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2023 Supreme(HP) 602
IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA
M.S. RAMACHANDRA RAO, CJ, JYOTSNA REWAL DUA, J.
Shiv Kant Prashar - Appellant
Versus
Chairman, Bhakra Beas Management Board and Another - Respondents
CWP No. 5170 of 2022
Decided On : 09-10-2023
For the Appellant : Subhash Sharma
For the Respondent: Atul Jhingan
A contractor must timely communicate any impediments to executing work; failure to do so does not excuse non-performance and justifies forfeiture of earnest money under contract terms.
Headnote:(A) General Conditions of Contract - Clause 12 - Writ petition challenging termination of work order and forfeiture of earnest money - The petitioner cited increased steel prices and inability to execute work as reasons for delay, but failed to communicate these issues timely to respondents, who acted within their rights to forfeit the earnest money as per contract. (Paras 1, 8, 10, 11)
(B) Petitioner's Claim - The claim of impossibility of execution due to price change was not timely raised by the petitioner prior to work order expiration and cannot be entertained post facto. (Paras 8, 11)
Facts of the case:
The petitioner was awarded a work order but failed to start work within the stipulated time. The respondents issued notices for compliance which were not adhered to. The petitioner eventually claimed price escalation as reason for non-compliance.
Findings of Court:
The court found the action of the respondents in forfeiting the earnest money and imposing a period of business dealing suspension valid and justified under the contract terms.
Issues: Whether the forfeiture of earnest money was justified given the circumstances surrounding the delay in work execution.
Ratio Decidendi: The court ruled that the petitioner’s failure to raise timely concerns about price increases invalidated his later claims, affirming that the respondents acted within contractual boundaries.
Result: Petition dismissed.
| Table of Content |
|---|
| 1. details surrounding tender and contract execution (Para 1 , 2 , 3 , 4 , 5 , 6 , 7) |
| 2. petitioner's argument on price escalation (Para 8) |
| 3. validity of respondents' action under contract clauses (Para 9 , 10 , 11) |
| 4. court dismissal of the petition (Para 12) |
M.S. RAMACHANDRA RAO, CJ.
1. This Writ petition has been filed by the petitioner assailing Annexure P-19 dt.18.05.2022 issued by the respondents cancelling the work order dt.14.10.2020 issued by the respondents for executing the work of “Replacement of roofing of remaining 26 Nos. E-4 and SL-4 type quarters in BBMB Colony at Slapper” forfeiting EMD amount of Rs.1,35,540/- deposited by the petitioner and also suspending business dealings with the petitioner for a period of three years from that date invoking General Condition Sr. no.12.
2. It is not in dispute that the respondents had published an Online tender dt. 31.07.2019 for execution of the above work and the petitioner participated in the said tender and his bid was accepted. Thereafter from time to time, the respondents, for various reasons sought extension of the petitioner’s offer on 12.03.2020, 01.06.2020 and the petitioner obliged by e-mails dt. 16.03.2020, 01.06.2020, 01.07.2020, 17.07.2020 and lastly on 16.09.2020 by extending his offer up to 20.10.2020.
3. Before the expiry of the said date on 14.10.2020, the respondents issued work order to the petitioner. The work order required completion of the work within five months, which period ended in March, 2021.
4. The petitioner however did not commence the execution of work.
5. Therefore, the respondents issued Annexure P-8-Notice dt. 05.04.2021 asking the petitioner to start the work and followed it up by Annexure P-10-Notice dt. 07.04.2021.
6. For the first time on 03.05.2021 vide Annexure P-11, the petitioner replied to the said letter issued by the respondents stating that he had quoted minimum rate as per his tender filed on 16.09.2019, but there was delay in awarding of work up to 14.10.2020, and in the meantime the price of steel had escalated in the market and it was impossible for him to do the work. This letter was followed up by another letter dt. 04.06.2021 reiterating the same.
7. After correspondences in that regard between the parties, ultimately impugned termination order Annexure P-19 dt. 18.05.2022 was issued by the respondents.
8. The learned counsel for the petitioner contended that it was impossible for the petitioner to execute the work in question on account of steep rise in prices of steel, but the fact remains that the petitioner, between 16.09.2019 and 14.10.2020, had not raised the said issue with the respondents at any point of time, and he raised it only on 03.05.2021, after the time fixed for execution of work under the contract had expired. The respondents had repeatedly issued notices to the petitioner vide Annexures P-8 dt. 05.04.2021, P-9 dt. 06.04.2021 and P-10 dt. 07.04.2021 asking the petitioner to commence the work, but the petitioner did not do anything.
9. As per Clause 12 of the General Conditions applicable for the tender in question, the impugned order is passed by the respondents. The said clause states as under:
12. The earnest money/security deposit taken from the firms/tender shall be forfeited under the following circumstance:
f. If the tenderer withdraws his tender at any stage during the currency of his validity period, his earnest shall stand forfeited in full.
g. If the acceptance of tender has been issued but the contractor refuses to comply with it, the earnest money deposited by him shall be forfeited in full, irrespective of the fact whether the BBMB sustains any loss on account of his default or not. This forfeiture shall be without prejudice to the right of the BBMB to claim any other damage as admissible under the law as well as to take such executive action against the contractor as blacklisting etc.
h. Where the tender has been accepted but the contractor stops the works after part
