The court upheld the principle of enforcing contract terms regarding termination and forfeiture of deposits due to delay in work completion. The recovery of additional expenditure was subject to a fresh inquiry.

ORDER :

(Prayer: This Petition filed under Article 226 of the Constitution of India, to issue a writ of Certiorarified Mandamus, calling for the records pertaining to the proceedings of the second respondent in his proceedings letter No. 7/2010-11/A2 dated 16.07.2013 and quash the same and consequently direct the respondents to accept the foreclosure letter dated 25.01.2013 made by the petitioner and to refund the E.M.D, Security Deposit, Additional Security Deposit and Retention amounts due to the petitioner.)

The present writ petition has been filed by a Contractor challenging an order passed by the second respondent herein under which the contract awarded to him was terminated and E.M.D, Security Deposit, Additional Security Deposit were forfeited. Under the impugned order, the petitioner was also informed that the additional expenditure incurred by the Government for executing the contract through a different Contractor would also be recovered from him.

2. According to the petitioner, the first respondent had called for public tender for improvement to Kulithurai-Alancholai-Arukani Road and for reconstruction of small bridges. The petitioner firm had submitted their quotation on 03.11.2010. During the selection process, the petitioner was the successful lowest bidder. A work order was issued to the writ petitioner on 01.12.2010 for a sum of Rs.1,17,83,667/- and an agreement was entered into between the parties on 05.01.2011.

3. According to the petitioner, the second respondent had failed to fulfil his obligation in handing over the site within 10 days from signing of the agreement. Due to heavy unprecedented rains and consequent floods for more than 15 days, the sub-grade of the road was heavily damaged. The contract awarded in favour of the writ petitioner was only for surface renewal and hence, an erosion of the sub-grade due to heavy floods had completely altered the nature of the work awarded to the writ petitioner.

4. The petitioner had further contended that on several occasions, he has informed about the serious damages caused to the sub-grade of the road during the period between 11.12.2010 to 25.12.2010 and that the surface renewal provision in the contract cannot be done in the road unless the damaged sub-grade is rebuild with suitable new provisions. According to the petitioner, the respondents have accepted to sanction the addition item of work in view of alteration in the physical feature of the site. Only based on the assurance granted by the respondent authorities, the petitioner had undertaken the work. On 03.05.2011, the petitioner has sent a representation explaining the damages in the road and seeking the respondents' attention to the petitioner's difficulties in commencing the work for which there was no response from the respondents. The respondent authorities have imposed a fine of Rs.2,00,000/- on the writ petitioner by an order dated 17.03.2011. Therefore, the petitioner was constrained to send a communication on 16.08.2011 foreclosing the contract on the ground that, when laying of the sub-grade work has not been handed over to the writ petitioner, the petitioner firm cannot be found fault with. The respondent authorities have not responded to the foreclosure notice issued by the writ petitioner, but passed an order on 06.09.2011 terminating the contract and forfeiting the E.M.D, Security Deposit, Additional Security Deposit. However, by an order dated 23.12.2011, the petitioner firm was directed to continue the work in view of public pressure and urgency in completing the work. Thereafter, the petitioner has submitted a representation on 25.01.2013 again making a request for foreclosure. Thereafter, without considering the said request, an order was passed on 02.07.2013 by the authorities extending the time for completion of the work till 19.07.2013. Thereafter, the present impugned order was passed on 16.07.2013, finally terminating the contract and forfeiting the E.M.D, Security Deposit, Additional