Contractors cannot be penalized for non-performance if site handover delays are caused by the contracting authority.

J U D G M E N T

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The 1^st petitioner, an A Class Contractor, who has undertaken work of the 2^nd respondent-Kerala Water Authority, is aggrieved by the forfeiture of Bank Guarantee and other Guarantees furnished for a contract work. The 2^nd petitioner is the Managing Director of the 1^st petitioner-

Company.

2. The 1^st petitioner quoted ₹2,76,52,109/- for the work of Jal Jeevan Mission (JJM) 2023-2024-Maranalloor Panchayat Phase III – Restoration of tar cut portion in PWD roads – General Civil Work. The work was allotted to the 1^st petitioner. On 04.09.2023, Ext.P1 Letter of Acceptance was issued. The work was to be completed in nine months from the date of handing over the site. The petitioners were required to deposit ₹13,82,605/- as Performance Guarantee and the petitioners provided security deposit of ₹4,63,400/- by way of Treasury Savings Bank Deposit. A Bank Guarantee of ₹4,14,800/- was also given. Ext.P5 agreement was executed by the petitioners on 20.09.2023. Though the petitioners requested the 3^rd respondent to handover site for performance of contract, the site was not handed over. On 19.06.2024, the petitioners sent Ext.P8 registered notice stating that the inordinate delay in handing over the site will cause heavy loss to the petitioners. The petitioners requested to pre-close the contract and release the security amount without any risk and cost.

3. To Ext.P8, the petitioners were served with Ext.P9 communication dated 11.11.2024 directing them to complete the work urgently. By Ext.P10 reply, the petitioners pointed out that the pipeline work was not yet completed by the Contractor who undertook that work. The petitioners again requested pre-closure of contract on account of delay in handing over the site. Ext.P10 was followed by Ext.P11, yet another request dated 03.02.2025.

4. The petitioners were thereupon served with Ext.P12 communication stating that the pipe installation work is nearing completion and the petitioners have to start the work urgently, failing which the work will be rearranged at the risk and cost of the petitioners. The petitioners state that Ext.P12 communication is highly illegal and arbitrary. The petitioners were ready to perform their part of the contract and complete the work within nine months as agreed. But, the Kerala Water Authority failed to handover the site.

Therefore, Ext.P12 demand is illegal and unjust.

5. Respondents 2 to 4 resisted the writ petition.

The respondents stated that the petitioners executed Ext.P5 agreement on 20.09.2023. Due to delay in obtaining road cutting permission from PWD, the pipeline works were postponed. The road cutting permission was granted by the National Highway only on 20.11.2024 on condition that the road restoration work should be completed within three months.

6. The respondents submitted that the petitioners were aware of the situation and the Kerala Water Authority was making efforts to obtain required permission. Despite the delay, the petitioners were instructed to commence the work immediately after the completion of the pipeline works. As per Ext.P12, the petitioners were informed that the failure to start work would lead to the work being rearranged at their risk and cost. The petitioners' continued non-performance has hindered progress of the Jal Jeevan Mission work intended to provide functional household tap connections to every rural household. The writ petition is therefore liable to be dismissed.

7. I have heard the learned counsel for the petitioners, the learned Government Pleader appearing for the 1^st respondent and