Additional performance guarantee unenforceable in item-wise tenders without published item-wise estimated rates.

JUDGMENT

The petitioner is a Private Limited Company undertaking contract works mainly of the Government Agencies. The 1^st respondent, a Public Private Partnership initiative of Government of Kerala, invited tenders for the work “Development of General Hospital Kozhikode– Construction of Surgical block and Service block” as per the notification dated 18.3.2025. Exhibit P1 is the relevant pages of the tender documents. As per the tender documents, the probable amount of contract (PAC) was for Rs.78,38,82,685/- against which, the petitioner quoted an amount of Rs.74,12,40,840/- which is 5.44% below the PAC. Being the lowest tenderer, the petitioner was awarded with the work.

2. Consequent to the acceptance of the tender submitted by the petitioner, Ext.P2 letter of acceptance was issued by the 1^st respondent on 14.7.2025, wherein, the petitioner was required to furnish an additional performance guarantee for an amount of Rs.9,73,28,500/- as per clause 4.2.2. of Ext.P1 tender documents. The petitioner is aggrieved by the insistence of furnishing the additional performance guarantee, as according to the petitioner, even though the contract to be entered into between the parties is an item wise contract, and the clause 4.2.2 provides for furnishing of an additional performance guarantee, if the item wise rates falls below 10% of the respective value of such items. It is the case of the petitioner that, in this case, no such obligation can be imposed upon the petitioner, as the item wise rates were never published through the tender documents. Therefore, according to the petitioner, as far as furnishing of additional performance guarantee is concerned, the obligation that can be imposed upon the petitioner, is only in cases where, the total rate quoted by the petitioner falls below 10% of the PAC, and the item wise rates quoted by the petitioner do not have any significance. It is pointed out that, in this case, the total rate quoted by the petitioner is only 5.44% below the PAC and hence no additional performance guarantee can be insisted upon. The petitioner places reliance upon Ext.P5 judgment rendered by a Division Bench of this Court in W.A. No.950/2023 and Ext.P6 judgment rendered by a learned Single Bench of this Court following the aforesaid writ appeal judgment wherein, this Court clearly laid down that, in cases where, item wise rates are not published along with the tender documents, the additional performance guarantee cannot be insisted upon, for the reason that the item wise rates quoted for certain items falls below the 10% of the estimated rate.

3. A detailed counter affidavit has been submitted by the 1st and

2^nd respondents, wherein, the maintainability of the writ petition itself was challenged in view of the fact that, the dispute involved is in respect of an obligation arising from a commercial contract and hence, the power of this Court under Art. 226 of the Constitution of India cannot be invoked. Even though it was also contended in the counter affidavit that the 1^st respondent is not amenable to the writ jurisdiction of this Court, as it was not a State under Art.12 of the , the said contention was not pressed during the course of hearing. In the counter affidavit, it is highlighted that, as per clause 4.2.2 of Ext.P1 agreement, the petitioner is bound to furnish additional performance guarantee, if item wise rates are below the 10% of the estimated rates. A distinction was sought to be drawn from the observations made by this Court in Exts.P5 and P6 judgments, by pointing out that, as far as Ext.P5 judgment is concerned, it was a case in which the Government Order based on which, the additional performance guarantee was demanded therein, was iss