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TMI Blog2002 (7) TMI 823X X X X Extracts X X X X X X X X Extracts X X X X ..... er cent below the estimate rate. The second lowest tenderer had quoted 25 per cent above the estimate rate. 4. On 16th September 1981, the appellant's tender was accepted and an acceptance letter was sent, vide Ext. P-l. By this letter, the appellant was called upon to execute a formal agreement on stamp paper and he was also informed that failure to do so would make, the earnest money deposit liable to forfeiture and lead to cancellation of the proposed contract and make him liable to pay the Government the entire loss that may be caused to the Government by retender or rearrangement of the work or otherwise consequent on the failure of the appellant to execute the agreement or execute the work as provided for in C1ause 13 of the notice inviting tenders. 5. On 29th September, 1981, by letter, Ext, P-2, the appellant informed the third respondent that he had committed a mistake, as due to inadvertence he had quoted 12.90 per cent below the estimate rate while it was his intention to quote 12,90 per cent above the estimate rate. He also contended that he had come to the conclusion that even a rate 12.90 per cent above the estimate rate is not at all worth consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous other works. 10. A show cause notice was issued to the appellant, vide Ext. P-6, calling upon him to furnish an explanation or reason why revenue recovery proceedings should not be taken against him for recovering ₹ 91,36,199, which was said to be the loss suffered by the State Government due to failure of the appellant to execute the contract. The appellant challenged Ext. P-6 show cause notice by filing O.P. No. 1739 of 1984. The said Original Petition was disposed of by a judgment of a learned single Judge dated 1st March, 1984 (Ext. P-7) holding that the order issued against the appellant without giving him an opportunity of hearing or representation was prima facie bad. However, the learned single Judge was of the view that there was no need to quash and set aside the impugned order, on the statement made by the Government Pleader the orders at Exts. P-5 and P-6 would be treated as notices proposing blacklisting and recovery of loss for the-inaction on the part of the appellant, that the appellant would submit his representation within a stipulated period on answer to show cause notices and that, after consideration of the representation made by the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n order on 12th February, 1997, by which the department claimed to have reassessed the loss suffered, which is shown as ₹ 91,36,199 and called upon the appellant to pay the said amount with 12 per cent interest from 5th January, 1994, failing which revenue recovery action was threatened against him. The appellant challenged the said order by his O.P. No. 4921 of 1997 in which the said order is exhibited as Ext. P-13. 15. The first question that needs to be considered is, whether the respondents could have claimed damages against the appellant in the matter of his failure to execute the agreement as required under the terms of the contract. Clauses(3) and (13) of the notice inviting tender are material and read as under: 3. All works shall be done in conformity with the specifications and conditions of contract in force in the Harbour Engineering Wing which are identical to those in force in Public Works Department (Kerala). In case of schedule rate contract tenderers must quote their own rates specifically for each item without reference to the departmental estimates or the current schedule of rates and for percentage rate contract only a single rate as an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15.9.6. If after the selection notice is issued, the selected contractor fails to deposit the required security and or fails to sign the contract agreement, then action should be taken against the contract as provided for in the tender notice and in the rules regarding registration of contractors. 15.9.7. In cases as outlined above when the selected contractor fails to deposit security and/or execute agreement, a registered notice should be sent to him indicating the penalties to be in inflicted and the award of the contract withdrawn. The officer competent to decide the contract may then negotiate with the next two lowest tenderers whose earnest money have been retained whether any of them is willing to take up the work on the same terms and conditions and rates are given by the lowest tenderer. If any of them agrees, the contract may be awarded to that tenderer after getting a format letter from him accepting the terms and conditions and rates as given by the lowest tenderer. If both the tenderers agree, the contract should be concluded with the second lowest on the above terms. If neither of the two tenderers agree to accept the terms and conditions and rates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns and rates of the lowest tender, the work should be retendered. 18. In our view, the provisions in Clause 15.9.7. of the P.W.D, Manual provide a binding guideline for the executive officers to proceed in a matter, so that a work is not arbitrarily given to a person who has quoted very high rates. This is to safeguard the interest of the State Government and to ensure that, if possible, the work is executed at the same rates as quoted by the lowest tenderer which had been accepted. It is only in the case, where despite best efforts it is not possible to execute the work at the same rates quoted by the lowest tenderer, the question of retendering would arise. It is only after this procedure is followed that it will be possible for the State Government to say that it had incurred loss as a result of the failure of the lowest successful tenderer. Then alone would it be possible to impose the liability on the unsuccessful and unwilling lowest tenderer. 19. In the present case, we notice that no such attempt was made by the respondents. We will assume that the respondents were justified in declining the request of the appellant to treat his quoted rates as 12.9 per c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt. The order quantifying his liability has been issued only on 5th January, 1994 (Ext. P-10). The present Original petition has been filed within short time thereafter and cannot, therefore, be barred by laches as urged by the learned Government Pleader. 21. The judgment in O.P. No.1739 of 1984 decided no issues. Instead of quashing the orders impugned on the ground of violation of principles of natural justice, it merely treated, the order as a show cause notice and further gave liberty to the State Government to make fresh orders. It is not as if the appellant agreed at any time that whatever was decided by the State Government was acceptable to him; nor does the judgment in O.P. NO. 1139 of 1984 say so. It appears to us that there may be justification on the part of the respondents to forfeit the earnest money deposit of ₹ 50,000 because it is clearly provided so in the notice inviting tenders. In our view, the respondents have net followed the binding procedure prescribed in Clause 15.9.7. of the P.W.D. Manual. The other alternative for them was to sue the appellant for alleged damages, in which case it would have been possible for him to raise all open defenc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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