High Court
Case Details
WP(C) 8003/2005 B E F O R E HON’BLE MR JUSTICE BK SHARMA JUDGMENT & ORDER (ORAL) Heard Mr. GN Sahewalla, learend Senior counsel, assisted by Mr. U Dutta, learend counsel for the petitioner. Also heard Mr. J Roy, learned Standing coun sel, HPC for all the respondents.
Legal Reasoning
2. The petitioner is aggrieved by the Annexure XIII Communication dated 22. 10.2005 by which referring to the earlier communications and also clause 1 of th e work order, in question, as well as clause 8 of the General Terms and Conditio ns of the detailed tender document, the work order dated 17.01.2005 made in favo ur of the petitioner was terminated, it was also conveyed that tender would be f loated for supply of 40,000/- MTG of Bamboos and that the entire amount of EMD/S ecurity Deposit against the order cancelled would stand forfeited as the HPC was constrained to purchase the balance material at the risk and cost of the petiti oner. By the said communication, it was further communicated that the petitioner would stand debarred from participating in any tender for a period of 2(two) ye ars w.e.f. 22.10.2005. 3. Referring to the various difficulties being faced by the petitioner, it is the case of the petitioner that at times there might be some variations in su pplying bamboos but since there was time upto December, 2005 it was incumbent on the part of the HPC authority to wait till completion of the contractual period instead of terminating the same by the impugned order. 4.
Legal Reasoning
Mr. Sahewalla, learned Senior counsel for the petitioner further submits that irrespective of the inability attributed to the petitioner to supply the m aterials, the respondents could not have forfeited the entire EMD/Security Depos it. He also submits that because of the Annexure 9 Notice dated 29.08.2005, the rate/purchase price having been increased from Rs.1000/- to Rs.1200/- per metric tonne under direct purchase scheme same was beyond the terms and conditions of contract. 5. In the counter affidavit, filed by the respondent Corporation, the afore said contentions that the petitioner have been denied, it has been stated that t here being failure on the part of the petitioner to supply Bamboos as per the sc hedule of the programme, the HPC did not have any other option than to terminate the work order in terms of the conditions of work order. As regards the enhance ment of price under direct purchase scheme referred to above, it is the stand of the respondents that the said enhancement did not have any concern with the wor k order, in question, and that the termination of the contract was on account of the failure on the part of the petitioner to supply the materials as per the sc hedule. 6. Mr. J Roy, learned Standing counsel, HPC submits that since the petition er failed to adhere to the terms and conditions of the schedule as was incorpora ted in the work order, the HPC authority had to terminate the work order as per the said provisions. 7. The schedule of supply was as follows: (cid:28)1st Schedule : Jan, 2005 - Feb, 2005 2nd Schedule : Mar, 2005 - Apr, 2005 3rd Schedule : May, 2005 - June, 2005 4th Schedule : July, 2005 - Aug, 2005 5th Schedule : Sep, 2005 - Oct, 2005 6th Schedule : Nov, 2005 -Dec, 2005 =1500 MTG =1500 MTG =1500 MTG = 1250 MTG = 1750 MTG = 2500 MTG (cid:29) 8. os as follows: Sl No. Period As against the aforesaid schedule, the petitioner could supply the bambo Quantity to be Supplied (in MT) Actual quantity supplied (in MT) 1. 2. 3. 4. 5. 6. 1500 January’05-February’05 1500 March ’05-April ’05 1500 May’ 05- June ’05 July’ 05- August’ 05 1250 September’05-October’05 1750 November’05- December’05 1863.48 1352.37 701.12 376.21 Nil 2500 Nil 9. Although as per the terms and conditions of the contract 10% variation w as permissible, if we go by the aforesaid supply made by the petitioner, there i s absolutely no manner of doubt that the same is in wide variation of the supply schedule prescribed in the work order. As indicated in the impugned order, the petitioner was given notice for improving his performance but there was failure to do so. It was on that count and considering the fact that it was an essential supply for running of the industry itself. The respondent Corporation inviting the provisions of the terms and conditions of the contract terminated the work o rder at the risk and cost of the petitioner. Upon failure to adhere to the suppl y schedule, the petitioner was also debarred from participating in any future co ntract. By now the aforesaid period of two years has already elapsed. 10. The only question for determination is as to whether the respondent shou ld have forfeited the entire amount of EMD/Security Deposit. As noticed above, i n the impugned communication dated 22.10.2005, the petitioner was intimated abou t his liability of risk and cost purchase of Bamboos by the HPC. The amount of E MD/Security Deposit was also appropriated/forfeited as the company was constrain ed to purchase the balance material from other source at the risk and cost of th e petitioner. As per the terms and conditions of the contract (Clause A) the per iod of contract is divided into numbers of schedules. Performance of supply shal l be judged from the very 1st schedule and if found not satisfactory, the order would be terminated/cancelled at suppliers risk and cost within 15 days notice. Clause relating to security deposit, penalty and forfeiture/refund of security d eposit is as follows: (cid:28)11. a) On issue of the supply order, Earnest Money Deposit shall be converted a nd adjusted towards Security Deposits. However, the conversion and adjustment sh all be @Rs.20/-(Rupees Twenty) only per MT from the EMD for the contract quantit y. b) ither from the bill or any other source. c) The Security Deposit retained by the Company shall not bear any interest No further Security money other than in 11(a) above shall be recovered e Security Deposit: in any event and shall be retained till the completion of the contract. 12. Penalty: A) For non adherence to the supply schedule (s) ie if there is any short fall of supply in any schedule, penalty at the rate of Rs.20/- only per MT shall be imposed and recovered. b) In case of completion of supply of the total contract quantity within the contract period, penalty already recovered as in 12(a) may be decided for a ny refund and shall be solely at the discretion of the competent authority of th e company depending on situation prevailing during currency of the contract. 13. Forfeiture/Refund of Security Deposit: a) In the event of successful completion of the contractual obli gations, full security deposit shall be refunded to the suppliers. To effect thi s the tolerance limit of =10% of the agreed quantity shall be considered. b) In the event any party accepts our offer and also executes an Agreement for the contract and fails to supply any quantity, the total amount o f security deposit received from EMD, shall be forfeited. c) In the event any party fails to supply the full contract quan tity, proportionate security deposit shall be forfeited @ Rs.20/- (Rupees Twenty ) only per MT towards the short supply after taking into account of (-) 10% tole rance limit to effect this forfeiture and will be deducted, which shall be bindi ng on the suppliers. d) While effecting proportionate forfeiture of security deposit as in 13’C’, the same shall be done after taking into account the penalty actual ly deducted for non-adherence to the supply schedule (clause- 12(a) or in other words in case of proportionate forfeiture of security deposit the total of secur ity deposit forfeiture and the penalty recovered shall not exceed Rs.20/- (Rupee s Twenty) only per MTG on the short supply. In the event a party completes all contractual obligatio n before expiry of the contract period, security deposit of the party shall be r eleased provided the party does not continue supply under ’OPEN ORDER’. (cid:29) e) 11. It is submitted by Mr. Sahewalla, learned Senior counsel for the petitio ner that since the petitioner had supplied part of the quantities as per the sch edule, the HPC could not have forfeited the entire security deposit/EMD. 12. Mr. Roy, representing the HPC authorities, however, submits that if the actual amount with the proportionate adjustment and penalty comes to equal to th at of EMD/Security Deposit, there is nothing wrong in forfeiting the entire Secu rity Amount/EMD. However, there is some controversy regarding the jurisdiction t o forfeit the entire EMD/Security Deposit, even if there was failure on the part of the petitioner to supply the full quantity. The submission of the petitioner is that adjustment shall be at the rate of Rs.20/- per metric tonne from the EM D for the contract quantity. On the other hand, Mr. Roy submits that in addition to the said amount, the penalty clause and forfeiture/refund clause will also h ave to be perused. 13. On perusal of the forfeiture/refund clause, it appears that under clause 13(b) in the event any party accepts the offer and also executes an agreement f or the contract and fails to supply any quantity, the total amount of security d eposit received from EMD, shall be forfeited. In the instant case, it is not the case of total failure to supply the quantity. However, supply was made partiall y as indicated above. 14. In view of the above, I am of the considered opinion that the matter req uires fresh consideration of the HPC authority, more particularly, the aforesaid clauses of the contract. Upon such dealing in reference to the factual aspect o f the matter, the HPC authority shall pass a speaking order. Depending upon the outcome of the said exercise, the rights and liabilities of the parties shall be governed. Let the speaking order be passed as expeditiously as possible prefera bly by 31st May, 2013. 15.
Decision
This writ petition, accordingly, stands disposed of.