IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 21056 of 2010(F)
1. 3I INFOTECH LTD., TOWER #5,
... Petitioner
Vs
1. STATE OF KERALA,
... Respondent
2. KERALA SUSTAINABLE URBAN DEVELOPMENT
3. THE PROJECT DIRECTOR,
4. IDBI BANK LTD.,
For Petitioner :SRI.P.B.SURESH KUMAR
For Respondent :GOVERNMENT PLEADER
The Hon'ble MR. Justice ANTONY DOMINIC
Dated :20/12/2010
O R D E R
ANTONY DOMINIC, J
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W.P.(C).No. 21056 OF 2010
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Dated this the 20th day of December, 2010
JUDGMENT
The 2nd respondent invited tenders for the supply of
Geographic Information System based property tax database in
respect of the properties in five Municipal Corporations in the
State. Ext.P2 is a bid document. Petitioner submitted its bids,
which were finally accepted and the acceptance was conveyed to
the petitioner by Exts.P3 and P4 communications. Exts.P5 and P6
are the agreements that were executed between the petitioner
and respondents 2 and 3.
2. In terms of the agreements, the work ought to have
been completed by 18.10.2008. At the request of the petitioner,
time was extended on four occasions and the extended time
expired on 18.7.2010. Even according to the petitioner, the work
could be completed only partially and finally, the 3rd respondent
issued Ext.P8 order dated 30.6.2010, terminating the agreements
and informing that the petitioner’s liability to the Government on
account of fresh tendering and awarding of the work shall be the
sole responsibility of the petitioner and that appropriate action for
making good the damages suffered by the 2nd respondent, will be
W.P.(C).No. 21056 OF 2010
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initiated. It is stated that subsequent steps were taken for
invoking Bank guarantee furnished by the petitioner. It was at
that stage, this writ petition was filed challenging Ext.P8 and
consequential proceedings.
3. Petitioner states that though, subsequently, on the
representations made by them and the meeting held between
parties, they were issued Ext.P11 offering to extent the time,
which was accepted by them by Ext.P12, no further orders were
issued. The main argument of the counsel for the petitioner is
that, even if, it is accepted that, under the provisions of Ext.P2 bid
document and the agreements, once default is committed, the
respondents had the liberty to terminate the contract at the risk
and cost of the defaulting party, any such action has to be guided
by fairness. It is contended that Ext.P8 was issued without issuing
notice to the petitioner or affording them an opportunity to
represent their case. On this ground, the learned counsel for the
petitioner submits that this court should require the respondents
to afford them an opportunity of hearing before any decision is
taken to impose penalty on the petitioner.
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4. Respondents have filed a counter affidavit. In so far as
the allegations contained in para 6 of the writ petition accusing
the respondents of having committed various breaches, which
allegedly prevented the petitioner from executing the work are
concerned, all these allegations have been denied by the
respondents in paragraph 9 and 10 of their counter affidavit. In
so far as the contention that the issuing Ext.P8, which visits the
petitioner with penal consequences, respondents have not acted
fairly by issuing notice or giving the petitioner an opportunity to
make their representations in the matter, it is contended that
after agreements were executed in October 2007, the first show
cause notice warning of termination was issued to the petitioner
on 21.6.2008. It is stated that there was no response to the said
notice and that on 25.7.2008, a letter was addressed to the
Project Manager of the petitioner, asking to show cause why
action should not be initiated for their failure to meet the contract
obligations.
5. The learned Government Pleader’s submission is that,
it was in response to the above letter, a letter dated 27.8.2008
was submitted by the petitioner, requesting for extension of time
W.P.(C).No. 21056 OF 2010
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till 18.4.2009, which was allowed in the meeting held on 3.9.2008.
It is stated that even thereafter there was no progress, and that
faced with the threat of invocation of Bank Guarantee, on
31.12.2008, petitioner issued a letter requesting the respondents
not to invoke Bank Guarantee. It is stated that though on
18.3.2009, Bank Guarantee was invoked at the request of the
petitioner, the contract period was again extended on 4.5.2009 till
18.10.2009. Again, there was a review meeting and the contract
period was further extended till 18.1.2010. According to the
learned Government Pleader, even during these periods there
was no progress in the work and that in spite of letter dated
19.12.2009 warning of legal action, at the request of petitioner,
on the 4thoccasion, period for completion of the work was again
extended till 18.7.2010. It is stated that despite of these, the
petitioner completed only 16% of the work and therefore they
were issued letter dated 11.3.2010 and e-mail dated 18.3.2010,
warning of legal action. Even thereafter, there was no progress in
the work and that a review meeting was held on 15.5.2010 and
29.5.2010. Ext.R2(a) is the minutes of the review meeting held
on 29.5.2010, which shows that three representatives of the
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petitioner were present and that the petitioner did not dispute
that they had completed only 15-20% of the work. It is also
stated in the minutes that if the petitioner does not complete the
work, it was made clear that the contract will have to be
terminated and the petitioner will have the sole responsibility for
the damages suffered by the 2nd respondent. It is stated that
even thereafter not only that there was no progress in the work,
but also the petitioner did not even attend the review meeting
that was held on 15.6.2010. According to the respondents, it was
in these circumstances, by Ext.P8, the contract had to be
terminated.
6. As already stated, the only question canvassed by the
petitioner is that in issuing Ext.P8 communication, the
respondents have not acted fairly or reasonably. The fact that a
termination, petitioner is liable for the risk and cost cannot be
disputed in view of Clause 31 (1) of the Ext.P2 bid document. As
far as the question whether the respondents have acted fairly and
reasonably is concerned, such contention will have to be decided
in the light of the facts disclosed in the counter affidavit.
Averments in the counter affidavit, which are not rebutted by any
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reply, shows that despite repeated extensions granted, the
petitioner did not even complete 20% of the work. They were
also warned repeatedly, that action will be initiated for
termination of the work and even that did not persuade the
petitioner to make any progress in the work. In such
circumstances, on these facts, I do not think there is any
justification for the petitioner to contend that the respondents
have acted unreasonably or unfairly or in violation of the
principles of natural justice.
Therefore, I do not find any merit in the writ petition. Writ
petition fails and is dismissed.
ANTONY DOMINIC
JUDGE
dmb