C. George Choolackal v. State of Kerala & Ors.

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR** **&** **THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE** **WEDNESDAY, THE 18TH DAY OF DECEMBER 2019 / 27TH AGRAHAYANA, 1941** **WA.No.445 OF 2018** **AGAINST THE JUDGMENT IN WPC 38041/2017 DATED 09-02-2018 OF HIGH COURT OF KERALA** ## **APPELLANT/PETITIONER:** **C.A.GEORGE CHOOLACKAL HOUSE, CHINNAKANAL P.O., MUNNAR, IDUKKI- 685 618 BY ADVS. SRI.SANTHOSH MATHEW SRI.ARUN THOMAS SRI.JENNIS STEPHEN SRI.VIJAY V. PAUL SMT.KARTHIKA MARIA SMT.VEENA RAVEENDRAN SRI.ANIL SEBASTIAN PULICKEL** ## **RESPONDENTS/RESPONDENTS:** |**1**|**STATE OF KERALA**| |---|---| ||**REPRESENTED BY SECRETARY TO GOVERNMENT,**| ||**PUBLIC WORKS DEPARTMENT, GOVERNMENT SECRETARIAT,**| ||**THIRUVANANTHAPURAM - 695 001.**| |**2**|**THE CHIEF ENGINEER**| ||**PUBLIC WORKS DEPARTMENT(NATIONAL HIGHWAYS),**| ||**MUSEUM P.O.,THIRUVANANTHAPURAM - 695 033**| |**3**|**THE SUPERINTENDING ENGINEER**| ||**PUBLIC WORKS DEPARTMENT,**| ||**NATIONAL HIGHWAY (CENTRAL CIRCLE),**| ||**VYTTILA, KOCHI-19.**| ||**BY ADV.SR GP SRI.KANNAN S**| **THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 5.12.2019, THE COURT ON 18.12.2019 DELIVERED THE FOLLOWING:** WA No.445/18 -:2:- ## **J U D G M E N T** Dated this the 18[th] day of December 2019 ## _**Shaffique, J.**_ The appeal is filed by the petitioner in WP(C) No. 38041/2017 challenging judgment dated 9/2/2018 of the learned Single Judge by which the writ petition was dismissed. 2. The petitioner/appellant had filed the writ petition _inter alia_ seeking for a writ of certiorari to quash Ext.P14 to the extent of rearranging the work done by the petitioner at his risk and cost and also for a writ of mandamus directing the respondents to release the Earnest Money Deposit (EMD) amount of `22,60,000/-. 3. The short facts of the case are as under: Petitioner who is a registered contractor of the Public Works Department (PWD) was awarded with the work of improving the Rajakkad-Rajakumary-Pooppara road to riding quality. The approximate value of work was `11,29,06,076/-. He had submitted an EMD of `22,60,000/-. The petitioner quoted WA No.445/18 ## -:3:- `7,99,99,990/- which was 29.14% below the estimated cost. Since the rate was below 25% of the estimated cost, Chief Engineer called upon the petitioner to forward the rate analysis of each item which was also furnished. By an _email_ message dated 19/7/2017, petitioner was called upon to give an undertaking in Ext.P6 format. On perusal of Ext.P6, according to the petitioner, it was noticed that he had to give an undertaking that the rate quoted includes all sort of taxes, levies, statutory fees etc. Petitioner by Ext.P7 informed the Superintending Engineer by his letter dated 28/7/2017 that he cannot give such an undertaking since the rate quoted by him for the work is not as per the conditions stated in Ext.P6, whereas the rate quoted was without taxes. However, by Ext.P8 dated 24/7/2017, the Superintending Engineer addressed a letter to the petitioner accepting his price bid for the value quoted which is inclusive of taxes. He was called upon to execute necessary agreement. Responding to Ext.P8 letter dated 24/7/2017, petitioner sent Ext.P10 letter dated 14/8/2017 _inter alia_ stating that as per online tender at column 53, he was called upon to give the total amount, “without taxes” and therefore, his quoted rate was without taxes. He further WA No.445/18 -:4:- submitted that subsequently he was handed a hard copy of the letter of acceptance together with the accepted schedule of the subject work in which the word “without taxes” was seen omitted. Therefore, according to him, he cannot be forced to enter into the agreement by calling upon him to undertake the work and hence, he requested to relieve him from the subject work and to refund the EMD. Yet another letter was sent to the Superintending Engineer on 19/8/17 which is marked as Ext.P11. Petitioner also approached this Court by filing WP(C) No. 28087/2017 wherein direction had been issued to the Superintending Engineer, PWD to consider Ext.P11 representation. However, pursuant to the said direction, the Superintending Engineer of PWD terminated the contract, after rejecting his representation, Ext.P11 and it was mentioned that the work will be rearranged at his risk and cost. Though petitioner submitted Ext.P14 letter dated 3/10/2017 to the Chief Engineer, informing him that he is ready and willing to execute the agreement and start the work with 14% tax amount, nothing else was heard in the matter and therefore he had approached this Court challenging Ext.P13. WA No.445/18 -:5:- 4. Counter affidavit had been filed by the 3[rd] respondent _inter alia_ stating that the writ petition itself was not maintainable, that the petitioner did not place any queries and did not attend the bid meeting, that when the BoQ was uploaded from the office in column 53, “the total amount without taxes” is entered. According to the 3[rd] respondent, the tax in BoQ is “service tax” which is exempted as per PWD order dated 3/2/2017. They also contended that as per clause 13.3 of the instructions to bidders of the standard bidding document, the total price shall include all duties, taxes and levies payable by the contractor and therefore the petitioner is estopped in assailing the words “without taxes” in the tender (BoQ) document. It is also contended that, being a regular contractor, petitioner was fully aware of the contractual aspects involved in the matter and if at all he had any doubt, he should have asked for a clarification. 5. A reply has been filed reiterating the factual issues. They also produced Ext.P15, a letter dated 27/10/2017 from the Chief Engineer in which direction had been issued to award the work to the second lowest. An additional document had been WA No.445/18 -:6:- produced which is a communication sent by the Principal Secretary to Government to the Chief Engineer, National Highways on 10/1/2018 referring to the aforesaid contract work calling upon them to retender the work. It is also stated that the ambiguity is created due to discrepancies in the preparation of tender documents. 6. Learned Single Judge while considering the aforesaid claim observed that in so far as Clause 13.3 in the bidding documents including invitation of bid clearly indicates that the price shall include all duties, taxes and other levies, it cannot be stated that the petitioner was not aware that he had to quote the price bid with tax. Being an A class contractor of PWD, petitioner is well versed with the manner in which tenders are to be submitted and therefore, there is justification on the part of the respondents to re-arrange the work and forfeit the EMD. 7. Learned counsel for the appellant while impugning the aforesaid judgment submits that though in the invitation to bid, there was a specific provision that the price shall include all taxes, duties and other levies, in the online tender documents, in WA No.445/18 -:7:- the column where the price has to be mentioned, it was specifically indicated as “without taxes”. Ext.P2 is the format of item rate BoQ where under column 53, it is recorded as “Total amount without taxes”. Ext.P3 is the item rate quote submitted by the petitioner, in which also, in column 53, the total bid amount has to be specified, “without taxes”. It is also recorded that: _“BOQ template must not be modified/replaced by the bidder and the same should be uploaded after filling the relevant columns, else the bidder is liable to be rejected for this tender. Bidders are allowed to enter the bidder name and values only.”_ 8. Apparently, in the bid document, petitioner was asked to make the bid without taxes and he had quoted 7,99,99,990/-. 9. The PWD authorities have no dispute regarding the fact that in the bill of quantities, petitioner was asked to give a bid 'without taxes'. Therefore, there is justification on the petitioner to have given a rate without taxes. In fact, the Chief Engineer's office of PWD was apprehensive about the low rate quoted by the petitioner and therefore, petitioner had given a clarification of the rate analysis. Learned Government Pleader WA No.445/18 ## -:8:- placed the same before us and fairly submitted that even in the rate analysis, the component of tax was not mentioned. The fact that there was an error which occurred in the bid document is not disputed because when the petitioner was given Ext.P9, after accepting his tender, the word “without taxes” in the total amount was conspicuously deleted, whereas the price remained the same. Petitioner was called upon to execute the agreement based on Ext.P9. Therefore, it is clear that there is ambiguity in the tender (BoQ) as a result of which petitioner had given a quote without taxes. But when he was called upon to submit an undertaking as per Ext.P6 format, the format included the value inclusive of all taxes, levies statutory fees etc at which time, he had objected to the same stating that his rate did not include any taxes. But without considering the same, Ext.P8 letter of acceptance had been issued calling upon him to undertake the work for an amount, `7,99,99,990/-, inclusive of taxes. Since the petitioner was not agreeable, the work was cancelled at his risk and cost and his EMD became liable to be adjusted. 10. Though the issue projected in the writ petition comes WA No.445/18 ## -:9:- within the realm of a contract, if there is an arbitrary action on the part of the authorities and the issue projected does not involve substantial questions of fact, it is always open for a writ Court to consider whether there is any arbitrariness or illegality in the act of the Governmental authorities. The position of law has been well settled in the judgment in _**ABL International Ltd. v. Export Credit Guarantee Corporation of India Ltd.**_ [(2004) 3 SCC 533]. Paragraph 19 of the judgment is relevant, which reads as under:- _**“19.** Therefore, it is clear from the above enunciation of law that merely because one of the parties to the litigation raises a dispute in regard to the facts of the case, the court entertaining such petition under Article 226 of the Constitution is not always bound to relegate the parties to a suit. In the above case of Gunwant Kaur [(1969) 3 SCC 769] this Court even went to the extent of holding that in a writ petition, if the facts require, even oral evidence can be taken. This clearly shows that in an appropriate case, the writ court has the jurisdiction to entertain a writ petition involving disputed questions of fact and there is no absolute bar for entertaining a writ petition even if the same arises out of a contractual obligation and/or involves some disputed questions of fact._ 11. This is also a case in which the only question to be WA No.445/18 ## -:10:- considered is whether the action of the respondents in treating that there was a valid acceptance of the tender by the petitioner/appellant is justified or not. 12. Learned Government Pleader however raised two contentions. First is on the basis of clause 13.3 of the invitation to bid. It is true that in the bidding documents which forms part of the notice inviting tender, it was specifically mentioned that the quoted price should contain all taxes, duties and other levies. But in this case what was intended by PWD while uploading the BoQ was that the total amount ought to have been with all taxes, duties and levies. However, it seems that erroneously the word “without taxes” came to be incorporated in the BoQ. When such a mistake occurred in the tender document, the contractor can only give a rate without taxes failing which it is possible that his tender may be rejected. The fact that BoQ (tender) was erroneously issued is further evident from the fact that while accepting the tender, in Ext.P9, the word “without taxes “had been deleted. The conditions of the notice inviting tender by itself does not amount to a contract. A contract comes into existence WA No.445/18 -:11:- only when the price quoted by the contractor is accepted by the department. In the document which provides for the price bid, when there is clear instruction that the price should be without taxes, the bidder cannot be blamed for having not incorporated the tax element in the bid document. Yet another contention urged is that without taxes indicates that it is without service tax. If that be the case, it ought to have been specifically mentioned in the BoQ and therefore, such a contention is not sustainable. 13. Though learned Government Pleader points out that all other contractors have quoted the rates inclusive of taxes, we do not think that we should venture to consider the approach taken by other contractors. In the case on hand, this particular contractor had made a quote based on the tender document supplied to him and when in the BoQ, he is expected to give the rate for each item and he was called upon to give the rate “without taxes”, he could only give a rate without taxes. His experience in the field and the approach of the PWD authorities are irrelevant matters in considering a specific contract. Therefore, it could be seen that the acceptance of the offer made WA No.445/18 ## -:12:- by the petitioner was not in terms with the tender. His quoted price was without taxes and he cannot be called upon to undertake the work inclusive of all taxes. Under such circumstances, we have no hesitation to hold that the 3[rd] respondent was not justified in terminating the contract at the risk and cost of the contractor. It is also settled law that when an offer is made in a tender, acceptance has to be unconditional. If any conditions are imposed in the acceptance letter, it does not become valid as such. The termination of the contract is therefore totally illegal and arbitrary. 14. In the result, this appeal is allowed. We set aside the judgment of the learned Single Judge and the writ petition stands allowed as under:- (i) Ext.P13 is set aside. (ii) The respondents shall refund to the petitioner the EMD of `22,60,000/- (Twenty two lakhs and sixty thousand only) within a period of one month from the date of receipt of a copy of the judgment. WA No.445/18 -:13:- (iii) If there is delay in refunding the EMD, it shall carry interest @9% per annum from the date of judgment till realisation. **Sd/-** **S.MANIKUMAR CHIEF JUSTICE** **Sd/-** Rp **A.M.SHAFFIQUE JUDGE** WA No.445/18 -:14:- ## **APPENDIX** ## **APPELLANTS' EXHIBITS:** ## **ANNEXURE A1** **PHOTOCOPY OF THE COMMUNICATION SENT BY THE FEDERAL BANK TO THE 3RD RESPONDENT ON 16.4.2019.** True Copy PS to Judge Rp