T.O. Abraham and Co. Engineers and Contractors Private Ltd. v. Kerala State Electricity Board and The Chief Engineer, Civil Construction, North

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR MONDAY, THE 8TH NOVEMBER 2010 / 17TH KARTHIKA 1932 WP(C).No. 3711 of 2010(L) ------------------------- PETITIONER: --------------- T.O.ABRAHAM AND CO.ENGINEERS AND CONTRACTORS PRIVATE LTD., ST.MARY'S CORPORATE TOWER, RAMANCHIRA, THIRUVALLA P.O., REP. BY ITS MANAGING DIRECTOR, T.O.ABRAHAM. BY ADV. SRI.RINNY STEPHEN CHAMAPARAMPIL RESPONDENT(S): --------------- 1. KERALA STATE ELECTRICITY BOARD, REP. BY ITS SECRETARY, VYDYUTHI BHAVAN, PATTOM, THIRUVANANTHAPURAM. 2. THE CHIEF ENGINEER, CIVIL CONSTRUCTION, NORTH, VYDYUTHI BHAVAN, GANDHI ROAD, KOZHIKODE-693 011. ADV. SRI.P.P.THAJUDEEN, SC, K.S.E.B FOR R1,2 SRI.C.K.KARUNAKARAN, SC FOR KSEB FOR R1&2 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 08/11/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ## **APPENDIX IN W.P.(C)No.3711/10** ## **PETITIONER'S EXTS:** EXT.P1: TRUE COPY OF NOTICE DATED 4.1.08 ISSUED BY THE 2ND RESPONDENT TO M/S T.O.ABRAHAM AND COMPANY. EXT.P2: TRUE COPY OF REPLY LETER DATED 31.7.08 SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT. EXT.P3: TRUE COPY OF JUDGMENT DATED 2.2.2006 IN W.P.(C)No.35893/05 OF THIS COURT. EXT.P4: TRUE COPY OF JUDGMENT DATED 11.7.06 IN W.A.NO.1190/06 OF THIS COURT. EXT.P5: TRUE COPY OF ORDER DATED 13.10.06 OF THE HONBLE SUPREME COURT OF INDIA IN PETITION FOR SPECIAL LEAVE APPEAL NO.16331/06. EXT.P6: TRUE COPY OF NOTICE DATED 30.10.09 SUBMITTED BY THE PETITIONER EBFVORE THE 2ND RESPONDENT WITH A COPY TO THE 1ST RESPONDENT. EXT.P7: TRUE COPY OF APPLICATION DATED 30.10.09 SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT. EXT.P8: TRUE COPY OF THE NOTICE DATED 22.12.09 ISSUED TO THE PETITIONER BY THE 2ND RESPONDENT. EXT.P9: TRUE COPY OF CERTIFICATE OF INCORPORATION. EXT.P10: TRUE COPY OF ARTICLES OF ASSOCIATION. ## **RESPONDENTS' EXTS:** EXT.R2(A): TRUE COPY OF BOARD ORDER (FM.NO.2891/2007 (GPC/177/2005) DATED 26.12.2007. EXT.R2(B): TRUE COPYOF THE RELEVANT PAGE OF THE TENDER NOTICE. EXT.R2(C): TRUE COPY OF LETTER NO.TC.3(C)331/1993 DATED 15.1.2007. EXT.R2(E): TRUE COPY OF LETTER NO.TOA/KSEB/04/2006 DATED 31.10.06 OF THE PETITIONER. EXT.R2(F): TRUE COPY OF LETTER DATED 22.12.2009 SENT TO THE PETITIONER. TRUE COPY P.A.TO JUDGE ## **T.R.RAMACHANDRAN NAIR,J. ------------------------------------W.P.(C)No.3711 Of 2010** ## **----------------------------------------------------DATED THIS THE 8[th] DAY OF NOVEMBER, 2010** **J U D G M E N T** This Writ Petition is filed seeking to quash Exhibit P1, whereby the Board has proposed to forfeit an amount of Rs.five lakhs deposited as Earnest Money Deposit (EMD) by the petitioner for tendering a work. The facts of the case show that the petitioner is a Private Limited Company incorporated with the Registrar of Companies as per the provisions of the Companies Act. The petitioner submitted a tender for execution of Adayanpara Small Hydro Electric Project, during March, 2006 and an Earnest Money Deposit of Rs.5 lakhs was made along with the tender, which was refundable. 2.The petitioner was not successful in the tender process and the contract was entered into with the successful tenderer by the Board. Thereafter, the petitioner demanded refund of the Earnest Money Deposit of Rs.5 lakhs to which Exhibit P1 reply was given. 3. The entire action taken by the Board is on the plea that another partnership firm, namely, M/s T.O.Abraham and W.P.(C)No.3711/10 -2- Company had received some excess amount in another work and therefore the liability will have to be adjusted against the petitioner-Company also. The Board and the said partnership firm were involved in different litigations with regard to the said dispute also. When revenue recovery proceedings were sought to be initiated against the partnership firm, they approached this Court by filing W.P.(C)No.35893/2005 which was disposed of by Exhibit P3 judgment, wherein this Court took the view that since the Contractor disputes the liability to refund, there should be an adjudication by the competent authority, namely the civil court and therefore the revenue recovery proceedings cannot be supported. The said judgment was confirmed by the Division Bench in Writ Appeal No.1190/2006 by Exhibit P4 judgment. A Special Leave Petition filed against the said judgment was dismissed by the Apex Court by Exhibit P5 order. Exhibit P6 is a representation submitted by the petitioner pointing out these aspects and again the same has been replied by Exhibit P8 rejecting his request to release the amount. Exhibit P8 will show that the Board has already filed a civil suit to realise the excess payment, from the partnership firm. W.P.(C)No.3711/10 -3- 4. The learned counsel for the petitioner submitted that the petitioner is a Private Limited Company and the dispute, the Board is having, with the partnership firm cannot result in adjustment of the Earnest Money Deposit made by the petitioner for tendering a different work. It is pointed out that none of the conditions of the tender will enable the respondents to enforce any such liability. 5. On behalf of the respondents, a counter affidavit has been filed. In the counter affidavit, certain conditions put in Exhibit R2(b), which is the relevant page of tender notice have been relied upon. Clause 11.0 of Exhibit R2(b) provides for contingencies under which the bid security will be forfeited. They are as follows: - (a) If a bidder withdraws his bid during the period of bid validity or - (b) in the case of a successful bidder, if he fails within the specified time limit of 30 days from the date of receipt of notice of acceptance of his tender to; - (i) sign the agreement; or - (ii) furnish the necessary performance security.” W.P.(C)No.3711/10 -4- Item (a) will apply only if the bidder withdraws the bid during the period of validity of the bid. Item (b) obviously applies to a successful bidder. Both these contingencies are not applicable here. Therefore, the same cannot be enforced against the petitioner. The other Clause that is relied on is E1.022 under the caption 'Failure to Execute the Work”. The said Clause will enable the Board to realise the amount of loss as land revenue, in case there is default on the part of the tenderer/contractor to pay requisite deposit, sign contracts or take possession of the work and execute the work. The same also will not apply to the case of the petitioner, because the Company is not the successful tenderer. 6. The Board has also produced Exhibit R2(c) and R2(d) issued against the party, namely T.O.Abraham and Company. That also will not help the Board from realising or adjusting the amount from the petitioner-Company. 7. It is mentioned in the counter affidavit that while submitting the tender, the petitioner had produced a certificate Exhibit R2(e) to prove the technical capacity for pre-qualification. W.P.(C)No.3711/10 -5- What is mentioned in paragraph 6 of the counter affidavit is that it will show that both firms are inter-related. True that Exhibit R2(e) was relied upon by the petitioner to establish the credentials at the pre-qualification stage; but that does not mean that the same can be utilised in a matter like this, where the earnest money is sought to be adjusted against the liabilities of a different firm. 8. The learned counsel for the petitioner relies upon a decision of the Apex Court in **Indowind Energy Ltd. v. Wescare (I)Ltd. (2010 (5) SCC 306)** and paragraph No.17, in particular. In paragraph No.17, it is held as follows: “17. ..... ..... ...Each Company is a separate and distinct legal entity and the mere fact that the two Companies have common shareholders or common Board of Directors, will not make the two Companies a single entity. ..... .......”. Evidently, the petitioner-Company and the partnership are different entities and the liabilities of the partnership, if any, cannot be sought to be realised from the petitioner. 9. It is mentioned in the counter affidavit that a civil suit has already been filed. It is upto the Board to prosecute the civil W.P.(C)No.3711/10 -6- suit against the partnership firm or any other parties who are defendants in the suit. But, the petitioner cannot be saddled with the liability with respect to the alleged amount claimed from the firm. There are no disputed questions of facts to be adjudicated herein and hence the petitioner is entitled for the reliefs sought for. In that view of the matter, Exhibits P1 and P8 are quashed. The Writ Petition is allowed. There will be a direction to the respondents to release an amount of Rs.5 lakhs (Rupees Five Lakhs only) along with the interest accrued to the petitioner within a period of two months from the date of receipt of a copy of this judgment. No costs. Sd/-( T.R.RAMACHANDRAN NAIR, JUDGE) ## dsn ## **True copy** ## **P.A.to Judge**