NATHA SINGH Vs. UNION OF INDIA

JUDGEMENT

(1.) This petition filed under Section 11 of the Jammu and Kashmir Arbitration and Conciliation Act, 1997 (for brevity 'the Act') prays for referring the dispute raised herein to an independent arbitrator in view of the fact that the respondents have failed to appoint an arbitrator in accordance with the provision of arbitration clause even before filing of the instant petition. In order to appreciate the controversy it would first be necessary to notice few facts. The petitioner is a partnership firm and Harjinder Singh s/o S. Natha Singh is one of the partner. The respondents invited tenders for 'construction of road over bridge No.166, 136, 114, 106 and 58 with 22.30 M PSC Girder 18.30 M RCC T. Beam Slab, Sub Structure of RUB No. 124, PSC Slab of Bridge No. 111, dismantling of existing ROB No/166, 136, 114, 106, 58 and 34 and protection work of Bridge No.43 and allied work such as approach Road breast wall, side drain, catch water drain, cutting formation near ROB and RUB and any protection work between Vijaypur Jammu Kathua in connection with Jalandhar-Pathankot-Jammu Tawi doubling'. The quotations were invited vide tender notice dated 30.08.2007. The approximate cost of the work was Rs. 814.57 lacs. Earnest money of Rs. 16,29,500/- was to be deposited by the applicants. The period for completion of work was fixed at 13 months. The last date for submission of tenders was 25.09.2007, which were to be opened immediately after 15.00 hrs (Annexure-A). It is clear from the terms of the tender indicated in Clause 3 of the Tender Form that a sum of Rs. 16,29,500/- i.e. 2% of the estimated tender value is to be forwarded as earnest money. The earnest money was to be forfeited without prejudice to any other rights or remedies in case tender is accepted and the contractor failed to execute contract documents within 15 days. It is pleaded by the petitioner that no contract agreement was executed between the parties.

(2.) The petitioner submitted the tender and was a successful bidder as is clear from communication dated 14.02.2008 conveying acceptance of the tender by respondents for a total cost of Rs.9,86,49,744.00 (nine crore, eighty six lakhs, forty nine thousand, seven hundred forty four only). It is obvious that the petitioner has deposited the earnest amount of Rs.16,29,510/-. The petitioner was asked to submit a performance guarantee in the form of irrevocable bank guarantee within a period of 15 days from the date of acceptance letter amounting to 5% of the contract value as per the proforma prescribed by the Railway in terms of clause no.5.2 of the special tender conditions and instruction to tenderer/s. The entire work was required to be completed in all respect within 13 months from the date of issuance of letter dated 14.02.2008. The petitioner was asked to contact the Deputy Chief Engineer/Construction, Northern Railway, Pathankote for further instructions for commencement of the work (Annexure-B). It is not disputed that no performance guarantee amounting to Rs. 49,32,490/- was furnished in term of clause 5.1 and 5.2 of the special tender conditions despite notices issued by the respondents.

(3.) The cause of petitioner has been opposed by the respondent by filling detailed objections. The respondents have raised objection that after acceptance of communication dated 14.02.2008 the documents were required to be executed within a period of two weeks. In that regard the petitioner was asked on 14.02.2008, 16.02.2008, 13.03.2008 and 16.04.2008 to submit the performance guarantee which was to be furnished to the tune of 5% of the total amount of contract value. Instead of depositing the performance guarantee the petitioner preferred a petition under Section 9 of the Act and obtained ex-parte direction on 08.05.2008 as has already been noticed in the preceding para. The performance guarantee was required to be furnished to either of the State Bank of India or any nationalized bank as per clause 5.2(iv) of the general conditions of contract Northern Railway (Annexure-D). The petitioner was further asked to commence execution of the work and deposit the performance guarantee on 16.02.2008 as is evident from letter dated 16.02.2008 (Annexure-F). The total amount of performance guarantee comes to Rs.49,32,490.00 which is 5% of the contract value as per the proforma prescribed by the Northern Railway in terms of clause 5.2 (Annexure-F). Despite repeated reminders the petitioner failed to comply with the terms and conditions leaving no option with the respondents to issue final notice dated 25.04.2008 stating therein that in the event of not depositing the performance bank guarantee which is mandatory for executing the contract agreement as well as to start the work under rules then action was to be taken as per clause 62 of the general conditions of the contract which include termination of contract (Annexure-H).