Rajkumar vs. Chief Engineer And Head Of Department

Held

The High Court held that the appellant's contention that the respondents ought to have negotiated with him was without merit, as the appellant had clearly stated his unwillingness to execute the work at the previously quoted prices after the expiry of the 120-day validity period and had sought a refund of his earnest money deposit. No useful purpose would have been served by such negotiations. The Court also rejected the contention that the tender process should have been cancelled and fresh tenders invited. It reasoned that any further delay would lead to cost escalation and adversely affect public interest. Given that the work was already awarded to L-2 and a significant period had passed, the learned Single Judge was justified in refusing to interdict the award. The Court further held that the appellant's claim for damages was a disputed question of fact requiring adjudication by a competent Civil Court based on evidence. The Special Appeal was dismissed, but the appellant was permitted to pursue his common law remedy for damages in the Civil Court.

Facts

The appellant, a lowest tenderer (L-1), was awarded a civil construction work contract by the Public Works Department for Rs. 75,48,139.50 + 12% GST. The tender prescribed a validation period of 120 days. The department failed to execute the agreement within this period, which expired on February 14, 2019. The appellant requested a refund of his earnest money deposit, stating the quoted rates were no longer economical. The department then negotiated with the second lowest tenderer (L-2) and awarded the contract to them on March 5, 2019, for Rs. 75,46,333.49 + 12% GST. The appellant challenged this award, seeking its quashing and a direction to allot the work to him. The Single Judge, while faulting the department for the delay, disposed of the writ petition by directing payment of Rs. 75,481/- to the appellant and initiating an inquiry into the delay. The appellant filed a Special Appeal against the non-cancellation of the contract awarded to L-2 and the inadequacy of the compensation.

Key Issues

1. Whether the respondents ought to have awarded the contract to the fourth respondent (L-2) when the appellant (L-1) had withdrawn from the contract due to the expiry of the validation period, and whether the tender process should have been cancelled and fresh tenders invited, or negotiations should have been held with the appellant as per the Procurement Rules? Petitioner's Arguments: The appellant contended that the award of the contract to L-2 was arbitrary and illegal. He argued that the learned Single Judge erred in granting only 1% of the project cost as damages, whereas the department's permitted profit margin was 10%, and a higher amount should have been awarded. The appellant also argued that the respondents should have either cancelled the tender and invited fresh bids or negotiated with him as per the Procurement Rules. Respondents' Arguments: The State Government argued that the learned Single Judge's direction to pay compensation and interest was erroneous. They did not explicitly argue against the appellant's contention regarding the award to L-2 or the need for fresh tenders, but their overall stance was against the compensation awarded to the appellant.