1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN JAIPUR BENCH AT JAIPUR ORDER S.B.Civil Writ Petition No.1055/1997 M/s Krishna Construction Company Vs. The State of Rajasthan & Ors. Date of Order :- 23.04.2009 HON'BLE MR.JUSTICE R.S.CHAUHAN Mr.R.S. Mehta, for the petitioner. Mr.K. Verma, Addl.G.A. for the State. The petitioner has challenged the notice dated 02.01.1997 issued by the Executive Engineer, Distt. Division (North), Public Works Department, Jaipur directing it to deposit Rs.26,000/- because of his failure to carry out the construction work allotted to it. The Brief facts of the case are that the petitioner is a proprietorship doing the business of construction. The petitioner is a “C-class” contractor enlisted with the Public Works Department. Respondent No.4 invited tenders for constructions of Public Health Centre (P.H.C.) building in village Dhula, District Jaipur. In pursuance to the said tender, on 08th March, 1996 the petitioner submitted his tender. The respondents accepted the said tender. Vide 2 telegram dated 20.04.1996, the respondents intimated to the petitioner about the acceptance of the tender. They asked him to deposit the performance guarantee ('P.G.', for short) amounting to Rs.76,880/-. Immediately after receipt of the telegram, the petitioner's proprietor Shri S.N. Joshi, went to the site. There he learned that already a building was constructed by the villagers on the land. Moreover, there was no vacant land available for the construction of P.H.C. building. Therefore, vide letter dated 01.05.1996, the petitioner requested respondent No.4 either the department should demolish the building, or the Assistant Engineer and the Junior Engineer be deputed along with the police force for demolishing of the building. But, vide letter dated 08.07.1996, respondent No.4 informed the petitioner to deposit the performance guarantee, to the extent of 5 per cent, within a period of ten days, failing which the tender amount would be forfeited and tender will be treated as invalid. Vide letter dated 23.07.1996, the petitioner submitted his representation to respondent No.4 and stated that he is ready and willing to deposit the desired P.G. amount without any delay, but only after a 3 clear site is made available for the work. Vide letter dated 23.07.1996, the Sarpanch of village Dhula also requested the Public Works Department not to start the work, as one Hanuman Sahai Mahajan, who donated the amount for construction of existing building, is objecting to its demolition. But, the respondent No.3 did not pay any heed either to the representation of the petitioner, or to the letter of Sarpanch dated 23.07.1996. Instead, he demanded P.G. amount vide his letter dated 30.07.1996. Again on 19.08.1996 the petitioner submitted his representation. But without looking into the records and without verifying the real position at the site, respondent No.4, vide his letter dated 07.12.1996, informed the petitioner that the vacant site is available on which the constructions is possible. Thereafter, the petitioner received a letter dated 02.01.1997, issued by respondent No.4, whereby a penalty of Rs.26,000/- has been imposed and the petitioner has been asked to deposit the same within a period of seven days failing which the said amount was ordered to be deducted from the running bills of the petitioner. Being aggrieved by the letter dated 02.01.1997, the petitioner has filed the present petition before this Court. 4 Mr. R.S. Mehta, the learned counsel for the petitioner, has contended that the land which was allotted to the petitioner for construction of a Primary Health Centre already had certain constructions upon it. According to the learned counsel, the construction which already existed was in fact used for the purpose of running a Hospital. Therefore, the villagers were not willing to permit the petitioner to demolish the said construction and to raise a new construction. The petitioner had brought these facts to the notice of the department. In fact, it had requested that police help be given to it so that it could raise the construction. Even the Sarpanch had informed the Department that the villagers are not permitting the new construction to be raised. Despite knowing the reality, still notice dated 02.01.1997 has been issued imposing a penalty of Rs.26,000/- upon the petitioner. Therefore, the said notice is absolutely arbitrary, unfair and unjust. On the other hand, Mr. K. Verma, the learned Additional Government Advocate, has contended that only two rooms were constructed which were being used for running the Primary 5 Health Centre. Moreover, sufficient open land was available for the petitioner to raise the construction. In fact, the two rooms need not be demolished as pleaded by the petitioner. Despite the availability of the land and inspite of not having to demolish the two rooms, the petitioner never deposited the performance guarantee money. Therefore, under the contract the respondents are justified in imposing a penalty of Rs.26,000/- on the petitioner. Heard the learned counsel for the parties. Besides being entrusted and welfare activities, the State has now entered into the commercial arena. In order to carry out minor and mega projects, the State enters into contract with persons and companies. It is not only in the administrative arena, but also in commercial field, the States is supposed to act in a just, fair and reasonable manner. Moreover, like any other party to a contract, the State is bound by the obligations imposed by the contract. While granting the contract for raising the construction, it was incumbent on the 6 respondents to ensure that the land is free from any encumbrances. However, according to the respondents themselves, two rooms exist which are being used for the purpose of running a Primary Health Centre. Moreover, according to the letter dated 23.07.1996 issued by the Sarpanch, Hanuman Sahai Mahajan, who had constructed the two rooms, is not agreeable to demolishen of the said two rooms. According to the petitioner, the villagers are opposing the demolishen and the raising of the new construction. In this view of the matter, it was difficult for him to carry out the contract due to public opposition. It is obvious that the petitioner has a genuine reason and justification for non-payment of the performance guarantee amount. Although the respondents have mentioned that there is sufficient vacant land where the contractor could carry out the construction, but no map/report of the site has been placed on record to buttress this contention. In absence of such a map/report, the reality cannot be decided. It was incumbent on the respondents to inspect the site, and to appreciate the difficulty faced by the petitioner before issuing the notice dated 7 02.01.1997. Since the same has not been done, the notice dated 02.01.1997 is absolutely arbitrary and unjust. In this view of the matter, this Court has no hesitation in quashing and setting aside the notice dated 02.01.1997. Therefore, the notice dated 02.01.1997 is, hereby, quashed and set aside. The writ petition is, hereby, allowed. There shall be no order as to costs. (R.S.CHAUHAN)J. Manoj Solanki