IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE V.GIRI TUESDAY, THE 14TH JULY 2009 / 23RD ASHADHA 1931 WP(C).No. 17743 of 2009(K) -------------------------------------- PETITIONER(S): --------------------- ALL KERALA ENGINEERS AND SKILLED WORKERS LABOUR CONTRACT CO-OPERATIVE SOCIETY LTD NO.4447, THEVALLY, KOLLAM - 691 009. REPRESENTED BY ITS PRESIDENT D.RAJKUMAR. BY ADV. MR.A.SUDHI VASUDEVAN SMT.K.PUSHPAVATHI RESPONDENT(S): ------------------------- 1. STATE OF KERALA, REP. BY THE SECRETARY, CO-OPERATION (C) DEPARTMENT, THIRUVANANTHAPURAM. 2. SECRETARY, IRRIGATION DEPARTMENT, GOVERNMENT OF KERALA, THIRUVANANTHAPURAM. 3. THE SUPERINTENDING ENGINEER, IRRIGATION SOUTH CIRCLE, IRRIGATION DEPARTMENT, GOVERNMENT OF KERALA, THIRUVANANTHAPURAM. R1 TO R3 BY SR.GOVERNMENT PLEADER MR.P.N. SANTHOSH. THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 14/07/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: rs. V.GIRI, J ------------------- W.P.(C).17743/2009 -------------------- Dated this the 14th day of July, 2009 JUDGMENT Petitioner is a Labour Contract Co-operative Society and is registered as A-Class contractors. By Ext.P3 notification, a work relating to construction of sea wall, was tendered by the Irrigation Department. PAC for the work has been estimated as Rs.238 Lakhs. EMD is fixed at Rs.50,000/-. The period of work is estimated as ten months. The tender notification also stipulates that apart from the security deposit, the tenderer who is chosen for award of the contract should also cause furnishing of the bank guarantee covering 10% of the contract amount. Petitioner's tender, which quoted a rate of 34% above the PAC was accepted and this was intimated vide Ext.P4. Petitioner was also directed to furnish a bank guarantee for an amount of Rs.31,46,420/- approximating 10% of the contract amount. It is essentially this condition that has been challenged in this writ petition. 2. I heard Mr.Sudhi Vasudevan, learned counsel for the W.P.(C).17743/09 2 petitioner and Mr.P.N.Santhosh, learned senior Government Pleader. 3. Learned counsel for the petitioner points out that according to the petitioner, Clause 10 of Ext.P1 Government Order would exempt the petitioner, a Labour Contract Society, from not only effecting EMD but also payment of security deposit. Clause 10 of Ext.P1 reads as follows:- “The Societies will be exempted from payment of security deposit and earnest money. The usual retention of 10% of each bill will, however, be made to guard against default in the satisfactory completion of work.” 4. It is contended that a condition by way of requiring the awardee to furnish a bank guarantee for 10% of the contract amount could be made applicable only to other private contractors who do not enjoy the benefit of exemption under Ext.P1. It is contended that the W.P.(C).17743/09 3 respondents are also aware that the petitioner is entitled to get the benefit of exemption contemplated under Ext.P1 and it is therefore, that the petitioner was not called upon to furnish EMD. The scope of exemption under Clause 10, it is contended, would extend to a bank guarantee as well. Learned Government Pleader submits that exemption contemplated under Ext.P1 Government Order would relate only to a security deposit or an EMD. Ext.P1 Government Order does not refer to a condition like furnishing a bank guarantee for 10% of the contract amount. An exemption can be claimed only if it is so specified. 5. The scope of exemption contemplated under Clause 10 of Ext.P1 Government Order will have to be ascertained on a plain reading of the same. Clause 10 of Ext.P1 states that Societies are exempted from payment of security deposit or EMD. A stipulation by way of furnishing a bank guarantee by an awardee is really not contemplated or referred to in Ext.P1. Ext.P1 provides for certain exemptions in favour of Labour Contract Societies. A W.P.(C).17743/09 4 Clause in the nature of exemption cannot be construed as comprehending areas which are not specified. The stipulation for furnishing a bank guarantee for 10% of the amount is obviously applicable only at the stage at which contract is sought to be awarded, ie., it is applicable to a tenderer whose tender has been accepted. Exemption Clause in Ext.P1 cannot be construed in such a manner as to infer that it would also comprehend a stipulation for furnishing a bank guarantee, otherwise applicable to all contractors, but to be imposed only at the stage at which the contract is awarded. I am therefore, unable to accept the contention of the learned counsel for the petitioner that the word 'security deposit' as contained in Clause 10 should be liberally construed as to comprehend a direction for furnishing a bank guarantee. That is neither warranted nor justified. 6. Learned counsel for the petitioner further submits that a stipulation to furnish a bank guarantee for 10% of the PAC lacks statutory backing. That may be so. But there is no W.P.(C).17743/09 5 statutory requirement vis-a-vis the conditions contained in the tender notification. These are tenders floated by Government Departments and would ultimately result in a contract within the meaning of Article 299 of the Constitution of India. A stipulation for furnishing a bank guarantee is not prohibited by any statutory prescription or any other Government order for that matter. I do not find any merit in this writ petition and the same is accordingly dismissed. Sd/- V.GIRI, Judge mrcs //true copy// P.A. to Judge.