Debashree Construction (India) Pvt. Ltd. Vs. the State of Bihar and ors. - Court Judgment

Excerpt:
government contract-rescinding of contract-delay in execution of work under agreement even after repeated warnings-reasons for delay assigned not sustainable as the contractor agreed to the terms of the final work order-no justification in not completing even 7 per cent of the work specially when in terms of the agreement it was required to complete 50 per cent of the same by that time-it is also not open to petitioner to say that opportunity of hearing was not given to it before order of rescission of contract, since at different stages it had filed a detailed reply to letters issued by the authority-it must be assumed that whatever it had to say in the matter it had already said before the departmental authorities and no further opportunity of hearing was required. - - since the same has not been done therefore, the impugned order is bad on that account also. it is further submitted by the learned counsel that for such a decision a formal show cause notice was not required to be issued to the petitioner as it was being regularly informed about non-compliance of the terms and conditions of the contract and by letter dated 18.5.2006 it was clearly told to comply with the terms of the agreement, otherwise action would be taken for putting the same to an end in terms of the agreement. learned counsel further submits that the petitioner was clearly informed that so far as about 28 km road is concerned, there was no hindrance at all to the completion of the work over the same since the same was not damaged, yet the petitioner was not taking any step for completing the work there. it is clearly laid down in the said decision that even if the petitioner is not entitled to a refund of security deposit in respect of licence, he is surely entitled to a notice when the order to that effect is proposed. ramesh kumar datta, j.1. heard mr. y.v. giri, learned senior counsel along with mr. raj kishore prasad, advocate for the petitioner, learned government advocate no. 9, for the state and mr. rakesh kumar singh, learned central government counsel, for the union of india.2. the petitioner seeks quashing of the office order no. 22/2006 issued vide memo no. 639 dated 17.7.2006 by the executive engineer, national highway division, aurangabad by which the contract awarded to the petitioner has been rescinded and the security money has been forfeited. consequently, the petitioner also seeks a relief for a direction upon the respondents to allow it to complete the work subject to execution of supplementary agreement making provision for enhancement of the rate and also for metal work and further for a direction upon the respondents to make payments for the works executed by the petitioner fortnightly as per agreement.3. the case of the petitioner is that in the year 2005 pursuant to a tender for construction of irqp work in national highway no. 98 between kilometer 89 to 127.52, the petitioner approached the office of the executive engineer for purchasing the bill of quantity (boq in short) but on account of strike of the non-gazetted employees of the state government, the office was found locked and it could not obtain the same. on learning that the executive engineer was selling the same surreptitiously to his favoured persons, rather only one person, it challenged the said action by filing cwjc no. 2079/2005 which was dismissed by order dated 9.3.2005 but on challenge to the same in lpa no. 310/2005, the same was allowed by order dated 13.4.2005 and this court finding that the tender papers were submitted by only two tenderers, who were related to each other directed that a fresh auction be held in the public interest on the basis of fresh advertisement inviting tender. pursuant to the said re-advertisement the petitioner also filed tender and ultimately it succeeded in the same and the financial bid was also opened on 6.7.2005 in which the petitioner participated along with another tenderer and it was found to be the lowest tenderer. however, the matter was not finalised by the authorities for reasons which have not been explained by them and ultimately the petitioner was informed by letter dated 31/12/2005 of the executive engineer that the department had decided to allot the work in its favour. the petitioner appeared before the executive engineer along with a copy of letter dated 12.1.2006 making certain objections on account of delay, as a result of which the rate of the bitumen had increased and the condition of the road had also deteriorated for which some repairing work was necessary and accordingly, it claimed that the valuation of the tender should be enhanced. it is stated that certain verbal assurance were given to the petitioner but the same does not find place in the work order that was issued to it by letter no. 111 dated 2.2.2006 (annexure-7 series) and formal agreement was also signed on that day.4. it is alleged by the petitioner that it had started work immediately thereafter but the executive engineer having a biased attitude towards the petitioner from very beginning on 25.2.2006 wrote to the petitioner alleging that the petitioner is not executing the work as per the specification provided in the agreement. similar letter was again given on 16.3.2006. the petitioner gave a detailed reply vide letter dated 6.4.2006 stating therein about the delayed supply of bitumen and that after receipt of the same it had started executing the work and by the end of march 2006, it had completed the work for a value of rs. 40 lacs for which bill has been submitted but no payment, had been received. the petitioner also learnt that the sanction/approval period of the job has already expired as per the sanction letter issued by the ministry of surface transport, government of india but it had been kept in dark about the same. the petitioner again reiterated the objections that it had made by its letter dated 12.1.2006 claiming enhancement of the amount of agreement. the said letter of the petitioner was replied by the executive engineer by letter dated 7.4.2006 in which the petitioner was informed that it had to complete 50% of the works by march, 2006 as per the terms of the agreement but it had completed the work only to the extent of 10% of the same and accordingly it was warned to complete the work according to the agreement otherwise necessary action would be taken against it in accordance with law. this was replied by the petitioner and a series of correspondences continued between the petitioner-company and the executive engineer in this regard. ultimately, the petitioner was communicated that it was decided by letter dated 18.5.2006 (annexure-13) of the executive engineer that the sanction of additional quantity and additional amount for the work in question is under consideration and as soon as the sanction is obtained, information would be given to the petitioner. this was also replied by the petitioner.5. thereafter by letter dated 21.6.2006 the petitioner was informed that in spite of warning given by the department it has not shown any progress in the work and stopped the execution of the work and therefore, the department has taken a decision to close the agreement after taking final measurement and to take necessary action against it in terms of the department's rule and the agreement, requesting it to be present on the date fixed for final measurement on 3.7.2006. the petitioner however, did not turn up for the final measurement and it replied to the said letter by a detailed application dated 30.6.2006. thereafter, by the impugned letter dated 17.7.2006 (annexure-17), the petitioner was finally informed about the decision of the department to rescind the contract and further to forfeit the security deposit given by it and also to realise the additional expenditure to be incurred in completing the work from it in terms of clauses 3(a) and (c) of the agreement.6. learned counsel for the petitioner submitted that from the aforesaid catalog of events it is evident that the respondent-executive engineer was personally biased against the petitioner and he was bent upon to create a situation by which the petitioner would not be able to fulfil the terms of the contract and the same would be rescinded. in this regard he also referred to the fact as mentioned in the letter dated 12.1.2006 of the petitioner, referred to above, that for the previous period also the petitioner had been given a contract for repair and maintenance of the same stretch of road for which he had submitted a bill of rs. 24 lacs but apart from payment of rs. 3 lacs the remaining amount, has not been paid at the instance of the said executive engineer.7. so far as the allegation of bias and malafide against the then executive engineer is concerned, this court does not find that he has been made a party by name in the case and thus, no such issue can be considered in the present matter. moreover, mala fides has to be proved by clear facts and the same has not been done. merely by making allegations of mala fide, a charge cannot be proved as has been laid down in several decisions of the apex court and this court. the charge of mala fide has to be specifically proved and mere allegation cannot amount to mala fide.8. the main contention of the learned counsel for the petitioner however, is that the impugned order dated 17.7.2006 visits it with serious civil consequences and thus it was imperative upon the respondents to issue show cause notice to the petitioner and give it an opportunity of hearing before passing such an order and since the same has not been done, it is submitted by the learned counsel that the said order ought to be quashed as being in violation of the principles of natural justice. the further submission of the learned counsel is that there cannot be any automatic forfeiture on the rescission of the contract and passing any such order of forfeiture and the further order with regard to realization of the extra expenditure on the completion of work from the petitioner could only have been passed by issuing separate show cause in that regard to the petitioner and after hearing it in the matter. since the same has not been done therefore, the impugned order is bad on that account also.9. in this regard learned counsel 'specifically refers to the fact that repeated pleas before the authorities by the petitioner to enhance the amount on account of the condition of the national highway having deteriorated due to delay committed in awarding the contract to the petitioner by the authorities, fell on deaf ears, whereas by order dated 11.9.2006 issued by the road construction department, the fresh contract had been awarded to m/s. ram briksha singh, jai prakash nagar, karma road, aurangabad at the total amount of rs. 4,99,04,577 which is 2.5% above the estimated cost as per the boq that was fixed in the fresh tender and rs. 1.6 crore higher than the agreement entered into with the petitioner. it is submitted that the same contractor was the other bidder along with the petitioner and it had bid for an amount which was 10% less than the bill of quantity fixed in the earlier tender i.e., rs. 3.99 crores, whereas the petitioner had bid for an amount 15% less than said boq. it is submitted that the whole matter has been manipulated by the executive engineer to favour the said contractor and there is no justification in the huge difference of contract which has been awarded at the cost of this petitioner whereas the nominal increase sought by the petitioner was not being considered by the authorities which had caused delay in fulfillment of the terms of the contract.10. learned government advocate, on the other hand, submitted that the petitioner itself had applied against the tender at the aforesaid rate and was awarded the contract at the rate quoted by it and it was not open to it to raise any dispute with regard to the said rate at later stage. in fact, even though there was some delay in the issuance of the final work order but the petitioner after raising objections on 12.1.2006 had ultimately accepted the contract on 2.2.2006 on the same terms and conditions as has been given by it in its tender and thus it was not open to it to raise any such dispute regarding the enhancement, that too, immediately after it took over the execution of the contract. it is further submitted that the petitioner took no interest in executing the contract for which it was reminded in february and thereafter in march, april and may and again several warnings were given. instead of completing 50% of the works by march, 2006 it could complete less than 7 per cent of the works and even after repeated warning in the month of may, the petitioner did not re-start the work after march, 2006 and under those circumstances, the department had no alternative except to rescind the agreement that had been made with it. it is further submitted by the learned counsel that for such a decision a formal show cause notice was not required to be issued to the petitioner as it was being regularly informed about non-compliance of the terms and conditions of the contract and by letter dated 18.5.2006 it was clearly told to comply with the terms of the agreement, otherwise action would be taken for putting the same to an end in terms of the agreement. the petitioner was further informed that with regard to the damages sustained to the roads the matter of sanction of additional amount was under consideration, the moment it is approved, the sanction will be given to it. learned counsel further submits that the petitioner was clearly informed that so far as about 28 km road is concerned, there was no hindrance at all to the completion of the work over the same since the same was not damaged, yet the petitioner was not taking any step for completing the work there. in these circumstances, learned counsel submits that the petitioner was duly informed about all steps to comply with the conditions of the agreement and it was not taken by surprise when it was informed about the order dated 26.6.2006 (annexure-6) regarding the decision of the government to close the contract and to take other action against it in accordance with law to which it had also replied by letter dated 30.6.2006 and ultimately, after considering its response to the various letters issued by the department, the order dated 17.7.2006 (annexure-17) has been passed. thus, in the said circumstances, it is submitted that it cannot be stated that the petitioner has been taken by surprise and it had not been given an opportunity to explain the matter that is required under the principles of natural justice and therefore no formal show cause notice was required to be issued in the facts and circumstances of the case.11. on a consideration of the aforesaid facts and circumstances and the rival submissions made on behalf of the parties, this court is of the view that the petitioner was at all times made aware of the lack of progress made by it with respect to the execution of the work under the agreement and it had been repeatedly warned also in this regard. since the petitioner even after its objection taken on 12.1.2006, had ultimately agreed to the terms of the final work order by entering into an agreement with the department on 2.2.2006, it was not open to it to immediately thereafter raise objections and not to proceed with the work as was required and within the time schedule fixed in terms of the agreement. there can be no justification for the petitioner in not completing even 7% of the work specially when in terms of the agreement it was required to complete 50% of the same by march, 2006. it was not open to the petitioner to stop the work altogether after march, 2006 when under the terms of the contract it was required to complete the entire work within a period of six months. the said facts had been brought to the knowledge of the petitioner continuously in series of correspondences starting from 25.2.2006 itself till 18.5.2006 and thus it is not open to the petitioner to say that it was not given an opportunity of being heard in the matter before order of rescission of contract was passed against it, since at different stages the petitioner had filed a detailed reply to the letters issued by the executive engineer and thus, it must be assumed that whatever it had to say in the matter it had already said before the departmental authorities and no further opportunity of hearing was required. thus, there is no non-compliance of the principles of natural justice so far as the rescission of the contract is concerned.12. however, with respect to forfeiture of the security deposit as also that part of the order wherein it has been stated that in terms of clause 3(c) of the agreement, whatever additional expenditure is made in completing the remaining part of the work it will be realised from the petitioner, learned counsel for the petitioner has rightly relied upon a division bench decision of this court in the case of kudrat ali v. state of bihar and ors. : air1973pat111 . the said decision arose out of the provisions of the bihar excise act in which it was provided that on cancellation of a licence the holder of the licence shall not be entitled to the refund of any deposit made in respect thereof. it is clearly laid down in the said decision that even if the petitioner is not entitled to a refund of security deposit in respect of licence, he is surely entitled to a notice when the order to that effect is proposed. in the present matter also though there is a provision under the agreement for forfeiture of the security deposit as also for realization of additional expenditure from the contractor, with respect to the remaining work, yet for passing any such order, the petitioner was certainly entitled to proper show cause notice giving details as to what extra expenditure is to be incurred which the petitioner would be required to meet. in the present matter it is all the more necessary in view of the fresh contract for the remaining work which has been awarded at nearly 50% above the amount on which the contract had been awarded to the petitioner that too within a period of 7 months from the date on which the agreement was entered into with the petitioner and after nearly a period of one year from the date of earlier tender. moreso, in the said tender also the new awardee of the contract also participated and had agreed to do the entire work at an amount, as compared to which the present total amount of the agreement entered into with him is nearly 40% higher that what had been awarded earlier. there is no explanation given by the department as to how within such a short period the amount of agreement has been enhanced by such a huge amount. under such circumstances, the entire liability cannot be fastened upon the petitioner unilaterally and it was obligatory on the department to have given a due show cause notice to the petitioner and pass an order fixing its liability only after considering its reply to the same and giving it an opportunity of being heard.13. in the aforesaid facts and circumstances, this writ application is partly allowed and the order dated 17.7.2006 is quashed to the extent that so far as the order regarding forfeiture of security deposit and the payment of the difference of expenditure in completion of remaining work is concerned, the petitioner shall be entitled to a fresh show cause notice with respect to the same and only after considering his reply and giving him an opportunity of being heard, final orders in that regard shall be passed by the competent authority.14. by orders of this court, the authorities had been directed to take a re-measurement of the works in presence of the petitioner which was admittedly taken on 20.11.2006, but the details of the same had not been provided to the petitioner. the authorities are accordingly directed to provide the details to the petitioner within four weeks to enable him to file a representation regarding any additional amount that may be due to it on the basis of such re-measurement and the said representation shall also be disposed of by the authorities within a period of two months after receipt of the same and if any further amount is due to the petitioner the same should also be paid to it within the said period.

Judgment:

Ramesh Kumar Datta, J.

1. Heard Mr. Y.V. Giri, learned Senior counsel along with Mr. Raj Kishore Prasad, Advocate for the petitioner, Learned Government Advocate No. 9, for the State and Mr. Rakesh Kumar Singh, learned Central Government Counsel, for the Union of India.

2. The petitioner seeks quashing of the office order No. 22/2006 issued vide memo No. 639 dated 17.7.2006 by the Executive Engineer, National Highway Division, Aurangabad by which the contract awarded to the petitioner has been rescinded and the security money has been forfeited. Consequently, the petitioner also seeks a relief for a direction upon the respondents to allow it to complete the work subject to execution of supplementary agreement making provision for enhancement of the rate and also for metal work and further for a direction upon the respondents to make payments for the works executed by the petitioner fortnightly as per agreement.

3. The case of the petitioner is that in the year 2005 pursuant to a tender for construction of IRQP work in National Highway No. 98 between Kilometer 89 to 127.52, the petitioner approached the office of the Executive Engineer for purchasing the bill of quantity (BOQ in short) but on account of strike of the non-gazetted employees of the State Government, the office was found locked and it could not obtain the same. On learning that the Executive Engineer was selling the same surreptitiously to his favoured persons, rather only one person, it challenged the said action by filing CWJC No. 2079/2005 which was dismissed by order dated 9.3.2005 but on challenge to the same in LPA No. 310/2005, the same was allowed by order dated 13.4.2005 and this Court finding that the tender papers were submitted by only two tenderers, who were related to each other directed that a fresh auction be held in the public interest on the basis of fresh advertisement inviting tender. Pursuant to the said re-advertisement the petitioner also filed tender and ultimately it succeeded in the same and the financial bid was also opened on 6.7.2005 in which the petitioner participated along with another tenderer and it was found to be the lowest tenderer. However, the matter was not finalised by the authorities for reasons which have not been explained by them and ultimately the petitioner was informed by letter dated 31/12/2005 of the Executive Engineer that the Department had decided to allot the work in its favour. The petitioner appeared before the Executive Engineer along with a copy of letter dated 12.1.2006 making certain objections on account of delay, as a result of which the rate of the bitumen had increased and the condition of the road had also deteriorated for which some repairing work was necessary and accordingly, it claimed that the valuation of the tender should be enhanced. It is stated that certain verbal assurance were given to the petitioner but the same does not find place in the work order that was issued to it by letter No. 111 dated 2.2.2006 (Annexure-7 series) and formal agreement was also signed on that day.

4. It is alleged by the petitioner that it had started work immediately thereafter but the Executive Engineer having a biased attitude towards the petitioner from very beginning on 25.2.2006 wrote to the petitioner alleging that the petitioner is not executing the work as per the specification provided in the agreement. Similar letter was again given on 16.3.2006. The petitioner gave a detailed reply vide letter dated 6.4.2006 stating therein about the delayed supply of bitumen and that after receipt of the same it had started executing the work and by the end of March 2006, it had completed the work for a value of Rs. 40 lacs for which bill has been submitted but no payment, had been received. The petitioner also learnt that the sanction/approval period of the job has already expired as per the sanction letter issued by the Ministry of Surface Transport, Government of India but it had been kept in dark about the same. The petitioner again reiterated the objections that it had made by its letter dated 12.1.2006 claiming enhancement of the amount of agreement. The said letter of the petitioner was replied by the Executive Engineer by letter dated 7.4.2006 in which the petitioner was informed that it had to complete 50% of the works by March, 2006 as per the terms of the agreement but it had completed the work only to the extent of 10% of the same and accordingly it was warned to complete the work according to the agreement otherwise necessary action would be taken against it in accordance with law. This was replied by the petitioner and a series of correspondences continued between the petitioner-company and the Executive Engineer in this regard. Ultimately, the petitioner was communicated that it was decided by letter dated 18.5.2006 (Annexure-13) of the Executive Engineer that the sanction of additional quantity and additional amount for the work in question is under consideration and as soon as the sanction is obtained, information would be given to the petitioner. This was also replied by the petitioner.

5. Thereafter by letter dated 21.6.2006 the petitioner was informed that in spite of warning given by the Department it has not shown any progress in the work and stopped the execution of the work and therefore, the department has taken a decision to close the agreement after taking final measurement and to take necessary action against it in terms of the department's rule and the agreement, requesting it to be present on the date fixed for final measurement on 3.7.2006. The petitioner however, did not turn up for the final measurement and it replied to the said letter by a detailed application dated 30.6.2006. Thereafter, by the impugned letter dated 17.7.2006 (Annexure-17), the petitioner was finally informed about the decision of the Department to rescind the contract and further to forfeit the security deposit given by it and also to realise the additional expenditure to be incurred in completing the work from it in terms of Clauses 3(a) and (c) of the agreement.

6. Learned Counsel for the petitioner submitted that from the aforesaid catalog of events it is evident that the respondent-Executive Engineer was personally biased against the petitioner and he was bent upon to create a situation by which the petitioner would not be able to fulfil the terms of the contract and the same would be rescinded. In this regard he also referred to the fact as mentioned in the letter dated 12.1.2006 of the petitioner, referred to above, that for the previous period also the petitioner had been given a contract for repair and maintenance of the same stretch of road for which he had submitted a bill of Rs. 24 lacs but apart from payment of Rs. 3 lacs the remaining amount, has not been paid at the instance of the said Executive Engineer.

7. So far as the allegation of bias and malafide against the then Executive Engineer is concerned, this Court does not find that he has been made a party by name in the case and thus, no such issue can be considered in the present matter. Moreover, mala fides has to be proved by clear facts and the same has not been done. Merely by making allegations of mala fide, a charge cannot be proved as has been laid down in several decisions of the Apex Court and this Court. The charge of mala fide has to be specifically proved and mere allegation cannot amount to mala fide.

8. The main contention of the learned Counsel for the petitioner however, is that the impugned order dated 17.7.2006 visits it with serious civil consequences and thus it was imperative upon the respondents to issue show cause notice to the petitioner and give it an opportunity of hearing before passing such an order and since the same has not been done, it is submitted by the learned Counsel that the said order ought to be quashed as being in violation of the principles of natural justice. The further submission of the learned Counsel is that there cannot be any automatic forfeiture on the rescission of the contract and passing any such order of forfeiture and the further order with regard to realization of the extra expenditure on the completion of work from the petitioner could only have been passed by issuing separate show cause in that regard to the petitioner and after hearing it in the matter. Since the same has not been done therefore, the Impugned order is bad on that account also.

9. In this regard learned Counsel 'specifically refers to the fact that repeated pleas before the authorities by the petitioner to enhance the amount on account of the condition of the national highway having deteriorated due to delay committed in awarding the contract to the petitioner by the authorities, fell on deaf ears, whereas by order dated 11.9.2006 issued by the Road Construction Department, the fresh contract had been awarded to M/s. Ram Briksha Singh, Jai Prakash Nagar, Karma Road, Aurangabad at the total amount of Rs. 4,99,04,577 which is 2.5% above the estimated cost as per the BOQ that was fixed in the fresh tender and Rs. 1.6 crore higher than the agreement entered into with the petitioner. It is submitted that the same contractor was the other bidder along with the petitioner and it had bid for an amount which was 10% less than the bill of quantity fixed in the earlier tender i.e., Rs. 3.99 crores, whereas the petitioner had bid for an amount 15% less than said BOQ. It is submitted that the whole matter has been manipulated by the Executive Engineer to favour the said contractor and there is no justification in the huge difference of contract which has been awarded at the cost of this petitioner whereas the nominal increase sought by the petitioner was not being considered by the authorities which had caused delay in fulfillment of the terms of the contract.

10. Learned Government Advocate, on the other hand, submitted that the petitioner itself had applied against the tender at the aforesaid rate and was awarded the contract at the rate quoted by it and it was not open to it to raise any dispute with regard to the said rate at later stage. In fact, even though there was some delay in the issuance of the final work order but the petitioner after raising objections on 12.1.2006 had ultimately accepted the contract on 2.2.2006 on the same terms and conditions as has been given by it in its tender and thus it was not open to it to raise any such dispute regarding the enhancement, that too, immediately after it took over the execution of the contract. It is further submitted that the petitioner took no interest in executing the contract for which it was reminded in February and thereafter in March, April and May and again several warnings were given. Instead of completing 50% of the works by March, 2006 it could complete less than 7 per cent of the works and even after repeated warning in the month of May, the petitioner did not re-start the work after March, 2006 and under those circumstances, the Department had no alternative except to rescind the agreement that had been made with it. It is further submitted by the learned Counsel that for such a decision a formal show cause notice was not required to be issued to the petitioner as it was being regularly informed about non-compliance of the terms and conditions of the contract and by letter dated 18.5.2006 it was clearly told to comply with the terms of the agreement, otherwise action would be taken for putting the same to an end in terms of the agreement. The petitioner was further informed that with regard to the damages sustained to the roads the matter of sanction of additional amount was under consideration, the moment it is approved, the sanction will be given to it. Learned Counsel further submits that the petitioner was clearly informed that so far as about 28 KM road is concerned, there was no hindrance at all to the completion of the work over the same since the same was not damaged, yet the petitioner was not taking any step for completing the work there. In these circumstances, learned Counsel submits that the petitioner was duly informed about all steps to comply with the conditions of the agreement and it was not taken by surprise when it was informed about the order dated 26.6.2006 (Annexure-6) regarding the decision of the Government to close the contract and to take other action against it in accordance with law to which it had also replied by letter dated 30.6.2006 and ultimately, after considering its response to the various letters issued by the Department, the order dated 17.7.2006 (Annexure-17) has been passed. Thus, in the said circumstances, it is submitted that it cannot be stated that the petitioner has been taken by surprise and it had not been given an opportunity to explain the matter that is required under the principles of natural justice and therefore no formal show cause notice was required to be issued in the facts and circumstances of the case.

11. On a consideration of the aforesaid facts and circumstances and the rival submissions made on behalf of the parties, this Court is of the view that the petitioner was at all times made aware of the lack of progress made by it with respect to the execution of the work under the agreement and it had been repeatedly warned also in this regard. Since the petitioner even after its objection taken on 12.1.2006, had ultimately agreed to the terms of the final work order by entering into an agreement with the department on 2.2.2006, it was not open to it to immediately thereafter raise objections and not to proceed with the work as was required and within the time schedule fixed in terms of the agreement. There can be no justification for the petitioner in not completing even 7% of the work specially when in terms of the agreement it was required to complete 50% of the same by March, 2006. It was not open to the petitioner to stop the work altogether after March, 2006 when under the terms of the contract it was required to complete the entire work within a period of six months. The said facts had been brought to the knowledge of the petitioner continuously in series of correspondences starting from 25.2.2006 itself till 18.5.2006 and thus it is not open to the petitioner to say that it was not given an opportunity of being heard in the matter before order of rescission of contract was passed against it, since at different stages the petitioner had filed a detailed reply to the letters issued by the Executive Engineer and thus, it must be assumed that whatever it had to say in the matter it had already said before the departmental authorities and no further opportunity of hearing was required. Thus, there is no non-compliance of the principles of natural justice so far as the rescission of the contract is concerned.

12. However, with respect to forfeiture of the security deposit as also that part of the order wherein it has been stated that in terms of Clause 3(c) of the agreement, whatever additional expenditure is made in completing the remaining part of the work it will be realised from the petitioner, learned Counsel for the petitioner has rightly relied upon a Division Bench decision of this Court in the case of Kudrat Ali v. State of Bihar and Ors. : AIR1973Pat111 . The said decision arose out of the provisions of the Bihar Excise Act in which it was provided that on cancellation of a licence the holder of the licence shall not be entitled to the refund of any deposit made in respect thereof. It is clearly laid down in the said decision that even if the petitioner is not entitled to a refund of security deposit in respect of licence, he is surely entitled to a notice when the order to that effect is proposed. In the present matter also though there is a provision under the agreement for forfeiture of the security deposit as also for realization of additional expenditure from the contractor, with respect to the remaining work, yet for passing any such order, the petitioner was certainly entitled to proper show cause notice giving details as to what extra expenditure is to be incurred which the petitioner would be required to meet. In the present matter it is all the more necessary in view of the fresh contract for the remaining work which has been awarded at nearly 50% above the amount on which the contract had been awarded to the petitioner that too within a period of 7 months from the date on which the agreement was entered into with the petitioner and after nearly a period of one year from the date of earlier tender. Moreso, in the said tender also the new awardee of the contract also participated and had agreed to do the entire work at an amount, as compared to which the present total amount of the agreement entered into with him is nearly 40% higher that what had been awarded earlier. There is no explanation given by the Department as to how within such a short period the amount of agreement has been enhanced by such a huge amount. Under such circumstances, the entire liability cannot be fastened upon the petitioner unilaterally and it was obligatory on the Department to have given a due show cause notice to the petitioner and pass an order fixing its liability only after considering its reply to the same and giving it an opportunity of being heard.

13. In the aforesaid facts and circumstances, this writ application is partly allowed and the order dated 17.7.2006 is quashed to the extent that so far as the order regarding forfeiture of security deposit and the payment of the difference of expenditure in completion of remaining work is concerned, the petitioner shall be entitled to a fresh show cause notice with respect to the same and only after considering his reply and giving him an opportunity of being heard, final orders in that regard shall be passed by the competent authority.

14. By orders of this Court, the authorities had been directed to take a re-measurement of the works in presence of the petitioner which was admittedly taken on 20.11.2006, but the details of the same had not been provided to the petitioner. The authorities are accordingly directed to provide the details to the petitioner within four weeks to enable him to file a representation regarding any additional amount that may be due to it on the basis of such re-measurement and the said representation shall also be disposed of by the authorities within a period of two months after receipt of the same and if any further amount is due to the petitioner the same should also be paid to it within the said period.