SANJAY KISHAN KAUL,J. - (1.) South Eastern Coalfields Ltd., appellant no.1 is a Government company registered under the Companies Act, 1956. The appellant no.1 floated a tender for the work of "Hiring of HEMM and allied equipments including digging machines fitted suitable slump breaker for excavating overburden (including drilling in all kinds of strata/overburden) loading into tipples, transportation, unloading the extra waited material and silt, dumping dozing scrapping/removal bands preparation/maintenance of haul road water sprinkling and spreading of material at the site shown and as per direction of the management/Engineer In Charge of Patch-D, Mahan I OCM of Bhatgaon Area" on 23.06.2009. Bids were received and respondent was the successful bidder. In view thereof a Letter of Intent ('LoI') was issued bearing No.2415 dated 05.10.2009 awarding the contract for a total work of Rs.387.40 lakh. The LoI stated as under: i. A direction was made to the respondents to mobilize equipment for executing the work to handle minimum allotted Cu.m. per day and "commence the work immediately." Towards the said objective the respondent was directed to report to the Chief General Manager, Bhatgaon Area for "immediate commencement of work." ii. The respondent was called upon to deposit Performance Security Deposit for a sum total to 5% of annualized contract amount within 28 days from the date of receipt of the LoI as per the provisions of the tender document. iii. Sign the Integrity Pact before entering into the agreement in accordance with the tender document. iv. The work order would be issued and the agreement would be executed at the Area Office. v. The date of commencement of work may be intimated to the issuing office and agreement may be concluded within 28 days as per the provisions of the tender document.
(2.) The respondent, in pursuance of the LoI, mobilized resources at site and a measurement team was sent by appellant no.1 as intimated vide letter dated 09.10.2009. On 28.10.2009, the appellant issued a letter of site handover/acceptance certificate, which was to be taken as the date of commencement of the work.
(3.) The respondent apparently faced difficulties soon thereafter and the letter dated 05.12.2009 of the respondent records that though the work was started in all earnest and considerable quantity of overburden had been removed, the truck mounted drill machine employed by the respondent suffered a major breakdown. The work, thus, had to be suspended for reasons beyond the control of the respondent. The endeavour to rectify the position or arrange alternative machinery did not work out and the letter states that the purchase of new machines was expected only after about three months. The contractual relationship apparently deteriorated as on 09.12.2009, the appellants issued a letter alleging breach of terms of contract and rules and regulations applicable by the respondent. The appellant further asked the respondent to show cause as to why penal action be not initiated of - (a) termination of work; (b) blacklisting of the respondent company; and (c) award of execution of work to other contractor at the cost and risk of the respondent.;