As stipulated in Clause 1 of Contract, Performance Guarantee is to be obtained from the successful tenderer at 5% of the tendered amount. This is meant to ensure proper performance of the Contract and is to be deposited by the Contractor within the period from date of issue of Letter of Acceptance as indicated in Schedule F. The Performance Guarantee shall be in the form of F.D. Receipts or Guarantee Bond / B.G. of any Scheduled Bank in accordance with the format stipulated in Clause 1 of the Contract. In case a F.D Receipt of any Bank is furnished and the Bank is unable to make payments, the loss caused thereby shall fall on the Contractor who shall make good the deficit by additional Security.
10.1A Recovery of additional Performance Guarantee
The successful Tenderer is also to deposit Additional Performance Guarantee in case of unbalanced bid as explained in para 8.9.2.2. This will also be in the same form as normal Performance Guarantee and deposited within the same time limit.
10.1B It should be ensured that in the Tender Document a specific reference is made to the effect that Bank Guarantee or F.D Receipts will not be acceptable from Banks who have been blacklisted by RITES or with whom business dealings have been banned / suspended by RITES. The details of such Banks should also be clearly mentioned in the Tender Document.
10.2 VALIDITY OF PERFORMANCE GUARANTEE
They shall be valid initially up to the stipulated date of completion plus 60 days beyond that. In case the completion period gets extended, the validity of the Performance Guarantee shall also be extended accordingly.
10.3 CLAIM UNDER PERFORMANCE GUARANTEE
The circumstances under which the Engineer in charge can make claim against the Performance Guarantees have been given in Para (iv) of Clause 1 of Contract. In case of such claims, in the event of available Performance Guarantee getting reduced by reason of such deduction or sale, the Contractor shall within 10 days make good the deficiency to be valid for the same period as mentioned in Para 10.2.
10.4 REFUND OF PERFORMANCE GUARANTEE
Soon after recording of the Provisional Certificate of Physical Completion for the works under Clause 8 of Contract by the Competent Authority, the Guarantee will be returned to the Contractor without interest.
Additional Performance Guarantee can be refunded earlier if the unbalanced items for which such additional Guarantee had been demanded, are completed to the satisfaction of the Engineer-in-charge.
10.5 RECOVERY OF SECURITY DEPOSIT
As stipulated in Clause 1A of Contract, the Security Deposit shall be deducted at 5% of the gross amount of each Running bill till the sum along with the sum already deposited as Earnest Money will amount to Security Deposit of 5% of the Tendered Value of work. Earnest Money shall be adjusted first in the Security Deposit and further recovery of Security Deposit shall commence only when the upto date amount of SD to be recovered starts exceeding the available Earnest Money. Such deductions will be made and held by RITES by way of Security Deposit, unless the Contractor has deposited the amount of Security at the rate mentioned above in cash or FD Receipts. In case of Bank FDs, if the Bank is unable to make payment, the loss caused shall fall on the Contractor who forthwith on demand shall furnish additional security to make good the deficit. Security Deposit shall not be accepted in the form of Bank Guarantee.
10.6 CLAIMS UNDER SECURITY DEPOSIT
The items for which RITES can claim on the Security Deposit have been given in Clause 1A of Contract. In the event of Security Deposit being reduced on account of the claim, the Contractor shall, within 10 days, make good the deficiency in cash or FD receipts endorsed in favour of Engineer in charge.
10.7 VALIDITY PERIOD OF SECURITY DEPOSIT AND REFUND
10.7.1 On completion of the whole work and issue of Final Completion Certificate, the Security Deposit may be released against B.G. issued by a Scheduled Bank. The Security Deposit will be refunded in terms of Clause 17 of Contract which shall be after the expiry of 12 months or the period as specified in the Works Contract, of Maintenance period counted from the date of issue of Completion Certificate (Final or otherwise) under Clause 8 of Contract or after the Final Bill has been prepared and passed, whichever is later. Release of Security Deposit will also be subject to Labour Officer’s clearance as per Clause 45 of Contract and State Govt. clearance as per Clause 45A of Contract.
10.7.2 Refund of security Deposit in cases of delay in final bill
1) Where there is a delay in payment of final bill, the Engineer-in-charge shall make an assessment of the likely recoveries against the contractor, and order release of as much security deposit as possible unless he has reasons to
withhold the release of full security deposit to the contractor. These reasons should be recorded by him in writing.
2) The Engineer in charge shall satisfy himself that the following formalities are completed by all concerned before exercising his discretionary power for part payment of security deposits.
Formalities to be completed by RITES Officers
a) Completion of prescribed test checks of measurements by the Controlling Site Engineer / Project Coordinator.
b) Sanction of extra / substituted items by the competent authority. c) Decision on levy of compensation, etc.
ii) Formalities to be completed by Contractor
a) Acceptance of final measurement recorded by RITES Officers b) Applying for extension of time as and when required immediately.
c) Rectification of defects pointed out by RITES Officers during Maintenance Period.
d) Completion of work in all respects, including clearance of site etc.
e) return of surplus materials issued by the Employer immediately on completion of work or as and when it comes to light.
3) There should be no need for the Contractor to apply for refund of the Security Deposit. The case for refund shall be processed by the Project Coordinator as soon as refund is due.
10.8 MISCELLANEOUS PROVISIONS
10.8.1 Deposits of Contractors including percentage deductions from Contractor’s bills may be converted, at his cost, into one or more of the forms of interest bearing securities provided
i) that the contractor has expressly desired this in writing and
ii) that the acceptance of the new form of security is permissible under the rules as well as under the terms of the agreement.
10.8.2 Repayment / Retransfer of Security Deposit
Without the special orders of competent authority, no Security Deposit / Performance Guarantee should be repaid or re transferred to the depositor, or otherwise disposed off, except in accordance with the terms of the agreement. Note : The depositor’s acknowledgement should be obtained in all cases of
security returned. When an interest bearing security is returned or re-transferred, the acknowledgement should set forth the full particulars of the security.
10.8.3 FDRs as Security Deposit
a) Since Fixed Deposit Receipts are not Government securities there is no objection to their being accepted even if the period for the completion of the work is less than one year. The Fixed Deposit Receipts should be accepted as security when these cover the stipulated period including extended period, if the contract period is extended, plus the Maintenance period mentioned in the contract.
b) Fixed Deposit Receipt tendered by the State Bank of India and Scheduled Banks is acceptable as security. There is, therefore, no objection to the investment by RITES of the amount of security, deducted from the running bills of the contractors in Fixed Deposit Receipts of the State Bank of India and Scheduled Banks at the request of the Contractors.
c) It may, however be seen that the Fixed Deposits Receipt is made out in the name of RITES, though Interest accruing at the time of conversion into BG in terms of Para 10.7 above will be refunded to the Contractor.
10.8.4 Lump sum Deposits, Recoveries and Release
Once the recoveries become due from the Contractor, the same should be effected from the money due to the Contractor either from the same work or from any other work or from the Performance Guarantee / Security Deposit. Action to recover the overpaid amount should not be kept pending or be held in abeyance on account of the case being before the arbitrator. Action in terms of the award can be taken after the award is received and accepted by the competent authority. The recovery of overpaid amounts should be effected as early as possible and the recovery should not be held in abeyance during the pendency of arbitration proceeding.
10.8.5 Time Limit on Claims for Refund of Security Deposit
The claim for refund of security deposit is governed by the Limitation Act. The period of limitation is 3 years commencing from the date the right to due accrues. In the case of Security Deposit paid along with the individual contract, the right to due would accrue under Clause 17 after the expiry of maintenance period or payment of final bill whichever is later.
10.9 REFUND OF SECURITY DEPOSIT - GUARANTEE ON SPECIALISED ITEMS OF WORK The specialised items of work such as anti-termite treatment, waterproofing work, providing kiln seasoned and chemically treated wooden shutters etc., shall be entrusted to specialised firms or registered contractors and the Contractors should be asked to give a specific guarantee that they shall be responsible for removal of any defect cropping up in such works within the guarantee period. The typical form of the guarantee to be executed by the contractors is given vide Annexures 10.1 and 10.2. The Security Deposit should not be refunded till the Guarantee is executed by the Contractor for Specialised Works. The SBU office shall, maintain a register in which all such specialised works carried out in the SBU jurisdiction shall be entered and which shall be reviewed by the SBU Head.
The Register will contain the following heads:- Name of the work:
Date of completion: Specifications in brief: Rate paid:
Name of the firm / or registered contractors:
History of all defects with date when noticed during the guarantee period, till handing over the completed works to the client along with the Guarantee.
The history will help as a ready reference about the efficiency and the quality of the work done by the firm.
10.10 SBU’s RESPONSIBILITY FOR PROMPT REFUND OF SECURITY DEPOSIT AND PERFORMANCE GUARANTEE
In order to avoid delay in the refund of Security Deposit and Performance Guarantee to the Contractors, the Accounts section of SBU Office, should put up to the SBU Head, every month a list of all the cases where the Security Deposit / Performance Guarantee becomes due for refund so that the requisite certificate is immediately obtained by the SBU Head from the Engineer in charge concerned and the Security Deposit or Performance Guarantee refunded without waiting for any application from the Contractor.
SECTION 11
AGREEMENTS / CONTRACTS - ESSENTIAL FEATURES