Earnest Money | PROFORMA | Earnest money Refund

Earnest Money

 

The earnest moneyfor tenders other than turnkey should be 2% (Two percent) of the estimated value of work (without ceiling) to be deposited in the form of Bank Draft from Nationalized Banks. However, for work valued up to Rs. 5 lakhs the earnest money depositedin cash or in aforesaid form. The earnest money shall bear no interest and shall be earnest money refunded to the unsuccessful tenderers after finalization of tender and award of work. Earnest money deposit in the form of Bank Draft shall be deposited to the associated Accounts Department. Earnest money refunded to the unsuccessful tenderers.

 

For turnkey contract Earnest Money deposited in the form of Bank Draft up to Rs.05 lakhs and the balance amount, if any, is to be deposited either in the form of Bank Draft or Bank Guarantee from amongst any of the list of Banks to be provided in the bid document.

On receipt of Bank Guarantee, an independent reference shall be made to the issuing Bank for confirming the issue of BG. The BG shall be kept under the custody of accounts Department passing the bills. The record of BGs shall also be maintained in the Office of SO(C)/CE(C) for monitoring the validity and timely renewal.

 

 

PROFORMA OF BANK GUARANTEE IN LIEU OF EARNEST MONEY.

 

APPENDIX-29

( Ref. Cl. 4.06 )

 

PROFORMA OF BANK GUARANTEE IN LIEU OF EARNEST MONEY.

 

M/s. company name

Company add

state

Or

………………………………………………….

(Name of the Subsidiary Company with address).

 

Dear Sir,

 

In consideration of The……………………………….having its Registered Office at ……………………………… (hereinafter called “the Company” which expression shall unless repugnant to the subject or context includes its successors and assigns) having agreed to exempt M/s……………………….. having its Registered Office at ………………………. (hereinafter called “the said tenderers” which expression shall unless repugnant to the subject or context includes its successors and assigns) from the demand under the terms and conditions of Tender No…………….. for ……………….. (hereinafter called “the said Tender”) of each earnest money for the due fulfillment of the terms and conditions contained in the said Tender by the said Tenderer on production of Bank guarantee for Rs………………….). We ……………….. Bank (hereinafter referred to as “the Bank”) do hereby undertake to pay to the company an amount not exceeding Rs……………….on demand by the company for the reason of any breach by the Tenderer of any of the terms and conditions contained in the said Tender. The decision of the company as to any such breach having been committed by the Tenderer shall be final and binding on us.

 

2. We, ……………. Bank do hereby undertake to pay an amount due and payable under this guarantee without any demur merely on a demand from the company stating that the amount claimed is due from the tenderer for the reason of breach by the said tenderer of any of the terms and conditions contained in the said Tender or for the reason of the Tenderer failing to keep the Tender open. Any such demand made on the Bank shall be conclusive. As regard the amount due and payable by the Bank under this Guarantee shall be restricted to an amount not exceeding Rs………………..

 

3. We, the said Bank further agree that the Guarantee herein contained shall come into force from the date hereof and shall remain in full force and effect till a demand or claim under this Guarantee is made on us in writing on or before the …………………………. We shall discharge from all liability under this Guarantee thereafter.

 

4. We, the said Bank lastly undertake not to revoke this Guarantee during its currency except with the previous consent of the company in writing and agree that any change in the constitution of the said Tenderer or the Bank shall not discharge our liability hereunder.

 

5. This guarantee is issued by Sri ……………………….. who is authorized by the Bank.

 

 

 

 

 

Under jurisdiction of …………………………… court only.

 

Fig - PROFORMA OF BANK GUARANTEE IN LIEU OF EARNEST MONEY

Earnest money Refund

 

 

The earnest money refundedto the unsuccessful bidders on finalization of the award or on rejection of his bid or at the expiry of the validity period of the tender (unless extended), whichever is earlier. Earnest money refunded without waiting for any application or request from unsuccessful bidders. The Earnest money of the successful bidder will be retained by the department as part of the security deposit for due fulfilment of the contract and will not carry any interest.

 

 

Forfeiture of Earnest Money

 

According to prevalent standard practice Earnest Money is paid by each tenderers to enable the company to ensure that a tenderer does not refuse to execute the work after it has been awarded to him. In cases where the tenderer fails to commence the work latest within one month of award of the work or within one month of handing over site, whichever is earlier, the Earnest Money shall be absolutely forfeited to the company. In case, where decision has been taken to forfeit earnest money of the tenderer for valid reasons, it is necessary to issue requisite notice to defaulting contractor.

 

 

Exemption of Earnest Money

 

The tenders shall be treated valid when it carries requisite earnest moneyand the tenders without Earnest Money shall be rejected out right except in such cases where prior approval for exemption has been granted by CMD of the Subsidiary Company or Chairman, CIL.