Indian Railway Codes and Manuals-Stores code- Vol-I-Chapter-4 (IV)
CHAPTER-IV
CONTRACTS
401. General.—The rules in
this chapter apply only to contracts i.e. agreements
enforceable by law, which relate to the execution of works of constructions,
repair or maintenance or to the conveyance of supply of materials. The rules do
not apply to petty purchases of Rs. 1 Lakh and under, in
respect of which General Manager is competent to frame such instructions, as he
may consider necessary.
Note: - (i) The term "General Manager" used in these rules is
deemed to mean besides the General Managers of Railways, D.G., RDSO, Chief
Administrative Officers and Engineer-in-Chief in independent charge, directly
under the Railway Board.
(ii) The terms "Financial Adviser" is
deemed to mean the Accounts Officer.
(Authority Board's letter No.
2008/RS(G)/779/9 dated 06-02-2009).acs no.23 page no. 72
402. The following
fundamental principles are enumerated for the guidance of authorities who have
to enter into contracts or agreements.
(i) The terms of a contract must be
precise and definite and there must be no room for ambiguity or
mis-construction therein.
(ii) As far as possible legal and
financial advice should be taken in the drafting of contracts before they are
finally entered into.
(iii) Standard forms of contracts should
be adopted, wherever possible, the terms to be subject to adequate prior
scrutiny.
(iv) The terms of contract once entered
into should not be materially varied except in consultation with the competent
financial authority.
(v) No contract involving an uncertain or
indefinite liability or any condition or an unusual character should be entered
into without the previous consent of the competent financial authority.
(vi) Whenever practicable and
advantageous, contracts should be placed only after tenders have been openly
invited and in cases where the lowest tender is not accepted, reasons should be
recorded.
(vii) In selecting the tender to be
accepted, the-financial status of the individuals and firms tendering must be
taken into consideration in addition to all other relevant factors.
(viii) Even in cases where a formal
written contract is not made, no order for supplies & c, should be placed
without at the least a written agreement as to price.
(ix) Provision must be made in contracts
for safeguarding governments property entrusted to a contractor.
(x) In entering into long term agreements
or contracts considerations should be given to the desirability of providing
for the railway unconditional power to cancel the agreement at any time after
the expiry of six months' notice to that effect.
(xi) The Auditor-General and under his
direction, other audit authorities have power to examine contracts and to bring
before the Public Accounts Committee any cases where competitive tenders have
not been sought, or where high tenders have been accepted, or where other
irregularities in procedure have come to light.
403. "Lump
Sum "Contracts.—The Lump Sum Contract is a contract under which the
contractor engages to carry out a work or effect supply as specified and within
a given period for a fixed total sum; his receipt of this sum being dependent
on his completing the work or supply to specification and time, irrespective of
the actual quantities and kind of work done or materials supplied in achieving
his result.
404. In the case of such contracts a scale of rates
or prices may be agreed upon by which enhancement of or reduction from the lump
sum may be regulated in the event of any departures from the work or supply as
specified being made subsequently under the orders of competent authority; or
by which reduction may be made, at the discretion of competent authority for
failure on the contractor's part to conform to specification.
405. Schedule Contracts.—The
Schedule Contract is a contract under which the contractor engages to carry out
a work or effect supply as specified
and within a given period at fixed unit rates or prices for each of the various items comprising such
work or supply, the sum he is to receive depending on the actual quantities and
kinds or work done or materials supplied in completing the work or supply to
specification and time. It is not repugnant to the above definition to show in
such contracts the approximate amount of the contract, based on approximate
quantities and the fixed unit rates.
406. Piece-Work Contracts.—
This means a contract under which only unit rates or prices for various kinds
of work or materials are agreed upon, without reference either to the total
quantity of work to be done or material supplied; or to the quantity of work to
be done or material supplied within a given period.
Note.—(i) Agreeable to
the above definition of a price work contract:—
(a) The Railway may indicate
its intention as to the maximum value of the orders it is likely to place; but
the contractor cannot claim to be given an order for more than one unit of work
or supply.
(b) After the contract is
executed, specific orders for work or supply may be placed against it.
(c) The rate of progress
may not be specified; but if it is not satisfactory the contract can be
terminated.
(ii) The "Lump
Sum", "Schedule" and "Piece-work" forms of contract
are primarily intended for application to "Works" contracts.
407. Rate Contracts.—The
Rate Contract is a contract under which, during the period of its currency, the
contractor engages to supply materials on demand, irrespective of quantity, at
fixed unit rates or prices, within a given period of the receipt of such
demand.
408. Running
Contracts.—The Running Contract is one under which, during the period of its
currency the contractor engages to supply, and the other party to the contract
to take, a specified quantity (with a percentage tolerance either way) of
materials, as and when ordered, at fixed unit rates or prices, within a given period
of the receipt of such order.
Note.—The "Rate" and
"Running" forms of contract are primarily intended for application to
"Stores" contracts.
409. " Fixed
Quantity" Contract.—This means a contract for a definite quantity of
materials to be delivered in one or more installments, delivery of each
installment being completed by a definite date.
410. Competency of Authorities to Execute Contracts
.— On behalf of the President of India contracts may be executed only by or
with the approval of the authority empowered so to contract. Such powers are
restricted as to "class" and as to "amount". The competence
of authorities, as to "Class" is determined by the President of India
and is specified in Appendix II to this code. The powers so entrusted may not
be delegated.
411. The competence of
authorities, as to "amount" is determined by the financial powers of
each authority in this respect. The powers so entrusted may be delegated
subject to any restrictions which may be imposed by the Railway Board.
412. Restrictions as to
"amount" shall not prevent an authority from giving out to different
contractors a number of contracts relating to one work, even though the sum of
such contracts may exceed the pecuniary limits of its powers.
413. No authority shall
execute a contract:—
(i) which is beyond its powers as to either
"class " or "amount".,
(ii) which relates to a work, the incurrence of
expenditure or liability on which is not authorised under current rules and
orders regarding control of expenditure.,
(iii) which involves, in respect of the work to
which it relate, an excess over the estimate greater than is within such
authority's competence to sanction;
(iv) any provision of which contravenes any
standing rule or order of higher authority ; provided always that an authority
may sign any contract within its powers as to "class", with the
approval of the authority competent to execute it.
Note.— In cases where materials are supplied by
the railway to the contractor for the execution of a work, the amount of the
contract shall for the purpose of determining the authority competent to
execute it, be taken to be the net amount to be paid to the contractor,
exclusive of the cost or value of the material so supplied.
414. On behalf of the
contractor the signature of only such person or persons as are competent to
bind him legally shall be accepted on a contract.
415. Contract
Documents.—Every contract shall be so framed as to place beyond all reasonable
doubt all the matters upon which parties thereto intended to agree, and the
matters to be agreed upon shall include in detail, the following :—
(a) What the contractor is to
do, when, where and to whose satisfaction it is to be done ;
(b) What Government is to do ;
and on what terms .
(c) What payment is to be made;
what it is to cover, to whom it is to be made; and the method and basis of
making it.
(d) The responsibility of the
contractor in respect of adequate supervision, care of Government property, and
the protection of outside interests and those of his staff and workmen.
(e) The terms on which
variations and modifications (under paragraphs 446 to 447), if any are to be
permitted; the authority competent to order and to assess them, and the
occasion and basis of such assessment.
(f) The measures to be adopted
in the event of a breach of the contract by either party thereto, and the
method of and grounds for the determination thereof.
(g) The method of settling
disputes.
416. The documents forming
integral part of a contract are :
(i) the tender comprising of Instructions to
Tenderers, Conditions of Contract, Standard or Spccial, The Specification,
Standard or Special, (and any plans/ drawings as necessary), the Schedule of
items, quantities and rates, Agreement Form and Tender form, (if any).
(ii) Contractors offer.
75 (iii) Advance acceptances of tender,
(if any).
(iv) Formal Acceptances of Tender.
(v) Any document making any change or
deviation in any of the terms as embodied in the Advance Acceptance of Tender
or the formal Acceptance of Tender.
Note.—"Rates" are included in
the schedule of items only in case of "work" contracts, where the
tenderers are instructed to quote a percentage above or below the schedule
rates at which they offer to carry out the work.
417. Conditions of
Contract.—The conditions of contract may be either Standard or Special. The
Standard Conditions of contract including special conditions prescribed by the
Railway Board are reproduced in Appendix III to this code.
418. Standard Conditions are
preferably embodied in all contracts to which they are applicable. In the event
of such conditions proving defective in any way, it will be the duty of the
General Manager to report the fact to the Railway Board, if such conditions
were prescribed by them, and in all other cases to arrange, in consultation
with his Legal and Financial Advisors, to amend or amplify them suitably.
419. Any unusual Conditions
of Contract should, before they are imposed, be approved by the General
Manager, acting in consultation with this Legal and Financial Advisor; or, if
the contract to which they relate is beyond his powers to execute, by the
Railway Board.
Note.—These powers shall be exercised by the
Controller of Stores to the extent delegated to him by the Rly. Board.
420. The interpretation to
be placed on the word "unusual" is left to the General Manager who
will use his discretion both in issuing instructions as to the cases to be
submitted to him and also in deciding which cases should be referred to the
Railway Board.
421. The Conditions of
Contract adopted, should take account of the Purchase Policy Rules (Chapter
III) and the considerations in paragraphs 422 to 428.
422. For a contract to be
legal, there must be "lawful consideration" for performance. Such
"consideration" may take a positive form (i.e.,
an agreement to order a certain quantity of work or materials) or a
negative form (i.e. an agreement not to order certain work or materials from
any one but the contractor). The negative form of "consideration" may
advantageously be employed in cases of the supply of materials of a perishable
nature ; or which it is not necessary store; or for the requirements of which
it is not possible to estimate; or where a contractor offer to carry out all
work on a district at a fixed percentage below Schedule Rates.
423. Time should ordinarily
be "of the essence" of the contract and it should be specifically so
stated. It may in some cases be found advisable to avoid "penalty
clauses" by lowering the basic rate and providing for an enhanced rate,
which would bring it up to standard, if the contract is completed by the time
specified. A penalty clause of any nature is, in any case, pre-eminently a
matter on which legal advice should be obtained.
424. Control of material
issued to the contractor.—In contracts involving use of Railway materials,
strict control should be exercised over the proper utilisation and accounting
of the materials issued to the contractors cither free or on payment. For this
purpose following details should be incorporated in the contract:-
(i) Particulars of raw materials to be supplied
and the terms on which they are to be supplied.
(ii) Whether scrap left on completion of the
contract will be the property of the railway and if so, the quantity thereof.
(iii) Standard estimate of each type of raw
material required per unit of finished goods and total quantity of raw
materials to be supplied.
(iv) The rates and other terms applicable for
the recovery of the materials.
425. Where tools plant, patterns
or other railway property are lent to a contractor for the performance of his
contract, the term of such loan should clearly be specified. In order to
safeguard railway property adequately it is desirable that in addition to
providing that any damage or deterioration is made good, a provision should
exist that the contractor is responsible for "loss or destruction".
Under the Law of Bailment, the contractor, in the absence of any special
contract is "not responsible" for loss, destruction, or deterioration,
if he has taken the amount of care that a man of ordinary prudence, would under
similar circumstances take of his goods".
426. In Lum Sum
Contracts and Contracts for Machinery and Plant, it should, where feasible, be
made a condition that the cost of all repairs necessary, until the work or
machinery is finally accepted and for a specified period thereafter, should be
borne by the contractor.
427. Special conditions should not be
taken on to Standard Conditions until the effect of doing so has been carefully
examined and consequential changes carried out.
428. One of the conditions
should be that any gift or offer of illegal gratification made by the
contractor or others on his behalf, renders the contract void.
429. Specifications.— Stores
should be purchased to specification whenever possible rather than a sample. If
Indian Standards accepted by the Railway Board for adoption on the Railway
exist, these should be used, failing which Indian Railway Standard
Specification/D.G.S.&D specifications should be specified. Where none of
these specifications exist, the British Standards Institution Specifications,
DIN or ASTM specifications should be used. In the absence of any standard
specification, local specifications should be prepared. For special plant and
materials specifications should be prepared by or in consultation with the
consuming branch. If further technical advice is required reference should be
made to the Research Design and Standards Organization of the Railway Board.
Note.—Specification should not be altered after
opening of tenders unless the alteration is minor and of no financial
consequence. Where specifications in a tenders have under gone a major change
before the tenders are finalised, fresh tenders should be invited. Where, in
urgent cases, recourse to retendering is not practicable, negotiation may be
held with all tenderers who quoted against the original tender, after obtaining
sanction of competent authority.
430. Where qualities which
are difficult to specify have to be defined, such as "Finish", a
reference may be made to standard samples and in all such cases it should be
made clear that sample is supplementary to and docs not supersede the
specification or drawing. Intending tenderers should be given adequate
facilities to inspect or obtain such standard samples. They should be informed
at the same time that notwithstanding any defect in the sample, the supplies
will be required to conform fully to any specification or drawings which may
exist.
Tenderers should normally not be asked to submit
samples in cases where definite specifications, drawings, or purchaser's scaled
samples exist, unless the nature of stores is such that it not covered
adequately by specification drawings or the store is of such a difficult nature
(as proved by experience) as to necessitate calling of samples.
Where it has been decided to make a purchase
calling samples from tenderers, the samples should invariably accompany the
tender failing which the tender should be summarily rejected.
431. When there are
two or more alternatives given in a specification, it should be definitely
stated what alternative is to be followed.
431-A. Warranty.—-A warranty clause should be
included in all cases where defects come to light only when the stores are put
to use and not before by visual or even laboratory inspection.
431-B. Marking of Railway Materials.—In order to
prevent pilferage as well as misuse of Railway Stores, the system of marking of
Railway materials with distinguishing marks in as large a measure as possible,
should be adopted.
432. Rates.—All rates
should be entered in a contract in words as well as in figures and what they
are to cover should be clearly stated in the contract.
433. Subject to any
general or specific order at the time being in force, the authority empowered
to execute a contract is competent to decide on the rates there fore provided
that where such rates are in excess of the Market, or Standard Rates of the
Railway, or rates quoted by railway workshops for the manufacture of the stores
in question, the authority should record the reasons for adopting the higher
rates.
434. Quantities.—All
quantities should be entered in a contract in words as well as in figures.
435. Nomenclature.—As far as
practicable, standard forms of nomenclature or description should be employed
in a contract, the terminology should be such in all cases as to show beyond
all reasonable doubt that exactly is required.
435A. Delivery.—A contract for
sale of goods may be :—
(a) an entire contract
(b) a severable contract
The fact that a contract for delivery in
instalments is divisible in performance, does not necessarily make it a
severable contract as would be evident from following delivery stipulations
which illustrate these two types of contracts:—
(i) An entire contract.—"Delivery to
commence after 45 days from the date of receipt of the con tract and to be
completed @ 20,000 units per month i.e. by 30 th April, 1985 or earlier."
(ii) A severable contract.—Delivery date—7410
units 15-2-1986, 8510 units by 31-3-1986.
The delivery terms provided in a contract should
therefore, be worded carefully and as for as possible specific date/dates
should be indicated by which supplies should be completed by the contractor, so
as to allow no room for ambiguity.
436. Agreement Forms.—The
Form of Agreement may either be the Tender Form itself or may be provided
separarely. The conditions of contract, Specifications, etc., may be embodied
in the Agreement Form or may be an annexure thereto; or may, provided they are
readily accessible to the contractor, be merely referred to therein.
437. Competency of
Authorities to vary Contracts.—The power to vary the terms of a contract lies
only with the actual parties thereto. The contractor, and his sureties, if any,
must therefore be consenting parties to all variations, which should be the
subject of a Subsidiary Agreement stating what is to be varied and what will
remain unchanged in the original contract. The drafting of this agreement
should be the subject of very careful scrutiny, to ensure that the conditions,
specifications, etc., of the main contract are adequate for and applicable to
the variation, or that the latter is made self-sufficient in these respects.
Such Subsidiary Agreements should be regarded as fresh contracts and entered
into before effect is given to the variations.
438. The powers of
authorities to effect variations on behalf of the President of India are
governed by the rules in paragraphs 439 to 445. The reasons and justifications
for any variation in the terms of a contract should be invariably recorded in
writing.
439. (a) Variation
of Indian Railways Standard Conditions of Contract.—These may be varied only
with the sanction of the General Manager, in exceptional cases within his
powers of placing contracts, in consultation with his Financial Adviser and
after taking legal advice, if necessary, these may be varied with the sanction
of the authority that approved the original contract acting in consultation
with his Financial Adviser and after taking legal advice, if necessary.
The Controller of Stores may also waive
operation of clauses relating to 'Liquidated damages', 'Risk Purchases' and
'Arbitration' appearing in the IRS Conditions of contract as a standing measure
on the Railways/P. Units in respect of contracts valued up to Rs. 1 lakh at the
post contract stage in order to avoid disproportionate administrative
expenditure in small recoveries.
(b) All other variations
including minor relaxation in specifications and drawings .—
These may be varied with the sanction of the
authority that approved the original contract acting in consultation with his
Financial Adviser and after taking legal advice, if necessary.
440. Variation of the
rates of items.—Contracts in which a price
variation clause is included, the rates may be varied by the authority which
approved the original contract with the concurrence of his Financial
Adviser. If the total value of the contract after allowing for
the variation is beyond the powers of the authority which approved the original
contract, the sanction of the higher authority within whose competence as to
amount it lies, should be obtained.
441. Variation of
Quantities of any item.—These may be varied by the authority which approved the
original contract to the extent deemed necessary provided that the Indian
Railway Code Rules relating to control over expenditure are not contravened
thereby, and provided also that the total value of the amended Contract shall
not exceed the powers of the authority that approved the original.
Where materials are required during a contract
period in excess of the quantities contracted for, and such excess is not
sufficiently large to justify the invitation of fresh tenders, there is no
objection to the quantities under the existing contract being increased
suitably. Effort should, however, be made to secure more favourable terms for
the increased quantity.
Note .—Depot Officers/ Inspecting Officer /
District Officers of the consuming department are authorised to accept
deliveries short or in excess up to 5% of the total value of the contract
or Rs.1 lakh whichever be less, provided as a result thereof
the normal powers of purchase of the Controller of stores are not exceeded. No
formal amendment of contract w ill be necessary in such cases and also in cases
(other than those falling under Para. 711-S) where value of supplies short or
in excess does not exceed Rs. 100/- irrespective of the %age involved.
(Authority: Railway Board’s letter No.
98/RS(G)/779/10(CS) (3/03)dated
25.02.2003) --acs no.14 page no.78
442. Repeat Orders.—Where
materials are required during a contract period in excess of the quantities
contracted for, and such excess is not sufficiently large to justify the invitation
of fresh tenders there is no objection to the quantities outstanding under the
existing contract, if any, being increased suitably, provided that as a result
of negotiations, more favourable terms are secured for the purchase than would
have been possible by the invitation of fresh tenders.
443. No repeat orders are
ordinarily to be placed on previously accepted rates obtained on Limited or
Single tenders.
444. Variation of the
items.—These may be varied at discretion by the authorities which approved the
original contract to the following extent, namely ; existing items may be
deleted or additional Items inserted at rates, which, agreeable to any general
or specific orders at the time being inforce, may be decided by the authority
making the variation ; subject only to the two provisions of the Rule in
sub-paragraph (441) above.
445. Extensions of delivery
dates.—No correspondence should be entered into with the contractor after
expiry of the contract delivery period, which has the effect of keeping the
contract alive. Ordinarily no extension of delivery date should be granted
unless it is specifically asked for by the contractor. When asked for, the
extension may be sanctioned at the discretion of the competent authority (which
signed the original contract) provided :—
(a) that the rate in the
contract was not accepted ignoring lower tenders in consideration of the date
of delivery ;
(b) that he is satisfied that
the delay will not cause loss or damage, or in case of special purchases, the
indenting party certifies that no loss on account of late delivery would be
sustained; and
(c) that in any case which does
not satisfy any or both of the above conditions, such sanction shall be given
only in consultation with his financial Adviser and after taking legal advice,
if necessary.
Note.—(1) In case of severable contracts
extention in delivery period will be necessary for each instalment
separately.
(2) Unless other wise specified in a
contract, the Depart officers/Inspecting Officers/ Consignees may at their
discretion, accept delayed supplies of indigenous or imported stores with in
the time limit specified below: -
|
|
Time Limit |
|
|
(a) |
Contracts valued up to Rs. 3
Lakh |
6 months |
|
(b) |
Contracts valued over Rs. 3 Lakh but
not exceeding Rs. 6 Lakh provided the initial
delivery period does not exceed 6 months. |
21 days |
The relaxation will, however, not apply to: -
(i) contracts where higher
prices have been paid for earlier delivery.
(ii) contracts for supply of stores
subject to severe market fluctuations.
(iii) contracts in which provision is made
for recovery of pre-estimated damages.
(iv) contracts placed against urgent, operational
express and Works Programme indents.
(Authority Board's letter No. 2008/RS(G)/779/9 dated
0 6-02-2009) –acs no. 24 page no. 79
446. Modifications.—
Modification of Conditions, Specifications, Quantities, Rates, etc., for which
provision has been made, either expressly or by implication, in the contract
itself shall not be deemed to constitute a variation thereof provided that they
are carried out only to the extent, and by or by order of the authority,
specified therein. The reasons and justification for any modifications in the
terms of a contract shall be invariably recorded in writing.
447. Such
modifications are, however, subject to the proviso that if, as a result
thereof, the amount of the contract exceeds' the powers of the authority with
whose approval it was executed, the sanction of the authority within whose
competence as to amount it is, shall be obtained. They are also subject to the
Indian Railway Code Rules relating to Control over Expenditure.
448. Security.—Security
where necessary, shall, except under general or special orders from the Railway
Board, be taken for the due fulfilment of a contract.
Note .—Security deposit need not be taken from
other Railways, Government Departments, Small Scale Industrial Units recognised
by the National Small Scale Industries Corporation and firms borne on Railway's
list of approved suppliers for items for which they are registered. Security
Deposit also need not be taken from firms approved by RDSO, DLW, CLW, ICF and
CORE in respect of the items for which they are registered with them.
(Authority:- Board's letter No. 88/RS(G)/779/36 dated 03.06.1996.)--acs
no. 5 page no.79.
449. The security may be :—
|
(i) |
Government securities at 5 per
cent below the market value. |
|
(ii) |
Deposits Receipts, Pay Orders,
Demand Drafts & Guarantee Bonds of State Bank of India, or any of the
Nationalised Banks or any Scheduled Commercial Bank. |
|
(iii) |
Bond of Indian Railways Finance
Corporation and KRCL Bond |
|
(iv) |
A deposit in Post Office Saving
Bank |
|
(v) |
Deposits in National saving Certificates, |
|
(vi) |
A percentage deduction, ordinarily
10% from periodic payments made on account of work done or supply made. |
(Authority Board's letter No. 2008/RS(G)/779/9 dated 0 6-02-2009).acs no.
25 page no. 79
450. General.— Where the rules in this Chapter
call for a consultation between the General Manager and his Financial Adviser
and their views are at variance, a reference should be made to the Railway
Board.
451. Before any legal
proceedings arising out of contracts are entered upon, the sanction of the
General Manager acting in consultation with his Legal and Financial Advisers,
should be obtained.
452. It is the duty of
all authorities concerned with the execution or carrying out of contracts to
see that the terms of such contracts are strictly enforced and that nothing is
done by them that would tend to nullify or vitiate a contract.
453. Where the terms of
contract expressly admit of waiver, such right may be exercised only by the
authority designated and for adequate reasons, which should be placed on
record. In the absence of such provision, non-enforcement of a Condition of
Contract constitutes a "variation", thereof and should be dealt with
as required by paragraphs 437 to 445.
454. Stamp Duty.— Contracts
are exempt from stamp duty, in cases where Government (as opposed to the
contractor) would, but for this exemption, be liable to pay such duty.
455. Execution of Contract
prior to commencement of works or supplies.—
(i) No contractor should be permitted to
commence work or supply materials until the relevant contract has been signed
by the parties competent to do so.
(ii) Exceptions to this rule are permissible
only in cases of extreme urgency such as works or supplies necessary to
safeguard life or property or to repair damage to the track caused by flood,
accident or other unforeseen contingency, so as to restore and maintain through
communication. Even in such cases, if circumstances permit some form of written
contract, or atleast an agreed statement of rates to be paid, should be
prepared before commencement of works or supplies, the intention being that the
conditions, specifications, etc., with sufficient items and rates to carry on
with, should be agreed upon beforehand.
(iii) In other exceptional but less emergent
cases, in which the commencement of work or supply cannot be postponed till the
preparation and sanction of the contract documents, prior consultation with the
Financial Adviser shall be necessary.
(iv) In all cases of departure from Sub-rule (i)
above, the completion and execution of the main contract should be proceeded
with expeditiously.
456. In those cases in which
the authority concerned has no power to agree to a variation from schedule of
the essential rates, emergency powers to fix rates might be granted, such
powers being modified or withdrawn, if abused.
457. The employment of a
contractor in no way relieves the authorities concerned from responsibility as
to the standard or progress of the work or supply. Contracts
framed agreeably to the provisions in the foregoing paragraphs provide adequate
powers for securing satisfaction in these
respects. .
458. The capability and financial
status of a contractor should be investigated before any contract is placed
with him.
459. Power to withhold
payment of any sum of money due to a contractor and to retain it under a lien
for setting off claims whether arising out of the particular contract or out of
any other transaction or claim whatever against the contractor, should be
secured.
Multiple choice questions:
- The rules in this chapter apply to contracts related to
which of the following?
- A) Office supplies
- B) Execution of works of construction, repair, or
maintenance
- C) Travel expenses
- D) Petty purchases of Rs. 1 Lakh and under
Answer: B) Execution of works of construction, repair, or
maintenance
- Who is considered equivalent to the "General
Manager" according to the given rules?
- A) Accounts Officer
- B) Chief Administrative Officers
- C) Divisional Railway Manager
- D) Chief Commercial Manager
Answer: B) Chief Administrative Officers
- Which principle is fundamental for entering into
contracts or agreements?
- A) The terms must be vague to allow flexibility
- B) Legal and financial advice should be taken as far
as possible
- C) Contracts should be written in informal language
- D) Contracts can be materially varied without
consultation
Answer: B) Legal and financial advice should be taken as far as
possible
- What should be done whenever practicable and
advantageous regarding contracts?
- A) Place contracts only after tenders have been openly
invited
- B) Avoid open tenders to save time
- C) Accept the highest tender to ensure quality
- D) Place contracts without tenders
Answer: A) Place contracts only after tenders have been openly
invited
- What is a "Lump Sum" Contract?
- A) A contract for undefined quantities at variable
rates
- B) A contract for a fixed total sum dependent on
completion to specification and time
- C) A contract with flexible terms and conditions
- D) A contract with no specified period for completion
Answer: B) A contract for a fixed total sum dependent on completion
to specification and time
- Which type of contract involves fixed unit rates for
various items, with payment depending on actual quantities supplied?
- A) Lump Sum Contract
- B) Schedule Contract
- C) Piece-Work Contract
- D) Running Contract
Answer: B) Schedule Contract
- What is the main characteristic of a
"Piece-Work" Contract?
- A) Fixed total sum for all work
- B) Only unit rates or prices for various kinds of work
or materials
- C) Definite quantity of materials to be delivered
- D) Unconditional power to cancel the agreement
Answer: B) Only unit rates or prices for various kinds of work or
materials
- Which type of contract is primarily intended for
"Stores" contracts?
- A) Lump Sum Contract
- B) Schedule Contract
- C) Piece-Work Contract
- D) Rate and Running Contracts
Answer: D) Rate and Running Contracts
- What does a "Fixed Quantity" Contract entail?
- A) Flexible delivery schedule
- B) Definite quantity of materials to be delivered in
one or more installments
- C) Variable unit rates
- D) No specific delivery date
Answer: B) Definite quantity of materials to be delivered in one or
more installments
- Who determines the competence of authorities to execute
contracts on behalf of the President of India?
- A) The General Manager
- B) The Railway Board
- C) The Financial Adviser
- D) The President of India
Answer: D) The President of India
- What should a contract document include in detail?
- A) General terms and conditions
- B) What the contractor is to do, payment details, and
method of settling disputes
- C) Only the responsibilities of the contractor
- D) Only the method of payment
Answer: B) What the contractor is to do, payment details, and
method of settling disputes
- What should be the content of the tender forming an
integral part of a contract?
- A) Instructions to Tenderers and the Contractor’s
offer only
- B) Conditions of Contract, Specifications, Schedule of
items, and Tender form
- C) Only the formal acceptance of the tender
- D) Any informal agreements
Answer: B) Conditions of Contract, Specifications, Schedule of
items, and Tender form
- What must be ensured before any unusual conditions of
contract are imposed?
- A) Approval from the contractor
- B) Approval from the General Manager in consultation
with Legal and Financial Advisor
- C) Immediate implementation without consultation
- D) Approval from the local supervisor
Answer: B) Approval from the General Manager in consultation with
Legal and Financial Advisor
- What must be present for a contract to be considered
legal according to the rules?
A) Only positive forms of
consideration
B) Only negative forms of consideration
C) Lawful consideration, which can be positive or negative
D) No consideration is needed
Answer: C) Lawful consideration,
which can be positive or negative
- In contracts involving Railway materials, which of the
following details should be incorporated to exercise strict control?
A) Only the quantity of materials
issued
B) Particulars of raw materials, scrap ownership, standard estimates, and
recovery rates
C) The contractor's personal details
D) None of the above
Answer: B) Particulars of raw
materials, scrap ownership, standard estimates, and recovery rates
- Under the Law of Bailment, a contractor is not
responsible for which of the following unless there is a special contract?
A) Timely completion of work
B) Quality of the work done
C) Loss, destruction, or deterioration of loaned Railway property
D) Adherence to specifications
Answer: C) Loss, destruction, or
deterioration of loaned Railway property
- What should be done if specifications in a tender have
undergone a major change before finalizing the tenders?
A) Accept the original tender
B) Ignore the changes
C) Retender or negotiate with all original tenderers with competent authority's
sanction
D) Proceed without any changes
Answer: C) Retender or negotiate
with all original tenderers with competent authority's sanction
- Which of the following should be included in a warranty
clause?
A) Only visual inspection
requirements
B) Defects that come to light during visual or laboratory inspection
C) Defects that come to light only when stores are put to use
D) No warranty clause is required
Answer: C) Defects that come to
light only when stores are put to use
- In the case of an "entire contract" for the
sale of goods, how should delivery be scheduled?
A) Delivery to commence immediately
and be completed in parts
B) Delivery to commence after a specified period and be completed in
installments by a specific date
C) Delivery on a monthly basis
D) No specific schedule is required
Answer: B) Delivery to commence
after a specified period and be completed in installments by a specific date
- Who has the power to vary the terms of a contract?
A) Any railway employee
B) Only the General Manager
C) The actual parties to the contract
D) The Auditor-General
Answer: C) The actual parties to the
contract
- Which authority is competent to decide on the rates for
a contract?
A) Any railway employee
B) The authority empowered to execute the contract
C) The Auditor-General
D) Only the General Manager
Answer: B) The authority empowered
to execute the contract
- How should all rates and quantities be entered in a
contract?
A) Only in figures
B) Only in words
C) Both in words and figures
D) It depends on the type of contract
Answer: C) Both in words and figures
- What should be done if the total value of the contract,
after allowing for rate variation, exceeds the powers of the original
approving authority?
A) Ignore the variation
B) Obtain sanction from a higher authority within whose competence it lies
C) Cancel the contract
D) Proceed without any further approval
Answer: B) Obtain sanction from a
higher authority within whose competence it lies
- Which authority can waive clauses related to
'Liquidated damages,' 'Risk Purchases,' and 'Arbitration' in contracts
valued up to Rs. 1 lakh at the post-contract stage?
A) The Auditor-General
B) The General Manager
C) The Controller of Stores
D) The Financial Adviser
Answer: C) The Controller of Stores
- What should be done when there are two or more
alternatives given in a specification?
A) All alternatives should be
followed
B) It should be stated which alternative is to be followed
C) None of the alternatives should be followed
D) Any alternative can be chosen by the contractor
Answer: B) It should be stated which
alternative is to be followed
- What is the effect of special conditions on standard
conditions in a contract?
A) Special conditions automatically
override standard conditions
B) Special conditions should not be added until carefully examined
C) Standard conditions should always prevail
D) Special conditions can be added without any examination
Answer: B) Special conditions should
not be added until carefully examined
- To what extent can the quantities of any item in a
contract be varied by the approving authority?
A) Without any limit
B) Only if fresh tenders are invited
C) Provided the Indian Railway Code Rules relating to control over expenditure
are not contravened and the total value does not exceed the powers of the
approving authority
D) By any authority without restrictions
Answer: C) Provided the Indian
Railway Code Rules relating to control over expenditure are not contravened and
the total value does not exceed the powers of the approving authority
- When can Depot Officers/Inspecting Officers/District
Officers accept deliveries short or in excess without formal amendment of
the contract?
A) Up to 10% of the total value
B) Up to 5% of the total value or Rs.1 lakh, whichever is less
C) Only with a formal amendment
D) Any excess quantity can be accepted
Answer: B) Up to 5% of the total
value or Rs.1 lakh, whichever is less
- What should be ensured when placing repeat orders for
materials during a contract period?
A) Original contract terms are
strictly followed
B) More favorable terms are secured through negotiation
C) Fresh tenders are always invited
D) The original contractor is not informed
Answer: B) More favorable terms are
secured through negotiation
- What are the conditions under which no repeat orders
should be placed?
A) When rates were obtained on Open
tenders
B) When rates were obtained on Limited or Single tenders
C) When there is no change in quantities
D) When the original contractor refuses
Answer: B) When rates were obtained
on Limited or Single tenders
- How should variations of items in a contract be
handled?
A) Existing items may be deleted or
additional items inserted at rates decided by the approving authority, provided
the total value does not exceed the powers of the original approving authority
B) Only additional items can be inserted
C) Variations are not allowed
D) Only with fresh tenders
Answer: A) Existing items may be
deleted or additional items inserted at rates decided by the approving
authority, provided the total value does not exceed the powers of the original
approving authority
- Under what conditions can delivery dates be extended?
A) Without the contractor's request
B) Only if the rate in the contract was the lowest tender
C) If the delay will not cause loss or damage, or with certification from the
indenting party that no loss will be sustained due to late delivery
D) Whenever the contractor demands
Answer: C) If the delay will not
cause loss or damage, or with certification from the indenting party that no
loss will be sustained due to late delivery
- Who may accept delayed supplies within specific time
limits without formal contract extension?
A) General Manager
B) Depot Officers/Inspecting Officers/Consignees
C) Only the original approving authority
D) Any railway employee
Answer: B) Depot Officers/Inspecting
Officers/Consignees
- When is security deposit not required for the due fulfillment
of a contract?
A) For all contractors
B) For other Railways, Government Departments, Small Scale Industrial Units
recognized by NSIC, and firms on Railway's list of approved suppliers
C) For contracts below Rs.1 lakh
D) For foreign suppliers
Answer: B) For other Railways,
Government Departments, Small Scale Industrial Units recognized by NSIC, and
firms on Railway's list of approved suppliers
- What types of security may be accepted for a contract?
A) Only cash deposits
B) Government securities, bank guarantees, bonds, and deposits in Post Office
Savings Bank or National Savings Certificates
C) Personal property of the contractor
D) Any form of collateral
Answer: B) Government securities,
bank guarantees, bonds, and deposits in Post Office Savings Bank or National
Savings Certificates
- Who should be consulted before entering into any legal
proceedings arising out of contracts?
A) The contractor
B) The General Manager, in consultation with his Legal and Financial Advisers
C) The Controller of Stores
D) No consultation is necessary
Answer: B) The General Manager, in
consultation with his Legal and Financial Advisers
- When can waiver rights be exercised in a contract?
A) At any time by any authority
B) Only by the designated authority with adequate reasons recorded
C) Without any conditions
D) By the contractor alone
Answer: B) Only by the designated
authority with adequate reasons recorded
- What must be ensured before a contractor commences work
or supplies materials?
A) Oral agreement is sufficient
B) Relevant contract must be signed by the competent parties
C) Work can commence without any agreement
D) Only verbal assurance from the contractor
Answer: B) Relevant contract must be
signed by the competent parties
- Who holds responsibility for the standard or progress
of work or supply when a contractor is employed?
A) The contractor alone
B) The authorities concerned
C) The Financial Adviser
D) The General Manager
Answer: B) The authorities concerned
- What should be done to investigate the capability and
financial status of a contractor before placing any contract?
A) No investigation is necessary
B) A thorough investigation should be conducted
C) Only financial status needs to be checked
D) Only capability needs to be checked
Answer: B) A thorough investigation
should be conducted
- What power should be secured to set off claims against
a contractor?
A) Power to withhold payment of any
sum due and retain it under a lien
B) Power to terminate the contract immediately
C) Power to increase the contract value
D) Power to change the contract terms
Answer: A) Power to withhold payment
of any sum due and retain it under a lien
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