Bombay High Court
Ashwin S. Shah vs Downloaded On - 09/06/2013 14:55:18 on 20 August, 2009
Author: Swatanker Kumar
Bench: Swatanter Kumar, A.M. Khanwilkar
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (LODGING) NO. 1243 OF 2009
ALONG WITH
WRIT PETITION NO. 765 OF 2009
1) Ashwin S. Shah )
carrying on business in the firm name )
and style "Shantinath Roadways, )
as sole proprietor thereof and having )
its address at 105, Flyover Apartment, )
Teli Gali, Andheri (East), )
Mumbai 400 069. )
2) Harshad S. Shah, )
carrying on business in the firm )
name and style of New India )
Construction Co. as sole proprietor )
thereof having its address at )
103, Flyover Apartment, Teli Galli, )
Andheri (East), Mumbai 400 069. )
3) Mrs. Sudha A. Shah, )
carrying on business in the firm )
name and style of )
M/s Mahesh Kumar & Co., as sole )
proprietress thereof having its )
address at 103, Flyover Apartment, )
Teli Galli, Andheri (East), )
Mumbai 400 069. ).. Petitioners
VERSUS
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2
1) Municipal Corporation of )
Greater Bombay, A statutory body, )
constituted under the Bombay )
Municipal Corporation Act, 1988 )
having its office at Mahanagar )
Palika Marg, Fort, Mumbai 400 001. )
2) The Municipal Commissioner )
Municipal Corporation of )
Greater Bombay, having his office )
at Mahanagar Palika Marg, )
Fort, Mumbai 400 001. )
3)
The Deputy Chief Engineer (Roads) )
Municipal Corporation of )
Greater Bombay, having his office )
at 6th Floor, K/W Ward Office, )
Paliram Path, Opp, Bus Depot )
Andheri (West), Mumbai 400 058. )
4) Chirag Constructions Co. )
A Partnership Firm duly registered )
under (Indian) Partnership Act, 1932, )
having Registered Office at 104/105, )
Gopal Puri, S.V. Road, )
Borivali (East), Mumbai 400 066. )
5) R.P.S. Infraprojects Pvt. Ltd. )
A company registered under the )
Companies Act, 1956 and having )
its registered office at 113-C, )
Shyam Kamal, Agrawal Market )
Vile Parle (East), Mumbai 400 057. )
6) Smt. Tarla R. Shah )
of Mumbai Indian Inhabitant )
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3
Proprietor of K.R. Construction having )
office at 1201/A, Aditya Apartment )
Chandavarkar Road, Borivali (West) )
Mumbai 400 092. ).. Respondents
ALONG WITH
WRIT PETITION NO. 765 OF 2009
1) Chirag Constructions Co. )
a partnership firm duly registered )
under (Indian) Partnership Act, 1932, )
having registered office at 104/105, )
Gopal Puri, S.V. Road, Borivali (E), )
Mumbai 400 066. )
2) R.P.S. Infraprojects Pvt. Ltd. )
a Company registered under the )
Companies Act, 1956 and having its )
registered office at 113-C, )
Shyam Kamal, Agrawal Market )
Vile Parle (E), Mumbai 400 057. )
3) Smt. Tarla R. Shah )
of Mumbai Indian Inhabitant )
Proprietor of K.R. Construction having)
office at 1201/A, Aditya Apartment )
Chandavarkar Road, Borivali (W) )
Mumbai 400 092. ).. Petitioners
VERSUS
1) Municipal Commissioner )
Having office at Mahapalika Marg, )
C.S.T. Mumbai 400 001. )
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4
2) The Municipal Corporation of Greater )
Mumbai, a Corporation established )
under the Bombay Municipal )
Corporation Act, 1888 having its )
office at Mahapalika Marg. )
C.S.T., Mumbai 400 001. ).. Respondents\
--
Mr. Aspi Chinoy, Mr. J.P. Cama, Sr. Advocates, Mr. Rohan Cama,
Mr. Sanjay Udeshi and Mr. Mahesh Londhe i/b M/s S. Udeshi & Co.
for the Petitioners in Writ Petition (Lodging) No. 1243 of 2009.
Dr. Virendra Tulzapur, Senior Advocate, i/b M/s Thakore Jariwala
& Associates for the Petitioners in Writ Petition No. 765 of 2009 and
for Respondent Nos.4 to 6 in Writ Petition (Lodging) No.1243 of
2009.
Mr. E.P. Bharucha a/w Mrs. Geeta Jogalekar for the Municipal
Corporation of Greater Mumbai.
CORAM : SWATANTER KUMAR, C.J. AND
A.M. KHANWILKAR, J.
JUDGMENT RESERVED ON : 31ST JULY 2009
JUDGMENT PRONOUNCED ON : 20TH AUGUST 2009
JUDGMENT (PER SWATANKER KUMAR, C.J.)
Rule in both the Writ Petitions. Rule made returnable forthwith. By consent, Rule called out and heard.
::: Downloaded on - 09/06/2013 14:55:18 ::: 52. Fairness in State action is the soul of good governance.
Every action of the State where it infringes the constitutional mandate or is opposed to basic rule of law or suffers from the infirmity of patent arbitrariness, judicial intervention is inevitable.
Government enjoys great freedom while entering into contracts with private parties, but even that freedom is circumscribed by the rule of fairness, transparency and objectivity. It is more so where the Government is dealing with State largesse. The State holds monopoly in certain fields and where this privilege of monopoly is utilized for the purposes of allocation of works, it takes the colour of State largesse as both the State or its instrumentalities or public statutory bodies and the bidder are expected to benefit from such distribution and/or allocation of such works by way of contracts.
3. The roads in the city and suburbs of Mumbai are within the exclusive jurisdiction of the Municipal Corporation of Greater Mumbai (hereinafter referred to as "the Corporation"). To maintain these roads is the obligation of the Corporation which otherwise is an essential service in modern times. The work of construction, ::: Downloaded on - 09/06/2013 14:55:18 ::: 6 maintenance and improvement of roads is executed by the Corporation. Therefore, the Respondent Corporation issued tender notice, inviting sealed tenders in Packets "A", "B" and "C" on percentage basis from the firms who were on the approved list of the Corporation as Class AA contractors and also from the contractors having equivalent registered class with the PWD and other Government organizations. This notice was issued by the Corporation on 23rd January 2009 and the last date for sale of bid documents was 9th February 2009. Date for submission of the tender and opening of Packet "A" was 10th February 2009. The bid document consisted of various Sections. Section 1 contained the Tender Notice; Section 2 related to Scope of Work; Section 3 related to Instructions to Tenderers; Section 4 related to General Conditions of Contract; Section 5 related to Special Conditions of Contract; Section 6 related to Specifications; Section 7 related to Additional Specifications; Sections 8 and 9 both related to Specifications of Carboncor Material and Methodology of Laying of Carboncor Work and Section 10 related to Form of Bank Guarantee, Agreement Form, etc. It may be noticed that this contract was for improvement of roads in the City, and its Western and Eastern ::: Downloaded on - 09/06/2013 14:55:19 ::: 7 suburbs for a period of twenty four months excluding monsoon.
4. The Petitioners are "AA" Class Municipal Contractors registered with the Corporation and had on the due date of submission being 16th February 2009, submitted their tenders. The Respondent/Corporation on 10th February, 2009 had issued corrigendum by which date of submission of tender was extended to 16th February, 2009. As per the schedule declared in the said corrigendum, Packet "A" was to be opened on 16th February, 2009;
Packet "B" was to be opened on 27th February, 2009 and the Packet "C" was to be opened on 12th March, 2009. As per the terms of the Corrigendum, Clause 3.24(d) was deleted and joint venture was allowed in case of use of Carboncor technology, with only manufacturers/suppliers as JV partner. The Respondent/ Corporation had opened Packet "A". Vide letter dated 2nd March, 2009, the Respondent - Corporation informed the Petitioners that their Packet "B" had been opened on 27th February, 2009 and called upon the Petitioners to submit "Joint Venture of the manufacturer/supplier of Carboncor material work" by 7th March, 2009 before 1.00 p.m. It was also indicated in the said letter that in ::: Downloaded on - 09/06/2013 14:55:19 ::: 8 the event the Petitioners fail to comply with the above terms then their tender would be treated as non-responsive and their financial bid would not be opened. The Petitioners, despite shortage of time claim to have submitted the Joint Venture Agreement with the manufacturer/supplier for supply of carboncor material to the Respondent/Corporation on 3rd March, 2009. Packet "C" of all the tenderers were opened only on 12th March, 2009. It is averred by the Petitioners that new technology canvassed by the Respondent Corporation and its Committee has been in use internationally for last 15 years which helps in repairs of bad patches and pot holes in roads, which is economic and effective and traffic can be opened within a short time. The Standing Technical Advisory Committee of the Respondent Corporation had prepared such a report on 15th December 2006 in which it had recommended carboncor technology, the minutes of which are at Exhibit-"I" to the Petition.
The Petitioners state that they satisfied all the conditions of the tender.
5. Respondent Nos.4 to 6 in the present Petition were aggrieved from the Corrigendum dated 10th February 2009 and ::: Downloaded on - 09/06/2013 14:55:19 ::: 9 letter dated 2nd March, 2009 issued by the Corporation, requiring the bidders to submit joint venture agreement with the manufacturers/suppliers of carboncor material and has challenged the same by filing Writ Petition being Writ Petition No.765 of 2009 seeking a direction that the Respondent Corporation should not take any step towards cancellation of the tender and for awarding the work to these Respondents as they claimed to be the lowest bidders in response to the tender notice. No interim directions were issued in this Writ Petition. The Petitioners submitted an offer at par with the offer of Respondent Nos.4 to 6 to the Corporation on 13th June, 2009 and thereafter even further reduced their bid during negotiations by another 1% lower than the rate quoted by Respondent Nos.4 to 6. The Tender Committee of the Respondent Corporation held its meeting on 19th June, 2009 and recommended awarding the work to the lowest tenderer, viz. to Respondent Nos.4 to 6. A proposal to place these recommendations before the Standing Committee was initiated and the Municipal Commissioner forwarded it to the Municipal Secretary on 26th June, 2009. The said proposal was placed before the Standing Committee which accorded its sanction in its meeting dated 1st July 2009 and the ::: Downloaded on - 09/06/2013 14:55:19 ::: 10 tender of Respondent Nos.4 to 6 was accepted.
6. On this premise, the Petitioners have prayed that, firstly, the award of tender by Respondent Nos.1 to 3 to Respondent Nos.4 to 6 be quashed and set aside and all the three contracts be awarded to the Petitioners i.e. Western suburbs to Petitioner No.1, Eastern suburbs to Petitioner No.2 and City to Petitioner No.3 and, secondly, Respondent Nos.4 to 6 be restrained from executing the contracts in furtherance to acceptance of the tender. This claim of the Petitioners has been contested by the Respondents who have filed separate reply affidavits. In the common reply affidavit filed on behalf of Respondent Nos.1 to 3, objection has been taken as regards to the maintainability of the present Writ Petition as it involves disputed facts. On merits, there is really not much of a dispute on facts and the case of the Respondent Corporation is that the tender Condition No.3.24(d) only contemplates use of carboncor material as one of the modes and it is not mandatory that only carboncor material is to be used, in fact it is optional. Condition 3.24(d) was deleted by Corrigendum-I dated 10th February 2009 before opening of Packet "A" and letters were issued to all the ::: Downloaded on - 09/06/2013 14:55:19 ::: 11 tenderers, before Packet "C" was opened on 12th March 2009, without declaring any tender as non-responsive, including the tenderers who had not submitted the joint venture documents. On opening Packet "C", Respondent Nos.4, 5 and 6 were found to be lowest tenderers in respect of each tender as they had quoted 37.1% to 33.00% less than the scheduled rate. The rates quoted by the Petitioners were higher which is clear from the Writ Petition itself as they then reduced the rate and even agreed to reduce it further by 1% less than the lowest bidder. The allegation of arbitrariness and waiving the essential condition of the tender are denied and it is stated that in these circumstances the Petitioners cannot be awarded the contract and it is prayed that the Writ Petition be dismissed.
7. In addition to what has been stated on behalf of Respondent Nos.1 to 3, Respondent Nos.4 to 6 in a separate reply have taken up the objection of delay and latches and have raised a further objection as regards the maintainability of the Writ Petition.
While relying on the reply affidavit of Respondent Nos.1 to 3, it is also stated that the Petition has become infructuous, as vide letter dated 6th July 2009 separate work orders have been issued to the ::: Downloaded on - 09/06/2013 14:55:19 ::: 12 respective Respondents in relation to three tenders. It is further averred by these Respondents that Clause 3.24(d) was modified on the request of the Municipal Contractors Association and thereafter sufficient time was provided for the parties to submit their respective tenders. The Corporation then issued the letter requiring them to submit documents relating to joint venture and the condition stated in the said letter was waived on the representations made by the said Respondents. The waiver of the condition of joint venture with the manufacturer/supplier of carboncor, thus, was inconsequential. The Respondents being the lowest tenderers, they have been rightly awarded the tender.
8. To both these replies, the Petitioners have filed rejoinder stating that carboncor technology is the essence of the tender and its use was within the discretion of the Respondent Corporation. This being one of the essential conditions of the tender, which was reiterated by letters of the Corporation requiring the bidders to submit the joint venture with the manufacturer/supplier of carboncor, indicates that the condition relating thereto was essential and of essence. This condition was informed to the bidders ::: Downloaded on - 09/06/2013 14:55:19 ::: 13 sometime in advance but was not adequate. However, the waiver of the said condition was not intimated at all to the bidders, particularly, the Petitioners who had already submitted the joint venture documents. It is specifically averred that the tenders were uncomparable, being based on different conditions and foundations and in face of the variation indicated by subsequent letter and conduct of the Corporation, the entire process is vitiated and suffers from the element of arbitrariness. While dealing with the question of delay, latches and maintainability of the Writ Petition, it has been averred by the Petitioners that the contract has to come into force from 1st October 2009. The Petitioners contend that they have approached the Court without any undue delay, particularly, when the Corporation has failed to take note of the issues raised by the Petitioners. In these circumstances, neither the Petition has become infructuous nor it suffers from the defect of delay and latches. On the contrary, the Corporation is acting in an arbitrary manner so as to favour Respondent Nos.4 to 6 who have not even qualified as they have not satisfied the eligibility criteria by complying with the condition in regard to submission of joint venture documents.
::: Downloaded on - 09/06/2013 14:55:19 ::: 149. As is evident from the above narrated facts, the controversy in the present case relates to the interpretation, change of terms of tender and exercise of power in an arbitrary and discriminatory manner. There cannot be any dispute that the awarding of these contracts involves large amount of Corporation revenue and relates to maintenance of essential services that of roads. The Corporation is, therefore, expected to act fairly, transparently, free of arbitrariness, in public interest and to ensure that the revenue of the Corporation is not adversely affected. The concept of fairness takes in its ambit that element which provides an equal and fair opportunity for the parties to participate in the tender bid. It is not expected to favour any individual or adopt/change criterion midway so as to bring uncertainty or favourtism in awarding of such contracts. Thus, relevancy of the specific terms stated in the General Conditions, including the tender, is an important aspect to the present case.
10. It will be useful to refer to some of the terms and conditions of the tender notice as they have a bearing on the question that arise for consideration of the Court in the present Writ ::: Downloaded on - 09/06/2013 14:55:19 ::: 15 Petitions. The same read as under :-
"2. SCOPE OF WORK 2.2 Improvement of asphalt roads -
a. Various roads falling under the area of contract shall be improved/reconstructed by the contractor under this project work. The improvement work shall comprise of excavation in kutcha portion of road, treatment to potholes, milling, water bound macadam works, laying of asphaltic layers/Carboncor material/C.C. Roadwork etc. b. Some of the stretches/junctions may have to be improved with paver blocks as per the directions of the Engineer.
c. The works of construction of storm water drains, repairs to S.W.D. (wherever required), covering of storm water drains with R.C.C. Slab and precast frames and covers, water entrances, cross drainage works etc. shall also be required to be carried out under the project work.
d. Improvement of existing footpaths, construction of new footpaths, and construction of footpath by covering the drains shall be carried out as a part of project work. Footpath will be provided with ramp of physically challenged persons & tree guards.
e. Existing/Burried Manholes/chambers, if detected during the progress of work, shall be raised/lowered to final formation level.::: Downloaded on - 09/06/2013 14:55:19 ::: 16
f. Street furniture such as Railings, Road name boards, direction boards shall be fixed as per the guidelines and designs as contemplated in Catalogue for street furniture available in the office of Dy. Ch. E. (Traffic).
g. Necessary road markings, lane markings shall be required to be carried out on project roads, as per the applicable specifications. Painting of kerbs and central dividers shall form part of the project.
h. Repairing potholes and rough/bad patches on the project roads free of cost, during the contract period including intervening monsoon. This includes -
(1) Cutting the potholes to square or rectangular shape down up to the base course level to the affected depth and filling up with metal and stone powder during wet spell i.e. rains and with catonic emulsion & bituminous mixes during dry spell of monsoon, compacting the same as per the specifications & as directed by the Engineer.
(2) Sealing of cracks developed, as per specifications & as directed by the Engineer in asphalt/mastic surface.
(3) Repairs to settled portions as per the specifications & as directed by the Engineer.
xxxxx xxxxx xxxxx ::: Downloaded on - 09/06/2013 14:55:19 ::: 17
3. INTRUCTIONS TO TENDERERS 3.2.3 Post Qualification Criteria -
i) General
a) Post qualification will be based on tenderer's meeting all the following criteria regarding their general and particular construction experience, financial position, personnel and equipment capability and other relevant information as demonstrated by tenderer's responses in the information forms attached to the tender.
b) The Post qualificatin criteria as prescribed below shall be filled in the proforma given in clause 3.29 and supported by documents mentioned under clause 3.24.
c) The cost of the executed works and turnover will be enhanced by 10% every year to bring the same to present level for purpose of post qualification.
d) The cost of executed works and the turnover of the current financial year to meet the requirements will be accepted, subject to submission of non-audited financial statement (original documents) duly certified by C.A.
e) Joint Venture shall not be allowed.
ii) General Construction Experience The tenderer(s) shall provide evidence that -
a) It has been actively engaged in the civil works ::: Downloaded on - 09/06/2013 14:55:19 ::: 18 construction business for similar works such as those pertaining to Roads/Highways/Runways during the last 5 years in the role of prime contractor.
b) The tenderer(s) has generated a maximum annual turnover of any one year during the last 3 years i.e. 01.04.2005 to 31.03.2006 (audited), 01.04.2006 to 31.03.2007 (audited), 01.04.2007 to 31.03.2008 (audited) and 01.04.2008 to till the date (provisional) not less than 75% of the cost of the work tendered for.
iii) Particular construction experience
a) The tenderer(s) shall provide evidence that it has successfully completed at least one contract pertaining to Roads/Highways/Airport runways or is successfully executing currently one work of similar nature with at least 75% progress (financial value as on the date of invitation of tender) of Cost of magnitude of at least 30% of the cost of the works tendered for, for the works costing up to 10 crores OR 5 crores or 30% of the cost of the works tendered for, whichever is more, for the works costing more than 10 crores In support of this, certificates from the employer shall be submitted along with the application incorporating clearly the contract value, billing amount, date of commencement of work, completion period, satisfactory performance of the contract and other relevant information.
The works may have been executed by the tenderer as a prime contractor, or proportionately as member of a joint venture or ::: Downloaded on - 09/06/2013 14:55:19 ::: 19 approved sub-contractor, with references being submitted to confirm satisfactory performance.
iv) Financial Capabilities The tenderer(s) shall demonstrate that it has access to, or has available liquid assets, unencumbered assets, lines of credit and other financial means (independent of any contractual advance payment) sufficient to meet the construction cash flow requirements for the subject contract in the event of stoppage, start- up or other delay in payment, of the minimum 15% of the cost of the work tendered for, net of the tenderer's commitment of other contracts.
Certificate from Bankers/C.A./Financial institution shall be accepted as evidence.
Alternatively a notarized undertaking on Rs.
100/- stamp paper stating that "the requisite net cash flow i.e. 15% of the tendered cost will be made available during the execution of the work" shall be submitted in Packet `B' of the quoted work(s).
The audited balance sheets for the last 3 years shall be submitted and must demonstrate the current soundness of the tenderer's financial position and indicate its prospective long term profitability. If deemed necessary, the employer shall have the authority to make enquiries with the tenderer's bankers.
v) Personnel Capabilities Tenderer(s) shall supply general information on the management structure of the firm, and shall make provision of suitably, qualified personnel to fill the key position required during the contract implementation.
::: Downloaded on - 09/06/2013 14:55:19 ::: 20The tenderers shall supply information a prime candidate for each key position and each shall meet the requirements specified, as under -
Sr. Post Qualification Minimum nos. to be
No. deployed on this
Project
1. Project At least B.E. (Civil) with min. 1
Manager 10 years experience or D.C.E.
2. Site
With min. 20 years experience
At least B.E. (Civil) with min. 2 2
Engineers years experience or D.C.E. With min.
4 years experience.
In addition, Quality Control Engineers per shift per work are to be deployed, qualification being B.E. (Civil) with site experience and having experience of working in Material Testing Laboratory. A notarized undertaking on Rs.100/- stamp paper shall be submitted in packet "B" stating that "Quality Control Engineer per shift per work having experience of working in Material Testing Laboratory, will be appointed/deployed on the work on award of the contract."
NOTE :
The minimum suggested personnel, to begin with for execution of works, in accordance with the prescribed construction schedule are shown in the above list.::: Downloaded on - 09/06/2013 14:55:19 ::: 21
The tenderer(s) should furnish general information on the Organizational set up of the firm, to allow the employer to review their proposals.
vi) Equipment Capabilities
(A) The tenderer(s) shall own equipments, in full
working order, as listed below, and must
demonstrate that based on know commitments, they will be available for timely use in the proposed contract.
Sr.No. Equipment No.
1. Vibratory Roller (min.10 T.) 1
2. Static Roller 1
3. Vibratory Roller (About 3 T) 1
(B) The tenderer shall own or have assured access
by means of letter from the respective registered plant owners (as required) as listed below -
Sr. No. Equipment
1. R.M.C. Plant (computerised) - Capacity 30 Cu.m.
per hr.
2. Asphalt Plant Capacity min. 40 MT pr. hr.
3. Paver Blocks manufacturing factory approved by M.C.G.M. With valid registration number.
4. Supplier of Carboncor materials ::: Downloaded on - 09/06/2013 14:55:19 ::: 22 Vii) Bid Capacity The available bid capacity at the time of bidding shall be more than the cost of the work tendered for.
The available bid capacity will be calculated as under :-
Assessed Available Bid Capacity = (A x N x 2.0 - B) Where, A = ig Maximum value of Civil Engineering Works executed in anyone year during the last three years (updated to current price level) taking in to account the completed as well as the works in progress. The value of the works carried out during current financial year will not be updated.
N = Numbers of years prescribed for the completion of works for which bids are invited (0.3 year to be added for each intervening monsoon, within the contract period).
B = Value of existing commitments and ongoing works to be completed during the `N' years mentioned above.
Note: 1) The statements showing the value of the existing commitments and ongoing works as well as the stipulated period of completion remaining for each of the works, shall be supported by certificates signed by the officer not below the rank of an Executive Engineer ::: Downloaded on - 09/06/2013 14:55:19 ::: 23 or equivalent.
2) Tenderer(s) who meet the minimum qualifications criteria will be qualified only if the available bid capacity at the time of bidding is more than the total estimated cost of the Work(s). The available bid capacity will be calculated mentioned above.
Viii) Slice and Package The tenderer(s) will be awarded more than one contract only if he satisfies the aggregate criteria mentioned in (vii) above."
ig xxxxx xxxxx xxxxx
D-
SUBMISSION OF TENDER
3.21 xxxxx xxxxx xxxxx
3.22 The tenderer will submit bid in three packets
i.e. Packet `A', Packet `B' and Packet `C'. The copies of the documents asked for in packet `A' and `B' shall be certified by the Gazette Officer or Officers not below the rank of Asstt.
Engineer/Administrativer Officer of the MCGM or Practicing Notary approved by of the Govt. of Maharashtra or Govt. of India with his stamp, with or without a red seal clearly stating his name registration number, except where original documents are demanded. One set of documents in one work having maximum EMD per division can be submitted. However, the same shall be mentioned in the forwarding letter in the other tenders. Also, the requirement of net cash flow and Q.C. Engineers can be submitted in one affidavit.
::: Downloaded on - 09/06/2013 14:55:19 ::: 24xxxxx xxxxx xxxxx 3.24 The Packet "B" shall contain the copies of following document -
a. The name of civil works construction business for similar works such as those pertaining to Roads Highways/ Runways in the role of prime contractor, partner in a joint venture of approved Sub Contractor (Proforma0I) (original).
b. Maximum annual construction work turnover of any one year during the last 3 years (including the current financial year) (Proforma - II) (original).
c. Evidence stating that the tenderer has successfully completed at least one contract pertaining to Roads Work of size stated in post qualification criteria (Proforma III) (original).
d. A letter from the supplier of R.M.C. Asphaltic Material, Paver Block and carboncor materials, for continuous supply for the tender period.
e. Evidence stating that it has access to, or has available liquid assets, unencumbered assets, lines of credit and other financial means (independent of any contractual advance payment) to the extent of the minimum 15% of the cost of the work tendered for.
f. The balance sheets for the last 3 years (i.e. 01.04.2005 to 31.03.2006 (audited), 01.04.2006 to 31.03.2007 (audited), 01.04.2007 to 31.03.2008 (audited) and 01.04.2008 to till the date (provisional). The ::: Downloaded on - 09/06/2013 14:55:19 ::: 25 provisional balance sheet of 2008-09 duly certified by C.A. will only also be considered).
g. Information on provision of suitably qualified personnel (Proforma IV) (original).
h. Information about ownership, or assured access (through hire, lease, purchase agreement or other commercial means) to key items of equipments) Proforma V-A & V-B (original).
i. Details of works in hand (Proforma VI A and VI B) (original).
j. Programme of work in the form of a Bar
chart/PERT/ Mile stone chart.
k. Financial & Physical Milestones of various stage
of the work during the contract period.
l. Signed copy of the addendum, corrigendum
and clarifications, if any."
E -
TENDER OPENING AND EVALUATION
3.32 Examination Tenders and Determination of
Responsiveness.
Prior to the detailed evaluation of tenders, the M.C.G.M. will determine whether each tender -
(a) Meets the eligibility criteria
(b) Has been properly signed
(c) Is accompanied by the required securities
(d) Is responsive to the requirement of the
tendering documents
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26
(e) Has submitted letter of assured supply of
R.M.C., Asphaltic Material, Paver Block, carboncor material.
3.33 Mandatory Requirements-
The tender shall be treated as non-responsive if the tenderers -
i) Stipulates the validity period less than 120 days.
ii) Stipulates his own condition/s.
iii)
Does not fill and sign the Financial Bid Form.
iv) Does not submit adequate amount of Earnest Money Deposit and Additional Security Deposit in the form of D.D. for rebate, as per the relevant conditions in the tender.
v) Does not quote percentage in figures and words
in the Financial Bid Form. If there is any
discrepancy in the figures and words while quoting percentage, the percentage quoted in the words shall be considered for deciding responsiveness of tender.
vi) Does not submit short fall in documents listed in Packet `A' and Packet `B' within three days of intimation after opening of the said packets and Packet `C' shall not be opened.
11. In this very Section, the Corporation had also given the list of approved manufacturers of different items i.e. Asphalt Plants, ::: Downloaded on - 09/06/2013 14:55:19 ::: 27 interlocking paver blocks, R.M.C. Plants, Carboncor Material Supplier, etc.
5. SPECIAL CONDITIONS OF CONTRACT 5.6.
i) Methodology of the work and quality assurance plan shall be submitted before commencement of the work.
ii) Daily programme of the work shall be submitted one day in advance.
iii) Methodology for New Technology Carboncore Technology as per section - 8 namely Specifications of Carboncor Material in this Tender Document."
8.2 CARBONCOR ALL ROAD SURFACING Carboncor All Road Surfacing is used for new skid resistant road surfaces, or more heavy-duty resurfacing on existing asphalt, concrete and dirt roads. The key patented process involves the mixing of carbonaceous shale with our specially formulated concentrate which, through a combination of chemically activated carbons, allows for a superior bonding strength that effectively `binds' the aggregates tightly together to produce a strong, trafficable, long lasting and skid resistant waterproof surface.
The product can be mixed on site, with local aggregates, or it can be supplied ready made."
::: Downloaded on - 09/06/2013 14:55:19 ::: 2812. As already noticed, date of submission of tender was extended, the condition contained in Clause 3.24(d) was deleted and permissibility of joint venture was introduced by a modification directed by the Corporation vide its Corrigendum-I dated 10th February 2009. This Corrigendum-I, therefore, also has a substantial bearing on the issues before the Court. The modification/Corrigendum-I dated 10th February 2009 reads as under :-
"MUNICIPAL CORPORATION OF GREATER MUMBAI No. Dy. Ch./12084/Roads/W.S. dt. 10.2.2009 CORRIGENDUM - I Ref.: Tender Notice under No. Dy.
Ch.E/11357/Roads/WS Dated 23.01.2009.
Following changes are made in the tender notice published on 28.01.2009.
1) Tender date of submission is extended from 10.02.2009 to 16.02.2009.
2) The condition of Tender No. 3.24(d) is deleted i.e. The letter from the supplier of Carboncor material for continuous supply for the tender period.
::: Downloaded on - 09/06/2013 14:55:19 ::: 293) J.V. will be allowed, in case of Carboncor technology, only manufacturers/supplier as his J.V. partner will be permissible.
New Schedule of opening Tender:
Name of the work : Bi-annual contract for improvement of roads in 1) City Div. 2) Western Sub. Div 3) Eastern Sub. Div.
Last date of Date of submission
Date of opening the tender
sale of the tender
13.2.2009
ig Packet `A' Packet `B' Packet `C'
16.2.2009 upto 16.02.2009 27.02.2009 12.03.2009
upto 1.00 1.00 p.m. at 2.30 P.M. At 2.30 P.M. At 11.00 A.M.
p.m. Onwards onwards onwards
Other Details remained unchanged.
Sd/- 10.2.2009
Dy. Ch. Eng. (Roads) W.Sub."
Certainty in the terms and conditions of tender is an essential feature of fair play and its effect
13. Corporation had invited tenders on 23rd January 2009.
The last date for sale of tender was 9th February 2009. The tender ::: Downloaded on - 09/06/2013 14:55:19 ::: 30 documents thus were open for sale between that period and the bidders were expected to submit Packets "A", "B" and "C", respectively. The financial bid of the bidders was expected to be given on percentage basis. The first eligibility for submitting tenders was that the applicant had to be a registered or approved Contractor of Class "AA" of the Corporation or registered with PWD and of the Government Organizations in India. We have already referred to the various aspects and essential conditions which were part of the tender document. The initial terms and conditions under "Scope of Work" required that the improvement work shall comprise of excavation in kutcha portion of road, treatment to potholes, milling, water bound macadam works, laying of asphaltic layers/Carboncor material/C.C. Roadwork etc. In terms of Equipment Capabilities, amongst others, it was specifically stated that the bidder should have a supplier of carboncor materials and the tenderer shall have or own or have assured access by means of letter from the respective registered plant owners in relation to this item. Condition 5.1 of Section 5 relating to Special Conditions of Contract, clause (e) thereof provided that improvement of roads in new carboncor technology was one of the envisaged parts of the contract. In terms ::: Downloaded on - 09/06/2013 14:55:19 ::: 31 of Condition 5.6, the applicant was required to submit methodology of work and quality assurance plan before the commencement of the work.
14. A useful reference can also be made to the contents of Exhibit-"I" to the minutes of the Standing Technology Advisory Committee (Roads) of its 21st meeting. It is recorded therein that the Committee members along with Municipal Officers paid a visit to a few roads in the suburbs and the city and saw the demonstration of resurfacing by new material on 14th December, 2006. Besides discussing various aspects, it particularly referred to the need to control quality at the plant sites. With reference to this report, it has been averred by the Petitioners that the Committee specifically recommended that repairs to bad patches and potholes should be carried out by use of this technology of carboncor which can even be done during rainy season. The Committee while making recommendations also advised that the concerned authorities in Africa should be contacted for their views and comments on this type of treatment which is stated to be in use for about 15 years. It also recommended that a note forwarded by M/s.
::: Downloaded on - 09/06/2013 14:55:19 ::: 32Sumer Infrastructure Pvt. Ltd. on the treatment be circulated for guidance of municipal officers highlighting the specifications, the tests and quality control required and precautions during laying such treatments. Greater emphasis under the tender document was given to the use of new technology of carboncor as Sections 8 and 9 exclusively related to specifications of carboncor material and methodology of laying of carboncor work. The emphasis of the authorities in requiring its bidders to be familiar with the use of new technology and its significance in execution of the contract is obvious from these documents which have been placed on record.
Under Clause 8.2, it was recorded that:
"Carboncor All Road Surfacing is used for new skid resistant road surfaces, or more heavy-duty resurfacing on existing asphalt, concrete and dirt roads."
15. Sections 8 and 9 of the terms of the tender provided minutest details like introduction to use methodology for preparation, laying, construction procedure and even the allied work in execution and utilization of carboncor technology. From the ::: Downloaded on - 09/06/2013 14:55:19 ::: 33 above referred documents on record read in conjunction with the averments made in the Writ Petition, it is obvious that carboncor technology was one of the essential features for invitation of tender and the bidders were expected to be able to use the said technology for execution of the work. It is also clear and in fact there was not much of a dispute that it was one of the technologies, amongst others, which the Corporation wanted the bidders to be able to perform. The Corporation could ask for repairing of any of the roads by use of a particular technology and the bidder was expected to be fully competent to execute the work in accordance with the specifications. With reference to any of the technologies referred to, in terms of Clause 5.1, the contract envisages the following parts:
"a) Improvement of asphalt Roads/Bridges,
b) Maintenance of road stretches improved under the project work.
c) Reinstatement of trenches on the project Road.
d) Improvement of roads in concrete and paver blocks.
e) Improvement of roads in new carboncor technology."::: Downloaded on - 09/06/2013 14:55:19 ::: 34
16. The intent of the Corporation was to ensure that the bidder was capable of performing and executing the work in any of these technologies and it had even gone to the extent of identifying the sources from where the raw material, that too as per specifications, was to be acquired. The suppliers were earmarked by the Corporation itself and they were expected to supply material as per the specifications and there was no intention to compromise the quality of the product. The carboncor technology, amongst other technologies, and the material was to be taken from the sole supplier who was identified in the tender document itself. As per the terms and conditions declared in the tender, which were duly notified to the public at large, a letter was to be obtained by the bidder from the respective registered plant owners as identified in the list. If such a letter was not obtained, the tender would be treated as not responsive by the Corporation. The requirements of Packet "B", in terms of Clause 3.24, was modified by issuance of corrigendum dated 10th February, 2009 while date for submission of tender was 10th Febraury, 2009 itself. In other words, this decision ::: Downloaded on - 09/06/2013 14:55:19 ::: 35 was changed by the Corporation at the eleventh hour i.e. on the date of submission of tender. This Corrigendum made a substantial change in the terms and conditions of the tender. Firstly, that it deleted Condition 3.24(d) entirely and permitted, instead of letter from the carboncor supplier for continuous supply for the tender period, joint venture in case of carboncor technology and to that extent joint venture was made permissible and, secondly, the date for submission of tender was extended to 16th February, 2009. The Corporation, vide letter dated 2nd March, 2009 had written to all bidders, including the Petitioners, that if joint venture with manufacture/supplier of carboncor material work was not submitted by 1.00 p.m. of 7th March, 2009, their bid would be treated as non-
responsive and their Packet "C" would not be opened on 12th March, 2009. The Petitioners claim to have submitted joint venture document as per the prescribed form on 3rd March, 2009 while Respondent Nos.4 to 6 did not submit any such documents.
Respondent Nos.4 to 6 claim that they made a representation and upon their representation, the condition contemplated in terms of letter dated 2nd March, 2009 was waived. The Respondent-
Corporation has in its affidavit stated that condition 3.24(d) was ::: Downloaded on - 09/06/2013 14:55:19 ::: 36 deleted vide corrigendum dated 10th February, 2009 and all concerned persons were informed about the deletion. Thereafter, a decision was taken that the joint venture agreement was allowed, in the cases of carboncor technology, with manufacture/supplier and not to others. Thereafter, Packet "A" was opened on 16th February, 2009 and Packet "B" was opened on 27th February, 2009. An order was passed on 9th March, 2009 by the Additional Municipal Commissioner (City) which, it appears from the record, was not communicated to any of the tenderers. After tenders were opened, some decisions appear to have been taken on the file of the Corporation. The Deputy Chief Engineer (Roads) in no uncertain terms expressed that "it is felt necessary for the each tenderer to submit the J.V. with manufacture/supplier carboncor material for operating BOQ item incorporated in the tender, otherwise it will be discretion of tenderer whether to use carboncor or otherwise, which is not correct & to maintain the sanctity of tender procedure. It is therefore necessary that on opening packet "B", all the tenderers will be issued tender of demand for submitting J.V. with the manufacturer/supplier of Carbancore material work only, within three days from the date of issue of letter for making them qualified for ::: Downloaded on - 09/06/2013 14:55:19 ::: 37 opening the financial offer packet "C" on schedule date already circulated." This very Officer expresses a different stand in the affidavit filed by him and probably because of the opinion of the Additional Municipal Commissioner. The Additional Municipal Commissioner (City) in his Note dated 9th March, 2009 recorded as under :
"This tender is basically for having an agency for each i.e. City, ES & WS for unforeseen, miscellaneous road works, so that bad patches/trenches can be improved within time. Carbon core is going to one of the treatment processes/techniques in addition to asphalt mcadam, asphalt concrete, mastic asphalt, paver block etc. Hence by insisting for JV in case an agency desires to use carbon core technology is not going to create any sort of monopoly. Instead it will ensure proper implementation of technology, if preferred by the contractor or required as per field level circumstances, by having the assurance/commitment from the supplier of carbon core in form of JV. In case, it has not to be used, there will not be any necessity of JV. JV is limited to the extent of use of carboncore only. Ideally speaking, the carboncore agency should be ready to enter into JV partnership with any agency which became L1."
17 By recording the above, the Additional Municipal Commissioner (City) directed the department to go ahead with ::: Downloaded on - 09/06/2013 14:55:19 ::: 38 awarding of work. The Chief Engineer (Roads) in his Note dated 4th April, 2009 recorded as under:
"It is observed that compliance of requirement letter after opening of Packet "B" only six nos. of tenderers out of 14 tenderers has submitted the J.V. With Carboncor technology manufacture/supplier. However, as per A.M.C. (City)'s orders dated 9.3.2009 vide N.AMC/C/3740/II dt. 9.3.2009 (at page No.N/4) Packet "C" of all the tenderers were opened without declaring non-responsive to any tenderers who have not submitted J.V. Documents.
After opening of Packet "C" on scheduled date i.e. On 12.3.2009, it is observed that the tenderers who have not submitted JV with carboncor supplier/manufacturer have quoted lowest offer. The comparative statement for first three lowest bidders for each division is attached (at page C/135). The tenderers (six nos.) who have submitted JV with carboncor manufacturer/supplier have quoted tenders within range of -12.50% to 13.50%.
It may be pointed out here that the comparison of bid offer submitted by tenderer having JV with carboncor manufacturer/supplier and those who had not submitted JV with carboncor manufacturer/supplier is not correct.
In view of above detailed report, Dir.(E.S. & P.)/A.M.C. (City) M.C.'s orders are requested whether to consider lowest bidder with/without JV with carboncor manufacturer /supplier to be considered for recommendation of Tender Committee for all three divisions. On receipt of approval, necessary action regarding Tender Committee will be carried out by this department ::: Downloaded on - 09/06/2013 14:55:19 ::: 39 and Asst. Law Officer will be informed accordingly for further necessary action in this matter."
18. Thus, it is evident that there was ambiguity and uncertainty, both in terms of contract as well as expectation of the Corporation from the tenderers, created by events subsequent to the inviting of tender. This prevailed both in the office of the Corporation as well as in the mind of the tenderers. The above notings on the concerned file even show that costing was also likely to be affected by deletion of condition 3.24(d) and permitting of Joint Venture Agreement. The computation of comparative cost and determination of lowest bidder thus was not free from doubt and impediment. Divergent views were expressed by the Officers of the Engineering Department, Legal Department and the Administrative Department. These views related to the interpretation of the terms of tender. These were material terms having a bearing on the performance of tender work as well as consequences of such alterations were on the tender process itself. Even during the course of argument, serious doubts were expressed as to whether it was open to the tenderers to use any technology or under the tender ::: Downloaded on - 09/06/2013 14:55:19 ::: 40 term it was expected that the bidder should possess expertise in the technology in all the four methods indicated in the tender. It also remained a question of serious debate whether it was the discretion of the Corporation to identify a Section of a road and whether a particular work of improvement and repairing of road was to be performed with the aid of specified technology. This itself reflects conflict which persisted even till opening of the Packet "C". Further, in violation to the known principles of public contract, it is alleged by the Respondent Nos.4 to 6 that they had written a letter dated 30th March, 2009 much after the date of opening the packets was over, requesting the Corporation to issue the work order without any delay and irrespective of the fact that they had not submitted Joint Venture Agreement with carboncore manufacturer/supplier and they further stated that they would file the letter subsequently and would make payment in advance to the supplier. This condition appears to have been accepted by the Corporation without intimation to any of the other tenderers and in a manner which does not appear to be fair. The opinion of the Officers on the file had clearly indicated that the compliance of this condition was mandatory. The views of the Officers from the Technical and Legal ::: Downloaded on - 09/06/2013 14:55:19 ::: 41 Departments on record of the file establish the fact that this submission of Joint Venture Agreement was treated as an essential condition after deletion of 3.24(d) and it prominently indicates that the Corporation was certain in its mind that the tenderers be fully equipped with all the four technologies and choice of what technology is to be utilized at which Section lay with the Corporation. In fact, on the cumulative reading of different clauses of the terms and conditions inviting tenders particularly conditions 2.2, 3.2.3, 3.21, 3.22, 3.24, 3.32, 3.33, 5.1, 5.6 read with Sections 8 and 9 of the tender document relating to the use of technology of carboncor and subsequent letters varying that condition imply that such a view was correct and needs to be sustained in law.
19. It is a settled principle of law that changing terms and conditions of a tender midway is hardly permissible and particularly when it is not even informed to all the tenderers. The conditions are varied and altered to make them favourable to one party and prejudicial to other. The concept of level playing field does not permit the authorities concerned to vary material conditions of tender which would have the effect of taking away the very fairness ::: Downloaded on - 09/06/2013 14:55:19 ::: 42 and transparency in such State action.
20. The Supreme Court in the case of Reliance Energy Ltd. & Anr. v. Maharashtra State Road Development Corporation Ltd. & Ors., (2007) 8 SCC 1 emphasized the need for "legal certainty" as it was an important facet of rule of law. The norms have to be certain and they should be clear and properly understood by the decision-maker, the bidders and other stakeholders. Besides this, it should satisfy the test of reasonableness. The Court there had held thus:-
"36. ........... When Article 19(1)(g) confers fundamental right to carry on business to a company, it is entitled to invoke the said doctrine of "level playing field". We may clarify that this doctrine is, however, subject to public interest. In the world of globalisation, competition is an important factor to be kept in mind. The doctrine of "level playing field" is an important doctrine which is embodied in Article 19(1)(g) of the Constitution. This is because the said doctrine provides space within which equally laced competitors are allowed to bid so as to subserve the larger public interest. "Globalisation", in essence, is liberalisation of trade. Today India has dismantled licence raj. The economic reforms introduced after 1992 have brought in the concept of "globalisation".
Decisions or acts which result in unequal and discriminatory treatment, would violate the doctrine of "level playing field" embodied in Article 19(1)(g). Time has come, therefore, to say that Article 14 ::: Downloaded on - 09/06/2013 14:55:19 ::: 43 which refers to the principle of "equality" should not be read as a stand alone item but it should be read in conjunction with Article 21 which embodies several aspects of life. There is one more aspect which needs to be mentioned in the matter of implementation of the aforestated doctrine of "level playing field". According to Lord Goldsmith, commitment to the "rule of law" is the heart of parliamentary democracy. One of the important elements of the "rule of law" is legal certainty. Article 14 applies to government policies and if the policy or act of the Government, even in contractual matters, fails to satisfy the test of "reasonableness", then such an act or decision would be unconstitutional.
37. ig In Union of India v. International Trading Co., (2003)5 SCC 437, the Division Bench of this Court speaking through Pasayat, J. had held: (SCC p.
445, paras 14-15) "14. It is trite law that Article 14 of the Constitution applies also to matters of governmental policy and if the policy or any action of the Government, even in contractual matters, fails to satisfy the test of reasonableness, it would be unconstitutional.
15. While the discretion to change the policy in exercise of the executive power, when not trammelled by any statute statute or rule is wide enough, what is imperative and implicit in terms of Article 14 is that a change in policy must be made fairly and should not give the impression that it was so done arbitrarily or by any ulterior criteria. The wide sweep of Article 14 and the requirement of every State action qualifying for its validity ::: Downloaded on - 09/06/2013 14:55:19 ::: 44 on this touchstone irrespective of the field of activity of the State action is an accepted tenet. The basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play.
Actions are amenable, in the panorama of judicial review only to the extent that the State must act validly for a discernible reason, not whimsically for any ulterior purpose. The meaning and true import and concept of arbitrariness is more easily visualised than precisely defined. A question whether the impugned action is ig arbitrary or not is to be ultimately answered on the facts and circumstances of a given case. A basic and obvious test to apply in such cases is to see whether there is any discernible principle emerging from the impugned action and if so, does it really satisfy the test of reasonableness."
"38. When tenders are invited, the terms and conditions must indicate with legal certainty, norms and benchmarks. This "legal certainty" is an important aspect of the rule of law. If there is vagueness or subjectivity in the said norms it may result in unequal and discriminatory treatment. It may violate doctrine of "level playing field".
21. In the case of M/s. Lanco Infratech Limited v. Mormugao Port Trust, 2009(3) BCR 353, a Division Bench of this Court, relying upon the decision in the case of Reliance Energy Ltd. (Supra), while emphasizing the need for certainty of contract, observed that where ::: Downloaded on - 09/06/2013 14:55:19 ::: 45 tenders are invited, the terms and conditions must indicate with legal certainty, norms and benchmarks.
22. Under its general power or even with the aid of concept of level playing field, some element of discretion might be available to the authorities concerned while awarding a contract to competitors. But this discretion has to be exercised in a just and fair manner. In the present case, authorities again substantially altered the standard criteria in the tender notice which cannot be done except where compelling circumstances and reasonable grounds for doing the same exists. If such an attempt is made in an arbitrary manner then the same will not stand the scrutiny of law.
23. In a recent decision of a Division Bench of this Court in the case of Shapoorji Pallonji & Company Ltd. & Anr. v. Maharashtra State Power Generation Co. Ltd. & Anr., decided on 9th July, 2009 in Writ Petition (Lodging) No.1125 of 2009, the Court held as under:-
"21. Similarly, in the case of M/s. Sahakar ::: Downloaded on - 09/06/2013 14:55:19 ::: 46 Agencies Pvt. Ltd. v. M/s. Maharashtra State Road Development Corporation, in Writ Petition (Lodging) No.2584 of 2008 along with Writ Petition No.135 of 2009 decided on 17th March, 2009, a Division Bench of this Court categorically dealt with somewhat similar situation stating the principles that the standard criteria laid down in the notice of tender cannot be departed from arbitrarily unless there were compelling and justifiable reasons, the Court held as under:-
"30. The public law principles controlling the administrative actions of the public authorities are well settled. Right from the case of Ramana Dayaram Shetty vs International Airport Authority of India and others, (1979) 3 SCC 489, the Supreme Court stated that standard of eligibility laid down in the notice of tender cannot be departed from arbitrarily as such departure from the standard will amount to denial of equality of opportunity to those who felt bound by the standard of eligibility and therefore did not submit their tender. The Supreme Court also held that relaxation of the standard of eligibility at the time of considering tender will amount to denial of opportunity to those who considered themselves ineligible."
24. In the case of Harminder Singh Arora v. Union of India & Ors., (1986)3 SCC 247, the Supreme Court clearly stated the principle that the Government may enter into a contract with any person but in so doing the State or its instrumentalities cannot act arbitrarily. In absence of any specific policy of the Government it is ::: Downloaded on - 09/06/2013 14:55:19 ::: 47 open to the State to adopt any policy. But if the authority or the State chooses to invite tenders then it must abide by the conditions laid down in the tender notice and cannot arbitrarily and capriciously accept a much higher tender to the detriment of the State. This principle has an application to cases of awarding of contract by the State and is universally applicable. The obligation on the part of the State to show fairness in awarding contract is the basic rule of the present times. Any substantial variations in the terms and conditions of tender with an intent to favour one and cause prejudice to others can hardly be permitted. Furthermore, by its subsequent conduct or modifications, it cannot create uncertainty or ambiguity in the terms and conditions of invitation to tender particularly when such uncertainty and even non-communication of alteration or deletion of terms and conditions would substantially affect performance of contract as well as the cost factor.
25. This principle has to be applied stricto senso while dealing with matters of contract particularly where there are hardly any justifiable reasons before the court for deletion/alteration of material terms of tender. It is also a settled principle that terms of a ::: Downloaded on - 09/06/2013 14:55:20 ::: 48 tender are to be strictly construed as the parties have expressed their intent and accepted performance of terms of tender by a written document and, therefore, it would not be proper to give construction to such terms which will be at complete variance to the specific terms of the contract. We have no doubt in our mind that Corporation is responsible for creating this situation of uncertainty.
In fact, the decision making process was without transparency as the parties were not even informed of the complete waiver of the condition of Joint Venture agreements in relation to use of carboncor technology and it remained confined to the files of the Corporation and the parties to whom probably the authorities in the Corporation intended to favour.
Whether the action of the Corporation suffers from the infirmity of Arbitrariness and lack of transparency.
26. We have already noticed, the terms and conditions of the tender specifically required the tenderers to be fully equipped with all and any of the technologies stated in the tender for carrying out the repair, improvement of the roads in the city and suburban sections of Mumbai. Use of carboncor technology was one of the ::: Downloaded on - 09/06/2013 14:55:20 ::: 49 essential features to the extent that two whole Sections of the terms inviting the tender were devoted to this technology. In terms of Clause 3.2.3.(i) of the tender, Joint Ventures were prohibited and it was clearly stated under Clause (e) that Joint Venture will not be allowed. Then came the deletion of Clause 3.24(d) and its substitution by another clause which permitted Joint Ventures agreements with manufacturer/supplier of carboncor material and it was made mandatory that these documents be filed along with the tender document. This variation was made by Corrigendum-I dated 10th February 2009 and was made known to all concerned.
Thereafter the matter in relation to the use of carboncor technology received divergent views in the Corporation. The Chief Engineer (Roads and Tr.) on 4th April 2009 not only reiterated his earlier opinion but considered it as an eligibility condition and also observed as under :-
"It may be pointed out here that the comparison of bid offer submitted by tenderer having JV with carboncor manufacturer/supplier and those who had not submitted JV with carboncor manufacturer/supplier is not correct".::: Downloaded on - 09/06/2013 14:55:20 ::: 50
The Chief Engineer (Roads and Tr.) had clearly opined that this is an essential condition and even on 5th March 2009 i.e. after the introduction of the new term, it was specifically recorded that the Corporation should insist from all responsive bidders to submit the letter regarding Joint Venture with manufacturer/supplier of carboncor material or work, especially from the tenderers who were interested in carrying out the improvement of road work by using carboncor material. The Additional Commissioner (City) of the Corporation had expressed the view that Joint Venture is limited to the extent of use of carboncor technology only and the agency (supplier) should be ready to enter into Joint Venture with any agency which becomes L-1. Thereafter the Director (Engg. Services and Project) recommended all the tenders as responsive bids. By that time, the tenders had been opened. However, from 9th April to 11th May 2009, the file remained with the Municipal Commissioner where after it was sent for seeking legal opinion which was recorded on 20th May 2009. The Legal Department, in its opinion recorded on 20th May 2009, stated that Joint Venture agreement between the bidder and the manufacturer/supplier of carboncor as Joint Venture partners can only be considered for recommendation of the Tender ::: Downloaded on - 09/06/2013 14:55:20 ::: 51 Committee for all the three divisions and specifically recorded that the Joint Venture agreement between bidder and the manufacturer/supplier of carboncor as Joint Venture partner was mandatory.
27. It is interesting to note that the Chief Engineer (Roads) had expressed his opinion in no uncertain terms holding the condition of submitting Joint Venture agreement to be essential that in the event the same was not treated mandatory, it was likely to affect a comparison of bids offered by the tenderers. The Director, based on the note of the Additional Municipal Commissioner (City) made on 9th March 2009 without referring any reasons observed that all the tenderers may be treated responsive on which the Additional Commissioner on 9th April 2009 had sought opinion of the Legal Department, however, the file was sent to the Municipal Commissioner, who, on 11th May 2009, made the following noting :
"The file was with me for discussion with Hon'ble C.M. Please comment quickly".::: Downloaded on - 09/06/2013 14:55:20 ::: 52
28. With the above remarks, the file was sent to the Law Officer who, as already noticed, recorded a note not favouring waiver of the condition of submitting the Joint Venture agreement and opined that only the tenderers who have submitted Joint Venture agreement with the tender could be considered for recommendation to the Tender Committee for the three works in question. In the note of the Commissioner dated 11th May 2009, no reasons or details of the discussion have been recorded. Then the matter was discussed by the Additional Commissioner, Director, Chief Engineer (Roads) and Deputy Law Officer (LO). Again a note is put up by Chief Engineer referring to the matters which also expressed difficulty in regard to payment in the same financial year.
On 8th June 2009, the Additional Commissioner recorded that MC had directed to go by lowest quoted tender irrespective of Joint Venture condition and to over-rule Legal Officer's opinion. It is also interesting to note that on the letter of Respondent Nos.4 to 6 dated 30th March 2009 requesting for waiving this condition, no decision had been taken. In fact, none of the notings of this letter has been referred to. In his final note, the Commissioner had also made an observation that what was agreed in the meeting was to support ::: Downloaded on - 09/06/2013 14:55:20 ::: 53 new technology only if it was cost competitive. From the file on record, it is evident that this analysis was never done by any competent authority and the file was thereafter put up before the Commissioner or before any other competent authority.
29. The reply affidavit filed on behalf of the Respondents only state the fact of change in essential and particular material terms and conditions of the invitation to tender but does not provide any reasons for such deletion, addition and alteration. It is not stated in the affidavit as to how the Corporation accepted the request of Respondent Nos.4 to 6 dated 30th March 2009.
Fairness and transparency in the action of the Respondent Corporation must have been reflected firstly from the records and the affidavit filed on the basis of such record. We have already noticed that perusal of the record produced before us does not indicate fairness, proper reasoning and objective application of mind. At no point of time it was publicly declared that it was not necessary for the tenderers to submit Joint Venture agreement and such a clause was applicable only in case of carboncor technology and implied that submission of such a document would not be ::: Downloaded on - 09/06/2013 14:55:20 ::: 54 necessary for a tenderer who does not wish to use the carboncor technology. This decision has been taken after opening all the three Packets "A", "B" and "C" respectively. In other words, the rules of tender have been declared after the tenders were opened thereby denying fair competition and fairness in the decision making process while awarding the tenders. It was contended before us with some seriousness that Respondent Nos.4 to 6 were not even eligible as they had never submitted neither the letter from the manufacturer/supplier of carboncor with the tender document, as contemplated under the terms of the agreement (to be annexed to Packet "B") and after the issuance of the Corrigendum dated 10th February 2009, nor the Joint Venture agreement was submitted, as is obvious from the letter dated 30th March 2009 written by the said private Respondents to the Corporation. This argument has some merit. As per the original terms and conditions of the tender, it was mandatory for a tenderer to submit the letter from a manufacturer/supplier of the carboncor material. However, by Corrigendum issued on 10th February 2009, the condition of submission of the letter was altered and Joint Venture agreement which was prohibited under the original condition in terms of ::: Downloaded on - 09/06/2013 14:55:20 ::: 55 Condition 3.23(e) was permitted. This document was to be submitted with Packet "B" as per Condition 3.24(d) which of course was deleted subsequently. Corrigendum dated 10th February 2009 required submission of Joint Venture, obviously before the last date of submission of tender, which was extended to 16th February 2009.
As per the Corrigendum, even this condition was mandatory. The Chief Engineer (Roads) and the Legal Department of the Corporation had expressed an opinion that keeping in view the terms and conditions inviting tenders, this condition would be essential even if the carboncor technology is treated as one of the methods to be adopted for repairing, improvement and maintenance of roads in the city and suburbs of Mumbai. It may be usefully noticed here that in terms of original condition of 3.24(d), a letter from supplier of RMC, Asphaltic material, Paver Block and carboncor materials, for continuous supply for the tender period, was essential.
Of course, Clause 3.24(d) was deleted by the Corrigendum-I but it had further in clause (d) referred to Joint Ventures in case of carboncor technology. This further added to ambiguity, uncertainty and indecisiveness on the part of the Corporation. As mentioned hereinabove, all through the Corporation had taken a stand that use ::: Downloaded on - 09/06/2013 14:55:20 ::: 56 of all technology was at the discretion of the Corporation but suddenly everything appears to have changed that too after 10th February 2009 and particularly after opening of Packets "A" and "B", when the things have taken a turn that too without any justifiable reasons. This conduct of the Corporation, which we have already discussed in some detail, was arbitrary. Despite the opinion of the Engineering and the Legal Departments, the competent authorities have not considered the aspect whether Respondent Nos.4 to 6 had satisfied the original criteria or even the criteria which was introduced by the Corrigendum dated 10th February 2009. The matters ancillary thereto had been mentioned in the file which even led to complete waiving of the essential condition of the tender, thus causing a further doubt on the fairness and transparency of the action of the Corporation. This aspect ought to have been adverted to by the concerned authorities in the hierarchy of the Corporation.
It is a settled principle that the persons who do not satisfy the prescribed criteria in of the terms and conditions and the procedure adopted should not be treated as eligible. Here we have noticed that apparently Respondent Nos.4 to 6 had not satisfied the original criteria and even the criteria stated by Corrigendum dated 10th ::: Downloaded on - 09/06/2013 14:55:20 ::: 57 February 2009. Of course, even the subsequent decisions i.e. Decision taken after opening of Packet "C" was without recording proper reasons by the Corporation on its file. It was never communicated to all the tenderers, that without letter of Joint Venture agreement relating to carboncor technology, the tenderers would be held eligible. However, we have already expressed our opinion that the said decision of the Corporation is not in consonance with the language, spirit and public purpose sought to be achieved by the tender conditions. Another aspect which needs to be examined by the Court is that the Corporation first itself created a monopoly that it only named one supplier of carboncor in terms of clause 3.45.6 whose letter was stated to be mandatory.
This was modified by Corrigendum dated 10th February 2009 permitting Joint Venture agreement to be submitted instead of letter from the said concern. From the record of the Corporation, it appears that even this supplier had written letters to the Corporation that by awarding contracts to the persons who had neither obtained letter nor Joint Venture agreement from the said concern, the Corporation would be breaching the terms and conditions of the invitation to tender. After opening of the packets and negotiating ::: Downloaded on - 09/06/2013 14:55:20 ::: 58 with persons, then, without proper disclosure to all concerned, this term was wiped out for reasons which are unknown. This creation and then abolishing of terms show monopolistic attitude regarding an essential technology and it creates a shadow of doubt on the entire methodology adopted by the Corporation in finalising the tenders.
30. In the case of Haji T.M. Hassan Rawther v. Kerala Financial Corporation, AIR 1988 SC 157, the Supreme Court clearly stated the principle that the State or its instrumentalities while dealing with the public property owned by it should act carefully and such properties generally be sold by inviting tender which is not only to fetch highest price for the property but also to ensure fairness in the activities of the State and public authorities. The State and the Public Authorities should undoubtedly act fairly.
Their action should be legitimate. Their dealings should be above board. Their transactions should not be suggestive of discrimination. Nothing should be done by them which gives an impression of bias, favouritism or nepotism.
::: Downloaded on - 09/06/2013 14:55:20 ::: 5931. Following the view expressed by the Supreme Court in Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCC 489, the Supreme Court in the case of Ram and Shyam Company v. State of Haryana & Ors., (1985)3 SCC 267, held that even in administrative action the authority must act fairly which means in accordance with the principles of natural justice variously described as fair play in action. In a given case, one can expect the State to act within the four corners of fairness and reasonableness in regard to its properties.
32. With the development of public law and principles guiding its application in the field of administrative action more and more comprehensive approach has been adopted by the Courts. It is obviously relatable to the activities of the State which are increasing by the passage of time and particularly in commercial fields. In most of the items, the State enjoys monopoly and it gets its work executed by awarding contract to the private sector. As far as framing of policy governing such field is concerned, the Government has wide discretion and the Courts rarely interfere in the policy matters of the State, of course, unless they are ex-facie ::: Downloaded on - 09/06/2013 14:55:20 ::: 60 arbitrary, discriminatory or are in abuse of or colourable exercise of powers. Still while acting in furtherance to its policies, the State has to take care of not offending the constitutional mandate and is expected to act fairly and in a transparent manner.
33. In the case of United Insurance Company Limited v.
Manubhai Dharmasinhbhai Gajera & Ors., (2008)10 SCC 404, where the Supreme Court was concerned with the terms and conditions of mediclaim policies including renewal clauses and defining the scope of judicial review and obligation of the State to act fairly, held as under:-
"46. One important facet of the matter which must also be taken note of is duty on the part of a State to act fairly. Such a fair dealing is expectd at the hands of State within the meaning of Article 12 of the Constitution of India. Strong reliance has been placed by Mr. Parekh on the decision of this Court in Mahabir Auto Stores v. Indian Oil Corpn., (1990)3 SCC 752 and Shrilekha Vidyarthi v. State of U.P., (1991)1 SCC 212.
There cannot be any doubt whatsoever that Article 14 of the Constitution of India which encompasses within its fold obligations on the part of the State to act fairly which operates also in the contractual field, but the said principle would be applicable more in a case where bargaining power is unequal ::: Downloaded on - 09/06/2013 14:55:20 ::: 61 or where the contract is not a negotiated one and/or is based on the standard form contracts between unequals. Some of these decisions, however, had been taken into consideration in Excise Commr. v. Issac Peter, (1994)4 SCC 104 whereupon strong reliance has been placed by the learned Solicitor General. Therein, inter alia, it was held: (SCC p. 124, para 26) "26. Learned counsel for the respondents then submitted that doctrine of fairness and reasonableness must be read into contracts to which State is a party. It is submitted that the State ig cannot act unreasonably or unfairly even while acting under a contract involving State power. Now, let us see, what is the purpose for which this argument is addressed and what is the implication ? The purpose, as we can see, is that though the contract says that supply of additional quota is discretionary, it must be read as obligatory - at least to the extent of previous year's supplies - by applying the said doctrine. It is submitted that if this is not done, the licensees would suffer monetarily. The other purpose is to say that if the State is not able to so supply, it would be unreasonable on its part to demand the full amount due to it under the contract. In short, the duty to act fairly is sought to be imported into the contract to modify and alter its terms and to create an obligation upon the State which is not there in the contract. We must confess, we are not aware of any such doctrine of fairness or reasonableness. Nor could the learned counsel bring to our notice ::: Downloaded on - 09/06/2013 14:55:20 ::: 62 any decision laying down such a proposition. Doctrine of fairness or the duty to act fairly and reasonably is a doctrine developed in the administrative law field to ensure the rule of law and to prevent failure of justice where the action is administrative in nature. Just as principles of natural justice ensure fair decision where the function is quasi-
judicial, the doctrine of fairness is evolved to ensure fair action where the function is administrative. But it can certainly not be invoked to amend, alter or vary the express terms of the contract ig between the parties. This is so, even if the contract is governed by statutory provisions i.e. where it is a statutory contract - or rather more so. It is one thing to say that a contract - every contract - must be construed reasonably having regard to its language. But this is not what the licensees say. They seek to create an obligation on the other party to the contract, just because it happens to be the State. They are not prepared to apply the very same rule in a converse case i.e. Where the State has abundant supplies and wants the licensees to lift all the stocks. The licensees will undertake no obligation to lift all the stocks. The licensees will undertake not obligation to lift all those stocks even if the State suffers loss. This one-sided obligation, in modification of express terms of the contract, in the name of duty to act fairly, is what we are unable to appreciate."::: Downloaded on - 09/06/2013 14:55:20 ::: 63
A bare perusal of the said decision would show that the same was rendered in the context of contracts entered into between the State and its citizens pursuant to public auction of tenders or by negotiation. The respondents therein sought to get new term incorporated in the contract on the specious plea of fairness. The said plea was rightly rejected. The fact, however, remains that the ratio in Issac Peter (supra) is not applicable to the facts of the present case not because the duty to act fairly on the part of a State has no application in the ig field of a contract, but the same would not apply for the purpose of alterations or modifications of a term of contract."
34. From the above stated principles, it is clear that some element of discretion is vested in the competent authority in commercial transactions which are executed on behalf of the State.
But this discretion has to be exercised fairly, without bias and should necessarily be in consonance with the criterion and procedure declared. This criteria should fall in line with the principles of equality and all persons should be treated identically who belong to the same class. The criteria and procedure declared in the terms and conditions of the tender have not been properly and uniformly applied at a subsequent stage. The essential terms and conditions ::: Downloaded on - 09/06/2013 14:55:20 ::: 64 forming part of criteria were deleted, of which notice was given to the parties on the last date of submission and then, of course, extending the date of submission by six days. This undue haste coupled with fact that further changes were made administratively by the Corporation which were not even informed to the parties. In fact, the entire balance of the terms and conditions of the tender was tilted in favour of the bidders rather than in favour of Corporation. The Corporation had earlier vehemently advocated the use of carboncor technology for better repairing and maintenance of roads and later on not only altered it from the terms of tender, but the condition of Joint Venture which was not permissible earlier was allowed in case of carboncor technology and this amended condition was also not enforced and the Corporation accepted the request of the private Respondent Nos.4 to 6 without following any requisite procedure and without declaring the same to all the tenderers.
This undue haste and not insisting upon the specified criteria and then altering same to suit a particular tenderer is the conduct of the Corporation which cannot be sustained in law. All this gives an impression of bias, favouritism and the transaction does not appear to be above board and is not without a colour of favouritism.
::: Downloaded on - 09/06/2013 14:55:20 ::: 6535. Transparency and reasonableness are the twin essential features of fairness. This fairness is to be adopted in procedure and practice. The State functionaries must act fairly and reasonably, that however does not mean to say that they must act judicially and quasi judicially. The terms "fairness of procedure", `fair play in action', `duty to act fairly' are perhaps used as alternatives to "natural justice" without drawing any distinction. According to Prof. Paul Jackson, "such phrases may sometimes be used to refer not to the obligation to observe the principles of natural justice but, on the contrary, to refer to a standard of behaviour which, increasingly, the courts require to be followed even in circumstances where the duty to observe natural justice is inapplicable." These observations were duly approved by the Supreme Court in the case of Management of M/s. M.S. Nally Bharat Engineering Co. Ltd. v.
State of Bihar & Others, (1990) 2 SCC 48, it also approved observation of Lord Pearson, who stated that fairness has no set form or procedure. It depends upon the facts of each case. Indeed, it cannot have too much elaboration of procedure since wheels of administration must move quickly but in this process of quickness, ::: Downloaded on - 09/06/2013 14:55:20 ::: 66 fairness cannot be permitted to be a casualty.
36. The above discussion brings us to the absence of reasons and reasonableness in the action of Corporation. At the cost of repetition, we may notice that there were divergent views expressed within the Corporation as regards the need for enforcing the condition of Joint Venture for carboncor, and the need for its waiver in absolute terms. However, as it appears from the record, the Tender Committee granted approval and contract was awarded to Respondent Nos.4 to 6 subsequently. Despite various suggestions from different quarters, including contradictory views, no final decision had been taken till 11th May, 2009 as to whether to waive the condition of Joint Venture Agreement and treat such class of tenders as responsive/non-responsive. On 11th May, 2009, from the remark recorded by the Municipal Commissioner the trend appears to have changed in the administration of Corporation. Of course, there is nothing on record and even the reply affidavit filed on behalf of the Corporation is silent as to whether the Commissioner actually discussed the matter with the Chief Minister ? What was the content of discussion ? What directions, if any, were issued by ::: Downloaded on - 09/06/2013 14:55:20 ::: 67 the Chief Minister. But the fact of the matter remains that thereafter the Corporation overruled the Law Officer's opinion and the condition of submission of Joint Venture Agreement was waived.
The remark of the Municipal Commissioner to complete the cost competitive justification does not appear to have been dealt with in its correct perspective and the doubt expressed by the Chief Engineer (Roads) as to how the costing of tender bids was to be done to determine the lowest bidder, if the condition stood waived, remained unattended.
37. In terms of the provisions of the Mumbai Municipal Corporation Act, 1888, the affairs of the Corporation are governed by the elected General Body of the Corporation. Thereafter, it is the Standing Committee and the Municipal Commissioner which is the competent authority to take decisions subject to the supervision of these bodies. The Government or the Chief Minister does not fall in the hierarchy of the Corporation in taking business decision particularly day to day business. The Government only has the jurisdiction under Section 520C to issue directives on policy matters.
The Municipal Commissioner in terms of Section 69 of the Mumbai ::: Downloaded on - 09/06/2013 14:55:20 ::: 68 Municipal Corporation Act, 1888 is empowered to enter into contracts on behalf of the Corporation. This was certainly not a policy matter nor the Government has attempted to exercise its powers by issuing directives. What was the need for the Municipal Commissioner to discuss the matter with the Chief Minister ? It is neither requirement of the Municipal law nor in fact it was so needed. The reply affidavit filed as well as the record are clearly silent in this regard. It will be appropriate for us to leave the matter at that while noting that this exercise by the Municipal Commissioner seems to be beyond the authority of law. However, shadow of such discussion, if any, certainly resulted in change in the attitude of the Municipal Corporation in awarding the contract to the private Respondents.
38. The sudden change in decision making process and the decision itself that too without any properly recorded reasons shows the unreasonableness in the action of the Corporation. How the Corporation could leave a discretion vested in it for getting the work executed at the mercy of the tenderers as to which one of the specified technology was to be used, is an aspect which is beyond ::: Downloaded on - 09/06/2013 14:55:20 ::: 69 comprehension of reasonable mind. To our mind, it would be for the Officers of the Corporation to decide as to which road and which section would require repairs based on which technology and it is not for the tenderer to decide which road he would repair with what technology, more so, a tenderer who does not even have the basic requisite of carboncor technology. It appears that suddenly larger public interest and the interest of the Corporation was overlooked and procedures were varied for sustaining the private interest.
39. It is a settled principle of law that in contractual matters, terms of tender are binding commitments. Decision has to be taken on relevant consideration and not by extraneous consideration. If it is influenced by extraneous consideration and the concept of reasonableness is noticeabely absent, the decision is bound to be vitiated even if there was absence of definite bias. Delegate of a power is under obligation to discharge its delegated duty in consonance with the law and the prescribed procedure. When such a wide power is vested in the Government, it has to be exercised with greater circumspection. It is said, the greater is the power, greater should be the caution. No power is absolute, it is hedged by ::: Downloaded on - 09/06/2013 14:55:20 ::: 70 the checks in the statute or prescribed procedure itself.
40. It is essential to lay down as a matter of policy as to how the preference should be assigned between two persons falling in the same category. This should be made in a transparent manner with objective criteria and the procedure as to who would be preferred and why is to be indicated before hand. Lack of transparency in the system promote nepotism and arbitrariness.
Reference can be made to the decisions of the Supreme Court, in the cases of (i) Consumer Action Group and another v State of Tamil Nadu and others, (2000) 7 SCC 425, (ii) Common Cause, A Registered Society v Union of India and others (1996) 6 SCC 530 and
(iii) Faish Chaudhary v Director General Doordarshan, (1989) 1 SCC
89.
41. Fairness in the action of the State while awarding contracts to successful bidders is a sine qua non. Such matters may fall entirely in the administrative domain but since they are relatable to distribution of State largesse the State unlike a private party has to follow certain settled norms, procedures, fairness and ::: Downloaded on - 09/06/2013 14:55:20 ::: 71 transparency in its action. The action of the State should be free of arbitrariness and must not be in colourable exercise of power.
Usefully, a reference can be made to the judgment of this Court in the case of Vijay Kumar Gupta v State of Maharashtra and others, 2008 (4) Mh.L.J. 370, where the Court held as under :-
"6.8 In the case of Association of Registration Plates vs. Union of India and others, [2005 (1) SCC 679], the Court was concerned with the merits of the plea of arbitrary action where selection of one manufacturer through process of open competition was finalised and ultimately one single manufacturer was chosen for a region or State. The Court held that such action would not amount to creating a monopoly of business in favour of a private party. The following observations of the Supreme Court need to be noticed which would have some bearing on the controversy in the present case.
"43. Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work. Article 14 of the Constitution prohibits the Government from arbitrarily choosing a contractor at its will and pleasure. It hast o act reasonably, fairly and in public interest in awarding contract. At the same time, no person can claim a fundamental right to carry on business with the Government. All that he can claim is that in competing for the ::: Downloaded on - 09/06/2013 14:55:20 ::: 72 contract, he should not be unfairly treated and discriminated, to the detriment of public interest.
Undisputedly, the legal position which has been firmly established from various decisions of this Court, cited at the Bar (supra) is that government contracts are highly valuable assets and the court should be prepared to enforce standards of fairness on the Government in its dealings with tenderers and contractors."
7. ig Another facet of fairness in administrative action is whether the action suffers from the vice of arbitrariness. The courts while exercising the powers of judicial review within the prescribed limitation are bound to examine this aspect of executive actions. The executive besides taking decisions effecting its powers are expected to act in consonance with the rule of fair play. Normally, such actions could be examined by the court on the touch-stone of Wednesbury's principles. This doctrine has emerged from English Law and has now been accepted in India as well. The judicial pronouncements now, for a considerable time, have applied this principle with all its rigours. Normally, it will be impermissible for a State to exercise its discretion free of any checks and balances and without any objectivity in their decisions. As already noticed, it is the fairness of decision making process which squarely falls within the ambit of judicial review and if such a decision making process suffers from basic infirmities and it unreasonably denies the principles of equality of participation as well as infringes fair competitiveness in contractual matters with the State, the judicial intervention in such cases may be justified. Noting reasonableness in State ::: Downloaded on - 09/06/2013 14:55:20 ::: 73 action relating to distribution of State largesse particularly, in the field of trade would have its own consequences."
42. Still in another case of Subhash R. Acharya v State of Maharashtra and others, 2007 (6) BCR 100, where the Court was considering arbitrary renewal of contracts and avoidance on the part of the administration to invite tenders, and while terming it to be arbitrary and prejudicial to the State interest the Court required the State to act fairly, observing as follows:
"20. Before we examine the facts of the present case in the light of the above principles, another important facet of the case in relation to the doctrine of public accountability and application of Wednesbury principles in State action would be important to be noted. A Division Bench of this Court in the case of Mohammed Salim Abdul Karim vs. The State of Maharashtra and others (Writ Petition No. 1513 of 2006), commenting upon the fairness in State action, held as under:-
"4. In the case of Shanti Prasad Agarwal and ors vs Union of India and ors,
-1991 Supp (2) Supreme Court Cases 296, the Supreme Court clearly stated that the administrative law requires that in an administrative action, while adhering to the principles of natural justing, passing of a speaking order would be desirable. In the ::: Downloaded on - 09/06/2013 14:55:20 ::: 74 case of Shri Mahender Kumar vs Land Acquisition Collector, W.P(C) No.13308-12 of 2005 dated 11th May 2006, the Division Bench of the Delhi High Court observed as under:
"....Wherever a cause is relatable to breach of statutory or implied duty of a public officer, the rule of law would essentially provide for a remedy even if it is not so specifically spelled out in the provisions of the Act. Arbitrariness and unreasonableness being facets of Article 14 are available as grounds not only for questioning an administrative action but ig in certain cases may even invalidate subordinate legislation. Timely action is the essence of government functioning and unreasonable delay questions the very correctness of such orders.
Wherever the records offer no explanation for prolonged unreasonable delay, the equity will tilt more in favour of the petitioners than uphold the action of the authorities to be correct, being done in the normal course of its business......."
".....Concept of public accountability has been applied to the decision making process in the government by the courts for a considerable time. This concept takes in its ambit imposition of costs and its recovery from the officer concerned for their negligence or acts of prolonged, unexplained delays running into years. In the case of State of Andhra Pradesh vs. Food Corporation of India 2004 (13) Supreme Court Cases 53, the Court directed as under:-
"We are shocked as to the manner in which the State Government is filing petitions in this Court resulting ::: Downloaded on - 09/06/2013 14:55:20 ::: 75 not only in wasting the time of this Court and all others concerned but in total waste of public money.
The impugned orders have been challenged after more than eight years with almost no explanation, as is evident from the paragraph reproduced above"
".......The doctrine of full faith and credit applied to the acts done by the officers and presumptive evidence of regularity of official acts done or performed, is apposite in faithful discharge of duties to elongate public purpose and to be in accordance with the procedure prescribed. It is now settled legal position that the bureaucracy is also accountable for the acts done in accordance with the rules when judicial review is called to be exercised by the Courts.
The hierarchical responsibility for the decision is their in-built discipline. But the Head of the Department/designated officer is ultimately responsible and accountable to the Court for the result of the action done or decision taken. Despite this, if there is any special circumstance absolving him of the accountability or if someone else is responsible for the action, he needs to bring them to the notice of the Court so that appropriate procedure is adopted and action taken. The controlling officer holds each of them responsible at the pain of disciplinary action. The object thereby is to ensure compliance of the rule of law"
".......It is known fact that in transaction of the Government business, none would own personal responsibility and decisions are leisurely taken at various levels. It is not uncommon that delay would be deliberately caused in filing appeal or revision by Government to confer advantage to the opposite litigant; more so when stakes involved are high or persons are well connected/influential or due to obvious considerations. The Courts, therefore, do not adopt strict standard of proof of every day's delay.::: Downloaded on - 09/06/2013 14:55:20 ::: 76
The imposition of costs on officers for filing appeals causes public injustice and gives the manipulators an opportunity to compound the camouflage. Secondly, the imposition of costs personally against the officers would desist to pursue genuine cases of public benefit or importance or of far-reaching effect on public administration or exchequer deflecting course of justice. The principle of care, maintenance of higher caution, expeditious decision-making process in exercise of statutory powers, public accountability and transparency are also applicable to the various proceedings under the law of acquisition. Various provisions of the Act could be referred to demonstrate that the exercise of powers eminating from statutory provisions is coupled with public obligation, to protect the rights of the land owners...."
6. The basic rule of law is truly applicable to the administrative acts as well. The need for reasoned orders and prompt action by the State administration is the requirement of the day".
21. The concept of public accountability has been applied to the decision making process in the Government by the courts for a considerable time. Administrative or executive actions are subject matter of judicial review. Defining this role, the Supreme Court in the case of State of Bihar vs. Subhash Singh, AIR 1997 SC 1390 held as under:
"In our democracy governed by the rule of law, the judiciary has expressly been entrusted with the power of judicial review as sentinal in qui vive. Basically judicial review of administrative actions as also of legislation is exercised against the actions of the State. Since the State or public authorities act in exercise of their executive or legislative power, they are amenable to the judicial review"::: Downloaded on - 09/06/2013 14:55:20 ::: 77
"..... The normal principle that the permanent bureaucracy is accountable to the political executive is subject to judicial review. The doctrine of "full faith and credit" applied to the acts done by the officers and presumptive evidence of regularity of official acts done or performed, is apposite in faithful discharge of duties to elongate public purpose and to be in accordance with the procedure prescribed. ''
22. The decision of the Delhi High Court in the case of Major General B.D. Wadhwa vs. Union of India and others (W.P. (C) No. 10630/2006), at this stage can be usefully referred to:
" The main line of arguments raised on behalf of the petitioner is that the Court is entitled to investigate the action of the authorities with a view to see, whether it has taken into account matters which ought not to have been taken into account or conversely has refused or neglected to take into account the matters which it ought to take into account. It is also contended that no promotion board or authority can exercise unfettered discretion.
The process of selection should essentially be in conformity with the basic rule and should not be arbitrary, discriminatory in its form and conclusion. In support of his contention, he relied upon the juudgments of Associated Provincial Picture Houses Ltd. vs. Wednesbury Corporation, 1947 (2) All ER 680 and Air Vice Marshal Harish Masand vs. Union of India & Ors., 2004 VIII AD (Del.) 429.
15. On the other hand, the learned counsel appearing for respondent No.4 with some vehemence contended that the power of judicial review of such administrative actions has inbuilt limitations. "Reasonableness" and "Rationality" or even "Proportionality" of decision making process can ::: Downloaded on - 09/06/2013 14:55:20 ::: 78 be examined within a very limited scope (Refer R.M. Arunachalam vs. Commissioner of Income Tax, Madras,1997 (7) SCC 463).
16. Further, it is contended that the competent authority can select any person, not necessarily the senior most, keeping in view the service profile of the candidate and judicial review is permissible only to the extent of finding whether the process in reaching the decision has been observed correctly and not the decision as such. In this regard, reliance has been placed to the case of Union of India and ors. vs. Lt. Gen. Rajendra Singh Kadyan and another, 2000 (6) Supreme Court Cases 698.
Emphasizing on the restricted scope of judicial review under Article 226 of the Constitution of India, it is also contended that the Court does not act as an Appellate Authority and even if a decision taken by the Government does not appear to be agreeable to the Court, the Court would not interfere unless such decision was offending the above rules of law (Refer:
Ekta Shakti Foundation vs. Govt. Of NCT of Delhi, JT 2006 (6) SC 500."
23. Usefully, a reference can also be made in regard to the judgments of the Supreme Court in the cases of (i) Secretary, Jaipur Development Authority, Jaipur vs. Daulatmal Jain and others, (1997) 1 SCC 35, (ii) Vineet Narain vs. Union of India, AIR 1998 SC 889, and (iii) Kumari Shrilekha Vidyarthi etc. etc. vs. State of U.P. and others, AIR 1991 SC 537.
24. On the basis of the undisputed facts, as aforenoticed by us, the Court needs to squarely deal with the question whether the decision of the Minister, contrary to the note of the Department and without complying with the instructions and the ::: Downloaded on - 09/06/2013 14:55:20 ::: 79 procedure provided by rules of business, can be termed reasonable, bona fide and free of arbitrariness or it is a decision taken in colourable exercise of power and devoid of public interest. ....."
43. The principle object of inviting tenders in question was to use best and/or different technologies and different steps as per requirement while keeping the economic interest of the Corporation in mind and ensuring achievement of a laudable public purpose that roads in the suburbs and City of Mumbai should be maintained and kept in a good condition. To achieve this object, the Corporation had issued voluminous terms and conditions of the tender containing specification, methodology, criteria and the procedure it intended to adopt for awarding of the tender. Paramount considerations of public purpose and economic interest of the Corporation were ignored at least in terms of procedure. Deletion, variation and then completely waiving even the substituted conditions, which were material, casts a serious shadow of doubt on the action of the Corporation. While distributing the State largesse specially in the form of awarding of contract of high magnitude, the obligation on the part of the Corporation to be fair, transparent and ::: Downloaded on - 09/06/2013 14:55:20 ::: 80 judicious is on a higher pedestal. It is a settled norm of administrative prudence that higher the power greater is the responsibility to be cautious and fair which has now been accepted as a legal principle. The binding terms and conditions and accepted criteria was duly provided for and, thus, it was for the Corporation to show that it had acted in accordance therewith and its action was free of arbitrariness. The action of the Corporation has undermined the dignity of settled administrative norms and good governance. In fact, from the record, it is abundantly clear that the Corporation has failed to maintain absolute fairness and transparency in its procedure, decision making process and the final decision in awarding the contract. It can also be useful to notice that there is no clarity in the terms and conditions of the tender itself as to what would be the extent of use of each of the specified technologies while carrying out the repairs and maintenance of the roads.
Undefined quantity and unspecified quality have not only resulted in giving rise to confusion but have considerably affected costing factors. To arrive rationally at a comparative cost study at L-1, there had been no definite criteria as the bidders were not required to state their bid amount with reference to each of the specified ::: Downloaded on - 09/06/2013 14:55:20 ::: 81 technologies. In our view, this is a serious lacunae in the terms and conditions of the tender and doubt expressed by the Chief Engineer ( Roads) in his note dated 4th April, 2009 is fully justified and the Authorities of the Corporation were expected to consider that aspect in a more objective and realistic manner. The Corporation is expected to discharge its obligation in accordance with the basic rule of law. The statutory power vested in the Commissioner of the Corporation to enter into contracts under Section 69 of the Act is to be exercised cautiously. He too has to exercise such power subject to approval of the Competent Authority if so specified. The Standing Committee is expected to exercise its power of approval expeditiously but certainly in a manner which is in line with the principle of fairness and transparency. In our view, both, the Commissioner of the Corporation and the Standing Committee have failed to act in exercising this basic principle. The entire decision making process and the decision suffer from defect of uncertainty, ambiguity and arbitrariness.
44. Rule is made absolute in Writ Petition (Lodging) No.1243 of 2009. The Letter of Intent dated 6th July, 2009 issued to ::: Downloaded on - 09/06/2013 14:55:20 ::: 82 Respondent Nos.4 to 6 is hereby quashed with a further direction that the Corporation shall invite fresh tenders by stating its terms and conditions with certainty and without ambiguity while keeping in mind the economic interest of the Corporation and ensuring the achievement of the public object.
45. In view of the above, nothing survives in Writ Petition No.765 of 2009 and the same is accordingly disposed of. Rule is discharged.
46. No order as to costs.
CHIEF JUSTICE A.M. KHANWILKAR, J.
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