Bombay High Court
Kirloskar Brothers Limited vs The Kalyan Dombivli Municipal ... on 14 May, 2010
Author: A.M.Khanwilkar
Bench: A.M.Khanwilkar, R.M.Savant
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.2245 OF 2010
Kirloskar Brothers Limited - ]
Maharashtra Electro-mech (A Joint Venture) ]
having its office at "Yamuna" Survey No.98/3 to ]
7 Baner, Pune - 411 045 Through its ]
authorised officer and power of attorney holder ]
Shri Arun Bhupal Chogule, Age:- , Occ:-Service ]
with Petitioner as Associate Vice President, ]
Having office address as above. ]...Petitioners
Versus
1. The Kalyan Dombivli Municipal Corporation ]
Through its Executive Engineer, ]
Water Supply Department, Having office at ]
Shankarrao Chowk, At Kalyan, District Thane. ]
2. The Chairman, ]
Standing Committee of Kalyan-Dombivli ]
Municipal Corporation, Having office at ]
Shankarrao Chowk, At Kalyan, District Thane. ]
3. Shri Goving J. Rathod, ]
The Commissioner of Kalyan-Dombivli ]
Municipal Corporation, Having office at ]
Shankarrao Chowk, At Kalyan, District Thane. ]
4. M/s. R.B. Krishnani - Viraj (Joint Venture) ]
2nd Flower, Shirin Garden Housing Soc., ]
Parihar Chouk, Aundth, Pune - 411 026. ]
5. Union of India, Through the Ministry of Urban ]
Development and Jawaharlal Nehru National ]
National Urban Renewal Mission, Govt. of ]
India, Having its office at Ministry of Urban ]
::: Downloaded on - 09/06/2013 15:57:18 :::
2
Development and Poverty Alleviation, ]
Nirman Bhavan, Maulana Azad Road, ]
New Delhi 110 011. ]
6. Ministry of Urban Development, ]
State of Maharashtra, ]
Through Mr. Bhaskar Jadhav Ld. State ]
Minister for Urban Development, State of ]
Maharashtra, Mantralaya, Mumbai - 32. ]
7. The State of Maharashtra. ]...Respondents
......
Mr.Y.S.Jahagirdar, Sr.Counsel with Mr.Tejesh Dande for Petitioners.
Mr.K.K.Singhvi, Sr.Counsel with Mr.A.S.Rao for Respondents 1 to 3.
Mr.P.K.Dhakephalkar,Sr.Counsel with Mr.M.S.Karnik for Respondent No4.
Mr.V.S.Gokhale, A.G.P. for Respondents 6 & 7.
......
CORAM: A.M.KHANWILKAR AND
R.M.SAVANT, JJ.
JUDGMENT RESERVED ON : MAY 4, 2010.
JUDGMENT PRONOUNCED ON : MAY 14, 2010
JUDGMENT :(Per A.M.KHANWILKAR, J.) :
1. By this Writ Petition under Article 226 of the Constitution of India, the Petitioners in substance are questioning the legality and validity of the procedure followed by the Respondent Corporation in relation to the tender process pertaining to renewal, expansion and automization of the existing ::: Downloaded on - 09/06/2013 15:57:18 ::: 3 works at Barave and Titwala Water Treatment Plant in Kalyan - described as work No.1 (hereinafter referred to as `the said work'), of which estimated price is stated to be Rs.20,52,08,234/-. Pursuant to the tender notice bearing No.03/2009-2010, since the Petitioners fulfilled all the qualifications, they submitted their tender on 5th October 2009 in respect of work at Serial No.1 of the said work. In all, four tenders were received for the said work before the expiry of the date and time for submission thereof including that of the Petitioners. The technical bid of all the four bidders were opened on-line on 7th October 2009. After scrutiny of the technical bids, it was found that the Petitioners and one SMC Infrastructure Pvt.Ltd.
(hereinafter referred to as `SMC') were the only bidders who were technically qualified. The bid submitted by the other two bidders M/s.R.B.Krishnani-Viraj (Joint Venture)-Respondent No.4 herein and one S.N.Thakkar Construction Pvt.Ltd. were found to be lacking in qualification, for which reason, their bids were rejected. It was noticed that Respondent No.4 had not submitted registration copy and experience certificate along with their tender. The Respondent No.4, however, on 7th October 2009 submitted representation to the Commissioner to consider their case on the ground that although they had submitted their tender for the said work on 4th October 2009 through E-Tendering along with all ::: Downloaded on - 09/06/2013 15:57:18 ::: 4 documents such as bank guarantee and qualification certificates, but when the tenders were opened, the relevant documents were not visible on the web. Here it may be relevant to notice that the Respondents on affidavit filed in this Court have conceded that no supporting documents were uploaded on the website of the Corporation. In that sense, the stand taken by the Respondent No.4 in the said representation dated 7th October, 2009 is belied. Be that as it may, the Respondent No.4 asserts that their representative was present at the time of opening of tender and had volunteered to submit hard copy of bank guarantee for EMD but was not accepted. In this communication, the Respondent No.4 also stated that their offer is 0.13% below the tender cost, for which reason, they should be awarded the contract.
2. When the commercial bids were opened, it was noticed that the Petitioners had quoted Rs.22,47,03,016.23, whereas, the other qualified bidder-SMC quoted Rs.24,62,49,880.80 as against the estimated tender price of Rs.20,52,08,234. The Petitioners' bid was the lowest amongst the qualified bidders and therefore was declared to be the lowest bidder No.1 (L-1). The second lowest bid was that of said SMC and was declared L-2.
Accordingly, the Petitioners were invited for negotiations by the Respondent No.1 vide letter dated 26th October 2010.
::: Downloaded on - 09/06/2013 15:57:18 ::: 5The price bid evaluation report on balance works in water supply was prepared. Insofar as the said work (work No.1) of renewal, expansion and automization of existing work at Barave Water Treatment Plant, the evaluation report reads thus :
"Analysis and recommendation:
Work No.1 Renewal, expansion and atomization of existing works at Barave & Titwala water treatment plants.
There are about 104 items of works in this tender. However, the item which form the major component of the cost are RCC ground service reservior of 3.00 ML capacity, VT pumps, construction of administration block, PLC based automation system and providing & laying of 1422 mm dia MS pipe of 100 m length. The percentage wise impact of these items with respect to cost put to tender is as follows:
SR PARTICULARS COST (RS. CRORE)
NO
Total cost put to tender 17.07 (Excluding O & M)
1 RCC GSR of 3.0 ML 00.85 (4% of total cost)
2 VT Pumps 09.89 (48% of total cost)
3 Administration block 00.40 (2.0% of total cost)
4 PLC based automation 02.00 (9.7% of total cost)
5 MS pipe 00.55 (2.68% of total cost)
6 Sub total of above items 13.69 (about 81% of the total cost)
KDMC has recently finalized the tender for 100 MLD head works at Mohili which included all the above components. These tenders have been finalized at about 4.95% above. Since in the present case, the cost is governed mainly by these components, it will be reasonable to finalise the present tender on the similar line. Hence the reasonable acceptable cost would about 5.00% above the cost put to tender.
It is therefore suggested to negotiate further with bidder and take the ::: Downloaded on - 09/06/2013 15:57:18 ::: 6 decision accordingly." (emphasis supplied)
3. Although the bid submitted by Respondent No.4 was rejected and was out of reckoning, yet they submitted letter dated 3rd December 2009 directly addressed to the Commissioner once again requesting to consider their offer and to allot them the said work. Along with this letter, it is stated that the Respondent No.4 submitted hard copies of all the relevant documents which are found from Pages 215 to 157 of the original record of the Corporation. We shall presently advert to the said documents submitted by Respondent No.4, which according to them indicated that the Respondent No.4 possessed necessary qualification. Significantly, the Commissioner, purportedly on 10th December 2009, made noting on the said covering letter sent by the Respondent No.4 to verify with the Consultant and then put up. The noting reads thus:
"Mr. Juneja Verify with consultant and put up.
Sd/- 10/12"
4. Be that as it may, during the negotiations, the Petitioners gave discount of 0.5% on the offered tender cost. However, the Respondent No.1 by letter dated 17th December 2009 once again invited the Petitioners for ::: Downloaded on - 09/06/2013 15:57:18 ::: 7 further negotiations. Accordingly, on 18th December 2009, the Petitioners gave their final discount of 4.5%, making their discount offer of 5% above the estimated cost. Considering the recommendation in the evaluation report reproduced above, the Petitioners' bid could have been accepted by the Corporation.
5. However, in view of the noting made by the Commissioner on the representation submitted by the Respondent No.4 dated 3rd December 2009, opinion of the Consultant was invited, obviously on the basis of the documents submitted by the Respondent No.4 along with the said covering letter. The Consultants by their communication dated 19th December 2009 advised the Executive Engineer of the Water Supply Department of the Respondent Corporation that on the basis of information provided to them, the Respondent No.4 possessed the requisite experience necessary to carry out the subject work. We would think it apposite to reproduce the said communication in its entirety as available at page 237 of the original record.
The same reads thus:
"COSULTING ENGINEERING SERVICES (INDIA) PRIVATE LIMITED 41A, MAKER TOWER, "E", 4TH FLOOR, CUFFE PARADE, MUMBAI 400005 PHONE:
22182772/22186429/ 22164489 E-mail [email protected]/[email protected] Website : www.cesinter.com Fax:::: Downloaded on - 09/06/2013 15:57:18 ::: 8
022-22188430 Date: 19.12.2009 To Executive Engineer Water Supply Department Kalyan Dombivli Municipal Corporation Kalyan Sub: Work of renewal, expansion and automation of existing water treatment plants at Barave & Titwala.
Dear Sir, This has reference to the submission made by M/s.R.B. Krishnani-Viraj to Kalyan Dombivli Municipal Corporation (KDMC) in connection with carrying out the execution of the subject works.
The said submission as received by KDMC has been reviewed as requested and the observations made are as follows:
1. M/s. R.B. Krishnani, the Lead Partner, has given the details about financial standings which are adequate for carrying out the subject work.
2. M/s. R.B. Krishnani, the Lead Partner, has submitted experience certificates regarding providing & installing VT pumps of required capacity, constructing the RCC reservoir of required capacity and operation & maintenance of the system. Thus M/s. R.B. Krishnani-Viraj JV has demonstrated their capacity as far as the major components of the subject work.
3. As far as the work of automisation of WTP is concerned, M/S.R.B. Krishnani-Viraj JV has enclosed a letter from M/s.Crystal, who has completed the automisation of water supply system of Thane Municipal Corporation, stating the willingness of M/S Crystal to carry out the automisation component of the said work for M/S R.B. Krishnani-Viraj JV. The concept of automisation is a recent one and the cost impact of the same would be less as compared to the remaining components of the subject work.
Considering the above mentioned information, M/S R.B. Krishnani - Viraj may be considered to have the requisite experience necessary to carry out the subject work. Additionally, separate confirmation may be obtained from M/S Crystal in connection with the subject work and the deciding authorities of KDMC may take appropriate decision further in connection with the execution of the subject work.
::: Downloaded on - 09/06/2013 15:57:18 ::: 9Thanking you, Yours faithfully, Consulting Engineering Service (India) Private Limited Sd/-
(R D Panandikar)" (emphasis supplied)
6. It does appear that the Officials of the Corporation were on the one hand negotiating with the Petitioners and at the same time were pursuing their other option of giving contract to the Respondent No.4 subject to their competence and requisite experience possessed by the said respondent no.
4 necessary to carry out the subject work. What is relevant to notice is that the documents submitted by the Respondent No.4 contained letters exchanged between the Respondent No.4 and one Krystal Techno Engineering Services Pvt.Ltd. (hereinafter referred to as `Krystal') indicating that in the likelihood of Respondent No.4 getting the said contract, part of the work of automization could be undertaken by the said Krystal. We shall elaborate on this aspect at the appropriate stage.
7. It is noticed that on receipt of the opinion of the Consultant, the matter was placed before the Standing Committee of the Corporation. In ::: Downloaded on - 09/06/2013 15:57:18 ::: 10 its meeting dated 30th January 2010, the Standing Committee passed the following Resolution. English translation whereof reads thus:
"KALYAN DOMBIVALI MUNICIPAL CORPORATION, KALYAN Standing Committee Meeting Number 12, Date 30/01/2010 Subject Number - 14 Resolution Number- 127 As the proposal bearing O. No. KDMC/EE/WS/655 dated 25/1/2010 of the Administration, Lowest Offerer (bidder) M/s Kirloskar Brothers- Maharashtra Ele.Mech.
( J.V.) was requested to give revised offer in respect of the works viz. to carry out the repairs of Water Purification Centre of Kalyan Dombivali Municipal Corporation, at Barave and Titwala under Jawaharlal Nehru National Urban Renewal Scheme and to make improvement with machineries, as per requirement and to set up machinery (plant) with computerised systems, it has shown inclination to carry out the work by reducing the rate given in the offer which was submitted earlier and at the additional rate of 5 percent on the estimated rate (costs). Considering the opinion of the consultant, a recommendation has been made to accept the said tender at a maximum additional rate of 5 percent on the estimated rate (costs). After the negotiation, as the offer with reasonable rate (cost) was not received, a decision was taken to re-issue (invite) the tender. However, the tenderer viz. M/s Krishnani-Viraj (J.V.), which participated in this tender, but, declared ineligible, has expressed it's willingness to do the work at the rate 0.13 percent less, on the estimated rate declared (offered). As the documents of M/s Krishnani -Viraj (J.V.) are not available, after calling for the documents about it's eligibility (qualification) and upon making scrutiny thereof, the Administration and the Consultant of the said work have given an opinion that M/s Krishnani- Viraj (J.V.) is eligible to do the said proposed work. Moreover, M/s Krishnani -Viraj (J.V.) has received even other important works (jobs) of the Municipal Corporation. Considering all these things, instead of inviting the tender for the work under subject again, this meeting of the Standing Committee accords sanction as per Rule 2(2) Chapter V of the schedule to Bombay Provincial Municipal Corporation Act, 1949, to entrust the said work to M/s Krishnani-Viraj (J.V.).
Proposer : Sd/- Arun Pandharinath Gidh Seconder: Sd/- P.P.Penkar - Pratima Prakash Penkar Resolution passed unanimously ::: Downloaded on - 09/06/2013 15:57:18 ::: 11 Sd/-
Chairman Standing Committee (Seal of the Municipal Corporation Secretary of Kalyan Dombivali Municipal Corporation)" (emphasis supplied)
7. When the Petitioners representative visited the Office of Respondent No.1 on 1st February 2010, he realised that the Respondent No.3 Commissioner was in the process of giving contract of the said work to Respondent No.4 who was declared as technically disqualified bidder at the threshold. The Petitioners have alleged that the Respondent No.3 Commissioner was biased and took personal interest to favour the Respondent No.4. In the circumstances, the Petitioners approached the Respondent No.6 - Minister for Urban Development, Mantralaya by way of representation dated 1st February 2010 about the illegalities committed in the said tender process. Since no intimation was received by the Petitioners in relation to the request for stay made in the said representation, the Petitioners filed Writ Petition in this Court being Writ Petition No.1314 of 2010. That Writ Petition, however, was disposed of on 18th February 2010 by the following order :::: Downloaded on - 09/06/2013 15:57:18 ::: 12
"1. The learned Advocate appearing for the respondent Nos.1 & 2 states that on a complaint made by the petitioner, the State Government has stayed the further process and, therefore, till the order of the State Government continues, there is no question of respondent Nos.1 & 2 proceeding further in the matter of awarding of contract. Statement is accepted. In view of this statement, Petition is disposed off as withdrawn. All contentions available to both sides are kept open. It is however directed that in case the Government vacates the stay that it has granted, the Corporation will not proceed ahead for a period of seven days from the date of communication of the order of the Government to the petitioner. Writ Petition is disposed off accordingly."(emphasis supplied)
8. The Petitioners, however, received an intimation from Respondent No.1 on 24th February 2010 mentioning that the Minister has already vacated the stay granted at the behest of the Petitioners. The Petitioners took the stand that until the order passed by the Minister was served on the Petitioners by the Government, the interim protection granted by this Court in terms of the order dated 18th February 2010 would operate. However, on realising that the matter was being precipitated by the Respondents 1 to 3 and Respondent No.3 in particular, at the behest of Respondent No.4, the Petitioners approached this Court by way of present Writ Petition on 17th March 2010, praying for the following reliefs:
"a. Rule may be issued.
b. The entire Record, including minutes of meeting noted in meeting
no 12 on subject no.14, dated 30/01/2010 of Standing Committee of Respondent no 1, further all the resolutions passed during the said meeting and, result of technical bid opening in the process of Tender notice bearing No.03/2009-2010, from the file of the Respondent no.1;
::: Downloaded on - 09/06/2013 15:57:18 ::: 13and further entire Record from the file of Respondent no 6, with regard to impugned Order dated 24/02/2010 passed on the Complaint filed by the Petitioner on Tender notice bearing No.03/2009-2010 may kindly be called for;
c. After considering the said record and after verifying the legality and validity of the same, this Hon'ble Court may kindly be pleased to issue a Writ of mandamus or any other appropriate Writ, order, or direction in like nature thereby revoking, recalling and rescinding the action/decision of the standing committee of the Respondent no.1 to award the contract in favour of the Respondent no.4, pursuant to the tender notice 03/2009-2010; and further it may kindly be directed to the Respondent no 1 to award the said Contract in favour of the Petitioner, with regard to tender notice bearing no.03/2009-2010;
d.
After considering the said record and after verifying the legality and validity of the same, this Hon'ble Court may kindly be pleased to quash and set aside the Order dated 24/02/2010 passed by the Respondent no 6 on the Complaint filed by the Petitioner on Tender notice bearing No.03/2009-2010;
e. Pending the hearing and final disposal of the present petition, the Respondent no.1 to 3 and 6 may kindly be directed to not to take any further steps and/or action/s in respect of the tender notice bearing No. 03/2009-2010 and also further consequential actions there to; and further the effect, operation and implementation of the work order, if any, issued in favour of the Respondent no.4, pursuant to the tender notice 03/2009-2010, may kindly be stayed;
f. Pending the hearing and final disposal of the present petition, effect implications and the execution of the said Order dated 24/02/2010 passed by the Respondent no 6 on the Complaint filed by the Petitioner on Tender notice bearing No.03/2009-2010 may kindly be stayed and also further consequential actions thereto may kindly be stayed;
g. Pending the hearing and final disposal of the present petition, the Respondent no 1 be directed to produce original record pertaining to minutes of meeting noted in meeting no 12 on subject no.14, dated 30/01/2010 of Standing Committee of Respondent no 1, further all the resolutions passed during the said meeting and, result of technical bid opening in the process of Tender notice bearing No.03/2009-2010; and further entire Record from the file of Respondent no 6, with regard to impugned Order dated 24/02/2010 passed on the Complaint filed by the ::: Downloaded on - 09/06/2013 15:57:18 ::: 14 Petitioner on Tender notice bearing No.03/2009-2010.
h. Ad-interim reliefs in terms of prayer clause (e) (f) and (g) above be granted;
i. Any other and further reliefs as this Hon'ble Court deems fit and proper in facts and circumstances of the case."
9. The Respondent No.3 however, proceeded to issue work order on 17th March 2010 in favour of Respondent No.4 for the said work. When the present Writ Petition came up for hearing on 26th March 2010, after considering the arguments of both sides, the Court passed the following order:
"1. Heard counsel for the parties.
2. Prima facie, we find force in the argument of the Petitioners that the entire action of the Corporation smacks of malafide exercise of power.
In the first place, the bid submitted by the Respondent No.4 was found to be non-responsive as it was technically rejected on account of non- affixing registration copy and experience certificate. Nevertheless, we are informed that even the work order has been issued in favour of the said Respondent. This is unfathomable. In that, once the tender submitted by a party is found to be non-responsive, the question of considering his offer or allowing him to participate in the tender process, does not arise.
3. Further, we have noticed that in spite of order dated 18/2/2010 passed in Writ Petition No.1314 of 2010 the Corporation has hastened to issue work order in favour of the Respondent No.4, in spite of the fact that the communication of the order of the Government has not been received by the Petitioners from the Government so far as contemplated in the order dated 18/02/2010.
4. The counsel for the corporation has justified the action on the basis of some endorsement noticed in the communication issued by the Commissioner dated 24/02/2010, which mention that stay in respect of Commissioner Kalyan Dombivli Municipal Corporation has been vacated on 24/02/2010.::: Downloaded on - 09/06/2013 15:57:18 ::: 15
5. These and other issues raised in this Petition will have to be examined after reply is filed by the Respondents. We expect the Commissioner of the Respondent-Corporation to file his personal affidavit justifying the stand of the Corporation. Besides, the original record pertaining to tender process be kept ready for the perusal of the Court on the next date of hearing.
6. Since we are informed that the work order has already been issued th on 17 March 2010 in favour of the Respondent No.4, we direct the Respondents not to act upon the said work order till this matter is heard further on Tuesday i.e. on 30th March 2010 which adjournment is necessitated at the request of the Respondents-Corporation. We are inclined to grant this ad-interim order as we are prima facie in agreement with the grievance of the Petitioners and more so because the contract is stated to be to the tune of over Rs.Twenty crores.7.
It will be open to the other Respondents to file their reply affidavit, if so advised.
8. The learned AGP assures to produce the original file in the office of the Minister on which stay was initially granted and same has been later on vacated by the Minister. Original file be kept ready in the Court on the next date of hearing.
9. Accordingly, place this matter on Tuesday i.e. on 30th March 2010." (emphasis supplied)
10. Later on, both - Respondents 1 to 3 as well as the Respondent No.4 have filed affidavits in this Court to explain the circumstances in which contract has been awarded to Respondent No.4 and refuting the plea taken by the Petitioners that the Respondent No.4 is not qualified and that it does not possess the requisite experience necessary to carry out the said work.
According to the Respondents, no illegality has been committed in awarding the said work to the Respondent No.4. In substance, the stand ::: Downloaded on - 09/06/2013 15:57:18 ::: 16 taken is that as the bids submitted by the two qualified bidders did not match the expectation of the Corporation and was on the higher side than the estimated price of the contract. Further, to safeguard the interest of the Corporation even though initially it was felt that fresh tenders should be invited, but the Tender Committee which consists of senior officials of the Corporation, thought it appropriate to take recourse to power under Rule 2(2) below Chapter V of the Bombay Provincial Municipal Corporation Act, 1949, thereby not accepting the tenders submitted by the qualified bidders but instead, giving contract of the said work to the Respondent No.4 who was later on found to be eligible and possessing requisite experience necessary to carry out the subject work. For that reason, the action of awarding contract to Respondent No.4 which is after complying with all the statutory formalities is legitimate and proper. According to the Respondents, the cause of action for institution of the present Writ Petition does not survive as the tender process which was commenced on the basis of tender notice No.03/2009-2010 dated 5th September 2009 stood terminated and instead, the fresh process of allotting contract as per the powers vested in the Commissioner under the Proviso to Rule 2(2) of Chapter V was resorted to and the Petitioners cannot be heard to make any grievance in that regard.
Moreover, it is the case of the Respondents that even though the Petitioners ::: Downloaded on - 09/06/2013 15:57:18 ::: 17 were given opportunity to match the offer given by the Respondent No.4, the Petitioners have failed to avail of the same and instead, gave final discount of only 0.5% of the quoted price. As a result, the difference between the price offered by the Petitioners and by the Respondent No.4 was to the tune of about Rs.1.05 crores. In other words, the Corporation would be benefited by awarding the contract to Respondent No.4.
Moreover, the offer given by the Petitioners was far in excess of the estimated price of the contract and the same is beyond the budgetary provision of the Corporation. Accordingly, the Tender Committee as also the Standing Committee took a conscious decision to allot the contract to Respondent No.4 and only thereafter, the Respondent No.3 proceeded to give the contract of the said work to the Respondent No.4. We may notice that the Respondent No.4 along with the reply affidavit filed to oppose this Writ Petition, has placed reliance on certain additional documents than the documents submitted by them to the Corporation along with representation dated 3rd December 2009. Since the documents submitted by the Respondent No.4 along with the said representation dated 3rd December 2009 were the basis on which the Consultant of the Corporation offered his opinion that the Respondent No.4 possessed the requisite experience necessary to carry out the subject work, and which opinion was the basis ::: Downloaded on - 09/06/2013 15:57:18 ::: 18 for taking decision by the Standing Committee , it may not be appropriate to now consider some further documents pressed into service by the Respondent No.4 for the first time before this Court to justify the opinion of the Consultant of the Corporation or for that matter, the decision of the Corporation, as the case may be.
11. Having considered the rival submissions, the foremost question that needs to be examined is: whether on account of awarding of contract to Respondent No.4 by issuance of work order on 17th March 2010, the grievance made in this Petition does not survive for consideration? We have no difficulty in accepting the argument of the Respondent Corporation that the two processes, namely, the tender process commenced on the basis of the tender notice and the process of giving contract by invoking powers under the Proviso to Rule 2(2) of Chapter V of the Act are different and distinct. Nevertheless, in the present case since the latter process has been invoked in pursuance of the tender notice in question, wherein the petitioners had participated, the petitioners are competent to raise the question that even if the abovesaid provision authorises the Commissioner to enter into contract in favour of a party other than the lowest qualified bidder (i.e. the petitioners), can that power be exercised in favour of a ::: Downloaded on - 09/06/2013 15:57:18 ::: 19 contractor dehors the mandatory requirements provided in the tender notice and as a result of which the claim of the petitioners has been discarded. The grievance of the Petitioners before us is that the bid submitted by the Respondent No.4 pursuant to the tender notice came to be rejected for want of fulfilling the criteria provided in the tender notice and more particularly, not submitting registration copy and experience certificate. It is incomprehensible that a contract of this kind can be awarded to such ineligible and unqualified contractor, that too, by invoking exceptional power under the proviso now pressed into service. Therefore, we would first advert to the provision in the Act which empowers the Commissioner to execute contracts on behalf of the Corporation. Section 73 of the Act deals with that aspect. The same reads thus:
"73. Power to Commissioner to execute contracts on behalf of Corporation.- With respect to the making of contracts under or for any purpose of this Act, including contracts relating to the acquisition and disposal of immovable property of any interest therein, the following provisions shall have effect, namely, -
(a) every such contract shall be made on behalf of the Corporation by the Commissioner;
(b) no such contract or any purpose which, in accordance with any provision of this Act, the Commissioner may not carry out without the approval or sanction of some other municipal authority, shall be made by him until or unless such approval or sanction has first been duly given;
(c) no contract which will involve an expenditure exceeding, 1[ten ::: Downloaded on - 09/06/2013 15:57:18 ::: 20 lakh rupees] or such higher amount as the Corporation may, with the approval of the [State] Government, from time to time prescribe, approved by the Standing Committee.
[Provided that, where the previous approval of the Standing Committee is sought by the Commissioner for any contract 4* * * the Standing Committee shall consider and dispose of the proposal made by the Commissioner in that behalf within fifteen days from the date on which the item is first included in the agenda of any meeting of that Committee, failing which, the approval to such contract shall be deemed to have been given by the Committee, and a report to that effect shall be made by the Commissioner to the Corporation];
(d) every contract made by the Commissioner involving an expenditure exceeding 5 [fifty thousand rupees] and not exceeding 6[ten lakh rupees] or such higher amount as may for the time being be prescribed under clause (c) shall be reported by him, within fifteen days after the same has been made, to the Standing Committee;
(e) the foregoing provisions of this section shall, as far as may be, apply to every contract which the Commissioner shall have occasion to make in the execution of this Act; and the same provisions of this section which apply to an original contract shall be deemed to apply also to any variation of discharge of such contract."
12. Besides the above provision, we may have to also keep in mind the provisions of Chapter V which is part of Appendix IV of the Act of 1949, which deals with contracts. Rule 1 of the said Chapter provides for mode of executing contract. However, the relevant provision for our purpose is Rule 2 of the said Chapter, which reads thus:
"2. Tenders to be invited for certain contracts.- (1) Except as is hereinafter otherwise provided, the Commissioner or any officer authorised by him in this behalf shall, at least seven days before entering into any contract for the execution of any work or the supply of any materials or goods which will involve an expenditure exceeding three thousand rupees or such higher amount as the Corporation may, with the approval of the 2[State] Government, from time to time prescribe, give notice by advertisement in the local newspapers, inviting tenders for such ::: Downloaded on - 09/06/2013 15:57:18 ::: 21 contract.
(2) The Commissioner shall not be bound to accept any tender which may be made in pursuance of such notice, but may accept, subject to the provision of clause (c) of section 73, any of the tenders so made which appears to him, upon a view of all the circumstances, to be the most advantageous;
Provided that the Standing Committee may authorize the Commissioner, for reasons which shall be recorded in its proceedings, to enter into a contract without inviting tenders as herein provided or without accepting any tender which he may receive after having invited them." (emphasis supplied)
13. On bare perusal of Section 73 of the Act, it is noticed that the Commissioner on his own cannot enter into any contract for the work which exceeds the specified amount. Further, the contract to be executed by the Commissioner which is exceeding the specified amount, it should necessarily have the approval of the Standing Committee. Rule 2(1) of Chapter V reproduced above mandates that every contract exceeding the specified amount shall be given only after inviting tenders by giving public notice, by advertisement in the local newspaper. In other words, inviting tenders before awarding contract for an amount which exceeds the specified sum, is the rule. The purpose underlying for giving public notice is to invite interested qualified persons to participate in the tender process, so as to get the contract executed at the most competitive rate and also observe transparancy and fairness.
::: Downloaded on - 09/06/2013 15:57:19 ::: 2214. As per sub-rule (2) of Rule 2, ordinarily, the lowest qualified bidder should be preferred and awarded contract. That is the rule. However, as an exception, the sub-rule (2) provides that, the Commissioner is not bound to accept any tender which may be made in pursuance of such notice and instead accept any of the tenders so submitted which appears to him, upon considering all the circumstances, to be the most advantageous. In terms of sub-rule (2), the Commissioner can accept any tender only from amongst the "participating qualified bidders" who have submitted tender in pursuance of the tender notice. This exceptional power cannot be exercised in favour of a disqualified bidder. In other words, the power under sub-
rule (2) cannot be invoked to award contract either to a tenderer who was found to be not qualified and ineligible, or whose offer was rejected at the threshold. At the same time, this sub-rule (2) cannot be invoked by the Commissioner to award contract to some other person who had not submitted his tender "in pursuance of the tender notice" in question. This position is reinforced from the expression used in this sub rule such as "any tender which may be made in pursuance of such notice" and "any of the tenders so made". Indubitably, the tender referred to in Rule 2(2) must necessarily be of the qualified tenderor, including of the tenderor not being ::: Downloaded on - 09/06/2013 15:57:19 ::: 23 the lowest qualified bidder. In any case, the departure to be made from the ordinary rule of allotting contract to the lowest bidder from amongst the qualified bidders who submitted their tender in pursuance of the tender notice in question, will have to abide by the mandate of Section 73(c) of the Act, which requires taking prior approval of the Standing Committee in that behalf. The Standing Committee may approve such recommendation of the Commissioner only on "one consideration" - that accepting the tender of any other qualified bidder other than that of the lowest qualified bidder would be "most advantageous" for the Corporation.
15. Insofar as the "proviso" to sub-rule (2) of Rule 2 is concerned, it provides that the Standing Committee may authorise the Commissioner, for reasons to be recorded in its proceedings-
(i) to enter into a contract without inviting tenders as required as per Rule 2(1); or
(ii) without accepting any tender which were received in pursuance of the tender notice in question.
16. Indeed, the proviso is used to remove special cases from the general rule of awarding contract to the qualified bidder. But it cannot be construed to bestow unbriddled power in the Standing Committee of the Corporation ::: Downloaded on - 09/06/2013 15:57:19 ::: 24 to authorise awarding of contract to an unqualified and ineligible contractor, whereas that power must necessarily be invoked only when such decision will be most advantageous to the Corporation. In other words, even if we were to accept the stand of the Corporation that on reading the proviso as a whole, it postulates that the Standing Committee can authorise the Commissioner, for reasons to be recorded in its proceedings, not only not to accept any of the tenders of qualified bidders already received in pursuance of the tender notice in question but also to allot the contract referred to in such tender notice to any person including the bidder whose tender was rejected at the stage of technical bid itself because he had not submitted the required documents. Even so, this power is required to be exercised with circumspection and only in exceptional circumstances where awarding contract to person other than the qualified bidders would be "most advantageous" for the Corporation. If so, it would not be permissible to allot the contract and more particularly such as the present one (where the estimated price of the contract exceeds Rs.20 Crores and involves specialised work) to a person who does not possess the mandatory qualifications specified in the tender notice and without compliance of formalities such as providing security and bank guarantee to secure the interest of the Corporation for timely completion of the project. In our view, ::: Downloaded on - 09/06/2013 15:57:19 ::: 25 even during exercise of extraordinary power under the proviso to Rule 2(2), it can be resorted to only after having invited the tenders by public notice. Further, the Standing Committee would be under obligation to accept the recommendation of the Commission only in favour of a contractor who would fulfill the mandatory qualification and experience to undertake the work. The benchmark provided in the tender notice in that behalf will have to be strictly adhered to atleast in relation to the mandatory conditions. For, to give contract to a person who does not possess the requisite qualification and experience to undertake the said work, referred to in the tender notice in question, which involves expertise- being a specialised job - would be preposterous and antithesis to the test to be observed of "most advantageous" to the Corporation.
17. Keeping these principles in mind we would examine the case on hand. The question is whether the documents submitted by the Respondent No.4 along with its representation dated 3rd December 2009 to the Commissioner were sufficient to determine the qualification of the Respondent No.4. Significantly, even the Consultant of the Corporation has adverted to only those documents to form his opinion that the Respondent No.4 may be considered to have the requisite experience necessary to carry ::: Downloaded on - 09/06/2013 15:57:19 ::: 26 out the said work. The principal governing condition to be kept in mind is that the person to whom the contract is to be awarded must possess the mandatory qualification specified in the tender notice and further the said person has unequivocally undertaken to abide by the other formalities of furnishing security or bank guarantee and to complete the work within the specified time. In absence thereof, the decision of the Standing Committee authorising the Commissioner to award contract to unqualified person would be vitiated on the ground that it is arbitrary, unreasonable and unfair decision. Such infirm decision of the Corporation will be hit by the Wednesbury Principles.
18. In the context of the stand taken by the Petitioners, we would straightaway advert to the qualification specified in the tender notice.
Clause (9) of the tender notice provides as follows:
"9. Qualification Annual average turn over for the past Five years of the bidder shall not be less than Rs.10.00 Crores duly certified by Chartered Accountant.
Bidder shall have a solvency of at least Rs.2.00 Crores as certified by his banker. It shall be nationalized/ scheduled bank.::: Downloaded on - 09/06/2013 15:57:19 ::: 27
The bidder shall have assessed available bid capacity as per following and it shall be more than Rs.10.00 Crores.
Assessed available bid capacity = A X N X 2 - B, where A= maximum turn over achieved during last Five financial years ending on 31.03.2008 (corrected to current level of value) N = Execution period of the contract(as per the table given in paragraph 1 above.) B = Value of existing commitments to be completed during the execution period of contract.
For the purpose of enhancing the costs, following multiplying factors shall be used:
Financial year Multiplying Factor 2007-08 1.10 2006-07 1.21 2005-06 1.331 Bidder shall satisfy following:
1. Experience of providing and erecting 1100 HP V.T. Pump. In last seven years.
2. Shall have provided and commissioned atomization system for treatment plant of minimum 50 MLD capacity during last seven years.
3. Experience of constructing 1 ML RCC Sump in last seven years.
4. Experience of operating and maintenance of 100 MLD water treatment plant and head works for at least 2 years in the last seven years."
(emphasis supplied) ::: Downloaded on - 09/06/2013 15:57:19 ::: 28
19. For the purpose of considering whether the Respondent No.4 possessed qualification and requisite experience, we will have to examine that question in the context of requirements under the clause "bidder shall satisfy following". The first requirement thereunder is that the bidder should have the experience of providing and erecting 1100 HP VT pump in last seven years. According to the Petitioners, the documents relied by the Respondent No.4 in support of this requirement are at pages 191, 205, 206 and 207 of the original record. Insofar as document at page 191 is concerned, it is a Certificate issued by the Superintending Engineer, Maharashtra Jeevan Pradhikaran, Pune (hereinafter referred to as `MJP') dated 5th August 2009. On the overleaf, the experience of the Respondent No.4 of having provided pumping machinery Vertical Turbine Pumpset has been mentioned at Serial No.2. It states that the quantity executed by the Respondent No.4 is 125 HP - 2 Nos. and 100 HP - 2 Nos. The document at page 205 is again a Certificate issued by the Executive Engineer, Takari Pump House, Division No.1, Islampur dated 27th January 2009. That mentions that the Respondent No.4 has executed work of construction Stage-IV Pump House, Rising Main, Pumping Machinery and Distribution System and erected pumping machinery of 270 HP in 3 Nos. (VT Pumps) in year 2006. It further states that the pumping machinery so erected by the ::: Downloaded on - 09/06/2013 15:57:19 ::: 29 Respondent No.4 was running successfully for last two years and that the operation and maintenance of Scheme for two years is going to be completed in 2009. Insofar as document at pages 207 and 206, is again a Certificate issued by the Executive Engineer, MJP, Development Division, Pune-1 stating that the Respondent No.4 has completed pumping machinery works in RR Water Supply Scheme in Maval Taluka, Grade-I for 1998-99 at Village Done-Adhale of VT type pump of 100 HP in two sets. The total HP installed was 200 HP.ig Similarly, at Village Khadkale-Pathergaon, the Respondent No.4 installed VT type of pump of 50 HP in two sets and the total HP installed was 100 HP and at Village Vadgaon, the VT type of pump installed was of 100 HP in two sets and the total HP installed was 200 HP.The said Certificate further mentions that the Respondent No.4 has completed the pumping machinery works at RR Water Supply Scheme in Junnar Taluka for 1998-99 Junnar Group, wherein, installed VT type of pump of 40 HP in two sets and the total HP installed was 80 HP. Insofar as the last document at pages 207 and 206 of the origial record is concerned, the argument of the Petitioners is that this cannot be taken into account at all for the simple reason that the works pertain to years 1998-99 which was not within the last seven years of the date of issuance of the tender notice dated 5th September 2009. We are in agreement with this submission. This ::: Downloaded on - 09/06/2013 15:57:19 ::: 30 Certificate at pages 207 and 206 of the original record will be of no avail to the Respondent No.4.
20. Be that as it may, insofar as documents at page 91, it is a Certificate issued under the signature of Superintending Engineer, MJP and at page 205 of the original record, it is a Certificate issued by the Executive Engineer, Takari Pump House, Division No.1. The same can be considered as it pertain to works carried out within the last seven years of the date of issuance of the tender notice in question. The argument of the Petitioners, however, is that, even if the said documents were to be accepted as it is, the works carried out by the Respondent No.4 was not of erecting VT pump of 1100 HP as such, which is the requirement of Clause (1). On the other hand, the argument of the Respondents is that the experience of providing and erecting VT Pump of 1100 HP was a cumulative requirement. In that, the HP of all the VT pumps erected by the Respondent No.4 during the last seven years will have to be reckoned and if the aggregate thereof exceeds 1100 HP, the Respondent No. 4 would qualify the experience provided in Clause (9) of the tender notice. To buttress this submission, the Respondents have relied on page 52 of the tender notice which specifies the data for design of pumping machinery. The same reads thus:::: Downloaded on - 09/06/2013 15:57:19 ::: 31
"DATA FOR DESIGN OF PUMPING MACHINERY Low Level BPT High Level BPT
1. Discharge of Each 41 MLD 36 MLD Pump
2. Mode of Operation 2 Pumps in parallel 3 Pumps in parallel should give combined parallel should discharge 81 MLD give combined discharge 106 MLD of Pumps
3. Combined Discharge 2 Pumps in parallel gives combined 3 Pumps in parallel gives combined discharge 81 MLD discharge 106 MLD
4. Duty Head 38 Mts. 55 Mts.
5. Water Quality Pure Water Pure Water
6. Nos. of Pumps 3 Nos. 5 Nos.
7. Floor Level of 26.50 Mt. 26.50 Mt. Pump house
8. F.S.L. of B.P.Tank 52.40 Mts. 69.00 Mts.
Bottom RL 49.50 65.50
9. Rising Main
(a) Dia 813 mm O.D. 965 mm O.D.
(b) Type M.S.8 mm thick M.S.8 mm thick
(c) Length 600 Mts. 700 Mts.
(d) Lining Inside Cement Lining Inside Cement
Lining
(e) C Value 120 120
::: Downloaded on - 09/06/2013 15:57:19 :::
32
Note :
1. Successful bidder should workout frictional head, driving head etc. for design of pumps and motors to suit the desire discharge."
(emphasis supplied)
21. The question is: whether the stand taken by the Respondents that the cumulative work done by the Respondent No.4 of installation of VT pumps during the relevant period will have to be reckoned or the Respondent No.4 was required to undertake at least one consolidated work of erecting 1100 HP VT pump. Considering the data for designing of pumping machinery specified, it is amply clear that the Contractor would be required to install three pumps in parallel to give combined discharge of 106 MLD and two pumps in parallel to give combined discharge of 81 MLD. In the further affidavit filed on behalf of the Corporation, it is stated that in all eight pumps including standby pumps referred to at Serial No.6 were required to be erected. Further, the discharge for each pump of 1 MLD = 1700 cum tr/hr for low level BPT and the discharge for each pump of 36 MLD = 1500 cum tr/hr for high level BPT, pumps of 300 to 350 HP will be sufficient for this Project in view of its design to achieve the discharge capacity required as per the said Chart. This factual position stated on affidavit by the ::: Downloaded on - 09/06/2013 15:57:19 ::: 33 Respondent Corporation has gone unchallenged. If this plea of the Corporation were to be accepted, it would necessarily follow that the HP requirement provided in Clause (1) will have to be considered as cumulative work undertaken by the concerned Contractor of erecting aggregate 1100 HP VT pump in last seven years. Insofar as the Respondent No.4 is concerned, from the Certificates at pages 191 and 205 of the original record, it is noticed that the aggregate work of erecting VT pumps undertaken by the Respondent No.4 during the last seven years would exceed the cumulative 1100 HP. Inasmuch as, the Respondent No.4 has erected three pumps of 270 HP and in addition, 100 HP VT pumps and 125 HP pumps in 2 Nos. each. The cumulative HP of all these works would exceed 1100 HP.
The Respondent has also given justification in the further affidavit as to how the requirement of VT Pump of 1100 HP has been stipulated. It is mentioned that the total capacity of the working VT pumps will be above 1660. HP. The condition of experience of providing and erecting of VT pump of 1100 HP has been stipulated as qualifying criteria, as suggested by the Consultant, by taking into consideration the 2/3rd capacity of the whole requirement of the said work. Besides, we find force in the argument of the Respondents that even the contemporaneous position would indicate that all the bidders submitted their tenders on the basis of having experience of ::: Downloaded on - 09/06/2013 15:57:19 ::: 34 providing and erecting of VT Pump of cumulative work undertaken by them in excess of 1100 HP in last seven years.
22. Considering the above, we do not find any substance in the challenge of the Petitioners regarding the opinion formed by the Consulting Engineer of the Corporation and also by the appropriate Authority of the Corporation that the Respondent No.4 possessed requisite experience necessary to provide and erect 1100 HP VT pumps in last seven years.
22. That takes us to the second requirement under Clause (9) of the tender notice. It provides that the bidder shall have provided and commissioned automization system for Treatment Plant of minimum 50 MLD capacity during the last seven years. Admittedly, it is not the case of the Respondents that the partners of Respondent No. 4 Joint Venture either individually or collectively possessed the experience of providing and commissioning automisation system as per this requirement. Reliance is, however, placed on the document at page 204 of the original record. It is a communication-cum-work order dated December 29, 2007 issued by SMC in favour of Krystal Techno-Engineering Services Pvt. Ltd (hereinafter referred to as the said Krystal). It is relevant to notice that the said SMC is ::: Downloaded on - 09/06/2013 15:57:19 ::: 35 one of the qualified bidder in the present tender process and was found to be the lowest bidder no.2 (L-2). Further, the said SMC appears to have given work order of automisation work for additional 110 MLD Water Supply from Pise Head Works, which work was allotted to them by Thane Municipal Corporation. Secondly, it is indisputable that the work of providing and commissioning automisation system for treatment plant is a specialised job. Thirdly, there is no document on record to suggest that the said Krystal have in fact successfully completed the said work. Indeed, the Respondents are relying on another document at pages 203 and 202 in the original record which is a communication sent by said Krystal addressed to Viraj Projects-who is a partner of Joint Venture of Respondent No. 4, dated 20th September, 2009. The said communication reads thus:-
"Vijay Projects Kumari Pearl, Banglow No.8, Opp. Corporation Bank, Camp, Pune - 411 001.
Kind attn. Mr.Pandit.
Sub.:- Automation work for 144 MLD WTP at Barawe & 7.5 MLD WTP at Titwala Dear Sir, We take this opportunity to introduce ourselves as a ::: Downloaded on - 09/06/2013 15:57:19 ::: 36 company engaged in providing Control & Automation Solutions and turnkey solutions for HT & LT Electrical systems.
Currently we are executing two projects which are as follows -
- Electrical work for High Court Bench at Gulbarga.
This work includes supply & installation of
250KVA/ 500 KVA Transformers, HT/LT panels,
internal concealed wiring & associated
electrical/lighting fixtures. Supply & installation of two nos Elevators.
- Automation work for 110 MLD Water Treatment Plant Thane Municipal Corporation.
This work includes automation of Raw water pumping station, treatment water pumping station, water distribution network i.e. 45 ESR's. The supply work includes supply of filed instruments like PT/DPT/LT Transmitters, Ultrasonic Level transmitters, temp scanners, electronic power meters, Flow meters, level switches, valve actuators, total 250+ field instruments and PLC & SCADA Control System with Database management System. And wireless communication system to transmit all the data to central control room at TMC head office.
We understand that you are bidding for Water Treatment plant for Kalyan Dombivli Municipal Corporation for tender of revamping of Baware & Titwala Water treatment plants.
We hope that our offer is in line with your requirement.
Thanking you, ::: Downloaded on - 09/06/2013 15:57:19 ::: 37 Yours truly, For Krystal Techno-Engineering Services Pvt.Ltd.
Santosh Vidwans Business Development Manager 09766615241.
Terms and conditions Price:- As per attached ANNEXTURE.
Price basis- prices offered are inclusive Excise Duty/custom duty and free delivery of material to your sites.
Taxes:-
a) VAT Extra as actuals for Supply items.
b) Service Tax extra at actuals.
c) Octroi will be applicable at actual against documentary proof.
Delivery :- Delivery of material - 16-20 weeks.
Commissioning work - 12-14 weeks.
Payment Terms-
A) For Supply-
a) 25% Advance along with Purchase Order.
b) 70% against proof of dispatch.
c) 5% payment within 30 days of commissioning.
B) For Labor -
a) 95% payment against Running Bill.
b) 5% after completing of Work.
Validity - 30 days.
::: Downloaded on - 09/06/2013 15:57:19 ::: 38Warrantee - 18 months from the date of dispatch or 12 months from the date of commissioning which ever is earlier."
Even from this communication it is not possible to discern that the said Krystal has successfully completed the works referred to therein.
23. Fourthly, from the Chronology of events it is noticed that the Respondent No. 4 submitted its bid on line on 4th October, 2009 which was, however, rejected on 7th October, 2009- as it did not fulfill the criteria as set out in the tender notice. On bare perusal of the communication dated 20th September, 2009, sent by the said Krystal to Viraj Projects(partner of Respondent No.4-Joint Venture), it is in anticipation that the said Viraj Projects was to submit its tender for the said work. According to the Petitioners, there was no reason for the said Krystal on its own to introduce itself to Viraj Projects on the assumption that the latter were to bid for the said work of Kalyan Dombivali Municipal Corporation. Notably, the said offer of Krystal is not in favour of Respondent No.4-Joint Venture as such.
Morever, the said communication does not unambiguously state that the said Krystal has successfully commissioned automisation system for treatment plant for minimum 50 MLD capacity.
23A. Thus, no other document has been relied by the respondents which ::: Downloaded on - 09/06/2013 15:57:19 ::: 39 would indicate that the said Krystal had in fact successfully commissioned automisation system for the treatment plant of minimum 50 MLD. In any case, admittedly, the said Krystal is not a member of the Respondent No.4- Joint Venture. The tender notice nowhere provides that the successful bidder in whose favour the contract was to be executed would be entitled to sub-contract the whole work or part thereof to third party. On the other hand, the expectation is that the same successful bidder in whose favour the contract was to be awarded, itself would execute the said whole work and it is for that reason the qualification and experience of very high order has been insisted upon. Our attention has not been invited to any specific term in the tender notice which would permit the Corporation to relax this condition at a later stage. We are conscious of the fact that the Consultant of the Corporation has opined that insofar as the work of automisation of Water Treatment Plant is concerned, that concept is a recent one and the impact of the same would be less as compared to the remaining components of the subject work. From the Evaluation Report it is noticed that the cost impact in respect of automisation of Water Treatment Plant is concerned, it would be to the extent of 9.7% of the total contract cost.
Indeed, it is a small portion of the total contract, but cannot be said to be insignificant one. Moreover, the work of automisation of Water Treatment ::: Downloaded on - 09/06/2013 15:57:19 ::: 40 Plant is the fulcrum of the said work. That is a specialised job. If the same was to be of inferior quality or defective, the entire project would be at stake. In that, besides causing financial loss to the public exchequer, it would also cause grave hardship to the public in general considering the gravity of shortage of water supply. Thus understood, non fulfillment of this condition cannot be lightly brushed aside.
24. We would assume that the said Krystal has the requisite expertise and experience of automisation of water supply system. However, it is not a partner of Joint Venture of Respondent No.4. Any amount of assurance given by the said Krystal would not have the same effect of a binding contract or fastening the liability on the principal contractor in whose favour the contract was to be executed by the Corporation. There would be no lis between the Corporation and the said Krystal. Indeed, in the affidavit filed before us, it is stated on behalf of the Corporation that the said Krystal has committed itself to execute the automisation of the Corporation's project, if the contract was to be awarded to Respondent No. 4 - Joint Venture. That commitment is made in its communication dated 18th December, 2009 which is at page 234 of the original record. The same reads thus:-
::: Downloaded on - 09/06/2013 15:57:19 ::: 41Krystal Techno-Engineering Services Pvt.Ltd.
Reg.Office: 15, Krystal House, Dr.Mankikar Road, Sion, Mumbai- Pin-400 022.
Date: 18th December, 2009 To The Executive Engineer, Water Supply Department, Kalyan Dombivli Municipal Corporation, Mahapalika Bhavan, Kalyan.
Kind Attn : Mr.Pramod Kulkarni, EE.
Subject:- Tender submitted by M/s. Vital Projects- R.B.Krishnani JV for Barve WTP Works.
Respected Sir, We have submitted our offer to M/s. Viraj Projects-R.B.Krishnani JV for Automation work for above mentioned project.
We hereby confirm to you, that in case KDMC allots the above mentioned works to M/s. Viraj Projects
-R.B.Krishnani JV we would execute the work related to automation system as per mutually agreeable Terms & Conditions.
Thanking You, For Krystal Techno Engineering Services Pvt.Ltd. Sd/-
Mr.Sanjay Tembe.::: Downloaded on - 09/06/2013 15:57:19 ::: 42
24A. Even on a fair interpretation of this communication, it would appear that the said Krystal has merely agreed to execute the work related to automisation system as per mutually agreeable terms and conditions, obviously with the Respondent No. 4 - Joint Venture and not in the capacity of party to the contract to be awarded by the Corporation. It would have been a different matter if the said Krystal had shown willingness to become part of the Joint Venture as is permitted by clause 8 of the tender notice.
The same reads thus :
"8. Joint Venture Joint Venture(JV) participation is permitted provided number of partners in the joint venture shall not exceed three and minimum participation of one of the partners shall not be less than 20%. All the partners of the Joint Venture jointly shall meet the qualification criteria given in paragraph 9 below except that all the partners shall be registered in Govt./Semi-Govt. Organization. Members of JV shall be jointly and severally responsible for the performance of the contract. Once formed and qualified, the partners of joint venture cannot be changed until the tenure of the contract.
A company can participate only in one joint venture. Further a company participating in joint venture cannot submit separate application in its own name. Payment under contract shall be made in the name of joint venture only."::: Downloaded on - 09/06/2013 15:57:19 ::: 43
25. Thus, the tender notice clearly permits participation of Joint Venture, provided the number of partners in the Joint Venture shall not exceed 3 and minimum participation of one of the partners shall not be less than 20%. In view of the latter condition in clause-8 of the tender notice, even if the said Krystal were to agree to be partners of the Joint Venture between R.B. Krishnani and Viraj Projects, its share would not exceed even 10% of the cost of entire project as the automisation work is only of 9.7% of the total contract cost. Significantly, clause-8 of the tender notice further postulates that all the partners of Joint Venture jointly shall meet the qualification criteria given in Paragraph 9 and more importantly that the members of the Joint Venture shall be jointly and severally responsible for the performance of the contract. It further postulates that once the Joint Venture is qualified, the partners of Joint Venture cannot be changed until the tenure of contract.
It is thus obvious that the said Krystal will not be interested or may be eligible if its participation was not to exceed 20%, in participating as as partner of the Respondent No.4 -Joint Venture, but would only be interested in taking sub-contract of the work of automation of Water Treatment Plant for which it has expressed its intention to the partner of Respondent No. 4 Joint Venture.
::: Downloaded on - 09/06/2013 15:57:19 ::: 4426. Taking any view of the matter, therefore, the inevitable conclusion is that the Respondent No. 4 - Joint Venture "itself" does not possess the requisite qualification of having provided and commissioned automation system for treatment plant of minimum 50 MLD capacity during last seven years. The experience of said Krystal cannot be reckoned to ascertain the qualification and experience of Respondent No. 4 Joint Venture, as the said Krystal is not a partner thereof. In view of clause 8 above, it is doubtful whether the said Krystal can become a partner of the Joint Venture with limited interest in taking the sub-contract of only automation of Water Treatment Plant constituting only of 9.7% of the total contract cost. It necessarily follows that the opinion given by the Consultant of the Corporation and by the appropriate Authority including the decision of the Standing Committee of the Corporation which proceeds on the assumption that the Respondent No.4 possesses the necessary experience to carry out the subject work is indefensible and unsustainable. Assuming that the Corporation was within its power to permit the contractor to get part of the work such as automation system for treatment plant executed through the sub-contractor, as the cost impact thereof is less, even then such an ::: Downloaded on - 09/06/2013 15:57:19 ::: 45 arrangement must be a firm arrangement and fastening complete liability and accountability of such sub-contractor along with the principal contractor, failing which the interest of the Corporation would be completely jeoparadised as there would be no lis between the sub-
contractor and the Corporation. Moreso because, the work of automisation of system for treatment plant is a specialized job and a core work for successful operation of the said work of Water Treatment Plant. As mentioned by the Consultant of the Corporation, it is a concept of recent origin.
27. In so far as the third qualification provided in clause-9 is in relation to experience of constructing 1 ML RCC sump in last seven years.
Insofar as this condition is concerned, the same is not in issue at all. In other words, it is not the case of the Petitioners that the Respondent No. 4 Joint Venture does not possess this experience.
28. That takes us to the Condition No. 4 which provides that the contractor should have the experience of operating and maintenance of 100 MLD Water Treatment Plant and Head Works for atleast two years in the last seven years. In support of this experience, the Respondents are ::: Downloaded on - 09/06/2013 15:57:19 ::: 46 relying on documents at pages 174 and 173 of the original record. The document at page 174 is a certificate issued by the Executive Engineer, Water Supply Department, P.C.M.C. Pimpri that M/s. R.B. Krishnani, Pune have completed the work under 100 MLD Water Treatment Plant project for P.C.M.C, Pimpri. It mentions that scheme is running from last 24 months. The date of issuance of this certificate is 19th December, 2009 bearing outward no. PAPU/JANI/2045/09. It is in respect of work of chlorine contract tank, pure water sump of 10,000 m³.
ig The document at page-173 of the original record is also issued by the Executive Engineer Water Supply Department, P.C.M.C, Pimpri, incidentally bearing same outward number and same date of issuance of document at page 174 referred to above. The only additional item given in this certificate is about the cost of work done by M/s. R.B. Krishnani which is to the extent of Rs.
9.13 Crores. The criticism of the Petitioners is that the partner of Respondent No. 4 Joint Venture had done only partial work referred to in the said certificate. Moreover, the said certificate has been issued after submission of the tender and for which reason also, it cannot be considered.
We may not agree with this submission of the Petitioners that since the document is issued in subsequent point of time after submitting the tender, it should not be looked at. However, what appears to us, which is so ::: Downloaded on - 09/06/2013 15:57:19 ::: 47 obvious, is that, this document is issued under the signature of Chief Executive Engineer on 19th December, 2009 which is much after the representation dated 3rd December, 2009 submitted by the Respondent No. 4 to the Commissioner requesting to consider their offer. The certificates at pages 173 & 174 respectively, having been issued after 3rd December, 2009, it necessarily follows that the same did not form part of the representation submitted by the Respondent No.4. It is common ground that the Corporation forwarded the same representation and accompanying documents thereto to the Consultant of the Corporation for opinion. If the above said certificates now pressed into service by the Respondent No. 4 could not have been part of the compilation of documents sent to the Consultant along with representation of the Respondent No. 4 dated 3rd December, 2009, it does not stand to reason as to on what basis the Consultant has still opined that the Respondent No. 4 possessed requisite experience and capacity to carry out the subject work. The Condition No. 4 is an important condition pertaining to the successful operation and maintenance of the proposed 100 MLD Water Treatment Plant and head works for at least 2 years in the last seven years. In that sense, the opinion of the Consultant of the Corporation is vitiated as there was no other document placed before it which would suggest that the Respondent No. 4 ::: Downloaded on - 09/06/2013 15:57:19 ::: 48 fulfilled this condition no.4. As a matter of fact, the Consultant has not adverted to any document to support the opinion rendered by him nor has made attempt to analyse the documents considered by him in the context of each of the mandatory qualification condition. It is pertinent to note that the opinion has been submitted by the Consultant on 19th December, 2009.
Neither the Corporation nor the Respondent No.4 has stated on affidavit that before this communication was issued by the Consultant on 19th December, 2009, they had forwarded the two certificates at pages 174 and 173 of the original record to the Consultant and on perusing the same, the opinion was given by the Consultant as contained in the communication dated 19th December, 2009. As aforesaid, the opinion of the Consultant is of the same date i.e. 19th December, 2009. Therefore, it is unlikely that the two certificates were infact placed before the Consultant when the opinion was formalized and signed by the Consultant on 19th December, 2009. The inclusion of these two certificates at pages 173 and 174 in the original record also becomes matter of serious doubt and would suggest that the officials of the Corporation were more than resiled to the decision that the contract be given to Respondent No.4, for reasons best known to them.
29. It is thus noticed that there was no tangible material before the ::: Downloaded on - 09/06/2013 15:57:19 ::: 49 Consultant of the Corporation to arrive at an informed opinion that the Respondent No.4 possesses requisite experience of operating and maintenance of 100 MLD water treatment plant and head works for atleast two years in the last seven years. Inspite of that, the Consultant of the Corporation without referring to any material (in his opinion dated 19 th December, 2009 ) has opined that the Respondent No.4 Joint Venture may be considered to have requisite experience necessary to carry out the subject work. It is seen that the Consultant of the Corporation has not adverted to any singular document to testify the eligibility of Respondent No.4 in the context of each of the qualification condition separately or collectively, as the case may be, and not even disclossed the basis on which the opinion has been given in favour of the Respondent No.4. In our view, the opinion given by the Consultant of the Corporation is palpably vague and casual one, if not misleading. If so, it is obvious that the said opinion of the Consultant of the Corporation is tailor-made, at the behest of the Respondent No.4 or the persons in authority who were keen on awarding the contract to the Respondent No.4 Joint Venture, even though the Respondent No.4 did not possess the mandatory qualification/conditions of having provided and Commissioned Automation System for treatment plant of minimum 50 MLD capacity during last seven years, as also experience of ::: Downloaded on - 09/06/2013 15:57:19 ::: 50 operating and maintenance of 100 MLD water treatment plant and head works for atleast two years in the last seven years.
30. The document pressed into service by the Respondents at pages 174 and 173 of the original record, if taken into account at best may indicate that the Respondent No.4 possesses qualification regarding experience of operating and maintenance of 100 MLD water treatment plant and head works for atleast two years in the last seven years. However, these documents could not have been the basis of the opinion, formed by the Consultant of the Corporation. The decision of the appropriate Authority including that of the Standing Committee is founded on the opinion of the Consultant on which basis the said contract is being awarded to the Respondent No.4 Joint Venture. From the Resolution of the Standing Committee dated 30th January, 2010, it is evident that the decision is completely based on the opinion of the Consultant of the Corporation and no other document. It is further mentioned that besides the said opinion, the only other reason that can be discerned from the said Resolution is that the Respondent No.4 Joint Venture has already received other important works of the Municipal Corporation. Insofar as this reason is concerned, that cannot be the basis to justify the awarding of contract to Respondent No.4 Joint Venture. For, It is not stated that the other important works ::: Downloaded on - 09/06/2013 15:57:19 ::: 51 awarded to the Respondent No.4 Joint Venture were of identical type which involved expertise in execution of the work such as the present one, which is a specialised job. In that sense, the said reason mentioned in the resolution cannot legitimise the incorrect and inappropriate decision of the Corporation, which has been taken on the assumption that the Respondent No.4 Joint Venture possesses qualification and requisite experience necessary to carry out subject work. Admittedly, the Respondent no.4 does not fulfill atleast condition No.2 of having provided and commissioned automization system for treatment plant of minimum 50 MLD capacity during last seven years.
31. Reverting to the resolution passed by the Standing Committee dated 30th January 2010, in the first place it mentions that after negotiations the offer with reasonable cost was not received. That is however, not in consonance with the view noted in the evaluation report, which states that it would be reasonable to finalize the present tender on the same lines as the recently finalized contract for 100 MLD head works at Mohili. In that, the reasonable acceptable cost would be about 5.00% above the cost put to tender. Notably, during the negotiations the petitioners had matched the said expectation of the Corporation. The Standing Committee may be well ::: Downloaded on - 09/06/2013 15:57:19 ::: 52 within its power to over-rule the opinion of the Tender Committee to reissue the tender. But, by no standards could have taken decision to award the contract to a Contractor who did not possess the mandatory qualification and experience to undertake the said work which was a specialized job involving expenditure to the extent of over Rs. 20 cores. Moreover, the said resolution is stated to have been passed in exercise of power under Rule 2(2) and makes no reference to the fact that a conscious decision is taken to invoke powers under "proviso" to Rule 2(2) as such. We may, however, assume that on reading the said resolution as a whole it is possible to hold that the intent of the said resolution was to invoke powers under the "proviso" to Rule 2(2). However, for the reasons adverted to hitherto, the exercise of that power in the fact situation of the present case cannot be countenanced.
32. The next question is whether it is open for this Court to interfere at the instance of the Petitioners. As is found earlier, tender process commenced on the basis of the tender notice in question, and the process of giving contract by invoking power under proviso to Rule 2(2) of Chapter V of the Act are different and distinct. Nevertheless, atleast for two reasons this Court may have to exercise its writ jurisdiction to remedy the mischief.
Firstly, because, the act of Corporation to award the contract to ::: Downloaded on - 09/06/2013 15:57:19 ::: 53 Respondent No.4, in view of our findings relating to the non fulfulment of mandatory qualification and experience by the respondent no.4, by no standards it can be said to be most advantageous to the Corporation. For, there would be uncertainty in successful completion of the said work within the specified time- considering the finding that the Respondent No.4 Joint Venture itself does not possess the qualification in respect of having provided and commissioned automization system for treatment plant of minimum 50 MLD capacity during last seven years. Insofar as Condition No.4 that the contractor should possess experience of operating and maintenance of 100 MLD water treatment plant and head works for at least 2 years in the last seven years is concerned, even if that condition is fulfilled by the Respondent No.4 Joint Venture as is indicated in the certificates at pages 173-174, however, neither those certificates nor any other document were before the Consultant of the Corporation to take an informed decision that the said condition was fulfilled by the Respondent No.4. Inspite of that, the said Consultant has ventured into giving opinion that the Respondent NO.4 possesses requisite experience necessary to carry out the subject work. While deciding the controversy on hand, we cannot uphold the opinion of the Consultant of the Corporation or the decision of the Corporation by now relying on documents at pages 173 and 174 ::: Downloaded on - 09/06/2013 15:57:19 ::: 54 respectively. In any case, those documents would not do away with the shortcoming in the qualification of Respondent No.4 regarding condition No. 2 of having provided and commissioned automization system for treatment plant of minimum 50 MLD capacity during last seven years. A priori, awarding contract to such contractor would be a case of misadventure, which may end up in financial implication and loss to public exchequer and more importantly likelihood of causing undue hardship to the persons residing within the Corporation limits on account of continued shortage of water supply due to delay in timely completion of the project or for that matter in proper operation and maintenance thereof.
We are not examining the factum of possibility of a concerted effort by all concerned to cover up the deficiencies of respondent no. 4, they were well advised to submit incomplete tender and then remain in reckoning by way of representation and making offer lower than the one made by the qualified bidders (petitioners and SMC) after their commercial bids were opened on 7th October 2009. Indeed, it is difficult to establish conspiracy theory in this regard- as there can be no direct evidence to prove the same.
Certainly, it is open to the court to analyse all the circumstances and on the basis of legal inference, record a finding on such plea. But as aforesaid, we do not wish to burden this judgment by searching energetically into ::: Downloaded on - 09/06/2013 15:57:20 ::: 55 these matters.
33. Suffice it to observe that the basis on which the extraordinary power has been invoked by the Corporation under proviso to Rule 2(2), the same being incorrect, the final decision taken by the Corporation must necessarily vitiate. In that case, the Corporation may have to consider of either renegotiating with the Petitioners who admittedly, possess the requisite qualification and experience or in the alternative to issue fresh tender. The Corporation in the first place may have to give opportunity to the Petitioners to match the offer given by the Respondent No.4 Joint Venture.
If the Petitioners were to avail of that option, there would be no need to issue fresh tender. In our opinion, there is one good reason for giving opportunity to the petitioners to match the offer given by the Respondent No.4. Inasmuch as, we find force in the stand taken by the Petitioners that they were under the impression that until the order to be passed by the State Government to vacate the stay granted in their favour was to be communicated to them by the State Government, the Interim order granted by this Court on 18th February, 2010 in Writ Petition No.1314 of 2010 would enure in their favour and it would not be open to the Respondent Corporation to precipitate the matter for a period of 7 days from the date of communication to be received by them from the Government. On the other ::: Downloaded on - 09/06/2013 15:57:20 ::: 56 hand, the Respondent Corporation precipitated the matter after having sent intimation to the Petitioners about the order passed by the State Government on 24th February, 2010. In this view of the matter and in the larger interest it would be most advantageous for the Corporation to give opportunity to the Petitioners to match the offer given by the Respondent No.4 and if that option was to be availed by the Petitioners - since the Petitioners possess all the necessary qualifications and experience and expertise in relation to the specialised job - there can be no valid reason to ignore the claim of the Petitioners and prefer some one else. Even if the Respondent Corporation were to ignore the claim of all the qualified bidders who had submitted their tender in pursuance of the tender notice in question and appoint some other person, by no stretch of imagination the action of the Corporation of appointing an unqualified and in-eligible contractor to undertake such an important and specialised job can be said to be most advantageous for the Corporation. Rather, such decision would be antithesis to the test of most advantageous for the Corporation. Indeed, the prerogative to appoint a contractor to execute any work of the Corporation is that of the Corporation, which however, has to be taken after following due process and keeping in mind that the interest of the Corporation is secured first, both in respect of financial aspects, as also regarding ::: Downloaded on - 09/06/2013 15:57:20 ::: 57 successful completion of work within specified time.
34. For the aforesaid reasons, we may have to in the interest of justice, consider of moulding the reliefs claimed by the Petitioners in this Petition.
We have no hesitation in taking the view that considering the fact that the said work is a specialised job, it will have to be awarded by the Respondent Corporation only to a qualified and experienced contractor to ensure that it is successfully completed within the specified time and also properly operated and maintained. The fact that the Corporation would save substantial amount of around Rs. One crore, by itself, cannot justify the action of awarding contract of this kind to any contractor and more particularly, when it is noticed that the said contractor does not fulfill atleast one of the mandatory qualification and experience.
35. In view of the finding recorded hitherto, we hold that the opinion recorded by the Consultant of the Corporation communication dated 19th December, 2009, is on the face of the record indefensible and vitiated; and since the final decision of the Corporation was essentially founded on the said opinion, as a necessary corollary, even the said decision of the Corporation recorded in Resolution dated 30/1/2010 is vitiated. If so, the parties would be relegated to the situation to the stage of Corporation ::: Downloaded on - 09/06/2013 15:57:20 ::: 58 having issued tender notice and in pursuance of which received bids from two qualified contractors out of which the Petitioners are the lowest bidder(L1). In other words, by this order, to do substantial justice to the parties and and more importantly in the larger interest of all concerned, we would direct the parties to restore status quo ante to the stage of negotiations with the petitioners. We are conscious of the fact that evaluation report recommends that it will be reasonable to finalise the present tender by about 5% above the cost put to tender and the petitioners have matched that expectation. However, since there is already an offer received from Respondent No.4, the parties will have to re-negotiate on that basis. In other words, the Petitioners in the first place may consider of matching the offer given by the Respondent No.4 and if that option is availed by the Petitioners, the Corporation would be free to appoint the petitioners as contractor for the said work on the terms and conditions referred to in the tender notice and to be agreed upon between the parties.
On the other hand, if the Petitioners fail to match the offer given by the Respondent No.4, it would be open to the Corporation to pursue with the said Krystal either to become partner in the Joint Venture of Respondent No.4 if permissible as per the tender conditions or atleast to enter into a tripartite agreement with the Corporation to secure the interest of the ::: Downloaded on - 09/06/2013 15:57:20 ::: 59 Corporation and to fasten liability and accountability of Krystal in relation to the part of the work to be undertaken by them for and on behalf of the principal contractor-Respondent No.4. This course can be adopted "only if"
the appropriate authority of the Corporation is satisfied that the Respondent No.4 possesses requisite experience and qualifications in particular in relation to condition No.4 of clause (9) and further the Respondent No.4 Joint Venture as also the said Krystal provides sufficient security and bank guarantee consistent with the terms specified in the tender document and comply all other essential formalities for execution of joint agreement.
Even if this option does not materialise, then the only other option for the Corporation would be to issue fresh tender for the said work and pursue the same in accordance with law.
36. Accordingly, we pass ther following order.
(i) The resolution passed by the Standing Committee dated 30th January, 2010 and the consequential contract executed by the Commissioner in favour of the Respondent No.4 dated 17th March 2010, in respect of the said work No.1 ascribable to the tender notice No.03/2009-2010, are quashed and set aside.
::: Downloaded on - 09/06/2013 15:57:20 ::: 60(ii) The Respondent Corporation is free in the first place, to give option to the Petitioners to match the offer given by the Respondent No.4. If the Petitioners were to avail of that option, the contract in respect of the said work No.1 may be awarded to the Petitioners.
iii) However, if the petitioners fail to avail of the above option within a reasonable time specified by the Corporation, the Respondent Corporation may consider to allot the contract of the said work No.1 to Respondent No.4 joint venture as per the offer given by the respondent no.4, provided the respondent no.4 possesses the requisite qualification and experience specified in the tender notice in question (in particular condition no.4 in clause 9 thereof) necessary to discharge the said work and also gives firm commitment to abide by all the crucial terms and conditions referred to in the tender notice for timely competition of the entire project and to secure Corporation by offering commensurate security and bank guarantee, by invoking powers under proviso to Rule 2(2) of Appendix V to the Act of 1949. As the respondent no.5 does not fulfill the requisite mandatory condition of experience of having provided and commissioned automisation system for treatment plant ::: Downloaded on - 09/06/2013 15:57:20 ::: 61 of minimum 50 MLD capacity during the last seven years, it would be open to the Corporation to consider to relax that condition provided the sub-contractor (M/s Krystal Techno-Engineering Services Pvt.Ltd.) to be appointed by the principal contractor (respondent no.4.) agrees to be partner of the joint venture of respondent no.4 and/or agrees to execute a tripartite agreement (between the Corporation on the one hand, the Principal Contractor on the other hand, the sub-contractor as the third party or confirming party), with express commitment to successfully complete the work to be assigned to the third party in relation to automation system for the subject treatment plant, within the specified time and also furnishes sufficient and commensurate security and bank guarantee consistent with the terms and conditions of the tender notice to secure the interest of the Corporation.
(iv) If none of the options referred to above are possible, the Corporation may consider of issuing fresh tender for the said work No.1 of renewal, expansion and automization of the existing works at Barave and Titwala Water Treatment Plant in Kalyan.
::: Downloaded on - 09/06/2013 15:57:20 ::: 62(v) Petition is allowed on the above term with costs.
(R.M. SAVANT, J) (A.M.KHANWILKAR, J)
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