Bombay High Court
Som Projects Pvt Ltd vs Union Of India on 26 June, 2023
Author: Nitin Jamdar
Bench: Nitin Jamdar
2023:BHC-OS:5511-DB
WPL-14830-2023
Pdp
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO. 14830 OF 2023
Som Projects Pvt. Ltd.
Through its Director
At 1201-1202, Tower B,
12th Floor, Millennium Plaza
Sector-27, Gurugram-122002
(Haryana) .. Petitioner
Versus
1. Union of India
Through its Engineer-in-Chief
Ministry of Defence
Military Engineer Services
Kashmir House, Rajaji Marg,
New Delhi - 110 011.
2. Military Engineer Services
Through its Chief Engineer (Navy)
26, Assaye Building, Colaba,
Mumbai - 400 005.
3. RDS-KSCPL (JV)
427, Somdutt Chambers-II,
9, Bhikaji Cama Place,
New Delhi - 110 066. .. Respondents
Mr. Janak Dwarkadas, Senior Advocate a/w Mr. Sharan Jagtiani,
Senior Advocate a/w Mr. Mutahhar Khan, Mr. Chirag Dave, Mr. Noel
Thomas i/by Legasis Partners for Petitioner.
Mr. Piyush Shah a/w Mr. Niranjan Shimpi a/w Mr. Jay Vora for
Respondent Nos.1 and 2.
Mr. Mayur Khandeparkar a/w Mr. Davesh Juvekar, Ms. Kavita B.
Chavan i/by Rajani Associates for Respondent No.3.
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WPL-14830-2023
CORAM: NITIN JAMDAR, ACTING CJ. &
ARIF S. DOCTOR, J.
DATE: 26 JUNE 2023 JUDGMENT [ Per Acting Chief Justice]:
Faced with a shortage of accommodation for married sailors in Mumbai, the Military Engineer Services (Chief Engineer (Navy), Colaba, and Engineer-in-Chief, Ministry of Defence) issued a tender for building construction of a building to accommodate married sailors. The Petitioner submitted the lowest bid, with Respondent No. 3 as the second lowest bidder. The Authorities decided retender the process. The Petitioner has challenged this decision and seeks a writ of mandamus to accept their bid.
2. The subject contract for Engineering, Procurement and Construction (EPC) of Deficient Sailors Married Accommodation in Mumbai was published by Respondent Nos. 1 and 2 in June 2022. The bidding period was extended, and bids were required to be submitted by 15 February 2023 as per the Notice Inviting Tender (NIT). The Petitioner submitted its bid on the specified date. Five bidders, including Respondent No. 3, participated in the tender. The Petitioner claims that its technical bid was accepted on 14 March 2023, and it was declared eligible for the financial bid stage. The Petitioner's financial bid, being the lowest, was treated as of L1 bidder. The Financial Bid Opening Summary was published on Respondent Nos. 1 and 2's website on 16 March 2023. The tender validity period was initially until 16 May 2023, but Respondent Nos. 1 and 2 2 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 ::: WPL-14830-2023 requested an extension until 30 June 2023, which the Petitioner agreed to. However, on 17 May 2023, the Petitioner expressed dissatisfaction with the delay despite meeting all requirements and qualifications. The Petitioner learned that Respondent No. 3 had filed a complaint on 17 March 2023, which was being considered and potentially impacting the decision in favour of the Petitioner. Concerned about the outcome, the Petitioner initially filed a Writ Petition (C) No. 7745 of 2023 before the Delhi High Court on 29 May 2023 but later withdrew it due to objections over jurisdiction. The present Petition was subsequently filed by the Petitioner.
3. On 29 May 2023, Respondent Nos. 1 and 2 responded to the Petitioner's letter dated 17 May 2023, for notifying the Petitioner that the Accepting Officer has decided to reissue the tender in the best interest of the State. The Petitioner was reminded of the clauses in the Letter of Intent, NIT, and the Tender, which state that Respondent Nos. 1 and 2 were not obligated to accept the lowest or any bid received.
4. By this petition, Petitioner has questioned the decision taken to retender and for a mandamus to accept the bid of the Petitioner. Before we refer to the rival contentions, the relevant terms of the tender documents need to be referred to.
5. The NIT laid down the pre-qualification criteria. The pre- qualification criteria was as under:
3 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 :::WPL-14830-2023 "1. PRE-QUALIFICATION CRITERIA (PQC)
(a) Applications Average annual financial turnover during the last 3 years, ending 31st March of the previous financial year, should be at least 30% of the estimated cost i.e., ₹15900 lakhs. Certificate from Ca and balance sheets duly notarized to be submitted. Form 26AS of income tax shall also be submitted by the tenderer in support of average annual turnover.
(b) Experience of having successfully completed similar works during last 7 years ending last day of month previous to the one in which applications are invited should be either of the following:
Three similar completed works costing not less than the amount equal to 40% of the estimated cost.
OR Two similar completed works costing not less than the amount equal to 50% of the estimated cost.
OR One similar completed work costing not less than the amount equal to 80% of the estimated cost.
(c) The similar work mentioned above shall mean:
(i) Construction of buildings having RCC framed structure completed in any Government Department/PSU.
(ii) Production and verification of satisfactory performance reports of the respective qualifying work(s) with supporting documents shall be essential requirement during scrutiny of pre-qualification criteria. Certificates shall be accepted only after due scrutiny and verification from the concerned department.
(d) For the purpose of value of completed works, the value of previously completed work be enhanced @ 5% per year to bring them at par with present cost.
(e) The firm should have completed at least one work (irrespective of value of work), involving RCC framed 4 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 ::: WPL-14830-2023 structure of height not less than 60 m or G+19 floors excluding stilt/ basement in any Government Department/PSU."
Similar work was defined as the firm should have completed at least one work (irrespective of value of work), involving RCC framed structure of height not less than 60 m or G+19 floors excluding stilt/ basement in any Government Department/PSU.
6. The provision of integrity pact was provided in the NIT Clause 15 as under:
"15. INTERGRITY PACT:
Integrity pact is an integral part of tender/bid documents. Scanned copy of Integrity pact duly signed on each page by the bidder shall be uploaded as a part of technical bid (Cover-1) and original IP duly on all pages shall be forwarded by post along with demand draft to Accepting Officer. Bidders who do not upload scanned copy of IP duly signed will be informed through option of `Short Fall Documents' (in e-tendering portal). Any bidder who fails to forward the copy of IP duly singed even after this communication shall be disqualified in the Technical Bid (Cover-1) evaluation and his financial bid will not be opened. Refer tender documents."
7. The relevant clauses of the Integrity Pact placed on record read thus:
"3. Objectives Now, therefore, the Principal/Owner and the Bidder agree to enter into this pre-contract agreement, referred to as INTEGRITY PACT (IP), to avoid all forms of corruption by following a system that is fair, transparent and free from any 5 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 ::: WPL-14830-2023 influence/prejudiced dealings prior to, during and subsequent to the conclusion of the contract to be entered into with a view to.
3.1 Enabling the Principal / Owner to get the desired works/services at a competitive price in conformity with the defined specifications of the services by avoiding high cost and the distortionary impact of corruption on public procurement.
3.2 Enabling Bidders to abstain from bribing or any corrupt practice in order to secure the contract by providing assurance to them that their competitors will also refrain from bribing and other corrupt practices and the Principal/Owner will commit to prevent corruption, in any form, by their officials by following transparent procedures.
10. Independent External Monitors (IEMs) 10.1 MoD has appointed the following Independent External monitors for this pact in consultation with the Central Vigilance Commission: -
SI Name of IEM e-mail id
No.
1. Shri Sudhir XXX
Bhargava, IAS
(Retd)
2. Shri Vikram XXX
Srivastava, IPS
(Retd)
10.2 Details of Nodal officer nominated by E-in-C's
Branch are as follows: -
Name : Shri Sanjay Kumar Gupta, Director
(Contracts), E-in-C's Branch, New
Delhi.
e-mail id : XXX
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WPL-14830-2023
10.3 In case of any complaint with regard to violation of
Integrity Pact, either party can approach IEMs with copy to the Nodal Officer and the other party. If any such complaint from bidder is received by the Principal/Owner, the Principal/owner shall refer the complaint to the Independent Eternal Monitors for their recommendations/inquiry report.
10.4 If the IEMs need to peruse the relevant records of
the Principal/Owner and/or of the
Bidder/Contractor in connection with the
complaint sent to them, the Principal/Owner and/or the Bidder/Contractor shall make arrangement for such perusal of records by the IEMs as demanded by them including unrestricted and unconditional access to the project documentation and minutes of meeting. If records/documents of Sub- Contractor(s) are also required to be perused by the IEMs, the Bidder shall make arrangement for such perusal of records by the IEMs as demanded by them. IEMs are under obligation to treat the information and documents of the Principal/Owner and Bidder/ Contractor/Sub-Contractors with confidentiality. 10.5 The task of the IEMs is to review independently and objectively, any complaints received with regard to violation Integrity Pact and offer recommendations or carry out inquiry as deemed fit. The IEMs are not subject to any instructions by the representatives of the parties and shall perform their functions neutrally and independently. The report of inquiry, if any, made by the IEMs shall be submitted to either of the following for a final and appropriate decision in the matter keeping in view the provision of this Pact: -
(a) Engineer-in-Chief in normal cases
(b) CVO (MES & BRO)/MoD in cases involving vigilance angle"7 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 :::
WPL-14830-2023
8. The NIT specifically stated in Clause 15 that Accepting Officer does not bind himself to accept the lowest or any tender/bid or to give any reason for not doing so. In Clause 5 of the Letter of Intent by the Petitioner, the Petitioner has stated that it fully understands that Respondent Nos. 1 and 2 are not bound to accept the lowest tender or any bid received. Para 2 of the tender states that the President of India does not bind himself to accept the lowest or any tender.
9. By then, on 29 May 2023, Respondent Nos. 1 and 2 replied to the letter of the Petitioner dated 17 May 2023, informing the Petitioner that it has been decided by the Accepting Officer to resort to retender in the interest of State. According to Respondents No.1 and 2 the communication conveying the decision to retender need not contain elaborate reasons and therefore, the reasons are now supplied through the Affidavit in Reply. In the Affidavit in Reply filed by Respondent Nos. 1 and 2 following facts are placed on record.
10. On 17 March 2023, Respondent No.3 had raised an objection that the Petitioner did not meet the prequalification criterion and was taking advantage of an ambiguity. The objection was as follows:
"a. The datum and basic reference with regards to mode of measurement should be same in both cases. All measurements are deemed to be above ground plus level not below.
b. "Excluding stilt/Basement is applicable to both criterion ie RCC framed structure of height 60 m as well as G+19 floors. The criterion has been fixed based on the 8 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 ::: WPL-14830-2023 design of 3 metres floor to floor height which comes to 20x3 = 60 metres.
c. The same reason applies for excluding the height of basement to bring equivalent between the two criterions. d. If the department view is considered that everything that comes after "or" is not applicable to RCC framed structure then "in any Government Department/PSU" in continuation of the sentence also gets excluded from "RCC framed structure of not less than 60 m". This argument falls flat because department will not have allowed qualification of any private works under any circumstances. e. The NBC also specifies the height of building has to be above GL.
f. The NBC specifies that the Fire-fighting requirements changes for building greater than 60 m hence the PQC was stipulated. This is in gross violation because of the building should be measures from the ground level to the top of the roof slab level of last liveable storey. As even when basement and stilt is excluded being below GL then any structure below GL should not be measured. Hence height from 1st Tie beam level to GL should be excluded.
g. Any structures like mumty room, water tank or machine room on the roof of the 16th floor would not construe that the entire RCC framed structure goes upto the roof of the water tank or the roof of the machine room and should not be measured. This is also against NBC criteria which excludes these from total height of structure. h. This aspect stands clarified in another tender of "Provision of Deficient Officer's Married Accommodation (220 DUs) (G+62) including Demolition of Four Blocks P, Q, J and K at Nofra, Colaba, Mumbai" issued by same Chief Engineer (Navy) Mumbai where specific amendment doated 10 Mar 2023 has been done as follows:
"The firm should have completed at least one work RCC building work (irrespective of value of 9 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 ::: WPL-14830-2023 work) of height more than 60 m (Height shall be measured from Finished Ground Level to roof slab to top most storey. Height of Mumty, Machine Rooms Water Tanks, etc., are excluded from the height) or G+19 floors in any Government Department/PSUs."
i. This goes to show that department was clear about the height of RCC framed structure but chose to ignore this very aspect to favour one particular Contractor."
11. The Independent External Monitor (IEM), after considering the position, opined that, "One of the Pre-Qualification Criteria (PQC) stipulated in the NIT is that, "The firm should have completed at least one work (irrespective of value of work), involving framed structure of height not less than 60 m in any Government Department/PSU. However, the NIT did not specify as to how the height of the building would be measured. In such a case, it is prudent, in order to prevent arbitrariness or bias towards any bidder, that the height of the building be computed as per standard procedure laid down for regulating the building construction activities.
Sec. 2.4 of Part 4 of the National Building Code of India (NBC), a comprehensive code for regulating the building activities in India provides that "the vertical distance in the case of flat roofs from the average level of the ground around and contiguous to the building or as decided by the Authority to the terrace of the last liveable floor of the building adjacent to the external wall....
Further Sec. 9.4.2 provides that the following appurtenant structures shall not be included in the height of the building unless the aggregate area of such structures including penthouses, exceeds one-third of the area of the roof of building upon which they are erected:
(a) Roof tanks and their supports (with support height 10 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 ::: WPL-14830-2023 not exceeding 1 m)
(b) Ventilating air conditioning, lift rooms and similar service equipment;
(c) Stair cover (Mumty) not exceeding 3 m in height;
and
(d) Chimneys, parapet walls and architectural features not exceeding 1.2 m in height.
***** Thus, the procedure adopted by the TSC lacked objectivity, equity and transparency. Moreover, had the TSC computed the height of the building as per NBC the height of the building would have been less than 60 metres.
In view of the above, the IEMs are of the view that M/s Soma Projects Pvt. Ltd. was not qualified to submit financial bid for Engineering, Procurement and Construction of Deficient Sailors Married Accommodation at Mumbai as the firm did not complete at least one work (irrespective of value of work), involving RCC framed structure of height not less than 60 m or G+19 floors excluding stilt/basement in any Government Department/PSU. Engineer-in-Chief may take further action in the matter accordingly."
This was the opinion rendered by the IEM.
12. With this opinion, Respondent Nos. 1 and 2 were faced with the decision of whether to proceed with the Tender in light of the independent external body's findings that the procedure employed by the Tender Selection Committee lacked objectivity, equity, and transparency. It is on record that the E-in-C's Branch in New Delhi concurred with the opinion of the independent external body, as did 11 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 ::: WPL-14830-2023 the Appellate Authority. Consequently, based on this consensus, Respondent Nos. 1 and 2 were faced with the choice of either continuing with the existing tender, thereby continuing the ambiguity, or opting for a retender process to rectify the identified issues. The Affidavit in Reply states that the decision to retender was made in the best interest of the State, taking into consideration the severe shortage of Sailor Married Accommodation and the necessity to avoid potential litigation between the L1 and L2 bidders. Accordingly, amendments were made to the prequalification criteria in the re- published tender, thus eliminating the ambiguities. These amendments have been placed on record in the affidavit filed by Respondent Nos. 1 and 2.
13. It is crucial to emphasize at the outset that the present matter does not involve the removal of the Petitioner from the tender process or the awarding of the tender to Respondent No. 3. This is not a situation where the tender was awarded, followed by the execution of an agreement that is now being cancelled. The crux of this case is that Respondent Nos. 1 and 2, based on the reasons stated in their reply, have made the decision to initiate a retender process. Their rationale is rooted in the presence of certain ambiguities that could potentially lead to litigation delaying the construction of the much need accommodations.
14. Mr. Dwarkadas, the learned Senior Advocate for the Petitioner, firstly, contended that the principles of natural justice were not followed when the Petitioner was disqualified. Secondly, he asserted 12 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 ::: WPL-14830-2023 that the principles of natural justice were not adhered to during the decision to initiate a retender process. It has come to light from the records that Respondent No. 3 lodged a complaint with an IEM on 17 March 2023, and this committee was briefed by Respondent No. 3 as the complainant. The Petitioner claims that they were completely unaware of these proceedings and only received a communication on 29 May 2023, conveying the decision to retender. According to the Petitioner, the entire decision to retender, which was based on the IEM's opinion derived from Respondent No. 3's complaint, constitutes a serious violation of the principles of natural justice. Therefore, the Petitioner seeks to have the decision nullified and set aside. It was argued that the Petitioner's technical bid had been opened and accepted, publicly known since February 2023, and Respondent No. 3 raised no objections until after the financial bid was opened on 16 March 2023, when the Petitioner was declared as the lowest bidder (L1). Consequently, it is alleged that the IEM, influenced by a disgruntled and unsuccessful bidder, the Respondent No.3, assumed authority and jurisdiction to conclude that the Petitioner was unqualified, without affording the Petitioner any opportunity for a hearing. As per the provisions of the NIT, if the Tender Selection Committee had rejected the Petitioner's bid, the Petitioner would have had the chance to file an appeal and request a personal hearing before the Appellate Authority. However, the Petitioner has been deprived of this opportunity. Mr. Shah, the learned Counsel for Respondent Nos. 1 and 2, argued that the Petitioner suppressed a meeting where they were made aware that Respondent No. 3 had lodged a complaint with the IEM but chose not to participate. Therefore, it is contended that 13 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 ::: WPL-14830-2023 the Petitioner cannot now raise grievances, especially considering the significant suppression of facts. Additionally, it was stated that the IEM did not provide Respondent No. 3 with a hearing and was only allowed to state its objections, which were already on record. It was further argued that it is not a legal requirement to provide a hearing to the lowest bidder before making a decision to retender.
15. Respondent Nos. 1 and 2 have asserted that a meeting was conducted on 3 April 2023 involving all relevant stakeholders. The meeting was attended by the Petitioner represented by Mr. Mukul Garg and Mr. Shekhar Ahuja, Respondent No. 3 and the L3 bidder
- M/s. NCCCL-Dev Engineers (JV). Representatives from the Office of the Chief Engineer (Navy) Mumbai, including the Chief Engineer, Director (Design), Director (E/M), Director (Contracts), Director (Architect), and other officers, were present. The Command Chief Engineer chaired the meeting, with the Offg. Joint Director General (Contracts) and Deputy Director (Contracts) of HQ CESC joining through video conference. During the meeting, Respondent No. 3 raised concerns about the Petitioner not meeting the pre-qualification criteria. This meeting is completely suppressed from the petition. Petitioner was thus fully aware of the complaint filed by these bidders with the IEM and its contents. Therefore, the Petitioner's assertion that they were unaware of Respondent No. 3's complaint to the IEM cannot be accepted, as there is no specific denial, except for the contention that the Petitioner should have been given an opportunity to rectify any defects. It is asserted by Respondents No.1 that Respondent No. 3 was only given an opportunity to present its 14 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 ::: WPL-14830-2023 objections, which were already documented and known to the authorities. It is emphasized that the relevant facts had already been communicated to the IEM by the concerned authorities themselves. Consequently, the claim that the Petitioner was unaware of the complaint and that there was a breach of natural justice is factually incorrect and involves the suppression of material facts.
16. As a matter of law, the Petitioner has raised the issue of whether the lowest bidder should be afforded an opportunity to be heard if a decision is made to cancel the tender and retender it. What in effect the Petitioner claims is a vested right having been declared as the lowest bidder i.e. L-1. The Petitioner relied on the Supreme Court's decision in the case of State of U.P. v. Sudhir Kumar Singh and Ors.1 However, it is important to note that the facts of that case are substantially different. In that case, Sudhir Kumar Singh, who was Respondent No.1, was declared as the successful bidder. Subsequently, an agreement was entered into between Sudhir Kumar Singh and the relevant authority, which remained in force for one year before the contract was terminated and the tender was cancelled. In the present case, there is no such agreement between the Petitioner and Respondent Nos. 1 and 2, and therefore, the Petitioner has not acquired any vested rights. No decision based on similar factual circumstances as the present one, is shown to us indicating that the lowest bidder has a vested right and thus must be given a hearing before any decision for retendering is taken. Consequently, both the factual and legal arguments put forth by the Petitioner, cannot be 1 2020 SCC OnLine SC 847 15 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 ::: WPL-14830-2023 accepted based on the well principles of law pertaining to both natural justice and awarding of tenders.
17. Mr. Dwarkadas, the learned Senior Advocate for the Petitioner, sought to challenge the proceedings and conclusion of the IEM. He argued that the IEM deviated from the norms stated in the NIT by imposing external criteria. He contended that the IEM not only changed the rules during the ongoing process but also denied the Petitioner an opportunity to present its case. Had such an opportunity been given, the Petitioner could have demonstrated to the IEM that its interpretation regarding the height of the building was incorrect. The authority of the IEM was limited by the integrity pact, which empowered the IEM to examine tender-related issues only in cases where there were allegations of high-level corruption or distortionary impacts on public procurement. The purpose of the integrity pact was to ensure that bidders refrained from engaging in bribery or corrupt practices to secure the contract and that officials followed transparent procedures. The task of the IEM to independently and objectively review any complaint was restricted to violations of the integrity pact. The integrity pact, to which the Petitioner was a signatory, did not grant any right or power to the IEM to consider complaints regarding the qualifications of the tender. Therefore, since the IEM lacked the authority to entertain the complaint filed by Respondent No. 3, Respondent Nos. 1 and 2 should not have relied on it. The Petitioner's technical and financial bids were examined and approved by four authorities: the Accepting Officer, Appellate Authority, Tender Selection Committee, and the Competent Authority. However, the 16 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 ::: WPL-14830-2023 IEM still entertained the matter and overruled the decisions of these four authorities. Once the Petitioner's bid was accepted by an expert body, the IEM could not have made a different decision without affording the Petitioner an opportunity to be heard. The entire process undertaken by Respondent Nos. 1 and 2 is highly arbitrary and in bad faith, warranting intervention in the form of a writ jurisdiction. Furthermore, the complaint filed by Respondent No. 3 does not allege any corruption or bribery. He placed reliance upon the decision of the Division Bench of this Court in the case of Leighton Welspun Contractors Pvt. Ltd. vs. Oil and Natural Gas Corporation Limited and Ors.2 to point out that in the said case, unlike the facts in the case in hand the integrity pact itself provided that the bidders may raise disputes and complaints directly with the nominated IEM and the Court held that objection of competing bidder could not be heard. Further, on breach of principles of natural justice, decision of the Hon'ble Supreme Court in the case of Sudhir Kumar Singh & Ors. was relied on. The decision in the case of Ganpati Rv-Talleres Alegria Track Pvt. Ltd. v. Union of India and Anr. 3 was relied on in furtherance of the proposition that rejection of technical bid without assigning any reason is illegal.
18. Before referring the Respondents' response to these submissions, it is important to note that our role is not to act as an appellate body over the decision of the IEM or to determine whether the IEM had the authority under the integrity pact to disqualify the 2 Writ Petition (L) No. 3033 of 2012 3 (2009) 1 SCC 589 17 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 ::: WPL-14830-2023 Petitioner. Our focus is on the decision made by Respondent Nos. 1 and 2 to proceed with retendering and whether the said decision in the facts of present case is liable to be interfered with in writ jurisdiction. As already noted, the reasons for the decision to retender are to be found in the Affidavit-in-Reply of Respondent Nos. 1 and 2 wherein they have acknowledged the observations made by the IEM and have consciously decided to retender. It is this particular decision that we are examining in the present writ petition.
19. Mr. Shah, the learned counsel for Respondent Nos.1 and 2 submitted that Petitioner has no right to insist that its tender should be accepted, nor can it seek any writ of mandamus. Respondent Nos.1 and 2 in the Affidavit-in-Reply has given cogent reasons as to why the retendering is resorted to. Respondent Nos.1 and 2 have relied upon the decision of the Hon'ble Supreme Court in the case of Tata Motors Limited v. Brihan Mumbai Electric Supply & Transport Undertaking (BEST) and Ors.4. The counsel for the Respondent Nos. 1 and 2 argued that the neither has the Petitioner been disqualified nor has the tender been cancelled. He submitted that all that has been done is to re tender in which process the Petitioner is free to participate again. Since there has been no acceptance of the Petitioner's tender and no contract has been awarded to Respondent No. 3, there is no prejudice to the Petitioner. It is emphasized that bids are open, and parties can always submit new bids, leading to competitive prices that benefit the State exchequer. Retendering is a common practice and should not be considered as a case of gross injustice. The view taken by the IEM is 4 2023 SCC OnLine SC 671 18 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 ::: WPL-14830-2023 correct, as there was ambiguity regarding the relevant clause in the NIT. The IEM determined that it would be appropriate to measure the height of the building in accordance with Section 2.4 Part 4 of the National Building Code of India (NBCI). Consequently, Respondent Nos. 1 and 2, in order to avoid further litigation and considering the genuine need for the construction of quarters, decided to cancel the tender and initiate retendering. It is also asserted that the authority inviting the tender is not obligated to accept any tender and has the right to invite fresh tenders. Mr. Khandeparkar, the counsel representing Respondent No. 3, supported the stand of Respondent Nos. 1 and 2.
20. The right of Respondent Nos. 1 and 2 to reject any tender or bid is explicitly stated in the NIT and is acknowledged by the Petitioner when submitting their bid. Hence, the issue before us is whether the decision of Respondent Nos. 1 and 2 to retender the project in question can be deemed as being in bad faith or entirely arbitrary. Furthermore, it has to be considered whether it is appropriate to grant a writ of mandamus to compel Respondent Nos. 1 and 2 to accept the bid submitted by the Petitioner.
21. The NIT specified a pre-qualification criterion stating that the firm must have completed a construction project involving an RCC framed structure with a minimum height of 60 meters or Ground + 19 floors (excluding stilt/basement) in a Government Department/PSU. Respondent No. 3 raised an objection, asserting that the Petitioner's previous construction did not meet the required 60-meter height. Respondent No. 3 argued that the Petitioner had 19 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 ::: WPL-14830-2023 incorrectly calculated the height, including elements like tie beams below ground level up to the top of the water tank, resulting in a measurement of only 51 meters. The essence of Respondent No. 3's objection was that the height of the building should be measured from ground level to the terrace, excluding the stilt/basement. According to Respondent No. 3, the qualification documents submitted by the Petitioner to Respondent Nos. 1 and 2 revealed that the Petitioner had provided a certificate regarding a previous project executed under Garrison Engineer (P) Bhandup in Mumbai. This project involved the construction of an RCC framed structure comprising 152 flats in two towers of Type-3, Ground + 16 floors, and one tower of Type-4, Ground + 12 floors. It was evident that the maximum height of the building constructed by the Petitioner was Ground + 16 floors, which naturally fell short of the PQC requirement. According to Respondent No. 3 even if a standard floor-to-floor height of approximately 3.2 meters is considered, the maximum height of the Ground + 16-floor building would be 51.2 meters. Respondent No. 3 complained that despite this obvious ineligibility clear from the submitted documents, the Tender Selection Committee of Respondent Nos. 1 and 2 proceeded to declare the Petitioner as eligible according to the NIT and as the lowest bidder.
22. A meeting was convened in response to the complaint, chaired by the Director General of Works from the Engineer-in-Chief's Branch in New Delhi, and attended by the IEMs, namely Shri Sudhir Bhargava (IAS, Retd) and Shri Vikram Srivastava (IPS, Retd). Other participants included the Officiating Chief Technical Examiner from 20 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 ::: WPL-14830-2023 the CVO (MES & BRO) office, the Officiating Joint Director General (Contracts) from HQ Chief Engineer Southern Command in Pune, the Chairman of the Tender Selection Committee, the Director (Contracts) of Chief Engineer (Navy) Mumbai, the Nodal Officer to IEMs from the Engineer-in-Chief's Branch, and two other Directors (Contracts) from the Engineer-in-Chief's Branch. During the meeting, the Chief Technical Engineer highlighted that the measurement conducted by the Tender Selection Committee for the Petitioner's building, consisting of Ground + 16 floors, did not comply with the stipulations outlined in Section 2.4 of Part 4 and Section 9.4.2 of the National Building Code of India (NBCI). It was suggested that the Petitioner had received preferential treatment to demonstrate their eligibility. This concern was also raised by the Officiating Joint Director of the Appellate Authority. In the respondents' affidavit, they mentioned that only these officials had brought attention to the fact that the Complainant, Respondent No.3, was allowed to present its case due to their submission of a complaint.
23. The initial tender included a prequalification criterion that required firms to have completed a construction project involving an RCC framed structure with a minimum height of 60 meters or Ground + 19 floors (excluding stilt/basement) in any Government Department/PSU, regardless of the project's value. However, the NIT did not provide specific instructions on how to measure the height of the building. As a result, when it was brought to the attention of Respondent Nos. 1 and 2 that the Petitioner might be receiving undue advantage due to this ambiguity, the IEM identified certain 21 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 ::: WPL-14830-2023 uncertainties and lack of clarity regarding the measurement of construction in the prequalification criteria. The IEM drew the attention of Respondent Nos. 1 and 2 to the Standard Code. In order to address these ambiguities, the retender specified the following clarifications:
"The firm should have completed at least one work (irrespective of value of work), in any Government Department/PSUs, either of the following:
Height of the building shall be 60 m and above (Height shall be measured from Finished Ground Level to roof slab of top most storey. Height of mumty, Machine Rooms, OH Water tanks etc. are excluded from the height).
OR Building shall have minimum (G+19) floors excluding basements, Mumty, Machine Rooms, OH Water tanks etc."
In the interest of providing accommodation to married Sailors and considering the broader public interest, Respondent Nos. 1 and 2 made a decision to retender. They did not exclude the Petitioner from the process or award the tender to Respondent No.3. Instead, Respondent Nos. 1 and 2 opted for a retender process in which the Petitioner is free to participate.
24. The Petitioner's argument that the rules of the game have changed is unmeritorious. There is no contractual agreement between the Petitioner and Respondent Nos. 1 and 2. Moreover, there was no 22 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 ::: WPL-14830-2023 clarity in the pre-eligibility criteria of the first tender regarding how the height of the building should be measured. In this context, the IEM expressed the view that the measurement should be in accordance with the Indian Standard Code, and there was no valid reason to exclude its application. This highlights a lack of transparency in the decision-making process of Respondent Nos. 1 and 2 carefully assessed the situation following the IEM report and considered various options available. Ultimately, they decided to proceed with retendering in order to avoid potential litigation between the top two bidders and to address the pressing need for providing accommodation to married Sailors. Therefore, there is no gross arbitrariness or malicious intent in the decision to retender.
25. The Petitioner's claim of prejudice is based on the argument that their financial bid is now known. However, Respondents point out that in the retender process that all parties will submit their bids, and if there is competition, it would benefit the State without adversely affecting any public interest. It is not uncommon for a tender process to be cancelled and retendering to be ordered even after the financial bids have been opened. Therefore, such contingencies can arise in retendering situations. In this case, the Petitioner has not been removed from the tender process, they are allowed to participate, and the tender has not been awarded to Respondent No. 3. Hence, the Petitioner does not possess a vested right having been declared as L-1 so as to support the argument of prejudice. The contention made by the Petitioner that Respondent No. 3 could have raised objections earlier lacks merit. It should be noted that Respondent No. 3 has not 23 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 ::: WPL-14830-2023 been awarded the contract as the second lowest bidder, despite their request for it. Therefore, the focus of our examination is solely on the decision of Respondent Nos. 1 and 2 to retender the work.
26. As regard the judicial review of the decision of the State to invite fresh tender, in the case of State of Jharkhand and Ors. v. CWE- SOMA Consortium 5 , the Hon'ble Supreme Court, referred to the well-established legal principle that in the case of a tender, the entity issuing the tender notice is not obligated to accept any of the tenders received, including the lowest one. Upon reviewing the rates or the status of the contractors who submitted tenders, if it is determined that there is no competition, the entity issuing the tender may decide not to proceed with any contract and subsequently cancel the tender. It is established that until a bid has been accepted, the highest bidder (in this case, the lowest) does not acquire any vested right. This principle is incorporated in clauses of the NIT and the clauses of the bid in the present case. Furthermore, even though Respondent Nos. 1 and 2 possessed the right to cancel the tender without assigning any reason, they did, in fact, furnish a credible and acceptable justification for their decision.
27. This position of law was reiterated by the Hon'ble Supreme Court in the decision of State of Punjab and Ors. v. Mehar Din6. In para 27 of the said decision, it is observed that it is well-established that the highest bidder does not possess a vested right and 5 (2016) 14 SCC 172 6 (2022) 5 SCC 648 24 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 ::: WPL-14830-2023 considering the limited scope of judicial review under Article 226 of the Constitution, the High Court is not expected to interfere in the opinion of the executive authorities involved, unless the decision was entirely arbitrary or unreasonable. The High Court cannot function as an appellate court, reviewing the decision of the competent authority, especially in cases where the authority responsible for issuing the tender is in the best position to assess its requirements. Therefore, any interference by the court should be kept to a minimum. In the case of B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd.7, the Hon'ble Supreme Court held that the authority inviting tender is in the best position to make judgments. Therefore, the Court's intervention in such matters should be minimal. Where the High Court's jurisdiction is limited, the court should exercise judicial restraint unless there is clear evidence of mala fides, illegality or arbitrariness on the part of the authority.
28. In the case of Jagdish Mandal v. State of Orissa and Ors.8, the Supreme Court drew a distinction between tenders for public projects and tenders for the allotment of shops, grant of licenses, dealerships, and franchises. The Supreme Court observed that laid down that the judicial review of administrative action aims to prevent arbitrariness, irrationality, unreasonableness, bias, and mala fides. But when it comes to tenders or awarding contracts, certain considerations should be kept in mind. Contractual matters involve commercial transactions where principles of equity and natural justice take a back seat. Courts will not 7 (2006) 11 SCC 548 8 (2007) 14 SCC 517 25 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 ::: WPL-14830-2023 interfere in the award of contracts if it is made in good faith and serves public interest, even if there are procedural errors or prejudice to a tenderer. Private interests should not overshadow public interest, and contractual disputes can be resolved through civil courts. Courts should resist attempts by unsuccessful tenderers to magnify minor technical/procedural violations or self-prejudice to invoke judicial review. Before interfering in tender or contractual matters, Courts should assess whether the authority's actions are mala fide, arbitrary, or irrational and whether public interest is affected. If the answers are in the negative, there should be no interference under Article 226.
29. On the aspect of judicial restraint in the matter of tenders of public works, in the case of N.G. Projects Limited v. Vinod Kumar Jain and Ors.9, the Supreme Court took a review of the legal position and held that the writ court should exercise restraint and not override the employer's decision regarding the acceptance of a tenderer's bid. The Court lacks expertise in examining the terms and conditions of contemporary economic activities undertaken by the state, and this limitation should be acknowledged. In cases involving technical issues, courts should be even more reluctant to interfere, considering the need for specialized expertise to adjudicate on such matters. Rather than scrutinizing the tender process with a fault-finding approach, the Court should assess whether the decision-making process adhered to the prescribed procedures outlined in the tender conditions. The Supreme Court emphasized that interfering with the tender process by issuing injunctions leads to more expenses for the 9 (2022) 6 SCC 127 26 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 ::: WPL-14830-2023 government and goes against the public interest. This means that the state and its citizens are negatively affected in two ways: firstly, they have to bear the increased costs, and secondly, they are deprived of the infrastructure that the government is responsible for providing in the present times.
30. Therefore, when the Respondent Nos.1 and 2 informed the Petitioner about their decision to proceed with retendering, they correctly referred to the relevant clauses in the NIT, tender documents, and the bid, highlighting that the Petitioner has no legal entitlement, and the Respondent Nos.1 and 2 possess the power to reject any bid. It was not necessary for them to provide a reason in that communication. In the case of Silppi Constructions Contractors v. Union of India and Anr.10, the Hon'ble Supreme Court observed that the matters of tender are in the realm of contract and are purely administrative decisions and the authority inviting tender is not required to give reasons like a judgment, and the authorities can give reasons in reply to the Writ Petition. Now since the Petitioner has challenged the decision of retender, Respondent Nos.1 and 2 have given cogent reasons why retender is necessary. We are satisfied with the reasons given.
31. In this case, Respondent Nos.1 and 2 have taken a bona fide decision to retender after carefully considering the overall situation. Their objective is to avoid potential litigation that could further delay the construction of quarters for married Sailors. These quarters are 10 (2020) 16 SCC 489 27 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 ::: WPL-14830-2023 urgently needed as stated in the affidavit, as the Sailors are currently facing hardships. It is important to prioritize the larger public interest in matters of tender, and no legal rights of the Petitioner have been violated, nor has any tender been awarded to Respondent No.3. Therefore, there is no error in initiating the retender process, and the Petitioner's challenge against it must fail. The Court cannot issue a mandamus in favour of the Petitioner to compel Respondent Nos.1 and 2 to award the contract to the Petitioner.
32. The writ petition is accordingly dismissed.
(ARIF S. DOCTOR, J.) (ACTING CHIEF JUSTICE)
33. At this stage, learned counsel for the Petitioner states that Petitioner desires to participate in the tender process upon retender; however, the last date is today and it will not be possible for the Petitioner to submit its bid.
34. The learned counsel for Respondent Nos.1 and 2, on instructions from Mr. D. V. Maheswar, Director (Contracts), CE Navy, Mumbai and Maj. Anand Singh, DCWE, states that the last date for submitting tender will be extended till 28 June 2023 at 6.00 p.m.
35. Statement is accepted.
(ARIF S. DOCTOR, J.) (ACTING CHIEF JUSTICE) 28 ::: Uploaded on - 26/06/2023 ::: Downloaded on - 27/06/2023 13:02:24 :::