Bombay High Court
M/S K. K. Vidyut Thr Its Authorized Sign ... vs The Union Of India Thr Its Ministry Of ... on 24 August, 2016
Author: B.R. Gavai
Bench: B.R.Gavai, V.M.Deshpande
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT NAGPUR, NAGPUR.
...
WRIT PETITION NO.234/2016
M/s K.K. Vidyut
(A Joint Venture of M/s Manisha Construction
and M/s K K Vidyut Ltd.) having its
registered address office at 627, B-2, Wadgaon Gupta,
Ahmednagar 414 111.
Through its Authorised Signatory, namely,
Shri Avinash s/o Sukhdeorao Shende,
Aged about 40 years, occu: Business
R/o Wardha Road, Dhantoli, Nagpur. ..PETITIONER
v e r s u s
1) The union of India
Through its Ministry of Railway,
New Delhi.
2) The Chief Administrative Officer (Construction)
South East Central Railway,
G M Annex Building
Bilaspur (Madhya Pradesh)
3) The Chief Engineer (Construction)
South East Central Railway,
3rd floor, DRM Building Kingsway, Nagpur.
4) The Deputy Chief Engineer (Construction)
South East Central Railway
Chhindwara (Madhya Pradesh )
5) M/s Siddartha Builders (Engineering
and Contractors) Rajghat Pal Project
Dist.Lalitpur (U.P.). ...RESPONDENTS
...........................................................................................................................
Mr. A. S.Jaiswal, Senior Advocate for the petitioner
Mr. Nitin Lambat, Advocate for Respondent Nos.1 to 4
Mr. Sunil Manohar, Senior Advocate for respondent no.5.
............................................................................................................................
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CORAM: B.R.GAVAI &
V.M.DESHPANDE , JJ
.
DATED : 24th August, 2016
ORAL JUDGMENT: (PER B.R. GAVAI, J.)
Rule. Rule made returnable forthwith. Heard finally by consent.
2. The petitioner firm has approached this Court, being aggrieved by the decision of the respondent nos.2 to 4 in rejecting the technical bid of the petitioner.
3. The respondent nos. 2 to 4 had invited tenders for supplying and stacking of 1,50,000 cum machine crushed ballast between Seoni (including) (conforming to specifications of machine crushed stone ballast issued by RDSO, corrected up to date) in cess, in formation or in yards, in connection with gauge conversion between Chhindwara-Nainpur vide tender Notice No. CEC/BSP/2015-16/60. The tenders were to be submitted in two envelopes.
The first envelope was pertaining to the technical and financial capacity of the bidder and the second envelope was with regard to the price bid. In response to the tender notice dated 2nd September 2015 as may as eight bidders had submitted their bids. The first envelopes were opened on 23rd December, 2015 in which the petitioner and one another bidder were found to be disqualified.
Being aggrieved thereby, the present petition is filed.
4. Heard Shri Anand Jaiswal, learned senior counsel for the ::: Uploaded on - 29/08/2016 ::: Downloaded on - 30/08/2016 00:06:40 ::: wp.234.16 3 petitioner; Shri Nitin Lambat, learned counsel for respondent nos. 1 to 4 and Shri Sunil Manohar, learned senior counsel for respondent no.5.
5. Shri Anand Jaiswal, learned senior counsel for the petitioner submits that the respondents have grossly erred in rejecting the bid of the petitioner, on the ground that the petitioner had not submitted the documents with regard to the bidding capacity. Learned senior counsel submits that the qualifying conditions for individual bidders and joint ventures were different.
It is the contention of the learned senior counsel that clause 5 of the Tender Document specifically deals with the individual bidders on one hand and the joint ventures bidders on the other hand. He submits that insofar as the bidding capacity is concerned, it is required to be submitted only by the individual tenderer and not by the joint venture tenderer. Learned senior counsel therefore submits that the action of the respondents in rejecting the technical bid of the petitioner is totally unsustainable in law. Learned senior counsel relying on the judgment of the Apex Court in the case of Rashmi Metaliks Limited and another vs. Kolkata Metropolitan Development Authority and others, reported in (2013) 10 SCC 95, submits that in any case, the condition regarding the bidding capacity cannot be held to be an essential condition and the rejection of the technical bid on the ground of non-supply of the documents pertaining to bidding capacity would not be permissible in law.
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6. Shri Nitin Lambat, learned counsel appearing on behalf of the respondent nos.1 to 4, on the contrary, submits that the rejection of the bid of the petitioner is not only on the ground of non-submission of papers as regards bidding capacity, he submits that the essential documents which are required to be submitted as per clause (6) of the Tender Document, have not been supplied by the petitioner. He submits that in any case an interference by this Court would be warranted only if the action of the respondents/ authorities is found to be arbitrary or mala fide. He further submits that even after rejection of the bid of the petitioner and one another bidder, there are in all total six bidders in the fray and, therefore, it cannot be argued that the action of the respondents is either mala fide or arbitrary.
7. Shri Sunil Manohar, learned senior counsel submits that since the petitioner-firm has not submitted the necessary documents, its technical bid was rightly rejected. He submits that since the respondent no.5 was the lowest bidder, the award of contract in favour of respondent no. 5 warrants no interference.
8. For considering the rival submissions of the respective parties, it would be necessary to refer to clause 5 and clause 6 of the Tender Document.
Insofar as clause 5 is concerned, it deals with the eligibility criteria, the caption given is: 'tenderers who fulfill the eligibility criteria as mentioned ::: Uploaded on - 29/08/2016 ::: Downloaded on - 30/08/2016 00:06:40 ::: wp.234.16 5 below and NIT are only requested to participate for this tender'. Clause
(i) deals with technical criterion. It provides that the tenderers should have successfully completed at least one similar single work for a minimum value of 35% of advertised tender value of work in the last three financial years (i.e. current year and three previous financial years). The said clause also defines as to what should be the similar work for the purpose of eligibility criteria.
Clause (ii) deals with the financial criterion. It provides that the total contract amount received during last three years ( i.e. current year and three previous financial years) as per attested payment certificates/audited Balance Sheet duly attested by the Chartered Accountant should be minimum 150% of advertised tender value or work. Clause (iii) deals with the bidding capacity of the contractor, which should be more than the advertised tender value/quoted value of the work whichever is higher. The formula is given in clause (iii) as to how the bidding capacity of the tenderer is to be worked out.
After this, Clause (5) provides for participation by the Joint Venture/Partnership firm and it provides for technical criteria and financial criteria and bidding capacity. Perusal of sub-clauses (a) and (b) of the title 'participation by the Joint Venture/Partnership Firm' would reveal that it provides for the same technical as well as financial capacity of a bidder only with an additional provision that the value of the completed work done by in an earlier Joint Venture shall be commensurate with the concerned member's ::: Uploaded on - 29/08/2016 ::: Downloaded on - 30/08/2016 00:06:40 ::: wp.234.16 6 share in that JV firm for the purpose of satisfying his/her compliance to the technical as well as financial eligibility. It could thus be seen that clause (i)
(ii) and (iii) are common to all the bidders and the clause 'under participation by joint venture and partnership firm' only provides for the formula as to how the works or the financial capacity of the partners in the JV is to be considered.
9. Accepting for a moment that the clause regarding bidding capacity is not applicable to a joint venture, we find that the petitioner cannot escape from the rigour of clause 5.1 and clause 6 of the Tender Document. Clause 5.1 deals with the details regarding eligibility criteria. It provides for what would be the nature of documents to be submitted with regard to the eligibility criteria of the tenderer Clause 6(c) and clause 6 (e) would be very vital in nature. Sub-clause (c) of clause 6 requires the list of works completed in last three financial years giving description of work and scope of work within the following details :
(i) name and scope of work,
(ii) date of award of work,
(iii) actual date of completion if the work is completed in all
respect;
(iv) value of work as per letter of award/original agreement;
(v) paid amount including statutory deduction till date;
(vi) whether final measurements have been recorded, if yes, value of
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completed work as per variation statement;
(vii) whether variation has been sanctioned after final measurements
are recorded;
(viii) full address of certificate issuing officer.
10. Sub-clause (e) of Clause 6 provides for list of works on hand indicating description of work, contract value, approximate value of balance work on the date of opening yet to be done i.e./ financial profress, date of award ( supportive documents/ certificates from the organisations with whom they worked/ are working should be enclosed in the form of given format (Format for Bidding capacity is enclosed).
11. Perusal of clause (e) would clearly reveal that if the tenderers fail to submit the above details along with their offer, their offer will be summarily rejected. It could, thus, be seen that the said clause makes it mandatory to submit the documents mentioned therein and provides for consequences of non-submission of the documents. It could further be clearly seen that it is essential for the bidder to be qualified in the financial bid, to submit the documents mentioned in the said clause. It even provides that in case any fresh contract is awarded to the tenderer in between the date of submission and prior to finalization of the instant tender, the tenderer must immediately inform in writing to the tender inviting authority for the purpose of evaluation of their bidding capacity.
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12. It would thus be clearly seen that the aforesaid clauses were applicable to all the tenderers. We may say that they were not only applicable but they were very much essential because in the absence of those documents, the employer could not have ascertained the technical and financial viability of the bidder to participate in the process. Admittedly, the documents as required under sub-clause (c) and (e) of Clause 6, have not been submitted by the petitioner.
13. Insofar as the judgment of Rashmi Metaliks and another (supra) is concerned, in our view, the said judgment would not be applicable to the facts of the present case. Perusal of sub-clause (e) of clause 6 would reveal that submission of documents were essential. The parties were clearly put to notice that on account of non-submission of the said documents the offer of the bidder was liable to be summarily rejected. Not only this but the tender notice also granted an opportunity to a bidder to submit the documents of any work which is allotted to him after submitting his tender bidder but prior to finalisation of the tender.
14. The law with regard to interference by this Court in contractual matters is very well crystallized in the case of Tata Cellular vs. Union of India, reported in (1994) 6 SCC 651. Paragraph 77 of the said judgment reads thus, ::: Uploaded on - 29/08/2016 ::: Downloaded on - 30/08/2016 00:06:40 ::: wp.234.16 9 "77. The duty of the court is to confine itself to the question of legality.
Its concern should be :
1. Whether a decision-making authority exceeded its powers?
2. Committed an error of law,
3. committed a breach of the rules of natural justice,
4. reached a decision which no reasonable tribunal would have reached or,
5. abused its powers.
Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfillment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case.
Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under:
(i) Illegality : This means the decision- maker must understand correctly the law that regulates his decision-making power and must give effect to it.
(ii) Irrationality, namely, Wednesday unreasonableness.
(iii) Procedural impropriety.
The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact, in R. v. Secretary of State for the Home Department, ex Brind28, Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should, "consider whether something has gone wrong of a nature and degree which requires its intervention".
It could thus be seen that the scope of judicial interference in contractual matters is very limited. Unless the Court comes to a conclusion ::: Uploaded on - 29/08/2016 ::: Downloaded on - 30/08/2016 00:06:40 ::: wp.234.16 10 that the decision maker has not understood the law correctly that regulates his decision-making power it or when it is found that the decision of the decision maker is vitiated by irrationality and that too on the principle of 'Wednesbury Unreasonableness' or unless it is found that there has been a procedural impropriety in the decision-making process, it would not be permissible for this Court to interfere in the decision-making process. It is also equally well settled that it is not permissible for the Court to examine the validity of the decision but this Court can examine only the correctness of the decision making process. In the present case, we find that the respondents had rightly taking into consideration, sub-clauses (c) and (e) of Clause 6 have found that the petitioner had failed to submit the necessary documents and, therefore, rightly rejected its technical bid. The decision of the respondents also cannot be said to be vitiated on the ground of mala fide action, inasmuch as even after rejection of the bid of the petitioner and one another bidder, there were six bidders in the fray.
15. We may refer to the last words of their Lordships of the Hon'ble Supreme Court in such matters, in the recent judgment of Central Coalfields Limited and another vs. SLL -SML (Joint Venture Consortium) and others decided on 17th August, 2016.
"47. The result of this discussion is that the issue of the acceptance or rejection of a bid or a bidder should be looked ::: Uploaded on - 29/08/2016 ::: Downloaded on - 30/08/2016 00:06:40 ::: wp.234.16 11 at not only from the point of view of the unsuccessful party but also from the point of view of the employer. As held in Ramana Dayaram Shetty the terms of the NIT cannot be ignored as being redundant or superflous. They must be given a meaning and the necessary significance. As pointed out in Tata Cellular there must be judicial restraint in interfering with administrative action. Ordinarily, the soundness of the decision taken by the employer ought not to be question but the decision making process can certainly be subject to judicial review. The soundness of the decision may be questioned if it is irrational or mala fide or intended to favour someone or a decision "that no responsible authority acting reasonably and in accordance with relevant law could have reached" as held in Jagdish Mandal followed in Michigan Rubber.
48. Therefore, whether a term of the NIT is essential or not is a decision taken by the employer which should be respected. Even if the term is essential, the employer has the inherent authority to deviate from it provided the deviation is made applicable to all bidders and potential bidders as held in Ramana Dayaram Shetty. However, if the term is held by the employer to be ancillary or subsidiary, even that decision should be respected. The lawfulness of that decision can be questioned on very limited grounds, as mentioned in the various decisions discussed above, but the soundness of the decision cannot be questioned, otherwise this Court would be taking over the function of the tender issuing authority, which it cannot.::: Uploaded on - 29/08/2016 ::: Downloaded on - 30/08/2016 00:06:40 :::
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49. Again, looked at from the point of view of the employer if the court take over the decision-making function of the employer and make a distinction between essential and non-essential terms contrary to the intention of the employer and thereby re-write the arrangement, it could lead to all sorts of problems including the one that we are grappling with......
52. There is a wholesome principle that the Courts have been following for a very long time and which was articulated in Nazir Ahmad v. King Emperor namely "where a power is given to do a certain thing in a certain way the thing must be done in that way or not at all. Other methods of performance are necessarily forbidden". There is no valid reason to give up this salutary principle or not to apply it mutatis mutandis to bid documents. This principle deserves to be applied in contractual disputes, particularly in commercial contracts or bids leading up to commercial contracts, where there is stiff competition. It must follow from the application of the principle laid down in Nazir Ahmed that if the employer prescribes a particular format of the bank guarantee to be furnished, then a bidder ought to submit the bank guarantee in that particular format only and not in any other format. However, as mentioned above, there is no inflexibility in this regard and an employer could deviate from the terms of the bid document but only within the parameters mentioned above.
53. Nazir Ahmed has been followed in dozens of decisions rendered by this Court and by other constitutional ::: Uploaded on - 29/08/2016 ::: Downloaded on - 30/08/2016 00:06:40 ::: wp.234.16 13 Courts in the country. The Central Vigilance Commission has accepted this principle in a modified form as a guiding principle in its circular dated 31st December,2007 wherein it is mentioned that all organizations ought to evolve a procedure for acceptance of bank guarantee that is compatible with the guidelines of banks and the Reserve Bank of India. One such requirement is that the bank guarantee should be in a proper prescribed format and should be verified verbatim on receipt with the original. Adherence to this principle of verbatim verification would not only avoid undue problems for the employer but would also virtually eliminate subjectivity on the part of the employer.
54. In this context, and in the present times, it is important to note that the World Bank has ranked India extremely low in matters relating to enforcement of contracts and ease of doing business. Out of 189 countries worldwide, India is ranked 178 in the matter of enforcement of contracts and 130 in the matter of ease of doing business. One of the possible reasons for this extremely low ranking given to our country is the failure of all parties concerned in strictly adhering to the terms of documents such as the NIT and the GTC. In so far as the present case is concerned, the NIT was floated on 5 th August, 2015 and one year later, we are still struggling with the issue of acceptance of a bank guarantee for a contract of about 2000 crores - certainly not a small sum."::: Uploaded on - 29/08/2016 ::: Downloaded on - 30/08/2016 00:06:40 :::
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16. It could thus be seen that Their Lordships have clearly held that the issue of acceptance or rejection of a bid or a bidder should be looked at not only from the point of view of the unsuccessful party but also from the point of view of the employer. It has further been held that ordinarily soundness of the decision ought not be questioned but the decision-making process can certainly be subject to judicial review. It has been held that soundness of the decision cannot be questioned only if it is irrational or mala fide or intended to favour someone or a decision that no responsible authority acting reasonably and in accordance with the relevant law could have reached. It could further be seen that like the case before Their Lordships of the Apex Court where one year had gone between floating of the NIT and the decision of the matter, in the present case also, the period of almost 11 months has gone from the date of issuance of the tender notice and the decision of the matter.
17. In that view of the matter, we find that no case is made out in extraordinary jurisdiction under Article 226 of the Constitution. The Writ Petition is therefore rejected. Needless to mention that the interim protection granted earlier, stands vacated. Rule discharged.
JUDGE JUDGE
sahare
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