Allahabad High Court
The Indian Hume Pipe Co. Ltd. vs State Of U.P. And 7 Others on 6 November, 2019
Equivalent citations: AIRONLINE 2019 ALL 3036
Bench: Pradeep Kumar Singh Baghel, Rohit Ranjan Agarwal
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Reserved on 27.09.2019 Delivered on 06.11.2019 Court No. - 21 Case :- WRIT - C No. - 9402 of 2019 Petitioner :- The Indian Hume Pipe Co. Ltd. Respondent :- State Of U.P. And 7 Others Counsel for Petitioner :- Shubham Agrawal,Raghav Dev Garg,Shri Anurag Khanna (Senior Advocate) Counsel for Respondent :- C.S.C.,Anant Kishore,Manish Kumar Nigam,Pranjal Mehrotra,S.K.Chaturvedi Hon'ble Pradeep Kumar Singh Baghel,J.
Hon'ble Rohit Ranjan Agarwal,J.
(Delivered by Hon'ble Rohit Ranjan Agarwal,J.)
1. Heard Sri Anurag Khanna, learned Senior Advocate assisted by Sri Shubham Agarwal and Sri Radhav Dev Garg, learned counsel for the petitioner, Sri Shashi Nandan, learned Senior Advocate assisted by Sri Manish Kumar Nigam, learned counsel for respondent nos. 6 and 7 and Sri Pranjal Mehrotra, learned counsel for respondent nos. 2 to 5.
2. Present petition has been filed by the petitioner for the following reliefs:
"a. Issue a writ, order or direction in the nature of certiorari quashing the entire proceedings of opening of financial bids in pursuance of the E-tender Notice dated 09.01.2019.
aa. Issue a writ, order or direction in the nature of certiorari quashing the impugned letter dated 09.03.2019 issued by the Respondent no. 4 herein.
b. Issue writ, order or direction in the nature of mandamus calling for the records of the technical bids submitted and further reject the technical bid submitted by the Joint Venture comprising of Respondent no. 6 and 7.
c. Issue writ, order or direction in the nature of mandamus calling for the records of financial bids submitted and further declare the Petitioner as the successful bidder.
d. Issue writ, order or direction in the nature of mandamus restraining the Respondent no. 2 from issuing letter of intent in favour of the Joint Venture (JV) comprising of the Respondent no. 6 and 7."
3. Petitioner is a company incorporated under the provisions of the Companies Act, having its registered office at Mumbai. According to petitioner, it is engaged in the business of manufacture of Prestressed Concrete Pipes, Hume Steel Pipes, Penstock Pipes, R.C.C. Hume Pipes, Prestressed Concrete Sleepers, Bar Wrapped Steel Cylinder Pipes and Prestressed Concrete Cylinder Pipes.
4. It was on 09.01.2019 that an e-tender notice was issued by the office of Superintended Engineer Vth Circle, U.P. Jal Nigam, Jhansi inviting bids on "Turnkey" basis for survey, design, construction, testing, commissioning, trial and run and handing over of work proposed in Jhansi Water Supply Reorganization Scheme (Phase-II) under AMRUT programme. As per the notice technical part of e-bids was to be opened on 07.02.2019, which was postponed to 04.03.2019, as 04.03.2019 was a holiday, the technical bid was revised to be opened on 05.03.2019.
5. According to petitioner, it submitted its bid on 01.03.2019. e-tender notice was accompanied by e-tender document, having all the conditions of eligibility in order to participate in the tender proceedings.
6. Technical bid was opened and the same was uploaded on the website on 05.03.2019 by respondent no. 2, and three technical bids including that of petitioner, as well as of Joint Venture (JV), comprising of respondent nos. 6 and 7 and one more bid was uploaded.
7. It is further stated that petitioner found certain discrepancies in the joint bid of respondent nos. 6 and 7, as such he wrote a letter on 08.03.2019, as well as sent, an e-mail on 09.03.2019 to respondent no.2. The objection of petitioner to the technical bid of respondent nos. 6 and 7 was that documents appended were not in conformity with the conditions prescribed in e-tender document. It is also stated that petitioner received an e-mail from respondent no. 2 on morning of 09.03.2019 that tender of petitioner has been accepted during technical evaluation and financial bid will be opened on 09.03.2019 at 5 p.m.
8. In the evening of 09.03.2019, financial bids of all the three bidders were opened and the Joint Venture, comprising of respondent nos. 6 and 7 was found to be the lowest being 5.55% less than the estimated value, while petitioner's bid was second lowest at 1.92% less than the estimated value, while financial bid of the third bidder that is respondent no. 8 was 9.45% more than the estimated value.
9. Sri Anurag Khanna, learned Senior counsel appearing for the petitioner submitted that entire proceedings and exercise undertaken by respondent no. 2 and its officers are ex-facie illegal and are in clear violation of terms and conditions provided in the e-tender document. Bid awarded in favour of respondent nos. 6 and 7 is being challenged on the following three grounds:-
9.1. Firstly on the basis of work experience of the Joint Venture which does not confirm with the criteria provided in e-tender document, according to him, criteria for pre-qualification with respect to work experience was provided in Clause 11 of the e-tender document. In technical bid submitted by JV of respondent no. 6 and 7, two certificates of work experience for the work done in Ghana and Angola was disclosed and the said work certificate for work done in a foreign country would not tantamount to work experience as per e-tender document.
9.1.1. He laid emphasis on Clause 2.13 of e-tender document which provides for effect of work experience in a foreign country, which is reproduced hereinunder:-
"2.13 The experience in foreign countries of a subsidiary or parent company will also be considered for qualification in case the company is not registered in India. The experience has to be certified by the respective Embasssy office."
9.1.2. According to Sri Khanna, work experience of a Company in a foreign country will be considered only if the same is not registered in India, while both respondent nos. 6 and 7 are Companies which are registered in India, hence work experience in Ghana and Angola as claimed by them cannot be counted as work experience. Further, the experience has to be certified by respective Embassy and from perusal of certificates so enclosed by respondents, it is clear that they are not certified by respective Embassies of Ghana and Angola, thus, the said work certificate cannot be considered and the condition as stipulated in the document has not been fulfilled. He further pointed out that work experience certificate submitted by respondent nos. 6 and 7 relating to certificate issued by Government of Karnataka, reflects that only 80.05% of total work was done and not the entire work, while eligibility criteria as per Clause 11 mandates that certificate of completed work was to be enclosed.
9.2. The second ground of attack is in regard to the solvency certificate provided by JV of respondent no. 6 and 7 which is not in conformity with the requirement of e-tender document. Emphasis has been laid on the list of documents in the e-tender document which a proposed bidder has to submit online on the e-tender website. Serial No. 27 requires a bidder to submit a solvency certificate issued by District Magistrate/ Nationalized Bank. According to petitioner respondent no. 6 submitted two solvency certificates, one issued by HSBC Bank, dated 21.02.2019, and other issued by Yes Bank on 25.02.2019, thus, total solvency of the two being 190 crores (Rs. 100 crores + 90 crores). While solvency certificate of Rs.75 crores issued by Punjab National Bank on 02.02.2019 was submitted by respondent no. 7. Stress has been laid on the fact that as Clause 27 provided for solvency certificate either issued by District Magistrate or by a nationalized bank, but in present case respondent no. 6 has submitted solvency certificate issued by HSBC Bank which is not a nationalized bank, nor any solvency certificate has been issued by District Magistrate. Thus, solvency certificate so submitted by respondents cannot be considered while reviewing the technical bids. It was also pressed that bidder was required to have a solvency of Rs.189 crores and respondent no. 7 had submitted a solvency certificate issued by Punjab National Bank to the tune of Rs.75 crores only which was not in accordance with the amount prescribed in e-tender notice.
9.3. The third ground of attack is that, working bid capacity of respondent no. 7 is less than the estimated cost of work supposed to be done by it. It has been contended that in the JV, respondent no. 6 was the lead partner as per their Joint Venture agreement dated 27.02.2019 and responsibility of work has been divided between them as per agreement, and scope of work of respondent no. 7 is limited to extent of supply, execution and maintenance during defect liability period of PCCP pipes.
10. Sri Khanna invited the attention of the Court to eligibility criteria in the e-tender document which requires the bidder to have working bid capacity equal to or more than the estimated cost of work put to tender. According to him, on calculating the estimated cost of work, earmarked for respondent no. 7, in pursuance of the JV agreement, from bill of quantity issued by respondent no. 2, is about Rs.165 crores, while respondent no. 7 has shown its bidding capacity to be Rs.127.31 crores which is less than the estimated cost of work, thus the respondent should not have accepted the technical bid of the JV.
11. Lastly, petitioner has raised an objection that financial bid was opened on a State Government holiday, as Clause 3.28.01 of e-tender documents provides that in case specified date of e-tender opening being declared a holiday for the Department, e-tender shall be opened at the appointed time and place on the next working day. As 09.03.2019 was a second Saturday of the Month, all Government Offices were closed, as such the opening of financial bid on the said date creates suspicion on the conduct of the respondents.
12. A supplementary affidavit was filed by the petitioner bringing on record the objections decided by respondent no. 4, dated 09.03.2019, wherein the objections raised by the petitioner before authorities concerned were decided. Sri Anurag Khanna, learned Senior counsel further, to impress upon his arguments relied upon the judgment of the Apex Court in case of AFCONS Infrastructure Ltd. vs. Nagpur Metro Rail Corporation Ltd. and another, (2016) 16 SCC 818. Relevant paras 12, 13, 14 and 15 of the judgment are extracted hereasunder.
"12. In Dwarkadas Marfatia and Sons v. Port of Bombay, (1989) 3 SCC 293 it was held that the constitutional Courts are concerned with the decision-making process. Tata Cellular v. Union of India, (1994) 6 SCC 651 went a step further and held that a decision if challenged (the decision having been arrived at through a valid process), the constitutional courts can interfere if the decision is perverse. However, the constitutional courts are expected to exercise restraint in interfering with the administrative decision and ought not to substitute its view for that of the administrative authority. This was confirmed in Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517 as mentioned in Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium), (2016) 8 SCC 622.
13. In other words, a mere disagreement with the decision- making process or the decision of the administrative authority is no reason for a constitutional court to interfere. The threshold of mala fides, intention to favour someone or arbitrariness, irrationality or perversity must be met before the constitutional court interferes with the decision making process or the decision.
14. We must reiterate the words of caution that this Court has stated right from the time when Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCC 489 was decided almost 40 years ago, namely, that the words used in the tender documents cannot be ignored or treated as redundant or superfluous - they must be given meaning and their necessary significance. In this context, the use of the word ''metro' in Clause 4.2(a) of Section III of the bid documents and its connotation in ordinary parlance cannot be overlooked.
15. We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given."
13. He also relied upon a judgment of the Apex Court in case of Haffkine Bio-Pharmaceutical Corporation Ltd. vs. Nirlac Chemicals and others, (2018) 12 SCC 790 as well as in case of Maa Binda Express Carrier and another vs. North-East Frontier Railways and others (2014) 3 SCC 760. In Paras 8 and 9, the Apex Court held as under:-
"8. The scope of judicial review in matters relating to award of contract by the State and its instrumentalities is settled by a long line of decisions of this Court. While these decisions clearly recognize that power exercised by the Government and its instrumentalities in regard to allotment of contract is subject to judicial review at the instance of an aggrieved party, submission of a tender in response to a notice inviting such tenders is no more than making an offer which the State or its agencies are under no obligation to accept. The bidders participating in the tender process cannot, therefore, insist that their tenders should be accepted simply because a given tender is the highest or lowest depending upon whether the contract is for sale of public property or for execution of works on behalf of the Government. All that participating bidders are entitled to is a fair, equal and non-discriminatory treatment in the matter of evaluation of their tenders. It is also fairly well-settled that award of a contract is essentially a commercial transaction which must be determined on the basis of consideration that are relevant to such commercial decision. This implies that terms subject to which tenders are invited are not open to the judicial scrutiny unless it is found that the same have been tailor made to benefit any particular tenderer or class of tenderers. So also the authority inviting tenders can enter into negotiations or grant relaxation for bona fide and cogent reasons provided such relaxation is permissible under the terms governing the tender process.
9. Suffice it to say that in the matter of award of contracts the Government and its agencies have to act reasonably and fairly at all points of time. To that extent the tenderer has an enforceable right in the court which is competent to examine whether the aggrieved party has been treated unfairly or discriminated against to the detriment of public interest. (See Meerut Development Authority v. Association of Management Studies and Air India Ltd. v. Cochin International Airport Ltd. (2000) 1 SCR 505)."
14. Further reliance has been placed in case of Union of India vs. Sankalchand Himatlal Sheth and another (1977) 4 SCC 193 wherein the Court held as under:-
"11. The normal rule of interpretation is that the words used by the legislature are generally a safeguard to its intention. Lord Reid in Westminster Bank Ltd. v. Zang, 1966 AC 182 observed that "no principle of interpretation of statutes is more firmly settled than the rule that the Court must deduce the intention of Parliament from the words used in the Act." Applying such a rule, this Court observed in S. Narayanaswami v. G. Panneerselyam, AIR 1972 SC 2284 that "where the statute's meaning is clear and explicit, words cannot be interpolated." What is true of the interpretation of an ordinary statute is not any the less true in the case of a constitutional provision, and the same rule applies equally to both. But if the words of an instrument are ambiguous in the sense that they can reasonably bear more than one meaning, that is to say, if the words are semantically ambiguous, or if a provision, if read literally, is patently incompatible with the other provisions of that instrument, the court would be justified in construing the words in a manner which will make the particular provision purposeful. That, in essence is the rule of harmonious construction. In M. Pentiah v. Veeramallappa, AIR 1961 SC 1107, 1115 this Court observed :
"Where the language of a statute, in its ordinary meaning and grammatical construction leads to, a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity, hardship or injustice presumably not intended, a construction may be put upon it which modifies the meaning of the words, and even the structure of the sentence......"
But, if the provision is clear and explicit, it cannot be reduced to a nullity by reading into it a meaning which it does not carry and, therefore, "Courts are very reluctant to substitute words in a statute or to add words to it, and it has been said that they will only do so where there is a repugnancy to good sense." In the view which I am disposed to take, it is unnecessary to dwell upon Lord Denning's edict in Seaford Court Estates Ltd. v. Asher, (1949) 2 All ER 155, 164 that when a defect appears in a statute, a Judge cannot simply fold his hands and blame the draftsman, that he must supplement the written word so as to give force and life to the intention of the legislature and that he should ask himself the question how, if the makers of the Act had themselves come across the particular ruck in the texture of it, they would have straightened it out. I may only add, though even that does not apply, that Lord Denning wound up by saying, may be not by way of recanting, that "a Judge must not alter the material of which the Act is woven, but he can and should iron out the creases."
15. Per contra, Sri Shashi Nandan, learned Senior counsel appearing on behalf of respondent nos. 6 and 7 submitted that petitioner had challenged the bid on technical grounds which were already resolved in pre-bid query and its reply submitted by respondent, Jal Nigam on 09.03.2019. Further, replying to the first argument made by counsel for the petitioner, it was submitted that respondent no. 6 is a registered Company under the Indian Companies Act, who has submitted its work experience of parent Company which is registered in Israel. As given in notice inviting tender (NIT Clause No. 3) which is the basis of all e-tender document, which states that experience in foreign countries of a subsidiary or parent Company will also be considered for qualification. As far as certification from respective Embassy is concerned, it is only necessary when neither parent Company nor subsidiary Company is registered in India.
16. As to the second argument regarding solvency certificate provided by the JV, it was submitted that being a global tender where foreign companies can participate providing solvency certificate from nationalized bank was struck down by the Department. This issue was also raised in pre-bid query of Koya and Company as well as JV, in which written reply was given by the Department, where word "nationalized" was removed and only "bank" was written for issuing solvency certificate. He further submitted that there is no mention about the fact that solvency certificate has to be issued by a Nationalized Bank, and the Master Circular only lays condition regarding solvency amount be equal to 40% or more than that of estimated cost of work. Neither e-tender notice or in Master Circular there is any requirement of solvency certificate from a nationalized bank, as the rationale behind such liberal drafting in the circular, pre bid qualification/ eligibility criteria and NIT was to afford opportunity for global traders to bid for the project.
17. He further submitted that Clause 15 of the e-tender notice provides for earnest money to be submitted in form of either FDR/ B.G. of a nationalized bank or other bank so provided. The same requirement has been given in Clause 8 of the Master Circular dated 16.11.2018 in regard to the performance guarantee/ security money in form of bank guarantee from any nationalized bank and other banks as provided therein.
18. Answering respondent had submitted bank guarantee for earnest money of Punjab National Bank and ICICI Bank. As e-tender notice as well as Master Circular of the Jal Nigam provides for the earnest money in form of FDR/ B.G. from nationalized bank or the banks provided therein, but for solvency certificate, it would be issued by a Bank.
19. Replying the third argument, Sri Shashi Nandan submitted that contention of the petitioner regarding the fact that working bid capacity of respondent no. 7 being less than the estimated cost of work supposed to be done by it is totally wrong. As per the agreement between JV of respondent nos. 6 and 7, respondent no. 7 was to execute 25% of total work within prestressed cement, concrete pipes and the lead partner that is respondent no. 6 will execute remaining 75% of work. As total cost of project is 472 crores and 25% of the same comes to Rs.118 crore, while the working bid capacity of respondent no. 7 being 127.31 crores, hence the same is much more than the required amount. Thus, the contention of the petitioner that acceptance of technical bid of the answering respondent being irregular is factually wrong.
20. According to him, working bid capacity of both the JV partners taken together has to be considered and it should not be less than estimated cost of work, while nowhere in the tender it required that JV partners have to individually show their working bid capacity to be in excess of the work individually.
21. Replying to the last objection raised by the petitioner as far as the financial bid being opened on State Government holiday, it was contended that the final bid was opened after prior information to all the parties concerned and there being no objection raised by any of the parties to the financial bid being opened.
22. Sri Shashi Nandan, learned Senior Counsel invited the attention of the Court to the judgment of Apex Court rendered in case of Ramana Dayaram Shetty v. The International Airport Authority, AIR 1979 (SC) 1628, wherein the Apex Court while dealing with the grant of contract in Para 23 held as under:-
"23. We may also in this connection refer to the decision of this Court in C. K. Achuthan v. State of Kerala, (1959) Supp (1) SCR 787, where Hidayatullah, J., speaking on behalf of The Court made certain observation which was strongly relied upon on behalf of the respondents. The facts of this case were that the petitioner and the 3rd respondent Co-operative Milk Supply Union, Cannanore, submitted tenders for the supply of milk to the Government hospital at Cannanore for the year 1948-49. The Superintendent who scrutinised the tenders accepted that of the petitioner and communicated the reasons for the decision to the Director of Public Health. The resulting contract in favour of the petitioner was, however, subsequently cancelled by issuing a notice in terms of clause (2) of the tender, in pursuance of the policy of the Government that in the matter of supply to Government Medical Institutions the Co-operative Milk Supply Union should be given contract on the basis of prices filed by the Revenue Department. The petitioner challenged The decision of the Government in a petition under Article 32 of the Constitution on the ground inter alia that there had been discrimination against him vis-a-vis the 3rd respondent and as such, there was contravention of Article 14 of the Constitution. The Constitution Bench rejected this contention of the petitioner and while doing so, Hidayatullah, J., made the following observation: "There is no discrimination, because it is perfectly open to the Government, even as it is to a private party, to choose a person to their liking, to fulfil contracts which they wish to be performed. When one person is choosen rather than another, the aggrieved party cannot claim the protection of Article 14, because the choice of the person to fulfil a particular contract must be left to the Government." The respondents relied very strongly on this observation in support of their contention that it is open to the 'State' to enter into contract with any one it likes and choosing one person in preference to another for entering into a contract does not involve violation of Article 1a. Though the language in which this observation is couched is rather wide, we do not think that in making this observation, the Court. intended to lay down any absolute proposition permitting the state to act arbitrarily in the matter of entering into contract with third parties. We have no doubt that the Court could not have intended to lay down such a proposition because Hidayatullah J. who delivered the judgment of the Court in this case was also a party to the judgment in Rashbihari Panda v. State of Orissa (AIR 1969 SC 1081) which was also a decision of the Constitution Bench, where it was held in so many terms that the State cannot act arbitrarily in selecting persons with whom to enter into contracts. Obviously what the Court meant to say was that merely because one person is chosen in preference to another, it does not follow that there is a violation of Article 14, because the Government must necessarily be entitled to make a choice. But that does not mean that the choice be arbitrary or fanciful. The choice must be dictated by public interest and must not be unreasoned or unprincipled."
23. Reliance was also placed upon the decision of Supreme Court in case of Poddar Steel Corporation vs. Ganesh Engineering Works and others (1991) 2 SCC 273; Para 6 of the judgment is extracted hereasunder:-
"6. It is true that in submitting its tender accompanied by a cheque of the Union Bank of India and not of the State Bank the clause 6 of the tender notice was not obeyed literally, but the question is as to whether the said non- compliance deprived the Diesel Locomotive Works of the authority to accept the bid. As a matter of general proposition it cannot be held that an authority inviting tenders is bound to give effect to every term mentioned in the notice in meticulous detail, and is not entitled to waive even a technical irregularity of little or no significance. The requirements in a tender notice can be classified into two categories-those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to enforce them rigidly. In the other cases it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases. This aspect was examined by this Court in C.J. Fernandez v. State of Karnataka, [1990] 2 SCC 488 a case dealing with tenders. Although not in an entirely identical situation as the present one, the observations in the judgment support our view. The High Court has, in the impugned decision, relied upon Ramana Dayaram Shetty v. International Airport Authority of India & Ors., [1979] 3 SCC 489 but has failed to appreciate that the reported case belonged to the first category where the strict compliance of the condition could be insisted upon. The authority in that case, by not insisting upon the requirement in the tender notice which was an essential condition of eligibility, bestowed a favour on one of the bidders, which amounted to illegal discrimination. The judgment indicates that the court closely examined the nature of the condition which had been relaxed and its impact before answering the question whether it could have validly condoned the shortcoming in the tender in question. This part of the judgment demonstrates the difference between the two categories of the conditions discussed above. However it remains to be seen as to which of the two clauses, the present case belongs."
24. In case of G.J. Fernandez vs. State of Karnataka and others (1990) 2 SCC 488, the Apex Court held that changes or relaxation given by the authority/ Department in terms of NIT effecting on all the intending parties should not result in arbitrariness or discrimination. Relevant Para 15 is extracted hereasunder:-
"15. Thirdly, the conditions and stipulations in a tender notice like this have two types of consequences. The first is that the party issuing the tender has the right to punctiliously and rigidly enforce them. Thus, if a party does not strictly comply with the requirements of paras III, V or VI of the NIT, it is open to the KPC to decline to consider the party for the contract and if a party comes to court saying that the KPC should be stopped from doing so, the court will decline relief. The second consequence, indicated by this Court in earlier decisions, is not that the KPC cannot deviate from these guidelines at all in any situation but that any deviation, if made, should not result in arbitrariness or discrimination. It comes in for application where the non-conformity with, or relaxation from, the prescribed standards results in some substantial prejudice or injustice to any of the parties involved or to public interest in general. For example, in this very case, the KPC made some changes in the time frame originally prescribed. These changes affected all intending applicants alike and were not objectionable. In the same way, changes or relaxations in other directions would be unobjectionable unless the benefit of those changes or relaxations were extended to some but denied to others. The fact that a document was belatedly entertained from one of the applicants will cause substantial prejudice to another party who wanted, likewise, an extension of time for filing a similar certificate or document but was declined the benefit. It may perhaps be said to cause prejudice also to a party which can show that it had refrained from applying for the tender documents only because it thought it would not be able to produce the document by the time stipulated but would have applied had it known that the rule was likely to be relaxed. But neither of these situations is present here. Sri Vaidhyanathan says that in this case one of the applicants was excluded at the preliminary stage. But it is not known on what grounds that application was rejected nor has that party come to court with any such grievance. The quesion, then, is whether the course adopted by the KPC has caused any real prejudice to the appellant and other parties who had already supplied all the documents in time and sought no extension at all? It is true that the relaxation of the time schedule in the case of one party does affect even such a person in the sense that he would otherwise have had one competitor less. But, we are inclined to agree with the respondent's contention that while the rule in Ramana's case (supra) will be readily applied by courts to a case where a person complains that a departure from the qualifications has kept him out of the race, injustice is less apparent where the attempt of the applicant before court is only to gain immunity from competition. Assuming for purposes of argument that there has been a slight deviation from the terms of the NIT, it has not deprived the appellant of its right to be considered for the contract; on the other hand, its tender has received due and full consideration. If, save for the delay in filing one of the relevant documents, MCC is also found to be qualified to tender for the contract, no injustice can be said to have been done to the appellant by the consideration of its tender side by side with that of the MCC and in the KPC going in for a choice of the better on the merits. The appellant had no doubt also urged that the MCC had no experience in this line of work and that the appellant was much better qualified for the contract. The comparative merits of the appellant vis-a-vis MCC are, however, a matter for the KPC (counselled by the TCE) to decide and not for the courts. We were, therefore, rightly not called upon to go into this question."
25. In Tata Cellular v. Union of India (1994) 6 SCC 651, the Apex Court held that judicial review in tender matters is limited and review can only be made on point of arbitrariness, illegality and excess exercise of power. Relevant paras 74, 77 and 94 are extracted hereasunder:-
"74. Judicial review is concerned with reviewing not the merits of the decision in support of which the application for judicial review is made, but the decision-making process itselt.
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 Brind (1991) 1 AC 696, 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".
94. The principles deducible from the above are :
(1) The modem trend points to judicial restraint in administrative action.
(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.
(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract.
Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.
Based on these principles we will examine the facts of this case since they commend to us as the correct principles."
26. In Indian Railway Catering and Tourism Corporation Ltd. and another v. Doshion Veolia Water Solutions Pvt. Ltd. and others, (2010) 13 SCC 364, the Apex Court held as under:-
"42. For this conclusion, we are again supported by the decision in Kanhaiya Lal Agrawal v. Union of India, (2002) 6 SCC 315 in which this Court relying on G.J. Fernandez v. State of Karnataka [(1990) 2 SCC 488] held: (Kanhaiya Lal case, SCC p. 317, para 6) "6. .....Whether a condition is essential or collateral could be ascertained by reference to the consequence of non-compliance thereto. If non-fulfillment of the requirement results in rejection of the tender, then it would be an essential part of the tender otherwise it is only a collateral term."
Hence, if on the recommendation of the Tender Committee, the accepting authority did not find the deviation from Clause (ii) of the Note by Ion Exchange very material and has accepted the offer of Ion Exchange, the Division Bench of the High Court could not have held that Ion Exchange committed a breach of an essential term by not mentioning the excise duty amount in rupees in its offer."
27. Counsel for the answering respondent also relied upon Para 15 of the judgment of the Apex Court in AFCONS (supra) and submitted that it is only the person who has authored the tender document, is the best person to understand and appreciate its requirement. Relevant portion is extracted hereasunder:-
"15. We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional Courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional Courts but that by itself is not a reason for interfering with the interpretation given."
28. In case of Nabha Power Ltd. (NPL) v. Punjab State Power Corporation Ltd. (PSPCL) and another, (2018) 11 SCC 508, the Supreme Court while discussing the legal principal for interpretation of commercial contracts held as under:-
"72. We may, however, in the end, extend a word of caution. It should certainly not be an endeavour of commercial courts to look to implied terms of contract. In the current day and age, making of contracts is a matter of high technical expertise with legal brains from all sides involved in the process of drafting a contract. It is even preceded by opportunities of seeking clarifications and doubts so that the parties know what they are getting into. Thus, normally a contract should be read as it reads, as per its express terms. The implied terms is a concept, which is necessitated only when the Penta test referred to aforesaid comes into play. There has to be a strict necessity for it. In the present case, we have really only read the contract in the manner it reads. We have not really read into it any ''implied term' but from the collection of clauses, come to a conclusion as to what the contract says. The formula for energy charges, to our mind, was quite clear. We have only expounded it in accordance to its natural grammatical contour, keeping in mind the nature of the contract."
29. Following the aforesaid judgment the Apex Court in Civil Appeal No. 3588 of 2019 (Caretel Infotech Ltd. v. Hindustan Petroleum Corporation Limited and others) decided on 09.04.2019 held that the Court should restrain from giving its interpretation to contracts, especially tender terms, at the behest of a party already competing for the tender, rather than what is propounded by the party framing the tender. His Lordship Sanjay Kishan Kaul, J. while deciding the issue held as under:-
"36. We consider it appropriate to make certain observations in the context of the nature of dispute which is before us. Normally parties would be governed by their contracts and the tender terms, and really no writ would be maintainable under Article 226 of the Constitution of India. In view of Government and Public Sector Enterprises venturing into economic activities, this Court found it appropriate to build in certain checks and balances of fairness in procedure. It is this approach which has given rise to scrutiny of tenders in writ proceedings under Article 226 of the Constitution of India. It, however, appears that the window has been opened too wide as almost every small or big tender is now sought to be challenged in writ proceedings almost as a matter of routine. This in turn, affects the efficacy of commercial activities of the public sectors, which may be in competition with the private sector. This could hardly have been the objective in mind. An unnecessary, close scrutiny of minute details, contrary to the view of the tendering authority, makes awarding of contracts by Government and Public Sectors a cumbersome exercise, with long drawn out litigation at the threshold. The private sector is competing often in the same field. Promptness and efficiency levels in private contracts, thus, often tend to make the tenders of the public sector a non-competitive exercise. This works to a great disadvantage to the Government and the Public Sector.
37. In Afcons Infrastructure Limited v. Nagpur Metro Rail Corporation Limited & Anr., (2016) 16 SCC 818, this Court has expounded further on this aspect, while observing that the decision making process in accepting or rejecting the bid should not be interfered with. Interference is permissible only if the decision making process is arbitrary or irrational to an extent that no responsible authority, acting reasonably and in accordance with law, could have reached such a decision. It has been cautioned that Constitutional Courts are expected to exercise restraint in interfering with the administrative decision and ought not to substitute their view for that of the administrative authority. Mere disagreement with the decision making process would not suffice.
42. We have considered it appropriate to, once again, emphasise the aforesaid aspects, especially in the context of endeavours of courts to give their own interpretation to contracts, more specifically tender terms, at the behest of a third party competing for the tender, rather than what is propounded by the party framing the tender. The object cannot be that in every contract, where some parties would lose out, they should get the opportunity to somehow pick holes, to disqualify the successful parties, on grounds on which even the party floating the tender finds no merit."
30. Sri Pranjal Mehrotra, learned counsel appearing for the respondent nos. 2 to 5 submitted that the objections of the petitioner-Company was decided and conveyed to it on 09.03.2019. There was no inconformity in the documents submitted by respondent nos. 6 and 7 with the terms and conditions prescribed in e-tender document. It was further submitted that bids submitted by petitioner was higher than the bid of respondent nos. 6 and 7 by about Rs.17,13,84,103.95 (Rupees Seventeen Crore Thirteen Lac Eighty Four Thousand One Hundred Three and Ninety Five Paisa) and in case the tender was awarded to petitioner, huge loss would have been caused to the public exchequer without any legal justification.
31. It was also stated that e-tender process was totally impartial, systematic and transparent. As Department had found the bid of the JV to be substantially responsive and also their financial bid to be lowest, as such law and equity requires issuance of letter of intent in their favour.
32. Sri Mehrotra replying to the first objection of the petitioner stated that Clause 2.13 of e-tender document is derived from Master Circular of the respondent no. 2 that is U.P. Jal Nigam dated 16.11.2018 and relevant portion being at Note (iii) to Serial No. 1 of the Circular which is reproduced hereinbelow:-
"(iii) the experience in foreign countries of a subsidiary or parent company will also be considered for qualification. In case the company is not registered in India, the experience has to be certified by the respective embassy office."
33. The said Master Circular is on record as CA-1. While the NIT in Clause 3 also provides the same which is extracted hereasunder:-
"3. The experience in foreign countries of a subsidiary or parent company will also be considered for qualification. In case the company is not registered in India, the experience has to be certified by the respective Embassy office."
34. According to counsel, it is only on account of typographical mistake in Clause 2.13 of the e-tender document that petitioner is incorrectly interpreting the said clause. According to him, clause relating to foreign experience in NIT was in consonance with the Master Circular. A perusal of the same reveals that foreign experience of parent Company shall also be considered for qualification, and this requirement has been framed keeping in mind that global tenders are issued, calling upon all major players to participate, so that world class infrastructure may be established in State of U.P.
35. He laid stress on the fact that experience certificate has to be certified by the Embassy office only in cases where Company is not registered in India, but in present case, both respondent nos. 6 and 7 are registered in India.
36. It was also contended that petitioner had raised a pre-bid query regarding foreign experience clause and the Jal Nigam had directed them to refer to NIT, the said fact has not been disclosed by the petitioner nor these documents are there in the writ petition, and they have not approached this Court with clean hands and writ petition suffers from supprsio veri suggestio falsi. The said document has been brought on record as Annexure- CA-3 by the Jal Nigam.
37. As far as the second argument regarding solvency certificate, it has been contended that Master Circular dated 16.11.2018 in Clause 5 provides "the solvency amount should be equal to 40% or more of the estimated cost of work". There is no stipulation in the Master Circular preventing the respondents from accepting solvency certificates from banks other than nationalized bank. This fact becomes more relevant when compared with Clause (7) and Clause (8) relating to earnest money and performance guarantee/ security money, as in Clause 7 Circular provides that earnest money should be in form of bank guarantee from any nationalized bank, Axis Bank, ICICI Bank, IDBI Bank and HDFC Bank. Similarly Clause 8 provides that performance guarantee should be in form of bank guarantee from any nationalized bank, Axis Bank, ICICI Bank, IDBI Bank and HDFC Bank.
38. Had the intention of the respondents been to restrict the banks for solvency certificates, a restriction similar to that as in Clause (7) and (8) would have been included in Clause 5 of the circular. Based on the Circular, NIT also specified amount for which solvency was required but did not specify the issuing authority/ bank.
39. Further, pre-qualification/ eligibility criteria (Clause d) also only provided for solvency amount but does not place any restriction on issuing authority, as rationale behind such liberal drafting in circular, pre-bid qualification/ eligibility criteria and NIT was that global participants were called to bid for the project. Foreign entities cannot provide solvency certificate from District Magistrate or Nationalized Bank, and if the contention and interpretation of the petitioner is accepted then it would exclude them from tendering process.
40. Replying the third argument of the petitioner in regard to the working bid capacity of respondent no. 7, Sri Mehrotra submitted that interpretation of the clause as made by the petitioner cannot be accepted and the working bid capacity of both JV partners are to be taken together and should not be less than estimated cost of work. Further, nowhere the Clause requires that JV partners will have to individually show their working bid capacity to be in excess of work individually undertaken by them. As the working bid capacity of JV of respondent nos. 6 and 7 is 4705.34 crore, which is in excess of work that has to be put to tender.
41. Lastly responding to the 4th objection of the petitioner it was stated that the date of SLTC meeting was proposed on 11.03.2019, therefore, it was required to work on holiday. In fact, the e-tender opening date for 09.03.2019 was declared in advance and same was communicated to all bidders including petitioner.
42. Sri Anurag Khanna, learned Senior Counsel replying to the counter allegations made on behalf of respondents submitted that e-tender document being issued subsequent to NIT would prevail over it and Clause 2.13 of the e-tender document is very clear and logical. He further submitted that Master Circular referred to, does not have binding statutory effect and the conditions enumerated in the e-tender document would prevail over the same. He further submitted that the work experience certificate was not certified from the respective Embassies and cannot be considered as respondent no. 6 was not registered in India and further, the work experience of the JV with the Karnataka Government being not considered by the Jal Nigam is a concession of fact that the JV did not have requisite work experience to qualify for technical bid. He further submitted that the solvency certificate acceptable is provided in the list of documents at Annexure-8 and the same submitted by respondent no. 6 was not issued by the Nationalized Bank or District Magistrate nor the same was provided by the partner that is respondent no. 7 to a tune of Rs.189 crores. He reiterated the objections made by him in regard to the fact that the technical bid of respondent nos. 6 and 7 should not have been accepted.
43. We have heard learned counsel for the parties at length and perused the material on record.
44. It is not in dispute that the respondent, U.P. Jal Nigam had issued an e-tender on 09.01.2019 for proposed work in Jhansi for supply of water under AMRUT programme. The tender being a global tender, various companies participated and submitted their bid. Petitioner and Joint Venture of respondent nos. 6 and 7 and also respondent no. 8 participated by submitting their bid. Technical bid was opened and uploaded on the website on 05.03.2019, wherein three bids qualified for the financial bid to be opened on 09.03.2019.
45. It is also not in dispute that when the financial bid was opened on 09.03.2019, bid comprising of Joint Venture of respondent nos. 6 and 7 was found to be the lowest, followed by bid of the petitioner, while financial bid of respondent no. 8 was at the third place.
46. Bid made by Joint Venture of respondent nos. 6 and 7 has been challenged by the petitioner on three technical grounds that the work experience certificate given by them was for work done in Ghana and Angola which was done in a foreign country and would not tantamount to work experience as per e-tender document. Secondly, solvency certificate submitted by respondent no. 6 was not from a nationalized bank and working bid capacity of respondent no. 7 was less than estimated cost of work supposed to be done by it.
47. The e-tender notice dated 09.01.2019 which prescribes the terms and conditions for participation in the bid has its very genesis from the Master Circular of the Department that is the U.P. Jal Nigam which is dated 16.11.2018. It has been pointed out that the terms and conditions of the e-tender notice as well as e-tender document goes back to the Master Circular issued by Jal Nigam.
48. The first ground so raised by the petitioner as far as the certificate of work experience of Joint Venture for work done in Ghana and Angola cannot be considered as work experience, is a fallacy, as from the reading of Clause 3 of e-tender notice as well as Master Circular, it is clear that in case of a Company not registered in India then the work done by a subsidiary or a parent company in a foreign country will not be considered, unless certified by the respective Embassy office. But in the present case, the Joint Venture is a Company registered in India, while the parent Company is registered in Israel, as such no certification of work experience done in Ghana and Angola are to be certified by their respective Embassies. Thus, objection made on the basis of Clause 2.13 of e-tender document is of no relevance, as also counsel for the Department stating that, it was due to typographical error which had occurred in the said Clause, would not change the very object of the Clause.
49. As far solvency certificate provided by the Joint Venture is concerned, it has been argued by both the counsel for the Joint Venture as well as Jal Nigam that it being a global tender inviting global players, it would not be possible to have solvency certificate issued by nationalized bank or District Magistrate. Further, the issue regarding solvency certificate was also settled in pre-bid query of Koya and Company, wherein the Jal Nigam in its written reply had removed the word "nationalized" and only bank was written for issuing solvency certificate. Further, Jal Nigam submitted that in global tender such conditions cannot be laid down as foreign entities cannot provide solvency certificate from District Magistrate or nationalized Bank. It is worth nothing that Clause 15 of e-tender notice in respect of earnest money provides for FDR/ B.G. of a nationalized Bank, Axis Bank, ICICI Bank, IDBI and HDFC Bank. While Clause 5 of the Master Circular only provides that solvency amount should be equal to 40% or more of the estimated cost of work, but does not specify whether it should be from a nationalized bank or bank. Similarly, Clauses 7 and 8 which are in regard to earnest money and performance guarantee/ security money, it has been specifically provided that the same should be in form of bank guarantee from a nationalized bank, Axis Bank, ICICI Bank, IDBI Bank and HDFC Bank. The argument of the petitioner to the extent that Clause 27 of the e-tender document which provides for solvency certificate issued by District Magistrate/ Nationalized Bank cannot be accepted as the Department itself while answering the pre-bid query had clarified that solvency certificate should only be equal to 40% or more of the estimated cost of work but not from any particular bank or Government authority.
50. The Supreme Court in the matter of Nabha Power Ltd. (supra), Caretel Infotech Ltd. (supra) and AFCONS Infrastructure Ltd. (supra) repeatedly held that the Court should not venture into the realm of terms of contract and it is the author of the tender document who is the best person to understand and appreciate its requirement and interpret the same.
51. As in the instant case, Jal Nigam had answered pre-bid query of the respondents and clarified the fact regarding solvency certificate, we refrain ourselves from interpreting the terms of contract.
52. The third objection as far as the working bid capacity of respondent no. 7 is concerned, Jal Nigam has submitted that working bid capacity of both JV partners are to be taken together and it should not be less than estimated cost of work, and it is not that the capacity of work individually undertaken by them has to be considered, while their joint working bid capacity being 4705.34 crores, which is excess of work that has been put to tender, as such the argument has no force.
53. Lastly, the objection was raised in regard to the fact that financial bid was opened on 09.03.2019 which was a holiday, being second Saturday to which the answering Department had submitted that the date was declared in advance and communicated to all bidders including petitioner, as such the same being too technical as no prejudice is caused to either of the parties, the same is not accepted.
54. The petitioner has not alleged any arbitrariness, mala fide or excess of exercise of power by the respondents in the e-tender process. Further, the bid of the Joint Venture comprising of respondent nos. 6 and 7 was found to be the lowest being 5.55% less than the estimated cost of work which saved the Department about Rs. 17 crores, and in case they are ousted from the process and tender is awarded to petitioner, huge loss would be caused to public exchequer without any legal justification.
55. Argument raised by counsel for petitioner to the extent that the e-tender document came later in time to the e-tender notice, as such it would prevail cannot be accepted, as the very genesis of e-tender notice (NIT), and e-tender document is the Master Circular of U.P. Jal Nigam which guides and provides for all the work and contract to be undertaken by the Department. It is on the basis of this Circular that terms and conditions were laid down in the e-tender notice and further in the e-tender document. Once the author of the document itself has come out with clarification to the effect that what will be the work experience and the requirement of solvency certificate, there is no justification to interfere in the tender process on the ground of technicalities.
56. It is well-settled that the Courts should refrain from exercise of judicial review in matters relating to terms and conditions of the tender document, and only in case where breach of rules of natural justice has been committed, or decision has been reached which no reasonable Tribunal would have reached or there is an abuse of power, that the Court can interfere.
57. In the present case, we find that none of grounds raised by the petitioner for invoking extra ordinary jurisdiction under Article 226 of the Constitution arise and the bid of the Joint Venture being the lowest and there being no deviation in the tender process, we decline to interfere in the tender process of respondent no. 2.
58. The writ petition is dismissed. However, no order as to cost.
Order Date :- 06.11.2019 V.S.Singh