Madras High Court
N.S.Jayaraman & Sons vs Government Of India on 9 August, 2010
Author: V.Dhanapalan
Bench: V.Dhanapalan
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED:09.08.2010 CORAM: THE HONOURABLE MR.JUSTICE V.DHANAPALAN W.P.NO.12695 OF 2010 and M.P.No.1 of 2010 N.S.Jayaraman & Sons Proprietary Concern Rep.by its Proprietor J.Madhourai No.16-C, II Cross, Ramanapuram Kadhirkamam (Post) Puducherry .. Petitioner vs 1.Government of India Rep.by its Secretary Ministry of Road Transport and Highways No.1, Parliament Street, Transport Bhavan, New Delhi 1 2.The Chief Secretary of Government of Puducherry cum The Chairman Works Board Public Works Department Government of Puducherry Puducherry 3.The Chief Engineer Public Works Department Puducherry 4.The Executive Engineer National Highways Division Public Works Department Puducherry .. Respondents Writ Petition is filed under Article 226 of the Constitution of India for the issue of writ of Certiorarified Mandamus calling for the records relating to the proceedings of the 4th respondent in No.271/PW/NH/DB/D1/F.No.461/10-11 dated 24.05.2010 and quash the same and consequentially directing the respondents 2 to 4 to confirm and award the tender in favour of the petitioner for execution of the work according to the notification of the 4th respondent in proceedings No.457/PW/NH/DB/D1/F.No.461/9-10 dated 30.06.2009 in accordance with the sanction and approval of the 1st respondent vide proceedings in File No.RW/NH-12018-163/2009/PO/P-7 dated 14.12.2009. For petitioner : Mr.K.M.Vijayan Senior Counsel for M/s K.M.Vijayan Associates For respondents : Mr.D.Ferdinand, SCCG (for R1) Mr.E.Vijaya Anand Government Advocate (for R1) Mr.D.Sreenivasan Government Pleader(Pondicherry) (for R2 to R4) ORDER
In this petition, a challenge has been made to an order passed by the 4th respondent in his proceedings No.271/PW/NH/DB/D1/F.No.461/10-11 dated 24.05.2010 seeking to quash the same and for a consequential direction on the respondents 2 to 4 to confirm and award the tender in favour of the petitioner for execution of the work according to the notification of the 4th respondent dated 30.06.2009 in accordance with the sanction and approval of the first respondent dated 14.12.2009.
2. The Brief facts leading to the filing of this case in a nutshell are set out hereunder:
(i) According to the petitioner, the 4th respondent vide his press notification dated 30.06.2009 invited tenders for Improvement of riding quality in K.M.16/122-24/000 of N.H.45A in Puducherry. The petitioner applied for a tender and filed his tender on 13.7.2010 quoting Rs.5,24,68,300/-(Rupees Five Crores Twenty four Lakhs Sixty Eight Thousand and Three Hundred only). The petitioner claimed that he was declared as the lowest tenderer among other participants and the third respondent by his proceedings dated 29.7.2009 requested the petitioner to attend the office for negotiation. As per the negotiation, the rate was decreased and the third respondent accepted the offer of the petitioner. The petitioner accepted for reduction of Rs.2,80,650/-. The respondent accepted the same and finalised the tender amount at Rs.5,21,87,650/-.
(ii) As per the procedure of C.P.W.D. Manual of the first respondent, the tenders have to be sanctioned by the first respondent. However, no efforts were taken by the respondents 2 to 4 for having the tender sanctioned. The third respondent applied for approval on 21.8.2009 to the first respondent. It is alleged that no approval was made as the letter of the third respondent was either not made or reached the first respondent.
(iii) While that being so, the Works Board of the P.W.D., Puducherry (hereinafter referred to as "the Works Board") consisting of the respondents 2 to 4 and other officials was convened on 24.9.2009 for the purpose of discussing various P.W.D.projects and the present tender was also one of the agenda. In the said meeting, it was decided in agenda item No.3 that the tender was not sanctioned by the first respondent and therefore the tender may be rejected and decided for fresh tender. It is the case of the petitioner that in the very same meeting a similar case in agenda No.2 for approval is pending. The tender was approved and awaited for approval of the first respondent. Therefore, there was no reason to have two yardsticks in the same set of cases.
(iv) Besides the rejection of the tender, the third respondent in his letter to the first respondent on 10.11.2009 applied for the approval of the tender of the petitioner whereas the first respondent in his letter dated 17.11.2009 sought for a clarification over the tender of the petitioner. The third respondent replied on 18.11.2009 justifying the reason for accepting the tender of the petitioner. Thereafter, the first respondent in his proceedings dated 14.12.2009 approved the tender of the petitioner along with the revised estimate made by the third respondent.
(v) The first respondent had approved the tender. But no action was taken by the respondents 2 to 4 to finalise the tender and to award the contract to the petitioner. Much later, in April 2010 the third respondent forwarded a note seeking permission to place the approval in the Works Board meeting as an agenda to approve the tender. The said note had a detailed study of the case and explained that the earlier agenda decision in the meeting conducted on 24.09.2009 rejecting the tender of the petitioner would not be fruitful and more particularly, the tender was sanctioned by the first respondent. Therefore, they sought for permission of the first respondent to place the matter in the Ensuing Works Board meeting. The petitioner claimed that the note file would reveal that all other members of the Board had approved the note of the third respondent and the second respondent alone has rejected the note stating that "We should strict to the earlier decision and call fresh tender." The P.W.D. would have completed the exercise by now since the revised estimate was approved by the Ministry of Surface and Transport in December 2009 to get the revised tenders wanted immediately. The second respondent had lost sight of the fact that the first respondent had approved the very tender of the petitioner. In spite of the approval of the first respondent and the subsequent recommendation of the third respondent to award the contract, the second respondent had adamantly stuck to the earlier decision which was prior to the sanction of the Central Government. Therefore, the action of the 2nd respondent is malice in law and arbitrary exercise of power.
(vi) The E.M.D.amount of Rs.7,15,264/- is lying with the respondent from 13.7.2009 and the petitioner had spent lakhs of rupees in preparing for the execution of the work by mobilizing men, material and machineries. At this stage, the 4th respondent had issued the impugned order on 24.5.2010 rejecting the tender of the petitioner in a single line without even assigning any reason in the impugned order passed against the petitioner. Therefore, the impugned order is challenged on the ground that the said order was passed without application of mind and without considering subsequent approval of the first respondent on 14.12.2009, ignoring the approval by the Central Government, the decision taken suppressing the material fact adversely affected the petitioner. The authority while rejecting the application has to assign the reasons for its conclusion.
3. The respondents 2 to 4 filed their counter stating as under:
(i) It is specifically stated that as per C.P.W.D. Works Manual 2007, the Chief Engineer has power to accept the lowest tender with or without negotiation upto Rs.400 lakhs only. As the above lowest negotiated tender amount exceeds Rs.400 lakhs, approval of the Works Board is required for acceptance since the tender amount was Rs.5,21,87,650/-. The tender was submitted to the Works Board for approval on 18.09.2009 and the same was placed before the meeting held on 24.09.2009. The Works Board comprises the following members:
(i)Chief Secretary to Govt.of Puducherry-Chairman
(ii)Secretary(Finance) -Member
(iii)Secretary (Works) -Member
(iv)Under Secretary(Works) -Member
(v)Chief Engineer, PWD -Member Secretary
(ii) It is also stated that the tender which was recommended by the Chief Engineer, P.W.D., was not agreed by the Board for the reasons that the revised estimate submitted to the Ministry of Road Transport and Highways (MORTH) on 21.08.2009 has not been sanctioned, directing that the tenders may be rejected and further directing the Chief Engineer, PWD to go for fresh call of tender adopting new rates based on PSR 2009-10 soon after the receipt of revised expenditure sanction from MORTH.
(iii) It is further stated that the revised estimate was submitted to the MORTH on 21.8.2009 for obtaining revised expenditure sanction. Subsequent to the clarifications furnished by the Chief Engineer, P.W.D., Puducherry, the Ministry of Road Transport and Highways, New Delhi accorded revised sanction for an amount of Rs.598.18 lakhs vide letter dated 14.12.2009. Therefore, the tender was resubmitted to the Works Board for reconsideration. However, the Works Board directed to reject the tender and call for fresh tender.
(iv) The MORTH accorded only revised administrative and expenditure sanction. The power of approval of the tender rests with the Works Board, Government of Puducherry. However, after receipt of the expenditure sanction from the MORTH, the Chief Engineer submitted a note to the Members and Chairman seeking permission to place an agenda in the next Works Board Meeting to reconsider the lowest negotiated tender. However, the Chief Secretary-cum-Chairman directed to call for fresh tenders.
(v) As per the C.P.W.D. Manual, the Chief Engineer can accept the lowest tenders with or without negotiation upto Rs.400 lakhs. As the tender amount exceeds Rs.400 lakhs, the Works Board is the competent authority to accept the tender. The main reason for calling fresh tender is that the trend of the recent tenders for road works are being offered at very low prices and sometimes to the extent of 10% to 20% below the estimated cost. After launching of e-tendering system, by the Public Works Department, many of the tenders for the road work are being offered at a very less price. By calling fresh tenders the tender amount is expected to be quoted at a lesser price and there will be substantial savings to the Government. Hence, the decision of the Chief Secretary-cum-Chairman does not suffer from malice or arbitrary exercise of power.
(vi) The Public Works Department requested the contractor to extend the validity of the tender only upto 30.11.2009. Thereafter, the contractor extended the validity on his own. Since the final decision was taken to call for fresh tender, the tender offered by petitioner- N.S.Jayaraman & Sons was rejected on 24.05.2010 and he was informed to arrange to collect the Earnest Money Deposit of Rs.7,15,264/-.
4. The foremost contention of the learned Senior Counsel appearing for the petitioner is that the impugned order has been passed by an incompetent authority namely the Executive Engineer (NH) and therefore it is legally infirmed; and, instead, the Works Board is an appropriate authority to take whatever decision in respect of the tender and, on its approval alone, the order can be passed. The learned Senior Counsel would also submit that the tender of the petitioner was accepted and thereafter it was revised and hence the Works Board has to take a decision for granting approval of the same. It is the last submission of the learned Senior Counsel that the Works Board returned the revised tender even before the sanctioning was accorded by the first respondent and not even a single reason has been given in the order impugned and as such the said order is non-speaking and passed without any application of mind by an incompetent authority.
5. Per contra, learned counsel for the respondents would submit that the impugned order has been passed by the Executive Engineer on the instructions of the competent authority and therefore there is no legal infirmity with the order. The learned counsel would further submit that the revised tender of the petitioner, which was recommended by the Chief Engineer, PWD, was not agreed to by the Board for the reasons that the revised estimate submitted to the Ministry had not been sanctioned and therefore a fresh tender was called for, adopting the new rates, and the revised sanction was accorded by the first respondent only on 14.12.2009.
6. I have heard Mr.K.M.Vijayan, learned Senior Counsel appearing for the petitioner, Mr.D.Ferdinand, learned Standing Counsel for Central Government and Mr.E.Vijay Anand, learned Government Advocate for the respondents 2 to 4, perused the relevant material documents and also the provisions of C.P.W.D.Works Manual 2007.
7. It is seen that there was a notification dated 30.6.2009 inviting tenders. The petitioner, namely N.S.Jayaraman & Sons, Puducherry has applied for the same and offered the lowest tender amount of Rs.5,24,68,300/-. Since the lowest tender quoted higher rate for certain items the tenderer who offered the lowest tender was called for negotiation and the tenderer reduced the rate for 3 items vide his letter dated 30.07.2009. The tender amount was fixed at Rs.5,21,87,650/- which according to the petitioner is based on PSR-2009-10 which includes VAT at the rate of 2.80% on negotiated tendered amount and the corresponding estimate amount of Rs.5,03,85,942/-. The said revised estimate was submitted to the Ministry of Road Transport and Highways on 21.8.2009 by the Chief Engineer, Public Works Department for obtaining revised expenditure sanction. There was administrative, technical and financial sanction whereas the tenders are to be called and approved by the Executive Authority, namely, the State Government. It appears that the petitioner's tender was rejected by the second respondent for the reasons that the revised estimate submitted by the Chief Engineer, P.W.D., was not agreed by the Board and therefore they have decided to go for the fresh call of tender adopting new rates based on PSR 2009-10 soon after the receipt of revised expenditure sanction from MORTH.
8. The revised estimate was submitted thereafter on 21.8.2009 for obtaining revised sanction. Subsequently the first respondent accorded revised sanction for the amount of Rs.598.18 lakhs vide letter dated 14.12.2009 and the tender was resubmitted to the Works Board for reconsideration and the same was rejected by the Works Board and called for fresh tender.
9. In the above circumstances, the impugned order passed by the Executive Engineer, (NH) has to be examined as to whether the order passed by him is valid and in accordance with law. The power of the approval of the tender rests with the Works Board which consists of the Chief Secretary to Government of Puducherry as Chairman, Secretary(Finance), Secretary(Works), Under Secretary(Works) as members and Chief Engineer(PWD) as Member Secretary. It appears that when the power is vested with the Works Board only after receipt of the accepted sanction from the first respondent, the Chief Engineer submitted a note to the Members and Chairman to place an agenda in the next Works Board Meeting to reconsider the lowest negotiated tender. However, the Chief Secretary directed to call for fresh tender based on the sanction accorded by the first respondent. While that being so, the Executive Engineer who is not even a Member Secretary without reference to any of the proceedings and only with reference to the petitioner's tender dated 17.7.2009 simply rejected stating that the tender for the abovementioned work is hereby rejected and directed the petitioner to collect the EMD.
10. Even assuming that the Executive Engineer has taken a decision on instructions from the members of the Board, there is no reference that he has taken a decision to pass the impugned order only after instructions from the authorities concerned. It appears that the constitution of the Works Board which is the competent authority to look into the matter in respect of approval of the tender consists of Chairman and other members who are all the higher authorities of the State concerned and the Executive Engineer has assumed the jurisdiction of the Works Board and took a decision by passing the order impugned without assigning any reason.
11. Law is well settled that the power of judicial review in contractual/tender matters is very limited. However, when the manner of processing the tender and the procedure contemplated are not in conformity with the law and when the matter is dealt with by an incompetent authority, this Court can very well examine the issue.
12. The principle of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. The judicial power of review is also exercised to rein in any unbridled executive functioning. The restraint has two contemporary manifestations. One is the ambit of judicial intervention and the other covers the scope of the courts ability to quash an administrative decision on its merits. These restraints bear the hallmarks of judicial control over administrative action. 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. The grounds upon which an administrative action is subject to control by judicial review can also be classified as (i) illegality; (ii) irrationality and (iii) procedural impropriety. A decision of a public authority will be liable to be quashed or otherwise dealt with by an appropriate order in judicial review proceedings, where the Court concludes that the decision is such that no authority properly directing itself on the relevant law and acting reasonably could have reached it. This is the law laid down by the Supreme Court in Tata Cellular v. Union of India, (1994) 6 SCC 651.
13. In the instant case, the authority, who passed the impugned order, has exceeded his powers; committed an error of law and breach of the rules and took a decision, which he ought not to have reached, besides abusing his powers. Therefore, the impugned order suffers from illegality, irrationality and procedural impropriety. In addition to the impugned order being passed by an incompetent authority, not even a single reason spelt out therein, for rejection of the tender of the petitioner. It is also well settled that reasoning is the heartbeat of every conclusion and without the reasoning, the conclusion becomes defunct. The rationale behind it is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made.
14. Therefore, the impugned order is ex-facie illegal and without jurisdiction. Accordingly, the impugned order is set aside and the matter is remanded to the competent authority, namely, the Works Board, headed by the second respondent, to take appropriate decision in the light of the first respondent's sanction accorded on 14.12.2009 and pass appropriate orders on merits and in accordance with law within a period of four weeks from the date of receipt of a copy of this order.
15. Writ Petition is allowed with the above direction. No costs. Consequently, M.P.No.1/2010 is also disposed of.
09.08.2010 index:yes internet:yes Note to office: Issue order copy on 12.8.2010 sal/dixit To
1.Government of India Rep. By its Secretary Ministry of Road Transport and Highways No.1, Parliament Street, Transport Bhavan New Delhi 1
2.The Chief Secretary of Government of Puducherry cum The Chairman Works Board Public Works Department Government of Puducherry Puducherry
3.The Chief Engineer Public Works Department Puducherry
4.The Executive Engineer National Highways Division Public Works Department Puducherry V.DHANAPALAN,J.
(sal/dixit) W.P.NO.12695/2010 & M.P.No.1/2010 09.8.2010