Andhra HC (Pre-Telangana)
C.S.R. Infratech India Private Limited vs The Government Of Andhra Pradesh Rep., ... on 2 June, 2014
Author: Ramesh Ranganathan
Bench: Ramesh Ranganathan
THE HONBLE SRI JUSTICE RAMESH RANGANATHAN
WRIT PETITION NO.204 OF 2014
02-06-2014
C.S.R. Infratech India Private Limited .Petitioner
The Government of Andhra Pradesh rep., by its Secretariat, TR & B, Secretariat,
Hyderabad and others . Respondents
Counsel for the petitioners: Smt. C. Vani Reddy
Counsel for respondents:GP for Roads & Buildings
Sri A. Sanjeev Kumar
<GIST:
>HEAD NOTE:
?Citations:
1) (2004) 4 SCC 714
2) (2006) 10 SCC 236
3) (1979) 3 SCC 489
4) (2007) 6 SCC 81
5) (2012) 4 SCC 407
6) (1991) 1 SCC 212
7) AIR 2005 SC 469
8) (2000) 1 SCR 505
9) Judgment of the Supreme Court in Civil Appeal No.5898 of 2012 dated
17.08.2012
10) 1990 4 JT 601
11) 1985 8 SCR 909
12) AIR 1996 SC 51
13) 2005 7 JT 214
14) 1991 1 JT 605
15) 2004 Suppl 1 JT 502
16) AIR 1996 SC 11
17) (2003) 5 ALD 87 (DB
18) (1999) 1 SCC 492
19) (2006) 10 SCC 1
20) (2008) 16 SCC 215
21) (2007) 14 SCC 517
22) (2010) 14 SCC 253
23) (2012) 6 SCC 464
24) AIR 2007 SC 437 = (2006) 11 SCC 548
25) AIR 1951 SC 467
26) (2010) 6 SCC 545
27) 2012 (6) ALD 98 (DB)
28) (1987) 1 SCC 658
29) AIR 1986 SC 1518
30) (1994) 5 SCC 198
31) AIR 1965 SC 722
32) (2007) 8 SCC 1
33) (1973) 2 SCC 836
34) (1993) 2 SCC 279
35)(1995) 5 SCC 482
THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN
WRIT PETITION NO.204 OF 2014
ORDER:
The relief sought for in this Writ Petition is to declare the action of the respondents, in disqualifying the petitioner by letter dated 27.12.2013 from being awarded the work of improvement of Kandukuru Pamuru Road from KM 19/8 to 34/0 in Prakasam District as per tender notification No.NIT No.11940(1)/E-in-C (R&B) R/EE[R]/DEE.5/AEE.2/2013 dated 07.02.2013, as illegal, arbitrary and against the tender conditions. A consequential direction is sought to set aside the proceedings dated 27.12.2013, and to direct the official respondents to open the petitioners price bid.
Facts, in brief, are that the 2nd respondent issued an e-procurement notice dated 07.02.2013 inviting bids, for improvements to the Kandukuru Pamuru Road from KM 19/8 to 34/0 in Prakasam District, at an estimated contract value of Rs.9,87,93,893/-. Amongst the eligibility criteria stipulated thereunder was that the applicants should be registered as a Special Class and Class-I contactor with the Government of Andhra Pradesh; and each bidder should have in its name, as a prime contractor, satisfactorily completed, in any one of the last five financial year ending 31.03.2012, works of a value not less than Rs.4,93,96,947/-. The petitioner was informed on 28.04.2013 that they had been dis-qualified in the prequalification/technical evaluation stage. On enquiry with the 4th respondent, they learnt that they were disqualified for the reason that they had not completed a similar nature of work for a value not less than Rs.4,93,96,947/-. The petitioner filed W.P.No.14181 of 2013 before this Court contending that, though they had completed a similar nature of road work as per the value mentioned in the NIT, they were disqualified and the work was awarded in favour of the 5th respondent. This Court, while ordering notice before admission, directed status quo as on that date i.e., 08.05.2013 to be maintained with regards allotment of the work. W.P. No.14181 of 2013 was disposed of, by order dated 19.11.2013, permitting the petitioner to make a representation afresh. The 3rd respondent was directed to consider the said representation, and pass a reasoned order thereupon. The petitioner submitted its representation and the 3rd respondent, by proceedings dated 27.12.2013, informed them that, as they had not produced a completed road work certificate covering all the five components of the subject tendered work, they were not technically qualified for award of the work.
It is the petitioners case that as they had executed a similar road work, in one of the five financial year ending 31.03.2012 of a value not less than Rs.4,93,96,947/-, they satisfy the eligibility criteria as per the notification inviting tenders; the expression similar nature of work can only mean road works for the value of Rs.4,93,96,947/-; and, in the absence of any specific stipulation that the road work should contain all the five parameters, the respondents were not entitled to reject their bid at the technical evaluation stage. The petitioner refers to another tender notification dated 12.02.2013 whereby bids were invited for improvement of Ollapalem - Vemulapadu Road from KM 49/0 to 69/2 in Prakasam District wherein a similar condition was stipulated that the applicants should have completed works under the road category, in any one financial year ending 31.03.2012, of a value not less than Rs.3,62,93,020/- with minimum quantities of three specifications. The petitioner claims to have submitted their tender with the same experience certificates of 2007-2008, their tender was accepted though all the components were not found in the works, and they were awarded the contract. The petitioner submits that the tender conditions do not stipulate that all the principal components should form part of one work; disqualifying the petitioner on such a ground is illegal and arbitrary; in the present case the official respondents had manipulated the tender conditions, and had interpreted it in an unusual manner, only to knock out the petitioner from participating in the tender process; no guidelines were notified regarding what constituted a similar work; the interpretation now placed on the words similar work, that it should contain all the five principal components, is not consonant with the tender conditions; the petitioner had executed similar works with the required specifications in one financial year as per the eligibility criteria stipulated in the tender notification; merely because the tenders are evaluated by experts, does not enable them to act arbitrarily or unfairly, more so by causing loss to the public exchequer; the petitioner, as a special class contractor, has executed several road works; the methodology adopted in this case has never been adopted in other works; the petitioner had submitted their price bid at 10.85% less i.e., Rs.1,07,19,137/- less than the estimated contract value; after disqualifying the petitioner, the next lowest bid, i.e., the 5th respondents bid of 0.79% over the estimated contract value, was accepted; and the petitioners tender was rejected with ulterior motives.
In the counter-affidavit, filed on behalf of respondents 1 to 4, it is stated that the Government had sanctioned the subject work vide G.O.Rt.No.1260 dated 06.11.2012; the Engineer-in-Chief, Hyderabad, vide memo dated 04.02.2013, had accorded technical sanction for Rs.1200 Lakhs and had invited tenders vide notification dated 07.02.2013; the technical bids were opened on 27.02.2013; three bids, including the bid submitted by the 5th respondent, fulfilled all the NIT conditions and qualified at the technical evaluation stage; they also qualified for their price bids to be opened; the remaining two bids, including that of the petitioner, were disqualified at the technical evaluation stage as they had not executed a similar nature of work; the tenderers were informed accordingly on 28.04.2013; the tender notice stipulated that the bidder should have satisfactorily completed, as prime contractor, similar nature of works of a value not less than Rs.4,93,96,947/- in any one financial year during the last five financial years i.e., from 2007-08 to 2011-12; this value was to be up-dated for the year 2012-13, in which the tender for the work was called for, duly giving 10% weightage for each financial year; the petitioners claim of having completed similar works, under road works category, is not tenable; the petitioner has not executed similar nature of work with the stipulated specifications/levels of work to that of the present tender work; it is only if the five salient or prime specifications, involved in work execution, had been executed in the previous years could the work be treated as a similar nature of work; as these five items constitute the salient and basic items of execution, the expression similar nature of work implies that the work should comprise of all the five specifications; the NIT conditions specified that the tenderer should have experience in execution of this particular specification items i.e., BM/DBM/SDB/AC/BC/MSS as per Ministry of Road Transport and Highways Specifications; this is the core item of the entire work; bituminous layers are provided at the top of the road, and have to be durable to the stress and strain imposed on them by heavy traffic; the petitioner had executed OGPC (Open Graded Premix Carpet) specifications which is not treated as a similar nature of work; pursuant to the directions of this Court, in W.P.No.14181 of 2013 dated 19.11.2013, the Commissioner of Tenders had passed an order dated 27.12.2013 assigning reasons for rejecting the petitioners bid; the petitioners tender was rejected by the members of the 3rd respondent committee after detailed deliberations and critical examination; the petitioners bid was rejected on the ground that they had not executed a similar nature of work; the price bids were opened on 28.04.2013 wherein the 5th respondent had quoted Rs.9,95,74,365/- at 0.79% over the estimated contract value of Rs.9,87,93,893/- based on CSSR 2008-09; as their bid was the lowest, it was recommended to the Engineer-in-Chief for favour of acceptance of the bid of the 5th respondent; and he was requested to communicate his orders so that the work could be grounded at the earliest.
In its counter-affidavit the 5th respondent states that, as per the tender documents, the bidders were required to submit their respective bids duly uploading the documents showing their eligibility criteria in respect of the technical bid, and quoting their figure in respect of the financial bid, online; out of the five bids received, the technical bid submitted by them, along with two others, fulfilled all the tender conditions; the petitioner and another contractor were disqualified; the competent authority had evaluated the technical bids in comparison with the salient or prime specifications involved in five items; the technical bids were opened on 27.02.2013; the petitioner has been successfully stalling proceedings for almost one year; this Court would not sit in appeal over the decision of the competent authorities in evaluation of tenders, and re-evaluate the entire process; the petitioners allegation that, with similar experience, he was granted other works is without any basis; the competent authority had also considered this aspect and held that the said work, which was awarded to the petitioner, was less than Rupees two crores and was finalised by the Engineer-in-Chief as per the powers delegated to him; the present tenders were finalised at the level of the Commissionerate of tenders; and the competent authority is justified in disqualifying the petitioner for non-completion of similar nature of work as stipulated in the conditions of the notice inviting tender.
In its reply affidavit, the petitioner submits that it has executed similar nature of works comprising of various specifications as per the eligibility criteria mentioned in the tender; the contention of the respondents that the works, containing all the five specifications, would alone be considered as similar nature of work is not tenable; nowhere has it been mentioned, in the notice inviting tender, that only those works, containing all the five specifications, would be considered for qualification at the technical evaluation stage; the contention that the petitioner has not executed works with the specification mentioned in serial No.4 is not correct; the petitioner has executed similar nature of works with BT items with hot mix process during the 2007-2008 financial year; the contention that the petitioner has executed works with OGPC specification is not correct; the petitioner has executed works, other than the works mentioned in para C & D of para 2 of the counter, which contains SDBC and MSS specifications; this is clear from the experience certificates filed along with the Writ Petition; the eligibility criteria, stipulated in the NIT, required the tenderer to have executed the minimum quantities in any one financial year; it is not correct to state that, as per the specification at Sl. No.4, one should execute minimum quantity of 2207 cubic metres by following BM/DBM/SDBC/AC/BC/MSS; the contention that the petitioner has not executed a similar nature of work of Rs.4,93,96,947/- is not tenable; the petitioner has, in fact, executed similar nature of works of Rs.11,56,64,101.74, and has submitted the experience certificate to that effect; in evaluating tenders what has to be seen is whether or not the contractor has executed works with the required specifications; in evaluating another tender dated 12.02.2013, the respondents had followed the proper methodology; in the present case an unusual method was adopted only to disqualify the petitioner; while this Court would not sit in appeal and re-evaluate the tender, it would interfere with the decision making process if the authority has exercised its powers arbitrarily, unfairly and irrationally; the petitioners financial bid is far lower than that of the 5th respondent; while evaluating the tender, the petitioner has been deliberately disqualified though they have experience in similar nature of works with the specifications mentioned in the tender conditions; the petitioners disqualification is irrational, and is with ulterior motives; an unusual method has been adopted by the respondents in disqualifying tenders at the technical qualification stage; and the action of the respondents, in disqualifying the petitioner, is illegal.
The rival contentions need to be examined, bearing in mind that this Court would neither sit in appeal over the decisions of the Expert Committee constituted for evaluation of tenders nor would it substitute its views for that of the said Committee. While examining and scrutinising the decision-making process, the facts of a given case may be needed to be appreciated as, otherwise, the decision cannot be tested on grounds of illegality, irrationality or procedural impropriety. To the limited extent, of scrutinising the decision-making process, it is open to the court to review the facts evaluated by the decision-maker. (State of U.P. v. Johri Mal ; Noble Resources Ltd. v. State of Orissa ). The notice inviting tenders, which prescribes the technical eligibility criteria for opening the price bid, reads as under:
Eligibility criteria for opening the price bid:
i) The bidder should have satisfactory completed, as prime contractor, similar nature of works of value not less than Rs.49396947/- in any one financial year during last five financial years i.e., from 2007-2008 to 2011-2012 (This value will be updated to the year 2012-2013 in which the tenders for this work is called duly giving 10% weightage for each financial year. Subcontractors/GPA holders experience shall not be taken into account.
ii) Executed the following minimum quantities in any one financial year during the last five financial years i.e., from 2007-2008 to 2011-2012.
Sl. No. Items for this work:-
1. Earthwork for forming embankment/Earth work excavation (Combined quantity): 13284 M3
2. Granular Sub-base/Gravel base/Shoulders (Combined quantity): 2290 Cum
3. WBM/WMM/CRM (Combined quantity): 5795 CUM
4. BM/DBM/SDBC/AC/BC/MSS/ (Combined quantity):
2207 CUM
5. PCC/VCC/RCC/VRCC (Combined Quantity ): 2411 CUM Sri D. Prakash Reddy, Learned Senior Counsel appearing on behalf of the petitioner, the Learned Government Pleader for Roads & Buildings and Sri L. Ravichander, Learned Senior Counsel appearing on behalf of the 5th respondent, would agree that Condition No.(ii) which requires minimum quantities of five items of work to be executed in one financial year, during the last five financial years, need not form part of the very same road work; and it is sufficient compliance of condition No.(ii) if the minimum quantities, stipulated for each of these five items, have been executed even if each of these five items form part of different road works.
It is not in dispute that both the petitioner and the 5th respondent have executed road works for a value not less than Rs.4,93,96,947/- in one financial year during the last five financial years; both of them have fulfilled condition No.(ii); and they have both executed the minimum quantities stipulated thereunder in one financial year, during the last five financial years from 2007- 2008 to 2011-2012. The dispute in this Writ Petition revolves around the scope of the expression similar nature of work in condition No.(i). While the road work executed by the 5th respondent, for a value exceeding Rs.4,93,96,947/-, relates to a single road work containing all the five items referred to in Condition No.(ii), even though it did not contain the minimum quantities of each of the five items stipulated therein, none of the road works, executed by the petitioner, contain all the five items specified in Condition No.(ii). While Sri D. Prakash Reddy, Learned Senior Counsel appearing on behalf of the petitioner, would contend that the expression similar nature of work can only mean another road work, both the Learned Government Pleader for Roads & Buildings and Sri L. Ravichander, Learned Senior Counsel for the 5th respondent, would submit that the expression similar nature of work can only mean a single road work containing all the five items mentioned in Condition No.(ii), even if it be for quantities below the minimum quantities specified therein. I. JUDICIAL REVIEW OF DECISIONS OF EXPERT COMMITTEES IN EVALUATING TENDERS:
Every action of the State must be informed with reason and should be free from arbitrariness. That is the very essence of the rule of law and its bare minimal requirement. And to the application of this principle it makes not difference whether the exercise of the power involves affection of some right or denial of some privilege. (Ramana Dayaram Shetty v. International Air Port Authority of India ). An action which is unfair or unreasonable cannot be sustained. Objective satisfaction must be the basis for an executive action. The State is required to act bona fide and not arbitrarily when its action is like to prejudicially affect the rights of others. (Bharat Petroleum Corpn. Ltd. v. Maddula Ratnavalli ). An act, uninformed by reason, is arbitrary. The rule of law contemplates governance by laws and not by humour, whim or caprice. (Ravi Yashwant Bhoir v. Collector ; Shrilekha Vidyarthi v. State of U.P. ). Article 14 of the Constitution prohibits the State or its instrumentality from arbitrarily choosing a contractor at its will and pleasure. In awarding contracts, it has to act reasonably, fairly and in public interest. At the same time, no person can claim a fundamental right to carry on business with the government or its instrumentalities. All that he can claim is that, in competing for the contract, he should not be unfairly treated and discriminated to the detriment of public interest. (Association of Registration Plates v. Union of India ). The Court can interfere if the decision making process is vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. (Air India Ltd. v. Cochin International Airport Ltd ). The basic requirement of Article 14 is fairness in action by the State and non-arbitrariness, in essence and substance, is the heartbeat of fair play. Their actions are amenable to judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. In the matter of formulating conditions of a tender document, and in awarding a contract, greater latitude is required to be conceded to the State authorities. Unless the action of the tendering authority is found to be malicious, interference by Courts is not warranted. If the State or its instrumentalities act reasonably, fairly and in public interest in awarding the contract, interference by the Court is limited. (M/s. Michigan Rubber (I) Ltd. v. State of Karnataka ).
The award of contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. Commercial transactions, of a complex nature, involve balancing and weighing of all relevant factors and a final decision is taken on an overall view of the transaction. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though their decision is not amenable to judicial review, the Court can examine the decision making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. (Air India Ltd.8).
While contractual matters are not beyond the realm of judicial review, its application is limited (Noble Resources Ltd.2; Indian Oil Corpn. Ltd. v. Amritsar Gas Service ; and LIC of India v. Escorts Ltd. ) primarily to the infirmity in the decision making process, and whether it is reasonable and rational or arbitrary and in violation of Article 14 of the Constitution of India. (Sterling Computers Ltd v. M & N Publications Ltd ). The Court does not sit as a Court of appeal, but merely reviews the manner in which the decision was made. Although the terms of the invitation to tender is not open to judicial scrutiny as it is in the contractual realm, Courts can examine the award of contract, by the Government or its agencies, to prevent arbitrariness or favouritism. (Noble Resources Ltd.2; Binny Ltd. v. V. Sadasivan ; G.B. Mahajan v. Jalgaon Municipal Council ; Directorate of Education v. Educomp Datamatics Ltd. ). There are inherent limitations in the exercise of judicial review of contractual powers as the Government must have the freedom of contract and a free- play in the joints. The duty to act fairly will vary in extent, depending upon the nature of cases to which the said principle is sought to be applied. The State has the right to refuse the lowest or any other tender, provided it tries to get the best person or the best quotation, and the power to choose has not been exercised for collateral purposes or in infringement of Article 14. (Tata Cellular v. Union of India ).
The Court should not substitute its own decision, for the decision of an expert evaluation committee, in evaluating tenders. Often when an evaluation committee of experts is appointed to evaluate offers, the expert committee's special knowledge plays a decisive role in deciding which is the best offer. (Union of India v. Laxmi Builders, Secunderabad ; Raunaq International Ltd. v. I.V.R, Construction Ltd. ). If two views are possible, and no mala fides or arbitrariness is alleged or shown, there is little scope for interference with the view taken by the authorities in inviting tenders. (Reliance Airport Developers (P) Ltd. v. Airports Authority of India ; Siemens Public Communication Networks (P) Ltd. v. Union of India ).
The limited question that has to be considered in a writ petition filed by the unsuccessful tenderer is whether the authority had acted unreasonably in taking the decision to reject the tender. Before interfering in tender or contractual matters, in the exercise of its power of judicial review, the Court should pose to itself the following questions : i) Whether the process adopted or decision made by the authority is malafide or intended to favour someone or whether the process adopted or the decision made is so arbitrary and irrational that the court can say : 'the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached'; and ii) Whether public interest is affected. If the answers are in the negative, there should be no interference under Article 226 of the Constitution of India. (Jagdish Mandal v. State of Orissa ; M/s. Michigan Rubber (I) Ltd.9; Himachal Pradesh Housing and Urban Development Authority v. Universal Estate ; and Tejas Constructions & Infrastructure (P) Ltd. v. Municipal Council, Sendhwa ).
When the power of judicial review is invoked, in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. The limited scope of judicial review by the High Court envisages examination of the question whether there is any material irregularity in the decision making process or whether the decision to reject the tender is irrational, unreasonable or arbitrary. If the decision relating to the award of contract is bonafide and in public interest, Courts will not interfere even if a procedural aberration or error in assessment or prejudice to a tenderer is made out. The power of judicial review will not be invoked to protect private interest at the cost of public interest or to decide contractual disputes. The tenderer or a contractor with a grievance can always seek damages in a civil court. (Jagdish Mandal21; Sterling Computers Ltd12; Tata Cellular16; Raunaq International Ltd.18; Air India Ltd.8; Association of Registration Plates7; and B.S.N. Joshi v. Nair Coal Services Ltd. ; Siemens Public Communication Networks (P) Ltd.20).
Bearing in mind the fact that Condition No. (ii) enables a contractor to qualify, at the technical bid evaluation stage, if the minimum quantities stipulated for each of the five items have been executed, albeit in different works, and both the petitioner and the fifth respondent have fulfilled this condition, let us now examine whether the respondents have acted arbitrarily in rejecting the petitioners tender on the ground that they have not satisfactorily completed, as a prime contractor, similar nature of work of a value not less than Rs.4,93,96,947/- in any one financial year during the last five financial years 2007-2008 to 2011-2012. The five items of work, referred to in Condition No.(ii), are (1) Earth work for forming embankment/Earth work for excavation; (2) Granular Sub-base/Gravel base/shoulders; (3) WBM/WMM/CRM; (4) BM/DBM/SDBC/AC/BC/MSS; and (5) PCC/VCC/RCC/VRCC.
The Learned Government Pleader for Roads and Buildings would place reliance on G.O.Ms.No.23 dated 05.03.1999 to contend that the guidelines stipulated therein prescribe the procedure for determining what a similar nature of work is. G.O.Ms.No.23 dated 05.03.1999 was issued by the Irrigation and Command Area Development Department of the Government of Andhra Pradesh. The said G.O. prescribes guidelines for streamlining and finalizing the procedure for calling tenders, and award of contracts, in the Public Works Department. Clause 7 of the said G.O. stipulates that, in order to avoid ambiguity in implementing the order, detailed guidelines are formulated in Annexures I and II of the said G.O. Annexure-I of G.O.Ms. No.23 dated 05.03.1999 relates to preparation of realistic estimates, standard data etc. Clause 3 therein relates to preparation of tender documents and finalization of tenders. Clause 3.01 relates to the tender notice document. Clause 3.02, which relates to the qualification criteria, reads as under:
3.02 QUALIFICATION CRITERIA A. To qualify for award of the Contract, each bidder in its name should have, during the last five years (specified financial years i.e., they should be immediately preceding the financial year in which tenders are invited).
a) Satisfactorily completed as a prime contract, similar works of value not less than Rs./- @ (usually not less than 50% of Estimated value of contract) in any one year.
b) Executed in any one year, the following minimum quantities of works:
-Cement concrete including RCC and PSC Cum. -Earth work in both excavation and Embankment Cum. - -(relevant principal items be indicated)
-(usually 50 per cent of the expected peak quantities of construction per year).
B. Each Bidder should further demonstrate:
a) Availability (either owned or leased or to be procured against mobilization advances) of the following Key and critical equipment for this work.) Clause 4 relates to evaluation of tenders and clause 4.01.3 requires the first cover (Cover-A), with the superscription as TECHNICAL BID, to contain the qualification data as described in para 3.02. Clause 4.01.4 relates to the second cover (Cover-B) with the superscription PRICE BID.
While Clause 3.02.A (a) requires an eligible contractor to complete, as a prime contractor, similar works, the said clause does not explain what the term similar work means. It only stipulates that the value of a similar work should, usually, not be less than 50% of the estimated value of the contract in any one year. The guidelines, issued in G.O.Ms. No.23 dated 05.03.1999, have been revised periodically, including in G.O.Rt. No.407 dated 26.05.1999, G.O.Ms.No.85 dated 01.06.1999 etc. G.O.Ms. No.23 dated 05.03.1999, including Clause 3.02 (A)(a) in Annexure-I thereof, does not throw any light on what the expression similar work or similar nature of work means.
As the Learned Government Pleader for Roads & Buildings has also placed reliance on the working guidelines on tenders, formulated by the Commissionerate of tenders, it is necessary to examine what these guidelines stipulate, albeit in brief. The Commissionerate of Tenders was of the view that the clauses, conditions and provisions of G.O.Ms.No.23 dated 05.03.1999 were being incorporated and interpreted in different ways by the Field Officers and it was necessary, therefore, to issue certain guidelines, notwithstanding anything contained in G.O.Ms.No.23 dated 05.03.1999, except otherwise stated for bringing in uniformity in the tendering process. Clause 8 of the working guidelines on tenders, as formulated by the Commissionerate of Tenders, relates to tender evaluation. Clause 8.1, which relates to qualification criteria, reads as under:
8.0 TENDER EVALUATION:
8.1 Qualification Criteria:
Para 3.02 of the Annexure to GO Ms.No.23, dt.5.3.1999 has provided guidelines for stipulating the qualification criteria, but while adopting them many a time, in majority cases, the Field Officers are prescribing the conditions without appreciating the spirit of the guidelines.
In sub-para.A(a) as amended in G.O.Ms.No.407, dt.26.5.1999, it is stipulated that Satisfactorily completed as Prime Contractor, similar works of value not less than Rs.. @ (Usually not less than 50% estimate value of Contract) in any one of financial year.
It is necessary to clarify about similar works. Similar works are those which are alike to the work in question. Normally to assess the similar works, firstly to see whether they belong to the same category of works for which tenders are invited. Secondly, the principal components involved in the work in question and their similarity in the experience produced by the tenderer must be examined.
It may be explicitly understood that word Completion means that a Contractor should have completed the work within the block period provided. In case a similar work was executed in two or more financial years, the value executed in any one year should be considered and after updating to the present price level, it should be compared to the required value. The words within brackets are provided, as a guidance to the Engineer concerned to fix the value of work to be executed, but not for prescribing in the condition. The Engineer concerned responsible for finalizing the tender document should workout 50% of the value of work for which tenders are invited and accordingly suitable amount to be mentioned. @ indicates the updation of the value of work to price level of the financial year during which the tenders are invited.
Clause 8.1 of the working guidelines, formulated by the Commissionerate of tenders, clarifies that similar works are those which are alike the work in question; they should belong to the same category of works for which tenders are invited; and the principal components, involved in the work in question, and their similarity in the experience produced by the tenderer must be examined. The Clarification given to the expression similar works, in Clause 8.1 of the working guidelines formulated by the Commissionerate of tenders, does support the view taken by the official respondents that the petitioner has not executed a similar work or a similar nature of work.
The question which necessitates examination is whether the construction placed on the words similar works or similar nature of work, in the working guidelines formulated by the Commissionerate of tenders, can be relied upon by the official respondents to reject the petitioners technical bid. While G.O.Ms. No.23 dated 05.03.1999, issued by order and in the name of the Governor of Andhra Pradesh, is in the nature of executive instructions under Article 162 of the Constitution of India, the working guidelines prepared by the Commissionerate of Tenders is an internal memorandum circulated within the Department for the benefit of its Field Officers, and to enable them to uniformly evaluate tenders. It is not in dispute that, in the subject notification inviting tender, no reference is made to the aforesaid working guidelines framed by the Commissionerate of Tenders; and none of the tenderers were made aware that the words similar works or similar nature of work meant those works which are alike to the work in question and, in order to assess similar works, it must firstly be seen whether they belong to the same category of works for which tenders are invited, and secondly, the principal components involved in the work in question and their similarity in the experience produced by the tenderer must be examined. It is also not known when the Commissionerate of Tenders issued these guidelines to its field staff.
II. TENDER CONDITONS MUST BE SPECIFIC, CLEAR AND PRECISE AND ALL THE TENDERERS SHOULD BE MADE AWARE OF THE SCOPE AND PURPORT OF THESE CONDITIONS:
Can the official respondents apply their internal working guidelines, which have not even been communicated to the tenderers, to disqualify some of them on the basis of an indefinite and imprecise expression similar works? Before a law can become operative, it must be promulgated or published. It must be broadcast in some recognisable way so that all men may know what it is or, at the very least, there must be some special rule or regulation or customary channel by or through which such knowledge can be acquired with the exercise of due and reasonable diligence. Promulgation or publication of some reasonable sort is essential. (Harla v. State of Rajasthan ; T. Narasimhulu v. State of A.P., ). The object of publication is to enable the public to acquire knowledge. (Tirumala Devi Eada v. State of Andhra Pradesh ; B.K. Srinivasan v. State of Karnataka ; Sonic Industries, Rajkot v. Municipal Corporation of the city of Rajkot ; Harla25). Where a law, whether plenary or subordinate, demands compliance, those that are governed must be notified of the law and all changes and additions made to it by various processes. Whether law is viewed from the standpoint of the conscientious good man seeking to abide by the law or from the standpoint of Justice Holmes unconscientious bad man seeking to avoid the law, the law must be known, that is to say it must be so made that it can be known. Subordinate legislation, in order to take effect, must be published or promulgated in some suitable manner, whether such publication or promulgation is prescribed by the parent statute or not. It will then take effect from the date of such publication or promulgation. (B.K. Srinivasan28; Pankaj Jain Agencies v. Union of India ; Sonic Industries29; Harla25).
Even where the mode of publication of the law is not prescribed by the law, such law should be published in some usual or recognised mode to bring it to the knowledge of all persons concerned. (State of Maharashtra v. Mayer Hans George ; T. Narasimhulu26). If this be the requirement of bringing subordinate legislation, which has the force of law, into operation can internal working guidelines of the Commisisonerate of tenders, which has no statutory sanction, be made applicable to tenderers without their even being made aware thereof before submission of their bids? The answer can only be in the negative. It is also evident that these working guidelines, formulated by the Commissionerate of tenders, were not applied by the Engineer-in-Chief in awarding the contract, pursuant to the notification issued on 12.02.2013 whereby bids were invited for improvement of Ollapalem Vmulapadu Road from KM 49/0 to 69/2 in Prakasam District. The justification given by the official respondents in their counter- affidavit filed before this Court, for such a deviation, is that the total value of the said work was less than Rupees two crores; they were finalized by the Engineer-in-Chief as per the power delegated to him; and the present tenders were finalized at the level of the Commissionerate of Tenders. The counter-affidavit filed by the official respondents makes no mention of the internal working guidelines of the Commissionerate of Tenders having been communicated to any of the tenderers. As noted hereinabove, these working guidelines are not even executive instructions issued under Article 162 of the Constitution of India. Unless these working guidelines of the Commisisonerate of tenders had been made a part of the tender documents, and the intending tenderers were made aware of their contents, the official respondents cannot but be said to have acted arbitrarily in relying on the meaning given, in its internal and uncommunicated working guidelines, to the expression similar works or similar nature of works in disqualifying the petitioner at the technical evaluation stage. III. THE TERMS AND CONDITIONS OF TENDER MUST INDICATE, WITH LEGAL CERTAINTY, THE NORMS AND BENCHMARKS:
While Sri D. Prakash Reddy, Learned Counsel for the petitioner, would contend that the expression similar nature of work means a road work as distinct from a building work, dam work etc., both the Learned Government Pleader for Roads and Builidngs and Sri L. Ravichander, Learned Senior Counsel appearing on behalf of the 5th respondent, would contend that the said expression can only mean a road work containing all the five items specified in condition No.(ii) i.e., (1) Earth work for forming embankment/Earth work for excavation; (2) Granular Sub- base/Gravel base/shoulders; (3) WBM/WMM/CRM; (4) BM/DBM/SDBC/AC/BC/MSS; and (5) PCC/VCC/RCC/VRCC. Even if it is accepted that the construction placed on the expression similar nature of works by the petitioner on the one hand, and the respondents on the other, are both possible views, should this Court exercise judicial restraint when the expression similar nature of work in clause (1) of the eligibility criteria for opening the price bid, of the subject notice inviting tenders, suffers from lack of legal certainty?
In Reliance Energy Ltd. v. Maharashtra State Road Development Corpn. Ltd. , the Supreme Court noted that the High Court, in its judgment dated 04.06.2007, had ruled that MSRDC was right in excluding REL/HDEC from the second stage of the bidding process; the basic debate, according to the High Court, was about the accounting treatment to be given to "non- cash expenses"; the High Court was of the view that it had no jurisdiction, under Article 226 of the Constitution, to interfere with the decision of MSRDC, particularly when there were two different opinions regarding adjustment to the net income; according to the High Court, the decision of MSRDC, on the future cash impact of "the provision for bad debts" made by HDEC in its accounts for 2001, could not be said to be arbitrary or unreasonable; and for the aforestated reasons the High Court had dismissed the writ petition without going into the question whether provision for bad debts is or is not a "non-cash expense" liable to be added back to arrive at net cash profit. It is in this context that the Supreme Court observed:-
..We find merit in this civil appeal. Standards applied by courts in judicial review must be justified by constitutional principles which govern the proper exercise of public power in a democracy. Article 14 of the Constitution embodies the principle of "non-discrimination". However, it is not a free- standing provision. It has to be read in conjunction with rights conferred by other articles like Article 21 of the Constitution. The said Article 21 refers to "right to life". It includes "opportunity". In our view, as held in the latest judgment of the Constitution Bench of nine-Judges in the case of I.R. Coelho vs. State of Tamil Nadu (2007) 2 SCC 1, Article 21/14 is the heart of the chapter on fundamental rights. It covers various aspects of life. "Level playing field" is an important concept while construing Article 19(1)(g) of the Constitution. It is this doctrine which is invoked by REL/HDEC in the present case. When Article 19(1)(g) confers fundamental right to carry on business to a company, it is entitled to invoke the said doctrine of "level playing field". We may clarify that this doctrine is, however, subject to public interest. In the world of globalization, competition is an important factor to be kept in mind. The doctrine of "level playing field" is an important doctrine which is embodied in Article 19(1)(g) of the Constitution. This is because the said doctrine provides space within which equally-placed competitors are allowed to bid so as to subserve the larger public interest. "Globalization", in essence, is liberalization of trade. Today India has dismantled licence-raj. The economic reforms introduced after 1992 have brought in the concept of "globalization". Decisions or acts which results in unequal and discriminatory treatment, would violate the doctrine of "level playing field" embodied in Article 19(1)(g). Time has come, therefore, to say that Article 14 which refers to the principle of "equality" should not be read as a stand alone item but it should be read in conjunction with Article 21 which embodies several aspects of life. There is one more aspect which needs to be mentioned in the matter of implementation of the aforestated doctrine of "level playing field". According to Lord Goldsmith - commitment to "rule of law" is the heart of parliamentary democracy. One of the important elements of the "rule of law" is legal certainty. Article 14 applies to government policies and if the policy or act of the government, even in contractual matters, fails to satisfy the test of "reasonableness", then such an act or decision would be unconstitutional.
When tenders are invited, the terms and conditions must indicate with legal certainty, norms and benchmarks. This "legal certainty" is an important aspect of the rule of law. If there is vagueness or subjectivity in the said norms it may result in unequal and discriminatory treatment. It may violate doctrine of "level playing field" (emphasis supplied).
The notice inviting tender, whereby bids are invited for a work of an estimated value of nearly ten crores, must be extremely precise. A very high degree of care, and meticulous adherence to the requirements of the bid, is inherent in such a bidding process. The competent authority is under an obligation not only to maintain a high degree of transparency and to deal fairly, but also to maintain the sanctity and integrity of the entire process. It is incumbent upon the competent authority to ensure that different yardsticks are not adopted; and there is not even the remotest possibility of discrimination, arbitrariness or favouritism. It is not open to the competent authority to read into the documents, terms and conditions which do not exist therein. (Siemens Public Communication Networks (P) Ltd.20). As noted hereinabove neither does the notice inviting tenders refer to the clarification given, to the expression similar works, in the working guidelines of the Commissionerate of tenders nor were the tenderers made aware of such a clarification. The imprecise and indefinite expression similar nature of work is capable of several plausible interpretations and suffers from lack of legal certainity.
While the conditions to be stipulated in the tender, inviting bids for award of works, are matters in the executive realm and not for this Court to prescribe, the tender conditions must be coherent, clear and precise, as prescription of ambiguous conditions would confer an unfettered discretion on the executive to place a construction of their choice on the expression similar nature of work. This would, in turn, result in tenderers being deprived of their right to a fair and reasonable evaluation of their bids in compliance with the requirements of Article 14 of the Constitution of India. While it is for the official respondents, and not for this Court, to decide whether a similar nature of work for a value of Rs.4,93,96,947/-, should relate to a work containing all the five items of work, referred to in condition No.(ii) i.e., (1) Earth work for forming embankment/Earth work for excavation; (2) Granular Sub-base/Gravel base/shoulders; (3) WBM/WMM/CRM; (4) BM/DBM/SDBC/AC/BC/MSS; and (5) PCC/VCC/RCC/VRCC, the requirements of Article 14 of the Constitution of India would be satisfied only if the meaning to be given to the said expression, similar nature of work, is clearly stated in the notice inviting tenders. Disqualification of the petitioners tender, without stating in the notice inviting tenders what the expression similar nature of work means, is arbitrary and illegal.
IV. A DECISION TO AWARD A CONTRACT MUST BE GUIDED BY LARGER PUBLIC INTEREST:
The duty to act fairly is a part of the fair procedure envisaged under Articles 14 and 21, and every activity of the public authority, or those under public duty, must be received and guided by public interest. (Union of India v. Mohan Lal Capoor ; Mahesh Chandra v. U.P. Financial Corpn. ; LIC v. Consumer Education and Research Centre ). When a writ petition is filed challenging the award of a contract by a public authority or the State, the Court must be satisfied that there is some element of public interest involved in entertaining such a petition. (Laxmi Builders, Secunderabad17; Raunaq International Ltd.18). The Court should always keep larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should intervene. (Air India Ltd.8). On a challenge to the award of a contract or rejection of a tender, by a public authority or the State, the court must be satisfied that there is some element of public interest involved in entertaining such a petition. The elements of public interest are (1) public money would be expended for the purposes of the contract; (2) the goods or services which are being commissioned could be for a public purpose; (3) the public would be directly interested in the timely fulfilment of the contract so that the services become available to the public expeditiously; and (4) the public would also be interested in the quality of the work undertaken or goods supplied by the tenderer. (Raunaq International Ltd.18). The price bid submitted by the petitioner was 10.85% less than the estimated value of the subject work of Rs.9,87,93,983/-. The petitioners price bid of Rs.8,80,74,846/- was Rs.1,07,19,137/- less than the estimated value of the work. It is evident, from the counter- affidavit filed on behalf of respondents 1 to 4, that the 5th respondents price bid was Rs.9,95,74,365/- which was 0.79% over the estimated contract value. It is thus clear that the price bid submitted by the petitioner was nearly Rs.1.15 crores lower than the price bid of the 5th respondent.
V. FACTORS TO BE TAKEN INTO CONSIDERATON IN DECIDING TO WHOM THE CONTRACT SHOULD BE AWARDED PRICE IS NOT THE SOLE CRITERION:
The price offered may not always be the sole criterion for awarding a contract, and is only one of the criteria. The difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. The past record of the tenderers, the quality of the goods or services which are offered, assessing such quality on the basis of the past performance of the tenderers, their market reputation and so on, all play an important role in deciding to whom the contract should be awarded. At times, a higher price for a much better quality of work, can be legitimately paid in order to secure proper performance of the contract and good quality of work-which is as much in public interest as a low price. (Laxmi Builders, Secunderabad17; Raunaq International Ltd.18; Air India Ltd8).
The impugned order dated 27.12.2013 disqualifying the petitioner, on the ground that they did not execute a similar nature of work, must be, and is accordingly, set aside. The respondents shall open the petitioners price bid and evaluate his bid along with the other bids which have been found to be technically qualified. It is made clear that this Court has not expressed any opinion on whether or not the subject contract should be awarded to the petitioner or to the 5th respondent or to any of the other tenderers as these are all matters for the competent authority i.e., the Commissionerate of tenders to examine and recommend, and for the Government to decide. As noted hereinabove, other than the difference in price offered by the tenderers, several other factors such as the tenderers past record; the quality of works executed by them earlier; whether or not the contract should be awarded to the tenderer who has executed works containing all the five items referred to in condition No.(ii) i.e., (1) Earth work for forming embankment/Earth work for excavation; (2) Granular Sub-base/Gravel base/shoulders; (3) WBM/WMM/CRM; (4) BM/DBM/SDBC/AC/BC/MSS; and (5) PCC/VCC/RCC/VRCC; whether or not the tenderer, who has executed all the five items in one road work, is better suited to execute the subject work properly; are all factors which would weigh with the Expert body i.e., the Commissionerate of tenders in finalizing the tenders, and in recommending award of the subject work to the best suited contractor. Suffice it to hold that, while undertaking this exercise, the official respondents shall record elaborate and detailed reasons for their decision.
VI. CONCLUSION:
The impugned order, disqualifying the petitioner on the ground that he has not executed a similar nature of work, is set aside. The Writ Petition is, accordingly, disposed of. The miscellaneous petitions pending, if any, shall also stand disposed of. However, in the circumstances, without costs. _____________________________ RAMESH RANGANATHAN, J Date: 02-06-2014