Madras High Court
M/S.M.R.Pro Tech Pvt. Ltd vs The Director on 3 June, 2015
Author: R.Mahadevan
Bench: R.Mahadevan
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 03.06.2015 CORAM THE HONOURABLE MR.JUSTICE R.MAHADEVAN W.P(MD)No.371 of 2015 and M.P(MD)No.1 of 2015 AND W.P(MD)No.5154 of 2015 and M.P(MD)Nos.1 to 3 of 2015 W.P(MD)No.371 of 2015: M/s.M.R.Pro Tech Pvt. Ltd., represented by its Managing Director, No.10, CMC Complex, B.C.H.Road, Rajarajeswari Nagar, Bangalore - 560 098. ... Petitioner Vs. 1.The Director, ISRO Propulsion Complex, Mahendragiri - 627 133. Tirunelveli District. 2.Group Head, Construction and Maintenance Group, ISRO Propulsion Complex, Mahendragiri, Tirunelveli District - 627 133. 3.M/s.AMR Constructions Ltd., 187-A, Fourth Main Road, Sri Ayyappa Nagar, Chinmaya Nagar, Chennai - 600 092. ... Respondents (R.3 impleaded vide order of this Court dated 13.03.2015 made in M.P(MD)No.2 of 2015 in W.P(MD)No.371 of 2015) PRAYER: Writ Petition is filed under Article 226 of the Constitution of India praying to issue a Writ of Mandamus to direct the second respondent to open and consider the price bid submitted by the petitioner pursuant to the re- tender notice dated 31.07.2014 in respect of the work, namely, Earthwork excavation and formation of ground for establishing integrated engine test stand at IPRC, Mahendragiri along with the other eligible bidders, on merits and finalise the tender thereafter. !For Petitioner : Mr.S.S.Sundar For Respondents : Mr.E.T.Rajendran for R.1 & R.2 Mrs.Nalini Chidambaram Senior Counsel for Mr.S.Karthick for R.3 W.P(MD)No.5154 of 2015: M/s.M.R.Pro Tech Pvt. Ltd., represented by its Managing Director, No.10, CMC Complex, B.C.H.Road, Rajarajeswari Nagar, Bangalore - 560 098. ... Petitioner Vs. 1.The Director, ISRO Propulsion Complex, Mahendragiri - 627 133. Tirunelveli District. 2.Group Head, Construction and Maintenance Group, ISRO Propulsion Complex, Mahendragiri, Tirunelveli District - 627 133. 3.M/s.AMR India Ltd., (Formerly M/s.AMR Constructions Limited), 187-A, 4th Main Road, Sri Ayyappa Nagar, Chinmaya Nagar, Chennai - 600 092. ... Respondents PRAYER: Writ Petition is filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorari to call for the records in connection with the impugned order (letter of intent) issued by the second respondent vide proceedings No.IPRC/CMG/TS/2013-14/MW-05, dated 20.02.2015, in favour of the third respondent and quash the same. For Petitioner : Mr.S.S.Sundar For Respondents : Mr.E.T.Rajendran for R.1 & R.2 Mrs.Nalini Chidambaram Senior Counsel for Mr.S.Karthick for R.3 :COMMON ORDER
W.P(MD)No.371 of 2015 has been filed seeking a Writ of Mandamus to direct the second respondent to open and consider the price bid submitted by the petitioner pursuant to the re-tender notice dated 31.07.2014 in respect of the work, namely, Earthwork excavation and formation of ground for establishing integrated engine test stand at IPRC, Mahendragiri along with the other eligible bidders, on merits and finalise the tender thereafter.
2. W.P(MD)No.5154 of 2015 has been filed seeking a Writ of Certiorari to call for the records in connection with the impugned order (letter of intent) issued by the second respondent vide proceedings No.IPRC/CMG/TS/2013- 14/MW-05, dated 20.02.2015, in favour of the third respondent and quash the same.
3. Since the issue involved in both these writ petitions, is one and the same, they are taken up for hearing together and disposed of by this common order.
4. The case of the petitioner as culled out from the averments in the affidavits filed in support of both the writ petitions, is as follows:
4.1. The petitioner, a private limited company having its registered office at Bangalore, claimed that it had completed several projects for Karnataka Housing Board, Public Works Department of State of Karnataka and the estimated cost of several other ongoing projects, is around Rs.200 Crores. The second respondent issued a tender notice dated 06.12.2013 calling for the tenders from the contractors having valid registration in appropriate class with experience, for a civil work, namely, formation of ground for establishing integrated engine test stand at Liquid Propulsion System Centre [ISRO Propulsion Complex], Mahendragiri and the estimated cost of the work is Rs.25.964 Crores.
4.2. The petitioner has submitted the tender within the time along with the requisite documents and materials in terms of the eligibility criteria drawn by the second respondent. The petitioner further claimed that on opening the price bids, the petitioner was found to be the lowest tenderer and thereafter, the second respondent, vide its communication dated 06.06.2014 requested the petitioner to extend the validity of the petitioner's offer upto 31.07.2014 and accordingly, the petitioner also extended the validity of its bid upto 31.07.2014, however, the second respondent, issued a re-tender notice on 31.07.2014, without any reasons.
4.3. According to the petitioner, in the re-tender notice dated 31.07.2014, there were only minor changes regarding the total estimated cost, the period of completion, etc., but, there was no change in the eligibility criteria. As per the re-tender notice, the tenders should be submitted on or before 28.08.2014 and it was extended upto 09.09.2014. The petitioner further came to know about the opening of the price bids as per the re-tender notice, was fixed on 05.01.2015, which was not informed to the petitioner.
4.4. The main grievance of the petitioner is that the second respondent was not justified in not informing about the opening of the price bids as per the re-tender notice, when the petitioner was declared eligible as per the tender notice dated 06.12.2013 and that too, when the eligibility criteria in both the tenders, was one and the same. Aggrieved thereby, the petitioner has filed W.P(MD)No.371 of 2015 for the above stated relief.
4.5. Meanwhile, the second respondent issued the letter of intent in favour of the third respondent, vide proceedings No.IPRC/CMG/TS/2013-14/ MW-
05, dated 20.02.2015. Further, the petitioner's offer was Rs.13,03,68,379, whereas as per the impugned proceedings, the third respondent made an offer for a sum of Rs.16,33,34,073/- and the difference works out to Rs.3,29,65,704/-. Challenging the same, the petitioner filed W.P(MD)No.5154 of 2015.
5. In the counter affidavit filed by the respondents 1 and 2 in W.P(MD)No.371 of 2012, it is, among other things, stated thus:
5.1. The public tender for the work of 'Site Leveling, Earthwork Excavation & Formation of Ground for Establishing Integrated Engine Test Stand' at IPRC, Mahendragiri, was invited vide NIT No.LMF/CMD/TS/2013-
2014/MW-05, dated 06.12.2013. The petitioner was also one of the participants in the said tender. While finalising the lowest offer for the tender, the Tender Finalization Committee of the Department has noticed that there were anomalies / ambiguities and discrepancies in the tendering process and therefore, the Department cancelled the said tender, consequent to which, all the tender offers were not accepted by the Competent Authority with due return of Earnest Money Deposit to all the participating tenderers.
5.2. Thereafter, the re-tender notice dated 31.07.2014 has been issued with certain modifications. The petitioner has also participated in the fresh tender and it was rejected during the detailed Technical Evaluation process due to non-fulfilment of the conditions stipulated in the tender. According to the respondents 1 and 2, the petitioner is not qualified for the price bid opening which was held on 05.01.2015 and therefore, the Earnest Money Deposit made by the petitioner was returned.
5.3. Moreover, the petitioner has no right to claim over the cancelled/rejected tender as he has been disqualified by the Tender Evaluation Committee. Further, the eligible lowest tenderer has been awarded the work order with the approval of the Competent Authority. Accordingly, they prayed for the dismissal of this writ petition.
6. Mr.S.S.Sundar, learned Counsel for the petitioner (in both writ petitions), made the following submissions:
6.1. The second respondent was not at all justified in issuing the re-
tender notice on 31.07.2014, for the reason that the petitioner was requested to extend the validity of its offer upto 31.07.2014 and it was also accepted by the petitioner, vide communication dated 07.06.2014.
6.2. There were no major changes in the re-tender notice and more particularly, the eligibility criteria was one and the same and thereby, the petitioner stood eligible even as per the re-tender notice also.
6.3. The petitioner was not informed of the opening of the price bids on 05.01.2015 as per the re-tender notice and the second respondent did not assign any reason to disqualify the petitioner for the re-tender.
6.4. The petitioner alleged mala fides on the part of the second respondent in rejecting the price bid of the petitioner so as to enable the third respondent to be the successful bidder and despite the fact that the second respondent sought time to file the counter affidavit in W.P(MD)No.371 of 2015, he issued the letter of intent in favour of the third respondent on 20.02.2015 stating that the tender of the third respondent is accepted for Rs.16,33,34,073/- for the work namely, 'Site Levelling, Earthwork Excavation and Formation of Ground for establishing Integrated Engine Test Stand at IPRC, Mahendragiri' which proved the malice on the part of the second respondent.
6.5. The said act of issuing the letter of intent in favour of the third respondent, is put to challenge in W.P(MD)No.5154 of 2015 alleging mala fides on the part of the authorities concerned.
6.6. When there is no question of disqualification in regard to the eligibility criteria of the petitioner, it is not made clear as to how the second respondent rejected the offer kept open by the petitioner as requested by the second respondent and issued the re-tender notice on 31.07.2014. Hence, the petitioner was put to irreparable loss and prejudice.
6.7. The second respondent ought to have informed the petitioner of his disqualification even prior to the opening of the re-tender and such course of action is not adopted by the authorities concerned before taking such a decision.
6.8. According to the petitioner, the second respondent appointed a sub-committee consisting of two civil engineers to evaluate the tenders and the said committee found the petitioner ineligible, however, the very same committee evaluated on an earlier occasion and found the petitioner eligible and hence, there was inconsistency in the evaluation done by the said sub- committee.
6.9. In sum and substance, the petitioner submitted that the third respondent cannot be permitted to proceed with the work by causing loss to the tune of Rs.3.29 Crores to the Central Government as the petitioner has been found the lowest tenderer in the earlier cancelled tender and therefore, prayed for considering the offer made by the petitioner despite the erroneous recommendations of the sub-committee, which evaluated the tenders and the petitioner is also prepared to undertake the work without even receiving any mobilization advance to commence the work.
6.10. In support of his submissions, the learned Counsel for the petitioner placed reliance on the following decisions:
(i) Kasturi Lal Lakshmi Reddy v. State of J and K reported in (1980) 4 Supreme Court Cases 1. Paragraph 14 reads as under:
"14. Where any governmental action fails to satisfy the test of reasonableness and public interest discussed above and is found to be wanting in the quality of reasonableness or lacking in the element of public interest, it would be liable to be struck down as invalid. It must follow as a necessary corollary from this proposition that the Government cannot act in a manner which would benefit a private party at the cost of the State; such an action would be both unreasonable and contrary to public interest. The Government, therefore, cannot, for example, give a contract or sell or lease out its property for a consideration less than the highest that can be obtained for it, unless of course there are other considerations which render it reasonable and in public interest to do so. Such considerations may be that some Directive Principle is sought to be advanced or implemented or that the contract or the property is given not with a view to earning revenue but for the purpose of carrying out a welfare scheme for the benefit of a particular group or section of people deserving it or that the person who has offered a higher consideration is not otherwise fit to be given the contract or the property. We have referred to these considerations to only illustratively, for there may be an infinite variety of considerations which may have to be taken into account by the Government in formulating its policies and it is on a total evaluation of various considerations which have weighed with the Government in taking a particular action, that the Court would have to decide whether the action of the Government is reasonable and in public interest. But one basic principle which must guide the Court in arriving at its determination on this question is that there is always a presumption that the Governmental action is reasonable and in public interest and it is for the party challenging its validity to show that it is wanting in reasonableness or is not informed with public interest. This burden is a heavy one and it has to be discharged to the satisfaction of the Court by proper and adequate material. The Court cannot lightly assume that the action taken by the Government is unreasonable or without public interest because, as we said above, there are a large number of policy considerations which must necessarily weigh with the Government in taking action and therefore the Court would not strike Down governmental action as invalid on this ground, unless it is clearly satisfied that the action is unreasonable or not in public interest. But where it is so satisfied, it would be the plainest duty of the Court under the Constitution to invalidate the governmental action. This is one of the most important functions of the Court and also one of the most essential for preservation of the rule of law. It is imperative in a democracy governed by the rule of law that governmental action must be kept within the limits of the law if there is any transgression the Court must be ready to condemn it. It is a matter of historical experience that there is a tendency in every government to assume more and more powers and since it is not an uncommon phenomenon in countries that the legislative check is getting diluted, it is left to the Court as the only other reviewing authority under the Constitution to be increasingly vigilant to ensure observance with the rule of law and in this task, the court must not flinch or falter. It may be pointed out that this ground of invalidity, namely, that the governmental action is unreasonable or lacking in the quality of public interest, is different from that of mala- fides though it may, in a given case, furnish evidence of mala-fides."
(ii) Star Enterprises v. C.I.D.C. of Maharashtra Ltd. reported in (1990) 3 Supreme Court Cases 280. Paragraphs 9 and 10 are extracted hereunder:
"9. The question which still remains to be answered is as to whether when the highest offer in response to an invitation is rejected would not the public authority be required to provide reasons for such action? Mr. Dwivedi has not asked us to look for a reasoned decision but has submitted that it is in the interest of the public authority itself, the State and every one in the society at large that reasons for State action are placed on record and are even communicated to the persons from whom the offers came so that the dealings remain above board; the interest of the public authority is adequately protected and a citizen knows where he stands with reference to his offer. What this Court said in State of U.P. v. Raj Narain [(1975) 4 SCC 428 : (1975) 3 SCR 333] may be usefully recalled here:
"In a government of responsibility like ours, where all the agents of the public must be responsible for their conduct, there can be but few secrets. The people of this country have a right to know every public act, everything that is done in a public way, by their public functionaries. They are entitled to know the particulars of every public transaction in all its bearing. The right to know, which is derived from the concept of freedom of speech, though not absolute, is a factor which should make one wary, when secrecy, is claimed for transactions which can, at any rate, have no repercussion on public security. To cover with veil of secrecy, the common routine business, is not in the interest of the public."
10. In recent times, judicial review of administrative action has become expansive and is becoming wider day by day. The traditional limitations have been vanishing and the sphere of judicial scrutiny is being expanded. State activity too is becoming fast pervasive. As the State has descended into the commercial field and giant public sector undertakings have grown up, the stake of the public exchequer is also large justifying larger social audit, judicial control and review by opening of the public gaze; these necessitate recording of reasons for executive actions including cases of rejection of highest offers. That very often involves long stakes and availability of reasons for action on the record assures credibility to the action; disciplines public conduct and improves the culture of accountability. Looking for reasons in support of such action provides an opportunity for an objective review in appropriate cases both by the administrative superior and by the judicial process. The submission of Mr. Dwivedi, therefore, commends itself to our acceptance, namely, that when highest offers of the type in question are rejected reasons sufficient to indicate the stand of the appropriate authority should be made available and ordinarily the same should be communicated to the concerned parties unless there be any specific justification not to do so."
(iii) Food Corporation of India v. Kmdhenu Cattle Feed Industries reported in AIR 1993 SUPREME COURT 1601. Paragraphs 7 and 8 would run thus:
"7. In contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to Article 14 of the Constitution of which non-arbitrariness is a significant facet. There is no unfettered discretion in public law: A public authority possesses powers only to use them for public good. This impose the duty to act fairly and to adopt a procedure which is `fairplay in action'. Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and its instrumentalities, with this element forming a necessary component of the decision making process in all State actions. To satisfy this requirement of non- arbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely lo be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona fides of the decision in a given case. The decision so made would be exposed to challenge on the ground of arbitrariness. Rule of law does not completely eliminate discretion in the exercise of power, as it is unrealistic, but providers for control of its exercise by judicial review.
8. The mere reasonable or legitimate expectation of a citizen, in such a situation, may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirement of due consideration of a Legitimate expectation forms part of the principle of non- arbitrariness, a necessary concomitant of the rule of law. Every legitimate expectation is a relevant factor requiring due consideration a fair decision making process. Whether the expectation of the claimant is reasonable or legitimate in the context is a question of fact in each case. Whenever the question arises, it is to be determined not according to the claimant's perception but in larger public interest wherein other more important considerations may outweigh what would otherwise have been the legitimate expectation of the claimant. A bona fide decision of the public authority reached in this manner would satisfy the requirement of non- arbitrariness and withstand judicial scrutiny. The doctrine of legitimate expectation gets assimilated in the rule of law and operates in our legal system in this manner and to this extent."
(iv) Dutta Associates Pvt. Ltd. Indo Merchantiles Pvt. Ltd. reported in (1997) 1 Supreme Court Cases 53. The relevant paragraphs are extracted as under:
"3. ... The Division Bench found that the Commissioner and the Government have acted unfairly in calling upon the appellant, Dutta Associates, alone to submit a counter-offer while not giving a similar opportunity to other tenderers. The High Court accordingly directed that fresh tenders be called for awarding the contract. It has also made certain directions for the period until fresh tenders are called for and finalised. ***** ***** ***** *****
5. It is thus clear that the entire procedure followed by the Commissioner and the Government of Assam in accepting the tender of Dutta Associates [appellant herein] is unfair and opposed to the norms which the Government should follow in such matters, viz., openness, transparency and fair dealing. The Grounds No.1 and 2, which we have indicated hereinabove, are more fundamental than the third ground upon which the High Court has allowed the writ appeal.
***** ***** ***** *****
7. In the circumstances, we affirm the judgment of the Division Bench in writ appeal on the grounds stated above and direct that fresh tenders may be floated in the light of the observations made in this judgment. We reiterate that whatever procedure the Government proposes to follow in accepting the tender must be clearly stated in the tender notice, The consideration of the tenders received and the procedure to be followed in the matter of acceptance of a tender should be transparent, fair and open. While a bonafide error of judgment would not certainly matter, any abuse of power for extraneous reasons, it is obvious, would expose the authorities concerned, whether it is the Minister for Excise or the Commissioner of Excise, to appropriate penalties at the hand of the courts, following the law laid down by this Court in Shiv Sagar Tiwari v. Union of India [(1996) 6 SCC 558 and (1996) 6 SCC 599] (In re, Capt. Satish Sharma and Sheila Kaul)".
(v) Netai Bag v. State of W.B. reported in (2000) 8 Supreme Court Cases
262. Paragraph 17 is extracted thus:
"17. It has been consistently held by this Court that in a democracy governed by the rule of law, the Executive Government or any of its officers cannot be allowed to possess arbitrary powers over the interests of the individual. Every action of the Executive Government must be in conformity with reason and should be free from arbitrariness. The Government cannot be equated with an individual in the matter of selection of the recepient for its largesse. Dealing with the limits on the exercise of Executive authority in relation to rule of administrative justice, Mr.Justice Frankfurther in Vitarell v. Seaton [359 US 535 : 3 L Ed 2d 1012 (1959)] said:
"An executive agency must be rigorously held to the standards by which it professes its action to be judged.... Accordingly, if dismissal from employment is based on a defined procedure, even though generous beyond the requirements that bind such agency, that procedure must be scrupulously observed. ...This judicially evolved rule of administrative law is now firmly established and, if I may add, rightly so. He that takes the procedural sword shall perish with the sword.""
(vi) Maa Binda Express Carrier v. Northeast Frontier Railway reported in (2013) 8 MLJ 540 (SC). The relevant paragraphs are reproduced hereunder:
"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 who 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 Another etc. AIR 2009 SC 2894 : (2009) 6 SCC 171 and Air India Ltd. v. Cochin International Airport Ltd. AIR 2000 SC 801 : (2000) 2 SCC 617 : (2000) 1 SCR 505 : LNIND 2000 SC 190 : (2000) 2 MLJ 72).
10. The scope of judicial review in contractual matters was further examined by this Court in Tata Cellular v. Union of India (1994) 6 SCC 651 :
LNIND 1994 SC 665, Raunaq International Ltd. v. I.V.R. Construction Ltd. and others (supra) and in Jagdish Mandal v. State of Orissa and others (2007) 14 SCC 517 : LNIND 2006 SC 1126 besides several other decisions to which we need not refer. In Michigan Rubber (India) Ltd. v. State of Karnataka and others AIR 2012 SC 2915 : (2012) 8 SCC 216 : LNIND 2012 SC 479, the legal position on the subject was summed up after a comprehensive review and principles of law applicable to the process for judicial review identified in the following words:
?19. From the above decisions, the following principles emerge:
(a) 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.
These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities;
(b) fixation of a value of the tender is entirely within the purview of the executive and courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by Courts is very limited;
(c) In the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities unless the action of tendering authority is found to be malicious and a misuse of its statutory powers, interference by Courts is not warranted;
(d) Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work; and
(e) If the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interference by Court is very restrictive since no person can claim fundamental right to carry on business with the Government.
20. Therefore, a Court before interfering in tender or contractual matters, in exercise of power of judicial review, should pose to itself the following questions:
(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; or whether the process adopted or 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 the public interest is affected. If the answers to the above questions are in negative, then there should be no interference under Article 226.? (emphasis supplied)
11. As pointed out in the earlier part of this order the decision to cancel the tender process was in no way discriminatory or mala fide. On the contrary, if a contract had been awarded despite the deficiencies in the tender process serious questions touching the legality and propriety affecting the validity of the tender process would have arisen. In as much as the competent authority decided to cancel the tender process, it did not violate any fundamental right of the appellant nor could the action of the respondent be termed unreasonable so as to warrant any interference from this Court. The Division Bench of the High Court was, in that view, perfectly justified in setting aside the order passed by the Single Judge and dismissing the writ petition."
This Court is in entire agreement with the propositions laid down in the above said decisions.
7. Mr.E.T.Rajendran, learned Counsel for the respondents 1 and 2 (in both writ petitions), made the following submissions:
7.1. As per the decision of the Technical Evaluation Committee, dated 13.10.2014, the sub-committee were formed to inspect the works of the tenderers at various places to verify their eligibility criteria and to inspect the sites and after inspection, they submitted the reports for compliance of the conditions.
7.2. Since the site inspection procedures were not strictly followed by the authorities concerned for the earlier tender, the re-tender notice dated 31.07.2014 was issued in order to ensure the compliance of the conditions stipulated and the site inspection procedures as well.
7.3. Insofar as the re-tender notice dated 31.07.2014, all requirements were called for afresh and scrutinized thoroughly by the Technical Evaluation Committee/Tender Finalization Committee with necessary pre-audit.
7.4. The earlier tender process has nothing to do with the re-tender process and as per re-tender notice dated 31.07.2014, all documents were subjected for thorough scrutiny afresh without having any point of consideration for the earlier one.
7.5. The capacity and capability of the tenderer to complete the work will be assessed by the documents and site inspections and verifications by Technical Evaluation Committee with respect to the stipulated conditions.
7.6. The claim of the petitioner to open his price bid alone, is unsustainable as the other unqualified tenderers like the petitioner, may make such a frivolous claim.
7.7. Having participated in the re-tender process, the petitioner is not justified in seeking for consideration of the aspects in the earlier cancelled tender and further, the petitioner was disqualified by the Technical Evaluation Committee for opening the price bid. Moreover, the claim of the petitioner that he was the lowest tenderer in the cancelled tender, cannot be countenanced for the reason that one M/s.Coastal Consolidated Structures Pvt. Ltd., Vijayawada, was the lowest tenderer and he has also filed the second additional typed set of papers to that effect. Accordingly, he prayed for the dismissal of both the writ petitions.
8. Mrs.Nalini Chidambaram, learned Senior Counsel appearing for Mr.S.Karthick, learned Counsel for the third respondent (in both writ petitions), made the following submissions:
8.1. The earlier tender was cancelled due to various discrepancies and the Committee while evaluating the tenders, did not conduct any site inspections to verify the veracity of the documents submitted by the tenderers and there was no sub-committee at all.
8.2. In the re-tender process alone, the sub-committee was formed to make site inspections and it found that the petitioner did not comply with the Notice Inviting Tender (in short 'NIT') conditions and hence, the contention put forth on the side of the petitioner in this regard, fails.
8.3. Whereas the sub-committee found that the third respondent and two others have complied with the NIT conditions.
8.4. The scope of challenge put to tender cases is very limited and the decision making process can be questioned and not the decision itself and in support of her contention, she relied on the decision of the Honourable Supreme Court in Maa Binda Express Carrier v. North-East Frontier Railway reported in (2014) 3 Supreme Court Cases 760.
8.5. Since the Techno Commercial bid was rejected by the Tender Finalization Committee based on the recommendation of the sub-committee of Technical Evaluation Committee even during December, 2014 and the price bids of three tenderers were opened on 05.01.2015, the writ petition in W.P(MD)No.371 of 2015, would become infructuous.
8.6. The petitioner has locus standi to impugn the letter of intent8 given to the third respondent, without challenging the rejection of the technical bid and thus, the rejection has become final.
8.7. Though the letter of intent was given to the third respondent on 20.02.2015, the petitioner did not take any steps to challenge the same till 07.04.2015.
8.8. The contention of the petitioner that the work for which the tender was called for, did not require any expertise, is not tenable as it requires highly technical skills and it is not merely excavation of earth work and the bidders have to satisfy all the NIT conditions on each and every aspect. Hence, she prayed for the dismissal of both the writ petitions.
9. This Court has carefully considered the rival submissions and perused the materials available on record and the decisions relied on by either side, including the original files produced by the respondents 1 and
2.
10. The indisputable and admitted facts, could be narrated as under:
10.1. The ISRO Propulsion Complex located at Mahendragiri, Tirunelveli District, is functioning from 1982 under the Department of Space, directly controlled by the Office of the Hon'ble Prime Minister of India.
10.2. The main aim and object of the ISRO is testing and development of Engines suitable for launching of Rockets and Satellites and for deep space mission, namely, Chandrayan/Mangalyan, etc. 10.3. The second respondent issued the tender notice dated 06.12.2013 and it was subsequently cancelled due to administrative reasons.
10.4. The cancellation of the earlier tender notice dated 06.12.2013, has been informed to the petitioner on 25.06.2014 and accordingly, the Earnest Money Deposit was also returned to the petitioner on 08.07.2014.
10.5. On 31.07.2014, the re-tender notice has come into existence.
Thereafter, on 05.01.2015, the Tender Finalization Committee has opened the price bid and approved to release the Earnest Money Deposit to the unaccepted tenderers and accordingly, the same has been returned to the petitioner through registered post, on 08.01.2015.
10.6. On 20.02.2015, the respondents has sent intimation to the successful bidder, namely, the third respondent.
10.7. Challenging the same, the petitioner is before this Court.
11. A careful analysis of the original documents produced before this Court by the learned Counsel for the respondents 1 and 2, would reveal the following:
11.1. Technical Evaluation Committee has been constituted vide Officer Order No.87, dated 09.09.2014, by the Director, IPRC, Mahendragiri, to scrutinize the credential of the tenderers with respect to the eligibility criteria stipulated in the Notice Inviting Tender and the eligibility criteria would read as under:
Eligibility Criteria as per NIT stipulations:
1.Valid Registration Certificate (wherever applicable.)
2.Experience certificate (satisfactorily completed works) of any one of the following options during the last 7 years ending 30-06-2014.
Similar nature of work shall mean Earthwork excavation, blasting of rocks, site levelling for establishing a new facility. The Completion certificates for works issued by private parties shall be supported by TDS (Tax Deducted at Source) certificates.
i. One similar work costing not less than 80% of PAC (Rs.2074.94 Lakhs) ii. Two similar works each costing not less than 50% of PAC. (Rs.1296.84 Lakhs).
iii. Three similar works each costing not less than 40% of PAC. (Rs.1037.47 Lakhs).
3. Certificate to prove that Annual financial turn over during last three years ending 31.03.2013 is not be less than 30% of PAC. (Rs.778.10 Lakhs).
4. Current solvency certificate from scheduled / Nationalized bank for an amount not less than 40% of PAC. (Rs.1037.47 Lakhs).
5.The documentary proof that contractor has not incurred any financial loss in more than 2 years during last 5 year ending 31.03.2013.
11.2. Meanwhile, Sub-Committees were constituted in order to inspect the works carried out by the tenderers to assess the similar nature and magnitude of work and further evaluation of tenderers. After fulfilling pre- requisite conditions of Notice Inviting Tender, the Sub-Committees inspected the works and submitted their reports, based on which, the Tender Evaluation Committee evaluated the competency of the participated tenderers regarding the credentials of the tenderers / tender documents. It is relevant to reproduce hereunder the summary of the report of Tender Evaluation Committee regarding the petitioner and the third respondent:
M/s.AMR India Limited, Chennai. [the third respondent herein]:
The tenderer has completed the work "Blast hole drilling, controlled blasting with shock tube initiation, excavation, loading transportation and dumping etc. Pit-II of Koyagudem, Khammam" for M/s.Singareni colleries company Ltd., on 10.03.2008 with a completion cost of Rs.341.48 Crores.
The tenderer have carried out similar nature and magnitude of work as per NIT stipulation. (i.e) Earth work excavation, blasting of rocks, site levelling for establishing a facilility.
The firm has bidding capacity of Rs.1468.99 Crores, which is more than the required bidding capacity of Rs.25.93 Crores.
On considering the above and further technical evaluation, TEC noted the following:
Technical Competency and Financial capability of the tenderer is found to be very good.
Plant and machinery proposed to be deployed by the tenderer is found to be good.
Quality and safety systems found to be very good.
Schedule control and work experience also found to be very good. Based on the above findings, the tenderer M/s.AMR India Limited, Chennai have obtained the qualifying marks in the individual traits and also weighted average of all traits. Hence TEC recommends to qualify the tenderer for execution of this work.
M/s.M.R.Pro Tech. Pvt. Limited, Bangalore. [the petitioner herein]:
It is noted that, the tenderer has submitted the following two completed works:
1.Proposed construction of composite housing scheme at Ilavala package III in Mysore District for M/s.Karnataka Housing Board, Mysore, on 27.06.2014 with a completion cost of Rs.34.63 Crores. (Work done certificate issued on 17.02.2014 which is much earlier than completion date.). Based on the further correspondence from the client, it is confirmed that the work is an ongoing one. Hence, the same cannot be considered as completed work. (Copy of certificate and reply from client are enclosed.)
2.Proposed development of site & services including construction of composite housing scheme at Suryanaga, Phase II, Block IV, Anekal Taluk, Bangalore, for M/s.Karnataka Housing Board, Bangalore, on 10.06.2012 with a completion cost of Rs.2533.25 Lakhs. The work was awarded on Lumpsum fixed prices by M/s.Karnataka Housing Board, Bangalore. Scope of work caters site levelling, road, laying of UG cables, drains, culverts, borewells, external water supply, GLR, OHT, UGD, external electrification, net work for treated water, rain water harvesting, pump room and pumps and construction of 50 nos of houses (LIG and MIG).
Though the tenderer have carried out work for Rs.2533.25 Lakhs, out of which only for the tune of Rs.907.00 Lakhs executed towards similar nature of earth excavation, blasting of rocks, site levelling which is assessed based on the BOQ/cost of abstract obtained from the client at site i.e. Assistant Executive Engineer of M/s.KHB, Bangalore, and remaining towards mainly construction of houses for Rs.479.92 lakhs, external electrification of about Rs.525.22 lakhs, GLR of about Rs.75.27 lakhs, OHT of about Rs.60.87 lakhs and UGD of about 176.35 lakhs (Copy of cost of abstract is enclosed.). Hence, the work is not meeting the magnitude condition for similar nature and magnitude of works.
The firm has bidding capacity of Rs.47.27 Crores, against the required bidding capacity of Rs.25.93 Crores.
From the above, it is very clear that the tenderer has failed to prove the similar nature and magnitude of work as per the NIT though they have the adequate bidding capacity. Hence, the offer of tenderer M/s. M.R.Pro Tech. Pvt. Limited, Bangalore is not considered for further evaluation and is liable for rejection.
11.3. It is to be noted that insofar as the petitioner is concerned, the Sub-Committee constituted on 24.10.2014, felt that the completed work at Bangalore has a magnitude of Rs.907 lakhs towards similar nature of earth work, blasting of rocks and site levelling, which is not meeting the eligibility criteria of NIT of one similar work costing Rs.2074.95 lakhs and therefore, it recommended that the offer of firm M/s.M.R. Pro Tech. Pvt. Limited, Bangalore is liable for rejection.
11.4. Whereas the Sub Committee constituted vide Office Order No.7, IPRC/TEC/dated 05.11.2014, made the following recommendations:
"Based on the site inspection and the subsequent evaluation, the sub- committee found that all the above tenderers namely, Shri.P.Venkat Reddy, Hyderabad, M/s.AMR India Limited, Chennai, M/s.Suryodaya Infra Projects (I) Pvt. Ltd., Hyderabad, and M/s.PJB Engineers Pvt. Ltd., Bangalore, are competent to carry out the proposed work "Site leveling, earthwork excavation & formation of ground for establishing integrated Engine test stand at IPRC, Mahendragiri."
12. This Court, on a careful consideration of the materials in the form of original documents placed before this Court by the authorities concerned, could visualise the factual position as to the circumstances leading to the filing of the present writ petitions.
13. It is the case of the petitioner that in the earlier tender, he was found eligible and the petitioner was requested to keep open their offer upto 31.07.2014, on which date, the re-tender notice came into existence. Again, the petitioner had also participated in the re-tender, with the fond hope that he would be the successful bidder to carry out the work, but, it is otherwise.
14. The main challenge put forth by the petitioner as to the eligibility criteria aspect has been strongly opposed by the respondents 1 and 2, stating that the third respondent was given the letter of intent as they have met out all eligibility criteria and there can be no room for questioning such process.
15. No doubt, while considering the tenders submitted by the participants, the eligibility criteria plays a vital role, in the absence of which, the entire tender process would be vitiated and the very purpose would get defeated. In the case on hand, the petitioner participated in the earlier tender process and after analysing the materials, the Department sought to cancel the said tender, as there were ambiguities / anomalies in the tender and thereby, the tenderers were returned with their Earnest Money Deposit and such tender process came to end by itself.
16. Now, the claim of the petitioner is that since he was found eligible in the earlier tender process, as to how, he could be disqualified in the re-tender process and that too, when there are no major modifications in the re-tender notice regarding the eligibility criteria.
17. This Court is not in a position to understand as to how the petitioner can raise such a plea, for the reason that once the earlier tender process is over, how the materials available thereto, can be placed reliance during the re-tender process, which is, obviously, an independent one that can be processed afresh.
18. For the sake of argument, it is accepted that the petitioner was found eligible during the earlier tender process, on that ground alone, it cannot be pleaded that he must be found eligible in the re-tender process as well.
19. The original documents produced before this Court would throw some light on the rival contentions and this Court is of the view that the alleged discrepancies found in the earlier tender process were rectified and thereafter, the re-tender notice has been issued. Admittedly, the petitioner has also participated in the re-tender along with other participants, without challenging the cancellation of the earlier tender and hence, having submitted himself in the re-tender process, the petitioner cannot plead otherwise.
20. The contention of the petitioner that the tenderers need not possess any expertise for participating in the re-tender process, is liable to be rejected, on the sole ground that it is not for the petitioner to assess those eligibility criteria as the Department alone can frame those guidelines for carrying out their works by calling for the tenders.
21. In the considered opinion of this Court, both the writ petitions are liable to be dismissed for the following reasons:
(i) The petitioner having accepted the cancellation of the earlier tender by the authorities, cannot claim any right over the re-tender process, since the re-tender notice came to being in order to rectify some defects in the earlier one.
(ii) Albeit, the petitioner claimed that he was the lowest bidder in the earlier tender, on scrutiny of the materials available on record, it is seen that the petitioner was not the lowest bidder as claimed by him.
(iii) Once the earlier tender process has been come to an end and re-
tender notice has been issued by the authorities after rectification of the defects therein, the participants in the earlier tender could not achieve by citing the same in the re-tender process as well.
(iv) According to the respondents 1 and 2, the re-tender notice has been issued after complying with the mandatory procedures and therefore, the claim of the petitioner is not tenable, for the reason that the petitioner had not disputed the cancellation of the earlier tender and moreover, the petitioner accepted the return of Earnest Money Deposit relating to the earlier tender.
(v) The Tender Finalization Committee, based on the report of the Sub- Committee which had conducted the spot inspection on the work places of the participants, finalised the tenders and admittedly, the said procedures had not been complied with by the authorities in the earlier tender process, which paved the way for cancellation of the same.
(vi) The petitioner is estopped from challenging the letter of intent given to the third respondent, as the respondents would inform the opening of the price bids only to the eligible participants and not the others.
22. In the result, W.P(MD)No.371 of 2015 and W.P(MD)No.5154 of 2015, are dismissed. Consequently, the connected miscellaneous petitions are dismissed. No costs.
To
1.The Director, ISRO Propulsion Complex, Mahendragiri - 627 133.
Tirunelveli District.
2.Group Head, Construction and Maintenance Group, ISRO Propulsion Complex, Mahendragiri, Tirunelveli District - 627 133.