Orissa High Court
M/S. Haraparbati Construction vs State Of Orissa And Others. ... Opp. ... on 23 June, 2010
Author: V. Gopala Gowda
Bench: V. Gopala Gowda
W.P.(C) No. 361 of 2010
In the matter of an application under Articles 226 and 227 of the
Constitution of India.
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M/s. Haraparbati Construction . ... Petitioner
Versus
State of Orissa and others. ... Opp. Parties
For Petitioner ... M/s. U.C.Mohanty,
J.K.Biswal and
T.Sahoo.
For Opp. Parties ... Government Advocate.
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P R E S E N T:
THE HONOURABLE CHIEF JUSTICE MR.V. GOPALA GOWDA
AND
THE HONOURABLE MR. JUSTICE A.S.NAIDU
Date of Judgment - 23.06.2010
V.GOPALA GOWDA,C.J.. The petitioner, one of the tenderers, has filed this
writ petition seeking for issuance of a writ of mandamus directing the
opposite parties to finalize the tender and execute necessary deed of
agreement for issuance of work order in its favour in respect of
Package Nos. 2 and 4 (Kansabansa RD 31.00 KM to 21.00 KM and
Kansabansa 10.00 KM to 0.00 KM) respectively and for a declaration
that in the event the opposite parties have executed agreement with
any disqualified bidder, the same may be deemed to be illegal,
inoperative and untenable with a further prayer to quash the same in
respect of the aforesaid package nos. 2 and 4 urging various facts
and legal contentions.
2. After the filing of this writ petition, vide order dated
18.1.2010, the petitioner has impleaded opposite party nos.6 and 7 -2- in whose favour the contract has been awarded in respect of the aforesaid items of civil work.
3. Facts in brief are stated as under:
Opposite party no.4 by e procurement notice No.5/08-09 fixing 13.1.2009 11 hours to 27.1.2009 15 hours invited tenders in respect of six number of packages. As per the Tender Call Notice, the petitioner submitted his tenders. In the technical bid both the petitioner and opposite party nos. 6 and 7 were successful in respect of the six packages. On 22.2.2009 the final bids of the qualified bidders were opened. It was found that as per the stipulation made in the e procurement notice, Clause 30 of DTCN, price bid of the qualified bidders should contain additional performance security in respect of those bidders whose offer is lesser than the amount mentioned in the tender call notice failing which the bid is liable for rejection. The aforesaid relevant clause will be extracted in the reasoning portion.
4. The case of the petitioner is that though opposite party nos. 6 and 7 qualified in the technical bid in respect of package nos. 2 and 4, no additional performance security was furnished along with the bid. Therefore, their price bid is deemed to have been rejected though their price was lesser than the price quoted by the petitioner. On 28.2.2009 in view of Clause 30 of DTCN, opposite party no.4 having found that opposite party nos. 6 and 7 did not deposit the additional performance security, their price bids are deemed to have been rejected. Therefore, the petitioner was invited for negotiation and in fact negotiations were made and the petitioner reduced his offer in respect of package no.2 from 14.86% excess to 9.78% excess and in respect of package No.4 from 14.69% excess to 9.80% excess. Thereafter no communication was made in any manner to the petitioner. It was, therefore, revealed that the price bid of opposite party nos. 6 and 7 has been rejected and the petitioner became L1 though its offer is higher than the contract price. In this -3- view of the matter, it was the duty of opposite party no.4 to make further negotiation with it regarding reduction of price or to go for fresh tender. It is further stated that under no stretch of imagination, the price bid of opposite party nos. 6 and 7 were to be considered when their price bid was deemed to have been rejected for non- compliance of Clause 30 of the DTCN which is an admitted fact.
5. Opposite party no.4 vide his letter dated 21.5.2009 intimated the Chief Engineer, Drainage, Gandarpur that though in case of on line tender additional performance security is to be deposited by the successful bidder when the bid amount is seriously unbalanced, i.e., less than the estimated cost by more than 10%, out of the two numbers of bidders who participated, the 1 st lowest bidder has not furnished the required additional performance security along with the bid and the second lowest bidder has also not furnished the additional performance security since no such performance security was required and sought instruction for taking further necessary action by opposite party no.4 which fact is admitted by opposite party no.4 in his affidavit dated 9.4.2010. The Chief Engineer vide his letter dated 22.6.2009 issued instruction to opposite party no.4 to proceed with the matter by following the codal provisions and circulars issued by the Government from time to time. Instead of proceeding with the matter as per the instructions of the Chief Engineer, opposite party no.4 sat over the matter, neither took any decision nor made further negotiation even though he himself has issued work order in respect of other packages 3 and 6 in favour of Messrs Ashok Construction as revealed from Annexure-G/4 to the counter affidavit filed by opposite party no.4 on 15.3.2010. For the reasons best known to opposite party no.4, again vide letter dated 12.10.2009 under Annexure-L/4 to the affidavit filed on 9.4.2010, he has further sought instruction from opposite party no.3 though he had given his instructions vide letter dated 22.6.2009 to opposite party no.4 to proceed in accordance with the OPWD Code. It is -4- contended by the learned counsel for the petitioner that as per letter dated 21.5.2009 addressed to opposite party no.3 for non-deposit of additional performance security as per the conditions of the DTCN by opposite party nos. 6 and 7 their bid was liable to be rejected but not rejecting the bids again writing letter dated 12.10.2009 stating that if the instruction is followed, the conditions of the bid document which has been floated will be violated which may lead to legal complicacy, if the tender of the first lowest is not considered due to non- submission of additional performance security, the bidder who fulfilled the criteria should come to the rate of the 1st lowest bidder. If that is considered as per codal rule permission of the higher authority is required. It is further stated that though opposite party no.4 received the letter dated 22.6.2009 of opposite party no.3 to his earlier correspondence, he sat over the matter without taking action which action is purely with an ulterior motive and he has not proceeded further with the tender in fair manner. Thereafter opposite party no.4 issued letter under Annexure-L/4 dated 12.10.2009 and work order in favour of opposite party nos. 6 and 7 by Annexures-G/ 4 and H/4 to the affidavit filed on behalf of opposite party nos. 1 to 4 which are purely motivated one and is a product of mala fide, which action of their further proved that opposite party no.4 is in hand in glove with the aforesaid awardees of the contract. Issuing work order on 6.1.2010 in favour of the successful bidders is purely a product of favouritism and the entire tender process is purely unfair, unjust and unreasonable and violative of Articles 14 and 19(1)(g) of the Constitution of India and flouting well established principles of law enunciated by the apex Court in the cases reported in AIR 1990 SC 1031 Mahaveer Auto Stores & others v. Indian Oil Corporation and others, (2004) SCC 553 (ABL International Ltd. V. Export Credit Guaranteed Ltd.) and AIR 2007 SC 119 (Nobel Resources Ltd. V. State of Orissa & others) -5-
6. It is further stated that the stand taken by the opposite parties 1 to 4 in their counter affidavit that the offer of opposite party nos. 6 and 7 is lower and they are L1 in respect of Package Nos. 2 and 4 is purely an afterthought and motivated one as the opposite parties had invited the present petitioner on 28.2.2009 for negotiation due to deemed rejection of the bid offered by opposite party nos. 6 and 7 for non-submission of additional performance security along with the bid. Thererefore, when their bid was rejected and the present petitioner was invited for negotiation, the present petitioner being L1, he should have been declared as the successful bidder as he has revised his bid offer for execution of the work or in the alternative to go for fresh tender instead of again writing letter to opposite party no.3 on 12.10.2009. Therefore, the contract awarded is liable to be quashed. He has further placed reliance upon the decision of the Supreme Court in the case reported in AIR 2001 SC 682 (West Bengal Electricity Board v. Patel Engineering Company Ltd.) in support of the proposition of law that merely because the bid is lowest, the requirement of the Rules and the conditions cannot be ignored. Further the principle of awarding contract to the lowest tender applies when all other things are equal. In the case at hand, opposite party nos. 6 and 7 did not submit any additional performance security. Therefore, they did not have any legal right to be declared as the lowest tenderer and the petitioner should have been declared as the successful bidder having a valid legal right accrued in his favour.
7. It is urged that in view of the decisions of the Supreme Court referred to supra, the action of the opposite party in awarding the contract in favour of opposite party nos. 6 and 7 and issuing the work order on 6.1.2010 after lapse of one year is against public interest in delaying the execution of the work on account of deliberate inaction on the part of opposite party no.4. Therefore, responsibility should be fixed on him having regard to the fact that -6- on earlier occasion this Court vide order dated 23.3.2009 passed in W.P.(C) No.12288 of 2008 in the case of M/s. Haraparbati Construction v. State of Orissa and another deprecated the conduct of opposite party no.4. It is further stated that the affidavit filed by opposite party no.4 before this Court on 11.5.2010 is an attempt to escape from the illegalities committed by him and perpetuate the same. It is further stated that this Court vide interim order dated 18.1.2010 stated that the action of the opposite party no.4 in issuing the work order in favour of opposite party nos. 6 and 7 will be subject to the result of the writ petition.
8. Counter statement has been filed on behalf of the opposite parties on 15.3.2010 justifying the award of the contract and producing the documents in justification of the award of the contract in favour of opposite party nos. 6 and 7. The comparative offers made by the petitioner and opposite party nos. 6 and 7 in respect of package nos. 2 and 4 are mentioned in the counter statement which reads thus:
Package no. Bid amount of Negotiated rate Bid amount of 1st M/s.Haraparbati Of M/s.Haraparb Lowest bidder Construction ati Construction No.2 Renovation ofRs.1,25,96,764/- Rs.1,20,39,528/- Rs.98,35,728.50 Of Kansabansa (14.86% excess) (9.78% excess) (10.31% less) Drainage channel From RD 31.00 KM to 21.00Km Village Bhaskar Pur to Raikula in Doab No.XI Package.
No.4 Renovation Rs.1,73,65,238.50 Rs.1,66,28,599/- Rs.1,31,48,141.00
Of Kansabansa
(14.69 excess) (9.83% excess) (13.16% less)
Drainage channel
From RD 10.00
Km to 00 Km.
Village Saradanga
To Dungura in
Doab No.XI.
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From the aforesaid offer, as given by the petitioner and opposite party nos. 6 and 7, it appears that opposite party nos.6 and 7's offer is respectively 10.31% and 13.16% less than the estimated cost and the negotiated rate of the petitioner in respect of both the packages is respectively 9.78% and 9.83% excess than the estimated cost. Therefore, the petitioner's offer is higher than the offer of opposite party nos. 6 and 7. Since the monetary difference between L1 and the petitioner after opening the bid comes to Rs.27.61 lakhs in package No.2 and Rs.42.17 lakhs in respect of package No.4, there would have been huge loss of government money of about Rs.69.78 lakhs if the work would have been awarded to the petitioner rejecting the tenders of the 1st lowest bidders. In so far as non-submission of additional performance security is concerned, it is stated by placing reliance on Annexure-F/4, regarding the amendment to para 3.5.5 of the OPWD Code Volume I stating that additional performance security shall be deposited by the successful bidder when the bid amount is seriously unbalanced, i.e., less than the estimated cost by more than 10%. In such an event the successful bidder will deposit the additional performance security to the extent of the differential cost of the bid amount and 90% of the estimated cost in shape of post office Savings Bank Account/National Savings Certificate etc.Non-deposit of the same at the time of submitting the tender is not the requirement in view of the amendment to para 3.5.5. Therefore, the contention urged on behalf of the petitioner is not tenable in law. No doubt opposite party no.3 vide his letters dated 21.5.2009 and 12.10.2009 sought clarification in this regard though he is the tender inviting and accepting authority having regard to the nature of work to be awarded. It is further stated by placing reliance on Annexure-J/4, the letter dated 21.5.2009 that the second lowest bidder had also not furnished the additional performance security since no additional performance security is required. In the subsequent letter dated 12.10.2009 addressed by opposite party -8- no.4 to opposite party no.3 vide Annexure-L/4 it is mentioned in the penultimate paragraph after adverting to the letter dated 22.6.2009 written by opposite party no.3 to opposite party no.4 to take necessary action as per the codal provision and circulars issued by the Government that if the said instruction is followed, the conditions of the bid document which has been floated will be violated. It would lead to legal complicacy in future. Further it is observed that between the first and second lowest bidder, there was huge financial difference. If the tender of the first lowest tenderer is not considered due to non-submission of additional performance security, the bidders who fulfilled the above criteria would come to the rate of 1st lowest bidder. If that is considered, as per codal rule permission of next higher authority is required. All the first lowest bidders have agreed to submit the additional performance security at the time of drawal of agreement by written statement if their cases are considered. Placing the said reasons, the allegations made by the petitioner that waiting for a long time from the date of first letter received from opposite party no.3 till the next letter dated 12.10.2009 is mala fide intention to favour opposite party nos. 6 and 7 are also denied. Further the allegation of favouritism, arbitrariness, unreasonableness on the part of opposite party no.4 in not accepting the bid of the petitioner and accepting the bid of opposite party nos.6 and 7 after long lapse of time from the date the financial bids were opened when it was pointed out that they had not deposited additional performance security in respect of package nos. 2 and 4 has been denied. Due to the inaction on the part of opposite party no.4, damage has been caused to public exchequer as the tender process has been deliberately delayed to favour the opposite party nos. 6 and 7 and, therefore, the action is tainted with mala fide and is liable to be quashed. Further as regards the allegation regarding delay in finalizing the tender process, the opposite parties have sought to explain the same in paragraph-4 of the counter affidavit -9- dated 9.4.2009 stating that the general elections were notified on 2.3.2009. By that time only two items could be decided and there was introduction of the model code of conduct for which processing of rest four numbers of packages were kept pending. The office staff were kept engaged in preparation of estimates for about twenty numbers of works of urgent nature under Flood Management Programme to be completed before the unset of monsoon. After the elections were over on 18.5.2009 some verbal objections were received regarding the balance four number of packages and in respect of bids received it was found that APS had not been deposited by the bidder for which it was difficult to take decision at the level of opposite party no.4. So as per the codal rules the matter was referred to the next higher authority, the Chief Engineer, Drainage vide letter dated 21.5.2009.The Chief Engineer, Drainage vide his letter dated 22.6.2009 instructed the opposite party no.4 to take necessary action as per Codal Rules/Circulars issued by the Government from time to time. As there was no specific instruction, again the matter was referred to the Chief Engineer vide letter dated 12.10.2010 and the Chief Engineer in his letter dated 5.12.2010 instructed that opposite party no.4 is competent to take decision in the matter at his end. So considering the most suitable offers and basing on the Codal Rules the tenders were finalized by 24.12.2009 selecting the first lowest bidders as explained in the counter affidavit.
Therefore, the allegation regarding delay caused by opposite party no.4 is not tenable. Hence, he requested to reject the writ petitions.
9. This Court after hearing the parties on the basis of the counter statement filed by opposite party no.4 on 15.3.2010 being not satisfied with the cause shown for delay in finalization of the contract, directed opposite party no.4 to file a detailed affidavit by 13.4.2010. Pursuant to the same, an affidavit is filed by opposite party no.4 explaining the delay in not accepting the tender and finalizing the contract for nearly a period of one year. After perusing
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the said affidavit this Court was not satisfied with the same and vide its order dated 21.4.2010 was intended to make certain observation against opposite party no.4 regarding the delay in not executing the contract in favour of the successful bidder after negotiations with the bidders, but before making any observation this Court wanted to afford an opportunity to the concerned officer calling upon him to have his say in the matter. Pursuant to the same, opposite party no.4 appeared in person on 10.5.2010 and this Court directed him to file an affidavit by 12.5.2010. He has filed the affidavit explaining as to why the remarks and observations shall not be made in this case against him for not proceeding with the tender process and awarding the contract keeping in view the earlier order passed by this Court in the earlier writ petition referred to supra by the learned counsel for the petitioner.
10. With reference to the aforesaid rival legal contentions, the question that would arise for consideration is whether awarding of the contract in favour of opposite party nos. 6 and 7 though additional performance security has not been deposited by them along with the bid amount is legal and valid (b) whether the award of contract in favour of opposite party nos. 6 and 7 is liable to be quashed, (c) whether any observation is required to be made against opposite party no.4 for having not processed the tender and awarded the contract within a reasonable period in respect of item nos. 2 and 4 and (d) to what order the petitioner is entitled to.
11. The aforesaid points 1 to 3 are answered together in favour of opposite party nos. 1 to 3 for the following reasons. It is an undisputed fact, as could be seen from the table quoted above, the initial bid amount and revised bid amount of the petitioner is higher than the bid amount of opposite party nos. 6 and 7 in respect of package nos. 2 and 4; opposite party nos. 6 and 7's offer is less than the estimated cost. Even after revision of the offer by the petitioner in the negotiation, the offer of the petitioner is more than the
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estimated cost percentagewise. Therefore, the petitioner is not the lowest bidder. The only question for consideration is whether for non- compliance of Clause 30 of the DTCN, the offer of opposite party nos. 6 and 7 in respect of package nos. 2 and 4, which was less than the estimated cost of the works notified in the tender call notice could be deemed to have been rejected. Strong reliance has been placed by the learned counsel for the State on the amendment to OPWD Code to submit that Clause 30 of the DTCN is not available in view of the amendment. We find from Annexure-F/4 that the additional performance security amount shall be deposited at the time of executing the contract. Therefore, the contention urged by the learned counsel for the petitioner that there is a deemed rejection of the bid of opposite party nos. 6 and 7 on the basis of Clause 30 of DTCN is not tenable in law. Clause 30 is contrary to the PWD Code as amended which is required to be followed by the tender inviting authority. The said document is produced and placed reliance by the learned Government Advocate and the learned counsel for opposite party nos. 6 and 7. It is an undisputed fact that opposite party nos. 6 and 7 are the lowest tenderers and their offer is accepted and they have agreed to fulfill to condition in Para 3.5.5 of OPWD Code Volume I for deposit of the additional performance security as contemplated in the said clause. Therefore, the petitioner's claim that the action of opposite party no.4 in awarding the contract in favour of opposite party nos. 6 and 7 by delaying the finalization process having found that the opposite party nos. 6 and 7 have not deposited the additional performance security, their price bid are deemed to have been rejected and having invited the petitioner for negotiation and its offer being the second lowest one was not accepted with the mala fide intention to favour opposite party nos. 6 and 7 cannot be accepted for the reason that clause 3.5.5 of the OPWD Code makes it clear that the additional performance security amount is to be deposited at the time of execution of the agreement for the civil
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work. Merely because after opening of the financial bid the petitioner was called for negotiation and by such the petitioner did not acquire any right for award of the contract. Its claim that there was deemed rejection of the bid of opposite party nos. 6 and 7 for non-compliance of Clause 30 of the DTCN, as we have already held above, is contrary to Clause 3.5.5 of the OPWD Code. Therefore, the contention urged in this regard that its bid should have been accepted is not acceptable for this Court. If, that contention is accepted there would have been huge financial loss to the public exchequer. Therefore, though there was delay in finalizing the bid and accepting the bid of opposite party nos.6 and 7, the same cannot be termed either as product of favouritism or mala fide action. The contention that the action of the opposite parties 1 to 3 is arbitrary, unjust, unfair or unreasonable is wholly untenable in law having regard to the facts and circumstances and the reasons assigned and the affidavits filed by opposite party nos. 1 to 4 and the reasons assigned by them. Reliance placed by the learned counsel for the petitioner upon the decisions of the Supreme Court referred to above are misplaced. On the other hand, after award of the contract in favour of opposite party nos. 6 and 7, work orders have been issued and they have been executing the work. Therefore, the claim of the petitioner cannot be accepted. The claim of the petitioner that the interim order dated 18.1.2010 will enure to its befit for quashing the award of the contract in favour of opposite party no.6 and 7 is not tenable in law for our reasons recorded on the first point, namely, that award of contract for package nos. 2 and 4 in favour of opposite party nos. 6 and 7 is legal and valid. Therefore, the question of quashing the contract awarded in their favour does not arise at this stage.
12. Having regard to the facts and circumstances, the delay sought to be explained by opposite party no.4 in finalizing the award of contract is rejected by order dated 21.4.2010. The affidavit filed by opposite party no.4 on 12.5.2010 is not accepted particularly
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having regard to the earlier similar allegations made against opposite party no.4. If this was the matter, we leave it to the State Government to consider entrusting responsible job in future to the officer keeping the facts and circumstances in view. With the aforesaid observation, this writ petition is dismissed.