Himachal Pradesh High Court
Ajay Kumar Sharma vs State Of Hp And Others on 1 October, 2020
Bench: L. Narayana Swamy, Anoop Chitkara
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA .
CWP No. 2118/2020 with COPC No. 100 of 2020 Judgment reserved on 22.09.2020.
Decided on: 01.10.2020
CWP No. 2118/2020
Ajay Kumar Sharma .....Petitioner.
Versus
State of HP and others .....Respondents.
COPC No. 100 of 2020.
Ajay Kumar Sharma ...Petitioner.
Versus
Er. Sanjeev Kumar Sharma and others .....respondents.
Coram
The Hon'ble Mr. Justice L. Narayana Swamy, Chief Justice. The Hon'ble Mr. Justice Anoop Chitkara, Judge. Whether approved for reporting?
For the petitioners: Mr.B.C. Negi, Sr. Advocate with Mr. Virbahadur Verma, Advocate.
For the respondents: Mr. Ashok Sharma, Advocate General with Mr. Adarsh K. Sharma and Ms. Ritta Goswami, Additional Advocates General.
L. Narayana Swamy, Chief Justice.
The petitioner, through the medium of this writ petition demonstrates that he is A Class Government ::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 2 Contractor and deals with the construction work having its expertise in construction of bridges. The petitioner is stated .
to be engaged in construction activities of Roads and Bridges in the State of Himachal Pradesh.
2. It appears that on 11.6.2019, respondents floated tenders for C/O 140.00 Mtrs. Span double Lane bridge across Moul Khad on Hamirpur Sujanpur Thural Maranda road at RD 31/540 (Under CRF) Job No.CRFHP201919 152 (SHC/o 105.50 Mtr. Span P.S. Box Girder bridge, including approaches and temporary diversion for plying of vehicular traffic. The value of tender was Rs.11.43 crores.
The petitioner along with others is stated to have submitted online bid for the work on 25.6.2019 along with earnest money in the shape of FDR bearing no. 38547701887 amounting to Rs.11,76,000/ dated 24.6.2019. The technical bid was opened on 26.6.2019 and Financial bid was opened on 7.9.2019 in the office of Executive Engineer, HPPWD Division, Jaisinghpur in which the petitioner was found successful.
::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 33. Respondent No. 3 is stated to have accepted the bid of the petitioner amounting to Rs.10,46,45,000/ subject .
to furnishing performance security to the tune of Rs.52,32,250/ which accordingly, the petitioner furnished.
The petitioner had submitted performance security in the shape of Bank guarantee on 17.1.2020 to the tune of Rs.11,76,000/ which, according to the petitioner, stands released to him on his request by respondent No.5.
4. The petitioner, on inspection of the site, found hindrances and obstacles such as ongoing traffic, land not acquired of private individuals, high tension wires and poles etc. which required huge expenditure for its shifting. The petitioner, after observing the ground realities is stated to have made such an alternative plan which avoided less acquiring of private land and others, shifting expenditures and he accordingly submitted the alternative plan to the respondents for doing the same at the original cost. The respondents vide letter dated 3.2.2020, rejected the said proposal of the petitioner. The petitioner on 10.2.2020, wrote ::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 4 a letter to the respondents explaining the hindrances caused to the said project. Respondent No. 5 after going through the .
alternative proposal and finding it viable, forwarded the same to respondent No. 4, however, on 18.2.2020, the petitioner received a letter stating therein to get the insurance of the work immediately and intimate the respondent and the proposal for alternative site was rejected by the respondents. The petitioner then requested the respondents to hand over the site to him but there was no response from the respondents, constraining the petitioner to write a letter on 21.3.2020 for appointment of Dispute Review Expert for the work, explaining the reasons therein.
Respondent No. 5 however, issued letter dated 6.5.2020 asking the petitioner to sign the agreement within 15 days and if not signed, the earnest money to the tune of Rs.11,76,000/ shall be forfeited. The petitioner was directed to start the work on the partially available site towards Sujanpur.
::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 55. That on 21.5.2020, respondent No. 5 wrote to respondent No.4 under intimation to the petitioner for .
withdrawing the letter of Award on the ground that the petitioner has failed to comply with the contractual obligation. The petitioner accordingly replied the same stating that he is ready and willing to execute the contract however, respondents have not acted in accordance with the contract. Hence, the present petition has been filed, seeking the mainly the following directions:
"i). Issue a writ of mandamus directing the respondent authority, i.e., respondent No. 3 to issue an appropriate letter of acceptance alogwith signed copy of agreement to be signed by the petitioner and/or;
ii) issue a writ of certiorari quashing Annexures P7, P11, P12 issued by respondents; and /or
iii) issue a writ of mandamus directing the respondents not to implement Annexures P7, P11 , P12;
iv) Issue a writ o mandamus directing the respondents not to implement Annexure P16 for withdrawal of award letter:
and/or;
v) Issue a wit of certiorari quashing Annexure P16 issued by respondent department; and/or ::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 6
vi) If during the pendency of the writ petition any action is taken by the respondents, issue a writ of mandamus to place the same on record; and or .
vii) issue a writ of certiorari quashing any action taken by the respondents during the pendency of the writ petition against the petitioner;and/or
(viii) issue writ of mandamus directing the respondents to send the signed copy of agreement to the petitioner as per the terms of the agreement; and/or
ix) Issue a writ of mandamus directing the respondent authorities to accept the alternative proposal submitted by the petitioner; and/or
x) issue a writ of mandamus directing the respondents not to award or retender the contract to any other person in respect of C/o 140.00 Mtr. Span double Lane bridge across Moul Khad on Hamirpur Sujanpur Thural Maranda road at RD 31/540 (Under CRF) Job no CRFHP201919152 (ShC/o 105.50 Mtr.
Span P.S. Box Girder bridge includes approaches and temporary diversion for plying of vehicular traffic;."
6. The respondents have filed the reply to the writ petition taking objections that that respondents floated tenders for C/O 140.00 Mtrs. Span double Lane bridge across Moul Khad on Hamirpur Sujanpur Thural Maranda road at RD 31/540 (Under CRF) Job No.CRFHP201919 152 (SHC/o 105.50 Mtr. Span P.S. Box Girder bridge, ::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 7 including approaches and temporary diversion for plying of vehicular traffic. The value of tender was Rs.11.43 crores.
.
The petitioner along with others submitted online bid for the work on 25.6.2019 along with earnest money in the shape of FDR bearing No. 38547701887 amounting to Rs.11,76,000/ dated 24.6.2019. The technical bid was opened on 26.6.2019 and Financial bid was opened on 7.9.2019 in the office of Executive Engineer, HPPWD Division, Jaisinghpur in which the petitioner was found successful.
7. Respondent No. 3 accepted the bid of the petitioner amounting to Rs.10,46,45,000/ subject to furnishing performance security to the tune of Rs.52,32,250/ which accordingly, the petitioner furnished.
The petitioner had submitted performance security in the shape of Bank guarantee on 17.1.2020 to the tune of Rs.11,76,000/ which admittedly stands released to the petitioner on his request by respondent No.5. The work was awarded to petitioner by respondent No. 5 on 3.2.2020 and ::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 8 the proposal to increase the span of bridge 105.50 meters to
135. 50 metes was submitted by petitioner but the same .
was rejected by respondent No. 4 on 25.2.2020 with copy to contractor for the reasons mentioned in detail therein. The site was shown to the representative of petitioner on 7.2.2020 and the site was handed over to petitioner by respondent No. 5 vide letter dated 21.3.2020. The petitioner did not start the work on the site as per the proposal of the department inspite of various verbal and written requests and insisted for approval of alternative proposal submitted by him. According to the respondents, he wasted the golden summer period of 2020 which is best time for execution of bridge's work in hand due to lean water season. Therefore, keeping in view the adamancy of petitioner, the permission to withdraw/cancel award letter was accorded by respondent No.3 and accordingly the award letter was withdrawn by respondent No. 5 on 6.7.2020. It is further submitted that tender was reinvited but postponed by respondent No. 5 on 10.7.2020. It is further submitted that the petitioner has ::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 9 not raised any query regarding site conditions or any other issues in the prebid meeting as per Clause 9.2 of ITB. The .
site of work free from all encumbrances has been handed over to the petitioner. It is emphatically stated that petitioner want to enforce his own alternative proposal which requires involvement of more private land. Hence, petition.
r to the learned Advocate General prays for dismissal of this
8. We have heard learned counsel for both the parties and have meticulously gone through the records.
9. Mr. B.C. Negi, learned Senior Advocate, appearing for the petitioner argued that there exists no contract inter se the parties as the signed agreement is an integral part of Contract Act because the acceptance is to be given in a specified form and such form requires issuance of an appropriate performance security by signing of an agreement which never happened in the present case. There must be an acceptance in an usual and reasonable manner.
Since the acceptance is/was not in an usual and reasonable ::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 10 manner therefore, there was no concluded contract between the parties. It is further submitted that there exists no .
dispute since there is no agreement therefore, there exists no arbitration clause. Thus, the petitioner has been left remedyless. It is further argued that rejection of alternative proposal made by petitioner is without any authority and suffers from bias and moreover it is infraction of principles of natural justice as the petitioner was never heard in the matter despite the action effecting the petitioner with serious civil consequence. He further submits that in the absence of a signed agreement there can neither be a notice to commence the work nor can there be a start date or a date of handing over the possession. It is further contended that the respondents have given the terms of the agreement a goby which is completely illegal, arbitrary, perverse and liable to be set aside. It is further submitted that the respondents have ignored the letter of their own officer which says that the proposal as submitted by the petitioner is feasible without disrupting the flow of ::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 11 traffic. It is further argued that the respondents have not appointed any dispute review expert for resolution of the .
dispute relating to the execution of work in terms of Clause 36.1 which shows highhandedness on the part of respondents.
10. The case of the petitioner, inter alia, is that his bid application to the tender issued by the respondents was accepted only in respect of C/O 140.00 Mtrs. Span double Lane bridge across Moul Khad on Hamirpur Sujanpur Thural Maranda road at RD 31/540 (Under CRF) Job No.CRFHP201919152 (SHC/o 105.50 Mtr. Span P.S. Box Girder bridge, including approaches and temporary diversion for plying of vehicular traffic for a value of 11.43 crores. When the specification is prescribed under the tender Notification and for this specification of the job, the application has been made which was accepted, it is legally presumed that the petitioner has accepted the work which was given in the tender notification. Once such specification in the tender notice is accepted, there was no occasion for ::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 12 the petitioner to deviate from the specification and job, except for minor alteration. But, for alteration of the job .
given in the tender notification, it is for the employer who has floated the tender and not the person who has submitted the bid application. If there is major change in the job, which was subject matter in the notification, including the cost of tender or the work, then ordinarily, it is the employer who has to cancel the tender by issuing fresh tender notification. The persons, who are interested in tender work, may apply and may not apply, depending upon the subject matter of the job in the tender notification. For the given specification, the petitioner and others who have submitted the applications must have impressed upon themselves that they have submitted the application in pursuance to the tender notification. If there is change in the notification, without hearing the other parties who have participated the tender process, it may lead to arbitrariness.
11. The bid application made by the petitioner has been accepted and it shall only be in respect of the ::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 13 specification of the job given in the tender notification. The respondents have issued repeated reminders to the .
petitioner to come to the office to enter into an agreement but instead going for it, he went on submitting application for alternative proposal. This itself shows that the petitioner himself is at fault and not the respondents/employer.
12. It is the petitioner who has stated that as per notification, where there is a dispute and if the contractor believes that a decision taken by the Engineer was either outside the authority given to the Engineer by the Contract or that the decision was wrongly taken, the dispute shall be referred to the Dispute Review Expert within 14 days of the notification of the Engineer's decision. This has been relied upon by the petitioner and he insisted the respondents to appoint a dispute review expert. This clause comes into picture only if the petitioner enters into an agreement or if the employer or its Engineer's decision, at any circumstances, was wrongly taken. But no such circumstance warrants in the present case to appoint such ::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 14 an review expert. Hence the case of the petitioner has rightly been rejected for appointment of Dispute Review .
Expert.
13. The petitioner has stated that he has insisted the respondents to accept the alternative proposal which was referred to the Superintending Engineer 5th Circle HPPWD, Palampur for consideration however, it was rejected. Even much earlier, on 3.2.2020, as per Annexure P 7 alternative proposal to increase the span as proposed by the petitioner was rejected. It was further intimated to the petitioner that the letter of acceptance of his tender application is only provisional agreement and until and unless a formal agreement is signed, in accordance with law, he will not be entitled for any payment. The petitioner did not adhere to this information, therefore, his case was rejected.
14. Respondent No. 5, vide communication dated 2.5.2020 (Annexure P16) under intimation to the petitioner while referring therein that "contractor has failed to comply ::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 15 with the contractual obligations and did not start work till date" has advised respondent No. 4 to withdraw the award .
letter. Thus, the award made in favour of the petitioner was withdrawn.
15. All the conditions stipulated in the tender notification have to be acted upon in a time bound manner.
The ground taken by the petitioner that withdrawing the acceptance of award is arbitrary, illegal and malafide is not available to the petitioner as he has not entered into an agreement and there was no contractual agreement between the parties. Per contra he goes on to enter correspondence with the respondents for alternative proposal.
16. When agreement itself is not signed and entered into, the petitioner is not entitled to seek enforcement of the legal provisions contained in the contract/agreement. The legal maxim Conventio et modus vincunt legem means a contract and agreement overcome the law until and unless there is a contract established, there cannot be any application of any provision of law. Though the petitioner ::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 16 was entitled to enter into an agreement, but, he remained standing outside awaiting for his acceptance of alternative .
proposal, which was rejected.
17. The commercial matters, more particularly, the contractual matters like the present one are always between the parties. When the employer is the State or its Agencies, it is true that employer should take more care and caution and if any action is taken by the respondents, which is arbitrary, malafide and unreasonable, then only it may be for this Court to exercise its discretionary powers under Article 226 of the Constitution and in all other circumstances, it is the parties who have to redress their grievances, as per the terms and conditions contained in the agreement, in case it is entered into. In all other circumstances, the Court should refrain from entering into individual disputes.
18. The Hon'ble supreme Court in Silppi Constructions Contractors versus Union of India and another, 2019 SCC Online SC 1133, held that it is ::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 17 settled law that the writ courts should not easily interfere in commercial activities just because public sector .
undertakings or government agencies are involved. In this case, the Supreme Court has referred to its previous judgments, which are pertinent in the instant case also. It is apposite to extract the relevant paragraphs of the said judgment hereunder:
"7. In Tata Cellular vs. Union of India, 1994 6 SCC 651, it was held that judicial review of government contracts was permissible in order to prevent arbitrariness or favouritism. The principles enunciated in this case are : "94. ........
(1) The modern trend points to judicial restraint in administrative action.
(2) The Court does not sit as a court of appeal but merely reviews the manner in which the decision was made.
(3) The Court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 18
(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract.
.
Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts. (5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasiadministrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure."
[8] In Raunaq International Ltd. vs. I.V.R. Construction Ltd., 1999 1 SCC 492, this Court held that superior courts should not interfere in matters of tenders unless substantial public interest was involved or the transaction was mala fide.
[9] In Air India Limited vs. Cochin International Airport Ltd., 2000 2 SCC 617, this Court once again stressed the need for overwhelming public interest to justify judicial intervention in contracts involving the State and its instrumentalities. It was held that Courts ::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 19 must proceed with great caution while exercising their discretionary powers and should exercise these powers only in furtherance of public interest and not merely on .
making out a legal point.
[10] In Karnataka SIIDC Ltd. vs. Cavalet India Ltd., 2005 4 SCC 456 it was held that while effective steps must be taken to realise the maximum amount, the High Court exercising its power under Article 226 of the Constitution is not competent to decide the correctness of the sale affected by the Corporation.
[11] In Master Marine Services (P) Ltd. vs. Metcalfe & Hodgkinson (P) Ltd., 2005 6 SCC 138 it was held that while exercising power of judicial review in respect of contracts, the Court should concern itself primarily with the question, whether there has been any infirmity in the decisionmaking process. By way of judicial review, Court cannot examine details of terms of contract which have been entered into by public bodies or State.
19. In Jagdish Mandal versus State of Orissa reported in (2007) 14 SCC 517 the Supreme Court has held as under:
"22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound".
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 ::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 20 tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide .
and is in public interest, courts will not, in exercise of power of judicial review, 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 permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold........."
20. In para 19 of the judgment referred to supra { Silppi Constructions) it has been observed as under:
"19. This Court being the guardian of fundamental rights is duty bound to interfere when there is arbitrariness, irrationality, mala fides and bias. However, this Court in all the aforesaid decisions has cautioned time and again that courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters. This Court is normally loathe to interfere in contractual ::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 21 matters unless a clearcut case of arbitrariness or mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings .
compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution. The Courts must realise their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. As laid down in the judgments cited above the courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give "fair play in the joints" to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer."::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 22
21. In Bharat Coking Coal Ltd. and others vs. AMR Dev Prabha and others, 2020 SCC Onlilne SC 335 while .
answering the question of maintainability of the writ petition, it has been held by the Supreme Court that:
"29. The scope of judicial review in tenders has been explored in depth in a catena of cases. It is settled that constitutional courts are concerned only with lawfulness of a decision, and not its soundness. 1 Phrased differently, Courts ought not to sit in appeal over decisions of executive authorities or instrumentalities. Plausible decisions need not be overturned, and latitude ought to be granted to the State in exercise of executive power so that the constitutional separation of powers is not encroached upon.(Air India Ltd v. Cochin International Airport Limited, 2000 2 SCC
617.) However, allegations of illegality, irrationality and procedural impropriety would be enough grounds for courts to assume jurisdiction and remedy such ills. This is especially true given our unique domestic circumstances, which have demonstrated the need for judicial intervention numerous times.
Hence, it would only be the decisionmaking process which would be the subject of judicial enquiry, and not the end result (save as may be necessary to guide determination of the former).
30 to 32.............
33. Such a proposition has been noticed by this Court even earlier in Jagdish Mandal v. State of Orissa, 2007 14 SCC 517 in the following words:
"22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound". When the power of judicial review is invoked in matters ::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 23 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. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, 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 permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold."
(emphasis supplied)
22. While dealing with the contractual matters, like the present one, there shall be a maximum restraint unless and until the petitioner establishes arbitrariness, malafide or illegalities.
23. We have examined the pleadings of the parties and also the papers made available. We find that no such ::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 24 things have been established by the petitioner. The only thing which the petitioner is trying to establish is that .
alternative proposal submitted to the respondents has not been considered, which is arbitrary. When a person, who approaches the court himself, is at fault and who do not wish even to enter into an agreement to carryout and accept the job as per the tender notification, cannot make accusations against the respondents. The petitioner has delayed the state interest in not providing the bridge to the public and action of the petitioner itself is not in public interest.
24. Under these circumstances, we are not inclined to interfere in this petition on the ground that petitioner has failed to establish the case against the respondents and also on the ground of maintainability.
25. Having regard to the aforesaid discussion, the petition fails and is accordingly dismissed, alongwith pending applications, if any.
::: Downloaded on - 05/10/2020 20:18:02 :::HCHP 2526. In view of the disposal of the writ petition, the Contempt Petition shall also stands disposed of.
.
(L. Narayana Swamy) Chief Justice (Anoop Chitkara) Judge October 01, 2020.
(cm Thakur ) ::: Downloaded on - 05/10/2020 20:18:02 :::HCHP