Karnataka High Court
Tam Tam Pedda Guruva Reddy B.T. Patil And ... vs State Of Karnataka And Others on 16 March, 2001
Equivalent citations: 2001 AIR - KANT. H. C. R. 1431, (2001) 5 KANT LJ 106 (2002) 1 BANKCAS 655, (2002) 1 BANKCAS 655
ORDER
1. This is a second round of litigation with respect to a project undertaken by the State to construct an ambitious dam across Tunga River, near Gajanur Village with a critical objective of Krishna Basin Project and to complete it before 2000 A.D. The project was taken up to provide irrigation facilities and according to the estimates the dam should have a storage capacity of 50.17 cusecs and at that area that is proposed to be brought under irrigation will cover to an extent of 94,698 hectares of land spread over Shimoga, Honnali, Ranebennur, Haveri and Hanagal Taluks. The second respondent initially published pre- qualification tender notice bearing No. 98-99/4, dated 27-6-1998 inviting applications from registered Class-I Contractors who have necessary facilities, experience, ability and financial resources to execute the work of construction of dam and allied works across Tunga River. The project is estimated at the cost of Rs. 7,780 lakhs. The day fixed for issue of pre-qualification documents was 11-8-1998 and the last day for submission of receipts of pre-qualification document was 27-8-1998. The period for the issue of pre-qualification document was extended to 14-9-1998 and it is averred that the estimate was altered to Rs. 7,331.00 lakhs. Yet another notification was issued, and the altered date was postponed from 25-9-1998 to 5-10-1998. The petitioner secured the pre-qualification booklet after paying the requisite amount and submitted their pre-qualification papers. Out of 43 contractors who secured pre-qualification application to tender papers only 30 contractors submitted the pre-qualification application papers. The pre-qualification application papers were opened on 25-9-1998. The third respondent scrutinized the pre-qualification notification of all the 30 contractors and he held discussion with the second respondent. Thereafter, he short-listed the applicants to 18 as eligible tenderers qualified to participate. The petitioner alleges that the Executive Engineer, Upper Tunga Project Division, Shimoga invited item rate tenders dated 29-9-1998 restricting the same to the enlisted pre-qualification tenderers. The petitioner alleges there are certain corrigendum issued in-between and that the Executive Engineer has supplied a tender booklet to all the 18 pre-qualified tenderers. He further alleges that of the 18 only 14 pre-qualified application tenders including the petitioner and the 6th respondent submitted the complied tender documents.
2. Each of the tenderers were also required to pay a sum of Rs. 74.29 lakhs either in cash or deposit in Sub-Treasury or by furnishing Bank Guarantee. The petitioner had complied with all the requirements. Section II of tender documents of all the tenderers were opened by the Executive Engineer on 14-10-1998 at 5.30 P.M. It is alleged by the petitioner that the Chief Engineer submitted the evaluation papers of Section II of the tender documents to the first respondent and who in turn directed the second respondent to submit the evaluation paper of both Sections I and II of the Tender Documents. The petitioner submits that the Executive Engineer informed the tenderers the date of opening of tender documents of Section I as on 23-10-1998 at 11.00 A.M. and it was opened in the presence of all the 14 contractors. The Executive Engineer and the Accounts Superintendent evaluated all the tenders. The petitioner noticed that the petitioner's tender was found to be lowest being 23.93% below the estimated rate and the second lowest being that of the 6th respondent herein and the third lowest was of Mr. Satyam Shankar Narayan, joint venture. The petitioner submits that the Executive Engineer submitted all the papers recommending award of the contract to the petitioner as their's being the lowest. The peti-
tioner asserts that the third respondent after scrutiny recommended the award of the contract to the petitioner and submitted the recommendation to the second respondent who in turn scrutinized the papers and being satisfied that the petitioner is duly qualified and that the tender submitted by him being the lowest offer, recommended to the first respondent for award of contract to the petitioner. The petitioner further asserts that some time in the month of November 1998 after the first respondent received the papers, and the documents examined recommended the award of the contract to the petitioner. Even though the matter was hurried up till the finalisation of the tender, according to the petitioner the State Government did not pass any order thereon with an ulterior motive. The petitioner alleges positively that some time in the month of December thereafter feelers were sent to the petitioner that they contacted the fourth and fifth respondents personally in the matter of award of tender, they being the Chief Minister of the State and the Irrigation Minister respectively; the petitioner claims that as his tender being the lowest, and there being a saving of nearly Rs. 17 crores to the State when compared to the estimated cost, there was no need for him to meet the respondents as indicated.
3. Thereupon the petitioner felt that the matters were not moving in a reasonable manner. The petitioner alleges that the fourth respondent acted mala fide to see that the contract was not awarded to the petitioner and he came to know that the 6th respondent is exerting extraneous influence to secure the contract after berating the petitioner. The petitioner submits that compared to the offer of the 6th respondent a positive difference of 2 crores could be earned by the State if the award be made to the petitioner. Therefore, at this stage, the petitioners allege that apprehending that the petitioners claim would be negatived, he moved this Court by filing W.P. No. 2253 of 1999 seeking a writ of mandamus calling upon the first respondent to award the contract to the petitioner. Therein this Court passed the following order:
"2. When the matter came up for preliminary hearing, the learned Additional Government Advocate was instructed to ascertain the present position. He stated on instructions that in regard to such tenders, the following procedure is adopted: The tenders received are evaluated considering the tender conditions. The matter is then referred to the Technical Advisory Committee, which is a Committee of experts constituted by the Government. After clearance by the Technical Advisory Committee, the evaluated tenders are placed before the M.I.P.C. Board constituted by the Government under the Irrigation, with Finance Commissioner and experts in irrigation, as members. After clearance by the said Board and with the concurrence of Finance Department, the proposal is placed before the State Cabinet for according approval. Only after this process is completed, acceptance of the tender by the Government will be issued.
3. In the present case, the learned Additional Government Advocate submitted that the tenders have been evaluated and submit-
ted to the Technical Advisory Committee. The said Committee at its 44th meeting held on 31-12-1998, considered the matter and sought certain specific and detailed clarifications, vide proceedings on 4-1-1999. In compliance with it, the Chief Engineer, Upper Tunga Project, has submitted the clarifications for the consideration of the Technical Advisory Committee, as per his letter dated 5-2-1999. The same is being processed at Government level and will be placed before the Technical Advisory Committee for further examination and recommendations in the matter. He further submitted that no decision in regard to the tenders has been taken yet".
This Court on the statement of the Additional Government Advocate disposed of the writ petition The 1st respondent after the professed compliance of the norms it held out it would follow, has awarded the tender to the 6th respondent. That award is challenged in this proceedings by the rival tenderer alleging various grounds including mala fide, arbitrariness, non-application of mind etc. The enquiry in this proceedings is the validity of the award made. By virtue of the order, of this Court, the dispute has been crystallized in that, in the matter of the award of the tender in the instant case, and choosing the contractor whether the 1st respondent has followed the norms it held out before this Court, and the inquiry thus is confined as to whether the selection procedure is uniformly applied to all cases.
4. Now armed with the above direction the present writ petition is filed challenging the action taken by the first respondent in choosing the 6th respondent to be the grantee of the largesse i.e., the contract, Several allegations have been made challenging the grant. The main among them is the impropriety of the TAC and the MIPC in the matter of settling and choosing the 6th respondent to be the beneficiary of the grant (TAC is the abbreviation for Technical Advisory Committee, who in fact does the scouting to secure an appropriate tenderer, and the MIPC refers to Major Irrigation Project Control Board who oversees the discharge of the function by the TAC). Though the petitioner alleges that the third lowest bidder has also complained to the authorities about the illegality that may result if the 6th respondent is awarded the tender, the authorities have ignored the objections. Since the petitioner is not authorised to voice the grievance of the third lowest bidder, these contentions do not deserve any consideration.
5. That apart it is seen that the averments in the writ petition shows that the petitioner has an in-depth knowledge of what was transpiring in the office of the respondents 1 to 5. Though it is expected that it is normal to assume such active involvement of a tenderer in the process of tender selection, I am of the view that, this Court cannot rely on such disclosures as if the petitioner was a principal player in every parley by the Government Officials. Transparency in the governmental action does not mean bareness of every act of the Government. There are certain codified information equated to privileged information that the Government is entitled to keep for itself. A citizen, while assailing a govern-
mental action cannot assert that he knows all the facts. If he does, it is legitimate to assume executive collusion with the petitioner to act adverse to the interest of the State.
6. However, the persuasive argument of Mr. Gopal Hegde based on these averments led this Court to secure the records of the TAC. From the records of TAC the following facts are disclosed.
7. It is that initially the Technical Advisory Committee met on 23-3-1999 and recommended that the work would be entrusted both to the petitioner and the 6th respondent. This report was on the advise obtained from the Law Department. The file discloses that a considered opinion had been tendered by the Law Department. It is seen that thereafter an endorsement is made on the file on 25-5-1999 that the legal opinion tendered was reconsidered by the MIPC at its meeting held on 1-4-1999. This recommendation of the TAC dated 23-3-1999 was discussed and the matter was referred back for securing legal advise from the Law Secretary. But at this stage, a revised legal advise was tendered by the Law Secretary.
8. It is noted from the file that MIPC had met on 23-3-1999, the very same day on which the TAC met and they also made similar recommendation as made by the TAC. MIPC meeting was in fact presided over by the Chief Minister. It is seen in the endorsement made after the meeting that the MIPC decided to refer back the issues to the Law Secretary who made the second recommendation to reject the offer of the petitioner.
9. The opinion from the Law Secretary is seen tendered on 5-6-1999. This opinion was tendered on the basis of the decision of the MIPC held on 23-3-1999. The file discloses that on 1-4-1999, there was a meeting of MIPC and a draft minutes of the meeting was prepared. This was sent to the Minister who had presided over the meeting for approval. This was done on 23-4-1999. Subsequently, it is seen from the noting on the file that on 7-5-1999 and 27-5-1999 a discussion with the Minister concerned was held and the file containing the minutes was returned thereafter. From the minutes, it is seen that the Minister who presided had scored off the endorsements regarding the discussion on the impugned tender. This was received by the office only on 22-5-1999. But it is seen that meanwhile on 21-5-1999 the Deputy Secretary had referred the matter to the Law Secretary for his opinion. This was done apparently on the basis of the informal discussion held at the meeting of the MIPC. The endorsements show that on the very same day the file moved to the Law Department for securing the opinion. The opinion was tendered on 5-6-1999. In-between, on 23-5-1999 the endorsement regarding the discussion on the subject is scored off and it is added that the discussion held will be considered; the file was then sent back to the office. I have referred in detail, the movement of the file and various endorsements, as Mr. Gopal Hegde was at pains to demonstrate malice in fact in the decision making process. I should confess it does not at all disclose either malice nor mala fide. The basic fact is that the TAC did evaluate the tender. The high powered Board MIPC scrutinized the decision. The executive secured the legal opinion as well. I do not know, what is the pivotal role the Legal Department can play in the matter of a selection of a tenderer to entrust a construction actively using brick, mortar and steel. It is purely in the realm of technical experts and not for the Law Department to tender any advise.
10. It is fundamental to remember that the tender is granted to the appropriate person whom the State believes will be competent to execute the work. An error in the judgment which does not seriously vitiate the decision may not at all invalidate the decision. It is ruled that all that the Courts may examine is whether the decision making process has been strictly adhered to and whether the decision is arrived at applying correct parameters. But if the adjudicator has kept the correct parameters and has adopted and decided the same without reckoning irrelevant consideration, then as this Court is not functioning as the Court of appeal in these matters, it cannot interfere. There are several circumstances, yardsticks or paradigms which the executive has to follow in the decision making process. If correct parameters, yardsticks or paradigms were kept in view by the executive while making the decision, then the question whether the decision is correct or not is not within the domain of the Court to examine. The Court should only adopt and examine whether relevant consideration has prevailed with the authority concerned in the decision making process and that it has eschewed all irrelevant considerations.
11. The main attempt of the petitioner has been that there has been a review of the decision of the Competent Authority arrived at, at the pre-tender stage and therefore it is a material fact jeopardising his chance of being selected. It is paramount to remember that it is not the Chief Engineer who is deciding as to whom the tender be granted. The Chief Engineer is one of the officers in the hierarchy of officers who have to decide the issue. The State Government has entrusted the duty of selecting the tenderer to the competent officers of the Department and it has evaluated the cumulative advise of the various officials. To begin with, the Chief Engineer was called upon to advise. The Chief Engineer in turn has deployed this duty to his subordinate. If the subordinate has taken a decision, the Chief Engineer or higher authorities can review as to whether the subordinate has taken a right decision applying correct yardstick in making the decision. The decision of the subordinate cannot control the decision of the Chief Engineer. Nor can it be used to veto the decision of the ultimate, the Government. It is always open to Government to decide as to in the interest of the State whether the decision of the Chief Engineer or Superintending Engineer should be accepted. If it is seen that these processes had been followed, I do not think there can be any complaint in the matter.
12. Before proceeding further it is desirable to advert to the following principles laid down by the Supreme Court and as noticed in New Horizons Limited and Another v Union of India :
"18. In the recent decision in Tata Cellular v Union of India, this Court has examined the scope of judicial review in the field of exercise of contractual powers by Government bodies and, after noticing the current mood of judicial restraint in England, the Court has laid down the following principles:
"(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 of 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.
(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 of quasi-administrative sphere. However, the decision must not only be tested by the application of "Wednesbury principle of reasonableness" (including its other facets 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".
19. "Wedneshury principle of reasonableness" to which reference has been made in principle (5) aforementioned is contained in Associated Provincial Picture Houses Limited v Wednesbury Corporation . In that case Lord Greene, M.R. has held that a decision of a public authority will be liable to be quashed or otherwise dealt with by an appropriate order in judicial review proceedings where the Court concludes that the decision is such that no authority properly directing itself on the relevant law and acting reasonably could have reached it. In Tata Cellular's case, supra, this Court, has mentioned two other facets of irrationality:
(1) It is open to the Court to review the decision-maker's evaluation of the facts. The Court will intervene where the facts taken as a whole could not logically warrant the conclusion of the decision-maker. If the weight of facts pointing to one course of action is overwhelming, then a decision the other way, cannot be upheld.
(2) A decision would be regarded as unreasonable if it is partial and unequal in its operation as between different classes", In short, there should be a freedom of joint to the executive in the decision making process and the review by the Court of the decision taken by the executive is in a limited area. The conclusion arrived at by the decision maker should not be interfered with if it is a reasonable conclusion. I would also invite the attention to the following passage from the subsequent decision in Raunaq International Limited v I.V.R. Construction Limited and Others :
"16. It is also necessary to remember that price may not always be the sole criterion for awarding a contract. Often when an evaluation committee of experts is appointed to evaluate offers, the expert committee's special knowledge plays a decisive role in deciding which is the best offer. Price offered is only one of the criteria. The past record of the tenderers, the quality of the goods or services which are offered, assessing such quality on the basis of the past performance of the tenderer, its market reputation and so on, all play an important role in deciding to whom the contract should be awarded. At times, a higher price for a much better quality of work, can be legitimately paid in order to secure proper performance of the contract and good quality of work - which is as much in public interest as a low price. The Court should not substitute its own decision for the decision of an expert evaluation committee".
What can be seen from the above is that it is not the function of the Court to act as Court of appeal with respect to the decision arrived by the executive. The decision of the expert addressed in all technical aspect to choose a tenderer is that of his and the Court cannot substitute the decision. In other words this Court cannot function as a third chamber in the matter of decision making process. Same is the view expressed by the Supreme Court in M/s. Star Enterprises and Others v City and Industrial Development Corporation of Maharashtra Limited and Others , I do not think there is any need to multiply the various judgments of the Supreme Court which have been cited by the learned Counsels. Suffice to say that these principles have groomed the fundamental factors on which the decision has to be arrived at.
13. The primary challenge of the petitioner in the matter of selection of the 6th respondent is that the quotation of the petitioner is Rs. 2 crores less than, what is quoted by the 6th respondent. It is to be remembered that the question is not only the price factor. The question is the conviction of the authority concerned as to the due execution of the work by the offeree. This is also an important factor. If the authority believes that the person whom he selects would duly and satisfactorily execute the work then the mere fact that his quotation is second lowest would not really matter. If for instance, the resultant position of award of tender results in award of tender to a person who would not otherwise be able to discharge the work, the State would suffer irreparable loss. The State is an experienced employer in these matters. May be, it would be known to the State, that certain tenderer may offer attractively low bid to knock off the tender, and later using the escalation clause hike the total cost much higher than the offer of the next higher bidder. Such tenderers may not have the needed infrastructure to complete the work as per the time schedule. There may be several such pitfalls if the State acted merely by the price offered. The State is always entitled to keep larger perspective in mind in its decision making process. The Court is ill-equipped to test the correctness of the decision of the executive arrived at by it, by employing its accumulated experience in tender management by long, cumulative commercial activities.
14. Another allegation is regarding the alleged representation held out on behalf of the 4th and 5th respondents. The allegations are vague. It is not mentioned anywhere as to who directed the petitioner to meet them. Before the Court examines such a plea, it should know whether anyone wielding authority who can be relied on, directed the petitioner to do so. This is not averred. Vague allegations are hardly any material to substantiate mala fide. It is to be noted that the 6th respondent was also qualified at pre-tender stage. In such circumstances, it can be assumed that basically the 6th respondent is also a person capable of discharging the work. The only edge the petitioner pleads is the variation in the price. That by itself is not the last word. I do not think that the allegations made against the respondents 4 and 5 are of any value and was intended to see that the Court is prejudiced in taking the decision.
15. The other question is as to whether there is a miscarriage of the procedure committed by the TAC. As alleged we have seen from the records kept by the 1st respondent that the decision making process has been elaborate. No doubt, at one stage the Law Secretary of the State suggested that the tender be given to the petitioner. I do not think that it is the function of the Law Secretary to choose as to whom the tender be given; but the very same Law Secretary reversed the view later and chose the 6th respondent. The oscillating opinion by the Law Secretary on a technical matter can be treated only as an irrelevant act. I do not find that these circumstances have in anyway prevailed with the 1st respondent in choosing the 6th respondent. The sum total of the decision making process is choosing a person who is capable of otherwise completing the work and he has been entrusted with the work. Merely because there has been an increase in the price or of a marginal variation in the price would not disentitle the first respondent from choosing the 6th respondent.
16. Learned Counsel, Mr. Gopal Hegde at length cited several authorities in the matter of selection of the tenders. Annexure-G has been held out to be the procedure to be in the matter of selection. If it is shown that Annexure-G has been complied with the petitioner cannot have any complaint. As stated earlier this Court cannot decide the correctness or otherwise of the decision of the executive. If the executive action is not vitiated this Court should uphold the decision taken. This Court cannot sit in judgment as to whether the price quoted for a particular item is correct or high or it should have scouted for a cheaper variety. Such exercise is ill-suited in a judicial review of administrative action. Whether a decision that choice of X is illegal and Y should have been chosen and whether the X should have selected the case in the place of Y are all matters for the executive to decide. These are inquiries outside the purview of the jurisdiction of this Court if it is shown that correct decision making process has been adhered to.
17. For all these reasons, the selection of the 6th respondent by the 1st respondent in the matter of award of tender is in no way vitiated. The 1st respondent has taken reasonable care to eschew irrelevant consideration. It has adopted the correct procedure. The decision making process has been demonstrated as correct. There are no merits in the writ petition. The same is dismissed. No costs.