Calcutta High Court
Electrosteel Castings Ltd vs The Kolkata Municipal Corporation & Ors on 7 August, 2013
Author: Arun Mishra
Bench: Arun Mishra
ORDER SHEET
IN THE HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
ORIGINAL SIDE
APOT 344 OF 2013
GA 2207 of 2013
WITH
WP 579 of 2013
ELECTROSTEEL CASTINGS LTD.
Versus
THE KOLKATA MUNICIPAL CORPORATION & ORS.
APOT 345 of 2013
GA 2208 of 2013
WITH
WP 570 of 2013
ELECTROSTEEL CASTINGS LTD.
Versus
THE KOLKATA MUNICIPAL CORPORATION & ORS.
BEFORE:
The Hon'ble CHIEF JUSTICE ARUN MISHRA
The Hon'ble JUSTICE JOYMALYA BAGCHI
Date : 7th August, 2013.
Mr.Samit Talukdar, Sr. Advocate
Mr.Anirban Roy, Advocate
Mr.Shaunak Mitra, Advocate
Mr.Padam Kumar Khaitan, Advocate
Mr. Vivek Jhunjhunwala, Advocate
..for petitioner (in APOT 344 of 2013)
Mr.Pratap Chatterjee, Sr. Advocate
Mr.Anirban Roy, Advocate
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Mr.Shaunak Mitra, Advocate
Mr.Padam Kumar Khaitan, Advocate
Mr. Vivek Jhunjhunwala, Advocate
..for petitioner (in APOT 345 of 2013)
Mr.Somnath Bera, Advocate
Mr. Rajsekhar Basu, Advocate
..for respondent 5 (in APOT 344 of 2013)
Mr.Somnath Bera, Advocate Mr.Rajsekhar Basu, Advocate ..for respondent 6 (in APOT 345 of 2013) Ms.Rajshree Kajaria, Advocate Mr.Saptarshi Mukherjee, Advocate Mr.Soumabho Mukherjee, Advocate ..for respondent 5(in APOT 345 of 2013) Mr.Mainak Bose, Advocate Mr.P.K.Srivastava, Advocate Mr.Arif Ali, Advocate Mr.J.Chowdhury, Advocate Mrs. Kaushiki Bhattacharjee, Advocate Ms. A.Saha, Advocate ..for Rashmi Metaliks Ltd.
Mr.Ashoke Banerjee, G.P. Mr.Biswajit Mukherjee, Advocate Mr.A. Dey, Advocate ..for K.M.C. The Court :- (Oral Order): Par Arun Misra, C.J.) These appeals have been preferred by Electrosteel Castings Limited who was the tenderer in the tender process being NIT invited by the respondent No.3 for supply and delivery of Ductile Iron Pipes for distribution network under 30 MHD Dhapa WTP for water gas and sewerage projects that conforms to Is 9329 : 2000 specifications of Government of West Bengal.
It appears that NIT was issued on 15-5-2013 and the date of bid submission commenced on 16-5-2013 at 1.00 p.m. The date of submission of the original copies for the cost of tender documents and earnest money deposit in the office of Deputy municipal Commissioner (Supply) was fixed on 10-6-2013 from 11 A.M. to 12 noon. Date of bid submission closing 3 (online) was 10-6-2013 up to 11 A.M. and bid opening date for technical proposals (online) was on 10-6-2013 at 12 30 noon. Date of uploading list for technically qualified bidder (online) was 13th June 2013 at 12 noon, and date for opening of financial proposal (online) was 14-6-2013 at 12.00 noon.
Rashmi Metaliks Limited through its authorized representative filed a writ petition before the single Judge questioning the disqualification in the technical bid round on 10-6-2013. The Kolkata Municipal Corporation informed the petitioner of its technical disqualification as it had received information from other sources, namely, M/s. Jai Balaji Industries Ltd., who had lodged a complaint to the Kolkata Municipal Corporation, on June 8, 2013, wherein reference was made to the fact that PHE Department had debarred the petitioner from participating in the process of tender for a period of 3 years. The said order had been passed by the PHE on 7th June, 2013.
This fact is not in dispute that on 7-6-2013, Rashmi Metaliks Ltd. was debarred by PHE for a period of 3 years from participating in the tender process. It is also not in dispute that disqualification was persisting as on the date on which technical bid has been evaluated by the Kolkata Municipal Corporation on 10th of June, 2013. Records indicate that Kolkata Municipal Corporation had information that Rashmi Metaliks Ltd. had been disqualified by PHE from participating in the tender process for 3 years. However, the said order passed by PHE was questioned by Rashmi 4 Metaliks in another writ petition which was filed in this Court and this Court on 17th June, 2013 ordered that so far as disqualification of the petitioner was concerned in respect of the work with PHE, fresh hearing should be granted by PHE to the petitioner and the order preventing the writ petitioner from participating in the tenders floated by PHE was set aside. By that time, decision had already been taken on 10th of June 2013 by Kolkata Municipal Corporation disqualifying the petitioner from participating in the tender process.
It is the case of the appellant that petitioner had, in fact, suppressed such material information and has filed a false affidavit on 09.06.2013 that it has not been debarred as the petitioner had already been informed on 7-6-2013 by PHE about such debarment. The e-mail sent by PHE to the petitioner Rashmi Metaliks Ltd. has been placed on record in this appeal. The said electronic message was sent on 7-6-2013 and was received on the same date. It was submitted by the writ petitioner Rashmi Metaliks Ltd. that no such E-mail was available in its mail box. However, the fact remains that admittedly the said order of disqualification had been passed debarring the petitioner for a period of three years by PHE and that information was available with the Kolkata municipal Corporation at the time of consideration of the technical bid. Unfortunately, when the matter came up for consideration before the single judge on 23rd July 2013, the Corporation strangely acceded to the demand of the writ petitioner- 5
respondent to waive such term of tender so far as writ petitioner was concerned.
It was submitted that the Court could not allow the writ petitioner to participate in the financial bid. It was also submitted that the Corporation could not have waived the condition of technical disqualification of the writ petitioner- respondent which was in force at the relevant time.
It was submitted on behalf of the respondent/petitioner that disqualification on technical ground could no longer be insisted upon and the petitioner be allowed to participate to the financial stage along with other bids that have progressed to such stage.
The Single Bench without going in to the merit of the submission whether the technical disqualification was rightly ordered or not has passed the order that there was no further grievance persisting in view of the submission of KMC that disqualification would not be insisted upon. Relevant question was not examined by the Single Bench whether the K.M.C. while once disqualifying the petitioner on technical ground could have made the submission to the detriment of other tenderers and altered the terms and conditions subject to which tenders were invited and reopen the issue and held that the technical disqualification which prevailed at the time of taking of the decision by the Corporation on the technical bid would be in applicable so far as the petitioner was concerned. Admittedly, the decision had been taken by the Corporation on 10.6.2013 when the disqualification of petitioner was in force.
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Aggrieved by the order of the learned Single Judge yet another tenderer namely Electrosteel Castings Limited has come up in the appeal.
It was submitted by Mr. Pratap Chatterjee, learned Senior Counsel appearing on behalf of the appellants that on 10.6.2013, admittedly, the disqualification ordered by PHE was prevailing, it was neither stayed nor set aside on 10.6.2013. Thus order of disqualification was rightly passed by K.M.C.. It was also submitted that the petitioner Rashmi Metaliks was very well aware of such order of disqualification which had been communicated to them via e-mail on 7.6.2013 which has been placed on record. Thus they were guilty of filing of false affidavit on 9.6.2013 that they had not been debarred in any of tender process knowing fully well that they had been debarred on 7.6.2013 by PHE, as aforesaid. As the Corporation was made aware of the order of disqualification from other sources. It was placed on record of the Corporation by one M/s. Joy Balaji. Once a person is not technically qualified, as on the date of opening of the technical bid, any subsequent eclipse of such disqualification would not enure to the benefit of such a tenderer. The decision taken on 10.6.2013 could not have been faulted. Petitioner was guilty of suppression of material fact and as such was rightly disqualified on the ground that it was debarred for suppression of the material fact and filed a false affidavit. Thus no concession could have been made by the Municipal Corporation that they would not insist upon the technical disqualification which was to the detriment of the other tenderers. Once a person was technically disqualified as on the date on which the technical disqualification was considered, no subsequent document/event can be 7 taken into consideration. Such a decision could not have been reviewed by the Corporation as per terms of the NIT or there is no power of the Corporation to make such a statement to the detriment of the other tenderers. The conditions of the tender are binding and once a person is not qualified as per terms of the NIT, on the date of opening technical bid the terms cannot be changed and rules of the game cannot be changed once play has been started. Thus, the decision taken by the Corporation was in accordance with the law. Corporation could not have made such a concession. The Court could not have disposed of the writ application on the basis of the concession as the legality of such concession has to be considered by the Court and whether it is open to the Corporation to amend the terms and conditions subject to which tenders have been invited.
Reliance has been place of the decision of the Hon'ble Supreme Court in Tata Cellular Versus Union of India, (1994) 6 SCC 651 to contend that the order of the Single Bench has the effect of reviewing of the terms and conditions of the tender while passing the impugned order. As such, it is liable to be set aside and the decision of K.M.C. disqualifying the respondent/petitioner be upheld. They have also relied upon a decision in M/s. Monarch Infrastructure (P) Ltd. V. Commissioner, Ulhasnagar Municipal Corporation & Ors., AIR 2000 SC 2272.
It was submitted by Sri Ashoke Banerjee, learned Senior Counsel appearing on behalf of the respondent that K.M.C. could not have brooked any further delay in completion of the project and as such, statement was made not to insist on such technical disqualification of the writ petitioner, although on the 8 date on which the decision had been taken by the Corporation, it was justified in taking the decision to disqualify the petitioner Rashmi Metaliks Limited. False affidavit had been filed by the petitioner to the effect that petitioner was not qualified as, admittedly, the petitioner was disqualified by PHE and was debarred for three years from the tender process. Thus, it could not have participated in the tender process in question and was rightly disqualified. Its financial bid could not have been ordered to be reopened in view of disqualification at technical stage.
Mr. Mainak Bose, learned Counsel appearing on behalf of the Rashmi Metaliks has submitted that PHE had not informed the petitioner of the disqualification recorded on 7.6.2013. He has disputed receipt of the e-mail communication from PHE regarding disqualification which has been filed along with Memo of Appeal. He also submitted that the petitioner was informed of the technical disqualification of the technical bid on 17.6.2013, although as per schedule in NIT, it was to be done on 13.6.2013. Even in such communication which was sent to the petitioner no reason was assigned for debarring the petitioner from the tender process. Thus, it was doubtful on what basis such disqualification had been ordered. As reasons have not been mentioned in communication or uploaded information on internet by Corporation. The petitioner was not in position due to lack of information as to disqualification by PHE to inform the Corporation on 9.6.2013 ordered by PHC on 07.06.2013 which was ultimately set aside by this Court on 17.6.2013 in a petition filed by respondent/petitioner.
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It was further submitted by Counsel on behalf of respondent/petitioner that once representation was filed by the petitioner, the Corporation ought to have reviewed its decision on the technical bid as well as for opening of the financial bid. It was further necessary as per Clause 1(7) of the Opening of the Technical Proposal to seek clarification with respect to disqualification ordered by PHE. By not seeking clarification as per the provisions contained in Clause 1(7) of the conditions of Opening of Technical Proposal, illegality had been committed by the K.M.C. Thus, the concession, which was made before the Single Bench was fair in the circumstances and Corporation was bound by its concession that it would not insist on the technical disqualification. It cannot be said that it was contrary to the terms and conditions of the notice inviting tender.
When we consider the scheme of notice inviting tender it is apparent that technical qualification was to be first assessed and technical disqualification was to be considered as prevalent on 10th June, 2013. Admittedly, the petitioner was disqualified as on the date on which technical bid was considered and the information of the order of disqualification of the writ petitioner was with the municipal corporation as on that date of consideration of technical disqualification the decision taken by the Corporation was absolutely just and proper. A person who had been debarred from participating in tender process by PHE on 07.6.2013 could not have been allowed to participate in the technical bid as ordered by the Single Bench. Filing of Writ petition subsequently and setting aside of the order dated 7.6.2013 issued by PHE, by this Court in WP 555 of 10 2013 could not enure to the benefit of the petitioner in respect of the disqualification which was in force on 10.6.2013 as per terms and conditions of NIT. Once technical bid has been considered and disqualification was ordered there was no scope for KMC to review it at any subsequent stage. No such clause has been shown in the notice inviting tender in this case.
The terms and conditions on which the tenders had been invited cannot be changed. Once the play has been started, its rules cannot be changed. The concession made by the Municipal Corporation not to insist for technical disqualification was absolutely contrary to the terms and conditions subject to which tenders were invited. In Tata Cellular Vs. Union of India (supra) it has been laid down that there cannot be any judicial review of such terms and conditions of the terms of tender or there cannot be any special treatment of any of the bidders. An eligibility attained on a subsequent date then fixed cannot be considered, in view of what has been laid down in Tata Cellular Vs. Union of India (supra) which has been summarized in paragraph 94, as follows.
"94. The principles deducible form the above are :
(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.11
(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 quasi-administrative 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." In the circumstances, disqualification on the technical ground ordered on 10.6.2013 could not be termed to be arbitrary or unjustified or non-essential. There could not be any review of such a disqualification by KMC at a subsequent stage to reopen a proceeding which stood already concluded when the order of black-listing dated 7.6.2013 was in force. In the absence of any power reserved by the Corporation in terms and condition of NIT to review its decision, we are of the considered opinion that it was a misadventure on the part of the Corporation to make aforesaid concession which it could not have defended on merits and it was also incumbent upon the Single Bench to go into the legality of such 12 concession. Concession could not have been made in respect of mandatory terms and conditions of the tender. It would be discriminatory to permit at a subsequent stage, such a waiver of a mandatory technical qualification due to subsequent event. Particularly in process of tender question of eligibility is to be examined with respect to a particular date.
We find equally futile the submission raised by the learned Counsel appearing on behalf of the Rashmi Metaliks that as per conditions of Clause no.1.7 for Opening and Evaluation of Tender, K.M.C. ought to have sought clarification as to disqualification by PHE. In our opinion, no clarification was required, as admittedly there was nothing to be clarified, as, the fact remains uncontroverted that the petitioner Rashmi Metaliks stood disqualified by PHE for a period of three years from participating in tender process on 7.6.2013 and that such fact had not been disclosed by the petitioner in the affidavit filed on 9.6.2013 though it is apparent that e-mail was also sent by PHE to the petitioner Rashmi Metaliks on 7.6.2013 and it is to be presumed that the same had been received by the petitioner on the same date and time as disclosed in the electronic record, hard copy whereof has been placed on record before this Court in appeal. The explanation of the respondent/petitioner that it did not find such e-mail in its mail box is not reliable particularly when it had been admittedly disqualified by the PHE and the letter appears to have sent at the e-mail correctly addressed to the respondent/petitioner. Obviously, it is presumed to have been delivered. The petitioner has deliberately withheld information from Corporation. Even if e-mail was not delivered the fact remains that Corporation was aware of 13 the disqualification on the basis of materials placed before it from other sources. Such fact is incontrovertible one, decision taken by Corporation thereon in an objective manner could not be faulted by the petitioner. No duty was cast in the facts of the case upon the Corporation to seek explanation from the petitioner as to the aforesaid disqualification as the existence of the same as on the relevant date decision had been taken on technical bid has not been questioned before us. The fact remains that it was incumbent upon the petitioner to disclose the aforesaid disqualification fairly in the affidavit. Such information was suppressed for the reasons best known to the petitioner. Even assuming that the petitioner was not aware of the disqualification, the fact remains that K.M.C. was aware of such disqualification, and rightly acted thereupon. The petitioner had subsequently questioned the aforesaid disqualification the same was set aside in writ petition no. 555 of 2013 was of no consequence. In the circumstances, we find that impugned order passed by Single Bench cannot be permitted to subsist and the same is liable to be set aside. It was not open to the Corporation to review decision on the basis of subsequent developments. Then opening of technical bid would amount to rewriting the terms and conditions of the NIT and changing rules of game in between. In M/s. Monarch Infrastructure Pvt. Ltd. Vs. Commissioner, Ulhasnagar Municipal Corporation & Ors.(supra) it has been laid down that if the tender is changed after the players entered into the arena it is like changing the rules of the game after it had began and, therefore, if the Government or the Municipal Corporation was free to alter the conditions fresh process of tender was the only alternative permissible route. By reason of 14 deletion of a particular condition, a wider net would be permissible and larger participation or more attractive bids could be offered.
In our opinion, in the facts and circumstances of the case it was not open to K.M.C. to waive the technical disqualification as it prevailed on 10.6.2013. In Monarch Industries (supra) the Apex Court had held that once the notice inviting tender stipulated that earnest money is to be deposited by demand draft or cash, pay order or in the submission of photocopy of demand draft duly notarized by the tenderer was not sufficient and rejection of his offer could not be faulted on the equitable plea that demand draft had been misplaced in haste and confusion.
We accordingly hold that subsequent setting aside of debarment of the writ petitioner on 17.6.2013l would not enure to his benefit for getting rid after qualification in the technical bid ordered on 10.6.2013.
In the circumstances we have no hesitation to set aside the order passed by the Single Judge. We allow the appeals set aside the order passed by the Single Bench. However, the parties are left to bear their own costs.
Learned Counsel for the petitioner prays for interim stay of the order. We find no merit in the submission considering the urgent nature of work and better interest in work, we decline to stay the order passed by us.
(JOYMALYA BAGCHI, J.) (ARUN MISHRA, C.J.)
Rsg/SN/GH.
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