Jammu & Kashmir High Court
M/S Trg Industries Pvt. Ltd Office 29 ... vs Ut Of Jammu And Kashmir Th. Commissioner ... on 22 March, 2024
Author: Sanjeev Kumar
Bench: Sanjeev Kumar
1
HIGH COURT OF JAMMU & KASHMIR AND LADAKH
AT JAMMU
WP(C ) No.2910/2022
Reserved on 05.03.2024
Pronounced on: 22 .03.2024
M/S TRG Industries Pvt. Ltd office 29 Gaurimal Complex Rail Head
Complex Near Bahu Plaza Jammu th. its Managing Director Naresh
Gupta age 59 years son of Sh. T.R.Gupta
....Petitioner(s)
Through: Mr. Varut Gupta Advocate with
Mr. Rajeev Chargotra Advocate
V/s
1 UT of Jammu and Kashmir th. Commissioner Secretary to Government,
Public Works Department (R&B) Civil Secretariat Jammu
2 Chief Engineer PMGSY Jammu
3. Executive Engineer PMGSY Division Ramnagar
4 Superintending Engineer PMGSY Division Ramnagar
5. A.H.Wani Infratech Pvt. Ltd and M/S Tarmech Road and Roop
Builders (Joint Venture) Chinar Commercial Complex,Residency Road
Srinagar/Kashmir
Respondent(s)
Through:Mr. Ravinder Gupta AAG
Mr.Sunil Sethi Sr. Advocate with
Mr. Ravi Abrol Advocate.
CORAM:
Hon'ble Mr Justice Sanjeev Kumar, Judge
JUDGMENT
1 The extraordinary writ jurisdiction conferred on this Court under Article 226 of the Constitution of India is invoked by the petitioner-firm for issuance of a writ, an order or a direction in the nature of certiorari quashing the decision of respondents 1 to 4 ['the official 2 respondents'] taken on 24.12.2022 vide No. CEJ/PMGSY/27462, issuing "Revised Summary of Technical Evaluation Report" in respect of work for up-gradation of road from T01 Sira to Shivgali, Package No. JK14- 3008, PMGSY-III, Batch No. I of 2022-23, Block Latti, District Udhampur Length- 32.150 kms ['the subject work']. A further writ or direction in the nature of mandamus is sought against the official respondents for restraining them from opening the financial bid or to proceed further in pursuance of e-NIT No. CEJ/PMGSY/723 of 2022-23 dated 14.11.2022.
Factual matrix:
2 Vide e-NIT issued on 14.11.2022, the official respondents invited bids for various developmental projects across the UT of Jammu and Kashmir which also included the subject work. The petitioner-firm, being eligible in terms of the e-NIT, participated in the tendering process by submitting its bid within the stipulated time. Apart from the petitioner, four other bidders including the respondent No.5 also participated in the bidding process. As is stipulated in the e-NIT, the bidding process envisaged two stages i.e Part I and Part II and, therefore, the bidders were required to submit technical bid and the financial bid separately. The bidders, who would qualify and are declared 'responsive' during technical evaluation of the bids, were alone entitled to participate in the price bid. 3 On 20.12.2022, the Chief Engineer PMGSY, Jammu, who was heading the Technical Evaluation Committee, issued a brief summary of technical evaluation report in respect of subject work. In the brief 3 summary issued by the Chief Engineer, it was indicated that, out of five bidders, who had participated in the tender process, only two bidders were found responsive and technically qualified to participate in the price bid. Respondent No.5 was, however, declared 'non-responsive' for the reason that the annual turnover certificate submitted by the second joint venture partner M/S Tarmech Road and Roof Builders did not have Unique Document Identification Number ['UDIN'] of Institute of Chartered Accountants of India mentioned in the certificate, which was the mandatory requirement of clause 4.4 B(a) III(a) of Instructions to Bidders ['ITB']. The requisite information in this regard was uploaded by the official respondents in their official website.
4 Respondent No.5, who was declared 'non-responsive' in the technical evaluation of bids, submitted a representation to the official respondents in terms of clause 22.6 of ITB which provides five working days' time to the aggrieved bidder to submit his/her complaint. In its complaint dated 23.12.2022, it was projected by respondent No.5 that as per the Standard Bidding Document (SBD), prescribed qualifying criteria is that the bidder must have achieved the required amount of turnover in any one out of the last five financial years and, therefore, the latest year's turnover of JV Partner M/S Tarmech Road and Roof Builders meets the qualifying criteria and, as such, the issue may be reconsidered. It was stated by respondent No.5 that it has been disqualified and declared 'non responsive' only because of the omission of the members of the 4 Evaluation Committee to take note of the last year's turn over certificate which was fulfilling the qualifying criteria laid down in SBD. 5 It seems that upon consideration of complaint made by respondent No.5, the matter was reconsidered by the Technical Evaluation Committee. The respondent No.5 was declared 'responsive' and consequently, Revised Summary of Technical Evaluation Report was put on e-procurement portal. It is this change of decision made and published by the Technical Evaluation Committee in the form of Revised Summary of Technical Evaluation Report dated 24.12.2022, the petitioner is aggrieved of and has challenged the same in the instant petition. The pleadings and submissions of parties:
6 The impugned decision of the Technical Evaluation Committee headed by Chief Engineer, PMGSY, Jammu is assailed by the petitioner primarily on the following grounds:
(a) That the decision of the Technical Evaluation Committee and issue of revised summary of technical evaluation report in respect of respondent No.5 changing its status from 'non-responsive' to 'responsive' bidder is arbitrary, unfair and in violation of the mandatory terms and conditions of e-NIT;
(b) That the publication of technical evaluation summary wherein the petitioner was shown responsive along with other bidders and respondent No.5 was shown 'non-
responsive' had generated legitimate expectation in the petitioner to bag the contract on the basis of lowest rates amongst the bidders quoted by the petitioner; and
(c) That the impugned decision of the official respondents overlooks the mandatory condition provided in the SBD at 5 more than one places that the certificate of five years turnover required to be uploaded/submitted by a bidder must be signed by the qualified Chartered Accountant and bears UDIN. It is submitted that the certificate in respect of five years' annual returns signed by the Chartered Accountant and submitted by respondent No.5 did not have on it the mandatory UDIN.
7 Per contra, the stand of the official respondents is that in the first meeting of Technical Evaluation Committee that took place on 20.12.2022, two bidders including the petitioner were found responsive. The petitioner was declared 'responsive' on the ground that UDIN of the Institute of Chartered Accountants of India was not mentioned on the annual turnover certificate submitted by 2nd JV Partner M/S Tarmech and Roof Builders. However, on a complaint filed by respondent No.5 in terms of clause 22.6 of ITB, the matter was re-examined in the light of submissions made in the complaint and it was found that there was on record one year's turnover certificate, mentioning the turnover for the financial year 2021-22 with assessment year 2022-23 bearing UDIN, meeting the qualifying criteria. The complaint filed by respondent No.5 having merit was accepted and revised summary of technical evaluation report was issued and put on e-procurement portal. It is submitted that the decision of the Evaluation Committee consisting of experts was bona fide, fair and free from any arbitrariness. Respondent No.5 was found to be meeting the essential eligibility criteria and, therefore, was declared 'responsive'.
68 On the similar lines is the reply affidavit filed by respondent No.5. On behalf of respondent No.5, it is submitted that the earlier decision of the Technical Evaluation Committee dated 20.12.2022 was contrary to the terms and conditions of the SBD and taken without considering the latest annual turnover of JV Partner which was not only bearing a UDIN, but was otherwise fulfilling the qualifying criteria. Apart from elaborately dealing with the legal position vis-à-vis the power of this Court to judicially review the decision of Technical Evaluation Committee consisting of experts and other related issues, it is also argued that the documents uploaded by respondent No.5 with regard to its financial status and capability to execute the work clearly depict substantial compliance of the terms and conditions of the contract. It is also the plea taken by respondent No.5 that bearing of UDIN on the annual turnover certificate for all the five years was not a mandatory condition of contract and, therefore, the decision of the Technical Evaluation Committee taken on 24.12.2022 waiving the directory condition cannot be interfered with by this Court in exercise of its extraordinary writ jurisdiction. It is also argued that in view of huge difference between the bids submitted by the petitioner and respondent No.5, if the contract is permitted to be allotted to the petitioner, it would cause huge loss to the public exchequer, in that, the official respondents will have to shell out more than 20 lacs above the bid/rates quoted by respondent No.5.
79 Aside the aforesaid pleadings of the parties, there is a supplementary affidavit filed by the Managing Director of the petitioner-firm taken on record. In the supplementary affidavit, it is highlighted by the petitioner that mentioning of UDIN on the turnover certificate is not an idle formality, but a mandatory requirement. It is submitted that necessity of mandatory submission of certificates by Chartered Accountants with UDIN was felt in the last few years when several cases came up before the intending departments, particularly in works contracts, where it was found that annual turnover certificates and balance sheets issued by the Chartered Accountants did not match the figures in the income tax returns. There were number of cases of manipulation of such certificates to somehow acquire the eligibility qualification to participate in the biding process. 10 It is, in these circumstances, need was felt to check this malaise and put in place a system where the certificates issued by the Chartered Accountants carry UDIN, so that if it is found that the certificates are incorrect or manipulated, the concerned Chartered Accountants are made to account for. It was, thus, made mandatory by all the Government Departments and the Public Sector Undertakings for the bidders to enclose with their bidding documents the certificates issued by the Chartered Accountant with UDIN. Further more, it is highlighted by the petitioner that the certificate dated 19.09.2022 of the Chartered Accountant uploaded by respondent No.5 is not a turnover certificate, but a certificate of GST and Tax Audit issued in terms of Section 3 CB- 8 Section 14AB (a) of the Income Tax Act. Nor does said certificate gives any details of the civil works executed for the relevant year for which the certificate has been issued. It is also pleaded in the supplementary affidavit that in respect of same e-NIT relating to different work, the official respondents rejected the bid of the bidder on account of the fact that the certificate issued by the Chartered Accountant of annul turnover did not carry UDIN.
11 It is further submitted that it has been the consistent practice of the official respondents to reject the bids of such bidders whose annual turnover certificates do not carry mandatory UDIN. The petitioner has also quoted an example suggesting favouritism of the official respondents in favour of respondent No.5. It is pleaded that in relation to same e-NIT, which is under consideration in the instant case, in respect of another work i.e upgradation of road from Dansal to Assar via Lalhote etc., the Technical Evaluation committee declared respondent No.5 as 'responsive' bidder and the petitioner as 'non-responsive' bidder. The bid of the petitioner was declared 'non-responsive' on the ground that the petitioner- firm had attached/uploaded audit reports of four years instead of last five financial years of the second JV Partner which, in any case, is not the requirement of clause 4.4B(a) III (e). It is pointed out that bid of respondent No.5 was declared 'responsive' despite the fact that it had not uploaded the annual turnover certificate bearing UDIN issued by the Chartered Accountant for the last five years. The dispute is stated to be pending adjudication in this Court in a separate petition. 9 12 The supplementary affidavit filed by the petitioner is responded to by the official as well as the private respondent. In reply to the supplementary affidavit, it is submitted that the mandatory requirement of any contract, including the contract in question, is the financial capacity of the bidder to execute the work. This is so clearly laid down in clause 4.6 of the SBD. The bid capacity of the respondent No.5 in terms of clause 4.6 was worked out on the basis of the annual turnover submitted by respondent No.5 and it was found that respondent No.5 had the requisite bid capacity to execute the work and, therefore, was meeting the requirements of SBD substantially. It is on account of this reason, respondent No.5 was declared 'responsive'. With regard to the example cited by the petitioner in respect of other works where the bids of the bidders have been rejected, it is submitted by the official respondents that each contract is separate and independent and that in those cases, there was no complaint lodged by the 'non-responsive bidders' by providing any reason and justification projecting their grievances in the manner it was done by respondent No.5.
Discussion & Analysis 13 Before proceeding to proceed to evaluate the material on record and ananlyse the rival contentions, it would be appropriate to allude to relevant clauses of e-NIT which have direct bearing on the controversy in hand.
14 The SBD in question is in two parts. Part I pertains to technical bid and Part II pertains to financial bid. As per e-procurement 10 document, the subject work is enlisted at S.No.13 and estimated cost of the work is Rs.5331.06 lacs (Rs.53.31 crores approximately). Clause 2 of the e-NIT contains instructions to bidders (ITB). Clause 3 provides for eligibility of the bidders. Other relevant clauses of ITB may be set out thus:
3 Eligible Bidders:
3.1 The invitation for Bids is open to all eligible bidders meting the eligibility criteria as defined in ITB. The applicant should be a private or Government owned legal entity.For package size exceeding Rs.10 crore,the Joint Ventures are allowed.
3.2......................................................................
4. Qualification of the Bidder 4.1..................................................................... 4.1.1.................................................................. 4.2. All bidders shall include the following information and copies of the following documents with their bids in Section 3, qualification Information unless otherwise stated in the Appendix to ITB:
(I)Copy of PAN Card issued by income tax authorities (clause 4.4 of ITB) (pdf);
(II) Contractor registration certification (clause 3 of ITB) duly renewed for the current financial year (pdf). (III) Reports on financial standing:
(a) Annual Turnover certificate from Chartered Accountant for last five financial years (2017-18, 2018-19, 2019-20, 2020-21 and 2021-22) excluding current financial year bearing UDIN of Institute of Chartered Accountants of India with breakup of civil works and total works excluding GST/VAT in each financial year (clause 4.4 of ITB)(pdf). Without UDIN the certificate will not be entertained and the bid rejected.
(b) ...................................................................
(c) ..................................................................
(d) ..................................................................11
(e) ..................................................................
(f) Audit reports under Income Tax Act (3CA/3CB along with 3CD reports/(whichever applicable) for the last five financial years.
(g) .................................................................. .........
(h) The successful bidder will have to provide the original documents (from a to g) duly certified by a Chartered Accountant before a work is allotted to him. Any certificate issued by the Chartered Accountant should mandatorily bear UDIN.
4.3 Joint Ventures: For bids valuing Rs.10.00 crores and above.
(a).....................................................................
(b).....................................................................
(c).....................................................................
(d).....................................................................
e)........................................................................
(f).....................................................................
(g).....................................................................
(h)...................................................................... 4.4A To qualify for award of the contract, each bidder should have in the last five financial years:
,
(a) Achieved in any one financial year, a minimum financial turnover (as certified by chartered accountant, and at least 50% of which is from civil engineering construction works) equivalent to amount given below:
(i) 60% of amount put to bid, in case the amount put to bid is Rs.200 lakhs and less.
(ii) 75% of amount put to bid, in case the amount put to bid is more than Rs.200 lakhs.
4.4 B(a) Each bidder must upload scanned copies of the following documents on website www.pmgsytenders.gov.in at appropriate place failing which the bid shall be rejected outrightly.
I.................................................................. II.................................................................. III Reports on financial standing 12
(a)Annual turnover certificate from chartered accountant for last five financial years (2017-18,2018- 19,2019-20, 2020-21 and 2021-22) excluding current financial year bearing UDIN of Institute of Chartered Accountants of India with breakup of civil works and total works excluding GST/VAT in each financial year. (clause 4.4 of ITB)(pdf). Without UDIN the certificate will not be entertained and the bid rejected.
(b)............................................................... .............
©............................................................... ............
(d)............................................................... ........
(e)............................................................... ......
(f)............................................................... ......
(g)............................................................... .......
(h) The successful bidder will have to provide the original documents (from a to g) duly certified by a Chartered Accountant before a work is allotted to him. Any certificate issued by the chartered accountant should mandatorily bear UDIN.
15 Similar requirement is repeated in clause 12.2(b) III(a) and clause 12.2(b) III(h). The bid opening and evaluation is given in clause 22 which requires that the result of evaluation of Part I of the bids (technical bids) shall be made public on e-procurement system following which there shall be a period of five working days for an aggrieved bidder to submit his complaint. This is so provided in clause 22.6 which reads thus:
"The result of evaluation of Part I of the bids shall be made public on e-procurement systems following which there shall be a period of five working days during which any bidder may submit complaint which shall be considered for 13 resolution before opening Part II of the bid. for an aggrieved bidder to submit his complaint".
Clause 25; Examination of bids and determination of responsiveness:
25.1 During the detailed evaluation of 'Part I of Bids' the Employer will determine whether each Bid; (a) meets the eligibility criteria defined in clauses 3 and 4; (b) has been properly signed; (c ) is accompanied by the required securities; and (d) is substantially responsive to the requirements of the bidding documents. During the detailed evaluation of the 'Part II of bids' the responsiveness of the bids will be further determined with respect to the remaining bid conditions i.e priced bill of quantities, technical specifications and drawings;
25.2 A substantially responsive 'financial bid' is one which conforms to all the terms, conditions and specifications of the bidding documents, without material deviation or reservation. A material deviation or reservation is one (a) which affects in any substantial way the scope, quality or performance of the works; (c) which limits in any substantial way, inconsistent with the bidding documents, the Employer's rights or the Bidder's obligations under the contract; (c) whose rectification would affect unfairly the competitive position of other bidders presenting substantially responsive bids.
25.3.....................................................................
16 It is in light of the aforesaid relevant clauses of ITB, this Court is required to examine the grievance projected by the petitioner in this petition vis-à-vis the decision of the official respondents dated 24.12.2022, issuing revised summary of technical evaluation report and declaring respondent No.5 'responsive' for participating in the price bid for the subject work.
1417 Having heard learned counsel for the parties and perused the material on record, I am of the view that the decision of this petition would turn on the determination of following two issues:-
(i) Whether the requirement of uploading annual turnover certificate issued by the Chartered Accountant for the last five financial years bearing UDIN of Institute of Chartered Accountants of India with breakup of civil works and total works in each financial year is mandatory condition of contract and breach thereof entails rejection of the bid; and
(ii) Whether submission/uploading of turnover for at least one out of the last five financial years bearing UDIN is substantial compliance of clause 4.2 (III)(a) read with clause 4.4 B(a) III (a) of the ITB and bid submitted by respondent No.5 could be termed as 'substantially responsive' in terms of clause 25.1 of the ITB.
18 The facts in this case are not much in dispute. Clause 4.2 (III) deals with documents pertaining to the financial standing of the bid. Sub-clause (a) of Clause 4.2 (III) requires the bidder to submit annual turnover certificate from the Chartered Accountant for the last five financial years bearing UDIN of Institute of Chartered Accountants of India with breakup of civil works and total works excluding GST/VAT in each financial year. It further provides unequivocally that, without UDIN, the certificate will not be entertained and the bid rejected. It is, thus, evident that clause 4.2 (III) (a) does not only mandate submission of annual turnover certificate bearing UDIN, but also provides for the consequences of the failure of the bidder to submit such certificate having UDIN of Institute of Chartered Accountants of India on the certificate. Apart from the turnover certificate as stipulated in aforesaid clause, the 15 bidder is also required to submit audit reports under the Income Tax Act for the last five financial year. Clause 4.2 (III)(h) reiterates that successful bidder shall have to provide original documents (from a to g) duly certified by Chartered Accountant before the work is allotted to him, making it further clear that any certificate issued by the Chartered Accountant should mandatorily bear UDIN. This requirement is repeated in clause 4.4 B(a)(III)(a) requiring the bidder to uploaded scanned copies of the requisite documents including annual turnover certificate from the Chartered Accountant for last five financial years bearing UDIN. This clause again reminds the bidder that without UDIN the certificate of Chartered Accountant will not be entertained and the bid shall be rejected. There is another clause referred to hereinabove i.e clause 12.2(b) III which again reminds the bidders unequivocally that no certificate issued by the Chartered Accountant shall be entertained if the same was not bearing UDIN and the bid shall be rejected. It is in the light of these clauses, the bids of the eligible bidders were considered. Indisputably, the certificate of five years turnover submitted by respondent No.5 does not meet the requirements stipulated in clause 4.2 (III)(a) read with clause 4.4
(a) III(a) of ITB.
19 Regard being had to the mandatory nature of requirement which is reiterated in two more clauses, the Technical Evaluation Committee in its decision taken on 20.12.2022 declared respondent No.5 as 'non-responsive'.
1620 True it is that clause 22.6 reproduced hereinabove gives time of five working days to the aggrieved bidder to lodge his complaint against any adverse decision of the Technical Evaluation committee in respect of his bid. Respondent No.5 availed of this opportunity and lodged its complaint.
21 From a reading of the complaint dated 23.12.2022, which is placed on record by respondent No.5 with his objections, it is evident that respondent No.5 sought review of the decision primarily on the ground that the latest turnover issued by the Chartered Accountant on 19.09.2022 was conforming to the requirement of bearing UDIN and was sufficient enough to declare respondent No.5 qualified and substantially responsive. The complaint was considered by the Technical Evaluation Committee and was found meritorious. The Technical Evaluation Committee acceded to the plea of respondent No.5 by placing reliance upon clause 4.4 A of ITB also reproduced hereinabove.
22 From a reading of clause 4.4 A, it becomes abundantly clear that a bidder to qualify for award of contract should have in the last five financial years: (a) achieved in any one financial year, a minimum financial turnover as certified by the Chartered Accountant and, at least 50% of which is from civil engineering construction works as certified by the Chartered Accountant as is equivalent to the amount i.e 75% of the amount put to bid, in case the amount put to bid is more than 200 lacs. The amount put to bid would not include maintenance cost for five years and turnover will be indexed at the rate of 8% per year. 17 23 Admittedly, in the instant case, the bid amount is more than Rs.200 lacs and, therefore, the bidder was required to show a minimum financial turnover equivalent to 75% of the amount put to bid. He was further required to show that at least 50% of such financial turnover which is equivalent to 75% of the bid amount is from civil engineering construction works. The bidder was also required to show that he had satisfactorily completed, as prime Contractor or sub-contractor, at least one similar work equal in value to one-third of the estimated cost of work of any Government/Semi Government Department (excluding maintenance cost for five years) for which the bid was invited. 24 When we look at the certificate issued by the Chartered Accountant bearing UDIN in addition to five years turnover certificate issued by the Chartered Accountant without UDIN in favour of JV Partner M/S Tarmec Road and Roof Builders, it is evident the document is per se and strictly speaking not a turnover certificate issued by the Chartered Accountant. It is GST and tax audit report. It does not speak about the nature of work carried out by respondent No.5 in the latest financial year i.e 2021-22. It also does not reflect that 50% of the turnover equivalent to 75% of the bid amount is from civil engineering construction work. It seems that the Technical Evaluation Committee considered the tax audit report signed by the Chartered Accountant along with the financial turnover certificate issued without UDIN for all the five financial years i.e 2017-18, 2018-19, 2019-20, 2020-21 and 2021-2022. Since the annual turnover certificate for the requisite five financial years issued by the 18 Chartered Accountant without bearing mandatory UDIN was required to be excluded from consideration, as such, it was not just and fair on the part of the Technical Evaluation Committee to read the said annual turnover certificate into an income tax audit report submitted by respondent No.5 in terms of clause 4.2 (III)(f) of the ITB. The official respondents are fair in admitting before this Court that they did not take into consideration the turnover certificate issued by the Chartered Accountant on 23.12.2022 in respect of five years i.e 2017-18, 2018-19, 2019-20, 2020-21 and 2021-2022. The official respondents have, however, failed to explain by giving any cogent reason as to why and how the certificate dated 23.12.2022 which as per the official respondents was not admissible to be considered, has been relied upon to import the execution of requisite volume of civil work into the tax audit report which they considered to determine bid capacity of the respondent No.5. The decision of the Technical Evaluation Committee in relying upon a part of annual turnover certificate dated 23.12.2022 issued by the Charted Accountant without bearing UDIN is, on the face of it, illegal, arbitrary and seemingly unfair and biased against the petitioner and in favour respondent No.5. 25 That apart, it is trite law that if a condition of a contract requires a particular thing to be done in a particular manner and also provides the consequences of its breach, such condition is required to be treated as mandatory. As noted above, the tender documents reiterate at more than two places that any certificate to be issued by the Chartered Accountant is required to bear UDIN of the Institute of Chartered 19 Accountants and breach thereof will entail rejection of the bid. In the face of such stipulation, it is very difficult to accede to the argument of the learned counsel for the official respondents that the stipulation requiring five years annual turnover certificate from the Chartered Accountant bearing UDIN is directory and can be waived off.
26 This brings me to the question as to whether so called year annual financial turnover certificate of respondent No.5 (tax audit report plus consolidated annual turnover certificate for the last five financial years not bearing UDIN) as was accepted by the official respondents could be termed as 'substantial compliance of the terms and conditions of Part I of the bid document' and, therefore, the decision of the Technical Evaluation Committee is fair and is ought not to be interfered with. 27 Clause 25 of the ITB deals with examination of bids and determination of responsiveness. So far as Part I of the bids is concerned, clause 25.1 clearly provides that the evaluation of the bid shall be done by the employer on the basis of following criteria:
(a) the bid meets the eligibility criteria defined in clause 3 and 4;
(b) it has been properly signed;
(c) it is accompanied by required securities; and,
(d) it is substantially responsive to the requirements of the bidding documents.
28 It is only if all the four requirements are met, a bid can be declared as 'responsive' to the SBD. In the instant case, the bid of respondent No.5 does not meet eligibility criteria defined in clause 3 and 4, in that, indisputably, the annual turnover certificate from the Chartered 20 Accountant for the last five financial years submitted/uploaded by the respondent No.5 does not bear UDIN of Institute of Chartered Accountants of India. The one year's certificate pertaining to the financial year 21-22 which is issued by the Chartered Accountant in form 3 CB under section 44 AB(a) of the Income Tax Act is only a GST and tax audit report and cannot be termed as 'annual financial turnover certificate'. The other five years' turnover certificate submitted by respondent No.5 for the last five financial years including the financial year 21-22 does not bear UDIN and, therefore, is required to be kept out of consideration. As a matter of fact, stand of the official respondents is that though they have not taken into consideration aforesaid certificate, yet have found respondent No.5 substantially responsive in terms of clause 4.4 A of SBD. 29 I have already explained that the manner in which respondent No.5 has been sought to be declared responsive by riding on illusionary interpretation of the clause by the official respondents smacks of total unfairness, arbitrariness and biased nature of decision. Although, the tax audit certificate for the financial year 2021-22 relied upon by the official respondents cannot, by any stretch of reasoning, be called as 'annual financial turnover', yet if one were to concede that the said certificate can be treated as 'annual financial turnover' for the financial year 2021-2022, the certificate would not still meet the requirement of clause 4.4 A. 30 I am aware that with a view to verify the bidding capacity of respondent No.5, the official respondents have picked up for consideration 21 the annual turn over certificate issued by the Chartered Accountant without bearing UDIN. This was not permissible for the reason that the entire certificate was not admissible to be considered in the evaluation of the bid in view of the clear stipulation contained in clause 4 and at two other places as explained above.
31 Aside, the official respondents in reply to the supplementary affidavit filed by the petitioner have clearly admitted that in relation to other works tendered in terms of e-NIT in question, the similar bids of the bidders which were not conforming to the requirement of bearing UDIN on the annual turnover certificate issued by the Chartered Accountant have been rejected. The only reason assigned for deviation in the instant case is that the aforesaid cases were pertaining to different works and that no complaint in terms of clause 26.2 of SBD was filed by the aggrieved bidder(s). Be that as it may, the fact remains that till the impugned decision was taken on the compliant of respondent No.5, it was also the understanding of the official respondents that submission of five years turnover certified by the Chartered Accountant bearing UDIN of Institute of Chartered Accountants of India was mandatory requirement and breach thereof would entail rejection. It is because of this reason, in the couple of cases, similar bids of the bidders have already been rejected and bidders declared non-responsive. The reasons assigned by the official respondents are totally irrational and clearly smack of arbitrariness and reflect discriminatory attitude adopted by the official respondents in the instant case.
2232 Needless to say that the stipulation of submitting five years' annual turnover certificate issued by the Chartered Accountant and bearing UDIN relates to adequate financial capacity of the bidder to execute the contract. It also reflects upon the continuity of the bidder in the similar business for the last five financial years. The annual turnover certificate for the last five financial years is also a document in the hands of Technical Evaluation Committee to verify the veracity and correctness of the certificate to be furnished as per the format shown in Section 3 Qualification Information. As is provided in clause 4.4A of ITB, the bidder is required to submit a certificate to the effect that he has satisfactorily completed at least one similar work equal in value to one- third of the estimated cost of work of any Government/Semi Government Department for which the bid is invited or such higher amount as may be specified in appendix to ITB during the last five financial years excluding this work.
33 It is true that to qualify for award of contract, the bidder is required to show that he has achieved in any one of the last five financial years, a minimum financial turnover of which 50% is from civil engineering construction work, equivalent to the amount of 75% of the bid amount where the bid amount is more than 200 lakhs, yet the requirement of submission of annual audit reports of five financial years cannot be dispensed with. The Technical Evaluation Committee was obliged to strictly adhere to clause 25 of the ITB and determine, inter alia, amongst other conditions that the bid submitted by respondent No.5 was 23 conforming to the eligibility criteria defined in Clauses 3 and 4 of the ITB. 34 Both sides have relied upon a bulk of case law on the powers of judicial review of this Court vis-a-vis the disputes relating to contracts awarded or to be awarded by the Government, Semi Government and other Public Sector Undertakings. Suffice to say that all these issues have already been considered by this Court elaborately in Mohd Yousaf Shan vs. UT of Jammu and Kashmir and others (WP(C) No. 1875/2023, decided on 03.08.2023). It is relevant to reproduce paragraphs 12, 13, 14 and 16 of the judgment as under:-
".12. The distinction between "mandatory or essential conditions" and "ancillary conditions" in a contract is aptly brought out by Hon‟ble the Supreme Court in para 14, 15 and 16 of Vidharbha Irrigation Development Corporation vs. Anoj Kumar Agarwala and ors, (2020) 17 SCC 577, which is reproduced below:-
"14. The law on the subject is well settled. In Bakshi Security and Personnel Services Pvt. Ltd. v. Devkishan Computed Pvt. Ltd. and Ors., (2016) 8 SCC 446, this Court held:
"14. The law is settled that an essential condition of a tender has to be strictly complied with. In Poddar Steel Corpn. v. Ganesh Engg. Works [Poddar Steel Corpn. v. Ganesh Engg. Works, (1991) 3 SCC 273] this Court held as under: (SCC p. 276, para 6):
"6. ... The requirements in a tender notice can be classified into two categories--those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to enforce them rigidly. In the other cases it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases."
15. Similarly in B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd. [B.S.N. Joshi & Sons Ltd. v. Nair Coal 24 Services Ltd., (2006) 11 SCC 548] this Court held as under: (SCC pp. 571-72, para 66):
"(i) if there are essential conditions, the same must be adhered to;
(ii) if there is no power of general relaxation, ordinarily the same shall not be exercised and the principle of strict compliance would be applied where it is possible for all the parties to comply with all such conditions fully;
(iii) if, however, a deviation is made in relation to all the parties in regard to any of such conditions, ordinarily again a power of relaxation may be held to be existing;
(iv) the parties who have taken the benefit of such relaxation should not ordinarily be allowed to take a different stand in relation to compliance with another part of tender contract, particularly when he was also not in a position to comply with all the conditions of tender fully, unless the court otherwise finds relaxation of a condition which being essential in nature could not be relaxed and thus the same was wholly illegal and without jurisdiction;
(v) when a decision is taken by the appropriate authority upon due consideration of the tender document submitted by all the tenderers on their own merits and if it is ultimately found that successful bidders had in fact substantially complied with the purport and object for which essential conditions were laid down, the same may not ordinarily be interfered with;..."
16. We also agree with the contention of Shri Raval that the writ jurisdiction cannot be utilised to make a fresh bargain between parties. However, the learned counsel appearing on behalf of the appellant strongly relied upon Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd., (2016) 16 SCC 818, and paragraphs 14 and 15 in particular, which state:
"14. We must reiterate the words of caution that this Court has stated right from the time when Ramana Dayaram Shetty v. International Airport Authority of India [Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCC 489] was decided almost 40 years ago, namely, that the words 25 used in the tender documents cannot be ignored or treated as redundant or superfluous -- they must be given meaning and their necessary significance. In this context, the use of the word "metro" in Clause 4.2(a) of Section III of the bid documents and its connotation in ordinary parlance cannot be overlooked.
15. We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given."
16. It is clear even on a reading of this judgment that the words used in the tender document cannot be ignored or treated as redundant or superfluous - they must be given meaning and their necessary significance. Given the fact that in the present case, an essential tender condition which had to be strictly complied with was not so complied with, the appellant would have no power to condone lack of such strict compliance. Any such condonation, as has been done in the present case, would amount to perversity in the understanding or appreciation of the terms of the tender conditions, which must be interfered with by a constitutional court."
13. The view I have taken is, thus, fortified by the legal position expounded by the Apex Court in myriad pronouncements. In B. S. N. Joshi & sons vs. Nair Coal Services Ltd., (2006) 11 SCC 548, Hon‟ble Supreme Court has enumerated some principles in para 66, which, for facility of reference is reproduced below:-
"66. We are also not shutting our eyes towards the new principles of judicial review which are being developed; but the law as it stands now having regard to the principles laid down in the aforementioned decisions may be summarized as under :26
i) If there are essential conditions, the same must be adhered to;
ii) If there is no power of general relaxation, ordinarily the same shall not be exercised and the principle of strict compliance would be applied where it is possible for all the parties to comply with all such conditions fully;
iii) If, however, a deviation is made in relation to all the parties in regard to any of such conditions, ordinarily again a power of relaxation may be held to be existing
iv) The parties who have taken the benefit of such relaxation should not ordinarily be allowed to take a different stand in relation to compliance of another part of tender contract, particularly when he was also not in a position to comply with all the conditions of tender fully, unless the court otherwise finds relaxation of a condition which being essential in nature could not be relaxed and thus the same was wholly illegal and without jurisdiction..
v) When a decision is taken by the appropriate authority upon due consideration of the tender document submitted by all the tenderers on their own merits and if it is ultimately found that successful bidders had in fact substantially complied with the purport and object for which essential conditions were laid down, the same may not ordinarily be interfered with.
(vi) The contractors cannot form a cartel. If despite the same, their bids are considered and they are given an offer to match with the rates quoted by the lowest tenderer, public interest would be given priority.
(vii) Where a decision has been taken purely on public interest, the Court ordinarily should exercise judicial restraint."
14. Equally noteworthy are the principles set out in para 23 and 24 of the judgment rendered by Hon‟ble the Supreme Court in Michigan Rubber (India) Ltd. vs. State of Karnataka, (2012) 8 SCC, 216:
"23. From the above decisions, the following principles emerge:
(a) the basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any 27 ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities;
(b) fixation of a value of the tender is entirely within the purview of the executive and courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable.
If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by Courts is very limited;
(c) In the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities unless the action of tendering authority is found to be malicious and a misuse of its statutory powers, interference by Courts is not warranted;
(d) Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work; and
(e) If the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interference by Court is very restrictive since no person can claim fundamental right to carry on business with the Government.
24. Therefore, a Court before interfering in tender or contractual matters, in exercise of power of judicial review, should pose to itself the following questions:
(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; or whether the process adopted or decision made is so arbitrary and irrational that the court can say: "the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached"; and
(ii) Whether the public interest is affected.
If the answers to the above questions are in negative, then there should be no interference under Article 226."
16. Equally unfruitful is the attempt of learned senior counsel to invoke the doctrine of „substantial compliance‟. Substantial compliance in a contract would occur when the broader 28 objectives of the contract have been met, but technically, not all of the formal requirements have been met.
Substantial compliance requires that all material conditions of a tender,determined on an objective standard, be complied with. A bid is substantially compliant if any departures from the tender call concern mere irregularity. The Court is in fact not in a good vantage position, as the employer would, to decide if the decision of the respondents to reject the bid of the petitioner on the ground of non-compliance of the terms and conditions of tender.
35 After examining the entire matter in light of the settled legal position as adumbrated hereinabove, this Court finds that the decision taken by the official respondents on 24.12.2022 is not only non compliant in so far as the mandatory terms and conditions of ITB are concerned, but is otherwise irrational, arbitrary, unfair and in violation of Article 14 of the Constitution. I am told that the price bids have been opened in which respondent No.5 has been found to be lowest, whereas, the petitioner is second lowest and the difference between the two bids is substantial. It was also projected before me that even if this Court finds the decision of the official respondents not sustainable in law, yet awarding the contract to the petitioner would be to the serious detriment of public exchequer. 36 Having given thoughtful consideration to this aspect of the matter and keeping in mind the larger public interest in safeguarding public exchequer, this Court though is inclined to allow this petition and quash the decision impugned, yet, will not favour the allotment of contract to the petitioner either. Learned counsel for the petitioner also took exception to the argument of Mr. Sethi learned Senior Counsel appearing for respondent No.5 that awarding of contract to the petitioner would be to 29 the detriment of public exchequer and submits that that the rates quoted by respondent No.5 are totally un-realistic and, therefore, otherwise ought to have been rejected by the official respondents. Without entering into this controversy and with a view to doing the complete justice in the matter, this petition is disposed of in the following manner:
Impugned decision taken on 24.12.2022 by the official respondents is quashed. The respondents are directed to issue fresh e-NIT inviting fresh bids from the eligible bidders for the subject work and proceed to conclude the bidding process strictly in accordance with the terms and conditions of the contract and the legal position stated above without any further waste of time.
37 Keeping the public interest in view and also that the execution of the work is already delayed, it is impressed upon the official respondents to embark upon the exercise of issuing fresh e-NIT at the earliest and conclude the same without any further waste of time. Parties are left to bear their own costs.
(Sanjeev Kumar) Judge Jammu 22 .03.2024 Sanjeev Whether the judgment is reportable: Yes