Andhra HC (Pre-Telangana)
Union Of India (Uoi) And Ors. vs Laxmi Builders And Anr. on 17 March, 2003
Equivalent citations: 2003(5)ALD87, 2003(3)ALT1
Author: B. Sudershan Reddy
Bench: B. Sudershan Reddy
JUDGMENT B. Sudershan Reddy, J.
1. The first respondent herein filed W.P. No. 1529 of 2003 invoking the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India with a prayer to issue a writ of mandamus declaring the action of the appellants herein in disqualifying it from the tender process and awarding the contract to the second respondent herein as arbitrary, illegal and against the principles of natural justice. The first respondent herein also prayed for grant of an appropriate direction directing the appellants herein to award the contract to it.
2. The learned Single Judge allowed the said writ petition duly setting aside the award of contract to the second respondent herein and further directed the appellants herein to consider the tender of the first respondent herein also and finalise the tender afresh, as per rules.
3. In order to consider as to whether the impugned order suffers from any legal infirmities, it may be necessary to notice the relevant facts leading to filing of this Writ Appeal:
4. The appellants herein called for Sealed Open Tenders vide Tender Notice dated 8-11-2002 in respect of the works relating to upgradation of railway infrastructure for introduction of suburban traffic (MMTS)-Secunderabad/Hyderabad-Lingampalli and Secunderabad-Faluknuma Sections-earthwork, construction of suburban booking office, circulating area, approach road and miscellaneous works at Necklace Road Station with an estimated approximate value of Rs. 156.79 lakhs. Clause (6) of the said Tender Notice prescribes the eligibility criteria for participating in the tender process and it says that the tenderers should possess the credentials and at least should have completed one work of similar nature, viz., building works costing not less than 1/3rd of the tendered value during the last three years preceding the date of tender opening. The tenderers are required to submit a certificate from an office of the Government or semi-Government indicating therein the names of the works completed, value of the works and period during which completed. The tenderer(s) is/are further required to submit along with his/their tender a Statement showing similar works executed by him/them and also credentials from the party with whom he/they have worked for the successful completion of his/ their work. They should also submit a list of their Engineering Organisation and equipment, construction tools and plants available with them.
5. The first respondent as well as the second respondent herein apart from many others submitted their respective offers enclosing necessary documents including the credentials, income tax clearance certificates and details of the machinery held by them. The tenders were opened as scheduled at 11-30 a.m., on 3-12-2002.
6. The first respondent herein submitted a Certificate dated 15-9-2002 issued by the competent authority of South Central Railway indicating that it was awarded work of proposed development of Sports Complex at RRC, Ground at Secunderabad whose accepted value was Rs. 1,86,74,718-49. The said Certificate reveals that the first respondent was, so far, paid an amount of Rs. 42.00 lakhs and equipment worth Rs. 30.00 lakhs was supplied by the first respondent and was awaiting installation. The first respondent asserts that it is qualified for being considered for the work now tendered by the appellants herein as 1/3rd value of the tendered works comes to Rs. 53.00 lakhs (approximately). That apart, the tender of the first respondent was the lowest, when the tenders were opened on 3-12-2002.
7. The appellants herein having disqualified the first respondent herein entrusted the work to the second respondent herein. The first respondent's tender was disqualified on the ground that the work executed by it did not satisfy the eligibility criteria as per the tender notice.
8. The contention of the first respondent herein in the writ petition was that the appellants herein with a view to favour the second respondent herein had improperly rejected its tender, which is the lowest of all the tenders received. It was contended that the work done by the first respondent in respect of the contract work worth Rs. 186.75 lakhs being executed by it, is more than 60% and that the work being executed by the first respondent is that of the South Central Railway, and in fact the certificate enclosed by it with the tender also clearly shows that it satisfied the norms fixed.
9. In the affidavit filed in support of the writ petition it is stated:
"Inspite of bringing all these facts to the notice of respondents 2 and 3 and in spite of petitioners being the lowest tenderers, the respondents 1 to 3 with mala fide intentions and for extraneous reasons, wantonly and deliberately disqualified the petitioners even though they are otherwise qualified only to favour respondent No. 4. In these circumstances the action of respondents 1 to 3 in disqualifying the petitioners and awarding the contract to respondent No. 4 cannot be sustained and is liable to be set aside and consequently the work under the present tender be awarded to the petitioners."
10. The case of the appellants as is evident from the counter-affidavit filed by them in the writ petition is that the first respondent-writ petitioner does not satisfy the eligibility criterion for awarding the contract. The certificate made available by the first respondent-writ petitioner merely indicates that so far it was paid a sum of Rs. 42.00 lakhs in respect of the works of Sports Complex at RRC Ground at Secunderabad, whose accepted value was Rs. 1.86,74,718-49. In the said certificate, of course, it is stated that filtration and circulation equipment, approximate cost about Rs. 30.00 lakhs, reached site, for which payment is to be made, after placement and testing. In the counter-affidavit it is further stated that the first respondent has suppressed the material fact that it is in consortium agreement with M/s. Imperial Pools for executing the work of swimming pool. Therefore, the first respondent firm cannot claim entire experience of the consortium of its own. The appellants herein found the second respondent herein eligible and qualify being the lowest eligible tenderer and he was accordingly called for negotiations and after due negotiations, the competent authority accepted the recommendations of the Tender Committee dated 10-1-2003 and the work was awarded to the second respondent hereinunder acceptance letter dated 12-1-2003. The second respondent herein commenced the work duly mobilising the men and material as the work has to be completed within six months, in line with the other works of the project, which are under completion.
11. The learned Judge found that as per the Certificate dated 15-9;2002 produced by the first respondent; the value of the work completed by the first respondent was Rs. 42.00 lakhs plus Rs. 30.00 lakhs, i.e., Rs. 72.00 lakhs. The learned Judge came to such conclusion on the basis of the averment made in the Certificate that the equipment worth Rs. 30.00 lakhs reached the site even before September, 2002. The learned Judge disbelieved the fact of handing over the site on 12-1-2003 itself to the second respondent herein immediately after the letter of acceptance. The learned Judge accordingly concluded that there is collusion between the appellants and the second respondent herein.
12. Sri S.R. Ashok, learned Senior Counsel appearing on behalf of the appellants contended that the order of the learned Single Judge is legally unsustainable as it runs counter to the well settled proposition of law laid down by the Apex Court. The learned Senior Counsel contended that the first respondent herein does not satisfy the requirement as to experience stipulated in the Tender Notice inasmuch as on the basis of its own showing, it had executed the works to a tune of Rs. 42.00 lakhs only as against the requisite experience of execution of work of worth Rs. 52.26 lakhs. Mere mention of factum of supply of machinery cannot be construed as amounting to execution of work. More so, when a rider has been added in the Certificate itself to the effect that the equipment reached the site for which payment is to be made only after placement and testing.
13. The short question that falls for consideration is as to whether the first respondent herein satisfied the eligibility criteria in terms of Clause (6) of the Tender Notice dated 8-11-2002?
14. The Tender Notice in specific terms requires that the tenderer should have completed at least one work of similar nature costing not less than 1/3rd of the tendered value during the last three years preceding the date of tender opening. The total approximate value of the work in question is Rs. 156.79 lakhs and 1/3rd of the same would come to roughly about Rs. 52.00 lakhs. Even according to the first respondent, it had received a sum of Rs. 42.00 lakhs only in respect of the work undertaken by it relating to the proposed development of Sports Complex at RRC Ground, Secunderabad construction of swimming pool etc. The Certificate in clear terms does not show that the first respondent had completed 1/3rd of the work entrusted to it relating to the proposed development of Sports Complex at RRC Ground at Secunderabad. All that it says is that it was paid a sum of Rs. 42.00 lakhs so far. Mere fact that the equipment approximately costing about Rs. 30.00 lakhs reached the site, for which payment is required to be made only after placement and testing of the machinery, is not enough to include the said sum of Rs. 30.00 lakhs to the credit of the work executed by the first respondent. Mere availability of the machinery and equipment at the site cannot be equated to that of placement and testing.
15. In our considered opinion, the Certificate upon which strong reliance is placed by the first respondent does not satisfy the eligibility criterion prescribed under Clause (6) of the Tender Notice.
16. It is very well settled and needs no reiteration at our hands that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, there are inherent limitations in exercise of that power of judicial review. The parameters of judicial review are too well settled in the matter of exercise of contractual powers by the governmental bodies. This Court does not exercise any appellate jurisdiction over the decisions taken by the Governmental bodies in the matter of awarding contract. The Court, of course, would interfere to prevent arbitrariness or favouritism and to protect larger public interest. The Court in exercise j of its judicial review jurisdiction is concerned | with decision-making process, but not with the decision itself. This Court in appropriate cases may issue writs directing the State, its Corporations, instrumentalities and agencies to adhere to the norms, standards and procedures laid down by them and prevent them from departing from those norms arbitrarily. The Court, of course, would interfere if the decision is found vitiated by mala fides, unreasonableness and arbitrariness.
17. It is well settled that the award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision, considerations, which are of paramount importance, are commercial considerations. Such considerations include the ability of the tenderer to deliver goods or services or to do the work of the requisite standard and quality; and past experience of the tenderer and whether he has successfully completed similar work earlier.
18. When a writ petition is filed challenging the award of a contract by a public authority or the State, the Court must be satisfied that there is some element of public interest involved in entertaining such a petition. "If, for example, the dispute is purely between two tenderers, the Court must be very careful to see if there is any element of public interest involved in the litigation. A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. 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......
The Court should not substitute its own decision for the decision of an expert evaluation committee". (See Raunaq International Ltd. v. I.V.R, Construction Ltd., .
19. In the instant case, the dispute is between two private individuals. Each one of them is claiming their legitimate right for consideration of their offer. The Tender Committee comprising of three officers having scrutinised the tenders submitted by all the tenderers including respondents 1 and 2 herein and having examined the eligibility criteria of the tenderers found that the first respondent does not satisfy the requirement and accordingly made its recommendations to the competent authority for taking further action in the matter in accordance with law. It is a collective decision taken by more than one individual consisting of experts. The competent authority having examined the recommendations of the expert body accepted the evaluation so made by the expert body and accordingly awarded the contract to the second respondent herein. In our considered opinion, the decision making process, in no manner, is vitiated.
20. In order to consider as to whether the first respondent successfully completed at least one work of similar nature, costing not less than 1/3rd of the tendered value during the last three years, preceding the date of tender opening, the competent authority, based on the recommendations of the expert body, rightly excluded the value of the machinery and equipment approximately costing about Rs. 30.00 lakhs that reached the site, for which payment is to be made after placement and testing, and had only taken into consideration the work successfully completed by the first respondent equivalent to that of only Rs. 42.00 lakhs. The said amount, by no stretch of imagination, is equivalent to that of 1/3rd of the tendered value. The first respondent becomes eligible if it had completed successfully at least one work of similar nature costing not less than 1/3rd of the tendered value, i.e., Rs. 53.00 lakhs, during the last three years, preceding the date of the tender opening. The first respondent had admittedly completed the work equivalent to that of only Rs. 42.00 lakhs.
21. The next question that falls for consideration is as to whether the action on the part of the appellants in disqualifying the first respondent herein is a mala fide one?
22. In the affidavit filed in support of the writ petition, it is averred that the action of the appellants herein in disqualifying the first respondent herein "is arbitrary, illegal and contrary to the facts besides being for extraneous reasons". It is further averred that the appellants herein "with mala fide intentions and for extraneous reasons, wantonly and deliberately disqualified the first respondent herein.......".
23. There is no specific averment made in the affidavit attributing any malice as such to any individual authority. None of them are impleaded as eo nomine parties. The allegations levelled are vague and indefinite in terms.
24. The burden of establishing the mala fides is very heavy on the person who alleges it. The allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations demands proof of a high order of credibility.
25. More than one individual is involved in the decision making process. Nothing is stated in the affidavit filed in support of the writ petition as to which authority acted on extraneous considerations in evaluating the tenders. In such view of the matter, it becomes difficult for us to accept the plea put forth by the first respondent-writ petitioner attributing mala fides. The charge of mala fides cannot be upheld. Test to be applied in a given case may be influenced by the extent to which a decision is supported by the collective wisdom, which evidences the decision.
26. Mere fact that the site was handed over on the same day immediately after entering into an agreement with the second respondent enabling the second respondent to commence the work on 12-1-2003 itself cannot be a ground to draw an adverse inference of collusion as such between the appellants and the second respondent. In fact, there is no such plea raised by the first respondent in its writ petition. The writ petition itself has been filed on 24-1-2003 after the commencement of the actual work by the second respondent herein pursuant to the agreement entered on 12-1-2003. In the given facts and circumstances, it is not possible to draw any such adverse inference about there being any collusion between the appellants and the second respondent herein.
27. For all the aforesaid reasons, we hold that the first respondent herein did not make out any case requiring our interference.
28. The impugned order is accordingly set aside. Writ Appeal is allowed. Consequently, the writ petition shall stand dismissed. There shall be no order as to costs.