Andhra HC (Pre-Telangana)
M. Sitarama Reddy vs Indian Railways Rep. By Its Chairman And ... on 30 December, 1994
Equivalent citations: 1995(1)ALT14
ORDER S.R. Nayak, J.
1. This petition is by the unsuccessful bidder seeking declaration of the action of the respondents 2 and 3 in awarding the contract for supply and stacking of 50 mm Machine Crushed Stone Ballast to Railway's specifications at Railway Depot Rajahmundry on BZA-VSKP Section of Vijayawada Division (approximate quantity being 3.00 Lacs Cubic Metres) and loading into Railway Wagons/Hoppers by Mechanised/Manual means bearing Tender No. GM/ W/B/19/OT in Tender Notice No. GM/W/SC/Open Tender/93/8 dated 31-8-1993 to the fourth respondent as arbitrary and illegal and to set aside the same. The petitioner has further sought for a consequential direction to the respondents 2 and 3 to award the said work to him.
2. The pleadings filed by the parties disclose that open tenders were invited for the supply and stacking of 50 mm. Machine crushed stone ballast to Railways specification, at railway depot at Rajahmundry on Vijayawada - Visakhapatnam section of Vijayawada division on South Central Railway and loading the same into Railway Wagons/hoppers by mechanised/manual means - Quantity 3.00 lakhs cum. The approximate face value of the tender invited was Rs. 9.54 crores. The last day for issue of tender forms was fixed as 15-12-1993 by post and 27-12-1993 in person. The last day for submission of tenders was fixed at 15.00 hours, on 28-12-1993. The time and date for opening the tender was fixed at 15.30 hrs. on 28-12-1993.33 tender forms were sold and as many as 10 tender forms were received on 28-12-1993. All the ten tenders were opened in the presence of the tenderers or their representatives at 15.30 hours on 28-12-1993. The particulars of the tenderers, rate of supply etc., and the total quantity and amount for which they have tendered in the ascending order are given below:
Sl. Name of the Rate per Cum. Amount Total:
______________ ____________________
No. Tenderer Supply Loading Supply Loading
_________________________________________________________________________________ Rs. Rs. Rs. Rs. Rs.
_________________________________________________________________________________
1. M/s.Ch.Veera 266/- 23/- 7,98,00,000/- 69,00,000/- 8,67,00,000/-
Raju & Co., Rajahmundry
2. Sri M. Sitarama 279/- 18/- 8,37,00,000/- 54,00,000/- 8,91,00,000/-
Reddy, Rajahmundry.
3. M/s.P.K. Ramaiah 299/- 33/- 8,97,00,000/- 99,00,000/- 9,96,00,000/-
& Co., Hyderabad
4. M/s. Srinivasa 318/- 24/- 9,54,00,000/- 72,00,000/- 1,02,60,000/-
Transport Co., Hyderabad
5. M/s.Rashtriya 324.90 18/- 9,74.70,000/- 54,00,000/- 10,28,70,000/-
Pariyojana Nirman Nigam Ltd., Visakhapatnam
6. Sri S. Chandra 324/- 27/- 9,72,00,000/- 81,00,000/- 10,53,00,000/-
Reddy, Rajahmundry
7. Shri P. Venugopal 327/- 24/- 9,81,00,000/- 72,00,000/- 10,53,00,000/-
Reddy, Madras
8. ShriChodisetty 333.99 27.99 10.01,97,000/- 83,97,000/- 10.85,94,000/-
Venkateswara Rao, Rajahmundry
9. M/s.Siddartha 333/- 33/- 9,99,00,000/- 99,00,000/- 10,98,00,000/-
Constn.
Visakhapatnam
10. Shri M.V. Krishna 399/- 23/- 11,97,00,000/- 69,00,000/- 12,66,00,000/-
Reddy, Rajahmundry
3. As per Condition No. 8 of the Tender Notice dated 31-8-1993 and also as per Condition No. 6 of Tender schedule, the contractor having a minimum annual turn-over of Rs. 3.00 crores or above on Civil Engineering work need to tender. This should cover atleast one work of Rs. 50.00 lakhs or more in value. The contractors at the time of submission of tender should furnish the proof of turnover capacity duly certified by the Bankers or Chartered Accountants. The tender called for was an open tender.
4. The Tender Committee consisting of 1. Chief Engineer 2. Financial Advisor & Chief Accounts Officer and 3. Chief Signal & Telecom Engineer constituted for the purpose of examining the eligibility and other qualifications prescribed in the tender notice and tender schedule for award of work examined the eligibility and other qualifications of the ten tenderers who have submitted the tenders and ultimately the Tender Committee recommended the fourth respondent for award of the work. The recommendations of the Tender Committee were forwarded along with the recommendation of the General Manager, South Central Railway, Secunderabad to the Ministry of Railways respondent No. 1 who are the competent authority for accepting the tender. The tenders submitted by the 10 tenderers were examined in detail at different stages and finally the first respondent accepted the lowest of the offers i.e., tender submitted by the fourth respondent and conveyed its decision on 11-11-1994 to the second respondent. Subsequently the acceptance of the tender of the fourth respondent by the first respondent has been communicated to the fourth respondent by letter No. W. 496/B/19 dated 21-11-1994. The present writ petition was filed in this Court on 16-11-1994 and the same was posted before the Court on 21-11-1994 on which day this Court issued rule nisi and made an interim order in W.P.M.P.No. 25119/94 directing that status quo obtaining as on that day should be maintained with reference to the execution of the work relating to the tender notice dated 31-8-1993 up to 30-11-1994. The interim order granted by this Court on 21-11-1994 for a period ending with 30-11-1994 was not further extended by the Court.
5. In Clause 6 of the letter No. 496/B/19 dated 21-11-1994 addressed to the fourth respondent referred to above it is stated that until a formal agreement is executed, acceptance of tender constitutes a binding contract between the fourth respondent and the administration. Therefore, the contract is completed and the learned Counsel for the fourth respondent in the course of hearing submitted that his client after 21-11-1994 executed some work also.
6. Sri C.V. Mohan Reddy, the learned Counsel appearing for the petitioner submitted three-fold argument. Firstly, he contended that the respondents-authorities violated Condition No. 8 of the tender notification in awarding the contract to the fourth respondent. The learned Counsel elaborated that the fourth respondent at the time of submission of the tender did not have a minimum annual turnover of Rs. 3.00 crores or above on Civil Engineering work as contemplated under condition No. 8 of the tender notification. He submitted that the fourth respondent firm was registered only on 9-11-1993 only for the purpose of knocking away the contract. He also submitted that none of the partners constituting the fourth respondent firm have either individually or together executed or have an actual minimum turnover of Rs. 3.00 crores as contemplated under condition No. 8 of the tender notification. Further he contended that the experience certificate issued by the Executive Engineer should not have been taken into account by the respondents-authorities in awarding contract to the fourth respondent inasmuch as the said certificate was issued without specific permission by the Executive Engineer as required under Clause 54 of the Andhra Pradesh Detailed Standards Specifications. Secondly, but alternatively Sri Mohan Reddy contended that assuming that the experience certificate issued in favour of Mr. N. Suryanarayana Reddy was validly issued, that itself does not indicate that Sri N. Suryanarayana Reddy had an actual turnover of Rs. 3.00 crores. He submitted that the certificate clearly states that the work was executed in two financial years and the value of the work executed during the financial year 1992-93 was Rs. 1,67,01.353/- and the value of the work executed in the financial year 1993-94 was Rs.1,56,18,417/-. According to him a person, in order to be eligible for applying for the award of contract should have an actual turnover of Rs. 3.00 crores or more in a financial year and not actual turnover of Rs. 3.00 crores or more in more than one financial year. Thirdly, the learned Counsel submitted that the certificate was issued to Sri N. Suryanarayana Reddy as a partner of the firm and according to the learned Counsel, experience certificate could not be issued in favour of an individual partner where the firm was a contracting party and such a certificate could be issued only in favour of the firm. For all these reasons Sri Mohan Reddy contended that a case is made out for this Court to interfere in this matter and set aside the contract awarded to the fourth respondent in exercise of its extraordinary discretionary jurisdiction under Article 226 of the Constitution of India.
7. On behalf of the respondents 1 to 3 authorities Sri Subrahmanya Reddy, the learned senior Counsel advanced the arguments whereas Sri T. Anantha Babu, the learned senior Counsel appearing for the respondent No. 4 supplemented and supported the argument of Sri Subrahmanya Reddy. Sri Subrahmanya Reddy, the learned senior Counsel in the first instance would impress upon the Court the limited scope of judicial review in the matter of awarding contract by the public authorities placing reliance on a decisions of the Supreme Court in G.J. Fernandez v. State of Karnataka, and in the case of Sterling Computers Limited v. M & N Publications Limited and Ors., . Sri Subrahmanya Reddy, the learned senior Counsel argued that tenders were opened as far back as on 28-12-1993 in the presence of all the tenderers or their representatives and none of them raised any objection to the action of the respondents-authorities for awarding the contract in favour of respondent No. 4 and the writ petition was filed only on 16-11-1994 in this Court and the interim order for a limited period was made by this court on 21-11-1994 and by that time the contract between the administration and the fourth respondent was concluded and in that view of the matter there is inordinate delay on the part of the petitioner in approaching the Court and on that count itself the writ petition was liable to be rejected in limine. He placed reliance on a decision of this Court delivered in the case of Bhanu Constructions Co. Ltd. v. A.P. State Electricity Board, (D.B.) to contend that the petitioner, having not raised any objection to the tender submitted by the fourth respondent when the same was opened along with other tenders on 28-12-1993, should not be permitted to raise the same in this Court having lost the award of the contract. Sri Subrahmanya Reddy, the learned senior Counsel also submitted that the action of the respondents-authorities in awarding the contract to the fourth respondent, in the facts and circumstances of the case and in the public interest, is fully justified. He would submit that award of the contract to the fourth respondent resulted in saving valuable sum of Rs. 24 lakhs to the Central exchequer. Further M/s. Subrahmanya Reddy and T. Anantha Babu, the learned senior Counsel submitted that even eschewing certificate issued by the Executive Engineer, the fourth respondent firm has fully satisfied condition No. 8 of the tender notification inasmuch as N. Suryanarayana Reddy a partner of the fourth respondent has submitted seven experience and turnover certificates issued by the Executive Engineers of the different divisions.
8. Before dealing with the points urged by Sri C-V. Mohan Reddy, the learned Counsel for the petitioner it is necessary to meet the argument advanced on behalf of the respondents that the petitioner having not raised any objection to the tender submitted by the fourth respondent when the same was opened in his presence on 28-12-1993 should not be permitted to raise the same in this Court. The ten tenders were opened on 28-12-1993 in the presence of the tenderers or their representatives and nobody including the petitioner did raise any objection to the tender submitted by the fourth respondent firm as regards its eligibility and qualifications to submit the tender. However, the petitioner in his reply-affidavit filed to the counter-affidavit of the fourth respondent has asserted that after the tenders were opened on 28-12-1993 apart from meeting the officials including the Chief Engineer Mr. Ratnam he sent a representation on 4-4-1994 to the Minister for Railways, New Delhi marking a copy of the same to the Member Engineer and also to the General Manager of the South Central Railways. He further stated that at his behest 8 Members of Parliament also wrote letters to the Minister for Railways on 19-3-1994 and 11-5-1994. He also stated that apart from the representations sent by him and the letters written by the Members of Parliament, a complaint was also made by M/s. P.K. Ramayya & Co., Hyderabad, one of the tenderers, complaining about the ineligibility of the fourth respondent firm to bid for the contract and the respondents have not taken any action on those representations. At the time of hearing a copy of the letter sent by M/s. P.K. Ramayya & Co., was made available to the Court. The said copy does not bear any date. Sri Subrahmanya Reddy on instructions from his client submitted that they did not receive the letter dated 4-4-1994 claimed to have been sent by the petitioner and therefore, considering that letter did not arise. He submitted that the letters of the Members of the Parliament were taken note of by the Tender Committee. A Division Bench of this Court in Bhanu Constructions Co. Ltd., v. A .P. State Electricity Board (3 supra) upheld the plea of the respondents therein that the appellant therein, having not raised any objection at the time of evaluation of price bids before the Board considering the tender of the fourth respondent therein, could not raise the same in this Court having lost the award of the contract. The said ratio squarely covers the facts of this case also. Ten tenders were opened on 28-12-1993 in the presence of the tenderers or their representatives. No objection was taken by any tenderer or by the representatives of the tenderers to the tender submitted by the fourth respondent. Even the so called representation of the petitioner stated to have been sent on 4-4-1994 was not received by the respondents and there is no evidence to show that such a representation was sent to the authorities on 4-4-1994. There is evidence to show that the representations of the Members of the Parliament were taken note of irrespective of the fact whether such representations by the Members of the Parliament could be relevant material or not, for deciding as to whom the contract should be awarded. Therefore, I uphold the plea of the respondents that the petitioner is not entitled to raise objections to the tender submitted by the fourth respondent at this belated stage i.e., after conclusion of the contract between the fourth respondent and the administration on 21-11-1994. In that view of the matter I would have rejected the writ petition on this ground itself. However, the learned Counsel argued this case for considerable time. It is necessary to briefly deal with the other contentions also.
9. I do not find any merit in any of the contentions advanced on behalf of the petitioner. Before dealing with the specific contentions advanced by Sri Mohan Reddy at the outset it is necessary to define the scope and limit of power of judicial review available to this Court under Article 226 of the Constitution in the matter of awarding work contracts by the public administration. The Supreme Court in the case of Sterling Computers Limited v. M & N Publications Limited and Ors. (2 supra) in paragraphs 17, 18, 19 and 20 observed thus:
"17. It is true that by way of judicial review the Court is not expected to act as a Court of appeal while examining an administrative decision and to record a finding whether such decision could have been taken otherwise in the facts and circumstances of the case. In the book Administrative Law, Prof. Wade has said:
"The doctrine that powers must be exercised reasonably has to be reconciled with the no less important doctrine that the Court must not usurp the discretion of the public authority which Parliament appointed to take the decision. Within the bounds of legal reasonableness is the area in which the deciding authority has genuinely free discretion. If it passes those bounds, it acts ultra vires. The Court must therefore resist the temptation to draw the bounds too tightly, merely according to its own opinion. It must strive to apply an objective standard which leaves to the deciding authority the full range of choices which legislature is presumed to have intended. The decisions which are extravagant or capricious cannot be legitimate. But if the decision is within the confines of reasonableness, it is no part of the Court's function to look further into its merits. 'With the question whether a particular policy is wise or foolish the Court is not concerned; it can only interefere if to pursue it is beyond the powers of the authority".
18. But in the same book Prof. Wade has also said:
"The powers of public authorities are therefore essentially different from those of private persons. A man making his will may, subject to any rights of his dependants, dispose of his property just as he may wish. He may act out of malice or a spirit of revenge, but in law this does not affect his exercise of his power. In the same way a private person has an absolute power to allow whom he likes to use his land, to release a debtor, or, where the law permits, to evict a tenant, regardless of his motives. This is unfettered discretion. But a public authority may do none of these things unless it acts reasonably and in good faith and upon lawful and relevant grounds of public interest.
There are many cases in which a public authority has been held to have acted from improper motives or upon irrelevant considerations, or to have failed to take account of relevant considerations, so that its action is ultra vires and void".
19. While exercising the power of judicial review in respect of contracts entered into on behalf of the State, the Court is concerned primarily as to whether there has been any infirmity in the "decision making process". In this connection reference may be made to the case of Chief Constable of the North Wales Police v. Evans (1982) 3 All.E.R. 141, where it was said that "The purpose of judicial review"-
"is to ensure that the individual receives fair treatment, and not to ensure that the authority, after according fair treatment, reaches on a matter which it is authorised on a matter which it is authorised or enjoined by law to decide for itself a conclusion which is correct in the eyes of the Court".
By way of judicial review the Court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State. Courts have inherent limitations on the scope of any such enquiry. But at the same time as was said by the House of Lords in the aforesaid case, Chief Constable of the North Wales Police v. Evans (supra), the Courts can certainly examine whether "decision making process" was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution.
20. If the contract has been entered into without ignoring the procedure which can be said to be basic in nature and after an objective consideration of different options available taking into account the interest of the State and the public, then Court cannot act as an appellate authority by substituting its opinion in respect of selection made for entering into such contract. But, once the procedure adopted by an authority for purpose of entering in to a contract is held to be against the mandate of Article 14 of the Constitution, the Courts cannot ignore such action saying that the authorities concerned must have some latitude or liberty in contractual matters and any interference by Court amounts to encroachment on the exclusive right of the executive to take such decision".
10. What emerges from these observations of the Apex Court is that in the matter of awarding the contract, the administration is permitted to have considerable latitude and discretion. The courts normally respect the decision taken by the administration in awarding the contract in terms of utility, expediency and advisability. But, this Court shall definitely intervene if the contract has been entered into ignoring the procedure which can be said to be basic in nature and ignoring other objective circumstances which should necessarily go into the decision making process and if the action is prejudicial to the public interest. In the matter of awarding contracts the paramount consideration is public interest. All the limitations imposed by the statute as well as Judge-made law in this field is to ensure that public interest is protected. In the backdrop of these principles the contentions raised by the petitioner have to be examined.
11. There is no merit in the contention of the petitioner that the Executive Engineer should not have granted experience certificate to Mr. N. Suryanarayana Reddy. It transpires the firm was formed as far back as on 24-9-1992 itself consisting of nine partners. The petitioner shall not be permitted to assail the correctness or genuineness of the certificate issued by the Executive Engineer in the absence of the author of that certificate in this writ proceedings. The Executive Engineer is not arrayed as a party. Added to this it is relevant to note a partnership firm does not have a separate legal identity and every partner of the firm represents the firm. However, there is no necessity to pursue this question further because I find considerable force in the submission of the learned senior Counsel for the respondents that even eschewing the experience certificate issued by the Executive Engineer, the fourth respondent has satisfied the requirement of condition No. 8 of the tender notification. In the counter filed on behalf of the respondents 1 to 3 it is stated that Sri N. Suryanarayana Reddy is a Class-I contractor and he has submitted 7experience and turnover certificates issued by the Executive Engineer/R & B/ Bhimavaram, Executive Engineer/R & B/Kakinada, Executive Engineer/NH Divn/Rajahmundry, Executive Engineer/Amalapuram, Executive Engineer/ Bhimavaram and Executive Engineer/NH Divn/Rajahmundry and Executive Engineer/ R & B /Tadepalligudem apart from the certificate from the Executive Engineer/CRP Divn/Rajahmundry. If these experience and turnover certificates are taken into consideration and leaving out the experience certificate issued by the Executive Engineer in respect of which the petitioner has made complaint from consideration, nevertheless the fourth respondent-firm has satisfied the requirements of condition No. 8 of the tender notification.
12. The other contention of the petitioner that only the firm is entitled to have experience and turnover certificate and not the partners who constituted the firm, is also not tenable. In the counter filed on behalf of the respondents 1 to 3 it is stated that it has been uniform practice to take into consideration the eligibility criteria and qualification of the partnership as that of the individual partners. That statement seems to be correct. Even the fourth respondent understood the said requirement quite correctly and produced experience and turnover certificates issued in favour of an individual partner. The petitioner cannot be permitted to blow hot and cold and approbate and reprobate- In this context it is relevant to note what the Apex Court has to say in the case of -
M/s. C.J. Fernandez v. State of Karnataka and Ors. (1 supra).
In the said decision the Supreme Court in para 15 observed thus:
"If a party has been consistently and bona fide interpreting the standards prescribed by it in a particular manner, we do not think this Court should interfere though it may be inclined to read or construe the conditions differently".
In that case the Karnataka Power Corporation issued a notification inviting tenders (NIT) for construction of main Station building of power house. Pre qualifications such as experience in insulation, brick work etc., were stipulated in the NIT for obtaining blank tender books by prospective tenderers- Some documents which had bearing on or were indicative of the fulfilment of experience etc., of tenderer were required to be furnished along with the application for blank tender books. One of the proposed tenderer submitted a required document not along with the application for issue of blank tender books but belatedly. The Corporation considered those documents and eventually the contract was granted to him. The consideration of the belatedly submitted document by the Corporation was objected to by the appellant before the Supreme Court and in that context the Supreme Court held that:
"The fact that a document was belatedly entertained from one of the applicants will cause substantial prejudice to another party who wanted, likewise, an extension of time for filing a similar certificate or document but was declined the benefit. It may perhaps be said to cause prejudice also to a party which can show that it had refrained from applying for the tender documents only because it thought it would not be able to produce the document by the time stipulated but would have applied had it known that the rule was likely to be relaxed. But when the appellant and other parties had already submitted all the documents in time and sought no extension at all it could not be said that any real prejudice had been caused to them because of the course adopted by the Corporation. The slight deviation from the terms of the NIT has not deprived the appellant of its right to be considered for the contract; on the other hand, its tender has received due and full consideration. If, save for the delay in filing one of the relevant documents, the respondent tenderer is also found to be qualified to tender for the contract, no injustice can be said to have been done to the appellant by the consideration of his tender side by side with that of the respondent tenderer and in the KPC going in for a choice of the better on merits".
Further the Supreme Court, in paragraph 16 observed that:
"It is true that the relaxation of the time schedule in the case of one party does affect even a person like the appellant in the sense that he would otherwise have had one competitor less. But, the rule of invalidation of a grant on account of deviation from professed standard will be readily applied by Courts to a case where a person complains that a departure from the qualifications has kept him out of the race, injustice is less apparent where the attempt of the applicant before Court is only to gain immunity from competition".
13. The other contention of the petitioner that a person in order to qualify himself for the purpose of applying for award of the contract should have a minimum turnover of Rs. 3.00 crores or more on Civil Engineering work in every financial year, is required to be noted only to be rejected. Condition No. 8 of the tender notification stipulates that applicant-contractor should have minimum annual turnover of Rs. 3.00 crores or above on Civil Engineering works. The interpretation placed by Sri Mohan Reddy is that the words 'annual turnover' occurring in condition No. 8 should be construed as the turnover in a financial year and if such a construction is placed, the fourth respondent did not have minimum annual turnover of Rs. 3.00 crores or above either during the financial year 1992-93 or during the financial year 1993-94, and therefore the fourth respondent was ineligible. This contention is liable to be rejected in limine for more than one reason. The words 'annual turnover' occurring in condition No. 8 of the tender notification should be understood in the context of the case as turnover in a calendar year i.e., a span of 12 months. If the interpretation placed by Sri Mohan Reddy, the learned Counsel for the petitioner is accepted as the correct one, it will lead to absurdity in certain facts-situation. For example, if an applicant contractor was awarded contract in the month of March, 1993 and his turnover for the financial year 1992-93 was only Rs. 20 lakhs and his turnover for the succeeding financial year 1993-94 was Rs. 15 crores and above, nevertheless he would not be eligible to apply for the contract. That could not be the intention of the administration. Even otherwise, as pointed out supra even eschewing the experience certificate issued by the Executive Engineer, the fourth respondent firm has satisfied the requirements of condition No. 8 of the tender notification.
14. At the time of hearing the respondents 1 to 3 made available the relevant records wherein the administration took decision to award the contract in favour of the fourth respondent. I am fully satisfied that the decision was reached by following the proper procedure and the action of the respondents, cannot be termed either as arbitrary or unreasonable so as to attract the mandate of Article 14 of the Constitution. Added to this the award of the contract in favour of the fourth respondent has resulted in saving a sum of Rs. 24 lakhs to the Central exchequer. In other words, the award of the contract in favour of the fourth respondent is in public interest. At the time of hearing, Sri T. Anantha Babu, the learned senior Counsel submitted that the fourth respondent after 21-11-1994 performed part of the contract also. No bias is alleged against the members of the Tender Committee consisting of relatively senior executives of the administration and they are the experts in the field. In the absence of mala fide, their opinion deserves to be respected.
15. In the result and for the reasons stated above I do not find any ground, let alone substantial ground, to interfere with the grant of contract in favour of the fourth respondent. Writ petition fails and is accordingly dismissed. In the facts and circumstances of the case, the parties are directed to bear their own costs.