Madhya Pradesh High Court
M/S Cmc Limited vs The State Of Madhya Pradesh on 3 December, 2014
Equivalent citations: AIR 2015 MADHYA PRADESH 17, (2015) 2 MPLJ 328
W.P.No.1275/2014 1
M/s CMC Limited Vs. State of M.P. and others
03/12/2014
Shri V.K.Bharadwaj, Sr.Advocate with Shri
Anvesh Jain, Advocate for the petitioner.
Shri Bhagwan Raj Pandey, Public Prosecutor for
the respondent/State.
Heard.
The petitioner has filed this petition against the order dt.7.12.2013 (Annexure P/1). By the aforesaid order, the competent authority directed that the Earnest Money deposited by the petitioner be forfeited.
The office of Commissioner, Land Records & Settlement Gwalior, Madhya Pradesh invited offers in two bid system for the work "conversion of Existing Record Rooms of Cyber Record Rooms at 342 Tehsils of Madhya Pradesh" from interested and eligible bidders vide "Request For Proposal" (RFP)/Tender Document No. CLRMP/2010/03 on 21 February, 2011.
The petitioner submitted its bid. The Tender Evaluation Committee after evaluation of Technical and Commercial Bid/ proposal of the petitioner and other vendors declared the petitioner as L1 bidder. Consequently, the petitioner was asked vide letter dt.5.3.2012 to submit its written consent. The petitioner replied the same on 13.3.2012 and requested the authorities to share the technical W.P.No.1275/2014 2 specification make and model of all the L1 items offered by L1 vendors. The petitioner further submitted in the letter that after receiving the same it would look at the cost in implementing the same.
The Commissioner, Land Records vide letter dt.15.3.2012 informed the petitioner that whether the petitioner was willing to execute the work in accordance with L1 basket rate up to 21.3.2012. The petitioner vide letter dt.21.3.2013 informed the authority that "After evaluating each and every line item we found that there is a wide variation on the rates quoted by various vendors for Civil Work, Access Control, Fire and smoke detection, Lamination, Data entry etc. The difference between the rates of the petitioner and L1 bidders are ranging from 136 to 5600 times approximately." Consequently, the petitioner informed the authorities that it was not possible for the petitioner to work in accordance with all the L1 basket rates. Thereafter, the committee had taken a decision to forfeit the bank guarantee of Rs.50 lac on 13.6.2012 as submitted by the petitioner.
Against the aforesaid order, the petitioner filed a writ petition before this court. It was registered as W.P.No.4255/2013 and this court vide order dt.19.9.2013 disposed of the aforesaid petition with the following directions :-
W.P.No.1275/2014 3(i) The impugned orders dt.13.6.2012 (Annexure P/1) and 16.5.2012 (Annexure P/9) are hereby quashed.
(ii) The authority is given liberty to pass fresh order after giving proper opportunity of hearing of show cause and after considering the reply of the petitioner in accordance with law and observations made by this court in the order. The aforesaid process shall be completed within a period of eight weeks from the date of receipt of copy of the order. Release of the EMD amount of the petitioner shall be subject to the order that may be passed by the authority.
(iii) No order as to costs."
In pursuance to the directions issued by this court, the competent authority has passed the impugned order dt.7.12.2013 (Annexure P/1). The authority has held that the petitioner deliberately denied execution of the agreement after notification of L1 rate list, hence, as per clause 4.27.3 of the tender document, the earnest money deposited by the petitioner is hereby forfeited.
Clause 3.13.4 of the tender document prescribes "Commercial Bid Evaluation" and Clause 3.13.5 of the tender document prescribes "Deprivation of L1 Rate List and Grading of Vendors and Clause 3.13.6 is in regard to "Selection of winning bidder.
Clause 3.13.6 of the tender document reads as under :-
W.P.No.1275/2014 4"3.13.6 Any vendor can refuse to execute the work using L1 Rate List without forfeiting the EMD unless as stated in Sec 4.27 - Signing of Contract Agreement (Pg.34)."
From the aforesaid clause, it is clear that the vendor can refuse to execute the work using L1 rate list without forfeiting the EMD unless as stated in Section 4.27 - Signing of Contract Agreement.
Clause 4.27 of the tender document is in regard to Signing of Contract Agreement, which reads as under :-
"4.27 Signing of Contract Agreement 4.27.1 CLR shall notify the successful bidder(s) that his/their bid has been considered for awarding the work subjected to his willingness to execute the work as per the L1 Rate List.
4.27.2 Upon issue of the notification by CL, the concerned bider is required to sign the contract agreement with the CLR within 7 days from the date of issue of notification.
4.27.3 Any bidder failing to sign an agreement as mentioned above shall be disqualified and his bid shall be considered as invalid. He will also forfeit his EMD, if his bid value against any of the item has been considered as Rate for the corresponding item in the L1 Rate List."W.P.No.1275/2014 5
From the aforesaid clause it is clear that the CLR shall notify the successful bidder for awarding the work subject to his willingness to execute the work as per the L1 Rate List and the concerned bidder is required to sign the agreement within 7 days.
The aforesaid clause be read in harmony with Clause 3.13.6 of the tender document, which says that the application software shall be awarded to the L1 Bidder only as per the L1 Rate List. It is an admitted fact that the rates quoted by the petitioner in tender document of all the items were not the lowest. L1 Rate list was prepared by the department in accordance with Clause 3.13.5 of the bid document. It means that the department has taken the lowest rates of various items quoted by different bidders and those rates have been offered to the petitioner including some lowest rates mentioned by the petitioner during the rates as L1 basket. In accordance with the aforesaid clause 3.13.6 of the bid document, a vendor can refuse to execute the work using L1 rate list without forfeiting EMD if the L1 rates are higher than the lowest rates quoted by the bidder. The rates offered to the petitioner as L1 rates were higher than the rates quoted by the petitioner except of three items. In such circumstances, the petitioner was eligible to refuse to sign the agreement and his Earnest Money Deposit W.P.No.1275/2014 6 (EMD) could not be forfeited. It is also in consonance with the provisions of the Indian Contract Act. Section 2 (a) of the Indian Contract Act prescribes that a valid contract is not complete without a valid offer. The petitioner could not be forced to execute the work in accordance with the rates which are higher than the rates quoted by the petitioner. This is also mentioned in the Bid Document as mentioned above in the order.
Supreme Court in the case of Jagdish Mandal Vs. State of Orissa and others reported in (2007) 14 SCC 517 has held as under in regard to power of the court in regard to interference in contractual matters.
"(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";
(ii) Whether public interest is
affected."
Supreme Court further in Jagmohan Singh Vs. State of M.P. and others reported in (2008) 7 SCC 38 has held that the action of the authority in regard to exercise of power of forfeiture is required to be W.P.No.1275/2014 7 judged on the touchstone of Article 14 of the Constitution of India.
In the present case, the Commissioner, Land Records has held that the petitioner deliberately denied execution of the agreement after notification of L1 Rate List, however, this finding of the authority is arbitrary and illegal because the petitioner has been given a right not to execute the work on L1 Rate List if the Rate List is higher than the rates quoted by the petitioner, hence, the decision of the authority is arbitrary and irrational. It is also against the terms and conditions of the bid document.
Hence, the petition is allowed. The impugned order dt.7.12.2013 (Annexure P/1) is hereby quashed. The Earnest Money deposited by the petitioner be refunded to the petitioner within a period of thirty days from the date of receipt of copy of the order.
No order as to costs.
(S.K. Gangele) (Sheel Nagu)
Judge Judge
SP