Madhya Pradesh High Court
Ms Power Solutions Through Its Partner ... vs M.P. Paschim Kshetra Vidyut Vitran ... on 1 November, 2023
Author: Sushrut Arvind Dharmadhikari
Bench: Sushrut Arvind Dharmadhikari, Pranay Verma
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IN THE HIGH COURT OF MADHYA PRADESH
AT I N D O R E
BEFORE
HON'BLE SHRI JUSTICE SUSHRUT ARVIND DHARMADHIKARI
&
HON'BLE SHRI JUSTICE PRANAY VERMA
WRIT PETITION No. 16427 of 2023
BETWEEN:-
MS POWER SOLUTIONS THROUGH ITS PARTNER TANVEER
AKHTAR KHAN S/O LATE SHRI AKHTAR ALI KHAN, AGED
ABOUT 38 YEARS, OCCUPATION: BUSINESSMAN 31-A HAZRAT
NIZZAMUDDIN COLONY BHEL BHOPAL (MADHYA PRADESH)
.....PETITIONER
(SHRI SUNIL JAIN, LEARNED SENIOR ADVOCATE WITH SHRI SIDDHARTHA
KUMAR JAIN, LEARNED COUNSEL FOR THE PETITIONER).
AND
M.P. PASCHIM KSHETRA VIDYUT VITRAN COMPANY LTD.
1. MANAGING DIRECTOR GPH COMPOUND POLO GROUND
INDORE (MADHYA PRADESH)
CHIEF ENGINEER PURCHASE OFFICE OF M.D. WZ MP
2. PASCHIM KSHETRA VIDYUT VITRAN COMPANY LTD. GPH
COMPOUND POLOGROUND INDORE (MADHYA PRADESH)
M/S PRACHI CONSTRUCTION PLOT NO. 27 SADAR
3.
BAZAR JOBAT ALIRAJPUR (MADHYA PRADESH)
.....RESPONDENTS
(SHRI PRASANNA PRASAD, LEARNED COUNSEL FOR THE RESPONDENTS
NO.1 AND 2)
_________________________________________________________________________
Reserved on :- 11/10/2023
Pronounced on :- 01/11/2023
__________________________________________________________________________________________________________________________________________________
This petition having been heard and reserved for orders, coming on for
pronouncement this day, Hon'ble JUSTICE PRANAY VERMA, pronounced
the following
ORDER
1. By this petition preferred under Article 226 of the Constitution of India,
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the petitioner has challenged the order dated 20/6/2023 passed by respondents 1 and 2 whereby they have dropped the entire tender proceedings. Further relief has been sought for a direction to respondents 1 and 2 to issue work order to the petitioner after declaring it as L/1 bidder.
2. The case of the petitioner is that respondent No.1 had issued a notice inviting tender (NIT) for ; -
"supply, installation, testing and commissioning of New 11 KV line for Bifurcation and Interconnection, Additional 11 KV Bay at 33/11 KV Sub- station, Augmentation of conductor of 33 KV & 11 KV lines, Additional distribution transformer sub-station with Associate New 11 KV lines, LT line on AB cable, conversion of bare LT line with AB cable, Augmentation of LT AB cable, cover conductor for 11 KV line crossing agriculture and non- agriculture feeder, 11 KV and 33 KV bus bar renovation other associated work, and supporting work such as DPs, TPs, crossing etc. in Jhabua O & M Division (LOT-12) under the revamped reforms based and results linked, distribution scheme (TS-1667). As per the tender documents the deadline for submission of bid was 16/3/2023 upto 15:00 hrs and the opening technical part of bid was scheduled for 17/3/2023 at 15.00 hrs".
3. The petitioner along with one M/s. Eltel Power Private Ltd created a joint venture and submitted bid for participation in the NIT for Jhabua O and M Division (LOT-12) TS-1667. The technical bid was opened on 17/3/2023 and petitioner firm was accepted for technical and financial evaluation. On 13/4/2023 respondents 1 and 2 received an e-mail whereby complaint was made to the effect that the petitioner firm has submitted forged and fabricated documents for participating in the tender process. An enquiry was conducted by respondents 1 and 2 after which they found the petitioner technically qualified and decided to open its financial bid. On 11/5/2023 the petitioner was informed that the price bid shall be opened on 12/5/2023. After opening of the financial bid, the petitioner firm was found as L/1 bidder and respondent
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No.3 was found as L/2 bidder. The work order was to be issued on 19/5/2023 in favour of the petitioner.
4. The proprietor of respondent No.3, the L/2 bidder, made a complaint on 14/5/2023 to respondents 1 and 2 alleging that the petitioner firm has been declared as disqualified in the tender issued by Bhopal Discom due to irregularities and fabricated documents having been submitted by it. As a consequence of the complaint, issuance of work order was postponed. No notice was issued by respondents 1 and 2 to the petitioner and they took the decision to drop the tender by order dated 20/6/2023 without giving any cogent reason. The petitioner firm acquired knowledge of the said fact only when the same was published on the web-site of respondent authorities. Thereafter a fresh NIT dated 20/6/2023 was issued by them. Being aggrieved by order dated 20/6/2023 issued by respondents No.1 and 2 dropping the tender proceedings the petitioner has preferred the instant petition.
5. Learned Senior counsel for the petitioner has submitted that the impugned order dated 20/6/2023 passed by respondents No.1 and 2 and the fresh NIT issued by them dated 20/6/2023 is unauthorized and arbitrary. No opportunity of hearing was afforded to the petitioner firm prior to dropping of the tender proceedings. They are acting in collusion with respondent No.3 and the entire exercise is being done by them at its behest to illegally benefit it. The action of respondents No.1 and 2 is based solely on the complaint made by respondent No.3. No explanation was sought for from the petitioner prior to dropping of the tender. There has been violation of principles of natural justice by respondents No.1 and 2. Complaint was made by respondent No.3 in respect of another tender where the petitioner was declared as financially disqualified. The petitioner was not black-listed therein nor any penal action was ever taken against it in respect of any of the earlier tenders. Without verifying genuineness of the complaint the impugned action has been taken which cannot be justified. The mala fides of respondents No.1 and 2 are
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evident from the fact that fresh tender for the very same work has been issued on 20/6/2023 solely for benefiting respondent No.3. Reliance was placed on the decision of the Supreme Court in Pooran Mal V/s. Director of Inspection (Investigation), New Delhi & Others, (1974) 1 SCC 345, Raunaq International Ltd. V/s. I.V.R. Construction Ltd & Others, (1999) 1 SCC 492 and Caretel Infotech Ltd V/s. Hindustan Petroleum Corporation Ltd & Others, (2019) 14 SCC 81 and of the Bombay High Court in Nanak Construction V/s. State of Maharashtra & Ors. 2023 SCC On-line BOM 176.
6. Reply has been filed by respondents No.1 and 2 and learned counsel on their behalf has submitted that though the JV of petitioner firm was found technically and financially qualified for opening their price bids but was never declared as a successful bidder for award of contract. No formal agreement was ever entered into with it. After opening of price bids on 12/5/2023 complaint was made by respondent No.3 on 14/5/2023 alleging anomalies on part of the petitioner. Thereafter detailed investigation was conducted after which the tender has been dropped subsequent to obtaining competent approval. The same has been done in accordance with the provisions contained in the tender document. No benefit has been given to respondent No.3. The complaint made by it is not the basis of any action against the petitioner. In enquiry conducted in respect of the petitioner it was found that it has intentionally manipulated most of the contents in its certificates which was submitted on-line to Central Discom, Bhopal for getting work against tender issued by it. The petitioner had participated in another tender. In the enquiry it was also found that experience certificate submitted by it has not been issued by the Officer as stated therein. The petitioner has adopted fraudulent practice and has tried to get contract in RDSS tenders of Central and West Discom of M.P hence in order to disallow the petitioner to enter into any contract with West Discom Indore the tender has been dropped and fresh NIT has been issued. Disciplinary action has already been initiated against the petitioner
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firm. Reliance has been placed on the decisions of the Supreme Court in Baldev Kumar, Man Power Agency V/s. State of Himachal Pradesh, 2021 SCC On-line HP 7467, Maa Binda Express Carrier V/s. North East Frontier Railway & Ors. (2014) 3 SCC 760, State of Jharkhand V/s. CWE-SOMA Consortium, (2016) 14 SCC 172, Rishi Kiran Logistics Pvt. Ltd. V/s. Board of Trustees of Kandla Port Trust & Ors. (2015) 13 SCC 233, State of Chhattisgarh V/s. Dhirjo Kumar Sengar, (2009) 13 SCC 600, Dharampal Satyapal Ltd. V/s. Deputy Commissioner of Central Excise, Gauhati, (2015) 8 SCC 519, of the Patna High Court in B. Rai Construction Co. V/s. State of Bihar, (2022) SCC Online Pat 4612 and of this Court in Shiv Prasad Singh Bhadoriya V/s. State of M.P. (2022) SCC Online M.P. 2024 (SB) and Phaloudi Constructions & Infrastructure Pvt. Ltd V/s. Indore Smart City Development Ltd & Anr. passed in W.P.No.15445/2022 dated 23/8/2023. It is hence submitted that the petition deserves to be dismissed.
7. We have considered the rival submissions of the learned counsel for the parties and have perused the record.
8. The scope of interference in contractual matters and the principles governing the same have been illustrated by the Supreme Court in a catena of decisions from time to time. They have been summed up in a recent decision in the case of Silppi Constructions Contractors V/s. Union of India & Anr. (2020) 16 SCC 489 in which it has been laid down as under :-
"19. This Court being the guardian of fundamental rights is duty-bound to interfere when there is arbitrariness, irrationality, mala fides and bias. However, this Court in all the aforesaid decisions has cautioned time and again that courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters. This Court is normally loathe to interfere in contractual matters unless a clear-cut case of arbitrariness or mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The
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contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution. The Courts must realise their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in Judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. As laid down in the judgments cited above the courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give "fair play in the joints" to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer.
20. The essence of the law laid down in the judgments referred to above is the exercise of restraint and caution; the need for overwhelming public interest to justify judicial intervention in matters of contract involving the state instrumentalities; the courts should give way to the opinion of the experts unless the decision is totally arbitrary or unreasonable; the court does not sit like a court of appeal over the appropriate authority; the court must realise that the authority floating the tender is the best judge of its requirements and, therefore, the court's interference should be minimal. The authority which floats the contract or tender, and has authored the tender documents is the best judge as to how the documents have to be interpreted. If two interpretations are possible then the interpretation of the author must be accepted. The courts will only interfere to prevent arbitrariness, irrationality, bias, mala fides or perversity. With this approach in mind we shall deal with the present case."
9. The primary contention of the petitioner is that no reasons were
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furnished by respondents No.1 and 2 for dropping the entire tender process and no opportunity of hearing was given to it prior to aforesaid decision being taken which is in violation of the principles of natural justice.
10. In Silppi Constructions Contractors (supra) it was held in paragraph No.25 as under :-
"25. That brings us to the most contentious issue as to whether the learned single judge of the High Court was right in holding that the appellate orders were bad since they were without reasons. We must remember that we are dealing with purely administrative decisions. These are in the realm of contract. While rejecting the tender the person or authority inviting the tenders is not required to give reasons even if it be a state within the meaning of Article 12 of the Constitution. These decisions are neither judicial nor quasi judicial. If reasons are to be given at every stage, then the commercial activities of the State would come to a grinding halt. The State must be given sufficient leeway in this regard. The Respondent nos. 1 and 2 were entitled to give reasons in the counter to the writ petition which they have done."
11. In Ghanshyam Das Aggrawal V/s. Delhi Development Authority, 1996 SCC Online Del. 193 it was held by the Division Bench of Delhi High Court in paragraph No.15 as under :-
"(15) The observation made by the Supreme Court is binding on us, but we do not think it is going to make any difference in the case at hand. Firstly, the Rules and the Terms and Conditions of the Public Auction did not contemplate reasons for rejection of highest bid being communicated to the concerned bidders. There is a distinction between existence of reasons and assigning of reasons (see Shrilekha Vidyarthi). The former is a requirement of natural justice, the later is a dictate of law.
Reasons need not be assigned in the sense of being communicated to a party unless required to be so done by any Rule having force of law. Secondly, the reasons could have been made available if asked for. Thirdly, the reasons for rejection though not communicated and though not asked for by the petitioners before filing the petitions have
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been made available in the Court in response to the show cause notice issued and it would serve no useful purpose if we may dispose of the petitions merely by directing the respondents-DDA to communicate the reasons to the petitioner. The reasons now having been made known to the petitioners, they have been heard thereon. Whatever they had to say on such reasons they have said and we have also tested the validity of the reasons and have found nothing unreasonable therewith. That is an end of the matter"
12. The eventually where the tender itself has been dropped has been considered in B. Rai Construction Company and INSCPL (JV) a Joint Venture (supra) wherein the Patna High Court held as under :-
"24. Be that as it may, the respondent BMSICL has not disqualified the petitioner, rather it has decided to cancel the tender process itself and issue notice inviting re-tender. The petitioner has not demonstrated any bias or malice against the impugned action nor do we find any arbitrariness, irregularity and unreasonableness in the impugned action, warranting interference in exercise of the power of judicial review under Article 226 of the Constitution of India.
29. In the present case, as has been noticed, that NIT itself has been cancelled. The said decision to cancel the tender cannot be said to be quasi-judicial in nature, determining the rights of any party. It is a purely administrative decision of the respondents, which does not require recording of reasons."
13. In State of Jharkhand & Ors. V/s. M/s. CWE SOMA Consortium, (Supra) it was held by the Supreme Court that the right to refuse the lowest or any other tender or to cancel the tender process and float a fresh tender is always available to the Government. So long as the bid has not been accepted, the bidder acquired no vested right. It was held as under :-
"13. In case of a tender, there is no obligation on the part of the person issuing tender notice to accept any of the tenders or even the lowest tender. After a tender is called for and on seeing the rates or the status of the contractors who have given tenders that there is no competition, the person issuing
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tender may decide not to enter into any contract and thereby cancel the tender. It is well-settled that so long as the bid has not been accepted, the highest bidder acquires no vested right to have the auction concluded in his favour (vide Laxmikant and Ors. v. Satyawan and Ors. (1996) 4 SCC 208; Rajasthan Housing Board and Anr. v. G.S. Investments and Anr . (2007) 1 SCC 477 and Uttar Pradesh Avas Evam Vikash Parishad and Ors. v. Om Prakash Sharma (2013) 5 SCC 182).
14. The appellant-state was well within its rights to reject the bid without assigning any reason thereof. This is apparent from clause 24 of NIT and clause 32.1 of SBD which reads as under:-
"Clause 24 of NIT: "Authority reserves the right to reject any or all of the tender(s) received without assigning any reason thereof."
* * * Clause 32.1 of SBD: "...the Employer reserves the right to accept or reject any Bid to cancel the bidding process and reject all bids, at any time prior to award of Contract, without thereby incurring any liability to the affected Bidder or Bidders or any obligation to inform the affected Bidder or Bidders of the grounds for the Employer's action."
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14. In the present case, there was a specific provision in the tender document in respect of the employer's right to accept any bid, and to reject any or all of the bids. The same was clause 39.1 which is reproduced as under :-
"The Employer reserves the right to accept or reject any Bid, and to annul the Bidding process and reject all Bids at any time prior to Contract Award, without thereby incurring any liability to Bidders. In case of annulment, all Bids submitted and specifically, Bid securities, if applicable as per ITB 18 and submitted, shall be promptly returned to the Bidders".
15. The aforesaid clause unmistakably demonstrates that respondents No.1 and 2 had reserved their right to accept or reject any bid and to annul the bidding process itself at any time prior to award of contract. The facts reveal
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that though the financial bid of the petitioner had been opened and it was found to be L/1 bidder but no agreement was executed with it nor was it declared by respondents 1 and 2 as the successful bidder. Thus, no concluded contract came into existence between the parties. At any time prior to award of contract in favour of the petitioner and execution of agreement with it or in favour of the other bidder, respondents No.1 and 2 had the absolute right to reject the bid of either of the bidders including the petitioner and even to cancel the entire tender proceedings themselves in terms of Clause 39.1 of the tender document. Exercising this right respondents No.1 and 2 have dropped the entire tender process and have issued a fresh NIT for the same in which it cannot be said that they have acted illegally or arbitrarily in any manner. They have on the other hand acted well within their rights as per the tender document itself.
16. From the return filed by respondents No.1 and 2 it is apparent that complaints were received from respondents No.3 to the effect that the petitioner firm had submitted forged and fabricated documents in some other tenders floated by another departments of respondents No.1 and 2 themselves. The said fact was got verified by respondents No.1 and 2 and during such verification it came to their knowledge that such documents were in fact submitted by the petitioner firm as a result of which it was not awarded the tenders therein. It is on the basis of the said enquiry done by respondents No.1 and 2 that the decision was taken by them for cancelling the entire tender process which was well within their right. The verification of genuineness of the documents filed by the petitioner in the other tender process was well within the right and authority of respondents No.1 and 2. It was not mandatory for it to have been proved by evidence beyond doubt before them that the allegations against the petitioner firm are correct. Prima facie material was available with them to seriously doubt the antecedents and competence of the petitioner firm and to reasonably form an opinion that it was not fit for award
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of the contract in question.
17. Since the complaints made by respondent No.3 were in respect of certain forged and fabricated documents having been submitted by the petitioner in some other tender process, there was no necessity or requirement for issuance of any notice to the petitioner and affording it any opportunity of hearing. It was sufficient if respondents 1 and 2 had got verification of the said facts done on their own from their other departments where the petitioner had allegedly submitted such documents and arrive at their own subjective satisfaction. The tender process has been dropped by a simplicitor order and no fact has been recorded therein that the same is being done on account of some fabricated documents having been submitted by the petitioner elsewhere. No finding has been given at any stage by respondents No.1 and 2 to the said effect. If upon completion of verification of documents of the petitioner, respondents No.1 and 2 felt that it would be more appropriate to drop the entire tender process itself and to issue a fresh tender, it cannot be said that they have acted illegally or arbitrarily in any manner. On the contrary they have acted well within their rights as conferred upon them under the tender document itself. This is more so when the petitioner was not at any stage declared as the successful bidder. Prior to that respondents No.1 and 2 had every right and have hence not committed any illegality in dropping the tender. In such circumstances, the judgments relied by the learned Senior counsel for the petitioner are of no avail to him.
18. As a result of the aforesaid discussion, we do not find any reason to interfere in the matter. The petition is found to be devoid of merits and is hereby dismissed.
(S.A. DHARMADHIKARI) (PRANAY VERMA)
JUDGE JUDGE
SS/-
Digitally signed by SHAILESH MAHADEV
SUKHDEVE
Date: 2023.11.02 16:15:50 +05'30'