Jharkhand High Court
Ms Pappu Construction Through Its ... vs Welfare on 10 May, 2017
Author: Aparesh Kumar Singh
Bench: Aparesh Kumar Singh
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W. P. (C) No. 6419 of 2016
M/s. Pappu Construction, a partnership firm,
Jamshedpur, District East Singhbhum ..... Petitioner
vs.
1. The State of Jharkhand through the Principal
Secretary, Welfare Department, Govt. of Jharkhand
2. Deputy Commissioner, East Singhbhum, Jamshedpur
3. Zila Parishad, East Singhbhum, through the
Deputy Development Commissionercum
Chief Executive Officer, Zila Parishad,
East Singhbhum, Jamshedpur
4. Deputy Development Commissionercum
Chief Executive Officer, Zila Parishad,
East Singhbhum, Jamshedpur
5. Secretary, Zila Parishad, East Singhbhum, Jamshedpur
6. District Engineer, Zila Parishad, East
Singhbhum, Jamshedpur ......Respondents.
CORAM: HON'BLE MR. JUSTICE APARESH KUMAR SINGH
For the Petitioner : M/s. Sumeet Gadodia, Prem Pujari
Shilpi John, Ranjeet Kushwaha, Advs.
For the RespondentState : Mr. H.K.Mehta, A.A.G,
8/10.5.2017 Heard learned counsel for the parties.
2. Writ petitioner approached this Court on issuance of Press Advertisement on 30th October, 2016 (Annexure6), whereby Notice Inviting Tender (for short 'NIT') No. 04/201617 pertaining to the work of construction of New Eklavya Model Residential School at Purnapani Panchayat under Behragora Block in the District of East Singhbhum, was cancelled.
3. The essence of petitioner's grievance is reflected in the order dated 21st November, 2016, by which the Respondents were directed to file their counter affidavit. It is accordingly quoted hereunder:
"Counsel for the petitioner submits that after being successful in the NIT at Annexure1 bearing no. 04/201617 for award of the work for construction of new Eklavya Model Residential School at Purna Pani Panchayat in village Budipokhar, blockBahragora, as per decision of the Tender Committee at Annexure3 dated 18.10.2016, petitioner was communicated vide Annexure4 to enter into an Agreement by the District Engineer, East Singhbhum under the orders of Deputy Development Commissioner - cum - Chief Executive Officer, Zila Parishad being Memo No. 952 dated 21.10.2016. Petitioner was intimated that if he fails to enter into an Agreement by 28.10.2016, then work would be allocated to the second lowest tenderer. Despite the fact that the petitioner appeared to enter into an Agreement on 28.10.2016 vide Annexure5 before the Secretary, Zila Parishad, East Singhbhum, NIT itself has been cancelled by the impugned press communication dated 30.10.2016 (Annexure6) issued 2. by the Respondent No. 4 Deputy Development Commissioner
- cum - Chief Executive Officer, Zila Parishad, East Singhbhum, Jamshedpur. Therefore, petitioner has approached this Court. Counsel for the Respondent State prays for and is allowed two weeks time to obtain instruction in the matter.
2. Counsel for the State would also seek instruction from the Respondent Nos. 3 to 6 being the officials of Zila Parishad. Counter affidavit should be filed well within time, as per the High Court Rules and Standing Instructions.
3. List the case accordingly on 07.12.2016 within first ten cases as an unfixed case.
4. In the meantime, Respondent should not proceed to initiate a fresh process for award of the same work."
4. Counter affidavit was filed on behalf of respondent no. 6 on 5th January, 2017.
5. When the matter was heard on 18th January, 2017, it was observed that certain pertinent issues remained conspicuously unanswered in the counter affidavit of respondent no. 6 sworn by District Engineer, East Singhbhum, Jamshedpur, who claimed to be duly authorized by other respondents. Learned counsel for the State was granted time to seek further instructions from the RespondentWelfare Department as well as RespondentDistrict Authority. Thereafter, counter affidavit of respondent nos. 1 and 2 and respondent nos. 3 to 6 were filed separately on 20th February, 2017. Petitioner had filed rejoinder to the first counter affidavit on 9th January, 2017 and thereafter to the two counter affidavits on 22nd February, 2017. One supplementary counter affidavit was again filed on 3rd May, 2017 on behalf of RespondentState.
6. The conspectus of fact, which emerge from the pleadings of rival parties and are relevant for consideration of the issues involved, are briefly referred to hereinafter. The Project, in question, is executed by funds allocated by the Central Government through Welfare Department of the State Government. The administrative guidelines to execute such works were issued on 26th November, 2012 (Annexure11 Series), as per which such works were to be executed through the "Integrated Tribal Development Agency" (for short 'ITDA') which had to identify and empanel the Project Implementation Agency for execution of construction 3. work under the Heads "Functions of ITDA". The Welfare Department issued letter no. 246 dated 5th October, 2015 (Annexure10), laying down the guidelines and the manner in which the funds allocated by the Central Government under Article 275(1) of the Constitution of India is to be utilized. Para5 thereof provides that Tribal Welfare Commissioner, Ranchi/TRI/Project Director, ITDA and District Welfare Officer of the concerned Districts would be the Agencies to get the work executed as per the Guidelines issued by the Central Government and the department from time to time. At the district level, the Controlling Officer would be the Deputy Commissioner while at the State Level, it will be the Tribal Welfare Commissioner.
7. For the construction of New Eklavya Model Residential School at Purnapani Panchayat under the Centrally Sponsored Scheme, the Project Director, ITDA appointed the Executive Engineer, Building Division, Jamshedpur through Memo no. 131 dated 18th February, 2016 as the Executing Agency. The Executive Engineer through Letter no. 1351 dated 2nd July, 2016 (part of Annexure9 Series to the rejoinder) informed the Project Director of ITDA, East Singhbhum, Jamshedpur that Jharkhand State Building Construction Corporation Ltd.(For short 'Corporation') had been constituted. Such works were to be executed through Corporation by inviting tenders. The estimate prepared after soil testing, planning, would include 7% Agency Charges as required by Corporation. Incidentally, it would be pertinent to mention here that the State of Jharkhand by resolution contained in Memo no. 3514 dated 24th November, 2015 (AnnexureK to counter affidavit of Respondent nos. 1 & 2 dated 20.02.2017) had constituted the Corporation for execution of different nature of works under different departments of the State. Vide letter no. 585 dated 12th July, 2016 of Project Director, ITDA, East Singhbhum, Jamshedpur addressed to Joint Secretary, Welfare Department, guidelines were sought regarding inclusion of 7% Agency Charges which would come to Rs. 1 Crore over and above the estimate amount of work to be executed 4. through the Building Construction Corporation. The Welfare Department through letter no. 2503 dated 11th August, 2016 categorically informed him that New Eklavya Model Residential School at Purnapani Panchayat was being constructed through the Central funds allotted under Article 275(1) of the Constitution of India by Tribal Works Ministry, Government of India. Therefore, no further amount could be released beyond the allocated amount of Rs. 12 Crore for execution of the project.
8. The Committee comprising Deputy Commissioner, East Singhbhum, Jamshedpur and Project Director, ITDA, East Singhbhum, Jamshedpur in its meeting held on 30th July, 2017 after making reference of the stand of respondent department on the issue of inclusion of 7% Agency Charges, appointed the Zila Parishad, East Singhbhum, Jamshedpur to execute the work. Accordingly, by order dated 22nd August, 2016 issued by Project Director, ITDA bearing Memo no. 706, Zila Parishad, Jamshedpur was appointed as Executing Agency after canceling the earlier order dated 18th February, 2016, whereunder the Executive Engineer, Works Division, Jamshedpur had been appointed as Executing Agency. NIT No. 4/201617 was issued by the Zila Parishad on 4th October, 2016 for construction of Model School in question in which four bidders participated including the petitioner. The tender committee upon evaluation of the bids in its meeting held on 18th October, 2016 (Annexure3) took decision to allot the work in favour of the petitioner as his registration was in the category 101 with the Zila Parishad, East Singhbhum and he was also amongst the lowest bidder. By letter dated 21st October, 2016 (Annexure4), District Engineer, Zila Parishad informed the petitioner that he has been selected as the lowest bidder to execute the work. He should execute the agreement on or before 28th October, 2016, failing which the work could be allotted to second successful tenderer. Petitioner contends that despite approaching the respondent for execution of agreement vide Annexure5 dated 28th October, 2016, agreement was not executed, instead the NIT No. 04/201617 was 5. cancelled through impugned Press Advertisement dated 30th October, 2016 (Annexure6) issued by Deputy Development Commissionercum Chief Executive Officer, Zila Parishad, East Singhbhum, Jamshedpur.
9. Counter affidavits of respondent no. 6 and RespondentState in effect have defended the impugned decision inter alia on the followings grounds:
(i) Upon constitution of Jharkhand State Building Construction Corporation Ltd., the work of such nature could not have been executed through Zila Parishad;
(ii) The work of more than Rs. 50 Lakhs could be executed only through the Corporation as per letter dated 27th October, 2016 issued by the Chief Secretary, Government of Jharkhand (AnnexureD to their counter affidavit). The technical sanction of work has been accorded by Chief Engineer of Subernarekha Multipurpose Project, though as per the norms laid down by Jharkhand State Building Construction Department, the works of the value of more than Rs. 5 Crores is to be sanctioned by EngineerinChief of the Department.
(iii) It is also their stand that works of such nature above estimated cost of Rs. 50 lakhs were to be executed through e Tender.
10. The respondents have not disputed that there was no misrepresentation, fraud or irregularity committed on behalf of petitioner.
11. Learned counsel for the petitioner has during the course of argument pointed out that the counter affidavit of respondent no. 3 to 6 filed on 3rd January, 2017 categorically stated at para12 that there is no discrepancy in the whole process of tender. He also states that communication contained in letter no. 184 dated 31st January, 2012 of the Building Construction Department regarding invitation of eTender is not applicable in respect of tender issued by Zila Parishad, East Singhbhum, Jamshedpur. 6.
12. Reliance is placed on resolution of Department of Panchayati Raj contained in Memo no. 1335 dated 12th October, 2011 in order to submit that for execution of work through Zila Parishad functioning under the department of Panchayati Raj and NREP (Spl. Division), the technical sanction of works over Rs. 50 Lakhs is to be granted by the Chief Engineer (Annexure16 to rejoinder affidavit).
13. Counsel for the petitioner further submits that on completion of tender process and communication expressed in writing vide Annexure4 to the petitioner on 21st October, 2016, a concluded agreement came into existence, though the formal agreement was not executed by the RespondentZila Parishad on wholly arbitrary and irrational grounds. He submits that in the present state of facts, it is the arbitrary action of RespondentState, which is under challenge. The decision of the respondents in such circumstances is open to challenge on the well settled grounds of judicial review.
14. Reliance has been placed on the judgment rendered by Hon'ble Supreme Court in the case of Rishi Kiran Logistics Private Limited Vs. Board of Trustees of Kandla Port reported in (2015) 13 SCC 233 and in the case of Kisan Sahkari Chini Mills Limited Vs. State of Uttaranchal reported in (2008) 12 SCC 500 at Para 23 quoted hereunder:
"23. If the dispute was considered as purely one relating to existence of an agreement, that is, whether there was a concluded contract and whether the cancellation and consequential non-supply amounted to breach of such contract, the first respondent ought to have approached the civil court for damages. On the other hand, when a writ petition was filed in regard to the said contractual dispute, the issue was whether the Secretary (Sugar), had acted arbitrarily or unreasonably in staying the operation of the allotment letter dated 26-3-2004 or subsequently cancelling the allotment letter. In a civil suit, the emphasis is on the contractual right. In a writ petition, the focus shifts to the exercise of power by the authority, that is, whether the order of cancellation dated 24-4-2004 passed by the Secretary (Sugar), was arbitrary or unreasonable. The issue whether there was a concluded contract and breach thereof becomes secondary. In exercising writ jurisdiction, if the High Court found that the exercise of power in passing an order of cancellation was not arbitrary and unreasonable, it should normally desist from giving any finding on disputed or complicated questions of fact as to whether there was a contract, and relegate the petitioner to the remedy of a civil suit. Even in cases where the High Court finds that there is a valid contract, if the impugned administrative action 7. by which the contract is cancelled, is not unreasonable or arbitrary, it should still refuse to interfere with the same, leaving the aggrieved party to work out his remedies in a civil court. In other words, when there is a contractual dispute with a public law element, and a party chooses the public law remedy by way of a writ petition instead of a private law remedy of a suit, he will not get a full-fledged adjudication of his contractual rights, but only a judicial review of the administrative action. The question whether there was a contract and whether there was a breach may, however, be examined incidentally while considering the reasonableness of the administrative action. But where the question whether there was a contract, is seriously disputed, the High Court cannot assume that there was a valid contract and on that basis, examine the validity of the administrative action."
15. Learned counsel for the petitioner has also placed reliance on the judgment rendered by this Court in W.P.(C) No. 1848 of 2016 in the case of M/s. Baban Kumar Singh Vs. The State of Jharkhand and others and analogous cases dated 3rd May, 2017. He submits that if the impugned action is found to be arbitrary, this Court can duly examine it in exercise of the powers under Article 226 of the Constitution of India, especially when there is no allegation of misrepresentation, fraud or irregularity on the part of the petitioner. Such solemn transaction with the State or its instrumentalities should not be abrogated, unless there is an element of larger public interest or loss to public exchequer or the possibility of public mischief involved.
16. Reliance has also been placed upon the judgment rendered by Hon'ble Supreme Court in the case of ITC Limited Vs. State of Uttar Pradesh and others reported in (2011) 7 SCC 493, para 107 whereof quoted hereunder.
"107. The position is, however, different in public law. Breach of statutory provisions, procedural irregularities, arbitrariness and mala fides on the part of the Authority (transferor) will furnish grounds to cancel or annul the transfer. But before a completed transfer is interfered on the ground of violation of the regulations, it will be necessary to consider two questions. The first question is whether the transferee had any role to play (fraud, misrepresentation, undue influence, etc.) in such violation of the regulations, in which event cancellation of the transfer is inevitable.
107.1. If the transferee had acted bona fide and was blameless, it may be possible to save the transfer but that again would depend upon the answer to the further question as to whether public interest has suffered or will suffer as a consequence of the violation of the regulations:
(i) If public interest has neither suffered, nor is likely 8. to suffer, on account of the violation, then the transfer may be allowed to stand as then the violation will be a mere technical procedural irregularity without adverse effects.
(ii) On the other hand, if the violation of the regulations leaves or is likely to leave an everlasting adverse effect or impact on public interest (as for example when it results in environmental degradation or results in a loss which is not reimbursable), public interest should prevail and the transfer should be rescinded or cancelled.
(iii) But where the consequence of the violation is merely a shortrecovery of the consideration, the transfer may be saved by giving the transferee an opportunity to make good the shortfall in consideration.
107.2. The aforesaid exercise may seem to be cumbersome, but is absolutely necessary to protect the sanctity of contracts and transfers. If the Government or its instrumentalities are seen to be frequently resiling from duly concluded solemn transfers, the confidence of the public and international community in the functioning of the Government will be shaken. To save the credibility of the Government and its instrumentalities, an effort should always be made to save the concluded transactions/transfers wherever possible, provided (i) that it will not prejudice the public interest, or cause loss to public exchequer or lead to public mischief, and (ii) that the transferee is blameless and had no part to play in the violation of the regulation.
107.3. If the concluded transfer cannot be saved and has to be cancelled, the innocent and blameless transferee should be reimbursed all the payments made by him and all expenditure incurred by him in regard to the transfer with appropriate interest. If some other relief can be granted on grounds of equity without harming public interest and public exchequer, grant of such equitable relief should also be considered.
17. In the present case, petitioner, a successful bidder, is blameless and has no part in any alleged irregularity a fact which is not disputed by the respondent.
18. Learned counsel for the State on his part has also relied upon the judgment rendered by Hon'ble Supreme Court in the case of JSW Infrastructure Limited & another Vs. Kakinada Seaports Limited and others reported in (2017) 4 SCC 170 which lays down the contours of interference in matter relating to contract under writ jurisdiction.
19. Considered the submission of learned counsel for the parties and the relevant material facts pleaded and referred to hereinabove. On due scrutiny of the relevant material facts noted hereinabove, it cannot be gainsaid that petitioner had a definite locus standi to raise the instant grievance on issuance of the order dated 21st October, 2016 by District 9. Engineer, East Singhbhum, Jamshedpur asking him to enter into an agreement by 28th October, 2016 on being selected as the successful tenderer. " (see Haridwar Singh Vs. Bagun Sumbrui and others; (1973) 3 SCC 889)"
20. It is also evident from the chronology of facts narrated hereinabove that Welfare Department had, as per the policy decision dated 26th November, 2012, appointed Integrated Tribal Development Agency at the district level represented through the Project Director to execute such works sponsored by the Central Government. The Project Director, ITDA was duly informed by Executive Engineer, Building Division, Jamshedpur through letter dated 2nd July, 2016 that such works were now to be executed by Corporation in view of the resolution dated 24th November, 2015 bearing Memo no. 3514 of State of Jharkhand and that 7% Agency Charges were to be included in the estimate of work as required by norms of Building Construction Corporation. On specific communication being made on this point by the Director, ITDA East Singhbhum, Jamshedpur through letter dated 12th July, 2016 (AnnexureC to counter affidavit of respondent no. 6 dated 20.02.2017), the Department of Welfare categorically informed through letter dated 11th August, 2016 (Annexure D to the same counter affidavit of Respondent no. 6) that no further allocation such as Agency Charges could be made beyond allotment of Rs. 12 Crores for execution of project. The District Level Scheduled Tribe Development Council comprising Deputy Commissioner and Project Director, ITDA, East Singhbhum, Jamshedpur has also made reference of this stand of the Welfare Department in its meeting held on 30.07.2016 (AnnexureE) and decided to appoint the Zila Parishad, Jamshedpur as Executing Agency. Thereafter, the process of tender was initiated and finalized in favour of the petitioner on finding him as the lowest bidder and he was registered in 101 category with the Zila Parishad, East Singhbhum.
21. Petitioner has also brought on record the minutes of the meeting 10. held on 9th November, 2016 chaired by Hon'ble Chief Minister of State relating to review of works under Building Construction Department. The Minutes signed by Chief Secretary of Jharkhand being part of Annexure13 of the reply dated 22.02.2017, provided under RTI by Building Construction Department itself goes to reveal that a number of works earlier allotted to the Building Construction Corporation were being taken back to be executed by the Building Construction Department itself. Petitioner has also brought on record eprocurement notice issued by Rural Special Division, Jamshedpur dated 21st January, 2017 to show that several such works of value of more than Rs. 3 Crores and Rs.4 Crores respectively are being executed through such department on their own. Annexure14 to the reply dated 22.02.2017 an eprocurement notice dated 21st December, 2016 issued by Building Construction Department, Jharkhand has also been referred to. Learned counsel for the petitioner has also during the course of argument referred to other shortterm notice issued by Zila Parishad, East Singhbhum, Jamshedpur, such as, shortterm NIT for execution of different works, value of which work is more than 50 Lakhs. Petitioner has endeavoured to drive home the point that execution of works under Building Construction Corporation as per the resolution of the State Government dated 24th November, 2015 are not being observed in such a strict manner. It is urged that Building Construction Corporation have been found to have failed in executing several such works on account of lack of enough resources. In such circumstances, it has been submitted on behalf of the petitioner that after due award of work, decision to cancel NIT was not based on any valid reasons. The reasons if any are also not tenable in law. They are arbitrary in nature which can be interfered by this Court in writ jurisdiction.
22. The scope of interference in such contractual matters have been well defined by judgments of Hon'ble Supreme Court from time to time including those relied upon by the parties. It would be apposite to quote the opinion of Hon'ble Supreme Court on the scope of interference under 11. Article 226 of the Constitution of India as laid down in the case of JSW Infrastructure Limited & another Vs. Kakinada Seaports Limited and others reported in (2017) 4 SCC 170 paras 8 to 10 relied upon by learned counsel for the respondents themselves, are quoted hereunder.
"8. We may also add that the law is well settled that superior courts while exercising their power of judicial review must act with restraint while dealing with contractual matters. A threeJudge Bench of this Court in Tata Cellular v. Union of India held that:
(i) there should be judicial restraint in review of administrative action;
(ii) the court should not act like court of appeal; it cannot review the decision but can only review the decisionmaking process;
(iii) the court does not usually have the necessary expertise to correct such technical decision;
(iv) the employer must have pay in the joints i.e. necessary freedom to take administrative decisions within certain boundaries.
9. In Jagdish Mandal v. State of Orissa this Court held that evaluation of tenders and awarding contracts are essentially commercial functions and if the decision is bona fide and taken in the public interest the superior courts should refrain from exercising their power of judicial review. In the present case there are no allegations of mala fides and the appellant consortium has offered better review sharing to the employer.
10. In Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd. this Court held as follows: (SCC pp. 82526, paras 13 & 1516) "13.....a mere disagreement with the decision making process or the decision of the administrative authority is no reason for a constitutional court to interfere. The threshold of mala fides, intention to favour someone or arbitrariness, irrationality or perversity must be met before the constitutional court interferes with the decisionmaking process or the decision.
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 reasons for interfering with the interpretation given.
16. In the present appeals, although there does not appear to be any ambiguity or doubt about the interpretation given by NMRCL to the tender conditions, we are of the view that even if there was such an ambiguity or doubt, the High Court ought to have refrained from giving its own interpretation unless it had come to a clear conclusion that the interpretation given by NMRCL was perverse or mala fide or intended to favour one of the bidders.
12.This was certainly not the case either before the High Court or before this Court.
The view taken in Afcons was followed in Montecarlo Ltd. v. NTPC Ltd. Thus it is apparent that in contractual matters, the writ courts should not interfere unless the decision taken is totally arbitrary, perverse or mala fide.
23. Learned counsel for the respondents have also placed reliance upon the judgment rendered by Hon'ble Supreme Court in the case of Jagdish Mandal Vs. State of Orissa and others and analogous case reported in (2007) 14 SCC 517 Para22 which contains the broad principles guiding the exercise of powers of judicial review in administrative action.
24. From the principles laid down in the judgment referred to above, it can be easily inferred that the writ court can interfere in the decision making process or the decision if it is suffering from malafides, intention to favour someone or arbitrariness, irrationality or perversity. The Writ court does not act like a Court of Appeal but can review the decision making process without entering into the arena of questioning the experts opinion, judicial restraint should be exercised in reviewing the administrative action.
25. From the undisputed facts, which have been noted hereinabove in the present case, it is clear that execution of work through Zila Parishad, East Singhbhum, Jamshedpur was undertaken by a conscious decision after the Welfare Department itself refused to provide for further allotment to cover 7% Agency Charges as are required for execution of work by Building Construction Corporation Ltd. The actual amount involved to cover the additional 7% Agency Charges was in the range of Rs. 1 Crore as per the report of Project Director contained in letter dated 12th July, 2016. From the discussions made hereinabove, it is also evident that all such nature of works are not exclusively being executed through the Building Construction Corporation. Government of Jharkhand itself as per the minutes of 9th November, 2016 signed by Chief Secretary, Jharkhand, which has directed the Building Construction Department to complete several such works which were earlier allotted to Building Construction 13. Corporation. The entire basis for annulment of the tender by the impugned Press Advertisement Annexure6 is based upon one such letter of Chief Secretary, Jharkhand itself dated 27th October, 2016. In such circumstances, the only tenable plea if at all open for the respondents to take, despite serious opposition by the petitioner, is on the question of authority of Chief Engineer in according technical sanction to the project. This, being a procedural requirement, with which the petitioner had no role to play, is one which can be cured by placing the matter before EngineerinChief of the concerned department. It is also true that though, the employer has the freedom to annul any tender process but the decision has to be informed with valid reasons and should stand the test of non arbitrariness and fair play in action.
26. The impugned decision to cancel the entire tender process therefore does not appear to be based upon valid reasons. It is accordingly quashed. However, it is open for the respondent department to place the matter before Engineer in Chief concerned for taking a fresh decision on the technical sanction of project. In case, such an exercise entails any variation of the specification or value of the works to be executed, petitioner is required to abide by any such additional conditions for award of the work.
27. With the aforesaid observations, the writ petition is allowed in the manner and to the extent indicated hereinabove.
(Aparesh Kumar Singh,J) jk