Hcil Hcll Jv And 2 Others vs Union Of India And 4 Others
2013 Latest Caselaw 6566 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

AFR
 
Reserved on 10.10.2013
 
Delivered on 24.10.2013
 
Court No. - 39
 

 
Case :- WRIT - C No. - 47076 of 2013
 

 
Petitioner :- Hcil-Hcll (JV) And 2 Others
 
Respondent :- Union Of India And 4 Others
 
Counsel for Petitioner :- A.K. Goyal, Sudeep Seth
 
Counsel for Respondent :- Govind Saran,K.S. Singh,S.C.
 

 
Hon'ble V.K. Shukla,J.

Hon'ble Suneet Kumar,J.

HCIL and HCLL (JV) a Joint Venture of M/s. Harish Chandra (India) Ltd. and M/s. Hardik Construction & Leasing Ltd. and others have approached this Court questioning the validity of the decision dated 25th July, 2013 taken by the Tender Evaluation Committee constituted by the Chief Engineer (Construction), North Central Railway, Bhagirathi Building, Allahabad whereby the Pre-qualification Bid of petitioners have been rejected and further prayer has been made that the Pre-qualification Bid be accepted as responsive and their Techno-commercial Bid be considered and thereafter contract in question be awarded, accordingly, to the petitioners.

Brief background of the case is that Railways proceeded to float tender notice dated 25th April, 2013 inviting tenders for executing civil work of construction of road over bridge at NHAI Chainage 315142m Railway Chainage 4050m near Etawah on NH-2 Express Highway consisting of Reinforced Earth, Retaining Wall, RCC Boxes on approaches and construction of Railway span with RCC Boxes in connection with New BG Rail Line between Etawah and Mainpuri. In the top sheet of the tender documents approximate cost of the work was quoted as Rs. 33.81 Crore and the earnest money of Rs. 18,40,600/- was required to be deposited by the bidder/tenderer. The last date/time of receipt of tender was stipulated upto 1500 hrs on 29.05.2013. The date of opening of tender was stipulated at 1530 hrs on 29.05.2013 in the office of Chief Administrative Officer (Construction), North Central Railway, Bhagirathi Building, Allahabad. The top sheet of the tender documents also proceeded to ask for as to when was the partnership constituted and deed executed, whether attested copies of partnership deed and power of attorney furnished with the tender and details were also required to be furnished and the working contractors were required to submit a list of works executed/now being executed by them with their value and agreement number with the tender and name and address of party to whom the tender sold was also liable to be disclosed. Tender form, first sheet also clearly proceeded to mention that the terms and conditions of tender attached has been read and the tenderer undertakes to abide by the said conditions. First Sheet in question is followed by Special Tender Conditions and Instructions to Tenderers.

Relevant extract of the special tender conditions and instructions to tenderers are hereby quoted below;

"2. TENDER DOCUMENTS

2.1 SUBMISSION OF TENDERS.

2.1.1 The tender documents consist of (a) Top Sheet (b) Tender form (First sheet) (c) Special Tender Conditions and Instructions to tenderer/s (d) Special Conditions Relating to Site Data and Specifications (e) Schedule of Items, Rates, and Quantities. These must be submitted together as one set, failing which the

tender is liable to be rejected.

2.1.2 Tender documents can be had from the office of of in the office of the Chief Administrative Officer/Construction/North Central Railway, Bhagirathi Building GM office Complex, Subedarganj, Allahabad as well as Deputy Chief Engineer/Construction/NCR, opposite Jhakarkati Bus Stand, Kanpur, on any working day from 1000 hrs to 1500 hrs up to 28.05.2013 on cash payment of Rs.10000/- (Rupees Ten thousand) +12.5% VAT only per set, if the same are required by post, an additional sum of Rs.500/- (Rupees Five Hundred) only should be deposited towards postal charges. The cost of this tender form is not refundable and the tender form is not transferable. Tenders requested by post will be sent on the risk of the applicant.

2.1.3 Tender documents will also be available on the net and can be down loaded from Railway Web site www.ncr.indianrailways.gov.in. and htpp://tenders.gov.in In case of down loading of tender form, from Railway's web site or India Govt web site, the cost of tender form should be submitted through demand drafts in favour of FA&CAO/C/NCR/Allahabad along with the tender, otherwise tender will not be considered.

2.1.4 These tender documents must be submitted duly completed in all respects in a sealed cover superscribed as tender form for the work and should be deposited in the Tender Box in the office of the of in the office of the Chief Administrative Officer/Construction/North Central Railway, Bhagirathi Building GM office complex, Subedarganj, Allahabad & CAO/Indian Railway Project Management Unit,(IRPMU), Shivaji Bridge, behind Shankar Market, New Delhi. up to 15.00 hrs on 29.05.2013. The tenders will be opened on same day at 15.30 hours thereafter and Packet-A (Pre-qualification Bid) should be opened in presence of such tenderer/s as is/are present and Time and date for opening the SECOND PACKET i.e. ''Techno Commercial BID' of only those tenderers who qualify in Pre-qualification Bid shall be communicated subsequently. Tenders which are received after the time and date specified above may not be considered. In case the intended date for opening of tenders is declared holiday, the tenders will be opened on the next working day at the same time.

Tenders sealed and superscribed as aforesaid can also be sent by registered post addressed to the of in the office of the Chief Administrative Officer/Construction/North Central Railway, Bhagirathi Building GM office complex, Subedarganj, Allahabad but tender received after the time and date specified in Clause 2.1.3 above is liable to be rejected. Any tender delivered or sent otherwise will be at the risk of the tenderer/s.

2.1.5 (a) TENDER BID

The Tender Bid shall be submitted in only two separate sealed covers as under:

Packet -A

Pre-qualification element of the tender bid, herein after called "Pre-qualification Bid"

Packet -B

Technical, Commercial and Price elements of the Tender Bid herein after called "Techno commercial Bid".

The details to be included in Pre-qualification Bid (Packet A) AND Techno Commercial Bid (Packet-B) are as per 2.1.5(b) below:

The Pre-qualification Bid (Packet-A) shall be opened on the date of tender opening. The detailed scrutiny ofPre-qualification Bid shall be carried out. The "Techno-commercial Bid" (Packet-B) of only those tenderers shall be opened who qualify in Pre-qualification Bid. The Techno-Commercial Bid (Packet-B) of unqualifying tenderers shall not be opened and they shall be intimated about rejection of their Pre-qualification Bid along with return of un-opened price bid & Earnest money Deposit (EMD) before opening of price bid of tenderers whose technical bids have been found acceptable.

2.1.5 (b) FORM OF TENDER

The Tender Bid shall be submitted in two parts viz:

i) Pre-qualification bid (packet- A).

ii) Techno Commercial Bid (Packet-B)

The Tender Bid shall be submitted in two copies. One sealed cover shall Contain Pre-qualification BID (Packet A). The packet A shall contain only details with respect to eligibility criteria, conditions, failing which the tender shall be rejected.

Earnest money/bid bond shall also be kept in this cover. This cover shall be clearly super scribed with Pre-qualification BID (Packet A) along with the tender no. and its description.

The second sealed cover shall contain all technical and commercial details as well as schedule with rates offered with them and be clearly super scribed TECHNO COMMERCIAL BID (Packet -B) alongwith the tender no. and its description.

The two separate sealed envelop of both packets shall be put into a large envelope and sealed. The large envelop shall also bear the tender No. and date of closing and opening of Tender for Construction of Road over Bridge at NHAI Chainage 315142m & Railway Chainage 4050m near Etawah on NH-2 Express highway consisting of Reinforced Earth, Retaining wall, RCC Boxes on approaches and construction of Railway span with RCC Boxes in c/with New BG Rail line between Etawah-Mainpuri.

b) Each copy of the Tender shall be completed in all respects the copies should be marked "ORIGINAL" and "DUPLICATE". In case of any differences in the Original and Duplicate offers only original offer shall be considered as the true offer. Duplicate copy of the tender shall be replica of the original in all respect except as specified in the note below. The tenderer may submit his tender on his own paper but he shall strictly adhere to the form included in Part-V of the tender paper. The nomenclature and part nos. of various components in materials as used in the tender paper shall be strictly adhered to. The tender and its contents shall be in foolscap/quarto size. Tenders not submitted in the proper form are liable to be rejected.

c) Documents to be enclosed with each copy of PRE-QUALIFICATION BID (Packet - A) :-

1. Offer letter complete with summary of prices blanked out.

2. Tenderer's credentials

3. Receipts for Earnest Money.

4. Cost of tender paper if down loaded from internet.

5. All the documents required to establish eligibility criteria of the tenderer.

6. Any other document tenderer wants to enclose to justify their eligibility and credential for this tender.

d) Each copy of the TECHNO COMMERCIAL BID (Packet B)

1. Offer letter complete with summary of prices.

2. Complete Technical data and particulars of the equipment offered, as specified in the Tender Paper together with descriptive literature, leaflets etc.

Note:-

i) A copy of the Tender papers duly signed in Ink by the Tenderer, on each and every page in token of his having studied the Tender papers carefully shall be attached with the Tender.

ii) The original and duplicate copies of the Tender offer shall be signed on each and every page in ink.

iii) The original copy of the Earnest Money shall be incorporated in original copy of the Pre-qualification BID. Other copy of the Tender shall contain true copies of the deposit receipts.

First sheet of the tender form opens with the sentence that the tenderer has read the various conditions attached hereto and hereby agree to abide by the said conditions. Thereafter special tender conditions and instructions to bidders have been provided for. Clause 2 deals with the tender documents and Clause 2.1 of Special Tender Conditions and Instruction to Tenderers provides for submission of tenders. Clause 2.1.2 provides that tender documents can be obtained from the office of Opposite Party No. 3 on any working day up to 28.05.2013 on cash payment of Rs. 10,000/- only per set. Clause 2.1.3 provides that the tender documents will also be available on the net and can be downloaded from the railway website. In case of downloading of tender form, the cost of the form should be submitted through demand draft in favour of FA&CAO (C) NCR, Allahabad along with the tender, otherwise tender will not be considered. Clause 2.1.4 provides that the tenders will be opened on 29.05.2013 and Packet A (Pre-qualification Bid) should be opened in presence of the tenderers. Time and date for opening the Second Packet (Techno-commercial Bid) of only those tenderers who qualify in Pre-qualification Bid shall be communicated subsequently. Clause 2.1.5 provides that the tender bid shall be submitted in two separate sealed cover; Packet A (Pre-qualification Bid) and Packet B (Techno Commercial Bid). The Pre-qualification Bid shall be opened on the date of tender opening. The detailed scrutiny of Pre-qualification Bid shall be carried out. The Techno Commercial Bid of only those tenderers shall be opened who qualify in Pre-qualification Bid. The Techno Commercial Bid of unqualified tenderers shall not be opened and they shall be intimated about rejection of their Pre-qualification Bid along with the return of unopened price Bid and earnest money deposit before opening of price bid of tenderers whose technical bids have been found acceptable. Clause 2.1.5 (b) provides that earnest money shall be kept in cover of Pre-qualification Bid.

Clause 2.3 provides for Credential to be submitted along with tender(s). Clause 2.3.3 (A) (ix) provides that Tenders from Joint Ventures are also permitted. In such a case, eligibility criteria as above must be fulfilled as per Joint Venture condition. Joint Venture agreement has to be as per specified proforma and MOU should also be as per proforma. The above mentioned similar clause has again been repeated under the heading Constitution of the firm in Clause 2.4.2 (d).

Clause 3 provides for Earnest Money, which is hereby quoted below;

"3. EARNEST MONEY [Railway Board letter no. 2007/CE-1/CT/18 dated 28.09.2007 as circulated by Dy. CE/C/HQ/NCR/ALD letter no. 62-W/C/NCR/T.Policy/Pt-III dated 05.12.2008]

3.1 The earnest money should be deposited by the tenderer/s as under:

SN

Value of the work (Tender value)

EMD

1.

For works estimated to cost upto Rs. 1 Crore

2% of the estimated cost of the work

2.

For works estimated to cost more than Rs. 1 Crore

Rs. 2 Lakhs + 1/2% (half percent) of the excess of the estimated cost of the work beyond Rs. 1 Crore subject to a maximum of Rs. 1 Crore

The tender must be accompanied by a sum of Rs.18,40,600/- (Rs Eighteen lacs forty thousand six hundred) only as Earnest Money in the manner prescribed in Clause 3.2 failing which the tender shall be summarily

rejected.

(a) A sum of Rs.18,40,600/- (Rs Eighteen lacs forty thousand six hundred) only towards Earnest Money for due performance of the stipulation and keep the offer open for the period as specified in Clause 3.1.1 below.

3.1.1 The tenderer/s shall keep the offer open for a period of 120 days from the date of opening of the tender in which period tenderer/s cannot withdraw his/their offer, subject to period being extended further, if required, by mutual agreement from time to time. It is understood that the tender documents have been sold/issued to the tenderer/s and tenderer/s is/are being permitted to in consideration of stipulation on his/their part that after submitting his/their offer he/they will not resale from his/their offer or modify the terms and conditions thereof in a manner not acceptable to North Central railway. Should the tenderer/s fail to observe to comply with the foregoing stipulation the amount deposited, as earnest money for the due performance of the stipulation and to keep the offer open for the specified period, shall be forfeited to the Railway. The earnest money of unsuccessful tenderer/s will be returned to the unsuccessful tenderer/s within a reasonable time, but Railway shall not be responsible for any loss or depreciation that may happen to the earnest money for the due performance of the stipulation and to keep the offer open for the period stipulated in the tender documents or to the earnest money while in Railway possession nor will be liable to pay interest thereon.

3.2 The Earnest Money of the requisite amount referred to in Clause 3.1 above is required to be deposited either in cash with the DCPM/NCR/Allahabad on any working day before 12.00 hrs on 29.05.2013 or in any of the following form.

(a) Deposit receipts, Pay order & Demand drafts pledged in favour of FA&CAO/C/NCR, Allahabad. These forms of earnest money could be either of the State Bank of India or of any of the Nationalized Banks or by a Scheduled Bank.

NOTE

i. Earnest money which is not in valid form and in favour of specified authority i.e. FA&CAO/C/NCR, Allahabad, will not be considered as valid and offers with such Earnest Money will be summarily rejected.

ii. Any request for recovery from outstanding bills for earnest money against present tender will not, under any circumstances, be entertained. Tenders submitted with Earnest Money in Cheque, Government Securities or in any form other than those specified above shall not be considered.

iii. No interest shall be allowed on the earnest money.

iv. Earnest money in the form of Guarantee Bond shall not be accepted."

The tender, as per Clause 3, has to be accompanied by a sum of Rs. 18,40,600/- as earnest money in the manner prescribed in Clause 3.2 failing which the tender shall be summarily rejected. Clause 3.2 provides that the earnest money of the requisite amount referred to in Clause 3.1 above is required to be deposited either in cash with the DCPM/NCR/Allahabad on any working day before 1200 hrs on 29.05.2013 or in any of the following form i.e. Deposit Receipts, Pay Order and Demand Drafts pledged in favour of FA & CAO/C/NCR, Allahabad, either of the State Bank of India or of any of the Nationalized Banks or a Scheduled Bank. Note appended to the Clause provides that earnest money not in valid form and in favour of specified authority i.e. FA & CAO/C/NCR, Allahabad, will not be considered as valid and offers with such earnest money will be summarily rejected.

Guidelines for participation of Joint Venture firm in Works Tender at item no. 5 provides that normally earnest money deposit shall be submitted only in the name of Joint Venture firm and not in the name of constituent member. However, in exceptional case earnest money deposit in the name of lead member can be accepted subject to submission of specific request letter from the lead member stating therein the reasons for not submitting the earnest money deposit in the name of Joint Venture firm and giving written confirmation from the Joint Venture members to the effect that the earnest money deposit submitted by the lead member may be deemed as earnest money deposit submitted by Joint Venture firm. For ready reference relevant part of the said guidelines is hereby quoted below;

"5. Normally EMD shall be submitted only in the name of the JV firm and not in the name of constituent member. However, in exceptional case EMD in the name of lead member can be accepted subject to submission of specific request letter from lead member stating the reasons for not submitting the EMD in the name of JV firm and giving written confirmation from the JV members to the effect that the EMD submitted by the lead member may be deemed as EMD submitted by JV firm.

6. One of the members of the JV firm shall be its Lead Member who shall have a majority (at least 51%) share of interest in the JV firm and also must have satisfactorily completed in the last three previous financial years and the current financial year upto the date of opening of the tender, one similar single work for a minimum value of 35% of advertised tender value. The other members shall have a share of not less than 20% each in case of JV firms with up to three members and not less that 10% each in case of JV firms with more than three members. In case of JV firms with foreign member(s), the lead member has to be an Indian firm with a minimum share of 51%.

7. A copy of Memorandum of Understanding (MOU) executed by the JV members shall be submitted by the JV firm along with the tender. The complete detail of the members of the JV firm, their share and responsibility in the JV firm etc. particularly with reference to financial technical and other obligations shall be furnished in the MOU. (The MOU format for this purpose shall be finalized by the railway in consultation with their law branch and shall be enclosed along with the tender)."

In the present case both the petitioner nos. 2 and 3 have come up with the case that they are Public Limited Company, who have entered into a Joint Venture agreement for the purposes of participation in the aforementioned tender process. The Joint Venture in question has been named as HCIL-HCLL (JV). Petitioner no. 2 M/s. Harish Chandra (India) Ltd., is the lead partner of the Joint Venture and submits that in order to give effect to the aforementioned Joint Venture a Memorandum of Understanding dated 27.05.2013 has been entered in between the petitioner nos. 2 and 3 and therein it has been specifically mentioned that M/s. HCIL shall be lead member of JV for all intents and purpose and shall represent the Joint Venture in its dealing with the employer. One Shri Vir Karan, Vice President (Contract) of M/s. HCIL has been nominated as a leader duly authorized to submit bid proposals, to sign and submit documents and subsequent clarifications to the employer. Thereafter his authority has been sought to be restricted by mentioning that he shall not submit any such proposals/clarifications/commitments before securing clearance of other partners which was understood to be given shortly/expeditiously. JV ratio was also mentioned as (a) Head partner (HCIL): 51% (b) Joint Venture partner (HCLL): 49%. The joint and several responsibility has also been there, with a clause of indemnification that each party agrees to indemnify the other party against its respective parts in case of breach/default of respective party.

Petitioners have come up with the case that in consonance with the Clause 2.1.3 of the Special Tender Conditions and Instructions to Tenderers, the petitioners downloaded the tender documents from the railway website and proceeded to duly filled tender documents along with a demand draft of Rs. 11,250/- in favour of FA&CAO/CONST, North Central Railway, Allahabad, towards cost of the tender and was deposited by the petitioners in two sealed covers viz. Pre-qualification Bid and Techno-Commercial Bid. Petitioners submit that the Pre-qualification Bid submitted by them contained a covering letter dated 29th May, 2013 along with the term deposit receipt pledged in favour of FA&CAO/CONST, North Central Railway, Allahabad, of State Bank of India issued from the account of the petitioner no. 3 for an amount of Rs. 18,40,600/-. Petitioners have proceeded to mention that it was clearly mentioned therein that petitioners have formed a new Joint Venture, as such, they did not have a joint bank account in the name of HCIL-HCLL (JV), hence, earnest money deposited in the shape of FDR was being submitted in the name of HCLL, a Joint Venture partner, on behalf of the joint venture. Petitioners submit that after the tender in question has been duly filled up, the Pre-qualification Bid was opened on the same day but its detailed scrutiny was required to be carried out by the Tender Evaluation Committee. Petitioners submit that they were awaiting for information of date and time for opening of Techno-commercial Bid, then they acquired knowledge of the fact that their Pre-qualification Bid has been rejected. Petitioners submit that their Pre-qualification Bid has been arbitrarily rejected whereas the terms and conditions of the tender in question stood complied with in its words and spirit and, as such, their Pre-qualification Bid ought not to have been rejected and to the contrary the bid submitted by the petitioners on Techno-commercial front also ought to have been given due consideration for awarding the contract in question and, as such, the action taken is per-se bad and arbitrary on its face value, accordingly, petition in question be allowed and requisite relief be accorded.

In the present writ petition, counter affidavit has been filed on behalf of the railways and therein categorical stand has been taken that M/s. HCIL-HCLL (JV) deposited earnest money in the name of its member M/s. HCLL (other than lead member) in place of tendering firm i.e. M/s. HCIL-HCLL (JV), as such, tender form was not considered to be valid same being not at all in accordance with the tender conditions and, in view of this, petitioners' firm has been failed to qualify the Pre-qualification Bid. Petitioners have violated, 65.5 of General Conditions of Contract, paragraph 5 Annexure D, as here earnest money has not been submitted in the name of Joint Venture Firm, and further earnest money could be accepted on behalf of lead firm, subject to specific request letter and written confirmation from JV members to the effect that earnest money deposited submitted by the lead member may be deemed as earnest money submitted by JV Firm. Shri Ashok Kumar Lamba was informed about his disqualification on mobile number and the said information was also sent to him by registered post on 29th August, 2013 and thereafter price bid of M/s. MG Contractors was opened and the same has been accepted. In view of this, it has been requested that there is no occasion to interfere once on admitted position the terms and conditions of the tender has not been fulfilled by the petitioners' company.

Counter affidavit has also been filed on behalf of private respondent no. 5 in whose favour contract has been finalized and therein stand has been sought to be taken that proceedings have been sought to be manipulated by the petitioners, inasmuch as, as far as lead partner is concerned his financial credibility is in shambles, inasmuch as, against the said lead partner in question proceedings under SARFAESI Act, 2002 has been initiated and the said firm in question has virtually gone bankrupt and is not in a position to obtain any contract on its own financial situation and in such a situation in order to give cover Joint Venture has been sought to be constituted on 27th May, 2013, in view of this, it has been stated that rightly railway has not proceeded to entertain the request of petitioners, once on admitted position terms and conditions of tender has not been complied with.

To both the counter affidavit, rejoinder affidavit has been filed reiterating the averments mentioned in writ petition and disputing averments mentioned in counter affidavit and thereafter matter has been taken up for final hearing and disposal with the consent of parties.

Shri Sudeep Seth, Advocate appearing with Shri A.K. Goyal, Advocate, submitted with vehemence that in the present case on totally unsustainable ground Pre-qualification Bid of petitioners has been turned down whereas each and every prerequisite terms and conditions for depositing of earnest money stood fulfilled by the petitioners in its word and spirit and there has been no default whatsoever on the part of the petitioners as such their Pre-qualification Bid ought to have been accepted, and further their Techno-commercial Bid also sought to have been considered. Alternatively, it has also been submitted that as far as the guidelines for participation of Joint Venture firms in work tenders are concerned, the said guidelines in question are non-essential character of the tender and, in view of this, the same ought to have been treated as directory in nature and by placing reliance on the same, the tender in question ought not to have been non-suited as in the event of there being non-compliance of the non-essential part of the tender at no point of time any consequences has been provided for that if there is any diversion, then the tender would be non-suited and, in view of this, petitioners submit that totally arbitrary and unreasonable view has been taken in the facts of the case amounting to arbitrary treatment to the petitioner and, accordingly, writ petition deserves to be allowed.

Countering the said submission Shri Govind Saran, Advocate contended that petitioners have proceeded to go through the terms and conditions of the tender and have given a clear cut undertaking that they have read the various conditions of tender attached thereto and agree to the said conditions and once on its face value the said condition in question has not been complied with and the Committee concerned has taken a objective consideration and thereafter on admitted breach of the terms and conditions of the tender on the part of petitioners as here as per condition no. 3.1 and 3.2 of tender document non submission of tender money by tenderer calls for outright rejection of offer, and exception to the same has been carved out, vide Annexure D and even the same has not been complied with, as has been provided for, as such authority concerned has rightly proceeded to pass an order rejecting the tender of petitioners, as such tender conditions formed essential character of tender conditions, then this Court in exercise of its authority of judicial review cannot come to the rescue of the petitioners and, as such, writ petition in question as it has been framed and drawn is liable to be dismissed.

Shri Kripa Shankar Singh, Advocate appearing with Shri Gaurav Singh, Advocate, on the other hand contended that in the present case whatever action has been taken by the railways, same is strictly in consonance with the terms and conditions of the tender in question and, in view of this, action, which has been so taken, cannot be faulted and coupled with this in addition to this it has been submitted by him that petitioner no. 2, is a lead partner of the Joint Venture in question, and same is a bankrupt company as against the same proceedings under the SARFAESI Act, 2002 has been initiated for recovery of a sum of Rs. 476,80,09,979.00/- and it has been submitted that once such is the financial status of the leading company and the said company is even not in a position to furnish the earnest money from its own account and even the earnest money has been paid from the account of petitioner no. 3, other than the lead company, then in such a situation looking into the over all picture, as is emerging in the present case, no interference should be made by this Court.

After respective arguments have been advanced the factual situation which is so emerging in the present case is that for construction of road over bridge at NHAI Chainage 315142m Railway Chainage 4050m near Etawah on NH-2 Express Highway consisting of Reinforced Earth, Retaining Wall, RCC Boxes on approaches and construction of Railway span with RCC Boxes in connection with New BG Rail Line between Etawah and Mainpuri tender notice had been published and As per the Tender Form (First Sheet) a clear cut mention has been made that I/We i.e. petitioners have read with the various conditions in tender attached here to and hereby agree to abide by the said conditions. It was also mentioned therein that the tenderer in question agree to abide by the General Conditions of Contract corrected up to printed/advance latest correction slips and to carry out the work according to the Special Conditions of Contract and Specifications For Material and Works as laid down by the Railway in the annexed Special Conditions/Specifications and the North Central railway Works Manual corrected up to printed/advance latest correction slips and Schedule of Rates corrected up to printed/advance latest correction slips, for the present contract. A sum of Rs. 18,40,600/- was required to be forwarded as earnest money.

Pursuant to the Special Tender Conditions and Instructions issued to the tenderers by the construction department of railway, petitioners have obtained the tender document as is provided under Clause 2 and then tender document were required to be furnished as has been provided in Clause 2.1.1 to 2.1.4. This much was also clearly provided therein that the tender bid shall be submitted in two separate sealed covers wherein Pocket A was to contain Pre-qualification element of the tender bid, hereinafter called Pre-qualification Bid and Pocket B was to contain Technical, Commercial and Price elements of the tender bid hereinafter called Techno-commercial Bid. It was mentioned therein that the details to be included in Pre-qualification Bid (Pocket A) and Techno-commercial Bid (Pocket B) should be as per Clause 2.1.5 (b) and it was also mentioned therein that the Pre-qualification Bid (Pocket A) is to be opened on the date of tender opening and detailed scrutiny of Pre-qualification Bid shall be carried out and the Techno-commercial Bid (Pocket B) was to be opened only of those tenderers, who have qualified in Pre-qualification Bid and the Techno-Commercial Bid of unqualified tenderers was not to be opened and further they were to be intimated about rejection of their Pre-qualification Bid along with return of un-opened price bid and earned money deposit (EMD) before opening of price bid of tenderers whose technical bids have been accepted.

Petitioners claim that in consonance with the same they have filled their tender form in question in the name of Joint Venture created by Memorandum of Understanding (MOU) dated 27.05.2013. Petitioners have also proceeded to mention that they got prepared tender documents along with a demand draft of Rs. 11,250/- in favour of FA&CAO/CONST, North Central Railway, Allahabad, towards cost of the tender and same was deposited by the petitioners in two sealed covers viz. Pre-qualification Bid and Techno-Commercial Bid and the Pre-qualification Bid submitted by them contained a covering letter dated 29th May, 2013 mentioning therein that as a member of HCIL-HCLL (JV) have formed a new JV and we are not having a joint bank account in the name of HCIL-HCLL (JV), thus we are submitting the EMD in the shape of FDR in the name of HCLL a JV partner on behalf of JV along with the term deposit receipt pledged in favour of FA&CAO/CONST, North Central Railway, Allahabad, of State Bank of India issued from the account of the petitioner no. 3 for an amount of Rs. 18,40,600/-, thereafter, their Pre-qualification Bid has been turned down on the premises that the guidelines for participation in work tender has not at all been complied with.

The guidelines for participation of Joint Venture firms in work tender clearly proceeds to mention that normally EMD shall be submitted only in the name of Joint Venture Firm and not in the name of constituent member, however, in exceptional case EMD in the name of lead member can be accepted subject to submission of specific request letter from the lead member stating the reasons for not submitting the earnest money deposit in the name of Joint Venture firm and giving written confirmation from the Joint Venture members to the effect that the earnest money deposit submitted by the lead member may be deemed as earnest money deposit submitted by the Joint Venture firm.

Breach of this particular guidelines is a conceded position as admittedly in the present case the EMD in question has not at all been submitted in the name of Joint Venture firm rather to the contrary an application has been moved signed by Sri Veer Karan, Vice President (Contract) mentioning therein that as a Member of HCIL-HCLL (JV) a new Joint Venture has been formed and they are not having a joint bank account in the name of HCIL-HCLL (JV) and thus are submitting EMD in the shape of FDR in the name of HCLL, a Joint Venture partner, on behalf of Joint Venture. Thus in the present case accepted position is that EMD has not been submitted in the name of Joint Venture Firm nor in the name of lead partner and there is no written confirmation on record from the Joint Venture members to the effect that the earnest money deposit submitted by the lead member may be deemed as earnest money deposit submitted by the Joint Venture firm. Petitioners faced with this situation are contending that same is not at all an essential condition of tender, as such, same should not have been made foundation and basis for canceling the Pre-qualification Bid of petitioners, as has been done in the present case and liberal view ought to have been taken by condoning such lapses, if any, and in this regard petitioners are placing reliance on following judgments;

The first judgment, on which reliance has been placed upon, is the judgment of Bombay High Court in the case of M/s B.D. Yadav and M.R. Meshram v. Administrator of the City of Nagpur, AIR 1984 Bombay 351, wherein view was taken, that deficiency of non-payment of earnest money in the manner in which it was required, relates to non-essential character of tender, and authorities have the discretion to condone the conditions related to unessential part of tender. This particular judgment has been followed by Apex Court in the case of Poddar Steel Corporation Vs. Ganesh Engineering Works reported in 1991 (3) SCC 273, wherein Apex Court has noted that requirements in tender notice can be classified in two categories (I) which lays down essential qualification (ii) others which are merely necessary or ancillary, in following terms;

"The relevant clause 6 of the notice required the tender to be accompanied by earnest money calculated at 5% of the offer under the tender subject to a maximum of Rs 50,000 and in terms permitted the deposit by cash or by demand draft drawn on the State Bank of India. the defect pointed out by the respondent no. 1 and accepted by the High Court is in the appellant sending the cheque of the Union Bank of India drawn on its own branch and not on the State Bank. By the impugned judgment it has been held that in view of this defect the authorities had no power to accept the appellant's tender.

The learned counsel for the appellant has contended that having regard to the circumstances in the case it must be held that the Tender Committee had the power to accept the appellant's tender. Referring to the books "Bills of Exchange" by Byles, and "Cheques in Law and Practice" by M.S. Parthasarathy, it has been argued that certified cheques are as good as cash and the irregularity relied upon in the appellant's submitting his tender could be validly waived by the Diesel Locomotive Works. Reliance was also placed on M/s B.D. Yadav and M.R. Meshram v. Administrator of the City of Nagpur, AIR 1984 Bombay 351 and T.V Subhadra Amma v. Kerala Board of Revenue.

It is true that in submitting its tender accompanied by a cheque of the Union Bank of India and not of the State Bank the clause no. 6 of the tender notice was not obeyed literally, but the question is as to whether the said non- compliance deprived the Diesel Locomotive Works of the authority to accept the bid. As a matter of general proposition it cannot be held that an authority inviting tenders is bound to give effect to every term mentioned in the notice in meticulous detail, and is not entitled to waive even a technical irregularity of little or no significance. The requirements in a tender notice can be classified into two categories-those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to enforce them rigidly. In the other cases it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases. This aspect was examined by this Court in GJ Fernandez v. State of Karnataka 7 Ors., [1990] 2 SCC 488 a case dealing with tenders. Although not in an entirely identical situation as the present one, the observations in the judgment support our view. The High Court has, in the impugned decision, relied upon Ramana Dayaram Shetty v. International Airport Authority of India & Ors., [1979] 3 SCC 489 but has failed to appreciate that the reported case belonged to the first category where the strict compliance of the condition could be insisted upon. The authority in that case, by not insisting upon the requirement in the tender notice which was an essential condition of eligibility, bestowed a favour on one of the bidders, which amounted to illegal discrimination. The judgment indicates that the Court closely examined the nature of the condition which had been relaxed and its impact before answering the question whether it could have validly condoned the shortcoming in the tender in question. This part of the judgment demonstrates the difference between the two categories of the conditions discussed above. However it remains to be seen as to which of the two clauses, the present case belongs.

In the present case, the certified cheque of the Union Bank of India drawn on is own branch must be treated as sufficient for the purpose of achieving the object of the condition and the Tender Committee took the abundant caution by a further verification from the bank. In this situation it is not correct to hold that the Diesel Locomotive Works had no authority to waive the technical literal compliance of clause 6, specially when it was in its interest of not to reject the said bid which was the highest. We, therefore, set aside the impugned judgment and dismiss the writ petition of the respondent no. 1 filed before the High Court. The appeal is accordingly allowed with costs throughout."

Apex Court once again in the case of Kanhaiya Lal Agrawal Vs. Union of India reported in 2002(6) SCC 315 has held as follows:

''This Court is normally reluctant to intervene in matters of entering into contracts by the Government, but if the same is found to be unreasonable, arbitrary, mala fide or is in disregard of mandatory procedures it will not hesitate to nullify or rectify such actions.

It is settled law that when an essential condition of tender is not complied with, it is open to the person inviting tender to reject the same. Whether a condition is essential or collateral could be ascertained by reference to consequence of non-compliance thereto. If non-fulfilment of the requirement results in rejection of the tender, then it would be essential part of the tender otherwise it is only a collateral term. This legal position has been well explained in G.J.Fernandez vs. State of Karnataka.''

Thereafter Apex Court in the case of Ganpati RV- Talleres Alegria Track(P) Ltd Vs. Union of India reported in 2009(1) SCC 589 after noticing the argument has held as follows;

"The action of the respondents in subsequently rejecting the duly approved technical bid of the appellant without assigning any reasons is highly illegal, malicious, arbitrary, irrational and unjustified. It is pointed out that the bid was initially accepted, but on the basis of the representation of two of the competitive bidders, totally different views were taken. It is pointed out that in view of what has been stated by this Court in New Horizons Ltd. and Anr. v. Union of India and Ors. (1995 (1) SCC 478) the view taken by the respondents is erroneous.

Learned counsel for the Union of India, on the other hand, submitted that New Horizon's case (supra) related to the experience of the joint venture partners and that logic cannot be applied to the present case where the parameters are different. So far as the factual position is concerned, it is to be noted that the appellant annexed ISO 9001 certification of joint venture partners with the tender offer. Though the ISO 9001 certification of the joint venture company prior to the date of opening of tender existed, the same was not annexed with the tender as the appellant was under the impression that submission of certificate in the name of individual partners is sufficient and the respondents had also never demanded the same. In respect of RDSO approval it was pointed out that one of the joint venture partners i.e. M/s R.V. Rail Products Pvt. Ltd. is also an existing RDSO approved manufacturer of conventional curved switches i.e. 1 in 12 curved switches. The said certificate was enclosed with the appellant's offer.

In that view of the matter the inevitable conclusion is that the view taken by High Court that appellant did not fulfill the eligibility criteria was not correct. The High Court was not right in dismissing the writ petition. We direct the evaluation committee to consider the Bid of appellant along with two persons who had been selected and take final decision. "

` The other side i.e. the respondents have placed reliance on the judgment of Apex Court in the case of Michigan Rubber (India) Ltd. Vs. State of Karnataka & others 2012 (8) Supreme Court Cases 216 wherein after considering the earlier judgments qua scope of interference in contractual matters Apex Court has summed up the scope of interference in contractual matters as follows;

"23. From the above decisions, the following principles emerge:

(a) the basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the

national priorities;

(b) fixation of a value of the tender is entirely within the purview of the executive and courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by

inviting tenders, in those circumstances, the interference by Courts is very limited;

(c) In the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities unless the action of tendering authority is found to be malicious and a misuse of its statutory powers, interference by Courts is not warranted;

(d) Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work; and

(e) If the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interference by Court is very restrictive since no person can claim fundamental right to carry on business with the Government.

24. Therefore, a Court before interfering in tender or contractual matters, in exercise of power of judicial review, should pose to itself the following questions:

(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"; and

(ii) Whether the public interest is affected. If the answers to the above questions are in negative, then there should be no interference under Article 226."

On the parameters of the aforementioned judgments as has been quoted and noted above this much is clear that in the matter of formulating conditions of tender documents and awarding contract greater latitude is conceded to the State Authorities and State Authorities are the best judge to finalize the terms and conditions of tender to see and ensure that contractor has the capacity and resources to execute the work. The requirements in tender notice as finalized by the authorities, can be classified into two categories (a) those which lay the essential conditions of eligibility (b) the others which are merely ancillary or subsidiary with the main object to be achieved by the said condition. In the first category, the authority issuing the tender is required to enforce the same rigidly, whereas in the other category the authority can deviate from and not insist strict literal compliance, by relaxing the same once main object is being achieved. The discretion vested in the tendering authority has to be exercised in free/fair and bonafide manner. Whether a condition is essential or collateral has to be ascertained by reference to the language used therein as well as consequence of non-compliance thereto. Court's interference in such matters i.e. in exercise of authority of judicial review, is limited and unless the action of the tendering authority is found to be malicious or tender finalization process is so arbitrary or irrational, interference by Court is not at all warranted.

This Court now proceeds to examine the case in hand, and same reflects that a Joint Venture Firms are also entitled to participate in tender process, and specific guidelines have been provided for participation of Joint Venture Firms, at Annexure D. These guidelines are part of General Conditions of Contract and has to be accepted as integral part of tender conditions, as this guideline in question, sets out the condition for enabling participation of Joint Venture Firms as per Clause 2.3.3 (A) (ix) read with Clause 2.4 (d). Clause 3 of tender document deals with earnest money and Clause 3.1 provides that earnest money should be deposited by the tender, and the tender must be accompanied by a sum of Rs. 18,40,600/- only as Earnest Money in the manner prescribed in Clause 3.2 failing which the tender shall be summarily rejected. Clauses 3.1 and 3.2 has to be complied with in its word and spirit as they are the essential conditions of Contract provided for, and for enabling participation of Joint Venture Firms, special provision in the shape of Annexure D has been inserted, wherein condition no. 5 clearly mentions that normally EMD shall be submitted only in the name of Joint Venture Firm and not in the name of constituent member and in exceptional cases EMD in the name of lead member can be accepted subject to submission of specific request letter from lead member stating the reason for non-submitting the EMD in the name of Joint Venture Firm and giving written confirmation from JV members to the effect that EMD submitted by lead member may be deemed as EMD submitted by Joint Venture Firm. Submission of EMD in the name of Joint Venture Firm is a mandatory requirement but an exception has been carved out to meet the situation, when EMD in the name of lead member can be accepted subject to fulfillment of terms and conditions mentioned therein, then it can be deemed as EMD submitted by Joint Venture Firm. Condition No. 5 of Annexure D has to be accepted as essential condition of tender and the authorities have not at all been empowered to relax such a condition of acceptance of EMD on behalf of non lead member. Deeming provisions has to be strictly construed, as only on the fulfillment of prerequisite terms and conditions, EMD submitted by lead firm can be presumed to be substitute of Joint Venture Firm. Once you do not comply with the aforementioned terms and conditions, then Joint Venture Firm cannot be accepted as fulfilling the terms and conditions of tender.

Clause 3.2 contains a Note which clearly proceeds to mention that Earnest Money which is not in valid form will not be considered as valid and offers with such Earnest Money shall be summarily rejected. Clause 3.1, Clause 3.2 read with Annexure D paragraph 5 dealing with guidelines for participation of Joint Venture Firm has to be accepted as essential conditions of tender, and non-compliance of the same would result in rejection of tender, with no element of discretion left with the authorities concerned in the said matter. Paragraph 5 of the Annexure D, is not to be read in isolation, rather same has to be treated as integral part of the terms and conditions of tender, as it in respect of Joint Venture Firms, clearly specifies the form and the manner as per which EMD has to be furnished. The 'Note' in question requires (i) EMD in valid form (ii) EMD in favour of specified authority. The said exercise has to be undertaken by the Tenderer and in case both the terms and conditions are not at all fulfilled, such offers are not to be accepted as valid and offers with such EMD has to be rejected, with no discretion left with the authorities concerned. EMD is required to be deposited by Tenderer i.e. by Joint Venture Firm and in exceptional circumstances by lead member in reference of Joint Venture Firms, and once it has not been done, it cannot be accepted as EMD on behalf of Joint Venture Firm. After bids are submitted detail scrutiny of Pre-qualification Bid has to be carried out, and therein it has to be found as to whether the terms and conditions as set-out for submitting EMD in the name of Joint Venture Firm has been complied with or not. In case Joint Venture Firm has failed to comply with the same, the same may entail the consequences of rejection of Pre-qualification Bid itself, as has been done in the present case.

Once a party is participating with the status of Joint Venture Firm, then the format for furnishing EMD by Joint Venture Firm, has clearly been specified in paragraph 5 of Annexure D which cannot be permitted to be overlooked, as EMD has to be submitted only in the name of Joint Venture Firm and not in the name of constituent member. To the said requirement, exception has been carved out by providing that in exceptional case earnest money deposit in the name of lead member can be accepted subject to submission of specific request letter from the lead member stating therein the reasons for not submitting the earnest money deposit in the name of Joint Venture firm and giving written confirmation from the Joint Venture members to the effect that the earnest money deposit submitted by the lead member may be deemed as earnest money deposit submitted by Joint Venture firm. Such a provision has been flouted with impunity as EMD is not in the name of Joint Venture Firm rather EMD is in the name of other member of Joint Venture, who admittedly is not a lead member and, accordingly, it cannot be said to be EMD on behalf of Joint Venture Firm, as only in exceptional circumstances EMD in the name of lead member can be accepted, and the EMD submitted by lead member may be deemed as EMD submitted by Joint Venture Firm, and in no contingency whatsoever EMD submitted by other partner can be accepted as EMD submitted by Joint Venture Firm. In the facts of the case, it is clearly substantiated that EMD was not at all submitted by the Joint Venture Firm, as it ought to have been submitted. In such a situation and in this background, authorities concerned as per the terms and conditions of the tender document, have proceeded to reject the Pre-qualification Bid in question, the petitioners cannot then complain that they have been meted with arbitrary treatment especially when at the point of time, when they have proceeded to fill up the tender form, they have clearly proceeded to mention that they have read the various terms and conditions of the tender document and agreed to the same and also to abide by the said condition but have failed to abide by the same, then they have to blame themselves for such a situation and whatever decision has been taken by the authorities concerned, the said opinion cannot be faulted.

Petitioners have failed to demonstrate before this Court, that process adopted or decision made by the authority in any way is actuated with malafides and is intended to favour someone. Once the authorities have proceeded to act on the parameters of terms and conditions of contract and, accordingly, have taken a conscious decision, which in the facts of the case, can neither be dubbed as arbitrary or irrational, then in exercise of authority of judicial review no relief or reprieve can be given to the petitioners. Petitioners at last faintly have tried to suggest that as only one tenderer has been left, as such, public interest would be adversely effected. Once petitioners have failed to qualify, the Pre-qualification Bid and is accordingly out of the race, then merely because there is one incumbent left, who has qualified, Pre-qualification Bid, then it cannot be presumed that in such a situation always public interest would be affected.

Writ petition sans merit and the same is dismissed, accordingly. Interim order stands discharged.

Order Date :- 24.10.2013

Shekhar