M/S Sulbha Enterprises Thru. Sole ... vs Chairman U.P. Jal Nigam Urban ...
2022 Latest Caselaw 5219 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
 
 

RESERVED
 
Court No. - 2
 

 
Case :- WRIT - C No. - 28810 of 2021
 

 
Petitioner :- M/S Sulbha Enterprises Thru. Sole Proprietor Ravi Lavania
 
Respondent :- Chairman U.P. Jal Nigam Urban Lucknow And Ors.
 
Counsel for Petitioner :- Akshat Kumar
 
Counsel for Respondent :- Rishabh Kapoor,Ajay Kumar Gupta,Kaviya Singh
 

 
Hon'ble Devendra Kumar Upadhyaya,J.

Hon'ble Subhash Vidyarthi, J.

By means of this petition filed under Article 226 of the Constitution of India challenge has been made by the petitioner-firm to the tender process conducted by the Construction and Design Services, Uttar Pradesh Jal Nigam (Urban) Lucknow for execution of work relating to rehabilitation, cleaning and maintenance work of sewer line at Bachcha Park to Hapur Road, Meerut.

Heard Shri Vivek Raj Singh, learned Senior Advocate, assisted by Shri Akshat Kumar, Advocate for the petitioner, Shri Rishabh Kapoor, learned counsel representing the respondent nos.1 to 4, Shri Ajay Kumar Gupta, learned counsel representing the respondent no.5 and Ms. Kaviya Singh, learned counsel representing the respondent no.6 and perused the records available before us on this writ petition.

For execution of the aforesaid work, a tender notice dated 01.11.2021 was issued inviting e-tender. As per the said tender notice, the technical bid was to be opened first on due date and time and the time and date of financial bid of those contractors who qualified the technical bid was to be opened at a later date.

Pursuant to the tender notice dated 01.11.2021, the petitioner which is a proprietorship firm and is said to be engaged in the business of government contracts of cleaning and maintenance of sewer line for past 18 years submitted its bid along with other bidders. The technical bids of the participants, including that of the petitioner, were opened on 16.11.2021, however, by means of an Office Memorandum dated 30.11.2021 it was communicated that out of three bidders, technical bid of respondent nos.5 and 6 were found to be eligible and accordingly the date for opening of financial bid was fixed to be 02.12.2021. The Office Memorandum dated 30.11.2021 which has been annexed as annexure 2 to the writ petition does not disclose any reason as to why the technical bid of the petitioner was not declared eligible. It only mentions that the technical bid of two bidders, that is, those of respondent nos.5 and 6 were found to be eligible.

Learned Senior Advocate representing the petitioner-firm has submitted that as per the information available on the E-portal of the respondent-organization, it was only mentioned that technical bid submitted by the petitioner did not qualify in technical evaluation as per the NIT (Notice for Invitation of e-Tender). The tender summary report is available at page 201 as Annexure-8 to the writ petition. From perusal of this report what we find is that as against the technical bid submitted by the respondent nos.5 and 6 "qualified in technical bid evaluation" is written whereas as against the petitioner-firm "not qualified in technical evaluation from the NIT" is written. Neither the said tender summary report, nor the office memorandum dated 30.11.2021 discloses any reason as to why the technical bid of the petitioner-firm was not found eligible.

The petitioner is said to have made certain objections vide letters dated 01.12.2021 and 03.12.2021 against disqualification of its technical bid to the respondent-organization, however, as submitted by the learned counsel for the petitioner-firm, the objections raised by the petitioner-firm were not taken into account; neither any decision was taken thereon. It has been submitted by the learned Senior Advocate representing the petitioner that in fact the respondent nos.5 and 6 whose technical bids were accepted also did not qualify inasmuch as they did not fulfill the tender conditions. It has, thus, been argued that the impugned action on the part of the respondent-organization in rejecting the technical bid of the petitioner and thereafter declaring the technical bid of the respondent nos.5 and 6 eligible is completely illegal and arbitrary.

Further submission made by the learned Senior Advocate representing the petitioner is that the facts of the case clearly establish that the fairness which is expected in processing the tender has not been followed in the instant case and hence acceptance of the technical bid of respondent nos.5 and 6 and subsequently Letter of Award issued in favour of the respondent no.5 are completely unlawful and thus the entire tender process as also the Letter of Award issued in favour of the respondent no.5 deserves to quashed.

Pointing out the substantial defects in the tender submitted by the respondent no.5, it has been stated on behalf of the petitioner that various tender conditions as mentioned in the tender document were not fulfilled by the respondent nos.5 and 6 and accordingly they were also not technically eligible and hence their financial bid could not have been evaluated. In respect of discrepancies in the tender document furnished by the respondent no.5 the following submissions have been made by the learned Senior Advocate representing the petitioner:

(a) The respondent no.5 did not fulfill the condition no. 2.30(f) of the tender document relating to Character Certificate. It has been stated that as per the said requirement a bidder was required to furnish a Character Certificate to be issued by the District Magistrate in the State of Uttar Pradesh. It also provided that the Character Certificate issued by the District Magistrate/Deputy Commissioner/equivalent rank officer from other States where contractor resides shall also be acceptable. The Character Certificate as per the said condition was to be furnished in Form I-D. The submission is that the Character Certificate submitted by the respondent no.5 was not valid on the date the bid by the respondent no.5 was submitted, inasmuch the said Character Certificate issued by the District Magistrate, Gautam Budha Nagar was valid from 29.01.2019 to 20.01.2021 whereas the tender notice was issued on 01.11.2021. The said Character Certificate is available at page 206 of the writ petition which clearly shows that the said Character Certificate was valid only till 20.01.2021. In this view the submission is that on the date of issuance of the tender notice and also on the date when the bid was submitted by the respondent no.5 the Character Certificate was not valid.

(b) It has also been stated by the learned Senior Advocate representing the petitioner that in terms of the condition no.2.30 (h) the bidder was required to submit Bank Solvency Certificate to be issued by the Bank in Form II-B, whereas the document submitted by the respondent no.5 terming it to be Solvency Certificate was in fact a Liquidity Certificate issued by Canara Bank and hence the said requirement was also not fulfilled by the respondent no.5.

Drawing our attention to the document which is available at page 205 of the writ petition and is dated 30.06.2021, it has been contended by the learned Senior Advocate that the said document is not Solvency Certificate; rather it is Liquidity Certificate and hence in absence of the Solvency Certificate as per the requirement of clause 2.30(h) of the Tender Condition, however, the respondent no.5 did not qualify the technical bid.

(c) Learned Senior Advocate further submitted that in terms of the provisions contained in clause 2.30(l) of the Tender Conditions, the tenderer was to submit the list of similar works executed during last 5 years along with supporting documents. Learned Senior Advocate also stated that as per clause 3.4 of Chapter-3 of the Tender conditions which mentions eligibility and information required to be furnished by the bidders, it was provided that the bidders should own or have assured access to the equipment/machines as required and in full working order and the bidders should also demonstrate that based on known commitments the equipment will be available for use in the work to be executed. It has been stated that contrary to the provisions of clause 2.30(l) and clause 3.4 the respondent no.5 only furnished an affidavit stating therein that the respondent no.5 was possessed of certain machines, tools and plant in good condition. However, the said affidavit related to some work in Greater Noida Industrial Development Authority. Thus, the affidavit which is said to be a part of the Tender Document was in fact an old document which was prepared in relation to certain work at Greater Noida Industrial Development Authority. Our attention has been drawn to e-Stamp on which the said affidavit is inscribed which shows the date of issuance of the e-Stamp to be 26.07.2021. In this factual background, it has been stated by the learned Senior Advocate that the affidavit was prepared even prior to the date of issuance of the tender notice, that is prior to 01.11.2021 and was meant for some work at Greater Noid Industrial Development Authority and not in relation to work which was to be executed.

So far as respondent no.6 is concerned, it has been stated by the learned Senior Advocate representing the petitioner that the technical bid of respondent no.6 also did not quality on account of the fact that the experience certificate submitted by respondent no.6 was not as per the requirement of clause 3.4 of Chapter 3 of the Tender Document. As per clause 3.4 the bidders should have experience of execution of works of similar nature including constructions, supply, installation, testing & successful commissioning and other related associated/allied/appurtenant works as applicable. However, the experience certificate submitted by the respondent no.6, which is available at page 208 of the writ petition, did not relate to similar nature of work which was required to be executed pursuant to the Tender Notice in question, namely, rehabilitation, cleaning and maintenance work of sewer line. The said document at page 208 of the writ petition gives details of work undertaken in past by the respondent no.6, according to which experience certificate of respondent no.6 was in relation to construction of 1 BHK and 3 BHK Apartment at Greater Noida and certain class rooms constructed at some colony at New Delhi. Thus, the submission on behalf of the petitioner is that in absence of requisite experience of similar nature, as is apparent from the documents submitted by the respondent no.6 showing its experience, technical bid of respondent no.6 was also liable to be rejected.

Pointing to the aforesaid deficiencies in the Tender Documents submitted by the respondent nos.5 and 6, it has been argued on behalf of the petitioner that on account of non-fulfillment of essential tender conditions the respondent-organization has acted illegally in accepting the technical bids of the respondent nos.5 and 6 which clearly is arbitrary. In this factual background, submission on behalf of the petitioner is that the entire tender process adopted by the respondent-organization lacks fairness and non-arbitrariness and in fact it is not only that the technical bid of non-qualified tenderers have been held to be eligible but also that a completely non qualified tenderer has been given Letter of Award to execute the work in question.

Opposing the submissions made by the learned Senior Advocate appearing for the petitioner, learned counsel representing the U.P. Jal Nigam and the respondent nos.5 and 6 have submitted that facts of the present case did not establish there has been any arbitrariness in processing of the tender and as such the prayers made in the writ petition cannot be granted.

It has been submitted by Shri Rishabh Kapoor that on evaluation of technical bid on 16.11.2021 the petitioner-firm was thus, disqualified on the ground that the Solvency Certificate furnished by the petitioner-firm was not issued by the Bank and in fact it was a forged document and also because the petitioner-firm did not submit an undertaking/letter to the effect that it shall undertake the work and shall complete the same in time. On these two counts, the technical bid of the petitioner is said to have been rejected.

Shri Kapoor has relied upon an agenda note prepared for consideration of the Tender Committee in its meeting held on 02.12.2021. As per the said agenda note, the technical bid submitted by the petitioner firm was not found to be eligible as the bank which is said to have issued the Solvency Certificate, on verification had stated vide letter dated 29.11.2021 that the Solvency Certificate said to have been issued to the petitioner was not issued by the said bank. The agenda further states that the technical experience of the petitioner firm was not as per the tender condition hence the technical bid of the petitioner-firm was rejected. The said agenda was considered by the Technical Committee in its meeting held on 02.12.2021 and as per minutes of the said meeting of the Technical Committee, decision was taken to issue Letter of Award to the respondent no.5 which was found to have offered the lowest financial bid (L-I)

In respect of the certain discrepancies/deficiencies pointed out by the learned counsel for the petitioner in the tender documents furnished by the respondent nos.5 and 6, it has been stated on behalf of the U. P. Jal Nigam that as per clause 2.41 of the Tender Conditions the department reserves the power to relax non-essential requirements of the bid which do not have materiel impact on the eligibility of the bidder and thus, accordingly the office memorandum dated 22.07.2020 was issued by the Managing Director of U.P. Jal Nigam dispensing with the requirement of furnishing the Character Certificate and thus the requirement of Character Certificate has not been considered to be a qualifying criteria.

The Office Memorandum dated 22.07.2020 has been annexed as Annexure-8 to the counter affidavit filed by the U.P Jal Nigam, however, what is to be noticed is that the Character Certificate which is required to be furnished by the District Magistrate or an equivalent rank officer is a condition prescribed in the tender notice issued on 01.11.2021 that is much after the issuance of the Office Memorandum dated 22.07.2020. It appears that the respondent-organization is attempting to take shelter of the Office Memorandum issued much prior to issuance of tender notice for submitting that the requirement of Character Certificate was dispensed with. In our opinion, such a course was not available to U.P. Jal Nigam for the reason that if there was no requirement of furnishing a Character Certificate in terms of the Office Memorandum dated 22.07.2020 the same ought to have been duly incorporated in the tender conditions in respect of which the tender notice was issued on 01.11.2021 which is subsequent to issuance of the Office Memorandum dated 22.07.2020. Non-prescription that there is no requirement of furnishing the Character Certificate in terms of the Office Memorandum dated 22.07.2020 in the tender conditions pursuant to the the Tender Notice dated 01.11.2021 has resulted in depriving so many tenderers from participating in the tender process who would have been otherwise eligible except for not having Character Certificate. Such a process thus cannot be said to be fair, rather it is arbitrary and illegal. In fact it is contrary to the principles enunciated in Article 14 of the Constitution of India which mandates every state action to be fair and non-arbitrary. Adopting such a course has definitely resulted in stopping the tenderers who would have been otherwise eligible but for want of having the Character Certificate, to participate in the tender process. It is also astonishing to notice that learned counsel for the U.P. Jal Nigam has attempted to take shelter to clause 2.41 of the Tender Document which reserves the power to the department to relax non-essential requirements of the bid. The Office Memorandum issued on 22.07.2020, which is prior to issuance of the tender notice dated 01.11.2021, cannot, in any manner, be referable or relatable to clause 2.41 of the Tender Conditions. Even otherwise requirement of furnishing Character Certificate for participation in a tender process for a project whose estimated cost is around Rs. 495.08 lakhs, cannot, in any manner, be said to be a non-essential tender condition. Thus, the attempt made by the learned counsel representing the Jal Nigam justifying the Character Certificate submitted by the respondent no.5 which was not valid on the date of invitation of tender and on the date of furnishing the bid by the respondent no.5, cannot be justified.

Learned counsel representing the U.P. Jal Nigam in respect of Solvency Certificate submitted by the respondent no.5 has submitted that after the bid documents were submitted, a letter dated 18.11.2021 was written by the Project Manager of the respondent-organization for confirming the Solvency Certificate, to the banks concerned. It has further been argued that on seeking confirmation of the Solvency Certificate furnished by the respondent no.5, the Canara Bank vide its letter dated 23.11.2021 informed the Project Manager of U.P Jal Nigam that the certificate issued to respondent no.5 is Solvency Certificate on the bank proforma. The letter dated 23.11.2021 is available at page 88 of the counter affidavit filed by U.P Jal Nigam which bears the date of issuance as 23.11.2021. The technical bid admittedly was opened on 16.11.2021 and as such we find it strange to learn as to how the letter written by the bank on a date subsequent to the date on which technical bid was open, could be taken into consideration for holding the respondent no.5 technically qualified.

It is also to be noticed that the document annexed at page no.88 of the counter affidavit is said to be a letter issued by the Canara Bank, does not bear any stamp of the authority who is said to have issued the said certificate, neither does it even makes a mention as to which branch of the Canara Bank has issued the said letter. This document appears to be a letterhead of Canara Bank without making any mention of the Branch and the issuing authority is though shown to be Branch Manager but the said document does not bear any stamp of the issuing authority.

In any case, even if that the letter dated 23.11.2021 is taken to be a genuine document, what is noticeable is that the said letter has been issued subsequent to the date on which the technical bid was evaluated as such the respondent-organization while evaluating the technical bid of respondent no.5 has acted in a complete arbitrary manner. Taking into account the letter issued subsequent to the date on which technical bid was opened, in our opinion, vitiates the entire tender process adopted by the respondent-organization.

It has further been argued by the learned counsel representing the U.P. Jal Nigam that as per Clause 2.30 (l) and Clause 3.4 of the tender documents a bidder was required to submit details of the machinery and the respondent no.5 instead of filing the details submitted an affidavit in respect of which a letter dated 23.11.2021 was written by the authorities of the respondent-organization to the respondent no.5 as well as to Greater Noida Industrial Development Authority. It has also been stated that thus respondent no.5 was directed to provide an affidavit to the effect that he is the owner of the machinery in respect of which an affidavit was to be filed by the respondent no.5 on 25.05.2021 and Greater Noida Industrial Development Authority confirmed that at present no contract between the respondent no.5 and Greater Noida Industrial Development Authority was in existence and accordingly inference can be drawn that the machinery was available with him for executing the work.

Here again it is noticeable that the technical bid was opened on 1.11.2021 whereas the respondent no.5 admittedly was required to file the affidavit by means of a letter dated 23.11.2021 stating that he was the owner of the machinery. It is also admitted that in response to the letter of the respondent-organization, dated 23.11.2021 the respondent no.5 submitted an affidavit on 25.11.2021. We fail to understand as to how the documents submitted after evaluation of the technical bids are being relied upon to justify that the respondent no.5 had qualified in the technical bid. Evaluation of technical bid is to be made on the basis of the documents furnished and available with the bid documents and no document furnished by a bidder can be taken into account for justifying its eligibility in the technical bid which is submitted at a subsequent stage i.e. stage subsequent to the date on which the technical bid in this case was evaluated/finalized.

The explanation sought to be submitted by the learned counsel representing the U.P. Jal Nigam in this regard is also not acceptable for the reason that admittedly at the time when the technical bid of respondent no.5 was evaluated on 16.11.2021, the affidavit dated 25.11.2021 was not available with the Respondent-organization. In fact by inviting the affidavit on a date subsequent to the date on which the technical bid was opened from the respondent no.5 amounts to permitting interpolation in the tender documents submitted by the respondent no.5 which, in our considered opinion, was wholly impermissible. Such a course adopted by the authorities of U.P .Jal Nigam is clearly arbitrary.

So far as the discrepancies pointed out in the tender document submitted by respondent no.6, it has been stated by the learned counsel representing the U.P. Jal Nigam that after the technical bid was opened on 16.11.2020 a letter was written by the Project Manager to Greater Noida Industrial Development Authority on 18.11.2020 seeking clarification as to whether the work in respect of which the experience certificate was furnished by the respondent no.6 related to cleaning and laying of sewer pipe line. It has also been brought on record by the U.P. Jal Nigam that another letter dated 25.11.2021 was written for verification of the experience certificate submitted by the respondent no.6 and the Greater Noida Industrial Development Authority in its letter dated 26.11.2021 confirmed that construction of 1 BHK and 3 BHK flats also included the work relating to sewer.

It is again astonishing to notice that the respondent-organization has relied upon certain documents which were made available for establishing the work experience of respondent no.6 after opening up of the technical bid.

Thus, it is established that the respondent-organization firstly held the respondent nos.5 and 6 technically eligible and thereafter procured documents and permitted them to bring on record more documents which admittedly were not part of the tender documents submitted by the respondent nos.5 and 6 at the time they furnished their bids pursuant to the tender notice dated 01.11.2021. There is yet another document on record at page 98-99 of the counter affidavit filed by the U.P. Jal Nigam which is apparently of a date subsequent to the date on which the technical bid was open. The said document is the affidavit filed by the respondent no.5 in respect of the machinery said to be available with it and the non-judicial e-stamp paper on which this affidavit is inscribed was clearly issued on 25.11.2021. In this view, admittedly, this document was not available at the time when the technical bid was opened.

In the light of the aforementioned facts, it is clear beyond any doubt that the respondent-organization has permitted changes and alterations in the tender documents after opening the technical bids to justify the eligibility of the respondent nos.5 and 6 in the technical bid which, in our opinion is completely illegal, being arbitrary and unlawful.

Learned counsel representing the U.P. Jal Nigam has submitted that since the petitioner is an ineligible bidder as such he has no locus to challenge the award of the tender. In support of this submission he has placed reliance on the case of Shagun Mahila Udyogik Sahakari Sansthan Maryadit vs. State of Maharashtra and others, (2011) 9 SCC 340 and also on another judgment in the case of Raunaq International Ltd. vs. I.V.R. Construction Ltd., (1999) 1 SCC 492. So far as the aforesaid submissions of the learned counsel representing the U.P. Jal Nigam is concerned, we may make it clear that it is not only that the petitioner has challenged the rejection of technical bid but he has also pointed out various apparent illegalities and arbitrariness in the manner in which the tender has been processed and the respondent nos.5 and 6 were held to be technically eligible, though we have observed above that they were not technically eligible. The arbitrariness in processing the technical bid in this case is writ large and hence it cannot be said that this petition could not be maintainable by the petitioner. It has also been argued by the learned counsel representing the U.P. Jal Nigam that the petitioner cannot be termed to be a person aggrieved in view of the law laid down by the Hon'ble Supreme Court in the case of Jasbhai Motibhai Desai vs. Roshan Kumar, Haji Bashir Ahmed and others, (1976) 1 SCC 671 for the reason that the petitioner was not found technically eligible to participate in the further bid process. This submission of the learned counsel representing the U.P. Jal Nigam also does not appeal to the court for the reasons disclosed and discussions made above wherein it has clearly been found by the Court that the respondent-organization has committed substantial irregularities and arbitrariness in processing the tenders.

Shri Kapoor has further argued that even if some defect is found in the decision, the Court in exercise of its jurisdiction under Article 226 of the Constitution of India will refrain from interfering in the tender process. In support of this submission reliance has been placed on the judgment in the case of Air India Ltd. vs. Cochin International Airport Ltd. and others, (2002) 2 SCC 617. It has also been argued on behalf of the respondents that intervention by this court in exercise of its jurisdiction under Article 226 of the Constitution of India in tender matters should be minimum and jurisdiction in tender matters should be exercised with caution and it can be exercised only if there is arbitrariness or favouritism. Reliance has been placed in this regard on the judgment in the case of Siemens Aktiengeselischaft and Siemens Ltd. vs. Delhi Metro Rail Corporation Ltd. and others, (2014) 11 SCC 288.

So far as the aforesaid submissions made by the learned counsel for the respondents is concerned, we may only observe that the Court is conscious of its limitation of judicial review while scrutinizing a tender process. The law in this regard is well settled in most celebrated case of Tata Cellular vs. Union of India, (1994) 6 SCC 651. The scope of judicial review in the tender matters has been summarized by Hon'ble Supreme Court in the case of Tata Cellular (supra) in paragraph 69 to 82 of the report.

Hon'ble Supreme Court in the case of Reliance Energy Ltd. and another vs. Maharashtra State Road Development Corporation Ltd. and others, (2007) 8 SCC has again considered the scope of judicial scrutiny by the superior Courts. In this case Hon'ble Supreme Court has held that the judicial review must be justified by constitutional principles which govern the proper exercise of public power in a democracy and that Article 14 of the Constitution embodies the principle of non-discrimination. There is no dearth of judgments of Hon'ble Supreme Court where it has clearly been held that in case any action on the part of the Government body is found to be contrary to the broad principles relating to equality and non-arbitrariness as enshrined under Article 14 of the Constitution of India even in the matter relating to tenders, this Court can interfere in appropriate cases.

If this case is considered in the light of the aforesaid principles laid down by Hon'ble Supreme Court in the cases of Reliance Energy Ltd. and another (supra) and Tata Cellular (supra), what we find is that respondent-organization has completely acted in a manner while processing the tender in question which is arbitrary and unlawful. Respondent-organization has even gone to the extent of permitting filing of documents after the technical bid was opened to justify that technical bids of respondent nos.5 and 6 were eligible.

For the reasons given above, we are convinced that the writ petition deserves to be allowed, which is hereby allowed.

The entire tender process undertaken by the respondent-organization pursuant to the tender notice dated 01.11.2021 is hereby quashed. Consequently the letter of award dated 03.12.2021 issued in favour of respondent no.5 is also hereby quashed.

Respondent-organization is directed to initiate tender process afresh for execution of works in question at the earliest.

There will be no order as to the costs.

Order Date :-16.06.2022

akhilesh/

[Subhash Vidyarthi, J.] [D.K. Upadhyaya, J.]