Bombay High Court
Ashwin S. Shah vs Municipal Corporation Of Greater ... on 10 December, 2009
Bench: A.M. Khanwilkar
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
REVIEW PETITION NO.63 OF 2009
IN
WRIT PETITION NO.1893 OF 2009
1. Ashwin S. Shah,
carrying on business in the firm
name and style "Shantinath Roadways"
as sole proprietor thereof and having
its address at 105, Flyover Apartment,
Teli Gali, Andheri (East)
Mumbai-400 069.
2. Harshad H. Shah,
carrying on business in the firm
name and style of
New India Construction Co.
as sole proprietor thereof having
its address at 103, Flyover Apartment,
Teli Galli, Andheri (East),
Mumbai- 400 069.
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3. Mrs. Sudha A. Shah, .. Petitioners
carrying on business in the firm
name and style of
M/s. Mahesh Kumar & Co.
as sole proprietress thereof having
its address at 103, Flyover Apartment,
Teli Galli, Andheri (East),
Mumbai- 400 069.
Versus
1. Municipal Corporation of Greater Bombay
A Statutory body, constituted under the
Bombay Municipal Corporation Act, 1988
having its office at Mahanagar Palika Marg,
Fort, Mumbai -400001.
2. The Municipal Commissioner,
Municipal Corporation of Greater Bombay
having his office at Mahanagar Palika Marg,
Fort, Mumbai -400001.
3. The Deputy Chief Engineer (Roads)
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Municipal Corporation of Greater Bombay
having his office at 6th Floor, K/W Ward,
Office, Paliram Path, Opp. Bus Depot,
Andheri (West), Mumbai -400058.
4. Chirag Constructions Co.
A Partnership Firm duly registered under
(Indian) Partnership Act, 1932, having
Registered Office at 104/105, Gopi Puri,
S.V. Road, Borivali (East),
Mumbai 400 066.
5. R.P.S. Infraprojects Pvt.Ltd.
A company registered under the
Companies Act, 1956 and having its
registered office at 113-C, Shyam Kamal,
Agrawal Market, Vile Parle (East),
Mumbai 400 057.
6. Smt. Tarla R. Shah .. Respondents
of Mumbai, Indian Inhabitant,
Proprietor of K.R. Construction,
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having office at 1201/A, Aditya
Apartment, Chandavarkar Road,
Borivali (West), Mumbai 400 092.
ALONGWITH
REVIEW PETITION (LODGING) NO.52 OF 2009
IN
WRIT PETITION (LODGING) NO.1243 OF 2009
1. Chirag Constructions Co.
A Partnership Firm duly registered under
(Indian) Partnership Act, 1932, having
Registered Office at 104/105, Gopi Puri,
S.V. Road, Borivali (East),
Mumbai 400 066.
2. R.P.S. Infraprojects Pvt.Ltd.
A company registered under the
Companies Act, 1956 and having its
registered office at 113-C, Shyam Kamal,
Agrawal Market, Vile Parle (East),
Mumbai 400 057.
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3. Smt. Tarla R. Shah ... Review Petitioners
of Mumbai, Indian Inhabitant, (Orig.Respondent
Proprietor of K.R. Construction, Nos.4 to 6.
having office at 1201/A, Aditya
Apartment, Chandavarkar Road,
Borivali (West), Mumbai 400 092.
Versus
1. Ashwin S. Shah,
carrying on business in the firm
name and style "Shantinath Roadways"
as sole proprietor thereof and having
its address at 105, Flyover Apartment,
Teli Gali, Andheri (East)
Mumbai-400 069.
2. Harshad H. Shah,
carrying on business in the firm
name and style of
New India Construction Co.
as sole proprietor thereof having
its address at 103, Flyover Apartment,
Teli Galli, Andheri (East),
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Mumbai- 400 069.
3. Mrs. Sudha A. Shah,
carrying on business in the firm
name and style of
M/s. Mahesh Kumar & Co.
as sole proprietress thereof having
its address at 103, Flyover Apartment,
Teli Galli, Andheri (East),
Mumbai- 400 069.
4. Municipal Corporation of Greater Bombay
A Statutory body, constituted under the
Bombay Municipal Corporation Act, 1988
having its office at Mahanagar Palika Marg,
Fort, Mumbai -400001.
5. The Municipal Commissioner,
Municipal Corporation of Greater Bombay
having his office at Mahanagar Palika Marg,
Fort, Mumbai -400001.
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6. The Deputy Chief Engineer (Roads) .. Respondents
Municipal Corporation of Greater Bombay
having his office at 6th Floor, K/W Ward,
Office, Paliram Path, Opp. Bus Depot,
Andheri (West), Mumbai -400058.
Mr. Aspi Chinoy, Senior Advocate with Mr. Mahesh Londe i/by M/s. Sanjay
Udeshi & Co. for the petitioners.
Mr. E.P. Bharucha, Senior Advocate with Ms. S.V. Gharapure for the BMC.
Mr. S.U. Kamdar, i/by M/s. Z.A. Jariwala i/by M/s. Thakore Jariwala &
Associates for the respondent No.4.
Mr. R.A. Thorat i/by Mr. P.J. Thorat for the respondent No.6.
Mr. M.M. Vashi i/by M/s. M.P. Vashi & Associates for the petitioners in
Review Petition (L) No.52 of 2009.
CORAM : SWATANTER KUMAR, C.J. &
A.M. KHANWILKAR, J.
DATE OF RESERVING THE JUDGMENT : 24TH NOVEMBER, 2009
DATE OF PRONOUNCING THE JUDGMENT: 10TH DECEMBER, 2009
JUDGMENT (Per Swananter Kumar, C.J.)
Municipal Corporation of Greater Mumbai had issued a tender notice
inviting bids for awarding work of repair and maintenance of roads as
indicated therein on 23rd January, 2009. The last date for submission of
documents was 9th February, 2009. The petitioners were one of the
bidders. However, their bids were not accepted resulting in filing of the writ
petitions afore-noticed which was partly allowed by this court by a detailed
judgment dated 20th August, 2009 and directed the Corporation to invite
fresh tenders. It will be useful to refer to the relevant extract in the
operative part of the judgment at this stage itself:
"........ It is a settled norm of administrative prudence that
higher the power greater is the responsibility to be
cautious and fair which has now been accepted as a legal
principle. The binding terms and conditions and accepted
criteria was duly provided for and, thus, it was for the
Corporation to show that it had acted in accordance
therewith and its action was free of arbitrariness. The
action of the Corporation has undermined the dignity of
settled administrative norms and good governance. In
fact, from the record, it is abundantly clear that the
Corporation has failed to maintain absolute fairness and
transparency in its procedure, decision making process
and the final decision in awarding the contract. It can
also be useful to notice that there is no clarity in the
terms and conditions of the tender itself as to what
would be the extent of use of each of the specified
technologies while carrying out the repairs and
maintenance of the roads. Undefined quantity and
unspecified quality have not only resulted in giving rise
to confusion but have considerably affected costing
factors. To arrive rationally at a comparative cost study at
L-1, there had been no definite criteria as the bidders
were not required to state their bid amount with
reference to each of the specified technologies. In our
view, this is a serious lacunae in the terms and conditions
of the tender and doubt expressed by the Chief Engineer
Roads) in his note dated 4th April, 2009 is fully justified
and the Authorities of the Corporation were expected to
consider that aspect in a more objective and realistic
manner. The Corporation is expected to discharge its
obligation in accordance with the basic rule of law. The
statutory power vested in the Commissioner of the
Corporation to enter into contracts under Section 69 of
the Act is to be exercised cautiously. He too has to
exercise such power subject to approval of the Competent
Authority if so specified. The Standing Committee is
expected to exercise its power of approval expeditiously
but certainly in a manner which is in line with the
principle of fairness and transparency. In our view, both,
the Commissioner of the Corporation and the Standing
Committee have failed to act in exercising this basic
principle. The entire decision making process and the
decision suffer from defect of uncertainty, ambiguity and
arbitrariness.
44. Rule is made absolute in Writ Petition (Lodging) No.
1243 of 2009. The Letter of Intent dated 6th July, 2009
issued to Respondent Nos.4 to 6 is hereby quashed with a
further direction that the Corporation shall invite fresh
tenders by stating its terms and conditions with certainty
and without ambiguity while keeping in mind the
economic interest of the Corporation and ensuring the
achievement of the public object.
45. In view of the above, nothing survives in Writ Petition
No.765 of 2009 and the same is accordingly disposed of.
Rule is discharged.
46. No order as to costs."
Against the above judgment, the petitioners preferred Special Leave Petition
before the Supreme Court which was disposed of by the Supreme Court
vide its order dated 5th October, 2009 and the order reads as under:
"Learned Senior Counsel appearing on behalf of the
petitioners submits that the question as to what should be
done after setting aside of the grant of tender in favour of
respondent Nos.4 to 6 and the specific prayer regarding
the award of tender in favour of present petitioners was
specifically argued before the High Court. However, we
do not find any consideration of argument if at all made.
The petitioners are, therefore, allowed to withdraw this
Special Leave Petition with liberty to file a review
petition, if needs be, before the High Court regarding the
relief claimed by the petitioners now of the grant of
tender in their favour."
In furtherance to the said order, the petitioners have filed the present
review petition No.63 of 2009 praying that the contract ought to be
awarded to them as the court had set aside awarding of contract to the
private respondents. Thus, the only relief that the court could grant was to
direct awarding of the contract to the petitioners. It was argued by the
learned counsel appearing for the petitioners with reference to certain
observations and findings.
2. It is contended that the court had recorded specific findings that
carbon core technology was one of the essential features for inviting
tenders and the bidders were expected to be able to use the said technology
for execution of the work. An essential condition of submitting a letter
from Carboncore material manufacturer/supplier for continuous supply of
material was subsequently amended and a joint venture agreement with
manufacturer/ supplier as J.V. Partners was allowed. The court has also
recorded a finding that the private respondents had not satisfied the
original criteria and even the criteria as amended vide corrigendum dated
10th February, 2009 and as such, their bids could not have been accepted.
The third finding recorded by the court is that confusion was caused by the
Corporation itself which resulted in arbitrariness and favoritism to
respondent Nos.4 to 6. On this premise, it is contended that awarding of
contract in favour of the private respondents has been held to be bad and,
therefore, the only finding that could be recorded, in view of the prayer
made in the writ petition, was awarding of contract to the petitioners.
Therefore, the direction issued by the court as aforeindicated, requiring
inviting fresh tenders, thus, is a mistake in law and needs to be corrected.
3. The learned counsel appearing for the respondent-Corporation has
submitted that the present review petition is neither maintainable nor is
justified on any accepted norms of law for the grant of the relief prayed. Of
course, these submissions have been made without prejudice to their rights
of inviting of fresh tenders. In any case, it is the discretion of the
Corporation and nobody has a vested right to regulate the commercial
affairs of the Corporation. The respondents further contend that review
petition deserves to be dismissed.
4. The learned counsel appearing for the review petitioners, while
referring to various findings and observations and relying upon the
judgment of the Supreme Court in the case of M/s. Prestress India
Corporation V. U.P. State Electricity Board and others, 1988 (Suppl) SCC
716 submitted that once the court had recorded the finding that there was
arbitrariness and unreasonableness on the part of the Corporation, then
giving partial relief to the petitioner may not be correct as the petitioner
would be entitled to get the entire reliefs i.e. awarding of the contract.
Reliance has also been place on the judgment of this court in the case of Sri
Shankaranarayana Construction Co. and another v. Konkan Railway
Corporation Ltd. and others, 2004(2) Bombay C.R. 676 to contend that the
tender should be awarded to the petitioner and any kind of preferential
treatment of any other person is not permissible in law.
5. As far as principle of law stated in the above judgments, relied upon
by the petitioner are concerned, can hardly be disputed but what is to be
examined by the court is whether these judgments have any application on
law and facts of the case in hand. To maintain an application for review, it
is essential that the same should fall squarely within the ambit and scope of
Order 47 Rule 1 of the scope of Civil Procedure Code and ancillary
principles thereto. The only clause of the provision which can be invoked by
the petitioner is that review of the judgment is called for `any other seen
reason'. What has to be seen is that the reasons stated by the applicant are
sufficient reasons in reviewing the order and would essentially meet the
ends of justice. Review has a limited scope and jurisdiction and is expected
to be exercised with due care and caution. The doctrine of finality has its
own application as it is a principle enunciated on public policy. The courts,
while exercising jurisdiction under Article 226 of the Constitution of India,
would not disturb or review its order unless the grounds stated in the
provisions are satisfied or there some injustice is done to the parties
concerned. In the present case, the judgments relied upon by the learned
counsel appearing for the petitioners, in our opinion, would hardly have
any application to the facts and circumstances of the case in hand. It is true
that the State or its instrumentalities have every right to award contract to
any person but its action in such commercial field must be regulated by
principles of fairness and transparency. Distribution of State largesse is a
matter which is normally determined by the concerned authority but
decision making process of such distribution should be free of arbitrariness
and favoritism. In the event where the court records finding that these
principles have been violated then the court has to examine what relief the
petitioners, in a given case, would be entitled to. It is not an absolute
principle of law without exception that the petitioners must be granted the
relief prayed for even if there are findings as to the the presence of
element of arbitrariness and favoritism or violation of the terms of the
contract, in a matter relating to awarding of contract or tender recorded by
the court. Sometimes in the larger public interest, the court has every
jurisdiction to direct inviting of fresh tender instead of directing that the
tender be awarded to a particular party. Thus, the court has to examine on
the basis of the judgment and also on the basis of such findings it had
recorded as to whether would it be justified in passing an order directing
invitation of fresh tenders or the relief ought to have been granted to the
petitioner as prayed.
6. We may also notice that scope of review petition is a limited one.
The petitioner cannot be permitted re-agitate and have the matter reheard
as the provisions for review and its application has to be construed in a
strict manner. Reference in this regard can be made to a judgment of the
Delhi High Court in the case of H.K. Kapoor v. Union of India and others,
[122 (2005) Delhi Law Times 455 (DB)] which reads thus-
"In the case of H.K. Kapoor v. Union of India & Ors.
[122 (2005) Delhi Law Times 455 (DB)], a Division Bench of
this Court held that an attempt on the part of the petitioner
or applicant to have the matter reheard on the basis of a
review application would not be permissible. A party cannot
be permitted to agitate or re-agitate the issues by filing the
review application. Such applications would even be beyond
the purview and scope of Order 47 Rule 1 of the CPC."
7. In light of the above principles, now we may refer to the facts and
findings for that purpose. As already noticed, the court had recorded a
positive finding that the use of carboncore technology was an essential
feature for invitation of tenders and the bidders were expected to fulfill the
said condition. Private respondents did not satisfy the original and even
the modified condition as per the corrigendum. The waiver in favour of the
said respondents smacks favoritism. The entire course of awarding the
tender was put on a different path after the Commissioner's meeting with
the Chief Minister as recorded in paragraph 27 of the judgment and which
is sought to be refuted. This course of action was contrary to the advice
given by the technical experts and apparently contrary to the terms and
conditions of the tender. Besides recording these findings, the court had
specifically noticed the terms and conditions of the tender and certain facts
which were revealed from the records, produced by the Corporation during
the course of hearing. The following findings, recorded in different
paragraphs of the judgment, can usefully be referred hereto:
"...... It is a settled norm of administrative prudence that
higher the power greater is the responsibility to be
cautious and fair which has now been accepted as a
legal principle. The binding terms and conditions and
accepted criteria was duly provided for and, thus, it was
for the Corporation to show that it had acted in
accordance therewith and its action was free of
arbitrariness. The action of the Corporation has
undermined the dignity of settled administrative norms
and good governance. In fact, from the record, it is
abundantly clear that the Corporation has failed to
maintain absolute fairness and transparency in its
procedure, decision making process and the final
decision in awarding the contract. It can also be useful
to notice that there is no clarity in the terms and
conditions of the tender itself as to what would be the
extent of use of each of the specified technologies while
carrying out the repairs and maintenance of the roads.
Undefined quantity and unspecified quality have not
only resulted in giving rise to confusion but have
considerably affected costing factors. To arrive
rationally at a comparative cost study at L-1, there had
been no definite criteria as the bidders were not required
to state their bid amount with reference to each of the
specified technologies. In our view, this is a serious
lacunae in the terms and conditions of the tender and
doubt expressed by the Chief Engineer (Roads) in his
note dated 4th April, 2009 is fully justified and the
Authorities of the Corporation were expected to consider
that aspect in a more objective and realistic manner.
The Corporation is expected to discharge its obligation
in accordance with the basic rule of law. The statutory
power vested in the Commissioner of the Corporation to
enter into contracts under Section 69 of the Act is to be
exercised cautiously. He too has to exercise such power
subject to approval of the Competent Authority if so
specified. The Standing Committee is expected to
exercise its power of approval expeditiously but certainly
in a manner which is in line with the principle of
fairness and transparency. In our view, both, the
Commissioner of the Corporation and the Standing
Committee have failed to act in exercising this basic
principle. The entire decision making process and the
decision suffer from defect of uncertainty, ambiguity and
arbitrariness."
"The principle object of inviting tenders in question was
to use best and/or different technologies and different
steps as per requirement while keeping the economic
interest of the Corporation in mind and ensuring
achievement of a laudable public purpose that roads in
the suburbs and City of Mumbai should be maintained
and kept in a good condition. To achieve this object, the
Corporation had issued volumi9nous terms and
conditions of the tender containing specification,
methodology, criteria and the procedure it intended to
adopt for awarding of the tender. Paramount
considerations of public purpose and economic interest
of the Corporation were ignored at least in terms of
procedure. Deletion, variation and then completely
waiving even the substituted conditions, which were
material, casts a serious shadow of doubt on the action
of the Corporation. While distributing the State largesse
specially in the form of awarding of contract of high
magnitude, the obligation on the part of the Corporation
to be fair, transparent and judicious is on a higher
pedestal."
"The sudden change in decision making process
and the decision itself that too without any properly
recorded reasons shows the unreasonableness in the
action of the Corporation. How the Corporation could
leave a discretion vested in it for getting the work
executed at the mercy of the tenderers as to which one
of the specified technology was to be used, is an aspect
which is beyond comprehension of reasonable mind. To
our mind, it would be for the Officers of the Corporation
to decide as to which road and which section would
require repairs based on which technology and it is not
for the tenderer to decide which road he would repair
with what technology, more so, a tenderer who does not
even have the basic requisite of carboncor technology. It
appears that suddenly larger public interest and the
interest of the Corporation was overlooked and
procedures were varied for sustaining the private
interest."
"......... However, we have already expressed our
opinion that the said decision of the Corporation is not
in consonance with the language, spirit and public
purpose sought to be achieved by the tender conditions.
Another aspect which needs to be examined by the Court
is that the Corporation first itself created a monopoly
that it only named one supplier of carboncor in terms of
clause 2.45.6 whose letter was stated to be mandatory.
This was modified by Corrigendum dated 10th February
2009 permitting Joint Venture agreement to be
submitted instead of letter from the said concern. From
the record of the Corporation, it appears that even this
supplier had written letters to the Corporation that by
awarding contracts to the persons who had neither
obtained letter nor Joint Venture agreement from the
said concern, the Corporation would be breaching the
terms and conditions of the invitation to tender. After
opening the packets and negotiating with persons, then,
without proper disclosure to all concerned, this term was
wiped out for reasons which are unknown. This creation
and then abolishing of terms show monopolistic attitude
regarding an essential technology and it creats a shadow
of doubt on the entire methodology adopted by the
Corporation in finalizing the tenders."
".......... Here we have noticed that apparently
Respondent Nos.4 to 6 had not satisfied the original
criteria and even the criteria stated by Corrigendum
dated 10th February, 2009. Of course, even the
subsequent decisions i.e. decision taken after opening of
Packet "C" was without recording proper reasons by the
Corporation on its file. It was never communicated to
all the tenderers, that without letter of Joint Venture
agreement relating to carboncor technology, the
tenderers would be held eligible."
8. In paragraph 18 of the judgment, the court also noticed and found
that there was ambiguity and uncertainty, both in terms of the contract as
well as expectations of the Corporation from tenders, created and which
existed even subsequent to inviting of tender. Uncertainty, economic loss,
ambiguity in relation as to whether carboncore technology was or was not
to be used by tenderer, loss of revenue and favouritism was writ large.
Once the court records findings in relation to such serious matters which
vitiates the entire process of selection, no particular individual can be
permitted to benefit therefrom. It is of great importance and a better
course that all persons are given a fair chance to participate in the tender
afresh and in accordance with law.
9. From the bare reading of the above recorded findings in the
judgment, it is clear that the action of the respondent-Corporation not only
suffers from arbitrariness and favouritism but the entire decision making
process was defective and stood vitiated being in contrary to the specific
terms and conditions of the notice inviting tenders. Furthermore, the
ambiguities in the terms and conditions of the tender, particularly,
introduced by subsequent corrigendum and letters issued by the
Corporation were in complete contradiction to the terms and conditions of
the notice inviting tenders. Creation of the monopoly of carboncore
material manufacturer/supplier by the Corporation exhibited clear, unjust
and unfair actions on part of the Corporation in relation to distribution of
State largesse. The most important aspect, as a matter of fact, is that it
would not be in public interest to permit grant of absolute and entire relief
to the petitioners as it is bound to hurt the economic interests of the
Corporation and the public interest at large. If the tender work is directed
to be given to the petitioners notwithstanding the ambiguities,
uncertainties, specifically noticed in the judgment as well as created by the
conduct of the Corporation, would tilt the balance in favour of the private
interest rather than larger public interest. The use of the most sophisticated
technology for the benefit and in favour of the larger public interest would
stand defeated.
10. In the above paras, thus, we have recorded specific reasons as to why
it will be in the larger public interest as well as the economic interest of the
Corporation not to grant tender to the petitioners in preference to issuance
of the direction to the respondent-Corporation to invite fresh tenders. The
Corporation itself has also decided to invite fresh tenders and such a
decision squarely falls within the domain of the competent authorities in
the Corporation.
11. In the circumstances aforenoticed, we do not see any reason to
review our judgment dated 20th August, 2009 or any part thereof as prayed
by the petitioners. Both the Review Petitions are dismissed with no order
as to costs.
CHIEF JUSTICE
A.M. KHANWILKAR, J.
Review 63-09final
