Bombay High Court
M/S K. K. Vidyut Thr Its Authorized ... vs The Union Of India Thr Its Ministry ... on 24 August, 2016
Bench: B.R. Gavai
wp.234.16
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT NAGPUR, NAGPUR.
...
WRIT PETITION NO.234/2016
M/s K.K. Vidyut
(A Joint Venture of M/s Manisha Construction
and M/s K K Vidyut Ltd.) having its
registered address office at 627, B-2, Wadgaon Gupta,
Ahmednagar 414 111.
Through its Authorised Signatory, namely,
Shri Avinash s/o Sukhdeorao Shende,
Aged about 40 years, occu: Business
R/o Wardha Road, Dhantoli, Nagpur. ..PETITIONER
v e r s u s
1) The union of India
Through its Ministry of Railway,
New Delhi.
2) The Chief Administrative Officer (Construction)
South East Central Railway,
G M Annex Building
Bilaspur (Madhya Pradesh)
3) The Chief Engineer (Construction)
South East Central Railway,
3rd floor, DRM Building Kingsway, Nagpur.
4) The Deputy Chief Engineer (Construction)
South East Central Railway
Chhindwara (Madhya Pradesh )
5) M/s Siddartha Builders (Engineering
and Contractors) Rajghat Pal Project
Dist.Lalitpur (U.P.). ...RESPONDENTS
...........................................................................................................................
Mr. A. S.Jaiswal, Senior Advocate for the petitioner
Mr. Nitin Lambat, Advocate for Respondent Nos.1 to 4
Mr. Sunil Manohar, Senior Advocate for respondent no.5.
............................................................................................................................
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CORAM: B.R.GAVAI &
V.M.DESHPANDE , JJ
.
DATED : 24th August, 2016
ORAL JUDGMENT: (PER B.R. GAVAI, J.)
Rule. Rule made returnable forthwith. Heard finally by consent.
2. The petitioner firm has approached this Court, being aggrieved
by the decision of the respondent nos.2 to 4 in rejecting the technical bid of
the petitioner.
3. The respondent nos. 2 to 4 had invited tenders for supplying and
stacking of 1,50,000 cum machine crushed ballast between Seoni (including)
(conforming to specifications of machine crushed stone ballast issued by
RDSO, corrected up to date) in cess, in formation or in yards, in connection
with gauge conversion between Chhindwara-Nainpur vide tender Notice No.
CEC/BSP/2015-16/60. The tenders were to be submitted in two envelopes.
The first envelope was pertaining to the technical and financial capacity of the
bidder and the second envelope was with regard to the price bid. In response
to the tender notice dated 2nd September 2015 as may as eight bidders had
submitted their bids. The first envelopes were opened on 23rd December, 2015
in which the petitioner and one another bidder were found to be disqualified.
Being aggrieved thereby, the present petition is filed.
4. Heard Shri Anand Jaiswal, learned senior counsel for the
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petitioner; Shri Nitin Lambat, learned counsel for respondent nos. 1 to 4 and
Shri Sunil Manohar, learned senior counsel for respondent no.5.
5. Shri Anand Jaiswal, learned senior counsel for the petitioner
submits that the respondents have grossly erred in rejecting the bid of the
petitioner, on the ground that the petitioner had not submitted the documents
with regard to the bidding capacity. Learned senior counsel submits that the
qualifying conditions for individual bidders and joint ventures were different.
It is the contention of the learned senior counsel that clause 5 of the Tender
Document specifically deals with the individual bidders on one hand and the
joint ventures bidders on the other hand. He submits that insofar as the
bidding capacity is concerned, it is required to be submitted only by the
individual tenderer and not by the joint venture tenderer. Learned senior
counsel therefore submits that the action of the respondents in rejecting the
technical bid of the petitioner is totally unsustainable in law. Learned senior
counsel relying on the judgment of the Apex Court in the case of Rashmi
Metaliks Limited and another vs. Kolkata Metropolitan Development
Authority and others, reported in (2013) 10 SCC 95, submits that in any
case, the condition regarding the bidding capacity cannot be held to be an
essential condition and the rejection of the technical bid on the ground of
non-supply of the documents pertaining to bidding capacity would not be
permissible in law.
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6. Shri Nitin Lambat, learned counsel appearing on behalf of the
respondent nos.1 to 4, on the contrary, submits that the rejection of the bid of
the petitioner is not only on the ground of non-submission of papers as
regards bidding capacity, he submits that the essential documents which are
required to be submitted as per clause (6) of the Tender Document, have not
been supplied by the petitioner. He submits that in any case an interference
by this Court would be warranted only if the action of the respondents/
authorities is found to be arbitrary or mala fide. He further submits that even
after rejection of the bid of the petitioner and one another bidder, there are in
all total six bidders in the fray and, therefore, it cannot be argued that the
action of the respondents is either mala fide or arbitrary.
7. Shri Sunil Manohar, learned senior counsel submits that since the
petitioner-firm has not submitted the necessary documents, its technical bid
was rightly rejected. He submits that since the respondent no.5 was the lowest
bidder, the award of contract in favour of respondent no. 5 warrants no
interference.
8. For considering the rival submissions of the respective parties, it
would be necessary to refer to clause 5 and clause 6 of the Tender Document.
Insofar as clause 5 is concerned, it deals with the eligibility criteria, the
caption given is: 'tenderers who fulfill the eligibility criteria as mentioned
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below and NIT are only requested to participate for this tender'. Clause
(i) deals with technical criterion. It provides that the tenderers should have
successfully completed at least one similar single work for a minimum value
of 35% of advertised tender value of work in the last three financial years (i.e.
current year and three previous financial years). The said clause also defines
as to what should be the similar work for the purpose of eligibility criteria.
Clause (ii) deals with the financial criterion. It provides that the total contract
amount received during last three years ( i.e. current year and three previous
financial years) as per attested payment certificates/audited Balance Sheet
duly attested by the Chartered Accountant should be minimum 150% of
advertised tender value or work. Clause (iii) deals with the bidding capacity of
the contractor, which should be more than the advertised tender value/quoted
value of the work whichever is higher. The formula is given in clause (iii) as
to how the bidding capacity of the tenderer is to be worked out.
After this, Clause (5) provides for participation by the Joint
Venture/Partnership firm and it provides for technical criteria and financial
criteria and bidding capacity. Perusal of sub-clauses (a) and (b) of the title
'participation by the Joint Venture/Partnership Firm' would reveal that it
provides for the same technical as well as financial capacity of a bidder only
with an additional provision that the value of the completed work done by in
an earlier Joint Venture shall be commensurate with the concerned member's
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share in that JV firm for the purpose of satisfying his/her compliance to the
technical as well as financial eligibility. It could thus be seen that clause (i)
(ii) and (iii) are common to all the bidders and the clause 'under
participation by joint venture and partnership firm' only provides for the
formula as to how the works or the financial capacity of the partners in the
JV is to be considered.
9.
Accepting for a moment that the clause regarding bidding
capacity is not applicable to a joint venture, we find that the petitioner
cannot escape from the rigour of clause 5.1 and clause 6 of the Tender
Document. Clause 5.1 deals with the details regarding eligibility criteria. It
provides for what would be the nature of documents to be submitted with
regard to the eligibility criteria of the tenderer Clause 6(c) and clause 6 (e)
would be very vital in nature. Sub-clause (c) of clause 6 requires the list of
works completed in last three financial years giving description of work and
scope of work within the following details :
(i) name and scope of work,
(ii) date of award of work,
(iii) actual date of completion if the work is completed in all
respect;
(iv) value of work as per letter of award/original agreement;
(v) paid amount including statutory deduction till date;
(vi) whether final measurements have been recorded, if yes, value of
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completed work as per variation statement;
(vii) whether variation has been sanctioned after final measurements
are recorded;
(viii) full address of certificate issuing officer.
10. Sub-clause (e) of Clause 6 provides for list of works on hand
indicating description of work, contract value, approximate value of balance
work on the date of opening yet to be done i.e./ financial profress, date of
award ( supportive documents/ certificates from the organisations with whom
they worked/ are working should be enclosed in the form of given format
(Format for Bidding capacity is enclosed).
11. Perusal of clause (e) would clearly reveal that if the tenderers
fail to submit the above details along with their offer, their offer will be
summarily rejected. It could, thus, be seen that the said clause makes it
mandatory to submit the documents mentioned therein and provides for
consequences of non-submission of the documents. It could further be clearly
seen that it is essential for the bidder to be qualified in the financial bid, to
submit the documents mentioned in the said clause. It even provides that in
case any fresh contract is awarded to the tenderer in between the date of
submission and prior to finalization of the instant tender, the tenderer must
immediately inform in writing to the tender inviting authority for the purpose
of evaluation of their bidding capacity.
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12. It would thus be clearly seen that the aforesaid clauses were
applicable to all the tenderers. We may say that they were not only applicable
but they were very much essential because in the absence of those
documents, the employer could not have ascertained the technical and
financial viability of the bidder to participate in the process. Admittedly, the
documents as required under sub-clause (c) and (e) of Clause 6, have not
been submitted by the petitioner.
13.
Insofar as the judgment of Rashmi Metaliks and another
(supra) is concerned, in our view, the said judgment would not be applicable
to the facts of the present case. Perusal of sub-clause (e) of clause 6 would
reveal that submission of documents were essential. The parties were
clearly put to notice that on account of non-submission of the said documents
the offer of the bidder was liable to be summarily rejected. Not only this but
the tender notice also granted an opportunity to a bidder to submit the
documents of any work which is allotted to him after submitting his tender
bidder but prior to finalisation of the tender.
14. The law with regard to interference by this Court in contractual
matters is very well crystallized in the case of Tata Cellular vs. Union of
India, reported in (1994) 6 SCC 651. Paragraph 77 of the said judgment
reads thus,
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"77. The duty of the court is to confine itself to the question of legality.
Its concern should be :
1. Whether a decision-making authority exceeded its powers?
2. Committed an error of law,
3. committed a breach of the rules of natural justice,
4. reached a decision which no reasonable tribunal would have reached
or,
5. abused its powers.
Therefore, it is not for the court to determine whether a particular policy
or particular decision taken in the fulfillment of that policy is fair. It is
only concerned with the manner in which those decisions have been
taken. The extent of the duty to act fairly will vary from case to case.
Shortly put, the grounds upon which an administrative action is subject
to control by judicial review can be classified as under:
(i) Illegality : This means the decision- maker must understand correctly
the law that regulates his decision-making power and must give effect to
it.
(ii) Irrationality, namely, Wednesday unreasonableness.
(iii) Procedural impropriety.
The above are only the broad grounds but it does not rule out addition of
further grounds in course of time. As a matter of fact, in R. v. Secretary
of State for the Home Department, ex Brind28, Lord Diplock refers
specifically to one development, namely, the possible recognition of the
principle of proportionality. In all these cases the test to be adopted is
that the court should, "consider whether something has gone wrong of a
nature and degree which requires its intervention".
It could thus be seen that the scope of judicial interference in
contractual matters is very limited. Unless the Court comes to a conclusion
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that the decision maker has not understood the law correctly that regulates
his decision-making power it or when it is found that the decision of the
decision maker is vitiated by irrationality and that too on the principle of
'Wednesbury Unreasonableness' or unless it is found that there has been a
procedural impropriety in the decision-making process, it would not be
permissible for this Court to interfere in the decision-making process. It is
also equally well settled that it is not permissible for the Court to examine
the validity of the decision but this Court can examine only the correctness of
the decision making process. In the present case, we find that the respondents
had rightly taking into consideration, sub-clauses (c) and (e) of Clause 6
have found that the petitioner had failed to submit the necessary documents
and, therefore, rightly rejected its technical bid. The decision of the
respondents also cannot be said to be vitiated on the ground of mala fide
action, inasmuch as even after rejection of the bid of the petitioner and one
another bidder, there were six bidders in the fray.
15. We may refer to the last words of their Lordships of the Hon'ble
Supreme Court in such matters, in the recent judgment of Central Coalfields
Limited and another vs. SLL -SML (Joint Venture Consortium) and others
decided on 17th August, 2016.
"47. The result of this discussion is that the issue of the
acceptance or rejection of a bid or a bidder should be looked
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at not only from the point of view of the unsuccessful party
but also from the point of view of the employer. As held in
Ramana Dayaram Shetty the terms of the NIT cannot be
ignored as being redundant or superflous. They must be
given a meaning and the necessary significance. As pointed
out in Tata Cellular there must be judicial restraint in
interfering with administrative action. Ordinarily, the
soundness of the decision taken by the employer ought not
to be question but the decision making process can certainly
be subject to judicial review. The soundness of the decision
may be questioned if it is irrational or mala fide or intended
to favour someone or a decision "that no responsible
authority acting reasonably and in accordance with relevant
law could have reached" as held in Jagdish Mandal
followed in Michigan Rubber.
48. Therefore, whether a term of the NIT is essential or
not is a decision taken by the employer which should be
respected. Even if the term is essential, the employer has the
inherent authority to deviate from it provided the deviation
is made applicable to all bidders and potential bidders as
held in Ramana Dayaram Shetty. However, if the term is
held by the employer to be ancillary or subsidiary, even that
decision should be respected. The lawfulness of that
decision can be questioned on very limited grounds, as
mentioned in the various decisions discussed above, but the
soundness of the decision cannot be questioned, otherwise
this Court would be taking over the function of the tender
issuing authority, which it cannot.
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49. Again, looked at from the point of view of the
employer if the court take over the decision-making
function of the employer and make a distinction between
essential and non-essential terms contrary to the intention
of the employer and thereby re-write the arrangement, it
could lead to all sorts of problems including the one that we
are grappling with......
52. There is a wholesome principle that the Courts have
been following for a very long time and which was
articulated in Nazir Ahmad v. King Emperor namely
"where a power is given to do a certain thing in a certain
way the thing must be done in that way or not at all. Other
methods of performance are necessarily forbidden". There
is no valid reason to give up this salutary principle or not to
apply it mutatis mutandis to bid documents. This principle
deserves to be applied in contractual disputes, particularly
in commercial contracts or bids leading up to commercial
contracts, where there is stiff competition. It must follow
from the application of the principle laid down in Nazir
Ahmed that if the employer prescribes a particular format
of the bank guarantee to be furnished, then a bidder ought
to submit the bank guarantee in that particular format only
and not in any other format. However, as mentioned above,
there is no inflexibility in this regard and an employer
could deviate from the terms of the bid document but only
within the parameters mentioned above.
53. Nazir Ahmed has been followed in dozens of
decisions rendered by this Court and by other constitutional
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Courts in the country. The Central Vigilance Commission has
accepted this principle in a modified form as a guiding
principle in its circular dated 31st December,2007 wherein it
is mentioned that all organizations ought to evolve a
procedure for acceptance of bank guarantee that is
compatible with the guidelines of banks and the Reserve
Bank of India. One such requirement is that the bank
guarantee should be in a proper prescribed format and
should be verified verbatim on receipt with the original.
Adherence to this principle of verbatim verification would
not only avoid undue problems for the employer but would
also virtually eliminate subjectivity on the part of the
employer.
54. In this context, and in the present times, it is
important to note that the World Bank has ranked India
extremely low in matters relating to enforcement of
contracts and ease of doing business. Out of 189 countries
worldwide, India is ranked 178 in the matter of
enforcement of contracts and 130 in the matter of ease of
doing business. One of the possible reasons for this
extremely low ranking given to our country is the failure
of all parties concerned in strictly adhering to the terms of
documents such as the NIT and the GTC. In so far as the
present case is concerned, the NIT was floated on 5 th
August, 2015 and one year later, we are still struggling with
the issue of acceptance of a bank guarantee for a contract of
about 2000 crores - certainly not a small sum."
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16. It could thus be seen that Their Lordships have clearly held that
the issue of acceptance or rejection of a bid or a bidder should be looked at
not only from the point of view of the unsuccessful party but also from the
point of view of the employer. It has further been held that ordinarily
soundness of the decision ought not be questioned but the decision-making
process can certainly be subject to judicial review. It has been held that
soundness of the decision cannot be questioned only if it is irrational or mala
fide or intended to favour someone or a decision that no responsible authority
acting reasonably and in accordance with the relevant law could have
reached. It could further be seen that like the case before Their Lordships of
the Apex Court where one year had gone between floating of the NIT and
the decision of the matter, in the present case also, the period of almost 11
months has gone from the date of issuance of the tender notice and the
decision of the matter.
17. In that view of the matter, we find that no case is made out in
extraordinary jurisdiction under Article 226 of the Constitution. The Writ Petition is
therefore rejected. Needless to mention that the interim protection granted earlier,
stands vacated. Rule discharged.
JUDGE JUDGE
sahare
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