M/S Arde Electricals Engineers ... vs The State Of Maharashtra And ...
2016 Latest Caselaw 7482 Bom

                 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                            BENCH AT AURANGABAD


                            WRIT PETITION NO. 6725 OF 2016




                                                                          
     
    M/s Arde Electricals, Engineers




                                                 
    & Contractors,
    Registered Govt. Contractor
    through its Proprietor
    Sachin s/o Zumber Arde,




                                                
    Age : 38 years, Occu. Business,
    R/o Ujwal Complex,
    Opp. Old S.T. Stand, Ahmednagar,
    District Ahmednagar                                              PETITIONER




                                         
                    VERSUS

    1.
                                  
           The State of Maharashtra,
           through Secretary,
           Water Conservation Department,
                                 
           Mantralaya, Mumbai - 32

    2.     The Superintending Engineer,
           Small Scale Irrigation
      

           (Water Conservation),
           Circle Nashik
   



    3.     The Executive Engineer,
           Small Scale Irrigation
           (Water Conservation),





           Division Ahmednagar

    4.     M/s Jain Irrigation Systems Ltd.,
           Jain Fields, National Highway No. 6,
           Bambhori Tq. Dharangaon,





           District Jalgaon - 425 001                                RESPONDENTS
     

                              ----
    Mr. Girish K. Thigale (Naik), Advocate for
    the Petitioner
    Mr. S.B. Yawalkar, A.G.P. for respondent Nos. 1 to 3 
                              ----




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                                            CORAM :   R.M. BORDE AND
                                                      SANGITRAO S. PATIL, JJ.

                                            DATE  :  20th DECEMBER, 2016




                                                                                 
                                                         
    JUDGMENT (PER : SANGITRAO S. PATIL, J.) :

Rule, returnable forthwith. With the consent

of the learned counsel for the petitioner and the

learned A.G.P., heard finally.

2.

Respondent No. 3 - the Executive Engineer,

Small Scale Irrigation (Water Conservation), Division

Ahmednagar issued e-Tender Notice No. 6 of 2016-17,

inviting sealed online tenders from registered

contractors of appropriate class with Public Works

Department, Government of Maharashtra for the

strengthening work at Shri Sant Yadavbaba Water Shed

Area Recharge Scheme (Stage-II) Ralegansiddhi, Taluka

Parner, District Ahmednagar. As per condition No. 3.1

(G) of the tender document, for determining the minimum

bid capacity in case of joint venture partnership or a

partnership, yearly turnover to bid capacity and

quantities of main items executed of prime and

sub-contractors have to be added together. However, no

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addition would be permitted for working out the minimum

cost of similar type of work executed. The term

"Experience of similar type of work" has been clarified

in condition No. 3.3.1 as under :-

"3.3.1 Experience of similar type of work

The contractor should have successfully completed at least one similar type of work

i.e. construction of Pump house, Rising Main, Delivery Chamber etc in a single work having

similar nature and complexity also having cost not less than Rs. 235.00 lacs at price level of

2015-16, and having executed main item of works 3.3.2 during last five years. (The works should have been commissioned and completed during

last five years i.e. 2014-15, 2013-14, 2012-13,

2011-12, 2010-11). A weightage of 10% compound annually shall be given for equating the cost of work of the year, previous to current year

2014-15."

3. According to the learned counsel for the

petitioner, the above referred terms provide that the

capacity of joint venture partners collectively has to

be considered while evaluating the tender submitted by

them. He submits that the petitioner is a joint venture

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comprising of M/s Arde Electricals and Sanket

Enterprises. They have executed a Joint Venture

Agreement on 15th June, 2016. As per condition 3.3.1 of

the tender document, the value of the work of similar

nature completed by both the members of the petitioner -

joint venture was required to be considered which was to

the tune of Rs. 4,68,62,588/-, i.e. double of the

prescribed minimum that has been contained in condition

3.3.1 i.e. Rs. 2,35,00,000/-. However, while evaluating

the post-qualification of the petitioner, respondent No.

3 showed the work experience value of M/s Arde

Electricals only for Rs. 59,16,000/- and did not

consider the work experience value of the other member

of the joint venture namely Sanket Enterprises. The

learned counsel for the petitioner submits that

respondent No.3 misread the above referred conditions

of the tender document and by adopting unfair, illegal,

arbitrary and malafide approach, disqualified the

petitioner from participating the tender process. He

submits that this was done with the sole object to

facilitate respondent No. 4 to get qualified for

participating the tender process and for allotment of

the tender work to respondent No. 4 only. He,

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therefore, submits that the impugned decision dated 22nd

June, 2016 disqualifying the petitioner and selecting

respondent No. 4 only for participating the tender

process may be quashed and set aside and the petitioner

may be permitted to participate the tender process.

4. Reply came to be filed on behalf of respondent

Nos. 1 and 2 to oppose the petition. Based on the

contentions raised in the said reply, the learned A.G.P.

submits that in order to ensure high quality of the

proposed work and the requisite capability to undertake

the job of construction of Shri Yadav Baba Water Shed

Area Recharge Scheme, estimated cost whereof is Rs.

2,34,94,566/-, eligibility criteria have been

incorporated in the tender document. Accordingly,

condition Nos. 3.1 (G) and 3.3.1, referred to above,

were required to be fulfilled by joint venture

partnership in order to exhibit its capacity and

capability to execute the tender work within the

scheduled time maintaining the high quality. As per the

Joint Venture Agreement of the petitioner, the share and

participation of M/s Arde Electricals and Sanket

Enterprises is shown as 90% and 10%, respectively.

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Therefore, the net cost of the works executed by Sanket

Enterprises was not liable to be considered for holding

the joint venture of the petitioner eligible for

participating the tender process. The net cost of the

similar type of works completed by M/s Arde Electricals,

having share and participation in the joint venture to

the extent of 90%, alone was liable to be considered,

which was to the tune of Rs. 59,16,000/-. The net cost

of the works performed by Sanket Enterprises and that of

M/s Arde Electricals was not liable to be considered

together in view of condition No. 3.1 (G) of the tender

document. According to the learned A.G.P., the

petitioner was not eligible to participate the tender

process and consequently, respondent No. 3 rightly

disqualified the petitioner.

5. The learned A.G.P. submits that the petitioner

has no legal right to claim participation in the tender

process since it does not fulfill the terms and

conditions of the tender document, more particularly the

cost condition which was expected to be more than Rs.

2,35,00,000/- in a single work of similar nature and

complexity at price level of 2015-16 and having executed

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main item of works described in condition No. 3.3.2

during last five years. The allegation that the

decision to disqualify the petitioner has been taken by

adopting arbitrary, unreasonable, illegal and malafide

attitude with a view to facilitate respondent No. 4 to

participate the tender process and to get the tender

work, is wrong. The learned A.G.P., therefore, submits

that the petition may be dismissed.

6.

In order to appreciate the controversy between

the parties, it would be worthwhile here to reproduce

paragraph No. 24 of the judgment in New Horizons Limited

and another Vs. Union of India and others (1995) 1

S.C.C. 478, cited by the learned counsel for the

petitioner, wherein the expression "joint venture" has

been clarified as under :-

"The expression "joint venture" is more

frequently used in the United States. It connotes a legal entity in the nature of a partnership engaged in the joint undertaking of a particular transaction for mutual profit or an association of persons or companies jointly undertaking some commercial enterprise wherein all contribute assets and share risks. It requires a community of interest in the performance of the subject-matter, a right to direct and govern the policy in connection

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therewith, and duty, which maybe altered by agreement, to share both in profit and losses. (Black's Law Dictionary, 6th Edn., p. 839). According to Words and Phrases, Permanent

Edn., a joint venture is an association of two or more persons to carry out a single business

enterprise for profit (p.117, Vol. 23). A joint venture can take the form of a corporation wherein two or more persons or companies may join together. A joint venture corporation has been defined as a corporation

which has joined with other individuals or corporations within the corporate framework in some specific undertaking commonly found in oil, chemicals, electronic, automic fields.

(Black's Law Dictionary, 6th Edn., p. 342) Joint venture companies are now being

increasingly formed in relation to projects requiring inflow of foreign capital or technical expertise in the fast developing

countries in East Asia, viz., Japan, South Korea, Taiwan, China, etc. [See Jacques Buhart : Joint Ventures in East Asia - Legal Issues (1991).] There has been similar growth of

joint ventures in our country wherein foreign companies join with Indian counterparts and

contribute towards capital and technical know- how for the success of the venture."

7. As seen from the Joint Venture Agreement

executed by the members of the petitioner i.e. M/s Arde

Electricals and Sanket Enterprises, it was specifically

executed for the tender work namely, "Construction of

Shri Sant Yadavbaba Water Shed Area Recharge Scheme

(Stage-II) Ralegansiddhi, Taluka Parner, District

Ahmednagar". There are number of terms and conditions

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incorporated in the said Agreement, including the share

and participation of the members of the petitioner in

respect of all the rights, interests, liabilities,

obligations, work experience and risks (and all net

profit and losses) arising out of the contract, to be

shared or borne by them in proportion of 90% and 10%

respectively. The petitioner has produced a

certificate, issued by the Executive Engineer, Rural

Water Supply Division, Zilla Parishad, Ahmednagar,

showing that Sanket Enterprises has completed the

works, having total net cost of Rs. 4,68,62,588/-

satisfactorily and is possessing professional capacity

and good experience in execution of the works. Since

M/s Arde Electricals and Sanket Enterprises entered into

the Joint Venture Agreement, the petitioner would assume

the character of legal entity undertaking to execute the

tender work for mutual profit, wherein both of them

would contribute their assets and share risks. They

would have a community of interest for the purpose of

the tender work. If that be so, in view of condition

No. 3.1 (G), the net cost of the works performed by

Sanket Enterprises certainly was liable to be considered

together with the net cost of the works performed by M/s

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Arde Electricals for the purpose of evaluating the bid

capacity.

8. The contention of the learned A.G.P. that the

share and participation of Sanket Enterprises in the

joint venture is 10% only and therefore, the net cost of

the works performed by Sanket Enterprises was not liable

to be considered while evaluating the bid capacity of

the petitioner, cannot at all be accepted. None of the

terms/conditions of the tender document prescribe any

particular percentage of sharing between or amongst the

members of the joint venture. If that be so, the

petitioner, which is a product of the Joint Venture

Agreement, would be a separate legal entity and the

financial capacity of both of its members would be

required to be considered together for evaluating the

bid capacity of the petitioner.

9. The learned A.G.P. cited the judgment in the

case of Central Coalfields Limited and another Vs. SLL-

SML (Joint Venture Consortium) and others AIR 2016 S.C.

3814, wherein submission of bank guarantee in the format

prescribed in the bid document was an essential

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requirement. The respondent - Joint Venture Consortium

(JVC) did not submit the bank guarantee as required.

Therefore, the bid of JVC was rejected. It was observed

that the process by which the decision was taken by the

petitioner - Central Coalfields Ltd (CCL) that the bank

guarantee furnished by JVC ought to be rejected, did not

indicate that it was flawed in any manner whatsoever.

It was further observed that the decision taken by CCL

to reject the bank guarantee furnished by JVC, was not

arbitrary or unreasonable or perverse. Considering the

distinguishing facts of the above-cited case, we do not

find that it would be of any help to respondent nos. 1

and 2 to substantiate the decision to disqualify the

petitioner. In the present case, there is no breach on

the part of the petitioner of condition No. 3.1 (G) of

the tender document. On the contrary, the said

condition itself provided that in case of Joint Venture

partnership, yearly turnover to bid capacity and

quantities of main items executed of prime and

sub-contractors shall be added together, for determining

the minimum criteria of bid capacity. Respondent No.3,

therefore, ought to have considered the cost of works

performed by both the members of the petitioner, as

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furnished by them, together for determining the minimum

criteria of bid capacity of the petitioner. If the

cost of works completed by both the members of the

petitioner is considered together, it would certainly be

above Rs. 2,35,00,000/- as required by condition No.

3.3.1 of the tender document. In the circumstances, the

decision to disqualify the petitioner merely considering

the cost of works completed by one of the members of the

petitioner, i.e. M/s Arde Electricals, ignoring the cost

of works of the another member of the petitioner, i.e.

Sanket Enterprises, cannot be said to be fair,

reasonable and legal.

10. Considering the above facts and circumstances

of the case, we hold that the decision rendered by

respondent No. 3 disqualifying the petitioner from the

tender process being not fair, reasonable and legal, is

liable to be quashed and set aside and accordingly,

quashed and set aside. We direct respondent No. 3 to

allow the petitioner to participate the tender process

and proceed with the said process afresh from the stage

where the petitioner was declared as disqualified.

Respondent No. 3 would be at liberty to evaluate the

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financial bids of the qualified bidders and take

appropriate decision for allotting the tender work on

its own merits.

12. Rule is made absolute in the above terms. The

Writ Petition is accordingly allowed with no order as to

costs.

[SANGITRAO S. PATIL] JUDGE ig [R.M. BORDE] JUDGE

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