Globe Construction Company & Ors. vs Govt. Of Nct Of Delhi & Ors.
1999 Latest Caselaw 60 Del

JUDGMENT

Anil Dev Singh, J.

Rule.

1. This is a writ petition whereby the petitioner, four in number, pray that a direction be issued to the respondent to permit them to participate in the tenders for the work of "construction of 200 bedded Hedge war Aarogya Sansthan at Karkardooma, Delhi". The petitioners claim that they are registered class one contractors with the Public Works Department and have completed various high value prestigious contracts to the satisfaction of their principals. According to the 'model notice inviting tenders' given in the General Conditions of Contract for the Central Public Works Department the eligibility criteria for issue of tender documents for works estimated to cost above Rs. 5 crores is: "three works each costing Rs. 2 crores or two works of aggregate cost not less than Rs. 6 crores during last seven years". Each of the petitioners claim to have fulfillled the said condition. The respondents without issuing any public notice inviting tenders from builders/contractors generally, have privately invited offers from six parties, namely, M/s. Continental Construction, M/s. Larsen & Toubro, M/s. Nagarjun Constructions, M/s. Ahluwalia Contracts and M/s. Puri Construction for Construction of 200 bedded Hedge war Aarogya Sansthan at Karkardooma, Delhi. The value of the said work is Rs. 12 crores and the tenders were required to be opened on October 12, 1998. The grievance of the petitioners is that the second respondentExecutive Engineer, Public Works Department, and the third respondentChief Engineer, Public Works Department, have not issued any public notice inviting tenders. The petitioners alleged that the decision of the said respondents is arbitrary and has been arrived at under the influence and persuasion of the above mentioned six parties. The petitioner allege violation of their fundamental rights to do business guaranteed by Article 19(1)(g) of the Constitution as they are being eliminated without providing them an opportunity to win the contract.

2. On October 8, 1998 while issuing notice to the respondents, this Court interdicted the respondents from opening the tenders without the permission of the Court. The respondents 1 to 3 in response to the notice filed a counteraffidavit of Shri M.L. Goel, Executive Engineer, Public Works Department, Division No. XXII, Govt. of NCT of Delhi. In the affidavit it is stated that in order to provide better medical facilities to the citizens of Delhi, particularly in the East Delhi, where approximately 35% of the population of the Delhi is located, the Government of NCT of Delhi decided to establish a 200 bedded hospital in the name of Dr. Hedge war Arogya Sansthan at Karkardooma. Justifying their decision to invite only six parties to compete for award of the contract for construction of the said hospital, it is averred that the Government of NCT of Delhi conveyed the sanction to the expenditure for the project cost for establishing the hospital subject to the condition that the construction should be done in a limited time and on fast track technology. It is also stated that in the past prequalification applications were invited for execution of the works of urgent nature which were required to be completed within a limited time schedule, namely, construction of Delhi Schivalaya near Metcalf House, construction of Orthopaedic Block of Lok Nayak Jai Prakash Narain Hospital, construction of Delhi City Museum at Kashmere Gate, etc. In this regard a press notice was published in the issue of 'The Statesman' dated October 29, 1997. Pursuant to the invitation for prequalification applications, eleven agencies applied for prequalification for execution of the said works. The petitioners did not submit their applications for prequalification for execution of the said works. Out of eleven tenders, six tenders were found eligible as per prequalification norms. They were selected on the basis of their turnover, works executed, personnel employed by them and availability of specialised equipment with them. Since the work of construction 200 bedded hospital is of a nature similar to the works mentioned in the press notice inviting prequalification applications, the respondents decided to issue tender documents to the above said shortlisted contractors. It is also stated that according to office memorandum dated April 5, 1998 for all works costing more than Rs. 5 crores only restricted tenders are to be resorted to.

3. I have heard learned Counsel for the parties. Mr. Mukul Rohtagi, learned Senior Counsel for the petitioner, argued that the action of the respondents in excluding the petitioner from participating in the selection process for award of the work in question is violative of Articles 14 and 19(1)(g) of the Constitution. In support of his submission he relied upon a decision of the Supreme Court in Rashbihari Panda etc. Vs. State of Orissa, . He submitted that the petitioners are being deprived of their right to participate in the competitive bidding for the work in question under the undue pressure of the six shortlisted agencies. Learned Counsel contended that since the decision of the respondents is arbitrary and has been rendered under the influence of the above said six parties, the action is liable to be quashed. In this regard he relied upon a decision of the Division Bench of this Court in Arphi Electronics Pvt. Ltd. Vs. Union of India and Others, . Besides, it was canvassed that there was no urgency in the construction of the building as the foundation stone of the hospital was laid one year back and even the plans for the said hospital have not been got sanctioned by the respondents from the Municipal Authorities, and that in any case prequalification applications were not called for the work in question and therefore it cannot be held against the petitioners that they did not submit prequalification applications for the other works, namely, Construction of Delhi Sachivalaya near Metcalf House, Construction or Orthopaedic Block of Lok Nayak Jai Prakash Narain Hospital, and Construction of Delhi City Museum at Kashmere Gate.

4. On the other hand, Ms. Avnish Ahlawat, learned Counsel for the respondents, submitted that the work in question requires high tech and specialised equipment for execution of the work in question and such specialised equipment is not available with the petitioners. She further submitted that in normal course a work costing approximately Rs. 12 crores takes about three years for its completion, but in the present case the time period for completion of the work has been reduced to eighteen months and the limited time stipulated for construction requires specialised equipment. She further submitted that since the petitioners are not capable of executing the work at a speed which is required for the similar contract of which a mention has been made in the counteraffidavit, they did not make prequalification applications for earlier works. She further submitted that the action of the respondents does not suffer from any arbitrariness and does not stem from any extraneous grounds.

5. I have considered the submissions of the learned Counsel for the parties. According to para 18.4.1. of the CPWD Manual, restricted tenders can be called for, on the following grounds :

(i) The work is required to be executed with very great speed which not all contractors are in a position to generate;

(ii) where the work is of special nature requiring specialised, equipment which is not likely to be available with all contrac tors; and

(iii) where the work is of secret nature and public announcement in not desirable."

As per para 18.4.2. of the CPWD Manual, the procedure for calling restricted tenders is to be adopted only when it is absolutely necessary. It also provides that there need be no fixed restricted list of contractors but when restricted tenders are to be called the list of contractors should be as big as possible so that competitive tenders as received. Para 18.4.3. provides that restricted call of tenders is normally made after selection of contractors on the basis of an advertisement so as to make the list of contractors of technical, financial capabilities backed by sufficient experience.

6. It is true that though the prequalification applications were invited for the three works, namely, Delhi Sachivalaya, Orthopaedic Block of Lok Nayak Jai Prakash Narain Hospital and Delhi City Museum at Kashmere Gate, it is not notified that the shortlisted contractors would be the only ones who would be considered for all the restricted tenders which may be issued in future. The petitioners, therefore, did not have any opportunity to submit prequalification applications for carrying out works for which restricted tenders can be called by the respondents. The shortlisting of said six agencies could be restricted only to the above said three high tech projects mentioned in the press notice. Therefore, that shortlisting could not be of universal application for all high tech projects which are required to be executed expeditiously. The registered contractors were not put to notice that the offer given pursuant to the public notice published in The Statesman on October 19, 1997 will serve as prequalification for future tenders. Had such a notice been given the registered contractors, who might not have been interested in tendering for the said three works, may have felt inclined to apply for prequalification for future tenders. It is difficult to accept the contention that the exercise undertaken as a result of the public notice dated October 29, 1997 was for prequalification of contractors for all high tech contract works which were to be executed at great speed. It is also clear from the pleadings of the parties that though the foundation stone of the hospital in question was laid one year back, plans for the said hospital have not been got sanctioned by the respondents from the Municipal Authorities.

7. In Rashbihari Panda's case (supra) where the Govt. of Orissa instead of inviting tenders for sale of Kendu leaves offered to certain old contractors the option to purchase Kendu leaves for the year 1968 on the ground that the purchases had carried out their obligations in the previous years to the satisfaction of the Government, the Supreme Court quashed the scheme inter alia on the ground that it unreasonably excluded traders in Kendu leaves from carrying on their business. While negativing the contention of the Government that the scheme of selling Kendu leaves to selected purchasers or of accepting tenders only from the specified class of purchase was connected with the creation of monopoly, it was held that the scheme was not integrally and essentially connected with the creation of the monopoly and was not permitted by Article 19(6)(ii) and, therefore, it had to satisfy the requirement of reasonableness under first part of Article 19(6). The right to make offers being open to a limited class of persons it effectively shut out all other persons carrying on trade in Kendu leaves and also new entrants into the business. The court held that the scheme was ex facie discriminatory and imposed restrictions upon the right of persons other than the existing contractors to carry on business. In this regard the Supreme Court observed as follows: "The Government realised that the scheme of offering to enter into contracts with the old licensees and to renew their terms was open to grave objection, since it sought arbitrarily to exclude many persons interested in the trade. The Government then decided to invite offers for advance purchases of Kendu leaves but restricted the invitation to those individuals who had car ried out the contracts in the previous year without default and to the satisfaction of the Government. By the new scheme instead of the Government making an offer, the existing contractors were given the exclusive right to make offers to purchase Kendu leaves. But in so far as the right of make tenders for the pur chase of Kendu leaves was restricted to those persons who had obtained contracts in the previous year the scheme was open to the same objection. The right to make offers being open to a limited class of persons it effectively shut out all other per sons carrying on trade in Kendu leaves and also new entrants into that business. It was ex facie discriminatory, and imposed unrea sonable restrictions upon the right of persons other than exist ing contractors to carry on business. In our view, both the schemes evolved by the Government were violative of the fundamen tal right to the petitioner under Article 19(1)(g) and Article 14 because the schemes gave rise to a monopoly in the trade in Kendu leaves to certain traders, and singled out other traders for discriminatory treatment."

8. In the circumstances, while upholding the right of the respondent to shortlist contractors for restricted class of tenders for high tech projects which are required to be executed with great speed, it must be held that the petitioners have not been given opportunity to apply for being shortlisted for restricted class of tenders for high tech projects. The restricted class of tenders ought to have been made in accordance with para 18.4.3. of the C.P.W.D. Manual. This clause, as already noticed, envisages making of a list of selected contractors for restricted class of tenderers only after inviting the applications through advertisement from contractors possessed of technical and financial capabilities backed by sufficient experience and possessing specialised equipment, for example excavatorscumloaders, trucks/dumpers, bulldozers, weigh batch mixers, chasse cutting equipments, automatic batching plant conforming to IS 49251968 of required capacity for production of controlled concrete etc. The list is required to be as big as possible so that competitive tenders can be received. Since in the instant case no public notice has been issued for inviting prequalification applications generally or in respect of the work in question, the action of the respondents calling the six shortlisted contractors to submit their bids cannot be sustained as otherwise it would lead to violation of rights of the petitioners conferred on them by Articles 14 and 19(1)(g) of the Constitution. In the circumstances, the action of the respondents inviting the above mentioned six shortlisted contractors to submit the tenders for the work in question is hereby quashed.

9. It will however, be open to the respondents to issue a general advertisement inviting prequalification applications for high tech projects to be executed in future or issue an advertisement in respect of the work in question. On receipt of the applications, the respondents would be entitled to shortlist the contractors for high tech projects or the work in question, as the case may be. After the preparation of list, the respondents will be entitled to invite the shortlisted contractors to submit their tenders for the work in question and to make a final selection out of them. Accordingly, the writ petition succeeds to the extent indicated above.