A.V. Science And Technologies ... vs C.P.W.D.
2008 Latest Caselaw 474 Del

JUDGMENT

T.S. Thakur, J.

1. In this petition for a writ of certiorari, the petitioner calls in question a tender notice issued by the respondents-Central Public Works Department inviting tenders for what is described as creation of computerized projector facility at Parliament House Annexe, New Delhi. The challenge proceeds primarily on the ground that the respondents have restricted the tenders to only such of the contractors as have satisfactorily completed works of similar nature of the stipulated magnitude for the Central Government, the State Government, Central Government PSUs and Central Government autonomous bodies. Experience of contractors in executing similar works with other non-governmental organizations or in the private sector has, according to the petitioner, been arbitrarily excluded thereby bringing about a classification which has no rational differentia nor any nexus with the object of inviting competitive bids. The petitioner claims that despite it having considerable experience in the private sector, its tender submitted pursuant to the impugned tender notice has been rejected merely on the ground that it did not have the requisite experience involving the stipulated magnitude of the work executed for the Government or non-government organizations. This, according to the petitioner, offends the equality clause contained in Article 14 of the Constitution and is, therefore, liable to be struck down.

2. The respondents have appeared in response to a show cause notice issued by this Court and filed a counter affidavit in which it is inter alia pointed out that the advertised work is a work of a specialized kind covered by Section 17.3 of the CPWD Works Manual, 2003. The counter affidavit further points out that in the case of specialized works like the one advertised by the impugned notice, the criterion for pre-qualification of the contractors has to be decided by the officer approving the Notice Inviting Tenders (NIT). The impugned NIT has, accordingly, been approved by the authority competent to do so inter alia stipulating that the contractors must have satisfactorily completed works of similar nature with the Central Government, State Government or Central Government PSUs or Central Government autonomous bodies. There is, according to the respondents, nothing illegal or arbitrary about the said stipulation to call for interference from this Court. It is also pointed out that in the absence of any allegation of malafides against the authority approving the NIT and stipulating the conditions of eligibility of the contractors, there is no room for interference with the tender notice or the conditions of eligibility prescribed in the same.

3. We have heard learned Counsel for the parties at some length and perused the record. Appearing for the petitioner-company, Mr. Khanna strenuously argued that the stipulation of work experience for the contractors as a condition of eligibility made only such works relevant as were allotted or undertaken for the Central Government, the State Governments, Central Government PSUs or Central Government autonomous bodies. This was, according to Mr. Khanna, an arbitrary stipulation and tantamounted to creating a class of contractors for favoring them with allotment of works by an arbitrary and discriminatory exclusion of similar other contractors who have worked not only for the Central Government and State Government organizations but also in the private sector. Relying upon the provisions contained in the CPWD Works Manual, 2003. Mr. Khanna contended that there was a striking divergence between the criterion prescribed for pre-qualification of the tenders stipulated in the works manual on the one hand and the impugned tender notice on the other. The requirement of similar works in the Works Manual was limited to only one out of three such works being with the Central Government or Central Government autonomous bodies. The impugned tender notice, however, prescribed that all the works should have been undertaken for the Governments concerned or the Government PSUs or Government autonomous bodies. Mr. Khanna also placed reliance upon the decision of a Division Bench of this Court in Subhash Chander Gupta and Ors. v. Municipal Corporation of Delhi and Ors. in support of his submission that the stipulation of a condition of eligibility that would bring about an artificial classification with no nexus with the object sought to be achieved by such classification was arbitrary and offensive to Article 14 of the Constitution.

4. On behalf of the respondents it was, on the other hand, argued by Mr. Aggarwal that the work in question being work of a specialized character, the general provisions contained in CPWD Works Manual had no application to the same. He referred to para 17.3 of the said Manual to urge that the work in question was a specialized work for which the authority approving the NIT could stipulate suitable terms in exercise of which power the authority approving the tender notice had stipulated the requirement of similar works experience with Central Government, State Government or Central Government PSUs and Central Government autonomous bodies as a condition of eligibility. There was, according to Mr. Aggarwal, no question of finding fault with the stipulation of the said condition especially when the condition was intended to ensure that the contractor eventually chosen to undertake the work was a reliable contractor who had not only the work experience stipulated for the same but was also certified by the concerned Government or a semi-Government organization to have completed the works extended for them satisfactorily.

5. The tender notice in question does not involve any civil works. The "Computerized projector facility" in the auditorium and the Committee rooms at the Parliament House Annexe constitutes specialized work within the meaning of para 17.3 of the CPWD Works Manual. This is evident from a plain reading of para 17.3 read with Item VII which deals with common electrical works and includes projector and other special equipment for theater. Para 17.3 and Item VII (10) under the same may at this stage be extracted:

17.3 In order to obeviate difficulty to get competitive rates in respect of all specialized jobs it is necessary that the tenders for specialised works should be issued to the firms concerned who deal in the items of works for which tenders are being invited. For this purpose, the following items should be taken as special items of work.

For specialised electrical jobs of Diesel Generating Sets, Lifts/elevator works, Sub-stations works and Fire alarm system works, Fire fighting works (gas based), Fire fighting works (water based) contractors are enlisted separately in accordance with rules given in Appendix 20.

List of specialised Items/Jobs/Works

(i) to (vi) xxxxx

(vii) Common electrical works:

1 to 9 xxxxx

10. Projector and other special equipment for theatre.

6. In fairness to Mr. Khanna, counsel appearing for the petitioner, we must mention that he did not dispute that in the light of para 17.3 (VII)(10) (supra), the work advertised by the impugned tender notice would constitute a specialized work. This would necessarily imply that the criteria for pre-qulaification of contractors stipulated in para 16.5.2 of Appendix 18, a copy whereof has been placed on record by Mr. Khanna, would have no application. The authority approving NIT would then be competent to stipulate such conditions of eligibility as may be considered proper. This is evident from para 3 of Appendix 18 which reads as under:

Appendix - 18

(Para 16.5.2 & 16.5.7)

CRITERIA FOR PRE-QUALIFICATIN OF CONTRACtorS AND EVALUATION OF PERFORMANCE

1. The criteria for pre-qualification to be inserted in Section-11 (information and instructions for Applicants) and Section-III (Pre-qualification Information) of the Pre-qualification document and in the Press Notice shall be decided on the following lines:

(A) Para 2 (a) of the Invitation to pre-qualify, 7.1 of Section-II and Form 'B' of Section-III

The 'month' shall be the month previous to the one in which the applications are invited.

(B) Para 2(a) of the Invitation to pre-qualify and Column 7.1 of Section-II.

Experience of having successfully completed works during the last 7 years ending last day of the month previous to the one in which applications are invited:

Three similar completed works (at least one of them should be in Central Government/Central Autonomous Bodies/Central Public Sector Undertakings) costing not less than the amount equal to 40% of estimated cost put to tender.

Or

Two similar completed works, costing not less than the amount equal to 50% of the estimated cost put to tender

Or

One similar completed work of aggregate cost not less than the amount equal to 80% of the estimated cost

"similar nature of work" as proposed by the Chief Engineer shall be got approved from the ADG.

(C) Para 2(b) of the Invitation to pre-qualify and 7.2 of Section-II

Turnover: Average annual financial turn over on construction works should be at least 30% of contract value, during last 3 years ending 31st March of the previous financial year.

(D) Para 2(c) of the Invitation to pre-qualify and 7.3 of Section-II

Profit/loss: The date to be filled in this column should be 31st March of the previous financial year.

(E) Para 2(d) of the Invitation to pre-qualify and 7.5 of Section-II

Solvency certificate: The contractor should have a solvency of the amount equal to 40% of the estimated cost of the work.

(F) Para 7.8 of Section-II

Performance reports: The performance report of the contractor, to be obtained by him from clinet/EE in sealed cover and enclosed with the pre-qualification document, should be on Form 'D'. Before taking a final decision in the matter, the authority competent for pre-qualification or the evaluation committee constituted by him or any other representative of him, shall inspect the works of those applicants who otherwise pre-qualify or confidentially obtain reports from their client/EE.

(g) Para 8.1.2 of Section-II

Scoring Method for Evaluation: The scoring for evaluation mentioned in this column shall be done as given in Annexure-I. This shall not to be made a part of the Pre-qualification document.

2. For all works Pre-qualification criteria shall be based on above guidelines. However, for recorded reasons ADG may insert experience of particular categories of items like Stone Work, Metal False Ceiling, Basements, Form Works etc. as an additional Pre-qualification condition.

3. The above Pre-qualification criteria shall be applicable for normal Civil & Electrical Works in CPWD. For specialised works contained in Section 17.3 of CPWD Works Manual, the Pre-qualification criteria shall be as under.

(a) Details and expertise should be appended with the applications for issue of tender papers by intending tenderers.

(b) Pre-qualification criteria should be indicated in the press notice and NIT for specialised items of works. The criteria may be decided by the officer approving the NIT.

(c) The Pre-qualification criteria could be either in monetary terms and/or in terms of quantum of work, as may be decided by the authority approving the NIT.

4. For recorded reasons ADG shall have powers to Pre-qualify the Contractors for any particular work irrespective of its monetary value.

5. The Department reserves the right to restrict the list of approved contractors if too many applications are received satisfying the basic PQ criteria. Approval of DG(W) will be necessary for further restricting the list of pre-qualified contractors, based on request from clients.

7. It is evident from the above that for specialized works, the general conditions and criteria for pre-qualification of contractor stipulated in Appendix 18 would have no application in such cases. The authority approving NIT would be competent to decide as to what the criteria for pre-qualification should be. Thus far Mr. Khanna had no difficulty. What he argued was that while exercising the power vested in the competent authority in terms of the above, it could not do something that would have the effect of bringing about two classes of contractors; one qualified on the basis of their experience with the Government and Government undertakings and the other who did not have any such experience or the experience related to works of a value less than the stipulated amount. There can be no quarrel with the proposition propounded by Mr. Khanna that the power vested in the competent authority in terms of para 3 of Appendix 18 must be exercised in a manner that is consistent with the guarantee contained in Article 14 of the Constitution. The power must be so exercised as not to bring about a classification that can be said to be hostile or discriminatory. It should not have the effect of excluding arbitrarily a contractor otherwise qualified on a ground which is illusory or wholly irrelevant to the object sought to be achieved. The question, however, is whether the exercise of that power in the instant case can be said to be vitiated by any such infirmity to call for our interference. Our answer is in the negative. We say so for two precise reasons. Firstly, because the power vested in the authority has been exercised bonafidely. There are no allegations of malafides against the officer who has stipulated the conditions of eligibility in the impugned tender notice. We specifically asked Mr. Khanna whether he had made any allegation or laid any foundation for a challenge on the ground of malafides? He candidly admitted that there was no such allegation in the writ petition nor was it his case that the stipulation of the conditions of eligibility in the impugned tender notice was mala fide.

8. Secondly, because the conditions requiring experience of the kind stipulated in the tender notice in works executed for the Central Government, State Government or public sector undertakings or the Central Government autonomous institutions may restrict the competition to a much lesser number of contractors than what would be expected in the ordinary course, but keeping in view the specialized nature of the work and the sensitivities that are involved for a perfect execution of the same, the authority approving the NIT would, in our opinion, legitimately insist that the contractors must have satisfactorily completed the works of the magnitude stipulated by him for the Central Government, State Government or the PSUs or the autonomous bodies. It is not in dispute that the petitioner has been working for Government and semi-Government organizations also like many others who responded to the tender notice in question. His problem, however, is that he does not have the requisite turnover in connection with those works as stipulated in the tender notice. The petitioner, therefore, falls short of the benchmark stipulated not because it is excluded from consideration on a ground which is irrelevant but because of its failure to satisfy the requirement of works experience stipulated to meet that benchmark.

9. Mr. Khanna's contention that it is always desirable to have a larger number of contractors to ensure better competition, better expertise for the execution of the work and better & more competitive rates cannot be disputed. But better competition does not mean that every one desirous of undertaking the execution of the work is allowed to compete. It is fairly well settled that pre-qualification is legally permissible and is undertaken in almost every tendering process to ensure that the very best and the most eligible alone remain in the fray. Inasmuch as that process was undertaken in the instant case, there was no illegality committed by the respondents. The position may have been different if the terms and conditions stipulated were so prescribed as to constitute a tailor-made eligibility to favor any one contractor while excluding the rest. We are, however, told that in response to the impugned tender notice as many as eight other contractors had responded and submitted their financial bids out of those eight tenders, four were found to be technically qualified and eligible. That, in our opinion, constitutes good competition. It is also pointed out by Mr. Aggarwal that two out of the four contractors, who have qualified, deal in the equipment of Barcos while the other two deal in the product of Christies. The situation in any case is not a single tender situation so as to put the Court or the tendering authority at its guard for lack of competition.

10. In the result we see no reason to interfere in this writ petition which fails and is hereby dismissed but in the circumstances without any order as to costs.