Delhi High Court
R.K.Jain & Sons Hospitality Pvt. ... vs Union Of India & Anr on 29 June, 2020
$~7.
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P. (C) 3712/2020
R.K. JAIN & SONS HOSPITALITY PVT. LD THROUGH ITS
DIRECTOR ..... Petitioner
Through: Mr. Manish Jain and Mr. Sougata
Ganguly, Advocates
versus
UNION OF INDIA & ANR ..... Respondents
Through: Mr. Kirtiman Singh, CGSC for R-1.
Mr. Digvijay Rai, Advocate for R-2/AAI.
CORAM:
HON'BLE MS. JUSTICE HIMA KOHLI
HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD
ORDER
% 29.06.2020
HEARD THROUGH VIDEO CONFERENCING
CM APPL. 13299/2020 (Exemption)
Allowed, subject to all just exceptions.
W.P. (C) 3712/2020 and CM APPL. 13298/2020 (stay)
1. The instant writ petition is for issuance of a writ of mandamus for a
declaration that Conditions No. 4 and 5 under Technical Bid Evaluation
(Additional Eligibility) criteria in e-tender notice ID No. 2020-
_AAI_048738_1 issued by the respondent No.2/AAI (in short, 'AAI')
inviting applications for providing environmental support services (up-
keeping) are unjust, unreasonable, unconstitutional, and consequently, liable
to be quashed.
2. The petitioner, a private limited company, is a registered contractor
of the Govt. of Delhi. The petitioner states that it has participated in various
bids floated by the respondent No. 2/AAI for different kind of works in
various areas in Delhi and has also been awarded contracts by the
respondent No.2/AAI for different kinds of work.
3. The petitioner states that the respondent No.2/AAI has brought out a
notice inviting e-tender bearing tender ID No.2020_AAI_48378_1, calling
the bidders to provide environmental support services (up-keeping) for the
office complex at Rajiv Gandhi Bhawan SAP, New Delhi for Rs. 583.52
lakhs (Rs. 194.51 lakhs per annum) for a period of 3 years, extendable for
further 1 year subject to satisfactory performance.
4. It is the contention of the petitioner that the criteria for technical bid
evaluation prescribed in the NIT contains conditions which are not in
conformity with the CVC guidelines dated 12.07.2002 and 07.04.2004.
Conditions No.4 and 5 of the additional incorporated conditions in the e-
tender which are under challenge, read as under:-
"4. During the technical evaluation stage, each bidder shall
be assigned different marks out of a total of 100 marks, as
per the criteria specified below:-
S. Criteria Max Conditions & score Remarks/documents for
No. marks submission in technical
bid folder
01 Firm 20 a) if firm turnover Firm turnover is
turnover >50 cr(20 marks) defined as the average
b) else if firm turnover from facility
turnover more than management services
40 cr but up to 50 cr over the last 3 years.
range (15 marks) Charted Accountant
c) else if firm verified/audited
turnover more than turnover statements to
30 cr. But up to 40 be furnished as proof
cr range(10 marks) for the same
d) else if firm
turnover 20-30 cr
range (05 marks)
e) firm turnover
<20cr(02 marks)
02 Scale and 15 a) Single work of Similar works mean-
Size of similar nature > 5 ESS/Mechanised
Operations cr during awarded cleaning of airport
work duration-15 terminals, non-
marks residential corporate
b) Single work of office buildings/ Cyber
similar nature city, MNC buildings,
greater than 3.5 cr shopping malls/
but up to 5 cr during complex, Five Star
awarded work Hotels/ Corporate
duration-10 marks Hospitals/ metro rail
c) Single work of premises etc.
similar nature
greater than 2 cr but Client certificate for
up to 3.5 cr during experience should show
awarded work the nature of work
duration- 05 marks done, the value of work,
d) Single work of date of start, date of
similar nature equal completion as per
to or lesser than 2 agreement/ status of
crores during ongoing work
awarded work Level of satisfaction of
duration-02 marks client with work needs
to be mentioned in the
work experience
certificate.
Highest work value
performed over the last
7 years of the single
work will be considered
for evaluation with min.
Of 1 year of execution
of contract completed
(Ongoing works
meeting above criteria
will be considered)
03 No. of 15 a) No. of works of Definition of similar
Projects similar nature>=7 - works -same as above
15 marks but with at least 1 year
b) No. of works of duration. Work can be
similar nature completed work/
greater than 4 but ongoing work and
lesser than 7 -10 should have at least 1
marks year of work executed
c) No. of works of and should have been
similar nature performed over the last
greater than or 7 years.
equal to 2 and lesser Value of each works
than or equal to 4 - contract should not be
05 marks < 02 cr over awarded
d) No. of works of duration.
similar nature lesser Self-attested copy of
than 2 - 02 marks experience certificates
for completed
work/ongoing work
issued by the
Organisation awarding
work shall be
acceptable. References
of clients are also
requested.
04 Manpower 15 a) overall Manpower on roll will
on Roll manpower on roll> be all employees on the
2000 -15 marks books of the company
b) Overall on the date of release of
manpower on roll the tender
between 1001-2000 Duly CA audited
10 marks statement of manpower
c) Overall wages/manpower roll
manpower on roll for the previous four
between 500-1000 quarters to be
05 marks submitted as part of the
d) Overall technical bid.
manpower <500 -2 For winning
marks contractor, EPFO
Challan/bank account
statement in support of
available manpower
(duly submitted to
EPFO0 in respect of
the previous four
quarter may be verified
during award of
contract. Inability to
produce the same will
lead to blacklisting of
agency from future AAI
MESS tenders
05 Quality 10 OHSAS: 18001 (>1 QA certification should
Focus & yr) 10 marks have been obtained at
Capability least a year before the
date of the tender
release.
Certification should be
valid with undertaking
for periodic renewal
06 Possession 10 The Bidders to submit
of a) If Book Value/ the proof of the owning
Machinery Rent Value of the machineries
Machinery >5 cr (invoice etc) or Hire
10 marks agreement with the
Equipment Owners (
b) If Book On Stamp Paper of Rs.
Value/Rent Value of 100/-) with details of
Machinery between the Book value?Rent
3 cr to 5 cr- 06 Value of machineries as
marks mentioned in Annexure-
A on 31st March of the
c) If Book
previous financial year.
Value/Rent Value of
The machines in the
Machinery 1 cr or
possession of bidder
more but less than 3
should not be more
cr- 04 marks
than 05 years old.
d) If Book Charted Accountant
Value/Rent Value of verified to be furnished
Machinery < 1 cr - as proof for the same
02marks
7 Presentation 15 Presentation will be
Presentation by the evaluated by a panel
firm on the work to appointed by AAI on
be done; the aspects defined in
scoring criteria
a) Work plan
Bidders are
methodology/manpo
encouraged to study the
wer /machinery with
referred airport and
cleaning plan for
also suggest
critical areas of
improvements for
referred airport -05
upkeep. Bidder is
marks
supposed to explicitly
b) Worker retention/
detail out work plan of
incentive plan -05
chemical usage (make
marks
and monthly
c) New Technology
consumption quantity),
usage/ innovations
manpower deployment
in Housekeeping -05
(quality and
marks
qualifications) as well
as machinery plan (no.
of machines and make)
in the presentation.
Work plan details of
machinery, chemicals,
manpower as well as
innovations showcased
in presentation will be
added to work contract/
agreement and
contractor will be
bound to adhere to it at
all costs
Presentation needs to
be given in-person and
Date of Presentation
will be intimated.
5. A Bidder should secure mandatorily a minimum of 70 %
marks (i.e. 70 marks out of total 100 marks as per para 4) in
Technical Evaluation in order to be a qualified bidder for being
eligible for Technical weightage and subsequently for opening of
financial bids."
5. Under Condition No. 4 (quoted above), there are five heads, (i) firm
turnover (ii) scale and size of operations (iii) number of projects (iv)
manpower on roll (v) quality focus and capability (vi) possession of
machinery (vii) presentation, for which marks have been allotted for each of
the criteria. Condition No.5 stipulates that a bidder must mandatorily secure
a minimum of 70 marks out of 100 marks in technical evaluation in order to
be a qualified bidder for being eligible for technical weightage and
subsequently for opening of financial bids. These conditions have been
challenged by the petitioner stating that they are arbitrary and contrary to the
CVC guidelines and have been inserted only to eliminate competition and
are therefore liable to be struck down. The petitioner relies on the CVC
guidelines dated 17.12.2002. Paragraph 5 of the CVC guidelines which is
relevant for the instant case, reads as under:-
"5 i) Average Annual financial turnover during the last 3 years,
ending 31st March of the previous financial year, should be at least
30 per cent of the estimated cost.
ii) Experience of having successfully completed similar works
during last 7 years ending last day of month previous to the one in
which applications are invited should be either of the following:-
a) Three similar completed works costing not less than the amount
equal to 40 per cent of the estimated cost.
Or
b) Two similar completed works costing not less than the amount
equal to 50 per cent of the estimated cost.
Or
c) One similar completed work costing not less than the amount
equal to 80 per cent of the estimated cost."
6. It is the contention of Mr. Manish Jain, counsel for the petitioner that
the respondent No.2/AAI has been issuing similar tenders every year and the
eligibility criteria has always been in accordance with the CVC guidelines,
without there being any additional conditions. The additional conditions
being contrary to the C.V.C guidelines are therefore liable to be struck
down. He contends that the additional conditions particularly Conditions
No.4 and 5 under the technical bid evaluation (Additional Criteria) in the e-
tender notice have been inserted only to favour some. He has argued that
these conditions would result in denying fair competition to the bidders and
there is no justification for imposing them when the respondent No.2/AAI
has been following the CVC guidelines all along.
7. Per contra, Mr. Digvijay Rai, learned counsel appearing for the
respondent No.2/AAI submits that these conditions that are part of Quality
and Cost Based Selection (QCBS) system have been in vogue since the year
2013. He relies on the tender for mechanised and automated cleaning of
JNNATC by AIIMS, Delhi and tenders floated by other organisations like
the O.N.G.C wherein similar conditions have been stipulated. He has also
produced a bid document issued by the office of the Comptroller and
Auditor General of India (CAG) on 18th June, 2013, for hiring of
mechanised housekeeping services for the office of the Comptroller and
Auditor General of India, wherein similar conditions have been
incorporated. Learned counsel states that Airport Authority of India had
invited bids for mechanised environmental support services for up-keeping
of Terminal No.1 and the inter-terminal link at SPT Airport, Ahmedabad,
wherein identical conditions had been imposed. The said conditions were
challenged before the High Court of Gujarat and a Division Bench has
upheld these conditions. It is also contended that the petitioner after having
participated in the tender process by submitting his bid, cannot turn around
and challenge the tender conditions.
8. We have heard Mr. Manish Jain, learned counsel for the petitioner
and Mr. Digvijay Rai, learned counsel for the respondent No.2/AAI.
9. The scope of judicial review in matters relating to tender are now well
settled. In Jagdish Mandal vs. State of Orrisa reported as 2007 14 SCC 517,
after considering the relevant case law, the Supreme Court had observed as
under:-
"22. Judicial review of administrative action is intended to
prevent arbitrariness, irrationality, unreasonableness, bias and
mala fides. Its purpose is to check whether choice or decision is
made "lawfully" and not to check whether choice or decision is
"sound". When the power of judicial review is invoked in matters
relating to tenders or award of contracts, certain special features
should be borne in mind. A contract is a commercial
transaction. Evaluating tenders and awarding contracts are
essentially commercial functions. Principles of equity and
natural justice stay at a distance. If the decision relating to
award of contract is bona fide and is in public interest, courts
will not, in exercise of power of judicial review, interfere even if
a procedural aberration or error in assessment or prejudice to a
tenderer, is made out. The power of judicial review will not be
permitted to be invoked to protect private interest at the cost of
public interest, or to decide contractual disputes. The tenderer
or contractor with a grievance can always seek damages in a
civil court. Attempts by unsuccessful tenderers with imaginary
grievances, wounded pride and business rivalry, to make
mountains out of molehills of some technical/procedural
violation or some prejudice to self, and persuade courts to
interfere by exercising power of judicial review, should be
resisted. Such interferences, either interim or final, may hold up
public works for years, or delay relief and succour to thousands
and millions and may increase the project cost manifold.
Therefore, a court before interfering in tender or contractual
matters in exercise of power of judicial review, should pose to
itself the following questions:
(i) Whether the process adopted or decision made by the
authority is mala fide or intended to favour someone;
OR
Whether the process adopted or decision made is so
arbitrary and irrational that the court can say: "the decision is
such that no responsible authority acting reasonably and in
accordance with relevant law could have reached";
(ii) Whether public interest is affected.
If the answers are in the negative, there should be no
interference under Article 226. Cases involving blacklisting or
imposition of penal consequences on a tenderer/contractor or
distribution of State largesse (allotment of sites/shops, grant of
licences, dealerships and franchises) stand on a different footing
as they may require a higher degree of fairness in action."
(emphasis added)
10. In Michigan Rubber (India) Ltd. Vs. State of Karnataka reported as
2012 8 SCC 216, the Supreme Court has laid down the following principles
defining the parameters of judicial review in tender matters. Paras 23 and
24 of the said judgment are apposite and read as under:-
"23. From the above decisions, the following principles emerge:
(a) The basic requirement of Article 14 is fairness in action by the
State, and non-arbitrariness in essence and substance is the
heartbeat of fair play. These actions are amenable to the judicial
review only to the extent that the State must act validly for a
discernible reason and not whimsically for any ulterior purpose. If
the State acts within the bounds of reasonableness, it would be
legitimate to take into consideration the national priorities;
(b) Fixation of a value of the tender is entirely within the purview of
the executive and the courts hardly have any role to play in this
process except for striking down such action of the executive as is
proved to be arbitrary or unreasonable. If the Government acts in
conformity with certain healthy standards and norms such as
awarding of contracts by inviting tenders, in those circumstances,
the interference by courts is very limited;
(c) In the matter of formulating conditions of a tender document
and awarding a contract, greater latitude is required to be
conceded to the State authorities unless the action of the tendering
authority is found to be malicious and a misuse of its statutory
powers, interference by courts is not warranted;
(d) Certain preconditions or qualifications for tenders have to be
laid down to ensure that the contractor has the capacity and the
resources to successfully execute the work; and
(e) If the State or its instrumentalities act reasonably, fairly and in
public interest in awarding contract, here again, interference by
court is very restrictive since no person can claim a fundamental
right to carry on business with the Government.
24. Therefore, a court before interfering in tender or contractual
matters, in exercise of power of judicial review, should pose to QC
(i) Whether the process adopted or decision made by the authority
is mala fide or intended to favour someone; or whether the
process adopted or decision made is so arbitrary and irrational
that the court can say: "the decision is such that no responsible
authority acting reasonably and in accordance with relevant law
could have reached"? and
(ii) Whether the public interest is affected?
If the answers to the above questions are in the negative, then
there should be no interference under Article 226." (emphasis
added)
11. In the instant case, nothing has been brought out by the petitioner to
demonstrate that the process adopted or the decision taken by the respondent
No 2/AAI is contrary to the law laid down by the Supreme Court. There is
no material before us to arrive to a conclusion that the decision taken by the
respondent No.2/AAI is arbitrary or irrational or that public interest is
adversely affected that would compel us to interfere in the tender conditions.
We may note that the respondent No.2/AAI has not diluted any of the
conditions or the guidelines issued by the CVC. It has only made them more
stringent. It cannot be said that the authority issuing the tender is not
empowered to impose more stringent conditions to ensure better quality of
performance of the contract and also to ensure that the contractor has the
financial means to execute the contract and that he is not a fly by night
operator who will abandon the work midstream.
12. Our attention has been drawn by learned counsel for the respondent
No.2/AAI to the judgment dated 12.03.2018, passed by Division Bench of
the Gujarat High Court in Samvit Buildcare Private Ltd. Vs. Civil Aviation.
In the said judgment, the very same clauses were present in the e-tender
issued by the AAI for the work of mechanised environmental support
services (MESS) Up-keeping of Terminal-1 and inter-terminal link at SVIP
Airport, Ahmadabad. These conditions were challenged on the very same
grounds in WP No. Special Civil Application No. 1098/2018 and the
Division Bench after considering various judgments had upheld the tender
conditions by observing as under:-
"12.2. In the present case, a conscious decision has been taken
to adopt the QCBS system in the larger public interest. The
same cannot be said to be either arbitrary, mala fide or illegal,
which calls for the interference of this Court in exercise of
powers under Article 226 of the Constitution of India. Even
otherwise, there is a justification by the respondent to adopt
QCBS. It is the case on behalf of the respondent authority that
earlier when work was awarded in 2012, during that period
footfall was very less but there is tremendous growth in
passenger's movement reaching to approximately 7.5 million per
annum (projected for the year 2017 18 is 8.6 million per annum)
and due to the growing traffic, Corporate Head Quarters of AAI
has classified Ahmedabad Airport under QCBS category "A". It
is also the case on behalf of the respondent authority that during
the recent past authority has received numerous complaints
pertaining to upkeeping of Terminals from the passengers and
therefore, a conscious decision has been taken to adopt QCBS
which as observed herein above cannot be said to be arbitrary.
As observed herein above, as such it is for the employer to select
the method and manner and even eligibility criteria and the
Courts would not be justified in interfering with the same unless
the same is found to be so perverse that no prudent person who
take such decision and or adopt such method.
13.0. Now, so far as submission on behalf of the petitioners that
some of technical bid evaluation criteria and other eligibility
criteria on the basis of which technical bid and financial bids to
be evaluated are just contrary to the policy of the State
Government and the CVC guideline and that by such conditions
only few bidders would be in the competition are concerned, at
the outset, it is required to be noted that what is challenged by
the petitioner is additional eligibility criteria and not sole
eligibility criteria. What is challenged by the petitioner is
additional eligibility criteria and not principal eligibility criteria.
Therefore, as such CVC guidelines shall not be applicable. Even
otherwise, the additional eligibility criteria under challenge
cannot be said to be so arbitrary and/or no nexus with the object.
The additional eligibility criteria cannot be said to be so
arbitrary and/or perverse that no prudent persons would impose
such condition." (emphasis added)
13. We see no reason to differ with the view expressed by the Gujarat
High Court.
14. In the present case, the petitioner has failed to demonstrate as to how
Conditions No.4 and 5 have been introduced only to eliminate it or to favour
a few individuals. There is no justification for this court to exercise its
jurisdiction under Article 226 of the Constitution of India only to dilute the
additional stringent conditions imposed by the respondent No.2/AAI in
order to make it compliant with the CVC guidelines.
15. The petitioner has participated in the tender process with its eyes wide
open. After participating in the tender process, it is not open to the petitioner
to turn around and challenge the tender conditions. In this context, a
Division Bench of this Court in Siemens Aktiengesellschaft and Siemens
Ltd. Vs. DRMC Ltd., reported as 2013 SCC OnLine Delhi 1982, had
observed thus:-
"68. Subsequent to the issue of Addendum No. 7 on 13.07.2012 the
Petitioner had raised several queries on GEC related issues which
were responded to by the Respondent No. 1, however the Petitioner
never communicated or expressed any doubts or apprehensions.
The Petitioner had thus accepted and adhered to the tender
conditions while submitting its bids. Having accepted the tender
conditions and the Guaranteed Energy Consumption based
evaluation by submitting its bid, the Petitioner is now estopped
from challenging the tender conditions or the manner of financial
bids evaluation."
16. The captioned judgment of the Delhi High Court was upheld by the
Supreme Court in Siemens Aktiengesellschaft and Siemens Ltd. Vs. DRMC
Ltd. reported as (2014) 11 SCC 288. In Meerut Development Authority vs.
Assn. of Management Studies reported as (2009) 6 SCC 171, the Supreme
Court held as below:-
"27. The bidders participating in the tender process have no
other right except the right to equality and fair treatment in the
matter of evaluation of competitive bids offered by interested
persons in response to notice inviting tenders in a transparent
manner and free from hidden agenda. One cannot challenge the
terms and conditions of the tender except on the abovestated
ground, the reason being the terms of the invitation to tender are
in the realm of the contract. No bidder is entitled as a matter of
right to insist the authority inviting tenders to enter into further
negotiations unless the terms and conditions of notice so
provided for such negotiations."
17. From a perusal of the above, the principle which emerges is that
after having participated in the tender process, a bidder cannot turn
around and challenge the tender conditions. The bidder has no other
right except the right to equality and fair treatment in the matter of
evaluation of competitive bids offered by interested parties in response
to the NIT in a transparent manner and free from any hidden agenda.
18. In view of the above discussion, we are unable to persuade ourselves
to interfere in the tender conditions, more so after the petitioner has
participated in the process. Even on merits, we do not find that the
conditions imposed in the tender are arbitrary, discriminatory, irrational
or manipulated in order to eliminate fair competition, as has been alleged
in the petition.
19. Consequently, the petition is dismissed as meritless alongwith the
pending application.
HIMA KOHLI, J
SUBRAMONIUM PRASAD, J
JUNE 29, 2020
Hsk/rkb
