Gujarat High Court
Akash Infra Projects Limited vs Ahmedabad Municipal Corporation on 11 January, 2024
Author: N.V.Anjaria
Bench: N.V.Anjaria
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 20780 of 2023
With
CIVIL APPLICATION (FOR VACATING INTERIM RELIEF) NO. 1 of
2023
In R/SPECIAL CIVIL APPLICATION NO. 20780 of 2023
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE N.V.ANJARIA
and
HONOURABLE MR. JUSTICE CHEEKATI MANAVENDRANATH ROY
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1 Whether Reporters of Local Papers may be Yes
allowed to see the judgment ?
2 To be referred to the Reporter or not ? Yes
3 Whether their Lordships wish to see the No
fair copy of the judgment ?
4 Whether this case involves a substantial No
question of law as to the interpretation
of the Constitution of India or any order
made thereunder ?
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AKASH INFRA PROJECTS LIMITED
Versus
AHMEDABAD MUNICIPAL CORPORATION
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Appearance:
MR PARAS K SUKHWANI, ADVOCATE (8284) for the
Petitioner(s) No. 1
MR G H VIRK, ADVOCATE with MR SIMRANJIT H. VIRK, ADVOCATE
WITH MR PRASHANTH S. UNDURTI, AND MS NENCY SHETH,
ADVOCATE (7392) for the Respondent(s) No. 1,2
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CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIA
and
HONOURABLE MR. JUSTICE CHEEKATI MANAVENDRANATH
ROY
Date : 11/01/2024
Page 1 of 23
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ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE N.V.ANJARIA)
Heard learned advocate Mr. Paras Sukhwani for
the petitioner and learned advocate Mr. G.H. Virk
for the respondent Corporation, at length.
2. By invoking the jurisdiction of this Court
under Article 226 of the Constitution, the
petitioner prayed to set aside the action on the
part of the respondent Ahmedabad Municipal
Corporation in disqualifying the petitioner in
respect of Tender Notice No.21 of 2023-24 (Tender
ID 598706). It is further prayed to direct the
respondents to qualify the petitioner in the said
tender process. Yet another direction is prayed for
requiring the respondents to open the price bid of
the petitioner.
3. The tender in respect of Supply, Installation,
Testing and Commissioning of a Hot Mix Plant and
for Onward Production of Bituminus Mix and related
other Machinery, Accessories, etc. with
infrastructure development for plant site (AMC
Plot) at Piplaj, Ahmedabad came to be floated by
the Corporation on 14.06.2023 on the portal. The
production in the plant is meant to be utilised for
resurfacing of the roads of the city. In the tender
process, bids were submitted by the interested
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bidders on 06.07.2023, which date was extended upto
13.07.2023.
3.1 The petitioner was one of the bidder. The
technical bids of the bidders were opened on
13.07.2023. At the stage when the technical bids
were opened, the petitioner contractor herein was
disqualified by the respondents. The
disqualification was conveyed to the petitioner on
09.10.2023, which was on the same day when the
evaluation was completed. Thereafter the price
bids of the other bidders, excepting the
petitioners were opened.
3.2 At this stage, it is to be noted with
relevance that the present petition and the prayers
made therein is a second round of litigation by the
petitioner. Previously, Special Civil Application
No. 18244 of 2023 was filed, in which, the very
action of disqualification in relation to the same
tender process was brought under challenge. The
same action of respondent of disqualification of
the petitioner at the stage of opening of the
technical bid was sought to be impugned before this
Court.
3.2.1 The proceedings of the said writ petition
ended up with order dated 19.10.2023, reproduced
herein,
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"1. The petitioner is a tenderer who has been
disqualified in the technical bid opened on
09.10.2023. It is an admitted fact of the
matter that the final bid with respect to the
tender in question has also been opened on the
same day, i.e. 09.10.2023. Only submission
made by the learned counsel for the petitioner
to seek cancellation of the tender notice is
that no reasoning has been disclosed as to why
the tender of the petitioner is disqualified
and the price bid of the petitioner is not
opened. For the limited grievance raised in
the present petition that the petitioner has
not been intimated of the reasons of his
disqualification in the technical bid opened
on 09.10.2023, we are of the considered
opinion that it is open for the petitioner to
approach the competent authority by raising
his grievances in the form of representation.
2. At this stage, the learned counsel for the
petitioner submits that the petitioner is
ready and willing to approach the competent
authority. It is, therefore, provided that in
case the petitioner moves a representation
along with a copy of this order within a
period of one week from today before the
Municipal Commissioner, Ahmedabad Municipal
Corporation, the same shall be decided by
passing a reasoned and speaking order strictly
in accordance with law, preferably within a
period of three weeks from the date of receipt
of the same. The writ petition stands disposed
of, accordingly."
3.2.2 The Division Bench noted in the order that
the limited grievance raised in the petition was
that the petitioner was not intimated the reasons
for his disqualification in the technical bid
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opened on 09.10.2023. The Court was of the view
that the petitioner should be given opportunity to
make representation before the competent authority.
Accordingly, the directions as contained in
paragraph 2 of the order came to be issued. It
required the respondent Ahmedabad Municipal
Corporation to pass a speaking order.
3.3 Thereupon, the order dated 08.11.2023 came to
be passed by the Corporation. It was upon a
representation made in detail by the petitioner.
It is this order, the legality of which is brought
under scanner in this petition.
3.4 Looking at the order and the reasons given
therein, at the outset, it reveals three reasons.
Firstly, that the petitioner was blacklisted
earlier by order dated 05.07.2017 by the Standing
Committee of the Corporation. The blacklisting
order figures on record (page 425). It shows that
it was on the ground of vigilance inquiry in
relation to the earlier tender for the work of
similar nature of work of construction of road
performed by the petitioner -contractor in
relation.
3.4.1 The second reason reflected in the
impugned order is that the petitioner held back and
not disclosed the details of the criminal case and
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the proceedings which were pending against him.
Third ground is that the history of litigation was
not revealed and were suppressed.
3.4.2 It was stated that clause 5(4) of the
instructions to bidders contained in the tender
required the petitioner to disclose whether any
legal proceedings for any claim, dispute or
difference in respect of any work with Ahmedabad
Municipal Corporation was in process. It was
stated that as per clause no.5 of the instructions,
if the bidder concerned was found to be or alleged
to be in malpractice in respect to the tender work
allotted to him during last three years, acceptance
or rejection of tender of such bidder shall be the
sole discretion of the Municipal Commissioner.
3.4.3 The third reason in the order was in the
context of clause no.39 of the tender conditions,
which necessitated the tenders insisted to
provided the accurate information on litigation
and/or arbitration resulting from contracts
completed or the works under execution during last
five years.
3.4.4 It was the condition that if the details of
the litigation and its history were considered by
the bidder and if such details comes to the
knowledge of the of the Corporation at the
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subsequent shall, the bidder shall be liable to be
disqualified for the proposed work to face the
appropriate action. The order also mentioned
clause 30 of the tender, which invested the
employer-corporation with discretion to reject the
bid.
3.5 It was on 12.12.2023 that this petition first
came up before this Court. Notice was issued after
hearing learned advocate for the petitioner ex
parte. Ad interim relief was passed providing that
the petitioner shall be permitted to participate in
the tender process with clarification however that
such shall remain subject to further orders, which
may be passed by the Court.
3.5.1 The issuance of notice and passing of the
interim direction as above was guided by and
founded on following submissions then made on
behalf of the petitioner, reproducing paragraph 4
of the said order dated 12.12.2023,
"4. Assailing the order of disqualification,
it was submitted by learned advocate for the
petitioner that in respect to the very issues
and consideration mentioned in the impugned
order, arbitration proceedings had taken
place; earlier also the petitioner was
blacklisted. However in the arbitration
proceedings, wherein one of the dispute was
blacklisting itself, the arbitrator declared
the award and held that action of blacklisting
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of the petitioner-contractor was not
permissible in law. Learned advocate for the
petitioner produced copy of arbitral award for
perusal of the court. The same may be placed
on record before the next date."
3.6 In the affidavit-in-reply filed on behalf of
the respondent Corporation thereafter, the factual
details and developments in relation to the tender
process have been detailed. Therefrom followings
acts and aspects emerge,
(i) Technical bid was already opened on
13.07.2023. The petitioner was disqualified.
(ii) It was at that stage itself, the petitioner
approached this Court by filing Special Civil
Application No. 18244 of 2023, which culminated
into aforementioned order dated 09.10.2023,
reproduced in para 3.2.1 above.
(iii) Upon the opening of the price of the other
bidders, one Varun Procon Pvt. Ltd. was evaluated
and stood qualified as L-1 bidder, whose price bid
amount is also mentioned in the reply affidavit.
(iv) The said L-1 bidder was also called for
negotiation who further reduced the price earlier
quoted. The Building Committee of the Corporation
cleared the selection of the said Varun Procon Pvt.
Ltd. as L-1 bidder by passing Resolution dated
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04/05.12.2023(page 435).
(v) The Standing Committee of the Corporation
passed Resolution No. 211 dated 07.12.2023 to
accept the decision to award the tender to the said
L-1 bidder (page 436 to 438).
3.7 All the aforesaid developments took place and
stood concluded after the order dated 19.10.2023
passed by this Court in the previous petition
mentioned hereinabove as also before the order
dated 08.11.2023- the order impugned in this
disqualifying the petitioner was passed.
3.8 The impugned order disqualifying the
petitioner was passed pursuant to and in light of
the order dated 19.10.2023 of this Court. The
present petition was filed on 07.12.2023.
4. Learned advocate for the petitioner submitted,
assailing the impugned order, that the order which
disqualifies the petitioner from the present tender
process is virtually an order of blacklisting and
that the petitioner is debarred from participation
in the process. It was submitted that arbitral
proceedings had taken place between the parties in
respect of the disputes which arose pertaining to
the other tender work wherein one of the issue
before the arbitrator was legality of the action on
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the part of the Corporation of blacklisting of the
petitioner and that the arbitrator had set aside
the blacklisting.
4.1 It was next submitted that although the
criminal proceedings are pending against the
petitioner, anticipatory bail is granted. It was
submitted that order dated 08.11.2023, which came
to be passed pursuant to the observations of this
Court in earlier petition, is arbitrary and that it
contains reasons which are not acceptable. Learned
advocate for the petitioner submitted tenets of
Article 14 of the Constitution are required to be
observed by the Corporation even in the matter of
awarding of tender contract.
4.2 Decision of Supreme Court in Madras Aluminium
Company Ltd. Vs Tamilnadu Electricity Board [(2023)
8 SCC 240] was sought to be relied on to submit
that merely because the dispute falls under the
realm of contract, it will not permit the authority
to avoid its obligation to comply with the
requirements of equality clause and principles of
fairness and reasonableness. By pressing into
another decision in Fedrick Cutinha vs. State of
Karnataka [(2023 SCC Online 437], as well as in
Arulvelu vs. State represented by Public Prosecutor
[(2009) 10 SCC 206], the principle was submitted
that unless proved to be guilty, the person is
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presumed to be innocent, stating further that the
criminal prosecution are yet to be finally
concluded.
4.2.1 By relying on yet another decision in
Roots Industries India Ltd. vs. Airports Authority
of India [(2016) 3 SCC 569], it was sought to be
asserted that the interference is not entirely
impermissible in the contractual matters is
exercise of writ jurisdiction, if the action is
found to be arbitrary. A decision was also cited
to submit that respondent authority can be directed
to re-issue the tender by inviting the fresh one.
4.3 On the other hand, learned advocate for the
respondent Corporation highlighted and reiterated
the contentions raised in the affidavit-in-reply.
It was submitted that earlier petition in relation
to the same challenge was not entertained by the
Court. It was submitted that what the court
directed in the earlier auction, was only to
intimate the petitioner about the reasons for which
the petitioner was relegated to make
representation. It was submitted that thereafter,
the impugned order came to be passed on the ground
stated therein. It was sought to be highlighted
that all the grounds in the order are based on the
facts either figuring on the record or not
disputable.
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4.3.1 It was submitted on behalf of the
respondent that the entire process was over, that
the L-1 was selected, that the competent
authorities of the Corporation including the
Standing committee passed necessary Resolution and
the only stage left was to award the actual work
order to the qualified bidder-L1.
4.3.2 Learned advocate for the respondent
submitted that the tender work involved is for
resurfacing of the roads of the city and thus, has
a public interest dimension. From the affidavit-
in-reply, learned advocate also referred to the
proceedings of the public interest litigation filed
before the Court and that the instant tender was
invited during that time.
4.4 The answering contentions of the Corporation
was sought to be thwarted by filing rejoinder
affidavot. It was stated that sole arbitrator while
passing the award which was in relation to disputes
of other subject matter tender declared the action
of blacklisting of the petitioner on the part of
the Corporation to be arbitrary and against the
contract clauses as well as in gross violation of
principles of natural justice. It was contended
that in that view, there was no occasion for the
Corporation to repeat the order of blacklisting.
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4.4.1 It was further contended that the
petitioner had not challenged the Declaration Form
(page 26); nor the petitioner had challenged the
provisions of clause 1.15 of the tender since the
petitioner has not carried out any work for the
respondents during last three years. It was
contended that petitioner has also not challenged
the provisions of clause 6 of the tender terms;
also not challenged clause 15 by the petitioner,
the petitioner having not carried out any work for
the Corporation during last three years.
4.4.2 It was contended further in the rejoinder
that petitioner has not also challenged the right
of the Municipal Corporation to accept or reject
any bid without any reason. Therefore, clause 30.2
would not be attracted. The petitioner also called
in question the conclusion about supplying of
inferior quality of material by the petitioner and
thereby discounting the case of the petitioner in
the instant tender process.
4.4.3 Averments were also made in the rejoinder
affidavit denying that bogus bills were submitted
by the petitioner, which aspect is subject matter
of pending criminal cases. It was therefore harped
on the basis of the rejoinder affidavit that once
the arbitrator had declared the action of
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blacklisting to be arbitrary and the merits of
ground mentioned of the order dated 08.11.2023 do
not hold good, the order of blacklisting may not
approved in law by the Court.
4.4.4 In addition to highlighting all the above,
learned advocate for the petitioner pointed fout
from para 14 of the rejoinder that the petitioner
is released on anticipatory bail and that the
condition imposed while granting anticipatory bail
of the depositing of the amount of Rs.22,19,492/-
has been complied with. In relation to the
allegation that the litigation history and the
details of the criminal cases are suppressed it was
sought to be pointed out on behalf of the
petitioner, from the tender conditions, from
particular condition No.5, pertaining to
disqualification that what was required to disclose
was pendency of criminal proceedings in any court
of law in India against any of the Directors
partners or a proprietor and if any such
proceedings has culminated into conviction.
According to submission of learned advocate for the
petitioner, the said condition required to disclose
the details only there was a conviction.
5. One of the aspect needs to be steered clear at
the outset, is that the arbitrator who considered
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and went into the disputes between the parties were
the disputes and the subject matter other than
relating to the instant tender. The arbitrator
dealt with the disputes pertaining to earlier
tender disputes between the same parties in which
the issue of blacklisting was addressed. The
linking of the order of arbitrator passed in its
award to set aside the blacklisting with the
disqualification ordered for the petitioner in the
present tender process could therefore hardly be
countenanced.
5.1 Irrespective and notwithstanding the above, it
could be figured out from the facts that the
impugned order of disqualification is passed inter
alia considering the factum that criminal cases are
pending against the petitioner. The details of the
FIR filed against the petitioner and the criminal
cases in pursuance are given by the Corporation in
the affidavit-in-reply. The FIR was filed in
relation to the allegations of misappropriation of
money received by the petitioner from the
Corporation, indulging into bogus billings,
preparation of duplicate and triplicate bills for a
specific tranche of raw materials deployed in
specific location and for raising the bills for
multiple zone/wards of the Corporation. Serious
wrong doings, it was stated in the affidavit, were
detected, which led to filing of complaint.
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5.2 The credentials of the bills allegedly made
by the purchase from Indian Oil Corporation Ltd.
(IOCL) were doubted as IOCL informed the respondent
Corporation that it had not provided any bitumen to
the petitioner contractor and no invoices in that
regard were issued by the IOCL to the Corporation.
5.3 The registration of FIR No.I-59/18 by the
Karanj Police Station, Ahmedabad, has now resulted
into the criminal proceedings pending before the
competent court. When the award of the Arbitrator,
assistance of which was sought for by the
petitioner to assail the impugned order of
disqualification to submit that the blacklisting
was set aside by the arbitrator, it could be
readily seen that the arbitrator had not touched
the aspect of criminal case already initiated and
pending in the background.
5.3.1 In this regard, the Court could notice the
following paragraphs extracted from the award of
the arbitrator, placed on record,
"The Arbitral Tribunal has examined the
contentions of the respondent about filing of
criminal complaint No. 59 of 2018 filed before
the Karanj Police Station, Ahmedabad u/s 406,
420, 465, 467, 468, 471 of IPC against the
claimant company. As per the directions of the
Hon'ble Court in this matter, the claimant had
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returned an amount of Rs.22,19,492/-, which
was paid by the respondent against the 9
Number of Invoices presented by the claimant,
total amount of Rs.50,36,681/-. The matter is
pending before the Court. The respondent's
allegation of bogus bills produced by the
claimant is to be proved by Ahmedabad
Municipal Corporation and adjudicated by the
Court, which is pending till today. The
Arbitral Tribunal has not expressed any
opinion on the respondent's allegation of
bogus bills as matter is subjudice before the
Hon'ble Court.
The Arbitral Tribunal has noted that the
decision of blacklisting the claimant was
taken by the respondent on 10.08.2017.i.e.
much before the filing of Criminal complaint
against the claimant in 2018. The matter of
criminal complaint is a sub-judicial matter
before the Court, hence, Arbitral Tribunal
would not take into consideration such a
subjudice matter while adjudicating the
legality of blacklisting of the claimant."
5.4 Therefore, the entire edifice sought to be
raised by the petitioner to challenge the
disqualification by asserting that the arbitrator
had decided and that the blacklisting order earlier
passed was set aside, falls flat. Not only that
the arbitrator had not touched the pendency of
criminal cases, the impugned order is passed on
independently justifiable grounds. One of such
ground is that the petitioner suppressed the factum
of pendency of criminal cases. The tender form
contained Statement no.5 for Part-A (copy figures
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on record at Annexure R13, page 441), which made it
mandatory for the petitioner to furnish the details
of completed or ongoing litigation and arbitration.
The said form was left blank by the petitioner for
the reasons best known to it.
5.5 Non-mentioning criminal cases amounted to
suppressio veri and suggestio falsi. The details
of arbitral proceedings on which the reliance is
now placed, are also the necessary details required
to be mentioned in the tender form. They are also
held back and nothing is mentioned. The petitioner
could not furnish any explanation for not
disclosing the details of the criminal case and
other above details. This conduct may be suggestive
of gravity of suppression of facts.
5.6 The requirement of providing litigation
history in the tender form was also ignored by the
petitioner. The non-revealing of the litigation
empowered the Corporation to readily discard the
case of the petitioner as bidder who had suppressed
the important factum of litigation.
6. It was on all these consideration that the
petitioner was disqualified from the instant tender
process. The mere fact that the petitioner had
submitted its technical bid which was opened, did
not confer on the petitioner any enforceable right
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in relation to the tender process. As such, no
right was created for the petitioner in his
submitting the technical bid. The contract cannot
be said to have been finalised and relationship of
the employer and the contractor could not be said
to have come into existence nor any mutual
obligations arise until the contract is completed
by taking a final decision to award the contract to
the eligible bidder.
6.1 It was misconceived on the part of the
petitioner to submit before this Court that it was
entitled to participate further in the process
since the technical bid was opened when no right
was created in the petitioner.
6.2 The outweighing factor is that as already
stated, the petitioner had already chosen his
remedy of challenging the disqualification at the
very stage when the technical bid was opened by
filing Special Civil Application No. 18244 of 2023,
aforementioned. The Court did not entertain the
petition but while relegating the petitioner to
make representation, it was observed that there was
a limited grievance raised by the petitioner that
the petitioner had not been intimated with the
reasons of his disqualification in the technical
bid opened on 09.10.2023.
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6.3 The directions issued by this Court at that
juncture, in view of this court, meant only
providing a post-decisional hearing to the
disqualification already imposed on the petitioner,
by observing that the reasons for disqualification
are required to be supplied to the petitioner.
These reasons are revealed and supplied by passing
the order dated 08.11.2023.
6.4 In that view, the Court does not find any
merit in the submission on behalf of the petitioner
that the impugned order dated 08.11.2023 is passed
without compliance of natural justice or that a
further opportunity of hearing was needed to be
granted to the petitioner.
6.5 The impugned order is a culmination of
formality of observations of post-decisional
hearing and the compliance of the order dated
19.10.2023 passed by the Court in the aforesaid
earlier petition.
7. Even otherwise, this Court has examined the
grounds and the reasons supplied in the order dated
08.11.2023 to find that viewed from any standpoint,
they are not assailable. They emerge from the
admitted facts on record to be valid ground to be
adopted by the Corporation for disqualifying the
petitioner.
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8. In course of the submissions, an apprehension
was expressed on behalf of the petitioner that the
impugned order amounts to disqualification in the
nature of blacklisting even for the future purposes
and future contracts.
9. At this stage, when the Court queried learned
advocate for the Corporation, he specifically
stated upon instructions of one Mr. Yogesh Pandya,
holding the post of Assistant City Engineer who is
present in the Court and who has the authority to
make statement on behalf of the Corporation as
stated by learned advocate for the Corporation,
that the impugned disqualification does not amount
to a permanent debarment of the petitioner.
10. On cumulative operation of the facts and the
aspects observed and highlighted above, there is no
gainsaying that the present is a petition whereby
the petitioner has re-engaged itself in litigation
by filing the petition. It is a repeat challenge
of virtually same action, once having failed before
this Court in Special Civil Application No. 18244
of 2023. The challenge lodged by the petitioner
and the process of awarding the work under the
contract travelled simultaneously.
10.1 As it is noted, the process was over, L-1
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bidder was selected, the Building Committee and
Standing Committee passed Resolutions clearing the
selection of the L-1 bidder. The Court sees a
justification in what was submitted on behalf of
the Corporation that due to the present litigation,
the Corporation was prevented from awarding the
final work order.
10.2 Litigation for the sake of litigating is not
be to be welcomed. It partakes abuse of process of
law. Apart that, such litigation arrests the
actions of the public and statutory authorities,
which ultimately subserves the public interest.
The instant petition could not be approved by the
Court to be treated as an honest litigation.
10.3 For all the aforesaid reasons and
discussion, the petition stands devoid of merit. It
is dismissed with cost of Rs.25,000/-.
10.4 At this stage, the only submission made by
learned advocate for the petitioner is that the
cost part may be removed.
11. In the facts of the case and in view of
what is observed above, it is not possible for the
court to remove the cost part. It has to remain
however, acceding to the request the cost shall be
Rs.15,000/-, to be paid within three weeks, out of
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which, Rs. 10,000/- shall be paid to the Gujarat
High Court Legal Aid Committee and Rs.5,000/- to
the Gujarat High Court Advocates Library.
In view of the dismissal of the Special Civil
Application, Civil Application would not survive
and shall stand disposed of accordingly. Interim
relief is vacated.
(N.V.ANJARIA, J)
(CHEEKATI MANAVENDRANATH ROY, J)
BIJOY B. PILLAI
