Desai Infra Projects (India) Pvt. ... vs The State Of Madhya Pradesh
2021 Latest Caselaw 6960 MP

                                         1                   WP 20236-2021

            THE HIGH COURT OF MADHYA PRADESH
                           WP 20236-2021
 (Desai Infra Projects (India) Pvt. Ltd. Vs. The State of M.P. & ors.)
Gwalior Dt. 28.10.2021

       Shri Manoj Swaroop, learend Senior counsel with Shri

Dharmendra Nayak and Shri Nitin Agarwal, learned counsel for

petitioner.

       Shri Ankur Mody, learned Additional Advocate General for

respondents No.1 to 6/State.

Shri Prashant Sharma, learned counsel for respondent No.7.

The instant petition u/Art. 226 of the Constitution is preferred by

Private Limited Company questioning the legality and validity of the

decision of official respondents in rejecting the technical bid of petitioner

submitted for work of Repair and Reconstruction of chambal right main

canal and their structures, Damaged and breached portion of canal by

heavy rainfall and flood in between 0.00 km and 83.00 km with Earth

Work, Raincuts filling, Concrete lining, Duct repair, Structure. Further

prayer is made for restraining the official respondents from executing the

agreement in respect of work with any other bidder and for direction to

decide the objection preferred by petitioner on 17.9.21 vide P/8 against

the impugned decision of disqualifying petitioner on technical aspect.

2. Learned counsel for rival parties are heard on the question of

admission and final disposal.

3. Respondent No.7 to whom the contract has been awarded and is

presently undertaking the work in question has filed a caveat. On supply 2 WP 20236-2021

of copy of petition to the caveator, an application for dismissal of petition

i.e. IA 13410/21 is preferred by respondent No.7. Thereafter petitioner

filed IA 13455/21 for bringing certain additional documents on record

primarily to emphasize the haste with which the official respondents

executed the agreement in favour of respondent No.7. The official

respondents (respondents No.1 to 6) have also filed detailed parawise

reply.

4. With the aforesaid pleadings on record, with consent of learned

counsel for rival parties, this matter was finally heard at the admission

stage.

5. Leanred Senior Counsel Shri Manoj Swaroop alongwith Shri

Dharmendra Nayak and Shri Nitin Agarwal, appearing on behalf of

petitioner has primarily submitted that despite a clear mandate in Clause

19.5 of "Instructions to Bidders" appended to the NIT obliging the official

respondents to record reasons for rejection of any bid, the impugned order

vide P/1 is conspicuoulsy non-speaking. It is further submitted that the

haste with which the entire process of opening and evaluation of technical

and financial bid followed by execution of agreement in favour of

respondent No.7 was undertaken, the same smacks of favouritism. It is

further urged that despite being eligible, petitioner has been intentionally

outsted for reasons untenable in law. Learned Senior Counsel for

petitioner further brings to the notice to this Court that it is wrong on the

part of respondents to contend that tenure of completion of contract is 3 WP 20236-2021

only two months since the tenure as per agreement is 12 months followed

by 24 months of management, operation and maintenance. In this

background, it is submitted by learned Senior Counsel that the reasons of

short tenure of the work assigned by the official respondents to justify

their haste in completing the tender process is untenable. In the aforesaid

factual background, petitioner has sought allowing of this petition.

6. Per contra, learned counsel for official respondents Shri Mody, in

their return revealed that six bids were received. At the first stage of

"envelop A" pertaining to fees, all six tenders were found eligible.

Thereafter at the second stage of "envelop B" containing technical bid out

of six offers including that of petitioner, two tenderers including

petitioner were found disqualified for having not completed experience

criteria of 15 lakh cubic meters of earthworks during any one year in the

last three years. It is further submitted by official respondents that since

petitioner was not eligible to be considered for opening financial bid

"envelop C", the contention of petitioner that its bid was lower than the

bid of respondent No.7 is futile.

6.1 Shri Mody, learned counsel for official respondents, has apprised

this Court that the nature of work in question which related to repairing of

a damaged irrigation canal which had suffered breached at several places

and had to be repaired before the onset of Rabi season, the initial work of

repairing the canal and making it temporarily functional was required to

be done urgently at war-footing and thus the official respondents 4 WP 20236-2021

following the due process of law did not waste any time in the process of

consideration of evaluation of tenders and execution of contract in favour

of respondent No.7 who was found to be lowest qualified bidder. It is

submitted by Shri Mody that the work of concrete lining of the canal was

to be undertaken after the initial repairing work. It is further urged by Shri

Mody that since the State of M.P. is predominantly an agrarian State

where more than 70% of economy is agriculture based, the work of

repairing the breached canal had to be undertaken urgently to make the

canal functional for the flow of water required during Rabi season which

commences immediately after Dusshera season. As such it is emphasized

that looking to the emergent nature of work, the time period provided for

completing evaluation of tender may appear to be a bit short but looking

to the object behind the work in question, the tight time schedule is

justified. For this purpose, Shri Mody relies upon Clause 5.0 of the

conditions of contract Part II (special condition of contract) which

provides thus:-

5.0 The tenderer shall be responsible to restore/repair the

entire canal system with inline structure to provide irrigation

from October, 2021.

6.2 Shri Mody has also pointed out that the petitioner was not eligible

since the certificate of experience in regard to 20 different earthworks

undertaken in 2019-20 did not sum up to the minimum eligibility criteria

of 15 lakh cubic meters of earthworks. It is revealed by Shri Mody that 5 WP 20236-2021

out of the 20 earthworks relied upon by petitioner for claiming eligibility,

details of several of these did not mention the quality but only the value of

work done. It is submitted that after excluding the work in which only

value and not the quantum of earthwork was shown, the sum total of the

experience of petitioner came to be less than 15 lakh cubic meters. Lastly,

Shri Mody submits that due to changed circumstances, inasmuch as

exeuction of contract in favour of respondent No.7 and also completion of

the first stage of restoring/repairing the entire canal system, the remedy of

judicial review u/Art. 226 of the Constitution is not available to petitioner

who should be relegated to avail the remedy under private law.

7. Learned counsel for respondent No.7 Shri Prashant Sharma has

raised certain preliminary objections in its application for dismissal of the

petition by contending that the power of attorney, in the given facts and

circumstances does not authorise the power of attorney holder to file this

petition. For this purpose, reference is made to the special Power of

Attorney Annexure P/3 which according to learned cousnel for respondent

No.7 empowers the Power of Attorney holder to assail the tender process

only on the occasion of the bid of petitioner being successful. It is

contended by Shri Prashant Sharma that since petitioner's bid was

rejected, there was no occasion for invoking the Power of Attorney and

therefore, this petition is infructuous.

8. Leanred Senior Counsel Shri Manoj Swaroop alongwith Shri

Dharmendra Nayak and Shri Nitin Agarwal, learned counsel appearing for 6 WP 20236-2021

petitioner supplementing his arguments submits that Annexure P/1

impugned herein is non-speaking as it fails to assign reason behind the

rejection of technical bid and therefore, is in breach of Clause 19.5 of NIT

instructions. Learned Senior Counsel in regard to merits of the alleged

ineligibility of petitioner qua technical bid, submits by referring to IA

13548/21 that the official respondents have intentionally misread and

misinterpreted the certificate of earthwork experience submitted by

petitioner in respect of 20 different earthworks undertaken in the year

2019-20. It is submitted by learned Senior Counsel that the work

completion certificate was furnished to the official respondents in support

of technical bid in the format as it was received from the

person/institution for whom/which the work in the year 2019-20 was

executed. Learned Senior Cousnel drawing attention of this Court to the

excavation of earthwork experience certificate submits that the cost of

work was though mentioned in the tabular illustration but the quantity of

earthwork in cubic meter was also mentioned. It is submitted that the

official respondents to extend undue favour to respondent no.7,

intentionally turned a blind eye towards the experience certificate which

was explicit in respect of quantum of earthwork. Learned Senior Counsel

thus submits that if the certificates had been read in entirety with an

honest and impartial intention then there was no occasion or cause to

declare the petitioner ineligible. Learend counsel for petitioner has relied

upon Harminder Singh Arora Vs. Union of India 1986 (3) SCC 247 7 WP 20236-2021

Para 19, 24 and 25, Union Bank of India & ors. Vs. Jai Prakash Singh

& Anr. 2007 (10) SCC 712 Para 7.

8.1 As regards the two decision of Apex Court in the case of

Harminder Singh (supra) and Jai Parakash (supra), the earlier one

i.e. Harminder Singh (supra) a case where NIT was issued inviting

application to supply fresh buffalo and cow milk. The petitioner before

the Supreme Court whose petition had been dismissed by the High

Court, was though found to be L-1 and suitable, but the concerned

official respondent therein found that it would be economically more

beneficial to receive pasteurized milk rather than fresh buffalo/cow

milk and therefore, tender of petitioner despite being technically and

financially eligible was rejected and instead L-2 who had no expertise

of supplying fresh cow and buffalo milk was chosen for award of

contract. The Supreme Court while allowing the petition held that the

original terms and conditions of NIT of supplying fresh cow/buffalo

milk could not have been altered during process of evaluation of

tender and therefore, held grant of contract to L-2 to be unlawful. In

this background, it was inter alia held by Supreme Court that the State

and its instrumentalities are required to act in accordance with the

conditions laid down in the tender notice. The factual matrix attending

the case before the Apex Court in Harminder Singh (supra) is diverse

to the factual matrix attending the instant case and therefore, the said

case is of no avail to petitioner.

                                          8                  WP 20236-2021

8.2    The other case i.e. J.P. Singh (supra) is also relied upon by

petitioner in support of proposition that rejecting the offer pursuant to

NIT is necessarily to be attended with reasons. In the said case of J.P.

Singh (supra) the Apex Court while upturning the decision of

Allahabad High Court rejecting the petition, found that High Court

wrongly held policy to be arbitrary under which petitioner was seeking

remedy. The Apex Court also noticed that despite there being no

challenge to the policy in question, the High Court travelled beyond its

brief to hold the policy to be arbitrary. The Apex Court also found that

High Court did not afford any opportunity to the petitioner to file

counter affidavit before striking down the policy which was not even

challenged. Thus, the factual matrix attending the case of J.P. Singh

(supra) is also diverse and not even similar to the facts attending the

present case and thus this citation further does not assist the petitioner.

9. Learned counsel for the official respondents on the other hand has

relied upon Jagdish Mandal Vs. State of Orissa & Ors. 2007 (14) SCC

517 Para 22.

10. This Court, after having heard learned counsel for rival parties, to

begin with would not like to enter into hypertechnical objections raised by

learned counsel for respondent No.7 since this court intends to consider

the merits of the matter.

11. Law in regard to scope of judicial review in matters of tender

or award of contract except matters pertaining to blacklisting or 9 WP 20236-2021

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. 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 ?

(ii) 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 such a decision ?

(iii) Whether public interest is adversely affected or not ?"

12. A bare perusal of Annexure P/1 further indicates in regard to

grounds raised by petitioner that no reason has been assigned for

taking the impugned decision does not appeal to this Court, since

the impugned order P/1 reflects that petitioner was not technically

qualified. The impugned information vide P/1 may not be as explicit

as expected by petitioner but mere non-assigning or non-

communication of reasons by itself can not vitiate the process of

evaluation and award of contract in favour of respondent No.7,

especially in the face of paramount consideration of public interest 10 WP 20236-2021

which eclipses the personal interest of petitioner.

13. The requirement in the NIT was to furnish quantum of earthwork

which should be atleast 15 lakh cubic meters in any one year during last

three years. The requirement was not to mention the value/price of work

undertaken by petitioner. Petitioner has not only mentioned the price/cost

of earthwork undertaken but has also mentioned the quantum of

earthwork and therefore, it appears that the official respondents without

seeking any clarification from petitioner went ahead to disqualify

petitioner from the tender evaluation process by rejecting the technical

bid. The action of official respondents therefore, prima facie appears to be

unreasonable.

13.1 However, the supervening factor which outweighs the breach of

personal right caused to petitioner due to rejection of its technical bid is

that the work of the first stage of repairing the breaches in the canal has

progressed to a considerable extent and is likely to be over within a week.

Moreso, if the work in progress is now hindered then the prospects of a

healthy Rabi crop would suffer irreparably damage. Looking to the nature

of the work in question, it needs completion within a time frame. Any

delay at any stage of the work would deprive thousands of farmers of

water- the lifeblood for Rabi crop. The cumulative effect of the damage

would not only be to thousands of farmers but also millions of foodgrain

consumers in and around Madhya Pradesh which has now become the

leading wheat producer in the nation. The public interest involved in the 11 WP 20236-2021

timely and uninterrupted completion of the work in question, is

paramount which cannot be made subservient to the personal interest of

petitioner.

14. The aforesaid analysis of the factual matrix attending the present

case reveals that there does not appear to be any mala fide or favour

extended to respondent no.7. This Court further finds that decision to

reject the technical offer of petitioner to be not arbitrary. The decision

taken in the given facts and circumstances to award contract in favour of

respondent No.7 where breaches in the canal had to be repaired before the

onset of Rabi season, cannot be termed to be such which a responsible

authority would not take. Moreso the reason assigned by the official

respondents to award contract and work order to respondent No.7 is in

public interest as explained above. Therefore, the aforesaid three

questions are answered in the negative an therefore, this Court declines to

exercise power of judicial review in favour of petitioner.

15. The Apex Court in Bharat Coking Coal Ltd. Vs. AMR Dev

Prabha & Ors. (2020) 16 SCC 759 has held that interference in matters

of tender is to be sparingly made and if and when made, the Courts ought

to keep in mind that the public interest is protected even at the cost of

sacrificing personal interest. Relevent Para 33 of the said judgment is

reporduced below for ready reference and convenience:-

"33. Such a proposition has been noticed by this Court even earlier in Jagdish Mandal Vs. State of Orissa & Ors. 2007 (14) SCC 517 in the following words:

12 WP 20236-2021

"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." (emphasis supplied)

16. From the above discussion and analysis of facts and submissions of

learned counsel for rival parties, this Court declines interference in the

matter but affords liberty to the petitioner to seek his remedy in private

law domain in accordance with law.

17. Consequently, present petiiton stands dismissed with the aforesaid

liberty, sans cost.

                          (Sheel Nagu)                     (Deepak Kumar Agarwal)
                             Judge                               Judge
                   ojha    28/10/2021                          28/10/2021
YOGENDRA OJHA
2021.10.28
17:43:31 +05'30'