Manipur High Court
M/S Bhartia Infra Project Ltd. Having ... vs The Union Of India Through The Secretary on 28 August, 2024
Author: Ahanthem Bimol Singh
Bench: Ahanthem Bimol Singh
[1]
IN THE HIGH COURT OF MANIPUR
SHOUGRAKPA Digitally signed by
SHOUGRAKPAM
M DEVANANDA DEVANANDA SINGH AT IMPHAL
Date: 2024.08.28 14:11:36
SINGH +05'30'
WP(C) No. 477 of 2024
1. M/S Bhartia Infra Project Ltd. having its head office at
201 Royal Arcade, Dr. B. Baruah Road, Ulubari, P.O. &
P.S. Ulubari, Guwahati-781007.
2. M/S GKC Projects Limited (Joint Venture) having its
office at Sy. No. 9 (P). CII-Green Building Lane, HITEC
City, Kondapur, Hyderabad - 500084, Telangana, India
respectively.
The petitioner Nos. 1 and 2 are represented by the authorised
Signatory namely Shri Ningombam Ibochouba Singh,
aged about 52 years, S.O. Late N. Nabakumar Singh of
Chingamakha Phura Makhong, P.O. & P.S. Singjamei, Imphal
West District, Manipur - 795008.
... Petitioners
-Versus-
1. The Union of India through the Secretary, Ministry of Road
Transport & Highways, Transport Bhawan, 1, Parliament
Street, New Delhi - 110001.
2. The State of Manipur represented by the Commissioner
(Works), Govt. of Manipur, Old Secretariat Complex,
Babupara, Imphal West, Manipur - 795001.
3. The Project Director-cum-Chief Engineer, Externally Aided
Projects (EAP), Public Works Department (PWD), Manipur
having its office at PWD Complex, Khuyathong, P.O. & P.S.
Imphal, Imphal West District, Manipur.
... Official Respondents
With
WP(C) No. 477 of 2024 with
Contd.../-
WP(C) No. 521 of 2024
[2]
WP(C) No. 521 of 2024
1. M/S Bhartia Infra Project Ltd. Represented by its Director
Mr. Ramawatar Bhartia having office at 201, Royal Arcade,
Dr. B. Baruah Road Ulubari, Guwahati - 781007, Assam.
2. M/S GKC - BIPL (JV) represented by Mr. Ramawatar Bhartia
Authoritsed Signatory having office at 201, Royal Arcade,
Dr. B. Baruah Road, Ulubari, Guwahati - 781007, Assam.
The petitioner Nos. 1 and 2 are represented by the authorised
Signatory namely Shri Ningombam Ibochouba Singh, aged
about 54 years, S/o N. Nabakumar Singh of Chingamakha
Phura Makhong, P.O. & P.S. Singjamei, Imphal West District,
Manipur - 795008.
... Petitioners
-Versus-
1. The Union of India through the Secretary, Ministry of Road
Transport & Highways, Transport Bhawan, 1, Parliament
Street, New Delhi - 110001.
2. The State of Manipur represented by the Secretary/
Commissioner (Works), Govt. of Manipur, Old Secretariat
Complex, Babupara, Imphal West, Manipur - 795001.
3. The Project Director-cum-Chief Engineer, Programme
Implementation Unit (PIU) Externally Aided Projects (EAP),
Public Works Department (PWD), Manipur having its office
at PWD Complex, Khuyathong, P.O. & P.S. Imphal, Imphal
West District, Manipur.
4. AMRIL-IRCON Jont Venture, Saikrupa, D. No. 8-3-833,
Plot: 37 & 38, Phase-1, Kamalpuri Colony, Hyderabad,
Telangana-500073.
... Respondents
WP(C) No. 477 of 2024 with
Contd.../-
WP(C) No. 521 of 2024
[3]
B E F O R E
HON'BLE MR. JUSTICE AHANTHEM BIMOL SINGH
For the petitioners :: Mr. H.S. Paonam, Sr. Advocate asstd. by
Mr. Yumnam Shushruta, Advocate
For the respondents :: Mr. S. Vijayanand Sharma, Sr. Panel
Counsel;
Mr. M. Devananda, Addl. AG asstd. by Ms.
Naorem Jyotsana, Advocate.
Date of hearing :: 07-08-2024
Date of judgment :: 28-08-2024
J U D G M E N T
[1] Heard Mr. H.S. Paonam, learned senior counsel assisted by
Mr. Yumnan Sushruta, learned counsel appearing for the petitioners;
Mr. S. Vijayanand Sharma, learned senior panel counsel appearing for the
respondents No. 1 and Mr. M. Devananda, learned Additional AG assisted
by Ms. Naorem Jyotsana, learned counsel appearing for the respondents
No. 2 and 3. None appeared for the respondent No. 4, despite service of
notice.
The present two writ petitions have been filed primarily
challenging the rejection of the Technical Bids submitted by the petitioners
in connection with the NIT dated 15-03-2024 in respect of a contract work
for construction of Rigid Pavement and Lined Drain of Selected Roads
under Highway South Division - Package - 4 (total road length of 111.182
km.) coupled with the prayer for directing the respondents No. 2 and 3 to
open the Financial Bids submitted by the petitioners in connection with the
said contract work. As the two writ petitions filed by the same petitioners
WP(C) No. 477 of 2024 with
Contd.../-
rises common question of facts and law, the same were heard jointly and
being disposed of by this common judgment.
[2] There is no dispute with regard to the facts of the present
two writ petitions. The Project Director-cum-Chief Engineer, EAP, PWD,
Manipur, respondent No. 3 herein, issued a Notice Inviting Tender (NIT)
dated 15-03-2024 inviting e-tender bids from interested and eligible
tenderers in connection with the following contract works:-
IOCT No. / Package Name Completion Time Tender Security
Package No. (Months) (INR)
MN/PWED/EAP/ Construction of Rigid Execution = 36 17.80 crore using the
MURDAMIP/PRO Pavement and Lined Post construction instruments specified
C-W/2024/01 Drain of Selected Roads Mandatory in Instructions to
under Imphal West Tenderers 19.3
Maintenance = 60
Division - Package 1: (Tender Data Sheet)
MUR-CW-01
Total Road Length -
172.858 km.
MN/PWD/EAP/M Construction of Rigid Execution = 36 13.85 crore
URDAMIP/PROC Pavement and Lined Post construction Using the
-W/2024/02 Drain of Selected Roads Mandatory instruments specified
under Imphal West in Instructions to
maintenance = 60
Division - Package 1: Tenderers 19.3
MUR-CW-02
Total Road Length - (Tender Data Sheet)
172.858 km.
MN/PWD/EAP/M Construction of Rigid Execution = 36 12.20 crore
URDAMIP/PROC Pavement and Lined Post construction Using the
-W/2024/03 Drain of Selected Roads Mandatory instruments specified
under Imphal East in Instructions to
maintenance = 60
Division (ED-2) - Tenderers 19.3
MUR-CW-03
Package 3: Total Road (Tender Data Sheet)
Length - 122.209 km.
MN/PWD/EAP/M Construction of Rigid Execution = 36 11.10 crore
URDAMIP/PROC Pavement and Lined Post construction Using the
-W/2024/04 Drain of Selected Mandatory instruments specified
Roads under Highway in Instructions to
maintenance = 60
South Division - Tenderers 19.3
MUR-CW-04
Package 4: Total Road (Tender Data Sheet)
Length - 111.182 km.
[3] The tender document consist of three parts. Part 1 relates to
tendering procedure consisting of six Sections, i.e., Section I to VI,
WP(C) No. 477 of 2024 with
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Part 2 relates to works' requirements consisting of one Section, i.e., Section
VII and Part 3 relates to conditions of contract and contract forms consisting
of three sections, i.e., Sections VIII to X. Section I relates to instructions to
tenderers and under Clause 11 of Section I, it is, inter alia, provided as
under:-
"11.1. The Tender shall comprise two Parts, namely Technical Part
and the Financial Part. These two Parts shall be submitted
simultaneously in two separate sealed envelopes (two- envelope
tendering process). One envelope shall contain only information
relating to the Technical Bid and the other only information relating to
the Financial Part. These two envelopes shall be enclosed in a
separate sealed outer envelope marked "ORIGINAL TENDER."
[4] Under Clause 16 and 17 of Section I, it is provided as under:
"16.1. The tenderer shall furnish a technical proposal in the Technical Part of
the Tender including the statement of work methods, equipment,
personnel, schedules and any other information as stipulated in
Section IV, Tender Forms, in sufficient detail to demonstrate the
adequacy of the tenderer's proposal to meet the works' requirements
and the completion time."
"17.1 To establish Tenderer's eligibility in accordance with ITT 4. Tenderers
shall complete the Letter of Tender - Technical Part, included in
Section IV, Tender Forms."
"17.2 In accordance with Section III, Evaluation and Qualification Criteria, to
establish its qualifications to perform the Contract, the Tenderer shall
provide the information requested in the corresponding information
sheets included in Section IV, Tender Forms."
"17.3 If provisions for development of domestic industry (such as a margin of
domestic preference) apply as specified in accordance with ITT 38.1,
domestic Tenderers, individually or in joint ventures, applying for
eligibility for domestic preference shall supply all information required
to satisfy the criteria for eligibility specified in accordance with ITT
38.1."
[5] Under Clause 27 and 30 of Section I, it is, inter alia, provided as
under:-
WP(C) No. 477 of 2024 with
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"27.1 To assist in the examination, evaluation and comparison of the
Tenders, and qualification of the Tenderers, the Employer may, at its
discretion, ask any Tenderer for a clarification of its Tender, allowing a
reasonable time for response. Any clarification submitted by a
Tenderer that is not in response to a request by the Employer shall not
be considered. The Employer's request for clarification and the
response shall be in writing. No change, including any voluntary
increase or decrease, in the prices or substance of the Tender shall be
sought, offered or permitted, except to confirm the correction of
arithmetic errors discovered by the Employer in the evaluation of the
Tenders, in accordance with ITT 36."
"30.1 In evaluating the Technical Parts of each Tender, the Employer shall
use the criteria and methodologies listed in this ITT and Section III,
Evaluation and Qualification Criteria. No other evaluation criteria or
methodologies shall be permitted."
[6] Under Clause 31 and 32 of Section I, it is provided as under:-
"31.1 The Employer's determination of a Tender's responsiveness is to be
based on the contents of the Tender itself, as defined in ITT 11."
"31.2 A substantially responsive Tender is one that meets the requirements
of the Tender Document without material deviation, reservation or
omission. A material deviation, reservation or omission is one that:
(a) if accepted, would:
(i) affect in any substantial way the scope, quality or performance
of the Works specified in the Contract; or
(ii) limit in any substantial way, inconsistent with the Tender
Document, the Employer's rights or the Tenderer's obligations
under the proposed Contract, or
(b) if rectified, would unfairly affect the competitive position of other
Tenderers presenting substantially responsive Tenders.
"31.3 The Employer shall examine the technical aspects of the Tender
submitted in accordance with ITT 16, in particular, to confirm that all
requirements of Section VII, Works' Requirements have been met
without any material deviation, reservation or omission."
"31.4 If a Tender is not substantially responsive to the requirements of the
Tender Document, it shall be rejected by the Employer and may not
subsequently be made responsive by correction of the material
deviation, reservation or omission."
"32.1 The Employer shall determine to its satisfaction whether the eligible
Tenderers that have submitted substantially responsive Tender -
WP(C) No. 477 of 2024 with
Contd.../-
Technical Parts meet the qualifying criteria specified in Section III,
Evaluation and Qualification Criteria."
"32.2 The determination shall be based upon an examination of the
documentary evidence of the Tenderer's qualifications submitted by
the Tenderer, pursuant to ITT 17. The determination shall not take into
consideration the qualifications of other firms such as the Tenderer's
subsidiaries, parent entities, affiliates, subcontractors (other than
Specialized Subcontractors if permitted in ITT 33.3) or any other firm(s)
different from the Tenderer."
"32.3 If a Tenderer does not meet the qualifying criteria specified in
Section III, Evaluation and Qualification Criteria, its Tender shall
be rejected by the Employer and may not subsequently be made
responsive by correction of the material deviation, reservation or
omission."
"32.4 Only Tenders that are both substantially responsive to the Tender
Document and meet all Qualification Criteria shall have their envelopes
marked "FINANCIAL PART™ opened at the second public opening."
[7] Section III of Part 1 relates to Evaluation and Qualification
Criteria and Clause 3 of Section III deals with Qualification Criteria. Under
Clause 3.2 of Section III, it is provided as under:-
Historical Contract Non-Performance
Eligibility and Qualification Criteria Compliance Requirements Documentation
No Subject Requirement Single Joint Venture (existing or intended) Submission
Entity All Members Each One Requirements
Combined Member Member
3.2 History of Nonperformance Must meet Must meet Must meet N/A Form CON-2
Nonperforming of a contract did requirement requirement requirement
Contracts not occur as a
result of
contractor
default since
January 1, 2019
1. Nonperformance as decided by the Employer, shall include all contracts where (a) non-
performance was not challenged by the contractor, including through referral to the dispute
resolution mechanism under the respective contract, (b) contracts that were so challenged
but where the dispute resolution mechanism/ court of Law has not overturned /stayed the
decision of the Employer* and (c) contracts that were so challenged but fully settled
against the contractor. Nonperformance shall not include contracts where decision of the
Employer* was overruled by the dispute resolution mechanism. Nonperformance must be
based on all information on fully settled disputes or litigation, i.e., dispute or litigation that
has been resolved in accordance with the dispute resolution mechanism under the
respective contract and where all appeal instances available to the Tenderer have been
exhausted.
* Refers to the competent authority who had awarded/ terminated the Contract.
2. This requirement also applies to contracts executed by the Tenderer as JV member.
3. The Tenderer shall provide accurate information on the related Tender Form about any
litigation or arbitration resulting from contracts completed or ongoing under its execution
WP(C) No. 477 of 2024 with
Contd.../-
over the last five years. A consistent history of awards against the Tenderer or any
member of a joint venture may result in failure of the Tender .
[8] In response to the aforesaid NIT, the petitioners submitted their
bid for Package No. MUR-CW-04 for construction of Rigid Pavement and
Lined Drain of Selected Roads under Highway South Division-Package-4
(total road length of 111.182 km.) The Technical Bids submitted by the
tenderers, including the present petitioners, in connection with the four
contract works notified in the aforesaid NIT, were opened on 24-05-2024 in
the office of the respondent No. 3. The information submitted by the
petitioners in connection with their historical contract non-performance,
pending litigation and litigation history in Form CON - 2 as required under
clause 3.2 of Section-III of Part-1 of the bidding documents are as under:-
Non performed Contracts in accordance with Section III, Evaluation and Qualification Criteria
Year Non-performed Contact Identification Total Contract
portion of contract Amount (INR)
2022 Amount - Contract Identification - CON/J-1/2612 dated Rs. 150,66,92,915.20
Rs. 53,50,76,967.79 12.03.2020
Name of Employer - Chief Engineer/ CON-VII
Percentage - 35% Address of Employer = N.F. Railway, Maligaon,
Guwahati-11
Reasons(s) for nonperformance - There was
total ban on quarrying/ borrowing of Earth in
the State of Manipur due to which earthwork
was hampered badly.
2014 Amount - Contract Identification - CON/BVU-NLP/1267 Rs. 15,87,07,142.00
Rs. 2,94,10,109.00 dated 10.07.2009
Name of Employer - General Manager/ CON/
Percentage - 18% N.F Railway
Address of Employer - Maligaon, Guwahati-11
Reasons(s) for nonperformance - Unilaterial
Closure of CA by Department
2014 Amount - Contract Identification - CON/BVU-NLP/1272 Rs. 18,16,94,706.00
Rs. 1,99,57,089.00 dated 15.09.2009
Name of Employer - General Manager/CON/
Percentage - 10% N.F Railway
Address of Employer - Maligaon, Guwahati-11
Reason(s) for nonperformance - Unilateral
Closure of CA by Department
WP(C) No. 477 of 2024 with
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[9] On coming to know about the information submitted by the
petitioners in connection with their historical contract non-performance, the
respondent No. 3 wrote a letter dated 28-05-2024 to the Deputy Chief
Engineer, CON-4, North East Frontier Railway (Construction), Imphal,
requesting the latter to provide an update on the status of the historical
contract non-performance of the petitioners. In response to the said
letter, the Deputy Chief Engineer, CON-4, NF Railway, Imphal, wrote a
letter dated 12-06-2024 furnishing the following information:-
"1. Bhartiya Infra Project Ltd.:
• The contract agreement No-.CON/J-1/2612 dated 12.03.2020 with
M/s Bhartiya Infra Project Ltd. was terminated vide letter No.
W/60/CON/J-1/EMB/2019/RT-1/2612 dated 26.09.2022. Despite
the termination of the aforementioned contract, M/s Bhartiya Infra
Project Ltd. has several other ongoing contracts with the railway
which are under progress as per schedule.
• A legal case concerning this termination is currently ongoing, and
the court has not given any ruling in this regard."
[10] The Technical Bids submitted by the petitioners were evaluated
by the duly constituted Bid Evaluation Committee and the Committee
recommended that the Technical Bids/ tenders submitted by the petitioners
were substantially non-responsive to the technical requirements specified
in Section III: Evaluation and Qualification Criteria of the tender document.
Thereafter, the said Evaluation Report was submitted to the investment
bank by the respondent No. 3 under a letter dated 12-07-2024 for obtaining
No-objection and approval for opening Financial Part of the tender for the
technically responsive tenderers. The operative portion of the said report
are reproduced hereunder for ready reference.
WP(C) No. 477 of 2024 with
Contd.../-
"3.1.6. Historical Contract Non-Performance
(1) GKC-BIPL JV
The Lead Member of the joint venture has submitted a completed
Form CON-2, asserting that no instances of contract
non-performance have occurred since January 1, 2019, as specified
in Section III, Evaluation and Qualification Criteria, Sub-Factor 3.2.1.
However, the JV partner, BIPL, has submitted a completed Form
CON-2 listing a project that experienced non-performance, as
detailed below:
Year Non-Performed Contract Identification Total Contract
portion of Contract Amount
2022 Amount - Contract Identification - CON/J- Rs. 150,66,92,915.20
Rs. 53,50,76,967.79 1/2612 dated 12.03.2020
Name of Employer - Chief Engineer/
Percentage - 35% CON-VII
Address of Employer - N.F. Railway,
Maligaon, Guwahati - 11
Reason(s) for nonperformance -
There was total ban on quarrying/
borrowing of Earth in the State of
Manipur due to which earth work was
hampered badly
This office vide its letter No.22/PD/PIU/MUR/PROC-CW/2024/8726
dated 28/05/2024 had requested the Deputy Chief Engineer, CON-4,
North East Frontier Railway (Construction). Imphal to confirm any
declaration as Non-Performer of all the Tenderers who submitted the
tender for all 4 (four) contract packages of the Project during the last
5 (five) years since 1" Jan 2019. It was also requested to provide an
update on the status of termination of the work - "Earthwork,
Construction of Major or Minor Bridges and Protection works between
Ch 115.930 to 124.660 in connection with Jiribam-Tupul-Imphal new
BG Railway Line Project". This project was originally awarded to
Bhartia Infra Projects Limited under North East Frontier Railway's
Agreement no. CON/J-1/2612 dated 12.03.2020. It was subsequently
terminated as per North East Frontier Railway's letter no.
W/60/CON/J-I/EMP/2019/08/RT-1/2612 dated 26.09.2022, and as of
the latest available information on 17.11.2023, the termination
remains in effect. Further it was also requested to furnish details
whether the Hon'ble Court has given any ruling regarding the
challenge made by the Contractor in the court of law. The Northeast
Frontier Railway, in its letter W/60/CON/J-I/EMB/2019/RT-1/2612/
0522 dated 12.06.2024, informed that a legal case concerning the
termination of the above-mentioned contract is ongoing, and the court
has not given any ruling in this regard."
In accordance with Section III, Evaluation and Qualification Criteria,
under the History of Nonperforming Contracts:- "Nonperformance, as
WP(C) No. 477 of 2024 with
Contd.../-
decided by the Employer, shall include all contracts that were so
challenged but where the dispute resolution mechanism/court of law
has not overturned/stayed the decision of the Employer".
Though BIPL had challenged its employer (the authority who
awarded/terminated the contract) in court against the termination of
the contract due to nonperformance, the court has not
overturned/stayed the decision of the Employer, hence it will be
considered as Non-Performing Contracts. Therefore, the JV Member
BIPL doesn't meet the requirement under this criterion.
Since all members combined must meet the requirement under
Section III, Evaluation and Qualification Criteria, under the History of
Nonperforming Contracts, the Tenderer GKC-BIPL JV does not meet
the requirement under this criterion.
"5. Conclusion and Recommendations:
The evaluation has been carried out against the requirements of the
Tender Documents for the completed tenders offered by GKC-BIPL JV
and AMRIL-IRCON Joint Venture. Observation based on the
documents made available by the Tenderer are summarized below
(i) GKC-BIPL JV
The Tenderer meets the aggregate requirements regarding
Completeness of the tender.
The Tenderer satisfies the requirements under Clause 3.3: Financial
Situation and Performance, Clause 3.4: Experience (including General
Experience and Specific Construction Experience), and the
Declaration of Environmental, Social, Health, and Safety (ESHS) as
outlined in Section 3: Qualification Criteria. However, the Tenderer fails
to meet the requirements under Historical Contract Non-Performance.
Specifically, the JV Partner, Bhartia Infra Projects Limited (BIPL), has
a record of contract non-performance. Although BIPL challenged the
employer (the authority who awarded or terminated the contract) in
court, the court has not overturned or stayed the employer's decision.
Therefore, the Evaluation Committee concludes that the Technical
Tender submitted by the GKC-BIPL JV is substantially non-responsive
to the Technical requirements specified in Section III: Evaluation and
Qualification Criteria of the Tender Document."
[11] The status about the rejection of the Technical Bids submitted
by the petitioners on ground of non-responsiveness was updated on the
WP(C) No. 477 of 2024 with
Contd.../-
Website and the petitioners having been aggrieved filed the present writ
petitions for redressing their grievances.
[12] Mr. H.S. Paonam, learned senior counsel appearing for the
petitioners submitted that the Ministry of Road Transport and Highways
(S&R Zone), Government of India, issued a Circular dated 06-10-2021
laying down the Standard Operating Procedure to debar/ penalise/
declare the Contractor/ Concessionaire as non-performer in National
Highways and other Centrally Sponsored Road Projects. In para. 5 of the
said Circular, it is provided that before deciding the Contractor/
Concessionaire as non-performer or debarring/ penalising it, the
concerned authority shall issue a notice to the Contractor/
Concessionaire by giving 15 days' time to furnish its return reply and
allowed personal hearing, if so desired by the Contractor/
Concessionaire, before the competent authority or any person
designated for the purpose and that such a notice shall not be
issued without approval of an Officer below the rank of Chief Engineer/
CGM/ ED. In case of projects where public safety is endangered
by the behaviour/ conduct/ action of the Consultant/ Contractor/
Concessionaire, the authority may temporarily suspend the concerned
Contractor/ Concessionaire from participating in ongoing future bidding
upto one month period during which the regular process of debarment
shall be concluded.
WP(C) No. 477 of 2024 with
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[13] The learned senior counsel submitted that declaring a
Contractor non-performer/ debarring/ blacklisting being a serious
adverse action against the Contractor, the accepted norm in this regard
is providing a show cause and giving an opportunity of being heard is a
precondition requirement. It has been submitted that in the present case,
there has never been an instance where the petitioners have been
subjected to such procedures as mentioned above leave alone issuance
of a letter or order declaring the petitioners as non-performers. The
learned senior counsel further submitted that without ascertaining such
obligated formality and without any material and by just relying on the
correct information provided by the petitioners as regards their having a
history of termination of contract on 26-09-2022 along with the portion of
the non-performed work, the authorities arrived at a conclusion that the
petitioners are non-performers and rejected the Technical Bids submitted
by them. According to the senior counsel, such action of the authorities
is highly misconceived/ arbitrary and without any legal basis and as such,
it would be just and proper to direct the authorities to evaluate the
Technical Bids submitted by the petitioners and to allow them to compete
with other qualified bidders in the Financial Bids so that the most suitable
bidder can be identified and award the contract.
[14] The learned senior counsel forcefully submitted that the
petitioners have never been declared as a non-performer and that this
factum is supported by the letter of the Deputy Chief Engineer, CON-4,
WP(C) No. 477 of 2024 with
Contd.../-
NF Railway, Imphal, dated 17-07-2024 addressed to the Project Director,
EAP, Public Works Department, Manipur (respondent No. 3) wherein it
has been specifically certified that the agency, M/S Bhartia Infra Project
Limited is not declared "Non-performer" by the Railway.
[15] It has further been submitted that as the petitioners were
not declared as non-performer, the Railway Authority and other
authorities in other States allowed the petitioners to participate in many
tender process after 26-09-2022 on which date, the earlier contract work
executed by the petitioners was terminated by the Railway Authority and
having been found successful, the petitioners have been awarded Letter
of Acceptance of high value contracts and as such, the rejection of the
Technical Bids submitted by the petitioners only on the basis of the
information furnished by the petitioners relating to historical contract
non-performance is not warranted and such action of the authorities are
highly arbitrary and have been done in colourable exercise of power.
[16] The last point submitted by the learned senior counsel
appearing for the petitioners is that before taking a decision to reject the
Technical Bids submitted by the petitioners, the authorities did not issue
any notice or show cause to the petitioners or gave an opportunity of
being heard and that the decision to reject the Technical Bids of the
petitioners have been taken in complete violation of the principle of
natural justice and on this count alone, the decision for rejecting the
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Contd.../-
Technical Bids is liable to be quash and set aside. In support of his
contention, the learned senior counsel cited the following case laws:
1. "Prakash Ratan Sinha Vs. State of Bihar & ors." reported in
(2009) 14 SCC 690 wherein it has been held as under:-
"12. The argument of the learned counsel for the appellant, basically is that,
the administrative decision taken by the respondents is unfair,
unreasonable and in breach of the principles of natural justice. The
administrative decision taken by the respondents is within the realm of
public law and therefore, the decision ought to have been taken in a
fair and reasonable manner. This was more necessary because the
action cancelling the promotion of the appellant had civil consequences
in the sense that it not only puts an end to the right of the appellant and
also his further career prospects. Therefore, the respondents are under
an obligation to take all decisions in a fair and lawful manner by
adhering to the rules of natural justice."
"13. The law in this regard has been settled by several decisions of this
Court. The principle that emerge from the decisions of this Court is that,
if there is a power to decide and decide detrimentally to the prejudice
of a person, duty to act judicially is implicit in exercise of such a power
and that the rule of natural justice operates in areas not covered by any
law validly made."
"14. Corollary principles emanating from these cases are as to what
particular rule of natural justice should apply to a given case must
depend to an extent on the facts and circumstances of that case and
that it is only where there is nothing in the statute to actually prohibit
the giving of an opportunity of being heard and on the other hand, the
nature of the statutory duty imposed on the decision maker itself
implies an obligation to hear before deciding. These cases have also
observed, whenever an action of public body results in civil
consequences for the person against whom the action is directed, the
duty to act fairly can be presumed and in such a case, the
administrative authority must give a proper opportunity of hearing to
the affected person."
2. "Gorkha Security Services Vs. Government (NCT of Delhi)
& ors." reported in (2014) 9 SCC 105 wherein it has been held
as under:-
"16. It is a common case of the parties that the blacklisting has to be
preceded by a show-cause notice. Law in this regard is firmly grounded
and does not even demand much amplification. The necessity of
compliance with the principles of natural justice by giving the
opportunity to the person against whom action of blacklisting is sought
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to be taken has a valid and solid rationale behind it. With blacklisting,
many civil and/or evil consequences follow. It is described as "civil
death" of a person who is foisted with the order of blacklisting. Such an
order is stigmatic in nature and debars such a person from participating
in government tenders which means precluding him from the award of
government contracts.
"17. Way back in the year 1975, this Court in Erusian Equipment &
Chemicals Ltd. v. State of W.B.4, highlighted the necessity of giving an
opportunity to such a person by serving a show-cause notice thereby
giving him opportunity to meet the allegations which were in the mind
of the authority contemplating blacklisting of such a person. This is
clear from the reading of paras 12 and 20 of the said judgment.
Necessitating this requirement, the Court observed thus: (SCC pp. 74-
75)
"12. Under Article 298 of the Constitution the executive power of the
Union and the State shall extend to the carrying on of any trade
and to the acquisition, holding and disposal of property and the
making of contracts for any purpose. The State can carry on
executive function by making a law or without making a law. The
exercise of such powers and functions in trade by the State is
subject to Part III of the Constitution. Article 14 speaks of equality
before the law and equal protection of the laws. Equality of
opportunity should apply to matters of public contracts. The State
has the right to trade. The State has there the duty to observe
equality. An ordinary individual can choose not to deal with any
person. The Government cannot choose to exclude persons by
discrimination. The order of blacklisting has the effect of
depriving a person of equality of opportunity in the matter of
public contract. A person who is on the approved list is unable to
enter into advantageous relations with the Government because
of the order of blacklisting. A person who has been dealing with
the Government in the matter of sale and purchase of materials
has a legitimate interest or expectation. When the State acts to
the prejudice of a person it has to be supported by legality.
"20. Blacklisting has the effect of preventing a person from the privilege
and advantage of entering into lawful relationship with the
Government for purposes of gains. The fact that a disability is
created by the order of blacklisting indicates that the relevant
authority is to have an objective satisfaction. Fundamentals of fair
play require that the person concerned should be given an
opportunity to represent his case before he is put on the blacklist."
"20. Thus, there is no dispute about the requirement of serving show-cause
notice. We may also hasten to add that once the show-cause notice is
given an opportunity to reply to the show-cause notice is afforded, it is
not even necessary to give an oral hearing. The High Court has rightly
repudiated the appellant's attempt in finding foul with the impugned
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order on this ground. Such a contention was specifically repelled in
Patel Engg."
"29. No doubt, rules of natural justice are not embodied rules nor can they
be lifted to the position of fundamental rights. However, their aim is to
secure justice and to prevent miscarriage of justice. It is now well-
established proposition of law that unless a statutory provision either
specifically or by necessary implication excludes the application of any
rules of natural justice, in exercise of power prejudicially affecting
another must be in conformity with the rules of natural justice."
"31. When it comes to the action of blacklisting which is termed as "civil
death" it would be difficult to accept the proposition that without even
putting the noticee to such a contemplated action and giving him a
chance to show cause as to why such an action be not taken, final
order can be passed blacklisting such a person only on the premise
that this is one of the actions so stated in the provisions of NIT."
"34. For the aforesaid reasons, we are of the view that the impugned
judgment of the High Court does not decide the issue in the correct
perspective. The impugned Order dated 11-9-2013 passed by the
respondents blacklisting the appellant without giving the appellant
notice thereto, is contrary to the principles of natural justice as it was
not specifically proposed and, therefore, there was no show-cause
notice given to this effect before taking action of blacklisting against the
appellant. We, therefore, set aside and quash the impugned action of
blacklisting the appellant. The appeals are allowed to this extent.
However, we make it clear that it would be open to the respondents to
take any action in this behalf after complying with the necessary
procedural formalities delineated above. No costs."
[17] Mr. M. Devananda, learned Addl. AG appearing for the
respondents No. 2 and 3 submitted that by a letter dated 26-09-2022 of
the Chief Engineer/CON-VII, NF Railway, Maligaon addressed to the
petitioner No. 1, the contract work of "Earthwork, construction of Major of
minor bridges and protection works between Ch. 115930 to 124660 in
connection with the construction of Jiribam-Tupul-Imphal new BG
Railway Line project" awarded to the petitioner No. 1 was rescinded on
the ground of non-performance and the petitioner No.1 was penalized by
debarring it from participating in the tender for executing the balance
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work and by forfeiting the security deposit and encashing the
Performance Guarantee.
It has been submitted that while submitting the Technical Bids,
the petitioners voluntarily declared their earlier historical contract
non-performance in the Form CON-2 submitted by them as required
under Clause 3.2 of Section III of Part 1 of the bidding documents and
one of such non-performance occurred in the year 2022.
[18] It has also been submitted that under Clause 3.2 of Section III,
one of the eligibility and qualification criteria to be fulfilled by a bidder is
that non-performance of a contract did not occurred as a result of
Contractor default since January, 1, 2019 and that under Clause 32.3 of
Section I, it is provided that if a tenderer does not meet the qualifying
criteria specified in Section III, its tender shall be rejected by the
employer and may not subsequently be made responsive by correction
of the material deviation, reservation or omission.
Mr. M. Devananda, learned Addl. AG submitted that as the
petitioners have voluntarily declared that they have a history of contract
non-performance in 2022, the Bid Evaluation Committee recommended
that the Technical Bids/ tenders submitted by the petitioners was
substantially non-responsive to the technical requirements specified in
Section III and on the basis of such recommendation, the Technical Bids
submitted by the petitioners were rejected as non-responsive.
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[19] The learned Addl. AG submitted that the tender bidding
documents lays down in detailed the procedure to be followed for each
stage of the bidding process, such as, issuance of invitation for bids,
issuance of notices, corrigendum, opening of bids, evaluation of bids,
approval of bids, etc., with detailed instructions to bidders that is
obligatory for each bidder to follow including the requirements to be
fulfilled while bidding. It has also been submitted that the employer
diligently followed and complied with the laid down procedure, all the
approved instruction to tenderers and the guidelines laid down in the
bidding documents. It has further been submitted that the Technical
Evaluation of all the bids for all the packages including that of the
petitioners were carried out as per the procedure laid down in the
tender bidding documents and in complete compliance of the guidelines
of the bank of procurement for works. According to the learned Additional
AG, the authorities have acted fairly and strictly in conformity with the
laid down norms and procedure while evaluating the Technical Bids
submitted by the tenderers and there is no question of arbitrariness or
mala fide action on the part of the authorities. The learned senior
counsel, accordingly, submitted that there is no merit in the present writ
petitions and the same deserves to be rejected outright.
[20] I have heard at length and considered the rival submissions
advanced by the learned counsel appearing for the parties. I have also
carefully examined all the materials available on record including the
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connected Government file produced by the learned Additional AG. The
only issue that needs to be considered and decided in the present two
writ petitions is whether the petitioners, more particularly the petitioner
No. 1 is a non-performing contractor or not.
It is an admitted position of fact that by a letter dated
26-09-2022 of the Chief Engineer, CON-VII, NF Railway, Maligaon
addressed to the petitioner No. 1, the contract work in connection with
"Earthwork, construction of Major of minor bridges and protection works
between Ch. 115930 to 124660 in connection with the construction of
Jiribam-Tupul-Imphal new BG Railway Line Project" awarded to the
petitioner No. 1 was rescinded on ground of non-performance and the
petitioner No. 1 was penalised by debarring it from participation in the
tender for executing the balance work and by forfeiting the security
deposit and encashing the Performance Guarantee. On examination of
the said letter, it can be clearly seen that the said termination order was
issued after giving two prior notices to the petitioner No. 1 and by
following the procedure laid down in Clause 62 of the Standard General
Conditions of contract and the petitioners have admitted such factual
position. It is also an admitted position of fact that the said termination
order still stands without any interference from any court or competent
authority. In the present case, the petitioners have also voluntarily
disclosed about their historical contract non-performances in Form
CON-2 as required under Clause 3.2 of Section III of Part 1 of the bidding
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documents. In fact, the petitioners have never denied the fact that the
petitioner No. 1 has a history of non-performance including one in 2022.
Taking into consideration such admitted factual positions, this
court is of the considered view that the petitioners, more particularly the
petitioner No. 1 has a history of non-performance and this court did not
find any merit and substance in the submission advanced by the learned
senior counsel appearing for the petitioners that the petitioners have
never been declared as non-performers.
[21] In the present case, the petitioners voluntarily disclosed the
information about their historical contract non-performance including one
of 2022 in the Form CON-2 submitted by them along with their bidding
documents. On coming to know about such historical non-performance
of the petitioners, the respondent No. 3 wrote a letter to the authorities of
the Railway to confirm about the veracity of the disclosure made by the
petitioners and only after obtaining confirmation from the concerned
authorities of the Railway, the Technical Bids of the petitioners were
evaluated by the Bid Evaluation Committee and after careful and detail
consideration, the Bid Evaluation Committee recommended that the
Technical Bids/ tenders submitted by the petitioners was substantially
non-responsive to the technical requirements specified in Section III
of Part 1. On the basis of such recommendation, the Technical Bids
submitted by the petitioners were rejected as non-responsive. Taking
into consideration such undisputed factual positions, this court is of the
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considered view that there is no question of arbitrariness or mala fide or
colourable exercise of power on the part of the authorities in rejecting the
Technical Bids submitted by the petitioners and this court did not find any
ground or reason for interfering with such decisions.
[22] It has been submitted on behalf of the petitioners that the
Deputy Chief Engineer, CON-4, Imphal NF Railway has specifically
certified in his letter dated 17-07-2024 that the petitioner No. 1 was not
declared as non-performer by the Railway and that the respondent
No. 3 did not take into consideration the said letter while rejecting the
Technical Bids of the petitioners. This court did not find any merit and
substance in the said submission for the following two reasons:-
Firstly, the said letter dated 17-07-2024 was issued only after
the evaluation of the Technical Bids of the petitioners by the Bid
Evaluation Committee had been completed and the evaluation report
had been submitted by the respondent No. 3 to the investment bank on
12-07-2024 for conveying No-Objection and approval for opening of
the Financial Bids. As such, there was no question of ignoring or not
considering the said letter at the time of evaluation of the Technical Bids
of the petitioners.
Secondly, under Clause 32.3 of Section I of the bidding
documents, it is provided that if a tenderer does not meet the qualifying
criteria specified in Section III, Evaluation and Qualification Criteria,
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its tender shall be rejected by the employer and may not
subsequently be made responsive by correction of the material deviation,
reservation or omission. In view of the said provisions, the information
or declaration made by the petitioners about their historical contract
non-performance in Form CON-2 cannot be corrected and the Technical
Bids of the petitioners cannot be subsequently made responsive.
[23] In the case of "Jagdish Mandal Vs. State of Orissa & ors."
reported in (2007) 14 SCC 517, the Hon'ble Apex Court in para. 22 of
the judgment held 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:
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(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."
[24] In the case of "N.G. Projects Ltd. Vs. Vinod Kumar Jain &
ors." reported in (2022) 6 SCC 127, the Hon'ble Apex Court in para. 22
and 23 of the judgment held as under:-
"22. The satisfaction whether a bidder satisfies the tender condition is
primarily upon the authority inviting the bids. Such authority is aware of
expectations from the tenderers while evaluating the consequences of
non-performance. In the tender in question, there were 15 bidders.
Bids of 13 tenderers were found to be unresponsive i.e. not satisfying
the tender conditions. The writ petitioner was one of them. It is not the
case of the writ petitioner that action of the Technical Evaluation
Committee was actuated by extraneous considerations or was mala
fide. Therefore, on the same set of facts, different conclusions can be
arrived at in a bona fide manner by the Technical Evaluation
Committee. Since the view of the Technical Evaluation Committee was
not to the liking of the writ petitioner, such decision does not warrant
for interference in a grant of contract to a successful bidder.
"23. In view of the above judgments of this Court, the writ court should
refrain itself from imposing its decision over the decision of the
employer as to whether or not to accept the bid of a tenderer. The Court
does not have the expertise to examine the terms and conditions of the
present day economic activities of the State and this limitation should
be kept in view. Courts should be even more reluctant in interfering
with contracts involving technical issues as there is a requirement of
the necessary expertise to adjudicate upon such issues. The approach
of the Court should be not to find fault with magnifying glass in its
hands, rather the Court should examine as to whether the decision
making process is after complying with the procedure contemplated by
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the tender conditions. If the Court finds that there is total arbitrariness
or that the tender has been granted in a mala fide manner, still the
Court should refrain from interfering in the grant of tender but instead
relegate the parties to seek damages for the wrongful exclusion rather
than to injunct the execution of the contract. The injunction or
interference in the tender leads to additional costs on the State and is
also against public interest. Therefore, the State and its citizens suffer
twice, firstly by paying escalation costs and secondly, by being
deprived of the infrastructure for which the present day Governments
are expected to work."
[25] In the case of "Tata Motors Limited Vs. Brihan Mumbai
Electric Supply & Transport Undertaking (BEST) & ors." reported in
2023 SCC Online SC 671, the Hon'ble Apex Court in para. 48 and 52 to
54 held as under:-
"48. This Court being the guardian of fundamental rights is duty-bound to
interfere when there is arbitrariness, irrationality, mala fides and bias.
However, this Court has cautioned time and again that courts should
exercise a lot of restraint while exercising their powers of judicial review
in contractual or commercial matters. This Court is normally loathe to
interfere in contractual matters unless a clear-cut case of arbitrariness
or mala fides or bias or irrationality is made out. One must remember
that today many public sector undertakings compete with the private
industry. The contracts entered into between private parties are not
subject to scrutiny under writ jurisdiction. No doubt, the bodies which
are State within the meaning of Article 12 of the Constitution are bound
to act fairly and are amenable to the writ jurisdiction of superior courts
but this discretionary power must be exercised with a great deal of
restraint and caution. The courts must realise their limitations and the
havoc which needless interference in commercial matters can cause.
In contracts involving technical issues the courts should be even more
reluctant because most of us in Judges' robes do not have the
necessary expertise to adjudicate upon technical issues beyond our
domain. The courts should not use a magnifying glass while scanning
the tenders and make every small mistake appear like a big blunder.
In fact, the courts must give "fair play in the joints" to the government
and public sector undertakings in matters of contract. Courts must also
not interfere where such interference will cause unnecessary loss to
the public exchequer. (See: Silppi Constructions Contractors v. Union
of India, (2020) 16 SCC 489)"
"52. Ordinarily, a writ court should refrain itself from imposing its decision
over the decision of the employer as to whether or not to accept the bid
of a tenderer unless something very gross or palpable is pointed out.
The court ordinarily should not interfere in matters relating to tender or
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contract. To set at naught the entire tender process at the stage when
the contract is well underway, would not be in public interest. Initiating
a fresh tender process at this stage may consume lot of time and also
loss to the public exchequer to the tune of crores of rupees. The
financial burden/implications on the public exchequer that the State
may have to meet with if the Court directs issue of a fresh tender notice,
should be one of the guiding factors that the Court should keep in mind.
This is evident from a three-Judge Bench decision of this Court in
Association of Registration Plates v. Union of India, reported in (2005)
1 SCC 679."
"53. The law relating to award of contract by the State and public sector
corporations was reviewed in Air India Ltd. v. Cochin International
Airport Ltd., reported in (2000) 2 SCC 617 and it was held that the
award of a contract, whether by a private party or by a State, is
essentially a commercial transaction. It can choose its own method to
arrive at a decision and it is free to grant any relaxation for bona fide
reasons, if the tender conditions permit such a relaxation. It was further
held that the State, its corporations, instrumentalities and agencies
have the public duty to be fair to all concerned. Even when some defect
is found in the decision-making process, the court must exercise its
discretionary powers under Article 226 with great caution and should
exercise it only in furtherance of public interest and not merely on the
making out of a legal point. The court should always keep the larger
public interest in mind in order to decide whether its intervention is
called for or not. Only when it comes to a conclusion that overwhelming
public interest requires interference, the court should interfere."
"54. As observed by this Court in Jagdish Mandal v. State of Orissa,
reported in (2007) 14 SCC 517, that while invoking power of judicial
review in matters as to tenders or award of contracts, certain special
features should be borne in mind that evaluations of tenders and
awarding of contracts are essentially commercial functions and
principles of equity and natural justice stay at a distance in such
matters. If the decision relating to award of contract is bona fide and is
in public interest, courts will not interfere by exercising powers of
judicial review even if a procedural aberration or error in assessment
or prejudice to a tenderer, is made out. Power of judicial review will not
be invoked to protect private interest at the cost of public interest, or to
decide contractual disputes."
[26] I have carefully perused the judgments cited on behalf of the
petitioners and this court is of the considered view that the ratio laid down
in the said judgments are not applicable in the facts and circumstances
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of the present case and accordingly, the said judgments are of no help
to the case of the petitioners.
[27] In view of the facts and circumstances of the present cases
and for the reasons and findings given hereinabove and the ratio laid
down by the Hon'ble Apex Court in the case of Jagdish Mandal (supra),
N.G. Projects Ltd. (supra) and Tata Motors Limited (supra), this court
did not find any ground or reason for interfering with the decision taken
by the authorities for rejecting the Technical Bids submitted by the
petitioners. Accordingly, the present writ petitions are hereby dismissed
and the interim order passed earlier stands vacated. There will be no
order as to cost.
JUDGE
FR / NFR
Devananda
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