Punjab-Haryana High Court
M/S A.G. Construction Co vs Food Corporation Of India And ... on 10 February, 2021
CWP No. 20130 of 2020 -1-
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
CWP No. 20130 of 2020
Date of decision: 10-2-21
M/s A.G. Construction Co. ... Petitioner
Versus
Food Corporation of India and others ... Respondents
CORAM: HON'BLE MR. JUSTICE RAVI SHANKER JHA,
CHIEF JUSTICE
HON'BLE MR. JUSTICE ARUN PALLI, JUDGE
Present: Mr. Puneet Gupta, Advocate,
for the petitioner.
Mr. K.K. Gupta, Advocate,
for the respondent-FCI.
****
ARUN PALLI, J.
1. The petitioner-M/s A.G. Construction Co., is a proprietorship
concern. And vide this petition, prays for a writ of Certiorari to quash the
orders dated 02.11.2020 (P-6), whereby the bid submitted by the petitioner,
upon technical evaluation by the duly constituted committee, was rejected
being non-responsive, and also dated 20.11.2020 (P-12), vide which even
the representation against rejection of its bid has since been declined. A
Mandamus is also prayed for, commanding the respondent-authorities to
reckon the experience the sole proprietor (Ajay Kumar Garg) of the
petitioner concern had acquired, while being a partner in M/s B.G.
Constructions Co. Bathinda (partnership firm) and accordingly, he be held to
be technically compliant, and the bidding process be initiated afresh from
that stage.
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2. In brief, the case set out in the petition is that petitioner is an
enlisted contractor in Class I category of building works of the Punjab
Mandi Board and the Punjab Roads and Bridges Development Board. And
as would be necessary to point out, earlier the petitioner was a partner in M/s
B.G. Constructions Co. (erstwhile partnership firm), and held 50% share,
whereas, Tarun Bansal and Varun Bansal were the other two partners who
had 25% share each in the firm. For, the firm was dissolved on 25.6.2019, in
terms of the Memorandum of Understanding dated 25.6.2019, executed
between the partners, it was agreed that they were free to set up their new
ventures and could also use the technical and financial credentials of the
firm corresponding to their respective shares. The respondent authorities, in
August, 2020, vide tender notice No.06/2020, invited E-tenders under Two
Bid System for construction of District Office Building at Bathinda, from
appropriate class of approved contractors of CPWD, State PWDs, MES,
Railways and Public Sector Undertakings/Enterprises of the Central
Government and State Government. To be eligible to bid, the tenderers
required to have satisfactorily completed, during the last five years, at least,
Three Multi Storey RCC Framed Structure Government Office
Building/Institute Building works costing not less than the amount equal to
40% of the estimated cost (Rs.3,95,47,577/-) of the tender; or Two Multi
Storey RCC Framed Structure Government Office Building/Institute
Building works costing not less than the amount equal to 60% of the
estimated cost of the tender; or One Multi Storey RCC Framed Structure
Government Office Building/Institute Building work of aggregate cost not
less than the amount equal to 80% of the estimated cost put to tender. As
stipulated in the tender conditions, copies of experience/work completion
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certificates of requisite amount were required to be uploaded, along with the
technical bid. The last date for submission of technical and price bid was
14.9.2020. The petitioner being fully compliant, in terms of the tender
document, submitted his technical and price bid in time, along with the
requisite fee. However, as posted on the Government eProcurement System
Portal, on 02.11.2020, the tender submitted by the petitioner was rejected
during technical evaluation, for the documents appended with the bid were
not as per MTF. For neither any opportunity was afforded to the petitioner
before rejection of his technical bid, nor any explicit reasons were assigned,
in support of the rejection, the petitioner approached the respondent
authorities on 5.11.2020. But, was orally informed, for the work experience
of M/s B.G. Constructions Co., Bathinda (erstwhile partnership firm), could
not be counted or reckoned as his experience, his bid was found to be non-
responsive. And, this was despite the fact that petitioner, along with its bid
document, had submitted a representation dated 14.9.2020, wherein it was
clarified that in terms of the settled law, the experience gained by the
proprietor of the petitioner-concern, as partner in M/s B.G. Constructions
Co., was required to be computed in proportion to his 50% share, and the
judgments of Delhi and Madhya Pradesh High Court were also appended
therewith. For, even though the petitioner required the respondent
authorities to furnish reasons and provide technical summary of rejection of
its bid, but there was no response, the petitioner approached this Court vide
CWP No.18987 of 2020. However, as counsel for the respondent authorities,
who appeared upon an advance notice, submitted, for the representation
submitted by the petitioner was pending consideration and shall be disposed
of, by passing a detailed order, the petition was disposed of by the Division
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Bench on 10.11.2020. But, eventually, the said representation was rejected
by the respondent authorities, vide order dated 20.11.2020, on the grounds:-
"Now coming to the experience documents
submitted by the bidder with tender criteria, it has been
concluded that M/s A.G. Construction Co. has submitted only
one document under 60% work experience head and rest of the
experience documents uploaded is in the name of M/s B.G.
Construction Co., which cannot be considered as per the
experience criteria. Needless to say that M/s A.G. Construction
Co. is claiming the experience as gained in partnership in deed
in M/s B.G. Construction Co. only to the extent of the ratio of
share as named by Ajay Kumar Garg as 50% which does not
fulfill the experience criteria as laid down in terms and
conditions discussed above.
Furthermore, the judgments relied upon by M/s A.G.
Construction Co. in his representation was examined by the
technical evaluation committee and operating division in
consultation with empanelled advocate of FCI and it was found
that said judgment of Hon'ble High Court of Delhi passed in
case of PK Delicacies Pvt. Ltd. Vs. UOI and the judgment of
Hon'ble High Court of Indore, Madhya Pradesh, passed in case
of Samrudha Buildcon Pvt. Lt. Vs. Indore Development Authority
are judgments in personam and not judgment in rem.
It is not out of place to mention that the Hon'ble High
Court of Punjab and Haryana in CA-CWP-5 of 2017 (O&M)
titled FCI Vs. M/s Daniel Masih Satprit Singh Bedi wherein the
challenge was to the validity of the amendment incorporated by
the FCI in MTF of contract division to the effect that in case of
Partnership only the experience of the Firm will be reckoned and
for the purpose the experience of individual partners will not be
counted has upheld the said view point of the FCI and same has
also been upheld by the Hon'ble Supreme Court of India.
Needless to say that the said legal position established by the
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Hon'ble High Court of Punjab and Haryana and the Apex Court
in the ibid judgment applies to present case also."
3. Thus, this petition.
4. Learned counsel for the petitioner submits that respondent
authorities seriously erred in declining to consider the experience gained and
acquired by M/s B.G. Constructions Co. (erstwhile partnership firm), in
which Ajay Kumar Garg (sole proprietor of the petitioner concern) happened
to be one of the partners, as his experience or the experience of the petitioner
concern. Further, as per the tender conditions, the requisite experience, in
terms of the qualifying criteria, was required to be possessed by the
appropriate class of approved contractors and not by or in the name of the
petitioner (M/s A.G. Construction Co.), and for the proprietor of the
petitioner concern possessed the requisite experience, he was eligible to
compete in the tender process. In any case, he asserts, for concededly, Ajay
Kumar Garg held 50% share in M/s B.G. Constructions Co. (erstwhile
partnership firm), he was entitled to claim proportionate experience, in terms
of his share, out of the experience acquired by the firm. He, therefore, in
reference to the performance/experience certificate (P-13), which was issued
to M/s B.G. Constructions Co. (erstwhile partnership firm), upon
construction of administrative block in BISA Headquarters, at Ladhowal,
submits, for the value of the work/project executed by the firm was Rs.852
lakhs, the petitioner, in terms of his share, would be deemed to have
executed one work valuing Rs. 426 lakhs (852/2), and that being more than
the cost of the subject tender (Rs. 3.95 crores), he was eligible to bid in
terms of the eligibility criteria. Further, it is urged that the approach and
understanding of the respondent authorities to term the decisions rendered
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by the Division Bench of Madhya Pradesh High Court in Samruddha
Buildcon Pvt. Ltd. Vs. Indore Development Authority and others, (CWP
No. 4448 of 2015) and of Delhi High Court in P.K. Delicacies Pvt. Ltd. Vs.
Union of India and others, 2005 (13) RCR (Civil) 491, as judgments in
personam and not in rem, is apparently perverse. For, in both the cases, the
Court had actually relied upon the decision of the Supreme Court in M/s
New Horizons Limited and another Vs. Union of India and others, 1995
(1) SCC 478, wherein it was held that in the absence of any exclusionary
clause in the tender document, it could not be said that past experience of a
partner of the firm could not be considered. Rather, he submits that in terms
of the law laid down in those decisions, experience of the firm ought to have
been considered. And, in reference to the impugned order, he asserts that
reliance placed by the authorities upon the decision of the Division Bench of
this Court in FCI v. Daniel Masih Satprit Singh Bedi (2017 SCC OnLine
P&H 417), to reject the representation of the petitioner is apparently ill-
founded, for the said decision has no bearing on the matter in issue. For,
unlike in Daniel Masih (supra), in the matter at hand, there was no
exclusionary clause which stipulates that experience of the partner would not
be reckoned and experience in the name of the firm alone shall be counted.
He submits that the Division Bench in the said decision had rather observed
that judgment of the Supreme Court in M/s New Horizons Limited (supra),
was confined to the cases, where the qualification was stipulated in respect
of the firm without excluding qualifications of the partner thereof. Thus, the
respondent authorities apparently failed to apply its mind and consider the
claim of the petitioner in the right perspective. No other argument was
advanced.
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5. Per contra, Mr. K.K.Gupta, learned counsel for the respondent
authorities, supports the rejection of the technical bid submitted by the
petitioner, by the duly constituted committee, being non-responsive, as also
the impugned order dated 20.11.2020 (P-12), whereby, upon due and
comprehensive consideration of the claim of the petitioner, even its
representation was rejected. He asserts, for apparently the petitioner did not
possess the requisite experience, in terms of the qualifying criteria, rejection
of its technical bid was inevitable. Thus, he submits that the petition
deserves to be dismissed.
6. We have heard learned counsel for the parties and perused the
records.
7. In context of the matter in issue and to proceed further, we
consider it expedient to set out the eligibility criteria stipulated at page 4 of
the MTF, which reads thus:-
"Online Item rates Tenders under Two Bid
System are invited on behalf of the Food Corporation of
India for the following works from the appropriate class
of approved Contractors of CPWD, State P.W.Ds,
M.E.S, Railways and Public Sector
Undertakings/Enterprises of the Central Government
and State Government who have satisfactorily
completed during the last five years, ending last date of
the month previous to the one in which the Tenders are
invited at least three Multi Storey RCC framed
Structure Government Office Building/Institute
Building works of costing not less than the amount
equal to 40% of the estimated cost put to Tender(or)
two Multi Storey RCC framed Structure Government
Office Building/Institute Building works costing not
less than the amount equal to 60% of the estimated cost
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put to Tender (or) One Multi Storey RCC framed
Structure Government Office Building/Institute
Building work of aggregate cost not less than the
amount equal to 80% of the estimated cost put to
Tender, in any of the Organisation listed above for
registration in NIT."
8. Explicitly, for a tenderer to be eligible to bid, he ought to have
satisfactorily executed, during the last five years, either three of the
specified works: costing not less than the amount equal to 40% of the
estimated cost put to tender (40% of Rs.3,95,47,577.00)=Rs.1,58,19,031.00
or Two works costing not less than the amount equal to 60% of the
estimated cost of the tender (60% of Rs.3,95,47,577. 00)=Rs.2,37,28,546.00
or One work costing not less than the amount equal to 80% of the estimated
cost put to tender (80% of Rs.3,95,47,577.00)=Rs.3,16,38,062.00. And, as
indicated earlier, in terms of the tender conditions, copies of
experience/work completion certificates of requisite amount were required
to be submitted with the technical bid. Concededly, the petitioner did not
possess the required experience either in his name or in his independent
capacity. But, for he happened to be one of the partners in M/s B.G.
Construction Co. (erstwhile partnership firm), he appended the
experience/performance certificate (P-13), dated 9.3.2020, that was issued in
the name of the firm. And, as indicated earlier, his claim is, for the
partnership firm is not a separate legal entity but only a compendious mode
of describing its partners, therefore, the experience of the firm is indeed the
experience of its partners, and thus, ought to have been reckoned, while
evaluating the eligibility of the petitioner. Also, in any case, for Ajay Kumar
Garg (the sole proprietor of the petitioner), held half share in the erstwhile
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firm, he was entitled to claim work experience, at least, equal to half the
value of the project/work (852/2 lakhs=Rs. 4.26 crores), executed by the
firm. And thus, by necessary implication, he possessed the requisite
experience and eligibility to bid in his independent capacity.
9. In this backdrop, therefore, the question that arises for
consideration is, whether the experience (P-13) gained/acquired by M/s
B.G. Constructions Co. (erstwhile partnership firm), could be construed
as experience of Ajay Kumar Garg, who happened to be one of the three
partners in the firm, in his individual/independent capacity; or could he
claim the work experience of the firm even in proportion to the share he
held?
10. To appreciate its true essence and even the nature of
project/work that was assigned to and executed by M/s B.G. Constructions
Co. (erstwhile partnership firm), it would be apposite to refer to the
experience/performance certificate (P-13), which forms basis of the claim of
the petitioner:-
CLIENT'S CERTIFICATE REG. PERFORMANCE OF CONTRACTOR
No. 2753
dt 09-03-2020 (hand written)
No. Date
Name & Address of the Contractor M/s B.G. Constructions Company,
St. No.9, House No. 922, Ganesha
Basti, Bathinda
Name of Work with brief particulars Construction of Administrative
Block, including GIS Lab
Informatics and Statistical unit
Agronomy Lab, Genomic
Selection Lab and Multipurpose
Hall etc, in BISA Headquarter at
Ladhowal, Distt. Ludhiana as per
approved DNIT.
Agreement No. and date 7 of 2017-18
Agreement amount Rs. 770.33 Lacs
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Date of commencement of work 21.08.2017
Stipulated date of completion 20.08.2018
Actual date of completion 22.01.2020
Details of compensation levied for delay N.A.
( indicate amount) if any
Gross amount Rs. 852.00 Lacs
Final Bill under process
Name and address of the authority Executive Engineer, Construction
under whom work executed Division No.1, PWD, B&R Br.
Ludhiana
Whether the contractor employed Yes
qualified Engineer/Overseas during
execution of work
i) Quality of work (indicate grading) √
Outstanding/Very Good/Good/Poor
ii) Amount of work paid on reduced rate No.
work?
i) Did the contractor go for arbitration? No.
ii) If yes, total amount claim No.
iii) Total amount awarded No.
Comments on the capabilities of the
Contractor
a) Technical Proficiency √
Outstanding/VeryGood
b) Financial soundness √
Outstanding/VeryGood
c) Mobilization adequate T&P √
Outstanding/VeryGood
d) Mobilization manpower √
Outstanding/VeryGood
e) General behavior √
Outstanding/VeryGood
11. Ex facie, the experience gained by M/s B.G. Constructions Co.
(erstwhile partnership firm), upon execution of the project/work (ibid), was
acquired by the combined, collective and integrated labour of its partners,
who, apart from their individual investments, had pooled in their respective
resources, skill, knowledge, experience, ideas and information. And, were,
thus, supplemental to each other. Quite naturally, the experience certificate
(ibid) certifies the performance, capacity and capabilities of the firm (M/s
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B.G. Constructions Co.), that had executed the project and not of any
partner individually. It is true that from the same subject of experience, more
than one can gain experience, however, that must not by itself evince the
conclusion that each person gaining 'experience' (limited to their
contribution) in the output jointly created by them, is entitled to the benefit
of the output in its entirety. Though, the so called experience of a firm, in
reality, is nothing but the experience of the partners who compose it, such
experience of a firm is not in its entirety attributable to each individual
partner, but attributable only to the collective effort of all partners
concerned. The benefit of the experience of a firm understood as an
inextricably synthesised synergism of the individual efforts of all partners
cannot therefore, be extended to a single partner in his individual capacity
merely because he might have been actively involved in producing the
jointly created final output. Therefore, given the nature of experience, it
could have been identifiable, and could be quantified (quantitatively and/or
qualitatively) only if it was claimed by the firm itself or its partners jointly.
But, we must pause for a moment to point out that we are not unmindful of a
situation, which, perhaps, could be viewed differently subject, of course, to
its circumstantial landscape and the specific terms/conditions of the tender
enquiry, where a partner is able to conclusively show by producing tangible
material that he was the one tasked in his individual/independent capacity
with looking after the project he claims experience for and that in doing so,
he acquired/gained that experience which is germane to the tender's
requirement.
12. This could be examined from yet another perspective.
Ordinarily, in the case of a partnership, the arrangements of the partners
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inter se, related to running the business/affairs of the firm, division of work,
assignment of specific operations to a particular partner, skill, knowledge
and experience possessed by the other and extent of its usage and benefit to
the firm are opaque to an outsider looking inwards. Similarly, it is not
unusual that every partner does not necessarily attend to the day to day
business of the firm. Even a partner who possesses the requisite experience
might not have ever participated in the management or affairs of the firm,
for he may only be an investment partner. Now, from here, another factor
that needs to be kept in view is that matters related to tenders or award of
contract in essence are commercial in nature. As such, the tender inviting
authority is certainly entitled to evaluate and satisfy itself as regards the
capability and competence of the tenderer in completing the tasks of the kind
and magnitude involved in the NIT. Undeniably so, the technical evaluation
stage is an extremely sensitive phase in reaching that satisfaction.
Additionally, in the context of State projects, an element even of public
interest is involved. For the characteristic features herein are opacity and
uncertainty as to the innards of the firm's workings, coercing a tender
inviting authority to blindly treat experience in the name of an erstwhile
partnership firm as the experience of the partner in his individual capacity, in
our view, would militate against every judicious consideration that animates
an NIT.
13. At this juncture, we consider it expedient to even refer to the
observations recorded by the Supreme Court in New Horizons Limited and
others (supra), that when a businessman enters into a contract, pursuant
whereto some work is to be performed, he is entitled to assure himself about
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the credentials of the person who is to be entrusted with the performance of
the work:
".....While considering the requirement regarding
experience it has to be borne in mind that the said
requirement is contained in a document inviting offers for a
commercial transaction. The terms and conditions of such a
document have to be construed from the standpoint of a
prudent businessman. When a businessman enters into a
contract whereunder some work is to be performed he seeks to
assure himself about the credentials of the person who is to be
entrusted with the performance of the work. Such credentials
are to be examined from a commercial point of view which
means that if the contract is to be entered with a company he
will look into the background of the company and the persons
who are in control of the same and their capacity to execute
the work....."
14. We are also reminded of the observations recorded by the
Supreme Court in Raunaq International Limited Vs. I.V.R. Construction
Limited, (1999) 1 SCC 492, where the Supreme Court held that:
9. "In arriving at a commercial decision
considerations which are of paramount importance are
commercial considerations. These would be :
(1) xx xx xx xx
(2) xx xx xx xx
(3) whether the person tendering has the ability to deliver the
goods or services as per specifications. When large works
contracts involving engagement of substantial manpower or
requiring specific skills are to be offered, the financial ability
of the tenderer to fulfil the requirements of the job is also
important;
(4) the ability of the tenderer to deliver goods or services or to
do the work of the requisite standard and quality;
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(5) past experience of the tenderer and whether he has
successfully completed similar work earlier;
xx xx xx xx"
15. Therefore, in a situation where the tender inviting authority is
not equipped with any material on record to judge and be sure of whether the
tenderer in his individual capacity has the requisite experience or not, we
don't consider it rational to coerce the authority to accept the experience
certificate of an erstwhile partnership firm regardless, and ask it to resign the
fate of its project to the mercurial vicissitudes of chance.
16. This brings us to a decision rendered by a Division Bench of
the Uttarakhand High Court in Kunwar Construction Vs. State of
Uttarakhand and others, 2019 SCC OnLine UTT 1210, where in similar
circumstances, an identical question arose for consideration. The petitioner
(Kunwar Construction) therein was a sole proprietorship concern. In terms
of the tender conditions, a tenderer was required to have undertaken works
of at least 50% of the cost of project, i.e. Rs.427.78 lakhs. Kunwar
Construction hitherto was a constituent of joint venture: M/s Kunwar
Constructions and M/s Balvinder Singh and Co. and had contributed 25%
of the investment. The experience certificate submitted by the petitioner
included the works executed by the joint venture. The experience acquired
by the joint venture was claimed as experience of the petitioner. However,
the authorities added only 25% of the experience of the joint venture as
experience of the petitioner (sole proprietorship concern) and rejected its
bid upon technical evaluation, for it had not executed works above
Rs.427.78 lakhs. However, claim of the petitioner was that notwithstanding
its investment (25%), the entire experience acquired by the joint venture
ought to have been reckoned in computing the required experience and in
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that situation, the petitioner fulfills the minimum prescribed experience.
Whereas, the case of the authorities was, for the petitioner had submitted its
technical bid as a sole proprietorship concern and not as a joint venture, the
experience of the joint venture could not be considered as experience of the
sole proprietorship concern. And, in any event, for the petitioner merely
held 25% share in the joint venture, at best, only 25% of the said experience
could be claimed by the petitioner. And, the Division Bench, in reference to
the decision rendered by the Bombay High Court in Atasha Ashirwad
Builders (J.V.) Nagpur Vs. State of Mahrashtra & Ors., (2010) 15 RCR
(Civil) 377, relied upon by the petitioner and also the judgment of the
Supreme Court in New Horizons Limited (supra), concluded that in those
cases, the bidder was a joint venture and had claimed the experience of all
its constituents. Thus, rejection of the bid by the authorities, drawing a
distinction between the joint venture itself and its constituent members, was
set aside both by the Bombay High Court in Atasha Ashirwad Builders
(supra) and by the Supreme Court in New Horizons Limited (supra).
Whereas, in the matter the Court was seized of, though undoubtedly, the
petitioner was a member holding 25% share in a joint venture, however, the
bid submitted by the petitioner was not as a joint venture, but as a sole
proprietorship concern. Thus, unlike a situation where a bid submitted by a
joint venture in which the experience of all its constituent members is
required to be taken into consideration in computing experience of the joint
venture itself, the converse may not be possible. Resultantly, the sole
proprietorship concern could not claim the experience of the joint venture
and all its constituents, as its individual experience.
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"19. Just as in Atasha Ashirwad Builders, the
bidder in New Horizons Limited was also a Joint Venture, and
had claimed the experience of all its constituents. Rejection of
the bid, drawing a distinction between the Joint Venture itself
and that of its constituent members, was set aside both by the
Bombay High Court in Atasha Ashirwad Builders and by the
Supreme Court in New Horizons Limited.
20. In the present case, while the appellant-writ petitioner was
no doubt a member holding 25% share in a Joint Venture, the
bid submitted by them was not as a Joint Venture, but as a sole
proprietary concern. Unlike in cases where a bid is submitted by
a Joint Venture, in which case the experience of all its
constituent members may be required to be taken into
consideration in computing the experience of the Joint Venture
itself, the converse may not be true. The appellant-writ petitioner
herein, having submitted their bid as a sole proprietary concern
and not as a Joint Venture, cannot claim the experience of the
Joint Venture, and all its constituents, to be reckoned as his
individual experience as a sole proprietary concern."
17. Though, we shall be analysing this position in required depth in
the subsequent paragraphs, but we may hasten to clarify, at this stage itself,
that observations recorded by the Division Bench in Kunwar Construction
(supra), in paragraph 21 of its judgment, "since the Joint Venture did not
participate in the bidding process, the appellant-writ petitioner can, at
best, claim the experience of the Joint Venture only to the extent of his
25% share therein," would not advance the cause of the petitioner either.
For, on a proposition of law, it was concluded that if a bid is submitted by
the joint venture itself, it can legitimately claim the experience of its
constituent members. Whereas, the converse may not be true. Rather, before
recording those observations, emphasised by us, it was clarified, "while it
was unnecessary for the respondents to have included even a part of the
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experience of the Joint Venture, in determining the experience of the
appellant-writ petitioner as a sole proprietary concern." Thus, it was
only because the authorities themselves had reckoned 25% of the experience
in the name of the joint venture, as experience of the petitioner (sole
proprietorship concern), the court, in the given situation, observed that the
petitioner, at best, could claim the experience of the joint venture
corresponding to its share.
18. Having said that, we may now advert to the argument that
because the sole proprietor of the petitioner concern happened to be a
partner and held 50% share in M/s B.G. Construction Co.(erstwhile
partnership firm), he was entitled to claim proportionate work experience,
equal to half the value of the project. We hold that it lacks conviction and
cannot be countenanced either.
19. As defined in Black's Law Dictionary (sixth edition),
'experience', means, "A state, extent, or duration of being engaged in a
particular study or work; the real life as contrasted with the ideal or
imaginary. A word implying skill, facility, or practical wisdom gained by
personal knowledge, feeling, and action, and also the course or process by
which one attains knowledge or wisdom."
20. That general understanding of the term however changes
semantic shades with reference to the specific disciplinary or factual context
it is employed in. In the fields of trade & commerce, business & contracts,
applied technology and the like, experience would mean a special skill or
knowledge possessed by a person in a particular discipline of science,
technology, profession or business by reason of distinctive study, practical
acquaintance and involvement relevant to the disciplinary or factual context
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in question. For instance, in case of a notification inviting tenders aimed at
screening experience for a construction project, a capital investor, though
experienced for his professional fief may not be deemed to have the
experience of previously constructing a building merely because he
bankrolled the venture. An identical anomaly could have arisen even in
respect of the partners of M/s B.G. Constructions Co., since its partnership
deed in clause 10 (P-4) mentions only Ajay Kumar Garg and Varun Bansal
as 'working partners'. The Memorandum of Understanding (P-5) whereby
partners of M/s B.G. Constructions Co. agreed to go their separate ways,
stipulated that the partners were free to start new firms and participate in any
tender by taking their separate shares technically as well as financially. One
could very well imagine a situation where Tarun Bansal (third partner of M/s
B.G. Constructions Co.), merely being an investment partner, approached
this Court claiming the benefit of experience in the name of the erstwhile
firm. Evidently, the financial stakes or share held by a partner per se has no
nexus with the experience he is required to possess in terms of the tender
conditions. In other words, experience is not a commodity that could be
acquired for consideration. As for this, we may also refer to the
observations recorded by the Division Bench of the Bombay High Court in
Atasha Ashirwad Builders (supra):-
"7. Having considered the matter, we do not find any
justification on the part of the respondent-VIDC in assessing
the experience of Joint Venture by reducing the actual
experience of constituents of the Joint Venture to the ratio of
their investment and profit sharing. There is no correlation
between the extent of investment of a partner in a Joint
Venture and his experience. The two are entirely different
things. It cannot be said that a partner's experience is affected
18 of 43
in any way because he invests in the Joint Venture only to a
certain extent. The attempt to correlate the two seems wholly
unjustified and absurd.
8. Joint Ventures are commonly formed by two or
more individuals with a view to pool their resources, skill,
experience etc. in order to inter alia meet the eligibility
criteria of tenders of specific projects. The fact that
participation of the constituents of the Joint Venture is in a
particular ratio cannot become a reason to whittle down and
reduce the experience of the constituents. The partners, who
constitute the Joint Venture, may agree to limit investment
and profit sharing to a certain percentage. This does not mean
that they have thereby agreed to have a limited experience. If,
in fact, a partner has certain amount of experience, that
experience remains as a part of experience of a Joint Venture
when the Joint Venture makes a bid and the ratio of
investment and profit sharing are the factors, which have
nothing to do with such experience."
21. Further, in anatomising the issues that have reared their head in
the instant case, this Court is mindful of the myriad stages and processes that
a proposal passes through before coalescing into an NIT. Conscious of the
acute necessity of a specific proposal, the tender inviting authority first
conceives the project; then, it evaluates its logistical viability, and further
enriched by the assistance of financial consultants and technical experts, the
authority finally confects terms & conditions suitable for achieving the
purpose of the project's initiation and for taking it to its logical end. It is
after that painstaking odyssey of continual application of mind that the
tender inviting authority arrives at its conception of the nature of the project,
expectations from the party that would ultimately be awarded the contract
etc., commensurate to the project and the authority's requirement. From that
19 of 43
vantage point, the authority examines the tenderers' bids, and takes a
decision on which tenderer, on a relative basis, most appositely meets the
requirements of the tender inviting authority. To adulterate that stream of
decision making by interpolative interpretations (like the petitioner's
argument of apportionment with reference to extent of shareholding) on the
suggestion of a bidder, would in this Court's opinion be a constitutionally
ill-suited coercive exercise.
22. Even otherwise, the argument that is sought to be advanced not
only defies logic, but is also self defeating. For, if that is accepted and cost
of the project executed by the firm, is reduced in proportion to his share
(50%), then, as a necessary consequence, not only the work/project but even
the experience that stems from its execution loses its character and
conclusivity, for that too would be reduced proportionately. Whereas, in
terms of the eligibility criteria, the tenderer ought to have satisfactorily
executed one specified work valuing not less than 80% of the estimated cost
of the subject tender. Moreover, as indicated earlier, the experience gained
by the erstwhile firm was acquired owing to combined, collective and
integrated labour and resources of its partners, and hence, was so inseparably
interwoven that it was neither divisible nor could it be apportioned amongst
its partners. Unlike a joint holding where a co-sharer has a right to seek
partition of his defined share.
23. We have also examined the decisions that have been relied
upon by the learned counsel for the petitioner, and before we even refer to
each of those, we may observe that none, in our opinion, applies to the facts
of the present case. In New Horizons Limited (supra), the department of
telecommunications invited tenders for printing telephone directories. The
20 of 43
tenderers were required to possess experience in compiling, printing and
supplying telephone directories to the large telephone systems with the
capacity of more than 50,000 lines and to substantiate this with documentary
proof and by furnishing its credentials in the field. NHL (appellant) and
respondent No.4 were amongst the 5 bidders. NHL (appellant) had
mentioned in its bid that it was a joint venture company comprising of 5
entities incorporated both in India and abroad. The High Court had held,
albeit each of the members of the joint venture had more than the requisite
experience, but, NHL (appellant) itself did not possess the same. However,
the Supreme Court in its decision concluded:
"25. Even if it be assumed that the requirement regarding
experience as set out in the advertisement dated 22-4-1993
inviting tenders is a condition about eligibility for consideration
of the tender, though we find no basis for the same, the said
requirement regarding experience cannot be construed to mean
that the said experience should be of the tenderer in his name
only. It is possible to visualise a situation where a person having
past experience has entered into a partnership and the tender
has been submitted in the name of the partnership firm which
may not have any past experience in its own name. That does not
mean that the earlier experience of one of the partners of the
firm cannot be taken into consideration. Similarly, a company
incorporated under the Companies Act having past experience
may undergo reorganisation as a result of merger or
amalgamation with another company which may have no such
past experience and the tender is submitted in the name of the
reorganised company. It could not be the purport of the
requirement about experience that the experience of the
company which has merged into the reorganised company
cannot be taken into consideration because the tender has not
been submitted in its name and has been submitted in the name
21 of 43
of the reorganised company which does not have experience in
its name. Conversely there may be a split in a company and
persons looking after a particular field of the business of the
company form a new company after leaving it. The new
company, though having persons with experience in the field,
has no experience in its name while the original company
having experience in its name lacks persons with experience.
The requirement regarding experience does not mean that the
offer of the original company must be considered because it has
experience in its name though it does not have experienced
persons with it and ignore the offer of the new company because
it does not have experience in its name though it has persons
having experience in the field. While considering the
requirement regarding experience it has to be borne in mind that
the said requirement is contained in a document inviting offers
for a commercial transaction. The terms and conditions of such
a document have to be construed from the standpoint of a
prudent businessman. When a businessman enters into a
contract whereunder some work is to be performed he seeks to
assure himself about the credentials of the person who is to be
entrusted with the performance of the work. Such credentials are
to be examined from a commercial point of view which means
that if the contract is to be entered with a company he will look
into the background of the company and the persons who are in
control of the same and their capacity to execute the work. He
would go not by the name of the company but by the persons
behind the company. While keeping in view the past experience
he would also take note of the present state of affairs and the
equipment and resources at the disposal of the company. The
same has to be the approach of the authorities while considering
a tender received in response to the advertisement issued on 22-
4-1993. This would require that first the terms of the offer must
be examined and if they are found satisfactory the next step
would be to consider the credentials of the tenderer and his
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ability to perform the work to be entrusted. For judging the
credentials past experience will have to be considered along with
the present state of equipment and resources available with the
tenderer. Past experience may be of much help if the machinery
and equipment is outdated. Conversely lack of experience may
be made good by improved technology and better equipment. The
advertisement dated 22-4-1993 when read with the notice for
inviting tenders dated 26-4-1993 does not preclude adoption of
this course of action. If the Tender Evaluation Committee had
adopted this approach and had examined the tender of NHL in
this perspective it would have found that NHL, being a joint
venture, has access to the benefit of the resources and strength
of its parent/owning companies as well as to the experience in
database management, sales and publishing of its parent group
companies because after reorganisation of the Company in 1992
60% of the share capital of NHL is owned by Indian group of
companies namely, TPI, LMI, WML, etc. and Mr Aroon Purie
and 40% of the share capital is owned by IIPL a wholly-owned
subsidiary of Singapore Telecom which was established in 1967
and is having long experience in publishing the Singapore
telephone directory with yellow pages and other directories.
Moreover in the tender it was specifically stated that IIPL will be
providing its unique integrated directory management system
along with the expertise of its managers and that the managers
will be actively involved in the project both out of Singapore and
resident in India.
xx xx xx xx
xx xx xx xx
28. Once it is held that NHL is a joint venture, as claimed by it in
the tender, the experience of its various constituents namely,
TPI, LMI and WML as well as IIPL had to be taken into
consideration if the Tender Evaluation Committee had adopted
the approach of a prudent businessman.
23 of 43
29. The conclusion would not be different even if the matter is
approached purely from the legal standpoint. It cannot be
disputed that, in law, a company is a legal entity distinct from its
members. It was so laid down by the House of Lords in 1897 in
the leading case of Salomon v. Salomon & Co. [1897 AC 22 :
(1895-9) All ER Rep 33] Ever since this decision has been
followed by the courts in England as well as in this country. But
there have been inroads in the doctrine of corporate personality
propounded in the said decision by statutory provisions as well
as by judicial pronouncements. By the process, described as
"lifting the veil", the law either goes behind the corporate
personality to the individual members or ignores the separate
personality of each company in favour of the economic entity
constituted by a group of associated companies. This course is
adopted when it is found that the principle of corporate
personality is too flagrantly opposed to justice, convenience or
the interest of the Revenue. (See : Gower's Principles of Modern
Company Law, 4th Edn., p. 112.) This concept, which is
described as "piercing the veil" in the United States, has been
thus put by Sanborn, J. in JJ.S. v. Milwaukee Refrigerator
Transit Co. [(1905) 142 Fed 247, at p 255]:
"When the notion of legal entity is used to defeat public
convenience, justify wrong, protect fraud, or defend crime,
the law will regard the corporation as an association of
persons."
30. In a number of decisions, departing from the narrow
legalistic view, courts have taken note of the realities of the
situation.
In Scottish Coop. Wholesale Society Ltd. v. Meyer [1959 AC
324, a case under Section 210 of the Companies Act, 1948,
Viscount Simonds has quoted with approval the following
observations of Lord President Cooper:
24 of 43
"In my view, the section warrants the court in looking at the
business realities of a situation and does not confine them to a
narrow legalistic view."
xx xx xx xx
xx xx xx xx
42. Thus the approach from the legal standpoint also leads to the
conclusion that for the purpose of considering whether NHL has
the experience as contemplated by the advertisement for inviting
tenders dated 22-4-1993, the experience of the constituents of
NHL, i.e., the Indian group of companies (TPI, LMI and WML)
and the Singapore-based company, (IIPL) has to be taken into
consideration. As per the tender of NHL, one of its Indian
constituents (LMI) had printed and bound the telephone
directories of Delhi and Bombay for the years 1992 and its
Singapore-based constituent (IIPL) has 25 years' experience in
printing the telephone directories with "yellow pages" in
Singapore. The said experience has been ignored by the Tender
Evaluation Committee on an erroneous view that the said
experience was not in the name of NHL and that NHL did not
fulfil the conditions about eligibility for the award of the
contract. In proceeding on that basis the Tender Evaluation
Committee has misguided itself about the true legal position as
well as the terms and conditions prescribed for submission of
tenders contained in the notice for inviting tenders dated 26-4-
1993.
The non-consideration of the tender submitted by NHL
has resulted in acceptance of the tender of Respondent 4. The
total amount of royalty offered by Respondent 4 for three years
was Rs 95 lakhs whereas NHL had offered Rs 459.90 lakhs, i.e.,
nearly five times the amount offered by Respondent 4. Having
regard to this large margin in the amount of royalty offered by
NHL and that offered by Respondent 4, it must be held that
decision of the Tender Evaluation Committee to refuse to
consider the tender of NHL and to accept the tender of
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Respondent 4 suffers from the vice of arbitrariness and
irrationality and is liable to be quashed."
24. Apparently, the appellant (NHL) was a joint venture comprised
of 5 entities and each of those was an accomplished business leader and
possessed the requisite experience. Thus, NHL had access to the benefit of
the resources and strength of its parent/owning companies. Moreover, in the
tender, it was specifically stated that IIPL will be providing its unique
integrated directory management system along with the expertise of its
managers and that the managers will be actively involved in the project both
out of Singapore and resident in India. It was in these circumstances, that it
was concluded that NHL, being a joint venture, the experience of its
constituents had to be taken into consideration if the Tender Evaluation
Committee had adopted the approach of the prudent businessman. Further,
non-consideration of the tender submitted by NHL had resulted in
acceptance of the tender of respondent No.4 who had offered only Rs.95
lakhs as royalty for three years whereas NHL had offered Rs.459 lakhs
which were nearly 5 times the amount offered by respondent No.4. Thus,
the decision of the Tender Evaluation Committee suffered from the vice of
arbitrariness and irrationality. Whereas, the issue in the matter at hand is
distinctly different: for in the present case, concededly, neither the petitioner
nor its sole proprietor had the necessary experience in its/his own name.
Further, in the instant case, the petitioner's sole proprietor as an erstwhile
partner of M/s B.G. Constructions Co. cannot validly claim the benefit of
experience in the name of such erstwhile firm for reasons already recorded.
Hence, the question herein is not whether Ajay Kumar Garg's experience
acquired in his individual capacity can enure to the benefit of the petitioner
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sole proprietorship concern; instead, the point at issue is whether Ajay
Kumar Garg (and by implication the petitioner sole proprietorship concern)
can claim experience in the name of his erstwhile firm, i.e., M/s B.G.
Constructions Co. in the first place. In other words, if Ajay Kumar Garg
undoubtedly possessed requisite experience in his independent capacity in
terms of the eligibility criteria, needless to say, the authorities would've been
bound to reckon it as the experience of the petitioner sole proprietorship
concern, but, as highlighted hitherto, that is not the matter in issue presently.
Therefore, there is nothing materially analogical in New Horizons Limited
(supra) that could effectively undergird the petitioner's claim.
25. In fact, upon an analysis of the decision in New Horizons
Limited (supra), we are rather of the opinion that our view finds resonance
and support in few of the observations emphasized by us, while extracting
relevant paragraphs of the judgment. For instance, in each of the illustrations
described by the Supreme Court, an individual or an entity possessed the
requisite tangible experience in its individual capacity, which was
quantifiable (qualitatively and/or quantitatively), and with which it could
merge itself in another company or enter into a partnership with a firm
which lacked the necessary experience. Since the fact that such individual or
entity actually had the experience was incontrovertible in these illustrations,
the Supreme Court remarked on how absurd it was to discount such
experience just because the re-organized company or the firm which had
submitted the bid did not have that experience in its name.
26. Likewise, even the decision by the Division Bench in P.K.
Delicacies Private Limited (supra), has no bearing and is clearly
distinguishable. For, in the said case, Indian Railway Catering and Tourism
27 of 43
Corporation had invited tenders for providing catering services in certain
trains that were being plied by the Corporation. The technical bid of the
petitioner, i.e. P.K. Delicacies Private Limited, was rejected, for, it failed to
meet the eligibility criteria of at least 5 years past experience in
catering/hospitality industries. The tenders by way of publication were
invited in the months of March and April 2005. Whereas, the company itself
was incorporated on 07.04.2005, but with the object and purpose to take
over the business of a partnership firm M/s Pee Kay Associates along with
its assets and liabilities. Concededly, both the partners of the firm, namely
Mr. Prem Taneja and Mr. Ashu Taneja, were the only directors of the
petitioner-company. And, in these circumstances, the past experience of 20
years of M/s Pee Kay Associates was being claimed as experience of the
petitioner company. Therefore, in reference to the decision in New Horizons
Limited (supra), the High Court held that requirement regarding past
experience had to be considered from the standpoint of the prudent
businessman and commercial point of view. Thus, the corporate veil was
required to be lifted to find out the persons who were in actual control and
behind the company. Again, what we wish to lay emphasis upon is that there
was a complete takeover of the firm (M/S Pee Kay Associates) along with its
assets and liabilities; no portion or remnants of the experiential contribution
that created the experience of the erstwhile firm was lost or left behind on its
transition from being a firm to becoming a company insofar as the
conglomerate of individuals behind the veil remained the same.
27. Similarly, the decision rendered by the Division Bench of
Madhya Pradesh High Court in Samruddha Buildcon Pvt. Ltd. (supra), is
distinguishable on facts. Indore Development Authority had invited tenders
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for construction of swimming pool complex of International standard. The
petitioner-Samruddha Buildcon Pvt. Ltd. (private limited company) was
aggrieved, for its technical bid was rejected by the authority. Shri Mahesh
Hassanandani, who was one of the directors of the company, also happened
to be a partner in M/s Jethanand Arjundas & Sons. However, owing to a
family settlement, he retired from the partnership of the firm and formed the
petitioner Co. Post split from the partnership firm, he applied for Class-A
Contractor Registration Certificate, in terms of Government circular dated
29.03.2011, from the Government of M.P. Significantly, as per clause 3 of
the said circular, the petitioner was entitled to use the financial and
experience credentials equal to his proportionate share (33.33%) in the firm.
Accordingly, the petitioner company was granted Class-A certificate w.e.f.
06.02.2013. The petitioner, along with its bid, submitted the experience
certificate issued by the principal contractor in the year 2013, as per which
the partnership firm M/s Jethanand Arjundas & sons had executed the civil
construction work valuing Rs.45.40 crores. Therefore, Mahesh
Hassanandani, who held 33.33% share in the firm, claimed 1/3rd of the said
work experience, which would come to Rs.15.13 crores. Whereas, the
qualifying work experience had to be equal to the value of tender i.e.
Rs.11.87 crores. Vide declaration appended with the bid, it was notified that
pursuant to the order of the Government dated 29.03.2011, the petitioner
was entitled to use financial and experience credentials proportionate to his
share in the erstwhile firm. Further, the case of the petitioner was that in the
response submitted by the department, it was nowhere stated that circular
dated 29.03.2011, issued by the Government, was not being followed. And,
in terms of clause 4 of NIT, the Committee of IDA was competent to take a
29 of 43
decision to accept or reject the technical bid, whereas a novel method was
adopted by the authority by referring the matter to a Chartered Accountant
for financial appraisal report for PQBD and on the basis of the said report,
the technical bid of the petitioner was rejected. In these circumstances, it
was concluded that decision making process by which the petitioner was
excluded was not reasonable and rational under Article 14 of the
Constitution of India. But, we are afraid such is not the position in the matter
at hand.
28. In Comptroller and Auditor General Vs. Kamlesh Vadilal
Mehta 2003(2) SCC 349, the respondent was a sole proprietorship firm of
Chartered Accountant. One of the statutory functions assigned to the
appellant was to get the accounts of Public Sector Undertakings and
Government Concerns audited by the Chartered Accountants. The audit
work of the Government and Public Sector Undertaking was assigned to
only those Chartered Accountants who were enrolled on the panel
maintained by the appellant. Vide advertisement issued in May, 1981,
applications from the firms of Chartered Accountants for empanelment for
audit of the Government companies were invited. Except a few states, only
the partnership firms of the Chartered Accountants were eligible for
enrolment on the panel and the proprietor firms of the Chartered
Accountants were made ineligible. Upon an analysis of the matter, it was
concluded that appellant itself erroneously assumed that the partnership
firms were more efficient than the proprietor concern in the matter of audit
of accounts of the Public Sector Undertakings or of the Government
concerns. In any event, it would not follow as a categorical imperative that a
partnership is better placed for auditing simply because "two minds are
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better than one". Further, if the proprietary concern of Chartered
Accountants were really inefficient, there is no reason why they were made
eligible to conduct audits in few of the specified states, such as Orissa,
Jammu & Kashmir, Assam, Manipur, Meghalaya, Nagaland and Tripura.
Therefore, the classification between proprietary and partnership firm was
held to be arbitrary and unfair on the anvil of Article 14 of the Constitution.
Thus, we cannot fathom, as to how this decision would apply to the present
case.
29. But, yes the argument advanced by the learned counsel for the
petitioner that decision of a Division Bench of this Court in Daniel Masih
(supra), has wrongly been relied upon by the respondent authority is valid,
as the said judgment does not stricto sensu apply to the facts of this case. For
the said judgment answers a question distinctly different from the one
presently under consideration, the question in Daniel Masih (supra) was
about the constitutionality of tender prescriptions which stipulate that the
experience in the name of the firm only would be considered and that the
experience in the name of individual partners would not be counted as that
of the firm, whereas that is not the case here. However, that would not by
itself automatically lead to the conclusion that every case featuring the
absence of an exclusionary clause ought to be one where the authority would
be impelled into regarding experience in the name of an erstwhile
partnership firm as the experience of the partner in his individual capacity.
Despite the apparent difference between the issues answered in Daniel
Masih (supra) and the questions before this Court, the ratiocination behind
the Respondent authority's reliance on Daniel Masih (supra) is indubitably
obvious. This Court's discernment in that respect was further fortified during
31 of 43
arguments, when the learned counsel for the respondents specifically drew
the attention of the Court to the following paragraph of Daniel Masih
(supra):
"13. Every partner does not necessarily attend to the day to
day business of the firm or even participate in its
management or in the work performed by the firm. Even a
partner of a firm who possesses the requisite qualification
stipulated in the notice inviting tenders may not have
participated in any of the affairs of the firm. He may not
even intend participating in any of the affairs of the firm.
He may only be an investment partner. Such a partner
would not bring to bear his experience in the performance
of the work for which the tenders are required. In such a
case the fact that he possesses the qualifications stipulated
in the notice inviting tenders would be entirely meaningless.
The party inviting tenders would, therefore, be entitled to
insist upon the firm itself having executed such contracts of
the stipulated kind and value."
30. A bare perusal of the observations, extracted above, reveals that
the Division Bench's logical imagination of the issues surrounding a
partnership firm and its experience is in sync with the concerns already
expressed by us in the preceding paragraphs on the reasons why the jointly
created experience of a partnership firm cannot be claimed by one of its
partners in his independent capacity. Therefore, in the factual matrix of the
instant case, the Respondent authority upon due consideration of the
Petitioner's bid concluded that experience in the name of the erstwhile firm
(i.e., M/s B.G. Constructions Co.) which Ajay Kumar Garg was a part of,
could not be considered, not even proportionately so with reference to the
extent of his shareholding in the firm, in his individual capacity.
32 of 43
31. There is yet another dimension to the matter. As specified in the
tender notice, tenders were invited from the appropriate class of approved
contractors. The expression, 'Contractor', is defined under Clause 2(c) of
conditions of contract, at page 21 of the tender document, which reveals that
'Contractor' shall mean the individual or firm or company, whether
incorporated or not, undertaking the work.
32. As indicated earlier, under the caption 'Technical Bid', (page 6
of the tender document), clause (iv) required the 'Contractor' to submit
copies of experience/work completion certificates, in terms of the conditions
of tender notice. The tender acceptance letter (Annexure-B), page 15 of the
tender document, required the bidder to submit an undertaking that he
unconditionally accepts the tender conditions in their totality/entirety. And,
the prescribed pro forma (page 112 of tender document), in sync with which
the experience/work completion documents were required to be furnished by
the bidders/tenderers, and the petitioner, in response whereto, submitted its
experience certificate (P-13), reads thus:
CLIENT'S CERTIFICATE REG. PERFORMANCE OF
CONTRACTOR
Name & address of the Client......................................................
Details of Works executed by Shri/M/s...........................................
1. Name of Work with brief
particulars
2. Agreement No. and date
3. Agreement amount
4. Date of commencement of
work
5. Stipulated date of completion
6. Actual date of completion
7. Details of compensation levied
for delay
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( indicate amount) if any
8. Gross amount of the work
completed and paid
9. Name and address of the
authority under whom works
executed
10. Whether the contractor
employed qualified
Engineer/Overseer during
execution of work
11. i) Quality of work (indicate Outstanding/Very
grading) Good/Good/Poor
ii) Amount of work paid on
reduced rates, if any
12. i) Did the contractor go for
arbitration?
ii) If yes, total amount claim
iii) Total amount awarded
13. Comments on the capabilities
of the Contractor
a) Technical Proficiency Outstanding/VeryGood/Good/Poor
b) Financial soundness Outstanding/VeryGood/Good/Poor
c) Mobilization of adequate Outstanding/VeryGood/Good/Poor
T&P
d) Mobilization of manpower Outstanding/VeryGood/Good/Poor
e) General behavior Outstanding/VeryGood/Good/Poor
33. Clearly, in terms of the tender conditions, the entity or an
individual, who bids for a contract, is the Contractor. The
experience/performance certificate (ibid) shows that information sought
under its different heads is in relation to none other than the contractor
alone. And, the authority's assessment of contractor's
competence/capacity/capability is predicated on the information so furnished
by the contractor. In the instant case therefore, experience of both the
tenderer-in-name (i.e., M/s A.G. Construction Co.) and the tenderer-in-
34 of 43
substance (i.e., Ajay Kumar Garg, being the sole proprietor), was relevant
for the authority's consideration. Had any of the two possessed the necessary
experience, the authorities were bound to consider and reckon the same.
However, concededly, neither of the two had the requisite experience in their
names. Additionally, for reasons recorded in the preceding paragraphs, Ajay
Kumar Garg's experience as a partner of an erstwhile firm (i.e., M/s B.G.
Constructions Co.) cannot be construed as his individual/independent
experience. In the milieu of this factual position, the scope of the term
'tenderer/contractor' cannot be stretched to encompass even M/s B.G.
Constructions Co. within its sweep. Thus, in the given situation,
notwithstanding that Ajay Kumar Garg happened to be a partner in M/s B.G.
Constructions Co. (erstwhile partnership firm), the firm would be a third
party to the tender process. In Municipal Corporation, Ujjain v. BVG
India Ltd. (2018) 5 SCC 462, the Hon'ble Supreme Court similarly held:
"5. The questions involved in these appeals are:
a) xx xx xx xx
b) Whether a bidder who submits a bid expressly
declaring that it is submitting the same independently
and without any partners, consortium or joint venture
can rely upon the technical qualifications of any third
party for its qualification;
c) xx xx xx xx
...
40. It is necessary to note that in Annexure 1 to the NIT
at serial no. 11, the bidder was required to set out
details of any other company/firm involved as a
consortium member to which respondent no.1 - BVG
India Limited replied in the negative, which means no
other company/firm was involved as a consortium
member with BVG India Limited in the process in
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question. In other words, BVG India Limited submitted
the bid on its own unaccompanied by any of the
consortium member. Despite the same, BVG India
Limited (respondent no.1) furnished the experience
certificate of BVG Kshitij Waste Management Services
Private Limited. No information whatsoever was given
of the relationship/linkage of BVG Kshitij and
respondent no.1 - BVG India Limited. Therefore,
reliance placed by the respondent no.1 on the purported
experience certificate issued in the name of BVG Kshitij
Waste Management Services Pvt. Limited would not
come to the help of the respondent no.1 to show its work
experience. The Pimpri Chinchwad Municipal
Corporation (PCMC) Certificate dated 24.10.2013 is in
Marathi and the same discloses that the work order was
issued on 2.3.2012. The PCMC Certificate thus neither
shows three years' experience of BVG India Limited
nor that BVG India Limited was carrying out
garbage/waste collection of more than 300 MT per day.
Since respondent no.1 has categorically mentioned in
its bid under the column "basic information about
tenderer" that no other company (either joint venture
or consortium) is involved with BVG India Limited,
respondent no.1 - BVG India Limited could not have
relied upon the purported experience certificate issued
in the name of BVG Kshitij Waste Management
Services Pvt. Ltd. Other certificates submitted by the
respondent no.1 also did not satisfy the eligibility
requirement.
...
57. Thus, the questions to be decided in this appeal are
answered as follows:
(a) xx xx xx xx
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(b) A bidder who submits a bid expressly declaring that
it is submitting the same independently and without
any partners, consortium or joint venture, cannot rely
upon the technical qualifications of any 3rd Party for
its qualification.
(c) xx xx xx xx "
34. Similarly, even in the instant case, the petitioner sole
proprietorship concern having applied for the tender independently, sought
to rely on an experience certificate (P-13) issued to a third party (i.e., M/s
B.G. Constructions Co.). Further, the relationship/linkage of Ajay Kumar
Garg (proprietor of the petitioner concern) with such third party (erstwhile
firm) does not engender any benefit to the petitioner concern for reasons
already recorded in the preceding paragraphs. Therefore, the petitioner
herein having applied independently without any partners, consortium or
joint venture, cannot rely upon the technical qualifications of a third party
(erstwhile firm) to claim eligibility. In this respect, the position of law
emerging from Municipal Corporation, Ujjain (supra) is that as long as a
person or entity cannot in law, validly claim experience that exists in the
name of a third-party, that third-party remains a stranger to the subject
tender.
35. There cannot be any quarrel with the proposition of law either
that the interpretation, construction and as to how a provision, clause or a
condition of a tender document has to be construed is primarily the domain
of the author of such document (in this case, the authority framing the NIT).
For none else is better positioned and equipped than such authority itself in
understanding the tender document's requirements, as also the purport and
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intent of its terms and conditions. Therefore, a reference, in this regard, to a
few decisions of the Supreme Court, shall be inevitable.
36. In Ramana Dayaram Shetty V. International Airport
Authority of India (1979) 3 SCC 489, the Supreme Court opined that:
"7. It is a well settled rule of interpretation
applicable alike to documents as to statutes that, save
for compelling necessity, the court should not be prompt
to ascribe superfluity to the language of a document
"and should be rather at the outset inclined to suppose
every word intended to have some effect or be of some
use". To reject words as insensible should be the last
resort of judicial interpretation, for it is an elementary
rule based on common sense that no author of a formal
document intended to be acted upon by the others
should be presumed to use words without a meaning.
The court must, as far as possible, avoid a construction
which would render the words used by the author of the
document meaningless and futile or reduce to silence
any part of the document and make it altogether
inapplicaple."
37. In Central Coalfields Ltd. v. SLL-SML (Joint Venture
Consortium) (2016) 8 SCC 622, it was observed as follows:
"38. In G.J. Fernandez v. State of Karnataka
[(1990) 2 SCC 488] both the principles laid down in
Ramana Dayaram Shetty (1979) 3 SCC 489 were
reaffirmed. It was reaffirmed that the party issuing the
tender (the employer) "has the right to punctiliously
and rigidly" enforce the terms of the tender. If a party
approaches a court for an order restraining the
employer from strict enforcement of the terms of the
tender, the court would decline to do so.."
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38. In Afcons Infrastructure Ltd. vs. Nagpur Metro Rail
Corporation Ltd., (2016) 16 SCC 818, the Supreme Court held that:
"15. We may add that the owner or the employer
of a project, having authored the tender documents, is the best
person to understand and appreciate its requirements and
interpret its documents. The constitutional Courts must defer
to this understanding and appreciation of the tender
documents, unless there is mala fide or perversity in the
understanding or appreciation or in the application of the
terms of the tender conditions. It is possible that the owner or
employer of a project may give an interpretation to the tender
documents that is not acceptable to the constitutional Courts
but that by itself is not a reason for interfering with the
interpretation given."
39. Similarly, in Montecarlo Ltd. Vs. NTPC Ltd., 2016 (15) SCC
272, the Supreme Court held as under:
"24. We respectfully concur with the aforesaid
statement of law. We have reasons to do so. In the
present scenario, tenders are floated and offers are
invited for highly complex technical subjects. It
requires understanding and appreciation of the nature
of work and the purpose it is going to serve. It is
common knowledge in the competitive commercial field
that technical bids pursuant to the notice inviting
tenders are scrutinised by the technical experts and
sometimes third party assistance from those
unconnected with the owner's organisation is taken.
This ensures objectivity. Bidder's expertise and
technical capability and capacity must be assessed by
the experts. In the matters of financial assessment,
consultants are appointed. It is because to check and
ascertain that technical ability and the financial
feasibility have sanguinity and are workable and
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realistic. There is a multi-prong complex approach;
highly technical in nature. The tenders where public
largesse is put to auction stand on a different
compartment. Tender with which we are concerned, is
not comparable to any scheme for allotment. This arena
which we have referred requires technical expertise.
Parameters applied are different. Its aim is to achieve
high degree of perfection in execution and adherence to
the time schedule. But, that does not mean, these
tenders will escape scrutiny of judicial review. Exercise
of power of judicial review would be called for if the
approach is arbitrary or mala fide or procedure adopted
is meant to favour one. The decision-making process
should clearly show that the said maladies are kept at
bay. But where a decision is taken that is manifestly in
consonance with the language of the tender document
or subserves the purpose for which the tender is floated,
the court should follow the principle of restraint.
Technical evaluation or comparison by the court would
be impermissible. The principle that is applied to scan
and understand an ordinary instrument relatable to
contract in other spheres has to be treated differently
than interpreting and appreciating tender documents
relating to technical works and projects requiring
special skills. The owner should be allowed to carry out
the purpose and there has to be allowance of free play
in the joints."
40. Recently, in State of Madhya Pradesh and another Vs. U.P.
State Bridge Corporation Ltd. And another, 2020 (13) SCALE 774, after
referring to judgments mentioned above, the Supreme Court reiterated:
"18. Judged by these parameters, it is clear that
this Court must defer to the understanding of clauses in
tender documents by the author thereof unless, pithily put,
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there is perversity in the author's construction of the
documents or mala fides..."
41. Likewise in M/s Galaxy Transport Agencies, Contractors,
Traders, Transports and Suppliers Vs. M/s New J.K. Roadways, Fleet
Owners and Transport Contractors and others [Civil Appeal No. 4107 of
2020 (Special Leave Petition (Civil) No. 12766 of 2020), dated 18.12.2020],
the Supreme Court categorically held:
"14. In a series of judgments, this Court has held
that the authority that authors the tender document is the best
person to understand and appreciate its requirements, and
thus, its interpretation should not be second-guessed by a
court in judicial review proceedings".
42. And, before we record our conclusion, we may even briefly
touch upon the scope and extent of interference by this Court in exercise of
the power of judicial review in administrative decisions. The Supreme
Court, in Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P)
Ltd. and Anr. (2005) 6 SCC 138 held:
"9. after an exhaustive consideration of a large
number of decisions and standard books on administrative
law, the Court enunciated the principle that the modern trend
points to judicial restraint in administrative action. The Court
does not sit as a court of appeal but merely reviews the
manner in which the decision was made. The court does not
have the expertise to correct the administrative decision. If a
review of the administrative decision is permitted it will be
substituting its own decision, without the necessary expertise,
which itself may be fallible. The Government must have
freedom of contract. In other words, fair play in the joints is a
necessary concomitant for an administrative body functioning
in an administrative sphere or quasi-administrative sphere."
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43. In Jagdish Mandal vs. State of Orissa (2007) 14 SCC 517, the
Supreme Court observed as:
"19. Judicial review of administrative action is
intended to prevent arbitrariness, irrationality,
unreasonableness, bias and malafides. 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....."
44. Thus, in the wake of the position as sketched out above, and in
light of the pronouncements (ibid) of the Supreme Court, on the interpretive
latitude of the tender inviting authority and the scope of judicial review, we
do not find any taint of unfairness, arbitrariness, irrationality or mala fides,
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either in the respondent authority's rejection of the experience certificate in
the name of M/s B.G. Constructions Co. on its interpretation of the tender
document, or in the decision making process which preceded the respondent
authority's rejection of the petitioner's technical bid being non-responsive.
45. Thus, in the given situation, the only and the inevitable
conclusion that could be reached: the petition being bereft of merit is
required to be dismissed. And, it is so ordered.
(RAVI SHANKER JHA) (ARUN PALLI)
CHIEF JUSTICE JUDGE
10-2-2021
AK Sharma/Manoj Bhutani
Whether speaking / reasoned: YES
Whether Reportable: YES
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