Shri Mahalaxmi Construction Corporation v. Chief Engineer Y. B. J. S. Vibhag
1992-12-08
S.K.CHAWLA, S.K.DUBEY
body1992
DigiLaw.ai
ORDER S.K. Dubey, J. -- 1. The aforesaid two petitions are disposed of by this common order. 1. The three petitioners in M.P. No. 1430 of 1992 carry on business of construction of buildings, dams, etc. Petitioners No.1 and 2 are the registered partnership firms, and petitioner NO.3 is a company incorporated and registered under the Companies Act, 1956. The three petitioners jointly intended to submit their tender for construction of masonry dam of Sindh Phase II of Madikheda Dam, District Shivpuri; for that petitioner No.1 Mahalaxmi Construction Corporation through one Vijay Choudhary, a constituted attorney of the two partnership firms and Chairman of the Board of Directors of petitioner No.2, was authorised to act and to do all lawful acts for the joint venture as one of the prospective tenderers. 2. In Misc. Petition No. 1431 of1992 both petitioners are limited companies, incorporated and registered under the Companies Act, and carryon business of construction of buildings, dams, etc. Petitioner Chetak Construction Company is a common petitioner in both petitions. 3. By the two petitions, the petitioners seek a writ of mandamus commanding the respondents to issue fresh Notice Inviting Tenders (NIT) relating to group 1 of masonry dam, and in M.P. No. 1431 of 1992 of group II in respect of construction of main earthen dam, or to clarify the matters relating to commercial conditions and to compel the respondents to accept the tender documents including the prequalification information and the price bid by extending the date from 9.9.1992 for a further period of 15 days. 4. Material facts leading to the two petitions are thus: The respondent No.1 issued NIT No. 1/92-93 dated 8.5.1992 inviting item rate tenders for construction of masonry dam (R.D. 25 M. to R.D. 517 M.) (Annexure R/6) known as Madikheda Dam (Phase II), Sindh Project, District Shivpuri, of Yumuna Basin Jal Sansadhan Vibhag, Gwalior, and for construction of main earthen dam 533 M. long on the right side of masonry dam and Ukaila Saddle Dam on right periphery of Sindh Reservoir of Madikheda Dam (Phase II), which was published in fourteen newspapers, like Indian Express, Hindustan Times, Statesman, Hindu, Free Press Journal, Nai Dunia, etc. published from Delhi, Calcutta, Bombay, Madras, Indore, Bhopal, Gwalior, etc.
published from Delhi, Calcutta, Bombay, Madras, Indore, Bhopal, Gwalior, etc. The NIT so published gave information relating to the nature of work, the amount of the estimated cost, the amount to be deposited with tender documents' cost of tender documents and the period fixed for completion of work. The last date for submitting the tenders was fixed as 25.7.1992; besides, in the NIT it was also notified that for other information pertaining to work, the tenderer may contact the Executive Engineer, Mohini Sagar Dam Division; Shivpuri. A corrigendum No.1 (Annexure 2) dated 6.7.1992 to NIT 1/92-93 was issued and published in all the aforesaid newspapers, whereby reduced Distance for masonry dam was changed to 80 M to R.D. 543M., and the estimated cost of work of Group I was reduced from Rs. 8685 lacs to Rs. 8530 lacs, increasing the period of completion of work from 39 months' to 60 months. For Group II, the estimated cost was increased from Rs. 1685 lacs to Rs. 2435 lacs, fixing the period of completion of work from 39 months to 48 months for construction of main earthen dam on right and left flanks of masonry dam wrap round and Ukaila Dam on right periphery of reservoir. The date for submitting the tender documents was extended from 25.7.1992 to 18.8.1992, and for purchase documents 17.8.1992 was fixed. Eligibilities and qualifications of the proposed tenders were also changed in respect of experience and work done; drilling was substituted by grouting. To facilitate all the prospective tenderers a pre-tender meeting without any restriction to the purchase of tender documents, was arranged on 25.7.1992 at 4.00 p.m. in the office of respondent No.1 at Gwalior. Another corrigendum No.2 to corrigendum No. 1 to NIT 1/92-93 was again issued and published in all the aforesaid newspapers, intimating that the completion period of work of Group No. II, i.e., construction of earthen dam on the right periphery of Sindh Reservoir, given as 48 months including rainy season, be read as 48 months excluding rainy season. All other conditions remained unchanged. A third corrigendum No.3 to NIT 1/93-93 (Annexure R/1) issued on 7.8.1992 was also published in all fourteen newspapers, whereby' the date for purchase of tender documents was extended to 8.9.1992 and the date for receiving tenders from 18.8.1992 to 9.9.1992 at 3 p.m in the offices at Bhopal, Gwalior and Shivpuri 5.
All other conditions remained unchanged. A third corrigendum No.3 to NIT 1/93-93 (Annexure R/1) issued on 7.8.1992 was also published in all fourteen newspapers, whereby' the date for purchase of tender documents was extended to 8.9.1992 and the date for receiving tenders from 18.8.1992 to 9.9.1992 at 3 p.m in the offices at Bhopal, Gwalior and Shivpuri 5. In M.P. No. 1430/1992 petitioner No.1 Mahalaxmi Construction Corporation' applied for tender documents on 1.8.1992, which were received by it on 12.8.1992. In the pre-tender meeting, in all, 12 intending tenderers including, C.E.C. Ltd. (petitioner No.1 in M.P. No. 1431/1992) took part, while other petitioners did not participate in that meeting. Out of the 12, three tenderers of Delhi, viz., M.P.C.C. Ltd., S.E.W. Ltd., and Continental Construdion Company Ltd., submitted their proposals in writing as per minutes (Annexure R/2), wherein as many as 26 proposals for clarifications/modifications were made by the prospective tenderers relating to commercial conditions contained in the tender document, as is evident from Annexure 3. On 4.8.1992, vide Annexure 3 respondent No.1 clarified 16 points mentioned at serial Nos. 1, 5, 8, 9, 10, 11, 12, 13, 15, 16, 18,21,23; 24, 25 and 26 in the statement annexed to Annexure 3, while clarification of 10 points mentioned at serial Nos. 2,3,4,6, 7, 14, 17, 19, 20 and ~2 was not made. The respondent No.1 vide Annexure 4 dated 2.9.1992 further clarified 7 points. Of the remaining three proposals, one related to escalation of price on cement and steel, one to special condition 13 pertaining to enhancement of mobilisation advance, and the third to statutory orders, i.e., statutes which may be enacted in future, or statutory orders issued, either by the State Government or by the Government of India, having a bearing on the contract. The clause rotating to escalation of cost price remained unchanged. For increase in mobilisation advance, the clarification given was that it was under consideration of Government. As regards statutory enactment and orders, the deification was that it will be considered at appropriate time. For the proposal on item No.2, 1-13. G.C. 23-24 relating to variation in quantities and fixation of rate between Rs. 5 lacs and 15 lacs, and the proposal in relation to extra items, the proposes wanted that their decision should not be unilateral but by mutual' agreement.
For the proposal on item No.2, 1-13. G.C. 23-24 relating to variation in quantities and fixation of rate between Rs. 5 lacs and 15 lacs, and the proposal in relation to extra items, the proposes wanted that their decision should not be unilateral but by mutual' agreement. The clarification was that the Superintending Engineer will determine the rates but it will be sanctioned by the competent authority as per procedure given in clauses 4.3, 13.3 a, b & c, however being reviewed by Government. 6. To Mahalaxmi Construction Corporation the tender documents along with Annexure 3 containing the clarifications to 26 proposals relating to commercial conditions in the tender documents were also supplied. Then, a letter dated 2.9.1992 (Annexure 4) was sent intimating the decision taken on the three proposals referred to above. Mahalaxmi Construction Corporation received Annexure 4 on 7.9.1992, which sent a telegral1) (Annexure 5) to respondent No. 1 on 9.9.1992, said to have been received on 14.9.1992, whereby extension of 15 days' time for submitting tenders was demanded. 7. Though Mahalaxmi Construction Corporation, petitioner No.1 in M.P. No. 1430/192, sent the telegram for extension for Group I, it submitted its tender for Group No. II on 9.9.1992 as an individual tenderer through its representative Shri R.D. Shinde Till then (the last date and time fixed for submitting tenders), as many as 10 tenderers had submitted their tenders in Group No. I, and 15 in Group No. II. Shri P.N. Kelkar, learned Additional Advocate General, also made a factual statement at the bar, that on examination by the authority of the pre-qualification documents submitted with the tender documents for Group No. II, Mahalaxmi Construction Corporation was not found to be eligible, which was not refuted by the petitioners. It would also be proper to mention here that though the petitioners have stated that they are intending tenderers for Groups I and II as joint venturers, in the petitions it has not been averred that they fulfil the qualifications or eligibilities even as joint tenderers. 8. Shri A.K. Chitaley, learned counsel appearing for petitioners in M.P. No. 1430/1992, and Shri J.P. GUPTA, learned counsel for petitioners in M.P..
8. Shri A.K. Chitaley, learned counsel appearing for petitioners in M.P. No. 1430/1992, and Shri J.P. GUPTA, learned counsel for petitioners in M.P.. No. 1431 of 1992, in the backdrop of the above facts, contended that the NIT issued and published is no NIT in the eye of law, as it is lacking in particulars; in spite of issue of three corrigenda and clarifications, the three conditions remained unclarified; therefore, the NIT be quashed or the respondents be directed to issue clarifications and for the respondents be directed to extend the time for accepting the tenders, which would be in public inters as the action of the respondents in not extending the time is arbitrary, unreasonable and is not in public interest. The Supreme Court through several decisions ruled that in granting contracts the governmental action should satisfy three tests, viz., non-arbitrariness, action with reason and action in public interest. If an action of the State or its instrumentality is found to be unreasonable, arbitrary or not in public interest, that has to be struck down. Counsel placed reliance on Supreme Court judgments in E.P. Royappa's case, AIR 1974 SC 555 ; Smt. Maneka Gandhi's case, AIR 1978 SC 597 ; Ramana Dayaram Shetty's case, AIR 1979 SC 1628 ; M/s Kasturilal's case, AIR 1980 SC 1992 ; Harminder Singh's case, AIR 1986 SC 1527 ; Nandlal's case, AIR 1987 SC 251 ; Sachidanand Pandey's case, AIR 1987 SC 1109 •; J.R. Raghupathy's case, AIR 1988 SC 1681 ; M/s Press tress India Corporation's case, AIR 1988 SC 2035 and Mahabir Auto Stores' case, AIR 1990 SC 1031 . The petitioners contend that along with tender forms a clarificatory letter, dated 4.8.1992, (Annexure 3) with a statement containing clarifications on proposals of intending tenderness' was given. In that letter it was also stated that on 10 items the decision will be communicated in due course. Thereafter vide letter dated 2.9.1992 (Annexure 4) on seven items clarification was sent still three items remained to be clarified. This did not allow sufficient time for filing of the bids, as the contracts were of heavy financial implications, and for that a contractor has to apply his mind; therefore, in public interest a fresh NIT ought to have been issued so that more competitors may take part and the public exchequer is not burdened.
This did not allow sufficient time for filing of the bids, as the contracts were of heavy financial implications, and for that a contractor has to apply his mind; therefore, in public interest a fresh NIT ought to have been issued so that more competitors may take part and the public exchequer is not burdened. On NIT and the terms of public contracts, learned counsel cited Vol. 64 of American Jurisprudence, paras 53 & 58; a passage 3.7 at p. 25 from the book entitled 'Law Relating to Building Contracts' by M.A. Sujan; a para at p.6 from G.T.G.-Ajria's law relating to Building and Engineering Contracts in India, and a case from Cases and Materials on Contracts, Third Edition by E. Allan Farnsworth. It was also contended that as the time was not the essence, the contract being not mercantile, the authorities ought to have considered the prayer for extension of time. Reliance was placed on Blziklzraj Jaipuria 's case. AIR 1957 SC 586; Bizalcizandra Pandurang's case, AIR 1947 Nag. 193; Hajilbrahim's case, AIR 1966 Mysore 118;SrinivasaSaw Mills and Wood Industries' case, AIR 1989 NOC 51 (Kant.) and a recent decision of the Supreme Court in case of M/s Rajshila, AIR 1992 SC 1600 . 9. True, in public contracts the State and its instrumentalities cannot deal like a private individual and, therefore, NIT should be clear for making an offer in certain terms in competitive bidding upon the advertised proposals by intending contractors. It is equally true that if an offer is indefinite and uncertain its acceptance cannot create any contractual relationship, and the vagueness of the same would not carry any contractual force. 10. An advertisement of invitation for bids addressed by the public authorities to intending contractors is ordinarily required as a preliminary step in securing of competitive bids. In the absence of any statutory requirement complete publication of the proposed terms on which the work is to be done, is not a prerequisite to a valid call for bids for a public contract. An' advertisement being nothing more than a solicitation of bids or proposals for doing the work or furnishing the materials, does not of itself impose any contractual obligation. 11.
An' advertisement being nothing more than a solicitation of bids or proposals for doing the work or furnishing the materials, does not of itself impose any contractual obligation. 11. While an inaccuracy in the advertisement as to the extent of the contract cal.1ed for by specifications is ordinarily immaterial, and an inconsequential change in the plans on file, after the commencement of advertising for bids, does not invalidate the advertisement; if an advertisement for bids is so defective in respect of the specifications as to exclude competition, it will be a ground for making no award thereon. See 64 American Jurisprudence 2d p. 907 para 53. NIT usually describes the work required to be done, its description, extent, period in which it is to be completed; drawings, specifications, plans and other terms on which a contract is to be entered into, of the tender documents prepared, if not published, should be made available to intending tenderers, so that the builder in conjunction with the specifications and other technical documents may price his obligation. 12. It is not disputed that NIT in the present case was published in conformity with Appendix 2-10-A of M.P. Works Departmental Manual 1983, specifying the work, amount of the estimate, probable amount of contract, time allowed for completion and the earnest money to be deposited. It also speaks that for the special and commercial conditions, specifications, designs, drawings and other' information pertaining to work, the tenderer may contact the office of the Executive Engineer. The book of Tender Documents is a complete volume containing about 276 pages, besides 11 drawings and plans. 13. Considering the bulk of the tender documents, in our opinion, Shri P.N. Kelkar, learned Additional Advocate General, is right in submitting that NIT was published in conformity with the proforma provided by the Works Departmental Munual, which gives sufficient notice and time to bidders to apply their mind for competition, as it was not possible to publish the Tender Documents with the NIT, nor the law requires to do so. Therefore, after publication of NIT in fourteen national and State level newspapers, the intending tenderers were having sufficient notice and, if they were interested, they could have collected the information from the office and also could have purchased the tender documents to make an offer in certain terms.
Therefore, after publication of NIT in fourteen national and State level newspapers, the intending tenderers were having sufficient notice and, if they were interested, they could have collected the information from the office and also could have purchased the tender documents to make an offer in certain terms. Besides, a pre-tender meeting, though not contemplated either in the Works Department Manual or in any statute, was held to facilitate the intending tenderers, in which anybody irrespective of the fact that he has purchased the tender documents or not, was allowed to participate. In the meeting certain modifications and clarifications were suggested by the participants. Though the petitioners in M.P. No. 1430/1992 did not take part in the meeting, the clarifications, or proposals/suggestions made by the intruding tenderers were supplied with the tender documents to petitioner Mahalaxmi Construction Corporation; there after, it was for them to takc a decision, as the date and time was fixed for filing tenders. In both Groups 25 tenderers had submitted their tender documents. As for accepting tender documents the date and time was fixed as 9.9.1992 at 3 p.m., no time could be extended further for accepting and considering the tender documents of the petitioners. 14. The contention that for completing the work of above Rs. 50 lacs, a gap of at least 45 days from the date of publication of NIT till the last date of submitting tenders should be there, as per instruction contained in para 363 of PWD Manual, has also no merit, as from the first publication of NIT, more than 45 days were given, and when the corrigenda were issued, about 30 days' time was available for submitting tenders. The three corrigenda issued to NIT do not invalidate the NIT first published, nor the corrigenda can be considered to be the first publication for fixing the time according to the instructions contained in para 363 of the PWD Manual. . 15.
The three corrigenda issued to NIT do not invalidate the NIT first published, nor the corrigenda can be considered to be the first publication for fixing the time according to the instructions contained in para 363 of the PWD Manual. . 15. Shri Gupta, learned counsel for petitioners, placing reliance on a recent report, of the Supreme Court in case of Food Corporation of India v. M/s Kamdhenu Cattle Feed Industries, JT 1992 (6) SC 259, contended that the petitioners reasonably expected that when along with the tender documents (Annexure 3) letter dated 4.8.1992 was supplied regarding clarification on commercial conditions, technical points, stating therein that the decision of the Government on escalation clause 4.01 and method of payment of escalation on cement and steel and extent of payment of mobilisation advance clause 2.23, will be communicated in due course. Therefore, the petitioners had a legitimate expectation, which ought to have been considered as a relevant factor requiring due consideration in a fair decision making process and, therefore, the time ought to have been extended. The applicability of the principle of legitimate expectation depends on the facts of each case. 16. From the facts slated in para 5, it is clear that nothing remained to be further clarified even with respect to the points for which respondent No.1 stated that the matter was under consideration or would be reviewed. It clearly meant that those commercial conditions remained unchanged, and the tenderers were expected to make their tenders on that basis. If on certain commercial conditions some more concessions proposed by the tenderers were kept under consideration or for review, the tenderers could not have taken into consideration those possible concessions which might or might not be granted. 17. The time, date and place was fixed for receiving the tenders; hence, it was the duty of the petitioners to file their bids within the time. Annexure 3 nowhere speaks that communication or no communication in due course, the time for receiving tenders will be extended. The petitioners were having full knowledge of the last date, time and place fixed for receiving the tenders, and that is why petitioner Mahalaxmi Construction Corporation through its representative submitted tender documents for Group II on 9.9.1992, but neither the petitioners in their individual capacity nor as joint ventures submitted tenders for Group I for the reason best known to them.
As the petitioners have missed the bus, on fact situation it would now not be proper in the larger public interest to extend the time on the principle of legitimate expectation of petitioners, as it would be an undue indulgence detrimental to the public interest. 18. The other decision in M/s Rajshila's case (supra) has also no application in the present case, as in that case one bidder could not participate in the auction, who was virtually prevented from participation owing to a strike in Government offices during the period It had to run from pillar to post to fulfil the pre-conditions of security deposit, which, in view of the involved procedure, was rendered impossible to be fulfilled and, therefore, he tendered the cash security amount of Rs. 7 lacs on the date of the auction and sought permission to participate, but that request was turned down, and on the same date he gave an application signifying therein his willingness to offer Rs. 86 lacs per year as compared to the last acceptance of offer of Rs. 80.21 lacs. In the aforesaid facts the Supreme Court directed re-auction if the bidder who could not participate and furnish the documents, satisfied all other requirements of eligibility, and the first bid was directed to be recorded as Rs. 86 lacs per year for collecting toll tax. 19. Several decisions of the Supreme Court right from E.P. Royappa's case (Referred to in para 8 above) are also of no help to the petitioners, as they are distinguishable on facts. The law laid down by the Supreme Court in the aforesaid cases is that it is a well settled rule of administrative law that an executive authority must be rigorously held to the standards by which it professes its actions to be judged and it must scrupulously observe those standards on pain of invalidation of an act in violation of them which is a judicially evolved rule of administrative law firmly established. In other words, he that takes the procedural sword shall perish with the sword. Therefore, every action of the executive Government must be informed with reason, should be free from arbitrariness and should be in the public interest.
In other words, he that takes the procedural sword shall perish with the sword. Therefore, every action of the executive Government must be informed with reason, should be free from arbitrariness and should be in the public interest. The Government, as a private individual, cannot pick and choose the person with whom it will deal, and if it enters into any contract, it must satisfy that the contract granted was not largess, the power conferred was not exercised arbitrarily or capriciously and the action taken is reasonable, guided by public interest, which can be considered on total evaluation of various considerations which have weighed with the Government in taking a particular action without discriminating any competitor similarly circumstanced. 20. The rule laid down in Ramana Dayaram Shetty's case (supra) was reiterated in Kasturilal's case, Sachidanand Pandey, Harminder Singh's cases (supra) and also in the other cases of the Supreme Court, relied by the counsel for the petitioners. But that has to be judged on the facts of each case. 21. A heavy burden lies on the person who challenges that the action of the respondents is violative of Article 14 of the Constitution, as there is a general presumption in the validity of the governmental action while dealing with the property by public auction, as the public interest is paramount. But for that the petitioners have not placed any material that fixing of the last date for receiving tenders is suggestive of arbitrariness or is discriminatory, giving an impression of bias, favouritism or nepotism. In fact there is no such allegation against the instrumentalities of the State of any favouritism or nepotism. On the other hand, the State and its instrumentalities had dealt with all competitors alike. But, the petitioners who have lost the opportunity, are taking a chance on the pretext of clarifications, which were communicated late. It is strange that for Group II on the same material the tender documents were submitted within time, and for Group I a telegram was sent for extending time by the same petitioner This does not appeal to reason. Moreover, in the telegram which is in the shape of a representation, nothing has been said that because of the clarifications not being sent, the petitioners are not in a position to participate.
Moreover, in the telegram which is in the shape of a representation, nothing has been said that because of the clarifications not being sent, the petitioners are not in a position to participate. In such circumstances, and considering the conduct of the petitioners, we are fully satisfied that the petitioners are estopped from seeking extension of time on the pretext that the NIT in spite of the issue of the corrigenda and the clarifications give~, because of the proposals and suggestions made by the prospective tenderers to facilitate them to avail of some more facilities, is vague or uncertain and, therefore, no tenderer can apply his mind to make a specific offer on the commercial conditions, special and general, and, therefore, a fresh NIT be issued or the respondents be directed to make clarifications and, hence, the time be extended so that more and more participants may take part. If on the 'perceptions of petitioners time is extended, in our opinion, it will not be in the larger public interest, which will multiply litigation and public work will suffer, as in the present cases, not only one or two tenderers but there are 25 in number in both groups, ~ho are from various parts of the country and had deposited their tender' forms with earnest money of Rs. 5 lacs each, giving their offer on the same terms and conditions and in similar circumstances, for executing the public work. 22. In the result, both petitions have no merit and are dismissed with costs. Stay order passed on 15.9.1992 shall stand vacated. Counsel's fee Rs. 2,500/- in each case, if pre-certified.