Rastriya Pariyojana Nigam v. State of Bihar — 1995 DIGILAW 453 (PAT)

ORDER 1. The petitioner in this application challenges the decision taken on 30.5.1995, by the Tender Committee of the Patna Regional Development Authority (hereinafter referred to as the 'Authority') to eliminate the petitioner from consideration for the award of the contract for construction of a multi-storied building on the ground that in 1991 the petitioner had been black-listed by the Water Resources Development Department, Government of Bihar. 2. The petitioner is a Government of India Undertaking. It was incorporated with the object of undertaking big construction projects. It is stated in the writ petition that at present it is engaged in the construction of a multi-storied building called the 'Lok Nayak Bhawan Complex' for Patna Zila Parishad under the D.D.C., Patna. The Lok Nayak Bhawan is said to be in the final stages of construction. 3. The Authority intended to construct a multi-storied commercial-cum-office building under the name of Maurya Tower on its premises commonly known as Maurya Lok in the heart of the City of Patna. (Maurya Lok is a few hundred meters from the site of the Lok Nayak Bhawan Complex). It was proposed to get the construction of the building carried out by an outside agency for a total contract amount of Rs. 4,06,00,000/- as per the Authority's final estimates regarding the building's construction cost. Having regard to the nature of the project and with a view to ward off unsuitable and unqualified tenderers the Authority issued a pre-qualification tender notice. 4. The object of this notice (as stated in paragraph 8 of the counter affidavit filed on behalf of the Authority) was to ensure that only persons of repute, having similar work experience and who had completed their earlier contracts on schedule should be before the Authority for consideration for awarding the construction contract. The pre-qualification tender notice was published in a daily newspaper, The Times of India on 8.10.1994. Eleven agencies, including the petitioner, applied to the Authority asking for the pre-qualification tender application form. Each of them were given the forms and they submitted their applications. Out of the eleven applications only five were found qualified for making the final tender and tender papers were sold only to those five agencies. 5. The petitioner claims to have successfully passed the pre-tender screening. Each of them were given the forms and they submitted their applications. Out of the eleven applications only five were found qualified for making the final tender and tender papers were sold only to those five agencies. 5. The petitioner claims to have successfully passed the pre-tender screening. The Authority admits this with some qualification; it is stated in the counter affidavit that the pre-tender applications of the petitioner and another firm namely M/s. Hindustan Steel Construction Limited were incomplete in respect of a number of particulars and for that reason they too had failed to qualify for participation in the tender. Later, on their requests, however, they were also included among the short listed agencies primarily on a consideration that they were Government of India Undertaking. 6. As noted above, after the initial screening the tender papers were supplied by the Authority to five agencies and they were also advised to come to the office of the Vice-Chairman of the Authority for a pre-bid conference on 15.5.1995 at 3.30 p.m. However, out of the five agencies to whom tender papers were supplied only three submitted their tenders namely: – (i) M/s. Rastriya Pariyojana Nigam (the present petitioner), (ii) M/s. Walia Builders (Respondent No.6) and (iii) M/s. Hindustan Steels Construction Limited (not a party to the writ petition). 7. It is not in dispute that the petitioner was the lowest tenderer and the three bids were as follows:– (i) M/s. Rastriya Pariyojana Nigam: 14% above schedule. (ii) M/s. Walia Builders: 22% average above schedule. (iii) Hindustan Steel Construction Limited: 29.15% average above schedule. 8. Thereafter the matter appears to have been placed before the Tender Committee in its meeting held on 30.5.1995. From the minutes of the meeting (copy at Annexure-3) it appears that the Committee found that the petitioner Nigam had made a bid for a sum of Rs. 5,05,76,978.90. However, it decided not to take into consideration the petitioner's bid on the ground that the petitioner had been black-listed by the Irrigation Department, Government of Bihar. It further decided to call Respondent no.6, the second lowest tenderer for negotiation and awarding the contract. It is not in dispute that before taking the decision for its elimination, the petitioner was not given an opportunity to explain its black-listing by the Government Department; no negotiations were held with it regarding the cost of construction quoted by it. 9. It further decided to call Respondent no.6, the second lowest tenderer for negotiation and awarding the contract. It is not in dispute that before taking the decision for its elimination, the petitioner was not given an opportunity to explain its black-listing by the Government Department; no negotiations were held with it regarding the cost of construction quoted by it. 9. From the facts narrated above, it is evident that the Authority completely failed to achieve the desired object of the prequalification tender notice. According to the Authority it had initially short-listed only three tenderers and afterwards included the present petitioner and M/s. Hindustan Steel Construction Ltd. among them. Out of the five agencies screened by the Authority, two did not even care to make a bid. It is thus evident that on the basis of the original short-listing made by the Authority, Respondent no.1 would have been the lone tenderer, a highly undesirable situation in awarding contract for such a coveted project. Further, in the case of the petitioner also the pre-qualification tender notice did not fulfill its object because the petitioner was eliminated on a ground which was avowedly relevant at the stage of the pretender screening. On the Authority's own statement the object of the screening was to find out the reputation and the past antecedents of the proposed tenderers and once the tenderers was found qualified to make his bid that stage was over and at the stage of the tender the Authority was normally required to undertake a comparison of the technical and financial offers made by the tenderers. However, this is not to say that at the stage of the tender the Authority was wholly barred from taking into consideration some relevant facts or materials coming to light at that stage and it was surely entitled to take into consideration some material facts coming to light even at that stage. What is required to be judged, however, is whether or not, in the facts and circumstances of this case, the Authority acted fairly, reasonably and evenly. 10. The Authority in its counter affidavit has assigned a number of reasons in support of its decision. What is required to be judged, however, is whether or not, in the facts and circumstances of this case, the Authority acted fairly, reasonably and evenly. 10. The Authority in its counter affidavit has assigned a number of reasons in support of its decision. It is stated that in the pre-qualification tender notice as also in the final tender application there were clauses reserving the right of the Authority to reject an application or tender without assigning any reason and hence the Authority was not obliged to give any reasons for not accepting the petitioner's tender and no writ petition was maintainable on that ground. In my opinion, this plea is to be recorded only to be rejected. Any such stipulation in the pre-qualification tender notice or in the final tender application will not clothe the Authority with the right to act unreasonably or arbitrarily and its decision to eliminate any tenderer from consideration and to award the contract to any other tenderer must be based on valid and reasonable grounds. 11. In support of its decision not to consider the petitioner for the award of the contract and to give it to Respondent no.6, the Authority has given three more reasons. First is that the petitioner in its pre-qualification tender application suppressed the fact that it had been black-listed by the Irrigation Department of the Government. It is stated that Part II of the application asked for a list of important projects (of value above Rs. 100 lacs) executed by the tenderer during the last ten years. This part of the application was in a printed form divided into a number of columns under various heads. None of the columns even remotely related to past black-listing etc. by any other organisation or a Government department but it is contended that the petitioner was supposed to mention this fact under column nos. 9 and 10 which were under the heads "additional information" and "remarks if any". The petitioner's omission to state this fact in the pre-tender application is described as suppression of a material fact. 12. I am quite unable to accept this contention. Reading the heading of Part II of the applicant and the heads of its different columns normally it would never occur to an application that it was required to mention its any past black-listing etc. 12. I am quite unable to accept this contention. Reading the heading of Part II of the applicant and the heads of its different columns normally it would never occur to an application that it was required to mention its any past black-listing etc. by any other organisation or a Government department and I am clearly of the opinion that on that basis alone the petitioner cannot be charged with suppression of any material facts. 13. It is secondly stated in the Authority's counter affidavit that in one of the meetings of the Tender Committee one of the Government officials (being a member of the Committee) mentioned the fact that the petitioner had been black-listed by the Irrigation Department. This information was confirmed vide letter dated 3.6.1995 (Copy at Annexure-E/3) from the Secretary, Department of Water Resources Development, Government of Bihar. This fact was considered sufficient and formed the basis of the decision to eliminate the petitioner. 14. The Authority further justified its decision to award the contract to Respondent no.6 on the plea that though the original bid of Respondent no.6 was much higher than the petitioner, after the petitioner's elimination, Respondent no.6 was, in negotiations, made to agree to lower its bid to the amount offered by the petitioner and it was on that lowered bid that he was given the contract. 15. I remain quite unimpressed by all the aforesaid reasons assigned by the Authority to defend its decision and I have no doubt in my mind that the Authority cannot be said to have acted fairly, reasonably and evenly in examining and dealing with the offers made to it. 16. On the question of black-listing it should be kept in mind that the Authority being an autonomous body created in terms of Section 3 of the Regional Development Authority Act was per se not bound by the decision of any Government department to black-list a contractor. It was quite free in exercise of its decretion to award the contract to an agency notwithstanding the fact that the agency was black-listed by any Government department. However, to say that the Authority was not bound by a Government department black-listing any agency is not to say that the Authority was not entitled to take into consideration that circumstance for taking a decision to award any contracts of its own. However, to say that the Authority was not bound by a Government department black-listing any agency is not to say that the Authority was not entitled to take into consideration that circumstance for taking a decision to award any contracts of its own. The basic question, I may repeat once again would be, whether the Authority has acted fairly and reasonably and has meted out equal treatment to all applicants/tenderers. 17. To begin with it may be noted that the confirmation regarding the petitioner's black-listing came by letter dated 5.6.1995 whereas the decision to eliminate the petitioner was taken in the meeting held on 30.5.1995. It is thus evident from the materials on record that the decision to eliminate the petitioner was taken even before the formal confirmation of the allegation. Secondly, the admitted position is that the petitioner was not given any opportunity of hearing in this question. In my opinion, in the facts and circumstances of this case the Authority was required to hear the petitioner's version on the question of its blacklisting by the Government department and the action of the Authority to eliminate the petitioner on that basis without affording it an opportunity of hearing is plainly violative of the principles of natural justice. 18. The Authority also failed to take into consideration the fact that even after it black-listing by the Government department in 1991 the petitioner was awarded the prestigious contract for the construction of the Lok Nayak Bhawan by the Patna Zila Parishad and the Patna Administration at a stone throw distance from the site of Maurya Towers. For- the aforesaid reason, I am of the view that the action of the Authority was quite unreasonable and arbitrary in excluding the petitioner's bid from consideration. 19. I am further of the view that the Authority failed to meet out equal treatment to the petitioner and acted in a manner discriminatory against the petitioner. The reasons are as follows:– It has been noted above that on the basis of the pre-qualification tender application it was highly unlikely that any fact regarding the black-listing etc. of any of the proposed tenderers could be elicited. The reasons are as follows:– It has been noted above that on the basis of the pre-qualification tender application it was highly unlikely that any fact regarding the black-listing etc. of any of the proposed tenderers could be elicited. It has also been noted that in the case of the petitioner the fact of its black-listing by a Government department came to light merely by chance when one of the members of the Tender Committee being a Government official recalled it from his personal knowledge and mentioned the fact in one of the meetings of the Committee. Now when the fact of the petitioner's black-listing had come to light and the Authority intended to take it into consideration for eliminating the petitioner it was incumbent upon the Authority to make similar investigation in respect of Respondent no. 6 also. The Authority should have pointedly asked Respondent no. 6 also whether it has been black-listed by any other organisation including any department of the Government and if necessary investigation should have been made from other sources also. Respondent no.6 is a Delhi based Company and presumably the areas of its operation are mostly out of this State. Hence it was not quite likely that any similar information in respect of Respondent no. 6 would have cropped up accidentally or by chance as in the case of the petitioner. The Authority should have, therefore, made special effort to find out the antecedents of Respondent no.6 and to ascertain whether or not it had been similarly black-listed by any other organisation or authority. No such effort appears to have been made and there is absolutely no statement in this regard. This to my mind clearly put the petitioner in a disadvantageous position and led to a hostile discrimination against it. Further in case it was noted against the petitioner that it has not completed some of its earlier projects on schedule, a similar investigation should have been made in the case of Respondent no.6 also. 20. For the reasons aforesaid, I find and hold that the Authority acted unreasonably, arbitrarily and in a manner discriminating against the petitioner. It failed to compare the petitioner and Respondent no.6 on the basis of a like to like matching within comparable parameters. 21. The negotiations with Respondent no. 20. For the reasons aforesaid, I find and hold that the Authority acted unreasonably, arbitrarily and in a manner discriminating against the petitioner. It failed to compare the petitioner and Respondent no.6 on the basis of a like to like matching within comparable parameters. 21. The negotiations with Respondent no. 6 after the elimination of the petitioner, in my opinion, only worsen the case of the Authority and do not justify the award of the contract to that Company. No negotiations were held with the petitioner and hence it is not known whether the petitioner would have been also prepared to further lower down its bid and any negotiation with Respondent no.6 after the elimination of the petitioner does not carry much weight. 22. For the reasons aforesaid, I am unable to sustain the action of the Authority. I, accordingly, quash the decision taken in the meeting held on 30.5.1995, as contained in Annexure-3 and direct the Authority to reconsider the tender in the light of the observations made in this decision. In case the Authority proposes to hold the petitioner's black-listing as a circumstance against it, it should afford the petitioner an opportunity of hearing on that question. It should also make a similar investigation in respect of Respondent no.6 and in case anything comes in light against Respondent no.6 that Company must also be given a hearing on that point and then a decision should be taken in accordance with law. 23. In the result, this application is allowed. No order as to costs.