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2000 DIGILAW 172 (ORI)

NU CALCUTTA CONSTRUCTION COMPANY v. NATIONAL ALUMINIUM COMPANY LTD.

2000-03-27

P.K.MISRA, P.K.MOHANTY

body2000
P. K. MOHANTY, J. ( 1 ) THE petitioner calls is question the action of opp. party No. 1, National Aluminium Company Ltd. and its official in awarding the contract in favour of the Associated Cement Company Ltd. (Opp. party No. 3) and prays for quashing the award of contract in favour of said opp. party No. 3 and for a direction to issue the work order in favour of the petitioner-firm. ( 2 ) THE short fact of the petitioner's case is that, it is a registered partnership firm engaged in the business of Refractory insulation, guaniting, acid/alkali proof lining exposy etc. The opp. party No. 1 sent its tender papers to the petitioner on 17/19-6-99 on 'limited Tender' basis because of its reputation and experience in the required work, requesting it to submit its sealed offer for "repair and modification work of Refractory of Calciner A and B" for shut downs. The tender was to be submitted on or before 9th July, 1999 by 14. 30 hours and the tender was to be opened at 15. 00 hours of 9-7-99. The bidders were also requested to quote their best competitive price, considering the fact that price negotiation if required may be held with the lowest tenderer. A copy of the tendered document has been annexed as Annexure-1. Under Clause 23, of the terms and conditions of the contract, the Techno Commercial part of the bid was to be opened first and the price bid after acceptance of Techno Commercial bid only. The petitioner-firm submitted its tender on 7-7-99 along with all required documents and the earnest money deposit. Petitioner claims that it had quoted a sum of Rs. 49,97,448/- for the work. ( 3 ) IT is the petitioner's case that after submission of the tender form, both for Techno-Commercial and price bid, opp. parties 1 and 2 vide their letter dated 15-9-99, a copy of which is Annexure-4, intimated the petitioner that the conditions put by the petitioner-firm were not acceptable to them inasmuch as in order to make all the parties at par before the price bid opening, some special conditions were conveyed to the petitioner indicating therein that their tender will be considered as technically acceptable subject to the acceptance of the points raised by them and subject to withdrawal of the additional conditions mentioned by the petitioner in its offer. ( 4 ) THE petitioner firm in their letter dated 23-9-99 informed the opp-parties 1 and 2 that they are agreeable to the conditions imposed in Annexure-4 and that the conditions stipulated in their offer are withdrawn. The opposite parties in their letter dated 1-10-99 informed the petitioner that the price bid will be opened on 8-10-99, even though the date for opening of the tender in terms of Annexure-1 was fixed to 9-7-99. The petitioner claims that the tender documents were offered to tea contractors like the petitioner, but out of which only six of them submitted their tender papers. According to the petitioner, the lowest price was offered by M/s. S. N. Islam and Sons, but its bid was not brought to the zone of consideration, nor it was called to the price bid since it was not found technically suitable. Out of the five remaining tenderers, the petitioner was the lowest bidder whose rate was Rs. 49,97,448/- and opp. party No. 3 was the third lowest tenderer having quoted Rs. 61,44,750/ -. On 8-10-99, all the bidders found technically suitable were present and their price bids were opened wherein, according to the petitioner, it was found to be the lowest tenderer and as such, the petitioner's firm had the legitimate expectation that the bid would be knocked down in their favour. The petitioner alleges that it received a fax message from opp. party No. 3 on 2-11-99 for a job for refractory insulation at one of their job sites. A copy of such letter is Annexure-8 and according to the petitioner, it is identical to the work site which the opp. parties 1 and 2 have provided to the petitioner with the tender form. It is alleged that opp. parties 1 and 2 had entered into a private negotiation with opp. party No. 3 and because of the said deal, opp. party No. 3 is trying to get the work done through some other agencies at a lesser cost. ( 5 ) OPP. Parties 1 and 2 have filed their counter affidavits controverting the assertions and allegations made in the writ petition. According to these opposite parties, the contract has already been awarded in favour of opp. party No. 3 is trying to get the work done through some other agencies at a lesser cost. ( 5 ) OPP. Parties 1 and 2 have filed their counter affidavits controverting the assertions and allegations made in the writ petition. According to these opposite parties, the contract has already been awarded in favour of opp. party No. 3 with effect from 26-10-99 and it has already commenced work since 1-11-99 in respect of calcinor-B. It is claimed that on account of increase in capacity, it had decided to go for major modification to bring the capacity from 1400 tons to 1700 tons per day and in the process, the capacity of the Furnace was required to be altered/modified and for that purpose Limited Tenders were called for from the parties, who are known to be doing such type of jobs. An estimate of cost for the work was prepared at Rs. 1,87. 48 lakhs which included the cost of the materials and also the job value for two calciners. The job value for the Two Calciners was estimated at Rs. 72. 4 lakhs and the petitioner was the tenderer for the job part only and not for the materials part. It is asserted that on analysis of all the tenders the inter se position was found to be as follows : (1) M/s. S. M. Islam and Sons (-) 51. 69%. (2) M/s. NU Calcutta (-) 30. 80%. (3) M/s. A. C. C. (-) 15%. (4) M/s. General Insulation Co. (-) 14. 35%. (5) M/s. Furnace Fabrics (-) 5. 7% (6) M/s. Rockwell Insulation (+) 36,52%. ( 6 ) THE allegations of the petitioners that the lowest offer of M/s. S. M. Islam and Sons was rejected on the ground of technically unsuitable is absolutely false and baseless. M/s. S. M. Islam and Sons was found technically suitable and therefore their price bid was opened along with other tenderers on the stipulated day i. e. on 8-10-99. The petitioner was not the lowest tenderer, but M/s. S. M. Islam and Sons was. It is therefore, claimed that the petitioner being not the lowest tenderer, it could not have any legitimate expectation to get the work. The allegation of private negotiation with opp. party No. 3 has been stoutly denied. It is the specific case of opp. parties 1 and 2 that the work has been awarded to opp. It is therefore, claimed that the petitioner being not the lowest tenderer, it could not have any legitimate expectation to get the work. The allegation of private negotiation with opp. party No. 3 has been stoutly denied. It is the specific case of opp. parties 1 and 2 that the work has been awarded to opp. party No. 3 on consideration of the fact that the rate quoted by them is workable and the rate quoted by the lowest tender M/s. S. M. Islam and Sons was absolutely low and was found technically not workable and similarly the offer of petitioner was found to be low and not workable. The petitioner had quoted (-) 30. 87% of the estimated cost prepared by the Nalco and the quotation of M/s. S. M. Islam and Sons was (-) 51. 69% less and therefore the Committee which considered the matter, did not accept the offer as workable. The work required a great deal of expertise and was to be completed within a very short span of time since for each day the plant is closed, for the construction/modification, the production loss is to the extent of 50 lakhs, and in such circumstances while choosing the contractor, the employer has to be very very careful and merely on the basis of lowest tender such highly technical and skilled work could not be awarded. It is strongly asserted that the tender price of the parts bid issued i. e. Techno Commercial bid opened on 9-7-99 in presence of the petitioner as well as other five tenderers and/or their agents were found technically suitable. But on the opening of the price bid on 8-10-1999, the aforementioned price difference was found. ( 7 ) THE petitioner has filed a rejoinder on 20-12-99 taking some altogether new plea and allegations while controverting the averments made in the counter affidavit filed by opp. parties 1 and 2. It is alleged in the rejoinder affidavit filed by the petitioner that opp. party No. 3 had not furnished the E. M. D. along with the tender document which became transparent while the price bid was opened in presence of the respective tenderers. The other tenderer M/s. S. M. Islam and Sons who had the lowest bid had not produced the E. P. F. registration number before opp. party No. 3 had not furnished the E. M. D. along with the tender document which became transparent while the price bid was opened in presence of the respective tenderers. The other tenderer M/s. S. M. Islam and Sons who had the lowest bid had not produced the E. P. F. registration number before opp. parties 1 and 2 for which at the threshold it was taken out of the zone of consideration. On opening the price bid in respect of the respective bidders, the lowest bid of M/s. S. M. Islam and Sons was rejected on the ground that it had not produced the E. P. F. registration number. According to this petitioner, the fact of non-furnishing of earnest money deposit along with tender document by opp. party No. 3 was also discussed, but despite the above, opp. party No. 3 was brought within the zone of consideration and ultimately was given the contract. ( 8 ) IN reply to the rejoinder filed by the petitioner, opp. parties 1 and 2 have filed acounter, inter alia, stating that as a matter of fact, opp. party No. 3 had not submitted the E. M. D. while submitting techno-commercial bid. M/s. Islam and Sons has submitted E. M. D. along with the tender and its tender was considered as valid tender but on the ground that the offer was found unworkable, it was rejected. Opp. Parties 1 and 2 asserted that the tender documents submitted by all the parties were found defective and not in compliance with the tender conditions, inasmuch as all the tender papers submitted by the parties, suffered from serious flaws and therefore, to consider the tender papers before opening of the price bid, an opportunity was given to all the tenderers to rectify the defect which also included the petitioner as well as opp. party No. 3. A copy of the report of the tender committee has been filed as Annexure-D to this reply. The petitioner was intimated by letter dated 15-9-99, a copy whereof is Annexure. . . . . . . . . . party No. 3. A copy of the report of the tender committee has been filed as Annexure-D to this reply. The petitioner was intimated by letter dated 15-9-99, a copy whereof is Annexure. . . . . . . . . . to rectify the defects since it had not given the tender in accordance with the tender conditions and on the contrary it had given certain counter conditions to be incorporated in the contract and, therefore, it is stated that the petitioner's tender could have been rejected on that ground at the outset, but keeping in view the decision of the Tender Committee in Annexure-D, the petitioner was also called upon to withdraw such additional conditions and accept certain special conditions of the owner. The petitioner in compliance gave its undertaking accepting the same by its letter under Annexure-2. ( 9 ) OPP. Party No. 3 has filed a counter affidavit refuting the allegations made by the petitioner and more or less adopting the stand taken by opp. parties 1 and 2. In addition, opp. party No. 3 states that it has commenced the work and had already completed the job relating to Calciner-B making huge investment and after commencement/completion of work, the petition is not maintainable. The allegation of the petitioner that opp. party No. 3 had handed over the contract to opp. party No. 4 has been stoutly denied. According to opp. party No. 3, opp. party No. 4 is merely a supplier of labour force to opp. party No. 3 for execution of the work. The allegation of the petitioner that opp. party No. 3 intimated the petitioner to do the entire work on a paltry sum having negotiated with opp. party No. 1 with obvious reasons has been denied inasmuch as, it has been stated that opp. party No. 3 had written Annexure-8 to the petitioner so far as the work force/man power/ labour force is concerned, but not for the entire work and therefore, no exception can be taken nor it can be said that it is by way of an under-hand means. ( 10 ) IN view of the pleadings of the parties, the question that calls for consideration is, as to whether, opp. parties 1 and 2 the owners could consider the case of opp. ( 10 ) IN view of the pleadings of the parties, the question that calls for consideration is, as to whether, opp. parties 1 and 2 the owners could consider the case of opp. party No. 3, who had not filed its earnest money deposit in terms of the requirements in the NIT and as to whether, by such consideration, the petitioner has been prejudiced. The further question is, as to whether, the tender of the petitioner could be rejected by opp. parties, it having quoted a price less than opp. party No. 3 and admittedly stood as the second lowest tenderer. ( 11 ) SRI S. S. Das, learned counsel appearing for the petitioner, while reiterating and referring to the averments made in the writ application, strenuously argued that in view of the letter dated 17-6-99 along with its enclosures containing terms and conditions, sealed offers were invited along with the required documents and it was required that E. M. D. should be enclosed along with the sealed offers and the last date for submission of the tender was on or before 9-7-99 at 14. 30 hours, opp. party-owner could not have accepted the earnest money deposit of the opp. party No. 3, which admittedly, was submitted after 9-7-99, but not along with the sealed offer and therefore, the acceptance of such earnest money deposit and taking the case of the petitioner into consideration, vitiates the entire process of tender and as such should be struck down. Sri Rajat Ratha, learned counsel for opp. parties 1 and 2 however submits that the petitioner who was present at the time of opening of the tender, did not object to the consideration of the opp. party No. 3's tender, inasmuch as after opening of the techno-commercial bid, it was found that all the tender papers submitted by all the parties were defective, and as such, a decision was taken to call upon all the parties to rectify the defects and to withdraw the conditional offer given by such parties. party No. 3's tender, inasmuch as after opening of the techno-commercial bid, it was found that all the tender papers submitted by all the parties were defective, and as such, a decision was taken to call upon all the parties to rectify the defects and to withdraw the conditional offer given by such parties. A copy of the said decision allowing the parties to rectify the defects has been annexed as Annexure-D. It is further submitted that the petitioner was called upon to withdraw the condition given along with the offer, as would be evident from the letter in Annexure-E, to which the petitioner complied, as would be evident from Annexure-F. If the petitioner was given an opportunity as of other tenderers, then there is no harm or no illegality is committed, if a similar opportunity is afforded to opp. party No. 3, if it was called upon to rectify the defects. A reference has been made to the copy of the letter addressed to opp. party No. 3 under Annexure-C. ( 12 ) IT is apparent from the tender Committee recommendation dated 10-9-99, copy of which is Annexure-D that defect and discrepancies were found in the offers submitted by all the parties and therefore in order to make all parties at par, opportunity was given to all the parties to rectify their defects. It has also been indicated therein that subject to the acceptance of the points stipulated therein and withdrawal of the additional conditions mentioned in the letter, all bidders are technically acceptable. Pursuant to the decision, the NALCO sent a letter on 15-9-99 to the petitioner that the conditions put in the offer are not acceptable and in order to make all parties at par before price bid opening, some special conditions of the contracts were to be accepted by it. The petitioner company in their letter dated 23rd September, 1999 accepted the conditions laid in the letter under Annexure-D and requested that the date of price bid opening may be confirmed. A letter also was written by the NALCO to opp. party No. 3 indicating therein that the tender cost as well as the E. M. D. has not been submitted and if the same is not submitted by 25-9-99, their offer will be summarily rejected. A letter also was written by the NALCO to opp. party No. 3 indicating therein that the tender cost as well as the E. M. D. has not been submitted and if the same is not submitted by 25-9-99, their offer will be summarily rejected. Similar letters appear to have been issued to M/s. S. M. Islam and Sons, a copy of which is Annexure-H. It also transpires from the proceedings of the Tender Committee dated 1-10-99 that it had gone through the clarification received from all the six parties and found them in order and it was also found that all the parties are techno-commercially at par and therefore it was recommended to open the price bid of all qualified tenderers. It further appears that the parties were informed that the price bids were to be opened on 18-10-99, copies of which are Annexures L series. Undisputedly, the date for opening of the price bid in terms of the letter inviting offers. Annexure-1 was 9-7-99 and as a matter of fact, the price bid could not be opened since the tenders were found defective in respect of the tenderers and an opportunity was afforded to all the parties to rectify their defects and so far as the petitioner is concerned, it was intimated to withdraw the condition stipulated by it in the offer and to accept the additional conditions, which the petitioner-firm did accept. In M/s. G. J. Fernandes v. State of Karnataka, AIR 1990 Supreme Court 958, the Apex Court held that the party issuing the tender has the right to rigidly enforce them, but it is not the law that the owner cannot deviate these guidelines at all in any situation, but any deviation, if made, should not result in arbitrariness or discrimination. It comes in for application where a conformity of that or relaxation from the prescribed standard results in substantial prejudice or injustice to any of the parties involved or to public interest in general. The Apex Court held that changes or relaxation would be unobjectionable unless the benefits of these changes or relaxations were extended to some but denied to others. The Apex Court held that changes or relaxation would be unobjectionable unless the benefits of these changes or relaxations were extended to some but denied to others. A relevant portion of the observation of the Apex Court at paragraph 16 of the aforesaid judgment may be quoted hereunder at page 967-968 :"it is true that the relaxation of time schedule in the case of one party does affect even such a person in the sense that he would otherwise have had one competitor less. But, we are inclined to agree with the respondent's contention that while the rule in Ramana's case, ( AIR 1979 SC 1628 ) (supra) will be readily applied by Courts to a case where a person complains that a departure from the qualifications has kept him out of the race, injustice is less apparent where from the attempt of the applicant before Court is only to gain immunity from competition. Assuming for purposes of argument that there has been a slight deviation from the terms of the NIT, it has not deprived the appellant of its right to be considered for the contract, on the other hand, its tender has received due and full consideration. If, save for the delay in filing one of the relevant documents, MCC is also found to be qualified to tender for the contract, no injustice can be said to have been done to the appellant by the consideration of its tender side by side with that of the MCC and in the KPC going in for a choice of the better on the merits. The appellant had no experience in this line of work and that the appellant was much better qualified for the contract. The comparative merits of the appellant vis-a-vis MCC are, however, a matter for the KPC (counselled by the TCE) to decide and not for the Courts. We were, therefore, rightly not called upon to go into this question. " ( 13 ) THAT being the settled position of law, if the owner-NALCO, having found on scrutiny that all the tenders, received are defective and as such, liable to be rejected and in such situation, it thinks of allowing as opportunity to all the tenderers without any exception to remove and or rectify such defects indiscriminately, then such action of the owner-opp. parties 1 and 2 cannot be ascribed as illegal, unfair, or with oblique purposes. parties 1 and 2 cannot be ascribed as illegal, unfair, or with oblique purposes. The petitioner on its own showing, pursuant to the letter of the owner has withdrawn the conditions set up along with their offer and has also accepted the special conditions indicated by the owner, after the last date of receipt of tender/offer i. e. after 7-9-1999. Thus, if the petitioner, whose offer having been found to be defective or unacceptable was given an opportunity along with other tenderers to remove and rectify the defects and the petitioner has admittedly removed such defects, during the extended time, it is otherwise estopped from challenging such action of the owner. Moreover, it appears that the price bid was opened on 18-10-1989 in presence of all the tenderers, but the petitioner did not raise any objection, that the E. M. D. of opp. party No. 3 was accepted at a belated stage and, therefore, its offer/tender could not have been considered from the very beginning. In the present writ application also there had been no allegation that the tender/offer of opp. party No. 3 was not in order, but that has been illegally taken into consideration. This plea has been made by the petitioner in its rejoinder when the opp. parties 1 and 2 filed their counter refuting the claim of the petitioner specially with regard to the plea that the petitioner was the lowest tenderer since the tender of M/s. S. M. Islam and sons which was the lowest was not taken into consideration being found defective the K. P. F. clearance having not been produced. It is thus not a case where the petitioner has been kept out of the race and the opp. party No. 3 has been given an advantage by allowing it time to remove or rectify the defects. In that view of the matter, we do not find any illegality in the action of opp. parties 1 and 2 in considering the tender/offer of opp. party No. 3. ( 14 ) THE next submission of Sri Das, learned counsel for the petitioner is that the petitioner being the lowest valid tenderer, it was legally entitled and had the reasonable expectation of being favoured with the work order, but the opp. parties 1 and 2 have with ulterior motive settled the contract in favour of opp. party No. 3 by an underhand arrangement. parties 1 and 2 have with ulterior motive settled the contract in favour of opp. party No. 3 by an underhand arrangement. It is not the law that in case where tenders are invited for execution of a work, the lowest tenderer/offerer has to be awarded the work without any further consideration or requirement. In the case at hand the petitioner is not the lowest tenderer as claimed, but the second lowest. M/s. S. M. Islam and Sons was the lowest tenderer and the contention of the petitioner that M/s. Islam's tender was not considered because of defects, is misconceived. The owner-opp. parties 1 and 2 have categorically stated in their affidavit that the offer of M/s. S. M. Islam and Sons was never rejected on the ground of non-furnishing of any certificate. It was one of the six valid tenderers along with the petitioner and opp. party No. 3 and all the tenders having been found to be Techno-commercially acceptable, their price bid was opened. M/s. S. M. Islam and Sons was the lowest tenderer having quoted (-) 51. 69%. The petitioner having quote (-) 30. 80% was the second lowest. The lowest tenderer was M/s. S. M. Islam and Sons, but it has not been made a party to this writ petition. Admittedly, the petitioner had quoted Rs. 4,997,448/- as against an estimated cost made by the owner at Rs. 72. 4 lakhs for the concerned work. If in such circumstances the Tender Committee consisting of experts find that the offer submitted by the petitioner or any other tenderer is too low and is not workable and, therefore, takes a decision not to award the contract in favour of such tenderers they cannot be said to have acted illegally with any material irregularity. The owner has the right to choose a right person with requisite experience and ability to execute the work. In that view of the matter, the decision of opp. parties in preferring the third lowest tender which was (-) 15% whereas the second was (-) 30. 80% and the first lowest (-) 51. 69% such decision cannot be faulted. The owner has the right to choose a right person with requisite experience and ability to execute the work. In that view of the matter, the decision of opp. parties in preferring the third lowest tender which was (-) 15% whereas the second was (-) 30. 80% and the first lowest (-) 51. 69% such decision cannot be faulted. ( 15 ) LAW is well settled that there are inherent limitations in exercise of power of judicial review and while adjudicating the constitutional validity of an executive decision relating to economic matter certain measure of freedom or play in the 'joints' to the executive should be allowed. A reference may be made to the decision of the Apex Court in Raunaq International Ltd. v. I. V. R. Construction Ltd. , 1999 (8) JT (SC) 411 : ( AIR 1999 SC 393 ) wherein the Apex Court observed that the Courts should be reluctant to interfere with the dispute between the two private tenderers unless the dispute involved violation of public interest. In paragraph 9 of the aforesaid judgment the Apex Court observed (at pages 396-397 of AIR) :"the award of contract, whether it is by a private party or by a public body or the State, is a essentially a commercial transaction. In arriving at a commercial decision considerations which are of paramount importance are commercial considerations. There would be : (1) The price at which the other side is willing to do the work; (2) whether the goods or services offered are of the requisite specifications; (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 man power 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; (5) past experience of the tenderer, and whether he has successfully completed similar work earlier; (6) time which will be taken to deliver the goods or services; and often (7) the ability of the tenderer to take follow up action, rectify defects or to give post contract service. Even when the State or a public body enters into a commercial transaction, considerations which would prevail in its decision to award the contract to a given party would be same. However, because the State or a public body or an agency of the State enters into such a contract, there could be in a given case, an element of public law or public interest involved even in such a commercial transaction. " ( 16 ) A submission has been made on the basis of a letter in Annexure-8 that the opposite party No. 3 having offered the very same work at a much lower price, the opposite parties 1 and 2 have connived with each other by an underhand transaction and as such, it should be viewed with suspicion. But for the pleadings of the parties referred to earlier, it appears that the letter in Annexure-8 was with regard to the supply of manpower for the work and not for the entire work as alleged. It has also been brought on record that in fact the opposite party No. 3 has entered into a contract for supply of manpower with opposite party No. 4 and we see nothing illegal in such a transaction in the fact situation of the case. ( 17 ) IN any view of the matter the action of the opposite parties No. 1 and 2 in awarding the tender in favour of opposite party No. 3 cannot be held to be unfair, unreasonable or in violation of the Rules of natural justice and fair play and as such, we are not inclined to interfere in this matter. ( 18 ) IN the result the writ petition is devoid of any merit and as such is dismissed. But in the facts and circumstances of the case there shall be no order as to costs. ( 19 ) P. K. MISRA, J. , I agree. Petition dismissed.