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2004 DIGILAW 125 (JHR)

A. K. Construction v. State Of Jharkhand

2004-02-04

R.K.MERATHIA

body2004
JUDGMENT R.K. Merathia, J. 1. Heard the parties. 2. The only question to be decided in this case is whether respondent No. 6 has been favoured in giving the contract or not. In other words, whether the decision making process was arbitrary or not. 3. The case of the petitioner is that a tender was invited by the Executive Engineer, Waterways Irrigation Division, Garhwa, being Tender No. 4/2002-03 in respect of various words which was published in the news paper on 3.1.2003. Item No. 1 related to the work in question "Renovation of Sarswatia Irrigation Project". Five tenders were submitted by various contractors including the petitioner and respondent No. 6. The tenders were opened on 17.1.2003. The rate quoted by the petitioner and respondent No. 6 was equal. It was found that respondent No. 6 did not submit any Sales Tax Clearance Certificate and it was not even registered under the Sales Tax Act, even then the work order was allotted to respondent No. 6 ignoring Clause 10 of the tender notice. Otherwise being equal in rates the petitioner was entitled to get the work. 4. The case of the respondents 1 to 5 as made out the counter affidavit is as follows :-- "8. That it is stated that comparative statement was sent to the Chief Engineer for scrutinizing the paper and final selection of the contractor. Among all the tenderers M/s. Kaushik construction was selected to execute the work due to following reason : That M/s. A.K. Construction having labour licence for fifty labours where as M/s. Kaushik Construction is having labour licence for One Hundred labours. This contract is having mainly earth work and small part constructure repair. The major portion of the work is to be completed within this financial year. Therefore it was finally decided by the Chief Engineer to allot the work to M/s. Kaushik Construction. The agreement has been executed and the work is in progress. That regarding sales tax clearance the first partner Sri Gopal Kishor Choubey of M/s. Kaushik Construction had newly applied for sales tax number hence clearance clause was not applicable to him. The it is stated that M/s. Kaushik Construction was newly registered in Water Resources Department of Jharkhand State and sales tax clearance can only be given after registration. That regarding sales tax clearance the first partner Sri Gopal Kishor Choubey of M/s. Kaushik Construction had newly applied for sales tax number hence clearance clause was not applicable to him. The it is stated that M/s. Kaushik Construction was newly registered in Water Resources Department of Jharkhand State and sales tax clearance can only be given after registration. That M/s. Kaushik Construction has three partners and the first partner having share of 50 % are registered in sales tax department and clearance certificate has been obtained." 5. The case of respondent No. 6 is that, considering the past experience, the work has been allotted to it. It was category 1A, whereas petitioner was a category 1B contractor. It had licence for 100 labourers, whereas petitioner had licence for 50 labourers. 6. In reply, the petitioner submitted that the stand of the respondent Nos. 1 to 5 and 6 are contradictory. Though, respondent No. 6 has stated that it was registered under the Bihar Finance Act but no documents in support of this statements made in paragraph 18 of its counter affidavit has been filed. Admittedly the respondent No. 6 applied for Sales Tax Registration Certificate vide Annexure-C on 14. 1.2003 i.e. after the publication of the Tender Notice on 3.1.2003. Moreover, tender was opened on 17.1.2003, whereas Annexure-E relied on by respondents, purported to be a Commercial Tax Clearance Certificate Is dated 26.2.2003 and that too it is in favour of M/s. Gopal Krishan Choubey and not in favour of respondent No. 6-Firm namely M/s. Kaushik Construction. This being the admitted position, it is a clear case of showing favour to respondent No. 6 ignoring the case of the petitioner. 7. After hearing, the following facts emerge. The petitioner and respondent No. 6 quoted equal rates. Respondent No. 6 did not fulfill the condition No. 10, mentioned in the notice Inviting tender Annexure-1 (NIT). Even the said Sales Tax Clearance Certificate has not been issued in the name of the respondent No. 6-firm comprising of other partners also. There was no term in NIT for producing labour licence of 50 laboures or 100 labourers. The NIT simply contemplated submission of a labour licence. Even the said Sales Tax Clearance Certificate has not been issued in the name of the respondent No. 6-firm comprising of other partners also. There was no term in NIT for producing labour licence of 50 laboures or 100 labourers. The NIT simply contemplated submission of a labour licence. It does not lie in the mouth of the respondents that as one of the partners of respondent No. 6 had newly applied for Sales Tax number hence clearance clause was not applicable to him, and that as it was newly registered in the Water Resources Department of Jharkhand State. Sates Tax Clearance can only be given after registration. The respondents have taken into consideration irrelevant matters and not the relevant matters, while giving work to the respondent No. 6. 8. Had it been stipulated In the notice inviting tender that the Sales Tax Clearance Certificate can be produced even after opening of the tender, other contractors similarly situated could have also applied. This Is like changing the rules of the game after it has begun and the players have entered into the arena. This is clearly arbitrary. 9. Further on 7.3.2003, this Court allowed time to the respondents State to obtain instructions and it was further ordered that if any work order is issued in favour of respondent No. 6 it shall be subject to the decision of this case. On 26.3.2003, while issuing notice to respondent No. 6, in the presence of the counsel for the respondents State, it was ordered that in the mean time apart from the earlier order dated 7th March, 2003, the respondents were also directed not to release any fund in favour of respondent No. 6 without prior permission of the Court. The respondent No. 6 in paragraph 19 of its counter affidavit has stated that it has already completed 90 % of the work and also paid a running bill. When this Court sought clarification of the said statement. Learned counsels for the respondents could not dispute that inspite of the order dated 26.3.2003, the respondent State has released fund in favour of respondent No. 6 without prior permission of the Court. 10. When this Court sought clarification of the said statement. Learned counsels for the respondents could not dispute that inspite of the order dated 26.3.2003, the respondent State has released fund in favour of respondent No. 6 without prior permission of the Court. 10. Learned counsel for respondent No. 6 relied on a judgment of this Court in case of Rama Expo Invest Pvt. Ltd v. State of Jharkhand dated 8.5.2001 rendered in CWJC No. 1800 of 2001 [see 2001 (2) JCR 133 (Jhr)] to show that the submission of Sales Tax Clearance Certificate was not necessary. The ratio of the said case is not applicable to the present case. The petitioner, of that case was registered under the Sales Tax Department of West Bengal but not under the Jharkhand, as it was not doing any business in the State of Jharkhand. Therefore, this Court held that on that account the tender could not be Ignored. No such case has been made out herein this case. Admittedly, respondent No. 6-Firm could not produce a Sales Tax Clearance Certificate issued in the name of the Firm till today. What they had produced is an application made by one Sri Gopal Krishan Choubey who happens to be one of the partners of the Firm, for issuing a Sales Tax Registration Number after publication of an NIT in the newspaper, and a Sales Tax Registration Certificate is issued in his favour after opening of the tender. Learned counsel for respondent No. 6 relied on 2001 (1) JCR 635 (Jhr), M/s. Singh Electrical & Construction and submitted that when the work is almost complete, no relief can be granted to the petitioner. In that case the main grievance of the petitioner therein was that the tender was not opened on the date fixed and later on it came to know that the work has been allotted to other persons, but it was shown before the Court that the tenders were opened on the date fixed. It was further shown that the petitioner therein did not fulfill other conditions of the NIT also. Therefore, the said Judgment is of no help to respondent No. 6. Certain other judgments were relied on by the respondent No. 6 to show the scope of judicial review in such matters. This Court is conscious of such scope. It was further shown that the petitioner therein did not fulfill other conditions of the NIT also. Therefore, the said Judgment is of no help to respondent No. 6. Certain other judgments were relied on by the respondent No. 6 to show the scope of judicial review in such matters. This Court is conscious of such scope. If brought to the notice, the Court can certainly look into whether the decision making process should be approved or not. The Government Departments have the public duty to be fair to all concerned. The parameters of interference in such matters are mala fide, bias and arbitrariness. In this case, the purported clearance certificate is only in the name of one Sri. G.K. Choubey said to be one of the partners of the Firm-respondent No. 6 and that too was issued after the tenders were opened. As per W.B. State Electricity Board v. Patel Engineering Co. Ltd. and Ors., (2001) 2 SCC 451 : 2001 (2) JCR 422 (SC) :-- "In a work of this nature and magnitude where bidders who fulfil pre- qualification alone are invited to bid, adherence to the instructions cannot be given a go-by by branding it as a pedantic approach, otherwise it will encourage and provide approach, otherwise It will encourage and provide scope for discrimination, arbitrariness and favourtism which are totally opposed to the rule of law and our constitutional values. The very purpose of issuing rules/instructions is to be ensure there enforcement lest the rule of law should be a casualty. Relaxation or waiver of a rule or condition, unless so provided under the ITB, by the State or its agencies (the appellant) in favour of one bidder would create Justifiable doubts in the minds of other bidders would impair the rule of transparency and fairness and provide room for manipulation to suit the whims of the State agencies in picking and choosing a bidder for awarding contracts as in the case of distributing bounty or charity. In our view, such approach should always be avoided. Where power to relax or waive a rule or a condition exists under the rules, it has to be done strictly in compliance with the rules. We have, therefore, no hesitation in concluding that adherence to the ITB or rules is the best principle to be followed, which is also in the best public interest." 11. Where power to relax or waive a rule or a condition exists under the rules, it has to be done strictly in compliance with the rules. We have, therefore, no hesitation in concluding that adherence to the ITB or rules is the best principle to be followed, which is also in the best public interest." 11. The action of the respondents in granting work to respondent No. 6 who admittedly did not qualify, is arbitrary and unfair, it amounts to changing the rules of the fame after the players have entered into the arena and the game has begun. Paragraph 12 of Monarch Infrastructure Pvt. Ltd. v. Commissioner, Ulhasnagar Municipal Corporation and Ors., (2000) 5 SCC 287 may be seen. 12. Further it appears that the respondents State disobeyed interim order passed on 26.3.2003, passed in this case directing them not to release any fund in favour of respondent No. 6 without permission of the Court. It is not clear whether respondent No. 6 has also disobeyed the order of this Court by receiving payment after the knowledge of the aforesaid orders passed by this Court. All these circumstances taken together clearly establishers that the respondents State have shown favour to respondent No. 6 in granting the contract. 13. However, relying on the judgment of this Court reported in 2001 (3) JCR 366 (Jhr) : 2001 (2) JLJR 350 , Surendra Prasad Singh v. State of Jharkhand, and in view of the fact that major portion of the work allotted to respondent No. 6, is complete, I do not intend to disturb the present work because restoring the status quo ante shall be against the public interest, thought this Court finds that the action for the respondents State in rejecting the tender of the petitioner was illegal, unconstitutional and totally invalid. It is a clear case of showing favour to respondent No. 6 of which it is a beneficiary. Because of the arbitrary and unreasonable exercise of power of the respondents State, the petitioner has been deprived of the work and therefore be needs to be compensated for this because if the work was awarded to him be could have expected some profit. In the said case 2001 (3) JCR 366 (Jhr) : 2001 (2) JLJR 350 , the estimated cost of the work was about 7.75 lacs. The compensation awarded was Rs. In the said case 2001 (3) JCR 366 (Jhr) : 2001 (2) JLJR 350 , the estimated cost of the work was about 7.75 lacs. The compensation awarded was Rs. 25,000/- in the present case, the estimated cost of the work is about Rs. 47.176 lacs. Moreover the facts of the present case are more disturbing. Accordingly, I allow respondent No. 6 to complete the work and receive payment. This order will be subject to payment of compensation to the petitioner by the Department tentatively assessed at Rs. 1,00,000/- within two months from today. Let a copy of this order be sent to the Chief Secretary of the Jharkhand Government. This Court leaves it to the Government to decide whether it would like to hold an enquiry into the matter and fix the responsibility upon the persons concerned in such arbitrary, whimsical and unfair exercise of executive power by ignoring the case of the petitioner who was a successful tenderer and granting work to respondent No. 6 by ignoring the conditions of NIT. If the Government of Jharkhand decides to do so and ultimately fixes the responsibility, it shall be at absolute liberty after fixing such responsibility to direct that the aforesaid amount of Rs. 1,00,000/-shall be recovered from the salary of the person or the persons held responsible. Such an action, if taken by the Government, shall be in total conformity with the spirit and ratio of this judgment. 14. In the result, this writ petition is disposed of with the aforesaid observations and directions.