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2008 DIGILAW 342 (CAL)

Pam Development Private Limited v. STATE OF WEST BENGAL

2008-03-28

DIPANKAR DATTA

body2008
Judgment :- (1). THE issues involved in the writ petitions alongwith the parties thereto being common have been heard together and shall be governed by this common judgment and order. Facts of the writ petition filed on the Original Side may be noted. (2). THE petitioners responded to a notice inviting tender issued by the superintending Engineer, West Bengal State Rural Development Agency vide memo No. SRDA/n-2/2007 in relation to construction of roads under Pradhan mantri Sadak Yojana and their maintenance for five years and obtained tender documents pertaining to package no. WB 09/42. The estimated cost of construction and maintenance were shown in the tender notice as Rs. 386. 64 lakhs and Rs. 16.34 lakhs respectively, adding to Rs. 402. 98 lakhs. (3). IT is the claim of the petitioners that despite furnishing relevant documents in support of the bid capacity of the petitioner no. 1 and despite fulfilling the eligibility criteria, as notified, its tender has been rejected at the technical bid stage without showing just reasons. Feeling aggrieved thereby, the present petition had been moved. (4). A learned Judge of this Court while admitting the writ petition on 4. 12. 07 had restrained the respondents from opening the price bids for a limited period in respect of package no. WB 09/42. The writ petition was thereafter heard on affidavits by this Court. (5). ACCORDING to the respondents, the petitioners tender was rejected on the ground that it had deliberately suppressed details of work-in-hand which is an essential requirement of the subject tender in order to earn unlawful gain. The relevant pleading in this respect, as appears from paragraph 3 (c) of the counter affidavit, is quoted below : "the petitioners have intentionally suppressed their running work-in-hand under Howrah Zilla Parishad. The name of the work is improvement of Road from Bandardaha Panchanantala to Bhaspur Mayrapara under Domjur panchayet Samiti with an estimated cost of Rs. 4,82,71,837/ -. The petitioners have declared before the concerned authority in respect of the tender-in-question which is subject matter of the present writ petition that work-in-hand is Rs. 399.77 lacs being annexure P-6 (Page 114) to the said petition. But facts remain that work-in-hand of the petitioners should be Rs. 882. 48 lacs instead of Rs. 399.77 lacs as furnished by the petitioners. 399.77 lacs being annexure P-6 (Page 114) to the said petition. But facts remain that work-in-hand of the petitioners should be Rs. 882. 48 lacs instead of Rs. 399.77 lacs as furnished by the petitioners. As such it is ex facio clear that the petitioners deliberately suppressed the material fact as indicated above before the authority concern in order to earn unlawful gain". Mr. Mukhopadhyay, learned Junior Standing Counsel representing the respondents submitted that in terms of the tender terms and conditions, every bidder apart from the necessity of satisfying the eligibility criteria is under an obligation not to make misleading or false statements and if any misrepresentation, incorrect statement or suppression of fact is detected, the respondents have the right to reject the bid of the concerned defaulting bidder. He further submitted that the course of action adopted by the respondents, in the present case, is not vitiated by any of the infirmities which may attract judicial review of administrative action and, therefore, the writ petition merits outright rejection. (6). IN support of his submission, learned Counsel relied on the decisions of the Apex Court reported in (1994) 2 SCC 70 : U. T. of Pondicherry vs. P. V. Suresh (paragraphs 11 and 12) and (2004) 4 SCC 19 : Directorate of Education vs. Educomp Datamatics Ltd. (paragraphs 9-11)It appears from the tender terms and conditions that bidders who meet the minimum eligibility criteria will be qualified only if their available bid capacity for construction work is equal to or more than the total bid value. A procedure (appears to this Court to be quite complex) has been laid down for calculation of the assessed available bid capacity. It is set out hereunder: " Assessed Available Bid capacity = (A*n*m*-B) Where a= Maximum value of civil engineering works executed in any one year during the last five years (updated to the price level of the last year at the rate of 8 percent simple interest a year) taking into account the completed as well as works in progress. N= Number of years prescribed for completion of the works for which bids are invited (period up to 6 months to be taken as half-year and more than 6 months as one year ). N= Number of years prescribed for completion of the works for which bids are invited (period up to 6 months to be taken as half-year and more than 6 months as one year ). M= 2 b= Value, at the current price level of existing commitments and ongoing works to be completed during the period of completion of the works for which bids are invited. " Note : The statements showing the value of existing commitments and ongoing works as well as the stipulated period of completion remaining for each of the works listed should be countersigned by the Engineer in charge, not below the rank of an Executive Engineer or equivalent." Mr. Sen, learned counsel for the petitioners led by Mr. Bandopadhyay, learned Senior Counsel, invited the attention of this Court to a document (Annexure P-11 to the reply affidavit) being a calculation of the assessed available bid capacity of the petitioners taking into consideration the said undisclosed work entrusted to it by the Howrah Zilla Parishad. On the basis thereof, he contended that even if the said work had been disclosed, it would not have rendered them ineligible to participate in the tender process and, therefore, withholding of such fact with a view to derive unlawful gains, as alleged, does not and cannot arise. (7). THE reason for non-disclosure of such work has been attributed to the petitioners understanding of the note appended to clause 4. 6. According to Mr. Sen, the petitioners were of the impression that only the existing commitments and on-going works under the Pradhan Mantri Gram Sadak Yojana were to be disclosed and since the work of the Howrah Zilla Parishad is not under the said yojana, it had not been disclosed. He finally submitted that the non-disclosure was not intended with any ulterior motive but was absolutely bonafide. (8). LEARNED Counsel for the parties have been heard. Before this Court proceeds to decide the contentious issues, it would be relevant to consider the ratio of the decisions cited by Mr. Mukhopadhyay. The apex Court in P.V. Suresh (supra) ruled that Courts have no jurisdiction to alter the terms or re-write the contract between the parties. (8). LEARNED Counsel for the parties have been heard. Before this Court proceeds to decide the contentious issues, it would be relevant to consider the ratio of the decisions cited by Mr. Mukhopadhyay. The apex Court in P.V. Suresh (supra) ruled that Courts have no jurisdiction to alter the terms or re-write the contract between the parties. This Court has not been able to comprehend the relevance of the law laid down therein to the facts of the present case, for, neither is this Court inclined to alter the terms of the tender nor is it necessary at all to re-write the terms thereof. In the present case, terms of tender have not been challenged and hence the ratio of the decision in educomp Datamatics (supra) would have no application. (9). HOWEVER, unlike judicial review of actions of administrative authorities pertaining to contracts which have already been executed, judicial review of actions affecting the right of an intending bidder at the threshold of entering into a contract would be more intrusive is settled law (see Noble Resources Ltd. vs. State of Orissa : AIR 2006 SCW 5409 ). Keeping this principle in mind, this Court proceeds to decide the claim of the petitioners that their tender has been rejected unreasonably and in an arbitrary manner. (10). THIS Court is of the considered view that non-disclosure of any/every fact does not per se amount to suppression of fact which disentitles a party to have his claim considered on merits. There may be non-disclosure of a fact by reason of a bonafide human error, or there may be non-disclosure of a fact owing to a partys perception that disclosure of such fact may not be relevant at all. In such cases, if by the non-disclosure the person concerned does not derive any unlawful gain or does not knowingly steal a march over others or does not intend to deceive the adjudicator or the fact alleged to have been suppressed is not so material that even if it had been disclosed before the adjudicator it would not have any effect on the outcome of the consideration by him, it cannot be contended that fact (s) has/have been suppressed with ulterior motive and, therefore, consequences must follow. It is only when a fact is not disclosed or suppressed for achieving purposes as above that a party would disentitle himself to have his claim considered on merits by the adjudicator. (11). IN SJS Business Enterprises (P) Ltd. vs. State of Bihar reported in (2004) 7 SCC 166 , it has been ruled as follows : "as a general rule, suppression of a material fact by a litigant disqualifies such litigant from obtaining any relief. This rule has been evolved out of the need of the Courts to deter a litigant from abusing the process of Court by deceiving it. But the suppressed fact must be a material one in the sense that had it not been suppressed it would have had an effect on the merits of the case. It must be a matter which was material for the consideration of the court, whatever view the Court may have taken". There is no reason as to why the above principle of law shall not be applicable in the present case. (12). MR. Mukhopadhyay is correct in contending that the view taken by the respondents that existing commitments and/or on-going works includes all similar works undertaken by a contractor and that it would not be restricted to works under the said Yojana only, may not be substituted by the Court, for, it is a plausible view. However, at the same time, viewed from the perspective of the petitioners interpretation of the said clause, it cannot be held that their interpretation is clearly wrong. Therefore, on the issue of suppression of fact, this court is not inclined to hold that the petitioners withheld the fact of their existing commitment/on-going work at Domjur with any intention to deceive the respondents. (13). THAT apart, even if the petitioners had disclosed the existing commitment/on-going work at Domjur entrusted to them by the Howrah Zilla parishad based on the cost at which they agreed to execute the work, the same would not have materially altered their position in the sense that they would not have been rendered ineligible to participate. It is, therefore, held that their tender ought not to have been rejected for non-disclosure of this particular work. This court holds so for the calculation made by the respondents, for reasons assigned hereafter, suffer from a basic infirmity rendering its impugned decision vitiated. (14). It is, therefore, held that their tender ought not to have been rejected for non-disclosure of this particular work. This court holds so for the calculation made by the respondents, for reasons assigned hereafter, suffer from a basic infirmity rendering its impugned decision vitiated. (14). THE stand in the counter-affidavit of the respondents extracted above has been noted. The respondents have calculated work-in-hand of the petitioners as Rs. 882. 48 lakhs though Rs. 399. 71 lakhs was the figure furnished by them at the first instance. (15). MR. Mukhopadhyay submitted that the said figure was arrived at after taking into consideration the estimated cost of the work entrusted to the petitioners by the Howrah Zilla Parishad being Rs. 4,82,71,837/ -. The petitioners by relying on the document at page 13 of their reply affidavit submitted that the work is to be executed @ 9. 25% below the estimated cost which has brought down the cost to Rs. 4,38,06,692/ -. (16). ONE of the important principles laid down by the Apex Court in Reliance airport Developers (P) Ltd. vs. Airports Authority of India : (2006) 10 SCC 1 is that whenever a norm/benchmark is prescribed in the tender process, in order to provide certainty the norm/standard should be clear. Following this decision, in reliance Energy Ltd. vs. Maharashtra State Road Development Corporation : (2007) 8 SCC 1 , it has been held that when tenders are invited, the terms and conditions must indicate with legal certainty, norms and benchmarks since legal certainty is an important aspect of the rule of law and that difference of opinion in exercise of contractual matters must be based on specified norms, which may be legal norms or accounting norms. (17). APPLYING the aforesaid principles, it appears to this Court that the respondents have failed to explain why Rs. 4,82,71,837/-was considered as the value of the work instead of Rs. 4,38,06,692/-, in arriving at the figure of rs. 882. 48 lakhs. [ (A*n*m) ? B] in this case, according to the calculation of the respondents, works out to [ (636. 78*1*2) ? 882. 48] = 391. 08 which is below the total estimated cost and thus renders the petitioners ineligible. However, if the figure 882. 48 is substituted by 811. 4,38,06,692/-, in arriving at the figure of rs. 882. 48 lakhs. [ (A*n*m) ? B] in this case, according to the calculation of the respondents, works out to [ (636. 78*1*2) ? 882. 48] = 391. 08 which is below the total estimated cost and thus renders the petitioners ineligible. However, if the figure 882. 48 is substituted by 811. 77 (being the value of existing commitments and on-going works as per calculation made by the petitioners) and the same is subtracted from 1273.56 (i. e. 636. 78*2), the figure 461. 79 is reached which is more than the total estimated cost and thus would render the petitioners eligible to participate. (18). THIS Court is of the further considered view that legal certainty has been observed in the breach in the present case. No accounting norm has been brought to the notice of the Court which persuades it to hold in favour of the respondents. The norm notified, i. e. current price level of existing commitments/on-going works cannot mean estimated value of work as notified in a tender notice by the authority. At least, nothing has been placed before this court for taking a view contrary thereto. For want of justification advanced from the side of the respondents and/or in the absence of proper reasons based on such norm in arriving at a decision in this behalf, the issue must be remitted to the respondents for a fresh reasoned decision in accordance with law upon taking into consideration the on-going work at Domjur. (19). ACCORDINGLY, the decision taken by the respondents to reject the bid of the petitioners stands set aside. There shall be a direction on the respondents to take a decision afresh on the issue of the petitioners eligibility to participate in the tender upon granting them an opportunity of personal hearing and on construing strictly the value, at the current price level of existing commitments and on-going works, which appears to be the clinching factor. The respondents shall not proceed on the basis of norms, hithertobefore undisclosed. Having regard to the urgency involved, it is expected that the respondents would act with expedition. Till communication of the decision to be taken by the respondents to the petitioners in terms of this order, the price bids shall not be opened. (20). The respondents shall not proceed on the basis of norms, hithertobefore undisclosed. Having regard to the urgency involved, it is expected that the respondents would act with expedition. Till communication of the decision to be taken by the respondents to the petitioners in terms of this order, the price bids shall not be opened. (20). THE facts of the writ petition on the Appellate Side being more or less similar to the facts of the writ petition on the Original Side except the arithmetical calculations, W. P. 25727 (W) of 2007 shall also be governed by this order wherein the petitioners had shown interest to execute the work under package no. WB 09 ADB 07, total estimated cost of which is 529. 347 lakhs. (21). THE writ petitions stand disposed of with the above directions. There shall be no order as to costs.