Research › Search › Judgment

Andhra High Court · body

2008 DIGILAW 601 (AP)

Sri Harsha Constructions, Hyderabad v. Union of India

2008-08-01

B.SESHASAYANA REDDY

body2008
JUDGMENT:- This writ petition has been filed by M/s Sri Harsha Constructions represented by its Managing Partner Sri. N. Venkateswara Rao with a prayer to issue a writ of mandamus declaring the action of the 3rd respondent-The Chief Engineer (Const.IV), South Central Railway, Secunderabad in awarding the contract to 7th respondent-Y'. Murali Krishna Rao as arbitrary, illegal and against the principles of natural justice. 2. Averments made in the affidavit filed in support of the writ petition, in brief, are: The petitioner is a registered partnership firm and it has been in works contracts for the last more than 25 years. The petitioner has carried on works of Central Government and various State Governments and other instrumentalities. It has acquired specialized skill in constructing bridges, aqueducts, irrigation projects, PSC structures etc. The 2nd respondent-The Chief Administrative Officer (Const.), South Central Railway, Secunderabad called for tenders for construction of road over bridge through Tender Notice No. 1 3/CAO/C/SC/2008, dated 8.4.2008. The estimated value of the work was Rs.4,69,64,961.20 and the work was to be completed within nine months from the date of accepting the tender. The petitioner and four others submitted tenders. The petitioner made a conditional offer to the effect that if its offer is accepted a rebate up to 2 per cent will be given on the value of its quoted rates. The petitioner made similar conditional offers in the earlier tenders and they were accepted by the respondents. With regard to the tender in question the offer made by the petitioner is the lowest amongst all the five tenders. The offer made by five tenders is detailed hereunder: ________________________________________________________________ S.No. Name of the Tenderer Base Value Quoted value 4,69,64,961.20 _________________________________________________________________ 1. ESSVY Constructions 6,33,36,599.31 2. VISHNU Constructions 6,73,31,830.44 3. Y. MuraIi Krishna Rao 6,05,19,254.57 4. Sri Harsha Constructions 6,12,44,043.40 Without rebate With rebate 6,00,19,162.53 5. Siri Eng. Constructions 6,79,27,882.92 ___________________________________________________________________ The tenders were opened on 14,5.2008 and the petitioner was found to be the L1 tenderer. The petitioner being the L1 tenderer expected acceptance from the respondents. However, the petitioner was informed that there was some ambiguity about the offer. Therefore, the petitioner gave clarification as to the intended meaning and purport of its offer of rebate by way of representations dated 24.5.2008 and 9.6.2008. The petitioner being the L1 tenderer expected acceptance from the respondents. However, the petitioner was informed that there was some ambiguity about the offer. Therefore, the petitioner gave clarification as to the intended meaning and purport of its offer of rebate by way of representations dated 24.5.2008 and 9.6.2008. The Tender Committee comprising R4 to R6 recommended to 3rd respondent to call 7th respondent for negotiations and prevailed over 7th respondent to reduce his offer so as to make his offer as the least after considering the rebate of the petitioner. According to the petitioner, R4 to R6 ought to have called the petitioner for negotiations. Acceptance of tender of 7th respondent is assailed in this writ petition on the ground that it is contrary to fair play and opposed to the principles of natural justice. 3. Respondents have filed counter affidavits. Sri Anil Kumar Malik has sworn to the counter-affidavit filed on behalf of Rl to R3 and whereas B. Vishwanath Eerya has sworn to the counter-affidavit filed on behalf of R4 to R6 and R7 has filed a separate counter-affidavit. 4. It is stated in the counter-affidavit of R4 to R6 that the petitioner has mentioned the special condition of offering a rebate of 2 per cent on the quoted percentage in respect of E Schedule only. As per clause 15.0 page 13 of the instructions to tender and conditions of tender, the tenderers shall keep their offer open for a minimum period of 90 days from the date of opening of the tender. If the tender of the petitioner is accepted basing on the special offer made in Schedule E, it would' amount to varying the important condition of keeping the offer open for a minimum period of 90 days from the date of opening of the tender and the petitioner would be treated differently. 5. The petitioner filed reply affidavit. It is stated in the reply affidavit that submitting a conditional order is not prohibited in the tender and it is not the case of any of the respondents that the tender of the petitioner was rejected on the ground that it was a conditional order. 5. The petitioner filed reply affidavit. It is stated in the reply affidavit that submitting a conditional order is not prohibited in the tender and it is not the case of any of the respondents that the tender of the petitioner was rejected on the ground that it was a conditional order. A plain reading of the note immediately appended after Schedule E would invariably give the meaning that the rebate offered is for the entire value and thus the rebate offered by the petitioner cannot be confirmed to Schedule E only and that the respondents have deliberately and wantonly misread the said offer only to eliminate the petitioner. Clause 20.1 of the tender condition~ seeking clarification with regard to the offers made by the tenderers is not totally prohibited. 6. 7th respondent has stated in the counter-affidavit that 3rd respondent communicated the acceptance of his offer and thereupon he commenced the work on 14.6.2008. Para 4 of the counter-affidavit needs to be noted and it is thus: "I submit that I have received the Letter No.w.Con.496/ AIB/5141/WC, dated 12.6.2008 from the 3rd respondent communicating the acceptance of my offer. Immediately after receipt of the said acceptance letter, I commenced the work on 14.6.2008 and communicated the same by my letter dated 16.6.2008 as the acceptance letter constitutes a binding contract until a proper agreement is executed. I have received the approved drawings for the work on 20.6.2008. I have also submitted the Performance Guarantee to a value of Rs.29,85,590/- on 27.6.2008. I entered into agreements with material suppliers and the work is under progress. Later on I entered into an Agreement No.123/ CAO/C/SC/2008, dated 8.7.2008 with the 1st respondent for execution of the work and the work is under progress. I submit that if this Honourable Court grants stay of execution of the work at this juncture irreparable injury would be caused to the respondents 1 to 3 who represent public interest, as well as to me. It is, therefore, just and necessary that this Hon'ble Court may be pleased to dismiss the above' writ petition with costs." 7. When this writ petition came up for admission hearing, with the consent of learned Counsel for the parties, the same has been taken up for final disposal. 8. Heard learned Counsel appearing for the petitioner, learned Standing Counsel appearing for R1 to R6 and learned Counsel appearing for R7. 9. When this writ petition came up for admission hearing, with the consent of learned Counsel for the parties, the same has been taken up for final disposal. 8. Heard learned Counsel appearing for the petitioner, learned Standing Counsel appearing for R1 to R6 and learned Counsel appearing for R7. 9. Learned Counsel appearing for the petitioner submits that rebate of 2 per cent offered by him is in respect of all the schedules i.e., A to E and that it is not in respect of E Schedule alone and if the discount offered by him is taken into consideration, his offer would be the lowest and in which case his tender is to be accepted. He further submits that RI to R6 accepted a similar offer made by him in respect of earlier works and not accepting the conditional offer in respect of tender in dispute is only to accommodate R7. He would further contend that a plain reading of the note would invariably give the meaning that the rebate offered is for the entire value and the understanding of R4 to R6 that the rebate is confined only to E Schedule is unreasonable as the value of E Schedule is only Rs.100 lakh. In support of his submissions, reliance has been placed on the decision of Supreme Court in Kanhaiya Lal Agrawal v. Union of India, AIR 2002 SC 2766 , wherein the Supreme Court held that tenderer offering firm rates with concessional rate if tender is finalized within shorter period does not amount to conditional offer. Paragraphs 7 and 8 of the cited judgment need to be noted and they are thus: "(7) IN the present case, the short question that falls for consideration is whether the tender offered by the appellant with the rebate could have been accepted and whether such acceptance would affect the interests of any other party. Paragraphs 7 and 8 of the cited judgment need to be noted and they are thus: "(7) IN the present case, the short question that falls for consideration is whether the tender offered by the appellant with the rebate could have been accepted and whether such acceptance would affect the interests of any other party. (8) THE letter dated 27.2.200 I accompanying the tender made by the appellant after setting out rate offered by him also set out certain circumstances with a note in the following terms: "note :- I would like to offer if the tender is finalised in my favour : (a) 5% reduction in rate within 45 days; (b) 3% reduction in rate within 60 days; (c) 2% reduction in rate within 75 days; (d) to make use of the machinery at the quickest possible time." Bureaucratic delay is a notorious fact and delay in finalising tenders will cause hardship to the tenderer. In such circumstances, if a hardened businessman makes an attractive offer of concessional rates if tender is finalized within a shorter period, it cannot be said that the rates offered are subject to conditions. The rates offered are clear and the time within which they are to be accepted is also clear. As long as such offer does not. militate against the terms and conditions of inviting tender it cannot be said that such offer is not within its scope. All that is required is that offer made is to be kept open for a minimum period of 90 days. Offer in compliance of that terms has been made by the appellant The concession or rebate given is an additional inducement to accept the offer expeditiously to have a proper return on the investment made by the tenderer in the equipment and not keeping the labour idle for long periods, which is part of commercial prudence. The commercial aspect of each one: of the offers made by the parties will have to be ascertained and, thereafter a decision taken to accept or reject a tender." The cited decision squarely applies to the facts of the case on hand and therefore• the conditional offer made by the petitioner holds good. The commercial aspect of each one: of the offers made by the parties will have to be ascertained and, thereafter a decision taken to accept or reject a tender." The cited decision squarely applies to the facts of the case on hand and therefore• the conditional offer made by the petitioner holds good. The question is whether 2 per cent rebate offered by the petitioner is only in respect of E Schedule or to all the schedules i.e., A to E will be examined in the foregoing paras of the judgment. 10. Learned Counsel appearing for R7 submits that R 7 executed Performance Guarantee to a tune of Rs.29,85,590/- on 27.6.2008 and entered into agreements with material suppliers and the work is under progress and at this stage interference of the works allotted to him is uncalled for. 11. Learned Counsel appearing for the petitioner submits that after submitting the tender, he clarified through letters that he offered rebate to the entire work i.e., Schedule A to E and that the Tender Committee is not justified in ignoring the clarification given by the petitioner. 12. The tender conditions are very clear that after submitting the tender the tenderers are not supposed to enter any correspondence and it is for the committee to seek any clarification or ambiguity with regard to the particulars mentioned in the tender. Therefore, in view of the specific bar, even if the petitioner made representations clarifiying the rebate offered by him is in respect of Schedules A to E, the Tender Committee is justified in ignoring the same. 13. It is very well settled and needs no reiteration that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, there are inherent limitations in exercise of that power of judicial review. The parameters of judicial review are too well settled in the matter of exercise of contractual powers by the governmental bodies. This Court does not exercise any appellate jurisdiction over the decisions taken by the governmental bodies in the matter of awarding contract. The Court, of course, would interfere to prevent arbitrariness or favouritism and to protect larger public interest. The Court in exercise of its judicial review jurisdiction is concerned with decision-making process, but not with the decision itself. This Court does not exercise any appellate jurisdiction over the decisions taken by the governmental bodies in the matter of awarding contract. The Court, of course, would interfere to prevent arbitrariness or favouritism and to protect larger public interest. The Court in exercise of its judicial review jurisdiction is concerned with decision-making process, but not with the decision itself. This Court in appropriate cases may issue writs directing the State, its Corporations, instrumentalities and agencies to adhere to the norms, standards and procedures laid down by them and prevent them from departing from those norms arbitrarily. The Court, of course, would interfere if the decision is found vitiated by mala fides, unreasonableness and arbitrariness vide the decision of a Division Bench of this Court in Union of India and others v. Laxmi Builders, Secunderabad, 2003 (5) ALD 87 (DB). 14. Indisputably the petitioner made a conditional offer. The condition put by the petitioner reads as under: "Note: If the work is awarded in our favour within one month's time we are offering a rebate of 2 per cent (2 per cent on our quoted percentage)." The entire work comprises five schedules i.e., A, B, C, D and E. The petitioner offered 2 per cent rebate by appending a note under E Schedule. For better appreciation I may extract the note appended under E Schedule in the tender submitted by the petitioner. ''SCHEDULE 'E' Items that are covered by the Standard Schedule of Rates of 2002 Vol.I & II of Vijayawada Division. ________________________________________________________________________ SNO. DESCRIPTION QIY. UNIT RA1E AMOUNT ________________________________________________________________________ (1) Any items as per South Central Railway Standard Schedule of Rates, 2002 Vol & IT for Vijayawada Division as corrected by and upto the date of opening of tenders likely to be operated which are not covered by Schedule A, B, C and D. 1,00,000.00 Contractors percentage rate: Above (+) 1 Y. (Plus one per cent) Total value of Schedule E 180 1,00,000.00 Note: The tenderer is required to quote percentage above the total value of Schedule E both in figures and words. In case of discrepancy in quoted percentage, the percet!tage rate quoted in words will be taken as final. In case of discrepancy in quoted percentage, the percet!tage rate quoted in words will be taken as final. ABSTRACT Total Value of Schedule A Total Value of Schedule B Total Value of Schedule C Total Value of Schedule D Total Value of Schedule E Grand total _______________________________________________________________________ Note: If the work is awarded in our favour within one month time we are offering a rebate of 2 % (two per cent) on our quoted percentage." The Tender Committee comprising R4 to R6 considered the note and came to the conclusion that the rebate offered by the petitioner pertains to only E Schedule but not of all the five schedules. 15. Learned Standing Counsel appearing for R1 to R6 placed before me the file relating to the work for which the petitioner submitted tender. 16. I have gone through the tender submitted by the petitioner. The petitioner offered 2 per cent rebate if the work is awarded in its favour within 30 days. Two views are possible by reading the note, appended under E Schedule. One view is the rebate applies to the entire work and the other view is the rebate applies to E Schedule alone. During the course of arguments the learned Standing Counsel placed before me the rebate offer made by the petitioner in respect of some other works wherein the petitioner categorically stated that rebate offered by him is applicable to the entire work. Coming to the tender in question, the petitioner did not state that the rebate offered by him is applicable to the 181 entire work. The Tender Committee has considered the note appended to E Schedule of the tender in question and also the note appended to E Schedule in the tender submitted by the petitioner in respect of other works. Keeping in view the entire material placed on record the Tender Committee came to the conclusion that the rebate offered by the petitioner is only in respect of E Schedule. When two views are possible and the- view taken by the Tender Committee is possible, this Court cannot legally interfere with the view of the Tender Committee merely because the other view is also possible. The Tender Committee comprising R4 to R6 acted fairly in evaluating the tenders and there is no arbitrariness or favoritism. The work has been entrusted to R7. The Tender Committee comprising R4 to R6 acted fairly in evaluating the tenders and there is no arbitrariness or favoritism. The work has been entrusted to R7. The period of completion of the work is nine months and about a month has already elapsed. In these circumstances, though the other view is possible i.e. 2 per cent rebate to all the five schedules, I am not inclined to take that view in view of the facts and circumstances of the case. 17. In view of the above, this writ petition is devoid of merits and it is hereby dismissed at the admission stage. No order as to costs.