Arunachal Trade and Commercial Agency v. State of Arunachal Pradesh
2009-06-26
P.K.MUSAHARY
body2009
DigiLaw.ai
JUDGMENT P.K. Musahary, J. 1. The facts leading to filing this writ petition are that the Executive Engineer, Rural Works Department, Laaying-Yangte (Sangram), published a notice inviting tender (NIT in short) on behalf of Governor of Arunachal Pradesh from eligible contractors, Joint Venture firms registered with CPWD/PWD/NBCC/NEEPCO/NHPC/BRO Agencies through Press Notice No. KK (RWD) PMGSY (PH-VII) NIT-01/2008-09 dated 28.11.2008 which was published/advertised in the local daily "Arunachal Times" dated 30.11.2008 followed by Corrigendum No. KK(RWD)/PMGSY(PH-VII)NlT-01/08-09dated9.12.2008, in respect of estimated cost of Construction and Maintenance and Earnest Money. Pursuant to aforesaid NIT and corrigendum, the petitioner along with other firms purchased necessary Bid Document in respect of Package No. 2 (BRTF Kuru Bridge pt. to Pari Village-stage-I) AR/14/03/026, estimated cost of Construction and Maintenance Rs. 1458.83 lakh by paying the required fee of Rs. 15,000/- and having filled the necessary requirements in the documents submitted Tender form/Bids for the packages aforesaid by depositing the earnest money of Rs. 29.17 lakh. The Technical Bid was opened on 18.12.2008 as per the said notice but the Financial Bid, which was supposed to be opened on 22.12.2008, was deferred to 27.12.2008 and finally it was opened on 7.1.2009. When the Financial Bid was finally opened on 7.1.2009, the firm M/s Muzibur Rohman (private respondent No. 6) was accepted as the successful bidder being lowest bidder with a difference of 0.25% from the bid amount offered by the petitioner.
When the Financial Bid was finally opened on 7.1.2009, the firm M/s Muzibur Rohman (private respondent No. 6) was accepted as the successful bidder being lowest bidder with a difference of 0.25% from the bid amount offered by the petitioner. However, it was found later on that the Solvency Certificate which is an essential prerequisite under the Standard Bidding Document for PMGSY for Construction and Maintenance, and Guidelines issued by National Rural Roads Development Agency (an Agency of the Ministry of Rural Development), Government of India (hereinafter shall be referred to as Guidelines) was allegedly obtained by illegal/fraud means by the private respondent from State Bank of India, Nirjuli Branch in clear violation of Section 2 Instruction to Bidders (ITB in short), Clause 4.4(B)(a)(iii) of the Appendix to ITB, inasmuch as Branch Manager of State Bank of India, Nirjuli Branch himself issued certificate to the effect that the Solvency Certificate issued earlier in favour of the respondent firm M/s. Muzibur Rohman having Account No. 30605975615 was issued through oversight and the said firm did not put through sufficient transaction to the account to become eligible for such Solvency certificate and as such the said Solvency certificate issued by them on 15.12.2008 in his favour stood cancelled with immediate effect. 2. The petitioner contended that when the matter was brought to the notice of the official respondents about the same they feigned ignorance and refused to take any action on the ground that the petitioner did not bring the said fact to the notice of the respondents earlier and tender has already been settled with the private respondent and the same cannot be recalled causing irreparable loss to the respondent firm. This petition was filed on 24.3.2009 with a prayer: for setting aside and quashing Tender Package No. 2 (BRTF Kuru Bridge pt. to Pari Village-stage-I) AR/14/03/026, Estimated cost of Construction and Maintenance Rs. 1458.83 lakh settled/awarded in favour of the private respondent and further directing the respondents to settle/award the said Tender Package in favour of the petitioner. and in the interim "to direct the respondent not to issue any letter of acceptance and notice to proceed work to the private respondent". 3. On 30.3.2009 this Court issued Rule returnable by 6 (six) weeks and also called for the records.
and in the interim "to direct the respondent not to issue any letter of acceptance and notice to proceed work to the private respondent". 3. On 30.3.2009 this Court issued Rule returnable by 6 (six) weeks and also called for the records. On 18.5.2009 this Court also passed an interim order as under: Having regard to the fact that financial solvency of a tenderer is a vital criteria for considering any bid to be a valid bid and since the Bank which had issued the certificate in favour of the respondent No. 6 had cancelled the said certificate on 30.1.2009, by stating that the respondent No. 6 is not entitled to such a solvency certificate on the strength of their transactions with the Bank, I am of the opinion that it would be in public interest to restrain the respondent No. 6 from proceeding with the work in question, by staying the work order dated 28.4.2009 issued in their favour. It is ordered accordingly. The settling Authorities are directed now to examine the responsiveness of the bid of the respondent No. 6. because of the cancellation of the solvency certificate dated 15.12.2008 granted to M/s Muzibur Rohman and take an appropriate decision in the matter. 4. Heard Mr. I. Riram, learned Counsel for the petitioner and also Mr. R. H. Nabam, learned Senior Government Advocate, Arunachal Pradesh and Ms. S. Nag, learned Counsel appearing on behalf of private respondent No. 6. 5. Mr. Riram, learned Counsel for the petitioner submits that the respondent firm obtained Solvency certificate from the State Bank of India, Nirjuli Branch by fraud which they submitted along with the Tender Papers for settlement of the works in question in clear violation of the terms of the NIT and ITB.
5. Mr. Riram, learned Counsel for the petitioner submits that the respondent firm obtained Solvency certificate from the State Bank of India, Nirjuli Branch by fraud which they submitted along with the Tender Papers for settlement of the works in question in clear violation of the terms of the NIT and ITB. The said Solvency Certificate obtained on fraud having been cancelled by the issuing authority of the said Bank and the same having been brought to the notice of the respondent authorities, the works in question should not have been settled with the respondent firm but the respondent authorities have settled the works with the said firm as they were predetermined and premeditated to do so which smacks mala fides, biased and arbitrary action on the dictates of vested interest for some extraneous gains against the public interest which warrants judicial review and interference by this Court for cancellation of the work order, if any issued in favour of the respondent firm and awarding the same with the petitioner. 6. Mr. Nabam, learned Senior Govt. Advocate submits that no illegality or irregularity has been committed by the respondent authorities in awarding the contract with the private respondent. They have maintained complete fairness and transparency inasmuch as the tender papers were opened in presence of the tenderers and/or their representatives. He refers to averments made in paragraph 6 (six) of the counter affidavit filed by State respondent, the relevant portion of which, is quoted below: 6...After determination of responsiveness as per ITB in technical bid the financial bid of responsive firm was opened on 7.1.2009. The actual date of opening financial bid was 22.3.2008 but due to some unavoidable circumstances the date was deferred to 7.1.2009 by the Committee. Regarding Solvency Certificate issued in favour of M/s. Muzibur Rohman, Guwahati by State Bank of India, Nirjuli Branch was confirmed through the Manager. State Bank of India, Nirjuli and found genuine by the Chief Engineer, Rural Works Department, Itanagar on 6.1.2009 at 2.00 p.m. Moreover, the bid was finalized on the strength of the bank documents/other documents submitted by the bidder under sealed cover in tender box. The solvency of one page is generally issued by the bank after consideration of all the pros and cons and after charging some overhead charges on it. Therefore, such document cannot be issued by the Branch Manager of any bank due to oversight.
The solvency of one page is generally issued by the bank after consideration of all the pros and cons and after charging some overhead charges on it. Therefore, such document cannot be issued by the Branch Manager of any bank due to oversight. In any case if at all any irregularities are observed by the bidder, the complaint should be registered there in the hall itself in presence of all the members and other bidder but not through any other means. In fact form of canvassing as per the SBD itself is disqualification. The whole process of examination of bids and determination of responsiveness was done in fair and transparency by the Board members. The aforesaid Solvency Certificate was laid before the Board Members and the tenderers and/or their representatives who did not raise any question on its genuineness, Mr. Nabam, learned Sr. Govt. Advocate submits that the cancellation of solvency certificate issued by the SBI, Nirjuli Branch was not intimated by the official of the said bank. The same was brought the notice of the respondent authorities only after the settlement order was made on 13.3.2009 on due recommendation of the tender committee. There is no mala fides in settling the works with the private respondent warranting any interference by the Court in exercise of power under judicial review. Mr. Nabam submits that the settlement of tender with the respondent No. 6 has been challenged by an unsuccessful tenderer like the petitioner firm. Such a challenge by an unsuccessful tenderer should not be entertained by the Court to interfere with the settlement of contract unless substantial public interest is found to be involved or settlement is found to be mala fide. In this regard he refers to Uncle's Shop and Ors. v. Biva Hazarika 2002(1) GLT 109. He also refers to Ameya Developers Pvt. Ltd v. State of Assam 2006(2) GLT 483 for the purpose of bringing home his submissions that in the present case there is no scope for judicial review inasmuch as Court should not interfere with the decision making process on hypertechnical grounds ignoring cumulative effect of relative components in the decision making process. 7. Mrs.
7. Mrs. S. Nag, learned Counsel appearing for the respondent No. 6 submits that the Solvency Certificate was issued by the SBI, Nirjuli Branch on 15.12.2008 in favour of the respondent firm after fulfilment of formalities and on deposit of all requisite fees and it is quite unreasonable and fissy that the said bank issued a certificate on 30.1.2009 cancelling the solvency certificate dated 15.12.2008 after a lapse of 45 days. Even if, for arguments sake, it is presumed that the solvency certificate was issued through oversight, it should have been rectified the same within a short period of time and could have directly intimated the concerned firm but, quite amazingly, the Branch Manager, instead of intimating the private respondent, issued the cancellation certificate dated 30.1.2009 and handed over the same to an interested person of the petitioner firm to use it as a weapon against it and to get the settlement order cancelled. 8. It is further submitted by Mrs. S. Nag, learned Counsel for the respondent firm that a local MLA is an interested person being closely related to the petitioner and he tried to influence the respondent authorities by using his power as a political leader. 9. The relevant records have been produced by the learned Sr. Government Advocate at the time of hearing. I have/carefully gone through the same. The basic facts regarding calling of tenders, opening of technical and financial bids and the bids offered by three tenderers namely: (i) M/s. Gepong Enterprises, (ii) M/s. Muzibur Rohman (respondent No. 6) and (iii) M/s. Arunachal Trade and Commercial Agency are not in dispute. The comparative statement was prepared and the ITB Board recommended the bid price of the respondent firm, which can be seen from the minutes of the Tender Committee, held on 7.1.2009 at 14.00 hours. On the basis of the said recommendation, the Chief Engineer vide his letter No. RWD/PMGSY-TAP-IV/2008-09 dated 1.3.2009 directed the Executive Engineer and DPIU, Rural Works Division, Laaying-Yangte (Sangram) to issue formal letter of acceptance to the successful bidder as per the laid down guidelines within stipulated period. The aforesaid Executive Engineer, in pursuance to the Chief Engineer's direction, issued a letter dated 13.3.2009 to the respondent firm requesting them to furnish performance security of 5% i.e. Rs. 69,28,018.00 only in the form detailed in Clause-32.2 of ITB within 10 (ten)days of the receipt of the letter of acceptance.
The aforesaid Executive Engineer, in pursuance to the Chief Engineer's direction, issued a letter dated 13.3.2009 to the respondent firm requesting them to furnish performance security of 5% i.e. Rs. 69,28,018.00 only in the form detailed in Clause-32.2 of ITB within 10 (ten)days of the receipt of the letter of acceptance. Accordingly, the respondent firm furnished the Bank Guarantee No. 19/18 dated 21.3.2009 for Rs. 69,28,018/- issued in prescribed performa, by the Senior Manager, Central Bank of India, Ulubari Branch, Guwahati-7. It was sent to the Executive Engineer, Rural Works Division, Laaying-Yangte (Sangram) vide letter No. CBI/ULU/PBL/9.10.2001 dated 8.4.2009 under the signature of the aforesaid Senior Manager of the Bank. Thereafter, an agreement between the Executive Engineer, Rural Works Division, Laaying-Yangte (Sangram) and M/s. Muzibur Rohrnan, S.S. Road, Lakhtokia, Guwahati, District Kamrup (Assam), the private respondent was signed on 27.4.2009. The aforesaid Executive Engineer, Rural Works Division, then issued a letter No. RWD/L-Y/PMGSY/PH-VII/AGREE-07/08-09 dated 28.4.2009, asking the respondent firm to proceed with the execution of the said works in accordance with the contract documents. 10. It may be noted that the petitioner filed the present writ petition on 24.3.2009 and a Rule returnable by 6 (six) weeks was issued vide order dated 30.3.2009. This Court passed an interim order on 18.5.2009 restraining the respondent firm from proceeding with the works in question. It is stated at the Bar by Mrs. S. Nag. learned Counsel for the respondent firm, that by the time the matter was listed for hearing on 9.6.2009, the respondent firm has executed 45% of the works and it has spent considerable amount of money by engaging men and materials for completion of the works within the stipulated period that is within a period of 12 (twelve) months and any interference with the settlement of the works at this stage would not be in public interest. 11. The Standard Bidding Documents for construction and maintenance prepared for the year 2008-09 (Annexure-II to the writ petition), particularly, Clause 4.4(B)(a) under Section 2 of the ITB provides that each bidder must produce the following documents: (i) the current Income Tax clearance certificate, (ii) an affidavit to the effect that the information furnished with the bid document is correct in all respects, and (iii) such other certificates as defined in the Appendix to ITB, and the failure to produce the certificate shall make the bid non-responsive.
The solvency certificate is required to be furnished by the bidder under Clause 4.4(B)(a)(iii). It is not provided that the solvency certificate must be produced like the Income Tax clearance certificate, etc. It is not provided that failure to produce solvency certificate would render the bid non-responsive. Looking at the provisions for furnishing of Income Tax clearance certificate and solvency certificate it becomes clear that the requirements in the NIT can be classified into two categories namely: (i) those which must and invariably be furnished along with the tender papers to fulfill the essential conditions of eligibility, and (ii) those which are not compulsorily required to be furnished along with the tender papers and failure to furnish the same would not render the bid non-responsive. To illustrate further; the furnishing of an Income Tax clearance certificate is one of the essential requirements or conditions for determining the eligibility, failing which the tender offered by the bidder would not be accepted. It may not be so in case the tenderer who fails to furnish solvency certificate provided he can otherwise show himself financially solvent to carry out the work by furnishing other certificate or documents. 12. There is no complaint that the private respondent failed to produce the documents under the category of 'must' to be produced with the tender papers like Income Tax clearance certificate. The only allegation is that the solvency certificate issued in favour of the private respondent was not proper and the bank, which issued the same cancelled subsequently. It may be noted here that the respondent authorities were not intimated by the said bank about the cancellation of the solvency certificate through any official letter. There was no scope for the respondent authorities to know the fact of cancellation of the solvency certificate and to take any decision in regard to settlement of the work with the respondent firm. Had it been intimated, the respondent authorities would have considered the matter and could have taken a decision in the matter before the agreement was signed on 27.4.2009 and notice to proceed with work was issued on 28.4.2009. There is nothing on record that the information about cancellation of the solvency certificate was ever furnished to the respondent authorities, either in writing or otherwise, for their consideration and taking necessary decision thereon.
There is nothing on record that the information about cancellation of the solvency certificate was ever furnished to the respondent authorities, either in writing or otherwise, for their consideration and taking necessary decision thereon. In absence of such material on record it is difficult, rather improper to accept the allegation of the petitioner that the respondent authorities awarded the work in question with the respondent firm pre-decidedly on some extraneous consideration in an unfair and arbitrary manner or for purpose other than bona fide. 13. I am afraid that the power of judicial review under Article 226 of the Constitution of India could be exercised for interference with the settlement of works made with the respondent firm on the basis of mere allegation of unfairness, arbitrariness or favouritism without any basis thereof or any materials available on record. Records confirm that the respondent firm admittedly offered responsive bid and its bid was found lowest which was duly recommended by the Tender Committee and on the basis of which the settlement order was made after execution of agreement and furnishing the required Bank Guarantee. 14. The execution of the works in question involves sufficient public interest inasmuch as the same relates to construction of bridge for improving road communication for the benefit of the people and it is desirable to complete the work within the specified period. Interference with the work order would cause unnecessary delay in timely completion of work to the disadvantage and against the interest of the public and, as such, in my considered view, it would not be in the larger interest of the public to issue any direction to respondent authorities for cancellation of the work order and floating fresh NIT. 15. The principle of judicial review in the matter of awarding contract has been enunciated in several decisions of the Supreme Court, among which, Tata Cellular v. Union of India (1994) 6 SCC 651 , could be referred to for the purpose of disposal of this petition, wherein it is held that a judicial review would apply to the exercise of contractual powers by the Government bodies in order to prevent arbitrariness or favouritism and the principles laid down in Article 14 of the Constitution of India have to be kept in view while accepting or refusing a tender.
The settled position of law is that the Court would interfere with the decision making process and not the merits of the decision itself and the Court would not sit as an appellate Court while exercising power of judicial review. In Poddar Steel Corporation v. Ganesh Engineering Works (1991) 3 SCC 273 , it is held that deviation non-essential or ancillary/subsidiary requirement of tender condition or minor technical irregularity can be waived. In the said case, the successful tenderer furnished with its tender a banker is cheque marked and certified by the Union Bank of India in place of earnest money deposit. In that context the Apex Court observed and held as follows: 6. It is true that in submitting its tender accompanied by a cheque of the Union Bank of India and not of the State Bank Clause 6 of the tender notice was not obeyed literally, but the question is as to whether the said non-compliance deprived the Diesel Locomotive Works of the authority to accept the bid. As a matter of general proposition it cannot be held that an authority inviting tenders is bound to give effect to every term mentioned in the notice in meticulous detail, and is not entitled to waive even a technical irregularity of little or no significance. The requirement in tender notice can be classified into two categories those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to en force them rigidly. In the other case it must be open to the authority to deviate from and not to insist upon the strict literal compliance with the condition in appropriate cases.... 16. The said observation and decision are applicable to the present case given the fact that the production of solvency certificate is not a 'must' condition of eligibility as per the NIT/SDB as discussed earlier and taking into consideration that the respondent firm furnished sufficient and proper Bank Guarantee. 17. In the case of B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd. and Ors.
17. In the case of B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd. and Ors. 2009 (1) CLT 28 (SC) : (2006) 11 SCC 548 , it is held that whether a decision has been taken purely on public interest, the Court ordinarily should exercise judicial restrain in the matter of interference with Government contracts/tenders. It is also held therein that when a decision is taken by the appropriate authority upon due consideration of the tender documents submitted by tenderers on their own merits and if it is ultimately found that successful bidder had in fact substantially complied with the purport and object in which essential conditions were laid down, the same may not ordinarily be interfered with. In the said case the Apex Court has laid down the legal principles applicable to the award of Government contracts/tenders. It would be apt to quote paragraph 66 below: 66.
In the said case the Apex Court has laid down the legal principles applicable to the award of Government contracts/tenders. It would be apt to quote paragraph 66 below: 66. We are also not shutting our eyes towards the new principles of judicial review which are being developed; but as it stands now having regard to the principles laid down in the aforementioned decisions may be summarised as under: (i) if there are essential conditions, the same must be adhered to; (ii) if there is no power of general relaxation, ordinarily the same shall not be exercised and the principle of strict compliance would be applied where it is possible for all the parties to comply with all such conditions fully; (iii) if, however, a deviation is made in relation to all the parties in regard to any of such conditions, ordinarily again a power of relaxation may be held to be existing; (iv) the parties who have taken the benefit of such relaxation should not ordinarily be allowed to take a different stand in relation to compliance with another part of tender contract, particularly when he was also not in a position to comply with all the conditions of tender fully, unless the Court otherwise finds relaxation of a condition which being essential in nature could not be relaxed and thus the same was wholly illegal and without jurisdiction; (v) when a decision is taken by the appropriate authority upon due consideration of the tender document submitted by all the tenderers on their own merits and if it is ultimately found that successful bidders had in fact substantially complied with the purport and object for which essential conditions were laid down, the same may not ordinarily be interfered with; (vi) the contractors cannot form a cartel. If despite the same, their bids are considered and they are given an offer to match with the rates quoted by the lowest tenderer, public interest would be given priority; (vii) where a decision has been taken purely on public interest, the Court ordinarily should exercise judicial restraint. 18.
If despite the same, their bids are considered and they are given an offer to match with the rates quoted by the lowest tenderer, public interest would be given priority; (vii) where a decision has been taken purely on public interest, the Court ordinarily should exercise judicial restraint. 18. On perusal of the records I am satisfied that the works in question were settled with the respondent firm on substantial compliance with the terms and conditions of the NIT without any mala fides, unfairness and irrationality and it is not desirable to exercise the power of judicial review and interfere with the settlement of works made by the respondent authorities. 19. In the light of above discussion and decision rendered by the Apex Court, I come to a conclusion that the petitioner has not been able to make out any case for interference with the settlement of works with the respondent firm in exercise of judicial review under Article 226 of the Constitution of India and as such I hold that the instant writ petition is liable to be dismissed and accordingly same is dismissed hereby. 20. The writ petition stands dismissed. Consequently the interim orders passed on 18.5.2009 and 5.6.2009 also stand vacated. No order as to costs. Petition dismissed