Research › Search › Judgment

Gauhati High Court · body

2009 DIGILAW 851 (GAU)

Diethozo Khape v. State of Nagaland

2009-11-30

ASHOK POTSANGBAM

body2009
JUDGMENT Asok Potsangbam, J. 1. Heard Mr. R. Iralu, learned Counsel appearing for the Petitioners as well as Ms. Y. Longkumar, learned Government Advocate appearing on behalf of the Respondent Nos. 1 to 4. Also heard Ms. V. Suokhrie, learned Counsel appearing for the Respondent No. 5. 2. By this writ petition, the Petitioner has challenged the work order dated 28.7.2009 under No. CE(II)/TB/UPGRN-GHS/ PHEK/2009 issued by the Chief Engineer, PWD (Housing) for construction of Government High School, (GHS), Phek (Upgradation of Phek GHS), in favour of the 5th Respondent, M/s. Neikho-0 Mere & Co., and the terms and conditions therein stipulated that the work was to be completed within a period of 24 months from the date of issue of the work order. At the time of issuing notice, this Court passed an interim order on 13.9.2009 for maintaining status quo and also for restraining execution of the work by the Respondent No. 5. In view of the order passed by this Court, it is informed that work order dated 28.7.2009 (Annexure-E) has not yet been executed. Two separate affidavits-in-opposition have been filed, disputing and controverting the contentions of the Petitioner, one by the Government Respondent Nos. 1 to 4 and another by the Respondent No. 5. Misc. Case Nos. 138 and 139 of 2009 have been filed by Respondent No. 4 and the Government Respondents respectively, for vacating the interim order dated 13.8.2009. Re-joinder affidavit to the affidavit-in-opposition of the Respondents, has also been filed by the Petitioner. Exchange of affidavits have been completed between the parties and the case is ready for hearing. In view of the urgency involved in the case and also as agreed upon by the learned Counsel appearing for the parties, instead of considering the Misc. applications for vacation of interim order, this matter is taken up for final disposal and the parties are heard on 23.11.2009 and 25.11.2009. 3. For better appreciation of the issues raised in the case by the contesting parties, the following brief facts may be noticed. 3(i). It is stated that a short notice inviting tenders dated 19.5.2009 was issued by the office of the Chief Engineer PWD (Housing), Government of Nagaland inviting tenders from the eligible registered Contractors of Nagaland PWD Class-I/CPWD/MES, for 11 works of construction and upgradation of Government High Schools in 11 districts of the State. 3(i). It is stated that a short notice inviting tenders dated 19.5.2009 was issued by the office of the Chief Engineer PWD (Housing), Government of Nagaland inviting tenders from the eligible registered Contractors of Nagaland PWD Class-I/CPWD/MES, for 11 works of construction and upgradation of Government High Schools in 11 districts of the State. After receipt of the tenders submitted by the competing Contractors, the case of six tenders have been finalized on 8.6.2009 and necessary work orders have long been issued whereas, in the case of construction and upgradation of Government High School at Phek, the Government decided to re-call/re-tender the tender as there was only two tenderers who participated in the tender. It may be noted that in order to be a lawful and valid tender, there is a need for participation of not less than three tenderers in a particular tender. Accordingly, Government issued a fresh tender notice dated 18.6.2009, inviting eligible contractors/firms in respect of the construction and upgradation of Government High School at Phek. 3 (ii) In all, 7 tenderers/firms submitted their bid for the work at Phek and the Tender Board, after opening the Tender/bid submitted by the competing 7 tenderers, prepared a comparative chart (Annexure-D). According to the comparative chart, serial Nos. 1,2 and 4 submitted their tender as per the scheduled of rate (SOR for short) of building NPWD 2008. Serial Nos. 3,5 and 6 submitted their bids above the SOR i.e. 4%, 20% and 15% respectively. The bid of the Petitioner was found 1% below SOR and accordingly, it was recorded so in the comparative statement. 3 (iii) Thereafter, on the recommendation of the Tender Board, the Respondent No. 5 was awarded the contract for construction and upgradation of the Government High School at Phek on the terms and conditions stipulated therein, vide the impugned order dated 28.7.2009. 4. The award of the contract work to the Respondent No. 5 is challenged by the Petitioner in this writ petition, mainly on the ground that no reason has been assigned in the impugned work order, for rejection of his tender though his bid was found to be the lowest among the bidders and that the work was awarded arbitrarily in favour of the Respondent No. 5. The argument of the Petitioner is that tender notice has clearly laid down that tender could be submitted above and below the Nagaland PWD scheduled of rate of 2008 and therefore, the bid of the Petitioner which was 1 % below the SOR is very much in terms of the conditions stipulated in the re-tender notice and as such, there is no reason why the lowest bid tendered by the Petitioner should not have been accepted. Further, it is contended that if at all the lowest tender is not to be accepted, valid reasons for non-acceptance of the lowest tender must be assigned. In support of the argument that bid below the SOR was accepted by the Government, the Petitioner sought to rely upon some work orders which have been issued in the year 2008, to some firms in which the bid was 1 % or .05% below the SOR of Nagaland PWD. Of course, the matter relates to development of some Horticulture road. 5. The stand of the Government Respondents, can be summed up as follows: 5(i). It is contended by the Respondent that out of 7 firms which submitted their tenders in connection with the construction of Government High School at Phek, the bid of 3 tenderers were found above the SOR and this group is categorized as Group-A category for convenience and easy reference. Three other contractors including the Respondent No. 5, who submitted their bids as per SOR is categorized as B category contractors. The remaining firm whose bid was found 1% below the SOR may be categorized as C category contractor and the Petitioner belongs to the C category contractor. 5(ii). The Tender Board, after having scrutinized all the relevant tender papers and also after having considered the trend of market rate which have increased in the recent past i.e. 2009, by the leaps and bound, was of the view that tender of the Petitioner, which was 1% below the SOR, was not workable. It is also stated by the Respondent that, in the past, the department had come across many instances where rates were quoted lower than the prescribed schedule rate only for the purpose of securing the work order, without considering the aspect of technical factors and anticipated price escalation. Thus, many works were either abandoned half-way or suffered from delayed execution or compromised on quality, thereby inviting criticism from general public. Thus, many works were either abandoned half-way or suffered from delayed execution or compromised on quality, thereby inviting criticism from general public. Considering the factors mentioned above, in depth, vis-à-vis the bid of other contractors, the Tender Board decided that the bid of the Petitioner which was 1 % below the SOR of 2008 was not workable and as such, the same was not accepted. In this regard, it may be mentioned that Clause 9 of the NIT clearly lays down that acceptance of the lowest bid is not obligatory and reasons for non-acceptance of the Petitioner's bid is due to consideration of the factors, as mentioned above. Thus, it is submitted that the decision of the Tender Board in this regard is very much in terms of the NIT and there is no illegality or infirmity in the process. 6. The stand taken by the Respondent No. 5 is more or less the same with the stand taken by the Government Respondents. The only additional ground taken by the Respondent No. 5 in his application for vacating the interim order dated 13.8.2009, which is registered as CMC No. 138 of 2009, is that the Petitioner has no locus standi to challenge the work order awarded in favour of the Respondent No. 5 inasmuch as the case of the Petitioner has already been considered by the Tender Board and found as unworkable. The further contention of the Respondent No. 5 is that, if, at all any one is aggrieved among the tenderers against the award of work order to the Petitioner, it ought to have been the other two tenderers who submitted their bid as per SOR and who have been identified along with the Respondent No. 5 as category-B contractors, mentioned above. But none of these tenderers had come before the Court challenging the award of contract to the Respondent No. 5 and this shows that they have no grievance against the impugned order. 7. In the backdrop of the facts narrated above and the contentions raised by the parties, the Court is to examine and decide whether the decision taking process leading to the award of contract can be interfered with or whether the award of contract to the Petitioner has suffered from any illegality, warranting an interference from this Court. 8. Mr. 7. In the backdrop of the facts narrated above and the contentions raised by the parties, the Court is to examine and decide whether the decision taking process leading to the award of contract can be interfered with or whether the award of contract to the Petitioner has suffered from any illegality, warranting an interference from this Court. 8. Mr. Iralu, learned Counsel appearing for the Petitioner submits that the viability range for acceptance and rejection of the tender is not indicated in the NIT dated 18.6.2009 and therefore, the tender process leading to the issuance of the impugned order dated 28.7.2009 is liable to be quashed in view of the law laid down by the Apex Court in Dutta Associates Pvt. Ltd. v. Indo Merchantiles Pvt. Ltd. and Ors. (1997) 1 SCC 53 : 1997(2) GLT (SC) 1. The alternative argument of the Petitioner is that as the NIT referred to above, permits a contractor to bid above and below the SOR of 2008, there is no reason why the Petitioner's tender being the lowest should not have been accepted by the Tender Board. 9. It is not disputed at the bar that there is no viability range involved in the instant case as in the case of Dutta Associates (supra). The NIT clearly indicates that all the eligible contractors could submit their bids as per SOR, above and below the SOR and as such, the Petitioner and 6 others including the Respondent No. 5, submitted their tenders-some as per SOR, some above SOR and some below the SOR. The permissibility range for submission of bid is well indicated in the NIT and therefore, the case of Dutta Associates (supra) is not applicable in the present case. In the aforesaid case of Dutta Associates (supra), the facts of the case revealed that after tenders were already received and opened, a viability range of price between Rs. 14.72 to 15.71 per IPL was introduced by the Government and Appellant Dutta Associates whose bid was outside the viability range, was given a counter offer to revise his price bid at Rs. 15.71 per IPL which was the maximum of the viability range and thereafter, his bid was accepted followed by award of contract. 14.72 to 15.71 per IPL was introduced by the Government and Appellant Dutta Associates whose bid was outside the viability range, was given a counter offer to revise his price bid at Rs. 15.71 per IPL which was the maximum of the viability range and thereafter, his bid was accepted followed by award of contract. The opportunity of counter offer was neither given to other contractors whose offer was outside the viability range nor was the counter offer given to the other tenderers including the Respondents therein, whose offer was within the viability range. In the circumstances, the Apex Court held that the introduction of viability range by the Government after the tenders were already received and opened and giving an opportunity to make counter offer to the Appellant alone who eventually became the awardee of the contract was found not sustainable in law. But the case of Dutta Associates (supra) is clearly distinguishable from the instant case and Dutta's case has no application in the facts of the instant case. 10. Mrs. Y. Longkumar, the learned Government Advocate, in support of the Government case, relied upon the case of Air India Ltd v. Cochin International Airport Ltd. and Ors. (2000) 2 SCC 617 . The emphasis of Mrs. Y. Longkumar, learned Government Advocate is at Para 7 of the judgment wherein the Apex Court laid down that "award of contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction and in arriving at a commercial decision, considerations which are paramount are the commercial consideration. Price need not always be the sole criterion for awarding a contract and what is to be looked into by the Court in a judicial review is whether the decision making process is vitiated by mala fide, unreasonableness and arbitrariness. Even when some defect has been found in the decision making process, the Court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point Only when overwhelming public interest requires interference, the Court shall intervene." However, the Court must always keep the larger public interest in mind before any intervention is made. Thus, relying upon the ratio laid down by the Apex Court in the aforesaid case, Mrs. Thus, relying upon the ratio laid down by the Apex Court in the aforesaid case, Mrs. Longkumar, learned Government Advocate submits that factors taken into consideration by the Members of the Tender board while coming to the conclusion that 1% below the SOR as not workable, are relevant and lawful and they are in public interest and as such, there is no any legal infirmity. She further submits that because of the interim order passed by this Court, the construction and upgradation of the Government High School, (GHS), Phek could not be carried out and as a result the students in particular and public in general, have suffered and therefore, public interest demands that the work must be allowed to be completed before the next rain comes. 11. Mrs. Longkumar has also submitted that the Tender board has consistently maintained that any rate quoted below the SOR as un-workable and un-acceptable in view of the present trend of market rate. In the case of upgradation of Government High School at Dimapur District of Nagaland, the rate quoted 1.70% below the SOR was found unworkable and consequently the same was not accepted and this is evident from the Annexure-B/I to the writ petition which is the minutes of the Tender Board meeting held on 10.6.2009. Like in the present case, considering the present trend of market rate, contract works in respect of other Government High Schools have been awarded only to those firms which quoted their rate as per SOR and this is evident from the minutes of the Tender Board meeting as referred to above. Thus, it is submitted that the decision to award contract to the firms, which quoted the rate as per SOR, was consciously taken by the Tender Board after taken into consideration the trend of market rate, anticipated escalation of price, technical assessment and other relevant factors and as such, the decision needs no interference. 12. Ms. V. Suokhrie, learned Counsel appearing for the Respondent No. 5, in support of her case, has relied upon in Jagdish Mandal v. State of Orissa and Ors. reported in (2007) 14 SCC 517. The learned Counsel submits that in the aforesaid case, the consideration before the Apex Court was whether the rejection of the tender on the ground of its offer of rate being 1 % less than the estimated rate, is justified or not. reported in (2007) 14 SCC 517. The learned Counsel submits that in the aforesaid case, the consideration before the Apex Court was whether the rejection of the tender on the ground of its offer of rate being 1 % less than the estimated rate, is justified or not. The Apex Court found that the very purpose of setting up a committee was for scrutinizing the tenders to find out whether any freak low rate would effect the work if the contract was awarded. In the aforesaid case, the Committee felt that there was reasonable possibility for leaving the work at mid way on account of low rate quoted by him being unworkable and that apart, the modus operandi of quoting lower rates in regard to some works and thereby securing the contract and then raising disputes by making large claim was not uncommon among the contractors. Once the Committee rejected the low rate tender on the aforesaid ground, such decision cannot be termed as unreasonable or arbitrary inasmuch as, the Committee, after applying its mind, rejected the tender by assigning reason which could neither be termed as irrational nor arbitrary. What is deductible from the above case is that the High Court is not supposed to sit in appeal over the technical assessment made by the technical experts of the Tender Board and what is to be looked into in a judicial review is whether, the choice or selection of the contractors has been made lawfully after having taken into consideration of all the relevant factors, not the soundness of the decision. The Apex Court further observed that power of judicial review is not to be invoked to protect private interest at the cost of public interest inasmuch as, any tendered or contractor with a grievance can always seek damages in the Civil Court. 13. I have considered the submission of the learned Counsel appearing for the parties. This Court also found from the records that the Government has maintained consistency in all the contracts for construction of Schools in the 11 Districts of Nagaland by awarding the contract only to the contractors whose bid was as per SOR and any bid below the SOR was not accepted in view of the present trend of market rate and inflation. I do not find any infirmity or illegality in the decision making process of the Tender Board, which led to the award of contract work under the impugned order dated 28.7.2009. This Court is also of the considered opinion that in the interest of students of Phek District and also in public interest, the construction/upgradation of School at Phek District which is as one of the most backward Districts in the Nagaland State, should be allowed to be completed before the next rain comes. 14. In the circumstances, this Court is of the considered opinion that no case is made out by the Petitioner for an interference with the impugned order dated 28.7.2009 and accordingly, the writ petition is dismissed as devoid of merit. 15. Interim order, if any, stands vacated. 16. No order as to cost. Petition dismissed