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2013 DIGILAW 726 (JK)

Nayak Infrastructure Pvt. Ltd. v. State

2013-12-13

TASHI RABSTAN

body2013
1. Since there is a common question involved in these two petitions, therefore, the same are being disposed of by this common judgment. 2. Briefly stated, the facts of the first writ petition, namely, OWP no. 1169/2012, are that petitioner-company which claims to be an approved and registered class 1(A) Contractor with PWD (Roads) Assam, Guwahati-3 and is engaged in the business of Architects, Engineers, Builders, Contractors, Designers, Planners, etc., responded to NIT No. CEJ/PMGSY/70 of 2011-12 dated 13.03.2012 through the e-tendering mode. The petitioner --company claims to have submitted its bid for the following three works viz. (i) Construction of Road from Block Boundary Ghordi to Kotwait Part-II, Phase VIII, Stage Ist, Block Ramnagar, District Udhampur, Package No. JK14-174; (ii) Construction of Road from Charal to Nappah, Phase VIII, Stage Ist, Block Dudu, District Udhampur, Package No. JK14-166. (iii) Construction of Road from Banjian to Motto, Phase VIII, Stage Ist Block DUDU, District Udhampur, Package No. JK14-182. 3. In the second writ petition, OWP No. 1170/2012, the petitioner-company is stated to have responded to NIT No. CEJ/PMGSY/61 of 2011-12 dated 29.02.2012 identically through the same mode, submitting its bid for the following three works viz., (i) Construction of Road from KM 13th TKN Road to Challer, Block Thathri, District Doda, Package No. JK04-147, Phase-VIII Stage 1st. (ii) Construction Road from Thathri to Chira, Block Thathri, District Doda, Package No. JK04-148, Phase-VIII Stage 1st. (iii) Construction of Road from KM 2nd L025 to Champal, Block Bhallesa, District Doda, Package No. JK04-151, Phase-VIII Stage 1st. 4. The grievance projected by the petitioner-company in these writ petitions is that its technical bids have been rejected by respondent No. 2 by declaring them as `Non-Responsive'. 5. The petitioner-company claims that the reason assigned for rejecting the technical bid qualification of the petitioner company is that the authorization letter in favour of its authorized representative had not been attached with the bid documents. The petitioner-company has, therefore, challenged rejection of its bid for the aforesaid works by declaring the same as `Non-Responsive' primarily on the ground that rejection is illegal and wholly arbitrary and, therefore, violates rights guaranteed to the petitioner-company under Article 14 of the Constitution of India. The petitioner-company has, therefore, challenged rejection of its bid for the aforesaid works by declaring the same as `Non-Responsive' primarily on the ground that rejection is illegal and wholly arbitrary and, therefore, violates rights guaranteed to the petitioner-company under Article 14 of the Constitution of India. The rejection of bids submitted by the petitioner company has further been assailed on the ground that the condition in the tender notice/NIT with regard to enclosing of authorization letter in favour of an authorized representative was merely ancillary and subsidiary condition and not the main and substantive condition or essential condition of eligibility. On this basis, it is contended that rejection of bids for not fulfilling ancillary and subsidiary condition could not be construed to be non-fulfilment of the basic conditions of eligibility laid down in the NIT. It is further stated that authorization letter in favour of an authorized representative, namely, Sanjiv Singh was already in existence when NIT was issued and failure to enclose the same with the tender documents was only an advertent omission, not fatal to the contract, and that the deficiencies pointed out by the department in this regard were duly supplied before opening the technical bid. 6. On the other hand, respondents in their objections have stated that in absence of authorization letter by the company in favour of authorized representative/signatory, submission of tender documents was found to be by a private party, who was the partner in some other firm. The respondents in their objections have pointed out the following deficiencies which were found in the tender documents of the petitioner-company: 1. that no contact Number, Facsimile (Fax) details/e-Mail ID of the Firm was uploaded/submitted. 2. that no document in respect of authorized signatory has been submitted through website; 3. that the earnest money document in the shape of bank guarantee submitted with the bid was again through some person who is also a partner of another firm M/s national India Construction Co. which clearly indicates that the firm is either entering into joint venture with some other Firm or subletting the work to someone by illegal means, which is against Clause No. 7 of Standard Bidding Document; 4. that the affidavit uploaded with the bid is again not signed by any authorized signatory of the firm but by some anonymous person. which clearly indicates that the firm is either entering into joint venture with some other Firm or subletting the work to someone by illegal means, which is against Clause No. 7 of Standard Bidding Document; 4. that the affidavit uploaded with the bid is again not signed by any authorized signatory of the firm but by some anonymous person. It is contended that aforementioned conditions were not merely ancillary and subsidiary conditions, but are very vital and essential conditions of the contract. In absence of the authorization letter in favour of the person submitting tender documents on behalf of the Company, tender documents cannot be said to have been submitted by the Company. It is further contended that the aforesaid omission made the tender submitted by the Company by a stranger. The respondents have also submitted that in absence of vital documents aforesaid, it is abundantly clear that bid has been uploaded by some anonymous person. Reference in this regard is also made to condition 4.2 of the General Condition which, inter alia, provided that all bidders shall include the information and documents with their bids in Section 3, Qualification Information unless otherwise stated in the Appendix to ITB. The Clause further provides for submission of original documents defining the constitution or legal status, place of registration, and principle place of business, written power of attorney of the signatory of the Bid to commit the Bidder. It is further provided in the same section in clause 8.2 that bidder is expected to examine carefully all instructions, conditions of contract, contract data, forms, terms and specifications, bill of quantities, forms and drawings in the Bid document. Failure to comply with the requirements of Bid documents shall be at the bidder's own risk. It is further provided that Bids, which are not substantially responsive to the Requirements of the Bid documents, would be rejected. Respondents, therefore, submitted that the petitioner-company was well aware that its failure to comply with requirement of bid documents would be at its own risk and the same would entail rejection of the bid being substantially non-responsive. Respondents, therefore, submitted that decision taken by them whereby bids of the petitioner were declared non-responsive is strictly in terms and conditions of the Contract/NIT and the same cannot be termed as illegal or arbitrary. 7. I have heard learned counsel for the parties and perused the record. 8. Respondents, therefore, submitted that decision taken by them whereby bids of the petitioner were declared non-responsive is strictly in terms and conditions of the Contract/NIT and the same cannot be termed as illegal or arbitrary. 7. I have heard learned counsel for the parties and perused the record. 8. Learned counsel for the petitioner submitted that scope of interference in contract matters by exercising extra ordinary jurisdiction under Article 226 of the Constitution of India is very limited inasmuch as it is not the decision, which can be judicially reviewed under writ jurisdiction, but the decision making process if is found, to be irrational, arbitrary or violative of Article 14 of the Constitution of India, it alone can be interfered with by a judicial review by the Courts. To support his submission, reliance was placed by him on the judgment of the Supreme Court in Tata Cellular v. Union of India, (1994) 6 SCC 651 . 9. Learned counsel for the respondents has on the other hand contended that on the similar grounds a writ petition, earlier filed by the petitioner company wherein it had been declared non-responsive in technical bid, has already been dismissed by a Co-ordinate Bench of this Court which judgment was upheld by the Hon'ble Division Bench of this Court. Reliance in this behalf was also placed on the judgment of the Division Bench in LPAOW No. 53/2013 dated 15.07.2013. 10. On the contrary learned counsel for the petitioner submitted that the aforesaid judgment is not applicable to the instant case for the reasons that bids in the aforesaid case were rejected by the respondents on the grounds of suppression of material information in the undertaking submitted in the tender documents; whereas facts of the case in hand are different as the bids in the instant case have been rejected and declared non-responsive allegedly for not complying with the ancillary and subsidiary condition of the tender documents, i.e., non submission of authorization letter in favour of the signatory, who had downloaded the bid documents and submitted its bids through e-bidding process. Respondents have also tried to project public interest element involved in the matter inasmuch as learned counsel for the petitioner has submitted that in so far as first contract is concerned M/s Harminder Singh Ashok Kumar and Co. Respondents have also tried to project public interest element involved in the matter inasmuch as learned counsel for the petitioner has submitted that in so far as first contract is concerned M/s Harminder Singh Ashok Kumar and Co. has been declared as L1, who has quoted the rates which are higher than the rates quoted by the petitioner company, so is the position with regard to the 2nd contract. The petitioner therefore, contended that rates quoted by the petitioner are less by an amount of more than Rs. 64.00 lac in first contract work, more than Rs. 40.00 lac in the second contract work and more than Rs. 3.00 lacs in the third contract work. He, therefore, submitted that if the petitioner is allowed to participate in the price bid, his tender is opened and contract is awarded, respondents would save more than Rs. 1 crore in the process and, therefore, even public interest demands that the petitioner should be allowed to participate in the contract by declaring the same as valid and responsive. 11. It be noted, as contended by learned counsel for the respondents, that in matters which are purely commercial in nature the scope of interference by this Court in exercise of extra ordinary jurisdiction vested in it in terms of Article 226 of the Constitution of India, is very limited. It is correct that in the contract matter, jurisdiction of the court is limited, but at the same time, unfair, irrational and arbitrary exercise of power by the State which is one of the contracting parties, cannot be said to be not open to the process of Judicial review. In Tata Cellular v. Union of India (Supra) the Supreme Court laid down certain broad parameters for exercising extra ordinary jurisdiction in the contractual matter wherein one of the contracting parties is State. For facility of reference paragraph No. 94 of the aforesaid judgment is reproduce as under:- "(1) The modem trend points to Judicial restraint in administrative action. (2) The Court does not sit as a court of appeal but merely reviews the manner in which the decision was made. (3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible. (2) The Court does not sit as a court of appeal but merely reviews the manner in which the decision was made. (3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible. (4) The terms of the invitation to tender cannot be open to Judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts. (5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure." 12. In the latest Judgment of the Apex Court in Tejas Constructions and Infrastructure Private Limited v. Municipal Council, Sendhwa and another, reported in (2012) 6 SCC 464 , same principles have been laid down. 13. Applying the tests laid down in the aforesaid cases, which have been followed by the Supreme Court as well as by this Court in various subsequent judgments, interference in the contractual matter, where one of the parties in the State, is limited to the extent of testing the decision of the State by the application of Wednesbury Principle of reasonableness and to see that action of the State is free from arbitrariness, not affected by bias or actuated by mala fides. 14. The case set up by the petitioner is required to be examined keeping in view the above guidelines laid down by the Supreme Court with regard to the sphere of jurisdiction of this court in contract matters. 15. It is contended by the petitioner that rejection of his technical bids by declaring the same as Non Responsive being illegal and arbitrary is subject to Judicial review. 15. It is contended by the petitioner that rejection of his technical bids by declaring the same as Non Responsive being illegal and arbitrary is subject to Judicial review. The petitioner has termed impugned decision of respondents rejecting his bid as illegal and irrational primarily on the ground that the conditions prescribed in the tender notice with regard to the submission of authorization letter along with tender documents was merely an ancillary and subsidiary condition and not basic condition of eligibility. It is true that if the condition, which was not complied with by the petitioner at the time of submission of documents, is held to be ancillary and subsidiary condition of contract, then rejection of contract for non-compliance of ancillary condition could be validly termed as an action by respondents, which is illegal and arbitrary. 16. I have perused the tender documents and conditions laid therein with regard to submission of authorization letter in favour of a person submitting tender documents on behalf of a company, firm and contractor. The condition aforesaid cannot be said to be ancillary and subsidiary condition of contract. I am in agreement with the respondents that in absence of authorization letter in favour of the signatory of the tender documents submitted on behalf of the firm or company, tender documents are deemed to be downloaded and by an anonymous private person without any authorization from the company or firm on whose credential tender documents have been submitted. If the proposition propounded by the learned counsel for the petitioner is accepted, then it would be very difficult to check the tendency of busybody/strangers, who would be downloading tender documents and submitting the bids on behalf of a reputed qualified company/contractor. The condition, therefore, is vital and essential condition of the contract and non-compliance thereof makes the tender documents submitted by a non-entity. 17. I, therefore, hold that the condition, which has not been complied with by the petitioner is the basic condition of eligibility and cannot be termed as a mere ancillary and subsidiary condition of contract. The rejection of bid by the respondents on this score cannot be said to be arbitrary or unfair. It is not the case of the petitioner that respondents have acted with any bias or that the decision is actuated by mala fides. The rejection of bid by the respondents on this score cannot be said to be arbitrary or unfair. It is not the case of the petitioner that respondents have acted with any bias or that the decision is actuated by mala fides. In absence of allegations of bias or mala fides, the decision which is otherwise in consonance with the terms and conditions of the contract, cannot be termed to be unfair, arbitrary or violative of Article 14 of the Constitution of India. 18. Since the condition, which was not complied with by the petitioner company at the time of submission of tender documents, is held to be a vital and essential condition of the contract, the public interest element sought to be projected by the petitioner may not have any relevance in the matter. Rather, public interest requires that only those bidders should be allowed to participate in the financial bid and/or award of the contract, whose technical bids are found to be valid and responsive. 19. Applying the broader parameters, laid down in the Tata Cellular case (Supra), to the facts of the present writ petitions; I do not find a case of interference in these petitions. Consequently, writ petitions are dismissed along with connected CMA(s). Interim direction, if any subsisting, shall stand vacated forthwith. 20. No order as to costs.