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Madhya Pradesh High Court · body

2014 DIGILAW 498 (MP)

Samruddha Buildcon Pvt. Ltd. v. Western Railways

2014-05-01

J.K.JAIN, SHANTANU KEMKAR

body2014
Judgment: 1. Heard on the question of admission. By filing this petition under Article 226 of the Constitution of India, the petitioner is seeking issuance of appropriate writ, order or direction, thereby directing the respondents No. 1 to 3 not to reject the petitioner's tender on the ground of past experience, as required vide Eligibility Condition No. 2.2.1(a) of the Tender Document. Briefly stated, the respondents - Western Railway had floated a tender inviting bids for construction of Inspection-cum-Washing Pit Lines Facilities, including dismantling of existing pit line/track at Indore in connection with Ratlam-Mhow (Phase-I) Gauge Conversion Project. Approximate cost of the work was mentioned to be Rs. 9,43,17,026.76/-. Clause 2.2 of the Tender Document provided for Eligibility Criteria. As per Clause 2.2.1 of the Tender Document, the Eligibility Criteria prescribed is as under:-- "2.2 Eligibility criteria 2.2.1 The minimum eligibility criteria shall be as under: (a) Tenderer/s should have physically completed within the qualifying period i.e. the last three financial years and current financial year (even though the work might have commenced before the qualifying period), at least one work of similar nature for a minimum value of 35% of the advertised tender value. Similar nature of work shall mean "Any Civil Engineering work comprising of RCC/PSC. However, the cost of RCC/PSC should be minimum 35% of the tender value". Note:-- (i) The total value of similar nature of work completed during the qualifying period and not the payments received within the qualifying period alone shall be considered. (ii) In case, the final bill of similar nature of work has not been passed and final measurement have not been recorded, the period amount including statutory deduction will be considered. If the final measurements have been recorded and the work has been completed with negative variation, then also the paid amount including statutory deduction will be considered. However, if the final measurements have been recorded and the work has been completed with positive variation but variation has not been sanctioned original agreement value or last sanctioned agreement value whichever is lower shall be considered for judging eligibility. (iii) In case of composite works involving combination of different works, even separate completed works of required value i.e. 35% of total tender value will be considered while evaluation of the eligibility criteria. (iii) In case of composite works involving combination of different works, even separate completed works of required value i.e. 35% of total tender value will be considered while evaluation of the eligibility criteria. (b) Total contract amount received during last three financial years (i.e. current financial year and three previous financial years) should be minimum 150% of the advertised value of work supported by an attested certificate from employer/client, audited balance sheet duly certified by Chartered Accountant etc." 2. According to the learned counsel for the petitioner, though the petitioner is fulfilling the eligibility criteria, but the respondents are not accepting the petitioner's tender and it is likely that they will be accepting the tender of the fourth respondent. In support of its claim about fulfilling the eligibility criteria, the petitioner has filed document partnership deed (Annexure P/4) in order to show that one of the petitioner company's Director Mahesh Hassanandani was earlier partner in the partnership firm M/s. Jethanand Arjundas and Sons. As a partner of the partnership firm, one of the Director of the petitioner-company Mahesh Hassanandani had acquired requisite experience, as per Annexure P/5 by performing the work of similar nature for a minimum value of 35% of the advertised tender value having cost of RCC/PSC to be minimum 35% of the tender value, as per the Eligibility Criteria 2.2.1(a). 3. In addition, the petitioner has also filed a certificate (Annexure P/7) issued by the Municipal Corporation, Indore in support of clause 2.2.1(b) to show that the said partnership firm M/s. Jethanand Arjundas and Sons had executed a work, out of which an amount of Rs. 17,56,83,899/- was paid to the said firm on account of RCC work, which is more than 150% of the advertised value of work which also should have been treated as amount received by the petitioner-company, as the partner of the said firm is one of the Directors of the petitioner-company. In the circumstances, according to the learned counsel for the petitioner, though the petitioner is fulfilling the eligibility criteria, still the respondents have not considered the petitioner's bid, which was of much less amount then the offer which was submitted by the 4th respondent. Thus, it is also the case of the petitioner that if the petitioner's tender is accepted, it will save loss to the public exchequer. 4. Thus, it is also the case of the petitioner that if the petitioner's tender is accepted, it will save loss to the public exchequer. 4. Respondents No. 1 to 3 have filed preliminary reply and have stated that the petitioner/company is claiming the fulfilment of the eligibility criteria on the basis of the experience gained by its one of the Director of the partnership firm M/s. Jethanand Arjundas and Sons of which, he was a partner. The respondents have stated that the Tender Document nowhere provides that tenderer can get credit of its experience while working with some other firm. It is the case of the respondents that the tenderer should have its own experience and should itself have received an amount to the extent of 150% of the advertised value of the work. Learned counsel for the respondents has argued that the essential conditions of the eligibility criteria having not been fulfilled by the petitioner, its tender cannot be accepted. 5. We have heard learned counsel for the parties at length and perused the record. 6. It is not in dispute that the petitioner is a private limited company. It is also not in dispute that the petitioner itself has not completed the requisite work of a minimum value of 35% of the advertised tender value. It is also not in dispute that the petitioner-company itself has not received the amount minimum 150% of the advertised value of work. 7. The petitioner's case is that its one of its Director was one of the partners of the firm and as a partner of the said firm, he gained the requisite experience of work, as provided under Clause 2.2.1(a) and that the said partnership firm has received the requisite minimum amount 150% of the advertised value of work, as per Clause 2.2.1(b) of the Tender Document, and as such, there is sufficient compliance of the eligibility criteria. In support of its contention, the petitioner has relied on the judgment of the Supreme Court passed in the case of Master Marine Services (P) Limited v. Metcalfe and Hodgkinson (P) Limited and another, (2005) 6 SCC 138 . In support of its contention, the petitioner has relied on the judgment of the Supreme Court passed in the case of Master Marine Services (P) Limited v. Metcalfe and Hodgkinson (P) Limited and another, (2005) 6 SCC 138 . The learned counsel for the petitioner has drawn our attention to paragraph 16 of the said judgment of the Supreme Court to contend that the license to act as surveyor/loss assessor under the Insurance Act, was possessed by the Chairman of the bidder company and was not in the name of the company, and the Supreme Court has treated it to be the license held by the company. In the present case also, he submits that the previous experience of the Director as a partner of the partnership firm was required to have been taken by the respondents. On going through the judgment of the Supreme Court in the matter of Master Marine Services (P) Limited v. Metcalfe and Hodgkinson (P) Limited and another (supra), we find that the Supreme Court taking into consideration that in the tender document, power to relax the conditions of tender at any stage was existing, and therefore, since condition regarding holding of such license by the company itself could be relaxed, observed that the holding of the license by the company could have been relaxed, as the Chairman was holding the license. Thus, this case is distinguishable on facts, as in the present case, no such provision of relaxation in the conditions is brought to our notice. 8. Learned counsel appearing for the respondents No. 1 to 3 - Railway has argued that in paragraph No. 15 of the judgment in the case of Master Marine Services (P) Limited v. Metcalfe and Hodgkinson (P) Limited and another (supra), the Supreme Court, after taking note of various judgments, has observed as under:-- "15. The law relating to award of contract by the State and public sector corporations was reviewed in Air India Limited v. Cochin International Airport Limited, (2000) 2 SCC 617 and it was held that the award of a contract, whether by a private party or a State, is essentially a commercial transaction. It can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation. It can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation. It was further held that the State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process, the Court must exercise its discretionary powers 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. The Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should interfere." 9. Learned counsel for respondents No. 1 to 3 placed reliance on the judgment of Supreme Court in the case of Tata Cellular v. Union of India, (1994) 6 SCC 651 in which it has been held that:-- "The principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favoritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down. Judicial review is concerned with reviewing not the merits of the decision in support of which the application for judicial review is made, but the decision-making process itself. It is thus different from an appeal. When hearing an appeal, the Court is concerned with the merits of the decision under appeal. Judicial review is concerned with reviewing not the merits of the decision in support of which the application for judicial review is made, but the decision-making process itself. It is thus different from an appeal. When hearing an appeal, the Court is concerned with the merits of the decision under appeal. Since the power of judicial review is not an appeal from the decision, the Court cannot substitute its own decision. Apart from the fact that the Court is hardly equipped to do so, it would not be desirable either. Where the selection or rejection is arbitrary, certainly this Court would interfere. It is not the function of a judge to act as a super board, or with the zeal of a pedantic schoolmaster substituting its judgment for that of the administrator. In all these cases the test to be adopted is that the Court should, "consider whether something has gone wrong of a nature and degree which requires its intervention". The principles deducible from the above are: (1) The modern 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. (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." 10. 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." 10. He also placed reliance on the judgment of the Supreme Court in the case of Director of Education and others v. Educomp Datamatics Limited and others, (2004) 4 SCC 19 , in which it has been held by the Supreme Court that:-- "The scope of judicial review is open to judicial interference only when it is arbitrary, discriminatory or biased but not open to interference merely because Court feels that some other terms would have been more preferable." In Raunaq International Limited v. IVR Construction Ltd., 1999(1) SCC 492 it was observed by the Supreme Court that the award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision, considerations which are of paramount importance are commercial considerations, which would include, inter alia, the price at which the party is willing to work, whether the goods or services offered are of the requisite specifications and whether the person tendering is of ability to deliver the goods or services as per specifications. 11. Having considered the submissions made by the learned counsel for the parties and the law laid down by the Supreme Court, we are of the view that the decision of respondents No. 1 to 3 not to accept the petitioner's tender for want of non-fulfilment of the conditions of the eligibility criteria cannot be said to be illegal warranting interference in a petition under Article 226 of the Constitution of India. The experience, as a partner of the partnership firm by one of the Directors of the company, has rightly not been taken into consideration by the respondents, in view of sub-clause (a) of Clause 2.2.1 of the Eligibility Criteria and the fact that there is no provision for relaxation of the condition so as to include the experience gained by the Director of the tenderer which is in the present case, a company in the capacity of a partner of the partnership firm. Similarly, the amount received by the partnership firm, cannot be said to be the amount received by the petitioner-company for the purposes of clause 2.2.1(b), as it is not the case of the petitioner-company that the aforesaid amount received by the said partner of the partnership firm was given to the petitioner-company. The aforesaid clauses of the eligibility criteria have objects behind them. These clauses of the Tender Document are incorporated to ensure that only the experienced tenderer with sound financial capacity matching with the volume of the work should participate in the tender process. The petitioner-company is lacking in the experience as also has failed to establish that it has itself received the amount to the extent of 150% of the advertised value as provided under sub-clause (b) of Clause 2.2.1, from the partnership firm. 12. In view of the aforesaid, we are of the view that no case for judicial interference in the matter is made out. The writ petition fails and is hereby dismissed. No orders as to the costs.