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2015 DIGILAW 1399 (RAJ)

Abeinsa Infrastructuras Medio Ambiente, S. A. v. State of Rajasthan

2015-07-27

BELA M.TRIVEDI

body2015
JUDGMENT 1. - The petitioner, by way of present petition, has challenged the action of the respondent No.2 in evaluating the Technical bids submitted by the petitioner for the package No.1(TM-01), package No.2(TM-02) and package No.3 (TM-03) for the Rajasthan Rural Water Supply & Fluorosis Mitigation Project (Nagaur)(hereinafter referred to as 'the said project'), as substantially non-responsive to the requirements of Bid documents. The petitioner has also challenged the legality of Clause 42.5 of the Instructions to the bidders (ITB) contained in the Bid documents. 2. The short facts giving rise to the present petition are that the petitioner is a company incorporated in Spain under the law of Spain having registered office at Spain as well as at Mumbai. The Government of India having received a loan from Japan International Cooperation Agency(JICA) under the loan agreement dated September 28, 2012 for the said project, and the Government of Rajasthan being an implementing agency for the said project, had invited online bids under the International Competitive Bid procedure on 25/11/2014 from the eligible bidders for three transmission projects i.e. IFB No.02/2014-15 (TM-01), IFB No.03/2014-15(TM-02) and IFB No.04/2014-14(TM-O3). The conditions and requirements for all the three packages were contained in the Bid documents Annexure-1. According to the petitioner, it had submitted the Technical Bids containing all the documents as required, along with the Financial Bids on March 10, 2015 separately for all the three packages and had also deposited the requisite bid security amount for the same. It appears that the concerned respondent vide the letters dated 24 and 26 March, 2015 had sought clarification from the petitioner on certain issues for the evaluation, and the petitioner vide the letters dated 31st march, 2015 had responded to the said queries raised by the respondent and furnished the documents sought for by the respondent. According to the petitioner, though it had complied with all the requirements of the three packages, it was informed by the respondent No.2 vide the letters dated 21st May, 2015 (Annexure-5 collectively) that the Technical bids submitted by the petitioner were found to be substantially nonresponsive to the requirements of the Bid documents for all the three packages. The said decisions contained in the said letters are under challenge in the present petition. 3. The said decisions contained in the said letters are under challenge in the present petition. 3. The respondents have filed the reply resisting the petition disputing and denying the allegations made in the petition, to which the petitioner has filed the rejoinder. 4. The learned Senior Counsel Mr. Kamlakar Sharma for the petitioner taking the Court to the various clauses and instructions contained in the Bid documents vehemently submitted that the action of the respondent No.2 in evaluating the Technical bids submitted by the petitioner as substantially nonresponsive to the requirements of the Bid documents was arbitrary and illegal, more particularly when the same was not supported by any reasons. According to him, though the petitioner had made representation to the respondents requesting them to give the reasons for treating the petitioner's Technical bids as substantially non-responsive, the respondents did not respond to the said representation. He further submitted that the Clause 42.5 contained in the ITB permitting the respondents to withhold the reasons for rejecting the Technical bids of the bidders, till the award of contract, is itself arbitrary, illegal and unconstitutional. Placing reliance upon the decision of Apex Court in case of Kranti Associates Private Limited & Anr. v. Masood Ahmed Khan & Ors., (2010) 9 SCC 496 , he submitted that the participating bidders are entitled to the fair, equal and non discriminatory treatment in evaluation of their bids/tenders, and that the fairness in decision could be known only through the reasons. He also relied upon the decision of Apex Court in case of Central Inland Water Transport Corporation Ltd. & Anr. v. Tarun Kanti Sengupta & Ors, AIR 1986 Supreme Court 1571 to submit that such a clause in the ITB would be opposed to the public policy and deserves to be struck down being arbitrary and unconstitutional. According to him, the settled position of law is that the Courts would set aside the contract, if the parties have not met on equal terms, and when one is so strong in bargaining power and the other is so weak that, as a matter of common fairness, the strong should not be allowed to push the weak to the wall. He further submitted that the respondents being on stronger footing, the bidders had no option but to accept the terms and conditions contained in the Bid documents. He further submitted that the respondents being on stronger footing, the bidders had no option but to accept the terms and conditions contained in the Bid documents. Pressing into service the provisions contained in the Rajasthan Transparent in Public Procurement Act, 2012(hereinafter referred to as 'the said Act'), he submitted that the respondents had acted in violation of the object of the said Act, by not disclosing the reasons and by not remaining transparent in the process of evaluating the bids. He also submitted that even the loan agreement between the JICA and the Government of India did not prohibit the respondents from disclosing the reasons for rejecting the bid of the bidder, and on the contrary it was provided in the Guidelines for Procurement under Japanese ODA Loans that if any bidder who submitted a bid wishes to ascertain the reasons as to why its bid was not selected, the borrower i.e. the Government shall promptly provide an explanation for the same. Lastly, he submitted that the petitioner having complied with all the requirements as contained in the bid documents and there being no deviation in the substantive material, its Technical bids could not have been evaluated as non-responsive to the requirements of the bid documents. 5. However, the learned Additional Advocate General Mr. J.M. Saxena relying upon the various Clauses of the ITB more particularly on the Clause 42.5 and the Guidelines for Procurement under Japanese ODA Loans submitted that the petitioner who is an unsuccessful bidder could make request seeking explanation from the respondents for rejecting its bids, only after the award of contract has been notified and not before that. He further submitted that the petitioner having fully understood the instructions given in the bid documents during the pre-bidding meetings, had submitted the Technical bids and it was not open for the petitioner to challenge the said Clause 42.5 on the ground of being arbitrary, when its Technical bids were found to be non-responsive to the bid documents. He submitted that the provisions contained in the said Act do not apply to the procuring entity in the matter of agreement entered into by the Central Government with any other country, as per Section 3(3) of the said Act. He submitted that the provisions contained in the said Act do not apply to the procuring entity in the matter of agreement entered into by the Central Government with any other country, as per Section 3(3) of the said Act. In the instant case, the loan agreement having been entered into between the Government of India and JICA for the project in question, the provisions of the said Act could not be pressed into service. Mr. Saxena also submitted that since the project is being finalised by the JICA on the terms and conditions set out in the loan agreement, all the bid documents relating to the instructions to bidders etc. have to be approved by the JICA, and that the respondents are required to maintain confidentiality with regard to the entire process of evaluation till the bids are finalised. The learned counsel had placed on record the sealed envelop containing the decision of the respondents evaluating the Technical bids submitted by the petitioner as non-responsive to the bid documents for the perusal of the Court. 6. Before adverting to the rival contentions raised by the learned counsels for the parties, it would be useful to reproduce the settled legal position reiterated by the Apex Court, in the matter of rights of participating bidders in the contractual transactions with the Government. In the latest decision in case of Maa Binda Express Carrier & Anr. v. North-East Fronteir Railway & Ors., (2014)3 SCC 760 the Supreme Court has held as under:- "8. The scope of judicial review in matters relating to award of contract by the State and its instrumentalities is settled by a long line of decisions of this Court. While these decisions clearly recognise that power exercised by the Government and its instrumentalities in regard to allotment of contract is subject to judicial review at the instance of an aggrieved party, submission of a tender in response to a notice inviting such tenders is no more than making an offer which the State or its agencies are under no obligation to accept. The bidders participating in the tender process cannot, therefore, insist that their tenders should be accepted simply because a given tender is the highest or lowest depending upon whether the contract is for sale of public property or for execution of works on behalf of the Government. The bidders participating in the tender process cannot, therefore, insist that their tenders should be accepted simply because a given tender is the highest or lowest depending upon whether the contract is for sale of public property or for execution of works on behalf of the Government. All that participating bidders are entitled to is a fair, equal and non-discriminatory treatment in the matter of evaluation of their tenders. It is also fairly well-settled that award of a contract is essentially a commercial transaction which must be determined on the basis of consideration that are relevant to such commercial decision. This implies that terms subject to which tenders are invited are not open to the judicial scrutiny unless it is found that the same have been tailor made to benefit any particular tenderer or class of tenderers. So also the authority inviting tenders can enter into negotiations or grant relaxation for bona fide and cogent reasons provided such relaxation is permissible under the terms governing the tender process. 9. Suffice it to say that in the matter of award of contracts the Government and its agencies have to act reasonably and fairly at all points of time. To that extent the tenderer has an enforceable right in the Court who is competent to examine whether the aggrieved party has been treated unfairly or discriminated against to the detriment of public interest. (See: Meerut Development Authority v. Association of Management Studies and Anr. and Air India Ltd. v. Cochin International Airport Ltd., 2000 A.I.R. (SC) 801 " 7. In case of Tata Cellular v. Union of India (1994) 6 SCC 651 , in case of Jagdish Mandal v. State of Orissa, (2007) 14 SC 517 , and in case of Michigan Rubber (India) Ltd. v. State of Karnataka (2012) 8 SCC 216 , also the scope of judicial review in contractual matters was examined by the Apex Court. Certain principles were deduced in this regard according to which the basic requirement of Article 14 is fairness in action by the State. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities. Certain principles were deduced in this regard according to which the basic requirement of Article 14 is fairness in action by the State. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities. It was also laid down that in the matter of formulating conditions of a tender document and awarding the contract, greater latitude is required to be conceded to the State authorities, and unless the action of the tendering authority is found to be malicious or misuse of its statutory powers, interference by Courts is not warranted. 8. In the light of the afore-stated legal position, let us appreciate the submissions made by the learned counsels for the parties. Though the counsels for the parties had argued at length, the controversy involved in the instant case moves in a very narrow compass, as to whether the Clause 42.5 contained in the Bids document is arbitrary, illegal and against the principles of natural justice. As such, the tendering of the Technical bids and Price bids for all the three packages by the petitioner for the project in question has not been disputed. The knowledge of the terms and conditions mentioned in the Bid documents is also not disputed. The pre-bid meetings held between the parties are also not disputed. The bone of contention raised by the learned Senior Counsel Mr. Sharma is with regard to the clause 42.5 of the bid document, which reads as under:- "42.5 After notification of award, unsuccessful Bidders may request, in writing, to the Employer a debriefing seeking explanations on the grounds on which their Bids were not selected. The Employer shall promptly respond, in writing, to any unsuccessful Bidders who, after the notification of award in accordance with ITB 42.1, request a debriefing." 9. According to Mr. K.K. Sharma, the learned counsel for the petitioner, the non communication of reasons by the respondents at the time of rejecting the Technical bids of the petitioner and reserving the reasons for the same till the finalisation of the award as per the said clause, itself would be violative of principles of natural justice and fair play. Though, there is some substance in the said submission of the learned counsel Mr. Though, there is some substance in the said submission of the learned counsel Mr. Sharma, the same cannot be accepted for the simple reason that the said condition contained in Clause 42.5 of the Bid documents was not only made aware to the bidders in the pre-bid meetings but the petitioner and other bidders had also accepted the said condition along with the other conditions, while submitting their bids. It is pertinent to note that as per Clause 6.4, the bidder was expected to examine all the instructions, forms, terms and specifications in the Bidding documents. Clause 33 pertained to the determination of responsiveness of Technical bids, and it was specifically provided in Clause 33.4 that "if a Technical bid is not substantially responsive to the requirements of the bidding documents, it shall be rejected by the employer and may not subsequently be made responsive by correction of the material deviation, reservation or omission". The word 'Deviation' has been defined in Clause 30 thereof and accordingly 'deviation' means a departure from the requirements specified in the Bidding documents. Since the Technical bids submitted by the petitioner were found to be substantially non responsive to the requirements of the Bid documents, the same were rejected by the respondent. It is also pertinent to note that the petitioner had submitted the Bid documents after examining and accepting all clauses including Clause 42.5, and the conditions, descriptions, drawings etc. of the Bid documents, without any reservations or conditions, as per the letter of technical bid prescribed along with the Bid documents. Therefore, it did not lie in the mouth of the petitioner to say that the conditions of the Bid documents more particularly condition contained in Clause 42.5 was violative of the principles of natural justice. The Court finds substance in the submission made by the learned counsel Mr. Saxena that it is only because the Technical bids of the petitioner were evaluated as substantially non-responsive, the petitioner has now challenged the said clause. As per the settled legal position stated herein above, the matter of formulating conditions of a tender document falls within the purview of the State authorities. The terms subject to which tenders are invited are not open to the judicial scrutiny unless it is found that the same have been tailor made to benefit any particular tenderer or class of tenderers. The terms subject to which tenders are invited are not open to the judicial scrutiny unless it is found that the same have been tailor made to benefit any particular tenderer or class of tenderers. In the instant case, no such allegations are made by the petitioner against the respondents. As such the said Clause 42.5 was applicable to all the bidders without any discrimination. Hence, such condition could not be said to be arbitrary or illegal. At this juncture, it is worthwhile to note that in order to rule out any possibility of subsequent manipulation or concoction in the record of the respondents, the Court had called for the record in respect of the decision taken by the respondents evaluating the Technical bids of the petitioner as non-responsive. On the perusal of the record submitted by the learned AAG in the sealed envelope, the Court was fully satisfied that not only the reasons were recorded for evaluating the Technical bids of the petitioner in respect of all the three packages, as substantially non-responsive, but there was substance in the said reasons also. That being the position, the Court has no hesitation in holding that the respondents had acted fairly in the matter of evaluation of the Technical Bids submitted by the petitioner, and no interference of the Court is called for. 10. So far as the application of the said Act is concerned, as rightly pointed out by the learned AAG for the respondents, the provisions of the said Act would not apply to the procuring entity in the matter of agreement entered into by the Central Government with any other country or with an intergovernmental international financing institution. In the instant case, admittedly the loan agreement having been entered into between the Government of India and JICA for the project in question, the provisions of the said Act would not be applicable in view of Section 3(3) thereof. 11. In that view of the matter, the Court does not find any substance in the present petition. The petition being devoid of merits is dismissed accordingly.Writ petition dismissed. *******