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2016 DIGILAW 448 (ORI)

B. M. P. & Sons Pvt. Limited v. State of Odisha

2016-06-23

B.R.SARANGI, VINEET SARAN

body2016
JUDGMENT : B.R. SARANGI, J. The petitioner, a Private Limited Company registered under the Companies Act, has filed this petition seeking to quash the award of tender work pursuant to the proceedings of the tender committee meeting held on 05.12.2015 in Annexure-10 disqualifying the first lowest bidder and second lowest bidder as per clause-117 (a) of the Detailed Tender Call Notice (DTCN) for suppression of facts in respect of “Improvement of Kalunga-Bonai Road (MDR-26) from 45/000 KM to 54/000 KM under State Plan” and calling for the third lowest bidder for award of work in its favour. 2. The factual matrix of the case, in hand, is that opposite party no.2 floated a tender call notice on 10.06.2015 inviting tenders/bids from the intending tenderers/bidders to participate in the tender process for the work “Improvement of Kalunga-Bonai Road (MDR-26) from 45/000 KM to 54/000 KM under State Plan” which was subsequently modified/revised to certain extent pursuant to the order of opposite party no.2 dated 04.07.2015. The petitioner along with others submitted their tender bids and participated in the tender and on opening of the bids, it was found that the petitioner is the lowest bidder. Consequently it was called upon by opposite party no.2 vide letter dated 03.09.2015 to attend the office on or before 08.09.2015 for verification of the original documents, which the petitioner complied. Similarly, the second lowest tenderer, namely, Manju Acharya and the third lowest tenderer, namely, Promod Kumar Behera were called upon for verification of the original documents, but on verification of the documents, the bids of petitioner (L-1) and one Manju Acharya (L-2) have been rejected and Sri Promod Kumar Behera (L-3) has been called upon for negotiation. The reasons for non-consideration of the bids of petitioner (L-1) and one Manju Acharya (L-2) have been spelt out in the decision of the committee stating that the petitioner has suppressed two number of works and therefore, it incurred disqualification and accordingly, the tender committee decided not to award the work in its favour. So far as Manju Acharya (L-2) is concerned, her bid was also not considered as per Clause-117 (a) of the DTCN for suppression of facts. Hence, this petition. 3. Mr. Milan Kanungo, learned Sr. Counsel appearing for the petitioner strenuously urged that the non-awarding the work in favour of the petitioner on flimsy ground of suppression of two number of works, is misconceived one. Hence, this petition. 3. Mr. Milan Kanungo, learned Sr. Counsel appearing for the petitioner strenuously urged that the non-awarding the work in favour of the petitioner on flimsy ground of suppression of two number of works, is misconceived one. It is contended that the mention made with regard to two number of works in the observation of the committee is without any basis and therefore, he seeks for a direction that the work should be awarded in favour of the petitioner. 4. Mr. P.K. Muduli, learned Addl. Standing Counsel for the State-opposite parties strenuously urged that on the basis of the materials available before this Court, an inventible conclusion can be drawn that there is suppression of fact by the petitioner and the authorities have acted in consonance with the conditions stipulated in the DTCN and therefore, due to suppression of facts as provided in Clause-117 (a) of the DTCN, the tender submitted by the tenderer is liable to be cancelled. In view of such power being exercised by the authority, no illegality or irregularity has been committed and therefore, the action taken against the petitioner is wholly and fully justified. To substantiate his contention, he has relied upon the judgments of the Apex Court in Air India Ltd. v. Cochin International Airport Ltd. and others, (2000) 2 SCC 617 and Jagdish Mandal v. State of Orissa and others, (2007) 14 SCC 517. 5. Mr. Ashok Mohanty, learned Sr. Counsel appearing for opposite party no.4 while supporting the contention raised by the learned counsel for the State submitted that since the petitioner has not complied with the conditions stipulated in the tender paper, the authorities are wholly and fully justified in not awarding the work in favour of the lowest bidder, the petitioner herein. Apart from the same, it is urged that as the State authorities have complied the norms, standard and procedure and that apart, the State has got absolute jurisdiction to choose its own method, in that case, the Court should not interfere with the decision making process in exercise of the power of judicial review and therefore, the writ petition filed by the petition should be dismissed. 6. 6. Having heard learned counsel for the parties and after going through the records and examining the materials available before this Court, admittedly the opposite party-State floated a tender with value of work estimated at Rs.14,81,57,514/-and the period of completion of work was mentioned as 12 calendar months. This being an e-tender, the participants were directed to submit their bids from 20.06.2015 to 10.07.2015 and the bids were to be received only on ‘on-line’ on or before 5.00 P.M. of 10.07.2015 and the bids received ‘on-line’ shall be opened at 11.30 hours on 16.07.2015 in the Office of the Engineer in Chief (Civil), Nirman Soudha in the presence of the bidders who wish to attend. Clause 12 of the DTCN for road and bridge work deals with bid capacity which reads as follows:- “12. Bid Capacity: Applicants who meet the minimum qualification criteria will be qualified only if their available bid capacity at the expected time of bidding is more than the total estimated cost of the works. The available bid capacity will be calculated as under. Assessed Available Bid Capacity=(A*N*-B), where A= Maximum value of works executed in any one year during the last five years (updated to the current price level) rate of inflation may be taken as 10 per cent per year (escalation factor) which will take into account the completed as well as works in progress. B= Value at current price level of the existing commitments and ongoing works to be completed during the next twelve months (period of completion of works for which bids are invited); and N= Number of years prescribed for completion of the works for which the bids are invited. (for work completion period less than one year the value may be taken as one year) Note: In case of a Joint Venture the available bid capacity will be applied for each partner to the extent of his proposed participation in the execution of the works. The statement showing the value of existing commitments and ongoing works as well as the stipulated period of completion remaining for each of the works listed should be countersigned by the Engineer-in-Charge not below the rank of an Executive Engineer. Escalation factor Following enhancement factors will be used for the costs of works executed and the financial figures to a common base value for works completed in India. Escalation factor Following enhancement factors will be used for the costs of works executed and the financial figures to a common base value for works completed in India. Year before Multiplying factor One 1.10 Two 1.21 Three 1.33 Four 1.46 Five 1.61 (Applicant should indicate actual figures of costs and amounts for the work executed by them without accounting for the above mentioned factors) In case the financial figures and value of completed works are in foreign currency the above enhanced multiplying factors will not be applied. Instead current market exchange rate (State Bank of India B.C. selling rate as on the last date of submission of the bid) will be applied for the purpose of conversion of amount in foreign currency into Indian rupees. The information on Bid Capacity as on the date of this bid is to be furnished as per the format in Schedule-G. The aforementioned clause also includes a condition that information on Bid Capacity as on the date of this bid is to be furnished as per the format in Schedule-G. Clauses 117 & 122 of the DTCN read as follows: “Clause-117 -Even qualified criteria are met, the bidders can be disqualified for the following reasons, if enquired by the Department (a) Making a false statement or declaration. (b) Past record of poor performance. (c) Past record of abandoning the work half way/recession of contract. (d) Past record of in-ordinate delay in completion of the work. (e) Past history of litigation. Xx xx xx xx xx Clause-122 -Eligibility Criteria-To be eligible for qualification, applicants shall furnish the followings. a. Required E.M.D. (Bid Security) as per the Clause No.06 and Cost of Bid document as per Clause No.04. b. Scanned Copy of valid Registration Certificate, Valid VAT clearance certificate, PAN card along with the tender documents as per Clause No.07. c. Information regarding (i) Evidence of ownership of principal machineries/equipments in Schedule-C as per annexure-1 of Schedule-C (ii) Annexure-III of Schedule-C & (iii) Annexure-IV of Schedule-C if required as per Clause No.10 scanned copy of all documents are to be furnished with the bid. d. Information in scanned copy regarding current litigation, debarring/expelling of the applicant or abandonment of work by the applicant in Schedule “E” and affidavit to that effect including authentication of tender documents and Bank guarantee in schedule “F” as per clause 11. d. Information in scanned copy regarding current litigation, debarring/expelling of the applicant or abandonment of work by the applicant in Schedule “E” and affidavit to that effect including authentication of tender documents and Bank guarantee in schedule “F” as per clause 11. e. Submission of original bid security and tender paper cost as prescribed in the relevant clause of DTCN after last date and time of submission of bid but before the stipulated date & time for opening of the bid. f. Submission of the required information of his/their available bid capacity at the expected time of bidding as per Clause 12. The bidder who meets the above minimum eligible criteria shall be qualified.” As per sub-clause (f) of Clause 122 of the DTCN read with Clause 12, the bidders are obliged to furnish the existing commitments and ongoing works as per Schedule-G. 7. In compliance to the same, the petitioner furnished information in Schedule –G, which has been annexed as Annexure-B/1, where the anticipated date of completion of the work has been stated as “18.05.2016”. Basing on such information and in view of the affidavit given by the bidder to the effect of the correctness of the information, the technical evaluation was conducted and the bid capacity of the petitioner was assessed as more than the requirement of Clause 12 of the DTCN and it was declared qualified for opening of the price bid. But objections having been received by the Technical Committee from the local MLA and also the representation of Manju Acharya (L-2) and considering the same, the Tender Committee has categorically stated that the petitioner has suppressed the material facts so far as the existing works to be undertaken by it. It appears that the petitioner has concealed the fact of other two on-going works in Schedule-G. The Executive Engineer, R & B Division, Rourkela has submitted the status of the on-going works and existing commitments of the petitioner in his letter dated 20.03.2015 from which it is revealed that under Clause 12 of the DTCN, the tenderer has to countersign the statements showing the value of the existing commitments and ongoing works as well as stipulated period remaining for each of the work. On re-evaluation of the status of the Bid Capacity of the petitioner, it was found that the available bid capacity comes to Rs.175.28 lakhs, which is less than the requirement and therefore, it was found disqualified. The evaluation statement (re-evaluation) has also been enclosed to the counter affidavit filed by the opposite parties 1 to 3. It is stated that due to non-compliance of such provisions, there is suppression of facts in respect of two works, namely: (i) Construction of peripheral road around NIT, Rourkela in the year 2013-14; (ii) Improvement and widening to Kuanrmunda-Purnapani –Nuagaon Road ODR from 0/0 Km to 11/744 Km under NABARD assistance scheme. Since the petitioner failed to satisfy the requirement of Clause 12 of the DTCN, it was found ineligible and thus unqualified as per Clause 122 of the DTCN. 8. In the rejoinder affidavit filed by the petitioner it has specifically denied that it has not suppressed the material facts as alleged by the opposite parties 1 to 3. With regard to the allegation of suppression of fact by the petitioner, i.e. construction of peripheral road around NIT, Rourkela (0/00 to 7/850 Km Intermediate lane) for the year 2013-14, it is stated that the said work has been completed by the petitioner on 03.02.2015 save and except certain portion of work which the petitioner could not execute due to land dispute and litigations and that the petitioner had also taken back its EMD and security deposit. Therefore, as the work was completed so far as it relates to the petitioner, the petitioner had not mentioned such fact and thus not mentioning the said fact cannot be said as suppression of facts or a false statement. So far as the other allegation with regard to the work i.e. improvement and widening to Kuanrmunda-Purnapani –Nuagaon Road (ODR) from 0/00 to 11/744 Km under NABARD Assistance Scheme is concerned, it is stated that the tender for the said work was floated on a number of occasion and the petitioner was the lowest bidders therein but it was cancelled due to the reasons best known to the opposite parties. Finally, the tender for the said work was invited on 08.07.2014 and the last date of submission of tender/bid documents was fixed to 25.07.2014. Finally, the tender for the said work was invited on 08.07.2014 and the last date of submission of tender/bid documents was fixed to 25.07.2014. The petitioner claims that it was the lowest bidder in the said contract, but the petitioner was unable to execute the work due to the Maoist activities in the said area. The petitioner was called upon to execute an agreement on 27.07.2015 and on executing the said agreement on the said date, the petitioner proceeded with work, which was completed on 31.03.2016 awaiting release of final bill. These facts have been strongly refuted by the State-opposite parties by giving a reply to the rejoinder affidavit filed by the petitioner. It is categorically stated that the bidder has not executed a portion of the work which could have been executed by it before closure of the said contract on its request. The petitioner has executed the agreement for the work on 07.07.2015 and therefore the petitioner was under apprehension about the execution of the work and therefore it could not mention about the same while submitting the tender on 20.03.2015. 9. In course of hearing, this Court vide order dated 17.05.2016 called upon the State Counsel to produce the agreement said to have been executed on 07.07.2015 or 20.07.2015 as well as the agreement register to show the exact date of execution of the agreement. In compliance to the same, the copy of the agreement as well as the agreement register was produced before this Court. On perusal of the same, it appears that the petitioner executed the agreement on 07.07.2015 and vide letter dated 01.06.2015 tender for the work “improvement and widening to Kuanrmunda-Purnapani– Nuagaon Road (ODR) from 0/00 to 11/744 Km under NABARD Assistance Scheme” has been accepted by the Chief Engineer calling upon the petitioner to attend his office on 08.06.2015 along with balance amount of ISD and other documents for drawal of agreement and on that basis agreement has been executed on 07.07.2015. The work in respect of “construction of peripheral road around NIT, Rourkela (0/00 to 7/850 Km Intermediate lane) for the year 2013-14” having been completed by the petitioner and it having received the money, it cannot be construed that there is suppression of facts by the petitioner. The work in respect of “construction of peripheral road around NIT, Rourkela (0/00 to 7/850 Km Intermediate lane) for the year 2013-14” having been completed by the petitioner and it having received the money, it cannot be construed that there is suppression of facts by the petitioner. It is further stated that so far as the work “improvement and widening to Kuanrmunda-Purnapani–Nuagaon Road (ODR) from 0/00 to 11/744 Km under NABARD Assistance Scheme” is concerned, agreement having been executed on 07.07.2015 and the said fact having been disclosed in the prescribed Schedule-G as per Annexure-B/1, it cannot be construed that there is suppression of facts by the petitioner. 10. In Tata Cellular v. Union of India, AIR 1996 SC 11 = (1994) 6 SCC 651 , the Apex Court held as follows : “A tender is an offer. It is something which invites and is communicated to notify acceptance. Broadly stated, the following are the requisites of a valid tender: 1. It must be unconditional. 2. Must be made at the proper place. 3. Must conform to the terms of obligation. 4. Must be made at the proper time. 5. Must be made in the proper form. 6. The person by whom the tender is made must be able and willing to perform his obligations. 7. There must be reasonable opportunity for inspection. 8. Tender must be made to the proper person. 9. It must be of full amount. It is true that tender notice did mention that no tender will be considered valid if it is not accompanied with the documents mentioned therein but the tender notice also mentioned that there may be other particulars and details of the contract which have to be of obtained from the office, and the tender of the contract which have to be of obtained from the office, and the tender form and the instructions to the tenderer attached along with the tender form mentioned clearly that if the receipt of deposit of the earnest money was not furnished along with the tender form, the tender shall not be considered but with regard to documents, it was mentioned that the tender was liable too be rejected if these documents, were not attached along with the tender form, it could not be said that submission of documents was a condition precedent, the non-performance of which would make the tender immediately void ab initio.” 11. In Mahavir Auto Stores v. Indian Oil Corporation, AIR 1990 SC 1031 = (1990) 3 SCC 752 , the Apex Court held as follows: “The freedom of Government to enter into business with anybody it likes is subject the condition of reason and fairplay as well as public interest.” 12. It is well settled law laid down by the Apex Court that the Government cannot act arbitrarily at its sweet will and every activity of the Government must have a public element in it and it must therefore, be informed with reasons and guided by public interest and such activity will be liable to be tested for its validity on the touchstone of reasonableness and public interest and if it fails to satisfy either test, it would be unconstitutional and invalid. The Government cannot act arbitrarily even though the matter arises out of a contractual obligation. 13. In Karnataka State Forest Industries Corporation v. Indian Rocks, (2009) 1 SCC 150 = AIR 2009 SC 684 , the Apex Court held that when action of the State is arbitrary or discriminatory and also violative of Article 14 of the Constitution, writ application is maintainable for enforcement of the terms of the contract. 14. In Air India Ltd. (supra), the Apex Court held as follows: “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 paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decision-making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. 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 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. 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 intervene.” 15. In Jagdish Mandal (supra), considering the scope of the Court to interfere in tender and contractual matters in exercise of powers of judicial review, the Apex Court held as follows : (i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; OR Whether the process adopted or decision made is so arbitrary and irrational that the court can say: “the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached”; (ii) Whether public interest is affected. If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.” 16. Taking into consideration the law laid down by the Apex Court in Air India Ltd. (supra) as well as Jagdish Mandal (supra), this Court is conscious of the fact that its jurisdiction to interfere with the decision making process in exercise of powers under judicial review is very limited in nature. Taking into consideration the law laid down by the Apex Court in Air India Ltd. (supra) as well as Jagdish Mandal (supra), this Court is conscious of the fact that its jurisdiction to interfere with the decision making process in exercise of powers under judicial review is very limited in nature. But certainly this Court is of the considered view that when in a decision making process, there is arbitrary and unreasonable exercise of power, this Court has got jurisdiction to interfere with the same under Article 226 of the Constitution of India. 17. In view of the parameters as discussed above and applying the same to the present context, admittedly the opposite party-State floated a tender and basing upon such tender the participants including the petitioner submitted their bids within the time stipulated which were received on “on line” on or before 10.07.2015. The said bids were opened at 11.10 hours on 16.07.2015 in the office of the Engineer in Chief (Civil), Nirman Soudh in presence of the bidders. As per sub-clause (f) of Clause-122 of the DTCN read with Clause-12, the bidders are obliged to furnish the existing commitments and ongoing works as per Schedule-G. In compliance of the same, the petitioner having furnished the information in Schedule-G, the technical evaluation was conducted and the bid capacity of the petitioner was assessed as more than requirement as per clause-12 of the DTCN. Consequently, it was declared qualified for opening of price bid. But, the objection having been received by the technical committee from the local MLA and also representation from Manju Acharya (L-2), the tender committee on consideration of the same found that the petitioner has suppressed the material facts so far as the existing works being undertaken by it. Consequentially, the petitioner having failed to satisfy the requirement of Clause-12 of DTCN, it was found ineligible and unqualified as per Clause-122 of the DTCN. But, it appears that the petitioner being the lowest tenderer the reason for cancelling the tender, on the ground of non-compliance of the provisions contained in Clause-117 of the DTCN regarding suppression of facts, is not correct. Apart from the same, the facts brought by the local MLA to the notice of the tender committee have been taken into consideration without any rhyme and reason and without giving any opportunity to the petitioner. Apart from the same, the facts brought by the local MLA to the notice of the tender committee have been taken into consideration without any rhyme and reason and without giving any opportunity to the petitioner. Therefore, depriving the petitioner of getting the contract, despite it being the lowest one, amounts to arbitrary and unreasonable exercise of power and as such the decision making process reaching to such conclusion is contrary to the provisions of law. 18. In view of the aforesaid facts and circumstances, the action taken by the authority in not awarding the work in the favour of the petitioner on the ground of non-compliance of the provisions contained in Clause-117 (a) of the DTCN cannot sustain in the eye of law and accordingly, the decision to that extent vide Annexure-10 dated 05.10.2015 is hereby quashed. Consequently, the State-opposite parties are directed to take fresh decision in the light of observation made hereinabove as expeditiously as possible, preferably within a period of one month from the date of communication of the judgment. 19. The writ petition is accordingly allowed. No order as to costs.