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2016 DIGILAW 829 (ORI)

Coal Carriers v. Chairman-cum-Managing Director, Mahanadi Coalfields Limited

2016-09-19

B.R.SARANGI, VINEET SARAN

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JUDGMENT : DR. B.R. SARANGI, J. General Manager (CMC), Mahanadi Coalfields Limited issued a notice inviting tender bearing No.MCL/SBP/GM (CMC), NIT-738/2016/330 dated 25.06.2016 for “Hiring of Tippers for Mechanical Transportation of crushed coal from Kulda CHP/Stocks to Kanika Railway Siding of Kulda OCP, Basundhara Area for a Total Quantity of 42.00 Lakh Tes” wherein clause 4.6 of the Conditions of Contract enumerates “Additional performance security”, though previously in respect of similar work no such clause was inserted. Therefore, being aggrieved by insertion of clause 4.6 in the present notice inviting tender, the petitioner has filed this writ petition. 2. Mr. A. Patnaik, learned counsel for the petitioner, states that insertion of clause 4.6 in the Conditions of Contract is contrary to the provisions of law, inasmuch as, the petitioner is deprived of participating in the tender process, which violates Articles 14 and 19(1)(g) of the Constitution of India. It is further contended that the doctrine of “level playing field” is an important doctrine embodied in Article 19(1)(g) of the Constitution of India, which provides space within which equally placed competitors are allowed to bid so as to subserve the larger public interest. By inserting clause 4.6, it is restricting and preventing the present petitioner and other similarly situated bidders/contractors from participating in the tender process. Therefore, the petitioner seeks to quash the said provision of the Conditions of Contract and direct the opposite parties to allow it and other similarly situated contractors/bidders to participate in the tender process for the interest of the public at large. 3. Mr. S.D. Das, learned Senior Counsel appearing for opposite parties no.1 and 2 raises a preliminary objection with regard to maintainability of the writ petition at the instance of the petitioner, who is a non-participant in the tender process. It is contended that the primary objective of insertion of clause 4.6 is to discourage the non-serious and financially not so sound bidders from bidding process and, as such, to prevent any loss to the company in the event of abandoning of work by the contractor on the plea of low rate quoted by him. It is contended that the primary objective of insertion of clause 4.6 is to discourage the non-serious and financially not so sound bidders from bidding process and, as such, to prevent any loss to the company in the event of abandoning of work by the contractor on the plea of low rate quoted by him. It is urged that the insertion of clause 4.6 neither offends the provisions contained in Article 19(1)(g) nor affects Article 14 of the Constitution, rather the same has been inserted to secure the work to be done by a bonafide bidder, who can perform his duty with utmost sincerity and within the time specified in the contract itself. Therefore, the action of opposite parties no.1 and 2 by inserting clause 4.6 in the Conditions of Contract under Annexure-1 dated 25.06.2016 is justified. 4. We have heard Mr. A. Patnaik, learned counsel for the petitioner, and Mr. S.D. Das, learned Senior Counsel along with Mr. H. Mohanty for opposite parties no.1 and 2, and perused the records. Pleadings having been exchanged between the parties, with the consent of learned counsel for the parties this writ petition is being disposed of at the stage of admission. 5. The sole question raised before this Court is, whether due to insertion of clause 4.6 in the Conditions of Contract under Annexure-1 dated 25.06.2016 the petitioner and similarly situated contractors have been deprived of participating in the tender process and, as such, whether it violates Articles 14 and 19(1)(g) of the Constitution of India. 6. Clause 4 of General Terms and Conditions of the Contract deals with Security Deposit. Clause 4.6 thereof, which states about Additional Performance Security, being relevant for the purpose of this case, is quoted hereunder. “4.6 Additional performance security: Additional performance security shall be applicable if the bid price is below 15% of the estimated cost put to tender. The amount of such additional performance security shall be the difference between 85% of the estimated cost put to tender and quoted price. Additional performance security shall be furnished by bidder along with normal performance security. Failure to submit such additional performance security may result into termination of the contract. This additional performance security will not carry any interest and shall be released in the following manner: (i) 30% of Additional performance security will be released after 60% of the total work is completed. Failure to submit such additional performance security may result into termination of the contract. This additional performance security will not carry any interest and shall be released in the following manner: (i) 30% of Additional performance security will be released after 60% of the total work is completed. (ii) 50% of Additional performance security will be released after 80% of the total work is completed. (iii) 100% of Additional performance security will be released after total work is completed. Additional performance security may be furnished in any of the forms as applicable for performance security.” 7. Admittedly, prior to this tender such a condition was not there in the Conditions of Contract. Such clause 4.6 has been inserted as per Manual for e-Procurement of Works & Services/guidelines, circulated by General Manager (Civil) HOD, CIL, Kolkata vide letter dated 13.01.2016 for implementation of Reverse Auction at CIL & Subsidiary Companies and the same has been approved by the MCL Board in its 177th meeting held on 26.05.2016 basing on the Revised Contract Manual circulated by General Manager (Civil) HOD, CIL, Kolkata, vide letter dated 01/02.12.2014. Though such condition has been incorporated in the NIT of Service Tenders floated by MCL recently, the said provision is quite prevalent in other organizations and has been incorporated in the works contracts done under Civil Engineering Manual in MCL. The Central Vigilance Commission in its guidelines published in 2002 for improvement in the award of contract has also pointed out in clause 15 about reasonableness of prices/market rate justification. The primary motive of incorporating this clause is to discourage the non-serious and financially not so sound bidders from bidding process and to prevent any loss to the company in the event of abandoning of work by the contractor on the plea of low rate quoted by him. The experience of the opposite parties that the bidders having no economic, financial viability have participated in the tender, but in the mid way they are leaving the work and they are not able to perform the same with the rate quoted by them. Consequentially, the opposite parties have to face difficulties for conclusion of contract itself and as such the work could not be completed within the time stipulated as per the agreement executed by the bidders, which leads to colossal wastage of money. Consequentially, the opposite parties have to face difficulties for conclusion of contract itself and as such the work could not be completed within the time stipulated as per the agreement executed by the bidders, which leads to colossal wastage of money. To prevent the opposite parties from such unscrupulous bidders, such clause has been inserted. Thereby, no illegality or irregularity can be said to have been committed by the opposite parties. 8. The contention raised that the insertion of clause 4.6 in the tender document offends Articles 14 and 19(1)(g) of the Constitution of India depriving the petitioner and other similarly situated bidders to participate in the auction process and the doctrine of “level playing field” are being affected has no justification. The opposite parties are not obliged to insert a condition in the contract itself to allow each and every person to participate in the tender process, rather considering the nature of work to be performed, time and financial stability, the condition has been imposed only allowing the persons, those who can participate in the bid so as to complete the work as per the terms of the agreement itself. 9. It is the prerogative of the authority issuing the tender to put suitable conditions to get the work done within the time specified. This Court has no jurisdiction to alter the condition of the contract or change the same at any point of time and the Court has only to examine as to whether the conditions stipulated in the contract itself are arbitrary, unreasonable or contrary to the provisions of law in exercise of power of judicial review. But the present case does not come within the ambit, domain or jurisdiction of this Court to interfere with the conditions stipulated in clause 4.6 of the contract itself. The reasons for inserting clause 4.6 in the contract itself to save the company from financial loss, time and unscrupulous bidders those who are leaving the work causing loss to the organization. 10. An objection was raised that the writ petition is not maintainable at the instance of the petitioner, as he is not a participant in the tender itself. It is not the case of the petitioner that there was no adequate publicity in inviting tender from the bidders. 10. An objection was raised that the writ petition is not maintainable at the instance of the petitioner, as he is not a participant in the tender itself. It is not the case of the petitioner that there was no adequate publicity in inviting tender from the bidders. Therefore, if anyone wanted to make bid in the auction he should have participated in the said auction and made his bid. The petitioner having not participated in the auction and made its bid, merely filing a representation stating that the insertion of clause 4.6 in the contract is not justified, cannot sustain in the eye of law and, as such, the petitioner being non-participant, at its instance the writ petition is not maintainable in view of the judgment rendered by the apex Court in Valji Khimji and Company v. Official Liquidator of Hindustan Nitro Product (Gujarat) Limited and others, (2008) 9 SCC 299 . 11. In view of the above facts and circumstances of the case, we are of the considered opinion that the writ petition at the instance of the petitioner, who is a non-participant in the tender process, is not maintainable. More so, the insertion of clause 4.6 with regard to performance security neither affects Article 14 nor Article 19(1)(g) of the Constitution of India. Accordingly, the writ petition merits no consideration and the same is hereby dismissed.