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2016 DIGILAW 93 (ORI)

Gopal Chandra Sahu v. State of Odisha

2016-02-02

D.H.WAGHELA, S.C.PARIJA

body2016
JUDGMENT : S.C. Parija, J. 1. This writ petition has been filed challenging the action of the authorities (opposite party Nos. 2 to 4) in finalizing the tender for the work "Improvement of Sundar Irrigation Project, Jadamunda, under the Dam Rehabilitation and Improvement Project (DRIP) for the year 2015-16", in favour of opposite party No. 6. The brief facts of the case as detailed in the writ petition are that the Chief & Basin Manager, Tel Basin, Bhawanipatna, in the Department of Water Resources, Government of Odisha, issued E-Procurement Notice/Invitations for Bids (IFB) through National Competitive Bidding, inviting Item Rate Bids in double cover system for the work "Improvement of Sundar Irrigation Project, Jadamunda, under the Dam Rehabilitation and Improvement Project (DRIP) for the year 2015-16". The approximate value of the work was Rs. 593.28 lakhs. 2. Pursuant to such Invitation for Bids, the petitioner along with 8 other bidders, including the opposite party No. 6, participated in the said tender process. On 14.10.2015 the technical bid was opened and the bid documents submitted by the bidders were scrutinised and it was found that all the 9 bidders have technically qualified. Subsequently, on 06.11.2015 the price bid was opened in presence of all the bidders and it was found that the present petitioner along with one BKD Infrastructure Pvt. Ltd. were the lowest bidders (L1) and the opposite party No. 6 was the second lowest bidder (L2), as per the price bid summary uploaded in the official website. However, on 09.11.2015, the Chief & Basin Manager, Tel Basin, Bhawanipatna (opposite party No. 2) intimated the Superintending Engineer, Western Irrigation Circle, Bhawanipatna (opposite party No. 3), that the rate quoted by the opposite party No. 6 amounting to Rs. 5,04,31,685.90 being 14.995% less than the amount put to tender of Rs. 5,93,27,983/-, the bid submitted by opposite party No. 6 is approved, taking single digit decimal into consideration as per Clause-4 of the bid document. Accordingly, the Executive Engineer, Nuapada Irrigation Division (opposite party No. 4) was instructed to execute agreement with the opposite party No. 6, he being the 1st lowest bidder. 3. 5,93,27,983/-, the bid submitted by opposite party No. 6 is approved, taking single digit decimal into consideration as per Clause-4 of the bid document. Accordingly, the Executive Engineer, Nuapada Irrigation Division (opposite party No. 4) was instructed to execute agreement with the opposite party No. 6, he being the 1st lowest bidder. 3. The case of the petitioner is that as his bid was found to be the lowest along with one BKD Infrastructure Pvt. Ltd., as per the price bid summary uploaded in the official website, the subsequent decision of the Chief & Basin Manager (opposite party No. 2), to accept the bid of opposite party No. 6 as the 1st lowest and approve the same is arbitrary, unreasonable and discriminatory. Accordingly, a prayer has been made to set aside the decision of opposite party No. 2 in approving the award of the contract work in favour of opposite party No. 6 and to award the same in favour of the petitioner., 4. Learned counsel for the State, with reference to the counter affidavit filed on behalf of opposite party Nos. 1 to 4, submitted that the claim of the petitioner that he was the lowest bidder (L1) and was therefore entitled to be awarded with the contract work is erroneous and misconceived. It is submitted that as, per Clause-4 of the E-Procurement Notice/Invitations for Bids dated 11.9.2015, the bidder was required to write unit rate upto one decimal point only and if he writes the unit rate upto two or more decimal points, the first decimal point shall be considered without rounding off. During evaluation of the price bid, it was found that some of the bidders, including the present petitioner, had quoted the rates upto two or more decimal points in some of the items. Therefore, the evaluation of the financial bid has been done by the authorities taking the unit rate upto one decimal point, as per the said Clause a of the Invitation for Bids. After evaluation, opposite party No. 6 was found to be the first lowest bidder and the petitioner was the fourth lowest bidder. Accordingly, the price bid of opposite party No. 6 was accepted and approved. 5. After evaluation, opposite party No. 6 was found to be the first lowest bidder and the petitioner was the fourth lowest bidder. Accordingly, the price bid of opposite party No. 6 was accepted and approved. 5. As regard the plea of the petitioner that he along with BKD Infrastructure Pvt. Ltd. were the lowest bidders (L1), as per the price bid summary uploaded in the official web site, learned counsel for the State submitted that the same, is a computer generated sheet, which was not accepted by the authorities, as some of the bidders had quoted their rates upto two or more decimal points in some of the items, in violation of Clause-4 of the bid document. It is specifically submitted that there was no official declaration of the petitioner being the lowest bidder (L1) and the entire bid process has been finalized in a fair and transparent manner, strictly in terms of the conditions enumerated in the bid documents. 6. In response, learned counsel for the petitioner, with reference to the rejoinder affidavit submitted that even calculating the rates offered by the petitioner as per Clause-4 of the bid document, the rate offered by the petitioner is 14.99.002% less than the estimated cost and the rate offered by opposite party No. 6 is 14.995% less than the estimated cost and therefore as both the bids were 14.99% less than the estimated cost, the authorities were required to finalise the tender through transparent lottery system, as per Clause-36 of the Orissa Public Works Department Code ("OPWD Code" for short), which provides that if more than one bid is quoted at 14.99% (Decimals upto two numbers will be taken for all practical purposes) less than the estimated cost, the tender accepting authority will finalise the tender through a transparent lottery system. 7. Learned counsel for the petitioner submitted that the provisions of OPWD Code apply to the present tender in question, which would be evident from the contract data, which is a part of the tender document. It is submitted that in the said contract data, in the marginal note to the provision regarding deposit of additional performance security, it has been dearly mentioned that the successful bidder will deposit the additional performance security as per the amended Para-3.5.5 Volume-II of OPWD Code, Government of Odisha, Works Department No. 12366, dated 08.11.2013. It is submitted that in the said contract data, in the marginal note to the provision regarding deposit of additional performance security, it has been dearly mentioned that the successful bidder will deposit the additional performance security as per the amended Para-3.5.5 Volume-II of OPWD Code, Government of Odisha, Works Department No. 12366, dated 08.11.2013. According to learned counsel for the petitioner, this implies the application of the provisions of OPWD Code to the tender in question. 8. Learned counsel for the petitioner further submitted that the application of the provisions of the - OPWD Code to the present tender in question is also evident from the Project Appraisal Document of the World Bank, which clearly stipulated for financial management (FM) and it is proposed to use the extant Government FM procedures that are contained in various documents, such as the State Public Works Department (PWD) Manual, Central Public Works Account Code and General Financial Rules of respective States and CWC. The FM arrangement for DRIP will be documented in a concise FM Manual, which will standardize the policies, procedures and reporting formats to be followed. Learned counsel for the petitioner has also relied upon the Office Memorandum dated 24.1.2009, issued by the Government of Orissa, Works Department, prescribing the guidelines/procedure to be followed in introduction of e-Procurement in Government of Orissa, in support of his contention that the provisions of the OPWD Code is applicable to the present tender. 9. Learned counsel for the petitioner accordingly submitted that as the rates offered by the opposite party No. 6 was 14.995% less than the estimated cost and the rate of the petitioner was 14.99.002% less than the estimated cost, both the bids should have been counted as 14.99% less than the estimated cost, as per Clause-36 of the OPWD Code, which provided that if more than one bid is quoted at 14.99% (Decimals upto two numbers will be taken for all practical purposes) less than the estimated cost, the tender accepting authority should have finalise the tender through a transparent lottery system. It is accordingly submitted that as the authorities have not acted in a fair and transparent manner and have proceeded to accept the bid of opposite party No. 6 as the lowest bidder (L1), in contrary to the clear provisions of the OPWD Code, the impugned decision is liable to be quashed. 10. It is accordingly submitted that as the authorities have not acted in a fair and transparent manner and have proceeded to accept the bid of opposite party No. 6 as the lowest bidder (L1), in contrary to the clear provisions of the OPWD Code, the impugned decision is liable to be quashed. 10. Learned counsel for the State in his rejoinder to the response of the learned counsel for the petitioner, submitted that the bids of the parties having been considered by the concerned authorities strictly in terms of the conditions enumerated in E-Procurement Notice/Invitations for Bids and after evaluation of the bids, taking the unit rate of the items upto one decimal point, the bid of opposite party No. 6 having been found to be lowest, being 14.995% less than the estimated cost, the authorities have accepted the same as the first lowest bid, which cannot be faulted. It is further submitted that as regard the plea of the petitioner with regard to the application of the provisions of the OPWD Code to the tender in question, the same is wholly erroneous and misconceived, as the conditions of the present tender, as detailed in the bid document, cannot be diluted and/or expanded by importing the provisions of the OPWD Code. 11. It is further submitted that in any case, the petitioner having accepted the terms and conditions of the tender and having participated in the same, he is not permitted to question the said terms and conditions and seek expansion of its scope by application of the provisions of the OPWD Code. It is further submitted that the project being funded by the World Bank, the terms and conditions of the tender are to be strictly adhered to and no dilution is permissible. In this regard, learned counsel for the State has referred to the Procedures and Guidelines for Procurement of Goods/Equipment, Works and Consulting Services under Dam Rehabilitation & Improvement Project funded by the World Bank, prescribed by the Central Water Commission, Government of India, Clause-2.1 (iv) of which provides that except with the prior concurrence of the Bank, there shall be no negotiation of price with the bidder, not even with the lowest evaluated bidder. It is further submitted that even otherwise, the amended Para 3.5.5 Volume-I of the OPWD Code itself states that the same may not be applicable to the works funded by the World Bank and other agencies, in which case their guidelines shall be followed. 12. As regard the marginal note in the contract data with regard to the furnishing of additional performance security as per the provisions of the OPWD Code, learned counsel for the State submits that such marginal note cannot be a legitimate aid to construction of the terms and conditions of the tender and the same cannot over-ride the clear and specific terms of the tender. 13. Learned counsel appearing for the opposite party No. 6, while reiterating the stand taken by the State, submitted that as the evaluation of the bids of the parties has been made by the authorities in terms of Clause - 4 of the invitation for bids, taking into account the unit rate of items upto one decimal, no impropriety or illegality can be committed by the authorities so as to warrant any interference in the present writ petition. 14. The ambit and scope of judicial review of administrative action in contractual matters has been settled by a long line of decisions of the apex Court. In Tata Cellular v. Union of India, (1994) 6 SCC 651 , the apex Court emphasized the need to find a right balance between administrative discretion to decide the matters on the one hand, and the need to remedy any unfairness on the other, and observed: "94. (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.... (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. (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.... (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." 15. In Raunaq International Ltd. v. I.V.R. Construction Ltd. & Ors., (1999) 1 SCC 492 , the apex Court reiterated the principle governing the process of judicial review and held that the writ court would not be justified in interfering with commercial transactions in which the State is one of the parties, except where there is substantial public interest involved and in cases where the transaction is mala fide. 16. In Union of India & Anr. v. International Trading Co. & Anr., (2003) 5 SCC 437 , the apex Court in similar circumstances has held as under: "15. While the discretion to change the policy in exercise of the executive power, when not trammelled by any statute or rule is wide enough, what is imperative and implicit in terms of Article 14 is that a change in policy must be made fairly and should not give the impression that it was so done arbitrarily or by any ulterior criteria. The wide sweep of Article 14 and the requirement of every State action qualifying for its validity on this touchstone irrespective of the field of activity of the State is an accepted tenet. The basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. Actions are amenable, in the panorama of judicial review only to the extent that the State must act validly for a discernible reason, not whimsically for any ulterior purpose. The meaning and true import and concept of arbitrariness is more easily visualized than precisely defined. A question whether the impugned action is arbitrary or not is to be ultimately answered on the facts and circumstances of a given case. The meaning and true import and concept of arbitrariness is more easily visualized than precisely defined. A question whether the impugned action is arbitrary or not is to be ultimately answered on the facts and circumstances of a given case. A basic and obvious test to apply in such cases is to see whether there is any discernible principle emerging from the impugned action and if so, does it really satisfy the test of reasonableness." 17. In Jagdish Mandal v. State of Orissa and others, (2007) 14 SCC 517, the following conclusion is relevant: "22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides, its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound". When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind, A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts wilt not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succor to thousands rind millions and may increase the project cost manifold. Such interferences, either interim or final, may hold up public works for years, or delay relief and succor to thousands rind millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions: (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." 18. The apex Court in Meerut Development Authority v. Assn. of Management Studies, (2009) 6 SCC 171 , has laid down the legal principle that the bidder who has participated in tender process has no other right except the right to equality and fair treatment in the matter of evaluation of competitive bids offered by interested persons in response to the notice inviting tenders in a transparent manner and free from hidden agenda. The relevant paragraph is extracted hereunder: The bidders participating in the tender process have no other right except the right to equality and fair treatment in the matter of evaluation of competitive bids offered by interested persons in response to notice inviting tenders in a transparent manner and free from hidden agenda. One cannot challenge the terms and conditions of the tender except on the above stated ground, the reason being the terms of the Invitation to tender are in the realm of the contract. No bidder is entitled as a matter of right to insist the authority inviting tenders to enter into further negotiations unless the terms and conditions of notice so provided for such negotiations." 19. No bidder is entitled as a matter of right to insist the authority inviting tenders to enter into further negotiations unless the terms and conditions of notice so provided for such negotiations." 19. In M/s. Michigan Rubber (India) Ltd. v. State of Karnataka, (2012) 8 SCC 216 , the legal position on the subject was summed up after a comprehensive review and the principles of law applicable to the process for judicial review was identified by the Hon'ble Court in the following words: 19. From the above decisions, the following principles emerge: (a) The basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities; (b) Fixation of a value of the tender is entirely within the purview of the executive and courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in conformity with certain healthy standards and norms such as awarding (sic) contracts by Inviting tenders, in those circumstances, the interference by Courts is very limited; (c) In the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities unless the action of tendering authority is found to be malicious and a misuse of its statutory powers, interference by Courts is not warranted; (d) Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work; and (e) If the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interference by Court is very restrictive since no person can claim fundamental right to carry on business with the Government. 19. 19. Therefore, a Court before interfering in tender or contractual matters, in exercise of power of judicial review, should pose to itself the following questions: (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", and (ii) Whether the public interest is affected. If the answers to the above questions are in negative, then there should be no interference under Article 226." 20. In Maa Binda Express Carrier and another v. North-East Frontier Railway and others, (2014) 3 SCC 760 , the apex Court while-dealing with the scope of power of judicial review in contract matters, has held as under: 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 recognize 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. 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 or benefit any particular tenderer or class of tenderers. 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 or 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." 21. in the present case, Clause-4 of the E-Procurement Notice/Invitations for Bids (IFB) provides as under: The Bill of Quantities shall mention Quantities of each item thereto. The Contractor has to mention his "ITEM UNIT RATES" in figures in the prescribed format appended to the Bid document. The bidder has to only enter the amount in figures and the system translates this into words and the total amount. The Bidder/Contractor will write UNIT RATE up to one decimal point only. If he writes the UNIT RATE up to two or more decimal point, the first decimal point shall only be considered without rounding off." Clause-12.1.1 of the Instructions to Bidders (ITB) provides as follows: "8. Bill of Quantities (BoQ): The schedule of quantities shall mention Quantities of each item. The Bidder/Contractor has to mention UNIT RATE (in figures) in the prescribed format appended to the tender document. The amount shall be worked out thereof against each item & gross total worked out at the end by the system itself." Clause 5 of the Invitations for Bids provides that bidding will be conducted through the National Competitive Bidding procedures specified in the World Bank's Guidelines. 22. It is not disputed before us that the authorities have evaluated the price bids of the bidders in accordance with the terms and conditions of the tender. It is also not the case of the petitioner that his price bid has been improperly evaluated or worked out. The only plea of the petitioner is that as the rates offered by him was 14.99.02% less than the estimated cost and the rates quoted by the present opposite party No. 6 was found to be 14.995% less 'than the estimated cost, both the bids should have been counted as 14.99% less than the estimated cost and the tender accepting authority should have finalized the tender through a transparent lottery system in terms of Clause-36 of the OPWD Code, the provisions of which are applicable to the present tender. 23. 23. The terms and conditions of the tender cannot be expanded or diluted by application of the provisions of the OPWD Code, on the basis of a marginal note to the provisions for deposit of additional performance security in the contract data. Such marginal notes cannot be considered as a legitimate aid to construction of the provisions of the tender document. The side notes are not to be considered as part of the tender document and therefore such marginal notes cannot be referred to for the purpose of construction of the provisions of the tender document. (See-Guntaiah and others v. Hamamma and others (2005) 6 SCC 228 ). 24. It is trite law that the terms and conditions of an invitation to tender is not open to judicial scrutiny, as the same is in the realm of contract. It is reiterated at the risk of repetition that in the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities and unless the action of tendering authority is found to be malicious and a misuse of its statutory powers, interference by Courts is not warranted. The petitioner having failed to show as to how the authorities have acted in an arbitrary, unreasonable and mala fide manner in dealing with his bid and there being no impropriety or illegality in the selection of opposite party No. 6, we do not find any scope for interference in exercise of extra ordinary writ jurisdiction. The writ petition being devoid of merits, the same is accordingly dismissed: No costs. I agree.