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2017 DIGILAW 1374 (GAU)

Naga Construction v. East West Construction

2017-10-26

AJIT SINGH, MANOJIT BHUYAN

body2017
JUDGMENT : Manojit Bhuyan, J. 1. The nub of the issue for adjudication is whether the Chief Engineer, Public Works Department (Housing), Nagaland, Kohima could have approved the rate quoted by the appellant pursuant to Notice Inviting Tender dated 13.03.2015 and direct that work order be issued to the appellant. Additionally, whether the learned Single Judge could have directed issuance of work order to the respondent No. 1/writ petitioner consequent upon the setting aside of the Chief Engineer's approval made in favour of the appellant. Heard Mr. D.K. Mishra, learned Senior Counsel for the appellant, assisted by Mr. B. Prasad, Advocate, Mr. S. Dutta, learned Senior Counsel representing respondent No. 1 and Ms. M. Kechii, learned Government Advocate, Nagaland for the respondent Nos. 2 to 7. Ms. Kechii have also produced the records in original. The present writ appeal by M/S Naga Construction is directed against the judgment and order dated 10.04.2017 passed in WP(C) 28(K) of 2016. 2. Facts essentially to be noticed are that a Notice Inviting Tender dated 13.03.2015 was issued from the Office of the Commissioner, Nagaland, Kohima under the hand of the Executive Engineer (CAWD) inviting bids for construction of the Deputy Commissioner's Office Complex at Zunheboto, Nagaland. The estimated cost of construction was fixed at Rs. 10,25,42,000.00 with time of completion at 36 months. It was a two-bid tender system consisting of the techno-commercial bid, followed by the financial bid. As many as five parties, including the appellant M/S Naga Construction and the respondent No. 1 i.e. M/S East West Construction, responded to the NIT, out of which three bidders were found technically responsive on 29.04.2015. One Chabou & Company, Kohima was disqualified while another M/S Multi Builders, Dimapur had withdrawn its bid. As per the Technical Bid Capacity Evaluation, respective marks were awarded to the parties who were otherwise declared technically qualified, in that, whereas M/S Naga Construction was awarded 55.00 marks, M/S East West Construction was given 87.50 marks. The third technically responsive party i.e. Jordan Construction was awarded 49.00 marks. The financial bid of the three bidders above was opened on 8.5.2015. In so far as the appellant and the respondent No. 1 are concerned, both had quoted rate as per Nagaland Public Works Department Schedule of Rates (SoR), 2013. 3. The third technically responsive party i.e. Jordan Construction was awarded 49.00 marks. The financial bid of the three bidders above was opened on 8.5.2015. In so far as the appellant and the respondent No. 1 are concerned, both had quoted rate as per Nagaland Public Works Department Schedule of Rates (SoR), 2013. 3. On 11.05.2015, the Chief Engineer, PWD (Housing) issued a letter to the Executive Engineer, CAWD, enclosing therewith the Comparative Statement (Financial Bid) in respect of the work in question and informing approval of the rate quoted by the appellant M/S Naga Construction. Instruction was made for issuing Work Order in favour of the approved firm. At this stage, the respondent No. 1 M/S East West Construction instituted the related WP(C) 28(K) of 2016 and in view of the interim order passed by the Court, there was no occasion for issuing the Work Order in favour of the appellant In the said writ petition the challenge to the letter dated 11.5.15 was made primarily on the ground that since M/S East West Construction had secured 87.50 marks in its Technical Bid Evaluation, compared to 55.00 marks secured by M/S Naga Construction, as such, M/S East West Construction being more technically qualified, ought to have been legitimately awarded with the contract in question. In the said writ petition, both the State respondents as well as M/S Naga Construction, so impleaded as respondent No. 7, filed respective affidavits-in-opposition. The stand of the State respondents for approving the appellant firm finds mention in paragraph 5 of the affidavit-in-opposition, which is reproduced hereunder:- "5. That with regard to the statements made in paragraphs 11, 12, 13, 14 and 15 of the writ petition the deponent respectfully beg to state that as per the terms and conditions of NIT dated 13.03.2015 at SL No. 17 "Mobilization advance payment will not be considered" and also Sl. No. 20 "Payment will be subject to availability of fund by the State Government of Nagaland". Although it is clearly mentioned in the terms and conditions of the NIT for not considering the advance payment some contractors have suspending/ceasing their works in half done until advance payment is made. At present the State Government financial position is very tight and if the contractors are not financially sound position he/she cannot complete the project in specified time. Although it is clearly mentioned in the terms and conditions of the NIT for not considering the advance payment some contractors have suspending/ceasing their works in half done until advance payment is made. At present the State Government financial position is very tight and if the contractors are not financially sound position he/she cannot complete the project in specified time. And considering the repeated escalation of prices if the project is not completed in time by the amount allotted for the project the Government will unnecessarily spend extra fund. This project is a time bound and inordinate delay will hamper the developmental works of general public interest. It is also stated in NIT terms and conditions at Sl. No. 12 "The acceptance of the lowest tender is not obligatory". It means that lowest tender as well as the highest bidder has no right to be awarded the work order. While awarding the work order the department has consider some criteria according to the nature of works and Government financial position. Hence considering all this factors the deponent had approved M/S Naga Construction for construction of D.C. Office Complex at Zunheboto. Since the firm is financially sound than the petitioner i.e. M/S East West Construction as per the records available in the Technical Bid Sl. 2 Financial strength." 4. The aforesaid WP(C) 28(K) of 2016 was allowed vide judgment and order dated 10.04.2017. The learned Single Judge, inter alia, held that the reasons assigned by the State respondents to deny the contract work to M/S East West Construction despite having fulfilled all requirements and also having scored the highest marks, was not only unreasonable but also suffered from the vice of arbitrariness, nepotism, bad faith etc. The decision approving the tender submitted by the appellant i.e. M/S Naga Construction, as conveyed in the letter dated 11.05.2015, was accordingly set aside with further direction to the State respondents to issue work order to the deserving firm/contractor i.e. M/S East West Construction within a period of one month. Being aggrieved, the present writ appeal is laid by M/S Naga Construction. 5. After hearing the parties we place on record that the process leading to approving the appellant's tender vide letter dated 11.05.2015 was vitiated and in this particular respect we find no infirmity in the judgment and the order dated 10.04.2017. Being aggrieved, the present writ appeal is laid by M/S Naga Construction. 5. After hearing the parties we place on record that the process leading to approving the appellant's tender vide letter dated 11.05.2015 was vitiated and in this particular respect we find no infirmity in the judgment and the order dated 10.04.2017. At the same time, we are unable to agree with the findings and decision of the learned Single Judge in directing the State respondents to issue Work Order to M/S East West Construction for having scored the highest marks in the Technical Evaluation. The reasons for reaching the above views may now be indicated. From the NIT dated 13.03.2015 it is seen that Clause 17 of the terms and conditions mentions that Mobilization Advance Payment would not be considered and Clause 20 thereof also specifies that payment in respect of the contract work will be subject to availability of fund by the State Government of Nagaland. On a plain reading of the aforesaid Clause 17 and 20 makes it clear that the contractor who would be selected has to depend on its own resources for timely construction of the contract work. The said two clauses clearly suggest that the contractor who would be selected must be financially sound. No obligation is held out by the State respondents either for any Mobilization Advance Payment or any payment during the course of the work in question. In the affidavit-in-opposition filed by the State respondents it is clearly stated that at present the financial position of the State Government is very tight and it has to guard against any delay in the execution of the work as, otherwise, there will be escalation of prices for which the Government will have to unnecessarily spend extra fund. Further, any delay will also hamper developmental works of general public interest It is also the stand of the State respondents that it had looked into some criteria and having regard to the financial position of the State Government, it had approved the appellant M/S Naga Construction as in their opinion the appellant was financially sound and better-off than M/S East West Construction as per available records. Reference may be had to one of the documents, which was part of the tender evaluation process, where the Bank credit facility of M/S East West Construction was shown at Rs. Reference may be had to one of the documents, which was part of the tender evaluation process, where the Bank credit facility of M/S East West Construction was shown at Rs. 600.00 lakh and that of M/S Naga Construction as Rs. 1000.00 lakh, 6. To test the contentions advanced by the State respondents, the records in original as produced by Ms. Kechii was looked into. Ex facie, there is not a whisper to support the contentions advanced and so pleaded in paragraph 5 of the affidavit-in-opposition filed by the State respondents. The reason for approving the tender of the appellant as being more financially sound has been brought on record for the first time in the affidavit-in-opposition so filed. This takes us to the law laid down by the Supreme Court in Commissioner of Police, Bombay v. Gordhandas Bhanji, reported in AIR 1952 SC 16 , followed in Mohinder Singh Gill & Anr. v. The Chief Election Commissioner, New Delhi & Ors., reported in (1978) 1 SCC 405 which held that public orders, publicly made cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. It was also held that the validity of an order has to be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Else, an order which may be bad at the beginning may, by the time it reaches the Court on account of a challenge made to it, get validated by additional grounds later brought out. In the instant case, the letter of the Chief Engineer dated 11.05.2015 makes no mention whatsoever that it was on account of better financial capability and/or bank credit facility that the tender of the appellant was more suitable and required to be approved in comparison to M/S East West Construction. The ground assigning better financial soundness over M/S East West Construction was brought for the first time in the affidavit-in-opposition filed before the Court. To reiterate, the original records does not make a whisper of it. Records go to reveal that M/S East West Construction being technically qualified was also found to be at par with M/S Naga Construction in the financial bid. In other words, both parties were at par with each other. To reiterate, the original records does not make a whisper of it. Records go to reveal that M/S East West Construction being technically qualified was also found to be at par with M/S Naga Construction in the financial bid. In other words, both parties were at par with each other. In case the State Government wished to exercise its discretion of freedom of contract in choosing one party over the other, who are both equally placed, cogent reasons ought to have been assigned and recorded to demonstrate the decision as being reasonable, free from arbitrariness, not affected by bias or actuated by malafides. The manner in which the tender of the appellant was approved with a direction for issuance of work order, without anything being recorded to support such decision, is clearly a decision made by the authority intending to favour M/S Naga Construction. Besides, assessment of financial soundness vis-à-vis respective bank credit facility is an alien concept under the present NIT. Clause 5 of the NIT makes it clear that a contractor is only required to have overdraft/credit facility certificate equivalent to 15% of the tendered amount. 7. In so far as M/S East West Construction is concerned, besides being equally placed with M/S Naga Construction in so far as its financial bid is concerned, it is seen from the records that said M/S East West Construction had secured more marks in the inter-se assessment made by the Technical Evaluation Committee of the technical bids of the respective tenderers. Indeed, M/S East West Construction had scored higher than the other two qualified tenderers in the Technical Evaluation. However, this by itself cannot be a ground to make M/S East West Construction more deserving than M/S Naga Construction in the award of the contract, having regard to the terms and conditions of the NIT dated 13.03.2015. The tender notice did not specify allotment of marks under different heads, as has been done by the Technical Evaluation Committee to assess the inter-se merit of the bidders on the technical side. No procedure is specified in the tender notice that in case parties are at par in their respective financial bids, recourse will be had to inter-se merit of the parties in the technical evaluation. No procedure is specified in the tender notice that in case parties are at par in their respective financial bids, recourse will be had to inter-se merit of the parties in the technical evaluation. In clear absence of such parameters and having regard to the fact that both M/S Naga Construction and M/S East West Construction had been adjudged technically qualified with their financial bids at par with each other, it cannot be held that the latter was in a more advantageous position to be awarded with the contract, merely on account of being better placed in the inter-se technical evaluation exercise. It is too well settled in law and as enunciated in Dutta Associates Pvt. Ltd. v. Indo Merchantiles Pvt. Ltd. & Ors., reported in (1997) 1 SCC 53 , that whatever procedure the Government proposes to follow in accepting a tender must be clearly stated in the tender notice. It further held that consideration of tenders so received and the procedure required to be followed in the matter of acceptance of a tender should be transparent, fair and open. In view of the clear position of law, there was no occasion to make direction for awarding the contract to M/S East West Construction merely on account of having scored better marks than M/S Naga Construction in the technical bid evaluation. The procedure adopted in allotting marks to assess technical merit of the parties is contrary to the law laid down in Dutta Associates (supra). In this view of the matter, the direction of the learned Single Judge to issue work order to M/S East West Construction is not sustainable in law and, therefore, set aside. 8. Many decisions were placed by either side on the power of judicial review and the parameters available to the Court to make interference in tender or contractual matters. We have gone through the same and do not wish to elaborate on it, save and except, the decisions in Gordhandas Bhanji (supra) and Dutta Associates (supra) which, in our opinion, are most relevant for adjudication of the issue before us. In consideration of the views and findings above, the only decision that can be taken is for a direction to the State respondents to initiate a de-novo exercise for award of the contract in question by a fresh Notice Inviting Tender. In consideration of the views and findings above, the only decision that can be taken is for a direction to the State respondents to initiate a de-novo exercise for award of the contract in question by a fresh Notice Inviting Tender. Whatever procedure the State Government proposes to follow in accepting a tender, must be clearly spelt out in the fresh tender notice and while taking a final decision for award of the contract, appropriate reasons also be recorded to form part of the selection records. Let the required exercise for floating fresh tender be done within 4 (four) weeks from today and let the entire tender process including award of contract to the deserving party be completed within an outer limit of 4 (four) weeks from the date of publication of the tender notice. The judgment and order dated 10.04.2017 passed in WP(C) 28 (K)/2016 stands interfered to the extent as indicated above. The present appeal stands accordingly disposed of with directions as above.