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2017 DIGILAW 1701 (RAJ)

Sundar v. Jodhpur Vidhyut Vitaran Nigam Limited

2017-08-01

VIJAY BISHNOI

body2017
ORDER : Vijay Bishnoi, J. Both these writ petitions have been filed by the petitioners-firms being aggrieved with the qualification requirements mentioned in the tender document (NIT) issued by the respondent - Jodhpur Vidyut Vitran Nigam Limited (for short 'the JdVVNL' hereinafter) inviting tenders from the eligible bidders for giving contract for operation and maintenance of 33/11 KV Sub-Stations identified, in respect of various sub-divisions of respective circles under Jodhpur Discom i.e. SE(O&M) JdVVNL, Sri Ganganagar. The qualification requirements as mentioned in the tender document read as under: "a. The Bidder should possess class "A/B" Electrical license issued by Electrical Inspectorate of any state Govt. or Central Govt. of India and is a qualified contractor who regularly undertakes the projects of the type specified and has adequate technical knowledge and practical experience. If the bidder owns a license other than Rajasthan state, then he will have to obtain it within one month from electrical inspectorate of Govt. of Rajasthan before commencement of the work in case he is selected for award failing which the contract awarded is likely to be cancelled. An undertaking to this effect is to be furnished along with bid. The registration should be valid from the date of start of the work and shall remain valid up to 30 days from the date of completion of contract period. i. the bidder should have at-least Three Years experience for operation and maintenance of 33/11 KV sub station and bidder having similar exposures in higher voltage class than 33 KV i.e. 66 KV, 132 KV & 220 KV etc. shall also be considered for Technical Evolution, during last five financial years from date of opening of Bid i.e. from 2012-13 to 2016-17 in any of the Discoms. ii. The Bidder should have minimum experience of three years for operation & Maintenance of GSS of 50% quantity of GSS for which bidder quoted in last five years. iii. The copies of the relevant detailed work orders should be enclosed regarding above work experience. iv. The 'G' Schedule/reports indicating various activities of works executed should also be enclosed along with satisfactorily work completion certificate issued by concerned officer not below the rank of Executive Engineer or equivalent in case of in any of the Discoms. iii. The copies of the relevant detailed work orders should be enclosed regarding above work experience. iv. The 'G' Schedule/reports indicating various activities of works executed should also be enclosed along with satisfactorily work completion certificate issued by concerned officer not below the rank of Executive Engineer or equivalent in case of in any of the Discoms. b. The Bidder should have Minimum Annual Turnover (MAT) not less than 50% value of estimated cost of Tender/lot, for which bidder quoted, in any one year of last five financial years. In case a bidder is quoting for more than one Lot, Pre-qualification requirement shall be examined on the basis of sum of Lot requirements of MAT of all quoted Lot. Details of all lot are available at "Annexure-F". A CA Certified certificate is required for the same. c. The contractor should be registered with PF and ESI Department in case of notified area. The certificate may be produced prior to opening bid. d. The contractor should possess the valid license as provided under section 12 of the contract labour (R&A) Act 1970, an attested photocopy of which should be submitted by the Contractor. The work of Operation & Maintenance of GSS under the domain of Jodhpur Discom shall be one year initially. Nigam shall review same as per need and same can be extended for one more additional year." 2. The petitioners are aggrieved by the requirements mentioned in sub-clauses i and ii of clause 'a' and clause 'b' in particular. The main grounds of challenging the said conditions taken by the petitioners in these petitions are thus: (a) That no such conditions were ever incorporated by the respondents in the previous tenders. (b) That the Ajmer Vidyut Vitran Nigam Limited had floated identical tender for similar nature of work and in the tender process conducted by it, majority of the contractors had failed to meet the qualification requirements, which were similar to the qualification requirements, which are under challenge in these writ petitions and from this fact, it is clear that the said qualification requirement is illegal and is arbitrarily fixed by the respondent - JdVVNL. (c) That the respondent - JdVVNL did not float any tender during the period running between the year 2012 and 2017 regarding the same nature of work and, therefore, it is not possible for the contractors of the JdVVNL to meet the said qualification requirement. (d) That the said qualification requirement is fixed with intent to oust the petitioners-firms only. In support of the above, learned counsels for the petitioners have placed reliance on decision of M.P. High Court rendered in Dhar Cement Ltd. v. State of Madhya Pradesh Through Secretary; Ministry of Irrigation Govt. of Bhopal reported in 1993 AIR (MP) 251. They have also placed reliance on decision of Bombay High Court rendered in Marathwada Radio Communication Systems v. General Manager, Telecom Department & Ors., reported in 2004 1 AIIMR 414. 3. Heard learned counsels for the petitioners and perused the material available on record. 4. The scope of judicial review in award of contracts has been defined by the Hon'ble Supreme court in various decisions. The ultimate conclusion of the decisions of the Hon'ble Supreme Court is this that the High Court can interfere in the contractual matters when the action of the tendering authority is found to be malicious, discriminatory or 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. It has also been held that where the public interest is affected, the court can also interfere in the contractual matters. 5. A Three Judge Bench of the Hon'ble Supreme Court in Tata Cellular v. Union of India, reported in 1994 (6) SCC 651 at paras 77 and 94, has held as under: "77. The duty of the court is to confine itself to the question of legality. Its concern should be: (1) whether a decision-making authority exceeded its powers? (2) committed an error of law, (3) committed a breach of the rules of natural justice, (4) reached a decision which no reasonable tribunal would have reached or, (5) abused its powers. Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under: (i) Illegality : This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it. (ii) Irrationality, namely, wednesbury unreasonableness. (iii) Procedural impropriety. The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact, in R. v. Secy. of State for the Home Deptt., ex Brind [[1991] 1 AC 696], Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should, "consider whether something has gone wrong of a nature and degree which requires its intervention. 94. The principles deducible from the above are: (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. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts. (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. 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." 6. Relying on the decision rendered in Tata Cellular v. Union of India (supra) and other decisions, the Hon'ble Supreme Court in Jagdish Mandal v. State of Orissa & Ors., (2007) 14 SCC 517, has held as under: "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 will 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 succour to thousands and 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. 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 tendered/ contractor or distribution of state largess (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." [Emphasis supplied] 7. In Michigan Rubber (India) Ltd. v. State of Karnataka & Ors., (2012) 8 SCC 216 , the Hon'ble Supreme Court while relying on its earlier decisions has held as under: "(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 of 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." [Emphasis supplied] 8. The Hon'ble Supreme Court has further held as under: "(31) As observed earlier, the Court would not normally interfere with the policy decision and in matters challenging the award of contract by the State or public authorities. In view of the above, the appellant has failed to establish that the same was contrary to public interest and beyond the pale of discrimination or unreasonable. We are satisfied that to have the best of the equipment for the vehicles, which ply on road carrying passengers, the 2nd respondent thought it fit that the criteria for applying for tender for procuring tyres should be at a high standard and thought it fit that only those manufacturers who satisfy the eligibility criteria should be permitted to participate in the tender. As noted in various decisions, the Government and their undertakings must have a free hand in setting terms of the tender and only if it is arbitrary, discriminatory, mala fide or actuated by bias, the Courts would interfere. The Courts cannot interfere with the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. In the case on hand, we have already noted that taking into account various aspects including the safety of the passengers and public interest, the CMG consisting of experienced persons, revised the tender conditions. In the case on hand, we have already noted that taking into account various aspects including the safety of the passengers and public interest, the CMG consisting of experienced persons, revised the tender conditions. We are satisfied that the said Committee had discussed the subject in detail and for specifying these two conditions regarding pre-qualification criteria and the evaluation criteria. On perusal of all the materials, we are satisfied that the impugned conditions do not, in any way, could be classified as arbitrary, discriminatory or mala fide." [Emphasis supplied] 9. From the above decision of the Hon'ble Supreme Court, it is clear that the State or the Public Authorities are required to grant greater latitude in formulating conditions of tender document and awarding a contract and such action of the tender authority cannot be interfered with by the courts, unless the action is found to be malicious and a misuse of statutory powers. 10. Undisputedly, the petitioners are not meeting the qualification requirements as mentioned in the tender document but this fact does not give right to them to challenge the said qualification requirements until and unless they prove that the respondents have fixed those requirements malafidely or in violation of statutory provisions. The respondents are best judge of their requirements and they have to prescribe certain preconditions or qualifications for tenders to ensure that the contractor has the capacity and resources to successfully execute the work for which tenders have been called. If the petitioners are not meeting the said requirements, they cannot claim as a matter of right that despite lacking the qualifications, they are entitled to participate in the tender process. 11. In the present cases, the petitioners have failed to make out a case of mala fide or violation of statutory powers. 12. Hence, in view of the limited scope of judicial review in the contract matters, no relief can be granted to the petitioners. The judgments, on which the learned counsels for the petitioners have placed reliance are of no help to them in view of the above referred judgments of the Hon'ble Supreme Court. 13. Consequently, both the writ petitions fail and are hereby dismissed. Stay petitions also stand dismissed.