Research › Search › Judgment

Gauhati High Court · body

2017 DIGILAW 216 (GAU)

Kalita Construction (M/S) v. State of Assam

2017-02-17

A.K.GOSWAMI

body2017
JUDGMENT & ORDER : Arup Kumar Goswami, J. Heard Mr. M.K. Choudhury, learned senior counsel for the petitioners. Also heard Mr. B. Goswami, learned standing counsel, Water Resources Department, appearing for the respondent Nos.1 & 2 as well as Mr. D.K. Das, learned counsel, appearing for respondent Nos.3 to 13. 2. The petitioner in WP(C) No.803/2017 had submitted his bids pursuant to a Notice Inviting Tender (for short, "NIT") dated 20.12.2016 and the petitioners in WP(C) No. 811/2017, WP(C) No. 800/2017 and WP(C) No. 813/2017 had submitted their respective bids pursuant to a NIT dated 21.12.2016 issued by the Chief Engineer, Water Resources Department, Assam. 3. In WP(C) No.800/2017, the petitioner had submitted his tender for an amount of Rs.1,78,57,030.70 against the estimated amount of Rs.1,99,67,477/-. Thus, the bid of the petitioner was 10.57% below the estimated rate. Similarly, in WP(C) No.803/2017, the petitioner had submitted his tender for Rs.1,29,15,216.42 against the estimated amount of Rs.1,44,09,005/- and, thus, the bid of the petitioner was 10.37% below the estimated rate. In WP(C) No.811/2017, the petitioner had quoted his bid at Rs.1,07,87,777.11 against the estimated amount of Rs.1,20,25,307.28 and, thus, the bid of the petitioner was 10.29% below the estimated rate. In WP(C) No.813/2017, the petitioner had quoted his bid at Rs.1,36,89,553.55 against the estimated amount of Rs.1,53,12,316/-, and, thus, the bid of the petitioner was 10.60% below the estimated rate. 4. It is not in dispute that the tenders submitted by the petitioners in the aforesaid cases are, otherwise, valid tenders and they had also emerged as the lowest tenderers. However, in view of a decision taken in a meeting held on 19.01.2017, which was attended to, amongst others, by the Chief Engineer, Water Resources Department and the Chief Engineer (QC), Water Resources Department, to the effect that (i) quoted rates of packages beyond 10.00% below of the estimated package value shall not be considered for acceptance and (ii) acceptance of lowest quoted rates of individual packages to be restricted to 10.00% below of the estimated value of the packages (i.e. within the limit of allowable contractor's profit of 10.00%), the tenders submitted by the present petitioners were not considered to be technically viable. Aggrieved, these four writ petitioners are before this Court. 5. Aggrieved, these four writ petitioners are before this Court. 5. A common affidavit is filed in these 4(four) writ petitions by the Chief Engineer, Water Resources Department and the justification for rejection of the bids of the petitioners is sought to be explained in Paragraph-10 of the affidavit. Paragraph-10 of the said affidavit reads as follows: "10. That it is respectfully stated that the Respondents are duty bound to consider all aspects of the matter before awarding any contract/job to any Contractor and nothing can be done whimsically at the cost of life and property of the people of the State and hence the Department always proceeds after meticulous study of the matter. In the Bid Documents the Authorities/Employer has reserved its right to accept any bid or to reject the same if among others, a successful bidder quotes absurd/unworkable rate for any item and therefore concerned Authority is competent to act accordingly towards acceptance or rejection of the Bids. Such provision is very much there in the Bid Documents which the present petitioners have not disclosed before this Hon'ble Court. The Tender Scrutiny Committee of the Department in its Meeting dated 19/01/2017 has observed that the Government of Assam has approved a good number of flood management schemes to be taken up during current working season under different Head of Accounts and process of e-Tendering of the Schemes are presently going on at the Office of the Chief Engineer, Water Resources Department, Assam and it has been noticed that Contractors have quoted much lower rates than that of the sanctioned estimates and therefore, that Meeting was convened with the Senior Officials of the Department so as to arrive at a decision regarding acceptance of Tender Rates which are lower than the Estimated Rates. In the said Meeting dated 19/01/2017 it has also been discussed that while arriving at the Estimated Rates realistic assessments is made as per actual involvement of cost of materials and labour against each item and in the Estimated Rates a provision of 10% is made on account of Contractor's Profit. So, while quoting the rates against the tenders it is always at the discretion of the Contractor regarding the profit margin expected by him against the particular Item/Package. So, while quoting the rates against the tenders it is always at the discretion of the Contractor regarding the profit margin expected by him against the particular Item/Package. But quoting a rate more than 10% below of the Estimated Rate (i.e. beyond the allowable margin of the Contract's profit) is not found to be justified as in such a case it may affect the cost involved for materials and labours against the item of works thereby affecting the laid down specifications of that particular item. Under such circumstances after threadbare discussion considering the pros and cons the Committee has finally arrived at the decisions regarding acceptance of lower tendered rates than Estimated Rates and thereby it has been decided that quoted rate of Package beyond 10% below of the Estimated Package shall not be considered for acceptance with a further decision that the acceptance of lowest quoted rates of the individual Packages to be restricted to 10% below of the Estimated Value of the Package within the limit of allowable Contractors profit of 10%. While calculating the percentage it will be rounded of up to 2(two) decimal place." 6. Submission of Mr. Choudhury is concise and precise. It is his argument that in the NIT there was no clause empowering rejection of bids of the tenderers quoting 10% below the estimated value of the contract. Mr. Choudhury submits that Clause 30(V) of the NIT, which reserves the right of the employer to reject the bid in the event a successful bidder quotes absurd/unworkable rate for any item, does not come into picture inasmuch as no finding could have been recorded by the respondents without affording an opportunity to the petitioners to justify their bid and, therefore, such unilateral decision taken by the authorities cannot be sustained in law. Mr. Choudhury places reliance on the decision of the Supreme Court in the case of Dutta Associates Private Limited v. Indo Merchantiles Private Limited, reported in (1997) 1 SCC 53 to contend that the procedure to be followed in acceptance of tenders must be clearly stated in the tender notice and that the procedure adopted has to be fair, open and transparent. 7. Mr. Goswami and Mr. Das, learned counsel appearing for the respondents, however, strenuously argue that in the instant case, Clause 30(V) comes into play. 7. Mr. Goswami and Mr. Das, learned counsel appearing for the respondents, however, strenuously argue that in the instant case, Clause 30(V) comes into play. The higher authorities in the department sat together to decide as to whether it would be just and appropriate to consider the bids of the tenderers who had quoted less than 10% of the estimated value and they reasonably considered that it will not be in the interest of the department to permit acceptance of tenders quoting below 10% of the estimated value as the same would not be viable and would ultimately compromise the quality of work. 8. It is submitted by Mr. Goswami that in WP(C) No.800/2017 and WP(C) No.813/2017, financial bids were opened on 17.01.2017, which is prior to the meeting held on 19.01.2017. In WP(C) No.803/2017 and WP(C) No.811/2017, financial bids were opened on 20.01.2017 and 19.01.2017, respectively. 9. I have considered the submissions advanced by the learned counsel appearing for the parties and have also perused the materials on record. 10. Clause 30(V) of the NIT enables the employer to reject the bid if a successful bidder quotes absurd/unworkable rate. In other words, a finding has to be recorded that the rate quoted by the bidder is absurd or unworkable. It is axiomatic that no finding could have been recorded without asking the bidder to justify his rate and unilaterally, the employer could not have taken a decision holding that the rate quoted by a particular bidder is absurd or unworkable only on the basis of the estimated cost. 11. What has been done in the instant case is that a blanket decision was taken to consider any rate below 10% to be an unworkable and an absurd rate. If that was a case, the authorities could have indicated in the tender notice itself that any rate less than 10% of the estimated price would be not considered, as being not viable. Such a Clause is not inserted but a right was reserved to reject a tender on the ground of the same being absurd and unworkable rate. If that was a case, the authorities could have indicated in the tender notice itself that any rate less than 10% of the estimated price would be not considered, as being not viable. Such a Clause is not inserted but a right was reserved to reject a tender on the ground of the same being absurd and unworkable rate. It is no doubt true that the employer must be given allowance to have free play in the joints and if a conscious decision is taken holding that a rate offered by a particular tenderer is absurd and unworkable, the Court may not lightly interfere with such decision but if a conclusion is drawn that a particular rate is absurd or unworkable on the mere ipse dixit of the authorities, such a conclusion cannot be sustained as in that case the entire decision making process is vitiated. If the petitioners were granted opportunity to justify the rates and if they had failed to justify the bid, the issue would have been different. The petitioners could have valid reasons as to why they had quoted rates, which they find in their own estimation, to be workable. 12. In the case of Dutta Associates (supra), the Supreme Court emphasized that in the matter of distribution of State largesse, the State and its authorities must follow the norms of openness, transparency and fair dealing. The acceptance of tender on the ground of the tender being within the viability range was negated by the Supreme Court on, amongst others, the ground that the tender notice did not specify viability range, which should have been notified in the tender notice itself as fairness demanded the same. In the context of viability range, the Supreme Court had observed that the tenderers are hard headed businessmen and they know their interest better and, therefore, there was no reason to hold that why they will not be able to supply rectified spirit (subject-matter of contract in the said case) at the rate which they had offered. 13. In view of the above, I am of the considered opinion that the authorities cannot be permitted to overlook the tenders of the petitioners merely because it was less than 10% of the estimated price. 13. In view of the above, I am of the considered opinion that the authorities cannot be permitted to overlook the tenders of the petitioners merely because it was less than 10% of the estimated price. It is also to be noticed that the rates offered by the petitioners are only marginally less than 10% and, therefore, it was all the more essential for the authorities to have embarked upon an enquiry giving opportunity to the petitioners to justify their case in order to invoke Clause-30(V). This being not done, I have got no doubt in my mind that the writ petitions are required to be allowed. Accordingly, the writ petitions are allowed. Consequential directions are issued to consider the bids of the petitioners to be valid bids.