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2017 DIGILAW 276 (JK)

Cube Construction Engineering v. State

2017-06-07

B.S.WALIA

body2017
JUDGMENT : B.S. Walia, J. 1. Petitioner responded to item No. 4 of Annexure-B i.e. E-NIT No. CEJ/PMGSY/419 of 2016-17, dated 26.11.2016 and Item Nos. 2 & 7 to Annexure-C i.e. E-NIT No. CEJ/PMGSY/425 of 2016-17, dated 07.01.2017 both floated by the Government of J & K. Item No. 2 & 7 in respect of E-NIT, dated 07.01.2017 in respect of which the petitioner had responded was different than Item No. 4 of E-NIT, dated 26.11.2016. Grievance is that the aforementioned tenders were not processed, instead fresh tender Annexure-H i.e. E-NIT No. CEJ/PMGSY/448 of 2017-18, dated 08.05.2017 was floated in respect of Item No. 4 of E-NIT, dated 26.11.2016 and Item Nos. 2 & 7 of E-NIT, dated 07.01.2017. 2. It needs noticing here that on abandoning of the earlier two E-NITs dated 26.11.2016 and 07.01.2017, Annexure-E i.e. E-NIT No. CEJ/PMGSY/444 of 2017-18, dated 15.04.2017 which pertained to same items as contained in E-NITs dated 26.11.2016 and 07.01.2017 in response to which the petitioner had responded was floated. It is the plea of the petitioner that despite representation dated 21.04.2017 at page No. 51 of the paper book having been submitted to respondent No. 2, no action was taken thereon, therefore, the petitioner was constrained to institute the writ petition i.e. OWP No. 613/2017 in which directions were issued that the tendering process may go on but the contract be not awarded. It is during the pendency of the aforementioned writ petition, fresh tender i.e. Annexure-H dated 08.05.2017 was floated and the same is the subject-matter of challenge in the instant writ petition. 3. Learned counsel has referred to Annexure-F which is undated office note recorded by a committee of officers in response to E-NIT dated 07.01.2017 recommending inviting fresh tenders on account of there being only two bids in response to the aforementioned tender on the ground that the same would be in the interest of healthy competition. Learned counsel referred to paragraph No. 5.8(c) of Annexure-D, dated 07.05.2013 i.e. Guidelines for Evaluation of Bids and Award of Contract under the Pradhan Mantri Gram Sadak Yojana (PMGSY) issued by the Ministry of Rural Development. The same is reproduced hereunder:- 5. 8 Single Bids/Tenders: In order to promote full transparency, healthy Competition and award of works at the most reasonable price, it is not desirable to have too many awards of works on Single Bid/Tender basis. The same is reproduced hereunder:- 5. 8 Single Bids/Tenders: In order to promote full transparency, healthy Competition and award of works at the most reasonable price, it is not desirable to have too many awards of works on Single Bid/Tender basis. Accordingly, in case of receipt of Single Bid/Tender in the first invitation of Bids, the following process shall be adopted: (a)................... (b)................... (c) Second and Subsequent Invitation of Bids/Tenders: Before issuing the second or subsequent invitations of bids, the SRRDAs are free to re-package the works or revise the estimated cost based on current market rates though no cost escalation would be borne by Government of India in such cases (In case of repackaging, the invitation of bids would be treated as fresh invitation/call). The State would be able to accept Single Tender in second or subsequent invitations/calls keeping in view the Guidelines of CVC in this regard and the fact that the rates are reasonable and full justification is recorded. Such bids shall be accepted with the approval of a Committee headed by CEO of SRRDA and comprising CE/B-in-C and Financial Controller as members (as per Para 5.7 above). 4. On the basis of paragraph No. 5.8(c) of the aforementioned guidelines, it is contended that although in case of 2nd or subsequent invitation, it is open to the State to accept a single tender, the official respondents for reasons best known to them have not opened the technical bid of the petitioner in respect of E-NIT tenders dated 26.11.2016 and 07.01.2017 despite the fact that Item in respect of E-NIT dated 26.11.2016 was in respect of which the petitioner had responded was by way of tender floated for the 2nd time. Likewise, in the case of E-NIT dated 07.01.2017, one of the Item's in respect of which the petitioner had responded was advertised for the 3rd time. 5. Learned counsel relies upon the decision of the Hon'ble Supreme Court in 2009 Legal Eagle (SC) 647' in case titled as 'Meerut Development Authority & Anr. v. Association of Management Studies & Anr., Relevant extract of the same is reproduced hereunder:- Scope of judicial review in contractual matters: 23. In Tata Cellular (supra) this Court observed that "Judicial quest in administrative matters is to strike the just balance between the administrative discretion to decide matters as per government policy, and the need of fairness. v. Association of Management Studies & Anr., Relevant extract of the same is reproduced hereunder:- Scope of judicial review in contractual matters: 23. In Tata Cellular (supra) this Court observed that "Judicial quest in administrative matters is to strike the just balance between the administrative discretion to decide matters as per government policy, and the need of fairness. Any unfair action must be set right by judicial review." 24. In Chief Constable of North Wales Police v. Evans, (1982) 3 AIIER 141], Lord Hailsham stated: "The underlying object of judicial review is to ensure that the authority does not abuse its power and the individual receives just and fair treatment and not to ensure that the authority reaches a conclusion which is correct in the eyes of the court." 25. Large numbers of authorities have been cited before us in support of the submission that even in contractual matters the State or "other authorities" are bound to act within the legal limits and their actions are required to be free from arbitrariness and favouritism. The proposition that a decision even in the matter of awarding or refusing a contract must be arrived at after taking into account all relevant considerations, eschewing all irrelevant considerations cannot for a moment be doubted. The powers of the State and other authorities are essentially different from those of private persons. The action or the procedure adopted by the authorities which can be held to be State within the meaning of Article 12, while awarding contracts in respect of properties belonging to the State, can be judged and tested in the light of Article 14. Once the State decides to grant any right or privilege to others, then there is no escape from the rigour of Article 14. These principles are settled by the judgments of this Court in the cases of Ramana Dayaram Shetty v. International Airport Authority of India 1979 (3) SCC 489 ], Kasturi Lal Lakshmi Reddy v. State of J&K, 1980 (4) SCC 1 : 2010 (6) JKJ 763 [SC], Ram and Shyam Co. v. State of Haryana, 1985 (3) SCC 267 , Mahabir Auto Stores v. Indian Oil Corporation, 1990 (3) SCC 752 , Sterling Computers Ltd. v. M&N Publications, 1993 (1) SCC 445 and A.B. International Exports v. State Corporation of India. v. State of Haryana, 1985 (3) SCC 267 , Mahabir Auto Stores v. Indian Oil Corporation, 1990 (3) SCC 752 , Sterling Computers Ltd. v. M&N Publications, 1993 (1) SCC 445 and A.B. International Exports v. State Corporation of India. 2000 (3) SCC 553 Executive does not have an absolute discretion, certain principles have to be followed, the public interest being the paramount consideration.' 6. Per contra, learned Dy. A.G. relies upon the decision of the Hon'ble Supreme Court in case titled as 'Jagdish Mandal v. State of Orissa & Ors.' with 'Laxman Sharma v. State of Orissa & Ors.' (2007) 14 Supreme Court Cases 517.' 7. Learned counsel relies upon paragraph No. 22 of the decision in Jagdish Mandal's case (supra) to contend that a contract being a commercial transaction, evaluating tenders and awarding contracts is essentially a commercial function and principles of equity and natural justice stay at a distance and if the decision relating to award of contract is bona fide and 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 a tenderer, is made out. Paragraph No. 22 of the decision of the Hon'ble Supreme Court in Jagdish Mandal's case (supra) is reproduced hereunder: "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. 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. 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. 8. I have considered the submissions made by learned counsel for the parties and am of the view that the action of the respondents in issuing a fresh tender being primarily a matter pertaining to evaluation of tenders in respect of a commercial transaction, interference by this Court with the decision of the intending department to issue a fresh tender is not warranted. 9. A perusal of Clause 5.8(c) of the guidelines for Evaluation of Bids and Award of Contract under PMGSY reveals that in case of 2nd and subsequent invitation of the Bid, it is the prerogative of the State to accept a single tender, meaning thereby that the State is not bound to so accept and can re-advertise the tender. 9. A perusal of Clause 5.8(c) of the guidelines for Evaluation of Bids and Award of Contract under PMGSY reveals that in case of 2nd and subsequent invitation of the Bid, it is the prerogative of the State to accept a single tender, meaning thereby that the State is not bound to so accept and can re-advertise the tender. The decision to take recourse to the option available as per clause 5.8(c) or to issue a fresh tender lies exclusively within the domain of the authorities since as has been noted above, a contract being a commercial transaction with evaluation of the tender and awarding of contract being a commercial function, principles of equity and natural justice stay at a distance and if the decision relating to award of contract is bona fide and 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 caused particularly when the action is viewed in the context of the stand of the respondents to go in for fresh tender in order to have healthy competition. To the same extent is the observation of the Hon'ble Supreme Court in B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd., (2006) 11 SCC 548 . Relevant extract of the same is reproduced hereunder:- '21.6. In B.S.N. Joshi & sons Ltd. v. Nair Coal Services Ltd. this Court observed: (SCC P. 568 para 56) 56. It may be true that a contract need not be given to the lowest tenderer but it is equally true that the employer is the best judge, therefore; the same ordinarily being within its domain, court's interference in such matter should be minimal. It may be true that a contract need not be given to the lowest tenderer but it is equally true that the employer is the best judge, therefore; the same ordinarily being within its domain, court's interference in such matter should be minimal. The High Court's jurisdiction in such matters being limited in a case of this nature, the Court should normally exercise judicial restraint unless illegality or arbitrariness on the part of the employer is apparent on the fact of the record.' Likewise in Air India Limited v. Kochin Airport Limited, (2002) 2 SCC 617, it was held that in arriving at a commercial decision considerations which are paramount are commercial considerations and the State can choose its own method to arrive at a decision, it can fix its own terms of invitation to tender and the same would not be open to judicial scrutiny though the court can examine the decision making process and interfere if it is vitiated by mala fide, unreasonableness and arbitrariness and further even if some defect is found in the decision making process the court must exercise its discretionary power under Article 226 with great caution and should exercise it with great caution and only in furtherance of public interest and not merely on the making of a legal point. Relevant extract of decision of the Hon'ble Supreme Court in Air India Limited's case (Supra) is reproduced hereunder: '21.4. In Air India Ltd. v. Cochin International Airport Ltd., this Court summarized the scope of interference as enunciated in several earlier decisions thus: (SCC pp. 623-24, para 7) "7.....The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decision-making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process the court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the court should intervene." 10. I am of the conscious of the fact that in the instant case, the tender has been floated more than once. However, learned Dy. A.G. states that in such an eventuality in terms of Clause 5.8(c), in case a single tender has been received more than once, then in that situation, it is open to the Intending Department to repackage the works or revise the estimated cost based on current market rates and in the circumstances, if there has been only single response to the tender floated more than once, then in that eventuality, it would be open to the Intending Department to take recourse to the aforementioned course of action instead of opting to consider the response of the single tenderer even though it may be in response to the 2nd or subsequent invitation. Thus in the facts and circumstances of the case it cannot be said that the petitioner has been treated unfairly on account of the fact that the claim is in respect of a commercial transaction, and in such matters it is always open to the authorities concerned to work out the modalities as to whether a fresh tender is required to be floated or it would be appropriate to accept the bid of a single tenderer or to repackage the works etc. in terms of Clause 5.8(c) of the guidelines. 11. In the light of the aforementioned position, it is not for the Court to opine as to what would be the appropriate course of action for the Intending Department to take, whether to accept the single tender in 2nd or subsequent invitation or to take recourse to repackage the work or revise estimated cost based on current market rates. The same would be exclusively within the domain of the Intending Department. 12. In the light of the position as noted above, no case is made out warranting intervention. Accordingly, the writ petition being devoid of merit is dismissed. Learned counsel for the petitioner states that in the light of orders in the instant writ petition, OWP No. 613/2017 does not survive and same be also disposed of in same terms. Ordered accordingly. For the reasons recorded above, OWP No. 613/2013 is also dismissed. No order as to costs.