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2017 DIGILAW 827 (GAU)

T & T Projects Ltd. v. State of Arunachal Pradesh

2017-06-21

SUMAN SHYAM

body2017
JUDGMENT AND ORDER : Suman Shyam, J. Heard Mr. K.N. Choudhury, learned senior counsel assisted by Mr. K. Tama, learned counsel for the petitioner in WP(C) 220(AP)/2017. Also heard Mr. M. Kato, learned counsel appearing for the petitioner in WP(C) 287(AP)/2017. Mr. K. Ete, learned Additional Senior Government Advocate, Arunachal Pradesh, appears for respondent nos. 1 to 4 whereas Mr. I. Choudhury, learned senior counsel assisted by Mr. D. Panging, learned counsel appears for private respondent no. 5, in both the writ petitions. Since both these writ petitions are related to the same tender hence, those are being disposed of by this common judgement and order. 2. The Department of Power, Government of Arunachal Pradesh had earlier issued an Invitation for Bid (IFB) dated 08.12.2016 inviting Single Stage Bids in two parts for execution of the project, viz. Electrification works of Itanagar town, Naharlagun town & Seppa town, Pasighat town, Aalo town, Daporij o town, Tezu town and Namsai town in Arunachal Pradesh under Integrated Power Development Scheme (IPDS), through a process of e-tendering. The estimated cost of the work was Rs. 150.90 crores (Rupees one hundred fifty crores and 90 lakhs). The work is to be executed under a centrally sponsored scheme to be funded by the Rural Electrification Corporation Ltd. (REC)/ Power Finance Corporation Ltd. (PFC), wherein the Government of Arunachal Pradesh is the implementing agency. The project is required to be executed on a "Trunkey" basis with the financial assistance received by the Government of Arunachal Pradesh from the Central Government Agencies. 3. In response to the said IFB, 3 (three) tenderers, viz. M/s. BS Limited, M/s. T&T Projects Limited and M/s. Capital Power Infrastructure Limited had submitted their bids in sealed cover. The technical bids of all the 3 tenderers were opened on 11.01.2017, where after, it was found that the bids submitted by all the 3 (three) bidders were technically responsive. Accordingly, the financial bids of the 3 bidders were opened on 02.02.2017, where after it was found that M/s. T&T Projects Ltd. had quoted an amount of Rs. 149,83,000,00.08P (L-3); M/s. Capital Power Infrastructure Private Ltd. had quoted Rs. 127,21,24,219.93 P (L-2) whereas M/s. B.S Ltd had quoted Rs. 109,49,01,337.97P (L-1). 4. Accordingly, the financial bids of the 3 bidders were opened on 02.02.2017, where after it was found that M/s. T&T Projects Ltd. had quoted an amount of Rs. 149,83,000,00.08P (L-3); M/s. Capital Power Infrastructure Private Ltd. had quoted Rs. 127,21,24,219.93 P (L-2) whereas M/s. B.S Ltd had quoted Rs. 109,49,01,337.97P (L-1). 4. Since the bids submitted by all the three tenderers were found to be technically valid, hence, by following the mandate of Clause 30.1 of the ITB, the departmental authorities had decided to award the work in favour of M/s. BS Ltd. Since the bid submitted by the said firm had emerged as the lowest (L-l) bidder. Accordingly, a Letter of Intent (LOI) dated 24.03.2017 was issued in favour of M/s. B.S. Ltd. i.e. the private respondent in both the writ petitions awarding the work. However, taking cognizance of the law price quoted by the said firm as compared to the estimated cost of the work, the Hon'ble Chief Minister of Arunachal Pradesh had put up a note dated 22.03.2017 directing that the L-1 bidder be asked to deposit additional performance security of 10% so as to ensure quality and time bound completion of the contract work. 5. Assailing the decision of the respondent authorities to award the work in favour of M/s. B.S. Ltd. i.e. the respondent no.5, M/s. T&T Projects Ltd. i.e. the L-3 bidder has approached this Court by filing WP(C) 220 (AP)/2017, inter-alia, contending that having regard to the estimated cost of the work valued at Rs. 150,09,000,00.00, the price quoted by the respondent no. 5 was abnormally low, which is below 27% of the tender value, and as such the price bid of the respondent no. 5 was liable to be rejected as a substantially non-responsive bid. The aforesaid contention of the writ petitioner is primarily based on Section 20.4.3.2 of the CPWD Manual, 2014 which mandates that rates quoted 10% below the estimated cost should not be accepted. It is also the case of the writ petitioner in WP(C) 220 (AP)/2017 that the rate quoted by the respondent no. 5 was un-workable, inasmuch as, the contractual work cannot be executed at such low price. It is also the case of the writ petitioner in WP(C) 220 (AP)/2017 that the rate quoted by the respondent no. 5 was un-workable, inasmuch as, the contractual work cannot be executed at such low price. Contending that the CPWD Manual does not admit acceptance of price bids with at variation of more than 10%, the petitioner has stated that even the bid offered by M/s. Capital Power Infrastructure Private Ltd. being 17% below the estimated cost was unrealistic. On the basis of such allegations, the petitioner has prayed for setting aside the Letter of Intent (Lol) dated 24.03.2017 issued in favour of respondent no. 5. 6. M/s. Capital Power Infrastructure Pvt. Ltd. has approached this Court by filing the connected writ petition bearing No. WP(C) 287(AP)/2017 assailing the LOI dated 24.03.2017, inter-alia, on the ground that not only the price bid, even the technical bid of the respondent no. 5 was non-responsive and hence, ought to have been rejected by the authorities. According to the writ petitioner, the NIT in this case was issued on 05.01.2017 but the respondent no. 5 had signed the e-tender on 29.1.2016. Therefore, the first objection of the writ petitioner pertaining to the validity of the bid submitted by the respondent no. 5 is on such count whereby an allegation has been made of connivance of the said respondent with the tendering authorities which had led to the award of the LOI in its favour. It is the further case of the writ petitioner that as per the terms of the IFB, Earnest Money Deposit (EMD)/Bid Security in this case would have been deposited only through Demand Draft (DD) and there was no provision for receiving Fixed Deposits (FD). But in the present case, the respondent no. 5 has not only submitted FD on account of bid security but has even failed to do that in the prescribed format. It is also the case of the writ petitioner that the consolidated balance sheet submitted by the respondent no. 5 was in the name of M/s. BS Transcom Ltd. whereas the name of the respondent no. 5 firm is M/s. BS Ltd. It has further been contended that even the FDR submitted by the respondent no. 5 was not in its own name. 7. Raising such objections, the writ petitioner has contended that the bid submitted by the respondent no. 5 firm is M/s. BS Ltd. It has further been contended that even the FDR submitted by the respondent no. 5 was not in its own name. 7. Raising such objections, the writ petitioner has contended that the bid submitted by the respondent no. 5 was, technically non-responsive and ought to have been rejected by the authorities on such count alone. However, although objection as regards technical validity of the bid submitted by the respondent no. 5 was raised by the petitioner in his representation dated 31.01.2017, the authorities did not consider the same and went on to open the financial bid of the respondent no. 5 on 02.02.2017. 8. The petitioner has raised objection to the price quoted by the respondent no. 5 on the ground that the same is totally unbalanced and unrealistic price which is in marked deviation from the estimated cost as reflected in the tender value. In such view of the matter, the bid of the respondent no. 5 is not substantially responsive as per the ITB and, therefore, was liable to be rejected. The writ petitioner in this case has prayed for a Writ of Certiorari setting aside the LOI dated 24.03.2017 and also Writ of Mandamus directing the authorities to award the work in its favour. 9. The respondent nos. 1, 2 and 3 have filed counter affidavit controverting the averments made in the writ petitions. The respondent no. 5 had also filed separate counter affidavit in both the writ petitions denying the allegations made therein. 10. Mr. K.N. Choudhury, learned senior counsel appearing for the writ petitioner in WP(C) 220(AP)/2017 submits that considering the estimated cost of the work, there can be no manner of doubt that the price quoted by the respondent no. 5 is totally unrealistic. Acceptance of such price would undoubtedly lead to poor quality of work which in the long run would adversely affect public interest at large. Referring to the various documents brought on record, more particularly, the letter dated 09.06.2015 issued by the Executive Director, REC, addressed to the Secretary of Power, Mr. Choudhury, learned senior counsel submits that the instructions sent out to the State Government was to customise any bidding documents as per the specific needs of the State. Referring to the various documents brought on record, more particularly, the letter dated 09.06.2015 issued by the Executive Director, REC, addressed to the Secretary of Power, Mr. Choudhury, learned senior counsel submits that the instructions sent out to the State Government was to customise any bidding documents as per the specific needs of the State. Considering the fact that the project work is required to be executed in the far flung areas within the State of Arunachal Pradesh, it is evident that in the absence of a proper price being paid to the contractor, it would not be able to execute the work by maintaining the desired quality level. The learned senior counsel has further submitted that the CPWD Manual, 2014 categorically debars acceptance of tenders quoting such low rate and, therefore, the present is a clear case of complete arbitrariness and irrationality in the decision making process, leading to the issuance of the LOI dated 24.03.2017. 11. Mr. Choudhury, further contended that even assuming that the bid submitted by the respondent no. 5 was technically valid, even than there was no provision to accept its financial bid by demanding an additional performance security, as has been done in this case on the basis of the note of the Chief Minister. The learned senior counsel submits that the tender process being one which is to be finalised strictly in terms of the conditions of the ITB, the Chief Minister of the State did not have any role or authority to intervene in the matter as has been done in the present case. According to Mr. Choudhury, the very fact that the respondent no. 5 has been asked to deposit 10% additional performance security is a pointer to the fact that there was serious doubt about its capability to execute the work by maintaining the quality norms and, therefore, such a measure has to be understood as a long rope being given to the respondent no.5, to overcome the technical barriers created due to the low rate quoted by it. In support of his aforementioned arguments, Mr. Choudhury has relied upon two decisions viz. (1999) 1 SCC 492 Raunaq International Ltd. v. IVR Construction Ltd. and others rendered by the Supreme Court as well as a decision of this Court reported in 1991 (1) GLT 334: (1999) 2 GLR 291 Saikhom Raghumani Singh v. Chief Engineer-I, PWD & Ors. In support of his aforementioned arguments, Mr. Choudhury has relied upon two decisions viz. (1999) 1 SCC 492 Raunaq International Ltd. v. IVR Construction Ltd. and others rendered by the Supreme Court as well as a decision of this Court reported in 1991 (1) GLT 334: (1999) 2 GLR 291 Saikhom Raghumani Singh v. Chief Engineer-I, PWD & Ors. to contend that the methodology adopted for working out a justified rate should be sound and proper and that paying of higher price for better quality of work can be in public interest rather than choosing a low price which yields poor quality or work. 12. Adding to the aforementioned submissions made by Mr. Choudhury, learned counsel, Mr. K. Tama, appearing for the writ petitioner has further contended that due to the methodology adopted by the authorities validating the financial bid of the respondent no. 5 which was otherwise substantially non-responsive, the tendering authorities have resorted to a completely non-transparent procedure, thereby extending undue benefits to the respondent no. 5 in a manner which is impermissible under the law. In such view of the matter, the present is a fit case where the Writ Court should interfere. In support of his aforementioned submission, Mr. Tama has referred to the decision of this Court in the case of Educomp Solutions Ltd. v. State of Assam & Ors. reported in 2006(2)GLT 775. 13. By referring to the grounds taken in the writ petition, Mr. M. Kato, learned counsel appearing for the writ petitioner in WP(C) 287(AP)/2017 has submitted that since the technical bid of respondent no. 5 itself was non-responsive, hence, there was no occasion for the authorities to open the price bid submitted by the respondent no. 5. He further contends that the completely unrealistic and abnormally low price quoted by the respondent no. 5 could not have been accepted by the authorities by ignoring the fact that acceptance of the same, besides being contrary to the design of all the tender document was also completely irrational, inasmuch as, an estimate of Rs. 150.9 crores prepared in the month of December, 2016 could not have been justified by accepting the price as low as Rs. 109,49,01,337.97P quoted by the respondent no. 5 just two months thereafter. 14. Controverting the objections raised by the writ petitioners in both the petitions, Mr. I. Choudhury, learned senior counsel appearing for respondent no. 150.9 crores prepared in the month of December, 2016 could not have been justified by accepting the price as low as Rs. 109,49,01,337.97P quoted by the respondent no. 5 just two months thereafter. 14. Controverting the objections raised by the writ petitioners in both the petitions, Mr. I. Choudhury, learned senior counsel appearing for respondent no. 5 submits that the responsiveness of a bid has to be ascertained on the basis of the conditions laid down in the ITB and as per clause 30.1 of the ITB, the bid submitted by the respondent no. 5 could not have been adjudged as a technically non-responsive. He submits that the CPWD Manual is meant for guidance in respect of tenders related to execution of civil works and the same would not have any bearing in settlement of tenders, such as in the present one, which is connected with electrical work. The learned senior counsel further submits that as per clause 30.1, the respondent authorities are bound to award the work in favour of the L-1 bidder, once it is found that the bid was technically valid. Under the circumstances, submits Mr. Choudhury, the ground taken by the petitioners are totally untenable in law and hence, liable to be rejected. 15. Coming to the objection raised by the writ petitioner in WP(C) 287(AP)/2017, Mr. Choudhury submits that the IFB was originally notified on 08.12.2016, which is also a fact admitted by the petitioner in WP(C) 220 (AP)/2017. The objection of the writ petitioner on the said count is based on misreading of facts in as much as the second notification was issued on 5.1.2017. As such, submits Mr. Coudhury, the said objection is liable to be rejected as a wholly misconceived. Coming to the question of submission of the EMD, Mr. Choudhury has invited the attention of this Court to the notification dated 10.01.2017 uploaded in the e-portal of the department, wherein it has been categorically mentioned that FDs would be acceptable as EMD and, therefore, contends Mr. Choudhury, the said ground of the petitioner is also completely devoid of any substance and hence, liable to be rejected. 16. On the objection raised by the writ petitioner pertaining to the consolidated balance sheet submitted by it in the name of another firm, Mr. Choudhury, the said ground of the petitioner is also completely devoid of any substance and hence, liable to be rejected. 16. On the objection raised by the writ petitioner pertaining to the consolidated balance sheet submitted by it in the name of another firm, Mr. Choudhury has invited the attention of this Court to the Certificate of Incorporation dated 18.10.2012 to contend that the firm M/s. BS Transcom Ltd. had subsequently been renamed as M/s. BS Ltd. i.e. the respondent no. 5 and hence, the consolidated balance sheet pertaining to the relevant years had to be submitted in the erstwhile name of the company. 17. Besides the above submission, Mr. Choudhury has also invited the attention of this Court to the delay with which the petitioners have approached this Court by contending that in the present case, the technical bids were opened on 11.01.2017 and the price bids were opened on 2.02.2017. Both the petitioners were aware about the outcome of the tender but the writ petitions have been instituted before this Court after much delay, thereby indicating that the petitioners are taking a chance by filing the present petitions. On the basis of the aforementioned submission, the learned senior counsel has prayed for dismissal of both the writ petitions with exemplary cost. 18. Mr. K. Ete, learned senior Additional Advocate General, Arunachal Pradesh has produced the records pertaining to the tender process. Besides submitting that the respondents have followed a completely transparent process in evaluating the bids, the learned Addl. AG has referred to the second volume of the Standard Bidding Documents (SBD) to contend that the said section lays down elaborate provision for ensuring that the materials supplied by the contractor is of proper standard and that the work executed is of a high quality. Mr. Ete submits that proper specifications are given by the bidders along with their financial bids and it is only after a meticulous scrutiny of such specifications, that the authorities have decided to accept the bid of the respondent no. 5 on being satisfied about its capability to execute the work. That apart, submits Mr. Ete, the condition imposed by the Chief Minister requiring 10% additional performance security is nothing but an added assurance to the effect that the respondent no. 5 would execute the work by maintaining the highest standards. Therefore, submits Mr. 5 on being satisfied about its capability to execute the work. That apart, submits Mr. Ete, the condition imposed by the Chief Minister requiring 10% additional performance security is nothing but an added assurance to the effect that the respondent no. 5 would execute the work by maintaining the highest standards. Therefore, submits Mr. Ete, there is no scope for accepting the arguments advanced by the petitioners' counsel in these writ petitions. 19. I have considered the submissions made by the learned counsel for the parties and have also gone through the materials available on record. 20. As noted above, the work in question is to be executed in a time bound manner under the centrally sponsored scheme, viz, Din Dayal Upadhyay Gramin Jyoti Yojona DDUGJY/IPDS scheme with the fund to be provided by the Central Government. The department is required to follow the Standard Bidding Documents (SBD) provided by the central agency which is common for all such work being executed all through out the country. Clause 30.1 of the ITB lays down the award criteria, which is quoted herein below :- "30.1 Subject to ITB Clause 31, the Employer will award the contract to the successful Bidder (also referred to as the LI Bidder) whose bid has been determined to be substantially responsive and to be the lowest evaluated bid, further provided that the Bidder is determined to be qualified, as per the Qualification Requirement specified in Annexure-A (BDS) to perform the contract satisfactorily." 21. A bare reading of the aforesaid clause leaves no manner of doubt that the contract is required to be awarded in favour of the successful bidder i.e. the L-1 bidder provided the bid is determined to substantially responsive and the bidder is found to be qualified to perform the contract satisfactorily. 22. In the present case, the first objection raised by the petitioners appears to be the low price quoted by the LI bidder as compared to the estimated value. Although, Mr. K.N. Choudhury, learned senior counsel has placed heavy reliance on the CPWD manual to contend that prices below 10% of the estimated value is required to automatically rejected, yet, from a proper scrutiny of the ITB, I do not find any such clause which requires prices quoted with a variation of 10% or more to be rejected. Although, Mr. K.N. Choudhury, learned senior counsel has placed heavy reliance on the CPWD manual to contend that prices below 10% of the estimated value is required to automatically rejected, yet, from a proper scrutiny of the ITB, I do not find any such clause which requires prices quoted with a variation of 10% or more to be rejected. There is also no indication in the ITB that the CPWD Manual, 2014 will have to be followed by the authorities while considering the price bid. From a perusal of the preface of the CPWD Manual, I find that the said Manual provides a basic frame work of planning, designing and execution of construction works in the CPWD and the provisions therein arc meant to be pressed into service while awarding contracts of civil nature, such as construction and maintenance of office, residential buildings etc. In the present case, the work in question is pertaining to supply and installation of electrical fittings and fixtures and, therefore, this Court is unable to comprehend as to in what manner, the CPWD Manual will come into play while awarding the contract, more so in the absence of any such indication in the ITB/ SBD. 23. The contractors are hard headed businessman who, it is believed, are having sufficient experience and exposure in execution of works of similar nature of such high value and, therefore, it will be difficult to presume that any bidder would quote a low rate without understanding the implication it would have in the execution of the work. It is no doubt true that the rate quoted by the L-1 bidder i.e. the respondent no. 5 was much lower than the estimated cost but that by itself, in the absence of any specific condition in the ITB, cannot lead to rejection of the price bid offered by the respondent no. 5. If quoting of low price is perceived as a ground for poor quality of work, I find from the ITB that there are adequate measures to protect the interest of the State when it comes to quality control and, therefore, there is no basis for this Court to readily presume that the low price quoted by the respondent no. 5 was only aimed at delivering poor quality of work and beyond the time frame. 24. 5 was only aimed at delivering poor quality of work and beyond the time frame. 24. Another significant aspect that has invited the attention of this Court is the conscious role played by the Chief Minister of the State who had put up a note requiring the respondent no. 5 to deposit additional 10% performance security for protecting the interest of the State. Although Mr. K.N. Choudhury, learned senior counsel for the petitioner has argued that such action of the Chief Minister was without the authority of law, I am unable to accept the said argument for two reasons, firstly, clause 9.3.1 of the General Conditions of Contract (GCC) permits the authorities to ask for additional performance security from the contractor and, therefore, it cannot be said that insistence on 10% additional performance security was de hors the contract. Secondly, The Chief Minister, being the Executive head of the State, can never be denuded of his authority to take any decision for protecting the interest of the Government or the public interest in general. 25. As noted above, even without the 10% performance security, the selection of the respondent no. 5 could not have been held to be bad under the ITB. However, expressing concern about the interest of the State, the Chief Minister has thought it prudent to insist on additional security from the bidder. The project is meant for bringing light to the thousands of households spread across the remote corners of the State. Being the executive head of the State, the Chief Minister was certainly well within his jurisdiction and power to demand such additional security from the contractor and the said decision cannot, by any stretch of reasonable reckoning, be termed as unwarranted. Rather, the stand of the Chief Minister displays a great degree of dynamism in the thought process while maintaining the concern for early implementation of the project at an economical cost without jeopardising the interest of the State. 26. Coming to the objection raised by the writ petitioners on account of technical defects in the bid submitted by the respondent no. 5, I find that none of the said objections are sustainable on the face of the materials brought on record by the respondent no. 5 by filing counter affidavit. This is not a case where the bids submitted by the respondent no. 5 can be held to be technically non-responsive. 27. 5, I find that none of the said objections are sustainable on the face of the materials brought on record by the respondent no. 5 by filing counter affidavit. This is not a case where the bids submitted by the respondent no. 5 can be held to be technically non-responsive. 27. By referring to a decision of Central Coal Fields Ltd. & Anr. v. SLL-SML (Joint Venture Consortium) & Ors. reported in (2016) 8 SCC 622 , Mr. K. Tama has made an attempt to impress upon this Court that the Supreme Court has held that deviation from the requirement of furnishing Bank Guarantee in the prescribed format is not permissible but from the materials on record I find that FDR was a permissible mode of furnishing EMD and, therefore, there was no deviation in the present case. 28. In the case of Raunaq International Ltd.(supra) relied upon by Mr. K.N. Choudhury, The Board of Directors had accepted the bid of the appellant due to the price advantage by relaxing the qualification criteria therein by rejecting the tender of the respondent on the ground of technical deficiency. It was under such circumstances that the Apex Court had held that such recourse was permissible. The said decision therefore, does not come in assistance of the petitioners in this case. In the case of Saikhom Raghumani Singh (supra) the decision of the authorities to award the work in favour of the second lowest bidder was upheld by the ground by recognizing free play of joint in such tender matter. Therefore, the ratio of the said decision would not have any applicability in the facts of the present case. 29. In a recent decision reported in 2016 SCC Online SC 940 Afcon Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd & Ors, the Supreme Court has held that normally the decision making process of the owner or the accept or should not be interfered with by the court and interference would be permissible only when the decision making process is found to be malafide or arbitrary in nature. From the materials on record, I do not find any ground to hold that the decision to award the work to the respondent no 5 i.e. lowest bidder was in any manner arbitrary or illegal, warranting interference by this court. 30. From the materials on record, I do not find any ground to hold that the decision to award the work to the respondent no 5 i.e. lowest bidder was in any manner arbitrary or illegal, warranting interference by this court. 30. For the reasons stated herein above, I am of the view that both the writ petitions are devoid of any merit and the same are accordingly dismissed. 31. The stay order passed earlier shall stand vacated. Parties to bear their own costs.