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Gujarat High Court · body

2018 DIGILAW 665 (GUJ)

DEZAL ELECTRO INC v. UNION OF INDIA

2018-05-01

A.Y.KOGJE, M.R.SHAH

body2018
JUDGMENT AND ORDER : M.R. Shah, J. By way of this petition under Article 226 of the Constitution of India, the petitioner one of the bidder whose bid was rejected at technical stage, the petitioner has prayed for following relief: "A. This Hon'ble Court may kindly be pleased to issue a writ of mandamus or any other appropriate writ, order or direction by restraining the respondent authorities from awarding contract of tender No. EL501ADIT56 (2017 18) in favour of the respondent no.5 and if such contract is already awarded, the same may be ordered to be quashed and set aside by directing the respondent authorities to award the contract to the petitioner, in the interest of justice." 2. The facts leading to the present petition in nutshell are as under: 2.1. That the petitioner is engaged in the business of execution of Government Electrical contracts and supplier of DG sets in various Government and semi Government Departments. That the respondent no.2 - Divisional Railway Manager, Ahmedabad floated tender on 13.06.2012 for hiring of new window type 83 number of AC units of 1.5 ton capacity for the period of five years in 2013. The petitioner being lowest (L1) was offered contract of hiring of new window type 83 number of AC units of 1.5 ton capacity for the period of five years by Letter of Acceptance (LOA) issued by the respondent no.3 dated 28.08.2012 for contract value of Rs.43, 33, 043.23 paisa. That on 07.01.2013, an agreement was executed in favour of the petitioner for the aforesaid contract for five years upto 30.11.2017. That as per the terms and conditions of the contract, the petitioner was required to supply another 20 number of AC units as per clause no.5 for variation in quantities of tender schedule, which stipulates that contract shall be operated with variation of plus or minus 25% and payment would be paid as per the agreement rate. Accordingly, the petitioner was asked to provide more 12 units of AC on 19.4.2013 and further 8 units of AC on 19.08.2013. It appears that petitioner successfully executed the contract by supplying new 103 number of AC on hire basis to the respondents within the contract period and the respondent also made timely payment to the petitioner from time to time. It appears that petitioner successfully executed the contract by supplying new 103 number of AC on hire basis to the respondents within the contract period and the respondent also made timely payment to the petitioner from time to time. It appears that as the contract awarded to the petitioner was near completion, the respondent issued fresh tender for hiring of new Acs in their office being tender No.EL/50/1/ADI/T/14(17/18) opened on 18.07.2017. The petitioner submitted its offered for the said tender online in electronic form for supply, installation and maintenance of 1.5 ton new window type AC unit having minimum of 3 star rating up to 60 months on hire basis. It appears that on 28/11/2017 and before the earlier contract period was over i.e. prior to the date of completion of the contract awarded to the petitioner in the year 2013, the respondent - Divisional Railway Manager (Electrical), Ahmedabad vide letter dated 28.11.2017, informed the petitioner that sanction to the execution of the completion date of the contract which has been extended from 1.12.2017 to 9.2.2018 (without 25% excess quantity) without penalty, has been accorded by the Senior Divisional Electrical Engineer, Ahmedabad. That by letter dated 11.12.2017, the petitioner requested the respondent No.3 to issue completion certificate as the petitioner has satisfactorily completed five years' contract period. 2.2. It appears that thereafter the tender issued on 18.7.2017 could not be processed, a fresh tender was issued by the respondent No.3 being tender No.EL501ADIT56 2017-18 closing on 29.1.2018 at 15:00 hrs for supply, installation and maintenance of 100 numbers of new window type AC units of 1.5 ton capacity having minimum of 5 star rating on hire basis. That one of the execution conditions of the tender for the tenderer being minimum eligibility criteria is that the tenderer should have physically completed, at the time of opening the tender, in the last three financial years (i.e. current year and three previous financial years) at least one similar single work for a minimum of value of 35% of the advertised tender value of the work. The work should be physically completed on or before date of the opening of the tender. 2.3. The work should be physically completed on or before date of the opening of the tender. 2.3. That the petitioner submitted its tender offer along with requisite details including last 17th and 19th running bills of its earlier contract to show that the petitioner has completed the work of more than Rs.50 lakh with the respondents for the hiring of ACs for last five years. That the petitioner submitted bid on 28.01.2018 online along with ereceipts and scan copies of the documents of running bills etc. It is the case on behalf of the petitioner that when the tender bids were opened on 29.1.2018, the petitioner was again lowest being L1 and respondent No.5 at L4. It is the case on behalf of the petitioner that despite the fact that petitioner being L1 and having fulfilled all the eligibility criteria as per the tender notice/document, the work order was not issued to the petitioner and according to the petitioner, the petitioner came to know that the respondents have awarded LoA to the respondent No.5, who is L4 in the bid on the ground that the petitioner has not physically completed work before the date of opening of tender on 29.1.2018. Therefore, the petitioner made an application under the Right to Information Act on 26.2.2018 requesting the name of the successful bidder and amount for which the tender has been awarded together with Minutes of Tender Committee and criteria adopted for award of the tender. 2.4. Feeling aggrieved and dissatisfied with the impugned action of the respondent in not awarding contract to the petitioner, though being L1 on the ground that petitioner has not satisfied one of the eligibility criteria for awarding contract namely the petitioner has not physically completed the work which was placed for consideration for the best experience as the work order was extended upto 09.02.2018 and therefore, the petitioner is deemed to have not completed the work due to extension of time period by the respondent, the petitioner has preferred present Special Civil Application under Article 226 of the Constitution of India. 3. Shri Bhargav Karia, learned advocate has appeared on behalf of the petitioner and Ms. Archna Amin, learned advocate has appeared on behalf of the respondent nos. 1 to 4 and Shri Chintan Patel, learned advocate has appeared on behalf of the respondent no.5. 4. 3. Shri Bhargav Karia, learned advocate has appeared on behalf of the petitioner and Ms. Archna Amin, learned advocate has appeared on behalf of the respondent nos. 1 to 4 and Shri Chintan Patel, learned advocate has appeared on behalf of the respondent no.5. 4. Shri Karia, learned advocate for the petitioner has vehemently submitted that in the facts and circumstances of the case the respondents have materially erred in rejecting the bid submitted by the petitioner at the technical stage. 4.1. It is further submitted by Shri Karia, learned advocate for the petitioner that as such the impugned action/decision of the respondent authorities in rejecting the bid submitted by the petitioner at technical stage is absolutely illegal and arbitrary and on misinterpretation and on misreading of the terms and conditions of the tender document. 4.2. It is further submitted by Shri Karia, learned advocate for the petitioner that as such the petitioner is fulfilling all the criteria mentioned in clause 1(b) of the tender condition and therefore, the petitioner could not have been denied of awarding the contract by the respondents. 4.3. It is further submitted by Shri Karia, learned advocate for the petitioner that respondent authorities have erred in not awarding the contract to the petitioner by brushing aside the fact that the contract, which was awarded to the petitioner in 2013, was not service contract by supplying AC machines on hire basis and therefore, the value of the work is to be measured from the time for which the contract period is over and as such, the petitioner has successfully completed the work by each day on providing service and more particularly, when the petitioner applied for second tender the petitioner has completed the work of more than Rs.50 lakh, which is evident from the 19th running bill. 4.4. It is further submitted by Shri Karia, learned advocate for the petitioner that merely because subsequently and more particularly, after earlier contract period was over, the petitioner continued to work on extension, it cannot be said that the petitioner has not completed the work as required as per the eligibility criteria contained in clause 1(b) of the tender document. 4.5. It is further submitted by Shri Karia, learned advocate for the petitioner that as such the petitioner had completed the work as per the earlier work order within the stipulated period of the contract i.e. prior to 30.11.2017. 4.5. It is further submitted by Shri Karia, learned advocate for the petitioner that as such the petitioner had completed the work as per the earlier work order within the stipulated period of the contract i.e. prior to 30.11.2017. It is submitted that therefore and considering the 17th and 19th running bill for the work carried out by the petitioner prior to 30.11.2017, which the petitioner successfully executed, the following of which was more than Rs.50 lakhs and therefore, it cannot be said that the petitioner has completed and/or satisfied all the eligibility criteria, more particularly, contained in clause 1(c) of the tender document. It is submitted that therefore, the respondent authorities have materially erred and/or acted arbitrarily in rejecting the bid of the petitioner on the ground that the petitioner has not completed the work at the time when the tenders were invited i.e. 29.01.2018. It is submitted that therefore, conclusion arrived at by the respondent authorities that the petitioner has not physically completed the work before the date of opening of the tender on 29.01.2018 is absolutely illegal and arbitrary. 4.6. It is further submitted by Shri Karia, learned advocate for the petitioner that as such the petitioner is L1 and the petitioner has not be awarded the contract merely on the ground that as on 29.01.2018, the petitioner has not physically completed the work. It is submitted that therefore, interference of this Court in exercise of powers under Article 226 of the Constitution of India is warranted. Making above submissions, it is requested to allow the present petition. 5. Present petition is vehemently opposed by Ms. Archna Amin, learned advocate for the respondent authorities. 5.1. It is vehemently submitted by Ms. Amin, learned advocate for the respondent authorities that the impugned decision of the respondent authorities in not considering the bid of the petitioner on the ground that the petitioner has not fulfilled the eligibility criteria contained in clause 1(b) of the tender document is absolutely just and proper and on true interpretation of the relevant terms and conditions of the tender document. 5.2. It is further submitted by Ms. 5.2. It is further submitted by Ms. Amin, learned advocate for the respondent authorities that the petitioner was issued the letter of accepted dated 28.08.2012 for contract value of Rs.43, 33, 043.23 paisa for hiring of new window type 83 number of AC units of 1.5 ton capacity for the period of five years pursuant to the tender No. EL/50/1/ADI/T/10 (2012-13). That the contract agreement was executed on 4.4.2013. It is submitted that condition no.5 of the said condition of the tender provided about variation in quantities of tender schedule. It is submitted that condition no.5(i) pertains to variation of plus or minus 25% of individual NA items in contracts. It is submitted that as per the requirement of variation in the original contract work, initially hiring of 12 numbers of AC units were added and actually hired on 18.4.2013. Subsequently, 8 more units of AC were hired w.e.f. 1.4.2014 as per the permissible limit of plus or minus 25%. It is submitted that vide letter dated 28.11.2017, the petitioner was informed about the extension of completion dated of contract agreement dated 4.4.2013 from 1.12.2017 to 09.02.2018 (within 25% excess quantity) without penalty requesting him to ensure that the work is completed by the date. It is submitted that vide letter dated 11.12.2017 the petitioner requested to issue work completion certificate towards amount of work done/completed upto 20th running bill of work done pursuant to tender for hiring of new window type 83 numbers Act units of 1.5 ton capacity for the period of five years. The performance guarantee submitted by the petitioner having validity upto 25.12.2017 was further extended upto 26.6.2018. It is submitted that thereafter the new tender in question for work for the period of 5 years with the advertised value of Rs.78, 42, 000/came to be floated. It is submitted that date and time of uploading tender was fixed on 3.1.2018 and the closing date of the tender was 29.01.2018. It is submitted that as per the eligibility criteria for the tender costing above 50 lakhs, the bidder/tenderer should have physically completed at the time of opening of tender in the last three financial years, at least one similar single work for a minimum value of 35% of advertised tender value of work and the work should be physically completed on or before the date of opening of tender. It is further submitted that one another eligibility criteria was that the tenderer should have received a total contractual amount during the last three financial years and in the current financial year which should be minimum of 150% of advertised tender value of work and in support of which, the attested certificate from employer/client, audited balance sheet duly certified by Chartered Accountant etc. to be submitted with the tender. It is submitted that in the present case the petitioner along with three other tenderer participated in the tender. It is submitted that along with offer, the petitioner had submitted 19th running bill of earlier contract of hiring of new window type 83 numbers AC units of 1.5 ton capacity for the period of five years amounting to Rs.50, 27, 374/. However, the petitioner had not submitted the completion report of the contract or any final bill as the earlier contract of the petition awarded in the year 2012 was physically not completed as on closing date of tender floated for the year 2017-18. It is submitted that 19th running bill is for the period from 2012 to 2017. 5.3. It is submitted that as per condition no.4 of the said condition of tender being Tender No. EL/50/1/ADI/T/10(2012 13), a work completion report had to be given by the contractor after the work had been completed in all respects before submitting final bill. It is submitted that since the work was physically not completed as on the date of closing date of the tender of 2017-18 i.e. 29.01.2018, no final bill was submitted by the petitioner till date. 5.4. It is submitted that all the tender document submitted by the four bidders including the petitioner were scrutinized by the Tender Committee consisting of technical expert and financial expert. It is submitted that the Tender Committee has declared three tenderers as invalid since they were not fulfilling the eligibility criteria, including the petitioner. It is submitted that the petitioner is declared invalid as out of the tender documents submitted by the petitioner, two were not relating to the similar nature of work. One document of similar nature of work and the date of completion was also 20.02.2016 but the value of the same was less than 35% of the advertised work and therefore, the same was not considered as meeting with the eligibility criteria. 5.5. One document of similar nature of work and the date of completion was also 20.02.2016 but the value of the same was less than 35% of the advertised work and therefore, the same was not considered as meeting with the eligibility criteria. 5.5. It is submitted that the petitioner also submitted 19th running billof ADI division - Hiring of new window type of 83 nos. AC units of 15 ton capacity for the period of five years amounting to Rs.50, 27, 374/but that work was not physically completed as on 29.01.2018 i.e. the closing date of the tender of 2017-18 and therefore, the petitioner was not fulfilled the basic requirement of the eligibility criteria and therefore, bid submitted by the petitioner though L1 has not been considered. It is submitted that after negotiations, the contract is awarded to the successful bidder i.e. respondent no.5 as he is fulfilling all the eligibility criteria. 5.6. It is further submitted by Ms. Amin, learned advocate for the respondent authorities that as such there are no allegation of bias, perversity, favourtism, mala fide or arbitrariness. It is submitted that the only allegation of mala fide with respect to the interpretation of eligibility criteria by an unsuccessful bidder. It is submitted that therefore when there are no allegation of bias and/or mala fide this Court may not interfere with the decision of the respondent authorities in exercise of powers under Article 226 of the Constitution of India. In support of her above submission, she has relied upon the decision of the Hon'ble Supreme Court in the case of Afcons Infrastructure Limited vs. Nagpur Metro Rail Corporation Limited, (2016) AIR(Supreme Court) 4305. 5.7. It is submitted by Ms. Amin, learned advocate for the respondent authorities that in the present case lowest bidder has not been awarded the contract while strictly adhering to the norms, standards and therefore, also the same is not required to be interfered with by this Court in exercise of powers under Article 226 of the Constitution of India. In support of her above submission, she has relied upon the decision in the case of Jagdish Mandal vs. State of Orissa, 2000 2 SCC 617 . Making above submission and relying upon the following the decision on scope of judicial review in contractual matter, it is requested to dismiss the present petition. In support of her above submission, she has relied upon the decision in the case of Jagdish Mandal vs. State of Orissa, 2000 2 SCC 617 . Making above submission and relying upon the following the decision on scope of judicial review in contractual matter, it is requested to dismiss the present petition. (1) Jagdish Mandal vs. State of Orissa, (2000) 2 SCC 617 . (2) Consortium of Titagarh Firema Adler SPA - Titagarh Wagons Ltd vs. Nagpur Metro Rail Corporation Limited, (2017) 7 SCC 486 . (3) Goldstone Infratech Limited vs. State of Gujarat and Ors rendered in Special Civil Application No.2097 of 2018. 6. Shri Chintan Patel, learned advocate for the respondent no.5 has adopted submission made on by the learned advocate for the respondent authorities and has submitted that the respondent no.5 has even reduced the price/offer after further negotiations and therefore, it is requested to dismiss the present petition. 7. Heard the learned advocates for the respective parties at length. At the outset, it is required to be noted that the bid submitted by the petitioner though being L1 has not been accepted by the respondent authorities solely on the ground that the petitioner has not fulfilled eligibility criteria as contained in tender document contained in clause 1(b) of the tender document viz. the petitioner has not physically completed the similar nature of work as on the date of tender notice i.e. 29.01.2018. The relevant eligibility criteria/condition as per the clause 1 of the tender notice is as under: Conditions of Tender 1. Eligibility condition for the tenderer: A. Tenderer has to submit attested copy of the valid electrical contractors license as per IE Rule 45, which can be in his own name of his fimr. B. Minimum Eligibility Criteria for tender costing above 50 Lakh as under: I. The tenderer should have physically completed at the time of opening of tender in the last Three financial years (i.e. current year and three previous financial years). At least one similar single work for a minimum of value of 35% of the advertised tender value of the work. The work should be physically completed on or before date of the opening of the tender. II. the tenderer should have received a total contractual amount during the last three financial years and in the current financial year. At least one similar single work for a minimum of value of 35% of the advertised tender value of the work. The work should be physically completed on or before date of the opening of the tender. II. the tenderer should have received a total contractual amount during the last three financial years and in the current financial year. Should be minimum of 150% of advertised tender value of work and in support of which, the attested certificate from employer/client, audited balance sheet duly certified by Chartered Accountant etc. to be submitted with the tender 7.1. While submitting the bid, the petitioner in fact submitted 19th running bill of ADI division hiring of new window type 83 numbers AC units of 1.5 ton capacity for the period of five years amounting to Rs.50, 27, 374/, which admittedly as such can be said to be the similar nature of work. However as the earlier contract was further extended upto 09.02.2018 and therefore, the respondent authorities have not accepted the bid of the petitioner on the ground that the said similar nature of work cannot be said to have been physically completed as on the date of the tender document. Therefore, the short question which is posed for the consideration of this Court is whether in the facts and circumstances of the case and more particularly, when the earlier contract period was upto 30.11.2017 and thereafter for whatsoever administrative reasons the said contract was extended can it be said that the petitioner had not physically completed the similar nature of work ? 7.2. While appreciating and considering the aforesaid issue, it is required to be noted that the petitioner was issued a letter of acceptance dated 28.08.2012 for contract value of Rs.43, 33, 043.23 for hiring of new window type 83 number of AC units of 1.5 ton capacity for the period of five years. That the contract agreement was executed on 4.4.2013. It appears that condition no.4 of the said Special Conditions of Tender provided for variation in quantities of tender schedule. Condition no.5(i) pertains to variation of plus or mines 25% of individual NS items in contracts. It appears and it is not in dispute that as per the requirement of variation in the original contract work, initially hiring of 12 numbers of AC units were added and actually hired on 18.04.2013. Condition no.5(i) pertains to variation of plus or mines 25% of individual NS items in contracts. It appears and it is not in dispute that as per the requirement of variation in the original contract work, initially hiring of 12 numbers of AC units were added and actually hired on 18.04.2013. Subsequently, 8 more units of AC were hired w.e.f. 1.4.2014 as per the permissible limit of plus or minus 25%. At this stage, it is required to be noted that as such the earlier contract period was upto 30.11.2017 and/or to and on 30.11.2017. However, before the 30.11.2017 vide letter dated 28.11.2017 the contract period was extended from 1.12.2017 to 09.02.2018 and the earlier contract was further extended upto 09.02.2018. In the meantime, vide letter dated 11.12.2017, the petitioner requested to issue work completion certificate towards amount of work done/completed upto 20th running bill of work done pursuant to the Tender for hiring of new window type 83 nos. AC units of 1.5 ton capacity for the period of five years, which admittedly was for an amount of Rs.50 lakhs. Therefore, as such the petitioner can be said to be complying with the eligibility criteria as provided under clause 1(b) viz. at least one similar single work for a minimum value of 35% of advertised tender value of work. However, as condition no. 1(b) provides that the same work should be physically completed on or before the date of opening of tender and as the earlier contract period was extended upto 09.02.2018, the respondent authorities have held the petitioner ineligible on the ground that the aforesaid work cannot be said to have been physically completed on or before the date of opening of tender. The aforesaid interpretation is most arbitrary and as such no prudent person would interpret in such a manner. As observed herein above, as such, the petitioner had carried out/completed the similar single work prior to 30.11.2017 as per the earlier contract and the said work was for a minimum value of 35% of the advertised the tender value of the work. Merely because, the earlier contract was extended considering the request made by the Railway Authority and the said work was continued during the extended period (after the earlier contract period was over), the petitioner cannot be held to be ineligible on the ground that the earlier work is not physically completed. Merely because, the earlier contract was extended considering the request made by the Railway Authority and the said work was continued during the extended period (after the earlier contract period was over), the petitioner cannot be held to be ineligible on the ground that the earlier work is not physically completed. If the earlier contract would have been extended beyond 30.11.2017, which as such was extended, in that case, the petitioner could have been declared eligible as he is meeting with the eligibility criteria of completing the similar nature of work. Solely on the ground that work has been continued beyond the earlier contract period and during the extended period, the petitioner cannot be held to be ineligible on the ground that earlier contract could not have said to have been physically completed. No other reasons have been assigned to declare the petitioner ineligible. Under the circumstances, ground on which the petitioner is held to be ineligible, cannot be sustained and same is arbitrary and not germane and no prudent person would take such a view and/or would interpret in such a manner. Under the circumstances, action of the respondent authorities in declaring the petitioner ineligible at the technical stage and not considering the price bid of the petitioner is absolutely illegal and arbitrary and same deserves to be quashed and set aside. 8. Now, so far as reliance placed upon the decisions of the Hon'ble Supreme Court as well as this Court by the learned counsel for the respondent authorities referred to herein above are concerned, on considering the aforesaid decisions, we are of the opinion that in the facts and circumstances of the case narrated herein above, the aforesaid decisions shall not be applicable to the facts of the case on hand. We are of the opinion that the present case squarely falls within the exception carved out by the Hon'ble Supreme Court in the aforesaid decisions while interfering with the decision of the authority in contractual matter. Even in the in the case of Tata Cellular, the Hon'ble Supreme Court has observed and held that the Constitutional Court can interfere if the decision is perverse. We are conscious of the limitation of the Constitutional Court and the limitation that exercising the power of judicial review must act with restrain while dealing with contractual matter and Court should not act like Court of Appeal. We are conscious of the limitation of the Constitutional Court and the limitation that exercising the power of judicial review must act with restrain while dealing with contractual matter and Court should not act like Court of Appeal. Even considering the decisions of the Hon'ble Supreme Court referred to herein above and relied upon by the learned counsel for the respective parties, if the decision is found to be arbitrary and/or unreasonable and no prudent person would take such a decision and/or interpret in such a manner, the Court may be justified in interfering with the such decision. Under the circumstances, we are of the opinion that the present case falls within the exception carved out by the Hon'ble Supreme Court while interfering with the decision in the contractual matter and/or while interfering with administrative decision. At this stage, it is required to be noted that even otherwise the petitioner is found to be L1 and the difference between the bid price quoted by the petitioner is below 22.5% whereas the bid price quoted by the respondent no.5 is below 2.79% and even after negotiations the petitioner who is found to be L1 and therefore, also it is not in the public interest to award the contract in favour of the respondent no. 5 at a higher price and there shall be huge difference between the bid price given by the petitioner and the respondent no.5 and ultimate burden would be upon the public exchequer. Under the circumstances also and the petitioner haws not been awarded the contract and/or is held to be ineligible solely on the ground stated herein above and not on any other ground, as observed herein above, the ground on which the petitioner is held to be ineligible is absolutely perverse and/or arbitrary and unreasonable, the impugned decision of the respondent Railway Authority in declaring and/or considering the petitioner ineligible and not opening the price bid of the petitioner, cannot be sustained and same deserves to be quashed and set aside and consequently awarding the contract in favour of respondent no.5 L2, deserves to be quashed and set aside and bid submitted by the petitioner is directed to be considered along with other eligible bidders. 9. In view of the above and for the reasons stated above, present petition succeeds. 9. In view of the above and for the reasons stated above, present petition succeeds. The impugned decision of the respondent authority in considering the petitioner ineligible on the ground stated in the minutes of the meeting of the Tender Committee held on 22.02.2018 and consequently not opening the price bid of the petitioner and not considering the bid submitted by the petitioner along with other eligible bidders is hereby quashed and set aside. The decision of the respondent authorities in awarding the work order in favour of the respondent no.5 ignoring the price bid of the petitioner is hereby quashed and set aside. The respondent authorities are hereby directed to take fresh decision after considering the price bid/bid submitted by the petitioner along with other eligible bidders. The aforesaid exercise shall be completed at the earliest. Rule is made absolute to the aforesaid extent. No costs. FURTHER ORDER At this stage, a request is made on behalf of the respondent authorities to stay the operation of the present order. However, for the reasons stated above, the impugned decision is found to be arbitrary and not in Public Interest, prayer is rejected.