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2019 DIGILAW 452 (JK)

Baba Peer Stone Crusher v. Union of India

2019-10-16

RAJESH BINDAL

body2019
ORDER : 1. The petitioner has filed the present writ petition challenging Clause 10.1(a) providing for eligibility criteria for participation in the tendering process for supply of 1,10,000 cum. 65 mm gauge stone ballast. 2. Mr. M. K. Bhardwaj, learned senior counsel appearing for the petitioner submitted that the tender notice was uploaded on the website of the Northern Railways on 15.06.2019 inviting offers for manufacturing and supply of 1,10,000 cum 65 mm gauge stone ballast (mechanically broken) duly stacked and loading into Railway Wagons/Hoppers in quarry siding in Sub Depot-I & II at Kathua under ADEN-II/PTK. The bidding was to start from 17.07.2019. The closing date for tender was 31.07.2019. The petitioner is an experienced contractor and supplier who is already working with the railways satisfactorily with no default whatsoever. The tender was to be submitted in two parts, i.e. the technical bid and the financial bid. After the petitioner qualified the technical bid, the financial bids were opened and the petitioner was found to be L-1. Despite the petitioner being L-1 when the letter of acceptance was not issued in favour of the petitioner, he approached this Court. 3. The argument is that the petitioner had already qualified the technical bid and was found to be L-1 when financial bids were opened. There was no question of re-evaluation of the technical aspects to debar the petitioner from allotment of tender. The basic concept for submission of bids in two parts, i.e. technical bid and financial bid is that after a tender qualifies the technical bid, only then financial bids are opened. The petitioner fulfils all the conditions. He had even submitted a certificate which clearly provided that that petitioner was fully eligible as he had completed the work of the requisite amount with the railways up to 10.07.2019. But still the petitioner is not being allotted the work only because of Clause 10.1(a) of the General Conditions. The same has no nexus with the objects sought to be achieved. The conditions imposed are quite harsh. Further the last date of submission of tender was 31.07.2019 and before that in any case the petitioner fulfilled all the conditions. It is evident from the certificate attached by the petitioner. The same has no nexus with the objects sought to be achieved. The conditions imposed are quite harsh. Further the last date of submission of tender was 31.07.2019 and before that in any case the petitioner fulfilled all the conditions. It is evident from the certificate attached by the petitioner. Once there is substantial compliance of the conditions as laid down in the notice inviting tenders, merely because a small fraction thereof is lacking, the petitioner cannot be ousted from the zone of consideration specially when he had quoted rates far less than L-2, who was a new entrant as far as the execution of work in the State of Jammu and Kashmir is concerned. After the petitioner had qualified the technical bid, he had legitimate expectation of allotment of the work to him. His that right is being defeated. The only object for which Clause 10 has been added in the eligibility condition is that unscrupulous persons should not participate in the tendering process. Admittedly, the petitioner has an outstanding record. In support of his arguments, reliance was placed on the judgments of Hon’ble the Supreme Court in M/s B. S. N. Joshi & Sons Limited v Nair Coal Services Limited and others, AIR 2007 SC 437 and Rashmi Metaliks Limited and another v Kolkata Metropolitan Development Authority and others, (2013) 10 SCC 95 . 4. On the other hand, Mr. P. S. Chandel, learned counsel appearing for the railways submitted that, all the conditions laid down in the tender documents are mandatory and to be eligible to participate in the tendering process everyone is to comply the same. The conditions have been laid down with an object that only the tenderers, who have proven track record in execution of work, participate in the process. In the present case, ‘single packet system’ was followed. Both were to be opened simultaneously. It is not the case where firstly the technical bids were to be opened and the financial bids of only those tenderers were to be opened who qualified the technical bids. In the present case the table of the rates offered by the tenderers was prepared and the technical evaluation of the bids was made as per the offers made by them, namely the documents of L-1 were examined first. In the present case the table of the rates offered by the tenderers was prepared and the technical evaluation of the bids was made as per the offers made by them, namely the documents of L-1 were examined first. He further submitted that as per the tender document, the cut-off date for consideration of eligibility was 31.05.2019 and admittedly the petitioner was not eligible on that date. Formally, there is no order of rejection of the tender of the petitioner as on date, though stand has been taken that the petitioner does not qualify the eligibility conditions. He further submitted that as per the guidelines laid down by Railways for any tender less than Rs.10 crore, ‘single packet system’ is followed, whereas for tender about Rs.10 crore, ‘two packet system’ is followed. 5. In support of the arguments, reliance was placed on judgment of this High Court in G. M. Trading Company and others v State of J&K and others, 2015 (2) JKJ 619 and Hon’ble the Supreme Court in Special Leave Petition (Civil) Nos. 13802-13805 of 2019 titled as The Silppi Constructions Contractors v Union of India and another etc., decided on 21.06.2019. 6. Mr. R. K. Gupta, learned senior counsel appearing for the respondent No. 4 submitted that what has been challenged by the petitioner in the writ petition is the condition as laid down in the Standard Conditions whereas in the case in hand, this eligibility condition has been specifically laid down in the tender document itself, in Para 4 thereof. The same has not been challenged. Any condition laid down in the tender document is to be complied with strictly. The petitioner admittedly was not eligible on the cut-off date as according to him, he had completed the work in July 2019. To be eligible as per the conditions laid down in the tender, the cut-off date was 31.05.2019. Despite being ineligible, he submitted the tender. The bidding system followed was ‘single packet system’. The employer has a right to fix any eligibility conditions concerning the requirements for the project. The employer being the master, nothing can be dictated on him to vary, changed the conditions except in certain exceptional circumstances, where a party can claim that any of the conditions laid down is impossible to fulfill or the same is tailor-made. The employer has a right to fix any eligibility conditions concerning the requirements for the project. The employer being the master, nothing can be dictated on him to vary, changed the conditions except in certain exceptional circumstances, where a party can claim that any of the conditions laid down is impossible to fulfill or the same is tailor-made. If there is any relaxation in the conditions, same has to apply uniformly to all the tenderers. These cannot be relaxed only for one. 7. He further argued that it is a case in which admittedly the petitioner was not eligible as per the tender conditions. Still he participated in the tendering process and having failed has sought to challenge the eligibility conditions. By his own conduct, he could not be permitted to challenge the same. The petitioner is not a position to dictate his own terms and the tender conditions. In support of the arguments, reliance was placed of judgments of Hon’ble the Supreme Court in Michigan Rubber (India) Limited v State of Karnataka and others, (2012) 8 SCC 216 , Maa Binda Express Carrier and another v North East Frontier Railway and others, (2014) 3 SCC 760 and Central Coalfields Limited and another v SLL-SML Venture Consortium and others, (2016) 8 SCC 622 . 8. In response, learned counsel for the petitioner submitted that in the objections filed by the railways, it is specifically admitted that offers were invited in two packets. That means technical bid and the financial bid. Once the petitioner had qualified in the technical bid, it was thereafter only that the financial bides were opened. Case in hand is of non-consideration of the offer of the petitioner, especially when he had offered rates far less than L-2. Huge amount of State exchequer is involved, which need to be saved. 9. Heard learned counsel for the parties and perused the paper book. 10. Before considering the arguments raised by learned counsel for the parties, it would be appropriate to refer to the undisputed facts in brief. 11. The tender notice was uploaded by Ferozpur Division Engineering/Northern Railways on 15.06.2019 at 15.48 hrs. The name of the work is ‘Manufacturing and Supplying of 1,10,000 cum 65 mm gauge stone ballast (Mechanically broken) duly stacked and loading into Railway Wagons/Hoppers in quarry siding in Sub Depot-I & II at Kathua under ADEN-II/PTK’. 11. The tender notice was uploaded by Ferozpur Division Engineering/Northern Railways on 15.06.2019 at 15.48 hrs. The name of the work is ‘Manufacturing and Supplying of 1,10,000 cum 65 mm gauge stone ballast (Mechanically broken) duly stacked and loading into Railway Wagons/Hoppers in quarry siding in Sub Depot-I & II at Kathua under ADEN-II/PTK’. Bidding system to be followed was ‘single packet system’. Bidding was to start on 17.07.2019 and the closing date and time was 31.07.2019 at 11.00 a.m. Para 4 provided for eligibility conditions. A tenderer had to be eligible on the date ending last day of month previous to one in which tender is invited. The tender notice was uploaded on 15.06.2019. Hence, the eligibility conditions have to be fulfilled as on 31.05.2019. Relevant clause of the eligibility condition is extracted below: “4. ELIGIBILITY CONDITIONS Special Technical Criteria S. No Description Confirmation required Remarks allowed Documents Uploading 1 Technical Eligibility Criteria: No No Allowed (Mandatory) (a) The tenderer must have successfully completed any of the following during last 07 (seven) years, ending last day of month previous to the one in which tender is invited:- Three similar works costing not less than the amount equal to 40% of advertised value of the tender, or Two similar works costing not less than the amount equal to 50% of advertised value of the tender, or One similar work costing not less than the amount equal to 80% of advertised value to the tender. (b) (i) In case of composite works (e.g. works involving more than one distinct component, such as Civil Engineering works, S&T works. Electrical works, OHE works etc. and in the case of major bridges-substructure, superstructure etc.) tenderer must have successfully completed any of the following during last 07 (seven) years, ending last day of month previous to the one in which tender is invited:- Three similar works costing not less than the amount equal to 40% of advertised value of each component of tender, or Two similar works costing not less than the amount equal to 50% of advertised value of each component of tender, or One similar work costing not less than the amount equal to 80% of advertised value to each component of tender. Note: Separate completed works of minimum required values for each component can also be considered for fulfillment of technical eligibility criteria. Note: Separate completed works of minimum required values for each component can also be considered for fulfillment of technical eligibility criteria. (b) (ii) In such cases, what constitutes a component in a composite work shall be clearly pre-defined with estimated tender cost of it, as part of the tender documents without any ambiguity. Any work or set of works shall be considered to be a separate component, only when cost of the component is more than 2 crore each. 1.1 Similar nature of work: Supply of machine crushed stone ballast for railway/highway/roads. No No Allowed (Mandatory) 12. A perusal of the aforesaid eligibility condition shows that to be eligible a tenderer must have successfully completed any of the works as enumerated therein during last 7 years. If these are three similar works, then it has to be 40% of the advertised value of the tender, for two similar works, the value has to be 50%, whereas for single, the execution work has to 80% of the advertised value of the tender. 13. The petitioner in the present case himself claims that he had placed on record a certificate dated 15.07.2019 showing that he was executing a work with the railways which was completed on 10.07.2019 after grant of two extensions, however, without any penalty. It was on the basis of the aforesaid certificate that the petitioner sought to claim that he was eligible to participate in the tendering process. Otherwise, it is not the case of the petitioner that he fulfilled the eligibility conditions. That is why challenge has been made to the clause in tender document. 14. As far as the challenge to Clause 10.1(a) of the General Conditions is concerned, it needs to be added here, to put the record straight, that in the eligibility conditions there is no Clause 10.1(a). In fact the same is a clause in the general terms and conditions in the Standard Tender Document. However, in the case in hand, similar clause has been added in the tender document itself in the eligibility conditions in Para 4, which has been extracted in Para 10 of the Judgment. Be that as it may, as nothing hinges on that the clause being similar, the challenge to the aforesaid condition by the petitioner cannot be entertained at this stage when knowing well the aforesaid condition, the petitioner participated in the tendering process and was ultimately unsuccessful. Be that as it may, as nothing hinges on that the clause being similar, the challenge to the aforesaid condition by the petitioner cannot be entertained at this stage when knowing well the aforesaid condition, the petitioner participated in the tendering process and was ultimately unsuccessful. In case, he had any grievance, he could have availed of his remedy, if any available, before participating in the tendering process. Even otherwise, a challenge to the aforesaid condition may not sustain as the employer is within its rights to lay down preconditions or qualifications for the tenderers to be eligible. Idea is to ensure that the prospective tenderers have the capacity and resources to execute the work. Interference of the Court in such matters is very limited, they being not experts in the field. If the action of the authorities is found to be malicious or contrary to any statutory provisions, Courts can always interfere. Hon’ble the Supreme Court in Michigan Rubber (India) Limited’s case (supra) summed up the legal position on the issue in the following terms: “23. 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) 15. It was further laid down in the aforesaid judgment that before interfering in tender or contractual matters in exercise of judicial review, what needs to be examined as to whether the decision making process was hit by mala fide or was intended to favour someone or the decision is so arbitrary and irrational that the Court can opine that no responsible authority acting reasonably will reach to such a conclusion. Case in hand is not of that kind. Any ineligible tenderer can spoil the whole game while quoting rates which may not be feasible. 16. A recent order passed by Hon’ble the Supreme Court in Special Leave Petition (C) No. 37479/2016 titled as Durgawati Devi vs Union of India through its Secretary, Ministry and others decided on 04.10.2019, can also be referred to whereby Special Leave Petition filed against the judgment of Allahabad High Court was dismissed. It was a case in which an applicant for allotment of a dealership of Liquefied Petroleum Gas had agreement to sell for purchase of land but the sale deed had not been registered in his favour before the cut-off date. Hon’ble the Supreme Court finding that if the candidate had fulfilled the conditions after the cut-off date, he cannot be treated as eligible. Hon’ble the Supreme Court finding that if the candidate had fulfilled the conditions after the cut-off date, he cannot be treated as eligible. The High Court had rightly declined to exercise the power under Article 226 of the Constitution of India to relax the terms and conditions of the tender notice as any such relaxation granted would be patently discriminatory qua the other applicants or who could not apply because they did not fulfill the conditions on the cut-off date. 17. As far as the argument that the petitioner was found to be eligible while evaluating his technical bid, hence, his offer could not have been rejected, later on opining that the petitioner was not technically qualified as he did not fulfill the eligibility conditions. It may be added that the system followed in the present case was ‘single packet system’ and not ‘two packet system’ in which technical and financial bids are submitted separately. ‘Two packet system’ of tendering is meant to assess the tenders technically without being influenced by the financial bids. In the ‘single packet system’ both the bids are submitted in one packet and opened simultaneously. The technical evaluation is also at the same time when the bids are opened. Merely because a tenderer is found to be L-1, he cannot claim, as a matter of right, that the tender should be allotted to him though he may not be eligible. It is a matter of policy and the system followed by the employer to process the tenders floated by it. The courts do not intervene in that process or advise or opine as to procedure to be adopted by an employer. 18. As far as the argument raised by learned counsel for the petitioner regarding his legitimate expectation is concerned, the same also deserves to be noticed and rejected for the reason that expectation would come only when conditions laid down are fulfilled. In case in hand, admittedly the petitioner did not fulfill the eligibility condition as on the cut-off date of tender, he can not now raise the plea that he legitimately expected that the work will be allotted to him as he was found to be L-1. If the eligibility conditions are to be relaxed by the employer, the possibility is there in the case of non mandatory condition but that can not be limited only to one tenderer. If the eligibility conditions are to be relaxed by the employer, the possibility is there in the case of non mandatory condition but that can not be limited only to one tenderer. Rather it has to apply uniformly to all. Not only this, if the cut-off date itself is changed or relaxed in the case of the petitioner as is sought to be claimed, there may be number of other persons who may be fulfilling those conditions up to the date the petitioner had fulfilled the same. 19. The argument that in case of substantial compliance of the conditions of eligibility any offer could not have been rejected also does not have any merit as in the commercial contracts, it is not for the Court to opine as to which of the condition is to be complied with or which can be relaxed. It is for the employer to consider the same. The contract is a commercial transactions, evaluation of tenders and award of contracts are essentially commercial functions. 20. As far as the process followed by the railways is concerned, nothing could be pointed out that there was any deviation or effort was to favour anyone out of the tenderers who are eligible. Hence the power of judicial review does not deserve to be exercised in the case in hand. There is no grievance with the process followed. 21. For the reasons mentioned above, I do not find any merit in the present petition. The same is accordingly dismissed.