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2019 DIGILAW 784 (CAL)

Naaraayani Sons Pvt Ltd. v. Union of India

2019-08-08

DEBANGSU BASAK

body2019
JUDGMENT : DEBANGSU BASAK, J. 1. A participant in a e-tender process is before Court claiming that, the respondent no. 4 was ineligible to participate in the subject tender process. The respondent no. 2 acted arbitrarily in allowing the respondent no. 4 to participate in the e-tender process and acted arbitrarily in declaring the respondent no. 4 as the successful tenderer. 2. Learned senior advocate for the petitioner submits that, the first petitioner participated in a tender for composite manual and mechanised mining work and transportation of approved grade Iron Ore Lump and Fines at Kalta Iron Mine, Transportation of the same to Steel Authority of India Limited (SAIL) Railway Siding at Roxy, loading into wagons and removal of face rejects to be executed at Kalta Iron Mine as mentioned in the scope of work as special conditions of contract. He draws the attention of the Court to the special conditions of contract and particularly the eligibility criteria prescribed therein. Referring to Clause 6.3 of the eligibility criteria, learned senior advocate for the petitioner submits that, a participant to be eligible must have requisite work order/agreement, job completion/experience certificate issued by the employer for the relevant job and relevant period amongst other criteria to be fulfilled. He refers to the general conditions of contract of the respondent no. 2 and submits that, the employer is defined therein. According to him, Clause 9.1 of the general conditions of contract defines an employer to mean the person who is undertaking the tender process. He submits that, the respondent no. 4 herein is a sub-contractor of a contractor in respect of a contract entered into between the respondent nos. 5 and 3. The respondent no. 5 is the employer. The respondent no. 3 is the contractor. The respondent no. 4 is at best the sub-contractor. He refers to the agreement dated September 13, 2017 entered into between the respondent nos. 5 and 3 and submits that, there is an embargo on the respondent no. 3 in granting any sub-contract without the permission of the respondent No. 5. The permission of the respondent, if there be any, is not on record. 3. Learned senior advocate for the petitioner refers to a certificate issued by the respondent no. 3 in favour of the respondent no. 3 in granting any sub-contract without the permission of the respondent No. 5. The permission of the respondent, if there be any, is not on record. 3. Learned senior advocate for the petitioner refers to a certificate issued by the respondent no. 3 in favour of the respondent no. 4 and submits that, the same cannot be construed to be a sufficient document to establish the eligibility of the respondent no. 4 in terms of Clause 6.3 of the special conditions of contract. The certificate of the respondent no. 3 cannot be that of an employer within the meaning of Clause 6.3. He refers to the agreement entered into between the respondent nos. 3 and 4 and submits that, such agreement does not allude to the fact that, the respondent no. 5 granted permission to the respondent no. 3 to engage the respondent no. 4 as the sub-contractor. Therefore, the certificate issued by the respondent no. 3, which the respondent no. 4 relies upon as a document in support of the eligibility criteria, is of no value. 4. Learned senior advocate for the petitioner submits that, the respondent no. 2 cannot relax the special conditions of contract. The respondent no. 2 having defined the employer to mean the original person undertaking the tender process, cannot now give a new meaning to the definition of employer under the special conditions of contract to include sub-contractors. Such an interpretation is perverse and must not be accepted by a Constitutional Court. The actions taken by the respondent no. 2 are justiciable. A Constitutional Court should intervene. The decision of the respondent no. 2 to consider the respondent no. 4 as the successful tenderer should be set aside. 5. Learned senior advocate for the respondent no. 2 submits that, as an employer, the respondent no. 2 is entitled to interpret the special conditions of the contract. He relies upon (Afcons Infrastructure Limited Vs. Nagpur Metro Rail Corporation Limited & Anr., 2016 16 SCC 818) and an unreported judgment and order dated April 9, 2019 of the Hon'ble Supreme Court of India rendered in Civil Appeal No. 3588 of 2019 arising out of SLP(C) No. 46 of 2019 (Caretel Infotech Ltd. Vs. He relies upon (Afcons Infrastructure Limited Vs. Nagpur Metro Rail Corporation Limited & Anr., 2016 16 SCC 818) and an unreported judgment and order dated April 9, 2019 of the Hon'ble Supreme Court of India rendered in Civil Appeal No. 3588 of 2019 arising out of SLP(C) No. 46 of 2019 (Caretel Infotech Ltd. Vs. Hindusthan Petroleum Corporation Limited & Ors.) in support of the contention that a Constitutional Court is expected to exercise restraint in interfering with administrative decisions and that, a Court ought not to substitute its view for that of the administrative authority merely because the Court disagrees with the view. In the present case, he submits that, respondent no. 2 considered whether the respondent no. 4 was capable of executing the nature of the work under the subject tender or not. In so considering, it took into account the certificate issued by the respondent no. 3 and the documents produced by the respondent no. 4. The respondent no. 2 on consideration of the documents submitted by the respondent no. 4 is of the view that, the respondent no. 4 has requisite experience to execute the subject tender. The respondent no. 2 considered the respondent no. 3 to be the employer of the respondent no. 4. Such an interpretation is plausible. On the strength of the ratio laid down in Afcons Infrastructure Limited (supra) and Caretel Infotech Ltd. (supra), the Court need not intervene. 6. Relying upon ( Bagdogra Airport Restaurant Workers Co-operative Society Limited & Anr. Vs. Airport Authorities of India & Ors.,2017 SCCOnLineCal 621), learned senior advocate for the respondent no. 2 submits that, the first petitioner did not participate in the reverse e-auction process subsequent to the declaration of the floor price by the respondent no. 2. A Writ Court should not intervene at the instance of a person, who is not the lowest tenderer. In the present case, in the event, the respondent no. 2 is not allowed to proceed with the subject tender, then, the respondent no. 2 will suffer financial prejudice. He submits that, the difference between the bid price of the respondent no. 4 and the first petitioner are in excess of Rs.235 crores for the three year contract period and the difference will work out to be in excess of Rs.78 crores on an yearly basis. 2 will suffer financial prejudice. He submits that, the difference between the bid price of the respondent no. 4 and the first petitioner are in excess of Rs.235 crores for the three year contract period and the difference will work out to be in excess of Rs.78 crores on an yearly basis. An instrumentality of the State within the meaning of Article 12 of the Constitution of India need not be saddled with such financial liabilities. Therefore, he submits that, the writ petition be dismissed. 7. Learned senior advocate for the respondent no. 4 submits that, the techno-commercial bid was opened on July 10, 2019. The letter of acceptance was issued on July 24, 2019. All of these facts were known to the petitioners. The respondent no. 4 deposited the security deposit in terms of the tender with the respondent no. 2. The work order was issued in favour of the respondent no. 4 on August 3, 2019. On the interpretation of the clauses of the tender, he adopts the submissions advanced on behalf of the respondent no. 2. 8. The parties agreed that, the writ petition can be disposed of on the basis of the materials made available to Court. In view of such agreement at the bar, affidavits are not called for. 9. The first petitioner and the respondent no. 4 participated in the subject e-tender undertaken by the respondent no. 2. The subject etender specifies a number of special conditions of contract. Clause 6 of the special conditions of contract lays down the eligibility criteria. The relevant clause of the eligibility criteria for the instant purpose is clause 6.3, which is as follows: "6.3. In support of successful execution of the above mentioned work(s) as per clause 6.1 & 6.2, the tenderer should submit the following documentary proof along with the tender: (i) Copy of Work Order/Agreement, job completion/Experience certificate issued by the employer for the relevant job(s) and relevant period and corresponding TDS certificate in Form-16A and/or 26AS along with the tender for minimum quantity as indicated in clauses 6.1 & 6.2. Or (ii) In case the tenderer himself is a mine owner then he should submit copy of lease deed in the name of the tenderer certified by the District Mining Officer and copy of challan(s) issued for royalty paid for the minimum quantity as indicated in Clause 6.1 & Clause 6.2 above." 10. Or (ii) In case the tenderer himself is a mine owner then he should submit copy of lease deed in the name of the tenderer certified by the District Mining Officer and copy of challan(s) issued for royalty paid for the minimum quantity as indicated in Clause 6.1 & Clause 6.2 above." 10. The petitioners rely upon Clause 1.9 of the tender conditions of contract, which is as follows: "1.9. Employer means the Raw Materials Division of Steel Authority of India Limited, a company registered under the Indian Companies Act, 1956 & includes its legal successors and assigns. Wherever in this contract instructions/directions are to be issued by the 'employer', the Chief Executive of Raw Materials Division, the Head of the concerned mine, or their duly authorised representatives shall issue such instructions/directions." 11. Afcons Infrastructure Limited (supra) is of the following view: "15. We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional courts must defer to this understanding and appreciation of the tender documents, unless there is a mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given. 16. In the present appeals, although there does not appear to be any ambiguity or doubt about the interpretation given by NMRCL to the tender conditions, we are of the view that even if there was such an ambiguity or doubt, the High Court ought to have refrained from giving its own interpretation unless it had come to a clear conclusion that the interpretation given by NMRCL was perverse or mala fide or intended to favour one of the bidders. This was certainly not the case either before the High Court or before this Court." 12. Afcons Infrastructure Limited (supra) was quoted in Caretel Infotech Ltd. (supra). 13. Caretel Infotech Ltd. (supra) is of the following view: "42. This was certainly not the case either before the High Court or before this Court." 12. Afcons Infrastructure Limited (supra) was quoted in Caretel Infotech Ltd. (supra). 13. Caretel Infotech Ltd. (supra) is of the following view: "42. We have considered it appropriate to, once again, emphasise the aforesaid aspects, especially in the context of endeavours of courts to give their own interpretation to contracts, more specifically tender terms, at the behest of a third party competing for the tender, rather than what is propounded by the party framing the tender. The object cannot be that in every contract, where some parties would lose out, they should get the opportunity to somehow pick holes, to disqualify the successful parties, on grounds on which even the party floating the tender finds no merit." 14. Bagdogra Airport Restaurant Workers Co-operative Society Limited (supra) noted the ratio laid down in ( Raunaq International Limited vs. I.V.R. Construction Limited,1991 1 SCC 492). 15. An owner or the employer of a project having authored the document is the best person to understand, appreciate the requirement and interpret the same. Courts are not to interfere with such interpretations and understandings unless, such an interpretation is perverse, or is tainted with mala fides or was made in order to give undue favour to one of the bidders. 16. In the present case, interpretation of the word 'employer' and Clause 6.3 of the special conditions of contract are up for consideration. Respondent no. 2 as the employer understand the word 'employer' as used in Clause 6.3 and Clause 6.3 itself to mean any person under whom a participant in the tender process was or is working in respect of a similar nature of the work as in the subject tender. Such an interpretation is a plausible interpretation. A Writ Court need not substitute its own wisdom over such an interpretation. 17. The contention that, the interpretation of the word 'employer' must be understood in the context of the definition of the word 'employer' as used in the general conditions of contract cannot be accepted. The general conditions of contract prescribes the conditions of contract which a successful participant is required to enter into on such participant being declared as successful in the tender process. The special conditions of contract and the general conditions of contract operate at specified different levels. The general conditions of contract prescribes the conditions of contract which a successful participant is required to enter into on such participant being declared as successful in the tender process. The special conditions of contract and the general conditions of contract operate at specified different levels. Lifting one to the other and trying to interpret one on the strength of the other may not be warranted. Moreover, definition of the employer in Clause 1.9 of the general conditions of contract limits the definition to the respondent no. 2. Importing such a definition of employer to Clause 6.3 of the special conditions of contract would mean that, a participant in the subject tender process will be qualified only if, it worked under the respondent no. 2 and nobody else. Such an interpretation, in my view, cannot be accepted in the facts of the present case. 18. The terms of the agreement entered into between the respondent nos. 3 and 5 does not bar sub-contracting absolutely. Subcontracting is permissible subject to the permission being granted by the respondent no. 3. In any event, in view of the interpretation of Clause 6.3 as taken by the respondent no. 2 being accepted, the Court need not entered into the arena as to whether the respondent no. 4 possesses requisite permission of the respondent no. 3 or whether the respondent no. 5 granted the sub-contract to the respondent no. 4 after obtaining permission from the respondent no. 3 or not. 19. In the facts of the present case, therefore, no relief can be granted to the petitioner. 20. WP No. 15024(W) of 2019 is dismissed. No order as to costs. 21. Urgent certified website copies of this judgment and order, if applied for, be made available to the parties upon compliance of the requisite formalities.