S. P. N. Enterprise Govt. Registered Contractor and Supplier Class - 1 Represented by its Proprietor Shri. Neirukuolie Yhome v. State of Nagaland
2019-07-29
MICHAEL ZOTHANKHUMA
body2019
DigiLaw.ai
ORDER : Heard Ms. Imnasenla, learned counsel for the petitioner. Also heard Ms. Livika, learned Government Advocate for the State respondent Nos. 1 to 6 and Mr. Wati Jamir, learned counsel for the respondent No. 7. 2. The petitioner is challenging the issuance of the work order dated 15.02.2019 to the respondent No. 7 by the Chief Engineer, PWD (Housing), Nagaland, for construction of a Brick Wall Boundary fencing and Retaining Wall around Assembly Complex, Kohima (Phase-1) with RCC Pillar (2640.00mm) and retaining wall of height 2.50m (398.00m) at an approximate cost of Rs. 4.2 Crores, on the ground that the same had been issued without any Notice Inviting Tender being issued by the State respondent Nos. 1 to 6. 3. The respondents, in their reply have submitted that a Notice Inviting Tender for the above contract work, with an estimated cost of Rs. 3,95,15,906.74/-, had been issued on 08.02.2019, by the Office of the Chief Engineer, PWD (Housing), Government of Nagaland. However, the said Notice Inviting Tender dated 08.02.2019, (hereinafter referred to as the NIT), was not published in any newspaper, but was posted in the Notice Board in the Office of the Chief Engineer, PWD (Housing), Nagaland. They also submit that in pursuance to the NIT, 3 (three) tenderers submitted their bids and out of the 3 (three) tenderers, the respondent No. 7’s bid, which was 6.6% above the schedule of Rates, 2016 NPWD (Building), i.e., above the estimated cost, was selected. Accordingly, a week later i.e. on 15.02.2019, work order was issued to the respondent No. 7. 4. The learned counsel for the writ petitioner submits that as per the second paragraph of Chapter 4, Serial No. 13 of the Nagaland Public Works and Accounts Rules, 2012, (herein after referred to as the 2012 Rules), the notice inviting tender has to be endorsed to all Deputy Commissioners of the Districts, Secretary of the Department, all Major Heads of Development Departments’, Notice Board in addition to newspaper publication. However, the same was not adhered to and no newspaper publication has been made by the State respondents in respect of the NIT. She accordingly submits that the work order issued to the respondent No. 7 should be set aside and the NIT dated 08.02.2019 should be advertised/published in newspapers, so that eligible contractors can also participate in the tender process. 5.
She accordingly submits that the work order issued to the respondent No. 7 should be set aside and the NIT dated 08.02.2019 should be advertised/published in newspapers, so that eligible contractors can also participate in the tender process. 5. The learned counsels for the respondents, on the other hand submit that though the NIT was not published in the newspaper, the same was posted in the Notice Board in the Office of the Chief Engineer, PWD (Housing). They accordingly submit that no illegality has been committed by the State respondents in posting the same in the Notice Board. They also submit that there cannot be any judicial review of the contract work allotted to the respondent No. 7, as the allotment of work was not arbitrary, unreasonable or malafide. They submit that the Assembly Complex, where the contract work was to be done, having been declared as a high security zone/restricted area and there being illegal encroachment on the land, the NIT was notified in the Notice Board only, as there was urgency for protecting the land in question, by building the retaining wall and boundary fencing. 6. The learned counsels for the respondents submit that the State respondents have the power to award contracts without calling for tender in case of urgent and special works. Accordingly, there was no infirmity in the respondents notifying the NIT only in the Notice Board, as the contract work was to be done on an urgent basis, in a high security zone. The learned counsels for the respondents also submit that the petitioner not having challenged the NIT, nor the recommendation of the State respondents in allotting the contract work to the respondent No. 7, the Court should not interfere in an ongoing contract work, wherein 40% of the work has been completed and payment has been made for the work done. The counsels for the respondents also submit that the petitioner cannot be said to be an aggrieved person, inasmuch as, the petitioner did not participate in the tender process and as the work order has been allotted on the basis of a selection process involving 3 (three) tenderers. 7.
The counsels for the respondents also submit that the petitioner cannot be said to be an aggrieved person, inasmuch as, the petitioner did not participate in the tender process and as the work order has been allotted on the basis of a selection process involving 3 (three) tenderers. 7. In support of their submission that the State respondents need not issue a NIT in respect of certain kinds of contract, the respondents counsels have relied upon the judgment of the Apex Court in the case of Pathan Mohammed Suleman Rehmatkhan vs. State of Gujarat and Others, reported in (2014) 4 SCC 156 . In support of their submission that there should not be any judicial review of a contract unless there is arbitrariness or an element of public interest involved, they have relied upon the judgment of the Apex Court in Raunaq International Ltd. vs. I.V.R. Construction Ltd. and Others, reported in (1999) 1 SCC 492 . In support of their submission that the petitioner does not have the locus standi to file the case as he is not an aggrieved person, they have relied upon the judgment of the Apex Court in Ayaaubkhan Noorkhan Pathan vs. State of Maharashtra and Others, reported in (2013) 4 SCC 465 . In support of their submission that the petitioner could not be allowed to challenge the work order dated 15.02.2019 (consequential order) unless the basic order, i.e. the NIT dated 08.02.2019 is challenged, they have relied upon the judgment of the Apex Court in Amarjeet Singh and Others vs. Devi Ratan and Other, reported in (2010) 1 SCC 417 . 8. I have heard the learned counsels for the parties. 9. The question to be decided is whether there was any illegality/arbitrariness in posting the NIT in the Notice Board of the Office of the Chief Engineer and not publishing the same in a newspaper. 10. In the case of Michigan Rubber (India) Ltd. vs. State of Karnataka and Others, reported in (2012) 8 SCC 216 , the Apex Court has held at para 24 as follows: “24.
10. In the case of Michigan Rubber (India) Ltd. vs. State of Karnataka and Others, reported in (2012) 8 SCC 216 , the Apex Court has held at para 24 as follows: “24. Therefore, a court before interfering in tender or contractual matters, in exercise of power of judicial review, should pose to itself the following questions: (i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; or whether the process adopted or decision made is so arbitrary and irrational that the court can say: “the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached”? and (ii) Whether the public interest is affected? If the answers to the above questions are in negative, then there should be no interference under Article 226.” 11. In the case of ML Enterprise (M/S) vs. State of Arunachal Pradesh and Others, reported in (2018) 2 GLT 269, this Court has held that in awarding contracts, the State action should be fair and tenders should be invited by advertising the same in well known newspapers. Otherwise, the violation of the same is hit by Article 14 of the Constitution and the awarded contract is liable to be set aside. The operative portion of the judgment at para 46 states as follows: “46. With regard to distribution of State largesse or Government contracts, it is well settled that a statutory body and instrumentalities of the State should act fairly by making it open for all eligible to submits their offers and the awarding of contract without inviting tender cannot be said to be fair and any such contract is liable to be quashed. Contracts by the State, its corporations, instrumentalities and agencies must be normally granted through public auction/public tender by inviting tenders form eligible persons and the notification of the public auction or inviting tenders should be advertised in well-known dailies having wide circulation in the locality with all relevant details such as date, time and place of auction, subject-matter of auction, technical specifications, estimated cost, earnest money deposit, etc.
The award of government contracts through public auction/public tender is to ensure transparency in the public procurement, to maximize economy and efficiency in government procurement, to promote healthy competition amongst the tenderers, to provide for fair and equitable treatment of all tenderers and to eliminate irregularities, interference and corrupt practices by the authorities concerned. This is required by Article 14 of the Constitution and any violation of this process, any government contract awarded by statutory bodies and instrumentalities of the State are liable to be set aside and quashed.” 12. In the case of Pathan Mohammed Suleman Rehmatkhan (supra), the Apex Court has held that the Court sitting in its writ jurisdiction cannot sit in judgment over commercial or business decision taken by parties to an agreement, after evaluating and assessing its monetory and financial implications, unless the decision is in clear violation of any statutory provision or perverse or taken for extraneous consideration or improper motives. In the above case, the State of Gujarat thought of developing an International Financial Services City, at par with the globally benchmarked financial centers of the world. Since the project was the first of its kind in the country and involved commercial risk, the State Government entered into a joint venture agreement on a public-private-partnership for the said purpose. It was in the above context that the Apex Court had held that the Court sitting in writ jurisdiction, cannot sit in judgment over the commercial or business decision taken by parties to an agreement. The facts of the above case are different from the facts herein and accordingly, the decision in the above case is not applicable to the present case. 13. In the case of Raunaq International Ltd. (supra), the Apex Court held that unless the Court is satisfied that there is a substantial amount of public interest, or transaction is entered into malafide, the Court shall not intervene under Article 226 of the Constitution, in disputes between two rival tenderers. In the present case, due to the NIT being posted only in the Notice Board of the Chief Engineer’s Office, the petitioner could not participate in the tender process, which was not only not in the interest of the Public Exchequer but also in public interest.
In the present case, due to the NIT being posted only in the Notice Board of the Chief Engineer’s Office, the petitioner could not participate in the tender process, which was not only not in the interest of the Public Exchequer but also in public interest. As the present dispute is not with regard to a dispute between two rival tenderers and as public interest is involved, the above case is also not applicable to the facts of this case, as is sought to be projected by the learned counsels for the respondents. 14. Though this Court finds that there has been no challenge to the NIT or the consequential order, the petitioner has challenged the work order dated 15.02.2019, which has been made on the basis of the NIT, which was not published in newspapers as per the 2012 Rules and as per the judgment of this Court in M.L.Enterprise(M/S) v. State of Arunachal Pradesh & Ors.(supra). As no publicity has been given to the NIT by issuing the same in any newspaper, to enable all eligible contractors to participate in the tender process, this Court is of the view that the writ petition cannot be dismissed, only due to no prayer being made to set aside the NIT, as the action of the State respondents is arbitrary and in violation of the Article 14 of the Constitution of India. Further, the facts in relation to the case of Amarjeet Singh and Other (supra) being in relation to a service matter, the same cannot be applied to the facts of this case. It is settled law that a decision is only an authority for what it decides and not what logically follows from it. A little difference in facts changes the precedential value of a decision. Accordingly, the facts of this case being different from the facts of the case relied upon by the respondent’s counsels, the decision in the above case is not applicable to this case. This Court also finds that the petitioner has the locus standi to file this case as his right to participate and be considered in the tender process has been violated, as there is nothing to show that he lacks the eligibility criteria to participate in the same. 15. The further question that arises is with regard to whether this Court can interfere in an ongoing project.
15. The further question that arises is with regard to whether this Court can interfere in an ongoing project. While the petitioner had taken a stand that no work had been started by the respondent No. 7 at the time of filing the writ petition, the respondents have taken the stand that at the time the interim stay order was passed by this Court, 40% of the contract work had been completed by the respondent No. 7 and payment made for the same. 16. With regard to the above issue, the respondent No. 7 has relied upon the judgment of the Apex Court in Tejas Construction and Infrastructure Private Limited vs. Municipal Council, Sendhwa and other, reported in (2012) 6 SCC 464 to support his stand that this Court cannot interfere in an ongoing contract work. The issue in the above Tejas Construction & Infrastructure Pvt. Ltd. (supra), was whether the respondent No. 2 therein was eligible to be awarded a contract, pursuant to the tender process, as he had allegedly failed in fulfilling all the eligibility clauses required. However, the contract was awarded to the respondent No. 2 therein. The Apex Court upheld the judgment of the High Court wherein it found that the respondent No. 2 therein satisfied the requirements of the tender notice. The Apex Court further held at para 32 as follows: “32. We may while parting point out that out of total of Rs 19.5 crores representing the estimated value of the contract, Respondent 2 is certified to have already executed work worth Rs 11.50 crores and received a sum of Rs 8.79 crores towards the said work. More importantly the work in question relates to a drinking water supply scheme for the residents of a scarcity-stricken municipality. The project is sponsored with the Central Government assistance under its urban infrastructure scheme for small and middle towns. The completion target of the scheme is September 2012. Any interference with award of the contract at this stage is bound to delay the execution of the work and put the inhabitants of the municipal area to further hardship.” 17.
The project is sponsored with the Central Government assistance under its urban infrastructure scheme for small and middle towns. The completion target of the scheme is September 2012. Any interference with award of the contract at this stage is bound to delay the execution of the work and put the inhabitants of the municipal area to further hardship.” 17. The above para 32 clearly shows that the Apex Court did not lay down any law/observation with regard to whether a writ Court could interfere in an ongoing project work, inasmuch as, the Apex Court had upheld the awarding of the contract work to the respondent No. 2 therein. This Court accordingly finds that the facts of the above case are not applicable to the facts of this case. 18. In the case of Yikhyao Lotha vs. State of Nagaland, reported in 2014 (4) GLT 871, this Court had to decide whether the award of a contract to the respondent No. 5, without any NIT being published by the State respondents in any newspaper, was liable to be set aside. The NIT had been posted in a Notice Board. The other grounds taken in the above case was that the respondent No. 5 therein was not competent to participate in the tender process. The State respondents and the respondent No. 5, however, took the stand that the Court should not interfere with the contract work, as 70% of the work had already been completed, though the work had not been allotted to the respondent No. 5 strictly in accordance with the 2012 Rules, i.e., the NIT had not been advertised in any newspaper, but had only been posted in the Notice Board. 19. This Court in the above Yikhyao Lotha (supra) held that award of the contract without publishing the NIT in a newspaper was in violation of the 2012 Rules and the CPWD Code. This Court held at para 29 to 32 as follows : “29. I have already found that in terms of Clause 291 of the PWD Code, the tender notice is to be published in Govt. Gazetted or Press or by public notice.
This Court held at para 29 to 32 as follows : “29. I have already found that in terms of Clause 291 of the PWD Code, the tender notice is to be published in Govt. Gazetted or Press or by public notice. Item 13 under the sub-head tender under head tender, agreement and work order in Chapter 4 of the Rules of 2012 further requires that the tender notice are to be endorsed to all DCs Secretary of the Department, all Major heads of Development department, and notice board. In addition, such tender notices are to be sent to the newspapers for publication. 30. Moreover, the C.P.W.D Code amongst other things, also requires that whenever the value of the work is estimated at Rs. 5(five) lakhs or more, tender notice should invariably be published in newspapers seeking bids from the prospective in bidders. Unfortunately, very unfortunately, none of those requirements were followed in the case under consideration. 31. In fact, those Codes and Rules were honoured more in violation than in observance. A bare perusal of the NIT in question makes such a position very clear. Therefore, there cannot be any escape from the conclusion that in settling the contract in question in favour of private respondent, the department violated all the rules and procedures vis-a-vis settlement of contract. 32. The learned Addl. Advocate General, however, contends that in the case in hand, the NIT was published in the notice board and according to him, such publication is a publication as contemplated in Clause 291 of the PWD Code. Such publication also satisfies the requirement of the Rule, 2012. Unfortunately, such contention hardly meets the specifications, made in aforesaid Codes and Rules and as such, I have no hesitation in rejecting such all argument.” 20. This Court in the above Yikhyao Lotha (supra) allowed the writ petition and set aside the work order issued in favour of the respondent No. 5 in Yikhyao Lotha (supra). However, since about 70% of the work had already been completed in Yikhyao Lotha(supra), this Court directed the State respondents to measure the work already done and to issue a fresh NIT in respect of the remaining work and to bring the same to conclusion, in accordance with the relevant Rules and procedures. 21.
However, since about 70% of the work had already been completed in Yikhyao Lotha(supra), this Court directed the State respondents to measure the work already done and to issue a fresh NIT in respect of the remaining work and to bring the same to conclusion, in accordance with the relevant Rules and procedures. 21. In the present case, the State respondents have, on the pretext that the construction of the retaining wall and boundary fencing is to be done in a high security area, done away with publishing the NIT in a newspaper, or through information technology, which is also a method being applied for publishing an NIT. The NIT was issued on 08.02.2019 and the work order was issued one week later, i.e., 15.02.2019. If at all the contract was to be done in a very secretive and hush-hush manner, keeping in view the fact that the land was in a high security zone, this Court fails to understand as to why at all, the NIT was posted in the Notice Board, where all visitors and staff of the office of the Chief Engineer could have seen the said NIT. However, the fact remains that the publication of the NIT and posting of the same in the Notice Board of the Chief Engineer, involving the estimated cost of approximately 4 Crores of contract work, for constructing the retaining wall and boundary fencing seems to have been done only to favour some blue eyed boy of the State respondents. In this respect, the RTI reply/information dated 09.05.2019, issued by the Addl. Chief Engineer, PWD (Housing), Nagaland & Public Information Officer to the petitioner’s 2nd RTI application is reproduced below:- “Sub:- Seeking information under RTI Act, 2005. Dear Sir, In replying to your 2nd RTI regarding to the floating of tender and publication sought by you, I am to inform you that the said works is table tendered as the Government has recommended and instructed to allot the works in favour of M/s Zaputuo Lhoungu. Hence accordingly, this office has initiated technical formalities and work orders has been allotted to him. Further, it is regretted to inform you that it was not published in any of the local dailies.” The above RTI reply dated 09.05.2019 is Annexure-F to the writ petition and is mentioned in para 7 of the writ petition.
Hence accordingly, this office has initiated technical formalities and work orders has been allotted to him. Further, it is regretted to inform you that it was not published in any of the local dailies.” The above RTI reply dated 09.05.2019 is Annexure-F to the writ petition and is mentioned in para 7 of the writ petition. The affidavits-in-opposition filed by the State respondents and the respondent No. 7 state that they have no comments to make in response to para 7 of the writ petition. 22. In Naseem Bano V. State of U.P., reported in 1993 supp (4) SCC 46, the Apex Court has held that averments are deemed to be admitted, if not controverted. The money to be spent is public money. The purpose of calling for an NIT is to get the best competitive price for the work to be done, which is in public interest. The conduct of the State respondents in posting the NIT only in the Notice Board cannot be said to be for safeguarding the interest of the Public Exchequer and in Public Interest. The entire tender process is shrouded in mystery and not transparent. The State respondents’ action seems to be only with the intent to favour the respondent No. 7, who it appears, has also colluded with the State respondents for allotment of the contract work. A lot of eligible contractors, who could have taken part in the selection process have been left out by the secretive arbitrary action of the State respondents. The NIT does not stipulate that the contract work requires specialized equipment or know-how. The construction for the retaining wall and brick wall boundary fencing in fact indicates that the contract work is a routine contract work. It is the view of this Court that the allotment of a routine contract work does not warrant the doing away with publishing the NIT in a newspaper, as the same is in violation of the 2012 Rules and the CPWD Code. 23. In the present case, the NIT was notified only in the Notice Board as had been done in the case of Yikhyao Lotha (supra). Also 40% of the work had allegedly been done by the respondent No. 7, while 70% of the word had been done in the case of Yikhyao Lotha (supra).
23. In the present case, the NIT was notified only in the Notice Board as had been done in the case of Yikhyao Lotha (supra). Also 40% of the work had allegedly been done by the respondent No. 7, while 70% of the word had been done in the case of Yikhyao Lotha (supra). The fact situation is similar in the present case and the above case of Yikhyao Lotha (supra). Keeping in mind the fact that the contract was awarded, without any publication of the NIT in any newspaper or in the mass media, which is against public interest and the interest of the Public Exchequer, the issuance of the work order is found to be arbitrary. 24. Accordingly, the work order dated 03.06.2019 issued to the respondent No. 7 is hereby set aside. No further action should be taken in pursuant to the NIT. However, the work already done by the respondent No. 7 is not interfered with by this Court, as the bills for the same has apparently already been paid, as alleged by the State respondent’s counsel. However, the State respondents shall cause a fresh exercise to be made, by again taking the measurement of the actual work done by the respondent No. 7 and recording the same in the Measurement Book of the PWD, within a period of 3 (three) weeks from the date of receiving a copy of this order. Thereafter, for the remaining portion of the work to be done, the State respondents shall publish a fresh advertisement and give wide publicity to the same in a known newspaper/s and also by utilizing other means, if so advised, calling for bids from all eligible contractors. The said advertisement should be issued within a period of 6 (six) weeks from the date of receipt of a copy of this order. The selection of the successful bidder shall be made not later than 2 (two) months from today, as per applicable Rules, Guidelines and Procedures, as the stand of the State respondents is that the contract work needs to be completed urgently. The writ petition is, accordingly, allowed.