Nakul Chauhan S/o Shri Dayal Chauhan v. State of Himachal Pradesh
2021-09-15
SATYEN VAIDYA, TARLOK SINGH CHAUHAN
body2021
DigiLaw.ai
ORDER : 1. All these writ petitions are being decided by a common judgment due to identical questions of law and facts involved therein. 2. The common issue involved in all the cases is, whether the respondents could justifiably recall and cancel the tenders for the reasons which were not part of the terms and conditions of Notice Inviting Tenders (for short “NIT”). 3. In CWP No. 4954 of 2021, the NIT was issued for construction of link Road from Siyasu to Morar KM 00 to 3/500. In CWP No. 4370 of 2021, the NIT was for metalling and tarring on Maryog-Lana-Ravana road Km 0/00 to 20/265 and the NIT in CWP No. 4371 of 2021, was for metalling and tarring on Kawal Bandli Tharu road Km 0/02 to 5/600. 4. Whereas, the NIT in CWP No. 4954 of 2021 was for work pertaining to Shillai Division of Himachal Pradesh Public Works Department, the NITs issued in CWPs 4370 and 4371 of 2021 were for the Rajgarh Division. Both divisions are under Superintending Engineer, 12th Circle, HPPWD, Nahan. 5. In all the cases, the petitioners were found technically responsive and after opening of financial bids, they were found “L-1” in their respective tenders. The respondents, however, decided to recall and cancel the tenders in all the cases for the reasons that the bids could not be invited strictly in accordance with the provisions of CPWD Manual, which prohibited the grant of tender beyond (-10%) or (+ 5% ) of the estimated value of the work. In all the cases, the bid amounts quoted by the petitioners were found below (-10%) of the estimated costs, which became the reason for impugned recalling and cancellation of tenders. 6. Petitioners have contended that the NIT did not provide for any such condition and, therefore, the actions of the respondents to recall and cancel the tenders on a condition which was not part of the NIT, were not only unreasonable and arbitrary, but also smeared with mala-fides. 7. The petitioners have further alleged that the orders whereby the NITs have been recalled and cancelled are non-speaking to the extent that these do not convey the reasons for cancellation of the tenders. The corrigendum issued only states “due to the administrative reasons/issues.” 8. On notice, the respondents have contested the claims of the petitioners.
7. The petitioners have further alleged that the orders whereby the NITs have been recalled and cancelled are non-speaking to the extent that these do not convey the reasons for cancellation of the tenders. The corrigendum issued only states “due to the administrative reasons/issues.” 8. On notice, the respondents have contested the claims of the petitioners. It is stated that the issue raised by the petitioners is squarely covered by the judgment passed by this Court in CWP No. 4411 of 2021. The specific stand of the respondents is that upon evaluation of the bids, the same were submitted to the competent authority. On examination, the office of Chief Engineer, South Zone, Shimla-2 observed that the bids were not in accordance with the instructions dated 22.07.2020 issued by the Principal Secretary (HP PWD), whereby the CPWD manual was made applicable to the HP PWD by the Government of Himachal Pradesh. As per salient features of CPWD working manual, the bids are required to fulfill the conditions contained at Serial No. 12, which states as under: “12. Tenders will also be invited on the basis of working of estimates approved on market rates and shall be awarded without negotiation if the tendered amount is within limit of (+) 5% to (-) 10% (MORTH letter No. RW/NH-15017/12/2015-P&M dated 9th July, 2018), otherwise the tenders will be recalled and negotiation shall be governed as per CPWD Manual or CVC guidelines.” 9. As per stand of the respondents, the bids involved in the instant cases were not found to be in accordance with the above noted instructions of the Government and provisions contained in CPWD working manual, hence the recalling and cancellation of the tenders was justified. 10. We have heard learned counsel for the parties and have also gone through the record of the case. 11. We are not in agreement with the contention of petitioners that impugned cancellation orders, being bereft of reasons, need to be quashed on that ground alone. The impugned orders are purely administrative orders that too, in the realm of commercial contracts. The respondents have specified reasons for impugned cancellation of tender in their response to the petitions filed by the petitioner and that can be taken to be sufficient compliance in the context of matters in hand. 12.
The impugned orders are purely administrative orders that too, in the realm of commercial contracts. The respondents have specified reasons for impugned cancellation of tender in their response to the petitions filed by the petitioner and that can be taken to be sufficient compliance in the context of matters in hand. 12. Evidently, all the NITs, involved in the cases herein, were silent on the applicability of the conditions contained in CPWD working manual to the works tendered thereby. The conditions of above noticed manual were not made applicable either in general or by incorporation of any specific condition thereof as integral part of the NIT. 13. The record reveals that before cancellation of NITs, the above mentioned Clause 12 of CPWD working manual was never sought to be incorporated in the terms of NIT and the petitioners or for that matter all other tenderers were not afforded opportunity to amend their bids accordingly. It can safely be assumed that in case such condition was made known to the petitioners beforehand, they definitely would have raised their bids to fall within the limit of (-) 10% of estimated costs. 14. Interestingly, the NITs have been recalled and cancelled on the ground that petitioners had quoted lesser prices than prescribed (-) 10% of the estimated tender cost. Respondents have tendered an explanation that the rates quoted by the petitioners were even lower than the prescription of Clause 12 of CPWD working manual, and thus it was apprehended that the execution of work would not be as per specification. The explanation so provided by the respondents is beyond comprehension. The NITs were issued by the State agency, which has no dearth of technical experts. It cannot be perceived that with the expertise available with respondents, still the possibility of below specifications works existed. 15. Respondents have taken strong exception even to the maintainability of these petitions. It is contended with vehemence that this Court in exercise of jurisdiction under Article 226 of the Constitution of India would not interfere with pure administrative decisions of respondents which are without any bias and mala-fides. 16. Respondents have placed reliance on Rishi Kiran Logistics Pvt. Ltd. vs. Board of Trustees of Kandla Port, (2015) 13 SCC 233 wherein it has been held as under: “29.
16. Respondents have placed reliance on Rishi Kiran Logistics Pvt. Ltd. vs. Board of Trustees of Kandla Port, (2015) 13 SCC 233 wherein it has been held as under: “29. It thus stands crystalised that by way of writ petition under Article 226 of the Constitution, only public law remedy can be invoked. As far as contractual dispute is concerned that is outside the power of judicial review under Article 226 with the sole exception in those cases where such a contractual dispute has a public law element.” 17. In our considered view public law element is definitely present in the cases under consideration. It is question of proper utilization of public money. Respondents do not want to award work for lesser amounts for the reasons which, as discussed above, do not satisfy the conscience of the Court. In addition, the factor of escalation in costs with delay in completion of works also looms large. 18. Reliance has also been placed on judgment passed by Apex Court in MAA Binda Express Courier vs. North East Frontier Railways and Others, (2014) 3 SCC 760 , in which it has been held as under: “8. The scope of judicial review in matters relating to award of contract by the State and its instrumentalities is settled by a long line of decisions of this Court. While these decisions clearly recognize that power exercised by the Government and its instrumentalities in regard to allotment of contract is subject to judicial review at the instance of an aggrieved party, submission of a tender in response to a notice inviting such tenders is no more than making an offer which the State or its agencies are under no obligation to accept. The bidders participating in the tender process cannot, therefore, insist that their tenders should be accepted simply because a given tender is the highest or lowest depending upon whether the contract is for sale of public property or for execution of works on behalf of the Government. All that participating bidders are entitled to is a fair, equal and non-discriminatory treatment in the matter of evaluation of their tenders. It is also fairly well-settled that award of a contract is essentially a commercial transaction which must be determined on the basis of consideration that are relevant to such commercial decision.
All that participating bidders are entitled to is a fair, equal and non-discriminatory treatment in the matter of evaluation of their tenders. It is also fairly well-settled that award of a contract is essentially a commercial transaction which must be determined on the basis of consideration that are relevant to such commercial decision. This implies that terms subject to which tenders are invited are not open to the judicial scrutiny unless it is found that the same have been tailor made to benefit any particular tenderer or class of tenderers. So also the authority inviting tenders can enter into negotiations or grant relaxation for bona fide and cogent reasons provided such relaxation is permissible under the terms governing the tender process. 9. Suffice it to say that in the matter of award of contracts the Government and its agencies have to act reasonably and fairly at all points of time. To that extent the tenderer has an enforceable right in the Court who is competent to examine whether the aggrieved party has been treated unfairly or discriminated against to the detriment of public interest. [See: Meerut Development Authority vs. Association of Management Studies and Another, (2009) 6 SCC 171 and Air India Ltd. vs. Cochin International Airport Ltd. (2000) 1 SCR 505 ].” 20. 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.” (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.” 19. The below observations made by Supreme Court in State of Uttar Pradesh and Another vs. AL Faheem Meetex Pvt. Ltd. and Another, (2016) 4 SCC 716 have also been relied upon by the respondents which reads as under: “13. We find force in the aforesaid argument of the learned counsel for the appellants. In the first instance, it is to be noted that BEC is only a recommendatory authority.
We find force in the aforesaid argument of the learned counsel for the appellants. In the first instance, it is to be noted that BEC is only a recommendatory authority. It is the Competent Authority which is to ultimately decide as to whether the recommendation of BEC is to be accepted or not. We are not entering into the discussion as to whether this Competent Authority is the State Government or the Municipal Corporation. Fact remains that there is no approval by either of them. Matter has not even reached the Competent Authority and no final decision was taken to accept the bid of respondent No. 1 herein. Much before that, when the BEC was informed that there were only two valid bids before it when it made its recommendation on September 08, 2010 and as per the Financial Rules there must be three or more bids to ensure that bidding process becomes competitive, the BEC realised its mistake and recalled its recommendation dated September 08, 2010. It cannot be said that such a decision was unfair, mala-fide or based on irrelevant considerations. This, coupled with the fact that the authority has right to accept or reject any bid and even to annul the whole bidding process, the High Court was not justified in interfering with such a decision of the BEC. 14. The High Court has also gone wrong in finding fault with the decision of the BEC by holding that such a subsequent decision could not have been taken by the BEC without notice to or in the absence of the appellant. When the decision making process had not reached any finality and was still in embryo and there was no acceptance of the bid of respondent No. 1 by the Competent Authority, no right (much less enforceable right) accrued to respondent No. 1. In such a situation, there was no question of giving any notice or hearing to respondent No. 1.” 20. Respondents have also relied upon the judgment passed in State of Jharkhand and Others vs. CWE-SOMA Consortium, (2016) 14 SCC 172 , wherein the Supreme Court held as under: “12. In case of a tender, there is no obligation on the part of the person issuing tender notice to accept any of the tenders or even the lowest tender.
Respondents have also relied upon the judgment passed in State of Jharkhand and Others vs. CWE-SOMA Consortium, (2016) 14 SCC 172 , wherein the Supreme Court held as under: “12. In case of a tender, there is no obligation on the part of the person issuing tender notice to accept any of the tenders or even the lowest tender. After a tender is called for and on seeing the rates or the status of the contractors who have given tenders that there is no competition, the person issuing tender may decide not to enter into any contract and thereby cancel the tender. It is well-settled that so long as the bid has not been accepted, the highest bidder acquires no vested right to have the auction concluded in his favour [Vide: Laxmikant and Others vs. Satyawan and Others, (1996) 4 SCC 208 , Rajasthan Housing Board and Another vs. G.S. Investments and Another, (2007) 1 SCC 477 and Uttar Pradesh Avas Evam Vikash Parishad and Others vs. Om Prakash Sharma, (2013) 5 SCC 182 ]. 13. The appellant-state was well within its rights to reject the bid without assigning any reason thereof. This is apparent from clause 24 of NIT and clause 32.1 of SBD which reads as under: 20. The government must have freedom of contract. In Master Marine Services (P) Ltd. vs. Metcalfe and Hodgkinson (P) Ltd. and Another, (2005) 6 SCC 138 , in Para-12 this Court held as under: “12. After an exhaustive consideration of a large number of decisions and standard books on administrative law, the Court enunciated the principle that the modern trend points to judicial restraint in administrative action. The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise, which itself may be fallible. The Government must have freedom of contract. In other words, fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principles of reasonableness but also must be free from arbitrariness not affected by bias or actuated by mala-fides.
In other words, fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principles of reasonableness but also must be free from arbitrariness not affected by bias or actuated by mala-fides. It was also pointed out that quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.” 21. We are of view that judgments relied upon by respondents do not interdict this Court from exercising jurisdiction in appropriate cases. What has been laid down as law is that the Constitutional Courts can always exercise jurisdiction on all the matters including the matters arising from the Government contracts in case the transactions suffer from arbitrariness, irrationality, mala-fides or bias. However, the Constitutional Courts have to be conscious of the fact that in such cases, they have to exercise a lot of restraints while exercising their powers of judicial review. 22. Recently, in Silppi Constructions Contractors vs. Union of India and Another, (2020) 16 SCC 489 , after taking notice of a number of precedents, Hon’ble Supreme Court has held as under: “19. This Court being the guardian of fundamental rights is duty bound to interfere when there is arbitrariness, irrationality, mala-fides and bias. However, this Court in all the aforesaid decisions has cautioned time and again that courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters. This Court is normally loathe to interfere in contractual matters unless a clearcut case of arbitrariness or mala-fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution. The Courts must realise their limitations and the havoc which needless interference in commercial matters can cause.
The Courts must realise their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in judges’ robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. As laid down in the judgments cited above the courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give “fair play in the joints” to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer. 20. The essence of the law laid down in the judgments referred to above is the exercise of restraint and caution the need for overwhelming public interest to justify judicial intervention in matters of contract involving the state instrumentalities; the courts should give way to the opinion of the experts unless the decision is totally arbitrary or unreasonable; the court does not sit like a court of appeal over the appropriate authority; the court must realise that the authority floating the tender is the best judge of its requirements and therefore, the court’s interference should be minimal. The authority which floats the contract or tender, and has authored the tender documents is the best judge as to how the documents have to be interpreted. If two interpretations are possible then the interpretation of the author must be accepted. The courts will only interfere to prevent arbitrariness, irrationality, bias, mala-fides or perversity. With this approach in mind we shall deal with the present case.” 23. Their Lordships, after discussing law on the issue in detail, proceeded to scrutinize the facts involved in that case and then found that the ground for interference were not made out in the facts and circumstances of the case. 24. While assessing the facts of the cases in hand at the touch stone of the above noticed expositions of law, we find that the action of the respondents is arbitrary and needs to be interfered with. We are not convinced that the impugned action of respondents is going to serve any public interest. On the contrary, we feel that said action of respondents is arbitrary and hence cannot be countenanced.
We are not convinced that the impugned action of respondents is going to serve any public interest. On the contrary, we feel that said action of respondents is arbitrary and hence cannot be countenanced. It is strange that though the petitioners are ready to execute the tendered works on lower prices, yet the respondents want the public money to be wasted by making expenditure that can be avoided. In addition, the factor of delay in execution of work as also consequent escalated costs have also been conveniently ignored by respondents, which again cannot be said to be in public interest. Thus no public interest is evidently likely to be served by the impugned action of respondents. 25. During the course of hearing, learned counsel for the petitioners have brought to the notice of the Court a document dated 24.08.2021, whereby Chief Engineer, South Zone, HP PWD, Shimla-2 has conveyed the acceptance of tenders in respect of work i.e. construction of link road from Maninvi to Tharvi falling under the jurisdiction of Superintending Engineer, 11th Circle, Rampur. Perusal of contents of this communication reveals that bid of L-1 in that case was 37.14% below the estimated cost of tender and after negotiation though the bid amount remained the same, the bidder was asked to provide additional security amounting to Rs. 15,00,000/- and the tender was accepted. In response, the respondents have tried to explain that deviation in that case was made for the reason that the tender was called 2nd time and further delay would have caused escalation of costs. 26. Again we are not convinced with the explanation provided by the respondents. When the contractors are willing to execute the works on much lower prices, refusal to accept their bids, places the entire decision-making process of respondents in the realm of conjectures. Merely, the tender in other case was on 2nd call, does not make it different than the facts involved herein. The rates quoted by the tenderer in said case were still much lower than the estimated costs of work. Meaning thereby that applicability of CPWD manual was discretionary with respondents. This again raises a serious question on the bona-fides of impugned actions of respondents. Fairness should be the hallmark of every public action. 27. In the light of the discussions made hereinabove, the actions of respondents impugned herein are held to suffer from vice of arbitrariness and discrimination.
Meaning thereby that applicability of CPWD manual was discretionary with respondents. This again raises a serious question on the bona-fides of impugned actions of respondents. Fairness should be the hallmark of every public action. 27. In the light of the discussions made hereinabove, the actions of respondents impugned herein are held to suffer from vice of arbitrariness and discrimination. 28. Accordingly, all these writ petitions are allowed. The impugned order dated 17.08.2021 (Annexure P-4) in CWP No. 4954 of 2021, orders dated 28.07.2021 and 02.08.2021 (Annexure P-1 and Annexure P-4) in CWP Nos. 4370 and 4371 of 2021 are quashed and set aside. The respondents are directed to consider the award of works in question respectively in favour of the petitioners by virtue of their being L-1 in their respective tenders. 29. The writ petitions are disposed of in the aforesaid terms, so also the pending applications, if any.