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Gauhati High Court · body

2025 DIGILAW 29 (GAU)

T. J. Enterprises v. State of Arunachal Pradesh

2025-01-08

ROBIN PHUKAN

body2025
JUDGMENT : Heard Mr. D. Mozumdar, learned Senior Counsel assisted by Mr. S.K. Deuri, learned counsel for the petitioner. Also heard Mr. N. Ratan, learned Additional Advocate General for the respondent Nos. 1 to 5 and Mr. T. Tagum, learned counsel for the respondent No. 6. 2. In this petition, under Article 226 of the Constitution of India, the petitioner has challenged the Minutes of Meeting, being Memo No. CEUD/PLG/MS-414/2023-24, dated 29.02.2024, issued by the Chief Engineer, Urban Development and Housing, Itanagar and signed by the Surveyor of Works, Department of Urban Development and Housing, Itanagar and also the Notice Inviting Bids (2nd Call), dated 04.03.2024, issued by the Executive Engineer, Urban Development and Housing, Aalo Division. 3. It is to be noted here that vide impugned Minutes of Meeting dated 29.02.2024, the e-tender invited, vide ID No. 2024_APUDH_1552_1, dated 13.01.2024 for the work “Infrastructure Development of Government Secondary School at Kamba” was cancelled and vide impugned Notice Inviting Bids (2nd Call) dated 04.03.2024, online item rate tender in double bid form, were invited from eligible enlisted contractors of APPWD, with appropriate level for the work “Infrastructure Development of Government Secondary School at Kamba” at an approximate value of Rs. 10,47,52,000.09/- only. 4. The background facts, leading to filing of the present petition, are briefly stated as under: “The petitioner, along with respondent No. 6, had participated in the tender process floated by the Executive Engineer, Urban Development and Housing, Aalo Division by a Notice Inviting Bid, on 13.01.2024, by which online item rate tender, in double bid form, were invited from eligible enlisted contractors of APPWD, with appropriate level for the work “Infrastructure Development of Government Secondary School at Kamba” at an approximate value of Rs. 10,47,52,000.09/-. Their technical bid became successful and thereafter, their financial bids were opened on 13.02.2024 and having carrying out detailed evaluation of the bid prices submitted by the petitioner and the respondent No. 6, a comparative statement of quotation was prepared, wherein the petitioner had quoted an amount of Rs. 9,00,86,720/-, which was the lowest among the two bidders. Thereafter, the respondent authorities, vide impugned Minutes of Meeting, dated 29.02.2024, had cancelled the Notice Inviting Bid, on 13.01.2024, for the aforesaid work i.e. “Infrastructure Development of Government Secondary School at Kamba”, on the ground that the petitioner”s firm and the firm of respondent No. 6 had quoted abnormal rate in the financial bid. Thereafter, the respondent authorities, vide impugned Minutes of Meeting, dated 29.02.2024, had cancelled the Notice Inviting Bid, on 13.01.2024, for the aforesaid work i.e. “Infrastructure Development of Government Secondary School at Kamba”, on the ground that the petitioner”s firm and the firm of respondent No. 6 had quoted abnormal rate in the financial bid. Thereafter, immediately on 04.03.2024, the Executive Engineer, Urban Development and Housing, Aalo Division, had issued fresh Notice Inviting Bids (2nd Call) for the aforesaid work. The pleaded case of the petitioner is that the action of the respondent authorities in issuing the minutes of meeting dated 29.02.2024, cancelling the e-tender and the Notice Inviting Bids dated 04.03.2024, calling for re-tender of the work as stated above, without specifying what was the abnormality in the rate and without providing the benefit of Clause 29.5 of the Standard Bidding Document to the petitioner, which requires that the employer should provide the bidder an opportunity to produce detailed price analysis for any or all items of the bill of quantities, to demonstrate the internal consistency of those prices with the construction method and schedule proposed, is in violation of the principles of natural justice, equity, good conscience, lack of administrative fairness, reasonableness and are in derogation of the legitimate expectation of the petitioner’s firm.” 5. The respondent Nos. 1 to 5 have filed their affidavit-in-opposition, wherein a stand is being taken that the petitioner has quoted the rate 14% below from the tender document and major item like internal electrification and carrying item have been drastically varied from the approved cost and specification and considering the quality and specification, the Board constituted for evaluation has recommended for retender of the work, and that having rejected the bid of the petitioner, the retender notice was issued on 04.03.2024, and technical bid was open on 18.03.2024 and the same has been kept in abeyance as per direction of this Court, and that there is no illegality or infirmity in the impugned minutes of meeting, by which financial bid filed by the petitioner has been rejected and therefore, it is contended to dismiss the petition. 6. The respondent No. 6 has also filed an affidavit denying the assertions made in the petition by the petitioner. 7. The petitioner has also filed rejoinder affidavit denying the averments made by the respondent Nos. 1 to 6 in their affidavit-in-opposition. 8. Mr. 6. The respondent No. 6 has also filed an affidavit denying the assertions made in the petition by the petitioner. 7. The petitioner has also filed rejoinder affidavit denying the averments made by the respondent Nos. 1 to 6 in their affidavit-in-opposition. 8. Mr. Mozumdar, learned Senior Counsel for the petitioner submits that in the impugned minutes of meeting, the respondent authorities have not assigned any reason for rejecting the financial bid of the petitioner and that the bid of the petitioner is below the private respondent No. 6 and as such, the petitioner is the L1 bidder and the financial bid ought to have settled in favour of the petitioner and in the bid document of instruction for bidders, there is a Clause 29.5 which requires that the employer should provide the bidder an opportunity to produce detailed price analysis for any or all items of the bill of quantities to demonstrate the internal consistency of those prices with the construction method and schedule proposed and the said chance has not been given to the petitioner and thereby, violated the principles of natural justice, equity, good conscience, and that rejection of the technical bid lacks administrative fairness and reasonableness. Mr. Mazumdar further submits that the respondent authorities were willing to award the contract to the respondent No. 6 and as they became unsuccessful in awarding the contract to him, they had cancelled the earlier process and issued re-tender notice. Further, Mr. Mazumdar submits that having not assigned any reason in the impugned minutes of meeting, the respondent authorities have tried to improve their case by assigning reason in the affidavit-in-opposition, which is not at all permissible in view of the decision of Hon’ble Supreme Court in the case of Commissioner of Police vs. Gordhandas Bhanji, reported in AIR 1952 SC 16 . Mr. Mozumdar further submits that the financial scrutiny report, which is annexed with the affidavit-in-opposition as Annexure-2 by the respondent authorities, indicates that in respect of additional carriage charge, the petitioner had quoted the rate at Sl. No. 1.2, the variation is 97.24% below and at Sl. No. 4.1, it is 210.24% above and it is good for the respondent authorities that the petitioner will carry out the said work at such a low rate and as such, Mr. No. 1.2, the variation is 97.24% below and at Sl. No. 4.1, it is 210.24% above and it is good for the respondent authorities that the petitioner will carry out the said work at such a low rate and as such, Mr. Mazumdar has contended to set aside the impugned minutes of meeting dated 29.02.2024 and to direct the respondent authorities to settle the contract in favour of the petitioner. 9. Per contra, Mr. Ratan, learned Additional Advocate General for the respondent Nos. 1 to 5 has vehemently opposed the petition. Mr. Ratan submits that the rates quoted by the petitioner are abnormally low in some items and abnormally high in some items and over all variation is 14% below the NIT amount and though he is the L1 bidder, the respondent authorities have refused to act upon the same and decided to proceed for retender of the work and while scrutinizing the financial bid, the authorities have shown the rate quoted by the petitioner in a table with variation in item wise and over all variation is 14% below the NIT and the reason has been assigned that the L1 bidder i.e. the petitioner has submitted the low rate beyond the justified rate put to tender and therefore, having found the rate neither justified nor acceptable, decided to retender the same. Further, Mr. Ratan, also referred to a decision of Hon’ble Supreme Court in the case of Afcons Infrastructure Ltd. vs. Nagpur Metro Rail Corporation Ltd. and Anr., reported in (2016) 16 SCC 818 , especially to the observation made in paragraph No. 11, in support of his submission wherein it has been held that the decisions making process of the employer or owner of the project in accepting or rejecting the bid of a tenderer should not be interfered with, unless it is seen that the decision making process is mala fide or is intended to favour someone, and unless the decision is seen to be arbitrary and irrational and merely faulty or incorrect or erroneous decision, should not be interfered with. Mr. Ratan has also pointed out that the work is urgent in nature and almost a year is over and therefore, in view of the delay in execution of the work, the respondent authorities have proceeded to retender the work and therefore, it is contended to dismiss the petition. 10. On the other hand, Mr. Mr. Ratan has also pointed out that the work is urgent in nature and almost a year is over and therefore, in view of the delay in execution of the work, the respondent authorities have proceeded to retender the work and therefore, it is contended to dismiss the petition. 10. On the other hand, Mr. Tagum, learned counsel for the respondent No. 6 has also adopted the submission so advanced by Mr. Ratan, learned Additional Advocate General for the respondent Nos. 1 to 5. 11. Having heard the submissions of learned Advocates of both sides, I have carefully gone through the petition and the documents placed on record and also gone through the decisions referred by learned Advocates of both sides. 12. It is not in dispute that the petitioner and the private respondent No. 6 became successful in the technical bid submitted by them for the work “Infrastructure Development of Government Secondary School at Kamba” floated vide Notice Inviting Tender dated 13.01.2024. It also appears that while scrutinizing the financial bid, the respondent authorities have prepared a comparative statement of quotations which indicates that the lowest bid has been submitted by the petitioner for a sum of Rs. 9,00,86,720/-, which is below 14% of the total sum of Rs. 10,47,52,000.09/-. 13. That perusal of the impugned minutes of meeting dated 29.02.2024 (Annexure 11 to the writ petition) indicates that due to abnormal rate quoted in the financial bid by the petitioner’s firm, it has been decided to cancel the notice, vide ID No. 2024_APUDH_1552_1. The financial scrutiny of the financial bid submitted by the petitioner indicates that the overall percentage of variation is 14% and in some of the items shown at the table at Sl. No. 1.1, it is 23.51% above; at Sl. No. 1.2, it is 97.24% below; at Sl. No. 1.3, it is 48.79% above; at Sl. No. 1.4, it is 81.81% below; at Sl. No. 1.5, it is 60.25% below; at Sl. No. 1.6, it is 56.72% below; at Sl. No. 2.1, it is 24.47% above; at Sl. No. 3.1, it is 84.98% above; at Sl. No. 4.1, it is 210.24% above; at Sl. No. 1.3, it is 48.79% above; at Sl. No. 1.4, it is 81.81% below; at Sl. No. 1.5, it is 60.25% below; at Sl. No. 1.6, it is 56.72% below; at Sl. No. 2.1, it is 24.47% above; at Sl. No. 3.1, it is 84.98% above; at Sl. No. 4.1, it is 210.24% above; at Sl. No. 5.1, it is 160.31% above, and it is stated that the lowest firm i.e. the petitioner”s firm has submitted the low rate beyond the justified rate put to tender and the same is unjustified and unacceptable and therefore, the committee had recommended for re-tender of the work. 14. It also appears that in the NIT, there is a clause i.e. Clause 8 which provides that a bid which is unrealistically priced, abnormally low/high, will summarily be rejected. It is already stated that the financial scrutiny, which is annexed as Annexure-2 to the affidavit-in-opposition by the respondent authorities, indicates that the overall variation is 14% below the NIT amount and the table indicates that the variation in the items, the lowest is 23.51% above and 97.24% below and the highest is 210.24% above and the same has duly been reflected in the said scrutiny. Further, in view of the Clause 9 of the NIT, the respondent authorities are justified in rejecting the financial bid of the petitioner. It is clearly stated in the financial scrutiny that the rate quoted by the petitioner is beyond the justified rate put to tender and in view of Clause 8 of the NIT, it cannot be said that the impugned minutes of meeting is unjustified or without any reason. 15. In the case of Central Coalfields Limited and Anr. vs. SLL-SML (Joint Venture Consortium), reported in (2016) 16 SCC 818 , Hon’ble Supreme Court by relying upon its several earlier decisions, has held that the decision making process of the employer or owner of the project in accepting or rejecting the bid of a tenderer should not be interfered with and interference is permissible only if the decision making process is mala fide or is intended to favour someone. Similarly, the decision should not be interfered with unless the decision is so arbitrary or irrational that the Court could say that the decision is one which is no responsible authority, acting reasonably and in accordance with law, could have reached. Similarly, the decision should not be interfered with unless the decision is so arbitrary or irrational that the Court could say that the decision is one which is no responsible authority, acting reasonably and in accordance with law, could have reached. Similar observation has also been made in the case of Afcons Infrastructure Ltd. (supra). 16. It is also well settled by Hon’ble Supreme Court in catena of decisions that the law with respect to interference in tender matters is limited. In the case of Tata Motors Limited vs Brihan Mumbai Electric Supply & Transport Undertaking (BEST) and others reported in 2023 SCC OnLine SC 671, Hon'ble Supreme Court has held as under:- "48. 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 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 clear-cut 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. 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. 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." 17. 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." 17. Again in the case of Silppi Constructions Contractors vs. Union of India reported in (2020) 16 SCC 489 , the Hon'ble Supreme Court has held as follows :- "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. .... 25. That brings us to the most contentious issue as to whether the learned Single Judge of the High Court was right in holding that the appellate orders were bad since they were without reasons. We must remember that we are dealing with purely administrative decisions. These are in the realm of contract. While rejecting the tender the person or authority inviting the tenders is not required to give reasons even if it be a State within the meaning of Article 12 of the Constitution. These decisions are neither judicial nor quasi-judicial. If reasons are to be given at every stage, then the commercial activities of the State would come to a grinding halt. The State must be given sufficient leeway in this regard. Respondents 1 and 2 were entitled to give reasons in the counter to the writ petition which they have done." 18. These decisions are neither judicial nor quasi-judicial. If reasons are to be given at every stage, then the commercial activities of the State would come to a grinding halt. The State must be given sufficient leeway in this regard. Respondents 1 and 2 were entitled to give reasons in the counter to the writ petition which they have done." 18. It is also well settled in the case of Gordhandas Bhanji (supra) that a party to a proceeding cannot improve their case subsequently by filing an affidavit. Mr. Mazumdar, has rightly pointed this out and there is substance in his submission. But, it cannot be said that no reason was assigned in the impugned Minutes of Meeting, dated 29.02.2024. For better appreciation of the submission of Mr. Mazumdar, the impugned Minute of the Meeting is reproduced herein below:- Dated Itanangar, the 29th Feb, 2024 MINUTE Due to abnormal rate quoted in the financial bid by the firm M/s T.J. Enterprise and M/s T. Gangkak Enterprises the e-tender invited vide ID No. 2024_APUDH_1552_1, dated 13.01.2024 for the work ‘Infrastructure Development of Government Secondary School at Kamba’ is hereby cancelled. The fixation of new date of e-tender shall be fixed in due course of time.‛ 18.1. Thus, a cursory perusal of the impugned Minutes of the Meeting, dated 29.02.2024, it cannot be said that there is no reason. Moreover, the respondent authorities No. 1, 2, 3, 4 and 5, have produced the Financial Scrutiny of the Financial Bid of the petitioner and respondent No.6 (Annexure-II). The said scrutiny also indicates that the reason has been assigned. The variation of rate, quoted by the petitioner was found to be 14% below the NIT amount and it is categorically stated that the same is unjustified and unacceptable. The rate quoted by the petitioner and the respondent No.6 was shown in the tabular form. That being so the question of improvement of the case by the respondent authority in their affidavit does not arise. As held in the case of Silppi Constructions Contractors (supra), the respondent authorities are entitled to give reasons in the counter to the writ petition, which they have already done. 18.2. That being so the question of improvement of the case by the respondent authority in their affidavit does not arise. As held in the case of Silppi Constructions Contractors (supra), the respondent authorities are entitled to give reasons in the counter to the writ petition, which they have already done. 18.2. Even for the sake of argument, if we accept that there is no reason in the impugned Minutes of the Meeting, dated 29.02.2024, yet, in view of the proposition of law, so laid down in the case of Silppi Constructions Contractors (supra), the respondent authorities are not bound to assigned any reason as the said decision was neither judicial nor quasi-judicial, although the respondent authorities are State within the meaning of Article 12 of the Constitution of India. It is also well settled that in respect of contract matters, the State must be given sufficient leeway. For the aforesaid reason, the contention of Mr. Mazumdar, the learned Senior Counsel for the petitioner, in this regard cannot be acceded to. 19. It is a fact that in the bid document, there is a provision i.e. Clause 29.5, which read as under:- “if the bid of the successful bidder seriously unbalance in substantially relation to engineer’s estimate of the cost of work to be performed under the contract, the employer may require the bidder to produce detailed price analysis for any or all items of the bill of quantities to demonstrate the internal inconsistencies of those prices with the construction method and the schedule proposed. After evaluation of the price analysis, the employer requires the amount of performance scrutiny set forth in Clause 34 be increased at the expense of the successful bidder to a level sufficient to protect the employer against the financial loss in the event of default of the successful bidder under the contract.” 19.1. Clause 29.2 of the said document also provides that in evaluating the bid, the employer will determine for the evaluated bid price by adjusting the bid price in each bid as follows: (a) making an appropriate adjustment for any other acceptable variation, deviation, and (b) making an appropriate adjustment to reflect discount, other price modification offered in accordance with Clause 23.6. 19.2. 19.2. Clause 23.6 provides that at the time of opening of financial bid, the name of the bidders were found responsive in accordance with Clause 23.4 will be announced, the bids of only those bidders will be open. The responsive bidders” name the bid price, the total amount of each bid, any discount, and such other detail as the employer may consider appropriate, will be announced by the employer at the opening. Any bid price or discount which is not read out and recorded will not be taken into account in bid evaluation. 19.3. Admittedly, the respondent herein did not ask the bidder to produce detailed price analysis for the items of the bill of quantities to demonstrate the internal inconsistencies of those prices with the construction method and the schedule proposed. 19.4. Though, Mr. Mozumdar learned Senior Counsel for the petitioner has tried to impress upon this Court that as per Clause 29.5, the petitioner has not been heard and as such, the principles of natural justice have been violated, yet, the said submission left this Court unimpressed, as the said clause is not mandatory, rather, from the word “may” employed in clause 29.5, it appears to be discretionary. 19.5. It is well settled in the case of Uflex Ltd. vs. State of T.N., reported in (2022) 1 SCC 165 , that the judicial review of contractual matters has its own limitations. Judicial review of administrative actions is intended to prevent arbitrariness, irrationality, unreasonableness, bias, and mala fides. The purpose is to check whether the choice of decision is made lawfully and not to check whether the choice of decision is sound. In evaluating tenders and awarding contracts, the parties are to be governed by principles of commercial prudence. To that extent, principles of equity and natural justice have to stay at a distance. 20. Though, Mr. Mozumdar, learned Senior Counsel for the petitioner has tried to impress upon this court that with a view to award the contract to the respondent No. 6, the respondent authorities have cancelled the tender notice, yet, in view of the tell- tale materials for rejection of the financial bid of the petitioner, this Court is unable to agree with the submission of Mr. Mozumdar. 21. Mozumdar. 21. In the case in hand, in view of existence of Clause 8 in the NIT, which provides for summery rejection of a bid which is unrealistically priced, abnormally low/high, the rejection of financial bid of the petitioner by the respondents cannot be said to be arbitrary or irrational. Rather, it appears that the respondent authorities have acted in accordance with the terms of the NIT. Thus, having tested the impugned Minutes of the Meeting and the terms of contract, on the touchstone of the Wednesbury’s principle of reasonableness, I find that the same able to withstand the test. 22. As the respondent authorities have already initiated the fresh process by floating a fresh tender on 04.03.2024, this Court is inclined to dismiss this petition, granting liberty to the petitioner to take part in the said bidding process. The respondent authorities are accordingly, directed to allow the petitioner to participate in the process and thereafter, to proceed with the matter in accordance with law. 23. In the result, this writ petition stands dismissed. The parties have to bear their own costs.