High Court of Punjab and HaryanaCWP/6473/2019dismissed

Ceigall-Gawar (Jv) Ludhiana v. State Of Punjab And ORS

2019-05-22Mr. Justice Krishna Murari,Mr. Justice Arun Palli35 pages

!"#$%&' () *"+, -## .(*/0#$%& 1**2*'3)45&50*1*1*067.8* * .....Petitioner versus 9*" :*;* .8, .....Respondents (- <6(

9= 9(

0 9 <6(

660 Present :

Mr. Puneet Bali, Senior Advocate with Mr. Vibhav Jain, Advocate, Mr. RP Saini, Advocate, Mr. Satyam Aneja, Advocate, for the petitioner. Mr. Atul Nanda, Advocate General, Punjab with Ms. Rameeza Hakeem, Additional Advocate General, Punjab & Ms. Amanat Chahal, Assistant Advocate General, Punjab. Mr. Satish Singla, Government Senior Standing Counsel for respondent No.2,Union of India.

Mr. Akshay Bhan, Senior Advocate with Dr. Ashwinie Kumar Bansal, Advocate and Mr. Alok Mittal, Advocate and Mr. Baljinder Singh, Advocate, for respondent No.5. **** = 9(

0 9 Aggrieved by the rejection of its technical bid submitted in response to a notice dated 21.01.2019 issued by respondent No.4 calling for a bid for selection of a contractor for engineering, procurement, construction, testing, commissioning of approaches to Rail Over Bridge & Rail Under Bridge on Pakhowal Rail Road crossing and development of Rotary club as Smart street in Ludhiana City under Smart City Mission, the

petitioner, a joint venture, has invoked the extra ordinary jurisdiction conferred upon this Court under Article 226 of the Constitution of India. 2.

Petitioner is a joint venture comprising of M/s Ceigall India Ltd. and M/s Gawar Construction Ltd. having a share holding of 74% and 26%, respectively. This joint venture was entered between the respective companies on 20.02.2019 for the purpose of bidding a tender issued by respondent No.4,Ludhiana Smart City Ltd. (hereinafter referred to as 'LSCL'). It is a Special Purpose Vehicle (hereinafter referred to as 'SPV') established as a limited company under the Companies Act, 2013 incorporated as per the Mission Statement & Guidelines issued by the Ministry of Urban Development for the purpose of implementation of Smart City Mission.

Under the Mission Statement & Guidelines issued by the Ministry of Urban Development, Government of India, the Smart City Mission has to be operated as Centrally Sponsored Scheme and the Central Government proposed financial support to the Mission to the extent of Rs.48,000/, crores over five years i.e. on an average of Rs.100/, crores per city per year for the cities selected as Smart Cities and equal amount on matching basis is required to be contributed by the State/Urban Local Bodies.

The Scheme further provides that the implementation of the Mission at the city level will be done by a SPV, created for the purpose to plan, appraise, approve, release funds, implement, manage, operate, monitor and evaluate the smart city development project. Each smart city is proposed to have a SPV to be headed by a full time Chief Executive Officer (CEO) and to have nominees of Central Government, State Government and Urban Local Bodies on its board. The execution of the project may be done through

joint venture subsidiaries, public private partnership (PPP), turnkey contracts, etc. suitably dovetailed with revenue streams. The SPV is a public limited company to be incorporated under the Companies Act, 2013 at the city,level in which the State/UT and Urban Local Bodies will be the promoters having 50,50 equity share holding.

In accordance with the Mission Statement Guidelines, respondent No.4 was incorporated as the SPV for Ludhiana City situated in Punjab. A Request For Bid (hereinafter referred to as 'RFB) was issued vide notice dated 21.01.2019 for the selection of contractors for engineering, procurement, construction, testing, commissioning of approaches to Rail Over Bridge & Rail Under Bridge on Pakhowal Rail Road crossing and development of Rotary club as Smart street in Ludhiana City including two years defect liability period.

Initially, the first notice of RFB was issued on 05.07.2018 prescribing 30th July as the last date for submission. However, since only a single bid was received in response to the notice in accordance with the Standard Operating Procedures of Department of Local Government, Punjab, providing that if there were less than three bids, the same were not to be opened in the first call of tender and accordingly the said tender was cancelled.

Another notice of RFB was issued on 07.08.2018. Till the last date of submission of bids, since only two bids were received, again in view of the Standard Operating Procedure, the same were not opened and the tender was cancelled.

For the third time, fresh RFB was issued inviting tenders on 20.09.2018. However, only one bid was submitted by M/s S.P.Singla Construction Pvt. Ltd. The technical bid submitted by the bidder was opened on 08.10.2018. After approval of the evaluation report by the City Level Technical Sub,Committee, Ludhiana as well as State Level Technical Committee, an approval was accorded on 11.10.2018 to open the financial bid of the said bidder. On 12.10.2018, the financial bid was opened which was for a sum of Rs.132,77,00,000/, . Since the bid amount was found to be unusually high and completely unbalanced against the project costs of Rs.62,24,00,000/,, this tendering process was also annulled. However, in view of the unbalanced bid received and low participation of bidders, a decision was taken to rework the estimates according to Standard Data Book of Ministry of Road Transport & Highways (hereinafter referred to as 'MoRTH'). Accordingly, the revised cost estimates were worked out as per MoRTH to be Rs.73.57 crores by the office of the Chief Engineering, PWD (B&R), Patiala.

After the revision of the costs, a fresh notice of RFB was issued on 22.01.2019 for a revised estimate of Rs.72.21 crores. The last date for submission of bids was prescribed as 22.02.2019. In response to this notice, two bids were received , one from M/s Ceigall India Ltd. and M/s Gawar Construction, a joint venture ( the petitioner) and another from M/s Deepak Builder and Engineers India Pvt. Ltd. (respondent No.5). 9.

The technical bids submitted by the aforesaid two bidders were opened on 22.02.2019. Since the petitioner had not submitted the details of the value of works in Form T,8(b) for the projects detailed in the tender at Sr. Nos. 8, 9 and 10 which was a requirement in the respect of the lead

member of the joint venture, the Project Management Committee (hereinafter referred to as the 'PMC') of the SPV sought clarification by way of two e,mails dated 25.02.2019 and 27.02.2019 in respect of value of works involved therein and whether agreements had been signed in relation thereto. The petitioner provided the requisite details while also making reference to the MoRTH RFP Amendment letter dated 07.06.2018 whereby an amendment was made in the model RFP regarding bid capacity to be issued by MoRTH. The amendment suggested was that while calculating the bid capacity as per the formula given for assessment of Available Bid Capacity i.e.

while determining the value of B the works for which the Letter of Award (LoA) has been issued but the Appointed Date/Commencement Date is not declared as on Bid Due Date, shall not be taken into account.

10.

PMC prepared a Technical Bid Evaluation Report which was placed before the City Level Technical Sub,Committee on 28.02.2019. The PMC made a presentation with regard to various aspects of qualification criteria and the Bid Evaluation Report. As per the formula set out in the RFB issued by respondent No.4, on evaluation of the technical bid, it was found that the petitioner had a negative bid capacity of Rs. , 470.40 crores and thus was ineligible for further participation in the tender process and financial bid submitted by it was not liable to be opened. However, the bid capacity of other bidder i.e. respondent No.5 was found to be Rs.739.59 crores. After due deliberations by City Level Technical Sub,Committee as well as State Level Technical Sub Committee, a decision was taken that the petitioner was disqualified to participate in the bid process any further as it did not qualify on technical grounds.

11.

It is the rejection of the technical bid submitted by the petitioner which is under challenge in this petition.

12.

Shri Puneet Bali, learned senior counsel appearing for the petitioner vehemently contended that the technical bid has wrongly been rejected and the petitioner has wrongly and illegally been disqualified from participating in the further tender process. It is further submitted that while calculating the assessed available bid capacity of the petitioner in accordance with Clause 4.4 of the RFB, respondent No.4 has wrongly and illegally included the value of work where LoA were received but the Appointed Date was not issued by the competent authority. 13.

In reply, learned Advocate General representing the State of Punjab and respondent No.4 submitted that MoRTH RFP Guidelines where upon the reliance is being placed by the petitioners to contend that the value of work for which appointed date was not issued ought not have been included, have no application whatsoever to the RFB issued by respondent No.4 for the project in question. It is further submitted that the circular dated 07.06.2018 which is being relied upon by the petitioner is a document incorporating certain amendments in Model RFP issued by MoRTH/NHAI and is not applicable to the RFB in question. 14.

Much stress has been laid by the learned Advocate General on the contention that the circular dated 07.06.2018 being an amendment to Model RFP of MoRTH/NHAI would have no application to the present tender for which RFB has been issued under the Ministry of Urban Development, Government of India and is based on Standard Bidding Document issued by the Public Works Department of the State of Punjab.

15.

It is also submitted that the RFB issued for the present project is a complete and independent document in accordance with which the bids were to be invited and evaluated and accordingly the tender was to be awarded. No terms and conditions other than the one specified in project RFB would be attracted or said to be incorporated or made applicable to the invitation and evaluation of bids and/or of the project whether by way of reference or otherwise, expressly or by implication. 16.

Learned Advocate General further submitted that by means of the instant petition, the petitioner seeks to call upon respondent No.4 to apply the terms and conditions of RFP of MoRTH which are ex,facie not applicable to the tender in question and issuing a mandamus to the respondents would tantamount to depart from the terms and conditions of RFB issued by respondent No.4, which would be against the well settled principle that the Tendering Authorities are bound to adhere to the norms and procedures laid down in the bidding document and any arbitrary departure from such norms would tantamount to a grave illegality. 17.

The argument on behalf of the petitioner revolves around the factum of application of MoRTH guidelines while computing the bid capacity of the petitioner. In order to appreciate the controversy it may be relevant to reproduce clause 4.4 of the RFB issued for the tender in question which prescribes the procedure for calculating the bid capacity of the tenderers and the contents of the letter dated 07.06.2018 bringing about the amendment in the standard bidding document of MoRTH.

! "## $" %

" $%

# $ %&

# # $ &

" " % ## # '% % $

# % # $ &

# % " % ## # '% % $ # # % $ % (

$ )" )% * &+

### * * ,-

. /&/&/& ,-

# # "'0,

"/& ,-.

' &1'(

# # $ & ! "## %% $ )2. 3 " %

# $ %& )2.

3 4 # 4.

$& 0

" % ## # ( $

# % # $ ,- & 5 $ ( # $ 67

- 4.

### -

- -

% &

# % " % ## # ( $

% % $ # # % $ % )%''. %

$ )" )% * )2. 2 3 .

4 9

820 7 3 8

. )%% $

' : : '/ : '

: '; : '< : '1 =

/&>> /&>1 /&/> /&/1 /& >

# %

## # & ;&

&+ 18.

Placing strong reliance upon clause 2.2.2.1 of the MoRTH guidelines, learned senior counsel for the petitioner has contended that the same ought to have been applied while computing the bid capacity of the petitioner.

19.

The dispute revolves around the method of determination of the bid capacity of the prospective tenderers. In accordance with the RFB of the tender in question, the assessed available bid capacity is to be calculated by applying the formula A*N*2,B where 'A' is maximum value of works executed in any year during last three years. 'N' is number of year prescribed for completion of works for which bids are invited whereas 'B' is the value of existing commitments and ongoing works to be completed during the period of completion of works for which bid is invited whereas according to the amended RFP of MoRTH while calculating the value of B for determination of the bid capacity, the work for which though LoA has been issued but appointed date/commencement date has not been declared as on bid due date shall not be taken into account while calculating the value of B.

20.

In the RFB for the tender in question, the current contract commitments/work in progress was required to be submitted in Form T,8(b) titled "Current Contract Commitments/Works in Progress". The said format in the RFB stipulates that the bidders should provide information on their current commitments on all contracts that have been awarded, or for which a letter of intent or acceptance has been received or for contracts approaching completion but for which an unqualified, full completion certificate has yet to be issued. The format is an integral part of the RFB for the project in question and binding on the bidders which becomes apparent from a perusal of clause 3.2 of the RFB which provides as under:,

! 21.

A perusal of the clause 4.4 and particularly the words

! "# $$$

"& '!( used therein make it abundantly clear that for computation of the bid capacity the value of such commitments and ongoing works have to be taken into consideration. The meaning of existing works and ongoing contracts is explained in Form T,8(b) which stipulates that information is to be provided on all the contracts that have been awarded, or for which a letter of intent or acceptance has been received or for contracts approaching completion but for which completion certificate has not been issued.

22.

Conditions set out in Clause 4.4 do not carve out any exception of excluding any such existing commitment for which though LoA has been issued but the appointed date/commencement date has not been declared unlike the condition existing in the MoRTH RFP brought in by way of amendment carried out vide letter dated 07.06.2018.

23.

It is not in dispute that the project for which the RFB has been issued is being implemented under Smart City Mission under the Ministry of Urban Development, Government of India and not under the Ministry of Road, Transport and Highways which brought an amendment in its RFP vide letter dated 07.06.2018, which is being strongly relied upon by the petitioner. How the conditions enumerated in RFP issued by one Department would stand attracted and can be made applicable in the RFB issued by Special Purpose Vehicle which has been incorporated under the Companies Act for the purpose of Smart City Mission Project under the aegis of completely different departments, namely, the Ministry of Urban Development has not been answered by the petitioner. 24.

Further more, the RFB for the project in question is based on standard bidding document issued by the Public Works Department of the State of Punjab. A perusal thereof would go to show that definition of bid capacity and the information in relation to existing commitments and ongoing contracts to be provided by prospective bidders is ) $

with the provisions contained in RFB issued for the project in question. On the other hand, a perusal of clause 2.2.2.1 of the MoRTH Model RFP (as amended by MoRTH Guidelines) and that of clause 4.4 of present RFB would yield the following distinctive features:, i) Two documents contain a different method for determining the value of B. In case of RFB for the project in question, the value of B is to be determined on the basis of existing commitments and ongoing works whereas in the MoRTH RFP guidelines, while determining the value of B, the works for which the

appointed date/commencement date has not been declared are to be excluded.

ii) The formula for bid capacity in two documents is entirely different. In the MoRTH Model RFP the bid capacity is computed by applying multiple of 2.5 to the project of A*N while under RFB in respect of the project in question only multiple of 2 is to be applied.

iii) In case of joint venture under the RFB issued for the project in question the lead member has to meet at least 51% of the requirement of the bid capacity and financial capacity whereas under the MoRTH Model RFP the lead member has to meet at least 60% of the requirement of the bid capacity, technical and financial capacity.

iv) Another important aspect worth noting is that under the MoRTH Model RFP, the joint venture is not even permissible for the projects having value of less than 100 crores whereas there is no such restriction in the RFB issued for the project in question.

25.

There is yet another aspect of the matter. To issue mandamus requiring respondent No.4 to apply the terms and conditions which are not culled out or incorporated in the RFB issued for the tender in question would tantamount to a mandamus to the respondents' authorities to depart from the stated terms and conditions of the RFB it has issued. The same shall be in violation of the well settled principles that the Tendering Authority is bound to adhere to the norms, standards and procedures laid down in the bidding document and any arbitrary departure from such norms would not stand test

of law. Reference may be made to the decision of the Hon'ble Apex Court in the case of

!!"

#"wherein it has been observed as under

" # "

$ %

& '

( '

)

" & %

" % *

# #+"" #

, %

& " #

- .

% #

* # #

# " "

! 26.

Rather a Tendering Authority is enjoined to rigidly enforce essential conditions of a bid document put forth by it in public domain and in case of non compliance it is enjoined to reject such bid. In case of $ % !!& ""

#'(it has been held as under:, ?@@&

3 % A %%

# # ##

( ##

% "

(

" #

# A ( ( #

(

" %A """"" """"" """"" """""+ 27.

In the case of ) * ) + * !!!

&",( the Apex Court has clearly laid down that while State is at liberty to choose its own method to arrive at a decision, there is an obligation cast upon them by which they are bound to adhere to the norms, standards and procedures laid down in the tender documents and there cannot be any arbitrary departure from the same. 28.

In the event, respondent No.4 was to adopt the criteria different from that stipulated in RFB issued for the project as is being suggested by the petitioner, it would lead to uncertainty and discrimination qua other bidders in the fray. Given that the bid capacity of all the bidders for the project in question has been computed in a uniform manner, strictly in accordance with the terms of the RFB issued for the project and thus, a fair, non,discriminatory and non,arbitrary approach has been adopted by respondent No.4 which cannot be faulted with. 29.

It is well settled that award of contract is essentially a commercial transaction and evaluation of the tenders are essentially commercial functions. Commercial consideration includes the ability of a tenderer to deliver goods or services or to do work of requisite standard. The

financial computation involved in the process of finalizing the tender capacity and efficiency of the bidder and perception of feasibility of completion of the project have to be within the domain of the financial experts and consultants and the Courts ordinarily would not enter into the said realm in exercise of powers of judicial review. 30.

In the case of -* . / 01.

+ -/0

0) -3)4

.* !", #

5"'(the Apex Court has observed as under:

" , 0

% *%

* &

" "

" / % ,

! 31.

In 6 *

- *

+!"& "

,(it has been held that when a decision is taken which is manifestly in consonance with the language of the tender document or subserves the purpose for which the tender is floated, the Court would follow the principle of restraint. It may be relevant to extract the following observations from the said judgment:,

3 4#

5 ' 0 3 6

3 4#

5 ' 0 3 -)7.700889-)7.8 :7;< %+=

" ,

% % # 9 1 "

/ #

/ "#

# ! 1

% 1

#" ,

% *

# #

" ,

+ "

% %

# > * &

/ "

" "

" ,

" "

# "

% *

+ # , ? #"

% % %

" &

% %

" /

% A,

% %

+* #

" %

* "

" % # #

# % * /

# * & %

" / ! 32.

Referring to note in Clause 4.4, learned senior counsel for the petitioner submitted that in view of the requirement in the note for the details to be supplied by the tenderer in Form T,8(b) to be counter signed by the officer of the authority for whom the bidder is undertaking the said works is itself indicative of the fact that such work for which the appointed date has not been specified, it cannot be considered for calculating the value of the 'B' for the purpose of bid capacity for the simple reason that the authority signing the document itself does not consider the said works within the category of the existing commitments. For a ready reference the provision of the note is being reproduced hereunder:, 4 9 & % #

, # # #% * %

# % *

% * A, A#

33.

In our considered opinion the provisions extracted above are only meant for certifying the veracity of the details to be submitted by the tenderer of the existing commitments of ongoing works and the stipulated period of completion remaining for each of the works so disclosed by him. The provisions of the said note cannot be taken for importing the provisions of MoRTH RFP guidelines into the RFB issued for the project in question as has been suggested by learned senior counsel for the petitioner. 34.

In the light of the aforesaid discussion, it is evident that MoRTH RFP guidelines cannot be referred to or relied upon for the purpose of ascertaining the rights and obligations of the bidders for the project by deviating from the conditions enumerated and set out in the RFB for the project in question. It is, therefore, only the terms of the RFB for the project in question that needs to be strictly applied. The MoRTH RFP guidelines thus will have no applicability to the case at hand. 35.

Thus, the first argument advanced by learned counsel for the petitioner has no force and is not liable to be accepted. 36.

The next submission advanced by the learned senior counsel for the petitioner is that no reason has been disclosed either in the decision rejecting the technical bid of the petitioner or during the process of evaluation of the technical proposals carried out by various committees. It is also contended that no formal communication was made to the petitioner with respect to the decision of rejection of its technical bid. Learned senior counsel also submitted that the absence of reasons in the deliberations for

the conclusion of rejecting the technical bid shows a complete absence of application of mind by the committees and thus the decision stands vitiated. 37.

Learned Advocate General, Punjab in reply contends that there has been adequate consideration of the petitioner's contention with respect to the application of MoRTH guidelines before the final decision in the matter. The deliberations were made by the City Level Technical Sub Committee (CLTSC), Ludhiana, in its meeting held on 28.02.2019 and MoRTH guidelines were found to be inapplicable to the project in hand. The Technical Bid Evaluation Report (TBER) was thus approved and was forwarded with recommendation for approval by the State Level Technical Committee (SLTC). The SLTC in its meeting held on 06.03.2019 deliberated upon the recommendations received and unanimously accorded that MoRTH guidelines were not in line with the RFB issued for the project. Accordingly, SLTC was also of the opinion that the bid of the petitioner stood technically disqualified. The contention that no reasons were accorded by various committees is misconceived in facts as well as in law. 38.

To support the facts, learned Advocate General has drawn the attention of the Court to the TBER filed as Annexure R,1, the minutes of the meeting of the CLTSC dated 28.02.2019 filed as Annexure R,2 as well as SLTC filed as Annexure R,3 to the counter affidavit. A perusal of the aforesaid documents lends credence to the contention of the learned Advocate General inasmuch as the issue of applicability of the MoRTH guidelines put forward by the petitioner has been considered and deliberated before taking a conscious decision that the same would not apply to the RFB issued for the project in question and the petitioner has a negative bid capacity.

39.

The first aspect in this regard to be delved is the legal necessity for recording reasons while rejecting the technical bid. At the outset it may be pointed out that clause 30 of the instructions to the bidders in the tender in question empowers the authority to reject any bid without assigning any reasons. Clause 30 reads as under:,

" #$ & A"

/ "

" %

# " "

" #

! 40.

Such clauses have been the subject matter of consideration and interpretation before the Hon'ble Apex Court and the power granted upon the Tender Issuing Authority the right to reject a bid without assigning reasons have been upheld. Reference may be made to the pronouncement of the Hon'ble Apex Court in the case of 8 2 4 $7 "9,

5&( wherein the Apex Court was considering challenge to Clause 6 of the Government Order which read "

!* + %

$ % +

!!#

$ %+,* - .

&* !* + + , ## ) / #

, +% &* !!"

* ". Such power conferred was upheld by making the following observations:, A %

D %

% %

" C

-7.

= " 7 D:

& C

" #

1 #

/ #

# , &

% D-.-#. (

"# #

# %

! 41.

It would be imperative to note the distinction in law between the existence of reasons and communication of reasons. While a party may not be necessarily communicated the reasons, it would be necessary for the reasons and the material on which the decision is based to exist in the record and which can be put forth before a Court of law while justifying such action. This view being propounded by us finds support from the judgment of the Allahabad High Court in the case of )8.. )

7 2: ). 0

+* . ( 6

5"##8!!& decided on 08.05.2007. The said judgment deals with the specific issue of communication of reasons for rejection of the technical bid ! ! the existence of reasons for such rejection. Aggrieved petitioner therein relied upon the judgment of the Hon'ble Supreme Court in + )0 26 "99!5

'!(to contend that non,communication of the reasons for rejection of the technical bid was fatal. Rejecting this contention, the Division Bench of the Allahabad High Court held that the law on the point as also laid down in - 0 )!

! 12!)

was that although the action must be based on reasons i.e. reasons must exist and must be demonstrable to the Court and there is no

such absolute proposition in law for such reasons to be communicated to the bidder. It may be relevant to extract the following observations from the said judgment

; 4%

# * F "

# '

# ,0

.& , 0

" &

" /

%& ,0

% # % % # ) /

# + )

% , #%

" " " &

" #

* # # % *

# /

" # #

% " # #> ?

/ #

# *

" ?

" 3* #

" /

5 G%

" % #

" /

# "

;5"))7

"4HG

# "

& "

" #

# %

# % %

& 0

5" ))7

# 0 A, H

/ "

# #

# #"

" "&

" #

& /

# , 0

. %

! 42.

The action of respondent No.4 for not communicating the reasons to the petitioner can only be faulted if there is any mandate in law for communicating such reasons, and no such requirement in law could be demonstrated by learned senior counsel for the petitioner.

43.

In the case of $ 6 82 !!,"#

",( while dealing with the specific case of rejection of a tender, the Apex Court held that there is no necessity to give an opportunity to show cause or pass a speaking order and it was observed that so long as the decision relating to award of contract was in public interest and +

% , the same cannot be interfered with and in such cases the principle of natural justice would stay at a distance. It may be relevant to extract the following from the said judgment

% "! * %

! 1 %

% *

A #

# %

& %

% %

% #

* #

% # " #

" *

" ,

" % * "

/ &

% #

9 - .1

" "

? H' 1

" #

!? - .1

7 0

# * #

$ #

# " "

G #

# % # # "

" "

" & 0

* #

# "

# 1 #

# A5G

# "! 44.

This issue has further been emphasized by the Hon'ble Apex Court in a recent decision rendered in the case of 4 ;1

+* . 2 )8.. 0

!", #

#5It was the contention of the respondent,bidder in the said case that the bid has been rejected by unreasoned order and the same is arbitrary. The facts were that a communication dated 24.09.2004 was sent to the bidder by the Estate Office where it was mentioned that the bid has not been accepted; and hence the earnest money was being returned. The Court observed that the communication of the decision reflects only return of the cheque pursuant to the decision of the Administrator. The decision of the Administrator which was communicated to the Estate Office on 21.09.2004 stated that on consideration of the relevant aspects and the report submitted seven bids are being rejected. The Court after looking into the communication and the report held that there was sufficient reason for rejection of the bid 0 #

# "

% "

/ &

(+D+))( %

" A H

A H

EIG +D+ ))(%

% *

" ,

@ ; %

"EIG !

% %

" C

* #

@ @*

% %

% " #

/ " % "

% " /

"& #

+D+))(

EIG #

0 "

G 0 5 3 6 A

0 "

0 5 3 -DD). 00 8)<&

9-00 8(+8; ). )

% , # %

" " " &

" #

* # # % * ,

# /

" # #

% " # #> ?

/ #

" ?

" 3* #

" /

5 G%

"% #

! 4

/ %

! 45.

In the case at hands, admittedly, petitioner was provided with an opportunity to clarify its bid to the extent that the details of the existing commitments and ongoing works submitted by the lead members were not in conformity with the RFB for the project in question. 46.

The minutes of the meeting of the CLTSC and SLTC alongwith the TBER demonstrate due deliberation and consideration of all the relevant issues including non,applicability of MoRTH RFP guidelines. The petitioner's contention that no reasons have been accorded by various committees is misconceived in facts as well as in law. The duty enjoined upon the respondents' authorities is to deliberate, apply its mind to the case of the petitioner and that the reasons must exist and be assigned for the rejection of the technical bid and not necessarily to be communicated to the

petitioner. In the case at hands the reasons for rejection of the technical bid were non,fulfillment of the bid capacity criteria as computed in terms of the formula contained in Clause 4.4 of the RFB for the tender in question coupled with the non,applicability of MoRTH RFP guidelines which were being relied upon by the petitioner. Seeking communication of the reasons for rejection of its technical bid on the aforesaid ground is not mandated by law.

47.

From the above it is clear that the presence of detailed reasons in the body of an order of rejection is not !

so long as the decision is based on reasons/material which could be demonstrated to a Court to record its satisfaction that the order of rejection is not 4 #

arbitrary or irrational.

48.

In view of the legal position discussed hereinabove and there being no mandate in law, in the case at hands, non,communication of a speaking order with reasons to the petitioner cannot be held to be fatal for rejection of its technical bid. Thus the second argument advanced by learned counsel for the petitioner also has no legs to stand. 49.

Last submission canvassed by learned senior counsel for the petitioner is that there were only two bidders for the tender in question. However, the bid of the petitioner having been rejected as technically non,responsive in utter disregard of the MoRTH RFP guidelines automatically left respondent No.5 as the sole bidder. The bid submitted by the petitioner, it is stated, is 7.11 crores less than the bids submitted by respondent No.5 which comes out to be almost 10% of the contract value and thus clearly there is a loss to the State exchequer on account of the arbitrary action on behalf of the respondents' authorities.

50.

The State respondents have responded to the said contention of the petitioner by urging that the scope of scrutiny of commercial matters under judicial review on the touchstone of the public interest is well settled and it has been held that contours of judicial review in such matters are very limited in nature. Learned Advocate General vehemently contended that the award of the contract is essentially a commercial transaction and evaluation of the tenders are essentially purely commercial functions and one of them very important consideration to be taken into account is the ability of the tenderer to deliver goods or services or to do the work of requisite standard and quality. Reliance in support of the contention has placed on the decision of the Hon'ble Apex Court in case of 5 "%!*

% - !!

%67 .02-0 21!)

51.

The very purpose of defining the bid capacity and evaluating the bids offered in response to the RFB on that basis is to ascertain if the bidder has the ability and bandwidth to execute the project within the stipulated completion period. Without there being sufficient bid capacity in all the likelihood, the contractor would not be able to complete the project within the timeline which would be detrimental to public interest and may lead to escalation in the project costs. It is to be noted that the invitation of the bids by way of RFB for the project in question was issued for the 4th time. It is trite law that in the absence of overwhelming public interest or the $ % , the Courts should not interfere in award of contracts and sufficient play in the joints should be afforded to the State authorities in commercial matters.

52.

In the case of -

. ;8)"99# &

&"(while considering the question of the scope of judicial review in the case of award of a tender by a public authority, it was held that the principles of judicial review are applicable to the exercise of contractual powers by government bodies in order to prevent arbitrariness or favoritism. However, the Court went to observe that there are inherent limitations in exercise of that power of judicial review and the right to choose cannot be considered as an arbitrary power. It is only where the power is exercised for any collateral purpose, the exercise of that power can be struck down by a Court of law. It may be relevant to quote the following observations from the said judgment:, BC * # #

% #

# & 8 % 3 &B " #% # ( .

%@DE A' / #

3 # &

# # # & ;

# & , # #

% ( "

( # & < #

# & 1 F # # # & ,

( 3 # # % # * ' # & G (

# (

# &

@H % # #

# #

% "

&+ 53.

The same view has been reiterated by the Hon'ble Apex Court in the case of <. . -84.

.) * "99,"

,5'In 74= * ;8) "99"

#,', the Apex Court has emphasized the need to allow for certain flexibility in the administrative decision making process while observing that the decision can be challenged only on the & %

!+, principle of reasonableness i.e.

unless the decision is so unreasonable that no sensible person would have arrived at that decision, it should not be interfered with. 54.

Again in the case of 0 <.* ;8) "99&

#!(7 reaffirming the principle, it has been held that if a reasonable procedure has been followed, the decision is not open to challenge except on the %

!+, principle of unreasonableness.

55.

While affirming the aforesaid principle once again, in the case of 3.>) )?3 ."999 "

#9( the Hon'ble Apex Court has observed as under:, 1 %

E #

# # %

" "

" %

" "

/ "

" # %

1 " ""

! 56.

Once again reference may be made to the decision of the Hon'ble Apex Court rendered in the case of 67 .02-0 2146!*

$ !)

&* it has been held that financial computation, capacity and efficiency of the bidder, perception of feasibility of completion of the project lies within the domain of experts and consultants and Courts ordinarily would not enter into the said realm in exercise of powers of judicial review. It may be relevant to extract the following observations from the said judgment:, 7 /

" , 0

% *%

* &

" "

" / % ,

!"# $% !& 6 8

1 % !)

and 5 "%!*

% - !!

% * ! !)

stand reiterated by the Apex Court in $

)8.. @: + !", #

",!Thus it stands well settled that mere offer of a lesser bid by a tenderer is itself not a sole criteria for accepting the bid particularly when the said bidder is not found to be technically qualified and its technical bid is held to be non,responsive and rejected. 58.

It may be pertinent to notice at this stage that Mr. Akshay Bhan, learned senior counsel for respondent No.5 adopted the arguments advanced by learned Advocate General, Punjab. He further submitted that once the petitioner was found to be technically disqualified, his financial bid was never opened and thus there was no occasion for the authorities to have any comparative assessment of the financial bid offered by the petitioner and respondent No.5. After disqualification of the technical bid offered by the petitioner, it was only respondent No.5 who was left alone in the fray and only his financial bid was left before the authorities which was opened and the authorities had no occasion to even know about the quantum of the financial bid offered by the petitioner and thus it does not lie in the mouth of the petitioner to s ay that he being the L,1, his bid was liable to be accepted.

59.

There appears to be force in this argument as well. The respondents' authorities had no knowledge about the quantum of the bid offered by the petitioner as his financial bid was never opened and thus there was no reason or occasion before the authorities to make a comparative assessment of two bids. Thus the decision taken by respondent No.4 to accept the bid offered by respondent No.5 cannot be faulted on the ground that the bid offered by the petitioner was lower than the one offered by respondent No.5.

60.

The legal proposition which emerges from the aforesaid discussion is that the prescription of the conditions in a tender document is within the domain of the employer and cannot be objected to unless the tender conditions are arbitrary or perverse. The decision making process cannot be challenged, except, where it is shown to be $ % or for collateral reasons. It is not at all necessary that only the L1 bidder ought to be selected for the work. The eligibility criteria to be fulfilled by a bidder is one of the essential requirements and in such a situation it is not necessary to accept the lowest financial bid for the reason that the said bidder may not be having the capacity or experience or may not be found to be technically qualified to provide quality work.

61.

In view of the facts and circumstances of the present case, enumerated hereinabove, neither the tender conditions nor the procedure followed for finalizing the bid can be held to be arbitrary, irrational or against the public interest. Furthermore, once the petitioner participated in the tender process without objecting to the tender conditions, he cannot be permitted to take u,turn and challenge the tender. 62.

The irresistible conclusion is that petition must fail and accordingly stands dismissed.

63.

However, in the facts and circumstances, we do not make any order as to costs.

#'#%#( Whether speaking/reasoned √Yes/No Whether reportable √Yes/No