High Court of Punjab and HaryanaCWP/30590/2024dismissed

M/S Zonta Infratech Private Limited v. State Of Punjab And Others

2024-12-19Mr. Justice Arun Palli,Mr. Justice Vikram Aggarwal26 pages

IN THE HIGH COURT OF PUNJAB AND HARYANA

AT CHANDIGARH

Reserved on: 05.12.2024

Pronounced on: 19.12.2024

CORAM: HON'BLE MR. JUSTICE ARUN PALLI HON'BLE MR. JUSTICE VIKRAM AGGARWAL

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5M/s Zonta Infratech Private Limited) assails the Technical Evaluation Report dated 02.08.2024 (Annexure P-7), vide which

-2respondents No.3 and 4 were considered to be technically eligible/compliant pursuant to bids having been submitted by them in response to the Notice Inviting Tender dated 05.07.2024 (Annexure P-5) (hereinafter referred to as the 'NIT') issued by respondent No.2 (Municipal Corporation, Patiala) for Operation and Maintenance of Semi Underground Bins and Portable Compactors of Patiala city. It also assails the order dated 30.10.2024 (Annexure P-18), communicated to the petitioner on 04.11.2024, vide which the representations dated 02.08.2024 (Annexure P-10), 05.08.2024 (Annexure P-11) and 06.09.2024 (Annexure P-12) submitted by the petitioner were rejected by way of a non-speaking and unreasoned order. The petitioner further prays for the issuance of a writ of mandamus directing respondent No.2 to declare the bids submitted by respondents No.3 and 4 as being technically non-compliant/ineligible and awarding the tender in favour of the petitioner who had emerged as L1 in the tendering process. FACTS 2.

Respondent No.2 had issued a tender for supply and installation of Smart Semi Underground Waste Collection Bins and Portable Compactor and Collection and Transportation of MSW (Municipal Solid Waste) from Smart Bins and Compactors to Dumping Sites in 2018. The petitioner had emerged as the successful bidder and was allotted the work vide work order dated 28.09.2018. Thereafter, an agreement dated 23.10.2018 was entered into between the petitioner and respondent No.2 for a period of 05 years for the work of Supply and Installation of 85 numbers of Smart Semi Underground Waste Collection Bins and 06 numbers of Portable Compactors at 36 designated locations in Municipal Corporation, Patiala and Collection and Transportation of MSW to dumping sites. It is the case of the petitioner that the work allotted to the petitioner included supply and installation of equipment as also operation and maintenance for the

-3period of contract. It has been averred that during the pendency of the aforesaid contract, its scope was expanded and a new work order dated 26.08.2021 was issued to the petitioner and the period of contract was also revised till April 2024. Again the period of work was extended by 02 months and the contract was to be terminated in June 2024. Yet another extension in the period of agreement was given for a period of 06 months as a result of which the agreement executed between the petitioner and respondent No.2 is valid till December 2024. 0 $

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-10K19. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and malafides. Its purpose is to check whether choice or decision is made 'lawfully' and not to check whether choice or decision is 'sound'. When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is - "

and is in public interest, courts will not, in exercise of Page 0102 power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted.

Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. 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 public interest is affected. If the answers are in the negative, there should be no interference under Article 226.

-11licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action." ,>

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: "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. 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

-12tender, 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. 4

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: "167. To sum up the above discussion, it may be noted that judicial review primarily involves a review of State action legislative, executive, administrative and policy. The primary examination in a review of a legislative action is the existence of power with the legislature to legislate on a particular subject matter. For this purpose, we often resort to doctrines of pith and substance, harmonious construction, territorial nexus etc. Once the existence of power is not in dispute, it is essentially an enquiry under Article 13 of the Constitution which enjoins the State to not violate any of the provisions of PartIII in a lawmaking function. The review of executive action would depend upon the precise nature of the action.

For, the domain of executive is wide and is generally understood to take within its sweep all residuary functions of the State. Thus, the precise scope of review would depend on the decision and the subject matter. For instance, an action taken under a statute must be in accordance with the statute and would be checked on the anvil of ultra vires the statutory or constitutional parameters. The enquiry must also ensure that the executive action is within the scope of executive powers earmarked for State Governments and Union Government respectively in the constitutional scheme. The scope of review of a pure administrative action is well settled.

Since generally individuals are directly involved in such action, the Court concerns itself with the sacred principles of natural justice audi altrem partem, speaking orders, absence of bias etc. The enquiry is also informed by the Wednesbury principles of unreasonableness. The review of a policy decision entails a limited enquiry. As noted above, second guessing by the Court or substitution of judicial opinion on what would constitute a better policy is strictly excluded from the purview of this enquiry.

Under the constitutional scheme, the government/executive is vested with the resources to undertake necessary research, studies, dialogue and expert consultation and accordingly, a pure

-15policy decision is not interfered with in an ordinary manner. The burden is heavy to demonstrate a manifest illegality or arbitrariness or procedural lapses in the culmination of the policy decision. However, the underlying feature of protection of fundamental rights guaranteed by the Constitution must inform all enquiries of State action by the constitutional Court." ..

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"- .J "2. Eligibility Criteria:

The bid to be submitted online by the bidder shall comprise scanned copies of the following documents:

a) Bidder must have achieved a minimum annual financial turnover (of solid waste work class ) equal to 40% of the estimated cost i.e. 4,88,92,691/ of working any one of the last three (3) financial years immediately preceding the Financial Year in which bids are invited.

b) Bidder must have satisfactorily completed in the last seven (7) years ending last day of month previous to the one in which bids are invited as a prime Contractor.

one similar work of value not less than 80% of the estimated cost of work or two similar works each of value not less than 50% of the estimated cost of work or three similar works each of value not less than 40% of the estimated cost of work.

-16c) An authorization form by the bidder/agency having authorized their official to sign all the documents on bidder/agency's behalf.

d) An undertaking that bidder's available bid capacity is more than the estimated value of the project/work e) The proof of bidder's PAN issued by Income Tax department;

f) The proof of bidder's valid GST Registration Number issued by concerned department;

g) The proof of bidder's valid ESI registration number. h) The proof of bidder's valid EPF registration with the Provident Commissioner;

i) Affidavit/undertaking of not having been black listed by any Govt./ Semi Govt. Organization/ Corporation at any stage and/ or debarred by Govt. of India or any Department of Govt. of Punjab j) The affidavit/ undertaking that information being submitted by the bidder is correct and true, and that any false information shall lead to disqualification at any stage; k) An undertaking that the bidder agrees to the terms and conditions of bidding document including the technical requirements and in case there is anything contradictory in his technical proposal with respect to the conditions of bidding document, the latter shall prevail.

Note: Work Completion certificates or other related documents as per above clauses must be attached. .0 4 (

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-18- "Thereafter, third time the tender was floated by Municipal Corporation Patiala on the same grounds vide tender ID 2024_ĐLG_ 123381 _1 dated 30.07.2024 on the same estimated cost. In the said tender five bidders namely Cheluvaraju Geron engineering Private Limited, M/s Pyara Singh and Sons, Urban Edge Management Pvt. Ltd and Zonta Infratech Private Limited total five bidders applied in this tender out of which three bidders namely (i) Pyara Singh and Sons; (ii) Urban Edge Management Private Limited and (iii) Zonta Infratech Private Limited were found to be technically qualified by . Technical Evaluation Committee report dated 02.08.2004, thereafter, the financial bid of the bidders were opened on the same day i.e. 02.08.2024.

The financial bids received by the bidders are as under in the tabular form;

Sr.

Bidder Name Estimated Quoted Rates No.

Rate %age Pyara Singh 48892691.16 7.00 4,54,70,202.78 and Sons Urban Edge 48892691.16 5.45 4,62,28,039.49 Management Pvt. Ltd.

Zonta Infratech 48892691.16 .01 4,88,87,801.89 Private Limite In view of the above said bids M/s Pyara Singh and Sons has submitted the lowest bid (L1), Urban Edge Management Pvt. Ltd. is the second lowest (L2) and the petitioner company is the third lowest bid (L3). The petitioner submitted application dated 02.08.2024 (Annexure P10) in which he asserted that the bidders shall have completed 'similar works' only and the similar work as per the RFP is "operation and maintenance of semi underground bins and portable compactors and if the party does have only experience of operation & maintenance of portable compactors, that cannot be counted as eligible project and similarly, if a party does not have experience for operation & maintenance of semiunderground bins and does have only portable compactors, that would be disqualified. In other words the party shall have experience of both the components together. Thereafter, the petitioner company submitted another application dated 05.08.2024 (Annexure P11) in

-19continuation to earlier application dated 02.08.2024 in which he asserted that M/s Pyara Singh & Sons was disqualified due to insufficient experience. That condition continues for the current call of tenders as well. As the custodian of Public conscience the petitioner requested to reevaluate the bids and impart justice. Thereafter, the petitioner company gave another representation dated 06.09.2024 (Annexure P12) in which he has raised certain deficiencies on the part of L1 and L2. The L1 has not fulfilled clause 2(b) of the RFP as the L1 has not executed the work in any of the documents annexed with this tender thus does not satisfy the minimum financial eligibility of the bidder on account of clause 2(b) of the RFP and L2 has only supplied the turnover certificate and net worth certificate of M/s Pole Star Enterprises which is admittedly is a minority shareholder of the Joint Venture and EPF and ESI registration certificate of minority partner cannot be considered as a valid document for the present tender.

In view of the applications dated 02.08.2024 and 05.08.2024 following principle of natural justice the petitioner was called for personal hearing on 16.08.2024 before the Joint Commissioner Municipal Corporation Patiala in which Sh. Satpal Bhamra, Vice President, Zonta Infratech Private Limited from petitioner side and Sh. Harkiran Pal Singh, Superintending Engineer and Sh. Jatinder Pal Singh, Corporation Engineer were present. The representative of the petitioner company was asked to submit any new fact other than the facts enumerated in the above said representations and was further asked to represent his case and provide documents in its support. The representative submits that "The similar work shall compromise O&M of both semi underground bins and portable compactors as provided in the tender scope ie.

operation & maintenance of semiunderground bins and portable compactors of Patiala city. As this eligibility is missing, the party stands disqualified at Patiala". It is pertinent to mention here that in continuation to the earlier certificate uploaded by M/s Pyara Singh and Sons who is the lowest bidder (L1) the petitioner submitted the Copy of certificate issued by Prayagraj Municipal Corporation in which it is certified by the Prayagraj Nagar Nigam that the L1 "has done operation and maintenance work for 27 Port stations including 8 No. Hook loaders and 35 Nos. portable compacters for two years. The total work cost was Rs. 4,03,75000.00. The work carried out by the firm since Jan 2019 is satisfactory".

-20In view of the above said certificate the, L1 Company has undertaken and worked in the field of O&M of Solid Waste Management (SWM). The representative of the petitioner company further, contended that the bid of the L1 was earlier rejected by the Technical Evaluation Committee on the grounds of insufficient experience but further, the L1 submitted the above certificate dated 27.04.2022 issued by the Chief Engineer, Municipal Corporation Prayagraj therefore, the documents of the L1 was considered eligible by the Tender Opening Committee resultantly, the bid was opened on 02.08.2024. Further, the second lowest bidder L2 Urban Edge Management Pvt Ltd. has formed consortium with M/s Pole Star Enterprises to qualify to participate in the tender dated 30.07.

2024 therefore, the objection of the petitioner that the documents of L2 company cannot be considered on the grounds that the any of the minority partner was not a prime bidder or any of the partner has not a valid ESI or EPF registration is not a valid objection. The purpose to make the consortium by the two companies is to be technically qualified for this tender by using the resources of both the companies and the consortium of these two companies are technically qualified in respect of clause 2(b) of the RFP and one of the company is having a valid ESI/EPF Nos for bidding of this tender. Accordingly, the L2 was considered to participate in the tender process.

There is no defined definition of similar work in RFP or instructions issued by the Corporation however, the technical evaluation committee as per the documents on record all the three bidders found the bidders technically considered by the Tender Opening Committee for participation in the Financial Bid. Accordingly, the application dated 02.08.2024 & 05.08.2024 was filed by the office of Municipal Corporation Patiala vide order dated 23.08.2024. Thereafter, the comparative statement and estimate of the work were sent to Chief Engineer (O&M), Department of Local Government Punjab, Chandigarh for vetting.

Thereafter, the above said work was resolved by the resolution Committee vide resolution bearing No. 659 dated 30.08.2024 and subsequently, Letter of Acceptance (LOA) bearing No. 1174 dated 02.09.2024 was issued in the favour of M/s Pyara Singh & Sons (L1). The petitioner company submitted another application dated 02.08.2024 on the same grounds as in earlier applications dated 02.08.2024 & 05.08.2024. The comparative statement was also vetted by the Government vide letter bearing No. 46909 dated 03.09.2024.

-21In compliance to the orders dated 25.09.2024 passed by the Hon'ble High Court the petitioner company and other stake holders were called for personal hearing on 30.09.2024 before the Commissioner, Municipal Corporation Patiala in which Sh. Satpal Bhamra from Zonta Infratech Private Limited along with their counsel were present. The representatives of the petitioner company represented their case and argued on the same facts and contentions as in the application dated 02.08.2024, 05.08.2024 & 06.09.2024. The L1 did not appear on 25.09.2024 & L2 sent email dated 24.09.2024 and showed his inability to come on the fixed date. In the interest of justice last and final opportunity was given to L1 & L2 for personal hearing on 01.10.2024 in which L2 did not turned up and L1 represented his case and asserted that we are in the field of manufacturing of SWM equipments and Operation & maintenance of SWM and has the required financial eligibility as per clause 2(b) and experience therefore, our company is technically eligible for this tender.

In view of the aforesaid submissions and discussions during the personal hearing of the petitioner on 30.09.2023 & 01.10.2024 it was apprised by the Superintending Engineer about the Certificate dated 27.04.2022 submitted by L1 in the office of the undersigned issued by Prayagraj Municipal Corporation in which it is certified that the L1 "has done operation and maintenance work for 27 Port stations including 8 No. Hook loaders and 35 Nos. Portable compacters for two years. The total work cost was Rs. 4, 03, 75000.00. The work carried out by the firm since Jan 2019 is satisfactory" which was handed over to the petitioner during the hearing.

The claim of the petitioner is rejected being bereft of merits on the grounds Firstly, that the request for considering additional documents was considered by the Technical Evaluation Committee as the submitted documents were in continuation of the tender documents attached by the L1 online during the uploading of the bid therefore, in the interest of healthy competition and Fair play the certificate given by the L1 was considered as per Section 23 Clause 6 of the Punjab Transparency in Public Procurement Rules 2022.

-2227 Port stations including 8 No. Hook loaders and 35 Nos.

Portable compacters with the said corporation and it will be against the spirit of healthy competition and will lead to promote monopolisation if bid submitted by the L1 would have been rejected on the ground that the L1 has not executed the work of semiunderground bins as both are the components of Municipal Solid Waste and as per the RFP the company possesses the required qualification and experience and the work executed by the L1 is of similar nature and the (L1) is the lowest bidder and further the claim of the petitioner that the L2 is also not technically eligible has no weight as the purpose to make the consortium by the two companies is to be technically qualified for this tender by using the resources of both the companies and the consortium of these two companies are technically qualified in respect of clause 2(b) of the RFP and one of the company is having a valid ESI/EPF No's for bidding of this tender.

Accordingly, the application/ complaint/claim dated 02.08.2024, 05.08.2024 & 06.09.2024 (Annexure P/10, P/11, P12) of the petitioner is rejected being bereft of merits.

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: "48. This Court being the guardian of fundamental rights is dutybound 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

-25their 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.

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. (See: Silppi Constructions Contractors v. Union of India, (2020) 16 SCC 489."

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: "18. The principles governing judicial review were then formulated in the following words:

(i) The modern trend points to judicial restraint in administrative action.

(ii) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. (iii) 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.

-26- (iv) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.

(v) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides (vi) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure."

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*-( (ARUN PALLI) (VIKRAM AGGARWAL) JUDGE JUDGE 19.12.2024