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WP ( C) No.5950 of 2014 Page 1 of 25
IN THE GAUHATI HIGH COURT
(THE HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
WP © No. 5950 of 2014
1.M/S Mega Electricals-Joint Venture with Dihang
Edutech Infrastructure Pvt. Ltd.
Borooah Real Estates & Commercials Pvt. Ltd.
Raj Apartment (Ground Floor) e,
J.B. Road , Silpukhuri
2.M/S Mega Electricals-
Raj Apartment (Ground Floor) e,
J.B. Road , Silpukhuri
Police Station, Chandmari, Guwahati-781003
3. M/S Dihang Edutech Infrastructure Pvt. Ltd.
House No.8, SN Bora Late,
Dighaliphukuri (East) PS Latasil,
4. M/S Borooah Real Estates & Commercial Pvt. Ltd.
Damayanti Mansion, Dighaliphukuri (East) PS Latasil,
Satya Bora Lane, Guwahati, Assam
………. Petitioner
-Versus-
1.Union of India
WP ( C) No.5950 of 2014 Page 2 of 25
Represented by the Secretary
The Ministry of Home, New Delhi
2. State of Assam, represented by the Secretary
To the Government ofAssam, Department of Power,
Dispur, Guwahati.
3. The Chairman
The Assam Power Distribution corporation
Ltd. Bijulee Bhawan
PO & PS Paltan Bazar
Dist-Kamrup (Metro) Assam
4. The Managing Director
The Assam Power Distribution corporation
Ltd. Bijulee Bhawan
PO & PS Paltan Bazar
Dist-Kamrup (Metro) Assam
5. The Chief General Manager (D)
The Assam Power Distribution corporation
Ltd. Bijulee Bhawan
PO & PS Paltan Bazar
Dist-Kamrup (Metro) Assam
6. Tender Purchase Committee,
Represented by The Chief General Manager (D)
The Assam Power Distribution corporation
Ltd. Bijulee Bhawan
PO & PS Paltan Bazar
WP ( C) No.5950 of 2014 Page 3 of 25
Dist-Kamrup (Metro) Assam
7. The General Manager,
Barak Valley Zone, The Assam Power Distribution corporation
Ltd. , Silchar, Cachar Assam.
8. M/S NK Power & Infrastructure
Pvt. Ltd. Ganeshguri, Guwahati
9. M/S Prag Electricals Private Ltd.
Industrial Estate, Bamunimaidam
Guwahati
10. M/S Jayanta Khound Joint Venture with Win Power Private Ltd.
Near Kasturva Ashram Road,
Ulubari, Guwahati
11. M/S Spectrum Meghalaya
Cement JV with Diamond Power Private Ltd.
Ashar Tower, 5th floor,
SC Goswami Road, Panbazar,
12. M/S Premier Enterprise JV with Power network Pvt. Ltd.
Divine Plaza, 5th Floor, Near Super Market
GS Road Dispur.
………. Respondents
PRESENT HON’BLE MR. JUSTICE N. CHAUDHURY
For the petitioner : Mr.N Dutta, Mr. NNB Choudhury Advocates.
WP ( C) No.5950 of 2014 Page 4 of 25
For the Respondents : Mr. BD Das, Mr. N Goswami , Mr. G Sharma Advocates. Date of Hearing : 17.03.2015 Date of Judgment : 23.03.2015
JUDGMENT AND ORDER(CAV)
Pursuant to notice inviting tender dated 31.7.2014 for settlement of a
contract work involving construction of 33 KV line under Kalain Electrical Sub-
Division of Cachar Electrical Circle , the Tender Purchase Committee of the
APDCL(hereinafter referred to as ‘the TPC’) adopted resolution on 13.11.2014 to
award the contract in favour of respondent No.10, M/S Jayanta Khound Joint
Venture with Win Power Pvt. Ltd. Writ petitioner claiming to be the lowest bidder
in the tender process has challenged this resolution by filing present writ petition.
On 21.11.2014 while issuing notice of motion, this court passed an interim order
permitting the official respondents to proceed with the selection procedure but
not to issue work order. By filing an affidavit-in-opposition, the official
respondents have brought on record that the selection procedure has been over
and the Board accepted re-commendation of the TPC on 20.12.2014. The writ
petitioner, therefore, filed an application praying for amendment of the writ
petition so as to challenge the decision of the Board taken on 20.12.2014
whereby impugned resolution of the TPC was approved. The amendment was
allowed after hearing both sides and thereafter the main writ petition has been
WP ( C) No.5950 of 2014 Page 5 of 25
taken up for hearing. The writ petition, therefore, requires adjudication as to
legality and validity of not only the resolution dated 13.11.2014 adopted by the
Tender Purchase Committee but also the decision of the board adopted on
20.12.2014 accepting the recommendation.
2. The writ petitioner is a joint venture of three units, namely, Mega
Electrical, Dihang Eductech Infrastructure Pvt. Ltd and Borooah Real Estates and
Commercial Pvt. Ltd. The writ petitioner along with six others participated in the
tender process initiated by Notice Inviting Tender (herein after referred to as
“NIT”) dated 13.7.2014. By that NIT, sealed tenders were invited from
experienced and financially sound electrical contractors (individual or joint
venture or firms having valid electrical contractor license upto 33 KV issued by
the competent authority of the Government of Assam, interalia, for construction
of 33 KV line , augmentation of 33/11 KV S/S construction on power railway track
crossing of 33 KV line under Kalain Electrical Sub-Division of Cachar Electrical
Circle for providing service connection to flood light installation along India
Bangladesh border in Assam. The NIT has been annexed as Annexure-1 to the
writ petition. The NIT shows that the tender paper can be purchased in all
working days upto 4 pm w.e.f.4.8.2014 to 12.8.2014 from the office of the Chief
General Manager (D), APDCL, CAR, Bijulee Bhawan , Paltan Bazar and can also
downloaded from the official website within the same period. Date of submission
of tender has been shown as 1300 hrs. of 22.8.2014. The date of opening of
techno commercial bid is at 1330 hrs. on 22.8.2014 and price bid would be
WP ( C) No.5950 of 2014 Page 6 of 25
opened on a date to be notified later on. Clause-3 of the NIT shows that bids
must be in two parts as techno commercial bid and price bid in two separate
envelops superscribing (a) tender number (b) name of bidder with full address
and (c) name of the package against which the bid is offered. In Clause-10 it
was further mentioned that only those bidders whose part-I bid i.e. techno
commercial bid is found acceptable, shall be considered for opening of the price
bid, the date and time for which would be communicated to the eligible bidders
in due course. It was mentioned that details can be seen in the official website of
the APDCL which is www.apdcl.gov.in. The terms and conditions of the NIT are
mentioned in separate sheet. As per recital of Clause-4 thereof, techno
commercial bid will include defined vendors, scope of work, responsibilities ,
guarantees, specification of equipment, commercial terms and conditions,
vendor’s company credentials, experience of similar assignment, registration
details etc. and the format for techno commercial bid is also furnished at
Annexure-1 to the terms and conditions. The same clause defined price bid under
a second sub-head. It shows that price bid will include rates of supply and
erection of different items for electrification according to the BOQ. The format for
this is also furnished at Annexure-2 of the tender document. In clause-6 it was
mentioned that the evaluation of the bids will be carried out first of the techno
commercial bid and thereafter opening the price bid of only those bidders who
qualify and meet the technical requirements. At the same time it was mentioned
that, the APDCL reserves the right not to order/award the job to pricewise lowest
WP ( C) No.5950 of 2014 Page 7 of 25
party if the party during any part of evaluation is found technically non-
responsive. In clause-18 of the terms and conditions it was disclosed that
funding of the project would be done by the Government of India. At the last
paragraph-20, it was mentioned that the terms and conditions which are not
specified in the tender document would be governed by the company’s General
Terms and Conditions of Supply and Erection. Thus, apart from the terms and
conditions mentioned in the tender document the whole of the General Terms
and Conditions of Supply and Erection (hereinafter referred to as ‘General Terms
and Conditions’) would apply to the tender process in question.
3. It is stated that pursuant to the aforesaid NIT, the writ petitioner and six
others participated by submitting technical and price bids. However, six of them,
namely, the writ petitioner and the respondents No. 8 to 12 were found to be
technically qualified. Thereupon, the price bids were opened on 29.9.2014. The
petitioner found that it was the lowest tenderer having bidded
Rs.9,00,74,630.45/- whereas respondent No.10 was fourth lowest bidder having
submitted bid for Rs.9,56,24,513/- . But for reasons best known to the authority
the respondent no.10 was selected by the TPC by its resolution dated
13.11.2014.
4. According to the writ petitioner, the TPC prepared a in-house estimate
formula surreptitiously in respect of price so as to restrain the lowest bidder from
coming into zone of consideration but no whisper of such procedure or estimated
price was disclosed either in the tender document or in the general Terms and
WP ( C) No.5950 of 2014 Page 8 of 25
Conditions. All the bidders, under such circumstances quoted a competitive price
as per their estimate following healthy competition but the respondent No. 4
acted against the modalities prepared by Central Vigilance Commission in
subsequently making estimate and procedure. Annexing the circulars and office
orders of Central Vigilance Commission, the writ petitioner claimed that the work
in question being a centrally sponsored scheme, guidelines of the CVC is
applicable in such a project. According to the writ petitioner, not only the
guideline of the CVC, the official respondents did not follow their own guideline
laid down in the General Terms and Conditions as well. Whole thing was done
without following the principle of transparency and fairness and so selection of
the respondent No.10 is arbitrary and illegal and the same deserves to be set
aside.
5. By filing an affidavit-in-opposition on behalf of respondents No. 3,4,5,6
and 7 it was claimed that as per Clause -20 of the tender document, the TPC
followed the General Terms and Conditions which is permissible because of
Clause -20 of the tender document. In 39th Board meeting of the APDCL held on
24.10.2011, a decision was taken for making addition to the General Terms and
Conditions whereby board approved ceiling of non-acceptance of bidders who
quotes 15 % below the estimated cost instead of earlier 10% ceiling. In terms of
the Board’s approval, notification was issued on 12.12.2011 and thereby General
Terms and Conditions stood amended and so the TPC or the Board did not
commit any mistake in adopting ceiling of 15 % below the estimated cost. The
WP ( C) No.5950 of 2014 Page 9 of 25
estimated cost of the tender in question being Rs.11,12,79,295/- the writ
petitioner stood excluded from consideration being much below 15 % from this
amount. According to the deponent of this affidavit, the writ petitioner was well
aware of the fact about such amendment of the General Terms and Conditions
because on this condition alone his earlier bid in regard to contract for sub-
station at Tezpur Medical College was rejected by the board on 27.5.2014 and so
the same writ petitioner had withdrawn earnest money. The writ petitioner,
therefore, was aware about the procedure which is in conformity with Clause -20
of the tender document. The extract of the minutes in the 39th Board meeting of
the APDCL is annexed as Anneure-1 to show that Board agreed to approve
addendum to the General Terms and Conditions in its meeting held on
24.10.2011 and consequently a notification was issued on 12.12.2011 by the
Chief General Manager (M) of the APDCL. This notification is also placed at
Annexure-2 of the Affidavit-in-opposition. Annexure-2 shows that the
corrigendum/addendum was to procure guideline and not to the General Terms
and Conditions. However, in Clause-3 of this notification it was shown that as per
amended procurement guideline, any price quoted below 15 % of the estimated
cost would be liable to be rejected by the TPC. The affidavit has also disclosed
the comparative statement at Annexure-4. It shows that writ petitioner quoted
Rs.9,00,44,630/- which is 19.08 % below the estimated amount and so it was
found non-responsive. Similarly, M/S Prag Electricals (respondent no.9) and M/s
Spectrum Meghalaya Cement (respondent NO.11) were found non-responsive
WP ( C) No.5950 of 2014 Page 10 of 25
being 18.56 % and 15.16 % respectively below the estimated amount. Thus,
respondent no.10 having quoted 9,56,24,514/- was found to be the lowest valid
tenderer. M/S premier Enterprises (respondent no.12) and M/S N.K.Power &
Infrastructure (respondent No.8) were found to be second and third lowest
bidders. The respondent no.10 being the lowest responsive bidder was therefore
selected by the TPC and the Board committed no error in accepting the
recommendation.
6. The writ petitioner filed an affidavit-in-reply against the affidavit –in-
opposition submitted by respondents No. 3 to 7 and stated that the respondent
No.6 misinterpreted clause-20 of the bid document and failed to consider the
lowest bid of the writ petitioner. It is clearly mentioned in clause-20 that terms
and conditions which are not specified in the bid document would be governed
by General Terms and Conditions which on turn nowhere specify that bidders
who quote 15% below the estimated cost shall not be responsible in the tender
process. Rather, forward No. 2 of the General conditions state that it shall not be
modified. If any modification is necessary for a particular contract the same has
to be done through a special condition of the contract to be enclosed with the
tender document. In the instant case, the APDCL amended clause No.11.8 (a) of
the procurement guidelines and provided that price quoted below 15 % of the
estimated cost is liable to be rejected by the TPC. But it is neither mentioned in
the terms of the tender nor has it been incorporated in the General Terms and
Conditions. Moreover, in the official website of the APDCL such amendment has
WP ( C) No.5950 of 2014 Page 11 of 25
not been uploaded till date. Consequently, this provision is not known to
petitioner and others. Regarding knowledge of the writ petitioner about this
amendment, it is claimed in paragraph -11 of the affidavit-in-reply that their
tender for substation of Tezpur Medical College was rejected but till date the
respondent authority did not inform the writ petitioner as to whether its bid was
responsive or not. The APDCL did not inform the writ petitioner in any point of
time that its bid in Tezpur Medical College contract was rejected as non-
responsive being below 15% of the estimated cost. Thus, both the points of
defence raised by the official respondents No. 3 to 7 stood refuted by the writ
petitioner specifically.
7. Under such circumstances, the respondents No. 3 to 7 filed a rejoinder
affidavit to the affidavit –in-opposition on 18.12.2014 and stated in para-5
thereof that petitioner had been declared non-responsive on the ground of 15%
below the estimated cost in the contract work for substation of Tezpur Medical
College. On 18.7.2014, the writ petitioner thereafter requested the APDCL to
release their earnest money against the tender and accordingly the same was
released vide letter 4.8.2014 after the work order for the tender was issued. The
writ petitioner, therefore, cannot take excuse that it did not know the board’s
decision taken in 2011 for amendment of the General Terms and Conditions.
8. Opposing this stand of the respondents No.3 to 7, the writ petitioner filed
another reply affidavit on 2.2.2015. The writ petitioner reiterated its stand taken
in paragraph 5,6 and 7 of the reply affidavit and denied that it had any
WP ( C) No.5950 of 2014 Page 12 of 25
knowledge about the provision regarding disqualifying any bidder if its bid value
is 15% below the estimated cost. Respondent authority had not allotted the work
for Tezpur Medical College to the petitioner but it was not informed that its bid
value was not considered due to the reason that it was below 15 % of the
estimate amount. The NIT of that contract was floated in 2012 but was settled
after one year. At that time due to various pending works, the writ petitioner was
not interested for the contract anymore and as such did not pursue the matter. It
is essential that respondent authority ought to have informed the reason for not
accepting the tender to the petitioner but till date the same has not been done.
Petitioner came to know about the reason only after affidavit-in-opposition was
filed by the respondents No. 3 to 7 in the present case. Be that as it may,
rejection of the writ petitioner’s bid is on a ground beyond the terms and
conditions of the bid document as well as the General Terms and Conditions.
Such rejection, therefore, is illegal and arbitrary.
9. Respondent No.10 also filed an affidavit-in-opposition on 1.12.2014 and
took the similar ground as taken by the APDCL. The points taken in this affidavit ,
therefore, are covered by the affidavit-in-reply filed by the writ petitioner already
in connection with affidavit-in-opposition of the respondents no. 3 to 7.
10. I have heard Mr. N Dutta, learned senior counsel assisted by Mr. NN B
Choudhury, learned counsel for the writ petitioner and Mr. BD Das, learned
senior counsel assisted by Mr. N Goswami, learned counsel for the respondents
No. 3 to 7. Mr. G Sharma, Government counsel has appeared on behalf of the
WP ( C) No.5950 of 2014 Page 13 of 25
respondents No. 1 and 2 while Dr. G.Lal, learned counsel has argued on behalf of
the respondent No.10. I have perused the averments made in the pleadings of all
the parties.
11. Mr. N Dutta, learned senior counsel for the appellant submits that the
procedure adopted by the respondents No.3 to 7 is arbitrary and illegal. The
procedure in regard to disqualifying a bid 15 % below estimated amount was
not disclosed in the NIT or in the website. Although, by paragraph-20 of the
terms and conditions of the NIT it is provided that grounds which are not
specified in the NIT shall be governed by the provisions of the General Terms
and Conditions but the said General Terms and Conditions also do not contain
such a provision of rendering a bidder non-responsive merely because his bid
value is 15 % below the estimated amount. He submits that although board had
adopted a resolution for amending the General Terms and Conditions but the
APDCL did not make any amendment accordingly. What it did is amendment of
the procurement guideline which has not been made applicable to the contract in
question. Besides, terms and conditions of the General Terms and Conditions
cannot be amended. What can be done is incorporation of a special condition in a
given contract. In the case in hand, the APDCL did not make any special
condition in the concerned NIT incorporating a condition of this nature, so
rejection of the petitioner’s bid on the ground of being 15 % below estimated
amount is arbitrary and untenable. He submits that under the guidelines
holding the field, the authority is duty bound to make estimate before issuance
WP ( C) No.5950 of 2014 Page 14 of 25
of an NIT. The procedure must be disclosed in the NIT or its General Terms and
Conditions for the purpose of transparency and fairness in the matter involving
distribution of state largesse.He has placed reliance on the following judgments:-
(i)Dutta Associates Pvt. Ltd.-vs-Indo Merchantiles Pvt. Ltd & Ors. (1997) 1 SCC 53 (pr.4, 5, 7)
(ii)Sargous Tours & Travels & anr.- Vs- Union of India & Ors. 2003 (3) GLT 202 (pr.18)
(iii)Educomp solution Ltd.& Ors.-vs- State of Assam & Ors 2006(2) GLT 775 (pr.49,50)
(iv)Md.Makrab Khan@ Md. Junu Khan –vs- Monoj Kr.Sharma 2011 (3) GLR 15 (pr.12)
12. In the case of Dutta Associates (supra), the Hon’ble Supreme Court
found that the tender process was vitiated by at least three grounds. The first
ground was that the tender notice did not specify ‘ viability range’ and did not
say that only those tenders which would come in the ‘viability range’ would be
considered. Fairness demand that authority should have notified in the tender
notice itself the procedure which they proposed to adopt while accepting the
tender. But nothing of the sort was done by the authority in that case. The
second ground was that the very concept of ‘viability range’ did not appear to be
reasonable to the court. The tenderers are all hard headed businessmen and
they know their interest better. If they agreed to perform a contract at a lower
rate it is inexplicable why should the Government think that they would not be
able to do so and still prescribe a far higher ‘viable range’. The third ground was
selective opportunity given by the authority to Dutta Associates (supra ) only for
WP ( C) No.5950 of 2014 Page 15 of 25
counter offer within ‘viability range’. Mr. Dutta, learned senior counsel for the
petitioner in this case has emphasized the first ground noted above from
paragraph-4 of the case and stated that even in the present case the authority
did not disclose the procedure of rendering some bidders non-responsive on the
ground of their bid value being below 15% of the estimated amount either in the
NIT or in the General Terms and Conditions. In this regard he has also placed
reliance on paragraph – 7 of this judgment. This paragraph is quoted below for
ready reference:
“7. In the circumstances, we affirm the judgment of the Division Bench in writ appeal on the grounds stated above and direct that fresh tenders may be floated in the light of the observations made in this judgment. We reiterate that whatever procedure the Government proposes to follow in accepting the tender must be clearly stated in the tender notice. The consideration of the tenders received and the procedure to be followed in the matter of acceptance of a tender should be transparent, fair and open. While a bona fide error or error of judgment would not certainly matter, any abuse of power for extraneous reasons, it is obvious, would expose the authorities concerned, whether it is the Minister for Excise or the Commissioner of Excise, to appropriate penalties at the hands of the courts, following the law laid down by this Court in Shiv Sagar Tiwari v. Union of India1 (In re, Capt. Satish Sharma and Sheila Kaul)”.
13. In the case of Sargous Tours & Travels(supra) court dealt with
paragraphs 63, 70 and 74 of the circular issued by the Government of India,
Ministry of Defence laying down policy regarding determination of reasonable
rates (RR) and rejection of tender if the rate quoted in the tender is below 20%
of the RR. In paragraph-22 of the judgment this High Court placed reliance on
WP ( C) No.5950 of 2014 Page 16 of 25
the law laid down by the Hon’ble Supreme Court in Dutta Associates (supra)
and ultimately held in paragraph-23 thereof that even in that case the authority
did not disclose the procedure in the NIT and so the entire tender process was
not transparent, fair and open. In paragraph-26 this court followed the law laid
down in Dutta Associates(supra) and adjudged the concerned tender process
bad and unfair. Paragraph-26 of the case is quoted below for ready reference:-
“( 26 ) In view of the fact that I have already held that the law laid down in Dutta associates (supra) is bound to be followed in every tender process and the primary requirement of a tender process to remain valid is that it must notify the intending tenderers of the procedure that the authorities concerned propose to follow in accepting the tender, it clearly follows that omission to mention about the concept and working of rr is fatal in the present case. It is, no doubt, true that the petitioners have been working with the authorities concerned and those, ordinerly, they were likely to know about the existence of the RR, the fact remains that in the fact of categorical assertions made, on oath, by the writ petitioners that they had not been informed about the RR, it was the duty of the respondent-authorities to show by producing materials on record that the RR were within the knowledge or information of the writ petitioners. In this regard, the respondent-authorities have miserably failed inasmuch as there is nothing in the materials on record to show that the petitioners were aware of, and/or had been informed about, the existence of the RR and/or of the fact that the tender, which quotes a rate, which is lower than 20% of the RR, would not be accepted. Viewed from this angle, omission to mention in the NIT the fact that quoting of rates must not be less than 20% of the RR, which may be fixed by the authorities concerned, one has no option but to hold that the procedure to be followed had not been notified in the NIT and in such a situation, the procedure adopted cannot be said to be, as held in Dutta associates (supra), transparent, fair and open.”
WP ( C) No.5950 of 2014 Page 17 of 25
14. In the case of Educomp Solution Ltd.(supra), this court did not
entertain the argument that Government agencies do not require to notify the
selection criteria in detail at the threshold and that the same can be done at any
stage. This court wondered as to whether selection criteria can be evolved after
opening of technical bids. Because such a procedure would give room and
leverage to the decision makers to manipulate result to suit the convenience of a
particular bidder. This court, therefore, held that even if such criteria is not
notified at the beginning, the same should be made known to all interested
parties before submission of bids by duly informing them about the proposed
criteria to be applied and the methodology in awarding the marks to evaluate
the technical and commercial bids. This court found that by applying hidden
criteria the state agencies awarded more number of marks to the fourth
respondent in that case in the technical bid. Thus, even in this judgment
undisclosed procedure of tender process has been unequivocally discouraged by
this court. Paragraphs -49 and 50 of this judgment are quoted below for ready
reference:-
“( 49 ) We are unable to persuade ourselves to accept the contention of the learned senior counsel Shri R. K. Anand that it is not at all necessary for the governmental agencies to notify the selection criteria in detail even at the threshold and the same can be done at any stage. Does it mean the selection criteria can be evolved after opening of the technical bids? Would it not give room and leverage to the decision makers to manipulate the result to suit the convenience of a particular bidder? In our view even if
WP ( C) No.5950 of 2014 Page 18 of 25
such criteria is not notified at the beginning, the same should be made known to all the interested before submission of bids by duly informing them about the proposed criteria to be applied and the methodology in awarding the marks to evaluate the technical and commercial bids. In the case on hand such a course ought to have been adopted at least on 14. 12. 2005 when the amendments to the nit were communicated to all the concerned. In fact, the case set up by the amtron is as if the methodology, crite-ria and the formula of 60:40 was communicated to all the concerned on 14. 12. 2005 which plea is not acceptable to us because record does not reveal the same. In the absence of such a communication, the contention that the decision makers applied hidden criteria evolved as a tailor made to suit the 4th respondent acquires legitimacy. We accordingly hold that the procedure adopted by the decision makers is vitiated by the application of hidden criteria, lack of transparency and accountability. Procedural impropriety is writ large on the face of the record. WHETHER THE LOWEST BID IS A valid CRITERIA TO BE TAKEN INTO consideration OR NOT?”
“( 50 ) It is true that in Raunaq International (Supra), Air India Ltd. (Supra) and Master Marine Services (P) Ltd. Vs. Matcalfe hodgkinson Pvt. Ltd. and Anr. , (2005) 6 SCC 138 the Supreme Court held that price need not always be the sole criterion for awarding of contract. It is free to grant any relaxation, for bona fide reasons, if the ten-der conditions permit such a relaxation. That, at the same time the courts may have to bear in mind that the state and its agencies do not have unlimited financial resources at their command, therefore, they altogether cannot ignore the lowest bid offers though it itself may not be the sole criterion for awarding the contract. The margin of difference between commercial bid offered by the petitioners and the 4th respondent runs into few crores. It is one of the factors that should have been taken into consideration by the decision makers particularly in the context of there being no dispute about the validity and eligibil-ity of technical bid offered by the petitioners. It is not a case where the technical bid offered by the petitioners
WP ( C) No.5950 of 2014 Page 19 of 25
were found to be ineligible. There is no dispute whatsoever that the petitioners' technical bid cm evaluation was found to be eligible along with the technical bid offered by the 4th respondent. It is a matter where applying hidden criteria the State agencies have awarded more number of marks to the 4th respondent so far as the technical bid offered by it is concerned for whatsoever reason. Having regard to the huge margin of difference between the price bid offered by the petitioners and the 4th respondent the State agencies ought to have decided for themselves as to what was requried to be done in the circumstances. This crucial factor completely escaped from their consideration. Thus, the decision makers ignored and failed to take relevant factor into consideration while deciding the matter. WHAT IS THE RELIEF TO BE granted?”
15. In the case of Md.Makrub Khan (supra), this court denounced
adoption of hidden criteria in the matter of settlement of contract holding that
such a practice is fraught with grave danger and the same is an anathema to the
concept of transparency, openness and fairness which had to be scrupulously
observed in the matter on distribution of state largesse. In paragraph-18 of this
judgment, this High Court again reiterated the law laid down in the case of
Dutta Associates(supra) and Sargous Tours & Travels (supra) and held
that the practice of disclosing the procedure at the threshold has to be followed
in every tender process. Paragraph-18 of this judgment is quoted below for
ready reference:
“18. In Sargous Tours & Travels and Arn. V. Union of India and others, reported in MANU/GH/0369/2003:2003 (3) GLT 202 one of us (Ansari ,J) , had opined that the law laid down in Dutta
WP ( C) No.5950 of 2014 Page 20 of 25
Associates Pvt. Ltd.(supra) is bound to be followed in every tender process and the primary requirement of the tender process to remain valid is that NIT must notify the intending tenderers the procedure that the authority concerned purposes to follow in accepting the tender and that omission to mention about the concept and working in the NIT is fatal. We agree with the principles laid down in Sargous Tours (supra).”
16. With the aforesaid submissions, Mr. N Dutta, learned senior counsel
would argue that the official respondents No. 3 to 7 have miserably failed to
bring on record that the system of disqualifying any bid on the ground of being
15% below estimated amount was either notified in the official website or was it
brought to the knowledge of the petitioner in the present tender process. The
General Terms and Conditions continue to remain unamended even till date
although a decision to that effect was taken by the Board of the APDCL. The
procurement guidelines have no causal connection whatsoever with the instant
tender process and so the whole tender process adopted by the respondents No.
3 to 7 is vitiated by lack of transparency and fairness. The impugned resolution
adopted by the TPC and the consequent approval thereof by the Board
subsequently cannot sustain. The writ petition, therefore, is liable to be allowed
by setting aside both the impugned actions.
17. Per contra, Mr. BD Das, learned senior counsel for the APDCL would
argue that the writ petitioner is a veteran in the field of contract with the
APDCL. It submitted tenders earlier on a number of cases and even in the
WP ( C) No.5950 of 2014 Page 21 of 25
tender process of Tezpur Medical College, bid of the same contractor was
rejected on the ground that it was below 15% of the estimated amount. The writ
petitioner had accepted the position knowing the same and so cannot be heard
today to say that it has no knowledge about this procedure. The objection is
merely technical and is devoid of substance.
18. Dr. G Lal, learned counsel for the respondent No.7 adopted the same
argument of Mr. BD Das and asserted that the writ petitioner was very much
aware about amendment of the General Terms and Conditions.
19. Having heard the learned counsel for the parties and on perusal of their
respective pleadings it is clear that in the NIT there were some terms and
conditions which did not include the requirement that bid should be within 15 %
of the estimated amount. The NIT provided that provisions of the General Terms
and Conditions would apply if there is no corresponding condition in the NIT. It is
also on record that Board adopted resolution for amending the General Terms
and Conditions but the APDCL ultimately amended the procurement guideline
only. There was no incorporation in the General Terms and Conditions. What is
worse is that amendment of the procurement guideline remained an internal
notification of the APDCL and it was never uploaded in the official website for
general information. In the case of Dutta Associates(supra) the Hon’ble
Supreme Court held that state agency must disclose in the NIT the procedure to
be adopted in the ongoing tender process. Such decision of the Hon’ble
Supreme court is only to ensure transparency and fairness in the field of
WP ( C) No.5950 of 2014 Page 22 of 25
distribution of state largesse. Unless such a transparent procedure is adopted
there is always room for nepotism and underhand dealings to defeat fair
competition among the participants which is a pre-requisite of the rule of law.
However, subsequently in the case of Haryana State Agricultural Marketing
Board & Ors. Vs. Sadhu Ram reported in (2008) 16 SCC 405 the question
came before the Supreme Court as to whether the principle of transparency in
such matters would include disclosure of the estimated amount at the threshold.
Of course the Hon’ble Supreme court did not find favour with such an argument
because this may give rise to cartel formation leading to unfairness in
competition. But even in that case the Supreme court did not differ with the view
expressed in the case of Dutta Associates(supra). The law laid down in the
case Dutta Associates (supra), therefore, continues to hold the field and so
the state agencies are duty bound to disclose the procedure at the time of
issuance of the NIT itself.
20. Once it is found that law laid down in the case of Dutta
Associates(supra) still holds the field we are to see as to whether the
impugned decision of the respondents No. 3 to 7 in the instant case can stand
the test of reasonableness, fairness and transparency in the light of this
judgment. The APDCL has failed to disclose either in the NIT or in the General
Terms and Conditions that a bidder shall be adjudged non-responsive if its bid
value is below 15% of the estimated amount. Even if it is assumed for the time
being that the APDCL had estimated the amount earlier correctly but there is no
WP ( C) No.5950 of 2014 Page 23 of 25
scope to hold that the bar of 15% referred to above has been disclosed at any
stage. Although writ petitioner’s tender in a previous tender process stood
rejected for this ground but there is nothing on record to come to hold that the
APDCL had intimated the writ petitioner about such ground. The writ petitioner
made a request for withdrawal of earnest money after the work order was
issued to successful tenderer without asking to know as to why was it not
granted the contract and the APDCL also released the earnest money without
disclosing the reason. Once, the APDCL took a stand in the affidavit that the
writ petitioner was aware about the ground, it became its burden to prove
existence of such knowledge. Mr. BD Das, learned senior counsel in his usual
fairness admitted that there is nothing on record to establish that the writ
petitioner was aware about this ground prior to receipt of the copy of the
affidavit-in-opposition in the present case.
21. Although there is no allegation of malice in fact in this case yet it is clear
that the procedure adopted by the APDCL in the present case is not in conformity
with the law laid down by the Hon’ble Supreme Court in the case of Dutta
Associates(supra). It needs no further comment that disclosure of the rule of
the game before it is played is a pre-requisite for fairness. Unless the same is
done irrespective of whether there is discrepancy or unfairness, a reason to
doubt fairness continues to remain in public mind. In a society governed by rule
of law it is necessary that justice should not only be done but it should seem to
have been done. The very concept of constitutionalism is only to ensure public
WP ( C) No.5950 of 2014 Page 24 of 25
confidence in the administration of the state machinery. In a contract matter,
state steps into the commercial realm and so such safeguard is even more
necessary.
22. A writ court examines the decision making process and not correctness of
decision. Purpose is to see whether a proper and fair procedure was adopted by
the executive to arrive at a decision. A decision making process can be said to be
fair, if it reasonably appears to be fullproof from potential manipulation. Dutta
Associates (Supra) required state machinery to divulge the rule of the game at
the first instance only to ensure that no loop whole is left for possible
manipulation of a decision. Whether decision has been really manipulated in the
instant case is not under consideration as no malice has been attributed. But
what has been pointed out is that after the techno-commercial bids were
examined and technically fit tenderers were singled out, an exercise of excluding
some technically fit bidders by applying amended procurement guidelines has
been made and as per the terms of the NIT or the general conditions
procurement guidelines were never disclosed to be applicable. So, the
participants have been prejudiced. If a new term or condition is permitted to be
applied at such stage, then always there shall be a scope to favour a blue eyed
contractor. This is how disclosure of the procedure at the time of issuance of NIT
constitutes a precondition for fairness in matters involving distribution of state
largesse.
WP ( C) No.5950 of 2014 Page 25 of 25
23. Having examined from this angle, the APDCL has miserably failed to ensure
such procedural safeguards and so the tender process has been vitiated entirely.
The whole tender process needs to be set aside and it is accordingly set aside.
Needless to say that consequently the impugned recommendation by the TPC
and approval thereof by the Board stand automatically set aside. The APDCL
shall be at liberty to issue fresh NIT keeping in view the law laid down by the
Hon’ble Supreme Court in the case of Dutta Associates(supra).
24. Writ petition is allowed. Interim order passed earlier is vacated.
25. No order as to costs.
JUDGE
Nivedita