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Judgment
Moksha Khajuria Kazmi, J
By these two petition, the petitioner herein has challenged e-NIT No.04 of 2022-23/EAST dated 01.09.2022 issued by respondent No.3 for inviting tenders for the work of extraction, off road transportation and marking in Compartment No.13-Siraj and Sanction No.916-19/GM/FCD/ECD dated 12.10.2022 issued by respondent Nos. 3 and 4 for the work of extraction, off road transportation and Road Transportation Works (Composite contract) of stocks outturn of regular marking available in Compartment 13/Siraj issued in favour of respondent No.5. The petitioner also seeks a direction upon the official respondents to issue fresh tender notice with the terms and conditions as incorporated in earlier tend notice being e-NIT No.03 of 2021-22 dated 09.06.2021.
Since the controversy in both the petitions revolves around allotment of extraction work, off road transportation, road transportation works and regular marking in compartment No.13-Siraj in Extraction Division Doda, as such, I propose to dispose of both these petitions by a common judgment.
Factual Matrix
The petitioner is an “A” class contractor registered with J&K Forest Development Corporation and is dealing with contractor works of timber extraction, lumbering operations from various forest divisions of Doda, Bhaderwah, Kishtwar and other divisions. The petitioner is also stated to be a partner of M/s G.A.Wani, which is also dealing with same contracts. Respondent No.3 issued e-NIT No.3 of 2017-18/Tenders/SFC/ECT dated 16.03.2018 thereby inviting tenders for execution of various timber logging operations viz. extraction, off road transportation and road transportation activities in various compartments of SFC Extraction Division Doda, which includes Compartment 13-Siraj. As per the e-NIT, tenderer was required to submit EMD of Rs.7.25 lac. However, none has responded to the aforesaid e-NIT. Even none has responded to the e-NIT issued by the respondent No.3 on 16.04.2018. Thereafter another e-NIT was issued being e-NIT No.2 of 2020-21/East dated 02.09.2020 containing all standards terms of the tender notice, however, this time the EMD in the shape of CDR was Rs.8.192 lacs. When no response has been received against the aforesaid e-NIT, another e-NIT No.03 of 2021-22/EAST dated 09.06.2021 came to be issued against which the petitioner was the only tenderer, who submitted his bid. It is stated that since only one tender was received, the respondents did not open the technical bid and price bid. Aggrieved by the action of the respondents, the petitioner filed WP(C) No.1347/2021, which came to be dismissed by this Court vide judgment dated 13.05.2022 on the ground that the respondents had right to reject any tender without assigning any reason.
Thereafter, e-NIT No.04 of 2022-23/EAST dated 01.09.2022 came to be issued by respondent No.3 inviting e-tenders for execution of various timber logging operations. In the e-NIT, the minimum rate per cft for all the activities for compartment 13-Siraj was fixed Rs.204.68. It is stated that the estimated rate per cft for all activities for Compartment No.13/Siraj was provided as Rs.231.30 per cft cubic feet in the e-NIT No.04 of 2022-23/EAST.
The petitioner has challenged the impugned e-NIT on the ground that the respondents in terms of the impugned tender notice have reduced the earnest money deposit from Rs.28.669 lac to Rs.8.19 lacs just to accommodate the contractors like respondent No.5. It is also stated that the rate quoted by respondent No.5 is Rs.198.890, which is much lesser than the rate quoted by the petitioner i.e. 211.110. It is further stated that though the petitioner’s rate is lesser than the reserved minimum rate but justifiable on account of the fact that the petitioner has all the infrastructure lying in the adjoining compartment, which the petitioner can easily use for the execution of the work in the said compartment.
It is also stated that since the earlier writ petition filed by the petitioner wherein the petitioner was the single bidder was dismissed by this Court, which necessitated issuance of the impugned e-NIT would mean that the Hon’ble Court confirmed the earnest money deposit to the tune of 28.669 lacs as indicated in the earlier tender notice as reasonable. According to the petitioner, respondent No.5 has defaulted in execution of different works allotted to him in different compartments, as such, the intention of respondent No.5 was only to defraud the Corporation again by submitting much lesser rates than the base minimum rates and to abandon the contract work only after drawing the extraction charges without transporting it to the sale depot of the corporation.
The petitioner in this petition has called in question the Sanction No.916-19/GM/FCD/ECD dated 12.10.2022 and work order No.373-76/DM/FDCL/D dated 20.10.2022 respectively for extraction, off road transportation and road transportation works (Composite contract) of regular marking in Compartment No.13-Siraj in favour of respondent No.5 on the similar grounds as taken in WP(C) No.2233/2022.
Per contra, in the reply filed by the official respondents it is stated that the petitioner participated in the previous NIT No.03 of 2021-22/EAST dated 09.06.2021 for the Compartment No.13/Siraj and was found only single bidder in the process. The tender opening committee decided to re-tender the said compartment in order to create more competition and more chances to various contractors to participate in the process and recommended the case for re-tendering to the competent authority. Meanwhile, the petitioner filed WP(C) No.1347/2021 for commanding the respondents to open his financial bid and to allot the work of extraction, off road transportation and transportation of markings in Compartment No.13/Siraj in his favour being the sole bidder/tenderer in response to the said NIT. However, this Court in terms of the judgment dated 13.05.2022 dismissed the writ petition. It is further stated that the reduction in deposition of earnest money (EMD) was not particularly for compartment No.13/Siraj in the said tender but it is in uniformity with the all other compartments mentioned in the said e-NIT and the reduction of the earnest money deposition (EMD) is in consonance with the Government directions issued from time to time by the Finance Department under Circular No.FD-Codes/233/2021-02-27 dated 10.02.2022 read with circular No.A/Misc (2018)-II-895/J dated 22.12.2020 with an intention to create healthy competitions among the bidders to safeguard the interests of the Corporation. It is further stated that the clause providing EMD @ 2% has been laid down in all tender notices issued right from February, 2022 and the same was done when the rationalization of EMD in extraction and transportation work was flagged by the contractors’ association through their memorandum submitted to the Managing Director on 07.07.2022. Keeping in view the demand of the contractors association, the management in its meeting held on 08.02.2022 held under the chairmanship of Managing Director, J&K FDCL, minutes of which stand circulated vide management decision No.02 of 2022 dated 08.02.2022, the EMD for participating in tendering process was fixed @ 2% of the advertised contract value and only in case of successful bidder, an additional performance guarantee @ 3% of the advertised contract value, over and above the EMD, was fixed. As per the official respondents, the clause of depositing EMD @ 2% has been part of each and every e-NIT issued after the decision of the management.
Respondent No.5 has also filed his reply. Respondent No.5 has raised a preliminary objection to the maintainability of the writ petition by the petitioner on the ground that the petitioner having participated in the e-NIT No.04 of 2022-23/East dated 01.09.2022 and failed in the competition with respondent No.5, is estopped to question the terms and conditions of the e-NIT. It is stated that once the petitioner participated in the tendering process in terms of the impugned e-NIT, he cannot turn around and challenge the terms and conditions enumerated in the tender notification. Respondent No.5 being the lowest bidder (L-1) in the bidding process has been allotted the work and sanction in this regard has been issued by the official respondents. An agreement dated 20.10.2022 has been executed in favour of respondent No.5 with respect to the work in compartment 13/Siraj.
It is further stated that the petitioner has consciously withheld the material information from the Court that was well within his knowledge that the rationalization of Earnest Money Deposit (EMD) in extraction and transportation works was sought by the contractors association in their meeting with the management of J&K Forest Development Corporation Ltd. held on 07.02.2022 , as such, a decision was taken by the Management of the respondent-corporation to fix the EMD for participation in tenders @ 2% instead of 7% of the advertised contract value. At the same time, requirement of furnishing Performance Guarantee to the tune of 3% of the advertised contract value in the shape of CDR was incorporated in the NITs. This Performance guarantee was to be furnished before issuance of the sanction. It is submitted that the rate of CFT in the e-NIT, impugned in the present petition, is Rs.231.39 and the petitioner is not aggrieved of the same. It is further submitted that Rs.231.39 was the estimated rate per CFT including all activities of the contract and the successful bidder would be the one who would quote the lowest rate per CFT. Respondent No.5 has quoted Rs.198.890 per cft whereas the petitioner has quoted Rs.211.110 per cft in the respect of the impugned e-NIT, as such, respondent No.5 has emerged as L-1 bidder with huge margin and has been declared successful. The petitioner has no cause to assail the e-NIT or allotment of contract in favour of respondent No.5.
Mr. M.A.Goni, learned counsel appearing for the petitioner, would argue the reduction of earnest money deposit from Rs.28.669 to 8.19 lac was only to favour the unscrupulous and resource-less contractors, which in turn would result into heavy loss to the state exchequer. He would also argue that the petitioner has invested a huge amount by purchasing latest machinery required for extraction and transportation of timber, as such, the work in question ought to have been allotted to him even when he is L-2. He also tried to find fault in the decision of the official respondents to reduce the EMD deposit.
On the other hand, learned counsel for the official respondents sought dismissal of both the petitions filed by the petitioner on the ground that there is no arbitrariness or biasness in the tendering process. He further submits that respondent No.5, being the L-1 in the tendering process has been allotted the tender in question. It is further submitted that rate quoted by the petitioner in his bid was higher from the rate quoted by respondent No.5, as such, he cannot claim allotment of tender in his favour, being the L-2. He would further argue that insofar as question of reduction of EMD is concerned, same was done pursuant to the Management Decision No.02 of 2022 dated 08.02.2022, which was taken on request of contractors’ association to ensure healthy competition and larger participation in the tendering process.
Mr. Vikram Sharma, learned senior counsel, appearing for respondent No.5 would argue that the petitioner, who participated in the tendering process, cannot challenge the bid condition/clause which might not suit him. He would further argue that the tender has rightly been allotted to respondent No.5 because he has merged as L-1 in the process.
Heard learned counsel for the parties and perused the material on record.
Scope of judicial review in tender matters has been considered by Supreme Court in its various decisions. Hon’ble the Supreme Court in the case of Tata Cellular Vs Union of India, 1994 6 SCC 651, while considering the scope of judicial review in tender matters, elucidated following principles:
1) The modern trend points to judicial restraint in administrative actions.
2) The Court does not sit as a court of appeal but merely reviews the decision-making process.
3) The Court lacks the expertise to correct administrative decisions. If a review is permitted, it would be substituting its decision, which may be fallible.
4) The terms of the invitation to tender cannot be open to judicial scrutiny as they are in the realm of contract. Decisions to accept or award contracts are reached through several tiers and are qualitative, often made by experts.
5) The Government must have the freedom of contract. Fair play in administrative actions is necessary, but decisions must be free from arbitrariness, bias, or mala fides.
6) Quashing decisions can impose heavy administrative burdens and unbudgeted expenditures on the administration and lead to increase and unbudgeted expenditure.
After Tata cellular (supra), there is a long series of judgments of the Supreme Court on the scope of judicial review in tender matters, some of them are Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517, Midhigan Rubber v. State of Karnataka, (2012) 8 SCC 216, Afcons Infrastructure Ltd. v. Nagpul Metro Rail Corporation Ltd., (2016) 16 SCC 818, M/s Agmatel India Pvt. Ltd. v. M/s Resoursys Telecom, 2022 Legal Eagle (SC) 98, Airport Authority of India v. Centre for Aviation Policy, Safety & Research (CAPSR), (2022) SCC Online SC 1334.
Hon’ble the Supreme Court in the case of Balaji Ventures Pvt. Ltd. V. Maharashtra State Power Generation Company Ltd. has observed that “the eligibility criteria in the tender document applied to all bidders. The owner has the freedom to set criteria unless they are arbitrary or mala fide. Bidders cannot challenge criteria that do not suit them. Courts have limited roles in reviewing tender conditions, as it is an offer to compete”. In Airport Authority of India (supra), it has been observed by the Supreme Court that “tender terms are within the domain of the tenderer and not open to judicial scrutiny unless arbitrary, discriminatory, or mala fide. The Government must have a free hand in setting terms.”
The principles which emerge from a series of decisions of the Supreme Court are that:
i. The tender inviting authority is free to set eligibility criteria and conditions unless they are arbitrary, discriminatory, or mala fide.
ii. The author of the tender document is best suited to understand and interpret its requirements.
iii. If two interpretations are possible, the author’s interpretation must be accepted.
iv. If the tender authority follows healthy standards and norms, court interference is limited.
v. Courts review the decision-making process, not act as courts of appeal.
vi. There should be no cancellation of awards due to procedural errors or wrongful exclusion; unsuccessful bidders can seek damages in civil court.
vii. Courts have no role in imposing fair, wiser, or logical decisions on tender authorities.
viii. In most cases, the Supreme Court upholds the views of the tender inviting authority unless the terms are arbitrary, discriminatory, or mala fide.
In view of the settled legal position, the scope of judicial review in tender matters is only to the extent of arbitrariness, mala fide or discrimination. It is an admitted fact that respondent No.5 is L-1 (lowest bidder) in terms of the rate quoted by him. There is also no denial to the fact that the petitioner has emerged as L-1 in the tendering process and being the lowest bidder (L-1) has been recommended to be allotted the tender work in question. Even according to the petitioner, he was declared L-2 in the evaluation of the tenders submitted by the contractors. Having failed in the bidding process, the petitioner has no right to claim that the work be allotted to him because he has all the infrastructure to complete the work. The award of contract is essentially a commercial transaction and in arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny.
The petitioner has not alleged any arbitrariness, mala fide or discrimination meted out to him in the tendering process. Even prior to the declaration of the petitioner as successful bidder, the petitioner was not aggrieved of the reduction of the EMD, in that, it was a well considered decision taken on the request of the contractors’ association in order to ensure more participation and healthy competition in the tendering process. The reduction of the Earnest Money Deposit is based on the Management Decision No.02 of 2022 dated 08.02.2022. The decision of the Management is reproduced hereunder:-
“The Committee discussed the proposal for rationalization of Earnest Money Deposit (EMD) in Extraction and Transportation works. This issue was flagged by the Contractors Association in their memorandum and meeting with the Management on 07.02.2022. The proposal was agreed to and it has been decided that:-
a. Earnest Money Deposit for participating in the tenders is fixed @ 2% of the advertised contract value instead of prevailing 7%.
b. Only the successful bidders will be required to furnish performance guarantee to the tune of 3% of the advertised contract value in the shape of CDR/FDC which shall be over and above the EMD before the issuance of sanction.”
From a perusal of the decision of the Management, it becomes crystal clear that in order to ensure a healthy competition during tendering, it was decided to reduce the Earnest Money Deposit for participating in the tenders from 7% to 2%. However, in order to secure the interest of the Corporation, it was also decided by the Management that the successful bidder will be required to furnish performance guarantee to the tune of 3% of the advertised contract value, which shall be over and above the EMD, before issuance of sanction.
The petitioner did not lay any challenge to the management decision to reduce the EMD. If at all, the petitioner was aggrieved of the reduction of EMD in the impugned E-NIT, he could have challenged the e-NIT instead of participating in the process. The petitioner also availed of the benefit of reduction of EMD while submitting his bid. Therefore, now when he has failed in the bidding process, he cannot be permitted to turn around and lay challenge to the condition of the tender of which he was also a beneficiary. It is also a beaten law that no party can be allowed to accept and reject the same thing and thus, one cannot blow hot and cold.
There seems no arbitrariness or mala fide on the part of the official respondents in evaluating the bids and thereafter allotting contract in question in favour of the lowest bidder i.e. respondent No.5. Accordingly, challenge of the petitioner to assail allotment of contract in favour of respondent No.5 fails.
In view of the above, both these petitions are found to be without any merit, hence dismissed.