M/s. N.C. Hore & Ors vs State Of West Bengal & Ors

Ravi Krishan Kapur, J

The petitioner challenges a provisional work order dated 3 January, 2018 issued in favour of the petitioner excluding two items which had been mentioned in the tender but do not find place in the work order.

On 16 November, 2017, a notice inviting e-tenders was published by the State respondents, for the purposes of electrical installation work, shifting of sub-station at Diamond Harbour Electrical Section, PWD Office, Diamond Harbour District Hospital, South 24 Parganas, electrical installation work for a new sub-station and re-installation of an old sub-station at a new place. Significantly the tender was an item rate tender and was not an invitation for individual items. There was only "one work" to be executed for which there was stated only one serial number. It was "one work" comprising of 128 items. A prospective participant had to bid for only "one work" comprising of all the items. The item rate BOQ specifically contemplated 128 items and it was categorically recorded in clause 22 of the tender conditions that "conditional/incomplete tenders will not be entertained". All the items were put together under the NIT (Notice Inviting Tender) and the electrical installation work comprised of the "entire name of work" and head of accounts specified in the notice inviting e-tenders.

The total price quoted by the petitioner was Rs.122,21,961.00 which comprised of 128 items. By a provisional work order, dated 3 January, 2018, the Superintendant Engineer, South Electrical Circular Public Works Department, inter alia, informed the petitioner that the bid given by the petitioner excluding item nos.109 and 110 being the lowest was accepted by him on behalf of the Governor of the State of West Bengal ("impugned notice"). It is this exclusion of item nos.109 and 110 which has been challenged by the petitioner in these proceedings.

By a letter dated 9 January, 2018 the petitioner ventilated his grievances in respect of the arbitrary exclusion of the two items by the respondents. It was primarily contended on behalf of the petitioner that the tender was issued only for one work containing several components and not several individual items that had been invited by the tender. In this context, the petitioner relied on a number of clauses in the tender conditions to show that there was only one serial number and there was no scope for any partial bid but for only a complete bid for all of the 128 items.

By an interim order dated 30 January, 2018 passed in this writ petition, the Learned Single Judge granted an ad-interim order of injunction restraining the respondent authorities from publishing any fresh NIT for the two items being serial nos.109 and 110 of the NIT dated 16 November, 2017 and it was also categorically provided for in the order that the ad-interim order would not prevent the parties from executing the works under the tender process without prejudice to their rights and contentions. It is submitted on behalf of the petitioner that the works have since been completed except for the two items which are in issue in this petition.

Counsel on behalf of the petitioner laid much emphasis on clause 22 of the NIT to emphasize that partial or incomplete tenders would be liable to be rejected. In this background, the petitioner pegged his case on the norm that "the rules of the game cannot be changed during or after the game has begun". In support of this proposition he relied on the decision reported in (2008) 3 SCC 512 at paragraphs 27 and 33, (2015) SCC OnLine Cal 7622 at paragraph 33 and (2001) 10 SCC 51 at paragraph 5.

It was further submitted on behalf of the petitioner that the NIT clearly showed that it was only one item of work. The petitioner further argued that it was well within the discretion of the State respondents to decide the terms and conditions of the tender prior to issuance of the tender. However, once the NIT was published, the two items could not be deleted arbitrarily on the ground that the prices quoted or amounts mentioned for two of the items were allegedly high. The petitioner contended that there was not a single example which the State respondents could cite of exclusion of work after one had been selected in the manner that has been done by the respondent. In this view of the matter, counsel on behalf of the petitioner submitted that, a direction should be given for setting aside of the impugned letter dated 15 January, 2018 whereby the two items of work were excluded and a further direction be given directing the petitioner to complete these two items and for consequential payment thereof.

Counsel on behalf of the State justified the issuance of provisional work order dated 3 January, 2018. He submitted that the bid submitted in respect of two of the items being item nos.109 and 110 respectively were found to be extravagant and far above the sanctioned amount. It was in this background that the aforesaid work order had been issued in favour of the petitioner excluding item nos.109 and 110. He submitted that this was the third attempt on the part of the respondent to invite tenders for the entire works. The earlier two tenders had not materialized. He placed much emphasis on paragraph 6 of the affidavit-in-opposition, highlighting the fact that awarding the BOQ in respect of item nos.109 and 110 to the petitioner would have resulted in unjust enrichment to the petitioner and loss to the public exchequer.

He submitted that there was no mandate or obligation of the State to award all the BOQ items nor was there any embargo under the conditions of the tender in avoiding some of the BOQ items. He submitted that the process adopted by the State could not be challenged on the ground of mala fides. He relied on a number of decisions of the Hon'ble Supreme Court to emphasize the limits on the bar of judicial review in tender matters. In particular, he laid emphasis on the judgment reported in Jagdish Mandal vs. State of Orissa reported in (2007) 14 SCC 517 and Michigan Rubber (India) Limited vs. State of Karnataka & Ors. reported in (2012) 8 SCC 216. Counsel on behalf of the State ultimately submitted that, there were no grounds warranting grant of a writ of mandamus in favour of the petitioner.

I am fully mindful of the limited scope of interference in judicial review with tender processes and the cautionary approach which ought to be adopted by a Court. It is relevant to reiterate the statement of the law by the Hon'ble Supreme Court in Jagdish Mandal & Ors. vs. State of Orissa (supra) at paragraph 22 whilst dealing with such matters:

Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. 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 bona fide and is in public interest, courts will not, in exercise of 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. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.

This approach was reiterated by the Hon'ble Supreme Court in Michigan Rubber (India) Limited vs. State of Karnataka & Ors. (2012) 8 SCC 216 at para 35, Bakshi Security & Personal Services (P) Ltd. vs. Devkishan Computer (P) Ltd. (2016) 8 SCC 446 at para 19 and JSW Infrastructure Limited & Anr. vs. Kakinada Seaports Limited & Ors. (2017) 4 SCC 170 at paras 8 to 10.

However, there are certain peculiar facts in the instant case. The State respondents were fully justified on commercial grounds to frame the tender conditions in any manner of their choice. However, they chose to publish an item rate tender. It was not an invitation to quote for individual items. Incorporating all the items together, the respondents made the NIT asking for bids for a single work namely "electrical installation work, shifting of sub-station and Diamond Harbour electrical station an installation of new sub-station and re-installation of the old sub-station at a new place". The description of work was categorically specified as "only one work i.e. electrical installation work for shifting of the sub-station etc." There was only one work required to be done that could be ascertained from the serial number appearing at page 21 of the writ petition. There was only one serial number. There was no scope for any partial bid. In fact, it was not permissible for any party to pick and choose an item which he would want to participate in. Clause 22 of the Terms and Conditions of the tender categorically provided for rejection of conditional or incomplete tenders. Thus, it is evident, from a plain reading of the tender document itself that there was only one job to be completed under the NIT. It is possible that any party participating in such a tender could do its own costing and choose to estimate a higher bid for one item and a lower amount for another item. This discretion lay with any prospective participant or bidder and it was for the State respondents to formulate the tender conditions in such a manner reserving to themselves the discretion to reject any particular item if they so desired. However, there is nothing in the subject tender to show that it was or could be interpreted to be a tender for individual items. The petitioner was bound to bid for 128 items that it did in fact and was accepted to be the lowest tenderer in respect thereof.

In this background, I may examine the impugned notice dated 3 January, 2018, whereby the State sought to issue a work order excluding these two items being item nos.109 and 110, I am of the view that this is akin to deleting or re-writing the terms of the bid by the tenderer after the players, so to speak, had entered into the arena and is equivalent to changing the rules of the game after the game had begun. In, Monarch Infrastructure Pvt. Ltd. vs. Commissioner Ullash Nagar Municipal Corporation at paragraph 12 this principle of law has been stated that "the rules of the game, meaning thereby that the criteria for selection cannot be altered by the authority concerned in the middle or after the process of selection has commenced. This would amount to changing the rules of the game after the game had been played which is clearly impermissible in law".

I am of the view that the decision to exclude item nos.109 and 110 from the bid of the petitioner amounted to alteration of the essential conditions underlying the tender and was impermissible in law. The action shows arbitrariness and irrationality. The course adopted by the respondent authorities cannot be justified since it vitiates the sanctity of the entire tender process in the facts of the instant case.

I am fortified in this view by several decisions of the Hon'ble Supreme Court Suffice it to mention some of them namely P.K. Ramachandra Iyer & Ors. Vs. Union of India & Ors. (1984) 2 SCC 141, Umesh Chandra Shukla vs. Union of India & Ors. (1985) 3 SCC 721, Durgacharan Misra vs. State of Orissa & Ors. (1987) 4 SCC 646, Maharashtra State Road Transport Corporation & Ors. Vs. Rajendra Bhimrao Mandve & Ors. (2001) 10 SCC 51 and K. Manjusree vs. State of Andhra Pradesh & Ors. (2008) 3 SCC 512. In all these cases, the Supreme Court has repeatedly reiterated that the norms after the game was played or during the middle of the game cannot be changed or tinkered with midstream. This is clearly prohibited. The rule laid down in the tender must be followed. The categorical interpretation of the tender document is that a prospective bidder had to give a complete bid for all the items and that partial bids were not permissible. Thus, a participant could not have decided which item to bid for and which not to bid for. By giving the breakup of costs or estimates for each individual item did not change his offer. It was for a single composite work. If this is what was mandatory and this is what had to be strictly adhered to by a prospective tenderer in terms of the NIT then it cannot lie in the discretion of the State respondents to pick and choose which items to agree to and which ones not to agree to in accepting the tender.

In view of the aforesaid and particularly bearing in mind that in the interim period the entire work for the remaining items has been completed, the writ petition is allowed. The State respondents are directed to set aside the portion of the provisional work order dated 3 January, 2018 whereby two items of work being item nos.109 and 110 had been excluded and a further direction is passed on the respondent authorities to permit the petitioner to complete those two items of work and receive consequential payment at the rates offered by the petitioner in the bid document in accordance with law.

WP No. 1456 (W) of 2018 stands disposed off accordingly.

There will be no order as to costs.

Urgent certified photostat copies of this judgment, if applied for, be supplied to the parties upon compliance of all requisite formalities.