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Judgment
A.M. Shaffique, J.—1. These appeals are filed against the common judgment dated 9/11/2015 in WP(C) Nos. 1353/15 and 28209/15. The writ petitions were filed challenging certain conditions in the Notice Inviting Tender (for short NIT) published by the Senior Port Conservator, Azhikkal Port, Kannur in respect of the work in relation to manual dredging at Azhikkal Port.
The short facts involved in the writ petitions would disclose that in terms with the Scheme framed as per Government Order dated 18/3/2010, which was modified by another Government order dated 13/4/2012 and Government Order dated 16/8/2013, tenders were invited to award the work of manual dredging at Azhikkal Port, Kannur for the year 2014-15. The contention urged by the petitioners is that though reference has been made in the NIT to the Government Orders referred above, the same is not in compliance with the said Government Order. Specific reference has been made to Column No. 9 of the tender notification and the special conditions in Clause 17, which, according to the petitioners, is quite arbitrary and not in terms with the Government Orders issued earlier.
It is stated that on the basis of the NIT, 73 societies submitted application of which 52 of them were shortlisted and 20 societies were selected in the final evaluation. But the work was not awarded.
The main contention urged by the petitioners is that the condition in Column No. 9(a) and Clause 17 of the special conditions, which gives preference or advantage for previous experience of the societies, is highly unreasonable, discriminatory and arbitrary. As per Column 9(a), there is a requirement to specify "work experience of the society in manual dredging". Clause 17 of the special conditions of the tender conditions reads as under;
"17. The societies having the following technical qualification will be given preference. If no society having experience in manual dredging gets qualified for any zone, then in such zones the societies having the other three qualifications shall be given preference on the basis of number of members having experience in those societies.
a. The work experience of the society in manual dredging.
b. The number of members in the society who are traditional dredging workers.
c. The availability of boats with harbour craft registration with the society.
d. The availability of necessary land with the society to unload the dredged materials".
It was contended that certain societies were working in Azhikkal Port since 2011 and they alone will have the necessary experience. The reason for incorporating the experience clause is to the disadvantage of other societies who are eligible to participate in the tender and therefore the said provision has been incorporated only for the purpose of giving an undue advantage and avoiding new players to come into the field. It was also contended that it may affect the interest of new societies and it will prevent competition.
Counter affidavit had been filed by the 3rd respondent, Senior Port Conservator in WP(C) No. 28209/15, inter alia stating that the tender notification had been issued taking into consideration the Government Orders dated 18/3/2010, 13/4/2012 and 16/8/2013. It is stated that taking into consideration the various factors involved in the matter, the main objective ought to be that the members of the Co-operative Society should earn their livelihood. It is stated that only experienced societies having harbour craft and place for dumping dredged sand for the smooth and effective dredging activities, should be given preference. It is stated that removal of sand was highly required for maintaining the depth of the channel. Therefore, it is a continuous process and only experienced societies having the required facilities will be capable of carrying out the dredging, as expected by the department. At the same time, the department was interested in providing job opportunities to the traditional manual sand dredging workers. It is for implementing the main purpose as intended by the Port and also in terms with the policy of the Government that such clauses had been incorporated in the tender conditions. It is also stated that there is no mandate that experienced societies alone will be permitted to participate in the tender. It is further stated that as per the norms stipulated in the tender, any society which scores 50% of total marks i.e., 15 marks out of 30 and above are qualified for the final process of evaluation. As far as experience is concerned, 5 marks alone is given for experience but if a new society though does not have experience acquires 50% of the marks out of the total 30, they will be qualified for price evaluation. It is therefore contended that there is no arbitrariness in the tender conditions and the marks had been specified for experience only as an evaluation process and, for achieving the qualification, experience is not the only criteria.
In WP(C) No. 1353/15, counter affidavits have been filed by respondents 3 and 5 to 6 who have impleaded themselves in the proceedings. They have supported the stand taken by the Government in this regard.
Learned Single Judge after evaluating the factual circumstances involved in the matter formed an opinion that the impugned clauses by which experience had been provided, is arbitrary and therefore, the impugned clauses in the NIT are liable to be set aside. Hence, the writ petitions were disposed of directing the respondent authorities to finalise the evaluation, without insisting for the stipulation in the impugned clauses in the NIT.
It is aggrieved by the aforesaid judgment that these appeals have been filed. WA No. 2641/15 has been filed by the Payyannur Labour Contract Co-operative Society after seeking leave of this Court and WA No. 2666/15 has been filed by respondents 3 and 4 in WP(C) No. 1353/15, among whom the appellant in WA No. 2641/15 is the first appellant in the present appeal.
Heard the learned counsel for appellants, the learned counsel for the respondents/writ petitioners and learned Government Pleader appearing on behalf of the Government and its authorities/officers.
The main contention urged on behalf of the appellants is that there was no arbitrariness in the impugned clauses. That apart, when about 20 persons are shortlisted in terms of the NIT, none of them were made parties to the writ petition. It is also contended that petitioners having participated in the tender have no right to raise any objection. It is further argued that the impugned tender condition has been incorporated only as an evaluation criteria and was not intended to exclude any person from participating in the tender. The total marks awarded in the evaluation criteria is 30 out of which, marks given for experience is only 5 and 50% out of 30, i.e. 15 marks, would qualify a tenderer for price evaluation, which aspect has been totally ignored by the learned Single Judge, especially when the jurisdiction of the writ court in interfering with the tender conditions are very limited. It was also contended that the Port Conservator has not departed from the Government Orders and was entitled to stipulate such conditions in the NIT for the purpose of providing sufficient employment to the traditional dredging workers in the locality.
The learned counsel also relied upon the judgment in Prabodh v. State of U.P. [, (1984) 4 SCC 251) to contend that the writ petition is bad for non joinder of necessary parties. The judgment in New Bihar Biri Leaves Co. v. State of Bihar and Ors. [, (1981) 1 SCC 537] is relied upon to contend that after participating in the tender, it is not open for one of the parties to challenge the tender conditions. Association of Registration Plates v. Union of India [, (2005) 1 SCC 679] is relied upon to contend that experience in carrying out the work is a sound criteria and therefore, there is nothing wrong in the authorities to insist for experience of the candidate. Further reference is made to the judgment in Tata Cellular v. Union of India [, (1994) 6 SCC 651] to contend that the scope of interfering in the tender conditions is very limited. He also relied upon the Apex Court judgment in Raunaq International Ltd., v. I.V.R. Construction Ltd., [, (1999) 1 SCC 492], wherein, it was held that granting relaxation when it is permissible under the tender on valid principles is justified, though not exactly in accordance with the prescribed criteria, but having regard to the expertise and experience of the tenderer.
On the other hand, learned counsel appearing for the writ petitioners/respondents submits that, since 2011, the work was being carried on by certain persons without any tenders being invited. Therefore, when experience is also mentioned as a criteria, none of the societies who were not doing the manual dredging work earlier or new societies cannot have that experience. Therefore, incorporation of such a clause is arbitrary and amounts to discrimination of new societies. In other words, they will not be in a position to compete with the tenderers who are already carrying on the work though without any process of tender. It is submitted that when Government Orders did not contain any stipulation to insist for work experience as a criteria for evaluating the tender, the Port Conservator has arbitrarily incorporated such a clause, which does not have any nexus to the object which is sought to be achieved.
Learned Government Pleader submitted that the clauses in the tender had been incorporated clearly in terms with the Government Order and that the experience factor can always be included in any NIT for the purpose of awarding the work.
The principle of law governing the challenge to conditions in an invitation to tender as held by the Supreme Court are as follows:-
(i) In Tata Cellular v. Union of India, [, (1994) 6 SCC 651], Supreme Court held as under:
"94. The principles deducible from the above are:
(1) The modern trend points to judicial restraint in administrative action.
(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.
(3) 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.
(4) 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.
(5) 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 or quasi-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.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure".
(ii) In Global Energy Ltd. v. Adani Exports Ltd., [, (2005) 4 SCC 435], the Supreme Court held as under:
"10. The principle is, therefore, well settled that the terms of the invitation to tender are not open to judicial scrutiny and the courts cannot whittle down the terms of the tender as they are in the realm of contract unless they are wholly arbitrary, discriminatory or actuated by malice".
(iii) In Meerut Development Authority v. Assn. of Management Studies, [, (2009) 6 SCC 171], the Apex Court held as under:
"26. A tender is an offer. It is something which invites and is communicated to notify acceptance. Broadly stated it must be unconditional; must be in the proper form, the person by whom tender is made must be able to and willing to perform his obligations. The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. However, a limited judicial review may be available in cases where it is established that the terms of the invitation to tender were so tailor-made to suit the convenience of any particular person with a view to eliminate all others from participating in the bidding process.
The bidders participating in the tender process have no other right except the right to equality and fair treatment in the matter of evaluation of competitive bids offered by interested persons in response to notice inviting tenders in a transparent manner and free from hidden agenda. One cannot challenge the terms and conditions of the tender except on the abovestated ground, the reason being the terms of the invitation to tender are in the realm of the contract".
Therefore, the primary question to be considered on merits is regarding the question whether the impugned clauses are either arbitrary or tailor made to suit the experienced tenderer. Perusal of the evaluation criteria annexed to the NIT is extracted in the evaluation method which forms part of it, the English translation of which reads as under;
"EVALUATION METHOD
A perusal of the evaluation method by itself would clarify the reasonableness of inclusion of the impugned clauses. The marks awarded for experience in manual dredging is only 5. There are six other criteria. Serial No. 2 is with reference to the number of manual dredging workers in the society. Serial No. 3 is with reference to the percentage of manual dredging workers. Serial No. 4 relates to the requirement of the marks given for possessing harbour crafts. Serial No. 5 is the mark awarded for land available to keep the dredged material. Serial Nos. 6 and 7 apparently relates to those societies which have done work earlier. Serial No. 6 states that if they are fined, they will lose marks and Serial No. 7 is with reference to them being blacklisted. Therefore, the evaluation criteria specified in the NIT takes care of new societies as well as societies with experience as contemplated in the impugned clauses. In such circumstances, when it is possible for new societies also to participate in the tender for price bid evaluation, once they qualify at the initial stage by getting 15 marks out of 30, the criteria for experience cannot be said to be tailor made to suit the existing contractors, or to exclude the new societies. Therefore, the learned Single Judge was not correct in holding that the impugned clauses were arbitrary and discriminatory to the writ petitioners.
Now coming to the question whether the tender conditions are contrary to the Government Orders, it is relevant to note that the Government Orders had only fixed certain norms for the Co-operative Societies for the regulation of manual dredging activities in Ports and to maintain navigation channel and port basin as per Indian Ports Act, 1908. Clause (2) of the norms indicate that at least 90% of the members of the society should be fully involved in the activity of manual dredging in the port limits and directly experienced in manual dredging, being traditional sand dredging workers of the area and that the manual sand dredging should be the main means of livelihood for all the members. The Government prescribed various norms relating to defining the zone, jetty selection and permitted quantity. Clause E of the Government Order dated 16/8/2013 provides that the Cooperative Societies for manual dredging of each zone within the port limits shall be selected through an open tender process by issuing the tender notice and tender specification by Conservator of Ports with local publicity. Other terms and conditions are also specified. However, there is no restriction imposed on the Conservator of Ports to make experience as a criteria for evaluation. When the Conservator of Port is given the power to specify the tender specification and the evaluation of the tenders are to be made by the said authority, we do not think that absence of a guideline which permits the Conservator to treat experience as a criteria in the guidelines cannot be a reason to set aside the impugned clauses in the NIT. As already indicated, the jurisdiction of this Court to interfere with the conditions of tender is very limited. Since we do not find any arbitrariness in the impugned clauses on account of the reasons stated above, we do not think that this Court will be justified in interfering with the conditions stipulated in the impugned clauses in the NIT.
The appellants contend that the writ petitioners having participated in the tender, they are not entitled to challenge the conditions of NIT. The tenders were issued on 8/1/2015 and the last date of submission of tenders was on 20/1/2015. But it is relevant to note that WP(C) No. 1353/15 is dated 12/1/2015. The challenge therefore was made even before the date of submission of bid. Under such circumstances, there is nothing wrong in the petitioners challenging the tender conditions.
Another argument raised was that all the tenderers who were qualified were not made parties to the writ petition. This eventuality may occur only in WP(C) No. 28209/15 wherein the petitioner submits that after considering the required qualification, 20 societies were selected in the final evaluation. But in so far as the work was not awarded, we do not think that non impleading of the qualified tenderers after the initial evaluation could be a reason to dismiss the writ petitions on the ground of non joinder of necessary parties.
Having found that the impugned clauses were neither discriminatory or arbitrary, we are of the view that the appeals are liable to be allowed. Therefore, we set aside the judgment of the learned Single Judge. Accordingly, the appeals are allowed and the writ petitions are dismissed.