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Judgment
This batch of three writ petitions and two contempt cases can be disposed of by a common order as the subject matter and the question for decision is one and the same.
The relevant facts may bementioned briefly: For the sake of convenience the parties will be referred to as arrayed in WP No.20349 of 1998. The Superintending Engineer and Project Administrator, Construction Circle, Dowleswaram, East Godavari District, third respondent, issued a tender notice on 18-3-1998 calling for tenders with regard to the execution of four works at Dowleswaram barrage as specified in the said tender notice. The tenders were opened on 16-4-1998. The tender of the 4th respondent was found to be the lowest for all the four works put together. Insofar as the fourth work is concerned, since the value of the said work exceeded rupees one crore, it had to be referred to the Commissioner of Tenders for Finalising the tender. The Commissionerate of Tenders, by its proceedings dated 30-6-1998, while approving the finalisation of the tender of the 4th respondent for the said work, however, recommended that the approval of the Government also may be obtained since the rates quoted by the 4th respondent were not strictly in accordance with clause 10 of the tender conditions which required the rates to be quoted in rupees and in sums of five paise. Ultimately all the four works were awarded to the 4th respondent who entered into agreements on 2-7-1998 with regard to Work No.4 and on 4-7-1998 with regard to Work Nos.l, 2 and 3.
The petitioner initially filed WP No.18871 of 1998 questioning the finalisation of the tender with regard to Work No.4 in favour of the 4th respondent. Simultaneously the petitioner also filed WP No.l 8872 of 1998 to direct the respondents to follow the tender conditions strictly while finalising the tenders in respect of Work Nos. 1, 2 and 3. Both the said writ petitions came up for admission on 8-7-1998. While ordering notice before admission this Court granted an interim direction in WP No.18871 of 1998 to maintain status quo as on that date with regard to the finalisation of the tenders. In WP No.18872 of 1998 also, while ordering notice before admission, this Court granted an interim direction to strictly adhere to the tender conditions in finalising the tenders pursuant to the tender notice dated 18-3-1998 pending further orders. Alleging violation and willful disobedience of the said interim orders, the petitioner has filed the two contempt cases C.C.Nos.908 and 909 of 1998 respectively. The petitioner has subsequently filed WP No.20349 of 1998 questioning the finalisation of the tenders in favour of the 4th respondent in respect of WorkNo.l, 2 and 3 also.
The petitioner questions the award of the contracts to the 4th respondent mainly on the ground that the tender filed by the 4th respondent is in violation of Clauses 10 and 12.4 of the conditions mentioned in the tender notice and as such the same is liable to be summarily rejected. It is the contention of the petitioner that the said conditions are mandatory conditions which cannot be waived. On the other hand it is the stand of the respondents that Clause 10 which stipulates that the rates quoted should be in rupees and sums of five paise is merely intended for the sake of convenience in arithmetical calculation and is not mandatory. So far as Clause 12.4 is concerned, according to the respondents, the rates quoted by the 4th respondent are in accordance with the said clause and there is, in fact, no violation of the same. It is, therefore, necessary at the outset, to refer to the said clauses in the tender notice:
Clause 10 reads as follows:
"A schedule of quantities accompanies the tender notice. It shall be definitely understood that the Government does not accept any responsibility for the correctness or (sic) this schedule is liable to alterations by omissions, deductions or additions at the discretion of the Executive Engineer. Or as set forth in the conditions of the contract. The tenderer will however base his lumpsum tender on this schedule of quantities. He should quote specific rates for each item in the schedule and the rates should be in rupees and in sums of five paise. The rates should be written in both words and figures and the units in words. The tenderer should also show the totals of each item and the grand total of the whole contract and quote in the tender a lumpsum for which he will undertake to do the whole work subject to conditions of the contract such lumpsum agreeing with the total amount of schedule accompanying the lumpsum tender and shall be written legibly and free from erasures, overwritings, or corrections of figures, corrections where unavoidable should be made by crossing out, initialling, dating rewriting."
Clause 12.4 is as follows:
"Tenders with an excess of 25% and above or less by 25% and below of the estimated contract value shall be summarily rejected. Where the estimated rates are different from the current schedule of rates, the excess or less in the tender percentage shall be compared with the schedule of rates in operation at the time of evaluation of tenders. The rest of tenders will be scrutinized carefully to arrive at the reasonableness of the rates quoted."
Clause 1 1.1(a) also may be noticed as it is of some relevance:
"11.1. Discrepancy in rates :
(a) In case of any discrepancy between the rates quoted in words and figures the rates quoted in words shall prevail. In case contractor quoted rates only in words and does not quote in figures or vice versa for any one or more items of work, such tender shall be treated as incomplete and rejected."
So far as the challenge based on Clause 10 is concerned, it is not in dispute that the rates quoted by the 4th respondent are not strictly in accordance with the said clause as admittedly they are not in sums of five paise as stipulated by the clause. The question for consideration, therefore, is whether the said clause is mandatory or it is only directory. The question as to the nature of the tender, conditions and the scope of judicial review in such matters fell for consideration before the Supreme Court as well as this Court earlier in several cases. In the leading case of Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, , it was laid down that the authority calling for tenders was not entitled to act arbitrarily and it was bound to conform to the standard or norm laid down in the notice inviting tenders and it cannot deviate from the tender conditions. The apex Court in that case referred to the well settled rule of administrative law that an executive authority must be rigorously held to the standards by which it professes its actions to bejudged and it must scrupulously observe those standards on pain of invalidation of an act in violation of them. At the same time a line of distinction must be drawn between the essential conditions of eligibility which cannot be waived and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In Poddar Steel Corporation v. Ganesh Engineering Works, (1993) 3 SCC 273, the Supreme Court observed as follows:
"As a matter of general proposition it cannot be held that an authority inviting tenders is bound to give effect to every term mentioned in the notice in meticulous detail, and is not entitled to waive even a technical irregularity of little or no significance. The requirements in a tender notice can be classified into two categories those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to enforce them rigidly. In the other cases it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases."
In M/s. G. J. Fernandez Vs. State of Karnataka and others, , the Supreme Court noted that the conditions and stipulations in the tender notice have two types of consequences. The first is that the party issuing the tender has the right to punctiliously and rigidly enforce them. Thus, if a party does not strictly comply with the requirements of the tender conditions, it is open to the tender issuing authority to decline to consider the party for the contract and if a party comes to Court saying that the authority should be stopped from doing so, the Court will decline relief. The second consequence indicated by the apex Court is not that the authority cannot deviate from the guidelines at all in any situation but that any deviation, if made, should not result in arbitrariness or discrimination. It comes in for application where the non-conformity with, or relaxation from, the prescribed standards results in some substantial prejudice or injustice to any of the parties involved or to public interest in general. The Supreme Court also observed in the said case that while the rule in Ramana''s case (supra) will be readily applied by Courts to a case where a person complains that a departure from the qualifications has kept him out of the race, injustice is less apparent where the attempt of the applicant before Court is only to gain immunity from competition. The Court further observed therein that even assuming for purposes of argument that there has been a slight deviation from the terms, it has not deprived the appellant of its right to be considered for the contract as its tender has received due and full consideration and no injustice can be said to have been done to the appellant by the consideration of its tender side by side with that of the MCC and in the KPC going in for a choice of the better on the merits.
In M/s. Nataraja Detonator Ltd., Commissioner of Women Development and Child Welfare, 1997 (3) An. WR 772, I had occasion to consider the question whether the action of the tender issuing authority in awarding the contract to the lowest bidder by granting some extra time to it to produce certain documents to prove its eligibility was arbitrary and illegal. Following the decisions of the apex Court noted earlier, I upheld the said action of the tender issuing authority holding that the same did not result in any arbitrariness or discrimination or real prejudice to the petitioner therein who admittedly was not the lowest bidder.
In J. Karunakara Rao Vs. Commissioner of Tenders, Hyderabad and Others, , a learned single Judge of this Court held that the condition in the tender notice requiring the rates to be mentioned both in words and figures which is similar to the one contained in Clause 11(a) of the tender notice in the instant case cannot be held to be a mandatory one and the discretion exercised by the authority should be fair and reasonable and public interest should be the paramount consideration in taking a decision. It is pertinent to note that the clause under consideration contained a stipulation that on failure to quote the rates in figures as well as in words the tender shall be treated as incomplete and rejected. Even then it was held that the said condition cannot be held to be a mandatory one and the rejection of the tender on the sole ground that the rates were quoted only in words but not in figures was arbitrary and it was vitiated by non-application of mind. It may also be pointed out that the tender of the petitioner therein was the lowest tender.
In M/s. Margadarsi Borewells and others Vs. The Singareni Colleries Co. Ltd., Hyderabad and others, , the tender notice prescribed minimum experience of three years of similar work and a turnover of Rs.1.5 crores in any one year during previous three years. The question which fell for consideration in that case was whether the experience of some of the individual partners of the firm and their collective annual turnover prior to the constitution of the partnership -firm can be treated as experience and turnover of the partnership-firm for awarding the contract to the firm. The Court held that it cannot be done and the acceptance of the tender of the firm was held to be in violation of the tender conditions. It was also held that the High Court had jurisdiction under Article 226 to interfere in matters of contract where the authority acted arbitrarily even though the contracting party should be given wide latitude in choosing its own contractor for the purpose of execution of the work to its satisfaction. In the light of the principles enunciated in the aforesaid decisions, it has to be seen whether Clause 10 of the tender notice in the instant case which requires the rates to be quoted in rupees and in sums of five paise is an essential condition which cannot be waived.
In the counter-affidavits filed on behalf of the respondents it is stated that this clause is only meant for arithmetical convenience of the Department at the time of the scrutiny and evaluation at various levels before settlement of the lowest contract. It is also pointed out that this clause is not being strictly enforced in various engineering departments since a pretty long time and that it has not been practically in vogue. It is also stated that in case of keen competition the tenderers have not been following the convention of quoting rates in sums of five paise and that there is no condition that the tender should be rejected if the rates are not so quoted. It is further pointed out that even the petitioner himself has deviated from the said clause inasmuch as he failed to show the totals of each item and the grand total of the whole contract and quote in the tender a lumpsum for which he will undertake the whole work as required by the said clause. The Department condoned this lapse on the part of the petitioner and considered his tenders for evaluation. The learned Counsel for the respondents have also drawn my attention to the minutes of the meeting of the Chief Engineers held on 4-5-1998 in which it was resolved to recommend to the Government to delete the condition requiring the rates to be quoted in sums of five paise from the tender conditions. Considering all these facts and circumstances, I am of the view that this clause is primarily intended to facilitate easy arithmetical calculation at the time of evaluation of the tenders and as such it cannot be considered to be mandatory. It is, no doubt, true as contended by the learned Counsel for the petitioner that this clause has some bearing on the relative ranking of the competing bidders and if the same is not strictly enforced, it gives scope for manipulation and arbitrary exercise of power by the authorities. However, on the facts and circumstances of the instant case, I am satisfied that no real prejudice is caused to the petitioner by the non-observance of the said clause inasmuch as the tender filed by the petitioner received due consideration along with the tenders filed by the other bidders. After all, the petitioner, who is an experienced contractor, well conversant with the practice in vogue, cannot be heard to complain that any prejudice has been caused to him by the non-observance of the said clause. Admittedly the rates quoted by the 4th respondent were the lowest. The petitioner was not even the next lowest bidder. In between him and the 4th respondent there was another bidder who has not made any grievance. The first ground of challenge must, therefore, fail.
Coming to the second ground of challenge based on clause 12.4 it is the case of the petitioner that the rates quoted by the 4th respondent for all the four items of work are less than 75% of the sanctioned estimated value and as such the tender of the 4th respondent is liable to be summarily rejected. In order to prove his case the petitioner relies on the sanctioned estimated values prepared by the Chief Engineer while granting technical sanction to the works in question. It is not in dispute that if these sanctioned estimated values are taken as the basis for evaluation of the tenders, the rates quoted by the 4th respondent will be outside the limits specified in Clause 12.4 of the tender conditions. It is, however, the stand of the respondents that the sanctioned estimated values prepared by the Chief Engineer are not relevant for the purpose and it is only the estimated contract value (E.C.V.) prepared by the Superintending Engineer who is the tender issuing authority which has to be taken into consideration. It is useful to extract the averments in this behalf in para 5 of the counter-affidavit filed on behalf of the official respondents in WPNo.20349 of 1998.
"I submit that condition No. 12.4 specifies that tenders with an excess of 25% and above or less by 25% and below of the Estimate Contract Value (E.C. V.) shall be summarily rejected. The E.C.V. is the value arrived at by taking the provisions available in the Technically sanctioned estimate which is framed based on the corresponding standard schedule of Rates (S.S.R.). The E.C.V. shall contain the directly computed values of certain items as well as contingent items. Normally the contingent items are worked on pro-rate basis and loaded to the relevant items. This value alone to be considered for comparing the tender percentage and action to be taken in terms of condition 12.4."
It is further stated in para 6. of the said counter affidavit that any bidder is concerned especially in the matter of quoting the rates in the tender only with reference to Estimated Contract Value (E.C.V.) but not with the sanctioned estimated value. A tabular statement is furnished in para.8 of the counter-affidavit showing the Sanctioned Estimated Value, Estimated Contract Value (E.C.V.), the value quoted by the petitioner and the value quoted by the 4th respondent for items 1, 2 and 3 of the works in question. The same may be extracted:
Sl. No Name of work Sanctioned estimated value Estimated contract value ECV Value quoted as per tender of petitioner Value quoted as per tender of 4th respondent
Rs. Rs. Rs. Rs.
Rad Arm 67,35,744 67,35,741 50,55,192.21 50,51,806.41
Madur Arm 32,33,006 32,33,003.10 24,27,970.20 24,24,752.34
Vijjiswaram Arm 68,86,070 65,86,058.17 49,44,707.29 49,39,571.54
Likewise in para.9 the said particulars relating to item No.4 are also given separately. It is not disputed by the petitioner that if the E.C.V. as mentioned by the respondents is adopted as the basis for evaluation, the rates quoted by the 4th respondent will be within the specified limits and there will be no violation of Clause 12.4.
Indisputably Clause 12.4 of the tender conditions in terms refers to only the Estimated Contract Value (E.C.V.) but not the Estimated Sanctioned Value. The learned Counsel for the petitioner has contended that both are one and the same and that the respondents are merely trying to take undue advantage of the mistake committed by the petitioner in mentioning the "Sanctioned Estimate Value" instead of the "Estimated Contract Value" in his affidavit. The learned Counsel for the petitioner has also contended that when the Chief Engineer, who is the sanctioning authority, has fixed the Sanctioned Estimated Value, the Superintending Engineer, who is the subordinate, has no power to vary or alter the same and fix the Estimated Contract Value differently. The learned Counsel for the petitioner also sought to substantiate this contention by referring to G.O. Ms. No.1007 Transport, Roads & Buildings (C1) Department, dated 5-11-1976 in which the Government issued orders delegating more powers to the officers of the Public Works Department and rationalising the procedures. My attention was drawn in particular to Annexure 111 of the Government Order in which the limits of the power to grant technical sanction by the Chief Engineers Superintending Engineers and Executive Engineers are specified. I do not, however, find anything in the-said Government Order which throws any light on the present controversy. On the other hand, the learned Government Pleader for Irrigation has produced before me a copy of the Circular Memo dated 30-3-1998 issued by the Office of the Chief Engineer, Medium Irrigation, Irrigation and CAD Department, Hyderabad, indicating the procedure to be followed with regard to preparation and sanction of estimates, calculation of Estimated Contract Value, founding off the estimated quantities, rates and amounts etc. The said memo clearly brings out the distinction between the E.C.V. and the sanctioned estimate. By the said memo the Superintending Engineers and Executive Engineers are requested to follow scrupulously the instructions contained in G.O. Ms. No.345, dated 8-9-1992 for founding off the quantities, rates and amounts in the estimates and also the through rates and that the E.C.V. may be worked out to the nearest paise. It further directs that the through rates, itemwise quantities and E.C.V. amount calculated should be displayed on the notice-board. Finally the Superintending Engineers and the Executive Engineers are requested to strictly follow the instructions contained in the said memo while sanctioning estimates, calculating E.C.V. and evaluating the tenders. This memo, therefore, clearly shows that the E.C.V. has to be prepared by the tender issuing authority only based on the sanctioned estimate. I have, therefore, no hesitation in rejecting the second contention of the petitioner based on Clause 12.4 of the tender conditions.
It follows from the above discussion that the rates quoted by the 4th respondent are in accordance with the said clause and there is no violation of the same.
The learned Counsel for the petitioner has finally contended that the contracts were actually awarded and the agreements were entered into with the 4th respondent only after 8-7-1998 in utter violation of the interim orders granted by this Court but the records have been deliberately manipulated to show that the agreements were concluded on 2-7-1998 and 4-7-1998. The learned Counsel for the petitioner has particularly relied upon the circumstance that the third respondent addressed a letter to the 4th respondent on 2-7-1998 informing the 4th respondent about the acceptance of his tender and calling upon him to attend the office on 2-7-1998 to complete the formalities whereas it appears from the records that the 4th respondent furnished the bank-guarantees on 1-7-1998 itself. The learned Counsel for the petitioner further contends that the contract for Item No.4 could not have been awarded to the 4th respondent without obtaining the approval of the Government as suggested by the Commissionerate of tenders on 30-6-1998. According to the learned Counsel for the petitioner, this clearly shows that the entire thing was pre-arranged and stage-managed by manipulating the records. I do not, however, find any substance in these submissions. It must be remembered that the tenders were opened on 16-4-1998 and they were evaluated. As the tender of the 4th respondent was the lowest, it was decided to award the contracts to him and the approval of the Commissionerate of Tenders was sought with regard to Item No.4. The Commissionerate of Tenders, while granting its approval, however, suggested that the approval of the Government also might be obtained since the rates quoted by the 4th respondent were not strictly in accordance with Clause 10. According to the respondents, obtainingthe approval of the Government was merely a formality and the Government has been addressed in that behalf. However, having regard to the urgent nature of the works which have to be completed within the time schedule fixed by the founding agency NABARD, the contracts were awarded to the 4th respondent who was the lowest bidder and the 4th respondent duly completed all the formalities by furnishing the required bank-guarantees and demand drafts on 1-7-1998 itself and the agreements were concluded on 2-7-1998 and 4-7-1998 and the work sites were also delivered to the 4th respondent on the dates of the respective agreements. It is further stated that the work was immediately commenced by the 4th respondent even before the filing of the writ petitions and the grant of the interim orders by this Court. On a perusal of the records which have been produced before me, I am satisfied that there is no basis for the contention of the learned Counsel for the petitioner that the records have been manipulated. As the tenders were opened on 16-4-1998 itself when it became clear that the 4th respondent was the lowest tenderer to whom the contracts will have to be normally awarded and the Commissionerate also signified its approval on 30-6-1998, the 4th respondent must have been asked by the official respondents to be ready with the required bank-guarantees and demand drafts and accordingly the 4th respondent made them ready on 1-7-1998 and the contracts were concluded on 2-7-1998 and 4-7-1998. I do not find anything irregular or out of the way in the same. Apart from the 4th respondent being the lowest bidder, it is stated that the petitioner is not at all qualified for Item No.4 as he does not have the prescribed qualifications and experience for the said work. In Tata Cellular Vs. Union of India, , the apex Court has clearly indicated the parameters and limits of judicial review in contractual matters. The following observations made by the apex Court in the said judgment are apposite in this context:
"It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be stuck down. Judicial quest in administrative matters has been to find the right balance between the administrative discretion to decide matters whether contractual or political in nature or issues of social policy; thus they are not essentially justifiable and the need to remedy any unfairness. Such an unfairness is set right byjudicial review."
Judged in the light of these observations, I do not find that the award of the contracts to the 4th respondent in the instant case is vitiated by any arbitrary or mala fide exercise of power.
For the aforesaid reasons, I do not find any merit in the writ petitions and accordingly they are dismissed but without costs.
For the self-same reasons, 1 do not find any valid grounds to entertain the above contempt cases and accordingly they are also dismissed.
Before parting with these cases I would like to observe that in order to obviate any uncertainty or confusion regarding the tendering process and to rule out any possibility for manipulation, it is desirable to delete the clause which requires the rates to be quoted in sums of five paise from the tender conditions as recommended by the Chief Engineers at the meeting held on 4-5-1998.