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Judgment
P.D. Dinakaran, C.J.—The petitioners are registered Government contractors in the State of Sikkim and they claim that they have successfully completed various Government contracts, semi-Government contracts as well as private contracts. Accordingly, they filed their tenders pursuant to the ''Notice Inviting Tender'' published by the Urban Development and Housing Department, Government of Sikkim ON 14.05.2010. The said Notice was also published in the Daily "Herald Classified" dated 17.05.2010 for the work namely, "Infrastructure Development for notified Slum Area, Singtam (IHSDP).
The Notice Inviting Tender dated 14.05.2010 prescribes 34 conditions for submission of Tenders, suffice it to refer to condition No. 34, which reads as hereunder:
PRE-QUALIFICATION OF CONTRACTORS
The following criteria shall be required to be fulfilled by the interested bidders for Pre-Qualification.
Three similar works experience having successfully completed costing not less than the amount equal to 40; of the estimated cost put to tender
OR
Two similar works costing not less than the amount of 50% of the estimated cost put to tender.
OR
One similar work of aggregate cost not less than 80% of the estimated cost.
Average annual financial turnover on construction works should be at least 30 percent of contract value during the last three years ending 31st March, of the previous financial year.
Profit/Loss account papers as on 31st March of the previous financial year.
Solvency Certificate for an amount equal to 40 % of the estimated cost of work.
The interested bidders who fulfill the above Pre-Qualification criteria by way of submission of the required documents/ Certificates issued from relevant Authority/ Departments may only apply for the tender form. Certificates in case of Sl. No. 1 above should be supported by Work Orders.
Concededly the said Pre-qualification of contractors, which is a condition precedent to submitting the tenders as per the said Notice Inviting Tender dated 14.05.2010, is in conformity with Section 11.6 of Chapter IV of Sikkim Public Works Manual, 2009, which reads as hereunder:
Prequalification of Contractors 11.6 Pre-qualification of contractors shall be resorted to in the following cases:
(a) The estimated cost of the work exceeds Rs. 10 crores.
(b) The estimated cost of work is upto Rs. 10 crores and the Principal Chief Engineer in his discretion and for recorded reasons decides to pre-qualify contractors on the following grounds:
(i) The work is required to be executed speedily, which not all contractors are in position to perform.
(ii) The work is of special nature requiring specialized equipments, which is not likely to be available with all contractors.
(iii) The work is to be executed in sensitive VIP areas.
(iv) Client has requested to restrict the tender.
(v) Any exigencies of the work to be placed on record.
(emphasis supplied)
Obviously, since the petitioners did not have the said pre-qualifications, they could not participate in the tender, even though they furnished the relevant details. The Government then considered the merits and demerits of the other contractors who had applied for the work and ultimately granted the contract work in favour of the 6th respondent herein. Hence, being unsuccessful at the threshold, and also aggrieved, the petitioners have filed the present writ petition for issue of writ of Certiorari/ writ of Mandamus to quash the prequalification criterion prescribed u/s 11.6 (a), Chapter IV of the Sikkim Public Works Manual, 2009; the impugned prequalification criterion prescribed in the NIT of construction of Infrastructure Development for Notified Slum Area, Singtam (IHSDP); the impugned notice dated 19.07.2010 issued by the Respondent No. 3 thereby disqualifying the Petitioners to participate in the tender proceeding of construction of Infrastructure Development for Notified Area, Singtam (IHSDP); and to allow the Petitioners to participate in the tender proceedings of construction of Infrastructure Development for Notified Slum Area, Singtam (IHSDP).
The writ petition was admitted by this Court on 27.07.2010.
6.1 In the meanwhile, the second and the third respondents moved this Court with Civil Miscellaneous Application No. 67 of 2010, setting out the fact that the tender notice for the impugned contract work was published on 17.05.2010. Tenders offered by the eligible contractors and firms were opened on 21.07.2010 and finally the contract work was awarded to the 6th respondent after due scrutiny of the tenders submitted by the eligible contractors by the Tender Evaluation Committee.
6.2 According to respondents No. 2 and 3, if there is any delay in handing over the work on account of pendency of the writ petition, that would not only result in the escalation of total cost of the work but would also cause loss to the public exchequer and lot of public inconvenience.
6.3 Hence, the respondents No. 2 and 3 brought this Civil Misc. Application No. 67 of 2010 seeking permission to proceed with the above mentioned contract work entrusting the same to the 6th respondent.
We have given our careful consideration on the submissions made by both sides.
It is not disputed that the petitioners, pursuant to the said Tender Notice dated 14.05.2010 applied for grant of the tender work by furnishing the requisite qualifications as required under Clause 34 of the tender notice, which is in compliance to Section 11.6 (a) of the Sikkim Public Works Manual, 2009. Therefore, the petitioners were aware of the fact that the pre-qualification contemplated under Clause 34 of the notice inviting tender dated 14.05.2010 is nothing but a requirement u/s 11.6 (a) of the Manual itself. If the petitioners are aggrieved by Section 11.6 (a) of the Manual, they should have approached this Court and challenged Section 11.6 (a) of the Manual, as they have done in the present writ petition, without applying for the impugned tender documents and accepting the requirements stated therein. The petitioners concede that they have accepted to comply with the pre-qualifications required for participating in the tender, after they were declared unsuccessful for non-compliance of the same. Hence the petitioners are estopped to seek the reliefs as prayed for.
8.1 The law on ''estoppel'' is well settled. The Supreme Court, in Raunaq International Limited Vs. I.V.R. Construction Ltd. and Others, , held as hereunder:
The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are of paramount importance are commercial considerations. These would be:
(1) the price at which the other side is willing to do the work;
(2) whether the goods or services offered are of the requisite specifications;
(3) whether the person tendering has the ability to deliver the goods or services as per specifications. When large works contracts involving engagement of substantial manpower or requiring specific skills are to be offered, the financial ability of the tenderer to fulfil the requirements of the job is also important;
(4) the ability of the tenderer to deliver goods or services or to do the work of the requisite standard and quality;
(5) past experience of the tenderer, and whether he has successfully completed similar work earlier;
(6) time which will be taken to deliver the goods or services; and often
(7) the ability of the tenderer to take follow up action, rectify defects or to give post contract services.
Even when the State or a public body enters into a commercial transaction, considerations which would prevail in its decision to award the contract to a given party would be the same. However, because the State or a public body or an agency of the State enters into such a contract, there could be, in a given case, an element of public law or public interest involved even in such a commercial transaction.
What are these elements of public interest ? (1) Public money would be expended for the purposes of the contract; (2) The goods or services which are being commissioned could be for a public purpose, such as, construction of roads, public buildings, power plants or other public utilities. (3) The public would be directly interested in the timely fulfilment of the contract so that the services become available to the public expeditiously. (4) The public would also be interested in the quality of the work undertaken or goods supplied by the tenderer. Poor quality of work or goods can lead to tremendous public hardship and substantial financial outlay either in correcting mistakes or in rectifying defects or even at times in re-doing the entire work - thus involving larger outlays or public money and delaying the availability of services, facilities or goods, e.g. A delay in commissioning a power project, as in the present case, could lead to power shortages, retardation of industrial development, hardship to the general public and substantial cost escalation.
When a writ petition is filed in the High court challenging the award of a contract by a public authority or the State, the court must be satisfied that there is some element of public interest involved in entertaining such a petition. If, for example, the dispute is purely between two tenderers, die court must be very careful to see if there is any element of public interest involved in the litigation. A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. It is important to bear in mind that by court intervention, the proposed project may be considerably delayed thus escalating the cost far more than any saving which the court would ultimately effect in public money by deciding the dispute in favour of one tenderer or the other tenderer. Therefore, unless the court is satisfied that there is a substantial amount of public interest, or the transaction is entered into mala fide, the court should not intervene under Article 226 in disputes between two rival tenderers.
8.2 In the above passage, the Hon''ble Supreme Court has clearly held that it is of paramount importance to consider whether the person tendering has the ability to deliver the goods or services as per the requisite specifications. When large contract works involving engagement of substantial manpower or requiring specific skills are to be offered, the financial ability of the tenderer to fulfill the requirements of the job; the ability of the tenderer to deliver goods or services or to do the work of the requisite standard and quality; past experience of the tenderer, and whether he has successfully completed similar work earlier; the ability of the tenderer to take follow-up action, rectify defects or to give post-contract services are the requisite qualifications to be taken into consideration at the entry point. The Apex Court has also held that the State or a public body or an agency of the State is also expected to take into consideration the element of public law or public interest involved in the matter of awarding the contract. The Apex Court thus ruled out that when a writ petition is filed in the High Court challenging the award of a contract by a public authority or the State, the Court must be satisfied that there is some element of public interest involved in entertaining such a petition.
8.3 It is also important to bear in mind that by Court intervention, the proposed project may be considerably delayed thus escalating the cost far more than any saving which the Court would ultimately effect in public money by deciding the dispute in favour of one or the other tenderer. Therefore, unless the Court is satisfied that there is substantial amount of public interest or the transaction entered into is mala fide, the Court should not intervene under Article 226 of the Constitution of India in disputes between two rival tenderers.
In the instant case, the impugned pre-qualifications were well within the knowledge of the petitioners as the very tender notice required the pre-qualifications to be complied with even for applying for tender forms. But they do not comply with such pre-qualifications, which, in the opinion of the State and the public body, are prime considerations to shortlist the eligible contractors.
The apex Court again in Air India Ltd. v. Cochin International Airport Ltd. reported in (2002) 2 SCC 617 has held that the State can fix its own terms of invitation to tender and that is not open to judicial scrutiny. Again in B.S.N. Joshi and Sons Ltd. Vs. Nair Coal Services Ltd. and Others, , the Apex Court has clearly declared that the High Court should normally exercise judicial restraint unless illegality or arbitrariness on the part of the employer (State Government) is apparent on the face of the record.
In the instant case, the petitioners even though they had the full knowledge that they are required to comply with the pre-requisite qualification as per Clause 11.6 (a) of the Sikkim Public Works Manual, 2009, applied for issuance of tenders, even when they were not eligible for want of pre-requisite qualifications. It is not open for this Court to entertain any judicial scrutiny over the validity of Section 11.6 (a) of the Manual at this point of time. That apart, the petitioners do not attribute any mala fide, arbitrariness or illegality on the part of respondents No. 2 and 3 in insisting such pre-requisite qualifications at the time of applying for issuance of tenders pursuant to the Notice Inviting Tender dated 14.05.2010. Thus this Court is bound by judicial restrain in entertaining a judicial review challenging the conditions insisted by the respondents Nos. 2 and 3 in the impugned Tender Notice dated 14.05.2010, pursuant to Section 11.6 (a) of the Manual.
We see no reason to permit the petitioners to seek the relief as prayed for in this writ petition. Since the Learned Counsel for the petitioners seeks liberty to challenge Section 11.6 (a) of Chapter VI of the Sikkim Public Works Manual, 2009, it is open for the petitioner to do so, if they are so advised.
The writ petition is dismissed. Consequentially, the Miscellaneous Applications are also disposed of accordingly.