High Court · 2012

tenders from the contractors registered with BSNL/MTNL/DOT/Central Government/St ate Government/PSU having experience of optical fibre cable laying works in BSNL /MTNL/DOT/Central Government/State Government/PSUs for an amount at least 30% of the estimated cost of the concerned sub-section in a single complete work in th e last three years ending 31st March of last financial year, for digging of tren ches/Micro tunneling for laying of PLB/GI Pipes at specified depth and re-instat ement of the same after laying, jointing of the protection pipes and pulling of optical fibre cable through the pipes for the OFC schemes as indicated therein and for adjudging the clause ’having experience for optical fibre cable laying w orks in BSNL/MTNL/DOT/Central Government/State Government/PSUs for an amount at least 30% of the estimated cost of the concerned sub-section in a single complet e work in the last three years ending 31st March of last financial year (cid:29) as ille gal and unconstitutional, with a prayer for a direction to the BSNL authorities to issue a fresh NIT after omitting the impugned clause. 9. While WP(C) No.3065/2009 and WP(C) NO.3302/2009 were taken up for consid eration, a submission was advanced by the counsel representing BSNL authorities that there was a re-thinking with regard to the requirement of stipulation of ha ving experience of three years in BSNL as appearing in the NIT Dated 25.5.09 and a corrigendum was suggested to the effect: (cid:28)The contractors should have experi ence of trenching and O.F. Cable link in BSNL or other reputed organizations (cid:29) an d the said suggested corrigendum had been accepted by the approving authority as evidenced by a communication dated 17.6.09. Accordingly, the writ petitions wer e disposed of by an order dated 28.1.2010 by directing the BSNL authorities to i ssue a fresh tender by incorporating the suggestion regarding experience as indi cated in the communication dated 5.6.09. 10. The aforesaid orders dated 28.1.2010 passed in WP(C) No.3065/2009 and WP (C) No.3302/2009 were challenged by one Dhrubajyoti Borgohain and Dhanjit Kumar Pathak in Writ Appeal No.55/2010 and Writ Appeal No.56/2010. The aforesaid two a ppellants were not parties in the writ petitions but were tenderers in response to the NIT dated 25.5.2009, whose interest was adversely affected by the order dated 28.1.2010. 11. On 23.2.2010, NIT dated 23.2.2010, which is the subject matter in WP(C) No.1709/2010 was issued for the same work as was covered by the NIT dated 25.5.2 009. In Misc. Case No.744/2010 filed in WA No.56/2010, by an order dated 12.3.20 10, it was directed that the process initiated by NIT dated 23.2.2010 shall not be finalized without leave of the Court and it was also observed that all the p arties to the present proceeding may participate in the said tender process with out prejudice to their rights in the proceeding. 12. By judgment dated 6.4.2010, the orders dated 28.1.2010 were set aside an d the matter was remanded back to the Single Bench for a decision on merit on th e issues. The writ appellate Court had observed that though the writ petitions w ere founded on the allegation that a cartel had been formed by some contractors whose names were also revealed in the writ petitions and at whose instance the impugned clause was incorporated, the said persons as well as the tenderers who submitted tenders pursuant to the NIT dated 25.5.2009 were not made parties. It was also noted by the writ appellate Court that on the issue of corrigendum, a contrary stand was taken by the BSNL in appeal. By the said judgment, the writ p etitioners were given liberty to implead the persons who had taken part in the p rocess pursuant to the NIT dated 25.5.2009 in view of the fact that such tendere rs would have a right to contest the proceeding. The interim order dated 12.3.20 10, as noted earlier, was directed to govern the parties till the matters were h eard and decided on merits. 13. Subsequently, the tenderers were impleaded as Respondent Nos.5 to 20 vid e order dated 28.7.2010 in MC No.1428/2010 in WP(C) No.3065/2009 and by order da ted 28.7.2010 in MC No.2332/2010 in WP(C) No.3302/2009. 14. It is stated in WP(C) No.3065/2009 that the writ petitioner having compl ained to the Respondent No.3 with regard to insertion of clause of having experi ence of similar work in the BSNL for the last three years, the Respondent No.3 h ad issued a corrigendum 2/3 days before the last date of submission of tender i. e. 19.6.2009, modifying the clause of past experience of three years in the BSNL by permitting the experienced contractors to submit tender with instruction to Respondent No.4 to publish and circulate the same, which, however, was not done . It has further been stated that in view of the decision of the Respondent No.3 to issue the corrigendum, the petitioner had submitted his tender for sub-secti on Nos.5 and 7 of Barengapara-Mahendraganj OFC Scheme. On the basis of the NIT dated 23.4.2007, NIT dated 16.5.2009 and NIT dated 6.5.2009 issued by BSNL auth orities in other divisions in respect of the similar nature of work, it has been asserted that no such clause regarding experience of three years in BSNL finds place in the said NITs. It has also been stated that his rates were lowest and w hile he had quoted rate at 11.88% and 18.25% above the estimated cost in sub-sec tion 5 and 8, respectively, the other tenderers had offered rates at 60 - 80% ab ove the estimated cost. 15. The writ petitioner in WP(C) No.3302/09 had submitted his tender on the basis of the letter dated 17.6.2009 of the Respondent No.3 on the subject of cor rigendum in respect of sub-sections 02, 04, 06, 08 of Barengapara-Mahendraganj O FC Route. It has been stated that while his rate was lowest being 6% above the e stimated cost, the rates of other tenderers were 60 - 80% above the estimated co st. It has also been stated that during the last three years, all the works of B SNL connected with trenching and laying of optical fibre cable had been awarded to the members of the cartel whose names were also disclosed. It has been stated that in the preceding three years he had executed many works of even higher val ue in other departments but had not executed any work in BSNL because of other business commitments and threat perception from the cartel. 16. In the affidavits filed in the aforesaid two cases by the BSNL authoriti es, the allegations of existence of a syndicate and allotment of works at high r ates were denied. It has also been stated that a good number of contractors had obtained tender documents and, therefore, issuance of a corrigendum on 17.6.2009 , i.e. two days before scheduled date of opening of tenders would have been irre gular and at any rate, issuance of a corrigendum is an internal matter of the BS NL authorities. It has further been stated that the NIT was given wide publicity and police personnel was also deployed for smooth conduct of the tendering proc ess. It has further been stated that in order to provide quality service, BSNL has introduced new and modern technologies and the experience of the writ petit ioner in WP(C) No.3065/2009 dating 10 years back does not meet the requirement. 17. An affidavit was also filed by the Respondent No.12 denying the allegati ons of the writ petitioner in WP(C) No.3065/2009. In WP(C) No.3302/2009, the Res pondent No.13 had filed an affidavit denying the allegations of the writ petitio ner. 18. Heard Mr. B.D. Konwar, learned counsel for the petitioner in all these w rit petitions. Also heard Mr. K.N. Choudhury, learned senior counsel appearing f or Respondent Nos.5, 8, 14, 15 and 19 in WP(C) No.3302/2009 and for Respondent N os.7, 13 14, 16 and 19 in WP(C) No.3065/2009 as well as Mr. R. Dey, learned coun sel appearing for Respondent Nos. 7, 9, 11, 13 and 16 in WP(C) No.3302/2009 and for Respondent Nos.6, 8, 10, 12 and 15 in WP(C) No.3065/2009. Mr. P. Chakraborty , learned counsel appearing for Respondent No.10 and Respondent No.9 in WP(C) No .3302/2009 and WP(C) No.3065/2009, respectively, has also been heard. Mr. Y. Dol oi, learned Standing Counsel, BSNL is heard in all the writ petitions. 19. Mr. K.N. Choudhury, learned senior counsel has advanced the lead argumen t on behalf of the private respondents and the other counsel appearing for the o ther private respondents have adopted his arguments. 20. Mr. B.D. Konwar, learned counsel appearing for the petitioner in all the se cases, submits that the impugned clauses in the notice inviting tenders in qu estion are arbitrary, discriminatory, illegal and violative of Article 14 of the Constitution of India. He has contended that such clauses are not incorporated in many other tender notices involving similar nature of work and such clauses a re found in the notice inviting tenders issued from Guwhati because of existence of a cartel, in order to restrict competition so as to allot the work orders to the members of the cartel. In support of his submission, the learned counsel re lies on the decisions rendered by the Apex Court in the case of Raunaq Internati onal Ltd. v. I.V.R. Construction Ltd. and others, reported in (1999) 1 SCC 492 a nd Jagdish Mandal v. State of Orissa and others, reported in (2007) 14 SCC 51 7. 21. Mr. K.N. Choudhury, learned senior counsel has submitted that the terms of the invitation to tender is not open to judicial scrutiny because certain amo unt of flexibility is required in administrative decision making. He has submitt ed that the qualification prescribed in the impugned notice inviting tenders can not be said to be arbitrary and unreasonable. He has denounced the existence of a cartel and has submitted that such plea has been taken only to sub-serve the interest of the writ petitioner, more particularly, Jayanta Kumar Bhattacharjee, who does not have any experience of doing similar nature of work for last 15 ye ars or so. The learned senior counsel relied upon a decision of the Apex Court r endered in the case of Tata Cellular v. Union of India, reported in (1994) 6 SC C 651. 22. Mr. Y. Doloi, learned Standing Counsel, BSNL, submits that the allegatio ns of showing favouritism to any tenderer is utterly misplaced. There is also n o existence of any cartel and allotment of work has all along been given by foll owing a transparent procedure by issuing notice inviting tenders and giving wide publicity. The petitioner, Jayanta Kumar Bhattacharjee, on his own showing, had done some work of similar nature way back in 1995 and it does not lie in his mo uth to contend that stipulation of experience of three years as finding place in the notice inviting tenders is arbitrary and illegal. He has also submitted tha t over the years, new technology has been introduced from time to time. It is a lso his contention that the terms of notice inviting tenders is in tune with the guidelines issued by the Central Vigilance Commission (CVC). He has relied on t he decision of the Apex Court rendered in the case of Directorate of Education v . Educomp Datamatics Ltd., reported in (2011) 6 SCC 756 and in the case of Air India Ltd. v. Cochin International Airport Ltd., reported in (2000) 2 SCC 617. In Tata Cellular (supra), the Apex Court had examined the scope of judic 23. ial review in the case of a tender awarded by a public authority for carrying ou t certain work and the Apex Court had laid down certain principles which are as follows: (1) The modern trend points to judicial restraint in administrative acti on. (2) The court does not sit as a court of appeal but merely reviews the m anner 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 sub stituting 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 scr utiny because the invitation to tender is in the realm of contract. Normally spe aking, the decision to accept the tender or award the contract is reached by pro cess 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 functi oning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of r easonableness (including its other facts pointed out above) but must be free fro m arbitrariness not affected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative burden on the adm inistration and lead to increased and unbudgeted expenditure. 24. In Raunaq International Ltd. (Supra), the Supreme Court stated thus : (cid:28)9. The award of a contract, whether it is by a private party or by a pu blic body or the State, is essentially a commercial transaction. In arriving at a commercial decision, considerations which are of paramount importance are comm ercial 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 specifica tions; (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 fin ancial ability of the tender to fulfil the requirement of the job is also import ant; (4) the ability of the tenderer to deliver goods or services or to do th e work of the requisite standard and quality; (5) past experience of the tenderer, and whether he has successfully completed s imilar 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. (cid:29)

25. In Jagdish Mandal (supra), the Apex Court at paragraph 22 observed thus: (cid:28)Judicial review of administrative action is intended to prevent arbitra riness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made (cid:28)lawfully (cid:29) and not to check whether cho ice or decision is (cid:28)sound (cid:29). When the power of judicial review is invoked in matt ers relating to tenders or award of contracts, certain special features should b e borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity an d natural justice stay at distance. If the decision relating to award of contrac t is bona fide and is in public interest, Courts will not, in exercise of judici al review, interfere even if a procedural evaluation or error in assessment of p rejudice to tenderer, is made out. The power of judicial review will not be perm itted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor can always seek da mages in a Civil Court. Attempts by unsuccessful tenderers with imaginary grieva nces, wounded pride and business rivalry, to make mountains out of mole hills of some technical/procedural violation or some prejudice to self, and persuade cou rts to interfere by exercising power of judicial review, should be resisted. Suc h 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 m atters in exercise of power of judicial review, should pose to itself the follow ing questions: (i) de or intended to favour some one; Or Whether the process adopted or decision made is so arbitrary and irrational that the Court can say (cid:28)the decision is such that no responsible authority acting r Whether the process adopted or decision made by the authority is mala fi Whether public interest is affected. easonably and in accordance with relevant law could have reached (cid:29); (ii) If the answers are in the negative, there should be no interference under Articl e 226. Cases involving blacklisting or imposition of penal consequences on a ten derer/contractor or distribution of state largesse (allotment of sites/shops, gr ant of licences, dealership and franchise) stand on a different footing as they may require a higher degree of fairness in action (cid:29). 26. In Air India (supra), the Apex Court observed: (cid:28)The award of a contract, whether it is by a private party or by a publi c body or the State, is essentially a commercial transaction. In arriving at a c ommercial decision considerations which are paramount are commercial considerati ons. 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. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract . It is free to grant any relaxation, for bona fide reasons, if the tender condi tions permit such a relaxation. It may not accept the offer even though it happe ns to be the highest or the lowest. But the State, its corporations, instrumenta lities and agencies are bound to adhere to the norms, standards and procedures l In Educomp (supra), the Apex Court observed thus : It has clearly been held in these decisions that the terms of the invita aid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the Court can examine the decision-making pr ocess and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. (cid:29) 27. (cid:28)12. tion to tender are not open to judicial scrutiny the same being in the realm of contract. That the Government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant f or an administrative body in an administrative sphere. The Courts would interfer e with the administrative policy decision only if it is arbitrary, discriminator y, mala fide or actuated by bias. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. The Courts cannot strike dow n the terms of the tender prescribed by the Government because it feels that som e other terms in the tender would have been fair, wiser or logical. The Courts can interfere only if the policy decision is arbitrary, discriminatory or mala f ide. (cid:29) 28. From the aforesaid judgments, it becomes clear that the award of a contr act is essentially a commercial transaction and the authority calling for the te nder is the best judge to prescribe the terms and conditions of the tender. It i s also not open for the Courts to say whether the conditions prescribed in the t ender under consideration could have been improved and made fairer. This is, how ever, not to be understood as if the superior Courts cannot, under any circumsta nces, strike down the terms of the tender. The cases under reference lay down t hat while there are inherent limitations in the exercise of power of judicial re view but Courts can interfere if the terms are found to be arbitrary and discrim inatory and thus, violative of Article 14 of the Constitution of India. Courts m ay also interfere if the process adopted in the tendering process is actuated by mala fide and is intended to favour some one and also when it affects public in terest. It is also apparent from the observations of the Apex Court in Raunaq that past experience of the tenderer and whether he has successfully com pleted similar work earlier can be an important consideration in the matter of a ward of contract. 29. Bearing in mind the aforesaid principles enunciated by the Apex Court, t he Court will now proceed to consider the impugned clauses of the notices inviti ng tender under consideration. The notice inviting tender dated 25.5.2009 is cha llenged on the ground that experience of three years in similar work in BSNL is illegal and arbitrary and the same is designed to help members of a cartel. The office memorandum dated 17.12.2002 issued by the CVC lays down certain points to be kept in view while fixing the eligibility criteria for civil/electrical work s. These are : (cid:28)A) For Civil/Electrical Works i) Average Annual financial turnover during the last 3 years, ending 31st M arch of the previous financial year, should be at least 30% of the estimated cos t. Experience of having successfully completed similar works during last 7 i) years ending last day of month previous to the one in which applications are inv ited should be either of the following :- a. 40% of the estimated cost. Three similar completed works costing not less than the amount equal to b. % of the estimated cost. Two similar completed works costing not less than the amount equal to 50 Or c. One similar completed work costing not less than the amount equal to 80% of the estimated cost. Definition of ’similar work’ should be clearly defined. iii) In addition to above, the criteria regarding satisfactory performance of works, personnel, establishment, plant, equipment etc. may be incorporated according to the requirement of the Project. (cid:29) The guidelines also indicate that the purpose of any selection p rocedure is to attract the participation of reputed and capable firms with prope r track record. There is another memorandum dated 7.5.2004 issued by the CVC on the subject of pre-qualification criteria. While noting that pre-qualification criteria specified in the tender document should neither be made very stringent nor very lax to restrict/facilitate the entry of bidders, it lays down that gui delines in the memorandum dated 17.12.2012 may be modified if considered necessa ry. The memorandum mandates that fair competition must be ensured. 30. In view of the aforesaid, laying down an eligibility criteria of experie nce of three years in similar work cannot be held to be arbitrary. Merely becaus e in similar tenders issued by BSNL in some other sectors such clause of three y ears’ experience is not incorporated, as a logical corollary, it does not automa tically follow that insertion of clause of experience of three years results in arbitrariness and discrimination. The contention of the petitioner in WP(C) No. 3065/2009 and WP(C) No.3302/2009 that the suggested corrigendum dated 17.6.09, w hich did not insist on three years experience, would have taken care of their in terest and, therefore, the authorities are bound to incorporate that said sugges tion in the notices inviting tender cannot be accepted. There was some ambivalen ce with regard to the corrigendum suggested as would be clear from a reading of the judgment dated 6.4.2010 passed in Writ Appeal No. 55/2010 and Writ Appeal No .56/2010. This Court cannot issue a mandamus to incorporate a clause in a notice inviting tender in a particular manner and the function of the Court, as has be en laid down in the cases cited by the learned counsel for the parties, is to ex amine as to whether a term of the notice inviting tender, as existing, is arbitr ary and discriminatory. 31. No materials have been placed by the BSNL in justification of restrictin g tenderers with three years experience of similar work in BSNL only. There is n o dispute that Railways/CPWD/many Central and State Government organizations are also carrying on similar nature of work. The notice inviting tender itself says that they could be registered with such organizations. Restricting the notice i nviting tender only to contractors working in BSNL does not promote fair competi tion which every authority must try to ensure. Though the petitioners have not b een able to establish that there is an existence of a cartel, insertion of such a clause limiting the eligibility criteria only to contractors having experience of similar work in BSNL, has favoured a class of tenderers to the exclusion of many others who had experience of similar work in other Government organizations , without any justifiable and reasonable basis. In view of the aforesaid, this C ourt is of the opinion that the term of notice inviting tender dated 25.5.2009 r equiring experience of trenching and laying of O.F Cable in BSNL for last three years is arbitrary and discriminatory and, therefore, cannot be sustained. 32. e notice inviting tender dated 25.5.2009 is quashed. 33. In the notices inviting tender dated 23.2.2010, 30.6.2010 and 17.1.2011 , the eligibility criteria is not restricted to only those having three years ex perience in BSNL but extended to any tenderer having three years experience in s imilar work in any Government organizations, PSUs. Thus, a level playing field has been laid out, making the prescribed eligibility criteria broad-based and t hus, ensuring fair competition. It is also noticeable that writ petitioner in WP (C) No.3302/2009 which also alleged existence of a cartel, has not challenged th e aforesaid notices inviting tender and the challenge is mounted only by Jayanta Kumar Bhattacharjee, whose experience dates back to 1995. This Court is of the considered opinion that the impugned clauses in the said notices inviting tender cannot be said to be arbitrary or unreasonable or tailor made to suit the requi In the result, WP(C) No.3065/2009 and WP(C) No.3302/2009 are allowed. Th rement of any particular class and, therefore, the challenge fails. 34. In view of the aforesaid, WP(C) No.1709/2010, WP(C) No.4153/2010 and WP (C) No.550/2011 are dismissed. The interim orders passed in all these cases stan d vacated. No costs.