High Court
Case Details
WP(C) 4862/2012 BEFORE HON’BLE MR. JUSTICE UJJAL BHUYAN This petition under Article 226 of the Constitution of India seeks a direction t o the respondents to treat the petitioner as the lowest bidder and to award the contract in his favour. Facts of the case may be briefly noted. 2. 3. Indian Institute of Technology (IIT), Guwahati issued Notice Inviting Te nder (NIT) dated 7.8.2012 inviting sealed tenders in single bid from experienc ed and competent contractors. Tenders were invited for the work of improvement, repairing and maintenance of internal roads of IIT, Guwahati campus. Earnest mon ey fixed was Rs.3.57 lakhs. 4. Petitioner being eligible, submitted tender in prescribed manner and wit hin the period specified. Tenders were opened on 19.9.2012 whereupon it was foun d that three parties i.e. petitioner, respondent No.5 and respondent No.6, have participated in the tender. As per comparative statement, respective bids of the parties are as under : SL. No. Name of Party Bid Offered 1 M/s S.K.Das Construction Co.(Petitioner) Rs.2,82, 91,640.00 with 3% Rebate,being Rs.2,74,42,890.00 2 Md.Matlabuddin Ahmed(Respondent No.6) 3 Tectonicsco (Respondent No.5) Rs.3,11,62,418.50 Rs.3,14,99,867.72 5. From the comparative statement it is evident that petitioner is the lowe st tenderer. According to the petitioner, when he came to know that steps were b eing taken to award the contract in favour of respondent No.5, despite his bid b eing much higher, petitioner has filed the present petition seeking the relief a s indicated above. 6. Contention of the petitioner is that the respondent has made the rate an alysis of the tender works and made an assessment of the works valued at Rs.3,45 ,96,440.00. On the basis of the said revised estimate, IIT has sought to award t he contract to respondent No. 5 on the ground that the bid value of respondent N o.5 is within the revised estimate of Rs. 3,45,96,440.00 minus 10 %. According to the petitioner, methodology adopted by IIT is contrary to the terms and condi tions of tender as well as the CPWD Manual. It is further contended that this Co urt had disapproved such a course of action adopted by IIT earlier. Reference ha s been made to the judgment of this Court dated 4.6.2012 passed in WP(C) No.187 4 of 2012 in M/S KK Enterprise -Vs- Union of India & Ors. This Court had directe d that in case of revision of estimate of the tender works, the same has to be n otified as required under Clause-8 of the General Conditions of Contract. 7. Respondents have filed counter affidavit. It is stated that Building and Works Committee is the principal authority regarding construction works under I IT, Guwahati. As per direction of Central Vigilance Commission (CVC), IIT, Guwah ati has been following the methodology of preparing justified estimate/revised r ate for the purpose of allotment of contract works. CPWD also follows the same m ethodology and has prepared a manual covering all aspects of contract works. CPW D Manual is followed by IIT, Guwahati. As per this methodology, for the purpose of issuing NIT, a preliminary estimate of the work is prepared which is based o n what is called Delhi Schedule of Rates (DSR). This is done only to obtain tech nical sanction and to decide minimum qualification of criteria of bidders. Subse quently, workable estimate of the work is prepared based on the prevailing local market rate of materials, labour charge, hire charge of plant and machinery etc . Contractor’s profit of 10% is added to said amount to arrive at a final figure which is called justified estimate, which is prepared before opening of the pri ce bids. Before opening of the price bids, the justified estimate is disclosed t o all the tenderers. Any tender which quotes an amount which is 10% above or 10% below than the justified estimate, is rejected. Lowest quoted tender which is w
Legal Reasoning
ithin the range of plus 10% to minus 10% of the justified estimate is accepted f or allotment of works. This procedure is followed to eliminate unworkable bids and to keep the bidding process within reasonable limits. Tenders offering bids below 10% of the justified estimate are rejected to ensure that there are no unw orkable bids, that the tender work is completed and there is no compromise with the quality of work. Justified estimate is not disclosed to the prospective tend erers before submission of their tenders. This is done to ensure that the tender ers quote their own rates which will be reflective of their competence and exper ience. Disclosure of justified estimate prior to submission of tender will preve nt healthy competition. Preparation of justified estimate cannot be treated as a n act of changing the terms of contract and cannot also be treated as an undiscl osed/hidden criteria. Justified estimate of Rs.3,45,96,440.00 was read out befor e opening of the price bids/ tender. This is in substantial compliance of the ju dgment of this Court directing notifying of justified estimate. Enhancement of t he justified estimate is because of price escalation which has been taken plac e since issuing of NIT. This Court by order dated 15.10.2012 issued notice and in the interim di 8. rected the respondents not to issue work order pursuant to the NIT dated 7.8.201 2. While passing the aforesaid order, Court had taken note of the fact that the justified estimate was read out just before opening of the price bids. Petitioner filed an additional affidavit on 11.2.2013 placing on record 9. a document called opening of estimate which had the signature of the petitioner and respondent No.5. The said document certifies that the justified estimate of the work assessed at Rs.3,45,96,440.14 was read out before opening of the price bids/ tenders. 10. Heard Mr. M Bhuyan, learned counsel for the petitioner and Mr. RP Kakoti , learned senior counsel for the IIT, Guwahati. Also heard Ms. D Sinha, learned counsel for the respondent No.1. Mr. Bhuyan, learned counsel for the petitioner submits that fixation of 11. justified estimate to adjudge validity of the tender amounts to changing the te rms of contract. Referring to Clause -8 of the General Conditions of Contract, he submits that a definite procedure is laid down therein which has to be follow ed in case of change of terms of contract. The same having not been done , the c ourse of action adopted by respondents cannot be justified. Declaring the justif ied estimate on the eve of opening of price bids cannot be termed as notifying t he justified estimate as per the judgment of this Court. Methodology adopted by respondents amounts to changing the rules of the game to the prejudice of the pe titioner. Petitioner is admittedly the lowest bidder and, therefore, he cannot b e eliminated by subsequent enhancement of estimated value of works and by taking the plea that any bid value which is less than or more than 10% of the justifie d estimate would be declared ineligible. Mr. Kakoti, learned senior counsel appearing for the IIT, Guwahati submi 12. ts that the writ petition is premature as it does not disclose any justiciable c ause of action . No decision on the NIT has been taken by IIT authority and, the refore, there is no cause for the petitioner to institute the present proceeding . He also submits that petitioner has not approached this Court with clean hands as he did not disclose in the writ petition that IIT authority had read out the justified estimate before opening of the price bids of the tenderers. In such c ircumstances, writ Court should decline any relief to the petitioner. Further su bmission is that IIT authority had substantially complied with the direction of this Court by reading the justified estimate before opening of the price bids. H e, therefore, seeks dismissal of the writ petition. 13. In his reply, Mr. Bhuyan, learned counsel for the petitioner submits tha t contention of the respondents is not correct inasmuch as this Court while pass ing the interim order had taken due notice of the submission of the respondents regarding disclosure of the justified estimate before opening of the price bids. Subsequently, petitioner filed additional affidavit to bring on record the said fact. Referring to the CPWD Manual, more particularly, Clause-20.4.3.2., he sub mits that said clause does not lay down any such provision disallowing bids belo w 10% of the justified estimate. He submits that the methodology adopted by the Before proceeding further, relevant provisions of the CPWD Manual and Ge IIT authorities is only to deprive the petitioner being awarded the contract des pite being the lowest tenderer. The above procedure or methodology, if accepte d, would be a complete negation of the principles of reasonableness and transpar ancy in the grant of state largesse. 14. 15. Submissions made have been considered. The contention of the respondents that the writ petition is premature as it does not disclose any cause of action cannot be accepted because of the stan d taken by the respondents themselves in the affidavit which would go to show th at by applying the methodology laid down by the respondents, tender of the peti tioner would automatically stand rejected as being ineligible despite being the lowest bidder. Further contention that petitioner has not approached the Court w ith clean hands also cannot be accepted as petitioner has brought on record disc losure of justified estimate on the eve of opening of price bids by filing addit ional affidavit. Further, the Court while granting interim order had considered this aspect of the matter. In that view of the matter, adjudication on merit is called for. 16. neral Conditions of Contract may be briefly referred to. 17. Section 19 of the CPWD Manuals deals with earnest money. Clause 19.3 pro vides for rates of earnest money. As per Sub-Clause (9), for works estimated to cost upto Rs.10 crores, the rate of earnest money is 2 % of the estimated cost. As per clause 20.4.3 the tender accepting authority shall satisfy himself about reasonability of rates before acceptance of the tender. Reasonability shall prim arily be assessed on the basis of justified rates. As per Clause-20.4.3.1, justi fication statement should be prepared for checking the reasonability of rates. T here is no need for preparing justification in case the lowest tender is less th an the estimate cost put to tender plus 10%. Justified estimate is prepared by t aking market rate of labour, materials etc. Clause 20.4.3.2, which is very relev ant, provides for acceptance of tender at justified rates with allowable variati on. It provides that variation upto 5 % over the justified rates may be ignored. Variation upto 10% may be allowed for peculiar situations and in special circum stances for which reasons have to be recorded. Tenders above this limit are not be accepted. 18. As per Clause 8 of the General Conditions of Contract, addenda/corrigend a to the tender document may be issued prior to the date of opening of the tende r to clarify documents or to reflect modification in the design or contract term s. Such addenda/corrigenda issued by tendering authority will be distributed to each of the persons to whom tender documents were issued. Each copy of the adden da/corrigenda is to be submitted alongwith the tender. All addenda/corrigenda is sued by tendering authority shall become part of the tender documents. 19. Having noticed the relevant provisions as above, the judgment of this Co urt in KK Enterprise may now be looked into. In the said case, this Court observ ed that when the lowest tenderer is not accepted, one has to examine the decisio n making process with greater care. It was further observed that being aware of the possibility of revision of estimate and being actually informed of the revis ed estimate cannot be same thing. As the revised estimate was not notified as p er requirement of Clause 8 of the General Conditions of Contract, this Court hel d that the integrity and credibility of the decision making process was violated . Recommendation made in favour of the private respondents was interfered with a s the respondents had not notified the revised estimate. This Court directed the respondents to re-consider all the valid bids and to award the contract to the most competitive (L-1) bidder. If the revised estimate made it difficult for re- consideration, liberty was granted to the IIT authorities to initiate fresh tend er process. 20. Coming to the facts of the case, it is seen that as per NIT the earnest money fixed was Rs.3.57 lakhs. Applying the principles laid down in Clause-19.3. of CPWD Manual, this would mean that the estimated cost of the contract was app roximately Rs.1.78 crores. The tenders were submitted accordingly. As already no ticed in the earlier part of this judgment, bid offered by the petitioner is Rs. 2,74,42,890.00 which mean that this bid the lowest (L-1). This bid was made in t erms of the NIT dated 7.8.2012. The justified estimate was assessed after submis sion of the tenders and was only read out before opening of the price bids. Sinc e the justified estimate would be the basic yardstick to judge the eligibility o r otherwise of a bid, principles of fairness and transparancy required that such justified estimate had to be made known to the tenderers before submission of t enders by them. Though preparation of the justified estimate and disclosure of t he same only after submission of tender before opening of price bids/tender has been justified on the ground of enabling the authority to take a reasonable view of the bids submitted, the fact remains that a bid can be accepted or rejected as ineligible on the basis of such justified estimate. Therefore, it really amo unts to changing the terms of contract. If that be so, then the procedure laid d own in Clause-8.2 of the General Conditions of Contract would come into play. T he justified estimate would have to be notified in the form of an addenda/corrig enda which would have to be issued to the tenderers so that they can submit thei r tender on the basis thereof, which will become part of the tender documents. V iewed in the above context, reading out of the justified estimate just before o pening of the price bids would not amount to notifying the justified estimate as per earlier judgment of this Court.
Decision
21. There is another aspect to the matter, also relatable to the justified e stimate. Clause 20.4.3.2. of the CPWD Manual, which has already been noticed abo ve, permits acceptance of bids which are 5 % above the justified rates as such variation may be ignored. Variation upto 10% may be allowed for peculiar situati ons, and in special circumstances for which reasons are to be recorded. Tenders above this limit are not to be accepted. A holistic reading of this Clause would indicate that said provision would come into play only in case of bids being ab ove the justified rates. A plain interpretation of the above clause would clearl y show rejection of bids would be automatic only in the event of bids being abov e 10% of the justified rate. This would be more clear from a reading of Clause 2 0.4.3 which provides that reasonability of rate shall primarily be assessed on t he basis of the justified rates and permissible variation over the justified rat es are given in Clause 20.4.3.2 as referred to above. 22. In view of the above, it becomes evident that the bar of clause-20.4.3.2 . of the CPWD Manual would not be applicable to a bid which is less than the jus tified rate. If that be the position, contention of the respondents that any bid value which is either above 10 % of the justified estimate or below 10 % of the justified estimate would become ineligible cannot be accepted. Consequent upon the discussions made above, the inevitable conclusions 23. is that the bid value of the petitioner is the lowest and subject to other techn ical conditions, would have to be considered as L-I for award of the contract by the respondents. Let the consequential decision be taken within a period of one month of 24. the date of the receipt of a certified copy of this order. 25. Writ petition is allowed to the extent indicated above. No cost.