M/s. R.P.S. Construction, having its office at Shivpuri, near Shiv Mandir, Kanke Road, Ranchi v. 1. Central Mine Planning & Design Institute Limited
Case Details
IN THE HIGH COURT OF JHARKHAND AT RANCHI (Civil Writ Jurisdiction) W.P(C) No.3263 of 2019 M/s. R.P.S. Construction, having its office at Shivpuri, near Shiv Mandir, Kanke Road, Ranchi, P.O. Ranchi University, P.S. Gonda, Town & District Ranchi, through its Partner, namely, Ram Pravesh Singh, age about 66 years, son of Tripit Singh, resident of Shivpuri, near Shiv Mandir, Kanke Road, Ranchi, P.O. Ranchi University, P.S. Gonda, Town & District Ranchi .. … … Petitioner Versus 1. Central Mine Planning & Design Institute Limited (CMPDI), (A Subsidiary of Coal India Limited/Govt. of India Public Sector Undertaking), through its Chairman-cum-Managing Director, having its office at Gondwana Place, Kanke Road, P.O. Jawahar Nagar, P.S. Gonda, District Ranchi (Jharkhand). 2. General Manager (Civil), Central Mine Planning & Design Institute Limited (CMPDI), (A Subsidiary of Coal India Limited/Govt. of India Public Sector Undertaking), having its office at Gondwana Place, Kanke Road, P.O. Jawahar Nagar, P.S. Gonda, District Ranchi (Jharkhand). … … Respondents ----- CORAM: HON’BLE THE ACTING CHIEF JUSTICE HON’BLE MR. JUSTICE NAVNEET KUMAR For the Petitioner For the Resp.-CMPDIL -------- : Mr. Ankit Vishal, Advocate : Mr. Rajesh Lala, Advocate -------- 25th April 2024 Per, Shree Chandrashekhar, A.C.J. M/s RPS Construction seeks quashing of Letter No. C.E/357 issued on 15th October 2018 by the General Manager (Civil), Central Mine Planning and Design Institute Limited (in short, CMPDIL) cancelling the bid submitted by it and forfeiture of Earnest Money Deposit (in short, EMD). 2.
Legal Reasoning
CMPDIL refers to an order passed by a co-ordinate Bench of this Court in W.P(C) No.5674 of 2019 title “M/s Nav Durga Construction v. Central Mine Planning and Design Institute Limited” to take a preliminary objection that the present writ petition is not entertainable in view of the order dated 2nd April 2024 passed in W.P(C) No.5674 of 2019. The learned counsel for the
Arguments
At the outset, Mr. Rajesh Lala, the learned counsel for the
Decision
CMPDIL has also raised a question of maintainability of the writ petition on the ground that the petitioner-Firm has an alternative remedy and, moreover, the place of the filing of a suit shall be at Nagpur. 3. In our opinion, the aforesaid preliminary objections raised on the ground of territorial jurisdiction of this Court and availability of alternative remedy are liable to be rejected summarily. The respondent- CMPDIL which seeks support from a decision of co-ordinate Bench of this Court in W.P(C) No.5674 of 2019 shall not be permitted to raise such grounds. As to judicial discipline and decorum in following the decision in W.P(C) No.5674 of 2019, we are inclined to observe that the said writ petition was dismissed in absence of any representation from “M/s Nav Durga Construction”. The doctrine of precedent enjoins on the Court to follow a decision of the co-ordinate Bench on an identical issue in law. However, a decision rendered on facts which does not decide an issue in law shall have no precedential value and binding on co-ordinate Benches. 4. The challenge laid by the petitioner-Firm to the order of cancellation dated 15th October 2018 is on the ground that the CMPDIL acted arbitrarily and whimsically in forcing the petitioner-Firm to extend the period of bid validity for a specified additional period. 5. The action of the CMPDIL to act beyond its power under the conditions under NIT vide E-Tender Notice dated 27th December 2017 and not adhering to therewith must be held arbitrary and illegal. This is not in dispute that the last date for bid submission was 27th January 2018. Under Clause 30 of the NIT, the bid validity period shall be 120 days from the end date of bid submission. However, Clause 30 provided that in exceptional circumstances prior to expiry of the original time limit the Employer may request the bidders to extend the period of validity for a specified additional period. Therefore, a bidder was required to keep its EMD alive till 27th May 2018. 6. The stand taken by the CMPDIL is that through communication dated 27th April 2018 the petitioner-Firm was asked to extend the validity of its bid for the next 60 days i.e. from 28th May 2018 to 26th July 2018. 2 W.P(C) No.3263 of 2019 7. For the sake of convenience, the communication dated 27th April 2018 is reproduced below: To, M/s R.P.S Construction Shivpuri, Near Shiv Mandir, Kanke Road Ranchi Jharkhand Kind Attention: Shri Ram Pravesh Singh Sub: Extension of your Bid Validity for the tender “Construction of Multi Storeyed office building at CMPDI,RI-IV, Nagpur” Ref.: Your bid no.265971 Dear Sir, This is in reference to your bid submitted for the above mentioned tender (Tender id: 2017 CMPDI_89938_1). The end date of bid submission for this tender was 27/1/2018. As per clause no. 30 of the NIT, the validity of the bid is 120 (one hundred twenty) days from the end date of bid submission i.e till 27/5/2018. However, in exceptional circumstances the employer (read CMPDI) may request the bidder to extend the period of validity for a specified additional period in accordance with clause no. 30 of the NIT. Such an exceptional circumstance has arisen in this tender and some more time may be required for the finalization of this tender. Therefore, it is requested that you may extend the validity of your bid for this tender by 60 days i.e from 28/5/2018 to 26/7/2018 in accordance with clause no. 30 (Bid Validity) of the NIT. You are requested to communicate your written acceptance of the above mentioned extension of bid validity period in accordance with clause no. 30 (Bid Validity) of the NIT to the office of the undersigned at the earliest. Sd/- GM(Civil) CMPDI, HQ Ranchi 8. Mr. Rajesh Lala, the learned counsel for the CMPDIL submits that the petitioner-Firm’s bid was evaluated and it was found that it did not satisfy the condition of “similar work” as defined under the heading work experience of the NIT and it was directed to furnish supplementary documents through the communications dated 26th May 2018 and 7th June 2018. This is the stand taken by the CMPDIL that under Clause 14(vi) of the NIT on failure of the petitioner-Firm to furnish requisite documents to qualify for the award of work the bid submitted by it was cancelled. 9. Clause 14(vi) of the NIT provides as under: “In case the L-1 bidder fails to submit requisite documents online as per NIT; or, if any of the Information/declaration furnished by L-1 bidder online is found to be incorrect by Tender Committee during evaluation of scanned documents uploaded by bidder, which changes the eligibility status of the bidder, then his bid shall be rejected and EMD of L-1 bidder will be forfeited.” 3 W.P(C) No.3263 of 2019 10. As we read Clause 30 of the NIT, an option is given to the bidder to refuse the request without forfeiting his bid security. That seems to be the reason the communication dated 27th April 2018 used the expression “may”. In the communication dated 27th April 2018, the CMPDIL stated that “it is requested that you may extend the validity of bid for this tender by 60 days i.e from 28th May 2018 to 26th July 2018 in accordance with Clause No.30 (bid validity) of the NIT”. 11. Clause 30 of the NIT is extracted below: “30. Bid Validity: The Bid Validity Period will be 120 (one hundred twenty) days from the end date of bid submission. The validity period of tender shall be decided based on the final end date of submission of bids. In exceptional circumstances, prior to expiry of the original time limit, the Employer may request the bidders to extend the period of validity for a specified additional period. The employer's request and the bidder's responses shall be made in writing. A bidder may refuse the request without forfeiting his bid security. A bidder agreeing to the request will not be required or permitted to modify his bid. The tenderer shall not, during the said period or within the period extended by mutual consent, revoke or cancel his tender or alter the tender or any terms/conditions thereof without consent in writing of the company. In case the tenderer violates to abide by this, the Company will be entitled to take action as per Clause No.31 (Modification and Withdrawal of Bid) of NIT.” 12. In our opinion, the whole exercise undertaken by the CMPDIL through the Tender Evaluation Committee was arbitrary and dehors the specific stipulations under the NIT. The petitioner-Firm which was found qualified as L-3 bidders after reverse auction was to be considered as prospective L-1 bidder and was to be offered the work under the NIT in the event L-1 and L-2 bidders were declared disqualified or left the fray on their own. The letter dated 27th April 2018 recites that “an exceptional circumstance has arisen” but the CMPDIL did not disclose what was that exceptional circumstance. Prima facie, the failure, disqualification or withdrawal of L-1 and L-2 cannot be the exceptional circumstance under which the CMPDIL can force L-3 bidder as prospective L-1 bidder to extend the bid validity period. Such an action by the CMPDIL shall be arbitrary and illegal for having acted dehors Clause 30 of the NIT. We are further of the opinion that as clearly provided under Clause 30 of the NIT even if the Employer thinks that there is an exceptional circumstance for which the bid validity period is required to be extended, a bidder may refuse to do so. 4 W.P(C) No.3263 of 2019 13. The powers of judicial review under Article 226 of the Constitution of India extend to the matters where the State and its instrumentalities have entered into contract with a private party. In “Mahabir Auto Stores v. Indian Oil Corporation” (1990) 3 SCC 752 the Hon’ble Supreme Court observed that even in contractual matters the State and its instrumentalities are required to follow the rules of natural justice and demonstrate fairness in action. 14. under: In “Mahavir Auto Stores” the Hon’ble Supreme Court held as “12. It is well settled that every action of the State or an instrumentality of the State in exercise of its executive power, must be informed by reason. In appropriate cases, actions uninformed by reason may be questioned as arbitrary in proceedings under Article 226 or Article 32 of the Constitution. Reliance in this connection may be placed on the observations of this Court in Radha Krishna Agarwal v. State of Bihar. It appears to us, at the outset, that in the facts and circumstances of the case, the respondent company IOC is an organ of the State or an instrumentality of the State as contemplated under Article 12 of the Constitution. The State acts in its executive power under Article 298 of the Constitution in entering or not entering in contracts with individual parties. Article 14 of the Constitution would be applicable to those exercises of power. Therefore, the action of State organ under Article 14 can be checked. See Radha Krishna Agarwal v. State of Bihar at p. 462, but Article 14 of the Constitution cannot and has not been construed as a charter for judicial review of State action after the contract has been entered into, to call upon the State to account for its actions in its manifold activities by stating reasons for such actions. In a situation of this nature certain activities of the respondent company which constituted State under Article 12 of the Constitution may be in certain circumstances subject to Article 14 of the Constitution in entering or not entering into contracts and must be reasonable and taken only upon lawful and relevant consideration; it depends upon facts and circumstances of a particular transaction whether hearing is necessary and reasons have to be stated. In case any right conferred on the citizens which is sought to be interfered, such action is subject to Article 14 of the Constitution, and must be reasonable and can be taken only upon lawful and relevant grounds of public interest. Where there is arbitrariness in State action of this type of entering or not entering into contracts, Article 14 springs up and judicial review strikes such an action down. Every action of the State executive authority must be subject to rule of law and must be informed by reason. So, whatever be the activity of the public authority, in such monopoly or semi-monopoly dealings, it should meet the test of Article 14 of the Constitution. If a governmental action even in the matters of entering or not entering into contracts, fails to satisfy the test of reasonableness, the same would be unreasonable. In this to E.P. Royappa v. State of Tamil connection reference may be made India , Ajay Hasia v. Khalid Mujib Nadu, Maneka Gandhi v. Union of Sehravardi, R.D. Shetty v. International Airport Authority of India and also Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of Bombay. It appears to us that rule of reason and rule against arbitrariness and discrimination, rules of fair play and natural justice are part of the rule of law applicable in situation or action by State instrumentality in dealing with citizens in a situation like the present one. Even though the rights of the 5 W.P(C) No.3263 of 2019 citizens are in the nature of contractual rights, the manner, the method and motive of a decision of entering or not entering into a contract, are subject to judicial review on the touchstone of relevance and reasonableness, fair play, natural justice, equality and non-discrimination in the type of the transactions and nature of the dealing as in the present case.” 15. In “Jagdish Mandal v. State of Orissa” (2007) 14 SCC 517 the Hon’ble Supreme Court observed that the decision of the State and its instrumentalities even in contractual matters if found arbitrary, unjust and unreasonable the High Court shall interfere in the matter in exercise of the powers under Article 226 of the Constitution. This is also too well-settled that perversity and mala fide are other grounds on which the High Court shall interfere in the matter. 16. under: In “Jagdish Mandal” the Hon’ble Supreme Court held as is intended “22. Judicial review of administrative action to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made “lawfully” and not to check whether choice or decision is “sound”. When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. tenders and awarding contracts are essentially commercial Evaluating functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such 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 matters in exercise of power of judicial review, should pose to itself the following questions: (i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; or Whether the process adopted or decision made is so arbitrary and irrational that the court can say: “the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached”; (ii) Whether public interest is affected. If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, 6 W.P(C) No.3263 of 2019 grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.” 17. For the foregoing reasons, the order of termination of the bid and forfeiture of EMD is held illegal and accordingly set aside. 18. However, having regard to the fact that the work under the NIT has been completed, we issue a direction to the respondent no.1 to ensure refund of EMD of Rs.22,81,300/- to the petitioner-Firm within two weeks. 19. W.P(C) No.3263 of 2019 is allowed in the aforesaid terms. Sudhir/NAFR (Shree Chandrashekhar, A.C.J.) (Navneet Kumar, J.) 7 W.P(C) No.3263 of 2019