Orissa High Court
Case Details
ORISSA HIGH COURT: CUTTACK W.P.(C) No. 35081 OF 2022 AFR In the matter of an application under Articles 226 and 227 of the Constitution of India. --------------- Gannon Dunkerley & Co. Ltd., New Delhi. ..… Petitioner -Versus- State of Odisha and Another ….. Opp. Parties For Petitioner : M/s. S.R. Mohanty, D. Acharya and B. Ray, Advocates For Opp. Parties : Mr. A.K. Parija, Advocate General, Odisha P R E S E N T: THE HONOURABLE DR. JUSTICE B.R.SARANGI AND HONOURABLE MR. JUSTICE B.P. SATAPATHY Date of hearing and judgment : 06.02.2023 DR. B.R. SARANGI, J. The petitioner, by way of this writ petition, seeks to read down clauses-2.1.18 and 3.5.1(i) of the Request for Proposal (RFP) under Annexure-1 by prohibiting opposite party no.1 from taking similar action against the petitioner in the pending tenders, and further // 2 // seeks to quash the letters no.10442 and 10443 dated 01.12.2022 under Annexure-9, by which the bid of the petitioner has been declared as non-responsive, and to issue direction to the opposite parties to qualify the petitioner in the technical bid and to open its price/ financial bid for the work in question. 2. The factual matrix of the case, in a nutshell, is that opposite party no. 2 issued tender call notices/RFPs vide Bid ID No.EIC/RWSS/17/2022-23 and ID No. EIC/RWSS/18/2022-23 for procurement of contractor/ executing agency for the work “Execution of Rural Piped Water Supply Project pertaining to 149 villages of Tangi- Chowdwar Block in Cuttack District including 5 years O & M on EPC contract under the package” and “Execution of 03 nos. of Rural Piped Water Supply Project pertaining to 15 GPs of Lamtapur Block, 13 GPs of Koraput Block of Koraput District and villages of Dabugam and villages of Jharigam Block of Nabarangpur District including 5 years O & M in EPC contract under the package” respectively. // 3 // 2.1 Having satisfied the requirement of the tender documents, the petitioner submitted its bid within the time specified. As per clause-2.1.17 and clause-2.1.18 of the tender call notice, the bidder was required to update details as to ‘if the bidder has failed to perform any contract, as evidenced by imposition of penalty by an arbitral or judicial authority or judicial pronouncement or arbitral award against the bidder, as the case may be, or has been expelled from any project or contract by any public entity or have had any contract terminated by public entity for breach of such bidder’. The petitioner in its bid had attached in a separate sheet all the details relating to the legal disputes and the stage in which the legal proceedings stand. But, without considering the same, when the bid of the petitioner was pending consideration, opposite party no.2 vide letter no. 7110 dated 31.08.2022 in respect of a separate tender, i.e., relating to the work “execution of 2 nos. of individual rural pipe water supply project pertaining to Angul and Baharnpal Blocks of Angul District including 5 years of operation and maintenance on EPC contract under the // 4 // package” with project value of Rs. 380.08 crores, sought clarifications from the petitioner with regard to execution of earth work in formation etc. between Singhpur to Badhwapara and Mudaria to Katkali in connection with construction of Anupur Katni third line, Bilaspur Division of SECR (South Eastern Central Railway) and further sought clarification as to the latest status of the termination and to submit the necessary legal documents and further development of the aforesaid termination, latest by 05.09.2022 on or before 3 PM for carrying out further evaluation of the tender submitted. 2.2 After receipt of the aforesaid letter, the petitioner immediately vide letter no. GDCL/WMD/2022- 2000433 dated 05.09.2022 gave detailed clarifications to the opposite parties by indicating that the aforesaid termination was unilaterally done by the railways for reasons not attributable to the petitioner and it was solely due to the non-performance of the reciprocal obligations by the SECR, who, being in dominant position, unilaterally terminated the contract without following the // 5 // procedure laid down under the agreement. More so, the delay was not attributable to the petitioner, as the same was completely due to the laches on the part of the Railways, as they were not able to provide fronts to the petitioner to work within the stipulated period and, as such, for that reason, the petitioner itself gave various letters to the Railways to arrange funds/fronts for the petitioner to work and complete the work within the stipulated time or the extended time. But since no solution was forthcoming, SECR terminated the contract of the petitioner and the same is under challenge before the arbitral tribunal, which is pending for adjudication. 2.3 Since arbitration proceeding is pending before the tribunal, no adverse inference can be drawn against the petitioner. But the authority issued letter dated 09.09.2022 declaring the bid of the petitioner with regard to the work ‘execution of 02 nos. of individual rural pipe water supply project pertaining to Angul and Baharnpal Block of Angul District including 5 years of O&M on EPC contract under the package with the project value of // 6 // Rs.380.08 crores’ as non-responsive as per clause-3.5.1(i) and, accordingly, rejected the bid of the petitioner, as per clause-2.1.18 of the RFP on the sole ground that “you have been terminated/expelled by South East Central Railway for the NIT bearing no. CEC/BSP/15/16/147 for execution of earth work for formation etc. between Singhpur to Badhwapara and Mudaria to Katkalui in connection with construction of Anupur Katni third line, Bilaspur Division of SECR on 28.11.2019”. 2.4 Challenging the letter dated 09.09.2022, the petitioner approached this Court by filing W.P.(C) No. 25034 of 2022, which was disposed of vide order dated 18.11.2022 to pursue the remedy by filing arbitration proceeding in terms of the contract itself. As such, pursuant to the tender call notice, petitioner furnished a statement, as required under the bid documents, at sl. no.1 of Appendix-I(B) of the updated information as per clause-2.1.18 he referred “Nil” and, as such, when the matter is pending before the arbitration tribunal, the bid of the petitioner has been declared as non-responsive. // 7 // Aggrieved thereby, the petitioner has approached this Court by filing the present writ petition. 3.
Legal Reasoning
Mr. S.R. Mohanty, learned counsel for the petitioner vehemently contended that in terms of clause- 2.1.18 of the tender documents, no discrepancy can be attributed on the petitioner and, as such, when the matter is sub-judice before the arbitral tribunal, the adverse view taken by the authority against the petitioner depriving it of participating in the proceeding by holding the bid of the petitioner as non-responsive, cannot be sustained in the eye of law. It is further contended that the order impugned dated 01.12.2022, by which the bid of the petitioner has been declared as non-responsive as per clause-3.5.1(i) and rejected as per clause-2.1.18 of the RFP, cannot be sustained in the eye of law. Consequentially, he seeks for quashing of Annexure-9 dated 01.12.2022. 4. Mr. A.K. Parija, learned Advocate General appearing for the State-opposite parties contended that the petitioner has not satisfied clause-2.1.18 of the RFP // 8 // read with clause-3.5.1(i), which is made clear from Annexure-2 to the writ petition, wherein information has been provided by the petitioner under Appendix-I(B) at sl.no.1 by mentioning “NIL”, that for the last three years the petitioner has not failed to perform on any contract. If that would be taken into consideration, the subsequent information given in Annexure-A at page-64 of the writ petition cannot have any justification, as at sl.no.10 of Annexure-A the petitioner has admitted that arbitral proceeding is pending before the authority concerned. Whether there was laches on the part of the petitioner or the department, such question can be considered by the arbitral tribunal. If that be so, when the information, as required under clause-2.1.18 of the tender documents, is given to the authority by declaring as “Nil”, whether the condition stipulated in the tender documents has been complied with or not. It is also contended that when clarification was sought from the railway authority, it was intimated by letter dated 18.10.2022 that the contract agreement was terminated vide letter dated 28.11.2019 and the contractor had approached the Court on // 9 // 22.01.2020 against termination of agreement but withdrew the petition. Again the contractor approached this Court on 23.03.2020 against mobilization advance against expired BG and interest on mobilization advance, but this Court disposed of the case. Thereafter, the contractor approached the office for adjudication of dispute through arbitration. Thus, it is contended that there is no doubt about the fact that the contract agreement was terminated and the matter is sub-judice before the arbitral tribunal. Therefore, the information provided under Appendix-I(B) as Annexure-B, which has been annexed as Annexure-2 to the writ petition that for last three years there was no termination of agreement in terms of clause-2.1.18, is absolutely misleading the fact. Thereby, the authority is well justified by passing the order impugned, which does not warrant any interference of this Court. Consequentially, he seeks for dismissal of
Decision
the writ petition. 5. This Court heard Mr. S.R. Mohanty, learned counsel for the petitioner and Mr. A.K. Parija, learned // 10 // Advocate General appearing for the State-opposite parties by hybrid mode and perused the records. Pleadings having been exchanged between the parties, with the consent of learned counsel for the parties this writ petition is being disposed of finally at the stage of admission. 6. For just and proper adjudication of the case, clause-2.1.18 and clause-3.5.1 of the RFP, are extracted hereunder:- judicial authority or a “2.1.18: The Bidder including individual or any of its Joint Venture member should, in the last 3(three) years preceding Bid Due Date, have neither failed to perform on any contract, as evidenced by imposition of a penalty by an arbitral or judicial pronouncement or arbitration award against the Bidder including individual or any of its Joint Venture Member, as the case may be nor has been expelled from any project or contract by any public entity nor have had any contract terminated by any public entity for breach by such Bidder including individual or any of its Joint Venture Member. 3.5.1: Prior to evaluation of eligibility of BIDs, the authority shall determine whether each BID is responsive to the requirements of the RFP. A BID shall be considered responsive only if: a. Letter comprising BID is received online as per the format at Appendix-1 b. Enclosures of the BID is received physically and online including any extension thereof // 11 // pursuant to Clause 1.3, schedule of Bidding Process: c. It is signed, sealed and marked as stipulated in clauses of RFP; d. It contain the agreements, clarifications, addendum provided by the authority duly signed & sealed. e. It is accompanied by Declaration as specified in RFP; the BID Security f. It is accompanied by the Power (s) of Attorney as specified in RFP, as the case may be; g. It contain all the information (complete in all respects) as requested in the RFP and/or Bidding Documents (in formats same as those specified); h.It does not contain any condition or qualification; and i. It is qualified w.r.t. clause 2.1.17 & 2.1.18 as per details mentioned at Annexure A & B of Appendix-1. j. It is not non-responsive in terms hereof.” 7. Perusal of aforementioned clause would evident that the bidder including individual or any of its Joint Venture member should, in the last 3(three) years preceding bid due date, have neither failed to perform on any contract, as evidenced by imposition of a penalty by an arbitral or judicial authority or a judicial pronouncement or arbitration award against the bidder // 12 // including individual or any of its Joint Venture Member, as the case may be nor has been expelled from any project or contract by any public entity nor have had any contract terminated by any public entity for breach by such bidder including individual or any of its Joint Venture Member. There is no dispute before this Court that the contract of the petitioner has been terminated by the SECR for breach of the contract itself and, as such, the matter is sub- judice before the arbitral tribunal for consideration. Whether it is due to the laches on the part of the petitioner or the department that is to be decided by the arbitral tribunal, on which this Court has not expressed any opinion. 8. But fact remains, the bid of the petitioner has been declared as non-responsive. There is no doubt that the petitioner has given a declaration, i.e., “Nil” at sl.no.1 of Appendix-I(B), which has been annexed as Annexure-2 to the writ petition and, as such, the same is not in consonance with the provisions contained under clause- 2.1.18 of the RFP. Similarly, clause-3.5.1(i) clearly // 13 // indicates that it is qualified w.r.t. clause-2.1.17 and 2.1.18, as per the details mentioned at Annexure-A & B of the Appendix-I. Therefore, Appendix-I has got nexus with clause-3.5.1(i) and any information which has been provided under the said Appendix-I is relevant for awarding the work in favour of the petitioner. As regards the information provided at sl.no.10 of Annexure-A, which has been marked as part of Annexure-2 to this writ petition, even though the petitioner reveals that such an arbitration proceeding is pending, that ipso facto cannot entitle the petitioner to participate in the bid, because the contract of the petitioner has been terminated, for which arbitration proceeding is pending and, as such, whether the same is bad in law or not, this Court has not expressed any opinion on the same. Rather, the question of compliance of clause-2.1.18 with regard to termination of contract, is very clear and sacrosanct. Therefore, this Court is of the considered view that since the petitioner has disclosed such fact in at sl.no.1 of Appendix-I(B) of Annexure-B, which has filed as Annexure-2 to this writ // 14 // petition, the order impugned cannot be said to be illegal or arbitrary so as to warrant interference of this Court. 9. Needless to say, the tender work is for supply of drinking water, which is the utmost requirement of the common people. Even though this Court being prima facie satisfied had granted interim order in favour of the petitioner, but now considering the contention raised by the parties this Court is of the considered opinion that the order impugned, having been passed in terms of clause- 2.1.18 read with clause-3.5.1(i) of the RFP, is well justified and does not warrant any interference of this Court. 10. The terms of a contract should be interpreted and their legal effect determinated as a whole. It is well settled in law that a word, phrase, sentence or a whole clause must be considered along with all the other words by which it is surrounded; and also along with- (1) the history and education of the user, (2) the nature of the business in hand, (3) the purpose of the parties to the transaction, and (4) the other relevant circumstances. // 15 // The intention of the parties should be collected from the instruments as an entirety. Disproportionate emphasis must not be laid upon a single provision. Word, phrase and clauses should not be isolated, but related to the context and the contractual scheme, as a whole, and given the meaning which accords with the probable intention. 11. In Western Power Co. of Canada v. Corp. of the Dt. Of Mosqui, AIR 1934 PC 254, the Privy Council held that words can, no doubt, be supplied to give effect to the obvious intention or apparent purpose of a contract. But this can only be, if the language taken as a whole in connection with the circumstances carries with it the meanings sought to be attached. Unexpected intention is of no legal effect. It is not permissible to add words which would result in adding new term not involved in the purpose of the contract. 12. In Modi Co. v. Union of India, AIR 1969 SC 9, the apex Court held that the terms of the contract can be expressed or there can be a necessary implication of a // 16 // term for what has been expressed in the contract. The question therefore, resolves in the ultimate analysis upon the construction of the terms of the contract between the parties. In this connection, it is well established that in constructing such a contract it is legitimate to take into account the surrounding circumstances for ascertaining the intention of the parties. The same view has also been taken in Food Corporation of India v. Kamdhenu Cattle Industries,