M/s BCC Developers & Promoters (P) Ltd v. State of Rajasthan & ors

Order

16th June, 2011 PRESENT HON'BLE MR JUSTICE MN BHANDARI Mrs Naina Saraf – for petitioner Mr AK Sharma, Sr Adv with Mr Rachit Sharma – for resp No.4 Mr NA Naqvi, Additional Advocate General – for the State BY THE COURT: Petitioner company is a class 'A' contractor of Central Public Works Department, National Thermal Power Corporation, NOIDA, Indian Oil Corporation Ltd, RITES etc. The State Government, in exercise of the powers under section 337 of the Rajasthan Municipalities Act, 2009 (for short 'the Act of 2009') and other related provisions notified the policy named as “Affordable Housing Policy – 2009”. The policy was for the purpose of construction/ allotment of affordable houses to the weaker sections i.e. economically weaker sections. The State Government accordingly prescribed eligibility criteria for 2 developers and other conditions to implement action plan for construction of houses in next five years. Respondent No.2- RIICO separately issued its policy on 5.4.2010 and, thereupon, issued tender notice on 1.5.2010

inviting expression of interest from the eligible firms for developing affordable low cost group housing in RIICO Industrial areas. In that regard, three plots were identified in Neemrana, District – Alwar and Boranada Industrial Area, District – Jodhpur and industrial area of Jaipur. Petitioner participated in the tender process but contract was then awarded to respondent No.4 hence writ petition has been filed. Learned counsel for petitioner submits that respondent No.4-M/s Annant Raj Industries Ltd has been awarded the contract though it is not possessing eligibility criteria. The company is not having experience in building construction work for the last three years with good track record of quality construction. Apart from the aforesaid, respondent No.4 company failed to deposit 8% of the NIT amount before presentation. As per tender conditions, one was required to deposit 2% amount at the initial stage and remaining 8% before presentation. The amount of 8% was deposited by the respondent No.4 through Electronic Clearing System (ECS) after presentation. The presentation was 3 yet allowed to the respondent No.4 company and their bid was also accepted. The respondent company is further allowed to club two EWS (Economically Weaker Section) flats by which the total area of the plots become more than EWS category rather LIG (lower income group) and MIG (medium income group). This is apart from assured construction of 2500 flats, respondent company would be constructing only 1200 flats to give room to the respondent company to club two EWS flats thus it was nothing but promoting higher category of flats. Thereby, undue favour has been given to the respondent company. The official respondents further ignored that petitioner assured completion of work within 12 months as against respondent company assured for completion of work within 15 months. This is more so when rate of the flats awarded by the petitioner as well as respondent company is at par. Hence, for all these reasons, the award of contract to the respondent company is arbitrary and is contrary to the tender conditions, thus deserves to be cancelled. Petitioner company is having much experience in developing and constructing flats as it has already undertaken projects in the State of Rajasthan, Uttar Pradesh, Delhi and Punjab. As against experience of the petitioner company, respondent company is having no experience at all, still has been assigned the work of construction of flats. For counting their experience, work of the respondent company's sister concern was taken into consideration which is again contrary to the terms and conditions of the tender. 4 Learned counsel for the respondents, on the other hand, supported the award of tender to the respondent company. It is submitted that petitioner is unnecessarily mixing two policies i.e. one of State Government and other of RIICO though are running separately. The State Government framed policy of year 2009 and is not applicable to RIICO but is applicable to Municipalities, Housing Board etc. The RIICO framed its own policy to construct affordable houses. For eligibility conditions, one was required to have infrastructure developing experience. The average of annual turnover of the company was required to be Rs.200 crore for one year in the last three years. The respondent company is having experience in the business of infrastructure development along with required turn over thus it was found to be eligible in the bid. Accordingly, the committee made comparative assessment of the bidders. Other than the respondent No.4 company, on their company gave offer for construction of 100% EWS flats. Few of the competitors and even the petitioner offered development of EWS flats to the extent of 70% and remaining LIG and MIG categories, whereas, respondent No.4 agreed to construct all the flats for EWS. In view of the aforesaid proposal, maximum flats were coming out for EWS category thus found to be more beneficial and akin to the policy. For EWS flats, required area is 5 400 sq feet with required accommodation and facility and such flats have to be sold at the agreed rate, whereas, the flats bigger than EWS i.e. falling in the category of LIG and MIG etc are of bigger size and can be sold at the appropriate rate thereby giving more volume of profitability to the contractor but reducing number of flats of EWS category. Since the offer given by the respondent No.4 company was the best for EWS category hence considered and accepted. Before presentation, respondent company deposited the remaining amount of 8% through ECS mode, which is not only known mode for transfer of money, rather, money is transferred directly to the bank through this mode. Petitioner has wrongly taken aforesaid deposit after presentation because in order of the list of the eligible contractor, respondent No.4 was at No.2 in the serial whereas presentation was not called in the said order but was as per the convenience of the contractor on the same date. Hence, argument regarding delayed deposition of 8% of the amount by the respondent No.4 company is without any basis. So far as clubbing of EWS flats is concerned, that has not been permitted as would be clear from the agreement finally executed. The respondent No.4 company will construct all the flats for EWS category and shall be on the price already determined and, accordingly, it will construct 2500 flats as was agreed. It is admitted by the respondents that clubbing of the flats would not be 6 undertaken or permitted. In the aforesaid background, grievance otherwise raised by the petitioner remains without substance. Learned counsel for respondent No.4-company has even made allegation about eligibility of the petitioner company as it is not having average turn over of Rs.200 crore for one year in the last three years. According to them, petitioner company was wrongly been considered as eligible. Objection regarding maintainability was raised inasmuch as writ petition has been filed on behalf of one of the companies out of consortium and the turn over of other company being part of consortium is having more than the petitioner. Consortium partner of the petitioner has not authorised the petitioner to file this writ petition, more specifically when the bid as well as presentation were signed by the partners of the consortium separately as is coming out from Annexure-4 to the writ petition and other documents. Thus, ineligible firm has been permitted by the respondent – RIICO. It is also submitted that interference in the contractual matter, specially regarding award of contract is quite limited while exercising jurisdiction under Article 226 of the Constitution of India, hence, writ petition deserves to be dismissed even on that count. I have considered rival submissions of learned counsel for parties and scanned the matter carefully. 7 By this writ petition, a challenge has been made to award of contract to respondent No.4. It is, firstly, on the ground that respondent company does not possess required eligibility because under the Affordable Housing Policy, 2009 one is required to possess experience in building construction work for at least three years and should have good track record of quality construction apart from fulfilling other eligibility conditions. Reply to the aforesaid shows that RIICO has evolved its own policy which is separate than of the State policy of 2009. The State Policy is applicable to the Rajasthan Housing Board, Jaipur Development Authority, Jodhpur Development Authority, all Urban Improvement Trusts and Municipal Bodies etc. The RIICO was specifically not included therein thus the RIICO introduced its own policy. Therein, eligibility conditions are different than in the State Policy of 2009, which is clearly coming out from Annexure-2 to the writ petition, wherein, criteria has been provided at para 3 which is quoted hereinbelow for ready reference - “3. Application Criteria: 8 – A company engaged in the Business of Infrastructure Development with a minimum experience of 3 years in the same. – Preference will be given to applicants who have developed Group Housing for other Government Agencies in any State. – The average annual turnover of the Company should be of Rs.200 crore. Perusal of the aforesaid shows that criteria is that the company should be engaged in Business of Infrastructure Development with minimum experience of three years. It further provides that preference will be given to the company who had developed group housing for government agencies and that average annual turnover of the company should be of Rs.200 crore. As against the aforesaid, under Chapter 4 of Affordable Housing Policy of the State, 2009 eligibility is that one should have experience in building construction work for at least three years with good track record of quality construction apart from other conditions. Petitioner has made reference of the eligibility condition of the State Policy of 2009 while arguing the matter, whereas, same is not applicable to this case in view of Annexure-

2. Respondent company possesses required eligibility criteria as it was engaged in infrastructure development with required experience. However, according to the petitioner, the experience 9 should be in building construction only. Looking to the policy of RIICO, it cannot be said that respondent No.4 is not possessing the required eligibility. Thus, first argument cannot be accepted. The next question raised by the petitioner is that one was required to deposit 8% of the NIT amount before presentation if one is technically qualified. This is apart from 2% of the amount deposited at the initial stage. The allegation against the respondent No.4 is that amount of 8% was not deposited by the mode provided and it is otherwise after the presentation. For that, I have gone through the record and find that payment of 8% amount was made through Electronic Clearing System (ECS) which is now the known procedure for payment where it is made promptly and without delay from one bank to another. The question now comes is as to whether the deposit was made before presentation or not? Petitioner's assumption regarding payment after presentation is on the ground that name of respondent No.4 company was listed at No.2 in the list prepared by the official respondents and, accordingly, it must have been called for presentation in that order, which should be before the payment through ECS. I find that aforesaid argument is based on 10 presumption. This is more so when respondent RIICO has clarified that nobody was called for presentation in order given in the list. The presentation was given by the parties as per convenience on the same day. Respondent No.4 company gave its presentation after deposition of money. In view of aforesaid and in absence of any material to support the argument raised by the petitioner, I am unable to accept that the payment of required 8% amount (with 2% earnest money earlier deposited) was after the presentation. The next question raised by learned counsel for petitioner is regarding undue favour to respondent No.4 inasmuch as while entering into agreement, it is allowed to club two Economically Weaker Section (for short 'EWS') category flats thereby making it total area of 800 square feet. The aforesaid is reflected from the agreement, wherein, respondent No.4 is allowed to construct only 1200 flats instead of 2500 flats. To this, it is candidly replied by the respondents that 2500 flats would be constructed and all would be of EWS category without clubbing. In the light of the aforesaid statement, the ground raised by the petitioner does not survive as with construction of 2500 flats of EWS category, no clubbing would be 11 possible or permissible and the sale of the flats would be at the rate agreed and not at a different rate. Now comes the issue as to whether there was any justification to award work to the respondent No.4 company as against the petitioner. It is submitted that the contractor was under an obligation to construct minimum 50% of EWS category flats and remaining Lower Income Group (LIG) and Middle Income Group (MIG) flats. LIG and MIG flats were allowed to be sold on a different rate and with bigger size than EWS. So far as petitioner is concerned, it has agreed to construct 70% EWS flats and remaining of bigger size. As against the aforesaid, respondent No.4 agreed to construct all the flats for EWS category, meaning thereby, they did not intend to construct flats of LIG and MIG category. Since the whole policy is to benefit EWS category and respondent No.4 volunteered to construct all the flats of the said category on the fixed price given in the agreement as their proposal was found to be more beneficial to achieve goal of the policy and it was also considered that by constructing LIG and MIG category flats one can earn more amount, whereas, respondent No.4 did not show its intention to construct such flats in LIG and MIG category. As against aforesaid, petitioner 12 intended to construct EWS category flats only to the extent of 70% keeping margin for high category flats with comparison to respondent No.4 company. In view of aforesaid, proposal of the respondent No.4 was found to be more beneficial, which, I do not find to be arbitrary. This is more so when interference of this court in such matters is to be very rare and unless arbitrariness is alleged which seems to be not the case in hand. The period of completion of the project is also an issue taken up by the petitioner as it had given 12 months to complete the project, whereas, respondent No.4 has given 15 months time. The justification of the official respondents is that they had accepted proposal of the respondent No.4 as more beneficial for EWS category hence variation of three months period to complete the project cannot be taken as an issue to award contract to the petitioner. I am in satisfaction to the aforesaid and, otherwise, this court is not to adjudicate the matter as if trying it as appellate forum. The issue of preference, however, remains as it is provided that those having experience of developing group housing for other government agencies is concerned, it is, no doubt true that petitioner is having an edge on that account as compared to respondent No.4 but then contract cannot be awarded solely on the 13 basis of past experience but it has to be on the proposals given by respective parties. Since respondent No.4 has given offer to construct all the flats for EWS category, it was found to be more beneficial for the EWS category persons. Hence, I do not find that petitioner was entitled for award of contract despite giving its offer to construct only 70% EWS flats. The fact, however, remains that work was started by the respondent No.4 thus endeavour should be for completion of the project at the earliest so that EWS category people may get flats in time. Learned counsel for respondent No.4 company has raised an objection regarding eligibility of the petitioner as it is not having average turnover of Rs.200 crore in preceding three years. Learned counsel appearing for the official respondent RIICO submits that petitioner was allowed to participate by treating it to be eligible and, accordingly, petitioner participated in the presentation. However, at this stage, I am not inclined to decide the issue as raised by the respondent No.4. 14 In view of the discussion made above, I do not find any merit in this writ petition. Accordingly, writ petition so as the stay application are dismissed. (MN Bhandari) J. bnsharma All corrections made in the judgment/ order have been incorporated in the judgment/ order being emailed. (BN Sharma) PS-cum-JW