HONOURABLE SRI JUSTICE P.NAVEEN RAO WRIT PETITION No.25464 of 2014 Date: 08.10.2014 Between :
M/s. K.Venkata Raju, rep. by its Managing Partner, K.Venkata Raju s/o.Narasimha Rao, Aged 68 years, Vemagiri Village, Kadiyam Mandal, East Godavari District.
… Petitioner and Union of India, rep.by Secretary, Rail Bhavan, New Delhi and others.
… Respondents The Court made the following:
HONOURABLE SRI JUSTICE P. NAVEEN RAO WRIT PETITION No.25464 of 2014 ORDER:
On 24.01.2014 tender notification was issued for awarding of contract for execution of earth work in embankment for laying Broadway line by the Indian Railways. Petitioner has responded to the tender notification by submitting tender. According to Clause-1.1 of the instructions to tenderer and conditions of tender, tenderer is required to furnish eligibility of physically completing one similar nature of single work for a minimum value of 35% of advertised tender value within the qualifying period. The advertised tender value was Rs.44,58,64,990/-. To show the experience gained by the petitioner, petitioner obtained Experience Certificate from the Executive Engineer, RBL-1, Executive Division No.2 of Pebberu, and enclosed to the tender document. Column-10 of experience certificate has shown that work executed by the petitioner was physically completed by 10.09.2012. The tender process was in two stages i.e., Packet-I and Packet-II. Packet-I was the technical bid and Packet-II was price bid. After having found that the petitioner was technically qualified, he was informed vide letter dated 29.05.2014 to participate in opening of price bid scheduled to be opened on 10.06.2014. Price bids were opened on 10.06.2014 and petitioner was found to be the lowest bidder. Thereafter, by order dated 27.08.2014, petitioner was informed that his Earnest Money Deposit (EMD) submitted along with tender application to an extent of Rs.23,76,490/- in the form of TDA is forfeited. Clause-1.7 of the instructions to tenderer and conditions of tender were invoked to forfeit the EMD. This writ petition is instituted seeking mandamus declaring the action of the 2nd respondent in not awarding contract to the petitioner when petitioner was identified as lowest bidder and forfeiting the EMD amount of the petitioner as arbitrary and illegal.
2. In the counter-affidavit filed by the respondents-Railways, the respondents-railways have stated that petitioner did not physically complete the work which he has shown in the experience certificate and, therefore, the statement made by the petitioner that he had physically completed to acquire the eligibility for participation in the tenders was misleading. The information obtained by the Railways would show that the work is yet to be completed 100% and, therefore, petitioner having given wrong statement regarding his experience, the Railways are entitled to forfeit the EMD in accordance with the Clauses-1.7 and 16.0 of the conditions of tenders. Learned standing counsel also produced the minutes of the tender committee. The tender committee recommended to reject the tender offered by the petitioner and process for banning of business from the petitioner and to conduct negotiations with the other tenderers. The recommendations of the tender committee were accepted by the competent authority. Learned standing counsel also submitted that appropriate orders were communicated to the petitioner.
3. At this stage, learned senior council Sri Vedula Venkata Ramana, submitted that since it is now stated that a decision was taken recommending rejection of the tender submitted by the petitioner and to conduct further action, the petitioner confines the relief in this writ petition only to the extent of forfeiture of EMD.
4. Learned senior counsel contended that the order dated 27.08.2014 is a non-speaking order. It has not assigned reasons why the EMD of the petitioner was forfeited. He, therefore, submitted that forfeiture was unjustified as it involves civil consequences and before passing such an order, no opportunity was afforded to the petitioner. Learned senior counsel further submitted that once a verification was done regarding the genuinity of the certificate produced by the petitioner along with tender document and once his technical bid was cleared after such verification, it is not open to the respondents-railways to conduct further enquiry and to pass orders forfeiting the EMD.
5. In reply, learned standing counsel submits that as per clause-4(c) of the Regulations for tenders and contracts for the guidance of contractors and Clause-2.1(c) of Credentials of Contractors, the Railways are entitled to look into the previous experience on works similar to that to be contracted for, in proof of which original certificate or testimonials may be called for and their genuineness verified, if need be, by reference to the signatories thereof. In exercise of said provision, the experience certificate was referred to the authorities of the State Government. Initially, the Executive Engineer said that the earlier certificate was issued by him and the contents of the said certificate was valid. Believing the same, technical bid of the petitioner was processed and cleared and petitioner was taken to the next level of financial bid. On further verification and correspondence with the higher authorities, it has come to the notice of the Railways that petitioner did not execute the work entrusted to him and the work was not executed within the time for various reasons and extension of time was granted from time to time and such extension was granted till 30.06.2014. The Executive Engineer in his letter dated 07.08.2014 further informed that the petitioner has completed only 99.75% of work and the work was under progress. Subsequently, the Executive Engineer also addressed several letters and in his subsequent letters, the Executive Engineer tried to justify his earlier stand and but agreed that petitioner has not executed 100% of the work. Petitioner in his letter dated 28.07.2014 also admits that he has not executed 100% of work. He tries to justify the reasons for not completing the work. Learned standing counsel, therefore, submits that all this would show that earlier experience certificate submitted by the petitioner was not valid and, therefore, in accordance with the provision contained in Clauses 1.7 and 16.0 of the instructions to tenderer and conditions of tender, the decision to forfeit was validly taken.
6. As seen from the order dated 27.08.2014, the order does not assign any reasons for forfeiture of the EMD submitted by the petitioner. It only refers to clause 1.7 of the instructions.
7. In the counter and during the course of arguments, learned standing counsel justifies forfeiture of EMD by referring to various correspondence entered into by the Railways with the authorities of the State Government. Petitioner was not put on notice before passing the said orders for forfeiture and the copies of correspondence was not marked to him.
8. Clauses 1.7 and 16.0, which are relied upon by the respondents reads as under:
“ 1.7 - In case the Certificates/Documents produced are proved to be false and/ or fabricated, the entire Earnest Money (EMD) will be forfeited.
16.0 – If the tenderer deliberately gives/tenderers deliberately give wrong information in his/their tender or creates./create circumstances for the acceptance of his/their tender, the Railway reserves the right to reject such tender at any stage.
9. There was continuous correspondence by the Railways with the authorities of the State Government to ascertain whether petitioner executed the work as claimed by him. This correspondence was not communicated to the petitioner and no explanation was called from the petitioner. It is not the case of the respondents that petitioner has fabricated the certificate. The Executive Engineer, subsequent to issuance of such certificate, tries to explain the reasons for giving such certificate. Thus, there is no dispute regarding genuinity of the certificate filed by the petitioner. The only thing that remains for consideration was whether the petitioner has given false certificate deliberately knowing fully well that work was not completed. On reading of Clauses-1.7 and 16.0 of the instructions to tenderer and conditions of tender, it is clear that if certificates produced are proved to be false and/or fabricated, the entire EMD be forfeited. It thus implies that there must be an exercise in the first instance to establish the submission of false certificate or fabricated certificate. It would necessarily imply putting the petitioner on notice on the information available with Railways, call for his explanation and then decide. No such exercise was undertaken. As the forfeiture order results in civil consequences and huge financial loss to the petitioner, petitioner is entitled to be put on notice by furnishing relevant material and an opportunity of hearing to explain before a decision to forfeit EMD is taken.
10. Accordingly, the writ petition is disposed of holding that forfeiture of EMD without affording opportunity as bad in law and matter is remitted to the competent authority with a direction to put the petitioner on notice by supplying the relevant documents, which are basis for the respondent-railways to take a decision to forfeit the EMD, call for his explanation and after considering the explanation, pass appropriate orders as warranted by law. It is made clear that since amount is already accounted for by Railways, the said amount need not be returned till a final decision is taken as directed above. It is also made clear that this exercise need not detain the Railways from taking further course of action with reference to the finalization of tenders. It is always open to the petitioner to challenge any decision that is communicated to him regarding rejection of tender as well as other consequential action. No costs.
In view of the disposal of the writ petition, all W.P.M.Ps. are dismissed.
JUSTICE P.NAVEEN RAO Date: 08.10.2014 kkm Oval:
HON’BLE SRI JUSTICE P.NAVEEN RAO Writ Petition No.25464 of 2014 Date: 08-10-2014 kkm