RESERVED ON : 27.04.2017 DELIVERED ON : 01.06.2017 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 01.06.2017 CORAM THE HON'BLE MR. JUSTICE M.DURAISWAMY W.P.Nos.2276 & 2277 of 2017 & W.M.P.Nos.2242 & 2243 of 2017 M/s.Senthamizh Construction & Projects Pvt Ltd Rep by Managing Director Mrs.P.Kalaiselvi 104 K Block, 16th Street Anna Nagar East Chennai-102 ... Petitioner in both WPs v.
1 Chief Engineer (H) NABARD & Rural Roads, HRS Campus, 76 Sardar Patel Road Guindy Chennai-600025
2 The Superintending Engineer (Highways) NABARD and Rural Roads Circles No.B-48, Alagesa Nagar, Chengalpattu
3 Special Chief Engineer (H) NABARD and Rural Roads Circles Chengalpattu .. Respondents in both WPs W.P.No.2276/2017 filed under Article 226 of the Constitution of India to issue a Writ of declaration declaring that the entire Tender process in pursuant to Tender Notice No.05/ 2016- 2017/ SDO/ Dated 05.12.2016 on the file of the 2nd respondent in respect of item no.1 as null and void on the aforesaid grounds.
W.P.No.2277/2017 filed under Article 226 of the Constitution of India to issue a Writ of declaration declaring that the entire Tender process in pursuant to Tender Notice No.04/ 2016- 2017/ SDO/ Dated 02.12.2016 on the file of the 2nd respondent in respect of item no.1 as null and void on the aforesaid grounds.
For Petitioner : Mr.K.Sridhar For Respondents : Mr.S.T.S.Murthy Addl. Advocate General Asst. by Mr.A.Kumar Spl. Govt. Pleader COMMON ORDER Since the issue involved in both the writ petitions are common, by consent of both the parties, both the writ petitions are disposed of by this common order.
2. The petitioner has filed the above writ petitions to issue a writs of declaration, declaring that the entire tender process in pursuant to Tender Notices dated 02.12.2016 and 05.12.2016, on the file of the 2nd respondent, in respect of item no.1 as null and void.
3. By the tender notice dated 02.12.2016, the 2nd respondent called for the tender for rebuilding of roads in Ponneri (H), NABARD & Rural Roads Sub-Divisions (package-1). Similarly, by the tender notice dated 05.12.2016, the 2nd respondent also called for the tender for rebuilding of roads in Chennai (H), NABARD & Rural Roads Sub-Divisions (package).
4. The brief case of the petitioner, necessary for the disposal of the writ petitions, is as follows:-
(i) According to the petitioner, it is the private limited company and is a registered class-I contractor at State level in Chennai circle. The petitioner is engaged in undertaking contractual works in various Government Departments, local authorities and they are specialised in road laying and other allied construction works. They have participated in various tender process conducted by the Highways Department of Tamil Nadu Government and successfully completed all the works awarded in their favour.
(ii) The 2nd respondent invited percentage tenders vide their notification dated 02.12.2016 for 3 works under two divisions. Similarly, by notification dated 05.12.2016, 2nd respondent also invited percentage tenders for 7 works under three divisions. The said tenders were in respect of rebuilding of roads in Ponneri (H), NABARD & Rural Roads Sub- Divisions (package-1) and for rebuilding of roads in Chennai (H), NABARD & Rural Roads Sub-Divisions (package) and the same were published vide advertisement in English daily, viz., "Indian Express" dated 08.12.2016. As per the said notification, the tender should be submitted to the 2nd respondent by 3 p.m. on or before 12.01.2017 in sealed two cover system, viz., the first cover shall contain pre-qualification document and EMD payment and the second cover shall contain price-document with the percentage tender.
(iii) According to the petitioner, their bids for the first item of the said notifications, viz., rebuilding of roads in Ponneri (H), NABARD & Rural Roads Sub-Divisions (package-1) and for rebuilding of roads in Chennai (H), NABARD & Rural Roads Sub-Divisions (package) along with the required enclosures in respect of their pre-qualifications and a demand draft for a total sum of Rs.2,02,500/- being the EMD prescribed and the same was received by the 2nd respondent within the time fixed by them i.e. on 12.01.2017. As per the said tender notifications, the tender schedule can be downloaded from the department website and the completed tender should reach the 2nd respondent's office on or before 12.01.2017 by 3.00 p.m. and it is further notified that the pre-qualification documents alone will be opened on the same day i.e. on 12.01.2017 by 3.15 p.m. and after its evaluation, price bid will be opened on some other day.
(iv) According to the petitioner, as contemplated under section 8 of the Tamil Nadu Transparency in Tenders Act, the 2nd respondent shall open the tender in the presence of the Tenderers on the date fixed for it. However, for the reasons best known to the 1st respondent, they postponed the tender opening date to 20.01.2017. On that day, the petitioner's representative was present in the 2nd respondent's office and all pre-qualification covers including that of the petitioner was opened and evaluated in the presence of their representative. To the knowledge of the petitioner, there were totally 3 bidders including the petitioner and their pre-qualification was opened on 20.01.2017 and after evaluating the documents, the 2nd respondent informed the petitioner's representative that the petitioner's tender was accepted as they satisfied the required pre-qualification criteria. It was further informed by the 2nd respondent that the price bids will be opened in their office on 23.01.2016 at 3.00 p.m.
(v) According to the petitioner, they possessed all pre-qualification required for participating in the said Tender and all the relevant documents in respect of their pre-qualification was placed before the 2nd respondent along with the EMD amount. On the date fixed for opening of the price bid, i.e. 23.01.2017, there was sudden break out of violence and protests in all over Chennai and various parts of Tamil Nadu on account of Jallikattu issue and the entire public movement has gone stand still due to road blocks and protests. When the petitioner contacted the 2nd respondent over phone, it was informed that the opening of the price bid was postponed to 24.01.2017 in view of the reason that the bidders could not reach the 2nd respondent's office. On 24.01.2017, when the petitioner's representative visited the 2nd respondent's office, to his shock and surprise, it was orally informed to him that the price bids of other 2 bidders were already opened on 23.01.2017 itself and the bid of the petitioner was not opened due to the reason that the petitioner did not submit relevant documents with regard to their pre-qualification.
(vi) According to the petitioner, the reply given by the 2nd respondent was not correct and contrary to the earlier information given by them on 20.01.2017 stating that the petitioner's pre-qualification was accepted. The 2nd respondent, only after having satisfied with the materials placed before them, had informed the petitioner that their tender was accepted and has not passed any order till date rejecting the petitioner's tender. The date fixed for opening of the price bid was already informed to the petitioner as 24.01.2017, but, strangely it was informed that the price bid was opened on 23.01.2016 itself and in spite of the request made by the petitioner's representative, they refused to give their reply in writing. The 2nd respondent has not passed any order with regard to rejection as stated by them on 24.01.2017, but, chosen to proceed with confirming the tender in favour of the other two bidders, whose details were not known to the petitioner and who could have quoted only higher bid than that of the petitioner.
(vii) The respondents ignored all their statutory obligations and violated the principles of natural justice in processing the tender proceeds in an arbitrary manner. The petitioner came to know that the 2nd respondent is going to issue work order in favour of the other two bidders, who have influence with the 2nd respondent. The entire tender process is stage managed and the tender proceeding was not conducted as per rules.
(viii) As per the provisions of Tamil Nadu tender Transparency Act, in a public tender, all the bids shall be opened only in the presence of all participants on the date fixed as per the notification and shall be published in the tender advertisements and the tenderers name have to be registered in the register. The 2nd respondent acted as per their whims and fancies to please the ruling party men without opening the petitioner's bids. In these circumstances, the petitioner has filed the above writ petitions to declare the tender notices dated 02.12.2016 and 05.12.2016 as null and void.
4. The brief case of the respondents is as follows:-
(i) According to the respondents, due to administrative reasons, opening of the tenders received was postponed to 3.00 p.m. on 20.01.2017 and the same was informed to all the contractors present on 23.01.2017 and this amendment was also displayed prominently in the Notice Board. The tender box was opened at 3.15 p.m. on 20.01.2017, as notified on 12.01.2017, in the presence of the contractors and their representatives. The petitioner's representative was also present on 20.01.2017 when the tender box was opened. Out of the total of 64 tenders received, 24 tenders for 4 works only, costing less than Rs.2 crores were opened on 20.01.2017 itself and the quoted percentage of all the tenderers were openly declared. For the balance 40 tenders received for 13 packages/works, costing more than Rs.2 crores, the inner cover containing the pre-qualification documents alone, were opened on 20.01.2017 in the presence of the contractors/representatives, who were present as stipulated in the tender conditions. All the tenderers had furnished the required EMD as noted in the Tender Notices and the same was duly notified to the contractors/representatives, who were present. On the same day, contractors and the representatives were informed that the price bid of the pre-qualifying tenderers alone will be opened on 23.01.2017 and the said process were conducted in an open, transparent and legal manner as witnessed by the petitioner's representative. The pre- qualification covers were opened only on 20.01.2017, however, they were not evaluated on 20.01.2017, as stated by the petitioner.
(ii) According to the respondents, the following three contractors have submitted their tenders for rebuilding of roads in Chennai (H), NABARD & Rural Roads Sub-division and for rebuilding of roads in Ponneri (H), NABARD & Rural Roads (package-1), viz.,
1. Thiru S.Babu
2. M/s.Balaji Enterprises
3. M/s.Senthamizh Constructions and Projects Pvt. Ltd. (petitioner in the writ petitions) The pre-qualifying tender documents were taken for examination on 20.01.2017. The price bids in the second cover were kept in safe custody for subsequent opening after pre-qualification examination.
(iii) As per G.O.(Ms) No.162, Highways and Minor Ports (NH1) Department, dated 01.10.2012, the above said three works were clubbed into a single package and tenders were called for vide tender notices dated 02.12.2016 and 05.12.2016.
(iv) In the pre-qualification document, it was clearly mentioned that the tenderers should produce the proof of ownership with regard to major items of constructional plant, minimum mandatory requirement of plant and equipment for the work. Further, it was mentioned that working condition certificate should be obtained from the Divisional Engineer (H), Quality Control concerned and enclosed along with the pre- qualification documents for the equipments. It was also mentioned that the contractor should compulsorily mention the contractor code assigned to him. While examining the pre-qualification documents, it was noticed that the petitioner has not furnished the necessary certificate regarding the working condition of the machineries to be obtained from the Divisional Engineer (H), as stipulated in Annexure 1 of pre-qualifying condition. Hence, after examination of pre-qualification, it was noticed that the petitioner is found as not qualified, since the petitioner has failed to furnish the necessary certificate from the Divisional Engineer (H), Quality Control, regarding working condition of plant and machineries.
(v) As informed to the contractors/representatives on 20.01.2017, the price bid of pre-qualifying tenders were opened on 23.01.2016 in the presence of contractors/representatives and the bidder, who has quoted the lowest tender percentage among the pre-qualified tenderers, was called for further negotiations. No assurance was given by the 2nd respondent to the petitioner that his tender was accepted based on pre-qualification criteria on 20.01.2017 as said by the petitioner. The petitioner had himself was absent from participating in the price bid. The price bid of bidders, who have pre-qualified only, were taken up for opening and whatever the number of pre-qualified bidders may be, the bidder, who had quoted lowest rate was called upon for further negotiations.
(vi) The nature of work involves immediate rebuilding of the road improvements and strengthening for which the work is to be executed in a fast track manner so as to prove good riding surface to the public. In order to achieve the progress, the condition of the machineries and equipments such as Central Hot Mix Plant, Paver Finisher, Static Roller Vibrator Roller (Tandem), Earth Compactor, Concrete Mixer Machine, Vibrator are to be in good working condition. Therefore, the working condition certificate for Plants & Machineries equipments for the said machineries from the Divisional Engineer (H), Quality Control Division for carrying out the contract was included in the tender documents.
(vii) As per the tender condition, the petitioner has not enclosed the relevant and necessary certificate obtained from the Divisional Engineer. The petitioner has not sent any application along with machinery details to the Divisional Engineer (H), Quality Control for getting Working Condition Certificate. The 2nd respondent also received a letter dated 07.02.2017 from the Divisional Engineer (H), Quality Control, stating that the petitioner has not applied for getting the certificate.
(viii) The two contractors, viz, (i) Thiru S.Babu and (ii) M/s.Balaji Enterprises, have submitted the working condition certificate issued by the the Divisional Engineer (H), Quality Control for their Plants & Equipments for the year 2017. Whereas, the petitioner has not enclosed the working condition certificate obtained from the quality control wing. The petitioner was not pre-qualified, as he had failed to produce the working condition certificate for Plants & Equipments from the Divisional Engineer.
(ix) The petitioner was not present in the 2nd respondent's office when the tender was opened on 23.01.2017. The entire tender process was conducted as per the Tamil Nadu Tender Transparency Act in an open, transparent and legal manner. In these circumstances, the respondents prayed for dismissal of the writ petitions.
5. In the reply affidavit, the petitioner has stated that as a matter of fact, in the year 2015, a working condition certificate was issued by the Division Engineer (H) Quality Control Division, Guindy, Chennai-25, to the petitioner, after inspecting all the machineries concerned and that the certificate was issued on 23.09.2015 for the purpose of participating in a Tender of the year 2015. Further, they ahve stated that even now, the said machineries and equipments are very much available in petitioner's office in good working condition. Further, in the reply affidavit, the petitioner has stated that one Mr.Mani, who is the Special Personal Secretary to State Highways Minister, demanded commission on the estimated cost of the Tender for sponsoring the petitioner company. Further, the petitioner has stated that the working condition certificate will be issued only to the favoured contractor, who gets sponsored by the Highways Minister for that particular tender.
6. The 3rd respondent filed rejoinder disputing the allegations made in the reply affidavit.
7. Heard Mr.K.Sridhar, learned counsel appearing for the petitioner and Mr.S.T.S.Murthy, learned Additional Advocate General appearing for the respondents.
8. Mr.K.Sridhar, learned counsel, appearing for the petitioner reiterated the averments stated in the affidavit filed in support of the writ petitions and submitted that the tender process was not conducted in a proper manner as per the Tamil Nadu Transparency in Tenders Rules, 2000. Further, the learned counsel submitted that the petitioner had obtained the working condition certificate from the Division Engineer (H) Quality Control Division, on 23.09.2015 and that all the machineries are in good working condition. Further, the learned counsel submitted that only to eliminate the petitioner from the tender process, the 2nd respondent insisted the petitioner to produce the working condition certificate.
9. Mr.S.T.S.Murthy, learned Additional Advocate General appearing for the respondents, submitted that the entire tender process was done in a legal manner as per the Tamil Nadu Transparency in Tenders Rules, 2000. Further, the learned Additional Advocate General submitted that since the petitioner has not produced the working condition certificate from the Divisional Engineer, which is a mandatory requirement stipulated in the tender notices dated 02.12.2016 and 05.12.2016, the petitioner without producing the said certificate cannot participate in the tender. Further, the learned Additional Advocate General submitted that the Division Engineer (H) Quality Control Division, by its letter dated 07.12.2017 informed the 2nd respondent that the petitioner has not made any application for issuance of the working condition certificate with regard to Plant & Machinery. The learned Additional Advocate General also submitted that the other 2 bidders, viz, (i) Thiru S.Babu and (ii) M/s.Balaji Enterprises, have produced the working condition certificate from the Division Engineer, therefore, their bids were taken into consideration. Since the petitioner failed to produce the working condition certificate, they were not pre-qualified. In support of his contention, the learned Additional Advocate General, relied upon the following judgments:-
(i) 2004(4) SCC 199 (Directorate Of Education & Others v.
Educomp Datamatics Ltd. & others) wherein the Hon'ble Supreme Court held as follows:-
"11. This principle was again re-stated by this Court in Monarch Infrastructure (P) Ltd. vs. Commissioner, Ulhasnagar Municipal Corporation and Others [2000 (5) SCC 287]. It was held that the terms and conditions in the tender are prescribed by the government bearing in mind the nature of contract and in such matters the authority calling for the tender is the best judge to prescribe the terms and conditions of the tender. It is not for the courts to say whether the conditions prescribed in the tender under consideration were better than the one prescribed in the earlier tender invitations.
12. It has clearly been held in these decisions that the terms of the invitation to tender are not open to judicial scrutiny the same being in the realm of contract. That the government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. The courts cannot strike down the terms of the tender prescribed by the government because it feels that some other terms in the tender would have been fair, wiser or logical. The courts can interfere only if the policy decision is arbitrary, discriminatory or mala fide."
(ii) 2005 (4) SCC 435 [Global Energy Ltd. & Another v. M/s Adani Exports Ltd. & Ors on 3 May, 2005] wherein the Hon'ble Supreme Court held as follows:-
"9. In Tata Cellular v. Union of India AIR 1996 SC 11, a Three Judge Bench has explained what is a tender and what are the requisites of a valid tender. It has been held that the tender must be unconditional and must conform to the terms of the obligation and further the person by whom the tender is made must be able and willing to perform his obligations. It has been further held that the terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. In Air India Ltd. v. Cochin International Airport Ltd. 2000 (2) SCC 617 the same view was reiterated that the State can fix its own terms of invitation of tender and that it is not open to judicial scrutiny. Whether and in what conditions the terms of a notice inviting tenders can be a subject matter of judicial scrutiny, has been examined in considerable detail in Directorate of Education v. Educomp Datamatics Ltd. 2004(4) SCC 19. The Directorate of Education, Government of National Capital Territory of Delhi had taken a decision to establish computer laboratories in all Government schools in NCT area and tenders were invited to provide hardware for this purpose. For the final phase of 2002- 03, tenders were called for 748 schools and the cost of project was approx. Rs.100 crores. In view of the difficulty faced in the earlier years where the lowest tenderers were not able to implement the entire project, a decision was taken to invite tenders from firms having a turnover of Rs.20 crores or more for the last three financial years ending with 31.3.2002, as it was felt that it would be easier for the department to deal with one company which is well managed and not with several companies. Some of the firms filed writ petitions in Delhi High Court challenging the clause of the NIT whereby a condition was put that only such firms which had a turnover of Rs.20 crores or more for the last three financial years would be eligible. It was contended before the High Court that the aforesaid condition had been incorporated solely with an intent to deprive a large number of companies imparting computer education from bidding and monopolize the same for big companies. The writ petition was allowed and the clause was struck down as being arbitrary and irrational. In appeal, this Court reversed the judgment of the High Court basically on the ground that the terms of the invitation to tender are not open to judicial scrutiny, the same being in the realm of contract and the Government must have a free hand in settling the terms of the tender. The courts would not interfere with the terms of the tender notice unless it was shown to be either arbitrary or discriminatory or actuated by malice. It was further held that while exercising the power of judicial review of the terms of the tender notice, the Court cannot order change in them.
(iii) 2009 (6) SCC 171 ( Meerut Development Authority v.
Association of Management Studies and another with Pawan Kumar Agarwal v. Meerut Development Authority and another) wherein the Hon'ble Supreme Court held as follows:-
"What is the nature of rights of a bidder participating in the tender process?
26. A tender is an offer. It is something which invites and is communicated to notify acceptance. Broadly stated it must be unconditional; must be in the proper form, the person by whom tender is made must be able to and willing to perform his obligations. The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. However, a limited judicial review may be available in cases where it is established that the terms of the invitation to tender were so tailor made to suit the convenience of any particular person with a view to eliminate all others from participating in the biding process."
10. On a careful consideration of the materials available on record and the submissions made by the learned counsel on either side, it could be seen that there is no dispute that the 2nd respondent in their tender notices dated 02.12.2016 and 05.12.2016 called upon the tenderers/bidders to submit working condition certificate obtained from the Division Engineer (H) Quality Control Division, for the current year with regard to the Plants & Machineries. The petitioner contended that the said certificate was issued only to the sponsored contractors and not to others. Further, the petitioner contended that since they are not favoured contractor, they were not issued with the said certificate. However, the contention of the petitioner cannot be accepted for the reason that they did not even apply for the issuance of the working condition certificate to the Division Engineer (H) Quality Control. This fact was also supported by the letter dated 07.02.2017 written by the Division Engineer (H) Quality Control to the 2nd respondent to the effect that the petitioner did not apply for the issuance of working condition certificate. It is not a new condition to the petitioner calling upon them to produce the said certificate. Even when they participated in the tender in the year 2015, they obtained the working condition certificate from the Divisional Engineer on 23.09.2015. When the petitioner had obtained a certificate on 23.09.2015 for participating in the tender for the year 2015, the reason for not applying for the certificate was not explained by the petitioner, in any manner whatsoever. Having failed to apply for the certificate and produce the same along with their tender, they cannot turn around and say that they are not favoured contractor and therefore, the Divisional Engineer will not issue certificate to them. When the petitioner was not pre-qualified, they were not considered for the tender process.
11. It is settled position that the terms of the tenderer are not open to judicial scrutiny, the same being in the realm of contract and the Government must have a free hand in setting the terms of the tender. The courts could not interfere with the terms of the tender notice unless it was shown to be either arbitrary or discriminatory or actuated by malice. Even while exercising the power of judicial review, the terms of the tender notice, the Court cannot order change in them. The court cannot whittle down the term of the tender as they are in the realm of contract unless they are wholly arbitrary, discriminatory or actuated by malice.
12. The Divisional Engineer (H), Quality Control, Chennai, has also filed an affidavit before this court wherein he has stated that the petitioner company has not approached him for the issuance of working condition certificate at any point of time in respect of the tender, which is the subject matter in the instant writ petitions. Further, he has stated that he had issued working condition certificate to Thiru Babu and M/s. Balaji Enterprises on 09.01.2017, however, while writing the date, it resembles as 07.01.2017. He has specifically stated that the certificates were signed by him only on 09.01.2017.
13. I do not find any reason to discredit the submissions made by the Divisional Engineer (H), Quality Control, Chennai and also the affidavit filed by him. Since the petitioner did not produce the working condition certificate from the Divisional Engineer (H), Quality Control, they were not pre-qualified to participate in the tender process. Hence, their price bid was not opened by the 2nd respondent. Unless the tenderers fulfill all the terms and conditions stipulated by the 2nd respondent, their bid need not be considered and the 2nd respondent has rightly found that the petitioner was not pre-qualified to participate in the tender process.
14. So far as the allegations made against the Minister for Highways and his Special Personal Secretary are concerned, the allegations are not supported by any evidence, therefore, I am not giving any finding with regard to the said allegations.
15. The judgments relied upon by the learned Additional Advocate General squarely applies to the facts and circumstances of the present case.
16. In these circumstances, I do not find any merits in the writ petitions. The writ petitions are liable to be dismissed. Accordingly, the writ petitions are dismissed. No costs. Consequently, connected miscellaneous petitions are closed.
01.06.2017 Index : Yes Rj To
1 Chief Engineer (H) NABARD & Rural Roads, HRS Campus, 76 Sardar Patel Road Guindy Chennai-600025
2 The Superintending Engineer (Highways) NABARD and Rural Roads Circles No.B-48, Alagesa Nagar, Chengalpattu
3 Special Chief Engineer (H) NABARD and Rural Roads Circles Chengalpattu M.DURAISWAMY, J, Rj order in W.P.Nos.2276 & 2277 of 2017 & W.M.P.Nos.2242 & 2243 of 2017 01.06.2017