2016 (4) TMI 223 - HC - Companies Law

Validity of public tender - Held that - Given the nature of the equipment to be installed at such crucial places, and going by the nature of work and the prior experience condition that is reproduced by us hereinabove, we cannot accept the stand taken in para 8 that the tender does not require any previous experience of three years, or the denial that a previous requirement experience of 3 years was mentioned in earlier tender notice but was deleted from the present tender notice. The requirement of experience is very much mentioned in that column of even the present tender. We do not think that the mandate of Article 14 of the Constitution of India has been adhered to by the State. Respondent no. 3 has also stated that as regards the earlier tender being relied upon by the petitioner company, they had bid at par with the aforesaid estimated cost of respondent no. 2, while the present respondent had submitted a bid of 8.1% below the estimated cost i.e. ₹ 3,38,67,804/-. It blames the petitioner for indulging in litigation, but we are not concerned here with the conduct of the petitioner, but the conduct of the State in a matter of public tender. We are aware of the principles laid down in the case of Michigan Rubber (India) Limited (2012 (3) TMI 512 - SUPREME COURT). We are also aware that we cannot interfere with the tender conditions. We are interfering in this case simply because the respondent nos. 1 and 2 represent that the terms and conditions of the tender are those which have been notified for the benefit of all bidders and participants and then makes a marked departure therefrom without producing any material justifying such deviation. We have found that the work experience is a vital and important eligibility criteria. That could not have been compromised or given up by the State in the manner done. We have found that the State itself and particularly the Department of Public Works, its Executive Engineer (Electrical) are not serious in adhering to the terms and conditions of the tender. Given the nature of the work and the maintenance that is required, the State ought to choose the best and the most experienced in the field. Once the tender process does not meet the requirements of fairness and reasonableness, then there is no alternative for this Court but to interfere. If the State, or its instrumentality, acts reasonably and in public interest in awarding contracts, then the Court s interference is not justified or permissible. However, no person can claim a fundamental right to carry on business with the Government. When the decision of awarding contract is not in accordance with the terms and conditions of the tender notified and the larger public interest is affected adversely, then this Court can, in its writ jurisdiction, interfere with the decision of the State. As a result of the above discussion, the writ petition succeeds. Rule is made absolute in terms of prayer clause (b) to the extent that the work order in favour of 3rd respondent being vitiated as above, is quashed and set aside.

Issues Involved:
1. Violation of Article 14 of the Constitution of India.
2. Non-compliance with the guidelines of the Central Vigilance Commission.
3. Alleged favoritism and deviation from tender terms by the Public Works Department (PWD).
4. Eligibility and experience criteria for bidders.

Detailed Analysis:

1. Violation of Article 14 of the Constitution of India:
The petitioner argued that the tender process violated Article 14, which mandates equality before the law. The petitioner contended that the password protection given to the 3rd respondent's bid violated the transparency required under Article 14. The court, however, did not find merit in this argument, accepting the State's explanation that all e-tenders were accessible to competitors.

2. Non-compliance with the guidelines of the Central Vigilance Commission:
The petitioner claimed that the tender process flouted the Central Vigilance Commission guidelines, which require transparency and fairness in public procurement. The court examined the tender documents and found that the password protection did not violate these guidelines. Therefore, this issue was not pursued further.

3. Alleged favoritism and deviation from tender terms by the Public Works Department (PWD):
The petitioner alleged that the PWD relaxed the tender terms to favor the 3rd respondent. The court scrutinized the tender documents and found discrepancies. The original tender required experience in installing and maintaining digital audio conference systems with specific features. The revised tender notice omitted these details, which the court found problematic. The court noted that the Executive Engineer's affidavit denied the necessity of three years of experience, contradicting the tender's explicit requirements. The court concluded that the PWD's actions compromised the tender's integrity, favoring the 3rd respondent without justifiable reasons.

4. Eligibility and experience criteria for bidders:
The petitioner argued that the 3rd respondent did not meet the eligibility criteria, particularly the requirement of having installed and maintained similar systems worth at least Rs. 111 lakhs in prestigious government buildings over the last three years. The court found that the 3rd respondent's experience was limited to less complex installations, such as those in the cabins of the Chief Minister and Deputy Chief Minister, which did not equate to the sophisticated systems required in the legislative assembly halls. The court emphasized the importance of strict adherence to the tender terms, given the critical nature of the work.

Conclusion:
The court found that the tender process did not adhere to the constitutional mandate of fairness and transparency. The PWD's deviation from the tender terms and the lack of requisite experience of the 3rd respondent warranted judicial intervention. Consequently, the court quashed the work order issued to the 3rd respondent.

Order:
The writ petition was allowed, and the work order in favor of the 3rd respondent was quashed. The court stayed its order for two weeks to allow the 3rd respondent to appeal, considering the upcoming budget session of the Maharashtra State Assembly.

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