9911796707
TMI Blog2006 (12) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... G. P. Mathur and R. V. Raveendran, JJ. JUDGMENT 1. Leave granted in both the special leave petitions. 2. These two appeals by special leave, arise out of a common judgment dated 25.1.2006 passed by the Orissa High Court allowing Writ Petition (Civil) Nos. 4769/2005 and 4768/2005 filed by Narayan Mohanty (common fifth respondent in these two appeals). In the said petitions, Narayan Mohanty had challenged the award of construction contracts to Jagdish Mandal and Laxman Sharma (respective appellant in these appeals) in Upper Indravati Irrigation Project ('UIIP' for short). The State, the Executive Engineer (Right Canal Division No.III), the Chief Engineer (UIIP), and Superintending Engineer (UIIP) who were the common respondents 1 to 4 in the said two writ petitions hold the same rank in these two appeals. Facts in SLP [C] No. 3196/2006 (re : first stretch) 3. The second Respondent, acting on behalf of the Water Resources Department, State of Orissa, invited tenders for "construction of Right Extension Main Canal from RD 8.01 km to 9.03 km including structures" by tender notice dated 9.11.2004. The estimated value of the work as per the tender schedule was Rs.1,69,10,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05 to the Chief Engineer, UIIP, reiterating that TD Account No.154120 for Rs.1,70,000 of fifth respondent should not be taken into account. On coming to know about the rejection of his tender, the respondent herein filed W.P. No.4769/2005 seeking a direction to respondents 1 to 4 not to award to Jagdish Mandal or any other contractor, and a further direction for awarding the work to him. The Accepting Authority, however, accepted the offer of Jagdish Mandal and awarded the work to him under an agreement dated 18.4.2005. 7. When the writ petition came up for consideration, the High Court desired to know the reason as to why the Postal authorities had advised that T.D. Account No.154120 dated 6.12.2004 of fifth respondent should not be taken into account. Therefore, the Chief Engineer (UIIP), addressed a letter dated 19.8.2005 to the Post Master General, Berhampur, requesting for reasons. The reasons were furnished in the following reply dated 25.8.2005 of the Post Master General: I am directed to intimate that 1 yr. TD A/c No.154120 for Rs.1,70,000/- has not actually been opened at Mukhiguda SO on 06.12.2004 depositing the amount. But one pass book bearing 1 yr. TD A/c No.1541 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plications and the investigation report submitted by the police to the learned Advocate General, after due investigation, we are of the view that the offers of the petitioner made for both the works have been arbitrarily rejected by the tender committee for no fault of the petitioner.(emphasis supplied) In view of the said finding, the High Court quashed the agreement between the Department and Jagdish Mandal (appellant) and directed the Committee to reconsider the case of Narayan Mohanty (fifth respondent) by accepting the T.D. passbook submitted by him as valid vis-`-vis other tenderers and take a final decision in regard to award of the contract de novo. The said decision is challenged by Jagdish Mandal. Facts in SLP(c) No. 7817/2006 (re : second stretch) 10. Tenders were also invited in regard to the adjoining stretch, that is 'Construction of Right Extension Main Canal from RD 9.03 km to 10.02 km', by tender notice dated 9.11.2004 issued by the second Respondent. The estimated cost of the tender schedule work was Rs. 2,23,10,768. There were 14 tenders in response to the said tender notice. Fifth respondent was the lowest tenderer (Rs.1,45,80,338). Laxman Sharma, the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the second stretch, was not accepted, solely as a consequence of non-acceptance of the fifth respondent's tender in respect of the first stretch. As the High Court set aside the decision of the Committee in regard to first stretch, it also set aside the decision of the committee regarding the second stretch. The said decision is challenged by Laxman Sharma. Question for consideration: 14. The learned Counsel for the appellants submitted that the scope of interference in judicial review of tender processes and award of contracts is limited only to cases where there are material violation of the terms relating to scrutiny and acceptance of tenders or where the decision is vitiated either by arbitrariness/irrationality or by mala fides/favoritism. It was contended that as the fifth respondent failed to plead or make out any of these grounds in his writ petitions, the High Court ought not to have interfered with the contracts awarded to the appellants. 15. In the first case, it was contended that the decision of the committee that the EMD was defective, was based on the communication dated 14.3.2005 of the postal authorities requiring the committee not to take note of the Page 00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scope of judicial review of administrative decisions and exercise of powers in awarding contracts, thus: (1) The modern trend points to judicial restraint in administrative action. (2) The Court does not sit as a court of appeal but merely reviews the manner in which the decision was made. (3) The Court does not have the expertise to correct the administrative action. If a review of the administrative decision is permitted it will be Page 0099 substituting its own decision, without the necessary expertise which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. More often than not, such decisions are made qualitatively by experts. (5) The Government must have freedom of contract. In other words, a fairplay in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facets pointed out above) but must be free from arbitrariness not affected by bias or actuate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public interest? (1) Public money would be expended for the purposes of the contract; (2) The goods or services which are being commissioned could be for a public purpose, such as, construction of roads, public buildings, power plants or other public utilities. (3) The public would be directly interested in the timely fulfilment of the contract so that the services become available to the public expeditiously. (4) The public would also be interested in the quality of the work undertaken or goods supplied by the tenderer. Poor quality of work or goods can lead to tremendous public hardship and substantial financial outlay either in correcting mistakes or in rectifying defects or even at times in re-doing the entire work - thus involving larger outlays or public money and delaying the availability of services, facilities or goods, e.g. A delay in commissioning a power project, as in the present case, could lead to power shortages, retardation of industrial development, hardship to the general public and substantial cost escalation. When a writ petition is filed in the High court challenging the award of a contract by a public authority or the State, the court must be satisfied that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the public duty to be fair to all concerned. Even when some defect is found in the decision-making process the court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the court should intervene. [Emphasis supplied] 18.5) In Association of Registration Plates v. Union of India , this Court held: ...Article 14 of the Constitution prohibits government from arbitrarily choosing a contractor at its will and pleasure. It has to act reasonably, fairly and in public interest in awarding contracts. At the same time, no person can claim a fundamental right to carry in business with the government. All that he can claim is that in competing for the contract, he should not be unfairly treated and discriminated, to the detriment of public interest.... 18.6) In B.S.N. Joshi v. Nair Coal Services Ltd. 2006 (11) SCALE 526, this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arbitrary and irrational that the court can say : 'the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached.' ii) Whether public interest is affected. If the answers are in the negative, there should be no interference under Article 226. Cases involving black-listing or imposition of penal consequences on a tenderer/contractor or distribution of state largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action. Re : Contract for First Stretch 20. The tender procedure requires all tenders involving Rs.10 lakhs or more to be evaluated by a Project Level Committee (with four members described in para 4 above) and their findings/recommendations have to placed before the approving/accepting authority. Clause 3.5.18 of the Orissa Public Works Department Code ('code' for short) requires the authority considering the tenders to take into consideration several points while determining the validity of the tenders. Two of the points to be so taken into account are whether the tenderer has made the specified EM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 006 of the Officer in charge of Junagarh police station reiterating his earlier report submitted to the High Court that the pass book is genuine and a sum of Rs.1,70,000 was deposited by fifth respondent in postal TA Account No.154120 on 06.12.2004. The third is the report of the Superintendent of Police, Kalahandi, dated 28.10.2006, opining that fifth respondent did not deposit Rs.1,70,000 on 6.12.2004 and that the Sub-Post Master, Mukhiguda had shown the date of deposit as 6.12.2004 in order to help fifth respondent to get his tender accepted. While the inquiry report of the Postal Vigilance Cell and the letters from postal department clearly holds that the TD Account Passbook No.154120 produced by fifth respondent was not genuine, the report of the office in charge of the police station, concludes that the passbook is genuine and not forged. But significantly the subsequent police report dated 28.10.2006 by a higher authority, namely the Superintendent of Police, Kalahandi, states that fifth respondent had obtained a pre-dated passbook in connivance with the Sub-Post Master Mukhiguda. 23. We have referred to various reports only to show that there exist divergent views about t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ope of judicial review by the High Court envisaged examination of the question whether there was any material irregularity in the decision making process or whether the decision of the Committee and consequential rejection of fifth respondent's tender was irrational, unreasonable or arbitrary. The validity of the decision of the Committee taken on the material available at the time of consideration of tenders, cannot be tested with reference to a subsequent police enquiry report submitted in the writ proceedings. Nor can it be held that the Committee acted arbitrarily in not accepting the passbook, on the basis of some report opining that the TD passbook is genuine. The High Court was not sitting in appeal over the decision of the Committee. The High Court could not, therefore, by relying on a subsequent police enquiry report, the correctness of which is yet to be established, to hold that the Tender Committee was wrong in rejecting the TD passbook. Further, the High Court missed the issue. The question for consideration was not whether the TD passbook pledged by the fifth respondent is genuine or not. The question for consideration was whether the committee acted arbitrarily or ir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27. The High Court has quashed the agreement relating to second stretch without even considering the matter on merits. It proceeded on the basis that both tenders of fifth respondent were rejected only on the ground of fabrication/manipulation of the term deposit pass book offered as EMD for the first tender. We have already held, while dealing with the first tender, that there was no irregularity in the decision to exclude reject fifth respondent's tender. Therefore, the very basis for High Court's judgment for interfering with the award of the work in respect of the second tender disappears. Be that as it may. The Committee has given other reasons also for rejection of fifth respondent's tender, which merit consideration. 28. The fifth respondent had submitted an unduly low rate in regard to item no. 19 (C.C. lining). It was the last item of work to be executed, and constituted nearly one fifth of the total estimated value of the work. In regard to the said work, as against the rate of Rs.2020.50 per cu.m., estimated by the department, the fifth respondent quoted an absurdly low rate of Rs. 20 only which was less than 1% of the estimated rate. It is obvious that he could not h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w rates in the case of Laxman Sharma, but making it a ground for rejection of fifth respondent's tender, show bias and favouritism. The value of work in respect of which Laxman Sharma is said to have given low tender rates, is not specified. It is for the Committee to assess whether a particular low tender rate is likely to affect the execution of the work. Therefore, the fact that Laxman Sharma had also quoted low rates in regard to certain items of work, will not affect the decision of the Committee. Conclusion: 30. We are therefore of the view that there were good and adequate reasons for the Committee to reject the lowest tenders of fifth respondent in both cases and there was no justification for the High Court to interfere with the contracts awarded to the respective appellant in these two appeals. We also record the statement made by the counsel for the appellants in the two appeals, on instructions, that the appellants are ready and willing to execute their respective works, without seeking any revision in rates or compensation for the delay in commencement of the work on account of pendency of the legal proceedings till now. The statement is recorded. 31. In view o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
