Dismissed

M/S. Chaudhary Construction Co. v. Brihanmumbai Municipal Corporation and Another

Bombay HC19 Mar 2009WP/682/2009

Case brief

AI extract

What is this about?

The High Court dismissed a writ petition challenging the rejection of a tender submission by a construction firm. The petitioner failed to meet amended post-qualification requirements introduced via valid addendums. The Court held that the petitioner did not satisfy the experience criteria and found no merit in the complaint of arbitrariness.

What did the court decide?

The writ petition is dismissed; the parties shall bear their own costs.

M/S. Chaudhary Construction Co. Vs… — Public Procurement and Tenders | Bombay HC (2009)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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ORDINARY ORIGINAL CIVIL JURISDICTION

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WRIT PETITION (LODGING) NO.180 OF 2009

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M/s. Chaudhary Construction Co. ) a partnership firm duly registered ) under the Indian Partnership Act, ) having its principal place of business ) at 15/129, Siddharth Nagar, Near ) Prabhodhan Krida Bhavan, Road No.5, ) Goregaon (West), Mumbai- 400 104. ).. Petitioner

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VERSUS

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Brihanmumbai Municipal Corporation, ) Mahapalika Marg, Mumbai-400 001. ) 2. Deputy Chief Engineer (SWD) WS, ) 6^th Floor, K/West Ward Office Bldg., ) Paliram Road, Andheri (West), ) Mumbai- 400 058. ).. Respondents

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Mr. M.M. Vashi i/by Mr. Diwakar Dwivedi for Petitioner. Mr. A.Y. Sakhare with Ms. Geeta Jogalekar for BMC.

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CORAM : SWATANTER KUMAR, C.J. & DR. D.Y. CHANDRACHUD, J.

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Date of reserving the judgment : 3rd March, 2009

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Date of pronouncing the judgment : 19th March, 2009

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JUDGMENT (Per Swatanter Kumar, C.J.)

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The Petitioner in this petition under Article 226 of the Constitution of India prays for issuance of a direction or order directing the Brihan Mumbai Municipal Corporation (hereinafter referred to as the Corporation') to open the Petitioner's bid containing Packet C' and consider its bid for awarding contract work at serial Nos.39, 41 and 48 pursuant to the Tender Notice dated 15.11.2008. This prayer is made on the factual matrix that the Petitioner claims to be a registered contractor for civil work with the Corporation and had been successful bidder in various tenders and has performed various civil works awarded to it by the Corporation satisfactorily, including storm water drain work, for which the Corporation had issued Performance Certificate. In November, 2008, the Corporation invited tenders on percentage basis for Storm Water Drain Works from its registered contractors for a total of 49 works. The successful tenderer was to be awarded maximum three works in each division. The Petitioner submitted its tender for three works viz. serial Nos.39, 41

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and 48. The Petitioner claimed that it was fully qualified for the said works. The Petitioner further claimed that it was given Grade AA' and as such it was entitled to submit its bids without limit. As per the terms and conditions of the tender, the Petitioner submitted duly certified credential documents alongwith PMD and Packets B' and C'. The respondents vide their letter dated 12th January, 2009 intimated the Petitioner about some shortfalls in Packet B' and directed the Petitioner to complete documentation and submit the same by 15.1.2009, in response to which the Petitioner vide its letter dated 14^th January, 2009 submitted the documents and complied with the directions issued by the respondents. The Petitioner was not required to deposit the Earnest Money Deposit as it was entitled for exemption to the extent of Rs.7.5 crores and deposited EMD for remaining amount. The tender documents were to be submitted in three packets viz. A', B' and C' respectively. Packet A' was to contain duly certified Credential Documents. Packet B' was to contain post qualification documents and was to be opened on 7th January, 2009 at 2.00 p.m. and Packet C' was to contain Tender Documents in original and was to be opened on 19^th January, 2009 at

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2.00 p.m. The Petitioner had already submitted its documents in three packets and after opening of Packet B', the Petitioner was called upon to submit some documents and certificates and was asked to provide evidence of successful completion of at least one contract pertaining to RCC Retaining walls, nalla training etc. These documents were submitted by the Petitioner on 14th January, 2009. However, Packet C' of the Petitioner was not opened on the date fixed. As per the allegations, the tender documents were not opened at 2.00 p.m. but were opened after office hours and processed in a most illegal and unlawful manner. According to the respondents, the bid of the Petitioner containing Packet `C' was not opened for the reason that as per the notice affixed on the Notice Board of the Corporation, the Petitioner had not complied with condition No. 3.2.3 (iii) (a) and (b). Thus, the Petitioner was not eligible for being awarded the contract even for the items asked for. This rejection is the cause for the Petitioner to approach this Court.

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In a short reply affidavit filed on behalf of the Corporation, the stand taken is that the Corporation had undertaken different

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projects numbering about 60, 37 works in Western suburbs and 23 works in Eastern suburbs for improvement of S. W. D. system approximately at the cost ranging from Rs. 99.68 lakhs to Rs. 80.70 crores. The tenders which were invited, the applicants were expected to satisfy the pre-eligibility conditions. The Corporation had decided to introduce post qualification criteria to filter out bidders who were inexperienced, technically incompetent and financially incapable. This resulted in incorporation of a condition in Condition No. 3.2.3 of the Tender. This was categorized into four categories, namely, general construction experience, particular construction experience, financial capabilities and personal capabilities. The tenderers were expected to provide evidence that they had successfully completed during the last seven years at least one contract pertaining to R. C. C. water retaining structures/R. C. C. retaining walls nalla training works in colcrete or concrete or R. C. C./R. C. C. structural works carried out in water bodies of value not less than 30% of the cost of the work tendered for or is successfully executing currently one work of similar nature with at least 75% progress, financial value as on the date of invitation of tender, of the cost of magnitude of at least 30% of the

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cost of the work tendered for. This condition was introduced on 29^th December 2008 much prior to the date for submission of tenders. The tenders were to be submitted by 2^nd January 2009 and the Petitioner had sufficient time to obtain such a certificate. The Corporation received a total number of 646 bids for 60 tenders in the Eastern and Western suburbs, out of which 560 bids i.e. nearly 86.68% were found to be responsive. Thus, the condition added by Addendum 3 in no way affected a fair competition. The Petitioner submitted a certificate of one single work executed in 2004-05 of value of Rs.77 lakhs, the value of which, in terms of present level was updated to Rs. 1.13 crores, and the petitioners could not be considered as qualified as it was less than 30% of estimated amount being less than Rs. 1.13 crores i.e. less than 30% of the estimated amount of Rs. 3.76 crores. Packet C' of tender under No.WS-34 submitted by the Petitioner was opened and as the Petitioner did not qualify for the bid for tenders under Item No. W-38, 40 and 47 the question of considering Petitioner's tender further did not arise and Packet C' was not opened. The certificate of Rs. 5.46 crores produced by the Petitioner reflects that the Petitioner has carried out

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more than one work at various locations in five Wards under that contract and, therefore, does not satisfy the stipulated conditions. WS-34 was treated to be responsive by the Respondent Corporation as it was supported by a necessary certificate for execution of single work which was considered and as such the allegation of discrimination and arbitrariness is denied. The main emphasis of the Petitioner is that unreasonable conditions were introduced at a subsequent stage by the Respondents primarily with an intention of ousting the Petitioner from the zone of consideration for allotment of tender in relation to the three works afore-referred in the Tender Notice published on 15^th November 2008.

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Exhibit “B” is the tender notice vide which the tenders were

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invited on percentage basis for the works mentioned therein by the Corporation. The Petitioner claims to have submitted tenders for item at Serial Nos. 39, 41 and 48 respectively. All these three items were awardable to the contractor of Class `AA' to which class the Petitioner is. Certain queries were raised by the tenderers and they were replied to by the Corporation vide their Addendum -1dated 15^th

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December 2008 where answer to Question No.2 in respect of experience clause was answered which reads as follows :-

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“Ans. 2 - The experience of S. W. D. works executed in Road Department work such as culvert/large S. W. D./R. C. C. slab of nalla and S. W. D. works executed by C. W. C. Contract will not be accepted as a qualifying experience.”

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Again, it appears that deliberations took place in the Corporation and certain changes were considered essential for the purposes of attaining objective and finalization of tenders and resultantly vide Addendum-3 dated 24^th December 2008 it was stated that certain changes were made in particular construction experience under Clause 3.2.3 iii(a), instructions to tenderers, and it was clearly stated that the experience of SWD works executed in Road Department work such as culvert/large SWD/RCC slab of nalla and SWD works executed by Ward CWC Contractor and other similar works contract will be accepted as a qualifying experience. However said works should be carried out as single work of value not less than 30% the cost of the work tendered for during last seven years. The tenderers were expected to provide evidence that they had achieved

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the minimum annual quantity of total pre-work to the tune of 30% of the estimated price as per the conditions of the tender. After opening of Packet B', as notified by the Corporation, the Petitioner Company was found to be deficient as it did not satisfy the requirement of 3.2.3 (iii)(a) and thus was not awarded the contract for the tendered work. As already noticed, it is argued that all this was done behind the back of the tenderers and particularly the modification of the conditions midway was unjustified. Consequently, the Petitioner could not have been ignored after opening of Packet B'. This argument is without substance. We had directed the Respondent Corporation to produce the original record to show that the tenderers including the Petitioner were put to notice well in advance of the date of opening of the tenders and about the qualification and modification of the conditions with particular reference to 3.2.3(iii)(a) of the terms of the tender. The Tender Register produced by the Corporation shows that copies of both the Addendum were received by M/s Choudhari Construction Company, the petitioner, on 15^th December and 31^st December 2008 as the entry with signature of the Petitioner is shown at Serial No.83. This itself shows that the Petitioner not only participated in regard to

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issuance of clarification and amendment of conditions but actually received the subject matter and varied conditions on the date aforeindicated. This fact has not even been averred in the Writ Petition and the Petitioner has attempted to make out a case for violation of basic contractual rights in regard to distribution of State largesse.

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The Petitioner has attempted to make out a case of mala fide or arbitrariness but without taking any substantive pleas to that effect in the Writ Petition. It is necessary for the Petitioner to approach the Court in such cases to make specific averments and produce material on record to justify its plea of mala fides and even of arbitrariness. Reference can usefully be made to a recent judgment of this Court dated 15^th January 2009 in the case of Nine Paradise Hotels Pvt. Ltd. and another vs National Textile Corporation Ltd. (Western Region) and another , ( Writ Petition (L) No.2904 of 2008 ), where the Court held as under :-

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“15. Both these principles are well settled and have been reiterated by the Supreme Court and followed by various High Courts. The facts of the present case examined in light of these

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principles do not persuade us to grant the prayers made by the Petitioners which even otherwise may not be tenable. It will be hardly open to a Petitioner to argue before the Court to the Petition under Article 226 of the Constitution to restrain the authorities from canceling the tender and from issuing fresh tenders. Merely because the Petitioners had submitted a tender which happened to be the highest and had furnished a Bank Guarantee of Rs.150 crores per se does not render the decision of the Respondent Corporation to cancel the tender process arbitrary. As already noticed, there is a valid reason for canceling the tender process which is based on commercial principles i.e. the highest tenderer being 40% lower than the reserved price. Inviting tenders is merely an invitation to offer and does not vest any indefeasible or legal right in the applicant-bidder to claim that he alone should be awarded the contract. There is no concluded contract between the parties as the Respondents had taken a decision at the threshold itself upon opening of the financial bid to cancel the tender process. The action of the Respondent Corporation thus does not suffer from the vice of arbitrariness or discrimination and, therefore, does not offend the canons of Article 14 of the Constitution.”

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In the case of Raunaq International Ltd. vs I. V. R

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Construction Ltd. and others , 1999 AIR SCW 53 , the Supreme Court clearly stated the principle that scope of judicial review in relation to matters of tenders where grant of contract is challenged by an

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unsuccessful tenderer, the Court normally would not interfere unless substantial public interest is involved or the grant of contract is patently mala fide. It is for the reason that the Court does not sit as a court of appeal but merely reviews the manner in which the decision was made and unless the decision making process is contrary to law, offends fundamental rights and is ex facie arbitrary or mala fide, the Courts would hardly interfere in such matters.

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In the present case, the averments made in the Writ Petition are vague, unsupported by any material and in fact, to some extent, are even incorrect. The Petitioner has not stated complete facts which even were within the knowledge of the Petitioner and as such there is no reason for this Court to interfere in the present Writ Petition even on equitable grounds. As far as legality and effect of clause 3.2.3(iii)(a) is concerned, a Division Bench of this Court in the case of M/s Prime Developers vs Municipal Corporation of Greater Mumbai, Writ Petition (L) No. 1 of 2009 , vide order dated 2^nd January 2009, held that Addendum has not introduced more stringent eligibility criteria after the initial tender was issued on 15^th November

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It is clarificatory and does not suffer from any infirmity. All the three Addendums dated 15^th December 2008, 24^th December 2008 and 29^th December 2008 were subject matter of the Writ Petition. Though it is an interim order but we would agree with the reasoning and view expressed in that order.

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The Petitioner does not satisfy the criteria stated in the amended and/or clarified condition 3.2.3 iii(a) and even does not have the qualifying experience of having executed work of at least 30% of estimated price of the work tendered. Both contentions of the Petitioner cannot be accepted by this Court. In the case of M/s Sorath Builders vs Shreejikrupa Buildcon Limited and another , JT 2009 (2) SC 673 , the Supreme Court stated the principle that the terms inviting the tender need to be adhered to strictly, more so with regard to pre-qualification conditions as regards experience and compliance in relation to submission of documents.

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For the above reasons, we find no merit in this Writ Petition

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and the same is dismissed while leaving the parties to bear their own

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costs.

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CHIEF JUSTICE

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DR. D.Y. CHANDRACHUD, J.

M/S. Chaudhary Construction Co. v. Brihanmumbai Municipal Corporation and Another

Case brief

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M/S. Chaudhary Construction Co. v. Brihanmumbai Municipal Corporation and Another

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