Allowed

Jai Laxmi Construction v. the State of Maharashtra and Ors.

Bombay HC6 Aug 2012WP/2674/2011

Case brief

AI extract

What is this about?

The High Court quashed the cancellation of the second call tender process and the award of contract to the third call bidder. The Court held that the Chairman's decision was arbitrary, irrational, and violative of Article 14, finding it detrimental to public interest. The petitioner was directed to issue a fresh tender within three months.

What did the court decide?

Quashed the cancellation of the second call tender process and the contract awarded to the third call bidder. Directed the respondent to issue a fresh tender notice and finalise the process within thr

Jai Laxmi Construction Vs the State of… — Pension and Retirement Benefits | Bombay HC (2012)

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WP-3345-11 FINAL

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Chandka

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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CIVIL APPELLATE JURISDICTION

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WRIT PETITION NO. 3345 OF 2011

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1. Jai Laxmi Constructions	]
through its Managing Partner	]
Jayram s/o. Narayan Nambiar	]
having its registered address at	]
Laxmi Vilas, 75/76, New	]
Shantiniketan Colony,	]
Aurangabad 431005	]
2. Laxmi Auto Agencies	]
Through its Proprietor	]
Mr. Lalit Vasant Gandhi,	]
Shop No.4, Tulsi Chambers, Opp:S	FS]
Jalna Road, Aurangabad	]
3. Shri Narayan Nambiar	]
Residing at Laxmi Vilas, 75/76	]
New Shantiniketan Colony,	]
Aurangabad 431005	].. Petitioners
versus
1. The State of Maharashtra	]
Through its P.W.D. Department,	]
Mantralaya, Mumbai	]
2. Maharashtra State Road Developm	ent]
Corporation Ltd.	]

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3. Shri Jaydatt Kshirsagar	]
Chairman, Maharashtra State Road	]
Development Corporation Ltd.,	]
Respondent No.2 and 3, having its	]
office at Priyadarshani Park,	]
Napean Sea Road, Mumbai 400036	]
4. Shri N. S. Umate	]
Chief Engineer, TMU	]
Maharashtra State Road Development	]
Corporation Ltd., Rajeev Gandhi	]
Sea Link Project Off.	]
Opp: Bandra Reclamation Bus Depot	]
Bandra West, Mumbai 51	]
5. Shri S. M. Authade	]
Khandoba Lane, Tq. Mangalwedha	]
Solapur – 413305And 8/2, Murarji	]
Peth, Bhagwat Uma Mandir Building	]
Solapur 413001	]
6. M/s. Shree Swami Samarth Engineers	]
A1, Samruddhi Banglow,	]
Kotnis Nagar, Vijapur Road,	]
Solapur 413004, through its Partner	]..Respondents
ALONG W	ITH
WRIT PETITION NO.	2674 OF 2011
1. Jai Laxmi Constructions	]
through its Managing Partner	]

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Chandka	Jayram s/o. Narayan Nambiar	]
	having registered address at	]
	Laxmi Vilas, 75/76,	]
	New Shantiniketan Colony,	]
	Aurangabad 431005	].. Petitioners
	versus
1.	The State of Maharashtra	]
	Through its P.W.D. Department,	]
	Mantralaya, Mumbai	]
2.	Maharashtra State Road Development	]
	Corporation Ltd.	]
3.	Shri Jaydatt Kshirsagar	]
	Chairman, Maharashtra State Road	]
	Development Corporation Ltd.,	]
	Respondent No.2 and 3, having its	]
	office at Priyadarshani Park,	]
	Napean Sea Road, Mumbai 400036	]
4.	Shri S. M. Authade	]
	Khandoba Lane, Tq. Mangalwedha	]
	Solapur – 413305And 8/2, Murarji	]
	Peth, Bhagwat Uma Mandir Building	]
	Solapur 413001	]..Respondents

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Mr. P. C. Madhkholkar i/b. Mr. C. V. Mahurkar, Mr. S. R. Durgakar and Mr. Abhijeet Desai for Petitioners.

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Mr. S. N. Patil – Assistant Government Pleader for State- Respondent No. 1.

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Mr. R. A. Dada – Sr. Advocate with Mr. P. P. Chawan i/b. Ms. R. J. Nathani for Respondent No. 2.

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Mr. R. M. Kadam – Sr. Advocate i/b. Mr. D. A. Nalawade for Respondent No. 3.

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CORAM : D. D. SINHA AND

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SMT. V. K. TAHILRAMANI, JJ.

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Date of Reserving the Judgment : 7.5.2012 Date of Pronouncing the Judgment : 6.8.2012

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JUDGMENT (Per: D. D. Sinha, J.)

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Heard the learned counsel for the petitioners, the learned Assistant Government Pleader for the Respondent No. 1, the learned counsel for the respondent no. 2 and the learned counsel for the respondent

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no. 3.

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Rule. Returnable forthwith by consent of the parties.

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FACTS OF THE CASE :

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The State Government had issued Government Resolution dated 15.4.2002 in respect of development of roads in Solapur through Maharashtra State Road Development Corporation Ltd. (MSRDC) on the build, operate and transfer basis by providing collection of toll for a period of 29 years to recover the cost of project to be incurred.

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The State Government issued a Notification dated 31.5.2006 specifying the toll station locations, the rates to be charged for various types of vehicles in respect of the Integrated Road Development Project, Solapur (IRDP, Solapur ). The toll collection contractors have been appointed in respect of IRDP Solapur from time to time. The toll contract which was in existence was expiring in the month of December 2007, offers were invited by MSRDC in September 2007 for appointment of toll collection contractor in respect of IRDP Solapur. The contract was of 52 weeks on monthly upfront payment basis. The highest bid of S. M. Authade of Rs.325 lacs was accepted for the contract period of 52 weeks from 24.2.2008 to 22.2.2009. The work order dated 21.2.2008 was issued.

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On 24.7.2008, by way of amendment to the earlier notification dated 31.5.2006 the State Government modified the location of three toll stations. The new locations were on the same road but were shifted at some distance from the then existing toll stations. In January 2009 the fresh tender process was initiated in respect of modified toll stations of IRDP Solapur. The contract of S. M. Authade was extended for a period of three months or till finalisation of the contract under the fresh / new tender process. Under the new tender

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process the estimated realisation was Rs.1220 lacs for the period of 156 weeks on monthly upfront basis. During the first call of tender issued in January 2009, the highest offer received of Rs.1065 lacs. The same being much less than the estimated realisation, it was decided to notify fresh tenders.

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On 3.8.2009 the notice in respect of second call tender process was initiated. Estimated realisation was Rs.1275 lacs for a period of 156 weeks on monthly upfront basis. The petitioners and Mr. S. M. Authade submitted their offers. The bid submitted by the petitioners was of Rs.1338 lacs whereas bid by Mrs. S. M. Authade was of Rs.1275 lacs. On 11.12.2009 office note was put up by the Assistant Executive Engineer (TMU) detailing the bids and proposing to issue temporary work order to the petitioners who were the highest bidder. The said office note has notings of various officials of MSRDC.

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On 13.4.2010 at the meeting of the Board of Directors of the respondent no.2, the members of the Board authorised Chairman and Vice Chairman and Managing Director to decide on tenders received for collection of toll at IRDP, Solapur and to take suitable steps. The Chairman vide noting of 27.7.2010 observed that after studying the

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proposal and scrutinising the documents that if the contract was awarded to either of the contractors i.e. petitioners or Mr. S. M. Authade the possibility of filing petition in the Court could not be denied. It further stated that the Solapur Camp Office had proposed change of locations of three toll stations out of four toll stations involved in the second call tender process. The Chairman therefore directed that the Government's approval be taken immediately for change of locations of these toll stations and the new tender process be started immediately as per the said changes. The Chairman further observed that to avoid any financial loss to the Corporation, the existing contractor i.e. Mr. M. S. Authade be asked to pay the rate of highest bidder of the tender and the said tender process be cancelled as the location of three toll stations was going to be cancelled.

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On 16.8.2010, the directions were issued by the Vice Chairman and Managing Director of MSRDC to the Joint Managing Director to do the needful in accordance with the directions of the Chairman. Pursuant to the directions by the Chairman, Mr. M. S. Authade was called for negotiations for revising the monthly upfront payment during the extended period of contract. Mr. S. M. Authade was called

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upon to pay sum of Rs.3430 lacs by MSRDC. However, MSRDC directed Mr. M. S. Authade to pay monthly payment of Rs.32 lacs from December 2010 without prejudice to the rights of MSRDC to claim monthly instalment at the rate of Rs.3430 lacs if desired by MSRDC.

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On or about 24.12.2010, the Chairman directed that as the relocation of toll stations is going to take sometime, the fresh tender process be initiated immediately on the basis of traffic density survey of 2010 so as to avoid financial loss to MSRDC. On 5.2.2011, the meeting under the Chairmanship of Secretary (Roads) was held. In the said meeting it was decided that the fresh notification for change of toll locations of IRDP, Solapur will be issued. The petitioners filed writ petition no. 2674 of 2011 on 25.3.2011 praying for decision on the second call bid submitted by the petitioners. On 1.4.2011, tender notice for third call was published in the newspaper for a period of 104 weeks with an estimated realisation of Rs.1140 lacs. The petitioners filed the writ petition no.3345 of 2011 on 26.4.2011 seeking direction against MSRDC to repeal / withdraw further proceedings pursuant to the third call notice inviting tender dated 1.4.2011 and prayed for award of contract for toll collection of IRDP Solapur to the petitioners in

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view of the second call bid. Petition no.3345 of 2011 was amended by the petitioners pursuant to order dated 4.10.2011 passed by this Court and sought directions against MSRDC to call the meeting of Board of Directors of MSRDC for finalising the second call tender process.

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Pursuant to the third call tender notice, three bids were received by MSRDC. Petitioners though had purchased tender form did not submit the bid. The financial bid submitted by the three bidders for the contract period of 104 weeks was as follows :

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I. M/s. Shree Swami Samarth Engineers of Rs.1213 lacs;

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II. Shri S. M. Authade of Rs.1210 lacs; and

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III. M/s. Solapur Construction and Fabrication Pvt. Ltd. of Rs.1112 lacs.

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During the pendency of the petition, the letter of acceptance dated 29.8.2011 was issued to the highest bidder M/s. Shree Swami Samarth Engineers for a period of 104 weeks for Rs.1213 lacs subject to result of the petitions. With effect from 25.9.211 M/s. Shree Swami Samarth Engineers started collection of toll. The Board of MSRDC had in its meeting held on 27.9.2011 approved the award of contract of third call bid to M/s. Shree Swami Samarth Engineers for a period of 104 weeks at the price of Rs.1213 lacs. M/s. Shree Swami Samarth

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Engineers were added as party respondent no. 6 by the petitioners in writ petition no. 3345 of 2011.

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SUBMISSIONS OF PETITIONERS :

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Counsel for the petitioners has submitted that the petitioners primarily have challenged the allotment of temporary work order issued in favour of Mr. S. M. Authade pursuant to second call bid dated 3.8.2009. Similarly, the petitioners are also questioning the allotment of tender pursuant to 3^rd call bid dated 1.4.2011 by MSRDC to M/s. Shree Swami Samarth Engineers. It is contended that the second call tender process was initiated vide notice dated 3.8.2009 and the basic price (estimated realization) was Rs.1275 lakhs for 156 weeks. The tenders were submitted by two bidders pursuant to the second call bid, namely, petitioners (Joint Venture) and M/s. Samarth – Authade Joint Venture. Both the bidders were found eligible and therefore the second envelope (financial bids) of both these bidders were opened. The rates quoted by the petitioners were Rs.1338 lacs and by M/s. Samarth Authade J.V. Were Rs.1275 lacs. Learned counsel has submitted that since sometime was required from the date of submission of bids, processing of bids, selection of contractors, entering into contract and finally commencing toll collection works

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as per the new rates, MSRDC incorporated a temporary work order

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clause in the offer document which reads thus :

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Clause 25.1:

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“Successful bidder whose offer amount is above Rs. Three Crores shall be initially issued a temporary work order on the same terms and conditions of the contract pending approval of competent authority;

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Clause 25.1(a) reads thus:

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“If the offer is approved by the competent authority, the permanent work order will be issued from the date of temporary work order on the same terms and conditions of the contract by the corporation without altering in any way the contract period or the date of commencement of toll collection work.”

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Clause 25.1(b) reads thus:

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“If the offer is rejected by the competent authority, then it

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is mandatory on the part of the toll contractor under the temporary work order to run the toll station on the same terms and conditions till new contractor is appointed by the corporation for which he shall not be eligible for any claim

/ compensation.”

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Counsel for the petitioners has submitted that in view of the above referred clauses of the bid document, it was recommended to issue temporary work order to the petitioners vide office note dated 11.12.2009 put up by the Executive Engineer (TMU) which was approved by the Officers of the MSRDC including the Co-chairman. However, when the proposal of the petitioners, for issuance of temporary work order (being the highest bidder) reached the office of the Chairman, he avoided to act upon the same. It is contended that since lot of time was already lost in acceptance of temporary work, the Toll Monitoring Unit of MSRDC vide agenda note dated 5.4.2010 forwarded the proposal of the petitioners for acceptance of offer submitted by the petitioners on permanent basis for grant of approval in 121^st Board meeting of the Board of Directors. Learned counsel further submitted that M/s. Samarth – Authade J.V. the second highest offerer had made some unfounded complaints about the petitioners vide letters dated 8.10.2009, 23.12.2009 just before the Board of Directors meeting dated 6.4.2010. It is contended that on the pretext of holding enquiry based on these unfounded complaints submitted by H2 bidder about the petitioners who was H1 bidder, MSRDC instead of collecting Rs.7 lacs per month more at

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notified locations, continued the contract of complainant Mr. S. M. Authade at lower rates and at notified locations.

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Counsel for the petitioners has contended that the issuance of work order to the petitioners was held up on the basis of these false and fabricated complaints submitted by H2 bidder from 6.10.2009 to 27.7.2010 i.e. for a period of 10 months which has resulted in causing losses to MSRDC and the petitioners. In view of this intentional delay the complainant (H2 bidder) has been financially benefited because of the extension granted to him to continue the work of toll collection on the basis of his then existing contract.

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It is the case of the petitioners that the Chairman on the basis of above complaints sought report from the Superintending Engineer vide communication dated 7.4.2010. The Superintending Engineer submitted his report on 9.4.2010 wherein it has been stated that since the petitioners were found qualified, competitively the second envelope of the petitioners was opened and that the offer of the petitioners has been submitted for consideration and acceptance. The Chairman not being satisfied with the report of Superintending Engineer took up the matter in its 121^st meeting of the Board held on

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13.4.2010. The counsel for the petitioners has submitted that the following resolution was passed in the said Board meeting, which reads thus :

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“Resolved that Chairman & VCMD be and are hereby authorised to decide on tender received for collection of toll in IRDP Solapur and take suitable subsequent steps.”

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The said resolution further reads thus :

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“Resolved further that the Vice Chairman & Managing Director be and is hereby authorised to delegate any of the powers to issue LOA, signing of agreement, issuance of work order and to administer the contract

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to any other officer of the corporation in line with decision to be taken by Vice Chairman & Managing Director and Chairman on the tender.”

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Mr. Madhkholkar has submitted that this was the only occasion where the Chairman was delegated powers by the board with respect to toll collection contract, else it is always delegated only to Vice Chairman and Managing Director. In view of the resolution of the board it is evident that the petitioners were exonerated from the allegations

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made by H2 bidder in the above referred complaints.

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Mr. Madhkholkar has contended that the Joint Managing Director -I vide a note dated 2.7.2010 opined:

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“Once the financial bids are known to both the agencies as in present case any disqualification may lead to litigations, which cannot be ruled out.”

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The Vice Chairman and Managing Director upheld the recommendation of Joint Managing Director -I and made the following observations on 22.7.2010:

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“in the light of analysis above, it appears that the contract should be awarded to the H1 bidder, M/s. Jailaxmi JV as per Board Resolution of 13.04.2010, the same is put up to Hon. Chairman for approval.”

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The Chairman on 27.7.2010 on the recommendation of Vice Chairman and Managing Director dated 22.7.2010 made the following observations”

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“On detailed study of the documents in the file it is observed that in case the contract is awarded to either of the bidders, the possibility of filing of suits in the Court

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cannot be ruled out. The camp office at Solapur has proposed changes in 3 out of 4 toll station locations of his tender. On making these changes the revenue of MSRDC will definitely increase. However, it is surprising to note that none of the authorities of the corporation have commented on these changes. Prior approval of the changed locations be obtained from the State Government and fresh tender process in accordance with the new changes be initiated immediately and in order to avoid the loss to the Corporation, upfront payment, equal to that of the bid price of the H1 bidder of 2^nd call bid be recovered from the Contractor approved by the Board of Directors, and since decision on 3 new toll stations have to be taken the existing tender process be cancelled. In this context Vice Chairman & Managing Director to initiate short tender notice process.”

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Counsel for the petitioners has submitted that in view of the above mentioned order / observation of the Chairman following oblique motives were achieved :

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“(a) the second call tender would be terminated in

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order to eliminate the rightful claim of the petitioners

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(H1 bidder) in respect of the work of tender;

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(b) to provide maximum possible extension to Mr. S. M. Authade on the basis of low rates knowing fully well that the process of new notification takes long time even otherwise issue of fresh tender on such notified location would also be delayed resulting in automatically providing extension to Mr. S. M. Authade to continue the collection of toll at lower rate;

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(c) Since re-tendering would be adopted in future it would present Ganesh Wankar with fresh opportunity to participate in new tender process, else, in case of acceptance of petitioners offer (H1 bidder) Ganesh Wankar could have been kept in waiting for three years i.e. till the end of contract period of the petitioners; and (d) Showing unfounded concern for MSRDC's revenue, making fraudulent proposition of recovering higher revenue from the contractor approved by the board equal to that of H1 offerer, knowing very well that the respondent cannot do so as per the tender condition

of tender documents.

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Mr. Madhkholkar, the learned counsel for the petitioners has submitted that the above referred facts clearly establish Chairman's unilateral action for stopping the operation of notification issued on 24.7.2008. It also establishes that the Chairman had no concern in protecting the financial interest of the Corporation. On the other hand by such unilateral action of the Chairman the interest of the private contractors is protected as against the public interest. It is contended that the unilateral action of the Chairman is in violation of rules, in breach of terms and conditions of contract as well as rules of business which has resulted in grant of extension to the earlier contract of Mr. S. M. Authade at lower contract rates as against the petitioners who were H1 bidder and quoted much higher contract rates.

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Counsel for the petitioners further submitted that the 3^rd call bid was given with the only intention to frustrate the rightful claim of the petitioners for award of contract pursuant to the 2^nd call bid and for continuation of the earlier contract of Mr. S. M. Authade by granting extension and to offend public interest and cause revenue loss to the Corporation.

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Mr. Madhkholkar, the learned counsel for the petitioners has submitted that on 24.7.2008 by way of amendment to the earlier notification dated 31.5.2006 the State Government modified 3 toll stations locations those were (1) Degaon, (2) Hotgi and (3) Akkalkot. It is contended that Mr. A.J. Bhosale, Executive Engineer, Toll Monitoring Unit in order to protect the contract of Mr. S. M. Authade from being terminated, upon coming into operation the notification dated 14.7.2008 as per clause 36.5 of the conditions of contract on 5.11.2008 had requested Public Works Department to issue notification for future period of toll collection under Solapur IRDP in conformity with locations of toll collection centers mentioned in notification dated 24.7.2008. The Public Works Department issued notification dated 19.1.2010 for collecting toll at the locations for a period between 24.7.2008 till 31.12.2020. Mr. Madhkholkar, the learned counsel has further submitted that in order to continue the then existing contract of Mr. S. N. Authade at any costs the officers of the department kept on finding out faults in notification dated 24.7.2008 so as to prevail its operation and consequently stop all new tender related activities. Mr. S. M. Authade the then toll collecting contractor, a week prior to publishing notice inviting tender of 1^st call bid in order to mislead the intending buyers and to get the extension

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of his ongoing contract, intentionally wrote a misleading letter to MSRDC, requesting to verify the facts and take proper decision in the matter of toll station location as per new notification dated 24.7.2008. Mr. A. J. Bhosale, Executive Engineer, Toll Monitoring Unit, Mumbai and in-charge of Solapur toll collection contact, asked Solapur camp office to provide details of the existing and possible shifting of toll station locations vide his office letter dated 2.4.2009 and 18.4.2009. Mr. P. M. Deewanji, Deputy Engineer of Solapur camp office submitted a proposal on 30.4.2009 totally misrepresenting facts and requested the Toll Monitoring Unit to consider shifting of toll stations to the new proposed locations. The Chairman in his noting dated 27.7.2010 has stated, which reads thus :

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“The camp office at Solapur has proposed changes in 3 out of 4 toll station locations of this tender. On making these changes the revenue of MSRDC will definitely increase. However, it is surprising to note that none of the authorities of the corporation have commented on these changes.”

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The learned counsel therefore contended if none of the officials informed the Chairman as mentioned in the note, then it is apparent that the observation that on making the changes the revenue of

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MSRDC will increase mentioned in the noting dated 27.7.2010 of the Chairman was completely unfounded and without any basis. It is contended that the Government (Public Works Department) vide letter dated 21.2.2011 denied approval to the proposal of MSRDC Solapur Camp office to shift 3 out of 4 toll locations of notification dated 24.7.2008. It is contended that in the office note dated 4.2.2011 it was mentioned that in the current situation till new notification is issued it would be reasonable to issue work order to the H1 offerer, in doing so we could avoid further possible litigations and it would generate higher revenue for the Corporation and this would consequently help in stopping issues being raised in audit. However, the Joint Managing Director and the Vice Chairman and Managing Director on 9.2.2011 after holding meeting with Public Works Authorities on 5.2.2011 recommended issuance of work order to the petitioners which is evident from the office note dated 4.2.2011, which reads thus :

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“it is requested to consider the acceptance of the offer of H1 bidder.”

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The Vice Chairman and Managing Director in view of the said office note on 28.2.2011 opined:

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“the file under submission was discussed with Hon. Chairman in presence of S&FA, accordingly S&FA and

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Joint Managing Director are to check and include if the term of contract is coming to an end and further file / proposal under submission may be processed in accordance with directions of Vice Chairman and Managing Director at 'A' on 62 earlier: Urgent.”

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Mr. Madhkholkar, the learned counsel has submitted that all this exercise of change of location of toll centers mentioned in the notification dated 24.7.2008, including the order / notings of Chairman dated 27.7.2010 was without any basis. On the other hand by keeping issue about change of toll collection locations stipulated in notification dated 24.7.2008 alive, the officers of the department including Chairman only protected the interest of Mr. S. M. Authade whose contract came to be extended because of pendency of this issue. It is submitted that all the officers including Chairman were intentionally keeping the issue of change of location of toll centers alive to ensure that Mr. S. M. Authade's contract of toll collection can be extended at the low contract rate. It is submitted that the Chairman anticipating early approval for the proposal already pending with the Government for change of toll locations ordered cancellation of 2^nd call offer which has also fraudulently cancelled 2^nd call.

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Mr. Madhkholkar, the learned counsel for the petitioners has submitted that though the MSRDC twice recommended for acceptance of petitioners offer, made no efforts to issue work order to the petitioners. Aggrieved by this callous attitude of MSRDC which was using the earnest money deposit of Rs.64 lacs deposited by the petitioners without communicating any decision with regard to the petitioners offer made on 6.10.2009, finally approached this Court by filing writ petition no. 2674 of 2011 with the prayers for issuance of directions to MSRDC to take a decision with respect to the offer made by the petitioners pursuant to the advertisement issued in the month of August 2009 inviting offers for awarding the contract of toll collection at 4 toll stations. It is contended that MSRDC officials without cancelling tender process initiated pursuant to the 2^nd call as well as before taking decision on the offer of the petitioners submitted pursuant to the 2^nd call issued 3^rd call bid even without refunding the earnest money deposit of the petitioners of Rs.64 lacs. The learned counsel has therefore contended that since the offer of the petitioners submitted pursuant to the 2^nd call was not cancelled by the MSRDC, the earnest money deposit of the petitioners therefore was not refunded by MSRDC. Though in later stage unsuccessful attempts

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were made to show that the 2^nd call bid was cancelled and the

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petitioners was asked to collect its EMD from MSRDC office. However, not a single document was placed on record by MSRDC to substantiate their contention that the 2^nd call had been cancelled or that the earnest money of the petitioners was refunded.

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Counsel for the petitioners has submitted that MSRDC has utilised petitioners money over 2.5 years for their financial enrichment and have deprived the petitioners from various opportunities by keeping the petitioners in dark about the status of his offer submitted pursuant to the 2^nd call with malafide intention of favouring the H2 bidder. MSRDC did not refund the EMD of the petitioners since they wanted to utilise the money of the petitioners which is evident from the noting in the office note dated 6.12.2010, which reads thus :

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“as on today the H1 offerer has not withdrawn his offer submitted for the locations of valid notification.”

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Similarly, office note dated 4.2.2011, reads thus :

¶161

“it is requested to consider the acceptance of the offer of H1 bidder.”

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Mr. Madhkholkar has submitted that in these circumstances the contentions canvassed by the respondents are wholly misconceived and action of issuance of 3^rd call is only an after thought devised to

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frustrate the petitioners claim of being awarded contract being a H1 bidder in 2^nd call tender process. It is contended that the 2^nd call bid has not been cancelled by the respondent nos. 2 and 3 in any board meeting nor there is any resolution passed to that effect. It is contended that as per paragraph 2 of the resolution dated 26.8.2004 any offer above Rs.500 lakhs is to be approved or rejected by the board meeting. It is submitted that till date no board meeting is held for cancellation of 2^nd call and therefore the tender process initiated pursuant to the 2^nd call is still in existence and petitioners being a H1 bidder are eligible to get the contract.

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Mr. Madhkholkar, the learned counsel has submitted that the Chairman with an oblique motive and in order to favour contractor Ganesh Wankar / S. M. Authade issued 3^rd bid call through notice inviting tender dated 1.4.2011 with an estimated realisation (basic price) of Rs.1140 lacs for 104 weeks. The petitioners therefore approached this Court by filing writ petition no. 3345 of 2011 on 25.4.2011 praying for directions to MSRDC to forthwith repeal / withdraw further proceedings pursuant to the notice inviting tender dated 1.4.2011 of IRDP Solapur. Mr. Madhkholkar submitted that the tenders were submitted on 23.5.2011. Second envelope of the

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bidders was opened and the contract rates given by them are as

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follows :

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1.	Shri Swami Samarth Engineers	- Rs.1213 lakhs
2.	S. M. Authade	- Rs.1210 lakhs
3.	Solapur construction	-Rs.1112 lakhs

¶174

The petitioners filed civil application no. 1881 of 2011 on 23.8.2011 for amendment of writ petition no. 2674 of 2011 whereby the petitioners sought permission to implead Mr. S. M. Authade a party respondent and also added prayer clause (a1). Similarly petitioners filed civil application no. 1880 of 2011 for permission to amend writ petition no. 3345 of 2011 for addition of prayer. By the proposed addition the petitioners wanted this Court to direct MSRDC to call for the meeting of the Board of Directors within a period of seven days and finalise the 2^nd call tender process within the time specified by this Court as mentioned vide Notice Inviting Tender dated 3.8.2009 and to further direct MSRDC to issue temporary work order in favour of the petitioners in respect of Solapur IRDP pending hearing and disposal of the writ petition. The learned counsel has submitted that after receipt of the above application, MSRDC on 29.8.2011 issued letter of acceptance to M/s. Shree Swami Samarth Engineers

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with a noting that the acceptance of its offer would be subject to outcome of writ petition no. 2674 of 2011 and writ petition no. 3345 of 2011.

¶179

Counsel for the petitioners has further submitted that the petitioners filed another civil application no. 1878 of 2011 on 6.9.2011 for amendment of writ petition no. 3345 of 2011, whereby the petitioners sought permission to implead M/s. Shree Swami Samarth Engineers as party respondent as well as for adding prayer clause whereby the petitioners had prayed for quashing and setting aside the letter of acceptance issued by MSRDC to M/s. Shree Swami Samarth Engineers.

¶180

It is contended that after receipt of the above application, MSRDC on 12.9.2011 issued temporary work order to M/s. Shree Swami Samarth Engineers directing them to start collection of toll at the notified location from 0.00 hours of 25.9.2011.

¶181

Mr. Madhkholkar, has further submitted that this Court was pleased to allow three civil applications filed by the petitioners on 23.8.2011, 6.9.2011 and 4.10.2011 seeking permission to amend the petitions.

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Mr. S. M. Authade and M/s. Shree Swami Samarth Engineers were made parties to the writ petitions accordingly.

¶186

Mr. Madhkholkar has submitted that in the letter of acceptance dated 29.8.2011 issued by MSRDC to M/s. Shree Swami Samarth Engineers, it has been observed thus :

¶187

“This is to inform you that your offer for appointment as contractor for collection of toll at approved rates on all specified vehicles and trailers drawn by such vehicles passing over the said section of road / project at the above subjected toll stations for a period of 104 weeks from the date of authorisation by the competent authority for the amount of Rs.12,13,00,000/- (Rupees Twelve Crores Thirteen Lacs only) on monthly upfront basis has been temporarily accepted by the corporation.

¶188

The above tender process is subject matter of challenge in writ petition No. 3345/2011 alongwith Writ Petition no. 2674/2011 which are pending before the Hon'ble High Court at Bombay. Therefore, kindly note that the acceptance of your offer is subject to the outcome of the said writ petitions pending before the High Court.”

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Mr. Madhkholkar has submitted that the contents of letter of acceptance of the offer of M/s. Shree Swami Samarth Engineers is crystal clear and shows that the MSRDC issued temporary work order which is nothing more than stop gap arrangement which MSRDC has made so as to continue the toll collection till the outcome of the writ petitions. Mr. Madhkholkar has contended that the contract is not concluded contract and in the facts and circumstances of the present case liable to be cancelled if the petitions are allowed by this Court.

¶193

Counsel for the petitioners has submitted that the petitioners offer which is still valid until the offerer withdraws it in writing or till the selection procedure is complete as per the terms and conditions of tender. The validity of the petitioners bid is still in force since the petitioners have not asked for refund of EMD or withdrawn their offer in writing and since the selection procedure has not attained finality, if the petitions are allowed the petitioners are eligible to get the contract. It is submitted that the petitioners bid is still valid and subsisting as per clause 11 of the tender document is ready to negotiate its offer as per clause 22 of the tender document and is ready to raise its offer to Rs.49 lacs per month (almost Rs.15 lacs i.e.

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41% higher than its offer of Rs.34.30 lacs per month made on 6.10.2009.

¶198

Counsel for the petitioners has submitted that third party interest may have been created but those are only stop gap arrangements made with a bidder who does not qualify in the first place and whose bid being rigged is non-responsive, void and against public policy and same has not attained the status of a concluded contract and therefore if the petitions are allowed the acceptance of bid of M/s. Shree Swami Samarth Engineers is liable to be quashed and set aside and the petitioners are eligible and entitled to get the contract.

¶199

SUBMISSIONS OF MSRDC :

¶200

Mr. Dada, the learned counsel for respondents – MSRDC on the other hand has submitted that the contention of the petitioners that they were the highest bidder under second call should have been awarded contract as the same was recommended for acceptance by various officials of MSRDC as is clear from the noting of office note dated 11.12.2009 is concerned, notings by the officials do no create any right in favour of the petitioners as the decision making body in respect of MSRDC is the Board of MSRDC and unless the tender is

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accepted and the letter of acceptance is issued to the bidder it does not amount to acceptance of tender by MSRDC. It is contended that in the present case the office note dated 11.12.2009 contains various notings by the officials of MSRDC. It is submitted that the Board had in its meeting held on 13.4.2010 authorised Chairman MSRDC and Vice Chairman and Managing Director of MSRDC to take decision in respect of tender for collection of toll of IRDP, Solapur and to take suitable subsequent steps. Pursuant to the said powers delegated by the Board to Chairman MSRDC vide noting dated 27.7.2010 observed that after studying the proposal and scrutinising the documents it could be discerned that if the contract is awarded to either of the contractor, the possibility of filing of petition in the Court could not be denied. It is further stated that Solapur Camp Office had proposed change of locations of 3 toll stations out of 4 toll stations involved in the tender. The Chairman directed that the Government's approval be taken immediately for change of location of these toll stations and the new tender process be started immediately as per the said change. The Chairman further observed that to avoid any financial loss to the Corporation, the existing contractor be asked to pay the rate of the highest bidder of the tender and the said tender be cancelled as the location of 3 toll stations was

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going to be changed. Mr. Dada, the learned counsel has submitted that in the event of change of toll locations the contract would have been terminated. The Chairman was aware of the position that the proposal of Camp Office Solapur for change of toll station location was pending before the State Government and therefore the Chairman was of the view that if the toll stations were relocated the second tender even if awarded will be terminated. Hence the Chairman had two options to award tender to the highest bidder i.e. petitioners or to direct the department to get the approval for fresh toll stations on the proposal of Camp Office Solapur and initiate fresh tender process. It is contended that the Chairman bonafide opted for the second option and directed the department to get approval for relocation of the toll stations and start new tender process thereafter. However, to protect the revenue of MSRDC the Chairman directed that the existing contractor i.e. Mr. S.M. Authade be asked to pay the rates of highest bidder of the tenderer. Thus the entire action cancelling the second call tender was bonafide.

¶209

Mr. Dada, the learned counsel has contended that since relocation of station was taking some time the Chairman vide noting dated 24.12.2010 directed to start fresh tender process immediately on the

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basis of traffic density process of 2010 so as to avoid financial loss to MSRDC. It is contended that though ultimately vide decision dated 5.2.2011 the State Government decided against the relocation of toll station the Chairman could not be aware of the same on 27.7.2010 or 24.12.2010 when the Chairman bonafide directed initiation of fresh tender process. Mr. Dada, the learned counsel has submitted that by the time the State Government took decision on 5.2.2011 that the toll locations could not be changed, MSRDC had already taken steps for 3^rd call tender process. Thus the entire action of MSRDC in cancelling second call tender process was bonafide, reasonable and not intended for the benefit of any contractor.

¶214

Mr. Dada has submitted that the contention of the petitioners that the second call tender process was cancelled for the benefit of Mr. S. M. Authade who was the existing contractor running four toll stations of IRDP Solapur is concerned, it does not have any merit. The contract was awarded to Mr. S. M. Authade for a contract period of 52 (fifty two) weeks from 24.2.2008 to 22.2.2009. Since Mr. S. M. Authade's contract was to come to an end in February 2009 a fresh tender process was initiated in January 2009 itself. However, as the bids received for a period of 156 weeks on monthly upfront basis were

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below the estimated realisation of Rs.1220 lacs it was decided to invite fresh tenders and in the meantime as the toll collection was required to be carried out, Mr. S. M.Authade was granted extension. Thereafter, on or about 3.8.2009 second call notice was issued wherein the petitioners were the highest bidders with the offer of Rs.1338 lacs for 156 weeks and Mr. S. M. Authade had submitted an offer of Rs.1275 lacs. Mr. Dada, the learned counsel has submitted that it is not denied that the petitioners being the highest bidders, office note was put up by the Assistant Executive Engineer (TMU) proposing to issue temporary work order to the petitioners. The said note passed through various officials who had put up their notings on the same. In the meanwhile at the meeting held on 13.4.2010 the Board authorised the Chairman, MSRDC and Vice Chairman and Managing Director of MSRDC to take decisions on the tenders received for collection of toll at IRDP, Solapur and to take suitable subsequent steps in respect thereof. What steps the Chairman has taken after he was authorised by the Board in this regard has already been noted by us as contended by Mr. Dada and therefore it is not necessary to reiterate the same. However, it is submitted that the steps taken by the Chairman so far as the second call is concerned were bonafide and not to benefit any contractor.

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Mr. Dada, the learned counsel further contended that the letter of acceptance dated 29.8.2011 was issued to M/s. Shree Swami Samarth Engineers who were the highest bidder under 3^rd call of collection of toll at IRDP Solapur, temporary work order has been issued to M/s. Shree Swami Samarth Engineers and they have started toll collection with effect from 25.9.2011. The Board of MSRDC has also approved the award of contract of 3^rd call bid to M/s. Shree Swami Samarth Engineers at its meeting held on 27.9.2011. Mr. Dada therefore contended that the entire allegation of the petitioners that the second call bid was cancelled for benefit of Mr. S. M. Authade is devoid of any merits. In fact the contract has been awarded to M/s. Shree Swami Samarth Engineers who were the highest bidder under 3^rd call and Mr. S. M. Authade ceased to be toll collecting agent of IRDP Solapur with effect from 25.9.2011.

¶223

Mr. Dada has submitted that the petitioners has alleged that Mr. Prakash Wankar and Mr. Ganesh Wankar are running the toll contract of IRDP, Solapur and even the present contractor M/s. Shree Swami Samarth Engineers is merely an extended arm of Mr. Prakash Wankar and Mr. Ganesh Wankar with support of respondent no.3, is

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devoid of any merits. It is submitted that the said allegation is not part of the petition but has come by way of affidavit in the present proceedings. It is settled position that if the allegations are made against the person then such person should be added as party to the proceedings. The Court would not take into account the said allegations as the petitioners have not impleaded Mr. Prakash Wankar and Mr. Ganesh Wankar as parties to the present proceedings.

¶228

Mr. Dada, the learned counsel has submitted that prayer of the petitioners whereby the petitioners have sought cancellation of 3^rd bid and direct to finalise the call tender process by the Board of MSRDC wherein the petitioners were the highest bidder is concerned, it is contended that the 2^nd call tender process has already been cancelled and a fresh notice for 3^rd call tender bid was issued on 1.4.2011. The petitioners in fact purchased the tender form of 3^rd call tender process and also attended the meeting dated 15.4.2011. It is therefore contended that the above conduct of the petitioners clearly shows that the petitioners accepted the position that the 2^nd call tender has been cancelled.

¶229

Mr. Dada, the learned counsel has further submitted that the bidders

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bid under second call was of Rs.1338 lacs for a period of 156 weeks i.e. Rs.3430 lacs upfront payment per month. However, under 3^rd call the offer of M/s. Shree Swami Samarth Engineers is Rs.1213 lacs for a period of 104 weeks i.e. Rs.46,65,385/- upfront payment per month. Thus, MSRDC is getting Rs.12,35,385/- per month more from M/s. Shree Swami Samarth Engineers compared to offer of the petitioners under 2^nd call tender process. Mr. Dada therefore submitted that the action of the MSRDC cancelling the 2^nd call tender process and awarding the contract pursuant to the 3^rd call process to M/s. Shree Swami Samarth Engineers is not only bonafide but also is in public interest and therefore petitions are liable to be dismissed with costs.

¶234

SUBMISSIONS OF RESPONDENT NO.3 AND THE STATE :

¶235

Mr. Kadam, the learned counsel for respondent no.3 and the learned Assistant Government Pleader for the State adopted and supported the contentions canvassed by Mr. Dada and specifically denied all the allegations of malafides made by the petitioners against the respective respondents.

¶236

FINDINGS AND CONCLUSIONS :

¶237

We have given anxious thought to the various contentions canvassed

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by the learned counsels for the respective parties. Mr. Madhkholkar as well as Mr. Dada have cited various decisions of the Apex Court and this Court in support of their respective contentions. At the outset, the law in respect of limitations relating to the scope of judicial review of administrative decisions is more or less well settled by the various decisions of the Apex Court and therefore before we take into consideration the merits of the case, we feel it appropriate to record our findings based on the law declared by the Apex Court in various decisions in respect of the scope of judicial review of administrative decision. We have considered decisions of the Apex Court in case of Sterling Computers Limited vs. M/s. M & N Publications Limited & Ors. (1993) 1 SCC 445, Tata Cellular vs. Union of India (1994) 6 SCC 651, Association of Registered Plates vs. Union of India (2005) 1 SCC 679, Jagdish Mandal vs. State of Orissa (2007) 14 SCC 517, as well as the law declared by the Apex Court on the subject in other decisions.

¶242

There is no quarrel with the proposition that while exercising power of judicial review in respect of the contracts entered into on behalf of the State, the Court is primarily concerned with the decision making process pursuant to which the contract is awarded. It is well settled

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that the Court is entitled to consider, examine and decide whether the decision making process was rational, not arbitrary and violative of Article 14 of the Constitution of India. The decision to award contract must not only be tested by the application of Wenesbury principles of reasonableness, but must be free from arbitrariness, not affected by bias or actuated by malafides. Similarly Article 14 of the Constitution of India prohibits the Government from arbitrarily choosing a contractor at its will and pleasure. It has to act reasonably, fairly and in public interest while awarding public contracts. It is no doubt true that no person can claim fundamental right to carry on business with the Government. However, he can always claim that in competing for the contract, he should not be unfairly treated and discriminated to the detriment of public interest.

¶247

The law declared by the Apex Court in case of Jagdish Mandal, clearly demonstrates that judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and malafides. Its purpose is to check whether the choice or decision is made “wrongly”. The Courts before interferring with any tender process or contractual matters in exercise of power of judicial review are required to consider the following vital questions:-

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(1) Whether the process adopted or decision made by the Authority is intended to favour someone or malafide?

¶252

(2) Whether the process adopted or decision made is so arbitrary and irrational that no responsible authority acting reasonably and in accordance with relevant law could have have reached?

¶253

(3) Whether the public interest is affected?

¶254

In light of above legal position, we feel it appropriate to consider the following undisputed facts while exercising powers of judicial review of administration decisions taken by the respondent:

¶255

(I) Mr. S. M. Authade was awarded contract for toll collection for a period of 52 weeks from 24.2.2008 till 22.2.2009.

¶256

(II) Since Mr. S. M. Authade's contract was to come to an end in February 2009 fresh tender process was initiated in January 2009 itself.

¶257

(III) The bids received for collection of toll for a period of 156 weeks on monthly upfront basis were below estimated realisation of Rs.1220 lacs, the Authorities have decided to invite fresh tenders and in the meanwhile as the toll collection was required to be carried out Mr. S. M. Authade was granted extension for collection of toll.

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(IV) On or about 3.8.2009 2^nd call notice was issued. The petitioners were the highest bidder with the offer of Rs.1338 lacs for 156 weeks and Mr. S. M. Authade had submitted offer of Rs.1275 lacs.

¶262

(V) In view of relevant clauses of tender documents, office note dated 11.12.2009 was put up by the Executive engineer (TMU) approved by the officers of MSRDC recommending the case of the petitioners for issuance of temporary work order.

¶263

(VI) The Toll Monitoring Unit of MSRDC vide note dated 5.4.2010 forwarded proposal of the petitioners for acceptance of offer on the permanent basis to be approved in 121^st Board Meeting of the Board of Directors.

¶264

(VII) On 13.4.2010 the 121^st Board Meeting was held and it was resolved that the Chairman and Vice Chairman and Managing Director be authorised to decide on tenders received for collection of toll in IRDP Solapur and take suitable subsequent steps.

¶265

(VIII) The Joint Managing Director -I vide note dated 2.7.2010 opined that once the financial bids are known to both the agencies, any disqualification may lead to litigation. Vice Chairman and Managing Director upheld the recommendation

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of Joint Managing Director-I and in note dated 22.7.2010 has observed that the contract should be awarded to H1 bidder i.e. M/s Jai Laxmi Constructions J.V. as per board resolution of 13.4.2010, and the issue was put up before the Chairman for approval.

¶270

(IX) Clause 36.5. of terms and conditions of contract of 2^nd call reads as under:

¶271

“In the event of change of location of toll stations on any account whatsoever, the contract in that event will be terminated and contractor shall not have any claim of any type on account of such termination of contract.”

¶272

(X) Notification dated 24.7.2008 was issued by way of amendment to the earlier notification dated 31.5.2006 by the State Government and modified the location of 3 toll stations. Though the Camp Office at Solapur had proposed changes in 3 out of 4 toll stations locations mentioned in the said notification and approval of the State Government was awaited. The Chairman vide note dated 27.7.2010 cancelled the tender process initiated pursuant to the 2^nd call bid without waiting for the decision of the State Government regarding grant of approval in respect of proposed change of toll station

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locations and Vice Chairman and Managing Director asked to initiate short tender notice process.

¶277

(XI) The Chairman in the note dated 27.7.2010 has observed that in case the contract is awarded to either of the bidder, the possibility of filing suit in the court cannot be ruled out since the Camp Office at Solapur has proposed changes in 3 out of 4 toll stations locations of the tender. It also observed that prior approval of the changed location be obtained from the Government and fresh tender process in accordance with the new changes be initiated immediately in order to avoid loss to the Corporation. In the same note it is also observed by the Chairman that in order to avoid the loss to the Corporation, upfront payment, equal to that of the bid price of H1 bidder of 2^nd call bid be recovered from the contractor approved by the Board of Directors and since the decision in respect of 3 new toll stations was to be taken the existing tender process be cancelled.

¶278

(XII) The Chairman vide noting dated 24.12.2010 directed to issue fresh tender process so as to avoid financial loss to MSRDC without waiting for the decision of the State Government on the proposal of relocation of 3 toll stations mentioned in

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notification dated 24.7.2008.

¶283

(XIII) The State Government vide decision dated 5.2.2011 rejected the proposal for relocation of 3 out of 4 toll stations mentioned in notification dated 24.7.2008. It is pertinent to note that though the contract period of Mr. S. M. Authade came to an end in the month of February 2009 and though the petitioners were the H1 bidder in 2^nd call bid, was granted extension and continued to collect toll in view of extension granted to him merely on the apprehension that the State Government was likely to approve the proposal regarding change of location of toll stations.

¶284

(XIV) The 3^rd call notice inviting tender was published on 1.4.2011 and M/s. Shree Swami Samarth Engineers were awarded contract for collecting toll with effect from 25.9.2011 and Mr. S. M. Authade has ceased to be toll collecting agent of IRDP Solapur with effect from

¶285

25.9.2011. Mr. S. M. Authade whose contract of collection of toll came to an end in the month of February 2009 continued to collect toll till 25.9.2011 i.e. for a period of more than two and half years.

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In view of the above referred undisputed facts, it is evident that the petitioners were the highest bidder who had submitted its tender for collection of toll pursuant to the notice dated 3.8.2009 in respect of 2^nd call tender. It is also pertinent to note that though the contract of toll collection of Mr. S. M. Authade came to an end in the month of February 2009, the officials of MSRDC took almost 7 months to initiate fresh tender process and there is no justification whatsoever for the delay caused in issuing 2^nd call tender notice dated 3.8.2009. The inaction on the part of MSRDC in not issuing 2^nd call bid notice promptly after the earlier contract of toll collection of Mr. S. M. Authade came to an end in February 2009 only benefited Mr. S. M. Authade and caused great loss to the public exchequer since the extension given to Mr. S. M. Authade for collection of toll was on the lower rates. Similarly, the petitioners were the highest bidder with the offer of Rs.1338 Lacs for 156 weeks in the 2^nd bid tender process. The petitioners were kept out of consideration by the MSRDC only prompted by mistaken belief in the existence of non existing facts or circumstances which in our view is clearly unreasonable and therefore

¶290

it cannot be said to be done in good faith or bonafide. An administrative order based on reasons of facts which do not exist is unjust and arbitrary.

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The above referred undisputed facts clearly show that the action of the Chairman keeping the petitioners out of tender process initiated pursuant to the 2^nd call tender notice is not only arbitrary, irrational, unreasonable, but same is also bad and can therefore never be bonafide. In the instant case the reasons given by the Chairman not to award contract to the petitioners in the 2^nd tender bid process on the ground that such action would lead to filing of cases in the court of law in view of clause 36.5 of the terms and conditions of the contract is wholly misconceived and totally against the public interest. Even if it is presumed that the Chairman was anticipating (though there was no basis for such assumption) that the proposal submitted by the State Government if approved would result in termination of contract in respect of change of 3 toll station locations, nothing has prevented the Chairman or the Board of MSRDC to issue temporary contract for collection of toll to the petitioners (H1) subject to decision of the State Government in respect of change of location which would have benefitted the public exchequer and also would have served the public purpose.

¶295

The contentions canvassed by Mr. Dada that the Chairman was aware

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that the proposal of Camp Office Solapur for change of toll station locations was pending before the State Government and therefore if the toll stations were relocated on approval of the State Government, the 2^nd call tender even if awarded would have been terminated and hence the Chairman had two options either to award the tender to the highest bidder i.e. the petitioners or direct department to get approval for fresh toll stations on the proposal of the Camp Office Solapur and initiate fresh tender process, is a bonafide action of the Chairman, in the facts and circumstances of the present case neither is justified nor served the public purpose. On the other hand the said action of the Chairman has resulted in causing loss to the public exchequer. Clause 36.5 of the terms and conditions of the tender document was known to the petitioners as well as Mr. S. M. Authade. Both were aware that if location of toll stations are changed the contract stands terminated and therefore it was not for the Chairman to think about consequence of clause 36.5 of Tender, his job was to prevent the loss to the public exchequer and protect the public interest. The Chairman ought to have acted reasonably, fairly and in the public interest in awarding contract rather than acting detrimental to the public interest resulting in causing loss to the public exchequer.

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The action of the Chairman in the facts and circumstances of the present case, in our view, is also not free from vice of Article 14. Article 14 of the Constitution of India prohibits the Government from arbitrarily choosing a contractor at its will and pleasure. In the instant case the petitioners being the H1 bidders were not only eligible but were legally entitled to get the contract of collection of toll since they were fulfilling all the other conditions. It is no doubt true that no person can claim fundamental right to carry on business with the Government but he can always have a legitimate expectation that in competing for contract he should not be unfairly treated or discriminated to the detriment of the public interest. In the present case in view of the above referred facts and circumstances, we are of the view, that the petitioners were unfairly treated and discriminated to the detriment of public interest. Apart from the fact that the action of the Chairman keeping the petitioners out of 2^nd call tender process is arbitrary and unreasonable.

¶304

In the instant case we are concerned whether the decision making process adopted by the Chairman in not awarding contract to the petitioners, who were H1 bidder is rational, reasonable, free from arbitrariness and serve the public purpose. In view of the facts and

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circumstances of the present case, the entire decision making process undertaken by the Chairman / Authority denying the legitimate claim of the petitioners for the contract is wholly unfair, arbitrary and detrimental to the public interest and therefore action of the Chairman / Authority of cancellation of 2^nd call tender process cannot be sustained in law.

¶309

So far as the challenge raised by the petitioners in respect of action of the respondents for awarding contract to M/s. Shree Swami Samarth Engineers pursuant to the 3^rd call tender is concerned, it is necessary to take into consideration the following facts :-

¶310

(I) 3^rd call bid inviting tender was issued on 1.4.2011. The petitioners filed writ petition no. 3345 of 2011 on 25.4.2011 seeking direction to MSRDC to forthwith repeal / withdraw further proceedings pursuant to the notice inviting tender dated 1.4.2011.

¶311

(II) Petitioners filed civil application no. 1881 of 2011 on 23.8.2011 for amendment of writ petition no. 2674 of 2011 and sought permission to implead Mr. S. M. Authade as party respondent.

¶312

(III) On 1.4.2011 3^rd call tender notice was issued and on

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6.9.2011 petitioners filed civil application no. 1878 of 2011 seeking permission to amend writ petition no. 3345 of 2011 whereby the permission was sought to implead M/s. Shree Swami Samarth Engineers as party respondent as well as for adding prayer clause to the petition whereby the petitioners have prayed for quashing and setting aside letter of acceptance issued by MSRDC to M/s. Shree Swami Samarth Engineers.

¶317

(IV) On 29.8.2011 MSRDC issued letter of acceptance to M/s. Shree Swami Samarth Engineers with the specific note that the acceptance of its offer would be subject to outcome of writ petition no. 2674 of 2011 and writ petition no. 3345 of 2011 and the offer was temporarily accepted by the Corporation.

¶318

In these undisputed facts and circumstances, it is evident that the MSRDC though issued the letter of acceptance dated 29.8.2011 to M/s. Shree Swami Samarth Engineers, same was in the nature of temporary work order and a stop gap arrangement made by MSRDC in order to continue the toll collection which was also made subject to result of these petitions. Since the letter of acceptance and issuance of

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temporary work order was made subject to result of the petitions, it can safely be inferred that there was no concluded contract between M/s. Shree Swami Samarth Engineers and MSRDC though it is contended that it was executed with effect from 25.9.2011 and therefore the outcome of the writ petitions necessarily would decide the status of the said contract and would give finality to it one way or the other, and, therefore rights if any created on the basis of such contract in the facts and circumstances of the present case would be subject to result of the petitions. Relevant observations in paragraph 6 of the judgment of the Apex Court in this regard are in the case of

¶323

Beg Raj Singh vs. State of U.P. & Ors. [AIR 2003 SC 833 ] reads thus :

¶324

“Having heard the learned counsel for the petitioner, as also the learned for the State and the private respondent, we are satisfied that the petition deserves to be allowed. The ordinary rule of litigation is that the rights of the parties stand crystalised on the date of commencement of litigation and right to relief should be decided by reference to the date on which the petitioner entered the portals of the Court. Petitioner though entitled to relief in law, may yet be denied relief in equity because of subsequent or

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intervening events, i.e. the events between the commencement of litigation and the date of decision. The relief to which the petitioner is held entitled may have

¶329

been rendered redundant by lapse of time or may have been rendered incapable of being granted by change in law. There may be other circumstances which render it inequitable to grant the petitioner any relief over the respondents because of the balance tilting against the petitioner on weighing inequities pitted against equities on the date of judgment. Third party interests may have been created or allowing relief to the claimant may result in unjust enrichment on account of events happening in between. Else the relief may not be denied solely on account of time lost in prosecuting proceedings in judicial or quasi-judicial forum and for no fault of the petitioner. Plaintiff or petitioner having been found entitled to a right to relief, the Court would as an ordinary rule try to place the successful party in the same position in which he would have been if the wrong complained against would not have been done to him. The present one is such a case.

¶330

The delay in final decision cannot, in any manner, be

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attributed to the petitioner.”

¶335

The observations of the Apex Court clearly demonstrates that relief

¶336

cannot be denied solely on account of time lost in prosecuting proceedings in judicial or quasi judicial forum for no fault of petitioner and if the petitioner is entitled for the relief claimed, the court in such circumstances would as an ordinary rule try to place the successful party in the same position in which he would have been if the wrong complained against would not have been done to him. In the instant case in the letter of acceptance issued by MSRDC to M/s. Shree Swami Samarth Engineers it is specifically mentioned that the acceptance of offer was accepted subject to outcome of the present writ petitions and the temporary work order therefore was issued in favour of M/s. Shree Swami Samarth Engineers by MSRDC was in the nature of temporary arrangement made by MSRDC in order to continue collection of toll till the outcome of the writ petitions and therefore the validity of the letter of acceptance as well as award of contract temporary / regular in favour of M/s. Shree Swami Samarth Engineers necessarily depends upon the outcome of the writ petitions and termination of tender process initiated pursuant to the 2^nd call bid if held to be bad in law, by necessary implication acceptance of offer and

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award of contract pursuant to the 3^rd call tender process would be rendered invalid in law. Similarly, in view of the observations made by the Apex Court in paragraph 6 of the above referred judgment, this Court would be legally entitled to pass appropriate order in the interest of justice.

¶341

In the instant case, we have noticed the following infirmities in the decision making process undertaken by the authorities which has rendered the action of the authorities not only violative of Article 14 but arbitrary, unfair and same is also detrimental to the public interest.

¶342

(a) It is not in dispute that pursuant to the second call bid dated 3.8.2009 (the estimated realisation was Rs.1,275 lakhs for the period of 156 weeks on monthly upfront basis).The financial bid submitted by the petitioners was Rs.13,38,00,000/- and that of the Mr. S. M. Authade was Rs.12,75,00,000/-. The bid of the petitioners being much higher than that of the Mr. S. M. Authade, who were H1 bidder and, therefore, as per clause 25.1 of the terms and conditions of the tender document (F. Award Criteria) successful bidder whose offer amount was

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above Rs.3 crores, therefore, should have been initially given a temporary Work Order on the same terms and conditions of the contract, pending approval of the competent authority in respect of proposal for relocation of toll stations. In the instant case, the authorities instead of taking steps inconformity with clause 25.1 acted totally in violation of the said clause by keeping the highest bidder on hold and granted extension to Mr. S. M. Authade, existing contractor, for collection of toll on the same terms and conditions of the then existing contract. The action of the authorities, on the face of it, is not only inconsistent with clause 25. 1, but the same is also violative of Article 14 of the Constitution since the authority arbitrarily chose to extend the contract of Mr. S. M. Authade and, therefore, the said action cannot be sustained in law.

¶347

(b) Clause 36.5 of the tender document contemplates that in the event of change of location of toll stations on any account whatsoever, the contract in that event will be terminated and the contractor shall not have any claim of any type on account of such termination of contract. We want to observe that clause 36.5 being one of the terms and conditions of the tender document was known to the petitioners as well as Mr. S. M.

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Authade and there was no justification or reason for the Chairman to brush aside the offer of the highest bidder like the petitioners on the pretext that if the contract is awarded to any of the bidders, would result in initiation of litigation, if the proposal for change of toll stations pending with the Government for approved. The action of the Chairman of MSRDC, in our view, is not only unjust, unreasonable but is also violative of clause 25.1 of the tender document.

¶352

(c) In the instant case, the Chairman of MSRDC vide his decision dated 27.7.2010 extended then existing contract of Mr. S. M. Authade on the lower rates by ignoring the H1 bidder. This action of the authority is per se not only against the public interest but has also caused loss to the public exchequer.

¶353

(d) The action of the Chairman in terminating the tender process initiated pursuant to the second call bid purely on the assumption and presumption that if the State Government approves the proposal of re-location of toll station, the contract if awarded in the meantime would stand terminated and would result in litigation between the parties, was wholly misconceived and detrimental to the public interest, which is evident from the decision dated 2.5.2011 of

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the State Government whereby the proposal submitted to the State Government for relocation of toll stations came to be rejected.

¶358

We are of the considered view that the above mentioned infirmities noticed by us in the decision making process undertaken by the authorities render the said process highly arbitrary, unfair, discriminatory, and also affect the public interest, resulting in loss to the public exchequer and, therefore, the decision to cancel the tender process initiated pursuant to the second call bid by the Chairman of MSRDC, cannot be sustained in law. Similarly, for the reasons recorded herein above, the awarding of contract temporary/regular to M/s. Shree Swami Samarth Engineers pursuant to the third call bid dated 1.4.2011 being subject to the result of these petitions and this fact being specifically mentioned in the letter of acceptance of offer, in the facts and circumstances of the present case, cannot be treated to be a concluded contract and its validity solely depends upon the outcome of these petitions. Since the cancellation of tender process initiated pursuant to the 2^nd call bid being arbitrary and unjust as well as against the public interest, the action of acceptance of offer and awarding of contract temporary / regular to M/s. Shree Swami

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Samarth Engineers, in our view, also cannot be sustained in law.

¶363

It is no doubt true that the public authority awarding public contracts is entitled to evolve the terms and conditions of the contract, however, those terms and conditions must be just, fair, transparent and should not be violative of Article 14 and should serve public purpose.

¶364

We want to express that so far as BOT contracts are concerned, the tender document must contain the cost of project, cost of maintenance, cost of toll collection and duration, rate of toll, payments, margin of profit of the contractor. This will bring transparency in the entire process of BOT contracts. In the present case clause 36.5 of the tender condition of the contract of 2^nd call is concerned, in our opinion, it brings arbitrariness, therefore we expect State to reconsider the same and take appropriate decision to modify it suitably to eradicate the arbitrariness.

¶365

FOR EXAMPLE

¶366

….... after tender notice inviting tender is published and bids are received pursuant thereof, the State Government can avoid award of

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contract to H1 bidder though he is otherwise qualified and eligible, by invoking clause 36.5 and by proposing change in location of toll station with or without any justification and in view of the pendency of proposal, can avoid awarding of contract to H1 bidder on this count.

¶371

Similarly even after awarding contract to H1 bidder who is otherwise qualified and eligible, the authority can invoke clause 36.5 with or without any justification and propose change in location of toll station and if the proposal is approved the valid contract executed between the State and H1 bidder automatically stands terminated resulting in total uncertainty and brings arbitrariness about the duration of the contract in tender process.

¶372

We feel that the State Government / Appropriate Authority should take into consideration all the pros and cons as well as other relevant factors and only thereafter should fix the location/s, and number/s of toll station/s on the road in question and subsequent thereto should publish tender notice inviting tenders. However once the location of toll station are mentioned in the tender document, they need not be changed during the existence of the said contract, unless there is compelling necessity but not otherwise. This, in our view, will

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remove arbitrariness, bring certainty in respect of duration of contract and serve the public purpose.

¶377

The second tender bid process was initiated in January 2009, a period of three-and-a-half years has been elapsed and, therefore, the cost of project, maintenance, cost of project, cost of toll collection, rate of toll upfront payment all must have gone up substantially and, therefore, the request of the petitioners for awarding the contract to them pursuant to the second bid call, in the circumstances, will not be expedient. However, in the interest of justice and to give fair and reasonable opportunity to the petitioners and others in competing for the contract, it will be just and appropriate, to direct the respondent - MSRDC to issue a fresh tender notice inviting tender for the subject project as per the terms and conditions of the tender document and finalise the entire process, including awarding of contract in accordance with the terms and conditions of the tender within a period of three months from today. Till such time, M/s. Shree Swami Samarth Engineers is temporarily permitted to carry on the work of toll collection as per the terms and conditions of the contract. It is made clear that the extension granted to M/s. Shree Swami Samarth Engineers to carry on the toll collection work is purely a stop-gap

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arrangement till such time a new contract is awarded by the MSRDC to the eligible, qualified and successful bidder.

¶382

For the reasons stated herein above, we quash and set aside the action of the Authorities of cancellation of tender process initiated pursuant to the second call. Similarly, we quash and set aside the contract executed by the Authorities in favour of M/s. Shree Swami Samarth Engineers pursuant to the 3^rd call tender notice dated 1.4.2011. The Authorities are directed to initiate fresh tender process by issuing appropriate tender notice in respect of the project in question as per the terms and conditions of the tender and finalise the entire process including awarding of contract in accordance with the terms and conditions of the tender, within a period of three months from today, by taking into consideration the observations made by us in foregoing paragraphs of this Judgment.

¶383

Rule made absolute in above terms.

¶384

(SMT. V. K. TAHILRAMANI, J.)

¶385

Chandka

¶386

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Jai Laxmi Construction v. the State of Maharashtra and Ors.

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Jai Laxmi Construction v. the State of Maharashtra and Ors.

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