Dismissed

Ccl International Limited and 2 Ors. v. the State of Assam and 8 Ors.

Gauhati HC5 Mar 2019WP(C)/5663/2017

Case brief

AI extract

What is this about?

Petitioners challenged the award of a road improvement contract to a second-lowest bidder, contending their lower bid should have been accepted. The Court upheld the Bid Evaluation Committee's rejection of the petitioner's bid due to failure to meet mandatory eligibility criteria regarding work experience and bank certificate format, citing judicial restraint in tender disputes.

What did the court decide?

Writ petition dismissed; status quo order vacated; letter of acceptance to respondent No. 6 upheld.

Ccl International Limited and 2 Ors. Vs the… — Contract and Commercial Disputes | Gauhati HC (2019)

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GAHC010040002017

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THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

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Case No. : WP(C) 5663/2017

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1:CCL INTERNATIONAL LIMITED and 2 ORS.

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A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND HAVING ITS CORPORATE OFFICE IN GHAZIABAD AND COMMUNICATION OFFICE IN GUWAHATI

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2: AKASH GUPTA S/O- SRI ANIL KUMAR R/O- RDC-131 RAJ NAGAR GHAZIABAD- 201002 EXECUTIVE DIRECTOR CCL INTERNATIONAL LIMITED

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3: JAI KISHORE S/O- SRI JAI NARAYAN R/O- E-97/11 MAHAVIR ENCLAVE NEW DELHI-110045 AUTHORISED SIGNATORY OF CCL INTERNATIONAL LIMITE

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VERSUS

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1:THE STATE OF ASSAM AND 8 ORS

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REP. BY THE COMMISSIONER AND SPECIAL SECRETARY TO THE GOVT OF ASSAM, PUBLIC WORKS DEPARTMENT ROADS, DISPUR, GUWAHATI781006

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2:THE CHIEF ENGINEER ARIASP and RIDF PUBLIC WORKS DEPARTMENT ROADS ASSAM ARR and TI CAMPUS FATASHIL AMBARI GUWAHATI- 781025

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3:THE SUPERINTENDING ENGINEER

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DHUBRI CIRCLE PUBLIC WORKS DEPARTMENTROADS GOVT OF ASSAM DHUBRI ASSAM 4:THE EXECUTIVE ENGINEER PUBLIC WORKS DEPARTMENT DHUBRI AACP DIVISION DHUBRI ASSAM 5:THE INTERNATIONAL BANK RECONSTRUCTION AND DEVELOPMENT BEING A CONSTITUENT OF WORLD BANK HAVING ITS HQ AT WASHINGTON DC UNITED STATES OF AMERICA THE WORLD BANK HAS ITS INDIA OFFICE AT SHILLONG MEGHALAYA

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6:M/S P K and COMPANY 201 COMMERCE HOUSE AT ROAD GUWAHATI- 781001 DIST- KAMRUPM ASSAM 7:THE UNION OF INDIA REP. BY THE REGIONAL OFFICER MIN OF ROAD TRANSPORT and HIGHWAYS GOVT OF INDIA CAMP OFFICE GUWAHATI 8:M/S PRABHU AGARWALLA CONSTRUCTION PVT LTD. A T ROAD GUWAHATI DIST- KAMRUPM ASSAM PIN- 781009 9:M/S MACROCOSM BUILDERS MAIN TOWN BARPTA DIST- BARPETA ASSA

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Advocate for the Petitioner : MS.J HAZARIKA

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Advocate for the Respondent : MR.K N CHOUDHURY Sr.Adv.R-6

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BEFORE

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HONOURABLE MR. JUSTICE UJJAL BHUYAN

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ORDER

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05.03.2019

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Heard Mr. N. Dutta, learned Sr. Counsel assisted by Mr. S. Saikia, learned counsel for the petitioners; Mr. M. Choudhury, learned Sr. Counsel assisted by Mr. G. Rahul, learned counsel for respondent No. 2 i.e. Chief Engineer (ARIASP and RIDF), PWD (Roads), Assam; Dr. A. K. Saraf, learned Sr. Counsel assisted by Mr. Z. Islam, for respondent No. 5; and Mr. K. N. Choudhury, learned Sr. Counsel assisted by Mr. R. Dubey, learned counsel for respondent No. 6.

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2 . By filing this petition under Article 226 of the Constitution of India, petitioners seek quashing of letter of acceptance dated 29.08.2017 issued by respondent No. 2 in favour of respondent No. 6 and further seeks a direction to the respondents to award the contract in question to petitioner No. 1.

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2.1. Matter relates to award of contract for improvement and updation of road from Dubapara to Goalpara in the district of Goalpara.

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Govt. of Assam in the Assam State Roads Project (ASRP) issued e-procurement notice/notification for bids through national competitive bidding on 06.05.2017. Though the e-procurement notice/invitation of bids (IFB) was for two works, the present petition is concerned with the work “improvement and updation of SH-46/C from Dubapara (21.150 KM) to Goalpara BOC (31.400 KM) in Goalpara district under ASRP”. Bid security amount for the said work was mentioned as Rs.6.13 millions and the period of completion of work was 18 months. As per the tender notice invitation was for item wise bids in electronic tendering system. It was mentioned that a pre-bid meeting was scheduled on 20.05.2017 at 1200 hours

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in the office of Chief Engineer and the last date and time for receipt of bids through e-tender portal was 08.06.2017 upto 1400 hours. It was also mentioned that the bids would be opened on the same day at 14.30 hours.

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According to the petitioners, as per tender summary report dated 06.09.2017 bids of four tenderers were found to be responsive and those were accepted. This included petitioner and respondent No. 6.

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On evaluation of the item wise bids of the above four parties it was found that amount offered by petitioner No. 1 was Rs.36,06,90,037.15 which was the lowest as compared to Rs.40,01,75,882.80 of respondent No. 6 which was the second lowest.

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Contending that issuance of letter of acceptance to respondent No. 6 at its higher bid value when petitioner No. 1 had offered the lowest bid value was not justified, present writ petition has been filed. It is contended that after the offer of petitioner No. 1 was accepted by the Tender Evaluation Committee as would be evident from the tender summary report, it was not open to respondent No. 2 to issue letter of acceptance to respondent No. 6 whose bid value is more than 4 crores higher than that of petitioner No. 1. Referring to Clauses 4.5 A, 4.5 B and 4.5 C of the conditions of tender, petitioners have contended that petitioner No. 1 fulfills all the requirements as laid down in the aforesaid clauses and, therefore, overlooking of the more competitive bid of petitioner No. 1 is not justified.

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This Court vide order dated 12.09.2017 directed that till the next date, status quo as on 12.09.2017 should be maintained. Thereafter, on apprehension being expressed by the parties that the funds budgeted for the contract work would lapse if the contract was not awarded before 31.03.2018 this Court passed an order dated 26.03.2018 to the effect that the funds may not lapse due to intervention of the Court.

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Respondent No. 2 in his counter affidavit has referred to Clause 4 of the instructions to bidders as well as Clause 12.2 thereof. Further reference has been made to Clause 4.5 A

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whereafter it is stated that only for the year 2013-14 the bidder (petitioner No. 1) had executed all the three quantities of work mentioned therein in a particular year. Bid Evaluation Committee on examination of its bid found that petitioner No. 1 did not satisfy the requirement of Clause 4.5 A(c). Therefore, petitioner No. 1 failed to qualify in the bid evaluation process. Bank certificates submitted by petitioner No. 1 was not as per the format of standard bid document. Petitioner No. 1 had initially submitted a certificate dated 06.06.2017 alongwith its bid issued by the Oriental Bank of Commerce, Connaught Place Branch, New Delhi which only certified that petitioner No. 1 was a borrower of the said Bank which availed total working capital limits at Rs. 13.50 crores. As the said certificate did not fulfill the requirement of Clause 4.5 B(c), bid of petitioner No. 1 was declared to be disqualified. Second bank certificate also failed to meet the laid down criteria. Therefore, bid of petitioner No. 1 was rejected although it was the lowest. It is further contended that bid of petitioner No. 1 alongwith bids of respondent No. 6 and other bidders were shortlisted for re-evaluation by the Bid Evaluation Committee as the bids were found to be responsive. However, upon evaluation, since petitioner No. 1 failed to successfully qualify, the contract in question was allotted to the second lowest bidder i.e. respondent No. 6 who qualified in the bid evaluation process.

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8.1. Respondent No. 6 has filed a detailed counter affidavit. Preliminary objection has been raised as to the maintainability of the writ petition on the ground of suppression of facts and misrepresentation. Respondent No. 6 has contended that petitioner No. 1 does not fulfill the eligibility criteria and therefore its bid was rightly rejected by the Tender Evaluation Committee. However, respondent No. 6 has contended that in addition to the grounds on which Tender Evaluation Committee has rejected the bid of petitioner No. 1, there are several other grounds on which the technical bid of petitioner No. 1 ought to have been rejected. It is contended that while petitioner No. 1 has only furnished information regarding works in Table No. 1.4(A) but it has not submitted any information in Table No. 1.4(B). In so far works for which petitioner No. 1 had already submitted bids, it is further contended that petitioners have not disclosed ongoing works of the tune of Rs.100 crores which would clearly reflect that petitioner No. 1 did not have adequate bid capacity to execute the contract work. Respondent No. 6 has also referred to letter dated 26.09.2017 issued by the Executive Engineer, PWD

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(Roads) NH-cum-Tura Central Division, Tura, addressed to the petitioners wherein slow progress of work by petitioner No. 1 was pointed out. Giving details of ongoing contract works of petitioner No. 1, respondent No. 6 contends that a careful analysis of the same would reveal that turnover of petitioner No. 1 for the year 2012-13 was Rs.24.966 crores; on the basis of the waited turnover at the rate of 5% as provided in the instructions to bidders the awarded annual turnover for the year 2012-13 for the civil works would come to Rs.29.95 crores as against the requirement of Rs.30 crores which would thus render petitioner No. 1 ineligible. Respondent No. 6 has also highlighted various aspects whereby it is contended that petitioner No. 1 has fudged figures to show that it is eligible. Since petitioner No. 1 did not fulfill the eligibility criteria it cannot question the letter of acceptance issued to respondent No. 6 on the ground that bid value of respondent No. 6 is higher than that of petitioner No. 1. Bid of respondent No. 6 fulfills the eligibility criteria and amongst the technically qualified bidders it was the lowest. Therefore, letter of acceptance was issued to respondent No. 6.

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Respondent No. 6 has filed additional counter affidavit to bring on record additional facts and documents. In the said affidavit respondent No. 6 has provided a list of ongoing works undertaken by petitioner No. 1 and contends that on the basis of assessed available bid capacity worked out as per formula mentioned in the instruction to bidders, petitioner No. 1 became ineligible.

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Thereafter petitioners have filed additional affidavit bringing on record certain additional facts. It is contended that from the information made available through the portal of respondent No. 2 it is respondent No. 6 who did not fulfill the eligibility criteria and not the petitioner No. 1.

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Learned counsel for the parties have made elaborate arguments in support of their respective contentions which have been duly considered.

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To appreciate the rival contentions, it would be apposite to advert to relevant stipulations in the e-procurement notice/invitation for bids (IFB). Clause 4 of the instructions to

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bidders deals with qualification of the bidder. As per Clause 4.3, if the employer has not undertaken prequalification of potential bidders, all bidders should include the information and documents alongwith their bids as mentioned in the said clause which includes experience in works of a similar nature and size for each of the last five years and details of works underway or contractually committed; reports on the financial standing of the bidder, such as profit and loss statements and auditors reports for the last 5 years; evidence of adequacy of working capital for the contract in question and availability of other financial resources.

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12.1. As per Clause 4.5 A, to qualify for award of the contract, each bidder in its name should have in the last 5 years i.e. from the year 2011-12 to 2015-16:-

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(a) achieved, in at least two financial years, a minimum annual financial turnover for each year (in all classes of civil engineering construction works only) of Rs.307 million;

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(b) satisfactorily completed (not less than 90% of contract value), as prime contractor, (or as sub-contractor duly certified by the employer/main contractor) at least one similar work of value not less than Rs. 184 million;

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(i) Earthwork in excavation, embankment	183100 cum
(ii)Granular Sub Base, WMM/WBM	16800 cum
(iii) Bituminous work with DBM, BM, SDBC & BC work	5300 cum

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As per Clause 4.5 B each bidder should further demonstrate —

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(a) availability of the equipments mentioned therein, either owned or leased or by procurement against mobilization advances.

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(b) availability of a project manager for the work having the required experience;

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13.1. Clause 4.7 says that bidders who meet the minimum qualification criteria will be qualified only if their available bid capacity is more than the total bid value. The available bid capacity is to be calculated in the following manner:-

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Assessed available bid capacity=(AN1.5-B)

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In the said formula, ANB have been explained in the following manner:-

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A= Maximum value of civil engineering works executed in any one year during the last five years (updated to 2016-17 price level) taking into account the completed as well as works in progress;

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N= Number of years prescribed for completion of the works for which bids are invited.

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B= Value, at 2016-17 price level, of existing commitments and ongoing works to be completed during the next one year.

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While Clause 23 deals with bid opening, Clause 26 is concerned with examination of bids and determination of responsiveness.

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Bid Evaluation Committee report has been placed before the Court by Mr. M. Choudhury, learned Sr. Counsel appearing for respondent No. 2. As per the report on bid opening and on preliminary examination of bids, bids of four bidders were determined to be substantially responsive. The four bidders were:-

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(1) CCL International Ltd. (petitioner No. 1)

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(2) M/s P. K. & Company (respondent No. 6)

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(3) M/s Prabhu Agarwalla Construction Pvt. Ltd.

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(4) M/s Macrocosm.

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On evaluation of the substantially responsive bids, the ranking of the bidders were determined as under:-

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Sl	Name of Bidder	Evaluated Bid Price	Position	% age
No.				Above/Below
1.	CCL International Limited	36,06,90,037.15	L1	17.66% above
2.	M/s P. K. and Company	40,01,75,882.80	L2	30.54% above
3.	Prabhu Agarwalla Construction Pvt. Ltd.	42,76,26,100.60	L3	39.49% above
4.	M/s Macrocosm	42,85,84,695.60	L4	39.80%above

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On scrutiny of the bid of petitioner No. 1 it was found that it did not satisfy Clause 4.5 A (c). It was found as follows:-

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4.5 (A)	Executed in any one ye minimumquantities of work:	ar, the following	Year(2013-2014)	Remarks
(c)	i)Earthwork in excavation, embankment	183100 cum	229705.89	Bidder does
	ii) Granular Sub Base, WMM/WBM	16800 cum	3,016.00	not satisfy this criteria.
	iii) Bituminous work with DBM, BM, BC & SDBC	5300 cum	24,312.00

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17 . Again in respect of Clause 4.5 B(c) it was held that petitioner No. 1 did not satisfy the criteria in the following manner:-

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Liquid assets and/or	Bank Certificate	Bidder does not
availability of credit facilities of no less than Rs.51.09 million.	submitted but not in the format as per section-2. The Bank has	satisfythis criteria	18. After analyzing the bid
	also added additional		capacity of
	condition which makes		petitioner No. 1, Bid
	the certificate		Evaluation
	conditional		Committee found

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that the bidder has not met the qualification criteria Clause 4.5 A(c) of minimum quantities of work required and 4.5 B (c) of liquid assets and/or availability of credit facilities in the format given. Since petitioner No. 1 did not qualify on the above counts, its bid capacity was not assessed. Though petitioner No. 1 was the lowest evaluated bidder, since it failed in the post qualification criteria it was not qualified for award of contract in terms of Clauses 4.5 A (c) and 4.5 B (c) of the instructions to bidders. Therefore, Bid Evaluation Committee proceeded to check the bid capacity of the second lowest responsive bidder i.e. respondent No. 6. The summary of Bid Evaluation Committee report vis-à-vis petitioner No. 1 is extracted hereunder:-

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“ 12. Check for Bid capacity :

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Since the bid of the L1 bidder CCL International Limited has been examined and found that the bidder has not met the qualification criteria clause 4.5(A) (c) of minimum quantities of work required and 4.5 (B) (c) of liquid assets and/or availability of credit facilities in the format given in Section 2 and therefore not qualified for award of contract in terms of clause 4 of ITB.

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Bid Capacity of the Lowest Evaluated Responsive Bidder CCL International Limited is not assessed as the bidder has not qualified the post qualification criteria.

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The lowest evaluated bidder CCL International Limited for Contract No. ASRP/P1S1/NCB/SH-46/1(C) (Balance Work) fails in the post qualification criteria and therefore not qualified for award of contract in terms of clause 4.5(A) c & (B) c of ITB.”

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In so far the second lowest evaluated bidder i.e. respondent No. 6 is concerned it was found that its bid satisfied the required criteria including Clauses 4.5A(c) and 4.5 B (c). Assessed available bid capacity of respondent No. 6 was worked out as per the format at Rs.548.543 millions. Price quoted by respondent No. 6 was Rs.400.18 millions. Since available bid capacity was more than the quoted bid price of respondent No. 6 it was declared that respondent No. 6 possessed capacity to undertake the work. Bid Evaluation Committee also sought for reasons from respondent No. 6 for quoting high rates. On consideration of the reasons furnished, the Committee was satisfied and accepted the justification given in the following terms:-

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“ 15. General Remarks and Comments on the unbalanced items of bid :

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The bidder has quoted 30.5% high bid price in relation to the estimated cost put to tender. The bidder has been requested to furnish the reasons for quoting high rates, which is found to be unbalanced. The bidder has justified that the bid price based on the item wise rates are reasonably framed. The quoted rates are based on the prevailing

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rates for labour, materials plant & machineries. The bidder has also stated that due to fluctuation of market, of construction materials, 5% of the bid amount has been added to the analyzed rate. Due to limited time period for completion of the works, additional expenditure to be incurred. The higher price involves additional cost for increase in royalty levied by the Forest department. The bidder has also justified that the bid price seems to be high because the estimate is prepared on old SOR 2013-14. There is a price hike during the 3 years period; approach road is not accessible requiring extra haulage charge.

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The justification given by the bidder is found to be acceptable given that no price escalation clause is included in the bid and work to be completed in one and half working seasons 18 months time.”

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Thereafter letter of acceptance was issued to respondent No. 6.

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21 . In Tata Cellular Vs Union of India reported in (1994) 6 SCC 651 , Supreme Court held that if an administrative decision relating to tender and contract is not arbitrary, irrational, unreasonable, mala fide or biased, Courts will not judicially review the decision taken. Supreme Court gave importance to the lawfulness of a decision and not its soundness. Similarly it was held that Courts will not countenance interference with the decision at the behest of an unsuccessful bidder in respect of a technical and procedural violation. Recent judicial trend points towards restraint in judicial review of decisions pertaining to award of contract. If the decision relating to award of contract is bona fide, Courts will not interfere in such decision making even if a procedural aberration or error in assessment or prejudice to a tenderer is made out.

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22 . In Jagadish Mandal Vs State of Orissa reported in (2007) 14 SCC 517 Supreme Court held that a constitutional court should pose the following two questions before embarking on an exercise of judicial review. It was held that a court before interfering in tender or contractual matters in exercise of the power of judicial review should pose the following two questions:-

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Whether the process adopted or decision made by the tendering authority is malafide or intended to favour someone?

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Whether public interest is affected?

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It was categorically held that if the answers are in the negative there should be no interference under Article 226. The above view was reiterated and followed in Michigan Rubber (India) Ltd. Vs State of Karnataka reported in (2012) 8 SCC 216 .

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23 . In Central Coal Fields Ltd. Vs SLL-SML (Joint Venture Consortium) reported in (2016) 8 SCC 622, Supreme Court surveyed the law relating to judicial interference in tenders and contracts and summed up the position as under:-

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“ 47. The result of this discussion is that the issue of the acceptance or rejection of a bid or a bidder should be looked at not only from the point of view of the unsuccessful party but also from the point of view of the employer. As held in Ramana Dayaram Shetty the terms of NIT cannot be ignored as being redundant or superfluous. They must be given a meaning and the necessary significance. As pointed out in Tata Cellular there must be judicial restraint in interfering with administrative action. Ordinarily, the soundness of the decision taken by the employer ought not to be questioned but the decision making process can certainly be subject to judicial review. The soundness of the decision may be questioned if it is irrational or mala fide or intended to favour someone or a decision “that no responsible authority acting reasonably and in accordance with relevant law could have reached” as held in Jagdish Mandal followed in Michigan Rubber.

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48. Therefore, whether a term of NIT is essential or not is a decision taken by the employer which should be respected. Even if the term is essential, the employer has the inherent authority to deviate from it provided the deviation is made applicable to all bidders and potential bidders as held in Ramana Dayaram Shetty. However, if the term is held by the employer to be ancillary or subsidiary, even that decision should be respected. The lawfulness of that decision can be questioned on very limited grounds, as mentioned in the various decisions discussed above, but the soundness of the decision cannot be questioned, otherwise this Court would be taking over the function of the tender issuing authority, which it cannot.

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49. Again, looked at from the point of view of the employer if the Courts take over the decision-making function of the employer and make a distinction between essential and non-essential terms contrary to the intention of the employer and thereby rewrite the arrangement, it could lead to all sorts of problems including the one that we are grappling with. For example, the GTC that we are concerned with specifically states in Clause 15.02 that “Any bid not accompanied by an acceptable Bid Security/EMD shall be rejected by the employer as non-responsive”. Surely, CCl ex facie intended this term to be mandatory, yet the High Court held that the bank guarantee in a format not prescribed by it ought to be accepted since that requirement was a non-essential term of the GTC. From the point of view of CCL, the GTC has been impermissibly rewritten by the High Court.”

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24 . Having noticed the legal position as above, can it be said that the decision of the Bid Evaluation Committee in rejecting the bid of petitioner No. 1 is so arbitrary and

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unreasonable that no responsible authority acting reasonably could have reached? The reasons given by the Bid Evaluation Committee as to why petitioner No. 1 did not satisfy requirement of Clauses 4.5 A (c) and 4.5 B (c) are germane to the issue and cannot be said to be unreasonable or arbitrary. Attempt made by the petitioners to show that a second view on the Bid Evaluation Committee report is possible would not render the view taken by the Bid Evaluation Committee bad in law. It is a reasonable view based on the assessment of the documents furnished by petitioner No. 1. Regarding non-acceptance of bank certificate furnished by petitioner No. 1 the same being not in the prescribed format was rightly not accepted.

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24.1. In Central Coal Field Ltd . (supra) Supreme Court was considering an identical issue. It was held that whether a term in the NIT is essential or not is a decision to be taken by the employer which should be respected. In that case, Supreme Court upheld the decision of the employer in not accepting a bank guarantee which was not in the prescribed format. It was held that since the employee had not relaxed or deviated from the requirement of furnishing bank guarantee in the prescribed format, bidders were obliged to adhere to the prescribed format of the bank guarantee. Failure of the bidder to furnish bank guarantee in the prescribed format was sufficient reason for CCL to reject its bids.

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25 . That being the position Court is not inclined to entertain the challenge made by the petitioners to the letter of acceptance issued by respondent No. 2 in favour of respondent No. 6.

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26 . In so far additional submissions of respondent No. 6 is concerned, Court is not inclined to enter into an examination of the same because what the Court is required to examine is the grounds given for non-acceptance of the bid of petitioner No. 1 which in the analysis of the Court cannot be termed as unlawful or even unsound to warrant judicial interference.

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27 . That being the position, there is no merit in the writ petition which is accordingly

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dismissed.

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28 . Status quo order passed earlier stands vacated.

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Comparing Assistant

Ccl International Limited and 2 Ors. v. the State of Assam and 8 Ors.

Case brief

What is this about?

What did the court decide?

Ccl International Limited and 2 Ors. v. the State of Assam and 8 Ors.

Case brief

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