Dismissed

Tatrari Electrical and Traders and Anr. v. the State of Assam and 4 Ors.

Gauhati HC8 Sept 2022WP(C)/5238/2022

Case brief

AI extract

What is this about?

The High Court dismissed a writ petition challenging the rejection of a tender bid as unreasonably low. The court upheld the tender committee's decision to reject a bid quoted 11% below schedule rates, holding that the bid was abnormally low under the tender terms and no justification was required under those specific clauses.

What did the court decide?

The writ petition challenging the rejection of the petitioner's financial bid was dismissed.

Tatrari Electrical and Traders and Anr. Vs… — Public Procurement and Tenders | Gauhati HC (2022)

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GAHC010159922022

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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)/5238/2022

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TATRARI ELECTRICAL AND TRADERS AND ANR.

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A PROPRIETORSHIP FIRM REP. BY ITS PROPRIETOR SRI PURAN SINGH TATRARI S/O LT. MADAN SINGH TATRARI, AGED 69 YEARS, HAVING ITS REGISTERED OFFICE AT PABITRA RABHA BHAWAN DR. RP ROAD GANESHGURI, DISPUR GUWAHATI-781006 DIST. KAMRUP (M) ASSAM

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2: PURAN SINGH TATRARI S/O LT. MADAN SINGH TATRARI AGED 69 YEARS

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HAVING ITS REGISTERED OFFICE AT PABITRA RABHA BHAWAN DR. RP ROAD GANESHGURI

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DISPUR GUWAHATI-781006 DIST. KAMRUP (M) ASSA

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VERSUS

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THE STATE OF ASSAM AND 4 ORS.

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REP. BY THE COMMISSIONER AND SECRETARY TO THE GOVT. OF ASSAM ANIMAL HUSBANDRY AND VETERINARY DEPTT. DISPUR GUWAHATI781006

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2:ASSAM AGRICULTURAL UNIVERSITY BARBHETA

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JORHAT-785013 REP. BY ITS REGISTRAR

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3:THE REGISTRAR ASSAM AGRICULTURAL UNIVERSITY BARBHETA JORHAT 785013

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4:THE DIRECTOR PHYSICAL PLANT

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ASSAM AGRICULTURAL UNIVERSITY CAMP KHANAPARA GUWAHATI-781022

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5:AMITABH CHOUDHURY S/O NOT KNOWN TO THE PETITIONER R/O JANAPATH KHANAPARA GUWAHATI-781022 DIST. KAMRUP (M) ASSA

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Advocate for the Petitioner : MR. N DEKA

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Advocate for the Respondent : GA, ASSAM

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BEFORE HONOURABLE MR. JUSTICE SUMAN SHYAM

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ORDER

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Date : 08-09-2022

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Heard Mr. N. Deka, learned counsel for the writ petitioners. Also heard Mr. P.N. Goswami, learned standing counsel, AAU appearing for the respondent Nos. 1 to 4 and Mr. I. Choudhury, learned Sr. counsel assisted by Mr. S. Biswakarma, learned counsel has appeared for the respondent No. 5.

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In this writ petition the decision of the Technical Evaluation Committee to reject the price bid submitted by the writ petitioner by holding the same to be unrealistic and unreasonably low, is under challenge. The facts and circumstances giving rise to the filing of this writ petition are briefly stated hereunder:-

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The respondent No. 4 had floated tender dated 27-05-2022 inviting bids for execution of certain electrical works, the value of which was estimated at Rs. 1.35 Crores. In response to the tender notice dated 27-05-2022, the writ petitioner No. 1 represented by its proprietor, i.e. the writ petitioner No. 2 and the respondent No. 5 had submitted

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their bids. The bids were to be evaluated in two parts, viz. technical and financial. On opening the tenders, the technical bids submitted by the writ petitioners and the respondent No. 5 were both found to be in order. After opening the financial bids, it was found that the writ petitioner No. 1 had quoted 11% below the PWD Schedule of Rates (SoR) of 2013-14 whereas the respondent No. 5 had quoted 5.12% below the SoR. Therefore, the price bid of the writ petitioner was the lowest. However, after analyzing the offers, the Tender Evaluation Committee found the offer made by the writ petitioner No. 1 to be unreasonably low. Accordingly, it had arrived at the impugned decision rejecting the Financial Bid of the writ petitioners. Consequently, recommendation was made to award the contract in favour of the respondent No. 5. The said decision is under challenge in this writ petition.

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By referring to the justification furnished by the Technical Evaluation Committee in its recommendation adopted in the meeting held on 03-08-2022, Mr. Deka submits that the impugned decision is entirely based on the circular dated 12-07-2018 issued by the Govt. of Assam, PWD. In that circular, it has been mentioned that rate quoted 10% beyond the PWD schedule of rates should not be accepted. Contending that the circular dated 12-07-2018 relates to civil works carried out by the PWD whereas the present is electrical work, Mr. Deka has assailed the impugned decision of the Technical Evaluation Committee by submitting that if the authorities had any doubt over the price quoted by the petitioners, then it was incumbent upon them to seek necessary clarification in the matter, in which event, the petitioner would have provided proper justification. Referring to Clauses 40.1 and 40.2 of the Tender Document, Mr. Deka has forcefully argued that

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even in a case where abnormally low price is quoted, the authorities were under an obligation to call for justification from the bidders including detail price analysis before taking a final decision in the matter. The same not having been done in this case and the decision to reject the petitioners’ financial bid having been taken merely by relying upon the circular of the PWD, Assam, the respondents according to Mr. Deka, have acted in illegal and arbitrary manner. According to Mr. Deka the impugned decision is not only dehors the law but is also against the public interest. Hence, the same calls for interference by this Court.

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Responding to the above, Mr. I. Choudhury, learned Sr. counsel has argued that reliance placed by the Tender Evaluation Committee on the circular dated 12-07-2018 issued by the Govt. of Assam, PWD, was by way of an additional support but the same was not the basis of the decision. According to Mr. Choudhury, Clause 46.1 of the Tender Document makes it amply clear that it is not the L-1 bid but the bid which turns out to be the most advantageous to the employer that will be accepted. Mr. Choudhury has further argued that Clause 40.2 relied upon by the petitioners’ counsel would have no application in this case since the same relates to only those bids which are found to be potentially low but not the bids which were determined as abnormally low as per Clause 40.1 of the tender document. Mr. Choudhury has further argued that the question as to whether the bidder was in a position to deliver the work and whether it has the ability to tender the goods and services by fulfilling the requisite norms of quality is a relevant factor for the employer to be considered at the time of awarding the contract. In support of his above arguments Mr. Choudhury has placed reliance on the decision of the Supreme Court in the

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case of Raunaq International Ltd. Vs. IVR Construction Ltd. & Ors. reported in (1999) 1 SCC 492 .

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Mr. P.N. Goswami, learned standing counsel, AAU has, while supporting the submission made by Mr. I. Choudhury, further submitted that the employer was well within its rights to be vigilant about freak rates and if it is found that the tender is based on predatory pricing it would be in public interest for the authorities to reject such bids. Mr. Goswami has relied upon the decision in the case of Jagdish Mandal Vs. State of Orissa & Ors. reported in (2007) 14 SCC 517 to submit that unless there is arbitrariness in the decision making process, the writ court would not interfere with a decision taken in the matter of award of Govt. contract.

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I have considered the submissions made by the learned counsel for rival parties and have also gone through the materials available on record. At the very outset, it needs to be noted herein that as per Clause 46.1 of the Tender Document award of contract was to be made in favour of the bidder who is determined to be the most advantageous as specified in Instructions to Bidder (ITB) 42. Clause 46.1 is extracted herein-below for ready reference:

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“46.1 Subject to ITB 43, the Employer shall award the Contract to the successful Bidder. This is the Bidder whose Bid has been determined to be the Most Advantageous Bid as specified in ITB-42.”

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Clause 42.1 defines most advantageous bidder, which is extracted herein-below for ready reference:

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“42.1 Having compared the evaluated costs of Bids, the Employer shall determine the Most Advantageous Bid. The Most Advantageous Bid is the Bid of the Bidder

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that meets the Qualification Criteria and whose Bid has been determined to be: (a) substantially responsive to the bidding document; and

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(b) the lowest evaluated cost.

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As per Clause 40.1 of the Tender Document, an abnormally low bid is one where the

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bid price, in combination with other constituent elements of bid, appear to be unreasonably low to the extent that the bid price raises material concern in respect of the capability of the bidder to perform the contract for the offered price.

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Clause 40.2 lays down the procedure to deal with bids which were identified as

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potentially low. Clause 40.1 and 40.2 of the Tender Documents are reproduced hereinbelow for ready reference:

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“40.1 An Abnormally Low Bid is one where the Bid price in combination with other constituent elements of the Bid appears unreasonably low to the extent that the Bid price raises material concerns as to the capability of the Bidder to perform the Contract for offered Bid price.

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40.2 In the event of identification of a potentially Abnormally Low Bid, the Employer unless otherwise specified in the BDS, shall seek written clarification from the Bidder, including detailed price analyses of its Bid price in relation to the subject matter of the contract, scope, proposed methodology, schedule, allocation of risks and responsibilities and any other requirements of the bidding document.”

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A plain reading of the aforementioned clauses of the ITB make it amply clear that

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the tender conditions do not stipulate that the contract will be awarded in favour of the L-

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1 bidder regardless of whether the price quoted by the bidder was found to be reasonable

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or not. Therefore, if the respondents have taken a view not to award the work to the Petitioner No. 1 by treating the price quoted by it to be unreasonably low, can it be said

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that the decision is dehors the provision of the ITB. The answer to the said question, in

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facts of this case, in view of Clauses 40.1 read with 42.1 and 46.1, obviously has to be in the negative.

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A plain reading of the minutes of the Evaluation Committee held on 03-08-2022 clearly depicts that the authorities had rejected the financial bid of the petitioner No. 1 by holding the price quoted by its as unreasonably low. However, to draw support to their decision reference was made to the notification dated 12-07-2018 issued by the Govt. of Assam. Rate quoted by the petitioner was admittedly 11% below the PWD schedule rates of 2013-14. Therefore, it was evident that the price quoted by the petitioner was abnormally low. Although Mr. Deka has argued that if the respondents had a genuine doubt about the capability of the writ petitioner No. 1 to deliver proper quality at its quoted price, they ought to have called for justification and price breakup from the petitioner as per Clause 40.2. I am afraid, such an argument of the petitioners’ counsel cannot be accepted for the following reasons. Firstly, Clause 40.2 does not refer to those bids which were already determined to be unreasonably low. The said clause in the Tender Documents refers to only those bids which were deemed to be potentially low. Since the petitioners financial bid was found to be unreasonably low, Clause 40.2, in the opinion of this Court, would not have any application in the facts of this case.

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Secondly, there is no averment in the writ petition that even by quoting rate which is 11% below the PWD SoR for the year 2013-14, the writ petitioners would be in a position to deliver the work by maintaining the quality. In the absence of any such averment made in the writ petition, this Court is of the considered view that the matter cannot be remanded back to the Evaluation Committee for re-evaluation of the financial

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bid of the petitioner based on additional particulars to be supplied by them.

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What is to be noted herein that law is firmly settled by a long line of judicial pronouncements that in the matter of award of Govt. contract, the writ Court, in exercise of powers under Article 226 of the Constitution of India, would examine the decision making process but not the merit of the decision. I do not deem it necessary to burden this judgment by quoting all the relevant decisions governing the subject. However, it would be apposite to mention herein that in case of Raunaq International (Supra) the Supreme Court, while dealing with an issue of similar nature, has observed that the capability of the bidder to deliver the goods and services would be a relevant consideration for award of contract. The observations made in paragraph 9 of the Raunaq International (Supra) is extracted herein below for ready reference:

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“9. The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are of paramount importance are commercial considerations. These would be :

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(1) the price at which the other side is willing to do the work;

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(2) whether the goods or services offered are of the requisite specifications;

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(3) whether the person tendering has the ability to deliver the goods or services as per specifications. When large works contracts involving engagement of substantial manpower or requiring specific skills are to be offered, the financial ability of the tenderer to fulfil the requirements of the job is also important;

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(4) the ability of the tenderer to deliver goods or services or to do the work of the requisite standard and quality;

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(5) past experience of the tenderer, and whether he has successfully completed similar work earlier;

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(6) time which will be taken to deliver the goods or services; and often

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(7) the ability of the tenderer to take follow up action, rectify defects or to give post contract services.

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Even when the State or a public body enters into a commercial transaction, considerations which would prevail in its decision to award the contract to a given party would be the same. However, because the State or a public body or an agency of the State enters into such a contract, there could be, in a given case, an element of public law or public interest involved even in such a commercial transaction.”

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It is a commonly known fact that the tendering authorities are often required to deal with freak pricing and/ or predatory pricing where the bidders quote unreasonably low or

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high price as the case may be to bag the contract and thereafter, either commit default in execution of the work or end up delivering poor quality or claim price escalation way beyond the acceptable rate quoted by other bidders at the stage of submitting their bids. If the public interest is to be protected and the quality of work is to be ensured, then the employers will have to guard against such predatory pricing policy. As long as the evaluation criteria adopted in such a case is transparent and in consonance with the Tender Conditions and the decision making process does not suffer from the vice of arbitrariness, irrationality or unreasonableness, the decision of the employer in such matters must be given due importance. The writ Court cannot sit in appeal over the decision of the employer in such matters.

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In view of what has been discussed hereinabove, this Court is of the opinion that the respondents were well within their right and fully justified in evaluating the financial bid of the petitioner No. 1 and coming to a conclusion that the price quoted by it was unreasonably low. The aforesaid exercise was not only transparent but also based on cogent materials available on record.

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For the reasons stated hereinabove, I do not find any justifiable ground to interfere

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in the tender process.

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The writ petition is accordingly dismissed.

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JUDGE

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