Allowed

M.a.Habeebullah v. State of Kerala

Kerala HC16 Feb 2009WA/313/2009

Case brief

AI extract

What is this about?

The Division Bench of the Kerala High Court allowed a writ appeal filed by an 'A' class contractor who was excluded from a government tender process. Relying on principles of judicial review and Article 14, the Court held that the denial of tender forms constituted procedural illegality and favoritism, warranting the quashing of the tender process and a directive for a fresh tender.

What did the court decide?

The entire tender process was set aside; the Government was directed to issue a fresh tender and bear the costs incurred due to the illegal refusal of tender documents.

M.a.Habeebullah Vs State of Kerala — Public Procurement and Tenders | Kerala HC (2009)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT :

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THE HON'BLE THE ACTING CHIEF JUSTICE MR.J.B.KOSHY & THE HONOURABLE MR. JUSTICE V.GIRI

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MONDAY, THE 16TH FEBRUARY 2009 / 27TH MAGHA 1930

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WA.No. 313 of 2009() -------------------AGAINST THE JUDGEMENT/ORDER IN WPC.28765/2008 Dated 23/01/2009

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APPELLANT(S): PETITIONER:

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--------------------------------------------

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M.A. HABEEBULLAH, BISMILLA MANZIL, BAKKALAM P.O., KANUL, KANNUR DIST.

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BY ADV. MR.A.K.ABDUL AZEEZ

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RESPONDENT(S): RESPONDENTS:

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1. STATE OF KERALA, REPRESENTED BY THE CHIEF SECRETARY, GOVENMENT SECRETARIAT, THIRUVANANTHAPURAM.

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2. THE CHIEF ENGINEER, P.W.D. (R & B), THIRUVANANTHAPURAM.

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3. THE SUPERINTENDING ENGINEER, P.W.D. (R & B) NORTH CIRCLE, KOZHIKODE.

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BY GOVERNMENT PLEADER SMT. K.MEERA

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THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 16/02/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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Kss

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J.B. Koshy,Ag.C.J. & V.Giri, J.

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W.A.No. 313 of 2009

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Dated this the 16^th day of February, 2009

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Judgment

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Koshy, Ag.C.J.

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Appellant/Petitioner, an 'A' class contractor who is holding Ext.P1 licence, approached the respondent when it invited tenders for the work concerning Cherukunnath-KeezhoorVellakalkadavu road in Thaliparambu. Total value of the contract was Rs.225 lakhs. Ext.P4 is the tender notice. As per the tender notice, applicant must have undertaken similar work for 40% of the tender amount. Ext.P3 certificate would show that he has satisfied the condition of pre-qualification. Petitioner has got a case that as per Ext.P5 Government order dated 9.6.1999, pre-qualification is not necessary if the work is less than Rs.500 lakhs. Ext.P5 was issued for the works sanctioned by the Ministry of Surface Transport, Government of India. It is stated in Ext.P5 as follows:

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“The system of pre-qualification of contractors was earlier adopted in Irrigation Department as per the Government Order read as 2^nd paper above. Under the pre-qualification system, contractors satisfying certain criteria alone are permitted to offer tenders. For original works sanctioned by Ministry of Surface

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W.A. No.313/2009

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Transport, Government of India for National Highways, pre-qualification limits are:

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i. Upto Rs.500 lakhs - open tender;

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ii. Rs.500 lakhs to Rs.2000 lakhs - 2 cover system;

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iii. Above Rs.2000 lakhs - prequalification.”

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Even though Ext.P5 was issued by the Irrigation Department, since this work is sanctioned by the National Highways, Ministry of Surface Transport, Government of India, it is the contention of the petitioner that pre-qualification is not necessary since the work is below Rs.500 lakhs. Petitioner also produced Ext.P7 tender notice dated 20.4.1999 to show that even PWD was not insisting on prequalification for similar works below Rs.500 lakhs. Whatever may be that, it is his specific case that he had pre-qualification as he has required experience as can be seen from Ext.P3.

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On behalf of the respondents counter affidavits are filed wherein it is stated as follows:

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“4. The criteria for pre-qualification aredecided by the guidelines issued by different authorities. If the pre-qualification work is tendered by the Superintending Engineer, PWD, N.H. Circle, criteria are decided as per the instructions of Ministry of Surface Transport, Government of India whereas in this Circle, pre-

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qualification of work is decided on the basis of the G.O. (Ms) No.52/87/PW & T dated 7.7.1987, G.O. (Ms) No.101/90/PW & T dated 19.10.1990, G.O. (Ms) No.12/97/PW & T dated 29.1.1997 and Chief Engineer's circular No.CE/A2/TC/92 dated 22.7.1996. The same procedure is followed in the PWD Building and Local works, North Circle, Kozhikode also. It is submitted that the petitioner did not produce the necessary certificate along with the request for tender documents. Hence his request for tender documents was not accepted.”

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That shows that Government is insisting on pre-qualifcation as per the guidelines issued by different authorities on the basis of the criteria decided by the Ministry of Surface Transport, Government of India. Even if pre-qualification is necessary as mentioned in the tender, documents to prove pre-qualification have to be produced along with the tender. Ext.R3 (a) was relied on by the respondent to show that before tender form was issued, production of certificate from the competent authority is necessary. Now, we will come to Ext.R3 (a). Ext.R3 (a) shows as follows:

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“The following norms are set for the initial scrutiny of the pre-qualification bids. This scrutiny shall be done by the Superintending Engineer in charge of the execution of the work and finalised by the concerned Chief Engineer.

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Only those bids passing the initial scrutiny need be recommended for final scrutiny by the Chief Engineers committee. However, all the bids received by the Superintending Engineer

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may be forwarded to the concerned Chief Engineers.”

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That also shows that while considering the initial scrutiny of prequalification bids by the Superintending Engineer, before recommending the bids, documents should be verified. That is, after submission of the tender, they have to verify regarding the pre-qualification bids before recommending the same. Petitioner was not given tender forms even after his several requests and, therefore, petitioner was weeded out without any valid grounds. Even though no interference will normally be made in contractual matters, when Government is entering into contract equal opportunity should be given and it cannot discriminate between citizens. Officers cannot exclude any eligible person from participating in the tender to help the favourites. It was held by the Hon'ble Supreme Court in Tata Cellular v. Union of India ((1994) 6 SCC 651) as follows:

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“70. ..... The principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favoritism. However, there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any

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other tender is always available to the Government. But, the principles laid down in article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down.”

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Illegality, irrationality (Wednesbury's unreasonableness), procedural impropriety etc. are grounds of judicial review. Exercise of power to award contract must be free from arbitrariness not affected by bias or actuated by malafides. Here, there is procedural illegality in not supplying the tender form to the petitioner who is a registered 'A' class contractor. In ABL International Ltd. and another v. Export Credit Guarantee Corporation of India Ltd. and others ((2004) 3 SCC 513), it was held that State as a party to the contract has an obligation in law to act fairly and reasonably which is a requirement of article 14 of the Constitution of India. The Hon'ble Apex Court in Directorate of Education and others v. Educomp Datamatics Ltd. and others ((2004) 4 SCC 19) held that procedural irregularities can be tested by the courts in the exercise of the power of judicial review in contractual matters to prevent arbitrariness or favoritism.

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Here, petitioner was not given tender form without any valid grounds even if the documents relied on by the respondent are accepted. Therefore, we have to interfere in the matter. In this case, a learned single Judge of this court (one of us, V.Giri, J.) earlier held that all further proceedings in the process of tender will be subject to the further orders passed in the writ petition. That order is dated 17.10.2008. Writ petition was dismissed on 23.1.2009. On 10.2.2009, the following order was passed in this writ appeal by a Division Bench of this Court:

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“Govt. Pleader wants to get instructions. Meanwhile, bid shall not be opened. Post on 16.2.2009.”

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It is now submitted that financial bids were opened at 11.00 a.m. on 9.2.2009 and the authority selected five qualified tenderers and informed of the same to all the selected tenderers by letter dated 12.2.2009 knowing fully well that the appeal is specifically posted for hearing on 16.2.2009. The financial bids were opened in a hurried manner. Since the petitioner was excluded from participating in the tender by not giving the tender form and the parties are aware of the tendered amounts, we are of the view that the entire process has to be set aside and fresh tender has to be issued by the Government. Government will be free to get the cost

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incurred by it from the concerned officers who illegally refused the

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tender form to the petitioner.

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The writ appeal is allowed.

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J.B.Koshy Acting Chief Justice

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