Disposed

M/S.Sherwood Technocrats v. State of Kerala

Kerala HC24 May 2016WP(C)/4871/2016

Case brief

AI extract

What is this about?

The Kerala High Court disposed of a writ petition challenging the rejection of a single bid for consultancy services. The court held that while fresh bidding was justified based on cost estimates, the petitioner's qualified technical bid could be considered if they submit a revised unconditional offer at the estimated cost.

What did the court decide?

Petitioner directed to submit a revised unconditional offer within 10 days; Committee to consider it if guidelines permit before fresh bids.

M/S.Sherwood Technocrats Vs State of Kerala — Contract and Commercial Disputes | Kerala HC (2016)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR

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TUESDAY, THE 24TH DAY OF MAY 2016/3RD JYAISHTA, 1938

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WP(C).No. 4871 of 2016 (H)

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PETITIONER(S) :

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M/S.SHERWOOD TECHNOCRATS AND CONSULTANTS PVT. LTD., 14/1937, SUNNY MEAD LANE, NEAR JUBILEE HOSPITAL, THIRUVANANTHAPURAM - 695 034, REPRESENTED BY ITS DIRECTOR & CHIEF EXECUTIVE OFFICER, SHABEER MOHAMMED.

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BY ADVS.SRI.P.A.MOHAMMED SHAH

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SRI.SOORAJ T.ELENJICKAL SRI.K.NANDAKUMAR SRI.P.K.ABDU RAHEEM SMT.MARY RESHMA GEORGE SMT.P.M.MAZNA MANSOOR

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RESPONDENT(S) :

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1. STATE OF KERALA, REPRESENTED BY CHIEF SECRETARY, GOVERNMENT OF KERALA, SECRETARIAT, THIRUVANANTHAPURAM - 695 001.

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2. PROJECT STEERING COMMITTEE ('PSC'), KERALA STATE TRANSPORT PROJECT, DEPARTMENT OF PUBLIC WORKS, REPRESENTED BY CHIEF SECRETARY, GOVERNMENT OF KERALA, SECRETARIAT, THIRUVANANTHAPURAM - 695 001.

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3. PRINCIPAL SECRETARY, PUBLIC WORKS DEPARTMENT, GOVERNMENT OF KERALA, SECRETARIAT, THIRUVANANTHAPURAM - 695 001.

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4. PROJECT DIRECTOR, KERALA STATE TRANSPORT PROJECT, PUBLIC WORKS DEPARTMENT, T.C.11/339, JAGAD BUILDING, KESTON ROAD, NANDANCODE, KOWDIAR P.O., THIRUVANANTHAPURAM - 695 003.

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R1 TO R3 BY GOVERNMENT PLEADER SRI.GEORGE JOSEPH R4 BY ADVS. SRI.K.V.MANOJ KUMAR

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SRI.P.R.SREEJITH

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SRI.M.PROMODH KUMAR

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 24-05-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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Msd.

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WP(C).No. 4871 of 2016 (H)

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APPENDIX

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PETITIONER(S)' EXHIBITS :

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EXHIBIT P1: THE TRUE COPY OF THE CERTIFICATE OF INCORPORATION CONSEQUENT ON CHANGE OF NAME DATED 23.06.2003.

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EXHIBIT P2: THE TRUE COPY OF THE LOAN AGREEMENT BETWEEN GOVERNMENT OF INDIA AND WORLD BANK DATED 19.06.2013.

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EXHIBIT P3: THE TRUE COPY OF THE PROJECT AGREEMENT DATED 19.06.2013.

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EXHIBIT P4: THE TRUE COPY OF THE EXPRESSION OF INTEREST PUBLISHED BY THE 4TH RESPONDENT DATED NIL.

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EXHIBIT P5: THE TRUE COPY OF THE LIST OF CONSULTANT COMPANIES WHO SUBMITTED THEIR EXPRESSION OF INTEREST DATED NIL.

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EXHIBIT P6: THE TRUE COPY OF THE POWER OF ATTORNEY ISSUED BY THE CONSORTIUM DATED 02.06.2015.

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EXHIBIT P7: THE TRUE COPY OF THE LETTER OF INVITATION ISSUED BY THE 4TH RESPONDENT DATED NIL.

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EXHIBIT P8: THE TRUE COPY OF THE COMMUNICATION ISSUED BY THE 4TH RESPONDENT TO THE PETITIONER DATED 28.07.2015.

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EXHIBIT P9: THE TRUE COPY OF THE MINUTES FORWARDED TO THE 4TH RESPONDENT DATED 04.11.2015 WHICH THE PETITIONER OBTAINED UNDER RIGHT TO INFORMATION ACT.

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EXHIBIT P10: THE TRUE COPY OF THE RELEVANT PORTION OF THE CONSULTANT GUIDELINES.

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EXHIBIT P11: THE TRUE COPY OF THE REPORT SUBMITTED BY THE 4TH RESPONDENT TO THE 3RD RESPONDENT.

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EXHIBIT P12: THE TRUE COPY OF THE COMMUNICATION ISSUED BY THE 3RD RESPONDENT TO THE 4TH RESPONDENT DATED 05.12.2015.

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EXHIBIT P13: THE TRUE COPY OF THE AGENDA ITEMS OF 90TH STEERING COMMITTEE.

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EXHIBIT P14: THE TRUE COPY OF THE MINUTES OF THE 90TH STEERING COMMITTEE MEETING FORWARDED BY THE 3RD RESPONDENT TO THE 4TH RESPONDENT DATED 30.01.2016.

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EXHIBIT P15: THE TRUE COPY OF THE NEWS PUBLISHED IN HINDU DAILY DATED 07.02.2016.

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EXHIBIT P16: THE TRUE COPY OF THE PROCEEDINGS ISSUED BY THE CHIEF VIGILANCE COMMISSIONER BY LETTER NO.3(V)/99/9 DATED 01.10.1999.

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WP(C).No. 4871 of 2016 (H)

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RESPONDENT(S)' EXHIBITS :

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EXHIBIT R4(A): TRUE COPY OF THE EVALUATION COMMITTEE REPORT. EXHIBIT R4(B): TRUE COPY OF THE INSTRUCTION TO CONSULTANTSDATA SHEET. EXHIBIT R4(C): TRUE COPY OF THE FINANCIAL BID SUBMITTED BY M/S.SWEDISH NATIONAL ROAD CONSULTING AB JOINTLY WITH THE PETITIONER. EXHIBIT R4(D): THE TRUE COPY OF THE COST ESTIMATE PREPARED FOR THE PURPOSE OF THIS PROJECT. EXHIBIT R4(E): NO OBJECTION DATED 08.02.2016 ISSUED BY THE WORLD BANK TO THE FOURTH RESPONDENT.

//TRUE COPY//

P.S.TO JUDGE.

Msd.

P.B.SURESH KUMAR, J.

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W.P.(C) No.4871 of 2016

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Dated 24^th May, 2016.

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J U D G M E N T

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Ext.P14 decision of the second respondent is under challenge in this writ petition.

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As per the terms of a loan agreement entered into by the State Government with the International Bank for Reconstruction and Development for implementing a road project, the fourth respondent invited Expression of Interest from eligible consultants for rendering consultancy service for the project. Ext.P4 is the notification inviting Expression of Interest. Seven consultants including the petitioner responded to the notification. After preliminary scrutiny, five out of the seven consultants including the petitioner were shortlisted and they were called upon to submit their technical and financial bids. In the evaluation of the technical bids, only the petitioner was qualified. Since the petitioner was found qualified in the

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WPC No.4871 of 2016

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evaluation of the technical bids, their financial bid was also opened and the files were placed before the second respondent, the Project Steering Committee which has to take a final decision in the matter as per the terms of Ext.P3 project agreement. Since there was only one bid for rendering consultancy services, the second respondent Committee did not accept the bid by the petitioner. Instead, the second respondent committee decided to invite fresh bids for the purpose of engaging consultant. Ext.P9 is the decision taken by the second respondent in this connection.

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The joint venture partner of the petitioner, thereupon, submitted a representation before the Government seeking review of Ext.P9 decision. On the said representation, the Government had called for remarks from the fourth respondent, the Project Director. In response to the same, the fourth respondent forwarded Ext.P11 remarks to the Government. In Ext.P11, the fourth respondent pointed out that even when only one bid is submitted, the bidding process can be considered valid as per the guidelines applicable, if the

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bid was satisfactorily advertised, the qualification criteria were not unduly restrictive and prices are reasonable in comparison with market values. It was also pointed out by the fourth respondent in Ext.P11 that as per the project appraisal document, the amount allocated for consultancy service is USD 1 million and that the price bid of the petitioner is INR 4,21,54,523/-. It is seen that though Ext.P11 remarks forwarded by the fourth respondent to the Government was placed before the second respondent Committee by the Government for their consideration, as per Ext.P14 decision, the second respondent stood by Ext.P9 decision. The petitioner, in the circumstances, is aggrieved by Exts.P9 and P14 decisions of the second respondent Committee.

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The fourth respondent, the Project Director, filed a counter affidavit opposing the writ petition. In the counter affidavit filed by the fourth respondent, it was contended that the estimated cost of the consultancy service being only INR 225 lakhs, the price bid of the petitioner is excessive. According to him, it is on account of the said reason that the

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second respondent Committee decided to invite fresh bids.

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Heard the learned counsel for the petitioner, the

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learned Government Pleader and the learned counsel for the fourth respondent.

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The learned counsel for the petitioner, relying on

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Ext.P11 remarks of the fourth respondent, contended that the financial bid of the petitioner should not have been rejected by the second respondent on the ground that there is only one bidder. He also pointed out, relying on Ext.P11, that the financial bid submitted by the petitioner namely, INR4,21,54,523/- is far below the budget available for consultancy service, viz., USD 1 million, viz., INR 663 lakhs. He further contended that Ext.P14 decision of the second respondent does not give any reason for its decision to go for fresh bid. As such, according to the learned counsel, Exts.P9 and P14 decisions are to be interfered with and that there shall be a direction to the second respondent Committee to consider the matter afresh. In the course of the hearing, on a query from the Court, the learned counsel for the petitioner submitted, on

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WPC No.4871 of 2016

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instructions, that the petitioner is willing to carry out the consultancy service at the cost estimated by the fourth respondent, namely INR 225 Lakhs.

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Ext.P10 is the guidelines applicable for selection and employment of consultants. Clause 2.33 of Ext.P10 guidelines reads thus :

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“2.33 The Borrower will be justified in rejecting all proposals only if: (i) all proposals are nonresponsive because they fail to respond to important aspects of the TOR or present major deficiencies in complying with the TOR in accordance with paragraph 2.21; or (ii) all proposals fail to achieve the minimum technical score specified in the RFP; or (iii) if the offered price of the successful proposal is substantially higher than the available budget or a recently updated cost estimate. In the latter case, as an alternative to re-invitation, the feasibility of increasing the budget or scaling down the scope of services with the firm should be investigated in consultation with the Bank. However, in accordance with paragraph 2.27, any substantial reduction in the scope of services will not be acceptable and will require a reinvitation. If cost is a factor in the evaluation for a time-based contract, the number of person-months proposed by the consultant may be negotiated, provided that it does not compromise quality or adversely affect the assignment. Even in such cases, the experts' rates shall not normally be negotiated,

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as per paragraph 2.29.”

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A close reading of the aforesaid clause in Ext.P10 guidelines indicates that if the offered price of the successful proposal is substantially higher than the available budget or a recently updated cost estimate, the borrower is justified in rejecting all the proposals. As noted above, the specific contention raised by the fourth respondent in the counter affidavit filed by him is that the estimated cost of the consultancy service is only INR 225 lakhs and that the bid of the petitioner is excessive. Ext.R4 (d) is the estimate prepared for the said purpose. As such, in the light of Clause 2.33 of Ext.P10 guidelines, it cannot be said that the decision of the second respondent Committee to reject all proposals and to invite fresh bids is illegal in any manner. As regards the contention advanced by the learned counsel for the petitioner based on the budget prepared for the consultancy service as indicated in Ext P11 remarks, it is clarified in the counter affidavit filed by the fourth respondent that the budget of USD 1 million shown in Ext.P11 is not only for the service for

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which bids have been invited as per Ext.P4 notification, but also for other services like training, NGO consultancies etc. There is nothing to indicate that the said contention of the fourth respondent is incorrect. As such, there is no substance in the argument raised by the petitioner based on the budget. As noted above, in Ext.P9 decision, the second respondent Committee has categorically stated the reason for its decision to invite fresh bids. As such, it cannot be said tha t the decision of the second respondent Committee in not interfering with its earlier decision at the instance of the joint-venture partner the petitioner is vitiated for want of reasons.

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As indicated above, the bid by the petitioner was rejected as the amount quoted by the petitioner is far in excess of the estimate prepared for the consultancy service. Now, the petitioner is willing to render consultancy service at the estimated cost. In so far as the petitioner was found qualified in the technical evaluation, I am of the view that if there is no prohibition in the guidelines in considering the single bid, the offer now made by the petitioner shall be considered by the

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WPC No.4871 of 2016

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second respondent Committee so that the project will not be delayed any further on that score.

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In the result, the writ petition is disposed of directing the petitioner to submit a revised unconditional offer as indicated to this Court with all particulars, within 10 days from today. If such a proposal is submitted by the petitioner, the same shall be considered by the second respondent Committee, if there is no prohibition in the guidelines in considering the single bid, before initiating further proceedings for inviting fresh bids pursuant Ext.P9 and P14 decisions.

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Sd/-

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P.B.SURESH KUMAR, JUDGE.

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tgs

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(true copy)

M/S.Sherwood Technocrats v. State of Kerala

Case brief

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M/S.Sherwood Technocrats v. State of Kerala

Case brief

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