A timber contractor challenged acceptance of a bid more than 25% below estimated PAC. The court held that the Government order permitting consideration of such bids applied through the tender notice’s incorporation of existing conditions. It treated the rejection clause as non-mandatory and dismissed the appeal.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR
&
THE HONOURABLE MR. JUSTICE SHAJI P.CHALY
WEDNESDAY, THE 17TH DAY OF NOVEMBER 2021 / 26TH KARTHIKA, 1943
WA NO. 1350 OF 2021
JUDGMENT DATED 13.10.2021 IN WP(C) 16522/2021 OF HIGH COURT OF KERALA.
APPELLANT/PETITIONER IN THE WRIT PETITION:
BABY JOSEPH
AGED 62 YEARS
S/O.JOSEPH, THAYIL HOUSE, THEKOY P.O, ERATTUPETTA, KOTTAYAM 686 580
BY ADVS.
S.PRASANTH (AYYAPPANKAVU) VARSHA BHASKAR
RESPONDENTS/RESPONDENTS IN WRIT PETITION:
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PATHANAMTHITTA 689 674.
7 SHAMEER B SHAMEER MANZIL, CHEMPANARUVI P.O, PIRAVANTHOOR, KOLLAM 689 696. BY ADVS. SRI. T.P. SAJAN, SPL. GOVERNMENT PLEADER SRI. THOMAS ABRAHAM SMT. MERCIAMMA MATHEW SRI. ASWIN.P.JOHN SRI. R.ANANTHAPADMANABAN SRI. THAYYIB SHA P.S. SRI. GEORGE J.NALAPPAT SRI. P.P.BIJU
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 17.11.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
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Dated this the 17th day of November, 2021.
JUDGMENT
SHAJI P. CHALY.
The petitioner in W.P.(C) No. 16522 of 2021 is challenging the judgment of the learned single Judge dated 13.10.2021 in this appeal, whereby the learned single Judge had declined the relief sought by the appellant/writ petitioner seeking interference with the tender awarded by respondents 3 and 4 i.e., the Chief Conservator of Forests, Southern Circle, Kollam and the Divisional Forest Officer, Divisional Forest Office, Ranni, Pathanamthitta respectively, to the 5th respondent namely Sri. Jim Zachariah Thomas, and the consequential relief sought to award the tender as per Ext. P2 tender document to the appellant.
The appellant is a forest contractor, who claims sufficient experience in the field, and said to have executed a number of works. The 4th respondent i.e., the Divisional Forest Officer, Ranni, Pathanamthitta District, invited e-tenders relating to 'working down timber, Teak Poles, Billets and Jungle Wood, and Firewood from 1956 TP, Adukuzhi Bit-III at Thannithode Forest Station of Vadasserikkara Range and transportation of the wood materials to various
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Government Timber Depots and stacking along with coupe road side during 2021-2022.
“(c) the bidders who quoted below estimate rate will remit performance guarantee with a view to curb the tendency to quote low rates and execute the works unsatisfactorily.
I) If the quoted PAC differs, estimate PAC by more than 25% the bid will be rejected.
ii) If the quoted PAC differ estimate PAC upto 25%, the bidder will remit performance guarantee equal to the unbalanced price in the estimated PAC and quoted PAC. This will be released only after satisfactory completion of the work.
iii) No interest, in any circumstances, shall be payable by the department to the bidder for the EMD/security/deposit/performance guarantee furnished.”
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provided that if the quoted PAC is less than the estimated PAC by more than 25%, the bid will be rejected. It is the case of the appellant/writ petitioner that he has decades of experience as a Forest Contractor and has all the infrastructure necessary for carrying out the works. However, since the tender condition contained the above specified clause not to quote the rate exceeding 25% below the estimated PAC, the maximum amount that could have been quoted by the bidders was 25% below the estimated PAC.
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favour of the 5th respondent.
PWD manual 2012, which according to the appellant, only deals with the decrease in the cost of bitumen and steel and therefore, the said notification cannot be made applicable for forest contracts. However, by relying upon Ext. P7, appellant makes a contention that the said Government Order is of the year 2016 and the Divisional Forest Officer, who was aware of the said order should have made the contents of the said order of the Government, part of Exts. P1 and P2 e-tender notice and the e-Government Procurement Notice respectively. Having not done so, the said Government Order should not have been relied upon to award the tender in favour of the 5th respondent, who has quoted 25% below the estimated rate in view of clause 3 ©, an essential condition contained under the e-Government procurement notice.
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Divisional Forest Officer is that in Ext. P1 e-tender notice dated 15.02.2021, it was clearly mentioned that the tenderer is bound to comply with the terms and conditions in force, besides the conditions that will be framed by the Government in future in connection with the tender in question.
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the estimated amount. It is clearly specified therein, that the tender accepting authority shall take appropriate decisions based on merits.
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if sufficient competition is ensured and the rate quoted by the second and third lowest bidder are also comparatively nearer to the lowest bidder. Other contentions are also raised.
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to failure of contract or poor quality of work executed by the contractor and wastage of public money. In such circumstances, the Government after examining the matter in detail pleased to issue certain guidelines for processing quotes below 25% of estimated PAC, in partial modifications of Clause 2009.4 of Revised PWD Manual. It will be better to extract the guidelines mentioned in Ext.P7 (Ext.R4(c)).
“(i) The tender with lowest quoted rate less than 75% estimated PAC shall not be rejected if sufficient completion is ensured and the rate quoted by the second and third lowest bidder are also comparatively nearer to the lowest bidder. (ii) The tender inviting authority shall obtain a statement from the lowest bidder quoting rates below PAC regarding the reasonableness of the rate quoted to assess that whether the quoted rates are workable. (iii)Assessment shall be made by Department also, as to whether the particular work has any rate advantage as compared to the rate as given in Price Software Viz.reduction in cost bitumen, steel etc. (iv). If any contractor quotes less than 75% of the estimated PAC and variation with all other quoted rates are much higher, the Tender accepting Authority shall take appropriate decision based on merits. (v). The above guidelines will come into force with immediate effect.”
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Joseph K.(L2) and Shameer (L3) had quoted -27.34% and -25.10% respectively which is also below the estimate rate. The petitioner, Mr.Baby Joseph(L4) quoted -25% below estimate rate. It is the case of the official respondents that while awarding any contract work related to Government, the topmost priority is Government profitability. According to the official respondents, in the bid opening summary of this tender, L1 is profitable to the Government. Absolutely no serious malafides are alleged in the writ petition. In such a situation, it is very difficult for this Court to interfere with the proceedings only on the ground that there is violation of Clause 3(c) of Ext.P2. Clause 7 of Ext.P1 says that all other existing conditions related to auction in timber in Kerala Forest department and PWD will be applicable in this etender also. Clause 13 of Ext.P2 says that the acceptance of the tender rests with the Divisional Forest Officer who does not undertake to accept the lowest or any particular tender. Clause 14 of Ext.P2 says that the right to carry out the work in conformity with or in a manner entirely different from the terms of this invitation that may be considered most suitable before or subsequent to the receipt of tenders due to exigencies of work is reserved with the Forest department. The official respondents say that the lowest quoted rate is beneficial to Government about Rupees 15.79 lakhs and being the lowest, the tendering authority accepted it and awarded the work. After going through the tender conditions and Ext.P7, it can not be said that Clause 3(c) of Ext.P2 is mandatory. The decisions relied on by the learned counsel for the petitioner are all
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settled positions in these types of cases. There cannot be any dispute on those settled positions laid down by the Apex Court and this Court in Bakshi Security and Personnel Services's case (supra), Ramana Dayaram Shetty's case (supra) and Ramesan's case(supra). But in this case, it cannot be said that the official respondents violated Clause 3(c) of Ext.P2 in the light of Ext.P7. Ext.P7 is a Government order issued by the Finance department of the Government of Kerala. As I said earlier, it is clearly stated in the tender conditions itself that all other existing conditions related to auction of timber in Kerala Forest department and PWD will be applicable in this e-tender also. Hence there is nothing wrong in the stand of the official respondents that the tender of the 5th respondent is not rejected in the light of Ext.P7. I see no reason to interfere with the actions of the official respondents.”
It is thus challenging the legality and correctness of the judgment, the appeal is preferred.
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timber and transporting it to various destinations. The fundamental argument raised by the appellant revolves around the said notification
and for convenience, the same is extracted hereunder for proper appreciation, though a partial repetition:
“GOVERNMENT OF KERALA
Abstract
Finance Department-Award of work when contractor quotes rates less than 75% of the Estimated value of work -Clarification-Orders issued.
FINANCE (INDUSTRIES & PUBLIC WORKS -B) DEPARTMENT G.O.(P) No. 124/2016/Fin. Dated, Thiruvananthapuram, 29.08.2016
Read: 1. G.O.(P) No. 13/2012/PWD dated 01.02.2012
ORDER
The clause 2009.4 of PWD Manual 2012 envisages that the tender/quotation with quoted PAC less than 75% of the estimated PAC shall not be accepted, since awarding of such works may lead to failure of contract or poor quality of work executed by the contractor and wastage of public money.
3.The Government after having examined this case in detail, are pleased to issue the following guidelines for processing quotes below 25% of estimated PAC, in partial modifications of Clause 2009.4 of Revised PWD Manual.
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(By Order of the Governor) Dr. K.M.ABRAHAM
Additional Chief Secretary (Finance).”
with 'approval of tender excess or quotation' is referred to and it reads thus:
“2009.4. Approval of tender excess / quotation
Normally the lowest tender/ quotation shall be accepted. If the quoted PAC for a work calculated based on the rates quoted by the contractor is within the local market rate justification estimate, the tender /quotation shall be approved by the tendering authority. If the quoted PAC exceeds the local market rate justification estimate amount the tendering authority shall reject the tender/ quotation and
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retender the work or invite fresh quotation.
The tender / quotation shall be rejected in the following cases also. 1) Tender / quotation with additional conditions
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Kerala Forest Department and PWD will be applicable in the instant e- tender also.
be permitted by the Government in future in connection with the tender in question. The appellant, who claims to be a seasoned forest contractor, has submitted that he has carried out various tenders invited by the Forest Department. When it is specified in the e-tender notice that the existing terms and conditions prevailing would be applied in the contract in question, a seasoned contractor can only be presumed to be aware of all the Government notifications in regard to the tender.
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PWD Manual would apply only to the civil works, we are unable to agree with the same for the reason that Ext. P7 order is issued by the Additional Chief Secretary (Finance) in respect of the award of work, when the Contractor quotes the rates less than 75% of the estimated value of work and clarifications were issued accordingly. It is true, in Ext. P7, it is stated that many bids are received at 25% below or even less than the estimated PAC owing to reduction in the cost of bitumen and steel, but not confined to that alone since it is explicitly specified therein that “ or due to any site specific advantage etc. and transparent competition due to e- tendering” . It was accordingly that the Government decided to revisit the existing clause in the revised PWD Manual 2012 by issuing Exhibit P7. The second and third lowest bidders are also comparatively nearer to the lowest tenderer, thus satisfying the requirements of Exhibit P7.
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contract is working down timber and transportation and which cannot be said to be a technically qualified work so as to materially affect the tender activities, even though the quoted PAC is less than the estimated PAC of the Government of Kerala. When there is a clear prescription made in Ext. P1 e-tender notice in respect of the existing terms and conditions applicable to the Government tender, the appellant, a seasoned contractor, cannot be said to be unaware of Ext. P7 order of the Government revising the PWD Manual. It is clear from the stand adopted by the Government that profitability was the essential condition. Above all, there is no allegation of mala fides made in the writ petition. This we say because, the State Government venturing in a commercial activity is entitled, as of right, to protect the interest of the public by ensuring maximum profitability. That apart, the conduct of the writ petitioner shows, he was aware of the fact that the other orders issued by the Government to the extent applicable applies to the instant tender, because he has produced Exhibit P7 order of the Government along with the writ petition, by making a pleading that there is every likelihood of tender being awarded to the 5th respondent.
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quoted PAC differs the estimated PAC by more than 25%, the bid will be rejected, that cannot be said to be a mandatory condition of Ext. P2 issued by the DFO, Ranni, especially due to the fact that the Government Orders are binding on the Department officials and there was no liberty available to the DFO for overlooking Exhibit P7 order of the State Government. The appellant has also no case that the appellant has not participated in any tender of the Forest Department after Ext. P7 order was issued by the State Government revising the PWD revised edition, 2012. It is also clear from clause 7 of Ext. P1 e- tender notice dated 15.02.2012 that the tender inviting authority namely DFO, Ranni has specifically notified for information of the bidders that all other existing conditions relating to the auction tender in Kerala Forest Department and PWD will be applicable in the instant e-tender also. Therefore, merely because a reference is made in Ext. P7 order, regarding the bitumen and steel, that by itself cannot be a good ground to think and visualise that it applies to the civil works alone, because the Government thought of reviewing the existing condition in the PWD Manual at clause 2009.4 also for the reason that there are circumstances available due to site specific advantage etc. and transparent competition due to e-tendering.
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upon various judgments rendered by the Apex Court, which he has canvassed before the learned single Judge in regard to the paramountcy of essential terms and conditions of contract, we are of the view that the condition clause 3(c) in Ext. P2 cannot be said to be an essential and inviolable condition, because it is clearly specified in Ext. P1 e-tender notice that all the existing conditions related to the auction of timber in Kerala Forest Department and PWD will be applicable in the instant e-tender also, apart from other enabling powers conferred on the tendering authority to reject the tenders. Therefore, we are unable to hold that the questioned condition contained under clause 3(c) of Ext. P2 is an essential condition, the violation of which was to be treated as a mandatory condition and the
tenders quoted below 25% of estimated PAC rejected. It is also significant to note that a copy of Exhibit P7 order is communicated to all the State Government Departments including the Forest Department, which can only be legally presumed to be done for guiding the departments, and accordingly regulating the tender proceedings .
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Divisional Forest Officer and the Contractor was executed on 18th October, 2021 and apparently from the documents produced, the 5th respondent has started the work and made substantial progress. The 5th respondent, apart from producing the agreement, has also produced the passes issued by the Range Forest Officer, Vadasserikkara for transporting the working down timber, and the work progress report upto 30.10.2021 shows that 1101 trees were cut down by the successful bidder, out of which 241 are registered. It is also evident from Annexure R5(d) that licence is issued consequent to the execution of the agreement. We find that the contract is also a time bound one and the 5th respondent has to complete the work as is agreed upon in Ext. R5(b) agreement.
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above, we are of the considered opinion that the learned single Judge was right in dismissing the writ petition, as the appellant could not establish any legal infirmities or jurisdictional error, liable to be interfered with in an intra court appeal.
Needless to say, the writ appeal fails and accordingly, it is dismissed.
sd/-
S. MANIKUMAR, CHIEF JUSTICE.
sd/- SHAJI P. CHALY,
JUDGE.
Rv
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APPENDIX OF WA 1350/2021
PETITIONER ANNEXURE
Annexure 1 TRUE COPY OF THE EXTRACT OF THE KERALA PUBLIC WORKS DEPARTMENT MANUAL REVISED EDITION 2012. Annexure 2 TRUE COPY OF THE EXTRACT OF THE NOTICE INVITING TENDER NO.KNC2-4726/21 DATED 05.10.2021 ISSUED BY THE DIVISIONAL FOREST OFFICER KONNI FOREST DIVISION ALONG WITH THE CORRIGENDUM.
ANNEXURE 3 TRUE COPY OF TEH TENDER SUMMARY REPORT ID 2021FD-415792-1 ON THE E-TENDER WEBSITE OF GOVERNMENT OF KERALA AS UPDATED ON 23.10.2021.
ANNEXURE 4 TRUE COPY OF THE AWARD OF CONTRACT FOR TENDER ID 2021-FD-415792-1 DIGITALLY SIGNED BY THE 4TH RESPONDENT ON 23.10.2021.
ANNEXURE 5 TRUE COPY OF GO(P) NO. 15/2013/FIN. DATED 07.01.2013 ISSUED BY THE PRINCIPAL SECRETARY, FINANCE DEPARTMENT.
ANNEXURE 6 TRUE COPY OF GO(P) NO. 50/2014/FIN DATED 07.02.2014 ISSUED BY THE ADDITIONAL CHIEF SECRETARY (FINANCE)
RESPONDENTS' ANNEXURES:
ANNEXURE R5(a): TRUE COPY OF THE ORDER DATED 11.08.2021.
ANNEXURE R5(b): TRUE COPY OF THE AGREEMENT DATED 18.10.2021.
ANNEXURE R5(c): TRUE COPY OF LICENCE NO.7/2021-22.
ANNEXURE R5(d): TRUE COPY OF THE WORK PROGRESS UPTO 30.10.2021.
ANNEXURE R5(d)-1: ENGLISH TRANSLATION OF ANNEXURE R5(d).
ANNEXURE R5(e): TRUE COPY OF THE SAMPLE PASS ISSUED FOR TRANSPORT OF TIMBER BY THE RANGE FOREST OFFICER, VADASSERIKKARA.
ANNEXURE R5: TRUE COPY OF G.O.(P) NO. 124/2016/FIN DATED 29.08.2016.
ANNEXURE R5(g): TRUE COPY OF THE BID OPENING SUMMARY.
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EXHIBIT R4(a): TRUE COPY OF THE AGREEMENT EXECUTED BETWEEN THE CONTRACTOR AND THE DFO.
EXHIBIT R4(b): TRUE COPY OF THE MAHAZER PREPARED ON 19.10.2021 ALONG WITH ENGLISH TRANSLATION.
EXHIBIT R4(c): TRUE COPY OF THE LICENCE NO. 7/2021 DATED 18.10.2021.
/True Copy/
PS to Judge.
rv
2 issues framed by the court
Did the Government order permitting consideration of bids below 75% of estimated PAC apply to the timber contract without express reproduction in the tender notices?
Was the tender clause requiring rejection of bids more than 25% below estimated PAC an essential and mandatory condition?
2 provisions across 2 enactments
BABY JOSEPH
THE STATE OF KERALA
THE PRINCIPAL CHIEF CONSERVATOR OF FORESTS (PLANNING AND DEVELOPMENT)
THE CHIEF CONSERVATOR OF FORESTS SOUTHERN CIRCLE
THE DIVISIONAL FOREST OFFICER
JIM ZACHARIAH THOMAS
S.MANIKUMAR
SHAJI P.CHALY
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
