Petitioner, second highest bidder, challenged award to highest bidder who delayed agreement execution due to revised security deposit and pandemic. Court dismissed petition holding no automatic right exists for second bidder upon highest bidder's default.
Petition dismissed without ordering award of work to petitioner.
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.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR TUESDAY, THE 14TH DAY OF SEPTEMBER 2021 / 23RD BHADRA,
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WP(C) NO. 15259 OF 2021
PETITIONER:
SHRI.G.BALAKRISHNAN NAIR, AGED 62 YEARS, S/O. GOPALA PILLAI, GOKULAM, 32/2255A, NEW KALAVATH ROAD, PALARIVATTOM, KOCHI-682025.
BY ADVS. S.SREEKUMAR (SR.) P.MARTIN JOSE P.PRIJITH THOMAS P.KURUVILLA R.GITHESH AJAY BEN JOSE MANJUNATH MENON SACHIN JACOB AMBAT HARIKRISHNAN S.
RESPONDENTS:
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4 MR. PRAVEEN KUMAR K.G., SOUPARNIKA, THALAVADY P.O., ALAPPUZHA-689572. SMT.PRINCY XAVIER GOVERNMENT PLEADER SRI.K.JAJU BABU (SR.) SRI.BRIJESH MOHAN SMT.RESMI G. NAIR
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 14.09.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
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P.B.SURESH KUMAR, J.
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dated this the 14th day of September, 2021
J U D G M E N T
In terms of Ext.P1 tender notice, the third respondent invited online bids for executing a work for removal of earth deposited during flood from 'varattar' and 'Adhipamba' rivers in Pathanamthitta District. Both petitioner and the fourth respondent submitted bids pursuant to Ext.P1 tender notice. The bid submitted by the fourth respondent was the highest. Though the rate quoted by the fourth respondent was Rs.501/- per cubic meter, on negotiation, the fourth respondent raised his offer to Rs.684/- per cubic meter. On 02.06.2020, the third respondent awarded the work to the fourth respondent and directed him to furnish the security
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deposit namely Rs.2,19,65,800/-in the manner prescribed and execute the agreement in stamp paper worth Rs.4,39,400/within 14 days without fine and within 24 days with fine. Ext.P5 is the selection notice issued by the third respondent to the fourth respondent in this regard. The fourth respondent did not furnish the security deposit within the time stipulated in Ext.P5 selection notice. Instead, on 25.09.2020, he submitted a representation to the third respondent seeking orders enlarging the time fixed for furnishing the security deposit and execution of the agreement in the light of the restrictions imposed by the Government for preventing the spread of Covid-19 pandemic. On the basis of the request made by the the fourth respondent, the third respondent granted time to the fourth respondent till 26.10.2020 for furnishing security deposit and execution of the agreement. Ext.R3(a) is the communication issued by third respondent in this regard on 21.10.2020.
entertained a doubt in the meanwhile as to the amount of the
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security deposit to be furnished by the fourth respondent, and after clearing the said doubt, the third respondent issued Ext.P6 communication to the fourth respondent on 30.10.2020 stating that the amount of the security deposit to be furnished by him is Rs.4,39,31,500/-. In terms of Ext.P6 communication, the third respondent directed the fourth respondent to furnish the security deposit and execute the agreement within seven days from the date of receipt of the said communication. The fourth respondent did not execute the agreement within the time stipulated in Ext.P6 communication as well. Instead, as the security deposit was doubled, on 23.12.2020, the fourth respondent preferred a representation to the third respondent seeking permission to furnish the security deposit in instalments. Ext.R4(f) is the representation submitted by the fourth respondent in this regard. Ext.R4(f) representation was rejected by the third respondent on 24.03.2021.
petitioner submitted Ext.P7 representation to the third
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respondent requesting the third respondent to award the work to him pointing out that since the fourth respondent has not furnished the security deposit and executed the agreement within the time stipulated in Ext.P5, the work ought to have been awarded to the petitioner. On the same day on which the request of the fourth respondent to furnish the security deposit in instalments was rejected, the third respondent gave Ext.P8 communication to the petitioner requiring to intimate the third respondent as to whether the petitioner is prepared to undertake the work at the rate of Rs.684/- per cubic meter quoted by the fourth respondent. In response to Ext.P8 communication, the petitioner submitted Ext.P9 willingness to execute the work at the rate quoted by the fourth respondent. No action was, however, taken on Ext.P9 willingness furnished by the petitioner. The petitioner, in the circumstances, preferred a representation to the Chief Minister of the State complaining about the inaction on the part of the third respondent in awarding the work to him. Ext.P11 is the
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representation submitted by the petitioner to the Chief Minister. It appears that the said representation has been forwarded to the office of the third respondent and in the light of the same, the third respondent has informed the petitioner that appropriate decision as regards the claim of the petitioner will be taken by the second respondent soon. Ext.P12 is the communication issued by the third respondent in this regard. The writ petition is filed immediately thereafter seeking directions to respondents 2 and 3 to enter into necessary agreement with the petitioner for execution of the work. The case set out by the petitioner in the writ petition is that insofar as the highest bidder has not executed the agreement within the time initially stipulated and later enlarged, the petitioner who is the second highest bidder in the bid process ought to have been awarded the work.
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third respondent pointing out that since the fourth respondent has not furnished the security deposit and executed the agreement despite having been given sufficient time, the second respondent, the Chief Engineer of the department has placed the matter before the Government for appropriate decision in this regard, and on 14.07.2021, the Government issued Ext.R3(c) communication to the second respondent directing him to give seven more days to the fourth respondent to furnish the security deposit and execute the agreement. It is stated on behalf of the third respondent that Ext.R3(c) communication was brought to the notice of the fourth respondent on 16.07.2021, and in the light of the said communication, the fourth respondent ought to have furnished the security deposit and executed the agreement on or before 23.07.2021. It is stated on behalf of the third respondent that on the next working day, the fourth respondent requested the third respondent to grant 15 days time more to furnish the security deposit pointing out his inability to obtain bank
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guarantee for the huge sum of money in that short span of time as the banks are not functioning on regular basis due to the restrictions imposed by the Government for the prevention of the Covid–19 pandemic. It is also stated on behalf of the third respondent in the statement that immediately thereafter on 04.08.2021, the fourth respondent completed the formalities for execution of the agreement including furnishing of the security deposit and the agreement was not executed by the department with the fourth respondent in the light of the interim order passed by this Court in the meanwhile on 30.07.2021. It is also stated in the statement that having regard to the disruptions caused to the normal life on account of the pandemic, insofar as the fourth respondent has completed all the formalities relating to the execution of the agreement, the department does not find any impediment in entering into the necessary agreement with the fourth respondent for execution of the work.
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respondent stating, among others, that though he was informed in terms of the selection notice that the amount of security deposit to be furnished by him for the work is Rs.2,19,65,800/-, the same was revised later to Rs.4,39,31,500/- in terms of Ext.P6 communication issued on 30.10.2020, at a point of time when the Government was considering the question of reducing the security deposits to be furnished by the contractors for similar works in the wake of the pandemic; that he was therefore, advised to wait until the Government takes a decision in this regard and while so, on 07.01.2021, in terms of Ext.R4(g) order, the Government reduced the security deposit to be furnished for similar works substantially; that in the light of Ext.R4(g) order of the Government, the department themselves sought clarification from the Government as to the security deposit to be furnished by him for the subject work, and that it was while the said request for clarification was pending consideration before the Government that the Government has issued Ext.R3(c)
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communication. It is also stated by the fourth respondent in the counter affidavit that since no decision was forthcoming from the Government on the issue relating to the quantum of security deposit to be furnished by him and since the Government has issued Ext.R3(c) decision in the meanwhile, he
decided to furnish security deposit in tune with Ext.P6 communication and it is on that basis that he has furnished security deposit for the work. It is also stated in the counter affidavit that the delay of a few days in complying with the direction contained in Ext.R3(c) was due to the delay caused by the bank in providing the bank guarantee sought by him as the banks were not functioning on regular basis then due to the restrictions in connection with the pandemic. It is also mentioned by the fourth respondent in the counter affidavit that the rate quoted by the petitioner for the work is less by Rs.16,44,21,939/- when compared to the rate quoted by him.
petitioner, the learned Government Pleader as also the learned
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Senior Counsel for the fourth respondent.
submitted that in Ext.P5 selection notice, it is categorically mentioned that if the fourth respondent does not execute the agreement within the time stipulated therein, the work will be awarded to the second highest bidder. According to the learned Senior Counsel, admittedly the fourth respondent has not executed the work within the time stipulated in Ext.P5 selection notice. It is argued by the learned Senior Counsel therefore, that the third respondent ought to have awarded the work to the petitioner as he was the second highest bidder in the bid process. It was also argued that at any rate, since the fourth respondent has not furnished the security deposit for the work and executed the agreement within the time stipulated by the Government even in Ext.R3(c) direction issued by the Government, the work should have been awarded to the petitioner. It was further argued that insofar as the petitioner has agreed to execute the work at the rate quoted by the
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highest bidder, the fourth respondent, there was absolutely no justification for the third respondent in not awarding the work to the petitioner. It was all the more so, according to the learned Senior Counsel, since the work in question was one to be executed on an emergent basis.
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respondent reiterated the stand of the fourth respondent in the counter affidavit filed in the matter. It was emphatically argued by the learned Senior Counsel that in the light of Ext.R4(g) order of the Government, the fourth respondent was not liable to furnish security deposit to the tune of Rs.4,39,31,500/- for the subject work and it was with a view to complete the work at the earliest point of time that he has decided to comply with the direction of the Government contained in Ext.R3(c) communication. It was argued by the learned Senior Counsel that in cases of this nature, the officers of the Department would be well within their powers in granting time for execution of the agreement for works, if the contractors concerned are willing to execute the work on the same terms and conditions offered by them. The learned Senior Counsel has relied on the decision of the Apex Court in Bharat Coking Coal Ltd. v. AMR Dev Prabha , (2020) 16 SCC 759, in support of the said point urged by him.
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considered the contentions put forward by their learned counsel.
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case of the fourth respondent that he has made all arrangements for execution of the agreement for the work before 30.06.2020. Again, as noted, the revision of the security deposit for the work was to the tune of almost Rs.2.2 crores. Ext.R4(g) order of the Government indicates that in the wake of the Covid-19 pandemic, on 13.5.2020, the Government of India requested the State Governments to relax the terms of security deposits to be furnished by the contractors in respect of procurements and it is in the light of the said request of the Central Government that the said order has been issued by the Government. In other words, Ext.R4(g) would probabilise the case of the fourth respondent that Ext.P6 communication was issued at a point of time when the Government was examining the question of relaxing the terms of security deposits to be furnished by the contractors in respect of procurements. It is seen that it is in the said circumstances, the fourth respondent preferred Ext.R4(h) representation before the third respondent requesting him to revise the security deposit to be furnished by
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the fourth respondent in tune with Ext.R4(g) order of the Government. It is also seen that it is having convinced that there is merit in the request made by the fourth respondent in Ext.R4(h) representation, the second respondent placed the matter before the Government in terms of Ext.R4(j) communication for a decision as to the security deposit to be furnished by the fourth respondent. Exts.R4(g), R4(h) and R4(j) documents would probabilise the case of the fourth respondent that the agreement for the subject work could not be executed by him on account of the doubt entertained by the officials of the department as to the quantum of the security deposit to be furnished by him. It is further seen that it was while Ext.R4(j) request made by the second respondent before the Government was pending consideration, the Government issued Ext.R3(c) communication directing the department to forfeit the earnest money deposit furnished by the fourth respondent if he does not complete the formalities regarding the execution of the agreement within seven days. As seen
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from the materials on record, pursuant to the said direction, the fourth respondent has furnished the security deposit in tune with Ext.P6 communication. Of course, there was a delay of nine days in complying with the direction contained in Ext.R3(c) communication. In a case of this nature, as rightly contended by the learned Senior Counsel for the fourth respondent, the department is well within its power in granting enlargement of time, and I do not, therefore, find any impropriety or illegality in the stand taken by the department that they would have entered into the necessary agreement with the fourth respondent but for the interim order passed by this Court on 30.07.2021, especially when the petitioner has no case that the stand aforesaid of the officials is vitiated by malice. I am fortified in this view by the decision of the Apex Court in Bharat Coking Coal Ltd. Paragraphs 46 and 47 of of the said judgment read thus:
46. With regard to other allegations concerning condonation of Respondent 6's delay in producing guarantees, we would only
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reiterate that there is no prohibition in law against public authorities granting relaxations for bona fide reasons. In Shobikaa Impex (P) Ltd. v. Central Medical Services Society , it has been noted that: (SCC p. 243, para 20)
“ 20 . … the State can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation. It has been further held that the State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process, the Court must exercise its discretionary powers under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point.”
47. Even if there had been a minor deviation from explicit terms of the NIT, it would not be sufficient by itself in the absence of mala fide for courts to set aside the tender at the behest of an unsuccessful bidder. This is because notice must be kept of the impact of overturning an executive decision and its impact on the larger public interest in the form of cost overruns or delays.
13. Be that as it may, in a case of this nature, of
course, the department would be well within its power to award the work to the second highest bidder, if the highest bidder
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does not furnish the security deposit and execute the agreement within the time stipulated. But that does not mean that the failure on the part of the highest bidder in furnishing security deposit and executing the agreement within the time stipulated would confer a right on the second highest bidder to get the work awarded to him. In other words, even if there is failure on the part of the highest bidder in furnishing security deposit and executing the agreement on receipt of selection notice, the same does not confer any right to the second highest bidder to claim that the work shall be awarded to him. Identical is the stand taken by this Court in Rajesh C. v. District Collector , 2012 (2) KHC 185 and the Calcutta High Court in Sarbangapur Fishermen's Co-operative Society v. State of West Bengal , 2018 SCC Online Cal 8094. It is all the more so since it is trite that the bidders participating in the tender process have no right other than the right to equality and fair treatment in the matter of evaluation of the competitive bids offered by the interested persons in response
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to notice inviting tenders in a transparent manner and free from any hidden agenda [See Meerut Development
Authority v. Assn. of Management Studies , (2009) 6 SCC 171].
The writ petition, in the circumstances is without
merits and the same is, accordingly, dismissed.
Sd/-
P.B.SURESH KUMAR, JUDGE.
YKB
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APPENDIX OF WP(C) 15259/2021
PETITIONER EXHIBITS
Exhibit P1 TRUE COPY OF E-TENDER NO. 03/EOI/2019/SE/ISC NOTICE DATED 01/01/2020 ISSUED BY THE 3RD RESPONDENT.
Exhibit P2 TRUE COPY OF TERMS AND CONDITIONS AND SCOPE OF THE WORK TO BE UNDERTAKEN BY THE SUCCESSFUL BIDDER ISSUED BY THE 3RD RESPONDENT ALONG WITH EXHIBIT P1.
Exhibit P3 TRUE COPY OF COMMUNICATION DATED 19/05/2020 ISSUED BY THE 1ST RESPONDENT TO THE 2ND RESPONDENT.
Exhibit P4 TRUE COPY OF COMMUNICATION DATED 29/05/2020 ISSUED BY THE 2ND RESPONDENT TO THE 3RD RESPONDENT.
Exhibit P5 TRUE COPY OF NOTICE OF SELECTION DATED 02/06/2020 ISSUED BY THE 3RD RESPONDENT TO THE 4TH RESPONDENT.
Exhibit P6 TRUE COPY OF NOTICE DATED 30/10/2020 ISSUED BY THE 3RD RESPONDENT TO THE 4TH RESPONDENT.
Exhibit P7 TRUE COPY OF REPRESENTATION DATED 11/02/2021 SUBMITTED BY THE PETITIONER TO THE 3RD RESPONDENT.
Exhibit P8 TRUE COPY OF COMMUNICATION DATED 24/03/2021 3RD RESPONDENT ISSUED TO THE PETITIONER.
Exhibit P9 TRUE COPY OF COMMUNICATION DATED 05/04/2021 TO THE 3RD RESPONDENT INTIMATING ACCEPTANCE OF THE GOVERNMENT APPROVED RATE OF RS. 684/M3 FOR
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EXECUTING THE WORK.
Exhibit P10 TRUE COPY OF COMMUNICATION DATED 24/03/2021 ISSUED BY THE 3RD RESPONDENT TO THE 4TH RESPONDENT INTIMATING REJECTION OF REQUEST TO PAY THE SECURITY DEPOSIT IN FIVE INSTALMENTS.
Exhibit P11 TRUE COPY OF REPRESENTATION DATED 31/05/2021 SUBMITTED BY THE PETITIONER BEFORE THE HON'BLE CHIEF MINISTER.
Exhibit P12 TRUE COPY OF COMMUNICATION DATED 05/07/2021 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER.
RESPONDENTS EXHIBITS
Exhibit R3(A) COPY OF THE LETTER DATED 21.10.2020 Exhibit R3(B) COPY OF THE LETTER DATED 30.10.2020 Exhibit R3(C) COPY OF THE GOVERNMENT LETTER DATED 14.07.2021
Exhibit R3(D) COPY OF THE LETTER DATED 14.07.2021 ISSUED BY 3RD RESPONDENT.
Exhibit R4(A) TRUE COPY OF THE LETTER VIDE NO.D63911/2019/ISC DATED 29.01.2020 ISSUED BY THE 3RD RESPONDENT TO THE 2ND RESPONDENT ALONG WITH TYPED COPY
Exhibit R4(B) TRUE COPY OF THE LETTER VIDE NO.W338940/2019/EOI/DB DATED 14.02.2020 ISSUED BY THE 2ND RESPONDENT TO THE 4TH RESPONDENT
Exhibit R4(C) TRUE COPY OF THE LETTER DATED 18.02.2020 SUBMITTED BY THE 4TH RESPONDENT BEFORE THE 2ND RESPONDENT ALONG WITH TYPED COPY
Exhibit R4(D) TRUE COPY OF THE THREE STAMP PAPERS
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DATED 30.06.2020 IN THE NAME OF THE 4TH RESPONDENT.
Exhibit R4(E) TRUE COPY OF THE EMAIL DATED 25.09.2020 SENT BY THE 4TH RESPONDENT TO THE 3RD RESPONDENT.
Exhibit R4(F) TRUE COPY OF THE REPRESENTATION DATED 23.12.2020 SUBMITTED BY THE 4TH RESPONDENT BEFORE THE SUPERINTENDING ENGINEER.
Exhibit R4(G) TRUE COPY OF THE GOVERNMENT ORDER G.O(P)NO.7/2021/FIN DATED 07.01.2021. Exhibit R4(H) TRUE COPY OF THE REPRESENTATION DATED 19.04.2021 SUBMITTED BY THE 4TH RESPONDENT BEFORE THE 3RD RESPONDENT. Exhibit R4(I) TRUE COPY OF THE CLARIFICATION LETTER NO.D6-1911/2019/SE/ISC DATED 20.04.2021 ISSUED BY THE 3RD RESPONDENT TO THE 2ND RESPONDENT Exhibit R4(J) TRUE COPY OF THE COMMUNICATION VIDE NO.W3-38940/2019/EOI/DB-2 DATED 08.05.2021 FORWARDED BY THE 2ND RESPONDENT TO THE GOVERNMENT. TRUE COPY OF THE CLARIFICATION LETTER NO.D61911/2019/SE/ISC DATED 20.04.2021 ISSUED BY THE 3RD RESPONDENT TO THE 2ND RESPONDENT
Exhibit R4(K) TRUE COPY OF THE CLARIFICATION LETTER NO.D6-1911/2019/SE/ISC DATED 14.07.2021 ISSUED BY THE 3RD RESPONDENT TO THE 4TH RESPONDENT Exhibit R4(L) TRUE COPY OF THE LETTER DATED 19.07.2021 ISSUED BY THE 4TH RESPONDENT TO THE PRIVATE SECRETARY, IRRIGATION AND WATER RESOURCES.
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Exhibit R4(M) TRUE COPY OF THE LETTER DATED 19.07.2021 ISSUED BY THE 4TH RESPONDENT TO THE 2ND RESPONDENT.
Exhibit R4(N) TRUE COPY OF THE TREASURY SAVING DEPOSIT CERTIFICATE VIDE NO.JL0404001 DATED 02.08.2021 OF THE SUB TREASURY, CHENGANOOR.
Exhibit R4(O) TRUE COPY OF THE LETTER OF THE STATE BANK OF INDIA DATED 03.08.2021 OFFERING BANK GUARANTEE WITHIN 2 DAYS.
Exhibit R4(P) TRUE COPY OF THE LETTER SUBMITTED BY THE 4TH RESPONDENT BEFORE THE 3RD RESPONDENT AND ITS ACKNOWLEDGMENT
Exhibit R4(Q) TRUE COPY OF THE BANK GUARANTEE OFFERED BY THE STATE BANK OF INDIA ON 04.08.2021.
Exhibit R4(R) TRUE COPY OF THE EMAIL SENT BY THE PETITIONER HEREIN ADDRESSED TO THE RESPONDENTS 2 AND 3 ON 23.07.2021.
3 issues framed by the court
Whether a second highest bidder has an automatic right to the tender award upon the default of the highest bidder in executing the agreement within the stipulated time.
Whether the department was justified in extending time for the highest bidder to furnish security despite delays caused by the pandemic.
Whether the petitioner acting as the second highest bidder can claim the work awarding based on the highest bidder's failure to sign the agreement.
Colour shows how this judgement treated each authority
Bharat Coking Coal Ltd. v. AMR Dev PrabhaRelied on¶84
Bharat Coking Coal Ltd. v. AMR Dev Prabha, (2020) 16 SCC 759 · Who else cites this
Shobikaa Impex (P) Ltd. v. Central Medical Services SocietyDistinguished¶87
Shobikaa Impex (P) Ltd. v. Central Medical Services Society
Rajesh C. v. District CollectorReferred¶94
Rajesh C. v. District Collector, 2012 (2) KHC 185
Sarbangapur Fishermen's Co-operative Society v. State of West BengalReferred¶94
Sarbangapur Fishermen's Co-operative Society v. State of West Bengal, 2018 SCC Online Cal 8094 · Who else cites this
Meerut Development Authority v. Assn. of Management StudiesReferred¶96
Meerut Development Authority v. Assn. of Management Studies, (2009) 6 SCC 171 · Who else cites this
SHRI.G.BALAKRISHNAN NAIR
STATE OF KERALA
THE CHIEF ENGINEER, IRRIGATION AND ADMINISTRATION
THE SUPERINTENDING ENGINEER, IRRIGATION SOUTH CIRCLE
MR. PRAVEEN KUMAR K.G.
P.B.SURESH KUMAR
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
