Dismissed

P M R Construction Company v. State of Kerala

Kerala HC21 Dec 2021WP(C)/17116/2021

Case brief

AI extract

What is this about?

In a public procurement dispute, the Court declined to interfere with the respondents' rejection of the petitioner's tender. The Court held the bank guarantee was invalid as it expired on 29.10.2021, failing to meet the requirement of validity 42 days beyond the bid date. The writ was dismissed.

What did the court decide?

The writ petition was dismissed; the order rejecting the petitioner's tender was upheld.

P M R Construction Company Vs State of Kerala — Contract and Commercial Disputes | Kerala HC (2021)

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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.V.KUNHIKRISHNAN

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TUESDAY, THE 21^ST DAY OF DECEMBER 2021 / 30TH AGRAHAYANA,1943

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WP(C) NO. 17116 OF 2021

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PETITIONER:

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P M R CONSTRUCTION COMPANY P.M.ARCADE, MELMURI P.O., MALAPPURAM DISTRICT, 676 517, A REGISTERED PARTNERSHIP REP.BY ITS PARTNER, P.M. ABDUL SHUKKOOR, PULLIYIL MADASSERY, MELMURI P.O., MALAPPURAM DISTRICT. BY ADVS. K.BABU THOMAS MARYKUTTY BABU

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RESPONDENTS:

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1 STATE OF KERALA REP.BY THE SECRETARY TO THE GOVERNMENT, PUBLIC WORKS DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM 695 001

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2 THE PROJECT DIRECTOR KSTP, T.C.11/339, SREE BALA BUILDING, KESTON ROAD, KAWDIYAR P.O., THIRUVANANTHAPURAM. 695 003

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3 THE CHIEF ENGINEER KSTP, T.C.11/339, SREE BALA BUILDING, KESTON ROAD, KAWDIYAR P.O., THIRUVANANTHAPURAM. 695 003 BY ADV GOVERNMENT PLEADER

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OTHER PRESENT:

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SRI.K.V.MANOJ KUMAR, SR.GP

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 21.12.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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W.P.(C).No.17116/2021

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P.V.KUNHIKRISHNAN, J.

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W.P.(C).No.17116 of 2021

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Dated this the 21^st day of December, 2021

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JUDGMENT

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The respondents issued Exhibit P1 e-tender notice dated 16-6-2021 inviting item rate competitive tenders for performance of the rehabilitation and up gradation of Nenmara - Nelliampathy Road in 30.470 km valued Rs.90,92,79,797/- funded by German Bank and the petitioner submitted online bid on 1-8-2021. It is the case of the petitioner that he produced all the relevant records including experience certificate for completion of single work valued Rs.77,32,04,000/-, bank guarantee for Rs.90,96,000/- valid up to 29-10-2022, notarized Power of Attorney, etc. According to the petitioner, they are duly qualified and eligible for opening of its price bid, which in all probability would be lowest and is entitled to award of the contract. The Petitioner is aggrieved by Ext.P3 letter dated 18-8-2021 of the 2^nd respondent, intimating that the price bids of the work would be opened on 24-8-2021, excluding its price bid, alleging that Ext.P2(d)

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W.P.(C).No.17116/2021

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power of attorney is not signed and the bank guarantee produced is not valid up to 12-1-2022. Aggrieved by the above, this writ petition is filed with following prayers:

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i. Issue a writ of certiorari, or any other appropriate writ, or order, or direction, to the respondents, calling for the records of the case leading up to Ext.P6 and quash Ext.P3 and all further proceedings pursuant to the same for illegal exclusion of the price bid of the petitioner for the work notified in Ext.P1.

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ii. Issue a writ of mandamus, or any other appropriate writ, or order, or direction to the respondents, requiring to forthwith consider and pass orders on Ext.P6 for opening of the price bid of the petitioner for the work notified in Ext.P1, keeping in abeyance finalization of the tender for the work till such time, or within a time stipulated by this Court.

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iii. Declare that Ext.P3 is illegal, arbitrary, unauthorized, without jurisdiction, indefensible, illegal, invalid and null and void and that the petitioner is duly qualified, eligible and entitled for opening of its price bid for the work notified in Ext.P1 and for award of the contract for the same in the event of its price bid becoming the lowest.

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iv. Grant such other relief this Court may deem proper, just and necessary in the peculiar facts and circumstances of the case including costs incurred by the petitioner in these proceedings.

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W.P.(C).No.17116/2021

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When this writ petition came up for consideration

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on 24.08.2021, this Court passed the following order:

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“ Admit.

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Government Pleader takes notice for the respondents.

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Having regard to the peculiar facts of this case, there will be an interim order directing the respondents to consider the financial bid submitted by the petitioner as well provisionally, subject to the outcome of the writ petition. If it is found that the petitioner is entitled to be awarded the work referred to in the writ petition based on their financial bid, the work shall not be awarded to them without obtaining orders from this court. It is, however, made clear that if the petitioner is not found to be the eligible bidder going by the financial bid submitted by them, this order will not preclude the respondents from awarding the work to the eligible bidder. ”

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Subsequently a statement is filed by the official respondents along with I.A.No.1 of 2021 to vacate the interim order. It is the submission of the official respondents that in compliance with the interim order dated 24.08.2021, on 26.08.2021, the website, e-procurement portal was addressed an e-mail to open the financial bid of the petitioner. Ext.R1(e) produced along with the statement is the e-mail. In reply to the same, it was informed that as per the construction of the

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W.P.(C).No.17116/2021

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website, financial bid is not openable for technical reason on account of the fact that only financial bid of the technically qualified bidders can be opened in the website. Otherwise it is to be revoked. Ext.R1(f) is the communication. Hence I.A.No.1 of 2021 to vacate the interim order is filed.

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The matter came up for hearing before this Court on 14.12.2021. The writ petition itself was heard in detail and on that day, this Court passed an order, which is extracted hereunder:

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“A petition is filed to vacate the interim order. According to the learned Government Pleader, as per clause 4 of Ext.P1, the bid is to be submitted on or before 02.08.2021. As per clause 5, the documents required to be submitted are mentioned. It is submitted by the learned Government Pleader that the original bid security in approved form is not submitted and the power of attorney was not signed. 2. The learned counsel for the petitioner submitted that as per Ext.P2(b), it is stated in Clause (iii) that “we are liable to pay up to the guarantee amount only and only if we receive from a written claim or demand not later than 12 months from the said expiry date, i.e., 29.10.2022”, and hence according to the learned counsel for the petitioner, the Bank Guarantee is valid up to 29.10.2022 even as per Ext.P2. The counsel for the petitioner submitted that

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W.P.(C).No.17116/2021

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he will produce documents to show that even as per Ext.P2, the Bank Guarantee is valid up to 29.10.2022. The counsel submitted that the same will be produced on or before 17.12.2021.”

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Based on the above order, the petitioner produced Ext.P7, a confirmation of bank guarantee issued by the Bank of the petitioner.

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Heard the counsel for the petitioner and the Senior Government Pleader.

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The counsel for the petitioner reiterated their contentions in the writ petition. The counsel submitted that a perusal of Ext.P2(b) itself, it is clear that the bank guarantee is valid upto 29.10.2022. The counsel also takes me through Ext.P7 in which the Bank stated that the bank guarantee is valid upto 29.10.2022. As far as the defect in the Power of Attorney is concerned, the counsel takes me through Clause (10) of Ext.P2(c) partnership deed, which is extracted hereunder:

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“All the Partners either severally or jointly may represent the firm before any Statutory, Government, Regulatory authorities and may also participate in Tenders on behalf of the firm and may also submit Tenders, quotations, amendments to such Tenders/quotations etc on behalf of the firm to carry

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W.P.(C).No.17116/2021

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out its business.”

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The counsel submitted that based on the same, the necessary signatures are there in the Power of Attorney. Therefore the counsel submitted that the rejection of the petitioner’s tender as per Ext.P3 is illegal and this Court may kindly interfere with the same.

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The Senior Government Pleader, on the other hand, submitted that, in Ext.P1 invitation for bids, it is clearly stated in Clause (3) that all bids must be accompanied by a bid security of Rs.90,96,000/- drawn in favour of the Project Director, KSTP, Thiruvananthapuram. It is also stated in clause (3) that bid security will have to be in any one of the forms as specified in the bidding document and shall have to be valid for 42 days beyond the validity of the bid. If this is taken, admittedly the bank guarantee should be up to 11.01.2022. In Clause (4) it is stated that the bids must be submitted online on or before 02.08.2021 at 3 pm. Clause (5) says that the bidders are required to submit (a) original demand draft towards the cost of bid document, (b) original bid security in approved form, (c) Power of Attorney and (d) original affidavit confirming correctness of information

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W.P.(C).No.17116/2021

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furnished with the 1^st envelop, to the Project Director, before 02.08.2021. The Senior Government Pleader submitted that as mentioned in Ext.R1(a), the bank guarantee produced along with the bid only shows that it is valid only upto 29.10.2021, which is clear from the confirmation of bank guarantee. Therefore, the Senior Government Pleader submitted that even if the Power of Attorney is in order, the bank guarantee is only upto 11.01.2022 and what is stated in Exts.P6 and P7 is not acceptable. The Senior Government Pleader submitted that since this is a contractual matter, this Court may not interfere under Article 226 of the Constitution of India and the funding to this project is from German Bank and if the work is not awarded before 31.12.2021, they will withdraw the funding.

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I considered the contentions of the petitioner and the respondents. It will be better to extract Clauses 3, 4 and 5 of Ext.P1:

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“3. For submission of the bid, the bidder is required to have Digital Signature Certificate (DSC) from one of the Certifying Authorities authorised by Government of India for issuing DSC. Aspiring bidders who have not obtained the user ID and password for participating in e-procurement in this Project, may obtain the same from the website:

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W.P.(C).No.17116/2021

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www.etenders.kerala.gov.in. All Bids must be accompanied by a bid security of INR 90,96,000/(Rupees NinetyLakhs Ninety Six Thousand Only), drawn in favour of Project Director, KSTP, Thiruvananthapuram. Bid security will have to be in any one of the forms as specified in the bidding document and shall have to be valid for 42 days beyond the validity of the bid. Procedure for submission of original bid security is described in Para below.

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Bids must be submitted online on https://etenders.Kerala.gov.in on or before 02/08/2021 hours on 15:00 hours IST and the 1^st Envelop of 'Qualification’ will be opened online on 02/08/2021 at 15:30 hours. The 2^nd Envelope of 'Bid' shall remain unopened in the e-procurement system until the second public Bid opening for the same. Any bid or modifications to bid (including discount) received outside e-procurement system will not be considered. If the office happens to be closed on the date of opening of the bids as specified, the bids will be opened on the next working day at the same time and venue. The electronic bidding system would not allow any late submission of bids.

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The bidders are required to submit (a) original demand draft towards the cost of bid document; (b) original bid security in approved form; (c) Power of Attorney, and (d) original affidavit confirming correctness of information furnished with the 1^st envelope, to the Project Director, Kerala State

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W.P.(C).No.17116/2021

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Transport Project (KSTP) T.C. 11/339, SreeBala Building, Keston Road, Nanthancode, Kowdiar P.O, Thiruvananthapuram - 695003 before the deadline for Bid submission i.e. before 02/08/2021 15:00 hours, either by registered post/speed post/courier or by hand, failing which bids will be declared nonresponsive and will not be opened. Any delays in delivery of the above documents forwarded by post / courier will be considered as delayed submissions and the bids will be considered as non responsive. Employer/ Tender inviting Authority will not be responsible for any such postal / courier delays.”

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From the above, it is clear that all bids must be accompanied by a bid security of Rs.90,96,000/- drawn in favour of Project Director, KSTP. It is also an admitted fact that the bank guarantee should be valid up to 11.01.2022. The bank guarantee produced by the petitioner is admittedly Ext.R1(a). I perused the same. The counsel for the petitioner relied on the inside page (3) of the bank guarantee in which it is stated like this:

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"Notwithstanding anything to the contrary contained herein:

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(i) Our liability under this Guarantee shall not exceed Rs. 90,96,000.00

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(ii) This Bank Guarantee shall be valid up to 29-10-2021

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W.P.(C).No.17116/2021

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(iii) We are liable to pay up to the guarantee amount only and only if we receive from you a written claim or demand not later than 12 months from the said expiry date, i.e 29-102022.

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(iv) This guarantee shall automatically stand cancelled notwithstanding that the original guarantee documents not returned to us by you even after the expiry of the final date of claim as mentioned above clause (iii).”

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The counsel submitted that even though in Clause

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(ii) it is stated that the bank guarantee shall be valid up to 29.10.2021, it is clearly stated in Clause (iii) that if the Bank receive a claim or demand not later than 12 months from the said expiry date, i.e till 29-10-2022, the Bank is liable to pay. Therefore the counsel submitted that the bank guarantee is valid upto 29.10.2022. But, I perused the covering letter along with the bank guarantee issued by the Bank in which it is clearly stated that the bank guarantee is valid only up to 29.10.2021. When the authorities contacted the Bank, as per Ext.R1(a)5, the Bank clearly stated that the bank guarantee is only valid up to 29.10.2021. I perused Ext.R1(a) also, in which, it is clearly stated that the validity of the bank guarantee is only up to 29.10.2021. The counsel for the

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W.P.(C).No.17116/2021

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petitioner is relying on Clause (ii) of page (3) of the bank guarantee in which it is stated the bank guarantee shall be valid up to 29.10.2022. I cannot agree with the counsel for the petitioner on this aspect. I perused the documents produced along with the bid by the petitioner, along with the covering letter of the Bank. After going through these documents, I am of the opinion that the petitioner has not complied with the conditions in Clauses (3) and (5) of Ext.P1.

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While invoking the powers under Article 226 of the Constitution of India in contractual matters, the powers are very limited. When the authorities, based on the documents, came to a conclusion that the bid submitted by the petitioner is not in order, without any allegation of malafides, this Court is not in a position to accept the contentions of the petitioner. According to me there is nothing to interfere with the orders passed by the authorities.

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After dictating the judgment, the learned Government Pleader submitted that he want to make some more submissions and the case is posted today as 'to be spoken to'. The Government Pleader submitted that the last date for submission of bid was on 2.8.2021 and the bid validity

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W.P.(C).No.17116/2021

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period as per Ext.P1 (ITB 18.1) is 120 days. This Court passed an interim order in the above writ petition on 24.08.2021 and the interim order was in force till the date of this judgment. Therefore, the Government Pleader submitted that the period during which the interim order was in force may be excluded while calculating the bid validity period. This is opposed by the learned counsel for the petitioner. That amount to the variation of the terms and conditions. The Government Pleader submitted that the fund for this project will be lapsed on 31.12.2021 as informed by the funding agency. I think in the peculiar facts and circumstances of this case, the period during which the interim order was in force can be excluded while calculating the bid validity.

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Therefore, the writ petition fails and the same is accordingly dismissed.

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SD/- P.V.KUNHIKRISHNAN JUDGE

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JV SKS

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W.P.(C).No.17116/2021

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APPENDIX OF WP(C) 17116/2021

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PETITIONER EXHIBITS

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Exhibit P1	TRUE COPY OF THE RELEVANT PORTION OF THE TENDER NOTICE, ESSENTIAL ELIGIBILITY QUALIFICATIONS AND EVALUATION
Exhibit P2	TRUE COPY OF COVERING LETTER UPLOADED ON 1.8.2021 ALONG WITH THE BID DOCUMENTS.
Exhibit P2(A)	TRUE COPY OF EXPERIENCE CERTIFICATE FOR SINGLE SIMILAR WORK VALUED RS.77,32,04,000/-
Exhibit P2(B)	TRUE COPY OF BANK GUARANTEE FOR RS. 90,96,000/-
Exhibit P2(C)	TRUE COPY OF THE PARTNERSHIP DEED UPLOADED
Exhibit P2(D)	TRUE COPY OF POWER OF ATTORNEY NOTARIZED
Exhibit P3	TRUE COPY OF LETTER OF THE 2ND RESPONDENT
Exhibit P4	TRUE COPY OF LETTER EXTENDING VALIDITY PERIOD OF THE BANK GUARANTEE DATED 30.7.2021 UP TO 31.1.2022 AND CONFIRMATION LETTER
Exhibit P5	TRUE COPY OF LETTER OF THE PETITIONER TO THE 2ND RESPONDENT BY E-MAIL
Exhibit P6	TRUE COPY OF REPRESENTATION OF THE PETITIONER TO THE 2ND RESPONDENT SENT BY E-MAIL.
Exhibit P7	TRUE COPY OF THE CONFIRMATION CERTIFICATE OF VALIDITY PERIOD OF THE BANK GUARANTEE UP TO 29.10.2012 ISSUED BY PUNJAB NATIONAL BANK.
RESPONDENTS’ EXH	IBITS
ANNEXURE R1(A)	COPY OF THE BID SECURITY
ANNEXURE R1(B)	COPY OF THE POWER OF ATTORNEY SUBMITTED BY THE PETITIONER
ANNEXURE R1(C)	COPY OF THE TECHNICAL EVALUATION DONE BY THE FUNDING AGENCY GERMAN BANK, KFW
	APPROVED PROJECT MANAGEMENT CONSULTANT M/S.LOUIS BERGER
ANNEXURE R1(D)	COPY OF THE APPROVAL OF HTE GERMAN BANK TECHNICAL EVALUATION DONE BY THE

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W.P.(C).No.17116/2021

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PMC ANNEXURE R1(E) COPY OF THE MAIL SENT TO THE E- PROCUREMENT WEBSITE FLOATED BY THE KERALA STATE IT MISSION ANNEXURE R1(F) COPY OF THE E-MAIL RECEIVED FROM THE KERALA STATE IT MISSION

P M R Construction Company v. State of Kerala

Case brief

What is this about?

What did the court decide?

P M R Construction Company v. State of Kerala

Case brief

What is this about?

What did the court decide?

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