Dismissed

National Buildings Construction Corporation Ltd. v. State of Odisha

Orissa HC2 May 2016WP(C)/16847/2015

Case brief

AI extract

What is this about?

The Orissa High Court dismissed a writ petition challenging the Rec Development Authority's decision to invite open tenders for unfinished construction work. The Court held that mere negotiation after contract expiry did not entitle the petitioner to the contract and the tender process was justified.

What did the court decide?

The writ petition challenging the invitation of open tenders was dismissed with no order as to costs.

National Buildings Construction Corporation Ltd. Vs… — Company and Corporate | Orissa HC (2016)

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ORISSA HIGH COURT: CUTTACK

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W.P.(C) No. 16847 of 2015

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In the matter of an application under Articles 226 & 227 of the Constitution of India.

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AFR

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National Buildings Construction …….. Petitioner Corporation Limited (NBCC)

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- versus -

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State of Odisha and another ..…… Opp. Parties

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For Petitioner : M/s. S.K. Padhi, Sr.Counsel along with S.S.Mohanty. For Opp.Parties: Sri B.P. Pradhan, Addl. Govt. Adv. (opposite party no.1).

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P R E S E N T :

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THE HON’BLE THE CHIEF JUSTICE MR. VINEET SARAN AND

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THE HON’BLE DR. JUSTICE B.R.SARANGI

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DECIDED ON : 02.05.2016

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Vineet Saran , C.J . National Buildings Construction Corporation Limited (hereinafter referred to as the ‘Corporation’), which is a Government of India Enterprise, has filed this application to quash the letter dated 04.01.2013 issued by the Vice Chairman, Cuttack Development Authority vide Annexure-17, to the Sr. General Manager of the Corporation, pursuant to the communication made by the Government in Housing & Urban Development Department, Odisha to go for an

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open and transparent bid to obtain best offer for the proposed construction work by rejecting the proposal filed by the Corporation, and further seeks for a direction to the opposite parties to execute necessary paper works so as to enable it to execute phase-II of commercial complex, as approved, along with ancillary relief.

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The brief facts of the case are that in the year 1999 the petitioner-Corporation entered into an agreement with the Cuttack Development Authority (for short, ‘Authority’) for construction of residential as well as commercial complex in the Old Jail premises, Cuttack. The said project was to be completed within two years, i.e. by 2001. However, due to certain reasons which, according to the petitioner, were beyond its control, the project could not be completed within time, and the matter kept pending consideration for extension and also change in the project, with the Government, till the year 2008. Then, in the year 2008 onwards, till early 2013, fresh negotiation between the Corporation and the Authority went on, as the Authority wanted the place to be structured as commercial complex as well as residential complex. There was no finality arrived at between the parties with regard to the construction work to be given by the Authority. There was also no assurance given that the petitioner alone would be given the contract for further development of the area. Then on 04.01.2013, the Vice Chairman Cuttack Development Authority informed the petitioner-Corporation that the Government of Odisha, Department of Housing & Urban Development

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had taken a decision to go for an open and transparent bid to obtain the best offer for the proposed work. Hence, this petition.

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Mr. S.K. Padhi, learned Sr. Counsel along with Mr. S.S. Mohanty, learned counsel appearing for the petitioner, urged that since the entire work was initially assigned to the Corporation in the year 1999, and if construction of the complex is to be undertaken in the area (for which agreement was entered into between the Corporation and the Authority) and the Corporation was negotiating with the Authority ever since completion of period, contract for such construction ought to be awarded to the Corporation alone. Further, it is urged that from the year 2008 onwards till early 2013, fresh negotiation between the Corporation and the Authority continued and now if the same work is to be undertaken, the petitioner should have been allowed to execute the work instead of allotting the same in favour of anyone else by open bid/tender.

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Mr. B.P. Pradhan, learned Addl. Govt. Advocate contended that the tenure of the petitioner having already completed in 2001, even though it has continued to subsequently negotiate with the Authority, that ipso facto cannot give any right to the petitioner to execute the work. It is further urged that time being the essence of the contract, the period having been completed, the petitioner has no right to claim that the work should now be allotted in its favour.

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After hearing the learned counsel for the parties and after going through the records, we dispose of the writ petition at the stage

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of admission, without issuing notice to the opposite party no.2 and without calling for any counter affidavit.

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The undisputed fact is that the petitioner had entered into an agreement on 4.12.1999 with the Authority for construction of a residential/commercial complex within the Old Jail complex, Cuttack on joint venture, and such agreement was for a period of two years, which ended in the year 2001. In our view, merely because the petitioner-Corporation is a Government of India enterprise, it would not have any special status in the matter of contract. It is noticed that the opp. party-Authority is also a government authority. Admittedly, the initial contract came to an end in 2001 and the extension, if any, granted thereafter has also expired.

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Time is the essence of every contract. If the petitionerCorporation has not been able to complete the work within the assigned time or the extended time, it would not have any right to complete the unfinished work. It is the choice of the Authority, thereafter, to get the work completed or even change the nature of construction, through any other contractor. Merely because the Corporation was engaged in negotiation with the Authority for undertaking the remaining left over construction, the same would not entitle the petitioner, as of right, to be given the contract for the remaining work. The decision of the State Government, which controls the Development Authority, to go in for an open and

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transparent bid to obtain the best offer for the proposed work, cannot be faulted with.

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In Pawan Kumar Agarwal v. Meerut

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Development Authority, AIR 2009 SC 2894, the Apex Court held that the bidders participating in the tender process have no other right except the right to equality and fair treatment in the matter of evaluation of competitive bids offered by interested persons in response to notice inviting tenders in a transparent manner and free from hidden agenda. One cannot challenge the terms and conditions of the tender, except on the above stated ground, the reason being the terms of the invitation to tender are in the realm of the contract. No bidder is entitled, as a matter of right, to insist on the authority inviting tenders to enter into further negotiations unless the terms and conditions of notice provided for such negotiations.

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No material has been produced before this Court to consider that the Corporation is entitled, as a matter of right, to insist on the Authority to enter into further negotiation. Therefore, even after completion of the period of contract in 2001, the so called negotiation done by the petitioner with the Authority is beyond the terms and conditions of the agreement executed in the year 1999. In absence of any such condition, the so called negotiation held by the Corporation with the Authority cannot be a justification to allow it to perform the work on the basis of agreement executed on 4.12.1999.

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10. In Monarch Infrastructure (P) Ltd. v.

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Commissioner, Ulhasnagar Municipal Corporation , AIR 2000

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SC 2272, the Apex Court held that the Court would not interfere with the matter of administrative action or changes made therein, unless the Government’s action is arbitrary or discriminatory or the policy adopted has no nexus with the object it seeks to achieve or is mala fide.

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In Directorate of Education v. Educomp Datamatics Ltd., AIR 2004 SC 1962, the Apex Court held that the Courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. Similar view has also been taken in Master Marine Services Pvt. Ltd. v. Metcafe & Hodgkinson Pvt. Ltd., AIR 2005 SC 2299.

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In view of the law laid down by the Apex Court as mentioned supra, in the facts of this case, we find that nothing material has been placed by the petitioner on the basis of which the action of the Authority can be considered as arbitrary, discretionary, mala fide or actuated by bias. Rather, the impugned order of rejection clearly indicates that the Government in Housing and Urban Development Department, has directed to go in for an open and transparent bid to obtain the best offer for the proposed work, which cannot be construed to be an arbitrary, discretionary and mala fide action of the authority or actuated with bias. The petitioner may be a Government Corporation, but the decision of

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the Authority to go in for an open and transparent bid for awarding the unfinished or further contract work is perfectly justified in law, and does not call for any interference.

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Besides on merits, this petition also suffers from delay and latches. The impugned order was passed on 04.01.2013, but the writ petition challenging the said order has been filed after more than two and half years i.e. in September, 2015. Perusal of the pleadings do not indicate that the latches in filing the writ petition have been properly explained. Therefore, for this reason also, we do not find any good ground to interfere with the order impugned in this writ petition.

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Accordingly, the writ petition is dismissed. No order

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as to costs.

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(Vineet Saran, C.J.)

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( Dr. B.R. Sarangi, J.)

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Orissa High Court, Cuttack The 2^nd May, 2016/ Ashok

National Buildings Construction Corporation Ltd. v. State of Odisha

Case brief

What is this about?

What did the court decide?

National Buildings Construction Corporation Ltd. v. State of Odisha

Case brief

What is this about?

What did the court decide?

What the court decided

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