Allowed

M/S Mackintosh Burn Ltd., Kolkata v. State of Odisha

Orissa HC1 May 2024WP(C)/1309/2024

Case brief

AI extract

What is this about?

The High Court of Orissa allowed a writ petition quashing the second tender notice and related orders cancelling the petitioner's bid. The Court held that the authority acted arbitrarily and violated principles of natural justice by rejecting the initial successful bid without assigning reasons or providing an opportunity of hearing. The Court directed the respondent to accept the petitioner's rec

What did the court decide?

Quashed the second tender call notice dated 05.01.2024 with corrigendum and cancellation orders; directed the respondent to accept the petitioner's tender recommendation within three weeks.

M/S Mackintosh Burn Ltd., Kolkata Vs State of… — Public Procurement and Tenders | Orissa HC (2024)

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IN THE HIGH COURT OF ORISSA, AT CUTTACK

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W.P (C) No. 1309 of 2024

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M/s Mackintosh Burn Ltd., Kolkata

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Petitioner

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Mr. Asok Mohanty, Sr. Adv. along with Mr. P.C. Nayak, Adv.

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Vs.

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State of Odisha and others ….. Opposite Parties

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Mr. B. Mohanty, AGA

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CORAM:

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DR. JUSTICE B.R. SARANGI

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MR. JUSTICE G. SATAPATHY

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ORDER

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01.05.2024

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This matter is taken up through hybrid mode.

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Order This matter is taken up through hybrid mode. No. 2. Heard Mr. Asok Mohanty, learned Senior Counsel appearing along

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07. with Mr. P.C. Nayak, learned counsel for the petitioner and Mr. B. Mohanty, learned Addl. Government Advocate appearing for the State-opposite parties. 3. The petitioner has filed this writ petition seeking to quash the second tender call notice issued by the authority for the selfsame work, vide tender call notice dated 05.01.2024, as modified through corrigendum dated 10.01.2024 under Annexure-1 (sl.no.49 of work on excess rate), as the petitioner was qualified in the technical bid it stood as 1^st lowest bidder in the price bid and, thereafter, its case was recommended for approval, as per Annexures-4, 5 and 6 respectively, pursuant to first tender call notice dated 22.08.2023 under Annexure-3 for the work “improvement such as widening and strengthening of Thakurmunda-Dangadiha-Podadiha-Udala-ManitriBaisingha-Rupsa road (MDR-70) from 61,000 km to 84/000 km under State Plan”. The petitioner also seeks to quash the decisions of the authority under Annexures-9 and 10 in cancelling the tender work, and issue direction to opposite party no.1 to approve its tender, as per the recommendation of the tendering authority, i.e., opposite party no.4 under Annexure-6 dated 11.12.2023 in terms of para-6.3.15 of OPWD Code in respect of the tender

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Page 1 of 6

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call notice dated 22.08.2023 under Annexure-3 taking into consideration the approval of other projects under Annexure-8.

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Mr. Asok Mohanty, learned Senior Counsel appearing along with Mr. P.C. Nayak, learned counsel for the petitioner contended that pursuant to the tender invited by the opposite parties for the work “Improvement such as widening and strengthening of Thakurmunda-Dangadiha-Podadiha-UdalaManitri-Baisinga-Rupsa road (MDR-70) from 61/000 km to 84/000 km under State Plan” with an estimated cost of Rs.48,60,85,658/- with various tender conditions, the petitioner participated in the process of tender and having become successful, its case was recommended to the Government by the Chief Engineer (DPI & Roads), Odisha on 11.12.2023 under Annexure-6, which also indicates that the tender is valid up to 11.03.2024. But, without taking into consideration the recommendation made by the competent authority, a fresh tender has been issued for the selfsame work on 05.01.2024 with an estimated cost of Rs.48.61 lakhs and, thereafter, 1^st corrigendum was issued on 10.01.2024 under Annexure-1 reducing the estimated cost to Rs.49.29 lakhs. It is contended that when the petitioner is ready to undertake the work and its bid was accepted and recommendation was made to the Government, vide letter dated 11.12.2023 under Annexure-6, at whose instance and interest, without accepting the bid of the petitioner, fresh bid has been issued on 05.01.2024, wherein the bid amount, which was fixed as Rs.48.61 lakhs has been enhanced to Rs.49.29 lakhs by way of corrigendum. It is further contended that pursuant to the recommendation made by the authority to the Government vide Annexure-6, no communication has been received from the State and, on the other hand, fresh tender has been issued by the authority followed by a corrigendum. Thereby, the action of the authority is arbitrary, unreasonable and contrary to the provisions of law. It is further contended that the matter is fully covered by the judgments of this Court in the cases of M/s Shree Ganesh Construction v. State of Odisha , 2016 (II) OLR 237; M/s Sical Logistics Ltd. v. Mahanadi Coalfields Ltd. , 2017 (II) ILR CUT 1035; Sampad Samal v. State of Odisha , AIR 2017

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Page 2 of 6

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ORISSA 33 and judgment of the apex Court in the case of State of Uttar Pradesh v. Sudhir Kumar Singh , (2021) 19 SCC 706.

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Mr. B. Mohanty, learned Addl. Government Advocate appearing for the State-opposite parties contended that in fact, while cancelling the bid, no opportunity of hearing was granted to the petitioner. He also admitted that the matter is covered by the judgment of this Court in the case of M/s Shree Ganesh Construction (supra).

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Having heard learned counsel for the parties and after going through the records, this Court finds that admittedly opportunity of hearing was not given to the petitioner while cancelling the bid of the petitioner. Thereby, the order of cancellation so passed by the authority cannot be sustained in the eye of law.

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In M/s Shree Ganesh Construction (supra), this Court in paragraph13, held as under:-

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“13. In view of the reasons assigned in the foregoing paragraphs, it appears that since no reasons have been assigned in the order impugned in Annexure-4 and subsequently by filing affidavit, the opposite parties have tried to justify their action by giving explanation, this Court is inclined to interfere with the same. Thus, the order impugned in Annexure-4 dated 5.2.2016 and the consequential invitation of bid in Annexure-5 also cannot sustain and accordingly, the same are hereby quashed.”

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8. In M/s Sical Logistics Ltd. (supra), this Court in paragraphs-14, 19 and 20 held as under:-

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“14. In view of the aforesaid facts and circumstances, this Court is of the considered view that by way of subsequent explanation given in the counter affidavit the communications dated 17.03.2017 in Annexures-5 and 6 cancelling the tender in question without assigning any reason cannot sustain in the eye of law. More so, in view of the Central Vigilance Commission guidelines dated 24.03.2005, the tender accepting authority is not free to take any decision in an arbitrary manner and is bound to record clear and logical reasons for any such action of rejection/recall of tenders on the file. In view of such position, in absence of any reason communicated to the

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Page 3 of 6

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petitioner, the order so passed in Annexures-5 and 6 dated 17.03.2017 cannot sustain.”

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xxx xxx xxx

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19. The intervenor contended that pursuant to subsequent tender dated 20.03.2017 it had quoted lower price than that of the petitioner quoted pursuant to earlier tender dated 13.10.2016. But that itself cannot be said to be a ground to cancel the tender which has not seen the light of the day and in which this price bid of the petitioner was disclosed and known to all after the reverse bidding was over. As such, the cancellation of tender dated 17.03.2017 being without assigning any reason, subsequent issuance of fresh tender quoting a lower price than that of petitioner pursuant to earlier tender dated 13.10.2016 cannot be justified, more particularly this Court cannot go into the financial implication of a fresh tender in view of ratio decided by CWE-SOMA CONSORTIUM (supra).

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20. In view of the factual and legal discussions made above, this Court is of the considered view that the orders of cancellation of tender dated 17.03.2017 passed in Annexures-5 and 6 cannot sustain in the eye of law and the same are hereby quashed. Consequentially, the retender notice dated 20.03.2017 issued by opposite party no.1 in Annexure-7 also cannot sustain in the eye of law and the same is accordingly quashed.”

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In Sampad Samal (supra), this Court in paragraphs-9, 14 and 15, held as under:-

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“9. Further, resorting to clause 10 of the terms and condition of tender papers, whereby right to reject is reserved by the authroity concerned without assigning any reason, can be justified only when there is proper and adequate ground for passing an order of cancellation and not in an arbitrary manner, as has been done in the present case.

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14. Applying the aforesaid well settled principles to the present context and taking into consideration the conditions stipulated in clause-17 of the tender document read with clause-10 of the terms and conditions of the tender paper and giving them their plain meaning, as the authority concerned has passed the impugned order of cancellation, without any proper and adequate ground, rather, as it is clear, in an arbitrary manner because of

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pendency of frivolous petition, the same cannot be sustained in the eye of law.

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15. In view of the aforesaid, this writ petition deserves to be allowed and is accordingly allowed. The orders dated 04.02.2016 and 03.02.2016 are quashed only to the extent with regard to work at serial no.1 and 2 of the tender call notice dated 22.08.2015. The petitioner would thus be entitled to be awarded the contract with regard to the works at serial no.1 and 2 of the said tender call notice, in accordance with the terms of the tender call notice, which should be complied with within six weeks from today. No order as to costs.”

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In Sudhir Kumar Singh (supra), the apex Court in paragraph-26 held as under:-

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“26. It may be added that every case in which a citizen/person knocks at the doors of the writ court for breach of his or its fundamental rights is a matter which contains a “public law element”, as opposed to a case which is concerned only with breach of contract and damages flowing therefrom. Whenever a plea of breach of natural justice is made against the State, the said plea, if found sustainable, sounds in constitutional law as arbitrary State action, which attracts the provisions of Article 14 of the Constitution of India – see Nawabkhan Abbaskhan v. State of Gujarat, (1974) 2 SCC 121 at paragraph 7. The present case is, therefore, a case which involves a “public law element” in that the petitioner (Respondent No.1 before us) who knocked at the doors of the writ court alleged breach of the audi alteram partem rule, as the entire proceedings leading to cancellation of the tender, together with the cancellation itself, were done on an ex parte appraisal of the facts behind his back.”

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In view of the principle of law decided by the apex Court as well as this Court, since the cancellation has been made without assigning any reason and without giving opportunity of hearing to the petitioner, the same cannot be sustained in the eye of law.

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Mr. B. Mohanty, learned Addl. Government Advocate appearing for the State-opposite parties brings to the notice of the Court that during pendency of the writ petition, pursuant to second tender call notice issued by the authority, the process of bid was continued and though a person has been selected, but no work order has been issued in his favour.

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Page 5 of 6

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As it appears, vide order dated 24.01.2024, this Court passed interim order to the following effect:-

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“As an interim measure, it is directed that the process of bid, so far as the work in question is concerned, may continue, but the same shall be subject to final outcome of the writ petition.”

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In view of such position, no third party interest can be created because of the fact that no leave was obtained from this Court to award the work in favour of any third party, pursuant to the second tender call notice issued by the authority. As such, the interim order is very clear that the process of bid, so far as the work in question is concerned, may continue, but the same shall be subject to final outcome of the writ petition. In such view of the matter, since the order of cancellation has been passed by the tendering authority without giving opportunity of hearing to the petitioner, the second tender call notice issued under Annexure-1, so far it relates to the work under item no.49, as well as the orders of cancellation under Annexures-9 and 10 cannot be sustained in the eye of law and the same are liable to be quashed and are hereby quashed. Needless to say, the recommendation made by the tendering authority to approve the tender submitted by the petitioner, pursuant to 1^st tender call notice, should be accepted as expeditiously as possible, preferably within a period of three weeks from today.

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With the aforesaid observation and direction, the writ petition stands disposed of.

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(DR. B.R. SARANGI) JUDGE

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Signature Not Verified Ashok Digitally Signed Signed by: ASHOK KUMAR JAGADEB MOHAPATRA Designation: Secretary Reason: Authentication Location: HIGH COURT OF ORISSA Date: 03-May-2024 12:15:57

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(G. SATAPATHY) JUDGE

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M/S Mackintosh Burn Ltd., Kolkata v. State of Odisha

Case brief

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M/S Mackintosh Burn Ltd., Kolkata v. State of Odisha

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