Allowed

M/s Mother India Construction Pvt. Ltd. v. The State Of Bihar and Ors.

Patna HC5 Feb 2013CWJC/21689/2012

Case brief

AI extract

What is this about?

The Patna High Court quashed the rejection of the petitioner's tenders. The Court held that State authorities cannot declare a contractor a defaulter and debar them based solely on unadjudicated letters from officials. Proper adjudication by a court or tribunal is required before debarment.

What did the court decide?

Quashed the decision dated 3.11.2012 rejecting the technical bid and the re-tender notice dated 28.11.2012. Directed respondents to consider the petitioner's tenders within two weeks.

M/s Mother India Construction Pvt. Ltd. Vs… — Contract and Commercial Disputes | Patna HC (2013)

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IN THE HIGH COURT OF JUDICATURE AT PATNA Civil Writ Jurisdiction Case No.21675 of 2012

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M/s. Mother India Construction Pvt. Ltd., a Company registered under the Companies Act, 1956 and having its registered office at Aspura House Road No. 3, Sanjay Gandhi Nagar, Kankarbagh, Patna-800020 through its Manager, Raj Kishor, S/o Sri Rama Shankar Singh, R/o Pesu Staff Quarter No.4, Mangals Road, Patna-800015

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.... .... Petitioner

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Versus

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The State of Bihar through the Secretary, Department of Rural Works, Government of Bihar, Patna

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The Engineer-in-Chief, Rural Works Department, Bihar, Patna

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The Chief Engineer-II, Department of Rural Works, Patna

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The Superintending Engineer, Rural Works Department, Patna

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The Superintending Engineer-cum-Project Manager, PMGSY, Patna

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The Superintending Engineer, Rural Work Department, Works Division, Bhagalpur

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The Executive Engineer, Rural Works Department, Rural Works Division (W), Kahalgaon, Bhagalpur

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The Secretary, Bihar Rural Roads Development Agency, Govt. of Bihar, Patna

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.... .... Respondents

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with

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Civil Writ Jurisdiction Case No.21689 of 2012

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M/s. Mother India Construction Pvt. Ltd., a Company registered under the Companies Act, 1956 and having its registered office at Aspura House, Road No.3, Sanjay Gandhi Nagar, Kankarbagh, Patna-800020 through its Manager, Raj Kishor, S/o Sri Rama Shankar Singh, R/o Pesu Staff Quarter No. 4, Mangals Road, Patna-800015

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.... .... Petitioner

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Versus

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The State of Bihar through the Secretary, Department of Rural Works, Government of Bihar, Patna

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The Engineer-in-Chief, Rural Works Department, Bihar, Patna

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The Chief Engineer-II, Department of Rural Works, Patna

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The Superintending Engineer, Rural Works Department, Patna

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The Superintending Engineer-cum-Project Manager, PMGSY, Patna

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The Superintending Engineer, Rural Work Department, Works Division, Bhagalpur

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The Executive Engineer, Rural Works Department, Rural Works Division(W), Kahalgaon, Bhagalpur

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The Secretary, Bihar Rural Roads Development Agency, Govt. of Bihar, Patna

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.... .... Respondents

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Patna High Court CWJC No.21675 of 2012 (6) dt.05-02-2013

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Appearance : (In both the cases) For the Petitioner/s : M/S Jitendra Singh, Sr.Advocate with Mrigank Mauli and Vijay Mistry, Advocates For the Respondent/s : Mr. Shashi Bhushan Kr. SC 7 (In CWJC No.21675 of 2012) with Mr.Kumar Pankaj, AC to SC 7 For the Respondent/s : Mr. J.S. Arora SC 6 (In CWJC No. 21689 of 2012)with Mr.Indrajeet Singh, AC to SC 6 ====================================================== CORAM: HONOURABLE MR. JUSTICE RAMESH KUMAR DATTA ORAL ORDER 6 05-02-2013 Heard learned counsel for the petitioner and learned

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Heard learned counsel for the petitioner and learned counsels for the State.

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Both the writ applications raise common issue and arise out of the same tender process and they have accordingly been heard together and are being disposed of by this common order.

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The petitioner seeks quashing of the decision dated 3.11.2012 by which the Technical Bid Committee has rejected the bid of the petitioner in both the matters by resorting to Clause 4.7 of the Standard Bid Document with regard to works relating to RCD Road Fazilpur to Laxmipur, Item No.7 to the Tender Notice and Dadar to Meharpur, Item No.2 to the NIT.

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The facts of the case in brief are that the petitioner had applied pursuant to the aforesaid Tender Notice along with others with respect to the aforesaid two items apart from another which is not the subject matter of the present writ petitions for award of the work. The Technical Bid Committee, however, rejected the tender

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Patna High Court CWJC No.21675 of 2012 (6) dt.05-02-2013

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of the petitioner on the ground that it was disqualified by Clause 4.7 of the SBD. The reason for taking such a stand was that by letter dated 26.9.2012 (Annexure-A) of the Coordinator (PMGSY), Patna, it was stated that with respect to Rs.5 crores under the Central Agency (IRCON) for the construction of roads under the Prime Minister Gram Sadak Yojna the petitioner had been awarded contract under the package No. BR 12/24 in which his progress in two of the works was to the extent of 65% and 60% which, according to the Circulars of the State Government issued in terms of Clause 4.7 of the SBD and similar such clauses, was less than 80% and would automatically debar the contractor from getting any further work. Relying upon the same the Technical Bid Committee has rejected the tenders of the petitioner with respect to the aforesaid two contracts.

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Learned counsel for the petitioner at the outset relies upon a decision of this Court by order dated 10.1.2013 passed in CWJC No. 19809 of 2011 (M/s. NCC Ltd. vs. The State of Bihar & Ors.) and analogous case in which it has been held by this Court that the authorities of the State cannot be permitted to decide the matter of default where the allegation of liability and fault is not admitted by the contractor and even if it is accepted that the authorities of the State have the power to debar a contractor from

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Patna High Court CWJC No.21675 of 2012 (6) dt.05-02-2013

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participating in future contract after they are declared defaulter on account of not making the targeted progress to the extent of 80% in the work, the finding regarding such default cannot be made by the State authorities and that must come from a proper adjudicatory forum, whether a court or arbitral tribunal and only after such finding it can be open to the authorities of the State to declare a contractor as a defaulter and debar it from participating

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in future tenders. The relevant part of the said decision is quoted

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below:-

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“The said proposition laid down by the Apex Court applies squarely in the present situation where the petitioners have been declared defaulters by alleging breach of contractual terms on their part and as being liable and at fault on account of the slow progress of the work as compared to what was required under the contract. This should be specially so since the petitioners not only do not admit such allegation of liability and fault on their part as made by the respondents but have on the contrary raised the plea of liability and fault on the part of the State authorities in the matter on various grounds. It is evident that the authorities of the State cannot be permitted to decide such matter which involves liability on the part of the State officials also. Thus, even if it is accepted that the authorities of the State have the power to debar a contractor from participating in future contract after they are declared defaulter on account of not making the targeted progress to the extent of 80% in the work, still the finding regarding the default cannot be made by the State authorities and that must come from a proper adjudicatory forum, whether a court or arbitral tribunal. Only after such finding it can be open to the authorities of the State to declare a contractor as a defaulter and debar it from participating in future tenders. It is evident that the effect of such declaration as defaulter and

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Patna High Court CWJC No.21675 of 2012 (6) dt.05-02-2013

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debarment would have serious civil consequence on the party concerned and cannot be left to be decided by the party which has made allegation against whom also there is counter allegation by the contractor concerned.”

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Apart from the aforesaid learned counsel submits that it

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is evident from the materials on the record that the petitioner was not even at fault with respect to Rs.5 crores under the aforesaid PMGSY contract as it is evident from the decision taken by the AGM, PMGSY on 16.8.2012 that apart from other reasons like natural calamity, disaster and various festivals like Holi, etc. which prevented the work being carried out in full space, and the area being naxal affected and having been so declared by the Central Government affected the flow of work. It is also stated in the said order dated 16.8.2012 that in the year 2008 case was lodged by the Forest Department for encroachment in forest land and illegal excavation of forest materials in almost five numbers of roads in the package and hence due to problem created by Forest Department work also suffered. For all the said reasons it was requested and accepted that the work should be extended to 31.12.2012.

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Learned counsel also refers to a letter dated 1.12.2012 issued by IRCON International Limited in which it is stated that the petitioner achieved 94.4% physical progress of the work in

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Patna High Court CWJC No.21675 of 2012 (6) dt.05-02-2013

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package No. BR-12-24 comprising of Nine Number roads. It is thus urged by learned counsel that admittedly there has been no delay or default on the part of the petitioner for which it could be held liable and debarred from participating in any bid.

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Learned counsels for the State, on the other hand, submit that the respondents had only acted upon the letter dated 26.9.2012 issued by the Coordinator (PMGSY) in which the petitioner is shown to have made progress of less than 80% with respect to two works allotted to it under PMGSY and thus they merely acted in terms of Clause 4.7 (ii) of the SBD which binds the petitioner once he applied in terms of the NIT as they form condition of the NIT.

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It is also submitted by learned counsel that the present matter to that extent differs from the decision dated 10.1.2013 of this Court in M/s. NCC Ltd. case (supra) as in the said case the debarment had been ordered pursuant to an agreement, whereas in the present matter it is in terms of prior performance of the petitioner which was considered in terms of Clause 4.7 (ii) of the SBD which was binding upon the petitioner.

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Clause 4.7 of the SBD is quoted below :-

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“4.7 Even though the bidder meet the above qualifying criteria, they are subject to be disqualified if they have:

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(i) made misleading or false representations in the forms, statements, affidavits and attachments submitted in proof of the qualification requirements; and/or

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Patna High Court CWJC No.21675 of 2012 (6) dt.05-02-2013

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(ii) record of poor performance such as abandoning the works, not properly completing the contract, inordinate delays in completion, litigation history, or financial failures etc.

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(iii) participated in the previous bidding for the same work and had quoted unreasonably high or low bid prices and could not furnish rational jurisdiction for it to the Employer.”

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It is evident from the said Clause that this is in the same terms as Clause 4.8 considered by this Court in the case of M/s. NCC Ltd. (supra). Apart from stating that the rejection of technical bid has been at the outset and not in accordance with the agreement, learned counsel is unable to show that there is any distinction between the two clauses. Even such stand does not have any leg to stand as the ratio of the decision in M/s. NCC Ltd. case (supra) is that it is not open to the authorities of the State to unilaterally decide regarding the question of default on the part of the contractor when the contractor himself does not admit the said default and even alleges fault and inaction on the part of the State authorities as the cause for the delay; the same would therefore apply even prior to the awarding of contract when the default and debarment issue is raised at the technical bid stage. The question to be considered is as to whether the default on the basis of whatever previous contract which is being taken into consideration has been adjudicated by a court or arbitral tribunal before the same

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Patna High Court CWJC No.21675 of 2012 (6) dt.05-02-2013

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is taken into account for rejecting the tenders of the petitioner. It is evident that the same has been done merely on the basis of a letter issued by an official who may be Coordinator but it cannot confer any power which does not belong to him as such powers can only be exercised by adjudicatory authority like court or arbitral tribunal when the fact of default is not admitted by the petitioner. Evidently, mere issuance of a letter dated 26.9.2012 cannot be used against the petitioner unless it is backed by a proper adjudication in a fair and impartial manner. The same has not been done in the present matter.

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Apart from the action of the respondents being clearly contrary to the law laid down by this Court in M/s. NCC Ltd. (supra) it is also apparent from the materials on the record that some delay with respect to some of the works allotted to the petitioner as per letter dated 16.8.2012 was as a matter of fact caused due to litigation by the officials of the Forest Department of the State, which is thus admitted, and extension of contract was also granted to the petitioner till 31.12.2012 and thereafter the petitioner has made substantial progress as per the certificate issued by the IRCON.

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Thus, both on the basis of law laid down in the M/s. NCC Ltd. case (supra) as also the facts on the record, this Court finds

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Patna High Court CWJC No.21675 of 2012 (6) dt.05-02-2013

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the action of the respondents in rejecting the technical bid of the petitioner by order dated 3.11.2012 with respect to the aforesaid two tenders as contrary to law and the said decision of the Technical Bid Committee is, accordingly, quashed.

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The petitioner had earlier filed an interlocutory application being I.A.No. 7802 of 2012 in CWJC No.21689 of 2012 challenging re-tender notice dated 28.11.2012 in which by order dated 11.1.2013 this Court had directed that the technical bid shall not be finalized. The said re-tender notice dated 28.11.2012 is also quashed and the respondents are directed to consider the tenders submitted by the petitioner with respect to both the bids in accordance with law within a period of two weeks from the date of receipt/production of a copy of this order.

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The writ application is, accordingly, allowed with the above observations and directions.

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(Ramesh Kumar Datta, J)

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spal/-

M/s Mother India Construction Pvt. Ltd. v. The State Of Bihar and Ors.

Case brief

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M/s Mother India Construction Pvt. Ltd. v. The State Of Bihar and Ors.

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