Allowed

M/s Hari Om Construction v. The State Of Bihar and Ors.

Patna HC21 Feb 2013CWJC/443/2013

Case brief

AI extract

What is this about?

The Patna High Court allowed a writ petition quashing the rejection of a contractor's technical bid. The court held that the State could not unilaterally declare default without adjudication and mandated that the petitioner be given an opportunity to rectify defects in their financial bid evaluation.

What did the court decide?

The writ application is allowed; decisions of the Technical Bid Committee are quashed; the petitioner's financial bid is to be considered along with others.

M/s Hari Om Construction Vs The State Of Bihar… — Public Procurement and Tenders | Patna HC (2013)

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IN THE HIGH COURT OF JUDICATURE AT PATNA Civil Writ Jurisdiction Case No.443 of 2013

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====================================================== 1. M/S Hari Om Constructions, Village- Khaira, P.O.- Jai Hind Tendua, District- Aurangabad Through Its Partner Shri Pankaj Kumar Singh S/O Shri Vijay Kumar Singh R/O Village- Khaira, P.O.- Jai Hind Tendua, District- Aurangabad

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.... .... Petitioner/s

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Versus

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1. The State of Bihar through Principal Secretary, Rural Work Department, Government of Bihar, Patna.

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1. The Principal Secretary, Rural Work Department, Govt. of Bihar, Patna.

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1. The Technical Bid Committee, Rural Work Department, Bihar, Patna.

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Engineer-in-Chief, Rural Work Department, Bihar, Patna.

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Chief Engineer-1, Rural Work Department, Bihar, Patna.

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Technical Secretary, CE-1, Rural Work Department, Patna.

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The Nodal Officer, 4515, Minimum Need Programme, Bihar, Patna. 8. Superintending Engineer (Head Office, Rural Work Department, Bihar, Patna. 9. Superintending Engineer, Rural Work Division, Work Circle, Aurangabad. 10. Executive Engineer, Rural Work Department, Works Division, Aurangabad. 11. M/s. Sawan Raj Construction Private Ltd. having its registered office at Karma Road P.O., P.S. & District- Aurangabad, through one of its Directors, Ravi Kumar Singh, s/o late Ram Naresh Prasad Singh, r/o Karma Road, P.S. and District- Aurangabad. .... .... Respondent/s ====================================================== Appearance : For the Petitioner/s : Mr. Y.V. Giri, Senior Advocate Mr. Ashish Giri For the State : Mr. Rishi Raj Sinha, G.P.19 Mr. Rakesh Kumar, A.C. to G.P.19 For Intervener : Mr. S.D. Sanjay Respondent No.11 ====================================================== CORAM: HONOURABLE MR. JUSTICE RAMESH KUMAR DATTA ORAL ORDER

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12 21-02-2013 I.A. No.1259 of 2013

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The interlocutory application has been filed by M/s. Sawan

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Raj Construction Pvt. Ltd. for being permitted to intervene and be

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Patna High Court CWJC No.443 of 2013 (4) dt.21-02-2013

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impleaded as respondent No.11 to the writ application since it is stated that it would be directly affected by any order or judgment that may be passed.

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It is submitted by learned counsel for the applicant intervener that he is among the lowest tenderers after the financial bid has been opened and thus he may be permitted to intervene.

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This Court is of the view that it is substantially for the State to justify the action of the Technical Bid Committee in rejecting the bid of the petitioner on the ground stated therein.

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However, the intervener is permitted to be added as party respondent No.11 in the case and to be heard.

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I.A. No.1259 of 2013 is, accordingly, disposed of.

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Heard learned counsel for the petitioner and learned counsels for the State and for the newly added respondent No.11.

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The petitioner has approached this Court for quashing the decision dated 18.12.2012 of the Technical Bid Committee, by which the Technical Bid Committee pursuant to the notice inviting tender bearing No.05-RWD/MNP-4515/ET/12-13 for construction of road and its maintenance for five years from Bishunpur More to Barakagaon has rejected the technical bid of the petitioner.

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The relevant short facts of the case are that the petitioner along with newly added respondent No.11 and others applied

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Patna High Court CWJC No.443 of 2013 (4) dt.21-02-2013

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against the aforesaid NIT bearing No.RWD/MNP-4515/ET/12-13, which was considered by the Technical Bid Committee on 18.12.2012 and three persons including the respondent No.11 and one Arvind Kumar another tenderer were declared pass while the petitioner along with others were declared to have failed on the ground that his work has remained pending and the certificate for Bank Credit facility was conditional.

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In the counter affidavit filed on behalf of the State it is submitted that so far as the first ground is concerned, the petitioner had been disqualified in view of non-compliance/non-fulfilment of the terms and conditions as contained in clause 4.8 of the S.B.D. which provides as follows:-

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

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made misleading or false representations in the forms, statements and attachments submitted in proof of the qualification requirements; and/or have record of poor performance such as abandoning the works, not properly completing the contract, inordinate delays in completion, litigation history, or financial failures etc; and/or

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Participated in the previous bidding for the same work and had quoted unreasonably high bid prices and could not furnish rational justification to the employer.”

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It is the stand in the counter affidavit that as per the list dated 6.6.2012 of the Superintending Engineer, Public Health Engineering Department, Circle Sasaram, the work progress is less than 80% in which the petitioner’s name is there and also in the revised list published on 27.8.2012 by the Regional Chief Engineer. It is also stated that for other works the petitioner had been directed to return back the amount of the Department failing which action for recovery of Government money would be initiated against him.

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Learned counsel for the petitioner submits that the said stand of the Department is not correct and not admitted by the petitioner and the ground of non-fuilfilment of the 80% previous work allotted is wholly non-existent, as there are subsequent lists published on the Website of Rural Works Department.

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The stand of the petitioner, so far as the work of the Rural Works Department is concerned, is that the petitioner has not been shown defaulter in the latest list of defaulters on the Website but the respondents are relying on the earlier letters dated 6.6.2012

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and 27.8.2012. So far as completion of work in Aurangabad is concerned, the same has not been rescinded and the petitioner has completed 95% of the said contract. So far as the construction work in Sasaram is concerned, the same was rescinded earlier arbitrarily and without following the process of law and the petitioner has now been directed by letter dated 2.2.2013 to complete the said work till March, 2013. Thus, it is submitted that there is no justification for invoking clause 4.8 of S.B.D. in the case of the petitioner.

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Learned counsel further submits that this Court by its decision on 10.1.2013 in C.W.J.C. No.19809/2011: M/s. N.C.C. Ltd. vs. the State of Bihar & others has held that it is not open to the respondents to unilaterally decide the question of default of a contractor and thereafter debar him as the question of default can only be considered by an independent adjudicatory body which may be a Court of law or an arbitral tribunal. It is, thus, submitted that it is not open to the respondents to apply clause 4.8 of SBD when the question of default should be decided by an independent judicial authority or arbitral tribunal and not by the authorities of the State who are themselves parties to the contract.

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So far as the question of Bank’s conditional certificate is concerned, it is the stand of the petitioner that although the Bank

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Certificate dated 1.10.2012 provided by the petitioner was substantially in terms of the format contained in the S.B.D. but it was further provided therein that the certificate had been issued on specific request of the petitioner and it does not bear confirmation of sanction of the loan/limit which will be subject to the fulfillment of the terms and conditions adhered to by the Bank. In the circumstances, the last paragraph was not really conditional but even in a certificate as per format the actual position would remain that after the grant of contract the over draft/credit facility would have to be sanctioned to the extent required.

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In this regard learned counsel for the petitioner relies upon clause 22.4 (ii) of S.B.D. which is in the following terms:-

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“After receipt of confirmation of the bid security, the bidder will be asked in writing (usually within 10 days of opening of the Technical Bid) to clarify or modify his technical bid, if necessary, with respect to any rectifiable defects.”

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Learned counsel also relies upon clause 25.1 of the S.B.D. which is quoted below:-

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“During detailed evaluation of “Technical Bids”, the Employer will determine whether each Bid (a) meets the eligibility criteria defined

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in Clause 3 and 4; (b) has been properly signed; (c) is accompanied by the required securities and; (d) is substantially responsive to the requirements of the Bidding documents. During the detailed evaluation of the “Financial Bid”, the responsiveness of the bids will be further determined with respect to the remaining bid conditions, i.e., priced bill of quantities, technical specifications, and drawings.”

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Learned counsel for the petitioner submits that in terms of the aforesaid two clauses it cannot be said that the petitioner’s Technical Bid was not substantially responsive to the requirement of S.B.D. merely because the Bank Certificate stated something more than what was required in the format. It is his submission that at worst it would be considered to be a defect which was rectifiable. The respondents ought to have asked the petitioner in writing to clarify or modify his technical bid, if necessary, with respect to any rectifiable defects and as a matter of fact he has already submitted a rectified Bank Certificate on 27.12.2012 before the respondents which is exactly in terms of the format but for the reasons best known to the respondent authorities, they did not approach the petitioner for rectification of defect.

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It is also the submission of learned counsel for the petitioner that exactly similar Bank Certificate was produced by Arvind Kumar who was declared to have passed by the Technical Valuation Bid Committee in its order dated 18.12.2012 without holding that his Bank Certificate was conditional and, therefore, his bid is rejected. Learned counsel for the petitioner also refers to another subsequent decision of the Technical Bid Committee dated 21.1.2013 with respect to the same contract by which the said Arvind Kumar has been declared fail this time with respect to the same contract but on the ground that his Labour Registration Certificate was not in accordance with SBD and not on the ground that the Bank Certificate produced by him was conditional. Thus according to learned counsel the respondents themselves are not treating the same as a mandatory requirement that the Certificate should be exactly as per the format and not rectifiable since under clause 4.2 (i) the requirement to furnish information is only of evidence of access to or availability of credit facility ( minimum 10% of the estimated cost) certified by the Bankers and only thereafter a sample format for evidence of access to or availability of credit facility has been provided.

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Learned counsel for the State, on the other hand, submits that clause 4.8 of the S.B.D. was part of the contract under which

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the petitioner has made his bid and therefore it is not open to the petitioner to challenge the rejection of his technical bid on the ground of clause 4.8 of S.B.D.

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It is also the stand of learned counsel for the respondents that the Bank Certificate was not as per the format and thus the rejection of the Technical Bid on the said ground cannot be held to be bad.

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This Court, however, put a question to learned counsel for the State as to what was the scope and ambit of the term of any rectifiable defect mentioned in clause 22.4 (ii) of the SBD under which it has been specifically provided that the bidder will be asked in writing (usually within 10 days of opening of the technical bid) to clarify or modify his technical bid, if necessary, with respect to such rectifiable defects. Learned counsel was unable to explain or elaborate the same with reference to any provision in the SBD.

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Learned counsel for the State is also unable to say as to how the Bank Certificate should not be treated as a rectifiable defect after the petitioner has produced the same with certain conditional words and why such benefit should not be granted to a party which is in a position to produce such a certificate, when the Bank Certificate was only required to the extent of 10% of the estimated

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value of the contract and not for any substantial amount.

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Learned counsel is also unable to answer as to how such a certificate may not be considered as being substantially responsive to the requirement of the bidding document,.

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Learned counsel for the intervener respondent No.11 while adopting the submission of learned counsel for the State further submits that under clauses 14 and 15 of NIT it was provided that if it did not fulfil the requirement specified therein it would be disqualified under clause 4.8 of the S.B.D. and it was required to file an affidavit that it fulfils the requirement of clause 4.8 of the S.B.D. It is the submission of learned counsel that the petitioner having entered into the bidding process was required to be qualified those grounds and to submit an affidavit to that extent and, therefore, he has rightly been disqualified.

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Learned counsel for the respondent No.11 further points out that the petitioner’s case stands on even much worse footing as one of his contracts has been rescinded and thus rightly his technical bid was rejected.

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With regard to rectification of Bank Certificate, it is the submission of learned counsel that such rectification of the Bank Certificate would have the effect of changing the qualification to the detriment of other bidders like the respondent No.11.

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I have considered the submissions of learned counsels for the parties.

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So far as the disqualification of the petitioner under clause 4.8 of the S.B.D. is concerned, the said issue is no longer res integra and this Court in C.W.J.C. No.19809/2011: M/s. NCC Limited vs. State of Bihar and others by order dated 10.1.2013 has already held in the following terms:-

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“From a perusal of the facts and

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circumstances enumerated above it is evident that in the present matter the petitioners have been declared defaulters in carrying out their contractual work by the authorities of the State which factual situation is denied by the petitioners who have on the other hand made allegations against the State authorities as being equally liable and at fault in the matter. The contention of learned counsel for the petitioners that in such circumstances the issue regarding default can only be decided by an impartial adjudicatory body has much force in view of the law laid down by the Apex Court in M/s. J.G. Engineers case (supra). The Apex Court has clearly held that the question

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whether the other party has committed a breach cannot be decided by the party which alleges the breach nor the contract can provide that one party to the contract can decide whether they committed the breach or the other party committed the breach, which question can only be decided by a judicial forum, i.e. a court or an Arbitral Tribunal. 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

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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 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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It is evident from the aforesaid decision that if the default is not admitted by the contractor then the issue of default can only be considered by an independent body which may be a Court of law

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or an arbitral tribunal and it is not open to the State which is a party to the contract to unilaterally decide the said issue. The said decision applies in the present matter also, as the question of default has not been admitted by the petitioner, rather he further asserted that the respondents have even gone to the extent of granting the petitioner extension in completing the contract and rescindment order of contract was also subsequently recalled.

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So far as the issue of rescindment of contract is concerned, the same has no relevance with respect to clause 4.8 as mere rescindment of contract does not fall within the purview of clause 4.8 of the S.B.D.

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With respect to the Certificate issued by the Bank, I find some force in the submission of learned counsel for the petitioner. It is true that the requirement is that the technical bid should be substantially responsive to the requirements of the bidding document. Further it has been clearly provided that at the stage of technical bid with respect to rectifiable defects, the bidder will be asked in writing (usually within 10 days of opening of the Technical Bid) to clarify or modify his technical bid, if necessary, with respect to any rectifiable defects but the same has not been specified at all in the S.B.D. and neither of the learned counsels for the respondents has been able to show any provision of SBD

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which specifies the rectifiable defects. From a perusal of the format and the Bank Certificate filed by the petitioner, I find that the Bank Certificate issued to the petitioner is not so much a conditional document as it is sought to be made out as the conditional word used in the Bank Certificate is in the nature of precaution used by the Bank while issuing the certificate mentioning the factual position that there is no confirmation of sanction of the loan/limit which would be subject to the fulfilment of the terms and conditions adhered to by the Bank. It is evident from the format of the Bank Certificate under SBD that there is no specific commitment stated in the said Certificate that the overdraft/credit facility has already been granted rather it is only averred that the Bank shall be able to provide the same to the extent mentioned in the certificate to meet their working capital requirements for executing the contract in question. Thus, even with the Bank Certificate under the format, it cannot be said that there is commitment by the Bank to provide the working capital requirement for executing the contract in question. Hence, in my view there being a provision for rectification of certificate during the consideration of the technical bid, the petitioner should have been provided an opportunity of rectifying the Bank Certificate.

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From what has been laid down above, it does not mean that

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the respondents in every case are bound to treat a defective certificate as rectifiable but if they choose not to do so it is for them to clearly state in the SBD the defects which may be rectified. The same cannot be left to the officers concerned to come to a conclusion as per their own whims. During the evaluation process of the technical bid in the present matter the defective Bank Certificate of the petitioner was treated as a good ground for his disqualification whereas the similar defect of another candidate was not considered as a good ground for disqualification.

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Thus, so far as the present matter is concerned, in the given facts and circumstances the petitioner ought to have been given the benefit of the provisions of clause 22.4 (i) of S.B.D. for rectification of defects and permitted to provide a Bank Certificate exactly in the format as required.

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I do not agree with the submission of learned counsel for respondent No.11 that the rectification of the Bank Certificate changes the qualification as it is only on the question regarding the availability of overdraft/credit facility and even the certificate in the format does not amount to a firm commitment of the concerned Bank.

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On a consideration of the aforesaid facts and circumstances,

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the writ application is allowed. The decisions dated 18.12.2012, 24.12.2012 and 21.1.2013 of the Technical Bid Committee in so far as they concern the petitioner are quashed and it is directed that the financial bid of the petitioner shall also be considered along with that of others in accordance with law.

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V.P.Sinha/-

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(Ramesh Kumar Datta, J)

M/s Hari Om Construction v. The State Of Bihar and Ors.

Case brief

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M/s Hari Om Construction v. The State Of Bihar and Ors.

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