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Eri-tech Ltd. & Another v/s Bharat Sanchar Nigam Ltd. & Others

    W.P.(C). No. 4057 of 2003
    Decided On, 16 February 2004
    At, High Court of Gauhati
    For the Petitioners: B.R. Bhattacharya, A. Dasgupta, S. Chakraborty, Advocates. For the Respondents: B.M. Choudhery, Advocates.

Judgment Text
1. What would be the correct parameters of State action after acceptance of a tender, is the core question that arises for determination in the present case. Having accepted a tender, is the State to be understood to be under compulsion to award the contract/grant the lease or is the State left free to decided the matter? The questions arise in the facts enumerated below:

2. A notice inviting tenders (hereafter referred to as the N.I.T) was published in the newspaper on 26.10.02 inviting bids in the two bid system for the grant of the following contract works: "Installation and erection of 12F aerial OFC with supply of supporting Fixtures and Accessories for Likhaball-Bazar-Along-Boieng-Geku-Yingklong Route In AP SSA". The petitioner submitted his tender in response to the aforesaid NIT and was qualified in the technical bid. By a letter dated 10.12.2002, the petitioner was informed that the financial bids submitted by the tenderers will be opened on 12.12.2002 at the time and place mentioned in the said letter. According to the petitioner, on the financial bids being opened, the rate quoted by him was found to be the lowest and thereafter on 28.4.2003 he was called for a negotiation. According to the petitioner, at that stage the works induced in the NIT in so far as the erection of poles is concerned was excluded from the scope of the contract work as the Army, who was likely to benefit from the works in question, had offered its existing infrastructure to the Respondents. According to the writ petitioner, by the aforesaid exclusion, the value of the contract works got reduced from the original anticipated amount of Rs.4.65 crores to about Rs 2.72 crores. The petitioner has further averred that after the negotiation, a letter dated 2.3.2003 was issued to him informing him that his offer has been accepted and that the advance purchase order, in terms of the relevant Clause of the NIT was in the process of being issued. On 2.5.03, an advance purchase order was issued in favour of the petitioner for an amount of Rs. 2,72,91,120 and the petitioner was requested to furnish the performance security, as per the terms of the NIT to the extent of Rs.13,64,556. According to the writ petitioner, on 9.5.03, performance security for the aforesaid amount was furnished by him in the form of a bank guarantee. However, the Respondent No.5 by a letter dated 9.5.03 Informed the petitioner that the advance purchase order issue to him is being kept in abeyance where after by another letter dated 19.5.2003, the aforesaid advance purchase order was withdrawn. Aggrieved by the aforesaid action, the instant writ petition has been filed. It must be noticed at this stage, that though the advance purchase order issued to the petitioner was initially kept in abeyance and thereafter withdrawn on 19.5.03, the acceptance of the offer of the petitioner communicated by letter dated 2.5.03 has not been withdrawn by the Respondent No. 4.

3. Before embanking upon a consideration of the rival submission advanced on behalf of the parties, it may be apposite herein to notice the sallent features of the NIT issued. Chapter ‘D' deals with award of contract under clause 24(1) of the NIT, the Respondents were required to consider placement of orders for commercial supply on a bidder whose offer has keen found to be technically, commercially and financially acceptable and whose bids have been approved/validated by the Bharat Sanchar Nigam Ltd., shortly BSNL, under Clause 23, the BSNL reserved the right, at the time of award of contract, to increase or decrease the quantity of goods and service specified to the extent of 25%. Such increase and decrease under Clause 25 was to be without any change in the unit price of the goods or services to be supplied/rendered. Under Clause 26 of the NIT, the BSNL further reserved the right to accept or reject any bid and to annul the bid process and reject all bids at any time prior to the award of contract without assigning any reason whatsoever. Clause 27 deals with the issue of advance purchase orders and under Clause 27(1), it was contemplated that the issue of an advance purchase order shall constitute the intention of the BSNL to enter into the contract with the bidder. Under Clause 27(2), the bidder was required to give his acceptance of the advance purchase order along with performance security deposit within 10 days of the date of issue of the advance purchase order under Clause 28 of the NIT, the issue of purchase order was to constitute the award of the contract on the bidder. Clause 29 of the NIT contemplates annulment of the grant of the contract and forfeiture of the bid security in the event a successful bidder falls to comply with the requirement of Clause 28 of the NIT.

4. The arguments on behalf of the writ petitioner have been made by Mr. B R Bhattacharyya, learned Senior Counsel. According to the learned counsel, the bid offered by the petitioner was found to be technically, commercially and financially viable. It is not the case of the Respondent authority that the petitioner was in any way disqualified from performing the contract on the basis of facts that may have been subsequently revealed. Learned counsel for the petitioner by referring to the affidavit filed by the Respondents has further submitted that it is the categorical stand of the authority that the works in respect of which advance purchase order was placed on the writ petitioner are still required to be performed and in fact there is a fair amount of urgency for execution of the works. Learned counsel, by pointing to the relevant part of the respondent's affidavit, has contended that the only ground disclosed for not going ahead with the award of the contract in favour of the writ petitioner is that the General Manager, AP, SSA, BSNL, who had issued the NIT, was competent to accept offers upto limit of three crores. As the tender value of the works advertised was to the tune of Rs. 4.65 crores, notwithstanding the exclusion of the part of the contract, as noticed above, had brought down the value of the contract to Rs. 2.72 crores, the procedure adopted was not correct. According to Respondents, there could be audit objections with regard to procedure and, therefore, the Respondent authority had decided not to grant the contract in favour of the writ petitioner and instead has decided to resort to a process of re-tender. Though in the affidavit filed, there is some indication that the Respondent authority also objects to the late receipt of the performance security offered by the writ petitioner, the same has not been cited as ground for the impugned action.

5. Mr. BM Chaudhury, learned counsel for the Respondents while defending the action taken by the Respondents in the present case, has reiterated the contentions advance in the affidavit and has submitted that as the Respondent No.4 was not competent to issue the NIT in view of the value of the works, the action of the authority in not issuing the formal work order to the writ petitioner would be a justified action and the same would not called for interference of the Court.

6. The rival submissions advanced have received due consideration of the Courts. Though award of the work order an acceptance of a tender must be understood to be the normal rule, a departure therefrom can be visualised in a rare and exceptional situation, if the circumstances would justify such a departure. The decision of the authority not to go ahead and award the work order even after acceptance of a tender must be primarily guided by public interest. Information subsequently received that the selected tenderer has become disqualified or disentitled to execute the work or that the work in question need not be executed or is to be executed in a modified form, would be broadly Illustrative of the instances where public interest may justify the departure. It is the satisfaction of the authority that the action has become necessary for relevant and good reasons which would be material and unless such a satisfaction is concurred to by the Court on the materials adduced, interference will have to be made and appropriate directions will have to be issued. If the action of the authority in this regard discloses arbitrary action disclosing no relevant and germane reasons and grounds for the decision taken, judicial intervention would be justified. In the last resort, every action of the State must be guided by reason and fairness and all such action must be dictated by public interest.

7. Coming to the facts of the present case, what is noticeable and virtually remains undisputed is that the offer made by the petitioner has bean found to be technically, commercially and financially viable and acceptable. It is not the case of the respondents that the petitioner had in any way become disabled or disentitled to execute the contract works for which tenders were floated. It is also not the case of the respondents that the work itself need not be executed. In fact, the respondents have stated in there affidavit, that execution of the works is of paramount importance for a viable telecommunication infrastructure in the north east and that the authorities are contemplating to re-advertise the works. The only ground stated, as already noticed, is that the respondent No. 4, who has issued the NIT, had exceeded with financial limit, which was pegged at Rs. 3 crores whereas the value of the contract works, as advertised, was Rs.4.65 crores. If the financial limit of the respondent No. 4, was Rs. 3 crores and the value of the work advertised exceeded the said limit, certainly there was an irregularity but such irregularity could have been cured by the approval of the higher authority. In the present case, however, aforesaid question would not arise, inasmuch as, with the taking away/exclusion or a part of the work advertised, the value of the contract had come down to Rs.2.72 crores, i.e., within the financial limit of the Respondent No.4. The exclusion of the part of the works bringing down its total value to Rs. 2.72 crores is a course of action that is permissible under Clause 25 of the NIT. The decision of the authority to exclude a part of the works from the purview of the contract thereby reducing its value, has not been challenged by the writ petitioner or by any other tenderers. In such a situation, the decision not to award the final purchase order to the petitioner, on the ground of procedural irregularities, which may invite audit objection, appears to have been a decision passed solely on the technicalities, if not on hyper technicalities of the situation. The writ petitioner having been found to be suitable and entitled in all respects to execute the contract work and the value of the contract work having been brought down to Rs. 2.72 crores, it will be difficult for this court to accept that the exercise of the powers by the Respondent authority in the present case, was a fair exercise. In any case, the financial limits,

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as stated in the affidavit, is with regards to award of a contract work not exceeding Rs. 3 crores and such restriction does not appears to be in respect of issuing an NIT for a higher value. In the above facts, this court takes the view that interference with the impugned action would be called for. The impugned orders dated 9.5.2003 and 19.5.2003 (Annexures J and K) are therefore, being interfered with. 8. The next question that will arise is the entitlement of the writ petitioner to any further relief. The offer made by the petitioner having been found to be acceptable in all the respect and the works having been admitted to the necessary for execution, re-tendering of the works at this stage would be detrimental to public interest. Re-tendering would involve escalation of costs. A suitable person who is willing to do the work at the rate offered in the year 2002 being available, this court finds no justification to permit Respondents to re-advertise the works. The respondents, therefore, are directed to go ahead with tender process from the stage where it had stopped, i.e. the stage of issuing the final purchase order. 9. The writ petition shall accordingly stand allowed as indicated.