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NR Constructions Limited, Rep by its VP Finance-Vaikuntanathan v/s M/s. Super Hitech Engineers and Contractors & Others

    W.A. No. 494 of 2022
    Decided On, 02 August 2022
    At, High Court of for the State of Telangana
    By, THE HONOURABLE CHIEF JUSTICE MR. UJJAL BHUYAN & THE HONOURABLE MR. JUSTICE N.V. SHRAVAN KUMAR
    For the Appellant: A. Venkatesh, Advocate. For the Respondents: R1, B. Narayan Reddy, Advocate, R2 to R5, Harender Pershad, Spl. GP.


Judgment Text
Ujjal Bhuyan, CJ.

Heard Mr. A.Venkatesh, learned counsel for the appellant; Mr. B.Narayan Reddy, learned Senior counsel for respondent No.1 (writ petitioner); and Mr. Harender Pershad, learned Special Government Pleader attached to the office of the learned Advocate General for respondents No.2 to 5.

2. This intra-court appeal has been filed assailing the legality and correctness of the order dated 19.07.2022 passed by the learned Single Judge in I.A.No.1 of 2022 in W.P.No.29606 of 2022.

3. Respondent No.1 as the writ petitioner has filed the related writ petition seeking the following reliefs:

It is therefore prayed that this Hon’ble court may be pleased to issue a Writ, Order or Direction more particularly, one in the nature of a Writ of Mandamus declaring the action on the part of Respondent No.4 in -

a. disqualifying the bid submitted by the petitioner submitted in response to the e-NIT. No.8/ ENC(R)/ MDK/ EE(R)/ DEE6/AEE /2022 dated 11.05.2022 and in not giving an opportunity to the petitioner to cure a curable deficiency in the technical bid, despite repeated representations;

b. approving the deficient technical bid of respondent No.5 submitted in response to the e-NIT. No.8/ENC(R)/MDKJ/EE(R)/DEE6/ AEE/2022 dated 11.05.2022 without considering the representations submitted by the petitioner bringing to their notice the said deficiencies as arbitrary, illegal, highhanded, violative of Articles 14 & 19 of the Constitution of India;

and further direct Respondent No.4 to award the contract to the petitioner by considering the price bid submitted by the petitioner herein and pass such other order or orders as this court may deem fit and proper in the interest of justice.

4. Be it stated that respondent No.5- Superintending Engineer (R&B), Sangareddy District, had issued a Notice Inviting Tender (NIT) dated 11.05.2022 for construction of ‘four lane road from IDA Pashamailaram industrial park to ORR (Patancheru – Shankarpally road junction) from km.0/0 to 4/658 in Sangareddy District’. The estimated contract value is Rs.32,87,22,353.00 and the period of completion of work is eighteen months. As per the NIT, submission of bids would commence from 13.05.2022 at 5:00 p.m. and would close on 30.05.2022 at 3.30 p.m. Date for opening of technical bid was fixed on 30.05.2022 at 4:00 p.m., and date for opening of price bid was fixed on 02.06.2022 at 4:00 p.m.

5. The bids were submitted online. At the time of technical evaluation, bid of respondent No.1 was rejected on the ground that the required experience certificate of respondent No.1 did not show the counter signature of Superintending Engineer (R&B). Thereafter, price bids were opened on 05.06.2022. Appellant herein was found to be the sole technically qualified bidder. He was declared as the successful bidder at 4.23% above the estimated value. Respondent No.1 made a representation before respondent No.3- Commissioner of Tenders on 06.06.2022 requesting the said authority to instruct respondent No.5 to open its price bid. Notwithstanding the same, Letter of Intent (LoI) was issued by respondent No.5 in favour of the appellant on 11.05.2022. It was at that stage that respondent No.1 preferred the related writ petition seeking the reliefs as indicated above.

6. Learned Single Judge by the order dated 19.07.2022, took a prima facie view that exclusion of respondent No.1 on the ground of incomplete transmission of experience certificate and proceeding with the single tender even though at a higher cost was not justified. Accordingly, the contract awarded in favour of the appellant has been interdicted by granting stay. However, learned Single Judge clarified that interim stay granted should not be construed as precluding the State from initiating tender process afresh by following the due process of law, if so advised.

7. Learned counsel for the appellant submits that on a reading of the order passed by the learned Single Judge, it is evident that learned Single Judge had proceeded on the basis that technical defect in the bid of respondent No.1 was a curable defect and that its exclusion from the tender process was not justified. He submits that learned Single Judge further proceeded on the erroneous footing that it was a single tender of the appellant. He has drawn the attention of the Court to various clauses of the NIT and submits that defective submission of experience certificate was not rectifiable at all; it could not have been construed to be a curable defect. From the language of the tender process, no such view can be taken that non-submission or defective submission of experience certificate is a curable defect.

8. Learned counsel for the appellant further submits that it was not a case of single tender. Admittedly, there were two tenders. But the tender of respondent No.1 was found to be defective and was accordingly rejected at the stage of technical evaluation. Once the stage of technical bid evaluation is over, it is not open to respondent No.1 to say that appellant was the only bidder and that the price bid offered by the appellant was much in excess of the price bid offered by respondent No.1, thereby causing loss to the State exchequer. In this connection, learned counsel for the appellant has referred to a Government Order, which permits acceptance of bids within the range of 5% in excess of the estimated cost. He further submits that learned Single Judge overlooked the recent decision of the Supreme Court in N.G.Products Limited v. Vinod Kumar Jain (2022) 6 SCC 127) though the same was specifically argued and relied upon by him. Finally, he submits that the interim order of the learned Single Judge is virtually a final order, which perhaps could not have been passed by the learned Single Judge at the interlocutory stage; question of initiating fresh tender process does not arise as by now, the price bids are out in the open.

9. On the other hand, learned Senior Counsel for respondent No.1 supports the order of the learned Single Judge. He submits that because of technical glitches signature of the Superintending Engineer (R&B) could not be traced while uploading the experience certificate. Learned Single Judge rightly held such defect to be a curable one. He further submits that present is a case where mala fides are writ large against the conduct of respondents No.4 and 5, who have gone out of their way to favour the appellant at the cost of public exchequer as the bid amount of the appellant is much in excess of the bid amount of respondent No.1. Contending that exclusion of respondent No.1 from the tender process is arbitrary, learned Senior Counsel submits that when there is arbitrariness and mala fides, writ court is well within its jurisdiction to interfere with the tender process. Learned Senior Counsel has also referred to various clauses of the tender documents to point out that the defect of respondent No.1 was not to such effect so as to oust him from the tender process. However, if the same yardstick is applied, tender of the appellant ought to have been rejected as number of documents of the appellant were found to be either incomplete or defective. On the point of arbitrariness and mala fides, learned Senior Counsel has extensively referred to and relied upon the decision of the Supreme Court in National High Speed Rail Corporation Limited v. Montecarlo Limited (2022) 6 SCC 401).

10. Learned Special Government Pleader appearing for the State has supported the case of the appellant. He submits that State has also filed an appeal against the order of the learned Single Judge dated 19.07.2022 though the same is not on board today. According to him, the decision ‘whether the defect in tender document is a curable one or not?’ should be left to the discretion of the tender evaluation committee, an expert body. Tender evaluation committee, on due consideration, found the tender of respondent No.1 to be defective. Accordingly, the tender of respondent No.1 was rejected at the stage of technical evaluation. Therefore, the question of comparision of the price bids of the two bidders after such rejection would not arise.

11. Submissions made at the bar have received the due consideration of the Court.

12. The appeal before us assails the interim order passed by the learned Single Judge staying the award of contract in favour of the appellant following the tender process. The tender relates to construction of four-lane road in Sangareddy District. It is an infrastructure related project. From a perusal of the order of the learned Single Judge, it is an admitted position that the experience certificate uploaded by respondent No.1 did not have the counter signature of Superintending Engineer (R&B). It was defective. Atleast respondent No.1 knew the same to be defective. It was for that reason that at the stage of technical bid evaluation held on 30.05.2022, the technical bid of respondent No.1 was rejected. The price bids were opened on 05.06.2022. After opening of the price bids, respondent No.1 submitted a representation before respondent No.3- Commissioner of Tenders on 06.06.2022 to instruct respondent No.5- Superintending Engineer (R&B) to open his price bid stating that such a step would be beneficial to the State exchequer. When the technical bids were opened on 30.05.2022 and respondent No.1’s bid was rejected, there was no immediate reaction on the part of respondent No.1. He waited till opening of the price bids on 05.06.2022 and when it was found that the bid amount offered by the appellant was higher than the bid amount offered by him, he made the aforesaid representation. Learned Single Judge proceeded on the basis that the defect in the experience certificate is a curable defect. We do not find any analysis by the learned Single Judge based on the tender conditions to come to atleast a prima facie conclusion that the defect was a curable one. Whether the defect is a curable one or not is a matter which required adjudication. Once tender of respondent No.1 was rejected on technical ground, question of comparison of the price bid of respondent No.1 with that of the appellant would not arise. Even though the price bid of the appellant may be higher than that of respondent No.1, question of arbitrariness would not arise as because, Article 14 of the Constitution of India prohibits unequals from being treated alike. We may also mention that Clause 3.5 of the NIT specifically clarifies that tenders upto 5% excess of the estimated cost would be considered as per G.O.Ms.No.230 dated 13.08.2007, but tenders above 5% of the estimated contract value would be summarily rejected. That apart, after disqualification of the technical bid of respondent No.1 at the stage of a technical bid evaluation leaving only the appellant for price bid evaluation, it cannot be construed as a single bid tender.

13. That apart, we are unable to persuade ourselves to concur with the ultimate decision of the learned Single Judge by way of clarification that the interim order should not be construed as precluding the State from initiating tender process afresh. Such a course of action, in our view, may not be permissible or feasible, now that, the price bids are out in the open.

14. In N.G Projects Limited v. Vinod Kumar Jain (1 supra), Supreme Court has categorically held that interference in the award of contracts is wholly unwarranted; it would cause loss to public interest; construction of roads is an essential part of development of infrastructure in any State. Supreme Court has reiterated the principles laid down in Tata Cellular v Union of India (1994)6 SCC 651) and culled out the principles laid down therein as well as in the subsequent decisions. A word of caution was sounded by stating that in contracts involving technical issues or any commercial matters, Courts should be reluctant in interfering. Courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. It is the duty of the courts to give ‘fair play in the joints’ to the Government and public sector undertakings in matters of contract. Finally, it has been held as follows:

Since the construction of road is an infrastructure project and keeping in view the intent of the legislature that infrastructure projects should not be stayed, the High Court would have been well advised to hold its hand to stay the construction of the infrastructure project. Such provision should be kept in view even by the Writ Court while exercising its jurisdiction under Article 226 of the Constitution of India.

The satisfaction whether a bidder satisfies the tender condition is primarily upon the authority inviting the bids. Such authority is aware of expectations from the tenderers while evaluating the consequences of non-performance. In the tender in question, there were 15 bidders. Bids of 13 tenderers were found to be unresponsive i.e., not satisfying the tender conditions. The writ petitioner was one of them. It is not the case of the writ petitioner that action of the Technical Evaluation Committee was actuated by extraneous considerations or was mala fide. Therefore, on the same set of facts, different conclusions can be arrived at in a bona fide manner by the Technical Evaluation Committee. Since the view of the Technical Evaluation Committee was not to the liking of the writ petitioner, such decision does not warrant for interference in a grant of contract to a successful bidder.

In view of the above judgments of this Court, the Writ Court should refrain itself from imposing its decision over the decision of the employer as to whether or not to accept the bid of a tenderer. The Court does not have the expertise to examine the terms and conditions of the present day economic activities of the State and this limitation should be kept in view. Courts should be even more reluctant in interfering with contracts involving technical issues as there is a requirement of the necessary expertise to adjudicate upon such issues. The approach of the Court should be not to find fault with magnifying glass in its hands, rather the Court should examine as to whether the decision-making process is after complying with the procedure contemplated by the tender conditions. If the Court finds that there is total arbitrariness or that the tender has been granted in a mala fide manner, still the Court should refrain from interfering in the grant of tender but instead relegate the parties to seek damages for the wrongful exclusion rather than to injunct the execution of the contract. The injunction or interference in the tender leads to additional costs on the State and is also against public interest. Therefore, the State and its citizens suffer twice, firstly by paying escalation costs and secondly, by being deprived of the infrastructure for which the present day Governments are expected to work.

14.1. Finally, Supreme Court held that any contract of public service should not be interfered with lightly and in any case, there should not be any interim order derailing the entire process of the services meant for the larger public good; grant of interim injunction by the Court would help no one except a contractor, who has lost a contract bid but would only cause loss to the State with no corresponding gain to anyone.

15. In National High Speed Rail Corporation Limited v. Montecarlo Limited (2 supra) relied upon by learned Senior Counsel for respondent No.1, Supreme Court has traced the evolution of the law pertaining to tenders and contracts and the scope of interference by the constitutional courts. Ultimately, Su

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preme Court has reiterated that delay in execution of the project due to intervention by the courts may have a cascading effect on the project cost and may ultimately increase the project cost leading to heavy financial burden on the State. 15.1. In that case also Supreme Court has referred to and reiterated the principles laid down in Tata Cellular v. Union of India (3 supra) In the facts of that case, interference by the High Court was found to be unsustainable and the same was set aside. Supreme Court has reminded us that the High Court should be extremely careful and circumspect in exercise of discretion while entertaining writ petitions or granting stay in matters of contract pertaining to infrastructure projects. Even in a case where the High Court is of the prima facie opinion that the decision is perverse and/or arbitrary and/or suffers from mala fides and/or favouritism then also, the High Court should put the writ petitioner to notice that in case the petitioner loses and there is delay in execution of the project due to such proceedings, the petitioner would be saddled with damages and costs for delay in execution of such projects. 16. That being the position and taking an overall view of the matter, we are of the unhesitant view that the learned Single Judge erred while passing the order dated 19.07.2022. Accordingly, order dated 19.07.2022 passed by the learned Single Judge in IA.No.1 of 2022 in WP.No.29606 of 2022 is hereby set aside. 17. Parties are at liberty to contest Writ Petition No.29606 of 2022 and to request learned Single Judge for early hearing. 18. Writ Appeal is accordingly allowed. No costs. As a sequel, miscellaneous petitions, pending if any, stand closed.
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