IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE FIRST DAY OF AUGUST TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE B.SESHASAYANA REDDY WRIT PETITION NO : 12532 of 2008 Between: M/s.Sri Harsha Constructions, rep.by its Managing Partner Sri N.Venkateswara Rao, 8-3-940, Flat No.202, II Floor, Tirumala shah Residency, Yllareddiguda Lane, Ameerpet Hyderabad-500073 ..... PETITIONER AND 1 Union of India., rep.by The General manager, South Central Railway, Rail Nilayam, Secunderabad-500071 2 The Chief Administrative Officer (Const), South Central Railway, Secunderabad-500071 3 The Chief Engineer (Const.IV), South Central Railway Secunderabad-500071 4 B.Viswanatha Eerya Dy.CE/Const.South Central Railway , Secunderabad-500071 5 N.Srinivasa Raju, Dy.FA& CAO/Const,South Central Railway, Secunderabad 6 R.Srinivas, Dy.CSTE/Const.DRM Compound, South central Railway, Vijayawada 7 Y.Murali Krishna Rao, 10-2-413/004, Francis Apartments Street No.2, West marredpally, Secunderabad-500025 .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Aﬃdavit ﬁled herein the High Court will be pleased to to issue a writ or direction more particularly a direction in the nature of writ of mandamus declaring the action of the 3rd respondent in awarding the contract to 7th respondent on 12.6.2008 in pursuance of Tender Notice No.13/CAO/C/SC/2008 dated 8.4.2008 in respect of Item No.5 as arbitrary, illegal, and against the principles of natural justice and consequently set aside the same and pass Counsel for the Petitioner: MR.PRASAD RAO VEMULAPALLI Counsel for the Respondent No.: MRS.C.V.VINITHA REDDY The Court made the following: O R D E R: 1. This Writ Petition has been ﬁled by M/s Sri Harsha Constructions represented by its Managing Partner Sri.N.Venkateswara Rao with a prayer to issue a Writ of Mandamus declaring the action of the 3rd respondent-The Chief Engineer (Const.IV), South Central Railway, Secunderabad in awarding the contract to 7th respondent-Y.Murali Krishna Rao as arbitrary, illegal and against the principles of natural justice. 2. Averments made in the aﬃdavit ﬁled in support of the writ petition, in brief, are: The petitioner is a registered partnership ﬁrm and it has been in works contracts for the last more than 25 years. The petitioner has carried on works of Central Government and various State Governments and other instrumentalities. It has acquired specialized skill in constructing bridges, aqueducts, irrigation projects, PSC structures etc. The 2nd respondent-The Chief Administrative Oﬃcer (Const.), South Central Railway, Secunderabad called for tenders for construction of road over bridge through tender notice No.13/CAO/C/SC/2008, dated 8.4.2008. The estimated value of the work was Rs.4,69,64,961.20 and the work was to be completed within nine months from the date of accepting the tender. The petitioner and four others submitted tenders. The petitioner made a conditional oﬀer to the eﬀect that if its oﬀer is accepted a rebate upto 2 percent will be given on the value of its quoted rates. The petitioner made similar conditional offers in the earlier tenders and they were accepted by the respondents. With regard to the tender in question the oﬀer made by the petitioner is the lowest amongst all the ﬁve tenderers. The offer made by five tenderers is detailed here under: S.No. Name of the Tenderer Base Value 4,69,64,961.20 Quoted value 1. ESSVY Constructions 6,33,36,599.31 2. VISHNU CONSTRUCTIONS 6,73,31,830.44 3. Y.Murali Krishna Rao 6,05,19,254.57 4. Sri Harsha Constructions 6,12,44,043.40 Without rebate With rebate 6,00,19,162.53 5. Siri Eng. Constructions 6,79,27,882.92 The tenders were opened on 14.5.2008 and the petitioner was found to be the L1 tenderer. The petitioner being the L1 tenderer expected acceptance from the respondents. However, the petitioner was informed that there was some ambiguity about the oﬀer. Therefore, the petitioner gave clariﬁcation as to the intended meaning and purport of its oﬀer of rebate by way of representations dated 24.5.2008 and 9.6.2008. The tender committee comprising R4 to R6 recommended to 3rd respondent to call 7th respondent for negotiations and prevailed over 7th respondent to reduce his oﬀer so as to make his oﬀer as the least after considering the rebate of the petitioner. According to the petitioner, R4 to R6 ought to have called the petitioner for negotiations. Acceptance of tender of 7th respondent is assailed in this writ petition on the ground that it is contrary to fair play and opposed to the principles of natural justice. 3. Respondents have ﬁled counter aﬃdavits. Sri.Anil Kumar Malik has sworn to the counter aﬃdavit ﬁled on behalf of R1 to R3 and whereas B.Vishwanath Eerya has sworn to the counter aﬃdavit ﬁled on behalf of R4 to R6 and R7 has ﬁled a separate counter affidavit. 4. It is stated in the counter aﬃdavit of R4 to R6 that the petitioner has mentioned the special condition of offering a rebate of 2 percent on the quoted percentage in respect of E schedule only. As per clause 15.0 page 13 of the instructions to tender and conditions of tender, the tenderers shall keep their oﬀer open for a minimum period of 90 days from the date of opening of the tender. If the tender of the petitioner is accepted basing on the special oﬀer made in Schedule E, it would amount to varying the important condition of keeping the oﬀer open for a minimum period of 90 days from the date of opening of the tender and the petitioner would be treated differently. 5. The petitioner ﬁled reply aﬃdavit. It is stated in the reply aﬃdavit that submitting a conditional order is not prohibited in the tender and it is not the case of any of the respondents that the tender of the petitioner was rejected on the ground that it was a conditional order. A plain reading of the note immediately appended after schedule E would invariably give the meaning that the rebate oﬀered is for the entire value and thus the rebate oﬀered by the petitioner cannot be conﬁned to schedule E only and that the respondents have deliberately and wantonly misread the said oﬀer only to eliminate the petitioner. Clause 20.1 of the tender conditions seeking clariﬁcation with regard to the oﬀers made by the tenderers is not totally prohibited. 6. 7th respondent has stated in the counter aﬃdavit that 3rd respondent communicated the acceptance of his oﬀer and thereupon he commenced the work on 14.6.2008. Para 4 of the counter affidavit needs to be noted and it is thus: “ I submit that I have received the letter No.W.Con. 496/A/B/5141/WC, dated 12.6.2008 from the 3rd respondent communicating the acceptance of my oﬀer. Immediately after receipt of the said acceptance letter, I commenced the work on 14.6.2008 and communicated the same by my letter dated 16.6.2008 as the acceptance letter constitutes a binding contract until a proper agreement is executed. I have received the approved drawings for the work on 20.6.2008. I have also submitted the Performance guarantee to a value of Rs.29,85,590/- on 27.6.2008. I entered into agreements with material suppliers and the work is under progress. Later on I entered into an agreement No.123/CAO/C/SC/2008, dated 8.7.2008 with the 1st respondent for execution of the work and the work is under progress. I submit that if this Honourable Court grants stay of execution of the work at this juncture irreparable injury would be caused to the respondents 1 to 3 who represent public interest, as well as to me. It is, therefore, just and necessary that this Hon’ble Court may be pleased to dismiss the above writ petition with costs.” 7. When this writ petition came up for admission hearing, with the consent of learned counsel for the parties, the same has been taken up for final disposal. 8. Heard learned counsel appearing for the petitioner, learned Standing Counsel appearing for the R1 to R6 and learned counsel appearing for R7. 9. Learned counsel appearing for the petitioner submits that rebate of 2 percent oﬀered by him is in respect of all the schedules i.e. A to E and that it is not in respect of E schedule alone and if the discount oﬀered by him is taken into consideration, his oﬀer would be the lowest and in which case his tender is to be accepted. He further submits that R1 to R6 accepted a similar oﬀer made by him in respect of earlier works and not accepting the conditional oﬀer in respect of tender in dispute is only to accommodate R7. He would further contend that a plain reading of the note would invariably give the meaning that the rebate oﬀered is for the entire value and the understanding of R4 to R6 that the rebate is conﬁned only to E schedule is unreasonable as the value of E schedule is only Rs.1.00 lakh. In support of his submissions, reliance has been placed on the decision of Supreme Court in KANHAIYA LAL AGRAWAL V. UNION OF INDIA[1], wherein the Supreme Court held that tenderer oﬀering ﬁrm rates with concessional rate if tender is ﬁnalized within shorter period does not amount to conditional oﬀer. Paragraphs 7 and 8 of the cited judgment need to be noted and they are thus: “ ( 7 ) IN the present case, the short question that falls for consideration is whether the tender oﬀered by the appellant with the rebate could have been accepted and whether such acceptance would affect the interests of any other party. ( 8 ) THE letter dated 27-2-2001 accompanying the tender made by the appellant after setting out rate oﬀered by him also set out certain circumstances with a note in the following terms :- "note :- I would like to offer if the tender is finalised in my favour : (a) 5% reduction in rate within 45 days; (b) 3% reduction in rate within 60 days; (c) 2% reduction in rate within 75 days; (d) to make use of the machinery at the quickest possible time. " Bureaucratic delay is a notorious fact and delay in ﬁnalising tenders will cause hardship to the tenderer. In such circumstances, if a hardened businessman makes an attractive oﬀer of concessional rates if tender is ﬁnalized within a shorter period, it cannot be said that the rates oﬀered are subject to conditions. The rates oﬀered are clear and the time within which they are to be accepted is also clear. As long as such oﬀer does not militate against the terms and conditions of inviting tender it cannot be said that such oﬀer is not within its scope. All that is required is that oﬀer made is to be kept open for a minimum period of 90 days. Oﬀer in compliance of that term has been made by the appellant. The concession or rebate given is an additional inducement to accept the oﬀer expeditiously to have a proper return on the investment made by the tenderer in the equipment and not keeping the labour idle for long periods, which is part of commercial prudence. The commercial aspect of each one of the oﬀers made by the parties will have to be ascertained and, thereafter a decision taken to accept or reject a tender.” The cited decision squarely applies to the facts of the case on hand and therefore the conditional oﬀer made by the petitioner holds good. The question is whether 2 percent rebate oﬀered by the petitioner is only in respect of E schedule or to the all the schedules i.e. A to E will be examined in the foregoing paras of the judgment. 10. Learned counsel appearing for R7 submits that R7 executed Performance Guarantee to a tune of Rs.29,85,590/- on 27.6.2008 and entered into agreements with material suppliers and the work is under progress and at this stage interference of the works allotted to him is uncalled for. 11. Learned counsel appearing for the petitioner submits that after submitting the tender, he clariﬁed through letters that he oﬀered rebate to the entire work i.e. schedule A to E and that the tender committee is not justiﬁed in ignoring the clariﬁcation given by the petitioner. 12. The tender conditions are very clear that after submitting the tender the tenderers are not supposed to enter any correspondence and it is for the committee to seek any clariﬁcation or ambiguity with regard to the particulars mentioned in the tender. Therefore, in view of the speciﬁc bar, even if the petitioner made representations clariﬁying the rebate oﬀered by him is in respect of schedules A to E, the tender committee is justified in ignoring the same. 13. It is very well settled and needs no reiteration that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, there are inherent limitations in exercise of that power of judicial review. The parameters of judicial review are too well settled in the matter of exercise of contractual powers by the governmental bodies. This Court does not exercise any appellate jurisdiction over the decisions taken by the governmental bodies in the matter of awarding contract. The court, of course, would interfere to prevent arbitrariness or favouritism and to protect larger public interest. The Court in exercise of its judicial review jurisdiction is concerned with decision-making process, but not with the decision itself. This Court in appropriate cases may issue writs directing the State, its Corporations, instrumentalities and agencies to adhere to the norms, standards and procedures laid down by them and prevent them from departing from those norms arbitrarily. The Court, of course, would interfere if the decision is found vitiated b y mala ﬁdes, unreasonableness and arbitrariness vide the decision of a Division Bench of this Court in UNION OF INDIA AND OTHERS V. LAXMI BUILDERS, SECUNDERABAD[2]. 14. Indisputably the petitioner made a conditional oﬀer. The condition put by the petitioner reads as under: “Note: If the work is awarded in our favour within one month’s time we are oﬀering a rebate of 2 percent (2 percent on our quoted percentage).” The entire work comprises ﬁve schedules i.e. A,B,C,D and E. The petitioner oﬀered 2 percent rebate by appending a note under E schedule. For better appreciation I may extract the note appended under E schedule in the tender submitted by the petitioner. “ SCHEDULE ‘E’ Items that are covered by the Standard Schedule of Rates of 2002 Vol.I & II of Vijayawada Division. S.NO. DESCRIPTION QTY. UNIT RATE AMOUNT 1) Any items as per South Central Railway Standard Schedule of Rates, 2002 Vol.I&II for Vijayawada Division as corrected by and upto the date of opening of tenders likely to be operated which are not covered by Schedule A, B, C and D. 100000.00 Contractors percentage rate: Above (+)1 Y. (Plus one percent) Total value of Schedule E 100000.00 Note: The tenderer is required to quote Percentage above the total value of Schedule E Both in figures and words. In case of Discrepancy in quoted percentage, the Percentage rate quoted in words will be Taken as final. A B S T R A C T Total Value of Schedule A Total Value of Schedule B Total Value of Schedule C Total Value of Schedule D Total Value of Schedule E Grand total Note: If the work is awarded in our favour within one month time we are oﬀering a rebate of 2 % (two percent) on our quoted percentage.” The tender committee comprising R4 to R6 considered the note and came to the conclusion that the rebate oﬀered by the petitioner pertains to only E schedule but not of all the ﬁve schedules. 15. Learned Standing Counsel appearing for R1 to R6 placed before me the ﬁle relating to the work for which the petitioner submitted tender. 16. I have gone through the tender submitted by the petitioner. The petitioner oﬀered 2 percent rebate if the work is awarded in its favour within 30 days. Two views are possible by reading the note appended under E schedule. One view is the rebate applies to the entire work and the other view is the rebate applies to E schedule alone. During the course of arguments the learned Standing Counsel placed before me the rebate oﬀer made by the petitioner in respect of some other works wherein the petitioner categorically stated that rebate offered by him is applicable to the entire work. Coming to the tender in question, the petitioner did not state that the rebate oﬀered by him is applicable to the entire work. The tender committee has considered the note appended to E schedule of the tender in question and also the note appended to E schedule in the tender submitted by the petitioner in respect of other works. Keeping in view the entire material placed on record the tender committee came to the conclusion that the rebate oﬀered by the petitioner is only in respect of E schedule. When two views are possible and the view taken by the tender committee is possible, this Court cannot legally interfere with the view of the tender committee merely because the other view is also possible. The tender committee comprising R4 to R6 acted fairly in evaluating the tenders and there is no arbitrariness or favoritism. The work has been entrusted to R7. The period of completion of the work is nine months and about a month has already elapsed. In these circumstances, though the other view is possible i.e. 2 percent rebate to all the ﬁve schedules, I am not inclined to take that view in view of the facts and circumstances of the case. 17. In view of the above, this writ petition is devoid of merits and it is hereby dismissed at the admission stage. No order as to costs. 1st August, 2008. (B.Seshasayana Reddy,J) tnb ASSISTANT REGISTRAR // TRUE COPY // SECTION OFFICER To 1.2CCs to 2.2CD copies Form-NIC-OGS/WP{TRK} THE HONOURABLE SRI JUSTICE B.SESHASAYANA REDDY WRIT PETITION NO.12532 OF 2008 1ST AUGUST, 2008. [1] AIR 2002 SC 2766 [2] 2003(5) ALD 87 (DB)