*T H E H O N ' B L E S R I J U +WRIT PETITION Nos.8752 and 19044of 2006 % 0 5 - 0 1 - 2 0 0 7 WRIT PETITION No.8752 of 2006 # M.Venkata Subbaiah ..... PETITIONER Vs. $ Engineer-in-Chief, Public Health, A.C.Guards Hyderabad and 3 others .....RESPONDENTS and WRIT PETITION No.19044 of 2006: # M.Venkata Subbaiah ..... PETITIONER Vs. $ Engineer-in-Chief, Public Health, A.C.Guards Hyderabad and 2 others .....RESPONDENTS < G I S T : > H E A D N O T E : ! C o u n s e l f o r p e t i t i o n e Sri M.R.K.Chowdary ^ C o u n s e l f o r R . 1 : - G . P C o u n s e l f o r R . 2 : - G . P C o u n s e l f o r R . 3 : - S r i C o u n s e l f o r R . 4 : - S r i ? C A S E S R E F E R R E D : - [1] (1994) 4 S.C.C., 104 2. AIR 2000 S.C, 2272 3 AIR 1997 S.C., 1390 4 AIR 1996 S.C., 11 5 AIR 1999 S.C., 393 6 W.P.No.798/2005 of A.P.High Court, dt.10-2-2005 7 W.P.No.10388/2004 of A.P.High Court, dt.17-1-2005 8 W.P.No.16051/2004 of A.P.High Court, dt.16-11-2004 9 W.A.No.278/2004 of A.P.High Court, dt.11-2-2004 10 W.P.Nos.3663 and 3637 of 2001 of Bombay High Court, dt.28- 9-2001 11 1999 (4) Bom.C.R., 729 HON'BLE SRI JUSTICE P.S. NARAYANA Writ Petition Nos.8752 and 19044 of 2006 Date: 5th January, 2007 Between :- WP.No.8752/2006 M.Venkata Subbaiab .. Petitioner And Engineer-in-Chief, Public Health, A.C.Guards Hyderabad and 3 others .. Respondents WP.No.19044/2006 M.Venkata Subbaiab .. Petitioner And Engineer-in-Chief, Public Health, A.C.Guards Hyderabad and 2 others .. Respondents HON'BLE SRI JUSTICE P.S. NARAYANA Writ Petition Nos.8752 and 19044 of 2006 COMMON ORDER:- 1. These Writ Petitions are being disposed of by this common Order in view of the commonality of the facts and also the close nexus between the subject matter of controversy between the parties. 2. In W.P.No.8752/2006 rule nisi was issued on 8-6- 2006 and in W.P.M.P.No.11143/2006 interim suspension as prayed for was granted. 3. The Writ Petition is filed for a Writ of Mandamus declaring the action of the respondent No.3 in cancelling the experience certificate issued on 20-6-2005 to the petitioner without a notice to the petitioner at the instance of respondent No.4 as illegal, arbitrary, unfair, unreasonable and also opposed to the principles of natural justice and consequentially the petitioner prays that this Court direct the respondents to permit the petitioner to have the benefit of the experience certificate obtained by him in the light of clause 15 of the Annexure annexed to the Rules issued in G.O.Ms.No.94, Irrigation & C.A.D., dated 1-7-2003 and pass such other suitable orders. 4. The self-same writ petitioner filed W.P.No.19044/2006 and rule nisi was issued on 13-9- 2006 and interim direction was granted for a limited period in W.P.M.P.No.23953/2006 which was further extended for a limited period and further extended until further orders on 27-9-2006. W.V.M.P.No.1836/2006 is filed to vacate the interim order made in W.P.M.P.No.23953/2006 in W.P.No.19044/2006. 5. The relief prayed for in W.P.No.19044/2006 is for issuance of a Writ of Mandamus declaring the action of respondents 1 and 2 in refusing to open the price bid of the petitioner in respect of the works vis., (1) Formation of right side flood bank of Mamidi Kalva from Chain 0.00 meters to 1200 meters near Gollapalem (v) in Ozili Mandal of Nellore District for an estimated contract value of Rs.77,97,580/-; (2) Mamidi Kalva Flood Bank from 0.00 metres to 1600 meters near Papireddy Kandrika in Ozili Mandal of Nellore District for an estimated contract value of Rs.1,28,37,226/-; and (3) Mamidi Kalva Flood Bank near Graddagunta from 0.00 meters to 1200 meters for an estimated value of Rs.62,57,187/- on rejection of the technical bid of the petitioner on the ground of invalidity of the experience certificate produced by the petitioner without a notice and in accepting the only remained tender of the respondent No.3 as illegal, void, arbitrary and discriminatory and opposed to the principles of natural justice and consequentially to direct the official respondents to consider the experience certificate produced by the petitioner which is still valid in the light of the orders of the this Court in W.P.M.P. No.11143/2000 in W.P.No.8752/2006, dt.8-6-2006, and to consider the price bid of the petitioner for awarding of the work on the basis of its own merits and to pass such other suitable orders. 6. Heard Sri M.R.K.Chowdary, the learned senior Counsel representing the writ petitioner in both the Writ Petitions and G.P. for Municipal Administration, G.P. for Irrigation & CAD, Sri K.Ratangapani Reddy and also Sri E.Dhanumjaya. 7. Sri M.R.K.Chowdary, the learned senior Counsel representing the writ petitioner in both the Writ Petitions had taken this Court through the contents of the respective pleadings of the parties and had pointed out to the relevant portions of the material papers and would maintain that the Superintending Engineer would be a party to the agreement though ultimately the Tender Committee may decide. The learned senior Counsel also had explained the relationship between the prime contractor and the sub-contractor and would maintain that how the Superintending Engineer is connected with the execution of the works. The learned senior Counsel also would contend that the status of the sub-contractor is not in serious dispute and the proceeding of the Superintending Engineer would clearly reflect the same and inasmuch as experience certificate had been granted, there cannot be any order of cancellation without notice to the petitioner and without affording the opportunity. The learned senior Counsel also had drawn the attention of this Court through clause (15) of G.O.Ms.No.94. The learned senior Counsel also would explain that on the ground that the Superintending Engineer is not competent and the Tender Committee alone is competent, the validity of the certificate cannot be doubted and at any rate, the very cancellation is in violation of the principles of natural justice. While elaborating his submissions further in relation to W.P.No.19044/2006, the learned senior Counsel would point out that the technical stand taken in the counter affidavit on the competency or in-competency of the Superintending Engineer need not be seriously considered in the light of the facts and circumstances. The learned senior Counsel also pointed out that in the light of the facts and circumstances the stand taken that these Writ Petitions are not maintainable also cannot be sustained and whenever an action of this nature is arbitrary and hit by Article 14 of the Constitution of India, the same can be challenged under Article 226 of the Constitution of India. 8. The learned Government Pleader for Municipal Administration would point out to the relevant material papers and the relevant records produced before this Court and would maintain that the disputed questions of fact are involved and hence the Writ Petition itself is not maintainable. The learned Government Pleader also would point out that when the principal contractor disputes the sub-contract, there is no question of further probing into the matter. The learned Government Pleader also would point out that the prime contractor appointed the petitioner as sub-contractor and the same was communicated through the concerned, had not been established since no material is forthcoming in this regard. By mere execution of work, the petitioner would not be entitled to get the experience certificate and all the conditions are to be satisfied. Even otherwise the Superintending Engineer is not the competent authority but the Tender Committee alone is the competent authority. In the peculiar facts and circumstances, the question of issuing notice does not arise. Even otherwise, the scope of judicial review being very limited in this arena, these are not fit matters to be interfered with. 9. The learned Government Pleader for Irrigation & C.A.D. in substance adopting the arguments of the learned G.P. for Municipal Administration would further maintain that in the light of the facts and circumstances and also the stand taken in the counter affidavit, these are not the matters to be interfered with. The learned G.P. made elaborate submissions on the scope of judicial review in the realm of contracts and placed reliance on several decisions. 10. Sri Ratangapani Reddy, the learned Counsel representing R.3 in W.P.No.19044/2006 had taken this Court through the contents of the counter affidavit and while adopting the arguments of the learned Government Pleaders referred to supra, further would maintain that a person who had been disqualified in technical bid has no right at all and such party is not entitled to maintain these Writ Petitions. The learned Counsel also made certain submissions relating to clause 15 and interpretation thereof. 11. Sri Dhanumjaya, the learned Counsel representing M/s.Larson & Tubro Ltd., would report to this Court that M/s.Larson & Tubro Ltd., is not responding at all and hence the learned Counsel has no say in this matter. 12. In W.P.No.8752/2006 it is stated that tenders were invited by using Tender Notice No.1144/ONG/WSS/SST/G2/2003, dated 11-3-2003 by the respondent No.2. It is also stated that on opening of the tenders on 31-3-2003 and in the light of the minutes of the Tender Committee meeting dated 7-4-2003 the respondent No.1 informed that the tender of the petitioner for construction of 3850 M1 capacity Summer Storage Tank of Water, depth of 10.85 meters at Ongole with all ancillary works was accepted for Rs.9,59,03,787-20 ps., at 4.2% less than the estimated value put to tender and thus as per the letter of acceptance the work is to be executed in 9 months and the contract is directed to be governed by the conditions of the contract as indicated in the tender documents. It is also stated that the Government in Irrigation & C.A.D.(PWCOD) Department issued orders providing for tender procedure and registration of Contractors Rules and these Rules, though issued in Irrigation & C.A.D. Department, yet these Rules are applied to all the Engineering Departments of the Government including the Public Health Department. It is further stated that in order to simplify adoption of the Government Orders issued in various G.Os., referred to in the Rules, the Government in supersession of such Rules, issued comprehensive order containing Rules and those Rules provided for tender procedure and registration of contractors and they are indicated in the Annexures annexed to the said G.O., and a copy of G.O.Ms.No.94, Irrigation & C.A.D., dated 1-7-2003 along with its enclosures is filed in the material papers for ready reference as Annexure-B. It is also further stated that by these Rules, clause 15 provides for the procedure for engaging of sub-contractors and to provide them the experience certificate and in other words clause 15 seeks to provide for subletting by the prime contractors to the sub-contractors subject to certain conditions to the extent of subletting. It is further stated that it shall be added to the experience of the sub-contractor and to that extent the quantity of work executed would be deducted from that of the main contractor. It is also stated that once a prime contractor resorted to permitting subletting and a sub- contractor was permitted to execute the work, the Department is under obligation to issue experience certificate adding to the experience of the sub-contractor while deducting to the same extent from the experience of the main contractor and thus under the Rules subletting is permissible and the Department can permit subletting resulting in measuring the works executed by the sub- contractor as a matter of execution by the main contractor and the main contractor to that extent, as per records, is under obligation to pay the amount due and payable to the sub-contractor as per the terms and conditions of the agreement. It is further stated that in the instant case, the petitioner had the benefit of subletting and executed the work in terms of the contract entered into between the respondents No.2 and 3 and respondent No.4 main contractor. It is also further stated that in pursuant to this contract, the respondent No.4, being the main contractor, permitted the petitioner to execute the work and the authorities also permitted the work executed by the petitioner to be measured for the purpose of payment to the respondent No.4 main contractor and ultimately the respondent No.4 on receipt of monies from the respondents No.2 and 3 paid the amount due and payable to the sub-contractor viz., the petitioner. It is also stated that there has been no dispute about the execution or about the payments due and payable to the petitioner. It is also stated that having executed the work by way of subletting, the petitioner having been entitled to claim for issuance of experience certificate, applied for experience certificate. It is also stated that the respondent authorities also issued the experience certificate in the light of the work order issued by the respondent No.4 to the petitioner. It is further stated that it is by virtue of the letter dated 5-5-2003 the respondent No.4 entrusted the work for execution to the petitioner by way of subletting for a value of Rs.8,70,83,536-00 and this work is to be completed during the period commencing from 2-5-2003 to 23-1-2004 and this is by an order No.4001, dated 2-5- 2003 issued on 5-5-2003. It is also stated that this work later was also revised to a tune of Rs.9,40,41,395-00 and there is no dispute about the amounts paid. Further it is stated that basing upon the work orders, the petitioner executed the work and the bills as claimed by the petitioner are paid from time to time by respondent No.4 and in fact, reflecting these facts, the Senior Manager of respondent No.4 by name Mr.Vijay Kumar, L&T Ltd., Mehdipatnam, Hyderabad furnished the information to Hindustan Constructions, Mumbai on their request and it is the one contemporaneous piece of evidence emanated from L&T at the request of Hindustan Construction Corporation, Mumbai. It is also stated that this information as furnished by the Hindustan Constructions Corporation clearly manifests that this petitioner has worked as a sub- contractor for execution of the work and there is no adverse remark against the petitioner. It is further stated that such information was solicited by Hindustan Constructions Corporation in the light of certain work to be entrusted with the petitioner and in fact those facts are nothing to do with the disputes under consideration. It is also averred that while so, after completion of the execution of the work entrusted with the petitioner, the petitioner requested for issuance of experience certificate in the light of the provisions contained in clause 15 of the Annexure annexed to G.O.Ms.No. 94 and after considerable correspondence and in the light of clause 15 of G.O.Ms.No. 94 and under the directions of respondent No.2 to respondent No.3, respondent No.3 issued the experience certificate and such certificates subsequently at the instance of respondent No.4 had been cancelled without any notice to the petitioner. Further it is stated that in the light of the experience in execution of work, the petitioner having become qualified and eligible to seek works by way of tender, has offered his tender in respect of one work i.e., Construction of Bheemavaram Summer Storage Tank, Public Health Department. It is also stated that instead of relying upon the certificate held by the petitioner and instead of awarding the work to the petitioner, respondent No.4 raised a querry as to the right of the respondents to issue the experience certificate and on that ground the petitioner was required to extend the EMD (Bank Guarantee) from time to time for finalization of the tenders which are kept pending. It is further stated that the petitioner has nothing to raise any issue out of the tenders which are not finalized in respect of the said work viz., Bheemavaram Summer Storage Tank. It is also further stated that respondent No.4 having felt that the petitioner had been filing the tenders directly instead of getting the works by way of subletting from the respondent No.4, disputed the correctness of the experience certificate by writing a letter to the 1st respondent and the 1st respondent forwarded the said letter to the 2nd respondent. It is also stated that ultimately in the light of the internal correspondence received from the superior authorities to the subordinate authorities, the respondent No.3 cancelled the experience certificate issued to the petitioner. Further specific stand is taken that the Writ Petition is maintainable since the petitioner is questioning only the arbitrary and illegal action of R.3 in cancelling the experience certificate issued to the petitioner earlier. In Grounds 1 to 5, certain additional facts had been averred. 13. Clause 15 of G.O.Ms.No.94 – Annexure I, dealing with SUB-CONTRACTS reads as hereunder:- “If the prime contractor desires to sub-let a part of the work he should submit the same at the time of filing tenders itself or during execution, giving the name of the proposed Sub-Contractor, along with details of his qualification and experience. The Tender Accepting Authority should verify the experience of the Sub-Contractor and if the Sub- Contractor satisfies the qualification criteria in proportion to the value of work proposed to be sub-let, he may permit the same. The total value of works to be awarded on sub-letting shall not exceed 50% of contract value. The extent of subletting shall be added to the experience of the sub-contractor and to that extent deducted from that of the main contractor.” 14. Several of the work orders and the details relating to the writ petitioner and certain bills and further correspondence in this regard also had been placed before this Court. 15. In the counter affidavit filed by respondents No.1 to 3, respondent No.3 had sworn to the affidavit and had denied all the material allegations except those which had been specifically admitted. It is averred in para 3 of the counter affidavit the principal contractor of aforesaid work is M/s.Larsen &Toubro Ltd., ECC Division, Hyderabad i.e., respondent No.4 and in their letter No. L&T, ECCD, HYRO:WET:4001, dated 29-3-2006 addressed to the Engineer-in-Chief, Public Health, Hyderabad i.e., respondent No.1 and informed that they have not given any official subletting to M/s.M.Venkata Subbaiah, or any other contractor in writing to the Department and also requested to issue the experience certificate on Larsen & Toubro, ECC Division’s name mentioning all the executed quantities and values by cancelling the experience certificate issued by respondent No.3 to the petitioner. It is also stated that based on that, the respondent No.2 had issued instructed to respondent No.3 to cancel the experience certificate dated 28-6-2005. It is further stated that in view of the directions of the respondent No.2 and as per para 15 of G.O.Ms.No. 94, I & C.A.D. (PW.COD) Department dated 1-7-2003, the 50% of the experience certificate in respect of the above work issued by the respondent No.3 has been cancelled and orders were communicated to the petitioner and the 2nd respondent had also stated vide letter dt.17-12-2005 that only Tender Accepting Authority is competent authority for approving the sub-contractor. It is also stated that the tenders were invited for the above work by R.2 and lowest tender was accepted by the respondent No.1 in favour of M/s.Larsen & Toubro Ltd., ECC Division, Hyderabad – respondent No.4 as per the minutes of the Tender Committee meeting held on 7-4-2003 but not in favour of the petitioner as stated in the affidavit vide letter No.5998/T4/ONG (W)/Vol.XIII/2003, dated 24-4-2003 of respondent No.1 for Rs.9,59,03,787.20 i.e., 4.20% less and agreement was concluded by 2nd respondent with respondent No.4 vide Agreement No.20/2003-2004 dated 12-6-2003. Further specific stand is taken that in streamlining of tender system, the Government had issued G.O.Ms.No. 94, I & C.A.D. (PW.COD) Department dated 1-7-2003 and it is a fact to the provisions of the G.O. had been implemented by the Public Health Engineering Department also. It is also further stated that in this case, the principal contractor was M/s.Larsen & Toubro Ltd., ECC Division, Hyderabad. It is also stated that the petitioner had executed the work on behalf of the principal contractor only as poer the work order issued by respondent No.4 and while executing the work, the petitioner had represented the Superintending Engineer, Public Health, Nellore submitting consent letter i.e., work order given by the prime contractor entrusting the above work to a tune of Rs.8,70,83,536/- vide letter No.NIL dated 5-5-2003 and requested the Superintending Engineer, Public Health, Nellore – respondent No.2 to issue the experience certificate as per the provisions of clause 15 of G.O.Ms.No. 94, which had been already referred to supra. It is further stated that based on the request made by the petitioner, the respondent No.2 had accepted the consent letter of the No.4 given to the petitioner and issued proceedings under intimation to the respondent No.4, permitting the petitioner as per G.O.Ms.No. 94 to get 50% value of the works and its quantities of the above work from the prime contractor – respondent No.4. Further it is stated that it was also advised by the respondent No.2 to the sub-let contractor to contact R.3 to obtain the experience certificate accordingly after completion of the above work, and the prime contractor M/s.Larsen & Toubro Ltd., Hyderabad is held responsible for completion of the above work as per the terms and conditions of the agreement. Even though the respondent No.4 was informed of the above facts, no objections were raised by them at that time and in view of the same, R.2 had issued instructions to R.3 to issue experience certificate to the petitioner on behalf of R.4 with quantities executed as per the provisions laid down in para 15 of the Annexure G.O.Ms.No. 94, I & C.A.D. (PW.COD) Department dated 1-7-2003, vide respondent No.3 Memo No.1144/Ongole/WSIS/2nd SS tank/DB/D2/2003, dated 7-11-2003 and in obedience of the instructions issued by the respondent No.2, the respondent No.3 had issued 50% of the experience certificate duly noting the executed quantities and its values on 28-6-2005 and the same was counter signed by R.2. It is further stated that the principal contractor of the aforesaid work – R.4 in their letter No. L&T, ECCD HYDO:WET:4001, dated 29-3-2006 addressed to the Engineer-in-Chief, Public Health, Hyderabad – respondent No.1 informed that they had not given any official subletting to M/s.M.enkata Subbaiah or any other contractor in writing to the Department and also requested to issue the experience certificate on M/s.Larsen & Toubro Ltd., ECC Division’s name mentioning all the executed quantities and values by cancelling the experience certificate issued by respondent No.3 to the petitioner. Based on that, R.2 had issued instructions to R.3 to cancel the experience certificate dated 28-6-2005 and in view of the directions of the respondent No.2 and as per para 15 of G.O.Ms.No. 94, referred to supra, the 50% of the experience certificate in respect of the above work issued by R.3 had been cancelled and orders were communicated to the petitioner and R.4 in letter No.Ong/2n SS tank/DB/D1/2006/263 M, dated 6-4-2006. Thus the specific stand taken that the experience certificate issued by R.3 was cancelled in view of the objections raised by R.4 in letter dt.29-3-2006 to R.1 with a copy the R.2 and R.3 and on instructions of R.2 to R.3, R.3 cancelled the certificate and as per Clause 15 of G.O.Ms.No. 94, referred to above, and clarification given by COT vide letter No.COT/EE1/DEE1/T5/Tender Clar/2005, dt.17-12-2005. 16. In W.P.No.19044/2006 apart from the Engineer-in- Chief, Major Irrigation and the Superintending Engineer, Irrigation Circle, Ramalingapuram, Nellore, the 3rd respondent also was impleaded. The rejection of the technical bid and refusal to open the price bid resulting in selection of the 3rd respondent had been called in question on certain grounds by the writ petitioner. It is stated that by unreasonable and irrational rejection of the petitioner’s technical bid, the 2nd respondent acted in contravention of