IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR TUESDAY, THE 8TH APRIL 2008 / 19TH CHAITHRA 1930 WP(C).No. 21020 of 2007(B) --------------------------------------- PETITIONERS: ---------------------- 1. KUNJU ABRAHAM, S/O. IYPE ABRAHAM, AGED 40 YEARS, OMANA COTTAGE, PAKKEL P.O., KOTTAYAM. 2. E.J.IYPE, EZHAVANKATTIL, POOVANTHURUTHU P.O., KOTTAYAM. 3. C.K.SALIKUMAR, S/O. KUNJUSEKHARA PANICKER, CHATHAMALACHIRAYIL, PAKKIL P.O., KOTTAYAM. 4. M.K.VIJAYAN, S/O. KARUTHA KUNJU, MULANTHANAM, PALLAM P.O., KOTTAYAM. 5. M/S. BINU & COMPANY, PERUMAN P.O., KOLLAM, REPRESENTED BY ITS PROPRIETOR, S.S.BINU, SREE VIHAR, PERUMAN P.O., KOLLAM. 6. P.K.SASI, S/O. KARUTHA KUNJU, PLAMPARAMBIL, PAKKIL P.O., KOTTAYAM. BY ADV. SRI.T.M.CHANDRAN SRI.JOSEPH ALBIN NEDUMTHALLY RESPONDENTS: ------------------------ 1. KERALA STATE ELECTRICITY BOARD, VYDHUTHI BHAVAN, THIRUVANANTHAPURAM, REPRESENTED BY ITS SECRETARY. Kss ....2/- ...2..... WPC.NO.21020/2007 B 2. DEPUTY CHIEF ENGINEER & PRINCIPAL TEAM LEADER, KERALA STATE ELECTRICITY BOARD, CIVIL CIRCLE, PALLAM, KOTTAYAM. 3. EXECUTIVE ENGINEER & TEAM LEADER, K.S.E.B. BUILDINGS & STORES DIVISION, M.F.I. ANGAMALY. 4. EXECUTIVE ENGINEER & TEAM LEADER, KSEB CENTRAL MECHANICAL DIVISION, CMF PALLAM, KOTTAYAM. 5. EXECUTIVE ENGINEER & TEAM LEADER, KSEB, MF II, KOLATHARA P.O., NALLALAM, KOZHIKODE. 6. ASSISTANT ENGINEER -V, DRAWING BRANCH SECTION, KSEB, CIVIL CIRCLE, PALLAM, KOTTAYAM. 7. ASSISTANT EXECUTIVE ENGINEER, OFFICE OF ASSISTANT EXECUTIVE ENGINEER, KSEB SUB DIVISION, C.M.DIVISION, PALLAM, KOTTAYAM. R1 TO R7 BY ADV. SRI.P.P.THAJUDEEN, SC, K.S.E.B THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 01/04/2008 ALONG WITH WPC.NO.22850 OF 2007, THE COURT ON 08/04/2008 DELIVERED THE FOLLOWING: Kss WPC.NO.21020/2007 B APPENDIX PETITIONER'S EXHIBITS: EXT.P1: COPY OF THE SHORT TENDER NOTICE DTD. 5/05/2006 SIGNED BY SECOND RESPONDENT. EXT.P2: COPY OF THE WORK AUTHORISATION ORDER NO.DB/CC/PLM/1/ 06-07 DTD. 19/07/2006 ISSUED TO THE 1ST PETITIONER. EXT.P2(A): COPY OF THE WORK AUTHORIZATION ORDER NO.DB/CC/PLM/ 2/06-07 DTD. 19/07/2006 ISSUED TO THE 1ST PETITIONER. EXT.P2(B): COPY OF THE WORK AUTHORISATION ORDER NO.DB/CC/PLM/ 3/06-07 DTD. 21/07/2006 ISSUED TO THE 2ND PETITIONER. EXT.P3: COPY OF THE WORK AUTHORISATION ORDER NO.DB/CC/PLM/ 12/06-07 DTD. 21/07/2006 ISSUED TO THE 2ND PETITIONER. EXT.P3(A): COPY OF THE WORK AUTHORISATION ORDER NO.DB/CC/PLM/ 10/06-07 DTD. 21/07/2006 ISSUED TO THE 2ND PETITIONER. EXT.P3(B): COPY OF THE WORK AUTHORISATION ORDER NO.DB/CC/PLM/ 11/06-07 DTD. 21/07/2006 ISSUED TO THE 2ND PETITIONER. EXT.P4: COPY OF THE WORK AUTHORISATION ORDER NO.DB/CC/PLM/ 14/06-07 DTD. 1/08/2006 ISSUED TO THE 3RD PETITIONER. EXT.P5: COPY OF THE WORK AUTHORISATION ORDER NO.DB/CC/PLM/ 15/06-07 DTD. 1/08/2006 ISSUED TO THE 4TH PETITIONER. EXT.P5(A): COPY OF THE WORK AUTHORISATION ORDER NO.DB/CC/PLM/ 13/06-07 DTD. 22/07/2006 ISSUED TO THE 4TH PETITIONER. EXT.P6: COPY OF THE WORK AUTHORISATION ORDER NO.DB/CC/PLM/ 18/06-07 DTD. 8/08/2006 ISSUED TO THE 5TH PETITIONER. EXT.P7: COPY OF THE WORK AUTHORISATION ORDER NO.DB/CC/PLM/ 17/06-07 DTD. 2/08/2006 ISSUED TO THE 6TH PETITIONER. EXT.P7(A): COPY OF THE WORK AUTHORISATION ORDER NO.DB/CC/PLM/ 16/06-07 DTD. 2/08/2006 ISSUED TO THE 6TH PETITIONER. Kss ..2/- ..2..... WPC.NO.21020/2007 B EXT.P8: COPY OF TENDER NOTICE DTD. 10/10/2006 OF ASST.EXECUTIVE ENGINEER. EXT.P9: COPY OF LETTER DTD. 19/08/2006 OF THE I.G.OF POLICE (VIG & SECURITY), KSEB. EXT.P10: COPY OF JUDGMENT DTD. 16/11/2006 IN WP(C) NO.27856/06 OF THE HIGH COURT OF KERALA. EXT.P11: COPY OF JUDGMENT IN CONTEMPT CASE NO.644/07 OF THE HIGH COURT OF KERALA. EXT.P12: COPY OF INTERIM REPORT DTD.2/08/2006 OF VIGILANCE WING. EXT.P13: COPY OF TENDER DTD. 14/06/2007 NO.EE/BSD/3/07=08. EXT.P14: COPY OF TENDER DTD. 14/06/2007 NO.EE/BSD/4/07=08. EXT.P15: COPY OF AUTHORISATION LETTER DTD. 07/05/05 ISSUED BY RAVI INDUSTRIAL CORPORATION. EXT.P16: COPY OF PURCHASE ORDER DTD. 25/05/05. /TRUE COPY/ P.S.TO JUDGE Kss T.R. Ramachandran Nair, J. - - - - - - - - - - - - - - - - - - - - - - - - W.P.(C)NOs.21020 & 22850 of 2007 - - - - -- - - - - - - - - - - - - - - - - - - - - Dated this the 8th day of April, 2008. JUDGMENT Both the writ petitions are filed by the very same petitioners. In Writ Petition No.21020/2007, the main challenge is against Exts.P13 and P14 notices proposing cancellation of the tenders. Pursuant to the notices, the tenders have been cancelled and those proceedings are under challenge in Writ Petition No.22850/2007. 2. Heard learned counsel for the petitioners Shri. T.M. Chandran and Shri C.K. Karunakaran, learned Standing Counsel for the Kerala State Electricity Board. 3. This is a case where the second respondent invited tenders as per tender notice Ext.P1, for execution of various works in the Civil Circle, Pallom. The tenders were opened on 6.6.2006 and those submitted by the petitioners stood the lowest and after negotiations, the quoted rates were reduced by the petitioners by certain percentages. They were issued work authorisation orders which are produced as Exts.P2 to P7(a). The works have been awarded in respect of three units, viz. Pallam, Angamaly and Kozhikode. It is also submitted that the petitioners deposited the security WPC 21020 & 22850/2007 -2- deposit in time and have produced necessary stamp papers also for execution of the agreements. As a matter of fact, the first petitioner had commenced work also, it is averred in the writ petition. 4. Since further delay occurred in the execution of the agreements, they submitted several representations requesting to see that the agreements are executed without any further delay. In view of the continued delay, they approached this court by filing Writ Petition No.27856/2006 which was disposed of by Ext.P11 judgment, wherein certain directions have been issued. Ext.P10 is a letter sent by the Inspector General of Police (Vigilance & Security), Kerala State Electricity Board, to the Deputy Chief Engineer, Civil Circle, Pallom (respondent No.2) informing that the Vigilance Wing is conducting an enquiry into the alleged irregularities in awarding of works and the further proceedings may be kept in abeyance. Even though Writ Appeal No.106/2007 was filed against Ext.P11, that was dismissed as withdrawn. Subsequently, the petitioners filed C.C.C. No.644/2007 which was disposed of by Ext.P12. In Ext.P12, the learned Single Judge recorded the submission of the learned Standing Counsel for the Board that the Vigilance enquiry disclosed irregularity involving petitioners' complicity. It was also observed that if contracts are cancelled and if aggrieved by the cancellation, the petitioners have to challenge them. Exts.P13 and P14 are WPC 21020 & 22850/2007 -3- the interim and final reports of vigilance enquiry. It is thereafter that the orders Exts.P15 to P21 have been passed cancelling the tenders. 5. Learned counsel for the petitioners submitted that the proceedings resulting in cancellation of the tenders, are totally arbitrary and illegal. It is contended that there is nothing in the vigilance enquiry against the petitioners and therefore the cancellation is without any genuine grounds. Relying upon Ext.P11 judgment, it is submitted that this court, while rendering the judgment, had made it clear that if the Inspector General finds that the petitioners are not prima facie involved, they should be allowed to take up the work without waiting for the enquiry. It is submitted that in the light of the binding directions in Ext.P11 judgment, as there is nothing in the enquiry reports against the involvement of the petitioners, the cancellation cannot be supported. It is also submitted that going by the dates of the interim report and the final report submitted, they were available with the Board when Writ Petition No.27856/2006 was pending and that was not pressed into service at that time and therefore there is a deliberate and purposeful concealment of those reports, for enabling them to grant the works tendered by the petitioners, to the persons chosen by the respondents herein. 6. Learned Standing Counsel for the Board submitted that the WPC 21020 & 22850/2007 -4- Original Petition itself is not maintainable, as the matter concerns cancellation of a contract which cannot be adjudicated in these proceedings. Apart from that, in Ext.P11 the respective rights of the parties have not been determined and at that stage, the vigilance enquiry was pending and the Board had to take a decision based on the reports submitted and ultimately the Board after considering the various irregularities pointed out in the report, decided to cancel the tenders. The said decision was taken keeping in mind the best interest of the Board and to clear off any irregularities in the awarding of the various works. Relying upon Kerala State Electricity Board (Tender) Regulations, 1968, it is contended that the Board is not bound to accept any tender or to assign any reasons for the rejection of any tender and there is absolute discretion for the Board in the matter and the rejection will not give any cause of action to the petitioners to compel the Board to accept their tenders and allow them to execute the work. 7. Firstly, I will consider the arguments raised by the learned counsel for the petitioners based on Ext.P11 judgment. A reference to the counter affidavit filed in that writ petition, the relevant portion of which is extracted in paragraph 7 of Writ Petition No.22850/2007, will be relevant. Therein, it was made clear that “if ultimately it is found that there were no irregularity in the award of tenders, they will be free to execute the agreement and WPC 21020 & 22850/2007 -5- complete the work within the stipulated period from the date of agreement.” In fact, when Ext.P11 judgment was rendered, this court did not enter any finding on the merits after assessing the respective contentions of the parties. Whether the petitioners had a right to execute the work and whether the action taken by the Board to conduct the vigilance enquiry was right or not, was not decided in the said writ petition. The competency of the Board to conduct the vigilance enquiry and the question whether such enquiry should deter the Board in proceeding to the execution of the contract, have also not been decided in that writ petition. This court only observed that if the Inspector General of Police finds that the petitioners are not prima facie involved, they should be allowed to take up the work. In fact, learned counsel laid emphasis on the above observation to argue that since the petitioners are not named in the reports and as there is no iota of evidence regarding their complicity in the commission of the alleged irregularity, the above binding observation by this court have to be accepted in toto and on that ground itself, the cancellation of the tenders should be set aside. I am afraid, the said contention cannot be accepted for the reasons stated by me. In fact, this court had not gone into the merits of the matter and into the respective rights of the parties. Going by the averments in the counter affidavit filed there, the Board had submitted before this court that if WPC 21020 & 22850/2007 -6- ultimately it is found that there were no irregularities in the award of tenders to the petitioners, they will be free to execute the agreement. The present stand taken by the Board based on the findings in the enquiry report is that there were serious irregularities in the award of tenders to the petitioners and that itself will be sufficient to cancel the tender. Therefore, the observation in Ext.P11 judgment, according to me, will not be of any help to the petitioners to contend that ipso facto the same should result in quashing the orders rejecting the tenders itself. 8. Then the further question is whether there were any materials available while passing Exts.P15 to P21 orders. The operative portion of the order Ext.P15 records that “as directed by this court, the Board has examined the matter in detail on the basis of the final report of the Inspector General of Police, (Vigilance & Security) and decided to cancel the tenders invited by the then Deputy Chief Engineer and Principal Team Leader, Civil Circle, Pallom as serious irregularities were revealed in the enquiry report of the Inspector General of Police, (Vigilance & Security)” Of course, a decision was taken by the Board also to retender the work at the risk and cost of the petitioners as per the relevant tender conditions. 9. Therefore, it is not a case where the respondents blindly cancelled the tenders at a stroke on flimsy reasons. The allegation which resulted in WPC 21020 & 22850/2007 -7- the vigilance enquiry was that the then Deputy Chief Engineer was acting in collusion with the contractors. In any view of the matter, going by the orders passed by the respondents, it will be seen that they have applied their mind to the reports submitted and only on the basis of the reports and the findings thereon, the tenders were cancelled. Therefore, it is not a case where they acted on their whims and fancies to straight away cancel the tenders and order retender. 10. Therefore, the next question will be whether the materials which were relied upon by the Board and other authorities were sufficient to cancel the tenders. This aspect has to be examined in the light of the vehement argument raised by learned counsel for the petitioners that there is nothing in the reports adverse to them. 11. The Board has filed a detailed counter affidavit in Writ Petition No.21020/2007 explaining the circumstances leading to the cancellation of the tenders. Therein, the various circumstances have been explained thus: “On 22.7.2006 the Board received a petition dated 30.6.2006 signed by the leaders of various trade unions in the Board, through the Office of the Hon'ble Minister for Electricity alleging serious irregularities in respect of the award and execution of contracts by the then Deputy Chief Engineer and staff in his office. Ext.R1(a) is the said petition. Pursuant to the receipt of WPC 21020 & 22850/2007 -8- the said complaint, the matter was enquired into by the I.G. of Police, (Vigilance and Security) of the Board. Ext.R1(b) is the said report. Various irregularities contained in the report are stated in para 10 of the counter affidavit. Thereafter, the Deputy Chief Engineer, Civil Circle, Pallom, Asst. Engineer in charge of Stores, Superintendent in charge of Divisional Accountant and Senior Assistant were kept under suspension as per Ext.R1 (c).” It is also averred that usually, the contractors will quote rates which are normally higher than the estimate normal amount in the tenders. The petitioners have quoted below the estimate rate for the work. The details of the quoted amounts are stated in para 12 of the counter affidavit. 12. Learned Standing Counsel for the Board invited my attention to the findings contained in the final report which has been produced as Ext.R1(b). The relevant findings in the said report relating to the tender in question are the following: “ 5(b) Clubbing and splitting of works tendered by the Deputy Chief Engineer. Most of the above stated tendered fabrication works have to be executed in the three different units located at CMF Pallom, MF-1 Angamaly and MF-2 Kozhikode which were managed by three different Executive Engineers and other subordinate engineers. The Deputy Chief Engineer had clubbed the quantum of works to be executed in three different units and invited tenders. The tenders serially from 1 to 10 can be tendered at the field WPC 21020 & 22850/2007 -9- Assistant Executive Engineer level itself. Here the Deputy Chief Engineer clubbed the works together and tendered at his level. For some works when the Deputy Chief Engineer asked for reduction in rate, the bidders have stated that they cannot reduce the rate further as works are located in different locations. Hence, the tender invitation by the concerned field engineers is ideal. Unlike the above works the fabrication of D30 Tower has to be done at CMF Pallom alone. The net PAC of D30 Tower comes to Rs.54 lakhs and for which tendering has to be done in the level of Chief Engineer. This work is split into two packages and tenders are invited by the Deputy Chief Engineer. Hence, all of the above tenders shall be tendered either in the level of Assistant Executive Engineer or in the level of Chief Engineer level. 5(c). Issuing of three different work orders and execution of three agreements on a single tender invited. In the special conditions clause 15 (Ext.13) of the tenders invited (tender nos.4, 6, 7, 10, 11, 12, 13 /06-07) it is stated that individual work orders will be issued to the three mechanical units. It is also stated that Security deposit will be recovered at 10% of the value of work done for each work. Hence, it is evident that one tender is invited for three works executed in three different regions. 5(d) Number of participants seen limited in the invited tenders. In some of the tenders number of participants is seen as two only. Even in limited tenders the number of three participants is must. In such cases the works should be retendered. 5(e) Adjustment among bidders before submitting tenders. As cited in the enclosure to the petition the courier service number and the DD number etc. of tenders was verified and found correct. In most of the tenders, there is a chance that the bidders have grouped together and adjustment rates have quoted. Almost in all tenders the DD numbers and courier numbers of bidders are coming serially. Almost many of the bidders had participated in many tenders WPC 21020 & 22850/2007 -10- but in most cases the courier postal nos. & the DD nos. in a tender is occurring serially instead of occurring the courier nos. and DD nos. of one bidder participating in different tenders serially. The DB section has pointed out various irregularities such as adjustments among bidders, exorbitant rates and even the work can be tendered at subordinate officers level etc. W1 overruled all the DB observations and to continue with tendering process and to negotiate with the lowest bidder (Ext.12). Also W1 alone is the draft for tender notices. W1 is responsible for inviting tenders through unnecessary screening conditions and other irregularities noted above.” Inviting my attention to the above, learned Standing Counsel submitted that these are serious irregularities which culminated in arriving at a conclusion that there had been defaults and omissions on the part of the Deputy Chief Engineer in the matter of finalising the tenders in favour of the petitioners. These were considered by the Board while taking a decision to cancel the tenders. Therefore, the learned Standing Counsel submitted that the authorities have clearly applied their mind to the above aspects while deciding to cancel the tenders. 13. The only question is whether the Board was justified in relying upon them when they took the decision to cancel the tenders. It is clear from the interim and final reports that various irregularities have been found out from the stage of invitation, processing as well as finalising of the tenders. This court cannot sit in appeal over the reasons which persuaded the authority to take such a decision. But this court can consider WPC 21020 & 22850/2007 -11- whether the authority has applied its mind to the circumstances which warranted cancellation of the tenders. It is well settled that in the exercise of the process of judicial review, this court is concerned with the decision making process and not the decision itself. The principles have been settled by various decisions of the Apex Court. In a recent decision reported in Rameshwar Prasad and others v. Union of India and another ((2006) 2 SCC 1, their Lordships held (para 232) that the scope of judicial review is limited to the deficiency in decision making process and not the decision. It was held as follows: “The common thread running through in all these decisions is that the court should not interfere with the administrator's decision unless it was illogical or suffers from procedural impropriety or was shocking to the conscience of the Court, in the sense that it was in defiance of logic or moral standards. In view of what has been stated in Wednesbury case, the Court would not go into the correctness of the choice made by the administrator open to him and the Court should not substitute its decision to that of the administrator. The scope of judicial review is limited to the deficiency in decision- making process and not the decision.” Their Lordships further explained in para 240 the manner in which a person entrusted with discretion has to conduct himself for arriving at the decision. The said paragraph is extracted below: “A person entrusted with discretion must, so to speak, direct himself properly in law. He must call his attention to matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider. If he does WPC 21020 & 22850/2007 -12- not obey those rules he may truly be said to be acting unreasonably. Similarly, there may be something so absurd that no sensible person could ever dream that it lay within the powers of the authority.” Judged in the light of the above principles, I am of the view that the authority herein has bestowed its attention to the relevant materials. The question is not whether the petitioners were personally involved or whether there were any blemish on their part. But the actual question is whether in finalising the tenders, there had been irregularities which spells out lack of transparency. If that be so, I am of the view that the materials relied upon by the Board clearly points out to the irregularities which have occurred during the entire process of finalising the tenders and if that be so, the Board which is the best authority to decide whether to proceed with the tenders or not, has chosen to cancel the tenders and invited fresh tenders. This court cannot substitute its own reasons by exercising an appellate power, to the reasons given by the Board. The only question is whether they have considered the relevant materials and whether the decision is so unreasonable or shocking to judicial conscience. It cannot therefore be stated that the decision taken by the Board is so unreasonable warranting interference in these proceedings. It cannot also be said that the decision is one which a reasonable man who is posited with the said facts and evidence, will not take. As these tests have been duly satisfied, I am of the view that WPC 21020 & 22850/2007 -13- the orders do not suffer from any legal infirmity. 14. Therefore, the argument advanced by the learned counsel for the petitioners that since there is no finding individually against the petitioners, the petitioners are entitled to be granted the tenders for performing the work in question, cannot therefore be accepted. It was not a question of any personal involvement of the parties concerned, but whether the finalisation of the tender was vitiated by irregularities in the process. Actually, the ultimate beneficiaries are the petitioners, since if the tenders are accepted, they have to execute the work. It cannot therefore be said that merely because of the observations contained in Ext.P11 judgment, the petitioners are entitled to succeed in these writ petitions. 15. Learned Standing Counsel for the Board also contended that the decision is perfectly justified in the light of the relevant regulations, viz, Kerala State Electricity Board (Tender Regulations), 1968. Clause 19 shows that the Board is not bound to accept any tender or to assign reasons for the rejection of any tender and the decision of the competent authority shall be final. The issue being one in the realm of contract, the Board is entitled to reject any tender which is not acceptable to them. It cannot also be said that merely because the petitioners had submitted the lowest tender, the Board was bound to accept it. Therefore, learned Standing Counsel is well WPC 21020 & 22850/2007 -14- founded in submitting that the Board is within its power to reject any tender. 16. Learned Standing Counsel further contended that the writ petition is not maintainable because the matter is purely in the realm of contract and this court under Article 226 of the Constitution of India, cannot enter into purely private law disputes. Reliance was placed on