1 IN THE HIGH COURT OF JUDICATURE OF BOMBAY BENCH AT AURANGABAD WRIT PETITION NO.7080 OF 2009 Narshima Constructions Pvt. Ltd. Through its Managing Director, Mr.Mohan Kashinathrao Kale, Age:47 Yrs., occu. Contractorship r/o Dhanshree, Dhanora Road, Beed, Dist. Beed (M.S.) - PETITIONER VERSUS 1) The State of Maharashtra Through Secretary Public Works Department, Mantralaya, Mumbai-32. 2) The Chief Engineer, Public Works Region, Bandhkam Bhavan, Adalat Rd., Aurangabad. 3) The Superintending Engineer, Special Project Circle, Bandhkam Bhavan, Aurangabad. 4) The Executive Engineer, Special Project Division No.1, Nagar Road, Beed, Dist.Beed. 5) Government of India, Through Secretary, Ministry of Surface, Transport Department of Road Transport & Highway, New Delhi. - RESPONDENTS ***** Mr.VJ Dixit, Sr. Counsel holding for Mr.J.N.Singh, Advocate for Petitioner; Mr.RP Phatke AGP for Respondent Nos. 1 to 4; 2 Mr.Alok Sharma, Assistant Solicitor General for Union of India for Respondent No.5. ----- CORAM : NARESH H. PATIL & K.U.CHANDIWAL, JJ. DATE : 9th December, 2009. ORAL JUDGMENT (PER: NARESH H.PATIL, J.) 1) Rule. Rule made returnable forthwith. By consent of parties heard finally. 2) The petitioner, a private limited company under the India Companies Act, 1956, participated in the tender process, pursuant to the Tender Notice/National Competitive Bid dated 26.8.2008 for carrying out the work for widening two-lanes Kalyan-Nanded-Nirmal Road NH-222 KM 376/00 to 395/00 (hereinafter to be referred to as the work under the tender). The estimated cost put under the tender is Rs.9,39,87,460/-. The petitioner submitted his tender bid with the concerned authorities. 3) The petitioner mainly raises its challenge on the ground that (i) carrying out the work under the tender by joint venture is prohibited by the respondents as per clause 4.4. 3 Part-I of National Competitive Bidding (for short,NCB); (ii) Sub- Clause (A)(b) of clause 4.5 of the NCB as regards satisfactory completion of earlier work to the extent of 90% of the contract value was unreasonable; and (iii) The respondents authorities claimed certain amenities for the Department under the caption `Errata’. We may here itself find it convenient to quote Clauses 4.4; 4.5 (A)(b) and relevant clauses shown under the caption “Errata”, set out in the National Competitive Bidding, which read as under : “4.4. Bids from Joint Ventures are not acceptable; or Bids from prequalified firms or prequalified joint ventures only will be acceptable. 4.5(A) To qualify for award of the contract, each bidder in its name should have in the last five years as referred to in Appendix. (a)................................. (b) Satisfactorily completed(not less than 90% of contract value), as a prime contractor (or as a nominated subcontractor, where the 4 subcontract involved execution of all main items of work described in the bid document, provided further that all other qualification criteria are satisfied) at least one similar work of value not less than amount indicated in Appendix (usually not less than 50% of estimated value of contract). Errata Name of Work – Widening to two lane KM 315/00 to 321/00 & km 332/00 to 336/600 Kalyan-Nagar-Pathardi- Padalsingi-Gadhi-Majalgaon-Parbhnai- Nanded-Nirmal Road NH-222 in the State of Maharashtra. Cost put to Tender :- Rs. 9,39,87,460/- The following amendments are made in Tender Booklet as per below :- (I) In VOLUME-II (original and copy) TECHNICAL SPECIFICATIONS Page No.40 Clause :- Amenities to department. Inspection vehicles for Engineer. The entire Para is deleted and instead, following shall be read: Special Conditions :- 5 1) The successful contractor shall provide one brand new vehicle to department for inspection purpose of TATA Sumo Victa Model CX seven seater without any extra cost to Government. The vehicle shall remain in the custody of the department and shall be the sole property of the Government. The contractor shall provide the above described vehicle duly insured and getting RTO passed at his own expenses in the name of the Executive Engineer, Special Project Division No.1, Beed. The contractor shall provide above vehicle within one month from the date of issue of work order, failing which an amount of 5.50 lakhs (Rupees five lakhs and fifty thousand) will be recovered from the first R.A. Bill of this work. 2) In addition to this the successful contractor shall provide following amenities without any extra cost to Government. i) 4 nos. of 2.00 Ton carrier split air conditioners model -2 T ESR ELLA 5 ii) 1. No.of Richo AFICIO MP 2000 Le 6 Xerox Machine. iii) 1 No. of Fax machine, Model Panasonic 981. iv) 15 Nos. of Neelkamal Chairs. V) 2 Nos. of Printer, model-Canon 2900 Laserjet. vi) 2 Nos. of Luminous Make Inverters Model-800 VA with 2 years warranty with 1 No. Exide make SF brand Fall tubular Battery model 150 Ah with 3 years warranty and installation thereof.” 4) The learned Senior Counsel Shri Dixit submitted that Joint ventures are accepted formula in the matters of carrying out huge work under contract and the concept of joint-ventures is not alien to bidding in tender. According to the learned Counsel,the petitioner would be ousted and deprived owing to arbitrary and unreasonable conditions mentioned in the Clauses 4.4. and 4.5.(A)(b), for which, reliance was placed by the learned Counsel on the reported Judgment of the Apex Court in the matter of New Horizons Limited and Anr. Vs. Union of India – (1995) 1 SCC 478. 5) As regards clause 4.4.(A)(b) of the NCB, it was submitted that in the matters of identical 7 nature, the respondents authorities have reduced the value of the work completed by the bidder. But, in the present case, the Respondent No.2 – Chief Engineer erred in exercising his discretion by fixing 90% of the value of the contract work for deciding the eligibility of the petitioner. The Counsel further submitted that the amenities demanded by the Department from the bidders/tenderers are arbitrary and unreasonable and in identical situation of a tender of like nature, the Chief Engineer had waived the condition as regards providing the amenities and had even reduced the value of the contract work. Certain documents were placed on record by the petitioner to substantiate their contention that the Chief Engineer has wrongly exercised his powers in rejecting the representation made by the petitioner for making corrections/amendments/alterations in the conditions of the tender document. 6) The Respondent nos. 2 to 4 have filed their affidavit in reply through Mr. Hemant Sampatrao Pagare, Superintending Engineer, Special Project Circle, Aurangabad. The deponent states that the Ministry of Surface Transport, Department of Road Transport & Highways, Government of India, is a necessary party to the proceedings of this writ petition. On the issue 8 raised by the petitioner in respect of value of the work, it was contended by the deponent that clauses 4.4. and 4.5(A)(b), Part-I, are the conditions stipulated in the Standard Bidding Document (SBD) and those conditions are commonly applied throughout the area of operation wherever the work of this nature is undertaken by the Ministry/Department. The deponent further submitted that in the present case the estimated costs of the work is Rs.939.87 lakhs and, therefore, the value of the similar work was fixed at Rs. 846.00 lkahs, i.e. at 90% of the estimated costs which is well above the limit of 50% and it is in tune with the conditions stipulated in the SBD. 7) As regards the issue of joint-ventures, it is submitted that clause 4.4 of the SBD provides that Bids from joint ventures for the projects above Rs.100.00 corers are acceptable. Therefore, the present project/work being less than Rs.100 crores, joint venture bidding is declined. 8) As regards the various amenities to be provided to the Department by the bidder, it is contended that these clauses are general in nature and routinely followed as they are essential for effective supervision of the work 9 in question to be carried out by the bidder. 9) The learned Counsel for the respondents placed reliance on reported judgment of this Court in the matter of Bhaskar Industries Ltd. Vs. Maharashtra State Electricity Distribution Company Ltd. reported in 2007-EQ(BOM)-0-1230. The learned Counsel Shri Sharma submitted that the powers of judicial review by this Court, in exercise of extra ordinary writ jurisdiction, are limited. It was submitted that the State can have its own terms of invitation of tender and it is not open for the judicial scrutiny. According to the learned Counsel, the Courts would not interfere with the terms of the tender notice unless it is shown to be either arbitrary or discriminatory or actuated by malice. 10) We have considered the submissions advanced by the learned Counsel for the parties and perused the documents placed before us and the Judgments cited by the parties. As regards the challenge made by the petitioner in respect of joint venture, we find satisfactory explanation given by the respondents. These clauses of tender are part of Standard Bidding Document (SBD) issued by the Government of India, Ministry of Surface Transport, Department of Road Transport & Highway. As regards the issue 10 relating to value of the work, the Chief Engineer had already considered the representation of the petitioner and had reduced the value of the work done earlier by the petitioner from Rs. 939.87 lakhs to Rs. 846.00 lakhs, which is above 50% as provided in clause 4.5 (A)(b) in Part-I of the tender document. 11) The issue regarding scope of judicial review in the matters of contract, tender and commercial nature are well-settled, for which we may refer to the observations made by the Apex Court in para 10 of the Judgment in the matter of Global Enery Ltd. Vs. Adani Exports Ltd. reported in 2005-EQ(SC)-0-450, which read as under : “10. The principle is, therefore, well settled that the terms of the invitation to tender are not open to judicial scrutiny and the courts cannot whittle down the terms of the tender as they are in the realm of contract unless they are wholly arbitrary discriminatory or actuated by malice. This being the position of law, settled by a catena of decisions of this court, it is rather surprising that the learned Single Judge passed an 11 interim direction on the very first day of admission hearing of the writ petition and allowed the appellants to deposit the earnest money by furnishing a bank guarantee or a bankers’ cheque till three days after the actual date of opening of the tender the order of the learned Single Judge being wholly illegal, was, therefore, rightly set aside by the Division Bench.” 12) However, we are not convinced with the submissions advanced by the learned Counsel Shri Sharma on the issue of amenities to be provided by the bidder to the Department and which are shown under the caption `Errata’ referred herein above. On instructions of the Officer, present in the Court, learned Counsel Shri Sharma submitted that for effective supervision over the work in question, a vehicle is necessary for the offices concerned. At the most, the vehicle taken from the bidder would be returned back to the successful bidder after completion of the work. We find that the special condition, mentioned in the tender booklet, in respect of binding the successful bidder to provide one new brand vehicle to the department for inspection purpose, would be unreasonable and 12 unconscionable. We also find that the condition of providing the items, mentioned in clause no.2 of the Special Conditions, by the successful bidder, is also unreasonable. We do not find any justifiable reason as to why the Central Governmental authorities are not equipped with the infrastructural items for effective supervision over the work of such a huge magnitude. We are not convinced with the submissions advanced by the learned Counsel for the respondents on this aspect of the matter. We are convinced that these conditions are arbitrary in nature. We are, therefore, inclined to quash and set aside the Special Conditions referred to above under the caption “Errata”. 13) The learned Senior Counsel during the course of hearing has produced a copy of the document, based on which, it was submitted that the condition of joint venture was waived by the authorities. To this, learned Counsel Shri Sharma submitted that in that case, the tender costs was below Rs. 5 crores. We are convinced with the submissions advanced on that count by learned Counsel Shri Sharma. 14) In view of the discussions made herein above, the petition is required to be allowed partly. The petition is accordingly allowed 13 partly. The petitioner fails in raising challenge to the clauses 4.4 and 4.5(A)(b) of the tender document in respect of joint venture and value of the work. As regards the special conditions under the caption “Errata”, mentioned above, the petition is allowed to that extent. We set aside the aforesaid special conditions. 15) Rule made partly absolute in the aforesaid terms. Interim relief stands vacated. sd/- sd/- (K.U.CHANDIWAL) (NARESH H. PATIL) JUDGE JUDGE bdv/wp7080.09 Authentic copy (BD VADNERE,PS)