IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No 2479 of 1998 For Approval and Signature: Hon'ble MR.JUSTICE M.S. SHAH. Sd/- ============================================================ 1. Whether Reporters of Local Papers may be allowed to see the judgements? Yes 2. To be referred to the Reporter or not? Yes 3. Whether Their Lordships wish to see the fair copy of the judgement? No 4. Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? No 5. Whether it is to be circulated to the Civil Judge? No -------------------------------------------------------------- HINDUSTAN DOOR OLIVER LTD Versus VADODARA MUNICIPAL CORPORATION -------------------------------------------------------------- Appearance: MR RD DAVE for Petitioner MR PRANAV G DESAI for Respondent No. 1 MR JA ADESHRA for Respondent No. 2 -------------------------------------------------------------- CORAM : MR.JUSTICE M.S.SHAH Date of Judgment: 15/05/98 CAV JUDGMENT In this petition under Article 226 of the Constitution, the petitioner-Company has prayed for a writ of mandamus and/or any other appropriate writ or order or direction quashing and setting aside Resolutions Nos. 4 and 5 dated 19.3.1998 passed by the Standing Committee of the Vadodara Municipal Corporation (hereinafter to be referred to as "the Corporation") and also to direct the Corporation to award and accept both the contracts in question to the petitioner in respect of Atladra and Gajarawadi Sewage Treatment Plants. .RS 2 #. The facts leading to filing of the present petition, as averred by the petitioner, are as under :- 2.1 The petitioner-Company is engaged in the business and activities of environmental and Solid-Liquid separation activities and DAP Fertilizers including giving treatment to Sewage-Water Treatment Plant etc. The petitioner-Company has collaboration with Dorr Oliver Inc. of U.S.A. 2.2 In July, 1997 the Corporation had issued a public notice inviting tenders for repairing works of mechanical parts of Sewage Treatment Plants at Atladra/Gajarawadi and to put the said plants into operational condition. Four parties submitted their tenders in response to the notice. However, two of them were rejected as they were not fulfilling the minimum requisite criteria for the technical bids. Hence, only the petitioner and respondent No. 2-Company (M/s Hydraulic General Engineers) remained in the fray. A Technical Committee of the Corporation sought for various technical clarifications and explanations from time to time in respect of the technical bids submitted by the parties. In view of the technical clarifications and explanations submitted by the parties, the Corporation required both the parties i.e. the petitioner-Company and respondent No. 2-Company to submit their revised price bids. The revised price bids of the parties were opened on 9.12.1997. On 12.12.1997, the petitioner-Company raised objections to the changes made by respondent No.2-Company in the tenders. On 16.1.1998, the petitioner submitted its final revised offer in respect of both the tenders. Hence, respondent No. 2 also submitted its final revised offer. The comparative final revised bids offered by the parties were as under :- Atladra Plant Gajarawadi Plant Petitioner Rs.1,91,07,398 Rs.2,04,43,254 Resp. No. 2 Rs.1,94,51,250 Rs.2,02,25,025 2.3 The petitioner-Company has stated that the price offered by respondent No. 2 came to be known to the petitioner later on through newspaper report dated 17.3.1998 stating that the Municipal Commissioner of the Corporation had made recommendations to the Standing Committee for accepting the petitioner's tender for Atladra Plant and the tender of respondent No. 2 for Gajarawadi Plant. However, the Standing Committee of the Corporation at its meeting held on 19.3.1998 decided to award both the contracts i.e. for Atladra and Gajarawadi Plants in favour of respondent No. 2 as respondent No. 2 reduced its prices as is reflected in the impugned resolutions of the Standing Committee produced at Annexure "A" to the petition. It is averred, on the basis of the newspaper report, that the Municipal Commissioner's recommendation for awarding contract to each party was to ensure that the work can be completed at the earliest and better quality of work can be obtained from two separate Companies. The petitioner raised objections against the aforesaid decision of the Standing Committee by letter dated 23.3.1998 sent to the Corporation (Annexure "F"). It is submitted that the representative of the petitioner-Company met the Municipal Commissioner and the City Engineer on 24.3.1998, but in view of their inability to do anything in the matter on account of the decision of the Standing Committee, the petitioner has no other alternative but to challenge the decision of the Standing Committee by filing the present petition. #. The petitioner has challenged the decision dated 19.3.1998 of the Standing Committee on the following grounds:- (a) On 16.1.1998 final offers were made by the petitioner as well as respondent No. 3 for both the treatment plants and thereafter no negotiations had taken place for further reduction of price and, therefore, the Municipal Commissioner had made recommendations on the basis of those offers. Since after 16.1.1998 there was no occasion for either the petitioner or respondent No. 2 to hold further negotiations with the Municipal Commissioner, the Standing Committee considered reduction in the price offerred by respondent No. 2 behind the back of the petitioner and without giving equal opportunity to the petitioner to further reduce its price bid. (b) The petitioner is ready and willing to reduce its prices by 5% of its offer only if the petitioner is awarded contracts for both the plants and this offer is also subject to further negotiations. (c) Before considering any offer for further reduction in prices made by respondent No. 2 before the Standing Committee, the petitioner ought to have been given an opportunity to reduce its offer to the benefit of the Corporation and the public at large. (d) The impugned decision of the Standing Committee is patently illegal, arbitrary, suffers from malafide and nepotism and an unilateral decision is taken behind the back of the petitioner. (e) The Standing Committee has illegally and erroneously rejected recommendations of the Technical Committee as well of the Municipal Commissioner. These recommendations were given considering various aspects that the work will be expedited, financially the Corporation would be benefited and it will be in the interest of public at large to award contracts separately to two parties. (f) The petitioner is deprived of equal opportunity to reduce its prices offered for both the plants, but the Standing Committee allowed respondent No. 2 to reduce its prices behind the back of the petitioner. (g) The impugned decision is taken only to favour respondent No. 2. (h) The petitioner has wide experience in the area of the concerned work and it is considered number one Company in the country for the said activities. The petitioner has technical know how in view of its foreign collaboration and trained personnel having wide experience with the petitioner. The petitioner also prayed for amendment which was granted on 27.3.1998. As per the said amendment, the petitioner made averments to the effect that during the course of discussion with the Municipal Corporation as well as City Engineer of the Corporation, the representative of the petitioner-Company made offer to give discount of 5% in total price offered if both the tenders in respect of Atladra and Gajarawadi were accepted. However, the petitioner was informed by the said officers that both the tenders are different and distinct and they cannot be clubbed together and, therefore, the petitioner was prevented by the City Engineer and the Municipal Commissioner from putting such conditional offer in giving discount in the final offer if both the contracts are given to the petitioner, whereas the Corporation allowed respondent No. 2 to put such conditional offer of discount and the Standing Committee relied on such discount. It was the Standing Committee which thus took into account an extraneous condition and material which was not part of the public notice and tender and was never considered before the Technical Committee or Municipal Commissioner at any point of time. #. While issuing notice on the petition on 27.3.1998, this Court also granted ad-interim relief restraining the Corporation from awarding the contracts to respondent No. 2 for the aforesaid two plants and to maintain status quo in respect of both the contracts and tenders. #. In response to the notice issued by this Court, respondent No. 1-Vadodara Municipal Corporation as well as respondent No. 2-M/s Hydraulic & General Engineers have appeared through their respective counsel and have also filed separate detailed affidavits in reply. Besides filing an additional affidavit dated 7.4.1998, the petitioner has also filed affidavits in rejoinder to the reply affidavits of the respondents. Repondent No. 2 has also filed affidavit in surrejoinder. #. On behalf of the Municipal Corporation affidavit dated 15.4.1998 is filed by Mr M.P. Sutaria, Assistant Municipal Commissioner and also by Mr S.D. Shah, Executive Engineer (Elect. & Mech.) on the same day making the following averments :- 6.1 Based on the prices quoted for both the plants and in view of the Gujarat Pollution Control Board notice and Suo Motu proceedings being Special Civil Application No. 2795 of 1997 pending before this Court, the Municipal Commissioner and the Tender Committee of the Corporation felt that both the petitioner as well as respondent No. 2 be awarded contract for one plant each and accordingly proposals were sent to the Standing Committee for approval. After considering all the relevant aspets and facts and circumstances the Standing Committeee by its resolution dated 19.3.1998 awarded the work to respondent No. 2 who had offered further discount if both the jobs were awarded to them vide their final offer. Respondent No. 2 was informed by the Corporation vide its letter dated 24.3.1998 about the awarding of the work and the work orders have been issued on 27.3.1998 vide CE/Outward No. 823 and 824. The said orders were duly accepted by respondent No. 2 vide their letter dated 27.3.1998. It is necessary to immediately commission the plants and to complete the project in view of the requirements of the Gujarat Pollution Control Board and considering the direction issued by this Court in the Suo Motu pollution matters. 6.2 Both the petitioner and respondent No. 2 had offered their revised offers dated 8.12.1997, received and opened by the Corporation on 9.12.1997. Respondent No. 2 had offered discount if the contracts for both the plants were awarded to respondent No. 2, but no such discount was offered by the petitioner on 8/9.12.1997 or even while offering its further revised price bid on 16.1.1998. On 16.1.1998, the petitioner revised its bid for ........................J Gajarawadi plant at Rs. 2,04,43,254/-. So far as respondent No. 2 is concerned, respondent No. 2 offered on 23.1.1998 the final bids - for Atladra plant at Rs.1,94,51,250/- and for Gajarawadi plant at Rs. 2,02,25,025 and further indicated that if both the jobs are to be awarded to respondent No. 2, the bid for Atladra plant would be at Rs. 1,89,52,500/- and for Gajarawadi plant Rs. 2,00,12,130/-. The said bids of both the parties including discount from respondent No. 2 were received before the proposal was put up before the Standing Committee. Annexure 3 is a copy of summary showing comparison of price bids of the parties. 6.3 Annexure 3 referred to above and produced before the Court is also set out verbatim as under :- EEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE ============================================================================ ==================== | Sr. | ITEM | STP AT ATALADARA STP AT GAJARAW D | R | | No. | | ------------------------------------------------------ -----------| E | | | | HINDUSTAN | HYDRAULIC | HINDUSTAN | HYD AULIC | M | | | | DORR | & GENERAL | DORR | & | DORR | & | DORR | & | DORR | & | DORR | & | DORR | & | DORR | & | DOR | & | DORR | & | DORR | & | DORR | & | DORR | & | DORR | & | DORR | & | DORR | & | DORR | & | DORR & | DORR | & | DORR | & | DORR | & | DORR | & | DORR | & | DORR | & DORR | & | DORR | & | DORR | & | DO R | & | DORR | & | DORR | & | DORR | & | DORR | & | DORR | & | DORR | & | DORR | & | DORR | & | DORR | & | DORR | & | DORR | & | DORR | & | DORR | & | DORR | | | | | | OLIVER | ENGINEERS | OLIVER | ENG NEERS | R | | | | | | | | K | | | | | | | | S | | ====| ============| ===============| ===============| ===============| === ===========| =====| | | | | | | |JJJJJJJJJJJ JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ | Provided Price | Invalid as VMC | Provided Price | Invalid as VMC | | | | Price sub- | for the addi- | asked both the | for the addi- | ask d both the | | | | mitted on | tional items | parties to | tional items | par ies to | | | | 25/9/97 by | only keeping | submit revised | only keeping | sub it revised | | | | the bidders | the original | price bid | the original | pri e bid | | | price bid | based on tech- | | | | the traders | valid | nical discus- | valid | nic l discus- | | | | | | sion to bring | | sio to bring | | | | | | both the | | bot the | | | | | | parties at par | | par ies at par | | JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ----------- | - --| ------------| ---------------| ---------------| ---------------| --------- -- | ----| ------------| ---------------| ---------------| ---------------| - ---------- | ----| ------------| ---------------| ---------------| ---------- ----| ------------ | ----| ------------| ---------------| ---------------| -- ------------| ------------ | ----| ------------| ---------------| ----------- ---| ---------------| ------------ | ----| ------------| ---------------| --- -----------| ---------------| ------------ | ----| ------------| ------------ --| ---------------| ---------------| ------------ | ----| ------------| ---- ----------| ---------------| ---------------| ------------ | ----| ---------- -| ---------------| ---------------| ---------------| ------------ | ----| -- ---------| ---------------| ---------------| ---------------| ------------ | ---| ------------| ---------------| ---------------| ---------------| -------- --- | ----| ------------| ---------------| --------------- | | | 2 | Prices as | | | | | | | | per revised | | | | | | | | Price Bid | Rs.258,24,380 | Rs.199,50,000 | Rs.224,14,790 | Rs. 12,89,500 | | | | opened on | | | | | | | | 09/12/97 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ------------| ---------------| ---------------| ---------------| --- -----------| | | | Rebate if | | | | | | | | both the | | | | | | | | plants are | - | 2.50% | - | 2.50% | | | | awarded | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | JJJJJJJ JJJJ | ---------------| ---------------| ---------------| ---------------| -----| | 3 | Prices after| | | | | | | | Negotiation | Rs.191,07,398 | Rs.194,51,250 | Rs.204,43,254 | Rs. 02,25,025 | | | | VMC with the| | | | | | | | Vendors | | | | | | -------------| ---------------| | | | Rebate if | | | | | | | | both the | | (5% on | | (6% on | | | | plants are | - | Rs.199,50,000) | - | Rs. 12,89,500) | | | | awarded | | | | | | JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ------- | - --| ------------| ---------------| ---------------| ---------------| -------- | ----| ------------| ---------------| ---------------| ---------------| ----- -- | ----| ------------| ---------------| ---------------| ---------------| - ------ | ----| ------------| ---------------| ---------------| -------------- | -------- | ----| ------------| ---------------| ---------------| ---------- ----| -------- | ----| ------------| ---------------| ---------------| ------ --------| -------- | ----| ------------| ---------------| ---------------| -- ------------| -------- | ----| ------------| ---------------| --------------- ---------------| -------- | ----| ------------| ---------------| ----------- ---| ---------------| -------- | ----| ------------| ---------------| ------- -------| ---------------| -------- | ----| ------------| ---------------| --- -----------| ---------------| -------- | ----| ------------| ---------------| ---------------| ---------------| -------- | ----| -----------rs), | 4 | Final Prices| | | | | | | | when the | Rs.191,07,398 | Rs.189,52,500 | Rs.204,43,254 | Rs. 00,12,130 | | | | jobs awarded| | | | | | ============================================================================ ==================== NOTE: By awarding both the jobs to M/s.HGE (Hydraulic & General Engineehe jobs to M/s.HGE (Hydraulic & General Engineehe jobs to M/s.HGE (Hydraulic & Ge eral Engineehe jobs to M/s.HGE (Hydraulic & General Engineehe jobs to M/s.HGE Hydraulic & General Engineehe jobs to M/s.HGE (Hydraulic & General Engineehe j bs to M/s.HGE (Hydraulic & General Engineehe jobs to M/s.HGE (Hydraulic & Gene al Engineehe jobs to M/s.HGE (Hydraulic & General Engineehe jobs to M/s.HGE (H draulic & General Engineehe jobs to M/s.HGE (Hydraulic & General Engineehe job to M/s.HGE (Hydraulic & General Engineehe jobs to M/s.HGE (Hydraulic & Genera Engineehe jobs to M/s.HGE (Hydraulic & General Engineehe jobs to M/s.HGE (Hyd aulic & General Engineehe jobs to M/s.HGE (Hydraulic & General Engineehe jobs o M/s.HGE (Hydraulic & General Engineehe jobs to M/s.HGE (Hydraulic & General ngineehe jobs to M/s.HGE (Hydraulic & General Engineehe jobs to M/s.HGE (Hydra lic & General Engineehe jobs to M/s.HGE (Hydraulic & General Engineehe jobs to M/s.HGE (Hydraulic & GenerJJJJJJJJJJJJJJ savings to the Corporation is Rs.3,67,793/- 6.4 The Assistant Commissioner has further denied the allegations made in para 13(AA) of the petition that the representative of the petitioner had met the Municipal Commissioner and the City Engineer and had made offers to give discount of 5% in total price offered if both the tenders of the petitioner in respect of Atladra and Gajarawadi plants were accepted. The other allegations made in para 13(AA) of the petition are denied as false and untrue and its is further stated that the petitioner was aware when the revised price bids were opened on 9.12.1997 that respondent No. 2 had offered joint discount for both the plants. It is stated that the revised price bid given by respondent No. 2 indicating the discount for both the plants and giving further discount during negotiation by respondent No. 2 was on their own volition and that the petitioner chose to give its own offer without giving any discount and the petitioner was not prevented in any manner whatsoever from giving revised price bids and final bid indicating any further reduction by way of discount if they so chose. However, the petitioner did not submit the price bids showing the discounts and it was petitioner's own decision. It is further stated that during the Standing Committee meeting respondent No. 2 was not called for further reduction in prices as alleged or otherwise. The The Standing Committee took the decision in its discretion and competence keeping in mind the offer of respondent No. 2 regarding further discount if both the works are given to respondent No. 2. The allegation that respondent No. 2 was allowed to reduce the price behind the back of the petitioner is denied. 6.5 In his affidavit of even date, the Executive Engineer (Elect. & Mech.) of the Corporation has stated that on 9.12.1997 in presence of both the parties, the revised price bids were opened and, therefore, both the parties were given full opportunity in negotiation to submit their final revised price bids. The averments made by the petitioner about the technology and methodology are denied. It is also stated that the petitioner knew about the discount offered by respondent No. 2 in their revised price bid on 9.12.1997 and the petitioner has never desired nor quoted any such discount even after 9.12.1997. The allegation that the petitioner was prevented from giving joint offer for the two tenders is denied. There was nothing to prevent the petitioner from giving such discount while submitting its final revised price bid on 16.1.1998. #. Affidavit in reply is also filed by Mr J.S. Doshi, Commercial Manager of respondent No. 2-Company on 7.4.1998 stating that after quoting its revised price of Rs. 1,99,50,000/- for Atladra STP and Rs. 2,12,89,500/for Gajarawadi STP, respondent No. 2 had offered to give discount of 2.5% on the quoted prices in case orders for both the plants were awarded to respondent No. 2. It is further averred that the petitioner-Company was aware about such additional discount offered by respondent No. 2 in the revised price bid and the petitioner-Company did not object to the consideration of the said additional discount in the revised price bid. Hence, the petitioner-Company is estopped from challenging the consideration of the said discount offered by respondent No. 2. It is submitted that respondent No. 2 had offered the aforesaid discount if both the projects were given to them, because getting both the projects would save them the additional cost of drawing, engineering, design and project management cost, the benefit of which they wanted to pass on to respondent No. 1 Corporation. It is a common practice to offer additional discount, and the petitioner-Company could have availed of the opportunity to offer such additional discount, but chose not to do so, even at the time of price negotiation on 16.1.1998. Respondent No. 2-Company has undertaken several Digester Dome replacement work which is the most critical and time consuming job in both these tender works. Respondent No. 2-Company have carried out 10 such replacement of Digester Dome at Municipal Corporation at Delhi, whereas the petitioner-Company has not carried out the work of replacement of Digester Dome and have no experience in the said regard which is basic and fundamental thing required for carrying out and in completing the revamping work of Atladra STP and Gajarawadi STP. The details of works of complete digesters constructed by respondent No. 2 and replacement of digester domes carried out by respondent No. 2 are produced at Annexure "V" to the reply affidavit. In the reply affidavit on behalf of respondent No. 2, it is further submitted that when the revised price bids were opened on 9.12.1997, the price offered by respondent No. 2 was lower than that offered by the petitioner by a substantial margin for both the plants, but surprisingly on 16.1.1998, the petitioner-Company had some price negotiations without the knowledge of respondent No. 2-Company and suprisingly, without any change in the speifications and scope of work, the petitioner reduced the price for Atladra by Rs. 67 lacs (approx.) and Gajrawadi STP by Rs. 19 lacs (approx.). It was because of the knowledge of the offer of respondent No. 2 opened on 9.12.1997 that the petitioner had further reduced its bids on 16.1.1998. When the Corporation permitted the petitioner-Company to negotiate and revise the price on 16.1.1998, and that since respondent No. 2 was earlier