* IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of Decision: February 20, 2007 + W.P.(C).No.9327/2006 M/s.Nawab Consultants for Ideas ..... PETITIONER Through: Mr.N.K.Kaul, Sr.Advocate with Ms.Shobna Takiar, Advocate. Versus Govt.of NCT of Delhi & Others .... RESPONDENTS Through: Mr.J.R.Midha and Mr.Ashish Gupta, Advocates. CORAM: HON'BLE MR. JUSTICE ANIL KUMAR 1. Whether reporters of Local papers may be YES allowed to see the judgment? 2. To be referred to the reporter or not ? YES 3. Whether the judgment should be reported YES in the Digest? Anil Kumar, J. 1. The main dispute in this writ petition is whether the petitioner was awarded the contract for supply of Godrej chairs or chairs equivalent to Godrej chairs. The allegation of the petitioner is that he was awarded contract for supply of chairs equivalent to Godrej and consequently on supplying the chairs equivalent to Godrej his EMD could not be forfeited by letter dated 8.5.2006 nor the agreement could be rescinded by rejection letter dated 12.5.2006 and in the circumstances the petitioner has prayed that the respondents be directed to recall the tender permit and petitioner WP (C) 9327 of 2006 Page 1 of 41 be allowed to participate in the fresh tender. 2. Brief facts to comprehend the controversies between the parties are that the petitioner is a sole proprietorship firm of Sh.Subhash Ahuja who is in the business of manufacturing furniture of all kinds and he is alleged to have a pool of talented artisans with expertise in the area of manufacturing furniture and he has successfully completed various projects since he started his business. 3. Respondent vide public notice dated 29.3.2006 invited item rate tenders from the enlisted contractor of CPWD, Class I, Furniture category contractor or specialized agencies having adequate experience in furniture. The tender was invited for providing movable furniture for Judge's library cum lounge, Judge's conference room, canteen, bar room and three branches etc. in District Courts of Rohini, Delhi. 4. The tender for work for providing movable property was to be submitted by 16 hours on 21st April, 2006 to Executive Engineer, PWD, Civil Division-II, DCE(P), PWD, Bawana Road, Delhi. The estimated cost of the work was Rs.96,15,673/- and earnest money was Rs.1,92,313/- and the tenderer was liable to give performance guarantee equivalent to 5% of the tender value and security deposit equal to 5% of the tender value. The time allowed for carrying out the work was 3 months from the 10th day after the date of issue of letter of acceptance of tender or from 1st day of handing over the site whichever was later. The tender form had conditions of work for execution. Some of the relevant terms are as follows:- WP (C) 9327 of 2006 Page 2 of 41 “1.5:- In the event of any difference or discrepancy in the description of any item or its specifications, the same shall be resolved in the following sequence and decision of the Engineer-in Charge shall be conclusive, final and binding on the contractor:- a) The nomenclature of the item shall take precedence over all and anything stated elsewhere. b) The conditions and specifications attached to the tender document shall take preference over the provisions of CPWD specification 1996 (Vol. 1 to VI) with upto date correction slip and relevant IS codes. c) The CPWD specification 1996 Vol.1 to VI shall take precedence over provisions of relevant IS Codes. d) In case, it is not possible to resolve the dispute with the help of tender documents the provision of relevant IS codes shall be relied upon. e) In case, it is not possible to resolve the dispute with the help of any of the above documents, the decision and direction of the Engineer-in-Charge shall be followed for execution and completion of any item of work.” 5. The general specifications of the tender provided for Chair. The `Chair' was defined under clause 16 as under:- “16: Chair Chair shall be steel chairs manufactured from approved manufacturer as per their specification and as approved by the Engineer-in-Charge. The seat shall have interwoven waving with 12 mm thick ply, unless otherwise indicated, seats shall be with 75 mm thick heavy duty fire retardant foam and back shall be with 40 mm thick heavy duty fire retardant foam upholstered on both sides.” 6. The document also had a list of approved make or material and item 19 described revolving chair and its make was specified as Godrej or equivalent which is as under:- WP (C) 9327 of 2006 Page 3 of 41 Sr.No. MATERIAL MAKE 19 REVOLVING CHAIR GODREJ OR EQUIVALENT 7. The schedule of quantities were also given along with the tender which categorically stipulated for supply of chair as under:- 42 Supplying and placing chairs of required size and shade as per direction of Engineer-in-Charge Qty Rate Unit Amount (a) Godrej revolving chair, ULTIMA PCH-9101R for PP Chamber 2 Each (b) Godrej Chair 'STAQ' 4012 XW Shape as per manufacturer MPC-101 for canteen 168 Each (c) Godrej Chair 'STAQ 4002 XW for canteen 36 Each (d) Godrej revolving chair 'ULTIMA PCH-9102 R for PP Chamber 40 Each (e) Godrej Chair 'SYPDER' 9602 A mesh fabric for training room 70 Each (f) Godrej revolving chair 'HALO' PCH 9200 R for conference hall 5 Each (g) Godrej revolving chair “HALO' PCH 9201 R for conference hall 122 Each (h)Godrej Chair ' Preimum Executive' PCH 7003 for PP Chamber 88 Each 8. The tender document also provided specification for super premium chairs. The specification for super premium chairs was also categorically provided for Godrej PCH-9200R/9201R. The specifications for Synchro chair Godrej, Premium Executive chair Godrej PCH-7003, STAQ chairs PCH-4012XW, Godrej PCH- 9602A, Godrej JT 104 and Godrej JT 9 were also provided in detail. On receiving the WP (C) 9327 of 2006 Page 4 of 41 tender the petitioner categorically filled in schedule of quantities, the rates offered by him which are as under:- 42 Supplying and placing chairs of required size and shade as per direction of Engineer-in-Charge Qty Rate in Rs. Unit Amount in Rs. (a) Godrej revolving chair, ULTIMA PCH-9101R for PP Chamber 2 10990.80 /- Eac h 21981.6 0/- (b) Godrej Chair 'STAQ' 4012 XW Shape as per manufacturer MPC-101 for canteen 168 1788.3 /- Eac h 300434 .4 (c) Godrej Chair 'STAQ 4002 XW for canteen 36 2314 /- Eac h 8330 4/- (d) Godrej revolving chair 'ULTIMA PCH-9102 R for PP Chamber 40 10465 /- Eac h 41860 0/- (e) Godrej Chair 'SYPDER' 9602 A mesh fabric for training room 70 6784/ - Eac h 47488 0/- (f) Godrej revolving chair 'HALO' PCH 9200 R for conference hall 5 24190 /- Eac h 12095 0/- (g) Godrej revolving chair “HALO' PCH 9201 R for conference hall 122 23663 /- Eac h 288688 6/- (h) Godrej chair “PREMIUM EXECUTIVE' PCH 7003 for PP Chamber 88 4101/- Eac h 36088 8/- 9. The tender of the petitioner was accepted by letter dated 28.4.2006. the tender of the petitioner for an amount of Rs.7386277 was lower than the estimated cost of Rs.9615673. The petitioner along with the acceptance letter was requested to submit performance guarantee of Rs.369314/- within 15 days of issue of the acceptance letter in the prescribed form and the time for supply of the material was reckoned three months after 22 days from the date of issue of the letter. WP (C) 9327 of 2006 Page 5 of 41 10. The petitioner supplied the chairs by a delivery challan dated 29.4.2006, however, in the delivery challan instead of Godrej chairs he mentioned about supply of chairs equivalent to various models of `Godrej' chairs stipulated in the tender and not of make `Godrej. 11. The respondents communicated to the petitioner by letter dated 8.5.2006 that in the nomenclature of item No.42 for chairs, Godrej chairs of particular make, being revolving chairs only had been mentioned and therefore, the petitioner has to supply the revolving chairs as mentioned in the nomenclature of item No.42 of make `Godrej'. It was also intimated to the petitioner that nomenclature of the item will prevail and, therefore, the petitioner has to supply the particular make of Godrej revolving chairs only and not its equivalent. 12. The petitioner responded to letter dated 8.5.2006 by his reply dated 11.5.2006 and categorically admitted that though in the nomenclature it was mentioned only Godrej make but since the nomenclature is a part of the contract and the most important portion is the approved list so the petitioner was misled in the process and the petitioner had quoted only on account of his ability to compete in the system. The relevant portion of the petitioner's communication dated 11.5.2006 is as under:- “Though in the Nomenclature it was mentioned only Godrej make since the Nomenclature is a part of the contract and the most important portion is approved List so we are misled in the process. We have quoted only on account of our ability to compete in the system................. That further, there is also a provision for settlement of dispute under clause 25 “Dispute and Arbitration. WP (C) 9327 of 2006 Page 6 of 41 That as per this clause, the matter can be decided by the Superintendent Engineer in case of any dispute and failing which the matter can be settled in appeal by the Hon'ble Chief Engineer. Further, there is a provision regarding action where no specifications are specified under clause 28. That our case falls under category 28 also, because the issue is open and both the parties are under confusion regarding the make of the goods. During our final meeting, we were under the impression that the goods equivalent to the Godrej can be supplied but as a matter of surprise now it has been observed by us that you are insisting for goods of Godrej make only which is not possible for us to be supplied at the quoted rates as our incidental charges are also involved. In that case order could have been placed directly by PWD on the Godrej and the question of going to open markets absolutely uncalled for as it is a monopoly item. The Government has provided for tenders to avoid monopoly in the system to meet statutory requirement...... That however, in case our contention is not found acceptable then we will request Hon'ble Chief Engineer to appoint a Sole Arbitrator in the matter as earliest as possible, though apparently there appears to be no justification because the contact has not been put in operation.” 13. In reply to the petitioner's reply, respondents by communication dated 12.5.2006 intimated to the petitioner that the contentions raised by the petitioner in reply dated 11.5.2006 are not convincing and acceptable. The petitioner was asked to supply the revolving chairs of Godrej make only as stipulated in nomenclature of item No.42. By letter dated 19.5.2006 the petitioner communicated to the respondent that due to unavoidable circumstances he would be unable to submit the performance guarantee by 20.5.2006 and so another 10 days time for submission of performance guarantee without prejudice was sought. The petitioner did not communicate to the WP (C) 9327 of 2006 Page 7 of 41 respondents that he can not furnish performance guarantee as he can not supply `Godrej' chairs. Rather apprehending forfeiture of EMD and terming the letters dated 8.5.2006 and 12.5.2006 being arbitrary, unreasonable and irrational the present writ petition was filed. 14. The petitioner asserted that he has been asked to deposit performance guarantee without approval of samples and without sorting out discrepancies and that he has been threatened with forfeiture of EMD which is unlawful and in violation of the rights of the petitioner. According to the petitioner he fully met and satisfied the requirements of the terms and conditions of the tender and in the event of any difference or discrepancy in the description of any item or its specification same ought to have been resolved by the decision of the Engineer-in-charge and not as per the manual of CPWD. 15. The petitioner categorically pleaded that condition and specification attached to the tender document had preference over the provisions of CPWD Specification 1996 and the decision of the Engineer-in-Charge has to be followed for execution and plan of any item of work. Relying on list of approved make or material at serial No.19 it was contended that the word `or' in "Godrej or equivalent” is disjunctive article used to express an alternative and to give a choice of one among two or more things and consequently the petitioner was entitled to supply chairs equivalent to Godrej and not of `Godrej' only. According to the petitioner this was the nomenclature of the goods to be supplied and not the quantity mentioned at serial WP (C) 9327 of 2006 Page 8 of 41 No.42 in schedule of quantities which could not be given preference in case of discrepancy. According to the petitioner if `Godrej' make items were required then the order could be placed simplicitor on Godrej company itself. The petitioner contended that he had participated under the confidence that it could supply better quality of material at cheaper rates than Godrej and that may be of better quality even than Godrej. 16. The writ petition had come up for hearing on 26.5.2006 and the following order was passed by this Court:- CM No. 6916/2006 Allowed, subject to all just exceptions. The Application stands disposed of. W.P.(C) 9327/2006 Issue notice to the Respondents to show cause as to why rule nisi be not issued, returnable on 30.05.2006. Mr. J.R. Midha, Standing Counsel accepts notice on behalf of the Respondents. Counsel for the Respondent to explain why only Godrej Products are sought to be purchased by the Respondents, especially where detailed specifications have been notified by them and, therefore, the Respondents are in a position to inspect and accept quality products of other parties also. It is not controverted that the Petitioner's products do not conform to the said specifications. CM No. 6915/2006 Issue notice to the Respondents for the date fixed. Mr. J.R. Midha, Standing Counsel accepts notice on behalf of the Respondents. No coercive step be taken till the next date of hearing.” WP (C) 9327 of 2006 Page 9 of 41 17. The writ petition is contested by the respondents and a counter affidavit of Sh.Arab Singh, Executive Engineer (C), Civil Division-II, DCE(P), PWD, Bawana Road, Delhi dated 30.5.2006 was filed. In reply to the averments made by the petitioner and the query raised by the Court by this order dated 26.5.2006, the respondents pleaded that after receipt of sanction, samples of various furniture were shown to the Judge Incharge, Rohini Courts and other Judges at Rohini Courts. After inspection of various samples and discussions with PWD officers, various makes of Godrej revolving chairs in conference room, PP chamber, Canteen, Training room were approved and the approved samples were kept at site by the respondents and thereafter the tender was invited for providing `Godrej' revolving chairs as per approved samples along with other movable furniture. The respondents in their reply also contended as to why only `Godrej' furniture was choosen. The relevant portion of the reply of the respondents is as under:- “Respondent No.4 received sanction from District & Session Judge, Delhi for providing movable furniture in Judge's Library cum Lounges, Conference room, Canteen, Bar rooms, 3 Nos. branches in District Courts Rohini, Delhi vide order dated 16.2.2006. After receipt of sanction, samples of various furnitures were shown to Judge in Charge, Rohini and other Judges at Rohini. After inspection of various samples and discussions with PWD Officers, the Judge in Charge, Rohini approved various makes of Godrej revolving chairs in conference room, PP chamber, Canteen, Training room. These approved samples were kept at site by respondents. Respondent No.4 invited tenders for providing Godrej revolving chairs as per approved samples along with other movable furniture. Approved samples of Godrej chairs and other furniture were also shown to the interested tenderers.” WP (C) 9327 of 2006 Page 10 of 41 18. The respondent categorically pleaded that the nomenclature of an item has to take precedence over all and in case of a dispute being not resolved with the help of tender documents and ISI codes, the decision and direction of the Engineer-in-Charge has to be followed for execution and completion of any item of work. Relying on General Condition of Contract, 2005 it was contended that discrepancies and adjustments of errors were to be resolved by having several documents forming the part of the contract as mutually explanatory to one another and detailed drawings being taken in preference to small scale drawings and figure dimensions in preference to scale and special conditions. The order of preference to be observed was as under:- “(i) Description of Schedule of Quantities (ii) Particular specification and special condition, if any. (iii) Drawings (iv) CPWD specifications (v) Indian Standard specification of BIS 19. Relying on para 8.2 it was contended that if there was varying or conflicting provisions, the accepting authority was the deciding authority in regard to the intention of the document and his decision was to be final and binding on the contractor. 20. On the basis of condition 1.5 at page 16 of tender document and para 8.1 at page 13 of General Conditions of Contract, 2005 it was asserted that both provisions stipulated that the details given in schedule of quantities would have precedence over WP (C) 9327 of 2006 Page 11 of 41 condition and specification attached with the tender documents and as description/nomenclature of item 42 of Schedule of Quantity clearly stipulated the particular make of `Godrej' chair any other description could not be taken in preference to whatsoever was given in nomenclature at item No.42. 21. According to the respondents, nine tenders were received and opened on 21.4.2006. The tender of the petitioner for supply of `Godrej' chairs was the lowest. The respondents categorically asserted that though the tender was for the supply of Godrej chairs and the petitioner had filed the tender for supply of `Godrej' chairs, however, later on after the petitioner mentioned equivalent chairs in the delivery challan and not `Godrej' chairs, the petitioner had given samples of equivalent chairs and he had made a request for the approval of his samples alleged to be equivalent to the `Godrej' chairs, however, the committee of Judges from District Courts, Rohini inspected the samples along with the PWD Officers and rejected the samples and the decision was communicated to the petitioner by the respondents vide letter dated 8.5.2006. 22. The respondents also pleaded that the petitioner did not give performance guarantee in terms of the agreement and sought extension of time on 20.5.2006 and again requested to extend the time for depositing the performance guarantees by 10 days. However as the respondent failed to give performance guarantee and also failed to supply the tender items, the respondents forfeited the earnest money on 25.5.2006 and sent the decision to the petitioner vide letter dated 25.5.2006 which WP (C) 9327 of 2006 Page 12 of 41 was posted by speed post on 26.5.2006. 23. The petitioner filed the rejoinder refuting the averments made by the respondents and contended that respondent was informed by the petitioner that he would submit the performance guarantee amounting to Rs.3,69,314/- only on approval of samples as sent by the petitioner. The rejection of samples submitted by the petitioner later was also denied. The petitioner also contended that on the first date of hearing of the writ petition on 26.5.2006 the department representative was present in the Court with the instruction and that the letter forfeiting the EMD was posted contemporaneously in order to abuse the process of the Court and the letter of forfeiture was dispatched after the hearing which was received by the petitioner on 29.5.2006. 24. An additional affidavit was filed by the respondents categorically contending that the case was attended by the respondents counsel on 26.5.2006 who had informed the Executive Engineer (Civil) that he had appeared and accepted the notice on behalf of the respondent and had sought time to take instructions. It was categorically stated that no representative of the respondents met the standing counsel on or before the date of hearing on 26.5.2006 nor had any representative of the respondent had attended the Court on 26.5.2006. According to the respondents the letter dated 25.5.2006 forfeiting the EMD was posed on 26.5.2006 prior to the information of the order of the Court not to take any coercive steps. The letter forfeiting the EMD was delivered to the petitioner on 27.5.2006. A copy of the WP (C) 9327 of 2006 Page 13 of 41 dispatch register was produced as well as a certificate issued by the postal department stipulating the date of delivery of the letter as 27.5.2006 which were also produced along with a photocopy of the receipt slip showing the signature for receipt of the said letter bearing item No.EE 204604617. A copy of the letter dated 25.5.2006 was also produced with the endorsement by the respondents on the same that since the petitioner has filed a writ petition no further action for forfeiture be taken till further direction on the matter and in view of the order passed by the Court and order of Executive Engineer be kept in abeyance till then. 25. The petitioner filed the response to the additional affidavit filed by the respondents and also produced the receipt slip of postal articles showing receipt of postal article bearing No.EE 204 604617 IM on 29.5.2006 with an endorsement without prejudice. The petitioner also relied on a notice inviting tender given by the respondents during the pendency of the writ petition stipulating that the tender be issued to various dealers of Godrej and Boyce manufacturing company only. 26. The respondents contended that the writ petition is barred under section 14 (1) and 41 (e) of the Specific Relief Act, 1963 and the petitioner is not entitled for specific performance of the agreement which is determinable in a writ petition. It was also contended that there is a valid arbitration agreement and the petitioner has an alternate remedy of Arbitration and the writ petition is not maintainable. The respondents relied on Indian oil Corporation ltd. Versus Amritsar Gas Service (1991)1 Supreme Court Cases 533; Percept D’Mark (India) Pvt. Ltd. Versus Zaheer WP (C) 9327 of 2006 Page 14 of 41 Khan and Another 2006(2) Arb LR 34 (SC); Bareilly Development Authority Versus Ajay Pal Singh AIR 1989 SC 1076; Kerala State Electricity board & Anr. versus Kurien E. Kalathil And Ors. JT 2000 (8) SC 167; National Textile Corporation Limited and Others Versus Haribox Swalram and ors. (2004) 9 Supreme Court Cases 786; State of Jammu and Kasmir Versus Ghulam Mohd. Dar and Anr AIR 2004 Supreme Court 510; State of UP and others Versus Ram Sukhi Devi (2005) 9 Supreme Court Cases 733; Libra Bus Service P. Ltd & Anr. Versus D.T.C 129(2006) Delhi Law Times 516; Ashok Kumar Chhabra Versus Govt of NCT of Delhi, 87(2000) Delhi Law Times 755; Sai Electrical Power Supply Pvt. Ltd Versus Delhi Electricity Regulatory Commission & Ors. 114(2004) Delhi Law Times 78 and Mrs. Sharda Nath Versus Delhi Administration & Ors. 65(1997) Delhi Law Times 351. 27. The petitioner, on the other hand contended that writ petition is maintainable as judicial review is permissible under Article 226 of the Constitution of India where the action of the State, though purely commercial in nature, is arbitrary and illegal. It was contended that the principle that a contract which is determinable can not be enforced, is applicable primarily to commercial contracts. The petitioner also contended that the matter can not be referred to Arbitration as there is no arbitration clause in tender document. The petitioner relied on Kumari Shrilekha Vidyarthyi and Others Versus State of U.P. and others (1991) 1 Supreme Court Cases 212; Style (Dress land) Versus Union Territory, Chandigarh (1999) 7 Supreme Court Cases 89; M/s Dwarkadas