1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD Writ Petition No.4241 Of 2010 Shivaji s/o Balasaheb Londhe .. Petitioner. Versus The State of Maharashtra & Others. .. Respondents. -------- Shri. S.B. Talekar, Advocate for petitioner. Shri. V.H. Dighe, Assistant Government Pleader, for respondent No.1. Shri. Shrihari G Aney, Senior Counsel with Shri. V.J. Dixit, Senior Counsel instructed by Shri. V.S. Bedre, Advocate, for respondent No.2. Shri. Girish Kulkarni with Shri. D.V. Soman, Advocates for respondent No.5. -------- CORAM: NARESH H PATIL & K.K. TATED, JJ. Order reserved on : 11th June 2010 Order pronounced on: 16th June 2010 2 ORDER (Per Naresh H Patil, J.): 1) The petitioner challenges Resolution No.2 passed in a meeting of the Standing Committee of Municipal Corporation Ahmednagar held on 21-4-2010 and prayed for recalling the tender notice in respect of Ahmednagar Water Supply Scheme (Phase-II) and invite fresh tenders. 2) We have heard this petition at admission stage extensively. 3) The petitioner is an elected Councilor of the Municipal Corporation Ahmednagar (for short “the Municipal Corporation”) and at the relevant time he was a Member of the Standing Committee of the Municipal Corporation. The petitioner contends that the Municipal Corporation invited tenders in sealed cover on percentage basis in B-1 form in respect of Ahmednagar Water Supply Scheme (Phase II) 3 Ahmednagar. The tenders were invited from the contractors registered Class-1 or equivalent with Ahmednagar Municipal Corporation, Maharashtra Jeevan Pradhikaran or any other authorized State or Central Government Water Supply Board having experience of executing similar type of works. The Tender notice was published in daily news paper - "Indian Express" in its issue dated 28-1-2010 by the Commissioner, Municipal Corporation. 4) The estimated cost of the scheme was sown as Rs.70,24,15,716/-. The petitioner contends that six prospective contractors purchased the tender documents on payment of Rs.26,000/- each. However, three contractors namely (1) S.M.C. Infrastructure Pvt. Ltd., Thane, (2) A.C. Kothari, Ahmednagar; and, (3) Tapi Prestressed Products Limited submitted tenders. It is contended that no tender document was produced by Sahakar Global Pvt. 4 Ltd in its name or in collaboration with or as a jointer venture of Tapi Prestressed Products Ltd. The petitioner contends that Sahakar Global Pvt. Ltd. has not executed work of replacement of pure water rising main, pumping machinery, pure water gravity mains, RCC MBR and ESRS, distribution system, SCADA any time in the past and, therefore, was not qualified to submit tender and participate in the process of tendering. According to the petitioner, Sahakar Global Pvt. Ltd. was not registered under Class-I and above with Ahmednagar Municipal Corporation, Maharashtra Jeevan Pradhikaran or any other authorities as mentioned in the tender notice. Sahakar Global Pvt Ltd. is a private company which was earlier known as Sahakar Agencies Pvt. Ltd. The objects of the Sahakar Agencies Pvt. Ltd (now Sahakar Global Pvt. Ltd.) are altogether different. The petitioner contends that blank 5 tender documents were purchased by the Tapi Prestressed Product Ltd without there being any mention of joint venture. 5) The petitioner specifically contends that Tapi Prestressed Products Ltd had sufficient experience which is evident from the works executed and experience certificates issued by various authorities. 6) It is contended that Sahakar Global Pvt. Ltd. had experience of collecting octroy and toll which cannot be equated with experience of water supply works. The petitioner alleges that, there was a ring among the contractors who purchased and submitted tenders. The tender was being cartelled so as to avoid competition among the contractors. One of the contractors, who refused to be a member of the cartel, was prevented from submitting tender which is evident from a complaint dated 6 18-2-2010 submitted by Sachin Pawar, Manager, Pratibha Industries Ltd. Mumbai (Exhibit “J”). The petitioner contends that the Principal Secretary to the Hon’ble Chief Minister had called for explanation from the Municipal Commissioner Ahmednagar, who was won over by the respondent No.5. The Municipal Commissioner had offered a lame excuse by a communication dated 25-2-2010 which is annexed as Exhibit “K” to the petition. 7) The petitioner submits that Envelope No.1 was opened on 9-3-2010 and it was revealed for the first time that the tender documents purchased in the name of Tapi Prestressed Products Ltd. were used to submit the tender in the name of Tapi Prestressed Products Ltd.-JV. The tender submitted by Tapi Prestressed Products Ltd ought to have been rejected and the envelope No.2 should not have been opened as conditions stipulated in the tender document 7 were not fulfilled by respondent No.5. But still envelope No.2 was opened. 8) The petitioner contends that during the course of evaluation of the tender documents it was noticed that original copy of joint venture was not filed whereas the Xerox copy which was filed by respondent No.5 was not duly attested. The registration was shown to be valid unto 21-5-2010 with Maharashtra Jeevan Pradhikaran in respect of Tapi Prestressed Products (Exhibit “L”). 9) It is contended that three tenders were found eligible and qualified. Therefore, envelopes No.2 of these three were opened. The respondent No.5 had offered rates which were 72% above the estimated cost of the tender (Exhibit “M”). All the three contractors had offered rates far above the estimated cost of the tender. It was therefore necessary to call 8 all the three tenders for negotiations of rates. However, the respondent No.5 alone was called for negotiation of rates by a communication dated 8-3-2010 issued by the Deputy Commissioner of the Corporation. 10) It is contended that the Standing Committee had decided to constitute a technical committee consisting of experts to scrutinize the tenders received by the Corporation. Accordingly, it was constituted on 16-12-2009 by the Municipal Corporation. The petitioner contends that the Municipal Commissioner himself decided to negotiate rates of respondent No.5 and a meeting was held in the chamber without consulting the members of the Technical Committee. Meanwhile, the Municipal Corporation had invited evaluation of the tenders from Maharashtra Jeevan Pradhikaran, Ahmednagar and Strudcom Consultants Pvt. Ltd. (PMC),which was appointed as Project Management 9 Consultancy (PMC) to supervise the work of Ahmednagar Water Supply Scheme (Phase II) so as to compare the rates with each other for the purpose of awarding contract. The Project Management Consultant namely Strudcom Consultants Pvt. Ltd. calculated the total cost of the scheme as Rs.107,04,10,620/- whereas the Municipal Corporation calculated the cost of the scheme as Rs.105,60,91,762/- as against the total cost calculated by the Chief Engineer, Maharashtra Jeevan Pradhikaran, Pune was Rs. 106,27,82,478/- including 3% towards contingencies. (Exhibits “Q” and “R”). 11) The petitioner further contends that, the rates offered by the respondent No.5 were slightly reduced during the course of negotiations with a view to ensuring that such rates do not exceed 10% limit above the estimated cost. Thus, the original rates quoted 10 by the respondent No.5 were Rs.118,70,82,560/- which was reduced to Rs.116,07,41,970/- during the course of negotiation (Exhibit “S”). 12) According to the petitioner, meeting of the Standing Committee was convened on 21-4-2010. A note prepared by Mr. Parimal Nikam was circulated along with the Agenda. Mr. Parimal Nikam is Mechanical Engineer and, according to the petitioner, he does not hold any requisite qualification required for the purpose. The petitioner had approached the Chairman of the Standing Committee as well as Municipal Commissioner, Ahmednagar and requested to call the three contractors for negotiations so as to have a fair competition and to avoid economic loss to the Corporation vide letter at Exhibits A1 and A2. According to the petitioner, Mr. P.J. Nikam, who was not Civil Engineer, should not have participated in 11 the negotiations and also in the meeting of the Standing Committee. The petitioner submits that he had brought to the notice of all the members including the Chairman of the Standing Committee that Mr. P.J. Nikam was not competent to deal with the tender contract of water supply scheme. 13) The petitioner requested to supply copies of the documents in respect of the tender contract. The petitioner requested to cancel the resolution passed in the meeting of the Standing Committee awarding contact to respondent No.5 and to reissue tender notice. 14) The matter was circulated for hearing before the Division Bench on 6th May 2010. The learned Senior Counsel Shri. V.J. Dixit appearing on behalf of respondent No.2 – Municipal Corporation asked for short 12 accommodation for getting instructions in the matter and further submitted that till next date of hearing work order will not be issued in respect of the subject tender. The matter was adjourned to 11th May 2010 which date had fallen during Summer Vacation and at the request of the counsel for respondent No.2 the matter was adjourned till 10th June 2010. 15) During the course of hearing learned counsel Shri. Talekar informed that the matter was argued extensively for two days during vacation and as the respondent No.2 was to file additional affidavit the matter came to be adjourned. The statement made by the learned Senior Counsel on 6th May 2010 on behalf of respondent no.2 was continued till 10th June 2010. 16) The contesting respondents have filed affidavits-in-reply. 13 17) In substance, the learned counsel Shri. Talekar appearing for the petitioner submitted that one of the partners in the joint enterprise is not a registered contractor. Though the tender was filed jointly by Tapi Prestressed Products Ltd and Sahakar Global Pvt. Ltd but they did not submit a registered partnership deed during the process of tendering. The parties did not file original copy of joint venture before the authorities. It is alleged that one Mr. Agrawal participated in the negotiations on behalf of Sahakar Global unauthorizedly. The participation of Mr. Nikam was objected as he is not an expert in the field and not a technical person. In the submission of the counsel the joint venture was not in respect of entire work but was in respect of only pumping machinery and SCADA. The tender was passed without referring to the technical committee, according to the learned 14 counsel. It is alleged that the Commissioner held meeting in his chamber and decided the fate of the tenders without referring the matter to the Technical Committee. The counsel further urged that the tendering process is undertaken in unreasonable and arbitrary manner lacking fairness and transparency. The willing persons were prevented from participating. Complaint filed on that count was brushed aside. The Corporation was put to loss of crores of rupees in the process. The counsel submits that the petitioner raised objection in the meeting of the Standing Committee though other members did not raise. The petitioner does not have any personal interest in the matter nor there are any allegations to that effect. In the interest of the Corporation and the public at large the petitioner approached this Court. In the submission of the counsel, alternate remedy in terms of Section 451 of the 15 Bombay Provincial Municipal Corporations Act, 1949 (for short, "the Act") is not meaningful and in the facts of this case this Court is not prevented from entertaining the petition even if the alternate remedy is available. The tender could be recalled. According to the counsel, fresh tender process be initiated with complete adherence to the terms of the tender and the law relating to the same. 18) The learned Senior Counsel Shri. Shrihari Aney, appearing on behalf of Ahmednagar Municipal Corporation, submitted that, on the issues raised in the petition the contract could not be vitiated. The counsel raised a preliminary objection to the maintainability of the petition on the ground that the petition is not a public interest litigation. The other tenderers participated in the process have not raised any challenge by 16 approaching this Court. The petitioner being a member of the Standing Committee had alternate efficacious remedies under the Act and the petitioner, in the facts of the case, is not serving interest of the public at large in stalling the project which may put the Corporation into huge monetary losses. 19) The learned Senior Counsel submitted that Tapi Prestressed Products Ltd. was fully qualified to apply and participate in the tender process. Clause 11e of the tender notice specifies that, main tender contractor will be civil contractor and should satisfy conditions given in clause 11a, 11b, 11c, 11d(1),(2)&(4) of the Tender Notice. 20) It was submitted that the essential conditions of the contract are followed. The joint venture agreement is duly notarized 17 agreement which need not be registered as a partnership deed. The contract is not awarded on the basis of price escalation. In respect of the role played by Mr. Agrawal it was submitted that he was authorized person and there is no illegality. None of the other tenderers raised objection to the participation of Mr. Agrawal. In respect of the allegation that the tenders were not referred to the Technical Committee the counsel submits that, barring one or two member, all the members of the Technical Committee were present when the matter was discussed in the chamber of the Commissioner. They participated in the process. According to the counsel, the Chief Accountant and the Auditor were present. The learned Senior Counsel submits that the Standing Committee consisted of 16 members and except petitioner rest of the members did not raise any objection to the tender process and awarding of contract 18 to the respondent No.5. In view of there being an alternative efficacious remedy under section 451 of the Act this writ petition is required to be dismissed as premature and not maintainable. The learned counsel has placed reliance on Articles 243P, 243Q and 243W of the Constitution of India. The learned Senior Counsel submitted that some aberrations, irregularity in the tender process, if at all are noticed, still the essential conditions of the tender have been strictly followed. The award of tender in favour of respondent No.5 by the Corporation could not be said to be against public interest or vitiated or termed as unreasonable and arbitrary. 21) The learned counsel appearing for respondent No.5 – Shri. Kulkarni adopted the arguments advanced by the learned Senior Counsel Shri. Aney and placed reliance on the 19 documents and affidavits filed by the respondents. The counsel submits that, the petitioner did not raise his objection at the initial stage when the bid document was submitted. The tender document did not debar the respondent No.5 from applying as joint venture. The tendering process had three tire assessment process of the proposal namely (1) the Department, (2) Standing Committee and (3) Maharashtra Jeevan Pradhikaran. And all these processes have been undergone carefully. The counsel submits that the petitioner retired as Member of the Standing Committee on 31st May 2010. The petitioner did not raise objection at the initial stage. Prices of cement, still and other materials are rising up and considering the same delaying the project would not be in the interest of the Corporation and the public at large. The counsel submits that Mr. Kishore Agrawal is signatory to the joint 20 venture agreement therefore it cannot be said that he is a third party or unconcerned person to the tender process. 22) The learned counsel Shri S.B. Talekar in reply extensively argued in respect of the issues raised in the petition. It was submitted that the Central Government had disbursed Rs.30 crores to the Municipal Corporation for the said purpose. The counsel maintained the allegation that Sahakar Global Pvt. Ltd. is the main contractor and not Tapi Prestressed Products Ltd. In absence of registered partnership deed on record, the joint venture agreement would not satisfy the conditions of the tender document. 23) We have heard the submissions of the learned counsel for the contesting parties quite extensively and perused the relevant 21 documents. At the outset we may observe that the principles governing judicial review of administrative action more particularly in respect of award of tender are well settled by now. The power of judicial review is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is sound. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. As observed by the Apex Court in catena of decisions, if the decision relating to award of contract is bona fide and is in public interest, courts will not in exercise of power of judicial review interfere even if a procedural aberration or error in assessment or prejudice to a tenderer is made out. While examining these principles, the 22 Court would squarely consider the mala fides, allegations of favoritism and whether public interest is affected. 24) The main thrust of the submissions of the learned counsel for the petitioner is that, the main tenderer is Sahakar Global Pvt. Ltd. and not Tapi Prestressed Products Ltd. One of the contentions in support of the said submission of the learned counsel for the petition is the ratio of capital investment in the joint venture agreement reached between Tapi Prestressed Products Ltd and Sahakar Global Pvt. Ltd on 15th December 2009. According to Article 4 of the Joint Venture Agreement (Exhibit “I”) the capital investment of Sahakar is 55% and that of the Tapi is 45%. It is necessary to even mention the percentage of profit and loss sharing. The profit and loss sharing is “ Tapi – 51% and Sahakar - 23 49%". Article 6 of the agreement clearly specifies that the parties shall enter into a detailed joint venture agreement as may be required as per the provisions of the Bidding Documents and such agreement shall be subject to the approval from the employer. Article 10 specifies that, the agreement shall not be construed as partnership within the meaning of Indian Partnership Act, 1932 and it is not the intention of the parties to form a partnership firm under this agreement. This document was signed by Mr. Kaushik D. Nahar for Tapi Prestressed Products Limited and Mr. Kishore P Agrawal, Chairman and Managing Director for and on behalf of Sahakar Global Private Limited. 25) Condition No.11 of the Tender Notice (Exhibit “B”) refers to “Pre-qualification Conditions”. We may usefully reproduce sub- clauses (d) and (e) of clause 11. 24 “11. Pre-qualification Conditions : a) ..... b) ..... c) ..... d) The Contractor should have experience in successfully completing following each sub- work, under a single contract. __________________________________________________ Sr. Sub Work Minimum Required No. Experience 1. Rising Main/Gravity Main 300 mm dia DI K-9/CI pipe, L = 3,500 M. 2. Pipeline Network (Distribution System) L = 89 km 3. Pumping Machinery V.T. Pumps – 400 HP each 4. ESR/MBR 10 lakh litres capacity. 5. SCADA Similar type of work costing Rs.1,25,00,000 executed under a single contract. Note: Satisfactory Completion Certificate should be issued by an officer not below the rank of Commissioner of Municipal Corporation / S.E. / E.E. / G.M. of concerned Govt. Semi Govt. Organization. (e) Collaboration / Joint Venture will be accepted for Pumping Machinery and SCADA work. Main tender contractor will be civil contractor and should satisfy conditions given in clause 11a, 11b, 11c, 11d(1),(2)& (4) as mentioned above. In case of Collaboration / Joint Venture, agreement on stamp paper of value of Rs.100/- duly notarize shall be submitted in original while applying for pre-qualification.” 25 Clause 14 of the Tender notice reads : “14. Manner of Submission of Tender and its Accompaniments: The tender shall be submitted in two separate sealed envelopes as below : A) Envelope No.1 The first envelope clearly marked as ENVELOPE NO.1 AND NAME OF WORK shall contain the following document duly attested by Govt. Gazetted Officer not below the rank of Executive Engineer. a) Earnest money receipt. b) Certificate of registration in appropriate class. c) In case of partnership firms, a certified copy of partnership deed and power of attorney to sign the tender documents and other proceedings pertaining to the work tendered. d) Letter of pre-qualification. e) Minutes of prebid meeting / clarification duly signed. All above documents should be enclosed in the Envelope No.1. If these documents are not complete, Envelope No.2 will not be opened.” 26) The submission of the learned counsel is that sealed tenders were invited from 26 Contractors registered under Class-I as mentioned in the tender notice. The precise objection is that Sahakar Global Pvt. Ltd. is not a registered contractor and therefore was not entitled to bid the tender document. 27) Prima facie assessment of the documents placed before us indicates that, the tender was issued to respondent No.5. Under the tender conditions joint venture was permitted for the purpose of pumping machinery and SCADA work. There is substance in the contention on behalf of the respondent No.5 that the all the conditions are required to be fulfilled by lead partner. Considering the conditions stipulated in clause 11d and 11e of the tender notice we find that the explanation and the reply tendered by the respondents and the documents placed on record indicate that the essential conditions of the tender notice have not been violated. Though the petitioner places reliance 27 on the investment ratio of the Tapi Prestressed Products Ltd and Sahakar Global Pvt. Ltd but it has also to be considered the profit and loss sharing percentage. 51% share is of Tapi Prestressed Products Ltd. and 49% share is of Sahakar Global Pvt. Ltd. 28) It was the contention of the petitioner that Mr. Agrawal was unauthorized person to participate in the negotiations. From the Joint Venture Agreement we find that Mr. Agrawal is not a stranger or a third party. Resolution dated 15th December 2009 passed by Tapi Prestressed Products Limited was brought on record by respondent No.5. A letter of authority was issued by respondent No.5 which was submitted with the respondent No.2 wherein Mr. B.B. Bapna and Mr. Kishore P. Agrawal were authorized to attend the negotiation meeting in respect of the said tender. We do not find 28 that the tender process is vitiated on this ground too or there has been any arbitrariness in allowing Mr. Agrawal to participate in the negotiations. 29) It was submitted that the tender document was not forwarded to the Technical Committee. It is borne out from the record that evaluation of the tender was done by the Municipal Corporation, Project Management Consultant namely Strudocom Consultant Pvt Ltd. And the matter was referred to the Chief Engineer, Maharashtra Jeevan Pradhikaran Pune. Barring one or two, all the members of the Technical Committee were present in the meeting called by the Municipal Commissioner. We do not find from the record that by flouting the norms and checks stipulated under the tender notice, the tender was awarded. The necessary authorities, organizations and agencies have 29 considered the tender document and after scrutiny and negotiations have decided to award tender in favour of respondent No.5. Prima facie, therefore, we do not find any error on this ground. The allegations made in this regard do not vitiate the tender process. 30) The objection raised about the role played by Mr. Parimal Nikam would not adversely affect the tendering process and therefore on that count also the allegations and contentions raised by the petitioner in respect of the role played by Mr. Nikam are not sufficient to cloud the tendering process. 31) The learned counsel for the petitioner submitted that the tender was being cartelled and a complaint was made to the Hon’ble Chief Minister and the Municipal Commissioner had to forward reply to the State Government. We find 30 that none of the participating tender bidders or other persons who wanted to file tender documents have approached this Court in support of the contention of the petitioner in this regard. It cannot be forgotten that the petitioner is not a tenderer but a Member of the Standing Committee. Prima facie we find that the petitioner could have raised some of the objections at the initial stage of submitting the