1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.2245 OF 2010 Kirloskar Brothers Limited - ] Maharashtra Electro-mech (A Joint Venture) ] having its office at “Yamuna” Survey No.98/3 to ] 7 Baner, Pune – 411 045 Through its ] authorised officer and power of attorney holder ] Shri Arun Bhupal Chogule, Age:- , Occ:-Service ] with Petitioner as Associate Vice President, ] Having office address as above. ]...Petitioners Versus 1. The Kalyan Dombivli Municipal Corporation ] Through its Executive Engineer, ] Water Supply Department, Having office at ] Shankarrao Chowk, At Kalyan, District Thane. ] 2. The Chairman, ] Standing Committee of Kalyan-Dombivli ] Municipal Corporation, Having office at ] Shankarrao Chowk, At Kalyan, District Thane. ] 3. Shri Goving J. Rathod, ] The Commissioner of Kalyan-Dombivli ] Municipal Corporation, Having office at ] Shankarrao Chowk, At Kalyan, District Thane. ] 4. M/s. R.B. Krishnani – Viraj (Joint Venture) ] 2nd Flower, Shirin Garden Housing Soc., ] Parihar Chouk, Aundth, Pune – 411 026. ] 5. Union of India, Through the Ministry of Urban ] Development and Jawaharlal Nehru National ] National Urban Renewal Mission, Govt. of ] India, Having its office at Ministry of Urban ] 2 Development and Poverty Alleviation, ] Nirman Bhavan, Maulana Azad Road, ] New Delhi 110 011. ] 6. Ministry of Urban Development, ] State of Maharashtra, ] Through Mr. Bhaskar Jadhav Ld. State ] Minister for Urban Development, State of ] Maharashtra, Mantralaya, Mumbai – 32. ] 7. The State of Maharashtra. ]...Respondents ...... Mr.Y.S.Jahagirdar, Sr.Counsel with Mr.Tejesh Dande for Petitioners. Mr.K.K.Singhvi, Sr.Counsel with Mr.A.S.Rao for Respondents 1 to 3. Mr.P.K.Dhakephalkar,Sr.Counsel with Mr.M.S.Karnik for Respondent No4. Mr.V.S.Gokhale, A.G.P. for Respondents 6 & 7. ...... CORAM: A.M.KHANWILKAR AND R.M.SAVANT, JJ. JUDGMENT RESERVED ON : MAY 4, 2010. JUDGMENT PRONOUNCED ON : MAY 14, 2010 JUDGMENT : (Per A.M.KHANWILKAR, J.) : 1. By this Writ Petition under Article 226 of the Constitution of India, the Petitioners in substance are questioning the legality and validity of the procedure followed by the Respondent Corporation in relation to the tender process pertaining to renewal, expansion and automization of the existing 3 works at Barave and Titwala Water Treatment Plant in Kalyan – described as work No.1 (hereinafter referred to as `the said work’), of which estimated price is stated to be Rs.20,52,08,234/-. Pursuant to the tender notice bearing No.03/2009-2010, since the Petitioners fulfilled all the qualifications, they submitted their tender on 5th October 2009 in respect of work at Serial No.1 of the said work. In all, four tenders were received for the said work before the expiry of the date and time for submission thereof including that of the Petitioners. The technical bid of all the four bidders were opened on-line on 7th October 2009. After scrutiny of the technical bids, it was found that the Petitioners and one SMC Infrastructure Pvt.Ltd. (hereinafter referred to as `SMC’) were the only bidders who were technically qualified. The bid submitted by the other two bidders M/s.R.B.Krishnani-Viraj (Joint Venture)-Respondent No.4 herein and one S.N.Thakkar Construction Pvt.Ltd. were found to be lacking in qualification, for which reason, their bids were rejected. It was noticed that Respondent No.4 had not submitted registration copy and experience certificate along with their tender. The Respondent No.4, however, on 7th October 2009 submitted representation to the Commissioner to consider their case on the ground that although they had submitted their tender for the said work on 4th October 2009 through E-Tendering along with all 4 documents such as bank guarantee and qualification certificates, but when the tenders were opened, the relevant documents were not visible on the web. Here it may be relevant to notice that the Respondents on affidavit filed in this Court have conceded that no supporting documents were uploaded on the website of the Corporation. In that sense, the stand taken by the Respondent No.4 in the said representation dated 7th October, 2009 is belied. Be that as it may, the Respondent No.4 asserts that their representative was present at the time of opening of tender and had volunteered to submit hard copy of bank guarantee for EMD but was not accepted. In this communication, the Respondent No.4 also stated that their offer is 0.13% below the tender cost, for which reason, they should be awarded the contract. 2. When the commercial bids were opened, it was noticed that the Petitioners had quoted Rs.22,47,03,016.23, whereas, the other qualified bidder-SMC quoted Rs.24,62,49,880.80 as against the estimated tender price of Rs.20,52,08,234. The Petitioners’ bid was the lowest amongst the qualified bidders and therefore was declared to be the lowest bidder No.1 (L-1). The second lowest bid was that of said SMC and was declared L-2. Accordingly, the Petitioners were invited for negotiations by the Respondent No.1 vide letter dated 26th October 2010. 5 The price bid evaluation report on balance works in water supply was prepared. Insofar as the said work (work No.1) of renewal, expansion and automization of existing work at Barave Water Treatment Plant, the evaluation report reads thus : “Analysis and recommendation: Work No.1 Renewal, expansion and atomization of existing works at Barave & Titwala water treatment plants. There are about 104 items of works in this tender. However, the item which form the major component of the cost are RCC ground service reservior of 3.00 ML capacity, VT pumps, construction of administration block, PLC based automation system and providing & laying of 1422 mm dia MS pipe of 100 m length. The percentage wise impact of these items with respect to cost put to tender is as follows: SR NO PARTICULARS COST (RS. CRORE) Total cost put to tender 17.07 (Excluding O & M) 1 RCC GSR of 3.0 ML 00.85 (4% of total cost) 2 VT Pumps 09.89 (48% of total cost) 3 Administration block 00.40 (2.0% of total cost) 4 PLC based automation 02.00 (9.7% of total cost) 5 MS pipe 00.55 (2.68% of total cost) 6 Sub total of above items 13.69 (about 81% of the total cost) KDMC has recently finalized the tender for 100 MLD head works at Mohili which included all the above components. These tenders have been finalized at about 4.95% above. Since in the present case, the cost is governed mainly by these components, it will be reasonable to finalise the present tender on the similar line. Hence the reasonable acceptable cost would about 5.00% above the cost put to tender. It is therefore suggested to negotiate further with bidder and take the 6 decision accordingly.” (emphasis supplied) 3. Although the bid submitted by Respondent No.4 was rejected and was out of reckoning, yet they submitted letter dated 3rd December 2009 directly addressed to the Commissioner once again requesting to consider their offer and to allot them the said work. Along with this letter, it is stated that the Respondent No.4 submitted hard copies of all the relevant documents which are found from Pages 215 to 157 of the original record of the Corporation. We shall presently advert to the said documents submitted by Respondent No.4, which according to them indicated that the Respondent No.4 possessed necessary qualification. Significantly, the Commissioner, purportedly on 10th December 2009, made noting on the said covering letter sent by the Respondent No.4 to verify with the Consultant and then put up. The noting reads thus: “Mr. Juneja Verify with consultant and put up. Sd/- 10/12” 4. Be that as it may, during the negotiations, the Petitioners gave discount of 0.5% on the offered tender cost. However, the Respondent No.1 by letter dated 17th December 2009 once again invited the Petitioners for 7 further negotiations. Accordingly, on 18th December 2009, the Petitioners gave their final discount of 4.5%, making their discount offer of 5% above the estimated cost. Considering the recommendation in the evaluation report reproduced above, the Petitioners’ bid could have been accepted by the Corporation. 5. However, in view of the noting made by the Commissioner on the representation submitted by the Respondent No.4 dated 3rd December 2009, opinion of the Consultant was invited, obviously on the basis of the documents submitted by the Respondent No.4 along with the said covering letter. The Consultants by their communication dated 19th December 2009 advised the Executive Engineer of the Water Supply Department of the Respondent Corporation that on the basis of information provided to them, the Respondent No.4 possessed the requisite experience necessary to carry out the subject work. We would think it apposite to reproduce the said communication in its entirety as available at page 237 of the original record. The same reads thus: “COSULTING ENGINEERING SERVICES (INDIA) PRIVATE LIMITED 41A, MAKER TOWER, “E”, 4TH FLOOR, CUFFE PARADE, MUMBAI 400005 PHONE: 22182772/22186429/ 22164489 E-mail cesmb@vsnl.com/cesmb1@gmail.com Website : www.cesinter.com Fax: 8 022-22188430 Date: 19.12.2009 To Executive Engineer Water Supply Department Kalyan Dombivli Municipal Corporation Kalyan Sub: Work of renewal, expansion and automation of existing water treatment plants at Barave & Titwala. Dear Sir, This has reference to the submission made by M/s.R.B. Krishnani-Viraj to Kalyan Dombivli Municipal Corporation (KDMC) in connection with carrying out the execution of the subject works. The said submission as received by KDMC has been reviewed as requested and the observations made are as follows: 1. M/s. R.B. Krishnani, the Lead Partner, has given the details about financial standings which are adequate for carrying out the subject work. 2. M/s. R.B. Krishnani, the Lead Partner, has submitted experience certificates regarding providing & installing VT pumps of required capacity, constructing the RCC reservoir of required capacity and operation & maintenance of the system. Thus M/s. R.B. Krishnani-Viraj JV has demonstrated their capacity as far as the major components of the subject work. 3. As far as the work of automisation of WTP is concerned, M/S.R.B. Krishnani-Viraj JV has enclosed a letter from M/s.Crystal, who has completed the automisation of water supply system of Thane Municipal Corporation, stating the willingness of M/S Crystal to carry out the automisation component of the said work for M/S R.B. Krishnani-Viraj JV. The concept of automisation is a recent one and the cost impact of the same would be less as compared to the remaining components of the subject work. Considering the above mentioned information, M/S R.B. Krishnani – Viraj may be considered to have the requisite experience necessary to carry out the subject work. Additionally, separate confirmation may be obtained from M/S Crystal in connection with the subject work and the deciding authorities of KDMC may take appropriate decision further in connection with the execution of the subject work. 9 Thanking you, Yours faithfully, Consulting Engineering Service (India) Private Limited Sd/- (R D Panandikar)” (emphasis supplied) 6. It does appear that the Officials of the Corporation were on the one hand negotiating with the Petitioners and at the same time were pursuing their other option of giving contract to the Respondent No.4 subject to their competence and requisite experience possessed by the said respondent no. 4 necessary to carry out the subject work. What is relevant to notice is that the documents submitted by the Respondent No.4 contained letters exchanged between the Respondent No.4 and one Krystal Techno Engineering Services Pvt.Ltd. (hereinafter referred to as `Krystal’) indicating that in the likelihood of Respondent No.4 getting the said contract, part of the work of automization could be undertaken by the said Krystal. We shall elaborate on this aspect at the appropriate stage. 7. It is noticed that on receipt of the opinion of the Consultant, the matter was placed before the Standing Committee of the Corporation. In 10 its meeting dated 30th January 2010, the Standing Committee passed the following Resolution. English translation whereof reads thus: “KALYAN DOMBIVALI MUNICIPAL CORPORATION, KALYAN Standing Committee Meeting Number 12, Date 30/01/2010 Subject Number – 14 Resolution Number- 127 As the proposal bearing O. No. KDMC/EE/WS/655 dated 25/1/2010 of the Administration, Lowest Offerer (bidder) M/s Kirloskar Brothers- Maharashtra Ele.Mech. ( J.V.) was requested to give revised offer in respect of the works viz. to carry out the repairs of Water Purification Centre of Kalyan Dombivali Municipal Corporation, at Barave and Titwala under Jawaharlal Nehru National Urban Renewal Scheme and to make improvement with machineries, as per requirement and to set up machinery (plant) with computerised systems, it has shown inclination to carry out the work by reducing the rate given in the offer which was submitted earlier and at the additional rate of 5 percent on the estimated rate (costs). Considering the opinion of the consultant, a recommendation has been made to accept the said tender at a maximum additional rate of 5 percent on the estimated rate (costs). After the negotiation, as the offer with reasonable rate (cost) was not received, a decision was taken to re-issue (invite) the tender. However, the tenderer viz. M/s Krishnani-Viraj (J.V.), which participated in this tender, but, declared ineligible, has expressed it’s willingness to do the work at the rate 0.13 percent less, on the estimated rate declared (offered). As the documents of M/s Krishnani -Viraj (J.V.) are not available, after calling for the documents about it’s eligibility (qualification) and upon making scrutiny thereof, the Administration and the Consultant of the said work have given an opinion that M/s Krishnani- Viraj (J.V.) is eligible to do the said proposed work. Moreover, M/s Krishnani -Viraj (J.V.) has received even other important works (jobs) of the Municipal Corporation. Considering all these things, instead of inviting the tender for the work under subject again, this meeting of the Standing Committee accords sanction as per Rule 2(2) Chapter V of the schedule to Bombay Provincial Municipal Corporation Act, 1949, to entrust the said work to M/s Krishnani-Viraj (J.V.). Proposer : Sd/- Arun Pandharinath Gidh Seconder: Sd/- P.P.Penkar – Pratima Prakash Penkar Resolution passed unanimously 11 Sd/- Chairman Standing Committee (Seal of the Municipal Corporation Secretary of Kalyan Dombivali Municipal Corporation)” (emphasis supplied) 7. When the Petitioners representative visited the Office of Respondent No.1 on 1st February 2010, he realised that the Respondent No.3 Commissioner was in the process of giving contract of the said work to Respondent No.4 who was declared as technically disqualified bidder at the threshold. The Petitioners have alleged that the Respondent No.3 Commissioner was biased and took personal interest to favour the Respondent No.4. In the circumstances, the Petitioners approached the Respondent No.6 - Minister for Urban Development, Mantralaya by way of representation dated 1st February 2010 about the illegalities committed in the said tender process. Since no intimation was received by the Petitioners in relation to the request for stay made in the said representation, the Petitioners filed Writ Petition in this Court being Writ Petition No.1314 of 2010. That Writ Petition, however, was disposed of on 18th February 2010 by the following order : 12 “1. The learned Advocate appearing for the respondent Nos.1 & 2 states that on a complaint made by the petitioner, the State Government has stayed the further process and, therefore, till the order of the State Government continues, there is no question of respondent Nos.1 & 2 proceeding further in the matter of awarding of contract. Statement is accepted. In view of this statement, Petition is disposed off as withdrawn. All contentions available to both sides are kept open. It is however directed that in case the Government vacates the stay that it has granted, the Corporation will not proceed ahead for a period of seven days from the date of communication of the order of the Government to the petitioner. Writ Petition is disposed off accordingly.”(emphasis supplied) 8. The Petitioners, however, received an intimation from Respondent No.1 on 24th February 2010 mentioning that the Minister has already vacated the stay granted at the behest of the Petitioners. The Petitioners took the stand that until the order passed by the Minister was served on the Petitioners by the Government, the interim protection granted by this Court in terms of the order dated 18th February 2010 would operate. However, on realising that the matter was being precipitated by the Respondents 1 to 3 and Respondent No.3 in particular, at the behest of Respondent No.4, the Petitioners approached this Court by way of present Writ Petition on 17th March 2010, praying for the following reliefs: “a. Rule may be issued. b. The entire Record, including minutes of meeting noted in meeting no 12 on subject no.14, dated 30/01/2010 of Standing Committee of Respondent no 1, further all the resolutions passed during the said meeting and, result of technical bid opening in the process of Tender notice bearing No.03/2009-2010, from the file of the Respondent no.1; 13 and further entire Record from the file of Respondent no 6, with regard to impugned Order dated 24/02/2010 passed on the Complaint filed by the Petitioner on Tender notice bearing No.03/2009-2010 may kindly be called for; c. After considering the said record and after verifying the legality and validity of the same, this Hon’ble Court may kindly be pleased to issue a Writ of mandamus or any other appropriate Writ, order, or direction in like nature thereby revoking, recalling and rescinding the action/decision of the standing committee of the Respondent no.1 to award the contract in favour of the Respondent no.4, pursuant to the tender notice 03/2009-2010; and further it may kindly be directed to the Respondent no 1 to award the said Contract in favour of the Petitioner, with regard to tender notice bearing no.03/2009-2010; d. After considering the said record and after verifying the legality and validity of the same, this Hon’ble Court may kindly be pleased to quash and set aside the Order dated 24/02/2010 passed by the Respondent no 6 on the Complaint filed by the Petitioner on Tender notice bearing No.03/2009-2010; e. Pending the hearing and final disposal of the present petition, the Respondent no.1 to 3 and 6 may kindly be directed to not to take any further steps and/or action/s in respect of the tender notice bearing No. 03/2009-2010 and also further consequential actions there to; and further the effect, operation and implementation of the work order, if any, issued in favour of the Respondent no.4, pursuant to the tender notice 03/2009-2010, may kindly be stayed; f. Pending the hearing and final disposal of the present petition, effect implications and the execution of the said Order dated 24/02/2010 passed by the Respondent no 6 on the Complaint filed by the Petitioner on Tender notice bearing No.03/2009-2010 may kindly be stayed and also further consequential actions thereto may kindly be stayed; g. Pending the hearing and final disposal of the present petition, the Respondent no 1 be directed to produce original record pertaining to minutes of meeting noted in meeting no 12 on subject no.14, dated 30/01/2010 of Standing Committee of Respondent no 1, further all the resolutions passed during the said meeting and, result of technical bid opening in the process of Tender notice bearing No.03/2009-2010; and further entire Record from the file of Respondent no 6, with regard to impugned Order dated 24/02/2010 passed on the Complaint filed by the 14 Petitioner on Tender notice bearing No.03/2009-2010. h. Ad-interim reliefs in terms of prayer clause (e) (f) and (g) above be granted; i. Any other and further reliefs as this Hon’ble Court deems fit and proper in facts and circumstances of the case.” 9. The Respondent No.3 however, proceeded to issue work order on 17th March 2010 in favour of Respondent No.4 for the said work. When the present Writ Petition came up for hearing on 26th March 2010, after considering the arguments of both sides, the Court passed the following order: “1. Heard counsel for the parties. 2. Prima facie, we find force in the argument of the Petitioners that the entire action of the Corporation smacks of malafide exercise of power. In the first place, the bid submitted by the Respondent No.4 was found to be non-responsive as it was technically rejected on account of non- affixing registration copy and experience certificate. Nevertheless, we are informed that even the work order has been issued in favour of the said Respondent. This is unfathomable. In that, once the tender submitted by a party is found to be non-responsive, the question of considering his offer or allowing him to participate in the tender process, does not arise. 3. Further, we have noticed that in spite of order dated 18/2/2010 passed in Writ Petition No.1314 of 2010 the Corporation has hastened to issue work order in favour of the Respondent No.4, in spite of the fact that the communication of the order of the Government has not been received by the Petitioners from the Government so far as contemplated in the order dated 18/02/2010. 4. The counsel for the corporation has justified the action on the basis of some endorsement noticed in the communication issued by the Commissioner dated 24/02/2010, which mention that stay in respect of Commissioner Kalyan Dombivli Municipal Corporation has been vacated on 24/02/2010. 15 5. These and other issues raised in this Petition will have to be examined after reply is filed by the Respondents. We expect the Commissioner of the Respondent-Corporation to file his personal affidavit justifying the stand of the Corporation. Besides, the original record pertaining to tender process be kept ready for the perusal of the Court on the next date of hearing. 6. Since we are informed that the work order has already been issued on 17 th March 2010 in favour of the Respondent No.4, we direct the Respondents not to act upon the said work order till this matter is heard further on Tuesday i.e. on 30 th March 2010 which adjournment is necessitated at the request of the Respondents-Corporation. We are inclined to grant this ad-interim order as we are prima facie in agreement with the grievance of the Petitioners and more so because the contract is stated to be to the tune of over Rs.Twenty crores. 7. It will be open to the other Respondents to file their reply affidavit, if so advised. 8. The learned AGP assures to produce the original file in the office of the Minister on which stay was initially granted and same has been later on vacated by the Minister. Original file be kept ready in the Court on the next date of hearing. 9. Accordingly, place this matter on Tuesday i.e. on 30th March 2010.” (emphasis supplied) 10. Later on, both - Respondents 1 to 3 as well as the Respondent No.4 have filed affidavits in this Court to explain the circumstances in which contract has been awarded to Respondent No.4 and refuting the plea taken by the Petitioners that the Respondent No.4 is not qualified and that it does not possess the requisite experience necessary to carry out the said work. According to the Respondents, no illegality has been committed in awarding the said work to the Respondent No.4. In substance, the stand 16 taken is that as the bids submitted by the two qualified bidders did not match the expectation of the Corporation and was on the higher side than the estimated price of the contract. Further, to safeguard the interest of the Corporation even though initially it was felt that fresh tenders should be invited, but the Tender Committee which consists of senior officials of the Corporation, thought it appropriate to take recourse to power under Rule 2(2) below Chapter V of the Bombay Provincial Municipal Corporation Act, 1949, thereby not accepting the tenders submitted by the qualified bidders but instead, giving contract of the said work to the Respondent No.4 who was later on found to be eligible and possessing requisite experience necessary to carry out the subject work. For that reason, the action of awarding contract to Respondent No.4 which is after complying with all the statutory formalities is legitimate and proper. According to the Respondents, the cause of action for institution of the present Writ Petition does not survive as the tender process which was commenced on the basis of tender notice No.03/2009-2010 dated 5th September 2009 stood