IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 22-12-2010 CORAM THE HONOURABLE MR.JUSTICE M.JAICHANDREN W.P.No.28949 of 2010 and M.P.Nos.1 and 2 of 2010 1.M/s.Paver Finish Road Builders’ Association, Chennai Rep. by its President No.11, Jayammal Street, GF-1, Shenoy Nagar, Chennai-600 030. 2.M/s.Balaji Roadways Pvt. Ltd. Rep. by its Director, S.Pandiyen No.13/23, V Cross Street, R.V.Nagar, Anna Nagar East, Chennai-600 102. 3.R.Ramaro 4.V.N.Gunasekaran 5.M.U.Mohan 6.T.J.Sivasankar 7.C.Vijayakumar 8.V.Manoharan 9.R.Sivabalan 10.K.Durvasulu 11.R.Sivakumar 12.Mrs.H.Ruby Nathan .. Petitioners. Versus 1. Government of Tamilnadu Rep. by its Secretary to Government, https://hcservices.ecourts.gov.in/hcservices/ Department of Municipal Administration and Water Supply and Sewerage Fort St.George, Secretariat, Chennai-600 009. 2.The Commissioner, Corporation of Chennai, Ripon building, Park Town, Chennai-600 003. 3.The Superintending Engineer, (Bus Route Roads) Corporation of Chennai, Ripon Building, Park Town, Chennai-600 003. .. Respondents. PRAYER: Petition filed Article 226 of the Constitution of India, praying for a Writ of Certiorarified Mandamus calling for the records of the third respondent herein, viz. the Tender Notification published in Tamil Daily, Dinakaran issue dated 9.12.2010, in respect of the work bearing Pe.Sa.Thu.Roc.No.B1/3465/2010 (for 84 Roads), B5 3466/2010 (for 79 Roads) and B4/3467/2010 (for 103 Roads) and quash the same and consequently direct the respondents herein to split the aforesaid work road-wise, division-wise, unit-wise and zone-wise and issue fresh Tender Notification and proceed in accordance with law. For Petitioners: Mr.AR.L.Sundaresan, Senior Advocate for Ms.AL.Ganthimathi For Respondents: Mr.P.S.Raman, Additional Advocate General for Mr.K.Balasubramanian, Special Government Pleader (R1) Mr.A.Mohamed Ghouse (R2 and R3) https://hcservices.ecourts.gov.in/hcservices/ O R D E R It has been stated that the first petitioner is a registered association, registered under the Tamil Nadu Societies Registration Act, 1975, with Registration No.1422 of 2000. Petitioners 2 to 12 are the members of the first petitioner association. The first petitioner association has more than 90 members. The members of the first petitioner association are registered Class-I contractors, who have been carrying out various items of work in paver finish roads, which are in the Chennai Corporation limits. 2. It has also been stated that to participate in the tenders floated by the Corporation of Chennai, or by any other authority, under the control of the State Government, it is mandatory for the tenderers to own and possess a central hot mix plant, paver finisher and other machineries, which are required for the purpose of carrying out the works concerned. As such, the members of the first petitioner association had invested huge sums of money, for the purpose of owning and possessing the machineries needed to be qualified to participate in the tenders. 3. It had also been stated that, for a period of more than two decades, the Corporation of Chennai has been inviting tenders for laying of roads, periodically, by splitting the works into various sections, with the estimated cost, varying from one lakh to about fifty lakhs of rupees. The members of the first petitioner association, who are registered Class-I contractors, are eligible to participate in the tenders, the value of which may even be above rupees seventy five lakhs. While so, the third respondent had issued a tender notification, published in the tamil daily `Dinakaran’, dated 9.12.2010, dividing the entire works to be carried out in the city of Chennai, under three broad headings, namely, (i) Item No.1 (Package No.1) for 84 roads, at an estimated cost of Rs.1,834.71 lakhs, (ii) Item No.2 (Package No.2) for 79 roads, at an estimated cost of Rs.1,943.81 lakhs and (iii) Item No.3 (Package No.3) for 103 roads, at an estimated cost of Rs.1,950.71 lakhs. As per the tender notification, dated 9.12.2010, the tender documents had to be submitted in the office of the third respondent, by 3.00 p.m, on 23.12.2010, and the tenders were scheduled to be opened, at 3.30 p.m, on 23.12.2010. 4. It has also been stated that the qualifications prescribed in the tender conditions would make it impossible for the Class-I contractors, who are the members of the first petitioner association, to participate in the tender process. It is for the first time, in many years, that the Corporation of Chennai had divided the works into three major packages, which require very heavy investments in materials, men and machineries. In spite of detailed representation https://hcservices.ecourts.gov.in/hcservices/ being given to the various administrative and other authorities of the Governemnt of Tamil Nadu, no action has been taken, to call for tenders, by splitting the works into smaller packages, enabling the members of the first petitioner association, to participate in the tender process. It is clear that the pre-qualification conditions have been prescribed in the tender conditions, only with the mala fide intention of favouring a few persons. As such, the notification issued by the third respondent, dated 9.12.2010, is contrary to the provisions of the The Tamil Nadu Transparency in Tenders Act, 1998, and Article 14 of the Constitution of India. 5. Mr.AR.L.Sundaresan, the learned Senior Counsel appearing on behalf of the petitioners had submitted that the impugned notification issued by the third respondent is arbitrary, illegal and void. It is also irrational and unreasonable, as it would only create concentration of economic wealth in a few persons. He had also submitted that by prohibiting the members of the first petitioner association from participating in the tender process their legitimate expectations had been belied. By prescribing stringent prequalification conditions, the members of the first petitioner association have been wrongly denied their legitimate rights to participate in the tender process. The act of the respondents would only create monopolies, which would hamper healthy competition, resulting in the unhealthy growth of economy in the Country, contrary to the provisions contained in the Directive Principles of State Policy enshrined in the Constitution of India. 6. The learned counsel had also submitted that the respondents cannot claim that the classification of the works into three major packages would be convenient for its administration. It had also been stated that, till recently, the road laying works had been given to a number of contractors, including, the members of the first petitioner association. In fact, it may not be possible for the respondents to implement the works, by classifying them into large packages. It would also slow down the works, considerably. Therefore, the impugned tender notification, issued by the third respondent, is unsustainable in the eye of law. 7. Mr.P.S.Raman, the learned Advocate General, appearing on behalf of the respondents, had submitted that the petitioners cannot claim that they are entitled to participate in the tender process, as a matter of right. Unless they are qualified, as per the prequalification conditions prescribed in the tender notification, dated 9.12.2010, it would not be open to the petitioners to participate in the tender process. They cannot claim that the tender notification issued by the third respondent is infringing their legitimate expectations. The works, in respect of which the tender notification, dated 9.12.2010, https://hcservices.ecourts.gov.in/hcservices/ had been issued, have to be carried out by well qualified and experienced contractors, as it has to be done in a hurry. The roads in the city of Chennai, including the other areas coming under the Corporation of Chennai are under disrepair, due to the heavy rains that had lashed the city in recent times. The damage caused to the roads have lead to heavy traffic jams causing serious problems, by disrupting the normal life of those who are residing in the areas concerned and for those outsiders who are using the roads in question. He had also submitted that the Corporation of Chennai had sanctioned rupees nineteen crores for the works to be carried out, in respect of interior roads, in 23 smaller packages. It would be open to the petitioners to participate in such tender processes. 8. It had also been stated that the Corporation of Chennai had called for the tender, based on the request of the State Government to complete the works, within a period of 90 to 120 days. Stringent conditions have been imposed in the tender conditions, including the proposal for imposing severe penalties on the tenderers, in whose favour the tenders are confirmed, on their failure to fulfill the tender conditions. Performance guarantee had also been incorporated in the tender conditions. 9. It had also been stated that there were 18 qualified tenderers, who had participated in the tender process, including some of the petitioners. The works, for which the tender notification, dated 9.12.2010, had been issued, is only due to the emergency situation that is prevailing in the city of Chennai and due to the administrative convenience in monitoring the works. Similar tender processes had been followed, in respect of the works in other cities, like Tanjore, Madurai and Coimbatore. Thus, it is clear that there is no mala fide intention on the part of the respondents, in calling for tenders for the works, in three large packages. In fact, many of the petitioners had participated in the smaller packages, for which tenders had been invited by the Corporation of Chennai. The petitioners have filed the present writ petition suppressing such material facts. He had also relied on the following decision in support of his contention: 9.1. In Union of India V. Hindustan Development Corporation (1993(3) Supreme Court Cases 499), it has been held as follows: “The Government while entering into contracts or issuing quotas is expected not to act like a private individual but should act in conformity with certain healthy standards and norms. Such actions should not be arbitrary, irrational or irrelevant. In the matter of awarding contracts inviting tenders is considered to be one of the https://hcservices.ecourts.gov.in/hcservices/ fair ways. If there are any reservations then they should not be arbitrary and must be justifiable on the basis of some policy or valid principles which by themselves are reasonable and not discriminatory. The policy of the Government in the matter of fixation of price and in allotment of the largess from the point of view of prohibiting monopolistic tendencies and encouraging healthy competition among the units, was not unreasonable or arbitrary. The avowed policy of the Government particularly from the point of view of public interest is to prohibit concentration of economic power and to control monopolies so that the ownership and control of the material resources of the community are so distributed as best to subserve the common good and to ensure that while promoting industrial growth there is reduction in concentration of wealth and that the economic power is brought about to secure social and economic justice. In this case a particular policy has been adopted by the Government, though it resulted in a change as compared to the previous one. Change of policy by itself does not affect the pursuant action provided it is rational and reasonable.” 10. In reply to the above contentions raised on behalf of the respondents, the learned counsel for the petitioners had submitted that there is no nexus between the classification of the works into three large packages and the object sought to be achieved by the respondents. The road works had been performed by the petitioners in the past, only in small packages. There has been no complaint, with regard to the quality of the works carried out by the petitioners so far. The respondents cannot claim that the classification of the works into three major packages is based on administrative convenience. It has been done only with the mala fide motive of helping some selected persons, in an arbitrary and illegal manner. 11. In view of the averments made in the affidavit filed in support of the writ petition and in view of the submissions made by the learned counsels appearing on behalf of the petitioners, as well as the respondents, and on a perusal of the records available, this Court is of the considered view that the petitioners have not shown sufficient cause or reason to grant the reliefs, sought for by the petitioners in the present writ petition. 12. The petitioners have not been in a position to substantiate their claim that the classification of the works into three major packages had been done in a mala fide manner. There is nothing on record to show that the tender notification, dated 9.12.2010, issued by the third respondent, is arbitrary or illegal. It is clear that the https://hcservices.ecourts.gov.in/hcservices/ classification of the works into three major packages has been done only due to the urgency in repairing the roads, which are within the limits of the Corporation of Chennai and due to the administrative convenience in monitoring the works. 13. It has also been noted that some of the petitioners had participated in the tender processes relating to smaller packages, in respect of the interior roads and in the larger packages, which are forming a part of the impugned tender notification, dated 9.12.2010. Further, it is a settled position that the Courts of law would be reluctant in interfering with the tender processes, except in rare cases, involving matters of public policy or in circumstances when the provisions of law have been infringed with impunity or if it had been conducted in a blatantly mala fide manner. 14. The petitioners have not been in a position to show that the classification of the works into three major packages in the impugned notification, issued by the third respondent, has been done in an arbitrary or illegal manner. The claim of the petitioners that their legitimate expectations had been belied cannot be countenanced, as there is no guaranteed right by which they are entitled to participate in the tender process. The following decisions make it clear that no person can claim a fundamental right to carry on business with the Government. Further, the power of judicial review, in matters relating to tenders or in respect of the awarding of contracts, is limited. 14.1. In Association of Registration Plates V. Union of India and others (2005(1) SCC 679), it has been held as follows: "Article 14 of the Constitution prohibits the government from arbitrarily choosing a contractor at its will and pleasure. It has to act reasonably, fairly and in public interest in awarding contract. At the same time, no person can claim a fundamental right to carry on business with the government. All that he can claim is that in competing for the contract, he should not be unfairly treated and discriminated against, to the detriment of public interest. Undisputedly, the legal position which has been firmly established from various decisions of the Supreme Court is that government contracts are highly valuable assets and the court should be prepared to enforce standards of fairness on government in its dealings with tenderers and contractors. In the matter of formulating conditions of a tender document and awarding a contract of the nature of ensuring supply of high security registration plates, greater latitude is required to be conceded to the State https://hcservices.ecourts.gov.in/hcservices/ authorities. Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work. Unless the action of tendering Authority is found to be malicious and misuse of its statutory powers, tender conditions are unassailable." 14.2. In Jagdish Mandal V. State of Orissa (2007(14) SCC 517), it has been held as follows: "When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. 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. 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. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions : i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone. OR Whether the process adopted or decision made is so arbitrary and irrational that the court can say : 'the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached.' ii) Whether public interest is affected. If the answers are in the negative, there should be no https://hcservices.ecourts.gov.in/hcservices/ interference under Article 226. Cases involving black- listing or imposition of penal consequences on a tenderer/contractor or distribution of state largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action." 14.3. In Shimnit Utsch India (P) Ltd V. W.B.Transport Infrastructure Development Corpn. Ltd. (2010 (6) SCC 303), it has been held as follows: "Government policy can be changed with changing circumstances and only on ground of change, a policy is not vitiated. Government has discretion to adopt a different policy, alter or change its policy to serve public interest and make it more effective. But change in policy must be in conformity with Wednesbury reasonableness and free from arbitrariness, irrationality, bias and malice. State or its tendering authority is bound to give effect to essential conditions of eligibility stated in a tender document and not entitled to waive such conditions. However, this does not take away its administrative discretion to cancel entire tender process in public interest provided such action is not actuated with ulterior motive, arbitrariness, irrationality or is in violation of some statutory provisions." 14.4. In Sri Amman Associates V. State of Tamil Nadu (2005 (4) CTC 399), it has been held as follows: "It is not for the Courts to interfere with the terms of tender notice unless it was shown that it was either arbitrary or discriminatory or actuated by malice." 15. In such circumstances, this Court is not inclined to interfere with the tender process, initiated by the third respondent, by his tender notification, dated 9.12.2010. As such, the writ petition is devoid of merits. Hence, it is dismissed. No costs. Consequently, connected miscellaneous petitions are closed. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar csh https://hcservices.ecourts.gov.in/hcservices/ 1. The Secretary to Government, Department of Municipal Administration and Water Supply and Sewerage Fort St.George, Secretariat, Chennai-600 009. 2.The Commissioner, Corporation of Chennai, Ripon building, Park Town, Chennai-600 003. 3.The Superintending Engineer, (Bus Route Roads) Corporation of Chennai, Ripon Building, Park Town, Chennai-600 003. 2 cc To Mr.Md.Ghouse , Advocate, SR.91070 1 cc To Mr.A.L.Ganthimathi, Advocate, SR.91384 W.P.No.28949 of 2010 ksj(co) pmk.22.12.2010 https://hcservices.ecourts.gov.in/hcservices/