IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.T.SANKARAN MONDAY, THE 19TH JULY 2010 / 28TH ASHADHA 1932 WP(C).No. 1344 of 2010(P) PETITIONER: CONSOLIDATED ENGINEERING ENTERPRISES, NALAPAD CHAMBERS, NO.19, KEMPE GOWDA ROAD, BANGALORE-560 009, REP. BY N.A.MUHAMMED, MANAGING PARTNER. BY ADV. SRI.R.D.SHENOY, SENIOR ADVOCATE ADV. SRI.S.VINOD BHAT AND ADV. SRI.SHIRAZ ABDULLA.M.S. RESPONDENTS: --------------- 1. THE SUPERINTENDING ENGINEER, PWD, NATIONAL HIGHWAY, NORTH CIRCLE, KOZHIKODE, KERALA. 2. THE CHIEF ENGINEER, NATIONAL HIGHWAYS, PUBLIC OFFICE BUILDING, THIRUVANANTHAPURAM. ADDITIONAL RESPONDENT IMPLEADED: 3. M/S.CONCORD CONSTRUCTIONS, KALLATRA COMPOUND, RAILWAY STATION ROAD, KANHANGAD P.O., REPRESENTED BY ITS PARTNER IBRAHIM KALLALTRA. ADDITIONAL THIRD RESPONDENT IS IMPLEADED AS PER ORDER IN I.A.NO.7387 OF 2010 DATED 9.6.2010. R1 AND R2 BY GOVERNMENT PLEADER SMT.NISHA BOSE ADDL.R3 BY ADVOCATE SRI.V.CHITAMBARESH THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 06/07/2010, THE COURT ON 19/07/2010 DELIVERED THE FOLLOWING: APPENDIX PETITIONER'S EXHIBITS: EXT.P1 TRUE COPY OF THE CERTIFICATE ISSUED BY THE EXECUTIVE ENGINEER DATED 10.7.2003. EXT.P1(a) TRUE COPY OF THE CERTIFICATE ISSUED BY THE EXECUTIVE ENGINEER DATED 21.3.2005. EXT.P1(b) TRUE COPY OF THE CERTIFICATE ISSUED BY THE EXECUTIVE ENGINEER, DATED 17.7.2006. EXT.P1(c) TRUE COPY OF THE CERTIFICATE ISSUED BY THE EXECUTIVE ENGINEER DATED 12.11.2009. EXT.P1(d) TRUE COPY OF THE CERTIFICATE ISSUED BY THE EXECUTIVE ENGINEER DATED 17.7.2006. EXT.P2 COPY OF THE TENDER NOTIFICATION ISSUED BY THE RESPONDENT DATED 5.10.2009. EXT.P3 COPY OF THE RELEVANT PAGES OF STANDARD BIDDING DOCUMENT. EXT.P4 COPY OF THE CIRCULAR NO.RW/NH-24035/4/2008-P&M/PIC DATED 27.11.2009. RESPONDENTS' EXHIBITS: EXT.R3(a) TRUE COPY OF THE INTERIM ORDER DATED 19.1.2010. EXT.R3(b) TRUE COPY OF THE INTERIM ORDER DATED 18.5.2010. //TRUE COPY// AHZ/ K.T.SANKARAN, J. ------------------------------------------------------ W.P.(C). NO. 1344 OF 2010 ------------------------------------------------------ Dated this the 19th day of July, 2010 JUDGMENT The question involved in this Writ Petition is whether a contractor can take advantage of the relaxed “qualification of the bidder” issued after the last date for submitting the technical bid and the financial bid, and after opening the technical bid and before opening the financial bid. 2. The writ petitioner, the additional third respondent and others submitted tenders for the work of improvement of riding quality of NH17 at KM63/00 to KM 91/00, in response to Ext.P2 tender notification dated 5.10.2009. The approximate cost of the work was fixed at Rs.906 lakhs. The tender was to be submitted under the two cover system containing financial bid and technical bid. The last date for submitting tender was before 4 PM on 25.11.2009. As per Ext.P2 notification, the technical bid was to be opened at 4.30 PM on 25.11.2009. 3. Five contractors, including the petitioner and the additional W.P.(C) NO.1344 OF 2010 :: 2 :: third respondent, submitted tenders. The technical bids were opened on 25.11.2009 at 4.30 PM. 4. Ext.P2 provides that the tenderer has to get the Standard Bidding Document, which should form part of the tender documents, from the Secretary, Indian Road Congress, New Delhi. The petitioner has produced relevant pages of the Standard Bidding Document as Ext.P3. The Standard Bidding Document in full was made available by the learned counsel appearing for the petitioner and it is taken on record. Clause 4.5 of Chapter A in Part I of the Standard Bidding Document provides for the requirements to qualify for award of contract. The relevant portion of Clause 4.5 of Chapter A in Part I of the Standard Bidding Document reads as follows: “4.5 A. To qualify for award of the contract, each bidder in its name should have in the last five years as referred to in Appendix. (a) achieved a minimum annual financial turnover (in all classes of civil engineering construction works only) amount indicated in Appendix in any one year (usually not less than two and a half times the estimated annual payments under the contract);” W.P.(C) NO.1344 OF 2010 :: 3 :: 5. On 27.11.2009, the Government of India, Ministry of Road Transport and Highways issued Ext.P4 Circular amending the Standard Bidding Document circulated vide Circular No.RW/NH- 24020/2/99-PIC dated 4.9.2000. Clause 4.5 of the Standard Bidding Document quoted above was amended as follows: “General Experience The Applicant shall meet the following minimum criteria: (a) Average annual turnover (defined as billing for works in progress and completed in all classes of civil engineering construction works only) over the last five years of 40 per cent of the value of contract/contracts applied for.” 6. According to the petitioner, the question of awarding the contract work has to be decided in terms of Ext.P4, which modified the qualifications of the bidder contained in Ext.P3. The petitioner contends that the evaluation of tenders should be made as per the amended provisions. The Writ Petition was filed on the ground that the petitioner apprehends that the respondents may “stick to the W.P.(C) NO.1344 OF 2010 :: 4 :: norms” contained in Ext.P3. The relief prayed for in the Writ Petition is to “issue a writ of mandamus or any other order or direction, directing the respondents to evaluate the tenders in terms of Exhibit P4 including the tender submitted by the petitioner pursuant to Exhibit P2”. 7. The additional third respondent filed a petition for impleading and got itself impleaded. According to the additional third respondent, Ext.P4 would apply to submission of tenders only after 27.11.2009. The eligibility criteria fixed by the amendment would not affect the tenders submitted earlier. Eligibility has to be decided with reference to the last date for submission of tenders and not thereafter. 8. In the counter affidavit filed on behalf of respondents 1 and 2, it is stated that before modification of the guidelines regarding the procedure to be adopted for inviting of tenders and qualifications of contractors, evaluation of the tenders in the present case was done by a committee consisting of the Chief Engineer, Regional Officer and the Superintending Engineer. The tender process commenced on 5.10.2009 based on the qualifying parameters prevailed at the W.P.(C) NO.1344 OF 2010 :: 5 :: relevant time. The evaluation committee which met on 5.1.2010 did not consider the modification issued on 27.11.2009. As per the established procedure, the criteria for qualification of tenders as specified in the Standard Bidding Document would not be changed after submission of the bids and such a procedure would be illegal. 9. The learned senior counsel for the petitioner submitted that going by Ext.P3 Standard Bidding Document, the petitioner may not be technically qualified, whereas, as per Ext.P4 amended qualification criteria, the petitioner would be qualified. It is submitted that only two contractors would get qualified if Ext.P3 is applied, while four contractors would get qualified if Ext.P4 is applied. 10. The following provisions in the Standard Bidding Document are relevant for the purpose of considering the question involved in the Writ Petition: “4.5 A. To qualify for award of the contract, each bidder in its name should have in the last five years as referred to in Appendix. W.P.(C) NO.1344 OF 2010 :: 6 :: (a) achieved a minimum annual financial turnover (in all classes of civil engineering construction works only) amount indicated in Appendix in any one year (usually not less than two and a half times the estimated annual payments under the contract); 10. Amendment of Bidding Documents 10.1 Before the deadline for submission of bids, the Employer may modify the bidding documents by issuing addenda. 10.2 Any addendum thus issued shall be part of the bidding documents and shall be communicated in writing or by cable to all the purchasers of the bidding documents. Prospective bidders shall acknowledge receipt of each addendum in writing or by cable to the Employer. The Employer will assume no responsibility for postal delays. 10.3 To give prospective bidders reasonable time in which to take an addendum into account in preparing their bids, the Employer may, at his discretion, extend as necessary the deadline for submission of bids, in accordance with Sub- Clause 20.2 below. 12.1 The bid to be submitted by the bidder as Volume V of W.P.(C) NO.1344 OF 2010 :: 7 :: the bid document (refer Clause 8.1) shall be in two separate parts: Part I shall be named “Technical Bid” and shall comprise (i) Bid Security in the form specified in Section 8 (ii) Qualification Information and supporting documents as specified in Section 2 (iii) Certificates, undertakings, affidavits as specified in Section 2 (iv) Any other information pursuant to Clause 4.2 of these instructions (v) undertaking that the bid shall remain valid for the period specified in Clause 15.1 (vi) Acceptance/non-acceptance of Dispute Review Expert proposed in Clause 36.1 Part II shall be named “Financial Bid” and shall comprise (i) Form of Bid as specified in Section 6 (ii) Priced Bill of Quantities for items specified in Section 7 Each part will be separately sealed and marked in accordance with the Sealing and Marking Instructions in Clause 19. W.P.(C) NO.1344 OF 2010 :: 8 :: 20. Deadline for Submission of the Bids 20.1. Complete Bids (including Technical and Financial) must be received by the Employer at the address specified above not later than the date indicated in appendix. In the event of the specified date for the submission of bids declared a holiday for the Employer, the Bids will be received upto the appointed time on the next working day. 20.2. The Employer may extend the deadline for submission of bids by issuing an amendment in accordance with Clause 10, in which case all rights and obligations of the Employer and the bidders previously subject to the original deadline will then be subject to the new deadline. 23. Bid Opening 23.1 The Employer will open all the Bids received (except those received late), including modifications made pursuant to Clause 22, in the presence of the Bidders or their representatives who choose to attend at time, date and the place specified in Appendix in the manner specified in Clause 20 and 23.3. In the event of the specified date of Bid opening being declared a holiday for the Employer, the Bids will be opened at the appointed time and location on the next working day. 23.2 .... .... W.P.(C) NO.1344 OF 2010 :: 9 :: 23.3 The envelope containing “Technical Bid” shall be opened. The amount, form and validity of the bid security furnished with each bid will be announced. If the bid security furnished does not conform to the amount and validity period as specified in the Invitation for Bid (ref. Column 4 and paragraph 3), and has not been furnished in the form specified in Clause 16, the remaining technical bid and the sealed financial bid will be returned to the bidder. 23.4. (i) Subject to confirmation of the bid security by the issuing Bank, the bids accompanied with valid bid security will be taken up for evaluation with respect to the qualification Information and other information furnished in Part I of the bid pursuant to Clause 12.1. (ii) After receipt of confirmation of the bid security, the bidder will be asked in writing (usually within 10 days of opening of the Technical Bid) to clarify or modify his technical bid, if necessary, with respect to any rectifiable defects. (iii) The bidders will respond in not more than 7 days of issue of the clarification letter, which will also indicate the date, time and venue of opening of the Financial Bid (usually on the 21st day of opening of the Technical Bid) W.P.(C) NO.1344 OF 2010 :: 10 :: (iv) Immediately (usually within 3 or 4 days), on receipt of these clarifications the Evaluation Committee will finalize the list of responsive bidders whose financial bids are eligible for consideration. 23.6. At the time of opening of “Financial Bid”, the names of the bidders were found responsive in accordance with Clause 23.4(iv) will be announced. The bids of only these bidders will be opened. The remaining bids will be returned to the bidders unopened. The responsive Bidders' names, the Bid prices, the total amount of each bid, any discounts, Bid Modifications and withdrawals, and such other details as the Employer may consider appropriate, will be announced by the Employer at the opening. Any Bid price or discount, which is not read out and recorded will not be taken into account in Bid Evaluation. 26. Examination of Bids and Determination of Responsiveness 26.1 During the detailed evaluation of “Technical Bids”, the Employer will determine whether each Bid (a) meets the eligibility criteria defined in Clause 3 and 4; (b) has been properly signed; (c) is accompanied by the required securities and; (d) is substantially responsive to the requirements of the Bidding documents. During the detailed evaluation of the “Financial Bid”, the responsiveness of the bids will be further W.P.(C) NO.1344 OF 2010 :: 11 :: determined with respect to the remaining bid conditions, i.e., priced bill of quantities, technical specifications, and drawings. 26.2 A substantially responsive “Financial Bid” is one which conforms to all the terms, conditions, and specifications of the Bidding documents, without material deviation or reservation. A material deviation or reservation is one (a) which affects in any substantial way the scope, quality, or performance of the Works; (b) which limits in any substantial way, inconsistent with the Bidding documents, the Employer's rights or the Bidder's obligations under the Contract; or (c) whose rectification would affect unfairly the competitive position of other Bidders presenting substantially responsive Bids. 26.3. If a “Financial Bid” is not substantially responsive, it will be rejected by the Employer, and may not subsequently be made responsive by correction or withdrawal of the non- conforming deviation or reservation.” 11. Sri.R.D.Shenoy, the learned senior counsel appearing for the petitioner submitted that clause 4.5 A(a) in Ext.P3 Standard Bidding Document is not an eligibility condition. It is only a representation of the intention of the “employer” regarding the future conduct of the employer in awarding the work. Regarding the future conduct of the employer, the petitioner or the additional third W.P.(C) NO.1344 OF 2010 :: 12 :: respondent has no vested right. Ext.P4 amendment having come into force before evaluation of the tenders held on 5.1.2010, the same should be applied in the case of the present tender. Ext.P4 is in public interest and it is aimed at attracting more bidders. The Standard Bidding Document contemplates amendment of the bid document. Clause 4 of the Standard Bidding Document being not a condition of bid, it does not affect the eligibility and therefore future events also can be looked into. It is submitted that the expressions “eligibility”, “qualification” and “award of contract” are used in the bid document with specific meaning. According to the counsel, “eligibility” would be subject to no change, while “qualification” is flexible and capable of taking any subsequent events at any time before award of the contract or at least till evaluation is made. According to the counsel, conditions of contract are those which form integral part of the contract, while qualifications of the bidder are only aimed at ensuring that the awardee of contract would be capable of executing the work. Sri.R.D.Shenoy also submitted that the third respondent would not be entitled to the benefit of promissory estoppel as he has no vested right. Alternatively, it is submitted by the counsel that, in the facts and circumstances, it is only just and proper to invite fresh tenders. W.P.(C) NO.1344 OF 2010 :: 13 :: 12. The learned Government Pleader made available the records. Page 14 of the records contains a letter dated 30.11.2009 from the Superintending Engineer, P.W.D., Kozhikode to the Chief Engineer, National Highways, Thiruvananthapuram. The following facts are clear from the said letter: (1) 18 numbers of bidding documents were issued; (2) Five contractors offered tenders; (3) Technical bids were opened on 25.11.2009 at 4.30 PM; and (4) Evaluation report was prepared and that report was enclosed with the letter. 13. Sri.V.Chitambaresh, learned senior counsel appearing for the additional third respondent, relied on the decisions in Ramana Dayaram Shetty v. International Airport Authority of Indian and Others ((1979) 3 SCC 489), Monarch Infrastructure (P) Ltd. v. Commissioner, Ulhasnagar Municipal Corporation and others ((2000) 5 SCC 287) and W.B.State Electricity Board v. Patel Engineering Co. Ltd. and others ((2001) 2 SCC 451 = AIR 2001 SC 682 ). W.P.(C) NO.1344 OF 2010 :: 14 :: 14. The decision in Ramana Dayaram Shetty v. International Airport Authority of Indian and Others ((1979) 3 SCC 489), deals with a case regarding tenders for putting up and running a II Class restaurant and two snack bars at International Airport in Bombay. Six tenders were received. The only tender which was complete and which fully complied with the terms and conditions of the tender notification was the one submitted by the fourth respondent therein. The offer made by him was the highest among all the tenders. The Supreme Court held thus: “Admittedly the standard or norm was reasonable and non-discriminatory and once such a standard or norm for running a IInd Class restaurant should be awarded was laid down, respondent 1 was not entitled to depart from it and to award the contract to respondents 4 who did not satisfy the condition of eligibility prescribed by the standard or norm. If there was no acceptable tender from a person who satisfied the condition of eligibility, respondent 1 could have rejected the tenders and invited fresh tenders on the basis of a less stringent standard or norm, but it could not depart from the standard or norm prescribed by it and arbitrarily accept the tender of respondents 4. When respondent 1 entertained the tender of respondents 4 even though W.P.(C) NO.1344 OF 2010 :: 15 :: they did not have 5 years' experience of running a IInd Class restaurant or hotel, it denied equality of opportunity to others similarly situate in the matter of tendering for the contract. There might have been many other persons, in fact the appellant himself claimed to be one such person, who did not have 5 years' experience of running a IInd Class restaurant, but who were otherwise competent to run such a restaurant and they might also have competed with respondents 4 for obtaining the contract, but they were precluded from doing so by the condition of eligibility requiring five years' experience. The action of respondent 1 in accepting the tender of respondents 4, even though they did not satisfy the prescribed condition of eligibility, was clearly discriminatory, since it excluded other persons similarly situate from tendering for the contract and it was also arbitrary and without reason. The acceptance of the tender of respondents 4 was, in the circumstances, invalid as being violative of the equality clause of the Constitution as also of the rule of administrative law inhibiting arbitrary action.” 15. In Monarch Infrastructure (P) Ltd. v. Commissioner, Ulhasnagar Municipal Corporation and others ((2000) 5 SCC 287), the Municipal Corporation invited tenders for appointment of agents for collection of octroi. Five persons submitted tenders. W.P.(C) NO.1344 OF 2010 :: 16 :: Thereafter, the State Government deleted a particular clause in the tender booklet. Taking into account the deletion, the Commissioner of the Municipality awarded the contract to a person, who, at the time of submission of tender did not satisfy the condition under the clause, which was subsequently deleted. The award of contract was challenged. The High Court set aside the award of contract. The Supreme Court held thus: “The High Court had taken the view that if a term of the tender having been deleted after the players entered into the arena it is like changing the rules of the game after it had begun and, therefore, if the Government or the Municipal Corporation was free to alter the conditions fresh process of tender was the only alternative permissible. Therefore, we find that the course adopted by the High Court in the circumstances is justified because by reason of deletion of a particular condition a wider net will be permissible and a larger participation or more attractive bids could be offered.” 16. In W.B.State Electricity Board v. Patel Engineering Co. Ltd. and others ((2001) 2 SCC 451 = AIR 2001 SC 682)), it was held thus: W.P.(C) NO.1344 OF 2010 :: 17 :: “It is essential to maintain the sanctity and integrity of process of tender/bid and also award of a contract. The appellant, Respondents 1 to 4 and Respondents 10 and 11 are all bound by the ITB which should be complied with scrupulously. In a work of this nature and magnitude where bidders who fulfil pre- qualification alone are invited to bid, adherence to the instructions cannot be given a go-by by branding it as a pedantic approach, otherwise it will encourage and provide scope for discrimination, arbitrariness and favouritism which are totally opposed to the rule of law and our constitutional values. The very purpose of issuing rules/instructions is to ensure their enforcement lest the rule of law should be a casualty. Relaxation or waiver of a rule or condition, unless so provided under the ITB, by the State or its agencies (the appellant) in favour of one bidder would create justifiable doubts in the minds of other bidders, would impair the rule of transparency and fairness and provide room for manipulation to suit the whims of the State agencies in picking and choosing a bidder for awarding contracts as in the case of distributing bounty or charity. In our view such approach should always be avoided. Where power to relax or waive a rule or a condition exists under the rules, it has to be done strictly in compliance with the rules. We have, therefore, no hesitation in W.P.(C) NO.1344 OF 2010 :: 18 :: concluding that adherence to the ITB or rules is the best principle to be followed, which is also in the best public interest. ...... ......... 31. ..... The contract is, therefore, awarded normally to the lowest tenderer which is in public interest. The principle of awarding contract to the lowest tenderer applies when all things are equal. It is equally in public interest to adhere to the rules and conditions subject to which bids are invited. Merely because a bid is the lowest the requirements of compliance with the rules and conditions cannot be ignored.” 17. The learned senior counsel for the petitioner, Sri.R.D.Shenoy, relied on the decision in State of Kerala and another v. B.Six Holiday Resorts Private Limited and others ((2010) 5 SCC 186) and certain other decisions which are in respect of granting of FL-3 licence under the Abkari Act. In State of Kerala and another v. B.Six Holiday Resorts Private Limited and others ((2010) 5 SCC 186), the question considered was whether an application for grant of FL-3 licence should be considered with reference to the Rules as they existed when the application was W.P.(C) NO.1344 OF 2010 :: 19 :: made or in accordance with the Rules in force on the date of consideration of the application. The Supreme Court held thus: “28. Having regard to the fact that the State has exclusive privilege of manufacture and sale of liquor, and no citizen has a fundamental right to carry on trade or business in liquor, the applicant did not have a vested right to get a licence. Where there is no vested right, the application for licence requires verification, inspection and processing. In such circumstances it has to be held that the consideration of application of FL-3 licence should be only with reference to the rules/law prevailing or in force on the date of consideration of the application by the Excise Authorities, with reference to the law and not as on the date of application. Consequently, the direction by the High Court that the application for licence should be considered with reference to the Rules as they existed on the date of application cannot be sustained.” This decision cannot be applied in the matter of submitting tenders. The distinction is clear from the decision of the Supreme Court itself. 18. Going by the Standard Bidding Document and the terms and conditions therein, it cannot be said that the qualification of