x HIGH COURT OF JUDICATURE CHHATTISGARH : BILA3PUR \ \ /"/,A— Sdl— POST FOR ORDER OMJuly, 2003. 15 L.c.BHAD°° Judge WRIT PETITION NO. 1850 OF 2003 / PETITIONER Shrikishan 8a Company, Through its Pmprietor, Sushjl Agawal, S/o Late Kishan Agrawal, aged about 37 years, R/ o Dani Road, Korba, Disirict— Korba. (C.G.) - Versus- #SPONDENTS 1. State of Chhauisgarh, Through the Secmtary, Panchayat and Rural “\Qg' ‘z Developmant Dépaltmsnt, DKS Bhawan, Raip‘ur (C.G.) 2. The Chief Engineer, Pradhan Mann-i Gram Sadak Yojna Development Commissioner OEce, Civil Lines, RaipuIiC.G.). 3. The Execuh've Engineer, Pradhan Mantri Gram Sadak Yojna Raigarh, Distm'ct—Raigarh (C.Gr.). 4. Central Vigilance Commission, Jaisalmer House, Man Singh Road, New Delhi- 1 1001 1. 5, Maa Shakmberi ConstructionS/ Through its Proprietor, Shri Sampat Sharaf, R/o Dhannupali, Sambalpur, Dishict— Sambalpur (Orissa). Illl [0 Q) (/j HIGH COURT OF JUDICATURE CHHATTISGARH : BILASPUR WRIT PETITION NO. 1850 OF 2003 ORDER uly, 2003) By Justice L. c. Bhadoo. 1. The main grievance of the petitioner] Company in this petition under Article 226 of the Constitution of India is against the decision of the Respondents No, 2 and 3 to enter into the negotiations with all the tendemrs asking them to send their negotiated rates in a sealed envelope and not to accept the petitioner’s tender even though the rates quoted by him were lowest. The petitioner Company has nled this VV: » 4% PETITIONER Shrikishan 8x. Oompany, Through its Proprietor, Sushil Agrawal, S/o Late Kishan Agrawal, aged about 37 years; R] o Dani Road, Korba, Distiict— Korba. (C,G.) - Versus- REBPONDENTS \ 1. State of Chhatiisgarh, Tlnvugh the Secretaxy, Panchayat and Rural Development Department, DKS Bhawan, RaipurjC.G.) 2. The Chief Engineer, Pxadhan Mantri Gram Sadak Yojna Development Commissioner omce, Civil Lines, Raipur(C.C§1. 3. The Executive Engineer, Pradhan Mantri Gram Sadak Yojna Raigarh, District-Raigarh (C. G.). 4. Centml Vigilance Commission, Jaisalmer House, Man Singh \ Road, New Delhi- 1 1001 1. 5. Maa Shakmberi Construcu'ons Through its Proprietor, Shri Sampat Sharaf, R/o Dhannupali, Sambalpur, District— Sambalpur (Orissa). \x \ <3 \Q peu'u'on with the averments that the Chief Engineer, Pladhan Mantri Gram Sadak Yojna had floated the. tender for road and cross drainage works for various amas under Pmdhan Mamn' Gram Sadak Yojna including the maintenance of the same for eve years after .the construction. The tender notice was published on 16th April 2003. In response to the said tender notice the petitioner had applied for Group No. 18 i.e. Raigarh CG—13-7. The estimated cost Rs. 513.18 lacs was nxed by the respondent No.2. The petitioner quoted the rate 4.8% below the estimated value whereas the late quoted by the Respondent No.5 was 5% above the estimated cost value. After opening the tender it was found that the rates quoted by the petitioner was lowest therefore in all fairness the tender of the petitioner should have been accepted by the Respondents No. 1 to 3 but to the utter surprise of the petitioner the Respondent No.2 had decided to negotiate with the petitioner and also with the Respondent No.5, both were called by the Respondent No.2 and they were asked to give their rates in sealed envelope under the negotiau'on. After receiving the negotiation o§er the petitioner had submitted his rates under negotiated oEer as 11.7 % helow the estimated cost therefore the Respondents No. 1 to 3 should have awarded the tender to the petitioner but to the utter surprise they have also asked the Respondent No.5 to submit negotiated oifer and according to the coniirmed information of the petitioner the rates quoted by the petitioner in the negotiated tender were disclosed to the Respondent No.5 by the Respondent No.2 and therefore the Respondent No.5 had quoted his rates as 14.7% below the estimated cost. Since the ,J‘ . y y r ncgotiated revised rates of the respondent No.5 am lower than the rates quoted by the petitioner therefore the Respondents No. 1 to 3 have decided to award the work to the Respondent No.5. The petitioner has further submitted in his pet'm'on that the Respondents No} 1 to 3 were not within their right to award the work to the Respondent No.5 on the revised rates given by the Respondent No.5 because the petitioner was the lowest bidder therefore the same should have been accepted as it was. More over, if the negotian'on has to be done this can only be done with the L—1 (Lowest Tenderer) and not with the Respondent No.5. Now it is settled law that how the tender is to be nnah'zed and the manner in which ,the negotiations are to be concluded. Even the Respondent No.4 (Cenual Vigilance Commission) has issued very categorical directions to all the departments of the country saying that “It is only L—1, who can be called for negotian’ons to avoid corruption and to have more transparent and eEective system. These directions were issued on 18. 11. 1998, copy of which is enclosed as Annexure P/7 with the petition. The action of the respondents No. 1 and 2 is prima—facie illegal, arbitrary and against the ]aw. It is expected n‘om the State Government to act fairly and honestly while awarding the tender to anyone. They cannot do any favour to any particular group or person for the best reasons known to them only. It is submitted that them is no rule, which i authorizes the Respondents No. 1 and 2 to call other tenderers for negotiation whose rates have not been found lowest. Ultimately prayed that the Respondents No. 1 to 3 be Vt, ;\_\ directed to produce the entire record of the group No.18 of the tender dated 16.4.2003 and further prayed that they be directed to award the tender to the petitioner on the basis of the Iates quoted by him and not to award any tender in favour of the Reepondent No.5. Return has been med on behalf of the Respondents No. 1 to 3. In reply to the petition they have submitted that the petitioner, Respondent No.5 and Shn' Balaji Engicons Pvt. Ltd. were the tenderers and all the there were called for negotiation as per the provisions contained in Paia 2.086 of the M.P. Works Department Manual. Copy of Chapter-II of the M,P. Works Depaitment Manual regaxding the procedure of tender and contract has been nled. as Annexure R/ 1 along with the return. The relevant clause (a) of para 2.086 of the Manual regarding procedure for negotiation of tender is relevant for the present context which reads as “All the tenderers who had tendered their rates in that paru'cular tender, for which the negotiations are considered suitably should be called for negotiations With a View to Withdraw conditions and reduoe the rates.” It is further submitted that all the three tenderers were called for negotiations and they were asked to reduce their rates and accordingly the petitioner, Respondent No.5 and Shri Balaji Engicons Pvt. Ltd. submitted their revised od‘er rates in sealed envelope. The petitioner has submitted his revised rate 11.7% below the schedule of rates whereas Respondent No.5 submitted his rate 14.70 below the schedule of rate. Similarly Shri Balaji Engicons Pvt. Ltd. submitted its rate 4.8% below the schedule of rate. When the petitioner came to know that his / / w x 41 rates are not the lowest one then he directly rushed to this Hon’ble Court for getting shelter. It is pertinent to mention that the petitioner has participated in the negotiation along with other two tenderers and thereafter he has got no legal right or interest to challenge the action of the answering respondents regarding negotiah'ons. He should have raised objection when oEer of negotiation was made. Later on he is stopped horn challenging the action of the respondents in which he has taken paxt. The answering respondents submitted that the tender has not been iinah'zed and the contract has not been awarded to any of the tenderers as the tender is under the process of scrutiny. The petiiion of the petitioner is that being lowest tenderer only he should have been called for negotiation and no other tenderer. It is submitted that the price cannot be only decisive factor for acceptance of tender and award of contract. The Respondents No.1 to 3 have further submitted in their return that the scope of judicial review in the held of contractual matter is very limited and does not extend beyond the limited scrutiny to see the decision making process and is not to review the merits of the decision in support of which the applicationrfor judicial review is made. The power of judicial review is not an appeal against decision; the Court would not like to substitute its own decision. The Government is a guardian of the nnances of the State and the right to refuse the lowest or any other tenderer is always J) available to the Government. As per the settled law in the imatter of tender a lowest tenderer can not claim an enforceable right to get the tender and a ard of the'contract/x: / y {i \ whethcr it is a private party'or public body or State as it is essentially a commercial transaction, The petition of the petitioner is based on misplaced facts that the action of the answering respondents is illegal and arbitxary. The petiu'oner is not entitled for award of contract only on the ground that he was the lowest bidder. The contents of para 5.7 are denied as false. It is specincally denied that after receiving the negotiated Oder from the petitioner, the respondent No. 1, 2 and 3 should have awarded the tender to the petitioner, but they asked the Respondent No.5 to submit negotiated olfer. It is thither denied that the Respondent No.2 has appraised the Respondent No.5 about the rates quoted in the negotiated tender by the pen'tioner, The petin‘oner’s allegation in this respect is vague so as to get anyhow the contract in his favour. It is denied that the action of the Respondent No. 1 and 2 are prima facie illegal, arbitrary and against the law. It is submitted that the answering respondents have acted in just fair and reasonable manner in the process of awarding contract, which has not yet been nnalized. Ultimately the respondents have prayed that the petition be dismissed With ecst. The Respondent No.5 has also nled almost the similar return and submitted that it is pertinent to mention here that the Divisional Manager has given merit certidcate to the answering respondent for executing the work of construction by maintaining the high standard of { quality and workmanship within stipulated time. Copy of such certificate .is tiled as Annexure R/ 1 along with his return. In View of the abovc-mfcrred circumstances the answexing respondent is one of suitable tenderer and also his rate. was the lowest one. I have heard Shri P.Diwakar, learned counsel for the petih'oner, Shri Sanjay K. Agarwal, Deputy Advocate General for the Respondents No. 1 to 3, and Shri Prafull Bharat, learned counsel for the Respondent No.5. Leamed counsel for the peti1ioner has argued almost what has been mentioned in the petition and submitted that the petitioner being lowest tenderer in the bid he should have been awarded the contract. More over in View of the guide line issued by the Central Vigilance Commission and in order to curb corruption and to have more transparent and eEective system the respondents No. 1 to 3 should have called only to the petitioner for negotiation and by inviting other parties they have acted in an illegal and arbitrary manner. He further submitted that the rates, which were quoted by the petitioner in negotiations in a sealed envelope, were disclosed to the respondent No.5. He further submitted that the’law on the point is that in the matter of contract which is entered by the State Government with the private parties looking to the arbitrary and illegal actions the power of judicial review is always available to the Courts, therefore in the given circumstances the petition of the petitioner deserves to be allowed and the respondents be directed to . award the contract in favour of the petitioner. In support of his submission learned counsel for the petitioner relied upon a decision of the Apex Court reported in (200 1} 2 SCC 451 W.B. State Electricitv Board Vs. Patel Engineering Co. Ltd. and others, and another decision relied upon by learned/ counsel for the pctitioncr is reported in (1999) 6 SCC 667 Common Cause, a Registtred Society V5, Union of India 8a othels. 8. On the other hand learned counsel for the respondents argued that in order to get the best rates and best contracts the respondents are always at library to invite all the tenderers for negotiation in order to get the reduced rates and best contract. He further submitted that in View of Para—2 .086 of the M.P. Works Deparunent Manual the respondents No. 1 to 3 are entitled to invite all L‘ue tenderers for negotiation with a View to Withdraw the conditions and reduce rates and in consonance of this provision the respondents have entered into the negotiations and invited the reduced rates in a sealed envelop on a specinc date, 11'me and place, and the envelopes were opened in the presence of all the parties. Therefore no illegality or arbitrariness has been committed by the respondents and the petition of the petitioner is liable to be dismissed. In support of his argument learned counsel for the respondents relied upon a , decision of Hon’ble Apex Court reported in (1999) 1 SCC 492 Raunaq International Ltd. Vs. I.V.R. Construch'on Ltd. and others, and also relied on a decision reported in AIR 1996 SC 51 Sterling Computers Ltd. Vs. M/s M &. N Publications Ltd. and others. 9. Now coming to the case laws cited by [he learned counsel for the petitioner the Hon’ble Apex Court in the matter of W.B. State Electricitv Board (Supra) has held that Rules and instructions must be complied with scrupulously in order to avoid discriminah'on, arbitrariness and favouritism which are ‘ contrary to rule of law and constitutional values. Relaxation by State or its agencies of a rule or condition in favour of a paxticular bidder, ‘held, not permissible unless expressly provided for in the rules. Adherence to the rules, held, is the best principle to be followed in the public interest. Principle of awarding contract to lowest tenderer, held applies when all things are equal ~ There is no obligation to award contract to lowest bidder - It is open to Government or its agency to negotiate with next lowest bidder and try to mach an economically viable and mutually acceptable price. 10. In the matter of Common Cause (Supra) it has been held by the Hon’ble Apex Court that the Govt.’s decisions regaiding award of contract are always open to the judicial review and if the decision making process is shown to be negotiated by arbitrariness, umeasonableness, illegality and arbitrariness then the Court can strike down the decision making process as also the award of the contract based on the decision. The Court held that this was laid down in ’l‘ata Cellular Vs. Union of India. In the case of W.B. State Elecuicitv Board (Supra) the Hon’ble Apex Court in para— 14 of the judgment observed that the principles governing the exercise of the powers‘by the High Court, a three—Judge Bench of this Court has, after exhaustive consideration of a long line of authorities, succinctly summarized the position and laid down the following principles in Tata Cellular Vs. Union of India:- (i) The modem trend points to judicial restraint in administrative action. N 11. 10 (ii) The court does not sit as a court of appeal but merely reviews the marmcr in which the d€cision was madc. (iii) The com does not have the expertise to comet the administratiw decision. If a mview of the administraiive decision is perfed it will be substituting its own decision, without the necessary expertise which itself may be falh'ble. (iv) The terms f the invitation t tender cnot be open to judicial scrutiny because the invitation to tender is in the rea of conuact, Normally speaking, the decision to accet the tender or award the. contract is rached by process of negotiations through several tiers. More ften than not, such decisions are made qualitatively by experts. (v) he Government must have needom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body ftio in an administrative sphere or quasi—administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle f reasonableness (incuding its other facts pointed out above) ut must be free from arbitrariness not affected by bias or actuated by mala tides. (vi) Quashing decisions may impose heavy administrati burden on the administration and lead to increase an unbudgeted expenditure.” 12. n the‘matter of the Hon’ble Apex I Common Cause (supra) p Iata Court has relied uon the principles laid down in ’‘ ’ case While exercising judicial review of awarding Cellulars contract by the Govt. Whereas the Hon’ble Apex Court in AIR has held that while exercising the judicial review 1996 SC 51 in the matter of the Govt. Contracts the Court cannot act as l 3x an appellate authority or examine the details of terms of the contract. Primary concern of Court is to see whether there is any inhnnity in the decision making process. Similarly in the/ mit o o an im p e o T uncning o l b ve WWW‘w ‘ 11 case mported in (1997! 1 SCC 738 Asia Foundation and Consu'uction Ltd. Vs. Trafggar House Construction (I) Ltd. and others the Hon’ble Apex Court has hem mat the judicial review in the Govt. Coniract, the Courts must keep in mind cost escalan'on of the project as a result of delay that would be caused by its interfemnce. 13. In Raunag International Ltd.(Supra) Hon’ble Apex Court has held that in amiving at a commercial decision, consideran'ons which are of paramount importance are commercial considerations. These would be: (i) The price at which the other side is Willing to do the work; (ii) Whether the goods or services otfered are of the requisite speciiications; (iii) Whether the person tendering has the ability to deliver the goods or services as per speciiications. When large works contracts involving engagement of substantial manpower or requiring specinc skills are to be odered, the hnancial ability of the tenderer to fulfill the requirements of the job is also important; (iv) The ability of the tenderer to deliver goods or services or’to do the work of the requisite standani and quality; (v) Past experience of the tenderer and whether he has successfully completed similar work earlier; (Vi) Time which will be taken to deliver the goods or services; and often (vii) The ability of the tenderer to take follow-up action, rectiiy defects or to give post-contract services. 14. In view of the above law laid down by the Hon’ble Apex Court gm there is no doubt that the judicial review in the matter of Govt. contracts is permissible, but the Hon’ble Apex Court has laid down the criteria in which the judicial review is/V / 12 permissible i.c. the Court cannot substituts its own decision and cannot Work as an appellats Court. In the mattbr of the Govt. Contract it is not always necessary tn award contract to the lowest tenderer and the scope of the judicial review the Apex Court has held that is very limited. Where the Court hnds that the relevant procedure, rules and regulations are not adhered to and any other unjust and unfair procedure has been adopted by the authorities in the matter of awarding the contract, the Court does not sit as a Court of appellate but merely review the manner in which the decision was taken. The Court does not have expertise to review the administrative decision. If a review of the administrative decision is permitted, it would be substituting its own decision, without the necessary expertise which itself may be fallible. The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts. The Govt. must have freedom of contract. In other words a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere administrative sphere. In view of the above law laid down by the Hon’ble Apex Court l shall now proceed to examine the factual matrix of this case and to ascertain as to Whether any principle laid down by the Apex Court in the matter of awarding the Govt. Contracts has been violated by the Respondents No. 1 to 3 so'as to enable / / or quas1— 15. : / / this Court to 6xemise the power of judicial review of the decision arrived at by the Respondents. 16. As far as the question raised by the learned counsel for the petitioner that the respondents’ decision for inviting all the tenderers for negotiau'on is illegal and contrary to the circular issued by the Central Vigilance Commission is concerned; the relevant circular is annexed with the petition as Annexure P/7. The first paragraph of this circular mentions that “exercise supen'ntendence over the vigilance administration of the various Ministries of the Central Govemment or corporations established by or under any Central Act, Government companies, societies and local authorities owned or controlled by that Government.” First of all it may be pointed out that this circular was issued to the Central Govt. omces as the jurisdiction of the Central Vigilance Commission extends over the Central Govt. omces and these guidelines were issued by the Central Vigilance Commission in order to curb the corruption Whereas in the present matter the Govt. Madhya Pradesh Department of Works has prepared the manual and the same has statutory force therefore these guidelines issued by the Central Vigilance Commission cannot override the Manual prepared by the State Govt. in the matter of awarding contract. The provision contained in para 2.086 of Chapter-II of the Manual provides for negotiation under the head “Procedure for Negotiations of Tenderers". Clause (a) of para 2.086 provides that “all the r tenderers who had tendered their rates in that particular tender for which the negotiations arc considered suitably should be called for negotiations with a view to withdraw 14 conditions and reduce the rates. Clause (b) of paxa 2.086 provides that “wherever necessary common conditions should be prepared in consultation with the tenderers and fresh sealed oEers should be obtained &om them. While drawing common conditions it should be mentioned that only downward revision of rates would be permissible”. Therefore, in View of the above I am of the considered opinion that the respondents No. l to 3 were well w1tmn their rights to invite the negotiated rates in a sealed envelope in order to get the better reduced rates, therefore, no illegality or arbitran'ness has been committed in inviting the negotiated rates in sealed envelope. More over on this point the petition of the petitioner is misconceived. Not only the petitioner and Respondent No.5 but all the tenderer i.e, Shn' Balaji Engicons Pvt. Ltd. had sent their revised rates in the sealed envelope and a fixed date, time and place for receipt and opening of the negotiated tenders was also given. It is not the allegau'on of the petitioner in the petition that at the time of opening of the envelope he was not invited. Therefore the allegation of the (a; petitioner in para 5.7 of the petition is baseless, without foundation and without any basis. I may mention that while alleging such bald allegah'ons against the Govt. oEcials the petitioner must be specihc, cogent,