V.GOPALA GOWDA, CJ & B.N.MAHAPATRA, J. W.P.(C) NO.20623 OF 2011 (Decided on 04.11.2011) RAJESWAR THAKUR ……….Petitioner. .Vrs. STATE OF ORISSA & ORS. ………Opp.Parties. For Petitioner - Mr. S.K.Padhi, Sr.Advocate Mr. Sibananda Mohanty. For Opp.Parties - Mr. R.K.Mohapatra, Govt. Advocate. V.GOPALA GOWDA, C.J. This writ petition is filed by the petitioner-contractor seeking for issuance of a writ of certiorari to quash the decision of the State Government for proclamation for fresh tender as per Annexures 9 and 10 and to direct the opposite parties to execute the agreement with him to allow him to proceed with the work, urging various facts and legal grounds. 2. The brief facts are stated for the purpose of examining as to whether the petitioner is entitled for the relief as prayed in this petition. The petitioner has submitted his bid pursuant to the tender call notice bearing No. 2 of 2010-11 issued by the Chief Engineer, L.I. & L.S. Project, Khariar (Opposite Party N.2). The said tender call notice had double cover system, i.e., technical and financial bids in respect of eight numbers of works including “Excavation and construction of Diaton Branch Canal from R.D. 0.00 Km. to 6.50 Kms. Including all structures off taking at RD 49.38 Km. of LMC (Left Main Canal) of LIIP (Lower Indra Irrigation Project)” at sl.no.4 of the said tender call notice. The cost of the work for which tender was called for, was fixed at ` 1302.99 lakhs, the cost of the tender paper was fixed at ` 10,400/- and the Earnest Money Deposit @ 1% of the tender value, comes to ` 13,03,000/- as published in the daily vernacular “The Samaj” and English newspaper “Times of India” on 30th September, 2010 and through website of the State Government. The last date for submission of the tender was 16th September, 2010 and the date of opening of the technical bid was 21st September, 2010. 3. In respect of the above tender call notice, three contractors including the petitioner submitted their bids “On line” along with required documents and scanned copy of EMD. The original receipt of EMD and the paper cost were submitted before the last date, i.e., the date of opening of the technical bid 21.10.2010. After opening of the technical bid , i.e., the same was evaluated by the Executive Engineer, Opposite Party No.3 and was placed before the Project Level Tender Committee on 1.2.2011. The said Committee after scrutiny of the documents submitted by all the three participants found all of them eligible to participate in the tender process. Accordingly the Chief Engineer in his letter dated 7.2.2011, submitted the proceedings of the Project Level Tender Committee along with documents to the tender Committee of water Resources Department. 4. The State Level Tender Committee in their meeting held on 4.3.2011 considered the report of the Project Level Tender Committee referred by the Chief Engineer, evaluated the technical bid of all the three participants and found all the participants technically qualified and responsive for opening of their financial bid. While evaluating the technical bid of the tenderers, the Committee of the State Government also considered the check list submitted by the Chief Engineer. On verification of the check list, it was found that administrative approval and technical sanction have been obtained from the Administrative Department i.e. Water Resources Department of the State Government and the Chief Engineer, L.I. and L.S. The Component Design has been completed and the land acquisition proceeding in respect of private land is at the stage of section 6(1) of the Land Acquisition Act, 1894. The estimate has been prepared as per S/R – 2008. The above said aspects had been considered by the Project Level Tender Committee as well as the State Level Tender Committee while evaluating the technical bid of the tenderers and the Committees were unanimously satisfied to proceed further to open the financial bid so that the execution of the work can commence to complete the project by end of March, 2012. The main reason is that the funds have been allotted under AIBP Scheme of the Central Government and if the work will not be completed before the said period, the cost of the project has to be borne by the State Government and the Central Government will not be responsible thereafter as per the MoU signed by the State Government with the Central Government. In the letter dated 7.2.2011 the Chief engineer had observed as hereunder : “This work is a part of the Distribution System and funded by AIBP, Government of India. The Administrative approval for the project has been accorded by DoWR, Orissa, Bhubaneswar vide letter No. 30171 dated 3.12.2010 for ` 1182.23 Cr. There is budget provision of ` 150 Cr. under A.I.B.P. during the Financial Year 2010-11 for Lower Indra Irrigation Project. The work under discussion is chargeable to the budget head Unit-II “C&B”. The budget provision under the head “C&B” is ` 46.01 Cr. for 2010-11. Further the Chief Engineer, L.I. and L.S. Project stated that the Left Main Canal from RD 00 to 49.38 Km (Tail) is under progress through different agencies and 75% work has been completed. This canal directly off-takes from LMC at RD. 49.38 Km. in view of stipulation by DoWR for completion of project by March 2012, the construction of this canal is badly necessary.” 5. Total length of Left Main Canal is about 49.38 Km. and the present construction work is at the tail end of the main canal. Length of branch canal from the left main canal is about 16 Kms. Unless this canal is constructed the entire project will be an unused one and the beneficiaries i.e. the farmers can not get water for their irrigation purpose. Undivided Kalahandi district being a backward district, the project has been taken up by the Central Government as a National importance. Keeping all the facts in view, the State Government in their letter No. 9540 dated 4.4.2011 instructed the Chief Engineer to open the financial bids of the technically qualified bidders and to submit the report along with the financial bid proposal within seven days for approval of the Government. 2 6. On 13.4.2011 the financial bid was opened and the petitioner was found to be the lowest tenderer and his bid amount was ` 12,69,11,228.00 (-2.60% below estimated cost) and the 2nd lowest tenderer was Ratna Infrastructures Projects (P) Ltd. and its bid was ` 12,76,93,022.00 (-2.00% below estimated cost). 7. The financial bid was submitted to the State Government for its approval along with recommendation of the Chief Engineer vide his letter No. 1356 dated 7.5.2011. It was placed before the Tender Committee of the State Government on 27.5.2011 and the Tender Committee considering the report of the Chief Engineer, wanted to know the detail position of the land acquisition proceeding of private lands. In the meeting, the Chief Engineer made a statement that the land acquisition work is at section 4(1) notification stage and the final land acquisition will take more than six to eight months time. The tenders have been invited basing on tentative drawing and designs and lands where available. The Chief Engineer further stated that estimate of the work has been prepared basing on SR 2009 with enhanced labour rate. If the work is retained the estimate cost will remain the same. On consideration of the statement of the Chief Engineer, the Tender Committee of the State Government recommended to cancel the tender and go for fresh tender for the work with the same estimated cost. The relevant portion of the same is extracted below : “Tender Committee examined the financial bid proposal, comparative statement and recommendation of the Chief Engineer. During discussion, the Committee desired to know from the Chief Engineer as regard to the status of the private land acquisition, drawing and designs. The Chief Engineer has stated that the position of the land acquisition proceeding of private land required for the work is under 4(1) notification stage. The final land acquisition will take more than six to eight months. The tenders have been invited basing on tentative drawings and designs and lands where available. For the time being the work will be taken up on the tentative drawings and designs. After received of final designs the scheduled quantities may vary less/excess. Even if the tender is awarded in favour of the lowest bidder, the work will commence only after the month of November of this year. The Chief Engineer further stated that estimate of the work has been prepared basing on SR 2009 with enhanced labour rate. If the work is retained the estimate cost will remain the same.” 8. The decision of the State Level Tender Committee communicated through the F.A.-cum-Addl. Secretary to Government to the Chief Engineer to cancel the tender and to go for fresh tender for the work in the same estimated cost, is arbitrary and unreasonable. The impugned proceedings and the decision of the State Government in cancelling the tender and go for fresh tender when once the technical and financial bids of the tenderers were considered and found that the petitioner offered a lowest bid compared to other two bidders, instead of awarding the contract by executing agreement and issuing work order, on flimsy grounds cancelling the tender call notice and directing the Chief Engineer to go for fresh tender, would affect public interest since the project work was required to be completed by the end of March, 2012 as per the MoU entered into between the State and the Central Governments failing which the State Government has to bear the expenses of the project work. The tender call notice was published quoting the S/R rate estimation cost after taking all relevant aspects into consideration that acquisition proceedings have been started and it is at the stage of 3 4(1) notification and also keeping in view that the present construction of the project work is at the tail end of the Main Canal and the length of Branch Canal from the Left Main Canal is about 16 Kms. Unless the said Canal is constructed, the entire project will be an unutilised one and the beneficiaries i.e. the farmers can not get water for their irrigation purpose. Therefore, the proceedings of the State Level Tender Committee on the basis of the statement of the Chief Engineer on the basis of which the State Government recommend to cancel the tender and go for fresh tender vide letter dated 10.6.2011 (Annexure-10), is arbitrary, unreasonable and colourable exercise of power, on flimsy grounds that acquisition proceedings are not concluded. Those aspect of the matter was taken into consideration at the time of taking a decision by the State Level Tender Committee while publishing the tender notice inviting tenders. Therefore, the impugned cancellation, is colourable exercise of power which is liable to be quashed. 9. The State Government has filed counter-affidavit sworn to by Sri Hrusikesh Padhi, working as Executive Engineer, Lower Indra Canal Division No.II, Bangomunda, district Kalahandi traversing the petition averments. He has sought to justify the proceedings of the Tender Committee and the impugned decision communicated by the F.A.-cum-Addl. Secretary to Government, Finance Department contending that though the petitioner’s tender offer was lowest, the contract cannot be awarded and the agreement cannot be executed in his favour in view of the statement made by the Chief Engineer that the acquisition proceedings of private land are not concluded. The final acquisition of the land will take six to eight months considering the present status such as usual time required for different stages like 6(1) notification, declaration, passing of awards and payment of compensation. The estimate was prepared basing on S/R 2009 with enhanced labour rate and tentative drawing. There is no increase in labour rate and material rate after sanction of estimates for the work. So the Chief Engineer has stated that the estimated cost will remain same if it is re-tendered. Further it is stated that the statement of the Chief Engineer in the State Level Tender Committee proceedings is not at all contrary to the check list submitted by him. There is no increase in labour rate and cost of material rate after technical sanction of estimates for the work. The increase in price index has no relation with the estimate. So the cost of work will not be changed for re-tender. 10. It is contended that the Tender Committee consists of six responsible Members from different Government Departments such as Law, Finance and Water Resources. The Committee has properly scrutinized the L.A. status and the slow progress of land acquisition process due to shortage I n required number of officers/staff in L.A. office. There was not a single piece of land available to start with the work. The award of work without any scope to start has no meaning. On the other hand it may create legal problems like claim for compensation, idle charges of machineries and labour etc. by the executants. In view of the above, the Committee has unanimously recommended to cancel the tender and go for fresh tender. Therefore, the allegations made by the petitioner against the opposite parties are all self-made and unfounded. 11. Further placing reliance upon clause 18 of the Bid Identification No. CELI&LSP 02/10-11 Dated 24.09.2010 the authority reserves the right to reject any or all the tender without assigning any reason thereof. So the Government has cancelled the tender for the interest of State which is justified and is not liable to be quashed. Therefore, Mr. Mohapatra, learned Government Advocate prayed for dismissal of the writ petition. 4 12. With reference to the abovesaid rival legal contentions, following points would arise for consideration : (i) whether the cancellation of the tender notice and not accepting the lowest LI bid offered by the petitioner for the project work in question and not awarding contract by executing the agreement and issuing the work order and ordering for re-tender at the same estimated cost, is legal and valid ? (ii) whether the action of the State Government in canceling the tender and directing to go for fresh tender at the same estimated cost on the basis of the statement of the Chief Engineer that acquisition proceedings in respect of private lands to execute the project work would take six to eight months, is legal and valid ? (iii) what order ? 13. All the points are answered in favour of the petitioner for the following reasons. 14. On the basis of the relevant aspects, viz. the project work is financed by the Central Government according to the MoU entered into between the Central Government and the State Government to execute the project work, the tender call notice was published inviting bids in that respect. This is a time bound project and the same should be completed by the end of March, 2012. Taking this important aspect into consideration the Chief Engineer (O.P. no.2) floated tender notice under double cover system including technical and financial bids in respect of eight numbers of works after fixing the cost of tender and other conditions of the tender. Pursuant to the said tender call notice, three tenderers including the petitioner submitted their bids which were opened and evaluated by the Executive Engineer and was placed before the Project Level Tender Committee. The petitioner and other two tenderers became successful in the technical bid as they submitted all the technical documents and satisfied the conditions stipulated in the tender call notice. Thereafter the Chief Engineer submitted the proceedings of the Project Level Tender Committee before the Tender Committee of the Water Resources Department, wherein it was indicated that “This canal directly off-takes from LMC at RD. 49.38 Km. In view of stipulation by DoWR for completion of project by the end of March, 2012, the construction of this canal is badly necessary.” On 4th March, 2011, the State Level Tender Committee evaluated the technical bid of all the three participants and found all the participants to be technically qualified and responsive for opening of their financial bid. The proceedings further stated that “The component designs for the work were completed. With regard to the acquisition of private land/forest land required for this work, the Chief Engineer has stated that 4(1) notification has been made and L/A cases are with Spl. LAO, LIIP, and under 6(1) stage. The period of completion of the work has been fixed to 15 calendar months.” The Committee of the State while evaluating the tenders has also considered the check list submitted by the Chief Engineer. On 4th April, 2011, the State Government in its letter No. 9540 instructed the Chief Engineer to open the financial bids of all the bidders who were successful in technical bids and to submit the report along with financial bid proposal within seven days for approval of the Government. On 13th April, 2011 the financial bids were opened and petitioner’s bid amount of ` 12,69,11,228 (Rupees twelve crores, sixty nine lakhs, eleven thousand, two hundred 5 and twenty eight) was found to be the lowest followed by the bid of Ratna Infrastructures. On 21st April, 2011 the Executive Engineer in his letter No. 722 requested the petitioner to extend the bid validity period as it will take some time to finalise the financial bid. The petitioner accordingly extended his validity period till 30th June, 2011. On 7th May, 2011, the Chief Engineer submitted the opened financial bid along with his recommendations vide letter No. 1366 to the State Government. The said report was placed before the Tender Committee of the State Government wherein the Chief Engineer recommended to accept the financial bid of the 1st lowest bidder- petitioner amounting to ` 12,69,11,228/- which is 2.60% less than the estimated amount put to tender. On being asked about the private land acquisition, drawing and designs, the Chief Engineer stated that the status of private land acquisition is under 4(1) notification stage and the final land acquisition will take about six to eight months. He further categorically stated that the tender was invited basing upon the tentative drawings and designs and the work will only commence after the month of November. He also stated that the estimate has been prepared basing on S/R-2009 with enhanced labour rate. On the basis of the report of the Chief Engineer, the Committee felt that since the land acquisition has not yet been fully completed and it wlll take further time of about six to eight months, the monsoon is approaching very shortly and the work cannot be commenced during the rainy season, it would not be proper for the State Government to award the work at this stage to the lowest tenderer. The said order of the Government to cancel the tender and to go for fresh tender for the project work with the same estimated cost, was intimated to the Chief Engineer through the F.A.-cum-Addl. Secretary to Government, which is not legal and valid. 15. The State Government after having taken a decision to invite tender keeping in view the fact that the amount was financed by the Central Government for the project which is to be completed by the end of March, 2012 as per the MoU entered into between the Central & the State Governments, otherwise the State Government will have to bear the expenses of the project. Total length of Left Main Canal is about 49.38 Km. and the present construction work is at the tail end of the main canal. Length of branch canal from the left main canal is about 16 Kms and unless this canal is constructed the entire project will be an unused one and the beneficiaries i.e. the farmers can not get water for the purpose of irrigation of their land and that since the undivided Kalahandi district is a backward district, the project has been taken up by the Central Government as a National importance, therefore, the decision of the State Government accepting the report of the State Level Tender Committee as communicated by the F.A.-cum-Addl. Secretary to Government to cancel the tender on the report of the Chief Engineer that the acquisition proceedings will take another six to eight months to complete, is not proper. The reason assigned that acquisition cannot be completed, the petitioner may ask for escalation of the rates for execution of work and enhancement of cost of material rate and labour rate. The award of work without any scope to start has no meaning and it may create legal problem. In this regard the petitioner has filed an additional affidavit on 12.9.2011. Review Petition No. 176 of 2011 arising out of the present writ petition, has also been filed. In paragraph-12 thereof it is stated that the specific assurance that the petitioner is ready and willing to execute the work at the same rate without claiming any escalation for delay in Land acquisition was not considered and no reply was submitted by the State Counsel. 6 16. In view of the abovesaid undertaking, the decision of the State Government for cancellation of the tender and asking for retender at the same rate, is wholly untenable in law. The reason assigned that the acquisition proceedings may take six to eight months, is also not tenable for the reason that the State Government can invoke the power under section 17 of the Land Acquisition Act and acquire the land and take possession under the urgency provision. The work is awarded to the petitioner as he is the lowest tenderer. Therefore, the reason assigned on the basis of the statement that the acquisition proceeding is at section 6(1) stage, cannot be a ground for the State Government for not accepting the lowest bid offered by the petitioner for execution of the work. The State Government can issue section 6 notification, pass award and take possession expeditiously keeping in view the fact that the execution of the project work is a time bound one and the Central Government is financing the project. If the project work is not finished by March, 2012, the Sate Government has to bear the cost of the project in view of the MoU with the Central Government by the State Government. Further the petitioner has categorically stated in the affidavit that he will not claim any extra labour charges or idle charges for the machineries for the delay in Land acquisition; but the Department did not hand over the land for execution of the work. In view of the abovesaid undertaking, the apprehension of the opposite parties is misconceived. Not awarding the contract to lowest bidder to execute the work keeping in view the fact that if the project is not completed by the end of March, 2012, the expenses have to be borne by the State Government, would affect the public interest. That apart, if the project is not started and completed, the beneficiaries i.e. the farmers cannot get water for irrigation of their land and therefore, they will be affected. Hence cancelling the tender and directing the Chief Engineer to retender, will not be in the interest of the either State or the farmers. Therefore, the action of the State Government in canceling the tender on flimsy reason without application of mind and exercise of its power under section 17 of the Land Acquisition Act for the purpose of taking possession of the private land under urgency clause as the same is required for execution of the project work of the Branch Canal to the Main Canal for utilization of the water for irrigation by the farmers of the area in question, after the financial bids were opened and it was noticed that the petitioner’s bid was the lowest, is untenable in law. Apart from that, as could be seen from the additional affidavit filed by the petitioner on 12.9.2011 wherein at paragraph-5 it is indicated that a similar situation, in the Pre-Bid Conference held in the conference Hall of the Chief Engineer, Upper Indravati Irrigation Project at