IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.3411 of 2008 Nagarjuna Construction Company Ltd., a company registered under the Companaies Act having its registered office at 9th Floor, J.M.D. Regent Square, D.L.F. Qutub Enclave Phase-II, Maharauli, Gurgaon Road, Gurgaon-122002 Through A.V.L. Narsimham Son of A.V.S. Sanyasi Roa, Senior General Manager, Business Development, resident of D.L.F. Qutub Enclave Phase-II, Mahrauli, Gurgaon Road, Gurgaon, Harayana. …… Petitioner. VERSUS 1. The State of Bihar through the Chief Secretary, Government of Bihar, Patna. 2. The Development Commissioner, Government of Bihar, Patna. 3. Principal Secretary, Water Resources Department, Government of Bihar, Patna. 4. The Chairman, Tender Committee/Evaluation Committee, Sichai Bhawan, Jawahar lal Nehru Road, Patna. 5. The Engineer-in-Chief (North), Water Resources Department, Government of Bihar, Patna. 6. The Chief Engineer, Water Resources Department, Valmiki Nagar, West Champaran. 7. The Joint Secretary, Budget, Water Resources Department, Government of Bihar, Patna. 8. The Superintending Engineer, Flood Control, Planning and Maintenance Circle, Water Resources Department, Sichai Bhawan, Patna. 9. The Chairman, Bihar State Construction Corporation Limited, Khawaja Imali, Anishabad, Patna-2. 10. The Managing Director, Bihar State Construction Corporation Limited, Khawaja Imali, Anishabad, Patna-2. ……. Respondents. ---------- Advocates for the Petitioner : Mr. Y.V. Giri, Sr. Adv. Mr. Mrigank Mauli. Mr. Vinay Mistry. Mr. P.C. Agrawal. Advocates for the State : Mr. P.K. Shahi, Advocate General. Mr. J.P. Karn, AAG-IX. Mr. Ashok Kumar Dubey, J.C. to AAG IX. -------------- 13 13.04.2009 The petitioner is aggrieved by the communication dated 02.01.2008 issued under the signature of Engineer-in-Chief (North) Gandak Rehabilitation and Restoration Cell, Department of Water Resources, Government of Bihar, by which the petitioner was informed that the tender invited for the restoration of Eastern Gandak Canal System being Tender No. 2GC/2006-07 has been cancelled by the - 2 - Departmental Tender Committee in its meeting dated 01.01.2008 (Annexure-16). No reasons are disclosed. But, later on, in the counter affidavit, as contained in Annexure-G, the proceedings of the said tender committee dated 01.01.2008 has been annexed, which gives the reason in support of the cancellation, the validity of which is in question in the present writ application. As counter affidavit and rejoinder have been filed with consent of parties the writ application is being disposed of at this stage itself. Petitioner is a public limited company incorporated under the provisions of the Companies Act and undertakes civil construction and other works as contractors. It appears that on 28.03.2007 the State Government in the Department of Water Resources issued a notice inviting tender for restoration of Eastern Gandak Canal system including Barrage and its appurtenants (adjoinings). The bids were to be filed in two separate sets. First technical bid which, inter alia, provided for various technical qualifications to mark the eligibility and the second the financial bid. The bids were to be filed by 04.05.2007 and to be opened on 08.05.2007. It appears only two entities filed their bids, the petitioner and the respondent-Bihar State Construction Corporation Limited. Technical bids being opened, comparative report of the two technical bids, one by the petitioner and other by the Corporation aforesaid were prepared, which is to be found in Annexure- 2, to the writ application. Suffice to say that even though this was the fourth time tenders were invited, earlier three could not be finalized and - 3 - changes were made in the tender each time. The comparative bid clearly shows that the Corporation had failed on many fronts to prove and establish its eligibility. It lacked the necessary experience and eligibility, yet, even though, this was specifically noticed, the tender committee by its decision dated 01.06.2007 held that the Corporation qualified to be considered for its financial bid. It may also be noticed here that the tender committee was fully aware of the disqualification of the Corporation, as it had made a lot of query from the Corporation, asking the Corporation to furnish various documents, certificates and information, which it had not furnished. But, notwithstanding, those queries not being complied with its financial bid was opened. Again, when the financial bids were opened even though it was known to all that the Corporation lacked the wherewithal to execute such a large work, still, it was held to be the lowest bidder and its financial bid was accepted ignoring the claim of petitioner. The fact that the Corporation was not capable of executing the work stands virtually admitted from the fact that Corporation immediately issued tenders for execution of the work, in question, in 14 packages thereby virtually establishing that the work would have to be done by sub- contractors and not the Corporation. In view of these arbitrary decisions of the tender committee, first in allowing a totally ineligible tenderer, the Corporation, to participate in financial bid and then awarding the contract to the Corporation, the petitioner filed CWJC No. 12188 of 2007 challenging this decision of the said tender committee, which was dismissed on - 4 - 28.09.2007 by a Hon’ble Single Judge of this Court. Petitioner preferred Letters Patent Appeal being LPA No. 820 of 2007. The Division Bench allowed the appeal of the petitioner by judgment and order dated 14.12.2007 (Annexure-13 to the writ application). Before the Letters Patent Bench, the learned Advocate General, who has now also appeared for the State contended that it was open to the State to accept or reject any bid prior to the contract at any time and as such it could accept any tender. This contention had found favour before Hon’ble Single Judge, but was not accepted by the Division Bench. The Division Bench clearly held that the petitioner had qualified, whereas the Corporation was not even eligible. It further held that the viability of the Corporation to execute such a contract was itself debatable, as it had not intended to execute such a contract itself but was outsourcing the work to many contractors (sub-contractors). The Corporation was facing winding up proceedings. It was of the view that in matters where importance had to be given to quality work the larger public interest could not be sacrificed, merely, because, the Corporation was a government undertaking and with the sole purpose of making the Corporation viable or to save it from liquidation proceedings. Thus, the Division Bench found arbitrariness and discrimination writ large on the decision of the authority. It also found that the Secretary-cum- Commissioner of the Water Resources Department was himself the Chairman of the Corporation and allegation of bias could not be ruled out. The Division Bench also noticed that the Hon’ble Single Judge did not take into consideration these aspects and dismiss the writ - 5 - application, merely, on the findings that the rate as quoted by the writ petitioner was higher by about Rs. 82 crores. The Division Bench, thus, set aside the order of the Hon’ble Single Judge and directed the authorities to reconsider the case of the appellant and the Corporation afresh after affording them sufficient opportunity in accordance with law. Purporting to act in pursuant to the directions of this Court as given in the Letters Patent Appeal, curiously a show cause was issued to the petitioner-Company alone pursuant to the meeting of the tender committee dated 27.12.2007. The petitioner-Company was directed to submit its written submission to the tender committee, putting its point of view and claim in the matter. Undisputedly, this was not what the LPA Bench had directed. Petitioner was not to be put to trial. However, petitioner responded and enquired as to what clarification or additional information was required. Petitioner was then informed about the impugned decision of the tender committee to cancel the tender itself, without considering the whole matter afresh. As stated above, the reasons in support of the cancellation have been given in Annexure-G, to the counter affidavit. The impugned decision dated 01.01.2008, as contained in Annexure-G, to the counter affidavit gives three reasons. It curiously states that both parties were required to give their written submissions and granted opportunity. On perusal of papers filed, the committee deliberated and took the decision to cancel the tender. The three reasons are as under:- - 6 - (i) The validity period of the tender had expired. (ii) The rates for work to be done had now been revised by the State Government, whereas, the previous tenders were notified at old rates and giving the tender at old rate would affect the quality of work. (iii) That the opinion of the learned Advocate General had been taken, in which, he had opined that it was opened to the authorities to consider public interest for good and valid reason, to cancel the entire tender process and go in for a fresh tender. Petitioner has filed a rejoinder and brought in on record the rates as quoted by them. They have also brought on record the opinion of the learned Advocate General to show that the opinion has been misconstrued. They have brought on record the proceedings and recommendations in relation to the tender, in question, which they obtained under Right to Information Act. They have also brought on record petitioner’s letter showing their willingness to do the work at the rates quoted by them, which admittedly were much higher than the old rates, as fixed by the State Government and was much closer to the new rates, as fixed by the State Government. Mr. Y.V. Giri, learned Senior Counsel appearing in support of the writ petition submitted that so far as the first ground is concerned, that was no ground at all for cancellation. Petitioner had already - 7 - expressed his willingness to be bound by the tender submitted by it and had agreed to renew the various guarantees and sureties for extended period. That was not to prejudice to the State. With regard to the second reason of the rate revision, he clearly stated that the rates quoted by it would continue to bind the petitioner. The rates were more realistic and in consonance with the revised rates and that could not affect the work in any manner. It was also pointed out that originally the rate quoted by the petitioner was termed as much higher than the government rates, but, now, it was comparable with the new rates. Lastly, with reference to the opinion of the learned Advocate General, it was pointed out that in fact the Advocate General clearly opined that in view of the Division Bench judgment in L.P.A., inter party, the eligibility question of the Corporation had to be gone into and as the Corporation was ineligible, then, in view of the judgment of the Division Bench authorities were obliged to negotiate with the petitioner. While, concluding his opinion, the Advocate General then pointed out that in view of changed situation and subsequent events the authorities could consider the matter in public interest for good and valid reason cancelling the entire tender and go for fresh tender. The authorities, it is submitted ignored the substantive advice and picked up last part only and cancelled the tender. This, it is submitted, was clearly against the letter and spirit of the Division Bench judgment. Having considered the matter, I must in fairness to the learned Advocate General, who appeared for the State note that had the authorities taken a decision to revise the terms of tender and merely on - 8 - that ground decided to reissue the tender then this Court would not have interfered in the matter. But, the authorities have chosen to give reasons and this Court finds that once reasons are ascribed for their action then validity of those reasons can be questioned. Here, in the present case, the arguments that were advanced on behalf of the State before the Hon’ble Single Judge at the first instance with regard to higher price, right of State to cancel tender, right of State to choose the tender were all rejected. The Division Bench of this Court overruling the Hon’ble Single Judge directed the State to consider afresh the tender of the petitioner and the eligibility of the respondent-Corporation. This, in my view, did not give scope to the State to cancel the tender itself and that too on the grounds as disclosed. Had they decided to cancel the tender in bona fide then they should have taken leave from the Division Bench or appealed against the said judgment. They did nothing and accepted the judgment, virtually defied it in its implementation. That is not accepted of the State, which is as much bound by principle enshrined in Article-14 of the Constitution, notwithstanding, it being a contractual matter, they are precluded from acting arbitrarily even in contractual matters. The petitioner is right in contending that the validity of the tender expired, not because of anything done by the tenderers but because of the arbitrary action on part of the government itself. It is well established that no one can take advantage of its own default and as such the State Government cannot exempt itself from this principle and escape from the tender. They had to give a chance to the petitioner, to say - 9 - whether they would be bound by their tender even after its validity expired. As noted above, on coming to know this reason, petitioner immediately informed the State that it was ready to keep its offer open, renew the bank guarantees, but State apparently had other things in mind and made its own default as an excuse to get out of the tender, which is not permissible. Then, we come to the second ground of price revision. Though, this Court cannot sit in appeal over the decisions made by the tender committee, but, when reasons are clearly disclosed the correctness thereof can be judged. In the present case, it is not in dispute that when the petitioner first tendered, the rated quoted by him were much above the then government rates. The rate quoted at that time by the Corporation was much below the government rates then prevailing. It was for this reason that there was difference of about 82 crores between the two tenders. Now, after rate revision by the government, the rates as quoted by the petitioner are undisputedly nearer to the revised new rates of the government. Thus, the Court wonders what difference it would have made if the rates as quoted by the petitioner, which became realistic, from being accepted. The petitioner was not revising their original rate, which was realistic, as against the original government rates, which were unrealistic and were too low. By rate revision the government was not to spend any extra money because within the allocation the petitioner was ready to work, then why was this made an excuse to cancel the tender. The reason was supplied by the learned Advocate General in his opinion “subsequent events and changed circumstances”. Howsoever, the - 10 - subsequent events and changed circumstances are relevant only “in public interest for good and valid reason” was not at all considered by the tender committee. This Court, therefore, finds that this was a lame excuse to get out of the tender. It smacks of the arbitrariness in the decision making process. Now, we come to the last ground being the advice of the Advocate General. If one looks to the advice of the Advocate General, as appended, it gives no direction but in terms advices the government, that in view of the Division Bench judgment, inter-party, authorities were bound to hold respondent-Corporation ineligible and then negotiate with the petitioner. He only pointed out that if the authorities considered it “in public interest for good and valid reason”, they could still cancel the entire tender. The question is, was there any good and valid reason for such an action. As found above, there was none. There were only lame excuses for getting out of tender, which the authorities were bound to consider and, as such, even, going by the opinion of the learned Advocate General there was no valid reason for cancelling the entire tender process. Thus, on the finding of this Court, there being no valid reason for cancelling the tender, the decision making process totally stands vitiated and cannot be sustained. It appears from the totality of the fact that for some reason or the other, State had chosen not to give the contract to the petitioner, especially, when it realized that it could not give the contract to the Corporation, who was thoroughly ineligible for it. In this way, they were virtually preparing for the fifth round of tender for - 11 - the same work, as if waiting for someone to come forward in the matter. This cannot be permitted, especially, in a time bound work, where lot of public finance is involved and public interest as well. Thus, I have no option but to set aside the decision of the tender committee dated 01.01.2008 and the decision to retender the matter for the fifth time. In line with the decision of the Division Bench, I direct the tender committee to reconsider petitioner’s tender and take a decision in accordance with law. When the hearing was concluded, learned Advocate General pointed out in view of the Code of Conduct having been enforced because of the ensuing Parliamentary election there would be impediment on the State in considering the matter and taking a decision. As this Court finds that as this is a time bound work for which State is to receive time bound funds and is of national importance, work finalization of this work cannot wait elections and the State would be at a liberty to finalize the same so that the work may begin and funds do not lapse, I order, accordingly. With the aforesaid observations and directions, the writ application is allowed and the impugned decision dated 01.01.2008 is quashed. Trivedi/AFN (Navaniti Prasad Singh, J.)