IN THE HIGH COURT OF GUJARAT AT AHMEDABAD APPEAL FROM ORDER No 181 of 2004 with CIVIL APPLICATION NO.4535 OF 2004 For Approval and Signature: HON'BLE MR.JUSTICE RAVI R.TRIPATHI ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? 2. To be referred to the Reporter or not? : YES 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals? -------------------------------------------------------------- C M S TRAFFIC SYSTEMS LTD Versus MUNICIPAL CORPORATION FOR THE CITY OF AHMEDABAD -------------------------------------------------------------- Appearance: 1. Appeal from Order No. 181 of 2004 MR MIHIR THAKORE SR.ADVOCATE WITH MR UMESH SHUKLA AND MR KUNJAL D PANDYA, ADVOCATES for Appellant. SUDHIR NANAVATI. SR. ADV. WITH MR.SANJEEV DAVE AND MR. RASESH PARIKH, ADVOCATES for opponent No. 1 MR HARDIK C RAWAL,ADV. for Respondent No. 2 MRS MH RAWAL, ADV. for Respondent No. 2 -------------------------------------------------------------- CORAM : HON'BLE MR.JUSTICE RAVI R.TRIPATHI Date of decision: 22/07/2004 ORAL JUDGEMENT 1. At the joint request and with consent of the learned Advocates, the matter is taken up for final disposal. The matter pertains to challenge to an order passed below Exhs.6- 7 Notice of Motion in Civil Suit no.791/2004 dated 14th May, 2004, whereby the learned Judge is pleased to reject the Notice of Motion Application and vacate the ad interim relief granted on 16th March, 2004 which was extended from time to time. It is stated at the bar that the said ad interim relief was continued so as to enable the plaintiff-appellant herein to approach this Court. It is further stated that the said ad interim relief is in operation till today. The controversy involved in the matter relates to a tender invited by the Ahmedabad Municipal Corporation i.e. defendant no.1 in the suit invited tenders for design, supply, installation and commissioning of traffic signals at Narol-Naroda National Highway with (a) Microprocessor base vehicle actuated system, (b) Microprocessor base fixed time system with maintenance contract for three years. The Corporation laid down necessary eligibility criteria in Clause A.5.1 containing as many as six subclauses which reads as under: "The bidder should be manufacturer of Traffic Signal Controller, Detector Cards, LED retrofit etc. The bidder should have experience of not less than three years for fixed time traffic signals and two years for vehicle actuated traffic signal. Bidder should submit Respective performance certificates of vehicle actuated/Fixed time traffic signal system installed and supplied by them. The bidder must possess proven track record of manufacturing and installing vehicle actuated/Fixed time signal system. The bidders must have financial capability and having a 50 Lacs (Fifty Lacs) average annual turn over in each year for last three years (Pertaining to traffic signaling system only & bidder has to submit order copies. The bidder should have experience of supply installation testing & commissioning of minimum 100 fixed time traffic junctions in each year (i.e. minimum 30 nos. of traffic junctions in last three years) for fixed time traffic signals. Vehicle actuated traffic signal bidder should have experience of Design, Supply, Installation, Testing & Commissioning of minimum five traffic junctions in each year (i.e. so minimum 10 nos of Traffic junctions in last two years." Clause A.5.1.2 provided for` Marking Systems for Eligibility Criteria ' for Vehicle Actuated Traffic Signal/Fixed Time, whereby the necessary marks were to be allotted to the bidders. It was provided that, ` Those who obtain minimum 25 marks will be qualified for this tender.' Clause A.5.2 provided for ` general experience ' in which subclause A.5.2.1 titled as the "The bidder shall meet following minimum criteria". It had as many as ten items which are reproduced for ready reference: "(1) The bidder shall have financial capability and having annual average turn over minimum of Rs.50 Lacs (Fifty Lacs) in each year for last three years. (2) Execution of minimum 5 Vehicle actuated/minimum 10 Fixed time signal systems in each year satisfactorily and Maintenance of the same during last three years. (3) Vehicle actuated/Fixed time Controller and LED Retrofits should be manufactured and tested in ISO approved facility. (4) Tenderer shall have qualified traffic Engineers with them. Details of traffic Engineers with there (their)qualification, Experience shall be enclosed. (5) Tenderer should have the signal maintenance experience of Three years in minimum three major cities of India. For fixed time signals. One years for vehicle actuated traffic signals Proof of the same shall be enclosed. (6) Tenderers should have experience of supply and installation of minimum 500 nos. LED aspects or LED retrofits. Proof and performance certificate for the same should be enclosed in tender. (7) Tender should submit the sample of LED retrofit of all colors and when asked to do so. (8) Tender shall invariably enclose in tender the test report of recognized laboratory clearly indicating wattage and light output/brightness of LED samples. (9) Tenders shall invariably submit the design & drawing of all junctions for signal design as per the quantities quoted. (10) List of Major orders with performance certificates executed with reputed customers, Govt. & Semi Govt. bodies should be enclosed for ready reference." Besides, the folowing facts, are not in dispute; that the plaintiff as well as defendant no.2 are the bidders in response to the aforesaid invitation to tender; that technical bid was opened on 18th November, 2003, that the commercial bid was opened on 23rd December, 2003; that the plaintiff had given notice dated 24th February, 2004, followed by statutory notice dated 28th February, 2004; that suit is filed on 16th March, 2004; that defendant no.1- AMC evaluated the tender as provided in Clause A.5 for, ` fixed time traffic signal' wherein the plaintiff (CMS) and the defendant no.2.(Nucleonics) had obtained 47 and 45 marks respectively. On the basis of the marks obtained, both were eligible for tender. The tender price which is recorded is also is not in dispute. CMS had quoted Rs.49,25,916/- while defendant no.2 had quoted 41,07,500/-. It is also on record that the Roads and Building Committee of AMC had passed Resolution no.1445 on 16th February, 2004 and Standing Committee passed Resolution no.1445 on 27th November, 2004 resolving that recommendation vide Resolution no.145 of the Roads and Building Committee dated 16th February, 2004, is granted approval. 2. The plaintiff approached the Court by filing the suit, praying that, " the Hon'ble Court be pleased to declare that the decision of defendant no.1 to qualify defendant no.2 in respect of second alternative of microprocessor base fixed time system with maintenance contract for three years and to award such contract to defendant no.2 and not to award such contract to the plaintiff is illegal, arbitrary, ultra vires, unfair, null and void and unenforceable. (emphasis supplied). The plaintiff has also prayed for grant of permanent injunction restraining the defendant no.1 from issuing the final work order and awarding the contract for design, supply, installation and commissioning of traffic signals at Narol-Naroda National Highway No.8 in favour of defendant no.2 or any other tenderers. (emphasis supplied). The plaintiff had also prayed for grant of a mandatory order to the effect that " defendant no.1 do award the contract for design, supply, installation and commissioning of traffic signals at Narol-Naroda National Highway No.8 in respect of either the first or the second alternative to the plaintiff." Along with the suit Exhs.6 and 7 were filed being Notice of Motion, wherein the Court granted injunction on the day of filing of the suit i.e. 16th March, 2004 which continued not only till the Notice of Motion was finally heard and decided, but has remained operative till today. 3. Mr. Thakore, learned Sr. Counsel appearing for the appellant vehemently submitted that requirements contained in Clause A.5.2 are mandatory in nature and in view of the fact that defendant no.2 did not comply with some of the requirements provided therein, it was not open for defendant no.1-AMC to hold defendant no.2 as qualified bidder, to accept the bid and to award the contract in its favour. He submitted that awarding of the contract is not concluded so far. He submitted that condition no.3, 4 and 5 are not satisfied by defendant no.2, and therefore, he could not have awarded the contract. He submitted that the tender document is to be read as a whole and cannot be read in piecemeal so as to come to the conclusion that some of the terms are not mandatory but are directory in nature. He submitted that the opening part of Clause A.5.1.1 says that, " The bidder should be a manufacturer of Traffic Signal Controller, Detector Cards, LED retrofit etc.". This was to be read along with Clause (3) of A.5.2 which says that, " Vehicle actuated/ Fixed time Controller and LED Retrofits should be manufactured and tested in ISO approved facility." He submitted that this should be construed to mean that the manufacturer should have the facility of ISO and only then he will qualify himself for bidding in this tender. He further submitted that in Clause (4) it is provided that, " Tenderer shall have qualified traffic Engineers with them. Details of traffic Engineers with there (sick) their, experience shall be enclosed." should be construed to mean that the tenderer should have a traffic engineer with him before he submits his bid then only he will qualify himself for bidding the tender. In this regard, he invited the attention of the Court to the written statement filed by defendant no.2 wherein it is stated in paragraph 10 that ........." It is also denied that the defendant no.2 has no qualified traffic engineer. In fact, the defendant no.2 has already appointed one Mr. Kamlakar Bhikhaji Karnik as Traffic Engineering Consultant on 20-12-2003 and Mr. Karnik has already accepted the appointment vide his endorsement dated 23-12-2003....................." The learned counsel submitted that from this it is clear that defendant no.2 did not have a Traffic Engineer with him on the date of submitting the tender. He also submitted that requirement under Clause (5) of experience of three years in minimum three major cities of India', for fixed time signals, one year for vehicle actuated traffic signals for which proof was to be enclosed was also not fulfilled. 4. Learned Counsel submitted that according to him the conditions prescribed in Clause A.5.2 are mandatory in character, were required to be observed by defendant no.1-AMC in strict sense. That AMC could not have relaxed or waived in favour of defendant no.2 as it did not have power to do so as in the whole of the tender document. To substantiate his submission that the terms of Clause A.5.2 were mandatory in character, he invited the attention of the Cour to Clause A.5.9.1 which pertained to `joint ventures'. Clause a) i. has provided that, "That lead partner shall necessarily have experience in the supply, erection and commissioning of mechanical & electrical work (Refer para A.5.2) and shall meet not less than 60 per cent of all the qualifying criteria given in para A.5.2 and A.5.3 above". Clause a) ii has provided that, " The other partners shall meet not less than 40 per cent of all the qualifying criteria given in para A.5.2 and A.5.3.1 above." He submitted that the fact that 60% of the qualifying criteria are to be fulfilled by the lead partner and 40% of the qualifying criteria are to be fulfilled by the other partners, should be taken to mean that total 100% qualifying criterias are required to be fulfilled by a joint venture. He submitted that this also finds support from the contents of Clause A.5.9.2 which reads, " The post eligibility of a joint venture does not necessarily qualify any of its partners, individually, or as a partner in any other joint venture or association. In case of dissolution of a joint venture, each one of the constituent firms may qualify if they meet all the qualification requirements, subject to the written approval of the employer." He submitted that from the aforesaid clause, it is clear that the requirements provided in Clause A.5.2 were mandatory in nature and it was not open for AMC to either relax or waive any of the requirements provided therein. He submitted that it is a well settled position of law that waiver in such matter could be only when there is a specific provision for the same and not otherwise. In this regard, he relied upon a decision of the Hon'ble the Apex Court in the matter of W.B. STATE ELECTRICITY BOARD V. PATEL ENGINEERING COLTD. AND OTHERS ( (2002) 2 SCC 451). He invited the attention of the Court to the observations made by the Hon'ble the Apex Court in paragraph 24 which reads as under: "The controversy in this case has arisen at the threshold. It cannot be disputed that this is an international competitive bidding which postulates keen competition and high efficiency. The bidders have or should have assistance of technical experts. The degree of care required in such a bidding is greater than in ordinary local bids for small works. 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 prequalification 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 concluding that adherence to the ITB or rules is the best principle to be followed, which is also in the best public interest." 5. Mr. Thakore, learned Sr. Counsel also relied on a decision of the Hon'ble the Apex Court in the matter of RAUNAQ INTERNATIONAL LTD v. I.V.R. CONSTRUCTION LTD. AND OTHERS reported in (1999) 1 S.C.C. 492 to substantiate his submission that, `relaxation can be made only if it is permissible under the terms of the tender.' In this regard, he invited the attention of the Court to paragraph 26 and 27. He submitted that in the case before the the Honourable the Apex Court, the relaxation was permissible under the terms of the tender, but then in the case on hand there is no such provision for relaxing or waiving any of the terms of the tender. The learned Counsel submitted that in that view of the matter, there being a prima facie case in favour of the plaintiff, the learned Judge has committed an error in not allowing the Notice of Motion and vacating the injunction granted on 16th March, 2004. He submitted that, therefore, this Appeal From Order be allowed and injunction which is operative till today be ordered to continue till final disposal of the suit. The order passed below Notice of Motion be quashed and set aside. 6. Mr. S.I. Nanavati, learned Sr. Counsel appearing for defendant no.1-AMC submitted that in the legal battle between the plaintiff and defendant no.2 the ultimate sufferer is the public at large which is not represented before the Court by any prominent Counsel like Mr.Thakore. He submitted that the members of the public are the real sufferers as they have to go on without traffic signals. He submitted that the commercial bid was opened on 23rd September, 2003 and work order was issued on 27th February, 2004 only on account of an injunction order which is operative since 16th March, 2004, work could not be proceeded with though defendant no.2 has paid the deposit as asked for by letter dated 27th february, 2004 on 28th February, 2004, and has also forwarded the contract papers which are not signed leaving the contract to be finally executed. The learned Counsel submitted that besides there being no case on merits, the present Appeal From Order deserves to be dismissed on the ground of suggestio falsi and suppressio veri as the plaintiff has not approached the Court with clean hands having suppressed the material fact. The plaintiff having acquiesced in the matter by participating in the technical bid which was opened on 18th November, 2003. The plaintiff did not raise any objection at the relevant time which is raised in the suit. He submitted that thereafter the plaintiff participated in the `price bid' also which was opened on 23rd December, 2003. This shows the conduct of the plaintiff and on that ground alone the Appeal From Order be dismissed upholding the order passed in the Notice of Motion. He submitted that the contention that defendant no.2 is though not qualified is considered by defendant no.1-AMC by giving certain relaxations by waiving some of the terms contained in Clause A.5.2 is raised very late. The plaintiff had the knowledge of all this right on 18-11-2003 and it was further clear to him on 23rd December, 2003 still it is only after having known that defendant no.2 is the lowest, as an afterthought the suit is filed. After filing the suit injunction is obtained suppressing material fact which if disclosed to the learned Judge would have weighed with the Court and might not have granted the interim injunction. He submitted that this aspect is very succintly dealt with by the learned Judge in paragraph 14 of its judgment as under: "..........From reading of para 6 of N.M. application, it is evident that plaintiff was well within the knowledge of issuance of work order. But, for the reasons best known to the plaintiff, it used the words Provisional work order. This Court has never come across word like provisional work order in a contractual matter. Further, from the said paragraph, it could be inferred that plaintiff was well within knowledge that the work order in question has been issued much prior to filing of the suit. Still, however, it seeks relief of temporary injunction restraining defendant no.1 from issuing final work order and awarding contract in question in favour of defendant no.2 or any other tenderers. In other words, the plaintiff uses the words like "provisional" and " final work" order so as to create impression as if, there is a chronological stage like provisional work order and final work order in a contractual matter. Therefore in court's considered opinion, this is nothing but jugglery of the language employed with a sole view to suppress material facts while seeking equitable relief from the court.............." 6. Mr. Nanavati, the learned Sr.Counsel next submitted that so far as the contents of Clause A 5.2 are concerned, the same cannot be said to be mandatory because they provide for additional qualities of the bidder, so as to see that if a contract is awarded to a qualified tenderer, its performance is smoothened. He submitted that Clause A.5 of the tender document pertains to the qualification criteria for tenderers. It is divided into various sub-clauses like A.5.1,, A.5.1.2, A.5.2. What is provided in Clause A.5.1 and A.5.1.2 is conclusive. In a tabular form assessment of the eligibility of the bidders is to be made. There it is provided in specific terms that, " Those who obtain minimum 25 marks will be qualified for this tender." He submitted that thus it was on the basis of the marks obtained by individual bidder, it was to be decided as to whether one is qualified or not. He submitted that it was not in dispute that, both, the plaintiff and the defendant no.2 are qualified vide the said marking system. As according to the AMC what is provided in Clause A.5.2 is only additional to the main requirement for eligibility, with a view to see that the performing of the contract is smooth enough. 7. In the alternative, learned Sr. Counsel submitted that assuming for the sake of argument that what was provided for in A.5.2 was to be fulfilled by a bidder to be qualified, then also, it was well within the power of defendant no.1-AMC to relax or waive one or more of the requirements provided therein not amounting to " major modification ". 8. The learned Sr. Counsel submitted that the appellant original plaintiff is not entitled to any relief on more than one grounds mentioned hereinabove. He submitted that to reiterate, on the ground of delay and acquiescene itself the appellant is liable to loose. He relied upon a decision of the Hon'ble the Apex Court in the matter of RAMANA DAYARAM SHETTY V. INTERNATIONAL AIRPORT AUTHORITY OF INDIA AND OTHERS reported in AIR 1979 SC 1628 to support his contention that,` when a party delays approaching the Court it loses its right to get equitable relief.' He relied upon the following observations: "Moreover, the writ petition was filed by the appellant more than five months after the acceptance of the tender of the 4th respondents and during this period, the 4th respondents incurred considerable expenditure aggregating to about Rs.1,25,000/- in making arrangements for putting up the restaurant and the snack bars and in fact set up the snack bars and started running the same. It would now be most inequitous to set aside the contract of the 4th respondents at the instance of the appellant. The position would have been different if the appellant had filed the writ petition immediately after the acceptance of the tender of the 4th respondents but the appellant allowed a period of over five months to elapse during which the 4th respondents altered their position. We, are, therefore of the view that this is not a fit case in which we should interfere and grant relief to the appellant in exercise of our discretion under Article 226 of the Constitution." The learned Sr. Counsel submitted that in the present case also, the contentions which are raised by the plaintiff by filing a suit in the month of March, 2004 could have been raised soon on opening of the technical bid on 18-11-2003. The plaintiff neither raised any objection before defendant no.1-AMC nor chose to approach the Court of law. Thereafter, again on 23rd December, 2003, there was an opportunity for the plaintiff to raise objection and/or to approach the Court of law but then the plaintiff did not do so. He submitted that the plaintiff served the AMC with a notice on 24th February, 2004, and thereafter, a statutory notice on 28th February, 2004 but then filed the suit only on 16th March, 2004. He submitted that, in that view of the matter, on this ground alone, no equitable relief is warranted, and the learned Judge has rightly rejected the Notice of Motion. 9. The learned Sr. Counsel submitted that in the matters of tender, the Court must keep in mind the `public interest' in forefront, more so, while exercising a discretionary power vested in it. He submitted that in the present case, if the injunction was not granted on 16th March, 2004, the