IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT :- THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE K.M.JOSEPH WEDNESDAY, THE 9TH APRIL 2008 / 20TH CHAITHRA 1930 W.A.No. 713 of 2008 ------------------------------- AGAINST THE JUDGEMENT IN WPC.3665/2008 DATED 19/03/2008 .................... APPELLANT/PETITIONER:- ------------------------------------- V.K. JANARDHANAN NAIR, GOVERNMENT CONTRACTOR, VADAKKEPUTHANPURA HOUSE, VARAPPETTY P.O., KOTHAMANGALAM. BY ADV. SRI.N.NANDAKUMARA MENON (SR.) & SRI.MURALI PURUSHOTHAMAN RESPONDENTS/RESPONDENTS:- ----------------------------------------------- 1. THE CHIEF ENGINEER, PWD (NATIONAL HIGHWAY), THIRUVANANTHAPURAM. 2. THE SUPERINTENDING ENGINEER, NATIONAL HIGHWAY, CENTRAL CIRCLE, VYTTILA-682 019. 3. THE CHIEF ENGINEER'S TENDER COMMITTEE FOR PREQUALIFICATION OF CONTRACTORS, REPRESENTED BY THE CHIEF ENGINEER, PWD, NATIONAL HIGHWAY, THIRUVANANTHAPURAM. 4. STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, PUBLIC WORKS DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM. 5. ABDUL FAIZY, GOVERNMENT CONTRACTOR, TARMAC BUILDERS (INDIA), ROYAL PLAZA, BRIDGE ROAD, ALUVA. R1 TO R4 BY SR.GOVERNMENT PLEADER SMT.K.MEERA R5 BY ADV. SRI.RAJIV A.GEORGE SRI.EAPEN A.GEORGE THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 09/04/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: H.L.DATTU, C.J. & K.M.JOSEPH, J. ------------------------------------------------------ W.A.No.713 of 2008 ------------------------------------------------------- Dated, this the 9th day of April, 2008 JUDGMENT K.M.Joseph, J. The appellant is the writ petitioner. The writ petition was filed challenging Ext.P7 and for a direction to respondents 1 to 3 to pre-qualify the petitioner for the work covered by Ext.P1. The appellant, inter alia, also seeks to quash Ext.P9. Apart from that, the petitioner challenges Clause 4.1.5 of Ext.P2. (2). By Ext.P1, tenders were invited for the work of improvement of riding quality in Km 226/000 to 237/000 of NH-49-Madura- Kochi Road. The appellant was found to be not pre-qualified. The work is contemplated to be done under the double cover system. The double cover system involves submission of technical bid and financial bid separately. To pre-qualify for the award of contract, the tenderer will have to pass muster in the technical bid. Technical bid will be opened first. Financial bids in respect of technically acceptable offers alone will be opened for awarding the work. In the case of the appellant it was found that, the appellant was not pre- qualified. This was for the reason that in terms of Clause 4.1.5 of Ext.P2 the appellant did not have the Bid capacity. It is in such circumstances the appellant has questioned the validity of Clause 4.1.5 of Ext.P2. Clause 4.1.5. of Ext.P2 provides for a formula to determine the Assessed Available Bid Capacity. It reads as follows: W.A.No.713/2008 -2- 4.1.5. Bidders who meet the minimum qualification criteria will be qualified only if their available bid capacity is more than the total bid value. The available bid capacity will be calculated as under: Assessed Available Bid Capacity -- (A x N x 2 -B) Where A= Maximum value of Civil Engineering works executed in any one year during the last five years (updated to the price level of the year indicated in Appendix) taking into account the completed works as well as completed part of works in progress. N= Number of years prescribed for completion of the works for which bids are invited. B= Value (updated to the price level of the year indicated in (Appendix) of existing commitments and on-going works to be completed during the next......years (period of completion of the work for which bids are invited) Note:--The statements showing the value of existing commitments and on-going works as well as the stipulated period of completion remaining for each of the works listed should be countersigned by the Engineer-in-charge, not below the rank of an Executive Engineer or equivalent. (3). According to the appellant, the component 'N' in the formula is capable of being misused and producing arbitrary results as it was done in this case. “N” stands for number of years prescribed for completion of the works for which bids are invited. In this case, it is pointed out that, the period of completion of the work has been fixed as 4 months. It is the case of the appellant that, for similar work, the period of work is fixed at a longer period. He submits that the period of completion is invariably extended. He further submits that fixation of 4 months as the period of work is arbitrary. By rejecting the petitioner's and accepting the party respondent's bid, the State W.A.No.713/2008 -3- stands to lose more than rupees one crore. (4). The learned Single Judge found that there is no merit in the complaint of the appellant. In doing so, the learned Single Judge took note of the fact that, the appellant, in terms of the requirement under Exts.P1 and P2, had given a programme of completion for carrying out the work in which he had calculated the period of completion of work as 4 months. It is after examining the bid in terms of the programme it was found that he was not entitled for pre-qualification in terms of Exts.P1 and P2. Further it was found by the learned Single Judge that even if the period of completion of the contract is taken as 6 months, the appellant would not be pre-qualified. It has been found by the learned Single Judge that the challenge to Clause 4.1.5 is without any basis. It is feeling aggrieved by that finding, the appellant/petitioner has approached this Court. (5). We heard Sri.N.Nandakumara Menon, learned senior counsel for the appellant, Sri.Rajiv Abraham George, learned counsel for the 5th respondent and also the learned Government Pleader. (6). As far as the challenge to clause 4.1.5. of Ext.P2 is concerned, the component 'N' is an integral part of the formula and to contend that clause 4.1.5. is bad for the reason that it provides for fixation of period for completion of the work bringing arbitrary results is untenable. The fixation of period would vary according to the requirements of each work. It may be true that in another work the employer after considering the facts of W.A.No.713/2008 -4- the work has decided to fix a larger period for the completion of such work. But, this court cannot in writ proceedings sit over the validity of the clause. It cannot be overlooked that the appellant himself accepted the clause insofar as he has prepared the programme for the completion of his work as 4 months under Clause 'N'. In short, it is a case where it was after the appellant found due to operation of 'N', he would become disqualified, he has turned around and impugned the clause 4.1.5. We would think that such a course may not be permissible. (7). Sri.N.Nandakumara Menon, learned senior learned counsel for the appellant would contend that, having regard to Ext.P11, award of work in favour of the contesting respondent is vitiated. Ext.P11 provides that in case of pre-qualification there should be at least 4 pre- qualified tenderers. It is pointed out that in this case there was only one pre- qualified contractor. Therefore, the submission of the appellant is that the work has to be re-tendered under the general process available. (8). The contention taken by both the contesting respondent and the learned Government Pleader is that this is a work entrusted to the State by the Central Government and Ext.P11 may not apply as such. Instructions were sought. A counter affidavit has been filed by the first respondent. Along with the counter affidavit, the first respondent has produced Ext.R1 dated 7-4-2008 which is an order passed by the Secretary to Government. It reads as follows: W.A.No.713/2008 -5- GOVERNMENT OF KERALA Abstract Public Works Department-Prequalification of contractors-modified-Orders issued. ----------------------------------------------------------------------------------------------------- PUBLIC WORKS (H) DEPARTMENT G.P.(P) No.19/2008/PWD Dated, Thiruvananthapuram, 7-4-2008. ----------------------------------------------------------------------------------------------------- Read: 1. G.O.(MS) No.52/87/PW & T dated 7-7-1987 2. Govt.Lr.No.7365/H3/2000/PWD dated 1-4-2000. ORDER As per the Government Order read as Ist paper above Govt. introduced a system of pre-qualification of contractors for all major works in PWD. Under the pre-qualification system, contractors satisfying certain criteria alone are allowed to offer tenders. 2. One of the conditions in the Government Order read as Ist paper was that there should be a minimum of four (4) pre-qualified contractors to ensure fair and reasonable competition. However there were instances of not getting 4 prequalified contractors in several cases. This led to retendering. Hence Government have examined the matter and introduced the double envelope system ie. the system of submitting one envelope for technical bids for prequalifification and another one for financial bids. Only the financial bids of the prequalified contractors would be opened and that of the disqualified contractors would be returned unopened. Subsequently as it was found difficult to get four or more prequalified contractors for all works, Government vide letter read as second paper above clarified that in double envelope system, requirement of minimum number of effective tenderers was not relevant. 3. Government are pleased to order that the minimum number of effective tenders in double envelope system is not relevant. This order replaces the clarification issued in the letter read above and is valid w.e.f. 1.4.2000. (By Order of the Governor) TOM JOSE, Secretary to Government. W.A.No.713/2008 -6- (9). It is therefore contended on behalf of the respondents that whatever may have been the position prior to Ext.R1, having passed Ext.R1 the Government has made it clear that by virtue of the Government Order in respect of the works to be awarded by the process of double cover pre- qualification it is not necessary that there should be minimum number of 4 pre qualified tenders. There is no dispute that this is also a case where pre qualification involved the double cover system, namely separate technical and financial bids are to be submitted by the tenderes. If that be so, in the light of Ext.R1 order we would think that it may not be open to the appellant to contend that the award of work in favour of the 5th respondent would be vitiated by Ext.P11 as Ext.P11 stood clarified by Government letter and after the issuance of Ext.R1 order which has effect from 1-4-2000, it may not be open to the appellant to contend that there is violation of Ext.P11. There is no merit in the appeal and it is dismissed. (H.L.DATTU) CHIEF JUSTICE (K.M.JOSEPH) JUDGE MS