1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION (LODGING) NO. 1243 OF 2009 ALONG WITH WRIT PETITION NO. 765 OF 2009 1) Ashwin S. Shah ) carrying on business in the firm name ) and style “Shantinath Roadways, ) as sole proprietor thereof and having ) its address at 105, Flyover Apartment, ) Teli Gali, Andheri (East), ) Mumbai 400 069. ) 2) Harshad S. Shah, ) carrying on business in the firm ) name and style of New India ) Construction Co. as sole proprietor ) thereof having its address at ) 103, Flyover Apartment, Teli Galli, ) Andheri (East), Mumbai 400 069. ) 3) Mrs. Sudha A. Shah, ) carrying on business in the firm ) name and style of ) M/s Mahesh Kumar & Co., as sole ) proprietress thereof having its ) address at 103, Flyover Apartment, ) Teli Galli, Andheri (East), ) Mumbai 400 069. ).. Petitioners VERSUS 2 1) Municipal Corporation of ) Greater Bombay, A statutory body, ) constituted under the Bombay ) Municipal Corporation Act, 1988 ) having its office at Mahanagar ) Palika Marg, Fort, Mumbai 400 001. ) 2) The Municipal Commissioner ) Municipal Corporation of ) Greater Bombay, having his office ) at Mahanagar Palika Marg, ) Fort, Mumbai 400 001. ) 3) The Deputy Chief Engineer (Roads) ) Municipal Corporation of ) Greater Bombay, having his office ) at 6th Floor, K/W Ward Office, ) Paliram Path, Opp, Bus Depot ) Andheri (West), Mumbai 400 058. ) 4) Chirag Constructions Co. ) A Partnership Firm duly registered ) under (Indian) Partnership Act, 1932, ) having Registered Office at 104/105, ) Gopal Puri, S.V. Road, ) Borivali (East), Mumbai 400 066. ) 5) R.P.S. Infraprojects Pvt. Ltd. ) A company registered under the ) Companies Act, 1956 and having ) its registered office at 113-C, ) Shyam Kamal, Agrawal Market ) Vile Parle (East), Mumbai 400 057. ) 6) Smt. Tarla R. Shah ) of Mumbai Indian Inhabitant ) 3 Proprietor of K.R. Construction having ) office at 1201/A, Aditya Apartment ) Chandavarkar Road, Borivali (West) ) Mumbai 400 092. ).. Respondents ALONG WITH WRIT PETITION NO. 765 OF 2009 1) Chirag Constructions Co. ) a partnership firm duly registered ) under (Indian) Partnership Act, 1932, ) having registered office at 104/105, ) Gopal Puri, S.V. Road, Borivali (E), ) Mumbai 400 066. ) 2) R.P.S. Infraprojects Pvt. Ltd. ) a Company registered under the ) Companies Act, 1956 and having its ) registered office at 113-C, ) Shyam Kamal, Agrawal Market ) Vile Parle (E), Mumbai 400 057. ) 3) Smt. Tarla R. Shah ) of Mumbai Indian Inhabitant ) Proprietor of K.R. Construction having) office at 1201/A, Aditya Apartment ) Chandavarkar Road, Borivali (W) ) Mumbai 400 092. ).. Petitioners VERSUS 1) Municipal Commissioner ) Having office at Mahapalika Marg, ) C.S.T. Mumbai 400 001. ) 4 2) The Municipal Corporation of Greater ) Mumbai, a Corporation established ) under the Bombay Municipal ) Corporation Act, 1888 having its ) office at Mahapalika Marg. ) C.S.T., Mumbai 400 001. ).. Respondents\ -- Mr. Aspi Chinoy, Mr. J.P. Cama, Sr. Advocates, Mr. Rohan Cama, Mr. Sanjay Udeshi and Mr. Mahesh Londhe i/b M/s S. Udeshi & Co. for the Petitioners in Writ Petition (Lodging) No. 1243 of 2009. Dr. Virendra Tulzapur, Senior Advocate, i/b M/s Thakore Jariwala & Associates for the Petitioners in Writ Petition No. 765 of 2009 and for Respondent Nos.4 to 6 in Writ Petition (Lodging) No.1243 of 2009. Mr. E.P. Bharucha a/w Mrs. Geeta Jogalekar for the Municipal Corporation of Greater Mumbai. CORAM : SWATANTER KUMAR, C.J. AND A.M. KHANWILKAR, J. JUDGMENT RESERVED ON : 31ST JULY 2009 JUDGMENT PRONOUNCED ON : 20TH AUGUST 2009 JUDGMENT (PER SWATANKER KUMAR, C.J.) Rule in both the Writ Petitions. Rule made returnable forthwith. By consent, Rule called out and heard. 5 2. Fairness in State action is the soul of good governance. Every action of the State where it infringes the constitutional mandate or is opposed to basic rule of law or suffers from the infirmity of patent arbitrariness, judicial intervention is inevitable. Government enjoys great freedom while entering into contracts with private parties, but even that freedom is circumscribed by the rule of fairness, transparency and objectivity. It is more so where the Government is dealing with State largesse. The State holds monopoly in certain fields and where this privilege of monopoly is utilized for the purposes of allocation of works, it takes the colour of State largesse as both the State or its instrumentalities or public statutory bodies and the bidder are expected to benefit from such distribution and/or allocation of such works by way of contracts. 3. The roads in the city and suburbs of Mumbai are within the exclusive jurisdiction of the Municipal Corporation of Greater Mumbai (hereinafter referred to as “the Corporation”). To maintain these roads is the obligation of the Corporation which otherwise is an essential service in modern times. The work of construction, 6 maintenance and improvement of roads is executed by the Corporation. Therefore, the Respondent Corporation issued tender notice, inviting sealed tenders in Packets “A”, “B” and “C” on percentage basis from the firms who were on the approved list of the Corporation as Class AA contractors and also from the contractors having equivalent registered class with the PWD and other Government organizations. This notice was issued by the Corporation on 23rd January 2009 and the last date for sale of bid documents was 9th February 2009. Date for submission of the tender and opening of Packet “A” was 10th February 2009. The bid document consisted of various Sections. Section 1 contained the Tender Notice; Section 2 related to Scope of Work; Section 3 related to Instructions to Tenderers; Section 4 related to General Conditions of Contract; Section 5 related to Special Conditions of Contract; Section 6 related to Specifications; Section 7 related to Additional Specifications; Sections 8 and 9 both related to Specifications of Carboncor Material and Methodology of Laying of Carboncor Work and Section 10 related to Form of Bank Guarantee, Agreement Form, etc. It may be noticed that this contract was for improvement of roads in the City, and its Western and Eastern 7 suburbs for a period of twenty four months excluding monsoon. 4. The Petitioners are “AA” Class Municipal Contractors registered with the Corporation and had on the due date of submission being 16th February 2009, submitted their tenders. The Respondent/Corporation on 10th February, 2009 had issued corrigendum by which date of submission of tender was extended to 16th February, 2009. As per the schedule declared in the said corrigendum, Packet “A” was to be opened on 16th February, 2009; Packet “B” was to be opened on 27th February, 2009 and the Packet “C” was to be opened on 12th March, 2009. As per the terms of the Corrigendum, Clause 3.24(d) was deleted and joint venture was allowed in case of use of Carboncor technology, with only manufacturers/suppliers as JV partner. The Respondent/ Corporation had opened Packet “A”. Vide letter dated 2nd March, 2009, the Respondent – Corporation informed the Petitioners that their Packet “B” had been opened on 27th February, 2009 and called upon the Petitioners to submit “Joint Venture of the manufacturer/supplier of Carboncor material work” by 7th March, 2009 before 1.00 p.m. It was also indicated in the said letter that in 8 the event the Petitioners fail to comply with the above terms then their tender would be treated as non-responsive and their financial bid would not be opened. The Petitioners, despite shortage of time claim to have submitted the Joint Venture Agreement with the manufacturer/supplier for supply of carboncor material to the Respondent/Corporation on 3rd March, 2009. Packet “C” of all the tenderers were opened only on 12th March, 2009. It is averred by the Petitioners that new technology canvassed by the Respondent Corporation and its Committee has been in use internationally for last 15 years which helps in repairs of bad patches and pot holes in roads, which is economic and effective and traffic can be opened within a short time. The Standing Technical Advisory Committee of the Respondent Corporation had prepared such a report on 15th December 2006 in which it had recommended carboncor technology, the minutes of which are at Exhibit-”I” to the Petition. The Petitioners state that they satisfied all the conditions of the tender. 5. Respondent Nos.4 to 6 in the present Petition were aggrieved from the Corrigendum dated 10th February 2009 and 9 letter dated 2nd March, 2009 issued by the Corporation, requiring the bidders to submit joint venture agreement with the manufacturers/suppliers of carboncor material and has challenged the same by filing Writ Petition being Writ Petition No.765 of 2009 seeking a direction that the Respondent Corporation should not take any step towards cancellation of the tender and for awarding the work to these Respondents as they claimed to be the lowest bidders in response to the tender notice. No interim directions were issued in this Writ Petition. The Petitioners submitted an offer at par with the offer of Respondent Nos.4 to 6 to the Corporation on 13th June, 2009 and thereafter even further reduced their bid during negotiations by another 1% lower than the rate quoted by Respondent Nos.4 to 6. The Tender Committee of the Respondent Corporation held its meeting on 19th June, 2009 and recommended awarding the work to the lowest tenderer, viz. to Respondent Nos.4 to 6. A proposal to place these recommendations before the Standing Committee was initiated and the Municipal Commissioner forwarded it to the Municipal Secretary on 26th June, 2009. The said proposal was placed before the Standing Committee which accorded its sanction in its meeting dated 1st July 2009 and the 10 tender of Respondent Nos.4 to 6 was accepted. 6. On this premise, the Petitioners have prayed that, firstly, the award of tender by Respondent Nos.1 to 3 to Respondent Nos.4 to 6 be quashed and set aside and all the three contracts be awarded to the Petitioners i.e. Western suburbs to Petitioner No.1, Eastern suburbs to Petitioner No.2 and City to Petitioner No.3 and, secondly, Respondent Nos.4 to 6 be restrained from executing the contracts in furtherance to acceptance of the tender. This claim of the Petitioners has been contested by the Respondents who have filed separate reply affidavits. In the common reply affidavit filed on behalf of Respondent Nos.1 to 3, objection has been taken as regards to the maintainability of the present Writ Petition as it involves disputed facts. On merits, there is really not much of a dispute on facts and the case of the Respondent Corporation is that the tender Condition No.3.24(d) only contemplates use of carboncor material as one of the modes and it is not mandatory that only carboncor material is to be used, in fact it is optional. Condition 3.24(d) was deleted by Corrigendum-I dated 10th February 2009 before opening of Packet “A” and letters were issued to all the 11 tenderers, before Packet “C” was opened on 12th March 2009, without declaring any tender as non-responsive, including the tenderers who had not submitted the joint venture documents. On opening Packet “C”, Respondent Nos.4, 5 and 6 were found to be lowest tenderers in respect of each tender as they had quoted 37.1% to 33.00% less than the scheduled rate. The rates quoted by the Petitioners were higher which is clear from the Writ Petition itself as they then reduced the rate and even agreed to reduce it further by 1% less than the lowest bidder. The allegation of arbitrariness and waiving the essential condition of the tender are denied and it is stated that in these circumstances the Petitioners cannot be awarded the contract and it is prayed that the Writ Petition be dismissed. 7. In addition to what has been stated on behalf of Respondent Nos.1 to 3, Respondent Nos.4 to 6 in a separate reply have taken up the objection of delay and latches and have raised a further objection as regards the maintainability of the Writ Petition. While relying on the reply affidavit of Respondent Nos.1 to 3, it is also stated that the Petition has become infructuous, as vide letter dated 6th July 2009 separate work orders have been issued to the 12 respective Respondents in relation to three tenders. It is further averred by these Respondents that Clause 3.24(d) was modified on the request of the Municipal Contractors Association and thereafter sufficient time was provided for the parties to submit their respective tenders. The Corporation then issued the letter requiring them to submit documents relating to joint venture and the condition stated in the said letter was waived on the representations made by the said Respondents. The waiver of the condition of joint venture with the manufacturer/supplier of carboncor, thus, was inconsequential. The Respondents being the lowest tenderers, they have been rightly awarded the tender. 8. To both these replies, the Petitioners have filed rejoinder stating that carboncor technology is the essence of the tender and its use was within the discretion of the Respondent Corporation. This being one of the essential conditions of the tender, which was reiterated by letters of the Corporation requiring the bidders to submit the joint venture with the manufacturer/supplier of carboncor, indicates that the condition relating thereto was essential and of essence. This condition was informed to the bidders 13 sometime in advance but was not adequate. However, the waiver of the said condition was not intimated at all to the bidders, particularly, the Petitioners who had already submitted the joint venture documents. It is specifically averred that the tenders were uncomparable, being based on different conditions and foundations and in face of the variation indicated by subsequent letter and conduct of the Corporation, the entire process is vitiated and suffers from the element of arbitrariness. While dealing with the question of delay, latches and maintainability of the Writ Petition, it has been averred by the Petitioners that the contract has to come into force from 1st October 2009. The Petitioners contend that they have approached the Court without any undue delay, particularly, when the Corporation has failed to take note of the issues raised by the Petitioners. In these circumstances, neither the Petition has become infructuous nor it suffers from the defect of delay and latches. On the contrary, the Corporation is acting in an arbitrary manner so as to favour Respondent Nos.4 to 6 who have not even qualified as they have not satisfied the eligibility criteria by complying with the condition in regard to submission of joint venture documents. 14 9. As is evident from the above narrated facts, the controversy in the present case relates to the interpretation, change of terms of tender and exercise of power in an arbitrary and discriminatory manner. There cannot be any dispute that the awarding of these contracts involves large amount of Corporation revenue and relates to maintenance of essential services that of roads. The Corporation is, therefore, expected to act fairly, transparently, free of arbitrariness, in public interest and to ensure that the revenue of the Corporation is not adversely affected. The concept of fairness takes in its ambit that element which provides an equal and fair opportunity for the parties to participate in the tender bid. It is not expected to favour any individual or adopt/change criterion midway so as to bring uncertainty or favourtism in awarding of such contracts. Thus, relevancy of the specific terms stated in the General Conditions, including the tender, is an important aspect to the present case. 10. It will be useful to refer to some of the terms and conditions of the tender notice as they have a bearing on the question that arise for consideration of the Court in the present Writ 15 Petitions. The same read as under :- “2. SCOPE OF WORK 2.2 Improvement of asphalt roads - a. Various roads falling under the area of contract shall be improved/reconstructed by the contractor under this project work. The improvement work shall comprise of excavation in kutcha portion of road, treatment to potholes, milling, water bound macadam works, laying of asphaltic layers/Carboncor material/C.C. Roadwork etc. b. Some of the stretches/junctions may have to be improved with paver blocks as per the directions of the Engineer. c. The works of construction of storm water drains, repairs to S.W.D. (wherever required), covering of storm water drains with R.C.C. Slab and precast frames and covers, water entrances, cross drainage works etc. shall also be required to be carried out under the project work. d. Improvement of existing footpaths, construction of new footpaths, and construction of footpath by covering the drains shall be carried out as a part of project work. Footpath will be provided with ramp of physically challenged persons & tree guards. e. Existing/Burried Manholes/chambers, if detected during the progress of work, shall be raised/lowered to final formation level. 16 f. Street furniture such as Railings, Road name boards, direction boards shall be fixed as per the guidelines and designs as contemplated in Catalogue for street furniture available in the office of Dy. Ch. E. (Traffic). g. Necessary road markings, lane markings shall be required to be carried out on project roads, as per the applicable specifications. Painting of kerbs and central dividers shall form part of the project. h. Repairing potholes and rough/bad patches on the project roads free of cost, during the contract period including intervening monsoon. This includes - (1) Cutting the potholes to square or rectangular shape down up to the base course level to the affected depth and filling up with metal and stone powder during wet spell i.e. rains and with catonic emulsion & bituminous mixes during dry spell of monsoon, compacting the same as per the specifications & as directed by the Engineer. (2) Sealing of cracks developed, as per specifications & as directed by the Engineer in asphalt/mastic surface. (3) Repairs to settled portions as per the specifications & as directed by the Engineer. xxxxx xxxxx xxxxx 17 3. INTRUCTIONS TO TENDERERS 3.2.3 Post Qualification Criteria - i) General a) Post qualification will be based on tenderer’s meeting all the following criteria regarding their general and particular construction experience, financial position, personnel and equipment capability and other relevant information as demonstrated by tenderer’s responses in the information forms attached to the tender. b) The Post qualificatin criteria as prescribed below shall be filled in the proforma given in clause 3.29 and supported by documents mentioned under clause 3.24. c) The cost of the executed works and turnover will be enhanced by 10% every year to bring the same to present level for purpose of post qualification. d) The cost of executed works and the turnover of the current financial year to meet the requirements will be accepted, subject to submission of non-audited financial statement (original documents) duly certified by C.A. e) Joint Venture shall not be allowed. ii) General Construction Experience The tenderer(s) shall provide evidence that - a) It has been actively engaged in the civil works 18 construction business for similar works such as those pertaining to Roads/Highways/Runways during the last 5 years in the role of prime contractor. b) The tenderer(s) has generated a maximum annual turnover of any one year during the last 3 years i.e. 01.04.2005 to 31.03.2006 (audited), 01.04.2006 to 31.03.2007 (audited), 01.04.2007 to 31.03.2008 (audited) and 01.04.2008 to till the date (provisional) not less than 75% of the cost of the work tendered for. iii) Particular construction experience a) The tenderer(s) shall provide evidence that it has successfully completed at least one contract pertaining to Roads/Highways/Airport runways or is successfully executing currently one work of similar nature with at least 75% progress (financial value as on the date of invitation of tender) of Cost of magnitude of at least 30% of the cost of the works tendered for, for the works costing up to 10 crores OR 5 crores or 30% of the cost of the works tendered for, whichever is more, for the works costing more than 10 crores In support of this, certificates from the employer shall be submitted along with the application incorporating clearly the contract value, billing amount, date of commencement of work, completion period, satisfactory performance of the contract and other relevant information. The works may have been executed by the tenderer as a prime contractor, or proportionately as member of a joint venture or 19 approved sub-contractor, with references being submitted to confirm satisfactory performance. iv) Financial Capabilities The tenderer(s) shall demonstrate that it has access to, or has available liquid assets, unencumbered assets, lines of credit and other financial means (independent of any contractual advance payment) sufficient to meet the construction cash flow requirements for the subject contract in the event of stoppage, start- up or other delay in payment, of the minimum 15% of the cost of the work tendered for, net of the tenderer’s commitment of other contracts. Certificate from Bankers/C.A./Financial institution shall be accepted as evidence. Alternatively a notarized undertaking on Rs. 100/- stamp paper stating that “the requisite net cash flow i.e. 15% of the tendered cost will be made available during the execution of the work” shall be submitted in Packet `B’ of the quoted work(s). The audited balance sheets for the last 3 years shall be submitted and must demonstrate the current soundness of the tenderer’s financial position and indicate its prospective long term profitability. If deemed necessary, the employer shall have the authority to make enquiries with the tenderer’s bankers. v) Personnel Capabilities Tenderer(s) shall supply general information on the management structure of the firm, and shall make provision of suitably, qualified personnel to fill the key position required during the contract implementation. 20 The tenderers shall supply information a prime candidate for each key position and each shall meet the requirements specified, as under - Sr. No. Post Qualification Minimum nos. to be deployed on this Project 1. Project Manager At least B.E. (Civil) with min. 10 years experience or D.C.E. With min. 20 years experience 1 2. Site Engineers At least B.E. (Civil) with min. 2 years experience or D.C.E. With min. 4 years experience. 2 In addition, Quality Control Engineers per shift per work are to be deployed, qualification being B.E. (Civil) with site experience and having experience of working in Material Testing Laboratory. A notarized undertaking on Rs.100/- stamp paper shall be submitted in packet “B” stating that “Quality Control Engineer per shift per work having experience of working in Material Testing Laboratory, will be appointed/deployed on the work on award of the contract.” NOTE : The minimum suggested personnel, to begin with for execution of works, in accordance with the prescribed construction schedule are shown in the above list. 21 The tenderer(s) should furnish general information on the Organizational set up of the firm, to allow the employer to review their proposals. vi) Equipment Capabilities (A) The tenderer(s) shall own equipments, in full working order, as listed below, and must demonstrate that based on know commitments, they will be available for timely use in the proposed contract. Sr.No. Equipment No. 1. Vibratory Roller (min.10 T.) 1 2. Static Roller 1 3. Vibratory Roller (About 3 T) 1 (B) The tenderer shall own or have assured access by means of letter from the respective registered plant owners (as required) as listed below - Sr. No. Equipment 1. R.M.C. Plant (computerised) – Capacity 30 Cu.m. per hr. 2. Asphalt Plant Capacity min. 40 MT pr. hr. 3. Paver Blocks manufacturing factory approved by M.C.G.M. With valid registration number. 4. Supplier of Carboncor materials 22 Vii) Bid Capacity The available bid capacity at the time of bidding shall be more than the cost of the work tendered for. The available bid capacity will be calculated as under :- Assessed Available Bid Capacity = (A x N x 2.0 – B) Where, A = Maximum value of