`IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. C.W.P. No.20557 of 2009 (O&M) Date of decision: 8.1.2010 M/s Raj Trans Stampings (Pvt.) Ltd. -----Petitioner. Vs. Dakshin Haryana Bijli Vitran Nigam Ltd. & Ors. -----Respondents CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE ALOK SINGH Present:- Mr. Arun Jain, Sr. Advocate with Mr. Alok Jain, Advocate for the petitioner. Mr. H.S. Hooda, Sr. Advocate with Mr. Gaurav Mohunta, Advocate for respondents. --- ORDER: 1. This petition seeks quashing of order dated 22.9.2009, Annexure P-43, by which the work allotted to the petitioner vide order dated 24.9.2008 has been cancelled after the petitioner made huge investment. Further prayer is to permit the petitioner to supply material as per work order dated 24.9.2008 and restrain the concerned respondent from allotting the said work to anyone else. 2. Case of the petitioner is that in pursuance of Tender Notices dated 15.7.2008, Annexure P-1 and 2.8.2008, Annexure P-3, the petitioner gave its bid and after due consideration, the work was allotted to it vide order dated 24.9.2008, Annexure P- CWP No.20557 of 2009 10, for supply, testing and commissioning of distribution of transformers of 11 KV 0.433 KV 3 ph 63 KVA=9, 25 KVA=15 and 16 KVA=50 nos., as per Nigam’s latest specifications for 74 nos. HT tubewell connections turnkey basis against Tender Enquiry No.16/GM/OP/HSR/2008-09 (Package-B). In pursuance thereof, inspection was duly carried out between 3rd to 5th October, 2008 and quantity of material specified therein was duly accepted. The petitioner was required to dispatch the material. Inspite of the said development, the petitioner received letter dated 25.11.2008, Annexure P-23, to the effect that as desired by the management, the award of contract was withheld. 3. The petitioner filed CWP No.4461 of 2009 seeking quashing of letter dated 25.11.2008 apart from making other prayers. 4. This Court vide order dated 21.3.2009, Annexure P-26, recorded the statement of learned counsel for the contesting respondents that since no reason had been given for withholding the work, a show cause notice will be duly given and a fresh decision will be taken. 5. Thereafter, fresh order dated 22.5.2009, Annexure P-33 was passed, against which the petitioner filed CWP No.8490 of 2009. One of the contentions raised was that there was discrimination in cancelling the work allotted to the petitioner while not cancelling the work allotted to other persons in similar 2 CWP No.20557 of 2009 circumstances and though this plea was raised in reply to the show cause notice, the same was not considered. 6. Learned counsel for the contesting respondents conceded that the said plea had not been considered and sought permission to withdraw order dated 22.5.2009 with liberty to pass a fresh order. The writ petition was disposed of accordingly. Thereafter, fresh order dated 22.9.2009, Annexure P-43, has been passed, which is sought to be challenged by way of this petition. The said order, inter-alia, is to the effect that there were irregularities committed by the officers of the respondents for which disciplinary action was being taken and that there was no requirement for the supply of transformers as the same were already available. The relevant part of the order so passed is reproduced below:- “From the totality of the facts, issue-wise decision is as under:- 1: The 1st issue raised by the department in the show cause notice that the firm has not submitted all drawings and designs/GTP for approval as per provision in the technical specifications of the Work order. Whereas the firm in its defence reply has submitted to the show cause notice that there is no such type of practice followed in the field offices of the Nigam & also submitted that the Nigam has never demanded, insisted or approved during the past three years. The firm has further submitted that this clause was fairly applicable to M/s Real Power Utility, M/s Super Power & M/s Garg 3 CWP No.20557 of 2009 Electricals, who have been granted permissions to re-start the work. With respect to above contention of the firm, it is stated that this clause is not so stringently followed in the work relating to erection of lines because the technical nature of work involved in laying of lines and erection of distribution transformer is altogether different. It was in the interest of Nigam in view of the financial involvement and exigency of work to get the 11kv lines erected as a number of components are required and sometimes the items involved in erection of lines are not available with the Nigam which could have further led to delay in execution of line work. In case of distribution transformer it is important to get its testing on the basis of GTP/all drawings & designs duly confirmed by accredited Lab of Govt. of India as a number of tests relating to distribution transformer’s health, life and losses relating to energy consumption are involved. The drawings & designs & GTP is mandatory requirement and there can not be any compromise on this front. Moreover, in case of lines work involving allied material such as poles, conductor and fitting items etc. etc., the Nigam has laid down technical specification for which most of the physical tests could be/are checked at manufacturer/ at site. It is further added that the complete line work including material tests are finally checked by the CEI as per provision rule 6 of the qualifications, powers and functions of Chief Electrical Inspector and Electrical Inspector Rules, 2006 as defined in 4 CWP No.20557 of 2009 the Electricity Act, 2003. Any deficiency in the line work can be rectified even after installation by the Nigam’s officers/Chief Electrical Inspector Govt. of Haryana. Whereas in case of distribution transformer, it is a mandatory to get it fully certified in advance before installation at the site in accordance with the certified type tests to be submitted to Nigam. As such, drawings, design & GTP of the distribution transformer has to be got certified by the supplier from the accredited Lab of Govt. of India for further submission to the Nigam as per Work order allotted to the firm before its inspection by Nigam’s officers. Comparatively distribution transformer is an important component of Electrical network than lines. Therefore, to ensure verification ot its quality Nigam requires drawings, designs & GTP test. In view of the above, M/s Real Power, M/s Super Power and M/s Garg Electrical, who were allotted to execute the lines work alongwith material, were not inferred upon on this account to get drawings, design & GTP test and they were allowed to erect the lines keeping in view the nature of work as explained above whereas it was not possible/allowed in case of M/s Ram Trans Stamping Pvt. Ltd., who were to supply the distribution transformer. It is worthwhile to mention here that sufficient quantity of distribution transformers were/are available with the Nigam. It is also added here that the work of all the tubewell connections covered in these orders have already been completed by the 5 CWP No.20557 of 2009 Nigam. Thus, no discrimination has been done, as alleged by the firm M/s Raj Trans Stamping Pvt. Ltd. in the instant case because nature of technical work involved in both cases were different and not on same footing. 2. The 2nd issue raised on behalf of the Nigam in the show cause notice that the Nigam was deprived of the benefits of free and open competition as there were only three bidders and they have intentionally quoted the different rates and succeeded in getting the work orders. Whereas the firm has submitted that as regards the rates of the items, prices are quoted by considering the estimated cost given in the NITs. The price quoted were in accordance with the market trend in that period. The firm has further stated that no fraudulent activities and pooling was made by them. But the rates quoted by firms for the same item have marginal difference while there can be no variance in the rates of a item which has same component/make. Thus, the price rate marginal difference was intentionally quoted to show healthy competition which is in fact was not there. As such, the contention of the firm in their defence are not sustainable being the firm adopted fraudulent practice in obtaining the order. 3. As regards the issue No.3 mentioned in the show cause notice, the version of the Nigam is that as per clause 2.3 of Bid instructions, in case of Joint Venture, the lead partner of the company was bound to meet not less than 40% 6 CWP No.20557 of 2009 financial criteria and 50% technical qualification, while the other partner was bound to meet not less than 25% financial criteria and 30% technical qualification. However, in the Joint Venture (firms namely M/s Raj Trans Stamping Pvt. Ltd., Jaipur and M/s New India Power agreement and signed by the company, submitted to the Nigam, the lead partner met 98% of financial criteria and technical qualification while the other partner met 2% of financial criteria and technical qualification only which is a gross violation of instructions and thus the stand of the firm is not sustainable in view of clear cut provision in terms & conditions of contract. 4,5,6&7: So far as reply of the firm in these paras regarding, split up in two parts, is concerned, they stressed on the plaint that it is Nigam’s affirm and similar practice was adopted by Chief Engineer/P&D, DHBVN, Hisar memo. No.Ch.14/PED-12/Pkg dated 13.12.2006 and further clarification vide memo. No.Ch.30/PED- 12 dated 11.1.2007 & NIT No.64 to 67/HC/BA/HSR/2006-07. It is established from the record that it was specifically for Tender Enquiry No.TED-12/Package-B addressed to SE (OP) Circle, Narnaul with copy to SE(OP) Hisar, for this specific package only and remaining SEs (OP) under DHBVN i.e. Bhiwani/Sirsa/Gurgaon and Faridabad was authorized to procure distribution transformer where line for release of tubewell connections on HT has been finalized and same does not 7 CWP No.20557 of 2009 create any right in favour of firm for execution of work which was otherwise not permissible under the instructions as it was not a turnkey work. Thus, the irregularities committed by Nigam officer/official in splitting the work does not in any way put the firm in any advantageous position. In so far as contention of the firm regarding awarding of work, it is not out of place to mention here that the work order placed was for procurement of 386 distribution transformers. the LOI was issued on 09.09.2008 and the entire material was offered for inspection by the firm on 18.09.2008 i.e. nine day after the issue of LOI. Thus, inference can be drawn that the distribution transformers were readily available with the firm and were not procured/manufactured specifically for DHBVN as in this short duration of 9 days, it was not possible to procure the material and thereafter manufacturer 386 distribution transformers. Furthermore, presently sufficient quantity of distribution transformer is available with the Nigam to meet the requirement. Thus, there is no necessity to procure the same from the outside agency and non-utilization of distribution transformers available with the Nigam may lead to great pecuniary loss to the Nigam which in turn would lead loss to the public. However, it is felt that the erection of line constitute a number of components as sometimes the items involved in erection of line are not available with the Nigam which may further delay in execution of the line whereas in the instant case, the 8 CWP No.20557 of 2009 sufficient quantity of distribution transformer is available with the Nigam. Hence, the contention raised by the firm in these paras, is nothing but only repetition of earlier paras which already stands suitably replied in preceeding paras. As such, no discrimination has been done in view of the position as explained in the above paras. Therefore, the contentions raised are rejected being not sustainable. Thus, in totality of facts and circumstances of the case, it is clear that there are irregularities committed on part of Nigam officers/official for which disciplinary action is being taken separately. It is added here that no discrimination has been done by withholding the work for supply, testing & erection of districution T/Fs, as allotted to the firm for the reasons stated in para 1 of reply as enumerated herein. Contrary to this, it is proved that the firm has not complied with the provisions as contained in the work order as well as irregularities have been committed by them as explained in the foregoing paragraphs. Therefore, the firm cannot drive any advantage out of the irregularities committed by some officers of the Nigam. Hence, the reply submitted by the firm in response to the show cause notice dated 17.4.09 is not feasible for acceptance. As such, no discrimination against the firm in cancellation of the orders under question is proved as detailed above. As such, the earlier direction of the competent authority vide office order No.267/SE(OP) Circle, HSR dated 22.05.2009 to cancel work order No.15378, 15432 & 15306 all dated 24.9.08, is in order and the same is hereby re-affirmed.” 9 CWP No.20557 of 2009 7. We have heard learned counsel for the parties and perused the record. 8. Main contention raised on behalf of the petitioner is that by way of inspection report dated 8.10.2008, the material was duly inspected and order placed and thereafter, there was no occasion to cancel the order. The reason for cancellation for not submitting drawings as per technical specifications was not relevant as the said part of the work was to be done by agencies responsible for erection of poles while the work of the petitioner was only to supply the transformers or to fit them. It is submitted that finding in para 1 above is, thus, based on irrelevant ground. It is further pointed out that order having been placed with the petitioner and the petitioner having taken steps, the fact of availability of transformers had no relevance to cancel the order already placed. Similarly, as regards absence of free and open competition, it is submitted that there was open competition as tenders were invited by issuing public notice. Similarly, alleged violation of instructions was not an issue which arose subsequently, which was required to be seen before placing the order. The splitting of tender in two parts was a process which was quite usual and was undertaken with open eyes. It is submitted that there is no fraud or misrepresentation by the petitioner or otherwise. Action of respondents was, thus, arbitrary and violative of fundamental right of the petitioner. In such 10 CWP No.20557 of 2009 circumstances, alternative remedy of arbitration cannot be a substitute for judicial review of arbitrary administrative action. Reference has been made to judgment of Hon’ble Supreme Court in Harbans Lal Sahnia and another v. Indian Oil Corporation Ltd. 2003(2) SCC 107 reiterating the principles laid down in earlier judgment in Whirlpool Corporation v. Registrar of Trade Marks and others AIR 1999 SC 22. 9. Learned Advocate General appearing for the caveator submits that since the matter has now been duly considered and it has been found that there was no discrimination and no requirement for placing of order, the petitioner may be relegated to alternative remedy under Clause 56 of the tender conditions. 10. We have considered rival submissions and perused the record. 11. Reference to the reasons given in the impugned order shows that the same are irrational and perverse, as pointed out by learned counsel for the petitioner. The work of erection was not part of the work of the petitioner. There was no question of submitting drawings by the petitioner. Availability of transformers or not following the procedure by the respondents could not be ground for avoiding contractual obligation in absence of any misrepresentation or fraud by the petitioner or any other illegality vitiating the contract. If the transformers were already available, there was no reason for issuing public notice and placing an order and thereafter, inspecting the material and requiring delivery. It is 11 CWP No.20557 of 2009 now well settled that even in the matter of award of contract a public authority cannot act arbitrarily and is not immune from judicial review. Alternative remedy of arbitration cannot, in these circumstances, be an absolute bar to judicial review of an arbitrary administrative action. 12. Accordingly, we allow this petition and quash the impugned order, Annexure P-43. We, however, do not consider it appropriate to go into question of consequential relief to the petitioner of specific performance of contract or damages in writ jurisdiction. The petitioner will be at liberty to take its remedies in accordance with law. (ADARSH KUMAR GOEL) JUDGE January 08, 2010 ( ALOK SINGH ) ashwani JUDGE 12