Case: State Of Jharkhand  Vs. M/S Cwe-Soma Consortium

The proposed project, Kharkai Dam at Icha is a part of Subernarekha Multipurpose Project, a Central Government Aided Scheme funded through the Accelerated Irrigation Benefits Programme (AIBP). Subernarekha Multipurpose Project is an Inter State project that was sanctioned in the year 1978 with the objective of providing irrigation in Jharkhand, Orissa and West Bengal. It will also provide water for drinking and industrial purpose as also for production of hydel power. The Water Resources Department, Government of Jharkhand, through its Executive Engineer issued a Notice Inviting Tender (NIT) for the construction of the Dam as per the Standard Bidding Documents (SBD) dated 28.02.2014. On 24.03.2014, a pre-bid meeting was held where ten tenderers participated and during its course, it was observed that in the clauses of the NIT, there were certain departures from the SBD. After the pre-bid meeting, in total, only three bidders namely, M/s CWE-SOMA Consortium, Hyderabad (respondent herein), M/s. IL & FS Engineering and Construction Co. Ltd., Hyderabad and M/s. Navyuga Engineering Co. Ltd., Hyderabad participated in the tender process and submitted their bids. In meetings of the Departmental Tender Committee held on 02.06.2014 and 06.06.2014, it was found that among the three tenderers, only the respondent was found responsive and other two bidders were found unresponsive. Therefore the tender committee took a decision under clause 4.18(d) of the Central Vigilance Commission Guidelines (‘CVCto cancel the tender and go for retender to make the tender process more competitive. The tender committee re-affirmed this decision in a meeting held on 09.07.2014 after the Chief Minister referred an application of the respondent to them. Aggrieved thereof, respondent filed a writ petition before the High Court.4. The learned Single Judge after examining clauses 4.17 and 4.18 of the CVC Guidelines which provide for procedure in case of a single quote/single valid acceptable quote and in case of lack of competition due to restrictive specifications respectively, came to the conclusion that in the absence of the decision of the tender committee that the specifications were stringent, clause 4.18 could not have been resorted to and tender committee should have resorted to clause 4.17. The Single Judge allowed the writ petition, holding the action of the appellants as arbitrary and against public interest. The matter was then carried in appeal filed by the appellants before the Division Bench by way of Letters Patent Appeal. The Division Bench upon perusal of the rationale for the decision of the tender committee, was of the view that there indeed existed competition as three companies, including the respondent had participated and respondent turned out to be the single bidder. Thus, the Division Bench concurred with the conclusion of the Single Judge that only clause 4.17 should have been invoked. The Division Bench also noted that the initial tender value was estimated as Rs.698 crores for the tender floated in February 2014, and when second tender was floated in July 2014 within the short span of few months, the estimated value of the project had increased to Rs.738 crores. Thus, Division Bench dismissed the appeal holding that re-tendering at later stage would further enhance the estimated value, causing excessive loss to the state exchequer which may not be in the public interest. Being aggrieved, the State of Jharkhand has preferred the present appeal.

Court's reasoning:
21. The right to refuse the lowest or any other tender is always available to the government. In the case in hand, the respondent has neither pleaded nor established mala fide exercise of power by the appellant. While so, the decision of tender committee ought not to have been interfered with by the High Court. In our considered view, the High Court erred in sitting in appeal over the decision of the appellant to cancel the tender and float a fresh tender. Equally, the High Court was not right in going into the financial implication of a fresh tender.22. Having addressed the correctness of reasonings recorded by the High Court, it is important to note one further aspect. When the SLP came up for hearing, by an order dated 10.08.2015, while granting interim stay on the operation of the impugned judgment, this Court directed that the appellants shall be free to invite fresh tenders and process the same, but no allotment shall be made without permission of this Court. The appellant-state has filed an additional document stating that about 20,421.43 acre of land is to be acquired under theto Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlement Act,which came into force on 01.01.2014. Section 41 of the said Act states that no acquisition of land as far as possible could be made in the Scheduled Area. If it is necessary, it should be done only as per last resort. It also states that land in Scheduled Areas can only be acquired with the prior consent of Gram Sabha or Panchayats or the autonomous DistrictThe impugned judgment of the High Court is liable to be set