in the gauhati high courtghconline.gov.in/judgment/wpc59502014.pdfin question being a centrally...

WP ( C) No.5950 of 2014 of 25

IN THE GAUHATI HIGH COURT

(THE HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

WP © No. 5950 of 2014

1.M/S Mega Electricals-Joint Venture with Dihang

Edutech Infrastructure Pvt. Ltd.

Borooah Real Estates & Commercials Pvt. Ltd.

Raj Apartment (Ground Floor) e,

J.B. Road , Silpukhuri

2.M/S Mega Electricals-

Raj Apartment (Ground Floor) e,

J.B. Road , Silpukhuri

Police Station, Chandmari, Guwahati-781003

3. M/S Dihang Edutech Infrastructure Pvt. Ltd.

House No.8, SN Bora Late,

Dighaliphukuri (East) PS Latasil,

4. M/S Borooah Real Estates & Commercial Pvt. Ltd.

Damayanti Mansion, Dighaliphukuri (East) PS Latasil,

Satya Bora Lane, Guwahati, Assam

………. Petitioner

-Versus-

1.Union of India

WP ( C) No.5950 of 2014 of 25

Represented by the Secretary

The Ministry of Home, New Delhi

2. State of Assam, represented by the Secretary

To the Government ofAssam, Department of Power,

Dispur, Guwahati.

3. The Chairman

The Assam Power Distribution corporation

Ltd. Bijulee Bhawan

PO & PS Paltan Bazar

Dist-Kamrup (Metro) Assam

4. The Managing Director


Ltd. Bijulee Bhawan



5. The Chief General Manager (D)


Ltd. Bijulee Bhawan



6. Tender Purchase Committee,

Represented by The Chief General Manager (D)


Ltd. Bijulee Bhawan


WP ( C) No.5950 of 2014 of 25


7. The General Manager,

Barak Valley Zone, The Assam Power Distribution corporation

Ltd. , Silchar, Cachar Assam.

8. M/S NK Power & Infrastructure

Pvt. Ltd. Ganeshguri, Guwahati

9. M/S Prag Electricals Private Ltd.

Industrial Estate, Bamunimaidam

Guwahati

10. M/S Jayanta Khound Joint Venture with Win Power Private Ltd.

Near Kasturva Ashram Road,

Ulubari, Guwahati

11. M/S Spectrum Meghalaya

Cement JV with Diamond Power Private Ltd.

Ashar Tower, 5th floor,

SC Goswami Road, Panbazar,

12. M/S Premier Enterprise JV with Power network Pvt. Ltd.

Divine Plaza, 5th Floor, Near Super Market

GS Road Dispur.

………. Respondents

PRESENT HON’BLE MR. JUSTICE N. CHAUDHURY

For the petitioner : Mr.N Dutta, Mr. NNB Choudhury Advocates.

WP ( C) No.5950 of 2014 of 25

For the Respondents : Mr. BD Das, Mr. N Goswami , Mr. G Sharma Advocates. Date of Hearing : 17.03.2015 Date of Judgment : 23.03.2015

JUDGMENT AND ORDER(CAV)

Pursuant to notice inviting tender dated 31.7.2014 for settlement of a

contract work involving construction of 33 KV line under Kalain Electrical Sub-

Division of Cachar Electrical Circle , the Tender Purchase Committee of the

APDCL(hereinafter referred to as ‘the TPC’) adopted resolution on 13.11.2014 to

award the contract in favour of respondent No.10, M/S Jayanta Khound Joint

Venture with Win Power Pvt. Ltd. Writ petitioner claiming to be the lowest bidder

in the tender process has challenged this resolution by filing present writ petition.

On 21.11.2014 while issuing notice of motion, this court passed an interim order

permitting the official respondents to proceed with the selection procedure but

not to issue work order. By filing an affidavit-in-opposition, the official

respondents have brought on record that the selection procedure has been over

and the Board accepted re-commendation of the TPC on 20.12.2014. The writ

petitioner, therefore, filed an application praying for amendment of the writ

petition so as to challenge the decision of the Board taken on 20.12.2014

whereby impugned resolution of the TPC was approved. The amendment was

allowed after hearing both sides and thereafter the main writ petition has been

WP ( C) No.5950 of 2014 of 25

taken up for hearing. The writ petition, therefore, requires adjudication as to

legality and validity of not only the resolution dated 13.11.2014 adopted by the

Tender Purchase Committee but also the decision of the board adopted on

20.12.2014 accepting the recommendation.

2. The writ petitioner is a joint venture of three units, namely, Mega

Electrical, Dihang Eductech Infrastructure Pvt. Ltd and Borooah Real Estates and

Commercial Pvt. Ltd. The writ petitioner along with six others participated in the

tender process initiated by Notice Inviting Tender (herein after referred to as

“NIT”) dated 13.7.2014. By that NIT, sealed tenders were invited from

experienced and financially sound electrical contractors (individual or joint

venture or firms having valid electrical contractor license upto 33 KV issued by

the competent authority of the Government of Assam, interalia, for construction

of 33 KV line , augmentation of 33/11 KV S/S construction on power railway track

crossing of 33 KV line under Kalain Electrical Sub-Division of Cachar Electrical

Circle for providing service connection to flood light installation along India

Bangladesh border in Assam. The NIT has been annexed as Annexure-1 to the

writ petition. The NIT shows that the tender paper can be purchased in all

working days upto 4 pm w.e.f.4.8.2014 to 12.8.2014 from the office of the Chief

General Manager (D), APDCL, CAR, Bijulee Bhawan , Paltan Bazar and can also

downloaded from the official website within the same period. Date of submission

of tender has been shown as 1300 hrs. of 22.8.2014. The date of opening of

techno commercial bid is at 1330 hrs. on 22.8.2014 and price bid would be

WP ( C) No.5950 of 2014 of 25

opened on a date to be notified later on. Clause-3 of the NIT shows that bids

must be in two parts as techno commercial bid and price bid in two separate

envelops superscribing (a) tender number (b) name of bidder with full address

and (c) name of the package against which the bid is offered. In Clause-10 it

was further mentioned that only those bidders whose part-I bid i.e. techno

commercial bid is found acceptable, shall be considered for opening of the price

bid, the date and time for which would be communicated to the eligible bidders

in due course. It was mentioned that details can be seen in the official website of

the APDCL which is www.apdcl.gov.in. The terms and conditions of the NIT are

mentioned in separate sheet. As per recital of Clause-4 thereof, techno

commercial bid will include defined vendors, scope of work, responsibilities ,

guarantees, specification of equipment, commercial terms and conditions,

vendor’s company credentials, experience of similar assignment, registration

details etc. and the format for techno commercial bid is also furnished at

Annexure-1 to the terms and conditions. The same clause defined price bid under

a second sub-head. It shows that price bid will include rates of supply and

erection of different items for electrification according to the BOQ. The format for

this is also furnished at Annexure-2 of the tender document. In clause-6 it was

mentioned that the evaluation of the bids will be carried out first of the techno

commercial bid and thereafter opening the price bid of only those bidders who

qualify and meet the technical requirements. At the same time it was mentioned

that, the APDCL reserves the right not to order/award the job to pricewise lowest

http://www.apdcl.gov.in/

WP ( C) No.5950 of 2014 of 25

party if the party during any part of evaluation is found technically non-

responsive. In clause-18 of the terms and conditions it was disclosed that

funding of the project would be done by the Government of India. At the last

paragraph-20, it was mentioned that the terms and conditions which are not

specified in the tender document would be governed by the company’s General

Terms and Conditions of Supply and Erection. Thus, apart from the terms and

conditions mentioned in the tender document the whole of the General Terms

and Conditions of Supply and Erection (hereinafter referred to as ‘General Terms

and Conditions’) would apply to the tender process in question.

3. It is stated that pursuant to the aforesaid NIT, the writ petitioner and six

others participated by submitting technical and price bids. However, six of them,

namely, the writ petitioner and the respondents No. 8 to 12 were found to be

technically qualified. Thereupon, the price bids were opened on 29.9.2014. The

petitioner found that it was the lowest tenderer having bidded

Rs.9,00,74,630.45/- whereas respondent No.10 was fourth lowest bidder having

submitted bid for Rs.9,56,24,513/- . But for reasons best known to the authority

the respondent no.10 was selected by the TPC by its resolution dated

13.11.2014.

4. According to the writ petitioner, the TPC prepared a in-house estimate

formula surreptitiously in respect of price so as to restrain the lowest bidder from

coming into zone of consideration but no whisper of such procedure or estimated

price was disclosed either in the tender document or in the general Terms and

WP ( C) No.5950 of 2014 of 25

Conditions. All the bidders, under such circumstances quoted a competitive price

as per their estimate following healthy competition but the respondent No. 4

acted against the modalities prepared by Central Vigilance Commission in

subsequently making estimate and procedure. Annexing the circulars and office

orders of Central Vigilance Commission, the writ petitioner claimed that the work

in question being a centrally sponsored scheme, guidelines of the CVC is

applicable in such a project. According to the writ petitioner, not only the

guideline of the CVC, the official respondents did not follow their own guideline

laid down in the General Terms and Conditions as well. Whole thing was done

without following the principle of transparency and fairness and so selection of

the respondent No.10 is arbitrary and illegal and the same deserves to be set

aside.

5. By filing an affidavit-in-opposition on behalf of respondents No. 3,4,5,6

and 7 it was claimed that as per Clause -20 of the tender document, the TPC

followed the General Terms and Conditions which is permissible because of

Clause -20 of the tender document. In 39th Board meeting of the APDCL held on

24.10.2011, a decision was taken for making addition to the General Terms and

Conditions whereby board approved ceiling of non-acceptance of bidders who

quotes 15 % below the estimated cost instead of earlier 10% ceiling. In terms of

the Board’s approval, notification was issued on 12.12.2011 and thereby General

Terms and Conditions stood amended and so the TPC or the Board did not

commit any mistake in adopting ceiling of 15 % below the estimated cost. The

WP ( C) No.5950 of 2014 of 25

estimated cost of the tender in question being Rs.11,12,79,295/- the writ

petitioner stood excluded from consideration being much below 15 % from this

amount. According to the deponent of this affidavit, the writ petitioner was well

aware of the fact about such amendment of the General Terms and Conditions

because on this condition alone his earlier bid in regard to contract for sub-

station at Tezpur Medical College was rejected by the board on 27.5.2014 and so

the same writ petitioner had withdrawn earnest money. The writ petitioner,

therefore, was aware about the procedure which is in conformity with Clause -20

of the tender document. The extract of the minutes in the 39th Board meeting of

the APDCL is annexed as Anneure-1 to show that Board agreed to approve

addendum to the General Terms and Conditions in its meeting held on

24.10.2011 and consequently a notification was issued on 12.12.2011 by the

Chief General Manager (M) of the APDCL. This notification is also placed at

Annexure-2 of the Affidavit-in-opposition. Annexure-2 shows that the

corrigendum/addendum was to procure guideline and not to the General Terms

and Conditions. However, in Clause-3 of this notification it was shown that as per

amended procurement guideline, any price quoted below 15 % of the estimated

cost would be liable to be rejected by the TPC. The affidavit has also disclosed

the comparative statement at Annexure-4. It shows that writ petitioner quoted

Rs.9,00,44,630/- which is 19.08 % below the estimated amount and so it was

found non-responsive. Similarly, M/S Prag Electricals (respondent no.9) and M/s

Spectrum Meghalaya Cement (respondent NO.11) were found non-responsive

WP ( C) No.5950 of 2014 of 25

being 18.56 % and 15.16 % respectively below the estimated amount. Thus,

respondent no.10 having quoted 9,56,24,514/- was found to be the lowest valid

tenderer. M/S premier Enterprises (respondent no.12) and M/S N.K.Power &

Infrastructure (respondent No.8) were found to be second and third lowest

bidders. The respondent no.10 being the lowest responsive bidder was therefore

selected by the TPC and the Board committed no error in accepting the

recommendation.

6. The writ petitioner filed an affidavit-in-reply against the affidavit –in-

opposition submitted by respondents No. 3 to 7 and stated that the respondent

No.6 misinterpreted clause-20 of the bid document and failed to consider the

lowest bid of the writ petitioner. It is clearly mentioned in clause-20 that terms

and conditions which are not specified in the bid document would be governed

by General Terms and Conditions which on turn nowhere specify that bidders

who quote 15% below the estimated cost shall not be responsible in the tender

process. Rather, forward No. 2 of the General conditions state that it shall not be

modified. If any modification is necessary for a particular contract the same has

to be done through a special condition of the contract to be enclosed with the

tender document. In the instant case, the APDCL amended clause No.11.8 (a) of

the procurement guidelines and provided that price quoted below 15 % of the

estimated cost is liable to be rejected by the TPC. But it is neither mentioned in

the terms of the tender nor has it been incorporated in the General Terms and

Conditions. Moreover, in the official website of the APDCL such amendment has

WP ( C) No.5950 of 2014 of 25

not been uploaded till date. Consequently, this provision is not known to

petitioner and others. Regarding knowledge of the writ petitioner about this

amendment, it is claimed in paragraph -11 of the affidavit-in-reply that their

tender for substation of Tezpur Medical College was rejected but till date the

respondent authority did not inform the writ petitioner as to whether its bid was

responsive or not. The APDCL did not inform the writ petitioner in any point of

time that its bid in Tezpur Medical College contract was rejected as non-

responsive being below 15% of the estimated cost. Thus, both the points of

defence raised by the official respondents No. 3 to 7 stood refuted by the writ

petitioner specifically.

7. Under such circumstances, the respondents No. 3 to 7 filed a rejoinder

affidavit to the affidavit –in-opposition on 18.12.2014 and stated in para-5

thereof that petitioner had been declared non-responsive on the ground of 15%

below the estimated cost in the contract work for substation of Tezpur Medical

College. On 18.7.2014, the writ petitioner thereafter requested the APDCL to

release their earnest money against the tender and accordingly the same was

released vide letter 4.8.2014 after the work order for the tender was issued. The

writ petitioner, therefore, cannot take excuse that it did not know the board’s

decision taken in 2011 for amendment of the General Terms and Conditions.

8. Opposing this stand of the respondents No.3 to 7, the writ petitioner filed

another reply affidavit on 2.2.2015. The writ petitioner reiterated its stand taken

in paragraph 5,6 and 7 of the reply affidavit and denied that it had any

WP ( C) No.5950 of 2014 of 25

knowledge about the provision regarding disqualifying any bidder if its bid value

is 15% below the estimated cost. Respondent authority had not allotted the work

for Tezpur Medical College to the petitioner but it was not informed that its bid

value was not considered due to the reason that it was below 15 % of the

estimate amount. The NIT of that contract was floated in 2012 but was settled

after one year. At that time due to various pending works, the writ petitioner was

not interested for the contract anymore and as such did not pursue the matter. It

is essential that respondent authority ought to have informed the reason for not

accepting the tender to the petitioner but till date the same has not been done.

Petitioner came to know about the reason only after affidavit-in-opposition was

filed by the respondents No. 3 to 7 in the present case. Be that as it may,

rejection of the writ petitioner’s bid is on a ground beyond the terms and

conditions of the bid document as well as the General Terms and Conditions.

Such rejection, therefore, is illegal and arbitrary.

9. Respondent No.10 also filed an affidavit-in-opposition on 1.12.2014 and

took the similar ground as taken by the APDCL. The points taken in this affidavit ,

therefore, are covered by the affidavit-in-reply filed by the writ petitioner already

in connection with affidavit-in-opposition of the respondents no. 3 to 7.

10. I have heard Mr. N Dutta, learned senior counsel assisted by Mr. NN B

Choudhury, learned counsel for the writ petitioner and Mr. BD Das, learned

senior counsel assisted by Mr. N Goswami, learned counsel for the respondents

No. 3 to 7. Mr. G Sharma, Government counsel has appeared on behalf of the

WP ( C) No.5950 of 2014 of 25

respondents No. 1 and 2 while Dr. G.Lal, learned counsel has argued on behalf of

the respondent No.10. I have perused the averments made in the pleadings of all

the parties.

11. Mr. N Dutta, learned senior counsel for the appellant submits that the

procedure adopted by the respondents No.3 to 7 is arbitrary and illegal. The

procedure in regard to disqualifying a bid 15 % below estimated amount was

not disclosed in the NIT or in the website. Although, by paragraph-20 of the

terms and conditions of the NIT it is provided that grounds which are not

specified in the NIT shall be governed by the provisions of the General Terms

and Conditions but the said General Terms and Conditions also do not contain

such a provision of rendering a bidder non-responsive merely because his bid

value is 15 % below the estimated amount. He submits that although board had

adopted a resolution for amending the General Terms and Conditions but the

APDCL did not make any amendment accordingly. What it did is amendment of

the procurement guideline which has not been made applicable to the contract in

question. Besides, terms and conditions of the General Terms and Conditions

cannot be amended. What can be done is incorporation of a special condition in a

given contract. In the case in hand, the APDCL did not make any special

condition in the concerned NIT incorporating a condition of this nature, so

rejection of the petitioner’s bid on the ground of being 15 % below estimated

amount is arbitrary and untenable. He submits that under the guidelines

holding the field, the authority is duty bound to make estimate before issuance

WP ( C) No.5950 of 2014 of 25

of an NIT. The procedure must be disclosed in the NIT or its General Terms and

Conditions for the purpose of transparency and fairness in the matter involving

distribution of state largesse.He has placed reliance on the following judgments:-

(i)Dutta Associates Pvt. Ltd.-vs-Indo Merchantiles Pvt. Ltd & Ors. (1997) 1 SCC 53 (pr.4, 5, 7)

(ii)Sargous Tours & Travels & anr.- Vs- Union of India & Ors. 2003 (3) GLT 202 (pr.18)

(iii)Educomp solution Ltd.& Ors.-vs- State of Assam & Ors 2006(2) GLT 775 (pr.49,50)

(iv)Md.Makrab Khan@ Md. Junu Khan –vs- Monoj Kr.Sharma 2011 (3) GLR 15 (pr.12)

12. In the case of Dutta Associates (supra), the Hon’ble Supreme Court

found that the tender process was vitiated by at least three grounds. The first

ground was that the tender notice did not specify ‘ viability range’ and did not

say that only those tenders which would come in the ‘viability range’ would be

considered. Fairness demand that authority should have notified in the tender

notice itself the procedure which they proposed to adopt while accepting the

tender. But nothing of the sort was done by the authority in that case. The

second ground was that the very concept of ‘viability range’ did not appear to be

reasonable to the court. The tenderers are all hard headed businessmen and

they know their interest better. If they agreed to perform a contract at a lower

rate it is inexplicable why should the Government think that they would not be

able to do so and still prescribe a far higher ‘viable range’. The third ground was

selective opportunity given by the authority to Dutta Associates (supra ) only for

WP ( C) No.5950 of 2014 of 25

counter offer within ‘viability range’. Mr. Dutta, learned senior counsel for the

petitioner in this case has emphasized the first ground noted above from

paragraph-4 of the case and stated that even in the present case the authority

did not disclose the procedure of rendering some bidders non-responsive on the

ground of their bid value being below 15% of the estimated amount either in the

NIT or in the General Terms and Conditions. In this regard he has also placed

reliance on paragraph – 7 of this judgment. This paragraph is quoted below for

ready reference:

“7. In the circumstances, we affirm the judgment of the Division Bench in writ appeal on the grounds stated above and direct that fresh tenders may be floated in the light of the observations made in this judgment. We reiterate that whatever procedure the Government proposes to follow in accepting the tender must be clearly stated in the tender notice. The consideration of the tenders received and the procedure to be followed in the matter of acceptance of a tender should be transparent, fair and open. While a bona fide error or error of judgment would not certainly matter, any abuse of power for extraneous reasons, it is obvious, would expose the authorities concerned, whether it is the Minister for Excise or the Commissioner of Excise, to appropriate penalties at the hands of the courts, following the law laid down by this Court in Shiv Sagar Tiwari v. Union of India1 (In re, Capt. Satish Sharma and Sheila Kaul)”.

13. In the case of Sargous Tours & Travels(supra) court dealt with

paragraphs 63, 70 and 74 of the circular issued by the Government of India,

Ministry of Defence laying down policy regarding determination of reasonable

rates (RR) and rejection of tender if the rate quoted in the tender is below 20%

of the RR. In paragraph-22 of the judgment this High Court placed reliance on

WP ( C) No.5950 of 2014 of 25

the law laid down by the Hon’ble Supreme Court in Dutta Associates (supra)

and ultimately held in paragraph-23 thereof that even in that case the authority

did not disclose the procedure in the NIT and so the entire tender process was

not transparent, fair and open. In paragraph-26 this court followed the law laid

down in Dutta Associates(supra) and adjudged the concerned tender process

bad and unfair. Paragraph-26 of the case is quoted below for ready reference:-

“( 26 ) In view of the fact that I have already held that the law laid down in Dutta associates (supra) is bound to be followed in every tender process and the primary requirement of a tender process to remain valid is that it must notify the intending tenderers of the procedure that the authorities concerned propose to follow in accepting the tender, it clearly follows that omission to mention about the concept and working of rr is fatal in the present case. It is, no doubt, true that the petitioners have been working with the authorities concerned and those, ordinerly, they were likely to know about the existence of the RR, the fact remains that in the fact of categorical assertions made, on oath, by the writ petitioners that they had not been informed about the RR, it was the duty of the respondent-authorities to show by producing materials on record that the RR were within the knowledge or information of the writ petitioners. In this regard, the respondent-authorities have miserably failed inasmuch as there is nothing in the materials on record to show that the petitioners were aware of, and/or had been informed about, the existence of the RR and/or of the fact that the tender, which quotes a rate, which is lower than 20% of the RR, would not be accepted. Viewed from this angle, omission to mention in the NIT the fact that quoting of rates must not be less than 20% of the RR, which may be fixed by the authorities concerned, one has no option but to hold that the procedure to be followed had not been notified in the NIT and in such a situation, the procedure adopted cannot be said to be, as held in Dutta associates (supra), transparent, fair and open.”

WP ( C) No.5950 of 2014 of 25

14. In the case of Educomp Solution Ltd.(supra), this court did not

entertain the argument that Government agencies do not require to notify the

selection criteria in detail at the threshold and that the same can be done at any

stage. This court wondered as to whether selection criteria can be evolved after

opening of technical bids. Because such a procedure would give room and

leverage to the decision makers to manipulate result to suit the convenience of a

particular bidder. This court, therefore, held that even if such criteria is not

notified at the beginning, the same should be made known to all interested

parties before submission of bids by duly informing them about the proposed

criteria to be applied and the methodology in awarding the marks to evaluate

the technical and commercial bids. This court found that by applying hidden

criteria the state agencies awarded more number of marks to the fourth

respondent in that case in the technical bid. Thus, even in this judgment

undisclosed procedure of tender process has been unequivocally discouraged by

this court. Paragraphs -49 and 50 of this judgment are quoted below for ready

reference:-

“( 49 ) We are unable to persuade ourselves to accept the contention of the learned senior counsel Shri R. K. Anand that it is not at all necessary for the governmental agencies to notify the selection criteria in detail even at the threshold and the same can be done at any stage. Does it mean the selection criteria can be evolved after opening of the technical bids? Would it not give room and leverage to the decision makers to manipulate the result to suit the convenience of a particular bidder? In our view even if

WP ( C) No.5950 of 2014 of 25

such criteria is not notified at the beginning, the same should be made known to all the interested before submission of bids by duly informing them about the proposed criteria to be applied and the methodology in awarding the marks to evaluate the technical and commercial bids. In the case on hand such a course ought to have been adopted at least on 14. 12. 2005 when the amendments to the nit were communicated to all the concerned. In fact, the case set up by the amtron is as if the methodology, crite-ria and the formula of 60:40 was communicated to all the concerned on 14. 12. 2005 which plea is not acceptable to us because record does not reveal the same. In the absence of such a communication, the contention that the decision makers applied hidden criteria evolved as a tailor made to suit the 4th respondent acquires legitimacy. We accordingly hold that the procedure adopted by the decision makers is vitiated by the application of hidden criteria, lack of transparency and accountability. Procedural impropriety is writ large on the face of the record. WHETHER THE LOWEST BID IS A valid CRITERIA TO BE TAKEN INTO consideration OR NOT?”

“( 50 ) It is true that in Raunaq International (Supra), Air India Ltd. (Supra) and Master Marine Services (P) Ltd. Vs. Matcalfe hodgkinson Pvt. Ltd. and Anr. , (2005) 6 SCC 138 the Supreme Court held that price need not always be the sole criterion for awarding of contract. It is free to grant any relaxation, for bona fide reasons, if the ten-der conditions permit such a relaxation. That, at the same time the courts may have to bear in mind that the state and its agencies do not have unlimited financial resources at their command, therefore, they altogether cannot ignore the lowest bid offers though it itself may not be the sole criterion for awarding the contract. The margin of difference between commercial bid offered by the petitioners and the 4th respondent runs into few crores. It is one of the factors that should have been taken into consideration by the decision makers particularly in the context of there being no dispute about the validity and eligibil-ity of technical bid offered by the petitioners. It is not a case where the technical bid offered by the petitioners

WP ( C) No.5950 of 2014 of 25

were found to be ineligible. There is no dispute whatsoever that the petitioners' technical bid cm evaluation was found to be eligible along with the technical bid offered by the 4th respondent. It is a matter where applying hidden criteria the State agencies have awarded more number of marks to the 4th respondent so far as the technical bid offered by it is concerned for whatsoever reason. Having regard to the huge margin of difference between the price bid offered by the petitioners and the 4th respondent the State agencies ought to have decided for themselves as to what was requried to be done in the circumstances. This crucial factor completely escaped from their consideration. Thus, the decision makers ignored and failed to take relevant factor into consideration while deciding the matter. WHAT IS THE RELIEF TO BE granted?”

15. In the case of Md.Makrub Khan (supra), this court denounced

adoption of hidden criteria in the matter of settlement of contract holding that

such a practice is fraught with grave danger and the same is an anathema to the

concept of transparency, openness and fairness which had to be scrupulously

observed in the matter on distribution of state largesse. In paragraph-18 of this

judgment, this High Court again reiterated the law laid down in the case of

Dutta Associates(supra) and Sargous Tours & Travels (supra) and held

that the practice of disclosing the procedure at the threshold has to be followed

in every tender process. Paragraph-18 of this judgment is quoted below for

ready reference:

“18. In Sargous Tours & Travels and Arn. V. Union of India and others, reported in MANU/GH/0369/2003:2003 (3) GLT 202 one of us (Ansari ,J) , had opined that the law laid down in Dutta

WP ( C) No.5950 of 2014 of 25

Associates Pvt. Ltd.(supra) is bound to be followed in every tender process and the primary requirement of the tender process to remain valid is that NIT must notify the intending tenderers the procedure that the authority concerned purposes to follow in accepting the tender and that omission to mention about the concept and working in the NIT is fatal. We agree with the principles laid down in Sargous Tours (supra).”

16. With the aforesaid submissions, Mr. N Dutta, learned senior counsel

would argue that the official respondents No. 3 to 7 have miserably failed to

bring on record that the system of disqualifying any bid on the ground of being

15% below estimated amount was either notified in the official website or was it

brought to the knowledge of the petitioner in the present tender process. The

General Terms and Conditions continue to remain unamended even till date

although a decision to that effect was taken by the Board of the APDCL. The

procurement guidelines have no causal connection whatsoever with the instant

tender process and so the whole tender process adopted by the respondents No.

3 to 7 is vitiated by lack of transparency and fairness. The impugned resolution

adopted by the TPC and the consequent approval thereof by the Board

subsequently cannot sustain. The writ petition, therefore, is liable to be allowed

by setting aside both the impugned actions.

17. Per contra, Mr. BD Das, learned senior counsel for the APDCL would

argue that the writ petitioner is a veteran in the field of contract with the

APDCL. It submitted tenders earlier on a number of cases and even in the

WP ( C) No.5950 of 2014 of 25

tender process of Tezpur Medical College, bid of the same contractor was

rejected on the ground that it was below 15% of the estimated amount. The writ

petitioner had accepted the position knowing the same and so cannot be heard

today to say that it has no knowledge about this procedure. The objection is

merely technical and is devoid of substance.

18. Dr. G Lal, learned counsel for the respondent No.7 adopted the same

argument of Mr. BD Das and asserted that the writ petitioner was very much

aware about amendment of the General Terms and Conditions.

19. Having heard the learned counsel for the parties and on perusal of their

respective pleadings it is clear that in the NIT there were some terms and

conditions which did not include the requirement that bid should be within 15 %

of the estimated amount. The NIT provided that provisions of the General Terms

and Conditions would apply if there is no corresponding condition in the NIT. It is

also on record that Board adopted resolution for amending the General Terms

and Conditions but the APDCL ultimately amended the procurement guideline

only. There was no incorporation in the General Terms and Conditions. What is

worse is that amendment of the procurement guideline remained an internal

notification of the APDCL and it was never uploaded in the official website for

general information. In the case of Dutta Associates(supra) the Hon’ble

Supreme Court held that state agency must disclose in the NIT the procedure to

be adopted in the ongoing tender process. Such decision of the Hon’ble

Supreme court is only to ensure transparency and fairness in the field of

WP ( C) No.5950 of 2014 of 25

distribution of state largesse. Unless such a transparent procedure is adopted

there is always room for nepotism and underhand dealings to defeat fair

competition among the participants which is a pre-requisite of the rule of law.

However, subsequently in the case of Haryana State Agricultural Marketing

Board & Ors. Vs. Sadhu Ram reported in (2008) 16 SCC 405 the question

came before the Supreme Court as to whether the principle of transparency in

such matters would include disclosure of the estimated amount at the threshold.

Of course the Hon’ble Supreme court did not find favour with such an argument

because this may give rise to cartel formation leading to unfairness in

competition. But even in that case the Supreme court did not differ with the view

expressed in the case of Dutta Associates(supra). The law laid down in the

case Dutta Associates (supra), therefore, continues to hold the field and so

the state agencies are duty bound to disclose the procedure at the time of

issuance of the NIT itself.

20. Once it is found that law laid down in the case of Dutta

Associates(supra) still holds the field we are to see as to whether the

impugned decision of the respondents No. 3 to 7 in the instant case can stand

the test of reasonableness, fairness and transparency in the light of this

judgment. The APDCL has failed to disclose either in the NIT or in the General

Terms and Conditions that a bidder shall be adjudged non-responsive if its bid

value is below 15% of the estimated amount. Even if it is assumed for the time

being that the APDCL had estimated the amount earlier correctly but there is no

WP ( C) No.5950 of 2014 of 25

scope to hold that the bar of 15% referred to above has been disclosed at any

stage. Although writ petitioner’s tender in a previous tender process stood

rejected for this ground but there is nothing on record to come to hold that the

APDCL had intimated the writ petitioner about such ground. The writ petitioner

made a request for withdrawal of earnest money after the work order was

issued to successful tenderer without asking to know as to why was it not

granted the contract and the APDCL also released the earnest money without

disclosing the reason. Once, the APDCL took a stand in the affidavit that the

writ petitioner was aware about the ground, it became its burden to prove

existence of such knowledge. Mr. BD Das, learned senior counsel in his usual

fairness admitted that there is nothing on record to establish that the writ

petitioner was aware about this ground prior to receipt of the copy of the

affidavit-in-opposition in the present case.

21. Although there is no allegation of malice in fact in this case yet it is clear

that the procedure adopted by the APDCL in the present case is not in conformity

with the law laid down by the Hon’ble Supreme Court in the case of Dutta

Associates(supra). It needs no further comment that disclosure of the rule of

the game before it is played is a pre-requisite for fairness. Unless the same is

done irrespective of whether there is discrepancy or unfairness, a reason to

doubt fairness continues to remain in public mind. In a society governed by rule

of law it is necessary that justice should not only be done but it should seem to

have been done. The very concept of constitutionalism is only to ensure public

WP ( C) No.5950 of 2014 of 25

confidence in the administration of the state machinery. In a contract matter,

state steps into the commercial realm and so such safeguard is even more

necessary.

22. A writ court examines the decision making process and not correctness of

decision. Purpose is to see whether a proper and fair procedure was adopted by

the executive to arrive at a decision. A decision making process can be said to be

fair, if it reasonably appears to be fullproof from potential manipulation. Dutta

Associates (Supra) required state machinery to divulge the rule of the game at

the first instance only to ensure that no loop whole is left for possible

manipulation of a decision. Whether decision has been really manipulated in the

instant case is not under consideration as no malice has been attributed. But

what has been pointed out is that after the techno-commercial bids were

examined and technically fit tenderers were singled out, an exercise of excluding

some technically fit bidders by applying amended procurement guidelines has

been made and as per the terms of the NIT or the general conditions

procurement guidelines were never disclosed to be applicable. So, the

participants have been prejudiced. If a new term or condition is permitted to be

applied at such stage, then always there shall be a scope to favour a blue eyed

contractor. This is how disclosure of the procedure at the time of issuance of NIT

constitutes a precondition for fairness in matters involving distribution of state

largesse.

WP ( C) No.5950 of 2014 of 25

23. Having examined from this angle, the APDCL has miserably failed to ensure

such procedural safeguards and so the tender process has been vitiated entirely.

The whole tender process needs to be set aside and it is accordingly set aside.

Needless to say that consequently the impugned recommendation by the TPC

and approval thereof by the Board stand automatically set aside. The APDCL

shall be at liberty to issue fresh NIT keeping in view the law laid down by the

Hon’ble Supreme Court in the case of Dutta Associates(supra).

24. Writ petition is allowed. Interim order passed earlier is vacated.

25. No order as to costs.

JUDGE

Nivedita

in the gauhati high courtghconline.gov.in/judgment/wpc59502014.pdfin question being a centrally...

Documents