WP/24535/2007 of M.V.V. Satyanarayana, Vs The Engineer-in-Chief (RANDB), on 31 December 2007

ORDER:-

The action of respondent No.2 in rejecting the technical bids of thepetitioner pertaining to the works covered by two tender notifications (forshort ‘NITs’) concerning the works of widening of High Level Bridge to 8lane carriage way across Musi river at KM 2/0 to 2/2 of Inner Ring Road(Nagole Bridge) including approaches right-side and left-side in RangaReddy district is questioned in this writ petition.

The petitioner is a registered Special Class Contractor and he isadmittedly eligible to file his tenders in respect of the works in question. The High Level Bridge as described above is divided into two works andNITs were issued separately for the work of widening of bridge on right-side (for short “right-side work”) vide Tender No.38539/E-In-C(R&B)/EE(TEC)/TA12/ AEE5/07/01 dated 06.10.2007 for an estimated contractedvalue of Rs.2,66,57,986/- and for the work of widening of bridge on left-side (for short “left-side work”) vide Tender No.38539/E-In-C(R&B)/EE(TEC)/TA12/ AEE5/07/02 dated 06.10.2007 for an estimatedcontract value of Rs.5,01,35,383/-. The petitioner applied for both theworks through e-procurement by uploading the bid documents within thestipulated time. It is the case of the petitioner that scheduled date ofopening of technical and price bids was postponed and the technical bidswere eventually opened on 16.11.2007. The petitioner averred in hisaffidavit that he was telephonically informed by the office staff ofrespondent No.2 that his technical bids for both the works were rejected onthe sole ground that the balance-sheet filed by the petitioner does notstand in his personal name but in the name of M/s.Meher Engineers, aregistered firm (for short “the firm”). The petitioner pleaded that he is theregistered special class contractor and the Managing Partner of the saidfirm and in view of the recitals in the parthership deed the balance-sheetand income tax return stand in the name of the said firm, and that the Income Tax Department has been assessing the turnover of the said firmby including the individual turnover of the petitioner. The petitioner furtheraverred that the firm has no separate and independent entity or income,other than the income of the petitioner and that the petitioner’s price bid islower by 3.06% for both the works which comes to about Rs.80 lakhs lessthan the estimated value of works. In support of the petitioner’s contentionthat the income of the petitioner is being assessed under firm’s name, hefiled Ex.P6 income tax return for the assessment year 2006-07.

Sri B.Laxmaiah, Superintending Engineer, Roads and Buildings,Rural Circle, Balkampet, respondent No.2 filed a counter affidavit. Heaverred that the technical bids in respect of the two works were opened on31.1.2007 and that he accepted the technical bid of one Sri K.SudershanReddy out of three tenders received as he was found to be the only bidderwho applied with all the tender eligibility conditions as per the NITs/biddocuments. He further stated that the technical bid for the right-side workof the petitioner was rejected on the ground that he has not furnished theincome tax return and balance-sheet statement pertaining to his individualname, as the said certificates are in the name of the firm and that thepetitioner’s technical bid for the left-side bridge work was rejected on theadditional ground, namely, that his failure to file documents showing thathe has executed the work of the value of not less than Rs.2,00,54,154/- inany one of the five preceding financial years as per the eligibility criterionmentioned under NIT/bid document. Respondent No.2 justified the saidrejection on the ground that since the registration of the petitioner asSpecial Class Contractor was done in his individual name and that the firmdoes not figure in the Registration Certificate, the financial statementsstanding in the name of the said firm could not be taken intoconsideration. Respondent No.2 further stated that in June, 2007 a similartender filed by the petitioner was rejected on the self same ground.

In the reply affidavit filed by the petitioner it is asserted that theincome tax return filed in the name of the firm reflect the works executedby the petitioner in his name and that authorities such as MunicipalCorporation of Hyderabad, Hyderabad Urban Development Authority andother Government Departments have been accepting the financialstatements of the firm for awarding the works in the petitioner’s name. Inrespect of the left-side work the petitioner disputed the correctness of theground of rejection, namely, that he did not satisfy the requirement ofexecution of the stipulated value of the work in any one of the precedingfive years. The petitioner re-iterated his stand that the turnover assessedby the Income Tax Department in the name of the firm is nothing but theturnover achieved by the petitioner in his individual name and that the saidprocedure was being followed in consonance with the terms of hepartnership deed.

Sri Prasad Rao Vemulapalli, learned counsel for the petitionersubmitted that rejection of the technical bids of the petitioner on the groundthat the petitioner failed to file the income tax return and balance-sheetsstanding in his name is illegal and unsustainable. He further contendedthat the petitioner is the Managing Partner of the firm and since the incometax returns reflect the turnover achieved by the petitioner in his individualname the respondents are not justified in rejecting his technical bid on thepurported ground of non-compliance of clause 3.3B(f) of the NITs. He alsocontended that since the firm is not a legal entity, the income tax returnand balance-sheet standing in the name of the firm shall enure to thebenefit of its partners. In support of his contention, he relied upon thejudgment of the Supreme Court in New Horizons Limited and Another Vs. Union of India and Others[[1]]and also a judgment of this Court inS.Kireetendranath Reddy Vs. A.P.Transco[[2]]. He also relied upon the

judgment of the Supreme Court in M/s.Poddar Steel Corporation Vs.

M/s.Ganesh Engineering Works and Others[[3]]in support of hiscontention that every term in a tender need not be complied with inmeticulous detail and that a tender cannot be rejected on a technicalirregularity of little or no significance.

Per contra, learned Government Pleader for Transport and Roadsand Buildings contended that clause 3.3B (f) is an essential condition andthat since the documents produced by the petitioner in purportedcompliance of the said condition do not reflect the name of the petitioner,his technical bid was rejected and that the said rejection beinginconsonance with the tender conditions the same cannot be interferedwith. The learned Government Pleader relied upon the judgment of theSupreme Court in M/s.G.J.Fernandez Vs. State of Karnataka andOthers[[4]]and Tata Cellular Vs. Union of India[[5]]in support of hiscontention. The learned Government Pleader further contended that as thepetitioner applied for the work in his own name, he cannot file documentspertaining to the financial standing of the firm, because the petitioner’sacts in the course of execution of the work if awarded would not bind thefirm and in such an event the department will not be in a position toenforce the liabilities if any incurred by the petitioner against the firm. Hetherefore, submitted that viewed from that perspective clause 3.3B (f) is anessential condition to be complied with. The learned Government Pleaderfurther contended that in respect of the left-side work, the petitioner failedto produce the documents to show that he executed a similar work of thevalue of Rs.2,00,54,154/- in any one of the preceding five years and thattherefore, the ground of rejection of the technical bid in respect of the saidwork does not suffer from any infirmity.

I have carefully considered the respective submissions of thelearned counsel and perused the record. The common ground on which the technical bids of the petitioner pertaining to both the works are rejectedis that petitioner failed to file the PAN card and income tax return standingon his name and thereby he failed to comply with clause 3.3B(f) of theNITs. The petitioner’s technical bid for the left-side work of the bridge wasrejected on the additional ground that the petitioner failed to demonstratethat he executed the work of the value of Rs.2,00,54,154/-.

Let me first examine whether the common ground on which thetechnical bids for both the works are rejected can be sustained in law?

Clause 3.3 of NITs prescribes qualification criteria for opening of the price bid. It is apposite to extract the said clause hereunder:

“ 3.3 Qualification Criteria for Opening of the price bid.

A.To qualify for opening the price bid each firm in its name, should haveduring the last five financial years from 2002-2003 to 2006-2007 (specifythe financial years those immediately preceding the financial year in whichthe tenders are invited)during the last five financial years from 2002-2003 to 2006-2007 (specifythe financial years those immediately preceding the financial year in whichthe tenders are invited)

vi. The bidder should have satisfactory completed, as prime contractorsimilar nature of Bridge works of value not less than Rs.1,06,63,195/- (andRs.2,00,54,154/- in respect of left-side work) in any one financial yearduring the last five financial years i.e., from 2002-2003 to 2006-2007 (thisvalue will be updated to the year 2007-2008 in which the tenders for thiswork is called duly giving 10% weightage for each financial year. Sub-contractors/GPA holders’ experience shall not be taken into account.

Note:The cost of completed works of previous years shall be givenweightage of 10% per year to bring them to current price level (the financialyear in which bids are invited).

a)Executed in any one year the following minimum physical quantities.

S.No. item for this work

_________________________________________________________________1. PCC or VCC or VRCC 1324 cum (2114 cum combined quantity for left-side work)_________________________________________________________________

B)Each bidder should further demonstrate:

a)Availability (either owned or leased of the following key and criticalequipment for this work)

S.No. Equipment type and Minimum no. Characteristics of required1. Concrete Mixers 3 nos.

2. Weigh Batchers 2 nos.3. Pin & Pan Vibrators 10 nos.

b.The contractor shall procure the Hot Mix material to the work siteduly maintaining the required laying temperature as per thespecifications.c.For all works costing more than Rs.2.00 crores, the contractorshall submit quality plan and also show proof of owning quality labor tie-up with an established quality lab.d.Availability of the key personnel

i. Graduate Engineer 1 no. ii. Diploma Holders with adequate experience 1 no.

e.Liquid assets and/or credit facilities of not less than Rs.53,31,598/-credit facility/letter of credits/solvency certificates from commercialbanks etc.f.Copy of PAN card with a copy of latest income tax returnsubmitted with proof of receipt.g.Copy of Value Added Tax (VAT) registration and latest validcommercial tax clearance certificate.”

A reading of Clause 3.3 as extracted above reveals that it is in twoparts, namely, A and B. Part-A prescribes experience of the bidder ofsatisfactory completion of work executed in its name (as prime contractor)similar nature of bridge works of a specified value in any one financial yearduring the last five financial years, i.e., from 2002-03 to 2006-07. Inrespect of the right-side work, it is stipulated that the bidder should haveexecuted in the above mentioned period the work of similar nature of thevalue of not less than Rs.1,06,63,195/- and in respect of left side work heshould have executed a similar work of the value of Rs.2,00,54,154/-.Under part-B of the said clause each bidder should further demonstrateavailability of critical equipment and key personal indicated therein. Undersub-clause (f) of part-B copy of PAN card with a copy of latest income taxreturn submitted with proof of receipt shall be submitted.

With respect to the right-side work of the bridge, the respondentsadmit that the petitioner satisfied the requirement of part-A and also part-B

except to the extent of sub-clause (f) of clause 3.3B. From a carefulreading of clause 3.3 it would be evident that clause 3.3A constitutes thecore and substantive requirement to be satisfied by the bidder, as it relatesto the previous experience of the bidder in respect of the work of similarnature. Similarly, under part-B clauses (a) to (d) which prescribe proof ofavailability of critical equipment and key personal and clause-(e) underwhich the bidder should produce proof of owning liquid assets and/or creditfacility of not less than Rs.53,31,598/- (in the case of right-side work),solvency certificates etc., also constitute conditions of substantive nature. As regard clauses 3.3B (f) and (g), all that is required therein is that thebidder should file copies of PAN card with latest income tax returnsubmitted with proof of receipt and Value Added Tax (VAT) registration andlatest valid commercial tax clearance certificate respectively. It issignificant to notice that all the sub-clauses of clause 3.3 except sub-clauses (f) and (g) stipulate that the bidders should produce proof ofpossessing experience, critical equipment, key personal and liquidassets/solvency certificate to the extent of specified requirements, whereas such stipulations are not contained in sub-clauses (f) and (g) and, asalready noted under the said clauses, the bidders are merely required tofile copies of the documents prescribed therein. The said clauses do notfurther stipulate the requirement of minimum turnover etc., both in respectof income tax and VAT. On a careful consideration of clause 3.3 in itsentirety, I am of the considered view that while all other sub-clauses ofclause 3.3 are substantive (essential) in nature, sub-clauses (f) and (g)are merely procedural in nature which are intended to ensure that thebidders are assessed under the Income Tax Act, 1961 and registered andassessed under the Andhra Pradesh Value Added Tax Act 2005.

Keeping in view the nature of sub-clause (f) of clause 3.3B, I shallnow examine whether respondent No.2 is justified in rejecting the technical bid filed in respect of right-side work on the ground of violation of the saidclause. The claim of the petitioner that he is the managing partner of thefirm is admitted by the respondents (in para-6 at page-4 of the counteraffidavit of respondent No.2). I find from the record produced by thelearned Government Pleader that alongwith the tenders, the petitioner fileda copy of partnership agreement dated 1.4.1993 with a copy of the deed ofamendment of the partnership dated 2.4.1993. Clause 6 of the amendedpartnership deed reads as under:

“Partner No.1 viz., Sri M.V.V.Satyanarayana shall be theManaging Partner of the firm who shall have the power of controland management of the affairs of the business. He shall have thepower individually to apply for tenders and negotiate the termsthereof, to enter into agreements, to accept measurements, to signthe bills and to receive payments etc. He shall also have thepower to appoint necessary staff, to maintain the books ofaccounts and to incur necessary expenses and to do all acts andthings necessary and incidental to carry on the business of thefirm. Any of the works tendered and obtained in the name ofSri M.V.V.Satyanarayana shall be deemed to have been takenon behalf of this firm.” (emphasis added}

From the above re-produced clause it is clear that it is agreed by allthe partners that the petitioner who is the managing partner of the firm isinter alia given the freedom to individually apply for tenders and it is furtheragreed that where the contracts are awarded in the name of the petitionerthey shall be deemed to have been awarded on behalf of the firm.

In this connection it is necessary to consider the relevant provisionsof the Indian Partnership Act, 1932 (for short “the Act”). Section 4 of theAct defines the terms ‘partnership’, ‘partners’, ‘firm’ and ‘firm name’ asunder:

“"Partnership" is the relation between persons who haveagreed to share the profits of business carried on by all or any of them acting for all.

Persons who have entered into partnership withone another are called individually "partners" andcollectively "a firm", and the name under which theirbusiness is carried on is called the "firm name".”

Section 11 of the Act enables the partners of the firm to determinetheir mutual rights and duties by contract between them and that suchcontract may be expressed or implied. Section 12 inter alia provides thatsubject to contract between the partners every partner has a right to takepart in the conduct of the business. Under Section 13(e)(i) of the Act thefirm shall indemnify a partner in respect of payments made and liabilitiesincurred by him in the ordinary and proper conduct of the business andunder section 13(f) a partner shall indemnify the firm for any loss causedto it by his willful neglect in the conduct of the business of the firm. UnderSection 16, if a partner derives any profit for himself from any transactionof the firm, or from the use of the property or business connection of thefirm or the firm name, he shall account for the profit and pay it to the firmand if a partner carries on any business of the same nature as andcompeting with that of the firm, he shall account for and pay to the firm allprofits made by him in that business. Under Section 18, subject to theprovisions of the Act, a partner is the agent of the firm for the purpose ofthe business of the firm. Under Section 19, subject to the provisions ofSection 22, the act of a partner which is done to carry on, in the usual way,business of the kind carried on by the firm, binds the firm and the partnerhas the implied authority to act as an agent of the firm. Under Section 22in order to bind a firm, an act or instrument done or executed by a partneror other person on behalf of the firm shall be done or executed in the firmname, or in any other manner expressing or implying an intention ofbinding the firm. Under Section 26, where, by the wrongful act or omission of a partner acting in the ordinary course of the business of a firm, or withthe authority of its partners, loss or injury is caused to any third party orany penalty is incurred, the firm is liable therefor to the same extent as thepartner. A similar liability is fastened on the firm in respect of mis-application of money and property received from third parties underSection 27(a) of the Act.

From the above reproduced definitions under Section 4, it is clearthat a partnership is nothing but a collective form of all its partners.

In Bacha F Guzdar, Bombay Vs. Commissioner of Income Tax,Bombay[[6]]it is held that a partnership is merely an association ofpersons for carrying on the business of partnership and in law the firmname is a compendious method of describing the partners. I n HerHighness Maharani Mandalsa Devi Vs. M.Ramnaram Private Limited[[7]]the Supreme Court held that for certain purposes law has extended alimited personality to a firm which is not a legal entity.

This Court in S.Kireetendranath Reddy (2 supra) considered inextenso the status of a partnership firm in law and its partners. That wasa case where A.P.Transco declined to recognize the experience claimedby one of the two partners of a partnership firm in respect of the worksexecuted in the name of the firm. When the said action was questioned ina writ petition, this Court in para-18 held as under:

“It is well settled that a firm is not a legal entity, but is only acollective or compendious name for all partners. It is neither alegal entity nor a person. A firm has no legal existence apart fromits partners. A firm name is really a description of the individualswho compose it. The essential characteristic of a firm is that eachpartner is a representative of the other partners. Each of thepartners is an agent and a principal. He is an agent in so far ashe can bind the other partners by his acts within the scope of thepartnership business and he is principal to the extent that he isbound by the acts of the other partners. The liabilities of the firm can be enforced against each of the partners personally.”

After analyzing various provisions of the Act and the decided case law in para 24, it is held as under:

“An examination of the above propositions of law and theauthorities clearly goes to show that a partner when he acts in allmatters which are within the scope and objects of the partnership,he steps into the shoes of the firm, which is a personifiedperson but not a legal person in popular language, and binds allother partners, who compose it by his acts. Artifice of speechdevised for compendious expression is extensively used inpopular language to personify even non-persons as persons. Forexample, we speak of the estate of a deceased person, a team ofplayers, a group of students, a public meeting, and a Bench ofJudges as if they were themselves persons though they are not. Similarly, we speak of a firm as a person distinct from theindividual persons. Undoubtedly, all legal personality involvespersonification, but all personification need not necessarilyinvolve legal personality. Salmond’s the following observation isapposite:

“…….legal personality is not reached until the lawrecognizes, over and above the associated individuals, asingle entity which in a manner represents them, but is notidentical with them.”

On the above premise, the action of the A.P.Transo in disqualifying thepetitioner therein by not taking into consideration the experience of the firmas his experience as a partner was invalidated by this Court and theA.P.Transco was directed to treat the experience of the firm as hisexperience. In my considered view the ratio laid down in this judgmentapply in all fours to the present case.

In the light of the settled law as discussed above a firm has noindependent existence dehors its partners. I have perused letter dated17.11.2007 addressed by respondent No.2 to respondent No.1 wherein he sent his recommendations after evaluating the technical bids. In the caseof the petitioner’s technical bid, he stated as under:

Ratio decidendi

“Sri M.V.V.Satyanarayana, the bidder has submitted hardcopies in time to this office. During the course of technicalevaluation of his bid it was observed that, the bidder has notfurnished the IT return filed on the same name i.e., SriM.V.V.Satyanarayana. Instead he has submitted the IT returnsfiled on the name of a firm M/s.Meher Engineering of which SriM.V.V.Satyanarayana is the managing partner. As such the bidhas not been considered qualified technically.”

From the reasons contained in the above re-produced letter ofrespondent No.2 it is clear that the rejection is based merely on the factumof not complying with sub-clause (f) in its letter and there is no discussionon the implication of such non-compliance. Once it is legally concededthat a partnership firm has no independent legal existence, I do not seeany justification whatsoever in respondent No.2 not considering the incometax return filed in the name of the firm of which admittedly the petitioner isthe managing partner. Respondent No.2 seems to be obsessed with thefact that the income tax return was not “on the same name” of thepetitioner and this objection looks to me to be hyper-technical. Asconcluded supra, the purpose of sub-clause (f) of clause 3.3B appears tobe limited only to ensure that the bidder holds a PAN card meaning therebythat he should be an assessee. The proof in respect of such fact could beshown only by producing the latest income tax return. With the filing of theincome tax return and the PAN card standing in the name of the firm ofwhich the petitioner is the managing partner, the requirement of sub-clause(f) is adequately complied with.

It is seen from the technical bid evaluation of the petitionercontained in the record, as against the value of liquid assets/creditfacility/solvency of not les than Rs.53,31,598/-, the petitioner produced the certificate to the extent of Rs.725 lakhs. It is therefore, quite evident thatthere is no dispute about either the petitioner’s experience or his owningcritical equipment or his having key personal or solvency as requiredunder the tender conditions. This is obviously the reason for respondentNo.2 in not mentioning any reason other than the reason that the petitionerhas not filed the income tax return in his own name.

In this context let me examine the issue from another angle. Supposing the firm was a proprietary concern with the petitioner as a solepartner, in such a case if the petitioner filed the tender in his personalname and filed the income tax return of the firm as proprietary concern,would the respondents have rejected the tender of the petitioner? Theanswer should be an emphatic ‘no’. This being so, respondents could nothave rejected the petitioner’s tender merely because he filed the incometax return standing in the name of the firm.

When a firm is represented by its partner, there is nothing in lawwhich separates him from the firm which he represents, as the firm has nolegal entity. In this perspective the name which does not spell any magicis not so much material, but it is the composition of the firm which ismaterial for, the partner of a firm steps in to the shoes of the firm.

Lindlay and Banks on ‘partnership’ in their sixteenth edition wrote:“In law the firm name represents no more than a convenientdesignation applicable to the persons who, on each occasion thatthe name is used, then constitute the firm. It serves no otherpurpose.” (Emphasis added)

While dealing with the contention that unless the bidder hasexecuted the work “in his own name”, the work executed in the name ofthe firm cannot be considered in favour of its partner, this Court inS.Kireetendranath Reddy (2 supra) went into the concept of what is a‘name’ and held in para-36 as under:

“The word ‘name’, as a noun, is that by which a person orthing is known. In other words, ‘name’ is the designation of anindividual person, or a firm or a corporation and it is the distinctivecharacterization in words by which one is known anddistinguished from others. ‘Name’ is not a legal percept nor‘name’ as such can be equated with identifying a person fromothers, and this device is invariably used by mankind not only inrespect of natural persons and legal persons but also in respect ofno-persons like animals, plants and non-living things. As statedabove, experience, in legal parlance, can be attributed to personsonly, whether they are natural or legal, and not to anyone else. The ‘name’ as such does not denote the experience of the personwho bears it. The change of the name in no way affects theexperience of the person who bore that name. Therefore, theconsideration of the name of the applicant for award of thecontract is irrational and that cannot be a valid basis for anydistinction in law.”

From the analysis as made above, I am convinced that the rejectionof the petitioner’s technical bid merely on the ground that the income taxreturn stands in the name of the firm and not in the personal name of thepetitioner has no legal basis whatsoever.

I find another crucial angle to this case on which also the result ofthis case can turn. The learned counsel for the petitioner relied uponclause 6 of the partnership agreement as amended, for the purpose ofconvincing this court that the petitioner is permitted to execute works inhis own name, but he is obliged under the said clause to assess the worksin the name of the firm. He has taken pains to explain and correlate withreference to the income tax returns filed in the name of the firm, the worksexecuted by him in his name with the turnover mentioned in the name ofthe firm in the income tax returns. In my opinion this exercise on the partof the learned counsel is wholly unnecessary, because, clause 6, which isunequivocal in its terms, obviates the necessity for such an exercise.

The said clause empowers the petitioner not only to individually apply fortenders, negotiate the terms thereof and enter into agreements etc., but italso contains a deeming provision, namely, that the works tendered andobtained in the name of the petitioner shall be deemed to have been takenon behalf of the firm. Thus on the true construction of this clause it isquite apparent that though the petitioner executed the works in the past inhis own name, they are deemed to have been executed on behalf of thefirm. Clause 6, in my view, is in accordance with the provisions of Section16 of the Act which was referred to supra and a fortiori, the tender which isfiled by the petitioner in his name is deemed to be filed in the firm’s name. Viewed from this perspective, even if sub-clause (f) of clause 3.3B of NITsis treated as substantive in nature and construed literally, the petitionercomplied with the said condition by filing the income tax return of the firm. The rejection of technical bid cannot therefore be sustained even from thisperspective.

The contention of the learned Government Pleader that if the tenderof the petitioner is accepted on the basis of the income tax return of thefirm, the department may not be in a position to enforce the petitioner’sliability against the firm is without any basis. In the face of the abovementioned clause of the partnership deed under which the work awarded tothe petitioner is deemed to be the work awarded to the firm, the firm isliable for the wrongful acts of the petitioner and it is liable to make good theloss if any caused to the respondents by operation of the provisions ofSections 26 and 27 of the Act. Therefore, these statutory provisions readwith clause 6 of the partnership agreement allay the said apprehensionexpressed by the learned Government Pleader at the hearing though thesame does not find a place either in the counter affidavit filed byrespondent No.2 or in the reasons mentioned in the record maintained bythe respondents and produced before the Court.

In New Horizons (1 supra) the Supreme Court held that the termsof a tender document have to be construed from the stand point of aprudent businessman. In that case the experience of one of the partnersof joint venture was refused to be treated as the experience of thecompany. Though it was a company which has a legal entity, unlike apartnership firm, the Supreme Court went to the extent of lifting thecorporate veil to know who are the persons behind the company. In para-23 it is held as under:

“While considering the requirement regarding experience ithas to be borne in mind that the said requirement is contained in adocument inviting offers for a commercial transaction. The termsand conditions of such a document have to be construedfrom the standpoint of a prudent businessman. When abusinessman enters into a contract whereunder some work is tobe performed he seeks to assure himself about the credentials ofthe person who is to be entrusted with the performance of thework. Such credentials are to be examined from a commercialpoint of view which means that if the contract is to be entered witha company he will look into the background of the company andthe persons who are in control of the same and their capacity toexecute the work. He would go not by the name of the companybut by the persons behind the company. While keeping in viewthe past experience he would also take note of the present state ofaffairs and the equipment and resources at the disposal of thecompany. The same has to be the approach of the authoritieswhile considering a tender received in response to theadvertisement issued on 22/4/1993.” (emphasis added)

In the instant case as already noted, the respondents are satisfiedabout the past experience and the capacity of the petitioner to execute theright-side work as reflected in his possession of key and criticalequipment, key personal and solvency which are the relevant criteria toassess the capacity of a contractor to execute the tendered work. But therespondents failed to exhibit business prudence by a pedantic construction of clause 3.3 B(f) of the NIT.

The Full Bench judgment of this Court in I.T.Commissioner, AndhraPradesh, Hyderabad Vs. G.P.Naidu[[8]],and the judgments of theSupreme Court in Champaran Cane Concern (Dissolved) Vs. State ofBihar and Another[[9]]and Devji Vs. Magan Lal R.Atharana andOthers[[10]]cited and relied upon by the learned Government Pleader haveno application at all to the case on hand.

In I.T.Commissioner (8 supra) the question arose whether for thepurpose of assessment under the Income Tax Act the income of the twopartnership firms can be clubbed. In the context of deciding the said issuein para-25(2) the Full Bench held as under:

“A firm as such is not entitled to enter into partnership with anotherfirm or individual as the definition of ‘person’ in Section 3(42) ofthe General Clauses Act 1897 cannot be imported into Section 4of the Indian Partnership Act.”

I have carefully read the said judgment and I have no manner ofdoubt that the same has no application to the facts of this case.

In the case on hand the firm in question has not entered into anypartnership with another firm or an individual, but the managing partner ofthe firm who is the petitioner herein is claiming to treat the income taxreturns filed in the name of the firm as sufficient compliance of sub-clause(f) of clause 3.3B.

The judgment in Champaran Cane Concern (9 supra) has equallyno application because that was a case where provisions of BiharAgricultural Income Tax Act, 1948 and the Partnership Act, 1932 weredealt with and the question which was referred to the High Court waswhether for the purpose of assessment under the said Act, the assesseetherein was a partnership firm or a co-ownership concern.

Similarly, the judgment in Devji (10 supra) also has no application because in that case a partner of a firm took sub-lease of a property in hisown name and the claim of the lessor who granted sub-lease against thepartnership firm was rejected on the ground that in order to bind thepartnership firm, it has to be proved that the act of the partner is done inthe name of the firm or in any other manner expressing any intention tobind the firm. I am at a loss to know how this judgment has relevance inthe context of the present case.

As observed supra, clause 6 of the partnership deed in the instantcase expressly authorized the petitioner to represent the firm by filingtenders in his own name. The judgment in G.J.Fernandes (5 supra) hasno application to the facts of this case.

Learned Government Pleader also relied upon para-84 of thejudgment in Tata Cellular (5 supra) in support of his contention that one ofthe requisites of a valid tender is that it must be made in the proper form. In the light of the discussion already undertaken above there cannot beany manner of doubt that the tender filed by the petitioner is in proper formand the only question was whether there was compliance with sub-clause(f) of clause 3.3B. Indeed the judgment of the Supreme Court in TataCellular (5 supra) is relevant from a different stand point in this case. Asheld therein, if the decision of an authority suffers from illegality,irrationality or procedural impropriety, the same is amenable for judicialreview by the High Court under Article 226 of the Constitution of India. Quoting Lord Diplock in Council of Civil Service Unions Vs. Minister forthe Civil Service ( 1985 (1) AC 374) the Supreme Court held that whether adecision is irrational or not has to be judged by applying Wednesburyprinciple as described in Associated Provincial Picture Houses v. Wednesbury Corporation (1948 (1) KB 223) in which it is held that adecision of a public authority will be liable to be quashed or otherwise dealtwith by appropriate order in judicial review proceedings where the court concludes that the decision is such that no authority properly directingitself on the relevant law and acting reasonably could have reached it. Byapplying the said principle to the facts of the present case, I have no doubtin my mind that the decision of the respondents in rejecting the petitioner’stechnical bid in respect of the right-side work of the bridge covered bytender No.38539/E-In-C(R&B)/EE(TEC)/TA12/AEE5/07/01 dated06.10.2007 is irrational.

In Reliance Energy Ltd., and Another Vs. Maharashtra StateRoad Development Corporation Ltd., and Others[[11]]the SupremeCourt while relying on its judgment in Reliance Airport Developers (P)Ltd., v. Airports Authority of India ( (2006) 10 SCC 1) held that thedecision maker must understand correctly the law that regulates hisdecision making power and he must give effect to it, otherwise, it mayresult in illegality. It was further held that the principle of judicial reviewcannot be denied even in contractual matters or matters in which theGovernment exercises its contractual powers and that judicial review isintended to prevent arbitrariness and it must be exercised in larger publicinterest. In my considered view, the above observations aptly apply to thepresent case. The respondents have failed to keep in view the law ofpartnership and the legal status of a firm qua the status and relationship ofits partners. This has resulted in arbitrarily rejecting the technical bid ofthe petitioner. With the rejection of the technical bids of the petitioner andanother tenderer in respect of the right-side work, the respondents wereleft with no option, but to consider the price bid of a single tenderer whoquoted 4.93 % in excess of the estimated value. The petitioner claims thathe quoted 3.06 % less than the estimated value. I have no reason to doubtthis submission of the petitioner. By rejecting the petitioner’s technical bidby making a dogmatic approach the respondents placed themselves in aposition where they are compelled to consider the price bid of the only tenderer remaining in the field. This, in my opinion, certainly affects thepublic interest. Nowhere in the pleadings or record did the respondentsever express lack of capacity or competence on the part of the petitionerto execute the right-side work of the bridge covered by tender No.38539/E-In-C(R&B)/EE(TEC)/ TA12/AEE5/07/01 dated 06.10.2007.

For all the aforementioned reasons, I hold that rejection of technicalbid of the petitioner in respect of NIT No.38539/E-In-C(R&B)/EE(TEC)/TA12/AEE5/07/01 dated 06.10.2007 (right–side work)does not conform to law and the extant tender conditions and is therefore,declared as illegal and invalid.

As regards NIT No.38539/E-In-C(R&B)/EE(TEC)/ TA12/AEE5/07/02dated 06.10.2007 (left-side work) the additional ground of rejection ofpetitioner’s technical bid is that his failure to produce the certificateshowing that he executed the work of the value of not less thanRs.2,00,54,154/-. Though the learned counsel for the petitioner madestrenuous efforts to convince this Court that the petitioner satisfies thiscondition, he has eventually conceded that the certificate produced by himrelating to Jamia Osmania road over-bridge does not show that in any oneyear during 2004-05 and 2007-08, the petitioner executed work of the saidvalue. Though the learned counsel sought to rely upon the certificaterelating to execution of works of gauge conversion between Mudikhed andNizambad, he agreed that the said work is not similar to the work involvedunder this contract. In view of the above, the petitioner failed to prove thathe satisfied the eligibility criteria of having executed a similar work of thevalue of Rs.2,00,54,154/- in any one of the preceding five years andtherefore, I do not see any illegality or irrationality in the decision of therespondents in rejecting his technical bid in respect of left-side work of thebridge covered by tender No.38539/E-In-C(R&B)/EE(TEC)/TA12/AEE5/07/02 dated 06.10.2007.

Conclusion

In the result, the writ petition is partly allowed. The respondents aredirected to open the price bid of the petitioner relating to NIT No.38539/E-In-C(R&B)/EE(TEC)/TA12/AEE5/07/01 dated 06.10.2007 (right–side work)and consider the same alongwith the price bid of the other qualifiedtenderer, namely, K.Sudershan Reddy.

As a sequel to disposal of the writ petition, W.P.M.P.No.31945 of2007 filed by the petitioner seeking interim direction is disposed of asinfructuous.

Date:31.12.2007mdaa

___________________________

C.V.NAGARJUNA REDDY,J

[1](1995) 1 SCC 478[2]1999 (5) ALT 47[3]AIR 1991 SC 1579[4]AIR 1990 SC 958[5]AIR 1996 SC 11[6]AIR 1955 SC 74[7]AIR 1965 SC 1718[8]AIR 1980 AP 158[9]AIR 1963 SC 1737[10]AIR 1965 SC 139[11](2007) 8 SCC 1