SCA/14592/2008 of SHREEJIKRUPA BUILDCON LIMITED Vs NAVSARI AGRICULTURAL UNIVERSITY on 29 December 2008

ORAL JUDGMENT

(Per : HONOURABLE MR. JUSTICE MOHIT S. SHAH)

Leave to delete respondent Nos. 2 and 3.

2. RULE. Mr HK Parmar waives service of Rule for respondent No. 1. Mr AM Joshiyara waives service of Rule for respondent No.4.

In the facts of the case, the petition is taken up for final disposal today.

3. In this petition under Article 226 of the Constitution, the petitioner challenges the decision dated 08.12.2008 of respondent No.1 – Navsari Agricultural University (Annexure–G) considering the petitioner as disqualified from participating in the tender for construction of Veterinary College building at respondent No.1 University (“the University” for short) being Tender Notice No. 20/2008-09.

4. Main terms of the Tender Notice, in so far as relevant for the purpose of this petition, were as under :- RemarksDemand Draft for E.M.D. & tender fee shall be submitted in electronic format only through online (by scanning) while uploading the bid. In case of cash option for EMD & Tender fee cash receipt No. & date should be scanned on blank paper and submit through online. This submission shall mean that E.M.D. & tender fee are received. Accordingly offer of those shall be opened whose E.M.D. & tender fee is received electronically as well as Pre Qualification requirement satisfied. The Bidder shall have to send the Pre Qualification Documents as required upto Dt. shall be submitted in electronic format only through online (by scanning) while uploading the bid. In case of cash option for EMD & Tender fee cash receipt No. & date should be scanned on blank paper and submit through online. This submission shall mean that E.M.D. & tender fee are received. Accordingly offer of those shall be opened whose E.M.D. & tender fee is received electronically as well as Pre Qualification requirement satisfied. The Bidder shall have to send the Pre Qualification Documents as required upto Dt.

27/11/2008. However for the purpose of realization of D.D., bidder shall send the D.D. in original through R.P.A.D. or through Speed Post only, so as to reach to Executive Engineer, NAU Navsari upto 4/12/2008. Penaltative action for not submitting D.D. in original to E.E. by bidder shall be initiated. realization of D.D., bidder shall send the D.D. in original through R.P.A.D. or through Speed Post only, so as to reach to Executive Engineer, NAU Navsari upto 4/12/2008. Penaltative action for not submitting D.D. in original to E.E. by bidder shall be initiated.

The general terms and conditions were, inter alia, as under :-

Bidders can download the tender document free of cost from the website. cost from the website.

Bidders have to submit technical bid as well as price bid in Electronic formate only on procure website till the last date & time for submission. price bid in Electronic formate only on procure website till the last date & time for submission.

Offer in physical form will not be accept in any case. case.

5. The petitioner submitted its price bid online on 28.11.2008. There is no dispute about the fact that the price bid was sent within the time limit. However, according to the respondent University, the petitioner was not considered to be eligible for participating in the tender process only on the ground that the pre-qualification documents were not sent by the petitioner so as to reach the University by 27.11.2008. The pre-qualification documents reached the University on 3.12.2008 by Speed Post. In the meantime, on 01.12.2008 the University had opened the pre-qualification documents of three other parties who had submitted their tenders.

Out of the said three parties, one was found to be ineligible as it did not have the requisite experience in terms of the value of the contract carried out. Hence, only two parties were considered to be eligible i.e. respondent No.4 – M/s. Sorath Builders and respondent No.2 – M/s. R.N. Dobaria. When the price bids of the said two parties were opened, respondent No. 4 was found having offered the rate of 21% above the estimated value and the rate offered by respondent No. 2 was still higher. Respondent No.4 was, therefore, called for further negotiations and respondent No. 4 offered the rate of 19.8% above the estimated value. The respondent University accordingly issued a letter of acceptance dated 10.12.2008 in favour of respondent No. 4.

6. The present petitioner contends that by providing arbitrary time limit to submit the pre-qualification documents, the respondent University has shut out competition and permitted only two eligible parties to enter the fray. It is stated that the price bid offered by the petitioner was much lower, being 6.38% above the estimated contract value, that if the petitioner's offer is accepted, the respondent University will be saving public funds to the tune of more than Rs. 1 crore. It is also contended that respondent No. 4 is working with the respondent University for years and therefore, the time limits stipulated in the tender notice were to suit respondent No.4.

7. In response to the notice, the affidavit-in-reply is filed by the Registrar of the University submitting that the tender notice published in the newspaper – Sandesh as well as the terms and conditions of the e-notice specifically required the contractor to submit the pre-qualification documents by Speed Post / RPAD so as to reach the University latest by 27.11.2008. Hence, anyone who read the tender notice online from 21.11.2008 onwards could have submitted the pre-qualification documents so as to reach the SCA/1459220/2008

University by 27.11.2008. It is submitted that three parties did submit the pre-qualification documents so as to reach the University by 27.11.2008. The petitioner having missed the bus cannot be permitted to challenge the decision accepting the tender of respondent No. 4.

8. At the hearing of this petition, the learned counsel for the University submitted that the time limit within which the contractor was required to submit the pre-qualification documents was part of the terms and conditions of the tender and that it has been held by the Apex Court in Tata Cellular Vs. Union of India, AIR 1996 SC 11 and in Raunaq International Ltd. Vs. I.V.R. Construction Ltd., AIR 1999 SC 393 that – “the terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to the tender is in the realm of the contract.”

Reliance is also placed on the other principles laid down in the said decision being –

1. The modern trend points to judicial restraint in administrative action.administrative action.

2. The Court does not sit as a Court of appeal but merely reviews the manner in which the decision was made. merely reviews the manner in which the decision was made.

3. The Court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise, which itself may be fallible. administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise, which itself may be fallible.

5. The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative or quasi-administrative sphere. However, the decision can be tested by the application of the “Wednesbury principle” of reasonableness and the decision should be free from arbitrariness not affected by bias or actuated other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative or quasi-administrative sphere. However, the decision can be tested by the application of the “Wednesbury principle” of reasonableness and the decision should be free from arbitrariness not affected by bias or actuated by mala fides.

6. Quashingdecisionsmayimposeheavy administrative burden on the administration and lead to increased and unbudgeted expenditure.

Reliance is also placed on Paras-69, 72, 75, 79, 80 and 93 in Tata Cellular case.

9. Mr SN Shelat, learned Senior Advocate with Mr AM Joshiyara for respondent No. 4 has also supported the decision of the University and submitted that this Court cannot substitute its own decision for the decision of the University in such matters. Strong reliance is placed on the observations of Prof. Wade in Administrative Law as quoted in Para-90 of the judgment in Tata Cellular case (supra) :- “The point to notice that the thing is not unreasonable in the legal sense, merely because the Court thinks it is unwise”.

10. Mr BT Rao, learned advocate for the petitioner submits that in the tender notices issued by all the authorities such as Sardar Sarovar Narmada Nigam Ltd., Surat Urban Development Authority, Surat Municipal Corporation, etc. (produced with the affidavit–in–rejoinder), the contractors are always given reasonable time of 3 to 7 days for submitting the documents after the last date for bid document downloading. In the instant case, the bid document downloading end date was 28.11.2008 and therefore, for a contract of the value of Rs. 8.40 crores which project was to be completed in a period of 16 months, the respondents were required to give at least a week's time for submitting the pre-qualification documents in physical form by RPAD / Speed Post after the end date for bid document downloading. Hence, the University was required to give time upto 5.12.2008 for sending the pre-qualification documents by RPAD / Speed Post before opening of the price bid scheduled on SCA/1459220/2008

6.12.2008, as indicated in the tender notice online. It is also submitted by Mr Rao that the University had never declared in the tender notice online or otherwise that the University was going to open the pre-qualification documents on 1.12.2008.

11. Having heard the learned counsel for the parties, we do find considerable substance in the submission made on behalf of the petitioner that when 28.11.2008 was the last date for downloading the bid document, the respondent University acted arbitrarily in requiring the pre-qualification documents to be sent physically so as to reach the University by Speed Post / RPAD latest by 27.11.2008. For all practical purposes, it meant that the contractor had to send the pre-qualification documents by RPAD / Speed Post by dispatching the same latest by 25.11.2008.

The starting date for downloading the bid document electronically was 20.11.2008 at 7:30 p.m. onwards i.e. 21.11.2008. 23[rd] November was Sunday and therefore, in effect the University gave only four working days to the prospective bidders for dispatching their pre-qualification documents in respect of the contract of the estimated value of Rs.8.40 crores which project was to be completed within 16 months. On the face of it, therefore, the time limit stipulated by the University that the pre-qualification documents must physically reach the University by Speed Post / RPAD latest by 27.11.2008 was such that no reasonable employer would have stipulated.

12. We are conscious of the fact that a thing would not be unreasonable in the legal sense merely because the Court thinks it unwise but in the facts and circumstances of the case indicated above, no reasonable person would have stipulated such a time limit as was done by the University. The consequence of such stipulation is, therefore, for all to see. For the contract of the

estimated value of Rs. 8.40 crores, only three parties applied out of whom only two were found to be eligible as having done works of the requisite value. The lower of the offers made by these two parties was 21.21% above the estimated value which was prepared on the basis of SOR rate of the year 2007–08. As against that, the rate which the petitioner states to have quoted was Rs.6.38% above the estimated value and in real terms, the difference works out to substantial amount of more than Rs. 1.50 crores.

13. Mr Parmar, learned counsel for the University submitted that the Expert Committee has evaluated the comparative offers and this Court should not sit in appeal over the decision of the Expert Committee.

The submission is misconceived. The Expert Committee merely considered the offers of two parties whose pre-qualification documents had reached the University by 27.11.2008. The Expert Committee had no occasion to consider the pre-qualification documents of the petitioner because the reasonable time was not given to the potential bidders to participate in the tender process by giving them only three working days time to submit pre-qualification, as discussed earlier.

14. As regards the submission made on behalf of the University that there is urgency in the matter and the grant will lapse by 31.03.2009, in the facts and circumstances of the case, we are of the view that by raising such a contention, the respondent University cannot pre-empt all legitimate arguments and put the public exchequer to loss of more than Rs.1 crore. The fresh tender process can be completed before the end of January 2009 and it will be open to the University to bring the above facts to the notice of the concerned authorities and to request for re-validating the grant in case the amount cannot be spent before 31.03.2009. We are sure that the concerned authorities will consider such request in proper perspective.

15. Mr Parmar also sought to submit that the rates offered by the petitioner at 6.38% may not be viable and that in some other tenders, the petitioner himself has quoted the rate of 70% above the estimated value of the contract.

16. Mr Rao for the petitioner submits that the rate of 70% above the estimated contract value was in respect of the tender where the estimated value was based on the SOR rates of 2005-06 and therefore, in the tenders submitted in the year 2008, the rate quoted was 70% above the estimated value of contract on the basis of SOR rates of 2005-06. It is submitted that on the other hand, the estimated value of contract in the present case is based on the SOR rates of 2007-08. It is also contended that the price of steel and cement has come down in recent times as compared to the rates of these items in the earlier years.

17. We are not concerned with the question of viability or otherwise of rates quoted by the petitioner for the simple reason that it is only after the University invites fresh tenders after taking into consideration the observations made in this judgment that the competent authority of the University will consider and evaluate the bids received in response to the fresh tender notice.

We do, however, record the following statements made by Mr Rao for the petitioner :-

(i) The petitioner will submit its offer in response to the fresh tender notice at a rate which will not be higher than the rate of 6.38% above the estimated value of Rs. 8.40 crores. tender notice at a rate which will not be higher than the rate of 6.38% above the estimated value of Rs. 8.40 crores.

(ii) The contract for the work in question shall not provide for any price escalation.price escalation.

(iii) If the contract is awarded to the petitioner, the work will be completed within a period of 16 months from the date of receipt of the work order. completed within a period of 16 months from the date of receipt of the work order.

(iv) The petitioner will bear all the expenses for the exercise of issuing fresh tender notice and the other incidental expenses and towards the same, the petitioner deposits an amount of Rs. 2 lacs by cheque No. 211556 dated 26.12.2008 drawn in favour of the Registrar of this Court. issuing fresh tender notice and the other incidental expenses and towards the same, the petitioner deposits an amount of Rs. 2 lacs by cheque No. 211556 dated 26.12.2008 drawn in favour of the Registrar of this Court.

18. The petition is accordingly allowed. The impugned decision dated 10.12.2008 accepting the bid of respondent No. 4 is hereby quashed and set aside. The respondent University shall issue a fresh tender notice with the same terms and conditions, but it shall provide for seven days time for submitting the pre-qualification documents after the end date for downloading the bid document.

The amount of Rs.2 lacs deposited by the petitioner shall be permitted to be withdrawn by the respondent University upon a note to that effect filed by the learned advocate for the respondent– University and the amount shall be paid over by a cheque in favour of the Registrar, Navsari Agricultural University.

Rule is made absolute with no order as to costs.

(MOHIT S. SHAH, J.)

mrpandya*

(HARSHA DEVANI, J.)