Chicago Constructions International Pvt Ltd v State of Kerala and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **WEDNESDAY,THE 20TH DAY OF MARCH 2019 / 29TH PHALGUNA, 1940** ## **WP(C).No. 6292 of 2019** ## **PETITIONER/S:** **CHICAGO CONSTRUCTIONS INTERNATIONAL PVT LTD., TC 22/2703, KOCHAR ROAD, SASTHAMANGALAM, THIRUVANANTHAPURAM - 695 010, REPRESENTED BY ITS MANAGING DIRECTOR MOHANAKUMAR S., AGED 57 YEARS, S/O SIVANANDAN.** **BY ADVS. SRI.D.KISHORE SMT.MEERA GOPINATH SMT.MINI GOPINATH SRI.R.MURALEEKRISHNAN (MALAKKARA)** ## **RESPONDENT/S:** - **1 STATE OF KERALA, REPRESENTED BY ITS SECRETARY TO GOVERNMENT, WATER RESOURCES DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM-695 001.** - **2 THE KERALA WATER AUTHORITY, REPRESENTED BY ITS MANAGING DIRECTOR, JALA BHAVAN, VELLAYAMBALAM, THIRUVANANTHAPURAM-695033.** - **3 THE MANAGING DIRECTOR, KERALA WATER AUTHORITY, JALA BHAVAN, VELLAYAMBALAM, THIRUVANANTHAPURAM-695033.** - **4 THE SUPERINTENDING ENGINEER, KERALA WATER AUTHORITY, PUBLIC HEALTH CIRCLE, MALAPPURAM-676505. R1 BY SMT. VINITHA B., GOVERNMENT PLEADER R2 TO R4 BY SRI. P. BENJAMIN PAUL, SC, KERALA WATER AUTHORITY.** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 20.03.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P.(C) No.6292 of 2019 2 ## **C.R.** ## **JUDGMENT** This writ petition is filed by the petitioner company incorporated under the Companies Act, seeking to quash Ext.P8 order passed by the 4[th] respondent dated 19.02.2019, declining to modify a condition sought for by the petitioner with respect to the qualification prescribed in the tender notification to have experience in the “sludge blanket type technology”, and for other related reliefs. Brief material facts for the disposal of the writ petition are as follows: 2. The 4[th] respondent invited two tenders covered by Exts.P1 and P1(a) for the work of Water Supply Scheme to Edayur Panchayat and Service Level Improvement of existing Water Supply Scheme to Irimbiliyam Panchayat and Valanchery Municipality in Malappuram District (Package-1), and for the work of Water Supply Scheme to Ramanchadi-Aligarh in Malappuram District (Package-1) under the Kerala Infrastructure Investment Fund Board (KIIFB), _vide_ tender notification dated 02.02.2019. The last date for submission of the tender was on 28.02.2019, and the pre-qualification bid was scheduled to be opened on 05.03.2019. A portion of W.P.(C) No.6292 of 2019 3 Clause 7.17.1.2.8 of Exts.P1 and P1(a) as modified by Ext.P3 series pertaining to pre-qualification bid is oppressive, unreasonable and is violative of Article 14 of the Constitution of India. Such conditions are incorporated only to favour a few contractors who had done Water Treatment Plants in the past with Upflow sludge blanket type clarifier, and it is also done with the intention of excluding major contractors like the petitioner from participating in the tender process. Therefore, the tender process, evident from Exts.P1, P1(a) and Ext.P3 series would reveal that the awarding process is vitiated by _malafides_ and arbitrariness. 3. Petitioner is fully qualified in terms of the Notice Inviting Tenders, except to the impugned portion of the clause specified above. The said portion contemplates that the tenderer should have an additional experience in constructing a Water Treatment Plant in the past with Up flow sludge blanket clarifier of a minimum capacity prescribed therein. According to the petitioner, such a clause is quite unnecessary as the construction of Water Treatment Plant or the nature of the work which is proposed to be tendered does not require such an outdated technology. It is also pointed out that, as of now, the said technology is W.P.(C) No.6292 of 2019 4 seldom used and all the existing contractors including the petitioner are having the expertise to undertake the said work. However, petitioner has not constructed a Water Treatment Plant with the aforesaid technology in the past, as it was not necessary to use the said technology despite the petitioner having more than two decades of experience in the field. However, that does not mean that the petitioner cannot do the work with the said technology, as the same does not require any special expertise or dexterity when compared to the conventional/lamella/place settler/tube settler technologies. The said clause creates an embargo for the petitioner to participate in the bid. Even though petitioner sought to delete the said clause, it was refused as per Ext.P8 order passed by the 4[th] respondent. 4. A detailed counter affidavit is filed by respondents 2 to 4, refuting the allegations and claims and demands raised by the petitioner. Among other contentions, it is stated that, the probable amount of contract for the first tender is Rs.34,43,62,963/- and Earnest Money Deposit of Rs.5,00,000/-. The invitation of the tender and the schedule prescribed thereunder for completing the formalities are all admitted. W.P.(C) No.6292 of 2019 5 According to the said respondents, as per the approved Detailed Engineering Report, it is envisaged to adopt innovative technology for water treatment. Considering lower land requirement and low operation and maintenance cost, it is decided to adopt modern Up flow Sludge Blanket type clarifier for these works. Sludge blanket clarifier is a treatment unit combining flocculation and upward flow of sedimentation, which is more efficient compared to the conventional sedimentation tank. It has the ability to treat water at a faster rate, resulting in less space requirement. The removal of suspended particles takes place by a combination of flocculation, sedimentation and straining as the water passes upwards through the blanket of sludge formed within the clarifier. Since the retention time required for this clarifier is less than conventional clarifoculator, the space requirement is less. Raw water and chemicals are hydraulically mixed eliminating the need for mechanical mixtures. Hence the meeting convened by Chief Engineer decided to adopt the technology for the works. 5. It was thereupon that the condition is incorporated to ensure a defect-free work from an experienced contractor. It is also stated that, for W.P.(C) No.6292 of 2019 6 long period, the Water Authority was adopting conventional clarifiers. Later in the present past started implementing Plate settler type clarifier. Up flow Sludge Blanket clarifier technology is relatively new to Kerala Water Authority. Therefore, the sum and substance of the contention put forth by the respondents is that, it was after due and effective study conducted, the Kerala Water Authority has decided to fix the pre-qualification criteria in Exts.P1 and P1(a). 6. Petitioner has submitted a representation dated 16.02.2019 before the 4[th] respondent, requesting to modify the NIT conditions, since the petitioner cannot participate in the tenders due to the past experience condition fixed in the NIT. The experience for dual media filter was later dropped as decided in the pre-bid meeting held on 16.02.2019 by the 4[th] respondent. Also the last date for submission of tender was extended by 15 days. Thereafter, petitioner submitted a representation dated 25.02.2019 before the 3[rd] respondent, requesting to amend the prequalification experience criteria as specified above, which was rejected by the 4[th] respondent. The Tender Committee of the Kerala Water Authority constituted W.P.(C) No.6292 of 2019 7 with Technical Member as Chairman met on 22.02.2019, discussed the representation submitted by the petitioner in detail and noted that the “Up flow sludge blanket type clarifier” is a superior technology and past experience in implementation of the same is necessary for the efficient functioning of the unit and formation of sludge blanket being sensitive. Hence, the Tender Committee opined that the action of the 4[th] respondent in fixing the pre-qualification criteria insisting additional minimum 10% experience in similar type technology is genuine, and it was also opined up flow sludge blanket type clarifier is a superior technology and many companies are carrying out these type of clarifiers in India, and it was thereupon that it was decided to reject the request made by the petitioner for deletion of the said condition. Therefore, according to the respondents, petitioner has not made out any case justifying interference of this Court, since there is no arbitrariness or illegality in the respondents taking a decision to reject the request made by the petitioner. 7. I have considered the rival submissions made across the Bar and perused the pleadings and the documents on record. W.P.(C) No.6292 of 2019 8 8. The sole question to be decided is, whether any manner of interference is warranted to Clause 7.17.1.2.8, which clause read thus: _“_ _**Construction of Water Treatment Plants with modern technology (except Conventional Filters, Lamella, Plate settler, Tube settler)** :-_ _(a) Must have constructed a Water Treatment Plant in the past with any Technology for a minimum of 40% output capacity subject to a maximum of 40 MLD for his sole/Joint Venture/Partner of the Joint Venture._ _For this work, must have constructed a Water Treatment Plant in the past with any Technology for a minimum of 452m3/hr output capacity for his sole/Joint Venture/Partner of the Joint Venture._ _(b) In addition to the above, must have constructed a Water Treatment Plan in the past with similar technology for a minimum of 10% output capacity of the proposed treatment plant for his sole/Joint Venture/Partner of the Joint Venture. (If the bidder has 40% experience in the same innovative technology, no further experience in conventional technology is required)._ _For this particular work, in addition to the above, must have constructed a Water Treatment Plant in the past with Upflow sludge blanket type clarifier of a minimum capacity of 113.1m3/hr output capacity for his sole/Joint Venture/Partner of the Joint Venture._ _For this particular work, in addition to the above, must have constructed a Water Treatment Plant in the past with Dual media filter of a minimum capacity of 113.1m3/hr output capacity for his sole/Joint Venture/Partner of the Joint Venture. (If the bidder has 452m3/hr experience in the above two (Upflow sludge blanket type clarifier and Dual media filter) innovative technologies, no further experience in conventional technology is required.”_ W.P.(C) No.6292 of 2019 9 9. It is an admitted fact that petitioner is not having qualification as is prescribed therein for construction of plant in accordance with the technology provided thereunder. Case projected by the petitioner is that, such a condition is incorporated in Exts.P1 and P1(a) to eliminate experienced contractors like the petitioner, and no special experience is required to carry out such construction. It is also pointed out that, it is with the _malafide_ intention of helping the contractors who have done such works, such a condition is incorporated in Exts.P1 and P1(a). That apart, learned counsel for the petitioner, Sri. D.Kishore submitted that, some of the conditions of the Notice Inviting Tender were removed as per Ext.P3 series of corrigendum issued. However, the request made by the petitioner to remove the pre-qualification condition of the outdated system of plant was declined. It is also pointed out that, as per Ext.P5 Manual issued by the Ministry of Urban Development, Government of India, it is clear that there are other latest technologies, and therefore, the incorporation of such a condition will defeat the interest of the respondents. W.P.(C) No.6292 of 2019 10 10. On the other hand, learned Standing Counsel for the Water Authority submitted that, such a condition was incorporated in Exts.P1 and P1(a) fully conscious of the fact that such a system is required in order to save space and also for efficient functioning. That apart, it is submitted that, on receipt of representation from the petitioner, the Tender Committee met and discussed the matter elaborately, and it has come to a definite conclusion that the incorporation of the said condition in Exts.P1 and P1(a) by the 4[th] respondent cannot be found fault with. 11. I have evaluated the situations put forth by the respective parties. Learned counsel for the petitioner has invited my attention to the judgment of the apex court in ' _**Siemens Aktiengeselischaft and**_ _**Siemens Limited v. Delhi Metro Rail Corporation Limited**_ _**and Others'**_ [(2014) 11 SCC 288] to canvass the proposition that, if and when there are unconscionable conditions in the tender invitation, the courts are vested with ample powers to interfere with the same. So also, the judgment of the apex court in ' _**Reliance**_ _**Telecom Limited and Another v. Union of India and**_ _**Another**_ ' [(2017) 4 SCC 269] was also pressed into service, and submitted that, judicial review is W.P.(C) No.6292 of 2019 11 possible, if there are any arbitrary and illegal conditions put forth in the Notice Inviting Tender. 12. In my considered view, the said qualification is incorporated in Exts.P1 and P1(a) by the respondents, in order to secure an experienced contractor who can execute the work of that particular type of plant efficiently to make it defect-free. Even though petitioner has a case that it was with the _malafide_ intention that such a condition was incorporated, except the bald allegation made, petitioner could not put forth sufficient pleadings and materials to establish the said contention. Moreover, when the petitioner submitted the representation seeking removal of the said condition, it was evaluated by the Tender Committee and has arrived at a conclusion that incorporation of such a condition was consciously done, since the 4[th] respondent has found that such a system is better for the Water Authority. In my considered view, it is for the Tender Inviting authority to decide the rules under which the work is to be carried out, and it was thereupon that such a qualification was prescribed under Exts.P1 and P1(a). Apparently, there are other contractors who have carried out the work with such a technology, and W.P.(C) No.6292 of 2019 12 therefore, petitioner cannot be heard to say that it was with the _malafide_ intention of helping someone, such a condition was incorporated in the tender invitation. It is also equally important to note that, more than one person have submitted tender having such qualification. Therefore, it cannot be said that such a clause was incorporated to help any particular individual and ultimately the tender is accepted by the respondents from out of the contractors who have submitted sealed tenders, and therefore, it cannot be said that even if it is aimed at any person, that person may not get the contract, especially due to the fact that the bid was invited in sealed covers in two bid system. So also, merely because the petitioner is not qualified to participate in the tender, that cannot be a ground to arrive at a conclusion that such a condition is incorporated for the purpose of eliminating petitioner and others from the submission of bid. 13. So much so, so far as the tender in question is concerned, it is a commercial bid, and therefore, unless and until clear _malafides_ are proved by the petitioner, in respect of the conditions incorporated in Exts.P1 and P1(a), petitioner is not entitled to W.P.(C) No.6292 of 2019 13 succeed, as is claimed in the writ petition. Moreover, the scope of judicial review in contractual matters is well settled that court cannot sit in appeal over the soundness of the decision made by the competent authority, or its wisdom to arrive at the conclusion. On the other hand, court can only ascertain whether the decision making process was fair, transparent and _bonafide_ . It is also pertinent to note that, when the petitioner submitted a representation to remove the qualification in question, the bid evaluation committee considered the same and has arrived at a conclusion assigning reasons. That apart, it is for the tender inviting authority to incorporate such conditions and qualifications in accordance with its requirements, feasibility and technical expertise, and any third person is not at liberty to dictate terms on the authority to include terms and conditions to suit his convenience and qualifications. So also, the authority while finalising the qualification must have taken into account various technological factors to suit its attire, and this Court is not expected to delve deep into such matters and arrive at a different conclusion, than the one arrived at by the tender inviting authority. As I have pointed out earlier, petitioner W.P.(C) No.6292 of 2019 14 could not establish the pleadings put forth before this Court in respect of the _malafides_ alleged against the respondents, and this Court also could not locate any arbitrariness or illegality to interfere with Ext.P8 decision, exercising the power of judicial review under Article 226 of the Constitution of India. Therefore, the writ petition has no sustenance, accordingly it is dismissed. ## **Sd/-** ## **SHAJI P.CHALY** **JUDGE** St/22.03.2019 W.P.(C) No.6292 of 2019 15 ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** |**EXHIBIT P1**|**TRUE COPY OF THE RELEVANT EXTRACT OF THE**| |---|---| ||**E-TENDER NOTICE WITH RESPECT TO TENDER**| ||**NO.SE/PHC/MPM/30/18-19 DATED 2.2.2019**| ||**ISSUED BY THE 4TH RESPONDENT.**| |**EXHIBIT P1(A)**|**TRUE COPY OF THE RELEVANT EXTRACT OF THE**| ||**E-TENDER NOTICE WITH RESPECT TO TENDER**| ||**NO.SE/PHC/MPM/29/18-19 DATED 2.2.2019**| ||**ISSUED BY THE 4TH RESPONDENT.**| |**EXHIBIT P2**|**TRUE COPY OF THE ACKNOWLEDGEMENT RECEIPT**| ||**EVIDENCING THE SUBMISSION OF E-TENDER BY**| ||**THE PETITIONER WITH RESPECT TO THE WORK**| ||**COVERED BY EXHIBIT P1.**| |**EXHIBIT P2(A)**|**TRUE COPY OF THE ACKNOWLEDGEMENT RECEIPT**| ||**EVIDENCING THE SUBMISSION OF E-TENDER BY**| ||**THE PETITIONER WITH RESPECT TO THE WORK**| ||**COVERED BY EXHIBIT P1(A).**| |**EXHIBIT P3**|**TRUE COPY OF THE CORRIGENDUM DATED**| ||**16.2.2019 WITH RESPECT TO TENDER NO.SE-PHC-**| ||**MPM/30/18-19.**| |**EXHIBIT P3(A)**|**TRUE COPY OF THE CORRIGENDUM WITH RESPECT**| ||**TO TENDER NO.SE-PHC-MPM/29/18-19 DATED**| ||**16.2.2019.**| |**EXHIBIT P3(B)**|**TRUE COPY OF THE CORRIGENDUM-11 DATED**| ||**18.2.2019 WITH RESPECT TO TENDER NO.SE-PHC-**| ||**MPM/30/18-19.**| |**EXHIBIT P3(C)**|**TRUE COPY OF THE CORRIGENDUM WITH RESPECT**| ||**TO TENDER NO.SE-PHC-MPM/29/18-19 DATED**| ||**18.2.2019.**| |**EXHIBIT P4**|**TRUE COPY OF THE RELEVANT EXTRACT OF 5**| ||**PAGES OF VOLUME 2 OF NOTICE INVITING TENDER**| ||**WITH RESPECT TO EXHIBIT P1 TENDER.**| |**EXHIBIT P5**|**TRUE COPY OF THE RELEVANT EXTRACT OF THE**| ||**MANUAL ON WATER SUPPLY AND TREATMENT, 3RD**| ||**EDITION ISSUED BY THE MINISTRY OF URBAN**| ||**DEVELOPMENT, NEW DELHI.**| |**EXHIBIT P6**|**TRUE COPY OF THE REPRESENTATION DATED**| ||**16.2.2019 SUBMITTED BY THE PETITIONER**| ||**BEFORE THE 4TH RESPONDENT.**| W.P.(C) No.6292 of 2019 16 **EXHIBIT P7 TRUE COPY OF THE REPRESENTATION DATED 23.2.2019 SUBMITTED BY THE PETITIONER BEFORE THE 3RD RESPONDENT. EXHIBIT P8 TRUE COPY OF THE PROCEEDINGS NO.SE/PHC/MPM/77/GEN./2018 DATED 19.2.2019 OF THE 4TH RESPONDENT.** RESPONDENTS' EXHIBITS: NIL //TRUE COPY// P.S. TO JUDGE St/-