C.S. ABRAHAM v. STATE OF KERALA & ORS

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** # **PRESENT** **THE HONOURABLE MR.JUSTICE V.G.ARUN** **WEDNESDAY, THE 7[TH] DAY OF DECEMBER 2022 / 16TH AGRAHAYANA,** **1944** ## **WP(C) NO. 31313 OF 2022** ## **PETITIONER:** C.S. ABRAHAM, AGED 71 YEARS S/O. XAVIER, PILE TECH, CHOOTHAMPARAMBIL HOUSE, MARIAPPALLY POST, KOTTAYAM TALUK, KOTTAYAM DISTRICT - 686 023. BY ADVS. GEORGE MATHEW M.D.SASIKUMARAN PRAVEEN S. SUNIL KUMAR A.G DIPU JAMES MATHEW K.T. GEORGE K.V. STEPHY K REGI ## **RESPONDENTS:** 1 STATE OF KERALA REPRESENTED BY ITS SECRETARY, PUBLIC WORKS DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM - 695 001. 2 THE CHIEF ENGINEER (BRIDGES), PUBLIC WORKS DEPARTMENT, (PWD) THAYCADU, THIRUVANANTHAPURAM - 695 014. 3 THE CHIEF ENGINEER, (BUILDINGS), PUBLIC WORKS DEPARTMENT, (PWD) THAYCADU, THIRUVANANTHAPURAM - 695 014. 4 THE CHIEF ENGINEER (NATIONAL HIGHWAYS)PUBLIC WORKS DEPARTMENT, THAYCADU, THIRUVANANTHAPURAM - 695 014. 5 THE SUPERINTENDING ENGINEER, BRIDGES CIRCLE, PUBLIC WORKS DEPARTMENT, SOUTH CIRCLE, ALAPPUZHA, ALAPPUZHA DISTRICT - 688 002. 6 MULAMOOTTIL CONSTRUCTIONS REPRESENTED BY ITS MANAGING PARTNER, M.M. MATHEW, (AGE & FATHER'S NAME NOT KNOWN TO PETITIONER) KUTTOOR P.O., THIRUVALLA, PATHANAMTHITTA DISTRICT - 689 106. W.P.(C) No.31313 of 2022 -2- 7 PAUL T. MATHEW, AGED 46 YEARS S/O. MATHEW, MANAGING DIRECTOR, M/S. K.T. MATHEW & COMPANY, KOCHUMUTTOM CONSTRUCTIONS, AVOLY P.O., MUVATTUPUZHA, ERNAKULAM DISTRICT - 686 670. BY ADVS. ADVOCATE GENERAL OFFICE KERALA DEEPU LAL MOHAN AISWARYA JOE J URUVATH ## **OTHER PRESENT:** GP RAJEEV JYOTHISH GEORGE **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 02.12.2022, THE COURT ON 07.12.2022 DELIVERED THE FOLLOWING:** W.P.(C) No.31313 of 2022 -3- ## **JUDGMENT** Dated this the 07[th] day of December, 2022 The petitioner is the holder of an 'A Class Civil Contractor's licence issued by the Public Works Department. He is engaged in execution of civil works for the Government and its agencies from 1998 onwards. The 5[th] respondent issued Ext.P2 notice inviting tender dated 9.08.2017 for the work - Construction of Pallakkalumkal Bridge in Kottayam District. The petitioner responded to the notice by submitting Ext.P3 bid on 03.08.2022. After accepting the petitioner's bid, he was later informed that on detailed scrutiny of the documents, the details submitted were found to be not sufficient enough to fulfill the pre-qualification requirements of the subject work and therefore, the petitioner was W.P.(C) No.31313 of 2022 -4- disqualified. Aggrieved, this writ petition is filed seeking the following reliefs; _“i) to call for the records which lead to the issuance of Ext.P5 and to issue writ in the nature of certiorari or any other appropriate writ order or direction quashing the same;_ _ii) to declare that petitioner is qualified for executing the work tendered as per Ext.P2 - viz., NABARD-RIDF XXVII - Construction of Palakkalumkal Bridge in Kottayam District - Work - General Civil Work as per NIT No.TR/BR/2021/1060/1 dtd.19.07.2022,_ _iii) to issue a writ in the nature of mandamus or any other appropriate writ, order or direction commanding respondents 2 to 5 to open the price bid submitted by petitioner along with Ext.P3.”_ 2. Adv. George Mathew assailed the petitioner's disqualification and contended that the petitioner had satisfied all the norms for pre-qualification. For this purpose, attention was drawn to the norms for evaluation of pre-qualification tender and ## W.P.(C) No.31313 of 2022 -5- attempt was made to demonstrate that the marks awarded to the petitioner is wrong. Referring to Ext.R2(a), it was argued that, under the pre-qualification system, only contractors satisfying the eligibility criteria are permitted to offer tenders. The petitioner's bid was accepted, since he satisfied the criteria. The respondents cannot thereafter find the petitioner to be disqualified. Moreover, Ext.P5 minutes of the Evaluation Committee does not reveal any valid reason. The disqualification is hence bad for complete absence of reasons and nonapplication of mind. It is contended that, after accepting the bids, the respondents can only compare the offers and cannot decide on the qualification. 3. Adv.Rajeev Jyothish George, the Government Pleader appearing for the official respondents refuted the allegations and made the W.P.(C) No.31313 of 2022 -6- following submissions; As per the system followed in the PWD, the tendering authority conducts a primary evaluation and contractors satisfying the essential criteria will be allowed to offer bids. A primarily accepted bidder will be qualified or disqualified based on the marks awarded after detailed pre-qualification scrutiny. The marks are awarded after evaluation by the PRICE software, as per the input data submitted by the bidder. The requirements for pre-qualification are mentioned in the standard bid document and notice inviting tender for each work. The criteria like experience, manpower, machinery and financial stability will vary depending on the nature of the work. Therefore acceptance of the bid for pre-qualification evaluation does not mean that the bidder has qualified. Even if a bid is accepted W.P.(C) No.31313 of 2022 -7- primarily, that can be rejected on finding that the bidder does not satisfy the pre-qualification requirements. In the petitioner's case, he got only very low marks for financial status, resources and experience. For financial status, petitioner scored only 22.10 marks out of 75. For resource, he could secure only 15 marks out of 35 and for experience, 83.87 out of 175. The petitioner therefore failed to satisfy the required parameters and the software found him ineligible for further consideration. The pre-qualification evaluation committee considered these aspects and disqualified the petitioner. 4. The details of evaluation are not stated in the minutes of the evaluation committee, since that would require a manual evaluation, over and above the evaluation done by the software. If process is adopted, W.P.(C) No.31313 of 2022 -8- that will defeat the very purpose behind the introduction of PRICE software system. Therefore, the contention that Ext.P5 does not contain reasons is liable to be rejected. 5. Adv.Deepu Lal Mohan appearing for the 7[th] respondent adopted the contentions of the learned Government Pleader and further submitted that the scope for interference in contractual matters is very limited. The tendering authority having come to a decision based on the norms set by it, this Court is not expected to interfere in exercise of the power of judicial review. 6. The limited scope for interference in contractual matters, even if one of the contracting parties is the State or its agencies, is no longer _res integra_ in view of the legal position laid down by a plethora of decisions. One among the decisions is _**Silppi**_ _**Constructions Contractors v Union of India**_ W.P.(C) No.31313 of 2022 -9- ## _**and another [(2020) 16 SCC 489],**_ wherein the Apex Court, after detailed precedental survey, held as under; “ _19_ _**.** This Court being the guardian of fundamental rights is duty-bound to interfere when there is arbitrariness, irrationality, mala fides and bias. However, this Court in all the aforesaid decisions has cautioned time and again that courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters. This Court is normally loathe to interfere in contractual matters unless a clear-cut case of arbitrariness or mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution. The courts must realise their limitations and_ -10- ## W.P.(C) No.31313 of 2022 _the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in Judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. As laid down in the judgments cited above the courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give “fair play in the joints” to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer._ 20. _The essence of the law laid down in the judgments referred to above is the exercise of restraint and caution; the need for overwhelming public interest to justify judicial intervention in matters of contract involving the State instrumentalities; the courts should give way to the opinion of the experts unless the decision is totally arbitrary or unreasonable; the court does not sit like a court of appeal over the appropriate authority; the court must realise that the authority floating the tender is the best_ ## W.P.(C) No.31313 of 2022 -11- _judge of its requirements and, therefore, the court's interference should be minimal. The authority which floats the contract or tender, and has authored the tender documents is the best judge as to how the documents have to be interpreted. If two interpretations are possible then the interpretation of the author must be accepted. The courts will only interfere to prevent arbitrariness, irrationality, bias, mala fides or perversity. With this approach in mind we shall deal with the present case.”_ Recently, in _**National High Speed Rail**_ _**Corporation Ltd v. Montecarlo Limited and another [(2022) 6 SCC 401]**_ **,** it was held that before interfering in a contract matter, the court should pose to itself the following questions; **“** _29. Thus, from the aforesaid decisions, it can be seen that a court before interfering in a contract matter in exercise of powers of judicial review should pose to itself the following questions:_ _(i) Whether the process adopted or decision made by the authority is mala fide or intended_ W.P.(C) No.31313 of 2022 -12- _to favour someone; or whether the process adopted or decision made is so arbitrary and irrational that the court can say:“the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached”? And_ _(ii) Whether the public interest is affected?_ _If the answers to the above questions are in the negative, then there should be no interference under Article 226.”_ 7. The challenge in the instant writ petition has to be considered in the backdrop of the settled legal position. As the petitioner's contention is that his bid was accepted after preliminary scrutiny, it could not have been rejected at the pre-qualification stage. In this regard, it is pertinent to note that, as per Ext.R2(a), the award of contracts in the PWD was decided to be in accordance with the prequalification system followed by the National Highway Projects and the Government of India. Under the pre-qualification system, W.P.(C) No.31313 of 2022 -13- contractors satisfying prescribed criteria alone are permitted to offer tenders. The selection of pre-qualification is to be done by a Committee consisting of Chief Engineers. The bids accepted after preliminary scrutiny are evaluated again for the purpose of prequalification. The norms for evaluation at the pre-qualification stage is described in Ext.R2(b), as under; ## NORMS FOR EVALUATION OF PRE-QUALIFICATION TENDER - A. Structure (a) Valid License : 35 Marks (b) Financial Strength (1) Asset Liquid Assets (2) Asset Bank Loans : 40 Marks : 75 Marks - Total - B. Financial Status (a) Average Annual turnover 75 : (b) Work in Hand : 50 - C. Resources (a) Project Managment : 35 (b) Work Force : 15 (c) Plant & equipment : 75 : 125 Marks - Total - D. Experience (a) Magnitude of work : 175 Marks W.P.(C) No.31313 of 2022 -14- : 500 marks Grand Total Minimum pass mark is 325 out of 500 8. After introduction of the PRICE software, the evaluation is system based. In the petitioner's case, the petitioner secured only very low marks for criteria like financial status, resources and experience. Consequently, his bid was found to be disqualified. Having participated in the bid, fully aware of the procedure being followed, the petitioner cannot turn around and assail the procedure. I also find no rationale in the contention that, once the bid is accepted after preliminary scrutiny it cannot be rejected at the pre-qualification stage, even if the criteria are not satisfied. 9. The contention that the findings at the per-qualification stage are factually incorrect cannot be accepted for the reason W.P.(C) No.31313 of 2022 -15- that the evaluation is system based. Even otherwise, this Court will not be justified in interfering with the discretion exercised by the tendering authority. This position is clearly laid down in _**N.G. Projects Ltd. v. Vinod Kumar Jain, [(2022) 6 SCC 127]**_ , the contextually relevant portion of which reads as under; _“23. In view of the above judgments of this Court, the writ court should refrain itself from imposing its decision over the decision of the employer as to whether or not to accept the bid of a tenderer. The Court does not have the expertise to examine the terms and conditions of the present day economic activities of the State and this limitation should be kept in view. Courts should be even more reluctant in interfering with contracts involving technical issues as there is a requirement of the necessary expertise to adjudicate upon such issues. The approach of the Court should be not to find fault with magnifying glass in its hands, rather the Court should examine as to whether the decision-making process is after complying with the_ -16- ## W.P.(C) No.31313 of 2022 _procedure contemplated by the tender conditions. If the Court finds that there is total arbitrariness or that the tender has been granted in a mala fide manner, still the Court should refrain from interfering in the grant of tender but instead relegate the parties to seek damages for the wrongful exclusion rather than to injunct the execution of the contract. The injunction or interference in the tender leads to additional costs on the State and is also against public interest. Therefore, the State and its citizens suffer twice, firstly by paying escalation costs and secondly, by being deprived of the infrastructure for which the present day Governments are expected to work.”_ As regards the contention that reasons are not stated in Ext.P5, I am satisfied with the explanation offered by the second respondent that if details of evaluation steps are to be explained, the bids will have to be evaluated manually, over and above the system based evaluation. The very purpose of introduction of system based evaluation being to do away with arbitrariness and to bring in W.P.(C) No.31313 of 2022 -17- transparency, the respondents cannot be compelled to manually evaluate every tender and explain the reason for disqualification of each bid. 10. As the petitioner has not alleged _mala fides_ and favouritism, the question boils down to whether the pre-qualification evaluation is so perverse and irrational that it warrants interference. In the light of the undisputed fact that the pre-qualification evaluation was done in strict compliance of the procedure prescribed in Ext.R2(a) and R2(b), I find no reason to hold the evaluation to be perverse or irrational. For the aforementioned reasons, the writ petition is dismissed. Sd/- ## **V.G.ARUN JUDGE** Scl/ W.P.(C) No.31313 of 2022 -18- ## **APPENDIX OF WP(C) 31313/2022** PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF REGISTRATION CARD NO.45A/ SESC/198-99 DTD. 21.06.2013 ISSUED BY THE SUPERINTENDING ENGINEER, ROADS AND BRIDGES DIVISION, PUBLIC WORKS DEPARTMENT, SOUTH CIRCLE, THIRUVANANTHAPURAM. Exhibit P2 TRUE COPY OF RELEVANT PAGES OF NIT NO.TR/BR/2021/1060/1 DTD. 19.08.2017. Exhibit P3 TRUE COPY OF PHYSICAL COPY OF TENDER DOCUMENT DTD. 03.08.2022 SUBMITTED BY PETITIONER. Exhibit P4 TRUE COPY OF SUMMARY DTD. 11.08.2022 DOWNLOADED BY PETITIONER FROM PWD PORTAL. Exhibit P5 TRUE COPY OF MINUTES, OF THE MEETING DATED 17.9.22 AND INFORMATION DTD. 27.09.2022 DOWNLOADED FROM PWD PORTAL. Exhibit P6 TRUE COPY OF FINANCIAL SUMMARY RECEIVED FROM PWD PORTAL ON 28.09.2022. RESPONDENT EXHIBITS Exhibit R2 (b) True copy of the circular No. CE/A2/TC/92,dated 22-07-1996 Exhibit R2(a) A true copy of the G.O (MS) 52/87/PWand T,dated 07-07-1987 Exhibit R2(c) True copy of the standard bid document for e-tendering (for work costing above Rs.5 Crores) Exhibit R2(d) True copy of the minutes of the prequalification committee meeting dated 17-09-2022