Kerala Agricultural University & Ors. v Johnson T. & Bindul Krishnan C.U. (Writ Appeal No.1209 of 2020) - High Court of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT** **THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR** **&** **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **WEDNESDAY, THE 14TH DAY OF OCTOBER 2020 / 22ND ASWINA, 1942** **WA.No.1209 OF 2020** **AGAINST THE ORDER/JUDGMENT IN WP(C) 1989/2020(W) OF HIGH COURT OF KERALA** ## **APPELLANTS/RESPONDENTS 1 TO 3:** - **1 KERALA AGRICULTRURAL UNIVERSITY KAU P.O., VELLANIKKARA, THRISSUR - 680 656, REPRESENTED BY REGISTRAR.** - **2 VICE CHANCELLOR KERALA AGRICULTURAL UNIVERSITY, KAU P.O., VELLANIKKARA, THRISSUR - 680 656.** **3 DIRECTOR OF PHYSICAL PLANT DIRECTORATE OF PHYSICAL PLANT, KERALA AGRICULTURAL UNIVERSITY, KAU P.O., VELLANIKKARA, THRISSUR - 680 656.** ## **BY ADV. SMT.SURYA BINOY** ## **RESPONDENTS/PETITIONER & RESPONDENT NO.4:** - **1 JOHNSONT T. AGED 54, S/O.THENKAYYAN, CONTRACTOR, KRIPA BHAVAN, CHAKKALAVILA, IRUMBIL, ARUVIPURAM P.O., NEYYATTINKARA VIA., THIRUVANANTHAPURAM DISTRICT.** - **2 BINDUL KRISHNAN C.U. DWARAKA, V.V.NAGAR-41, NCC ROAD, AMBALAMUKKU, PEROORKKADA P.O., THIRUVANANTHAPURAM - 695 005.** ## **R1 BY ADV. SRI.BABU JOSEPH KURUVATHAZHA** **THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 06-10-2020, THE COURT ON 14-10-2020 DELIVERED THE FOLLOWING:** WA.No.1209 OF 2020 2 ## **JUDGMENT** ## **SHAJI P.CHALY, J.** Above appeal is filed by respondents 1 to 3 in W.P.(C) No.1989 of 2020, challenging the judgment of the learned Single Judge dated25.6.2020, whereby the writ petition filed by the 1[st] respondent herein was allowed and has summarised the facts and the directions issued, at paragraphs 7 to 12 and they read thus: “7. For resolution of the issue involved, it is necessary to have a glance at the dates and events. The initial notice inviting e-tender is dated 26.10.2019 and the date fixed for opening of the online tender bid was 7.11.2019. In spite of the petitioner being the only qualified bidder, the University chose to re-tender the work. It was thereafter that the 4th respondent obtained EXt. P6(a) certificate dated 25.11.2019. The retender notice is dated 3.1.2020 and the date fixed for opening of the online tender bid was 20.1.2020. Accordingly, the bids were opened and the tender of the 4th respondent accepted. In the meanwhile, this writ petition was filed and an interim order issued on 14.1.2020, making the further proceedings subject to the result of the writ petition. The 4[th] respondent was called upon to execute the contract agreement before 5.2.2020 and thereupon the 4[th] respondent issued Exhibit Rl(b) letter on 25.1.2020, informing his decision to withdraw from the contract. It is surprising to note that a successful bidder, who had participated in two successive tenders, had withdrawn from the contract within five days of the award, that too, after bidding at 10% below the estimate rate. 8. As far as the challenge against the qualification of the 4[th] respondent is WA.No.1209 OF 2020 3 concerned, it is necessary to have a careful scrutiny of Exhibit P6(a), the only certificate showing the 4th respondent to have carried out work in excess of Rs.75 lakhs. The certification in Exhibit P6(a) is that the 4[th] respondent has successfully completed the piling work for the construction of four blocks of a residential scheme, totalling an amount of Rs.1,25,00,000/-. The requirement under Exhibit P3 is of an experience certificate of similar framed structure works of not less than Rs.75 lakhs. The piling work of a building, whatever be the magnitude of the work, is not the same as construction of a framed structure, which in the instant case, is the construction of a hostel building. As rightly pointed out by the learned counsel for the petitioner, piling work is only one of the components in the construction of a building. The requirement under Exhibits P1 and P3 being the execution of the work of a building in its entirety, acceptance of the 4[th] respondent's bid and award of contract to him, on the strength of Exhibit P6(a) certificate, was illegal. That being the case, the petitioner's offer could have been considered, being the only qualified bidder in the re-tender also. 9. The contention of the respondents that they had only acted in terms of the PWD Manual and Exhibit R1(c), cannot also be countenanced. The stipulation in Exhibit R1(c) is that, if the successful bidder fails to execute the agreement within the prescribed time, the tendering authority can cancel the offer of contract and negotiate with the next lowest bidder and award the work to him, if the lowest bidder is willing to execute the work at the accepted rate of the 'default bidder'. The 4th respondent did not have the required experience and could not have been awarded the contract. Only a qualified successful bidder, who fails to execute the agreement, can be termed as 'default bidder'. It is interesting to note that, even though the respondents harp on the stipulation in Exhibit R1(c), providing for re-tender if the lowest bidder is not willing to do the work at the accepted rate of the default bidder, the request in Exhibit R1(e) communication issued to the petitioner was to reduce his quoted rate to the lowest extent possible and not to express his willingness to WA.No.1209 OF 2020 4 accept the rate of the default bidder. The petitioner having expressed willingness to reduce the rate to 1% below estimate rate, respondents 1 to 3 ought to have considered the offer before deciding to go for another re-tender. No such consideration is discernible from Exhibit P11 minutes of the Works Committee and hence, the decision to re-tender the work without considering the offer of the lowest, and the only qualified, bidder is definitely illegal. 10. The next question is whether this court is precluded from interfering in contractual matters, in spite of noticing a patent illegality. It is true that, from the decision in **Tata Cellular v. Union of India** [(1994) 6 SCC 651] onwards, the Apex Court has cautioned the writ courts from interfering with the exercise of contractual powers by Government bodies. But none of the decisions is to the effect of there being an absolute embargo against such interference. As a matter of fact, in **Tata Cellular's case (supra)** , after holding the right to refuse the lowest or any other tender to be available with the Government, it was also held that the right to choose cannot be considered to be an arbitrary power and that, if the power to choose is exercised for any collateral purpose, the exercise of that power will be struck down. The learned counsel for the respondents has laid particular emphasis on paragraph 35 in **Municipal Corporation Ujjain's case (supra)** , which is extracted hereunder; "35. Evaluating tenders and awarding contracts are essentially commercial transactions/contracts. If the decision relating to award of contract is in public interest, the Courts will not, in exercise of the power of judicial review, interfere even if a procedural aberration or error in awarding the contract is made out. The power of judicial review will not be permitted to be invoked to protect private interest by ignoring public interest. Attempts by unsuccessful bidders with an artificial grievance and to get the purpose defeated by approaching the Court on some WA.No.1209 OF 2020 5 technical and procedural lapses, should be handled by Courts with firmness. The exercise of the power of judicial review should be avoided if there is no irrationality or arbitrariness. In the matter on hand, we do not find any illegality, arbitrariness, irrationality or unreasonableness on the part of the expert body while in action. So also, we do not find any bias or mala fides either on the part of the corporation or on the part of the technical expert while making the decision. Moreover, the decision is taken keeping in mind the public interest and the work experience of the successful bidder." 11. No doubt, the exercise of power of judicial review should be avoided if there is no irrationality or arbitrariness in the decision of the tendering authority. But, the facts of the instant case disclose a deliberate attempt to prevent award of the contract to the qualified bidder. As a result of such refusal, the right to equality and for equal consideration guaranteed under Article 14 of the Constitution stands infringed. Though the respondents were justified in deciding to re-tender the work, when the rate quoted by the petitioner, the only qualified bidder, in the first tender was found to unacceptable, as far as the re-tender notified as per Exhibit P3 is concerned, the decision to go for a re-tender again, in spite of the petitioner offering to do the work at a lower rate, was, to say the least, irrational and arbitrary. 12. It is a fact that Exhibit P13 is not under challenge. But, having issued an interim order making further proceedings pursuant to Exhibit P3 subject to the result of the writ petition, it is well within the power of this Court to interfere with Exhibit P13 notice issued during the pendency of the writ petition. In the result, Exhibit P13, to the extent of notifying the work covered by Exhibit P3 for re-tender, is quashed. The 1st respondent is directed to consider Exhibit P10 offer given by the petitioner and take a reasoned decision thereon, without comparing the offer with the estimate rate quoted by the 4th respondent in the tender conducted pursuant to WA.No.1209 OF 2020 6 Ext.p3. The decision, as directed, shall be taken within one month from the date of receipt of a copy of this judgment. The writ petition is allowed to the above extent.” 2. It is thus challenging the correctness and legality of the judgment, this appeal is preferred. Brief facts for the disposal of the appeal are as follows; writ petitioner had participated in a tender invited by the 1[st] appellant University i.e., the Kerala Agricultural University in pursuance of Ext.P1 notice inviting tender dated 26.10.2019. The work invited for tender was the balance construction of the P.G. Hostel for ladies at the college of Agriculture, Vellayani. The writ petitioner and 3 others participated in the tender. After evaluation, the bid submitted by the writ petitioner was found to be acceptable since the writ petitioner alone had the requisite qualification. The bid submitted by the 4[th] respondent in the writ petition i.e., one Bindul Krishnan.C.U. was rejected for the reason that he did not produce the certificate to prove the experience of having executed similar structure works of not less than Rs.75 lakhs within the last 5 years. 3. Anyhow in the said fact situation the Works Committee of the 1[st] appellant University decided to re-tender the work. Accordingly Ext.P3 tender notification dated 3.1.2020 was issued with similar conditions and specifications as in Ext.P1. The writ petitioner as well as 4[th] respondent submitted their bids and the bid submitted by the 4[th] respondent was accepted, evident from Ext.P7 tender summary report dated 21.1.2020. Being aggrieved by the acceptance of the tender of the 4[th] respondent, the writ petition was filed mainly on the WA.No.1209 OF 2020 7 ground that the 4[th] respondent did not have the requisite experience of having executed similar framed structure works of not less than 75 lakhs within the last 5 years. Therefore, the writ petitioner sought to quash Ext.P7 so far as awarding the contract in favour of the 4[th] respondent and for a further direction to the appellants to award the work notified under Ext.P3 to the writ petitioner. While the writ petition was admitted, an interim order was passed on 14.1.2020 making it clear that further proceedings pursuant to the contract would be subject to the result of the writ petition. 4. Anyhow in the counter affidavit filed by the appellants, it was stated that though selection notice was issued to the 4[th] respondent on 21.1.2020, 4[th] respondent informed the University that he was not in a position to take up the work due to financial difficulties. Thereupon the writ petitioner was asked about his willingness to execute the work at the accepted rate of the 4[th] respondent. However, the writ petitioner expressed willingness to execute the work at 1% below the estimate rate and thereupon a decision was taken by the University to re-tender the work again. Accordingly Ext.P13 notice dated 19.3.2020 was issued and item No.11 in Ext.P13 is the work originally notified under Exts.P1 and P3. Therefore, the question ultimately before the learned Single Judge was whether the action of the appellants in re-tendering the work during the pendency of the writ petition was legally correct or not ? 5. The learned Single Judge after taking into account the proposition of law laid down by the Apex Court in **Tata Cellular v. Union of India** [(1994)6 WA.No.1209 OF 2020 8 SCC 651] and **Municipal Corporation, Ujjain and Another v. BVG India Limited and Others** [(2018) 5 SCC 462] has arrived at the conclusion that, the action of the appellants are arbitrary since the re-tendering was done by issuing Ext.P13 in respect of the work in question was without considering the bid submitted by the writ petitioner and over riding the mandatory stipulation contained under Ext R1C tender notification dealing with the modalities to be adopted on cancellation of the tender awarded to a successful bidder and further that, there was no reason for the appellants to discard the tender submitted by the writ petitioner, which was qualified in all respects. To put otherwise what was weighed with the learned single Judge was the arbitrary action of the tendering authority in considering the tender submitted by the writ petitioner who was qualified in respect, which stands undisputed. 6. The paramount contention advanced by the appellants is that the offer made by the writ petitioner was considered on the 4[th] respondent withdrawing from the contract, and not that his offer was the best the appellants could have hoped for. It is also submitted that without setting aside Ext.P7 tender summary report and without considering whether the decision making process itself was vitiated, the learned Single Judge sat in appeal on an expert decision by the Tender Committee which is overstepping the powers of the judicial review. 7. On the other hand, learned counsel appearing for the writ petitioner submitted that the learned Single Judge has taken into account the entire pros WA.No.1209 OF 2020 9 and cons and has arrived at the conclusion that the tender submitted by the 4[th] respondent was not in accordance with the qualification requirements contained in the notice inviting tender and therefore bad and and illegal. It is also submitted that, the tender submitted by the 4th respondent being illegal there is no requirement for the writ petitioner to slash down his offer to the rate quoted by the 4th respondent as is requisited under the conditions of contract in the notice inviting tender. 8. We have evaluated the rival submissions. On analysing the judgment of the learned Single Judge, we are of the considered opinion that while allowing the writ petition the learned Single Judge was conscious of the fact that the realm of interference in a contractual matter is very limited,on grounds of illegality, arbitrariness, irrationality or unreasonableness on the part of the expert body while in action. In our considered opinion, the learned Single Judge has taken into account the fact that there is arbitrary action on the part of the appellants in not considering the tender submitted by the writ petitioner and it was accordingly that the fresh tender invited during the pendency of the writ petition relating to the work in question was quashed and the 1[st] appellant was directed to consider Ext.P10 offer given by the writ petitioner and take a decision without comparing the offer quoted by the 4[th] respondent. In this regard sub-clauses a to c of clause 1 of Ext R1(c) conditions of contract under the heading “ Executing of agreement for works will be made within the time limit prescribed as follows”, which is the rule of the game, is relevant, which WA.No.1209 OF 2020 10 ## read thus; a) Time allowed for executing agreement without fine will be 14 days from the date of acceptance of tenders. b) Further time of 10 days shall be allowed to execute agreement by imposing a fine of 1% of the PAC subject to a minimum of Rs.1000/- and maximum of Rs.25,000/-. c) The successful bidder shall execute the agreement within 14 days or with fine within next 10 days from the date of selection notice. In case of failure to execute the agreement within this period, tendering authority shall cancel the offer of contract forfeiting the EMD and taking such other actions as mentioned in the bidding document. After cancelling the offer of contract in the above case, the tendering authority may negotiate with the next lowest bidder and award the work to him if he expresses his willingness in writing to execute the work at the accepted rate of the default bidder otherwise the work will be retendered.” 9. The learned single Judge on the basis of the said conditions of contract was of the opinion that since the bid submitted by the 4th respondent was unqualified the tendering authority was not legally correct in insisting for negotiation at the accepted rate of the default bidder. Going by the facts and circumstances of the case at hand we are of the considered opinion that the said finding cannot be said to be bad or illegal because the tender submitted by the 4th respondent was found to be an unqualified and incompetent one being violative of the tender conditions. Therefore, now the question is, whether the finding of the learned single Judge that the tender submitted by the 4th respondent was bad, is correct or not? In that regard the experience prescribed under Ext.P3 Notice Inviting Tender is relevant which read thus; WA.No.1209 OF 2020 11 - 7 Copy of experience certificate of Copy of experience certificate of similar framed similar framed structure works not structure works not less than 75 Lakhs Rupees less than 75 Lakhs Rupees within within last 5 years. last 5 years. ## 10. Therefore we will have to see whether the experience requirement in contemplation of the bid notice is satisfied by the 4th respondent. Ext P6(a) is the experience certificate produced by the 4th respondent, which reads thus; " **To Whom so ever it may concern** Thiruvananthapuram Dated: 25/11/2019 This is to certify that the Contractor Bindul Krishnan C.U, Dwaraka, VV Nagar - 41, NCC Road Ambalamukku, Peroorkada P O Thiruvananthapuram has successfully completed the piling work for the construction of four Blocks (6 storied) Anayara in the Residential Scheme name of Kadakampally housing Board Scheme and the firm has satisfactorly completed the work, totally an amount of Rs. 1,25,00000/- (One Crore Twenty five lakhs). Total estimate of amount Rs.6,00,00000/- (Six Crore) as per the agreement Numer. (38/2018-2019) Dated: 17/9/2019. As far as the work in concern was satisfactory. S.Nanda Kumar Sd/- ## **Executive Engineer (In-charge)** **( Kerala State Housing Construction Board, Division – 1, P& C Executive Engineer's Office Thiruvananthapuram – 695 001)** -- the words in brackets are additionally supplied. 11. On a reading of Ext P6 ( a) it is evident that the experience of the 4th respondent is in respect to piling work for the construction of a residential housing scheme whereas the experience required in the instant contract was “ experience certificate of similar framed structure works not less than 75 lakhs Rupees within last 5 years”. According to us, the employment of the word “ similar” as above is WA.No.1209 OF 2020 12 very significant in the context since the construction sought to be carried out is balance work of construction of PG hostel for ladies which is the framed structure intended by the tender inviting authority. In that view of the matter we are of the considered opinion that the learned single Judge was right in holding that the bid submitted by the 4th respondent was unqualified. 12. Even though learned counsel for the appellants has submitted that the learned Single Judge without any material on record entered a finding that there is malafide action on the part of the appellants and has taken us through the findings contained in paragraph 11 of the judgment extracted above, on going through paragraph 11, we do not think that any such finding is rendered by the learned Single Judge. But it is only stated that the facts and circumstances disclosed a deliberate attempt to avoid the writ petitioner, who was a qualified bidder. In our considered opinion, such a finding was rendered on the basis that the tender submitted by the writ petitioner was not considered in terms of the conditions of contract, and that the work was renotified by the appellants while the writ petition was pending and that too without securing any orders from the writ court. We are also of the view that such findings rendered by the learned Single Judge do not have the impact of any malafide action on the part of the appellants. But on the other hand such a finding was rendered on the basis of the irrational and arbitrary action of not acting in accordance with law. 13. On appreciating the peculiar facts and the legal grounds raised by the WA.No.1209 OF 2020 13 appellants, We are also of the considered opinion that, since the subject issue of illegality of awarding the contract was pending consideration in writ petition, before inviting a fresh tender, the appellants ought to have sought leave of the writ court to invite a fresh tender during the pendency of the writ petition. The interim order passed by the learned Single Judge while the writ petition was admitted was only to the effect that whatever action taken by the appellants on the basis of the award of tender under challenge would be subject to the result of the writ petition. But to our estimate the said interim order did not enable the appellants to notify a fresh tender to proceed with the award of the contract under challenge, and therefore action of inviting fresh tender could only be seen as an action within the zone of consideration of the writ court . Upshot of the above discussion is, the appellants have not made out any case for interference in the judgment of the learned Single Judge in an intra court appeal filed under section 5 of the High Court Act there being no infirmity in the matter of the exercise of the discretionary jurisdiction conferred under article 226 of the constitution of India. Needless to say, appeal fails, accordingly it is dismissed. Sd/- **S. MANIKUMAR, CHIEF JUSTICE.** Sd/- smv **SHAJI P. CHALY, JUDGE.** WA.No.1209 OF 2020 14 ## **APPENDIX** ## **PETITIONER'S ANNEXURE:** **ANNEXURE I** **TRUE COPY OF THE GO(P) NO.324/2015 DATED 30/07/2015 PERTAINING TO SINGLE BID TENDERS.** ## **ANNEXURE II** **TRUE COPY OF RELEVANT EXTRACT OF CLAUSES 1524 OF PWD MANUAL PERTAINING TO BUILDING DESIGN.** **ANNEXURE III** **TRUE COPY OF THE TABLE OF CONTENTS OF VOLUME I OF NATIONAL BUILDING CODE, 2016.**