K.K.BUILDERS v State of Kerala and Project Director, Kerala Road Fund Board

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE V.G.ARUN** **MONDAY, THE 11[TH] DAY OF JULY 2022 / 20TH ASHADHA, 1944 WP(C) NO. 20478 OF 2022** ## **PETITIONER/S:** K.K.BUILDERS, CIVIL ENGINEERING CONTRACTORS, PERAVOOR, KANNUR, REPRESENTED BY ITS MANAGING PARTNER K.K. MOHANDAS, S/O. KUNHIRAMAN, AGED 62 YEARS, KOLANDHARA HOUSE, MELMURINGODI P.O, PERAVOOR, KANNUR DISTRICT 670 673. BY ADVS. P.K.SURESH KUMAR (SR.) CIBI THOMAS G.KRISHNAKUMARI ## **RESPONDENT/S:** 1 STATE OF KERALA, REPRESENTED BY ITS SECRETARY, PUBLIC WORKS DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM- 695 001. 2 PROJECT DIRECTOR, KERALA ROAD FUND BOARD, BALBHAVAN ROAD, KOWDIAR, THIRUVANANTHAPURAM- 695 003. BY ADV ADVOCATE GENERAL OFFICE KERALA ## **OTHER PRESENT:** SRI.APPU P.S-GP THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 06.07.2022, THE COURT ON 11.07.2022, DELIVERED THE FOLLOWING: W.P.(C) No.20478 of 2022 -2- ## **JUDGMENT** Dated this the 11[th] day of July 2022 The petitioner is a partnership firm that is doing business in construction contracts. The petitioner, along with K.K.Surendran, another registered contractor, entered into Ext.P2 joint venture (JV) agreement and participated in Ext.P1 tender. As per the terms of the JV agreement, the profit/loss of the JV is to be shared in the ratio of 51:49. The estimated cost of the work, 'improvement of Ammanappara – Pacheni – Thiruvattur - Therandi – Chapparakadavu Road in Kannur District', is Rs.46,52,58,354/-. The JV submitted its bid and, by Ext.P3 e-mail, was informed that its tender had been rejected during technical evaluation. Thereupon, Ext.P4 mail was sent, asking to furnish the reason for rejecting the tender. Later, the petitioner got information that the bid had been rejected, since the other W.P.(C) No.20478 of 2022 -3- joint venture partner, K.K. Surendran, did not have the prescribed experience. Hence, this writ petition seeking the following reliefs; _“(i) issue a writ of mandamus or other appropriate writ, order or direction commanding the respondents to accept the tender submitted by the petitioner pursuant to Exhibit P1 notice and to consider its financial bid along with other tenders;_ _(ii) call for the records relating to the decision taken for rejecting the tender submitted by the petitioner pursuant to Exhibit P1 notice and to quash the said decision (as revealed through Ext.P3 mail) by the issue of a writ of certiorari or other appropriate writ, order or direction;_ _(iii) declare that the rejection of tender submitted by the petitioner at the technical bid stage was highly improper and illegal.”_ 2. Senior Advocate P.K.Suresh Kumar, instructed by Adv.Cibi Thomas, assailed Ext.P3 on the following grounds; The criteria regarding pre-qualification of joint ventures is that the lead partner should ## W.P.(C) No.20478 of 2022 -4- meet not less than 50% of qualifying criteria as mentioned in Part VI- pre-qualification information. The joint venture must collectively satisfy that criteria, and the experience of the other joint venture partner shall not be less than 25% of the qualification criteria in Part VI- pre-qualification information. It is submitted that the petitioner and its partner must satisfy the criteria collectively and individually. To bolster this submission, reference is made to Exts.P6 to P9 certificates. Ext.P6 certificate would show that the petitioner had executed work having value of Rs.54.35 Crores for the Kerala Infrastructure Investment Fund Board in 2021. Exts.P6, P7 and P9 certificates of the other partner would show that he had executed works worth around Rs.24 Crores. As such, there was no justifiable reason for rejecting the petitioner’s bid at the technical evaluation W.P.(C) No.20478 of 2022 -5- stage. The argument now put forth by the second respondent is that the bid was rejected for nonproduction of banker's certificate by the other partner. According to the second respondent Clause 2.6 of Part VI-pre-qualification information mandates production of banker's certificate by all partners of the JV. The said contention is without substance, the responsibility of the JV being collective. Production of bank certificate by the lead partner will eminently satisfy the requirement. The bank certificates produced by the petitioner are worth much more than 10% of the estimated value of the work to be awarded. Going by the dictionary meaning of the term ‘collective’ also, the requirement is only of the partners jointly having the financial capacity to execute the work. Finally it is contended that, if the financial bid submitted by the joint venture is ## W.P.(C) No.20478 of 2022 -6- opened and the quoted rate found to be the lowest, acceptance of the bid will be in public interest. 3. Adv.K.V.Manoj Kumar, learned Standing Counsel appearing for the second respondent Board submitted that the writ petition is liable to be rejected solely on the ground that the petitioner, and not the JV, has filed the writ petition. Moreover, the writ petition is filed under the misconception that rejection was for the reason that the other partner in the joint venture did not have the requisite criteria. On the other hand, the bid was rejected for the other partner’s failure to produce bank certificates, as mandated under Clause 2.6 of Part VI-pre-qualification information. It is contended that the stipulation pertaining to joint venture agreements in the bid document, read along with clause 2.6 of Part VI-pre- W.P.(C) No.20478 of 2022 -7- qualification information makes it abundantly clear that all partners in the joint venture are bound to produce bank certificates to prove their financial capacity. This requirement cannot be met by the lead partner producing bank certificate evidencing working capital of more than 10% of the probable estimated cost of the work. Attention is drawn to Clause 3(h) of Part VI-pre-qualification information, as per which, the qualification parameter e.g; turn over details, financial resources etc of the individual partners of the joint venture, when added together, should not be less than what is spelt out in the qualification criteria. The Clause also specifies that the details of all the partners shall be submitted irrespective of their share in the joint venture or consortium. It is contended that the interpretation of Clause 2.6 put forth on behalf of the petitioner is flawed ## W.P.(C) No.20478 of 2022 -8- and even if such interpretation is possible, that will not justify the invocation of the power of judicial review, the interpretation of the clauses in the tender document being the prerogative of the employer. In support of this contention, the learned Counsel placed reliance on the decision in _**Jagdish Mandal v. State of Orissa [(2007) 14 SCC 517]**_ . 4. It is submitted that e-tender of the work in question was initially notified on 24.12.2021 with tender opening date as 20.01.2022. Only two bidders participated and on pre-qualification evaluation, one bidder became disqualified. Therefore, the work was re-tendered on 23.02.2022 with bid opening date as 19.03.2022. Eight bidders, including the petitioner’s joint venture participated. The petitioner’s joint venture was disqualified in the pre-qualification evaluation conducted in the ## W.P.(C) No.20478 of 2022 -9- Technical Evaluation Committee Meeting held on 29.04.2022. Thereafter, the financial bids of qualified bidders was opened on 05.05.2022 and placed before the tender approval committee on 22.6.2022. The Committee approved the tender of the L1 bidder, Sri.T.A.Abdul Rahman. The tendered work being of urgent nature, any interference by this Court will be against public interest. 5. The dispute herein pertains to the interpretation of certain clauses in the bid document and the pre-qualification information. Being so, it is only appropriate to have a careful scrutiny of the relevant clauses, extracted hereunder for easy reference, _“34.14_ ## _**Pre-Qualification Information of Joint**_ ## _**Venture**_ _The addendum regarding pre-qualification criteria of joint venture is as follows:_ _The lead partner shall meet not less than 50% of all the qualifying criteria as mentioned in Part VI-Pre qualification information and the_ W.P.(C) No.20478 of 2022 -10- _joint venture must collectively satisfy the prequalification criteria Part-VI-Prequalification Information. The experience of the other joint venture partner shall not be less than 25% of the qualification criteria in Part VI-Pre-qualification information._ ## _**Part VI-Pre-qualification information**_ _1. General_ _1.1. The following criteria specified for pre-qualification shall be met by the Bidder in addition to the requirements specified elsewhere in the bidding document. The Bidder is required to submit all details as below along with his bid online and subsequently a signed hardcopy of all these details shall be submitted to the tendering authority as detailed in the section "Instructions to the Bidders"._ ## _**3. Joint Venture/consortium:**_ _3.1. Tenders submitted by a Joint_ _Venture/Consortium/Partnership of two or more Firms/Contractors as partners shall comply with the following requirements;_ _…._ _c) The Lead Partner shall be authorized to incur liability and receive instructions for and on behalf of any and all the partners of the joint venture/consortium and the entire execution_ W.P.(C) No.20478 of 2022 -11- _of the contract including payment shall be done exclusively with the Lead Partner._ _…._ _h) The qualification criteria parameter e.g. turnover details, financial resources etc. of the individual partners of the joint venture will be added together and the total criteria should not be less than as spelt out in the qualification criteria. Hence, the details of all the partners shall be submitted irrespective of their share in the joint venture or consortium._ _i) The formation of joint venture or change in joint venture character / partner after submission of the bid and any change in the biding regarding joint venture will not be permitted._ _j) The pre-qualification of a joint venture does not necessarily pre-qualify any of its partners individually or as a partner in any other joint venture or association. In case of dissolution of a joint venture, each one of the constituent firms may pre-qualify if they meet all the pre-qualification requirements, subject to the written approval of the Tender Inviting Authority.”_ The addendum regarding pre-qualification criteria of joint ventures mandates that the lead partner shall meet not less than 50% of all the ## W.P.(C) No.20478 of 2022 -12- qualifying criteria as mentioned in Part VI-prequalification information and the joint venture - must collectively satisfy the pre qualification criteria. Further, experience of the other (junior) partner shall not be less than 25% of the qualification criteria in Part VI prequalification information. Clause 3 of Part VI - pre-qualification information deals with joint venture /consortium. Clause 3.1 mandates that tender submitted by a joint venture/ consortium/partnership shall comply with the requirements specified thereunder. The specification at Clause 3.1.h is that, details of all partners shall be submitted irrespective of the share in the joint venture or consortium. The qualification criteria parametres like, turn over details, ‘financial resources’ etc of the individual partners of the joint venture will then be added together, upon which the total W.P.(C) No.20478 of 2022 -13- criteria should not be less than what is spelt out in the qualification criteria. Cause 2.6 requires the production of bank certificate evidencing possession of working capital of more than 10% of the probable estimated cost of work. A conjoint reading of the above provisions leaves no room for doubt that both partners are bound to produce the bank certificates and when taken together (collectively), the certificates should be sufficient to meet the criteria in Clause 2.6. 6. As rightly contended by the learned Standing Counsel, it is the employer’s prerogative as to decide as to whether the adequacy of working capital of the individual partners is to be assessed, irrespective of the lead partner having produced bank certificates to prove possession of working capital of more than 10%. I also find considerable force in the contention that, even if a different ## W.P.(C) No.20478 of 2022 -14- interpretation is possible, the writ court should not exercise the power of judicial review when the decision of the employer is found to be sound. The legal position is clearly laid down at paragraph 22 of _**Jagdish Mandal** (supra)_ , which reads as under; _“22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made ‘lawfully’ and not to check whether choice or decision is ‘sound’. When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial_ W.P.(C) No.20478 of 2022 -15- _review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power 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 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_ ## W.P.(C) No.20478 of 2022 -16- _accordance with relevant law could have reached’;_ _(ii) Whether public interest is affected. If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/ contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.”_ In view of the above legal position and for other reasons mentioned above, the writ petition is dismissed. Sd/- **V.G.ARUN JUDGE** Scl/ W.P.(C) No.20478 of 2022 -17- ## **APPENDIX OF WP(C) 20478/2022** ## PETITIONER EXHIBITS |Exhibit P1|TRUE COPY OF THE TENDER NOTICE DATED| |---|---| ||24.12.2021 ISSUED BY THE 2ND| ||RESPONDENT.| |Exhibit P2|TRUE COPY OF THE JOINT VENTURE| ||AGREEMENT SUBMITTED BY THE PETITIONER| ||ALONG WITH K.K. SURENDRAN.| |Exhibit P3|TRUE COPY OF THE ELECTRONIC MAIL| ||ISSUED BY THE TENDER INVITING| ||AUTHORITY INFORMING REJECTION OF THE| ||BID.| |Exhibit P4|THE REQUEST DATED 20.05.2022 SUBMITTED| ||BY THE PETITIONER TO THE PROJECT| ||DIRECTOR.| |Exhibit P5|TRUE COPY OF THE BID DOCUMENT| ||EXCLUDING PARTS II, IV AND V.| |Exhibit P6|TRUE COPY OF THE EXPERIENCE| ||CERTIFICATE DATED 08.02.2021 SUBMITTED| ||ALONG WITH THE TENDER.| |Exhibit P7|TRUE COPY OF THE EXPERIENCE| ||CERTIFICATE DATED 03.11.2018 SUBMITTED| ||ALONG WITH THE TENDER.| |Exhibit P8|TRUE COPY OF THE EXPERIENCE| ||CERTIFICATE DATED 27.05.2020 SUBMITTED| ||ALONG WITH THE TENDER.| |Exhibit P9|TRUE COPY OF THE EXPERIENCE| ||CERTIFICATE DATED 06.07.2018 SUBMITTED| ||ALONG WITH THE TENDER.| |Exhibit P10|TRUE COPY OF THE TENDER SUMMARY| ||REPORT.|