Navin Construction Corporation v. Kerala Water Authority and The Chief Engineer, Kerala Water Authority, Central Region

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.N.RAVINDRAN TUESDAY, THE 22ND JUNE 2010 / 1ST ASHADHA 1932 WP(C).No. 6676 of 2010(H) ------------------------- PETITIONER(S): --------------- NAVIN CONSTRUCTION CORPORATION, EDAPPALLY, NEAR RAAILWAY GATE, AIMS, PONEKKARA.P.O., KOCHI-41- REP. BY ITS MANAGING PARTNER N.SUGATHAN. BY ADV. SRI.N.D.PREMACHANDRAN SRI.D.AJITHKUMAR SMT.LALIZA.T.Y. RESPONDENT(S): --------------- 1. THE KERALA WATER AUTHORITY, REPRESENTED BY ITS MANAGING DIRECTOR, JALABHAVAN, VELLAYAMBALAM, THIRUVANANTHAPURAM. 2. THE CHIEF ENGINEER, KERALA WATER AUTHORITY, CENTRAL REGION, KOCHI-11. ADV. SRI.M.DINESH, SC, KWA FOR R2 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 22/06/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ## W.P(C)No.6676/2010 ## APPENDIX ## PETITIONER'S EXHIBITS: EXT.P1. A BRIEF STATEMENT SHOWING THE DETAILS OF THE WORK UNDERTAKEN BY THE 1ST PETITIONER. EXT.P2. COPY OF THE CERTIFICATE OBTAINED FROM THE KERALA WATER AUTHORITY DATED 23.2.2010. EXT.P3. COPY OF THE RELEVANT EXTRACT OF THE NOTICE INVITING TENDER. EXT.P4. COPY OF AN EXTRACT OF THE RELEVANT PORTION OF THE NOTICE INVITING TENDER. EXT.P5. COPY OF AN EXTRACT OF THE RELEVANT PORTION OF THE NOTICE INVITING TENDERS. EXT.P6. COPY OF THE BID DATED 16.9.2009 EXT.P7. COPY OF THE BID DATED 16.9.2009. EXT.P8. COPY OF THE STATEMENT SHOWING THE LIST OF WORKS. EXT.P9. COPY OF THE CERTIFICATE DATED 19-4-2007 SHOWING THE LIST OF WORKS. EXT.10. COPY OF THE DEED OF AGREEMENT DTD. 29.9.09 EXT.P11. COPY OFO THE DEED OF AGREEMENT DTD. 29.9.09 EXT.P12. COPY OF THE RELEVANT EXTRACT OF THE NOTICE INVITING TENDER. EXT.P13. COPY OF THE REPRESENTATION DATED 16.1.2010. EXT.P14. AN EXTRACT OF THE RELEVANT COPY OF THE NOTICE INVITING TENDER NO.04/2009-2010. EXT.P15. AN EXTRACT OF THE RELEVANT COPY OFO THE TENDER CONDITION FOR THE OVERHEAD SERVICE RESERVOIR AT CHELLANAM. EXT.P16. TRUE COPY OFO THE FORM Q-1. EXT.P17. TRUE COPY OF THE CERTIFICATE DATED 4.9.2008. EXT.P18. TRUE COPY OF THE AUDITED BALANCE SHEET OF THE PETITIONER. W.P(C)No.6676/2010 : 2 : ## RESPONDENTS' EXHIBITS: EXT.R2(a). TRUE COPY OF THE ELIGIBILITY CRITERIA FOR THE BIDDERS AS PER APPROVED MOTHER NIT. EXT.R2(b). TRUE COPY OF THE E TENDER NO.1/09-10 AND TENDER NO.2/09-10 PRODUCED BEFORE THE 2ND RESPONDENT. EXT.R2(c). (SERIES) TRUE COPY OF THE ORDERS DATED 2.2.2010 AND 25.2.2010 PASSED BY THE 1ST RESPONDENT. **==> picture [74 x 9] intentionally omitted <==** P.S.TO JUDGE ## **P.N.RAVINDRAN, J.** ## **-----------------------------------------** ## **W.P(C).No.6676 of 2010 ----------------------------------------Dated this the 22[nd] day of June, 2010** ## **JUDGMENT** The petitioner is a registered A Class Contractor. In this writ petition the petitioner challenges the stipulation in Exts.P4 and P5 notices inviting tenders for the construction of Overhead Service Reservoirs (OHSR for short) at Njarakkal and Elamkunnapuzha respectively, that the tenderer should have executed (commenced and completed) similar type of projects in the past five years and that the tenderer should have experience in carrying out the construction of an OHSR with pile foundation. 2. By Ext.P4 tender notice the Kerala Water Authority (hereinafter referred to as the Authority for short) invited tenders for the construction of a 17.90 lakh litre capacity OHSR at Njarakkal. The stipulation regarding past experience in Ext.P4, which is under challenge in this writ petition, reads as follows:- - “1. It is necessary that the tenderer has executed (commenced and completed) similar type of projects in the past five years. The experience of carrying out 9 lakh litre capacity OH reservoir with pile foundation is required. 2. The present worth of at least one similar work executed by the tenderer in the past including **W.P(C).No.6676 of 2010** -:2:- the cost of materials supplied by the tenderer shall be Rs.126 lakhs when calculated at an annual escalation rate of 6%.” 3. By Ext.P5, the Authority invited tenders for the construction of 13.80 lakh liter capacity OHSR at Malippuram in Elamkunnapuzha Panchayat. The relevant stipulation regarding past experience of the tenderer in Ext.P5 reads as follows:- - “1. It is necessary that the tenderer has executed (commenced and completed) similar type of projects in the past five years. The experience of carrying out 7 lakh litre capacity OH reservoir with pile foundation is required. 2. The present worth of at least one similar work executed by the tenderer in the past including the cost of materials supplied by the tenderer shall be Rs.106 lakhs when calculated at an annual escalation rate of 6%.” 4. Pursuant to Exts.P4 and P5 tender notices the petitioner submitted tenders. It appears two other persons had also submitted tenders. The tenders were opened on 30-9-2009. After evaluation, the tender committee rejected the tender submitted by the petitioner on the ground that the petitioner does not possess the requisite **W.P(C).No.6676 of 2010** ## -:3:- experience of constructing an OHSR with pile foundation. The tender committee also recommended to pre-qualify the other two tenderers for the work. By Ext.R2(c) the Managing Director also accorded sanction for opening the price bids submitted by the other two tenderers, viz. M/s.Chicago Construction, Thiruvananthapuram and Sri.Abdul Azeez, Aluva. This writ petition was filed immediately after Ext.R2(c) order was passed, but without being aware of the same, challenging the stipulations in the tender notices extracted above. 5. The main contention raised by the petitioner is that the stipulation regarding past experience in Exts.P4 and P5 tender notices is one tailored to suit the two other tenderers, viz. M/s.Chicago Construction, Thiruvananthapuram and Sri.Abdul Azeez, Aluva and that if the said stipulation is insisted upon no contractor will be able in future to participate in the tender notifications issued by the Authority for construction of OHSR resting on pile foundation. The petitioner also relies on the stipulations in Exts.P12 and P15 tender notifications issued by the Authority for construction of OHSR at Murikumpadom in Vypin Island and at Chellanam, to contend that in respect of the said works the Authority did not insist on past experience in the construction of OHSR rested on pile foundation, and therefore the ## **W.P(C).No.6676 of 2010** -:4:- stipulation regarding past experience in Exts.P4 and P5 tender notices is liable to be struck down as arbitrary and irrational. 6. The second respondent, the Chief Engineer of the Authority has sworn to a counter affidavit dated 19-3-2010. It is contended that as in Vypin area, piling had to be done upto a depth ranging from 50 to 66 metres it was stipulated that experience in construction of OHSR with pile foundation is essential. It is contended that it was to ensure safety of the structure that such a stipulation was incorporated in Exts.P4 and P5 tender notices. Reliance is also placed on Ext.R2(a) modified model tender conditions, which came into force with effect from 24.4.2009, to contend that the stipulation regarding past experience is not arbitrary. 7. I heard Sri.N.D.Premachandran, learned counsel appearing for the petitioner and Sri.M.Dinesh, learned standing counsel appearing for the respondents. I have also considered the pleadings and the materials on record. The petitioner does not dispute the necessity of constructing the OHSR resting on pile foundation. The petitioner does not also dispute the fact that piling will have to be done upto a depth ranging from 50 to 66 metres. The petitioner challenges the stipulation regarding the past experience on the short ## **W.P(C).No.6676 of 2010** ## -:5:- ground that it is tailor-made to suit the two other tenderers - M/s.Chicago Construction, Thiruvananthapuram and Sri.Abdul Azeez, Aluva. The said contractors are not on the party array. The petitioner also relies on the stipulations in two other tender notices in support of their contention. The stipulation in Ext.P12 tender notice regarding past experience, which is relied on by the petitioner to contend that the stipulation in Exts.P4 and P5 is arbitrary, reads as follows:- - “1. It is necessary that the tenderer has executed (commenced and completed) similar type of projects in the past five years. The experience of carrying out 6 lakh litre capacity OH reservoir. Experience in pile foundation work is essential.” The stipulation in Ext.P15 reads as follows:- “Participation as contractor, management contractor, or subcontractor, in - 1) at least one contract of construction of OHSR within the last 10 years with a value of at least 46 million that has been successfully and substantially completed, and - 2) Piling works of any structure with depth not less than 25 m.” 8. From the stipulations in Ext.P12 it is evident that though the ## **W.P(C).No.6676 of 2010** -:6:- capacity of the OHSR is only 6 lakhs litres, it was stipulated that experience in pile foundation work is essential. In Ext.P15 also the stipulation is that the tenderer should have experience in carrying out piling works with depth not less than 25 metres. From the terms of Exts.P12 and P15 it cannot be said that experience in carrying out piling work has been dispensed with totally. Further in Ext.R2(a) model tender conditions it is stipulated as follows:- - “1. It is necessary that the tenderer has executed (commenced and completed) similar type of projects in the past five years. The experience of carrying out 50% the size/capacity of the present is required.” From the materials on record it cannot therefore, be said that the Authority cannot insist that the tenderer should have executed (commenced and completed) a similar type of project during the preceding five years . 9. The Apex Court has in _**Tata Cellular v. Union of India**_ , (1994) 6 SCC 651, held that the terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. In _**Air India Ltd. v. Cochin International**_ _**Airport Ltd.**_ , (2000) 2 SCC 617 the Apex Court held as follows:- **W.P(C).No.6676 of 2010** ## -:7:- “7. ... The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can fix its own terms of invitation to tender and that is not open to judicial scrutiny.” 10. The learned counsel for the petitioner however relies on the observations of the Apex Court in paragraph 22 of the decision in _**Jagdish Mandal v. State of Orissa**_ , (2007) 14 SCC 517 and in paragraph 26 of the decision of the Apex Court in _**Meerut Development Authority v. Association of Management Studies,**_ (2009) 6 SCC 171 to contend that the process adopted by the tendering authority can be challenged where it is established that the terms of the invitation to tender are tailor-made to suit the convenience of any particular person with a view to eliminate all others from participating in the bidding process. ## 11. In _**Jagdish Mandal v. State of Orissa**_ (supra) the Apex Court held as follows:- _“22. Judicial review of administrative action is intended to prevent arbitrariness,_ -:8:- ## **W.P(C).No.6676 of 2010** _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 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_ **W.P(C).No.6676 of 2010** -:9:- _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 and the court can say: “the decision is such that no responsible authority acting reasonably and in 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_ ## **W.P(C).No.6676 of 2010** ## -:10:- _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.” (emphasis supplied)_ ## 12. In _**Meerut Development Authority v. Association of**_ ## _**Management Studies**_ (supra) the Apex Court held as follows:- _“26. A tender is an offer. It is something which invites and is communicated to notify acceptance. Broadly stated it must be unconditional; must be in the proper form, the person by whom tender is made must be able to and willing to perform his obligations. The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. However, a limited judicial review may be available in cases where it is established that the terms of the - invitation to tender were so tailor made to suit the convenience of any particular person with a view to eliminate all others from participating in the bidding process.” (emphasis supplied)_ 13. In my opinion the decisions relied on by the learned counsel for the petitioner have no application to the case on hand. The Apex **W.P(C).No.6676 of 2010** ## -:11:- Court has not in the aforesaid decisions deviated from the law laid down in _**Tata Cellular**_ (supra) and _**Air India**_ (supra) that the State or its instrumentalities can fix its own terms of invitation to tender and such terms in the tender notice are not open to judicial scrutiny. In _**Jagdish Mandal**_ (supra) the Apex Court was only considering the scope of interference in contractual matters. In other words, the Apex Court was considering the scope of interference with the steps taken pursuant to a tender notification and not the validity of the conditions in the tender notification. In _**Meerut Development Authority**_ (supra) the Apex Court was considering the validity of a retender notification. In that case tenders had initially been invited for allotment of a plot of land for establishing educational institutions, but later the user was changed from educational to residential. It was in such circumstances that the Apex Court held that if the terms of the invitation to tender are tailor-made to suit the convenience of any particular person with a view to eliminate all others from participating in the bidding process, a limited judicial review may be available. Even in _**Meerut Development Authority**_ (supra) the Apex Court had taken the view that one cannot challenge the terms and conditions of the tender except on the limited ground indicated in paragraph 26. ## **W.P(C).No.6676 of 2010** ## -:12:- The Apex Court has in _**Meerut Development**_ (supra) held as follows in paragraph 27:- _“27. The bidders participating in the tender process have no other right except the right to equality and fair treatment in the matter of evaluation of competitive bids offered by interested persons in response to notice inviting tenders in a transparent manner and free from hidden agenda. One cannot challenge the terms and conditions of the tender except on the abovestated ground, the reason being the terms of the invitation to tender in the realm of the contract. No bidder is entitled as a matter of right to insist the authority inviting tenders to enter into further negotiations unless the terms and conditions of notice so provided for such negotiations.”_ 14. In the instant case, the challenge made by the petitioner is to the terms and conditions of the tender notification. As noticed by the Apex Court in _**Tata Cellular**_ (supra) and _**Air India Ltd**_ . (supra) the terms of invitation to tender cannot be open to judicial scrutiny for the reason that it is in the realm of a contract. In such circumstances I am of the considered opinion that this Court exercising the power of ## **W.P(C).No.6676 of 2010** -:13:- judicial review, cannot sit in appeal over the decision taken by the tendering authority as regards the past experience which a tenderer should possess. In the instant case it is evident from the counter affidavit filed by the respondents that the OHSR has to be constructed in an area which requires deep pile foundation. Having regard to the nature of the work to be executed it cannot be said that the stipulation that the tenderer should have previous experience in the construction of OHSR resting on pile foundation is arbitrary or irrational. Such a stipulation was made in order to ensure the safety of the structure which has to bear the weight of 17.90 lakh litres of water. Such a stipulation is certainly one in public interest. Further, the petitioner has not chosen to implead the two other tenderers who were prequalified. In the absence of the said tenderers on the party array no relief can be granted to the petitioner, even if this Court were to interfere with the terms of the tender notice. For the reasons stated above, I hold that there is no merit in the writ petition. The writ petition fails and is accordingly dismissed. **P.N.RAVINDRAN, Judge.** ## **ahg.** **P.N.RAVINDRAN, J. --------------------------W.P(C).No.6676 of 2010 ----------------------------** ## **JUDGMENT** **22[nd] June, 2010**