1 IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P.(C) No. 3980 of 2015 SPML Infra Limited, a company incorporated under the provisions of the Companies Act, 1956 and having its registered office at F27/2, Okhla Industrial Area, Phase2 New Delhi 110020 through its Senior Executive Business Development, Mr. Manish Sharma, son of Mr. Shankar Lal Sharma, residing at 5/2, Bama Charan Roy Road, Kolkata700034, P.O. Senhati, P.S. Behala, District Behala … … … Petitioner Versus 1. Jharkhand Urja Sancharan Nigam Limited, Government of Jharkhand Enterprises, having its office at Engineering Building, HEC Dhurwa, P.O. & P.S. Dhurwa, District Ranchi, Pin834004 (Jharkhand) 2. The Chief Engineer (Transmission), Jharkhand Urja Sancharan Nigam Limited, having its office at Engineering Building, HEC Dhurwa, P.O. & P.S. Dhurwa, District Ranchi, Pin834004 (Jharkhand) 3. Principal Secretary, Department of Energy, State of Jharkhand, having its office at, Nepal House, Doranda, Ranchi834001 ... … ... Respondents CORAM: HON'BLE MR. JUSTICE SHREE CHANDRASHEKHAR For the Petitioner : Mr. Anil Kumar Sinha, Sr. Advocate Mr. A.K. Das, Advocate Mrs. Somya Sinha, Advocate For RespondentJUSNL : Mr. Ajit Kumar, Sr. Advocate Mr. Navin Kumar, Advocate CAV on: 03.12.2015 Pronounced on: 10.12.2015 Per SHREE CHANDRASHEKHAR, J.
Initially, Notice Inviting Tender bearing NIT No. 272/PR/JUSNL/201415 was issued on 07.07.2014. The petitioner was found L1 tenderer however, on 07.08.2015 a Tender Cancellation Notice was published by the respondentJharkhand Urja Sancharan Nigam Limited, cancelling NIT dated 07.07.2014. Subsequently, the respondentNigam published advertisement dated 14.08.2015 inviting fresh bids for the said work. Aggrieved by the decision to cancel NIT dated 07.07.2014 and to invite fresh bids, the petitioner approached this Court. Subsequently, the decision of the Board of Directors of the Jharkhand Urja Sancharan Nigam Limited 2 in its 10th meeting held on 17.07.2015 was brought on record and the petitioner filed I.A. No. 5442 of 2015 seeking amendment in the writ petition for challenging the said decision. The amendment application was allowed on 18.09.2015 and consequently, the petitioner filed the amended writ petition. 2. The brief facts of the case disclosed in the present proceeding are that, for design, engineering, supply of materials/equipments, erection, testing and commissioning of 220/132/33 KV (2x150+2x50) MVA Grid Substation at Jasidih on turnkey basis, the Notice Inviting Tender was issued on 07.07.2014. In response to the NIT dated 07.07.2014, four bids were submitted however, in technical evaluation, only three bids were found qualified and subsequently, their financial bids were opened on 15.10.2014. The bids submitted by the petitionerCompany was found lowest and the respondentNigam invited the petitioner for deliberation and discussion. The petitioner agreed to reduce its bid to Rs. 79,03,90,251/ from the initial quoted price for the project at Rs. 83,68,61,780/. Thereafter, the respondents issued letter dated 28.11.2014 seeking certain clarifications for comparing price quoted by the petitioner in response to NIT dated 07.07.2014 with quoted price for similar type of the latest awarded work order to the petitioner by any Government Organisation, letter dated 05.05.2015 for renegotiation of the price and letter dated 10.06.2015 for further discussion. The petitioner submitted its response, justifying the price quoted for the work under the NIT. The respondentChief Engineer (Transmission) thereafter, issued letter dated 29.06.2015 seeking clarification on the issue of blacklisting of the petitionerCompany namely, SPML Infra Limited, New Delhi by Department of PHED, Government of Bihar. A letter dated 08.07.2015 was also issued to the petitioner to inform the respondentJharkhand Jharkhand Urja Sancharan Nigam Limited whether any contract has been awarded to it by the Government of Bihar or any other State Government/Central 3 Government/Government Department. The petitioner furnished copy of order in C.W.J.C. No. 1344 of 2014 whereby, the order of blacklisting and forfeiture of security deposit has been stayed by the Patna High Court. The petitioner further clarified that it has been awarded work from South Bihar Power Distribution Company Limited (SBPDCL) and by the West Bengal State Electricity Transmission Limited for two projects for “Construction of 132 KV GIS Substation at Bajkul” and “Construction of 220 KV GIS Substation at Alipurdwar”. The respondentJharkhand Urja Sancharan Nigam Limited however, has issued Tender Cancellation Notice on 07.08.2015. 3. Heard the learned counsel for the parties.
4. Mr. Anil Kumar Sinha, the learned Senior Counsel for the petitioner raised three fold contentions; (i) the reasons disclosed in the decision of the Board of Directors cancelling NIT dated 07.07.2014 are extraneous to the express terms of the bid document, (ii) the decision making process itself is faulty and the decision to cancel the Tender and to invite fresh bids is arbitrary and, (iii) the manner in which the respondent authorities have proceeded in the matter clearly discloses an element of bias which finally influenced the final decision. The learned Senior Counsel relied on decisions in (a) “M/s Star Enterprises & Ors. Vs. City and Industrial Development Corporation of Maharashtra Ltd. & Ors.” (1990) 3 SCC 280, (b) “Union of India & Ors. Vs. Dinesh Engineering Corporation” (2001) 8 SCC 491 and, (c) “Ramchandra Murarilal Bhattad & Ors. Vs. State of Maharashtra & Ors.” (2007) 2 SCC 588. 5. Per contra, Mr. Ajit Kumar, the learned Senior Standing Counsel for the respondentJharkhand Urja Sancharan Nigam Limited contended that after evaluating justification for the price quoted by the petitioner, a conscious decision was taken by the respondentNigam to cancel NIT dated 07.07.2014. The decision taken by the respondentNigam is in the public interest and in the interest of the corporation. Relying on decisions in “Air India Ltd. Vs. 4 Cochin International Airport Ltd. & Ors.” (2000) 2 SCC 617 and “Jagdish Mandal Vs. State of Orissa” (2007) 14 SCC 517”, the learned Senior Counsel submitted that the petitioner cannot claim an absolute right to do business with the respondentNigam and, in any event, the decision taken by the Board of Directors cannot be termed illegal and arbitrary. 6. The tender notice discloses that the technical and commercial (PartI) and price (PartII) were invited from reputed, capable, experienced and financially sound firms for the scheduled work on turnkey basis. The bidders were required to furnish earnest money deposit in the form of BG/DD for Rs.1.38 crores from a nationalised bank. The prebid meeting started on 21.07.2014 and the queries raised in prebid meeting were uploaded on the website. The tenderers were required to keep their bids alive for 180 days from the date of opening of tender and in the event a tenderer withdraws or modifies its offer, the earnest money deposit was liable to be forfeited by the respondentNigam. The bid document is an exhaustive one and it has taken care of every possible stage in the tendering process however, except providing that the respondentNigam has reserved the right to reject any tender or all tenders without assigning reason for such action and it is not obligatory for the respondentNigam to accept the lowest tender or any other tender, the tender document does not provide a guideline for not accepting a bid higher than the estimated cost for the project. The learned Senior Standing Counsel for the respondentNigam contended that the Nigam is not under a statutory duty to accept the highest or the lowest bid. The respondents have chosen their own method to ascertain the justification for the price quoted by the petitioner and, considering the fact that the price quoted by the petitioner is unreasonably high, the Board of Directors reached a decision not to accept the bid submitted by the petitioner. It is thus, contended that the decision 5 taken in the meeting held on 17.07.2015 was not arbitrary rather, it was just and proper and in the public interest. 7. The stipulation under the NIT empowering the respondentNigam not to accept a bid, in my opinion, cannot be pressed by the respondents to justify their action cancelling the tender notice dated 07.07.2014. I am also of the view that it cannot be contended by the respondents that the said stipulation is not under challenge. It is well settled that the Court can examine the decisionmaking process and interfere if it is found vitiated by malafide, unreasonableness and arbitrariness. In “Natural Resources Allocation, in RE, Special Reference No. 1 of 2012” (2012) 10 SCC 1, the Hon'ble Supreme Court has held that, the question of unfettered discretion in an executive authority, just does not arise. The Hon'ble Supreme Court has observed as under: 184. “.............The fetters on discretion are clear, transparent and objective criteria or procedure which promotes public interest, public purpose and public good. A public authority is ordained, therefore to act, reasonably and in good faith and upon lawful and relevant grounds of public interest.” 8. In the counteraffidavit, the respondents have admitted that M/s SPML Infra Limited, Kolkata emerged L1 bidder and the Tender Evaluation Committee recommended that L1 bidder should be called for its price justification and negotiation. The matter was placed before the Board of Directors which resolved for renegotiation with L1 bidder to arrive at a reasonable rate. The petitionerCompany reduced its offer by additional 1% on the negotiated amount and offered Rs. 78,48,10,940.76 as its bid for the work under the NIT. The order of blacklisting of the petitionerCompany is not the ground taken by the respondents for not awarding the contract to the petitioner. The specific case pleaded by the respondents is that, “the price offered by M/s SPML Infra Limited for GIS at Jasidih is unreasonably high as compared to 6 other similar projects awarded and therefore, in the interest of Company, Board decided to cancel this tender at the earliest”. In the affidavit dated 07.10.2015, a detailed comparison of the work for Musarahi (BSPTCL) and for the present tender has been narrated, to justify cancellation of NIT dated 07.07.2014. In its reply, the petitionerCompany disputed the assertions in affidavit dated 07.10.2015 of the respondents. The petitioner has asserted that Bays Designations are different for both the projects and cost components also will be different. There is difference in HV and LV side Bays of 132/33 KV 50 MVA transformer. The petitioner has pleaded that even if two tenders are for similar work but located in two different places, the price would vary. Moreover, in turnkey contract, a lot of factors may influence the price such as, financing pattern, payment terms, the rate of interest, incentive, earnest money deposit, supply component etc. In “Air India Limited”, the work under the contract was for groundhandling services at the New Cochin Airport. In the said case the Hon'ble Supreme Court found that CIAL bonafide believed that involving a public sector undertaking and a National Carrier would, in long run, prove to be more beneficial to CIAL and therefore, it cannot be held that CIAL acted arbitrarily and unreasonably. In the present case, the bids submitted by the other two qualified bidders were obviously even higher than the bid submitted by the petitionerCompany. The work under the contract is to end on its execution and it is not continuous in nature. No doubt, the Government ignoring the lowest bid may award the contract to another bidder however, the decision must not be unreasonable and arbitrary. Leaving aside the factual dispute raised by the parties in respect of justification of price quoted by the petitioner, one thing is apparent on the face of the record that the procedure adopted by the respondents to arrive at a conclusion that NIT dated 07.07.2014 should be cancelled, is neither provided under the NIT nor under Board's (Nigam) circular/guideline. The financial bids were opened on 15.10.2014 and about 9 months 7 thereafter, the Tender Cancellation Notice was issued on 07.08.2015. The time taken by the respondentNigam for the alleged negotiation and discussion raises questions to the procedure adopted by the respondentNigam in decisionmaking. Moreover, the entire process has consumed more than one year and the same cannot be said to be in public interest. 9. Now, dealing with the contention that cancellation of tender notice dated 07.07.2014 was in public interest, I find that the procedure adopted by the respondentNigam which finally culminated in the decision inviting fresh tenders must be held arbitrary. The enquiries conducted by the respondents are not contemplated under the contract. The petitioner is an eligible tenderer and its bid has been found the lowest, are the admitted facts. For assessing the bid of the petitionerCompany the respondents sought to compare previous bid of the petitioner with the present bid. The learned Senior Counsel for the petitioner has rightly contended whether the respondents would conduct similar enquiries in every other case, has not been asserted by them. The qualification and credentials of the petitioner appear to have been accepted by the respondents. The learned Senior Standing Counsel for the respondentNigam submitted that the bid offered by the petitioner for a similar projects was merely noticed by the Board of Directors and the same has no bearing on the final decision taken by the Board to invite fresh tender. As noticed above, the decision dated 17.07.2015 clearly discloses that the only reason for which the bid of the petitioner has not been accepted was that the price offered by M/s SPML Infra Limited for GSS at Jasidih is unreasonably high as compared to other similar project awarded to it. If the decision of the respondentNigam to cancel NIT dated 07.07.2014 is approved, it would amount to conferring arbitrary powers on the respondentNigam. In the absence of any guidelines for not accepting an otherwise eligible tender, the respondentNigam's decision would be tested on the touchstone of 8 reasonableness. Though, malafide has not been alleged by the petitioner and the respondents have tried to justify their action on the ground of public interest, in my opinion, sanctioning the impugned decision of the respondentNigam, in law, would not be in the public interest. In “Asia Foundation and Construction Ltd. Vs. Trafalgar House Construction (I) Ltd. & Ors.” (1997) 1 SCC 738, the Hon'ble Supreme Court observed that, “though the principle of judicial review cannot be denied so far as exercise of contractual powers of government bodies are concerned, but it is intended to prevent arbitrariness or favouritism and it is exercised in the larger public interest.” Any departure or exception from the established norms and course of action would lead to arbitrariness and it would shake the confidence of the public in the system. How much is too high and how much would be too low, is not known even to the respondentNigam. The same is not provided under the NIT, and if a bid is rejected simply by saying too high or too low compared to some other tender, such a practice would introduce uncertainty in the system which cannot be permitted in a system founded upon the rule of law. The expression “arbitrarily” means in an unreasonable manner, as done capriciously or at pleasure. The discretion which is absolute, uncontrolled and without any guidelines in the exercise of the powers can easily degenerate into arbitrariness. In “State of Punjab Vs. Khan Chand” (1974) 1 SCC 549, the Hon'ble Supreme Court has observed that, “the vesting of discretion in authorities in the exercise of power under an enactment does not by itself entail contravention of Article 14. What is objectionable is the conferment of arbitrary and uncontrolled discretion without any guidelines whatsoever with regard to the exercise of that discretion. The Hon'ble Supreme Court has further observed that, “it is no answer to the above that the executive officers are presumed to be reasonable men who do not stand to gain in the abuse of their power and can be trusted to use “discretion” with discretion”. During the course of hearing the learned Senior Standing Counsel for the 9 respondentNigam stated that a bid about 9 crores below the price quoted by the petitionerCompany has been received. Though, commercial considerations may arise in finalising a tender, normally that alone cannot be the sole factor for award of tender. In the present case, though the petitioner cannot claim award of contract as a matter of right and indeed, a direction for award of contract under NIT dated 07.07.2014 cannot be issued in favour of the petitioner still, the Court must interfere with the decision dated 17.07.2015 of the Board of Directors for the reason that affirming the said decision would amount to conferring an arbitrary power upon the respondentNigam to take such a decision in future also. In “Air India Limited”, the Hon'ble Supreme Court has held that, “even when some defect is found in the decisionmaking process the court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the court should intervene”. The decision taken by the Board of Directors for cancelling NIT dated 07.07.2014 and inviting fresh bids is not a mere minor error in the decisionmaking process rather, it would have much wider repercussions if such a decision is upheld. It is not a simple case in which the petitioner has just made out an arguable point; the issue involved in the present writ petition is of greater public importance and the decision of the Court must be in consonance with the principles upholding the rule of law. 10. Tested on the aforesaid principles, the decision of the Board of Directors in the meeting held on 17.07.2015 vide Annexure12 is found arbitrary and unreasonable and, accordingly, it is quashed. It is well settled that once the foundation is removed, the superstructure also goes. The legal maxim “sublato fundamento cadit opus” has been recognised by the Hon'ble Supreme Court in 10 various judgments. In “Badrinath Vs. Government of Tamil Nadu & Ors.” (2000) 8 SCC 395, the Hon'ble Supreme Court observed that, “once the basis of a proceeding is gone, all consequential acts, actions, orders would fall to the ground automatically and this principle of consequential order which is applicable to judicial and quasijudicial proceedings is equally applicable to administrative orders.” The Tender Cancellation Notice dated 07.08.2015 and advertisement dated 14.08.2015 inviting fresh bids are consequential actions pursuant to the decision taken by the Board of Directors in the meeting held on 17.07.2015 and therefore, Tender Cancellation Notice dated 07.08.2015 and advertisement dated 14.08.2015 are also quashed. It is also wellsettled that even after interfering with the administrative decision, the Court may not grant final relief to a person. In view of the absence of a legal right in a tenderer to seek mandamus for award of tender, it is made clear that consequent upon quashing of decision dated 17.07.2015, Tender Cancellation Notice dated 07.08.2015 and, the advertisement dated 14.08.2015, the petitionerCompany cannot claim award of Tender on account of its bid in response to NIT dated 07.07.2014.
11. The writ petition is allowed in the aforesaid terms. The respondentNigam is directed to issue fresh Notice Inviting Tender. (Shree Chandrashekhar, J.) Jharkhand High Court, Ranchi Dated: 10th December, 2015 Manish/A.F.R.