ORDER
Prabha Sridevan, J.
1. By consent the main writ petition itself is taken up for final disposal.
2. The Government of India had received a loan from the International Bank for Reconstruction and Development (hereinafter called 'the Bank') towards the cost of upgradation of government roads and for meeting the cost of Enhanced Periodical Maintenance. The first respondent invited bids enhanced periodical maintenance of Government roads on 5.12.2003. Bid was open to all bidders from eligible source country as defined in the guidelines, bidders from India registered with Tamil Nadu or other State Governments were also eligible to participate in the bid. Bids were invited for eight contracts MC-1 to MC-8. This writ petition is with regard to MC-5 which relates to roads in Tiruchy and Thanjavur District.
3. The instructions to bidders contains the details regarding to bidding documents, preparation of bids, submission of bids, bid opening and evaluation, award of contract. Some of the clauses are important and those clauses alone will be referred to. As per Clause 4.3, all bidders had to include the information given thereunder and the documents alongwith their bids. One of the relevant information that had to be given as per Clause 4.3 (j) was -
'proposals for sub-contracting components of the Works amounting to more than 20 percent of the Bid price (for each, the qualifications and experience of the identified sub-contractor in the relevant field should be annexed);'
Clause 4.4 reads thus:
'Bids from joint venture are not acceptable.'
Clause 4.5-A and Clause 4.5-B deal with requirements like fulfillment of one similar contract, availability of equipment etc. But, the controversy does not touch this Section. According to Clause 4.5-C, it was open to the bidders to bid for more then one contract. Clause 4.6 deals with subcontractors. Bidding documents consist of the documents listed in Clause 8.1. But there is no controversy regarding this. The bidding documents could be amended and Clause 10.1 deals with that. The deadline for submission of bid vas postponed from 23.1.2004 to 9.2.2004. Clause 22 deals with modification arid withdrawal of bid. Clause 22.3 reacts thus:
'No bid may be modified after the deadline for submission of Bids.'
Clause 22.5 reads thus:
'Bidders may only offer discounts to, or otherwise modify the prices of their Bids by submitting Bid modifications in accordance with this clause, or included in the original Bid submission.'
Clause 26 deals with examination of bids and determination of responses.
Clause 26.1 - 'Prior to the detailed evaluation of Bids, the Employer will determine whether each Bid (a) meets the eligibility criteria defined in Clause 3; (b) has been properly signed; (c) is accompanied by the required securities and; (d) is substantially responsive to the requirements of the Bidding documents.'
Clause 26.2 - 'A substantially responsive Bid is one which conforms to all the terms, conditions, and specifications of the Bidding documents, without material deviation or reservation. A material deviation of reservation is one (a) which affects in any substantial way the scope, quality, or performance of the Works; (b) which limits in any substantial way, inconsistent with the Bidding documents, the Employer's rights or the Bidder's obligations under the Contract; or (c) whose rectification would affect unfairly the competitive position of other Bidders presenting substantially responsive Bids.'
Clause 26.3 - 'If a Bid is not substantially responsive, it will be rejected by the Employer, and may not subsequently be made responsive by correction or withdrawal of the non-conforming deviation or reservation.'
There was an addition to the General Clause of (GCC) 7, viz., Clause 7.2 which reads thus:
'The contractor shall not be required to obtain any consent from the employer for -
a) the sub-contracting of any part of the Works for which the Sub- contractor is named in the contract;
b) the provision of labour; and
c) the purchase of materials which are in accordance with the standards specified in the contract.
Beyond this if the contractor proposes sub-contracting any part of the work during execution of works, because of some unforeseen circumstances to enable him to complete the work as per terms of the contract, the Engineer will consider the following before according approval:
- The contractor shall not sub-contract the whole of the works.
- The contractor shall not sub-contract any part of the Work without prior consent of the Engineer. Any such consent shall not relieve the contractor from any liability or obligations under the contract and he shall be responsible for the acts, defaults and neglects of any sub-contractor, his agents or workmen as fully as if they were the acts, defaults or neglects of the contractor, his agents or workmen.
- The Engineer should satisfy whether (a) the circumstances warrant such sub-contracting; and (b) the sub-contractors so proposed for the work possess the experience, qualifications and equipment necessary for the job proposed to be entrusted to them in proportion to the quantum of work to be sub-contracted.
- If payments are proposed to be made directly to that sub-contractor, this should be subject to specific authorization by the prime contractor so that this arrangement does not alter the contractor's liability or obligations under the contract.
(Note : 1. All bidders are expected to indicate clearly in the bid, if they proposed sub-contracting elements of the works amounting to more than 20 percent of the Bid Price. For each such proposal the qualification and the experience of the identified sub-contractor in the relevant field should be furnished along with the bid to enable the employer to satisfy himself about their qualifications before agreeing for such sub-contracting and include it in the contract.
2. However sub-contracting for certain specialized elements of the work is not unusual and acceptable for carrying out the works effectively; but vertical splitting of the works for sub-contracting is not acceptable).
In view of the above, normally no additional subcontracting should arise during execution of the Contract.'
4. The case of the petitioner is that the fifth respondent while furnishing the tender had 'enclosed the MOU executed by them with M/s. A. Ramanathan & Co., Tiruchy. Further my representative saw the pre- qualification documents of M/s. A. Ramanathan & Co. The MOU filled by the fifth respondent engaged an arrangement of 60:40 relationships among them. The MOU clearly indicated that a joint venture arrangement has been forged between the fifth respondent and M/s. A.Ramanathan & Co. besides attraction of vertical splitting of work between the two.'
5. According to the petitioner, this made the bid substantially not responsive and that after the opening of the tender, the petitioner had modified his bid on 8.3.2004 by withdrawing the MOU with the sub- contractor and made it substantially responsive. Yet, the second respondent issued a letter accepting the bid of the fifth respondent contrary to 26.3 extracted above. The learned Senior Counsel appearing for the petitioner Mr. Vijay Narayan would submit that the petitioner had applied for three contracts. He was awarded MC-7 only. As regards MC-5, the petitioner was L2 and the fifth respondent was L1. If the third respondent had applied the rules correctly then the fifth respondent's bid would have been rejected and the contract would have gone in favour of the petitioner.
6. The learned Senior Counsel further submitted that at the time of admission, the learned Judge, after hearing all the counsel concerned, directed the fifth respondent to adhere to the terms of the original bid submitted by him on 9.2.2004 ignoring the subsequent alteration by the letter dated 8.3.2004 and that the award of the contract shall also be on the same terms. In spite of this the third respondent, in order to award the contract to the fifth respondent, had refused to permit the subcontract, thereby flouting the directions of the Court. The learned Senior Counsel submitted that a contempt petition is also pending. The learned Senior Counsel further submitted that the manner, in which the petitioner intended to allocate the sub-contract would be by vertical splitting and this was not permitted in the contract.
7. Mr. A.L. Somayaji, learned Additional Advocate General appearing for respondents 1 to 4 would submit that there is no illegality in the award in favour of the fifth respondent. The criteria for deciding whether a bid is substantially responsive does not include the subcontracting component. If the fifth respondent is excluded, then there would be no substantially responsive bids since the technical evaluation committee found that the petitioner is qualified only for the award of one contract and accordingly, he has been awarded MC-7. Since the petitioner is not a person qualified to be awarded MC-5, he cannot be a person aggrieved. The learned Additional Advocate General also submitted that the funds have come from the World Bank and the project has to be completed in 12 months and any delay in the completion of the contract will visit the State Government with heavy financial burden, besides injuring public interest and therefore, the disappointment of one private party cannot outweigh the possible financial loss to the State or injury to public interest. It was further submitted that the respondents had no choice but to ignore the subcontracting component in the fifth respondent's bid because apart from giving the value of the subcontracting component, no further details were given and there was no way of ascertaining the split up works. The learned Senior Counsel also submitted that the records were produced before the learned Judge before the interim order was passed. It was found that there was no MOU as alleged in the writ affidavit. Therefore, a person who had come to Court with a false case intending to frustrate a public project deserves no indulgence from this Court.
8. The learned Senior Counsel Mr. R. Krishnamurthy who appeared for the fifth respondent submitted that a non-eligible person cannot challenge the finalisation of the tender and when the allegations made in the affidavit were proved to be false, the writ petition must be dismissed.
9. Several decisions were relied on, and the important paragraphs are extracted therefrom :
(i) Chairman-cum-Managing Director, Tamil Nadu Tea Plantation Corporation Limited, Coonoor and Anr. v. Srinivasa Timbers, Salem, 1999 (1) R.A.J. 495 (Mad);(ii) Ranjit Construction Co. Ltd. v. National Highways Authority of India, 2004 (1) R.A.J. 393 (Delhi)
'In matters of tender, in Tata Cellular v. Union of India, : AIR1996SC11 , the law is laid down by the Apex Court as under:
'(1) The modem trend points to judicial restraint in administrative action.
(2) The Court does not sit as a Court of Appeal but merely reviews the manner in which the decision was made.
(3) The Court does not have the expertise to correct the Administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision without the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often then not such decisions arc made qualitatively by experts.
(5) The Government must nave freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi administrative sphere. However, the decision must not only be tested by the application of wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.'
What is required to be noted by Court is that the public interest is paramount. There should be no arbitrariness. The Court has to consider whether the action is arbitrary and interference is called for in public interest. Award of a contract is essentially a commercial transaction. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to Vender. It can enter into negotiations. Price need not always be the sole criterion for awarding a contract. What is important to be borne in mind is that the Court must find some defect in the decision malting process and even in such a matter the Court has to 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.'
(iii) M/s. Kumar Transports, represented by its Managing Partner, M. Sukumar, Coimbatore v. Central Ware Housing Corporation, represented by its Managing Director, New Delhi and others, ,
'Public interest is paramount. No doubt, there should be no arbitrariness in the matter of award of contract. A technical assessment was made and respondents 1 and 2 had chosen the third respondent. The petitioner has not been able to show any unreasonableness, mala fide or collateral consideration in the award of the contract to the third respondent. The petitioner also has not substantiated that the third respondent does not have the necessary experience in the field.'(iv) Liebherr Export AG, represented by its Agent, Mr. D. Chaudhry, Sole Proprietor, Tirupati International, Kolkata v. Neyveli Lignite Corporation Limited, Chennai and another, .
10. The question whether the respondents have committed contempt will not come in the way of deciding this writ petition. Here, I have to see whether the award of contract to the fifth respondent suffers from any illegality. The principles governing the award of tender has already been extracted and the decisions cited above also indicate what should be foremost in the mind of the Court while considering the legality of such a commercial transaction.
11. The petitioner has come to Court with a specific case that the fifth respondent's bid contained, document indicating joint venture between the fifth respondent and the sub-contractor and that the sub-contract, as evidenced by the MOU, was withdrawn illegally. But the records reveal no MOU. Therefore, the sworn statement is clearly false. On this ground alone, the petitioner's case could be thrown out of Court.
12. The General Clauses of Contract (GCC) permit sub-contracting. But, Clause 4.6 specifically says that the sub-contractor's experience and resources will not be taken into account in determining the bidders compliance except to the extent stated in Clause 4.5-A. Clause 10 deals with Amendment of Bidding Documents. It is open to the bidders to amend their bidding documents before the deadline for submission of bids. Clause 22 deals with modification and withdrawal of bids. The petitioner's case is that the modification made by the fifth respondent after the deadline was in violation of Clause 22.3. The clause dealing with amendments of bidding documents does not consist of only the bid, but other details. Therefore, the modification or bids and amendment or bidding documents obviously operate within different spheres. Where the clause refers to modification of bids, it is clear that the reference is to financial bids. It is made clear by the words in Clause 22.5 which has been extracted above and which refers to discount and modification of prices which are the bid modifications. Therefore Clause 22 refers to only the price and not anything else.
13. Clause 26.2 explains what is material deviation or reservation. Clause 26.2 has already been extracted above. The presence of material deviation or reservation makes that bid substantially not responsive. The question is whether the inclusion of a subcontracting component, made the bid substantially not responsive; and did the fifth respondent make it subsequently substantially responsive by correction or withdrawal of deviation or reservation Clause 7.2 has already been extracted above.
14. This shows that if the subcontracting was for less than 20% of the bid price the papers were not expected to indicate the sub-contractors in the bid. But if they did propose sub-contracting for more than 20% of the bid price, then for each such proposal the qualification and the experience of the identified sub-contractor should, be furnished alongwith the bid. The employer would thereafter satisfy himself before agreeing for such subcontracting and only then include it. This only means that if the employer is not satisfied then it was open to him to reject the proposal to sub-contract. Then, the subcontracting component would not be included in the contract. Thereafter, presumably if the bidder is not willing to go ahead with the deletion of the subcontracting component, he could withdraw his bid subject to the consequences. I draw this conclusion from Clause 27 which deals with correction of errors. As per this clause, the employer could check certain errors in a bid which is substantially responsive. The amount stated in the bid will be adjusted by the Employer in accordance with the procedure for the correction of errors and with the concurrence of the Bidder. If the bidder does not accept the corrected amount the bid will be rejected. When the employer has the right to correct certain errors in a bid - then obviously, such errors will not constitute material deviation. Similarly, when the employer has the right to exclude the subcontracting component, then it follows that its inclusion by the bidder is not a material deviation so as to make the bid substantially not responsive. In this case, the fifth respondent intended to propose subcontracting for more than 20% of the bid price. Respondents 1 to 4 could not accept this because it vas not possible to make out whether there vas vertical splitting or horizontal splitting. Vertical splitting would mean that a section of the entire road would be given for sub-contracting. Whereas, horizontal splitting would mean that a section of the work would be sub-contracted. While giving the details of the proposed sub-contracts, the fifth respondent divided the whole work: into 7 sections and gave the value of the subcontract. On calculation, it vas found that this value vas about 40% of the bid value for each of the section. Since the subcontracting component does not make a difference to the substantial responsiveness of the bid, it was open to respondents 1 to 3 to exclude the subcontracting component and it was equally open to the bidders to delete the subcontracting component. For this reason also, the petitioner's objection to the award in favour of the respondent must fail.
15. The counter indicates that the loan assistance has been obtained -
(a) to improve the road infrastructure,
(b) to improve the riding quality,
(c) to reduce traveling time.,
(d) lower the vehicle operating cost, and
(e) to provide better facility to the travelling public.
It also shows that if the project is delayed the Government of Tamil Nadu would have to pay commitment charges to the World Bank. Therefore, public interest is a vital aspect. It is also seen from the counter that the bidding document is as per the model document acquired by the World Bank and it is only with the approval at every stage that the respondents are proceeding with the contract. So even on the ground of public interest, the writ must fail.
16. As regards the writ petitioner's eligibility to contest the award, the writ petitioner claims that if the calculations are correct, then Clause 4.5-C cannot come in the way of his bidding more than one contract. On an assessment of the various components the Technical Evaluation Committee had come to the conclusion that the petitioner is qualified for only one contract and he has been awarded MC-7. It is not for this Court to sit in appeal to correct the evaluation made by the tender committee and decide that the petitioner would be qualified for more than one contract. The petitioner has been found to be qualified for one contract and he has also been awarded one contract. So, he is not a person aggrieved and on this ground also, the writ petition must fail.
17. In Chairman-cum-Managing Director, T.N. Tea Plantation Corporation Ltd. v. Srinivasa Timbers, 1999 (3) RAJ 495, it is held as follows:
'It is well settled that the onus to demonstrate that such decision has been vitiated because of adopting a procedure not sanctioned by law, or because of bad faith or taking into consideration factors which are irrelevant, is on the person who questions the validity thereof. This onus is not discharged only by raising a doubt in the mind of the Court, but by satisfying the Court that the authority or the body which had been vested with the power to take decision, has adopted a procedure which does not satisfy the test of Article 14 of the Constitution of which is against the provisions of the statute in question or has acted with oblique motive or has failed in its function to examine each claim on its own merit on relevant considerations.... When there has been no allegation of malice or ulterior motive in cancelling the contract in favour of the respondent, the Court has to confine itself to the tests, such as, whether a decision making authority exceeded its powers, committed an error of law, committed a breach of the rules of natural justice, reached a decision which no reasonable Tribunal would have reached, or, abused its powers. In the instant case, there is no violation of any of these tests. There is no illegality or irrationality or impropriety in cancelling the confirmation of auction.'
18. So, merely by raising a doubt in the mind of the Court, the petitioner cannot hope to succeed. The person raising the doubt must also satisfy the various tests referred to above. No oblique motive is alleged nor mala fides. Therefore, the Court has to consider whether the decision-making authority has exceeded its powers or committed an error of law or violated rules of natural justice or had abused its powers or had reached a decision which does not satisfy the test of reasoning. Tested from this perspective also, the writ petition fails.
19. For all these reasons, the writ petition is dismissed with cost of Rs. 5,000. The connected miscellaneous petition closed.