| SooperKanoon Citation | sooperkanoon.com/437655 |
| Subject | Constitution;Contract |
| Court | Andhra Pradesh High Court |
| Decided On | Jun-19-2000 |
| Case Number | WP No. 8735 of 2000 |
| Judge | Goda Raghuram, J. |
| Reported in | 2000(4)ALD236; 2000(4)ALT146 |
| Acts | Constitution of India - Articles 14, 21, 32, 226 and 300-A |
| Appellant | Srinivasa Constructions Ltd., Hyd. |
| Respondent | Bharat Heavy Electricals Ltd., New Delhi and Others |
| Appellant Advocate | Mr. S. Ramachandra Rao, Adv. for Mr. L. Ravichander |
| Respondent Advocate | Mr. E. Manohar, Adv. for Mr. P. Kamalakar |
1. Having heard learned senior Counsels for the petitioner Sri S. Ramachandra Rao and for the respondents, Sri E. Manohar, at length, the writ petition itself is, with the consent of the parties, taken up for hearing.
2. The validity of the invitation to tender vide specification No.BIIEL-PS-SCT-911, dated 12-5-2000, is in issue in these proceedings at the instance of M/s. Srinivasa Constructions Ltd. The petitioner argues that the impugned notification is arbitrary, opposed to public interest and violative of Articles 14 and 300A of the Constitution of India.
3. The National Thermal Power Corporation (NTPC), for the purpose ofexecuting 2 x 500 MW units by name 'Simhadri Thermal Power Project' (STPP) at Paravada. Visakhapatnam District, floated a global tender. The 1st respondent Bharat Heavy Eieclricals Ltd., (BHEL) obtained the contract for the above work. In its turn the BIIEL invited tenders for various components of the works in relation to the said project. These tenders having been finalised, sub-contracts were entered into by the BHEL with the various sub-contractors including the petitioner herein.
4. On the established factual scenario, considered in the context of the extant legal principles, both the contract of the BHEL with the NTPC as well as various sub-contracts between the BHEL and the sub-contractors, as also the invitation to tender, impugned in these proceedings, are purely commercial contracts and are not liable to be characterised as statutory contracts.
5. Among the works related to the STPP. certain components of the Raw Water Reservoir were floated for tendering in the year 1998 under tender specification No.BHEL:PS:SCT:809. The scope of the work tendered is set out in Vol.11, Section (c), Sheet 6, Part E of the tender and in specie is as under:
'(i) Earthwork excavation in all types of soils including soft and hard rock;
(ii) Earthwork in embankment tilling;
(iii) providing and placing woven type Geo Textiles;
(iv) Providing and placing HOPE films; (v) Grid of stone drains;
(vi) Miscellaneous work out specified above.'
6. This work is administratively labelled as 809.F work. The petitioner hadalso bid for this work. The work was awarded to the petitioner on 5-10-1999 at the negotiated cost of Rs.36.38 crores. A contract has been entered into between the petitioner and the BIIEL. By its notification dated 6-1-2000 the BIIEL intimated its acceptance of the petitioner's offer subject to the terms and conditions set out in the letter.
7. The note annexed to this letter is relied upon in support of the relief sought, which, to the extent relevant, reads as under:
'Note: The following rates shall apply for the items not covered above. (a) Rate for complete item = +12.6% ofCPWDRates for theyear 1997-98.
8. The work which could broadly be termed as 'levelling and filling the Raw Water Reservoir Basin' is demonstrably and admittedly not an integral part of the work awarded to the petitioner under 809.F work, in respect of which acceptance of the BHEL to the tender of the petitioner was communicated, by the letter dated 6-1-2000, supra.
9. The challenge to the impugned notification of tender and the consequential relief sought by the petitioner is founded on the following premises of the petitioner pleaded and urged by the learned senior Counsel Sri S. Ramachandra Rao, in brief:
(A) The Raw Water Reservoir work was tendered simultaneously with the adjacent levelling work of the plant which is in an extent of about 100 L.cum. By the time of finalisation of the work allotted to the petitioner, all the nearby lands were purchased and utilised. The petitioner quoted a very competitive rate of Rs.57.60 per cum,for the embankment work by balancing the over all economics of the various components of work including the consideration that earth for the formation of embankment could be utilised from what was available in the adjacent area. As the levelling work was substantially over by the time the petitioner's contract was finalised, the earth in the lands adjacent and immediately contiguous to the petitioner's work area were already utilised and the petitioner was and is constrained to procure earth from longer distances involving a larger lead and consequent cost overruns. The cost of the land for procuring and quarrying earth had also increased exponentially, contrary to the initial premises of the petitioner, based on which the price was quoted for the embankment work.
(B) The levelling and filling the Raw Water Reservoir basin work is a 'contingent and integral' part of the 809.F work awarded to the petitioner. The work awarded to the petitioner viz., formation of drains, placement of geo textile, sand, HDPE Film and CC tiles cannot be executed without the prior execution of the work of levelling and tilling the Raw Water Reservoir basin. The two packages of work are integrated and sequential. It is not possible to orchestrate a common and inter-dependent schedule, if the two packages are awarded to two different agencies since any failure of a contractor awarded the basin levelling and filling work would inevitably upset the schedule as also adversely impact the economics of the petitioner's work.
(C) Under the terms of the entered contract, the petitioner is obligated to guarantee for 5 years and warranty for 15 vears thereafter. The filtersystem placed on the foundation filling. Any defect in the execution of the work on the part of a contractor executing the basin levelling and filling work would inevitably and adversely affect the work executed by the petitioner and would render him liable qua the guarantee and warranty that the petitioner is obligated to provide.
(D) While the basin levelling and filling has not been included in the components comprising the petitioner's contract, this work ought to have been so included, as a necessary corollary of the technical compulsions, in the interest of efficient execution of the project, as a whole and in order to ensure a fair and equitable deal to the petitioner, in the totality of circumstances encapsulated above. The BHEL however, tailed to include it as a component of the work awarded to the petitioner and the petitioner has by its letters dated 1-2-2000 and 19-2-2000 sensitised the BHEL to this aspect.
(E) On the instructions of the respondents, the petitioner has executed the basin filling work also in an extent of 2.75 L.cum, out of the total quantity, as on 30-4-2000 and has raised bills for the same @ Rs.130.86 per cum. The respondents however, chose to pay the petitioner only @ Rs.57,60 per cum treating the work as payable on par with the embankment work which forms part of the work awarded to the petitioner. The petitioner however does not canvass the dispute as to the rate at which he is entitled to be paid for the filling work already executed, in these proceed ings.
(F) Without prejudice to the contention that he is eligible to be paid for thework of basin filling @ CPWD rates for the year 1997-98 + 12.6% (qua the stipulations contained in the note to the letter of acceptance dated 6-1-2000), the said work cannot be awarded !o any other person excepting the petitioner having regard to the integrated and sequential nature of the said work with the work specifically awarded to the petitioner; having regard to the grossly arbitrary and inequitable impacts such separate award of the filling work could have on the petitioner's awarded contract; having regard to the possible detriment to the safety and quality of work awarded to the petitioner in the contingency of the basin filling work being defectively executed by any other contractor and having also regard to the fact that a part of the filling work has already been entrusted and executed by the petitioner on the specific instructions of BHEL.
10. The 1st respondent-BHEL has entered a categorieal demurral to all the aforesaid contentions of the petitioner in its counter-affidavit buttressed by the arguments of the learned senior Counsel Sri E. Manohar, as under in brief':
(A) The scope of the work awarded to the petitioner and that contained in the impugned invitation to tender are independent and different. Admittedly, the present work does not expressly or by any necessary implication form part of the work awarded to the petitioner.
(B) The petitioner initially quoted Rs.75.60 per cum, for the embankment filling but sealed it down to Rs.57.60 per cum, which was the rate at which it was awarded to him, as per the executed contract between the parties. The rate agreed upon isthus consequent on a conscious knowledge of the petitioner of the relevant circumstances and can found no legitimate ground for grievance.
(C) The peiitioner's averment that he was asked to execute 13.5 L.cum, of earth filling work is categorically denied. It is however, admitted that qua the minutes of the meeting held between the parties at Chennai on 16th and 17th February, 2000, the petitioner was directed to proceed with the bed filling work in the live storage area. It is contended that this area is of a smaller and demarcated extent, involving approximately 2 L.cum. In respect of the basin bed filling work executed, the petiiioner itself claimed @ Rs.57.60 per cum, in the first two running bills which had been paid accordingly. Subsequently, however, in the 3rd running bill submitted on 31-3-2000 the petitioner had claimed a higher rate of Rs.130.86 per cum, which not being acceptable to the BHEL, payment was made @ Rs.57.60 per cum. In the 4th running bill of April. 2000, the petitioner claimed @ Rs.174.47 per cum. As the nature of the bed filling work is in pan matcria with the embankment work, the petitioner is only entitled to be paid @ Rs.57.60 per cum, and the petitioner's claim for higher rates is unacceptable.
(D) The interpretation placed by the petitioner on the meaning and scope of the note to the annexure to the letter of acceptance dated 6-1-2000, is misconceived. The said note operates when the work executed by the contractor is within the scope of the work awarded to him but in respect of which there is no specification of a rate in any one of the 17 items set out in the annexure to the letter dated 6-1 -2000.
(E) The contention of the petitioner, that the basin bed filling work in an extent of Ac.200.00 is to be filled up to an average depth of 2.5 mts, before the drain formation work (forming part of the petitioner's work) taken up, is admitted. The two works are however separate in scope and nature and are independent and different. They are neither contingent nor integral. For executing the entirety of the STPP work undertaken by the BHEL with the NTPC, the BHEL has divided and sub-divided the total scope of the work into various packages and components, each having independent technical parameters, quality standards and testing procedures. Each component and package shall have to be executed according to the ordained quality standards and shall confirm to the settled technical and testing parameters. In this view of the matter, the contention of the petitioner that any defect in the quality of the basin filling work if entrusted to any other contractor and if executed defectively by such contractor would adversely impact on the petitioner's work, is a contention that is misconceived, fallacious and jejune. The division and sub-division of the STPP works into packages and components is an aspect of policy choice founded on technical evaluation. This choice cannot be the subject matter of judicial scrutiny.
(F) As admittedly the work comprised in the impugned notification is outside the work entrusted to the petitioner, the grievance of the petitioner or the relief sought is misconceived and requires to be rejected.
(G) The fact that the petitioner was called upon to and executed a small part of the basin bed filling workentrusted to him by the BHEL, in exigencies of the situation and, in the interest of the speedy execution of the work, does not entitle the petitioner to claim that the rest of the work should also be entrusted to him. Such claim of the petitioner is neither founded on the contract between the parties or on any legitimate expectation having a foundation on accepted legal principles.
(H) Though, a part of the basin bed filling work was entrusted and executed by the petitioner, as he claimed payment at higher rates and in the joint meeting between the parties held at Chennai on 2-5-2000 the petitioner did not agree to execute the work @ Rs.57.60 per cum, the BHEL decided to call for tenders for awarding the balance work of basin bed filling. Accordingly a letter was addressed dated 12-5-2000 (impugned) to 15 parties, including the petitioner herein, calling for submission of tenders. The BHEL has specifically intimated the petitioner in the unsigned minutes of the meeting held on 2-5-2000 that the basin bed filling work is outside the scope of the contract. In fact even in the minutes of the meeting between the parties held on 2-5-2000 at Chennai, drawn up by the petitioner, the petitioner has admitted to having stated that the reservoir bed filling is not included in the scope of the contract he has entered into.
(I) On a true and fair construction and holistically construed, the grievance of the petitioner involves an interpretation of the terms of the contract entered into between the parties. The contract between the parties is demonstrably a commercial contract which is not a statutory contract. That being so, theinterpretation of the scope of and a resolution of the disputes between the parties, in respect of or in relation to, such a contract would be outside the scope of this Court's jurisdiction under Article 226 of the Constitution.
(J) There is an existing and operative arbitration clause between the parties and the disputes urged by the petitioner squarely fall within its scope. This Court should thus, decline to adjudicate upon such disputes.
11. On the aforesaid rival contentions the issues that fall for resolution are, whether:
(1) the impugned notification to tender dated 12-5-2000 is illegal being arbitrary or subversive of public interest, tested on the touchstone of public law principles;
(2) on an analysis of the terms of the existing contract between the parties, in the context of the factual circumstances urged by the petitioner, including the scope, the sequential and integral nature of the works and the fact of the petitioner having been asked to and executed a part of the basin bed filling work, the petitioner is entitled to be exclusively awarded the entirety of basin bed filling work and as a necessary corollary to this entitlement, the respondent-BHEL is disentitled to invite tenders for the balance of the said work; and
(3) having regard to the established and relevant legal principles, the disputes between the parties, need be resolved by this Court under Article 226 of the Constitution.
12. As is apparent, despite blurred distinctions, the claims of the petitioner are alternatively founded on the contract(809.F work) he has entered into with the BHEL and de hors the said contract.
13. Neither the contract that the BHEL has entered into with the NTPC nor the one entered into between the BHEL and the petitioner nor even for that matter, the impugned invitation of tender, could be characterised as constituting or being potentially, a statutory contract.
14. In the existing contract between the parties there is an arbitration clause governing the resolution of the disputes between the parties.
15. The petitioner's claim for relief, to the extent it is based on contentions disassociated with the terms of his contract, (first issue), would not in the view of this Court posit any problems on the Maintainability Front.
16. In essence, it is urged, on behalf of the petitioner, that the impugned invitation to tender is arbitrary qua the petitioner and subversive of public interest. Arbitrary since as a consequence of a different agency being awarded the contract, the petitioner would be adversely impacted and would suffer a diminution of his rights inter alia under Article 300A of the Constitution. It is subversive of public interest since the work comprised in the impugned invitation to tender is integral and sequentially related to the package of work that the petitioner has a contract for. Execution of these two packages by diverse agencies would potentially jeopardise the safety and quality of the project and consequently the public interest.
17. As the NTPC and BHEL are 'State' within the meaning of Article 12 of the Constitution, and thus amenable to Constitutional and Public Law parameters, and as these contentions do not involve either an interpretation of or adjudication of the claims founded upon, the terms of thecontract, scrutiny of the validity of the impugned invitation to tender could be considered under Article 226 of the Constitution.
18. The fact that the petitioner's contract might become economically unviable, if the work involved in the impugned invitation to tender is allotted to a different agency, does not entitle the petitioner to exclusive award of the work. The petitioner has no linear or prioritised right to be awarded the work of basin bed filling. That the petitioner qua the existing contract (809.F work,) alleges or apprehends himself in a fiscally unattractive arrangement, does not entitle him to exclusive consideration for the work of basin bed filling on any recognised principle of law. In the premises, the contention of the petitioner that the non-awarding of this work to him violates his right to property under Article 300A of the Constitution, is misconceived and fallacious and need detain this Court, no further.
19. On the 2nd facet of the first issue, the contention rests on the premise that the work awarded to the petitioner and the work now tendered, ought to he, on a rational technical analysis of the nature of the total work, one integrated, sequential and indivisible work which needs to be executed by one agency. A resolution of this contention inevitably, invites a reappraisal by this Court, of the satisfaction arrived at by the BHEL that the two works arc different and distinct and could be separately executed. The BHEL is answerable to the NTPC in terms of the contract between the said two parties. The BHEL has, having evaluated the ordained technical parameters, time schedule, testing procedures and quality specifications and like areas, come to a considered decision that the two works are discrete and insular and could be severally executed in conformity with the over allrequirements. This satisfaction arrived at by BHEL is founded on a plurality of parameters and is intrinsically a policy choice that rightly and validly inheres in the BHEL. No allegation of malice in fact, has been urged or demonstrated, as vitiating such choice and satisfaction. A scrutiny of this area by this Court involves appreciation of complex technical parameters, specifications and a host of other administrative considerations which are outside the pale of curial analysis. The determination also involves judicially unmanageable standards.
20. What are the parameters of the judicial review ordained in this area?
21. Judicial review of executive action is per se not concerned with the wisdom or otherwise of Ihe decision on merits. It is appropriately directed at the decision making process. In this area this Court does not scrutinise the merits of the decision of the coordinate branch as an appellate body. It does not substitute its view for that of the authority, with a view to recording a conclusion whether a different decision could have been arrived at on an independent evaluation of the various facets and parameters that have fertilised or ought to have informed, the decision making process.
22. While dealing with a related jurisdiction under Article 32 of the Constitution, the Supreme Court in B. Krishna But v. Union of India, : [1990]2SCR1 , held:
'..... To make the State accept a particular policy, desirable and necessary as the policy might be is not the function of Article 32 of the Constitution. Article 32 of the Indian Constitution is not the nest for all the bees in the bonnet of 'public spirited persons'.'
23. Holding that matters of economicpolicy lack adjudicative disposition unless they violate the Constitutional or legal limits of tolerance, the Supreme Court in G.B. Mahajan v. Jalgaon Municipal Council, : AIR1991SC1153 , delineated the limits of judicial review in this area, in the following terms:
'The criticism of the project being 'unconventional' does not add to or advance the legal contention any further. The question is not whether it is unconventional by the standard of the extent practices, but whether there was something in the law rendering it impermissible. There is, no doubt, a degree of public accountability in all Governmental enterprises. But, the present question is one of the extent and scope of judicial review over such matters. With the expansion of the State's presence in the field of trade and commerce and the range of economic and commercial enterprises of Government and its instrumentalities there is an increasing dimensicn to Governmental concern for stimulating efficiency, keeping costs down, improved management methods prevention of time and cost overruns in projects, balancing of cost against time scales, quality control, cost benefit ratios etc. In search of these values it might become necessary to adopt appropriate techniques of management of projects with concomitant economic expediencies. These are essentially matters of economic policy, which lack adjudicative disposition, unless they violate constitutional or legal limits on power or have demonstrable pejorative environmental implications or amount to clear abuse of power. This again is the judicial recognition of administrator's right to trial and error, as long as both trial and error are bona fide and within the limits of authority. We might recall the memorable words of what justice Brandies said:
'The discoveries in physical science, the triumphs in invention, attest the value of the process of trial and error, in large measure, these advances have been due to experimentation.'
'..... There must be power in the State and the nation to remould, through experimentation, our economic practices and institutions to meet changing social and economic needs.....'
'To stay experimentation in things social and economic is a grave responsibility. Denial of the right to experiment may be fraught with serious consequences to the Nation. It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country. This Court has the power to present an experiment. But in the exercise of this high power, we must be ever on our guard, lest we erect our prejudices into legal principles. ' (emphasis)
24. The rigid limits on the jurisdiction of the Constitutional Courts while testing policy choices of the executive branch have been reiterated by the Supreme Court in Krishnan Kakkanth v. Government of Kerala, : AIR1997SC128 , as under:
'Unless the policy decision is demonstrably capricious or arbitrary and not informed by any reason whatsoever or it suffers from the vice of discrimination or infringes any statute or provisions of the Constitution, the policy decision cannot be struck down. It should be borne in mind that except for the limited purpose of testing a public policy in the context of illegality and unconstitutionally, Courts should avoid embarking on unchartered ocean of public policy.'
25. These limits have also been reiterated in State of Punjab v. Ram Lubhaya Bagga, : [1998]1SCR1120 , as under:
'When Government forms its policy it is based on a number of circumstances on fact law including constraints based on its resources. It is also based on expert opinion. It would be dangerous if Court is asked to test the utility, beneficial effect of the policy or its appraisal based on facts set out in the affidavits. The Court would dissuade itself from entering into this realm which belongs to the executive. It is within this matrix that it is to be seen whether the new policy violates Article 21 when it restricts reimbursement on account of its financial constraints.
By way of judicial review the Court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State. The Courts have inherent limitations on the scope of any such inquiry.' -- vide Sterling Computers Case.
26. The validity of the Telecom policy came to be considered by the Supreme Court in Delhi Science Forum v. Union of India, : [1996]2SCR767 . The principle of judicial defence to policy formulation by Legislature or Executive branches, has been set out succinctly in the following terms:
'What has been said in respect of the Legislations is applicable even in respect of policies which have been adopted by Parliament. They cannot be tested in Court of law. The Courts cannot express their opinion as to whether at a particular juncture or under a particular situation prevailing in the country any such national policy should have been adopted or not. There may be views and views, opinions and opinions which may be shared and believed by citizens of the country including the representatives ofthe people in Parliament. But that has to be sorted out in Parliament, which has to approve such policies. Privatisation is a fundamental concept underlying the question about the power to make economic divisions. What should be the role of the State in the economic development of the nation? How the resources of the country shall be used? How the goals fixed shall be attained? What are to be the safeguards to prevent the abuse of the economic power? What is the mechanism of accountability to ensure that the decision regarding privatisation if in public interest. All these questions have to be answered by the vigilant Parliament. Courts have their limitations-because these issues rest with the policy-makers for the nation. No direction can be given or is expected from the Courts unless while implementing such policies, there is violation of infringement of any of the constitutional or statutory provision.'
27. In the totality of circumstances, including the ones adverted to above; this area is, in the considered view of this Court, beyond the parameters of curial intervention under Article 226 of the Constitution.
28. The issue whether, the work involved in the impugned invitation to tender, impliedly falls within the work allotted to the petitioner under his existing contract with BHEL, in particular in the light of the 'note' set out in the annexure to the letter of acceptance dated 6-1-2000, involves interpretation of the terms of the contract and a resolution of the disputes between the parties as to such terms. The contract between the parties as already determined, is a pure and simple commercial contract not having any statutory favour. Such post non-statutory contractual disputes between the parties as to the terms of the contract, asare involved in a resolution of the contentions urged by the petitioner qua this issue, are not amenable to scrutiny on the touchstone of public law principles - vide Radhakrishna v. State of Bihar, AIR 1977 SC 1496; Bareilly D.A. v. Ajai Pal Singh, : [1989]1SCR743 ; Executive Engineer I/C v. C. Raghava Reddy, : 1993(2)ALT80 (DB); Assistant Commissioner of Excise v. Issac Peter, : [1994]2SCR67 ; State of U.P. v. Bridge & Roof Co., (I) Ltd., : AIR1996SC3515 ; D. Mohan v. Regional Manager, APSRTC, Khammam District, 2000 (3) ALD 148; State of H.P. v. Raja Mahendra Pal and others, (1994) 4 SCC 43.
29. The petitioner has, in any view of the matter, an efficacious and alternative remedy by way of arbitral resolution of his grievances or in the alternative a remedy in civil law, which is equally a factor warranting that this Court decline to enter upon adjudication of the disputes.
30. In the totality of circumstances and operation of settled legal principles, on the established factual matrix of the case, this Court is of the considered view that there are no merits in the writ petition.
31. The writ petition is accordingly dismissed. No costs.