DHD Infracon Pvt Ltd v. Public Work Department (West) Division

11. He then submitted that the onus lay upon the LGC 11 of 35 Respondents to produce clear and unambiguous documentary evidence to demonstrate that the conditions contained in the RFP were at the instance of ADB. He invited our attention to the letters dated 16th February, 2024 addressed by Superintendent Engineer, Public Works Department and pointed out that the same clearly bifurcated Phase III into two sections/parts. He submitted that the first section/part comprised of 23 packages which mentioned ADB bank as being the funding head. He then referred to the other letter dated 16th February, 2024 which was in respect of the other 21 packages (which included the project for which the tender was floated pointed) and pointed out that those were to be funded by the Housing and Urban Development Corporation Ltd. (HUDCO).

12. He then, without prejudice to the above, submitted that even if it was to be accepted that Phase III was funded by ADB, the preface to the RFP made clear that the terms and conditions of the RFP were to be in compliance of the Guidelines issued by the State and MoRTH. He then invited our attention to the 2018 Guidelines as also 2019 Guidelines and LGC 12 of 35 pointed out that the Respondents have not disputed and/or controverted the conditions laid down in the guidelines issued by MoRTH or the respective State Government guidelines/circulars. He therefore submitted that the submissions canvassed across the bar could not be accepted to support the contentions that the said Guidelines would not be applicable to the tender in question.

13. Mr. Desai then placed reliance upon Manual for Procurement of Works dated 1st July 2022 (MPW) issued by Ministry of Finance of Union of India and pointed out that the same incorporated the CVC Guidelines. He then from the said MPW pointed out that the same specified that (a) the prequalification criteria specified in a tender document should neither be very stringent nor very lax to restrict/facilitate the entry of bidders (b) the pre-qualification criteria were to be exhaustive, yet specific and that there was a fair competition. He pointed out that the Respondents had not taken these CVC guidelines into consideration while formulating the terms and conditions of RFP. LGC 13 of 35

14. Mr. Desai then placed reliance upon a judgment of this Court in the case of Health-O-Wonder Private Limited Vs. The Commissioner, Medical Education and Ayush Maharashtra & Ors.[1] to submit that any classification under Article 14 must (i) be based on an intelligible differentia and

(ii) the intelligible differentia must bear a rational nexus with the object sought to be achieved by or under the tender. He pointed out that in the present case, the situation was identical to the facts in the case of Health-O-Wonder Private Limited (supra) wherein, the Respondents under the guise that the said project was a special project funded by ADB had imposed conditions that had no reference and/or rational nexus with the object sought to be achieved by the tender. He thus submitted that the same were completely arbitrary in nature.

15. He then placed reliance upon a judgment of the Hon’ble Supreme Court in the case of Meerut Development Authority Vs. Association of Management Studies and Anr.[2] to submit the terms of a tender can be subjected to limited judicial review in cases where it is established that the Unreported judgment dated 14th March, 2024 passed in Writ Petition No.2445 of 2024.

LGC 14 of 35 terms of the tender are tailor-made to suit the convenience of a particular person with a view to eliminating all other participants from the bidding process. From the said judgment, he pointed out that the Hon’ble Supreme Court had held that bidders participating in the tender process have a right to equality and fair treatment and that the action or procedure adopted by the authorities under the ambit of Article 12 while awarding contracts concerning properties of the State Government, can be judged and tested in the light of Article 14.

16. He also referred to another judgment of the Hon’ble Supreme Court in the case of Indian Railway Catering and Tourism Corporation Limited & Anr. vs. Doshion Veolia Water Solutions Private Limited & Ors.[3] wherein the Hon’ble Supreme Court had observed that the very purpose of issuing rules/instructions was to ensure their enforcement lest the rule of law should be a casualty. He pointed out that the relaxation and/or waiver of a rule or condition, unless so provided under the instructions to bidders, by the State or its

LGC 15 of 35 agencies in favour of one bidder would create justifiable doubts in the minds of other bidders and would thus impair the rule of transparency and fairness and provide room for manipulation to suit the whims of the State agencies in picking and choosing a bidder for awarding contracts. Mr. Desai also placed reliance upon judgment of this Court in case of M/s D.B. Infratech vs Municipal Corporation of Greater Bombay and Ors.[4] to submit that tendering authorities cannot introduce condition at subsequent stage which were not provided in the tender document.

17. Though not canvassed at the time when the matter was heard, the Petitioners have filed written submissions in which it has been contended that only two bidders had participated in the tender. It has been contended that this fact unequivocally demonstrates that the conditions were arbitrary, unreasonable and disproportionately restrictive in nature and designed “to benefit a handful number of people”. Basis these submissions Mr. Desai submitted that the present Petition ought to be allowed as prayed for. Unreported judgment of this court dated 31st August 2023 in Writ Petition (L) 312 of 2023 LGC 16 of 35 Submissions of Mr. Kadam on behalf of Respondent Nos. 1 and 2.

18. Mr. Kadam at the outset raised the following preliminary objections to the maintainability of the present Petition, namely, i. That the Petitioners were four separate and distinct legal entities however the Petition was verified by only Petitioner No.1. He submitted that the Petition was neither affirmed by any of the other three Petitioners nor was any Power of Attorney of Petitioners issued by them in favour of Petitioner No.1 to file the present Petition. He submitted that the Petition as filed was not maintainable and was required to be dismissed as such. ii. That the Petitioners had not even annexed to the Petition the subject tender of which the terms were challenged. He pointed out that the tender document which was annexed to the Petition was in respect of LGC 17 of 35 ‘EPC 24’ which was in relation to Sangli District whereas the subject tender was in respect of ‘EPC-52’ which was in respect of the Satara district. iii. Mr. Kadam then submitted that the Petitioners had not even purchased the tender document/RFP. He pointed out that the RFP document had been made available for downloading to bidders from 27th February 2024 to those bidders who paid the tender fee of Rs. 47,200/-. He pointed out that the last day for submission of the bids was 24th April, 2024 and therefore clearly the Petitioners not having even purchased the tender document by paying the requisite fee and showing their intention to participate in the bid process, were now precluded from challenging the terms of the tender document/RFP at this belated stage. We must note here that Mr. Desai, did not dispute this, however submitted that the Petitioners had not done so as it would be futile to, since the Petitioners would not have been held eligible as per the terms of the tender which were under challenge in this Petition. He submitted LGC 18 of 35 that the Petitioners would do so immediately and requested that the time for submission of the bid be extended to permit the Petitioners to participate. Mr. Kadam however submitted that the original date for submission of bids was 12th April, 2024 which was subsequently extended to 24th April 2024 after the pre-bid meeting. He submitted that the present Petition had been filed only on 17th April 2024 and thus, the Petition was extremely belated and was required to be dismissed on this ground alone.

19. Mr. Kadam then on merits submitted that the Petitioners’ entire challenge was plainly misconceived and devoid of merit. He submitted that the subject tender was part of phase three of the flagship project of the State of Maharashtra for improvement of roads under the program ‘Maharashtra State Road Improvement Project’ (MSRIP) (“the said Project”). He submitted that the works taken up under this project are with the financial assistance from lending agencies, such as ADB, HUDCO, etc. He submitted that works under this project had commenced in the year 2019 and had been LGC 19 of 35 planned in three phases of which phase one and two were at the stage of completion. He pointed out that given the importance of this project, the Government of Maharashtra had set up a project management unit for the overall management of these works falling under MSRIP Chief Engineer who was the project director for externally aided projects.

20. Mr. Kadam then, to emphasis the importance of this project and the seriousness with which the Government of Maharashtra was treating the same, pointed out that the Chief Engineer (Konkan) had been given the additional responsibility of project director Externally Aided Project and was heading the Project Management Unit of the said project. He submitted that ordinarily the tender document and/or terms of the RFP were prepared and approved by the concerned field officers as per the powers of approval which had been conferred upon them by State Government but in the present case however, he pointed out that given that this was a flagship project of the Government of Maharashtra the terms of the RFP had been approved by the Government of Maharashtra on 20th December

2023. He submitted that this was done to ensure that the best LGC 20 of 35 possible bidders, both National and International, come forward and participate in the said tender. He pointed out that the Chief Engineer (Konkan) in his capacity as project director of Externally Aided Project was working on behalf of the Government of Maharashtra, and thereby responsibly, adherence to all the necessary rules and regulations has been ensured. He thus submitted that the Petitioners’ contention that the terms and conditions of the said tender were arbitrary and unreasonable was patently, untenable, and baseless.

21. He then placed reliance upon the Government Resolution dated 4th December 2023 of the Government of Maharashtra to point out that the said project which comprised in total of 60kms was being funded by the ADB. He submitted that the contention of Petitioners that the said project was not funded by RFP was a mere bald statement without any merit.

22. Mr. Kadam pointed out that what the Petitioners were attempting to do was to set forth a counter proposal to the terms of the tender, which was impermissible in law. He submitted that it was well settled that the tendering authority LGC 21 of 35 was the best judge of what was required from the said tender and thus accordingly it decided the terms thereof. Mr. Kadam pointed out that the bid document had been prepared and which contained such terms which ensure that the type of work to be done thereunder, which was construction of concrete type of roads with a lifespan of 30 years, was best achieved. He submitted that it was solely keeping in mind this objective that the Respondents had invited bids from both National as well as International bidders.

23. Mr. Kadam then placed reliance upon the Letters of Award dated 16th April 2018, 8th June 2018 and 7th September 2019 issued to Petitioner No. 2 in respect of phase two of the said project. He pointed out that the terms of the RFP pursuant to which these Letters of Award had been issued contained the very same tender conditions which the Petitioners had impugned herein. Basis this he submitted that it was not now open to the Petitioners to claim that the terms of the present tender were in any manner arbitrary, unreasonable or in violation of the said Guidelines and/or Circulars. LGC 22 of 35

24. Mr. Kadam, then, to dispel the Petitioners contentions that the terms of RFP were in any manner arbitrary and/or unreasonable and that the Guidelines issued by the State and/or MoRTH and/or the CVC were inapplicable, pointed out the following, viz. i. That since the State had issued a special bidding document for this particular project, the criteria for turnover of 75% of the project cost as per the 2018 Guidelines was not applicable to the present project. ii. That the criteria under ‘financial capacity’ of average annual construction turnover was also the same in phase two. The same was however revised to five years after discussion with ADB. However, in view of the intervening COVID 19 pandemic, representations were received from bidders to make it three years and it was thus amended to three years, which time period was the same as in phase two. iii. That since the tender/project contemplated construction of highways with rigid pavements, the LGC 23 of 35 requirement was for contractors having the necessary past experience of construction of rigid pavements. It was thus that the condition of bidder requiring experience in construction of rigid pavement road was inserted in the tender. iv. That the condition of having experience of construction of 12 Meter of bridge length as also for ownership of the machinery were both reasonable conditions inserted to best ensure that the object of the tender is best achieved. v. That the CVC guidelines would not apply in view of the fact that the said project was funded by ADB and thus the CVC Guidelines were exempt as per the letter of the CVC dated 1st October 1999. vi. Mr. Kadam, then without prejudice to the above, submitted the said Guidelines and circulars were formal and merely indicative in nature. He submitted that the said Guidelines were thus neither binding LGC 24 of 35 nor mandatory.

25. Mr. Kadam then took pains to point out (i) the Government Resolution dated 4th December 2023 which approved the work mentioned in RFP and estimated cost of the said work under Asian Development Bank (ii) the Supplementary Statement of Expenditure 2023-2024 dated 7th December 2023 which was presented to the legislature which recorded that work in the RFP was under financial assistance of ADB.

(iii) the letter dated 20th December 2023 issued by Chief Engineer (Konkan) and the Project Director which stated that changes in Standard Bidding Documents were to be adopted for works of MSRIP Phase-III aided by ADB. Basis this he submitted that the contentions of the Petitioners were all entirely baseless.

26. Mr. Kadam then submitted that what the Petitioners were attempting to do is to re write the terms of the tender. He submitted that this was entirely impermissible in law as it was the sole prerogative of the tendering authority to decide the terms of the tender. He submitted that unless such terms were LGC 25 of 35 arbitrary, unreasonable, mala fide or there is any act of Respondent which could suggest that the conditions of RFP were tailor made to select any particular bidder, this Court may dismiss this Petition keeping in mind the law laid down by Hon’ble Supreme Court in Tata Motors Vs. The Brihan Mumbai Electrical Supply and Trasport Undertaking (BEST) and others.[5] Reasons and Conclusions

27. As already noted above, we have found this Petition both wanting in substance as also in the Petitioners conduct. We thus find that the Petition not only deserves to be dismissed but deserves to be dismissed with cost, for the following reasons, viz.

47 Many a times, such a delay in the execution of the project due to the intervention by the courts may have cascading effect on the project cost and ultimately may increase the project cost and may impose heavy financial burden and lead to increased and unbudgeted expenditure. Therefore, while exercising the writ jurisdiction challenging the tender process midway and/or while entertaining the writ petition challenging the award of contract with respect to such Mega projects, more particularly, when such Mega projects are funded by the foreign countries, the Courts have to bear in mind the following principles laid down by this Court in Tata Cellular v. Union of India [Tata Cellular v. Union of India, (1994) 6 SCC 651] in para 94 as under: (SCC pp. 687-

88)

48. Even while entertaining the writ petition and/or granting the stay which ultimately may delay the execution of the Mega projects, it must be remembered that it may seriously impede the execution of the projects of public importance and disables the State and/or its agencies/instrumentalities from discharging the constitutional and legal obligation towards the citizens. Therefore, the High Courts should be extremely careful and circumspect in exercise of its discretion while entertaining such petitions and/or while granting stay in such matters. Even in a case where the High Court is of LGC 29 of 35 the prima facie opinion that the decision is as such perverse and/or arbitrary and/or suffers from mala fides and/or favouritism, while entertaining such writ petition and/or pass any appropriate interim order, High Court may put to the writ petitioner's notice that in case the petitioner loses and there is a delay in execution of the project due to such proceedings initiated by him/it, he/they may be saddled with the damages caused for delay in execution of such projects, which may be due to such frivolous litigations initiated by him/it. With these words of caution and advice, we rest the matter there and leave it to the wisdom of the Court(s) concerned, which ultimately may look to the larger public interest and the national interest involved.”

Petitioners did not purchase the tender document, then how did the Petitioners become aware of its terms and conditions. All this is left entirely opaque.

(iii) that there was no challenge to this special sanction.

I. We have only recently noted in our judgement in the case of B Right Real Estate vs. Pune Metropolitan Region and Others10 that “challenge to both, the award of tenders as also the process, are made in the most routine and casual manner, despite the law in respect of the same having been well settled” the challenge in the present Petition only amplifies this finding. We find it Michingan Rubber (India) Ltd. Vs. State of Karnataka (2012) 8 SCC 216 Silppi Constructions Contractors Vs. Union of India 2019 SCC OnLine SC 1133 Unreported judgment of this court dated 10th April 2024 in WP 5400 of 2024 LGC 32 of 35 apposite to quote the finding of the Hon’ble Supreme Court in the case of N.G. Projects Ltd. vs. Vinod Kumar Jain and Others11 wherein the Hon’ble Supreme Court has held as follows, viz. “15. …..The objective was to have greater transparency and the consequent right of an aggrieved party to invoke the jurisdiction of the High Court under Article 226 of the Constitution of India beyond the issue of strict enforcement of contractual rights under the civil jurisdiction. However, the ground reality today is that almost no tender remains unchallenged. Unsuccessful parties or parties not even participating in the tender seek to invoke the jurisdiction of the High Court under Article 226 of the Constitution. The Court held as under:- “2. The judicial review of such contractual matters has its own limitations. It is in this context of judicial review of administrative actions that this Court has opined that it is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. The purpose is to check whether the choice of decision is made lawfully and not to check whether the choice of decision is sound. In evaluating tenders and awarding contracts, the parties are to be governed by principles of commercial prudence. To that extent, principles of equity and natural justice have to stay at a distance. [Jagdish Mandal v. State of Orissa,

Petitioners are wholly inapplicable to the facts of the present case. The judgments in the case of M/s D.B. Infratech (supra) and Indian Railway Catering and

LGC 33 of 35 Tourism Corporation Limited (supra) were rendered in respect of deviation from tender conditions after the submission of the bids and not before. Hence, the same would be of no assistance to the Petitioners who have not even participated in the tender process. The judgment in the case of Health-O-Wonder Private Limited (supra) would also not be applicable to facts of the present case since in the present case the nexus between the terms of the RFP and object sought to be achieved under the tender is plainly cogent and clear. Equally, the judgement in the case of Meerut Development Authority (supra) would not apply since we have found that no case that the conditions have been tailor made has even remotely been made out by the Petitioners.

28. Hence for the reasons stated above, we passed the following order: i. Petition is dismissed. ii. Petitioner No.1 is directed to file an Affidavit LGC 34 of 35 stating viz. (a) the basis on which Petitioner Nos.2, 3 and 4 have been arrayed as Petitioners to the Petition and the authority based on which Petitioner No.1 had verified the Petition on behalf of Petitioner Nos. 2, 3 and 4. (b) the date on which each of the Petitioners purchased the tender document by paying tender fee of Rs.47,200/- with supporting documents to that effect. iii. The question of costs to be decided after compliance of above. iv. List the Petition on 9th May 2024 for compliance. (ARIF S. DOCTOR, J.) (CHIEF JUSTICE) LGC 35 of 35