Full Text
HIGH COURT OF DELHI
Date of Decision: 03rd MARCH, 2023 IN THE MATTER OF:
NAGENDRA YADAV ..... Petitioner
Through: Mr. Amit Sibal, Senior Advocate with
Mr.Ankit Jain, Mr. Mohit Gupta, Mr. Aditya Chauhan, Mr. Vinay Tripathi, Mr. Vinamra Kapariha, Mr. Darpan Sachdeva, Advocates
Through: Mr. Achal Gupta, Advocate for R-1 Mr. Prakash Gautam, Advocate for
R-2/DJB.
HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD
JUDGMENT
1. By way of the present Writ Petition, the Petitioner seeks to quash letter dated 02.02.2023, bearing No.DJB/EE(T) M-10/2022-23/1153, issued by the Respondent No.2 herein/Delhi Jal Board (hereinafter referred to as „the DJB’) by which the DJB has discharged the tender bearing NIT No.03 (2021-22) having tender ID: 2022_DJB_219683_1 (hereinafter referred to as „the tender in question’). The said tender was issued by the DJB for operation and maintenance of water meter test bench facility for testing of water meters of size 15 mm to 40 mm diameter for a period of 5 years.
2. The facts of the case reveal that the Petitioner participated in the tender in question and the Petitioner was the lowest bidder. It is stated that vide letter dated 31.08.2022, a Letter of Intent (LOI) was issued to the Petitioner herein by the DJB directing the Petitioner to submit an irrevocable performance guarantee of Rs.3,58,200/-, i.e. 3% of the awarded cost, within 10 days from the date of issuance of the letter. It is stated that in compliance of the letter dated 31.08.2022, the Petitioner herein submitted the requisite performance guarantee of Rs.3,58,200/- in the form of an FDR in favour of DJB on 02.09.2022.
3. At this juncture it is pertinent to mention that in Delhi there are two centres for testing water, i.e. one at Pitampura and the other at Nizamuddin. The tender in question pertains to the water testing centre at Nizamuddin. It is stated that in order to execute the work under the tender in question, the Petitioner has invested substantial amount of money for employment of skilled and expert manpower, technical know-how research team and a laboratory and for building a robust infrastructure etc.
4. It is stated that since the work was not awarded to the Petitioner even after issuance of LoI, the Petitioner wrote a letter dated 02.11.2022 to the Chief Secretary, GNCTD, IP Estate, New Delhi, complaining about the conduct of DJB in not awarding the work to the Petitioner in terms of the tender in question. It is stated that since DJB was not taking any action, the Petitioner herein sent a legal notice dated 22.12.2022 to the DJB requesting for award of the contract to the Petitioner. It is stated that being aggrieved by the inaction of the DJB, Petitioner herein filed Writ Petition, being W.P.(C) 909/2023, praying for issuance of a writ of mandamus to the DJB to award the contract to the Petitioner herein. Notice was issued in the said Writ Petition on 24.01.2023. It is stated that on 02.02.2023, in order to circumvent the Writ Petition and to wriggle out of its contractual obligation, DJB issued a letter discharging the tender in question.
5. It is this action of the DJB which has been challenged in the instant Writ Petition.
6. On 14.02.2023 learned Counsel appearing for DJB prayed for some time to file a reply in the matter. Reply dated 22.02.2022 has been filed.
7. In the reply it has been stated by the DJB that it received a letter on 19.10.2022 from A.C (Land & Estate) about handing over the land near Nizamuddin, where the facility was to be set up, to the GNCTD for setting up a school. It is stated that on 17.11.2022 and 29.11.2022, meeting was convened to discuss the issue and in that meeting A.C (Land & Estate) informed that vide resolution: No.636 dated 24.8.2018 it had been resolved that the DJB land -admeasuring 3511 sq. mtrs. on the left bank of Sunehri Pul Nallah near Nizamuddin west (site where the Centre was to come up) had been transferred to the Education Department of GNCTD for setting up a school. In the reply it is also stated that the DJB was informed by the Water Project Wing that total 1200 Non-AMR Meter have been tested during the period 01.09.2021 to 31.08.2022, i.e. 100 meter per month at the existing L&T bench which has a capacity of 40 meter per week or 2080 meter per year against which only 1200 meters were tested for which they have been paid about Rs.2,00,000/- and the contract with L&T is till June
2025. It was, therefore, decided that instead of setting up a new facility, the existing facility, which at present is being under-utilized, be utilized properly and, therefore, the tender in question was discharged.
8. Mr. Amit Sibal, learned Senior Counsel appearing for the Petitioner, contends that the Tender in question was issued by the DJB on 22.03.2022 and the Petitioner was declared as L[1] on 31.05.2022 and after three months from the date of declaration of results of the bid, an LoI was issued to the Petitioner herein on 31.08.2022 requesting the Petitioner to submit an irrevocable performance guarantee of Rs.3,58,200/- and in compliance of that letter the Petitioner herein submitted the requisite performance guarantee of Rs.3,58,200/- in the form of an FDR in favour of DJB on 02.09.2022. Mr. Sibal submits that even after receiving the said bank guarantee on 02.09.2022, the DJB kept quite and did not award the work to the Petitioner herein thereby forcing him to send a legal notice to the DJB on 22.12.2022 requesting the DJB to award the contract to the Petitioner. Mr. Sibal contends that apart from giving the performance guarantee substantial amount of money has been invested by the Petitioner for employment of skilled and expert manpower, technical know-how research team and a laboratory and for building a robust infrastructure etc. He states that when no action was taken by the DJB, the Petitioner was compelled to file a Writ Petition, being W.P.(C) 909/2023, praying for issuance of a writ of mandamus to the DJB to award the contract to the Petitioner herein and when this Court was inclined to entertain the said Writ Petition, in order to circumvent the Writ Petition and to wriggle out of its contractual obligation, DJB issued a letter dated 02.02.2023 discharging the tender in question. He states that this action of the DJB only demonstrates complete high handedness on their part. Mr. Sibal states that no reason whatsoever has been given by the DJB in the impugned letter for discharging the tender. Mr. Sibal places reliance on the judgment of the Apex Court in Mohinder Singh Gill v. Chief Election Commr., (1978) 1 SCC 405, which states that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. He states that the Apex Court in the said judgment has held that if the reasons so mentioned are permitted to be supplemented by fresh reasons then an order which may be bad in the beginning may, by the time it comes to Court by way of challenge, get validated by additional grounds which were brought out later on. He further submits that in the said judgment the Apex Court has relied on another judgment of the Apex Court in Commr. of Police, Bombay v. Gordhandas Bhanji, 1951 SCC 1088, wherein the Apex Court has held that public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. In the said case, the Apex Court has further held that public orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself. Mr. Sibal has, thereafter, placed reliance on another judgment of the Apex Court in State of Punjab v. Bandeep Singh, (2016) 1 SCC 724, wherein the Apex Court has reiterated the same principles which had been laid down by it in Mohinder Singh Gill (supra).
9. Mr. Sibal further points out that the need for a school, as has been pointed out by the DJB in its counter affidavit, is only a bogey. He draws the attention of this Court to Annexure A-4 which has been annexed with the counter affidavit filed by the DJB, to submit that in the note-sheet dated 18.01.2023 no reason to transfer the land to the GNCTD for the purpose of school has been stated. He, therefore, states that the idea was only to cancel the tender in question because DJB did not wanted the contract to be awarded to the Petitioner herein. He further submits that it was not open to the DJB to accept the performance guarantee from the Petitioner herein and then be quite for around five months without any action.
10. Per contra, Mr. Prakash Gautam, learned Counsel appearing for the DJB, and Mr. Achal Gupta, learned Counsel for the GNCTD, reiterates the submission made in the counter affidavit.
11. Heard the counsels appearing for the parties and perused the material on record.
12. A perusal of the records reflects that the tender in question was floated by the DJB for operation and maintenance of water meter test bench facility for testing of water meters of size 15 mm to 40 mm diameter for a period of 5 years. The Petitioner participated in the tender process and was declared as L[1] bidder on 31.05.2022. On 31.08.2022 an LoI was issued to the Petitioner asking him to furnish a performance guarantee of Rs.3,58,200/- and in compliance of the said letter a performance guarantee of Rs.3,58,200/- was furnished by the Petitioner herein on 02.09.2022. Material on record also indicates that when the work was not awarded to the Petitioner, the Petitioner approached this Court by filing a Writ Petition, being W.P.(C) 909/2023, praying for issuance of a writ of mandamus to the DJB to award the contract to the Petitioner herein. On 02.02.2023, the DJB issued a letter discharging the tender in question.
13. In the instant Writ Petition, DJB has filed a counter affidavit giving two reasons for discharging the tender in question. The first reason that has been given by the DJB is that the land where the centre in question was to be set up has been earmarked for a school and the second reason being under utilization of the existing testing bench which was being operated by L&T which though has a capacity of 2080 meter per year but only 1200 meters were being tested. The note-sheet dated 16.01.2023 also indicates that the whole issue was deliberated in the meeting held on 17.11.2022 & 29.11.2022 and it was observed that the expenditure involved in the newly proposed testing bench at Nizamuddin is comparatively much higher than the existing test bench at Pitam Pura which is not being fully utilized. The note sheet dated 18.01.2023 also records the same.
14. The scope of judicial review in contractual matters has been examined by the Apex Court in a number of judgments, including Tata Cellular v. Union of India, (1994) 6 SCC 651, Raunaq International Ltd. v. I.V.R. Construction Ltd., (1999) 1 SCC 492, Jagdish Mandal v. State of Orissa (2007) 14 SCC 517, Michigan Rubber (India) Ltd. v. State of Karnataka (2012) 8 SCC 216, etc. and the following principles have emerged: a) the basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities; b) fixation of a value of the tender is entirely within the purview of the executive and courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by courts is very limited; c) in the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities unless the action of the tendering authority is found to be malicious and a misuse of its statutory powers, interference by courts is not warranted; d) certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work; and e) if the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interference by court is very restrictive since no person can claim a fundamental right to carry on business with the Government. (Refer: Maa Binda Express Carrier v. North-East Frontier Railway, (2014) 3 SCC 760)
15. In all the judgments involving judicial review in the matter of tender, the Court has always posed two questions, namely, (i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; or whether the process adopted or decision made is so arbitrary and irrational that the court can say: ‘the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached’; and (ii) Whether the public interest is affected; and has held that if the answers to these questions are in the negative, then there should be no interference by the Court under Article 226 of the Constitution of India.
16. It is also well settled that a tender is only an offer and an invitation, and an invitation to tender functions in the realm of contract and the person who makes an offer has the right of withdrawing it before acceptance, in the absence of condition to the contrary supported by consideration. It has been consistently held that no right is accrued to the highest bidder until and unless there has been acceptance of the same and the contract has been concluded. The contract gets concluded only when a letter of acceptance is given by the tenderer. The said observation has been quoted and followed by the Apex Court in State of Punjab and Ors. v. Mehar Din, (2022) 5 SCC 648, wherein the Apex Court has observed as under:
17. The Apex Court in U.P. Avas Evam Vikas Parishad v. Om Prakash Sharma, (2013) 5 SCC 182, has also held that no contract is concluded till the bid is accepted and that without final acceptance of the bid, no vested right is acquired by the highest bidder.
18. Coming to the contention that the Order discharging the tender is a non-speaking Order and the DJB cannot be permitted to give reasons of discharging the tender in this Court. It is well settled that in tender matters a communication which is non-speaking and does not furnish reasons for withdrawing the offer need not be quashed only because the said communication is sans reasons. In Silppi Constructions Contractors vs. UOI and Anr., 2019 SCC OnLine SC 1133, the Apex Court was seized of a tender matter and while discussing the aspects of not furnishing reasons for rejecting the technical bids of the petitioner therein, it was observed as under:
19. In Ghanshyam Das Aggarwal v. Delhi Development Authority, 1996 (37) DRJ (DB), this Court was called upon to examine the action of the respondent therein/DDA in refusing to accept the bids of the highest bidders in respect of industrial plots put on a public auction, has observed as under:
party unless required to be so done by any Rule having force of law. Secondly, the reasons could have been made available if asked for. Thirdly, the reasons for rejection though not communicated and though not asked for by the petitioners before filing the petitions have been made available in the Court in response to the show cause notice issued and it would serve no useful purpose if we may dispose of the petitions merely by directing the respondents-DDA to communicate the reasons to the petitioner. The reasons now having been made known to the petitioners, they have been heard thereon. Whatever they had to say on such reasons they have said and we have also tested the validity of the reasons and have found nothing unreasonable therewith. That is an end of the matter." (emphasis added)
20. The abovementioned judgment has been followed by the Division Bench of this Court in its judgment dated 21.07.2020 passed in W.P.(C) 3811/2020, titled as Manmeet Singh v. South Delhi Municipal Corporation., wherein it was held that a bidder cannot insist that since they were declared as H[1] bidders, a vested right had accrued in their favour and the tendering authority has all the right to pause and re-examine the tender process. Relevant portions of the said judgment reads as under:
40. Insofar as the issue regarding concluded contract in the present case is concerned, this falls squarely in the realm of the contract law, without any hue or shade of any public law. In fact, that is not even pleaded or argued. At the same time, whether there was a concluded contract or not is seriously disputed by the respondents and, therefore, in the first instance it was not even necessary for the High Court to go into this issue and could have relegated the appellant to ordinary civil remedy. We are conscious of the position that merely because one of the authorities raises a dispute in regard to the facts, it may not be always necessary to relegate the parties to a suit. This was so stated in ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd. [(2004) 3 SCC 553] in the following manner:
41. At the same time, as already noted in Kisan Sahkari [(2008) 12 SCC 500] this Court had taken a view that where the question whether there was a contract or not is seriously disputed, the court is not to assume that there was a valid contract and on that basis examine the validity of the administrative action. Therefore, keeping in view the aforesaid understanding of the law, a very limited inquiry on this aspect is permissible.””
21. What flows from the above judicial pronouncements is that it is the discretion of the State/tendering authority to award the contract to the bidder who is deemed most suitable for the project. It has been held that no right is accrued in favour of a bidder until and unless a Letter of Acceptance is issued and the contract stands concluded. In any case, the fact that the contract stood concluded and that the Petitioner in the instant matter had a vested right in being awarded the tender for the reason that it had been declared as an L[1] bidder post the opening of the bids is not an event that a writ court can delve into or interfere with on the ground that the same constitutes a matter of contractual nature and is outside the scope of judicial review.
22. Valid reasons have been given by the DJB in the counter affidavit filed by them as to why the decision of discharging the tender in question has been taken by them. It cannot be said that the reasons given in the counter and in the note-sheets annexed to the counter affidavit filed by the DJB are vitiated by mala fides or are arbitrary. It is well settled that unless the contract is not awarded no right is accrued to any party. This Court, therefore, does not find any reason to interfere with the communication dated 02.02.2023, issued by the DJB, discharging the tender in question. However, it is to be seen that the Petitioner had given a performance guarantee of Rs.3,58,200/- to the DJB and the same has not been returned by the DJB. No reason has been given by the DJB as to why even after deciding to cancel the tender in question, the money has not been returned to the Petitioner. The Petitioner has been deprived the use of the money from the date of furnishing the same to the DJB. In view of the above, the DJB is directed to return the money to the Petitioner herein with interest @ 6% per annum from 02.09.2022 for inaction on their part in not returning the amount to the Petitioner.
23. With these observations, the petition is dismissed, along with pending application(s), if any.
SATISH CHANDRA SHARMA, C.J. SUBRAMONIUM PRASAD, J MARCH 03, 2023