Insituform Pipeline Rehabilitation Private Limited v. New Delhi Municipal Council

17. The petition stands disposed of in the above terms. (Emphasis Supplied)

14. Since, as per the respondent’s own showing, the work contained in the tender was an emergency work and of grave importance, the petitioner– post the decision of 15.02.2021 in WP(C) 509/2021, issued several letters to the respondent, requesting the respondent to communicate their decision in line with the directions passed by the Court.

15. On 04.06.2021, almost after 10 months since the bids were invited, the respondent cancelled the tender for the project, citing the following reasons: “1. The rates of L-1 agency were about 2.34% above the justified rate which is not acceptable by the Council.

2. Rehabilitation of water/sewer lines are not specialized but a routine work and hence, only 2 bids were found and noncompetitive in 1st call.”

16. It is in this background, the decision of the respondent to re-tender the work has been challenged in the present writ petition.

17. When the matter came up on 20.07.2021, while issuing notice, we restrained the respondent from awarding the contract for the work in question to any party till the next date. The interim order was continued on 08.09.2021, as well as on 05.10.2021.

18. The respondent has filed a detailed affidavit, wherein the respondent has reiterated the reasons why the respondent Council had decided in its meeting held on 21.05.2021 to cancel the tender in question. The agenda items and the Council’s decision as seen from the record is reproduced below: 07 (A-3) T/M of sewer line in NDMC area. Sub – head Rehabilitation of existing 1100-1200 mm dia sewer at Ashoka Road from Nirvachan Sadan to C-Hexagon During the last council meeting held on 26.12.2020, the reasons for rejection could not be recorded. It was deliberated in the Council and again confirmed in the meeting today that the earlier tender has to be rejected and recalled due to the following reasons:

1. The rates of L-1 agency were about 2.34% above the justified rates which is not acceptable by the Council.

2. Rehabilitation of water/sewer lines are not specialised but routine work and hence only 2 bids were found and none competitive in the first call. After deliberations the Council resolved that this tender be rejected and recalled immediately. It is further resolved by the Council that NDMC may initiate further necessary action on the decisions taken as above in anticipation of the confirmation of the minutes. The above minutes of the council meeting dated 21.05.2021 will be placed before the next meeting of the Council, for confirmation thereof. If approved we may return the file to Chif. Engr (Civil-I) please.

DEBASHISH SEN GUPTA (HEAD ASSISTANT) 02.06.2021 5:33 PM”

19. It has further been argued by the respondent, that the Council duly applied its collective mind, deliberated the issue and, thereafter, a conscious decision was taken to reject the bids received under the tender in question, and recall the tender.

20. It is further argued that the decision to accept or reject the bids, by the tender inviting authority is within the exclusive domain of that authority, and ought not to be interfered by the Court until the same is arbitrary, whimsical or mala fide. Reliance has been placed on Afcons Infrastructure Ltd. vs. Nagpur Metro Rail Corporation Ltd. & Anr.

21. Clauses 13 and 15 of the tender notice dated 20.08.2021 have also been relied upon, which read as under:

22. The Respondent Council, thus, argues that it is not bound to accept the lowest bid and grant the contract.

23. The petitioner has filed a rejoinder, and has argued that both the reasons recorded in the minutes of the meeting of 21.05.2021– prompting the Council to cancel the tender, are mala fide, arbitrary and whimsical. It is argued that the tender document clearly required specialised agencies to bid, and it was a specialised work. The Finance Department, as well as the NDMC deliberated the bid of the petitioner and found that the Petitioner’s financial bid was just above 2.35% of the estimated cost of Rs.16,61,35,617/- with quoted value of 17,00,43,000/-, and 2.34 % above the justified cost of Rs. 16,61,52,231/- (i.e., 0.001% above the estimated cost), making it eligible for the award of the contract, especially since the Respondent has been awarding contracts to entities/ institutions for similar works where the variation is within the permissible limit of 5% of justified rates.

24. It has further been argued by the petitioner that Mr. Virender Singh Kadian, who is a member of the Council, had written a letter dated 07.12.2020, pleading the case of the disqualified bidder Onsite, and calling upon the Respondent to withdraw the technical objections qua Onsite, and open the price bid of Onsite, or re-invite the tender in question. Shri Virender Kadian also participated in the Council meeting held on 21.05.2021, which has tainted the decision of the Council and, hence, the entire decision making process stands vitiated as one of its members openly had a bias in favour of the disqualified bidder, and against the qualified bidders. It is submitted that Shri Kadian had his way as he succeeded in ensuring cancellation of the tender on completely frivolous grounds.

25. In response, learned Counsel for the respondent has submitted that the Council has 13 members, all of whom have collectively taken the decision to cancel the tender and to re-tender the works. Mr. Kadian was only one of the 13 persons and hence, had a miniscule role in the decision making, if at all.

26. We have heard Mr. Sandeep Grover for the petitioner and Mr. Anil Grover for the respondent. The judgment of Afcons Infrastructure Ltd. vs. Nagpur Metro Rail Corporation Ltd. & Anr. (2016) 16 SCC 818 is clear, unequivocal and unambiguous. The decision of tender floating authority is not to be lightly interfered with by the Courts, unless the same is arbitrary, whimsical or malafide. The relevant extract of the Afcons judgment is reproduced as under:

27. With this background, we proceed to examine whether the reasons recorded by the Council on 21.05.2021, which were communicated to the petitioner on 04.06.2021, for cancellation and re-tender, suffer from arbitrariness, mala fides and need interference. The Reason No.1 is reproduced as under: “Reason 1: The Rates of L-1 agency were about 2.34% above the justified rate which is not acceptable by the Council”.

28. We directed production of the original file which was produced before us, and we have gone through the same. The notings dated 15.09.2020, 16.09.2020, 25.09.2020 read as under: “-19- Justification submitted by EE(SM) has been checked and is submitted for further scrutiny in detail by main planning Division. Submitted please. Sign AE(P) to SE(PH) 15/9/20 L[1] offer of M/s Insituform Pipeline Rehabilitation Private Limited may please be accepted which is about 2.32% above the justified cost. Sign 15/9/20 Rate of Item No.1 in Delhi Jal Board? Sign 16/09/2020 Justification 0.01 % above the estimated cost has been checked and submitted (illegible). Sign 2509-20(Typed copy)”

29. The Finance Department of the Council granted its approval to the bid of the Petitioner, and the operative portion of the file noting reads as under: “In the abstract of justification, it has been certified that the lowest market rates have been adopted in the justification. The justification has been checked by this office @0.01% above of the EC of Rs. 16, 61, 35, 617. As per the recommendation of SE (PH) & EE (WS) to accept the work to the lowest agency, the lowest agency i.e. M/s Insituform Pipeline rehabilitation Pvt. Ltd., who have quoted their rates @ 2.35% above of the EC of Rs. 16, 61, 35, 617 with quoted value of Rs 17, 00, 43, 000/-. The percentage of tendered of cost over the justified cost of tender i.e. 2.34% above. Accordingly the case is recommended for consideration and acceptance to the lowest agency i.e. M/s Insituform Pipcline rehabilitation Pvt. Ltd., who have quoted their rates @2.35% above of the EC of Rs. 16, 61, 35, 617. (With in variation of 5% over justified rates). The tender of lowest agency is submitted for consideration and approval by the competent authority please.” (emphasis supplied)

30. The Executive Engineer of the NDMC also recommended the bid of the petitioner for acceptance and the operative portion of his file noting reads as under: “In view of the above, it is again recommended for consideration and acceptance of tender of L-1 agency i.e. M/s Insituform Pipeline Rehabilitation Pvt. Ltd. who have quoted their rates @ 2.35% above of the estimated cost of Rs. 16,61,35,617/-. It is certified that the rates offered by L-1 bidder are reasonable and justified and recommended to acceptance/award.” (emphasis supplied)

31. The entire drift of the concerned departments, namely the Finance Department and the Executive Engineer of the Respondent NDMC was towards accepting the bid of the Petitioner, since the quoted rates though above the estimated cost, were well within the 5% variation limit. Neither the minutes of the meeting, nor the record produced before us indicates the reasons on which the Council sought to reject the recommendations of the concerned departments.

32. We are not suggesting that the Council is bound in all cases, to accept the recommendation on the file made by the concerned authorities. However, if the Council was so minded, and if it was of the view that the rates quoted by the Petitioner were not acceptable for any reason, it was necessary for the Council to record its reasons as to why the recommendation of the Finance Department and the Executive Engineer concerned was being differed from. The Council could not have simply stated that the rates quoted by the Petitioner– which were 2.34% above the estimated rates, were not acceptable, when rate variation upto 5% is, otherwise, acceptable. The reason, which seems apparent to us, is the influence of Mr. Virender Singh Kadian, the member of the Council. On 07.12.2020, Mr. Virender Singh Kadian, member of the Council, wrote a letter addressed to the Chairman, NDMC, as well as to Chief Vigilance Officer, NDMC which reads as under: “Ref No. VSK/644/12/20/NDMC Dated 07 Dec 2020 Shri Dharmendra Chairman New Delhi Municipal Council 3rd Floor, Palika Kendra New Delhi-110001 Subject: Regarding the tender of Rehabilitation of Existing 1100- 1200mm dia Sewer line along Ashoka Road from Nirwachan Sadan to C- Hexagon

1. I have received representation from Onsite India Private Limited regarding his grievance that the Company has applied for tender of Rehabilitation of Existing 1100-1200 mm dia Sewer line along Ashoka Road from Nirwachan Sadan to C-Hexagon which was rejected wrongfully on hyper technical grounds that EMD not submitted in the desired form and therefore price bid was not opened by the Department, although, the Company has submitted the complete EMD in the shape of Bank guarantee and the same was submitted to the Department in original before submitting the online tender. No objection by Department was raised at the time of submission of EMD as per rule generally the Company has to be intimated to remove the technical discrepancy if any. Once the EMD accepted the Department would have opened the price bid for healthy competition in the interest of NDMC.

2. The NDMC has been deprived of better and fair competition by not intimating the technical defect at the time of receipt of EMD due to which most competitive Company has been left out. The matter may be enquired and the dealing Executive Engineer (Sewer) of the NDMC may be held responsible for loss to the Department which can only be acknowledged after opening of price bid. The Onsite India Private Limited is most experienced sewer rehabilitation company using CIPP Technology and has completed most difficult projects in the country. The request of the Company to permit removal of technical objection and to open the price bid or to re-invite the tender for better and fair competition may be done in the interest of NDMC. Copy to- Chief Vigilence Officer New Delhi Municipal Council 3rd Floor, Palika Kendra New Delhi-110001 VIRENDER SINGH KADIAN MLA Govt, of NCT of Delhi( Delhi Cantt) Member of New Delhi Municipal Council”

33. In December 2020, the representation of Mr. Kadian was considered on the file and rejected. The relevant extract from the file noting reads as follows:

34. The Superintending Engineer of the Respondent NDMC, Shri Ajay Gupta, at Note 45 on the file, noted as under: “Note # 45 The note of Sh. Anil Grover, ASC may please be seen (CP/1) The High Court Orders are also attached at CP/2 to 18 ) The final Judgement of Hon’ble High Court at CP/18 may please be seen. The same may please be forwarded to Dir (Law) for suggesting next course l action please. Here it is not out of place to mention that Council had rejected the tender earlier and in my opinion, we should stick to the Council Decision and if need be, a special Council Meeting may be called for giving detailed deliberations for Rejecting the same and to Recall the Tender. Considering the VERY POOR CONDITION of the existing sewer line at Ashoka Road, it is again requested that the decision may please be taken at the earliest possible to avoid any possible collapse of line. 22/02/2021 2:16 PM AJAY GUPTA (SUPERINTENDING ENGINEER)” (underlining supplied)

35. A bare perusal of the said note clearly shows that Council meeting was called, not for re-consideration of the issue whether the contract should be awarded to the Petitioner– being the L-1 bidder, but for giving reasons for the already taken decision of rejecting the bid of the Petitioner. The Respondent NDMC, thus, did not act in accordance with direction of this Court contained in its order dated 15.02.2021 passed in WP (C) No.509 of 2021.

36. It is also evident that Mr. Virender Kadian – one of the members of the Council, had a pre-conceived mindset of rejecting the Petitioner’s bid – on account of his declared interest in the disqualified bidder Onsite. He had openly written a letter supporting Onsite, and if Onsite could not be declared technically qualified, to seek recall of the tender. In this background, in all fairness, he should have refrained from participating in the Council meeting held on 26.12.2020. In the counter-affidavit, the Respondent has, in response to paras 10 (j) & (k) of the writ petition, totally denied the same, which again smacks of mala fides and bias. Paras (j) and (k) of the counter-affidavit read as under: “That the contents of Para-1 0 (j) & (k) are wrong and denied as false and baseless. It is denied that on request of the disqualified bidder i.e. M/s Onsite India Private Limited a Member of the Legislative Assembly (MLA) of Delhi called upon the Respondent to re-invite the tender inter-alia on the ground that the bid submitted by M/s Onsite India Private Limited was not considered. The said allegation on the respondent is mala-fide and contrary to the record. It is a matter of record that disqualified bidder M/s Onsite India Private Limited was held to be not eligible and it was observed that is entire EMD of Rs.33,22,712/- have been submitted in the shape of Bank Guarantee in contravention of the Clause-9 of Form-6 of NIT. Thus, the allegation levelled by the petitioner against the respondent are misconceived and irrelevant for the purposes of adjudication of the present writ petition.”

37. In fact, the deponent of the affidavit appears to have perjured by stating a patent falsehood. This, itself, is demonstrative of the malafidies and bias entertained by the Respondent Council against the Petitioner. It is clear from the above that the decision to cancel the tender and to re-tender was taken at the behest of a Council member, viz. Shri Virender Singh Kadian, despite the Finance Department and the Executive Engineer being in favour of awarding the tender to the Petitioner. The decision of the Respondent Council dated 21.05.2021 was motivated by concerns, which were non-transparent and have not been explained by sound reason. The reasons for rejection of the Petitioner’s bid and cancellation of the tender process are mala fide, arbitrary, extraneous, illegal, whimsical and violate Wednesbury principle of Reasonableness and cannot be sustained. Validity of any administrative decision is to be judged on the basis of reasons existing on record. The Public authority cannot be permitted to supplant reasons at a later stage, especially if those reasons never existed before.

38. We are supported in our view by Royal Power Turnkey Implements (P) Ltd. v. Maharashtra Industrial Development Corpn., 2014 SCC OnLine Bom 2884, wherein the court set aside the arbitrary and irrational decision of the Respondent Corporation to re-tender the work:

39. It is also clear from the above that the Respondent, for the first time, at a belated stage and after a significant period had passed from when the bids were received, offered completely new reasons that are not found anywhere in the Respondent's records. It is clear that the new reasons offered are an afterthought, given only to deny the Petitioner the contract and allow the disqualified bidder to participate in the bid again. In Mohinder Singh Gill v. Chief Election Commr., (1978) 1 SCC 405, the Supreme Court held:

42. In Corporate Infotech Private Limited v. South Delhi Municipal Corporation, 2021 SCC OnLine Del 3519, the Court held that there may be no vested right available to the bidder for claim of contract, but it has the right to find out the reasons for cancellation and assail those reasons if they are arbitrary, whimsical or malafide. The Court observed: “14. It is well settled in law that a Request for Proposal is only an invitation to offer. In response to the Request for Proposal, the bidder submits its proposal/bid, which constitutes an offer under the Indian Contract Act, 1872. That offer may, or may not be, accepted and unless accepted, a binding contract does not come into being. The entity inviting offers is not bound to accept any offer, including the highest or the lowest offer, as the case may be. This position is not only well established in law, but invariably is also expressly so stated in the Request for Proposal/NIT. Even, in the present case, as noticed herein above, the said position was clearly set out in more than one ways in the RFP by the respondents.

15. Having said this, we cannot lose sight of the fact that the RFP was invited not by any private entity, but by the SDMC which is a public authority and its actions are, therefore, liable to tested on the touchstone of Article 14 of the Constitution of India. The respondents can, therefore, be called upon to show that they have acted bona fide and for good reason in the matter of withdrawal of the RFP after having invited bids, and after opening them. Whenever a challenge is laid to such an action, the Courts do call for an explanation and the reasons which prompted the taking of such a decision. After all, RFP's are not issued and bids are not invited in a casual manner and, even though, there may be no vested right in any bidder to claim that the RFP should culminate in the award of a contract, much less to itself, the bidders do have the legitimate right to, at least, find out as to what are the reasons for the cancellation, and assail those reasons if they are arbitrary, whimsical or mala fide. The scope of interference in such situations is, therefore, confined to call for the reasons which prompted the action taken by the public authority in cancelling the RFP/NIT, and to examine whether those reasons are germane and provide sufficient justification for the decision taken. It is only when the reasons are nonexistent, or arbitrary, whimsical or mala fide that the Court may interfere, and not otherwise.”

43. We may now look at the second reasons provided by the Council for rejection of the Petitioner’s bid, and cancellation of the tender. Even the second reason given for cancellation of tender and re-tendering the works does not inspire our confidence. The second reason for cancelation is reproduced as under: “Rehabilitation of water/sewer lines are not specialised but routine work and hence only 2 bids were found and none competitive in the first call.”

44. The Tender Notice dated 20.08.2020 reads as under: “Executive Engineer (S/M) invites online Item rate bids on behalf of NDMC from Specialized Agencies in the field of Rehabilitation of old Sewer lines by any structural lining method and registered under GST for the work of T/M of Sewer Line in NDMC area during 2020-21. Sub-Head: Rehabilitation of existing 1100-1200 mm Dia Sewer Line along Ashoka Road from Nirwachan Sadan to C- Hexagon, Estimated Cost of Rs.16,61,35,617/- with a time of completion of 06 Months at the cost of bids (non refundable) of Rs. –Nil–. A sum of Rs.33,22,712/- as earnest money shall be deposited in the office of any Ex. Engineer, NDMC before the opening of bid in the form of pay order/demand draft/banker' cheque/Deposit at Call Receipt/FDR of a scheduled bank in favour of Secretary, NDMC payable at local branch of Delhi/New Delhi. It should be ensured that the FDR is pledged in favour of the Secretary, NDMC.”

45. The heading of Clause 1.2.[2] reads as under: “Criteria of eligibility for Specialized Agencies Technical Eligibility Criteria: Three similar works each of value not less than 6.64 Crore or two similar work each of value not less than 9.96 Crore or one similar work of value not less than 13.29 Crore in last 7 years ending previous day of last date of submission of tenders shall also be considered. The value of executed works shall be brought to current costing level by enhancing the actual value of work at simple rate of 7% per annum, calculated from the date of completion to the last date of submission of bid.” (emphasis supplied)

46. A bare perusal of the aforesaid two clauses leads to only one conclusion, that the Tender Notice was targeting specialised agencies to bid for the tender and the specialised agencies had to be specialists in the field of “rehabilitation of old sewer lines by structural lining method and registered under GST, for executing the work in relation to the Project.” The very fact that in the tender only 3 agencies were considered qualified, further lends credence to the fact that it was a work of specialised nature. The experience criteria laid down was in respect of “Three similar works”, and not just any civil work. This also shows that the work under the tender was considered as a specialised work. The rules of interpretation clearly state that where the document is clear, unequivocal and speaks for itself, no external aids are required to interpret it. In the present case, the Tender Document at two places uses the word specialised agencies, and clearly leads to only one conclusion, that the work was of a specialised nature. For now claiming that the work was not of specialised nature, the Respondents have not given any reasons. The doctrine of Contra Proferentum binds the Respondent Council.

47. We may refer to our judgment in W.P.(C) 5603/2021, Maan Pharmaceuticals Ltd vs Employees State Insurance Corporation, delivered on 17.08.2021, wherein we had observed:

applicable and secondly, even if there exists any ambiguity, then it shall be construed against the drafter of the said contract or tender in the case before u

30. Therefore, it leads to only one conclusion that the respondents cannot read ambiguity into the tender condition. In absence of any ambiguity, the plain and express meaning of the condition has to be complied with.”

48. For the reasons stated above, we are of the view that the reasons for cancellation of subject tender, and for re-tendering given by the respondent NDMC are illegal, arbitrary, biased, malafide, whimsical, founded upon extraneous considerations, and violative of Wednesbury Principle of Reasonableness and do not pass judicial scrutiny.

49. In this view of the above, we quash the decision of the Respondent taken on 04.06.2021 to cancel the tender.

50. We direct the respondent Council to take a fresh decision in the matter keeping in view our aforesaid findings and observations. The respondent Council should take into consideration all relevant and germane aspects, including the following:

(i) Whether the price quoted by the petitioner L-1 bidder, which is 2.34% above the estimated cost of work, falls within the 5% acceptable limit and, if so, whether there is any genuine justification for still not accepting the petitioner’s financial bid. If the Council finds that there are any genuine reasons for not accepting the petitioner’s lowest bid, those reasons should be clearly recorded and should be borne out from the record.

(ii) Whether the re-tendering of the work at this stage (the tender in question was invited on 20.08.2020, and especially when as per respondent’s own showing the work contained in the tender was an emergency work and of grave importance) would itself be financially detrimental to the interest of the Council on account of inflation in rates and costs over the last about 18 months and, if so, the responsibility of the concerned individuals for inflation and costs should be fixed.

51. The decision that the Council may take should be communicated to the petitioner within a week of the same being taken. Looking to the past conduct of the Council, we direct that in case the decision taken is against the petitioner, the respondent shall not take any precipitative action at least for a period of ten days from the date of actual communication of the decision to the petitioner. The writ petition stands disposed of in the aforesaid terms.

VIPIN SANGHI, J JASMEET SINGH, J JANUARY 07, 2022 dm