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Judgment
Y.P. Nargotra, J.—Under Prime Minister's reconstruction plan for Jammu and Kashmir State, Mughal road from Baflias (Poonch) to
Shopian (Pulwama) is to be constructed by the Government of Jammu and Kashmir. The Government by its order No. 371-GAD of 2005 dated
1-4-2005 constituted an Empowered Committee under the Chairmanship of Financial Commissioner/Principal Secretary to Chief Minister to
finalize the contract for construction of the road with the approval of competent authority and monitor its execution. Pursuant to Govt. order No.
71-PW (R&B) of 2005 dated 10-3-2005 a Committee consisting of following officers to draft and prepare the tender documents for inviting pre-
qualification and financial bids was also constituted :-
Joint Dev.
Commmissioner (Works) .. Chairman.
Chief Engineers (R&B)
Department Jammu/Kashmir .. Members.
After the tender documents/standard bidding documents were prepared tenders for the work were invited vide NIT No. 01/ 2005 dated 15-3-
2005 the advertised cost of the work is Rs. 148.10 crores. In response three tenders have been received which included the tender of joint
Venture of IVRCL Limited and SEW Construction Ltd. The petitioner as per Joint Venture Agreement IVRCL Limited is the lead partner with
60% stake while SEW has 40% stake.
As per the terms of tender documents the tenderers are required to submit tenders in two covers i.e. one containing security deposit and pre-
qualification information while the other containing the financial bid. The first is to be opened first for deciding as to whether the tenderer fulfilled the
prescribed pre-qualification. If it fulfilled the criteria then the second one is to be opened for considering the financial bid. Accordingly the petitioner
and two other tenderers submitted their tenders in two covers. The petitioner's and another tenderer Joint Venture of Villayati Ram Mittal Rash
Builder's, pre-qualification bids have not been found by the respondents to be fulfilling the prescribed qualification criteria and therefore they have
not been able to make it to come within the consideration zone of financial bids and as such are out of the competition whereas the third tenderer
HCC Limited whose pre-qualification bid has been found by the respondents in order alone is in the consideration zone for grant of contract and
his financial bid is under consideration.
Aggrieved by the rejection of his pre-qualification bid by the respondent the petitioner seeks to invoke the powers of this Court vested under
Article 226 of the Constitution of India read with Section 103 of J. and K. Constitution by the present writ petition.
The case of the petitioner is that his pre-qualification bid meets the prescribed qualification but he has illegally and arbitrarily been thrown out of
the competition while stand of the respondent is that he has failed to meet the prescribed qualifications as such his ouster from the competition is
valid.
As per Section 3 Qualification Information the bidders are required to furnish the information in pre-qualification bid relating to the status of the
bidder, works of similar nature completed as prime contractor over last five years, on going works, works for which bids already submitted etc.
Section 2 Instruction to Bidders of the Tender Document in Clause 4 provides for the qualification of the bidder. Clauses 4.4. A and 4.4.A.1 (a
and b) dealing with qualification of Joint Venture Bidders which are relevant herein this case read as follows :-
4.4.A. to qualify for award of contract, each bidder would have in the last five years :
a) achieved in any year a minimum financial turnover (in all cases of civil engineering construction works only) volume of construction work of Rs.
140 crores. The turnover will be indexed at the rate of 8 per cent for a year;
b) Satisfactorily completed, as prima contractor, at least one similar work equal in value to 1 /3rd of the advertised cost of work for which the bid
is invited, or such higher amount, as may be specified in Appendix to ITB.
4.4.A. 1. Qualifying criteria for Joint Venture :
a) The joint venture must satisfy collectively the criteria of Sub-clause 4.4.A of the bidding document. For this purpose the following date of each
member of the joint, venture may be added together to meet the collective qualifying criteria :
i) Minimum annual financial turnover considering the sum of the maximum financial turnover of each partners in any one of the last five years (in all
classes of civil engineering construction works only), amount indicated in 4.4.A. above;
ii) Minimum value of one similar work;
b) The major partner shall meet not less than 50% of the following qualifying criteria:
i) Minimum annual financial turnover, amount indicated in 4.4.A above;
ii) Minimum value of one similar work, value indicated in 4.4.A above.
The petitioner-a joint venture, furnished the information of his completed works and on going works. As per Clause 4.4.A (b)(supra) the bidder
is required to have satisfactorily completed at least one similar work in the value of 1/3rd of the advertised cost of the work i.e. value of at least
49.366 crores for becoming eligible for consideration of his financial bid.
By now it stands firmly settled that the terms of invitation of tenders are not open to judicial review as the court does not have the expertise to
correct the administrative decisions nor it can sit as a court of appeal. The award of a contract by the State is a commercial transaction and like a
private party the State can also choose Its own method and terms to arrive at a decision with regard to grant of a contract. The State must have
freedom of contract. The only distinction between the private party and State for the purpose of awarding of the contract is that the decision of a
private party is not open to judicial scrutiny in writ Jurisdiction but the decision of the State can be tested by the Court to see whether it meets the
standards of reasonableness and is free from arbitrariness, not affected by bias or actuated by mala fide, meaning thereby that the decision by itself
is not open to judicial scrutiny but the process by which such decision has been arrived at can be examined by the Court to rule out arbitrariness,
mala fide or bias or unreasonableness and it can interfere if it is found vitiated by mala fide, arbitrariness and unreasonableness. The State in
exercise of its administrative power can prescribe criteria for eligibility for awarding a contract, and if it does so, then it is bound to follow the
criteria strictly for deciding as to whether a bidder/tenderer is eligible for award of a contract. In Air India Ltd. Vs. Cochin Int., Airport Ltd. and
Others, the Supreme Court has observed as follows :-
The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at
commercial decision considerations that are paramount are commercial considerations. The State can choose its own method to arrive at a
decision. It can fix Its own terms of Invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding
to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract, It is free to grant any relaxation, for
bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the
lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms; standards and procedures laid down by
them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the Court can examine the decision-making
process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness.
And also in Directorate of Education and Others Vs. Educomp Datamatics Ltd. and Others, it has been held (para 12) :-
It has clearly been held In these decisions that the terms of the invitation to tender are not open to judicial scrutiny the same being in the realm of
contract. That the Government must have a free hand in setting the terms of the tender. It must have reasonable play In its joints as a necessary
concomitant for an administrative body in an administrative sphere. The courts would interfere with the administrative policy decision only it. is
arbitrary, discriminatory, mala fide or actuated by bias. It is entitled to pragmatic adjustments, which may be called for by the particular
circumstances. The Courts cannot strike down the term of the tender prescribed by the Government because it feels that some other terms in the
tender would have been fairer, wiser or logical. The Court can interfere only if the policy decision is arbitrary, discriminatory or mala fide.
The pre-qualification condition prescribed here is the satisfactory completion of a work of same nature of the 1/3rd value of the advertised cost
of the work i.e. the value of at least 49.366 crores. To meet the eligibility criteria the petitioner-joint venture has indicated eight completed works
which are :-
SH-27 connecting town of Indore-Sanward-Khandwa-Burhanpur-Edal; abad within the State of Madhya Pradesh within Km chainage 2.60
Km.to 203.00 Kms. (BOT basis);
Construction of infrastructures works project;
Four laning and strengthening Rajahmundry-Dharmavararn section of NH-5 (Ch. Km. 200.000 to Km. 253.000) in the State of Andhra
Pradesh contract package AP-15 of NHIA;
Widening and strengthening of Thokapalli-Nandyal Road;
Construction of Housing Colony BHEL MIG Employees Co-operative Housing Society Ltd. Phase-II;
Construction of foundation for Gantry Towers, Equipment support structures, shunt reactors, Auxilliary Transporters etc. at 4300 KV Switchyat
Gazwaka.
Heavy Periodic maintenance Hyderabad Inner Ring Road from Km. 25/0 to 30/7.
Const, of Kalli-Amwri-Semra road including bridges and culverts. Total length 9.00 Km. in Dhamtari Dist. (Chhatishgarh).
The petitioner has also indicated the following work as 'ongoing works':-
Four laning and strengthening of existing two lane carriage way of NH5 from Srikulam to Palasa;
2.1 Urandar lift irrigation scheme district Pune;
Construction of G. Single lane tunnels (7 tunnels) from T6 to T12 on Katra Laole section of the Udhampur Srinagar Baramulla Rail link Project;
Ambey Valley Sahara lake city construction of internals roads stage 1A IB, IC, ID and spine roads at Lonava for Sahara India Panwar;
Varangaon-Talwell Gat Parisar district water supply scheme package scheme.
Distribution net work for package SSW A4 (Dascroi Group) including transmission main, gravity main, RCC, ESR, UG sump with all elctro-
mechanical works under Suljam Drinking water supply scheme on Design build and operate basis.
The Empowered Committee in its 3rd meeting held on 23-6-2005 considered the pre-qualification bids of the three tenderers including the
petitioner. The committee found the petitioner and another bidder not qualified to bid for the contract as the work in instance at S. No. 1 of
completed works was found to be not complete being still in progress therefore does not meet the criteria prescribed. Whereas the other seven
works were either not of the similar nature to the work in issue or were of less value than the required value. The ongoing works indicated by the
petitioner admittedly were not taken into consideration by the Empowered Committee for determining his eligibility.
On 24-6-2005 the petitioner by his communication to the Joint Development Commissioner of J. & K. Government sought review of technical
evaluation of his tender. The petitioner submitted :-
In addition, the work of widening to 4/6 lane and upgrading of the existing 2 lane road, service roads and Auxilliary works, including minor bridges
(up to 30m) in the State of Andhra Pradesh between Km. 97 (Srikakulam) and Km. 171 (Palasa) of Visakhaptnam (Km.0) Lachapuram (Km
233) section of NH5 construction package AP-2 which was shown in the statement of works in progress while submitting our bid has actually
been completed as per the takeover certificate issued by M/s. Consulting Engineering Service (India) Pvt. Ltd. NH5 in JV with BECA Int. &
RITES Ltd. Which is received subsequent to the date of submission of tender. The work was done by SPCL-IVRCL (JV) in the ratio of 51.49
vide certificate issued by National Highways Authority of India, Srikulam dated 28-2-2005. The share of M/s. IVRL Infrastructures & Projects
Limited is (0.49 x Rs. 229.76) Rs. 112.58 crores. This amount also is more than the prescribed minimum of Rs. 49.40 crores.
When the reconsideration was not accorded the petitioner filed this petition. Let us refer to the experience/completion certificates issued in favour
of the petitioner for the works being relied upon by him to urge that they fulfill the criteria prescribed.
The experience certificate issued with regard to the work, survey, investigation, design, financing, procurement, planing, monitoring,
construction, operation, maintenance, strengthening and widening of existing two lane State Highways SH 27 the tender cost was Rs. 120 crores.
The date of commencement was 23-12-2001 and stipulated time of completion 18 months from the date of commencement. The completed value
of the work executed by the petitioner has been shown to be 115 crores, meaning thereby that work of 5.00 crores still remains to be executed.
The experience certificate carries the following remarks :-
The contractor deployed well-experienced engineers and sufficient plant, equipment and machinery required for this project. The entire design for
road constructions and all structures being done in house by the contractor and found satisfactory. The first and second phase of this project from
Km. 2.600 top Km. 72.00 and Km. 72.00 to 132.00 were completed in all respects and collection of toll from traffic was started.
From the bare perusal of the completion certificate referred to above it is manifest that the work has not been executed completely though
about 97% of the work stands satisfactorily completed. As regards the ongoing work ""four laning and strengthening of existing 2 lane carriage-way
NH5 is concerned the final takeover certificate certifies as follows :-
This is to certify that the contractors M/s. SPCL-IVRCL (JV) have substantially completed the permanent work entrusted to them in the above
mentioned 28.550 Kms. of the Section I on 20-10-2004, 10.510 Kms. of the Section II on 19-12-2004 and 32.195 Kms. of the Section III on
31-5-2005 in compliance with the conditions of contract and being used by the employer. All parts of the permanent works which were
substantially completed in the above sections have satisfactorily passed all the tests on completion as prescribed in the contract. This final taking
over certificate for the above sections is issued in accordance with Clause 42.2 of General Conditions of Contract. The defects liability period for
the above sections shall be as per the above table in accordance with Clause 49.1 of General Conditions of contract. All outstanding works as
attached in annexure are to be completed within a period as stipulated thereon.
From the above said two completion certificates of the said works it is clearly indicated that the petitioner has not completed the works in their
entirety thcugh substantial part of the works stands satisfactorily completed. The contention of Mr. Shah learned Counsel for the petitioner is that
the second work indicated, as ongoing work for having been substantially completed should also be taken into consideration for deciding the
eligibility of the petitioner though the same was submitted after the cut oft date. Mr. Shah submits that the principle of cut off date for submission of
the documents should not be strictly adhered to, going by the nature and magnitude of the contract, which involves huge expenditure from public
money, Mr. Shah contends that in order to settle the contract beneficially in the public interest even if the second work was shown as ongoing
work and could not be considered as completed work at the time the committee examined the bids for deciding eligibility but is the final bids are
yet to be opened, therefore, the decision of the committee for deciding the eligibility of the petitioner can be reviewed.
The contention of Mr. Naik, learned Advocate General, is that the committee formulated for examining the pre-qualification bids of the bidders
was required to take decision on the date fixed and notified. As on that date completion certificate regarding the second work was not available in
the pre-qualification bid of the petitioner the same could not have been taken into consideration, for deciding the question of eligibility of the
petitioner. The petitioner had himself shown the work as 'ongoing work."" He submits that reconsideration even otherwise would be unnecessary
because as per completion certificate issued in respect of the said work it is clear that this work too is incomplete. Only those works which had
satisfactorily been completed by the petitioner could be considered for adjudging his eligibility. Both the works, which are being relied by the
petitioner for meeting the criteria, are incomplete and therefore no exception can be taken to the decision of the committee for declaring the
petitioner ineligible for awarding of the contract.
If the pre-qualification conditions set-down by the respondents in the contract documents are to be strictly construed then the petitioner has no
case. Both the works being relied upon by him are incomplete and therefore fall short of the criteria prescribed. However, Mr. Shah contends that
the term used in the eligibility condition is ""satisfactorily completed"" and not the ""satisfactorily completed in all respects"" therefore some allowance
for the works marginal in character is permitted by the condition. He submits that 97% completion of the first work and substantial satisfactory
completion of the second work can be construed to be completed works as value of the completed works comes to much more than the value of
the work required to be completed. Mr. Shah contends that for interpreting the scope of the condition pedantic approach should not be ad opted.
I am not in agreement with Mr. Shah, learned Counsel for the petitioner. In a work of this nature and magnitude where the bidders who fulfill
pre-qualification alone are invited to bid the pre-qualification conditions must be scrupulously complied with otherwise it is bound to encourage and
provide for discrimination, arbitrariness and favoritism which are totally opposed to rule of law. The very purpose of stipulating qualifications in the
tender document is to ensure their compliance by strict adherence so that there is no scope left for discrimination, arbitrariness and bias Relaxation
or waive of condition by the State in favour of one bidder would create justifiable doubt in the minds of other bidders, would impair the rule of the
transparency and fairness and provide room for manipulation to suit the whims of the State in picking and choosing a bidder for awarding contract
as in the case of distributing bounty or charity. In the name of pedantic approach the criteria prescribed cannot be given ago by. If the eligibility
condition prescribes is 'completed' work then for acquiring eligibility the bidder has to show the completed work executed by him.
The dictionary meaning of 'complete' is - Bring to an end, finish, conclude (The New Shorter Oxford Dictionary). The word 'complete"" thus
means complete in all respects. As the works executed by the petitioners have not been fully completed, the pre-condition of the tender cannot be
said to have been satisfied. In Shapers Construction (P) Ltd. and Another Vs. Airport Authority of India and Another, a similar question arose for
consideration of their Lordships of the Supreme Court. Regarding a Government contract tender document had been issued and tender condition
No. 2 envisaged as under :-
The tenderer who wishes to apply shall have satisfactorily completed at least two runway/National highway, preferably rigid pavement works
involving considerable earth filling each of value Rs. 400 lakhs or one work of Rs. 600 lakhs during the last five years and have annual turnover of
Rs. 500 lakhs in each (1992-93, 1993-94 and 1994-95) and should possess computerized hot mix plant and concrete batching plant for executing
asphaltic and rigid pavement works.
It was contended by the petitioners that they had two contracts as envisaged therein. Though they had not totally completed the same, major part
of the work had been completed. Therefore they have fulfilled the conditions prescribed thereunder. It was urged that the petitioners thereby could
not be denied their right to compete in, apply for and be considered for assignment of the work under the tenders in dispute. Their Lordships of the
Supreme Court held that. there is no force in the contention. It was observed :-
The condition envisaged that he shall have satisfactorily completed. The word 'completed' would indicate that as on the date of application for the
tenders, he should have completed at least two runway/National highway works, preferably rigid pavement works involving considerable earth
filling. In other words, the completion of the work of at least two runway/National highway is a pre-condition. On their own admission, they had
not completed, though the major part of the work as professed by them is completed. Under these circumstances, the view taken by the High
Court cannot be said to be unwarranted.
It may be pointed out here that the High Court had dismissed the writ petition of the petitioner on the ground of not satisfying condition No. 2
of the tender conditions. The observations of their Lordships made in the above quoted authority apply with full force to the facts in issue in the
present case. The petitioner herein though have completed the works substantially, same have not been completed completely and therefore the
pre-condition of the tender document regarding satisfactory completion of works has not been satisfied.
Therefore, there is no merit in the writ petition, which is accordingly dismissed, along with connected CMPs.