Kranthi Constructions (M/s) and Another vs State of Madhya Pradesh and Others

Arun Mishra, J.

Petitioners M/S Kranthi Constructions and M/s P.L.R. construction Private Limited assailed their disqualification at Pre qualification stage. Prayer has also been made to open the envelope ''C'' containing price bid of the petitioner in accordance with law and the petition has been amended after the arguments were virtually heard in the matter, so as to incorporate the relief, that even if clause 8.10 (C) (III) of the pre Qualification Document is held to be applicable the said clause is unjust, inequitable, arbitrary and is liable to be struck down and cannot be allowed to stand.

Petitioners formed joint venture and submitted tender pursuant to Notice Inviting Tender (NIT) No. 01/SAC/2008-09 dated 13.5.2008 (P/I). The tenders were invited by Water Resources Department of Government of Madhya Pradesh from R.D.O 0m to 2700m and 315m to 6353m including drilling grouting diaphragm wall of Pench Diversion Project. The tenders were invited from A-5 Class-I contractors registered with the M.P. Water Resources Department. Estimated cost of the work was Rs. 8383.00 lac and the earnest money to be deposited was Rs. 42.00 lac. The tenders were available for sale up to 5.6.2008 and had to be submitted by 6.6.2008. The petitioner is a registered Class 1 and a special class contractor having executed major earth dams and allied works in Andhra Pradesh with an annual turn over of above 50 crores. Application was submitted on 16.5.2008 to participate in the tender process. Permission was accorded vide communication (P/3) dated 23.5.2008. Last date of submission of tenders was extended up to 15.7.2008. NIT was modified from time to time in the meantime. Pre Qualification Documents were to be opened on 22.7.08. Petitioner submitted the tender along with requisite demand draft by way of earnest money. All the tenders were not opened and NIT was cancelled.

Thereafter another NIT dt. 11.8.2008 (P/6) was issued for construction of Earth dam from R D O 0M to R D 1400 M and R.D. 1800M to 6376 M (except sluice at R.D. 457-5 M and 5100 M) including construction of Diaphragm Wall, Drilling Grouting, Parapet wall etc of Pench Diversion Projects. The estimated costs of the work was Rs. 9299.31 lac, the earnest money required to be deposited was Rs. 47 lac. Tenders were to be submitted by 29.8.2008. Petitioner was granted permission to participate in the tender processing vide letter (P/7) dt. 23.8.2008 of Chief Engineer. Tender was again submitted. Petitioner submitted a notarized Joint Venture Agreement (P/8) of M/S Kranthi Constructions and PLR Projects Pvt. Ltd. At the time of submission of the tender, the petitioner intimated the department that he shall soon be submitting proof of its registration as a Joint Venture with the Firm and Society/Registrar Companies stating that the same could not be submitted along with the tender due to paucity of time. The tender of the petitioner was duly received. The minimum requirement of pre-qualification was provided in clause 8.10 which includes qualification for construction of diaphragm wall. The bid capacity of the prospective bidder is provided in clause 9.1. Petitioner submitted the requisite documents in the aforesaid regard. The envelop ''A'' which was submitted contained the certificate by the department to the effect that the amount of earnest money is already in deposit along with the tender at first call and permission to purchase the tender papers. The envelope ''B'' contained the pre-qualification documents while the Envelope ''C contained the price bid. The envelops A& B were opened on 5.9.2008 as per the condition mentioned in the tender document. No evaluation of all the pre-qualification documents submitted by various tenderers was made on that day. This process started only on 8.9.2008 and continued thereafter without any formal declaration of its outcome. On 18.9.2008 the petitioner acquired knowledge that the pre-qualification documents submitted by him have been found to be insufficient by the department and he shall not be invited for the opening of the envelopes containing price bid. The petitioner has been informed that the technical details furnished by him do not meet the standard requirements. Thus, they have not been found to be eligible in pre-qualification stage. Petitioner has submitted that the action is illegal and arbitrary. It was the intention of the respondents that the petitioner should not participate in the tender process. For that purpose they purposely inserted the condition while granting permission to the petitioner to participate that he shall have to get its firm registered as a Joint Venture concern without affording him any time for the same. Action is arbitrary. After the final arguments were virtually heard, the petition has been amended so as to incorporate the fact that P. Laxmu Reddy, the earlier joint venture partner of petitioner No. 1 as well as M/S PLR Project Private Limited, petitioner No. 2 the present joint venture partner of the petitioner No. 1 are one and the same concern, clause 8.10 (C) (III) of the Pre Qualification Document would not be applicable since there is no justification for the respondents to divide the work experience of the petitioner No. 1 and petitioner No. 2 in equal share. In the alternative it is submitted that even if, the said clause is applicable, the same is wholly unjust, inequitable, arbitrary and is liable to be struck down.

A rejoinder has been filed on behalf of the petitioner. It is submitted that earlier P. Lakshmu Reddy was a proprietorship concern. The petitioner had been entering into joint ventures with it and had been executing different works. Subsequently, on 5.5.2006 M/S PLR Project Pvt. Ltd. was incorporated as a private limited company under the Companies Act, 1956. The said company acquired, took over and assumed the existing business of "P. Lakshmu Reddy" on an on going basis as apparent from Memorandum of Association and the Articles of Association (P/11 and P/12) respectively. Thus, the experience could not have been brushed aside which the petitioners were having. Alternatively, it is submitted that in the earlier joint venture which petitioner had entered into with P. Lakshmu Reddy was in the ratio of 40% and 60% respectively. Figures have been wrongly worked out. Calculation made has been assailed and applicability of clause 8.10 (C) (III). Wrong principle has been applied by the evaluation committee, firstly the experience of each of the joint venture could not have been divided, it could have been taken together and thereafter the percentage should have been worked out. The nature of work of VRCC diaphragm wall and that of RCC diaphragm wall is more or less the same and there is hardly any significant difference between them. The technology implied in construction of VRCC DW includes RCC DW and further additional technique. Thus the petitioners were having the requisite experience.

In the return field on behalf of the respondents No. 1 to 3 it is contended that in the first round the petitioner was not found qualified. However, tenders were again invited. Tenders document contained 3 envelops. Petitioners firm submitted its document as joint venture company with one P.L.R. Projects Pvt. Ltd. The ratio of profit and loss of the petitioner firm was 55% and other firm namely P.L.R. Projects was 45% in the joint venture agreement for the work in question. They have relied up on para 8.10 (C) (III) of the pre Qualification document. Requirement of the work was given in Pre-Qualification Form with respect to Excavation of all type of Strata, (sic) of Hard Rock, Drilling, Earth work in Dam embankment including watering and compaction, filter Blanket, Pitching, Rock toe and Cement concrete. Besides, qualification for construction of Diaphragm Wall required the experience certificate of similar nature of diaphragm wall issued by an officer not below the rank of Executive Engineer. The alternative, experience required was also mentioned with respect to the diaphragm wall. The requisite work experience of the petitioner venture was far low. The experience of both the partners of M/s Kranthi Constructions was considered in the ratio of their profit and loss only in terms of the clause 8.10 of Pre-Qualification Document and in terms of the procedure given for consideration. The petitioner has submitted a chart showing experience of different work in the financial year of 2007-08, but there was some manipulations in the certificates (R/2 and R/3). D.W. Mentioned at Serial No. 6 appears to be typed subsequently. It was later on mentioned that D.W. means Diaphragm Wall. Petitioner firm was rejected in pre-qualification round, for want of experience, for manipulation in the experience certificate and for not performing construction of diaphragm wall.

In the additional return field by respondents No. 1 to 3 it is submitted that for Drilling work the petitioner''s qualification has been worked out to 10677 running meter, which was found to be less than quantity required by the Department i.e. 10800 running meter. The figure of 10677 in respect to Drilling work has been worked out in accordance with the provisions contained in clause 8.10 (C) (III) of the pre Qualification Document. Joint Venture Agreement (AR/2) was submitted by the petitioners. Earlier Joint Venture comprised of M/s P. Laxmu Reddy whereas joint venture in question comprised of PLR project Pvt. Ltd. The answering respondents proceeded to calculate work experience by applying provisions contained in clause 8.10 (C) (III) of the Pre Qualification Document.

It is further averred in the additional return that the calculations done by the Department were submitted along with all the tender documents to the Empowered Committee which was competent to take final decision on the question of acceptance or rejection of tender. Said Committee comprises of 14 persons including departmental authorities and Minister In-charge of Works Department and is presided over by the Hon''ble Chief Minister. The tender in question was placed for consideration before the Committee in its 69th meeting held on 16.9.2008. It was decided by the committee that the petitioner did not fulfill the requirement of work experience on the aforesaid count. Minutes of meeting (AR/5) dated 25.9.08 have been placed on record. Decision has been taken bonafidely in terms of the tender documents. As per the tender document, tenderer was required to possess experience of constructing Diaphragm Wall RCC M-20, whereas certificate of VRCC was submitted which means Vibrating Reinforced Cement Concrete. The letter of Executive Engineer Irrigation Division Tirupati confirms the fact that the petitioner does not possess experience of similar nature of Diaphragm Wall inasmuch as the petitioner has carried out the work of VRCC Diaphragm Wall whereas requirement of work in question is of RCC Diaphragm Wall. It is also doubtful that the petitioner has even carried out the work of VRCC and DW.

In the 3rd additional return filed by the respondents No. 1 to 3, it is submitted that M/s Kranthi Constructions as well as P.L.R. Project Pvt. Ltd. have to quality jointed and individually. Bid Capacity of Kranthi Constructions works out to 248.32 lakh which is less than 5114.53 lakh (required bid capacity). Other facts have also been mentioned how the calculations has been worked out.

In the return filed by the respondent No. 4 stand of respondent No. 1 to 3 has been supported.

Shri Ravish Agrawal, learned Sr. counsel on behalf of the petitioner was heard on different dates. He has submitted that the calculation made by the respondents No. 1 to 3 is quite illegal. The petitioners were illegally disqualified in the pre-qualified stage, bid capacity was not properly assessed. Clause 8.10 (C) (III) of the tender mentioned in the Pre-qualification Document has been wrongly applied. Relying upon the decisions of the Apex Court in New Horizons Limited and Another Vs. Union of India (UOI) and Others, and Ganpati RV-Talleres Alegria Track Pvt. Ltd. Vs. Union of India (UOI) and Another, learned Senior Counsel has submitted that there was no necessity of dividing the work of the joint venture as experience gained by P. Laxmu Reddy as proprietorship was ultimately the experience of PLR Projects Pvt. Ltd. Firstly 50% experience was divided and thereafter out of 50 % further division was made of 45 % and 55 %. They have requisite experience resources men power including the bid capacity. There is artificial deduction by invocation of clause 8.10 (C) (III) of the Pre Qualification Document. Counsel has submitted that the experience could not have been divided at all. Alternatively, learned counsel has submitted that such a condition of dividing the work amounts to arbitrariness and qualified bidder has been rendered unqualified due to aforesaid arbitrary conditions. Thus same deserves to be struck down. Though the main thrust of the counsel''s submission is that the clause could not have been invoked in view of the aforesaid decisions of the Apex Court.

Shri R.D. Jain, learned Advocate General appearing with Ms. Sheetal Dubey, GA, on behalf of the State has submitted that the joint venture of the petitioners Kranthi Constructions and PLR was not pre-existing one. In any view of the matter clause 8.10 (C) (III) of the Pre Qualification Document was attracted to bid submitted by a joint venture, thus, the experience, resources, men power and machinery of each parties of the joint venture was required to be taken into account for evaluation only upto the extent that party was responsible for performing task under the proposed joint venture agreement. He has relied upon the calculation reflected in the return and has submitted that the bid capacity has also been rightly worked out in terms of clause 9.1. Annexure-XI (i) has also been referred to by the learned Advocate General, on the basis of which he has submitted that criteria for evaluation of bid is due consideration of financial turnover, physical turnover, bid capacity and bid capacity in terms has to be worked out on the maximum value of civil engineering works executed in any one year during the last five years was prescribed and also amount of works as per the formula given for assessing the bid capacity. Thus, not only the experience, but, with respect to turn over which is included in resources the petitioner was found deficient in several aspects. Petitioners were not having the experience of Rock toe, Drilling, Filter Blanket and Diaphragm Wall. He has also submitted that manipulated certificate defining the meaning of words ''DW'' which was not mentioned in the original certificate, which was issued and filed with the first tender. Petitioner has also filed other manipulated documents and has not done the correct calculation in the balance-sheet as apparent from the documents submitted by the petitioner, as such the petitioner was also otherwise disqualified for opening of the price bid. Petitioner has not come to the Court with clean hands. The certificate which was required to be filed for formation of joint venture was also not submitted by the petitioner in spite of grant of time. The condition 8.10 (C) (III) could not be said to be illegal or arbitrary. Learned Advocate General has relied upon the decisions in Tata Cellular Vs. Union of India, . Siemens Public Communication Networks Pvt. Ltd and anr. Vs. Union of India and ors, 2009 (1) SCJ 634 and B.S.N. Joshi and Sons Ltd. Vs. Nair Coal Services Ltd. and Others, .

Shri Rajendra Tiwari, learned Sr. counsel appearing with Shri R.K. Tripathi, on behalf of the respondent No. 4 has submitted that the clause 8.10 (C) (III) of the Pre Qualification Document has been rightly applied. Once having accepted the agreement, it is not open to assail the terms and conditions of tender which are contractual in nature. It is open to the respondents No. 1 to 3 to fix the terms and conditions of the tender, such terms and conditions applied to each tenderer and are not open to judicial review. He has also submitted that as the tenderer submitted the tender by forming joint venture, it was necessary to consider their experience, resources, men and machinery to the extent each of them was responsible for performing the task under the proposed joint venture agreement. In the instant case, joint venture agreement (AR/2) has been placed on record. It is submitted that if a different yardstick is applied in the case of the petitioner equity will be destroyed and action would become arbitrary in case experience is not adjudged of all the players of the game in its midst as per the condition provided in clause 8.10 (C) (III). Said condition cannot be said to be illegal or arbitrary in any manner, otherwise it would not be possible to arrive at exact figure. There is a logic behind in working out the experience of each of the party to the joint venture to the extent that party was responsible for performing the task under the proposed joint venture agreement.

Before examination of rival submissions, we deem it appropriate to place on record certain facts which are relevant for decision. A joint venture has been formed by M/s Kranti Constructions and P.L.R. Projects Pvt. Ltd. For performing the task under the NIT in question. Proposed joint venture agreement (AR/2) has been submitted. Clause 1 of the joint venture agreement provides for formation of joint venture for the work in question. Clause 2 provides that the first party shall be authorized to incur liabilities and receive instructions for and on behalf of any and all the partner shall be done exclusively with the first party all the tax liability shall be met by the first party. With respect to profit sharing it is provided in clause 3 that the first party Kranthi Constructions shall have the profit and loss sharing to the extent of 55 % and the second party PLR Projects Pvt. Ltd. as provided in clause 3 (b) shall have 45% sharing in profit and loss. Clause 4 is also material, which provides for administrative arrangement participation, financial arrangement scope of activities to be performed and responsibilities for the execution of the work of the each party shall be 55 % to the first party and 45 % to the second party. Clause 2, 3 and 4 are relevant, are quoted below:

That all the parties shall be liable jointly and severally for the satisfactory Execution of contract in all respects in accordance with term and conditions of the contract And the FIRST PARTY shall be authorized to incur liabilities and receive instructions for and on behalf of any and all the partner shall be done exclusively with the FIRST PARTY all the tax liabilities shall be met by the FIRST PARTY.

PROFIT SHARING:

The shares of both the parties in the net profit and losses of the joint Venture shall be as follows:

(a) First Party Kranthi Constructions 55 %

(b) Second party PLR Projects Pvt. Ltd. 45%

The proposed administrative arrangement participation, financial arrangement scope of activities to be performed and responsibilities for the execution of the work of the Each party shall be as under :

a) First party 55 %

b) Second party 45 %

The pre Qualification Document contained a clause 3.5 dealing with situation if tender is submitted by the joint venture of two or more firms, Clause 3.5 (a) provides that Joint venture should be only from those firms who have experience in construction of civil works of similar nature. There are other requirements given in clause 3.5 sub-clause (b) to (g). Eligibility requirement is dealt with in clause 8. Clause 8.1 provides that tenderers have to submit satisfactory evidence to the department of their eligibility and of their capability and adequacy of the resources to carry out the contract effectively. There are other requirements culled out from clause 8.2 to 8.9 Various requirements have to be fulfilled. Clause 8.10 deals with the minimum requirement of pre-qualification. Minimum performance in any one of the last five years should have been executed as mentioned in clause 8.10. Clause 8.10.II-A deals with the minimum quantities of excavation of all type of strata, excavation of Hard Rock, Drilling, Earth work in Dam embankment including watering and compaction, Filter Blanket, Pitching & Rock toe and Cement concrete. Qualification for construction of diaphragm wall has been dealt in clause 18.10 II-B. Clause 8.10 (B) provides that the turnover of the year prior to 2007-2008 shall be given additional weight age of 10 % to bring them to price level of 2007-2008. The weightage shall be in the matter prescribed there under.

Clause 8.10 (c) provides even though the tenderer satisfied the above, they are subject to be disqualified if they have made untrue or falls representation in the forms, statements and attachments furnished in response to this clause. Clause 8.10 (C) (III) provides with respect to mode of assessment regards joint venture. Clause 8.10 (C) (III) is quoted below:

8.10(C)(III). As regards joint venture, the experience, the resources, men and machinery of each party to the joint Venture will be taken in to account for evaluation only, up to the extent that party is responsible for performing task, under the proposed joint venture agreement.

Bid capacity is provided in clause 9.1 which reads as under:

9.1 Bid Capacity : Applicant who met the minimum qualifying criteria evaluation as stated above are to be evaluated further for bid capacity as under:

Bid capacity = 1.5A x B-C

Where:

A = Maximum value of civil engineering works executed in any one year during the last five years updated to price level of 2007

B = Proposed completion period in year.

C = Value of existing commitments of works

(Updated to 2007 price level)

Clause 10 (1) clearly provides that it is only after evaluation of pre-qualification information the list of pre-qualified tenders will be approved by Govt. of M.P. Clause 10.2. provides that the pre-qualified tenderers shall be informed by the Chief Engineer, Wainganga Basin, Water Resources Department Seoni (M.P.) through a registered letter, the place date and time when their tender (price bid) will be opened so as to enable them to be present at the time when the tenders are opened. Annexure-XI (i) deals with criteria for evaluation of the bid, Annexure-XI (i) is quoted in extenso:

Annexure-XI (i)

(Refer clause 4.0 and 8.10)

(Criteria for evaluation capacity of tenderers for Pre-qualification tenderers (bid) in M.P. Water Resources Deptt.)

Name of Division: Executive Engineer Pench Diversion Division Chourai District Chhindwra

Name of Work: Construction of Earth dam from RD 0M. to RD 1400M & RD 1800 M to RD 6376 M. (Except Sluice at RD 457.S M & RD 5100 M), including construction of Diaphragm wall, Drilling, Grouting, Parapet wall etc. of Pench Diversion Project. (IInd Call)

0 CRITERIA FOR EVALUATION OF BID

1 Experience

Tenderer should be a civil Engineer contractor having experience of Civil Engineering construction works or having available services of graduate civil engineer and should have successfully executed works during last 5 years from 2003-2004 to 2007-2008 of similar nature and magnitude.

2 Financial Turnover:

Should have a minimum financial turnover of the amount worked out as under in any one year during the last five years from 2003-2004 to 2007-2008

Amount put to tender x 0.5 =

Period of completion in year (10% weight age per year shall be given to bring the financial turnover to present price level.)

3 Physical turnover:

Should have executed minimum satisfactory quantum or Work out as under for main item of works involved in the contract is given in annexure.

Quantity of main items arrived after clubbing x 0.5

Period of completion

0 Bid Capacity:

Tenderer (Bidder) who meet the minimum qualification criteria stipulated in 1.1.1.2 & 1.3 above shall be further evaluated for Assessed bid capacity as under:

Assessed bid capacity = 1.5A x B-C

Where: A = Maximum value of civil engineering works executed in any one year during the last five years (10% weightage per year shall be given to bring the value of work executed to present Price level).

B = Prescribed completion period in year.

C = Amount of works in hand at present.

* 1. Amended as per M.P W RD No 35/37/96/31/2.142 Dated 10.11.2000

Amended as per Govt. of M.P. Major Control Board Bhopal vide No. 49/Vividh/Ni Main/391/94 658 Dated 15.7.2004 Evaluation of bid capacity will be decided at the time of Pre-qualification. If the probable amount of contract is more than bid capacity, the ender of such contractor will not be taken in to consideration.

Criteria for evaluation of bid is given in nutshell in Annexure- XI (i) which is given in details in the Pre-Qualification Document in clause 8 and 9. The respondents No. 1 to 3 have worked out the bid capacity of the petitioner of which calculation has been given in Annexure-R/AA 9 which has been worked out in the following manner:

BID CAPACITY

As per clause 8.10 (B)

Year

Turn Over

Witrh Watage Turn Over

As per clause 8.10 (C) (III)

Total turn over (6 + 7)

M/s Kranti Individual

M/s P.L.R. Individual

M/s Kranti

M/s P.L.R.

M/s Kranti 55% of col

Ms. P.L.R. 45% of col

1

2

3

4

5

6

7

8

03-04

8

19

61

8

08

11

19

04-05

24

29

75

92

76

26

02

05-06

72

6

34

35

64

31

94

06-07

26

34

89

77

29

2

49

BALANCE WORK IN HAND AS PER INFORMATION FURNISHED BY PETITIONERS IN ANNEX-VI (PARA 8.5)

M/s Kranti

M/s P.L.R.

J.V.

M/s Kranti 55%

Ms. P.L.R. 45%

As per J.V

Total

82

77

15

15

95

15

25

BID CAPACITY

5 x MAX TURN OVER PERIOD - BALANCE WORK IN HAND

5 x 8547.94 x 2-18660.25 = 6983.57

VALUE OF WORK = 9299.32 lakhs

The bid capacity Rs. 6983.57 is less than P.A.C. Rs 9299.32 lakhs hence disqualified in bid capacity.

The bid capacity of the joint venture of M/s Kranthi Construction and M/s P.L.R. After calculation has been found to be less than PAC (probable amount of construction). Thus the petitioners have been disqualified in the bid capacity. It is also apparent in the table given in additional return dated 17.11.2008 that drilling work, Filter blanket work, pitching and diaphragm work was found to be deficient as apparent from the table.

In para 10 of additional return following table has been given of Drilling Work:

Quantity as per certificate

Work experience allotted to M/s Kranti Constructions @ 50 %

Work experience allotted to M/s PLR Project Pvt. Ltd. @ 50%

9720

4860

4860

11634

5817

5817

Total

10677

10677

Experience Calculated as per Clause 8.10

M/s Kranti Constructions @55%

M/s PLR Project Pvt. Ltd. @ 45%

5872

4805

Total (5852 + 4805) = 10677

It will thus be seen that total work experience in respect of drilling work executed by the joint venture was found to be 10677 which was less than required quantity of 10800.

In para 11 the following table has been mentioned of filter blanket work:

FILTER BLANKET

Quantity as per certificate

Work experience allotted to M/s Kranti Constructions @ 50%

Work experience allotted to M/s PLR Project Pvt. Ltd. @ 50%

135595

67797

67797

177866

88933

88933

3984

3984

-

5376

5376

-

6945

6945

-

Total

173035

156730

Experience Calculated as per Clause 8.10

M/s Kranti Constructions @55%

M/s PLR Project Pvt. Ltd. @ 45 %

95169

70529

Total (95169 + 70529) = 165698

It will thus be seen that total experience of Filter Blanket work of the petitioner''s joint venture was found to be 165698 which was far below the work experience required by the Department of 183200 Cu. M.

In para 12 of addition return following table of pitching and Rock Toe work has been given:

Quantity as per certificate

Work experience allotted to M/s Kranti Constructions @ 50 %

Work experience allotted to M/s PLR Project Pvt. Ltd. @ 50 %

34828

17414

17414

25427

12713

12713

5504

5504

-

5788

5788

-

9107

9107

-

6037

6037

7288

-

7288

Total

56563

37415

Experience Calculated as per Clause 8.10

M/s Kranti Constructions @ 55%

M/s PLR Project Pvt. Ltd. @ 45%

31110

16837

Total (31110 + 16837) = 47946

The quantity of Pitching & Rock Toe work was found to be 47946 whereas required quantity was 72000 Cu. M.

The main question for consideration which emerges is whether in the case of joint venture in order to find out the experience, resources, men and machinery of each party to joint venture the division which has been made could have been done up to the extent that party was responsible for performing the task under the proposed joint venture agreement. On facts we deem it appropriate to mention that in fact the experience of P.L.R. Construction Limited, P. Laxmu Reddy, M/s Kranthi Construction Limited which was submitted by the proposed joint venture of P.L.R. And Kranthi Construction has been taken into consideration. No part of experience has been left out, but in order to work out experience, resources, men and machinery of each party to joint venture firstly their capacity has been worked out based on experience, resources, men and machinery and it has been worked out in the instant case to be 50-50% of both the joint venture Kranthi Construction as well as P.L.R. However, in terms of clause 8.10 (C) (III) experience of each party responsible for performing the task to the extent that party is responsible under the proposed joint venture agreement has to be worked out. For which it was necessary to find out the experience of each of the partner of joint venture company M/s Kranthi Construction as well as P.L.R. Construction Pvt. Ltd. In the experience of P.L.R the experience acquired by P. Laxmu Reddy as proprietor and submitted for consideration has also been included. The working out of experience, resources, men and machinery of each party was necessary to be worked out in terms of percentage as it was to be taken out in evaluation only up to the extent that party was responsible for performing the task under the joint venture agreement. In the instant case proposed joint venture agreement clearly provides that the financial arrangement scope of activities to be performed of each party shall be 55 % of first party and 45% of the second party. The share of both the parties in the net profit and losses was also in that proportion. Thus we find nothing ohnoxious in the aforesaid condition 8.10 (C)(III). It cannot be said to be illegal or arbitrary. It is in fact a mode of working out the experience, the resources, men and machinery of each party to the joint venture to be taken in to account for evaluation only, up to the existent that party is responsible for performing task under proposed joint venture. Considering the facts, it was having direct nexus with the proposed joint venture agreement (AR/2)where aforesaid clause (4) has been mentioned which clearly makes out that the condition in clause 8.10 (C)(III) is to take care of the such kind of stipulation in the joint venture agreement where the participation, financial arrangement scope of activities is limited to the extent mentioned in the joint venture agreement. Thus, there is nothing arbitrary in taking into consideration for the purpose of evaluation experience, resources, men and machinery of each party up to the extent that party is responsible for performing task. Thus, the decision taken by the respondents is in the tune with the aforesaid proposed joint venture agreement submitted by the petitioners themselves. We find no hesitation to hold that the aforesaid condition is legal and valid and by no stretch of imagination, it could have been made inapplicable in the case of the petitioner. Case was tried to be made out from the averment made in para 6, 7, 8 of the additional return so as to cull out the reason for dividing experience. No doubt about it in pars 6, 7 and 8 it has been mentioned that M/s P. Laxmu Reddy and P.L.R. Are two different entities, as such experience has been worked out in the manner in which it has been mentioned, however, a plain reading of clause 8.10 (C) (III) makes it clear that experience of each of partner of joint venture has to be worked out and considered to the extent they are responsible in proposed joint venture. Even otherwise as none of the part of the experience gained by P. Laxmi Reddy as proprietor, M/s P.L.R. And M/s Kranthi Construction has been ignored in any manner, however, it was necessary for evaluation of the experience, resources men and machinery upto the extent that party is responsible for performing task, to find out the individual firms experience, resources, men and machinery and also to take it into consideration to the extent it was responsible for performing the task. That has been precisely done in the instant case. Then it has been combined of both partners.

Though on the face of it the submission appears to be attractive that experience could not have been divided, but, it is not only the experience which is taken into consideration, but, resources in the firm by considering maximum turn over for the preceding five years, additional weightage of 10 % is given as provided in clause 8.10 (B). The bid capacity is worked out under clause 9.1 maximum value of civil engineering works divided by proposed completion period after subtracting from proposed completion period the value of existing commitments works updated to 2007 price level, thus, the formula of bid capacity = 1.5 x B - C, takes into consideration the resources also. Resources have also found to be deficient in terms of clause 8.10 (C) (III).

Shri Ravish Agrawal, learned Sr. counsel has heavily placed reliance upon the decision of the Apex Court in New Horizons Limited and anr. Vs. Union of India and ors. (supra) in which the Apex court has considered the requirement regarding experience as set out in the advertisement inviting tenders was a condition about eligibility for consideration of the tender, the said requirement regarding experience cannot be construed to mean that the said experience should be of the tenderer in his name only. The terms and conditions of such a document have to be construed from the standpoint of a prudent businessman. Such credentials are to be examined from a commercial point of view which means that if the contract is to be entered with a company he will look into the background of the company and the persons who are in control of the same and their capacity of execute the work. He would go not by the name of the company but by the persons behind the company. While keeping in view the past experience he would also take note of the present state of affairs and the equipment and resources at the disposal of the company. The same has to be the approach of the authorities while considering a tender received in response to the advertisement issued. This would require that first the terms of the offer must be examined and if they are found satisfactory the next step would be to consider the credentials of the tenderer and his ability to perform the work to be entrusted. For judging the credentials past experience will have to be considered along with the present state of equipment and resources available with the tenderer. Past experience may not be of much help if the machinery and equipment is outdated. Conversely lack of experience may be made good by improved technology and better equipment. The High Court erred in taking the view that the appellant was not a joint venture and that there was only certain amount of equity participation by a foreign company in it. The express joint venture is more frequently used in the United States. It connotes a legal entity in the nature of a partnership engaged in the joint undertaking of a particular transaction for mutual profit or an association of persons or companies jointly undertaking some commercial enterprise wherein all contribute assets and share risks. It requires a community of interest in the performance of the subject-matter, a right to direct and govern the policy in connection therewith, and duty, which may be altered by agreement, to share both in profit and losses. A joint venture can take the form of a corporation wherein two or more persons or companies may join together. The conclusion would not be different event if the matter is approached purely from the legal standpoint. In law, a company is a legal entity distinct from its members. By the process, commonly described as "lifting the veil", the law either goes behind the corporate personality to the individual members or ignores the separate personality of each company in favour of the economic entity constituted by a group of associated companies. This course is adopted, when it is found that the principles of corporate personality is too flagrantly opposed to justice, convenience or the interest of the Revenue. There are cases where the court has looked behind the facade of the company and its place of registration in order to determine its residence and for this purpose the test laid down is the place of the central management and control. Seeing through the veil of the appellant it will be found that as a result of reorganization the company was functioning as a joint venture wherein the Indian group held 60% shares and the foreign-based company held 40% shares. Both the groups have contributed towards the resources of the joint venture in the form of machines, equipment and expertise in the field. The Company is in the nature of a partnership between the Indian group of companies and the Singapore-based company who have jointly undertaken this commercial enterprise wherein they will contribute to the assets and share the risks. In respect of such a joint venture company the experience of the company can only mean the experience of the constituents of the joint venture, i.e., the Indian group of companies and the foreign-based company. Therefore, for the purpose of considering whether the appellant had experience as contemplated by the advertisement for inviting tenders, the experience of the constituents of the appellant, i.e. Indian group of companies and the foreign-based company had to be taken into consideration. The said experience had been ignored by the Tender Evaluation Committee on an erroneous view that the said experience was not in the name of appellant and the appellant did not fulfill the conditions about eligibility for the award of the contract. In proceeding on that basis the Tender Evaluation Committee has misguided itself about the true legal position as well as the terms and conditions prescribed for submission of tenders contained in the notice for inviting tenders.

In the instant case, applying the aforesaid ratio it is apparent that the experience of both the constituents joint venture has been taken into consideration and calculated including that of P. Laxmu Reddy into that of M/s R.L.R. Constructions and M/s Kranthi Constructions and thereafter the evaluation has been made in terms of clause 8.10 (C) (III), no part of experience has been ignored in the instant case, but, it has been worked out in view of proposed joint venture agreement, thus applying the aforesaid ratio of the decision, we find that the entire experience has been considered, however, to the extent as envisaged in the aforesaid clause, which clause is not found to be arbitrary considering the proposed joint venture agreement filed by petitioners themselves, in which their liabilities, resources etc. have been limited to the extent they have undertaken the liability/responsibility to perform the work under the joint venture agreement. In fact after addition of figures of both partners of joint venture agreement they have been found to be deficient.

Shri Ravish Agrawal, learned Sr. counsel has also relied upon the decision of the Apex Court in Ganpati RV-Talleres Alegria Track Pvt. Ltd. vs. Union of India and Anr. (supra) in which the decision of New Horizons Limited and Ann Vs. Union of India and Ors. (supra) has been reiterated. On facts the evaluation committee was found to have committed error in not considering material aspects while applying the eligibility criteria as such the case was remitted. However, on facts the figures which have been mentioned in various tables are not disputed, no part has been left out, but, only dispute is about the applicability of clause 8.10 (C) (III). We have also found that the evaluation has been made in terms of the aforesaid clause which has been made in accordance with the terms and conditions of the tender documents which are also otherwise cannot be open to judicial review as laid down by the Apex Court in Tata Cellular Vs. Union of India, in which the Apex Court has laid down the terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. The Apex court has summed up the conclusion in para 113 thus:

The principles deducible from the above are:

(1) The modern trend points to judicial restraint in administrative action.

(2) The Court does not sit as a court of appeal but merely reviews the manner in which the decision was made.

(3) The Court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.

(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.

(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere for quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principles of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.

(6) Quashing decisions may imposed heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.

In contractual matter, the Court has to consider the method and manner in which the decision has been taken. It has to be adjudged in the facts and circumstances of the particular case whether something has been gone wrong of a nature and degree which requires its intervention. What is this charming principle of Wednesbury unreasonableness ? Is it a magical formula, as observed in R.V. Askew, 98 ER 139. This Court has taken note of Wednesbury principle in P.S. System (India) Ltd. vs. Aristocraft International Pvt. Ltd., AIR 2001 SC 135, thus :

The Court is concerned with the manner in which the decisions have been taken and fairness has to be adjudged in the facts and circumstances of a particular case. Illegality, irrationality and procedural impropriety etc. can be the grounds. However, golder rules is that the Court should "consider whether something has gone wrong of a nature and degree which requires its intervention." Charming principles of Wednesbury unreasonableness cannot be used as a magical formula as observed in R. Askew, 1998 ER 139, it is only when arbitrary, capricious or biased decision is there, interference may be made. Their Lordships referred to Wednesbury principle - The Supreme Court Practice 1993, Vol I, pp. 849-850 as under:

Wednesbury principle - A decision of a public authority will be liable to be quashed or otherwise dealt with by an appropriate order in judicial review proceeding where the Court concludes that the decision is such that no authority properly directing itself on the relevant law and acting reasonably could have reached it. (Associated Provincial Picture Houses Ltd. vs. Wednesbury Corpn., (1947) 2 All ER 680, per Lord Greene, M.P.)

Irrationality may occur when weight of the facts pointing to one course of action is overwhelming, then a decision the other way, cannot be upheld. Action can be unreasonable if it is unequal in its operation as between different classes. It is not for the Court to adhere to entrust the case to the public utility operation. Court has also to taken into consideration that it is not an expert while assessing the technical matter. In the words of Lord Denning it is the duty of the Court to supervise that the decision making body acts fairly in accordance with law and interprets correctly and also to see whether its decisions are influenced by ulterior consideration and whether the decision is so unreasonable that a reasonable person would not come to it and whether the decision making body had gone outside its powers or misconstrued the extent of its powers. The Court can always make an interference. This is the law culled out from the decisions in Healey vs. Minister of Health, (1955) 1 QB 221: (1954) 3 All ER 449, H.K. (an infant), Re, (1967) 2 QB 617 and R. v. Gaming Board for Great Britain, ex p Benaim and Khaida, (1970) 2 QB 417, Punton v. Ministry Of Pensions and National Insurance, (1963) 1 All ER 275, Ashbridge Investments Ltd. vs. Minister of Housing and Local Government, (1965) 3 All ER 371, Padfield v. Minister of Agriculture, Fisheries and Food, (1968)1 All ER 694.

Applying the aforesaid principles it cannot be said that the decision has been taken illegally, arbitrarily or irrationally or illegality has been committed. The decision has been taken in terms and conditions of the Pre Qualification Documents.

The Apex court in M/s B.S.N. Joshi & Sons Ltd. vs. Nair Coal Services Ltd. & ors. (supra) has laid down the principles of judicial review in contractual matter which have been summarized in para 68 thus:

(i) If there are essential conditions, the same must be adhered to;

(ii) If there is no power of general relaxation, ordinarily the same shall not be exercised and the principle of strict compliance would be applied where it is possible for all the parties to comply with all such conditions fully;

(iii) If, however, a deviation is made in relation to all the parties in regard to any of such conditions, ordinarily again a power of relaxation may be held to be existing;

(iv) The parties who have taken the benefit of such relaxation should not ordinarily be allowed to take a different stand in relation to compliance of another part of tender contract, particularly when he was also not in a position to comply with all the conditions of tender fully, unless the Court otherwise finds relaxation of a condition which being essential in nature could not be relaxed and thus the same was wholly illegal and without jurisdiction;

(v) When a decision is taken by the appropriate authority upon due. consideration of the tender document submitted by all the tenderers on their own merits and if it is ultimately found that successful bidders had in fact substantially complied with the purport and object for which essential conditions were laid down, the same may not ordinarily be interfered with;

(vi) The contractors cannot form a cartel. If despite the same, their bids are considered and they are given an offer to match with the rates quoted by the lowest tenderer, public interest, would be given priority;

(vii) Where a decision has been taken purely on public interest, the Court ordinarily should exercised judicial restraint.

Applying the aforesaid principles the decision cannot be termed to be illegal or arbitrary or violative of any of the aforesaid propositions. Thus, no case for interference is made out in the petition.

The Apex Court in Siemens Public Communication Networks Pvt. Ltd. and anr. Vs. Union of India and ors. (supra) has laid down that for invoking judicial review in the matters relating to tenders or award of contracts, certain special features have to be considered. A contract is a commercial transaction and evaluating tenders and warding contracts are essentially commercial functions. If the decision relating to award of contracts is bonafide and is in public interest, Courts will not exercise the power of judicial review and interfere even if it is accepted for the sake of argument that there is a procedural lacuna.

Resultantly, the writ petition being devoid of merits is hereby dismissed. Interim stay is vacated. Parties to bear their own costs as incurred in the petition.