National India Construction Co. vs State of J&K

Tashi Rabstan, J. - Through the medium of OWP No. 910/2015, the petitioner is seeking quashing of NIT No. CEJ/PMGSY/344, dated

13.06.2015 for construction of road from Basantgarh to Khennad Block Dudu, NIT No. CEJ/PMGSY/344 of 2015-16, dated 13.06.2015 for

construction of road from Kainthgali Bariote road km 26 to Lower Basnote, Block Dudu and NIT No. CEJ/PMGSY/345 of 2015-16, dated

15.06.2015 pertaining to construction of road from Dera Baba to Tanda Block Reasi. In OWP No. 219/2013 also, the petitioner has questioned

the same contract works.

Since common question of law and facts are involved in both the petitions and pertain to the same contract works, therefore, both the petitions

are being disposed of by this common judgment.

The facts, as averred in the writ petitions, are that the petitioner-firm has been undertaking a number of road works under Pradhan Mantri Gram

Sadak Yojana Scheme in the State of J&K since 2005. It is averred that in pursuance to Notice Inviting Tender No. 01/PMGSY/CE/J, dated

05.05.2010, the petitioner-firm applied for six contract works and it was found to be the lowest tenderer in as many as three contract works. It is

averred that the issuance of formal allotment order got delayed as the Law Department opined that the Partnership Deed executed between the

partners of the petitioner-firm in the year 2005 was not a valid document as the same had not been registered in the Court of Law nor registered

with the Registrar of Firms, however, the subsequent deed dated 31.05.2010 executed between the partners of petitioner-firm was a valid deed. It

is averred that based on the opinion of the Law Department, respondent No. 2 issued fresh NIT dated 24.11.2011, against which petitioner-firm

filed OWP No. 1620/2011 and the same got stayed. Further, it is averred that, this Court vide judgment dated 30.11.2012 left it to the

respondents to take a final decision as regards the eligibility of the petitioner-firm to participate in the tendering process while taking into

consideration the works allotted to the petitioner-firm during the period 2005 to 2008. However, respondent No. 2 held that the Partnership Deed

of the petitioner-firm executed in the year 2005 was not a valid document as the same had not been registered in the Court of Law nor registered

with the Registrar of Firms. Respondent No. 2, however, opined that the Partnership Deed of 2010 of the petitioner-firm was a valid document,

but still the petitioner-firm could not be allowed to participate in the bidding process being a new firm. Thereafter, respondent No. 2 issued three

fresh NITs for the aforementioned works, which the petitioner-firm challenged in OWP No. 219/2013 (now the same has been clubbed with the

present petition). When OWP No. 219/2013, was listed before this Court on 20.03.2013, Mrs. Shekhar, learned counsel appearing for

respondents made a statement that the impugned NITs in the said writ petition are not being acted upon. It is averred that although while hearing

OWP No. 219/2013, learned counsel appearing for respondents assured the Court that the impugned NITs were not being acted upon and as the

said petition was pending for final hearing, the respondents issued fresh NITs bearing Nos. CEJ/PMGSY/344, dated 13.06.2015, No.

CEJ/PMGSY/344 of 2015-16, dated 13.06.2015 and No. CEJ/PMGSY/345 of 2015-16 dated 15.06.2015 for the same contract works, which

are already subject matter of OWP No. 219/2013. It is averred that aggrieved of the same, the petitioner-firm has filed OWP No. 910/2015,

challenging all the three NITs and this Court vide order dated 03.07.2015 directed that the impugned tendering process may be taken forward, but

no allotment shall be made. Since both the petitions pertain to the same contract works, this Court vide order dated 26.11.2015 directed to list the

same together.

The contention of learned counsel for petitioner-firm is that even if it is assumed that the partnership deed dated 22.11.2005 was not a valid

document, even then the petitioner-firm is eligible and entitled to participate in the tendering process in view of subsequent partnership deed dated

31.05.2010 registered in the Court of Law as also with the Registrar of Firms.

Objections have been filed on behalf of respondents. In the objections filed in OWP No. 219/2013, it is averred that in view of J&K

Registration Act, the partnership-deed dated 22 11.2005 was not a valid document as the same had not been registered in the Court of Law nor

with the Registrar of Firms, rather the same had been attested by the Notary.

In the objections filed in OWP No. 910/2015, it is averred that the bids of petitioner-firm came to be rejected in view of the fact that the

petitioner-firm did not fulfil the requirements regarding the required annual turnover for the last five years in terms of the SBD of their own

credentials. Further, it is averred that on the basis of the opinion of the Law Department, the petitioner-firm was held to be non-responsive.

Heard learned counsel appearing for the parties and perused the file.

A perusal of the objections filed in OWP No. 219/2013, reveals that no work was allotted to the petitioner-firm during the period 2005 to

2008, rather the same was allotted to one M/s. National India Construction Company between 2005 to 2008 which was a Pathankot based

company having its head office at 52/53 Block near SDM Court, Dalhousie Road, Pathankot. Whereas, the specific case of petitioner-firm in the

said petition that a partnership firm under the name and style of M/s. National India Construction Company came to be constituted vide

partnership deed dated 22.11.2005 having principal office at 52, F-Block, Dalhousie Road, Pathankot and it was allotted works in the State of

J&K under PMGSY Scheme during the years 2005 to 2008 and all the payments were also made to the petitioner-firm through one of its

partners, namely, Sanjeev Singh. Thus, from the above factual position and the stand of respondents, it is evidently clear that M/s. National India

Construction Company is the same firm which was constituted by the four partners of petitioner-firm in the year 2005. Thereafter, in the year

2010, a new partnership deed came to be executed with regard to the same firm, which was got registered as per the provisions of J&K

Registration Act. Also, it has not been denied by the respondents that a person has a right to constitute as many firms as he desires and the same is

permissible under law.

Further, no doubt the credentials of one firm cannot be used for the benefit of another firm, but here the case is different. Here, petitioner-firm,

namely, M/s. National India Construction Company is the same firm which was allotted works during the year 2005 to 2008, But, when the

respondents raised a dispute that the petitioner-firm cannot be allotted contract works as the Partnership Deed of 2005 had not been registered as

per the provisions of J&K Registration Act, the partners of petitioner-firm executed a new Partnership Deed in the year 2010 as per the provisions

of J&K Registration Act thereby registering the same in the Court of Law as also before the Registrar of Firms, although as per the provisions of

Indian Partnership Act, 1932 and Indian Registration Act, 1908, the partnership deed is not a compulsory register-able document with the

registration authority.

The present controversy arose when even after the registration of Partnership Deed as per the provisions of J&K Registration Act, the

respondents rejected the bids of petitioner-firm despite being the lowest one on the ground that it cannot be allowed to participate in the bidding

process being a new firm, although the Law Department of the State had already opined that the Partnership Deed of petitioner-firm executed in

the year 2010 was a valid document. Further, the respondents have not denied that the four partners in the Partnership Deed of 2005 were the

same even in the Partnership Deed of 2010; meaning thereby virtually the respondents have rejected the claim of same firm and same partners for

the allotment of contract in the year 2010 whose credentials were never doubted by the respondents while allotting the contract works during the

years 2005 to 2008. In fact, only in order to overcome the legal flaw, the petitioner-firm re-executed the Partnership Deed under the J&K

Registration Act in the year 2010. Therefore, in my view, petitioner-firm cannot be said to be a new firm/non-responsive or it lacks experience in

executing the aforementioned contract works.

My this view is also fortified by a judgment of the Apex Court delivered in New Horizons Ltd. v. Union of India, (1995) 1 SCC 478, which

has also been relied upon by the Apex Court in Ganpati Rv-Tallers Alegria Track (P) Ltd. v. Union of India (2009) 1 SCC 589. It would be

appropriate to reproduce the relevant portion of paragraph-23 herein.

Even if it be assumed that the requirement regarding experience as set out in the advertisement dated 22-04-1993 inviting tenders is a

condition about eligibility for consideration of the tender, though we find no basis for the same, the said requirement regarding experience cannot

be construed to mean that the said experience should be of the tenderer in his name only. It is possible to visualise a situation where a person

having past experience has entered into a partnership and the tender has been submitted in the name of the partnership firm which may not have

any past experience in its own name. That does not mean that the earlier experience of one of the partners of the firm cannot be taken into

consideration. Similarly, a company incorporated under the Companies Act having past experience may undergo re-organisation as a result of

merger or amalgamation with another company which may have no such past experience and the tender is submitted in the name of the reorganised

company. It could not be the purport of the requirement about experience that the experience of the company which has merged into the re-

company cannot be taken into consideration because the tender has not been submitted in its name and has been submitted in the name of the re-

organised company which does not have experience in its name. Conversely there may be a split in a company and persons looking after a

particular field of the business of the company form a new company after leaving it. The new company, though having persons with experience in

the field, has no experience in its name while the original company having experience in its name lacks persons with experience. The requirement

regarding experience does not mean that the offer of the original company must be considered because it has experience in its name though it does

not have experienced persons with it and ignore the offer of the new company because it does not have experience in its name though it has

persons having experience in the field. While considering the requirement regarding experience it has to be borne in mind that the said requirement

is contained in a document inviting offers for a commercial transaction. The terms and conditions of such a document have to be construed from the

standpoint of a prudent businessman. When a businessman enters into a contract where under some work is to be performed he seeks to assure

himself about the credentials of the person who is to be entrusted with the performance of the work. 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 to 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 on 22.04.1993.

Further, on one hand in paragraph-B of the preliminary objections filed in OWP No. 910/2015, it was stated by the respondents that the claim

of petitioner-firm of being responsive was rejected vide No. CEJ/PMGSY/281552-59, dated 24.01.2013, whereas, on the other hand, in the

same paragraph it is stated that the petitioner-firm was free to participate in the fresh tenders which the firm did not choose to do; meaning thereby

the respondents have admitted that the petitioner-firm was eligible to participate in the tendering process at the time when these objections came to

be filed in this Court on 12.10.2015. Even otherwise, the dispute arose in the year 2010 when new partnership deed was executed between the

partners of petitioner-firm and now it is 2016. Therefore, as per the stand of respondents, the petitioner-firm was otherwise eligible to participate in

the tendering process. Further, the public at large is suffering in the concerned areas for non-execution of contracts-in-question which have been

stalled since the year 2010 just for the lapse on the part of respondents to act judiciously.

Therefore, in view of the above, I deem it proper to allow the writ petitions. Accordingly, the issuance of Notice Inviting Tenders dated

29.01.2013, impugned in OWP No. 219/2013, for construction of road from Basantgarh to Khennad Block Dudu; construction of road from

Kainthgali Bariote road km 26 to Lower Basnote, Block Dudu and construction of road from Dera Baba to Tanda Block Reasi are hereby

quashed. Further, in view of the above findings, order dated 24.01.2013, whereby the tenders of petitioner-firm in respect of aforementioned three

contract works have been declared non-responsive, is also quashed. Consequently, issuance of fresh Notice Inviting Tenders dated 13.06.2015

and 15.06.2015, impugned in OWP No. 910/2015; in respect of same aforementioned contract works, are also quashed. Accordingly,

respondents are directed to allot the aforementioned three contract works to the petitioner-firm in pursuance of NIT No. 01/PMGSY/CE/J, dated

05.05.2010 in case the tenders of petitioner-firm have been found to be the lowest one. Miscellaneous petition(s), if any, shall accordingly stand

disposed of.