P. Damodar Reddy vs Superintending Engineer, I and CD and Another

E. Dharma Rao, J.—This Writ Petition is filed for issuance of Writ of Mandamus declaring the action of the 1st respondent in rejecting the tender submitted by the petitioner for the work relating to drinking water supply improvement scheme from K.P. Canal of Telugu Ganga Project and formation of ground level reservoir at Kailasagiri near Ramapuram village, in Srikalahasthi Mandal, Chittoor district and forfeiting EMD of a sum of Rs.1,00,000/- furnished by the petitioner to the State Government vide proceedings No.DB/D1/T8/429C dated 24-9-1997 without even waiting for the orders from the higher authorities relating to relaxation of the conditions of the tender as illegal, arbitrary and discriminatory and for a consequential direction directing the respondents to permit the petitioner to execute the above work after concluding the agreement and complying with all the formalities. It is submitted by the petitioner that by notification dated 17-10-1996, respondents have called for sealed tenders for the purpose of executing the work relating to M.I. drinking water supply improvement scheme to Tirupati town from K.P. Canal of Telugu Ganga Project and formation of ground level reservoir at Kailasagiri near Ramapuram village in Srikalahasthi mandal, Chittoor district. The proposed estimate of the work as per the notification was Rs.4,01,66,140/-. Accordingly, the petitioner obtained tender schedule on payment of Rs.1,00,000/- in the shape of DD in favour of the 2nd respondent. As per condition No.5(g) of the tender notice, the tenders received will be finalised within a period of three months from the last date prescribed for the receipt of the tenders and the above said work has to be executed with the financial support, partly by the TT. Devasthanams, Tirupathi and partly by the Tirupathi Municipality. It is further submitted that the petitioner''s tender which was submitted on 12-11-1996 was less by 47.79% over the estimated amount. When a public interest litigation was filed in the Hon''ble High Court complaining the diversion of funds of TTD for other purposes which are not actually connected with TTD, the Hon''ble High Court passed an interim order directing the TTD not to divert its funds to any other activity which is not connected with the TTD. In view of the said interim order, the main source of funding the work in question was lost. According to the petitioner, the 1st respondent has unnecessarily protracted the matter without finalising the tenders within the stipulated period of 3 months. For the first time, the petitioner received a communication from the 1st respondent dated 7-4-1997 wherein he was asked to attend the office on 10-4-1997 for concluding the agreement by complying with all the requisite formalities. In the said letter, it was specified that already a letter dated 24-3-1997 was addressed to the petitioner, while according to the petitioner; he has not received the same. The petitioner was asked to produce F.S.D. for a sum of Rs.9,04,160/- in the shape of crossed DD taken in the name of the 2nd respondent and also A.S.D. for a sum of Rs.20,08,350/- in the shape of crossed DD taken in the name of the 2nd respondent herein for the purpose of concluding the agreement. The petitioner gave a reply dated 15-4-1997 specifying that he will furnish bank guarantee for a sum of Rs.9,04,160 towards FSD and requested the 1st respondent to exempt him from complying with the 2nd condition of producing ASD. for a sum of Rs.20,08,350/-. According to the petitioner, bank guarantee towards ASD will be normally insisted upon as a measure of security as the contractor would be given huge quantity of cement, steel, etc in advance for the purpose of executing the work entrusted to him, but in the present case, the entire work is earth work only and the question of using steel and cement is very negligible and some negligible quantity of cement would be required at the last stage of the work. When the request of the petitioner for exemption from payment of ASD was rejected, the petitioner once again in his letter dated 22-4-1997 addressed to the 1st respondent specified that, in similar circumstances, exemption was given to others from payment of ASD and further permitted to produce bank guarantee in respect of FSD and requested the1st respondent to relax the condition to enable him to execute the work. After receipt of the letter dated 22-4-1997, the 1st respondent referred the whole matter to the Chief Engineer (Minor Irrigation, Government of A.P. Hyderabad for obtaining his views. In turn, the Chief Engineer referred the matter to the Commissioner ate of Tenders, AP. Hyderabad, for relaxing the conditions of tender in the present case. While the matter stood thus, the 1st respondent sent a telegram to the petitioner on 15-5-1997 asking him to extend the validity of the tender up to 31-7-1997. Further, the 1st respondent vide his letter dated 27-5-1997 informed the petitioner that his representation for relaxation of the conditions of the tender was already referred to the Commissioner of Tenders, A.P. Hyderabad, for consideration and that the same is likely to be rejected. The petitioner was, therefore, directed to attend the office on 9-6-1997 along with DD towards FSD and bank guarantee towards ASD. The petitioner vide his reply dated 6-6-1997 expressed his willingness to remit FSD in the shape of DD and furnish Bank Guarantee for ASD and requested the 1st respondent to permit him to execute the agreement on furnishing FSD immediately and ASD in due course of time. The petitioner also specified that in the event of any default in payment of ASD the same could be recovered form his bills. Even though the matter was pending with the Commissioner ate of Tenders, without waiting for the orders from the said office, the 1st respondent unilaterally rejected the tender of the petitioner and forfeited the EMD of a sum of Rs.1,00,000/-, vide impugned proceedings dated 24-9-1997. Hence, the present writ petition.

The 1st respondent filed a counter affidavit admitting the issuance of tender notice calling for sealed tenders for the work of ''Drinking Water Supply - Improvements Scheme to Tirupathi town from K.P. Canal of Telugu Ganga Project - Formation of a ground level reservoir at Kailsagiri near Ramapuram village'' in Srikalahasthi Mandalam, Chittoor district, fixing the date of receipt of tender on 12-11-1996. In response to the above said notification, as many as 48 applications were received and 42 persons only received the tender schedules. It is admitted that the petitioner applied for tender schedule duly enclosing the DD for he 1000/- and Rs.1,00,000/- towards the cost of tender schedules and EMD respectively. On 12-11-1996, 30 tenders were received and the tenders were opened by the then Superintending Engineer, Irrigation Circle, Chittoor. Out of the 30 tenders, the tender of the petitioner was lowest one i.e., at 47.79% less than tender estimate value. The tender of the petitioner was accepted for the value of Rs.2,09,72,235/- at 47.79% less than the estimated value based on SSR of 1995-96 by the Commissioner, Commissioner ate of Tenders, Hyderabad, vide proceedings dated 18.3.1997. Accordingly, the petitioner was addressed through their office letter No. 450 M dated 24-3-1997 duly informing him the acceptance of his tender by the Commissioner ate of Tenders and requested him to attend the office on or before 3-4-1997 alongwith the following particulars for concluding the agreement:

i) Stamp paper for Rs.100/-

ii) FSD for Rs.9,04,160/- in the shape of crossed DD in favour of the Dist. Pay & Accounts Officer, TGP, Srikalahasthi.

iii) ASD for Rs.20,08,350/- in the shape of crossed DD in favour of Dist. Pay & Accounts Officer, TGP, Srikalahasthi.

iv) Details of Technical Personnel proposed to be employed.

When the petitioner did not comply with the above said letter, once again he was reminded through their office letter No.49 3M dated 7-4-1997 to attend their office with the particulars to conclude the agreement. The petitioner, without complying with the above said two letters, by his letter dated 15-4-1997 prayed to remit Rs.9,04,160/- towards FSD in the shape of Bank Guarantee and as per tender schedule. But on the above letter, the respondent informed the petitioner by letter dated 15-4-1997 stating that since there is no departmental issue involved in the work, the petitioner has to remit FSD of Rs.9,04,160/- in the shape of Bank Guarantee as per clause 5 (C)of the tender notice, which clearly stipulates that the balance of the DMD paid at the time of signing the agreement will have to be in the shape of crossed DD only and his request for remitting the FSD in the shape of Bank Guarantee is not acceptable. It is further stated that as regards the AFSD, rates were clearly specified in clause 19 of the Tender notice of the tender schedule. And payment of AFSD in respect of discount tenders is therefore, obligatory and no exemption can be granted. Even otherwise, as a special case, further time upto 12.4.1997 was given to remit the amounts to the petitioner and also informed that the action will be taken under clause 18 of the additional conditions of the tender notice in the Tender Schedule, which reads as follows:

"Concluding of agreement: The successful tenderer have to sign the agreement within a period of 15 days from the date of communication of acceptance of his tender otherwise the deposits paid by him will be forfeited without any further notice.."

Clause 18 contemplates if the successful tenderer fails to sign the agreement within a period of fifteen days, from the date of communication of acceptance of his tender by the respondents, the deposits so paid will be forfeited without any further notice. In compliance of the above said condition, the respondents have given notice to the petitioner to conclude the contract and as a special case when he failed to attend the office of the respondents, they have extended the time after 12-4-1997. Even then the petitioner failed to comply with the conditions and by telegram and letter dated 15-5-1997 requested the respondent to extend the validity of tender upto 31-7-1997. By letter dated 27-5-1997, the respondent informed the petitioner that the representation has been submitted to the Commissioner ate of Tenders for consideration and it is likely to be rejected and also requested him to attend the office on or before 9-6-1997 alongwith DD towards FSD and Bank Guarantee towards ASD. But by letter dated 6-6-1997 the petitioner sought assurance for the availability of funds for the work and requested to permit him to enter into agreement with FSD immediately and AFSD will be produced in due course of time and abide for recovery of AFSD in the bills, if he failed to produce the bank guarantee. Suitable reply was given with regard to the availability of funds by their letter dated 18-6-1997. By letter dated 25.6.1997 once again the petitioner was requested to attend their office for concluding the agreement and when the petitioner failed to conclude the agreement, the matter was referred to higher authorities.

It is submitted that the Commissioner ate of Tenders is not the competent authority to relax any condition of the tender and that as per Government Memo No.35330/Irr.-2/97-1 Dated 18-9-1997, the tender conditions, once stipulated, shall not be altered otherwise it would attract objections from unsuccessful bidders. It is further submitted that the Chief Engineer, in his telephonic message memo dated 21-9-1997, desired to seek action as per the Government order on the first lower tenderer and requested to send the revised proposals by 24-9-1997 duly recommending the second lowest tenderer who is ready to comply with tender conditions and, therefore, as per the directions of the Chief Engineer, Minor Irrigation, the tender of the petitioner was rejected duly forfeiting the EMD to the Government vide proceedings impugned in this writ petition. The respondents contended that the action of rejecting the tender of the petitioner and forfeiting the deposit was taken after the orders received from the higher authorities as the petitioner has been dragging on the issue requesting for relaxation of the clauses of the tender schedule conditions without showing interest to execute the work fulfilling the terms and conditions of the tender. It is submitted that action is already taken to award the tender to the next lower tenderer viz., M/s. Lenco Constructions Limited, Secunderabad, who has come forward to execute the work satisfying the usual terms and conditions of the tender schedules, vide Commissioner ate of Tender''s proceedings dated 3-10-1997. It was informed to the Court by the learned Government Pleader the work was also executed.

On the basis of the above facts and circumstances, the learned Counsel for the petitioner submits that by virtue of rejection of tender of the petitioner which is less by 47.79% over the estimated amount and accepting the 2nd lowest tender which is less only by 38.42% over the estimated amount, caused loss of Rs.37,00,000/- to the State Government exchequer. He further contends that there are cases where the respondents have relaxed conditions of the tender and that while the matter is pending for consideration before the Commissioner ate of Tenders, Hyderabad, rejection of the tender of the petitioner by the 1st respondent amounts to non application of mind and the same is discriminatory and violative of Article 14 of the Constitution of India.

On the other hand, the respondents have relied on clause 18 of the conditions of the tender notification with regard to concluding of agreement. The successful tenderer has to sign the agreement within a period of 15 days from the date of communication of acceptance of the tender failing which the deposit made by the tender will be forfeited without any further notice. When once the respondents have accepted the tender of the petitioner through letter dated 18-6-1997 and requested him to attend the office for concluding the agreement, the petitioner had, instead of doing so, went on corresponding with the 1st respondent, seeking time and relaxation of the conditions. The petitioner failed to give particulars of the other tenders in which the respondents had relaxed the conditions of deposit of FSD and ASD. The work of the tender pertains to supply of drinking water to the residents to Tirupati town, which is an important job of Government to satisfy the minimum needs of the citizens. Therefore, the petitioner should not have dragged on the matter without concluding the agreement/contract. The petitioner also failed to bring to the notice of this Court the provision of law under which he is seeking exemption of the tender conditions. The respondents were therefore constrained to inform the petitioner that the matter which was referred to the Commissioner ate of Tenders is likely to be rejected and called upon him to comply with the tender conditions. Even after receipt of the above communication, the petitioner has not come forward to conclude the agreement and he went on making correspondence to relax the conditions in the tender schedule causing much prejudice to the respondents.

Now-a-days, the contractors of this State have developed a tendency to submit the lowest tender in response to the tender notice issued by the Government so as to prevent the other contracts to get the same, knowing fully well that they are both technically and financially not viable to execute the contract. In this case also, the petitioner, though aware that he is not competent to execute the work, made the respondent - Government to suffer financially either by rescheduling the tender or engaging the next lowest tenderer, which has taken considerable time meanwhile escalation of materials cost and resulted in financial loss to the State Exchequer. Therefore, when the petitioner was aware of his financial and technical viability, he should not have submitted the tender and then go on requesting the respondents to relax the conditions to suit to his convenience at the cost of making allegations against the respondents. By virtue of the ill-designed and rank attitude of the petitioner, there is sufficient loss of time and financial loss to the tune of Rs.37,00,000/- to the Government. Therefore, with a view to put a stop to the attitudes of the tenderers like the petitioner herein and in the interest of justice, I came to the firm conclusion to hold that the impugned action of the respondents in rejecting the tender submitted by the petitioner for the work relating to drinking water supply improvement scheme from K.P. Canal of Telugu Ganga Project to Tirupathi Town and formation of ground level reservoir at Kailasagiri near Ramapuram village, in Srikalahasthi Mandal, Chittoor district and forfeiting EMD of a sum of Rs.1,00,000/- furnished by the petitioner to the State Government vide proceedings No.DB/D1/T8/429C dated 24-9-1997 is legal and sustainable in law.

The Writ petition accordingly fails and is dismissed. No costs.