S.I. Syndicate vs Managing Director, Kerala Irrigation Infrastructure Development Corporation

A.V. Ramakrishna Pillai, J.—Ext. P11 order issued by the 1st respondent is under challenge.

The 1st respondent, by Ext. P1 notification, invited tenders for removal of silt accumulated in channel between Pavilion and Kayamkulam Pozhi at Kayamkulam kayal. The petitioner and three others responded to the notification. E-tendering procedure was followed for awarding contract. All the bidders had to submit technical bid as well as financial bid. Technical bids were opened; and the petitioner''s technical bid alone was accepted. This was challenged before this Court by a consortium comprising of SIDCO and another in WP(C) No. 21187/2013. There was an interim order against the opening of financial bid, which was later vacated. Though it was appealed against in an intra court appeal, the same was dismissed. Pursuant to this, the petitioner''s financial bid was opened. The probable amount of contract fixed by the 1st respondent for this work was for 4,44,00,000/-. The petitioner''s financial bid was for 4,87,00,000/-. The writ petition was finally heard on 14.03.2014 and the same was dismissed. Though an intra court appeal was filed against the same, it was later dismissed as withdrawn in view of the stand taken by the SIDCO that it was not interested in pursuing the matter. A public interest litigation was filed before this Court contending that there is only one bidder for the work and, therefore, there should be a re-tender of the work. That writ petition also was dismissed by the Division Bench. Thereafter, the 1st respondent, by Ext. P11, has decided to re-tender the work. It is against this, this writ petition has been filed.

Respondents 1 and 2 filed a counter affidavit contending as follows;

"One of the unsuccessful bidders approached this Court and an interim order was passed from further proceeding with the tender pursuant to Ext. P1 and the writ petition was finally dismissed as per Ext. P2. Pursuant to Ext. P2, the matter was referred to the 3rd respondent seeking remarks and in the meanwhile, a public interest litigation was filed wherein Ext. P3 judgment was passed by this Court. The persons behind Ext. P3 are not known to these respondents. The challenge on Ext. P3 was also closed recording the submissions made therein leaving open the matter to be decided by the respondents. The execution of the work is of urgent nature and the delay occurred was on account of the litigations pending. Deposit of EMD is part of procedure for submitting tenders and the contentions with regard to escalation are false and such contentions are raised for the purpose of filing this writ petition. There was no delay caused on the part of these respondents or the 3rd respondent in finalising the process pursuant to Ext. P1 and judgments passed by this Court.

Ext. P7 only directed finalisation of the proceedings, which was done in the interest of the State. It was in full compliance of Exts. P8 and P9 that the processing was done. The study as per Ext. P10 was done for statistical purposes. These respondents had expressed its reason for retendering the work in the earlier round of litigation by invoking Clause 17.2 of Ext. P1. As per the said clause, the 2nd respondent is having the right to reject the bids and annul the bidding process before awarding of work without any liability. Thus, the action of these respondents in issuing Ext. P11 is perfectly valid. There was no arbitrary exercise of power as alleged in paragraph 9 of the writ petition.

There was no unfair action on the part of these respondents and every act has been done in the better interest of the State. On the above circumstances, the contentions raised by the petitioner with regard to re-tender are unsustainable and is only to be rejected. The allegation that such an act was done only to favour certain interested parties in an arbitrary manner under extraneous considerations are false and without any basis. Such contentions are raised for the purpose of filing this writ petition and also for causing prejudice in the minds of this Court. The contentions raised by the petitioner with regard to malafide intention and illegal acts are thus belied by the above statements. There is no cause of action for the petitioner to approach this Court and none of the grounds raised in the writ petition are sustainable and the reliefs prayed for also cannot be granted."

While the writ petition was pending, another person got himself impleaded as additional 4th respondent and filed a counter affidavit contending as follows;

"The petitioner fought 2 or 3 cases in the High Court arisen in connection with this tender process i.e. 2 cases filed by a disqualified bidder and one public interest litigation and one case filed by the petitioner himself complaining about the delay in awarding this very same contract to him which resulted in Ext. P7 judgment.

In Ext. P3 judgment, the challenge by a disqualified bidder was rejected with observation that "in the result, the writ petition is dismissed. The 4th respondent shall be at liberty to proceed with the process from the stage at which, it was stopped".

However, against this judgment, there was writ appeal and it resulted in Ext. P5 judgment, the operative portion of which was as under:

"xxx...... when this matter came up today, the learned counsel for the appellant would submit that in view of the stand taken by the SIDCO, which is in turn based on the submission by the learned counsel for the said corporation that the Board of Directors of SIDCO have decided to accept the decision in the technical report of the Chief Engineer that it may not be feasible to go ahead with the joint venture agreement. The learned counsel for the 2nd respondent in fact submit that the issue is now pending before the Government of Kerala for a final decision in the matter. We need not pronounce on the issue relating to the decision to be taken by the Government. Recording the submission of the learned counsel for the appellant, the WA is closed."

So, Ext. P3 judgment has merged with Ext. P5 appellate judgment, in which it is recorded that the Government will take the final decision on the issue.

Thereafter, the petitioner himself filed WP(C) No. 17297/14 challenging the delay in awarding the contract, which resulted in Ext. P7 judgment, the operative portion is as under:

"According to the petitioner, he was the highest bidder, which was accepted by the respondent authority. But so far the work has not been awarded to him. Apparently, when the legal issues with reference to the award of work is over, it shall always be open for the awarder of the work to pass appropriate orders either awarding the work in favour of the highest bidder or take further action in accordance with law.

Having regard to the factual situation, this WP (C) is disposed of as under:

The 1st respondent shall pass appropriate orders with reference to Ext. P1 notice inviting tenders within a period of two weeks from the date of receipt of a copy of this judgment."

It is pursuant to this direction that the respondents took the decision and communicated vide:

"Ext. P11. Ext. P11 is as under:

"It is decided in the 34th Board Meeting of KIIDC that as valid competitive offers are not available the single tender received for the work from the Consortium - S.I. Syndicate, T.C. 13/63, Ginsalayam, Kunnukuzi, PMG P.O., Vanchiyoor, Lead Partner Sukrithakiran Software Technologies (P) Ltd., be rejected. The Board also decided to re-tender the work. Hence this work is re-tendered."

So, it is for the non-competitiveness of offers (bids) that the decision is taken by the highest authority to reject the single tender of the petitioner and to re-tender the work. This has been done in public interest to avoid arbitrariness and to ensure fairness in public action. This is evident from Ext. P11 itself. The respondents have the authority to do so as per Ext. P1 notification itself. The petitioner could not make out anything to establish arbitrariness. His experiment is to safeguard his private interest and for which even produced fake documents before the authorities to get it technical qualified. This shocking aspect is revealed later.

Though the petitioner claimed that as per Ext. P2 technical evaluation statement, it alone had technical qualifications, it is revealed that there is fraud in obtaining the said decision on qualification. That is to say, the petitioner produced fake documents to show its financial status or turnover of minimum of Rs. 15 crores for previous 3 years, which was a prerequisite to get technical qualification. It is based on such fake documents that it obtained technical qualification as per Ext. P2.

Pursuant to Ext. P1 notification, there were 4 bids submitted. But, as stated above, after technical evaluation, 3 were rejected and one was found to be technically qualified viz: that of petitioner. However, this has been done by the Committee without verifying the crucial documents, he produced for technical qualification. As per Volume I, Sec. II, Clause 4:

"The bidders should have attained a minimum annual turnover of Rs. 15 crores in the last 3 years. The bidders shall submit the audited financial statements of at least the preceding three years. He should submit supporting documents and proof of annual turnover as well as financial statements...... xxx"

The petitioner is a consortium of 2 partners, viz:

(i) Sukrithakiran Software Technologies (P) Ltd., which is the lead partner with 60% equity.

(ii) Infra-Dredge Services (P) Ltd., which is the other partner with 40% equity.

They are jointly called "S.I. Syndicate". As per Ext. P1, all informations with evidence should be submitted along with the bids. In response to Ext. P1 notification, the petitioner produced financial statements of its lead partner viz: Sukrithakiran Software Technologies, for the preceding 3 years:

Viz: 2009-2010 showing Rs. 37.72 crores 2010-2011 showing Rs. 42.48 crores 2011-2012 showing Rs. 21.28 crores

It is relying on these financial statements of M/s. Sukrithakiran Software Technologies (P) Ltd. that the technical qualification was given to the petitioner. But, now it is revealed that the said decision is taken without verifying the veracity of those documents. The 4th respondent has now verified its genuineness. From the website of the Ministry of Corporate Affairs, Government of India, it is now revealed that the Company "Sukrithakiran Software Technologies (P) Ltd." Is incorporated only on 30.05.2012. Ext. R4(b) produced along with the impleading petition is the printout downloaded from the official website. It shows the above aspects. That means, a company floated/incorporated in 2012, has submitted financial statements for 2009, 2010 and 2011. This is fraud played on the Department and the Government.

What is produced is the documents of Sukrithakiran Software Technologies (P) Ltd. Bid documents cannot be substituted with somebody else''s when fraud is found out. It was on the basis of the documents produced by the petitioner it was found that the petitioner was technically qualified. It is now found to be done based on fake documents. So, what is done is a fraud or cheating and action has to be taken against all who are involved in it.

There is another reason also to disqualify the petitioner. As per Clause 4.1, one bidder shall submit only one bid for the work, either singly or in consortium. Here, one bid is submitted by M/s. S.I. Syndicate, in which Consortium the parties are:

(i) Sukrithakiran Software Technologies (P) Ltd. (Lead Partner)

(ii) Infra-Dredge Services (P) Ltd.

The directors of M/s. Sukrithakiran Software Technologies (P) Ltd. are:

(i) Mr. Hirosh Mohammed Hussain

(ii) Mr. Ranjit Ealukadu Raveendran

as can be seen from Ext. R4(b).

Another consortium which submitted the bid for this work, was M/s. ASK Synergy, Thiruvananthapuram, in which the partners are:

(i) AR Design and Infrastructures

(ii) Kallipparambil Construction Co.

(iii) Sealander Services

Out of this, the Managing Partner of M/s. AR Design and Infrastructures is Mr. Hirosh Mohammed Hussain. So, one Director in M/s. Sukrithakiran Software Technologies (P) Ltd. who is the Lead Partner of AR Design and Infrastructures, who is one of the partners in consortium - ASK Synergy, who have both submitted different bids for this very same work, are common. The details of these consortiums are available with R1 & R2. Anyhow, R1 & R2 are to be directed to produce the details of the Consortium of all the 4 bidders. So, both their bids are liable to be rejected on this sole ground. This aspect also has not been considered by the evaluation Committee, while granting the technical qualification for the petitioner in Ext. P2.

Another glaring anomaly which happened while granting technical qualification to the petitioner, has also come to light now. That is, as per Ext. P1 notification, Clause 15(b), the partners in the Consortium are to be jointly and severally liable to the employer for the performance of the contract. So, both have to remain in consortium till the work is over. However, as per Memorandum of Understanding to create Consortium of S.I. Syndicate, which is obtained under the Right to Information Act, the 2nd party in the petitioner''s consortium shall go out at any time and when it goes out, he shall be entitled to compensation for good-will. That is all. Clause 9(1) says, the lead partner is to invest 60% and in case 2nd party refuses to invest or fund, the lead party may make such investment and it shall be entitled to corresponding profit share. Hence, it is clear that the petitioner''s Consortium is a stop-gap arrangement merely to get M/s. Sukrithakiran Software Technologies (P) Ltd., the lead partner, to get qualification at bid stage and once the work is obtained, it can avoid the 2nd partner, who will have no responsibility later. So, there is violation of Clause 15(b). The informations to the above effect, obtained under the RTI Act is produced herewith and marked as Ext. R4(c). It may also be noted herein that the Director, who has signed the consortium agreement for M/s. Sukrithakiran Software Technologies (P) Ltd. is Mr. Hirosh Mohammed Hussain.

It was further alleged that the 4th respondent is an A-class contractor registered with the Government of Kerala and is engaged in the various works tendered by the Irrigation Department, Government of Kerala including dredging works from rivers and other water bodies as also various other construction activities for the past more than 10 years. He further alleges that he had successfully completed various works for the Irrigation Department at Kozhikode, Kannur, Thiruvananthapuram and Kuttanadu.

A bidder, who has participated in a tender process has only a right to get a fair consideration of his bid in the tender process and does not have any other special rights. Further, it is also to be noted that the subject matter contract is not awarded to anyone and the respondents 1 and 2 in their wisdom and in their zeal to render justice and display fairness in action have now taken a considered decision in its 34th board meeting, which is evidenced by Ext. P11.

It is also submitted in this context that the apex court has in a catena of decisions held that the right of a bidder participating in a tender process is only to equality and fair treatment in the matter of evaluation of bids. Further, the apex court has also held that if the action of the Sate is with a discernible reason and not whimsical for any ulterior purpose, then judicial review would be limited.

In the light of the various judicial pronouncements on the subject of contractual matters, it is clear that the writ petitioner (SI Syndicate) does not have any right to insist on the awarding of the subject matter contract in their favour, more so when the authority inviting the bids have taken a decision to reject their bid and go for re-tendering. Further, it can also be understood from the cursory reading of the various documents involved that the decision arrived at vide: Ext. P11 has been taken with due care and diligence so as not to cause loss to the state exchequer. So much so, Ext. P11 is not to be interfered with and the re-tendering proposed therein may be directed to be conducted/carried on and implemented forthwith, especially because, the writ petitioner is believed to have committed fraud in submitting 3 years balance sheets to show turnover.

The filing of this writ petition itself is an abuse of the process of the Court. This is an experimental writ petition to get orders, without bringing the real issues before this Hon''ble Court. This type of practice is to be deprecated. The intention behind this case is doubtful. So, the very conduct of the writ petitioner is malafide and mischievous. The above being the position, this writ petition is to be discarded at the beginning, it being unethical.

Addl. 4th respondent is a contractor, who is engaged in the business of construction and dredging, and is very much interested to participate in the bid process, as and when orders re-tendering the work is issued. It is further alleged that he is prepared to offer a much higher amount than what is offered by the writ petitioner. So much so, the clandestine and ulterior motive behind the filing of the present writ petition is very much in doubt. As per the terms contained in Ext. P1, the writ petitioner will not be qualified, in the light of what is disclosed above. So, to get over the conditions contained therein and to ensure that they are awarded the contract without genuine and bona fide tendering process, the writ petitioner has now chosen to approach this Court by filing this writ petition even though they have no right to claim a direction to the respondents 1 and 2 to award the contract, which is now rejected and re-tendering ordered. Further, the re-tendering is done in public interest and for the financial gain of the State exchequer. The 4th respondent is also interested to participate in the re-tender process of the subject matter work and is a contractor, who is prepared to pay a much higher amount than what is quoted by the writ petitioner. The only reason this respondent herein did not approach this Court earlier was only due to the pendency of the various litigations pertaining to the subject matter work, which has now attained finality by the issuance of Ext. P11 order. This order is to be implemented for the sake of justice, fair play and equity and all persons, who are interested to compete in the competitive bid process pursuant to the re-tendering of the subject matter work, including this additional 4th respondent, are to be given an opportunity to place their bids for the work being tendered by respondents 1 & 2."

I have heard the learned senior counsel for the petitioner, the learned Standing Counsel for respondents 1 and 2 and the learned senior counsel for the 4th respondent.

The grievance of the petitioner is that though he was the successful bidder, the 1st respondent decided to reject his tender and to go for re-tender. One of the reasons pointed out in Ext. P11 is that the single tender of the petitioner is not acceptable. According to the learned senior counsel, the action of the 1st respondent is unreasonable and arbitrary. There were four bidders responding to the notification. The petitioner alone was successful in the technical bid. If the respondents had a case that more than one bidder is necessary, they could have, decided to go for re-tender then and there. It is crucial to note that respondents 1 and 2 fought the legal battle against the rejection of the technical bid of other tenders in the previous writ petition. Thereafter, they opened the financial bid of the petitioner. The amount offered was found to be satisfactory. The respondents state that the bid is by a single bidder; and therefore, they have to go for re-tender. It is true that para 17.2 of the notification enables the 2nd respondent to reject the bidders before the award of contract. This Clause, however, does not enable exercise of arbitrary power. It was pointed out by the learned senior counsel for the petitioner that the Government, by Ext. P9, has decided as early as from February, 2014 not to insist on more number of bidders as a condition precedent to proceed with the tender. Here, the price offered by the petitioner to do the work is 43,00,000/-, which is more than the price expected by respondents 1 and 2. A consortium comprising of M/s. Sreenarayana Construction and SIDCO was one of the bidders. They challenged the rejection of the technical bid by respondents 1 and 2 in WP(C) No. 21187/2013, which was dismissed by this Court as per Ext. P3 judgment.

When the matter came up for consideration before the Division Bench in an intra court appeal, SIDCO, who was one of the members of the said consortium, filed an affidavit before the Division Bench taking the stand that they are withdrawing from the writ appeal in view of the fact that the price of sand, which is one of the sediments likely to be obtained from the silt, has gone down and it would not be feasible to pursue with the matter. A copy of the affidavit is produced and marked as Ext. P12. Such a stand was taken by SIDCO before the Division Bench on account of the opinion submitted by the Chief Engineer of SIDCO, which forms part of Ext. P12 affidavit. There, it is opined that to avoid loss, the technical partner may have a tendency of over dredging the canal, which would damage the environment and also cause loss to State exchequer. This observation becomes relevant in weighing the claim of the additional 4th respondent that the additional 4th respondent is ready to conduct dredging at a far higher rate. I will be referring to this while considering the arguments of the learned Senior Counsel for the fourth respondent.

The Apex Court in Meerut Development Authority Vs. Association of Management Studies and Another, has observed that the bidders participating in the tender process have no other right except the right to equality and fair treatment in the matter of evaluation of competitive bids offered by interested persons in response to notice inviting tenders in a transparent manner and free from hidden agenda. It was further observed that the authority has the right not to accept the highest bid and even to prefer a tender other than the highest bidder if there exists good and sufficient reasons such as the highest bid not representing the market price. However, there cannot be any doubt that the authority''s action in accepting or refusing the bid must be free from arbitrariness or favouritism.

Here, respondents 1 and 2 knew that the petitioner was the only successful bidder. With that knowledge, the 2nd respondent fought the litigation against the acceptance of the petitioner''s technical bid. It also fought the public interest litigation against awarding the contract to the petitioner. At none of these stages, respondents 1 and 2 thought that re-tender was necessary. Respondents 1 and 2 being instrumentalities of the State, their action should pass the test of fairness and transparency. The reason stated by them for rejecting the petitioner''s bid and going for re-tender, does not inspire confidence. It cannot be said that the respondents would suffer any loss if the petitioner is allowed to proceed with the work. The petitioner offered 43,00,000/- more than the probable amount of contract. In the present decision to retender also, there is no change for the probable amount of contract.

In addition to above, there are other circumstances favourable to the petitioner. A sum of more than 11,00,000/- is retained as earnest money by respondents 1 and 2. The technical bid was opened long ago and the financial bid was opened subsequently. That means, for about one year, the petitioner''s money is retained by the respondents. Had there been any apprehension of suffering losses by the award of contract to the petitioner, the respondents could have gone for re-tender immediately after opening the technical bid. However, without resorting to any such procedure, the petitioner''s financial bid was opened. Thereafter also, respondents did not think of a re-tender. It cannot be said that there is any bona fide in issuing Ext. P11.

Coming to the request of the additional 4th respondent for re-tender, this Court is of the definite view that he has no locus standi to challenge the tender in favour of the petitioner. Had there been any intention on the part of the 4th respondent to participate in the bid, he could have done so at the very inception. The learned senior counsel for the petitioner would submit that after failing in all the attempts, the other consortiums, who participated in the bid, have now brought the additional 4th respondent to delay the award of work to the petitioner.

One of the allegations made by the additional 4th respondent is that one of the partners of the petitioner''s consortium, viz., M/s. Sukrithakiran Software Technologies Pvt. Ltd. has got itself incorporated under the Companies Act only in the year 2012; and therefore, it does not satisfy the eligibility criteria under Ext. P1. SI Syndicate is a consortium of two partners, viz., M/s. Sukruthakiran Software Technologies Private Ltd. and M/s. Infra Dredge Services Private Ltd. The learned senior counsel for the petitioner submitted that Infra Dredge Services Private Ltd. has been involved in dredging business for more a decade. Its annual turnover has been much more than 20 crores for each year for last many years. However, in Ext. P2, by a mistake, instead of showing the name of Infra Dredge Services Private Ltd., the name of Sukruthakiran Software Technologies Private Ltd. was shown. The turnover shown in Ext. P2 for the 2nd bidder is that of Infra Dredge Service Private Ltd. and not that of M/s. Sukruthakiran Software Technologies Ltd.; so submitted the learned senior counsel for the petitioner.

It is crucial to note that respondents 1 and 2, who were competent to consider the eligibility of the bidders, have accepted the technical bid as well as the financial bid of the petitioner. They had no case that the petitioner''s consortium did not satisfy the eligibility criteria prescribed by the respondents. The acceptance of the tender of the consortium had accepted judicial recognition of this Court by Ext. P3 judgment.

It is also crucial to note that the 4th respondent had never chosen to challenge the acceptance of the technical bid and financial bid of the petitioner. The explanation offered that they waited till the closure of all the previous litigations, does not inspire confidence at all. On a consideration of the entire materials now placed on record, this Court is of the definite view that the petitioner is entitled to succeed.

It was persuasively submitted by the learned Senior Counsel for the fourth respondent that the fourth respondent is ready to conduct the drudging for an amount much higher than what is now quoted by the petitioner. It is here, the observation by the Chief Engineer of SIDCO in the opinion which forms part of Ext. P12 becomes relevant. As already stated, Ext. P12 is the copy of the affidavit submitted by SIDCO before the Division Bench which passed Ext. P5 judgment. There, SIDCO took the stand that they were withdrawing from the deal because of the fall in price of sand. Their Chief Engineer has pointed out that under such a circumstance, there is chance of over drudging by the technical partner to avoid the loss. This may happen in the case of the fourth respondent also. Therefore, the aforesaid argument is only to be repelled.

In the result, the writ petition is allowed.

Ext. P11 is quashed.

Respondents 1 and 2 are directed to complete the process of award of contract pursuant to Ext. P1 to the petitioner on the basis of financial bid opened.

It is hereby declared that respondents 1 and 2 are legally bound to accept the bid of the petitioner and to award the contract to the petitioner on the basis of acceptance of technical bid and opening of the financial bid.

Formal orders to this effect shall be issued by the respondents within a period of one month.