Sugam Infratech vs National Project Construction Corporation Ltd. And Others

Ramesh Ranganathan, CJ

Heard Mr. Shobhit Saharia, learned counsel for the appellants and Mr. S.S. Chauhan, learned Counsel for the respondents and, with their consent, the appeals are disposed of at the stage of admission.

The present appeal is preferred against the judgment and order of the learned Single Judge in Writ Petition (M/S) No. 470 of 2019 and batch, dated 06.05.2019. The appellants herein invoked the jurisdiction of this Court seeking a writ of certiorari to quash the decision dated 21/24.01.2019, as well as the decision dated 01.02.2019, by which the appellant-writ petitioner's technical bid was declared disqualified; and a writ of mandamus directing the respondent authorities to declare the technical bid of the petitioner as responsive; and to open and consider its financial bid.

The petitioner's technical bid was evaluated by the Technical Bid Evaluation Committee on 24.01.2019; and thereafter the Technical Bid Evaluation Committee, by its proceeding dated 01.02.2019, informed the appellant-writ petitioner that his bid was rejected. The appellant-writ petitioner invoked the jurisdiction of this Court on 20.02.2019, and an interim order was passed on 21.02.2019 granting stay of enforcement of the impugned order.

The appellant-writ petitioner communicated the said order to the respondents on 27.02.2019. A counter affidavit was filed, on behalf of the respondents, on 20.03.2019. The writ petitions were finally heard on 06.05.2019, and the judgment was pronounced on the very same day.

In the order under appeal, the learned Single Judge upheld the action of the respondents in holding that the petitioner had not submitted the balance sheet of the previous three years; he had only enclosed the balance sheet and audit report of 31.03.2018, and for rest of the years he had annexed the balance sheet and audit report of M/S Super Constructions; in order to enhance his bid capacity, the petitioner had used the turnover of M/S Super Constructions, but had not shown the liabilities and the on-going works of M/S Super Constructions; the petitioner could not blow hot and cold at the same time; if he used the turnover and balance sheets of Super Constructions, in order to enhance his bid capacity, then, at the same time, he was also liable to show the liabilities and the on-going works of M/S Super Constructions; and the petitioner had failed to fulfil the criteria laid down in the Standard Bidding Documents. Finding no illegality or perversity in the impugned order, the learned Single Judge dismissed the writ petitions. Aggrieved thereby, the present appeal.

Mr. Shobhit Saharia, learned counsel for the appellant-writ petitioner would state that the appellant-writ petitioner had submitted his bid as a sole proprietor; he was also a partner of a registered partnership firm called M/S Super Constructions; in terms of the registered partnership deed, the appellant-writ petitioner was entitled to a 50% share of the profits of the partnership firm; in the column, relating to financial capacity, he had, necessarily, to show 50% of the profits received by him as a partner of M/S Super Constructions since that part of the income formed part of his total income; the mere fact that he had included the profit, which he received from M/S Super Constructions in the column relating to his financial status, did not obligate him to show the on-going works of M/S Super Constructions, more so as there was no provision in this regard in the bidding documents; the Technical Bid Evaluation Committee had concluded its examination of all the technical bids only on 24.01.2019; even prior thereto the appellant-writ petitioner's bid was rejected by the Bid Accepting Authority on 21.01.2019; and rejection of the bid by the Bid Accepting Authority, on a date anterior to the date on which the Technical Evaluation Committee had finally evaluated the appellant-writ petitioner's bid on 24.01.2019, is arbitrary and illegal.

While we find considerable force in the aforesaid submissions urged by Mr. Shobhit Saharia, learned counsel for the appellant-writ petitioner, the Special Appeals necessitate rejection on another ground.

Mr. S.S. Chauhan, learned counsel for the respondents, would draw our attention to the counter affidavit, filed by the respondents on 20.03.2019, to submit that letters of acceptance had already been issued to the lowest bidders in all the three tenders; in favour of one on 14.02.2019 and in favour of the other two on 22.02.2019; and failure on the part of the appellants-writ petitioners to array the lowest bidders, as respondents in the writ petitions, is fatal.

Mr. Shobhit Saharia, learned counsel for the appellant-writ petitioner, would submit that the lowest bidder, in each of these three tenders, can, at the best, be held to proper parties, and not necessary parties; failure to implead proper parties in the writ petitions would not necessitate dismissal of the writ petitions; it is evident, from the averments in the counter affidavit, that, at least with respect to two tenders, the letter of acceptance was issued on 22.02.2019, after an interim order was passed by this Court on 20.01.2019; the respondents could not have issued letters of acceptance in the light of the interim order passed by this Court; the counter affidavit does not refer to an agreement having been executed between the respondents and the lowest bidders; it is only, after an agreement is executed, would any right accrue in favour of the lowest bidder; only thereafter can they be said to be necessary parties to these writ proceedings; since the appellants-writ petitioners have not sought any relief against L-1, it is wholly unnecessary for them to array the lowest bidders as parties to the writ petitions; the learned Single Judge has, in fact, rejected the contention of the respondents on the ground of non-joinder of necessary parties, and has examined the matter on merits; and, since no appeal has been preferred by the respondents, the question regarding non-joinder of necessary parties could not have been raised by them in these three appeals.

It is true that, in the counter affidavit filed by them in the writ petitions, the respondents have taken the plea regarding non-maintainability of the writ-petition only for non-joinder of the Uttarakhand Rural Road Development Authority (URRDA) as a respondent as it was the executing and implementing agency of the scheme of the Pradhan Mantri Gramin Sarak Yojana and, since factual disputes were involved, the same could not be examined in the writ petition. It is also true that the learned Single Judge has, in order under appeal, specifically held that he saw no reason to examine the technical arguments of non-joinder of necessary parties, and the writ petitions had to be examined on its merits. The appellants-writ petitioners had, in fact, filed an application thereafter to implead the URRDA, in the light of the objections raised in the counter affidavit filed by the respondents.

The fact, however, remains that, in their counter affidavit, the respondents have specifically stated that letters of acceptance had been issued in favour of M/S Ganga Prasad Punetha on 14.02.2019; and in favour of M/S Naini Valley Construction and M/S Kashmirilal Constructions Pvt. Ltd. on 22.02.2019. The letter of acceptance issued to M/S Ganga Prasad Punetha on 14.02.2019 was even before the petitioner had invoked the writ jurisdiction of this Court on 20.02.2019. While it is true that the letters of acceptance were issued in favour of M/S Naini Valley Construction and M/S Kashmirilal Constructions Pvt. Ltd. on 22.02.2019, after an interim order was passed in the writ petitions on 21.02.2019, it is admitted both by Mr. Shobhit Saharia, learned counsel for the appellant and Mr. S.S. Chauhan, learned counsel for the respondents, that, when the interim order was passed on 21.02.2019, the respondents were not represented by Counsel, and the said order was passed ex-parte, and in the absence of any of the respondents or their counsel.

As admitted by Mr. Shobhit Saharia, learned counsel for the appellant-writ petitioner, the interim order passed by this Court was communicated only on 27.02.2019 after receiving a certified copy of the order on 26.02.2019. Prior thereto the respondents had issued the letters of acceptance to M/S Naini Valley Construction and M/S Kashmirilal Constructions Pvt. Ltd. on 22.02.2019. The respondents cannot, therefore, be said to have violated the interim order passed by this Court, for having issued such letters of acceptance, since they were issued even before the respondents came to know about the interim order.

On the question, whether failure to implead the lowest bidders as parties to the writ petition is fatal, it is relevant to note that the offer of the lowest bidder was accepted by the respondents by way of the letters of acceptance. While it is, no doubt, true that a formal contract had not been executed, since the lowest bidders were required to perform certain obligations and execute certain documents, pursuant to the letters of acceptance being issued in their favour, the mere fact that agreements had not been executed between the parties, would not justify the appellant-writ petitioner's failure to array the lowest bidders as parties to the writ petition. The employer i.e. the respondents herein may be entitled, in law, to refuse to execute agreements with the lowest bidders in case the latter do not comply with the prescribed formalities. That would, however, not justify another tenderer seeking to obtain an order from this Court behind their back. Subject to compliance with the stipulated formalities, the letters of acceptance confer a right on the lowest bidders to claim that they should be awarded the contracts. While the employer may, for just and valid reasons, choose not to execute an agreement, even after letters of acceptance are issued to the lowest bidders, that would not justify another tenderer to seek cancellation of the letters of acceptance behind their back, nor would this Court be justified in passing an order, granting the reliefs sought for in the writ petitions, without giving a reasonable opportunity of being heard to those in whose favour letters of acceptance were issued.

The submission that the lowest bidders were only proper parties, and not necessary parties to the writ proceedings does not merit acceptance. If the orders, impugned in the writ petitions, were to be set aside, the respondents would be required to accept the technical bids submitted by the appellant-writ petitioner, to open his financial bid and, thereafter, evaluate all the financial bids once again; such an exercise could only have been undertaken by the respondents, if the letters of acceptance had been cancelled. In the present case, the validity of the letters of acceptance has neither been subjected to challenge, nor have the lowest bidders been arrayed as respondents. This Court could not therefore, behind their back, set aside the proceedings whereby the offer of the lowest bidder was accepted by the respondents.

It is, no doubt, true that the learned Single Judge has not non-suited the appellant-writ petitioner on the ground of non-joinder of necessary parties; and the appeal preferred, against the order of the learned Single Judge, is by the appellant-writ petitioner and not by the respondents. In such appeals, the Appellate Court would, ordinarily, not grant any relief in favour of the respondents, in as much as the respondents have not preferred the appeals. The Division Bench would, nonetheless, be entitled to uphold the order passed by learned Single Judge, albeit on a different ground.

As noted hereinabove the counter affidavit was filed by the respondent on 20.03.2019, and the order under appeal was passed by the learned Single Judge in Court on 06.05.2019. The appellants-writ petitioners were aware of the fact that letters of acceptance were issued in favour of the lowest bidders, when they received the counter affidavit on 20.03.2019. It is not as if the writ-petitions were heard and decided on the very same date on which the counter-affidavit was filed i.e. on 20.03.2019. The appellant-writ petitioner should, therefore, have arrayed the lowest bidders as parties to the writ petition. Despite lapse of a month and a half after 20.03.2019, the appellant-writ petitioner chose not to do so. The lowest bidders, in whose favour letters of acceptance were issued on 14.02.2019 and 22.02.2019 respectively, were necessary parties to the writ petitions, and failure to array them as respondents in the writ petition is fatal.

We make it clear that we have not expressed any opinion on the merits of the appellant-writ petitioner's claim; and the appeal is being rejected on the sole ground of non-joinder of necessary parties i.e. the lowest tenderers in whose favour letters of acceptance were issued by the respondents on 14.02.2019 and 22.02.2019.

The Special Appeals fail and are, accordingly, dismissed. No costs.