9911796707
TMI Blog2012 (5) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... essential conditions of eligibility for the intending bidders: "1. Registered Contractors have to produce valid Registration certificate in the category of S-V or equivalent in any State/Central Government Department or Government undertaking. a) Registered Contractors/Firms of Repute/Joint Venture firms have to produce certificate for executing single work of integrated water supply scheme comprising of intake well, raw/clear water pumping main, pumps, OHTS, Distribution system completed and running successfully at present, having value equal to 60% of the cost of the proposed works in last 5 years. This certificate should clearly mention amount of contract, completion period as per Tender and actual completion period. (In case of WPI adjustment for cost of works the same may be furnished along with a certificate of Chartered Accountant). The certificate shall be issued from the officer not below the rank of Executive Engineer or equivalent. b) Certified copy of audited balance sheet of last 5 years showing annual turnover equal to estimated cost of the work and average net worth equal to 40% of the cost of works." 4. In response to the above NIT several applications were r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and not a single integrated water supply scheme and based thereon dispatched a telegram to respondent No.1 asking for rejection of the bid offered by respondent No.2, but to no avail. 6. Aggrieved by the allotment of work in favour of respondent No.2, the appellant filed Writ Petition No.3427 of 2011 before the Indore Bench of the High Court of Madhya Pradesh. The challenge to the eligibility of respondent No.2 and eventually to the allotment of the project work to the said respondent in the Writ Petition was confined to two distinct grounds, namely (1) that respondent No.2 had not filed the requisite certified balance-sheets for five years immediately preceding the issue of tender notice and (2) that respondent No.2 did not have the requisite experience of executing a single integrated water supply scheme of the required value. 7. The Writ Petition was opposed by the respondents who asserted in their respective affidavits that requirement of submission of requisite balance-sheets was substantially complied with inasmuch as certified copies of the balance-sheets for four years had been filed but since the audit for the fifth year i.e. 2010-2011 had not been completed, the cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (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 or quasi- administrative sphere. However, the decision can be tested by the application of the "Wednesbury principle" of reasonableness and the decision should be free from arbitrariness, not affected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure." 10. In Raunaq International Limited v. I.V.R. Construction Ltd. & Ors. (1999) 1 SCC 492, this Court reiterated the principle governing the process of judicial review and held that the Writ Court would not be justified in interfering with commercial transactions in which the State is one of the parties to the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India & Ors. (2006) 10 SCC 1, this Court held that while judicial review cannot be denied in contractual matters or matters in which the Government exercises its contractual powers, such review is intended to prevent arbitrariness and must be exercised in larger public interest. 12. Reference may also be made to Sterling Computers Ltd. v. M & N Publication Ltd. (1993) 1 SCC 445 where this Court held that power of judicial review in respect of contracts entered into on behalf of the State primarily involves examination of the question whether there was any infirmity in the decision-making process if such process was reasonable, rational and non-arbitrary, the Court would not interfere with the decision. In Air India Ltd. v. Cochin International Airport Ltd. & Ors. (2000) 2 SCC 617, this Court held that award of contract was essential in commercial transactions which involves commercial consideration and results in commercial decision. While taking such decision the State can choose its own method on terms of invitation to tender and enter into negotiations. The following passage from the decision is apposite: "The award of contract, whether it is by a private party or by a public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw could have reached.' ii) Whether public interest is affected. If the answers are in the negative, there should be no interference under Article 226." 14. Let us examine the challenge to the award of the contract in favour of respondent No.2 in the light of the above legal position. In the earlier part of this judgment the challenge to the allotment of the work in question was primarily based on a two-fold contention. Firstly, it was argued that respondent No.2, successful bidder, had not satisfied the requirement of filing audited balance sheets for the five years preceding award of the contract. That the said respondent had filed certified copies of the audited balance sheets for the years 2006-07, 2007-08, 2008-09 and 2009-10, was not in dispute. What was disputed was that the balance sheet for the year 2010-11 had not been filed, instead a certificate from the Chartered Accountant concerned, relating to the period 1.4.2010 to 22.3.2011, had been produced which did not, according to the writ- petitioner before us, satisfy the requirement of the NIT. Rejecting that contention the High Court held that since the balance sheet for the year 2010-11 had not been audited the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the High Court. It is true that the date of submission of tender was initially fixed upto 25th March, 2011 but the same was extended upto 7th April, 2011. That being so, 5 years immediately preceding the issue of the tender notice would have included the year 2010- 2011 also for which financial year, audit of the company's books, accounts and documents had not been completed. Such being the case, respondent No.2 could not possibly comply with the requirement of the tender notice or produce certified copy of the audited balance-sheet for the said year. All that it could possibly do was to obtain a certificate based on the relevant books, registers, records accounts etc., of the company, which certificate was indeed produced by the said respondent. The High Court has rightly observed that the appellant had not disputed the correctness of the turnover certified by the Chartered Accountant for the year 2010-2011 nor was it disputed that the same satisfied the requirement of the tender notice. In that view, therefore, there was no question of respondent No.2 being ineligible or committing a deliberate default in producing the requisite documents to establish its eligibility to offer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce that Respondent No.2 should have experience of having executed integrated water supply scheme." 17. To the same effect is the case set up by respondent No.2 who has stated as under: "I say and submit that the only requirement as per the said eligibility condition was to have executed a single work of integrated water supply scheme comprising of all the components, such as intake well, raw/clean water, pumping main, pumps, water treatment plants, over head tanks, distribution system etc., but it was not necessary for the bidder to have himself constructed all the components of integrated water supply scheme. As such to show his experience in the said matter, respondent No.2 also has placed on record certificate issued by Bardoli Nagar Seva Sadan, (Annexure P/10 Page 78 of SLP), wherein respondent No.2 has constructed water treatment plant of 13.5 MLD capacity.................." They have carried out the work of integrated water supply for Upleta Municipal Council for a sum of Rs. 14.97 crores, similarly respondent No.2 have also carried augmentation water supply scheme for Bardoli Incorporation Seva Sadan of Rs. 4.35 crores, integrated drinking water supply scheme for Vyara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d water supply scheme and fulfilling that condition of tender by reference to the work undertaken by them. We, therefore, see no reason to interfere with the view taken by the High Court of the allotment of work made in favour of respondent No.2. 20. We may while parting point out that out of a total of Rs. 19.5 crores representing the estimated value of the contract, respondent No.2 is certified to have already executed work worth Rs. 11.50 crores and received a sum of Rs. 8.79 crores towards the said work. More importantly the work in question relates to a drinking water supply scheme for the residents of a scarcity stricken municipality. The project is sponsored with the Central Government assistance under its urban infrastructure scheme for small and middle towns. The completion target of the scheme is September 2012. Any interference with the award of the contract at this stage is bound to delay the execution of the work and put the inhabitants of the municipal area to further hardship. Interference with the on-going work is, therefore, not conducive to public interest which can be served only if the scheme is completed as expeditiously as possible giving relief to the thirst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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