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Saturday, October 10, 2015

When the appellant-Corporation had taken the decision regarding cancellation of the tender in the best interest of the corporation to get the best price and also to save public money. Therefore, the same could not be termed as an arbitrary decision of the appellant- Corporation.=The appellant- Corporation’s decision in cancelling its earlier tender is not in violation of Article 14 of the Constitution of India, as the High Court did not find any malafide intention on the part of the appellant-Corporation to favour someone in taking such decision. The appellant-Corporation’s decision in cancelling the earlier tender notice vide corrigendum dated 30.11.2012 and then issuing a subsequent tender notice dated 13.12.2012 inviting fresh bids from eligible persons for the same works was with a bonafide intention to get better and reasonable rates from the bidders for the execution of the works and not to show favouritism in favour of any bidder. The High Court has also failed to appreciate the relevant fact that the officials of the appellant-Corporation made proper analysis about the rates quoted by both the respondents as the same were higher than the usual market tendency and accordingly, they decided to cancel the entire tender process.A careful reading of the impugned judgment and order would show that none of the aforesaid aspects have been borne in mind by the High Court and it has failed to appreciate the same in a proper perspective while exercising its judicial review power. The High Court has erred in quashing the decision of the appellant-Corporation regarding the cancellation of its earlier tender notice and also the subsequent tender notice issued afresh by it on 13.12.2012 for the same works.We set aside the impugned judgment and order of the High Court passed in W.P.(C) No. 7993 of 2012 quashing the decision of the Corporation to cancel its earlier tender notice vide corrigendum dated 30.11.2012 and re-tender notification dated 13.12.2012 issued by the appellant-Corporation inviting bids afresh for the works notified therein. We restore the above re-tender notice and opportunity is given to both the respondents to submit their tender and the tender inviting Authority of the Corporation can proceed further in processing the bids after proper evaluation of the same without any further delay. No order as to costs.





                         IN THE SUPREME COURT OF INDIA
                          CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO.8314 OF 2015
     (Arising out of S.L.P. (C) NO. 23038 of 2013)


SOUTH DELHI MUNICIPAL CORPORATION   …… APPELLANT

                                   VERSUS

RAVINDER KUMAR & ANR.              …… RESPONDENTS



                               J U D G M E N T


V. GOPALA GOWDA, J.

    Leave granted.

This Civil Appeal is directed against the impugned judgment and order  dated
14.02.2013 passed by the High Court of Delhi at New Delhi in  Writ  Petition
(C) No. 7993/2012 whereby it has set aside the decision  of  the  appellant-
Corporation, dated 30.11.2012, regarding cancellation of the earlier  tender
notice whereunder both the respondents were declared successful and  it  has
also  quashed  the  appellant-Corporation’s  subsequent   e-tender   process
carried out in pursuance of tender notice No. 24 dated 13.12.2012.  Further,
the High Court has directed the appellant-Corporation to  process  the  bids
submitted by both the respondents in accordance with  law  in  pursuance  of
the Notice Inviting Tender No.  21  dated  15.11.2012.  The  correctness  of
impugned judgment and order is challenged in this appeal as  the  appellant-
Corporation is aggrieved of the said judgment and order of the High Court.

The necessary brief facts are  stated  hereunder  to  appreciate  the  rival
legal contentions urged on behalf of the parties:

The appellant is South  Delhi  Municipal  Corporation  and  respondents  are
registered civil contractors with the appellant authorities  and  stated  to
have executed several works of the Corporation in the past.  The  appellant-
Corporation in its area invited tenders relating to 26 works to be  executed
against NIT No.  21/EE(MZ-WZ)-II/TC/2012-2013  dated  15.11.2012.  The  last
date for bid preparation and its submission was 26.11.2012 upto 3.00 PM  and
the opening of the financial bids was scheduled on 28.11.2012, but the  date
was extended to 29.11.2012 as 28.11.2012 was declared holiday on account  of
‘Guru Nanak Birthday’.

On 29.11.2012, when the financial bids were  opened,  both  the  respondents
were declared successful being the lowest bidder in  respect  of  16  works.
There were only five bidders who participated in the  tender  process.  Both
the  respondents  being  successful  bidders   approached   the   appellant-
Corporation for issuance of work order against  the  works  for  which  they
were  declared  successful.  The  Executive  Engineer  of   the   appellant-
Corporation orally  informed  the  respondents  about  the  cancellation  of
entire tender due  to  non-submission  of  draft  by  some  of  the  bidders
(containing the tender cost and earnest money) required to  be  filed  along
with  the  tender.  Dissatisfied  with  the  oral  information   about   the
cancellation  process  the  respondents  insisted  for  written   intimation
regarding the same.

On respondents’ insistence the appellant-Corporation  issued  a  corrigendum
dated 30.11.2012 which stated that the tender was  being  cancelled  due  to
Administrative Reasons.

The respondents then sent a legal notice dated 13.12.2012 to the  appellant-
Corporation but they did not receive any reply to the same. However, on  the
same  day  appellant-Corporation  issued  a  fresh  NIT  No.  24  EE-(M-WZ)-
U/TC/2012-2013 dated  13.12.2012  inviting  fresh  bids  from  the  eligible
persons.

Being aggrieved by the cancellation of  earlier  tender  i.e.,  NIT  No.  21
dated 15.11.2012 vide corrigendum dated  30.11.2012,  both  the  respondents
filed a writ petition before the High Court of Delhi.

The High Court allowed the  respondents’  writ  petition  holding  that  the
process adopted by the appellant-Corporation in  coming  to  the  conclusion
that the rates offered were high was faulty. The High Court  on  that  basis
set aside and  quashed  the  decision  of  the  appellant-Corporation  dated
30.11.2012, regarding cancellation of its earlier tender  and  directed  the
appellant-Corporation to process the bids submitted by both the  respondents
in accordance with law in pursuance of the NIT No. 21 dated  15.11.2012.  It
also quashed the subsequent tender process pursuant  to  NIT  No.  24  dated
13.12.2012.  Hence,  this  appeal  is  filed  by  the  appellant-Corporation
challenging the said order on several grounds.

Mr. Gaurang Kanth, learned counsel for the  appellant-Corporation  contended
that the High Court has erred in quashing the  decision  of  the  appellant-
Corporation regarding cancellation of earlier tender even when  it  did  not
find any malafide intention on the part of the appellant to favour  someone.
He urged that the High Court has failed to  appreciate  the  fact  that  the
said decision was taken by  the  appellant-Corporation  to  serve  the  best
interest of the Corporation with a bonafide intention.

He further contended that the High Court has erroneously  ignored  the  fact
that in the same financial year i.e.  2012-2013,  the  appellant-Corporation
issued 72 other work orders for similar works in the adjacent areas  of  the
Corporation and all of them were issued at much lower rates than  the  rates
quoted by both the respondents. He urged  that  before  the  issuance  of  a
particular  contract,  the  internal  system  for  financial  check  by  the
concerned  department  of  the  appellant-Corporation  has  to  justify  the
reasonableness of the rates quoted by the  bidders  by  comparing  the  same
with rates of other  similar  works  awarded  in  the  recent  past  by  the
appellant-Corporation.

He further submitted that CVC Guidelines on  the  subject  ensure  that  the
Corporation gets the best price for execution of  works  at  the  same  time
ensuring  transparency  in  awarding  contracts  in  favour  of   successful
bidders. It was further urged by  him  that  the  appellant-Corporation  had
acted bonafide to get the best price for execution of works and  to  protect
the public money, by cancelling  the  entire  tender  process  and  inviting
fresh bids by another tender notice dated 13.12.2012.

It was further contended by him that the High Court  has  proceeded  on  the
wrong   assumption   that   the   appellant-Corporation   had   prepared   a
justification of rates in connection  with  the  said  tender.  As  no  such
justification of rates was  prepared  by  the  appellant-Corporation  reason
being the rates received from both the respondents  were  much  higher  than
the rates at which similar  works  were  awarded  in  favour  of  successful
bidders by the appellant-Corporation in the recent past. The High Court  has
thus proceeded on a wrong basis to quash  the  decision  of  the  appellant-
Corporation regarding the cancellation of its earlier tender  and  also  the
subsequent tender dated 13.12.2012 issued afresh for the  same  works.  This
decision of the High Court is erroneous in law  and  is  liable  to  be  set
aside in this Appeal.

It was further argued by him that the High Court while passing the  judgment
and order has erroneously ignored the fact that the State Government is  the
guardian of public finance and the right to refuse the lowest or  any  other
tender submitted to  it  is  vested  with  the  State  Government,  provided
Article 14 of the Constitution of India is not violated in that process.  He
urged that the appellant-Corporation had not violated the said provision  of
the Constitution of India by cancelling its earlier tender vide  corrigendum
dated 30.11.2012 and issuing tender notice dated  13.12.2012  for  the  same
works in the  public  interest.  The  appellant-Corporation  had  taken  the
decision regarding cancellation of the tender in the best  interest  of  the
Corporation to get the best price and also to save public money.  Therefore,
the same could not be termed as an  arbitrary  decision  of  the  appellant-
Corporation.

It was further contended by the learned counsel  that  the  High  Court  has
failed to appreciate the fact that the Courts do not sit in appeal over  the
commercial decisions taken by the statutory local  self  government  in  the
best interest of public.

On the other hand, Ms. Anusuya Salwan, learned counsel appearing  on  behalf
of both the respondents contended  that  the  appellant-Corporation’s  stand
that the earlier  tender  was  cancelled  as  the  rates  received  by  them
pursuant to the said tender were found to be higher than the rates at  which
similar works were awarded by appellant-Corporation in the Corporation  Area
in the recent past is absolutely false and misleading. In this  regard,  she
submitted that bids were invited by the appellant-Corporation on  the  basis
of tender rates fixed and the contractors are required to quote their  rates
below or above on percentage basis. After a bid is made by  the  contractor,
the tender accepting Authority satisfies itself about the reasonableness  of
the rates offered by the contractor in his  bid  before  acceptance  of  the
tender in his name. At this  stage  the  reasonableness  of  the  rates  are
assessed on the basis of justified rates. Justification of rates offered  by
the bidders is prepared by the appellant-Corporation on the basis  of  Delhi
Schedule of Rates, 2007 and Delhi Schedule of  Rates,  2012.  In  connection
with the above she pointed out that Delhi Schedule of Rates, for  each  item
of work prepared on the basis of CPWD rates on the basis of which works  can
be executed by the contractor and in case  the  rates  on  which  works  are
allotted are very much below the said Delhi Schedule  of  Rates,  there  are
chances of the quality of the work to be executed by the contractor  getting
compromised. She further submitted  that  the  appellant-Corporation  itself
has  issued  two  circulars  dated  30.08.2012  and  02.01.2013.  The  first
circular dated 30.08.2012 provides for adoption of an escalation @  61%  qua
2007 rates and  8%  qua  2012  rates,  whereas  the  second  circular  dated
02.01.2013 provides for the adoption of escalation @ 70% qua 2007 rates  and
14% qua 2012 rates. She further urged that the  rates  quoted  by  both  the
respondents were much below the rates in the said circulars  and  therefore,
the contention of the appellant-Corporation that  they  cancelled  the  said
tender on the ground of rates offered by both the respondents being high  is
absolutely misconceived and liable to be outrightly rejected.

She further contended that the plea of the  appellant-Corporation  that  the
rates quoted by the respondents were much higher than  the  rates  at  which
similar works were awarded in favour of successful  bidders  in  the  recent
past is also not tenable in law as the  tenders  issued  for  similar  works
were issued at abnormally low rates and the same could not be a  bench  mark
for comparison with the rates offered by both the  respondents  in  relation
to the tender for the works which have  been  cancelled  by  the  appellant-
Corporation. She urged  that  the  High  Court  was  right  in  passing  the
judgment in favour of the  respondents  for  reasons  that  were  valid  and
cogent. Hence, this Court need not exercise its  appellate  jurisdiction  to
annul the impugned order as there is no miscarriage of justice in  the  case
on hand. She therefore, prayed for dismissal of this appeal.

With reference to the above rival legal contentions urged on behalf  of  the
parties, this Court has carefully examined the correctness of  the  findings
and reasons recorded in the impugned judgment and order passed by  the  High
Court. The High Court has quashed the decision of the  appellant-Corporation
dated 30.11.2012, regarding  cancellation  of  its  earlier  tender  without
there being any finding to the effect of any malafide intention on the  part
of the appellant  in taking decision to cancel  its  earlier  tender  notice
with a view to favour someone.

By a careful examination of the impugned judgment  and  order  of  the  High
Court and the facts of  the  case  on  hand,  the  following  aspects  would
emerge:
The High Court has failed to  appreciate  that  the  appellant-Corporation’s
decision of cancelling its earlier  tender  notice  vide  corrigendum  dated
30.11.2012 was taken with a bonafide intention to serve  the  best  interest
of the Corporation ensuring that only a reasonable  price  is  paid  to  the
successful contractors for the works executed  in  the  area  as  the  money
which it spends on getting such works done is public money.
The High Court has not appreciated the fact  that  for  the  same  financial
year i.e. 2012-2013 the concerned department  of  the  appellant-Corporation
has issued 72 other work orders for similar works in the adjacent  areas  of
the Corporation and all of them were issued for much lower  rates  than  the
rates offered by both the respondents.
Further, the High Court has conveniently ignored the  very  relevant  aspect
of the case namely, that the appellant-Corporation,  before  issuance  of  a
particular  tender  notice,  is  required  to  satisfy  itself   about   the
reasonableness of the rates quoted  by  the  bidders  keeping  in  view  the
prevalent market rates in the Corporation  Area.  The  internal  system  for
financial check by the concerned  department  of  the  appellant-Corporation
justifies the  reasonableness  of  the  rates  offered  by  the  bidders  by
comparing them with the rates at which other similar works were  awarded  by
the appellant-Corporation  in  the  recent  past  in  favour  of  successful
bidders. For the aforesaid valid  reason,  the  appellant-Corporation  being
the custodian of public money, with  bonafide  intention  to  get  the  best
price, has cancelled  its  earlier  tender  notice  referred  to  supra  and
invited fresh bids by issuing another tender notice dated 13.12.2012.
Further, the High Court has not noticed  another  important  aspect  of  the
case namely, that there are CVC guidelines to ensure  that  the  Corporation
gets the best price  for  the  execution  of  the  works  as  per  the  said
guidelines and to ensure the  transparency  in  awarding  the  contracts  in
favour  of  successful  bidders  in  the  tender  process   the   appellant-
Corporation decided to cancel its earlier tender  notice  and  a  subsequent
tender notice dated 13.12.2012 was issued afresh by it for getting the  same
works done through successful contractors.
The High  Court  has  erroneously  quashed  the  Corporation’s  decision  of
cancelling its earlier tender notice vide corrigendum  dated  30.11.2012  on
the wrong  assumption  that  the  concerned  department  of  the  appellant-
Corporation has prepared the justification of rates but in reality the  same
were  never  prepared  by  the  concerned  department  of   the   appellant-
Corporation as the rates  received  from  both  the  respondents  were  much
higher than the rates at which similar works were awarded in favour  of  the
successful bidders by it in the recent past.
Further, the High Court has failed to consider another important  fact  that
the Government being guardian of public finance it has right to  refuse  the
lowest or any other tender bid or  bids  submitted  by  the  bidders  to  it
provided its decision is neither arbitrary nor unreasonable  as  it  amounts
to violation of Article 14 of the  Constitution  of  India.  The  appellant-
Corporation’s decision in cancelling its earlier tender is not in  violation
of Article 14 of the Constitution of India, as the High Court did  not  find
any malafide intention on the part of the  appellant-Corporation  to  favour
someone in taking such decision.  The  appellant-Corporation’s  decision  in
cancelling the earlier tender notice vide corrigendum dated  30.11.2012  and
then issuing a subsequent tender  notice  dated  13.12.2012  inviting  fresh
bids from eligible persons for the same works was with a bonafide  intention
to get better and reasonable rates from the bidders  for  the  execution  of
the works and not to show favouritism in favour of any bidder.
The High Court has also failed to appreciate the  relevant   fact  that  the
officials of the appellant-Corporation made proper analysis about the  rates
quoted by both the respondents as  the  same  were  higher  than  the  usual
market tendency and accordingly, they decided to cancel  the  entire  tender
process.

A careful reading of the impugned judgment and order would  show  that  none
of the aforesaid aspects have been borne in mind by the High  Court  and  it
has failed to appreciate the same in a proper perspective  while  exercising
its judicial review  power.  The  High  Court  has  erred  in  quashing  the
decision of the appellant-Corporation  regarding  the  cancellation  of  its
earlier tender notice and also the subsequent tender  notice  issued  afresh
by it on 13.12.2012 for the same works.

For the reasons stated above, the High Court has  failed  to  see  that  the
appellant-Corporation adopted a fair and transparent method by inviting  the
bids for the re-tender notice issued by it. The High  Court  has  not  found
any malafide intention on the part of appellant-Corporation in inviting  the
fresh bids after taking the decision to cancel its  earlier  tender  notice.
The appellant-Corporation, being the custodian of public finance,  took  its
decision objectively with a bonafide intention to serve  the  best  interest
of the public in general. Thus, for the foregoing  reasons,  the  appellant-
Corporation has not committed any wrong in  cancelling  its  earlier  tender
notice and issuing subsequent tender notice afresh inviting  bids  from  the
eligible contractors.

 The decision of the High  Court  in  quashing  the  appellant-Corporation’s
decision of cancelling the earlier tender vide corrigendum dated  30.11.2012
and also the subsequent e-tender process  carried  out  by  it  pursuant  to
notice No. 24 dated 13.12.2012 is vitiated in law and  therefore,  the  same
is liable to be set aside.

For the reasons  stated  supra,  the  submissions  made  on  behalf  of  the
appellant-Corporation are well founded and the  same  must  be  accepted  by
this Court. This Civil Appeal of the appellant-Corporation must succeed  and
deserves to be allowed. Accordingly, we pass the following        order :-

The Civil Appeal is allowed.

We set aside the impugned judgment and order of the  High  Court  passed  in
W.P.(C) No. 7993 of 2012 quashing the decision of the Corporation to  cancel
its earlier tender notice vide corrigendum dated  30.11.2012  and  re-tender
notification dated 13.12.2012 issued by the  appellant-Corporation  inviting
bids afresh for the works notified therein. We restore the  above  re-tender
notice and opportunity is given to both  the  respondents  to  submit  their
tender and the tender inviting Authority  of  the  Corporation  can  proceed
further in processing the bids after proper evaluation of the  same  without
any further delay. No order as to costs.




                                         …………………………………………………………J.
                             [T.S. THAKUR]




                             …………………………………………………………J.
                [V. GOPALA GOWDA]

New Delhi,
October 7, 2015

ITEM NO.1A-For Judgment       COURT NO.11               SECTION XIV

               S U P R E M E  C O U R T  O F  I N D I A
                       RECORD OF PROCEEDINGS

C.A. No. 8314/2015 arising from Petition(s) for Special Leave to Appeal (C)
 No(s). 23038/2013

SOUTH DELHI MUNICIPAL CORP                         Petitioner(s)

                                VERSUS

RAVINDER KUMAR & ORS                               Respondent(s)

Date : 07/10/2015 This appeal was called on for pronouncement of JUDGMENT
today.


For Petitioner(s)
                     Mr. P. Parmeswaran,Adv.

For Respondent(s)
                     Ms. S. Janani,Adv.


            Hon'ble Mr. Justice V.Gopala Gowda pronounced  the  judgment  of
the Bench comprising Hon'ble Mr. Justice T.S. Thakur and His Lordship.
            Leave granted.
            The appeal is allowed in  terms  of  the  signed  Non-Reportable
Judgment.


       (VINOD KR.JHA)                       (CHANDER BALA)
         COURT MASTER                        COURT MASTER
        (Signed Non-Reportable Judgment is placed on the file)

-----------------------
NON-REPORTABLE


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