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SUPREME COURT OF INDIA
R.V. Raveendran, G.P. Mathur, JJ.
JAGDISH MANDAL – Appellant
Versus
STATE OF ORISSA AND OTHERS – Respondent
Civil Appeal No. 5699 of 2006 (Arising out of SLP (Civil) No. 3196 of 2006)
Decided on : 11-12-2006
Tender Rejection - Construction Contracts - Orissa Public Works Department Code - [3.5.18, 18.1, 18.2, 18.3, 18.4, 18.5, 18.6, 19] - The court examined the rejection of the lowest tenders of the fifth respondent in two cases and found that the Committee had good and adequate reasons for the rejection. The High Court's interference with the contracts awarded to the respective appellants was unjustified.
Fact of the Case:
The case involved the rejection of the lowest tenders of the fifth respondent in two cases related to construction contracts. The High Court had interfered with the contracts awarded to the respective appellants based on the rejection of the tenders.
Finding of the Court:
The court found that the Committee had good and adequate reasons for rejecting the lowest tenders of the fifth respondent in both cases and that there was no justification for the High Court to interfere with the contracts awarded to the respective appellants.
Issues: The main issue was whether the High Court's interference with the contracts awarded to the respective appellants was justified based on the rejection of the lowest tenders of the fifth respondent.
Ratio Decidendi: The court held that the rejection of the lowest tenders of the fifth respondent was based on good and adequate reasons, and the High Court's interference was unjustified.
Final Decision: Both appeals were allowed, and the judgment of the High Court in the two writ petitions was set aside. The writ petitions filed by the fifth respondent were rejected. Parties were to bear respective costs.
Key Points: - The court's decision emphasized the importance of valid and reasonable grounds for rejecting tenders and highlighted the limited scope of judicial review in matters related to tender processes and award of contracts [judgement_subject]. - The case involved the rejection of the lowest tenders of the fifth respondent in two cases related to construction contracts [Fact of the Case]. - The court found that the Committee had good and adequate reasons for rejecting the lowest tenders of the fifth respondent in both cases [Finding of the Court]. - The High Court's interference with the contracts awarded to the respective appellants was unjustified [Finding of the Court]. - The court held that the rejection of the lowest tenders of the fifth respondent was based on good and adequate reasons, and the High Court's interference was unjustified [Ratio Decidendi]. - Both appeals were allowed, and the judgment of the High Court in the two writ petitions was set aside [Final Decision]. - The court examined the rejection of the lowest tenders of the fifth respondent in two cases and found that the Committee had good and adequate reasons for the rejection [judgement_subject]. - The court noted that judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and malafides, and not to check whether a decision is sound [1000626000018]. - The court stated that if the decision relating to award of contract is bona fide and is in public interest, courts will not interfere even if a procedural aberration or error in assessment is made out [1000626000018]. - In the first case, the rejection of the tender was based on the communication from postal authorities stating that the TD passbook should not be acted upon, which was a valid ground for treating the EMD as defective [1000626000020][1000626000022]. - In the second case, the rejection of the tender was based on the unduly low and unworkable rate quoted for a significant item of work, which is a valid ground for rejection according to the Orissa Public Works Department Code [1000626000027]. - The court found that the High Court exceeded its power of judicial review by interfering with the contracts awarded to the appellants (!) .
JUDGMENT
R.V. Raveendran, J.
Leave granted in both the special leave petitions.
2. These two appeals by special leave, arise out of a common judgment dated 25.1.2006 passed by the Orissa High Court allowing Writ Petition (Civil) Nos. 4769/2005 and 4768/2005 filed by Narayan Mohanty (common fifth respondent in these two appeals). In the said petitions, Narayan Mohanty had challenged the award of construction contracts to Jagdish Mandal and Laxman Sharma (respective appellant in these appeals) in Upper Indravati Irrigation Project ('UIIP' for short). The State, the Executive Engineer (Right Canal Division No.III), the Chief Engineer (UIIP), and Superintending Engineer (UIIP) who were the common respondents 1 to 4 in the said two writ petitions hold the same rank in these two appeals.
Facts in SLP [C] No. 3196/2006 (re : first stretch)
2. The second Respondent, acting on behalf of the Water Resources Department, State of Orissa, invited tenders for "construction of Right Extension Main Canal from RD 8.01 km to 9.03 km including structures" by tender notice dated 9.11.2004. The estimated value of the work as per the tender schedule was Rs. 1,69,10,506. In response, 17 tenders were received. The offer of the fifth respondent was the lowest (Rs. 1,22,99,099) and the offer of appellant (J. Mandal) was the second lowest (Rs. 1,29,36,579). The Executive Engineer recommended the acceptance of the tender of fifth respondent.
3. The fifth respondent furnished the Earnest Money Deposit (EMD) by pledging a postal Term Deposit of Rs. 1,70,000/- (Passbook No. 154120 dated 6.12.2004 issued by the Post Master, Mukhiguda) in favour of the second respondent. A written complaint was received by the Department alleging that fifth respondent had made a postal deposit of only Rs. 7,000 and had defrauded the Department by altering the figure in the passbook as Rs. 1,70,000. In view of the said complaint, the Superintending Engineer wrote to the concerned Post Office on 3.2.2005 requesting confirmation about the authenticity of the said Term deposit. A similar letter was addressed by the Chief Engineer on 11.3.2005 to the Post Master General, Berhampur Zone, seeking information as to whether fifth respondent had made a deposit of Rs. 1,70,000 on 6.12.2004 or any subsequent date. The Superintendent of Post Offices, Kalahandi Division, sent a reply dated 14.3.2005 to the Superintending Engineer stating that the said TD Account for Rs. 1,70,000 submitted by fifth respondent should not be taken into account for any official requirement.
4. The tenders were scrutinized and considered by the Project Level Committee ('Committee' for short) consisting of the Superintending Engineer, (Right Canal Circle), the Financial Advisor and Chief Accounts Officer (UIIP), the Executive Engineer (UIRC Division No. III), and the Assistant to Chief Engineer (UIIP). The details of their deliberations and recommendations are contained in the proceedings dated 24.3.2005. The Committee found that fifth respondent, the appellant (Jagdish Mandal) and Dinesh Kumar Panda were the first, second and third lowest tenderers. Having regard to the communication dated 14.3.2005 of the Superintendent of Post Offices not to take note of Term Deposit for Rs. 1,70,000, the Committee held that the EMD submitted by fifth respondent was invalid and consequently his tender was 'non-responsive'. It therefore recommended the acceptance of the next lowest valid tender of Jagdish Mandal.
5. The office of the Post Master General, Berhampur, sent a reply dated 30.3.2005 to the Chief Engineer, UIIP, reiterating that TD Account No. 154120 for Rs. 1,70,000 of fifth respondent should not be taken into account.
6. On coming to know about the rejection of his tender, the respondent herein filed W.P. No. 4769/2005 seeking a direction to respondent 1 to 4 not to award to Jagdish Mandal or any other contractor, and a further direction for awarding the work to him. The Accepting Authority, however, accepted the offer of J
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