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2012 Supreme(Bom) 2325
High Court of Judicature at Bombay
MOHIT S. SHAH, RANJIT MORE & A.A. SAYED, JJ.
Niyaz Ahmed Vanu
Versus
Municipal Corporation of Gr. Mumbai (M.C.G.M.) & Others
Public Interest Litigation No.9 of 2012
Decided on : 14-12-2012
For the Petitioner:Arshad Shaikh with Aditya Shiralkar i/b M/s. Shiralkar & Co., Advocates.
For the Respondents:E.P. Bharucha, Sr. Advocate with Ms. S.M. Modhale, BMC, R4, Iqbal Chagla, Sr. Advocate with Aniruddha Joshi, Nikhil, Karnawat i/b Viraj Maniar, Advocates.
Headnote:Mumbai Municipal Corporation Act, 1988 - Sections 72(1) and 72(3) - Appointment of Auditor for Roads.
Even though tenders were required for appointment world class auditor for road works, decision of Municipal Corporation to award contract by dispensing with inviting tender, justifiable in view of urgency involved. - The stand of the respondent- Municipal Corporation is reasonable-while appointment of respondent No. 4 was made without giving any public notice, in view of the urgency involved at the relevant time, the Corporation has decided to prepare a panel of auditors for quality audit of construction of roads and that work of quality audit will be entrusted to the auditors so empaneled.
As regards the preliminary objection. The petitioner himself is not in the business of providing quality audit for construction roads. None of the parties, who are in the profession of quality audit of construction of roads have come to the Court. In fact, the petitioner is a Member of the Standing Committee of the respondent-Municipal Corporation, who was present at the first meeting when the informal discussion had taken place for approval of the contract for audit of construction of roads and the petitioner had not objected for selection of respondent No. 4 for appointment as quality auditor for construction of roads. However, in the view that Court is taking on the merits of the matter, it is not necessary to give a finding on the preliminary objection :
(I) While awarding contract for construction of roads, the Mumbai Municipal Corporation has been proceeding on the erroneous basis that a public authority has no option but to accept the lowest bids, even of such bids are 20-25% less than estimated cost of the project.
(II) As provided in sub-section (2) of Section 72 of the Mumbai Municipal Corporation Act itself, the competent authority is not bound to accept any tender, which may be made in pursuance of the public notice and that the authority may accept any of the tender so made, which appears to the competent authority, upon a review of all the circumstances, to be the most advantageous to public interest.
(III) The work of quality audit of roads or work of similar nature is not covered by the expression "the execution of any work or supply of any materials or goods" within the meaning of Section 72(1) of the Mumbai Municipal Corporation Act, 1881.
(IV) For awarding contracts for quality audit of roads or for work of similar nature it would be sufficient for the Corporation give, over a period of time, an opportunity to be considered for empanelment of audit to without necessarily inviting bids from this who are qualified and competent for such work.
(V) For appointing professionals, who must enjoy trust and confidence of the public authority, tenders are not to be invited because there may be qualified and competent professionals who would not like to submit applications for appointment as auditors and consultants.
(VI) In the facts of the present case, eves if it were to be held that tenders were required to be invited for appointment of auditors, for quality assurance, quality control and quality audit of road works, the impugned decision of the Municipal Corporation to award the contract to respondent No. 4, by dispensing with inviting tenders, was justified in view of the urgency involved.
The work of quality audit of roads or work of similar nature to be done by a person who must enjoy trust and confidence of the public authority is not covered by the expression "the execution of any work or supply on any materials or goods" within the meaning of sub-section (1) of Section 72 of the Mumbai Municipal Corporation Act, 1881. Hence, it is not necessary for Municipal Commissioner to assign such work only by inviting tenders as contemplated by the proviso, i.e. sub-section (3) of Section 72 of the said Act.
Chief Justice
This Full Bench has been constituted for considering the following question referred by the Division Bench of this Court (Coram: S.A. Bobde & R.D. Dhanuka, JJ.) by order dated 21 February 2012:
“Whether the work of quality audit of roads or work of similar nature involves “the execution of any work or supply of any materials or goods” within the meaning of Section 72 of the Mumbai Municipal Corporation Act, 1881 and can be awarded by the Commissioner only by inviting tenders, as contemplated by that provision?”
2. The broad facts leading to the present reference are as under:-
The petitioner has challenged the award of the contract by the Municipal Corporation for Gr. Mumbai for quality assurance, quality control and quality audit of road works for a sum of Rs.4.17 crore. The contract is awarded in pursuance of the Resolution dated 4 January 2012 of the Standing Committee of the Municipal Corporation for appointment of a world class auditor for roads. The Corporation has accordingly allotted the task to respondent No.4-SGS India Pvt. Ltd., which in the opinion of the Municipal Corporation is a world class auditor and which is already doing the same work of quality audit of road works at several places such as Mumbai International Airport, PMGSY Golden Quadrilateral and several other Municipal Corporations in the State of Maharashtra. The Standing Committee noted that at that stage time was not available for complying with the process for appointing third party inspecting organization by inviting tenders. Institutions which are undertaking such type of audit work are very few. It was necessary to appoint the consultant of world class level for quality audit of construction of roads by metalization and by providing cement concrete. The Standing Committee noted that respondent No.4 is a world level organization which does such audit work in 170 countries. The audit charges of respondent No.4 will be 0.85% of the costs of work of construction of roads, i.e. on the costs of Rs.490.83 crore of construction of roads, the audit charges of respondent No.4 will be Rs.4.17 crore plus service tax.
3. The petitioner has challenged the legality of the said decision of the Corporation on the ground that that the contract has been awarded without inviting tenders and is, therefore, violative of the provisions of section 72(1) of the Mumbai Municipal Corporation Act, 1881 (“the Act”) and that the impugned decision is not justifiable under section 72(3) of the Act. In support of the above contention, learned counsel for the petitioner relied upon a decision of a Division Bench of this Court in Qmax Consultants Pvt. Ltd. v/s. Municipal Corporation of Greater Bombay & ors., 2006 (3) Mh.L.J. 281. According to the petitioner, this Court has held in the said decision that such contracts which exceed Rs.50,000/-in value are to be awarded only by floating a tender.
4. At the hearing of PIL before the Division Bench, the learned counsel appearing for the respondent-Municipal Corporation as well as learned counsel appearing for respondent No.4-SGS India Pvt. Ltd. made two fold submissions. In the first place, that the facts and circumstances of the present case are very different from those in Qmax case where the Court was dealing with simultaneous audit. Secondly, it was submitted that section 72 of the Act does not apply to appointment of auditor, advocate, chartered accountant or similar appointments of a fiduciary nature. According to respondents, section 72 of the Act makes it mandatory for the Municipal Commissioner to give a public notice inviting tenders only where the contract is “for the execution of any work, or, the supply of any materials and goods”, which involves an expenditure exceeding Rs.50,000/-. But quality audit of roads, which involves a simultaneous assessment and evaluation of work that is being done on roads, does not involve the execution of any work or supply of any material or goods as the nature of the
