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IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD
R.D. Dhanuka, S.G. Mehare, JJ.
Khilari Infrastructure Pvt. Ltd. & Ors. – Appellants
Versus
State of Maharashtra & Ors. – Respondents
Writ Petition No. 195 of 2022 And Public Interest Litigation No. 5 of 2022
Decided On : 06-05-2022
TENDER - CONTRACT - SECTION 93 OF THE MAHARASHTRA MUNICIPAL COUNCILS, NAGAR PANCHAYATS & INDUSTRIAL TOWNSHIPS ACT, 1965 - APPROVAL OF THE MUNICIPAL COUNCIL - CONTRACT ENTERED INTO BY THE COMMISSIONER WITHOUT OBTAINING PRIOR APPROVAL OF THE STANDING COMMITTEE - VOID AND NOT BINDING - CONTRACT WHICH WAS ENTERED INTO BY THE COMMISSIONER WITHOUT OBTAINING PRIOR APPROVAL OF THE STANDING COMMITTEE, CONTRACT WAS VOID AND NOT BINDING. SUCH APPROVAL CANNOT BE SAID TO BE AN EMPTY FORMALITY. THE COMMITTEE IS REQUIRED TO PERFORM ITS FUNCTION IN TERMS OF THE PROVISIONS OF THE SAID ACT. A STATUTORY AUTHORITY HAS A DUTY TO ACT IN PUBLIC INTEREST AS ALSO FAIRLY AND IN A REASONABLE MANNER.
Fact of the Case:
The petitioner in Writ Petition No. 195 of 2022 filed under Article 226 of the Constitution of India has prayed for a writ of certiorari for quashing and setting aside the report/result of the tender opening committee of the respondent Nos. 4 and 5 dated 28.12.2021 in respect of the petitioner, work order order dated 30.12.2021 and agreement dated 30.12.2021 executed in favour of the respondent No. 6. The petitioner also prays for a writ of mandamus directing the respondent Nos. 4 and 5 to take the decision considering the financial bid of the petitioner for execution of the work order and agreement.
Finding of the Court:
The court held that the contract entered into by the Commissioner without obtaining prior approval of the standing committee, contract was void and not binding. Such approval cannot be said to be an empty formality. The committee is required to perform its function in terms of the provisions of the said Act. A statutory authority has a duty to act in public interest as also fairly and in a reasonable manner.
Issues: Whether the contract entered into by the Commissioner without obtaining prior approval of the standing committee is void and not binding.
Ratio Decidendi: The court relied on the judgment of the Hon'ble Supreme Court in a case of Nandkishore Ganesh Joshi Vs. Commissioner, Municipal Corporation of Kalyan and Dombivali and Others reported in AIR 2005 (Supreme Court) 34 and more particularly, on paragraph Nos. 16 to 21. The court held that a contract which was entered into by the Commissioner without obtaining prior approval of the standing committee, contract was void and not binding. Such approval cannot be said to be an empty formality. The committee is required to perform its function in terms of the provisions of the said Act. A statutory authority has a duty to act in public interest as also fairly and in a reasonable manner.
Final Decision: The court dismissed the writ petition and held that the contract entered into by the Commissioner without obtaining prior approval of the standing committee, contract was void and not binding.
JUDGMENT
R.D. Dhanuka, J. - Rule. The learned counsel appearing for the respondents waives service. Rule is returnable forthwith.
2. By consent of parties both the proceedings were heard together and being disposed of by common order.
3. The petitioner in Writ Petition No. 195 of 2022 filed under Article 226 of the Constitution of India has prayed for a writ of certiorari for quashing and setting aside the report/result of the tender opening committee of the respondent Nos. 4 and 5 dated 28.12.2021 in respect of the petitioner, work order order dated 30.12.2021 and agreement dated 30.12.2021 executed in favour of the respondent No. 6. The petitioner also prays for a writ of mandamus directing the respondent Nos. 4 and 5 to take the decision considering the financial bid of the petitioner for execution of the work order and agreement.
4. In Public Interest Litigation No. 5 of 2022, the petitioner has prayed for a writ of certiorari for quashing and setting aside the work order dated 30.12.2021 issued by the respondent No. 5 - Municipal Council in favour of respondent No. 7 and to issue a fresh tender for underground sewage scheme under MSJNMA and further seeks directions to issue fresh tender for underground sewage work under the said scheme for Osmanabad city. The petitioner also seeks an order and direction against the respondents to decide the representation dated 17.01.2022 made by the petitioner.
Facts and submissions in Writ Petition No. 195 of 2022 :
5. On 01.12.2021, the Osmanabad Municipal Council (for the sake of convenience referred as 'said Council') issued a draft of paper proclamation in respect of work of Osmanabad underground sewerage scheme under Maharashtra Suvarna Jayanti, Nagrotthan Mahaabhiyan (MSJNM). The estimated cost of the work was Rs. 185,42,82,861/-. The security deposit amount was fixed as Rs. 92,71,415/-. The stipulated period for completing the work was 30 months. It was provided that the online process would be followed in respect of tender and the date for filling the tender form would be between 01.12.2021 and 16.12.2021. The respondent No. 4 uploaded on the Government website E-Tender Notice No. 1/2021-2022 for the work of Osmanabad underground sewerage under the said MSJNM.
6. Clause 6 of the tender document prescribed pre-qualification criteria for work experience and technical specification. Clause 6 also provided for the criteria of bidding capacity. The formula given for bidding capacity was 2NA-B.
7. On 23.12.2021, the respondent No. 4 issued a letter to the petitioner raising various queries. On the same day, the respondent No. 4 issued a letter thereby directing the petitioner to submit the details of the running bills of last four months of the project given for bid capacity calculation within 24 hours. It is the case of the petitioner that the petitioner submitted those details on 24.12.2021. On 28.12.2021, the respondent No. 4 uploaded the report of tender opening committee of Osmanabad underground sewage scheme. The result of the technical bid was opened declaring the petitioner company as not qualified on the ground that supporting documents did not match the bid capacity calculation. Two bidders had been declared qualified and other three bidders were disqualified.
8. It is the case of the petitioner that the petitioner submitted the documents on 29.12.2021 which were already forming part of the tender form submitted on 24.12.2021. The petitioner filed this writ petition for various reliefs on 03.01.2022. The matter was listed on board on 05.01.2022. The learned counsel for the respondent Council made a statement that the work order was issued in favour of respondent No. 6. The learned counsel submitted the copy of the work order dated 30.12.2021 and also a copy of the agreement of the same date.
9. It is the case of the petitioner that, on 05.01.2022, the status of the financial bid was shown as pending and there was no update in respect of the opening of the financial bid on the website.
The court emphasized the need for fairness and transparency in the tender process and held that the principles of judicial review apply to prevent arbitrariness or favoritism in the exercise of contr....
Every decision of the State must be supported by reasons and cannot be arbitrary, whimsical, or capricious.
Administrative decisions must be justified with reasons on record; arbitrary actions lacking justification violate principles of fairness and transparency.
A public authority's decision to cancel a tender must be reasoned and not arbitrary; failure to provide justifications exposes such decisions to judicial scrutiny.
Judicial review in contractual matters is limited to evaluating decision-making processes and does not extend to substituting the authority's decisions unless clear evidence of arbitrariness or mala ....
The pre-qualification prescribed for tenders for contract works for over fifty lakhs of Hyderabad municipal corporation was valid and constitutional.
Point of law: Entire process of awarding the contract by respondent No.2 in favour of Respondent No.3 cannot be accepted as valid
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