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2009 Supreme(Del) 128
IN THE HIGH COURT OF DELHI
Honble Judges: Madan B. Lokur and Siddharth Mridul, JJ.
Nagarjuna Construction Company Ltd. – Appellants
Vs.
Delhi Jal Board and Ors. – Respondent
Writ Petition (Civil) 6708/2008
Decided On: 29.01.2009
Advcoates appeared:
For Appellant/Petitioner/Plaintiff:Rajiv Nayyar, Sr. Adv., and Arvind Nigam, Manmeet Arora, Abhishek Mishra and Sreedevi R.G., Advs. For Respondents/Defendant:P.H. Parekh, Sr. Adv. Sameer Parekh, D.P. Mohanty, Ashish Vaid, Advs. for Respondent No. 2, K.C. Mittal, Sunil Goel, Advs. and Vishal, Adv. for Respondent No. 3
The paramount consideration of public interest in tender awards and the limitations of judicial review in contractual matters.
Headnote:
Tender Condition - Quashing of unreasonable and unfair prequalifying tender condition - Article 226 of the Constitution of India - Delhi Jal Board - 55 mgd Raw Water Pumping Station - 1500 mm diameter Raw Water Mains - 600 mm to 1600 mm diameter MS clear Water Mains - Packages 1A, 1B and III - Corrigendum II - Letter of Intent (LOI) - Cartel - Expansion joints - Public interest - Judicial review - Arbitrariness - Discrimination - Malafides - Nexus with object sought to be achieved - Manufacturer partner - Seismic area - Judicial restraint - Administrative action - Tender process - Award of contract - Fair competition - Eligibility criteria - Pre-qualification condition - Quality assurance - Consistency in supplies - Public interest - Administrative decision - Judicial review - Commercial considerations - Terms of invitation to tender - Administrative policy decision - Directorate Of Education and Ors. v. Educomp Datamaatics Ltd. and Ors. - Air India Ltd. v. Cochin International Airport Ltd. - Triveni Engineering & Industries Ltd. v. Delhi Jal Board and Anr.
Fact of the Case:
The petition sought quashing of unreasonable and unfair prequalifying tender condition and the issuance of Letter of Intent (LOI) and award of contract to Respondent No. 2 & 3 by Delhi Jal Board (DJB) for construction of 55 mgd Raw Water Pumping Station and laying an additional 1500 mm diameter Raw Water Mains from Chainage 11.5 to WTP at Dwarka and MS clear Water Mains of diameter varying from 600 mm to 1600 mm from WTP Dwarka to various areas of Dwarka, Najafgarh, Daulatpur, Ujwa and IGI Airport in three packages 1A, 1B and III.
Finding of the Court:
The court found that the condition of manufacture of expansion joints was necessary as it was a critical component of the pipeline structural system and was imperative in the public interest. The court held that the condition was neither arbitrary, nor discriminatory or malafide and that it was in the public interest, which is the paramount consideration to be followed by the Courts whilst considering the award of a tender. Therefore, the decision of the Respondents to award Letter of Intent to the Respondents No. 2 & 3 respectively cannot be found fault with or interfered in.
Issues: The issues included the reasonableness and fairness of the prequalifying tender condition, the nexus of the condition with the object sought to be achieved, allegations of cartelization, and the public interest.
Ratio Decidendi: The court emphasized the necessity and public interest of the condition of manufacture of expansion joints, the limitations of judicial review in contractual matters, and the paramount consideration of public interest in tender awards.
Final Decision: The writ petition was dismissed as devoid of merit and with costs actually incurred by the Respondents quantified in the amount of Rs. 17,50,000/- (rupees seventeen lakh fifty thousand).
Siddharth Mridul, J.
1. The present writ petition under Article 226 of the Constitution of India seeks quashing of unreasonable and unfair prequalifying tender condition as well as quashing of issuance of Letter of Intent (LOI) and award of contract to Respondent No. 2 & 3.
2. Respondent No. 1-Delhi Jal Board (DJB) invited bids for construction of 55 mgd Raw Water Pumping Station and laying an additional 1500 mm diameter Raw Water Mains from Chainage 11.5 to WTP at Dwarka and MS clear Water Mains of diameter varying from 600 mm to 1600 mm from WTP Dwarka to various areas of Dwarka, Najafgarh, Daulatpur, Ujwa and IGI Airport in three packages 1A, 1B and III.
3. The Notice Inviting Tenders was published in the newspapers on 9th of June, 2008. The original date for submission of bids for Package IA, Package IB and Package III were 4th July, 2008, 2nd July, 2008 and the 30th June, 2008 respectively. The DJB issued corrigendum II on 7th July, 2008 modifying certain terms and extending the time for submission of bids for all three Packages till 14th July, 2008. The Technical Committee, thereafter accepted the price bid of Respondent No. 2 for Package IA and Respondent No. 3 for Package IB and Letter of Intent was accordingly issued to the successful bidders on 11th September, 2008. Aggrieved by the terms and conditions stipulated in the tender document, the Petitioner filed the present writ petition on the 11th September, 2008, seeking quashing of a term incorporated in the same. The challenge primarily proceeds on the ground that the impugned condition stipulated in the tender document is completely unnecessary and has no nexus with the object sought to be achieved, as well as is provided only to unduly favour Respondent No. 3, the sole manufacturer of expansion joints who alongwith Respondent No. 2 and one DS Construction have formed a cartel. The Petitioner alleges that the conditions are tailor-made to suit the requirement of the said Respondents by unfairly and arbitrarily excluding others.
.4. Appearing for the Petitioner Mr. Rajiv Nayyar, Sr. Advocate and Mr. Arvind Nigam, learned Counsel strenuously argued that the requirement of the bidder or its approved manufacturer partner having experience in the manufacure of expansion joints in terms of Clause 4.2.24.8 was completely unnecessary as the requirement of expansion joints in the entire project was negligible. Further the same being a totally fabricated item being manufactured by some specialized vendors could have been procured from the open market and that therefore the said qualifying condition was tailored to suit only one company namely M/s Pratibha Industries Ltd., Respondent No. 3 herein and its associate bidder namely the Respondent No. 2 and the said DS Construction who as aforesaid has formed a cartel. It was also urged that the Respondent No. 1 in its earlier projects of a similar nature have never stipulated any such condition and the stipulation was, according to learned Counsel, without any rational nexus with object sought to be achieved, and consequently liable to be struck down. The stipulation of an experience of in house manufacture of expansion joints, according to counsel for the Petitioner, was unwarranted and aimed at excluding eligible bidders from competition. The threshold criteria as stipulated resulted in only one person qualifying technically, thereby catering to the cartel, which was contrary to public interest, and also ensured elimination of competition from the remaining competent bidders.
.5. In support of their submissions, counsel for the Petitioner placed reliance on the following decisions:
1. Rashbihari Panda ETC v. State of Orissa : [1969] 3 SCR 374 .
2. Monarch Infrastructure (P) Ltd. v. Commissioner Ulhasnagar Municipal Corporation and Ors. : AIR 2000 SC 2272 .
3. Jespar I. Slong v. State of Meghalaya and Ors. : AIR 2004 SC 3533 .
4. Dhingra Construction Co. v. Municipal Corporation of Delhi and Ors. : AIR 2005 Delhi 247 .
