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1992 Supreme(Guj) 226
Gujarat High Court
Judgename :A.P.RAVANI
VADI AND PATWA, CIVIL ENGINEERS AND BUILDERS - Appellant
Versus
UNION OF INDIA - Respondent
Civil Revision 853 of 1991
Decided On : 09/08/1992
Headnote:Constitution of India, 1950 - Art. 14 - Applicability - Contracts to which State is a party - Matter falling within the domain of contractual obligation would not relieve the State of its obligations to comply with basic requirements of Art 14.
There was difference in the contracts between the private parties and contracts to which the State is a party. Private parties are concerned only with their personal interest whereas the State while exercising its powers and discharging its functions, acts indubitably, as is expected of it, for public good and in public interest. The impact of every State action is also on public interest. This factor alone is sufficient to import at least the minimal requirements of public law obligations and impress with this character the contracts made by the State or its instrumentality. The fact that the dispute also falls within the domain of contractual obligations would not relieve the State of its obligation to comply with the basic requirements of Article 14.
[Para 12]
Constitution of India, 1950 - Art. 14 - C P W D Manual Sec.20 - Receiving and accepting tender documents - Procedure provided to act fairly and justly - Decision of department not to consider the tender of petitioner that it was not for Rs. 95,67,898.14p and it was for an amount of Rs. 4, 58, 39, 753.20p is unjust arbitrary and unreasonable - Same violative of Art. 14 of Constitution.
The very purpose of issuance of guidelines in the C.P.W.D. Manual appears to be to avoid unreasonable and arbitrary action by any officer. It also appears that meticulous care is taken while preparing the guidelines to see that there is no tampering with the documents by the contractors and no mischief is played by the contractor with the tender documents. Overall reading of the guidelines shows that mechanical and too technical or pedantic approach is not permitted. The mandate of the guidelines is to see that no mischief is committed by any contractor with the tender documents. Another object also appears to be to avoid unreasonable and arbitrary action by the officers. At the same time contractors are also required to be instructed to fill in the tender properly and carefully and avoid quoting absusrd rates. Reading the relevant guidelines and rules from the aforesaid perspective, it is evident that the department was not justified in reading the tender documents submitted by the petitioner as it did.
[Para 20]
The decision of the department not to consider the tender of the petitioner on the basis that it was not for Rs.95,67,898.14 ps. (Ninetyfive lakhs sixty seven thousand eight hundred ninetyeight and paise fourteen only) and it was for an amount of Rs.4,58,39,753.20 ps. (Four crores fiftyeight lakhs thirtynine thousand seven hundred fiftythree and paise twenty only) is unjust, arbitrary and unreasonable and the same cannot be sustained as being violative of Article 14 of the Constitution of India.
[Para 24]
Contract - Setting aside of a contract - Amounts to when there is valid contract in existence - Decision of department in not accepting petitioner tender and entering into contract with respondent does not suffers from vice of unconstitutionality - Avoidance of such contract does not amount to setting aside of contract.
Before executing the contract the department took first step of excluding the petitioners tender from considering the same as lowest tender. This decision of not accepting the petitioner tender for consideration itself is held to be violative of Article 14 of the Constitution. Therefore all the subsequent steps pursuant to this decision are tainted with vice of unconstitutionality. The agreement which is based on the decision which itself is violative of Article 14 of the Constitution cannot be said to be lawful. Therefore, such an agreement cannot be said to be an agreement enforceable at law. If such agreements are considered as enforceable at law and are given effect, it would amount to circumventing the provisions of Article 14 of the Constitution of India. Such action would certainly be against the public policy. In this view of the matter, there is no substance in the argument that if the prayer is granted it would amount to setting aside the contract already executed.
[Para 26]
Tender - Expression right to reject any tender without assigning any reasons - Only indicates is that the reasons may not be communicated to the party - It does not dispense with the existence of reasons.
The expression "right to reject any tender without assigning any reasons" does not mean that the tender may be rejected without any reason at all. All that the expression indicates is that the reasons may not be communicated to the party. But it does not dispense with the existence of reasons. There must be good and valid reasons for rejection of the tender.
[Para 27]
Petition - Seeking direction to accept tender of petitioner and issue work order - Held, grant of such prayer not acceptable - Execution of contract is an act of volition - Proper for the court to leave the matter and direct the State to act in accordance with law.
The petitioner has prayed that the respondents be directed to accept the tender of the petitioner and be further directed to issue work order. I am afraid, it would not be proper to grant such a prayer by the court. The execution of the contract is afterall an act of violation of parties to the contract. By an order of the court, ordinarily a party cannot be directed to enter into contract. As far as the State action is concerned, the court may in fit cases judicially review the action of the State. If the decision taken by the State is found to be unlawful and/or unconstitutional, the court may set aside the decision. Thereafter, ordinarily, it would be proper for the court to leave the matter and direct the State to act in accordance with law. This would be the proper course to be adopted instead of directing the department to accept the tender of the petitioner and to issue order that the work order be issued in favour of the petitioner.
[Para 28]
( 1 ) IN response to the notice inviting tender for construction of telephone exchange building estimated cost of which was Rs. 69 4 748 sixty nine lakhs four thousand seven hundred forty eight) the petitioner a partnership firm filled in tender for total amount of Rs. 1 0 18 711. 5 ps. (One crore eighteen thousand seven hundred eleven and paise fifty) stating that on all items rebate of 4. 5% was to be given. Thus deducting the amount of rebate of Rs. 4 50 843. 36 ps. (Four lakhs fifty thousand eight hundred forty three and paise thirty six) the tender was for net amount of Rs. 95 67 898. 14 ps. (Ninetyfive lakhs sixtyseven thousand eight hundred ninetyeight and paise fourteen only ). The respondents considered the tender of the petitioner as being for Rs. 4 58 39 753. 2 ps. (Four crores fifty eight lakhs thirty nine thousand seven hundred fifty three and paise twenty only ). According to the department the petitioner had not quoted Rs. 19 0 (nineteen thousand) for supply and installation of two overhead syntex water tanks of 2000 liters capacity but it had quoted Rs. 3 80 0 0 (Three crores and eighty lakhs ). Therefore the department did not consider the petitioners tender for acceptance. The petitioner firm has felt aggrieved by the decision of the department and hence the petition praying that the decision of the department rejecting the tender of the petitioner be declared illegal and invalid and steps consequent upon this decision be also declared illegal and invalid. The petitioner has also prayed for other ancillary reliefs for issuance of appropriate order and direction to the respondents.
( 2 ) THE petitioner is a partnership firm doing business as building contractors. It is registered as class I contractor with Posts and Telegraphs Department. Respondent no. 5 herein the Executive Engineer Telecom Civil Division Ahmedabad issued notice dated August 28 1991 inviting sealed item rate tenders for the work of construction of telephone exchange building at Kalol Dist. Mehsana. The construction work was for two different portions (i) building portion and (ii) internal water supply and sanitary installation. The estimated cost for the entire work was Rs. 69 4 748 (Rupees sixtynine lakhs four thousand seven hundred forty eight ). The last date for submission of tender was October 3 1991 The petitioner filled in tender and other four contractors also filled in the tenders. Their names are as follows: 1 M/s. M. B. Shyani and Company 2 M/s. Ballar Builders 3 M/s. Navyug Builders 4 M/s. Associated Construction Corporation. The tenders were opened on October 3 1991 itself. According to the petitioner its tender was for Rs. 1 0 18 711. 5 ps. (One crore eighteen thousand seven hundred eleven and paise fifty) deducting rebate at the rate of 4. 5% over the rates of all the items the amount of rebate came to Rs. 4 50 843. 36 ps. (Four lakhs fifty thousand eight hundred forty three and paise thirty six only ). Thus the net amount of tender quoted by the petitioner was Rs. 95 67 898. 14 ps. (Ninety five lakhs sixty seven thousand eight hundred ninety eight and paise fourteen only ). On this basis the tender filled in by the petitioner is 38. 57% higher than the estimated cost mentioned in the tender notice.
( 3 ) HOWEVER according to the department the comparative position of the tender filled in by each contractor was as follows : - sr. Name of the tenderer Tender amount as per the calculation made by the No. department. -- 1 Vadi and Patwa 4 58 39 753. 2 (563. 89% above estimated cost) 2 M. B. Shyani and Co. 1 0 61 651. 8 (45. 72% above estimated cost) 3 Ballar Builders 1 3 52 849 (49. 92% above estimated cost) 4 Navyug Builders 4 89 80 427. 19 (609. 39% above estimated cost) 5 Associated Construction 98 27 96. 4 - (42. 32% above estimated cost) Corporation On the other hand according to the petitioner the comparative position of tender filled in by each contractor sho
