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2022 Supreme(Ori) 401
IN THE HIGH COURT OF ORISSA AT CUTTACK
B.R.Sarangi, G. Satapathy, JJ.
Pmr Consortium – Appellant
Versus
Bhubaneswar Municipal Corporation & Ors.. – Respondent
W.P(C) NO. 14745 of 2022 (In the matter of an application under Articles 226 and 227 of the Constitution of India.)
Decided On : 21-10-2022
Mr. Lalit Kumar Maharana Advocate., for the Appellant; Mr. Pradipta Kumar Mohanty, Senior Advocate along with M/s. P. Mohanty, P.K. Pasayat, S.N. Dash and A.N. Dash, Advocates [O.P. No.1 & 2] M/s. Surya Kanta Dash and H.K. Moharana, Advocate [O.P. No.3] M/s. Pradeep Kumar Mohapatra, J.K. Jethy, S. Mohanty and A. Mohapatra, Advocates [O.P.No.4], for the Respondent
Headnote:
TENDER - FRAUDULENT PRACTICE - SUPPRESSION OF FACT - DISCLOSURE OF INCOMPLETE FACTS - BIDDER'S OBLIGATION - BMC'S RIGHT TO REJECT BID - RFP CLAUSES - INTERPRETATION - COURT'S ANALYSIS AND CONCLUSION - FINAL DECISION.
Fact of the Case:
The petitioner, PMR Consortium, participated in the tender process floated by Bhubaneswar Municipal Corporation (BMC) for 'Street Sweeping, Drain Cleaning, Conservancy Cleaning, and Bush Uprooting' in respect of South West Zone: Package- 5 and South East Zone: Package-8. The petitioner's technical bid was declared responsive and its financial bid was also accepted. However, the opposite party, Manju Services, was declared as the successful bidder for both packages. The petitioner challenged the bid of the opposite party on the ground that it had furnished a false certificate in the public tender by suppressing the fact that it was debarred by the Angul Municipality from participating in all sanitation tenders for a period of three years from 10.02.2021.
Finding of the Court:
The Court held that the opposite party had engaged in fraudulent practice by suppressing the fact of its debarment from participating in similar projects, which amounted to a misrepresentation or omission of facts or disclosure of incomplete facts in order to influence the bidding process. This constituted a 'fraudulent practice' as defined in Clause 4.3(a) of the RFP and, therefore, the bid of the opposite party was liable to be rejected.
Issues: Whether the bid submitted by the opposite party was liable to be rejected on the basis of alleged misrepresentation or omission of facts or suppression of facts or disclosure of incomplete facts, which amounted to fraudulent practice in terms of the RFP.
Ratio Decidendi: The Court interpreted the relevant provisions of the RFP, including Clauses 2.6.2, 2.6.3, 3.2.1, and 4, and held that BMC had the right to reject any bid and appropriate the performance security if there was a material misrepresentation or if the bidder failed to provide supplemental information sought by BMC for evaluation of the bid. The Court also held that such misrepresentation or improper response would lead to the disqualification of the bidder and that BMC could select the bidder which proposed the second lowest quote as the successful bidder or cancel the bidding process.
Final Decision: The Court allowed the writ petition, quashed the selection of the opposite party as the successful bidder for packages 5 and 8, and directed BMC to take follow-up action in accordance with law.
Based on the legal document provided, the key points are as follows:
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The petitioner, PMR Consortium, challenged the award of contracts to the opposite party, Manju Services, for packages 5 and 8, alleging that Manju Services submitted false declarations regarding its prior debarment status and engaged in fraudulent practices during the tender process (!) (!) (!) (!) .
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The core issue was whether Manju Services' bid should have been rejected due to suppression of material facts, specifically its prior debarment by Angul Municipality, which was not disclosed in the bid documents, constituting a fraudulent practice under the applicable tender conditions (!) (!) (!) (!) .
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The tender conditions explicitly provided that any material misrepresentation, suppression of facts, or incomplete disclosure could lead to rejection of the bid and disqualification of the bidder, including the entire consortium if applicable (!) (!) (!) (!) .
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The bid submitted by Manju Services contained a declaration stating that it was not barred by any government or public agency from participating in similar projects, which was found to be false because the company had been debarred by Angul Municipality prior to the bid submission but did not disclose this fact (!) (!) (!) .
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The document emphasizes that suppression or incomplete disclosure of facts related to prior debarment or cancellation of tenders constitutes fraudulent practice, which is grounds for disqualification and rejection of the bid (!) (!) (!) (!) (!) .
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The court analyzed the relevant provisions of the tender documents and concluded that the bid of Manju Services was tainted by fraud due to the suppression of material facts, rendering the bid invalid and justifying the cancellation of the contract award (!) .
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The court held that even subsequent revocation of debarment orders after the bid submission does not absolve the bidder from the obligation to disclose prior debarment, especially when the declaration explicitly asked for such information, and non-disclosure amounts to fraudulent practice (!) (!) (!) .
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The court ultimately quashed the award of the contracts to Manju Services and directed the authorities to take appropriate follow-up action in accordance with law, emphasizing that the integrity of the bidding process must be upheld and that fraudulent practices cannot be tolerated (!) .
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The decision underscores the importance of truthful disclosure and strict compliance with tender conditions to prevent misconduct and ensure fairness in procurement processes (!) (!) (!) .
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The court's ruling affirms that acts of suppression or misrepresentation during tender submissions, especially concerning material facts like debarment, are considered fraudulent practices that invalidate the bid and justify legal intervention.
JUDGMENT
Dr. B.R. Sarangi, J. - PMR Consortium, represented through its authorized representative, has filed this writ petition seeking to quash the bid of opposite party no.3-Manju Services and to declare the petitioner as successful bidder, so far as Package Nos.5 and 8 under Annexure-1 are concerned. The petitioner further seeks to direct the opposite parties to take immediate action to blacklist opposite party no.3 and to take penal action for furnishing false certificate in the public tender.
2. The factual matrix of the case, in brief, is that Bhubaneswar Municipal Corporation-Opposite Party No.1 issued Request for Proposal (RFP) for 'Street Sweeping, Drain Cleaning, Conservancy Cleaning, and Bush Uprooting in respect of South West Zone: Package- 5 for Ward Nos. 24, 25, 27, 37, 38, 39, 47, 48, 49, 50 and 51 and in respect of South East Zone: Package-8 for Ward Nos. 31, 32, 33, 42, 43 and 45' vide Annexure-1 through e-procurement from the intending bidders fulfilling the eligibility criteria and other qualified requirements as per the Notice Inviting Tender (NIT). The NIT consisted of two bid system. Part-I consisted of General and Technical Bid and Part-II consisted of Financial Bid/ Price Bid. The tender contained 10 numbers of work and each work was divided into 10 packages, i.e. Package No.1 to 10 and each package was categorized as per concerned Zone and concerned Wards. The petitioner is concerned with Package Nos.5 and 8 under Bid Reference No. 01/CE/BMC/2021-22.
The period for completion of the work under the package is three years. As the conditions of Package Nos. 5 and 8 are identical, therefore, he has referred to NIT so far as the Package No.8 is concerned, which has been placed on record under Annexure-1. The opposite party No.1 issued a corrigendum on 20.12.2021, whereby the pre- bid conference was amended from 26.12.2021 to 27.12.2021. Opposite party No.1 issued a clarification to the pre-bid queries received clarifying certain queries and making certain amendments vide Annexure-2. Clause-3 of the RFP provides for evaluation of bids whereas Clause-3.2 postulates the test of responsiveness. Clause-3.3.1 states about the conditions for evaluation of technical bid, whereas Clause-3.3.2 deals with technical qualification.
2.1 The petitioner, having fulfilled the criteria, participated in the tender process by submitting its bid for different packages, including Package Nos.5 and 8. The petitioner's technical bid was declared as responsive. Consequentially, its financial bid was also accepted by the committee. The opposite party no.3, along with the petitioner, participated in the tender process by submitting its bid in respect of all the packages, including Package Nos. 3, 5 and 8. According to the petitioner, since the bid documents submitted by opposite party no.3 for both the packages, i.e., Package Nos. 5 and 8 were identical and it had furnished a certificate in Appendix-I at point No.6, which is false and incorrect, the bid of opposite party no.3 would have been rejected, reason being opposite party no.3 was debarred by the Angul Municipality from participating in all the sanitation tenders for a period of three years from 10.02.2021. This fact was suppressed in the bid document. As such the debarment of opposite party no.3 from participating in the tender was in force on the date of bid submission, i.e. 11.01.2022. The Executive Officer, Angul Municipality, vide letter No. 644 dated 10.02.2021 issued to opposite party No.3 intimated that EMD relating to the work 'privatization of sanitation work for Zone-1, 2 of Angul Municipality' stood forfeited and tender for the said work was cancelled. The said letter also discloses that opposite party no.3 was debarred for three years from participating in future sanitation tender for the said Municipality. Since the said fact was not disclosed and, as such, oppos
