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2015 Supreme(P&H) 928
PUNJAB & HARYANA HIGH COURT
Hemant Gupta, Lisa Gill, JJ.
Sudarshan Kumar - Appellant
Versus
State of Punjab and Ors. - Respondent
C.W.P. No. 9607 of 2015
Decided On : 29-05-2015
For the Appellant :Anand Chhibbar, Senior Advocate and Riya Bansal, Advocate
For the Respondents: Vinod S. Bhardwaj, Addl. AG
The main legal point established in the judgment is the fairness and reasonableness of a condition restricting a contractor to be awarded contracts equivalent to its average annual turnover, aimed at preventing monopolistic hold over contracts and ensuring work distribution based on financial capacity and technical capabilities.
Headnote:
e-tender - Eligibility Condition - 8, 16 - The court discussed the eligibility conditions 15 & 16 from the e-tender notice and their legality. It highlighted the relevant conditions and the petitioner's argument against condition No. 16. The court also considered the purpose of introducing the condition and the respondents' explanation. The court referred to a previous case and observed that the condition restricting a contractor to be awarded contracts equivalent to its average annual turnover is fair and reasonable to prevent monopolistic hold over contracts.
Fact of the Case:
The petitioner, a Class A-1 Contractor, challenged condition Nos. 15 & 16 in the e-tender notice, rendering it ineligible for participation in the tender process. The petitioner contended that the conditions were illegal and arbitrary, specifically challenging condition No. 16. The respondents explained the purpose of introducing the condition, emphasizing the need to prevent contractors from bagging contracts beyond their financial capacity and technical capability.
Finding of the Court:
The court found that the condition restricting a contractor to be awarded contracts equivalent to its average annual turnover is fair and reasonable. It observed that such a condition prevents monopolistic hold over contracts and ensures that work is distributed amongst contractors based on their financial capacity and technical capabilities.
Issues: The issues revolved around the legality and fairness of condition Nos. 15 & 16 in the e-tender notice, and whether these conditions were arbitrary and discriminatory. The court also addressed the petitioner's contention that the conditions were introduced for the first time, rendering the petitioner ineligible for participation.
Ratio Decidendi: The court's decision was based on the fairness and reasonableness of the condition restricting a contractor to be awarded contracts equivalent to its average annual turnover. It emphasized the need to prevent monopolistic hold over contracts and ensure that contracts are executed within the financial capacity and technical capability of the contractors.
Final Decision: The court dismissed the writ petition, upholding the fairness and reasonableness of condition No. 16 in the e-tender notice. It ordered that the State shall be free to negotiate the rates offered by the bidders to bring them on par with the rates quoted by the petitioner in the peculiar facts and circumstances of the case.
1. Challenge in the present writ petition is to the eligibility condition Nos. 15 & 16 contained in the e-tender notice dated 02.05.2015, whereby the petitioner is rendered ineligible for participation in the tender process.
2. The petitioner is a Class A-1 Contractor having been granted license on 01.08.2014. The respondents published a tender notice inviting bids from the contractors for (i) repairing various Spurs, Studs and Revetment etc. in Panjgrain Complex, Singhoke Complex, Dharamkot Complex, Chaharpur Complex and Main FPE of various complexes of Amritsar Drainage Division on left side of river Ravi; and (ii) Repairing Spurs, studs and Revetment etc. in Sherpur, Kakkar Manj and Ranian Complex along left side of river Ravi. The estimated cost of the first project was Rs. 3.48 crores for which earnest money of Rs. 6.96 lacs was required to be furnished by the Contractors and Rs. 3.48 lac by the Labour & Cooperative Societies, whereas the estimated cost of the second project was Rs. 3.16 crores for which earnest money of Rs. 6.32 lacs was required to be furnished by the Contractors and Rs. 3.16 lac by the Labour & Cooperative Societies. The last date of submission of tenders was 15.05.2015. The technical bid was to be opened on the same day at 15.30 hours, whereas the financial bid was to be opened on 18.05.2015. The petitioner asserts that it has never been disqualified by the Irrigation Department, Punjab to execute the works. However, for the first time, conditions have been changed, which make the petitioner ineligible to participate in the tender process.
3. As per the petitioner, condition Nos. 15 & 16 are illegal and arbitrary, but the petitioner restricted itself to challenge condition No. 16 alone at the time of arguments. The relevant conditions including condition No. 16 from the tender notice read as under:
"GOVERNMENT OF PUNJAB (DEPARTMENT OF IRRIGATION) ELIGIBILITY FOR PARTICIPATION CONDITIONS FOR PREQUALIFICATION (FOR TWO TIERS SYSTEM)
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8. (a) Average annual financial turnover during the last three years ending 31st March of previous financial year (This will also include year 2014-15) should be at least 3 times of minimum 30% prescribed by the CVC i.e. 90% the cost of work in this tender.
(b) If the bidder on the basis of eligibility criteria of similar nature work done and turnover is eligible, he will be eligible for all the works separately. (Residual basis)
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16. For finalization and allotment of works, residual turnover and residual working capital shall be as per minutes of meeting of Chief Engineer / Drainage Punjab dated 25.03.2015. The residual turnover finalized by Patiala Drainage Circle, Patiala after opening of financial bids on 20.04.2015, 22.04.2015 and 23.04.2015 for flood protection works / cleaning of drains shall be considered for the above works."
4. The petitioner relies upon a certificate from its Chartered Accountant (Annexure P-7) to the effect that its gross turnover during the last three years i.e. 2012-13, 2013-14 & 2014-15 is Rs. 22,37,79,666/-. The grievance of the petitioner is that condition No. 16, as is contained in the tender notice, was not the condition in the earlier years, which has been introduced for the first time and that the respondents are treating the annual turnover as the account of a contractor, which stands exhausted with the value of the works being executed by the contractors. It is contended that annual turnover is sought by the State to assess the suitability of a contractor to execute the work and cannot be taken into consideration as an account of a contractor out of which the contracts under execution are subtracted. Such condition has no reasonable nexus with the objective to be achieved i.e. a tenderer has the capacity to execute the work, thus, not legal and binding.
5. On behalf of the respondents, it has been pointed out that on 25.03.2015, a meeting was held under the Chairmanship of the Chief Engineer, Drainage with all t
