ORDER
L. Narasimha Reddy, J.
1. The petitioner is a Civil Contractor. In accordance with the parameters prescribed by the Government of Andhra Pradesh, he was categorised as Special Class Contractor and was registered as such with the Irrigation and Command Area Development Department. He claims to have executed several works in the States of Andhra Pradesh and Karnataka as well in the Ministry of Railways, Government of India.
2. The Superintending Engineer, Irrigation Circle, Nellore, the 4th respondent herein, had invited tenders for execution of the work of Cement Concrete Lining to Kanupur Main Canal from 0.000 KMs to 7.200 KMs in Nellore District. The petitioner filed his tender for the work. The tenders were opened on 9-9-2002. The bid of the petitioner was at 9.7% below the estimated value of the work. Inasmuch the value of the work exceeded Rs. 1-00 crore; the 4th respondent submitted the matter for approval by the Commissionerate of Tenders, Hyderabad, the 2nd respondent herein. On approval being accorded by the 2nd respondent, the contract was awarded to the petitioner and an agreement was executed on 10-10-2002. The petitioner claims that he has been extended the mobilisation grant of Rs. 42-00 lakhs and that he has commenced the execution of the work.
3. The petitioner received a bunch of proceedings through registered post on 24-4-2003. The bunch comprised of the Memo dated 16-4-2003 issued by the Department of Irrigation and Command Area Development, Government of Andhra Pradesh, the Ist respondent herein, directing the Chief Engineer, the 3rd respondent herein, to take necessary steps for taking over the work from the petitioner. The basis for such an action is said to be the report of the Vigilance and Enforcement Department, the 6th respondent, to the effect that the petitioner did not fulfil the qualification criteria. The 1st respondent also proposed to black list the petitioner. The 3rd respondent, through proceedings dated 17-4-2003, directed the 4th respondent to take necessary action as directed by the Government. The 4th respondent, in turn, through his letter dated 19-4-2003, directed the Executive Engineer, the 5th respondent herein, to take necessary steps, as per the orders of the Government. The 5th respondent, through his letter dated 21-4-2003, had terminated the contract of the petitioner invoking Clause 60(a) of PS to A.P.S.S. and decided to invoke the bank guarantee for Rs. 50,40,000/- furnished by the petitioner.
4. In this writ petition, the petitioner seeks a Writ of Mandamus declaring the action of respondents 1, 3, 4 and 5, in terminating the contract awarded to him, as illegal, arbitrary and unjust and seeks a consequential direction to the respondents not to interfere with the execution of the work by the petitioner. He also seeks a direction to the respondents not to take further action in pursuance of Memo dated 16-4-2003.
5. In the counter-affidavit filed on behalf of the respondents, it is stated that after the contract was awarded to the petitioner, investigation by the 6th respondent was undertaken into the award of the contract in favour of the petitioner. According to them, the investigation has revealed that the petitioner did not fulfil the qualifications for submission of the tender, as regards the nature and volume of work indicated in the tender schedule. The respondents allege that discreet enquiry was undertaken into the evaluation, and on being satisfied that the petitioner did not fulfil the basic conditions, the contract was directed to be terminated. A preliminary objection is raised as to the very maintainability of the writ petition. Finally, it is averred that the petitioner is not entitled to be put on notice for termination of the contract and that further action of black listing the petitioner would be resorted to only after hearing him
6. Sri A. Rama Mohana Rao, learned Counsel for the petitioner, submits that the petitioner had been awarded the contract only after the 4th respondent was satisfied about the experience in execution of similar works by the petitioner as stipulated in the tender schedule, and on approval having been accorded by an specialised agency, the 2nd respondent. According to him, once a competent specialised agency has evaluated the matter, it was not open to the Vigilance and Enforcement Department to tender its own judgment on such evaluation. On merits, the learned Counsel submits that the view taken by the Vigilance Department does not conform to the facts and figures borne out by record and that it has undertaken an unprofessional and unscientific evaluation, exceeding its legitimate sphere of powers. To meet the objection raised as regards the maintainability of the writ petition, the learned Counsel submits that though what is cancelled by the Government is a non-statutory contract, since the cancellation was on the basis of an administrative exercise, writ petition is maintainable.
7. Sri Ramesh Ranganathan, learned Additional Advocate-General, submits that the contract in question is not a statutory one and, as such, the writ petition is not maintainable. He further submits that it was on an objective consideration of the entire matter that the Government has arrived at the conclusion that the contract ought not to have been awarded to the petitioner at all; since it emerged that the petitioner did not possess the basic qualification as to experience. According to him, the Government, being the ultimate authority in such matters is empowered to get the matter evaluated through Vigilance Department and there is no transgression of powers by one agency into that of another. As regards violation of principles of natural justice, the learned Additional Advocate-General submits that the cancellation was purely in terms of the relevant conditions of the contract and, as such, no notice was necessary for cancellation of the same. He contends that for any further action, such as black listing, the petitioner will certainly be put on notice. The learned Addl. Advocate-General relies upon the judgment of this Court in Vet India Pharmaceuticals Limited v. Government of Andhra Pradesh, , in support of his contention that the writ petition is not maintainable in the matters of award of contracts.
8. The petitioner emerged as the lowest tenderer for the work of Cement Concrete Lining to Kanupur Main Canal in Nellore District Since the value of the work was more than Rs. 1.00 crore, the 4th respondent, got the tender of the petitioner, which turned out to be the lowest, evaluated by the 2nd respondent. This agency (the 2nd respondent) is constituted by the Government specifically for this purpose. Approval was accorded by it. The agreement came to be executed on 10-10-2002 and the petitioner was extended the mobilization grant of Rs. 42-00 lakhs. The 5th respondent, on the directions issued by the Government, which in turn, have flown from one authority to the other, cancelled the contract of the petitioner. The basis for cancellation does not relate to the performance or execution of the work under the contract, by the petitioner. It relates to the possession of requisite experience of the petitioner to qualify himself to submit the tender.
9. The tender schedule contained what is known as “Qualification Criteria” and occurs at Para 19.2 of the schedule. It reads as under:
“19.2 Qualification Criteria :–“The intending applicants in the same name and style having good experience in execution of original agency in similar works under State Government satisfying the qualification as under:–
A. To qualify for award of the contract each bidder in the same name and style should have good experience in execution as original agency in similar works in State and Central Governments or Undertakings, during the last five years from 1997-98 to 2001-02 financial years i.e., they should be immediately preceding the financial year in which tenders are invited, satisfying the qualification shown under Para “bid capacity” only are eligible to tender.
(a) Satisfactorily completed as a prime contractor, similar works of value not less than Rs. 470.00 lakhs in any one financial year.
(b) Executed in any one year, the following minimum quantity of works.
(i) Earth Work: 80,000 cum.
(ii) C.C.Lining with paver finisher: 64,000 sqm.
(iii) Forming CNS layer in canal bed and slopes, consolidation with 10 ton roller to 98% Proctor’s density: 50,000 cum.”
The bid capacity referred to above comprises of ‘2’ parts, viz., the money value of the work executed in one financial year and the quantum of work of various descriptions as provided for in Paras (a) and (b) respectively. There is no complaint as to the completion of the works by the petitioner, of value of not less than Rs. 470.00 lakhs in one financial year. So far as the various quantities of works are concerned, he was required to have executed “similar works to the tune of 80,000 cum. of earth work, 64,000 sqm. of C.C.Lining with paver finisher and forming CNS layer of consolidation up to an extent of 50,000 cum.”
10. In support of his having executed these works, the petitioner had enclosed two Certificates issued by Krishna Bhagya Jala Nigam Limited, a Government of Karnataka Undertaking, in relation to the work executed by the petitioner in ALMEL Division. These Certificates relate to providing Cement Concrete Lining to Indi Branch Canal. In one Certificate, the petitioner was certified to have completed 12090 Cum of CC Lining with Paver and Labour for the work of Indi Branch Canal from 81.00 KM to 88.00 KM. In the 2nd certificate, it was certified that the petitioner executed similar work of 16,800 Cum., in the same Canal from 90.00 KM to 100.00 KM. The aggregate of these two quantities comes to 28,190 Cum. The required quantity out of the present contract is 6400 Cum (obviously because the thickness of the lining is 12 mm, 64000 sq.m. of the work would be equivalent to 6400 cum.; and there is no dispute on this aspect).
11. So far as the 3rd item is concerned, the petitioner had submitted the experience certificate issued by the Executive Engineer, Rallapadu Project Reconstruction Division, Kandukur, in relation to execution of Construction of Additional Spillway and Formation of earth dam in between 1.45 to 1.80 of Rallapadu Project. He was certified to have executed the work of the quantity of 1,65,667 cum. The Superintending Engineer and the Commissionerate of Tenders evaluated these certificates and ultimately the contract came to be awarded to the petitioner.
12. The Government undertook ordered an investigation into the matter by Vigilance and Enforcement Department. The Director of Vigilance and Enforcement is Ex-Officio Secretary to Government, GA Department of the concerned wing. He is impleaded as respondent No. 6 to the writ petition,
13. The 6th respondent prepared a report dated 22-12-2003. The observations of the 6th respondent as regards experience of the petitioner in CC Lining are to the following effect:
“Vigilance and Enforcement Officials visited Almel Circle Office and Executive Engineer’s Office, Karnataka for verification of records and it was observed in the concrete item that the concrete is to be hand placed and inside slopes of canal slip forms are to be used. It was specifically mentioned that the details of laying concrete for the sides of canal will be issued by Executive Engineer during execution (A-V)”
14. The 6th respondent also took exception to the experience certificate furnished by the petitioner in relation to formation of CNS layer. Having undertaken the discussion, the 6th respondent had recorded his findings/conclusions as under:–
“1. The qualification criteria as stipulated in Tender Notice was not satisfied in case of A. Krishna Reday. The contractor does not have experience in canal lining with paver as stipulated for the required quantity.
2. The certificate furnished along with tender document showing 1,65,667 cum as executed quantity is wrong. Even the subsequent certificate dated 5-9-2002 showing 1,06,789 cum quantity of carted soil is also not correct as the quantities as per M.Book are different.
3. When specifically CNS soil experience in canal bed and slopes was called for any other type of soil should not have been accepted. The test results of the executed quantity projected as required experience by the contractor do not match with CNS soil specifications to treat them as equal. In that case the specific requirement of CNS soil ought not to have been specified.
4. When one specific requirement about experience is specified in Tender Notice they are to be followed strictly. In spite of complaints, the eligibility criteria in case of Sri Krishna Reday was violated. On the contrary though it has come to notice that the experience certificates are different at the time of tendering and confirmation, the same was ignored.
5. In finalisation of tender document, the guidelines issued by COT were violated.
6. The experience certificates were not counter-signed by Superintending Engineer and same were issued by Deputy Executive Engineer as the G.O.Ms.23 specified certificate shall be issued by Executive Engineer.
7. The Superintending Engineer, in-charge Nellore ignored the deficiencies in the tender of Krishna Reday and mislead the facts in tender evaluation note.
8. The Assistant Engineer Sri Satyanarayana also misrepresented the executed quantity while confirming certificate dated 5-9-2002.
9. The Chief Engineer, Medium Irrigation failed to follow the guidelines on tenders in approving tender document and evaluating/ recommending the tender.
This report constituted the basis for the 1st respondent to direct the concerned agency to cancel the contract. The directions issued by the Government in Memo dated 16-4-2003, read as under:
“The Vigilance and Enforcement Department have observed that the contractor has not fulfilled the qualifications criteria as stipulated in tender notice. As the contractor has submitted false experience certificate, the work may be taken over invoking clause 60(a) of PS to APSS as per clause 3.02.4 of G.O. Ms. No. 23, Irrigation and CAD (PW.Cod) Department, dated 5-3-1999.”
“The Chief Engineer, Medium Irrigation is therefore directed to take immediate necessary steps for taking over the work under the above rules under intimation to Government.”
15. It is in this background that the Court has to examine as to whether the present case involves the termination of the contract in terms of the clauses contained therein or whether there exists an element of administrative exercise and public law in the matter.
16. The Courts have maintained distinction between statutory contracts, on one hand, and non-statutory ones, on the other. While judicial review was held to be permissible, both as regards award and cancellation of the contracts of the former category, the same was confined to certain aspects in the latter category. If the termination of contract is on the ground that a party thereto had violated the conditions therefor, such party is invariably required to work out his remedies as provided for under the relevant contracts, viz., arbitration or civil suit, as the case may be. However, where an element of administrative exercise is undertaken and executive power is exercised, considerations and parameters are somewhat different. The evaluation of such administrative and executive exercise, which in turn had given rise to the cancellation of the contract, would almost be unsusceptible of adjudication by a Civil Court. The reason is that the exercise of such administrative or executive power is not guided by the clauses in the contract. It is traceable to the inherent executive powers of the State and the only recognised mode of evaluation of such administrative power is judicial review, as provided for under Articles 32 and 226 of the Constitution of India.
17. The narration of the facts would disclose that the cancellation of the contract was the result of the exercise of executive power, de hors the clauses of the contract. The decision was imposed from the highest authority in the department, leaving nothing for the authority who signed the contract. Hence the writ petition is maintainable.
18. The judgment cited by the learned Additional Advocate-General in Vet India Pharmaceutical case related to appreciation of various tenders by the Tender Committee and refusal of the tender of the petitioner therein, though it was lowest. Learned Brother Justice B. Sudershan Reddy had considered the various judgments of the Supreme Court and ultimately held as under:
“Even if it is to be accepted that the petitioner’s offer is lowest, the respondents action in refusing to accept the same cannot be said to be arbitrary. It is not as if the respondents have refused to consider the offer of the petitioner without any material before them. It is settled law that the Government and its authorities are not bound to accept the lowest offer and even lower offer can be rejected for good reasons. It is not as if there are no reasons for taking such a decision, the past conduct of the petitioner is obviously taken into consideration by the first respondent-Government and accordingly issued directions to the second respondent not to accept and consider the offer of the petitioner.”
The ratio referred to above, by no stretch of imagination, can be applied to a case, where the contract is terminated on the basis of a Vigilance Report. Hence, the objection that the writ petition is not maintainable cannot be sustained.
19. Considerations in such matters, however, would more be about the decision making process than the decision itself. The parameters of judicial review have undergone a substantial metamorphosis in the recent past. The principle of reasonableness as enunciated by the Court of Appeal in Associated Provincial Picture House Limited v. Wednesbury Corporation, 1947 (2) AER 680, held the field till recently. Our Courts adopted and applied the said principle. However, it slowly came to be replaced by the principle of proportionality. After extensively referring to the judgment of House of Lords as to Principle of Proportionality in R. v. Secretary of State for the Home Department, Ex Porte Daly, (2001) 3 ALL.ER 433, the Court of Appeal in R (Farrakhan) v. Secretary of State, (2002) 4 ALL.ER 289, summed up as under:
“When applying the test of proportionality, the margin or discretion accorded to the decision maker is all important, for it is only by recognising the margin of discretion that the Court avoids substituting its own decision for that of the decision maker.”
This too has been implanted in the Administrative Law in India. See Om Kumar v. Union of India, 2001 (2) SCC 386.
20. Where the cancellation of a contract or other act results in detriment to a citizen is the consequence of an administrative exercise, apart from not being excluded, judicial review becomes imperative. A reading of the Memo dated 16-4-2003 discloses that it is the report of the 6th respondent, which constituted the basis for the cancellation of the contract. The 6th respondent is neither a party to the contract nor the evaluation was in terms of the contract.
21. The contract awarded to the petitioner involves specialised execution of work. It is not uncommon that the agency awarding the contract would satisfy itself as to whether the intending bidder has experience in execution of similar works. In this context, the distinction between the words ‘same’ and ‘similar’ becomes significant. No two works, particularly, of such magnitude, are bound to be same. The quantity, terrain, material, need, purpose, etc., of one work, radically differ from the other. That is why the tender schedules contain clauses regarding experience in ‘similar’ works, in contradistinction to ‘same’ work. The ultimate decision as to whether the experience held, by the tenderer conforms to the basic requirements of the tender in question or not, would rest with the evaluating agency. It is for these reasons that a clause is incorporated in the tender schedule, which reads as under:–
“4.1.1. Tenders will be finalised by the Executive Engineers/Superintending Engineers/ Chief Engineers for the works costing Rs. 1 crore. The tenders for the works costing more than Rs. 1 crore will be referred to COT along with technical bid evaluation for consideration. The Commissioner of Tenders shall scrutinize the tenders submitted by the Engineer-in-Chief/Chief Engineer/Project Administrators, in accordance with the conditions stipulated in the tender document and in case any discrepancy or non-adherence to the conditions, the same shall be communicated which will be binding both on the tender concluding authority and contractor. In case of any ambiguity the decision taken by the COT on tenders shall be final.”
The 2nd respondent (Commissionerate of Tenders) is a specialised agency comprising of officers of the rank of Chief Engineer. Each member has a vast experience behind him in evaluation as well as supervision of such works. That is the reason why, finality is attached to the decision taken by the 2nd respondent, in case any ambiguity exists in the matter. Even if an unsuccessful tenderer challenges the evaluation made by the specialised agency, like the 2nd respondent, the Court would straightaway refuse to interfere with such evaluations. It is only the agency which has a superior expertise than the 2nd respondent, if at all, that can point out the deficiencies or defects in the matter.
22. It is not in dispute that the Vigilance and Enforcement Department is headed by Senior Police Officers and comprises officers mostly of Police Department. The Government is certainly competent to get the matters even relating to award of contracts investigated by the Vigilance Department; to verify as to whether any irregularity has taken place in the award of the contracts. The investigation in such matters is expected to be into the aspects of acts of fraud and misrepresentation, if any, transparency (mostly its absence) at various levels resulting in loss to the Government, etc. Even where an honest and bona fide 2nd opinion is possible on the evaluation of technical matters, the Vigilance Department has hardly any role to play.
23. In the counter-affidavit, it is stated that the Vigilance Department is assisted by technical personnel of the rank of Executive Engineer and Superintending Engineer. Leaving apart the permissibility of evaluation of the Experience Certificate by the Vigilance Department, the opinion rendered by such officers of the rank of Executive Engineers or Superintending Engineer cannot constitute the basis to find fault with the initial evaluation undertaken by the 4th respondent and the final evaluation undertaken by the 2nd respondent. As long as the petitioner was not accused of furnishing any fabricated certificates and as long as there did not exist any element of lack of transparency at any level, the Vigilance Department does not have the power to sit in judgment over the award of contracts.
24. Various matters are required to be dealt with by the respective departments. Dozens of departments are constituted by the Government to deal with the matters, which are of specific nature. Such departments are entrusted with the power to deal with the matters in their sphere, and are endowed with the duty to ensure that their acts conform to the norms prescribed therefor. They are rendered answerable for any deviation therefrom. If any department fails in ensuring that the works are executed in accordance with norms, the explanation is required to be called from them. It is only if the concerned department fails to explain the alleged deviations, that necessary steps can ensue, be it against the violator or the officials of the Department. If the evaluation of the work of one department is to be entrusted to another, uncertainty of disturbing proportion will prevail.
25. It is true that the Vigilance Department had a role to play, which had its application spread over to various departments. The scope of the powers of the Vigilance Department is confined to those relating to ensuring transparency, checking of corruption, etc. By no stretch of imagination, it can be said to have to its credit the power to render a value judgment, on the decision taken by the authorities of other departments. If such course is to be extended to its logical conclusion, the Irrigation or Civil Supplies Departments, which may have on its rolls officials from Police Departments also, may have their own evaluation of the Home Department, be it as regards functioning of a particular Police Officer or the department as a whole. Such a course of action was never contemplated and if permitted would result a virtual pell-mell.
26. Reverting to the facts of the case, it needs to be observed that the relevant clause in the schedule provided for execution of similar work of a particular magnitude. Nobody doubted the genuinity of the certificates submitted by the petitioner. The objection pointed out by the 6th respondent is that the specific quantity of the work executed by the petitioner with paver finisher in the State of Karnataka was not furnished. The quantity of work executed by the petitioner in the State of Karnataka was to the tune of 28890 cum., which is almost 4 times the quantity required under the tender schedule. It may be true that the contract in the State of Karnataka did not provide for use of paver finisher.
27. Even the present tender schedule does not insist that there should have been a condition in the tenders for works executed by the tenderer for use of paver finisher. If the petitioner had volunteered to use that equipment, there is no reason why he cannot have the benefit of the experience. If there exists any doubt as to the quantity, the 5th respondent ought to have required the petitioner to specify the same. Similarly as regards CNS layer, the 6th respondent had undertaken its own evaluation, assuming to itself the role of Super Commissionerate of Tenders. It forgot to maintain the distinction between ‘same’ and ‘similar’. The required proportion of various categories of earth, to constitute the CNS layer may vary from place to place, depending on the terrain. However, neither the Courts, much less, an Officer of the Vigilance Department can evaluate that. It is for the expert body, which is endowed with the responsibility, to evaluate that The Executive Engineer, Kandukur, who issued the Experience Certificate, stood by it. The main objection was as regards its attestation by an Engineer from State of Karnataka and certain discrepancies as to figures, when compared with the Measurement Books. It was forgotten that even the figures contained in the Measurement Books were more than sufficient to bring the petitioner within the required quantity. If this kind of nitpicking exercise is undertaken without feeling any limitations, defects can be pointed out to every decision taken by the Government and its agencies in all the departments and in all the matters.
28. The decision making process has its own latitudes. It is here that the administrative discretion plays a pivotal role. In the absence of such administrative discretion, which is known as ply in the joints, hardly any decision making is possible. No set of rules or norms can be framed, which would take care of all minute facets of every fact situation. While broad guidelines are laid down, the authorities are vested with the power in application of the same. They are allowed the discretion to decide as to whether the given fact situation fits into the framework of the rules or norms. As long as such a decision is taken honestly, the possibility of there being a 2nd opinion is no ground to find fault with the same.
29. No exception can be taken for the Government to undertake an examination by Vigilance Department as observed earlier. The examination by the 6th respondent ought to have been on aspects other than those, which are specifically entrusted to the various agencies. Not a single instance of dishonesty, at any level, was pointed out in the report of the 6th respondent, nor did it find that the petitioner had filed any fabricated documents. Even assuming that it was competent for the 6th respondent to undertake the evaluation, and if it entertained any doubt as regards the compliance of the conditions by the petitioner, the minimum and fundamental that was expected of it was to have put the petitioner on notice. This becomes more imperative when the decision is going to result in drastic consequence of cancellation of the contract. It is a different thing as to whether the petitioner would have been in a position to offer an explanation or whether the same would have been acceptable to 6th respondent. But in the absence of such an opportunity to the petitioner, the whole exercise undertaken by the 6th respondent falls to the ground. It is almost a conviction without trial.
30. The 1st respondent had committed a blatant illegality in straightaway directing the take over of the work from the petitioner on acceptance of the report of the 6th respondent. Had the 1st respondent taken the trouble to get the matter legally examined before taking such drastic action, any person with basic knowledge of law, would have advised it to put the petitioner on notice. It is rather strange that the 1st respondent has unilaterally decided to take over the work, little realising that such half-hearted exercise is not only to result in delay of execution of the work, but exposing itself to several resultant problems. Out of respondents 1, 3, 4, 5 and 6, who have played role at various stages in the cancellation of the contract of the petitioner, none have chosen to hear the petitioner before the decision was taken. The 1st time the petitioner has known about the entire episode was when he received the bunch of letters, through a registered post. The whole exercise presents a text book of violation of principles of natural justice. In a country governed by law, such course of action is totally impermissible.
31. The argument advanced on behalf of the respondents that the petitioner would be given adequate opportunity before he is blacklisted, is almost similar to convicting a person without trial and giving him an opportunity to choose the cell of his choice in the prison.
32. Viewed from any angle, the impugned proceedings cannot be sustained. They suffer from the vice of violation of principles of natural justice, unreasonableness and arbitrariness and the entire exercise is violative of principles of equality and reasonableness enshrined in Article 14 of the Constitution of India. The Memo dated 16-4-2003 issued by the 1st respondent and other proceedings consequential thereto are set aside. As a result, the petitioner shall be entitled to proceed with the work awarded to him, strictly in accordance with the terms of the contract. This order does not preclude the respondents from taking any action against the petitioner, if he has violated the terms of the contract during the execution of the work.
33. The writ petition is accordingly allowed. No costs.