ORDER
1. M/s. Bharat Heavy
Electricals Limited, (BHEL), Government of India undertaking, has been commissioned by the National Thermal Power Corporation (NTPC) to undertake certain civil and other works for the Simhadri Thermal Power Project. Some of the items of the work undertaken by the BHEL have been earmarked for contracting out to others. One of the items of such work is “Raw Water Reservoir”.
2. The petitioner M/s. G.V.P.R. Engineers Limited, is one of the tenderers for this item of work. Aggrieved by certain developments to which reference would be made hereinafter, the petitioner has filed the present application seeking that this Court direct the 1st respondent to consider and grant the request of the petitioner contained in representations dated 22-9-1999 and 5-10-1999 regarding interchange of the rates quoted by the petitioner for items Nos.5 and 7 of the Tender Schedule as regards the work relating to Raw Water Reservoir Tank, tender specification No.BHEL:PS:SCT:809, and thereupon award the contract of work relating to raw water reservoir to the petitioner, if necessary, by declaring that the action of the 1st respondent in permitting the 2nd respondent to submit a revised tender for the said work, is illegal and consequently
direct the 1st respondent to award the contract to the petitioner as the rates quoted by the petitioner are the lowest and allow all
consequential benefits.
3. At one stage, Sri E. Manohar, learned senior Counsel appearing for the 1st respondent BHEL, has faintly sought to contend that the extant general principles contouring judicial review of contractual relations in which the State is one of the parties, is inapplicable to the present factual scenario since BHEL, though a State, is not directly entering into contractual relationships with private individuals, but is in effect sub-contracting a part of the work in respect of which it itself has entered into a contract with another viz., NTPC. This contention has, however, not been pursued further and the principal debase has proceeded on merits of the respective contentions and thus this Court is relieved of the obligation to adjudicate this nuance of the principle of judicial review of contractual relations to which the State is a party.
4. The established factual scenario relevant to the lis in issue is as under:
(a) The disputant area pertains to the item of work-Raw Water Reservoir.
(b) On initial invitation to tender for the said work by the 1st respondent, inter alia, the petitioner and the 2nd respondent submitted their bids for which the last date of submission of tender was 26-6-1998. The bids were opened on 5-5-1999 and the 2nd respondent was found to be the lowest of the 8 tenderers shortlisted, having quoted an amount of Rs. 32,49,24,3007- as against that of the petitioner at Rs.44,47,83,334/-. The process was however, not proceeded with and a fresh, though limited, tendering process was initiated by the 1st respondent by giving lender schedules to the shortlisted 8 tenderers. Bids, pursuant to this process, were opened on 21-9-1999.
(c) In the bids opened on 21-9-1999 the 2nd respondent quoted Rs.36,98,99,190/-, whereas the petitioner quoted Rs.41,18,83,992/-and has also offered a discount of 9.9% on the total value, if the work were to be allotted within a period of two weeks. The value of the quotation of the petitioner, on the application of the discount, would come to Rs.37,07,36,781.20ps.
(d) Pursuant to the opening of the bids on 21-9-1999, the bid of the 2nd respondent being the lowest, the contract was awarded to the 2nd respondent on 5-10-1999 communicated by a Telefax, pursuant to which the 2nd respondent sent a communication on 6-10-1999 appointing a Project Manager. Thereafter, the 2nd respondent entered into an agreement and proceeded to take various steps to execute the work, including mobilisation of resources for distributing the work, entering into memoranda of understanding with suppliers and the like.
(e) A day after the opening of the bids, on 22-9-1999 the petitioner submitted a representation to the Senior Deputy General Manager (Contracts) of the 1st respondent stating that in the tender submitted on 20-9-1999 the petitioner’s Engineer has entered item-5 (Geotextiles) at Rs.1357- per Sq.Mt and for item-7 (HDPE Film) at Rs.547-per Sq.Mt, by over-sight instead of the rates vice-versa for the above items. The representation further stated that it is an evident mistake as is apparent from the quotations received from the approved suppliers which are stated to have been enclosed and based on which the rates are said to have been quoted. The representation requested that the “bona fide mistake” may be ignored and the rates of Rs.547- for item-55 and Rs.1357- for item-7 may be considered and that if so considered the petitioner’s bid will come to Rs.35,92,10,010.60 ps., after taking into account the offer of discount of 9.9%. The representation ended with a request that the petitioner’s offer be accepted
and work awarded in his favour. By yet another letter dated 5-10-1999 the theme contained in the earlier letter dated 22-9-1999 was reiterated. This later letter of 5-10-1999 further stated that petitioner has come to learn that the respondent No.2 had earlier quoted based on samples of Geotextiles and HDPE Film furnished by the said respondent and the samples having been tested were found not to confirm to the technical norms and specifications and that by the respondent No.1’s conduct of permitting the limited re-tendering the respondent No.2 was afforded an opportunity to escape the consequences of defective quality and not confining to tender specifications, This letter also stated that if the change of rates as requested in the earlier letter dated 22-9-1999 and reiterated in this letter were to be accepted, the petitioner’s tender would have been the lowest, instead of that of the respondent No.2 and the respondent No.1 would be getting a profit of Rs. 1,06,89,180/- and that in view of an opportunity having been provided to the respondent No.2 for escaping the consequences of supplying defective material as per their initial tender, by the process of permitting the 2nd tender, a similar opportunity should be accorded to the petitioner to rectify the error and permit change if the rates of items 5 and 7. In conclusion this letter also requested that in view of the general terms and conditions of the tender document the respondent No.1 retains an option and right to divide the work and in that view of the matter the petitioner by also be given an opportunity may dividing the work between the petitioner and the respondent No.2.
5. Sri V. Venkataramana, learned Counsel for the petitioner urged that respondent No.1 being a State is obligated by Constitutional and public law injunctions to act rationally, fairly and with a view to achieve the best possible bargain for itself even in areas where it enters into contractual relationship with the individuals. In this
view of the legal position and in view of the factual circumstances of the issue encapsulated above the respondent No.1 ought in fairness to permit rectification of the error in the bid submitted by the petitioner in respect of items 5 and 7 and consider the petitioner’s bit which would have, in that event and on application of the discount offered, been the lowest bid and would have permitted the respondent No.1 to profit Rs. 1,06,89,180/-. It has further been urged that in view of the second process having been limited to the 8 tenderers short listed pursuant to the initial tendering process, this later process, in principle and substance, falls to be characterised as negotiations and in that view of the matter permitting the rectification requested by the petitioner ought to have been considered and non-consideration of the same, considering the respondent No.2’s bid as the lowest and awarding the work to the said respondent on that basis constitutes an arbitrary, irrational and extraneous exercise of power warranting interdiction by this Court under Article 226 of the Constitution of India, more so when the result of the said conduct of the respondent No.1 has occasioned a loss to the public authority in a quantum exceeding One Crore rupees. It has also been urged that the second process which is in the nature of negotiations ought to have been proceeded with to result in a maximum advantage to the BHEL which is a public authority [a submission which is reiteration of the submission earlier set out, though in a conceptual form]. In support of the submissions the petitioner relied on Food Corporation of India v. Ms Kamdhenu Cattle Feed Industries, , Raunaq International Limited., v. I.V.R. Constructions Limited, , and Punjab Communications Limited v. Union of India, and others, .
6. Sri E, Manohar, learned senior Counsel appearing on behalf of the respondent No.1 BHEL, urged as under:
(a) that the relief as claimed is unsustainable as it is pursuant to the 2nd process of tendering that both the petitioner and the respondent No.2 also submitted their tenders and in that context the action of the respondent No.1 in permitting respondent No.2 to submit a revised tender cannot be said to be illegal as equal opportunity was provided to all the 8 tenderers including the respondent No.2 and the petitioner. The other relief to direct respondent No.1 to award the contract to the petitioner is also unsustainable as the contract was awarded to the respondent No.2 who was the lowest on 5-10-1999 itself while this writ petition was filed on 11-10-1999.
(b) that during the initial process of short listing itself respondent No.1 has by a Fax message dated 24/28-12-1998 requested all tenderers to confirm that they meet the specific requirements as per the tender and intimate details of the vendors from whom they secure the materials to be used in the work and that in response thereto the tenderers furnished information about the agencies supplying these materials. That while the evaluating rates quoted by the shortlisted tenderers the respondent No.2 was found to have offered to supply indigenously manufactured material identical to the tender specifications but in view of the vast difference in the rates quoted by the tenders in respect of the two components viz., Geotextile and HDPE Film, the respondent No.1 requested respondent No.2 to supply samples for the purpose of testing to ensure that indigenously manufactured material would meet the technical requirements of BHEL/NTPC. Consequent thereupon the samples were tested at IIT, Chennai and the test report indicated that the samples do not meet the technical requirements. In this view of the matter and in view of the vast variance in the rates quoted by the 8 short listed tenders, the respondent No.1 came to the conclusion that there was an inadequate understanding
by the tenders about the two components. The respondent No.1 therefore, decided to identify the supply agencies for these components in consultation with the NTPC and such identified suppliers/products were initimated to all the 8 tenderers including the petitioner and the 2nd respondent and all were requested to send revised bids vide respondent No.1’s letter dated 7-9-1999. In the annexure thereto the specifications of the product, names and addresses of the manufactures and the Indian agencies of the product were intimated;
(c) that consequently revised bids having been received were opened on 21-9-1999 in the presence of the tenderers and/their representatives. On the opening of the bids the tender submitted by the respondent No.2 for Rs.36,98,99,190/- was found to be the lowest as against the petitioner's bid for Rs.41,18,83,992/-, which latter was with conditional offer of discount of 9.9% on the tender amount if the work order was given to it within two weeks; (d) that the allegation of the petitioner
as contained in his letters dated 22-9-1999 and 5-10-1999, that there has been a mistake in the quotation of bids between items 5 and 7 is an allegation that is misconceived and made with an ulterior motive. Even in the initial bid the petitioner has quoted Rs.126/- as against item-5 and Rs.180/- as against item-7 and even after the offer of 29.79% discount on the petitioner’s rates as against items 5 and 7, the rates for these items would have come to Rs.100.80 and Rs.144 respectively, the petitioner made representations having come to know that his bid was higher than that of respondent No.2 as is evident from the fact that the 1st representation dated
22-9-1999 was made on the day after the opening of the second set of bids on 21-9-1999. No such representation was made to rectify the so called error either after opening of the 1st bid on 5-5-1999 or on
the date of the opening of the 2nd bid on 21-9-1999. In any view of the matter such a representation cannot be entertained. Any consideration of the plea of the petitioner in this regard would be inconsistent with the policy underlying sealed tenders. The entire effort of the petitioner is to subvert the policy underlying awarding of contracts by a sealed tender system and to gain undue advantage based on the knowledge acquired after the bids were opened when the petitioner found himself not being the lowest tenderer;
(e) that there is neither any error, irrationality, arbitrariness nor any other extraneous consideration underlying the action of the respondent No.1 in awarding the contract to the 2nd respondent who happened to be the lowest tenderer; and
(f) that there is nothing in any of the facts and circumstances pleaded or urged by and on behalf of the petitioner warranting interference by this Court.
7. Sri M.P. Chandramouli, learned Counsel for the respondent No.2 has reiterated the aspects urged on behalf of the respondent No.1.
8. The contours of judicial review into the State action in the matter of entering contracts with individuals are too well recognised to necessitate an exhaustive analysis. In the limited context of the issues arising in this case, the principle applicable is that though the lowest tenderer can claim no right to the acceptance of his tender, and there in heres a power while inviting tenders to reject all the tenders, yet such power ought not to be exercised irrationally or arbitrarily and must depend for its validity on the existence of rational reasons. The object of inviting tenders for execution of a work is to provide an equal opportunity to all interesting bidders to compete, to obtain the most advantageous rate for execution
of the work together with the requisite expedition in execution and quality, warranted. Thus, the fundamental principle governing the State action in the matter of awarding contracts for its works is equal opportunity, ensuring competitiveness and advantageous rate to the public authority duly ensuring requisite quality. There is yet another aspect of the matter. Infinite deliberations and dilemma leading to endless negotiations may secure a more advantageous price but at the cost of expedient execution of the work which is an equally fundamental norm. Good governance cannot be founded on mere endless deliberations and negotiations. A time comes in every decision making where negotiations and deliberations must end and decision made on available facts and circumstances and the best bargain evaluated on such circumstances. In the case on hand the initial bids were opened on 5-5-1999 and tenders were again called for from the eight short listed tenderers and these later bids were opened on 21-9-1999. The respondent No.1 acting upon these bids had identified respondent No.2 as being the lowest tenderer and has awarded the work to it on 5-10-1999. The fact that the petitioner has become conscious of the alleged error in his quotation in respect of items 5 and 7 on the day after the bids were opened on the second occasion coupled with the request contained in its representation dated 5-10-1999 for splitting up of the work and award of half of it to the petitioner also, is clearly indicative of the fact that the petitioner wants to avail the advantage of the knowledge obtained on the opening of the bids. The refusal of the respondent No.1 to keep the process of deliberations open endlessly and in refusing to negotiate further with the petitioner or the refusal in aceding to the petitioner’s request for rectification of the so called error in its prices quoted, cannot be characterised by any standards as an arbitrary, irrational or extraneous conduct. The contract is for the execution of a work,
which is a component of a Thermal Power Project. If the respondent No. 1 has in the totality of circumstances considered time to be the essence, then such consideration cannot be faulted. Respondent No.1 is the best judge for balancing competing public interests as between a more advantageous price obtainable by endless and prolonged deliberations and negotiations on the one hand and a time frame within which such deliberations must end and the work begin, on the other. The petitioner’s endeavour to secure a contract for itself despite not being the lowest tenderer is sought to be canvassed under the rubric of subversion of public interest. Such an endeavour ought not to have the benediction of this Court.
9. In the facts and circumstances set out above and on the analysis of the applicable law this Court is unable to discern any principle warranting interference by this Court. The writ petition is accordingly dismissed. No costs.