TaxTMI 
TaxTMI 
2024 (3) TMI 1133
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....27462, issuing "Revised Summary of Technical Evaluation Report" in respect of work for up-gradation of road from T01 Sira to Shivgali, Package No. JK14-3008, PMGSY-III, Batch No. I of 2022-23, Block Latti, District Udhampur Length-32.150 kms ['the subject work']. A further writ or direction in the nature of mandamus is sought against the official respondents for restraining them from opening the financial bid or to proceed further in pursuance of e-NIT No. CEJ/PMGSY/723 of 2022-23 dated 14.11.2022. Factual matrix: 2. Vide e-NIT issued on 14.11.2022, the official respondents invited bids for various developmental projects across the UT of Jammu and Kashmir which also included the subject work. The petitioner-firm, being eligible in terms of the e-NIT, participated in the tendering process by submitting its bid within the stipulated time. Apart from the petitioner, four other bidders including the respondent No. 5 also participated in the bidding process. As is stipulated in the e-NIT, the bidding process envisaged two stages i.e Part I and Part II and, therefore, the bidders were required to submit technical bid and the financial bid separately. The bidders, who would qualify ....
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.... and published by the Technical Evaluation Committee in the form of Revised Summary of Technical Evaluation Report dated 24.12.2022, the petitioner is aggrieved of and has challenged the same in the instant petition. The pleadings and submissions of parties: 6. The impugned decision of the Technical Evaluation Committee headed by Chief Engineer, PMGSY, Jammu is assailed by the petitioner primarily on the following grounds: (a) That the decision of the Technical Evaluation Committee and issue of revised summary of technical evaluation report in respect of respondent No. 5 changing its status from 'non-responsive' to 'responsive' bidder is arbitrary, unfair and in violation of the mandatory terms and conditions of e-NIT; (b) That the publication of technical evaluation summary wherein the petitioner was shown responsive along with other bidders and respondent No. 5 was shown 'nonresponsive' had generated legitimate expectation in the petitioner to bag the contract on the basis of lowest rates amongst the bidders quoted by the petitioner; and (c) That the impugned decision of the official respondents overlooks the mandatory condition provided in the SB....
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....e terms and conditions of the contract. It is also the plea taken by respondent No. 5 that bearing of UDIN on the annual turnover certificate for all the five years was not a mandatory condition of contract and, therefore, the decision of the Technical Evaluation Committee taken on 24.12.2022 waiving the directory condition cannot be interfered with by this Court in exercise of its extraordinary writ jurisdiction. It is also argued that in view of huge difference between the bids submitted by the petitioner and respondent No. 5, if the contract is permitted to be allotted to the petitioner, it would cause huge loss to the public exchequer, in that, the official respondents will have to shell out more than 20 lacs above the bid/rates quoted by respondent No. 5. 9. Aside the aforesaid pleadings of the parties, there is a supplementary affidavit filed by the Managing Director of the petitioner-firm taken on record. In the supplementary affidavit, it is highlighted by the petitioner that mentioning of UDIN on the turnover certificate is not an idle formality, but a mandatory requirement. It is submitted that necessity of mandatory submission of certificates by Chartered Accountants ....
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....tioner-firm had attached/uploaded audit reports of four years instead of last five financial years of the second JV Partner which, in any case, is not the requirement of clause 4.4B(a) III (e). It is pointed out that bid of respondent No. 5 was declared 'responsive' despite the fact that it had not uploaded the annual turnover certificate bearing UDIN issued by the Chartered Accountant for the last five years. The dispute is stated to be pending adjudication in this Court in a separate petition. 12. The supplementary affidavit filed by the petitioner is responded to by the official as well as the private respondent. In reply to the supplementary affidavit, it is submitted that the mandatory requirement of any contract, including the contract in question, is the financial capacity of the bidder to execute the work. This is so clearly laid down in clause 4.6 of the SBD. The bid capacity of the respondent No. 5 in terms of clause 4.6 was worked out on the basis of the annual turnover submitted by respondent No. 5 and it was found that respondent No. 5 had the requisite bid capacity to execute the work and, therefore, was meeting the requirements of SBD substantially. It is on accou....
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....DIN of Institute of Chartered Accountants of India with breakup of civil works and total works excluding GST/VAT in each financial year (clause 4.4 of ITB)(pdf). Without UDIN the certificate will not be entertained and the bid rejected. (b)................................................................... (c) .................................................................. (d).................................................................. (e) .................................................................. (f) Audit reports under Income Tax Act (3CA/3CB along with 3CD reports/(whichever applicable) for the last five financial years. (g).................................................................. ......... (h) The successful bidder will have to provide the original documents (from a to g) duly certified by a Chartered Accountant before a work is allotted to him. Any certificate issued by the Chartered Accountant should mandatorily bear UDIN. 4.3 Joint Ventures: For bids valuing Rs. 10.00 crores and above. (a)..................................................................... ....
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........................ ....... (h) The successful bidder will have to provide the original documents (from a to g) duly certified by a Chartered Accountant before a work is allotted to him. Any certificate issued by the chartered accountant should mandatorily bear UDIN. 15 Similar requirement is repeated in clause 12.2(b) III(a) and clause 12.2(b) III(h). The bid opening and evaluation is given in clause 22 which requires that the result of evaluation of Part I of the bids (technical bids) shall be made public on e-procurement system following which there shall be a period of five working days for an aggrieved bidder to submit his complaint. This is so provided in clause 22.6 which reads thus: "The result of evaluation of Part I of the bids shall be made public on e-procurement systems following which there shall be a period of five working days during which any bidder may submit complaint which shall be considered for resolution before opening Part II of the bid. for an aggrieved bidder to submit his complaint". Clause 25; Examination of bids and determination of responsiveness: 25.1 During the detailed evaluation of 'Part I of Bids' the Employ....
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....s 'substantially responsive' in terms of clause 25.1 of the ITB. 18. The facts in this case are not much in dispute. Clause 4.2 (III) deals with documents pertaining to the financial standing of the bid. Sub-clause (a) of Clause 4.2 (III) requires the bidder to submit annual turnover certificate from the Chartered Accountant for the last five financial years bearing UDIN of Institute of Chartered Accountants of India with breakup of civil works and total works excluding GST/VAT in each financial year. It further provides unequivocally that, without UDIN, the certificate will not be entertained and the bid rejected. It is, thus, evident that clause 4.2 (III) (a) does not only mandate submission of annual turnover certificate bearing UDIN, but also provides for the consequences of the failure of the bidder to submit such certificate having UDIN of Institute of Chartered Accountants of India on the certificate. Apart from the turnover certificate as stipulated in aforesaid clause, the bidder is also required to submit audit reports under the Income Tax Act for the last five financial year. Clause 4.2 (III)(h) reiterates that successful bidder shall have to provide original document....
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....r to qualify for award of contract should have in the last five financial years: (a) achieved in any one financial year, a minimum financial turnover as certified by the Chartered Accountant and, at least 50% of which is from civil engineering construction works as certified by the Chartered Accountant as is equivalent to the amount i.e 75% of the amount put to bid, in case the amount put to bid is more than 200 lacs. The amount put to bid would not include maintenance cost for five years and turnover will be indexed at the rate of 8% per year. 23. Admittedly, in the instant case, the bid amount is more than Rs.200 lacs and, therefore, the bidder was required to show a minimum financial turnover equivalent to 75% of the amount put to bid. He was further required to show that at least 50% of such financial turnover which is equivalent to 75% of the bid amount is from civil engineering construction works. The bidder was also required to show that he had satisfactorily completed, as prime Contractor or sub-contractor, at least one similar work equal in value to one-third of the estimated cost of work of any Government/Semi Government Department (excluding maintenance cost for five ....
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....requires a particular thing to be done in a particular manner and also provides the consequences of its breach, such condition is required to be treated as mandatory. As noted above, the tender documents reiterate at more than two places that any certificate to be issued by the Chartered Accountant is required to bear UDIN of the Institute of Chartered Accountants and breach thereof will entail rejection of the bid. In the face of such stipulation, it is very difficult to accede to the argument of the learned counsel for the official respondents that the stipulation requiring five years annual turnover certificate from the Chartered Accountant bearing UDIN is directory and can be waived off. 26. This brings me to the question as to whether so called year annual financial turnover certificate of respondent No. 5 (tax audit report plus consolidated annual turnover certificate for the last five financial years not bearing UDIN) as was accepted by the official respondents could be termed as 'substantial compliance of the terms and conditions of Part I of the bid document' and, therefore, the decision of the Technical Evaluation Committee is fair and is ought not to be interfered wit....
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....y the bidding capacity of respondent No. 5, the official respondents have picked up for consideration the annual turn over certificate issued by the Chartered Accountant without bearing UDIN. This was not permissible for the reason that the entire certificate was not admissible to be considered in the evaluation of the bid in view of the clear stipulation contained in clause 4 and at two other places as explained above. 31. Aside, the official respondents in reply to the supplementary affidavit filed by the petitioner have clearly admitted that in relation to other works tendered in terms of e-NIT in question, the similar bids of the bidders which were not conforming to the requirement of bearing UDIN on the annual turnover certificate issued by the Chartered Accountant have been rejected. The only reason assigned for deviation in the instant case is that the aforesaid cases were pertaining to different works and that no complaint in terms of clause 26.2 of SBD was filed by the aggrieved bidder(s). Be that as it may, the fact remains that till the impugned decision was taken on the compliant of respondent No. 5, it was also the understanding of the official respondents that subm....
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....elating to contracts awarded or to be awarded by the Government, Semi Government and other Public Sector Undertakings. Suffice to say that all these issues have already been considered by this Court elaborately in Mohd Yousaf Shan vs. UT of Jammu and Kashmir and others (WP(C) No. 1875/2023, decided on 03.08.2023). It is relevant to reproduce paragraphs 12, 13, 14 and 16 of the judgment as under:- ".12. The distinction between "mandatory or essential conditions" and "ancillary conditions" in a contract is aptly brought out by Hon'ble the Supreme Court in para 14, 15 and 16 of Vidharbha Irrigation Development Corporation vs. Anoj Kumar Agarwala and ors, (2020) 17 SCC 577, which is reproduced below:- "14. The law on the subject is well settled. In Bakshi Security and Personnel Services Pvt. Ltd. v. Devkishan Computed Pvt. Ltd. and Ors., (2016) 8 SCC 446, this Court held: "14. The law is settled that an essential condition of a tender has to be strictly complied with. In Poddar Steel Corpn. v. Ganesh Engg. Works [Poddar Steel Corpn. v. Ganesh Engg. Works, (1991) 3 SCC 273] this Court held as under: (SCC p. 276, para 6): "6. ... The requirements in a ....
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.... "14. We must reiterate the words of caution that this Court has stated right from the time when Ramana Dayaram Shetty v. International Airport Authority of India [Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCC 489] was decided almost 40 years ago, namely, that the words used in the tender documents cannot be ignored or treated as redundant or superfluous - they must be given meaning and their necessary significance. In this context, the use of the word "metro" in Clause 4.2(a) of Section III of the bid documents and its connotation in ordinary parlance cannot be overlooked. 15. We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the co....
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....er document submitted by all the tenderers on their own merits and if it is ultimately found that successful bidders had in fact substantially complied with the purport and object for which essential conditions were laid down, the same may not ordinarily be interfered with. (vi) The contractors cannot form a cartel. If despite the same, their bids are considered and they are given an offer to match with the rates quoted by the lowest tenderer, public interest would be given priority. (vii) Where a decision has been taken purely on public interest, the Court ordinarily should exercise judicial restraint." 14. Equally noteworthy are the principles set out in para 23 and 24 of the judgment rendered by Hon'ble the Supreme Court in Michigan Rubber (India) Ltd. vs. State of Karnataka, (2012) 8 SCC, 216: "23. From the above decisions, the following principles emerge: (a) the basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason an....
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....ance requires that all material conditions of a tender, determined on an objective standard, be complied with. A bid is substantially compliant if any departures from the tender call concern mere irregularity. The Court is in fact not in a good vantage position, as the employer would, to decide if the decision of the respondents to reject the bid of the petitioner on the ground of non-compliance of the terms and conditions of tender. 35. After examining the entire matter in light of the settled legal position as adumbrated hereinabove, this Court finds that the decision taken by the official respondents on 24.12.2022 is not only non-compliant in so far as the mandatory terms and conditions of ITB are concerned, but is otherwise irrational, arbitrary, unfair and in violation of Article 14 of the Constitution. I am told that the price bids have been opened in which respondent No. 5 has been found to be lowest, whereas, the petitioner is second lowest and the difference between the two bids is substantial. It was also projected before me that even if this Court finds the decision of the official respondents not sustainable in law, yet awarding the contract to the petitioner would b....