M/s TRG Industries Pvt. Ltd and A H Wani Infratech Pvt. Ltd and M/s Tarmac Road and Roof Builders (Joint Venture) V. Union Territory of J&K through Comm/Secy to Govt., Public Works Department (R&B) and Chief Engineer, PMGSY, Jammu and Executive Engineer PMGSY Division Ramnagar and Superintendent Engineer PMGSY Division Ramnagar

LPA/89/2024

AI Insights

The case involves two appeals related to a tendering process for developmental projects in Jammu and Kashmir. M/s TRG Industries Pvt. Ltd and A H Wani Infratech Pvt. Ltd, both bidders, contested the decisions regarding their responsiveness in the tender process. The Technical Evaluation Committee initially declared A H Wani Infratech as 'un-responsive' due to the absence of UDIN in their turnover certificate. However, after reconsideration, they were declared 'responsive', leading M/s TRG Industries to file a writ petition. The learned Single Judge's decision to quash this re-evaluation and direct a re-tender was contested in both appeals. The High Court's decision balanced the adherence to tender conditions with public interest in re-tendering.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 816241 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 05-06-2024
• Assessment Year: misc
• Other Referred Cases: West Bengal State Electricity Board vs Patel Engineering Company Limited
• Laws Referred To: Instructions to Bidders (ITB), Standard Bidding Document (SBD)
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: RAVINDER GUPTA; SUNIL SETHI; RAVI ABROL
• Assessee Lawyers: R K G U P T A; VARUT GUPTA
• Keywords: Chartered Accountant; Financial Bid; Public interest; Responsive bidder; Technical bid; Tendering Process; Unique Document Identification Number (UDIN); Unresponsive bidder; Annual turnover certificate
• Section: 28(1); 25(1); 25(2); 4.2(III)(a); 4.4B(a)(III)(a)

Judgement Text

" HIGH COURT OF JAMMU & KASHMIR AND LADAKH AT JAMMU LPA No. 89/2024 in [WP(C) No. 2910/2022] CM No. 2461/2024 M/s TRG Industries Pvt. Ltd Office 29 Gaurimal Complex, Rail Head Complex, Near Bahu Plaza Jammu Through its Managing Director Naresh Gupta, age 59 years S/o Sh. T. R.Gupta ….Appellant/Petitioner(s) Through :- Mr.R. K. Gupta, Sr. Advocate with Mr. Varut K Gupta, Advocate V/s 1. Union Territory of J&K through Comm/Secy to Govt., Public Works Department (R&B) Civil Secretariat, Jammu. 2. Chief Engineer, PMGSY, Jammu. 3. Executive Engineer PMGSY Division Ramnagar. 4. Superintendent Engineer PMGSY Division Ramnagar. 5. A.H.Wani Infratech Pvt. Ltd and M/s Tarmac Road and Roof Builders (Joint Venture) Chinar Commercial Complex, Residency Road, Srinagar/Kashmir. ….Respondent(s) Through :- A H Wani Infratech Pvt. Ltd. M/s Tarmac Road and Roof Builders (Joint Venture) Chinar Commercial Complex, Residency Road, Srinagar/Kashmir, through its Director Asgar Nadeem Wani, aged 28 years S/o A H Wani, R/o Mangota, Doda Mr. Ravinder Gupta, AAG for R-1 to 4 Mr. Sunil Sethi, Sr. Advocate with Mr. Ravi Abrol, Advocate for R-5 LPA No. 94/2024 CM Nos. 2553 & 2554/2024 …Appellant/Petitioner(s) Through:- Mr. Sunil Sethi, Sr. Advocate with Mr. Ravi Abrol, Advocate Sr.No.43 2 LPA Nos. 89 & 94 of 2024 Coram: HON’BLE MR. JUSTICE ATUL SREEDHARAN, JUDGE HON’BLE MR. JUSTICE PUNEET GUPTA, JUDGE JUDGMENT(ORAL) 05.06.2024 Atul Sreedharan-J 1. Two appeals have been filed. Both the appellants are aggrieved by the common order passed by the learned Single Judge in WP(C) No. 2910/2024 dated 22.03.2024. LPA No. 94/2024 has been filed by the appellant who was respondent No.5 M/s TRG Industries Private Limited, who was the original writ petitioner in WP(C) No. 2910/2022. The appellant in LPA No.94/2024 was the respondent No.5 in the aforementioned writ petition. 2. The brief facts that are required to be reiterated are as follows:- 3. By way of e-NIT issued on 14.11.2022, the respondents 2 to 4 had invited bids for various developmental projects across the UT of Jammu and Kashmir. The said NIT also included the work that is relevant to the present appeal. The appellant M/s TRG Industries Private Limited participated in the tendering process. Besides the appellant, there were Vs 1. Union Territory of J&K through Principal Secretary Public Work Department (R&B), Civil Secretariat, Jammu 2. Chief Engineer PMGSY 3. Executive Engineer PMGSY Division Ramnagar 4. Superintendent Engineer PMGSY Division Ramnagar. 5. M/s TRG Industries Pvt. Ltd., Office 29 Gaurimal Complex, Rail Head Complex, Near Bahu Plaza, Jammu ….Respondent(s) Through:- Mr. Ravinder Gupta, AAG for R-1 to 4 Mr. R K Gupta, Sr. Advocate with Mr. Varut K Gupta, Advocate for R-5 3 LPA Nos. 89 & 94 of 2024 four other bidders including the appellant A H Wani Infratech Private Limited which is appellant in LPA No. 94/2024. The bidding process had two stages and the bidders were required to submit the Technical Bid and the Financial Bid separately. The bidders declared as 'responsive' in the Technical Bid would alone be entitled to participate in the Financial Bid. 4. On 20.12.2022, the Chief Engineer PMGSY, Jammu, who was heading the Technical Evaluation Committee, indicated that only two bidders were found ‘responsive’ and technically qualified to participate in the Financial Bid. The appellant in LPA No. 94/2024 was declared ‘un- responsive’ as its Annual Turnover Certificate submitted by the second JV partner M/S Tarmech Road and Roof Builders did not mention the Unique Document Identification Number (UDIN) of the Institute of Chartered Accountants of India, which was the mandatory requirement as per clause 4.4 B(a) III(a) of the Instructions to Bidders (hereinafter referred to as ITB). 5. Respondent No.5 submitted a representation to the respondents 2 to 4 (in the writ petition) in terms of clause 22.6 of the ITB which enables an aggrieved bidder to prefer a representation within five working days from the opening of the bid. The respondent No.5 stated that the Standard Bidding Document (hereinafter referred to as SBD), prescribed qualifying criteria to the effect that the bidder must have the required amount of turnover in any one out of the last five financial years and by that standard, the latest year's turnover of JV Partner M/S Tarmech Road and Roof Builders was compliant and as such, the issue may be reconsidered. The respondent No.5 in the writ petition brought it to the 4 LPA Nos. 89 & 94 of 2024 notice of the official respondents that it was declared 'un-responsive' only on account of the omission on the part of the Technical Evaluation Committee to take note of the turnover certificate of the last year which, according to the respondent No.5, fulfilled the qualifying criteria laid down in the SBD. The Technical Evaluation Committee (hereinafter referred to as TEC) reconsidered the case of the respondent No.5 and declared it 'responsive' and issued a Revised Summary which was put on the e-procurement portal. The change in decision by the TEC compelled the appellant M/s TRG Industries Private Limited (LPA No. 89/2024), to file the aforementioned writ petition in which the impugned order was passed by the learned Single Judge. The learned Single Judge by way of an elaborate order, considered and took into account all aspects of the case and the submissions made before it and allowed the petition filed by the petitioner and quashed the order of the TEC declaring the respondent No.5 as ‘responsive’ but at the same time, also directed the quashment of the tendering process on the aspect of public interest as the bid preferred by the respondent No.5 was less than that of the petitioner by Rs. 19.05 Crore. 6. The appellant in LPA No. 89/2024 is satisfied with the impugned order to the extent that it quashes the order of the TEC declaring the respondent No.5 as ‘responsive’ but is aggrieved by that part of the order which has quashed the tender process and directed the official respondents to re-tender the development work. 7. Learned counsel for the appellant in LPA No. 89/2024 has argued very vehemently that the direction for cancellation of the tender process was 5 LPA Nos. 89 & 94 of 2024 beyond the jurisdiction of the Court as firstly, there was no prayer in the writ petition for quashment of the tender process and secondly, no argument was ever made before the Ld. Single Judge to cancel the tender process and so, such an order could not have been passed. In support of his argument, learned counsel for M/s TRG Industries Private Limited has placed before this Court the judgment of the Supreme Court in “West Bengal State Electricity Board vs Patel Engineering Company Limited”, reported as 2001(2) SCC 451, with specific reference to paragraph 32 where inter alia the Supreme Court held that the principle of awarding contract to the lowest tender applies when all things are equal besides keeping public interest in mind and to adhere to the rules and conditions subject to which bids are invited. The Supreme Court further held that because a bid is the lowest the requirements of compliance of rules and conditions mandated in the tender document could not be ignored. With reference to the facts in that case, the Supreme Court observed that the bid of the respondents 1 to 4 in that case, was the lowest bid offered and as the bid document of the said respondents stands without correction, there will be inherent inconsistency between the particulars given in the annexure and the total bid amount and it cannot be directed to be considered along with other bid only on the ground of it being the lowest. In other words, a bid could not be considered merely because it was the lowest even though it was not compliant with the other requirements of the notice inviting tender. 8. Notwithstanding for the appellant M/s TRG Industries Private Limited, however, has fairly stated that the order of the learned Single Judge 6 LPA Nos. 89 & 94 of 2024 notwithstanding, it was the unbridled discretion of the official respondents under clause 28.1 of the SBD to cancel the tender process at any stage before placing an order. Therefore, it has been prayed on behalf of the M/s TRG Industries Private Limited that the second part of the order passed by the learned Single Judge be modified, giving the discretion to the official respondents to either accept the lowest bid to the exclusion of respondent No.5 or re-tender. LPA No. 94/2024 9. In this appeal, learned counsel appearing for the appellant A H Wani Infratech Private Limited has assailed the quashment of the order of the official respondents by which the appellant was held ‘responsive’ and was permitted to participate in the tender process. Learned counsel for the appellant has submitted that the only ground on which the appellant was initially declared as ‘non-responsive’ was on account of the absence of the UDIN in the annual turnover certificate. As already stated hereinabove, the order of the learned Single Judge has analyzed the case of the contesting parties threadbare. In page 10 of the order, the learned Single Judge has referred to the SBD and held that the same is in two parts. Part-I pertains to the Technical Bid and part-II to the Financial Bid, thereafter, it has reproduced clause 3 of the NIT which provides the eligibility criteria for the bidders. It has particularly highlighted clause 4.2(III)(a) which required that: “the annual turnover certificate from Chartered Accountant for last five financial years (2017-18, 2018-19, 2019-20, 2020-21 and 2021-22) including current financial year bearing UDIN of Institute of Chartered Accountant of India with breakup of civil 7 LPA Nos. 89 & 94 of 2024 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”. Thereafter, the learned Single Judge has reproduced clause 4.4B(a) III (a) of the ITB which has an identical provision as clause 4.2 (III)(a). 10. In paragraph 17 of the order, the learned Single Judge formulates two issues which may be summarized as follows:-“the first issue was whether the absence of UDIN of the Chartered Accountant in the annual turnover certificate for each financial year is mandatory and the violation of which, would necessarily entail the rejection of the bid and the second issue was, whether the submission of the annual turnover certificate of even one out of the last five financial years bearing UDIN could be termed as ‘substantially responsive’ in terms of clause 25.1 of the ITB”. 11. In paragraph 25, the learned Single Judge has referred to the total bid amount which is more than two crore and therefore, the bidder was to show a minimum financial turnover equivalent to 75% of the bid amount and further required to show that 50% of such financial turnover being equivalent to 75% of the bid amount is from civil engineering construction work. 12. In paragraph 24, the learned Single Judge held that upon examination of the certificate of the respondent No.5 (appellant in LPA No. 94/2024) which bears UDIN in addition to five years turnover certificate issued by the Chartered Accountant which was without UDIN in favour of the JV Partner M/S Tarmac Road and Roof Builders, was in the opinion of the learned Single Judge, not a turnover certificate issued by the Chartered 8 LPA Nos. 89 & 94 of 2024 Accountant but was a GST and tax audit report as there was no reference to the nature of work executed by the respondent No.5 in the latest financial year i.e 2021-22 and neither did it reflect that 50% of the said turnover which is equivalent to 75% of the bid amount was earned from the work relating to civil engineering construction. It further found that the Technical Evaluation Committee considered the tax audit report signed by the Chartered Accountant accompanied by the financial turnover certificate issued without UDIN for all the five financial years i.e from 2017 till 2022 and that, the annual turnover certificate for the five financial years issued by the Chartered Accountant without the mandatory UDIN was required to be excluded from consideration. In the course of arguments, which is recorded in the order of the learned Single Judge, it is seen that the official respondents had admitted before the learned Single Judge that they did not take into consideration the turnover certificate issued by the Chartered Accountant on 15.10.2022 and thereafter it held that the decision of the Technical Evaluation Committee in relying upon a part of the annual turnover certificate dated 15.10.2022 issued by the Charted Accountant without UDIN, was illegal, arbitrary and seemingly unfair and biased against the petitioner and in favour respondent No.5. Thereafter, the learned Single Judge in paragraph 25 has reiterated that the tender documents have required at more than two places that any certificate issued by the Chartered Accountant was required to bear UDIN of the Institute of Chartered Accountants and the failure to do so would result in rejection of the bid. Further, it was held that the arguments put forth on behalf of 9 LPA Nos. 89 & 94 of 2024 the official respondents that the stipulation requiring five years annual turnover certificate from the Chartered Accountant bearing UDIN is only directory and may be waived off, was rejected by the learned Single Judge. 13. During his arguments, the learned counsel appearing on behalf of the appellant in LPA No. 94/2024 referred to page 91 of the appeal which is a part of Section 2 of the ITB commencing from page 90. Referring to clause 4.2(III), the learned counsel has drawn the attention of this Court to clause (a) which reads “the annual turnover certificate from the Chartered Accountant for the last five financial (2017-18, 2018-19, 2019-20, 2020-21 and 2021-22) including current financial year bearing UDIN of Institute of Chartered Accountant 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”. Learned counsel submitted that the said clause (a) must be read in conjunction with clause (h) which provides that “the successful bidder will have to provide the original documents (from a to g) duly certified by Chartered Accountant before the works allotted to him. Any certificate issued by the Chartered Accountant should mandatorily bear UDIN”. Relying on clause (h), learned counsel for the appellant submitted that the bidder was required to provide the original documents as mentioned in sub-clause (a to f) of sub-clause 3 of clause 4.2 and that any certificate issued by the Chartered Accountant should mandatorily bear the UDIN. 10 LPA Nos. 89 & 94 of 2024 14. Under the circumstances, he has impressed upon this Court that the latest certificate issued by the Chartered Accountant bore the UDIN and so there was substantial compliance. However, this Court begs to differ as clause (h) is only applicable to a successful bidder. In this case, the tender process was in progress and a contract was never entered into with any party, which is a pre-requisite when a party is selected as a successful bidder. In other words, in this case, there is no successful bidder as on date and, therefore, clause (h) is inapplicable. 15. In paragraph 24 of the impugned order, the learned Single Judge has held that the certificate that was issued by the Chartered Accountant bearing UDIN, in addition to the five years turnover certificate without UDIN in favour of JV Partner M/S Tarmech Road and Roof Builders, was not a turnover certificate but is a GST and tax audit report as it did not speak about the nature of work executed by the respondent No.5 in the latest financial year i.e 2021-22 and neither did it reflect that 50% of the turnover, equivalent to 75% of the bid amount, is from civil engineering construction work. It further held that the Technical Evaluation Committee considered the tax audit report signed by the Chartered Accountant along with the financial turnover certificate issued without the UDIN for all the five financial years. And that the Technical Evaluation Committee erred in grading the income tax audit report as an annual turnover certificate in terms of clause 4.2 (III)(f) of the ITB. 16. Heavy reliance has been placed by the learned counsel for the appellant in LPA No. 94/2024, to clause 25.2, to demonstrate that it was substantially responsive. The said clause reads “A substantially 11 LPA Nos. 89 & 94 of 2024 responsive ‘Financial Bid’ is one which conforms to all the terms, conditions and specifications of the bidding documents, without material deviation or reservation. A material deviation or reservation is one (a) which affects in any substantial way the scope, quality or performance of the works; (b) which limit in any substantial way inconsistent with the bidding documents, the Employer’s rights or the Bidder’s obligation under the Contract; or (c) whose rectification would affect unfairly the competitive position of other bidders presenting substantially responsive bids. The said clause refers to ‘Financial Bid’ whereas, the respondent No.5 in the writ petition was declared ‘un-responsive in the Technical Bid on account of non-compliance of clause 4.2(III)(a), 4.4(B)(a), (III)(a) which provide that the absence of UDIN in the certificate will not be entertained and the bid rejected. 17. Learned counsel for the appellant in LPA No. 94/2024 has drawn attention of this Court to page 418 of the appeal which is the order quashed by the learned Single Judge which considered the representation of respondent No.5 and declared him ‘responsive’ by considering the turnover certificate for the financial year 2021-22 with assessment year 2022-23 bearing UDIN. The annual turnover certificate which was taken into consideration which bears the endorsement and seal of the Chartered Accountant does not bear the UDIN, the same is provided in the document list which is annexed to the annual turnover certificate which neither bears the seal or the signature of the Chartered Accountant. It is that document which bears UDIN which, however, cannot be taken into consideration as the clause mentioned hereinabove of the ITB requires 12 LPA Nos. 89 & 94 of 2024 the UDIN to be mentioned in the annual turnover certificate issued and endorsed by the Chartered Accountant. 18. Under the circumstances, that part of the impugned order which has quashed the order by which the respondent No.5 was declared ‘responsive’ cannot be faulted, far less be held to be perverse requiring the interference of this Court in exercise of its powers under LPA. Therefore, LPA No. 94/2024 stands dismissed. 19. As regards LPA No. 89/2024, we are impressed with the second part of the arguments that it is beyond the jurisdiction of the Court to quash the tender proceedings on the grounds of public interest where the same has not even culminated. In this regard, the judgment of the Supreme Court in West Bengal State Electricity Board (supra) with specific reference to paragraph 32 is clear. There, the Supreme Court held that the principle of awarding contract to the lowest tenderer applies when all things are equal. In this case, the respondent No.5 was declared ‘un-responsive’ at the first instance and as held by the learned Single Judge and by this Court also, the subsequent declaration of the respondent No.5 as ‘responsive’ was without jurisdiction on account of same having violated the terms of the ITB. However, during the course of the case before the learned Single Judge, it became clear that the Financial Bid of the respondent No.5 was less by Rs.19.05 Crore in comparison to the petitioner’s bid. Therefore, the second part of the learned Single Judge’s order is modified to the extent that instead of directing the Union Territory to retender, this Court considers it sufficient to give the discretion to the official respondents whether they feel the need to 13 LPA Nos. 89 & 94 of 2024 retender in the light of the wide disparity in the bid amounts between the respondent No.5 and the petitioner, which is a substantial amount of money, in exercise of its discretionary powers under clause 28.1 of the SBD as the official respondents have the power to do so as no valid contract was entered with the petitioner. Therefore, as no rights were created which are legally justiciable, the Union Territory on its own can consider retendering afresh in exercise of its powers under clause 28.1. Reserving this discretion of the official respondents, LPA No. 89/2024 stands disposed of. 20. This Court was informed that during pendency of the appeal, the official respondents in compliance of the order passed by the learned Single Judge had cancelled the NIT which is in question before this Court. The same shall not take effect till such time that the official respondents take a decision whether to retender or not in exercise of their discretion under clause 28.1 of the SBD. (Puneet Gupta) (Atul Sreedharan) Judge Judge Jammu: 05.06.2024 Vijay Whether the order is speaking: Yes/No Whether the order is reportable: Yes/No "