Himachal Pradesh High Court
Reserved On: 04.12.2024 vs State Of Himachal Pradesh And Others on 24 December, 2024
Bench: Tarlok Singh Chauhan, Chief Justice
2024:HHC:15828
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
CWPIL No. 30 of 2024
Reserved on: 04.12.2024
Decided on: 24.12.2024.
________________________________________________________
Mohinder Kalta and another …. Petitioners
Versus
State of Himachal Pradesh and others …Respondents
________________________________________________________
Coram
The Hon’ble Mr. Justice Tarlok Singh Chauhan, Acting
Chief Justice
The Hon’ble Mr. Justice Satyen Vaidya, Judge
1 Whether approved for reporting? Yes
________________________________________________________
For the petitioners: Mr. Ravi Tanta & Mr. Shakti
Bhardwaj, Advocates.
For the respondents: Mr. Anup Rattan, Advocate General
with Mr. Rakesh Dhaulta,
Additional Advocate General, for
respondents No. 1 to 3.
Mr. Hamender Chandel, Advocate,
for respondent No.4.
Mr. Sanjeev Bhushan, Senior
Advocate, with Mr. Narender Singh,
Advocate, for respondent No.5.
Satyen Vaidya, Judge
The instant Public Interest Litigation has been filed
for following reliefs:
(1) A direction in light of the facts averred in the
1
Whether reporters of Local Papers may be allowed to see the judgment?
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body of the writ petition to respondent No. 1 to
3 to cancel the award of work of upgradation of
Matiana, Mahori to Chhaila road, Km 0/00 to
25/650 under PMGSY package No. HP-09-694,
awarded to respondent No.5 vide award dated
15.03.2024, with a further direction to
respondent No. 1 to 3 to call for fresh tenders
for the work of upgradation of Matiana, Mahori
to Chhaila road, Km 0/00 to 25/650 under
PMGSY package No. HP-09-694.
(2) A direction in light of the facts averred in the
body of the writ petition to respondent No.1 to
3, to inquire as to why the work of upgradation
of Matiana, Mahori to Guthan road, Km 0/00
to 24/00, awarded to respondent No.5 in the
year 2019 vide award dated 31.01.2009 had
not been revoked till date despite their being a
delay of about four years in the completion of
the work, with the further direction to
immediately revoke the said work from
respondent No.5 and to make recovery of the
additional costs which would be borne by the
Government of H.P. in firstly completion of this
road along with due repairs emancipating from
the poor execution of the work on this road by
respondent No.4.
(3) A direction in light of the facts averred in the
body of the writ petition to respondent No.1 to
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4, to take appropriate actions against the
respondent No.5, along with all the erring
officials belonging to respondent No. 1 to 4,
who have apparently connived with respondent
No.5 to illegally manufacture fake performance
certificate Annexure P-16, declaration issued
by Patel Engineering Limited Annexure P-19,
incomplete work order Annexure P-20 and
declaration issued by General Manager Shong
Tong Hydro Electric Project Karcham, Kinnaur,
H.P. Power Cooperation Limited, Annexure
P-21, and have considered these documents in
favour of respondent No.5 to be legally valid for
grant of work of upgradation of Matiana,
Mahori to Chhaila road, Km 0/00 to 25/650
under PMGSY package No. HP-09-694, vide
award dated 15.03.2024, by respondent No. 1
to 3.”
2. As the member of Panchayat Samiti, Development
Block, Theog (elected from Ward No.1, Mahori) and Vice-
President of Gram Panchayat Mahori, Development Block,
Theog, respectively, the petitioners have come forward to
espouse the cause of public interest. The locus shown by the
petitioners for filing the instant petition is the representation
of the interest of common masses i.e. residents of the area of
Gram Panchayat Mahori as also to bring to the fore arbitrary
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actions of official respondents in dealing with public
contracts.
3. Petitioners have raised certain issues arising out of
the award of following work by respondent No.3 to
respondent No.5:-
“Up-gradation of Matiana-Mahori to Chhaila Road
Km 0/000 to 25/650 (SH: Formation Cutting,
Protection works, cross drainage works, Metalling
and tarring, road side drains, crash barrier,
parapets, road safety, Km stone & dumping sites
etc. routine maintenance for five years after
completion under PMGSY-III, Batch No. I, Package
No. HP-09-694. (for short ‘the work’)”
4. The work pertains to Pradhan Mantri Gram Sadak
Yojana (for short. “PMGSY”) Rural Roads Project, Batch I of
Package No. HP-09-694 for total estimated cost of
Rs.2335.88 lacs (Rs.2181.72 lacs for construction part and
Rs.154.16 lacs for maintenance part, excluding GST @ 18%).
5. The bids were invited on 30.01.2024. The last date
for submission of bids was 16.02.2024. Only two bids were
received. One by M/s P.K. Construction Pvt. Ltd. (for short,
‘PK Construction’) and the other by Om Parkash Mehta
(respondent No.5). The technical evaluation commenced on
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16.02.2024 and summary of Part I / technical bid evaluation
was uploaded by the official respondents on 29.02.2024. The
technical bids submitted by both the bidders were held
responsive. Accordingly, the financial bid was opened on
04.03.2024. The bid submitted by respondent No. 5 was
found lowest, accordingly, the work was awarded to
respondent No.5 vide award letter dated 15.03.2024.
6. The petitioners have instituted the instant petition
on 07.06.2024 taking exception to the award of work in
favour of 5th respondent by alleging arbitrariness,
unreasonableness and bias against official respondents inter
alia on the following grounds: –
(i) The credentials and work capacity of
respondent No.5 to execute the work have
been questioned on the basis of his adverse
performance while executing another work of
similar nature known as “Matiana-Mahori-
Guthan” Road (for short, ‘Guthan Road’). It is
alleged that the said work was awarded to
respondent No.5 in the year 2019, but was
incomplete even till date of filing of petition
and further whatever work had been done
was sub-standard. Reference has also been
made to a resolution passed by the Gram
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Panchayat, Mahori, Development Block,
Theog in this respect on 06.05.2024.
(ii) The Standard Bidding Document (for short.
“SBD”) Clause 22.6 provided for a mechanism
whereby the complaint, if any, received
against technical evaluation was to be
disposed of within five days and was a pre-
condition for further movement in the tender
process. Reference has also been made to
PMGSY Manual Chapter 3.4 which inter-alia
provides that unless complaints on Part-1 bid
are resolved satisfactorily, Part-2 bids should
not be opened.
(ii) (a) The petitioners have alleged that a
detailed written complaint was submitted
by PK Construction to the competent
authority detailing therein the dis-
qualifications suffered by respondent
No.5, but while uploading the Part-1
evaluation summary, the official
respondents suppressed the factum of
complaint having been submitted by PK
Construction and rather suggested “No
complaint was received”.
(b) The petitioners have highlighted a
contradictory stand of official
respondents, on the issue, from the
communication dated 19.04.2024 from
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Engineer-in-Chief, HPPWD, Shimla-2 to
the Principal Secretary (PW) to the
Government of Himachal Pradesh. The
relevant extract of such communication is
extracted as under:
“…..Meanwhile a complaint of M/s P.K.
Construction, Shimla Pvt. Ltd.
Himachal Pradesh received, but the
same has been scrutinized and after
scrutiny there was no base for the
complaint as the total work done by Sh.
O.P. Mehta is also supported by the
income tax returns filed and having all
the legal entries and cannot be ignored
and hence the bid of Sh. O.P. Mehta has
been found responsive and correct.
Moreover, the work is of semi-Govt. by
JSW Hydel Project not a private. It is
also submitted that Sh. O.P. Mehta has
already executed more than 6 works of
PMGSY under Shimla Zone satisfactory
and accordingly the LOA has been
issued for this office dated
07.03.2024.”
(c) It has further been contended that
a third version of official respondents is
also available on record, according to
which, they have admitted the receipt of a
complaint from PK Construction on
01.03.2024, however, the same was stated
to have been withdrawn on 04.03.2024.
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(iii) The violation of Clause 4.4 A (b) of SBD has
also been alleged, which reads as under:
“4.4 A. To qualify for award of the contract,
each bidder should have in the last five years:
(a) ……..
(b) Satisfactorily completed as prime
Contractor or sub-contractor at least one
similar work equal in value to one-third
(one-fourth in case of Naxal/LWE affected
districts) of the estimated cost of work
(excluding maintenance cost for five years)
for which the bid is invited, or such higher
amount as may be specified in the
Appendix to ITB. The value of road work
completed by the bidder under Pradhan
Mantri Gram Sadak Yojana in originally
stipulated period of completion shall be
counted as 120% for the purpose of this
Sub-Clause.”
(iii) (a) It is alleged by the petitioners that
keeping in view the total contract amount
of Rs.2335.88 lacs, in compliance to
Clause 4.4 A (b) of SBD, the bidders were
required to show that they had
satisfactorily completed work of similar
nature worth Rs.727.27 lacs.
(b) In the facts of the case in hand for
meeting out the above requirement,
respondent No.5 had submitted a work
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done certificate issued by Patel
Engineering Ltd. (for short, ‘the PEL’) a
contractor of respondent No.4 HPPCL
involved in execution of Shongtong
Karchham HEP in District Kinnaur, H.P.
It was shown that respondent No.5 had
completed work amounting to Rs.23.51
crores in February-2022.
(c) Exception has been taken by the
petitioners to the consideration of
aforesaid work done certificate on the
grounds firstly that respondent No.5 had
not executed any such work as the
documents provided by the said
respondent themselves established that
the work was executed by M/s Kinner
Kailash Company and secondly, that the
work shown to be executed by respondent
No.5 was not of the similar nature.
(iv) Respondent No.5 is enlisted as a Class “A”
contractor with HPPWD by the name “O.P.
Mehta”. As per the “Rules for Enlistment
of Contractors in HPPWD 2021” (for short,
“Enlistment Rules”), any entity whether
natural or legal can be registered only in
one name. The violation of Rules 4.4 and
4.5 of the Enlistment Rules has thus been
alleged, which reads as under:
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“4.4. A contractor is not permitted to
have Enlistment in more than one
name i.e. individual/sole
Proprietorshipfirm/ Partnership firm/
Company in HPPWD.
4.5. An individual or a partner of a
firm or a Director of a company
enlisted as a contractor cannot be a
partner/director in any other Enlisted
Firm/Company in HPPWD.”
(a) It is further submitted that the
work done certificate issued by PEL was
not valid; for PEL was not the principal
employer, rather was itself a contractor of
HPPCL for execution of Shongtong
Karchham HEP.
(b) As per Clause 4.4 A (b) of SBD, the
bidder was required to have satisfactorily
completed as prime contractor or sub-
contractor, at least one similar equal
work to 1/3rd of the estimated cost of work
for which the bid is invited. Since,
respondent No.5 had not completed the
work shown under work done certificate
issued by PEL either as a prime contractor
or sub-contractor, the bid submitted by
respondent No.5 could not have been
declared responsive.
(v) The petitioners have also alleged violation
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of Section 3 of PMGSY-SBD with the
allegation that the qualification
information was not submitted by 5th
respondent as per required format.
7. It is further averred that the petitioners issued a
legal notice to 4th respondent on 07.05.2024; as earlier
information received by the petitioners under RTI Act from
PEL was not only unconvincing but contradictory also,
however, no response was received by them.
8. Respondents No. 1 to 3 have filed their joint reply.
It has been submitted that the petitioners had not submitted
any complaint or objection before the award of work. The
official respondents, though, admitted that the work of
Guthan Road was completed by 5th respondent on
12.06.2024 after a period of almost six years but have sought
to render detailed explanation/justification for delay in
execution of said work. As per the official respondents, the
work in respect of total length of 8 Kms. was awarded to
respondent No.5, but after award of work, it had transpired
that in the initial stretch of the road in the length of about
2.5 Kms as awarded to 5th respondent, layers of G-I and G-II,
which had earlier been laid in the year 2015 had completely
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washed away and said layers were required to be re-laid.
Since, in the original tender the aforesaid work of laying of
these layers (G-I and G-II) was not included, it took
considerable time for the departmental action which was
finally sanctioned on 30.10.2019 and the tender cost was
increased by Rs. 49.55 lac. The period between 2020-
2021 has been dis-counted on account of the then prevailing
Covid-19 pandemic. It has further been submitted that
during 2022, the pace of work was accelerated by 5th
respondent and almost 95% completion was achieved till
August, 2022, but due to incessant rains in the entire State
during the year 2023, huge damages were suffered to the
already executed work on Guthan road. The restorations
works were executed after 2023 by 5th respondent on the
already approved rates at the time of initial award of work.
8.2 The resolution dated 06.05.2024 of Gram
Panchayat, Mahori in respect of the work executed by
respondent No.5 on Guthan road has been alleged to be a
bogus document. It is submitted that no such resolution was
passed by the Panchayat.
8.3 As regards the complaint by PK Construction, it
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has been submitted that though such complaint was
submitted on 01.03.2024; the discussions/deliberations were
held with said bidder on 02.03.2024 and on 04.03.2024 the
complaint stood voluntarily withdrawn. The discrepancies in
the summary of Part I/ technical bid have been sought to be
clarified by stating that since on that day, no complaint was
pending, “no complaint was received”, was reflected as
remark in the uploaded summary of bids.
8.4 The allegation of petitioners regarding invalidity of
the work done certificate submitted by 5th respondent of M/s
Kinner Kailash Company has been contested on the ground
that M/s Kinner Kailash Company was no separate entity
and as a matter of fact was the sole proprietorship concern of
5th respondent Sh. O.P. Mehta. It has been submitted that
GST and PAN number used by both the entities was the
same. It has further been stated that Sh. O.P. Mehta is
enlisted Class “A” contractor with respondents No. 1 to 3.
8.5 The objections as to dis-similarities in the work
executed by 5th respondent at Shongtong Karchham HEP and
the nature of work required to be executed under the
contract in hand, has been sought to be dispelled on the
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ground that the work executed by 5th respondent at
Shongtong Karchham HEP was more technical.
8.6. Respondents No. 1 to 3 have further recognized 5th
respondent as sub-contractor of PEL on the basis of an
agreement dated 04.01.2019 allegedly executed inter se PEL
and 5th respondent and the alleged tacit consent of HPPCL
evidenced by payments made to 5th respondent through
escrow account.
9 5th respondent has also filed his reply. It has been
submitted that resolution dated 06.05.2024 allegedly passed
by Gram Panchayat, Mahori was a forged document. Reliance
has been placed on information provided by Panchayat
Secretary of the said Panchayat. An apprehension has also
been shown about the bonafide of the petitioners and the
public interest sought to be projected by them. 5th
respondent has averred that he has executed and completed
hundreds of civil works for respondents No. 1 to 3 during his
long career as Class “A” contractor. As per the said
respondent, he has received a number of commendation
certificates. Reliance has also been placed on the resolutions
passed by various Panchayats, backing the 5th respondent.
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9.1 5th respondent has claimed himself to be a sub-
contractor insofar as the execution of work done by him
under PEL. He has also relied upon an agreement dated
04.01.2019. The payment received by him through escrow
account have been relied upon as evidence to support his
contention of being a sub-contractor.
9.2 As per 5th respondent, he had uploaded two work
done certificates at the time of submission of his bid. The
second certificate was issued by the Executive Engineer,
Kumarsain, District Shimla for the work to the tune of
Rs.683.17 lacs. It has been suggested that the said work was
also under PMGSY and as per terms of SBD, 5th respondent
was entitling to benefit of consideration of said work to the
extent of 120% after its completion.
9.3 Respondent No.5 has denied violation of
Enlistment Rules. He submitted that his enlistment was only
as O.P. Mehta and M/s Kinner Kailash Company was not a
separate entity. As per 5th respondent, M/s Kinner Kailash
Company was merely a symbolic name whereas the said
respondent was its sole proprietorship.
10 We have heard learned counsel for the parties and
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have also gone through the records of the case carefully.
11 The first question arises whether the petition is in
the nature of Public Interest Litigation?
12. It is not in dispute that the petitioners are public
representatives and represent one of the Panchayats i.e.
Gram Panchayat, Mahori, whose residents are beneficiaries
of the Matiana-Mahori-Chhaila Road. Thus, their locus-
standi is undeniable. As regards public interest, the
petitioners inter alia have raised issues touching upon the
alleged arbitrariness and consequent violation of Article 14 of
the Constitution of India in grant of public contract. Further,
there also is nothing on record to presume the absence of
public interest as the respondents have not been able to
place on record any material suggesting any personal interest
or ulterior motive of the petitioners in approaching the Court.
13 The controversy with respect to genuineness of
resolution of Gram Panchayat, Mahori dated 06.05.2024,
should not detain us for long for the reasons that said
resolution in any case dealt with the alleged modest
performance of 5th respondent in executing the work of
Guthan road. The parties have raised their counter-claims in
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respect of further proceedings taken under the Himachal
Pradesh Panchayati Raj Act on the disputed resolution of the
Panchayat. What transpires is that the question is still
undecided. As the said resolution was with respect to a
different work, the performance thereof cannot be a relevant
or at least the sole factor to adjudicate the controversy raised
in the instant petition.
14 What is required to be seen is whether 5th
respondent did not fulfil conditions of NIT to claim himself as
technically qualified? if yes, whether the award of work to
him by official respondents was vitiated being result of
arbitrariness, unreasonableness and bias?
15 On facts, there is no dispute that the summary of
Part-I technical evaluation of bid clearly mention that no
complaint/objection was received. Undoubtedly, this was a
categoric statement of fact, which has been belied by the
records and subsequent admissions of respondents No. 1 to
3 and 5.
15.1 On 17.06.2024, during the course of proceedings
of this matter learned Advocate General had placed on record
instructions dated 15.6.2024 along with a copy of
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communication dated 19.04.2024 addressed by the
Engineer-in-Chief to the Principal Secretary (PW) to the
Government of Himachal Pradesh. The relevant portion of
said communication has already been reproduced in
paragraph 6(ii)(b) supra. Thus, there was a clear mention
that PK Construction though had filed objection petition
dated 01.03.2024 but after scrutiny, the same had been
found baseless, whereas in the instructions dated 15.6.2024
a categoric statement was made that the complaint filed by
PK Construction had been withdrawn. Hence, there was
apparent contradiction between the instructions issued on
15.06.2024 and communication dated 19.04.2024 placed
along with such instruction. Admittedly, in communication
dated 19.04.2024 there was not even a whisper with respect
to the complaint submitted by PK Construction having been
withdrawn. Both the above versions were in total
contradiction of yet another third version of respondents
whereby it had been represented that no complaint had been
received.
15.2 It is not in dispute that as per SBD, there is a
mechanism provided for resolution of complaint/objection
19 2024:HHC:15828
filed against Part-1 technical bid summary. We are not
inclined to accept the explanation rendered by the official
respondents that the words “No complaint was received”
included in Part-I financial bid summary were for the reasons
that no complaint was pending on said date, which clearly
appears to be an afterthought. Since, the mechanism for
disposal of complaint filed to the Part-1 bid summary, was an
integral part of SBD, the official respondents were under
obligation to clearly describe the correct factual position.
Moreover, unexplained contradictions in the stand of official
respondents, more particularly, when no explanation has
been rendered in respect to contents of letter dated
19.04.2024 issued by the Engineer-in-Chief to the Principal
Secretary (PW) to the Government of Himachal Pradesh,
renders credence to the allegations that complaint filed by PK
Construction not only remained undecided but was
suppressed also. Evidently, there also is nothing to suggest
that the said complaint was ever considered or decided; as
reflected from communication dated 19.4.2024.
15.3 At this stage it will be relevant to have a look at
the contents of complaint dated 1.3.2024 submitted by PK
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Construction. It was pointed out that as per clauses 1.3.1
and 1.3.2 of section 3 of qualifying information, the
requirements were not met out by the 5th respondent; which
read as under:
“1.3.1 Work performed as prime contractor (in
the same name and style) on construction work of
similar nature and volume over the last five years.
Attach certificate from the Engineer-in-charge;
1.3.2 Work performed as Sub-Contractor (in
the same name and style) on construction work of
similar nature and volume over the last five years.
Attach certificate from the Engineer-in-charge.”
15.4 It was alleged that the work done certificate
submitted by the 5th respondent was issued by Patel
Engineering Limited in favour of M/S Kinner Kailash
Company and not in the name of Mr. O.P. Mehta, therefore,
the work done could not be considered to have been executed
in the same name and style.
15.5 It was also alleged that the 5th respondent could
not avail the benefit of operating under two different names
in violation of clauses 4.4 and 4.5 of the enlistment rules.
15.6 The work done certificate issued by PEL has also
been alleged to be not meeting the requirement of SBD clause
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4.4 A (b). According to complainant, the certificate, if any,
could have been issued by HPPCL (4th respondent) being the
principal employer and not by the PEL which itself was the
contractor of HPPCL.
15.7 The work shown to be done under PEL by 5th
respondent was also not of same nature as was the
requirement of work in question.
16 Thus, the issues raised by PK Construction
definitely related to the fulfilment of eligibility conditions of
5th respondent for the purposes of the contract in question.
17 The material on record reveals that the conduct of
respondents 1 to 3 in respect of dealing with the complaint of
PK Construction was not only lacking in meeting with the
requirements of Clause 22.6 of SBD and PMGSY Manual
Chapter 3.4 but was also wanting in fairness.
18 Further, it can also be seen that the work done
certificate in compliance with Clause 4.4 A (b) of SBD, was
required to be as principal Contractor or a sub-contractor.
Admittedly, 5th respondent was not the principal contractor
under HPPCL. The principal employer was respondent No.4
HPPCL and PEL was its contractor for execution of
22 2024:HHC:15828
Shongtong Karchham HEP. The 4th respondent i.e. HPPCL
has filed an affidavit dated 11.11.2024 in compliance to order
dated 07.11.2024 of this Court. They have specifically denied
the 5th respondent to be a sub-contractor under it. What has
been stated is that the 5th respondent was a sub-contractor
of M/s Patel Engineering Ltd. It has also been submitted that
the terms such as ‘PRW’, ‘Sub-Contractor’, ‘PRW Contractor’
or “Vendor” have been used interchangeably/synonymously.
The 4th respondent also denied having acknowledged the 5th
respondent as its sub-contractor. The payment through
escrow account to the 5th respondent has though been
admitted. In nutshell, the 4th respondent has admitted that
the work got executed by PEL from 5th respondent was as a
piece rate worker or vendor but not as its sub-contractor.
This stand taken by 4th respondent, in our considered view,
cannot be taken to be sufficient compliance of Clause 4.4 A
(b) of SBD.
18.1 The agreement dated 04.01.2019 relied upon by
respondents No. 1 to 3 and 5 will not help the cause of said
respondents either. Clause 6.3.6.1 of said agreement,
required that the sub-contractor should have registration as
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a firm and the same should be attached with the sub-
contract. As contended by 5th respondent that M/s Kinner
Kailash Company was a symbolic name of sole proprietorship
concern of O.P. Mehta, meaning thereby that M/S Kinner
Kailash Company was not a firm and for such reason could
not have any registration. There is nothing in the context of
contractual relations which may warrant maintaining a
symbolic name. The agreement dated 04.01.2019 was inter
se PEL and M/s Kinner Kailash Company. This agreement
was a bilateral document without any consent or involvement
of the principal employer.
18.2 There is material on record to suggest that as per
the terms of the contract between HPPCL and PEL, though
sub-contracts were allowed, but on fulfillment of certain pre-
requisites. It appears that such pre-requisites were missing
in the case of 5th respondent and for such reason neither the
HPPCL had recognized the said respondent as its sub-
contractor nor is still willing to confirm the same.
18.3 The term “Sub-contract” necessarily involves three
parties i.e. principal employer, contractor and sub-
contractor. To bear a legal relationship of sub-contract, there
24 2024:HHC:15828
has to be a recognition by principal employer. Such
recognition cannot be inferred by implication. Thus, the 5th
respondent did not qualify to be termed as a sub-contractor
under HPPCL. That being so, there was a clear violation of
Clause 4.4 A (b) of SBD.
19 The Enlistment Rules categorically provides that
one entity can have only one enlistment. He or it, cannot be a
partner/director in any other entity. The purpose is clear and
loud that there should not be unhealthy competition in the
matter of government contracts. Hence, the work done
certificate for fulfillment of requirement of Clause 4.4 A (b) of
SBD has to be in the name of enlisted entity, because
otherwise the very purpose of enlistment rules would be
rendered otiose. The credit of work executed by any other
entity cannot be allowed to the benefit of enlisted
contractor/bidder.
19.1 The SBD as also clauses 1.31 and 1.32 of section
3 of qualifying information also clearly provides that the work
done should have been in the same “name and style”. The
term “name and style” used in the SBD, keeps no doubt,
about its real import. One can take benefit of the ostensible
25 2024:HHC:15828
name of sole proprietorship if it was to be assessed in the
context of “name” only, but when it comes to ‘in the same
name and style’, the person or entity cannot have twin
persona.
20 Another objection is that even the work shown to
have been done by 5th respondent for PEL was not of the
same nature. In the scope of work awarded to respondent
No.5 under the contract in question, he was required to
execute the works of formation cutting, tarring, grading of
the road, making of cross drainage, parapets etc., whereas
the work done by respondent No.5 under PEL was of
construction of ‘Descending Chambers’ besides excavation
and allied works in tunnels. The official respondents 1 to 3
have tried to justify the equivalence of works by contending
that the work executed by 5th respondent was more technical
than the work awarded to him by the official respondents,
nonetheless the requirement of Clause 4.4. A(b), categorically
is of the work of same nature. Though, we are not experts,
yet, we have noticed that even the official respondents have
refrained from terming both the works to be of same nature,
meaning thereby that the opinion of their experts is also not
26 2024:HHC:15828
categoric as to similarity of works.
21 Now, in the above noticed backdrop, the question
arises whether the actions and conduct of respondents can
be countenanced as being not opposed to Article 14 of the
Constitution of India? Can it be said that said action and
conduct of respondents does not suffer from arbitrariness,
unreasonableness and biasness?
22 At this stage we find it apt to reproduce the
following extract from the judgment passed by Hon’ble
Supreme Court in the matter of Central Coalfields Ltd. Vs
SLL-SML (Joint Venture Consortium) and others, (2016) 8
SCC 622:
“47. The result of this discussion is that the
issue of the acceptance or rejection of a bid or a
bidder should be looked at not only from the point
of view of the unsuccessful party but also from the
point of view of the employer. As held in Ramana
Dayaram Shetty [Ramana Dayaram
Shetty v. International Airport Authority of India,
(1979) 3 SCC 489] the terms of NIT cannot be
ignored as being redundant or superfluous. They
must be given a meaning and the necessary
significance. As pointed out in Tata Cellular
v. Union of India, (1994) 6 SCC 651 there must be
judicial restraint in interfering with administrative
action. Ordinarily, the soundness of the decision
taken by the employer ought not to be questioned
but the decision-making process can certainly be
27 2024:HHC:15828subject to judicial review. The soundness of the
decision may be questioned if it is irrational or
mala fide or intended to favour someone or a
decision “that no responsible authority acting
reasonably and in accordance with relevant law
could have reached” as held in Jagdish
Mandal [Jagdish Mandal v. State of Orissa, (2007)
14 SCC 517] followed in Michigan
Rubber [Michigan Rubber (India) Ltd. v. State of
Karnataka, (2012) 8 SCC 216] .
48. Therefore, whether a term of NIT is essential
or not is a decision taken by the employer which
should be respected. Even if the term is essential,
the employer has the inherent authority to deviate
from it provided the deviation is made applicable
to all bidders and potential bidders as held
in Ramana Dayaram Shetty [Ramana Dayaram
Shetty v. International Airport Authority of India,
(1979) 3 SCC 489] . However, if the term is held by
the employer to be ancillary or subsidiary, even
that decision should be respected. The lawfulness
of that decision can be questioned on very limited
grounds, as mentioned in the various decisions
discussed above, but the soundness of the
decision cannot be questioned, otherwise this
Court would be taking over the function of the
tender issuing authority, which it cannot.”
23 In Madras Aluminium Co. Ltd. v. T.N. SEB,
(2023) 8 SCC 240, it has been observed as under:
38. A Constitution Bench of this Court in Natural
Resources Allocation, In re, Special Reference No. 1 of
2012 [Natural Resources Allocation, In re, Special
Reference No. 1 of 2012, (2012) 10 SCC 1] speaking
through J.S. Khehar, J. (as His Lordship then was)
observed in regard to contracts having the State as a
28 2024:HHC:15828party, as hereinunder reproduced: (SCC pp. 135-36,
para 183)
“183. The parameters laid down by this Court on
the scope of applicability of Article 14 of the
Constitution of India, in matters where the State, its
instrumentalities, and their functionaries, are
engaged in contractual obligations (as they emerge
from the judgments extracted in paras 159 to 182,
above) are being briefly paraphrased. For an action to
be able to withstand the test of Article 14 of the
Constitution of India, it has already been expressed
in the main opinion that it has to be fair, reasonable,
non-discriminatory, transparent, non-capricious,
unbiased, without favouritism or nepotism, in
pursuit of promotion of healthy competition and
equitable treatment. The judgments referred to,
endorse all those requirements where the State, its
instrumentalities, and their functionaries, are
engaged in contractual transactions. Therefore, all
“governmental policy” drawn with reference to
contractual matters, it has been held, must conform
to the aforesaid parameters. While Article 14 of the
Constitution of India permits a reasonable
classification having a rational nexus to the object
sought to be achieved, it does not permit the power of
pick and choose arbitrarily out of several persons
falling in the same category. Therefore, criteria or
procedure have to be adopted so that the choice
among those falling in the same category is based on
reason, fair play and non-arbitrariness. Even if there
are only two contenders falling in the zone of
consideration, there should be a clear, transparent
and objective criteria or procedure to indicate which
out of the two is to be preferred. It is this, which
would ensure transparency.”
(emphasis supplied)
39. A Bench of two learned Judges of this Court
in Shrilekha Vidyarthi (Kumari) v. State of U.P. [Shrilekha
29 2024:HHC:15828
Vidyarthi (Kumari) v. State of U.P., (1991) 1 SCC 212 :
1991 SCC (L&S) 742] observed that there exists “an
obvious difference” between contracts concerning
private parties to those which have State as a party. The
primary difference being that the State while exercising
its powers and discharging its functions “acts
indubitably, as is expected of it, for public good and in
public interest”. The said factor singularly is sufficient
to bring into any transaction the minimal requirements
of public law, to which the State is a party. The fact that
a dispute falls into the contractual realm does not
relieve the State of its obligation to comply with the
requirements of Article 14.
40. Further the Court in Shrilekha Vidyarthi
case [Shrilekha Vidyarthi (Kumari) v. State of U.P., (1991)
1 SCC 212 : 1991 SCC (L&S) 742] had observed that :
(SCC p. 237, para 24)
“24. The State cannot be attributed the split
personality of Dr Jekyll and Mr Hyde in the
contractual field so as to impress on it all the
characteristics of the State at the threshold while
making a contract requiring it to fulfil the obligation
of Article 14 of the Constitution and thereafter
permitting it to cast off its garb of State to adorn the
new robe of a private body during the subsistence of
the contract enabling it to act arbitrarily subject only
to the contractual obligations and remedies flowing
from it. It is really the nature of its personality as
State which is significant and must characterise all its
actions, in whatever field, and not the nature of
function, contractual or otherwise, which is decisive of
the nature of scrutiny permitted for examining the
validity of its act. The requirement of Article 14 being
the duty to act fairly, justly and reasonably, there is
nothing which militates against the concept of
requiring the State always to so act, even in
contractual matters. There is a basic difference
between the acts of the State which must invariably
30 2024:HHC:15828
be in public interest and those of a private individual,
engaged in similar activities, being primarily for
personal gain, which may or may not promote public
interest. Viewed in this manner, in which we find no
conceptual difficulty or anachronism, we find no
reason why the requirement of Article 14 should not
extend even in the sphere of contractual matters for
regulating the conduct of the State activity.”
(emphasis supplied)
24. The legal position has been reiterated by Hon’ble
Supreme Court in Banshidhar Construction (P) Ltd. v.
Bharat Coking Coal Ltd., (2024) 10 SCC 273 as under:
28. There cannot be any disagreement to the legal
proposition propounded in a catena of decisions of this
Court relied upon by the learned counsel for the
respondents to the effect that the Court does not sit as
a court of appeal in the matter of award of contracts
and it merely reviews the manner in which the decision
was made; and that the Government and its
instrumentalities must have a freedom of entering into
the contracts. However, it is equally well-settled that the
decision of the Government/its instrumentalities must
be free from arbitrariness and must not be affected by
any bias or actuated by mala fides.
29. Government bodies being public authorities are
expected to uphold fairness, equality and public interest
even while dealing with contractual matters. Right to
equality under Article 14 abhors arbitrariness. Public
authorities have to ensure that no bias, favouritism or
arbitrariness are shown during the bidding process and
that the entire bidding process is carried out in
absolutely transparent manner.
30-34……..
31 2024:HHC:15828
35. In Mihan (India) Ltd. v. GMR Airports Ltd. [Mihan
(India) Ltd. v. GMR Airports Ltd., (2022) 19 SCC 69 :
2022 SCC Online SC 574] , while observing that the
government contracts granted by the government bodies
must uphold fairness, equality and rule of law while
dealing with the contractual matters, it was observed in
SCC para 65 as under:
“65. In view of the above, it is apparent that in
government contracts, if granted by the government
bodies, it is expected to uphold fairness, equality and
rule of law while dealing with contractual matters.
Right to equality under Article 14 of the Constitution
of India abhors arbitrariness. The transparent
bidding process is favoured by the Court to ensure
that constitutional requirements are satisfied. It is
said that the constitutional guarantee as provided
under Article 14 of the Constitution of India demands
the State to act in a fair and reasonable manner
unless public interest demands otherwise. It is
expedient that the degree of compromise of any
private legitimate interest must correspond
proportionately to the public interest.”
36. It was sought to be submitted by the learned
counsel for the respondents relying upon the
observations made in Central Coalfields Ltd. v. SLL-SML
(JVC) [Central Coalfields Ltd. v. SLL-SML (JVC), (2016) 8
SCC 622 : (2016) 4 SCC (Civ) 106] , that whether a term
of NIT is essential or not is a decision taken by the
employer which should be respected. However, in the
said judgment also it is observed that if the employer
has exercised the inherent authority to deviate from the
essential term, such deviation has to be made
applicable to all the bidders and potential bidders. It
was observed in paras 47 and 48 as under : (SCC p.
638)
“47. The result of this discussion is that the issue
of the acceptance or rejection of a bid or a bidder
should be looked at not only from the point of view of
32 2024:HHC:15828
the unsuccessful party but also from the point of
view of the employer. As held in Ramana Dayaram
Shetty [Ramana Dayaram Shetty v. International
Airport Authority of India, (1979) 3 SCC 489] the
terms of NIT cannot be ignored as being redundant or
superfluous. They must be given a meaning and the
necessary significance. As pointed out in Tata
Cellular [Tata Cellular v. Union of India, (1994) 6 SCC
651] there must be judicial restraint in interfering
with administrative action. Ordinarily, the soundness
of the decision taken by the employer ought not to be
questioned but the decision-making process can
certainly be subject to judicial review. The soundness
of the decision may be questioned if it is irrational or
mala fide or intended to favour someone or a decision
‘that no responsible authority acting reasonably and
in accordance with relevant law could have reached’
as held in Jagdish Mandal [Jagdish Mandal v. State
of Orissa, (2007) 14 SCC 517] followed in Michigan
Rubber [Michigan Rubber (India) Ltd. v. State of
Karnataka, (2012) 8 SCC 216] .
48. Therefore, whether a term of NIT is essential or
not is a decision taken by the employer which should
be respected. Even if the term is essential, the
employer has the inherent authority to deviate from it
provided the deviation is made applicable to all
bidders and potential bidders as held in Ramana
Dayaram Shetty [Ramana Dayaram
Shetty v. International Airport Authority of India,
(1979) 3 SCC 489] . However, if the term is held by
the employer to be ancillary or subsidiary, even that
decision should be respected. The lawfulness of that
decision can be questioned on very limited grounds,
as mentioned in the various decisions discussed
above, but the soundness of the decision cannot be
questioned, otherwise this Court would be taking
over the function of the tender issuing authority,
which it cannot.”
33 2024:HHC:15828
37. The submissions made by the learned counsel for
the respondents that the project in question being
infrastructure project and also one of the mega projects,
this Court may not interfere more particularly in view of
the fact that agreement has already been entered into
between the respondent BCCL and the Special Purpose
Vehicle of Respondent 8, cannot be accepted, when we
have found that the impugned decision of the
respondent BCCL was grossly arbitrary, illegal,
discriminatory and violative of Article 14 of the
Constitution of India. As held earlier, the Government
bodies/instrumentalities are expected to act in
absolutely fair, reasonable and transparent manner,
particularly in the award of contracts for mega projects.
Any element of arbitrariness or discrimination may lead
to hampering of the entire project which would not be in
the public interest.
25. Thus, what can be looked into by this court is
soundness of decision-making process at the touch stone of
principles such as whether it is irrational or mala fide or
intended to favour someone or a decision “that no
responsible authority acting reasonably and in accordance
with relevant law could have reached”. Additionally, it can
also be considered as to whether the decision-making
process confirms to the principles enshrined in Article 14 of
the Constitution in India.
26. Noticeably, in the facts of the case at hand, the
respondents 1 to 3 and 5 have not disputed the applicability
34 2024:HHC:15828
of SBD clause 4.4 A(b) as foundational requirement to see
eligibility of the bidder. That being so the respondents 1 to 3
were required to show some special or extraordinary reasons
for deviation, if any.
26.1 We have already held in earlier part of this
judgment that the 5th respondent did not fulfill the
requirements of SBD clause 4.4 A(b) on account of following:
(i) It has not been established that 5th
respondent was an authorized sub-contractor for
execution of work at Shongtong Karchham HEP;
(ii) 5th respondent could not use his
purported dual persona to defeat the requirements
of NIT as also the real import and purpose of
enlistment rules; and
(iii) The respondents 1 to 3 have not shown
their unequivocal satisfaction in respect of the
similarity of works allegedly executed by M/S
Kinner Kailash Company and the one required to
be executed by the 5th respondent at Matiana-
Mahori-Chhaila Road.
27. The respondents 1 to 3 on the other hand have
35 2024:HHC:15828
their own justifications, as noticed above, for awarding the
work in favour of 5th respondent. Such reasons or purported
justifications, in our considered view, are not sufficient to
certify absence of arbitrariness, unreasonableness and bias
in the decision-making process of respondents 1 to 3. No
special reason to satisfy the conscience of this court has been
brought forth by the respondents 1 to 3. Rather, the
insistence of respondents 1 to 3 on denying the violation of
fundamental requirements of NIT, gives cause for drawal of
inference as to existence of a motive that does not meet the
benchmarks of fairness and reasonableness.
28 The manner in which the respondents 1 to 3 have
botched and abused their jurisdiction dealing with complaint
of PK Construction further fortifies the reasons for not
trusting their alleged bona fides.
29 As rightly said that “the right of equality
guaranteed by Article 14 of the Constitution of India abhors
arbitrariness”, we have found clear traces of repugnance to
the required fairness and reasonableness in the conduct of
respondents 1 to 3 in the process of their decision making
finally culminating in the award of work in favour of the 5th
36 2024:HHC:15828
respondent.
30. Lastly it has been argued for respondents 1 to 3
and 5 that after the award of work, the same was started
immediately and execution worth about Rs. Sixty lacs had
already been achieved till such execution was ordered to be
stayed by this Court.
30.1 Admittedly, the total estimated cost of the work is
Rs.2335.88 lacs, therefore, the respondents 1 to 3 having
been found in violation of law, cannot be allowed to claim
equity more particularly when more than 97% of the work is
still remaining.
31. In light of above discussion, we allow the petition.
Award of work in respect of Up-gradation of Matiana-Mahori
to Chhaila Road Km 0/000 to 25/650 under PMGSY-III,
Batch No. I, Package No. HP-09-694 to the 5th respondent by
respondents 1 to 3 vide award letter dated 15.3.2024 is
quashed. The respondents 1 to 3 shall re tender the
remaining work of Up-gradation of Matiana-Mahori to
Chhaila Road Km 0/000 to 25/650 under PMGSY-III, Batch
No. I, Package No. HP-09-694 within one month from the
date of this judgment.
37 2024:HHC:15828
32. The petition is accordingly disposed of so also the
miscellaneous application(s), if any.
(Tarlok Singh Chauhan)
Acting Chief Justice
24th December, 2024 (Satyen Vaidya)
(GR) Judge