Present
Mr. Justice Mushir Alam.
Mr. Justice Aqeel Ahmed Abbasi.
Date of hearing : 20.10.2010
Date of order : 16.11.2010
Petitioner : M/s Iqbal & Sons J/V AS Engineering
through Mr.M. Ilyas Khan, Advocate
Versus
Respondents : City District Govt. & others
Respondent No.1. : through Mr. Manzoor Ahmed, Advocate a/w Syed Raheel Ali, Addl. D.O. (CM) W & S, CDGK).
Respondent No.3. : through Ahmed Rana, Advocate
ORDER
Aqeel Ahmed Abbasi, J: Through instant petition the petitioner has impugned the action of respondent No.1, whereby the petitioner has been deprived of the contract by the respondent No.1, whereas such contract has been awarded to respondent No.3. It has been contended that the respondent No.1 has violated the provisions of Sindh Public Procurement Rules, 2010.
2. Briefly the facts relevant for the disposal of the instant petition are that the petitioner, the sole proprietor of M/s Iqbal & Sons Civil Engineers & Contractors, is the licensed contractor of Pakistan Engineering Council and registered with the Government of Sindh since 1979. The petitioner claimed impeccable reputation and experience in constructions work and claimed to have completed various mega projects including construction of roads, bridges and flyovers in the City of Karachi. The respondent No.1, CDGK invited tender in daily Dawn dated 10.5.2010 for construction of 2 lane flyover on Ziauddin Ahmed Khan Road, PIDC intersection, Karachi. Petitioner submitted his bid vide No.S/LICDGK/ CM/W&S/104/09-10, at estimated cost of Rs.143.274 (Million) to City District Government Karachi. According to terms and conditions of the tender and as per clause (2) of the procedure laid down in Sindh Procurement Regulatory Authority Rules, 2010, it is required that initially the technical proposals are opened by the Procurement Committee on the date and time mentioned, whereas financial proposals are retained with CDGK till evaluation of the technical proposals. It further appears that two types of Bid Security (Bank Guarantee) were required to be submitted, and a sum of Rs.10,00,000/- was also required to be paid with the technical offer and balance of 2% of the bid with the financial offer, failing which, the part bid i.e. Rs.10,00,000/- submitted with the technical offer was to be forfeited. Similarly, if the bid security i.e. Rs.10,00,000/- was not accompanied with technical proposal, the tender was not to be considered for evaluation. Learned counsel for the petitioner stated that on 26.5.2010, the petitioner had furnished Bid Security (Bank Guarantee) of Rs.10,00,000/- with technical offer and had also submitted the required bank guarantee of Rs.29,81,000/-. The bid of the petitioner as per evaluation of the procurement committee on the recommendation of Consultant M/s Engineering Associates, the firm of the petitioner was qualified on the basis of specified evaluation of criteria on 29.7.2010. Whereafter a letter of approving and accepting the bid dated 29.7.2010 was issued by City District Government Karachi. Learned counsel further submitted that in performa of Bank Guarantee provided by the respondent No.1, it has been provided that the bid security shall remain in force upto and including the date 28 days after the deadline of validity of bids as stated in instructions to bidders or as it may be extended by Employer, notice of which extension (s) to the Surety is hereby waived. The bankers of petitioner namely United Bank Limited issued Bank Guarantee according to the text of Performa. Both guarantees provided by the respondent. Learned counsel argued that inadvertently the bank through a hand written note at the right side on the top of Bid Security (Bank Guarantee) mentioned expiry as 23.6.10. Per learned counsel, in order to avoid any misunderstanding and confusion as regard validity date of the guarantee, the said guarantee was extended through addendum wherein it was mentioned that the guarantee is extended upto 23.10.10. Per learned counsel, the addendum of two guarantees submitted to EDO, CDGK through letter dated 17.8.2010 were accepted and the petitioner was technically qualified. The technical proposal was opened on 26th May 2010 and financial proposal was opened after 2 months and 23 days whereas financial proposal, normally, is opened in 4/5 days after opening of technical proposal. It has been contended by the learned counsel that the petitioner is the lowest bidder and the bid was accepted by Consulting Engineers M/s NAA Consulting Engineers (Pvt) Ltd., and National Engineering Services Pakistan (Pvt) Limited of CDGK, whereas on 4th September 2010 the petitioner was required to submit an undertaking and also issued the drawing of this project. However, before the matter could further proceed, the respondent No.3 approached the Contract Management Department of respondent No.1 and the file of the bid documents of the project were sent to the Sindh Public Procurement Authority (SPPRA) for advice, whereafter respondent No.1 and 2 on misrepresentation of facts by respondent No.3 and without giving any opportunity to the petitioner, decided not to award tender to the petitioner, whereas tender has been awarded to respondent No.3 in total disregard of Sindh Public Procurement Rules, 2010. Respondent No.2 vide its letter dated 20th September 2010 addressed to District Officer (CM) CDGK, considered the petitioner as unresponsive and recommended respondent No.3 to be considered for awarding the contract. The petitioner through his counsel written a letter dated 23.9.2010 to EDO (Works & Services) CDGK requiring him to provide the following documents, however no response was received from respondents.
(a) Evaluation report of tender opening committee
(b) Evaluation report of tender issued by the Consultant M/s NAA & NESPAK J/V
(c) Letter bearing Ref. D.OII (CM) W & S/CDGK/26/10 dated 8/9/2010.
(d) Letter bearing Ref. No.Dir(CB-C0037) SPRA/37-1 (CDGK) 10-11/0953 dated 20/9/2010
(e) Minutes/orders of adjournments of opening of financial bids.
Per learned counsel, the technical proposal was opened on 26th May 2010, whereas the financial proposal was opened after two months and 23 days. Per learned counsel, financial proposal is normally opened within 4/5 days after the opening of technical proposal. Had it been opened in normal routine, the bid of the petitioner would have been fallen within the validity date which was otherwise never expired in law, whereas the same was extended by submitting addendums within purported expiry period. It has been argued that instead of awarding contract the bid of the petitioner was not accepted and the contract has been awarded to respondent No.3 in a highly illegal and arbitrary manner and in total disregard of Sindh Public Procurement Rules 2010.
3. It is contended by the learned counsel for the petitioner that the entire process of rejecting the bid of the petitioner and awarding the contract to respondent No.3 whose bid was higher than the petitioners, is tainted with malafide and violative of Sindh Public Procurement Rules, 2010. Per learned counsel, there was no default or non compliance on the part of the petitioner who fully qualified to get award in his favour. Learned counsel further submitted that the objections regarding short period of expiry of the bank guarantee as written by hand on the top of such document is misconceived in view of specific clause (1) of such bank guarantee which provides for the same terms and conditions and the expiry period, as stated in the instructions to bidder. It is, inter alia, contended that while interpreting a document it is required to be read in full and not in part. In support of his contention, learned counsel has placed reliance on the following case-laws:
1. Saudi-Pak Industrial and Agricultural Investment Company (Pvt) Ltd., Islamabad v. Messrs Allied Bank of Pakistan PLD 2003 SC 215
2. Messrs State Engineering Corporation Ltd. v. National Development Finance Corporation and others 2006 SCMR 619
3. Pak Consulting & Engineering (Pvt) Ltd. v. Pakistan Steel Mills & another 2002 SCMR 1781
4. Messrs Huffaz Seamlen Pipe Industries Ltd v. Messrs Security Leasing Corporation Ltd. 2002 SCMR 1419
5. Emirates Bank International Limited v. Messrs Fair Commission Agency (Pvt) Limited & 7 others 1991 CLC 450
6. Shpyard K.Damen International v. Karachi Shipyard & Engineering Works Ltd. PLD 2003 SC 191
7. Mian Arif Mehmood v. Mst. Tanvir Fatima & another PLD 2004 Lahore 316
8. Petrosin Products Pakistan (Pvt) Ltd. v. Federation of Pakistan 2001 CLC 820.
4. Conversely, learned counsel for respondent No.3 has opposed the maintainability of the instant petition on the ground that since the petitioner failed to comply with the terms of bid and violated the Sindh Public Procurement Rules, 2010, he was rightly declared as un-responsive, whereas respondent No.3 was second lowest bidder, became the first bidder after exclusion of the petitioner, hence the respondent No.1 has rightly awarded the contract to respondent No.3. Learned counsel for the respondent has referred to various rules including rule 2 (hh) 37, 38, 45 as well as IB-14.1, IB-15.2, IB-26.3. Learned counsel further submitted that without prejudice to hereinabove the petitioner was otherwise not qualified to be granted such mega contract for having no experience in this regard, whereas respondent No.3 having a vast experience and reputation has been granted the instant contract after complying with all the codal formalities. In support of his contention, learned counsel has placed reliance on the following case-laws:
1. Calicon (Pvt) Ltd. v. Federal Government of Pakistan 1994 SCMR 1758
2. Faheem Ahmed Farooqui v. The State 2008 SCMR 1572
3. Al-Abbas Sugar Mills Ltd. v. Managing Director, Karachi Water and Sewerage Board & 2 others 2006 CLD 674
4. Dr. Tariq Mehmood Memon v. Province of Sindh 2007 MLD 1225.
5. Mr. Manzoor Ahmed, learned counsel for CDGK also opposed the maintainability of the instant petition on the ground that since the petitioner has not availed remedy provided in terms of Rule 31 of Sindh Public Procurement Rules 2010, the instant petition is not maintainable. Learned counsel further submitted that since the period of expiry as mentioned in the bank guarantee submitted by the petitioner was not in accordance with relevant rules, therefore, the petitioner was rightly declared as un-responsive. Learned counsel submitted that this aspect was even acknowledged by the petitioner whereby he has submitted addendum to the bank guarantee extending the period of expiry from 23.6.2010 to 23.10.2010. It has been further argued by the learned counsel for City District Government Karachi that such action was taken in view of a complaint made by respondent No.3 E.D.O (W & S) CDGK, wherein it was alleged that CDGK is giving favour to the petitioner for award of work. The Consultant M/s NAA JV NESPAK (Pvt) advised to CDGK to refer the matter to SPPRA, who vide their letter dated 20th September declared the petitioner as non-responsive and further observed that if respondent No.3 is willing to match the bid submitted by the petitioner then their request may be considered to avoid financial loss.
At this juncture, attention of the learned counsel for CDGK was drawn to para 1 of the Bid Security (Bank Guarantee) dated 26.5.2010 with a query as to its effect and application, the learned counsel for CDGK could not response to such query however submitted that since the petitioner himself has acknowledged the short period of expiry by filing addendum in this regard, therefore, was rightly considered as un-responsive bidder. Learned counsel for the respondent No.3 while confronted with similar query submitted that bankers have their mechanism for the purposes of determining validity of bank guarantee, whereas the petitioner having acknowledged such deficiency submitted the addendum for extension of expiry period which was rightly rejected by the respondent.
6. We have heard the learned counsel for the parties and perused the record. It appears that the statement of facts narrated by the petitioner showing chronology of events relating to the instant contract and application of relevant Sindh Public Procurement Rules 2010 has not been disputed by the parties, however interpretation of the terms of two Bid Security (Bank Guarantee) executed by the petitioner on 26.5.2010 has been disputed. Similarly, rejection of bid of the petitioner and subsequent awarding of contract to the respondent No.3 is also under dispute in the instant petition. It will be advantageous to examine chronology of the events relating to award of the instant contract.
7. Notice was published in daily Dawn dated 10.5.2010 inviting tenders. The petitioner opted for construction of 2 lane flyover alongwith Dr. Ziauddin Ahmed Road, PIDC Intersection Karachi. Receipt of applications and issuance of RFP document was upto 24.5.2010, dropping of RFP document was 26.5.2010, whereas on the same date was fixed for opening of technical proposals. Evaluation of Procurement Committee was communicated vide letter dated 29.7.2010. The technical proposal was approved on 9.8.2010, whereas financial proposals were opened on 9.8.2010 and the same were communicated to petitioner vide letter dated 10.8.2010 issued by CDGK, whereas the petitioner was required to submit an undertaking vide letter dated 4.9.2010. As per contents of para 9 of the Additional Counter Affidavit filed by CDGK, it appears that before the matter could proceed further, on a complaint made by respondent No.3 to EDO (W & S) CDGK, Consultant of CDGK M/s NAA JV NESPAK (Pvt) Ltd., advised to CDGK to refer the matter to SPPRA. The matter was referred vide letter dated 8.9.2010, which is reproduced hereunder for reference purposes.
The Director (CB),
Sindh Public Procurement Regulatory Authority,
Government of Sindh,
@ KARACHI
SUBJECT: CLARIFICATION ON THE CONSTRUCTION OF 02 LANE FLYOVER ALONG DR. ZIAUDDIN AHMED ROAD PIDC INTERSECTION KARACHI.
The undersigned is directed to inform you that the subject tender on Single Stage Two Envelop basis were received on 26.05.2010. The technical offer was opened on same day and evaluated as per evaluation criteria.
The bid validity as mentioned in the tender documents was 90 days whereas the Bid Security as per guide lines/rule of PEC & SPPRA was called in shape of Pay Order of Bank Guarantee valid upto 28 day (i.e. upto 23.06.2010). The tender opening report is enclosed.
The lowest firm later on furnished their bid extension upto 23.10.2010 alongwith their remarks vide their letter No.EDO/I&S/1696 received on 16.08.2010 date (copy enclosed).
The department in the financial interest of CDGK and to avoid financial loss needs to accept the lowest bid of M/s.Iqbal & Sons.
The Consultant of Works & Services Department also furnished their observations, vide their letter No.NAA/HO/CE/INC-JPIDC-F/2010/201 dated 06.09.2010 (copy enclosed) as follows:-
"Since rejection of the Bid of Iqbal & Sons solely on the basis of Bid Validity period shall cause a financial loss to the Government. It is therefore, proposed that the matter is referred to SPPRA as this a case of statuary requirement versus the financial requirement".
It is therefore requested to guide the undersigned office regarding acceptance of the lowest responsive bidder i.e. M/s. Iqbal & Sons to avoid financial loss to CDGK as mentioned above.
Sd/-
District Officer (CM) W&S, CDGK
8. The said letter was responded by SPPRA vide their letter dated 20th September 2010, which is also reproduced for reference purposes.
To,
District Officer (CM),
Works & Services Group of Offices,
City District Government Karachi,
Karachi.
SUB: CLARIFICATION ON THE CONSTRUCTION OF 02-LANE FLYOVER ALONG DR. ZIAUDDIN AHMED ROAD PIDC INTERSECTION KARACHI.
I am directed to refer to your letter No.DO-II(CM)/W & S/CDGK/261/10 dated 8th September, 2010 on the subject noted above.
2. The matter was examined in detail and following observations are made in the light of stipulations in the bidding documents.
(i) Bid validity period mentioned in bidding data and in the letter is 90 days (IB.14.1)
(ii) Bid security must be of (i) required amount (ii) required format and (iii) valid for period 28 days beyond the validity date (1B,15.1.15.2 and 15.3)
(iii) Bid is termed responsive if it is accompanied by the required bid security.
(iv) If a bid is not substantially responsive, it will be rejected by the procuring agency, and may not be subsequently made responsive by correction or withdrawal of the non-conforming deviation or reservations (IB.26.3).
3. In view of the provisions of bidding documents highlighted at Para 2 above the bid of M/s. Iqbal & Sons cannot be considered as responsive.
4. As far as the financial loss to the procuring agency is concerned by treating the lowest bidder as un-responsive due to not accompanying the required bid security as mentioned in the bidding documents. It is pointed out that the purpose of open competitive bidding is to provide a fair and transparent specified procedure for all interested bidders. The Rules do not allow negotiations though it is possible to save money by doing this. However, if M/s. Naseeb Khan & Sahar Enterprises, Karachi is willing to match the bid submitted by M/s.Iqbal & Sons then their request may be considered to avoid financial loss.
Sd/-
DIRECTOR (CB).
9. From perusal of above correspondence it appears that the petitioner has been non-suited for the purposes of awarding contract inspite of having offered the lowest bid, on the pretext of having submitted Bid Security (Bank Guarantee) for a period of less than the period prescribed in rules, whereas no other ground has been mentioned or communicated to the petitioner in this regard. From perusal of two Bid Security (Bank Guarantee) executed on 26.5.2010, it appears that Para 1 of both the Bid Security (Bank Guarantee) contains the same terms and conditions as prescribed by CDGK in his Performa Bank Guarantee, whereas there is no dispute regarding the amount of the bank guarantee. Para 1 of Bid Security (Bank Guarantee) dated 26.5.2010 is reproduced hereunder for reference purposes:
That the Bid Security shall remain in force up to and including the date 28 days after the deadline for validity of bids as stated in the Instructions to Bidders or as it may be extended by Employer, notice of which extension (s) to the Surety is hereby waived.
From perusal of contents of this para it is clear that it contains the same time period as provided in the rules and instructions to bidders as prescribed in performa guarantee issued by the CDGK, and there seems no curtailment of expiry period as alleged, however, it appears that there is some hand written note on the top of the Bid Security (Bank Guarantee) wherein different period of expiry has been mentioned, which has been considered as the basis of treating the bid of the petitioner as non-responsive resulting in cancellation of the contract.
10. From perusal of the record it appears that there has been no finding by the respondents, whereby the effect of this anomaly in the Bid Security (Bank Guarantee) has been resolved nor there seem any opportunity having been given to the appellant to explain the same. We are of the opinion that in view of the specific Clause No.1 of the Bank Guarantee as mentioned in the document itself reference to some hand written note of some bank official modifying the expiry period was required to be examined in view of the relevant law and principle of interpretation of document, by a reasoned order and after giving an opportunity of being hard to the appellant. Learned counsel for the respondents have also failed to refer to any rule prescribed under Sindh Public Procurement Rules, 2010, whereby on rejection of a tender to the lowest bidder, the second lowest bidder can be considered as the successful bidder on the same terms. On the contrary, from perusal of the correspondence by the CDGK and from perusal of Rule of the Sindh Public Procurement Rules 2010, it appears that no negotiations with the bidder are permissible in terms of Rule 52 and 83 of the Sindh Public Procurement Rules 2010, which are reproduced hereunder for the sake of relevance and resolution of the instant controversy.
52. Bar on Negotiations.- Save as otherwise provided there shall be no negotiations with the bidder having submitted the lowest evaluated bid or with any other bidder.
83. Negotiations.-(1) Notwithstanding the provisions of Rule 52, negotiations may be permissible after the financial bids have been opened. In case the procuring agency has valid reasons, which must be recorded in writing, that the financial offers are not providing best value for money or need changes, the procuring agency may invite sealed revised financial bids from all qualified bidders or through open bidding. The procuring agency shall keep complete minutes of the negotiation process.
(2) Direct negotiations shall be resorted to when there is only one complying bidder left as defined hereunder:
(a) If, in response to advertisement, only one interested bidder responds for prequalification, and it meets the pre-qualification criteria;
(b) If after advertisement, more than one interested bidders respond for pre-qualification, if any but only one of them meets the prequalification criteria;
(c) After pre-qualification, if any, more than one interested bidders respond, and only one of them submits a bid, which is found by procuring agency to be complying;
(d) After pre-qualification, if any, more than one interested bidders submits the bid, but only one is found by the procuring agency to be complying.
11. It is trite principle of law that a public functionary while performing function under the law, rule and regulation, is required to adhere to such law, rule and regulation in its letter and spirit. The discretion vested in a public functionary is to be exercised strictly in accordance with law in a reasonable and transparent manner and not under a colorful exercise of authority. It further appears that the respondents have not been able to refer to any law or rule whereby awarding instant contract to respondent No.3 could be justified in the facts and circumstances of this case, which fact has also been admitted by the CDGK in letter dated 20.9.2010 reproduced in para 10 hereinabove.
12. Having observed as above, we would also like to examine the objection of maintainability of the instant petition on the ground of not availing the departmental remedy available in terms of Rule 31 of the Sindh Public Procurement Rules, 2010. Through, while exercising constitutional jurisdiction, there is no absolute bar in entertaining the grievances of the aggrieved person against the orders or actions of public functionaries, however, such discretion is to be exercised rarely in cases where there is some jurisdictional error or gross violation of law and the alternate remedy is not considered to be efficacious under the facts and circumstances of the case. To examine the instant case on above parameters, it will be advantageous to reproduce the relevant sub-rules of Rule 31 for the sake of reference.
31. Mechanism for Redressal of Grievances. (1) The procuring agency shall constitute a committee for complaint redressal comprising odd number of persons, with appropriate powers and authorizations, to address the complaints of bidders that may occur during the procurement proceedings.
(2)
(3) Any bidder being aggrieved by any act or decision of the procuring agency during procurement proceedings may lodge a written complaint after the decision causing the grievance has been announced.
(4) The complaint redressal committee upon receiving a complaint from an aggrieved bidder may, if satisfied:
(a) prohibit the procurement committee from acting or deciding in a manner, inconsistent with these rules and regulations;
(b) annual in whole or in part, any unauthorized act or decision of the procurement committee; and
(c) reverse any decision of the procurement committee or substitute its own decision for such a decision:
Provided that the complaint redressal committee shall not make any decision to award the contract.
(5) ...
(6) ...
(7) ...
(8) A bidder not satisfied with decision of the procuring agency's complaints' redressal committee may lodge an appeal to the Chief Secretary through the Authority, who shall refer the matter to a review panel as per Rule 32.
(9) A bidder may file an appeal to the Chief Secretary provided:
(a) that the bidder has exhausted his complaint to the complaint redressal committee; and
(b) that he has not withdrawn the bid security deposited by him during the procurement process.
(10) .
(11) .
(12) .
(13) .
(14) .
(15) The decision of the Chief Secretary shall be final and the procuring agency shall act upon such findings. After the decision has been issued, the complaint and the decision shall be hoisted by the Authority on its website within three working days:
13. On perusal of the provisions of rule 31, it appears that an exhaustive mechanism and efficacious remedy has been provided for redressal of grievances and settlement of disputes whereby as per sub-rule 3 of rule 31, any bidder on being aggrieved by any act or decision of the procurement agency during procurement proceedings can lodge a written complaint after the decision causing the grievance, the committee so constituted under these rules upon receiving a complaint from an aggrieved bidder can either prohibit the procurement committee from the acting or deciding in a manner, inconsistent with these rules and regulation or annul in whole or in part, any unauthorized act or decision of the procurement committee and reverse any decision of the procurement committee or substitute its own decision for such a decision provided that the complaint redressal committee shall not make decision to award the contract. It further appears that a time bound mechanism has been provided for the committee to proceed and decide the complaint. However, if the bidder is still dissatisfied with the decision of the redressal committee an appeal to the Chief Secretary through the Authority has been provided in terms of sub-rule 8 and 9 of Rule 31. Upon receipt of an appeal and registration fee the Chief Secretary is required to select a review panel to examine the complaint. The decision of the Chief Secretary is final and procuring agency is under obligation to act upon such finding. It appears that the petitioner has not been able to offer any reasonable explanation for by passing the remedies available under Rule 31 of the Sindh Public Procurement Rules, 2010.
14. Keeping in view hereinabove facts, we are of the view that the respondents, while rejecting the bid of the petitioner and awarding contract to respondent No.3 have not followed the Sindh Public Procurement Rules 2010, nor have given cogent reasons for considering the bid of the petitioner as non-responsive, therefore, the impugned action is not sustainable in law.
15. However, since the petitioner has not availed the alternate departmental remedy provided under the rules, we deem it appropriate to remand the matter back to the respondents to examine the claim of the petitioner strictly in accordance with law and the Sindh Public Procurement Rules 2010, and dispose of the matter preferably within a period of seven days after providing opportunity to the petitioner in this regard. However, if the petitioner still fails to justify his claim he may avail the alternate remedy before the forum provided in terms of Rule 31 of Sindh Public Procurement Rules, 2010, whereafter the petitioner may avail any other remedy as available to him under the facts and circumstances of the case.
The instant petition stands disposed of in the above terms alongwith listed applications.
JUDGE
JUDGE