Pallavi Constructions Through Its Authorized Partner Sudhakar Ganeshrao Patil vs. The State Of Maharashtra And Others

Held

The Court held that the impugned corrigendum cancelling the tender was set aside. The reasoning was that while the Chief Officer could have taken steps if there were large-scale deficiencies in the tender documents, this should have been done after adhering to the basic tenets of natural justice. The Court found the cancellation abrupt and arbitrary, especially since a work order had been issued and an agreement executed, creating a vested right in the petitioner. The Court noted that the reason for cancellation in the corrigendum was vague, stating only that documents were not properly scrutinized and verified on technical grounds, without specific communication to the petitioner. The Court emphasized that even if the act is administrative, adherence to natural justice is required when a concluded contract exists. The Court did not explicitly decide on the issue of Section 93 of the Maharashtra Municipal Councils, Nagar Panchayats and Industrial Townships Act, 1965, but directed the Chief Officer to issue a notice to the petitioner calling for an explanation regarding potential deficiencies and non-compliance with Section 93, if applicable, before taking a final decision. The petitioner was to be given an opportunity to reply.

Facts

Pallavi Constructions, the petitioner, was awarded a contract by the Municipal Council, Gangakhed, for road and footpath construction after being the lowest bidder. An agreement was executed on October 28, 2021, and a work order was issued on October 29, 2021. The petitioner also deposited the security deposit. However, on November 1, 2021, the Chief Officer of the Municipal Council issued a corrigendum cancelling the tender. The petitioner challenged this cancellation, arguing that the tender was awarded after due process and a concluded contract existed. The stated reason for cancellation was that the petitioner had not submitted GST and ISO certificates, which the petitioner contended was incorrect or not a material breach, and that the ISO certificate was submitted late but not a mandatory requirement. The cancellation was allegedly influenced by an Ex-MLA and the second lowest bidder.

Key Issues

1. Whether the cancellation of the tender and work order issued to the petitioner, after a concluded contract and deposit of security, was arbitrary and in violation of principles of natural justice, despite the alleged non-submission of mandatory documents like ISO certificate? (Question of law and mixed fact and law, concerning principles of natural justice and contract law). 2. Whether the Chief Officer could issue a work order exceeding Rs. 3 Crores without the concurrence of the Standing Committee, as per Section 93 of the Maharashtra Municipal Councils, Nagar Panchayats and Industrial Townships Act, 1965? (Question of law, concerning statutory interpretation). Petitioner's arguments: The petitioner argued that a concluded contract existed, and the cancellation was arbitrary without assigning specific reasons or following natural justice. They contended that the ISO certificate was not a mandatory requirement and was submitted when requested, and that the GST certificate was indeed submitted. They relied on Supreme Court judgments in Bharat Coking and B.S.N. Joshi & Sons Ltd., and a High Court judgment in R. Venkatesh, for substantial compliance with tender terms. They also argued that the cancellation was influenced by external parties and that the Scrutiny Committee did not deem the ISO certificate mandatory. Respondents' arguments (Municipal Council): The Municipal Council argued that objections were raised by an Ex-MLA and the second lowest bidder, leading to the cancellation of the work order. They suggested the petitioner could re-apply when a fresh tender is issued. Intervenor's (J.K. Construction) arguments: The intervenor argued that the documents listed in the tender checklist were mandatory, and failure to submit all of them, including the ISO certificate, justified the cancellation. They also raised concerns about the authenticity of submitted documents and discrepancies in the tender evaluation process.