JAGDHATRI COKE MANUFACTURERS, GOVINDPUR v. HINDUSTAN ZINC LTD. , UDAIPUR
1997-04-09
P.P.NAOLEKAR
body1997
DigiLaw.ai
Judgment P. P. NAOLEKAR, J. ( 1 ) THE petitioner is the owner of Hard Coke Plant and is carrying on business of manufacturing and sale of Beehive/ Metallurgical Coke. Respondent No. 1 Hindustan -inc Ltd. is a Govt. of India enterprise. The practice of respondent No. 1 is to invite open tender for getting supply of Metallurgical Coke for its Tundoo and Vizag Smelters situated in Dhanbad (Bihar) and Visakhapatnam (Andhra Pradesh ). In pursuance of the aforesaid practice, respondent No. 1 invited tender being tender No. H-L/ HO/ CONT/4 (33) dated 16-7-1996 for supply of 5000 M. T. Metallurgical Coke of the specified specification for Tundoo and Vizag Smelters. The petitioner submitted his tender and deposited the amount of Rs. one lac. As per instruction No. 8 of the said tender, three parties did not submit C. F. R. I. reports along with the tender, though it was essential for checking the quality of the coke. Only one party furnished C. F. R. I. report and the quality of coke offered by that party was not found to be as per standard referred to in the tender. Moreover, some of the parties who had purchased tender documents had informed that they could not submit their offer as the time for getting C. F. R. I. report was not adequate. Considering the aforesaid facts, it was decided by the respondents to invite fresh tender being tender No. H-/ho/cont/4 (34), dated 3-9-1996. Respondent No. 2 Chief Manager (Contracts), Hindustan -inc Ltd. , Udaipur sent to the petitioner a set of fresh tender papers free of cost fixing the last date 18-10-1996 for submission of tender. The last date for submission of tender, was later on extended from 18-10-1996 to 14-11-1996 and intimation to that effect was sent to the parties. The notice inviting tender prescribed quality of coke to be supplied :- quantity : 2000 MT for Tundoo Smelter and 3000 MT for Visakhapatnam Smelter on phased delivery basis. Specification of Metallurgical Coke : (I) Ash : 26% Max. (ii) Moisture : 4% Max. (iii) Volatile Matter : 1% Max. (iv) Size : 100 mm to 150 mm (v) Porosity : 45% + /-2% (vi) Fixed Carbon : 72% Min. (vii) Sulphur : 1% Max.
Specification of Metallurgical Coke : (I) Ash : 26% Max. (ii) Moisture : 4% Max. (iii) Volatile Matter : 1% Max. (iv) Size : 100 mm to 150 mm (v) Porosity : 45% + /-2% (vi) Fixed Carbon : 72% Min. (vii) Sulphur : 1% Max. The tender notice requires that the offer of the tender must accompany EMD, latest analysis certificate from C. F. R. I. , Dhanbad for the quality of coke, else the offer may be ignored. The tender submission offer was required to be submitted in two parts in two separate sealed covers. Part I covers the specification of the quality of the coke offered along with E. M. D. as well as latest C. F. R. I. test report and Part covers coke price as per the format shown in Annexure-C. The envelope Part of the offer of price would not be opened along with Part I, that is to say, Part I will be opened first and thereafter Part would be opened and the day and time would be informed to the party in due course. After the submission of the tender, Part I was opened on due date and a Committee of four persons was constituted for evaluation and finalisation of the tender. ( 2 ) THE Committee considered the tenders of seven parties whose tenders were received against the tender notice. The Committee found in regard to the petitioner; M/s. Basuda Udyog, respondent No. 7 and M/s. Friends Coal Enterprises, respondent No. 8 as under :"m/s. Basuda Udyog : they have confirmed to supply coke as per tender. However, CFRI report does not indicate results of porosity, sulphur -and size. They have in general accepted H-L commercial conditions. They have indicated price variation clause which is based on variation in coal and diesel prices. They have offered to supply 500 MT Coke per month for V-S and 500 MT for LST and have stated to supply more with prior intimation. They are H-Ls existing supplier. M/s. Friends Coal Carbonisation : they have been offered to supply coke as per tender specifications and quantity. The CFRI report submitted by them confirms quality of coke as per tender except the size requirement. The size analysis given is not complete and requires clarification. They have accepted H-L commercial conditions with deviations in respect of payment terms, weight variation and price variation.
The CFRI report submitted by them confirms quality of coke as per tender except the size requirement. The size analysis given is not complete and requires clarification. They have accepted H-L commercial conditions with deviations in respect of payment terms, weight variation and price variation. The price variation offered is based on variation in coal and diesel prices. They are H-Ls existing supplier. M/s. Jagdhatri Coke Manufacturers : they have offered to supply coke as per tender specifications and quantity. They have furnished four Nos. CFRI reports dated 30-6l995, 2-8-1996, 24-9-1996 and 1-10-1996. The latest CFRI report dated 1-10-1996 furnished by them does not meet tender specifications with regard to porosity and VM. The other three reports indicate that quality of coke is not as per tender specifications. They have in general accepted H-Ls tender conditions. Price variation clause offered by them is based on variation in coal price. They were awarded trial order for 500 MT Coke for LST against H-Ls Tender No. H-L/ HO/ CONT/ 4 (27) with option to increase quantity up to 500 MT. " and on the basis of the evaluation, the Committee found that quality offered by the tenderers is not completely matching with tender specifications except that of M/s. Friends Coal, respondent No. 8. The Committee further found that M/s. Basuda Udyog, respondent No. 7 and M/s. Jagdamba Coke have confirmed to supply coke as per tender quality but their C. F. R. I. reports are not complete. These reports do not have analysis for porosity and size. The Committee found that M/s. Basuda Udyog have been supplying coke to the Company and their quality has been found to be satisfactory and decided that offer of M / s. Basuda Udyog can be considered technically acceptable, even though the C. F. R. I. report submitted by them is incomplete. As regards the petitioner, the Committee found that they have offered to supply coke as per tender specification and quality but the quality of coke as per C. F. R. I. report is not as per tender.
As regards the petitioner, the Committee found that they have offered to supply coke as per tender specification and quality but the quality of coke as per C. F. R. I. report is not as per tender. The deviations are regarding porosity and volatile matter and performance is not fully satisfied and thereafter recommended that offer of M / s. Friends Coal Carbonisation, Calcutta, respondent No. 8 be-accepted subject to confirmation of size, M / s. Basuda Udyog, Dhanbad, respondent No. 7 subject to, confirmation on porosity, sulphur and size and M /s. Jagdamba Coke Manufacturing Enterprise, Calcutta for trial order subject to verification by H-L team and C. F. R. I. report for porosity and size. According to the recommendations made by the Committee, respondent No. 1 has rejected the tender Part I document of the petitioner and has invited respondent No. 7 M / s. Basuda Udyog and respondent No. 8 M/s. Friends Coal Enterprises for price negotiation. As regards respondent No. 6 Jagdamba Coke Manufacturer Enterprise Ltd. , Dhanbad, it is submitted by respondent No. 1 that a team was deputed to scrutinise their work and after inspection and scrutinising their work, the respondent was not satisfied and they came to the conclusion that they cannot supply the coke as per tender specification and as such, the tender of respondent No. 6 was not considered and it was rejected. ( 3 ) THE petitioner has challenged the action of respondent No. 2 in inviting respondents Nos. 7 and 8 for price negotiation and in consequence thereof, placement of the order for supply of Metallurgical Coke at Tundoo and Vizag Smelters Plants of respondent No. 1 on the ground that the petitioner and these respondents are not being equally treated. The petitioners tender was rejected on the ground that it would not be able to supply the quality of coke required whereas the tenders of respondents Nos. 7 and 8 were accepted although they suffered with same disqualification of quality. ( 4 ) IN Tata Cellular v. Union of India ( (1994) 6 SCC 651 ), the Apex Court has examined the scope of judicial review in the field of exercise of contractual powers by Govt. bodies and has laid down the following principles :" (1) The modern trend points to judicial restraint in administrative action.
( 4 ) IN Tata Cellular v. Union of India ( (1994) 6 SCC 651 ), the Apex Court has examined the scope of judicial review in the field of exercise of contractual powers by Govt. bodies and has laid down the following principles :" (1) The modern trend points to judicial restraint in administrative action. (2) The Court does not sit as a Court of appeal but merely reviews the manner in which the decision was made. (3) The Court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts. (5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facets pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. " the Court has also mentioned two other facets of irrationality as under :- " (1) It is open to the Court to review the decision-makers evaluation of the facts. The Court will intervene where the facts taken as a whole could not logically warrant the conclusion of the decision-maker. If the weight of facts pointing to one course of action is overwhelming, then a decision the other way, cannot be upheld. (2) A decision would be regarded as unreasonable if it is partial and unequal in its operation as between different classes.
If the weight of facts pointing to one course of action is overwhelming, then a decision the other way, cannot be upheld. (2) A decision would be regarded as unreasonable if it is partial and unequal in its operation as between different classes. " the validity of the action of the Tender Evaluation Committee has to be considered in the light of the aforementioned principle No. 5 particularly and two other facets of irrationality and, therefore, it is to be seen whether the acceptance of the tender of respondents Nos. 7 and 8 is discriminatory and arbitrary. It is now well settled that where the Govt. is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largess, the Govt. cannot act arbitrarily at its sweet-will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norm which is not arbitrary, irrational or irrelevant. The power or discretion of the Govt. in the matter of grant of largess must be confined and structured by rational, relevant and non-discriminatory standard or norm and if the Government departs from such standard or norm in any particular case or cases, the action of the Govt. would be liable to be struck down, unless it can be shown by the Govt. that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory. It is true that neither the petitioner nor the respondents have any right to enter into any contract but they are entitled for equal treatment with others to offer tender of quality for purchase of goods. Reliance is placed on Ramana Dayaram Shetty v. International Airport Authority of India, AIR 1979 SC 1628 . ( 5 ) ON perusal of the report, it is apparent that the petitioners tender specification so far as the quality was concerned, was not in accordance with the specification of the tender. The latest certificate furnished by the petitioner as on 1-10-1996 issued by Central Fuel Research Institute, Dhanbad (Bihar), the porosity of the coke was 40. 95% against the requisite maximum of 47% and minimum of 43%. The volatile matter was also 1. 4% against the maximum standard of 1%.
The latest certificate furnished by the petitioner as on 1-10-1996 issued by Central Fuel Research Institute, Dhanbad (Bihar), the porosity of the coke was 40. 95% against the requisite maximum of 47% and minimum of 43%. The volatile matter was also 1. 4% against the maximum standard of 1%. The C. F. R. I. report submitted by the petitioner was of inferior quality of coke. It was not in accordance with the requisite quality of coke as mentioned in the tender document and, therefore, the petitioners tender was technically rejected. As the petitioners tender was technically rejected, it was naturally not called for further commercial evaluation and consideration of the price. The tender submitted by respondent No. 8 M/s. Friends Coal Enterprises was found by the experts in accordance with the quality specification except the size. The size is controllable factor and would not be fatal. Besides this, M/s. Friends Coal vide their letter dated 11-121996 confirmed that they will supply coke as per the tender specification including size. As regards Basuda Udyog, the Committee has found that they have not submitted complete C. F. R. I. The reports do not have analysis for porosity, sulphur and size. ( 6 ) NOW there can be no doubt that what para 3 of the notice inviting tender prescribes was a condition of eligibility, which was required to be satisfied by every person submitting a tender. The quality of coke required to be supplied is given in para No. 3 and that is to be certified by analysis certificate from C. F. R. I. , Dhanbad. Admittedly, the petitioners tender form does not match with the quality specification prescribed under the notice inviting tender and, therefore, the rejection of Part I of its tender would be in conformity of the tender requirement. It has been found as a fact by the Tender Evaluation Committee that respondent No. 8 fulfils the requirement of quality control of the coke to be supplied except the size, which he has accepted to supply as per the tender specification but that is not the case as regards respondent No. 7. The C. F. R. I. report submitted by respondent No. 7 is lacking in satisfying the quality requirement. The C. F. R. I. report does not have analysis for porosity, sulpher and size.
The C. F. R. I. report submitted by respondent No. 7 is lacking in satisfying the quality requirement. The C. F. R. I. report does not have analysis for porosity, sulpher and size. The counsel for respondent No. 1 candidly admitted that till the date of arguments, respondent No. 7 has not submitted C. F. R. I. report showing the quality of the coke as regards porosity, sulphur and size. On the one hand, the petitioners tender was rejected for not conforming with the quality of coke required to be supplied. On the other hand, the tender of respondent No. 7 was accepted and he was called for price negotiation although C. F. R. I. report does not at all indicate porosity, sulphur and size of the coke to be supplied by it. If this is permitted, then the person who do not submit C. F. R. I. certificate indicating quality of the coke, would be placed on a better footing. The condition for eligibility was that the person submitting the tender must submit the latest analysis certificate from C. F. R. I. for quality of coke and the quality of the coke should conform to the quality mentioned in the tender notice. Fulfilment of condition is a necessary requirement, which is apparent from the cancellation of first tender by respondent No. 1 on account of non-submission of C. F. R. I. report and the quality of coke offered was not found to be as per the standard referred to in the tender document. If tender document did not satisfy the condition of eligibility, the tender would not be eligible for consideration. The standard or norm laid down for eligibility by respondent No. 1, has to be fulfilled before the tender can be accepted for price negotiation. It is well settled rule of administrative law that an executive authority must rigorously held to the standards by which it professes its action to be judged and it must scrupulously observe those standards.
The standard or norm laid down for eligibility by respondent No. 1, has to be fulfilled before the tender can be accepted for price negotiation. It is well settled rule of administrative law that an executive authority must rigorously held to the standards by which it professes its action to be judged and it must scrupulously observe those standards. It is true that the Court does not have expertise to judge the administrative action as an expert and, therefore, not expected to act and judge the administrative action as an expert nor can impose or substitute its own decision but there cannot be any doubt that the Court can evaluate action of the administrative body and to find out whether the standards laid down by the administrative body are followed by it before the contract is given. The Court will enforce the executive authority to adhere to the standards laid down by it and to ensure that all the parties are equally treated in the matter of grant of contract. A decision arrived at by the executive authority applying different standards, shall be regarded as unreasonable. Submission of C. F. R. I. report conforming with the quality of coke. mentioned in the tender notice, was a condition laid down by respondent No. 1 and since respondent No. 7 did not satisfy the standard or norm, it was not competent for respondent No. 1 to entertain the tender of respondent No. 7. Expert Committee was clearly in error to recommend the tender of respondent No. 7 for acceptance and respondents Nos. 1 and 2 have committed greater mistake in accepting that recommendation and inviting respondent No. 7 for price negotiation. ( 7 ) AS a result thereof, the petition is allowed to the extent that so far as the tender of respondent No. 7 is concerned, the action of respondent No. 2 inviting respondent No. 7 for price negotiation and placing the order, if any, for supply of coke in pursuance of retender No. H- / HO / CONT / 4 (34), dated 3-91996 ( Annex. 4 ) is quashed. There shall be no order as to costs. Petition allowed.