Lachit Roller Flour Mill Pvt. Ltd. v. Union of India
1998-12-24
B.N.SINGH NEELAM
body1998
DigiLaw.ai
This civil rule petition is so preferred under Article 226 of the Constitution by the petitioner No. 1 Lachit Roller Flour Mill Pvt. Ltd. Jorhat, being represented by its Managing Director, Shri Manoj Kumar Agarwalla, petitioner No. 2 particularly, against the order so passed by the respondent Nos 1 to 4 in favour of respondent No.5 Kendulguri Roller Flour Mills Pvt Ltd Jorhat, accepting the tender of respondent No. 5 for grinding of wheat and manufacturing Atta for the defence services at Bhalukamara including all other stations of the State. 2. The case of the petitioners is that in the second tender so opened on 15.10.1998 the present petitioners had the lowest tender so given and in that circumstance the authorities should not have awarded the contract to respondent No. 5, who had the second lowest tender so given, as to supply Atta, etc, and such decision, as per the petitioner, is so taken depriving the petitioners' claim as the lowest tenderer arbitrarily, which is also, as per the petitioner, in gross violation of the standard tender evaluation practice and this offer of supply so given to respondent No. 5 for the period from 1.12.1998 to 30.11.2000 is thus liable to be quashed. It is also the case of the petitioners that there should have been transparency in dealing with the State largesse because it involves huge public money and the decision so taken thus by the respondents authorities in favour of respondent No. 5 accepting his tender, though respondent No. 5 being the second lowest tenderer, is illegal, arbitrary, capricious and against all the norms of fair play and in gross violation of the principles of natural justice and is thus liable to be declared null and void and quashed. 3. Heard Mr. R. Gogoi, learned counsel for the petitioners, being assisted by Dr. AK Saraf and Mr. KK Gupta, learned counsel, learned Senior Central Govt Standing Counsel, Mr. KK Mahanta, for the respondent Nos 1 to 4 and the learned counsel Mr. N. Dutta, representing respondent No. 5, in whose favour, the tender is accepted. 4. This will not be out of place to mention that when this civil rule petition was so filed, Notice of Motion was issued on 20.11.1998 and interim relief was also so granted by this Court by suspending the operation of the contract granted in favour of respondent No. 5.
4. This will not be out of place to mention that when this civil rule petition was so filed, Notice of Motion was issued on 20.11.1998 and interim relief was also so granted by this Court by suspending the operation of the contract granted in favour of respondent No. 5. After the appearance of the respondents, affidavit-in-opposition was filed, even two separate Misc. petitions bearing Nos. 1352 of 1998 and 1354 of 1998 got filed by respondent Nos. 1 to 4 and respondent No. 5, respectively, for vacating the interim order so passed on 20.11.1998, in which also affidavits-in-opposition were so filed. It further transpires that on 15.2.1998 this Court by passing orders made indication as to dispose of the whole matter at this stage itself after hearing the parties and they were so heard at length. 5. On behalf of the petitioners, Mr. R. Gogoi has submitted that after the notice was so issued inviting tenders by the respondent Nos. 1 to 4, at first the tenders were so opened on 27.8.1998, in which the petitioner had also participating a but, though the lowest tender was of respondent No. 5, who also participated in the first tender bid, his tender was not accepted, which was found much below the standard reasonable rate so fixed by the Tender Purchase Committee and though the present petitioner, who was the second lowest tender bidder, was called for negotiation, but since it could not materialize, second tender notice was so called for, which was opened on 15.10.1998, and though the petitioner was the lowest tenderer, but his case was not considered for allotment of the work on particularly two grounds : (1) that the earnest money which was directed to be deposited was not fully paid prior to taking part in the tender process; and (2) the grinding rate and other rates quoted by the present petitioner was short of more than 20 percent of the standard reasonable rate. Mr. Gogoi, the learned counsel for the petitioner, has submitted that fixing a standard, reasonable rate is given in the hands of the authorities and thus it should have been fixed not arbitrarily and in a rational way.
Mr. Gogoi, the learned counsel for the petitioner, has submitted that fixing a standard, reasonable rate is given in the hands of the authorities and thus it should have been fixed not arbitrarily and in a rational way. In the instant case, it is pointed out that the standard reasonable rate so fixed by the Tender Purchase Committee on 15.10.1998 itself, the day the second tender was opened, which was so done arbitrarily and when even respondent No.5 quotation so given was also short of the standard reasonable rate so fixed by the Tender Purchase Committee, in that case, without assigning any cogent reason, the offer should not have been given to respondent No. 5 by passing the claim of the petitioner, which was genuine. In support of his this contention that the petitioner has a good case to be interfered with, when after perusing the papers so furnished by respondent Nos. 1 to 4 in connection with the decision so taken fixing the standard reasonable rate, Mr. Gogoi, the learned e counsel for the petitioner, has submitted that the said process of fixing a standard reasonable rate was not rational, even respondent No. 5 had also quoted rates short of the standard reasonable rate and in such circumstances, the order for supply should not have been approved in favour of respondent No.5 by the concerned respondent Nos. 1 to 4. Mr. Gogoi has also pointed out that if the earnest money so deposited was less by Rs.500 that was a non-essential term, which would not have been fatal to this extent by rejecting his tender, though it was the lowest. By referring to some of the reported cases, it is pointed out that it is a fit case in which the powers under Article 226 of the Constitution can well be invoked because, though it relates to the contractual obligation, but the High Court can very well interfere to see the process of decision arrived at while deciding to award the contract of supply in favour of respondent No.5, which, according to the learned counsel for the petitioner, is being done arbitrarily in the instant case. In this connection, Mr. Gogoi has referred to a reported case, (1991) 3 SCC 273 , Poddar Steel Corporation vs. Ganesh Engineering Works & others, and particularly, its para 6 is referred.
In this connection, Mr. Gogoi has referred to a reported case, (1991) 3 SCC 273 , Poddar Steel Corporation vs. Ganesh Engineering Works & others, and particularly, its para 6 is referred. The second reported case so banked upon on behalf of the petitioner is, 1995 Supp (1) SCC 751, Delhi Development Authority vs. Grishthapana Co-operative Group Housing Society Ltd. By referring to (1997) 7 SCC 592 , MP Oil Extraction another vs. State of MP & others, particularly, its para 46, it has been submitted that interference by invoking the powers under Article 226 of the Constitution can very well be made. It has been pointed out that non-arbitrariness, fairness in action and due consideration of legitimate expectation, are the essential requisites for a valid state action and/or for contractual transactions of a State or its instrumentality, which, if not done, can very well be challenged under Article 226 of the Constitution. In support of his this contention, Mr. Gogoi has claimed himself to be fortified by a reported case (1993) 1 SCC 71 , Food Corporation of India vs. M/s Kamdhenu Cattle Feed Industries. Lastly, Mr. Gogoi has referred to the reported case, Tata Cellular vs. Union of India, (1994) 6 SCC 651 and has referred to its paragraph 81, and it is submitted that it is open to the Court to review the decision maker's evaluation of the facts and the Court may interfere under Article 226 of the Constitution where the facts taken as a whole could not legitimately warrant the conclusion of the decision maker. 6. In this connection, it will not be out of place to mention that during the course of the argument when the petitioners' side, with the permission of the Court, was given an opportunity as to see the report of the Tender Purchase Committee fixing the standard reasonable rate, an additional affidavit was so filed on behalf of the petitioner claiming that though the present petitioner's quotation was short of the standard reasonable rate so fixed by the Tender Purchase Committee, but the same was the same with respondent No. 5 as well, who is granted relief and on this score certain calculations are being made as detailed in the additional affidavit, which need not be repeated, as to establish his this claim.
Objection petitions are filed to this additional affidavit on behalf of respondent Nos 1 to 4 and respondent No. 5, separately, justifying the decision so taken by the Tender Purchase Committee, also specifying that such standard reasonable rate was so fixed by the committee when the first tender was so opened on 27.8.1998, almost showing the same rate except on one item and that there was nothing wrong with the respondent Nos. 1 to 4 settling the matter with the second lowest tenderer. 7. Mr. KK Mahanta, learned counsel representing respondent Nos. 1 to 4, has submitted that in a decision made in contractual matters, the Court has got a very limited jurisdiction only to see the process of decision arrived at, as to whether the same is arbitrary or rational. It is pointed out that there is no question in the hands of respondent Nos. 1 to 4 as in any way to oblige respondent No. 5, as claimed by the petitioner, because, if there would have been any such intention, even at the first stage when the first tender was opened on 27.8.1998, respondent No. 1 to 4 could have very well accepted the offer of respondent No.5, who was the lowest tenderer at that time, which was also not so done on the same principle of his rate so quoted was also found much below the standard reasonable rate fixed by the Tender Purchase Committee. It is pointed out by particularly referring to clause 15 of the NIT that there was specific indication for the person applying to deposit the earnest money along with the tender, which was not so done by the petitioner as Rs.500 less was so deposited, which was also a very good ground for not accepting his tender, though being the lowest. Also by referring to the clauses of the NIT it is further pointed out that it had been so very clearly mentioned therein that it was not obligatory on the part of the authorities as to accept the lowest tender which would have very well been rejected, which is so done here on the valid grounds mentioned therein. It is further pointed out that on no account it can be said that there was no transparency in the process so adopted by the respondent Nos. 1 to 4.
It is further pointed out that on no account it can be said that there was no transparency in the process so adopted by the respondent Nos. 1 to 4. It is pointed out by particularly referring to Annexure 1 of the civil rule petition that three different dates were so fixed for the calls in case of failure of the initial call on 27.8.1998 (the first tender call), the first re-tender call, that is, the second call on 17.9.1998, and the second re-tender call, that is the third call on 5.10.1998. That being the position, on no account it can be said that the second tendier notice was so given as to accommodate the respondent No. 5. The Tender Purchase Committee, it is pointed out, comprised of the three members of the ranking ASC, Deputy Director EME and an officer of Controller of Defence Accounts, who can very well be said to be the experts dealing with practical realities of life and fixing of standard reasonable rate even by calling quotations from different persons prior to the opening of the tenders as to meet the ends of justice and, therefore, on no account it can be said that there was no transparency in the process so adopted by the authorities taking decision accepting the tender of respondent No.5. In support of his this contention that the background of the facts and circumstances the order so given to respondent No.5 for supply on no account can be said to be arbitrary which does not require any interference, the learned counsel for respondent Nos 1 to 4, Mr. Mahanta, has referred to some of the reported cases in his favour. They are (1) (1995) 1 SCC 478 , New Horizons Ltd & another vs. Union of India & others; (2) AIR 1998 Orissa 11, Rashtriya Pariyojana Nigam Ltd vs. Orissa Water Supply and Sewerage Board & others. They are reported case so referred by the learned counsel for respondent Nos 1 to 4, Mr. Mahanta submitted that in case, the Tender Committee finds the tender of a particular person not workable, the rejection of such tender also after considering the technical and financial aspects and his past performance, cannot be interfered by the High Court under Article 226 of the Constitution.
Mahanta submitted that in case, the Tender Committee finds the tender of a particular person not workable, the rejection of such tender also after considering the technical and financial aspects and his past performance, cannot be interfered by the High Court under Article 226 of the Constitution. It is pointed out that in the instant case though the present petitioner was the lowest tenderer, but since the full earnest money was not deposited, the rates quoted were below by more than 20 per cent of the standard reasonable rate so fixed by the committee and also because of his past performance being also not found satisfactory as indicated by the authorities, rightly his tender, though lowest, was not accepted and in support of his this contention, learned counsel Mr. Mahanta, has referred to para 11 of this judgment, in which also the case of the lowest tenderer was not so considered in similar circumstances. 8. The learned counsel for respondent Nos 1 to 4 has also relied upon the Tata Cellular case, (1994) 6 SCC 651 (supra), also referred to on behalf of the petitioner's side. Mr. Mahanta has particularly referred to its para 94, and has submitted that the modern trend points to judicial restraint in administrative action; the Court does not sit as a Court of appeal but merely reviews; the manner in which the decision was made; and 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, and that the terms of the invitation to tender cannot be opened to judicial scrutiny because the invitation to tender is in the realm of contract; and, 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; and in such circumstances, thus, the Govt must have freedom of contract.
More often than not, such decisions are made qualitatively by experts; and in such circumstances, thus, the Govt must have freedom of contract. Such decisions can only be tested by the application of the Wednesbury principle of reasonableness and must be free from arbitrariness and it has to be seen whether it is affected by bias or actuated by certain mala fide intention; and in the instant case it is pointed out with all emphasis that there was no mala fide intention, no arbitrariness, there was perfect transparency and the process of decision was so taken within the norms, which will be so apparent by looking into the records which was so placed for perusal. 9. In support of his this contention, Mr. Mahanta also claimed himself to be fortified by a report case, (1989)1 SCC 89 , Fasih Chaudhary vs. Director General, Doordarshan & others, that being the position, hence the prayer is that since there is no merit in the civil rule petition and on no account it can be said that the decision so taken in the hands of respondent Nos. 1 to 4 are arbitrary and against the principle of natural justice, the same does not require any interference. 10. Mr. N. Dutta, learned counsel appearing for respondent No. 5 has also argued almost on the same line submitting that on no account it can be said that respondent Nos. 1 to 4 had any mala fide intention as to accept the tender of respondent No. 5 out of the way. The contract, after accepting the tender was given to respondent No.5 by respondent Nos 1 to 4 on 10.10.1998, the agreement was so signed on 20.11.1998 between respondent Nos 1 to 4 and respondent No.5, and the security deposit as per the direction was also made and that respondent No.5 by now has spent a huge amount by constructing godown, etc as to give proper hygienic Atta, etc.
Lastly, it is pointed out by Mr.Dutfa that since there is no arbitrariness and the matter is decided in the hands of the experts even fixing a standard reasonable rate prior to opening the tenders and since the tender so given by the petitioner was more than 20 percent below the rate and the full amount of earnest money was also not being deposited and the petitioner also having not good history when on previous occasion he was given an order to supply Atta, etc, it was in the fitness of affair that this time his tender was not accepted and it was so given after scrutiny to respondent No. 5. k 11. After hearing the learned counsel for the petitioner Mr. R. Gogoi, also Mr. KK Mahanta and Mr. N. Dutta, learned counsel appearing-for the respondents also after going through the contents of the civil rule petition with that of the affidavits-in-opposition so filed, keeping in mind also the additional affidavit so filed after the inspection of the papers so supplied by the respondent Nos. 1 to 4 fixing the standard reasonable rate and the additional affidavit-in-opposition filed and the reply thereto given from the respondents side controverting the same in detail which need not be repeated, find, after the consideration that there is much of strength in the argument so advanced by the learned counsel representing respondent Nos. 1 to 4 with regard to the order so given to respondent to. 5 for supply of Atta, etc, as per the terms and conditions, which, in my considered opinion, does not seem to be arbitrary or irrational and in any way suffering from mala fide intention for the reason that by the perusal of Annexure I it transpires that three different dates while inviting tenders were so announced at the very first occasion the first, second and third dates given as to face any situation or eventuality and that in the first tender so opened in August, 1998, though respondent No.5 participating was the lowest tenderer, on the same principle his tender was not accepted. In the second tender, because of the petitioner's tender being more than 20 percent short of the standard reasonable rate so fixed, respondent Nos.
In the second tender, because of the petitioner's tender being more than 20 percent short of the standard reasonable rate so fixed, respondent Nos. 1 to 4 found the same to be fictitious and not reliable and had all the apprehensions that the petitioner may back out because it was not feasible as to supply the Atta, etc, at such low rate hence they had taken the decision as to give the offer to the second lowest tenderer. By looking into the records so placed, I find that prior to the opening of the tenders, standard reasonable rate was so fixed by three experts and the grounds are also mentioned therein specifically for rejecting the tender of the present petitioner, particularly, on two grounds, because of the full earnest money not being deposited, which was a must, and also because of the quotation so given was short by more than 20 percent of the standard reasonable rate fixed by the Tender Purchase Committee comprising of high Defence Officers. As regards the Tata Cellular case (supra) j mentioned, particularly, its para 94, and the Rashtriya Pariyojana Nirman Nigam Ltd, (supra) it transpires that while invoking the powers under Article 226 of the Constitution this Court has to be very much careful in interfering with any such decision taken by the administrative authorities, unless the process of decision so arrived at is on the very face of it found to be arbitrary and against the principles of natural justice. In my considered opinion, in the instant case, the petitioner has thus failed as to show that the process of decision so taken suffers from arbitrariness. The respondent Nos. 1 to 4, in such circumstances, had no alternative but to give the offer to the second lowest tenderer, though his quotation was also below the standard reasonable rate so fixed, but, particularly by looking into the first four items, it will transpire that it was not so low, as not to be believed and to declare the same also fictitious at the very outset in comparison / to the quotation so given by the petitioner, though, admittedly in the second tender called for the petitioner was the lowest tenderer. 12. Consequently, finding thus no merit in this civil rule petition, the same is hereby dismissed. Any interim order granted by this Court in connection with this matter stands vacated.
12. Consequently, finding thus no merit in this civil rule petition, the same is hereby dismissed. Any interim order granted by this Court in connection with this matter stands vacated. This also disposes of the two Misc. Cases bearing Nos. 1352 of 1998 and 1354 of 1998, so pending. Parties to bear their own costs.