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2005 DIGILAW 1212 (PNJ)

Raj Singh v. State Of Haryana

2005-11-28

D.K.JAIN, HEMANT GUPTA

body2005
Judgment D.K.Jain, J. 1. Rule DB. 2. Since a common issue is involved in all the three writ petitions, these are being disposed of by this common judgment. 3. Challenge in these writ petitions, under Article 226 of the Constitution of India, is to the legality and propriety of the decision taken by the Deputy Commissioner-cum-Chairman, Tender Committee for Labour and Cartage Contract for Foodgrains, District Panipat, respondent No.3 herein, to award the work of labour and cartage contracts to respondent No. 7 (respondent No. 5 in C.W.P. Nos. l 1955 and 12455 of 2005), hereinafter referred to as the successful bidder. The petitioners pray for a writ in the nature of certiorari quashing the award of the said work. 4. The background facts, giving rise to the present writ petitions, in brief, are as under:- Some time in March, 2005, Haryana Warehousing Corporation, District Office, Panipat, respondent No,4 herein, issued Notice Inviting Tender ( for short, the NIT) inviting tenders from enlisted and non-enlisted labour and cartage contractors for the labour and cartage work except handling of foodgrain stocks in the godowns under FCI guarantee scheme, falling in District Panipat, for the year 2005-2006 in respect of its various mandis, The last date for submission of the tenders was 17.3.2005 and the tenders were to be opened on the same day under the chairmanship of respondent No.3, in the presence of the tenderers. Pursuant to the said NIT, the petitioners submitted their tenders for Madlauda Mandi (petitioner in C.W.P. No. 5671 of 2005), Samalkha Mandi (petitioner in C.W.P. 11955 of 2005) and Bapoli Mandi (petitioner in C.W.P. No. 12455 of 2005) along with requisite earnest money deposit. According to the petitioners, the tenders were opened and finalised on 22.3.2005 in the presence of all the tenders. Since the rates quoted by the petitioners were the lowest, their tenders were accepted and finalised after negotiations, in terms of the instructions issued by the State of Haryana, on 21.3.2005. The stand of the petitioners is that since their tenders had been accepted, they approached the office of the District and Food Supplies Controller for execution of formal agreement, but were put off on one pretext or the other, on the plea that file was pending with respondent No.3. The petitioners claim to have submitted their joining report on 1.4.2005. The stand of the petitioners is that since their tenders had been accepted, they approached the office of the District and Food Supplies Controller for execution of formal agreement, but were put off on one pretext or the other, on the plea that file was pending with respondent No.3. The petitioners claim to have submitted their joining report on 1.4.2005. However, they were informed that contracts had been awarded to the successful bidder. Aggrieved by the said action on the part of the official respondents, the present petitions have been filed, wherein it is pleaded that the award of contracts to the said respondent is absolutely illegal, arbitrary and violative of the instructions issued by the Haryana Government. 5. In the written statement filed on behalf of respondent No. 3, it is stated that though tenders were opened on 22.3,2005, but they were not finalised on that date as it was decided by the Tender Committee to compare the rates of the adjoining districts, which, on comparison, were found to be lower than the rates offered by the petitioners. Ultimately, it was decided to call meeting of all the tenderers on 31.3.2005 for re-negotiation of rates. Intimation in this regard was sent to all the tenderers and although, on the said date, the petitioners were present, they did not participate in the negotiations. It is pointed out that on account of the negotiations held by the Tender Committee, headed by respondent No.3, the rates offered by the successful bidder were found to be lower than the rates offered by the petitioners and therefore, keeping in view the public interest and to save loss to the State exchequer, the contracts were awarded to the successful bidder. It is pleaded that the while allotting all the three contracts to him, the official respondents have acted in larger interest of the State and therefore, its action cannot be termed as arbitrary. In support of the plea that the Tender Committee was competent to renegotiate the rates, reliance is placed on condition No.5 of the NIT. which reads as follows:- The sanctioning authority reserves the right to negotiate or accept/reject any tender without giving any reason. After the final acceptance of the tender by the Tender Committee, no request for further increase of rate for any operation shall be entertained. which reads as follows:- The sanctioning authority reserves the right to negotiate or accept/reject any tender without giving any reason. After the final acceptance of the tender by the Tender Committee, no request for further increase of rate for any operation shall be entertained. A reference is also made to paragraph 5 of the tender notice, which reserves with the competent authority the right to negotiate or to accept or reject any tender without assigning any reason. It is pleaded that the impugned decision taken in the public interest" is neither arbitrary nor unreasonable, warranting interference by this Court. Lastly, it is pointed out that the successful bidder has already completed about 80% of the work awarded. 6. Written statement filed on behalf of the other respondents are also on similar lines. 7. We have heard Mr. Ravi Kant Sharma, learned Counsel appearing for the petitioners and Ms. Ritu Bahri, Deputy Advocate Genera), Haryana on behalf of respondents No. l to 3. We have also perused the original record produced by learned Counsel for the State. 8. Having considered the matter in the light of the material on record, we are of the view that the impugned decision to allot the work in favour of the successful bidder, in respect of all the three mandis, cannot be sustained. 9. True, that Judicial restraint in interfering in matters relating to administrative functions, particularly in contractual matters, is the order of the day and unless the Court is convinced that the decision-making process, which is subject to judicial scrutiny, is vitiated by illegality, mala fides or unreasonableness or arbitrariness, the administrative action is not interdicted. It is equally true that the award of contract by a State agency is essentially a commercial transaction and mode of entering into contract can be chosen by such agency by fixing such terms of invitation to tender, as are appropriate, but once the terms of the NIT are finalised and announced/notified, these have to be adhered to scrupulously. Any relaxation or modification of the tender conditions has to be strictly in accordance with the prescribed conditions, (see: W.B. State Electricity Board v. Patel Engineering Co. Ltd and Ors. (2001)2 S.C.C. 451). By now, it is well-settled that even in contractual matters, a public authority does not have an unfettered discretion to "act arbitrarily on its own will. Any relaxation or modification of the tender conditions has to be strictly in accordance with the prescribed conditions, (see: W.B. State Electricity Board v. Patel Engineering Co. Ltd and Ors. (2001)2 S.C.C. 451). By now, it is well-settled that even in contractual matters, a public authority does not have an unfettered discretion to "act arbitrarily on its own will. Its actions have necessarily to be in conformity with the norms recognised by the Courts while dealing with public property even if certain measure of "free play in joints" is to be conceded to such authorities. While public interest is paramount, yet there should not be any element of arbitrariness in the matter of award of contract and all participants in the tender process have to be treated alike, (see: Union of India v. Dinesh Engineering Corporation and Anr. and Monarch Infrastructure (P) Ltd v. Commissioner, Ulhasnagar, Municipal Corporation and Ors. 10. As noticed above, in the present case, all the bids, received pursuant to the NIT, were opened on 22.3.2005, as originally scheduled. Though the stand of the petitioners is that negotiations were held by the Tender Committee with them and being the lowest bidders, their tenders were accepted, but, according to the official respondents, it was not so as the Tender Committee had decided to compare the rates with the adjoining districts. When it found that the rates offered by the petitioners were on the higher side, it decided to call all the tenderers for further negotiations. This procedure is stated to have been adopted by the Tender Committee, in terms of the instructions issued by the Director, Food and Supplies, Haryana, vide memo No. SOMP-1-2005/2575 dated 16.2.2005. Paragraph (ii) of the said instructions is in the following terms: It should be tried that the contracts are finalised on the day of opening. The Committee is fully competent to undertake open negotiation with various tenders individually or jointly as deemed fit for the purpose to arrive at uniform and lowest reasonable rates as far as possible. The committee is also competent to accept or reject the consent of the tenderer who has offered lowest rate in comparison with the rates offered by the other tenderer for any agency/agencies at the time of negotiations without considering the fact that he has not given tenders/deposited earnest money for that agency/agencies. 11. The committee is also competent to accept or reject the consent of the tenderer who has offered lowest rate in comparison with the rates offered by the other tenderer for any agency/agencies at the time of negotiations without considering the fact that he has not given tenders/deposited earnest money for that agency/agencies. 11. However, the Tender Committee failed to notice fresh instructions, issued by the Director, vide memo No. SOMP-1-2005/4565 dated 21.3 2005. Paragraph 2 of the said instructions, material for our purpose, reads as under:- The tender notice and its conditions and other instructions were issued vide letter under reference in the para No. 7 of the letter, tender committee have been authorised to negotiate each tenderer or all the tenderers to get the competitive rates after reconsidering the decision has been taken by the Government to ensure the transparency and to fix the competitive rate if the committee think necessary, the action of the negotiation be done only with the lowest tendered/tenderers (Emphasis supplied by us). 12. It is manifestly clear from the latter instructions that the Tender Committee could negotiate only with the lowest tenderer and not with all the bidders, as was admittedly done on 31.3.2005. In the light of the said instructions, which were binding on the Tender Committee, the petitioners were justified in refusing to participate in fresh negotiations, which took place on 31.3.2005, when all the tenderers were invited for the said purpose, in violation of the departmental instructions/guide-lines. 13. It is also pertinent to note from the proceedings of the Tender Committee, placed before us, that except for the successful bidder, no other bidder had participated in the negotiations. Another interesting feature, which emerges from the said proceedings, is that in the bid submitted by the successful bidder, in respect of Madlauda Mandi, the rate quoted was 500% above the scheduled rates (ASOR), whereas the rate quoted by the petitioner was 303%, which was the lowest amongst the five bidders, but the successful bidder finally reduced his rate to 295% ASOR and was declared successful. Similarly, in respect of Samalkha Mandi, as against the rate quoted by the petitioner at 265% ASOR, the rate of the successful bidder was 398%, which he finally reduced to 220% ASOR after the stated negotiations. Similarly, in respect of Samalkha Mandi, as against the rate quoted by the petitioner at 265% ASOR, the rate of the successful bidder was 398%, which he finally reduced to 220% ASOR after the stated negotiations. Similarly, in respect of Bapoli Mandi, as against the originally quoted rate of 500% ASOR, he reduced the rate to 200% ASOR, though the rate originally quoted by the petitioner was 290% ASOR. 14. It is thus, clear from the factual scenario, projected above, that respondent No.3, while evaluating the bids received, did not strictly adhere to the instructions issued by the State Government. If the Tender Committee was of the view that the rates quoted by the tenderers were higher than the rates in the adjoining districts, as per the instructions, it was open to it to negotiate with the lowest tenderer, namely, the petitioner and if the rates, offered by the lowest tenderer, were found to be still on the higher side, the Tender Committee was competent to cancel the NIT and opt for fresh bids. Having opened and evaluated all the bids in the presence of the bidders, the Tender Committee could not resort to negotiations with all the tenderers. In fact, this exercise amounted to an open bidding, which the tender conditions did not permit. Under the circumstances, we have no hesitation in holding that the impugned decision to award the three subject-contracts to the successful bidder was patently in violation of the tender conditions and the instructions issued by the State Government and therefore, illegal. 15. Resultantly, all the writ petitions are allowed; the award of the contracts in question in favour of the successful bidder (respondent No.7 in C.W.P. No. 5671 of 2005 and respondent No. 5 in C.W.P. Nos. 11955 and 12455 of 2005) is quashed and the Rule is made absolute. 16. Since it was stated before us by learned Counsel appearing for the successful bidder that the entire work awarded has already been executed, we direct that no further work shall be assigned to him and in case, some foodgrains still remain to be transported, it will be open to respondent No. 3 to negotiate with the petitioners herein. If they are satisfied with their offers, the balance work shall be awarded to them, failing which fresh tenders may be invited. If they are satisfied with their offers, the balance work shall be awarded to them, failing which fresh tenders may be invited. Balance amount, if any, due to the successful bidder for the work executed by him may be released as per the agreed terms. 17. However, in the circumstances of the case, there will be no order as to costs.