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2005 DIGILAW 726 (GAU)

Abhinandan Trading (P. ) Ltd. v. State of Assam

2005-09-27

RANJAN GOGOI

body2005
JUDGMENT Ranjan Gogoi, J. 1. The very same order dated 14.7.2005 granting the contract for supply of potable alcohol/rectified spirit to the Tinsukia Excise Warehouse in favour of the respondent No. 3 being the subject-matter of challenge in both the writ petitions, the writ petitions were heard analogously and are being disposed of by this common judgment and order. 2. A notice inviting tenders for wholesale supply of potable alcohol/rectified spirit (Grade-I) to the Excise Warehouse at Tinsukia was published by the Commissioner of Excise, Government of Assam, on 29.1.2005. The writ petitioner In W.P.(C) No. 5305 of 2005, Satya Capital Services (P.) Ltd., submitted its tender quoting an amount of Rs. 15.10 per LPL for award of the contract. The petitioner in W.P.(C) No. 5132 of 2005, Abhinandan Trading (P.) Ltd., quoted its rate of Rs. 18.95 per LPL whereas the respondent No. 3, Rangpur Trade Co. (P.) Ltd., quoted the rate of Rs. 17.11 per LPL. Eight tenders in all including those submitted by the parties to the present proceedings, as noticed above, were received pursuant to the NIT dated 29.1.2005. The tenders were opened on 11.3.2005 and after processing the same the Commissioner of Excise submitted his report to the State Government on 10.5.2005. In the report so submitted the Commissioner of Excise found three of the tenders including the one submitted by the writ petitioner in W.P.(C) No. 5305 of 2005 to be defective. The remaining five tenders including those of the writ petitioner in W.P.(C) No. 5132 of 2005 and the respondent No. 3 were forwarded to the State Government for consideration. In the aforesaid report submitted to the State Government, the Commissioner of Excise had worked out the viable/reasonable rate for supply of potable alcohol/rectified spirit to the warehouse at Rs. 18.23 per LPL. The aforesaid viable/reasonable rate was worked out by the Commissioner of Excise pursuant to Clause 28 of the NIT and after taking into account the various factors specifically enumerated in the aforesaid Clause 28 of the NIT. The writ petitioner in W.P.(C) No. 5305 of 2005 having come to know that the tender submitted by it has been found by the Commissioner of Excise to be defective instituted a writ proceeding before this Court which was registered and numbered as W.P.(C) No. 4200 of 2005. The writ petitioner in W.P.(C) No. 5305 of 2005 having come to know that the tender submitted by it has been found by the Commissioner of Excise to be defective instituted a writ proceeding before this Court which was registered and numbered as W.P.(C) No. 4200 of 2005. In the aforesaid writ petition the two alleged grounds on which the tender of the aforesaid writ petitioner was found to be defective, i.e., that the petitioner had not submitted up to date sale tax clearance certificate and that the petitioner had defaulted in running the North Lakhimpur Excise Warehouse which was earlier granted to it was specifically challenged. This Court, while entertaining the aforesaid writ petition, i.e., W.P.(C) No. 4200 of 2005 by an order dated 8.6.2005, took note of the submissions advanced on behalf of the petitioner in the case which were to the effect that the petitioner had a valid sales tax clearance certificate for the financial year ending 2005 and that the petitioner was not a lessee, at any point of time, in respect of the North Lakhimpur Warehouse. Accordingly, this Court directed that the aforesaid two contentions advanced before the Court should be taken into account by the authority while making final settlement pursuant to the NIT issued and the tenders received in response thereto. Thereafter, on 20.7.2005 the State respondents in W.P.(C) No. 4208 of 2005 filed an affidavit before the Court stating that the tender submitted by the petitioner was found to be a valid tender and the same was considered along with other valid tenders deceived and pursuant thereto by an order dated 14.7.2005 the contract for the supply of potable alcohol rectified spirit was awarded to M/s. Rangpur Trading Co. (P.) Ltd., i.e., respondent No. 3. On the basis of the stand taken by the State in W.P.(C) No. 4208 of 2005 the aforesaid writ petition was withdrawn and thereafter the petitioner in the said writ petition had instituted W.P.(C) No. 5305 of 2005 which has been heard along with the connected writ petition, i.e., W.P.(C) No. 5132 of 2005. 3. On the basis of the stand taken by the State in W.P.(C) No. 4208 of 2005 the aforesaid writ petition was withdrawn and thereafter the petitioner in the said writ petition had instituted W.P.(C) No. 5305 of 2005 which has been heard along with the connected writ petition, i.e., W.P.(C) No. 5132 of 2005. 3. Shri H. Roy, learned senior counsel appearing for the writ petitioner in W.P.(C) No. 5305 of 2005, Shri A.K, Goswami, learned senior counsel appearing in W.P.(C) No. 5132 of 2005 as well as Shri A.C. Buragohain, learned Additional Advocate General, Assam, appearing for the official respondents in both the cases have been heard. Shri B.K. Goswami, learned senior counsel appearing for the respondent No. 3 in both the cases has also been heard. The records in original placed before the Court by the official respondents have been duly perused and considered. 4. The writ petitioners contend the tender submitted by the respondent No. 3 to be an invalid tender and hence incapable of acceptance for award of the contract in favour of the said respondent. According to the writ petitioners, the tender of the respondent No. 3 was not accompanied by a certificate from the Registrar of Companies furnishing the names of the Directors as well as the photographs of the said Directors as is mandatorily required under Clause 2(a)(i) of the NIT dated 29.1.2005. The petitioners contend that instead of what is contemplated by the aforesaid clause of the NIT what was submitted by the respondent No. 3 is a certified copy of the Form 32 issued by the Registrar of Companies disclosing as to which of the Directors of the respondent No. 3 company had resigned and who are the office. The photographs or the Directors as required by the aforesaid Clause 2(a)(i) had not been furnished at all. That apart, it is the contention of the petitioners that one Prasanna Dutta who has another tenderer is the father of one Jayanta Dutta who is a Director of the respondent No. 3 company and, therefore, the tender submitted by the respondent No. 3 is contrary to the requirement of one person/firm/company submitting only one tender a stipulated under Clause 2(a)(iv) of the NIT dated 29.1.2005. The further argument advanced on behalf of the petitioners is with regard to the power and competence of the respondents to award the contract to a tenderer on the basis of a viable range/rate to be worked out under Clause 28 of the NIT. In this regard reliance has been placed on a judgment of the Apex Court in the case Dutta Associates (P.) Ltd. v. Indo Mercantiles (P.) Ltd. and Ors. reported in (1997) 1 SCC 53 . Alternatively, it is argued on behalf of the petitioners that even if the respondent authorities are understood to have the power and competence to award the contract on the basis of such viable rate/range as contemplated in Clause 28 of the NIT, in the instant case the records do not reveal that the said exercise was performed by the respondents in a manner which can have judicial acceptance. It must be put on record at this stage, that the records in original produced by the official respondents were allowed to be inspected by the learned Counsels for all the contesting parties so as to ensure an effective and meaningful adjudication of the issues arising for determination in the present case. 5. The arguments advanced on behalf of the petitioners have received a common response from the official respondents as well as the private respondent No. 3. The conditions stipulated in Clause 2(a)(i) of the NIT dated 29.1.2005, according to the learned Counsel for the respondents, do not impose any mandatory requirement, non-compliance of which will invalidate a tender. Clause 2(a)(iv), according to the respondents, is not attracted to the present case. The exercise of working out a viable range/rate on the basis of which the award of the contract is to be considered has been sought to be justified by the respondents by the necessity of obviating speculative and low rates being offered by tenderers which, if accepted, would jeopardize the supply of rectified spirit/potable alcohol to the warehouse. The decision of the Apex Court in Dutta Associates (P.) Ltd. (supra) has been sought to be explained by the respondents on the basis of the fact that in the NIT pursuant to which the viable rate/range was worked out in Dutta Associates, there was no indication of any such action being undertaken by the State. The decision of the Apex Court in Dutta Associates (P.) Ltd. (supra) has been sought to be explained by the respondents on the basis of the fact that in the NIT pursuant to which the viable rate/range was worked out in Dutta Associates, there was no indication of any such action being undertaken by the State. In the present case Clause 28 of the NIT dated 29.1.2005 specifically provided for working out a viable range/rate and, therefore, according to the learned Counsels for the respondents, the decision of the Apex Court in Dutta Associates (P.) Ltd. (supra) is distinguishable. It is the further case of the respondents that the viable range in the present case was fixed by the Government by having regard to all relevant factors and the offer made by the respondent No. 3 being the best the offers within the viable range as worked out, the contract was awarded to the said respondent in public interest. 6. The rival submissions advanced on behalf of the parties have received the due and anxious consideration of the Court. A notice inviting tender (NIT), in usual practice, contains several stipulations adherence to which is contemplated from a prospective bidder/tenderer. However, all such stipulations/conditions may not be mandatory and a NIT can consist of stipulators/conditions which go to the core of the matter and others which do not. The latter category of conditions/stipulations have all long been judicially understood to be non-mandatory or directory requirements permitting substantial compliance with the same. In the present case, Clause 2(a)(i) stipulates three requirements - the first is that in case a tenderer is a company, the tender submitted must be accompanied by a certificate from the Registrar of Companies with regard to the names and particulars of the Directors. The respondent No. 3 along with its tender did not submit the said certificate but had enclosed certified copies of Form 32 certified by the Registrar of Companies, which disclosed the names of the Directors of the company. The purpose of incorporating the said requirement in the NIT is to establish the identity of the Directors. The document submitted by the respondent No. 3 along with its tender having established the said identity the Court is of the view that specific insistence on a certificate by the Registrar of Companies would be an idle formality. The purpose of incorporating the said requirement in the NIT is to establish the identity of the Directors. The document submitted by the respondent No. 3 along with its tender having established the said identity the Court is of the view that specific insistence on a certificate by the Registrar of Companies would be an idle formality. The requirement of submission of the photographs of the Directors, which is the second condition stipulated by Clause 2(a)(1) is, again, a requirement imposed to establish the identity of the Directors. It is not the case of the petitioners that there is any doubt or dispute with regard to the identity of any of the Directors of the respondent No. 3-company. In such a situation it is the considered view of the Court that the absence of photographs should be construed by the Court to be a sound basis for treating the tender of the respondent as defective/invalid. Insofar as the third requirement stipulated by Clause 2(a)(i) is concerned, the respondent No. 3 has met the aforesaid requirement by submitting the certificate of its incorporation. Clause 2(a)(iv) of the NIT which has been alleged to have been breached by the respondent No. 3 would hardly be attracted to the facts of the present case. The aforesaid Clause 2(a)(iv) requires a person/firm/company to submit one tender. It is nobody's case that the respondent No. 3 has submitted more than one tender. What is contended is that one Prasanna Dutta who is the father of a Director of the respondent No. 3 Company had also submitted a tender. The above fact would hardly attract any violation of Clause 2(a)(iv) inasmuch as a company would have its own identity, distinct and different from individuals who may be associated with it in one way or the other. 7. This would take the Court to the question of viable rate/range as has been worked out in the present case and the award of the contract on the basis thereof. There are two connected facets of the question - one is the correctness of the manner in which viable rate/range has been determined and its application to the award of the contract ; the other is the power and competence of the State to fix such a viable rate/range. There are two connected facets of the question - one is the correctness of the manner in which viable rate/range has been determined and its application to the award of the contract ; the other is the power and competence of the State to fix such a viable rate/range. A judicial exercise must be limited to providing only such answers that are strictly necessary for the purposes of deciding the case and no question in respect of which an answer could be awaited should be offered by the Court. Keeping in view the above principle, in the facts of the present case, the Court is inclined to answer the question of the correctness of the manner of determination of the viable rate/range and its application to the award of the contract in favour of the respondent No. 3 in the first instance, and thereafter, if necessary, to proceed to answer the larger question, i.e., the power and competence of the State to fix the viable rate/range. 8. Clause 28 of the NIT, it must be noticed at the outset contemplates a viable range and not a viable rate. The reason is obvious. A viable range will offer more flexibility than a viable rate inasmuch as in a given case none of the rates quoted by the tenderers may coincide with the viable rate as may be fixed. In such a situation, it will become necessary to depart from the viable rate and rely on a viable range instead. This is precisely why Clause 28 of the NIT contemplates a range and not a rate. In the present case, the Commissioner of Excise, notwithstanding the clear stipulation in Clause 28, had fixed a viable rate (termed as reasonable rate) and not a range. When the recommendation of the Commissioner of Excise reached the table of the Commissioner and Secretary to the Government of Assam, Excise Department, the viable rate as fixed by the Commissioner, i.e., Rs. 18.23 per LPL was disagreed with on the ground that in fixing the said rate the transportation charge was assessed on the lower side and the element of profit margin had also not been considered. According to the Departmental Commissioner and Secretary, the correct viable rate should have been Rs. 24 per LPL. After recording the aforesaid finding the Departmental Commissioner and Secretary took note of the fact that the said rate, i.e., Rs. According to the Departmental Commissioner and Secretary, the correct viable rate should have been Rs. 24 per LPL. After recording the aforesaid finding the Departmental Commissioner and Secretary took note of the fact that the said rate, i.e., Rs. 24 per LPL, being high, will affect the consumer and, therefore, taking into account the lower rates offered by the re-commended firms, the range of 17.11 to 18.95 per LPL was suggested as the viable range. However, thereafter, the Commissioner and Secretary, Excise Department, on consideration of the valid tenders left in the fray found the rate offered by the respondent No. 3 and the petitioner in W.P.(C) No. 5132/2005 to be nearest to the viable rate of Rs. 18.23 per LPL calculated by the Commissioner of Excise. Amongst the two, finding the rate quoted by the respondent No. 3 to be lower, it was suggested that the contract be awarded in favour of the respondent No. 3. The aforesaid recommendation of the Commissioner and Secretary was accepted by the departmental Minister whereafter the impugned order dated 14.7.2005 was issued. 9. Under Clause 28 of the NIT dated 29.1.2005 the viable range is to be fixed by the Commissioner of Excise with the approval of the Government. The Commissioner of Excise did not fix a range Taut had fixed a rate. Even the rate fixed by the Commissioner of Excise was disagreed with by the departmental Commissioner and Secretary who noted in the file that the correct rate should be Rs. 24 per LPL. The departmental Commissioner and Secretary having determined the viable rate at Rs. 24 per LPL, naturally, if the need to fix the viable rate is to be understood on the manner suggested by the official respondents, the contract should have been awarded at the rate fixed and if no such rate had been forthcoming the contract should have been offered at a near about rate. Such a course of action alone could have ensured the exercise forthcoming, obviously, the range fixed and recommended has to be understood by the Court to he without any acceptable basis. Not only that, after working out the viable range as aforesaid, the departmental Commissioner and Secretary once again fell back on the viable rate fixed by the Commissioner of Excise, i.e., Rs. Not only that, after working out the viable range as aforesaid, the departmental Commissioner and Secretary once again fell back on the viable rate fixed by the Commissioner of Excise, i.e., Rs. 18.23 per LPL and on the basis of the said rate, which was earlier rejected by him, the contract was offered to the respondent No. 3 at his offered rate of Rs. 17.11 per LPL, on the ground that the said rate is the closest lower rate to Rs. 18.23 per LPL as fixed by the Commissioner of Excise. When the aforesaid rate of Rs. 18.23 per LPL as fixed by the Commissioner of Excise was rejected by the departmental Commissioner and Secretary it is incomprehensible as to how the said rejected rate could furnish a reasonable basis for offering the contract to respondent No. 3. 10. The net result of the above discussion is that the impugned grant made in favour of respondent No. 3 does not disclose any logical, acceptable and/or reasonable basis. The same, therefore, cannot have the Court's approval. Accordingly, the impugned order dated 14.7.2005 awarding the contract of supply of potable alcohol/rectified spirit to the Tinsukia Excise Warehouse in favour of respondent No. 3 is hereby set aside. The interference made by the Court would now require the State Government to redo the exercise which it may so perform in accordance with law and without any delay. During the interregnum the State Government may make such alternative arrangement, as may be considered necessary and appropriate with such person, firm or company as may be found suitable. 11. The conclusion of the Court as recorded above having been arrived at on a consideration of the correctness of the manner of working out the viable rate/range and its application in the selection of the eligible tenderer, this Court must be understood to have expressed no opinion on the power and competence of the State Government to fix such a viable rate/range by incorporation of a specific clause in the NIT which question is left open to be decided in an appropriate situation. 12. Both the writ petitions are accordingly allowed as indicated above. Writ petition allowed