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2006 DIGILAW 213 (JK)

New Jammu Flour Mills Pvt. Ltd. v. Union Of India

2006-09-29

J.P.SINGH

body2006
Background facts 1. Food Corporation of India, Regional Office, Jammu, issued an Emergent Notice under No. Stg.32(3)/JK/Tender/05-06/1793 dated 29.07.2006 inviting on the spot offers from financially sound parties having sound business competence and fulfilling eligibility requirements as per Model Tender Form (MTF) clauses for appointment of Road Transport Contractor on day-to-day basis, to be opened on 01.08.2006 at 12.00 noon. Complete failure of State Road Transport Corporation to supply the required number of trucks to carry the food grains to various parts of the State, had necessitated the issuance of this Emergent Notice which, inter alia, provided that since acute scarcity conditions were prevailing in the entire State, the working of the successful Transport Contractor would be monitored for a period of ten (10) days and in the event of short supply of trucks, the work would be carried out at his cost till finalization of regular Tender Enquiry. The Food Corporation of India ( hereinafter FCI for short) issued a Tender Notice for appointment of Regular Transport Contractors for transportation of food grains Ex-Jammu to various centers mentioned in the tender notice under Two Bid System from financially sound parties possessing sound business competence and eligibility. This notice was published on 01.08.2006. One hundred and five (105) tender documents were purchased by different parties. Fifty eight (58) tender documents were received before the date fixed for the purpose. A committee of officers comprising fourth to eighth respondents examined the Technical Bids and prepared comparative statements showing details of documents attached with technical bids for determining the eligibility of tenderers, who had participated in the Tender Enquiry. M/S New Jammu Flour Mills Pvt. Ltd., Sarore, Jammu, the writ petitioner offered its Technical Bid for three centers viz. (i) Jammu to Baramulla; (ii) Jammu to Kupwara; and (iii) Jammu to Kishtwar; alongwith Rupees fifty lacs as earnest money. The petitioner appears to have been informed in terms of communication dated 01.09.2006 that the opening of the price bid had been fixed on 01.09.2006 at 2.30 p.m., at the Regional Office of the Food Corporation of India. The petitioner appears to have been conveyed that the price bids offered by the petitioner for three centers had not been opened. The petitioner thereafter filed OWP No. 611/2006 seeking a direction to the respondents to open the price bids offered by the petitioner for three centers. The petitioner appears to have been conveyed that the price bids offered by the petitioner for three centers had not been opened. The petitioner thereafter filed OWP No. 611/2006 seeking a direction to the respondents to open the price bids offered by the petitioner for three centers. On coming up of this petition for consideration after notice, a communication is stated to have been produced by the respondents with a view to make the pending writ petition infructuous, says the petitioner. This communication No.Stg.32(3)/JK/Tender/06/376 dated 02.09.2006 emanates from premeditated exercise of the respondents to oust the petitioner from the competition to facilitate completion of tender enquiry in favour of a particular contractor. It is further stated by the petitioner that there were nine participants out of which four formed a cartel belonging to one Ch. Nagar Singh who, for the past some years, had been making continuous efforts to continue with the same contract. 2. The petitioner has questioned the Emergent Notice dated 29.07.2006, communication dated 02.09.2006 of the FCI, besides clause (iii) of the Technical Bid document. Communication dated 02.09.2006 and clause (iii) of the Technical Bid document are reproduced hereunder for facility of reference:- @TBLCEN = "Communication dated 02.09.2006 @TBLCEN = FOOD CORPORATION OF INDIA Ref. No. Stg.32(3)/JK/Tender/05-06/376 Dated: 02.09.2006. The Manager, M/S New Jammu Flour Mills (Pvt.) Ltd., Adda Sarore, Bari Brahmana, JAMMU. Sub: Request for written reason for rejection of Tender Sir, Reference your letter No. nil dated 02.09.2006 seeking reasons as to why the tenders submitted for stations of Baramulla, Kupwara have been rejected by FCI and as to why 3rd bid meant for Kishtwar station has not been opened. In this regard it is informed that Technical Bid clause (iii) contemplates the condition concerning experience in respect of eligibility and for your reference the same is reproduced below: "Enclose experience certificate for rake handling and transportation duly obtained from Manufacturer/Handling agency/Govt. Department/PSU/Public Ltd. Company dealing in fertilizers, food grains, cement or similar products during the preceding three years of which the value of single contract should not be less than 50% of the estimated value of present contract (for amount please refer press advertisement with respect to corresponding centre) in any of those three years otherwise work experience not be considered. It has been found that you were not found eligible for consideration for opening of price bid in respect of Stations Jammu-Baramulla, Jammu-Kupwara. It has been found that you were not found eligible for consideration for opening of price bid in respect of Stations Jammu-Baramulla, Jammu-Kupwara. It be also noted that Certificate of experience appended by you alongwith your tender on being verified at our level from the Agency (Commdt. 259 Coy ASC (Sup) Type G C/O 56 APO) having issued the Certificate, it has been noticed that in any of the year preceding the year of tender enquiry in question, your concern had not performed the work of transportation as per the requirements contained in clause (iii) above. However, we have considered your claim of consideration in respect of Jammu-Kishtwar Center viewing that single contract though of 2 years be taken as a single contract and declared you eligible for the said center so because the value of the contract in respect of Contract No.2-15 Corps was over and above the minimum requirement of Jammu-Kishtwar Center. So far as opening of price bid of Jammu-Kishtwar Center is concerned, it be noted that a unanimous decision was taken by the Committee to further seek opinion in respect of your eligibility even for the said Center so that the Corporation is saved from unwarranted litigations at the instance of various participants in the Tender Enquiry. We hope and expect that this would suffice and kindly be informed that date and time of opening of price bid in respect of Jammu-Kishtwar center shall be intimated after the decision in terms of the above is taken. Yours faithfully, Sd/- (I. K. KOUL) MANAGER (STG.) FOR GENERAL MANAGER Clause (iii) of the Technical Bid. "Technical Expertise Enclose experience certificate for rake handling and transportation duly obtained from Manufacturer/Handling agency/Govt. Department/PSU/Public Ltd. Company dealing in fertilizers, food grains, cement or similar products during the preceding three years of which the value of single contract should not be less than 50% of the estimated value of present contract (for amount please refer press advertisement with respect to corresponding centre) in any of those three years otherwise work experience not be considered. Objections on behalf of Respondent Nos. 2 to 8. 3. Respondent Nos. 2 to 8 have filed their objections stating that the present writ petition was barred by principles of Res judicata, in that, the petitioner had filed present writ petition during the continuation of its OWP No. 611/2006. Objections on behalf of Respondent Nos. 2 to 8. 3. Respondent Nos. 2 to 8 have filed their objections stating that the present writ petition was barred by principles of Res judicata, in that, the petitioner had filed present writ petition during the continuation of its OWP No. 611/2006. On merits of the case of the petitioner as to its eligibility for the Technical Bid, the respondents say that a Committee of five officers had been appointed to examine and evaluate the documents, which were to be examined by the competent authority for determining the eligibility of the respective contractors. This Committee, while examining the Technical Bids of various tenderers, noticed that the experience certificate furnished by the petitioner was vague, non-speaking besides not being in consonance with the requirement of clause III(i) of the Technical Bid. It appeared to the respondents that the petitioner had manipulated the certificate for ensuring its eligibility clearance. The certificate issued by Deputy Commandant of 259 Coy/ASC(SU) Type-G C/o 56 APO, indicated that the contract period for the transportation charges of Atta and Wheat amounting to Rs.11,93,08,585/-, was from 17.09.2001 to 17.09.2003, 01.08.2003 to 01.08.2005 and 01.08.2005 to 31.07.2006. This, according to the respondents, would mean that it had total work experience of six years. Finding this certificate to be doubtful, the respondents had sought clarification from Commandant 259 ASC C/o 56 APO. In response to this communication, the Deputy Commandant, with a view to communicate the details of the contract, did not indicate the value of the single contract in any of these six years. The communication/certificate for transportation, though referred to as a single contract of 15 Corps of the value of Rs.3,47,79,303/-, could make the petitioner eligible for Financial Bid for the contract of transportation of food grains from Jammu to Kishtwar. The eligibility of the petitioner for contract of transportation from Jammu to Kishtwar on the strength of the value of a single contract being Rs.3,47,79,303/- was, however, deferred pending receipt of legal opinion in the matter in view of the objections raised by others that the petitioner did not fulfill the requirement of preceding three years experience for this centre as well. 4. 4. Respondents have justified the issuance of Emergent Notice on the basis of emergency, which had arisen because of the failure of the earlier transport contractor, to supply food grains to various parts of the State, resulting in an alarming situation. The terms and conditions of the Bid document have been justified by the respondents saying that the guidelines issued earlier by the Central Vigilance Commission, were followed by fresh guidelines by the CVC on 04.09.2006, which were adhered to by all the Governmental departments and Public Sector Undertakings including the respondents. Respondents have stated that the eligibility clause questioned by the petitioner in this writ petition had been questioned in OWP No. 551/2006. The Court, on finding the Technical Expertise clause to be reasonable, however, dismissed the writ petition, relying on Directorate of Education & ors v. Educomp Datamatics Ltd. & ors (2004) 4 SCC 19. Submissions On behalf of petitioner 5. Sh. U. K. Jalali submits that the experience clause in the Technical Bid document was arbitrary and suffered from the vice of unfairness. Arguing on the alternative plea that in the event of the declaration of the experience clause as reasonable, the action of the respondents in holding the petitioner ineligible because of lack of requisite experience of handling of transportation contract from manufacturer/Handling agency/ Govt. Department/PSU/Public Ltd. Company dealing in fertilizers, food grains, cement or similar products during the preceding three years of which the value of single contract should not be less than 50% of the estimated value of present contract, was unwarranted because the petitioner had the requisite experience of preceding three years in the grinding of wheat and transportation of Atta and the value of such single contract was more than 50% of the value of the present contract. In order to support his submission, learned counsel had, during the course of hearing, produced communication dated 14.07.2003 pertaining to Case No.30353/kv depots/St-28; communication dated 02.08.2003 pertaining to Case No.30353/15 Corps/ST-28; and communication dated 02.08.2003 pertaining to Case No.30353/16 Corps/ST-28, from Major General MG ASC. These documents are taken on record for considering the submissions of Sh. Jalali. 6. Submissions of learned counsel for the parties have been considered in the light of their pleadings, official records and law on the subject. 7. These documents are taken on record for considering the submissions of Sh. Jalali. 6. Submissions of learned counsel for the parties have been considered in the light of their pleadings, official records and law on the subject. 7. Emergency expressed in the Emergent Notice No. Stg.32(3)/JK/Tender/05-06/ dated 29.07.2006 by the respondent- Corporation has not been questioned by the petitioner in its writ petition. Situation being emergent was required to be dealt with by the Corporation on priority and by resorting to emergent measures. Petitioner does not appear to have been seriously aggrieved of this emergent notice and had not, thus, competed for the grant of this stop-gap-contract. On an earlier occasion, when it had filed OWP No. 611/2006, it did not question the issuance of this emergent notice. It, on the other hand, had taken chance to compete in the tender inquiry for the Regular transport contract. All these factors indicate that the petitioner had in fact acquiesced to the action of the respondents in issuing the emergent notice and subsequent award of stop-gap-contract to the successful bidder. It is now, thus, too late for the petitioner to question the emergent notice in the present petition. Even otherwise, I do not find any error in Corporations going in for the emergent notice to meet the emergent situation, existence whereof has not been disputed by the petitioner in this petition. There is, thus, no substance in the case of the petitioner that emergent notice was unwarranted. 8. In order to examine the case of the petitioner regarding its challenge to one of the requirements of the Technical Bid i.e. Technical Expertise- "Experience Certificate for rake handling of transportation contract from manufacturer/Handling agency/Govt. Department/PSU/Public Ltd. Company dealing in fertilizers, food grains, cement or similar products during the preceding three years of which the value of single contract should not be less than 50% of the estimated value of present contract", it needs to be noticed that the authority prescribing conditions in the tender notice, expects strict adherence to such conditions. And its right of punctilious and rigid enforcement cannot be denied to it. It is also settled proposition of law that power of judicial review may not be exercised by the Courts to substitute its own views as to whether or not the questioned conditions of the tender were required to be prescribed by the executive authority issuing the tender. And its right of punctilious and rigid enforcement cannot be denied to it. It is also settled proposition of law that power of judicial review may not be exercised by the Courts to substitute its own views as to whether or not the questioned conditions of the tender were required to be prescribed by the executive authority issuing the tender. It is only in those cases where the questioned term/condition in tender notice/document, on the face of it, speaks of arbitrariness or/and un-reasonability that the Court may exercise this power. It has been held in Sterling Computers Ltd. V. M. N. Publications Ltd. reported as AIR 1996 SC 51 that judicial review is not permissible to examine the details of the terms of the contract which have been entered into by the public bodies or the State. All that is permissible is to see as to whether the decision making process was reasonable, rational and not violative of Article 14 of the Constitution. In another decision of Honble Supreme Court of India in Raunag International Ltd. v. I. V. R. Construction Ltd. reported as (1999) 1 SCC 492, it was held that the award of a contract, whether it be by a private party or by a public body or the State, is essentially a commercial transaction and in arriving at a commercial decision, considerations which are of paramount importance are commercial considerations, which would include, inter alia, the price at which the party is willing to work, whether the goods or services offered are of the requisite specifications and whether the person tendering is of ability to deliver the goods or services as per specifications. 9. Reiterating the law laid down in the aforementioned judgments, it was held in Air India Ltd. v. Cochin International Airport Ltd. (2000) 2 SCC 617, as follows:-- "12. ........ that the award of a contact, whether by a private party or by a State, is essentially a commercial transaction. It can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation. It was further held that the State, its corporations instrumentalities and agencies have the public duty to be fair to all concerned. It can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation. It was further held that the State, its corporations instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process, the Court must exercise its discretionary powers under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should interfere." 10. The Corporation, in its wisdom, had prescribed the condition regarding Technical Expertise, perusal whereof, demonstrates that the same had been incorporated by the Corporation to ensure that only bona fide bidders and experts in the field compete for the price bid. I do not find this clause of the Technical Bid to suffer from any vice of arbitrariness or unreasonableness so as to attract Article 14 of the Constitution of India. I would, therefore, like to fall in line with the view taken by this Court in OWP No. 551/2006 to hold the impugned Technical Expertise clause of the Bid document valid and mandatory in character. I do not find merit in the submissions of Sh. Upinder Kr. Jalali that CVC guidelines had not been followed by the Corporation. This is so because the guidelines issued earlier by the CVC stood modified with the new guidelines of Central Vigilance Commission issued vide office order No.44/9/03 dated 04.09.2003, which gave free hand to the PSUs to float their tenders and prescribe requisite conditions on the guidelines prescribed in the order. I do not find any transgression of the existing guidelines of the CVC by the FCI in prescribing the eligibility conditions. The conditions of the Technical Bid are in line with the prevailing guidelines of the Central Vigilance Commission. 11. Sh. Upinder Kr. I do not find any transgression of the existing guidelines of the CVC by the FCI in prescribing the eligibility conditions. The conditions of the Technical Bid are in line with the prevailing guidelines of the Central Vigilance Commission. 11. Sh. Upinder Kr. Jalali made yet another submission that none of the contestants of the Technical Bid had any experience of Rake handling as contemplated by clause (iii) of the Tender Bid document and in that view of the matter, the whole process of evaluation of contract in the absence of requisite qualification of Rake handling was illegal. 12. I do not find any merit in the submission of Sh. Jalali that none of the contestants of the Technical Bid had requisite qualification of Rake handling because retention of words Rake handling in clause (iii) appears to be inadvertent because the contract in question was regarding transportation of food grains by road and not by rail. I, therefore, find substance in the submission of Sh. M. A. Goni that the format of the Technical Bid had been devised by the Corporation so as to deal with two types of contracts; one dealing with transportation by rail and the other with transportation by road. Rake handling will not, thus, be a relevant consideration for award of contract of transportation by road. The existence of expression Rake handling in the clause (iii) will, thus, be, inconsequential to consider the case of the bidders, who were to compete for the award of contract of transportation by road. This submission of Sh. Jalali too is rejected. 13. Documents produced by Sh. Jalali to demonstrate that the contract of supply of Wheat and Atta to the Army was a single contract and the petitioner was, therefore, eligible to compete for the price bid, have been perused by me. Perusal of these additional documents of Sh. Jalali demonstrates that the contracts relied upon by the petitioner were in fact three contracts, which had been issued by the Army in favour of the petitioner for; (i) grinding of Wheat into Atta and Bran for Kv Depots from 01.08.2003 to 31.07.2005; (ii) grinding of Wheat into Atta and Bran for 15 Corps Depots from 04.08.2003 to 31.07.2005; and (iii) grinding of Wheat into Atta and Bran for 16 Corps Depots from 04.08.2003 to 31.07.2005. The value of these three contracts could not, thus, be clubbed by the FCI to treat these contracts and value thereof as a single contract to hold the petitioner eligible for the Financial Bid. 14. I, therefore, do not find any merit in the submission of the petitioner that he was eligible to compete for the price bid. This is so because he did not fulfill the requisite condition of the Technical Bid of having successfully carried a single contract of the value of 50% of the estimated value of the present contract, during preceding three years. 15. The petitioner has not placed any other material on the records to demonstrate its eligibility. In the absence of any such material having been placed on the records, the decision of the respondents in holding the petitioner ineligible in the Technical Bid for Stations Ex-Jammu to Baramulla and Ex- Jammu to Kupwara cannot, thus, be faulted. Communication No.Stg.32(3)/JK/Tender/05-06/376 dated 02.09.2006 issued by the respondents is held to be legal and valid. 16. For all what has been said above, I do not find any merit in this petition, which is, accordingly, dismissed alongwith CMP No. 840/2006.