Research › Search › Judgment

J&K High Court · body

2006 DIGILAW 242 (JK)

Futura Surgicare Pvt. Ltd. v. State Of J. &K.

2006-11-02

MANSOOR AHMAD MIR

body2006
Tender notice No. 5 of 2006 dated 7-4-2006 came to be issued by the Financial Advisor-cum-Chief Accounts Officer. Health and Medical Education Department -- respondent no. 4 for supply of items under Group no. III (Dressing and suturing Material) for use in various institutions, Hospitals and Health and Medical Education Department for the year 2006-07 on the terms and conditions contained in the said notice. It is profitable to notice the relevant condition (e) contained in the notice which reads: "Yearwise turnover of not less than Rs. 15 crores per annum of Principal manufacturer of Suturing Materials (To authenticate the annual Turnover yearwise statement of accounts) Balance Sheet duly audited and certified by the Chartered Accountant should be submitted with the Techincal Bid." 2. In terms of this condition, those manufacturers / registered firms/ private suppliers / authorized suppliers or those who arc dealing actually in the goods for which tenders came to be issued, could participate in the tender process on the terms and conditions stipulated therein, one of which is that they must have Yearwise Turnover of not less than Rs. 15 crores per annum of Principal manufacturer of Suturing materials and they had to authenticate annual turnover yearwise statement of accounts (Balance Sheet) duly audited and certified by the Chartered Accountant, which was to be submitted with the Technical Bid. 3. The petitioner has pleaded in the writ petition that he has been supplying Suturing materials to the respondents for the last so many years and has obtained appreciation letters contained in Annexures A to D to the writ petition and that the condition is aimed at to deprive him from participating in the tender process so as to pave was for allotting the contract to some other agency. The conditions laid down in clause (e) of the tender document is wholly arbitrary discriminatory and actuated with malice. The respondents have deliberately and with malafide intentions tried to preclude the petitioner from participating in the tender process despite of the fact that the petitioner was successfully obtaining supply orders of the Suturing materials for the last few years, being the lowest tenderer, which forced the petitioner to file a suit before the 3rd Additional District Judge, Srinagar in which a direction came to be passed on the interim application whereby respondents were directed to consider the representation of the petitioner before finalizing the tender process. The respondents considered the representation of the petitioner which came to be rejected vide consideration order No. 103-HME of 2006 dated 3-8-2006. The petitioner has invoked the jurisdiction of this Court for quashing condition (e) contained in the tender notice and the consideration order dated 3-8-2006 on the grounds taken in the writ petition, briefly narrated hereinabove. 4. Respondents have filed the reply and have resisted the petition on the ground that condition (e) is aimed at to ensure quality supply and to ensure participation of all those suppliers / contractors who are possessing sound documents/capacity of making supplies to the respondent -- department. It is also submitted that the tender notice is not in any way arbitrary and respondents have not given any benefit to any person or a party to the exclusion of the petitioner. The petitioner was at liberty to respond to the said notice, provided he was fulfilling the conditions contained in the NIT. In response to the NIT, 37 tenderers had submitted their tenders for supply of Dressing and Suturing material and technical bid was opened by the Technical Committee constituted for the purpose and final bid was also opened on 28-7-2006 by the committee and the report of technical evaluation had been received. However supply order could not be placed with the successful tenderer due to the interim order passed by the Court. 5. The core question for consideration is whether the terms of NIT are open to judicial scrutiny and whether courts can delete any condition. In order to thrash out this question, it is necessary to notice the following judicial pronouncements made by the Apex Court. 6. In Tata Cellular Vs. Union of India, AIR 1996 SC 11, the Apex Court has explained what is a tender and what are the requisites of a valid tender. Their Lordships have held that tender must be unconditional and must conform to the terms of the obligation and further the person by whom the tender is made must be able and willing to perform and must be able to do so and must have the capacity to perform the obligation. Further it has been held that terms of the invitation to tender cannot be open to judicial scrutiny the invitation to tender is in the realm of contract. 7. Further it has been held that terms of the invitation to tender cannot be open to judicial scrutiny the invitation to tender is in the realm of contract. 7. In Air India Ltd. V. Cochin International Airport Ltd., (2002) 2 SCC 617, the Apex Court has taken the same view by holding that invitation of tender is not open to judicial scrutiny. 8. In yet another case titled Directorate of Education Vs. Educomp Datamatics Ltd., (2004) 4 SCC 19, the apex court has held that terms of tender prescribing eligibility criteria is not open to judicial review but if same is arbitrary, discriminatory or biased, then judicial interference is required. Further it was held that court can not order change in the NIT. It is profitable to reproduce relevant portion of the judgement hereunder: ".........the Courts would not interfere with the terms of the tender notice unless it was shown to be either arbitrary or discriminatory or actuated by malice. While exercising the power of judicial review of the terms of the tender notice, the court cannot say that the terms of the earlier tender notice would serve the purpose sought to be achieved better than the terms of tender notice under consideration and order change in them, unless it is of the opinion that the terms were either arbitrary or discriminatory or actuated by malice. The provisions of the terms inviting tenders from firms having a turnover of more than Rs. 20 crores has not been shown to be either arbitrary or discriminatory or actuated by malice." 9. The Apex Court in case of Association of Registration Plates V. Union of India & Others, (2005) 1 SCC 679, held that NIT is not open to judicial review. It is useful to reproduce paras 38 and 42 hereunder: "38. In the matter of formulating conditions of a tender document and awarding a contract of the nature of ensuring supply of high security registration plates, greater latitude is required to be conceded to the Stale authorities. Unless the action of tendering authorities found to be malicious and a misuse of its statutory powers, tender conditions are unassailable. On intensive examination of tender conditions, we do not find that they violate the equality clause under Article 14 or encroach on fundamental rights of the class of intending tenderers under Article 19 of the Constitution. Unless the action of tendering authorities found to be malicious and a misuse of its statutory powers, tender conditions are unassailable. On intensive examination of tender conditions, we do not find that they violate the equality clause under Article 14 or encroach on fundamental rights of the class of intending tenderers under Article 19 of the Constitution. On the basis of the submissions made on behalf of the Union and State authorities and the justification shown for the terms of the impugned tender conditions, we do not find that the clauses requiring experience in the field of supplying registration plates in foreign countries and the quantum of business turnover are intended only to keep indigenous manufacturers out of the field. It is explained that on the date of formulation of scheme in Rule 50 and issuance of guidelines thereunder by the Central Government, there were not many indigenous manufacturers in India with technical and financial capability to undertake the job of supply of such high dimension, on a long term basis and in a manner to ensure safety and security which is the prime object to be achieved by the introduction of new sophisticated registration plates." ........................................................................................................The terms of the tender prescribing quantum of turnover of its business and business in plates with fixation of long term period of the contract are said to have been incorporated to ensure uninterrupted supply of plates to a large number of existing vehicles within a period of two years and new vehicles for a long period in the coming years. It is easy to allege but difficult to accept that terms of the notices inviting tenders which were fixed after joint deliberations between State authorities and intending tenderers were so tailored as to benefit only a certain identified manufacturers having foreign collaboration. Merely because a few manufacturers like the petitioners do not qualify to submit the tender, being not in a position to satisfy the terms and conditions laid down, the tender conditions cannot be held to be discriminatory." 10. The Apex Court in recent case titled Global Energy Ltd. Vs. Merely because a few manufacturers like the petitioners do not qualify to submit the tender, being not in a position to satisfy the terms and conditions laid down, the tender conditions cannot be held to be discriminatory." 10. The Apex Court in recent case titled Global Energy Ltd. Vs. M/s Adani Exports Ltd., 2005 AIR SCW 2875 has held that the terms of the invitation to tender are not open to judicial scrutiny and the Courts cannot whittle down the terms of the tender as they arc in the realm of contract unless they are wholly arbitrary, discriminatory or actuated by malice. It profitable to reproduce para 10 of the judgement hereunder: "The principle is, therefore, well sealed that the terms of the invitation to tender are not open to judicial scrutiny and the Court cannot whittle down the terms of the tender as they are in the realm of contract unless they are wholly arbitrary, discriminatory or actuated by malice. This being the position of law settled by a catena of decisions of this Court, it is rather surprising that the learned single Judge passed an interim direction on the very first day of admission hearing of the writ petition and allowed the appellants to deposit in earnest money by furnishing a Bank guarantee or a bankers cheque till three days after the actual date of opening of the tender. The order of learned single Judge being wholly illegal, was, therefore rightly set aside by the Division Bench." 11. Applying the test in the instant case, the respondents have taken specific stand that the aim and object of condition (e) is that tenderer must be financially sound and must supply standard and quality supply to the hospital and the material which is to be used must be available with the manufacturer. Keeping in view the stand taken by the respondents and the terms and conditions of the NIT, I am of the considered view that the fixing turnover clause is not in any way discriminatory, arbitrary or unjustified. 12. Now dealing with the second point raised by learned counsel for the petitioner that condition (e) has been incorporated in the tender notice with a view to preclude the petitioner from participating in the tender process and in order to exclude him from obtaining supply order, in order to give benefit to any other person. 12. Now dealing with the second point raised by learned counsel for the petitioner that condition (e) has been incorporated in the tender notice with a view to preclude the petitioner from participating in the tender process and in order to exclude him from obtaining supply order, in order to give benefit to any other person. This argument is also not tenable for the simple reason that respondents have not tried NIT have participated in the lender process and 37 tenderers have participated and applied and technical bid also came to be opened by the committee and also final bid also came to be opened, but supply order could not be placed by the respondents due to the interim direction passed by this court. Thus it cannot lie in the mouth of the petitioner that it was just to give benefit to any other person to his exclusion. The Apex Court in case titled as Association of Registration Plates Vs. Union of India. 2005 (1) SCC 679 has held that when all the eligible tenderers participate in the tender process, it could not be said that prescribing of any qualification or a condition is arbitrary and aimed at to deprive any particular person. It is profitable to reproduce para 44 hereunder: "......The grievance that the terms of notice inviting tenders in the present case virtually create a monopoly in favour of parties having foreign collaborations, is without substance. Selection of a competent contractor for procedure, is not an act of creating monopoly, as it sought to be suggested on behalf of the petitioner. What lias been argued is that the terms of the notices inviting tenders deliberately exclude domestic manufacturers and new entrepreneurs in the field. In the absence of any indication from the record that the terms and conditions were tailor made to promote parties with foreign collaborations and to exclude indigenous manufacturers judicial interference is uncalled for." 13. Keeping the above discussions and the ratio laid down by the Apex Court as quoted hereinabove, this writ petition is without any merit and is accordingly dismissed in limine. Interim direction is also vacated. Registry is directed to furnish copy of this judgement to Mr. Magray, AAG for onward transmission to the respondents.