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2007 DIGILAW 56 (CAL)

NIKHIL CH. DAS v. STATE OF WEST BENGAL

2007-02-02

SOUMITRA PAL

body2007
SOUMITRA PAL, J. ( 1 ) IN the writ application the petitioners, stated to be diet contractors, have challenged the decision taken by the Chief Medical officer of Health, Murshidabad selecting the private respondents to supply cooked dietary meals for the financial year 2006-2007 pursuant to a tender process initiated by notice inviting tender dated 23rd of May, 2006. ( 2 ) THE matter was moved on 28th June, 2006 when the learned Advocate appearing on behalf of the State was directed to produce the records. Thereafter, on 30th June, 2006 the matter came up for hearing. Records were produced. Though no interim order was passed, it was recorded that supply, if any, shall be an ad hoc measure and shall be without prejudice to the rights and contentions of the parties. Directions were issued upon the registrar General to keep the records produced by the State in a sealed cover to be produced on the date of hearing. ( 3 ) PURSUANT to directions, affidavits were exchanged. Records were placed and the matter was heard. ( 4 ) THE principal grievance of the petitioner is that though the terms and conditions of the tender stipulate that erasures, overwriting and deletions were totally unacceptable, and specific quotations, both in words and figures, should have to be neatly typed in double space, yet the respondents while accepting the tender of the private respondent ignored the guidelines which were essential and, thus at the time of selecting successful tenderers there had been non-compliance of the norms. Since the terms were incorporated to check malpractice, compliance was mandatory. Moreover, bids in the same tender process relating to some other hospitals in the same district were rejected by the Additional Chief Medical Officer of Health (for short "the ACMOH") as those were found handwritten. Accordingly, there cannot be two sets of norms - one adopted by the Chief Medical Officer of Health and the other by the ACMOH. On the date of opening the tender though they were requested to be present and were present they were unaware of the resolution adopted for accepting handwritten bids since it was not adopted in their presence. Therefore, the submission of the respondents that they were party to the resolution is not tenable. Even assuming they were a party to the resolution, no resolution whatsoever can clarify or alter the terms of the notice inviting tender. Therefore, the submission of the respondents that they were party to the resolution is not tenable. Even assuming they were a party to the resolution, no resolution whatsoever can clarify or alter the terms of the notice inviting tender. Had it been the intention of the authorities to amend the conditions of the tender, corrigendum of fresh notice should have been issued. Since no contract was entered into, clause relating to arbitration is inapplicable. The petition is maintainable as the decision making process and the consequent decision itself are under challenge. Reliance was placed on the judgment of the Supreme Court in Monarch infrastructure (P) Ltd. vs. Commissioner, Ulhasnagar Municipal Corpn. and ors. , reported in 2000 (5) SCC 287 , W. B. State Electricity Board vs. Patel engineering Co. Ltd. and Ors. , reported in 2001 (2) SCC 451 , Global Energy Ltd. and Ors. vs. Adani Exports Ltd. and Ors. , reported in AIR 2005 SC 2653 , Noble resources Ltd. vs. State of Orissa and Ors. , reported in 2007 (1) ICC 313 and an unreported judgment of this Court in matter No. 270 of 1990, Chandu Ghosh and Ors. vs. State of West Bengal and Ors. in support of his submissions. ( 5 ) LEARNED Advocates, appearing on behalf of the State and the private respondents besides reiterating the statements made in their respective affidavits-in-opposition, submitted that the question was whether the particular condition in the tender was essential or not. According to them, it was non-essential amended in public interest as they were expecting competitive offers. Ultimately 25 type written and 27 handwritten bids were accepted by the District Diet Tender Selection Committee which was headed by the District Magistrate of Murshidabad. Further, it was contended as the petitioner had taken part in the tender process and was a party to the resolution they could not now turn around and challenge the process. From the exercise it is clear that entire action was reasonable, in public interest and the question of mala fide does not arise. If the bids of the petitioners, which were higher, were accepted, then the State would have suffered financial loss. Since the private respondents have started supplying, any order passed in favour of the petitioner shall unsettle the position to the detriment of the patients. If the bids of the petitioners, which were higher, were accepted, then the State would have suffered financial loss. Since the private respondents have started supplying, any order passed in favour of the petitioner shall unsettle the position to the detriment of the patients. Moreover, the writ petition is not maintainable since there is an arbitration clause in respect of all disputes and differences arising between the tenderer in any matter relating to the supply of cooked food/diet. Reliance was placed on the judgments of the Apex Court in Poddar steel Corporation vs. Ganesh Engineering Works and Ors. , reported in 1991 (3) scc 273 , Tata Cellular vs. Union of India, reported in 1994 (6) SCC 651 , southern Painters vs. Fertilizers and Chemicals Travancore Ltd. and Anr. reported in 1994 Supp (2) SCC 699, Air India Ltd. vs. Cochin International airport Ltd. and Ors. , reported in 2000 (2) SCC 617 , Directorate of Education and Ors. vs. Educomp Datamatics Ltd. and Ors. reported in AIR 2004 SC 1962 , global Energy Ltd. and Anr. vs. Adani Exports Ltd. and Ors. reported in AIR 2005 SC 2653 , Master Marine Services (P) Ltd. vs. Metcalfe and Hodgkinson (P) Ltd. and Anr. , reported in 2005 (6) SCC 138 , Mohd. Riazul Usman Gani and ors. vs. District and Sessions Judge, Nagpur and Ors. reported in 2000 (2) SCC 606 and B. D. Yadav and M. R. Meshram, E. and C. vs. Administrator, reported in AIR 1984 Born. 351 in support of their contentions. ( 6 ) IT appears from the submission advanced by the learned Advocates for the parties that the decision making process and the consequent decision are the subject-matter of challenge. The question is to what extent judicial review of a State action particularly in case of a tender is permissible. The law in this regard is well-settled. The Apex Court in Monarch Infrastructure (supra) dealing with a tender process, had summed up the legal proposition as under: " (i) The Government is free to enter into any contract with citizens but the Court may interfere where it acts arbitrarily or contrary to public interest. (ii) The Government cannot arbitrarily choose any person it likes for entering into such a relationship or to discriminate between persons similarly situate. (ii) The Government cannot arbitrarily choose any person it likes for entering into such a relationship or to discriminate between persons similarly situate. (iii) It is open to the Government to reject even the highest bid at a tender where such rejection is not arbitrary or unreasonable or such rejection is in public interest for valid and good reasons. " ( 7 ) FURTHER, the Supreme Court in Noble Resources Limited (supra) while deciding whether a writ petition is maintainable in contractual matter held as follows: "27. Although terms of the invitation to tender may not be open to judicial scrutiny, but the Courts can scrutinize the award of contract by the government or its agencies in exercise of their power of judicial review to prevent arbitrariness or favouritism. However, the Court may refuse to exercise its jurisdiction, if it does not involve any public interest. 28. Although the scope of judicial review or the development of law in this field has been noticed hereinbefore particularly in the light of the decision of this Court in ABL International Ltd. (supra), each case, however, must be decided on its own facts. Public interest as noticed hereinbefore, may be one of the factors to exercise power of judicial review. In a case where a public law element is involved, judicial review may be permissible. 29. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30. Another field where judicial review is permissible would be when mala fide or ulterior motives is attributed. " ( 8 ) THEREFORE, the settled principle of law is Court can interfere where state acts in a arbitrary or in a mala fide manner or where ulterior motive is attributed. However, no strait-jacket formula can be laid down and each case has to be decided on its own facts. ( 9 ) IN the instant case admittedly handwritten quotations were accepted pursuant to a resolution adopted which is Annexure R1 to the affidavit-in- opposition affirmed on behalf of the State. The issue whether tender conditions were essential or subsidiary, primary or secondary can be gathered from the conditions of tender. ( 9 ) IN the instant case admittedly handwritten quotations were accepted pursuant to a resolution adopted which is Annexure R1 to the affidavit-in- opposition affirmed on behalf of the State. The issue whether tender conditions were essential or subsidiary, primary or secondary can be gathered from the conditions of tender. Since it was submitted on behalf of the State and the private respondents that acceptance of typewritten bids was not an essential criterion, in order to delve into the controversy it is necessary to refer to the tender conditions, the relevant portion of which is as under: "general guidelines for terms and conditions of tender of supply of cooked food/diet to indoor patients of Government hospitals. " intending tenderers shall be required to submit separate offer for separate hospital/group as noted in Annexure-1 (List of Health Institutions in murshidabad district ). All papers submitted with the tender offer must be legible. Only capital letter should be used in filling up Tender Forms. All papers forming part of the tender offer shall be serially numbered and signed by the tenderer. Erasures, overwriting and deletions are totally unacceptable. The specific quotation both in words and figures shall be neatly be typed in double space. Tender offer shall be submitted under a covering letter mentioning the total number of pages in the tender offer within the specified date and time. . . . . . " (Emphasis supplied) ( 10 ) IN this backdrop the issue is whether the conditions in the tender, as noted, were essential. Secondly, if so, whether the tender committee was justified in accepting besides the typewritten bids the handwritten quotations from the private respondents. In my opinion, the answer to the first question lies in the language itself in the notice inviting tender. The language "specific quotation both in words and figures shall be neatly typed" sends out the directive in no ambiguous terms that handwritten quotations were not to be accepted. That the tenders should be typed, was further made clear since it was indicated it should be in "double space" - words akin to typewritten matters. Since chances of manipulation are more in handwritten bids, authorities had laid down such rigorous and stringent conditions as unlike typewritten, a handwritten bid even during final stage of selection, can be put in or altered with minimum effort. Since chances of manipulation are more in handwritten bids, authorities had laid down such rigorous and stringent conditions as unlike typewritten, a handwritten bid even during final stage of selection, can be put in or altered with minimum effort. It may be inferred, these specific norms were incorporated for eliminating mischief, to ensure clarity and transparency in order to put the process beyond reproach. With this object, such conditions, as noticed, were incorporated and hence, essential. Thus, compliance of such terms was mandatory. However, it appears pursuant to a purported resolution adopted, the tender selection committee headed by its Chairman and District magistrate, Murshidabad in addition to typewritten bids had accepted handwritten bids if those were in "clear and legible handwriting". This was done, as submitted on behalf of the respondents, to invite more competition and consequently a lower rate. The question is, was the tender committee headed by the District Magistrate, Murshidabad competent to alter the terms. In my view, as already noticed, since the norms were stringent and essential, the District Magistrate had no authority to alter the terms and ought not to have ignored or should not have given the norms a go-by without issuing a fresh notice or a corrigendum. This, in my opinion, is a flagrant violation of the conditions which is least expected from the head of the executive in a district since, so far as the terms of tenders were concerned, there was no room for ambiguity or misconception. By accepting handwritten bids the decision making process stood vitiated as the norms stipulated acceptance of typewritten bids only. In this regard, it is necessary to point out the allegations made by the petitioner in paragraph 15 of the petition and the reply thereto by the State in paragraph 20 of its opposition. Paragraph 15 of the writ petition is as under: "15. Your petitioners state that in respect of other Hospitals in which the tender process was initiated by the self-same notice but selection process was under the control and supervision of respective Additional Chief Medical officer of Health, the tenders of the intending tenderers who put their rate in handwriting and without mentioning the same in words, were cancelled on the ground of violation of the conditions of the tender as quoted hereinabove. Whereas the Chief Medical Officer of Health who has been conducting the selection process in respect of the Hospitals for which your petitioners submitted their offers, purportedly waived the said condition in awarding the contract in favour of the said Murshidabad Sales and Supplies co-operative and Mr. Tapas Ghosh who had put their rate purportedly in handwriting and without mentioning the same in words. Your petitioners believed and had every reasons to believe that some malpractice was adopted by the said contractors with the help of the respondent No. 5 in getting the contract and there is every possibility that the rates were put in the tender form of the said selected contractors in handwriting after coming to know about the rates quoted by your petitioners. " The State respondent in paragraph 20 of their affidavit have sought to controvert paragraph 15 of the writ petition in the manner as under: "20. With regard to the statements and/or allegations made in paragraph no. 15 of the instant application, I state that they are matters of records and save and except what are matters of record, I deny and dispute each and every allegations and/or statements made therein that are inconsistent therewith and contrary thereto. " ( 11 ) A perusal of paragraph 20 of the opposition by the State shows that there is no specific denial by the State regarding the allegations made in paragraph 15 of the writ petition which are serious in nature. This is not expected from the State respondents when allegations by the petitioners are specific. In my view, there would have been no controversy had the state respondents accepted the bids according to the norms in the notice inviting tender. The argument of the respondents that resolution was taken in order to rope in more tenderers to invite attractive bids is without substance as norms were specific leaving no room for acceptance of handwritten bids. In fact the assertion by the petitioner, that similar handwritten bids in respect of other hospitals were cancelled by ACMOH, murshidabad had gone unchallenged. The argument of the respondents that resolution was taken in order to rope in more tenderers to invite attractive bids is without substance as norms were specific leaving no room for acceptance of handwritten bids. In fact the assertion by the petitioner, that similar handwritten bids in respect of other hospitals were cancelled by ACMOH, murshidabad had gone unchallenged. The principles of law laid down in poddar Steel Corporation (supra) which were referred to in Tata Cellular (supra) are not applicable to the facts of this case as the bidder was required to deposit the amount by demand draft drawn on State Bank of India but the tenderer had deposited certified cheques of Union Bank of India which too was a nationalised bank which was treated to be a sufficient for the purpose of achieving the object of the condition. But in the case in hand as already noticed the tender conditions, the bedrock against manipulation, unfairness and arbitrariness, which by no stretch can be called ancillary or subsidiary, had been given a go-by by the tender selection committee headed by the District Magistrate, Murshidabad. ( 12 ) THERE is another grave error in the decision making process. It was submitted on behalf of the respondents particularly State that the petitioners were parties to the resolution for amending the tender conditions. This submission does not appear to be convincing and tenable as nothing could be shown from the records that they were party to it. Eather it appears the attendance of the petitioners were recorded when bids were opened on a day when they were requested to be present. It only reveals the cavalier, unfair and arbitrary attitude of the tender committee headed by the District magistrate, Murshidabad who showed scant regard to observe the norms in the notice inviting tender which were stringent and unalterable. To put it briefly, the action of the District Magistrate, Murshidabad had set at naught what the tender conditions had sought to achieve - elimination of mischief, unfairness and illegality. Therefore, the decision making process stands vitiated on this count too. ( 13 ) REGARDING the question of maintainability of the writ petition, I am of the view since no contract was entered into and the petitioners have challenged the decision making process and the consequent decision, writ petition is maintainable. Therefore, the decision making process stands vitiated on this count too. ( 13 ) REGARDING the question of maintainability of the writ petition, I am of the view since no contract was entered into and the petitioners have challenged the decision making process and the consequent decision, writ petition is maintainable. The principles of law laid down in the judgment of the Apex court in Noble Resources (supra) are applicable to the facts of the case. ( 14 ) SO far as the submission on behalf of the respondent that no order may be passed which may jeopardize the supply of diet to the hospitals affecting patients, I feel, if such contentions are accepted no challenge can be thrown to a tender, particularly a short terms tender, which would give premium to persons bagging tenders in a highly questionable manner not warranted in law as had happened in this case. Since the private respondents were not competent to compete as they had submitted handwritten bids, the principles of law laid down in Southern Painters (supra) are not applicable to the facts of the case in hand as in the said matter other contractors were qualified and the appellant had complained of blacklisting without giving him an opportunity of hearing. The principles of law laid down in Air India (supra) and in Directorate of Education (supra) are also not applicable as though the authority had fixed or prescribed its own guidelines, they had acted contrary to it by accepting handwritten bids which was impermissible. Other judgments cited are not applicable to the facts of this case due to the special nature of the terms and conditions in the notice inviting tender. Moreover, it was indicated in the order dated 30th June, 2006 that "supply, if any, shall be treated as an ad hoc measure". ( 15 ) THEREFORE, since I find that the tender process was conducted in an unfair, arbitrary and illegal manner violating the norms in the tender, the writ petition is allowed. Consequently, the award of tenders to the private respondents are set aside and quashed. ( 15 ) THEREFORE, since I find that the tender process was conducted in an unfair, arbitrary and illegal manner violating the norms in the tender, the writ petition is allowed. Consequently, the award of tenders to the private respondents are set aside and quashed. The tender committee headed by the District Magistrate cum Chairman, District Diet Tender Committee, murshidabad, respondent No. 6 is directed to examine the typewritten bids only and to take a decision in light of the tender notice dated 23rd May, 2006 within a period of five days from the date of production of the certified copy of this order. Let the records furnished be returned Mr. Shantanu Das appearing on behalf of the State. ( 16 ) CONSIDERING the facts the Chief Medical Officer of Health, Murshidabad and the District Magistrate-cum-Chairman, District Diet Tender Committee, murshidabad, the respondents, are directed to pay Rs. 3,400/- each to the petitioners.