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Gauhati High Court · body

2008 DIGILAW 432 (GAU)

Associate Enterprise v. Coal India Ltd.

2008-06-13

ANIMA HAZARIKA, J.CHELAMESWAR

body2008
JUDGMENT Jasti Chelameswar, J. 1. Aggrieved by a common judgment and order dated 8.2.2007 passed in WP(C) No. 457/07 and WP(C) No. 458/07 the unsuccessful writ petitioner preferred the present appeals. By the said judgment and order the two writ petitions were dismissed. Since the issue involved in the present appeals is same both the appeals are taken up for decision by this common judgment and order. 2. The first respondent is a Limited Company and a Govt. Company within the meaning of Section617 of the Companies Act. 3. The dispute in the writ petitions is regarding the award of a contract in favour of the 6th respondent herein by the 1st respondent. The nature of the work covered by the contract is loading of coal from the railway siding to the railway wagons. The appellant, a registered partnership firm has been executing the work for the 1st respondent Company for the 18 years proceeding the transaction in dispute. 4. The 1st respondent issued a tender notification dated 25.9.02 inviting tenders for performing the above mentioned work. The period of contract was two years and the approximate value of the work was estimate to be Rs.2.25 crores by the 1st respondent requiring handling of 5,00,000 MTs. per year. 5. While the appellant quoted Rs.17.45 for handling per ton the coal the 6th respondent quoted Rs.13.50. 6. The objection of the appellant is that the contesting respondent did not have the requisite experience as contemplated by Clause 3.2(c) of the instructions to bidders. The relevant portion of the said clause reads as follows: 3.2(c). Experience in works of similar nature and size for each of the last five years, and details of work under way or contractually committed and the name and address of clients who may be contacted for further information on those contracts. The case of the appellant is that the respondent successful bidder did not possess the requisite experience contemplated under the above Clause. 7. On an examination of the materials on record the learned Judge by the judgment under appeal recorded the finding- The tender submitted by the respondent No. 6, in the above premises, therefore, does not appear to be non-responsive to the criteria of experience as stipulated in the above mentioned clause of the ITB. Admittedly, the 6th respondent quoted the lowest price of all the bidders. 8. Admittedly, the 6th respondent quoted the lowest price of all the bidders. 8. It is in the background of the above facts the learned Judge found no substance in the challenge made by the appellant/petitioner. 9. Mr. A.B. Choudhury, learned senior counsel for the appellant argued that the conclusion reached by the learned Judge by the judgment under appeal that the 6th respondent satisfied the requirement of experience, contemplated by the tender notification, is not correct, The very fact that admittedly the 1st respondent decided to award the contract in favour of the 6th respondent only for a limited period of three months and watch his performance indicates that even the 1st respondent and its officers were doubtful whether the 6th respondent had the requisite experience to handle the work and, therefore, the conclusion reached by the learned Judge in that regard is not sustainable. The learned Counsel, therefore, argued that if the 6th respondent did not have the requisite qualification, which is one of the essential conditions of eligibility for participating in the tender process, the 1st respondent could not have given a go bye to the requirement of the experience and arbitrarily award the contract to the 6th respondent. In this regard the learned senior counsel heavily relied upon a judgment of the Supreme Court in Ramana Dayaram Shetty v. The International Airport Authority of India and Ors. 1979 (2) LLJ 217 SC. More particularly, the learned senior counsel placed reliance on para 10 of the said judgment, which reads as follows: 10. Now, there can be no doubt that what paragraph (1) of the notice prescribed was a condition of eligibility which was required to be satisfied by every person submitting a tender. The condition of eligibility was that the person submitting a tender must be conducting or running a registered 2nd class hotel or restaurant and he must have at least 5 years' experience as such and if he did not satisfy this condition of eligibility his tender would not be eligible for consideration. This was the standard or norm of eligibility laid down by the 1st respondent and since the 4th respondents did not satisfy this standard or norm, it was not competent to the 1st respondent to entertain the tender of the 4th respondents. This was the standard or norm of eligibility laid down by the 1st respondent and since the 4th respondents did not satisfy this standard or norm, it was not competent to the 1st respondent to entertain the tender of the 4th respondents. It is a well settled rule of administrative law that an executive authority must be rigorously held to the standard fry which if professes its actions to be judged and it must scrupulously observe those Standards on pain of invalidation of an act in violation of them. 10, Before, he examine the submission made by the learned Counsel for the appellant it would be profitable to notice facts and issue involved in the above mentioned judgment of the Supreme Court. The respondent before the Supreme Court invited tenders for putting up and running a restaurant and two snack bars at the International Airport at Bombay. One of the conditions of the tender notification was that the tenderer must be a Registered IInd Class Hotelier "having at least 5 years' experience for putting up and running a IInd Class Restaurant and two Snack Bars". The tenderer ultimately chosen by the Airport Authority did not have the qualification of being a Registered IInd Class Hotelier. It is in this background a challenge was made by the appellant before the Supreme Court to the award of the contract on the ground that if only the appellant had known that the Airport Authority was going to relax the eligibility criteria of registration as IInd Class Hotelier for a period of 5 years, the appellant and many other persons who are similarly situated would also have participated in the tender process and by virtue of the departure of the Airport Authority from the norm, prescribed by it in the tender notification the appellant and others, who are similarly situated as the appellant, were denied the equality of opportunity. 11. Upholding the submission made by the appellant the Supreme Court ultimately held at para 34 as follows.- 34. 11. Upholding the submission made by the appellant the Supreme Court ultimately held at para 34 as follows.- 34. It is, therefore, obvious that both having regard to the constitutional mandate of Article 14 as also the judicially evolved rule of administrative law, the 1st respondent was not entitled to act arbitrarily in accepting the tender of the 4th respondents, but was bound to conform to the standard or norm laid down in paragraph 1 of the notice inviting tenders which required that only a person running a registered IInd Class hotel or restaurant and having at least 5 years' experience as such should be eligible to tender. It was not the contention of the appellant that this standard or norm prescribed by the 1st respondent was discriminatory having no just or reasonable relation to the object of inviting tenders namely, to award the contract to a sufficiently experienced person who would be able to run efficiently a IInd class restaurant at the airport. Admittedly the standard or norm was reasonable and non-discriminatory and once such a standard or norm for running a IInd Class restaurant should be awarded was laid down, the 1st respondent was not entitled to depart from it and to award the contract to the 4th respondents who did not satisfy the Condition of eligibility prescribed by the standard or norm. If there was no acceptable tender from a person who satisfied the condition of eligibility, the 1st respondent could have rejected the tenders and invited fresh tenders on the basis of a less stringent standard or norm, but it could not depart from the standard or norm prescribed by it and arbitrarily accept the tender of the 4th respondents. When the 1st respondent entertained the tender of the 4th respondents even though they did not have 5 years' experience of running a IInd Class restaurant or hotel, denied equality of opportunity to others similarly situate in the matter of tendering for the contract. There might have been many other persons, in fact the appellant himself claimed to be one such person, who did not have 5 years experience of running a IInd Class restaurant, but who were otherwise competent to run such a restaurant and they might also have completed with the 4th respondents for obtaining the contract, but they were precluded from doing so by the condition of eligibility requiring five years experience. The action of the 1st respondent in accepting the tender of the 4th respondents, even though they did not satisfy the prescribed condition of eligibility, was clearly discriminatory, since it excluded other person similarly situate from tendering for the contract and it was plainly arbitrary and without reason. The acceptance of the tender of the 4th respondents was, in the circumstances invalid as being violative of the equality clause of the Constitution as also of the rule of administrative law inhibiting arbitrary action. In substance holding that by the impugned action the Airport Authority denied an opportunity to all others who are similarly situated as the successful bidder and therefore, there is a violation of Article 14 of the Constitution of India. 12. The case at hand is not a case where there is a challenge by any person to the impugned action on the ground that if only the 1st respondent herein were known to relax the requirement of the experience, as stipulated in the tender notification the appellant also would have taken advantage of the same. Admittedly, the appellant has all the experience contemplated by the tender notification. Therefore, the case of the appellant is not covered by the ratio decidendi of the Ramana Dayaram's case coupled with the fact that there is a substantial difference in the price quoted by the appellant and the successful bidder therein. The 1st respondent which is public body cannot be said to halve acted illegally when it took a decision in the best economic interest of the public body. Even while taking such a decision the respondent took care to award the contract initially for a period of three months for observing the performance of the successful bidder in order to ensure due performance of the contract and the ability of the bidder to perform the contract. Another relevant factor is that there are no allegations of mala fides against the 1st respondent or any one of its officers in the present writ petition. 13. The learned Judge, therefore, rightly came to the conclusion that the writ petitions are without merits. 14. In me ultimate analysis the purpose of Rule of Law under Article 14 is to sub-serve the public interest. 13. The learned Judge, therefore, rightly came to the conclusion that the writ petitions are without merits. 14. In me ultimate analysis the purpose of Rule of Law under Article 14 is to sub-serve the public interest. In considering the relation between the rule of law and other values the law should serve, it is of particular importance to remember that the rule of law is essentially a negative value. It is merely designed to minimize the harm to freedom and dignity which the law may cause in its pursuit of its goals however laudable these may be. Finally regarding the rule of law as the inherent excellence of the law means that it fulfils essentially a subservient role. Conformity to it makes the law a good instrument for achieving certain goals, but conformity to the rule of law is not itself an ultimate goal. This subservient role of the doctrine shows both its power and its limitations. On me one hand if the pursuit of certain goals is entirely incompatible with the rule of law then these goals should not be pursued by legal means. But on the other hand one should be wary of disqualifying the legal pursuit of major social goals in the name of the rule of law. After all the rule of law is meant to enable the law to promote social good, ad should not be lightly used to show that it should not do so. Sacrificing too many social goals on the alter of the rule of law may make the law barren and empty. [The Rule of Law and its Virtue - Joseph RAZ (1977) 93 LQR 195]. The appeals are, therefore, dismissed. Appeal dismissed.