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Madhya Pradesh High Court · body

2009 DIGILAW 550 (MP)

JITENDRA AGRAWAL v. STATE OF M P

2009-04-27

DIPAK MISRA, R.K.GUPTA

body2009
Judgment ( 1. ) IN both the present petitions the challenge is to the legality and validity of the condition No. 2 in the letters of offer dated 20. 6. 2008 which stipulates that the rates quoted therein shall be exclusive of VAT and other taxes. The petitioners have also prayed for quashing of the amended supply order dated 19. 7. 2008 as contained in Annexure P-12 and further for issue of a writ of certiorari to restrain the respondents from taking any action for recovery of the amount on the strength of the order dated 19. 7. 2008 as well as the condition No. 2 of the offer dated 20. 6. 2008. Thus, the questions of fact and law involved in the present writ petitions being similar, both the petitions were heard together and are disposed of by this singular order. ( 2. ) THE petitioners engage in the business of supply of cement and they are authorized dealers for sale and supply of cement of various cement companies. The petitioners are also registered suppliers with the second respondent, namely, M. P. Laghu Udyog Vikas Nigam Limited, which is an undertaking of the Government of Madhya Pradesh for procurement of cement in various government departments. According to the petitioners, for the past several years they have been regularly and successfully supplying cement to various government departments as per the supply orders and directions of the second respondent. ( 3. ) IT is stated that in the month of October, 2007 a Notice inviting Tender (NIT) was issued by the respondent No. 2 for procurement of cement and thereafter a rate list, as contained in Annexure P-2, was issued which was valid for a period upto 16th January,2008. The petitioners participated in the NIT and they were issued orders for supply of cement, which are contained in Annexure P-3. It is alleged that after expiry of rate list on 16. 1. 2008 no fresh NIT was issued but various registered supplies including the petitioners were issued conditional orders (Annexure P-4) asking for supply of cement subject to a condition that "if lower rates are approved in new tender then approved lower rate will be applicable in this supply, indenter/consignee should withheld 25% payment in this supply order, which should only be released after getting confirmation from this office". Admittedly, the petitioners made supply of cement to the various government departments in pursuance of the aforesaid supply orders. ( 4. ) THE petitioners submitted their bids in pursuance of an nit (Annexure P-5) issued by the respondent No. 2 on 16. 4. 2008. Thereafter, the petitioners were issued the offer letters requiring them to execute the agreement for supply of cement on the rates quoted in the letter of offer. The Clause-2 of the offer letter reads:- "the above rates are inclusive of 2% LUN, service charge, service tax, excise duty as/if applicable, vat and other taxes. " ( 5. ) IT is submitted on behalf of the petitioners that Clause 2 of the terms and conditions of the NIT dated 16. 4. 2008 (Annexure P-5) earlier provided that the "rates should be quoted ex-works inclusive duties and LUNs service charges @2% plus service tax but VAT and other levies as applicable shall be payable extra" whereas while issuing the letter of offer the respondent No. 2 has altered the terms and conditions of the NIT which provided that the rates quoted shall be exclusive of VAT and other taxes. On this basis, it is contended that the respondent No. 2 without any authority in law has unilaterally altered the terms and conditions of the NIT and such an action of the respondent No. 2 without giving any opportunity to the petitioners is in violation of the fundamental rights guaranteed under Article 14 and 19 (1) (g) of the constitution of India. Further grievance of the petitioners is that the respondent No. 2 is contemplating recovery against them in respect of the supplies which were made by the petitioners on the basis of condition that if in the subsequent NIT lower rates are received, the amount would be recovered from the petitioners. ( 6. ) DURING the pendency of the writ petition the petitioners have brought on record amended supply orders dated 19. 7. 2008 issued by the respondents No. 2 and 3 as contained in Annexure P-12 and have prayed for its quashment. According to the petitioners, the aforesaid amendment in the order is arbitrary and illegally as it provides that the department is not supposed to make payment of VAT and other taxes. The aforesaid amount should be deducted from the 25% of the amount of the bill which was supposed to be withheld. ( 7. According to the petitioners, the aforesaid amendment in the order is arbitrary and illegally as it provides that the department is not supposed to make payment of VAT and other taxes. The aforesaid amount should be deducted from the 25% of the amount of the bill which was supposed to be withheld. ( 7. ) THE respondents No. 2 and 3 in their return have raised a preliminary objection that offer was given to 60 eligible bidders so that if bidder agrees then agreement could be executed on the rates so approved for the terms prescribed but the petitioners have declined to execute the agreement, though large number of other bidders have accepted the terms and executed the agreement. On this basis, it is argued on behalf of the respondents that the subject matter is purely a contractual one and does not give rise to violation of fundamental right and the respondents are well within their right to have profitable negotiations in the process of competitive finalization of rates. ( 8. ) IT is further submitted on behalf of the respondents that for the earlier tender No. 7073-A an agreement was entered into with the bidders on 16. 10. 2007 which was valid for three months i. e. upto 16. 01. 2008 wherein clause-2 of the Contract clearly provided that "unless revoked by party no. 1, the agreed rates shall remain in force and be valid till three months from the date of this agreement, which may be extended thereafter for a further period as agreed mutually between both the parties". Then, after expiry of validity of rate list the respondents decided to invite offers only and exclusively from the manufacturers so that procurement of cement at cheaper rates could be achieved. The tender was published on 2. 1. 2008 but respondents did not receive satisfactory response and therefore, fresh NIT No. KE 7276-A was issued for a period of three months. In the meantime, since the finalization of lowest rates was bound to take some time, the respondent No. 2 had issued conditional orders wherein it was specifically stipulated that "if in the new tender lesser rates (than rates prescribed in tender No. KE 7073-A) are decided, then the supply orders shall be modified accordingly". In the meantime, since the finalization of lowest rates was bound to take some time, the respondent No. 2 had issued conditional orders wherein it was specifically stipulated that "if in the new tender lesser rates (than rates prescribed in tender No. KE 7073-A) are decided, then the supply orders shall be modified accordingly". On the basis of the said specific condition, it is put forth on behalf of the respondents that it was up to the supplier not to make the supply if the condition imposed was unacceptable. ( 9. ) ON the basis of the aforesaid facts it is clear that the contract was valid only for a period of three months, which is now over and therefore, it is difficult for us to give any effective relief to the petitioners. ( 10. ) IT is contended on behalf of the petitioners that after the tenders were submitted by the petitioners the respondents negotiated with other suppliers and reduced the rates. The rates which were quoted in the tender, in any case, could not have been reduced unilaterally. ( 11. ) IT is to be seen that there was stipulation in the order itself wherein it was stated that if in the new tender, lesser rates than the rates prescribed in the tender No. KE 7073-A are decided then the supply orders shall be modified. According to us, this clause empowers the respondents to reduce the rates but it is equally true that the rates cannot be reduced arbitrarily. With respect to arbitrary action of the respondents it is perceivable from the record that the respondents have submitted enough material along with their return to show that when fresh NIT was issued other companies had submitted rates for supply of cement at much lower rates. During course of argument, it is also submitted on behalf of the respondents that apart from the above rates, each petitioner is entitled to the transportation charges to cover the expenses incurred by them for transportation of the goods. On this basis, it cannot be said that merely because there had been less distance for which new tenders have been submitted, rates cannot be reduced. There has been stipulation in the order issued in favour of the petitioners that in case new tenders are invited and lesser rates are received for supply of material, then accordingly the rates would be modified. ( 12. There has been stipulation in the order issued in favour of the petitioners that in case new tenders are invited and lesser rates are received for supply of material, then accordingly the rates would be modified. ( 12. ) IN view of the aforesaid, we do not find that the respondents have arbitrarily reduced the rates. There has been justification given by the respondents to reduce the rates as other suppliers were willing to supply the rates on lower price than the rates quoted by the petitioners and the difference was huge. We are of the considered view that there is no substance in the petitions and both the petitions are dismissed accordingly. There shall be no order as to costs.