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2011 DIGILAW 467 (MP)

Bagga Tyre and Transport Pvt. Ltd. v. Indian Oil Corporation

2011-04-19

ABHAY M.NAIK, SHANTANU KEMKAR

body2011
ORDER Abhay M. Naik, J. 1. This petition under Article 226 of the Constitution of India has been preferred by the Petitioner in respect of the grievance against non-consideration of its tender by the Indian Oil Corporation (i.e. the Respondent) for transportation of Indane Cylinders in vertical position on unit rate basis ex Ujjain LPG Bottling Plant. The Petitioner has prayed for issuance of writ, order or direction directing the Respondent for opening of the price bid of the Petitioner and to allot him to work, in case of its tender being the lowest and responsive. 2. Short facts, leading to the present writ petition are that the Petitioner is a private limited Company duly incorporated under the provisions of Companies Act, 1956. Respondent invited tenders for the aforesaid transportation in 2 envelopes system; Envelope A containing credential and technical bid and envelope B containing price bid. NIT is on record as Annexure P-2. Clause 1.3 of the General Guidelines applicable to the tender in question was as follows: 1.3 Tender should be submitted only in the prescribed forms supplied by the Corporation downloaded from the website namely www.indianoiltenders.com. Whenever tenders are downloaded from web site, such tenders are exempted from paying the tender fees. Forms are non-transferable and can be submitted only by the purchaser/party in whose name those are issued. Violation of this provision will automatically debar the tender from consideration. The Petitioner stated that he could not download tender form due to some technical problem while using his e-mail ID as such he downloaded tender form using e-mail ID of his friend. The Petitioner got the tender form copied from his friend, who himself has submitted tender form procured by him by downloading under the name of Gas-O-Point. The Petitioner submitted its tender in two envelopes system for 38 trucks on photocopy of the tender form, downloaded by his friend. He submitted earnest money by depositing Rs. 5,70,000/- by DD No. 517018, drawn on Bank of Baroda, Transport Nagar Branch, Indore. Petitioner did not receive any response. On making contact, he was informed that his tender form has been rejected because of the fact that he had not submitted the tender form by downloading from the official website of the Respondent. 5,70,000/- by DD No. 517018, drawn on Bank of Baroda, Transport Nagar Branch, Indore. Petitioner did not receive any response. On making contact, he was informed that his tender form has been rejected because of the fact that he had not submitted the tender form by downloading from the official website of the Respondent. Contention of the Petitioner is that Clause 1.3 of the tender guidelines is not mandatory in nature and the tender form of the Petitioner ought to have been opened. Accordingly, a prayer has been made for issuance of writ, order or direction directing the Respondent to open the price bid of the Petitioner and to allot him work in case, its tender is found to be the lowest and responsive. 3. Respondent submitted its reply stating therein that Clause 1.3 (supra) is mandatory and the tender form of the Petitioner being in contravention of the same, has been rightly rejected. 4. Shri Vijay Assudani, Advocate for the Petitioner and Shri B.L. Pavecha, Senior Advocate for the Respondent made their respective submissions, which have been considered in the light of material on record, as well as the law governing the situation. 5. At the outset, it has been contended by Shri B.L. Pavecha, learned senior Advocate appearing for the Respondent that the Petitioner has not pleaded the source of downloading the tender form, which amounts to suppression of material fact and the petition is liable to be dismissed on this short count, in view of the law laid down by the Predecessor of this Court in the case of Zikar S/o Yusuf v. The Government of Madhya Pradesh AIR 1951 Nag 16 wherein it has been observed: What the Constitution provides is a special speedy remedy for the enforcement of the fundamental rights and for any other purpose. But a person is not entitled to such a remedy as a matter of course. The very nature of the remedy requires that those who seek it must approach the Court in perfect good faith and place all the material facts before the Court. Otherwise the Court, might be misled to pass orders the consequences of which may be far reaching and even irreparable. The very nature of the remedy requires that those who seek it must approach the Court in perfect good faith and place all the material facts before the Court. Otherwise the Court, might be misled to pass orders the consequences of which may be far reaching and even irreparable. On perusal, it is found that the Petitioner in paragraph 5.6 of the writ petition has clearly averred that it has procured the tender form not by itself by downloading from the official website of the Respondent, but has obtained from his friend. Annexure P-6 is duly placed on record by the Petitioner, wherein it is clearly mentioned that the tender form was downloaded by one Mishraji, who himself has submitted his tender in the name of Gas-O-Point. Thus, the Petitioner has obtained the photocopy of the tender form from his friend, which was downloaded by the latter. Thus, we do not find suppression of any material fact. Moreover, it is admitted by Shri B.L. Pavecha, learned Senior Advocate that no disqualification accrues against the tenderer who allowed the tender form downloaded by him to be photocopied by another person. Every suppression in the writ petition cannot be treated as fatal and it does not necessarily provide a ground for dismissal of writ petition, at the threshold. Nature of suppression and consequences of suppression shall have to be taken into consideration while dealing with the question of maintainability of the writ petition in the light of the alleged suppression. In the case of Zikar (supra) itself it has been further observed that what acts are material in a particular case would necessarily depend on the nature of the order, direction or writ sought. In the present case, the Petitioner, in view of its specific averment about having obtained the tender form not by downloading by itself from the official website of the Respondent, would not gain anything by suppressing the source of tender form. Similarly, such disclosure would not have put it into disadvantageous position, anymore when it has been clearly averred by the Petitioner that he did not download the tender form from the official website of the Respondent. We, therefore, reject the plea of Mr. Pavecha. 6. Similarly, such disclosure would not have put it into disadvantageous position, anymore when it has been clearly averred by the Petitioner that he did not download the tender form from the official website of the Respondent. We, therefore, reject the plea of Mr. Pavecha. 6. Petitioner's learned Counsel Shri Vijay Assudani submitted that the Court in the matter of tenders shall look into the following aspects as laid down by the Hon'ble Supreme Court of India in the case of Tata Cellular v. Union of India AIR 1996 SC 11 . 93. The duty of the Court is to confine itself to the question of legality. Its concern should be: 1. whether a decision-making authority exceeded its powers? 2. committed an error of law. 3. committed a breach of the rules of natural justice. 4. reached a decision which no reasonable Tribunal would have reached or. 5. abused its powers. In view of the aforesaid, it has been contended that since the Petitioner has submitted its tender within time and its rate was lesser than that of the successful tenderer, the same ought to have been opened and accepted, being the lowest. He placed reliance on the following passages of the Apex Court in the case of Kasturi Lal Lakshmi Reddy etc. v. The State of Jammu and Kashmir and Anr. AIR 1980 SC 1992 : 11. So far as the first limitation is concerned, it flows directly from the thesis that unlike a private individual, the State cannot act as it pleases in the matter of giving largess. Though ordinarily a private individual would be guided by economic considerations of self-gain in any action taken by him, it is always open to him under the law to act contrary to his self-interest or to oblige another in entering into a contract or dealing with his property. But the Government is not free to act as it likes in granting largess such as awarding a contract or selling or leasing out its property. Whatever be its activity, the Government is still the Government and is, subject to restraints inherent in its position in a democratic society. The constitutional power conferred on the Government cannot be exercised by its arbitrarily or capriciously or in an unprincipled manner, it has to be exercised for the public good. Whatever be its activity, the Government is still the Government and is, subject to restraints inherent in its position in a democratic society. The constitutional power conferred on the Government cannot be exercised by its arbitrarily or capriciously or in an unprincipled manner, it has to be exercised for the public good. Every activity of the Government has a public element in it and it must, therefore, be informed with reason and guided by public interest. Every action taken by the Government must be in public interest; the Government cannot act arbitrarily and without reason and if it does, its action would be liable to be invalidated. If the Government awards a contract or leases out or otherwise deals with its property or grants any other largess, it would be liable to be tested for its validity on the touchstone of reasonableness and public interest and if it fails to satisfy either test, it would be unconstitutional and invalid. 14. Where any governmental action fails to satisfy the test of reasonableness and public interest discussed above and is found to be wanting in the quality of reasonableness or lacking in the element of public interest, it would be liable to be struck down as invalid. It must follow as a necessary corollary from this proposition that the Government cannot act in a manner which would benefit a private party at the cost of the State; such an action would be both unreasonable and contrary to public interest. The Government therefore, cannot, for example, give a contract or sell or lease out its property for a consideration less than the highest that can be obtained for it, unless of course there are other considerations which render it reasonable and in public interest to do so. Such considerations may be that some Directive Principle is sought to be advanced or implemented or that the contract or the property is given not with a view to earning revenue but for the purpose of carrying out a welfare scheme for the benefit of a particular group or section of people deserving it or that the person who has offered a higher consideration is not otherwise fit to be given the contract or the property. We have referred to these considerations only illustratively, for there may be an infinite variety of considerations which may have to be taken into account by the Government in formulating its policies and it is on a total evaluation of various considerations which have weighed with the Government in taking a particular action, that the Court would have to decide whether the action of the Govt, is reasonable and in public interest. But one basic principle which must guide the Court in arriving at its determination on this question is that there is always a presumption that the governmental action is reasonable and in public interest and it is for the party challenging its validity to show that it is wanting in reasonableness or is not informed with public interest. This burden is a heavy one and it has to be discharged to the satisfaction of the Court by proper and adequate material. The Court cannot lightly assume that the action taken by the Government is unreasonable or without public interest because, as we said above, there are a large number of policy considerations which must necessarily weigh with the Government in taking action and therefore the Court would not strike down governmental action as invalid on this ground, unless it is clearly satisfied that the action is unreasonable or not in public interest. But where it is so satisfied, it would be the plainest duty of the Court under the Constitution to invalidate the governmental action. This is one of the most important functions of the Court and also one of the most essential for preservation of the rule of law. It is imperative in a democracy governed by the rule of law that governmental action must be kept within the limits of the law and if there is any transgression, the Court must be ready to condemn it. It is a matter of historical experience that there is a tendency in every government to assume more and more powers and since it is not an uncommon phenomenon in some countries that the legislative check is getting diluted, it is left to the Court as the only other reviewing authority under the Constitution to be increasingly vigilant to ensure observance with the rule of law and in this task, the Court must not flinch or falter. It may be pointed out that this ground of invalidity, namely, that the governmental action is unreasonable or lacking in the quality of public interest, is different from that of mala fides though it may, in a given case, furnish evidence of mala fides. 7. It is further submitted that the tender price offered by the Petitioner is lesser by 22 paise per cylinder. There would be huge loss to the public exchequer. Same is to be avoided in the light of the following observations made by the Apex Court in the case of Divya Manufacturing Co. (P) Ltd. v. Union of India and Ors. AIR 2000 SC 2346 : 11. In our view, on facts it is apparent that the Division bench of the High Court has considered all the relevant facts including the fact that at the initial stage, the Appellant "Divya" offered only Rs. 37 lakhs to purchase the properties. That means the Appellant wanted to purchase at a throw away price. Thereafter, at the intervention of the Court, the price was increased to Rs. 13 crores by the Appellant. This indicates that Appellant was keen to purchase the property, however, by paying only the bare minimal amount and to take advantage of sale by the liquidator in the hope that if there are no other purchasers, it would purchase the Company at a price which is abnormally below the market price. It is also true that on 2nd July, 1998, the offer made by the Appellant was accepted and it was ordered that sale in its favour be confirmed, but at the same time, before possession of the property could be handed over, or before the sale deed could be executed in its favour, Respondent Nos. 7 and 8 pointed out that the assets and properties could be sold at Rs. 2 crores. For showing their bona fides, they were directed to deposit Rs. 40 lakhs each and also to pay Rs. 70 thousand each as damagers to the Appellant. Further, the application for setting aside the sale was filed within a few days of the order accepting the bid of the Appellant. 2 crores. For showing their bona fides, they were directed to deposit Rs. 40 lakhs each and also to pay Rs. 70 thousand each as damagers to the Appellant. Further, the application for setting aside the sale was filed within a few days of the order accepting the bid of the Appellant. In these set of circumstances, when correct market value of the assets was not properly known to the Court and the sale was confirmed at grossly inadequate price, it was open to the Court to set it at naught in the interest of the company, its secured and unsecured creditors and the employees. Appellant is also duly compensated by payment of Rs. 70 thousand each by Respondent Nos. 7 and 8. 12. ...The condition of confirmation by the Court operates as a safeguard against the property being sold at inadequate price whether or not it is a consequence of any irregularity or fraud in the conduct of the sale. In every case it is the duty of the Court to satisfy itself that having regard to the market value of the property the price offered is reasonable...it will be not only proper but necessary that the Court in exercising the discretion which it undoubtedly has of accepting or refusing the highest bid at the auction held in pursuance of its orders, should see that the price fetched at the auction is an adequate price even though there is no suggestion of irregularity or fraud. 16. As stated above, neither the possession of the property nor the sale deed was executed in favour of the Appellant. The offer of Rs. 1.30 crore is totally inadequate in comparison to the offer of Rs. 2 crores and in case where such higher price is offered, it would be in the interest of the Company and its creditors to set aside the sale. This may cause some inconvenience or loss to the highest bidder but that cannot be helped in view of the fact that such sales are conducted in Court precincts and not by a business house well versed with the market forces and price. Confirmation of the sale by a Court at grossly inadequate price, whether or not it is a consequence of any irregularity or fraud in the conduct of sale, could be set aside on the ground that it was not just and proper exercise of judicial discretion. Confirmation of the sale by a Court at grossly inadequate price, whether or not it is a consequence of any irregularity or fraud in the conduct of sale, could be set aside on the ground that it was not just and proper exercise of judicial discretion. In such cases, a meaningful intervention by the Court may prevent, to some extent, underbidding at the time of auction through Court. In the present case, the Court has reviewed its exercise of judicial discretion within a shortest time. 8. It has been contended by Shri B.L. Pavecha, learned senior counsel appearing for the Respondent that the conditions of the tender are to be strictly adhered to and the Petitioner having participated in the tender process under the same conditions, cannot be permitted to make a challenge to Clause 1.3, after his tender form was rejected in the light of it. To buttress it, he placed reliance on various decisions: 9. In the case of Sorath Builders v. Shreejikrupa Buildcon Limited (2009) 11 SCC 9 , the Hon'ble Supreme Court has held: 5. One of terms and conditions of the bid was that pre-qualification documents were required to be sent by 27-11-2008. Since the bid of Respondent 1, Shreejikrupa Buildcon Ltd. was sent on 1-12-2008, i.e. three days after the last date of receiving these documents by the University the bid of Respondent 1 could not have been opened as it was received beyond the time stipulated and accordingly it was not taken into consideration. The University considered the following stipulation in the tender: Late date of 'online' submission of price bid is dated 28-11-2008 up to 1800 hrs. All documents, tender fees, registration, bank solvency, bank guarantee and EMD, etc. duly scanned along with the tender documents should be submitted 'online'. Last date for submission of pre-qualification documents by RPAD/speed post is 27-11-2008. Any violation in the above instructions, the tender will be liable for rejection and will not be opened. In terms of and in accordance with the mandate of the tender notice the tender of Respondent 1 Shreejikrupa Buildcon Ltd. was not opened. 27. Last date for submission of pre-qualification documents by RPAD/speed post is 27-11-2008. Any violation in the above instructions, the tender will be liable for rejection and will not be opened. In terms of and in accordance with the mandate of the tender notice the tender of Respondent 1 Shreejikrupa Buildcon Ltd. was not opened. 27. Following the aforesaid legal principles, laid down by this Court, we are of the considered opinion that Respondent 1 was negligent and was not sincere in submitting his pre-qualification documents within the time schedule laid down despite the fact that he had information that there is a time schedule attached to the notice inviting tenders. Despite being aware of the said stipulation he did not submit the required documents within the stipulated date. Pre-qualification documents were received by Respondent 2 University only after the time schedule was over. The terms and conditions of the tender as held by the Supreme Court are required to be adhered to strictly, and therefore, Respondent 2 University was justified in not opening the tender submitted by Respondent 1 on 1-2-2008, which was late by three days. According to us no grievance could also be made by Respondent 1 as lapse was due to his own fault. In case of Directorate of Education and Ors. v. Educomp Datamatics Ltd. and Ors. AIR 2004 SCW 1505, turn over for eligibility criteria was fixed over 20 crores. Challenge was made to the Clause inviting tenders from firms having a turnover of Rs. 20 crores. While rejecting this plea the Hon'ble Supreme Court has held: 10. In Air India Limited v. Cochin International Airport Limited 2000 (2) SCC 617 , this Court observed: The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not, amenable to judicial review, the Court can examine the decision-making process and interfere if it is bound vitiated by mala fides, unreasonableness and arbitrariness. (Emphasis supplied). The Apex Court in the case of Global Energy Ltd. and Anr. v. Adani Exports Ltd. and Ors. AIR 2005 SCW 2875 has again observed: 10. The principle is, therefore, well settled 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 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 admission hearing of the writ petition and allowed the Appellants to deposit the earnest money by furnishing a bank guarantee or a banker's cheque till three days after the actual date of opening of the tender. The order of the learned single Judge being wholly illegal, was, therefore, rightly set aside by the Division Bench. 10. The question involved in the case in hands is whether Clause 13 (supra) is mandatory or directory. According to the language of the clause, undoubtedly, it is mandatory because a tender form submitted in violation stood excluded from consideration. Clause 1.3 may be bifurcated in the following manner in order to examine its requisites. (i) Tender should be submitted only in the prescribed form supplied by the corporation/downloaded from the website, namely, www.indianoiltenders.com. (ii) Whenever tenders are downloaded from web site, such tenders are exempted from paying the tender fees, (iii) Forms are non-transferable. (iv) Forms can be submitted only by the purchaser/party in whose name they are issued. (i) Tender should be submitted only in the prescribed form supplied by the corporation/downloaded from the website, namely, www.indianoiltenders.com. (ii) Whenever tenders are downloaded from web site, such tenders are exempted from paying the tender fees, (iii) Forms are non-transferable. (iv) Forms can be submitted only by the purchaser/party in whose name they are issued. (v) Violation of Clause 1.3 will automatically debar the tender from consideration. On being examined, it would be revealed that the prescribed form of the tender could have been obtained from the corporation or could have been downloaded from the official website of the Respondent. Only two modes were provided for obtaining the prescribed tender form. One from the corporation itself, another by downloading from the official website of the Respondent. Tender forms were made non-transferable and they could have been submitted only by the purchaser/party in whose name they were issued. Since the tender forms were not made transferable, a prescribed tender form purchased by party or downloaded from the official website of the Respondent, could not have been made available to the Petitioner in lawful manner. If photocopy of the tender form obtained by way of downloading from the official website is permitted, the non-transferability clause would become otiose. Moreover, in case of issuance of forms and also in case of downloading from the official website of the Respondent, the particulars of the person who purchases the prescribed form or who gets the same downloaded from the official website are available with the Respondent and in case of necessity to issue the corrigendum during the period from the date of issuance up to the date of submission of tender forms, the same may be issued directly to such person as per their particulars available with the Respondent. In case, if tender forms filled in on the photocopies of the prescribed tenders are permitted, the Respondent will not be able to issue any corrigendum etc. despite the compelling circumstances and shall have to always restart the process of tender. Thus, considering the language of Clause 1.3, as well as the object and purpose behind it, we hold that Clause 13 is mandatory in nature and the tender form submitted by the Petitioner, without having obtained it by downloading from the official website of the Respondent, was liable to be rejected in view of the said clause and has rightly been rejected. 11. 11. Apart from the aforesaid, it may be seen that the Petitioner failed to establish that the said clause is illegal or arbitrary and its inclusion is vitiated, on account of malice etc. Thus, the Petitioner having participated in the tender process, is not entitled to challenge Clause 1.3 after rejection of his tender form. 12. In this regard, we successfully refer to the Apex Court's decision in the case of State of Orissa and Anr. v. Mamata Mohanty (2011) 3 SCC 436 . 51. More so, relaxation in this manner is tantamount to changing the selection criteria after initiation of selection process, which is not permissible at all. Rules of the game cannot be changed after the game is over. (Vide K. Manjusree v. State of A.P. (2008) 3 SCC 512 and Ramesh Kumar v. High Court of Delhi (2010) 3 SCC 104 . 13. Learned Counsel for the Petitioner has contended that rates quoted by the Petitioner per truck is lowest and the contract granted by the Respondent would result into a total loss of Rs. 25,06,324/- to the public exchequer. Since, the tender of the Petitioner stood rejected, being in contravention of Clause 1.3 and there is no allegation of the writ Petitioner about any kind of fraud or mala fide, we are not inclined to entertain the petition on said plea. In the result, there is no force in the petition. The same is hereby dismissed, however with no order as to costs.