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2011 DIGILAW 984 (MP)

Upendra Singh Chouhan v. State of M. P.

2011-08-24

S.K.GANGELE, SHEEL NAGU

body2011
JUDGMENT : S.K. Gangele, J.:- Petitioner has filed this petition for the following relief (s):- "(i) That, the instant petition may kindly be allowed and the entire process of inviting tenders under CRF Project vide NIT No. 02/SAC/D-2Gwl/CRF/2011-12-Tender No. 5064 may kindly be declared as unconstitutional. (ii) That, the Respondents No. 1, 2 & 3 may kindly be further directed to initiate fresh process by inviting fresh tenders for improvement of Aron Ranighati Road Length 13.60 kms. under CRF Scheme with the direction to remove entire inconsistency and differences in the process in inviting fresh tenders. (iii) That, the other relief which this Hon'ble Court may deems fit may be granted." 2. Respondents No. 2 and 3 published a notice and invited tenders under CRF Project vide NIT No. 02/SAC/D-2Gwl/CRF/2011-12-Tender No. 5064 for improvement of Aron Ranighati Road Length 13.60 kms. under CRDF Scheme. The petitioner submitted his bid, however, that has not been accepted. 3. Respondents No. 1 to 3 along with the return filed minutes of the meeting of the Evaluation Committee held on 01.07.2011. The Evaluation Committee opened all the Technical bids on 17.06.2011 and evaluated the technical bids and recorded following findings: - "As per requirement contained in NIT, Bidder were required to submit hard bound copies of their technical bids in addition to online submission. It is seen that M/s C. R. Construction and M/s Om Shree Shanti Builders Ltd. has not submitted their technical bids in hard bound form. Their submission cannot be considered for evaluation. Accordingly, they are proposed to be disqualified. In addition to above other deficiencies have been observed in submission of bid which are as under - a) M/s C.R Construction has not furnished with the bid undertaking for validity of bid. Necessary affidavit, Bank undertaking and other documents, and not fulfill minimum qualification criteria in respect of bid capacity and average annual turnover. b) Bid Security in shape of E.G. submitted by M/s Om Shree Shanti Builders Ltd issued by HDFC Bank on 08.06.2011 is valid up to 20.11.2011 (i.e. 159 - days from the date of tender) instead of required 165 - days, also financial turnover submitted is not as per provisions of SBD. c) The Evaluation Committee evaluated technical bids and it is observed that bidder M/s K.P. Singh Bhadoriya and M/s Shapers Construction Ltd. Generally fulfill the stipulated qualifying criteria. c) The Evaluation Committee evaluated technical bids and it is observed that bidder M/s K.P. Singh Bhadoriya and M/s Shapers Construction Ltd. Generally fulfill the stipulated qualifying criteria. The Evaluation Committee recommends following bidders as technically qualified and recommends for opening of financial bids, (i) M/s K.P. Singh Bhadoriya (ii) M/s Shapers Constructions Ltd. The meeting ended with thanks to the Chair." 4. From the aforesaid findings recorded by the Evaluation Committee, it is clear that petitioner has not submitted its technical bid in hard bound form. The petitioner also did not submit the bid security for 165 - days. It submitted the bid security of the petitioner was for a period of 159 - days. It is also mentioned by the Evaluation Committee that the financial turn over of the petitioner was not in accordance with minimum qualification criteria. On the aforesaid ground the Evaluation Committee rejected the bid of the petitioner. 5. Hon'ble the Supreme Court in the case of Zonal Manager, Central Bank of India Vs. Devi Ispat Limited and others, reported in (2010) 11 SCC 186 , has held as under in regard to interference by the High Court in exercise of power of writ jurisdiction under Article 226 of the Constitution of India in writ jurisdiction under Article 226 of the Constitution of India in contractual matters after considering its previous judgments: - "24. After adverting to certain factual details the Court framed following question: "As could be seen from the arguments addressed in this appeal and as also from the divergent views of the two courts below, one of the questions that falls for our consideration is whether a writ petition under Article 226 of the Constitution of India is maintainable to enforce a contractual obligation of the State or its instrumentality, by an aggrieved party." 25. The following discussion and conclusion are apt and relevant for our purpose. They are: (ABL International Ltd. Case (2004) 3 SCC 553 , SCC pp. 564-69, para 9-19). "9. In our opinion this question is no more res integra and is settled by a large number of judicial pronouncements of this Court. In K.N. Guruswamy v. State of Mysore AIR 1954 SC 592 , this Court held: (AIR pp. 595-96, para 20) "20. The next question is whether the appellant can complain of this by way of a writ. In our opinion this question is no more res integra and is settled by a large number of judicial pronouncements of this Court. In K.N. Guruswamy v. State of Mysore AIR 1954 SC 592 , this Court held: (AIR pp. 595-96, para 20) "20. The next question is whether the appellant can complain of this by way of a writ. In our opinion, he could have done so in an ordinary case. The appellant is interested in these contracts and has a right under the laws of the State to receive the same treatment and be given the same chance as anybody else.... We would therefore in the ordinary course have given the appellant the-writ he seeks. But, owing to the time which this matter has taken to reach us (a consequence for which the appellant is in no way to blame, for he has done all he could to have an early hearing), there is barely a fortnight of the contract left to go.... A writ would therefore be ineffective and as it is no our practice to issue meaningless writs we must dismiss this appeal and leave the appellant content with an enunciation of the law." 10. It is clear from the above observations of this Court in the said case, though a writ was not issued on the facts of that case, this Court has held that on a given set of facts if a State acts in an arbitrary manner even in a matter of contract, an aggrieved party can approach the court by .way of writ under Article 226 of the Constitution and the court depending on facts of the said case is empowered to grant the relief. This judgment in K.N. Guruswamy v. State of Mysore was followed subsequently by this Court in the case of D.EO. v. Ram Sanehi Singh wherein this Court held: (SCC p. 865,para 4) "4.....By that order he has deprived the respondent of a valuable right. We are unable to hold that merely because the source of the right which the respondent claims was initially in a contract, for obtaining relief against any arbitrary and unlawful action on the part of a public authority he must resort to a suit and not to a petition by way of a writ. We are unable to hold that merely because the source of the right which the respondent claims was initially in a contract, for obtaining relief against any arbitrary and unlawful action on the part of a public authority he must resort to a suit and not to a petition by way of a writ. In view of the judgment of this Court in K.T" Guruswamy case there can be no doubt that the petition was maintainable, even if the right to relief arose out of an alleged breach of contract, where the action challenged was of a public authority invested with statutory power." (Emphasis supplied) 11. In the case of Gujarat State Financal Corpn. V Lotus Hotels (P) Ltd., (1983) 3 SCC 379 , this Court following an earlier judgment in Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCC 489 , held: (SCC pp. 380) "The instrumentality of the State which would be 'other authority' under Article 12 cannot commit breach of a solemn undertaking to the prejudice of the other party which acted on that undertaking or promise and put itself in a disadvantageous position. The appellant Corporation, created under the State Financial Corporations Act, falls within the expre ion of 'other authority' in Article 12 and if it backs out from such a promise, it cannot be said that the only remedy for the aggrieved party would be suing for damages for breach and that it could not compel the Corporation for specific performance of the contract under Article 226." 12. The learned counsel appearing for the first respondent, however, submitted that this Court has taken a different view in the case of LIC of India v. Escorts Ltd., (1986) 1 SCC 264 , wherein this Court held: (SCC p. 344, para 102) "102. If the action of the State is related to contractual obligations or obligations arising out of the tort, the court may not ordinarily examine it unless the action has some public law character attached to it. Broadly speaking, the court will examine actions of State if they pertain to the public law domain and refrain from examining them if they pertain to the private law field. The difficulty will lie in demarcating the frontier between the public law domain and the private law field. Broadly speaking, the court will examine actions of State if they pertain to the public law domain and refrain from examining them if they pertain to the private law field. The difficulty will lie in demarcating the frontier between the public law domain and the private law field. It is impossible to draw the line with precision and we do not want to attempt it. The question must be decided in each case with reference to the particular action, the activity in which the State or the instrumentality of them State is engaged when performing the action, the public law or private law character of the action and a host of other relevant circumstances. When the State or an instrumentality of the State ventures into the corporate world and purchases the shares of a company, it assumes to itself the ordinary role of a shareholder, and dons the robes of a shareholder, with all the rights available to such shareholder. There is no reason why the State as a shareholder should be expected to state its reasons when it seeks to change the management, by a resolution of the company, like any other shareholder." (emphasis supplied) 13. We do not think this Court in the above case has, in any manner, departed from the view expressed in the earlier judgments in the case cited hereinabove. This Court in the case of LIC of India proceeded on the facts of that case and held that a relief by way of a writ petition may not ordinarily be an appropriate remedy. This judgment does not lay down that as a rule in matters of contract the court's jurisdiction under Article 226 of the Constitution is ousted. On the contrary, the use of the words court may not ordinarily examine it unless the action has some public law character attached to it" itself indicates that in a given case, on the existence of the required factual matrix a remedy under Article 226 of the Constitution will be available. The learned counsel then relied on another judgment of this Court in the case of State of U.P. v. Bridge & Roof Co. (India) Ltd., (1996) 6 SCC 22 , wherein this Court held: (5CC p. 31, para 21) "21.... Further, the contract in question contains a clause providing inter alia for settlement of disputes by reference to arbitration. The learned counsel then relied on another judgment of this Court in the case of State of U.P. v. Bridge & Roof Co. (India) Ltd., (1996) 6 SCC 22 , wherein this Court held: (5CC p. 31, para 21) "21.... Further, the contract in question contains a clause providing inter alia for settlement of disputes by reference to arbitration. The arbitrators can decide both questions of fact as well as questions of law. When the contract itself proves for a mode of settlement of disputes arising from the contract, there is no reason why the parties should not follow and adopt that remedy and invoke the ' extraordinary jurisdiction of the High Court under Article 226. The existence of an effective alternative remedy-in this case, provided in the contract itself - is a good ground for the court to decline to exercise its extraordinary jurisdiction under Article 226. 14. This judgment again, in our opinion, does not help the first respondent in the argument advanced on its behalf that in contractual matters remedy under Article 226 of the Constitution does not lie. It is seen from the above extract that in that case because of an arbitration clause in the contract, the Court refused to invoke the remedy under Article 226 of the Constitution. We have specifically inquired from the parties to the present appeal before us and we have been told that there is no such arbitration clause in the contract in question. It is well known that if the parties to a dispute had agreed to settle their dispute by arbitration and, if there is an agreement in that regard, the courts will not permit recourse to any other remedy without invoking the remedy by way of arbitration, unless of course both the parties to the dispute agree on another mode of dispute resolution. Since that is not the case in the instant appeal, the observations of this Court in the said case of Bridge & Roof Co. are of no assistance to the first respondent in its contention that in contractual matters, writ petition is not maintainable. 15. Since that is not the case in the instant appeal, the observations of this Court in the said case of Bridge & Roof Co. are of no assistance to the first respondent in its contention that in contractual matters, writ petition is not maintainable. 15. The learned counsel then contending that this Court will not, entertain a writ petition involving disputed questions of fact relied on a judgment of this Court in the case of State of Bihar v. Jam Plastics and Chemicals Ltd. (2010) 1 SCC 216, wherein this Court held: (SCC p. 218, para 7) 7. In our view, it is apparent that the order passed by the High Court is, on the face of it, illegal and erroneous. It is trife that many matters could be decided after referring to the contentions raised in the affidavits end counter-affidavits, but that would hardly be a ground for exercise of extraordinary jurisdiction under Article 226 of the Constitution in case of alleged breach of contract. Whether the alleged non-supply of road permits by the appellants would justify breach of contract by the respondent would depend upon facts and evidence and is not required to be decided or dealt with in a writ petition. Such seriously disputed questions or rival claims of the parties with regard to breach of contract are to be investigated and determined on the basis of evidence which may be led by the parties in a properly instituted civil suit rather than by a court exercising prerogative of issuing writs." 16. A perusal of this judgment though shows that a writ petition involving serious disputed questions of facts which requires consideration of evidence which is not on record, will not normally be entertained by a court in the exercise of its jurisdiction under Article 226 of the Constitution of India. This decision again, in our opinion, does not lay down an absolute rule that in all cases involving disputed questions of fact the parties should be relegated to a civil suit. In this view of ours, we are supported by a judgment of this Court in the case of Gunwant Kaur v. Municipal Committee. Bhatinda, (1969) 3 SCC 769 , where dealing with such a situation of disputed questions of fact in a writ petition this Court held: (SCC p. 774, paras 14-16). "14. In this view of ours, we are supported by a judgment of this Court in the case of Gunwant Kaur v. Municipal Committee. Bhatinda, (1969) 3 SCC 769 , where dealing with such a situation of disputed questions of fact in a writ petition this Court held: (SCC p. 774, paras 14-16). "14. The High Court observed that they will not determine disputed question of fact in a writ petition. But what facts were in dispute and what were admitted could only be determined after an affidavit - in - reply was filed by the State. The High Court, however, proceeded to dismiss the petition in limine. The High Court is not deprived of its jurisdiction to entertain a petition under Article 226 merely because in considering the petitioners right to relief questions of fact may fall to be determined. In petition under Article 226 the High Court has jurisdiction to try issues both of fact and law. Exercise of the jurisdiction is, it is true, discretionary but the discretion must be exercised on sound Judicial principles. When the petition raises questions of fact of a complex nature, which may for their determination require oral evidence to be taken, and on that account the High Court is of the view that the dispute may not appropriately be tried in a writ petition, the High Court may decline to try a petition. Rejection of a petition in limine will normally be justified, where the High Court of the view that the petition is frivolous or because of the nature of the claim made dispute sought to be agitated, or that the petition against the party against whom relief is claimed is not maintainable or that then dispute raised thereby is such that it would be inappropriate to try it in the writ jurisdiction, or for analogous reasons. 15. From the averments made in the petition filed by the appellants it is clear that in proof of a large number of allegations the appellants relied upon documentary evidence and the only matter in respect of which conflict of facts may possibly arise related to the due publication of the notification under Section 4 by the Collector. 16. In the present case, in our judgment the High Court was not justified in dismissing the petition on the ground that it will not determine disputed question of fact. 16. In the present case, in our judgment the High Court was not justified in dismissing the petition on the ground that it will not determine disputed question of fact. The High Court has jurisdiction to determine questions of fact, even if they are in dispute and the present, in our judgment, is a case in which in the interests of both the parties the High Court should have entertained the petition and called for an affidavit - in - reply from the respondents, and should have proceeded to try the petition instead of relegating the appellants to a separate suit." 17. The above judgment of Gunwant Kaur finds support from other judgment of this Court in the case of Century Spg. and Mfg. Co. Ltd. v. Ulhasnagar Municipal Council, (1970) 1 SCC 769 , wherein this Court held: (SCC p. 587, para 13) "Merely because a question of fact is raised, the High Court will not be justified in requiring the party to seek relief by the somewhat lengthy, dilatory and expensive process by a civil suit against a public body. The questions of fact raised by the petitioner in this case are elementary." 18. This observation of the Court was made while negating a contention advanced on behalf of the respondent Municipality which contended that the petition filed by the appellant Company therein apparently raised questions of fact which argument of the Municipality was accepted by the High Court holding that such disputed questions of fact cannot he tried in t he exercise of the extraordinary jurisdiction under Article 226 of the Constitution. Bat this Court held otherwise. 19. Therefore, it is clear from the above enunciation of law that merely because one of the parties to the litigation raises a dispute in regard to the facts of the case, the court entertaining such petition under Article 226 of the Constitution is not always bound to relegate the parties to a suit. In the above case of Gunwant Kaur this Court even went to the extent of holding that in a writ petition, if the facts require, even oral evidence can be taken. In the above case of Gunwant Kaur this Court even went to the extent of holding that in a writ petition, if the facts require, even oral evidence can be taken. This clearly shows that in an appropriate case, the writ court has the jurisdiction to entertain a writ petition involving disputed questions of fact and there is no absolute bar for entertaining a writ petition even if the same arises out of a contractual obligation and/or involves some disputed questions of fact." 26. After holding so, this Court has concluded as under: "53. From the above, it is clear that when an instrumentality of the State acts contrary to public good and public interest, unfairly, unjustly and unreasonably, in its contractual, constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution. Thus if we apply the above principle of applicability of Article 14 to the facts of this case, then we notice that the first respondent being an instrumentally of the State and a monopoly body had to be approached by the appellants by compulsion to cover its export risk. The policy of insurance covering the risk of the appellants was issued by the first respondent after seeking all required information and after receiving huge sums of money as premium exceeding Rs. 16 lakhs. On facts we have found that the terms of the policy do not give room to any ambiguity as to the risk covered by the first respondent. We are also of the considered opinion that the liability of the first respondent under the policy arose when the default of exporter occurred and thereafter when the Kazakhstan Government failed to fulfill its guarantee. There is no allegation that the contracts in question were obtained either by fraud or by misrepresentation. In such a situation, we are of the opinion, the facts of this case do not and should not inhibit the High Court from granting the relief sought for by the petitioner. 27. In a recent decision in Karnataka State Forest Industries Corporation Indian Rocks, (2009) 1 SCC150, while considering the similar issue, S.B. Sinha, J. speaking for the Bench reiterated thus: "38. 27. In a recent decision in Karnataka State Forest Industries Corporation Indian Rocks, (2009) 1 SCC150, while considering the similar issue, S.B. Sinha, J. speaking for the Bench reiterated thus: "38. Although ordinarily a superior court in exercise of its writ jurisdiction would not enforce the terms of a contract qua contract, it is trite that when an action of the State is arbitrary or discriminatory and, thus, violative of Article 14 of the Constitution of India, a writ petition would be maintainable. (See ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd.) 39. There cannot be any doubt whatsoever that a writ of mandamus can be issued only when there exists a legal right in the writ petition and a corresponding legal duty on the part of the State, but then if any action on the part of the State is wholly unfair or arbitrary, the superior courts are not powerless." 28. It is clear that, (a) in the contract if there is a clause for arbitration, normally, writ court should not invoke its jurisdiction; (b) the existence of effective alternative remedy provided in the contract itself is a good ground to decline to exercise its extraordinary jurisdiction under Article 226; and (c) if the instrumentality of the State acts contrary to the public good, public interest, unfairly, unjustly, unreasonably discriminatory and violative of Art. 14 of the Constitution of India in its contractual or statutory obligation, writ petition would be maintainable. However, a legal right must exist and corresponding legal duty on the part of the State and if any action on the part of the State is wholly unfair or arbitrary, writ courts can exercise their power. In the light of the legal position, writ petition is maintainable even in contractual matters, in the circumstances mentioned in the earlier paragraphs." 6. The Hon'ble Supreme Court in the case of Chairman, All India Railway Recruitment Board and Another vs. K. Shyam Kumar and others, reported in (2010) 6 SCC 614 , has held as under in regard scope of the judicial review in award of contract:- "21, The High Court applying the Wednesbury principle accepted the last alternative by rejecting the decision by the Railway Board to conduct a retest for those candidates who had obtained minimum qualifying marks in the first written test. We are of the view that the High Court has wrongly applied the above principle and misdirected itself in directing the Board to accept the third alternative. We will examine the decision of the High Court by applying the principle of Wednesbury unreasonableness as well as the doctrine of proportionality. Before that let us examine both the concepts at some length. 22. Judicial review conventionally is concerned, with the question of jurisdiction and natural justice and the Court is not much concerned with the merits of the decision but how the decision was reached. In Council of Civil Service Unions v. Minister of State for Civil Service (GCHQ case) the House of Lords rationalised the grounds of judicial review and ruled that the basis of judicial review could be highlighted under three principal heads, namely, illegality, procedural impropriety and irrationality. Illegality as a ground of judicial review means that the decision maker must understand correctly the law that regulates his decision making powers and must give effect to it. Grounds such as acting ultra vires, errors of law and/or fact, onerous conditions, improper purpose, relevant and irrelevant factors, acting in bad faith, fettering discretion, unauthorized delegation, failure to act etc., fall under the heading "illegality". Procedural impropriety may be due to the failure to comply with the mandatory procedures such as breach of natural justice, such asaudi alteram partem, absence of bias, the duty to act fairly, legitimate expectations, failure to give reasons etc." 7. From the aforesaid judgments of the Hon'ble Supreme Court in which the Hon'ble Supreme Court has considered the earlier judgments, it is clear that the scope of interference by the High Court in contractual matters is limited one and the Court can interfere in the contractual matter if the instrumentality of the State or State acts contrary to the public good, public interest, unfairly, unjustly, unreasonably discriminatory and violative of Article 14 of the Constitution of India. 8. On the aforesaid principle of law laid down by the Hon'ble Supreme Court and the facts of the present case, it is clear that the petitioner did not qualify the terms and conditions of the bid. The case of the petitioner has been evaluated by the Evaluation Committee properly. There is no arbitrariness or illegality in the proceedings of the Evaluation Committee. Hence, in our opinion, there is no merit in this petition. It is hereby dismissed. The case of the petitioner has been evaluated by the Evaluation Committee properly. There is no arbitrariness or illegality in the proceedings of the Evaluation Committee. Hence, in our opinion, there is no merit in this petition. It is hereby dismissed. No order as to costs.