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2013 DIGILAW 1102 (RAJ)

R. N. Metals v. Rajasthan Vidhyut Utpadan Nigam Limited

2013-05-28

AMITAVA ROY, VEERENDR SINGH SIRADHANA

body2013
JUDGMENT AMITAVA ROY, J. 1. The appellants seek interference with the judgment and order dated 28-1-2013 passed in S.B. Civil Writ Petition No. 15997/2012 whereby, his challenge to the decision of the respondent-Nigam in awarding a part of the work for supply of Hi-chrome GM Balls (for short, hereinafter also referred to as Balls) to the respondent No.3 in a process initiated vide NIT No. TN-104/2012 has been rejected. 2. We have heard Mr. S.S. Hora, learned counsel for the appellants and Mr. R.K. Agarwal, Senior Advocate assisted by Ms. Sunita Pareek for the respondent-Nigam. 3. For the order proposed to be passed, we do not consider it necessary to issue formal notice to the respondent No.3. 4. The foundational facts indispensable for the present adjudication need be outlined at the outset. The appellant No.1 has introduced itself to be a manufacturer of Balls involved and claims to have been supplying the same to the respondent-Nigam for the last five years, having been selected therefore in a public participatory process. The respondent-Nigam, by the aforementioned NIT, initiated a process for supply of 2000 MT Hi-chrome Balls of different sizes, and in response thereto, the appellant No.1 submitted its tender along with the essential documents appended thereto. The tender process contemplated that the offer be made in two parts containing technical bid (Part-A) and price bid (Part-B). The respondent No. 3 also, did participate in the process and on the culmination of the exercise of opening the bids and evaluating the same, the appellant No.1 was adjudged to be the lowest bidder (L1) and the respondent No.3 as the second lowest bidder (L2). 5. The price bid was opened on 30-5-2012, and according to the appellants, though the LOI ought to have been issued to the appellant No.1, the matter was delayed in order to give undue benefit to the respondent No.3. On the being asked to extend the validity period of its offer by the respondent, Nigam, the appellant No.1 did so upto 30-9-2012. While the matter rested at that and the stalemate continued, the appellant No.1 on 27-9-2012 wrote a letter to the respondent-Nigam stating that as it had been adjudged to be the lowest bidder and was capable of executing the order for supplying the whole bulk of the Balls as envisaged, it ought to be issued the purchase order. While the matter rested at that and the stalemate continued, the appellant No.1 on 27-9-2012 wrote a letter to the respondent-Nigam stating that as it had been adjudged to be the lowest bidder and was capable of executing the order for supplying the whole bulk of the Balls as envisaged, it ought to be issued the purchase order. Close on the heels of this communication, on 29-9-2012, the appellant No.1 was issued the LOI for supply of only 1,200 MT of Hi-chrome GM Balls and the balance 800 MT was awarded to the L2 (the respondent No.3). The appellants protested against this action on the very same date pleading inter alia that the arrangement sought to be introduced by the respondent- Nigam was contrary to the Central Vigilance Commission (CVC) Guidelines. They reiterated that having regard to the manufacturing capacity of the appellant No.1, it was entitled in law, being the lowest bidder, to be awarded the whole bulk of work. On being asked and following some procrastination the respondent-Nigam supplied a photo state copy of the LOI issued to the respondent No.3 on 5-10-2012. Having unsuccessfully pleaded with the respondent-Nigam, the appellant turned to this Court questioning the validity of its decision to split the contract and awarding a part of the work to the respondent No.3. Violation of the CVC Guidelines and private negotiation with the respondent No.3 to their exclusion, were asseverated by the appellants. 6. The respondent-Nigam, in its reply, while admitting that the appellant No.1 had been supplying Hi-chrome GM Balls to it for the last five years, did assert that during the year 2011-12 against the supply order for 2707 MT of such commodity, it failed to make the same within the stipulated period. While contending that the Hi-Chrome GM Balls are required to grind coal in the coal mills of power generating stations, and that, timely supply of the Balls is essential to maintain flawless generation of power, it averred that reports from the respective generation units about the performance of the appellant No.1 were received by it and a conscious decision was taken by the Chairman & Managing Director of the respondent-Nigam to split the order to avoid any impediment in the process of generation of power. The respondent-Nigam asserted that such splitting of the work was permissible in terms of the tender norms and it was decided, in the interest of smooth and unineterrupted generation of power, that the respondent No.3 whose bid as L2 was close to the price bid of appellant No.1, be awarded a part of the work. Accordingly whereas, 60% of the bid quantity was awarded to the appellant No.1, the remaining 40% was given to the respondent No.3. The respondent-Nigam, therefore, categorically averred that its decision was bona fide and on relevant considerations, and more importantly, to secure the paramount need for uninterrupted power generation in public interest. 7. The reply of the respondent No. 3 is substantially in the same lines as of the respondent-Nigam and is thus not dilated upon. The appellants rejoinder to the reply, apart from reiteration and reaffirmation of the averments in the writ petition, sought to highlight their stand that the impugned decision was in derogation of the letter and spirit of the CVC Guidelines governing the process. 8. The learned single Judge, as adverted to hereinabove, rejected the appellants assailment on the following considerations:- (a) The respondent-Nigam, as per the tender norms, had reserved its right to split the order between two or more bidders. (b) In view of the acceptance of the appellant No.1 of the above stipulation, it was precluded from challenging any decision of splitting the work. (c) The decision of the respondent-Nigam to split the work was based on the assessment of the performance of the appellant No.1. (d) The respondent-Nigam had been able to demonstrate before the Court that the appellant No.1 had not adhered to the time schedule for delivery and at times, had delayed the supply of the Hi-chrome GM Balls. (e) The appellants contention that the reports of the field officers qua their performance had been prepared by the respondent-Nigam only to suit the convenience of the respondent No.3, is rejectable. (f) The delay in supply of the Hi-Chrome GM Balls by the appellant No.1 had the effect of delaying the generation of power, which the respondent-Nigam could ill afford. (g) The action of the respondent-Nigam cannot be said to be based on irrelevant or extraneous considerations. (h) The CVC circular requires recording of justification for splitting of the work and the requirements have been complied with by the respondent-Nigam. (g) The action of the respondent-Nigam cannot be said to be based on irrelevant or extraneous considerations. (h) The CVC circular requires recording of justification for splitting of the work and the requirements have been complied with by the respondent-Nigam. (i) The action of the respondent-Nigam in negotiating with the second lowest bidder to persuade it to lower its rates to be at par with that of the appellant No.1 cannot be construed to be arbitrary or unjust. (j) 55% of the work order has been executed by the respondent No.3 and the remaining supplies are to be made shortly. (k) Any interference with the process would have the effect of delaying the generation of power. (l) It would be conducive to public interest to permit procurement of the supplies on the basis of the impugned arrangement. 9. Mr. Hora has emphatically argued that the decision to split the work, and that too, on the purported adverse reports bearing on the performance of the appellant for the year 2011-12 is apparently illegal. Apart from the said decision, having a potential of blacklisting the appellants without affording prior opportunity to them, it being preceded by private negotiations with the respondent No.3, it is per se void, he urged. The learned counsel contended that the inexplicable lull after the opening of the price bid on 30-5-2012 and the spurt of activities on 29-9-2012, did unequivocalty suggest a machinated design to illegally favour the respondent No.3, thus vitiating the process with lack of transparency and fairness. Referring to the letter No. RVUN/DCE(TD)/TD-III/TN-104/12/D.1602 dated 29-9-2012, the learned counsel has urged that a private negotiation with the respondent No.3 to the exclusion of the appellant No.1 is evident therefrom. That at no point of time, any damages had been realised from the appellant No.1 for delayed supplies, was highlighted to dismiss the veracity of the adverse reports bearing on its performance for the year 2011-12. The learned counsel reiterated gross contravention of CVC Guidelines as well. Mr. Hora, to endorse his arguments, placed reliance on the decision of the Hon’ble Apex Court in Dutta Associates Pvt. Ltd. v. Indo Merchantiles Pvt. Ltd. & Ors. (1997) 1 SCC 53 . 10. In reply, Mr. Agarwal has maintained that the appeal, as on date, has been rendered infructuous as the whole amount of supply has already been made. Mr. Hora, to endorse his arguments, placed reliance on the decision of the Hon’ble Apex Court in Dutta Associates Pvt. Ltd. v. Indo Merchantiles Pvt. Ltd. & Ors. (1997) 1 SCC 53 . 10. In reply, Mr. Agarwal has maintained that the appeal, as on date, has been rendered infructuous as the whole amount of supply has already been made. On instructions, the learned senior counsel has urged that as would be apparent from the reports obtained, the performance of the appellant No.1 in the previous year had been below par resulting in delayed supply and frequent interruption in power generation to the great disadvantage and inconvenience of the respondent-Nigam. As the respondent-Nigam was of the view that the quality and extent of power generation by its plants had to be sustained, and that, no compromise therewith was affordable, on a threadbare considerations of all relevant factors, it did take the decision to split the work, which was even otherwise permissible under the tender norms. According to Mr. Agarwal, in the facts and circumstances of the case, no interference in exercise of this Courts power of judicial review is warranted and the impugned judgment and order is valid and unassailable. The learned senior counsel has argued that having regard to the limited scope of scrutiny in the present intra Court appeal, the same ought to be dismissed. Reliance was placed on the decision of the Hon’ble Apex Court in Jagdish Mandal v. State of Orissa & Ors. (2007) 14 SCC 517. 11. We have considered the pleadings of the parties and also the arguments founded thereon. 12. That the tender stipulations, amongst others, reserve a right with the respondent-Nigam to split the work contemplated, is a matter of record. The appellant No.1 did also subject itself to this covenant. Clause (5.0) of Part-B, Special Notes Instructions to this effect, is quoted herein-below: 5.0 RVUN reserves the right to split the order between two or more bidders. The bidder may quote for part or full quantity based on his manufacturing capacity. In case of offer for lesser qty., the monthly delivery schedule shall stand proportionally reduced. 13. A plain reading of the above stipulation, in our view, candidly demonstrates the unqualified reservation of the right to the respondent-Nigam to split the order of work between two or more bidders. In case of offer for lesser qty., the monthly delivery schedule shall stand proportionally reduced. 13. A plain reading of the above stipulation, in our view, candidly demonstrates the unqualified reservation of the right to the respondent-Nigam to split the order of work between two or more bidders. The remaining text of the clause does not govern or supersede this right. The unqualified authority of the respondent-Nigam to split the work between two or more bidders, therefore, is amply testified by this stipulation. 14. The performance reports appended to the reply of the respondent-Nigam as Annexure/R-1 collectively obtained from the respective generation units, did endorse the assessment of the respondent-Nigam qua the performance of the appellant No.1 and delayed supplies of Balls as referred to therein. The charts accompanying the reports also bear out the findings on the aspect of delay on the part of the appellant No.1 in making the supplies as referred to therein. All these reports, incidentally, are dated 29-9-2012 and in one of these, the suggestion for splitting the work contemplated between the two suppliers in the interest of power generation, has also been made, so much so that in case of failure on the part of one supplier, the other supplier may take over in situations of emergency. True it is, that all these reports are incidentally dated 29-9-2012, the date on which the impugned decision was taken, but in our estimate, this per se does not unimpeachably authenticate the appellants perception that these had been prepared to favour the respondent No.3 on irrelevant/oblique considerations. The letter dated 29-9-2012 referred to hereinabove and issued to the respondent No.3 though mentions about the office letter No. RVUN/DCE(TD)/TD-V/TN-104/12/D.1179 dated 14-8-2012, which according to the appellants, suggests private negotiation with it (the respondent No.3), it is difficult to endorse that inference on the basis of the available materials on record. There is no other overwhelming evidence to contradict the respondent-Nigams concern to maintain a sustained generation of power, to secure which, the impugned decision of splitting the work had been taken. In absence of any demonstrable fact supporting the appellants imputation of private negotiation with the respondent No.3 prior to its decision to split the work, having regard to the past performance of the appellant No.1, we are not inclined to overturn the conclusion recorded by the learned single Judge. In absence of any demonstrable fact supporting the appellants imputation of private negotiation with the respondent No.3 prior to its decision to split the work, having regard to the past performance of the appellant No.1, we are not inclined to overturn the conclusion recorded by the learned single Judge. The allegation of violation of CVC Guidelines, also does not commend for acceptance. True it is, that the Hon’ble Apex Court in Dutta Associates Pvt. Ltd. (supra), had emphasized upon the essentiality of transparency, fairness and openness in public participatory process, being bereft of any hidden criteria, in Jagdish Mandal (supra), the scope of interference in such matters in exercise of the power of judicial review, has been elaborated in paragraph 22, and excerpt whereof is quoted herein-below for ready reference:- 22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made lawfully and not to check whether choice or decision is sound. When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special feature should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, Courts will not, in exercise of power of judicial reveiw, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil Court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade Courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. 15. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. 15. Their Lordships, while referring to the pronouncement rendered by the Hon’ble Apex Court in Air India Ltd. v. Cochin International Airport Ltd., (2000) 2 SCC 617 : ( AIR 2000 SC 801 ), did refer with approval the following quote therefrom:- Even when some defect is found in the decision-making process the Court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The Court should always keep the larger public interest in mind in order to do decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should intervene. 16. On a cumulative consideration of all above, we are thus of the opinion that no interference with the impugned judgment and order is called for. As on date, that the supply is complete, is also a factor which cannot be lost sight of. 17. The challenge lacks in merit and is dismissed. The stay application also stands rejected. Appeal dismissed.