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2013 DIGILAW 372 (JK)

M/s ACE Enterprises v. State of J&K & Ors.

2013-06-27

RAJ KOTWAL, VIRENDER SINGH

body2013
Kotwal, J.:- This Letters Patent Appeal under clause 12 of Letters Patent Appeals Rules, 1999 is directed against judg­ment and order dated 21.12.2012 passed by a Id. Single Judge of this Court in OWP No. 1190/2012 whereby the writ petition filed by the appellant has been dismissed. 2. Heard. We have perused the record. 3. Relevant facts, brief as they are, are these: 4. By virtue of Notice Inviting Ten­der (NIT) No. 2 (Imports) of 2012 dated 08.03.2012, sealed tenders were invited for and on behalf of the Governor of Jammu and Kashmir State through Director, Sher-I-Kashmir, Institute of Medical Sciences, Soura (SKIMS), Srinagar (respondent No. 2) from the original manufactures/their autho­rized dealers for supply of RIA Kits on annual rate contract basis. List of the RIA Kits to be supplied was given in annexure to the NIT which reads: "List of RIA Kits for NIT No. 2) Im­ports of 2012 S. NoDescriptionPack SizeQuantity 1.T3 Coated tubes RIA500T06 Kits 2.T4 coated tubes RIA500T72 Kits 3.LH coated tubes IRMA200T36 Kits 4.FSH coated tubes IRMA200T36 Kits 5.Prolacin coated tubes IRMA20OT36 Kits 6.HGH coated tubes IRMA100T15 Kits 7.Cortisol coated tubes RIA200T24 Kits 8.Testosterone (coated tubes RIA)200T30 Kits 9.Progesterone (coated tubes RIA)100R12 Kits 10.17 (OH) Progester- one (coated tubes) RIA100T12 Kits” 5. It needs to be emphasized that the list, besides giving the description of the items to be supplied, specifies their 'pack size' and 'quantity'. 6. Two companies, namely M/S ACE Enterprises (Appellant) and M/S Chemi Health Diagnostics (respondent No. 5) responded to the NIT. 7. In para 6 (i) of the appeal, appellant has given a table showing the description, pack size and rate quoted by the two companies (bidders) of the nine items figuring at serial Nos. 2 to 10 of the annexure to the NIT. This table, as IRMA the information provided in it has significance qua the controversy raised by the appellant, is being reproduced here: S.No.Description Pack size Contract rate As provided by NITAs offered by the appellantAs offered by the respondent No. 5 1.T4 coated Tubes RIA500T(1x500T) Diasorin Rs. 9500-(1x500T) Rs. 10395-(5x100T) Cisbio france 11430/-(1x1000T) Backman Coulter Rs. 18700 2.LH coated tubes IRMA200T(2x100T) Shinjin Korea 8650/- (2x100T) DPC 14300/(1x100T) (2x100T) MP Bio medicals USA 9500/- (1x200T) Hungary 10668/-(1x400T) Backman Coulter Rs. 13.38-9/400T 3.FSH coated tubes IRMA200T(2x100T) Shinjin Korea 8650/- (2x100T) DPC 12990/- (2x100T) MP bio medicals USA 9500/-(1x200T) lsotop Hungary 10668/-(1x400) Backman Coulter Rs. 9500-(1x500T) Rs. 10395-(5x100T) Cisbio france 11430/-(1x1000T) Backman Coulter Rs. 18700 2.LH coated tubes IRMA200T(2x100T) Shinjin Korea 8650/- (2x100T) DPC 14300/(1x100T) (2x100T) MP Bio medicals USA 9500/- (1x200T) Hungary 10668/-(1x400T) Backman Coulter Rs. 13.38-9/400T 3.FSH coated tubes IRMA200T(2x100T) Shinjin Korea 8650/- (2x100T) DPC 12990/- (2x100T) MP bio medicals USA 9500/-(1x200T) lsotop Hungary 10668/-(1x400) Backman Coulter Rs. 13.38-9/400T 4.Prolactin200T(2x100T) Shinjin Korea 14000/- (2x100T) DPC 24500/- (2x100T) MP bio medicals USA 14500/-(2x200T) lsotop Hungary 16000/-(1x400) Backman Coulter Rs. 169-80/400T 5.HGH coated tubes IRMA100T(1x100T) Diasorin 8800/- (96T) Diasource 16000/- (1x100T) MP bio Medicals USA 7000/-(1x100T) Backman Coulter Rs. 666-5/100T 6.Cortisol coated tubes RIA200T(1x100T) Diasorin 5550/- (1x100T) Cisbio France USA 8890/-(1x100T) Backman Coulter Rs. 4750/- 7.Testosterone (coated tubes RIA)200T(1x100T) DPC 12000/- (1x100T) Cisbio France USA 10000/-(1x100T) Backman Coulter Rs. 7275-/100T 8.Progesterone (coated tubes RIA)100T(1x100T) DPC 12000/-(1x100T) MP Bio medicals USA 8880/-(1x100T) Backman Coulter Rs. 7275-/100T 9.17 (OH) Progester- one (coated tubes) RIA100T(1x96T) Diasource 12000/-(1x100T) Mp Bio medicals USA 9550/-(1x100T) Backman Coulter Rs. 8085-/100T 8. Correctness of the entries given in this table is not disputed. However, it needs to be noted that in this table appellant has omitted to provide information as regard item No. 1 of the annexure to the NIT. Reason of this omission is understanble and will get indicated hereafter. 9. Respondents 2-4 (hereafter official respondents) resorted to per test price basis for determining the lowest price and seem to have approved the items and their rates quoted by respondent No. 5 (hereafter private respondent) for 9 items (serial Nos. 2 to 9 of the annexure to the NIT), which is evident from communication No. SIMS 324-23-2010-RIA dated 23.07.2012 of the Material Management officer (Imports), SKIMS (Respondent No. 4) whereby the supply order for the said items has been issued in favour of the private respondent. This has aggrieved the appellant prompting him to file the writ leading to this LPA. In the course of hearing, it came to fore that supply order as regards item No. 1 of the annexure to the NIT, which does not fig­ure in the table given in the preceding paragraph, stands issued in favour of the appellant. 10. This has aggrieved the appellant prompting him to file the writ leading to this LPA. In the course of hearing, it came to fore that supply order as regards item No. 1 of the annexure to the NIT, which does not fig­ure in the table given in the preceding paragraph, stands issued in favour of the appellant. 10. Appellant's challenge to the ap­proval to the rates quoted by the respon­dent No. 5 before the Writ Court was two fold; "(i) that the respondent No. 5 has quoted the rates in disregard to the pack size of the items specified in the NIT inasmuch as the rates had been offered in respect of the pack size different than that given in the NIT and (ii) the items quoted by the respon­dent No. 5 were of inferior quality." 11. Ld. Writ Court after obtaining personal affidavit of respondent No. 3 (Head of the Department, Department of Immunology, SKIMS) dismissed the writ observing n paragraph-11 of the impugned judgment that "respondent No. 3 has clarified all the issues in his personal affidavit. He and other official respondents are responsible to provide quality material to the patients. It can­not be expected of them that they will play pranks with the lives of the patient, the affidavit of respondent No. 3, in es­sence, stands a guarantee in respect of quality of material/Kits to be pro­cures." Ld. Writ Court also took note of respondent No. 3's declaration in the affidavit that even the appellant had not complied with specifications provided in the NIT while quoting his rates in re­spect of some of the items and observed further that in contractual matters courts can intervene with the decision making process if the same is found to be arbitrary and not in accordance with settled principles of law. 12. Appellant, who mostly argued his case in person, sought to demon­strate that while issuing the NIT, re­spondents had prescribed the pack size of each item (RIA Kits) to be supplied. 12. Appellant, who mostly argued his case in person, sought to demon­strate that while issuing the NIT, re­spondents had prescribed the pack size of each item (RIA Kits) to be supplied. Referring to the annexure to the NIT, he pointed out that prescribed pack size of item No. 1 and 2, that is, T-3 quoted tubes and T4 quoted tubes was 500T whereas that of items 3, 4, 5, 7 and 8 was 200 T and as regards the remain­ing items, it was 100 T. It was explained to us during the hearing of the case that 500T, 200T and 100T respectively means, pack containing 500 tests, 200 tests and 100 tests. Petitioner took pains to make out that the user depart­ments, that is the SKIMS in this case, while specifying the quantity and pack size of a Radio Active medicines, like RIA Kits, take into account their shelf life and are required to strictly adhere to requirement in this regard. Appel­lant contended that the offer made by the private respondent was in total dis­regard to the specification of the pack size given in the NIT. His main stress was in respect of T4 coated tubes (T4). He would say that private respondent had offered T4 in 1000T pack size as against specified pack size of 500T and the offer as regards LH coated tubes, FSH coated tubes and prolactin was also contrary to the NIT vis a vis their pack size. He would say in this regard that the official respondents had allowed this material deviation fraudulently with the intention of clandestinely giv­ing benefit to the private respondent. Such benefit was sure to accrue to the private respondent because size of the pack is inversely proportionate to price per test and the official respondents had, instead of rejecting the offer of the private respondent, resorted to deter­mining the lowest price per test basis. This approach of the official respon­dents, said the appellant, was an out come of their malice against the ap­pellant and intention to exclude him from the competition. He would say fur­ther that official respondents acted il­legally by allowing deviation from the NIT and resorting to price per test cri­teria and Hon'ble Writ Court failed in taking note of this illegality. This approach of the official respon­dents, said the appellant, was an out come of their malice against the ap­pellant and intention to exclude him from the competition. He would say fur­ther that official respondents acted il­legally by allowing deviation from the NIT and resorting to price per test cri­teria and Hon'ble Writ Court failed in taking note of this illegality. As regards quality, the appellant alleged that ear­lier too the KIT Kits offered by the pri­vate respondent in response to NITs for previous years were rejected by the SKIMS for having been found of infe­rior quality but the same items have been ordered to be purchased from his this year. He advanced some other ar­guments too to demonstrate that the RIA Kits offered by the private respon­dent are of inferior quality. 13. Per contra, Mr. Shah Aamir, Ld. Counsel appearing on behalf of SKIMS would say that respondents have not compromised with the quality. As re­gards the pack size, he would say that not only the private respondent but both, the appellant as well as the pri­vate respondent, have largely quoted pack sizes other than those specified in the NIT so, given the emergency involved in procurement of the Kits in better interest of the patients, the offi­cial respondents resorted to determine the lowest price on per test price basis and approved the lowest rate. In the result price quoted by the appellant was found lowest as regards item No. 1 (T3 quoted tubes) whereas that quoted by the private respondent as regards re­maining items was found lowest and supply order issued accordingly. 14. We are not in a postion to accept appellant's contention that the items (RIA Kits) offered by the private respon­dent are of inferior quality. We are rather not persuaded to explore and comment about the quality of the items offered by the appellant or ther private respondent. We feel the doctors/au­thorities of a medical centre have a solemn duty to maintain the quality of medicines to be provided to the patients and believe they discharge this duty faithfully. In their reply/objections filed before the Writ Court, the official re­spondents, in response to the grounds of challenge to the approval accorded in favour of the private defendant, have declared that "technical committee during its evaluation has found that products of both the bidders are at par in terms of quality". In their reply/objections filed before the Writ Court, the official re­spondents, in response to the grounds of challenge to the approval accorded in favour of the private defendant, have declared that "technical committee during its evaluation has found that products of both the bidders are at par in terms of quality". Likewise, Respon­dent No. 3 in his personal affidavit filed before the writ Court has declared in paragraph-3 that "SKIMS cannot even think of compromising with the qual­ity not to talk of permitting any person to supply low quality product." He has also stated that 'immunotech' brand of RIA Kits being purchased from the pri­vate respondent are supplied through­out India by Diagnostic division of BARC, that is, BIRTH (Board of Radia­tion and Isotope Technology). We have faith in correctness of what the private respondents, in particular the respon­dent No. 3, have declared. Neither before the Writ Court nor before this Court has the appellant produced any such material, which would make us to pause and think that some compro­mise with quality might have been made while approving the items quoted by the private respondent. We trust and have no reason not to trust that the technical committee of SKIMS has not compromised with quality of the items (RIA Kits) while approving the offer made by the private respondent of for that matter the appellant. We there­fore, are inclined to agree with the ob­servation recorded by Id. Writ Court in this regard, referred to and quoted hereinabove. 15. There is indeed understandable devioation in the pack size of the RIA Kits offered to be supplied from the pack size specified in the NIT. This devia­tion cannot be denied or disputed. But not that the private respondent alone has deviated from the specified pack size while responding to the NIT, even the appellant has done so though bit less than the former. 16. In their reply/objections to the writ petition, private respondents in paragraph - 8 of the para wise reply have stated that petitioner (appellant) has quoted pack sizes other than those specified in the NIT and in certain cases has quoted only those pack sizes that are not specified in NIT. Respon­dents have given a table explaining the deviation in pack sizes made by appel­lant in his offer to the NIT. Respon­dents have given a table explaining the deviation in pack sizes made by appel­lant in his offer to the NIT. We have compared this table with the figures in the list of the items to be supplied given in the NIT and the sheet enclosed with offer document submitted by the appel­lant in response to the NIT, annexed as annexure-P8 to the Writ Petition. Having observed a minor discrepancy, we redraw this table shorn of unessen­tial, underlining the deviation: S.No.RIA KitNIT SpecificationQuoted by petitioner 1.T3500T500T and 100T 2.T4500T500T and 100T 3.LH200T100T 4.FSH200T200T and 100T 5.Prolactin200T100T 6.HGH100T100T and 96T 7.Cortisol200T100T 8.Testosterone200T100T 9.Progesterone100T100T 10.17 (OH)100T100T and 96T 17. Likewise, deviation in pack sizes made by the private respondent in his offer to the NIT can be similarly explained in tabulated form, underlining the deviation, on the basis of entries contained in the table prepared by ap­pellant in paragraph-6 of the appeal (su­pra): S.No.RIA KitNIT SpecificationQuoted respondent No. 5 1.Information not available on record 2.T4500T1000T 3.LH200T400T 4.FSH200T400T 5.Prolactin200T400T 6.HGH100T100T 7.Cortisol200T100T 8.Testosterone200T100T 9.Progesterone100T100T 10.17 (OH)100T100T 18. Deviation in both the cases has been underlined to make the same ob­vious. Given that both the bidders, that is, appellant and the private respon­dent, had quoted pack sizes of various items different than that specified in the tender notice, appellant's conten­tion that the private respondent had made the deviation fraudulently and in connivance with the official respondents or that the official respondents had acted with malice against appel­lant does not hold water or carry weight. It becomes undisputable that both the bidders in their offers had deviation from the specification vis a vis pack size given in the NIT for the reason known to them. In the situation so aris­ing, the decision of private respondents to have resort to price per test basis to determine the lowest price cannot be taken as colourable exercise or misuse of authority by them having stemmed out of mala fide, intention to cause undue benefit to the private respondent or malice towards the appellant. In this process, however, appellant turned out to be the loser as out of appellant's of­fer only one item, that is, T3 coated tubes was found at lessor rate whereas rest of the items had gone in favour of the private respondent. In this process, however, appellant turned out to be the loser as out of appellant's of­fer only one item, that is, T3 coated tubes was found at lessor rate whereas rest of the items had gone in favour of the private respondent. We, therefore, find no case for interfering with the tendering process undertaken by the private respondents in exercise of the power of judicial review of this Court, which has inherent limitation. We find no infringement of Fundamental Right under Article 14 of the Constitution of the appellant because both he and pri­vate respondent were equally placed though balance titled in favour of the latter. 19. Scope of judicial review of con­tractual powers exercised by the Gov­ernment bodies is well settled. Su­preme Court in Tata Cellular Vs. Union of India, AIR 1996, Supreme Court 11 has held: "85. It cannot be denied that the prin­ciples of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. How­ever, it must be clearly stated that there are inherent limitations in exer­cise of that power of judicial review. Government is the guardian of the fi­nances of the State. It is expected to protect the lowest or any other tender is always available to the Govern­ment. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any col­lateral purpose the exercise of that power will be struck down. 86. Judicial quest in administrative matters has been to find the right bal­ance between the administrative dis­cretion to decide matters whether con­tractual or political in nature or issues of social policy; thus they are not es­sentially justiciable and the need to remedy any unfairness. Such an un­fairness is set right by judicial review." 20. Having not found a sufficient case for judicial review, we nonethe­less, cannot avoid impression that the method adopted by the private respon­dents had created scope for dissatisfac­tion to the bidders (or one of them). Such an un­fairness is set right by judicial review." 20. Having not found a sufficient case for judicial review, we nonethe­less, cannot avoid impression that the method adopted by the private respon­dents had created scope for dissatisfac­tion to the bidders (or one of them). We initially felt that specifying the pack size in NIT was not without any reason and was required taking into consider­ation the shelf life of the RIA Kits. How­ever, given that there is remarkable difference in the pack size of almost all the items approved by the private re­spondents, we not feel that pack size is not a matter of much importance. It it is so, why the pack size should have been given in the NIT? Why from the inception of process, that is, from the time of issuing NIT, offers for price per test basis should not have been called? These are the questions which remain unanswered though, as discussed above, we do not see any wrongdoing or arbitrariness on the part of official re­spondents. Nonetheless, we feel re­spondents could have acted in a better way. When this aspect of the matter came up for discussion during hearing of the case, we were told by Mr. Shah Aamir, Government Advocate, that the current contract period, which com­menced on 23.07.2012 with issuance of supply order in favour of respondent No. 5, is about to conclude and the offi­cial respondents are in the process of issuing fresh tender notice for future supply. We appreciate this. 21. For all that has been said and discussed above, we do not find any merit in this appeal, which is dis­missed.