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2013 DIGILAW 89 (PAT)

Nilkamal Ltd. v. State of Bihar

2013-01-21

RAMESH KUMAR DATTA

body2013
ORDER Heard learned counsel for the petitioner and learned counsels for the Municipal Council, Kishanganj and the private respondent No.6. Learned counsel for the State is also present. 2. The petitioner has sought a direction from this Court to prevent the authorities of the Municipal Council, Kishanganj from awarding the contract to M/s. Supreme Enterprises in the light of Notice Inviting Tender bearing No. 5/2011-12 with respect to two items at Serial No.1 and 2, namely, (1) F.R.P. (Fiber) make Hand Trolly, capacity 200 liters, Wheel 16” with two nos. bearing 8 nos. pipe welded on Rim, Tubeless Tyres of EVA Foam, Fiber thickness (2) HDPE Injection Molded Fiber Garbage Bin of EN/DIN standards with extra window opening at front, of capacity 1100 liters. 3. Pursuant to the Notice Inviting Tender on 13.10.2011 the petitioner and respondent No.6 apart from others applied for the supply of the six different items mentioned therein. One of the tender conditions was that all the items should be of EN/DIN /ISO 9001: 2000 Standard. The petitioner and the respondent No.6 and another tenderer were declared successful at the technical bid stage and thereafter with respect to item No.1 the petitioner was the lowest bidder at Rs.10,010.70 with a warranty of three months and the respondent No.6 was the second lowest tenderer at Rs.12,500.00 with a warranty of 24 months. For item No.2 the respondent No.6 was the lowest tenderer at Rs.23,000.00 with a similar warranty of 24 months and the petitioner was at Serial No.3 having offered a price of Rs.29,964.00. Thereafter the Tender Committee asked the parties to produce the samples and further claimed to have negotiated the price with all the tenderers and on coming to the conclusion that the sample supplied by respondent No.6 M/s. Supreme Enterprises was of better quality and it having further agreed to reduce the price to Rs.11,500.00 had awarded the contract to respondent No.6. With respect to item No.2 it is claimed that there was a price negotiation and the respondent No.6 having agreed to offer a lower price of Rs.21,500.00 the contract was awarded to it for item No.2 also. The reason for awarding of contract even in item No.1 is stated to be better quality of material as per the sample of respondent No.6 as also higher warranty period of 24 months. The reason for awarding of contract even in item No.1 is stated to be better quality of material as per the sample of respondent No.6 as also higher warranty period of 24 months. It may be noted here that no specific minimum warranty period was prescribed in the Tender Notice nor anything was mentioned that any weightage was to be given for the same. There was nothing in the tender notice regarding any negotiation with all the parties. 4. It is admitted by all the parties that the petitioner and the respondent No.6 had produced the certifications which were valid till 8.8.2011 and 23.8.2011 respectively. However, it has come out that both the parties as a matter of fact had proper certifications by different International Certification Authorities which were valid on the date of NIT and the opening of tender. 5. Learned counsels for the parties have tried to raise some dispute with regard to the supplying of certificate which admittedly was supplied after the opening of the tender and before the final decision but it appears from the materials on the record that both the parties had proper certification by recognized International Agencies so far as the concerned items to be supplied by them. 6. Learned counsel for the petitioner has submitted that once the certificates supplied by the respondent No.6 showed that it had expired prior to the last date in the NIT on 8.8.2011 and even on the date of the advertisement in the newspapers, i.e., 13.10.2011 it was not open to the authorities to have given any further chance to any party to produce a proper certificate. It is submitted that there is no provision of relaxation for submitting of fresh papers in NIT and thus the same should not have been allowed and on failure to produce any paper even if he was in possession of the same the tender process ought to have been cancelled and fresh tender process ought to have been initiated. 7. It is further submitted that NIT also does not provide for any negotiation after the opening of the financial bid and thus at best the respondents could have negotiated with the L-I tenderer and they had no authority either in terms of the NIT or the general law to enter into negotiation with all parties which can only create an arbitrary situation in such matters. 8. 8. It has also been argued that even certificates that have been produced are defective and do not relate to the items which had to be supplied. 9. In support of the aforesaid proposition learned counsel for the petitioner relies upon a decision of the Supreme Court in the case of Dutta Associates Pvt. Ltd. Vs. Indo Merchantiles Pvt.Ltd. and others : (1997) 1 SCC 53 , in paragraph-7 of which it has been held as follows :– “7. In the circumstances, we affirm the judgment of the Division Bench in writ appeal on the grounds stated above and direct that fresh tenders may be floated in the light of the observations made in this judgment. We reiterate that whatever procedure the Government proposes to follow in accepting the tender must be clearly stated in the tender notice. The consideration of the tenders received and the procedure to be followed in the matter of acceptance of a tender should be transparent, fair and open. While a bona fide error or error of judgment would not certainly matter, any abuse of power for extraneous reasons, it is obvious, would expose the authorities concerned, whether it is the Minister for Excise or the Commissioner of Excise, to appropriate penalties at the hands of the courts, following the law laid down by this Court in Shiv Sagar Tiwari Vs. Union of India (In re, capt. Satish Sharma and Sheila Kaul).” 10. He also relies upon a decision of the Supreme Court in the case of Reliance Energy Ltd. and another Vs. Maharashtra State Road Development Corpn. Ltd. and others : (2007) 8 SCC 1 , in paragraphs- 38 & 39 of which it has been laid down as follows :– “38. When tenders are invited, the terms and conditions must indicate with legal certainty, norms and benchmarks. If there is vagueness or subjectivity in the said norms it may result in unequal and discriminatory treatment. It may violate doctrine of “level playing field”. 39. In Reliance Airport Developers (P) Ltd. Vs. Airports Authority of India the Division Bench of this Court has held that in matters of judicial review the basic test is to see whether there is any infirmity in the decision-making process and not in the decision itself. It may violate doctrine of “level playing field”. 39. In Reliance Airport Developers (P) Ltd. Vs. Airports Authority of India the Division Bench of this Court has held that in matters of judicial review the basic test is to see whether there is any infirmity in the decision-making process and not in the decision itself. This means that the decision-maker must understand correctly the law that regulates his decision-making power and he must give effect to it otherwise it may result in illegality. The principle of “judicial review” cannot be denied even in contractual matters, but judicial review is intended to prevent arbitrariness and it must be exercised in larger public interest. Expression of different views and opinions in exercise of contractual powers may be there, however such difference of opinion must be based on specified norms. Those norms may be legal norms or accounting norms. As long as the norms are clear and properly understood by the decision-maker and the bidders and other stakeholders, uncertainty and thereby breach of the rule of law will not arise. The grounds upon which administrative action is subjected to control by judicial review are classifiable broadly under three heads, namely, illegality, irrationality and procedural impropriety. In the said judgment it has been held that all errors of law are jurisdictional errors. One of the important principles laid down in the aforesaid judgment is that whenever a norm/benchmark is prescribed in the tender process in order to provide certainty that norm/standard should be clear. As stated above “certainty” is an important aspect of the rule of law. In Reliance Airport Developers the scoring system forms part of the evaluation process. The object of that system was to provide identification of factors, allocation of marks of each of the said factors and giving of marks at different stages. Objectivity was thus provided.” 11. The last decision relied upon by learned counsel is that of Larsen and Toubro Limited and another Vs. Union of India and others : (2011) 5 SCC 430 , paragraph-20 of which is quoted below:– “20. Having heard the learned counsel for the respective parties, we are satisfied that the High Court did not commit any error in dismissing the writ petition filed by the petitioners, since in the absence of compliance with the terms and conditions relating to firm and fixed price offer, the petitioners stood excluded from consideration. Having heard the learned counsel for the respective parties, we are satisfied that the High Court did not commit any error in dismissing the writ petition filed by the petitioners, since in the absence of compliance with the terms and conditions relating to firm and fixed price offer, the petitioners stood excluded from consideration. The offer in this regard made by Respondent 4 satisfies the requirements of a firm and fixed offer, since once the commercial bids were opened, there was no further scope of the rates being altered, which was not so in the case of the petitioners, which tried to make its bid responsive by withdrawing the initial offer and substituting the same with another.” 12. Learned counsel for the Municipal Council, Kishanganj, on the other hand, submits that the Purchasing Committee considered the rate and warranty period of the equipments and tried negotiating the rate with all bidders including the petitioner which denied to negotiate the rates while respondent No.6 agreed for negotiation to rates of both hand trolley and garbage bins and after considering the same and also of the fact that the period of certificates produced by the petitioner as well as respondent No.6 had already expired the Purchasing Committee decided to give time to all bidders to submit updated TUV certificates but only M/s. Supreme Enterprises submitted its said certificate. It is also submitted that the Purchasing Committee directed the bidders to produce their sample of equipments by 12.10.2012 and all the bidders produced their sample and on examining the same it was found that the quality of sample of the equipments of respondent No.6 was better then the other bidders and accordingly work order was issued in favour of respondent No.6 on the decision taken by the Purchasing Committee. 13. Learned counsel submits that the entire decision has been taken in the interest of the Municipal Council and the general public so as to get best material at the lowest possible rates after negotiation and thus there is no mala fide in the action of the respondent Municipal Council. 14. Learned counsel for the respondent No.6 apart from adopting the submission of learned counsel for the Municipal Council submits that as a matter of fact the respondent No.6 did have a valid TUV certificate which was issued on 25.5.2011 and it was valid till 24.5.2014 for a period of three years. 15. 14. Learned counsel for the respondent No.6 apart from adopting the submission of learned counsel for the Municipal Council submits that as a matter of fact the respondent No.6 did have a valid TUV certificate which was issued on 25.5.2011 and it was valid till 24.5.2014 for a period of three years. 15. Learned counsel also submits that the material supplied by the petitioner was not satisfactory as the same was not as per the tender specification. Learned counsel has also drawn the attention of this Court to the minutes of the Tender Committee which shows that the decision arrived at by the Tender Committee was on the basis of reasonable approach towards the finalization of the tender and there was no bias or mala fide involved. 16. It is also submitted by learned counsel that in the matters of awarding contract this Court should not interfere unless issues of public interest are involved and merely because the respondent authorities might have erred on certain matters the decision of the authorities should not be cancelled. 17. Learned counsel also sought to emphasize that the tender has already been delayed and apart from the regular requirement for the same material by the Municipal Council for removal of garbage, etc. the situation becomes very much worse during the monsoon season and one monsoon season has passed without the matter being finally decided. It is urged that if the tender is cancelled and fresh tender is directed to be made then the matter will get further delayed to the detriment of the public interest. 18. In support of the same learned counsel relies on a decision of the Supreme Court in the case of Tejas Constructions and Infrastructure Private Limited Vs. Municipal Council, Sendhwa and another : (2012) 6 SCC 464 , in paragraphs 16 & 17 of which it has been held as follows :– “16. In Tata Cellular Vs. Union of India this Court emphasized the need to find the right balance between administrative discretion to decide the matters, on the one hand, and the need to remedy any unfairness, on the other, and observed: (SCC pp. 687-88, para 94) “(1) The modern trend points to judicial restraint in administrative action. (2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. 687-88, para 94) “(1) The modern trend points to judicial restraint in administrative action. (2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. (3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise, which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract….. (5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facets pointed out above) but must be free from arbitrariness, not affected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.” (emphasis in original) 17. In Raunaq International Ltd. Vs. I.V.R. Construction Ltd. this Court reiterated the principle governing the process of judicial review and held that the writ court would not be justified in interfering with commercial transactions in which the State is one of the parties to the same except where there is substantial public interest involved and in cases where the transaction is mala fide. The Court observed: (SCC pp. 500-01, paras 10-11) “10. What are these elements of public interest? (1) Public money would be expended for the purposes of the contract. (2) The goods or services which are being commissioned could be for a public purpose, such as, construction of roads, public buildings, power plants or other public utilities. (3) The public would be directly interested in the timely fulfillment of the contract so that the services become available to the public expeditiously. (4) The public would also be interested in the quality of the work undertaken or goods supplied by the tenderer. (3) The public would be directly interested in the timely fulfillment of the contract so that the services become available to the public expeditiously. (4) The public would also be interested in the quality of the work undertaken or goods supplied by the tenderer. Poor quality of work or goods can lead to tremendous public hardship and substantial financial outlay either in correcting mistakes or in rectifying defects or even at times in redoing the entire work- thus involving larger outlays of public money and delaying the availability of services, facilities or goods, e.g., a delay in commissioning a power project, as in the present case, could lead to power shortages, retardation of industrial development, hardship to the general public and substantial cost escalation. 11. When a writ petition is filed in the High Court challenging the award of a contract by a public authority or the State, the court must be satisfied that there is some element of public interest involved in entertaining such a petition. If, for example, the dispute is purely between two tenderers, the court must be very careful to see if there is any element of public interest involved in the litigation. A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. It is important to bear in mind that by court intervention, the proposed project may be considerably delayed thus escalating the cost far more than any saving which the court would ultimately effect in public money by deciding the dispute in favour of one tenderer or the other tenderer. Therefore, unless the court is satisfied that there is a substantial amount of public interest involved, or the transaction is entered into mala fide, the court should not intervene under Article 226 in disputes between two rival tenderers.” 19. Having considered the submissions of learned counsels for the parties and on a consideration of the principles laid down by the Apex Court in the various decisions cited by learned counsels for both the parties, specially the Tejas Constructions and Infrastructure (P) Ltd. case relying on the Tata Cellular case (supra) it is evident that the Writ Court does not normally interfere with any tender process. Apart from examining the matter in the light of the principles laid down that the decision making process must be free from arbitrariness and mala fide this Court also considers the public interest involved in the matter. 20. On a consideration of the entire material on the record it is evident that the tender committee had not disqualified either the petitioner or the respondent No.6. It is the stand of the Municipal Council that both the parties were given time to produce fresh certificate and the respondent No.6 produced the fresh TUV certification. The petitioner evidently did not have a TUV certification after 8.8.2011 but it was in possession of other certification with respect to goods offered to be supplied by it, i.e., Plastic Omnium S.A. by LNE of France. 21. It is submitted by learned counsel for the petitioner that both LNE and SGS of France are internationally accepted certifying agencies. It is the case of the petitioner that the quotations had been made and sample produced are that of Plastic Omnium S.A. The said fact has not been denied in the counter affidavit of the respondents. 22. Thus, considering the fact that the parties had the required certifications, this Court does not consider it improper on the part of the respondent Municipal Council to have given opportunity to the parties to produce proper certification. The same does not amount to violation of the tender condition rather it is only giving a fresh chance to the parties to produce the proper certifications which are already in their possession. 23. Once it is accepted that the petitioner and respondent No.6 had proper certification and had rightly been cleared by the tender committee at the stage of technical bid, the only question which remains to be considered is as to whether it was open to the respondents to have entered into negotiation with all the parties for the purpose of rates. This has specially to be considered in the light of the fact that there was no such condition laid down in the NIT. I may at this stage observe that even if such condition had been stated then whether they would conduce to fairness and would not be arbitrary in the facts and circumstances of the given tender process, would still be open to challenge in the Court. I may at this stage observe that even if such condition had been stated then whether they would conduce to fairness and would not be arbitrary in the facts and circumstances of the given tender process, would still be open to challenge in the Court. Normally when such tenders are invited in two stages of technical and financial bids and once the financial bid is opened the party which has quoted the lowest rates should normally be given the contract unless there is cogent reason assigned for taking decision to the contrary. Even the price negotiation for any further reduction can only be made at this stage with the L-1 tenderer and not with all the bidders. 24. No good reasons have been shown for rejecting the tender of the petitioner with respect to item No.1 as it was the lowest tenderer by quoting an amount of Rs.10,500.00 as compared to the quotation of Rs.12,500.00 filed by respondent No.6 in the tender papers. The Purchasing Committee while deciding the tender resorted to negotiation of rates and also calling for the sample of the material and on the basis of latter came to the conclusion that the sample provided by respondent No.6 was superior for which no technical reasons have been assigned especially when the petitioner and respondent No.6 had cleared the hurdle at the technical bid stage and both were possessing proper certification for the goods to be supplied by them. It is the contention of the petitioner that EN certification of the goods of Plastic Omnium S.A. that the petitioner had offered to supply was not accepted by the concerned officials. In the facts and circumstances of the case and the manner in which the tender process has proceeded this Court is not inclined to accept the action on the part of the authorities as above board. It is evident that it was not open to the respondents to have entered into negotiation with the respondent No.6 when the petitioner’s quotation was much lower than that of respondent No.6. 25. It is evident that it was not open to the respondents to have entered into negotiation with the respondent No.6 when the petitioner’s quotation was much lower than that of respondent No.6. 25. In the light of the aforesaid it is evident that the award of contract to respondent No.6 with respect to item No.1 was illegal, unjustified and contrary to a fair tender process, which is, accordingly, quashed and the respondents are directed to award the tender with respect to item No.1 to the lowest tenderer, i.e., the petitioner, subject to the other terms and conditions of the NIT. 26. So far as the item No.2 is concerned, it is evident that respondent No.6 was not only the lowest tenderer but also in possession of necessary certification for the same and it agreed to further reduce the price offered by it. Thus, there was sufficient justification for awarding the contract of item No.2 to the respondent No.6. The challenge by the petitioner on this count must fail and it is, accordingly, rejected. 27. Let the petitioner approach the respondent authorities of Municipal Council within a period of two weeks from today upon which the respondent authorities shall proceed with complying with the directions of this Court within a further period of two weeks thereafter. 28. In the light of the aforesaid discussions, the writ application is partly allowed to the extent as indicated above. However, in the facts and circumstances of the case there shall be no order as to costs.