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2014 DIGILAW 417 (JK)

Shree Transport Associates v. Union of India

2014-10-28

TASHI RABSTAN

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JUDGMENT : Tashi Rabstan, J. 1. Since common questions of facts and law are involved in all these petitions, therefore, I deem it proper to dispose of the same by this common judgment. Through the medium of this petition, the petitioners are seeking quashing of report dated 27.06.2014 issued by the Technical Evaluation Committee of Indian Oil Corporation Limited generated by e-mail dated 07.07.2014 rejecting the technical/credential bids of the petitioners on account of non-submission of Provident Fund Registration Number in respect of NIT No. PSO/LPG/PT/P/Jammu/2013/20, dated 10.10.2013 for transportation of packed LPG Ex-LPG Bottling Plant, Jammu. The petitioners are also seeking a direction to the respondents to evaluate their tenders on merits and strictly as per the terms and conditions of the tender documents. 2. The case as projected by the petitioners in their writ petitions is that respondent No. 3 vide NIT No. PSO/LPG/PT/P/Jammu/2013/20, dated 10.10.2013 invited technical/credential bids from various transporters/contractors for transportation of packed LPG Ex-LPG Bottling Plant, Jammu and the last date for submission of tender documents was 06.11.2013. It is averred that the petitioners submitted their tender documents, complete in all respects, on the due date. The credential bids were opened on 16.01.2014, thereafter, respondent No. 4 vide communication dated 17.04.2014 required the petitioners to submit few formalities including the proof of Provident Fund Code. The petitioners while complying with all the formalities intimated the respondents that the number of employees of each of the firms of the petitioners did not exceed 10, therefore, the petitioners in view of Notification dated 25.10.2012 were not amenable to the provisions of J & K Employees Provident Funds (And Miscellaneous Provisions) (Amendment) Act, 2012, as such there was no requirement of petitioners-firms to apply for any Provident Fund Registration Number/Code. It is contended that despite completion of all the formalities, the Technical Evaluation Committee of the respondent-Corporation vide its report dated 27.06.2014 rejected the technical/credential bids of the petitioners on account of non-submission of Provident Fund Registration Number/Code. Aggrieved of the same, the petitioners have approached this Court by the medium of present writ petitions. 3. It is contended that despite completion of all the formalities, the Technical Evaluation Committee of the respondent-Corporation vide its report dated 27.06.2014 rejected the technical/credential bids of the petitioners on account of non-submission of Provident Fund Registration Number/Code. Aggrieved of the same, the petitioners have approached this Court by the medium of present writ petitions. 3. Learned counsel appearing for the petitioners argued that the petitioners-firms had complied with all the eligibility criteria as laid down in Clause (A) of Credential Bid of the NIT and the said clause did not find mention of submission of any provident fund number along with the tender documents, therefore, their disqualification on the ground of non-submission of Provident Fund Registration Number/Code is wholly illegal and arbitrary. He submitted that even the pre-qualification criteria do not require for submission of any such number by the aspiring contractors. He while referring to Clause 27 of LPG Cylinder Road Transport Contract Agreement pleaded that such a requirement arises only when a contractor is declared as a successful bidder in the tendering process and the same is not an essential condition at the time of determination of credential bid, thus the same is an ancillary condition. Learned senior counsel also argued that a similar nature of NIT was issued by the office of respondents at Jalandhar in Punjab, wherein no such condition was mentioned in the terms and conditions of the agreement. Therefore, mentioning such a condition in the present NIT is not only discriminatory in nature, but also unconstitutional. 4. Counter has been filed on behalf of respondents. It is contended that since the petitioners had not uploaded the Provident Fund Registration Code along with their tenders in terms of Clause 3.2 of Standard Tender Condition, their bids came to be rejected. Further, it is contended that other short comings were also observed while scrutinizing the tender documents. 5. Heard learned counsel appearing for the parties and perused the writ record. 6. The contention of learned counsel for petitioners is that the requirement of Provident Fund Code was not mentioned in the Pre-qualification Criteria for qualifying tenders, therefore, the same being not an essential condition, their bids could not have been rejected on this ground. It is contended that such number was required only after the bidder succeeded in the bid. 6. The contention of learned counsel for petitioners is that the requirement of Provident Fund Code was not mentioned in the Pre-qualification Criteria for qualifying tenders, therefore, the same being not an essential condition, their bids could not have been rejected on this ground. It is contended that such number was required only after the bidder succeeded in the bid. His next contention is that no such condition was even mentioned in the Checklist of Credential Bid; also providing of Provident Fund Code was only an ancillary condition and not mandatory one. 7. Pre-qualification criteria is a preliminary stage in a bidding process where it is determined if an applicant has the requisite resources and experience to complete the job as required. Virtually, it is simple and quick process of examining and screening of potential contractors to develop a list of qualified bidders who will receive the invitation-to-Tender documents. The invitation-to-tender documents will contain important instructions/terms and conditions on how to complete the documents in full and how the bid will be evaluated and, where applicable, 'evidence' will be requested to confirm the capability of the contractor. Thus, the pre-qualification process doesn't include a more thorough look into the credit worthiness of the contractors. It is only restricted to the eligibility of tenders who could apply for the particular bid. If a tender is found eligible in terms of the Pre-qualification Criteria, he is allowed to submit the tender following the terms and conditions/instructions as are specified in the Notice-Inviting-Tender. In the present case, though the petitioners were found eligible to apply for the bid, they were required to fulfill the terms and conditions as were specified in the Notice-Inviting-Tender/Standard Tender Conditions for Contract of Vertical Transportation of LPG Cylinders by road including Clause 3.2 thereof. Since they had failed to meet one of the requirements of providing Provident Fund Code so as to show their credit worthiness and capability to carry out the contract work smoothly, they are debarred from raising the plea that their disqualification was illegal, unjustified and uncalled for. 8. It would be relevant to reproduce Clause 3.2 of Standard Tender Conditions for Contract of Vertical Transportation of LPG Cylinders by road. 8. It would be relevant to reproduce Clause 3.2 of Standard Tender Conditions for Contract of Vertical Transportation of LPG Cylinders by road. "Tenders received late/in open condition/without EMD/tender fee (wherever applicable)/not meeting the tender conditions/incomplete in any respect or without registration certification from Employees' Provident Fund Organisation for PF Code is liable to be summarily rejected." 9. A bare perusal of the above-referred clause clearly reveals that at the time of uploading of tenders, providing of Provident Fund Registration Code was one of the essential terms and conditions. 10. So far as the contention of learned counsel for petitioners that no such condition was even mentioned in the Checklist of Credential Bid, the said document was only in the nature of a correspondence and the same cannot be construed to be a part of terms and conditions of the NIT. 11. Further, the scope of interference in contract matters by exercising extra ordinary jurisdiction under Article 226 of the Constitution of India is very limited, inasmuch as it is not the decision which can be judicially reviewed under writ jurisdiction, but the decision making process if is found to be irrational, arbitrary or violation of Article 14 of the Constitution of India, it alone can be interfered with by judicial review by the Courts. 12. The Supreme Court in M/s. Michigan Rubber (India) Ltd. v. State of Karnataka, AIR 2012 SC 2915 , while relying on the judgment of Tata Cellular v. Union of India, has laid down certain parameters for exercising extra ordinary jurisdiction in the contract matters, wherein one of the contracting parties is State. Paragraph 19 is reproduced hereunder: "19) From the above decisions, the following principles emerge: (a) the basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities; (b) fixation of a value of the tender is entirely within the purview of the executive and courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by Courts is very limited; (c) in the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities unless the action of tendering authority is found to be malicious and a misuse of its statutory powers, interference by Courts is not warranted; (d) certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work; and (e) if the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interference by Court is very restrictive since no person can claim fundamental right to carry on business with the Government." 13. Applying the tests laid down in the aforesaid case, which have been followed by Supreme Court as well as by this Court in various subsequent judgments, interference in the contractual matters, where one of the parties is a State, is limited to the extent of testing the decision of the State by the application of wednesbury's principles of reasonableness and to see that the action of the State is free from arbitrariness, not affected by bias or actuated by mala fide. The case set up by the petitioners is required to be examined keeping in view the guidelines laid down by the Supreme Court with regard to the sphere of jurisdiction of Courts in contract matters. 14. It is contended by the petitioners that the rejection of technical bids on account of non-furnishing of Provident Fund Code being illegal and arbitrary is subject to judicial review. 14. It is contended by the petitioners that the rejection of technical bids on account of non-furnishing of Provident Fund Code being illegal and arbitrary is subject to judicial review. Providing of Provident Fund Code being an ancillary condition, the same was required to be fulfilled only by the successful bidder at the time of execution of agreement of contract. Even otherwise, the said condition is not the basic condition of eligibility nor is amenable in the case of petitioners in view of amendment of the Act. 15. I have perused the tender documents annexed with the writ petition, wherein the requirement of Provident Fund Code is one of the basic conditions amongst other conditions as per condition 3.2. 16. The Supreme Court in its latest judgment delivered in case, titled as, M/s. Siemens Aktiengesellschaft & S. Ltd. v. DMRC Ltd., 2014 AIR SCW 1249, while referring to its earlier judgment delivered in Jagdish Mandal v. State of Orissa & Ors. (2007) 14 SCC 517, has held as under: "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 features 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 review, interfere even if a procedural aberration or error in assessment or prejudice to a tender, 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." "22. There is no gainsaying that in any challenge to the award of contract before the High Court and so also before this Court what is to be examined is the legality and regularity of the process leading to award of contract. What the Court has to constantly keep in mind is that it does not sit in appeal over the soundness of the decision. What the Court has to constantly keep in mind is that it does not sit in appeal over the soundness of the decision. The Court can only examine whether the decision making process was fair, reasonable and transparent. In cases involving award of contracts, the Court ought to exercise judicial restraint where the decision is bona fide with no perceptible injury to public interest." 17. I, therefore, hold that the condition, which has not been complied with by the petitioners, is the basic condition of eligibility and cannot be termed as mere ancillary or subsidiary one. The rejection of the bids by the respondents on this score cannot be said to be arbitrary or unfair. However, it is not a case of the petitioner that the respondents have acted with any bias or that the decision is actuated by mala fide. In absence of the same, the decision, which is otherwise in consonance with the terms and conditions of the contract, cannot be termed to be unfair, arbitrary or violation of Article 14 of the Constitution. Since the condition, which was not complied with by the petitioners at the time of submission of tender documents, is held to be vital and essential condition of the contract, the public interest element sought to be projected by the petitioners may not have any relevance in the matter, rather the public interest required that only those bidders should be allowed to participate in the financial bid and/or award of the contract whose technical bids are found to be valid and responsive. Applying broader parameters laid down by the Apex Court, referred to hereinabove, to the facts of the present writ petition, I do not find a case of interference in these petitions. Consequentially, the writ petitions along with the connected CMAs are dismissed. Interim direction, if any, shall stand vacated.