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2016 DIGILAW 1604 (PNJ)

Tarlok Kumar Mess Contractor v. State of Punjab

2016-06-02

ARUN PALLI, S.J.VAZIFDAR

body2016
JUDGMENT : S.J. Vazifdar, J. The petitioner has sought a writ of certiorari to quash Eligibility Clause G in a notice inviting tenders (NIT) for running a hostel mess and facility shop for the Meritorious School at Jalandhar and the award of the tender to respondent Nos.4 and 5. Eligibility Clause G reads as follows:- "Eligibility Documents required from the Tenderer:- ..... ..... ..... ..... G. the contractor must have Rs. 1.50 crores (annually) turnover in the similar type of work during the last three years for financial Session 2012-13 to 2014-15. Certified copies of audited P&L Statement and balance sheets by practicing C.A for the last 3 years i.e. FY 2012-13 to 2014-15 must be uploaded. Scanned copies uploaded without valid CA certification shall be rejected." 2. Respondent No.2 runs a senior secondary residential school for meritorious students at Jalandhar. Respondent No.3 is the Deputy Commissioner, Jalandhar. Respondent No.4-Tript Food and respondent No.5-Nav Prayas are private parties to whom the tender has been awarded. 3. Respondent No.3-Deputy Commissioner, Jalandhar, on behalf of the Project Director of the respondent No.2-Society for Promotion of Quality Education for Poor and Meritorious Students of Punjab, invited a short term tender for a hostel mess and facility shop. 4. Considering the nature of challenge, it is necessary to note that similar writ petitions have been filed by the bidders in respect of similar tenders floated for the same work in respect of such schools at six other places as well, namely, at Talwara, Ludhiana, Amritar, Patiala, Bathinda and Mohali. The decision in those writ petitions is covered by this decision. It is, however, necessary to note certain facts relating to the other petitions as well. 5. The notices inviting tenders in all these schools were issued in December, 2015. The required turnover stipulated in Clause G of each of these contracts was as follows:- "Location Annual Turnover Required (Rs.) Talwara 1.0 Crore Jalandhar 1.5 Crore Ludhiana 2.0 Crore Amritsar 2.5 Crore Patiala 2.8 Crore Bhatinda 4.5 Crore Mohali 1.60 Crore" When the petition was filed, the tender notice was yet to be issued in respect of Mohali. It has since been issued stipulating the annual turnover required at Rs. 1.60 crores. 6. The common features in all these petitions are the terms and conditions, the nature of the work and most important, the number of students, the number of meals and the menu. It has since been issued stipulating the annual turnover required at Rs. 1.60 crores. 6. The common features in all these petitions are the terms and conditions, the nature of the work and most important, the number of students, the number of meals and the menu. Each school except the one at Talwara had approximately 800 students in the year 2015-16 and the number was expected to increase to 900-950 in the following academic year. 7. Mr. Pankaj Gupta, the learned counsel appearing on behalf of the petitioner, placed strong reliance upon the fact that in the previous tender issued on 07.07.2015 for the period 15.08.2015 to 30.06.2017, the annual turnover required was Rs. 40 lacs for one school, Rs. 80 lacs for two schools and Rs. 1 crore for three schools or more. This was followed by a corrigendum dated 21.07.2015 which required an annual turnover of Rs. 50 lacs irrespective of the number of schools for which the bid was submitted. The turnover was in respect of the work during the previous three years, namely, for the financial years 2011-12, 2012-13 and 2013-14. That tender process was, however, cancelled. The respondents have not furnished any reason for the same. Neither has the petitioner suggested any reason for the same. Mr. Gupta, however, relies upon the terms and conditions of the NIT dated 07.07.2015 to demonstrate the arbitrariness and unreasonableness of the required turnover in Eligibility Clause G in each of the present notices inviting tenders. 8. Mr. Gupta also placed strong reliance upon the fact that except in Talwara there were about 900 students in each of the schools. The rate was to be quoted on a per day per student basis. The average rate was Rs. 150/- per student. This would involve an annual turnover of about Rs. 5.475 crores. In fact, the respondents themselves rely upon this calculation to explain the phenomenal increase in the required turnover from Rs. 40 lacs per centre in the previous NIT to amounts between Rs. 1.50 crores and Rs. 4.50 crores per centre in the present NIT. Between the previous financial years and the present financial year there has been no change in circumstances warranting such an increase. The number of students has increased from about 800 to 900. That by itself could never warrant such an increase in the required turnover. 9. 1.50 crores and Rs. 4.50 crores per centre in the present NIT. Between the previous financial years and the present financial year there has been no change in circumstances warranting such an increase. The number of students has increased from about 800 to 900. That by itself could never warrant such an increase in the required turnover. 9. We have ourselves more than once held that it is for the parties inviting tenders to stipulate the terms and conditions. Absent anything else, the Courts do not sit in appeal over the judgment of the party inviting tenders. However, if the term is arbitrary, unreasonable and indicative of mala fides, the Court must invoke its extra-ordinary jurisdiction under Article 226 of the Constitution of India to set right the wrong. The official respondents' action must be guided by principles of fairness, transparency and reasonableness eschewing arbitrariness and unfairness. 10. This drastic increase in the turnover required an explanation. The official respondents have sought to furnish an explanation in their affidavit in reply proceeding on the basis that the turnover is about Rs. 5.475 crores per annum. The turnover has allegedly been fixed by relying upon the Central Vigilance Commission (CVC) guidelines, albeit in respect of the electrical work. 11. Mr. Goyal, the learned counsel appearing on behalf of the official respondents, relied upon a office memorandum dated 17.12.2002 issued by the CVC which dealt with the pre-qualification criteria. Clause-5 of the office memorandum reads as under:- "5. The following points must be kept in view while fixing the eligibility criteria:- (A) For Civil/Electrical Works (i) Average Annual financial turnover during the last 3 years, ending 31st March of the previous financial year, should be at least 30% of the estimated cost. (ii) Experience of having successfully completed similar works during last 7 years ending last day of month previous to the one in which applications are invited should be either of the following: - a. Three similar completed works costing not less than the amount equal to 40% of the estimated cost. or b. Two similar completed works costing not less than the amount equal to 50% of the estimated cost. or c. One similar completed work costing not less than the amount equal to 80% of the estimated cost. (iii) Definition of "similar work" should be clearly defined. or b. Two similar completed works costing not less than the amount equal to 50% of the estimated cost. or c. One similar completed work costing not less than the amount equal to 80% of the estimated cost. (iii) Definition of "similar work" should be clearly defined. In addition to above, the criteria regarding satisfactory performance of works, personnel, establishment, plant, equipment etc. may be incorporated according to the requirement of the Project." 12. Mr. Gupta's contention that the official respondents' reliance upon the guidelines stipulated by the CVC for civil/electrical works is itself indicative of arbitrariness is not well-founded. The official respondents invited tenders. It was for them to stipulate the terms and conditions. They were entitled to do so on any basis that they bona fide considered reasonable. They were entitled to apply a principle in respect of a different type of contract if they were of the bona fide view that the same could reasonably be adopted. The mere fact that the official respondents adopted the same percentage in respect of the present tender does not indicate arbitrariness. 13. Mr. Goyal submitted that often there is a delay of about three months in the payment of the contractors' bills. The respondents were aware of the same and to ensure that there was no disruption in the working of the contractors on account of lack of funds desired to award the contract to a substantial party who would be able to tide over the period of three months. That would ensure that there would be no disruption in the canteen services. The official respondents not having adopted the option in the office memorandum of the CVC cannot, in the circumstances, be held to be unjust either. In fact, this would indicate that the respondents have not blindly adopted the policy. This, however, is provided the policy has actually been adopted fairly. 14. Mr. Goyal then relied upon a letter dated 10.11.2015 addressed by the 2nd respondent-Society to respondent No.3-Deputy Commissioner regarding the tenders for the said work. He relied upon the fact that a committee comprising of senior officers under the chairmanship of the Deputy Commissioner of the district, the Principal of the school and the Registrar-cum-male warden of the school was constituted to draft the tender conditions. He relied upon the fact that a committee comprising of senior officers under the chairmanship of the Deputy Commissioner of the district, the Principal of the school and the Registrar-cum-male warden of the school was constituted to draft the tender conditions. One of the broad terms and conditions of the tender suggested as follows: "Turn Over:- The same is governed vide CVC Guidelines circulated vide Para 5(h)(1) of Letter No. 12-02-1-CTE dated 17 Dec 2002, (Photocopy attached). Since food industry is an unorganised sector in the state of Punjab the same may be regulated/reduced at the discretion of the Committee but it shall not under any circumstances be less than anticipated bill for three months, as there may be delay in payments." 15. Having said that, however, there is a vital aspect that remains unanswered by the official respondents. As we mentioned earlier, the average rate per student per day for the same meal was about Rs. 150/- and the number of students in each school, except Talwara, was the same - about 900 students. Thus, the annual turnover was projected at about Rs. 5.475 crores. Despite that the eligibility conditions contained a turnover ranging from Rs. 1.50 crores to Rs. 4.50 crores. There is absolutely no explanation for the same. A condition of eligibility is one of the most important terms in any tender document. The reasonableness and the legality of the eligibility conditions in the present case having been put in issue, the respondents were bound to answer it. They offer no explanation for it. It is important to note that the party inviting tenders is the same. If the facts are the same and the party inviting the tenders is the same there must be an explanation for the drastically different eligibility criteria. Had the party inviting tenders been different, it would have been a different matter. We are not bound to speculate in their favour and to presume that there must have been some valid reason for the turnover to vary so drastically from Rs. 1.50 crores to Rs. 4.50 crores in similar cases. It is not the respondent's case that there were any special circumstances in each of the centres which warranted a different turnover being prescribed as a condition of eligibility. Although we do not for the purpose of this petition draw an inference of mala fides, we are inclined to accept Mr. 1.50 crores to Rs. 4.50 crores in similar cases. It is not the respondent's case that there were any special circumstances in each of the centres which warranted a different turnover being prescribed as a condition of eligibility. Although we do not for the purpose of this petition draw an inference of mala fides, we are inclined to accept Mr. Gupta's contention that this fact alone indicates, to say the least, an arbitrary and irrational act on the respondents' part. It would show a flaw in the decision making process. There is no rationale while working out and finally stipulating the required turnover. The quantum of turnover stipulated in Clause-G in the various agreements is, therefore, liable to be set aside. 16. In the circumstances, Clause-G is quashed and set aside. The official respondents are directed to issue a fresh tender. If they wish to stipulate a required turnover, they must do so in a rational and fair manner. 17. The petition is accordingly disposed of. The interim orders shall continue till the appointment of a regular contractor. Order accordingly.