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2016 DIGILAW 595 (JK)

Inderpal Singh v. Union of India

2016-11-17

JANAK RAJ KOTWAL

body2016
JUDGMENT : JANAK RAJ KOTWAL, J. 1. This is appeal under section 37 of the J&K Arbitration and Conciliation Act, 1997 (hereinafter to be referred as the Act) against order dated 08.08.2016 rendered by learned Additional District Judge, Rajouri, whereby appellants' application for interim measure under section 9 of the Act has been dismissed. Heard learned counsel for the parties and perused the record. 2. Common ground of both sides is that pursuant to a Tender Inviting Notice for the work, namely, 'PROVN OF SECURITY LIGHTS FOR FENCE AT PALMA AT UNDER AGE I GIF R' appellant submitted his technical and financial bids to the respondents. After consideration of the technical bids, the financial bids submitted by four bidders including the appellant were opened and through e-mail dated 27.07.2016 appellant was informed that his bid for the 'tender has been accepted during Financial evaluation by the duly constituted committee'. By a subsequent e-mail dated 29.07.2016 the appellant, however, was informed that 'due to administrative reasons, the tender has been Retendered'. 3. Faced with the information about the retendering of the tender, the appellant filed application under section 9 of the Act before learned Additional District Judge, Rajouri seeking interim relief to keep e-mail dated 29.07.2016 in abeyance till matter is adjudicated by the Sole-Arbitrator. Learned Additional District Judge inter alia took up the question whether the parties were governed by an Arbitration Agreement and vide the impugned order dated 08.08.2016 took a prima facie view that the case of the appellant was governed by clause 70 of IAFW 2249 Standard form of Contract. Learned court, however, refused the relief taking the view that even though the pleadings of the appellant suggest that he has a prima facie case of breach of 'allegedly accepted contract' but the facts pleaded by him do not show that applicant has a legal right to challenge the retendering of the work and cannot be said to have a prima facie case for interim measure of protection under section 9 of the Act. Besides, learned court also took the view that alternative remedy of seeking adequate compensation in money for losses suffered by him was available to the appellant. Besides, learned court also took the view that alternative remedy of seeking adequate compensation in money for losses suffered by him was available to the appellant. Learned court, therefore, dismissed the application for interim measure holding also that granting of the application will amount to trampling upon the jurisdiction of arbitral tribunal and will act as a cloak to defeat the rights of respondents to retender the work sought to be executed through third parties. 4. In assailing the impugned order learned counsel for the appellant, Mr. Sanjay Kakkar, submitted that the unilateral decision of the respondents to retender the work after accepting the lowest bid offered by the appellant without notice to him is arbitrary and violative of the Principles of Natural Justice and infringes appellant's Fundamental Right under Article 14 of the Constitution of India. It was submitted also that in case of the Government contracts Article 14 of the Constitution casts a duty on the Government to act fairly and reasonably against private contractors. Mr. Kakkar argued that learned Additional District Judge has fallen in error by taking the view that remedy of availing compensation in money is available to the appellant. In this behalf it is contended in ground-Ill in the memorandum of appeal that the appellant has still to commence the execution of works of the subject contract when the same has been brought to an end by illegal action of respondents. 5. Respondents have opposed not only the appeal but even the maintainability of application under section 9 of the Act. It is contended that neither the bid of appellant was finally accepted nor the work had been allotted to the appellant. Neither there had been any contract between the parties nor is section 9 of the Act attracted. Learned ASGI, Ms. Sindhu Sharma, while supporting the impugned order insofar as it dismisses the application of the appellant, submitted that learned Additional District Judge has fallen in error by entertaining the application without notice to the respondents assuming wrongly the existence of a contract agreement containing arbitration clause between the parties or application of clause 70 of the Standard form of Contract. 6. Learned ASGI submitted that appellant's contention that bid submitted by him being the lowest had been accepted is misconceived. Referring to the detailed objections filed on behalf of respondents, Ms. 6. Learned ASGI submitted that appellant's contention that bid submitted by him being the lowest had been accepted is misconceived. Referring to the detailed objections filed on behalf of respondents, Ms. Sharma sought to explain that after opening the financial bids, comparative statement and BoQ (Bills of Quantities) summary is auto generated and uploaded on e-procurement portal of the department. The financial bids were opened on 27.07.2016 and comparative statement of four bidders in order of the rates quoted by them by indicating L-1 to L-4 was uploaded on the same day indicating therein also that all these bids were accepted. Individual intimation about acceptance of their bids was sent to all the four bidders through e-mail. Ms. Sharma submitted that annexure-VI to the respondents' objections is the e-generated comparative statement whereas annexure-D to the appeal is e-generated intimation to the appellant. It is contended that the similar web based auto generated e-mail were sent to all the bidders. One such intimation received by the Narayana Construction Company, which was the highest bidder (L-4), is as annexure-IX to the objections. Learned ASGI submitted further that with the uploading of the comparative statement the online tendering process comes to the end and the decision in regard to accepting a bid or retendering a work is taken offline and acceptance or retendering of the work is uploaded on the e-portal. Learned ASGI thus concluded that there being no contract between the parties, application under Section 9 of the Act was not maintainable and it was open to the tendering authority not to accept the lowest bid as rate quoted even by the lowest bidder was found on higher side. In support, learned ASGI relied upon a recent judgment of Supreme Court in State of Jharkhand & Ors. v. CWE-SOMA Consortium, AIR 2016 SCW 3366. 7. In regard to the maintainability of application under Section 9 of the Act, learned counsel for appellant argued that contract between the parties came into existence with the acceptance of the bid of the appellant and Clause 70 of the Standard form of Contract was attracted. Learned Counsel relied upon a judgment of a Single Bench of this Court in Feedback Infra Private Ltd. v. State of J&K & Ors. 2015 (1) JKJ 727 [HC] and Supreme Court Judgment in Trimex International FZE Ltd. v. Vedanta Aluminum Ltd. (2010) 3 SCC 1 . 8. Learned Counsel relied upon a judgment of a Single Bench of this Court in Feedback Infra Private Ltd. v. State of J&K & Ors. 2015 (1) JKJ 727 [HC] and Supreme Court Judgment in Trimex International FZE Ltd. v. Vedanta Aluminum Ltd. (2010) 3 SCC 1 . 8. It is noticed that learned Additional District Judge has failed to address the question, whether there had been a contract agreement between the parties and section 9 of the Act was applicable. While taking up the question, whether the parties were governed by any Arbitration Agreement, learned Judge seems to have accepted appellant's plea that the case was governed by clause 70 of IAFW 2249 of the Standard form of Contract ignoring that clause 70, which provides for arbitration would operate to a dispute 'between the parties to the contract'. What is required primarily is the existence of a contract between the parties. I have no hesitation in accepting the contention of the respondents that after opening the financial bids on 27.07.2016 a comparative statement of all the four bids indicating the rates quoted by them was prepared and all of them were individually intimated that their bids have been accepted. The relevant from the comparative statement, which has been produced as annexure-VI to the objections of respondents is culled out: "e-Procurement System for Organizations under MoD Finance Bid Evaluation Summary Date: 27-Jul-2016 ........... No. of Bids: 4 Bid List S. No. Bid Number Bidder Name Opened by Submited Date Type Quoted Amount (INR) Rank Status Reason 1 338788 M/s. Pershotam Kumar Gupta Maj Dharmavir Singh 27-jun-2016 09:05 PM Online 8,79,705.00 L3 Accepted Bid is in Order 2 338804 M/s Inderpal Singh Maj Dharmavir Singh 26-jun-2016 05:39 PM Online 8,60,650.00 L1 Accepted Bid is in Order 3 339255 M/s. Narayan Construction company Maj Dharmavir Singh 27-jun-2016 049:08 PM Online 9,09,555.00 L4 Accepted Bid is in Order 4 339341 Tawi Construction Maj Dharmavir Singh 27-jun-2016 01:44 PM Online 8,66,555.00 L2 Accepted Bid is in Order Tender Inviting Authority" (underlining by me) 9. What is clear on a plain look at the comparative statement, which I am inclined to accept, is that on 27.07.2016 the four financial bids were opened, statement indicating the rates quoted by all the four bidders and all the four bids having been accepted was prepared and individual intimation was sent to each bidder through e-mail informing that his bid has been accepted. The statement indeed shows that the appellant was the lowest bidder among the four. This exercise, however, was never followed by allotting the contract to the lowest bidder, that is, the appellant and the respondents rather decided to retender the work on 29.07.2016 due to administrative reasons. No contract concluded between the parties or any agreement containing arbitration clause therefore, can be said to have come into existence. I am thus inclined to agree with and accept respondents' contention and hold that there was no arbitration agreement between the parties as contemplated under Section 7 of the Act and learned Additional District Judge has fallen in error in assuming jurisdiction under Section 9 of the Act. As there was no contract between the parties even Clause 70 of 'Standard Form of Contract' is not attracted because Clause 70 presupposes a dispute between the 'parties to the contract'. Tendering authority and a lowest bidder in no case can be construed as parties to a contract at tendering stage until contract is allotted. The parties at that stage are governed by the tender documents and in this behalf it is pointed out on behalf of the respondents that condition No. 15 of the Tender Inviting Notice clearly provided that 'the accepting officer does not bind himself to accept the lowest tender of any tenderer or to give the reasons for not doing so'. The judgment in Trimex International FZE Ltd. cited by learned counsel for appellant are distinguishable. 10. In Trimex International FZE Ltd. after several exchanges of e-mails and after agreeing on material terms of the contract, the respondent therein conveyed its acceptances of the offer of the appellant therein through e-mail on 16.10.2007, a formal contract containing a detailed arbitration clause was also sent by the respondent to the petitioner on 08.11.2007, which was accepted by the petitioner with some changes and returned to the respondent on the same evening. The petitioner, however, terminated the contract on 16.11.2007 reserving the right to claim damages. The petitioner, however, terminated the contract on 16.11.2007 reserving the right to claim damages. On 01.09.2007, the petitioner served a notice of claim-cum-arbitration on the respondent and on 14.11.2008, the respondent rejected the arbitration notice leading to filing of petition under the Arbitration and Conciliation Act, 1996 (corresponding State Act of 1997). Clearly there was a concluded contract between the parties which was terminated by the respondents. 11. Even if it is understood for the sake of argument that there was a concluded contract and arbitration clause between the parties, case for granting interim relief is not made out and learned Additional District Judge cannot be said to have committed any error in refusing the interim relief. It is admitted ground of both the sides that after conveying the decision of retendering of the work vide communication dated 27.07.2016 the tendering authority had issued a corrigendum indicating that 'high rates' was the reason for retendering the work. Not to accept the lowest bid at tendering stage in particular for the reason that in the opinion of the tendering authority tendered rates were on higher side is a decision of experts which cannot be examined by this Court in exercise of power of judicial review unless a clear and cogent case of mala fide or ulterior motive is made out. Consequences of retendering would be universal and equal for all the interested persons and decision to do so cannot be said to be an outcome of mala fides or ulterior motive. Legal position in this regard is clearly stated in the ratio of the judgment in M/s. CWE-SOMA Consortium (supra) relied upon by the learned ASGI, which squarely applies to this case. 12. Ratio of Feedback Infra Private Ltd. is not applicable to the case on hand. In that case during the tendering process tendering authority retendered the work on 13.09.2013 ignoring the lowest bid of the petitioner for the reason that it was informed during the tendering process about an order dated 22.03.2013 whereby petitioner had been blacklisted for a period of three years from participating in any tender or bid by the Public Works Department of State of Chhattisgarh. However, in the meantime, the petitioner therein had questioned the order blacklisting it in the High Court of Chhattisgarh and the order was set aside as illegal on 04.09.2013. However, in the meantime, the petitioner therein had questioned the order blacklisting it in the High Court of Chhattisgarh and the order was set aside as illegal on 04.09.2013. In this backdrop, learned Single Bench in exercise of writ jurisdiction had quashed the decision of reentering the work. 13. For all that said and discussed above, this appeal has no merit and is dismissed. Interim direction issued in favour of the appellant now stands withdrawn. Contempt (C) No. 06/2016: Consequent upon dismissal of the appeal, this contempt application is also dismissed.