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Madhya Pradesh High Court · body

2016 DIGILAW 68 (MP)

Naveen Kumar Jain v. State of Madhya Pradesh

2016-02-01

J.K JAIN, P.K.JAISWAL

body2016
ORDER : 1. They are heard. By this writ petition under Article 226 of the Constitution of India, the petitioner is praying for quashment of order dated 09.09.2015 whereby, Letter of Intent (LOI) issued in his favour on 04.08.2015 has been cancelled. 2. Brief facts of the case are that a Request For Proposal (RFP) was issued by the respondent No.3 – Chief Medical and Health Officer, Shajapur for selection of most suitable service provider to operate and manage Janani Express Service in the District of Shajapur under District Health Society, National Health Mission, District Shajapur for providing 14 vehicles for different places at District Shajapur. 3. On 20.07.2015, the petitioner submitted his bid/proposal with all necessary documents. The proposal of the petitioner and other intended bidders were opened on 24.07.2015 and the bid of the petitioner was found to be the lowest and therefore, the petitioner was selected as most successful and winning bidder by respondent No.3 and therefore, a LOI was issued on 04.08.2015 (Annexure-P/3) by the respondent No.3. 4. After acceptance of the bid of the petitioner and issuance of LOI, the petitioner was called for negotiation on 31.08.2015 vide letter dated 28.08.2015 (Annexure-P/4) and during negotiation, the petitioner further reduced his proposal at Rs.13.50 per km. Thereafter, by impugned order dated 09.09.2015, respondent No.3 informed the petitioner that the LOI has been cancelled by the respondent No.2 on account of some complaint and due to higher rate without giving any prior opportunity of hearing. 5. It is this action by which the petitioner has been aggrieved and filed this writ petition. It is submitted by the learned counsel for the petitioner that once the LOI has been issued to the petitioner after careful examination of the bid and experience of petitioner, then the respondents cannot cancel the same without giving any opportunity of hearing to the petitioner. In alternatively, he further submits that if the rates of the petitioner seems to be higher in nature, then the bid should have been rejected at first instance therefore, it is apprehended that there was some other reason for canceling the LOI though the same was not disclosed in the impugned order. He lastly submits that once the LOI has been issued to the petitioner therefore, the right has been accrued in his favour, which cannot be curtailed without following the procedure of law. He lastly submits that once the LOI has been issued to the petitioner therefore, the right has been accrued in his favour, which cannot be curtailed without following the procedure of law. The respondents are duty bound to enter into agreement with the petitioner as per RFP and the action of the respondent is illegal. 6. As per reply, the stand of the respondents is that on 15.04.2015, the Mission Direction, National Health Mission, Bhopal issued executive instruction to the Chief Medical and Health Officer, Shajapur, District Programme Officer and District Accounts Manager to invite tender for providing the vehicle for Janani Suraksha Yojana. In pursuance to the aforesaid guidelines, the respondent No.3 issued a tender for plying the Janani Suraksha Yojana and other mobility supporting vehicle vide letter dated 02.07.2016 (Annexure-R/2). 7. After issuance of LOI on 04.08.2015, on 28.08.2015, one person namely Nitin Yadav made a complaint to the District Collector who is Ex-Officio Chairman of District Health Society and stated that the said tender has been awarded to the petitioner on very higher rate against the guidelines issued by the Mission Director. After complaint, the present petitioner although called for negotiation on 28.08.2015 in which he reduced the rate by 50 paise but the same was again on higher side as on the last year, tender was awarded at the rate of Rs.8.50 and at that time, the rate of diesel was higher. Therefore, the District Collector felt that rates quoted by the present petitioner is on higher side and recommended for cancellation of the tender issued in favour of the petitioner, which was carried out by the respondent No.3 vide impugned order dated 09.09.2015. It is also stated that since no agreement has been entered into between the respondent No.3 and the petitioner therefore, there is no concluded contract between the parties. He also placed reliance on Clause No.2.18 wherein it is stated that Government reserve right to accept or reject any proposal at any time without any liability or any obligation for such rejection or annulment and without assigning any reason." Thus, the petition has no merit and prays for dismissal. 8. To counter the submissions of the learned counsel for the respondents, it is submitted by the learned counsel for the petitioner that the allegation of respondents that the tender was awarded on very higher rate is completely false and baseless. 8. To counter the submissions of the learned counsel for the respondents, it is submitted by the learned counsel for the petitioner that the allegation of respondents that the tender was awarded on very higher rate is completely false and baseless. The submission of the respondents in Para-6 of the reply that last year, tender was awarded at the rate of Rs.8.50 is completely false and misleading and no such document was filed by the respondents to support the said submission. He submits that in fact the truth is that the petitioner was earlier awarded the tender in the year 2013 with a condition that the petitioner shall be given Rs.23,000/- per month for each 1500 kms. and thereafter, Rs.7.00 per km after 1500 kms. and thereafter, in the year 2014, Rs.7.00 per km increased to Rs.8.50 per km. in addition to Rs.23,000/-. In respect of Clause No.2.18, he submits that the Government has right to accept or reject proposal. 9. In the case in hand, the proposal of the petitioner was accepted and LOI was issued in his favour. In respect of submission of tender, the petitioner is an individual capacity. It is submitted that earlier also in the year 2013 and 2014, the petitioner has submitted his tender in his individual capacity, as is evident from the agreement dated 05.03.2013 (Annexure-P/6) and thus, no illegality has been committed by the petitioner in submitting his bid. With the aforesaid, he submits that none of the grounds, which has been taken by the respondents in their reply is available to them for canceling the LOI by passing the order dated 09.09.2015 and submits that the petitioner is fully entitled for award of tender and no illegality has been committed in awarding the tender to him and the respondents with/motive and in colour-able exercise of power and with mala fide intention passed the impugned order, which is liable to the quashed. 10. 10. Para-1 of the agreement dated 05.03.2013 executed between the petitioner and the respondent No.3 for plying of the vehicle in the year 2013 is relevant, which reads as under :- “ ;g vuqcU/k eq[; fpfdRlk ,oa LokLF; vf/kdkjh }kjk ftyk fpfdRlky; 'kktkiqj esa tuuh ,Dlizsl okgu ds lapkyu ds laca/k esa Jh uohu firk calr dqekj tSu 51 ubZ lM+d 'kktkiqj e0iz0 ls vkt fnukad 05-03-2013 dks tuuh ,Dlizsl okgu gsrq eq[; fpfdRlk ,oa LokLF; vf/kdkjh dk;kZy; esa laikfnr fd;k tk jgk gS ftls Jh uohu tSu }kjk tuuh ,Dlizsl okgu fufonk varxZr 1500 fdyksehVj gsrq jsV usxksf'k;s'ku i= ds vuqlkj 23000@& :i;s ekfld rFkk 7@& :i;s izfr fdyksehVj gsrq izLrqr dh xbZ gSA ” 11. Lucid enunciation on the scope of judicial review of administrative action, that too in tender matters can be found in Tata Cellular v. Union of India ( 1994 (6) SCC 651 ), where following discussion is worthy of extraction:- “70. 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 financial interest of the State. The right to refuse 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. Judicial review is concerned with reviewing not the merits of the decision in support of which the application for judicial review is made, but the decision making process itself. The duty of the court is to confine itself to the question of legality. Its concern should be: (i) Whether a decision making authority exceeded its powers? Judicial review is concerned with reviewing not the merits of the decision in support of which the application for judicial review is made, but the decision making process itself. The duty of the court is to confine itself to the question of legality. Its concern should be: (i) Whether a decision making authority exceeded its powers? (ii) Committed an error of law, (iii) Committed a breach of rules of natural justice, (iv) Reached a decision which no reasonable tribunal would have reached or, (v) Abused its powers. Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfillment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under: (i) Illegality: This means the decision maker must understand correctly the law that regulates his decision making power and must give effect to it. (ii) Irrationally, namely Wednesbury unreasonableness. (iii) Procedural impropriety. The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact in R.V. Secretary of State for the Home Department, ex Brind Lord Diplock (1991) 1 AC 694, Lord Diplock refers specifically to one development namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should “consider whether something has gone wrong of a nature and degree which requires its intervention.” Two other facets of irrationality may be mentioned. (i) It is open to the court to review the decision maker's evaluation of the facts. The court will intervene where the facts taken as a whole could not logically warrant the conclusion of the decision maker. If the weight of facts pointing to one course of action is overwhelming, then a decision the other way cannot be upheld. (i) It is open to the court to review the decision maker's evaluation of the facts. The court will intervene where the facts taken as a whole could not logically warrant the conclusion of the decision maker. If the weight of facts pointing to one course of action is overwhelming, then a decision the other way cannot be upheld. Thus, in Emma Hotels Ltd. v. Secretary of State for Environment (1980) 41 P&* CR 255; the Secretary of State referred to a number of factors which led him to the conclusion that a non resident's bar in a hotel was operated in such a way that the bar was not an incident of the hotel use for planning purposes, but constituted a separate use. The divisional court analysed the factors which led the Secretary of State to that conclusion and, having done so, set it aside. Donaldson, L.J. Said that he could not see on what basis the Secretary of State had reached his conclusion. (ii) A decision would be regarded as unreasonable if it is impartial and unequal in its operation as between different classes. On this basis in R.V. Barnet London Borough Council, ex. P. Johnson 35 (1989) 88 LGR 73 the condition imposed by a local authority prohibiting participation by those affiliated with political parties at events to be held in the authority's parks was struck down.” 12. In Tejas Constructions and Infrastructure (P) Ltd. v. Municipal Council, Sendhwa & Anr. 2012 (6) SCC 464 , the Court was dealing with the case of challenge to the awarding of contract to the 2nd respondent in the writ petition on the ground that he had not complied with eligibility requirements in NIT. Paragraph 17 of that case reads as follows:- “In Raunaq International Ltd. v. IV.R. Construction Ltd. (1999) 1 SCC 492 , 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 transaction 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.” 13. In the case of Rishi Kiran Logistics Pvt. Ltd. v. Board of Trustees of Kandla Port Trust & others reported in AIR 2014 SC 3358 , the successful bidder was required to pay the premium within three months from the issuance of formal letter of allotment or Coastal Regulatory Zone (CRZ) clearance, whichever was earlier. The appellant's bid therein in respect of Plot Nos.14, 15 and 17 was accepted in the form of LOI, inter alia stating the leasehold rights in respect of above mentioned plots were given for a premium of Rs.3,200/- per sq. mtrs., Rs.3,150/- per sq. mtrs. and Rs.3,120/- per sq. mtrs. respectively. This communication further mentioned that the formal letter will be issued to the appellant therein after the receipt of CRZ clearance in general. The CRZ clearance was received on 16.08.2010 i.e., more than 5 years after NIT dated 12.03.2005 was floated. Due to this, the Board of Trustees on 09.12.2010 passed a Resolution No.108 deciding to cancel the tender process started in the year 2005. This decision of the Port Trust was conveyed to the appellant vide letter dated 09.12.2010. Considering the aforesaid facts, the Apex Court has held that decision to cancel the tender process is arbitrary and does not suffer from vicious unreasonableness. 14. In the present case, from the LOI dated 04.08.2015, it is clear that offer of the petitioner was finally accepted leading to concluded contract. The Apex Court has observed that the question whether the LOI is merely an expression of an intention to place an order in future or whether there is a final acceptance of the offer thereby leading to a contract, is a matter that has to be decided with reference to the terms of the letter. 15. In the case in hand, LOI was cancelled on the ground that rate of Rs.13.50 per km was on higher side and in the year 2014, the tender was awarded to the present petitioner @ Rs.8.50 per km was in addition to Rs.23,000/- per month, in the year 2013 and 2014, there was a condition that the contractor shall be given Rs.23,000/- per month for each 1500 kms. and thereafter, at Rs.8.50 per km after 1500 kms., which comes to more than Rs.13.50 per km. 16. This action has been taken on the basis of complaint dated 28.08.2015 by Nitin Yadav to the District Collector. and thereafter, at Rs.8.50 per km after 1500 kms., which comes to more than Rs.13.50 per km. 16. This action has been taken on the basis of complaint dated 28.08.2015 by Nitin Yadav to the District Collector. Thus, it shows that the respondents after considering the complaint also has failed to properly appreciate the facts nor they pointed out to this Court in their reply, which is supported with the affidavit of the Chief Medical and Health Officer, Shajapur that Rs.8.50 per km was in addition to Rs.23,000/- per month. This shows the unending needs of the respondents that they somehow want to cancel the LOI of the petitioner on wrong facts and figures by stating that the rate was on higher side. 17. From the aforesaid, it is true that the decision of canceling the LOI dated 09.09.2015 is taken without any reasons to support it or mere ipsi dixit, it would be arbitrary. 18. For these reasons, we are of the view that the respondent No.3 committed an error in passing the impugned order dated 09.09.2015 and accordingly, we quash the order dated 09.09.2015 by allowing the writ petition. 19. With the aforesaid, the writ petition is disposed of. No order as to costs.