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2016 DIGILAW 747 (CAL)

Debasis Ghosh v. State of West Bengal

2016-09-26

SANJEEB BANERJEE

body2016
JUDGMENT : 1. The matter which was virtually concluded by the order of September 19, 2016 has been sought to be resurrected by a spirited challenge of the private respondent. The facts are mostly recorded in the order of September 19, 2016, but the essential features warrant a repetition. 2. Both the petitioners and the private respondent no.5 applied for obtaining the work for supply of cooked diet to a government hospital in Barasat. Both the tenderers were found to be eligible and the matter progressed to the commercial stage. The petitioners and the private respondent quoted the same rate and it was decided that the successful candidate would be chosen by a draw of lots. Upon the agreement of all concerned, lots were drawn and the petitioners came up trumps. The work order was issued to the petitioners on or about January 26, 2016 and the supply was to commence on February 1, 2016. There is a dispute as to when the agreement was signed and, though the petitioners claim that the agreement was signed by February 1, 2016, it is possible that the agreement may have been signed sometime after March 9, 2016 but before March 19, 2016. However, since affidavits have not been called for, the date of signing of the agreement cannot be confirmed; but nothing much turns on such aspect of the matter. 3. There is no dispute that clause 5.1 of the tender documents required the contractor to furnish an appropriate performance security to the relevant health facility for an amount equivalent to two months’ estimated gross bill value for supply of full rice diet at full bed-occupancy of the facility. The clause also provided for the performance security to be retained upto six months after the completion of all the contractual obligations by the contractor. Clause 27.1 of the tender documents clearly stipulated that unless the performance security was furnished within fifteen days of the notification of the award in favour of the contractor, the earnest deposit of the contractor “will be forfeited and the award will be cancelled.” 4. Upon the petitioners not furnishing the performance security for a substantial period after the issuance of the work order, the private respondent instituted a petition under Article 226 of the Constitution in this court which was disposed of by an order of July 22, 2016. Upon the petitioners not furnishing the performance security for a substantial period after the issuance of the work order, the private respondent instituted a petition under Article 226 of the Constitution in this court which was disposed of by an order of July 22, 2016. The petitioners herein were not impleaded in the private respondent’s petition. The order therein was for the concerned Chief Medical Officer of Health to take a decision after affording the present petitioners a hearing. 5. In course of the hearing before the concerned CMOH, the petitioners referred to the petitioners’ registration as a micro enterprise under the Micro, Small and Medium Enterprises Development Act, 2006. The petitioners insisted that by virtue of such registration, the petitioners ought to be regarded as an SSI unit in the State and, as a consequence, the petitioners would be covered by the last sentence in the proviso to Rule 47A of the West Bengal Financial Rules that exempts the furnishing of performance security by units registered as SSI in the State. 6. The CMOH noted the submission and contention on behalf of the petitioners but found that the petitioners had not complied with the terms and conditions of the notice inviting tender dated March 19, 2015. The CMOH rejected the claim for exemption in furnishing the performance security. The net result of such finding was that the private respondent was called upon to undertake the work of supplying cooked diet to the relevant health facility at Barasat. 7. When the present petition was received on September 15, 2016, the issue involved therein was noticed and the petitioners were permitted to continue to supply cooked diet to the relevant hospital since the private respondent had not commenced its supply to such facility. By a further order of September 19, 2016, the petitioners were directed to furnish a deposit of Rs.15 lakh in lieu of performance security. The State had been called upon to indicate the quantum of the performance security that ought to have been furnished. Upon the State failing to immediately indicate the figure, a sum of Rs.15 lakh was required to be deposited by the petitioners since the petitioners claimed that the figure ought to be around Rs.12 lakh. The State has, however, submitted today that the quantum of performance security that the petitioners ought to have deposited would be Rs.17,50,336/-. Upon the State failing to immediately indicate the figure, a sum of Rs.15 lakh was required to be deposited by the petitioners since the petitioners claimed that the figure ought to be around Rs.12 lakh. The State has, however, submitted today that the quantum of performance security that the petitioners ought to have deposited would be Rs.17,50,336/-. The State acknowledges the deposit already made with the Bank of India to the tune of Rs.15 lakh by the petitioners. 8. The State submits that a decision has been taken by an appropriate official pursuant to the direction contained in the order dated July 22, 2016 passed on the private respondent’s petition. As to whether the State would object to the petitioners being permitted to deposit the performance security now, the State has made no specific submission. 9. Quite understandably, it is the private respondent which has risen to object to any discretion being exercised in favour of the petitioners, particularly in the light of the petitioners’ perceived conduct. The private respondent says that the petitioners do not have a micro enterprise certificate and the document appended at page 37 of the petition is only the acknowledgement of the receipt of an application in such regard from the petitioners. The private respondent claims that in view of the clear terms of clauses 5.1 and 27.1 of the tender documents, the order issued in favour of the petitioners herein was liable to be terminated upon the expiry of the time stipulated for furnishing the performance security. The private respondent maintains that no latitude can be shown to the petitioners in such regard. 10. In such context, the private respondent refers to several judgments of the Supreme Court, including those reported at (2000) 5 SCC 287 ; (2003) 1 SCC 123 ; (2001) 2 SCC 451 ; (2004) 4 SCC 19 ; (1991) Supp. II SCC 432; (1993) 2 SCC 429 and (1994) 2 SCC 723 . None of the judgments cited on behalf of the private respondent throws any light on the issue that has arisen herein. The judgments referred to by the private respondent dwell on the eligibility criteria for participating in any tender or selection process and the deadline for submitting documents in support of the eligibility criteria. 11. None of the judgments cited on behalf of the private respondent throws any light on the issue that has arisen herein. The judgments referred to by the private respondent dwell on the eligibility criteria for participating in any tender or selection process and the deadline for submitting documents in support of the eligibility criteria. 11. In the first of the cases cited, the photocopy of the banker’s cheque on account of earnest deposit was furnished and the Supreme Court did not permit the photocopy to be treated as the earnest deposit. In the second of the judgments relied upon by the private respondent, it was held that equity would not be applicable in the face of a clear statutory provision. In the third case, the tenderer sought correction of certain matters incorporated in the bid documents and the Supreme Court held that the same could not be done after the deadline had expired, particularly since the errors were not found to be merely clerical or mechanical. In the fourth case cited, it was observed that the eligibility criteria in a tender process could be interdicted only when they were found to be arbitrary, discriminatory or biased and not otherwise. In the fifth case, the concerned person had failed to produce the certificates demonstrating the eligibility as on the date of selection which was not condoned. In the sixth case, it was held that the suitability and eligibility have to be assessed with reference to the last date for application and not at a later date. In the final case in such regard cited by the private respondent, it was held that the educational qualifications should have been attained by the candidate by the last date for the applications to be received. 12. As would be evident from the nature of the cases cited, the dicta therein are clearly inapposite in the present context where the eligibility of the petitioners is not in question. The issue here is whether the petitioners could have sought the exemption or the CMOH by his order impugned dated September 6, 2016 could have declined the prayer for exemption. 13. The issue here is whether the petitioners could have sought the exemption or the CMOH by his order impugned dated September 6, 2016 could have declined the prayer for exemption. 13. The considerations that are relevant for assessing whether a candidate or an offerer was eligible under the eligibility criteria stipulated for any process are quite distinct from the contractual obligations upon an offerer being selected for the work and the award being made in such offerer’s favour. The matter then is more between the contractor and the employer and other participants in the tender process would have very little say in the matter, unless the tender terms are turned on their head to provide their contractor with an immense benefit that may not have been contemplated under the tender terms. However, the extension of the time to do a certain thing or like matters cannot be complained of by unsuccessful tenderers upon a work order being issued and upon the unsuccessful tenderers being unable to demonstrate that the acts complained of materially affected the process of selection. 14. It is evident in the instant case that the petitioners herein have been asserting their rights to be regarded as an SSI unit in the State by virtue of their registration as a micro enterprise or their application as such. Indeed, pursuant to a previous order of this court, the Secretary in the Ministry of Health and Family Welfare, no less, acceded to the prayer of the petitioners made before him in an order of March 30, 2016. However, since the Finance Department was involved in the matter of financial rules and the notifications issued in connection therewith, the matter was referred to the Finance Department for its clarification and confirmation. The concerned CMOH who passed the order impugned herein completely glossed over such fact that a superior officer had, tentatively, accepted the same contention of the petitioners herein and had referred the matter for clarification to the Finance Department. 15. The petitioners herein have not been found to be disqualified for the contract to be awarded in their favour. That is not in issue. The petitioners were issued letters on March 9 and 19, 2016 for the performance security to be furnished and by their response of March 22, 2016 the petitioners made out the grounds why they ought to be exempted from furnishing such security. That is not in issue. The petitioners were issued letters on March 9 and 19, 2016 for the performance security to be furnished and by their response of March 22, 2016 the petitioners made out the grounds why they ought to be exempted from furnishing such security. It was not as if the State took immediate action upon the receipt of the March 22, 2016 reply from the petitioners. The State was constrained to take a decision in the matter only by reason of the order obtained by the private respondent on its petition on July 22, 2016. 16. By the previous order of September 19, 2016, the petitioners were required to make a substantial deposit and the deposit has been made. Though implicit in requiring such deposit to be made was the acceptance of the view expressed by the CMOH in the impugned order, the matter or the issue is not finally settled by the order of the CMOH or by this order as the clarification sought by the relevant Secretary in the Health Department awaits the response from the Finance Department. In any event, it does not appear that the petitioners herein insisted on the exemption without any basis altogether or that the State or the relevant facility at Barasat would suffer any prejudice upon the performance security being required to be put in belatedly. At the end of the day, the performance security is a form of a guarantee in aid of the contractor discharging his contractual obligations and providing the cooked diet in accordance with the contractual specifications. The money is there for the State to proceed against the same in the event there is any breach in performance. As of now there is no complaint of any breach on the petitioners’ part in such regard. 17. Since the petitioners’ point of view was tentatively accepted by a contemporaneous order of March 30, 2016 at the time that the petitioners insisted on their exemption from furnishing performance security under the present contract, it cannot be said that the failure on the part of the petitioners to be put in the requisite amount was without any basis. 17. Since the petitioners’ point of view was tentatively accepted by a contemporaneous order of March 30, 2016 at the time that the petitioners insisted on their exemption from furnishing performance security under the present contract, it cannot be said that the failure on the part of the petitioners to be put in the requisite amount was without any basis. Equally, it cannot be said, in the absence of any clarification from the Finance Department pursuant to the request made in the order of March 30, 2016, that the CMOH has committed any grievous error in finding that the petitioners ought to have furnished the performance security. The view of the CMOH was possible on the strict interpretation of the provision that the petitioners cited for the exemption. It is the admitted position that the petitioners are not registered as an SSI unit in the State and Rule 47A of the Financial Rules, in terms, applies only to registered SSI units in the State. 18. However, the order impugned dated September 6, 2016 passed by the CMOH can be faulted on the doctrine of proportionality. Once the CMOH found that the performance security could not be waived as the petitioners’ status did not warrant as such, the CMOH ought fairly to have afforded a short but reasonable time to the petitioners to furnish the security and passed an order in favour of the private respondent which would have taken affect upon the default on the part of the petitioners in furnishing the security pursuant to such direction. The matter would have been otherwise if it was the very eligibility of the petitioners that had been questioned and the CMOH had found against the petitioners. But when the petitioners’ eligibility was not questioned and the issue was the failure on the part of the petitioners to comply with a contractual term within the time stipulated therefore, the order impugned appears to be harsher than warranted in it not affording any opportunity to the petitioners to make good the default. It is to such extent that the order impugned merits correction in judicial review. 19. Since an amount of Rs.15 lakh has already been furnished pursuant to the previous order of September 19, 2016, petitioners should furnish a further sum of Rs.2.60 lakh by September 30, 2016, whereupon the petitioners’ obligation of furnishing the performance security would stand satisfied. It is to such extent that the order impugned merits correction in judicial review. 19. Since an amount of Rs.15 lakh has already been furnished pursuant to the previous order of September 19, 2016, petitioners should furnish a further sum of Rs.2.60 lakh by September 30, 2016, whereupon the petitioners’ obligation of furnishing the performance security would stand satisfied. The deposit earlier made and the further amount in terms of this order will be accepted by the concerned government hospital at Barasat as security deposit. In default of the additional amount being put in within the time permitted, the order impugned will prevail and the petitioners will be entitled to the immediate refund of the earlier deposit of Rs.15 lakh. 20. WP 20546 (W) of 2016 is disposed of by modifying the order impugned dated September 6, 2016 accordingly. The parties will bear their own costs.