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2017 DIGILAW 1051 (GAU)

Nisita Enterprises Pvt. Ltd v. State of Assam

2017-08-04

SUMAN SHYAM

body2017
JUDGMENT AND ORDER (CAV) : 1. Heard Mr. I. Choudhury, learned senior counsel assisted by Mr. K. P. Pathak, learned counsel appearing on behalf of the writ petitioners. Also heard Mr. B. Gogoi, learned Standing Counsel, Health Department, Assam, appearing for respondent Nos.1 to 3 as well as Mr. A. K. Purkayastha, learned counsel appearing for the respondent No. 4. 2. Assailing the decision of the Tender Committee dated 06-03-2017 rejecting the tender submitted by the petitioner No.1 company holding the same as technically non-responsive, the petitioners are before this Court by filing the present writ petition, inter alia, praying for a writ of certiorari setting aside the impugned decision dated 06.03.2017 and for other consequential reliefs . 3. The brief facts of the case, as apparent from the pleadings, giving rise to the filing of the present writ petition may be noticed as here-under :- I. On 06.12.2016, the Mission Director, NHM, Assam i.e. the respondent No. 2, had issued an e-tender notice inviting bids in two parts i.e. technical and financial, for awarding the contract work, viz, “Engagement of Service Providers for Biomedical Equipment Maintenance Contract in Assam” through a national competitive bidding process. II. The petitioner No.1 is a private limited company registered under the Companies Act, 1956, and the petitioner No. 2 is one of the Directors of the Company. In response to the e-tender notice dated 06.12.2016, as many as 5 bidders including the writ petitioner No.1 Company had submitted their bids. The petitioner No. 1 company, as the lead member, had submitted a consortium bid along with M/s IVS Healthcare Pvt. Limited and M/s KSBIOMED Healthcare Pvt. Ltd. III. As per the eligibility condition laid down by the e-Tender Document, a bidder is required to furnish evidence of existence of a centralized call center of adequate capacity to meet the complaints from the number of facilities as expressed in the contract agreement or a tie up agreement with a computerized call center service provider and must be able to establish the call center within the re-mapping period after the selection of the bidder i.e. within three months. In compliance of the said eligibility condition, the petitioner had furnished a letter issued by call center provider viz. In compliance of the said eligibility condition, the petitioner had furnished a letter issued by call center provider viz. M/s Virtualis Services Pvt. Ltd. dated 29.12.2016, addressed to the respondent No.2, which gives an assurance that a call center, as per the norms prescribed by the authorities, would be set up within three months, if the contract is awarded in favour of the petitioner No. 1. IV. As per the requirement of the Tender Document, the petitioner No.1 had also submitted an undertaking from the individual member consortium partners in Annexure-IX but the said undertaking was issued in the name of M/s IVES Healthcare Pvt. Ltd although it was executed by another consortium partner i.e. M/s KSBIOMED Healthcare Pvt. Ltd. V. A three member Tender Committee was constituted by the authorities so as to evaluate the bids and taking note of the fact that the petitioner company did not submit the evidence of an existing call center or a tie up agreement and its undertaking given in Annexure-IX was defective, the technical bid submitted by the petitioner company was rejected by the minutes dated 06.03.2017 as a result of which, the Financial bid of the writ petitioner No. 1 was not opened. VI. As the bids submitted by the remaining four bidders were found to be technically responsive, their Financial bids were opened. Upon evaluating the financial bids, the quoted price of the respondent No. 4 at Rs.24,31,68,000.05 paise per year, was found to be the lowest. Accordingly, a decision was taken to award the contract in favour of the respondent No. 4. 4. Mr. I. Choudhury, learned senior counsel appearing for the writ petitioners admits that his client does not have an existing call center nor has any tie-up agreement been submitted by the petitioner No. 1 Company but the learned counsel submits that since the petitioner company has submitted a letter issued by a recognized service provider giving assurance that the call center as per the requirement of the Tender conditions would be established within three months from the date of issuance of the work order, there was substantive compliance of the said tender condition. 5. Referring to the deficiency in the undertaking given in Annexure-IX, Mr. Choudhury submits that even in the opinion of the Tender Committee, the name of the Company had been inserted erroneously. 5. Referring to the deficiency in the undertaking given in Annexure-IX, Mr. Choudhury submits that even in the opinion of the Tender Committee, the name of the Company had been inserted erroneously. It is apparent that the said discrepancy was of a trivial nature and hence, the same ought to have been ignored as a typographical error. The learned senior counsel further submits that the defect in the undertaking form did not affect the substance of the tender and as such, the same also did not constitute a valid ground for the respondents to reject the technical bid of the petitioner. 6. Mr. Choudhury further submits that although the price bid of the writ petitioner No.1 has not been opened, yet, it is a matter of record that the petitioner had quoted an amount of Rs.17,20,64,445.61/- per year. Since the contract is for a period of five years, which is extendable upto seven years, hence, the difference in the price quoted by the petitioner and the respondent No.4 is substantial. As such, submits Mr. Choudhury, if the work is awarded to the petitioner company, then the same would result in a saving of public money to the tune of Rs. 49,77,24,885/- (approx) spread over the period of seven years. According to Mr. Choudhury, the pecuniary benefits flowing to the state from awarding the contract to the writ petitioner being of a substantial nature, the authorities ought not to have rejected the bid of the petitioners on such hyper-technical grounds. In support of his aforesaid argument, Mr. Choudhury has placed heavy reliance on a decision of this Court rendered in the case of Bidhu Bhushan Chowdhury and Another Vs. Union of India and Others, reported in 2000 (1) GLT 341 to contend that this Court in exercise of power of judicial review under Article 226 of the Constitution would examine whether the respondents have overlooked the material considerations and have failed to maintain a proper balance between the adverse impact of the decision on the public exchequer and the purpose and objective sought to be achieved from the tender process. 7. Referring to the statements made in the counter-affidavit filed by the respondent No 2 Mr. 7. Referring to the statements made in the counter-affidavit filed by the respondent No 2 Mr. B. Gogoi, learned Standing Counsel, Health Department, submits that the decision to reject the technical bid of the petitioner No.1 company is on account of the fact that the petitioners had neither produced any evidence of having a call center nor did they submit a tie up agreement with any computerized call center service provider as per the tender conditions. The learned departmental counsel submits that since the same was one of the essential tender conditions, hence, the aforesaid clause has to be considered as mandatory condition and it was not open for the respondents to relax the said condition. Even assuming that the discrepancies in the undertaking given by the petitioner No.1 was of a trivial nature, yet, the non-fulfillment of the eligibility conditions was sufficient ground for the authorities to hold that the technical bid of the petitioner No. 1 was non-responsive. 8. Referring to the issue of low price quoted by Petitioner Company, Mr. Gogoi submits that the price bids were not opened on 06.03.2017 as a result of which price offered by any of the bidders were not known to the Committee on the date when the decision to reject the technical bid of the petitioner No 1 company was taken. Since, the technical bids were assessed only on the basis of the tender conditions, there was no scope for the Tender Committee to appreciate the price quoted by any of the tenderers nor was such a recourse permissible under the law. He submits that the relaxation of the essential tender conditions was not permissible and if resorted to, would expose the department to the risk of multiple litigations thereby jeopardizing the project itself. In support of his aforesaid argument Mr. Gogoi has placed reliance on a recent decision of the Hon’ble Supreme Court in the case of Central Coalfields Limited and Others vs. SLL-SML (Joint Venture Consortium) and Others, reported in (2016) 8 SCC 622 to contend that the issue raised in the present proceeding squarely falls in the domain of the Tender Committee and the writ court would not interfere with such decision if the same is found to be fair and transparent. 9. Supporting the stand of the department, Mr. 9. Supporting the stand of the department, Mr. A. K. Purkayastha, learned counsel appearing for the respondent No.4, has referred to Clause 4.3(d) of the NIT which bears the pre-qualification criteria of the tenderers. According to Mr. Purkayastha, it was mandatory on the part of the bidders to give evidence of existence of a centralized call center or atleast a tie-up agreement and the three months time permitted by the tender clause only indicates the time frame for establishing the same within the re-mapping period. Mr. Purkayastha submits that Clause 4.2.1(xxi) of the specific condition of contract further makes it clear that existence of a call center is one of the essential requirement for bagging the contract and since the petitioner company neither had a call center nor could it furnish any tie up agreement with a genuine service provider, the technical bid of the writ petitioners was rightly rejected by the authorities. On the contrary, the respondent No 4 meets all the eligibility norms including an existing call center and had emerged as the L-1 bidder. As such there is no scope for interference of the impugned decision in exercise of powers of judicial review. 10. By referring to the decision of the Supreme Court in the case of Tata Cellular Vs. Union of India, reported in (1994) 6 SCC 651 Mr. Purkaysatha submits that the scope of judicial review in a Government contract must remain confined to the decision making process and not the merit of the decision . Citing another decision of this Court in the case of S.K. Rai & Another vs. Union of India & Others, reported in (2002) 3 GLR 512 Mr. Purkayastha submits that the question of price would be relevant only when the bidder satisfy the eligibility condition as prescribed by the NIT. 11. I have considered the arguments advanced by the learned counsel for the parties and have also gone through the materials available on record. 12. There is no dispute at the bar that the eligibility condition prescribed by the NIT would require the bidders to submit either evidence of an existing call center or a tie-up agreement with a computerized call center. Mr. I. Choudhury, learned senior counsel has also fairly conceded that the same was an essential condition and therefore, every tenderer would have to comply with the said condition. Mr. I. Choudhury, learned senior counsel has also fairly conceded that the same was an essential condition and therefore, every tenderer would have to comply with the said condition. The case of the writ petitioners, however, is that by producing the letter of assurance dated 29.12.2016 issued by the service provider, the petitioner company had complied with the eligibility condition relating to the call center facility. 13. A perusal of the minutes of the Tender Committee meeting held on 06.03.2017 goes to show that the tender submitted by the writ petitioner No.1 was rejected on two grounds which are indicated in the minutes of the meeting. The relevant portion of the minutes of the meeting dated 06.03.2017 are extracted herein below for ready reference :- “The Party participated as a consortium with M/s KS Biomed Healthcare Pvt. Ltd. and M/S IVES Healthcare Pvt. Ltd. and has submitted all the documents, but as per eligibility criteria of the tender document, the party did not submit evidence of existence of a centralized call center or a tie-up agreement with a computerized call center service provider. Here the party has submitted only an assurance letter from M/s Virtualis Services Pvt. Ltd. addressed to the Mission Director, NHM, Assam. Further credentials of M/s Virtualis Services Pvt. Ltd. are not known. Undertaking for M/s. KS BIOMED, although given as Annexure IX, the company name has been erroneously written as M/s IVES Healthcare Pvt. Ltd. instead of M/s KIBIIOMED Healthcare Pvt. Ltd.” 14. In order to appreciate the argument advances by Mr. I. Choudhury that an assurance letter given by the service provider would be sufficient compliance of the eligibility criteria stipulated in the e-Tender Document, a reference to the eligibility conditions contained in Section III of the Tender Document would be necessary and the same is quoted here-in below:- “Eligibility to bid The Bidder may be a sole Bidder or a group of companies (maximum 3) coming together as Consortium to implement the Project. The Bidder cannot be an individual or group of individuals. The Bidder should be registered as a legal entity such as company registered under the Companies Act, Societies Registration Act, Trust Act or an equivalent law applicable in Assam. The Bidder cannot be an individual or group of individuals. The Bidder should be registered as a legal entity such as company registered under the Companies Act, Societies Registration Act, Trust Act or an equivalent law applicable in Assam. Technical capacity : a. The Bidder should have at least two (2) financial years of experience of (till the date of bidding) maintaining all Biomedical Equipment at a minimum of 10 hospitals with 100 bed each or 2 hospitals of 500 bed or a total of 1000 beds or minimum 100 equipment comprehensive maintenance contracts for two years each. b. The Bidder should be able to give evidence of existence of a centralized call center of capacity adequate to meet the complaints from the number of facilities as expressed in the contract agreement or a tie-up agreement with a computerized call center service provider. The call center should be established within the remapping period after the selection of the bidder i.e. within 3 months of the award of the contract. c. The Bidder must equip the trained Biomedical/Clinical engineering human resource with required vehicles to reach out to sites as well as vehicles to carry tools and equipment to and from the site. The Provider must also ensure that no equipment is transferred across health facilities to meet requirements at random as this could disturb patient care and planning. d. Financial Capacity:- The principal bidder/lead partner shall have an average turnover of Rs.10.00 Crores per annum in last three financial years. The above experience could be demonstrated by the single bidder or the lead member of the consortium. In case of consortium bidding, aggregate financial turnover of only those members of consortium would be considered who qualify the technical eligibility independently.” 15. Interpretation of Clause b of the eligibility condition, as quoted above, would be relevant for a just decision of the controversial issues involved in this case. A plain reading of the aforesaid clause goes to show that the bidder must furnish (i) evidence of an existing centralized call center of adequate capacity, or (ii) a tie-up agreement with a computerized call center service provider. The second part of the said clause provides that the call center must be established within the re-mapping period after selection of the bidder i.e. within three months. As would be apparent from the above, Clause b consists of two parts. The second part of the said clause provides that the call center must be established within the re-mapping period after selection of the bidder i.e. within three months. As would be apparent from the above, Clause b consists of two parts. The first part deals with an existing call center or a tie up agreement. While the second part relates to the time frame for setting up the call center within three month of remapping period. 16. Clause 4.2.1(xxi) of the Tender Document provides that the service provider shall establish and operate a well equipped service network and adequately staffed 24x7 centralized call center in Assamese language to accept calls for fault registration. Again, clause 4.3 (d), which deals with prequalification of tenderers, makes it mandatory that the bidders should give evidence of existence of a centralized call center of adequate capacity to meet the complaints from the number of facilities. Clause 4.4.16 mentions that three months time would be given for re-mapping and the call center has to be established within that period. A combine reading of the various clauses contained in the Tender Document leaves no manner of doubt that requirement of a call center was an integral part of work and therefore, a bidder who does not meet the said requirement would not be competent to execute the work to the satisfaction of the tendering authority. 17. It is to be noted here-in that the project is intended to benefit the general public of the State who will be availing the various medical facilities to be made available by the service provider. It appears that, keeping in mind the said reality, the existence of a proper call center was deemed to be of vital importance by the tendering authority and accordingly, an essential condition was incorporated in the Tender Document so as to ensure that the public can register their complaints without much difficulty. It is with that end in view that sufficient emphasis has been laid in the Tender Document on the call center facility. 18. Notwithstanding the above, the respondents had also permitted those bidders, who did not have a call center in existence, to participate in the tender process provided they submitted a “tie up” agreement with a call center agency. It is with that end in view that sufficient emphasis has been laid in the Tender Document on the call center facility. 18. Notwithstanding the above, the respondents had also permitted those bidders, who did not have a call center in existence, to participate in the tender process provided they submitted a “tie up” agreement with a call center agency. What must be noted here-in is that as per the tender condition, the tie -up agreement was to be accepted as an alternative to an existing call center. It is in the aforesaid context that the eligibility condition pertaining to the call center clause is to be looked into. 19. It is no doubt correct that the eligibility clause b allows three months time within the re-mapping period permitting the bidder to establish the call center. But what is also evident is that the said clause is preceded by the condition requiring the submission of evidence of an “existing call center” or a “tie- up” agreement. The aforesaid condition, in my considered opinion, constitutes the mandatory part of eligibility clause which is independent of the second part permitting three month time to set up the call center. From a reading of the entire clause b, what would logically follows is that only the tenderers who submit a tie-up agreement would be required to establish call center within the three month re-mapping period since the question of setting up a call center for those bidders having an existing one would not arise at all. As such, the second part of clause b would merely complement the essential condition in case of those bidders submitting tie-up agreement. Therefore, from a reading of clause b. as a whole, it cannot be said that there was a third option available to the bidders to merely submit an assurance letter showing its capability to establish the call center within three months instead of submitting evidence of an existing call center or a tie–up agreement. 20. An agreement brings into play a binding contract between the signatories, creating rights and obligations that are enforceable in a court of law. 20. An agreement brings into play a binding contract between the signatories, creating rights and obligations that are enforceable in a court of law. The terms and condition contained in an agreement would not only indicate the depth and dimension of the relationship between the entities but would also provide a vivid picture of the legal framework within which the parties have agreed to operate and hence, would provide sufficient basis for the authorities to make a realistic assessment as to the capacity of the bidder to successfully execute the work which may extend upto seven years. It cannot, therefore, be said that a tie up agreement would stand on the same footing as that of a letter of assurance. 21. As noted above, in the present case, the writ petitioner neither produced evidence of an existing call center nor submitted any tie-up agreement with a call center provider. If that be so, the petitioner No.1 firm evidently did not fulfill the essential part of the eligibility condition. As such the bid of the petitioner company was not technically responsive and has been rightly declared so by the Tender Committee. 22. In the case Maa Binda Express Carrier Vs. North-East Frontier Railway reported in (2014) 3 SCC 760 the Supreme Court, after considering several earlier decisions of the court on the scope of judicial review in the matter of award of Government contracts, has held that the bidders participating in the tender process cannot insist that their tender should be accepted simply because a given tender is highest or lowest depending upon whether the contract is for sale of public property or execution of work on behalf of the Government. All that the participating bidders are entitled to is a fair, equal and non-discriminatory treatment in the matter of evaluation of their tenders. What is necessary is that the Government or its agencies must act reasonably and fairly and to that extent, the tenderer has an enforceable right. 23. In the case of Central Coalfields Limited and Others (supra) it has been observed that the decision to accept or reject a particular bid should be looked into not only from the point of view of the unsuccessful bidder but also from the point of view of the employer. 23. In the case of Central Coalfields Limited and Others (supra) it has been observed that the decision to accept or reject a particular bid should be looked into not only from the point of view of the unsuccessful bidder but also from the point of view of the employer. It has further been observed that whether a clause in the NIT is essential or not is a matter that should be left to the decision of the employer and if the decision making process is found to be fair and transparent, the writ Court, in exercise of power of judicial review would not interfere with such a decision. 24. In the case in hand, there is no dispute about the fact that the tender document envisages a two bid system. Clause 5.19 of the Tender Document provides that only those bidders who meet the pre-qualification criteria and the conditions of the Tender will be technically qualified. 25. Clause 5.20 of the Tender document makes it clear that the price bids of only the technically qualified bidders shall be opened. These clauses contained in the Tender Document are equally binding upon the Government and even slightest of deviation therefrom, would be at the risk invalidating the entire tender process. 26. In the case of Bidhu Bhushan Chowdhury and another (supra) dispute was pertaining to the form of deposit of the Earnest Money which was tendered in the name of the wrong person. Although the bank, which stood as the guarantor, had subsequently clarified the matter, yet, the bid was rejected by the Railway Authorities. It was in that context that the learned Single Judge had observed that Earnest Money is a guarantee that the contract would be fulfilled and defect was of curable nature which did not affect the substance the tender. In the said decision the court had further observed that if there was any doubt in the mind of the authorities it was open for it to ask for further assurance from the bank. By referring to clause 5.5.7 Mr. Choudhury had contended that in the event of any doubt, the authorities could have asked for a clarification in the manner, which was a recourse permissible under the aforesaid clause. 27. It no doubt correct that clause 5.5.7 provides a scope for obtaining clarification from the bidders. By referring to clause 5.5.7 Mr. Choudhury had contended that in the event of any doubt, the authorities could have asked for a clarification in the manner, which was a recourse permissible under the aforesaid clause. 27. It no doubt correct that clause 5.5.7 provides a scope for obtaining clarification from the bidders. But it must noted here-in that it is for the Tendering authority to invoke the said clause as and when deemed necessary. The issue in this case is regarding non fulfillment of the eligibility condition set out in the Tender Document which was not the case in Bidhu Bhushan Chowdhury (supra). Clause 5.5.2 of the Tender Document clearly mentions that in the event of documentary proof not being enclosed, the tender will be liable to be rejected. The Petitioner Company was well aware of the said condition but still did not produce the required documents. It is not a case of submission of the wrong document but a case where the essential document had not been submitted at all. Non-submission of essential documents as proof of eligibility condition would amount to violation of the mandatory tender condition and hence, such defect cannot be said to be a curable defect. Therefore, the ratio of the decision in the case of Bidhu Bhusan Choudhury (supra), in the opinion of this court, would not be applicable to the facts of the present case. For the said reason, the submission of Mr. Choudhury that the respondent ought to have asked for clarification before taking a decision in the matter does not merit acceptance by this court. 28. Coming to the defect in the undertaking given in Annexure-IX, it must be remembered that the e-tender was a process of national competitive bidding where-in reputed National and Inter-National firms were expected to take part. Usually there is fierce competition amongst the bidders in such tender process where the margin for error is minimal. Under the circumstances, any error in submission of the Tender papers would constitute a valid ground for the authority to reject the same. The mention of a wrong name of the company which had executed the undertaking would render the undertaking itself as void in the eye of law and hence, such a defect can also not be treated as a minor defect. The mention of a wrong name of the company which had executed the undertaking would render the undertaking itself as void in the eye of law and hence, such a defect can also not be treated as a minor defect. If the Tender Committee was of the opinion that the undertaking was invalid for the stated reason, the said decision cannot be termed as arbitrary or illegal. 29. Law is firmly settled that in exercise of powers of judicial review the writ court would not go into the merit of the decision but would examine the decision making process. Whether the credentials of the bidder demonstrating its capability to establish a call center was essential or not; whether the letter of assurance submitted by the petitioner company was sufficient to establish its credential and did fulfill the eligibility criteria or not are matters to be left at the discretion of the Tender Committee comprising of experts and the writ court would not sit in appeal over the merit of such decision. If the decision is found to have been taken in reasonable, transparent and fair manner, the same would not call for interference in a writ proceeding. 30. In a two bid system, the price quoted in the financial bid would be relevant only when the technical bid is found to be valid. Once it is found that the bidder did not met the eligibility criteria, the bid would be liable to be rejected on technical grounds. In such an event, the price quoted by the bidder must remain confined in the seal cover and would be of no moment. 31. For the reasons stated above, I do not find any illegality or infirmity in the decision making process leading to the rejection of the tender submitted by the petitioner company. In the result the writ petition is held to be devoid of any merit and the same is accordingly dismissed. There would be no order as to cost.