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2017 DIGILAW 1082 (GAU)

Narayani Trading Co. v. State of Assam

2017-08-09

SUMAN SHYAM

body2017
JUDGMENT AND ORDER : 1. Heard Mr. R. Dubey, learned counsel for the writ petitioner. Also heard Mr. D. Nath, learned Additional Senior Government Advocate, Assam, representing the respondents. 2. By filing this writ petition, challenge has been made to the “pre-qualification” conditions contained in the Notice Inviting Tender (NIT) dated 30.01.2017 issued by the respondent No.2 inviting bids for supply of Dry Ration Commodities to the personnel of ASRF Bn- I, II & AISF Bn –I, II for a period of 12 months with effect from 01.04.2017. 3. The respondent No.2 had issued the NIT dated 30.01.2017 inviting bids for awarding the contractual work of supply of Dry Ration Commodities fixing the last date for receipt of the tenders at 11.00 am on 20-02-2017. The bidders were required to submit their tenders in two parts i.e. technical bid (first cover) and financial bid (second cover). As per Clause 3(a)(ix), the bidders were required to produce a certificate showing supply of similar nature in at least 10 (ten) Districts of Assam in last three financial years. Clause 3(a)(xii) stipulated that the turnover of the tenderer should be a minimum of Rs.15 Crores for the last three financial years. Since the writ petitioner did not meet the aforesaid criteria, hence, it has approached this Court by filing the present writ petition challenging the tender conditions contending inter-alia that the aforesaid conditions were totally arbitrary and illegal and did not have any reasonable nexus with the purpose sought to be achieved through the tender. 4. An affidavit has been filed on behalf of the respondent No.2 bringing on record the justification for incorporating the aforesaid clauses in the NIT. The writ petitioner has also filed reply to the same. 5. Mr. Dubey, learned counsel for the petitioner, submits that his client had participated in the tender which was floated by the same authority for supply of Dry Rations for the year 2015 since there was no such condition contained therein. But the writ petitioner has been unduly prevented from participating in the present tender process due to the onerous conditions in the form of Clauses 3(a)(ix) and (xii) which according to Mr. Dubey, have been deliberately included in the NIT for the first time only to eliminate bidders such as the writ petitioner, with a view to restrict the bidding process to a chosen few. Dubey, have been deliberately included in the NIT for the first time only to eliminate bidders such as the writ petitioner, with a view to restrict the bidding process to a chosen few. The learned counsel further submits that the NIT dated 30-01-2017 is in direct conflict with the instructions issued by the Central Vigilance Commission of India by the Office Memorandum dated 17.12.2002 and therefore, is liable to be set aside on such count alone. 6. Referring to the Annexure-I to the NIT, which gives the names of the items and the unit rate per 100 kg., Mr Dubey submits that the said schedule does not mention the quantity that would be required to be supplied nor does it indicate in any manner, the total value of the contract, thereby leaving enough room for manipulation of the supply order by the authorities at the stage of execution of the work. Mr. Dubey has, therefore, prayed for setting aside the NIT with a direction upon the authorities to issue a fresh NIT without the impugned pre-qualification clauses and also by indicating the tender value. 7. Mr. D. Nath, learned Additional Senior Government Advocate, Assam, on the other hand, submits that the supply of Dry Ration to the battalion personnel spread across the 43 locations across the State is a work which has to be executed in a time bound manner, without there being any margin for error. Keeping in mind such requirements, the authorities wanted to ensure financial soundness and proper logistic capability of the successful bidder so as to ensure that there is no undue delay in the execution of the supply order. It is with such objective in mind that a decision had initially been taken to impose a condition of 20 Crore rupees annual turnover which was subsequently brought down to Rs.15 Crores. In support of his aforesaid argument, Mr. Nath has produced the records. 8. Responding to the other argument of Mr. Dubey to the effect that the tender does not include the final value or the total quantity that would be required to be supplied in case of each of the 9 notified items, Mr. In support of his aforesaid argument, Mr. Nath has produced the records. 8. Responding to the other argument of Mr. Dubey to the effect that the tender does not include the final value or the total quantity that would be required to be supplied in case of each of the 9 notified items, Mr. Nath submits that the quantity keeps varying depending on the number of personnel deployed in a particular location in a given point of time and hence, it is not possible for the authorities to precisely indicate the quantity of materials in advance. It is for that reason alone, submits Mr. Nath, the total value of the work cannot be mentioned in the NIT and as such, this tender is based on unit prices of materials, which is the only rational criteria that can be followed in processing a tender of this nature. 9. I have considered the arguments advanced by learned counsel for the parties and have also perused the record produced by the learned Government Counsel. 10. A reference to the two offending clauses of the NIT dated 30.01.2017 would be relevant for the purpose of appreciating the contention advanced by the petitioner’s counsel. Sub-clauses (ix) and (xii) of Clause 3(a) are, therefore, quoted herein below for ready reference :- “(ix) Previous performance of executing supply of Ration items in any Govt. Department. A Certificate to that effect or documents showing such supply in at-least 10(ten) District of Assam in last 3(three) financial year.” “(xii) Annual turnover of the tender should be minimum of 15(fifteen) Crores for the last 3(three) financial year.” 11. By filing an affidavit –in- reply, the writ petitioner has brought on record materials to show that its annual turnover for the year ending 31.03.2016 was Rs.6,14,78,797.76/-; for the year ending on 31.03.2015 it was Rs.9,40,56,087.84/- and for the previous financial year it was Rs.9,37,88,739.68/-. The said figures have been relied upon to show that the writ petitioner had the necessary financial capability to execute the contract work but has been prevented from participating in the tender process due to the ceiling of Rs.15 Crores annual turnover stipulated by the NIT. 12. From the facts alluded above, it would be apparent that the writ petitioner is challenging the terms of invitation of the tender. 12. From the facts alluded above, it would be apparent that the writ petitioner is challenging the terms of invitation of the tender. The law relating to the scope of judicial review in such matters have been settled by a series of decisions of the Supreme Court. In the case of Tata Cellular vs. Union of India, reported in (1994)6 SCC 651 , the Hon’ble Supreme Court has held in categorical terms that the terms of the invitation to tender is in the realm of contract and hence, is not a matter which is open to judicial scrutiny. It has further been held that the Government must have the freedom of contract that is to say a fair play in the joints is a necessary concomitant for the functioning of an administrative body. However, the decision of the authorities can only be tested by the application of Wednesbury principle of reasonableness and must be free from arbitrariness and not affected by bias or actuated by mala fides. 13. In the case of Raunaq International Ltd. vs. I.V.R. Construction Ltd., reported in (1999)1 SCC 492 , the Supreme Court has held that the power of judicial review should not be exercised by the Courts to interfere with commercial transactions in which the State is one of the parties except where there is substantial public interest involved and in cases where the transaction is actuated by malafide. 14. By taking note of various decisions of the Supreme Court on the aforesaid subject, it was further held in the case of Michigan Rubber (India) Ltd. vs. State of Karnataka and others, reported in (2012) 8 SCC 216 that the courts cannot interfere with the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. That was a case where the appellant company, which was engaged in manufacture of tyres, tubes and flaps, had approached the court challenging the pre-qualification criteria in the tender floated by the Karnataka State Road Transport Corporation for supply of tyres, tubes and flaps. The writ petition filed by the appellant and the appeal preferred before the Division Bench of the High court were both dismissed. While dismissing the appeal, the Supreme Court had made the following observation in paragraph 35 :- “35. The writ petition filed by the appellant and the appeal preferred before the Division Bench of the High court were both dismissed. While dismissing the appeal, the Supreme Court had made the following observation in paragraph 35 :- “35. As observed earlier, the Court would not normally interfere with the policy decision in matters challenging the award of contract by the State or public authorities. In view of the above, the appellant has failed to establish that the same was contrary to public interest and beyond the pale of discrimination or unreasonable. We are satisfied that to have the best of the equipment for the vehicles, which ply on road carrying passengers, the 2nd respondent thought it fit that the criteria for applying for tender for procuring tyres should be at a high standard and thought it fit that only those manufacturers who satisfy the eligibility criteria should be permitted to participate in the tender. As noted in various decisions, the Government and their undertakings must have a free hand in setting terms of the tender and only if it is arbitrary, discriminatory, mala fide or actuated by bias, the courts would interfere. The courts cannot interfere with the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. In the case on hand, we have already noted that taking into account various aspects including the safety of the passengers and public interest, CMG consisting of experienced persons, revised the tender conditions. We are satisfied that the said Committee had discussed the subject in detail and for specifying these two conditions regarding pre-qualification criteria and the evaluation criteria. On perusal of all the materials, we are satisfied that the impugned conditions do not, in any way, could be classified as arbitrary, discriminatory or mala fide.” 15. From the aforementioned decisions rendered by the Supreme Court, what clearly follows is that the Courts would not exercise the power of judicial review in the matter of Government tender wherein the terms of inviting the tender has been put to challenge. From the aforementioned decisions rendered by the Supreme Court, what clearly follows is that the Courts would not exercise the power of judicial review in the matter of Government tender wherein the terms of inviting the tender has been put to challenge. The matter would, however, be entirely different if a case of complete arbitrariness, discrimination, unreasonableness or action actuated by malafide or bias is made out, in which event the Courts would have the jurisdiction to interfere in the matter in public interest and also to prevent infraction of legal rights of the citizens. 16. In the present case, the grievance of the petitioner is against the two pre-qualification clauses mentioned above. It is no doubt true that the aforementioned clauses have been inserted in the tender conditions for the first time. But record reveals that there are justifiable grounds for the authorities to take such a decision. Financial soundness and logistic support to make timely supply of dry ration to 43 location has a direct nexus with the ultimate object of the tender process and therefore, the pre-qualification criteria included in the NIT cannot be termed as unreasonable or arbitrary. Whether it would be fair or logical for the authorities to have some other eligibility criteria in the NIT or not is not a matter that falls within the scope of judicial review of the Writ Court in exercise of powers under Article 226. 17. The writ petitioner has failed to plead or establish malafide in the action of the respondents. It is not the case of the petitioner that the tender conditions have been designed to suit any particular bidder. On a query made by this Court, the learned Government Advocate had submitted, on instructions, that as many as four tenderers have submitted their bids in response to the NIT dated 30.01.2017. Such being the position, it cannot also be said that the inclusion of the impugned clauses had resulted into eliminating competition in the tender process. 18. On a query made by this Court, the learned Government Advocate had submitted, on instructions, that as many as four tenderers have submitted their bids in response to the NIT dated 30.01.2017. Such being the position, it cannot also be said that the inclusion of the impugned clauses had resulted into eliminating competition in the tender process. 18. Coming to the objection raised by the petitioner regarding non-disclosure of value of the contract, I find force in the argument of the learned Government Advocate that due to the uncertain nature of deployment of manpower it is not possible for the authorities to spell out in advance the exact quantity of any particular item and to such extent, the value of the contract also cannot be determined in advance. What must be borne in mind is that it is not the clauses in the tender as it appear but the manner in which those are applied at the stage of evaluation of the bids that would be relevant for the purpose of ascertaining the fairness of the entire process. 19. In this writ petition, there is no prayer made by the petitioner seeking an order from this Court allowing it to participate in the tender process. The petitioner has only prayed for a writ of certiorari, setting aside the NIT dated 30-01-2017, without praying for a writ of mandamus. Since the petitioner has not prayed for leave of the court to submit its tender, hence, the question of granting any relief to the petitioner also does not arise in the present proceeding. Likewise, it would also not be necessary for this Court to embark upon an exercise so as to ascertain as to whether the impugned clauses are mandatory or directory in nature. 20. For the reasons stated herein above, I am of the view that no good ground is made out in this case justifying interference by this Court. In the result, this writ petition is held to be devoid of any merit and is accordingly dismissed. There would be no order as to cost. The record be returned back to the learned Government Advocate forthwith.