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2017 DIGILAW 225 (JHR)

EL-MED-IMAGINE through its proprietor Shrikant Gupta, Dhanbad (Jharkhand) v. State of Jharkhand

2017-02-03

APARESH KUMAR SINGH

body2017
ORDER : Heard learned counsel for the parties. 2. Jharkhand Medical and Health Infrastructure Development and Procurement Corporation Ltd. (JMHIDPCL) (hereinafter referred to in short as 'Corporation'), invited e-tender from registered and eligible manufacturers/their authorized dealers/distributors/authorized stockiest for Rate Contract of hospital furniture on 14.06.2016. The date of publication of NIT was 14.06.2016, Annexure-C/A-2. Ten bids were offered by interested bidders, which were opened on 08.07.2016, Annexure-C/A-3. Technical evaluation of bids were made by the Tender Sub Committee between 08.07.2016 to 11.07.2016, Annexure-C/A-4. Technical evaluation report of Tender Sub-Committee was approved by the Executive Committee on 12.07.2016, Annexure-C/A-5. Factory inspection were made on 22.09.2016, Annexure-C/A-6. Review of technical evaluation report of tender subcommittee was done on 29.09.2016 by Executive Committee relating to factory inspection, Annexure-C/A-7. Technical evaluation details and financial bid opening notice uploaded for information to the bidders on 26.10.2016, Annexure-C/A-8. 6 out of 10 tenderers including the petitioner were found to be technically disqualified. Financial bids were opened on 28.10.2016, Annexure-C/A-9 and uploaded on the website. Registered L-I bidders were given direction to demonstrate their approved products as per the specification on 31.10.2016, Annexure-C/A-10. Products were demonstrated by the respective bidders on 08.11.2016 and 16.11.2016, Annexure-C/A-11. Final acceptance of products of L-I bidders by the Executive Committee was done on 16.11.2016, Annexure-C/A-12. The letters of acceptance have been sent to L-I bidders, four of them, for signing of contract agreement on 15.12.2016, Annexure-C/A-13. The draft agreement have been received by the L-I bidders thereafter. The relevant chronology of dates supported with necessary documents is contained in the supplementary counter affidavit of the respondent-State enclosed as Annexure-C/A-2 to Annexure-C/A-14. 3. Petitioner approached this Court on 13.12.2016 being aggrieved by the decision of the Technical Evaluation Committee as reflected in communication at Annexure-4 dated 06.10.2016 whereunder it has been declared technically disqualified on account of the fact that the principal manufacturer of the petitioner, M/s United Surgical Industries have been blacklisted in the State of Bihar. 4. When the matter was taken up on 15.12.2016, learned counsel for the petitioner submitted that the order of blacklisting dated 7.7.2012 was impugned by the manufacturer M/s United Surgical Industries before the Patna High Court in C.W.J.C. No. 19003 of 2012. 4. When the matter was taken up on 15.12.2016, learned counsel for the petitioner submitted that the order of blacklisting dated 7.7.2012 was impugned by the manufacturer M/s United Surgical Industries before the Patna High Court in C.W.J.C. No. 19003 of 2012. By the judgment dated 3.7.2013 rendered by the Patna High Court, it has been clarified that the order impugned would not preclude the petitioner from participating in any tender process issued by other functionaries of the State or the Central Government. It was further clarified that the order of blacklisting and prohibiting him from participating in any future bid shall restrict only in respect of the future tender to be floated by the respondent Society therein. 5. Learned counsel for the petitioner submits that the relevant details required as per the instant N.I.T have been disclosed by the petitioner in tender document vide Annexure-2. The manufacturer itself has been awarded several work orders thereafter by AIIMS Patna and AIIMS Bhuwaneshwar etc. It is also contended that work order have been issued in favour of the petitioner on being found the lowest bidder in the tender floated under Jharkhand Rural Health Mission Society as per Annexure-6 dated 7.6.2016 to supply equipments for various hospitals within the State. The disqualification of the petitioner on technical ground was therefore not proper in the eye of law and on facts. Petitioner apprehended that work order may be awarded to the lowest bidder as financial bid has already been opened. 6. While granting time to the respondents to file counter affidavit by 03.01.2017 positively, it was observed that respondent may process the financial bid but the work order be not awarded to any person, if not already awarded. 7. Respondents have thereafter filed their counter affidavit on 09.01.2017 and supplementary counter affidavit on 20.01.2017. Petitioner has also furnished his reply on 13.01.2017 to the first counter affidavit. 8. Learned counsel for the petitioner submits that decision to disqualify the petitioner on technical grounds is unsustainable in law as well as on facts. In the background of facts and circumstances, if the decision of the Tender Evaluation Committee suffers from serious error of law, it is an arbitrary exercise of power, as a result the decision making process has been vitiated. In the background of facts and circumstances, if the decision of the Tender Evaluation Committee suffers from serious error of law, it is an arbitrary exercise of power, as a result the decision making process has been vitiated. Therefore, in line with the judicial trend in case of interference in contractual matters, as held by the Hon'ble Supreme Court in the case of Tata Cellular Vs. Union of India reported in (1994) 6 SCC 651 , the order impugned cannot be sustained in the eye of law. 9. Learned counsel for the petitioner submits that in all fairness petitioner has with the tender document enclosed as Annexure-II-A and II-B which categorically indicate that petitioner as such is not blacklisted or debarred by Central or any State Government from participating in any tender, though its manufacturer M/s United Surgical Industries has been blacklisted by the State Health Society, Bihar. However, undertaking at Annexure-II-B incorporates the order of the Patna High Court, which clarified that the order of blacklisting has not precluded the petitioner from participating in any tender process issued by the functionaries of the State or the Central Government. Petitioner has also annexed the order of the Patna High Court with the tender documents. The impugned decision has ousted the petitioner from the zone of consideration though he may be lowest tenderer. The action can be treated to be suffering from malice in law and facts as well. 10. Learned counsel for the respondent-State submits that as per the terms and conditions of the NIT containing the eligibility criteria Clause-4(g) requirement was that the bidder should not have been blacklisted either by the Tender Inviting Authority or by any State Government or Central Government. Bidders were asked to supply copies of the stay order, if any, against the blacklisting along with bid. The order of Patna High Court relied upon by the learned counsel for the petitioner at page-84 of the writ petition is not the order of stay of blacklisting. Petitioner has failed to bring on record the order of blacklisting in the writ petition also. 11. Learned counsel for the respondent-State, Mr. Rajesh Kumar, GP-V submits that the pleadings and assertions of the petitioner do not point out to any act of malafide on the part of the respondent to favour any particular tenderer. Petitioner has failed to bring on record the order of blacklisting in the writ petition also. 11. Learned counsel for the respondent-State, Mr. Rajesh Kumar, GP-V submits that the pleadings and assertions of the petitioner do not point out to any act of malafide on the part of the respondent to favour any particular tenderer. The tender evaluation process has been done in a wholly fair and transparent manner in which no infirmity has been pointed out. Even if assuming the case of the petitioner to be true, at best it can only be said that it is a matter of interpretation of the particular tender condition, which would not amount to arbitrariness, vitiating the tender evaluation process itself. Petitioner is guilty of delay and serious laches in approaching the Court knowing fully well as early as 26.10.2016 of his disqualification on technical grounds. He has approached this Court only on 13.12.2016 when the financial bids were opened and four eligible L-I bidders were short-listed also. The respondent also carried out inspection of their factories and finally approved the items of medical goods to be supplied by the respective four bidders. The work is of an important public project. Respondents are under obligation to supply the required medical goods to the hospitals within the State and have also given undertaking before the learned Division Bench of this Court in W. P. (PIL) No. 2405 of 2016 that the Sadar Hospital, Ranchi would be made functional by the first week of April, 2017. Reliance has been placed upon the judgment rendered by the Hon'ble Supreme Court in the case of Tejas Constructions and Infrastructure Private Ltd. Vs. Municipal Council, Sendhwa and Anr. reported in (2012) 6 SCC 464 . It is submitted that the modern trend of judicial restraint in administrative action as propounded by the judgment rendered earlier in the case of Tata Cellular(Supra) and Raunaq International Ltd. Vs. I. V. R. Construction Ltd. and Ors. reported in (1999) 1 SCC 492 have also been reiterated by the Hon'ble Supreme Court in the instant judgment. Judicial restraint should be observed in contractual matters unless the process adopted or decision made by the authorities are shown to be malafide intended to favour someone. I. V. R. Construction Ltd. and Ors. reported in (1999) 1 SCC 492 have also been reiterated by the Hon'ble Supreme Court in the instant judgment. Judicial restraint should be observed in contractual matters unless the process adopted or decision made by the authorities are shown to be malafide intended to favour someone. In the facts of the instant case, the process adopted by the respondent cannot be said to be arbitrary or irrational inviting interference by this Court at this stage when the entire tender process has almost come to a finality and only agreement are to be executed with the successful bidders. In case the decision is interfered with, it may also entail substantial administrative burden and cost, which would ultimately delay the important project of supply of valuable life saving medical equipment in various hospitals of the State. Therefore, this Court may refuse to exercise its discretionary jurisdiction in the matter. 12. I have considered the submission of the parties and gone through the relevant material facts on record including the judgments relied upon. In the canvass of the facts and chronology of events referred to hereinabove, it is appropriate to reproduce the relevant eligibility criteria at Clause-4(g) of the NIT as under :- “(g) Bidder who has been blacklisted either by the Tender Inviting Authority or by any State Government or Central Government Organization will not be allowed to participate in the tender for that item during the period of blacklisting. Copies of stay orders if any against the blacklisting should be furnished along with the bid.” 13. Petitioner gave the following undertaking at Annexure-II-B (page-43 of the writ petition) as response to the instant requirement of Clause-4(g):- “We EL-MED-IMAGING do hereby Declare that presently we do not stand blacklisted by any Central or State Government organization or debarred from participating in tenders of such organization and are therefore eligible to participate in Tender No. JMC/NIT-16/F&F/002.” 14. It also gave an undertaking at page-57 Annexure-II-B in respect of status of blacklisting of its manufacturer M/s United Surgical Industries, Ghaziabad by the State Health Society Bihar vide order dated 07.07.2012, which is effective till 06.07.2017. Petitioner also enclosed the order of the Patna High Court in CWJC No. 19003 of 2012 dated 23.07.2013. The operative portion of which is also quoted hereinunder:- “This Court is, therefore, not noticing the submissions made by Mr. Petitioner also enclosed the order of the Patna High Court in CWJC No. 19003 of 2012 dated 23.07.2013. The operative portion of which is also quoted hereinunder:- “This Court is, therefore, not noticing the submissions made by Mr. Malhotra and countered by Mr. Sinha. Aggrieved party should invoke the said clause for resolution of dispute. It is, however, clarified that the order impugned shall not preclude the petitioner from participating in any tender process issued by other functionaries of the State or the Central Government. The impugned order, in substance, is to that effect also. In other words, the order of blacklisting of the petitioner and prohibiting him from participating in any future bid shall restrict only in respect of the future tender to be floated by the respondent Society.” 15. Evidently, the Patna High Court relegated the parties for resolution of the dispute through arbitration. The order of blacklisting passed by the State Health Society, Bihar, Patna was not stayed. Learned Single Judge of the Patna High Court, however, clarified that petitioner would not be precluded from participating in any tender process issued by other functionaries of the State or the Central Government. Going by the literal interpretation of Clause-4(g), the order of blacklisting of the manufacturer of the petitioner was not stayed by the Patna High Court. Laying down of terms and conditions of any such tender are in the domain of the employer and interference therein is restricted to very limited grounds. In any case, the relevant clause 4(g) is not under challenge in the present writ petition. On the other hand, the chronology of events narrated in the foregoing paragraphs show that petitioner despite being aware of technical disqualification as early as on 26.10.2016, chose to assail it before this Court in the present writ petition on 13.12.2016 when the financial bids of successful bidders were not only opened but their factories had also been inspected by the tender subcommittee. In fact upon inspection of the products at the factories by the tender sub-committee, final acceptance of the products of L-I bidder were also approved on 16.11.2016 itself. 16. From the pleadings on record and upon consideration of the submissions of the learned counsel for the petitioner, the tender evaluation process has not been shown to be suffering from malafide intended to favour someone. 16. From the pleadings on record and upon consideration of the submissions of the learned counsel for the petitioner, the tender evaluation process has not been shown to be suffering from malafide intended to favour someone. The principle of law on the scope and contours for interference in administrative action relating to contractual matters have been defined by series of judgments also relied upon in the case of Tejas Constructions and Infrastructure Private Ltd. (Supra). The Apex Court emphasized the need to find the right balance between administrative discretion to decide the matters, on the one hand, and the need to remedy any unfairness, on the other. It is also true that the Government must have freedom to contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness, but must be free from arbitrariness, not affected by bias or actuated by mala fides. The opinion of the Apex Court at para-16, 17 and 21 of the judgment rendered in the case of Tejas Constructions and Infrastructure Private Ltd. (Supra) is profitably quoted hereinunder:- “16. In Tata Cellular v. Union of India this Court emphasised the need to find the right balance between administrative discretion to decide the matters, on the one hand, and the need to remedy any unfairness, on the other, and observed: (SCC pp. 687-88, para 94) “(1) The modern trend points to judicial restraint in administrative action. (2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. (3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise, which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. … (5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. … (5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facets pointed out above) but must be free from arbitrariness, not affected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.” (emphasis in original) 17. In Raunaq International Ltd. v. I.V.R. Construction Ltd. 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 transactions 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. The Court observed: (SCC pp. 500-01, paras 10-11) “10. What are these elements of public interest? (1)Public money would be expended for the purposes of the contract. (2) The goods or services which are being commissioned could be for a public purpose, such as, construction of roads, public buildings, power plants or other public utilities. (3) The public would be directly interested in the timely fulfillment of the contract so that the services become available to the public expeditiously. (4) The public would also be interested in the quality of the work undertaken or goods supplied by the tenderer. Poor quality of work or goods can lead to tremendous public hardship and substantial financial outlay either in correcting mistakes or in rectifying defects or even at times in redoing the entire work—thus involving larger outlays of public money and delaying the availability of services, facilities or goods, e.g., a delay in commissioning a power project, as in the present case, could lead to power shortages, retardation of industrial development, hardship to the general public and substantial cost escalation. 11. 11. When a writ petition is filed in the High Court challenging the award of a contract by a public authority or the State, the court must be satisfied that there is some element of public interest involved in entertaining such a petition. If, for example, the dispute is purely between two tenderers, the court must be very careful to see if there is any element of public interest involved in the litigation. A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. It is important to bear in mind that by court intervention, the proposed project may be considerably delayed thus escalating the cost far more than any saving which the court would ultimately effect in public money by deciding the dispute in favour of one tenderer or the other tenderer. Therefore, unless the court is satisfied that there is a substantial amount of public interest involved, or the transaction is entered into mala fide, the court should not intervene under Article 226 in disputes between two rival tenderers.” 21. To the same effect is the decision of this Court in Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd. and Jagdish Mandal v. State of Orissa where this Court laid down the following tests for judicial interference in exercise of power of judicial review of administrative action: (Jagdish Mandal case, SCC p. 531, para 22) “22. … Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions: (i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone. OR Whether the process adopted or decision made is so arbitrary and irrational that the court can say: ‘the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached’. (ii) Whether public interest is affected. If the answers are in the negative, there should be no interference under Article 226.” 17. On scrutiny of the relevant material facts on record pleaded in the instant matter, in the first place it does not lead to the impression that the tender evaluation committee while interpreting clause-4(g) committed any illegality or arbitrariness while rejecting the claim of the petitioner. On scrutiny of the relevant material facts on record pleaded in the instant matter, in the first place it does not lead to the impression that the tender evaluation committee while interpreting clause-4(g) committed any illegality or arbitrariness while rejecting the claim of the petitioner. The blacklisting of the manufacturer of the petitioner has evidently not been stayed by the Patna High Court. The observation of the Patna High Court quoted hereinabove could have been construed as to confine participation in any tender process issued by other functionaries of the State meaning the State of Bihar. In that sense, an error in interpretation of the observation of the Patna High Court cannot cloud the decision of the tender evaluation committee as being actuated by arbitrariness or mala fide to favour someone. In the wider analysis, in such circumstances, interference in such matters entails larger repercussion in an important public project, sought to be executed by the respondent-Corporation for supply of valuable equipments and medical goods to the hospitals of State to cater to the needs of common masses. The facts of the instant case also shows that petitioner has wasted considerable time in approaching this Court, if at all it was aggrieved by rejection of his technical bid on 26.10.2016 itself. 18. On consideration of the entire facts, discussions made hereinabove and the reasons recorded, this Court is of the opinion that judicial restraint is rightly advised in interfering in such matters where at best petitioner can allege rejection of its technical bid on an erroneous interpretation of the provisions of Clause-4(g) vis-a-vis the documents submitted by it before the tender evaluation committee. On that count also the decision cannot be said to be vitiated in the eye of law warranting interference under Article 226 of the Constitution of India. 19. The writ petition is, accordingly, dismissed. Petition dismissed.