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2017 DIGILAW 312 (UTT)

Dev Enterprises v. State of Uttarakhand

2017-06-07

SHARAD KUMAR SHARMA

body2017
JUDGMENT : 1. The judgment herein would cover the two writ petitions, i.e. Writ Petition no.731 of 2015 and Writ Petition no.724 of 2015. Since, the two writ petitions are involving identical question of fact and law, hence for the purposes of brevity, both are being decided by common judgment. 2. Out of the aforesaid two writ petitions, writ petition no.731 of 2015 would be the leading writ petition. The cause agitated by the petitioner in the writ petition is by way of giving challenge to the order dated 05.03.2015, whereby he contends that the respondent no.3 has unilaterally cancelled the supply order, awarded to the petitioner on conclusion of the bidding process, in pursuance to the advertisement dated 30.02.2015. The contention of petitioner is that since the order of cancellation was without an opportunity of hearing is bad in the eyes of law. On the aforesaid ground he also challenges the subsequent advertisements issued by respondent on 22.03.2015, whereby fresh bids were invited for the supply of the goods. 3. Brief facts are that the respondent no.2, which is a corporation, has been created under Article 243 of the Constitution of India. By virtue of an advertisement dated 05.03.2015, invited bids for supply of goods by having a recourse of a twin bid system for supply of electrical equipments to be installed by the Nagar Nigam in the area of the township under their control. In accordance with the advertisement, dated 13.02.2015, the last date for submission of the tender was 16.02.2016 and the bid was to be opened on the same day at 3:00 p.m. 4. The petitioner of Writ Petition No. 731 of 2015, case is that he responded to the advertisement dated 13.02.2015 and submitted his bid for the supply of the following components:- (a) 290 pieces of 4 X 24 watts energy saving T-5 street lights fitting, consisting of nominal voltage 240 volts. (b) 200 mts. aluminum conductor cable for 4C X 16 mm PVC insulated armored cable, 1100 watts. (c) 200 mts. of GI pipe 50 mm diameter C class pipes. And in Writ Petition No.724 of 2015, in para 3(b) for:- 145 pieces of 7 mts. (b) 200 mts. aluminum conductor cable for 4C X 16 mm PVC insulated armored cable, 1100 watts. (c) 200 mts. of GI pipe 50 mm diameter C class pipes. And in Writ Petition No.724 of 2015, in para 3(b) for:- 145 pieces of 7 mts. long Glass reinforced Polymer Conical Shape having cast irong flange having bottom Outer diameter 194 mm with thickness of 4 mm and Top outer diameter 101 mm with thickness of 8 mm having glass content 60-72 % alongwith double arm bracket of 1000 mm long with integral junction box, consisting of MCB, bakelite sheet and suitable size connected as per cable size. 5. The case of the petitioner is that after opening of the technical and the financial bid, he was placed as L-1 and in pursuance to the order dated 04.03.2015, he was awarded the tender for supply of the aforesaid components and thus he alleges that the supply order was executed on 04.03.2015, has created a right in his favour which cannot be cancelled or set aside unilaterally without providing an opportunity of hearing. 6. Another ground which has been agitated by the petitioner is that after the issuance of the supply order dated 04.03.2015, he in anticipation of execution of a contract has entered into a contract with Garg Electrical stores for one of the items which was said to be supplied by the purchase order dated 04.03.2015, however it is not case of petitioner that he made any effort to get the contract executed as directed by order dated 04.03.2015. The case of the petitioner is that under the strength to the purchase order dated 04.03.2015, he has placed his orders amounting to Rs.3 lacs by way of advance supply. As a result of which by the impugned order of cancellation of the supply order his valuable rights would be affected. The petitioner in the writ petition has referred to Clause 24 of the Uttarakhand Procurement Rules 2008 which contemplates an attachment of transparency, competition, fairness elimination of arbitrariness in the procurement process. As a result of which by the impugned order of cancellation of the supply order his valuable rights would be affected. The petitioner in the writ petition has referred to Clause 24 of the Uttarakhand Procurement Rules 2008 which contemplates an attachment of transparency, competition, fairness elimination of arbitrariness in the procurement process. Thus, he files the writ petition on the aforesaid back drop for the following relief’s:- A. To issue a writ order or direction in the nature of certiorari quashing the impugned order dated 05.03.2016 (annexed as Annexure no.1 to the petition, whereby the respondent no.3 has unilaterally issued order of canceling the supply order awarded to the petitioner) and may further quash the consequential re-tender advertisement dated 22.03.2015 (Annexure no.2) published in daily Rashtriya Sahara dated 22.03.2015 and further quash any actions taken pursuant to the said re-tender advertisement. B. To issue a writ order or direction in the nature of mandamus consequently directing the respondents to execute the contract pursuant to the approval of contract by the second respondent and the supply agreement executed by second respondent on 04.03.2015 (Annexure no.4) between the petitioner and the second respondent. C. To issue any other writ order or direction, which this Hon’ble Court may deem fit and proper in the circumstances of the case. D. Award the cost of the writ petition in favour of the petitioner. 7. In response to the writ petition, a counter has been filed by respondent no.2, wherein, the respondent no.2 while supporting the order of cancellation of the supply order, and contended that no right has been created in favour of the petitioner, because a concluded contract would have come into existence only when an agreement was executed in pursuance to the supply order issued in their favour because the order of supply dated 04.03.2015, annexure 4 to the writ petition was with the rider that the directives given therein would be subject to execution of the contract. In the case at hand, admittedly no contract has been executed nor petitioner has made any effort to execute contract and thus no concluded contract has come into existence. In the case at hand, admittedly no contract has been executed nor petitioner has made any effort to execute contract and thus no concluded contract has come into existence. The respondents in the counter affidavit have taken a plea that the petitioners tender was rejected, because, it was subsequently found that his tender did not fulfill the condition as given in the tender document by way of condition no.5, wherein a tenderer was required to give a bond of guarantee of the product he proposes to supply. And since no such guarantee bond was issued by the petitioner. Hence, his supply order was rightly rejected. On reading of the comparison report, the various others builders who participated in the tendering process, it reveals that according to the petitioner M/s Perfect Electrical & Engineers who had represented before the Nagar Nigam had brought to the knowledge that if clause 5 was satisfied, it would be affecting the value of the contract by Rs.10 to 12 lacs by giving benefit to the Nagar Nigam. 8. Heard Mr. Dharmendra Barthwal, counsel for the petitioner and Mr. D.S. Patni, counsel for the respondent nos.2 and 3 and Mr. Ramji Srivastava, intervener in (Writ Petition No. 731 of 2015). The two basic grounds which have been agitated by the petitioner is one that the supply order said to have been issued in his favour on 04.03.2015, has been cancelled without opportunity. The aforesaid ground is untenable, for the reason, on a close scrutiny of the order dated 04.03.2015 goes to show that no concluded contract had come into existence, rather the petitioner was asked upon to appear before the Competent Authority for the purposes of execution of the contract. Admittedly, no contract has been executed nor any plea is there in writ petition that petitioner made efforts to get contract executed, if this was so merely on the basis of the supply order dated 04.03.2015, no indefeasible right of the petitioner is created or infringed and as per the tender document it was always open for the employer to reject the tender at any stage before a concluded contract comes into existence, without assigning any reason, to which petitioner is bound to adhere. 9. 9. Placement of the petitioner as L-1 after opening of his technical and price bid yet again does not create a right in his favour, and, hence it is always open for the employer to have a recourse of resorting to any subsequent tendering process to invite fresh bids for the benefit of the employer, where cost factor reduces in the benefit of authority. As per the terms of the bidding document, it was always left open for the employer to terminate the bid at any stage without assigning reasons and herein since no concluded contract has come into existence. It was opened to be cancelled by the employer, hence on this score, that the petitioner was not provided an opportunity of hearing and thus the cancellation of the order dated 04.03.2015 was illegal and unsustainable. 10. The petitioner has assailed the advertisement which was a consequence of the cancellation, however, apparently in the writ petition he, has not taken any legal ground or less justifiable grounds assailing the advertisements, which was the consequence of the impugned order of 04.03.2015, by which supply order of the petitioner was cancelled. 11. Another ground which has been agitated by the petitioner in the writ petition is that under a bona-fide anticipation of execution of the order dated 04.03.2015 and contract he has proceeded to place order for supply of the goods to M/s Garg Electrical Stores as against for which he has made the payment of Rs.3 lacs in advance. If the petitioner under some mistaken notion has prematurely placed an order for procurement of the good without a finalization of the contract and he has invested some amount, the employer/ respondent cannot be held responsible in any manner, whatsoever, because that would be an action taken in anticipation of execution of the contract by the petitioner on his own wisdom. Hence, also on this ground, the relief in writ petition is not sustainable. The petitioner case is that in pursuance to the order dated 04.03.2015, a right has accrued in his favour as soon as he is placed as L-1 after the opening of the technical and price bids. Hence, also on this ground, the relief in writ petition is not sustainable. The petitioner case is that in pursuance to the order dated 04.03.2015, a right has accrued in his favour as soon as he is placed as L-1 after the opening of the technical and price bids. The said conception of the petitioner is absolutely untenable because placement of a bidder as L-1 is a procedure resorted to under the rules and once a bidder is placed as L-1, he only gets a precedence of consideration over the other bidders and is an offer but does not acquire a right that a contract was bound to be executed in his favour. Hence, in that view of the matter also, the writ petition lacks merit and deserves to be dismissed. 12. The petitioner during the course of argument has drawn the attention of the Court to clause 24 of Uttarakhand Procurement Rules, para-24 of Uttarakhand Procurement Rules, which simply intends to attach transparency in the contracting process and being the object of Act. Looking to the chronology of the events which has chanced at no juncture the petitioner has succeeded to establish either in the pleadings or by the documents brought on record to show that there have been an infringement of para-24 of the procurement Rules 2008 rather the object and the purpose of Para-24 as provided by legislature was to attain the object of transparency as contemplated in the statement object and reasons of the rules of 2008. Looking to the aforesaid backdrop and the language of para 24 of the rules, the same is not attracted because none of the ingredients contained therein to be safeguarded has been marred. 13. During the course of argument, the petitioner has placed reliance on the judgment rendered in the case of Tata Cellular reported in 1994 volume VI SCC page 651. The said judgment has dealt with the scope of a judicial review over an administrative action it contends that the state action must satisfied the ingredients of Article 14 and should not be arbitrary. It further provides that its only the decision making process which has to be taken into consideration while exercising judicial review and not the decision itself. The said judgment has dealt with the scope of a judicial review over an administrative action it contends that the state action must satisfied the ingredients of Article 14 and should not be arbitrary. It further provides that its only the decision making process which has to be taken into consideration while exercising judicial review and not the decision itself. The judgment has held that when the courts are considering the decision or action of a statutory agency pertaining to the freedom of contract invitation of tenders, its acceptance or rejection only the reasonableness and fairness is to be taken into consideration and it further contemplates that only that decision could be scrutinized which falls within the category of a decision to be of such a nature which a reasonable person on proper application of mind could take or find a procedural impropriety. The analogy propounded with regards to the applicability of Article 14 will not be applicable because the powers of an employer to be merely choose a contractor and cannot be terminated as arbitrary as it is always the prerogative of the employer in selecting the best, in accordance with the counter affidavit by reinviting the tenders. The respondent no.2 intends that they would be saving about Rs.10 to 11 lacs and hence, the public money would be saved. Thus, in the entire decision of the process, there is no apparent arbitrariness at all. 14. Another judgment on which the petitioner has placed reliance is reported in 1995 volume V SCC Page 428. The said judgment has held that in the sphere of contractual relationship with the status to mentality or a public authority whose Act is impugned in the petition. Its only the decision making process which has to be just fair and reasonable after objectively taking into consideration the relevant options has to be taken into consideration while exercising the powers of judicial scrutiny. In the case, as referred above, was factually distinguishable because in the judgment supra, therein the respondents who were agents of the petitioner had presented the proposal to LIC which was turned down by the LIC by the impugned order, hence they filed the writ petition. In the said case, there was a conditions imposed and denial to accept the policies sought under Table-58 were assailed to be as arbitrary and discriminatory. 15. In the said case, there was a conditions imposed and denial to accept the policies sought under Table-58 were assailed to be as arbitrary and discriminatory. 15. The said judgment since was based upon altogether on two different factual matters of matrix will not be applicable in the instant case. The learned counsel for the petitioner, Mr. Dharmendra Barthwal, in his written submissions has placed reliance on the judgment of Uttar Pradesh Awas Vikas Parishad as reported in 213 Volume V SCC page 182. In this case too was based upon altogether a different facts, the same was emanating from a notice published by Awas Vikas for auctioning of nine shops and a plot ear marked for cinema halls and the controversy pertained to fixation of the reserve price of the cinema lot as fixed by the Avas Vikas. In the said case, the petitioners have requested for issuance of the letter of allotment in their favour from the Assistant Housing Commissioner which was denied and consequently, the first appeal before the Hon’ble High Court had remanded the matter to the Trial Court for reconsideration and it was after the remand when the case was reconsidered by the Trial Court. The subsequent judgment was passed which was subject matter of challenge in the second appeal before the High Court. 16. Thus, since in the said case involved an interpretation of Section 12 of Uttar Pradesh Awas Vikas Parishad Adhiniyam pertaining to the delegations of powers which was questioned, in the proceedings arising out of the regular suit would not cover the controversy in question. Hence, the judgment as relied by the petitioner would not be applicable and it is of no assistance in the instant case. 17. Another judgment which the petitioner has placed reliance is reported in 217 Volume IV SCC page 243. In the said case, the situation was that the plaintiff had instituted a regular suit invoking Section 35 and 39 of Specific Relief Act, for seeking a declaration regarding the rejection of his bid and sought a relief for mandatory injunction and a simultaneous relief for issuance of letter of allotment. In those proceedings, there was no concluded contract and the bid was rejected. In those proceedings, there was no concluded contract and the bid was rejected. The facts there were is entirely different as in the instant case, hence the same would not be applicable because here in the present case, the bid of the petitioner was accepted but the concluded contract has not come into existence. In the judgment rendered by the Delhi High Court, in the case of Barahler ICS India Private Ltd., was a case where the Hon’ble High Court was ceased with a matter as to whether the bid could be rejected on technical deficiencies, wherein the implications of the CVC guidelines was under consideration, which provides that once the technical bid is clear his right with regard would be adversely affected by the disclosure of his final bill. This is not the case agitated by the petitioner or pleaded in the writ petition based on the CVC guidelines or with regards to the impact of the opening of the technical and financial bid over the subsequent bids which has been invited by the impugned advertisement dated 22.03.2015. The judgment rendered by the Jharkhand High Court on which the reliance has been placed by the petitioner is confined to one of his ground that prior to cancellation of his supply order, an opportunity of hearing should be given. 18. This Court feels that under the tendering law, it is always open for the employer to reject the tender or to accept it at any stage without assigning any reasons as financial interest of employer interest is paramount and that is the condition given in the tendered document. Once, the bidder accepts the said condition of tender document and participates in the tendering process on failing at a subsequent stage, he cannot raised a ground that he ought to be provided an opportunity of hearing before cancellation of a supply order as concept of hearing in contractual matter is alien, this is one aspect of the matter. In the instant case, since no indefeasible right was created as the order dated 04.03.2015, was subject to execution of an agreement of contract, no concluded right was created or which could have been infringed. Thus, the ratio of the said judgment too would not apply. 19. In the instant case, since no indefeasible right was created as the order dated 04.03.2015, was subject to execution of an agreement of contract, no concluded right was created or which could have been infringed. Thus, the ratio of the said judgment too would not apply. 19. The Division Bench of this Hon’ble Court, in the case of M/s SPX Dry Cooling Technologies Belgium vs. Bharat Heavy Electricals Ltd. & another in judgment dated 07.04.2017, in Para-13:- The argument, which remains is the argument based on the using of the design of the appellant, which it got from it during the V-2B stage. We notice from the pleading that this is denied by the BHEL. Courts do not ordinarily resolve disputed questions of fact. Though, the learned Senior Counsel for the appellant would, in fact, point out that it is indeed true that design was made use of as the design of the appellant with all its errors have been employed during the V-3 stage. We will assume that indeed such a thing took place; but, we must at once pose a question whether that is sufficient to award the work to the appellant and this is to be most important question of all, which is whether a tenderer, who has given the lowest tender, is entitled in law to compel the employer to award the contract. It is well settled that L-1 is not entitled to the award of the contract. It is always open to the employer when the figure quoted by L-1 is found to be exorbitant or high, to reject it and employer has a freedom to go in for a fresh tender. In no case, can the lowest tenderer compel the employer to award the contract to the lowest tenderer. It is entirely the prerogative of the employer to decide whether the lowest tender should be accepted or not. 20. As held that mere placement of a contractor has L-1, will not create any right in his favour to maintain a writ petition for the purposes of judicial scrutiny in the decision making process under the contracting laws. It is entirely the prerogative of the employer to decide whether the lowest tender should be accepted or not. 20. As held that mere placement of a contractor has L-1, will not create any right in his favour to maintain a writ petition for the purposes of judicial scrutiny in the decision making process under the contracting laws. Even, otherwise as per the case of the respondents in their counter affidavit, the tenders submitted by the petitioner was defective due to the non compliance of clause 5 of the bidding document wherein the bidder was required to give a guarantee bond of his product, which according to the respondent and on perusal of the tendered document no such guarantee bond about quality was extended, hence that also attributed to be one of the grounds for rejecting the supply order dated 04.03.2015 by the impugned order. 21. The petitioner, after the conclusion of the arguments, has supplied a copy of few judgments which he seeks to place reliance in support of this case. In the case as relied by him reported in 2013 (5) SCC Page 182, dealt with the case where it has been held, that no right comes into existence merely by submission of the highest bid until it is accepted. The said case was for the purposes of allotment and was eminating from a regular suit under Section 34 of the Specific Performance Act, hence would not apply. Furthermore, in the said judgment, the scrutiny which was placed before the Hon’ble Apex Court was to the judgment rendered by the Hon’ble High Court while exercising the powers under Section 100 of the code of Civil Procedure with regards to the second appeal. 22. In the aforesaid judgment, the Hon’ble Apex Court while referring to Para-13 of the judgment rendered in State of Orissa vs. Hari Narayan Jaiswal reported in 1972 Volume II SCC page 36, it has been held in its para 13 “that before a concluded contract it was open to the bidder to withdraw their bids by merely giving bids, a bidder had not acquired any vested rights. As a government legal entity proposes to enter into a contract, if he withdraws its tender, it is a privilege which is been granted and its withdrawal will not infringed Article19 (1)(g) or Article 14.” 23. As a government legal entity proposes to enter into a contract, if he withdraws its tender, it is a privilege which is been granted and its withdrawal will not infringed Article19 (1)(g) or Article 14.” 23. The petitioner has also placed reliance on a judgment reported in 2017 Volume IV SCC page 243, Haryana Urban Development Authority & others vs. Orchid Infrastructure Developers Private Ltd., it was yet again a judgment rendered in the proceedings arising under Section 39 r/w 34 of the suit for specific performance seeking a declaration regarding the illegal rejection of bid and had sought a consequential relief on mandatory injunction which was altogether on a different precedents as compared with regards to the controversy involved in the present writ petition. 24. In view of the fact, that no indefeasible right has been created in favour of the petitioner, this Court finds that there is no anomaly in the impugned order and the advertisement. As such, the writ petition is dismissed and the interim order dated 27.03.2015 stands vacated, there would be no order as to cost. It is open for the respondents to proceed further on the basis of the advertisement impugned in the writ petition. Consequently, the writ petitions are dismissed. No orders as to cost.