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2017 DIGILAW 395 (ALL)

ASHOK LEYLAND LTD. v. STATE OF U. P.

2017-02-02

A.P.SAHI, SANJAY HARKAULI

body2017
JUDGMENT By the Court.—This writ petition was filed questioning the tender dated 10.6.2016 and the order dated 22.7.2016 primarily on the ground that the tender conditions have been tailored contrary to what has been laid down by the Court between the parties in an earlier decision in Writ Petition No. 11775 (MB) of 2015 decided on 10.2.2016. According to the petitioner, the respondent No. 5 is not in possession of the chassis of the model as prescribed and the tender dated 10.6.2016 has been tailored in violation of Rule 125-C of the Motor Vehicle Rules, 1989 and the notifications issued thereunder to extend the benefit of the contract to the 5th respondent. 2. The petition was initially entertained and the following order was passed on 3.8.2016 : “Heard Sri Prashant Chandra, learned Senior Advocate for the petitioner. Sri S.K. Kalia, learned Senior Counsel for the respondent Nos. 2, 3 & 4 alongwith Sri Ratnesh Chandra, learned counsel for the respondent No. 1 and Sri Jaydeep Narain Mathur, learned Senior Counsel for the 5th respondent. The issue raised in this writ petition is with regard to the allegation of the petitioner about the exclusion of the statutory requirement under Rule 125-C of the Central Motor Vehicle Rules, 1989 from the tender conditions. The learned counsel for the respondents has produced the Notifications dated 2nd May, 2016 and 18th January, 2016 to counter these submissions contending that the tenders have been floated viz-a-viz the required model. The petitioner himself has participated in the tender proceedings and had made his offer with regard to the same models and under the same conditions of the certifications without objection. It is also contended by learned counsel for the respondents that the petitioner has participated in other tenders where no such objection has been raised. The question can be resolved and for that assistance is required about the meaning of the words ‘existing models’ and new models of the buses. Let learned counsels assist the Court. Put up on Monday i.e on 8th of August, 2016.” 3. Affidavits were filed in the matter and a contest was put forth by the Uttar Pradesh State Road Transport Corporation as well as by the respondent No. 5. When the matter came up again before the Court for consideration, the following order came to be passed by the Division Bench on 5.10.2016 : “Heard Mr. Affidavits were filed in the matter and a contest was put forth by the Uttar Pradesh State Road Transport Corporation as well as by the respondent No. 5. When the matter came up again before the Court for consideration, the following order came to be passed by the Division Bench on 5.10.2016 : “Heard Mr. Prashant Chandra, learned Senior Counsel, assisted by Mr. Vibhanshu Srivastava, learned counsel for the petitioner, Mr. S.K. Kalia, learned Senior Counsel, assisted by Mr. Ratnesh Chandra, learned counsel for respondent Nos. 2 to 4 and Mr. J.N. Mathur, learned Senior Counsel, assisted by Mr. Anupras Singh, learned counsel for respondent No. 5. This writ petition basically challenges the order dated 22.7.2016, awarding e-tender dated 10.6.2016 to respondent No. 5. The challenge is on two grounds. Firstly, the exclusion of statutory requirement under Rule 125-C of the Central Motor Vehicles Rules, 1989 from the tender notice, and secondly, purchase policy, namely, in the event of difference between the successful bidder and the second highest bidder is less than 5%, the contract would be split into two parts, one purchase order would be issued to the highest bidder for 60% of the work, whereas a second purchase order would be issued to the second highest bidder for the remaining 40% of the work. Mr. Prashant Chandra, learned Senior Counsel for the petitioner submits that the petitioner being the second highest bidder is entitled to a purchase order for 40% of the work. Then, he submits that he has instructions to give up the first contention. In other words, he submits that the challenge on the first ground may be rejected as not pressed. Order accordingly. Insofar as the second ground of challenge is concerned, counsels for the respondents seek time to file short counter-affidavit. Time, as prayed, is granted till the next date. It is needless to mention that they shall serve a copy thereof to the counsel for the petitioner well in advance. S.O. to 2.11.2016.” 4. A perusal of the said order would therefore leave no room for doubt that the petitioner had given up the argument relating to violation of Rule 125-C but the other argument relating to the splitting of the tender and giving a purchase order to the next highest bidder for 40% of the work survived for which affidavits were exchanged between the parties. 5. 5. A short counter-affidavit was filed on behalf of the respondent No. 5 on 8.8.2016 and the Corporation also filed a short counter-affidavit on 2.11.2016. The matter was heard by us and Sri Prashant Chandra, learned Senior Counsel for the petitioner submitted that even though the argument in this writ petition was given up as recorded in the order dated 5.10.2016 in relation to Rule 125-C of the 1989 Rules, yet in view of the subsequent developments and the fresh notification dated 25.9.2016 that has come into force w.e.f. 1.1.2017, the respondent No. 5 cannot be permitted to supply the remaining part of the supplies of the tender awarded to it as it is not in possession of the chassis of the model about which now a prescription has been made in law. 6. The contention of Sri Prashant Chandra is that the respondents have neither taken any decision on the request of the petitioner dated 10.6.2016 for awarding the contract by splitting it to the extent of 40% in favour of the petitioner and the stand taken in the short counter-affidavit that the Managing Director was well within his jurisdiction and discretion not to do so is an arbitrary exercise of power and contrary to the purchase policy of the respondent-Corporation. 7. Advancing his submissions, Sri Prashant Chandra has urged that even if as per Clause 17 of the terms and conditions of the tender, the Corporation reserves the right to split the purchase order, the same does not amount to giving an absolute discretion in the hands of Corporation not to do so when the petitioner had made a written request on 10.6.2016 and the acceptance of the tender by the Managing Director does not reflect any application of mind on the same. He therefore submits that the approval of the tender in favour of the respondent No. 5 without considering this aspect amounts to an arbitrariness coupled with non-application of mind and contrary to the purchase policy of the respondent-Corporation. In the absence of any cogent reason or material available on record, the respondent-Corporation is not justified in resisting the demand of the petitioner. 8. In the absence of any cogent reason or material available on record, the respondent-Corporation is not justified in resisting the demand of the petitioner. 8. He has then invited the attention of the Court to the orders passed by us on 11.1.2017 to urge that in spite of the direction, the affidavit which has been again filed on 12.1.2017, namely, the supplementary counter-affidavit, nowhere indicates a response to the query raised by this Court and this form of omission by the respondent-Corporation in complying with the directions of the Court clearly establishes that firstly, the Corporation proceeded to tailor a fresh advertisement and then the Managing Director having failed to communicate any reasons for not considering the request of the petitioner amounts to a deliberate mala fide act on the part of the respondents, hence the relief prayed for deserves to be granted. 9. Sri S.K. Kalia, learned Senior Counsel for the Corporation submits that the words used in Clause 17 where the phrase “reserves the right” has been specifically used, the same does not give any option or right or privilege to the petitioner to claim any consideration of splitting of the tender. This right to exercise a discretion is solely within the authority of the Managing Director and there cannot be any compulsion created on the Managing Director so as to exercise such a right even if it is not desirable. He has then invited the attention of the Court to the decision making process by which the tender of the respondent No. 5 has been accepted to contend that an agenda was proposed in the end of the noting of the file described as ‘’prastav’. This was the proposal by way of an agenda before the Tender Committee where the contention of the petitioner on the strength of Clause 17 was also discussed and deliberated upon. However, while concluding it’s recommendations, the Tender Committee came to the conclusion that the award of the entire tender to the respondent No. 5 was found to be feasible, inasmuch as firstly it was the lowest bid offered and secondly, the said bidder was found capable of supplying the entire work order. There was nothing to indicate that the respondent No. 5 would be unable to supply the goods and even otherwise there was no reasonable apprehension or otherwise any contingency that required any consideration for splitting up of the tender. There was nothing to indicate that the respondent No. 5 would be unable to supply the goods and even otherwise there was no reasonable apprehension or otherwise any contingency that required any consideration for splitting up of the tender. It is for this reason that the Managing Director in his discretion did not take any steps for splitting up of the tender and if this discretion has been not exercised in favour of the respondent No. 5, then the respondent No. 5 cannot compel the Corporation to do so. He submits that neither the petitioner nor the respondent No. 5 can have any objection even if such a discretion is either exercised or not. He therefore submits that this exercise of discretion is a residuary form of authority which the Managing Director in the interest of a prompt supply of the goods and for maintaining the quality can be exercised but since there is no material to demonstrate any such contingency, the interest of the Corporation has not been affected in any way nor there existed any reason to split the supply as urged by the petitioner. No prejudice is caused nor such right can be claimed by the petitioner. 10. Sri Kalia then submits that the petitioner cannot have any possible claim when admittedly he is the second lowest bidder and more particularly in view of the limited scope of the writ petition now left after the order passed by the Court on 5.10.2016. 11. Sri J.N. Mathur has also made his submissions on behalf of the respondent No. 5 contending that the petitioner has filed this petition on an issue relating to non-compliance of the standards of supply but such an argument was given up as is recorded in the order dated 5.10.2016. He therefore submits that the petitioner now cannot urge that the answering respondent should be prohibited from further supplying the goods under the contract which should concluded prior to the notification dated 20.9.2016 which has been brought into effect from 1.1.2017. He therefore submits that the petitioner now cannot urge that the answering respondent should be prohibited from further supplying the goods under the contract which should concluded prior to the notification dated 20.9.2016 which has been brought into effect from 1.1.2017. He further submits that the judgment by the Division Bench dated 10.2.2016 rendered earlier on which reliance has been placed by the petitioner cannot be of any avail in the present set of circumstances, inasmuch as when the said tender was questioned, then the notifications in relation to the introduction of the new models existed in a form that came to be interpreted by the Division Bench on the facts then existing and therefore the said judgment can be of no avail more so when the petitioner himself had given up the said argument as recorded in the order dated 5.10.2016. He therefore submits that when only a small quantity of chassis are left to be supplied and the major part of the contract has already been concluded, there is no occasion for the petitioner to claim splitting up of the supplies according to the purchase policy which cannot be claimed as a matter of right and is only a matter of discretion with the Managing Director. In such circumstances, the writ petition cannot succeed and consequently no relief can be granted. 12. We have considered the entire submissions raised and we find that the argument which had been advanced initially by the petitioner in relation to the impact of the notifications issued under Rule 125-C of the 1989 Rules could have been considered in the light of the submissions that had been raised and the notifications issued from time to time. However, after the said argument had been given up, and an order had been passed accordingly on 5.10.2016, it will not be appropriate for us to delve into this issue now without prejudice to the rights of the petitioner as involved in Writ Petition No. 13205 (MB) of 2016. Any abandonment of argument on sthis issue in the present writ petition would therefore not affect the issue already raised in the previous writ petition and therefore we are not entering into the merits of the said issue accordingly. 13. Any abandonment of argument on sthis issue in the present writ petition would therefore not affect the issue already raised in the previous writ petition and therefore we are not entering into the merits of the said issue accordingly. 13. Coming to the second issue relating to the supplies being ensured by the splitting up of the tender, we find that Clause 17 of the contract reads as under : “17. Managing Director, UPSRTC reserves the right to place the Purchase order on more than one source as per requirement/need of the Corporation. Other than Tata and Leyland any new tenderer (who has not supplied the chassis of min 5334 W.B.) will be awarded maximum 20% of the tendered quantity subject to the minimum of 50 nos per firm depending upon its position in price bid that is L-1. The order for remaining quantity will be Placed on the lowest prices of the E-Tender and may be distributed as per purchase policy of the corporation.” 14. A perusal thereof would reveal that the Managing Director has been reposed with an authority to exercise a power of splitting up of the purchase order for which guidelines have been mentioned in the purchase policy. The ratio of such splitting up has been prescribed in the policy, but neither the policy nor the tender condition as extracted here-in-above compel the Managing Director to exercise such a power which has been captioned as a right available to him to compulsorily split the tender. It is quite possible that such a power has been retained in the hands of the Managing Director if the lowest tenderer defaults in supplying or is otherwise incapable of supplying the entire material within a specified time. The idea appears to be is that the Corporation can split the tender in order to ensure the supplies promptly. There can be a contingency where the lowest tenderer reports a failure of his business or otherwise suddenly on account of any such contingency that could be traceable to the principles of vis major and force majeure, is unable to perform his part of the contract, that the Corporation can through the Managing Director take appropriate steps for ensuring supplies. Such a power reposed in the Managing Director does not create any corresponding right on an unsuccessful bidder to contend that he can be given the supply order. Such a power reposed in the Managing Director does not create any corresponding right on an unsuccessful bidder to contend that he can be given the supply order. The petitioner is the second lowest tenderer and as against his bid, the bid of the respondent No. 5 having been found lowest was accepted and the supplies have been ensured by the respondent No. 5. There is no material on record to indicate that the respondent No. 5 is incapable of supplying the goods as per the tender conditions. In the aforesaid background, the power with the Managing Director who reserves in himself the right to split the purchase order, cannot be said to have acted mala fidely nor can any motive be attributed if the Managing Director has not chosen to exercise this power after having perused the proposal and the agenda in this regard. To the contrary, the Managing Director has cautiously approved the final recommendation made in favour of the respondent No. 5 without any modification. The contention of the petitioner that the request dated 10.6.2016 has not been adhered to at all may not be required to be gone into when there is no material to indicate that there was any shortage of supply or any deficiency in the supply as per the tender conditions by the respondent No. 5. The petitioner cannot take advantage on the basis of such a provision so as to claim a right to supply the goods by requesting for splitting the purchase order. Consequently, we are of the opinion that the petitioner cannot claim the relief of supply in the aforesaid background. 15. However, we may put a note of caution that if the notifications subsequently issued have any impact on any future supplies to be made, then the operation of law cannot be ignored by the Corporation and to that effect, the Managing Director will have to take a decision. Consequently, the Managing Director may notice the aforesaid facts as well as the notifications that have been pointed out to decide as to whether future supplies or any supplies that have been left over deserve to be continued or not or obtained on the basis of the new notifications. The petition is therefore consigned to records with the aforesaid observations.