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2017 DIGILAW 636 (UTT)

Shree Balaji Herbo Labs v. State of Uttarakhand

2017-12-04

ALOK SINGH, K.M.JOSEPH

body2017
JUDGMENT : K.M. Joseph, J. Appellant is the writ petitioner. Pursuant to an advertisement dated 04.08.2017 issued by the second respondent/Board to settle the right to carry out fishing, the appellant/writ petitioner also made its bid. The advertisement actually contemplated a two stage bid process, namely, the technical bid followed by the financial bid. Only those, who were found to be declared qualified in the technical bid, could have their financial bid opened. The appellant’s/writ petitioner’s technical bid did not pass muster. This was for the reason that he did not produce the security, in respect of the earnest money, in the form of a Bank draft from a nationalized bank as contained in Clause 5 of the advertisement. The said clause reads as follows: “5. For participating in tender process for the contract of fishing in the Dhaura Reservior, every bidder shall have to annex along with the tender form the advance amount of Rs. 2.349 Lakh (Rs. Two Lakh Thirty Four Thousand and Nine Hundred only) in the form of a bank draft issued by any nationalized Bank. Draft shall be issued in favour of Secretary, Uttarakhand Rajya Matsya Palak Vikas Abhikaran, Dehradun.” 2. The appellant/writ petitioner, it appears, had produced towards the earnest money, a Bank draft issued not by a nationalized Bank but by the Axis Bank, which is a Scheduled Bank. The learned Single Judge did not find favour with the contentions of the appellant/writ petitioner and dismissed the writ petition. Hence, the appellant/writ petitioner is before us. 3. We heard Mr. S.K. Mandal, learned counsel on behalf of the appellant/writ petitioner and Mr. Paresh Tripathi, learned counsel on behalf of respondent no. 2/Board. 4. Mr. S.K. Mandal, learned counsel for the appellant/writ petitioner would submit that the appellant/writ petitioner having produced the Bank draft from the Axis Bank, which is a Scheduled Bank, must be treated as having complied with the condition. What is more, he further drew our attention to the Government Order pursuant to which the entire advertisement was issued, namely, Government Order dated 09.08.2012. Condition No. 2 of the said Government Order reads as follows: “2. In Fishing Procedures/Management of reservoirs situated in Uttarakhand the compliance of Uttarakhand Procurement Rules, 2008 shall be ensured and contract for fishing will be made through tender process.” 5. Condition No. 2 of the said Government Order reads as follows: “2. In Fishing Procedures/Management of reservoirs situated in Uttarakhand the compliance of Uttarakhand Procurement Rules, 2008 shall be ensured and contract for fishing will be made through tender process.” 5. Learned counsel for the appellant/writ petitioner further drew our attention to Clause 4 of the Proposed Terms of Contract, which are annexed with the order dated 17.07.2017. The said clause reads as follows: “4. While submitting the bids it will be necessary to annex along with the bid the advance amount of 10 percent of the reserved value in the form of Bank Draft and the successful bidder have to deposit 25 percent of the tender money immediately. In case of non-deposit of 25 percent money the advance money shall be confiscated. 5 percent security deposit of total contract amount of 5 years through N.C.C. or F.D.R. in favour of Secretary, Uttarakhand Rajya Matsya Palak Vikas Abhikaran shall be deposited along with the agreement in the presence of Secretary, Uttarakhand Rajya Matsya Palak Vikas Abhikaran.” 6. Still further, having made reference to Clause 2 of the Government Order dated 09.08.2012, which, in turn, makes reference to the Uttarakhand Procurement Rules, 2008, learned counsel for the appellant/writ petitioner drew our attention to Clause 20 of the Uttarakhand Procurement Rules, 2008. The same reads as follows: “Bid Security or 20(1) Earnest Money To safeguard against a bidder’s withdrawing/altering its bid during the bid validity period in the case of advertised or limited tender enquiry, bid security (also known as earnest money) is to be obtained from the bidders except those who are exempted under specific provisions of law or rules. Amount of bid security should ordinarily range between 2% to 5%. The given percentage will depend on the total cost of the goods as follows:- (i) Upto Rs. 1 lakh - 5% (ii) Rs. 1 lakh to 5 lakh - 4%. (iii) Rs. 5 lakh to 25 lakh - 3% and, (iv) Above Rs. 25 lakh - 2% shall be charged. (2) From time to time the Government may revise such rates. 1 lakh - 5% (ii) Rs. 1 lakh to 5 lakh - 4%. (iii) Rs. 5 lakh to 25 lakh - 3% and, (iv) Above Rs. 25 lakh - 2% shall be charged. (2) From time to time the Government may revise such rates. The bid money should be pledged in the name of Government/authority in the form of demand draft or fixed deposit receipt or Bankers cheque or Bank guarantee or deposited in given heads of account through e-banking (if any) to the satisfaction of the competent authority safeguarding the interest of the purchaser in all respects. The bid security is normally to remain valid for a period of 45 days beyond the final bid validity period and the period may also be extended. (3) Bid securities of the unsuccessful bidders should be returned to them at the earliest after expiry of the final bid validity but not later than 30 days after the award of the contract by the concerned department/authority.” 7. Learned counsel for the appellant/writ petitioner would contend, in regard to the last mentioned document, which is contained in the Uttarakhand Procurement Rules, 2008, that as far as the earnest money is concerned, the security can be given in the form of demand draft or fixed deposit receipt or Bankers cheque or Bank guarantee. He would point out that it is not stipulated in the Uttarakhand Procurement Rules, 2008 that the demand draft should be issued by a nationalized Bank. Therefore, he would submit that the stipulation contained in the advertisement, which we have already extracted is irrational and is against the public interest. He further contends that the whole purpose of the said Clause is to ensure the due compliance of the tender given by the tenderer and also if the decision of the authority is accepted, it will result in loss to the pubic exchequer. In fact, he would submit that he has quoted the higher bid than the person, whose bid has been accepted (we may incidentally notice that during the course of the proceedings in the writ petition, the proceedings have been finalized and the contract has been awarded to a person, who is not before us. It is pointed out by Mr. Paresh Tripathi, learned counsel for the Board that it is after the disposal of the writ petition). It is pointed out by Mr. Paresh Tripathi, learned counsel for the Board that it is after the disposal of the writ petition). He also sought to place reliance on the judgment of the Hon’ble Apex Court in the case of M/s. Poddar Steel Corporation Vs. M/s. Ganesh Engineering Works and others reported in AIR 1991 SC 1579 . 8. Mr. Paresh Tripathi, learned counsel for the second respondent/Board, on the other hand, would point out that the appellant/writ petitioner participated; he has neither complied with the condition, as stipulated in Clause 5 of the advertisement nor has he challenged the said condition. In regard to the Procurement Rules, it does not rule out stipulating a condition, which is fixed in the advertisement. It is the prerogative of the employer to decide upon the condition and in this regard, he relied on the judgment of the Hon’ble Apex Court in the case of Central Coalfields Ltd. and another Vs. SLL-SML (Joint Venture Consortium) and others reported in (2016) 8 SCC 622 . 9. In response, Mr. S.K. Mandal, learned counsel for the appellant/writ petitioner would submit that the appellant/writ petitioner has, in fact, in the body of the writ petition laid a foundation for challenging the condition though it may be true that there is no challenge to the terms of the advertisement as such. 10. As far as the judgment of the Hon’ble Apex Court in the case of M/s. Poddar Steel Corporation Vs. M/s. Ganesh Engineering Works and others reported in AIR 1991 SC 1579 is concerned, under the terms of the tender notice, the earnest money was to be deposited only in cash or by a demand draft drawn on the State Bank of India. The appellant therein whose tender was apparently approved by the employer had sought to make payment of the earnest money by certified cheque of the Union Bank of India drawn on its own branch. The writ petition of the respondent no. 1 filed before the High Court was dismissed and the appeal was allowed. In doing so, the High Court did find favour with the contention of the writ petitioner that there was no compliance made by the appellant with the condition stipulating for the deposit of earnest money in the manner provided therein. The writ petition of the respondent no. 1 filed before the High Court was dismissed and the appeal was allowed. In doing so, the High Court did find favour with the contention of the writ petitioner that there was no compliance made by the appellant with the condition stipulating for the deposit of earnest money in the manner provided therein. It was while allowing the appeal filed by the appellant that the Court proceeded to hold as follows: “6. It is true that in submitting its tender accompanied by a cheque of the Union Bank of India and not of the State Bank the clause no. 6 of the tender notice was not obeyed literally, but the question is as to whether the said non-compliance deprived the Diesel Locomotive Works of the authority to accept the bid. As a matter of general proposition it cannot be held that an authority inviting tenders is bound to give effect to every term mentioned in the notice in meticulous detail, and is not entitled to waive even a technical irregularity of little or no significance. The requirements in a tender notice can be classified into two categories-those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to enforce them rigidly. In the other cases it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases. This aspect was examined by this Court in GJ Fernandez v. State of Karnataka Ors., [1990] 2 SCC 488, a case dealing with tenders. Although not in an entirely identical situation as the present one, the observations in the judgment support our view. The High Court has, in the impugned decision, relied upon Ramana Dayaram Shetty v. International Airport Authority of India & Ors., [1979] 3 SCC 489, but has failed to appreciate that the reported case belonged to the first category where the strict compliance of the condition could be insisted upon. The authority in that case, by not insisting upon the requirement in the tender notice which was an essential condition of eligibility, bestowed a favour on one of the bidders, which amounted to illegal discrimination. The authority in that case, by not insisting upon the requirement in the tender notice which was an essential condition of eligibility, bestowed a favour on one of the bidders, which amounted to illegal discrimination. The judgment indicates that the Court closely examined the nature of the condition which had been relaxed and its impact before answering the question whether it could have validly condoned the shortcoming in the tender in question. This part of the judgment demonstrates the difference between the two categories of the conditions discussed above. However it remains to be seen as to which of the two clauses, the present case belongs. 8. In the instant case the certified cheque of the Union Bank of India drawn on its own branch must be treated as sufficient for the purpose of achieving the object of the condition and the Tender Committee took the abundant caution by a further verification from the bank. In this situation it is not correct to hold that the Diesel Locomotive Works had no authority to waive the technical literal compliance of clause 6, specially when it was in its interest not to reject the said bid which was the highest. We, therefore, set aside the impugned judgment and dismiss the writ petition of the respondent no. 1 filed before the High Court. The appeal is accordingly allowed with costs throughout.” 11. We may, at once, notice how the case of M/s. Poddar Steel Corporation Vs. M/s. Ganesh Engineering Works and others reported in AIR 1991 SC 1579 has been revisited in the later decision, which is also rendered by a Bench of two Judges, namely, the decision in the case of Central Coalfields Ltd. and another Vs. SLL-SML (Joint Venture Consortium) and others reported in (2016) 8 SCC 622 . Therein, the Court proceeded to take the following view: “47. The result of this discussion is that the issue of the acceptance or rejection of a bid or a bidder should be looked at not only from the point of view of the unsuccessful party but also from the point of view of the employer. As held in Ramana Dayaram Shetty the terms of NIT cannot be ignored as being redundant or superfluous. They must be given a meaning and the necessary significance. As pointed out in Tata Cellular there must be judicial restraint in interfering with administrative action. As held in Ramana Dayaram Shetty the terms of NIT cannot be ignored as being redundant or superfluous. They must be given a meaning and the necessary significance. As pointed out in Tata Cellular there must be judicial restraint in interfering with administrative action. Ordinarily, the soundness of the decision taken by the employer ought not to be questioned but the decision-making process can certainly be subject to judicial review. The soundness of the decision may be questioned if it is irrational or mala fide or intended to favour someone or a decision “that no responsible authority acting reasonably and in accordance with relevant law could have reached” as held in Jagdish Mandal followed in Michigan Rubber. 48. Therefore, whether a term of NIT is essential or not is a decision taken by the employer which should be respected. Even if the term is essential, the employer has the inherent authority to deviate from it provided the deviation is made applicable to all bidders and potential bidders as held in Ramana Dayaram Shetty. However, if the term is held by the employer to be ancillary or subsidiary, even that decision should be respected. The lawfulness of that decision can be questioned on very limited grounds, as mentioned in the various decisions discussed above, but the soundness of the decision cannot be questioned, otherwise this Court would be taking over the function of the tender issuing authority, which it cannot. 49. Again, looked at from the point of view of the employer if the courts take over the decision-making function of the employer and make a distinction between essential and nonessential terms contrary to the intention of the employer and thereby rewrite the arrangement, it could lead to all sorts of problems including the one that we are grappling with. For example, the GTC that we are concerned with specifically states in Clause 15.2 that “Any bid not accompanied by an acceptable Bid Security/EMD shall be rejected by the employer as non-responsive”. Surely, CCL ex facie intended this term to be mandatory, yet the High Court held that the bank guarantee in a format not prescribed by it ought to be accepted since that requirement was a non-essential term of the GTC. From the point of view of CCL, the GTC has been impermissibly rewritten by the High Court.” 12. No doubt, Mr. From the point of view of CCL, the GTC has been impermissibly rewritten by the High Court.” 12. No doubt, Mr. S.K. Mandal, learned counsel for the appellant/writ petitioner sought to draw support from what is stated in paragraph 43 of the said judgment where the Court referred to its judgment in the case of Jagdish Mandal Vs. State of Orissa reported in (2007) 14 SCC 517 and dealt with the grounds, on which judicial review can be sustained. In this context, he would reiterate that the condition, as stipulated in the advertisement is arbitrary and, therefore, the principle, which has been enunciated in paragraph 43 would apply. 13. We may, before we pronounce on this aspect, also refer to and deal with the other arguments raised by Mr. S.K. Mandal, learned counsel for the appellant/writ petitioner. It is true that in the Government Order dated 09.08.2012, pursuant to which advertisement was issued and the proceedings were concluded, there is reference to Uttarakhand Procurement Rules, 2008, which were to be applied and the contract was to be made through a tender process. It is equally true that in Rule 20 of the Procurement Rules, in relation to furnishing security as it was for the earnest money, to furnish the same by way of a Bank draft without mentioning that it should be a Bank draft from a nationalized bank is provided. It is also true that in the Proposed Terms of Contract, which are accompanied by the order dated 17.07.2017, Clause 4 speaks about the Bank draft but it did not specifically stipulates that it should be a Bank draft from a nationalized Bank. But, we must notice that when the advertisement is issued, the authorities have stipulated that the Bank draft should be from a nationalized Bank. The appellant/writ petitioner has participated in the proceedings with its tender accompanied by a Bank draft, which is not in compliance with the terms of the advertisement. But, we must notice that when the advertisement is issued, the authorities have stipulated that the Bank draft should be from a nationalized Bank. The appellant/writ petitioner has participated in the proceedings with its tender accompanied by a Bank draft, which is not in compliance with the terms of the advertisement. He approached the Court; he makes allegations in the writ petition; when it comes to the relief’s sought in the writ petition, they are as follows: “I. Issue a writ, order or direction in the nature of mandamus directing and commanding the respondents to accept the tender of the petitioner for technical and financial bid for the contract of Dhaura Dam situated in Tehsil Kichha, District Udham Singh Nagar/Kumaon Mandal for the financial year 2017-18 to 2021-22 five years period in pursuance of the tender notice dated 4-8-2017 (contained in Annexure No. 1 to this writ petition). II. Issue a writ, order or direction in the nature of mandamus calling the record from the office of the respondent no. 1 & 2 and examined the same and set aside the illegal order of rejection.” 14. The challenge, as such, to Clause 5 of the advertisement is conspicuous by its absence. Therefore, we have to proceed on the basis that the appellant/writ petitioner has not challenged the advertisement and, therefore, Clause 5 of the advertisement would appear to stand against the appellant/writ petitioner. Furthermore, we have noticed the view taken by the Hon’ble Apex Court in the latest judgment in regard to the Court’s view relating to distinction between essential and non-essential conditions of the contract. In fact, the learned Single Judge has also relied on the same judgment. As far as the judgment of the Hon’ble Apex Court in the case of M/s. Poddar Steel Corporation Vs. M/s. Ganesh Engineering Works and others reported in AIR 1991 SC 1579 is concerned, that was a case where the employer thought it fit to relax the requirement of the condition and it was when the appellant’s tender came under a cloud by the judgment of the Division Bench that in appeal, the appellate Court took the view it did. No doubt, it has also dealt with the distinction between essential and non-essential conditions; but there again, we are confronted with the later judgment of the Hon’ble Apex Court. No doubt, it has also dealt with the distinction between essential and non-essential conditions; but there again, we are confronted with the later judgment of the Hon’ble Apex Court. We cannot also totally ignore the fact that the tender has been finalized in favour of somebody else, which is, no doubt, after the decision of the learned Single Judge. 15. Having regard to all the facts, we are not inclined to interfere with the judgment of the learned Single Judge. The appeal fails and will stand dismissed without any order as to cost.