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2018 DIGILAW 379 (GAU)

North East Equipment Solutions Pvt. Ltd. v. State of Mizoram

2018-03-01

SONGKHUPCHUNG SERTO

body2018
JUDGMENT : S. Serto, J. Heard Mr. B. Lalramenga, learned counsel for the petitioner. Also heard Mrs. Linda L. Fambawl, learned Govt. Advocate for the State respondents. 2. On 19.01.2015 when this matter was moved, the State respondents were directed not to open the quotations submitted in pursuant to the NIQ dated 10.01.2018 till the next date. It was also directed that in the event the quotations are already opened, no final decisions should be taken in the matter. The interim order continued as it was extended from time to time. The State respondents filed an I.A, being I.A(C) No. 15/2018 praying for vacation of the stay order dated 19.01.2018. Since the pleadings are complete in WP(C) No. 4/2018, both the learned counsels for the parties submitted that the same may be taken up and dispose. Therefore, this Writ petition has been taken up, heard and is being disposed of. 3. The brief facts and circumstances of the case is that on 25.10.2017 an NIQ was issued by Public Works Department, Govt. of Mizoram inviting quotations for supply of machineries and equipments for the State of Mizoram and one of the items was for supply of Backhoe Loader, 20 in numbers. The petitioner being a dealer for Tata Hitachi Company, which also supplies Backhoe Loaders of the same Company submitted his bid. On 06.11.2017, the bids were opened and the result of the bids as notified was as follows: Sl. No. Name of the Bidder/Quotationers Model of the equipment/Machineries i.e. Backhoe Loader Bid amount 1 Johnson Diesel Sales & Services 851 EXBHL CASE Rs. 26,48,000/- 2 Johnson Diesel Sales & Services 770 EXLBH CASE Rs. 24,86,000/- 3 TBL 3DX BHL JCB Rs.25,11,040/- 4 TBL 3DX SUPER JCB Rs.25,53,344/- 5 Ngente Enterprise TLB 740-S TEREX Rs. 21,64,000/- 6 Ngente Enterpriseaa TLB 844- S TEREX Rs. 22,74,000/- 7 The Petitioner TH86 TATA HITACHI Rs. 23,95,000/- 4. However, the respondents issued a Notification dated 10.11.2017 cancelling the NIQ on technical reasons. The Notification is reproduced below: "No. GMC-12/17/EC/RES/PWD/3 Government of Mizoram Office Of The Engineer-In-Chief:Pwd Mizoram : Aizawl NOTICE This is to notify to all concerned that the Quotations No-1 of 2017-18, No. GMC- 12/10/EC/RES/PWD/68, dated 25th Oct. 2017 is hereby cancelled due to technical reasons. Sd/- (R. Vanlaltluanga) Engineer-in-Chief, PWD, Mizoram: Aizawl." 5. Thereafter, second NIQ was issued on 10.01.2018. The Notification is reproduced below: "No. GMC-12/17/EC/RES/PWD/3 Government of Mizoram Office Of The Engineer-In-Chief:Pwd Mizoram : Aizawl NOTICE This is to notify to all concerned that the Quotations No-1 of 2017-18, No. GMC- 12/10/EC/RES/PWD/68, dated 25th Oct. 2017 is hereby cancelled due to technical reasons. Sd/- (R. Vanlaltluanga) Engineer-in-Chief, PWD, Mizoram: Aizawl." 5. Thereafter, second NIQ was issued on 10.01.2018. However, substantial change was made in the specifications of the Backhoe Loader from the specifications given in the earlier NIQ. Being aggrieved by the cancellation of the bid result of the earlier NIQ and also being aggrieved by the new specifications adopted in the second NIQ, the petitioner has approached this Court praying for quashing and setting aside the second NIQ on the ground that specifications given in the annexure of the same are reasonable and the NIQ is bias and has literally barred the petitioner from participating in the bidding. 6. Mr. B. Lalramenga, learned counsel for the petitioner submitted that the reason given in the cancellation order of the earlier NIQ is vague and reasonable because no specific reason for cancelling the NIQ is given. The learned counsel further submitted that the bid evaluation committee in their Meeting Minute dated 10.11.2017, which is supposedly the basis for the cancellation of the Bid and issuance of the new NIQ did mention the required specifications. Therefore, both the cancellation order and the new NIQ are without any basis whatsoever. Therefore, they deserve to be quashed and set aside. The learned counsel also submitted that since the lowest bidder i.e. Ngente Enterprise at Serial No. 6 of the bid result could produced House Tax Paying Certificate, the bid of that dealer should have been cancelled and thereafter, the petitioner who is the second lowest bidder should have been awarded the supply order for the Backhoe Loader. The learned counsel by referring to the affidavit of the respondents submitted that the respondents did say anything on the averment of the petitioner, therefore, the same has to be accepted as true and based on that the respondents has to be directed to accept the bid of the petitioner. 7. The learned counsel for the petitioner also submitted that as per the General Financial Rules, 2005, specifications given in any NIQ should be broad base and it should contain superfluous and non-essential features, which may result in unwarranted expenditure. 7. The learned counsel for the petitioner also submitted that as per the General Financial Rules, 2005, specifications given in any NIQ should be broad base and it should contain superfluous and non-essential features, which may result in unwarranted expenditure. The learned counsel in support of his submission cited Rule 160 Clause (i)(a) & (vii) and Rules 137 Clause (i) & (v) of the same Rule. The relevant portion of the said Rules are reproduced below: Rule 137. (i)(a) The specifications in terms of quality, type etc., as also quantity of goods to be procured, should be clearly spelt out keeping in view the specific needs of the procuring organizations. The specifications so worked out should meet the basic needs of the organization without including superfluous and non-essential features, which may result in unwarranted expenditure. Care should also be taken to avoid purchasing quantities in excess of requirement to avoid inventory carrying costs; (vii) at each stage of procurement the concerned procuring authority must place on record, in precise terms, the considerations which weighed with it while taking the procurement decision. Rule 160 (i)(a) the criteria for eligibility and qualifications to be met by the bidders such as minimum level of experience, past performance, technical capability, manufacturing facilities and financial position etc.; (vii) The specifications of the required goods should be clearly stated without any ambiguity so that the prospective bidders can send meaningful bids. In order to attract sufficient number of bidders, the specification should be broad based to the extent feasible. Efforts should also be made to use standard specifications which are widely known to the industry." 8. The learned counsel for the petitioner further submitted that the specifications given in the NIQ conforms only to the Backhoe Loader of JCB and non other. As such, the NIQ was floated with an aim in view to allot the supply order to the dealer of JCB only. Therefore, the second NIQ deserves to be quashed and set aside. The learned counsel also submitted that the Government purchase unlike private purchase, should provide level field for all potential participants so that everyone has equal opportunity or chance of participating in it. The conditions and specifications given in NIQs should therefore, be rational, relevant and non-discriminatory. Therefore, the second NIQ deserves to be quashed and set aside. The learned counsel also submitted that the Government purchase unlike private purchase, should provide level field for all potential participants so that everyone has equal opportunity or chance of participating in it. The conditions and specifications given in NIQs should therefore, be rational, relevant and non-discriminatory. In support of his submission, the learned counsel cited the judgment of the Hon'ble Supreme Court in the case of Union of India v. Hindustan Development Corporation & Others and Bhillai Engineering Corporation & Others v. Union of India & Others, reported in 1993 (3) SCC 499. The relevant para i.e. para 9 of the said judgment is reproduced here below: "9. It must be mentioned at this stage that the validity of the conditions in the tender as such are questioned. Consequently the Government had the right to either accept or reject the lowest offer but that of course, if done on a policy, should be on some rational and reasonable grounds. In Erusian Equipment and Chemicals Ltd. v. State of W.B. this Court observed as under: (SCC p. 75, para 17) "When the Government is trading with the public, 'the democratic form of Government demands equality and absence of arbitrariness and discrimination in such transactions'. The activities of the Government have a public element and, therefore, there should be fairness and equality. The State need enter into any contract with anyone, but if it does so, it must do so fairly without discrimination and without unfair procedure." Approving these principles, a Bench of this Court in Ramana Dayaram Shetty v. International Airport Authority of India held thus: (SCC p. 506, para 12) "... This proposition would hold good in all cases of dealing by the Government with the public, where the interest sought to be protected is a privilege. It must, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largess, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norms which is arbitrary, irrational or irrelevant. The power or discretion of the Government in the matter of grant of largess including award of jobs, contracts, quotas, licences etc. must be confined and structured by rational, relevant and non-discriminatory standard or norm and if the Government departs from such standard or norm in any particular case or cases, the action of the Government would be liable to be struck down, unless it can be shown by the Government that the departure was arbitrary, but was based on some valid principle which in itself was irrational, unreasonable or discriminatory." In Kasturi Lal Lakshmi Reddy v. State of J&K an order awarding contract by the Government to a party was questioned on the ground that it was arbitrary, mala fide and in public interest and the same created monopoly in favour of that party and that the contract was awarded without affording an opportunity to others to compete and the same is based on any rational or relevant principle and therefore was violative of Article 14 of the Constitution and also the rule of administrative law which inhibits the arbitrary action by the State. A Bench of this Court while approving the principles laid down in the above cases further observed thus: (SCC pp. 11-12, para 11) "... Though ordinarily a private individual would be guided by economic considerations of self-gain in any action taken by him, it is always open to him under the law to act contrary to his self-interest or to oblige another in entering into a contract or dealing with his property. But the Government is free to act as it likes in granting largess such as awarding a contract or selling or leasing out its property. Whatever be its activity, the Government is still the Government and is, subject to restraints inherent in its position in a democratic society. The constitutional power conferred on the Government cannot be exercised by it arbitrarily or capriciously or in an unprincipled manner; it has to be exercised for the public good. Every activity of the Government has a public element in it and it must therefore, be informed with reason and guided by public interest. Every action taken by the Government must be in public interest; the Government cannot act arbitrarily and without reason and if it does, its action would be liable to be invalidated. Every activity of the Government has a public element in it and it must therefore, be informed with reason and guided by public interest. Every action taken by the Government must be in public interest; the Government cannot act arbitrarily and without reason and if it does, its action would be liable to be invalidated. If the Government awards a contract or leases out or otherwise deals with its property or grants any other largess, it would be liable to be tested for its validity on the touchstone of reasonableness and public interest and if it fails to satisfy either test, it would be unconstitutional and invalid." 9. Mrs. Linda L. Fambawl, learned Govt. Advocate appearing for the State respondents submitted that the Government of Mizoram who requires the machineries as given in the NIQ is the best authority to decide what kind of machineries is to be purchased as per its needs. Accordingly, base on the decision of the bid evaluation committee, the first NIQ was cancelled and the second NIQ was notified, mentioning the specifications, the Backhoe Loader should have. The learned Govt. Advocate also submitted that since Backhoe Loader is heavy machinery, needed for construction and maintenance of roads, the department has to ensure that the best which would meet the requirement and give the best output is procured. Accordingly, the bidding evaluation committee in their meeting held on 10.11.2017 recommended to the authority who issued the NIQ to do the same and the authority after proper consideration has given the required technical specifications in the NIQ. The learned Govt. Advocate also submitted that there is no bias in preparing and issuing the specifications as attempted to be projected by the petitioner. In fact, 3 other bidders besides the JCB dealer has submitted their bids in the second NIQ. The learned Govt. Advocate in support of her submission relied upon the judgment of the Hon'ble Supreme Court in the case of Global Energy Ltd. & Another v. Adani Exports & Others, reported in 2005 (4) SCC 435 . The relevant portion i.e. para 10 of the said judgment is reproduced here below: "10. The learned Govt. Advocate in support of her submission relied upon the judgment of the Hon'ble Supreme Court in the case of Global Energy Ltd. & Another v. Adani Exports & Others, reported in 2005 (4) SCC 435 . The relevant portion i.e. para 10 of the said judgment is reproduced here below: "10. The principle is, therefore, well settled that the terms of the invitation to tender are open to judicial scrutiny and the courts cannot whittle down the terms of the tender as they are in the realm of contract unless they are wholly arbitrary, discriminatory or actuated by malice. This being the position of law, settled by a catena of decisions of this Court, it is rather surprising that the learned Single Judge passed an interim direction on the very first day of admission hearing of the writ petition and allowed the appellants to deposit the earnest money by furnishing a bank guarantee or a bankers' cheque till three days after the actual date of opening of the tender. The order of the learned Single Judge being wholly illegal, was, therefore, rightly set aside by the Division Bench." 10. The learned Govt. Advocate further submitted that judicial review on the exercise of contractual power of Government bodies would come into picture only where there is arbitrariness or favouritism. The learned Govt. Advocate in support of her submission relied upon the judgment of the Hon'ble Supreme Court in the case of Tata Cellular v. Union of India, reported in 1994 (6) SCC 651 . Para 70 of the said judgment, particularly relied upon by the learned counsel is reproduced here below: "70. It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down." 11. By now, the law is settled that Courts intervention or judicial review on NIQ/NIT matters is very limited. Courts can intervene only when the decision making process is arbitrary, bias or unreasonable. In this case, the whole process of the first NIQ was cancelled after the evaluation committee decided that Backhoe Loader to be procured should have more efficiency and output suitable to the State of Mizoram. The specifications of Backhoe Loader given in the earlier NIQ are only 10 in numbers where as, the specifications given in the second NIQ are 22 in numbers. On mere perusal of the 2 specifications, one can easily make out that the decision to cancel the process of the earlier NIQ and issuing the new NIQ is to procure a more efficient and suitable Backhoe Loader for the State of Mizoram. For easy reference and comparison, the 2 specifications are reproduced below: First NIQ Sl. No Description Minimum range 1 Engine Horse Power - HP 76 2 Operating/Shipping weight - Kg 7400 3 Loader bucket cu-m (GP) capacity 1 4 Excavator bucket capacity cu-m (GP) 0.24 5 Digging depth (m) Back Hoe 4.2 6 Dumping height (m) 2.6 7 Maximum working height (Excavator) (m) 3.89 8 Rear tyre HD - 14x25 9 Front tyre 12.5x18 - 12PR 10 Front axle 4WD Second NIQ Sl. No Description Required specification 1 Engine Four Cylinder Indigenous 2 Horse Power (hp) Minimum - 90 HP 3 Air Induction Turbocharged 4 Operating Weight Minimum 8000 Kg 5 Excavator Bucket 0.3 cum 6 Loader Bucket 1.1 cum 7 Rear Tyre HD - 14 x 25 8 Front Tyre 12.5 x 18-12PR 9 Drive (WD) 4WD 10 Travel Speed Minimum 7 - 40 kmph 11 Turning Radius (m) Maximum 8.35 meter 12 Loader Dump height (m) Minimum 2.8 meter 13 Pin Height (m) Minimum 3.45 14 Loader Shovel Break out force (kgf) Minimum 6500 15 Excavator Dig depth (m) STD Minimum 5.0 meter 16 Max. Workinig Height (m) STD Minimum 6.0 meter 17 Excavator Bucket Tearout Force (Kgf) Minimum 5700 18 Excavator Loader height Minimum 4.0 meter 19 All Glasses Except Windshield Tinted 20 Transmission, Gear box & Axles - Make Indegenous 21 Hydraulic System Pressure - Psi Minimum 3200 psi 22 Telematics System Standard Fitment 12. On the above given specifications, one can see that the Horsepower given in the earlier NIQ was 76 whereas, in the latter specifications, the Horsepower given is 90. Operating weight given in the earlier NIQ is 7400 kg whereas, in the second NIQ, it is given 8000 kg. Excavator bucket capacity given in the earlier NIQ is 0.24 cum whereas, in the second NIQ, it is 0.3 cu-m. Likewise, digging depth capacity in the first NIQ was 4.2 meters whereas, in the second NIQ, it is given as minimum 5.0 meters. From all these and more, one can conclude that the reason for cancellation of the earlier NIQ and issuing the second NIQ is to procure Backhoe Loader with better efficiency which can give more output. It is very much within the domain of the Government to decide what kind of machinery they should procure, based on the need. In fact, the Government is duty bound to do so because, it is for public purpose and the money to be spend is also public money. The petitioner has miserably failed to demonstrate that the improvement made on the specifications is unnecessary required for the purpose for which the Backhoe Loader is being procured. For that matter, the technical experts are the best to decide what specifications are needed or required for the work in which the Backhoe Loader is proposed to be used. 13. The petitioner has miserably failed to demonstrate that the improvement made on the specifications is unnecessary required for the purpose for which the Backhoe Loader is being procured. For that matter, the technical experts are the best to decide what specifications are needed or required for the work in which the Backhoe Loader is proposed to be used. 13. Further, being the lowest bidder does confer the right for allotment of the work, the evaluation committee can always examine the suitability of the bidder and their decision cannot be interfered with unless the same is shown to be arbitrary, unreasonable or malice. In this case, there is no material to show that the decision of the evaluation committee was unreasonable, bias and arbitrary. The submission of the learned counsel for the petitioner that NIQ should be broad base and inclusive has been answered by the learned Govt. Advocate who submitted that the fact that the second NIQ was broad based is proven by the fact that there were 4 bidders in the second NIQ. It appears from here that other manufacturers of Backhoe Loader do have such machineries having such specifications as given in the second NIQ. Therefore, it would be wrong to conclude that the second NIQ was not broad based, exclusive and bias. Lastly, the submission of the learned counsel for the petitioner that in the Meeting Minute of the evaluation committee such specifications as given in the second NIQ were not given, therefore, the specifications are not required is misconceive because the evaluation committee had broadly and sufficiently indicated such specifications when they said that the machinery to be procured must be one which can give maximum output with efficiency and it should be suitable to the job and place where it is intended to be used. 14. In view of what has been stated above, I do not find any merit in the writ petition and the same is accordingly dismissed. Interim order given earlier stands vacated.