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2021 DIGILAW 1634 (DEL)

Sunshine Enterprises v. Union Of India

2021-09-06

JASMEET SINGH, VIPIN SANGHI

body2021
ORDER 1. These two petitions have been preferred raising primarily the same issue, namely, that despite the petitioner being found to be the lowest bidder in the bidding process, the respondents have not awarded the contract to the petitioner, and are proceeding to cancel it and initiate the fresh tender process. Even when the matter, i.e. W.P.(C) 7923/2021 came up before this Court on 06.08.2021, we recorded the following order:- "W.P.(C) 7923/2021 & CM APPL. Nos.24609/2021 & 24783/2021 The submission of learned counsel for the petitioner is that the petitioner was found to be the L-1 Bidder in the previous round of bidding. Without assigning any reasons, and without even communicating the cancellation of the said tender, the respondents have now initiated a fresh tender on 04.08.2021. The last date for submission of the bids is 10.08.2021. Issue notice to the respondents returnable on 06.09.2021. In the meantime, the respondents shall not open the bids in relation to the tender dated 04.08.2021." 2. The respondent moved C.M. No. 27411/2021 - for vacation of the stay order granted on previous date, which came up before the Court on 23.08.2021. Mr. Jetly - who appears for the respondent, stated that the said application may be read as the respondent's counter-affidavit in the writ petition. The matter was thereafter adjourned for today, i.e. 06.09.2021. 3. Today, we have heard the submissions of learned counsels. The primary submission of learned counsel for the petitioner is that the respondents have acted on the basis of an anonymous complaint, and it appears that even before the said anonymous complaint was received, the respondents had proceeded to act in terms thereof. 4. The application filed by the respondents, as aforesaid - which is also their counter-affidavit, is highly revealing and the same brings out a sordid state of affairs in the respondents' organization for which, it appears, the petitioner was also responsible. The respondents have disclosed that 47 Firms had tendered their bids in response to the tender in question. However, only 2 bidders were found to be qualified. These two bidders were M/s Professional Management Services and M/s Sunshine Enterprises-which is the petitioner in both the writ petitions. Pertinently, these two firms are owned by Mrs. Savleen Kaur and Mr. Surinder Singh respectively - who are wife and husband. However, only 2 bidders were found to be qualified. These two bidders were M/s Professional Management Services and M/s Sunshine Enterprises-which is the petitioner in both the writ petitions. Pertinently, these two firms are owned by Mrs. Savleen Kaur and Mr. Surinder Singh respectively - who are wife and husband. The respondents have also disclosed that M/s Sunshine Enterprises was operating the same contract between the period 2012-2017, and from 01.04.2018 till now the contract has been operated by M/s Professional Management Services. 5. In view of the advice of the MoD/Finance and in the light of the CVC Guidelines Criteria (PQC), the matter was examined whether the conditions in the tender were very stringent and restrictive. 6. We may take note of the office note of the Ministry of Defence (Finance) at this stage, which reads as follows:- "Ministry of Defence (Finance) Main Office ***** Reference: Preceding Notes. This relates to the proposal moved by O/o CAO seeking concurrence ofMoD (Fin.) to enter into fresh contract with L-1 firm having more experience in the field of providing services i.e. M/s Sunshine Enterprises, for hiring of Conservancy/ Sanitation Services through 176 Labourers, 03 Supervisor, Machinery and Cleaning Agents and Garbage Lifting & Disposal for regular cleanliness of toilets, corridors, open space of offices in Defence Buildings/Hutments Block including KG Marg and Africa Avenue located in Delhi for a period of one year with total financial implication of Rs.4,34,92,630.56/-on GeMportal. 2. The aforementioned proposal has been examined in MoD (Fin.) and it has been observed that in response to the bid published on GeM portal on 24 March, 2021 for the purpose, total 47 bidders participated in bidding. However, out of these 47 bidders, only two (02) bidders have been technically qualified. It appears that the technical specifications given in the bid were quite restrictive. It has also been observed that the bid documents submitted by the technically qualified bidders are not also available in the file. 3. In view of the above, the proposal is returned with advice to consider retender after re-look at qualification criteria in accordance with CVC guidelines so as to have better competition. 4. This issues with approval of Addl. FA(RK) & JS) -sd- (P.T.Bhutia) Director (Fin./MOP Dir. (E&A), O/o CAO" (emphasis supplied) 7. 3. In view of the above, the proposal is returned with advice to consider retender after re-look at qualification criteria in accordance with CVC guidelines so as to have better competition. 4. This issues with approval of Addl. FA(RK) & JS) -sd- (P.T.Bhutia) Director (Fin./MOP Dir. (E&A), O/o CAO" (emphasis supplied) 7. The respondents have disclosed that the terms and conditions of the tender in question were found to be in contravention of GFR 173, relevant part whereof reads as follows :- "(i) GFR Rule 173 (xix) - Rejection of all bids is justified when (a) Effective competition is lacking. (b) All bids and proposals are not substantially responsive to the requirements of the Procurement Documents. (c) The Bids'/proposals' prices are substantially higher that the updated cost estimate or available budget; or (d) None of the technical Proposals meets the minimum technical qualifying score. (xx) Lack of competition in Rule l 72 (xix) shall not be determined solely on the basis of the number of Bidders. Even when only one Bid is submitted, the process may be considered valid provided following conditions are satisfied:- (a) The procurement was satisfactorily advertised and sufficient time was given for submission of bids. (b)The qualification criteria were not unduly restrictive; and (c) Prices are reasonable in comparison to market values." (emphasis supplied) 8. Thus, the tendering process may be cancelled if the qualification criterion is unduly restrictive or effective competition is lacking. Both these conditions are satisfied in the present case. 9. The respondents have also set out in their application/ counter-affidavit that the following conditions of the tender in question were found to be restrictive: "(i) Bidder should have experience of work in Ministry of Defence. (ii) Bidder should have annual financial turnover during each of the last three years, ending 31st March of the previous financial year should not be less than Rs 7 crores. (iii) The value of past contract for 01 house keeping project should be of 03 Cr. (iv) Bidder should have licence of 179 labourers. " 10. The respondents have also taken the views of 10 prospective bidders, who have given suggestions so as to enlarge the scope of competition. These suggestions were considered and it was decided to agree with the same, and include them in the bid conditions. (iv) Bidder should have licence of 179 labourers. " 10. The respondents have also taken the views of 10 prospective bidders, who have given suggestions so as to enlarge the scope of competition. These suggestions were considered and it was decided to agree with the same, and include them in the bid conditions. It is in this light that the respondents have not awarded the contract to the petitioner, despite it being found to be the L-1 bidder in the tendering process in question. 11. In the light of the aforesaid, we do not find any merit in the present petitions. Since the respondents invited the tenders, it was always open to the respondents to not proceed with the tendering process, and they are not obliged to necessarily award the contract to the lowest/ highest bidder, as the case may be. Such a bidder does not acquire a vested right to be awarded the contract. At the same time, since the respondent is a government instrumentality, they are bound to act reasonably and their conduct cannot be mala fide, or arbitrary. Therefore, when a grievance like the present is raised, all that we need to examine is whether the respondents have been able to satisfy the Court that they had reasonable grounds for not proceeding to award the contract to the lowest/ highest bidder, as the case may be. We are satisfied that the respondents are justified in not awarding the contract to the petitioner despite the petitioner being the L-1 bidder. 12. The writ petitions are, accordingly, dismissed.