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2021 DIGILAW 196 (MP)

Shubham Parmar Electrical and Civil Construction Company v. State of Madhya Pradesh

2021-02-22

SHAILENDRA SHUKLA, SUJOY PAUL

body2021
ORDER : Sujoy Paul, J. 1. This petition filed under Article 226 of the Constitution of India assails the order dated 22.09.2020, whereby the petitioner's bid was rejected. 2. The admitted facts between the parties are that petitioner along with other bidders submitted their bid pursuant to NIT No. 25/2020-21 dated 04.09.2020. The petitioner's bid was lowest. Being L-1 petitioner expected the contract but same was rejected by stating twin reasons namely-(i) the rates quoted by the petitioner were comparatively higher and (ii) the tender was issued for the first time. 3. Criticizing the said order, learned counsel for the petitioner submits that the impugned order is arbitrary and unreasonable in nature. As per Clause-14 of Appendix-2.10 (conditions of contract), the only parameter is that rate quoted by L-1 should not be below 15% otherwise it shall be treated as unworkable rate. The rate quoted by the petitioner was admittedly above the said percent. The respondents have allotted similar contract to certain contractors who have quoted rates more than the petitioner. Hence, the petitioner was subjected to discrimination. Reliance is placed on (2014) 3 SCC 760 , (Maa Binda Express Carrier & Another v/s. North East Frontier Railway & Others). 4. Per contra, learned Additional Advocate General supported the impugned order. The respondents placed reliance on Clause-2 of the aforesaid Appendix which enables the authorities to accept or reject the tender without assigning any reason. It is further argued that the reasons for cancellation are in fact mentioned in the relevant decision of a four member Committee (Annexure-R/1). Since petitioner's rate was compared with previous year's rate and it was found that it is first tender and if it is repeated, the Department may get a better comparable rate, impugned order was passed. 5. So far question of discrimination is concerned, learned Additional Advocate General submits that every tender of every area were different based on their fact situation, rates quoted with the rates to be compared with that of previous years. Thus those examples are of no relevance. 6. No other point is pressed by the learned counsel for the parties. 7. 5. So far question of discrimination is concerned, learned Additional Advocate General submits that every tender of every area were different based on their fact situation, rates quoted with the rates to be compared with that of previous years. Thus those examples are of no relevance. 6. No other point is pressed by the learned counsel for the parties. 7. So far Clause-2, which enables the respondents to accept or reject the tender is concerned, we are inclined to observe that similar question cropped up and decided by this Court in W.P. No. 16878/2020 (Krsnaa Diagnostics Private Limited v/s. The State of Madhya Pradesh & Others) on 22.02.2021. A similar Clause No. 17 of the contract was relied upon by the Department. This Court considered the same and opined as under:- "[18.] We deem it proper to first deal with the argument of learned AAG and Counsel for the respondent No. 2 based on Clause-17 of the NIT. It was argued that the order of scrapping NIT is founded upon Clause-17 aforesaid which gives power to the Competent Authority to accept, reject or annul any selection process/NIT. In our view, existence of power and exercise of power are two different things. Mere existence of power does not insulate the ultimate order which is passed in exercise of such power. Whether power is exercised in a justifiable manner is always subject to judicial review. Despite existence of power like one which is mentioned in Clause-17, it is duty of the Court to examine following factors:- (i) Whether the decision making authority exceeded its power? (ii) Committed an error of law. (iii) Breached the rules of natural justice. (iv) Arrived to a decision which no reasonable authority would have reached (Wednesbury principle of reasonableness). (v) Abused its power. [19.] Thus any enabling provision does not make the ultimate order passed in exercise of such power as sacred or sacrosanct. [20.] The Apex Court in catena of judgments held that the judicial review of a contractual matter is permissible on certain parameters spelled out by us in the previous paragraph. In Tata Cellular vs. Union of India, (1994) 6 SCC 651 and Elektron Lighting Systems (P) Ltd. vs. Shah Investments Financial Developments & Consultants (P) Ltd., (2015) 15 SCC 137 , the Apex Court opined that the judicial review in contract matter is permissible if action impugned is shown to be arbitrary. In Tata Cellular vs. Union of India, (1994) 6 SCC 651 and Elektron Lighting Systems (P) Ltd. vs. Shah Investments Financial Developments & Consultants (P) Ltd., (2015) 15 SCC 137 , the Apex Court opined that the judicial review in contract matter is permissible if action impugned is shown to be arbitrary. In Ramana Dayaram Shetty vs. International Airport Authority of India, (1979) 1 SCC 489, Dutta Associates (P) Ltd. v. Indo Merchantiles (P) Ltd., (1997) 1 SCC 53 , Heinz India (P) Ltd. v. State of U.P., (2012) 5 SCC 443 and Kalinga Mining Corpn. v. Union of India, (2013) 5 SCC 252 , the Supreme Court ruled that if decision making process or the decision is unreasonable, interference can be made even in contractual matters. In Sterling Computers Ltd. v. M & N Publications Ltd., (1993) 1 SCC 44, Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd., (2005) 6 SCC 138 , Michigan Rubber (India) Ltd. v. State of Karnataka, (2012) 8 SCC 216 and State of Jharkhand v. CWE-SOMA Consortium, (2016) 14 SCC 172 , the Wednesbury principle is also applied to test the decision making process adopted in a contractual matter. Reference may be made to Raunaq International Ltd. v. I.V.R. Construction Ltd., (1999) 1 SCC 492 , Air India Ltd. v. Cochin International Airport Ltd., (2000) 2 SCC 617 , Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517 , Reliance Energy Ltd. v. Maharashtra State Road Development Corpn. Ltd., (2007) 8 SCC 1 , Sanjay Kumar Shukla v. Bharat Petroleum Corpn. Ltd., (2014) 3 SCC 493 and Siemens Aktiengeselischaft & Siemens Ltd. v. DMRC Ltd., (2014) 11 SCC 288 , wherein Apex Court opined that apart from the facets of arbitrariness, unreasonableness and parameters relating to Wednesbury principles, the public interest element is also an essential facet which needs to be looked into in a contractual matter. In view of these judgments, there is no cavil of doubt that judicial review of impugned order is permissible and enabling provision namely, Clause-17 aforesaid does not insulate the process and impugned order from judicial review. Despite the fact that it contained a phrase that no reasons are required to be given for invoking Section 17. In view of these judgments, there is no cavil of doubt that judicial review of impugned order is permissible and enabling provision namely, Clause-17 aforesaid does not insulate the process and impugned order from judicial review. Despite the fact that it contained a phrase that no reasons are required to be given for invoking Section 17. This, in our view, does not mean that without any reasons or justifiable reasons, power under Clause 17 can be invoked." In the light of aforesaid view, it is clear that Clause-2 does not make the impugned order as sacred or sacrosanct. It is always subject to judicial review on the parameters mentioned in para-18 of the aforesaid judgment. 8. If impugned order is tested on the anvil of said parameters, it will be clear that a Committee of four officers considered the bid of petitioner and opined that the tender was issued for work in question for the first time. The Committee considered the petitioner's rate with the previous year's rate and opined that for similar nature of work previously the bids were below SOR from 8.63% to 12.01%. It's average is below 10.93% of SOR. The Committee opined that petitioner's rate is 4.31% above previous year's average i.e. 10.93%. Thus it was recommended for cancelling the bid and go for another tender. 9. Clause-14 on which reliance is placed by the petitioner deals with a different situation namely quoting of unworkable rate. Petitioner's bid is not rejected for this reason, and therefore, Clause-14 has no significance. 10. In our view, the Committee has taken a plausible decision in public interest in order to get lesser rates than the rates quoted by the petitioner. The rates were compared with average rates of 2019-20. We are unable to hold that said decision of the Committee, which was accepted and became reason for issuance of Annexure-P/1 was hit by Wednesbury Principle of reasonableness. In other words, we are unable to hold that impugned order is based on any extraneous or irrelevant consideration. In absence of any arbitrariness and manifest unreasonableness, we are not inclined to interfere in the impugned order. So far question of discrimination is concerned, we find force in the arguments of Shri Pushyamitra Bhargav, learned Additional Advocate General that all the tenders were of different areas based on different bids and comparative figures. In absence of any arbitrariness and manifest unreasonableness, we are not inclined to interfere in the impugned order. So far question of discrimination is concerned, we find force in the arguments of Shri Pushyamitra Bhargav, learned Additional Advocate General that all the tenders were of different areas based on different bids and comparative figures. Thus we are not impressed with the argument based on discrimination. 11. In nutshell, we find no reason on the strength of which interference can be made in this petition. The petition fails and is hereby dismissed.