M/s Sovereign Agra Tech Refinery P Ltd v. State of Andhra Pradesh
2021-07-09
R.RAGHUNANDAN RAO
body2021
DigiLaw.ai
JUDGMENT R Raghunandan Rao, J. - The petitioner company is in the business of manufacture and sale of refined sunflower oil and other edible oils. It had participated in a tender, issued by the 3rd respondent, dated 29.01.2020, for procurement of 14,000 tins of refined sunflower oil with Agmark. The petitioner emerged as successful bidder in the e-Tender and e-Reverse auction held on 12.02.2020 and 13.02.2020. In accordance with the tender, the petitioner had also deposited Rs.4,92,000/- as Earnest Money Deposit (EMD). 2. The 3rd respondent vide letter dated 05.03.2020, had issued a 'Supply Order' for procurement of 35% of the total tendered quantity i.e., 4,900 tins, at the rate of Rs.1,447.25/- per tin, inclusive of all taxes. The petitioner also states that the supply order itself mentioned that the supply shall be made in accordance with the supply schedule issued by the Deputy Executive Officer of TTD and to execute an agreement for implementing the conditions mentioned in the tender notice. However, the respondents failed to furnish the supply schedule and did not co-ordinate with the petitioner company in executing the agreement. 3. As the country was subjected to a National Lockdown commencing from 25.03.2020, on account of the Covid-19 pandemic, the petitioner sought clarifications regarding the validity of the tender notice and supply order as condition No.14 in the tender notice itself stated that the tender would be valid only for a period of three months. The respondents did not give any clarifications. However, the 4th respondent, by a letter dated 01.07.2020, had requested the petitioner company to stop supply of sunflower oil until further intimation. On receipt of this communication, the petitioner, by an email dated 04.08.2020, sent to the 3rd respondent, requested for supply of schedule so as to execute the agreement. Later, the 4th respondent, by a letter dated 06.08.2020, sent a supply schedule to the petitioner requiring delivery for the period between 25.12.2020 to 25.05.2021 which was contrary to the terms mentioned in the tender notice and which stipulated that the supply would have to be made within three months. Subsequently, the 3rd respondent, by a letter dated 09.09.2020, requested the petitioner company to supply oil as per the terms of the tender notice.
Subsequently, the 3rd respondent, by a letter dated 09.09.2020, requested the petitioner company to supply oil as per the terms of the tender notice. As the schedule given for the period from 25.12.2020 to 25.05.2021 was contrary to the terms of the tender notice, the petitioner, by letter dated 13.10.2020, sought clarification regarding the status of the tender. The petitioner also took the stand that since it would have to be understood that the tender notice was called off due to Covid-19 Pandemic, EMD paid by the petitioner should be returned. The petitioner also stated that the total EMD deposited by the petitioner was Rs.6,80,000/-. Apart from these contentions, the petitioner also set-forth its difficulty to hope that financial distress due to the Covid-19 pandemic and requested to return of the EMD. 4. The 3rd respondent, instead of addressing the show cause notice, had again sent a supply order letter dated 17.10.2020, wherein the petitioner is also asked to show cause as to how their conduct should not be treated as breach of conditions 14 and 33 of the tender document. The 3rd respondent again issued a show cause notice dated 29.10.2020, requesting the petitioner to show cause, within seven days, for breach of conditions 14, 33 and 38 as to why the petitioner should not be black listed for non performance of the tender notice. At the same time, the 3rd respondent again issued a fresh notice, inviting tenders for procurement of 15,000 tins of refined sunflower oil and thereupon, had issued the impugned order dated 03.12.2020, which was passed by the 2nd respondent. In the impugned letter, a direction to black listing the petitioner company for breaching the tender conditions 38, 21, 42 and 48 and for forfeiture of the EMD amount of Rs.1,78,000/-, apart from taking steps for recovery of excess cost incurred by the TTD in the event of delay in accordance with the condition No.21 was also imposed. 5. On the basis of the above facts, the petitioner raised various grounds impugning and assailing the order dated 03.12.2020.
5. On the basis of the above facts, the petitioner raised various grounds impugning and assailing the order dated 03.12.2020. It is the case of the petitioner that the bid filed in response to the tender notice, would be valid only for a period of three months and as such, the respondents cannot hold the petitioner liable for performance of an expired agreement; the supply schedule requires the petitioner to deliver the oil from December, 2020 i.e., eight months after the duration of tender notice, and as such, is not permissible and the petitioner cannot compelled to supply in December, 2020; the provisions of Section 56 of the Contract Act would clearly apply and as such, no orders could be passed against the petitioner and the principle of natural justice were also violated for two reasons,- firstly, show cause notices do not refer to any of the mails or letters sent by the petitioner company, and secondly, show cause notices were issued by the 3rd respondent while the impugned order was passed by the 2nd respondent which is a clear violation of the principles of natural justice. 6. Sri L.J.Veera Reddy, learned counsel for the petitioner reiterates the aforesaid contentions and submissions that the impugned order requires to be set-aside. 7. Respondent Nos.2 to 4 have filed a counter affidavit. In the counter affidavit, it is stated that since the consumption of refined sunflower oil had decreased from 360 tins to 70 tins per day due to the Covid-19 Pandemic, the petitioner was informed by a letter dated 01.07.2020, to stop further supplies; even though condition No.14 stated that supply should be affected as per schedule, to spread over three months, the said clause is also stipulated that the schedule is tentative and TTD would have every right to revise the schedule depending upon the consumption in the temples and other institutions of TTD; in view of the progressive relaxation of the Covid regulations, permitting increase of pilgrims to the temple, the tentative supply schedule was issued to the petitioner on 06.08.2020; as the petitioner was not coming forward, a notice dated 09.09.2020 was issued to the petitioner to execute the agreement immediately.
Despite the petitioner being called upon to execute the agreement by letters dated 05.03.2020 and 09.09.2020, the petitioner did not come forward to execute the contract; the petitioner did not respond even to the subsequent notice dated 09.10.2020, calling upon the petitioner to supply 1000 tins of sunflower oil on or before 16.10.2020; though the petitioner had initially deposited Rs.4,92,000/- as EMD, the said EMD was reduced to Rs.1,78,000/- taking into the fact that only 4,900 tins were being sourced from the petitioner, the amount of Rs.4,92,000/- was refunded to the petitioner on 29.10.2020 itself after the petitioner furnished proportionate EMD, for an amount of Rs.1,78,000/-; the respondents also submits that in view of the default of the petitioner, show cause notices were issued to the petitioner to show cause why the order placed on the petitioner should not be cancelled with consequential steps for forfeiture of EMD, as well as black listing of the petitioner. Despite receipt of notices, the petitioner did not bother to reply to any of the show cause notices. Thereupon, the 2nd respondent after looking at the material on record had passed the necessary orders. 8. Sri A.Sumanth, learned Standing Counsel for TTD reiterates the contentions raised in the counter affidavit and submits that there is no illegality or arbitrariness in the impugned order which would require any interference from this Court. He further submits that there is a provision of appeal under Section 120 of the Endowment Act to the board of the Devasthanam against the impugned order. He submits that the petitioner has an effective alternative remedy, and as such, the present petition is not maintainable. Consideration of the Court: 9. It is necessary to set out certain clauses of the tender notification. Serial No.5 of the notice inviting tender states that the period of the contract shall be for three months. Serial No.14 stipulates that the bid validity period is 90 days from the date of e-Tender and e-Reverse auction. 10. Clause 14 of the general terms and conditions reads as follows: "The supply should be effected strictly as per delivery schedule to be given spread over to 3 months. The schedule is tentative and the T.T.D. is having every right to revise the schedule depending upon the consumption in the Temples and other institutions of T.T.D." 11.
10. Clause 14 of the general terms and conditions reads as follows: "The supply should be effected strictly as per delivery schedule to be given spread over to 3 months. The schedule is tentative and the T.T.D. is having every right to revise the schedule depending upon the consumption in the Temples and other institutions of T.T.D." 11. Clause 21 of the general terms and conditions reads as follows: "In the event of delay or default in supply and the supplies not adhering to the schedule, the T.T.D. reserves the right to procure the requirement from the other sources and recover the excess cost, if any incurred by T.T.D., from the approved tenderer. However, if the rate is cheaper, the benefit will not accrue to the respective approved tenderer. The T.T.D. reserves the right to either reject the entire lot or impose cut or forfeit the E.M.D. and Security Deposit at its discretion if the quality is not in accordance with the specifications or of inferior quality goods as confirmed by Lab reports. In this regard the decision of Executive Officer/Addl. Executive Officer, Tirumala/General Manager(P)/Dy.E.O (W.H), TTD shall be final and binding on the supplier. The quantum of cuts imposed shall be final binding on the supplier. The cuts will be imposed both on the laboratory analysis and on the physical verification of the supply received. 12. Clause 30 of the general terms and conditions reads as follows: "The prices quoted shall be firm and fixed from the date of submission of tender to the date of completion of the contract of supply in all respects. ANY RERQUSTS FOR REVISION IN THE RATE OR RATES BY THE SUPPLIER SHALL NOT BE ENTERTAINED DURING THE RATE CONTRACT PERIOD. 13. Clause 33 of the general terms and conditions reads as follows: "The successful bidder has to enter into an agreement agreeing to all the conditions of the contract with the T.T.Devasthanams on Non-judicial stamp paper of value of Rs.100/- within 15 days from the date of receipt of the intimation to him that his TENDER has been accepted. The format of agreement shall be supplied to the approved supplier along with the communication of accepting the rates quoted". 14.
The format of agreement shall be supplied to the approved supplier along with the communication of accepting the rates quoted". 14. Clause 40 of the general terms and conditions reads as follows: "The TTD reserves the right to add/delete/change/modify any or all the conditions mentioned in the tender schedule and the said addition/deletion/changes/modifications can be incorporated in the agreement to be entered into with the supplier irrespective of tender conditions mentioned in the notice inviting tender or in the tender schedule or the same can be incorporated in a form of codicil as the case may be and the same will be binding on the supplier without any recourse". 15. Clause 51 of the general terms and conditions reads as follows: "No supplier shall be allowed at any time on any ground what so ever to claim revision or modification in the rates quoted by him. Conditions such as Subject to Availability Supplies will be made as and when supplies are received etc, will not be considered under any circumstances." 16. The first dispute arose on the execution of the agreement. Sri L.J.Veera Reddy, learned counsel for the petitioner submits that execution of the agreement was to be done only upon a schedule of delivery being given by the Devasthanam. On the other hand, Sri A.Sumanth, learned Standing Counsel for TTD submits that clause 33 required the successful bidder to execute the agreement within 15 days from the date of receipt of the intimation that his bid has been accepted. He submits that the letter dated 05.03.2020 filed by the petitioner, which informed the petitioner about the award of contract to him, had specifically required the petitioner to execute the agreement on or before 12.03.2020. Sri A.Sumanth, learned Standing Counsel for TTD would submit that in view of the above, the petitioner ought to have completed the execution of the agreement by 12.03.2020 itself. 17. In view of clause 33 and the letter dated 05.03.2020, I am of the view that the petitioner was required to execute the agreement by 12.03.2020, and at any rate, within 15 days from the date of receipt of the letter dated 05.03.2020. There is a failure on the part of the petitioner in executing the agreement by that day. 18.
There is a failure on the part of the petitioner in executing the agreement by that day. 18. The contention of Sri L.J.Veera Reddy, learned counsel for the petitioner is that the Devasthanam, by a letter dated 01.07.2020, had directed the petitioner not to supply any sunflower oil tins, till further directions, and the subsequent letter dated 6.8.2020, directing the petitioner to supply sunflower oil tins for the period between 25.12.2020 to 25.05.2021, which is more than the three months permissible under the tender and beyond the period of three months from the date of acceptance of the tender, would permit the petitioner to either refuse to performance or ask for additional consideration on account of the increase in prices. He submits that the refusal of the Devasthanam to accept such conditions set out by the petitioner in its letter dated 25.9.2020 would amount to breach of the tender conditions by the Devasthanam, and as such, the petitioner cannot be held responsible for the breach of contract. He further submits that in the circumstances, there could not be any termination of the contract or forfeiture of the deposit or black listing of the petitioner along with a proposal to recover additional damages from the petitioner. 19. Sri A.Sumanth, learned Standing Counsel for TTD would point out to clauses 14, 30 and 40, would submit that Devasthanam had the right to extend the period of the tender as well as extending the schedule of delivery from three months to five months. 20. A reading of the above clauses would show that TTD had reserved such rights. The petitioner having accepted the tender conditions and having participated in the tender, cannot assail those conditions and insist that he would be entitled for additional consideration, failing which, he should be relieved from the burden of the contract. 21. In the circumstances, I do not find any merit in the contentions of the petitioner and the Writ Petition is accordingly dismissed. There shall be no order as to costs. 22. As a sequel, pending miscellaneous petitions, if any, shall stand closed.