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2022 DIGILAW 967 (GUJ)

Grace Castings Limited v. Uttar Gujarat Vij Company Ltd.

2022-08-22

A.J.SHASTRI, ARAVIND KUMAR

body2022
JUDGMENT : A.J. Shastri, J. 1. Present group of petitions is arising out of almost similar controversy and respondent being common in all petitions, learned advocates appearing on behalf of both sides have requested to take up the present set of petitions conjointly and since same being tagged together, we deem it proper to deal with same accordingly. 2. Since common controversy has arisen and challenge to the impugned order dated 15.9.2021 is common in all the petitions, for sake of convenience, Special Civil Application No. 14472 of 2021 is treated as a lead matter. 3. So far as Special Civil Application No. 14472 of 2021 is concerned, petitioner is a public limited company engaged in the business of manufacturing and supplying M.S. Structural Rolling products, like M.S. Angle, Channel, Flat, Round, Square and M.S. Ingot. For products of various M.S. steel items, on behalf of respondents of all distribution companies against requirement of 2021-22, a public advertisement in daily newspaper dated 10.1.2021 came to be issued by respondent No. 1. Last date of submission of online preliminary, technical and price bid was 1.2.2021. Along with tender notice, commercial terms and conditions as well as technical specifications were also issued and pursuant to the bid so tendered by the petitioner, it had participated by submission of required documents, vide letter dated 30.1.2021. Later on, respondent No. 1, vide its letter dated 13.5.2021 requested the petitioner to extend validity of petitioner's offer till 31.8.2021 due to changed circumstance. In response thereto, petitioner vide reply dated 19.5.2021 rejected respondent No. 1's request to extend validity of offer in view of Covid-19 pandemic situation, wherein there was stoppage of oxygen supply to the industrial units. Respondent No. 1 issued another letter dated 24.5.2021 requesting the petitioner to depute representative for negotiation of prices of M.S. Angle 65 x 65 x 6 mm and thereafter, letter of acceptance came to be issued by respondent in favour of petitioner to supply Angle 65 x 65 x 6 mm on behalf of all respondents. Said letter of acceptance is dated 31.5.2021 and in response to it, letter of acceptance dated 1.6.2021 was issued by respondent No. 2, same was also issued by respondent No. 3 on 2.6.2021 and letter of acceptance by respondent No. 4 came to be issued on 1.6.2021. 4. Said letter of acceptance is dated 31.5.2021 and in response to it, letter of acceptance dated 1.6.2021 was issued by respondent No. 2, same was also issued by respondent No. 3 on 2.6.2021 and letter of acceptance by respondent No. 4 came to be issued on 1.6.2021. 4. On account of unprecedented second wave of Covid-19 pandemic and disruption of supply of oxygen to petitioner and other industries, petitioner was unable to respond to the letter of acceptance issued by respondent and as such, vide communication dated 2.6.2021, it was informed to respondent No. 1 that petitioner will not be in a position to accept the terms and conditions and letter of acceptance and as a result of it, respondent No. 1 rejected petitioner's representation and consequently, issued a communication on 4.6.2021 inter-alia informing the petitioner to execute the order as per letter of acceptance, as agreed upon originally. To this, petitioner wrote a letter dated 15.6.2021 as also on 14.7.2021 inter-alia reiterating its difficulty of scarcity of raw material, shortage of labourer in the ship recycling industries, etc. additional time was sought to complete the tender formality. Even GUVNL Steel Supplier Group to which petitioner is a member, also requested and posted with difficulties faced by them. But, according to petitioner, without considering such hardships, a show cause notice came to be issued on 23.8.2021 by respondent No. 1 as also issued by respondent No. 3 on 2.9.2021, calling upon petitioner to explain as to why stern action should not be taken like forfeiture of EMD/SD, stop deal / banned of business dealing/ blacklisting or any other action against petitioner. It is the case of petitioner that a personal meeting was sought to represent in person which was scheduled on 7.9.2021, but then even after representing, authority did not consider any reason offered by the petitioner and was pleased to pass order impugned in the petition on 15.9.2021, whereby petitioner's EMD has been forfeited and action to stop the deal has been taken against petitioner as well as its Directors for a period of six months. 5. 5. Petitioner states that simultaneously, respondent has issued a fresh tender notice for purchase of steel items and petitioner will not be in a position to participate in the said tender as it has been blacklisted and the last date for submission of tender being 27.9.2021, petitioner has been constrained to approach this Court for setting aside impugned order dated 15.9.2021. 6. So far as Special Civil Application No. 14468 of 2021 is concerned, almost similar circumstance is there, in which petitioner was plugged and on the same line and is faced with an order of similar nature dated 15.9.2021 and as such, had to approach this Court. Only slight distinction in the present case is that out of 4 items, petitioner stood as L-2 in three items for which also EMD was paid along with submission of tender as required. Petitioner of this petition stood as L1 in M.S. Angle 65 x 65 x 6 mm, whereas in respect of other 3 items, stood as L2 and as such additional relief prayed for in this petition is specified in relief clause No. 31(B) namely sought for refund of EMD in respect of items in which petitioner had been declared as L2. Rest of the challenge is almost similar to challenge the legality and validity of impugned order dated 15.9.2021. 7. So far as Special Civil Application No. 14466 of 2021 is concerned, same is also almost similar with respect to very same tender items and petitioner is faced with similar impugned order dated 15.9.2021. 8. In respect of Special Civil Application No. 14481 of 2021 also, for the very same tender items, petitioner had not been able to respond to letter of acceptance and representation having not been considered, authority has passed same kind of order on 15.9.2021, which is the subject matter of challenge in this Special Civil Application. 9. With a view to avoid unnecessary burdening of order, minute details as urged in these petitions have not been incorporated here-under, but it would suffice to note that sum and substance of challenge in these petitions relates to laying challenge to order dated 15.9.2021. 10. 9. With a view to avoid unnecessary burdening of order, minute details as urged in these petitions have not been incorporated here-under, but it would suffice to note that sum and substance of challenge in these petitions relates to laying challenge to order dated 15.9.2021. 10. Notice issued by this Court being served upon respondents, respondent No. 1 which is an authority which has passed the impugned order, has filed a detailed reply affidavit and since pleadings having been complete and learned advocates having jointly requested to take up the matters for its disposal and considering said request, we have heard this batch of petitions. 11. Learned advocate Mr. Arpit Sanghvi appearing for the petitioners has vehemently contended initially that respondent No. 1 authority has taken an absolutely arbitrary and unreasonable stand and in an illegal manner, without considering all the circumstances then prevalent and has passed an order of blacklisting the petitioner. According to him, there was no concluded contract between parties and as such no action ought to have been initiated and as such action is apparently arbitrary and is violative of Article 14 of the Constitution of India. It has been further submitted that impugned action of blacklisting the petitioner has been passed without considering the detailed cogent explanation and thereto for an unreasonable period, petitioners and its Directors were dealt with disproportionately, practically ousting them from future tender process for quite some time, which has a far-reaching consequence upon the petitioners and impugned order being arbitrary and unreasonable, same is liable to be quashed in the interest of justice. 12. As against this, learned advocate Mr. Dipak R. Dave, appearing on behalf of respondent No. 1 in all these petitions has vehemently contended that petitioners are not entitled to challenge the impugned order as same is passed in consonance with the terms and conditions of the tender document. It has been vehemently contended that though on several occasions, office has reminded the petitioners to complete all formalities, as required under the Master LoA, including submission of S.D. and execution of specific document and supply of material, as per the delivery schedule, which has already been prescribed, which is well within the knowledge of petitioners from the beginning, but under one pretext or the other, petitioners have miserably failed to meet with the request and despite opportunity extended to them. As a result of this, it is not open for the petitioners with this conduct to invoke the extraordinary equitable jurisdiction. It has been submitted that looking to the gravity of issue and tender requirement, before taking impugned decision, not only frequent reminders were sent, but also is in personal visit, significance of work was pointed out and there being no positive response forthcoming from any of the petitioners, as a last resort impugned action was taken. Even in the show cause notice itself, while extending an opportunity, specifically, it was indicated that non-compliance would result in stern action, but same has also not been adhered to. Even a personal meeting was also scheduled allowing the petitioners of an opportunity, but none of the petitioners have come forward to complete the formalities of Master LoA and had not supplied the material. Even in piecemeal basis also, petitioners have not supplied the material which resulted in shortage of critical item at all DISCOMs, which had affected the ongoing electrification work at all DISCOMs and as such, public work had suffered to a great extent, which has necessitated the authority to take action against petitioners and therefore, there is nothing arbitrary or unreasonable in passing the impugned order. Though sufficient time has been granted, petitioners have miserably failed to pay even Security Deposit to execute the agreement and supply of material which has seriously prejudiced the public work which is being undertaken by DISCOMs. He would also contend that when petitioners were quite aware about significance of the work for which tender was floated had to be carried out and despite respondent having called upon petitioners to supply was not responded, respondent No. 1 was led to a situation where there was no alternative left but to take stern action as such, it is rather a self-invited order by petitioners and hence no equitable relief deserves to be granted. 13. It has been pointed out that though in personal representation, it was brought to the notice that all DISCOMs were bereft of any material and lot of inconvenience and great damage would be caused in electrification, petitioners have failed to respond to the work and admittedly, petitioners have failed to furnish deposit performance guarantee towards execution and as such, respondent No. 1 was justified in not returning the Performance Guarantees and was also justified in forfeiting the EMD. Since it is the petitioners who have committed a serious default, the authority is justified in passing the impugned order. Hence, he prays for order in question not being disturbed in the interest of justice. 14. However, learned advocate Mr. Dave on instructions has candidly submitted that in respect of one of the petitioners, i.e. petitioner of Special Civil Application No. 14468 of 2021, in respect of 3 items, said petitioner stood and was declared as L2, Earnest Money Deposit in respect of these three items, deserves to be refunded and respective respondents will refund said Earnest Money Deposit insofar as three items are concerned. Said items are reflecting on page 132 of the said petition in which tabular form of communication dated 22.2.2021, it is reflected as item No. 1, 2 and 4 wherein petitioner remained L2 and therefore, an amount totaling around Rs.7 lakh deserves to be refunded of EMD, which would be refunded within a period of four weeks from now. However, in respect of rest of challenge in all petitions, a request is made not to exercise equitable jurisdiction. 15. In rejoinder to this, learned advocate Mr. Singhvi appearing on behalf of petitioners in all the petitions has then submitted that if Hon'ble is not inclined to disturb the action impugned in the petitions, then in that case, in an alternative form, Hon'ble Court may observe this impugned action may not come in the way of petitioner in future in tendering bid in respect respondents company. At least that observation would give respite to the petitioner and as such, requested that same deserves to be made while disposing of the petitions and petitioners would not insist for refund of EMD in case where petitioner stood as L1 and hence by making aforesaid submission, under instruction, has requested the Court to pass suitable order in the interest of justice. 16. Having heard the learned advocates appearing for the parties and having gone through the material on record, it appears from the pleadings as well as perusal of the impugned order that while inviting tender, all petitioners were made aware completely about the terms and conditions, period of supply, requirement of tender, as well as significance of work and with open eyes, petitioners have tendered their bids. It further appears that none of the petitioners have pointed out that petitioners were deprived of any opportunity or reasonable time to meet with the circumstance and it is also not in dispute that petitioners were reminded on several occasions for completion of all formalities, including S.D. submission, supply of material and delivery of schedule, but despite several requests and reminders having been made by respondents, petitioners have miserably failed in mitigating the same. Further, after issuance of show cause notice, petitioners have also been granted an opportunity of personal hearing which has also been made on 7.9.2021 and having realized the situation and difficulties which were faced by DISCOMs, a stern action has been taken and as such, impugned action apparently does not call for any interference, more particularly when decision making process is completely in consonance with the principle of natural justice and as also based upon few undisputed situation about inaction of all petitioners, impugned order has been passed. We see no reason to exercise equitable jurisdiction for setting aside the impugned orders dated 15.9.2021. 17. At this stage, we may refer to the law propounded by Hon'ble Apex Court in the matter of M/s. N.G. Projects Limited vs. M/s. Vinod Kumar Jain and Others, rendered in Civil Appeal No. 1846 of 2022 decided on 21.03.2022, where-under it came to be held that approach of the Courts should be not to find fault with magnifying glass in its hands. It has been further held: “23. In view of the above judgments of this Court, the Writ Court should refrain itself from imposing its decision over the decision of the employer as to whether or not to accept the bid of a tenderer. The Court does not have the expertise to examine the terms and conditions of the present day economic activities of the State and this limitation should be kept in view. Courts should be even more reluctant in interfering with contracts involving technical issues as there is a requirement of the necessary expertise to adjudicate upon such issues. The approach of the Court should be not to find fault with magnifying glass in its hands, rather the Court should examine as to whether the decision-making process is after complying with the procedure contemplated by the tender conditions. The approach of the Court should be not to find fault with magnifying glass in its hands, rather the Court should examine as to whether the decision-making process is after complying with the procedure contemplated by the tender conditions. If the Court finds that there is total arbitrariness or that the tender has been granted in a mala-fide manner, still the Court should refrain from interfering in the grant of tender but instead relegate the parties to seek damages for the wrongful exclusion rather than to injunct the execution of the contract. The injunction or interference in the tender leads to additional costs on the State and is also against public interest. Therefore, the State and its citizens suffer twice, firstly by paying escalation costs and secondly, by being deprived of the infrastructure for which the present-day Governments are expected to work. 26. A word of caution ought to be mentioned herein that any contract of public service should not be interfered with lightly and in any case, there should not be any interim order derailing the entire process of the services meant for larger public good. The grant of interim injunction by the learned Single Bench of the High Court has helped no-one except a contractor who lost a contract bid and has only caused loss to the State with no corresponding gain to anyone.” In the case of Reliance Energy Limited and Another vs. Maharashtra State Road Development Corporation Limited and Others, (2007) 8 SCC 1 , it came to be held that judicial review of decision making process is permissible and not the decision. It has been further observed: 39. In the case of Reliance Airport Developers (P) Ltd. vs. Airports Authority of India and Others, (2006) 10 SCC 1 , the Division Bench of this Court has held that in matters of judicial review the basic test is to see whether there is any infirmity in the decision-making process and not in the decision itself. This means that the decision-maker must understand correctly the law that regulates his decision-making power and he must give effect to it otherwise it may result in illegality. The principle of “judicial review” cannot be denied even in contractual matters or matters in which the Government exercises its contractual powers, but judicial review is intended to prevent arbitrariness and it must be exercised in larger public interest. The principle of “judicial review” cannot be denied even in contractual matters or matters in which the Government exercises its contractual powers, but judicial review is intended to prevent arbitrariness and it must be exercised in larger public interest. Expression of different views and opinions in exercise of contractual powers may be there, however, such difference of opinion must be based on specified norms. Those norms may be legal norms or accounting norms. As long as the norms are clear and properly understood by the decision-maker and the bidders and other stakeholders, uncertainty and thereby breach of rule of law will not arise. The grounds upon which administrative action is subjected to control by judicial review are classifiable broadly under three heads, namely, illegality, irrationality and procedural impropriety. In the said judgment it has been held that all errors of law are jurisdictional errors. One of the important principles laid down in the aforesaid judgment is that whenever a norm/benchmark is prescribed in the tender process in order to provide certainty that norm/standard should be clear. As stated above “certainty” is an important aspect of rule of law. In the case of Reliance Airport Developers (supra), the scoring system formed part of the evaluation process. The object of that system was to provide identification of factors, allocation of marks of each of the said factors and giving of marks had different stages. Objectivity was thus provided. The aforesaid propositions of law when applied to facts on hand the irreversible conclusion which has to be drawn would be that under no circumstance, the impugned order can be held as contrary to principles of natural justice and we see no reason to hold the action as bad in law. No case is made out by the petitioners to grant any relief.” 18. However, we deem it proper to consider the alternate prayer made by the learned counsel appearing for petitioners in view of peculiar background of facts and more particularly when same is not opposed by the learned counsel representing the respondent authority and same is based upon broad consensus arrived and we deem it proper to accept the same. 19. However, we deem it proper to consider the alternate prayer made by the learned counsel appearing for petitioners in view of peculiar background of facts and more particularly when same is not opposed by the learned counsel representing the respondent authority and same is based upon broad consensus arrived and we deem it proper to accept the same. 19. Accordingly, we dispose of these petitions by observing that impugned action which has got crystallized into an order dated 15.9.2021 would not come in the way of petitioners participating in future tender process which may be floated by respondent No. 1 and as such, as and when in future, if any tender is floated by any of the respondents, the bid offered by the petitioners may be considered in accordance with law without being influenced by present impugned order dated 15.9.2021. 20. Since there was no reservation on behalf of the respondents in respect of Special Civil Application No. 14468 of 2021 to refund Earnest Money Deposit, totaling around Rs. 7 lakh, in respect of afore-mentioned three items, as reflected in Page-132 of the Special Civil Application No. 14468 of 2022, same shall be refunded to petitioner as agreed upon within a period of FOUR WEEKS from date of receipt of certified copy of the present order. 21. With aforesaid observations, all petitions stand disposed of.