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2023 DIGILAW 794 (TS)

Asha Medical Hall v. Union of India

2023-12-21

SUREPALLI NANDA

body2023
ORDER : Surepalli Nanda, J. 1. Heard Mr. Jakkamsetti Ravindra, learned counsel appearing on behalf of the petitioners and Mr.Gadi Praveen Kumar, learned Deputy Solicitor General of India appearing on behalf of the Respondents. 2. Petitioners approached the Court seeking prayer as under : to issue a Writ of Certiorari to quash the office order, dated 29.11.2019, bearing No. CGHS/Hyd/ADMN/LC/2019/140-142, issued by the 3rd Respondent, the Additional Director, CGHS, Begumpet, Hyderabad, Telangana - 500016, unjustifiably disqualifying the petitioners in the e-Bid submitted for empanelment of ALCs under CGHS, Hyderabad, for the year 2019-2022, as illegal, arbitrary, unconstitutional and contrary to principles of natural justice and violative of article 14 of Constitution of India, consequently direct the 3rd respondent: (a) To return the EMD paid by the petitioners by way of payment order Nos. 000630, 000631, and 000632 of Rs. 3,59,000/-; Rs. 1,76,000/-; and Rs. 3,06,000/- respectively total amounting to Rs.8,41,000/- (Rupees Eight Lakhs Forty-One Thousand Only) on 17.07.2019, the payment orders were paid in favor of the 3rdRespondent, on 03.01.2020; (b) To pay interest @ 24% per annum on the total EMD of Rs.8,41,000/- (Rupees Eight Lakhs Forty-One Thousand Only) to the petitioners from the date of payment till the date of realization. (c) And direct the 3rd respondent to pay to the petitioners a total sum of Rs. 10,00,000/- towards damages and compensation. 3. Case of the Petitioners as per the averments made in the affidavit filed in support of the Writ Petition :- a) The Petitioner No.1 is a Proprietorship concern represented by its Proprietor, Petitioner No.2 and engaged in the sale and distribution of medicines in Hyderabad and in other States of India. The Respondent No.3 had invited E- Tender Online Bids vide Notice No. F.No.CGHS/Hyd/Admn./ALC/2019-22/1-13, dated 01.07.2019 for empanelment for supply of day to day Allopathic Medicine to Wellness Centres located in Hyderabad, which fall under the jurisdiction of the 3rd Respondent herein. In response to the said Tender Notification the Petitioner Bid for 3 Wellness Centres under Central Government Health Scheme, Hyderabad for the Wellness Centre No.2 Humayunnagar, Wellness Centre No.11 Kakatiyanagar, and Wellness Centre No.10 AG's Colony. The E-bids are invited on behalf of the Health Secretary by the Office of the 3rd Respondent as the Respondent No.1 is the final authority for the approval of the tenders. The E-bids are invited on behalf of the Health Secretary by the Office of the 3rd Respondent as the Respondent No.1 is the final authority for the approval of the tenders. The E-bid is of two stages one Technical and Commercial Bid, the Petitioner was successful in the E-bid and Commercial Bid and was offered as ALC and submitted EMD for Rs.8,41,000/-. It is further the case of the Petitioner that the Petitioner furnished all the relevant documents and on the perusal of the same only the Selection Committee had qualified the Petitioner for opening of commercial bid. The Petitioner had also addressed a letter dt. 03.09.2019 to the 3rd Respondent welcoming the Inspection Committee to conduct the inspection. While so, to the shock of the Petitioner the Petitioner received communication dt. 12.12.2019 intimating to the Petitioner that with reference to Petitioner bid submission 1689800 it is informed that the Petitioner bid has not been selected for Award of Contract by the duly constituted committee. The Petitioner also received communication dt. 29.11.2019 informing the Petitioner that the Petitioner had been disqualified for the E-bid submitted for Empanelment of ALCs under CGS, Hyderabad, for the year 2019-2022 the clauses/paras of the e-tender document on the recommendations of the tender committee. The said impugned order dated 29.11.2019 issued by the 3rd respondent further stated as under: "PARA 15 WITH SUBHEADING - CORRUPT OR FRADULENT PRACTICS (II) (B) FRAUDULENT PRACTICE MEANS MISREPRESENTATION OF FACTS IN ORDER TO INFLUENCE THE TENDER PROCESS OR EXECUTION OF A CONTRACT TO THE DETRIMENT OF CGHS (PAGE NO.15), TERMS AND CONDITIONS OF THE CONTRACT SECTION - 1, PARA 6 WITH SUBHEADING - CORRUPT OR FRAUDULENT PRACTICES - 6 (VII), CGHS WILL REJECT A PROPOSAL FOR AWARD OF CONTRACT (PAGE NO.39) OF THE TENDER DOCUMENT." Aggrieved by the same, petitioner filed the present writ petition. 4. Counter Affidavit filed by the Respondents, in brief, is as under: a) The petitioner has failed to submit the documents called for and on verification with Income Tax authorities it was found that the physical documents submitted and documents uploaded were not matching since the petitioner failed to produce the required documents, hence his e-tender was disqualified as per the tender guidelines. Also, the petitioner failed to submit the documents called for verification and therefore the petitioner's e-bid is disqualified. Also, the petitioner failed to submit the documents called for verification and therefore the petitioner's e-bid is disqualified. b) The Income Tax officials verified the IT returns of the petitioner and on comparison with the documents submitted, it was found that they were not matching, hence the EMD was forfeited. c) The e-bids were floated by the office of 3rdRespondent on behalf of the 1stRespondent and the E-bid is of two stages one technical bid and commercial bid, the petitioner was successful in the e-bid and commercial bid and was offered as ALC and submitted EMD for Rs. 8,41,000/-. Alongside, the office of the 3rd respondent directed all the qualified bidders to submit the IT related documents in original for the financial year 2017-18 at 11 am on 01.10.2019, as discrepancies were noted in the Annual Turnover, Profit and Loss Account furnished in Central Govt. E-procurement Portal (CPP Portal) and figures submitted in Income Tax Returns and3CB (Profit and Loss Account) were not matching, which amounts to fraudulent practice contravening Clause 15(ii) (b). d) Furthermore, a detailed letter dated 14.10.2019 was addressed to the 1st petitioner stating that the figures of CPP Portal and Income Tax Returns were not matching and directed to bring originals for verification, which the bidder failed to comply. As the Annual Turnover is a vital parameter for selection process, submission of inflated figures amounts to fraudulent practice and rightly enforced Clause 16 A(b) by forfeiting the EMD amount. e) Moreover, a detailed letter dated 14.10.2019 was addressed to the petitioner giving an opportunity to present all the documents before the Committee and Income tax officer which the petitioner failed to utilize. As already averred that Clause 16 A (b) was invoked for willful suppression of factual information for wrongfully gaining the tender, hence payment of damages does not arise. f) Thereafter, the petitioner has also submitted inflated Turnover Certificate and Profit and Loss Account Statements in CPP Portal which resulted in verification with Income Tax officials and finally removal of the bidder and forfeiting of the EMD amount invoking Clause 16 A(b) Clause Nos. 15 (ii) b, 15 (iii), 15(iv) of the terms & conditions of tender documents. As such petitioner Nos. 1 & 2 has no locus standi in the matter. Hence, the Writ Petition is devoid of merits and is liable to be dismissed. PERUSED THE RECORD 5. 15 (ii) b, 15 (iii), 15(iv) of the terms & conditions of tender documents. As such petitioner Nos. 1 & 2 has no locus standi in the matter. Hence, the Writ Petition is devoid of merits and is liable to be dismissed. PERUSED THE RECORD 5. The order impugned dt.29.11.2019 issued by the 3rd Respondent to the petitioners, reads as under : "Office Order M/s. Asha Medical Hall #11-6-465, Nampally Market, Hyderabad - 500 001 is hereby disqualified for the e-bid submitted for empanelment of ALCs under CGHS, Hyderabad for the year 2019-2022 for violating the clauses/paras of the e-tender document on the recommendations of the tender committee. PARA 15 WITH SUBHEADING - CORRUPT OR FRADULENT PRACTICS (II) (B) FRAUDULENT PRACTICE MEANS MISREPRESENTATION OF FACTS IN ORDER TO INFLUENCE THE TENDER PROCESS OR EXECUTION OF A CONTRACT TO THE DETRIMENT OF CGHS (PAGE NO.15), TERMS AND CONDITIONS OF THE CONTRACT SECTION - 1, PARA 6 WITH SUBHEADING - CORRUPT OR FRAUDULENT PRACTICES - 6 (VII), CGHS WILL REJECT A PROPOSAL FOR AWARD OF CONTRACT (PAGE NO.39) OF THE TENDER DOCUMENT. 6. Condition No.15 and 16 of the Open Tender Notice No.F.No.CGHS/Hyd/Admn./ALC/2019-22/1-13, dated 01.07.2019 issued by the Central Government Health Scheme, Hyderabad, is extracted hereunder: "15. CORRUPT OR FRAUDULENT PRACTICES (i) CGHS requires that the Bidders observe the highest standards of ethics and conduct during the tender process and afterwards during the execution of such contract. (ii) In pursuance of this policy, the terms and conditions are set forth as follows: a) "corrupt practice" means the offering, giving, receiving or soliciting of anything of value to influence the action of the public official in the tender process or in the process of execution of contract; and b) "Fraudulent practice" means misrepresentation of facts in order to influence the tender process or execution of a contract to the detriment of CGHS, c) "collusive practice/cartelization" means a scheme or arrangement among Bidder (prior to or after bid submission) designed to establish bid prices at artificial non-competitive levels and to deprive CGHS of the benefits of free and fair competition; d) "coercive practice" means harming or threatening to harm, directly or indirectly, person or their property to influence their participation in the procurement process or affect to execution of a contract. (iii) CGHS will reject a proposal for award of contract, if it determines that the bidder recommended for award has engaged himself in corrupt or fraudulent practices while competing for the contract in question; (iv) CGHS will declare a bidder ineligible, either indefinitely or for a specified period of time, for award of the contract if at any time it determines that the bidder was engaged in corrupt and fraudulent practices while competing for or in executing the contract. (v) The bidder shall not transfer, sublet or assign any part or whole of the contract to anyone else during the period of the contract. In the event of the bidder contravening this condition, it will be considered a fraudulent act. CGHS will terminate the contract and the Performance Bank Guarantee will be forfeited in addition to actions taken against the bidder for practising fraudulent acts. 16. FORFEITURE OF EMD/PERFORMANCE SECURITY A. EMD shall be forfeited if: a) the bidder withdraws his bid during the period of bid validity. b) it is found during the bidding process that factual information is being suppressed, then the bidder will be debarred from further participation and EMD will be forfeited. c) the successful bidder fails to unconditionally accept the contract within one week of receipt of offer letter, and sign the Contract within a maximum of 21 days of un-condition acceptance of the contract. d) the successful bidder fails to deposit the Performance Security as specified in the tender document and within the time frame specified. B. Performance Security/Bank Guarantee will be forfeited along with termination contract, if: a) the successful bidder fails to abide by the terms and conditions of the contract. b) it is found any time during the contract period and till 60 days of validity of PBG, that any factual information related to the contract has been suppressed by the contractor. c) the empanelled chemist supplies any sub-standard, spurious drugs or substitutes medicines. d) the empanelled chemist delays supplies. e) the empanelled chemist over charges f) the chemist is found engaged in corrupt, collusive, coercive and/or fraudulent practices including subcontracting. g) the medicines supplied by the Authorized Local Chemist against the indents placed on them in pursuance of this contract are subsequently found as having been stolen from anywhere or are not conforming to quality. h) the Chemist stops the supplies of the medicines/drugs without giving 90 days prior notice. g) the medicines supplied by the Authorized Local Chemist against the indents placed on them in pursuance of this contract are subsequently found as having been stolen from anywhere or are not conforming to quality. h) the Chemist stops the supplies of the medicines/drugs without giving 90 days prior notice. 7. Counter affidavit filed by the 3rd Respondent and in particular, Paras 3, 7, 8, 11, 12, 15, reads as under: "3. In reply to para 2 of the Writ Petition, it is to submit that the petitioner failed to submit the documents called for verification and he failed to produce the same by saying that the Chartered Accountant is not available. As under para per the tender guidelines 6 of the guidelines/instructions for corrupt or fraudulent practices, CGHS will reject the proposal for award of contract, the EMD submitted by the bidder stands forfeited and deposited into the Govt. account. The Income Tax officials verified the IT returns of the petitioner and on comparison with the documents submitted, and since they were not matching, hence the EMD was forfeited. 7. In reply to para 5 of the WP, it is submitted that the e-bids were floated by this office of the Respondent No.3 on behalf of the Respondent No.1, The E-bid is of two stages one technical and commercial bid, the petitioner was successful in the e-bid and commercial bid and was offered as ALC and submitted EMD for Rs. 8,41,000/-. 8. In reply to para 7 of the WP, it is submitted that the office of the respondent No.3 directed all the qualified bidders to submit the IT related documents in original for the financial year 2017-18 at 11 am on 1.10.2019, as discrepancies were noted in the Annual Turnover, Profit and Loss Account furnished in Central Govt. E-procurement Portal (CPP Portal) and figures submitted in Income Tax Returns and 3CB (Profit and Loss Account) were not matching, which amounts to fraudulent practice contravening Clause 15(ii) (b). 11. In reply to para 9 it is submitted that a detailed letter dated 14.10.2019 was addressed to M/s. Asha Medical Hall stating that the figures of CPP Portal and Income Tax Returns were not matching and directed to bring originals for verification, which the bidder failed to comply. 11. In reply to para 9 it is submitted that a detailed letter dated 14.10.2019 was addressed to M/s. Asha Medical Hall stating that the figures of CPP Portal and Income Tax Returns were not matching and directed to bring originals for verification, which the bidder failed to comply. As the Annual Turnover is a vital parameter for selection process, submission of inflated figures amounts to fraudulent practice and rightly enforced Clause 16 A(b) by forfeiting the EMD amount. 12. In reply to para 12 & 13 it is totally incorrect to state that order is vague, unspecific, discriminatory in nature, as detailed letter dated 14.10.2019 was addressed to the petitioner giving him opportunity to present his documents before the Committee and Income tax officer which the petitioner failed to utilize, as he was fully aware that the figures submitted in CPP portal were inflated to suit the tender terms and conditions. 15. In reply to para 16, as already averred that Clause 16 A (b) was invoked for willful suppression of factual information for wrongfully gaining the tender, hence payment of damages does not arise. And question of mental agony to the petitioner does not arise as he willfully committed fraudulent practice for gainful needs. 8. The learned counsel appearing on behalf of the Petitioner mainly puts-forth the following submissions : i. That the order impugned dated 29.11.2019 is vague, discriminatory, unspecific as to the error committed by the Petitioners. ii. The Petitioners have been unjustifiably disqualified without explaining the actual reason for disqualification. iii. The Petitioner being non-telugu speaking North Indian the Petitioner had been victimized. iv. Withholding the EMD amount was highly illegal, arbitrary. v. The Petitioners legal notice dt. 05.07.2021, 18.05.2022, 14.10.2022 and 29.11.2022 had not been considered at all by the Respondents and have not been replied to by the Respondents till as on date. vi. On the basis of the above said submissions the Learned Counsel for the Petitioner contended that the Petitioners did not involve in any corrupt or fraudulent practices and therefore disqualifying the Petitioners on the ground of willful suppression of factual information for wrongfully gaining the tender invoking Clause 16A(b) was totally unwarranted and uncalled for and therefore, the writ petition needs to be allowed as prayed for. 9. 9. The learned counsel appearing on behalf of the 3rd Respondent placing reliance on the counter affidavit filed by the 3rd Respondent mainly puts-forth the following submissions : i. A detailed letter dated 14.10.2019 was issued to the Petitioner calling upon the Petitioner to bring originals for verification purpose since the figures of CPP portal and Income Tax Returns were not matching, but however, the Petitioner failed to comply. ii. As the Annual Turnover is a vital parameter for selection process, submission of inflated figures amounts to fraudulent practice and therefore Clause 16A(b) of the Tender conditions was rightly enforced by forfeiting the EMD amount. iii. The plea of the Petitioner that the order is vague, unspecific is untenable since a detailed letter dated 14.10.2019 was addressed to the Petitioner giving opportunity to the Petitioner to present his documents before the Committee and Income Tax Officer which the petitioner failed to utilize as petitioner was fully aware that the figures submitted in CPP portal were inflated to suit the tender terms and conditions. iv. The office of the Respondent No.3 directed all the qualified bidders to submit the IT related documents in original for the financial year 2017-18 at 11.00 a.m., on 01.10.2019 as certain discrepancies were noted in the annual turnover, profit and loss account furnished in Central Government E-Procurement Portal (CPP Portal) and figures submitted in Income Tax Returns and 3CB (Profit and Loss Account) since they were not matching, which amounts to fraudulent practice contravening Clause 15(2)(b) and the Petitioner was addressed a mail on 03.10.2019 calling upon the Petitioner to appear before the 3rd Respondent with the originals of all IT approved IT related documents for financial year 2017-18 at 11.00 a.m. on 04.10.2019 without fail and the Petitioner replied on 04.10.2019 vide mail stating that the Petitioner is not able to produce the required originals since the Petitioner's tax consultant and his family went on a pilgrimage to Mecca Madina and the Petitioner requested to consider the copy submitted while applying for the tender and release the ALC appointment order. v. Income Tax Officials verified the IT returns of the Petitioner and since they were not matching when compared with the documents submitted the EMD was forfeited. There is no illegality in the order impugned and Clause 16A(b), Clause Nos. v. Income Tax Officials verified the IT returns of the Petitioner and since they were not matching when compared with the documents submitted the EMD was forfeited. There is no illegality in the order impugned and Clause 16A(b), Clause Nos. 15(ii)(b), 15(iii), 15(iv) of the terms and conditions of the tender document had been rightly invoked. vi. On the basis of the above said submissions the Learned Counsel for the Respondent contended that the Writ Petition needs to be dismissed. DISCUSSION AND CONCLUSION 10. A bare perusal of the order impugned dated 29.11.2019 bearing No.CGHS/Hyd/Admn/LC/2019/140-142 issued by the 3rd respondent indicates that on the ground that the Petitioner adopted fraudulent practice and misrepresented facts in order to influence the tender process for gainful needs and indulged in wilful suppression of factual information, the 3rd Respondent concluded that the Petitioner failed to observe the highest standards of ethics and conduct during the tender process and afterwards during the execution of such contract. 11. This Court opines that the judgment relied upon by the Learned Counsel for the Petitioner in C.A.No.6772/2013 in Rashmi Metaliks Ltd., & Another vs. Kolkata Metropolitan Development Authority & Ors., is not applicable to the facts of the present case in view of the fact that though the Petitioner has been provided with an opportunity to present Petitioner's documents in original before the Committee and Income Tax Officer, the Petitioner failed to utilize the said opportunity and hence the 3rd Respondent was constrained to invoke Clause 16A(b), Clause No.15(ii)b, 15(iii), 15(iv) of the subject tender conditions (referred to and extracted above). 12. Taking into consideration the averments made in the counter affidavit filed by the 3rd Respondent in particular Para 3, 7, 8, 11, 12, 15 (referred to and extracted above), this Court opines that the prayer sought for by the Petitioner seeking setting aside of the impugned order vide No.CGHS/Hyd/Admn./LC/2019/140-142, dt. 12. Taking into consideration the averments made in the counter affidavit filed by the 3rd Respondent in particular Para 3, 7, 8, 11, 12, 15 (referred to and extracted above), this Court opines that the prayer sought for by the Petitioner seeking setting aside of the impugned order vide No.CGHS/Hyd/Admn./LC/2019/140-142, dt. 29.11.2019 of the 3rd Respondent herein cannot be granted in view of the decision taken by the 3rd Respondent to reject the proposal for award of contract of the tender document in favour of the Petitioner herein invoking Clause 16A(b), Clause 15(ii)b, 15(iii), 15(iv) of the terms and conditions of tender documents, in view of the admitted fact as borne on record that the Petitioner did not submit the originals for verification purpose as sought for by the 3rd Respondent vide E-mail dated 03.10.2019 and also the letter dated 14.10.2019 and instead the Petitioner requested the 3rd Respondent to consider the copy submitted by the Petitioner at the time of application of the subject tender and release ALC appointment order in favour of the Petitioner. 13. In so far as grant of the 2nd limb of the prayer as sought for by the Petitioner is concerned pertaining to refund of EMD paid by the Petitioner on 17.07.2019 amounting to Rs.8,41,000/-, and payment of interest on the said amount, this Court opines that it is the 3rd Respondent who has to consider the representations of the Petitioner dated 18.05.2022, 14.10.2022, 29.11.2022 seeking refund of Rs.8,41,000/- paid by the Petitioner towards EMD in response to the Open Tender Notice No.F.No.CGHS/Hyd/Admn./ALC/2019-22/1-13, issued by the Central Government Health Scheme, Hyderabad, dated 01.07.2019 and take a decision in the matter and pass appropriate orders duly communicating the decision to the Petitioner. The Writ Petition is accordingly disposed of directing the 3rd Respondent to consider the Petitioners representations dated 18.05.2022, 14.10.2022 and 29.11.2022 submitted by the Petitioner to the 3rd Respondent in accordance to subject tender conditions, and as per the 3rd respondents discretion within a period of 3 weeks from the date of receipt of copy of the order and duly communicate the decision to the Petitioner. However, there shall be no order as to costs. Miscellaneous petitions, if any, pending shall stand closed.