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2024 DIGILAW 280 (HP)

R. K. Company v. State of Himachal Pradesh

2024-04-24

JYOTSNA REWAL DUA, M.S.RAMACHANDRA RAO

body2024
JUDGMENT : M.S. Ramachandra Rao, C.J. The background facts The petitioner is a registered Company and is doing the business of providing watch & ward/security services and manpower supply, expert services, security services, housekeeping, sanitation services, horticulture services etc. 2) The State Project Director, Department of Agriculture (3rd respondent) had invited online proposal for hiring of Service Provider Agency for skill and un-skilled manpower under the Centre & State Sponsored Scheme, i.e. support to State Extension Program for Extension Reforms-ATAMA & Prakritik Kheti Khushhal Yojna, on outsource basis, vide Annexure P-1, Request for Proposal (RFP). 3) The RFP envisaged that the tender should be submitted on or before 22.02.2023 by 11.00 a.m. and that they should be opened on the same day in the presence of bidders and their authorized representatives. 4) The petitioner alongwith five other bidders participated in the tender process. 5) Only four Firms were found to be qualified in the technical bid. The petitioner was one such Company which was found to be qualified in the technical bid. 6) The fin ancial bid was opened on 15.03.2023 and four firms were found to have qualified therein as per Annexure P-2 including the petitioner. 7) One M/s Shimla Cleanways was L-1 and petitioner was L-2. The quotation of M/s Shimla Cleanways was lowest and that of the petitioner was the next lowest one. 8) According to the respondents, M/s Shimla Cleanways was requested to sign the agreement within a week’s time from the issuance of the letter dt.22.3.2023 awarding the work to it and also deposit the performance security of Rs.10,00,000/- but it did not do so within the stipulated time. So the tender was not awarded to M/s Shimla Cleanways. 9) On 8.5.2023, the respondent no.3 got issued Annexure P4 letter cancelling the e-tender dt.1.2.2023 “due to administrative reasons” and granting extension to the existing agency by name M/s Farm Technocrats forum as a stop gap arrangement. 10) Petitioner then filed the Writ Petition seeking quashing of the said order dt.8.5.2023, to direct the respondents to call petitioner for negotiations as it was L-2 in the tender process and award the tender work to it. Events after filing of the Writ petition 11) This Writ petition was filed on 27.06.2023 and notice was issued in the said Writ petition on 28.06.2023 to respondents no.1 to 3 and the matter was ordered to be listed on 06.07.2023. Events after filing of the Writ petition 11) This Writ petition was filed on 27.06.2023 and notice was issued in the said Writ petition on 28.06.2023 to respondents no.1 to 3 and the matter was ordered to be listed on 06.07.2023. 12) It was next listed on 28.07.2023, when it was informed to the Court that by the counsel for the respondents that the e-tender document itself was cancelled on the basis of a statement made by the Deputy Chief Minister of Himachal Pradesh in “Vidhan Sabha Session” on 28.03.2023 that “in Jal Shakti Vibhag no outsourcing will be done in future and a Policy will be framed and accordingly employees would be engaged.” 13) The learned Single Judge called for a detailed reply from the respondents. 14) On 17.08.2023, reply was filed by respondents no.1 to 3 reiterating the same stand. Consideration by the Court 15) It is contended by the respondents that the 3rd respondent is a separate entity and he has neither awarded work to the petitioner nor given any assurance to award the work to the said firm and so, the petitioner was estopped from filing the Writ petition. 16) We find this stand taken by respondents no.1 to 3 untenable because no Principle of Law is cited to show that there is any provision for estopping the petitioner from filing the Writ petition when h e is denied the award of work, which according to the petitioner is violative of Article 14 of the Constitution of India. 17) Next, it is contended by respondents no.1 to 3 that the 3rd respondent had mentioned in the e-tender at Page no.4 of the Notice Inviting Tender that he reserves the right to reject any of the Request for Proposal (RFP) without assigning any reason. So he’s entitled to pass the impugned order without giving any reason. 18) In Union of India & Ors. Vs. Dinesh Engineering Corpn. So he’s entitled to pass the impugned order without giving any reason. 18) In Union of India & Ors. Vs. Dinesh Engineering Corpn. & Anr., (2001) 8 SCC 491 , the Supreme Court held that a similar clause entitling the Railways to reject any tender offer without assigning any reasons has to be exercised within the realm of the object for which this clause is incorporated; that it does not give an arbitrary power to the Railways to reject the bid offered by a party merely because it has that power; and such a power has to be exercised on the existence of certain conditions, which in the opinion of the Railways, are not in the interest of the Railways to accept the offer. No such grounds have been taken when the subject tender was rejected. In the said decision, it was also held that where a decision of the authority is in regard to a Policy matter, the Court will not ordinari ly interfere, but this does not mean that the Courts have to abdicate their right to scrutinize whether (i) the policy in question is formulated keeping in mind all the relevant facts and (ii) the said policy also has to be held to be beyond the pale of discrimination or unreasonableness, bearing in mind the material on record. The Supreme Court rejected the plea of the Railways based on the said clause and held that it cannot reject any or every offer that may be made by the writ petitioner, while responding to a tender issued by it. It also declared that a public authority, even in contractual matters, should not have unfettered discretion; and the public authorities, though may be having some extra discretion in commercial contracts, they will be bound to follow the norms recognized by Courts while dealing with public property, so that this requirement is necessary to avoid unreasonable and arbitrary decisions by the public authority, since their actions are amenable to judicial review. It declared that merely because the authority would have certain elbow room available for use of discretion in accepting offer in contracts, the same would have to be done within the four corners of the requirements of law, especially Article 14 of the Constitution of India. 19) This principle was also reiterated in Cellular Operators Association of India & Ors. It declared that merely because the authority would have certain elbow room available for use of discretion in accepting offer in contracts, the same would have to be done within the four corners of the requirements of law, especially Article 14 of the Constitution of India. 19) This principle was also reiterated in Cellular Operators Association of India & Ors. vs. Union of India & Ors., (2003) 3 SCC 186 20) In order to examine the genuineness of the stand taken by the respondents on 28.07.2023, this Court on 27.03.2024, aske the Advocate General appearing for the respondents to inform the Court whether any Policy for engaging people for doing work otherwise than by outsourcing has since been framed by the State Government or not; and if it is framed, to place the same before the Court. This was done since considerable time had elapsed between 28.3.2023 when the statement by the Deputy Chief Minister of Himachal Pradesh was made, and the hearing before this court on 27.3.2024. The matter was posted then on 01.04.2024, on which date, time was again sought on behalf of he respondents to furnish the requisite information. 21) The matter was then adjourned to 03.04.2024, on which date, the learned Advocate General appearing for the respondents/State, across the Bar, stated that no Policy has been framed pursuant to the statement of the Deputy Chief Minister made on 28.03.2023 in the Vidhan Sabha. 22) A question was put by the Court to the learned Advocate General as to how the work is being got done in the period from 31.3. 2023 till date, it was stated by him that the existing Service Provider M/s Farm Technocrats Forum, Palampur is being continued since Annexure R-7 proceedings dt. 12.04.2023 were issued to it granting extension upto 31.03.2024. 23) Thus though the arrangement/ said extension expired on 31.03.2024, but the said entity is still being continued without any formal orders. 24) We find this conduct on the part of the respondents no.1 to 3 arbitrary and unreasonable and it appears that they have taken advantage of the statement of Deputy Chief Minister of Himachal Pradesh made on 28.03.2023 in the Vidhan Sabha to perpetually continue the contract awarded to M/s Farm Technocrats Forum, Palampur . 24) We find this conduct on the part of the respondents no.1 to 3 arbitrary and unreasonable and it appears that they have taken advantage of the statement of Deputy Chief Minister of Himachal Pradesh made on 28.03.2023 in the Vidhan Sabha to perpetually continue the contract awarded to M/s Farm Technocrats Forum, Palampur . 25) We may also point out that instant e-tender was issued in the Agriculture department of the State of Himachal Pradesh and not in the Jal Shakti Vibhag of the State Government in respect to which the statement of the Deputy Chief Minister referred to. 26) Further there is no explanation forthcoming from the respondents other than what is indicated above as to why the petitioner, who had qualified in both the technical bid and the financial bid and who was L-2, was not offered the contract within a reasonable time, if such Policy decision, as was proposed to be taken by the Deputy Chief Minister of Himachal Pradesh, had not been taken within a reasona ble time. 27) Way back in 1979, in the decision in Ramana Dayaram Shetty vs. The International Airport Authority of India & Ors., (1979) 3 SCC 489 , the Supreme Court held that the Government in a Welfare State is the regulator and dispenser of special services and provider of a large number of benefits, including jobs contracts, licences, quotas, mineral rights etc. The power of giving licences means power to withhold them and this gives control to the Government or to the agents of Government on the lives of many people. It held that the Government cannot be permitted to say that it will give jobs or enter into contracts or issue quotas or licences arbitrarily, since it does not stand in the same position as a private individual. It held that where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largesse, it cannot act arbitrarily at its sweet will and like a private individual deal with any person as it pleases. Its action must be in conformity with standard or norms which are not arbitrary, irrational or irrelevant. It declared that the Government, acting through instrumentality or agency of Corporation, should equally be subject to the same limitation, as the Government acting through its Officers. Its action must be in conformity with standard or norms which are not arbitrary, irrational or irrelevant. It declared that the Government, acting through instrumentality or agency of Corporation, should equally be subject to the same limitation, as the Government acting through its Officers. 28) In Rishi Kiran Logistics Pvt. Ltd. vs. Board of Trustees of Kandla Port Trust & Ors., (2015) 13 SCC 233 , the Supreme Court reiterated that if the authority/ public body was to take a view that it need not go further ahead with the tender process, and if such a decision is taken without any reason to support it or mere ipsi dixit, it would be arbitrary. 29) The learned Advocate General however placed reliance on the judgment in Tata Motors Limited vs. Brihan Mumbai Electric Supply & Transport Undertaking (BEST) and ors., 2023 SCC Online SC 671 and in particular, placed reliance on paras-47 & 48 of the said judgment. In para-47 of the said judgment, the Supreme Court framed the question: “Whether the High Court, after upholding the disqualification of TATA Motors from the Tender, w as justified in undertaking further exercise to ascertain whether another tenderer by name EVEY also stood disqualified and that the respondent in its discretion, may undertake a fresh tender process?” The question was answered in negative in para-51 and it was held that High Court should have been a bit slow and circumspect in reversing the action of BEST rightly permitting EVEY (another bidder) to submit a revised document and BEST did not commit any error or is guilty of favoritism when it allowed EVEY to submit a revised document as the earlier one was incorrect on account of a clerical error. While cautioning that Courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters, the Supreme Court had reiterated in para-48 that a Constitutional Court is duty-bound to interfere in contractual matters if there is a clear-cut case of arbitrariness, irrationality, mala fides and bias. Again in para 52 of the said judgment, the Supreme Court reiterated that ordinarily a 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 unless something very gross or palpable is pointed out. Again in para 52 of the said judgment, the Supreme Court reiterated that ordinarily a 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 unless something very gross or palpable is pointed out. 30) Thus, there is no deviation of the principle of law laid down by the Supreme Court in Dinesh Engineering Corporation’s case (supra) or in the Cellular Operators Association of India’s case (supra) or in Rishi Kiran Logistics Pvt. Limited’s case (supra), that if there is a clear-cut case of arbitrariness or mala fides or bias or irrationality, Court is duty bound to interfere even in contractual matters. 31) Since, admittedly, petitioner is L-2 and had qualified in the technical as well as the financial bid, the respondents cannot reject the claim of the p etitioner for award of the tender. 32) Accordingly, the Writ petition is allowed with costs of Rs.25,000/-to be paid to petitioner by respondents no.3 in 4 weeks; and Annexure P-4 dt.8.5.2023 cancelling the e-tender dt. 01.02.2023 is set aside. Respondents no.1 to 3 are directed to call the petitioner for negotiations and award the tender work to the petitioner for a period of one year as stipulated in the RFP document within 4 weeks subject to the petitioner complying with all other formalities prescribed in it. 33) Pending miscellaneous application(s), if any, shall also stand disposed of.