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2025 DIGILAW 1275 (TS)

Digital Cloud Consulting Services Private Limited v. Chief Commissioner of Hyderabad GST & Customs Zone

2025-10-24

P.SAM KOSHY, SUDDALA CHALAPATHI RAO

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ORDER : Suddala Chalapathi Rao, J. Heard Sri Pavan Kumar(party-in-person)/2 nd petitioner, who advanced arguments on behalf of both petitioners and Sri Dominic Fernandes, learned Senior Standing Counsel for CBIC for respondents and perused the material on record. 2. The present Writ Petition is filed challenging the order passed by the 1st respondent vide letter dt.05.07.2024 in File No.GCCO/Cust/MISC/171/2024-TECH-O/o CC-CGST-Zone- Hyderabad, with DIN No.202407560000002252AB, as being arbitrary, unreasonable, illegal, untenable and consequently to set aside the same by directing the respondents to approve the sale of Lot Nos.11 & 12 of e-Auction No.40104 in favour of the petitioners-Company in compliance with the statutory provisions, as set forth in the Customs Disposal Manual, 2019 (for short ‘the Disposal Manual’). 3. The brief facts of the case are that, the petitioners-Company namely M/s. Digital Cloud Consulting Services Private Limited is a bona fide and duly registered member of the MSTC e-Auction Portal. The respondents had issued a e-tender notification calling for tenders in respect of various lots. In the e-auction conducted on 03.01.2024 in respect of lot Nos.11 & 12, the petitioners- Company participated and emerged as sole and successful bidder in the 4 th e-auction No.40104. That in spite of the petitioners- Company being the sole and successful bidder, the articles under the said lot numbers were refused to be allotted to the petitioners- Company by 1 st respondent vide order dt.05.07.2024, as the price offered was not found competitive enough to meet the Reserve Price and proposed to conduct the e-auction afresh. 4. It was contended by the Party-in-Person, that the 1 st Respondent is mandated to allot the said Lots to the Petitioners to the successful bidder under the provisions of Board Circular No.49/2018, dt.03.12.2018, more particularly, under Para 7.3.6 of the Disposal Manual, which reads that -“ordinarily the goods should not be put up for auction more than four times and only when there is a doubt, and/or there is a written report of the Supervising Officer that bidders had formed a cartel and the price offered was not genuine, the consignment should be put up for auction for any more number of times”, and that without there being any report of the supervising authority, as to the formation of cartel by the bidders. However, the 1 st respondent arbitrarily decided to put up the goods for further auction as the price offered was not genuine, so as to meet the Reserve Price and also stating that the petitioners have not submitted requisite licenses/certificates within the stipulated period. 5. It is contended by the petitioners that under 8.4.2 of the Disposal Manual while only registered persons under MSTC are entitled to participate, the role of the Systems administrator is only to set a reserve price, and as per 8.10.8 all sales will be subject to Reserve Price and as per 8.13 the delivery of the lots should be done within 15 days to the successful bidder. The petitioners have participated in the 4 th e-auction conducted by the 1st respondent through MSTC Online e-Auction Portal, dt.03.01.2024, and emerged as successful bidder being the sole bidder. Further it is contended that the said e-auction is governed and regulated by Rule of Law as laid down in the Disposal Manual at Page 48 Point (vii), which specifically states that “However, in the fourth auction, such shipments/lots are to be necessarily sold for the highest bid, regardless of the Reserve Price fixed.”. 6. It is contended by the petitioners that despite the existence of clear and binding statutory provisions and established rule of law, governing the conduct of 4th Auction, the respondents have arbitrarily refused to approve the sale of the aforesaid Lots to the petitioners-Company, who were the sole and successful bidder, relying on the irrelevant clauses from the Disposal Manual under para 8.9 and Para 8 of the Special Terms and Conditions of the 4 th e-Auction Notice, which have no lawful or statutory basis; and that the said conduct of the respondents is contrary to the auction provisions and constitutes a clear deviation from the rule of law. 7. It is further submitted by the petitioners that the first ground on which the 1 st respondent has refused to allot the Lots is that their bid was auto-rejected, as the petitioners being the successful bidder in the previous auction failed to pay the EMD amount. The second ground is that relevant documents were not submitted, which according to the petitioners have to be produced only after receipt of e-mail confirmation as to allotment of Lots to the petitioners. The second ground is that relevant documents were not submitted, which according to the petitioners have to be produced only after receipt of e-mail confirmation as to allotment of Lots to the petitioners. The third ground is that of the price offered being not genuine so as to meet the reserve price. The petitioners contend that the said refusal is contrary to Para 7.3.6 of the Disposal Manual and that the respondents have acted in violation to the Disposal Manual and their action is biased and arbitrary, and thus, prayed to allow the writ petition. 8. Per contra, Sri Dominic Fernandez, learned Standing Counsel appearing for respondents, would submit that since the e-auctions are governed by the Rules made under the Disposal Manual, 2019, and the Special Terms and Conditions of the 4 th e- Auction Notice, which were enacted to follow a uniform procedure, the contention of the petitioner that the said Rules have no binding force, is untenable and baseless 9. Learned Standing Counsel further submits vide communication dt.02.04.2024 in C.No.8/06/19/Sec.48/2022- ACC, the 2 nd respondent had informed the petitioners pursuant to their communication, dt.20.03.2024, that the e-auction held vide Auction No.40104, dt.03.01.2024 for Lot Nos.11 and 12, mandates submission of certificates from various government agencies to ensure that goods which are meeting specified standards are only allowed to be imported/cleared for home consumption, upon submission of valid certificate clearances. As per para 8 of the Special Terms and Conditions of the 4 th e-auction Notice, the Customs process will only be initiated after submission of such licenses or certificates for lots, and as the petitioners-firm failed to submit the said certificates within the stipulated time period, their bid was rejected, and the petitioners, by various e- mails addressed to M/s GMR Cargo, requested for 3-6 months time to submit the necessary certificates, and since the same is against the terms and conditions mentioned in the auction notice, the time as sought was not granted, which also lead to the refusal of the Lots. 10. 10. Learned Standing Counsel further submits that petitioners have quoted Rs.1,385/- for Lot No.11 and Rs.2,386/- for Lot No.12, and which is meticulously small to the Reserve Price and as the 1 st Respondent felt that as the price quoted by them was not genuine the Lots were refused to be allotted to the petitioners under the Clause 8.9 of Terms and Conditions for Auction specified under the Disposal Manual. 11. We have given earnest consideration to the submissions made by both the party-in-person/2 nd petitioner appearing for both the petitioners, and the learned Senior Standing Counsel for CBIC appearing for respondents. 12. Based on the above factual matrix and having regard to the submissions made by both the parties, the issues that arise for consideration in the present Writ Petition are : a) whether the respondents herein have got power to refuse the allotment of Lot Nos.11 & 12 to the petitioners-Company, being the sole bidder in the 4th e-Auction conducted on 03.01.2024, as per Para 8 of the Special Terms and Conditions of 4th e-Auction Notice, and under Paras 7.3.6 and 8.9 of the Disposal Manual; c) whether the Lots can be refused on failing to submit certificates by the petitioners . 13. Before dealing with the issues, the relevant paras/clauses of Disposal Manual and Special Terms and Conditions of 4th e-Auction Notice are reproduced below. “ Disposal Manual – 7.3.6. Ordinarily, the goods should not be put up for auction more than four times. Only when there is a doubt, and/ or there is a written report of the Supervising officer that bidders had formed a cartel and the price 8.9. Terms and Conditions for Auction - M/s MSTC Ltd. has in place certain conditions for conducting of the e-auction, which are as follows: i. The Principal Commissioner/ Commissioner concerned may withdraw any lot from auction or tender at any time or cancel the same at any stage, prior to the delivery of the goods; Special Terms and Conditions of the 4 th e- Auction Notice 8. In case any license requirements are to be met for competing the Customs clearance for delivery, (including Customs DGFT, BIS or any other Government License wherever required), Bidder has to arrange for such licenses as required by Customs”. 14. In case any license requirements are to be met for competing the Customs clearance for delivery, (including Customs DGFT, BIS or any other Government License wherever required), Bidder has to arrange for such licenses as required by Customs”. 14. To answer the 1 st issue, so far as the contention of the petitioners that under 7.3.6 of the Disposal Manual 2019, the respondents are bound to allot the lots to the highest bidder in the 4 th Auction, irrespective of the Reserve Price, and in the absence of the report of the Supervising Officer, lots cannot be refused to be allotted to the petitioners, who are the sole and successful bidders, on a perusal of the conditions of the Disposal Manual, the first and foremost condition of Para 8.9 of the Disposal Manual under ‘Terms and Conditions for Auction’, as extracted above and in terms thereof, the respondents retain full discretion to withdraw any lot from auction or tender at any time or cancel the same at any stage, prior to the delivery of goods. 15. Further, in terms of Para 8 of the Special Terms and Conditions governing the 4 th e-auction Notice, that “in case any license requirements are to be met for completing the Customs clearance for delivery, (including Customs DGFT, BIS or any other Government License wherever required), Bidder has to arrange for such licenses as required by Customs authorities”, refusal of Lots No. 11 and 12 to the petitioners-Company for non-submission of requisite licenses/certificates, is within the ambit of the 1 st respondent under Para 8 of Special Terms and Conditions governing the 4 th e-auction and under Para 8.9 of Disposal Manual 2019. Thus, the refusal of the lots to the petitioners, for non-submission of the required licenses/certificates, is justified and valid. Hence, this issue is answered against the petitioners. 16. It is pertinent to observe that the issue of ‘tender notification and allotment’ is purely contractual obligation, and the respondents retain full discretion to reject even the highest bid, if the bid amount is not reflective of the fair market value or fails to meet the prescribed reserve price or if the bidder has not complied with any of the Terms and Conditions of the Special Terms and Conditions of the e-auction. 17. In Meerut Development Authority v. Assn. of Management Studies [Meerut Development Authority v. Assn. 17. In Meerut Development Authority v. Assn. of Management Studies [Meerut Development Authority v. Assn. of Management Studies], (2009) 6 SCC 171 : (2009) 2 SCC (Civ) 803 the Hon’ble Supreme Court held as under: “27. The bidders participating in the tender process have no other right except the right to equality and fair treatment in the matter of evaluation of competitive bids offered by interested persons in response to notice inviting tenders in a transparent manner and free from hidden agenda. One cannot challenge the terms and conditions of the tender except on the above stated ground, the reason being the terms of the invitation to tender are in the realm of the contract. No bidder is entitled as a matter of right to insist the authority inviting tenders to enter into further negotiations unless the terms and conditions of notice so provided for such negotiations. 29. The Authority has the right not to accept the highest bid and even to prefer a tender other than the highest bidder, if there exist good and sufficient reasons, such as, the highest bid not representing the market price but there cannot be any doubt that the Authority's action in accepting or refusing the bid must be free from arbitrariness or favouritism.” 18. In Indore Vikas Praadhikaran (IDA) vs. Humud Jain Samaj Trust, 2024 INSC 904 the Hon’ble Supreme Court while referring to aforesaid decision in Meerut Development Authority ’s case (1 supra) as well as other decisions in State of Jharkhand and Others v. Cwe-Soma Consortium , (2016) 14 SCC 172 , Haryana Urban Development Authority vs. Orchid Infrastructure Developers Pvt. Ltd. , (2017) 4 Supreme Court Cases 243, Tata Cellular v. Union of India , (1994) 6 SCC 651 and U.P.Avas Evam Vikas Parishad v. Om Prakash Sharma , (2013) 5 SCC 182 , held that: “The bidder has no right in the matter of bid except of fair treatment and cannot insist for further negotiation.” 19. In the light of the legal position settled by the Supreme Court that bidders in a tender have no right except to equal treatment & fairness and they cannot demand negotiation or insist for grant of contract just because they bid highest, we are of the considered opinion that the writ petitioners have not made out any ground for interference by this Court with the impugned order passed by the 1st respondent vide letter dt.05.07.2024 in File No.GCCO/Cust/MISC/171/2024-TECH-O/o CC-CGST-Zone- Hyderabad, with DIN No.202407560000002252AB. Thus, the Writ Petition is devoid of merits and is liable to be dismissed. 20. Accordingly, the Writ Petition is dismissed. No order as to costs. Consequently, miscellaneous petitions, if any, pending shall stand closed.