Andhra Pradesh High Court - Amravati
Mukand Engineers Limited vs Rashtriyalspat Nigam Limited on 17 October, 2019
Author: T. Rajani
Bench: T. Rajani
HON'BLE SRI JUSTICE D.V.S.S. SOMAYAJULU
WRIT PETITION No.5074 of 2019
ORDER:
This Writ Petition is filed by the petitioner seeking relief of an order in the nature of a Writ of mandamus declaring the action of the respondents in proposing to accept the offer of the 2nd respondent on the basis of the price quoted by the 2nd respondent as illegal, arbitrary etc., and for further relief of cancellation of the unjustifiable reduction in price offered by the 2nd respondent is also sought.
All the learned counsels consented to this Court to hear the Writ Petition and wanted the Writ Petition itself to be disposed of. Accordingly, the Writ Petition is taken up for final hearing.
This Court has heard Sri K.Chidambaram, learned counsel appearing for the petitioner, Sri K. Sarvabhouma Rao appearing for the 1st respondent and Sri Yogesh Kumar Heroor appearing for the 2nd respondent.
The petitioner before this Court is a consortium which has participated in a tender floated by the 1st respondent. The 1st respondent is a Government of India undertaking, which runs the Visakhapatnam Steel Plant. It has floated a tender on 04.02.2017 for setting up of a Rebar Mill. During the course of tender evaluation four parties, including the petitioner and the 2nd respondent, were found to be eligible 2 tenderers. A few important dates and facts which have a bearing in this case are highlighted by the learned counsel for the petitioner -
a) the tender was floated on 04.02.2017.
b) The Goods and Service Tax (in short "GST") was introduced from 01.07.2017 by the Government of India.
c) The 1st respondent, therefore asked the qualified parties to give a reduction in the price on account of the introduction of GST by a letter No.0469, dated 31.08.2018.
d) Petitioner company, the 2nd respondent and another company (SMS India Pvt. Ltd.,), who were eligible tenderers, submitted their sealed covers containing the reduction in price in Indian Rupees on 11.09.2018.
e) All the bids that were submitted in sealed covers including the reduction in price were opened in the presence of the parties on 12.09.2018. Once the bids were opened, it was realized that the 2nd respondent on account of the reduction in price became the lowest tenderer.
f) At this stage in view of the reduction in price offered as per the tender conditions the matter was 3 referred to an Independent External Monitor (in short "IEM"). The petitioner, the 2nd respondent and the 3rd party (SMS India) attended the meeting with IEM on 12.10.2018. IEM asked the 1st respondent company to refer the matter to a tax consultant.
g) The matter was then referred to a tax consultant and all the eligible tenderers were called to the meeting with the tax consultant viz., M/s.
Lakshmikumaran and Sridharan Attorneys, on 13.12.2018. The tax consultant also gave an opinion on the subject, which is also reproduced in paragraph 10 of the Writ affidavit.
"The reasons quoted by IIPL for computation of reduction in the price offered to RINL are on account of GST and IIPL has not included any additional discount which is not on account of GST in the reduction in price. However, the quantum of reduction offered by IIPL for certain factors cannot be commented / confirmed as the same are made on estimation basis considering various factors such, as procurement pattern, nature of supply etc., for further period."
Learned counsel for the petitioner in all fairness submitted all the above details in a chronological order. His contention is that the price reduction of Rs.1,94,85,00,000/- is exorbitantly high and that the same cannot be due to introduction of GST. He also argues that this reduction in price is contrary to Clauses 28 and 29 of the Notice Inviting Tender. Therefore, learned counsel for the petitioner argues 4 that the 1st respondent cannot be permitted to accept this exorbitant reduction in price under the guise of GST and that the bid of the 2nd respondent should be cancelled and the work should be awarded to the petitioner alone. Learned counsel for the petitioner points out that Clauses 28 and 29 of the tender conditions are violated in their entirety. He submits that on the ground of reduction in price with the introduction of GST an exorbitant reduction was given by the 2nd respondent to grab the contract. He submits that there is unfairness in the action of the 1st respondent in proposing to accept the bid. Therefore, he prays for an order as mentioned earlier.
In response to this, Sri K. Sarvabhouma Rao, learned counsel for the 1st respondent points out that the sequence of events would clearly show that there is transparency and fairness in the decision making process. He points out that the bids were opened in the presence of all the parties. The request to give a price reduction after the introduction of GST was conveyed to all the parties. The petitioner and others also willingly and voluntarily submitted the price reduction. Thereafter, the matter was referred to IEM. The IEM did not fell that anything was wrong with the process but requested that this issue should be referred to a tax consultant. He points out that one of the most reputed tax consultant firms was asked to look into the matter. The petitioner also unconditionally appeared before the said firm of tax 5 consultants. The learned counsel also points out that the tax consultant clearly came to the opinion that the price reduction given by the 2nd respondent is valid and that they have not included any additional discount, which is not on account of the GST. Hence he submits that the decision making process is fair and correct. Learned counsel for the respondent argues that a project of national importance is being held up because of the Court case and prays that the stay should be vacated. He relies upon the judgment of the learned single Judge of this Court reported in ICOMM Tele Ltd., Hyderabad v Southern Power Distribution Company of A.P., Ltd., Tirupati, Chittoor District and others1, wherein the learned single Judge has considered all the leading cases on the subject and reiterated that the Court should only look into the decision making process to see if there were any mala fidies etc. He argues that the procedure adopted by the 1st respondent in this case is totally transparent.
Learned counsel appearing for the 2nd respondent company also argues on similar lines and points out that the GST can have both direct and also an indirect impact. Therefore, it cannot be said that the price offered is not correct. He submitted that the external tax consultant clearly came to a conclusion that the reduction in price offered by 1 2013 (3) ALD 667 6 the 2nd respondent is correct. He therefore submits that there are no merits in the writ petition.
This Court after hearing all the learned counsel notices that there is no dispute about the sequence of events. The request for reduction in price on account of the introduction of GST, was sought before the price bids were opened. After the bids were opened the 1st respondent also sought the advice of the IEM and also a reputed tax consultant firm on the reduced price bid. In both these cases the petitioner was given a notice and the petitioner appeared before the IEM and the tax consultant also along with other qualified bidders. Therefore, it is clear that no decision was taken behind the back of the petitioner.
Clause 28 and 29 are relied by the learned counsel for the petitioner who argued that these two clauses are totally ignored. The clauses are reproduced hereunder -
"28. The Bidder shall be ready to furnish clarifications/informations and attend to discussions, as called for by the Employer, at short notices. While responding for the same, no change in the substances in the offer or price shall be permitted, unless otherwise asked by the Employer. In case of any unsolicited Price offer submitted by the Bidder at this stage, the same shall not be considered for Tender evaluation. However, in case such Bidder becomes L-1 by virtue of his original Price Bid, then such unsolicited Price offer will be opened and if it is advantageous to the Employer, such unsolicited Price offer will be considered or otherwise the same shall be ignored.7
29. RINL shall not entertain any revised price/revision in price basing on the technical discussions unless RINL itself changes specifications/scope when compared to Tender Specifications/Scope, which calls for revision in the Estimate."
A plain language reading clearly shows that the bidders have to give the clarification as sought for by the employee. Only if an "unsolicited price" is given by the bidder at that stage, the same shall not be considered for tender evaluation. If the bidder becomes L-1, then the unsolicited price bid can be opened and considered. This is sum and substance of Clause-28. In the case on hand clarification was sought by RINL because of the introduction of GST. The petitioner and the 2nd respondent gave the same. Therefore, it cannot be said that it was "unsolicited". On the specific request of the 1st respondent by a letter dated 31.08.2018 the reduction in price was given. This is reproduced in the affidavit and is part of the material papers. Therefore, it cannot be said that this is an unsolicited price bid / offer.
Clause 29 talks of changes in the price based on technical discussions and change of specification/scope. Same is also not really relevant to the case on hand. This clause would come into play if the tender specifications are changed leading to further changes in prices. Therefore, this Court is of the opinion that neither Clause-28 nor Clause-29 are actually flouted in this case. The conduct of the petitioner 8 in participating and submitting the required information disentitles him from questioning the same at this stage.
The last question that survives for consideration is whether the decision making process is affected by mala fides or the like. As can be seen from the sequence of events after the tender was floated the GST regime was introduced. The 1st respondent company therefore, sought a clarification from the petitioner and all other tenderers if they were willing to reduce price on account of the introduction of GST. One of the bidders M/s. Mecon Ltd., did not confirm or reply to the letter dated 31.08.2018, by which a price reduction was sought. The petitioner and the 2nd respondent accepted the letter dated 31.08.2018 and submitted their reduction in price. The matter was referred to IEM and also a reputed tax consultant. The conclusion of the tax consultant is reproduced by the petitioner in their petition affidavit (paragraph-3). It can be seen that the tax consultant has also come to a conclusion that the 2nd respondent has not included any additional discount, which is not on account of GST. Even with regard to the quantum of reduction, the tax consultant did not make any adverse comment.
Therefore, after a reading of all the material papers, petition averments and after considering the submissions, this Court does not find any reason to hold that the reduction given by the 2nd respondent was on account of certain 9 extraneous fact/s. This Court by its very nature and of its power cannot go into the depth of the technical aspects of the price quoted by the 2nd respondent. This is a matter which has to be evaluated by the 1st respondent and their consultants, who have the necessary expertise. It is the decision making process alone that can be seen by this Court in exercise of its jurisdiction under Article 226 of the Constitution of India.
The case law cited by the learned counsel for the petitioner is also applicable to the facts. In paragraph 25 learned single Judge held that evaluating tenders and awarding contracts are essentially commercial functions and the Court should not quickly interfere in such matters. This is the settled law on the subject and in view of the fact that the learned single Judge has considered many of the leading judgments on the subject the same is not being dealt with once again. The fact remains that this Court does not find any aberrations let alone mala fides etc., in the procedure adopted by the 1st respondent. There are no clear averments let alone proof of mala fides. As per the settled law on the subject (E.P. Royappa v State of Tamilnadu and Others2) the quality of evidence needed to prove mala fides is high. The 1st respondent is yet to accept the tender. Quashing the entire proceedings at this stage is not called for. As noticed by the tax consultant, the 2nd respondent has not given any 2 (1974) 2 SCR 348 10 additional discount, which is not on account of the GST. Nothing contrary has been pointed out in the course of the submissions nor was any case made out in the Writ petition. The 2nd respondent is the best judge of the price reduction. If they have felt that they can offer this reduction, it is purely their decision based on their own inputs. This Court cannot interdict or stop the 1st respondent from not accepting the tender. In a free market economy parties are free to quote the rate that they choose. An equal opportunity was given to the petitioner and the 2nd respondent along with the another tenderer to reduce their price. The 2nd respondent in their wisdom thought it fit to offer this discount. This discount / reduction was not on account of any extraneous factors as pointed out by the tax consultant. Therefore, in view of the case law on the subject, this Court does not find anything wrong in the procedure adopted by the 1st respondent in this case. At the stage of acceptance of tender, interference is not called for. Stalling the tender process will also have adverse financial implications on the project. No case of 'public interest' being effected is also made out. The procedure adopted by the 1st respondent does not suffer from any infirmity. Therefore, this Court does not find any reason to interfere, more so at this stage.
Accordingly, the Writ Petition is dismissed. In the circumstances, there shall be no order as to costs. 11
Miscellaneous Petitions, if any, pending in this Writ Petition, shall also stand dismissed.
__________________________ D.V.S.S. SOMAYAJULU, J Date:17.10.2019.
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