Patna High Court - Orders
The State Of Bihar & Ors vs M/S S.C.Projects Ltd. & Anr on 6 May, 2010
Author: Ramesh Kumar Datta
Bench: Ramesh Kumar Datta
IN THE HIGH COURT OF JUDICATURE AT PATNA
LPA No.987 of 2009
1. THE STATE OF BIHAR THROUGH THE SECRETARY,
MINES AND GEOLOGICAL DEPARTMENT, GOVT. OF
BIHAR, PATNA,
2. THE SECRETARY, MINES AND GEOLOGY
DEPARTMENT, GOVT. OF BIHAR, PATNA,
3. THE BIHAR STATE MINERALS DEVELOPMENT
CORPORATION LTD., VIKASH BHAWAN, BAILEY ROAD,
PATNA,
4. THE CHAIRMAN, BIHAR STATE MINERALS
DEVELOPMENT CORPORATION LTD., VIKASH
BHAWAN, BAILEY ROAD, PATNA, AND
5. THE MANAGING DIRECTOR, BIHAR STATE MINERALS
DEVELOPMENT CORPORATION LTD., VIKASH
BHAWAN, BAILEY ROAD, PATNA ..... RESPONDENTS -
...................................................... APPELLANTS
Versus
1. M/S BHAGWATI COAL DISTRIBUTORS, A PROPRIETARY
CONCERN HAVING ITS PLACE OF BUSINESS AT
SHAHPUR, TIKARI ROAD, AURANGABAD, THROUGH ITS
PROPRIETOR, SHYAM KISHORE PRASAD, SON OF LATE
DEO NANDAN PRASAD, RESIDENT OF URMILA VILLA,
M.O. SURYA MANDIR ROAD, P.O., P.S. TOWN AND
DISTRICT - AURANGABAD ......... PETITIONER -
..................RESPONDENT (RESPONDENT 1ST SET) AND
2. M/S MAHALAXMI CONTINENTAL PVT. LTD., A
COMPANY INCORPORATED UNDER THE PROVISIONS OF
THE COMPANIES ACT, 1956 HAVING ITS REGIONAL
OFFICE SITUATED AT GALI NO. 8, BELTALA, GAUHATI,
ASSAM ... RESPONDENT-RESPONDENT (RESPONDENT
2ND SET) .............................................. RESPONDENTS.
with
LPA No.989 of 2009
1. THE STATE OF BIHAR THROUGH THE SECRETARY,
MINES AND GEOLOGICAL DEPARTMENT, GOVT. OF
BIHAR, PATNA,
2
2. THE SECRETARY, MINES AND GEOLOGICAL
DEPARTMENT, GOVT. OF BIHAR, PATNA,
3. THE BIHAR STATE MINERALS DEVELOPMENT
CORPORATION LTD., VIKASH BHAWAN, NEW
SECRETARIAT, PATNA THROUGH ITS MANAGING
DIRECTOR,
4. THE CHAIRMAN, BIHAR STATE MINERALS
DEVELOPMENT CORPORATION LTD., VIKASH BHAWAN,
BAILEY ROAD, NEW SECRETARIAT, PATNA, AND
5. THE MANAGING DIRECTOR, BIHAR STATE MINERAL
DEVELOPMENT CORPORATION LTD., VIKASH BHAWAN,
NEW SECRETARIAT, PATNA ............ RESPONDENTS-
.......................................................... APPELLANTS
Versus
1. M/S S.G. PROJECTS LTD., A COMPANY INCORPORATED
UNDER THE INDIAN COMPANIES ACT, 1956 HAVING ITS
REGISTERED OFFICE AT 613 JASMINE TOWER, 31-
SHAKESPEARE SARANI, KOLKATA-17, THROUGH ONE
OF ITS DIRECTOR SHRI SURESH SINGH, SON OF SRI
TEJAN SINGH, RESIDENT OF RAMAYAN NIWAS, BARWA
ROAD, DHAIYA, DHANBAD, DISTRICT - DHANBAD
(JHARKHAND) ..... PETITONER - RESPONDENT
(RESPONDENT 1ST SET) AND
2. M/S MAHALAXMI CONTINENTAL PVT. LTD., A
COMPANY INCORPORATED UNDER THE COMPANIES
ACT, 1956 HAVING ITS REGISTERED OFFICE AT GALI
NO. 8, BELTALA, GAUHATI, ASSAM ... RESPONDENT-
RESPONDENT (RESPONDENT 2ND SET)
........................................................ RESPONDENTS.
with
LPA No.1034 of 2009
M/S MAHALAXMI CONTINENTAL PVT. LTD., A
COMPANY INCORPORATED UNDER THE PROVISIONS
OF THE COMPANIES ACT, 1956 HAVING ITS
REGISTERED OFFICE GALI NO. 8, BELTALA, GAUHATI,
ASSAM THROUGH ONE OF ITS DIRECTORS, NAVIN
KUMAR GUPTA, SON OF SHRI LAXMI CHANDRA
GUPTA, RESIDENT OF GALI NO. 8B, N.H.-37, BELTALLA,
GAWAHATI ..................... RESPONDENT- APPELLANT
Versus
1. THE STATE OF BIHAR THROUGH THE SECRETARY,
MINES & GEOLOGICAL DEPARTMENT, GOVT. OF
BIHAR, PATNA,
3
2. THE SECRETARY, MINES AND GEOLOGICAL
DEPARTMENT, GOVT. OF BIHAR, PATNA,
3. THE BIHAR STATE MINERALS DEVELOPMENT
CORPORATION LTD., VIKASH BHAWAN, NEW
SECRETARIAT, PATNA, THROUGH ITS MANAGING
DIRECTOR,
4. THE CHAIRMAN, BIHAR STATE MINERALS
DEVELOPMENT CORPORATION LTD., VIKASH
BHAWAN, NEW SECRETARIAT, PATNA,
5. THE MANAGING DIRECTOR, BIHAR STATE MINERALS
DEVELOPMENT CORPORATION LTD., VIKASH
BHAWAN, NEW SECRETARIAT, PATNA .....
..........................RESPONDENTS - RESPONDENTS AND
6. M/S S.G. PROJECTS LTD., A COMPANY INCORPORATED
UNDER THE PROVISIONS OF THE COMPANIES ACT,
1956 HAVING ITS REGISTERED OFFICE 613, JASMINE
TOWER, 31, SHAKESPEARE SARANI, KOLKATA-17,
THROUGH ONE OF ITS DIRECTORS, SHRI SURESH
SINGH, S/O SRI TEJAN SINGH, RESIDENT OF RAMAYAN
NIWAS, BARWA ROAD, DHAIYA, DHANBAD,
(JHARKHAND) .................. PETITONER - RESPONDENT
with
LPA No.1049 of 2009
M/S MAHALAXMI CONTINENTAL PVT. LTD., A
COMPANY INCORPORATED UNDER THE PROVISIONS
OF THE COMPANIES ACT, 1956 HAVING ITS
REGISTERED OFFICE AT GALI NO. 8, BELTALA,
GAUHATI, ASSAM THROUGH ONE OF ITS DIRECTORS,
NAVIN KUMAR GUPTA, SON OF SHRI LAXMI CHANDRA
GUPTA, RESIDENT OF GALI NO. 8B, N.H.-37, BELTALLA,
GAWAHATI .................. RESPONDENT- APPELLANT
Versus
1. THE STATE OF BIHAR THROUGH THE SECRETARY,
MINES & GEOLOGICAL DEPARTMENT, GOVT. OF
BIHAR, PATNA,
2. THE SECRETARY, MINES AND GEOLOGICAL
DEPARTMENT, GOVT. OF BIHAR, PATNA,
3. THE BIHAR STATE MINERALS DEVELOPMENT
CORPORATION LTD., VIKASH BHAWAN, NEW
SECRETARIAT, PATNA THROUGH ITS MANAGING
DIRECTOR,
4
4. THE CHAIRMAN, BIHAR STATE MINERALS
DEVELOPMENTS CORPORATION LTD., VIKASH
BHAWAN, NEW SECRETARIAT, PATNA,
5. THE MANAGING DIRECTOR, BIHAR STATE MINERALS
DEVELOPMENT CORPORATION LTD., VIKASH
BHAWAN, NEW SECRETARIAT, PATNA .....
.................... RESPONDENTS - RESPONDENTS, AND
6. M/S BHAGWATI COAL DISTRIBUTORS, A
PROPRIETARSHIP CONCERN HAVING ITS OFFICE AT
SHAHPUR, TIKARI ROAD, THROUGH ITS PROPRIETOR,
SHYAM KISHORE PRASAD, SON OF LATE DEO
NANDAN PRASAD, RESIDENT OF URMILA VILA,
SURYAMANDIR ROAD, P.O., P.S. TOWN AND DISTRICT -
AURANGABAD ............... PETITIONER - RESPONDENT
-----------
(L.P.A. Nos. 987/09 & 989/09)
For the appellants: Mr. V.M.K. Sinha,
Spl. P. P. (Mines)- cum - S.C.-III.
For the respondents: Mr. Y.V. Giri, Sr. Advocate,
Mr. N.K. Agarwal, Sr. Advocate,
Mr. Raj Kishore Prasad and
Mr. Tej Bahadur Roy, Advocates.
(L.P.A. Nos. 1034/09 & 1049/09)
For the appellants: Mr. Gyan Prakash Ojha, Advocate.
For the respondents: Mr. V.M.K. Sinha,
Spl. P. P. (Mines)- cum - S.C.-III.
-----------
PRESENT- THE HON'BLE THE CHIEF JUSTICE
THE HON'BLE MR JUSTICE RAMESH KUMAR DATTA
ORDER
(06.05.2010) As per Dipak Misra, C.J.-
Regard being had to the similitude of assail, this batch of appeals was heard analogously and is disposed of by a common order.
2. In LPA No. 987/2009 and LPA No. 989/2009, the 5 State of Bihar and its functionaries, and in LPA No. 1034/2009 and LPA No. 1049/2009, the affected private respondents, whose selection has been held to be unsustainable, have called in question the legal substantiality of the common order dated 01.07.2009 passed by the learned single Judge in CWJC Nos. 17360/2008 and 16265/2008.
3. Though we have indicated hereinabove that there is commonality in the controversy and hence a singular order yet for the sake of clarity and convenience, we shall advert to the factual exposition in each case separately.
4. M/s S.G. Projects Ltd., the respondent no. 6 in LPA No. 1034/2009, preferred CWJC No. 16265/2008 contending, inter alia, that the Ministry of Coal, Government of India issued a New Coal Distribution Policy, 2007 (for short, `the 2007 Policy') on 18.10.2007 under which the Government of India had decided to supply coal through Fuel Supply Agreement by the Coal India Limited at notified prices to be fixed and declared by the Coal India Limited. As per the 2007 Policy, the 6 existing linkage holders of erstwhile core and non-core sector and not having Fuel Supply Agreement would be required to enter into Fuel Supply Agreement with Coal Companies. The distribution of coal to the units whose requirement was up to 4200 tons per annum would be drawn through the agencies nominated by the State Governments while the units whose requirement was more than 4200 tons per annum will take coal directly from Coal India Limited / subsidiary companies through Fuel Supply Agreements. As far as the linked consumers of erstwhile non-core sector whose annual requirement was less than 4200 tons were concerned, they were given the option to either enter into the Fuel Supply Agreement with the coal company as per the standard terms and conditions or they may opt out of the Fuel Supply Agreement regime and access their coal requirement through agencies nominated by the State Government.
5. A reference has been made to Clause 3.1 of the 2007 Policy as regards the role ascribed to the State Governments under the policy. It has become the obligation of the State Governments to work out the 7 genuine requirement of such units in small and medium sectors like smokeless fuel, brick kiln, coke oven units, etc. and on transparent and scientific basis and distribute coal to them accordingly. The State Governments are also required to take proper steps to evaluate the genuine consumption and monitor the use of coal. It has been set forth in order to meet the enhanced cap fixed for such consumers, the quantity earmarked for distribution to these agencies would also be increased to eight million tons annually and the said quantity would be allocated for distribution to those units/consumers in small and medium sectors across the country whose requirement is less than 4200 tons per annum and are otherwise not having any access to purchase coal or conclude Fuel Supply Agreement with Coal Companies. The earmarked quantity would be distributed through agencies notified by the State Governments which could be State Government Agencies / Central Government Agencies like National Small Industries Corporation or other Industries Associations. It is put forth that the State Government is required to enter into Fuel Supply Agreement (for short 8 `FSA') with the Coal company to be designated by the Coal India Limited (for short `CIL') which would include the subsidiaries of the CIL but not private coal companies owned by any individual or private company and the said FSA will continue to remain in force till the State Government denotifies the agency / association or CIL shifts the obligation to some other Coal company due to production, transportation, logistics, etc. In the latter case, a fresh FSA would be signed with the new Coal company. The FSA would be based on firm commitment and compensation for default in performance by either side.
6. According to the writ petitioner, the Mines and Geological Department, Government of Bihar, in terms of the 2007 Policy appointed the Bihar State Minerals Development Corporation Limited (for short `the Corporation') as its nominated agency. The Corporation, pursuant to the appointment as State nominated agency, floated a tender for appointment of Coal Coordinator for lifting and distribution of coal allotted under the New Coal Distribution Policy, 2007. Pursuant to the said notice inviting tender, the writ petitioner along with other 9 tenderers participated in the tender process and submitted their tenders along with requisite documents as prescribed in the Notice Inviting Tender (for short `NIT'). As per the NIT, the petitioner was required to submit a certificate from the coal company with respect to lifting of coal during the last three financial years. It was also provided that apart from the details of lifting of coal of the last three years, the tenderers were required to give the details of distribution / consumption of coal for the last three years. In terms of Clause 9 of the NIT, the tenderers were to furnish experience certificates of lifting of average 50,000 MT coal per year. Clause 9(1) of the NIT deals with the lifting of coal whereas Clauses 9(2) & 9(3) deal with distribution and own consumption of coal. There is no provision in the said technical bid format which deals with the sale of coal to the respective buyers. The petitioner submitted the technical bid giving details of lifting of coal for the years 2005-06, 2006-07 and 2007-08 and thereby had given the average lifting to the extent of 1,65,633.603 MT and a certificate in that regard issued by Bharat Coking Coal Limited (for short `BCCL') had also been 10 enclosed. The petitioner had also submitted a certificate of financial capacity for Rs. 18 crores issued by Dena Bank. Other formalities were also complied with. The Corporation opened the technical bid of the petitioner on 24.10.2008 and rejected his technical bid without assigning any reason. The petitioner came to know that his technical bid had been rejected on the ground that Clauses 9(2) & 9(3) had not been filled up. It was contended before the writ Court that the said clauses were not required to be filled up by the petitioner as the petitioner is neither a distributor nor a consumer of coal. The petitioner used to lift coal from BCCL as a trader and sell it to different consumers and, therefore, the petitioner has not filled up Clauses 9(2) & 9(3) of the technical bid as there was no clause which deals with the sale of coal. That apart, the details of sale of coal had already been mentioned in the balance-sheet submitted by the petitioner along with the technical bid.
7. It was argued that the technical bid submitted by the respondent no. 6 had been accepted by the respondent-Corporation in spite of the fact that the 11 respondent no. 6 had got no requisite experience of lifting of average 50,000 MT coal since the last three years. The said respondent had given the details of lifting of coal from a private mine which is not at all a coal company within the meaning of the 2007 Policy. It is put forth that in terms of the 2007 Policy, the coal company means a subsidiary of CIL and not a coal company owned by any private individual and, therefore, the experience of lifting of coal from a private mine cannot be taken into consideration for the purpose of appointment of Coal Coordinator by the State nominated agency. It was contended that in the terms of the notice inviting tender, the certificate of experience of lifting of coal was to be submitted and the said certificate should have been issued from any subsidiary coal company of C.I.L. The 6th respondent submitted an experience certificate from a private coal mine of Assam which was also fabricated and even at the time of opening of the technical bid, he had not enclosed any experience certificate but only the details of purchase had been mentioned in the technical bid form.
8. The Corporation after coming to know that no 12 certificate of experience had been attached with the technical bid allowed the respondent no. 6 to submit the experience certificate before opening of the financial bid on 30th October, 2008. The respondent no. 6 obtained the experience certificate from private coal mines and submitted the same after opening of the technical bid. It was put forth that the action of the respondent authorities in rejecting the technical bid of the petitioner and accepting the technical bid of the respondent no. 6 is wholly illegal and arbitrary inasmuch as the said respondent did not possess the requisite experience of lifting of coal in terms of the notice inviting tender.
9. The petitioner after coming to know about such a situation submitted a detailed representation to the Managing Director stating, inter alia, that in the tender paper there are only three columns under Clauses 9(1), (2) (3) wherein the figures of purchase and distribution or consumption were to be filed and there was no column pertaining to sale and the terms `distribution and consumption' do not connote the idea of sale. As the position was never made clear to the bonafide tenderers, 13 they did not fill up the said distribution column though the coal was sold amongst the consumers. The Corporation did not consider the representation and declared the 6th respondent successful in the technical bid without opening the financial bid of the petitioner though in terms of the notice inviting tender, the said respondent had got no requisite experience certificate for lifting and distribution of coal.
10. In this factual backdrop, a prayer was made for commanding the respondents to cancel the selection and appointment of respondent no. 6 as the coal coordinator of the Corporation and to issue directions to open the financial bid of the petitioner treating him as successful in the technical bid and to appoint the petitioner as the coal coordinator of the respondent-Corporation after considering the financial bid of the petitioner.
11. A counter affidavit was filed by the respondents no. 1 to 5 stating, inter alia, that the tender papers filed by the petitioner were incomplete as he had not disclosed the required information in columns 9(2) and 9(3) of the technical bid form. The representative of the petitioner 14 was present at the time of opening of the technical bid to express his inability to provide the information required in the aforesaid columns. The information regarding the quantity of coal and the number of consumers was to be disclosed in column 9(2). On 29.10.2008, two fax copies of the letter of the petitioner were received in which the number of consumers during 2005-2006 and 2006-2007 was mentioned as `500+'. The petitioner did not have the exact number of consumers available with him on 29.10.2008. The original copy of the said letter was made available on 30.10.2008. According to the original copy of the said letter, the number of consumers during 2005- 2006 and 2006-2007 were `520' and `515' respectively. The Purchase Committee on 30th October, 2008 gave an opportunity to the petitioner and after considering the submissions decided to reject its prayer. It is averred that for the purposes of counting the experience of various tenderers who had applied in pursuance of the advertisement, the experience with the private coal companies was also to be counted. There is no condition in the tender paper that the experience with the 15 Government Coal Companies shall only be counted. It is put forth that it is an erroneous assertion that there is no clause in the technical bid which deals with the sale of coal. The petitioner himself had harboured a sense of confusion whereas the other five tenderers had no confusion and they had submitted the figures of sale of coal in column 9(2) of the technical bid form. In the said heading, it has been mentioned `No. of consumers' and this obviously refer to the sale of coal. If the petitioner had confusion on this point, he could have sought clarification from the authorities before submitting the tender. The submission of the petitioner was considered by the Purchase Committee and, considering his representation, his bid was not accepted. It is put further that the respondent no. 6 has the requisite experience and it is fallacious to say that the certificate of the private coal mines cannot be counted inasmuch as there is no such condition in the tender document prohibiting the consideration of such certificate. It is contended that the petitioner has referred to various documents of the Ministry of Coal in which the `Coal Company' means the 16 subsidiary of CIL and the coal from the subsidiary of CIL can only be distributed under the new Coal Policy but for the purpose of counting the experience of various tenderers who had applied in pursuance of the advertisement, the experience with the private coal companies has also to be counted. There is no condition in the tender paper that the experience with the private coal companies shall not be taken into consideration. The respondent no. 6 had submitted the requisite certificate of the private coal mines and also claimed experience with respect to the State Government quota of Nagaland and in support of the same had enclosed the certificate issued by the State Nodal Agency nominated by the Nagaland Government. From the documents submitted by the said respondent, it was not clear as to whether the said State Nodal Agency had been appointed by the Nagaland Government or not and, therefore, the respondent no. 6 was asked to produce the order of the Nagaland Government by which the State Nodal Agency was appointed by it. The said documents were submitted by the respondent no. 6 from which it was found that the 17 State Nodal Agency was appointed by the Nagaland Government and, therefore, it was concluded that the respondent no. 6 fulfilled all the conditions of the tender. It is put forth that the petitioner was given due opportunity by the Purchase Committee but he was not found suitable.
12. A counter affidavit has been filed by the respondent no. 6 contending, inter alia, that for the purpose of considering the experience of the tenderers who had applied pursuant to the tender issued in the present matter, the experience with the private coal companies can be counted inasmuch as there is no condition in the tender paper that the experience with the private coal companies shall not be counted. It is put forth that for the purpose of coal mining in North Eastern State, it is not a pre-requisite for a private coal company to obtain a mining lease from the State Government and, thus, even a private coal company in Meghalaya can trade coal unlike the other States of India where mining leases are awarded only to those private parties which use mined coal for captive consumption. In support of the same, the annual report of 2004-2005 issued by the Ministry of Coal, 18 Government of India has been brought on record. It is contended that the policy does not formulate any guideline or impose any condition precedent for consideration / selection / appointment of the coordinator by the State's nominated agencies and, therefore, the State's nominated agency can formulate terms and conditions for selection and appointment of their coordinator. It is averred that the respondent had given certificates not only from the private coal companies but also the certificate issued by the State Nodal Agency nominated by the Nagaland State Government. It is also averred that the petitioner had sought withdrawal of the earnest money and the writ petition, at the first instance, is not maintainable.
13. A supplementary counter affidavit had been filed by the respondents no. 1 to 5 wherein it has been stated that when the writ petitioner was not found fit for the technical bid, he applied for return of the earnest money on 31.10.2008, but even though he was informed vide letter dated 12.11.2008 to collect the demand draft of the earnest money from the office of the Corporation, yet no representative on his behalf turned up to collect the 19 same.
14. The learned single Judge adverted to the policy and the conditions incorporated in the notice inviting tender and came to hold that the coal company would mean a subsidiary of Coal India Limited and BCCL is admittedly a subsidiary of Coal India Limited and, therefore, the stand of the respondents that supply or transaction with the private companies would also be accepted was impermissible under the policy as well as under the NIT.
15. As far as the writ petition preferred by M/s Bhagwati Coal Distributors (CWJC No. 17360/2008) the learned single Judge has held that the same was a proprietary concern of one Shyam Kishore Prasad, who had submitted the tender and in support of the experience had produced the certificate. The tender committee rejected his technical bid on the ground that the experience of said Shyam Kishore Prasad cannot be taken into consideration for the purpose of the firm M/s Bhagwati Coal Distributors. The learned Judge has held that the said approach is wholly illegal as it is well established 20 proposition of law that there is no distinction between the identity of the proprietary concern and the proprietor. Being of this view, the learned single Judge expressed that the rejection of the two writ petitioners were indefensible and they are entitled to be considered. The learned single Judge further held that the selection of the respondent no. 6 is vitiated in fact as well as in law and could not be sustained and his selection deserves to be lanceted and, accordingly, so ordered. Be it noted, the ground that one of the appellants had sought to refund of the earnest money did not impress the learned single Judge and he repelled the said submission.
16. We have heard Mr. V.M.K. Sinha, learned Special Public Prosecutor (Mines) - cum - Standing Counsel-III for the State and Mr. Y.V. Giri and Mr. N.K. Agarwal, learned Senior Advocates along with Raj Kishore Prasad, Tej Bahadur Roy and Mr. Gyan Prakash Ojha, for the respondents-company.
17. The crux of the matter is whether the approach of the owner in dealing with the conditions precedent for not considering the tenders of the writ petitioners is valid. 21 In this context we may refer with profit to the 2007 Policy which has its own sanctity. The 2007 Policy has its own sanctity. The learned single Judge has reproduced the relevant part of the Policy which we think apposite to be reproduced herein below for the sake of completeness:
"The agency/association so notified by the State Governments, would be required to enter into FSA with coal company to be designated by the Coal India Limited. The FSA will continue to remain in force till either the State Government denotifies the agency/association or CIL shifts the obligation to some other coal company due to production, transportation logistics etc. In the latter case, a fresh FSA would be signed with the new coal company. The FSA would be based on firm commitment and compensation for default in performance on either side. These State Government/Central Government agencies would be free to devise their own distribution mechanism. However, the said mechanism should inspire public confidence and should result in distribution of coal in a transparent manner."
18. Clause 3 of the 2007 policy deals with 22 consumers in small & medium sectors. It reads as follows:
"3.1 The State Governments are requested to work out genuine requirement of such units in small and medium sector like Smokeless fuel, brick kiln, coke oven units etc. on a transparent and scientific basis and distribute coal to them accordingly. The State Governments may take appropriate steps to evaluate the genuine consumption and monitor use of coal. The present cap is also enhanced to 4200 tonnes per annum for the targeted consumers under this category. In order to meet the enhanced cap fixed for such consumers, the quantity earmarked for distribution to these agencies would also be increased to 8 million tonnes annually, to start with. This quantity would be allocated to distribution to those units/consumers in small and medium sector across the country whose requirement is less than 4200 tonnes per annum and are otherwise not having any access to purchase coal or conclude Fuel Supply Agreement (FSA) for coal supply with coal companies.
The earmarked quantity would be distributed through agencies notified by the State Governments. These agencies could be State Govt. Agencies / Central Govt. Agencies (National Co-operative Consumer Federation 23 [NCCF] / National Small Industries Corporation [NSIC] etc) or industries associations, as the State Govt. may deem appropriate. The agency so notified will continue to distribute coal until the State Govt. chooses to denotify it.
The agency / association so notified by the State Govts., would be required to enter into FSA with coal company to be designated by the Coal India Limited. The FSA will continue to remain in force till either the State Govt. denotifies the agency/association or CIL shifts the obligation to some other coal company due to production, transportation logistics etc. In the latter case, a fresh FSA would be signed with the new coal company. The FSA would be based on firm commitment and compensation for default in performance on either side. These State Government / Central Govt. agencies would be free to devise their own distribution mechanism. However, the said mechanism should inspire public confidence and should result in distribution of coal in a transparent manner.
The price charged to such agencies would be same notified price as applicable to other consumers entering into FSA. The agency would be entitled to charge actual freight and upto 5% margin as service charge, over and above the basic price charged by the coal company, from their consumers. The concerned 24 State Governments and Central Government Department having administrative control over the agencies would be responsible to ensure that coal allotted for targeted consumer is distributed in a fair and transparent manner and appropriate action taken to prevent its misuse."
19. The tender notice in Clause 5 stipulates that tenders shall be submitted in two parts. The tender notice specifically stipulates that it is a tender under the Policy. Clause 5 of the tender notice which is in Hindi, on being translated into English, reads as under:
"5. Tender shall be submitted in two parts - technical bid and financial bid. Both parts shall be kept sealed in separate envelopes and, on each of them, name of the tenderer and the word `technical bid' or `financial bid' shall be written. Both the envelopes shall be kept sealed in another envelope on which the name of the tenderer and the words `Tender for appointment of coal distributor' shall be written and it shall be addressed to the Managing Director, Bihar State Minerals Development Corporation Ltd., Vikas Bhawan, Patna."25
20. Clause 9 of the tender notice is also relevant. The same, on being translated into English, reads as follows:
"9. The tenderer should have the experience of lifting and distribution / consumption of at least on an average 50 thousand metric tonne of coal per year during the last three years. For lifting it would be mandatory to submit the certificate of the coal company. The required informations for distribution and consumption shall be mentioned in the tender paper."
21. If the policy and the conditions envisaged in the tender notice are appreciated in juxtaposition there can be no shadow of doubt that the experience has to have nexus with the distribution of coal of the coal company. It is not only the mandate of the policy but a requirement of the notice inviting tender because the notice inviting tender refers to the policy and it has to be in accord with the policy. Quite apart from above, Clause 9 of the tender notice specifically postulates that it would be a mandate to submit a certificate of the coal company. The terms `coal company' as used in the notice inviting tender and the dictionary clause in the policy can be understood and 26 construed to mean a `coal company' which means a coal company to be designated by the Coal India Limited.
22. The submission of the learned counsel for the appellants is that the experience of the tenderer with the private coal companies has to be taken into consideration. As we have understood, the essential condition is to have the transaction with a coal company and the owner as per the policy and the notice inviting tender has to be understood appositely and correctly. Coal company means a subsidiary of the Coal India Limited. The essential condition as stipulated is clear and unambiguous and admits of no other interpretation, the same has to be strictly followed. There can be no iota of doubt that a bonafide interpretation of a prescribed standard by the owner in a particular manner, if possible, should not be differently read or construed by the court. But, a pregnant one, the Court cannot ignore the error or fallacy in the decision-making process as that is the basic facet of judicial review.
23. In Sterling Computers Ltd. V. M.N.Publications Ltd., (1993) 1 SCC 445 = AIR 1996 27 SC 51, the Apex Court, while dealing with the concept of judicial review in respect of contracts entered into on behalf of the State, had expressed the view as follows: -
"18. While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the Court is concerned primarily as to whether there has been any infirmity in the "decision making process." By way of judicial review the Court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State. Courts have inherent limitations on the scope of any such enquiry. But at the same time as was said by the House of Lords in the aforesaid case, Chief Constable of the North Wales Police v. Evans (supra), the Courts can certainly examine whether "decision making process" was reasonable, rational, not arbitrary and violative of Art. 14 of the Constitution.
19. If the contract has been entered into without ignoring the procedure which can be said to be basic in nature and after an objective consideration of different options available into account the interest of the State and the public, then Court cannot act as an appellate authority by substituting its opinion in respect of selection made for entering into such contract."28
24. In Tata Cellular v. Union of India, AIR 1996 SC 1, the Apex Court has laid down as follows: -
"94. The principles deducible from the above are:
(1) The modern trend points to judicial restraint in administrative action.
(2) The Court does not sit as a court of appeal but merely reviews the manner in which the decision was made.
(3) The Court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract.
Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi administrative sphere. However, the 29 decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facets pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.
25. In Raunaq International Ltd. v. I.V.R. Construction Ltd. (1999) 1 SCC 492, emphasis was laid on the element of public interest and commercial consideration in the award of contract.
26. In Air India Ltd. V. Cochin International Airport Ltd., (2000) 2 SCC 617, their Lordships expressed the view that the award of a contract whether by a private party or by a State is essentially a commercial transaction. It was held therein that when even some defect is found in the decision making process, the Court must exercise its discretionary powers under Article 226 of the Constitution with great caution and should exercise it only in furtherance of public interest. Emphasis was laid, apart from legal point, on public interest. The Apex Court has observed that in the matters of award of contract, the 30 larger public interest has to be kept in view and when it is vivid that public interest commands that there has to be interference, then the Court should interfere.
27. In M/s. B.S.N.Joshi and Sons Ltd. V. Nair Coal Services Ltd., AIR 2007 SC 437, their Lordships reiterated the principles of judicial review which have been developed for interference. The Apex Court summarized the principles as follows:
"(i) If there are essential conditions the same must be adhered to:
(ii) If there is no power of general relaxation, ordinarily the same shall not be exercised and the principle of strict compliance would be applied where it is possible for all the parties to comply with all such conditions fully:
(iii) If, however, a deviation is made in relation to all the parties in regard to any of such conditions, ordinarily again a power of relaxation may be held to be existing:
(iv) The parties who have taken the benefit of such relaxation should not ordinarily be allowed to take a different stand in relation to compliance of another part of tender contract, particularly 31 when he was also not in a position to comply with all the conditions of tender fully, unless the court otherwise finds relaxation of a condition which being essential in nature could not be relaxed and thus the same was wholly illegal and without jurisdiction.
(v) When a decision is taken by the appropriate authority upon due consideration of the tender document submitted by all the tenderers on their own merits and if it is ultimately found that successful bidders had in fact substantially complied with the purport and object for which essential conditions were laid down, the same may not ordinarily be interfered with.
(vi) The contractors cannot form a cartel. If despite the same their bids are considered and they are given an offer to match with the rates quoted by the lowest tenderer, public interest would be given priority.
(vii) Where a decision has been taken purely on public interest, the Court ordinarily should exercise judicial restraint."
28. In Asia Foundation and Construction Ltd. V. Trafalgar House Construction (I) Ltd. And Others, 32 (1997) 1 SCC 738, it has been held that the principles of judicial review cannot be denied to be applicable to contractual powers of government bodies but it is intended to prevent arbitrariness or favouritism and it is exercised in the larger public interest.
29. In Jagdish Mandal v. State of Orissa and Others, 2007 (8) SCJ 359, the Apex Court opined that the power of judicial review in administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and malafides. It was further opined that when exercising the power of judicial review in the matters relating to tender or award of contract, certain special features should be kept in mind regard being had to the fact that a contract is a commercial transaction. Emphasis was laid on the fact whether the process adopted or decision taken is so arbitrary or irrational that it could be said with certitude that no responsible authority acting reasonably and in accordance with relevant law would have reached such a conclusion. In the said decision, the concept of public interest was reiterated.
33
30. In Siemens Public Communication Networks Pvt. Ltd. And another v. Union of India and Others, 2009 (1) SCJ 634, it has been held as under:
"..... A contract is a commercial transaction and evaluating tenders and awarding contracts are essentially commercial functions. In such cases principles of equity and natural justice stay at a distance. If the decisions relating to award of contracts is bonafide and is in public interest, Courts will not exercise the power of judicial review and interfere even it if is accepted for the sake of argument that there is a procedural lacuna."
31. In M/s Moarch Infrastructure (P) Ltd. v. Commissioner, Ulhasnagar Municipal Corporation and others, AIR 2000 SC 2272, the Apex Court held that if a term of tender is deleted after the players entered into the arena, it is like changing the rules of the game after it had begun and, therefore, if the Government or the Municipal Corporation was free to alter the conditions fresh process of tender was the only alternative permissible. By reason of deletion of a particular condition the wider net will be permissible and a larger participation 34 or more attractive bids could be offered.
32. In Reliance Energy Ltd. and another v.
Maharashtra State Road Development Corpn. & ors., (2007) 8 SCC 1, their Lordships laid emphasis on level playing field to all bidders and the reasonableness of the State action.
33. We have referred to the aforesaid pronouncements to highlight when there is infirmity in the decision-making process which relates to ignoring the procedure that are basic in nature and further the action of the owner is not in consonance with the essential condition of the NIT and a deviation has been made and the action is unreasonable and smacks of arbitrariness or favouratism and runs counter to public interest that there can be interference by the Court. In the case at hand, the essential condition that has been postulated in the policy. There is a reference to the policy in the NIT and it has been stipulated in categorical terms that transactions are to be with the coal company. If the same is an imperative essential qualification and there is no power to relax. The policy was floated by the Central Government. It has its 35 own sacrosanctity. The purpose is perceptible inasmuch as while the transaction with subsidiaries of the CIL is alone to be taken into consideration. The policy has been framed for distribution of coal which was available to the coal companies. The private domestic consumers are required to enter into Fuel Supply Agreement and purchase on the price notified by the CIL or its subsidiaries. By interpretation of the policy, coal coverage of the State nominated agency was increased to 4200 tons per annum. They are entitled to get coal through agencies nominated by the State Government. The significant part of it, the State Government took a decision to entrust the work to the Corporation. The Corporation took a policy decision to outsource on profit sharing basis with the private entrepreneurs and floated the tender for appointing a coal coordinator. The conditions that have been stipulated, as is noticeable, are in accord with the policy and the NIT, but while selecting the coal co-ordinator, the Corporation has deviated and taken into consideration the experience of the 6th respondent which relates to his transaction with the private companies. That is in direct 36 conflict with the policy and the NIT. The policy is meant to subserve the public interest. The deviation runs counter to the public interest and violates the essential conditions of the policy as well as the NIT. The justification given by the Corporation and the other authorities as well as the private respondents are not acceptable in law. The act of the Corporation in its selection of the 6th respondent is totally unreasonable being violative of the policy and the NIT. By no stretch of imagination it can be said that it is the domain of the Corporation to do so as it has to be allowed a free play in the joints or is founded on acceptable commercial principle. The rejection of the technical bid of the writ petitioners and the selection of the 6th respondent smacks of arbitrariness and indubitably attributed to non-understanding of the policy and the NIT. Thus, when the respondent no. 6 is not qualified to enter into the fray, the ground urged that one of the writ petitioners had sought for refund of the earnest money cannot be allowed to founder or destroy his rights. The selection of the 6th respondent as coal coordinator is unsustainable and the same has to be struck down. 37
34. In the case at hand, as is perceptible, the interpretation placed by the learned single Judge is in accord with the policy and the notice inviting tender. The essential condition is transaction with coal company. The scope of judicial review is a limited one and the owner has to be allowed a free play in the joints. We have referred to the said concept that the laxity that has been sought by the appellants in the conditions really does not arise because they do not meet the essential requirements and, hence, the question of free play in the joints does not arise.
35. In this obtaining factual matrix, the application for grant of refund would not justify the action of the State and the Corporation. Similarly, the artificial distinction drawn with regard to experience between the proprietor and the proprietary firm is extremely unreasonable and also not sound in law. Thus, the whole approach, as we perceive, invites interference by this Court in exercise of the power of judicial review and the same has been appositely done by the learned single Judge and, therefore, we concur with the view taken by the writ Court. 38
36. Ex consequenti, all appeals, being sans merit, stand dismissed without any order as to costs. ( Dipak Misra, C.J. ) ( Ramesh Kumar Datta, J. ) Patna High Court.
The 06th May, 2010.
AFR.
Dilip.