Orissa High Court
Vijay Power Generators Ltd. vs Reserve Bank Of India And Ors. on 2 July, 2004
Equivalent citations: 98(2004)CLT150
Author: B.P. Das
Bench: B.P. Das
JUDGMENT B.P. Das, J.
1. Both these writ petitions filed by M/s. Vijay Power Generators Limited being inter-linked were heard together and are being disposed of by this common judgment.
2. In W.P.(C) No. 5693/2003 the petitioner has prayed for a declaration that the award of contract pursuant to the tender notice, Annexure-1, for supply, installation, testing and commissioning of 380 KVA Diesel Generator set for the Main Office Building of the Reserve Bank of India in Bhubaneswar in favour of O.P. No. 3 is illegal and further for a direction to O.P. Nos. 1 and 2 to award the said contract in favour of the petitioner.
While issuing notice on the writ petition on 13.6.2003 this Court passed an interim order to the effect that in case O.P. No. 3 has not supplied the goods pursuant to the tender notice, Annexure-1, the supply of goods by the said O.P. No. 3 would not be accepted by the R.B.I.-O.P. Nos. 1 and 2. During pendency of this case [W.P.(C) No. 5693/2003], the Bank-O.P. Nos. 1 and 2 considering the urgency in requirement of generator set in public interest for supply of uninterrupted power supply and to meet the exigencies for regulating the function in voltage specially for currency verification processing system machine issued another notice on 31.7.2003 inviting tenders for providing one 380 KVA D.G. Set at the Bank's Office premises at Bhubaneswar on hire basis. When the petitioner approached O.P. No. 1-Bank with requisite fee for issue of tender papers, the opp. parties refused to issue the same. Against such refusal, the petitioner has approached this Court in W.P.(C) No. 8651/2003.
In the aforesaid case [W.P.(C) No. 8651/2003] on 28.10.2003 this Court issued notice but declined to pass any interim order staying the tender notice, Annexure-1. This Court, however, directed that both the writ petitions would be heard together.
3. Let us first take up W.P.(C) No. 5693/2003.
The brief facts, as detailed in the writ petition, tend to reveal that the petitioner is an industrial unit registered with the National Small Industries Corporation Ltd. In response to the tender call notice vide Annexure-1 for supply, installation, testing and commissioning of 380 KVA Diesel Generator set in the Main Office Building of the Reserve Bank of India in Bhubaneswar, the petitioner after making payment of necessary fees made an application for supply of tender documents furnishing therewith the details of its experience, O.P. Nos. 1 and 2 issued the tender documents in favour of the petitioner. The tender documents consisted of two parts. While Part-l contained technical bid, Part-II contained only the price bid. The petitioner and two others, namely, O.P. No. 3-Jakson Engineers Ltd. and M/s. Unique Suppliers and Services submitted their tenders. According to the petitioner, on 11.11.2002 the technical bid was opened and the petitioner claims to have satisfied all the technical requirements of O.P. Nos. 1 and 2. Thereafter the petitioner was verbally informed that the date of opening of the price bid would be intimated later on O.P. Nos. 1 and 2 by letter dated 9.1.2003 required the petitioner to confirm the terms and conditions of the tender in order to enable the petitioner to participate in the opening of Part-II of the tender, i.e., the price bid, and the petitioner duly confirmed the same by its letter dated 10.1.2003. Ultimately, the price bid of the tender was opened on 21.1.2003, The petitioner quoted the price at Rs. 23,02,500/- and Rs. 22,95,500/- [excluding the price of item at sl. 2(f)], O.P. No. 3-Jakson Engineers Ltd. quoted the price at Rs. 22,95,520/- [excluding the price of item at sl. 2(f)] and Unique Suppliers and Services Ltd. quoted the price at Rs. 23,67,350/- and Rs. 23,49,350/- [excluding the price of item at sl. 2(f) of the price bid part]. The allegation of the petitioner is that on the date the price bid was opened, O.P. Nos. 1 and 2 did not take any decision and without any reason deferred the same to a future date. After expiry of ninety days from the date of opening of the price bid, i.e., Part-II of the tender documents, when the validity of acceptance of the tender expired, O.P. Nos. 1 and 2 awarded the contract to O.P. No. 3 in the last week of May, 2003. According to the petitioner, this has been done through private negotiation and by violating/relaxing the terms and conditions of the tender. The petitioner contended that its product was the best and the petitioner was placed at L-1 for which it was entitled to get the aforesaid order.
While repudiating the allegations made by the petitioner, O.P. Nos. 1 and 2 in their counter affidavit have taken the stand that the Commercial Conditions in Part-II clearly stipulated that the Bank reserved the right to accept or reject any or all the tenders without assigning any reason thereof. Even at the stage of inviting tenders, according to the O.Ps., the Bank made it expressly clear that the Bank reserved the right to reject any or all tenders without assigning reasons thereof and the same was also put on Bank's website. According to these opposite parties, the tenderers were expected to possess a minimum of four years' experience in executing two or more similar type of work individually costing not less than Rs. 10 lakhs and they were also required to furnish details of the works done, names and addresses of their bankers and clients. In response to the tender call notice, three tenderers, namely, the petitioner, O.P. No. 3 and one Unique Suppliers and Services Ltd., had submitted their tender papers. Thereafter the Bank called for confidential reports about the three tenderers. The Bank's New Delhi Office, where the petitioner had earlier executed similar work, vide letter dated 24.2.2003 intimated that the petitioner could not execute the work entrusted to it within the stipulated period for which penalty was imposed on the petitioner for the delay in completion of the Work. The petitioner had also deposited the said penalty and filed a case which was subsequently settled amicably out of Court. According to the opposite parties, though the price quoted by the petitioner was the lowest, the firm was not considered suitable for award of the work in view of its unsatisfactory performance in supply of a similar D.G. Set to the Bank's Head Office at New Delhi on previous occasion. That apart, the petitioner did not have its own service set up/centre in Bhubaneswar for which the petitioner in its tender paper had stated that Unique Suppliers and Services, one of the tenderers, would attend the post-installation maintenance of the D.G. Set. The opposite parties, therefore, thought it proper not to award the tender to the petitioner who had a bad past record and who depends upon somebody else for the post-installation maintenance of the D.G. Set. According to the opposite parties, the consensus decision not to award the contract to the petitioner was taken after due deliberation and application of mind. Since the tender of the petitioner was not acceptable for the reasons as indicated above, the tender submitted by O.P. No. 3 became the technically valid next lowest acceptable offer and on the request of the opposite parties and on negotiation, O.P. No. 3 reduced the price quoted by it from Rs. 22,95,520/- to Rs. 22,46,605/-, which was even lower than the price quoted by the petitioner, i.e., Rs. 22,84,500/-, Thereafter the contract was decided to be awarded in favour of O.P. No. 3. The aforesaid is the sum and substance of the reasons put forth by O.P. Nos. 1 and 2 in their counter affidavit for non-acceptance of the tender submitted by the petitioner.
O.P. No. 3-Jakson Engineers Ltd. has also filed a counter affidavit justifying the action of O.P. Nos. 1 and 2 in awarding the contract in its favour.
The petitioner has filed a rejoinder to the counter affidavit filed on behalf of O.P. Nos. 1 and 2 wherein the petitioner has denied the allegation made by O.P. Nos. 1 and 2 that it could not execute a similar work in O.P. No, 1's New Delhi Office within the stipulated period and that the petitioner deposited the penalty imposed by the Bank. But the petitioner has not denied the allegation that a dispute erupted between the parties. According to the petitioner, the petitioner approached the Arbitrator for settlement of the claim which was ultimately settled out of Court and accordingly the Bank issued a certificate on 19.10.1995, vide Annexure-2 series. The petitioner has placed reliance upon the aforesaid certificate dated 19.10.1995 and has stated that the aforesaid certificate would go to show that the petitioner executed the installation, testing and commissioning of the D.G. Set which are all part of satisfactory performance of the petitioner. But fact remains that a dispute arose between the petitioner and the Bank over the aforesaid supply and the matter was ultimately settled out of Court, which has also been admitted by both the parties.
4. An affidavit has been filed on behalf of the R.B.I. in W.P.(C) No. 8651/2003 annexing thereto the photocopy of the extracts of the Measurement Book bearing No. 623/5A relating to execution of the work of installation of Generator Set in the R.B.I. Office at New Delhi which was taken up by the present petitioner. From the aforesaid Measurement Book it transpired that there was delay in completion of the work for which penalty of Rs. 12,000/- was imposed on the petitioner. In reply to the aforesaid affidavit filed on behalf of the R.B.I., the petitioner has filed an affidavit through its authorized representative Shri Deepak Pattnaik wherein the petitioner has admitted that penalty was imposed on it but it has submitted that the matter was settled subsequently amicably and the amount due was later on released in favour of the petitioner.
5. Before delving into the merits of the case, it would be appropriate to have a look at the "Commercial Conditions" attached to the Tender for Supply, Installation, Testing and Commissioning of 380 KVA Diesel Generator Set with AMF Panel at Banks' Office Building at Bhubaneswar. Clause 8 of the aforesaid Commercial Conditions required the tenderers to furnish a list of clients for whom the tenderer had executed similar work in the past, with complete details indicating the name and address of the client, brief details and value of work, year of installation/completion, etc. Clause 12 thereof stipulated that time was the essence of the contract and the entire work would be completed in 16 weeks from the 10th day of the date of letter of acceptance, failing which liquidated damages at the rate of 1/4% of the contract value per week subject to a maximum of 5% of the contract value would be recovered for delay beyond the contractual period of completion. Clause 17 of the Conditions stipulated that the Bank reserved the right to accept or reject any or all the tenders without assigning any reason thereof.
6. A bare reading of Clause 8 of the aforesaid Commercial Conditions indicates that past performance record of the contractor is a must in order to assess the capability of the contractor. Though Clause 12 provided for imposition of penalty for non-completion of the work within the stipulated period, but the opposite parties are right in saying that it was a prudent decision to know the past record of the supplier to ensure that in future there would not be any occasion to apply Clause 12, i.e., the Penal Clause, against any inaction/delayed action of the contractor, which would cause inconvenience to the O.Ps. who have to suffer for the delay in execution of the work. Here is a case where there was a settlement out of Court between the petitioner and its client to whom it had supplied similar material in the past. It is also admitted that there was a dispute referred to the Arbitrator and penalty was imposed and the matter was subsequently settled amicably out of Court.
7. In the case of Tata Celluar v. Union of India, AIR 1996 SC 11, the Apex Court has categorically held that the duty of the Court is to confine itself to the question of legality and its concern should be : (1) Whether a decision-making authority exceeded its powers; (2) committed an error of law; (3) committed a breach of the rules of natural justice; (4) reached a decision which no reasonable Tribunal would have reached; or (5) abused its powers :
The Apex Court in the aforesaid decision further held that :
"85. It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down."
8. In the present case though mala fide and arbitrariness have been alleged in the writ petition, there is nothing on record to prove the same. After perusing the affidavits filed by the parties and considering the rival contentions of their learned counsel, we are of the opinion that the tender submitted by the petitioner was not accepted on consideration of its past records and on the ground that the petitioner did not have its own service set up/center in Bhubaneswar. The action of the opposite parties in not accepting the tender of the petitioner does not amount to black-listing the petitioner. There is no arbitrariness in the decision taken by the opposite parties nor can the same be said to be tainted with malice. The decision of the opposite parties in not accepting the tender of the petitioner and awarding the contract to O.P. Nos. 3, in our view, is correct and legal. There is no element of discrimination nor is there any unfair procedure adopted by O.P. Nos. 1 and 2. We, therefore, do not find any merit in this writ petition [W.P.(C) No. 5693/2003]. Accordingly, the writ petition is dismissed.
9. Now we shall deal with W.P.(C) No. 8651/2003. In this case, considering that a generator set was essentially required in public interest as indicated in the foregoing paragraph, the Bank invited tenders for hiring a D.G. Set for its Office Building at Bhubaneswar as per Annexure-1. When the petitioner wanted to purchase tender paper pursuant to the tender notice, Annexure-1, the Bank refused to sell the same to it as it was not found suitable for supply of D.G. Set on the earlier occasion. Challenging the said action of the Bank, the petitioner has filed this writ petition.
10. In W.P.(C) No. 5693/2003 we have already held that the action of the O.P. -Bank in not accepting the tender submitted by the petitioner because of its bad past records and awarding the same in favour of O.P. No, 3 is not actuated with malice, arbitrariness or discrimination. For the self-same reason, we do not find any fault with the Bank in not selling the tender document to the petitioner. We, therefore, dismiss this writ petition [W.P.(C) No. 8651/2003] as having no merit.
11. In the result, both the writ petitions are dismissed but without any order as to cost.
Sujit Barman Roy, C.J.
12. I agree.