Andhra HC (Pre-Telangana)
Bajaj Electricals Limited, Bombay And ... vs State Of Andhra Pradesh And Ors. on 21 September, 2001
Equivalent citations: 2001(6)ALD285, 2001(5)ALT526
Author: B. Sudershan Reddy
Bench: B. Sudershan Reddy
ORDER
1. The petitioners in the instant writ petition prays for issuance of a writ of Mandamus declaring the process of tendering adopted by the Municipal Corporation of Hyderabad vide Tender notice No. 12/EE (Elec)/MCH/DB/2001-2002 dated 21.6.2001 as illegal and unconstitutional. The process, according to the petitioners, is violative of petitioners' fundamental right guaranteed under Articles 14 and 19(1)(g) of the Constitution of India. The petitioners consequently challenge the action of the Corporation in not issuing tender schedules to the 1st petitioner-Company as arbitrary and illegal.
2. Before adverting to the questions that fall for consideration, it may be necessary to briefly notice the sequence of events leading to filing of this writ petition. The 1st petitioner-company is a public limited company and is part of Balaji Group of Companies. It is claimed to be one of the leading companies in the country in the field of illumination engineering with an annual turnover of Rs.450.00 crores. It is also stated that the products manufactured by the 1st petitioner-company are approved by all the leading consultants, Government institutions and private sector organisations. The company has been accredited with the prestigious ISO 2001 certificate for maintaining high standards in quality systems and procedures. It is claimed that the company manufactures decorative light fittings of various specifications suitable for garden lighting. It has a full-fledged Engineering and Projects Division to undertake large electrical and illumination projects on turnkey basis from concept to commissioning. Number of Governmental and Semi-Governmental Organisations and Premier Corporate Organisations have awarded number of contracts to the 1st petitioner-company for executing large value projects. It is further claimed that the Engineering and Projects Division of the 1st petitioner-company is manned with the highly qualified and experienced engineers in Electrical, Mechanical, Illumination design, Structural and Auto CAD disciplines who are well conversant with the systems and project management techniques. It is further claimed that except the 1st petitioner-company and the Crompton Greeves Limited, no other company has Project Division for exclusively undertaking projects/ contracts for illumination works on a turnkey basis.
3. Be that as it may, the Municipal Corporation of Hyderabad issued notice dated 21.6.2001 inviting tenders for decorative lighting of parks in twin cities of Hyderabad and Secunderabad from the leading manufacturers of lighting equipment for providing decorative lighting of identified parks in the twin cities and the tank bund (lake side). There is no doubt whatsoever, the scope of the work includes survey, design, supply, installation and commissioning of decorative lighting system including one year free maintenance of installed lighting system excluding cost of lamps. It is notified that the tender documents will be issued only to the integrated lighting equipment manufacturers who comply with the following conditions. Documentary evidence should be provided at the time of application only, (emphasis is of mine).
(a) The Bidder should be an ISO 9001 company and an integrated manufacturer of lamps, luminaries and associated control gears. The Bidder should offer and install all the lighting equipments (luminaries, lamps, associated gear) of its own make.
(b) The Bidder shall have an established lighting design facility with the lighting designer having experience in designing similar projects. The list of lighting design Engineers and their experience shall be furnished.
(c) The bidder should have completed design, supply and execution of the Garden Lighting Projects on a turnkey basis of value not less than Rs. 1 crore in a year, In the preceding 3 years.
(c) Proof of financial solvency of the company.
(d) Organisational strength and local support structure in Hyderabad and Secunderabad.
4. The petitioners have submitted an application duly enclosing certain documents along with a representation pointing out certain discrepancies in the tender notice and had accordingly sought clarification and sought a list of parks with regard to the identified parks for which tenders have been called by the Corporation. The petitioner particularly sought for a clarification with regard to Clause 3(a) of the tender notice wherein it is mentioned that the bidder should be an integrated manufacturer of lamps, luminaries and associated control gears and that the bidder should offer and install lighting equipment of its own make. The 1st petitioner required the details with regard to the specification of the luminaries, lamps, associated gears etc. that are required to be installed.
5. The petitioner No.1 is stated to have submitted ISO 9001 certificate for luminaries and lamps, which according to the respondent-corporation expired in May 2001. The said certificate, according to the Corporation, also does not mention regarding associated control gears. The petitioner No.1 also produced an experience certificate from AVAS VIKAS LIMITED dated 31" July 2001 for the work of illumination of Mandore & Ummaid Gardens at Jodhpur of value about Rs.43.00 lakhs. This, according to the Corporation, does not satisfy the pre-qualification for obtaining the tender schedule, namely, that the applicant should have completed design, supply and exclusive garden lighting project on turnkey basis of a value of not less than Rs. 1.00 crore in a year in the preceding three years.
6. According to the Corporation, the petitioner No. 1 does not satisfy the pre-qualifications prescribed even for obtaining the tender schedule. The respondent-Corporation altogether received four applications for tender schedules including that of the 1st petitioner and the 4th respondent. The 4th respondent is stated to have produced valid ISO 9001 certificate, experience worth Rs. 2.00 Crores during the years 1999 to 2001 on turnkey basis from Ramoji Film City and fulfilled all other tender conditions. In the circumstances, tender schedule was issued to the 4th respondent alone. All other applications including that of M/s V.N. Luxury House Limited and M/s Crompton Greeves were accordingly rejected.
7. It is the case of the Corporation that the tender notice dated 21.6.2001 was widely published in 1) Indian Express, 2) Times of India, 3) Eenadu and 4) Hindi Milap on 22.6.2001. The tender notice itself stipulates certain pre-qualification conditions for issuance of tender documents for prospective bidders. The parks to be illuminated are Indira Park, Golconda Facade fighting and details thereof are mentioned in the tender documents which would be supplied only to such applicants who fulfil the pre-qualification conditions laid down in the tender notice. It is the specific case of the Corporation that the petitioner No. 1 does not have valid ISO 9001 certification for manufacture of Luminaries, Lamps and Associated Control Gears, the very basis condition of the tender notice. The petitioner No. I also does not have required experience and turnover in decorative and park lighting.
8. The pre-qualification conditions are stipulated in the tender notice, according to the Corporation, to avoid entry of frivolous bidders which may defeat the very purpose of tender resulting in waste of money and time. According to the Corporation, it is the settled practice that whenever tenders are invited for big and specialised works, pre-qualification conditions are fixed invariably to prevent entry of frivolous bidders. Bids were invited on national competitive bidding lines with prescribed pre-qualification conditions to infuse competition.
9. It is the case of the 1st petitioner-company that the respondents have imposed Clause 3(a) in the tender notice only with an intention of eliminating all the persons from the tendering except the 4th respondent. The said condition, according to the petitioner No. 1, is totally arbitrary. It is submitted that there are number of manufacturers of Luminaries in the country and there is no uniformity in the number of products being manufactured by each company. The respondent-Corporation deliberately failed to express or intimate their requirements with regard to the specifications of the Lamps and Luminaries that are sought to be installed, virtually depriving the petitioners' right to participate in the tendering process. The conditions imposed are vague and unreasonable conferring arbitrary power on the respondents to restrict the number of persons from participating in the tendering process.
10. Likewise, Clause 3(b) in the tender notice is also challenged as arbitrary, illegal and ultra vires. It is contended that there is no rationale or nexus with the object that is sought to be achieved. Clause 3(b) stipulates that the intending bidders shall have an established lighting design facility with the lighting designer having experience in designing similar projects. It further stipulates that the intending bidder, for the purpose of being eligible in the tender process, should have completed design, supply and execution of garden lighting projects on a turnkey basis of value not less than Rs. 1.00 Crore in a year during the preceding three years.
11. It is the specific case of the petitioners that the action of the respondents in imposing the impugned conditions is only to award contract to the 4th respondent. Such vague and irrational conditions were incorporated in the tender notice only with a view to award contract to the 4fh respondent The same amounts to favouritism, apart from creating monopoly in favour of the brands manufactured by the 4th respondent. This has resulted in placing an unreasonable restriction on the petitioners' right to carry on the trade and the same is violative of the right guaranteed under Art. 19(1)(g) of the Constitution of India. It is contended that the impugned tender notice clearly reveals that the Corporation is insisting on a manufacturer that it should supply its own brand. The reference to manufacturer has no rationale or nexus with the object sought to be achieved.
The questions that fall for consideration are:
a) Whether the impugned tender notice suffers from any legal and constitutional infirmities?
b) Is there any attempt on the part of the respondent-Corporation to create any monopoly in favour of the 4th respondent as contended by the petitioners?
c) Whether the action of the respondent-Corporation suffers from any legal or constitutional infirmity in rejecting the petitioners' application for issuing tender schedules?
12. Sri C. Kodandaram, learned counsel for the petitioners, made elaborate submissions reiterating and emphasising as to what has been already stated in detail in the affidavit filed in support of the writ petition. Well-known decisions were cited by the learned counsel for the petitioners. We shall refer to only such authorities which would be relevant and necessary for the present purpose.
Parameters of Judicial Reviews
13. Before we proceed further and examine as to whether the respondent-Corporation created any monopoly in favour of the 4th respondent and thereby deprived the petitioners' legitimate right to participate in the tendering process, it may be necessary to notice the parameters of judicial review to examine the decision making process in the matter of awarding a contract by the State, its Corporations and Bodies acting as instrumentalities and agencies of the Government. The law relating to award of a contract by the State and its instrumentalities has been settled by the catena of decisions of the Supreme Court. There is absolutely no doubt whatsoever to hold that the State, its Corporations and instrumentalities are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. The State and its instrumentalities do not enjoy the same freedom as that of a private individual in the matter of granting largesse and awarding contracts. The State and its instrumentalities and agencies cannot choose the individuals or companies of their choice for awarding any contract or largesse.
The exercise of power or discretion by the State or its instrumentalities is subject to the constitutional or public law limitations. They cannot act arbitrarily and enter into relationships with any person they like at their sweet will. Their actions are bound to be in conformity with some principle which meets the test of reason and relevance. The State, while entering into relationship-contractual or otherwise -with a 3rd party, is expected to act in a rational and non-discriminatory manner and confined to some standard and norm, which is rational and free from arbitrariness (See Ramana v. International Airport Authority, 1979 (3) SCC 488; Fertilizer Corporation v. Union of India, and Asst. Collector and Excise v. Dunlop India Ltd, ).
14. But, at the same time, it is very well recognised that the award of a contract even by a public body or the State is essentially a commercial transaction. Commercial considerations do play an important role in arriving at a commercial decision. It is observed by the Supreme Court that the following commercial considerations would be relevant in arriving at a commercial decision;
1) the price at which the other side is willing to do the work;
2) whether the goods or services offered are of the requisite specifications;
3) whether the person tendering has the ability to deliver the goods or services as per specifications. When large works contracts involving engagement of substantial manpower or requiring specific skills are to be offered, the financial ability of the tenderer to fulfil the requirements of the job is also important;
4) the ability of the tenderer to deliver goods or services or to do the work of the requisite standard and quality;
5) past experience of the tenderer and whether he has successfully completed similar work earlier;
6) time which will be taken to deliver the goods or services; and often
7) the ability of the tenderer to take follow-up action, rectify defects or to give post-contract services.
15. It is well settled that the State or its instrumentality can choose its own method at arriving at a decision. It is true the State or its instrumentality cannot deviate from the specified norms after their notification for the benefit of intending bidders and public at large. But, in a given case, relaxation for bona fide reasons could be granted if the tender conditions permit such relaxation (See Ranuaq International Limited v. I.V.R. Construction Ltd., and Air India Limited v. Cochin International Airport Limited, 2000 (1) Supreme 351). It is equally well settled that this court in exercise of its jurisdiction under Article 226 of the Constitution of India does not exercise any appellate jurisdiction over the decisions of the State and its instrumentalities in the matter of award of contracts. Substitution of opinion by this court for that of the authorities concerned is impermissible in law. The decisions of the authorities concerned cannot be subjected to appellate scrutiny by this court. It is true, this court can examine the decision making process and interfere, if the same is found vitiated by mala fides, unreasonableness or arbitrariness. The State and its instrumentalities, agencies have the public duty to be fair to all the concerned. Judicial review would be permissible to review the decision making process only on the established grounds for such review including mala fides, arbitrariness or unreasonableness of the Wednesbury variety (Ranuaq International Limited v. I.V.R. Constructions Ltd (supra).
16. It is observed by the Supreme Court in Tata Cellular v. Union of India, , that the court does not have the expertise to correct the administrative decisions. 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. The court observed that the modem trend points to judicial restraint in administrative actions.
17. However, Sri C. Kodandaram, learned counsel for the petitioner, strenuously contended that in appropriate cases the court is entitled to lift the veil to find out for itself as to whether any contract has been awarded for collateral purposes. The court has to look into the substance of the decision and not the form and the manner in which the decision has been taken by the State or its instrumentalities, as the case may be. Restraint exercised by this court restricting the scrutiny to decision making process alone in a given case itself may amount to conferring unlimited discretion upon the authority concerned in the matter to award of contract. It is true that there is nothing like an unlimited discretion in any authority in a system governed by Rule of law and constitutionalism. But, at the same time, the distinction between an appellate scrutiny and judicial review may have to be borne in mind while evaluating the decisions of the authorities even in the matter of award of contract.
18. In the instant writ petition, Clause 3(a) and 3(b) of tender notice are impugned. We have already noticed the relevant clauses and the grounds of attack. Sri N. Subba Reddy, learned senior counsel appearing on behalf of the Corporation, submits that the terms of the Invitation to tender are not open to judicial scrutiny. The invitation to tender, be it by private or a public body, is in the realm of contract. Reliance is placed upon the well-known decision in Tata Cellular v. Union of India (supra), the Supreme Court after referring to its various earlier decisions observed that the following principles are deducible:
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 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 fairplay in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts 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".
19. I do not find any difficulty whatsoever to accept the submission made by the learned senior counsel that normally the terms of the invitation to tender may not be upon to judicial scrutiny. But in a given case, if the terms of the invitation to tender are so contrived and tailor-made to suit the conditions of one and the only person, the court in its exercise of judicial review jurisdiction may lift the veil and review the decision making process leading to prescription of the terms of the invitation to tender. The scope of judicial review cannot be restricted to such an extent preventing full enquiry into the question of legality and correctness of the decision making authority, nay, the jurisdiction to review becomes meaningless. A judicial review in such an event may become a hopeless formality.
20. The question as to the validity of the conditions imposed in the invitation to tender may have to be considered in the background of stated legal position and the facts and circumstances on hand. Is there any discernible attempt on the part of the respondent-Corporation to exclude the petitioners from participating in the tender process? It is required to notice that no mala fides as such are attributed against any of the authorities of the Corporation. It is not contended that there is any attempt on the part of the Corporation to exclude the petitioners from the tender process. The pre-qualifications prescribed may have resulted in exclusion of the petitioners from the tendering process. It is the simple case of the Corporation that the petitioner does not have the requisite qualifications. The Corporation is not bound to enter into any detailed correspondence with the petitioners and explain it to them as to for what reason they are not qualified for the supply of tender schedules.
21. It is stated that ISO 9001 certificate produced by the petitioners expired in May 2001. It is, however, stated in the reply affidavit that the petitioner No. 1 is having ISO 9001 certificate related to the scope of the work as notified in the notice of the tender dated 21.6.2001. The action of the respondents in insisting ISO 9001 certificate for the manufacturing facilities, according to the petitioners, is beyond the scope of the notice inviting tender. The fact remains that whatever certificate that is made available by the petitioners to the respondent Corporation itself would show that it had expired in the month of May 2001. At any rate, nothing turns upon the said fact.
22. It is explained in the counter affidavit that providing of park/landscape lighting requires considerable skill and experience. It is stated that a garden is a synthesis of material, colours and textures. Lighting is the medium that lets people perceive that synthesis in the nights. Successful park/landscape lighting '''requires the designer think about each element in the garden, its uses, and its users before establishing the criteria to be used".
23. It is further explained that turnover of poles, HID Lamps and Luminaries are not the criteria for the qualification. The requirement is, the prospective bidder should have experience in garden and decorative lighting works and should have executed work/works worth Rupees One Crore in a year in the preceding three years. In the circumstances, the petitioners' experience in High Masts is not relevant as far as this particular tender is concerned. The projects executed by the petitioner No. 1 are in the field of illumination of power plants, yard lighting, dock yards etc. It has no experience in the field of park lighting/decorative lighting, which is required for the tender notified by the respondents.
24. It is the case of the Corporation that to execute the special type of works like decorative lighting, park lighting and monumental lighting, the prospective bidder should have experience in the same field with a certain value of turnover in such type of work. Such conditions were imposed to avoid entry of frivolous bidders. It is clearly explained that the scope of work is survey, design, supply, install and commission system. The design itself has to be provided by the prospective bidders and precisely for that reason there is no reference to the specification of luminaries and lamps. The prospective bidders are free to use their own brands to show the conceived design. The conditions specified in the notice inviting tenders relates only to manufacture of luminaries, lamps and associated control gears. Other matters like poles, masts and their cost are not relevant as far as this tender notice is concerned. The conditions do not suffer from any vagueness.
25. In view of the explanation submitted by the Corporation, I find it difficult to accept the plea put forth by the petitioners that the impugned conditions suffer from any vagueness or arbitrariness. It cannot be said that there is no object or rationale sought to be achieved by imposing the said conditions. Obviously, such conditions were stipulated with an object to get quality of work from the reputed Concerns with experience in decorative lighting and garden lighting. The court in exercise of its jurisdiction under Article 226 of the Constitution of India cannot go any further in the matter and substitute its own opinion for that of the Corporation. The court obviously has no expertise in the matter and decide what could have been better in the given situation. It is not for this court to suggest as to in what manner and what type of conditions ought to have been incorporated in the notice to invitation of tenders. Suffice it to hold, that the impugned conditions do not suffer from any vice of arbitrariness.
26. Likewise, it cannot be said that there is any attempt on the part of the respondent-Corporation to create any monopoly in favour of the 4th respondent. As rightly explained, the tender notice does not stipulate the use of Philips brand. On the other hand, the bidders are supposed to use their own brands, no products of any particular mark or brand.
27. It is well settled by the Supreme Court in Krishnan Kakkant v. Government of Kerala, , that Article 19(1)(g) of the Constitution of India guarantees every citizen, freedom and right to choose his own employment or take up any trade or business subject only to the limits as may be imposed by the State in the interest of the public welfare and other conditions mentioned in clause (6) of Article 19 "but it may be emphasised that the constitution does not require franchise or right to business which are dependent on grant by the State or business effected by the public interest". It is further observed by the Supreme Court that although a citizen has a fundamental right to carry on trade or business, he has no fundamental right to insist upon the Government or any other individual for doing business with it. "Any Government or individual has got a right to enter into trade or business with a person or persons with whom he or if will dear (emphasis is of mine).
28. In the instant case, it cannot be said that the Corporation made any deliberate attempt to exclude 'the petitioners from tendering the process with a view to confer exclusive benefit upon the 4th respondent. It is a simple case where the petitioners do not satisfy the pre-tender qualifications. The respondent-Corporation in its discretion and wisdom thought it fit to restrict the tendering process only to the integrated lighting equipment manufacturers who comply with certain conditions. Obviously, the petitioners do not satisfy the conditions. There is no monopoly as such sought to be created in favour of the 4th respondent. In the circumstances, the ratio of the decision in Ras Bihari Panda v. State of Orissa, , has no application to the facts on hand.
29. For all the aforesaid reasons, I do not find any merit in this writ petition. The same shall accordingly stand dismissed. No costs.
30. Consequently, the interim order granted by this court shall stand vacated.