Uttarakhand High Court
Unknown vs Indian Institute Of Technology Roorkee ... on 27 November, 2019
Author: Sudhanshu Dhulia
Bench: Sudhanshu Dhulia
Judgment Reserved on : 19.11.2019
Judgment delivered on : 27.11.2019.
IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL
Writ Petition (M/S) No. 2478 of 2019
M/s Acoustic Arts Pvt. Ltd.
.............Petitioner
Versus
Indian Institute of Technology Roorkee and others
.........Respondents
Present : Mr. Saurabh Sharma, Advocate for the petitioner.
Mr. Vipul Sharma, Advocate for the respondents.
Hon'ble Sudhanshu Dhulia, J.
The present writ petition has been filed by the petitioner, which is a company registered under the Companies Act, having its office in New Delhi. The company is in the business of installation of sound equipments in Government organisations as well as private organizations. It is aggrieved by the action taken by the respondents i.e. Indian Institute of Technology, Roorkee (from hereinafter referred to as IIT, Roorkee), to cancel its notice dated 15.03.2019 by which it had invited tender for the purchase of "audio-video system" for the Institute. Mala fide and favouritism on the part of the employer are also alleged.
2. The case of the petitioner is that IIT, Roorkee on behalf of the Board of Governors gave its first notice dated 22.02.2019 inviting tender for supply, installation, testing & commissioning of audio-video system for Lecture Hall Complex-II at IIT, 2 Roorkee. The total cost of the project was Rs. 8.8 crores and one of the eligibility criteria was that a bidder must have completed three similar works costing not less than 40% of the estimated cost of the project, or should have done two similar works costing not less than 60% of the estimated cost of the project. According to the petitioner, after the said notice, a pre-bid meeting was held where according to the petitioner, prospective bidders which included original equipment manufactures and distributors raised objections that the criteria made by IIT, Roorkee is too high for most of the parties and therefore for a better participation, joint ventures be also allowed to make bid for the project. The respondent consequently cancelled the earlier notice dated 22.02.2019 and gave a fresh notice inviting fresh bids vide its notice dated 15.03.2019, whereby cost of the project was also marginally reduced from Rs. 8.8 crore to Rs. 8.50 crore and joint ventures were also allowed.
3. The reason assigned by IIT, Roorkee for cancelling the first notice was that as they were now including "joint ventures" as well, fresh notice had to be given since by that time the last date for the submission of bids was over.
4. It is an admitted case that despite allowing the joint ventures' participation, only two bids were received by IIT, Roorkee. Technical bids were opened, but before the financial bids could be opened, another notice inviting tender was given on 08.08.2019. This time the cost of the project was 3 increased from 8.50 crore to Rs. 10 crore and most specifically by which the petitioner is aggrieved is that this time joint ventures have not been allowed their participation. The petitioner's contention here is also that the IIT, Roorkee has not formally cancelled the notice dated 15.03.2019 as yet.
5. Having been ruled out from any participation in the present project, as joint ventures are not being allowed this time the petitioner was constrained to file the writ petition before this Court.
6. Petitioner alleges that both the increase in the cost of the project as well as making the joint ventures ineligible has been done at the behest of some interested parties. In other words, a mala fide as well as favouritism are being alleged.
7. This Court vide its interim order dated 05.09.2019 had directed that though the tender process may go on, but the final decision shall not be taken.
8. The IIT, Roorkee, on the other hand, is relying upon three set of Rules - (a) the Rules for Centralised Purchase, 2018 and Store Rules at IIT Roorkee (b) General Financial Rules (GFR) of Government of India and (c) CPWD Works Manual (Standard Operating Procedures) 2019.
9. First and foremost, the Rules which are applicable for procurement are the Rules for Centralised Purchase, 2018 and Store Rules at IIT 4 Roorkee which nowhere state that joint ventures are to be allowed. Moreover, there is a specific bar from taking bids from joint ventures under the CPDW Works Manual (Standard Operating Procedures) 2019. Participation of Joint ventures, according to IIT, Roorkee only complicates the matter, as the responsibility is not focused on a person, which makes it difficult for the employer to negotiate, and it has been done in the best interest of the institute.
10. The learned counsel for the IIT, Roorkee, Mr. Vipul Sharma has relied upon the seminal decision of the Hon'ble Apex Court in the case of Tata Cellular*, where basically the principles were laid down to be followed in issuing tenders and finalising contracts, which are 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 * Tata Cellular v. Union of India, 1994 (6) SCC 651.5
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 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."
11. The decision of Tata Cellular was later followed by the Hon'ble Apex Court in a number of 6 decisions. A particular reference here is of Air India Limited v. Cochin International Airport Limited reported in (2000 (2) SCC 617, where it has been stated as under:-
"The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its Corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decision-making process and 7 interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness."
12. In the case of Meerut Development Authority v. Association of Management Studies and another reported in (2009) 6 SCC 171, it was stated as under:-
"26. A tender is an offer. It is something which invites and is communicated to notify acceptance.
Broadly stated it must be unconditional; must be in the proper form, the person by whom tender is made must be able to and willing to perform his obligations. The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. However, a limited judicial review may be available in cases where it is established that the terms of the invitation to tender were so tailor made to suit the convenience of any particular person with a view to eliminate all others from participating in the bidding process.
27. The bidders participating in the tender process have no other right except the right to equality and fair treatment in the matter of evaluation of competitive bids offered by interested persons in response to 8 notice inviting tenders in a transparent manner and free from hidden agenda. One cannot challenge the terms and conditions of the tender except on the above stated ground, the reason being the terms of the invitation to tender are in the realm of the contract. No bidder is entitled as a matter of right to insist the Authority inviting tenders to enter into further negotiations unless the terms and conditions of notice so provided for such negotiations."
13. As far as the question whether joint ventures are permissible in the present tender process, the case of the petitioner is that the Rules which are actually applicable for IIT, Roorkee are "the Rules for Centralised Purchase, 2018 and Store Rules at IIT Roorkee" and not "the CPWD Works Manual (Standard Operating Procedures) 2019", which nowhere prohibit the participation of a joint venture. To strengthen his argument, learned counsel for the petitioner has relied upon Division Bench decision of Delhi High Court in the case of XS Productions India v. Union of India & another, 2018 (246) DLT 418, where in a broadly factually similar case, the permission given for participation of joint venture was held to be correct, as there was no specific prohibition for joint ventures in the case at hand, submits the counsel for the petitioner.
914. The first argument of the petitioner is that the cancellation of second notice inviting tender dated 15.03.2019 is arbitrary and illegal. This contention, however, is totally misplaced. Purchase and Store Rules, 2018 clear state that in case there are less than three bids, procurement will not proceed and fresh bid notification will be made. The reference of IIT, Roorkee is here of Rule 7(2) of its Purchase Rules, which states as under:
"7 (2). In case of purchase with estimated cost of more than Rs. 5 Lakhs minimum three valid quotations are required. If the number of quotations received against an enquiry letter/tender notice is less than three, quotations have to be re-invited by MMS after the specific recommendation of indenter to do so. Any other approval is not required. However, if the number of quotations received is still less than three after retendering, the MMS should process the purchase on the basis of these quotations with specific justification by the concerned DPC/PPC."
15. The objection of the petitioner to this provision is that this provision will only be applicable for the first time, but if for the second time also there are less than three bids contract cannot be cancelled on this ground.
1016. This contention of the petitioner, however, is not correct. As far as first bid notification dated 22.02.2019 is concerned, it cannot be considered as first bid notification, inasmuch as the admitted case is that no one applied in terms of the first bid. The first bid notification will only be the bid notification dated 15.03.2019 and admittedly in pursuance of the said bid notification only two bidders had applied, out of which one was the petitioner, and therefore as per the Rules this notice had to be given. Moreover, the first notice dated 22.02.2019 was cancelled, inter alia, due to the objections raised by the petitioner.
17. It is interesting to note that in the first notice inviting tender dated 22.02.2019, a request was made by none other but by the petitioner, amongst others, as the petitioner was not eligible to apply as per the first bid notification dated 22.02.2019, since joint ventures were not being allowed. He could only be eligible if joint ventures would have been allowed. IIT, Roorkee initially went with this proposal and invited and allowed the joint ventures to participate, but inspite of allowing the joint ventures admittedly only two bids were received by them. Therefore the entire argument of a wider participation, fairness and transparency does not hold good, as even when the joint ventures were allowed, IIT, Roorkee had received just two bids. Therefore, regarding the cancellation of second bid notification dated 15.03.2019, there is no fault on the part of the respondents.
1118. In any case, a participant in a bid process has no right whatsoever to challenge the cancellation of invitation of a notice. By its notice dated 15.03.2019, the IIT, Roorkee had only invited an offer. The offer was given, inter alia, by the petitioner. This offer had not yet been accepted. Only an acceptance of an offer formalises a right of a party. It is not even a case that petitioner's bid was the lowest and yet not accepted, as financial bids were never opened. Even in that contingency the petitioner does not have any right to get the contract though he has the right to get an explanation from the employer as to why his bid being L-1 have not been accepted.
19. For the question whether a joint venture can be allowed or not, the IIT, Roorkee relies upon Clause 1 of CPWD Works Manual (Standard Operating Procedures) 2019, where the joint ventures are not allowed. CPWD Works Manual (Standard Operating Procedure) 2019, which are also applicable to other Government and semi-government institutions, provided they make it applicable to them. According to the petitioner, this has not been formally done.
20. The allegations of malice, favouritism, etc. are merely bald allegations, without specific particulars or any prima facie evidence.
21. As far as joint ventures are concerned, there is absolutely no ground for the petitioner to insist on a joint venture. If the employer i.e. IIT, Roorkee is of the opinion that it is in the best interest 12 of the institute that the joint ventures should not be allowed, they are perfectly free to draw a line prohibiting joint ventures. That would be the decision of the IIT, Roorkee, which would not call for a judicial scrutiny. All the same, this must be done as per the procedure established under the law. This has evidently not been followed.
22. Admittedly though the IIT Procurement Rules i.e. the Rules for Centralised Purchase, 2018 and Store Rules at IIT Roorkee or the General Financial Rules (GFR) nowhere specifically permits joint ventures as contended by IIT, Roorkee, but it is also true that there is no specific bar for prohibiting joint ventures. CPWD Works Manual (Standard Operating Procedures) 2019 has not been formally adopted by the IIT, Roorkee by its Director. Most importantly, sub-clause (5) of Para 12 of the Rules for Centralised Purchase, 2018 and Store Rules at IIT Roorkee which is the Principal Rule governing the subject here clearly states that "any matter not covered by these rules and GFR may be referred to the Director". In other words, in case of any ambiguity or where the Rule is silent, the matter has to be referred to the Director.
23. In view thereof, though the IIT, Roorkee can prohibit joint ventures, this prohibition must have an approval of the Director. The approval of the Director is not on record.
1324. Writ petition is therefore disposed of in the aforesaid terms. Let the IIT, Roorkee proceed with the process but only after having a formal approval of the Director, IIT, Roorkee as far as joint venture is concerned.
(Sudhanshu Dhulia, J.) 27.11.2019 Avneet/-