Jammu & Kashmir High Court
M/S Shivam Enterprises vs Food Corp. Of India & Ors on 10 December, 2010
Author: Muzaffar Hussain Attar
Bench: Muzaffar Hussain Attar
HIGH COURT OF JAMMU AND KASHMIR AT JAMMU. LPAOW No. 20 OF 2010 M/s Shivam Enterprises Petitioners Food Corp. of India & ors. Respondent !Mr. Pranav Kohli, Mr. Ankur Gupta and Ms. Hancy Maini, Advocates. ^Mr.Sunil Sethi,Sr.Advocate with Mr. Ravi Abrol, Advocate Mr. K. S. Johal, Advocate, Mr. Ajay Kr. Gandotra, Advocate Honble Mr. Justice Dr. Aftab H. Saikia, Chief Justice Honble Mr. Justice Muzaffar Hussain Attar, Judge Date: 10.12.2010 :J U D G M E N T :
Dr. Saikia, CJ:
Heard Mr. Pranav Kohli, Mr. Ankur Gupta and Ms. Hancy Maini, learned counsel for the appellant.
2. Also heard Mr. Sunil Sethi, learned Senior counsel assisted by Mr. Ajay Kumar Gandotra and Mr. Ravi Abrol, learned counsel representing Food Corporation of India (for short, FCI) as well as Mr. K. S. Johal, learned counsel appearing for the private respondents.
3. The legality and correctness of the judgment and order dated 05.04.2010, passed by the learned Single Judge in OWP no. 314/2010, has been questioned in this Letters Patent Appeal.
4. The controversy raised in the above writ petition, initiated by the appellant as writ petitioner, being unsuccessful tenderer, pertains to challenge of the appointment of road transport contractors by FCI to the private respondents.
5. The said writ petition was dismissed by the impugned judgment and order holding that no fault could be found with the decision making process of the respondents to reject the case of the appellant as it was found that the appellant was not a transport contractor and the Court could not go into the merits of the decision taken by the respondents in rejecting the tender of the appellant.
6. Facts of the case in brief is that FCI floated Notice Inviting Tender (hereinafter referred to as NIT), being Notification no. Stg/32(3) JK/Tender/2008- 09 Vol. 1 dated 09.02.2010 thereby inviting Tenders for appointment of Road Transport Contractors for movement of stock by road from FSDs New Godown/Chatha/Nagrota(Jammu) to various centers as per the terms and conditions contained in NIT.
7. For the sake of convenience, relevant portion of the tender notice dated 09.02.2010, essential for adjudication of the controversy in hand, may be reproduced as under:
TENDER NOTICE No.Stg/32(3) JK/Tender/2008-09 Vol. 1 dated 9.2.2010 Food Corporation of India J&K Region invites tenders under Two Bid System from financially sound parties having business competency for appointment of Road Transport Contractors for movement of stocks by road from FSDs New Godown/Chatha/Nagrota (Jammu to various centres as mentioned below for a period of two years:-
Centre From To Earnest money (Fig.in lacs) Security (Fig. in corers) Estimated value of contract (Fig. in crores.) FSD, New Godown/Chatha/Nagrota (Jammu) Srinagar 63.78 2.24 Rs.31.89
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Lethpora 32.84 1.15 Rs.17.24
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Mirbazar 22.20 0.78 Rs.11.10
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Budgam 25.34 0.89 Rs.12.67
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Khillani 6.08 0.22 Rs.3.04 T .. . .
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Tender documents containing the terms and conditions can be obtained in person or through authorized representative from the office of General Manager . FCI, Regional Office, Jammu on payment of Rs. 500/- (Rs. Five hundred only) from 10.2.2010 to 2.3.2010 during office hours. The tender documents i.e. Technical Bid and Price Bid shall be received on 5.3.2010 upto 2 PM and shall be opened on the same day on 3 PM in FCI, Regional Office Jammu in presence of tenderers or their authorised representatives who may wish to be present. A. Work Experience: (Enclose experience certificate for rake handling and transportation duly obtained form manufacturer/handling agency/government department/PSU/public Ltd Company dealing in fertilizers, food grains, cement or similar products.
The tendered should have executed in the immediately preceding two years transport contracts, the total value of which is not less than 50 % or the value of the contract to be awarded.
OR The tenderer should have executed in the immediately preceding two years any single contract the value of which is not less than 25% of the contract to be awarded.
2. The tenderer must possess an immovable property in his own name (excluding the residential house) equivalent to at least 10% of the value of contract value.
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The tenderer who does not comply with these instructions shall be summarily rejected. Tenderer can also send their tender by registered post. The name of work and words Technical Bid only and Price Bid only as the case may be should clearly be written on the top of the respective envelops. The tenders which are not accompanied by all the required annexures as per Technical Bid format intact induly filled in and signed shall not be considered and on liable to be rejected. The Technical Bid shall be accompanied by Earnest Money in the form of Demand Draft or pay order only, drawn on any scheduled bank in favour of General Manager ( R), FCI, Jammu payable at Jammu. All credentials/documents and copies of the certificates/information called for shall have to be furnished along with Technical Bid in one stroke as per tender terms and no additional document shall be accepted after opening of the technical bid. Special attention be given for submitting of information called under clause (iii) (1) under he heading Technical experience/Work experience. Necessary work experience certificates should be supported by relevant work orders/agreements with the department /agencies served without fail.
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8. Hence NIT stipulates the following essential conditions in its eligibility criteria:
(a) Work experience for rake handling and Transportation duly obtained from Manufacturer / Handling Agency / Govern -ment Department/PSU/Public Limited Company dealing in fertilizers, food grains, cement or similar products;
(a) The execution of work in the shape of transport contracts the total value of which is not less than 50% of the value of the contract to be awarded or single contract the value of which is not less than 25% of the value of the contract to be awarded;
(b) The tenderer must possess immovable property in his own name (excluding residential house) equivalent to at least 10% of the contract value.
9. In terms of NIT, the appellant purchased the Tender documents, claiming to be eligible and qualified contractor, and submitted its bid in the shape of (i) Technical and (ii) Financial bid for as many as five locations/centres as shown above in NIT for works of the total value of Rs. 81.26 crores. The appellant also deposited the Earnest Money of total amount to the tune of Rs. 162.53 lakhs, per contract wise, by virtue of Demand Drafts/ Pay Orders duly prepared in the name of FCI. The appellant also annexed all the requisite documents/informations as required in terms of the eligibility criteria of NIT. The appellant supplied all the essentials in its Technical bid and quoted the rates in its official/prices bid for every contract for which the tenders were submitted. The rates quoted by the appellant were lower than the rates offered by the private respondents.
10. Although it had supplied all the relevant requisite informations in the Technical Bid, however, FCI issued a letter dated 16.3.2010 to the appellant by which certain clarifications/informations were sought from the appellant. Pursuant to which, the appellant tendered its reply vide its letter dated 18.3.2010, through which the appellant clarified all the required informations.
11. FCI after receiving the clarifications, as sought for, were supposed to open the bids after giving information about the opening of the bids to the appellant along with all other contractors. But the bids were opened on 25.3.2010 without giving information about the details of opening of the bid to the appellant. FCI only informed the private respondents, who were present at the time of opening of the bids. To the great shock, FCI rejected Technical Bid of the appellant on the ground of some disqualification despite the technical bid being duly tendered by the appellant fulfilling all the requirements/norms. FCI accepted the Technical Bids of private respondents.
12. Thereafter, FCI opened the Financial Bid and it was found that the rates quoted by the private respondents were much higher than that of the appellant. Hence, it was claimed by the appellant that it being admittedly the lowest bidder and having fulfilled all the essentials and requisites in total compliance of the terms and conditions envisaged in NIT, ought to have been allotted the contract in question. Eventually, ignoring the appellant, FCI was in the process of allotment of the contract in favour of private respondents.
13. Feeling aggrieved by the action of FCI for rejection of its technical bid, the appellant approached the Writ Court by filing the instant writ petition seeking the following reliefs:
It is, therefore, most respectfully submitted that the Honble Court may very kindly be pleased to:
(i) Certiorari seeking quashment of decision of respondent No. 1 to 3 whereby the bid submitted by the petitioner in pursuance to the NIT bearing No. Stg/32(3)/J K/Tender/2008-09 Vol. 1 dated 9.2.2010, has been rejected on the illegal grounds not contemplated as per the tender notice;
(ii) Certiorari quashing the decision of respondent No. 1 to 3 whereby the contract for the appointment of the Road Transport Contractor for movement of stock by road from FSDs new Godown/Chatha/Nagrota(Jammu) to various centers is issued in favour of respondents 4 to 8
(iv) Prohibition restraining the official respondents from executing any contract with respondents No. 4 to 8 for the appointment of Road Transporter Contractor in pursuance of the NIT bearing No. Stg/32(3)/J K/Tender/2008- 09 Vol. 1 dated 9.2.2010.
(v) Mandamous directing the respondent No. 1 to 3 to accept the technical bid as also financial bid submitted by the petitioner in pursuance to the NIT bearing No. Stg/32(3)/J K/Tender/2008-09 Vol. 1 dated 9.2.2010.
(vi) Mandamous directing the respondent No. 1 to 3 to allot the contract for the appointment of the Road Transport Contractor for movement of stock by road from FSDs new Godown/Chatha/Nagrota (Jammu) to various centers to the petitioner being the lower tender than the rates quoted by the respondents 4 to 8.
may kindly be passed in favour of the petitioner and against the respondents in the interest of justice, equity and fair play.
14. Disputing the contentions and claims raised by the appellant, FCI filed its response to the writ petition by way of an affidavit wherein it was pleaded that NIT was issued by FCI on 09.02.2010 for Transportation contract for various places from FSD New Godown Chatha/Nagrota and FSD Srinagar, Budgam, Lathpora and Mir Bazzar. As per NIT, the tendering was to be held in two tier/bid system and each tenderer had to submit technical bid and price bid. In the technical bid, the evaluation was to be done by FCI with a view to check the competence of the person who was applying for the allotment of the contract and his financial soundness with business competence. It was also stated that as per NIT, the last date for submission of tender form was 5.3.2010 and it was made clear in NIT that all the documents pertaining to the eligibility had to be attached with the technical bid itself in one stroke. It was also a condition in NIT that a tenderer was required to have work experience immediately preceding two years and should have carried transport contract total value of which was not less than 50% of the value of the contract to be awarded in case of multiple contracts or not less than 25% of the value of the contract in case of a single contract. It was only after a person getting qualified in technical bid that his price bid was to be considered.
15. It was further contended before the Writ Court by FCI that various persons applied for allotment of Road Transport Contract in their favour and out of ten firms, the technical bid of five firms including the appellant were rejected being falling short of the eligibility criteria, as fixed in NIT. Against the work of total value of Rs. 81.26 crorers the appellant deposited only an Earnest money of Rs. 162.53 lakhs. As the appellant had applied for works of the total value of Rs. 81.26 crores, as such, it was required to have experience of transportation contract for preceding two years the total value of which not be less than 50% of the contract value of the centre commanding higher value, i.e., it should have been Rs. 15.95 crores and in case the appellant was claiming to have carried multiple contracts and if it should be less than 25% of the contract value, i. e., it should not be less than 7.97 crores in case the appellant was claiming a single Road Transport Contract.
16. It was further submitted that after the technical bid were opened, it was found that the appellant was not having the eligibility on the basis of merit of its claim and it was also ineligible on the basis of the documents which it attached with the tender form. It was further case of FCI that the appellant annexed with the technical bid an agreement which the appellant executed with M/s. Ambuja Cements Ltd. on 31.10.2007 under the title of Dump Agent Agreement and as per the terms and conditions of the said agreement, the appellant did not come within the definition of transport contractor but was a dump agent only.
17. FCI further informed the Writ Court that the claim of the appellant for doing transport work worth Rs. 3 crores per month was also not apparently coming out from the records attached with the technical bid and the said statement appeared to be not correct. In this context when FCI sought for some clarification, the clarifying letter dated 18.03.2010 was issued by M/s Ambuja Cement Limited on behalf of the appellant which clearly showed that the freight rate was being directly paid to the contractors by the respective dealers/Government Department at the time of loading where the appellant had no role to play in the transportation.
18. FCIs stand was that the transport contract performed a very sensitive work in the FCI distribution system as the food grains worth more than Rs. 4000 crores were kept in the custody of the said transport contractors to be ferried from one place to another because of involvement of such a huge quantity of food grains worth thousand of crores of rupees and hence the financial competence as also the competence skills of the transporters were of pivotal value and no relaxation could be shown on that count.
19. It was submitted that though FCI was not required, under the terms and conditions of NIT to give further opportunity to the appellant to improve its position subsequent to the submission of technical bid, still, in all fairness, an opportunity was given to the appellant to explain its position and even after explanation submitted by the appellant, its position so far as the eligibility was concerned, was not improved and did not come as per the conditions of NIT. Technical bid of the appellant was, therefore, not accepted.
20. FCI in para 12 of its affidavit pleaded that as per the terms and conditions of NIT, the tenderer should have property worth 10% of the total contract value excluding the residential house. The appellant was required to submit the details of the properties worth Rs. 8.10 crores free from all encumbrances which would work as security during the currency of the contract. In the instant case, the appellant declared itself to be the owner of property worth Rs. 27.5 crores out of which two properties worth Rs. 16.00 crores were the constructed residential houses and as such the case of the appellant could not be considered. For remaining properties, appellant submitted a fax copy of non-encumbrances certificate of single property worth Rs. 4.50 crores which was on the name of Smt. Saroj Sood, who was not even partner of the appellant firm. Under such premise the case of the appellant could not be considered even on merit.
21. It was further case of FCI that the claim of the appellant of having done transportation work of Rs. 3.00 crores per month was not reflected in the profit and loss account where the total early business transaction was less than Rs. 1. 43 crores.
22. Besides FCI, the private respondents also filed their respective objections to the writ petition.
23. Controverting and rebutting all the averments, statements and claims, the private respondents have submitted that the appellant did not fall in the eligibility criteria as per the terms and conditions stipulated in NIT and, accordingly, its Technical Bid was rejected. According to them, the appellant was not a transport contractor and it failed to prove that it was ever involved in any transportation contract. It was simply working as Dump agent and same was evident form the Dump Agent Agreement dated 31.10.2007 executed between M/s Ambuja Cement Ltd. and the appellant, so furnished along with NIT. It was also contended before the Writ Court that FCI, having scrutinised the tender documents, sought clarification on certain aspects including as to whether the appellant was a transport contractor vide its communication dated 16.03.2010. In reply to such queries, the appellant by his communication dated 18.03.2010 along with other documents submitted another agreement dated 6.10.1995 which ex facie raised doubt as regards its genuineness and veracity. The said agreement clearly showed that that would be valid upto 6.04.2000 and as such the said agreement could not make the appellant the transport contractor for the allotment of contract in question in the year 2010. The Writ Court was also informed that tenders on Technical Bid submitted by the private respondents were accepted by FCI by its reasoned order passed on 23.03.2010 rejecting the appellants tender on Technical Bid and contract agreement were also executed in their favour and execution of work started with effect from 26.03.2010. Given such factual situation, the Writ Court has no scope to interfere with the decision of FCI regarding allotment of transport contract to the private respondents under Article 226 of the Constitution of India read with Section 103 of the Constitution of Jammu and Kashmir on contractual matter and the writ petition was liable to be dismissed.
24. After hearing learned counsel for the parties and taking into consideration the all other relevant aspects as well as on perusal of the records, the Writ Court refused to grant any relief, as prayed for, to the appellant observing that the tender of the appellant was rejected by FCI vide its order dated 23.02.2010 on the ground that the appellant did not have work experience as transport contractor, being one of the two conditions of the tender because the communications/documents relied upon by it did not conform to the requirement as set out in the eligibility clause of NIT and besides appellant was given fair opportunity by FCI for presenting its case. It was also held that the Court could not substitute its own opinion for that of the experts, inasmuch as the only scope of judicial review relating to the matters where the decision making process was vitiated either by arbitrariness, unfairness, illegality, irrationality or Wednesbury unreasonableness.
25. Impugning these findings arrived at by the learned Single Judge, Mr. Kohli, learned counsel appearing for the appellant has primarily raised the following issues:
(i) Whether the appellant Technical bid is in compliance with the conditions laid down in the NIT.
(ii) Whether the order of rejection dated 23.3.2010 has been passed after consideration of all the material and relevant facts/consideration provided by the appellant in the Technical Bid.
26. Referring to issue no. (i), learned counsel has contended that NIT prescribed two conditions, namely (i) work experience and (ii) possession of immovable property in its own name (excluding residential house). To satisfy the eligibility criteria, the appellant has submitted the following documents:
a. Experience certificate issued by M/s Ambuja cements clearly envisaging transport agreement and the transport capacity of the appellant as required in terms of the NIT;
b. Valuation report dated 17.03.2010 issued by Surveyor, Engineer/valuers for the commercial property measuring 160 marlas/8 kanals situated near Radha Swami Satsang Ghar, Una Road, Hoshisarpur. Total cost of commercial property after deduction of the net cost of construction = Rs. 8.00 crores.;
c. Valuation report dated 17.03.2010 issued by Surveyor, Engineer/valuers for the commercial property situated at Dhobi Ghat Raod, Hoshiarpur measuring 8.44 marlas. Total cost of commercial property=Rs. 1.00 crore.
27. It is strongly contended on behalf of the appellant that immediately after submission of the Technical Bid, FCI vide communication dated 9.3.2010 directly approached M/s. Ambuja Cement Ltd. seeking following clarifications of credentials submitted by the appellant, i.e., (i) to authenticate the issuance of experience certificate, (ii) whether the appellant was engaged in handling of cement or assigned transportation of cement work as well as (iii) whether the work assigned by the said Company to the appellant was single or multiple including the tenure/validity of the contract. In reply to such clarification, M/s. Ambuja Cement Ltd., vide its letter dated 11.3.2010 confirmed-(i) the issuance of authenticity of the experience certificate issued by its Jammu Branch office, (ii) the status of the appellant as transport contractor and (iii) trucks were directly provided by the appellant and its agreement that the appellant as transport contractor was continuing till date.
28. The specific case of the appellant is that though NIT prescribed that all credentials/documents must be furnished in one stroke, FCI itself, deviating from its own terms and conditions, vide communication dated 16.03.2010, wrote to the appellant seeking certain clarifications asking it to furnish relevant transport agreement executed between the appellant and M/s. Ambuja Cement Ltd. In reply, the appellant, by its letter dated 18.3.2010 clarified the entire aspects and furnished all the requisite documents, as desired by FCI, enclosing the transport agreement dated 6.10.1995, as a proof that the appellant is having the experience as transport contractor. Since the appellant has submitted all the documents/requisites, the Technical Bid of the appellant before FCI is in total compliance with the conditions laid down in NIT.
29. As regards issue no. (ii), Mr. Kohli, learned counsel for the appellant has vehemently argued that to the great dismay and surprise, FCI without communicating any reason or decision, has rejected the tender on Technical Bid of the appellant and has started the process to allot the said contract to the private respondents. More importantly, when the final bid was opened, it was found that the appellant was the lowest bidder. Despite fulfilment of the eligibility criteria as well as also having found the appellant to be the lowest bidder, rejection of the Technical Bid manifestly reflects arbitrariness, unreasonableness and favouritism and contrary to the settled law vitiating the decision making process.
30. Keeping in view the above action, it is submitted by the learned counsel that while the appellants Technical Bid was rejected, FCI did not consider all those materials provided by the appellant before it and such order of rejection would definitely come under the purview of judicial scrutiny.
31. Lastly, it is submitted by Mr. Kohli, learned counsel for the appellant that the Writ Court has also failed to consider these aspects in the light of the settled legal position vis-a-vis arbitrary exercise of the powers by the FCI. Rejection of the writ petition on the ground that the appellant was not a transport contractor, was ex- facie bad in law and the same deserves interference by this appellate Court.
32. In support of his submission, learned counsel for the appellant has relied on the following decisions:
a. Rameshwar Prasad and ors.(vi) v. Union of India & ors, 2006 (2) SCC 1 para 242;
b. Tata Cellular v. Union of India, (1994)6 SCC 651;
c. Asia Foundation & Construction (I) Ltd. v. Trafalgar House
Construction(I) Ltd. (1997) 1 SCC 738, para 9 & 10;
d. Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd. &
anr. (2005) 6 SCC 138 para 13 & 15;
e. Sterling Computers Ltd. v. M & N
Publications Ltd. (1993) 1 SCC 445
para 13, 14, 25.
f. Mohinder Singh Gill & another. v. Chief
Election Commissioner, New Delhi &
ors. (1978) 1 SCC 405 para 8.
33. Defending the impugned judgment and findings recorded therein, Mr. Sethi, learned Senior counsel appearing for FCI, has submitted that vide NIT, bids were invited in two tier system i.e. technical bid and the actual bid, whereunder technical bids were for seeing the capacity and capability of the bidder to undertake the transportation job for FCI for transporting the food grains worth crore of rupees to be distributed in far flung areas. In the instant case, the appellant has failed to fulfil the eligibility criteria so fixed in NIT. The learned counsel has contended that as the appellants tendered value of contract was Rs. 81.26 crore, as such the appellant was supposed to have done transportation contract to the tune of Rs. 40.63 crore in case of multiple contracts and to the tune of Rs. 20.31 crore in case of single contract. Additionally, the documents supporting the claim for having done transport business for immediately preceding two years were to be submitted in one shot at the time of filling of tender document itself and not afterwards. To satisfy this condition, appellant submitted along with his tender document an Agreement (Dump Agent Agreement) executed with M/s Ambuja Cements dated 31.10.2007, contents of which shows that the appellant was not in transport business for Ambuja Cements but it pertains to only dumping of the material of Company. Moreso, this Agreement was valid only upto 31st December 2008 without any further extension.
34. Being not satisfied with the aforesaid documents to accept the appellant as transport contractor, affording a fair opportunity to the appellant, FCI by its letter dated 16.3.2010 asked the appellant to clarify its position, inter alia, the contractual obligation for transportation of cement for M/s. Ambuja Cement Ltd.
with specific mention in the last para of the said communication that no fresh/additional document could be entertained and the appellant was only to require to give clarification.
35. However, according to the learned Senior counsel, the appellant on 18.3.2010 by way of clarification amongst others, furnished an agreement dated 6.10.1995 executed with M/s. Ambuja Cement to show its competence as transport contractor. However, FCI doubted the credibility of the said agreement and accepted the same as forged document due to certain contradictory contents incorporated in the said agreement. For instances (i) a mere reading of the agreement would manifestly indicate that although the said documents alleged to have been executed on 6.10.1995, but it refers to one resolution passed on future date on 15.10.1995 and more interestingly that the rights of the parties under the said agreement was mentioned to be governed by the Arbitration and Conciliation Act, 1996 when as on 6.10.1995 nobody could have conceived as to what was going to happen on 15.10.1995 or in the year 1996 about the Arbitration and Conciliation Act, 1996 and (ii) the agreement was only valid up to 6.4.2000 and no further agreement of transportation was projected or shown or even there was no indication of its automatic renewal.
36. It has also been argued on behalf of FCI that further grounds for rejection of the technical bid of the appellant were (i) profit and loss statement which did not reflect the transportation activity of the desired level as well as (ii) not having the financial worth prescribed under NIT, required to be equivalent to not less than 10 % of the value of the contract to be awarded. Appellant was supposed to show the holding of properties worth not less than 10% of Rs. 81.26 crore. The details of properties given did not satisfy the financial capacity of the appellant to the required value.
37. In support of his argument, the learned Senior counsel has relied on following decisions:
(i) Swapan Kumar Pal v. Achintya Kumar Nayak and ors, (2008) 1 SCC 379;
(ii) State of Kerla and anr v. Naveena Prabhu and ors, (2009) 3 scc 649.
38. Referring to Swapan Kumar Pals case (supra), it is submitted that since apparently no legal error has been committed in the decision making process, the Writ Court cannot interfere with the merit of the decision. Since invitation of tender and refusal of the tender pertained to the policy matter, applying the ration of Naveena Prabhus case (supra), in fixation of terms and conditions of the NIT, the Court would generally not interfere with the same.
39. Appearing for private respondents, Mr. Johal, learned counsel has supported the judgement under challenge stating that no illegality or jurisdictional error is being committed in dismissing the writ petition and by its findings, the Writ Court has taken a correct approach to the entire issue, being the contractual matter wherein the Courts power of interference under writ jurisdiction is very limited and circumscribed.
40. Mr. Johal, while raising a preliminary objection at the very outset, has submitted that the appellant has no locus standi to move this appeal due to the simple reason that he has withdrawn its entire earnest money amounting to Rs. 162.60 lacs immediately after the dismissal of the writ petition, as a result of which it voluntarily relinquished its right of contractor on the principle of waiver. According to him, this legal position has been reflected in the judgment rendered by Honble Supreme Court in case Municipal Corporation of Greater Bombay Dr. Hakimwadi Tenants Association and ors, reported in 1988 (Supp) SCC 55. The relevant portion of para 14 at page 65 is reproduced as under:-
.In order to constitute waiver there must be voluntary and intentional relinquishment of a right. The essence of a waiver is an estoppel and where there is no estoppel, there is no waiver. Estoppel and waiver are questions of contract and must necessarily be determined on the facts of each case
41. According to Mr. Johal, similar view was also taken by Andhra Pradesh High Court in Division Bench in a case Syed Mousa Quadri v. State of Andra Pradesh, reported in AIR 1980 Andhra Pradesh 236. In Para 13, it was observed as under:
13..Even otherwise the Corporation could not have accepted the tender of the 3rd respondent when he had already withdrawn the earnest money paid by way of cash and Bank Guarantee. The action of the Corporation is, therefore, illegal and devoid of jurisdiction.
42. It is also contended that after the issuance of the tender notice, the appellant has participated in the tender process and since the appellant did not fall in the eligibility criteria, its Technical bid was rejected.
43. As regards power of judicial review in contractual matter, learned counsel representing the private respondents, has drawn our attention to a judicial authority of the Apex Court in case AIR India Ltd. v. Cochin International Airport Ltd and others reported in 2002 (2) SCC 617. Referring to prargraphs 7 and 12, he has submitted that in arriving at a decision for allotment of a tender, the authority can choose its own method and it can fix its own terms for invitation of the tender and the same is not open for judicial scrutiny unless arbitrariness, irrationalism or unreasonableness are writ large in award of a contract. Accordingly, it is submitted that in the light of accepted precedent and taking note of facts situation, the impugned judgment and order need to be uphold and confirmed.
44. This Court has given anxious consideration to the arguments and submissions advanced by the learned counsel representing the respective parties, and also meticulously scrutinized the pleadings exchanged by and between the parties including the relevant documents and records so made available before it.
45. In the case in hand, it is seen that while considering the tender papers by way of evaluation of Technical Bids presented by as many as ten tenderers including the appellant by the Tender Committee on 23. 3. 2010, the private respondents were found as eligible for the contract when other five tenderes including the appellant declared as ineligible. In arriving at a decision to reject the tender, the appellant was assessed as not a bonafide transport contractor and in this regard a reasoned order on 23.3.2010 was passed which is quoted as under:-
1. Shivam Enterprises - Srinagar, Mir Bazar, Lathpora, Baramulla, Kupwara (without EMD) and Khillani Shri Shalinder Kumar, manager (Stg) was deputed to Headquarters of M/s. Ambuja Cement Ltd at New Delhi and Chandigarh to get the details of transportation work performed by the party. This was followed by visit to local Branch office at Jammu. Despite repeated attempts, M/s Ambuja Cement Ltd repeated the wording of original experience issued vide letter dated 11.3.2010 and no clear information has been provided whether the Company is performing any transportation work.
As per version of M/s Ambuja, payments of freight are on to pay basis from dealers and departments. The freight is paid by the customers to who cement is delivered to the trucks itself. In such a state of affairs, how can it be construed that M/s Shivam Enterprises is undertaking transportation work, when the payment is received by truckers and not by M/s Shivam Enterprises. Procurement of trucks, arranging safe delivery of stocks and also making payments to transporters/truckers is essential part of transportation work and in the absence of these activities, how M/s Shivam Enterprises can be considered to be having an experience of transportation as envisaged in the tender terms.
In the declaration at Technical Bid format, the party has declared owned property to the tune of Rs. 27 Crores, out of which two properties valuing at Rs. 16 crores are constructed houses. However, despite giving clear notice to provide non- encumbrance certificates of all properties, FAX copy of only one non-encumbrance certificate of single property has been furnished.
Since the party has failed to satisfy the criteria of work experience as per tender terms and payments received towards transportation charges are not clearly reflected in P&L Account statements, it cannot be construed that M/s Shvam Enterprises is a bonafide transport contractor. Hence Tender Committee declare this firm as ineligible.
46. From a close perusal of the above order, it appears that the Tender Committee found that the appellant was not undertaking any transportation work and lacked experience of transportation. That apart, the appellant declared owned property to the tune of Rs. 27.00 crores, out of which two properties valued at Rs. 16.00 crores, being constructed houses. Besides, the appellant instead of providing non-encumbrance certificate for all the properties, only one non-encumbrance certificate of single property, that too, a fax copy was only furnished. Even the profit and loss account statement did not clearly show as about the transportation charges. Consequently, having considered the eligibility criteria of the appellant, according to the authority, it could not be construed that the appellant was a bonafide transport contractor and eventually, the Tender Committee declared the appellant as ineligible.
47. In the backdrop of the order of rejection, as quoted above, in our opinion, the determination of the controversy in lis in hand would confine only to three basic questions. Those are as to (i) whether the appellant was a bonafide transport contractor to fulfil the eligibility criteria for appointment as transport contractor, (ii) whether the order of rejection is vitiated by arbitrariness, illegality and unfairness and (iii) permissibility of the Writ Court to interfere with the rejection order.
48. In order to answer question no. 1, let us take the document submitted with the tender on Technical Bid to fulfil one of the eligibility criteria as of transport contractor. The appellant while submitting the tender paper, annexed with the Technical Bid an agreement being Dump Agent Agreement dated 31.10.2007 executed with M/s Ambuja Cement Ltd. The recital of the agreement clearly indicates that the appellant was a Dump Agent only and not a transport contractor. Clause (2) of the said agreement dealt with the scope of dump work which quoted hereunder:-
2. Scope of Work 2.1 the Dump Agent will receive materials on behalf of the Company and the said materials shall be stored /stacked property in the dump(s).
2.2. As and when Deliver orders are issued by respective branches through Branch-in-Charge or any authorized officer of the company, the material shall be detached to consignees strictly as per the Delivery instructions by the authorized representative of the company from time to time.
2.3 The Dump Agent shall co-ordinate with the Clearing & Forwarding Agent and/or Transport Contractors and arrange to dispatch material in good condition to the consignees/agent of the consignee as directed by the Company from time to time.
49. The recital of the agreement did not speak of any transportation work done or carried out by the appellant.
50. FCI, thereafter vide communication dated 16.3.2010 sought for some clarifications from the appellant. The relevant portion of the communication dated 16.3.2010 may be extracted as under:
i) As per eligibility criteria (Col.iii-1 (Work Experience) of Technical Bid, the tenderer should have executed transportation work of relevant value in the immediately preceding two years.
However agreement attached by you with tender documents show that the you have been appointed as Dump Agent by M/s Ambuja Cement Ltd. it is not clear whether you have any contractual obligation for transportation of cement for M/s Ambuja Cement Ltd. If so, the relevant agreement executed with M/s Ambuja Cement Ltd and payments received along with cheque details for the preceding two years must be furnished:
. .. .. .. . .. . ..
iv) Agreement executed with M/s Ambuja Cement Ltd. is valid from 31.10.2007 to 31.12.2008, no papers are attached with regard to continuation of this agreement.
i. As per declaration in Technical Bid you have mentioned owned property of Rs. 27.50 crores. Whereas revenue documents attached in support of mentioned property show value of property aggregating at Rs. 38.67 lacs. The property documents are not supported by valuation by the competent authority along with non-encumbrance certificate.
To maintain the sanctity of tender enquiry no fresh /additional documents can be entertained. However, to enable Tender Committee to reach logical conclusion for determination of your eligibility, you are advised to clarify above points. In any case, your reply must reach this office within three days.
51. In response to the above communication, the appellant vide its communication dated 18.3.2010, along with other clarifications, submitted an agreement dated 6.10.1995 executed with M/s Ambuja Cement Ltd. in support of its appointment as transport contractor.
52. On careful consideration of the said agreement dated 6.10.1995, it is seen that though the agreement was executed on 6.10.1995, it had a reference of certain resolution dated 15.10.1995 as well as to the Arbitration and Conciliation Act, 1996, being non-est at the relevant time of execution of the said contract. That apart, it is found that though this document was executed in 1995, the same was not annexed at the time of filing of Technical Bid by the appellant. However, the entire action on the part of the appellant certainly raised doubt regarding the existence of this document. Save and except this document, there was nothing on record to support the claim of the appellant as a transport contractor. The above aspect was also carefully dealt with by the Writ Court and this Court also without any hesitation endorse the views of the Writ Court, without commenting on the legality of the document of 1995.
53. It also transpires from the rejection order that the tender of the appellant was rejected on the ground that it did not have the work experience as transport contractor, being the basic and essential requisite to make the appellant eligible in this tender process. Since the appellant failed to satisfy this condition, it was declared ineligible.
54. Insofar as question no. 2 is concerned, since the appellant primarily failed to satisfy one of the essential ingredients as per the terms and conditions of NIT, the action of FCI did not, in our considered view, reflect any arbitrariness, unfairness, unreasonableness and illegality.
55. As regard question no. 3, the power of judicial review would apply to the exercise of contractual power by the Government bodies in order to prevent arbitrariness or favouritism. In such a situation, in deciding the contractual matters, duty of the Court is, therefore, to confine itself to the question of legality, basically as to whether the decision making authority acted arbitrarily or acceded its power or abused its power or committed any error of law.
56. Law pertaining to award of a contract by the State, its undertakings, corporations and bodies acting as instrumentalities and agencies of the Government has been already settled. In granting contract the State, its undertakings, corporations, instru- mentalities and agencies are bound to adhere to the norms, standards and procedure laid down by them and cannot depart from them arbitrarily. They can choose their own method to arrive at a decision. But the power so vested upon such administrative authorities should be exercised in such a manner which can satisfy the test of Article 14 of the constitution. If necessary for the purpose of satisfying as to whether the grant of government contract has been made strictly in terms of standards and norms prescribed, which can be held not only reasonable, rational but also in the public interest, the principle of judicial review can be exercised by the courts. In exercising the power of judicial review, the Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not.
57. It is established that the administrative decision relating to awarding of contract taken by the statutory authority or a body constituted under an administrative order can be questioned preliminarily on the grounds: (i) decision has been taken in bad faith, (ii) decision is based on irrational and irrelevant considerations, (iii) decision has been taken without following the prescribed procedure which is imperative in nature. However, there are inherent limitations in the exercise of the power of judicial review. It should be restricted to whether (i) a decision making authority exceeded its power, (ii) committed an error of law, (iii) committed a breach of the rules of natural justice, (iv) reached a decision which not reasonable authority would be reached or and (v) abused its power. {see Tata Cellulars case (supra) para 77 page 677)}
58. Interference of a court of law has been prohibited particularly when there has been no allegation of malice or ulterior motive and especially when the Court has not found any malafide or favouritism in granting such contract. The Court has no jurisdiction to determine whether a particular policy or particular decision taken in the fulfilment of that policy/decision is fair. It is only intended to prevent arbitrariness or favouritism and it is exercised in the larger public interest.
59. It is also settled that since a contract would either involve expenditure from the State exchequer or augmentation of public revenue, consequently the discretion in the matter of selection of the person for award of the contract has to be exercised keeping in view the public interest involved in such selection. Ultimately, the extent of judicial review to see whether the administrative authority has acted fairly shall vary from case to case. Nonetheless, for an administrative authority exercising its administrative function, certain measure of free play in the joints is necessary.
60. It is also recognized that while granting contract, a statutory authority or the body so constituted, should have latitude to select the best offers on the terms and conditions prescribed, taking into account the economic and social interest of the nation. Unless any authority aggrieved, satisfies the Court that ultimate decision in respect of the selection has been vitiated, normally the Courts should be reluctant to interfere with the same.
61. In view of the settled proposition of law as observed hereinabove and also having considered the facts and circumstances of the case in its entirety, this Court is in full agreement with the views expressed and findings recorded by the Writ Court. In our considered opinion, the decision making process adopted in evaluating the tender papers submitted by the appellant by FCI cannot be questioned. The Government authority must have some freedom to fix the terms of contract. It should also be permitted to choose its own method and the same should comply with the prescribed norms and procedure. Right to refuse to the lowest or any other tenderer is always available to the Government, inasmuch as the price need not always be the decisive factor. However, while accepting or refusing a tender, it is incumbent upon the authority to act keeping in view the principles enshrined under Article 14 of the Constitution of India. It is upto the authority concerned to get the best person or best quotation to get the work done in a proper manner with prejudicing the public interest. In exercising the judicial review, it is open to the Court only to review the decision making process and not the merit of the decision as the Court does not sit as the appellate court while exercising the power of judicial review. The Court is restrained to interfere with the freedom of contract of the State or its instrumentalities in invitation of tender or refusal of tender which pertain to policy matter. But if such decision or action is vitiated by arbitrariness, illegality or unfairness, the same can be put under the judicial scrutiny. Question no. 3 is answered accordingly.
62. In the case in hand, though the appellant was the lowest bidder, it failed to show that it satisfied the prescribed condition precedent having possessed the requisite work experience as a transport contractor. It is true that determination by the respondents as to who satisfy the requirement of transport contractor is a decision which has to be taken on the basis of objective test and not the subjective test. Rejection order dated 23.3.2010 recorded by FCI has been put to strict scrutiny of this Court. However, no such significant materials have been detected to dislodge the same.
63. Accordingly, while appreciating the in-depth arguments canvassed by the learned counsel of the appellant as placed on record, we are unable to accept the same so as to convince us that the decision / action taken by FCI in rejecting the tender bid of the appellant was bad in law. Having regard to the facts situation in its totality in the light of the accepted proposition of law on allotment of governmental contract, however, we are of the view that there is enough force in the submissions and contentions put forward by the learned counsel on behalf of FCI and private respondents as discussed in details hereinabove and the same stand approved.
64. In view of the above, what has been stated, discussed and observed, we do not find any merit in this appeal warranting interference with the impugned judgment and order.
65. In the result, the appeal stands dismissed.
66. However, having considered the facts and circumstances of the case, there shall be no order as to costs.
(Muzaffar Hussain Attar) (Dr. Aftab H. Saikia)
Judge Chief Justice
Jammu:
10.12.2010
Tilak, Secy.