Delhi High Court
P.K. Delicacies Pvt. Ltd. vs Union Of India (Uoi) And Ors. on 26 July, 2005
Equivalent citations: IV(2005)BC561, 2005(2)CTLJ134(DEL), 122(2005)DLT685, 2005(83)DRJ691
Author: Sanjiv Khanna
Bench: Mukundakam Sharma, Sanjiv Khanna
JUDGMENT Sanjiv Khanna, J.
1. In the present matter arguments were heard on 14.7.2005 and the judgment was reserved. Thereafter the counsel for the respondents mentioned the matter and sought liberty to file an additional affidavit. With the consent of the parties and for the reasons recorded in the order-dated 19.7.2005, further arguments were heard on 22.7.2005.
2. Indian Railway Catering and Tourism Corporation Limited, the respondent No.2, by way of publications made in the months of March and April 2005, invited tenders from caterers in respect of some trains mentioned therein.
3. M/s. P.K. Delicacies Pvt. Ltd, the petitioner No.1, submitted tenders for 15 trains as per the details given below:
Sl.No. Train No. Name of the train
1 2707/08 Andhra Pradesh Sampark Kranti
2 2029/30 2031/32 Swaran Shatabadi Express
3 2017/18 New Delhi Dehradun Shatabdi
4 2007/08 Chennai Mysore Shatabdi
5 2015/16 New Delhi Ajmer Shatabdi
6 2005/06 New Delhi Kalka Shatabdi
7 2011/12 New Delhi Kalka
8 2433/34 Nizamuddin Chennai Rajdhani
9 2957/58 New Delhi Ahmedabad Rajdhani
10 2431/32 Nizamuddin Trivandrum Rajdhani
11 6687/88 Navyug Express
12 2311/12 Kalka Mail
13 2715/16 Sachkhand Express
14 2801/02 Purhsottam Express
15 2471/72, 2473/74,
2475/76 and
2477-78 Swaraj group of trains
4. The tender documents consist of two bids; the technical bid and the financial bid. The technical bids and the financial bids were required to be submitted in two separate sealed envelopes. Initially technical bids were required to be opened and on the Tender Committee being satisfied that the bidder meets the eligibility criteria and has complied with the terms and conditions, financial bid of the said party is opened. In the present case, technical bids of the petitioner have been opened and the tenders submitted by the petitioner no.1 have been rejected. This has prompted the petitioner no.1 to file the present Writ Petition.
5. The petitioner claims that the respondent no.2 has wrongly rejected its tenders after opening of the technical bids on the ground, inter alia, that petitioner no.1 does not meet the eligibility criteria of at least 5 years past experience. Some allegations of mala-fides have also been made in paragraph 14 of the Writ Petition. However, on 12.7.2005, the counsel for the petitioner stated that the allegations made against R.K. Group are subject matter of another writ petition and these allegations will not be pressed in this Petition.
6. Respondent Nos. 1 and 2 in their affidavit-dated 14.7.2005 have stated that the technical bids in respect of trains were opened and examined by the Tender Evaluation Committee. As per the report of the said Committee the tenders of the petitioner were rejected on two counts; firstly, the petitioner no.1 did not have relevant experience and secondly, the tenders were incomplete as Annexure B of the tender documents was not filled up and signed. Along with this affidavit dated 14.7.2005, the said respondents have enclosed minutes of the Tender Evaluation Committee in respect of nine trains bearing Nos.2433/34, 2031/32, 2017/18, 2005/06, 2015/16, 2431/32, 2011/12, 2007/08 and 2957/58.
7. In the affidavit dated 19.7.2005 filed by the respondents it has been stated that the Tender Evaluation Committee has rejected the tenders in respect of five other trains, namely train Nos. 6687/88, 2311/12, 2715/16, 2801/02 and 2471/72, for an additional reason also, i.e. for failure to furnish and file Annexure F with the technical bid documents. It is further stated that the tender in respect of train no.2707/08 has been discharged.
8. We have heard learned counsel for the parties and also examined the pleadings and the documents produced before us.
9. The scope of judicial review in tender cases has come up for consideration before the Supreme Court and various High Courts on several occasions. Courts have ordinarily shown great restrain in interfering with contractual matters, but at the same time when it appears that a functionary or instrumentality of a State is acting irrationally, or in an improper manner or the conduct lacks fairness, Courts have intervened. Judicial quest in administrative matters has been to find the right balance between he administrative discretion and need to remedy any unfairness.
10. The Supreme Court after exhaustive consideration of earlier judgments in the case of Tata Cellular v. Union of India, (1994) 6 SCC 651 has adduced the following principles that have to be kept in mind while adjudicating upon actions of the authorities on contractual or tender matters.
"(1) The modern trend points to judicial restraint in administrative action.
(2) The Court does not sit as a Court of appeal but merely reviews the manner in which the decision was made.
(3) The Court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principles 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 increase and unbudgeted expenditure.'
11. The Supreme Court also held that administrative action can normally be subjected to judicial review on three grounds, namely:-
i) Illegality, failure of the decision maker to correctly understand the law and apply it.
ii) Irrationality, namely "Wednesbury unreasonableness". A decision, which is outrageous, defies logic or accepted moral standards. A decision, no authority acting sensibly after properly directing itself on the relevant law and facts and after due application of mind would have arrived at.
iii)Procedural improprietory.
12. This Court in the case of Larson and Tourbo Ltd. and another. Versus Union of India and Others (DB) has referred to the power of judicial review and two facets of irregularities:-
1. It is open to the Court to review the decision maker's evaluation of the facts. The Court will intervene where the facts taken as a whole could not logically warrant the conclusion of the decision maker. If the weight of facts pointing to one course of action is overwhelming then a decision the other way, cannot be upheld.
2. A decision would be regarded as unreasonable if it is partial and unequal in its operation as between different classes."
13. Keeping in view the well settled principles, we have to examine whether the respondents were justified in rejecting the tenders of the petitioner and whether this Court can and should intervene.
14. The first reason given by the respondent no.1 and 2 for rejection of the tenders is that the petitioner did not meet the essential eligibility condition of 5 years past experience in catering/hospitality industry.
15. The petitioner no.1 a company, incorporated on 7th April, 2005 with the object and purpose of taking over business of the partnership firm M/s Pee Kay Associates Along with its assets and liabilities. The petitioner has pointed out that Mr. Prem Taneja and Mr. Ashu Taneja were partners of M/s Pee Kay Associates and are also the directors of the petitioner company. According to the petitioner 20 years past experience of M/s Pee Kay Associates has to be considered as experience of the petitioner company
16. The Tender Evaluation Committee has rejected this contention and the respondents have argued before us that the petitioner is a company and a separate juristic person; there were legal flaws in formation of the petitioner company and M/s. Kiran Capitals Services Ltd. was also a shareholder of the petitioner between the period 15th April, 2005 and 28th May, 2005 and therefore past experience of M/s Pee Kay Associates cannot be regarded as past experience of the petitioner.
17. With regard to the first objection and reasons given by the respondents for rejecting the tenders of the petitioner, we feel the that the stand of the respondents is not justified and correct. Almost a similar controversy had come up for consideration of the Supreme Court in the case of New Horizons Ltd. and Ors v. Union of India and Ors . It was held that while considering the requirement regarding past experience the matter has to be considered from the stand- point of apprudent business man and commercial point of view. Corporate veil has to be lifted to find out the persons who are in actual control and behind the company and the past experience of the persons at the helm of affairs that has to be considered and taken into account to decide whether criteria of experience is satisfied. Admittedly, the petitioner is a company incorporated with the object to take over the business of M/s Peekay Associates, a partnership firm. Mr. Prem Taneja and Mr. Ashu Taneja were the partners of M/s Peekay Associates and are also the only Directors of petitioner No.1, company. The past experience of the said firm has to be considered as experience of the petitioner, even if the petitioner is in law a company and a separate juristic person. The past experience of the partnership firm cannot be ignored. The above judgment of the Supreme Court clearly supports the stand of the petitioner and this ground and reason given be respondents to reject and not consider the tender of the petitioner is palpably wrong and contrary to law.
18. It is no doubt true that M/s. Kiran Capitals Services Ltd. was also a shareholder of the petitioner No.1 between the period 15th April, 2005 and 28th May, 2005. However, it is an admitted fact that Mr. Prem Taneja and Mr. Ashu Taneja were the only Directors of M/s. Kiran Capital Pvt. Ltd. and the shares held by M/s Kiran Capital Pvt. Ltd. were transferred in favor of Mr. Prem Taneja and Mr. Ashu Taneja. The minutes of the Tender Evaluation Committee also reveal that on basis of letters received from two Members of Parliament and the opinion given by the Legal Advisor, the Tender Evaluation Committee rejected the tenders submitted by the petitioner NO.1 on the ground that the conversion of the partnership firm-M/s. Pee Kay Associates and formation of the petitioner No.1 was done without observing legalities. It is, however, admitted before us that the petitioner no.1, i.e. M/s. P. K. Delicacies Pvt. Ltd., is duly incorporated and registered under the Companies Act, 1956 by the Registrar of Companies, Government of NCT of Delhi and Haryana and as per the Memorandum of Association of the said Company, it has taken over the running business of the partnership firm with all its assets and liabilities. The Certificate of Incorporation is not doubted. We feel that the Tender Committee should not have gone into the question of alleged legalities In the incorporation of the Company. As per section 35 of the Companies Act, 1956, a certificate of incorporation given by the Registrar is conclusive evidence that all requirements of the Companies Act, 1956 have been complied with in respect of registration and matters precedent and incidental thereto.
19. The second reason given by the respondent to reject the tender documents of the petitioner is that Annexure B to the tender documents was not filled up and left blank. It is the case of respondents that failure to fill up and submit Annexure B makes the bid incomplete and invalid. Reference in this regard is also made to note at serial No.6 of Annexure A of the bid documents that states, 'incomplete tender shall be summarily rejected'.
20. The learned counsel for the petitioner however submitted that failure to fill up Annexure B cannot be a ground for rejection of the tender as it is nothing but a covering letter and the contents of Annexure `B' are repetition of the terms and conditions mentioned elsewhere in the tender documents. Failure to fill up Annexure B cannot entail rejection of the tender.
21. To decide this question we have to examine Annexure B, which is reproduced below:-
"Format for the Covering Letter to be submitted on the Company/organisation's letterhead.
Director (Catering Services) Indian Railway Catering and Tourism Corporation Ltd.(IRCTC) Corporate Office: 9th Floor, Bank of Baroda Building, 16, Parliament Street, Connaught Place, New Delhi- 110001.
Subject: Submission of Bid for management of on board and catering services in train no: 2311-12, Kalka Mail.
Dear Sir,
a) I/ We_____________have read the general guidelines and bid document attached hereto containing the Terms and Conditions and agree to abide by such conditions. I /We offer the Bid for license for management of on board and catering services in train to: 2311-12, Kalka Mail in the attached schedules and hereby bind myself/ourselves to complete all the formalities from time to time as required after the award of license.
b) I/ We hereby understand that the submission of offers /bids does not guarantee allotment of license for management of on board and catering services in train. I/ We further understand that in case of any information submitted by me/ us being found to be incorrect, IRCTC will have the right to summarily reject the bid, cancel the license or revoke the same at any time without assigning any reason whatsoever.
c)I/ We further agree to execute an agreement to abide by the general and special conditions of license for management of on board and catering service sin train no: 2311-12, Kalka Mail. In case of acceptance of bid by the IRCTC, I/ We bind myself/ ourselves to execute the license agreement awarded to me/ us and to commence the work as per the conditions of the license failing which, I /We shall have no objection to the forfeiture of full Earnest Money Deposit (EMD), deposited by us with IRCTC, New Delhi in addition to other penalties specified under the terms of license.
d) IRCTC and its representatives are hereby authorized to conduct any inquiries or investigations or seek clarifications or verify any statements, documents and information submitted in connection with this bid.
e) On account of non-acceptance of award or on account of not fulfillling tender conditions within the prescribed time, I/We shall be debarred by IRCTC for further participation in the future tenders of IRCTC for a period of one year.
I/ We do hereby confirm that I/ We have the necessary authority and approval to submit this bid for license for management of on board and catering services in train.
A notice or letter of communication addressed to me /us at the given address given in the Bid, even by ordinary post will be deemed to be valid and proper notice of intimation to me/us.
Authorized Signatory Name, Designation and Seal Address:
Date:
Place:
With kind regards For______________(name of the company/ organisation) Signature of the Authorized signatory and Company/organisation seal (Name of the authorized signatory) Address:"
22. On our request the parties have filed a chart of the clauses mentioned in Annexure B and similar clauses in the other parts of the tender documents. As per the chart filed by both the parties the position is as under:-
Clauses in Annexure `B' Similar clauses in the Tender Documents
1. I / We ____________have read the general guidelines and bid document attached hereto containing the Terms and Conditions and agree to abide by such conditions. I / We offer the Bid for license for management of on board and catering services in train no.------in the attached schedules and hereby bind myself. Ourselves to complete all the formalities from time to time as required after the award of license.
1) I/ We further certify that we are ready to provide catering and on board services within the time frame given by the IRCTC and as per the terms and conditions of the Bid Document and in the agreement to be executed between the parties.
2. I/ We hereby understand that the submission of offers / bids does not guarantee allotment of license for management of on board and catering services in train. I / We further understand that in case of any information submitted by me / us being found to be incorrect, IRCTC will have the right to summarily reject the bid, cancel the license or revoke the same at any time without assigning any reason whatsoever.
2. I/ We hereby understand that the submission of offers /bids does not guarantee allotment of license for management of on board and catering services in train. I / We further understand that in case of any information submitted by me / us being fond to be incorrect either before or even after the award of license, IRCTC will have the right to summarily reject the bid, cancel the license or revoke the same at any time without assigning any reason whatsoever.
3. I/ We further agree to execute an agreement to abide by the general and special conditions of license for management of on board and catering services in 2011-12, New Delhi G" Kalka Shatabdi Express train. In case of acceptance of Bid by the IRCTC, I /We bind myself/ ourselves to execute the license agreement awarded to me / us and to commence the work as per the conditions of the license failing which, I / We shall have no objection to the forfeiture of full Earnest Money Deposit (EMD), depositedy us with IRCTC, New Delhi in addition to other penalties specified under the terms of license.
3. Clause 7.3 of section' one of Agreement The successful Bidder shall be required to execute an agreement on non-judicial stamp paper of Rs. 100/- at his cost before start of work. Till then the letter of award of license shall form the binding agreement between IRCTC and the Licensee.
4. IRCTC and its representatives are hereby authorized to conduct any inquiries or investigations or seek clarifications or verify any statements, documents and information submitted in connection with this bid.
Clause 5.1
4. System of Award of license.... The IRCTC may ask for any additional documents, if required, for its satisfaction.
5. On account of non-acceptance of award or on account of not fulfillling tender conditions within the prescribed time, I / We shall be debarred by IRCTC for further participation in the future tenders of IRCTC for a period of one year.
5. Clause 5.3 of section "one of the bidders In case the successful bidder (highest financial bid) refuses to accept the offer of award of license, he will be debarred from participating in the bidding process of future projects of IRCTC for a period one one year.
I/ We do hereby confirm that I / We have the necessary authority and approval to submit this bid for license for management of on board and catering services in train.
NIL A notice or letter of communication addressed to me/us at the given address given in the Bid, even by ordinary post will be deemed to be valid and proper notice of intimation to me/ us.
Clause 7.14 of section one Notice to the licensee Any notice to be served on Licensee's shall be deemed to be sufficiently served if delivered at or sent by registered post/courier addressed to the Licensee at their registered office or last known place of business. Any notice to be served by the Licensee on the licensor shall be deemed to be sufficiently served if, left at the office/sent by registered post/courier addressed to the Managing Director, Indian Railway Catering and Tourism Corporation at its Corporate office at 9th floor, Bank of Baroda Building, 16 Parliament Street, New Delhi- 110001.
23. In view of the above factual position and submissions made, we have to examine whether this Court while exercising its power of judicial review can hold that the Tender Committee was wrong in rejecting the tenders submitted by the petitioner on the ground that Annexure B was not signed and filed by the petitioner. It has to be examined, whether the said reason for rejecting the tenders can be said to suffer from failure of the decision maker to correctly understand the law and apply it, irrationality (namely "Wednesbury unreasonableness) and/or procedural improprietory. A Court can set right the decision making process but it cannot substitute its own opinion for that of the experts.
24. As a general rule, tender conditions have to be strictly adhered to and authorities concerned have power to reject and not consider a tender which is incomplete and lacking any particulars. Normally no power of regularization should be given to authorities to permit and allow the parties to fill up details and particulars at a later date, as it would encourage favoritism and discrimination. A degree of care is required while filling up and submitting tender bids. Supreme Court in W.B. State Electricity Board v. Patel Engineering Co. reported in (2001) 2 SCC 451 has held that negligent mistakes in bid documents cannot be permitted to be corrected on the basis of equity. It is further held that whether such corrections should be allowed and permitted is not for the Courts to decide within the limited scope of judicial review. Admittedly, in the present case the terms of the tender permit the respondents to reject a tender that is incomplete.
25. While applying the test of Wednesbury principles of reasonableness, the authorities have to give freedom of choice and 'free play in joints' provided they act fairly. Supreme Court in case of Tata Cellular (supra) has reproduced a quote of Prof. Wade, which reads as 'the point to be noted is that a thing is not unreasonable in the legal sense merely because the Court thinks it is unwise'.
26. The Tender Committee was of the view that Annexure B is an important tender document. It is in a declaration form given by the bidder stating that in case of non-acceptance of the award by him or non-fulfillment of the tender conditions, the earnest money deposited would be forfeited and he may be barred from further participation in future tenders to be given by the respondents for one year.
27. The question that arises now for consideration is whether the decision of the Tender Committee to reject the tender submitted by the petitioner on the ground of failure to furnish Annexure B can be said to be arbitrary, affected by bias or actuated by malafides. The said decision is to be also tested by applying the Wednesbury's Principles of reasonableness.
28. We do not think that the decision of the Tender Committee in this regard to reject the tenders submitted by the petitioner because of failure to fill up and sign Annexure B to the tender documents can be said to be arbitrary, biased or actuated by malafides. The said decision also cannot be said to be 'unreasonable' on applying Wednesbury's Principles of reasonableness. Failure to fill up and sign Annexure B, certainly must have raised apprehension and doubts in the mind of the Tender Committee a to whether the petitioner accepts and is bound by the undertakings given in the said letter and the contents thereof.
29. Even if certain clauses mentioned in the Annexure B can also be found in other parts of the tender bid, it cannot be said that filling up and executing Annexure B was a mere empty formality and of little or of no consequence. It is an important part of a tender bid and was required to be filled up and signed by the person giving the said bid. The Tender Committee obviously was not required to examine whether similar clauses can be found in other parts of the tender bid and whether the said clauses will be sufficient or ensure adequate protection to the respondents in case of a dispute. Moreover, we also feel that there is always a possibility that in a given case a bidder may later on object to acceptance of a tender or try and take advantage of not having signed and executed Annexure B. Keeping these aspects in mind, the decision of the respondents in rejecting the tenders of the petitioner cannot be said to be 'unreasonable, arbitrary, biased or actuated by malafides'. This Court cannot substitute its own opinion for that of the Tender Committee.
30. It will not be correct to say that Annexure B is merely an ancillary or inconsequential document that may or may not be filled up by a person giving bids. The failure to fill up the said documents cannot be regarded as a technical irregularity of little or no significance. Annexure B is a form of a covering letter by which every bidder specifically agrees and gives various undertakings to respondents and agrees to be bound by the said undertakings. The last portion of Annexure B is in nature of a cerification clause, whereby the applicant submitting the tender confirms that the contents of the tender bid are true and correct. Lastly, it obliges the bidder to give details of the person executing and signing the bid document and his authority to do to on behalf of the company giving its bid. Filling up, furnishing details and signing of Annexure B ensures that the bidders will not be able to wriggle out and give any excuse.
31. As far as the tenders for the five trains and the third objection raised by respondents is concerned, applying the above principles the petitioner is bound to fail and the Petition is liable to be rejected. Annexure F to the technical bid is also certainly a mandatory document that was required to be submitted by the bidder. By no stretch, it can be regarded as merely an ancillary document of little or no significance/consequence. Annexure F is a document in which the bidder was required to submit details in respect of hygiene and quality standards. These are details of vital importance and have to be taken into consideration by the tender committee. These details are not mentioned in any other part of the tender bid. Therefore the rejection of the tenders for the five trains on the ground that the petitioner did not submit Annexure F is valid.
32. Learned counsel for the petitioners during the course of arguments submitted that Annexure F was submitted along with the tender documents and has either been misplaced or deliberately removed. He stated that Annexure F is common to all the tender documents and there was no cause or occasion for the petitioner No.1 not to include Annexure F with the five tender bids/documents and include the said Annexure in ten other tenders submitted by him.
33. Learned counsel for the respondents, however, contested the said submission and stated that the Tender Committee which opened the technical bid had found Annexure F to be missing in the five tender documents. Affidavit on oath in this regard has been filed. It is further submitted that tenderers were required as per the tender documents, to paginate the entire tender document, which has not been done by the petitioner No.1. We have before us two conflicting statements on oath, one by the petitioner stating that he had filed Annexure F with the five tender documents and the other by the respondents also on oath stating that the tender Committee did not find Annexure F in the five tender bids. However, we feel that the petitioner should have, as per the terms of the tender, paginated the entire documents and having failed to do so cannot be heard to state that Annexure F to the tender bids for five trains has been removed or misplaced. In view of our findings recorded above, the present Writ Petition is liable to be dismissed.
34. With the above observations, the Writ Petition is dismissed. No costs.