Gujarat High Court
Bharti Tele-Tech Ltd. And Anr. vs Chief General Manager, ... on 19 December, 2001
JUDGMENT K.M. Mehta, J.
1. Bharat Teletech Ltd. and Others, petitioners have filed this petition with a prayer for a writ of certiorari or a writ of mandamus quashing the letter dated 2.5.2001 placing advance purchase order of 2,25,000 numbers of electronic push button telephone instruments of the total order value of Rs. 6.05 crores on the respondent No. 3. The petitioner further prayed for a writ of certiorari for quashing and setting aside the order for 84,620 numbers of electronic push button telephone instruments of total order value of Rs. 2.28 crores on Tata Telecom Ltd., for respondent No. 4. The petitioner further prayed that this Court may issue a writ of mandamus directing the respondents Nos. 1 and 3 viz,. Chief General Manager (Tele-communications. Bharat Sanchar Nigam Ltd., Gujarat Telecom Circle, Ahmedabacl and Bharat Sanchar Nigam Ltd., New Delhi (BSNL) to place upon purchase order as provided by Clauses 4.1 to 4.3 of Special Conditions of Contract in Section III of the tender in this behalf.
Facts
2. The petitioner No. 1 is a company incorporated under the Companies Act, 1956. The petitioner No. 2 is the authorised representative of petitioner No. 1 company.
3. It is the contention of the petitioners that respondent Nos. 1 and 2 are the "State" within the meaning of Article; 1 and 2 of the Constitution and are amenable to the writ jurisdiction, of this Court.
4. The petitioner No. 1 has been manufacturing the said electronic push button telephone instrument since 1986 with an installed annual capacity of manufacture 3 million union. It has supplied more than 10 million of the said telephone instrument to Department of Telecommunications till today.
5. It has been contended in the petition that by virtue of Tender Inquiry No. MP/EPBT/ 00-01/301 dated 24.1.2001 the respondent Nos. 1 and 2 invited bids for supply of 4.5 lac electronic push button telephone instruments. In the proposed tender the bids were to be submitted in two parts. The petitioner No. 1 submitted technical and priced bids as per the terms and conditions of the tender. It was an essential condition of the tender that the price bids would be opened and considered of only those bidders whose technical bid was substantially responsive and complaint of the terms and conditions of the tender and accepted by the Tender Opening Committee. The following provisions of the tender are relevant and significant:
"Section I--Notice Inviting Tender.--Maximum number of bidders on whom orders are likely to be placed is 5(5) Section III.--Special Conditions of the Contract (SCC) 4.1 The purchaser reserves the right to limit the number of technically and commercially responsible bidders to distribute the orders for supply. It may not be practicable to distribute the orders to all bidders who meet the technical specifications and commercial conditions as in some cases the quantity ordered on each supplier will be too small to be viable both for supply and use by BSNL. The distribution of purchase orders would, therefore, be limited to the maximum number suppliers as indicated in the Notice Inviting Tender (Section 1) 4.2 The order quantity on the lowest bidder (L-1) and on the remaining selected bidders will be determined as follows :
Number of bidders.--Distribution of the order on whom purchase quantities Orders are placed 2 70% to L-l and 30% to L-2.3
50% to L- 1 and remaining quantity to the other two selected bidders in inverse ratio of their evaluated prices.4
40% to L-l and remaining quantity to the rest selected bidders in inverse ratio of their evaluated prices.
5 to 9 :
30% to L-1 and remaining quantity to the rest selected bidders in inverse ratio of their evaluated prices.
10 and above :
20% to L-l and remaining quantity to the rest selected bidders in inverse ratio of their evaluated prices.
4.3 If two or more bidders quote the same composite price, their bids will be treated as one bid for the purpose of determining the total order quantity for them as per the Paragraph 4.2 above. The total order quantity so determined will be equally distributed among such bidders. In such situation, the number of bidders on whom the orders are placed may not be limited to the maximum number as indicated in Paragraph 4.1 above.
4.4 BSNL reserves the right to depart from the above guidelines as indicated in Paragraphs 4.1 and 4.2 above for distribution of order quantities amongst successful bidders depending upon the urgency and other factors prevailing at the time of evaluation the bids."
5.1 It was contended in the petition that the tenders were opened at 14.00 hours of March, 8,2001 by Tender Opening Committee (TOC). Out of the bids submitted by 11 parties two bids--one of respondent No. 4 and the other of Semicon Electronics, Calcutta were rejected by TOC as being defective and substantially non-responsive. Some bids were submitted and, therefore, they were also rejected. Thereafter even price bids of those bidders whose technical bids were accepted, were opened. The bid of Priyaraj Electronics respondent No. 3 was found to be lowest (L-1) at Rs. 294.95 and next lowest (L-2) were 3 bids quoting the same composition price of the petitioner, Goa Telecommunications and System Ltd, and United Telecoms Ltd. at Rs. 294.95. The third lowest price (L-3) was Rs. 303.03.
5.2 It was further submitted that it came to the notice of the petitioner's knowledge somewhere on 8.3.2001 that the respondent No. 4 after the rejection of its technical bid had made representation to the respondent Nos. 1 and 2 that their bid should also be considered. The petitioners objected to the same that the bid of the respondent No. 4 was not substantially responsive and deserved to be rejected in terms of Clause 20 of Section 1 to the tender. It is specifically stated that since the bid was rejected by TOC as being substantially non-responsive it cannot substantially be permitted to be made substantially responsive by the respondent No. 4.
5.3 It was further contended by the petitioners that the petitioners learnt somewhere on 19.3.2001 that the bids of the petitioner No. 1, Goa Telecommunications and Systems Ltd. and United Telecoms Ltd. were being treated as one bid since the composite prices quoted by them were same and that the respondent Nos. 1 and 2 were intending to divide between the three bidders the quantities which were otherwise determined to be awarded to L-2 wrongly and on misinterpretation of the tender provisions in this behalf. Thereafter the petitioners addressed a letter dated 19.3.2001 to the respondent Nos. 1 and 2 starting that their bids should be treated as separate one, that the tendered quantity should be distributed amongst the 5 lowest bidders.
5.4 Respondent No. 2 has placed advance purchase order for 2.25 lac instruments on 2.5.2001 (39.26% of the order quantity) on respondent No. 3 (L.1). Respondent No. 2 has also placed another advance purchase order and respondent No. 4 Tata Telecom Ltd. for 84,620 instruments (14.80% and respondent No. 2 had placed an order with the petitioners only for 30,121 instruments (5.26%). It has been stated that respondent No. 2 has awarded the tendered quantity as follows :Respondent No. 3
L-l 39.26% Petitioner L-2 5.26% Goa Tel, and Systems L-2 5.26% United Telecom Ltd.
L-2 5.26% SRV (Rsp. 5) L-3 15.35% HECL (Rsp. 6) L-4 14.82% Tata Telecom Respondent No. 4 L-5 14.80% 100%
6. Being aggrieved by the aforesaid order the petitioners have filed this petition before this Court praying for the aforesaid reliefs.
7. It may be noted that when the matter was placed for admission before this Court (Coram : P.K. Sarkar. I.) on 18.5.2001, this Court admitted the matter and granted certain interim reliefs.
7.1 After the matter was heard for interim relief on 26/27.6.2001 I have heard the matter and on 26/27.6.2001 I had vacated the interim relief and directed respondent Nos. 1 and 2 will place orders with the petitioner as well as respondent Nos. 3, 4, 5 and 6 provided they fulfil the other required conditions in this behalf as per the communication dated 2.5.2001.
8. Mr. K.S. Nanavati, learned Sr. Counsel instructed by Mr. Sanat Bhatt appeared on behalf of the petitioners. He has invited my attention to various terms and conditions of the tender in this behalf. He has made the following submissions on behalf of the petitioners.
9. The learned Counsel submitted that the respondent Nos. 1 and 2 have acted in breach of the fundamental and mandatory provisions of the contract. Since there were 3 bidders whose prices were evaluated at L-2 level, in terms of Clause 4.2 Section II Special Conditions of Contract and after awarding 30% to the lowest bidder (L-1) out of the balance 70% for the 5th successful bidder of L-3 price. Since the maximum number of successful bidders is limited to 5, the respondent Nos. 1 and 2 would not have gone further than L-3 bidder for distribution. He further submitted that the respondent Nos. 1 and 3 erred after rejecting the bid of respondent No. 4 in terms of the tender terms in arbitrarily and whimsically permitting the respondent No. 4, Tata Telecom Ltd. to alter and modify the terms originally quoted by them so as to make it rejected, non-responsive bid and substantially responsive one. It was further submitted that on evaluation of technical bid, it was found by the TOC that respondent No. 4 Tata Telecom Ltd's. technical bid was defective and not substantially responsive in that it did not quote for the prescribed minimum 30% of the tendered quantity. In view thereof their technical bid was rejected. However, the Tender Evaluation Committee (TEC) overlooked the said rejection and not only opened the price bid of respondent No. 4 Tata Telecom Ltd. but purported to award them about 14.80% of tendered quantity, in gross violation of the terms and conditions of the tender as also fair-play and principles of natural justice. Learned Counsel further contended that the tender respondent No. 4 was liable to be rejected and no quantity ought to have been awarded to them. Learned Counsel further submitted that despite being adjudged the second lowest (L-2) much lower than the price quoted by respondent No. 4, the petitioner has been awarded only 5.26% of the quantity, again in violation of the terms and conditions of the tender. The bid prices announced by the TOC are as follows :
1. Priyaraj Electronics Ltd. Rs. 294.80 each.
2. Bharat Teletech Ltd. Rs. 294.95.
3. Goa Telecom and Systems Ltd. Rs. 294.95.
4. United Telecoms Ltd. Rs. 294.95.
5. SRV Rs. 303.03.
6. HECLRs. 314.50.
7. WEBel Rs. 323.22.
8. Tata Telecom Ltd. Rejected.
9. Semicon Electronics Rejected.
10. BPL (late submission-hence Rejected).
11. BPL Sanyo (late submission-hence rejected).
He has further submitted that in Section 1 and Section III (Special Conditions of Contract) of the Tender, read together, very clearly lay down the norms for distribution of quantity among the successful bidders in this behalf.
10. Learned Counsel for the petitioner further submitted that respondent Nos. 1 and 2 have wrongly and whimsically misinterpreted the said provisions of the tender. They purported award merely 5.26% to the petitioner while awarding as much as 14.80% to Tata Telecom Ltd., respondent No. 4 on the misinterpretation of Clause 4.3 of Section III, Special Conditions of Contract (SCC). He further submitted that said interpretation would have no nexus with the object sought to be achieved. Learned Counsel further submitted that respondent Nos. 1 and 2 have acted in breach of the fundamental and mandatory provisions of the contract. Since there were 3 bidders whose prices were evaluated at L-2 level, in terms of Clause 4.2, Section III, Special Conditions of Contract and after awarding 30% to the lowest bidder L-1 out of the balance of 70% tendered quantity 52.85% ought to have been awarded to-the 3 L-2 bidders equally leaving only 17.15% for the 5th successful bidder of L-3 price. Since the maximum number of successful bidders is limited to 5, the respondent Nos. 1 and 2 would not have gone further than L-3 bidder for distribution.
11. Learned Counsel for the petitioner further submitted that the respondent Nos. 1 and 2 erred after rejecting the bid of respondent No. 4, Tata Telecom Ltd. in terms of the tender terms in arbitrarily and whimsically permitting the respondent No. 4, Tata Telecom Ltd. to alter and modify the terms originally quoted by them so as to make it rejected, non-responsible bid and substantially responsive one As a direct result of showing such unwarranted favour to respondent No. 4 loss and prejudice has been caused to petitioner in the form of awarding less quantity and what was due to it but for such unwarranted favour.
12. Learned Counsel further submitted that the respondent Nos. 1 and 2 misinterpreted and/or violated the essential and fundamental terms of tender in that in terms of contractual provision in Section 1 and Section III (Special Conditions of the Contract) of the tender, the Respondent Nos. 1 and 2 ought to have distributed the quantities to 5 successful bidders as follows :
(i) 30.00% to L-1 (Respondent No. 3)
(ii) 17.62% to L-2 (Petitioner)
(iii) 17.62% to L-3
(iv) 17.62% to L-4
(v) 17.15% to L-5 Since there were 3 successful bidders quoting L-2 prices, the quantities available to them should be 52.85% (approx). The division of 17.62% among the three L-2 bidders (at the rate of 5.87% each) and award of 17.15% to the next lowest bidder would militate against the, express contractual provision for distribution in inverse ratio of quoted prices, namely larger quantity to those quoting lower prices and smaller quantity to those quoting higher prices. It was further submitted that the petitioner and two others who quoted same composite prices are separate business entities, having furnished separate bids, separate security deposits and separate performance bonds. It was further submitted that the tender does not prohibit quoting of same composite prices by two or more parties nor provide that in that event they will be punished by way of awarding lesser quantity. The tender provisions are clearly to the effect that in such an eventuality they will be awarded equal quantities, after determining the quantities available to be awarded to them in inverse ratio of their evaluated prices. Since the evaluated prices of all the three of them were L-2 they together were entitled to 52.85% of the quantity remaining, being three successful bidders at L-2 price level and by virtue thereof being entitled to the quantities available to 3 slabs (L-2, L-3 and L-4), after awarding 30% to L-1. The said 52.85% quantity was to be distributed among them equally. It was further submitted that despite having quoted lowest price (L-2) the respondents have awarded too small a quantity which is not viable both for supply to the petitioners and use by the respondent Nos. 1 and 2.
13. Learned Counsel for the petitioner submitted that respondent Nos. 1 and 2 are State and, therefore, even as per the terms and conditions of the Contract they should not act arbitrarily. If they act arbitrarily it will be violative of Article 14 of the Constitution of India and in contractual matters also writ jurisdiction under Article 226 of the Constitution of India is available to the petitioner.
14. Learned Counsels for the petitioners have relied upon the decision of the Honourable Supreme Court in the case of Ram & Shyam Company v. State of Haryana and Ors., AIR 1985 SC 1147. In Paras 12, 13 and 14 the Honourable Supreme Court has observed as under:
"12. Let us put into focus the clearly demarcated approach that distinguishes the use and disposal of private property and socialist property. Owner of private property may deal with it in any manner he likes without causing injury to any one else. But the socialist or if that word is jarring to some, the community or further the public property has to be dealt with for public purpose and in public interest. The marked difference lies in this that while the owner of private property may have a number of consideration which may permit him to dispose of his property for a song. On the other hand disposal of public property partakes the character of a trust in that in its disposal there should be nothing hanky panky and that it must be done at the best price is that larger revenue coming into the coffers of the State administration would serve public purpose viz. the welfare State may be able to expand its beneficent activities by the availability of larger funds. This is subject to one important limitation that socialistic property may be disposed of at a price lower than the market price or even for a token price to achieve some defined constitutionally recognised public purpose, one such being to achieve the goals set out in Part IV of the Constitution. But where disposal is for augmentation of revenue and nothing else the State is under an obligation to secure the best market price available in the market economy. An owner of private property need not auction it nor is he bound to dispose it of at a current market price. Factors such as personal attachment or affinity kinship empathy religious sentiment or limiting the choice to whom he may be willing to sell, may permit him to sell the property at a song and without demur. A welfare State as the owner of the public property has no such freedom while disposing of the public property. A welfare State exists for the largest good of the largest number more so when it proclaims to be a socialist State dedicated to eradication of poverty. All its attempts must be to obtain the best available price while disposing of its property because the greater the revenue the welfare activities will get a fillip and short in the arm. Financial constraint may weaken the tempo of activities. Such an approach serves the larger public purpose of expanding welfare activities primarily for which the Constitution envisages the setting up of a welfare State. The Honourable Supreme Court after relying upon the case of Ramana Dayaram Shetty v. The International Airport Authority of India, 1979(3) SCR 1014=AIR 1979 SC 1628, in the case of Kasturilal Lakshmi Reddy v. State ofJammu & Kashmir, 1980(3) SCR 1338=AIR 1980 SC 1992, it has been observed as under :
"Where any Governmental action fails to satisfy the test of reasonableness and public interest discussed above and is found to be wanting in the quality of reasonableness or lacking in the element of public interest it would be liable to be struck down as invalid. It must follow as a necessary corollary from this proposition that the Government cannot act in a manner which would benefit a private party at the cost of the State such an action would be both unreasonable and contrary to public interest. The Government, therefore, cannot for example give a contract or sell or lease out its property for a consideration less than the highest that can be obtained for it unless of course there are other considerations which render it reasonable and in public interest to do so.
14.1 At one stage it was observed that the Government is not free like an ordinary individual in selecting recipient for its largesse and it cannot choose to deal with any person it pleases in its absolute and unfettered discretion. The law is now well settled that the Government need not deal with any one but if it does so, it must do so fairly and without discretion and without unfair procedure. Let it be made distinctly clearly that respondent No. 4 was not selected for any special purpose or to satisfy by any Directive Principles of State Policy. He surreptitiously ingratiated himself by a back-door entry giving a minor raise in the bid and in the process usurped the most undesired benefit which was exposed to the tilt in the Court. Only a blind can refuse to perceive it.
14.2 Approaching the matter from this angle can there be any doubt that the appellant whose highest bid was rejected by the Government should have no opportunity to improve upon his bid more so when his bid was rejected on the ground that it did not represent adequate market consideration for the concession to extract minor mineral. A unilateral offer secretly made not correlated to any reserved price made by the fourth respondent after making false statement in the letter was accepted without giving any opportunity to the appellant either to raise the bid or to point out the falsity of the allegations made by the fourth respondent in the letter as also the inadequacy of his bid. The appellant suffered an unfair treatment by the State in discharging its administrative functions thereby violating the fundamental principle of fairplay in action. When he gave the highest bid he could not have been expected to raise his own bid in the absence of a competitor. Any expectation to the contrary betrays a woeful lack of knowledge of auction process. And then some one surreptitiously by a secret offer scored a march over him. No opportunity was given to him either to raise the bid or to controvert and correct the erroneous statement.
14.3 What happened in this case must open the eyes both of the Government as well as the people at large. How an uncontrolled exercise of executive power to deal with socialist property in which entire community's interest was sacrificed so as to cause huge loss to the public exchequer would have gone unnoticed but for the vigilance of the appellant who no doubt is an altruistic in its approach but its business interest goaded it to expose the unsavoury deal. Conceding that on weighty and valid consideration the highest bid can be rejected by the State, one such which can be foreseen is that the highest bid does not represent the adequate market price of the concession yet before giving up the auction process and accepting a private bid secretly offered the authority must be satisfied that such an offer if given in open would not be unmatched by the highest bidder. In the absence of such satisfaction acceptance of an offer secretly made and sought to be substantiated on the allegations without the verification of their truth which was not undertaken would certainly amount to arbitrary action in the matter of distribution of State largesse which by the decisions of this Court is impermissible. Even though repeatedly this Court has said that the State is not bound to accept the highest bid this proposition of law has to be raised subject to the observation that it can be rejected on relevant and valid considerations, one such obeying that the concession is to be given to a weaker section of the society who could not outbid the highest bidder.
15. Thereafter the Honourable Supreme Court relying upon the case of K.N. Guruswami v. State of Mysore, AIR 1954 SC 592, held that in similar circumstances writ is maintainable.
16. He further relied upon the judgment of this Court in the case of Vadi and Patwa v. Union of India, 1993(2) GCD 490. He submitted that the contacts to which State is a party, Article 14 applies and matters falling within the domain of contractual obligation would not relieve the State of its obligation to comply with basic requirement of Article 14. In this case it has been held in Paras 12, 13 and 14 as under:
16.1 "12. However, the position of law as it stands today is altogether different. In the case of Shrilekha Vidyarthi v. State of U.P., AIR 1991 SC page 537, the question of applicability of Article 14 of the Constitution in the matters of contract with the State had arisen. It was a case in which the action of the State Government of UP was challenged whereby the Government had terminated by a general order the appointment of all Government Counsels (Civil, Criminal, Revenue) in all the districts of the State of UP. Therein it was contended that the matter was in the realm of contract and it was not permissible to the petitioners to invoke the provisions of Article 14 of the Constitution. Repelling the contention the Supreme Court observed that there was difference in the contracts between the private parties and contracts to which the State is a party. Private parties are concerned only with their personal interest whereas the State while exercising its powers and discharging its functions, acts indubitably, as is expected of it, for public good and in public interest. The impact of every State action is also on public interest. This factor alone is sufficient to import at least the minimal; requirements of public law obligations and impress with this character the contracts made by the State or its instrumentality. The Supreme Court further observed that wherever a challenge is made on the ground of violation of Article 14 alleging that the impugned act is [arbitrary, unfair or unreasonable, the fact that the dispute also falls within the domain of contractual obligations would not relieve the State of its obligation to comply with the basic requirement of Article 14. The Supreme Court held that an additional contractual obligation cannot divest the claimant of guarantee under Article 14 of non-arbitrariness at the hands of the State in any of its actions.
16.2 13. In para 24 of the judgment it is further held that the requirement of Article 14 being the duty to act fairly, justly and reasonably, there is nothing which militates against the concept of requiring the State always to so act even in contractual matters. There is a basic difference between acts of the State which must invariably be in public interest and those of a private individual engaged in similar activities being primarily for personal gain, which may or may not promote public interest.
16.3 14. Thus the position of law laid down by the Supreme Court is that even in respect of contractual rights and obligations of the parties, the State is not relieved of its obligations to comply with the provisions of Article 14 of the Constitution of India, i.e. to act justly, fairly and reasonably. The State action should be governed by reason and should be free from arbitrariness. It should be just and reasonable whether the State action is at the entering stage of the contract or during its execution of the contract or even at the conclusion stage of the contract. At all stages, State is bound by Article 14 of the Constitution. In this connection in Para 22 of the judgment, the Supreme Court has also observed that the scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resorting to remedies provided for adjudication of purely contractual disputes. This being the position of law, the contention that now when the contract has been executed, the petition under Article 226 of the Constitution of India wherein the provisions of Article 14 of the Constitution of India have been invoked is not maintainable cannot be accepted."
17. On behalf of respondent Nos. 1 and 2 Mr. D.N. Patel, learned Sr. Standing Counsel for Central Government appears. He has relied upon the affidavit in reply filed by Gopal Chandra Dutta, Assistant General Manager (Material Procurement). He also drew my attention to the various terms and conditions of contract in this behalf.
18. The learned Counsel for respondent Nos. 1 and 2 further submitted that each Bidder must quote for supplying at least 30% of tendered quantity, offers for lesser quantity may be ignored and, therefore, Tender Opening Committee while opening of Technical Bid Documents (which was done in the presence of the representatives of tender companies) had initially checked, quantity offered by bidder. Out of the total 9 bidders, 7 bidders had categorically offered at least 30% tendered quantity whereas M/s. Semicon Electronics (P) Ltd. had offered only 50,000 number of instruments which is less than 30% of the tendered quantity and, therefore, its price Bid was not opened. Whereas in the case of Technical Bid in Envelope 1 of M/s. Tata Telecom Ltd. the quantity offered could not be found out by Tender Opening Committee. Thus, statement relating to quantity offered could not be located in case of Tata Telecom Ltd. (Respondent No. 4) by the Tender Opening Committee.
19. He further submitted that the Tender Opening Committee has opened Technical Bid contained in Envelope I in the presence of representatives of the respective tenderers. As mentioned hereinabove, the quantity offered was not mentioned in Technical Bid (Envelope I) by respondent No. 4. After opening of Technical Bid (Envelope I), letter was received on 8.3.2001 from the respondent No. 4 wherein it was mentioned that quantity of instruments to be supplied by respondent No. 4 is mentioned in the original Price Bid in Envelope 11 and, therefore, they requested Bharat Sanchar Nigam Limited to open their Price Bid (Envelope II). The respondent No. 4 also gave an undertaking that if quantity offered by them in Price Bid is less than minimum 30% of 4,50,000 telephones, their bid may be rejected. Copy of the letter received from respondent No. 4 Tata Telecom Ltd. dated 8.3.2001 is annexed to the petition as Annexure III.
20. He further submitted that said letter was received by the respondent No. 1 on the same day i.e. 8.3.2001 the date on which the Tender Opening Committee had opened the Technical Bid of the rest of all the tenderers. The Price Bid of the respondent No. 4 Tata Telecom Ltd. was opened subsequently by the Tender Evaluation Committee only with a view to check and verify whether they have mentioned the quantity and if yes whether it is at least 30% of 4,50,000 Telephone instruments. It was submitted in the reply that the total quantity offered by the respondent No. 4 was 1,50,000 telephone instruments.
21. It was further submitted that on 9.3.2001 the Tender Evaluation Committee met at 2.30 p.m. to evaluate the bids. The Tender Evaluation Committee evaluated the bids. As per the guideline issued by the Department of Telecommunications dated 4.12.1998 the Tender Evaluation Committee examines the substantial response of the bids. The Tender Evaluation Committee evaluated the bids in detail and noted the rates quoted by the bidders. Further negotiations were held with the lowest bidder as permitted by the Central Vigilance Commissioner and reiterated by the Department of Telecommunications vide their letter dated 9.12.1998 permitting post tender negotiations with L-1 (lowest tenders) Copy of the instructions issued by the Ministry of Communication, Department of Telecommunications dated 4.12.1998 is at Annexure V to the petition and instruction No. 2 thereof reads as under:
"A more transparent and effective system of tendering should be introduced. As post-tender negotiations are the main sources of corruption, post-tender negotiation should be banned with immediate effect except in the case of negotiations with L-1 (i.e. lowest tenderer)"
Thereafter the Tender Evaluation Committee tabulated the price offered by the respective tenderer as under:
No. Name of bidders All Inclusive Ranking
1.
M/s. Priyaraj Electronics Ltd., Bangalore Rs.294.80 L-l
2. M/s. United Telecom Ltd., Bangalore Rs. 294.95 L-2
3. M/s. Bharati Teletech Ltd., New Delhi Rs. 294.95 L-2
4. M/s. Goa Telecom and Systems Ltd.
Rs. 294.95 L-2
5. M/s. SRV Telecom Pvt. Ltd., Bangalore Rs. 303.03 L-3 6 M/s. Himachal Exicom Communication Ltd., New Delhi Rs. 314.50 L-4
7. M/s. Tata Telecom Ltd., Chennai Rs. 315.00 L-5
8. M/s. Webel Communication Industries Ltd., Kolkata Rs. 323.22 L-6
22. It was further submitted on behalf of respondent Nos. 1 and 2 that the company at Sr. No. 1 had offered the telephone instruments at lowest prices in comparison with rest of the 7 tenderers and, therefore, as per the instructions of Ministry of Communications, Department of Telecommunications, post-tender negotiations were permissible only with lowest tenderers and, therefore, M/s. Priyaraj Electronics Ltd., Bangalore was called for negotiations. Their price per unit was at Rs. 294.80 per instrument, after negotiations M/s. Priyaraj Electronics Ltd. Bangalore was ready to supply telephone instrument at the cost of Rs. 269/- with condition that if 50% of the total tendered quantity is to be purchased from them and if this is not possible then M/s. Priyaraj Electronics Ltd., Bangalore was ready to sell instruments of telephone at the cost of Rs. 272.50 p. if 30% of the total tendered quantity was to be purchased from them.
23. It was further submitted that on 1.5.2001 the date of which M/s. Priyaraj Electronics Ltd., Bangalore was called for negotiation it was further pointed out by M/s. Priyaraj Electronics Ltd., Bangalore that they are ready to supply instruments of telephone at the rate of Rs. 269/- provided Bharat Sanchar Nigam Ltd. is purchasing from them minimum 2,25,000 instruments. This modification in prices was made conditionally by the lowest tender on 1.5.2001 itself. It may be noted that the difference in the quoted and the negotiated lowest price was Rs. 25.80 per telephone instrument.
24. It was further submitted that the tenders were invited in the month of January, 2001 and the total quantity of telephone instruments was worked out on tentative basis since target of new telephone connections for 2001-2002 was not finalised by Bharat Sanchar Nigam Ltd., till then. Requirement was substantially confirmed up at the time of actual purchase on the basis of exact information regarding targets and allocation on M/s. IT Ltd. under Public Sector Undertaking quota (Reserved quota) by BSNL Corporate Office, etc. and, therefore, exact requirement of electronic push button telephones instrument for 2001-2002 reads as follows :
At the time of inviting tenders At the time of actual purchase A. New Telephone Connections Target 400000 612000 B. Replacement, under Maintenance 100000 65380 C. Total Requirement for 2001-02= (A+B) 500000 677380 D. Reservation on M/s. I.T. Ltd. under PSU quota 500000 104685 E. Net Qty. to be procured through open market (C.D.) 450000 572695
25. In view of the same it is submitted that the total required quantity of electronic push button telephone instruments was 572700 instead of 450000 for the year 2001-2002.
26. It was further submitted that as per Technical Bid Condition No. 4.3 if two or more bidders quote the same composite price, their bids will be treated as one bid for the purpose of determining total ordered quantity for them as per para 4.2 and from para 4.2 the following position emerges :
Nos. of Distribution of the order.
Bidder on quantities whom the purchase orders are placed.
2.
70% to L-l and30% L-2
3. 50% to L-2 and remaining quantity to the other two selected bidders in inverse ratio of their evaluated prices.
4. 40% to L-l and remaining quantity to the rest selected bidders in inverse ratio of their evaluated prices.
5 to 9 30% to L-l and remaining quantity to the rest selected bidders in inverse ratio of their evaluated prices.
10 and above 20% to L-l and remaining quantity to the rest selected bidders in inverse ratio of their evaluated prices.
27. It was further submitted that all the aforesaid three bidders are to be considered a single bid for the purpose of determining the total ordered quantity for them as per the para 4.3 Section III of Technical Bid. The total ordered quantity so determined is to be equally distributed amongst such bidders. In such situation number of bidders on whom orders are placed may not be limited to maximum number as indicated in para 4.1 of the Technical Bid.
28. It was further submitted that as per condition Nos. 4.1, 4.2 and 4.3 of Section III of Vol. I of the Bid document of the aforesaid three bidders who quoted the same composite price shall be treated as one bidder. Therefore, total number of eligible bidders ranked as L-1, L-2, L-2, L-2, L-3, L-4, L-5 and L-6 (See Para 21.)
29. It was further submitted that as per the notice inviting tenders which is contained in the Technical Bid, Vol. I of the Bid document maximum number of bidders on whom orders are likely to be placed is only five and thus bidders considered for number L-6 in the present case was not distributing any quantity. Thus only L-1, L-2, L-2, L-2, L-3, L-4, L-5 were entitled to obtain orders from Bharat Sanchar Nigam Ltd.
30. He, therefore, submitted that in view of the aforesaid position as lowest tenderer who had offered the price at Rs. 294.80 per instrument was ready and willing to supply telephone instrument at the composite price at Rs. 2697- provided Bharat Sanchar Nigam Ltd. is purchasing minimum 225000 instruments from the lowest tenderer. It will be noted that such lowest tender was entitled to order of 135000 telephone instruments out of the tendered quantity, it was stated that the actual requirement was 572700 telephone instruments instead of 450000 instruments. Thus there was a need of additional 122700 telephone instruments and out of this additional requirement of 122700 instruments the lowest tenderer was given 90000 telephone instruments so as to get the benefit of further reduction in price which was at Rs. 269/-.
31. It was further submitted that in fact the lowest tendered composite price was Rs. 294.80 ps. and, therefore, if only 135000 telephones are ordered, then the department was required to place orders at the unit rate of Rs. 272.50 instead of Rs. 269.00 equally in lesser benefit out of post-tender negotiations. This resulted in savings of more than 1.47 crores to Bharat Sanchar Nigam Ltd. He further submitted that there is some deviation in the figures of total quantity of telephone instruments purchased from the tenderer but the said difference is due to fixation of target of new telephone connections for 2001-2002 the allocation on M/s. I.T. Ltd. in Public Sector Undertaking quota (Reserved quota), etc., Therefore, out of the eligible bidders, 3 bidders quoted the same composite priced, hence ranked L-2, were given following quantity as per condition Nos. 4.2 and 4.3 of Section III of Special Conditions of Contract, Vol. I Distribution of the quantity between five bidders reads as under :
No. Name of Bidders Rank Out of 450K tend.
Out of 122.7K Addl. Qty.
Grant Total(572.7K)
1.
M/s. Priyaraj Electronics Ltd., Bangalore L-l 135000 (30%) 90000 225000
2. M/s. United Telecomes Ltd., Bangalore L-2 27288 (6.064%) 2833 30121
3. M/s. Bharat Teletech Ltd., New Delhi L-2 27288 (6.064%) 2833 30121
4. M/s. Goa Telecom & Systems Ltd., New Delhi L-2 27288 (6.064%) 2833 87958
5. M/s. S.F.V. Telecom Pvt. Ltd., Bangalore L-3 79686 (17.708%) 8272 87958
6. M/s. Himachal Exixcom Communications Ltd., New Delhi L-4 76788 7971 84759
7. M/s. Tata Telecom Ltd., Chennai L-5 76662 (17.036%) 7958 84620
32. The learned Counsel for respondent Nos. 1 and 2 has relied upon condition No. 6 of the advance purchase order for supply of electronic push button telephone instruments dated 2.5.2001. Condition No. 6 reads as under:
"You are requested to convey your unconditional acceptance of this Advance Purchase Order and submit the required Bank Guarantee in the prescribed format latest by 15th May, 2001 failing which this APO is likely to be treated as cancelled and withdrawn without any further correspondence."
Therefore, in view of the same on or before 15.5.2001 even the petitioner was also required to inform Bharat Sanchar Nigam Ltd. whether they are going to accept advance purchase order or not. The petitioner was also requested to convey its unconditional acceptance of the advance purchase order and to submit the required Bank Guarantee latest by 15.5.2001 but the petitioner has not accepted on or before 15.5.2001. In fact the respondent is not entitled to accept advance purchase order after 15.5.2001 and that too without Bank Guarantee and without giving information of Bank Guarantee in time and information of accepting the advance purchase order in time, the petitioner preferred petition before this Court without highlighting the aforesaid facts and circumstances.
33. Learned Counsel for the respondent Nos. 1 and 2 has also submitted that in the matter of contractual aspect this Court has extremely limited jurisdiction, particularly when there are no allegations of mala fides. There are no allegation of exercise of power for collateral purpose or there are no allegation of colourable exercise of power or authorities have taken extraneous consideration. In such situation the Court may not have jurisdiction to interfere with the nature of transaction in Contract Act. In support of the same the learned Advocate for the respondent No. 1 has relied upon the following decisions.
33.1. Tata Cellular v. Union of India, 1994(6) SCC 651, in which on page 687 at Paragraph 94 the Hon'ble Supreme Court has observed as follows:
"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 review 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, with the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open judicial scrutiny because the invitation to tender is in the realm of contact. 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 arc made qualitatively bv experts.
(5) The Government must have freedom of contract. In other words, a f'airplay 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 Wednesday 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."
33.2. Air India Ltd. v. Cochin International Airport Ltd., II (2000) SLT 3=1 (2000) CLT 337=2000(1) Scale 346, in which on page 351 at Para 7 the Hon'ble Supreme Court has observed thus :
"The law relating to award of a contract by the State, its corporations and bodies acting as instrumentalities and agencies of the Government has been settled by the decision of this Court in R.D. Shetty v. International Airport Authority, 1979(3) SCC 488. Fertilizer Corporation Kamgar Union v. Union of India, 1981(1) SCC 568, Astt. Collector, Central Excise v. Dunlop India Ltd., 1985(1) SCC 260, Tata Cellular v. Union of India, 1994(6) SCC 651, Ramniklal N. Bhutta v. State of Maharashtra, 1997( 1) SCC 134 and Raunaq International Ltd. v. I. V. R. Construction Ltd., 1999( 1) SCC 492. The award of a contract, whether it is by a private or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are of paramount and 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 interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision making process the Court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should intervene."
33.3 Raunaq International Ltd. v. I.V.R. Construction Ltd., I (1999) BC 418 (SC)=X (1998) SLT 137=I (1999) CLT 67 (SC)=AIR 1999 SC 393 on page 397 at Paragraph 11 and on page 398 at Paragraph 15, the Hon'ble Supreme Court has observed as under :
"When a writ petition is filed in the High Court challenging the award of a contract by a public authority or the State, the Court must be satisfied that there is some element of public interest involved in entertaining such a petition. If, for example, the dispute is purely between two tenderers, the Court must be very careful to see if there is any clement of public interest involved in the litigation.
A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. It is important to bear in mind that by Court intervention, the proposed project may be considerably delayed thus escalating the cost far more than any saving which the Court would ultimately effect in public money by deciding the dispute in favour of one tenderer or the other tenderer. Therefore, unless the Court is satisfied that there is a substantial amount of public interest, or the transaction is entered into mala fide, the Court should not intervene under Article 226 in disputes between two rival tenderers.
Para 15--Where the decision making process has been structured and the tender conditions set out the requirements, the Court is entitled to examine whether these requirements have been considered. However, if any relaxation is granted for bona fide reasons, the tender conditions permit such relaxation and the decision is arrived at for legitimate reasons after a fair consideration of all offers, the Court should hesitate to intervene."
33.4 Monarch Infrastructure (P) Ltd. v. Commissioner, Ulhasnagar Municipal Corporation and Ors., V (2000) SLT 244=III (2000)CLT 71 (SC)=2000(5) SCC 287, in which at Paragraph Nos. 10, 11 and 12 on pages 291-292, the Hon'ble Supreme Court has observed as under:
"Para 10--there have been several decisions rendered by this Court on the question of tender process, the award of contract and have evolved several principles in regard to the same. Ultimately what prevails with the Courts in these matters is that while public interest is paramount there should be no arbitrariness in the matter of award of contract and all participants in the tender process should be treated alike. We may sum up the legal position thus:
(i) The Government is free to enter into any contract with citizens but the Court may interfere where it acts arbitrarily or contrary to public interest.
(ii) The Government cannot arbitrarily choose any person it likes for entering into such a relationship or to discriminate, between persons similarly situated.
(iii) It is open to the Government to reject even the highest bid at a tender where such rejection is not arbitrary or unreasonable or such rejection is in public interest for valid and good reasons.
Para 11--Broadly stated, the Courts would not interfere with the matter of administrative action or changes made therein, unless the Government's action is arbitrary or discriminatory or the policy adopted has no nexus with the object it seeks to achieve or is mala fide.
Para 12--If we bear these principles in mind, the High Court is justified in setting aside the award of contract in favour of Monarch Infrastructure (P) Ltd. because it had not fulfilled the conditions relating to Clause 6(a) of the Tender Notice but the same was deleted subsequent to the last date of acceptance of the tenders. If that is so, the arguments advanced on behalf of Konark Infrastructure (P) Ltd. in regard to the allegation of mala fides of the Commissioner of the Municipal Corporation in showing special favour to Monarch Infrastructure (P) Ltd. or the other contentions raised in the High Court and reiterated before us are insignificant because the High Court had set aside the award made in favour of Monarch Infrastructure (P) Ltd. the only question, therefore, remaining is whether any contract should have been awarded in favour of Konark Infrastructure (P) Ltd. The High Court had taken the view that if a term of the tender having been deleted after the players entered into the arena it is like changing the rules of the game after it had begun and, therefore, if the Government or Municipal Corporation was free to alter the conditions fresh process of tender was the only alternative permissible. Therefore, we find that the course adopted by the High Court in the circumstances is justified because by reason of deletion of a particular condition a wider net will be permissible and a larger participation or more attractive bids could be offered."
34. Learned Advocate for the respondent Nos. 1 and 2 has relied upon the recent judgment of the Division Bench of this Court (Honourable the Chief Justice D.M. Dharmadhikari & C.K. Thakkar, J. as he then was) in the case of Larsen & Toubro Ltd. and Anr. v. Gujarat State Petroleum Corporation Ltd. and Ors., 2001(2) GLR 934. In Para 12.3 (on page 946) of this judgment this Court has observed as under :
"It is settled principle of law that approach for judicial review is not an appeal against the administrative decisions which are made here in consultation with experts. Judicial review is permissible only against decision making process and not decision itself. This Court finds itself totally ill-equipped for want of knowledge of technical and financial intricacies in the matter of award of contract for setting up power plant, to come to a conclusion either way that the decision taken by the Managing Committee was erroneous or correct. We also do not find it to be against public interest. It is possible to project an opposite view on the financial and technical opinions formed by the experts and consequent decision taken by the Committee. But that can be no justification to upset their decision, as this Court finds the decision to have taken objectively and bona fide. We have tried to understand the technical and financial information given to us by the parties before us, and we have tried to scrutinise the record. So far as we have understood, it is not possible for this Court with limited knowledge on the subject to come to a conclusion that the decision taken was either actuated by favouritism or was in utter disregard of public interest. We also find no force in the bald allegation that the R.F.P. was tailormade to suit selection of A.B.B. Ltd."
35. On behalf of respondent No. 5 learned Counsel Mr. J.F. Reis appeared. On behalf of respondent No. 4 Mr. Darshan Parikh, learned Advocate appeared. On behalf of respondent No. 3 Mr. Girish Bhatt, learned Sr. Counsel appeared. All the learned Counsels have reiterated the contention which has been raised by Mr. D.N. Patel, learned Sr. Central Government Standing Counsel in this behalf.
36. Learned Counsel for the respondents further submitted that this Court may not exercise the jurisdiction because the petition is barred by delay and laches in this behalf. It was further submitted that in this case the orders were already given and if any injunction or any other order is passed the same will be contrary to the judgment of the Supreme Court in the case Raunaq Industries in this behalf.
37. The learned Counsel for the respondent No. 5 has relied upon the affidavit filed by one M. Vasudeesha of Bangalore on behalf of respondent No. 5. He submitted that there is gross delay and laches in filing the petition. He submitted that the petitioners have not disclosed any legal right in obtaining an order in their favour. It was submitted that on petitioner's own showing they have been awarded a contract to supply 5.25% of goods. If at all the petitioners are entitled to a higher order, they can be compensated in terms of money in respect of profits they would have made. He further submitted that the petitioners have themselves alleged in Para 11 of the petition that respondent No. 5 ought to have been awarded a contract for 17.5% of the goods and in Para 9 have admitted that respondent No. 5 have been allotted only 15.35% of contract. He further submitted that on their own showing, therefore, respondent No. 5 have been allotted a contract less than what should have been awarded. The petitioners, Goa Telecom and United Telecom, are admittedly sister concerns. It is further submitted that while filling the tender by giving same rates, they formed a cartel for mala fidely gaining higher order with a view to obviate the conditions of Clause 4.3 of the tender conditions. The said clause clearly stipulates that bids of the same amount are to be treated as one and the total order will be equally distributed amongst such bidders. As more particularly mentioned hcreinbelow there is a completed contract between respondent No. 2 and respondent No. 5 for supply of 87,598 pieces out of which 22,000 pieces have already been supplied and, therefore, the contract has been acted upon. Moreover, respondent Nos. 1 and 2 on 18.5.2001 have already placed order for supply of remaining pieces. It was further submitted that respondent Nos. 1 and 2 received number of bids under 5 to 9 categories and hence as per Paragraph 4.2 of the tender 30% of the Order was to be placed with the lowest bidder and the remaining quantity was to be divided amongst the other bidders as per Rule.
38. He has also relied upon the terms and conditions of the tender and has submitted that there is no mistake while issuing Purchase Orders in favour of respondent No. 5. He further submitted that the advance Purchase Order was issued by respondent Nos. 1 and 2 which was accepted by the respondent No. 5 and as such the contract is concluded. He further submitted that the respondent No. 5 has already supplied first lot of 8000 Nos. of electronic push button telephone instruments which was accepted by the respondent No. 1 and the production is in full swing. The said first lot was delivered on 12.5.2001 to the respondent Nos. 1 and 2 and respondent No. 5 raised their invoice dated 12.5.2001 for a sum of Rs. 21,52,000/-. In view of the above he submitted that the petitioners are not entitled to any relief in this behalf.
39. On behalf of respondent No. 4, learned Counsel Mr. Darshan Parikh appeared. The learned Counsel for the respondent has invited my attention to the affidavit filed by one Mr. R. Natarajan dated 8.6.2000. He submitted that due to some misunderstanding and for the purpose of keeping the original tender documents in a single such the whole tender form was filled up and kept in the second envelope which included the bid form and the price schedule which were respectively Part I and Part II of Section 3 of the Tender Form. The first envelope contained all the necessary documents necessary for establishing the eligibility criteria of the respondent No. 4 to compete the bid. The copy of the original tender documents submitted by the respondent No. 4 was submitted along with the reply to this petition. It may be noted that the confirmation of quantity is available in the Price Bid (second envelope) and that shows that the respondent No. 4 has actually quoted for more than 30% of the order and hence qualifying for the tender. It was further submitted that on 8.3.2001 the technical bids were to be opened by the Tender Opening Committee (TOC). Shri Raja Chidambaram, Assistant Manager, Marketing of respondent No. 4 attended the meeting. All the bids including the bid of respondent No. 4 were placed before the Tender Opening Committee. As the bid form i.e. Part I of Section III submitted by the respondent No. 4 was not found in the first envelope (which contained all the necessary documents for showing the technical competence of the respondent No. 4) it was thought appropriate by the Tender Opening Committee not to open the price bid at that stage and the TOC in turn sent the matter for consideration by the TEC. It is learnt that as per the guidelines for consideration of tenders it is the TEC which is only competent to consider the substantive responsiveness of the tender and not the TOC. It was further submitted that on 8.3.2001, as a confusion had arisen the aforesaid representative of the respondent No. 4 issued a letter clarifying the situation that everything is mentioned in second envelope and also gave an undertaking that if the quantity offered by them is less than 30% of the quantity their bid may be rejected. A copy of the letter was annexed to this reply affidavit. It was further submitted that all the bids were considered, calculations were made as per tender requirements, negotiation with the party which had quoted the lowest were held as per the guidelines and practice of the Government of India and decisions appear to have been taken. It was further submitted that after completion of the evaluation of the bids, calculation of quantity distributable amongst eligible bidders and negotiations of lowest price with the lowest bidder (hereinafter referred to as L-1 bidder) who had quoted the lowest quantities and prices were decided and Advance Purchase Orders were issued to the successful bidders including the respondent No. 4 which was received by FAX on the same day by respondent No. 4. Subsequently the original was also received by post. As per the Advance Purchase Order (A.P.O.) the respondent No. 4 was required to supply a total number of 84620 units of telephone instruments at the unit rate of Rs. 269/-. As per the said A.P.O. the respondent No. 4 was also required to submit an unconditional acceptance and a Performance Bank Guarantee in the prescribed format latest by 15.5.2001. The respondent No. 4 has accordingly acted upon in this behalf. He submitted that in view of the same the bid of respondent No. 4 was a correct bid. It was substantially responsive and was required to be considered on its merits and was rightly considered by respondent Nos. 1 and 2. The whole grievance made by the petitioners is false, bogus and by way of an afterthought and at a belated stage and is required to be rejected.
40. Mr. G.D. Bhatt, learned Advocate appearing for respondent No. 3 has supported the submissions of Mr. D.N. Patel in this behalf. However, he has relied upon the judgment of the Hon'ble Supreme Court in the case of Union of India and Ors. v. Hindustan Development Corporation and Ors., 1993(3) SCC 499. He has also submitted as to what is meant by cartel. He has also invited my attention to Para 4 of the said judgment (page 513) which reads as under:
7. It is true as it is today that the Government in a welfare State has wide powers in regulating and dispensing of special services like leases, licences and contracts, etc. The magnitude and range of such Governmental function is great. The Government while entering into contracts or issuing quotas is expected not to act like a private individual but should act in conformity with certain healthy standards and norms. Such actions should not be arbitrary, irrational or irrelevant. In the matter of awarding contracts inviting tenders is considered to be one of the fair ways. If there are any reservations or restrictions then they should not be arbitrary and must he justifiable on the basis of some policy or valid principles which by themselves are reasonable and not discriminatory.
41. He has also relied upon Para 14 of the said judgment where the word 'cartel' has been considered. He has also referred to para of the said judgment where the Hon'ble Apex Court has observed as under:
"14. First we shall consider the submissions regarding the formation of cartel by these three big manufacturers. The word "cartel" has a particular meaning with reference to monopolistic control of the market. In Collins English Dictionary the meaning of the word "cartel" is given as under :
Cartel'-1 Also called: trust, a collusive international association of independent enterprises formed to monopolize production and distribution of a product or service, control prices etc..."
In Webster Comprehensive Dictionary, International Edition, the meaning of the word "cartel"... 3 An international combination of independent enterprises in the same branch of production, mining at a monopolistic control of the market by means of weakening or eliminating competition.
In Chamber's English Dictionary the word "cartel" is defined thus :
"Cartel-A combination of firms for certain purposes especially to keep up prices and kill competition.
In Black'sLaw Dictionary, Fifth Edition the meaning of the word "cartel" is given thus :
"Cartel-A combination of producers of any product joined together to control its production, sale and price and to obtain a monopoly in any particular industry for commodity..... Also an association by agreement of companies or sections of companies having common interest, designed to prevent extreme or unfair competition and allocate markets, and to promote the interchange of knowledge resulting from scientific and technical research, exchange of patent rights and standardization of products."
In American Jurisprudence 2nd Vol. 54 page 677 it is mentioned thus:
"A cartel is an association by agreement of companies or sections of companies having common interests designed to prevent extreme or unfair competition and to allocate markets and perhaps also to exchange scientific or technical knowledge or patent rights and to standardise products with competition regulated but not eliminated by substituting competition in quality, efficiency and service for price cutting. An international cartel arrangement providing for a world-wide division of a market has been held a per se violation of 15 USC S. 1. An American corporation violates the Sherrman Act by entering into agreements with English and French companies to (1) allocate world trade territories among themselves: (2) fix prices on products of one sold in the territory of others : (3) cooperate to protect each other's markets and eliminate outside competition and (4) participate the cartel to restrict imports to and exports from the United States."
In a Dictionary of Model Legal Usage by Bran A. Garner it is noted thus :
"Cartelize.--to organize into acartel. See-IZE, Yet cartel has three quite different meanings (1) "an agreement between hostile nations; (2) an Anti Competitive combination use, that fixes commercial prices; and (3) a combination of political groups that work towards common goals. Modern usage favours sense (2)."
The cartel, therefore, is an association of producers who by agreement among themselves attempt to control production, sale and prices of the product to obtain a monopoly in any particular industry or commodity. Analysing the object of formation of a cartel in other words, it amounts to an unfair trade practice which is not in the public interest. The intention to acquire monopoly power can be spelt out from formation of such a cartel by some of the producers. However, the determination whether such agreement unreasonably restrains the trade depend on the nature of the agreement and on the surroundi ng circumstances that give rise to an inference that the parlies intended to restrain the trade and monopolizes the same. Dealing with the provisions of Shennan Anti-Trust Act, National Electrical Contractors Associations Inc. v. National Constructors Association, it was observed as under..."
He submitted that in this case the petitioners and two others have tried to form a cartel and, therefore, giving of same quantity to petitioner No. 1 and others by respondent Nos. 1 and 2 is in the public interest.
Conclusion :
42. I have also considered the submissions on behalf of other respondents and also the cases of Tata Cellular v. Union of India (supra), Raunaq International Ltd. v. I.V.R. Construction Ltd. (supra), Monarch Infrastructure (P) Ltd. v. Commissioner (supra), Nasiruddin v. State Transport Appellate Tribunal (supra), (All judgments of the Honourable Supreme Court) and also the judgment of the Division Bench of this Court of Larsen & Toubro Ltd. (supra). I have also considered the judgment of the Hon'ble Supreme Court in the case of Ram and Shyam Company (supra) and other cases cited by the learned Counsel for the petitioner in this behalf.
42.1. In my view the scope of judicial review in contract matters particularly tender matter is extremely limited. Particularly in this case the petitioners have not made any allegation of mala fide. Petitioners have not made any allegation of exercise of power for collateral purpose or there is no allegation that the authorities have exercised power for extraneous purpose. In my view the authorities have properly invited the tender for contract and thus they have acted in the public interest. The authorities have exercised the power legally. The same is bona fide exercise of power.
42.2 What is the Scope of Judicial Review of Government Contract has been set out by S.P. Sathe in his book "Administrative Law" Sixth Edition on pages 479 and 483. Relevant portions are reproduced as under :
"A Government contract is a privilege or a largess. Unlike a private person who has freedom to decide with whom to contract and on what terms to contract, the Government has to use its power of contracting in public interest. While deciding with whom to contract, it has to provide equal opportunities to all to compete for such privilege. Government cannot select any body arbitrarily. Further, the Government must choose the party as well as the terms so as to maximise the public interest. There are certain fixed procedures for contracts by public bodies. They have to invite tenders or quotations and select from amongst those who have given tenders one who offers the best terms or services."
42.3 The learned author thereafter considered the judgments of the Hon'ble Apex Court in the cases of R.D. Shetty v. International Airport Authority, AIR 1979 SC 1628, Kasturilal v. State of J. & K., AIR 1980 SC 1992, Tata Cellular (supra) and Sterling Computers Ltd. v. M. & N. Publications Ltd., AIR 1996 SC 51 and on page 483, of his book has observed as under:
"These cases established that Government contracts could be subject to judicial review on both counts.--(1) the terms and conditions, and (21) the parties. The Court would ensure that the terms and conditions are not detrimental to public interest and the choice of the party is not arbitrarily by denying equal opportunities to all those who were potential competitors for Government contract."
42.4 In my view one of the terms of tender, Para 4.3 provides that if two or more bidders quote the same composite price, their bids will be treated as one bid for the purpose of determining the total order quantity for them as per Para 4.2 above is also legal and valid and the same is adopted with a view to see that large number of manufacturers may not form a "cartel". For that purpose I have relied upon the judgment of the Hon'ble Apex Court in the case of Union of India v.H.K. Corporation (supra) where the principles of "cartel" have been explained by the Hon'ble Apex Court.
42.5 I have also considered the judgment of Ram and Shyam (supra) and also the judgment of Vadi and Patwa (supra) which have been relied upon by the petitioner in this behalf. However, in view of the detailed affidavit filed by the respondent Nos. 1 and 2 the extract of which I have quoted in this behalf and in view of large number of decisions which have been referred by the learned Counsel for the respondents, I am of the view that the Government-respondent has not acted arbitrarily. In my view the respondent Nos. 1 and 2 have entered into contract with the concerned respondents and they have entered into contract with adequate reasons and distribution of contract by respondents Nos. 1 and 2 is quite reasonable and fair and the same is not arbitrary and it is in accordance with socio-economic justice and directive principles of State Policy. The Government has acted in the form of certain healthy standards and norms. The contention of the petitioner cannot be accepted. The action of the Government is not arbitrary and Government has not taken any irrational or irrelevant element while awarding contract. In my view the action of the Government in awarding the contract is justifiable on the terms of the terms and valid principle of law. The Government has acted in public interest of saving large amount of money while awarding the contract to the concerned respondents. In my view when this Court is judging the awarding of contract by respondent Nos. 1 and 2 to other respondents this Court has to see the development of subject of Public Law doctrine governing public contract in this behalf. The same is in consonance with the principles laid down by the Hon'ble Apex Court in various decisions. There is no violation of the terms and conditions of the contract and there is no violation of the principles of the judgment of the Hon'ble Supreme Court in this behalf.
43. I fully agree with the view of the learning author in this behalf. It is no doubt true that the respondent Nos. 1 and 2 herein is a "State". The respondent Nos. 1 and 2 have also provided equal opportunities to all people to compete in the contract. The respondent Nos. 1 and 2 have also not selected other persons arbitrarily but based upon the terms and conditions of the contract. Government has also filed affidavit in reply and has also shown how the Government has tried to maximise the public interest. The respondent No. 1 has also offered best terms and services in this behalf. I have also considered the contract in this behalf. The terms and conditions of the contract are not detrimental to public interest and there is no arbitrariness in the choice of the parties. There is no denial of equal opportunities to the persons who have filled in the tender. The respondent No. 1 Government has also acted within the procedure and has also acted as per the procedure laid down in awarding the contract. Government has acted reasonably and bona fide. I have extracted the contentions of the respondent No. 1 from the affidavit in reply and also the contentions of the contending respondents to show that the Government has acted reasonably and bona fide. In my view, the action of the Government is quite legal and proper and this Court will not interfere with the said decision in this behalf. In the circumstances, the petition deserves to be dismissed. Accordingly the petition is dismissed with no order as to costs. Rule discharged.
44. In view of the disposal of the main Special Civil Application, no orders are required to be passed in Civil Application Nos. 6266 of 2001 and 9472 of 2001. Hence, those Civil Applications, also dismissed with no order as to costs.