Rajasthan High Court - Jaipur
Medhaj Techno Concept Pvt. Ltd vs State Of Rajasthan (2023:Rj-Jp:20369) on 29 August, 2023
Author: Inderjeet Singh
Bench: Inderjeet Singh
[2023:RJ-JP:20369]
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
S.B. Civil Writ Petition No. 6360/2023
Medhaj Techno Concept Pvt. Ltd, Medhraj, Cp-150, Sector-D1,
Kanpur Road, Lucknow (Up) Through Its Authorized
Representative Vishwajeet S/o Rajendra Singh, Aged About 34
Years, R/o Flat No. 1209, 12Th Floor, Mahagun Mascot, Crossings
Republic, Ghaziabad (Up)
----Petitioner
Versus
1. State Of Rajasthan, Through Principal Secretary, Energy
Department, Govt. Of Rajasthan, Secretariat, Jaipur.
2. Jaipur Vidyut Vitran Nigam Ltd, Vidyut Bhawan, Jyoti
Nagar, Jaipur Through Managing Director.
3. Jodhpur Vidyut Vitran Nigam Ltd., New Power House,
Jodhpur Through Managing Director.
4. Superintending Engineer (Tw), Old Power House
Premises, Near Ram Mandir, Jaipur
5. Superintending Engineer (Css), Jodhpur Vidyut Vitran
Nigam Ltd., New Power House, Jodhpur.
----Respondents
For Petitioner(s) : Mr. Bharat Vyas, Senior Counsel,
assisted by Mr. Ankit Sharma, Adv.
For Respondent(s) : Mr. Bipin Gupta Adv.
HON'BLE MR. JUSTICE INDERJEET SINGH
Order
29/08/2023
1. This writ petition has been filed by the petitioner-company
with the following prayers :-
"It is, therefore, humbly prayed to your
lordships may kindly graciously be pleased to
accept and allow this writ petition and :-
i) by appropriate writ, order or direction in the
nature thereof the impugned order dated
13.4.2023 issued by the respondent No.4 may
kindly be quashed and set aside and restrained
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the respondent No.5 from dropping/cancelling
the present Tender.
ii) by appropriate writ, order or direction in the
nature thereof the respondents may kindly be
directed to award work to the petitioner
pursuant to TN-538 dated 15.11.2022 and
TNTW-654 dated 15.11.2022 respectively
looking to H1 bidder to the petitioner company.
iii) Any other order which this Hon'ble Court
deemed just and proper in the facts and
circumstances of the case may be passed in
favour of the petitioner."
2. Brief facts of the case are that the respondents initiated e-
tender process for "Consultancy services for assisting and
supporting in Project Management under Revamped Reforms-
Linked Results-based Distribution Sector Scheme" for three
companies namely Jaipur Vidyut Vitaran Nigam Limited (JVVNL),
Ajmer Vidyut Vitaran Nigam Limited (AVVNL) and Jodhpur Vidyut
Vitaran Nigam Limited (JdVVNL) and the petitioner is concerned
with the JVVNL. In this writ petition, the petitioner seems to be
basically aggrieved by the condition incorporated in Clause-4-Bid
Capacity provided in the instructions 'Qualification Requirements
for Consultants' to be followed by the bidders participating in the
tender process and the order dated 13.04.2023, which the
petitioner has challenged in the present writ petition, appears to
be based thereon, issued by the respondents whereby the
aforesaid PMA tender for Jaipur Discom has been dropped.
3. The Clause No.4 being relevant to appreciate the
controversy raised herein, is quoted as under :-
4. Bid Capacity (A) For other than special category
states-Bidder cannot be awarded
as PMA for Distribution
Infrastructure works if bidder has
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already been awarded 4 or more
contracts as on date of publication
of this Tender for PMA for
Distribution Infrastructure works of
Discoms falling under other than
special category states under
RDSS.
4. The impugned order dated 13.04.2023 which has been
challenged by the petitioner in the present writ petition, is related
to the NIT issued by the respondents on 15.11.2022, pursuant to
which the petitioner had applied and submitted its tender with the
respondents on 13.12.2022 and thereafter the technical bid was
opened by the respondents on 14.12.2022, including that of the
petitioner and the communication dated 03.01.2023 reveals that
the petitioner was declared technically qualified and by the
communication dated 04.01.2023, which discloses about opening
up of fiscal bids, the petitioner was declared as L-1. The
respondents vide their communication dated 19.01.2023 informed
the petitioner about the negotiations being held on 20.01.2023 in
which the petitioner-company participated and from the
communication dated 23.01.2023 it is transpired that the
petitioner accepted the counter offer and informed the
respondents in this regard accordingly. Thereafter, the
respondents, according to the petitioner, without assigning any
reason, cancelled the aforesaid tender process vide their order
dated 13.04.2023, which is under challenge herein, as observed
above.
5. Learned Senior Counsel appearing for the petitioner submits
that the action of the respondents in cancelling the tender process
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clearly shows their non-application of mind. He further submitted
that no opportunity of hearing was afforded to the petitioner prior
to passing of the order dated 13.04.2023. He further submitted
that the action of the respondents in cancelling the tender process
is also in violation of the provisions of Section 26 of The Rajasthan
Transparency in Public Procurement Act, 2012 (hereinafter to be
referred as the "Act of 2012"). He further submitted that once
the negotiations were held and the counter offer suggested by the
respondents has been accepted by the petitioner, the respondents
have no authority to cancel the tender process which reached
almost to its final stage. He further submitted that action of the
respondents is also in violation of Article 14 of the Constitution of
India. He also submitted that once as per the provisions contained
in Section 27(1) of the Act of 2012 the bid of the petitioner stood
accepted, the respondents cannot be said to be justified in
cancelling the tender process in which the petitioner was declared
qualified almost at all the stages by the respondents themselves.
6. In support of the contentions, Learned Senior counsel for the
petitioner relied upon the judgment passed by the Hon'ble
Supreme Court in the matter of Commissioner of Police,
Bombay Vs. Gordhandas Bhanji, reported in (1952) 0 AIR
(SC) 16, where in paras no.8 & 9 it has been held under:-
"8. It will be necessary at this stage to
determine whether this was a cancellation
by the commissioner on his own authority
acting in the exercise of some power which
was either vested in him or of which he
bona fide believed himself to be possessed,
or whether he merely acted as a post office
in forwarding orders issued by some other
authority. We have no hesitation in
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reaching the conclusion that this is not an
order of cancellation by the Commissioner
but merely intimation by him of an order
passed and made by another authority,
namely the Government of Bombay.
9. An attempt was made by referring to the
Commissioner's affidavit to show that this
was really an order of cancellation made by
him and that the order was his order and
not that of Government. We are clear that
public orders, publicly made, in exercise of
a statutory authority cannot be construed
in the light of explanations subsequently
given by the officer making the order of
what he meant, or of what was in his mind,
or what he intended to do. Public orders
made by public authorities are meant to
have public effect and are intended to
affect the actings and conduct of those to
whom they are addressed and must be
construed objectively with reference to the
language used in the order itself."
7. He further relied upon the judgment passed by the Hon'ble
Supreme Court in the matter of M/s. Padia Timber Company
(P) Ltd. Vs. The Board of Trustees of Visakhapatnam Port
Trust through its Secretary, reported in (2021) 0 AIR (SC)
341, where in paras no.50, 55 & 56 it has been held under :-
"50. In Raghunandhan Reddy v. The State
of Hyderabad thr. The Secretary to
Government Revenue Department (supra),
a Division Bench of the High Court held:
8. It is a well-established principle of law
that only when an offer is accepted that
the contract is concluded and binds the
parties. It is equally well-settled that
before an offer is accepted, the offerer can
withdraw his offer, but if the acceptance is
conditional or is not final, then there is no
concluded contract.
55. The Trial Court relied on Section 4 of
the Contract Act, but completely
overlooked Section 7. Section 7 of the
Indian Contract Act, 1872 is set out
hereinbelow for convenience:
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7. Acceptance must be absolute.--In order
to convert a proposal into a promise the
acceptance must-- --In order to convert a
proposal into a promise the acceptance
must--"
(1) be absolute and unqualified;
(2) be expressed in some usual and
reasonable manner, unless the proposal
prescribes the manner in which it is to be
accepted. If the proposal prescribes a
manner in which it is to be accepted, and
the acceptance is not made in such
manner, the proposer may, within a
reasonable time after the acceptance is
communicated to him, insist that his
proposal shall be accepted in the
prescribed manner, and not otherwise; but,
if he fails to do so, he accepts the
acceptance.
56. It is a cardinal principle of the law of
contract that the offer and acceptance of
an offer must be absolute. It can give no
room for doubt. The offer and acceptance
must be based or founded on three
components, that is, certainty,
commitment and communication. However,
when the acceptor puts in a new condition
while accepting the contract already signed
by the proposer, the contract is not
complete until the proposer accepts that
condition, as held by this Court in Haridwar
Singh v. Bagun Sumbrui and Ors., AIR
1972 SC 1242. An acceptance with a
variation is no acceptance. It is, in effect
and substance, simply a counter proposal
which must be accepted fully by the
original proposer, before a contract is
made."
8. He next relied upon the judgment passed by the High Court
of Andhra Pradesh in the matter of Raghunandhan Reddy Vs.
State of Hyderabad, reported in AIR 1963 AP 110, where in
para no.9 it has been held under :-
"9. It is a well-established principle of law
that only when an offer is accepted that
the contract is concluded and binds the
parties. It is equally well settled that
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before an offer is accepted, the offerer can
withdraw his offer, but if the acceptance is
conditional or is not final, men there is no
concluded contract. Section 5 of the Indian
Contract Act states that a proposal may be
revoked at any time before the
communication of its acceptance is
complete as against the proposer, but not
afterwards, Similarly, an acceptance may
be revoked at any time before the
communication of the acceptance is
complete as against the acceptor, but not
afterwards.
Generally, in a sale by auction, the
auctioneer is the agent of the person
whose property or rights are being
auctioned. The agent invites offers and
every bid is an offer and it is only binding
on either side when it is assented to, that
is, when the hammer falls at the third bid.
Sometimes the owner reserves a right as
part of the conditions of auction and even
though the bid is the highest it need not
necessarily conclude the agreement.
Before the final acceptance of the bid or
before the hammer falls, it is always open
to the bidder to withdraw his bid and the
condition to the contrary in auction that
the bid shall not be retracted has been held
to be invalid. Following the English rule, in
Agra Bank v. Hamlin ILR Mad 235 it was
held by a Bench consisting of Muttusami
Ayyar and Best, JJ. that it was competent
for a bidder at a Court auction to withdraw
his bid. Two estates by name 'Chembali'
and 'Burnside' being the properties of the
judgment debtor, were put up for sale by
Court auction. At the sale, one person
acting on behalf of the plaintiff made a bid
for both the properties, but later intimated
to the Nazir that he wished to withdraw
these bids and also informed the court the
next day of his wish to withdraw. A
reference was made to the High Court as
to whether it was permissible for bidders at
court sales to withdraw their bids.
Muttusami Ayyar, J. answered the question
in the affirmative and pointed out that until
the lot is knocked down and the sale is
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concluded, the court may, in its discretion,
adjourn the sale. He observed:
It is clear then that until the lot is knocked
down, the court has a loeus penitentiae
and it follows, in the absence of some
specific provision to the contrary, that
bidders are intended to be placed in a
similar position.
Best, J. concurred and said:
An offer to buy or sell may be retracted at
any time before it is unconditionally and
completely accepted, by words or
conduct...
Later Leach, C. J., delivering the judgment
of the bench in Somasundaram Pillai v.
provincial Government of Madras
MANU/TN/0172/1946 : AIR 1947 Mad 366,
referred 1o the dictum of Muttusami Ayyar,
J. -- Particularly to the observations, "It
appears that, in the case under reference,
it was not one of the conditions of sale that
bidders were not at liberty to with draw
their bids" and said at page 368, that they
do not regard this statement as a definite
acceptance of the proposition that where
there is such a condition a bid cannot be
withdrawn, and expressed dissent if
Muttusami Ayyar intended to hold so.
In Somasundaram Pillai's case AIR 1947
Mad 365, the appellant was the highest
bidder for four shops and his bids were
provisionally accepted by the Sub-
Collector, but the Collector accepted only
two of them. He refused to confirm the
bids made by the appellant for the other
two licences and directed that the sale
should be continued under the conditions
of sale. Pursuant to this the Tahsildar
informed the appellant that his bids for the
two shops had not been accepted and that
the Collector had ordered that the auction
sale should be continued from the bids
already made by him. The appellant,
however, presented a petition to the
Tahsildar on the day fixed for the
continuance of the auction, in which he
stated that he did not require the two
shops and asked that the amount of his
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deposit should be returned to him. This
petition was rejected forthwith and
subsequently his pleader wrote on his
behalf pointing out that his bids had not
been accepted by the Government and that
he was entitled to withdraw them. The
Collector, after referring to the rule that
bids could not be withdrawn, rejected this
contention and accepted his bid, but the
appellant refused to take out licences,
which resulted in a loss to the Government
of Rupees 1148/-.
The Advocate General on behalf of the
State conceded that the publication of the
conditions of sale did not amount to a
notification under Section 69 of the Madras
Abkari Act and said that they were merely
rules drawn up by the Board for the
conduct of sales of liquor licences and had
no statutory force. It was consequently
held that the lower court was wrong in
holding that the conditions of sale had the
force of law. The learned Judges referred
to the case in Joravarmull Champalal v.
Jeygopal das Ghanshamdas ILR Mad 799 :
AIR 1922 Mad 488 and the cases
considered by that Bench in Payne v. Cave
(1789) 3 TR 148 : 100 ER 502 and Cooke
v. Oxley (1790) 3 TR 653 : 100 ER 785,
approving the dictum in both the cases,
particularly of Lord Kenyon in the latter
case that nothing could be clearer than
that at the time of entering into the
contract, the engagement was all on one
side and that the other party was not
bound and therefore it was a nudum
pactum.
Leach, C. J., observed at page 367 as
follows: "To have an enforceable contract
there must be an offer and an
unconditional acceptance. A person who
makes an offer has the right of
withdrawing it before acceptance, in the
absence of condition to the contrary
supported by consideration. Does the fact
that there has been a provisional
acceptance, make any difference? We can
see no reason why it should. A provisional
acceptance cannot itself make a binding
contract. There must be a definite
acceptance or the fulfilment of the
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condition on which provisional acceptance
is based."
In the result it was decided that the
appellant was entitled to withdraw his bids,
because a prohibition against withdrawal
has no force of law. This case is sought to
be distinguished by the learned
Government Pleader on the ground that
under Rule 10, the acceptance was final
and not provisional and the condition of
cancellation or suspension by the Excise
Commissioner within thirty days It only a
condition subsequent. In support of this
argument he relied on the judgment of
Safyanarayana Rao, J., sitting singly in
Rajanagaram Village Co-operative Society
v. Veerasami Mudaly, MANU/TN/0064/1951
: AIR 1951 Mad 322 and the passage in
Pollock and Mulla -- 8th Edition -- |pages
44-45. Satyanarayana Rao, J. in
Rajanagaram case, MANU/TN/0064/1951 :
AIR 1951 Mad 322 tries to distinguish the
Bench decision in Somasundaram Pillai's
case, AIR 1947 Mad 366 on the ground
that there is a difference between a
provisional acceptance and a conditional
acceptance. In the former case the officer
accepting the offer provisionally has no
authority to accept the bid. As such the
offeror can withdraw, while in the latter
case the offeror cannot withdraw. In his
view Somasundaram Pillai's case, AIR 1947
Mad 36B is one where the auctioning
authority had only power to accept the bid
provisionally and pass it on to the Collector
for his confirmation.
At page 488 (of Mad LJ): (at pp. 324-325
of AIR) he observed:
Under the terms of the sale which were
approved by the Board of Revenue, he
could only signify a kind of provisional
acceptance whatever that expression might
mean; but the final and actual acceptance
rested with the Collector. The appellant
who was the highest bidder in that case did
not thereby acquire any rights under the
sale as there was no concluded contract in
his favour.
The learned Judge then proceeds to
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observe that an absolute acceptance is
where the sale officer, or the auctioneer as
the case may be, is given full authority to
accept a bid unconditionally and that a
provisional acceptance means that the
auctioneer had only a right to receive the
bids and pass them on to his superior who
Is the final authority to confirm and
conclude the contract, while a conditional
acceptance has the effect of binding the
highest bidder to the contract If finally
there Is the approval or confirmation by
the superior person indicated in the terms
of sale. As such he cannot resile from the
contract, nor is it open to him to withdraw
the offer.
With great respect, we fail to appreciate
this distinction. In our view, where the
offer and acceptance culminating in a
concluded contract are themselves subject
to conditions and are not final, there is no
contract at all till these conditions are
fulfilled and an offer before the fulfilment
of these conditions can be withdrawn. The
distinction between a condition and an
ordinary term of the agreement must not
be confused, for, the non-performance of a
term would give rise to a right to an action
for the breach of the contract while the
failure of a condition acts as a release of
the corresponding duty. Such a condition is
one where the promisor's obligation
becomes effective only if some state of
facts exists or if and when some future
event happens. In other words, it is said to
be a condition precedent. Learned editors
of Pollock and Mulla's Indian Contract Act
classify both these cases and another case
of Chittibobu Adenna v. Garimalla AIR 1916
Mad 75, as cases of a condition precedent
where the didder could have retracted his
offer before the final acceptance, as in
Sundaram Pillai's case
MANU/TN/0172/1946 : AIR 1947 Mad 366.
It was further submitted by them that the
two cases, viz., Chittibobu's case AIR 1916
Mad 75 and Rajanagaram case 1950 2 MLJ
436 : AIR 1351 Mad 322 were wrongly
decided. In the first case, it is said that the
Court misunderstood the nature of a
condition subsequent. With respect to the
second case, it is observed that the
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acceptance is either absolute or conditional
and there is no half-way house between
the two. If an acceptance is conditional,
the offeror can withdraw at any moment
until absolute acceptance has taken place.
In that case before Salyanarayanarao, J.
the terms of the auction sale were that the
sale will be knocked down in favour of the
highest bidder subject to the approval or
the Mahasabha and the District Bank. The
plaintiff had become the highest bidder in
the auction and deposited the necessary
price money and later on the bank took up
the matter for consideration and accepted
the bid, but before it could be
communicated to the plaintiff, the Bank
rescinded it and ordered re-sale. The
question was whether there was a
concluded contract. There can be little
doubt that where the acceptance is
conditional, as in this case, there is no
concluded contract and the offeror can
withdraw. A condition precedent is a
condition which must happen before either
party becomes bound by the contract and
since there was in fact no approval, there
can be no concluded contract and the Bank
was justified in ordering the resale. The
decision of the single bench of the Madras
High Court, was, in our view, not
warranted either on principle or on the
authority of the Bench decisions which
preceded it.
An examination of Chittibobu's case, AIR
1916 Mad 75 would show that the decision
of the Bench was based on there being a
condition precedent and not a condition
subsequent. A condition subsequent is one
which arises only on there being a
concluded contract. A condition subsequent
is one, which follows the performance of
the contract, and operates to defeat and
annul it, upon the subsequent failure of
either party to comply with the condition.
It goes to the discharge of the obligations
under the contract. The statement of
Poilock and Mulla at pages 44-45 dealing
with Chittibobu's case AIR 1916 Mad 75
which has been relied upon by the learned
Government pleader, is in the following
terms:
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It is a resolutive condition, as distinct from
a suspensive condition or condition
precedent, which prevents the existence of
any obligation until the condition is
satisfied. Yet the Court clearly decided that
there was no binding agreement at any
rate until V, the special agent, approved. In
other words, their Lordships held that the
condition was a condition precedent, for
had the condition been a condition
subsequent, there would have been a
binding contract the moment D's bid was
accepted, name to be defeated by V's
failure to approve. Appropriate wording to
impose a condition subsequent would have
been to the effect that the bid was
accepted, but if V should not approve the
contract was to be at an end."
9. He also relied upon the judgment passed by a Coordinate
Bench of this Court in the matter of Ashok Kumar Sharma Vs.
State of Rajasthan & Ors, reported in (2013) 1 RLW (Raj.)
920, where in para no.8 & 9 it has been held as under :-
"8. Section 4 of the Contract Act, 1872
(hereinafter 'the Contract Act') provides
that the communication of a proposal is
complete when it comes to the knowledge
of the person to whom it is made, and that
the communication of an acceptance is
complete as against the proposer when it
comes to the knowledge of the proposer.
Section 8 of the Contract Act provides that
performance of the conditions of a proposal
or the acceptance of any consideration for
a reciprocal promise which may be offered
with a proposal is an acceptance of the
proposal. Section 8 of the Contract Act
thus provides that performance of the
conditions of a proposal or the acceptance
of any consideration for a reciprocal
promise which may be offered with a
proposal is an acceptance of the proposal.
9. In the instant case the letter dated 5-3-
2008 issued by the UIT on the face of it
constituted a proposal. As against the
proposal the petitioners deposited the
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required amount. Under Section 8 of the
Contract Act this tantamounted to
acceptance of the proposal of the promise.
Therefore a concluded contract came into
existence. In my considered view a
concluded contract having thus come into
force, it was binding on the UIT unless
there were allegations of fraud or
misrepresentation as against the petitioner,
based whereupon requisite declaration
from a competent court of law could have
been sought. No such fraud or
misrepresentation has been alleged against
the petitioners. No suit for cancellation of a
duly formed contract has been filed. The
Hon'ble Division Bench of the Delhi High
Court in Govt. of NCT of Delhi Vs. Bhushan
Kumar [LPA No. 141 and 168/2006 and WP
(C) No. 2040/2007 decided on 18-3-2008],
held that allotment having been made
specifically mentioning the area and
property number allotted to the applicant
and consideration having been paid by the
applicant a concluded contract came into
existence between the parties. It was held
that the terms and conditions of the
allotment following a concluded contract
can only be modified (novation under
Section 60 of the Contract Act) with mutual
consent and not unilaterally unless there
exists a provision in the law or in the
contract itself. Similarly no policy decision
could obstruct the operation of a concluded
contract. A party to a contract can not
unilaterally alter the terms and conditions
of the contract. Consequently no escape
from the inexorable effect of a contract was
available to any of the party to the
contract. It was further held that even in
cases of unilateral mistake, which was not
occasioned by the successful allottees who
had acted upon proposal and accepted it a
duly concluded contract could not be
cancelled. Reference was also made to
Section 22 of the Contract Act, which
provides a contract is not voidable merely
because it was caused under a mistake as
to a matter of fact, and where allottees
were not guilty of fraud, misrepresentation
or unfair dealing, their rights could not be
stalled by arbitrary action. In the aforesaid
case where the allottees parted with
money and deposited the sale
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consideration with the authority, which was
accepted and retained by the authority, (as
also in the present case where considerable
amounts have been deposited for over last
four years) the sanctity of the contract had
to be maintained as contrarily the allottees
would apart from arbitrary action of the
authority also suffer loss and damages in
circumstances not of their making."
10. Learned counsel appearing for the respondents opposed the
writ petition and submitted that the project for which the tender
was floated is funded by the Central Government through REC
Limited. He further submitted that since the project is funded by
the REC, therefore the respondents are bound to follow the
guidelines issued by the REC Limited dated 28.03.2022 whereby
the REC Limited directed the JVVNL to ensure implementation of
the scheme in accordance with all the prescribed scheme
guidelines including SBDs. He further submitted that with regard
to the present tender process, a clarification was also sought in
respect of appointment of PMA, in response thereto the REC
Limited vide letter dated 31.03.2023 informed the respondents as
under :-
"As per your letter, bid capacity clause was
incorporated in the tender. Since the Bid capacity
clause was part of the tender document, Bidders
were aware about the same while participating in the
tender. As Rajasthan is other than Special Category
State, in the instant case the L1 bidder would be
eligible to be awarded the work of PMA in only one
more Discom for Distribution Infrastructure Works as
they have already been awarded 3 other Discoms as
PMA in other than special category States."
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[2023:RJ-JP:20369] (16 of 24) [CW-6360/2023]
11. He further submitted that the REC Limited further advised
the respondents to strictly follow the bid capacity clause as
mentioned in the tender document. He also submitted that
according to the condition incorporated in clause-4 of the
instructions booklet, which is the basis of challenge made by the
petitioner to the order dated 13.04.2023, the petitioner is entitled
for doing the work only upto 4 of such type of contracts and made
a reference of clause no.3.1(A)-Bid Capacity which reads as
under:-
"(A) For other than special category states:- Bidder
cannot be awarded as PMA for Distribution
Infrastructure works if bidder has already been
awarded 4 or more contracts as on date of
publication of this Tender for PMA for Distribution
Infrastructure works of Discoms falling under other
than special category states under RDSS."
.
12. He next submitted that they have followed the procedure prescribed under the Act of 2012 and while passing the order of cancellation the matter was referred to the Principal Secretary, Jaipur Discom, Jaipur who after considering the tender conditions of the bid document as well as the clarification received from the REC Limited has taken a decision for cancellation of the tender process which was communicated to the petitioner dated 13.04.2023. He further submitted that according to section 27(2) of the Act of 2012 the tender process is treated to be complete if approval is received from the competent authority whereas in the present matter no such approval was given by the competent authority rather a decision was taken to cancel the tender process in question on the advice of REC Limited which is the funding (Downloaded on 11/11/2023 at 07:39:48 PM) [2023:RJ-JP:20369] (17 of 24) [CW-6360/2023] agency in the present matter. He also submitted that once the procurement process has been cancelled, the same cannot be reopened and in this regard made a reference of Rule 78 of The Rajasthan Transparency in Public Procurement Rules, 2013 (hereinafter to be referred as the "Rules of 2013") which provides that if any procurement process has been cancelled, it shall not be reopened and also submitted that the decision taken by them is just and fair and is in the public interest. Counsel further submitted that as per the advice of REC Limited which is the funding agency in the present matter and also based on the condition incorporated in clause no.4-Bid Capacity of the instruction booklet, the petitioner cannot be awarded the such number of contracts, as claimed by it, beyond the number of contracts as provided in the guidelines. He further submitted that since the petitioner is already having 4 contracts including that of Ajmer therefore no further contract in Jaipur Discom was granted to the petitioner.
13. In support of the contentions, he relied upon the judgment passed by the Hon'ble Supreme Court in the matter of Tata Motors Limited Vs. The Brihan Mumbai Electric Supply & Transport Undertaking (Best) & Ors., Civil Appeal No.3897 of 2023, decided on 19.05.2023, where in paras no.48, 52, 53 & 54 it has been held as under :-
"48. This Court being the guardian of fundamental rights is duty-bound to interfere when there is arbitrariness, irrationality, mala fides and bias. However, this Court has cautioned time and again that courts should exercise a lot of restraint while exercising their powers of judicial (Downloaded on 11/11/2023 at 07:39:48 PM) [2023:RJ-JP:20369] (18 of 24) [CW-6360/2023] review in contractual or commercial matters. This Court is normally loathe to interfere in contractual matters unless a clear-cut case of arbitrariness or mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution. The courts must realise their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in Judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. The courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give "fair play in the joints"
to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer. (See: Silppi Constructions Contractors v. Union of India, (2020) 16 SCC 489).
52. Ordinarily, a writ court should refrain itself from imposing its decision over the decision of the employer as to whether or not to accept the bid of a tenderer unless something very gross or palpable is pointed out. The court ordinarily should not interfere in matters relating to tender or contract. To set at naught the entire tender process at the stage when the contract is well underway, would not be in public interest. Initiating a fresh tender process at this stage may consume lot of time and also loss to the public exchequer to the tune of crores of rupees. The financial burden/implications on the public exchequer that the State may have to meet with if the Court directs issue of a fresh (Downloaded on 11/11/2023 at 07:39:48 PM) [2023:RJ-JP:20369] (19 of 24) [CW-6360/2023] tender notice, should be one of the guiding factors that the Court should keep in mind. This is evident from a three-Judge Bench decision of this Court in Association of Registration Plates v. Union of India and Ors. reported in (2005) 1 SCC 679.
53. The law relating to award of contract by the State and public sector corporations was reviewed in Air India Ltd. v. Cochin International Airport Ltd., reported in (2000) 2 SCC 617 and it was held that the award of a contract, whether by a private party or by a State, is essentially a commercial transaction. It can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation. It was further held that 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 powers 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 interfere.
54. As observed by this Court in Jagdish Mandal v. State of Orissa and Ors. reported in (2007) 14 SCC 517, that while invoking power of judicial review in matters as to tenders or award of contracts, certain special features should be borne in mind that evaluations of tenders and awarding of contracts are essentially commercial functions and principles of equity and natural justice stay at a distance in such matters. If the decision relating to award of contract is bona fide and is in public interest, courts will not interfere by exercising powers of judicial review even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. Power of judicial review will not be invoked to protect private interest at the (Downloaded on 11/11/2023 at 07:39:48 PM) [2023:RJ-JP:20369] (20 of 24) [CW-6360/2023] cost of public interest, or to decide contractual disputes."
14. He also relied upon the judgment passed by the Hon'ble Supreme Court in the matter of The Silppi Constructions Contractors Vs. Union of India & Anr, reported in (2020) 16 SCC 489, where in paras no.25, 30 & 31 it has been held as under :-
"25. That brings us to the most contentious issue as to whether the learned single judge of the High Court was right in holding that the appellate orders were bad since they were without reasons. We must remember that we are dealing with purely administrative decisions. These are in the realm of contract. While rejecting the tender the person or authority inviting the tenders is not required to give reasons even if it be a state within the meaning of Article 12 of the Constitution. These decisions are neither judicial nor quasi- judicial. If reasons are to be given at every stage, then the commercial activities of the State would come to a grinding halt. The State must be given sufficient leeway in this regard. The Respondent Nos. 1 and 2 were entitled to give reasons in the counter to the writ petition which they have done.
30. The eligibility criteria provided in the tender lays down that there should be no adverse remarks in the WLR of the competent engineering authority. Admittedly, there are adverse remarks in Work Load Return (WLR) of the sister company. It is obvious that the sister company having realised that it would not be awarded any contract neither got its enlistment renewed nor tried to submit the tender. The directors of the sister company tried to get over these insurmountable objections by applying for the tender in the name of the Petitioner firm. Not only are the names similar but as pointed above, all the directors of the sister company are partners in the Petitioner firm. Therefore, (Downloaded on 11/11/2023 at 07:39:48 PM) [2023:RJ-JP:20369] (21 of 24) [CW-6360/2023] these adverse remarks passed against the sister company could not be ignored.
31. Another important aspect of the matter is that as per the eligibility criteria for MES enlisted contractors only contractors falling in "SS Class" were eligible to apply. Admittedly, the Petitioner firm was not an enlisted contractor and was therefore required to meet the eligibility criteria for other contractors. Relevant portion of the notice inviting tender reads as follows:
8. Eligibility Criteria (A) For MES enlisted contractor They should satisfy the following criteria:
(a)...........
(b)...........
(c) They should meet the enlistment criteria of Class "SS" MES Contractors and Category a(i), i.e. having satisfactorily completed requisite value works, annual turnover, solvency, working capital, immovable property/fixed assets, T & P, Engineering establishment, no recovery outstanding in govt. department, police verification/passport etc. Enlistment criteria may be seen in para 1.4 of Section 1 of part I of MES Manual on Contracts-
2007 (Reprint-2102) as available in all MES formation. These firms shall also submit copy of police verification from police authority of the area where the registered office of the firm is located/notarized copy of valid passport of proprietor/each partner/each director.
(d) They should not carry adverse remarks in WLR of competent engineer authority.
A bare reading of the eligibility criteria would clearly show that as far as MES enlisted contractors are concerned, they should be enlisted in "SS" Category a(i) and secondly, they should not carry adverse remarks in WLR of competent engineer authority. As far as other contractors are concerned, they are required to meet the same criteria as "SS" MES contractors category a(i) and these contractors was specifically told that they could see enlistment criteria in the MES Manual Contracts."
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15. He next relied upon the judgment passed by the Hon'ble Supreme Court in the matter of Michigan Rubber (India) Ltd.
Vs. State of Karnataka & Ors., reported in (2012) 0 AIR(SC) 2915, where in paras no.19 & 20 it has been held as under :-
"19. From the above decisions, the following principles emerge:
(a) the basic requirement of Article 14 is fairness in action by the State, and non-
arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities;
(b) fixation of a value of the tender is entirely within the purview of the executive and courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by Courts is very limited;
(c) In the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities unless the action of tendering authority is found to be malicious and a misuse of its statutory powers, interference by Courts is not warranted;
(d) Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work; and
(e) If the State or its instrumentalities act reasonably, fairly and in public interest in (Downloaded on 11/11/2023 at 07:39:48 PM) [2023:RJ-JP:20369] (23 of 24) [CW-6360/2023] awarding contract, here again, interference by Court is very restrictive since no person can claim fundamental right to carry on business with the Government.
20. Therefore, a Court before interfering in tender or contractual matters, in exercise of power of judicial review, should pose to itself the following questions:
(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; or whether the process adopted or decision made is so arbitrary and irrational that the court can say: "the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached"; and (ii) Whether the public interest is affected. If the answers to the above questions are in negative, then there should be no interference under Article
226."
16. Heard counsel for the parties and perused the record.
17. This writ petition filed by the petitioner deserves to be dismissed for the reasons; firstly the respondents while passing the order dated 13.04.2023 cancelling the tender process considered the condition incorporated in clause no.4-Bid capacity of the tender document, secondly, the respondents after obtaining the opinion from REC Limited which is a Government of India Enterprise & funding agency in the present matter, have taken a conscious decision in public interest, of cancelling the present tender process vide order dated 13.04.2023 and the same in the opinion of this Court is not liable to be disturbed under Article 226 of the Constitution of India, thirdly as per Section 27(2) of the Act of 2012 a tender process shall be treated to be complete only after approval of the competent authority whereas in the present matter no such approval was given by the competent authority, (Downloaded on 11/11/2023 at 07:39:48 PM) [2023:RJ-JP:20369] (24 of 24) [CW-6360/2023] therefore the argument of the petitioner that the tender stood complete cannot be accepted; fourthly as per the guidelines issued by the REC Limited total 4 contracts can be awarded to the petitioner and the petitioner was already having three contracts of same nature and therefore was awarded one more contract by Ajmer Discom and thus beyond 4 contracts he cannot be awarded any more contract as prohibited in the guidelines issued by the REC Limited; fifthly the challenge made by the petitioner to the rejection of tender process is not sustainable, as on perusal of the material on record, I am of the view that the decision taken by the respondents cancelling the tender process is perfectly in conformity with the terms and conditions of the tender document as well as with the guidelines issued by the REC Limited and no more justification is required in taking such a decision; sixthly in view of the judgments passed by the Hon'ble Supreme Court in the matter of The Silppi Constructions Contractors and Michigan Rubber (India) Ltd., (both supra) I am not inclined to interfere in the present matter as no allegation of malafide has been levelled by the petitioner and lastly the scope of interference in the tender matters is very limited, therefore, in my view no interference is warranted in this matter by this Court under Article 226 of the Constitution of India.
18. In that view of the matter, the writ petition fails and is hereby dismissed.
(INDERJEET SINGH),J VS SHEKHAWAT /40 (Downloaded on 11/11/2023 at 07:39:48 PM) Powered by TCPDF (www.tcpdf.org)