Jammu & Kashmir High Court - Srinagar Bench
M/S New Jk Roadways vs Union Territory Of J&K And Others on 16 October, 2020
Bench: Chief Justice, Sanjay Dhar
IN THE HIGH COURT OF JAMMU AND KASHMIR
AT SRINAGAR
Reserved on:14.08.2020
Pronounced on:16.10.2020
LPA No.78/2020
CM No.2367/2020
M/S New JK Roadways ... Appellant(s)
Through: Mr. A. H. Naik, Sr. Advocate, with
Mr. Zia, Advocate.
Vs.
Union Territory of J&K and others ...Respondents
Through: Mr. B. A. Dar, Sr. AAG for 1 to 4.
Mr. Shuja-ul-Haq, Advocate, for R-5.
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE SANJAY DHAR, JUDGE
JUDGMENT
Sanjay Dhar, 'J'
1) Instant Letters Patent Appeal is directed against judgment dated 30.06.2020, passed by the learned Single Judge in EMG- WP(C) No.08-A/2020 [WP(C) No.861/2020], whereby the writ petition of the petitioner/appellant has been dismissed.
2) Before coming to the Appeal, let us give a brief background of the facts leading to filing of the same.
3) Vide GIST of e-NIT No.01 of 2020 dated 18.02.2020, MOHAMMAD ALTAF BHAT Inspector General of Police, Kashmir Zone, Zonal Police HQR's, 2020.10.21 10:28 I attest to the accuracy and integrity of this document 2 LPA No.78/2020 Kashmir, Srinagar, invited online tenders (e-tenders) from reputed transporters, registered firms/Associations for supply of various types of commercial vehicles (without fuel) for carriage of troops and equipments etc. for the financial year 2020-21. It is the admitted case of the parties that in response to aforesaid tender notice, four parties, namely, M/S Associated Contractors, Qureshi Transport Company, M/S New JK Roadways and M/S Galaxy Transport Agencies, submitted their bids for consideration by uploading the same through e-tendering system. As per the tender notice, in the first instance, the technical bids were to be opened and only those qualifying the technical bid were to be considered for evaluation of the financial bid.
4) It appears that the Committee constituted for evaluation of tenders met on 11.03.2020 and found that the appellant herein and M/S Associated Contractors did not qualify in the technical bid. The bids of remaining two tenderers, namely, M/S Qureshi Transport Co. and M/S Galaxy Transport Agencies (respondent No.5 herein) qualified the technical bids and their financial bids were considered.
5) Vide letter No.PCRK/MT-2020/2200/03 dated 30.03.2020, the official respondents allotted the contract for supply of commercial vehicles for the financial year 2020-21 to the lowest MOHAMMAD ALTAF BHAT 2020.10.21 10:28 I attest to the accuracy and integrity of this document 3 LPA No.78/2020 bidder, namely, M/S Galaxy Transport Agencies (respondent No.5 herein).
6) Feeling aggrieved of the aforesaid action of the official respondents, the appellant filed a writ petition claiming the following reliefs:
i) A writ of Certiorari or any other writ, order or direction, to quash/set aside the impugned contract for supply of commercial vehicles during the financial year 2020-21 allotted by respondent no.3 in favour of respondent No.5 in terms of order No.Acctts/ Hov/e-NIT-01/20/18636-54 dated 30.03.2020 and communication No.PCRK/MT-2020/2200/03 dated 30.03.2020;
ii) A writ of Mandamus or any other writ, order or direction, to direct the respondents to allot the contract for supply of commercial vehicles during the financial year 2020-21 to the petitioner, or, in the alternative, to issue a fresh tender notice with regard to the supply of commercial vehicles during the financial year 2020-21.
7) In the writ petition, the petitioner/appellant raised several grounds challenging the action of official respondents. However, it appears the main grounds that were urged by the petitioner before the learned Single Judge are as follows:
a) That as per the tender notice, a tenderer must have at least 30 vehicles registered in his own MOHAMMAD ALTAF BHAT 2020.10.21 10:28 I attest to the accuracy and integrity of this document 4 LPA No.78/2020 name but the respondent No.5 herein was found to own only 29 vehicles out of the list of 36 vehicles submitted by the said respondent;
b) That the respondent No.5 herein was not having the requisite experience of five years in supply of vehicles which was an essential condition of the NIT;
c) That the respondents by illegally rejecting the bid of the petitioner and accepting bid of respondent No.5 have caused grave prejudice to the petitioner and indulged in favouritism for respondent No.5;
d) That the service license submitted by respondent No.5 with his tender documents had expired on 31.03.2020 and that the validity of the service licence for the contract period was a pre-requisite condition, therefore, the respondent No.5 did not fulfill the essential conditions of the NIT.
8) The grounds urged by the petitioner/appellant in the writ petition were contested by the official respondents as well by private respondent No.5 herein by filing separate objections. In their objections, respondents claimed that the petitioner was ineligible, as such, his bid was rightly rejected by the official respondents. In this regard it was contended by the respondents that the list of vehicles submitted by the petitioner with his tender document contained the particulars of only heavy motor vehicles MOHAMMAD ALTAF BHAT 2020.10.21 10:28 I attest to the accuracy and integrity of this document 5 LPA No.78/2020 whereas the tender conditions required for furnishing of list of both heavy motor vehicles and light motor vehicles.
9) It was further averred by the respondents in their respective objections that due to some typographical error in the registration number of one of the vehicles mentioned in the list of vehicles furnished by respondent No.5, there was some confusion with regard to the number of vehicles owned by the said respondent and ultimately, upon scrutiny, the error was rectified and it was found that the respondent No.5 was owner of the requisite number of vehicles.
10) The respondents vehemently denied that the respondent No.5 was lacking the requisite experience of five years in supply of vehicles.
11) Regarding non-renewal of service licence of respondent No.5, it was contended by the respondents that vide communication dated 30th of March, 2020, issued by Government of India, Ministry of Road Transport and Highways, the Enforcement Authorities were advised to treat the validity of the documents under Motor Vehicles Act to have been extended till 30th of June, 2020 keeping in view the lockdown in the Country on account COVID-19.
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12) The learned Single Judge after hearing the parties by the impugned judgment dated 30.06.2020, repelled all the contentions raised by the petitioner in the writ petition and held that there was no merit in the petition and, accordingly, the same was dismissed. It is this order of the learned Single Judge which is under challenge before us.
13) We have heard learned counsel for the parties and perused the record and the grounds of appeal.
14) Though the appellant has raised a number of grounds in the appeal yet during the course of arguments, the main thrust of arguments advanced by the learned counsel for the appellant was on the following grounds:
(I) That the official respondents were not justified in rejecting bid of the appellant on the ground that it had submitted only the list of heavy motor vehicles and that the list did not contain the particulars of light motor vehicles;
(II) That the respondent No.5 despite lacking the requisite experience in supply of vehicles, was awarded the contract, which action has amounted to award of MOHAMMAD ALTAF BHAT 2020.10.21 10:28 I attest to the accuracy and integrity of this document 7 LPA No.78/2020 contract in favour of an ineligible bidder to the exclusion of an eligible bidder.
15) Before embarking on determination of the merits of the aforesaid submissions of learned counsel for the appellant, let us analyze the scope of jurisdiction of the Court to review the decisions of the public authorities in matters relating to tenders.
16) The Supreme Court in the case of Tata Cellular v. Union of India, (1994) 6 SCC 651, has laid down the principles relating to scope of judicial review in contract and tender matters in the following words:
(1) The modern trend points to judicial restraint in administrative action.
(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. (3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out MOHAMMAD ALTAF BHAT 2020.10.21 10:28 I attest to the accuracy and integrity of this document 8 LPA No.78/2020 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.
17) In Dwarkadas Marfatia and Sons v. Port of Bombay,(1989) 3 SCC 293, the Supreme Court has held that the constitutional courts are concerned with the decision making process and that if a decision, having been arrived at through a valid process, is challenged, the constitutional courts can interfere if the decision is perverse. The Court further observed that the constitutional courts are expected to exercise restraint in interfering with the administrative decisions and ought not to substitute its view for that of the administrative authority.
18) In Central Coalfields Limited and another v. SLL-SML (Joint Venture Consortium) and others, (2016) 8 SCC 622, it was held that the decision making process of the employer or owner of the project in accepting or rejecting the bid of a tenderer should not be interfered with and that the interference is permissible only if the decision making process is mala fide or is intended to favour someone. The Court further went on to hold that the decision should not be interfered with unless the decision is so arbitrary and irrational that the Court could say that the decision is one which no responsible authority acting MOHAMMAD ALTAF BHAT 2020.10.21 10:28 I attest to the accuracy and integrity of this document 9 LPA No.78/2020 reasonably and in accordance with law could have reached. In other words, the decision-making process or the decision should be perverse and not merely faulty or incorrect or erroneous.
19) In Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517, which has been referred by the learned Single Judge in the impugned judgment, the Supreme Court laid down tests for judicial interference in administrative actions. The same are reproduced as under:
"22......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 say: the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached:
(ii) Whether public interest is affected.
If the answers are in the negative, there should be no interference under Article 226."
20) In the backdrop of aforesaid legal position and bearing in mind that scope of judicial review in administrative matters, especially in those pertaining to tender matters, is very limited, let us now advert to the facts of the instant case. MOHAMMAD ALTAF BHAT 2020.10.21 10:28 I attest to the accuracy and integrity of this document 10 LPA No.78/2020
21) The first ground urged by the appellant is that the rejection of its tender by the official respondents is arbitrary and irrational, inasmuch as the appellant had submitted the particulars of 30 heavy motor vehicles thereby fulfilling the relevant condition of the NIT, according to which a tenderer was to furnish particulars of 30 vehicles, either Light Motor Vehicle (LMV) or Heavy Motor Vehicle (HMV). On the other hand, the respondents have contended that as per conditions of the NIT, a firm or a tenderer was required to furnish particulars of 30 vehicles, both HMV and LMV. In other words, the list should contain particulars of both types of vehicles. In this behalf, condition No.31 of NIT is relevant and the same is reproduced as under:
"31. The firm/tenderer should have owned at least 30 No's of vehicle both HMV/LMV and attached 200 vehicles with the firm along with documentary proof."
16) From a perusal of the aforesaid condition, it is clear that the official respondents while formulating the tender notice have used the expression "HMV/LMV" meaning thereby that a tenderer had the option of furnishing the particulars of either HMVs or LMVs or both types of vehicles. No other construction can be given to the expression "HMV/LMV". If the official respondents desired that a tenderer must own both types of vehicles i.e. HMVs as well as LMVs, they could have easily used MOHAMMAD ALTAF BHAT 2020.10.21 10:28 I attest to the accuracy and integrity of this document 11 LPA No.78/2020 the word "and" instead of "/" in between HMV and LMV in the tender notice, use whereof refers to "or". This is not the case over here. Thus, if the appellant has furnished the list of Heavy Motor Vehicles only, he has done what a reasonable and prudent person would do upon going through the tender condition quoted hereinabove. The action of the official respondents of rejection of technical bid of the appellant on the ground of non-furnishing of list of both types of vehicle is, therefore, irrational, arbitrary and perverse. Therefore, the contention of the appellant in this regard is full of substance and deserves to be accepted.
17) Mr. B. A. Dar, Sr. AAG, has submitted that the tender notice condition stated "both HMV/LMV" which meant that the tenderers had to provide details of both HMV and LMV vehicles. Per contra learned Sr. counsel for the appellant has contended that the very appellant was found eligible in respect of the same condition and was awarded the same work for the previous five years which was satisfactorily completed.
18) We are unable to agree with the submission of Sr. AAG. As already noted, if the respondents required provision of details of both HMV and LMV vehicles, they would have placed "and" between them. This has not been done.
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19) Next it has been argued by learned counsel for the appellant that the respondent No.5, the successful tenderer, was not possessing the requisite working experience of supplying the vehicles as per the conditions of the NIT whereas learned counsel for the respondents have vehemently contended that the respondent No.5 was possessing the requisite experience.
20) In order to determine this issue, we need to go to the relevant tender condition in this regard. Condition No.27 prescribes the minimum working experience for a tenderer. It reads as under:
"27. The firm/association shall have working experience of at least Five years with documentary proof and work should not less than 2 Crores."
21) The documents that have been placed on record by the appellant before the Writ Court as well as before us, which are not in dispute, show that the appellant possessed the requisite experience of supplying commercial transport vehicles to Police Control Room, Kashmir. The certificates produced in this regard show that the appellant had supplied vehicles to Police Control Room during the years 2014-15, 2015-16, 2016-17, 2018 and 2018-19. The certificates further go on to show that the appellant/ petitioner has executed orders for more than Rs.2.00 crores in each of the aforesaid years.
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22) As against this, as per the documents placed on record with the objections filed by the official respondents as also with the objections filed by respondent No.5 before the Writ Court, the respondent No.5 had supplied vehicles to PCR, Kashmir only during the Parliamentary/Assembly Elections, 2014 and other works for the year 2017 up to turnover of Rs.2.00 crores. The work done certificate placed on record by the official respondents in this regard is reproduced as under:
"It is certified that Transport Company namely M/S Galaxy Agencies Proprietor Hilal Ahmad Mandoo has supplied private vehicles etc. to Police Control Room Kashmir during Parliament/Assembly Election - 2014 and other works for the year 2017 up to the turnover of Rs.2.00 Crore and the work done for the above mentioned period in reference to Elections was satisfactory.
23) A perusal of the afore quoted certificate shows that respondent No.5 has supplied vehicles etc. to PCR, Kashmir, during the year 2014 only. Besides this, the said respondent has executed certain other works in the year 2017
24) The matter regarding working experience of respondent No.5 gets further clarified from a perusal of communication No.PCRK/Acctt/TPT-20/1541 dated 19.03.2020, a copy whereof was placed before the Writ Court as well as before us by the official respondents. The contents of the said communication MOHAMMAD ALTAF BHAT 2020.10.21 10:28 I attest to the accuracy and integrity of this document 14 LPA No.78/2020 elaborate what is provided in the afore-quoted certificate. It shows that the respondent No.5 had supplied vehicles for Parliament/Assembly Election, 2014, on 26.12.2014, 25.02.2015 and 31.03.2015. In addition to this, the document further shows that the respondent No.5 had undertaken the repairing of vehicles damaged during the floods of 2014 and the said work was undertaken by respondent No.5 in March, 2017.
25) What comes to the fore from the aforesaid document pertaining to working experience of respondent No.5 is that the said respondent was possessing the experience of supplying vehicles only for a few months in the year 2014 and 2015. So far as his working experience pertaining to the year 2017 is concerned, the same relates to repairing of vehicles and not to supply of vehicles. So at best respondent No.5 was having working experience of supplying of vehicles for one year only.
26) The condition No.27 of the NIT clearly lays down that a tenderer must have working experience of five years with documentary proof and the work should not be less than Rs. 2.00 crores. In the instant case, on the one hand we have undisputed documents on record to show that the appellant was having the requisite experience and on the other we have documents of the official respondents on record which show that the respondent MOHAMMAD ALTAF BHAT 2020.10.21 10:28 I attest to the accuracy and integrity of this document 15 LPA No.78/2020 No.5, the successful tenderer, was having working experience of only one year, meaning thereby that the said respondent lacked the requisite working experience.
27) Let us notice as to how the learned Single Judge has dealt with this aspect of the matter in the impugned judgment. Paras 11 and 12 of the judgment are relevant in this behalf and the same are reproduced herein-below:
"11. The argument of the respondents that it was within the competence of Tendering Authority to give effect to the terms and conditions of the tender documents commensurate with the object sought to be achieved deserves consideration. It is true that since the contract was for supply of commercial vehicles for carriage of troops and equipments, therefore, tendering authority was best judge with regard to interpretation of the terms and conditions in this regard. Since the contract is essentially a commercial transaction which must be determined on the basis of consideration relevant to such decision, therefore, they are not open to judicial scrutiny unless found to be discriminatory, biased and mala fide. Since four parties had submitted their bids and only two had qualified for financial bid, therefore, the respondents, keeping in view the public interest, were well within their rights to allot the contract to respondent No.
12. This apart, as per the terms and condition, the respondents reserved the right to accept or reject any MOHAMMAD ALTAF BHAT 2020.10.21 10:28 I attest to the accuracy and integrity of this document 16 LPA No.78/2020 tender as per condition No. 31. They, thus, rightly accepted the bid of respondent No. 5 keeping in view the requirement. It is settled law that there is an inherent limitation in exercise of power of judicial review in the matters relating to award of contract by the State and its instrumentality.
28) We are afraid the reasoning given by the learned Single Judge, as quoted hereinbefore, to brush aside the issue of lack of experience of the successful tenderer, is not in accordance with the law. The ld. Judge has not at all dealt with this issue though the same has clearly been raised in the writ petition. There is no quarrel with the proposition that a contract of supply of commercial vehicles for carriage of troops is essentially a commercial transaction and is open to judicial scrutiny on very limited grounds but then in a case where those limited grounds of discrimination, favouritism and unreasonableness are made out, we feel, the Court cannot lay off its hands.
29) In the instant case, we have found that the appellant had fulfilled the condition No.27 of the NIT by submitting the particulars of requisite number of vehicles. It has also been found that the respondent No.5, the successful tenderer, was ineligible, inasmuch as he was not having the requisite working experience as against the appellant who was having the requisite working experience. The question arises as to whether the observation of MOHAMMAD ALTAF BHAT 2020.10.21 10:28 I attest to the accuracy and integrity of this document 17 LPA No.78/2020 the learned Single Judge that the official respondents, keeping in view the public interest, were well within their rights to allot the contract to respondent No.5 despite his lack of requisite experience, can be sustained.
30) A notice inviting tenders contains several conditions, some of which are essential and some of which may not be so. So we have to see whether the condition stipulated in Clause 27 of the NIT is essential or ancillary, subsidiary or non-essential condition. The Clause in question pertains to experience of a tenderer. Unless a tenderer has certain experience of supplying commercial vehicles for use of troops or of supplying commercial vehicles to some other institutions for some other purpose, it would not be possible for the employer to assess and evaluate the previous conduct of the tenderer. It is for this reason that the Clause with regard to experience has been incorporated in the tender conditions and the same by no stretch of imagination can be termed as ancillary or non-essential condition.
A condition pertaining to work experience has always to be treated as an essential condition because for awarding work to a bidder, his past performance is an important factor which cannot be assessed unless a bidder has work experience at his back. Thus MOHAMMAD ALTAF BHAT 2020.10.21 10:28 I attest to the accuracy and integrity of this document 18 LPA No.78/2020 we have no hesitation in holding that the clause relating to experience of tenderers is an essential condition of the tender.
31) Once it is held that Clause No.27 of the NIT is an essential condition, any bidder who does not fulfill the conditions contained in the said Clause gets disqualified. So the present case is not a case of non-fulfilment of an ancillary or a non-essential condition which could be ignored or overlooked by the official respondents in the instant case. Having formulated essential conditions of the tender including the one which is subject matter of the discussion, strict compliance of such conditions is mandatory. It was not open to the official respondents to ignore the aforesaid condition, which, in our view, would affect the public interest and also defeat the objective of the tender.
32) It is well settled that public authorities while discharging public duty have to act in a transparent manner and their actions must be just, fair and free from arbitrariness as well as favouritism. It is also well settled that essential eligibility conditions are incorporated in the tender document in order to ensure proper implementation and fulfilment of objective of the tender. The mere fact that the Tender Committee in the instant case has decided to overlook the lack of experience of respondent No.5, does not make the said condition non-essential. Neither the MOHAMMAD ALTAF BHAT 2020.10.21 10:28 I attest to the accuracy and integrity of this document 19 LPA No.78/2020 official respondents nor private respondent No.5, in their objections filed before the Writ Court have, in any manner, justified the decision of the Tender Committee whereby they have overlooked the lack of experience of respondent No.5. The respondents have merely went on repeating that the respondent No.5 was holding the requisite experience without producing any documentary proof in that behalf.
33) It is no doubt true that right to choose a bidder as per conditions and procedure stipulated in the tender document is of the Authority/Tender Committee and the Court does not sit in appeal on the decision taken in this regard. Nevertheless, such decision must be free from arbitrariness and favouritism, must be in public interest and must be taken by the Tender Committee after proper application of mind. If the decision of the Tender Committee is silent on vital aspects, such decision, in our view, undoubtedly, would be arbitrary, unjust and no amount of explanation on behalf of the authority can legitimize such decision which does not show proper application of mind by the Tender Committee, as required in view of the essential conditions of the tender notice. In the instant case no explanation, much less a plausible explanation, has been given by the official MOHAMMAD ALTAF BHAT 2020.10.21 10:28 I attest to the accuracy and integrity of this document 20 LPA No.78/2020 respondents regarding overlooking of the lack of experience of respondent No.5.
34) It has also been contended by the respondents that the appellant should have raised the objection when the technical bid was opened but merely because the appellant has raised objection after award of tender, in our opinion and in view of the facts and circumstances of the case, it will make no difference vis-à-vis qualification/ disqualification of respondent No.5 in so far as condition No.27 of the NIT is concerned.
35) For the foregoing reasons, the impugned judgment passed by the learned Single Judge cannot be sustained and the same is, accordingly, set aside. Consequently, the appeal is allowed and the impugned order, whereby the contract relating to supply of vehicles for the year 2020-2021 has been awarded in favour of respondent No.5, is quashed. The official respondents are directed to invite fresh tenders and complete the process within a period of one month from the date of this order.
(SANJAY DHAR) (GITA MITTAL)
JUDGE CHIEF JUSTICE
Srinagar
16.10.2020
"Bhat Altaf, PS"
Whether the order is speaking: Yes/No
MOHAMMAD ALTAF BHAT
Whether the order is reportable: Yes/No
2020.10.21 10:28
I attest to the accuracy and
integrity of this document