Orissa High Court
Jagruti Welfare Organization ... vs State Of Odisha And Another on 18 July, 2017
Equivalent citations: AIR 2017 (NOC) 958 (ORI.)
Author: Vineet Saran
Bench: Vineet Saran
ORISSA HIGH COURT: CUTTACK.
W.P.(C) No. 15713 OF 2016
In the matter of an application under Article 226 of the Constitution of
India.
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Jagruti Welfare Organization,
Bhubaneswar, represented through
its Secretary, Smruti Ranjan Panda. ...... Petitioner
-Versus-
State of Odisha and another ...... Opp. Parties
For Petitioner : Mr. Ashok Parija,
Senior Advocate.
M/s. Bigyan Ku. Sharma,
A.U. Senapati & S. Palei
For Opp. Parties : Mr. P.K. Mohanty,
Senior Advocate.
M/s. D.N. Mohapatra, J. Mohanty,
P.K. Nayak, S.N. Dash,
A. Das & P.K. Pasayat
Addl. Government Advocate
(For O.P. 1)
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Date of Judgment : 18.07.2017
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P R E S E N T:
THE HONOURABLE THE CHIEF JUSTICE SHRI VINEET SARAN
AND
THE HONOURABLE SHRI JUSTICE K.R. MOHAPATRA
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K.R. Mohapatra, J.The petitioner, namely, Jagruti Welfare Organization, Bhubaneswar has filed this writ petition assailing the Tender Call Notice No. 9761 dated 27.8.2016 (Annexure-1) floated by Cuttack 2 Municipal Corporation-opposite party no. 2 (for short 'CMC') inviting bids from eligible bidders for "Integrated Municipal Solid Waste Management Project of Cuttack Municipal Corporation-2016" (for short 'the Tender') and has prayed for setting aside the same.
2. The petitioner essentially assails the Clause 4.2(a) i.e. Financial Eligibility Criteria of the tender condition, which reads as follows:
"4.2 Financial Eligibility Criteria:
(a) The average Annual turnover should be more than 30 Crores for last 3 years and net worth should be positive. The turnover and the net worth should be supported by documents from competent authority. The Bidders should provide audited annual account statement in support of the claim. In case the bidders fail to provide such audited financial statements, the bid will be rejected. The Bid document must be accompanied by the Audited Balance Sheet, Profit and Loss Account and income tax return of last 3 (three) financial years, ending March 31st 2016, duly attested by the Charted Accountant.
Self attested Photo copy is to be submitted.
(Emphasis supplied)
xx xx xx xx
3
3. The petitioner in this writ petition contended that CMC- opposite party no. 2 had earlier floated tender for 'Integrated Solid Waste Management' in the year 2010. The quantity of the work to be undertaken by the successful bidder was as follows:
Sweeping and collection of Municipal Solid Waste (MSW): 100-120 MT per day.
Transportation of MSW: 150-200 MT per day. Collection and transportation of debris:
3000 cubic feet per day.
Separation of MSW and operation of
compost plant.
In the said notice inviting tender, the following was the financial eligibility criteria for the said bid:
Average annual turnover should be more
than Rs.8 crores for last 3 years and net
worth should be positive.
4. Whereas, in the year 2016, the CMC had initially floated a tender on 25.7.2016 primarily with the following scope of work:
Sweeping and collection of MSW : 100-120 MT per day.
Transportation of MSW: 150-200 MT per day. 4 Collection and transportation of debris: 8000- 10,000 cubit feet per day.
Operation and maintenance of Compost Plant.
5. It is contended that the financial eligibility criteria at Clause 4.2 of the notice inviting tender, as quoted above, was unreasonably escalated to Rs. 30 crores in place of Rs.8 crores, as required in 2010. The technical bid was opened on 26.8.2016. Since only a single bid was received from one M/s. Global Waste Management Cell Private Limited, Mumbai, the same was cancelled and a fresh notice inviting tender was floated within 24 hours, with the same scope of work as well as financial eligibility criteria. The petitioner has, thus, filed this writ petition assailing the financial eligibility criteria of the tender conditions, essentially on two grounds, viz.
(1) There is no reasonable nexus for increasing the eligibility criteria from Rs.8 cores to Rs.30 crores for the scope of work remaining almost similar.
(2) The financial eligibility criteria were increased from Rs.8 crores to Rs.30 crores to oust several intending bidders like the petitioner and to limit the competition to chosen few.5
Hence, the petitioner has prayed for the aforesaid relief.
6. The CMC filed its counter affidavit questioning the locus standi of the petitioner to maintain the writ petition. It is contended, inter alia, that prior to the impugned notice inviting tender (Annexure-1), the CMC had issued a similar Tender Call Notice No. 8616 dated 25.7.2016. The last date for submission of the bid was fixed to 25.8.2016 and prior to the said date, a pre-bid meeting was held on 8.8.2016. The petitioner, along with other potential bidders, had participated in the said pre-bid meeting. Taking into consideration the queries made by the potential bidders, including the petitioner, a corrigendum of the said tender call notice was issued and up-loaded in the website of the CMC. The petitioner, being a society, was initially not eligible to participate in the said tender process, as there was no scope for a society to take part in the bid. However, after detailed discussion in the pre-bid meeting, the Societies, registered under the Societies Registration Act, were allowed to participate in the tender process in order to widen the scope of competition. Although the petitioner was allowed to participate in the said tender process by relaxing the tender condition, it preferred not to participate in the said tender process. Due to submission of a single bid, the said tender was cancelled and the impugned notice inviting tender was issued with the same terms 6 and conditions. The petitioner having not participated in both the tenders, in spite of being given scope for the same, he has no locus standi to challenge the impugned tender process.
7. It is further contended in the counter affidavit that in order to widen the scope of competition and in order to invite potential bidders, the impugned tender was made inviting bidders from all over India. In response to the impugned notice inviting tender, four agencies/bidders submitted their bids in two tier bid system, that is, technical bid and financial bid, which are as follows:
(i) M.E. - Infra Project Private Limited, Mumbai.
(ii) Global Waste Management Cell Private Ltd., Mumbai.
(iii) Jyoti Build Tech. Private Ltd., Lucknow.
(iv) SRP Clean Enviro Engineers Private Ltd., Bangalore.
The technical bids of the aforesaid four bidders were opened on 15.9.2016.
8. It is contended that prior to 2010, the CMC had not assigned any sanitation and conservancy work in an integrated manner through any single agency. However, basing upon of the experience gained by the CMC during last five years, i.e. from 2011 7 to 2016, as well as keeping in view the guidelines issued by the Government of India regarding Management of Municipal Solid Waste (MSW), the CMC decided to engage a competent agency having expertise and experience in such activities so as to improve the quality of sanitation and conservancy. Moreover, in order to comply with the recommendations of Solid Waste Management Rules, 2016 and instructions of 'Swachha Bharat Mission', certain additional activities have been included in the impugned tender call notice in the year 2016. The CMC also filed a comparative statement showing the scope of work of the tender call notice of the year 2010 and 2016 as at Annexure-D/2 to the counter affidavit In the year 2010, an average annual turnover of Rs.8 crores was suggested keeping in view the limited scope of work. However, taking into consideration the present hike in rate of minimum wages, cost of conservancy articles, fuel, equipment/machineries etc. and higher service level benchmark, as well as annual expenditure of more than Rs.15.00 crores during the year 2015-16, the annual turnover was fixed at Rs.30.00 crores in the impugned tender to give scope to the potential bidders, who have expertise in the field and capable of initial capital investment in machineries and other infrastructure as per the scope of the work. The comparative statement given in Annexure-D/2 shows the increase in scope of 8 work, like House to House Collection, Compost Plant Operation, provision of one dustbin for 100 persons, 22 sweepers for every ten thousand population and separate vehicles for each ward etc. The CMC also denied the other contentions made in the writ petition and prayed for dismissal of the same being devoid of any merit.
9. The petitioner, in response to the counter affidavit filed by CMC-opposite party no.2, filed two additional affidavits contending that out of four bidders named in the counter affidavit, M.E.- Infra Project Pvt. Ltd., Mumbai and Jyoti Build Tech. Pvt. Limited, Lucknow did not deposit the EMD of Rs.60.00 lakh. Thus, the competition pursuant to the impugned notice inviting tender dated 27.08.2016 has been reduced to two competitive bidders, namely, M/s. Global Waste Management Cell Pvt. Ltd., Mumbai and SRP Clean Enviro Engineers Pvt. Ltd., Bangalore, from which it is manifest that the impugned notice inviting tender was tailor made to suit the convenience of Global Waste Management Cell Pvt. Ltd., Mumbai as it was the only bidder pursuant to the earlier notice inviting tender dated 25.07.2016.
10. In course of hearing of the writ petition, the CMC- opposite party no.2 filed an affidavit dated 29.04.2017, which was taken on record. In order to justify the decision of the CMC to fix 9 the financial eligibility criteria of average annual turnover at Rs. 30 crores for last three years, it is contended, inter alia, that pursuant to the tender call notice for the year 2010, M/s. RAMKY Enviro Engineers Pvt. Ltd. (for short 'RAMKY') was the L-1 bidder. After its expiry, the said agency was granted extension from time to time until finalization of the present tender process. RAMKY is still operative in the field. In the year 2010, RAMKY having regard to the specification and scope of work of the year 2010 had quoted the price of Rs.1764/- per MT for sweeping, collection, lifting and transportation of garbage. As per the agreement with RAMKY, 5% annual escalation was allowed for the period from 2011 to 2016 and accordingly, the rate in the year 2016 has reached at Rs.2141/- per MT.
11. Taking into consideration the volume of work being executed by RAMKY, CMC has been paid Rs.18.00 crores (approximate) per annum @ Rs.1.5 crores per month at the present rate of Rs.2141/- per MT. The scope of work in the year 2010 was very limited in comparison to the same in the impugned notice inviting tender. The requirement of average turnover per annum was Rs.8.00 crores in the year 2010, which has already increased up to Rs.18.00 crores i.e. in the current year 2016-2017. At 10 paragraph-6 of the said affidavit, the CMC has also given details of the increase in the scope of work in the impugned tender notice in comparison to the tender call notice of the year 2010, which are as follows:-
"1. Increase of manpower for conservancy activities @ 28 person per 10,000 population (earlier it was around 14 persons per 10,000 population).
2. 100% House to House collection and segregation of Bio-degradable and Non bio-
degradable waste, which involves more
manpower and vehicles.
3. Provision of approximately 6,000 numbers of roadside dustbins @ 1 dustbin per 100 persons, which was only 2,000 in the year 2010.
4. Provision of individual Tractors to each 59 Wards, which was not there in the year, 2010."
12. All the aforesaid arrangements were made keeping in view the recommendations of 'Swachha Bharat Mission' launched by Government of India and Solid Waste Management Rules, 2016. 11 Thus, it was contended that requirement of annual turnover of the bidders at Rs.30.00 crores is neither excessive nor irrational, which has a reasonable nexus with the object to be achieved. It is also contended in the affidavit filed by CMC that on opening of the financial bids of two bidders, who are successful in the technical bid, it came to light that Global Waste Management Cell Pvt. Ltd., Mumbai has quoted Rs.7,200/- per MT and SRP Clean Enviro Engineers, Bangalore has quoted Rs. 5640/- per MT. Thus, if the lowest bid is accepted, then the expenditure to be incurred by the CMC would be Rs.41,17,20,000/- per annum. As such, by no stretch of imagination, it can be said that the financial criteria of the impugned tender notice is excessive, un-reasonable and irrational.
13. Since the CMC has to make payment to the successful bidder for solid waste management from the Central and State Government grants in phases, the successful bidder is expected to be financially sound to continue the activities uninterruptedly, even during the periods of delayed payment. Thus, the successful bidder has to be financially sound and feasible to withstand the delayed payment. Keeping in the view the aforesaid circumstances, the average annual turnover at Rs.30 crores is quite justified and 12 reasonable. Thus, the CMC has prayed for dismissal of the writ petition.
14. We have heard learned counsel for the parties at length, perused the records and went through the relevant clauses of the tender call notice as well as averments made in the pleadings.
15. Mr. Ashok Parija, learned Senior Advocate appearing for the petitioner drew our attention to the relevant provisions of the tender call notice of the year 2010 as well as the impugned one with an endeavour to justify his contention that the scope of work of the tender call notice of 2010 and the impugned tender notice of 2016 are almost similar. Referring to the averments made in the counter affidavit by the CMC, he submitted that in the tender call notice of 2010, RAMKY was the successful bidder and it had quoted the price at Rs.1764/- per MT for sweeping, collection, lifting and transportation of garbage. Although tenure of the agreement expired in the year 2011, it was allowed to continue with an annual escalation of 5% for the period from 2011 to 2016. Accordingly, in the year 2016, RAMKY was being paid Rs. 1.5 crores per month at the rate of Rs.2141/- per MT. As such, in the year 2016-17, the CMC has paid Rs. 18.00 crores (approximately) to RAMKY. Taking the clue from the aforesaid averments made by the CMC in the counter affidavit, Mr. Parija submitted that looking at the scope of 13 work in the impugned tender call notice, the requirement of average turnover per annum at Rs.30.00 crores is unjustified and unreasonable. It could, at the highest, be in between Rs.20.00 crores to Rs.22.00 crores per annum. There is no basis of fixing the financial eligibility criteria by the CMC at Rs.30 crores for last three years. Mr. Parija also drew our attention to the price quoted by two bidders, who were successful in the technical bid. Out of them, the Global Waste Management Cell Private Ltd., Mumbai has quoted Rs.7,200/- per MT and SRP Clean Enviro Engineers Private Ltd., Bangalore has quoted Rs.5640/- per MT, which is much more than that of what is being paid to RAMKY at present. Thus, he submitted that the impugned tender call notice is tailor made to suit the bidders of choice of CMC. The mala fide intention of the CMC cannot also be ruled out. There will be huge loss to the public exchequer, if any of the above named two bidders are entrusted with the contract. Mr. Parija also relied upon the decisions in the cases of Chittaranjan Mishra -v- State of Orissa and others, reported in 2016 (II) OLR 735, Ram & Shyam Company -v- State of Haryana and others, reported in (1985) 3 SCC 267 and South Delhi Municipal Corporation -v- Ravinder Kumar and another, reported in (2015) 15 SCC 545, in support of his contention. Hence, he prayed for setting aside the financial eligibility criteria as 14 prescribed in Clause 4.2 (a) of the tender call notice and, in consequence, to quash the entire tender process.
16. Mr. P.K. Mohanty, learned Senior Advocate appearing for the CMC, per contra, strove hard to persuade the Court that the writ petition is not maintainable and the petitioner does not have any locus standi to maintain the writ petition, inasmuch as he had not participated in the tender process. It was his submission that pursuant to the tender call notice dated 25.7.2016, there was a pre- bid meeting and the petitioner had participated in the said meeting. Considering the objections and queries raised by the petitioner, the CMC issued a corrigendum to the said tender call notice allowing the societies like the petitioner to participate in the tender process, which were not eligible previously. In spite of the same, the petitioner neither participated in the said tender process, which was cancelled due to participation of a single bidder nor participated in the impugned one.
17. Mr. Mohanty referring to Annexure-D/2 to the counter affidavit as well as to the additional affidavit dated 21.11.2016 filed by CMC submitted that the scope of work was much wider than that in comparison to the tender of the year 2010. It is further submitted that prior to 2010 the CMC had not assigned sanitation and conservancy work in an integrated manner through any single 15 agency. For the first time in the year 2010, it was done in an integrated manner and the contract was awarded to RAMKY. Subsequently, in view of introduction of Swachha Bharat Mission as well as requirement of Solid Waste Management Rules, 2016, the scope of work becomes wider involving sophisticated technology incurring high expenditure. There is also hike in the minimum wages, cost of conservancy articles, fuel, equipments/machineries etc. The CMC has also given a comparative statement of the same as at Annexure-D/2 to the counter affidavit justifying the escalation in financial eligibility criteria. Mr. Mohanty also reiterated the contention made in the counter affidavit as well as in the additional affidavit. Hence, he prayed for dismissal of the writ petition. In support of his contention, he relied upon the decisions in the cases of M/s. Michigan Rubber (India) Ltd. -v- State of Karnataka and others, reported in AIR 2012 SC 2915, Maa Binda Express Carrier and another -v- Northeast Frontier Railway and others, reported in AIR 2014 SC 390, Raunaq International Ltd. -v- I.V.R. Construction Ltd. and others, reported in AIR 1999 SC 393, Tata Cellular -v- Union of India, reported in AIR 1996 SC 11.
18. Taking into consideration the rival contentions raised in the pleadings and submission made by learned counsel for the 16 parties, the following three issues require adjudication in the present writ petition:
1. Whether the writ petition is maintainable for want of locus of the petitioner or otherwise?
2. Whether there is a reasonable nexus between escalation of the financial eligibility criteria from Rs.8.00 crores to Rs.30.00 crores and the nature and scope of work to be undertaken?
3. Whether escalation of the financial eligibility criteria has been tailor made to suit the convenience of CMC by keeping the potential bidders like the petitioner out of arena of competition and limit the same to a chosen few?
For the sake of convenience of discussion, Issue Nos. 2 & 3 are taken up first for consideration.
ISSUE NO.2
19. The opposite party no. 2-CMC has filed Annexure- D/2 with the counter affidavit detailing the increase in scope of work, to justify the escalation in financial eligibility criteria. To be moiré specific the table given in Annexure-D/2 is reproduced below:
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Comparison of Provisions in the Tender for Integrated Solid Waste Management of Cuttack Municipal Corporation, Cuttack during 2010-2016 Item Advertised During Advertised During 2016 Remarks 2010 Tender Tender Daily Wages Rs.90/- Rs.200/- More than twice No. of wards 36 40 Extra 4 Outsourced Wards Ward Wise As per requirement. Provision of 22 Sweepers for 1.5 times Sweeper Agency engaged 571 10000 Population. Agency has excess.
Engagement Sweepers in 36 to engage 880 Sweepers for
wards. 40 wards.
Ward Wise As per requirement. Provision of 06 Coolie per More than
Coolie Agency engaged 111 ward. Agency has to engage double.
Engagement Coolie in 36 wards. 240 Coolie for 40 wards.
House to No extra manpower Dedicated staff and vehicles Addition of
House engagement by the are to be provided @ 2 persons 800
Collection of agency. for 200 to 300 houses. 800 manpower
Waste extra manpower to be and vehicles.
engaged.
Dust Bin 1000 Bins. 6000 (One for 100 persons) 6 times
excess.
Vehicle As per requirement. Provision of 1 tractor per 2 times
Agency engaged 28 ward. Agency has to engage excess.
tractors in 54 wards. 59 tractors in 59 wards.
Sweeping Agency engaged 2 Agency has to engage At least twice.
Machine machines. machines in 4 zones.
Compost Plant Not included. Repair of compost plant and New Addition.
Repair & operation is to be carried out
Operation by agency.
GPRS System Not included. Mandatory as per Govt. of New Addition.
in the vehicle India guidelines.
20. So far as escalation of daily wages, as mentioned in the aforesaid table, is concerned, it can be safely said that the same has got no bearing in escalation of the financial eligibility criteria by more than three times, as RAMKY, which is operative in the field, is being paid Rs.18 crore annually, which includes the payment of daily wages at the prevailing rate. In course of hearing, an additional affidavit has also been filed by CMC detailing the increase 18 in the scope of work in order to justify the escalation in financial eligibility criteria, relevant portion of which is quoted at para-9 herein above. The same is more or less an abridged statement of the details given in Annexure-D/2. The details provided therein on the face of it cannot be accepted to be a plausible explanation/justification for escalation of financial eligibility criteria beyond three times, in absence of any explanation to the effect that the scope of work has a reasonable nexus with the escalation of financial eligibility criteria. Such an explanation is conspicuously absent in the pleadings of CMC. Further, justification given in Annexure-D/2, which has been introduced pursuant to Swachha Bharat Mission and Municipal Solid Waste Management Rules, 2016 as well as the scope of work as enumerated in paragraph-6 of the additional affidavit filed by CMC, this Court does not find any justification for escalation of financial eligibility criteria nearly four times than that of the year 2010. It further appears from the financial bids of two bidders, who came out successful in the technical bid, that they have quoted a price more than the double or triple of the amount being paid to RAMKY at present. Thus, there is likelihood of huge loss of the public exchequer if fair competition is not there, which is certainly opposed to the public interest. 19
21. In addition to the above, a comparison of the quantity and scope of work as specified in the tender call notice of the year 2010 and that of the year 2016 (the impugned Annexure-1), as has been quoted at para-3 and 4 hereinabove, it would be apparent that there is not much deviation or increase in the same in the year 2016, which would warrant nearly four fold escalation in the financial eligibility criteria. Further, quantity of machinery, vehicles as well as manpower etc. to be used for undertaking the job provided has not been specified in the impugned tender call notice under Annexure-1 itself. It would depend upon the requirement of the successful bidder to determine the quantity of machineries, vehicles and manpower etc. to be used or deployed to carry out the job specified under Annexure-
1. Thus, the justification given by CMC at Annexure-D/2 as well as in its additional affidavit (quoted at para-9 hereinabove) are not tenable.
Moreover, in absence of any specification for use of machinery, vehicles as well as manpower in the tender notice under Annexure-1, the explanation given by CMC is not acceptable.
22. In view of the discussion made above, although stray instances have been given justifying escalation of the financial eligibility criteria, the CMC has miserably failed to establish a reasonable nexus between the escalation of the financial eligibility with the object to be achieved i.e. the scope of work. The illustrations 20 given are also equally vague and ambiguous to justify nearly four fold escalation of the financial eligibility criteria. Hence, we hold that the escalation of the financial eligibility criteria as per Clause 4.2 (a) of the tender call notice is arbitrary, unreasonable, and discriminatory and deserves to be scraped.
ISSUE NO.3
23. Admittedly, pursuant to the notice inviting tender (for short 'NIT'), four bidders had submitted their bids. Out of four bidders, two, namely, M/s. M.E. Infra Project Pvt. Ltd., Mumbai and M/s. Jyoti Build Tech. Pvt. Ltd., Lucknow could not deposit the EMD of Rs.60.00 lakh. Thus, the competition was reduced to two competitive bidders, namely, M/s. Global Waste Management Cell Pvt. Ltd., Mumbai and M/s. SRP Clean Enviro Engineers Pvt. Ltd., Banagalore. Both the aforesaid bidders have quoted exorbitantly high price, which is more than double/triple of what is being paid to RMKY at present. As has been discussed while answering Issue No. 2, CMC could not satisfactorily explain the reasonable nexus between the escalation in financial eligibility criteria and the object to be achieved, that is the scope of work.
24. Cumulative assessment of the discussions made above, it can safely be concluded that the action of the CMC in escalating the financial eligibility criteria as per Clause 4.2 (a) of 21 the tender call notice is nothing but to eliminate the potential bidders like the petitioner. Participation of only two bidders suggests that there was no fair competition at all. CMC has every right to incorporate stringent condition in the tender call notice. But the same must have a reasonable nexus with the object to be achieved and more importantly, it must allow a fair competition giving scope to the potential bidders to compete. As observed by Hon'ble Apex Court in the case of Ram & Shyam Company (supra) at para-18, it has been held as follows:
"18. ............................And at any rate disposal of the state property in public interest must be by such method as would grant an opportunity to the public at large to participate in it, the State reserving to itself the right to dispose it of as best subserve the public weal."
25. Thus, there can be no second opinion that the CMC has fixed the financial eligibility criteria to eliminate potential bidders like the petitioner from the arena of competition. Further, possibility of limiting the bidding to a chosen few cannot also be ruled out. ISSUE NO. 1
26. Issue No. 1 can be dealt with in two parts, such as, maintainability of writ petition and locus of the petitioner.
Maintainability
27. There cannot be any quarrel to the settled position of law that the terms and conditions of a tender is not open to judicial 22 review/scrutiny, as the same is in realm of contract. The authority must have a free hand in setting the terms and conditions of the tender.
28. In the case of Tata Cellular (supra), in order to find out the right balance between the administrative discretion to decide the contractual matters in one hand and the need to remedy any unfairness on the other, the Hon'ble Apex Court has set out the following principles:
"113. The principles deducible from the above are :
(1) The modem 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 above) but must be free from arbitrariness not affected by bias or actuated by mala fides.23
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure."
29. In the case of M/s. Michigan Rubber (India) Ltd. (supra), the Hon'ble apex Court, taking into consideration the principles decided in Tata Cellular (supra), has set out the following principles to govern the judicial review in contractual matters.
"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 the 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 the 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 24
(e) If the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interference by court is very restrictive since no person can claim a fundamental right to carry on business with the Government."
30. In the case of Maa Binda Express Carrier and another (supra), the Hon'ble apex Court, dealing with the scope of judicial review in contract matters, held as follows:
"8. The scope of judicial review in matters relating to award of contract by the State and its instrumentalities is settled by a long line of decisions of this Court. While these decisions clearly recognize that power exercised by the Government and its instrumentalities in regard to allotment of contract is subject to judicial review at the instance of an aggrieved party, submission of a tender in response to a notice inviting such tenders is no more than making an offer which the State or its agencies are under no obligation to accept. The bidders participating in the tender process cannot, therefore, insist that their tenders should be accepted simply because a given tender is the highest or lowest depending upon whether the contract is for sale of public property or for execution of works on behalf of the Government. All that participating bidders are entitled to is a fair, equal and non- discriminatory treatment in the matter of evaluation of their tenders. It is also fairly well-settled that award of a contract is essentially a commercial transaction which must be determined on the basis of consideration that are relevant to such commercial decision. This implies that terms subject to which tenders are invited are not open to the judicial scrutiny unless it is found that the same have been tailor made to benefit any particular tenderer or class of tenderers. So also the authority inviting tenders can enter into negotiations or grant relaxation for bona fide and cogent reasons provided such relaxation is permissible under the terms governing the tender process."
31. In Raunaq International Ltd. (supra), reiterating the aforesaid principles regarding scope of judicial review, the Hon'ble Supreme Court held that writ Court would not be justified in 25 interfering with process of commercial transaction in which the State is one of the parties, except where substantial public interest is affected and also in cases, where the transaction is mala fide. Similar view is taken in Jagdish Mandal -v- State of Orissa and others, reported in (2007) 14 SCC 517. This Court relying upon the aforesaid case law has taken a similar view in the case of Gopal Chadra Sahu -v- State of Orissa and others, reported in 2016 (I) ILR CTC 439.
32. On a cumulative assessment of the case law, it can be safely concluded that the Court does not act as an appellate authority, but merely reviews the manner in which the administrative decision is taken. The Court does not have expertise to correct the administrative decision because it will amount to substituting its own decision without any necessary expertise which itself may be fallible. The scope of interference/judicial review is very limited and can be made in the case where the authorities have acted in a manner which is arbitrary, unreasonable, discriminatory and with mala fide intention to limit the scope of competition to a chosen few by eliminating the potential bidders from arena of competition and/or the decision so taken is against the public interest.
26
33. While answering Issue Nos. 2 and 3, we have already held that escalation in the financial eligibility criteria as at Clause 4.2(a) of the NIT is arbitrary and unreasonable. The consequence of such an arbitrary and unreasonable clause of financial eligibility criteria has prevented many potential bidders like petitioner from participating in the tender. Further, the price quoted by two competitive bidders is certainly exorbitant as compared to the price being paid to the contractor already working and, as such, is against the public interest. Thus, the writ petition is held to be maintainable.
Locus Standi
34. The next question that arises for consideration is whether the petitioner has any locus standi to maintain the writ petition. There cannot be any iota of doubt that the petitioner society does not have average turnover Rs.30.00 crores for last three years, for which it could not participate in the impugned tender process. As has been discussed earlier, due to unreasonable and arbitrary condition of financial eligibility criteria of the impugned tender notice, the petitioner is prevented from participating in the tender process. In the decision in the case of Chittaranjan Mishra (supra), it has been held at para-16 as follows:
27
"16. In S.S. and Company mentioned supra, on which reliance has been placed so far as locus standi of the petitioner is concerned, it has been held that if the tenderer did not satisfy the eligibility criteria, even in terms of the unamended clause, and consequently its tender was rejected thereunder, it could not assail the amendment made in the relevant clause in terms whereof it again failed to qualify. But, this is not a case where the petitioner had participated in the tender, rather by putting the conditions by enhancing the EMD and solvency amount, the petitioner has been precluded from participating in the tender itself. So far as the previous years tender conditions are concerned, such conditions were not there and, admittedly, in respect of other distribution systems, namely, PDS and SMP, such stringent conditions have not been put by the State authority and, consequentially, there was fair participation of the bidders in view of the terms and conditions mentioned in the previous years. But, by putting conditions, so far as EMD, solvency certificate and security deposits are concerned, the petitioner being outstayed from the tender and in order to favour group of persons such stipulations have been made, it amounts to arbitrary and unreasonable exercise of powers. Consequentially, the petitioner has been discriminated and malafidely the benefit has been extended to such people. Thereby, the petitioner has got every locus to assail such terms and conditions. Therefore, the judgment referred to supra has no application to the present case."
(emphasis supplied)
35. In the case at hand, the tender condition of the financial eligibility criteria is so stringent that only four bidders could participate in the tender process. Out of four, two could not even deposit the EMD and became unsuccessful in their technical bids. Only two bidders, as referred to above, came out successful in their 28 technical bid who have quoted exorbitantly inflated price. Had there been a reasonable 'financial eligibility criteria' a number of competitors as that of the petitioner could have participated and there would have been a fair competition. Hence, we have no hesitation to hold that the petitioner has locus standi to maintain the writ petition assailing the unreasonable, arbitrary and discriminatory action of the authorities in fixing the financial eligibility criteria.
36. In that view of the matter, we set aside the Clause 4.2(a) of the impugned tender condition as at Annexure-1 and consequently the entire tender process. The CMC is directed to issue fresh notice inviting tender fixing a reasonable financial eligibility criteria taking into consideration the nature and scope of work to be performed.
37. The writ petition is accordingly allowed, but in the circumstances, no order as to cost.
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(VINEET SARAN) CHIEF JUSTICE ................................
(K.R. MOHAPATRA) JUDGE Orissa High Court, Cuttack Dated the 18th July, 2017/bks