Meghalaya High Court
Smti. Ridalin Law vs . J.H.A.D.C & Ors. on 26 September, 2022
Author: H. S. Thangkhiew
Bench: H. S. Thangkhiew
Serial No. 01
Regular List
HIGH COURT OF MEGHALAYA
AT SHILLONG
WP(C) No. 29 of 2022 Date of Decision: 26.09.2022
Smti. Ridalin Law Vs. J.H.A.D.C & Ors.
Coram:
Hon'ble Mr. Justice H. S. Thangkhiew, Judge
Appearance:
For the Petitioner/Appellant(s) : Mr. S. Sen, Adv.
Ms. S. Shallam, Adv.
For the Respondent(s) : Dr. N. Mozika, Sr. Adv. with
Ms. T. Sutnga, Adv. (For R 1-6) Mr. H. Abraham, Adv. (For R 7).
i) Whether approved for reporting in Yes/No
Law journals etc.:
ii) Whether approved for publication
in press: Yes/No
JUDGMENT AND ORDER
1. The petitioner pursuant to an NIT dated 18th October, 2021, floated by the respondents, calling for bids for operation of a check station at 1 Mookyndur, West Jaintia Hills, came out as a highest bidder after evaluation by the Tender Committee, but however, the respondent No. 3 by a decision taken on 08.02.2022, rejected the appointment of the writ petitioner as agent, on the ground that the check station was situated on the right side of the highway from Jowai to Shillong, which did not have enough space for vehicles to stop for checking, and that the quoted rate was unrealistic and inflated, amongst other reasons. The respondents then vide impugned letter dated 09.02.2022, appointed the private respondent No. 7, who was the second highest bidder as the agent to operate the check station at Mookyndur. Being aggrieved thereby, the writ petitioner is before this Court.
2. The undisputed fact in this matter is that, the petitioner is the highest bidder in a tender process, which consisted of a Technical Bid and a Financial Bid. By all accounts, the Bids having been scrutinized and examined by a duly constituted Tender Committee, which had found the petitioner to be the most suitable, she should have been called by the respondents to formalize an agreement, to operate the said check station.
3. Mr. S. Sen, learned counsel for the petitioner submits that the denial of the contract to the petitioner inspite of being the highest bidder is illegal and motivated. He submits that the respondent No. 3, once the Tender Committee had recommended the petitioner had no jurisdiction to sit on top of the findings and award, the contract to the second highest bidder. It is 2 contended that, the reasons stated by the respondent No. 3 in its decision dated 08.02.2022, is misplaced, inasmuch as, the Tender Committee before finalizing the Technical Bids had conducted a physical verification of the site for the check station offered by the petitioner, and had found the same to be suitable. He further submits that, the award of the contract to the private respondent is therefore, illegal and that the respondents are liable to be directed to settle the contract with the petitioner without any further delay.
4. The learned counsel has placed reliance on the following decisions to impress upon the points that though the authority has the right not to accept the highest bid, the said decision should be free from arbitrariness or favoritism. The judgments are:-
i) Meerut Development Authority versus Association of Management Studies and Another (2009) 6 SCC 171.
ii) Municipal Corporation, UJJain and Another versus BVG India Limited and Others. (2018) 5 SCC 462.
iii) Tata Cellular versus Union of India (1994) 6 SCC 651.
iv) Manohar Lal Sharma versus Narendra Damodardas Modi and Others (2019) 3 SCC 25.
v) Sam Built Well Private Limited versus Deepak Builders and Others (2018) 2 SCC 176.3
5. Dr. N. Mozika, learned Senior counsel assisted by Ms. T. Sutnga, learned counsel for the respondent JHADC, submits that though admittedly the petitioner was the highest bidder, on the reassessment of the site of the check point proposed by the petitioner, it was found that the same was unsuitable due to the reasons recorded in its Executive Committee decision dated 08.02.2022. The learned Senior counsel submits that the non-settlement of the contract of the petitioner was made on the basis of cogent and valid grounds and to buttress this contention, has read out the relevant extracts of the said decision dated 08.02.2022. He further submits that the petitioner cannot claim any enforceable right, merely because she is the highest bidder, as there are good reasons for not awarding the contract to the petitioner. In support of his case, the learned Senior counsel for the respondents has cited the following decision:
i) ERA Infra Engineering Limited vs. Delhi Development Authority & Anr. 2010 (114) DRJ 569 (DB).
6. Mr. H. Abraham, learned counsel on behalf of the respondent No. 7 has endorsed and supported the submissions made by the counsel for the respondents No. 1-6, but further submits that due to the interim order of this Court, the respondent No. 7 is not operating the check station as it is being run departmentally.
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7. I have heard learned counsels for the parties. Shorn of all the other facts, the only question to be determined is the reasonableness of the decision by the respondents, to not award the contract to the highest bidder but to award the same to the second highest i.e., the respondent No. 7. It is settled law that there is no enforceable right for the highest bidder to be awarded a contract, if there exist good and sufficient reasons, based on factors which make the said bid unviable, but such decision in this regard, must be free from any arbitrariness and should be reasonable.
8. In the instant matter, undisputedly the writ petitioner is the highest bidder, and if all conditions stood fulfilled as submitted, by all rights should have been settled with the contract. It is noted that the bid system adopted in the tender process was in two parts i.e., Technical Bid followed by a Financial Bid. It was also stipulated in the NIT that the bids were to be opened and evaluated by the Tender Committee and that the decision was final and binding on the tenderers. The reason for non-settlement of the contract with the petitioner is contained in the extract copy of a decision dated 08.02.2022, which is appended at Annexure - 6 to the affidavit. For the sake of convenience this document being crucial to the adjudication of the matter is reproduced hereinbelow.
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"OFFICE OF THE JAINTIA HILLS AUTONOMOUS DISTRICT COUNCIL, JOWAI EXTRACT COPY OF DECISIONS PASSED BY THE EXECUTIVE COMMITTEE IN ITS MEETING HELD ON 08-02-2022 AND AUTHENTICATED BY THE CHIEF EXECUTIVE MEMBER, JAINTIA HILLS AUTONOMOUS DISTRICT COUNCIL, JOWAI
1. EXECUTIVE COMMITTEE DECISION NO. 1 DT. 08-02-2022 Views and Opinion of Legal Adviser regarding Check Point at Mookyndur:- The Chief Executive Member placed the agenda in the Executive Committee. He informed all the Members about the legal opinion on the legal notice regarding Check Point at Mookyndur and inspection report of the Department concerned. He then sought the views and opinion of the Members.
The Assistant Licensing Officer briefed the Executive Committee that the Office of the Jaintia Hills Autonomous District Council had issued Re-Tender Notice vide No. JHADC/TAX/9/2021/61 dated 18th October, 2021 with respect to Check Point at Mookyndur and Amlarem- Dawki respectively. Thereafter the Tender Committee who was tasked to oversee the bidding process, had vide letter no. JHADC/TC/1/2021/58 dated 20th December, 2021 have recommended to the Executive Committee, the name of Smt. Ridalin Law as the successful bidder. She also briefed that the Executive Committee had directed Shri. W Lyngdoh, Trading Inspector Taxation Department and Check Point to inspect the land proposed by Smt. Ridalin Law to set up Check Point at Mookyndur and to submit report forthwith to the Executive Committee. The Inspector had submitted his report with findings as follows:-
1. That the land where Ridalin Law proposed to set up the Check Point is situated in the right side of the Highway from Jowai to Shillong.
2. If the Check Point is set up in the said land, the staff have to cross over to check the trading license of the vehicle.
3. The land where the check point is proposed to be set up does not have sufficient space to stop vehicles to check the trading license and if 6 the land is used as Check Point and if vehicles are stopped it will result in traffic jam thereby causing inconvenience to the vehicle in the highway.
The Members pointed out that the Annual Premium quoted by Smt. Ridalin Law for a single Check Point only at Rs. 77,60,800/- is an illusion as it is far beyond the Annual Premium quoted by the Ex agent at the rate of Rs. 32,00,100/- for three Check Points.
The Executive Member incharge Taxation pointed about the instruction received from the District Council Affairs Department, Government of Meghalaya, hereinafter referred to as District Council Affairs that gate should not be on the Highway but away from the highway having lay bye. He also mentioned about the revenue leakage faced by this Office due to non-collection of fines from trucks without trading license and mentioned that after scrutiny of the land it is found that the land proposed by Smt. Ridalin Law is not feasible and does not have sufficient space for the Check Point as such it is not expedient to appoint Smt. Ridalin Law as the agent for operating Check Point at Mookyndur.
In consideration of all points mentioned above, the Executive Committee after a thorough discussion and deliberation, unanimously decided to stand by its earlier decision i.e. to appoint Shri Rudolf G. Kyndiah the second highest bidder as Lessee/Agent of the Mookyndur Check Station. Consequently the representation dated 20-12-2021 is hereby disposed off.
(NO. JHADC) Secretary, Executive Committee, Jaintia Hills Autonomous District Council, Jowai"
9. The decision it is noted, has detailed five points for non-acceptance of the tender of the petitioner on these considerations namely the location, availability of space and the annual premium quoted. This Court is now to 7 examine as to whether the decision as given meets the test of it not being unreasonable or arbitrary and whether the respondents No. 3 can sit over the decision of the Tender Committee, which had declared the petitioner the highest bidder after scrutiny of the Technical and Financial Bid.
10. A perusal of the tender document shows that, Clause - 8(vi) thereof, has stipulated that the land document, such as land holding certificate, lease agreement of the land where the check station is proposed to be set up, was to be furnished. It has been stated in the writ petition, that the Tender Committee had conducted an inspection of all the site locations of the bidders, to determine the suitability of each site and that only after such satisfaction, the Technical Bids had been opened. However, the site inspection report does not find place in any of the records before this Court. The impugned decision on the other hand, has set out reasons for non-acceptance of the tender of the petitioner and the reasons as given, being based on facts as they pertain on the ground, it is not possible therefore for this Court to render a finding as to its reasonableness or unreasonableness. It cannot also be held that, the decision taken by the respondent No. 3 is arbitrary or made for a collateral purpose, inasmuch as, apart from the observation on the inflated rate quoted by the petitioner, and the instructions received from the District Council Affairs Department, Government of Meghalaya with regard to the location of the check station, that it should be away from the highway with a lay bye, the 8 rest is based on factual considerations of the feasibility of the location for the check station.
11. Scrutiny of the award of tenders and contracts by the Courts, as has been held by various decisions, is basically confined to the decision-making process on the question of reasonableness and mala fides. The scope of judicial review in such matters as has been enunciated in the case of Tata Cellular versus Union of India (supra) wherein at Paras - 70, 71 and 94, the Supreme Court has held as follows:
"70. It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down.9
71. Judicial quest in administrative matters has been to find the right balance between the administrative discretion to decide matters whether contractual or political in nature or issues of social policy; thus they are not essentially justifiable and the need to remedy any unfairness. Such an unfairness is set right by judicial review.
94. The principles deducible from the above are :
(1) The modern trend points to judicial restraint in administrative action.
(2) The court does not sit as a court of appeal but merely 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.
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(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.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.
Based on these principles we will examine the facts of this case since they commend to us as the correct principles."
12. The above noted judgment, has become the benchmark on which such matters are considered by Courts and has been followed by various other judicial pronouncements, including the authorities cited by both the parties herein. Accordingly, therefore, by applying the said principles, in the considered view of this Court, the non-settlement of the contract with the petitioner cannot be said to be affected by bias or mala fides, inasmuch as, the reasons ascribed in the decision dated 08.02.2022, appear to be based on factual considerations. However, the only element of concern is the fact that the respondent No. 3, after the finalization of the bids had embarked upon the exercise to ascertain the viability of the offer of the petitioner. No doubt, the 11 findings reflect the complications that would arise in the operation of the check station by the petitioner, but however, the fact that the decision to not settle the contract with the petitioner, when essentially the petitioner had met the criteria as prescribed by the NIT deserves to be re-looked at by the respondent No. 3.
13. Though the Principles of Equity and Natural Justice do not operate in the field of commercial transactions and whenever, a decision has been taken in public interest, courts do not interfere, in the instant case, however, to strike a balance, limited interference is called for. Accordingly, the impugned letter No. JHADC/TAX/9/2021/86 dated 09.02.2022 issued by the respondent No. 4, appointing the respondent No. 7, as the Council's agent for the check station at Mookyndur, West Jaintia Hills is set aside and quashed.
14. It is further provided that as the NIT did not prescribe specific criteria and requirements to meet the norms of setting up toll stations, the respondent No. 3 is directed to have a re-look at the decision especially the process thereof, before any decision of allotment is taken.
It has also been brought to the notice of the Court that there have been subsequent developments whereby the State Government have issued certain orders which have a bearing on the operation of such check stations. All these considerations, shall also be taken into account when the respondents review the decision. As at the initial stage itself, this Court had by order dated 12 16.02.2022, suspended the settlement of the check station and directed that if any checking need be done, the same be done so departmentally, the same shall continue till the matter is finally decided.
15. With the above noted directions, and for the reasons as stated, the writ petition is partially allowed and disposed of.
Judge Meghalaya 26.09.2022 "D.Thabah-PS"
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