M/S. Hari & Co vs Food Corporation Of India on 10 January, 2014

[Cites 12, Cited by 6]

Madras High Court

M/S. Hari & Co vs Food Corporation Of India on 10 January, 2014

Bench: V.Dhanapalan

       

  

  

 
 
 IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED:     10.01.2014
CORAM:
THE HONOURABLE MR. JUSTICE V.DHANAPALAN
W.P.No.17743 of 2013
M/s. Hari & Co.			
Regd. Partnership Firm,
rep. by its Power of Attorney,
R.Arul Murugan,
No.48, III Floor, Rajaji Salai,
Chennai 600 001.							... Petitioner

vs.

1.	Food Corporation of India
	rep. by its General Manager (TN),
	Regional Office,
	No.8, Sathyamurthy Road,
	Chetpet, Chennai 600 031.

2.	M/s. S.Albert & Co. Pvt. Ltd.,
	rep.by its Managing Director,
	A. Madhu Kumaran,
	13/1, Whannels Road,
	Albert Theatres,
	Egmore, Chennai 600 008.			... Respondents

	Writ Petition filed under Article 226 of the Constitution of India praying for the issuance of a writ of certiorarified mandamus calling for the records relating to the Letter bearing Lr.No.S&C/13/2/1/2013/H&T Export Wheat/Cont dt.22.05.2013, the Letter bearing No.S&C/13/2/1/2013/H&T/Export Wheat/Cont. 14.06.2013 and Letter of Acceptance bearing No.S&C/13/2/1/2013/H&T/Export Wheat/Cont. dated 30.05.2013 on the file of the 1st respondent and quash the same and consequently, direct the 1st respondent to accept the Technical Bid submitted by the petitioner, reject the Technical Bid submitted by the 2nd respondent, open the price Bid submitted by the petitioner and award the contract to it.  

	For Petitioner	:	Mr.T.P.Manoharan

	For Respondents	:	Mr.S.Vijayakumar, for R1

					Mr.AR.L.Sundaresan, for R2
					Senior Counsel 
					for Mrs.A.L.Gandhimathi

O R D E R

Praying to quash the Letter bearing Lr.No.S&C/13/2/1/2013/H&T Export Wheat/Cont dt.22.05.2013 and the Letter bearing No.S&C/13/2/1/2013/H&T/Export Wheat/Cont. 14.06.2013 and Letter of Acceptance bearing No.S&C/13/2/1/2013/H&T/Export Wheat/Cont. dated 30.05.2013 on the file of the 1st respondent and for a consequential direction to the 1st respondent to accept the Technical Bid submitted by the petitioner, reject the Technical Bid submitted by the 2nd respondent, open the price Bid submitted by the petitioner and award the contract to it, the petitioner has filed the present Writ Petition.

2. The case of the petitioner is that it is a registered Partnership Firm carrying on business as (i) Exporters and Importers (ii) Shipping and Stevedoring Agents (iii) Clearing and Forwarding Agents (iv) Fleet & Heavy Equipment Operators etc., having all the required licences, including Stevedoring Licence, Railway Fund Account etc. and also Hired Godowns with a capacity of 40,000 MTS at the Chennai Port Premises to keep the stocks handled and transported by it. Out of the same, it is using Hired Godowns with the capacity of 15,000 MTS to stock the wheat belonging to the State Trading Corporation and the remaining Hired Godowns with the capacity of 25,000 MTS are readily available with it. It has got vast experience in handling, transportation and stevedoring works and has very effectively carried out the works of handling, transportation and stevedoring of about 7,92,317 MT of Wheat having a total value of about Rs.35,00,000/- imported by the 1st respondent Corporation through 13 Vessels in the Chennai Port from the year 2006 to 2008. In appreciation of the work, the Area Manager of the 1st respondent has issued a Certificate dated 08.08.2007. Further, for the past three years alone i.e. from the year 2010-2013, the petitioner has carried out handling, transportation and stevedoring works for different Companies to the tune of 9,53,400 MT. The Employment Provident Fund Organisation has alloted Establishment ID No.MDTNY0024652000 to the petitioner and it has deposited the EPF Contributions payable by it promptly till date.

3. The petitioner would further state that the 1st respondent Corporation has published a Tender Notice dated 01.04.2013, inviting sealed Tenders under 2 BID SYSTEM for appointment of contractor for handling and transportation of Food Grains inside the Chennai Port Premises on regular basis for a period of two years. As per the Tender Notice, the value of the Contract is Rs.8,00,00,00/-, the last date of submission of sealed Tender Form was fixed up to to 3.00 p.m. on 23.04.2013 and the opening of the sealed Tender was fixed at 3.30 p.m. on 23.04.2013. In the General Information to Tenderers attached to the Tender Notice, the 1st respondent has given the Experience Qualification required for submitting the Tender, production of Experience Certificate in the Proforma prescribed at Appendix-VI etc. In Clause XX-Duties & Responsibilities of the Contractor, the 1st respondent has specifically stated that the Tenderer should (i) have Railway Fund Account (ii) possess Stevedoring Licence & (iii) have at least 15,000 MTS Hired Godown at the Chennai Port Premises to keep the stocks. In the Tender Notice floated by it last year for the same purpose, the 1st respondent has not included the condition that the Tenderers should have at least 15,000 MTS Hired Godown at the Chennai Port Premises to keep the stocks.

4. According to the petitioner, it possesses all the qualifications prescribed in the Tender Notice and eligible to submit sealed Tender before the 1st respondent, participate in the tender process, for selection and for appointment as the contractor for handling and transportation of Food Grains inside the Chennai Port Premises on regular basis for a period of 2 years. Hence, on 23.04.2013, the petitioner has submitted its Sealed Tender containing (i) Part-A-Technical Bid along with required documents and (ii) Part-B-Price Bid, offering a very low and reasonable rate for carrying out the said works.

5. It is the further case of the petitioner that the 2nd respondent does not have a Hired Godown having capacity of at least 15,000 MTS at the Chennai Port Premises to keep the stocks and therefore, as per Sub-Clause 39 of Clause XX of Duties & Responsibilities of the Contractor attached to the Tender Notice, the 2nd respondent is not even eligible for submitting a Sealed Tender, containing (i) part-A-Technical Bid & (ii) Part-B - Price Bid, to participate in the tender process and also for award of the contract for Handling and Transportation of Food Grains imported by the 1st respondent inside the Chennai Port premises. In spite of the same, the 2nd respondent has also submitted a sealed Tender containing (i) Part A-Technical Bid & (ii) Part-B-Price Bid, offering a very high rate for carrying out the handling and transporting works. Therefore, the 1st respondent is bound to reject the Sealed Tender submitted by the 2nd respondent and refuse to permit it to participate in tender process, much less, to award the contract to it.

6. As per the Tender Notice, the value of the Contract is a very huge amount of Rs.8,00,00,000/- viz. public money. The 1st respondent Corporation is an Instrumentality of the Central Government and hence, it is bound to fairly and cautiously act in accordance with law and procedures; consider and evaluate the tenders submitted by all the tenderers, including the petitioner equitably by adopting the same standard; record reasons for its decisions and satisfy the principles of natural justice; entertain or reject the Sealed Tenders submitted by the Tenderers and award the contract to the lowest tenderer and save public money. The petitioner, as a tenderer is entitled for a right to such a treatment, consideration and evaluation of its Technical and Price Bids by the 1st respondent without any hidden agenda. Further, the 1st respondent should have communicated the reasons recorded by it for its decisions to the tenderers to enable them to know as to why their Tenders were rejected and challenge the same before the higher forum. The petitioner would contend that the 1st respondent, with an ulterior motive has awarded contract to the unqualified and ineligible 2nd respondent, when the petitioner possesses all qualifications and is eligible to participate in the tender process. Hence, having no other speedy and efficacious alternative remedy, the petitioner is before this Court.

7. The 1st respondent has filed counter affidavit stating that tenders have been floated for appointment of contract at Chennai Port Premises and consequently, tender notices have been issued vide S&C/13/2/1/2013/H&T/Export Wheat/Cont. dated 01.04.2013. Two firms viz. Albert & Company and Hari & Company have purchased tender forms to participate in the bid. In terms of the tender conditions, technical bid would be opened at 3.30 p.m. on 23.04.2013 and accordingly both the firms participated in the technical bid by signing in the tender Opening Register. The documents furnished by the aforesaid firms have been evaluated by the committee nominated and the said committee was entrusted to peruse the relevant documents and details furnished by the firm to take appropriate decision for eligibility. While evaluating, the Committee stated that Albert Company, the 2nd respondent has furnished all the documents as per Appendix II. However, the petitioner firm has not furnished the requisite documents in terms of Appendix II. Further, the petitioner firm failed to set out the details with regard to the Employees Provident Fund and also the information in respect of the experience as stipulated in Appendix VI. Hence, the competent authority disqualified the technical bid submitted by the petitioner and informed accordingly.

8. According to the 1st respondent, the allegations that the petitioner carried handling, transportation and stevedoring works in respect of eight companies are utterly false and incorrect, as no documents in support of such work done by the contractor have been placed along with the tenders to enable the Evaluation Committee to qualify the petitioner for bidding. The petitioner was also informed of the decision of the competent authority and it was requested by the Corporation to furnish the pre-stamped receipt for refund of EMD remitted at the time of submission of tender. The petitioner protested to the decision taken by the Corporation vide its letters 27.05.2013 and 10.06.2013, but the same were duly responded.

9. Denying the allegation of the petitioner that the 2nd respondent has not submitted the documents in support of having its godown at Chennai Port premises to keep the stock, the 1st respondent would submit that as could be seen from the report of the competent authority, the 2nd respondent has submitted relevant documents to prove their possession of the requisite godown for keeping stock. However, the petitioner herein is not in possession of any godown and no supporting materials in this regard have been filed along with the tender form. Therefore, the Committee has rightly rejected the sealed tenders submitted by the writ petitioner on account of non-submission of the relevant documents.

10. With regard to the petitioner's allegation that he was refused to participate in the tender process at the time of opening of bid, the 1st respondent would submit that the petitioner's representative was present and signed the proceedings before opening the technical bid and that the said representative also signed the price bid of the 2nd respondent herein. Therefore, the award of contract to the 2nd respondent is in accordance with the tender conditions and procedure adopted by the Corporation.

11. Traversing the allegations of the petitioner with reference to the grounds raised in paragraph 6 of its affidavit, the 1st respondent would state as follows:

(a) The tender was opened in the presence of both the parties at 3.30 p.m. on 23.04.2013. The signature of the representatives of the bidders have been obtained and the same are part and parcel of the records maintained by the 1st respondent Corporation.

(b) It is not correct that the petitioner has produced all the documents for verification. The petitioner has not submitted crucial documents such as experience certificate in the proforma prescribed at Appendix VI and the documents relating to the allotment of EPF code number. In the absence of crucial documents, it is not possible for the 1st respondent to accept the tender and therefore, it was rightly rejected by the competent authority.

(c) It is not correct on the part of the petitioner to allege that the 2nd respondent is not possessed of any hired godowns at the Chennai Port Trust premises. It is found by the competent authority that the 2nd respondent is eligible to participate in the tender process and seek award of contract in terms of the documents submitted along with the tender form.

12. The 1st respondent would submit that he has not acted arbitrarily as alleged and that the competent authority, who evaluated the tender of both the petitioner and the 2nd respondent, has rightly come to a conclusion that the petitioner is not eligible for participation in the tender. Hence, the tender was rejected. He would further go to state that the interim stay granted by this Court on 03.07.2013 in M.P.No.1 of 2013 has virtually brought the execution of the work to a standstill and hence, sought dismissal of the Writ Petition.

13. Submitting that the Writ Petition involving a contractual transaction between the 1st respondent herein and the bidders pursuant to the tender bid, is not maintainable in law and on facts, the 2nd respondent in his counter, has stated that pursuant to the tender which was floated by the 1st respondent herein on 01.04.2013, the 2nd respondent had duly submitted its tender together with all documents and testimonials and on consideration of the same, in accordance with the Tender conditions and on being fully satisfied with the eligibility of the 2nd respondent and of the fact that the 2nd respondent has satisfied all the qualifying parameters as stipulated in the Tender, the tender has been awarded in favour of the 2nd respondent for the work of Handling and Transportation of food grains inside the Chennai Port premises on regular basis for a period of 2 years vide proceedings of the 1st respondent, dated 30.05.2013. It is the further submission of the 2nd respondent that the petitioner has suppressed the said fact and filed the present Writ Petition and has also sought interim stay of all further proceedings of the Tender Notice dated 01.04.2013 and has obtained an order of interim stay on 03.07.2013.

14. Pursuant to awarding of tender in his favour, the 2nd respondent deposited a total amount of Rs.20,00,000/- as Security Deposit in terms of the Tender representing 50% of the Security Deposit payable and has exercised the option of deduction at the rate of 10% from the admitted bills towards the balance 50% of the Security Deposit. However, on account of the order of interim stay obtained by the petitioner, further steps have not been taken with regard to the Work Order in favour of the 2nd respondent and hence, the 2nd respondent has submitted a letter to the 1st respondent to take steps for vacating the stay in this Court, so as to enable the 2nd respondent to furnish the Bank Guarantee pursuant to the Work Order granted in favour of the 2nd respondent.

15. The 2nd respondent would further submit that the Writ Petition has been filed by the petitioner on untenable premise that the 2nd respondent is not qualified and does not satisfy the requirement of availability of a hired godown at Chennai Port premises of the capacity of at least 15,000 MT to keep the stock. The qualification conditions for the Tender are provided for in Clause 3 of the Conditions for Tender and Disqualification conditions are in Clause 4. In neither of the said Clauses, the requirement of hired godown of the capacity of 15,000 MT has been insisted upon as a condition precedent for participating in the tender. The documents which are required to be attached along with the Tender are contained in Clause 5, Appendix I and II. Even in the said Clause 5 or in Appendix I or in Appendix II, proof of availability of hired Godown of the capacity of 15,000 MT is not insisted upon. The requirement of a hired godown at Chennai Port premises of the capacity of atleast 15,000 MT is not a condition precedent for participating in the Tender and is not insisted as a mandatory requirement by production of any certificate as to the availability of such godown at the time of participating in the tender. The said requirement is contained in Clause 39 of Clause XX, viz. Duties and Responsibilities of the Contractor. As such, the said requirement of 15,000 MT capacity godown is to be fulfilled by the Contractor on his being selected as Contractor and awarded the work. Though it is not insisted as a pre-qualification, the Writ Petition has been filed on a total misconception as if it is a pre-qualification.

16. According to the 2nd respondent, he has been carrying on business in Stevedoring, Clearing and Forwarding of imported goods for long number of years and has got vast experience and satisfied the requirement as per tender and as per the Appendix annexed to the Tender documents and the same has been considered by the 1st respondent herein and the work has been rightly awarded to it. There is absolutely no malafide or lack of transparency or discrimination on the part of the 1st respondent in processing the Tender.

17. Mr.T.P.Manoharan, learned counsel for the petitioner would contend that the 2nd respondent is not having a Hired Godown with a capacity of at least 15,000 MTs at the Chennai Port premises to keep the stocks on the date of tender notice. It is his further contention that though the petitioner has sent a representation dated 10.06.2013 to the 1st respondent requesting to consider their Technical and Price Bids, the 1st respondent, with a mala fide intention has suppressed the said representation and sent a letter dated 14.06.2013 to the petitioner stating that the competent authority has taken a decision to reject the technical bid submitted by the petitioner in connection with the above tender. He would strenuously contend that the 1st respondent failed to record reasons for its decision and communicate the same to the petitioner, which is in direct violation of the principles of natural justice. In support of his case, the learned counsel has relied on the following :

(i) (1991) 3 SCC 273 (Poddar Steel Corporation vs. Ganesh Engineering Works and Others) "6. It is true that in submitting its tender accompanied by a cheque of the Union Bank of India and not of the State Bank the clause no. 6 of the tender notice was not obeyed literally, but the question is as to whether the said non- compliance deprived the Diesel Locomotive Works of the authority to accept the bid. As a matter of general proposition it cannot be held that an authority inviting tenders is bound to give effect to every term mentioned in the notice in meticulous detail, and is not entitled to waive even a technical irregularity of little or no significance. The requirements in a tender notice can be classified into two categories-those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to enforce them rigidly. In the other cases it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases. This aspect was examined by this Court in GJ Fernandez v. State of Karnataka 7 Ors., [1990] 2 SCC 488 a case dealing with tenders. Although not in an entirely identical situation as the present one, the observations in the judgment support our view. The High Court has, in the impugned decision, relied upon Ramana Dayaram Shetty v. International Airport Authority of India & Ors., [1979] 3 SCC 489 but has failed to appreciate that the reported case belonged to the first category where the strict compliance of the condition could be insisted upon. The authority in that case, by not insisting upon the requirement in the tender notice which was an essential condition of eligibility, bestowed a favour on one of the bidders, which amounted to illegal discrimination. The judgment indicates that the Court closely examined the nature of the condition which had been relaxed and its impact before answering the question whether it could have validly condoned the shortcoming in the tender in question. This part of the judgment demonstrates the difference between the two categories of the conditions discussed above."

(ii) 2006 (5) CTC 236 (C.Jayanthi vs. The Commissioner, Mettur Municipality, Mettur Dam, Salem District and another) "12. It is a well settled principle laid down by the Supreme Court and this Court that contracts by the State, its Corporations, instrumentalities and agencies must be normally granted through public auction/public tender by inviting tenders from eligible persons and the notification of the public auction or inviting tenders should be advertised in well-known dailies having wide circulation in the locality, with all relevant details such as date, time and place of auction, subject matter of auction, estimated cost, Earnest Money Deposit, etc. The main background of the award of the Government contracts through public auction/public tender is to ensure transparency, in the public procurement, to maximise economy and efficiency in Government procurement, to promote health competition among the tenderers, to provide for fair and equitable treatment of all tenderers, and to eliminate irregularities interference and corrupt practices by the authorities concerned. This is required by Article 14 of the Constitution. However, in rare and exceptional cases, for instance during natural calamities and emergencies declared by the Government, where the procurement is available from a single source only, where the supplier or contractor has exclusive rights in respect of the goods or services and no reasonable alternative or substitute exists, where the auction was held on several dates but there were no bidders or the bids offered were too low, etc., this normal rule may be departed and such contracts may be awarded through private negotiations."

(iii) (2006) 11 SCC 548 (B.S.N. Joshi & Sons Ltd. vs. Nair Coal Services Ltd. and another) "59. Recently, in Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd and Another [(2005) 6 SCC 138,], upon noticing a large number of decisions, this Court stated "15. 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.4 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."

61. Law on the similar term has been laid down in Poddar Steel Corporation v. Ganesh Engineering Works and Others [(1991) 3 SCC 273] in the following terms :

"6. It is true that in submitting its tender accompanied by a cheque of the Union Bank of India and not of the State Bank clause 6 of the tender notice was not obeyed literally, but the question is as to whether the said non- compliance deprived the Diesel Locomotive Works of the authority to accept the bid. As a matter of general proposition it cannot be held that an authority inviting tenders is bound to give effect to every term mentioned in the notice in meticulous detail, and is not entitled to waive even a technical irregularity of little or no significance. The requirements in a tender notice can be classified into two categories those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to enforce them rigidly. In the other cases it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases."

66. We are also not shutting our eyes towards the new principles of judicial review which are being developed; but the law as it stands now having regard to the principles laid down in the aforementioned decisions may be summarized as under :

(i) If there are essential conditions, the same must be adhered to;

(ii) If there is no power of general relaxation, ordinarily the same shall not be exercised and the principle of strict compliance would be applied where it is possible for all the parties to comply with all such conditions fully;

(iii) If, however, a deviation is made in relation to all the parties in regard to any of such conditions, ordinarily again a power of relaxation may be held to be existing

(iv) The parties who have taken the benefit of such relaxation should not ordinarily be allowed to take a different stand in relation to compliance of another part of tender contract, particularly when he was also not in a position to comply with all the conditions of tender fully, unless the court otherwise finds relaxation of a condition which being essential in nature could not be relaxed and thus the same was wholly illegal and without jurisdiction;

(v) When a decision is taken by the appropriate authority upon due consideration of the tender document submitted by all the tenderers on their own merits and if it is ultimately found that successful bidders had in fact substantially complied with the purport and object for which essential conditions were laid down, the same may not ordinarily be interfered with.

69. While saying so, however, we would like to observe that that having regard to the fact that a huge public money is involved, a public sector undertaking in view of the principles of good corporate governance may accept such tenders which is economically beneficial to it. It may be true that essential terms of the contract were required to be fulfilled. If a party failed and/or neglected to comply with the requisite conditions which were essential for consideration of its case by the employer, it cannot supply the details at a latter stage or quote a lower rate upon ascertaining the rate quoted by others. Whether an employer has power of relaxation must be found out not only from the terms of the notice inviting tender but also the general practice prevailing in India. For the said purpose, the court may consider the practice prevailing in the past. Keeping in view a particular object, if in effect and substance it is found that the offer made by one of the bidders substantially satisfies the requirements of the conditions of notice inviting tender, the employer may be said to have a general power of relaxation in that behalf. Once such a power is exercised, one of the questions which would arise for consideration by the superior courts would be as to whether exercise of such power was fair, reasonable and bona fide. If the answer thereto is not in the negative, save and except for sufficient and cogent reasons, the writ courts would be well advised to refrain themselves in exercise of their discretionary jurisdiction."

(iv) (2011) 3 SCC 436 (State of Orissa vs. Mamata Mohanty) "37. It is a settled legal proposition that if an order is bad in its inception, it does not get sanctified at a later stage. A subsequent action/development cannot validate an action which was not lawful at its inception, for the reason that the illegality strikes at the root of the order. It would be beyond the competence of any authority to validate such an order. It would be ironic to permit a person to rely upon a law, in violation of which he has obtained the benefits. If an order at the initial stage is bad in law, then all further proceedings consequent thereto will be non est and have to be necessarily set aside. A right in law exists only and only when it has a lawful origin. "

(v) 2012 (6) CTC 388 (A.Jayapaul vs. The Commissioner, Tambaram Municipality, Tambaram, Chennai-45.) "14. In matters of tenders, the duty of the court is to confine itself to the question of legality. Its concern should be :

Whether the Tender Inviting Authority -

1. exceeded its powers,

2. committed an error of law,

3. committed a breach of the rules of natural justice,

4.reached a decision which no reasonable tribunal would have reached or,

5.abused its powers ?

Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review are : (i) Illegality; (ii) Irrationality; and (iii) Procedural impropriety. This is the law laid down by the Supreme Court in Tata Cellular v. Union of India, (1994) 6 SCC 651. In the very same judgment, the power of Judicial Review has been examined by the Supreme Court, wherein it has been held that if the decision relating to award of contract is bona fide and is in public interest, Courts will not, in exercise of power of judicial review, interfere even if a procedural aberration of error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest or to decide contractual disputes. Restraint under judicial review is always limited to this Court and it has to be invoked rarely and hesitantly under Article 226 of the Constitution of India. The Courts are always hesitant to interfere with the administrative policy decision and in rarest of rare occasions, if it is arbitrary, discriminatory, mala fide or actuated by bias, the Courts can interfere. "

18. Refuting the above contentions, Mr.S.Vijayakumar, learned counsel appearing for the 1st respondent would submit that the competent authority, while evaluating the tenders found that the petitioner firm has not furnished the documents pertaining to the EPF details and also the documents supporting the past experience in respect of similar contract and therefore, disqualified the technical bid submitted by the petitioner and informed accordingly. He would also submit that the 2nd respondent has submitted relevant documents to prove their possession of the requisite godown for keeping stock. In this regard, learned counsel would emphasize that the petitioner is not in possession of any godown and no supporting material has been filed along with the tender form to prove the same.

19. Mr.AR.L.Sundaresan, learned Senior Counsel appearing for the 2nd respondent would submit that acceptance of the bid of the 2nd respondent would not in any manner cause loss to public money and that the tender was opened in the presence of the petitioner only. He would further submit that mere quoting of lesser rate would not entitle the petitioner to claim any right. As the 2nd respondent has satisfied all the requirements as per the Tender Schedule, the same has been considered by the 1st respondent and the work has been rightly awarded to it. Hence, he would contend that the Writ Petition is devoid of merits and the same deserves to be dismissed. To substantiate his case, learned Senior Counsel has relied on the following :

(i) 2008 (3) CTC 675 (ION Exchange Waterleau Ltd. vs. The Commissioner, Madurai Municipal Corporation, Madurai) "19. Needless to say, it is a settled principle that the terms of the invitation to tender are not open to judicial scrutiny, the same being in the realm of contract. The courts are always hesitant to interfere with the administrative policy decision and in rarest of rare occasions, if it is arbitrary, discriminatory, mala fide or actuated by bias, the Courts can interfere or otherwise the Courts cannot strike down the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. In the decision in Tata Cellular case, the Constitution Bench of the Supreme Court has authoritatively held that the principle of judicial review in the matter of contract 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. The Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State and the power to refuse the lowest or any other tender is always available to the Government. 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. In a commercial transaction, the State can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, provided the tender conditions permit such a relaxation. Even when some defect is found in the decision-making process, the Court has to necessarily 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 and is satisfied that overwhelming public interest requires interference, the Court should interfere. Otherwise, the larger public interest will prevail upon the individual's interest.

20. The learned Senior Counsel appearing for the petitioner has placed heavy reliance on the decision of the Supreme Court in the New Horizons case wherein it was categorically held that the validity of the action of the Tender Evaluation Committee in not considering the tender submitted by the tenderer has to be considered in the light of the principle laid down in Tata Cellular case. Here, what is to be considered is, when the condition regarding previous experience in the tender notification was not fulfilled, whether the action of the Tender Accepting Authority in rejecting the petitioner's Technical Bid, can be regarded as arbitrary and unreasonable. In this regard, it is to be noted that the tenderer has been required in Section 2.2 (b) of the Bid Document to substantiate his previous experience with documentary proof and also to furnish credentials in the said field. In New Horizons case, it was held that a tender is not liable to be excluded from consideration on the ground of non-eligibility on account of lack of past experience and that when the tenderer fails to furnish with the tender, the required material by way of credentials of the past experience, the decision of the Tender Evaluation Committee to exclude the tender from the consideration was therefore not warranted by the terms and conditions for submission of the tender as contained in the tender notification. Whereas, in the instant case, admittedly, there is a specific clause, viz., Section 2.2(b) of the Bid Document which requires the tenderers to have the past experience in similar work. In other words, in New Horizons case, though the Supreme Court has held so as stated above, it should be seen that there was no specific clause in the tender notification to the effect that the tenderer should have past experience which is not so in the case on hand inasmuch as, there is a specific clause to that effect, as referred to earlier. Thus, while giving anxious consideration to the ruling of the Supreme Court in New Horizons case, I am of the considered view that the facts and circumstances involved in this case are not akin to those in New Horizons case and as such, the said decision can, in no way, be of any help to the petitioner. Similarly, though it is held by the Supreme Court in the Reliance Energy case relied on by the learned Senior Counsel appearing for the petitioner that the doctrine of "Level Playing Field" is entitled to be invoked, it is clarified in the very same judgment that the said doctrine is subject to public interest and in this case, as the petitioner has not fulfilled the qualification criteria prescribed in Section 2.2(a) to (e) of the Bid Document, it is not entitled to claim the benefit of the doctrine of "Level Playing Field" the reason being that the aspect of public interest is very much involved in the matter. In such view of the matter, this judgment also can be of no avail to the petitioner for the reason that the petitioner has failed to satisfy the requirements prescribed in Section 2.2(a) to (e) of the Bid Document."

(ii) 2011 (4) CTC 225 (Uflex Limited vs. State of Tamilnadu and another) "17. In matters of tenders, the duty of the court is to confine itself to the question of legality. Its concern should be :

Whether the Tender Inviting Authority -

1. exceeded its powers,

2. committed an error of law,

3. committed a breach of the rules of natural justice,

4.reached a decision which no reasonable tribunal would have reached or,

5.abused its powers ?

(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 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.

18. Moreover, the terms of the contract are not open to judicial scrutiny, the same being in the realm of contract. The Courts are always hesitant to interfere with the administrative policy decision and in rarest of rare occasions, if it is arbitrary, discriminatory, mala fide or actuated by bias, the Courts can interfere or otherwise the Courts cannot strike down the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. 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. In a commercial transaction, the State can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, provided the tender conditions permit such a relaxation. Even when some defect is found in the decision making process, the Court has to necessarily 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 and is satisfied that overwhelming public interest requires interference, the Court should interfere. Otherwise, the larger public interest will prevail upon the individual's interest. This is the law laid down by this Court in the cases of Ion Exchange Waterleau Ltd. and P.Ramadas, cited supra."

20. I have heard the submissions of the learned counsel on either side and given thoughtful consideration to the materials available on record.

21. It is a settled principle that the terms of the invitation to tender are not open to judicial scrutiny, the same being in the realm of contract. The courts are always hesitant to interfere with the administrative policy decision and in rarest of rare occasions, if it is arbitrary, discriminatory, mala fide or actuated by bias, the Courts can interfere or otherwise the Courts cannot strike down the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. In the decision in Tata Cellular case, a Three Judge Bench of the Supreme Court has authoritatively held that the principle of judicial review in the matter of contract 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. The Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State and the power to refuse the lowest or any other tender is always available to the Government. 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. In a commercial transaction, the State can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, provided the tender conditions permit such a relaxation. Even when some defect is found in the decision-making process, the Court has to necessarily exercise its discretionary powers under Article 226 of the Constitution 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 and is satisfied that overwhelming public interest requires interference, the Court should interfere. Otherwise, the larger public interest will prevail upon the individual's interest.

22. Also, in matters of tenders, the duty of the Court is to confine itself to the question of legality. Its concern should be : Whether the Tender Inviting Authority -(1) exceeded its powers, (2) committed an error of law, (3) committed a breach of the rules of natural justice, (4) reached a decision which no reasonable tribunal would have reached or, (5) abused its powers ?

23. Therefore, it is not for the Court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review are : (i) Illegality; (ii)Irrationality; and (iii) Procedural impropriety. Further, the principles deducible relating to scope of judicial review of administrative decisions and exercise of contractual powers by government bodies 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.

(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.

24. Keeping the above principles and guidelines in mind, if we take up the present case, what is to be seen is that the tender, particularly, the technical bid submitted by the petitioner came to be rejected by the first respondent vide the impugned letters, dated 22.05.2013 and 14.06.2013, on the ground of non-furnishing of the details of EPF Code Number and Proof of Deposit of EPF for the relevant period. The said rejection was done as per Sl.No.8 (g) of the Tender Conditions, as per which, tenders not accompanied by all the schedules/annexure and duly filled in and signed may be ignored. By the impugned orders, the petitioner was also requested to send to the authority the stamped receipt, bank details and RTGS details to refund the EMD at the earliest possible.

25. In the above regard, while it is the contention of the petitioner that he has submitted all the documents as required in the tender form, according to the respondents, it is not so.

26. In order to examine the rival contentions and also to ascertain the correct position, it has become indispensable for this Court to call for the original records from the first respondent. Accordingly, the same are called for and produced.

27. I have thoroughly gone through the records. On a perusal of the records, it is seen, that, as per the schedule, the technical bids were opened at 03.30 p.m. on 23.04.2013 in respect of Regular H&T Contract at Chennai Port Premises and the technical bids and the tender documents submitted by the writ petitioner, namely, M/s.Hari & Co. and the second respondent, namely, M/s.Albert & Co., had been verified by the Tender Evaluation Committee, consisting of three members, viz., (1) Shri A.Sarangapani, AGM (Cont.), (2) Shri Pankaj Kumar Agarwal (AGM (Accts.) and (3) Shri P.Mani, AGM (Civil Engg.), as per Appendix-II. After verification, the Committee gave a report, stating that M/s.Albert & Co. had furnished all the documents as per Appendix-II and M/s.Hari & Co. had furnished the documents as per Appendix-II except EPF details besides not furnishing full information in respect of experience as per Appendix VI. In its report, the Committee also stated that the operating division should ensure that the tenderer should fulfil all the duties and responsibilities as per clause-xx, before awarding contract. Therefore, the Committee opined that the technical bid submitted by M/s.Albert & Co., second respondent herein, may be accepted. Pursuant thereto, the Price Bid submitted by M/s.Albert & Co., who was technically qualified, was opened by the Committee on 22.05.2013 at 11.00 a.m. in the presence of the tenderer and the said Committee submitted a report, stating that out of the two parties participated, one party M/s.Hari & Co., Chennai, was not qualified due to non-submission of required documents and the other tenderer M/s.Albert & Co.(P) Ltd., H&T Contractor, was qualified and had quoted the rates. After examination of rates of local market and State agencies and analysis of all other factors and viabilities, the Committee recommended for award of contract to the eligible tenderer. Based on the report of the said Committee, the first respondent has issued the Letter of Acceptance, dated 30.05.2013, to the second respondent, which also came to be challenged by the petitioner.

28. Though the Committee has stated that M/s.Hari & Co. has not furnished full information in respect of work experience, this Court, on going through the records, found that the writ Petitioner viz., M/s.Hari & Co. has furnished the full details therefor. However, the other point raised by the Committee in respect of the petitioner i.e., non-furnishing of EPF details, stands correct, as, this Court, in spite of a thorough examination of the records, particularly the tender document submitted by the writ petitioner, could not find the said details. This is also visible from the tender document of the writ petitioner, wherein, though the petitioner had ticked 'Yes' against all other points regarding production of documents, as against the said particular column as regards the EPF Code Number and Proof of Deposit, he had not ticked for either Yes or No, thereby leaving it untouched. As per Appendix-II, Point No.6, production of copy of EPF Code Number and Proof of Deposit of EPF for the relevant experience period is a necessary concomitant for consideration of the tender document, which, the petitioner had miserably failed to submit along with the tender form, whereas the second respondent had furnished all such details, as could be seen from the records. Notwithstanding that the petitioner has enclosed a copy of the said details regarding EPF contribution in the typed set of papers before this Court, as the said information was not furnished along with the tender document before the tender inviting authority, the same cannot now be cashed in on by the petitioner. It is also to be mentioned here that as the technical bid submitted by the petitioner was bereft of necessary details, the price bid submitted by the petitioner was not even opened and considered, though, according to the petitioner, he offered lowest price than that of the second respondent, which, in the opinion of this Court, cannot be faulted.

29. Coming to the point of the learned counsel for the petitioner that the second respondent does not possess the hired godown with a capacity of at least 15,000 Mts., in view of the legal position stated by me as above coupled with the fact that the petitioner did not fulfil the requirement for the tender, it is not for him to question the competence of the successful bidder, who is the second respondent.

30. Moreover, as per Condition No.8 and clause (d) of the tender document, tenders, which do not comply with the instructions, shall be summarily rejected, and, as per clause (g), tenders not accompanied by all the schedules/annexures intact and duly filled in and signed may be ignored. In addition, Condition No.11 empowers the Food Corporation of India/first respondent herein to reserve the right to reject any or all the tenders without assigning any reason and does not bind itself to accept the lowest or any tender. Therefore, the decision taken by the first respondent in rejecting the tender form submitted by the writ petitioner and accepting the tender submitted by the second respondent, thereby awarding the contract to it, is in consonance with the terms and conditions of the tender. As such, the orders impugned do not suffer from any infirmities or mala fides.

31. Writ Petition is dismissed. No costs. Consequently, the connected M.P.Nos.1,2,3 and 5 are closed.

Index : Yes							     10 -01-2014
Internet : Yes
abe/dixit
Note to Registry :  Issue copy of this order on 22.01.2014.
								V.DHANAPALAN,J.
Abe





Pre-delivery order in
W.P.No.17743 of 2013






Dated:      10.01.2014

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