Himachal Pradesh High Court
Shri Bipan Chand Awasthi vs State Of Orissa on 22 September, 2022
Bench: Tarlok Singh Chauhan, Virender Singh
REPORTABLE
IN THE HIGH COURT OF HIMACHAL PRADESH, AT SHIMLA
.
ON THE 22nd DAY OF SEPTEMBER 2022.
BEFORE
HON'BLE MR. JUSTICE TARLOK SINGH CHAUHAN
&
HON'BLE MR. JUSTICE VIRENDER SINGH
CIVIL WRIT PETITION No. 3704/2022
BETWEEN:-
FARM TECHNOCRATS FORUM
WARD NO.9, VPO CHOWKI KHALET,
TEHSIL PALAMPUR, DISTRICT KANGRA, HP
THROUGH ITS PRESIDENT
SHRI BIPAN CHAND AWASTHI .....PETITIONER
(BY MR. JIYA LAL BHARDWAJ, ADVOCATE)
AND
1. STATE OF HIMACHAL PRADESH
THROUGH PRINCIPAL SECRETARY (AGRICULTURE)
TO THE GOVERNMENT OF HIMACHAL PRADESH,
SHIMLA-171002.
2. PROJECT DIRECTOR,
HIMACHAL PRADESH CROP DIVERSIFICATION
PROMOTION PROJECT-THE JAPAN OFFICIAL
INTERNATIONAL COOPERATION AGENCY,
DEVELOPMENT ASSISTANCE, AGRICULTURE COMPLEX
NEAR HATHIL KHAD BRIDGE, HAMIRPUR-177001.
3. HIMACHAL PRADESH AGRICULTURE DEVELOPMENT
SOCIETY, PRINCIPAL OFFICE AT 218,
ASTHA KANWAL COMPLEX, WARD NO.1,
KRISHNA NAGAR, HAMIRPUR, 177001
THROUGH ITS PRESIDENT. ...RESPONDENTS
(MR. K. D. SHREEDHAR, SR. ADVOCATE
WITH MS. SNEH BHIMTA, ADVOCATE)
RESERVED ON: 19.9.2022
__________________________________________________________
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2
This petition coming on for admission after notice this day,
Hon'ble Mr. Justice Tarlok Singh Chauhan, passed the following:
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ORDER
The instant petition has been filed for grant of the following substantive reliefs:
"(i) That a writ in the nature of mandamus may kindly be issued directing the respondents to extend the contract in favour of the petitioner forum till the completion of the project on year to year basis subject to satisfactory performance;
(ii) That a writ in the nature of certiorari may kindly be issued to quash the evaluation criteria prescribed under Clause 8 and 8.1 of the pre- qualification evaluation to exclude the societies to participate in the e-tender process initiated by respondent No.2 in pursuance to annexure P-18 dated 23.05.2022 and also quash the e-tender process in view of the fact that the petitioner forum is entitled for extension of the contract till the completion of the project or in the alternative the petitioner forum may kindly be allowed to participate in the e-tendering process initiated vide Annexure P-18."
2 The petitioner is a society registered under the Himachal Pradesh Registration of Societies Act, 2006. The main object of the petitioner-society is to extend knowledge, skill and information to the farming community by enabling forward and backward linkages to strengthen the government programmes/execution by technical and professional support, to ::: Downloaded on - 23/09/2022 20:02:17 :::CIS 3 enhance the livelihood of providing opportunities good health, education, information sharing and social welfare, to create social .
awareness about environmental protection against hazardous with the industries, pesticides, obnoxious plants, un-degradable products etc., apart from many other objects. Majority of the members of the society are the alumni of the College of Agriculture, Palampur.
3. The Japan International Cooperation Agency (JICA) provided the official development assistance (ODA) loan to the Government of India (Japanices Yen 5.001 Billion) towards the implementation r of "Himachal Pradesh Crop Diversification Promotion Projects (HPCDP) in the State of Himachal Pradesh. It is averred that the State of Himachal Pradesh through Agriculture Department got formed Himachal Pradesh Agriculture Development Society i.e. respondent No. 3 and authorized the society through its Project Director to execute the Project of the financial assistance provided by JICA.
4 Respondent No.1 has formed respondent No.3-society to execute the project of JICA in the State of Himachal Pradesh and the State Government has appointed its Officers to execute the project. The petitioner being eligible also applied for expression of interest to provide services of personnel of various categories to the respondents and on being found eligible and successful was issued ::: Downloaded on - 23/09/2022 20:02:17 :::CIS 4 the letter of acceptance for providing services of various categories on 25.08.2012 and thereafter the petitioner-society had accepted the .
said letter of acknowledgement and executed the contract agreement with the respondent No.2 on 28.08.2012. As per the Service Agreement, respondent No.2 was referred to as "the Client"
and the petitioner was "the Agency'" and the petitioner had furnished the performance security with respondent No.2. The petitioner thereafter provided manpower to respondent No.2.
5 According to the petitioner, its performance was found to be satisfactory, therefore, the contract was extended on year to year basis vide separate agreements executed to this effect between respondent No.2 and the petitioner-society. Despite this, respondent No.2 invited fresh tender process in the year 2021 for execution of Phase-II project and the petitioner-Society being eligible also applied for providing services of the personnel of various categories to project management units of respondent No.2. Despite being the sole applicant having shown its expression of interest, respondent No.2 did not accept it's tender. However, again a tender process was issued on 15.3.2021, wherein again the petitioner was the sole candidate and this time the petitioner was asked to negotiate with respondent No.2 The petitioner quoted 8% services ::: Downloaded on - 23/09/2022 20:02:17 :::CIS 5 charges for providing the manpower, however in the negotiations, respondent No.2 asked to lower its service charges to 7.5%.
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6 After the negotiations, on 22.4.2021, service agreement was entered between the petitioner and respondent No.2 and the duration of assignment for providing the manpower was fixed for one year from the date of award of the contract, but the same was extendable till the completion of the project on year to year basis; subject to satisfactory performance. Before the term of the agreement came to an end, the petitioner-society wrote to respondent No.2 for extending the term of the contract, but respondent No.2 did not respond, rather issued e-tender process to invite fresh bids for supply of manpower and excluded the societies from participating in the tender process.
7 It is only after the issuance of tender process that respondent No.2 finally vide letter dated 25.5.2022 informed the petitioner-society that it had already restored to allotting the work through e-tender process taking into consideration the mode RFP (Request For Proposal) issued by the Finance Department, Government of Himachal Pradesh vide letter dated 1.12.2021. The petitioner again wrote to respondent No.2 vide letter dated 28.5.2022 for extending the contract stating therein that the petitioner-Society is serving as outsource agency from the date of ::: Downloaded on - 23/09/2022 20:02:17 :::CIS 6 inception of project and till date, there were no adverse remarks verbally or written communicated to it. This was followed by yet .
another letter dated 8.4.2022, but to no avail. Hence, the instant petition.
8 Respondents No. 1 to 3 have filed reply, wherein it is stated that the entire premise, on which the petition proceeds, is totally mis-conceived as in the agreement dated 23.4.2021, duration of the contract, that was fixed for one year, could no doubt be extended , but the same could be as per clause 11(1) of the terms of reference of the EOI, but the same was at the sole discretion of the Project Director and not by way of a mandatory condition.
9 That apart, as per clause 21 of the general terms and conditions, the project director has been vested with the power to terminate the agreement at any time without assigning any reason.
10 The respondents have tried to give certain details regarding work and performance of the petitioner-society, however we need not to advert to the same lest it would prejudice either of the parties, more particularly, the petitioner, in future.
11 Therefore, in such circumstances, the moot question is whether the petitioner-society has an indefeasible right to the extension and allocation of the work in question on the premise that ::: Downloaded on - 23/09/2022 20:02:17 :::CIS 7 its work and conduct has been satisfactory, though this contention has been specifically denied by the respondents.
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12 At this stage, we may advert to the relevant clause of the agreement, which reads as under:-
"4) Duration of the Assignment The period of the assignment for providing the manpower shall initially be one year from the award of the contract and shall be extendable till the completion of the project on year to year basis subject to satisfactory performance."
13 No doubt, the aforesaid service contract does give an indication that initially the contract shall be for one year and thereafter shall be extendable till the completion of the project on year to year basis; subject to satisfactory performance, however the word "shall" in the given circumstances, cannot be construed to be mandatory as is being contended by the petitioner for the reason that the service sought for by the respondents is in the public domain and therefore, the respondents cannot be walked down by any such condition that would adversely affect its revenue in times to come.
14 It needs to be observed here that vide order dated 15.6.2022, this Court had stayed the e-tendering process initiated by respondent No.2, however vide order dated 29.6.2022, the order dated 15.6.2022 was modified by directing that the e-tendering ::: Downloaded on - 23/09/2022 20:02:17 :::CIS 8 process may continue, however the same shall not finalized without the leave of the Court.
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15 The respondents have placed on record comparative service charge rate, as per e-tender opened on 5.8.2022 and rates being charged by the petitioner-Society, which shows that there is colossal difference between the rates being charged by the petitioner-society towards service charge vis a vis the service charge quoted by the bidders being L1 as is evident from the following tabulated statement:-
Sr. Description of work/item(s) Rate being Service No. charged charge by Farm rates Technocrat quoted s Forum by L1 Palampur 1 Office Manager 7.5 1.47 2 Accountant 7.5 1.47 3 Office Manager cum Accountant 7.5 1.47 (DPMU) 4 Office Manager cum Accountant 7.5 1.47 (BPMU) 5 Agri Exper 7.5 1.47 6 Agri. Officer 7.5 1.47 7 Agriculture Extension Officer 7.5 1.47 8 Chief Project Advisor 7.5 1.31 9 Private Secretary 7.5 1.47 10 Marketing Officer 7.5 1.47 11 Construction Engineer 7.5 1.47 ::: Downloaded on - 23/09/2022 20:02:17 :::CIS 9 12 Sr. Design Engineer 7.5 1.47 13 Design Engineer 7.5 1.47 .
14 H.D.M. 7.5 1.47 15 Junior Engineer 7.5 1.47 16 J.D.M./TA (Drawing & Estimates) 7.5 1.47 17 Surveyor/Tech. Assistant (Survey) 7.5 1.47 18 Draughtsman 7.5 1.47 19 Supervisor 7.5 1.47 20 I.T. Experts 7.5 1.47 21 GIS/MIS Operator 7.5 1.47 22 MIS & GIS Technician (ICT work plan in 7.5 1.47 Mod) 23 Computer Assistant 7.5 2.01 24 Drivers 7.5 2.01 25 Office Assistant 7.5 2.01 26 Office Attendant 7.5 2.01 27 Factory Worker (SCTC) 7.5 2.01 28 Cultivation worker (SCTC) 7.5 2.01 29 Office upkeep 7.5 2.01 30 Night Watchman 7.5 2.01
16 It is more than settled that judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and malafides. Its purpose is to check whether choice or decision is made 'lawfully' and not to check whether choice or decision is 'sound'.
::: Downloaded on - 23/09/2022 20:02:17 :::CIS 10When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A .
contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. 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 or 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. The tenderer or contractor with a grievance can always seek damages in a civil court. (Refer: Jagdish Mandal vs. State of Orissa, 2007 (14) SCC
517).
17 Ever otherwise, as regards scope of interference by the High Court under Article 226 of the Constitution of India, the basic requirement of article 14 regarding fairness of the action of the State is required to be seen. After all, non-arbitrariness is essence and substance, which is exercised by the court within purview of judicial review. Once the State action has been validly made for a discernible reason and not whimsically for an ulterior motive, the Court shall be loath to interfere within such action. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the State priorities. If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders, in those circumstances, ::: Downloaded on - 23/09/2022 20:02:17 :::CIS 11 the interference by courts is very limited. (Refer: Galaxy Transport Agenices vs. New J.K. Raodways, JT 2020 (12) SC 292).
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18 Law on the subject has been succinctly laid down by the Hon'ble Supreme court in Uflex Limited vs. Government of Tamil Nadu & ors., (2022) 1 SCC 165, wherein, in paras 1 to 4 thereof, it was observed as under:-
"1. The enlarged role of the Government in economic activity and its corresponding ability to give economic 'largesse' was the bedrock of creating what is commonly called the 'tender jurisdiction'. The objective was to have greater transparency and the consequent right of an aggrieved party to invoke the jurisdiction of the High Court under Article 226 of the Constitution of India (hereinafter referred to as 'Constitution'), beyond the issue of strict enforcement of contractual rights under the civil jurisdiction. However, the ground reality today is that almost no tender remains unchallenged. Unsuccessful parties or parties not even participating in the tender seek to invoke the jurisdiction of the High Court under Article 226 of the Constitution. The Public Interest Litigation ('PIL') jurisdiction is also invoked towards the same objective, an aspect normally deterred by the Court because this causes proxy litigation in purely contractual matters.
2. The judicial review of such contractual matters has its own limitations. It is in this context of judicial review of administrative actions that this Court has opined that it is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fide. The purpose is to check whether the choice of decision is made lawfully and not to check whether the choice of decision is sound. In ::: Downloaded on - 23/09/2022 20:02:17 :::CIS 12 evaluating tenders and awarding contracts, the parties are to be governed by principles of commercial prudence. To that extent, principles of equity and natural justice have to stay at .
a distance.
3. We cannot lose sight of the fact that a tenderer or contractor with a grievance can always seek damages in a civil court and thus, "attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted."
4. In a sense the Wednesbury principle is imported to the concept, i.e., the decision is so arbitrary and irrational that it can never be that any responsible authority acting reasonably and in accordance with law would have reached such a decision. One other aspect which would always be kept in mind is that the public interest is not affected. In the conspectus of the aforesaid principles, it was observed in Michigan Rubber v. State of Karnataka as under:
"23. From the above decisions, the following principles emerge:
(a) the basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities;
(b) fixation of a value of the tender is entirely within the purview of the executive and courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by Courts is very limited;::: Downloaded on - 23/09/2022 20:02:17 :::CIS 13
(c) In the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities unless the action of tendering authority is found to be malicious and a misuse of its .
statutory powers, interference by Courts is not warranted;
(d) Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work; and
(e) If the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interference by Court is very restrictive since no person can claim fundamental right to carry on business with the Government."
19 Scope of judicial review in the contractual matters has recently again come up before the Hon'ble Supreme court in National High Speek Rail Corporation Limited vs. Montecarlo Limited and anr., (2022) 6 SCC 401, wherein it was held that the court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions:
(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; or whether the process adopted or decision made is so arbitrary and irrational that the court can say: "the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached"? and
(ii) Whether the public interest is affected?
20 If the answers to the above questions are in the negative, then there should be no interference under Article 226 of the Constitution of India.
21 Judged in light of the aforesaid exposition of law, if the facts of the instant case are adverted to, it would be seen that not only the decision taken by the respondents-State is absolutely bona fide, but would ::: Downloaded on - 23/09/2022 20:02:17 :::CIS 14 also go to show that by taking a decision, the respondents have sought to save public money as is evident from the tabulated statement (supra).
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22 That apart, the decision cannot be termed to be arbitrary much less irrational, rather the decision taken by the respondents is definitely for the larger public interest.
23 Now when the rates offered by the petitioner have been found to be exorbitantly high when compared to the rates offered by the other bidders and once the respondents seek to save the public revenue, we are clearly of the view that the petitioner-society cannot claim any preferential right of continuing with the tender on the basis of clause 4 relating to duration of assignment and having been worked with the respondent satisfactorily, as alleged by the petitioner, which contention otherwise has been disputed by the respondents.
24 In view of aforesaid discussions, we find no merit in the instant petition and the same is accordingly dismissed so also the pending application(s), if any.
(Tarlok Singh Chauhan) Judge (Virender Singh) Judge 22nd September, 2022.
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