Madhya Pradesh High Court
Godrej And Boyce Mfg. Co. Ltd. vs State Civil Supplies Corporation ... on 2 May, 2017
Author: R. S. Jha
Bench: A. K. Joshi, R. S. Jha
1 W.P Nos.7805/2016 &
16746/2016
HIGH COURT OF MADHYA PRADESH AT JABALPUR
WRIT PETITION NO. 7805/2016
PETITIONER : JANAK HEALTHCARE PRIVATE LTD.
Vs.
RESPONDENTS : THE STATE OF M.P. & ORS.
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WRIT PETITION NO.16746/2016
PETITIONER : GODREJ AND BOYCE MFG. CO. LTD.
Vs.
RESPONDENTS : STATE CIVIL SUPPLIED
CORPORATION LTD. & ORS.
Present : Hon'ble Shri Justice R.S. Jha,
Hon'ble Shri Justice A. K. Joshi.
For the petitioners : Shri Brian D'silva, Senior counsel
with Shri Abhishek Dilraj and
Shri Abhishek Arjaria, Advocates.
For the respondents : Shri Naman Nagrath, Senior
Counsel with Shri Rohit Jain and
Shri Anvesh Shrivastava, Advocates.
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ORDER
(02/05/2017) Per R. S. Jha, J.
Both these petitions arise out of the same factual dispute and, therefore, are heard and decided concomitantly by a common order.
2. W.P No.7805/2016 has been filed by petitioner Janak Healthcare Private Ltd., being aggrieved by the 2 W.P Nos.7805/2016 & 16746/2016 communication dated 22.1.2016 and the email received by them on 21.4.2016 cancelling the notification of award and the tender proceedings in which the petitioner was the successful bidder. The petitioner has also challenged the subsequent tender notice dated 7.4.2016 issued by the respondents inviting application from prospective suppliers for the same items for which the petitioner had been found to be the successful bidder. W.P No.16746/2016 has been filed by the petitioner Godrej & Boycen Mfg. Co. Ltd., praying for a direction to award the contract to the petitioner therein instead of the petitioner in W.P No.7805/2016 or in the alternative, to re-tender the 9 items that were included in the previous tender proceedings.
3. It is pertinent to note that this Court by interim order dated 13.5.2016 had stayed further proceedings to be taken up by the respondents pursuant to the subsequent tender notice dated 7.4.2016. However, later on the aforesaid interim order was modified with the consent of the learned counsel for the parties and the interim order was restricted to the 9 items involved in W.P No.7805/2016.
3 W.P Nos.7805/2016 &16746/2016
4. The brief facts, leading to the filing of both these petitions, are that the respondent State Public Health Service Corporation issued a tender notice on 15.5.2015 inviting online tender proceedings for annual rate contract and supply of Maternal & Child Health and other equipment and instruments to various hospitals of Govt. of M.P. for a period of one year from the date of signing of the contract. It is stated that 34 bidders responded to the aforesaid online tenders. However, as many as 32 bidders were not found eligible and only two bidders namely; the petitioner in W.P No.7805/20016 and the petitioner in W.P No.16746/2016 where shortlisted.
5. Though various dates have been mentioned by the petitioner in the petitions, the relevant dates material for deciding the controversy raised before this Court are that after several extensions of time to submit the bid, the last date for submitting the bid was notified as 31.8.2015 whereafter certain proceedings were taken up by the respondents.
6. It is stated that on 03.11.2015 the respondents, instead of proceedings further in the matter, asked the petitioner in W.P.No.7805/2016 to refurnish their financial bids to which the petitioner in 4 W.P Nos.7805/2016 & 16746/2016 W.P.No.7805/2016 filed an objection on 09.12.2015. It is stated that ultimately after analyzing all the bids the petitioner in W.P.No.7805/2016, Janak Health Care, was found to be the lowest bidder and a notification of award (NOA) was issued to the petitioner Janak Health Care on 31.12.2015. Subsequently, a revised NOA was again issued to the petitioner Janak Health Care on 13.01.2016 asking the petitioner to furnish the earnest money deposited and to execute an agreement within 21 days. On 21.01.2016 the petitioner Janak Health Care submitted a Bank Guarantee as well as a draft agreement as required by the authorities. However, on the very next day i.e. 22.01.2016 they were served with an order passed by the respondents informing it that it was in fact not the lowest bidder but was L-2 and was also informed and directed to keep on hold further proceedings in the rate contract and the NOA issued to them. The petitioner Janak Health Care being aggrieved, filed a representation before the authorities on 18.03.2016, but no steps were taken by the respondents.
7. It is submitted that in the meanwhile from 21.03.2016 onwards the petitioner Janak Health Care having been issued the NOA, started receiving orders 5 W.P Nos.7805/2016 & 16746/2016 from various purchasing authorities from all over M.P. and supplied the necessary Maternal and Child Health Equipments and Instruments to various hospitals in the State of M.P. and others for a sum of about Rs.60 lakhs. It is submitted that while the petitioner was doing so they were shocked to find out that the respondents had issued a fresh Notice Inviting Tender (NIT) on 07.04.2016 inviting bids for the same items and for the same period for which the NOA had been issued to the petitioner and, therefore, the petitioner immediately approached the respondent authorities whereafter they were served with the impugned order dated 21.04.2016 terminating their NOA and the tender proceedings. The petitioner Janak Health Care being aggrieved have filed W.P.No. 7805/2016.
8. The petitioner in W.P.No.16746/2016 Godrej & Boyce, while reiterating the same facts, has stated that Godrej & Boyce was in fact the lowest bidder and was found to be L-1 in the impugned tender proceedings. However, on objections being filed by Janak Health Care, the petitioner in W.P.No.7805/2016, and on certain objections being raised by the petitioner Godrej & Boyce, against Janak Health Care, the authorities found that the 6 W.P Nos.7805/2016 & 16746/2016 petitioner Godrej & Boyce did not fulfill the necessary eligibility qualifications and, therefore, disqualified Godrej & Boyce and issued the NOA in favour of Janak Health Care on 31.12.2015, which was subsequently revised on 13.01.2016.
9. It is submitted that the disqualification of the petitioner Godrej & Boyce was illegal and the award of contract to Janak Health Care, the petitioner in W.P.No.7805/2016, was contrary to law as the petitioner Godrej & Boyce was in fact the lowest bidder and was entitled to be awarded the contract.
10. The respondents have filed a return and have stated that though there were 34 bidders who responded to the online tender invited by them in reference to tender No. 29/2015, however as many as 32 of the bidders were found to be ineligible and were, therefore, disqualified. It is submitted that ultimately 2 bids were short-listed, namely, Godrej & Boyce, the petitioner in W.P.No.16746/2016, who was L-1 and Janak Health Care, the petitioner in W.P.No.7805/2016 who was L-2. It is submitted that objections were filed by both the petitioners before the authorities against each other 7 W.P Nos.7805/2016 & 16746/2016 which related to the technical qualifications prescribed by the respondents in the tender.
11. It is submitted that on examining the matter the respondents found that Godrej & Boyce did not possess the necessary European CE Certificate and, therefore, after finding that Godrej & Boyce was not qualified as per the tender conditions even though they were the lowest bidder, the notification of award was issued in favour of Janak Health Care Private Ltd., petitioner in W.P. No.7805/2016, on 31.12.2015. It is submitted that later on, as it was found that the rates in respect of the items had not been properly computed by including the tax elements etc., a revised NOA was issued to petitioner Janak Health Care on 13.01.2016.
12. The respondents have not disputed the fact that pursuant to issuance of the revised NOA on 13.1.2016, the petitioner Janak Health Care deposited the performance bank guarantee on 21.01.2016 and also submitted a signed proforma of the contract agreement before the authorities. They have, however, submitted that thereafter objections were filed by petitioner Godrej & Boyce and, subsequently, an audit objection was also raised by the Directorate of Audit & Accounts of M.P. in 8 W.P Nos.7805/2016 & 16746/2016 respect of the issuance of NOA to the petitioner Janak Health Care on the ground that in the tender proceedings only one bidder remained in the fray and, therefore, there was no competitive bidding as such in view of the CVC guidelines.
13. It is submitted that in view of the aforesaid aspects, the respondent authorities, in their meeting held on 03.03.2016, took a decision to cancel the entire tender proceedings and go in for fresh tender proceedings, therefore, the impugned communication dated 21.04.2016 was issued to the petitioner Janak Health Care informing it about the decision and cancelling the NOA issued in their favour.
14. It is submitted that as the decision to cancel the tender proceedings has been taken by the respondent authorities on 03.03.2016, therefore, the respondents looking to the urgency of purchasing the health care equipments immediately went in for issuing a fresh tender notice on 7.4.2016 which has also been assailed by the petitioners in the present petitions. The learned Senior Counsel appearing for the respondents submits that in such circumstances no fault can be found with the action taken by them or the impugned orders issued by 9 W.P Nos.7805/2016 & 16746/2016 them which are the subject matter of challenge in the present petitions.
15. The learned Senior Counsel for the respondents, objecting to the maintainability of the petitions, submits that the petitions filed by the petitioners deserve to be dismissed on account the availability of the Arbitration Clause in the contract and the petitioners be directed to invoke the same. It is submitted that even otherwise, as the present petitions relate to a purely contractual dispute, the petitioners be directed to approach the Civil Court and the petitions be dismissed as the issues raised herein cannot be decided in a writ petition.
16. The learned Senior Counsel for the respondents submits that the present petitions relate to a purely contractual dispute arising out of the tender proceedings and, therefore, in view of the law laid down by the Supreme Court in the cases of Kisan Sahkari Chini Mills and others vs. Vardan Linkers and others, (2008) 12 SCC 500, Rishi Kiran Logistics Private Ltd. vs. Board of Trustees of Kandla Port Trust and others, (2015) 13 SCC 233 and South Delhi Municipal Corporation vs. Ravinder Kumar and Another, (2015) 15 SCC 545, wherein the Supreme Court has 10 W.P Nos.7805/2016 & 16746/2016 categorically held that a writ in contractual matters is not maintainable and it is only the administrative decision taken by the authorities in the tender proceedings which can be subjected to judicial review and scrutiny under Articles 226 & 227 of the Constitution of India, therefore, the petitions filed by the petitioners be dismissed.
17. The learned Senior Counsel for the petitioners in reply submits that in terms of Clauses 41 and 42 of the General Instructions to Tenderers (GIT), a copy of which has been filed as Annexure P/1, the award of contract in favour of the petitioner stood concluded on issuance of the NOA on 13.1.2016. It is submitted that once the contract in favour of the petitioner stood concluded, the respondent authorities could not have cancelled the NOA by issuance of a simple notice without resorting to the procedure prescribed under Clause 24 of the General Conditions of Contract, which provides for issuance of a notice and following the proper procedure for termination of the contract.
18. It is submitted that as the issuance of the NOA under Clause 41 results in constituting a concluded contract in favour of the petitioner, therefore, even in 11 W.P Nos.7805/2016 & 16746/2016 the absence of any further steps being taken by the respondent authorities under Clause 42 of the GIT, the respondents could not have cancelled the NOA, moreso, as the petitioner had infact started executing the contract by supplying the health care equipments to various Chief Medical & Health Officers in the State of M.P. which fact is evident from a perusal of the documents filed by them on page 119 to 132 of the petition.
19. It is submitted that as there was a concluded contract between the parties, the impugned communication cancelling the NOA dated 21.04.2016 be quashed and the subsequent tender notice dated 07.04.2016 be also quashed and the respondent authorities be directed to accept the Maternal and Child Healthcare equipments and instruments that had been put up for purchase by the impugned tender proceedings, as the petitioner has a concluded rate contract in its favour for specified number of medical care equipments.
20. The learned Senior Counsel for the petitioners submits that in the facts and circumstances of the case, as the impugned act of the respondent authorities is 12 W.P Nos.7805/2016 & 16746/2016 violative of the petitioner's Fundamental Rights under Articles 14 and 19 of the Constitution of India, therefore, the petitioner cannot be relegated to the remedy available under the common law nor can the petitioner be prevented from invoking the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India, in view of the decisions of the Supreme Court rendered in the cases of State of Kerala and others vs. M. K. Jose, (2015) 9 SCC 433 and ABL International Ltd and another vs. Export Credit Guarantee Corporation of India and others, (2004) 3 SCC 553.
21. The learned Senior Counsel of the petitioner submits that the issuance of a NOA amounts to a concluded contract which cannot be rescinded or terminated in view of the law laid down by the Supreme Court in the cases of Oil and Natural Gas Corporation Petro Additions Ltd. vs. Daelim Industrial Company Ltd. Korea, (2015) 13 SCC 176, and as the arbitrator, under the contract, has no right to restore the same in view of the decision of this Court rendered in the case of M/s Thapa Petrol Pump vs. Hindustan Petroleum Corporation and another, (W.A. No. 13 W.P Nos.7805/2016 & 16746/2016 819/2014) decided on 05.11.2014, therefore, the petitioner has no other remedy but to approach this Court seeking quashment of the impugned orders and for seeking a direction to restore its contract to enable it to perform its contractual obligations thereunder.
22. The petitioner Godrej & Boyce in W.P. No.16746/2016 submits that the petitioner infact was the L-1 bidder as its rates for the Maternal and Child Healthcare equipments was the lowest, however as the petitioner Godrej & Boyce was disqualified on imaginary and unnecessary grounds only on the objection of petitioner Janak Health Care though petitioner Godrej & Boyce fulfilled all the necessary eligibility conditions, therefore, the award of NOA to petitioner Janak Health Care was illegal and has rightly been cancelled. It is submitted that in such circumstances the rate contract be awarded to the petitioner Godrej & Boyce or in the alternative the respondents be directed to take up further proceedings in respect of the fresh tender notice issued by them on 07.04.2016 by dismissing the petition filed by petitioner Janak Health Care.
23. While both the parties have taken this Court through various decisions of the Supreme Court, we may 14 W.P Nos.7805/2016 & 16746/2016 at the very outset state that in view of the law laid down by the Supreme Court in the several judgments cited by the petitioners, we agree with the petitioners that a petition such as the one filed by the petitioner before this Court is neither barred nor is it not maintainable as asserted by the petitioners. However, the issue raised before this Court is not whether filing of such petitions is barred or not but is whether such a petition should be entertained by this Court or not.
24. The Supreme Court in the case of Kisan Sahkari Chini Mills Ltd. (supra), has held that while in contractual matters a petition challenging the administrative decision taken by the authorities may be subjected to judicial review, in case, it is arbitrary or unreasonable, however, the issue as to whether there is a concluded contract between the parties, the validity of an order cancelling such a concluded contract between the parties and the adjudication of contractual rights arising therefrom cannot be entertained and the petitioners should be relegated to the remedies available for the same before the Civil Court as under:-
"20. Finding serious irregularities in the letter dated 26.3.2004 issued by the Assistant Cane Commissioner, which directed supply of 85,000 15 W.P Nos.7805/2016 & 16746/2016 quintals of molasses by five sugar mills to two distilleries through first respondent at a very low price, the Secretary (Sugar), on 8.4.2004, stayed the operation of the said allotment letter.
21. & 22. xxx xxx xxx
23. If the dispute was considered as purely one relating to existence of an agreement, that is, whether there was a concluded contract and whether the cancellation and consequential non- supply amounted to breach of such contract, the first respondent ought to have approached the Civil Court for damages. On the other hand, when a writ petition was filed in regard to the said contractual dispute, the issue was whether the Secretary (Sugar), had acted arbitrarily or unreasonably, in staying the operation of the allotment letter dated 26.3.2004 or subsequently cancelling the allotment letter. In a civil suit, the emphasis is on the contractual right. In a writ petition, the focus shifts to the exercise of power by the authority, that is whether the order of cancellation dated 24.4.2004 passed by the Secretary (Sugar), was arbitrary or unreasonable. The issue whether there was a concluded contract and breach thereof becomes secondary. In exercising writ jurisdiction, if the High Court found that the exercise of power in passing an order of cancellation was not arbitrary and unreasonable, it should normally desist from giving any finding on disputed or complicated questions of fact as to whether there was a contract, and relegate the petitioner to the remedy of a civil suit. Even in cases where the High Court finds that there is a 16 W.P Nos.7805/2016 & 16746/2016 valid contract, if the impugned administrative action by which the contract is cancelled, is not unreasonable or arbitrary, it should still refuse to interfere with the same, leaving the aggrieved party to work out his remedies in a Civil Court. In other words, when there is a contractual dispute with a public law element, and a party chooses the public law remedy by way of a writ petition instead of a private law remedy of a suit, he will not get a full fledged adjudication of his contractual rights, but only a judicial review of the administrative action. The question whether there was a contract and whether there was a breach may, however, be examined incidentally while considering the reasonableness of the administrative action. But where the question whether there was a contract, is seriously disputed, the High Court cannot assume that there was a valid contract and on that basis, examine the validity of the administrative action.
24. In this case, the question that arose for consideration in the writ petition was whether the order dated 24.4.2004 passed by the Secretary (Sugar), cancelling the allotment letter dated 26.3.2004 was arbitrary and irrational or violative of any administrative law principles. The question whether there was a concluded contract or not, was only incidental to the question as to whether cancellation order dated 24.4.2004 by the Secretary (Sugar), was justified. As the case involved several disputed questions in regard to the existence of the contract itself, the High Court ought to have referred the first respondent to a 17 W.P Nos.7805/2016 & 16746/2016 Civil Court. But the High Court in exercise of its writ jurisdiction, proceeded as if it was dealing with a pure and simple civil suit relating to breach of contract.
25. When certain disputed facts cropped up, the High Court adopted a strange procedure of calling the General Managers of Sitarganj Sugar Mills and Nadehi Sugar Mills and putting some questions to them and recording their statements. The High Court reached the conclusion that there was a concluded contract between the five sugar mills and the first respondent for sale of 85,000 quintal of molasses at a price of Rs. 127/- per quintal. Thereafter, it formulated the question for consideration in the writ petition as 'whether the State Government was competent to cancel the valid and completed contract', and held that having regard to the doctrines of part performance, legitimate expectation, estoppel and acquiescence, the cancellation of the allotment letter dated 26.3.2004 issued by the Assistant Cane Commissioner was unsustainable and the first respondent was entitled to lift the entire quantity of 85,000 quintal (less 7,465.9 quintal already lifted), and he was also entitled to extension of time for taking delivery by one month and seven days from the date of the judgment.
26. In this view of the matter, two questions arise for our consideration. They are:
(i) Whether the High Court was right in concluding/assuming that there was a valid contract?18 W.P Nos.7805/2016 & 16746/2016
(ii) Whether the High Court was justified in quashing the cancellation order dated 24.4.2004 passed by Secretary, (Sugar)?
27. Before a court can record a finding as to whether there is a contract, it has to find out who are the parties to the contract, when and what was the offer, whether there was an acceptance, and whether the offer and acceptance were valid. None of these were addressed nor answered by the High Court.
28. to 32. xxx xxx xxx
33. In this case, the first allotment by the Assistant Cane Commissioner was on 15.3.2004 permitting the first respondent to lift 5000 quintals from Nadehi Mills at Rs. 127/- per quintals. This was wholly illegal as it was not in pursuance of any concluded contract and as first respondent was not a bona fide consumer. The first respondent submitted the authorization letter from the Patiala Distillers and the Chandigarh Distillers only on 14.3.2004. If there was already a concluded contract with the first respondent on 3.3.2004, there could not have been any change in the contract by submitting an authorization letter from Patiala Distillers and Chandigarh Distillers on 14.3.2004. There was also no correspondence or negotiations subsequent to 3.3.2004 to show that any contract was concluded in favour of Patiala Distillers or Chandigarh Distillers. Therefore, when the letter dated 26.3.2004 was issued by the Assistant Cane 19 W.P Nos.7805/2016 & 16746/2016 Commissioner authorizing the first respondent to lift 85,000 quintals of molasses it was not in pursuance of any concluded contract but was unilateral unauthorized act on the part of the Assistant Cane Commissioner which would not bind the State Government."
25. The same view has been taken by the Supreme Court in the case of Rishi Kiran Logistics Private Ltd. (supra), after taking into consideration the decision in the case of Kisan Sahkari Chini Mills (supra), in paras 10, 20, 21, 25, 27, 33, 37, 38, 40 and 41 as under:-
10. In M/s. Nikhil Adhesive Limited vs. Kandla Port Trust, 2011 (2) GLH 283, after taking note of the factual background starting from the issuance of tender and culminating in cancellation of said tender process by the impugned Resolution No. 108, the High Court found that the challenge to the said resolution was predicated on the following premise:-
I. With the issuance of LoI to the successful highest bidder, a concluded contract was arrived at between the parties and, therefore, it was not permissible for the Port Trust to terminate the tender process thereafter.
II. Doctrine of promissory estoppel was applicable in as much as by its actions and conduct, the Port Trust had given a clear and unequivocal promise, 20 W.P Nos.7805/2016 & 16746/2016 with intention to create legal relation to arise in future and the Port Trust i.e. the promissory was bound by the said promise and to honour its commitment and not to back out of its obligation.
III. The action of the Port Trust, which was an instrumentality of the state being "other authority" under Article 12 of the Constitution, was arbitrary as it was not based on any rational or relevant principle. There amounted to infraction of Article 14 of the Constitution.
11. to 19. xxx xxx xxx
20. It is more than obvious that larger public interest demanded fresh tender process in order to receive maximum amount as the premium of Rs. 612/- per square metre originally fixed and even the quotation of Rs. 3,000/- and odd of the appellant which were found to be highest, was far below the marked rate. Further, even when total premium amount to be paid by the appellant was to the tune of several crores for each plot at which LoI was issued in the year 2006, the appellant had paid only Rs. 3 lakhs by way of EMD in each case.
No further amount was paid for want of final allotment letter. However before taking a final decision in the matter, the Port Trust sought legal opinion specifically on the point as to whether it would be prudent to cancel 2005 tender process and start fresh process so as to fetch the realistic marked price in accordance with present market value of the land. Based upon the expert legal 21 W.P Nos.7805/2016 & 16746/2016 opinion i.e. there was no legal impediment in cancellation of the tender process, the decision was taken by the Port Trust to cancel the earlier tender process and to start fresh process.
21. On the aforesaid facts there is hardly any scope for argument that the decision of the Port Trust is arbitrary. It is based on valid considerations. We have to keep in mind that while examining this aspect we are in the realm of administrative law. The contractual aspect of the matter has to be kept aside which would be examined separately while dealing with the issue as to whether there was a concluded contract between the parties. This distinction is lucidly explained in Kisan Sehkari Chini Mills & Ors. v. Vardan Linkers & Ors.; (2008) 12 SCC 500. Keeping in mind this distinction between the two, we are not required to bring in the contractual elements of the case while dealing with the administrative law aspects.
22. to 24. xxx xxx xxx
25. Lucid enunciation on the scope of judicial review of administrative action, that too in tender matters can be found in Tata Cellular v. Union of India, 1994 (6) SCC 651, where following discussion is worthy of extraction:[SCCpp.675-78 & 68, paras 70, 74, 77 & 81) "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. 22 W.P Nos.7805/2016 & 16746/2016 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 tneder 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.
* * * * * *
74. Judicial review is concerned with reviewing not the merits of the decision in support of which the application for judicial review is made, bu the decision making process itself.
* * * * * *
77. The duty of the court is to confine itself to the question of legality. Its concern should be:
(1) Whether a decision making authority exceeded its powers?
(2) committed an error of law, 23 W.P Nos.7805/2016 & 16746/2016 (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 can be classified as under:
(i) Illegality: This means the decision maker must understand correctly the law that regulates his decision making power and must give effect to it.
(ii) Irrationally, namely Wednesbury unreasonableness.
(iii) Procedural impropriety.
The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact in R.V. Secretary of State for the Home Department, ex Brind Lord Diplock (1991) 1 AC 694, Lord Diplock refers specifically to one development namely, the possible 24 W.P Nos.7805/2016 & 16746/2016 recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should 'consider whether something has gone wrong of a nature and degree which requires its intervention.' * * * * * *
81. Two other facets of irrationality may be mentioned.
(1) It is open to the court to review the decision maker's evaluation of the facts. The court will intervene where the facts taken as a whole could not logically warrant the conclusion of the decision maker. If the weight of facts pointing to one course of action is overwhelming, then a decision the other way cannot be upheld. Thus, in Emma Hotels Ltd. v. Secretary of State for Environment, (1980) 41 P & CR 255, the Secretary of State referred to a number of factors which led him to the conclusion that a non resident's bar in a hotel was operated in such a way that the bar was not an incident of the hotel use for planning purposes, but constituted a separate use. The divisional court analysed the factors which led the Secretary of State to that conclusion and, having done so, set it aside. Donaldson, L.J. said that he could not see on what basis the Secretary of State had reached his conclusion.
25 W.P Nos.7805/2016 &16746/2016
(2) A decision would be regarded as unreasonable if it is impartial and unequal in its operation as between different classes. On this basis in R.V. Barnet London Borough Council, ex. P. Johnson, (1989) 88 LGR 73 (DC), the condition imposed by a local authority prohibiting participation by those affiliated with political parties at events to be held in the authority's parks was struck down." (emphasis in original)
26. xxx xxx xxx
27. In so far as argument of malafides is concerned, apart from bald averment, there are no pleadings and there is not even a suggestion as to how the aforesaid decision was actuated with malafides and on whose part. Even at the time of arguments Mr. Vikas Singh did not even advert to this aspect. In fact, the entire emphasis of Mr. Vikas Singh was that since there was a concluded contract between the parties, cancellation of such a contract amounted to arbitrariness. As already pointed out above that can hardly be a ground to test the validity of a decision in administrative law. For the sake of argument, even if you presume that there a concluded contract, mere termination thereof cannot be dubbed as arbitrary. A concluded contract if terminated in a bonafide manner, that may amount to breach of contract and certain consequences may follow thereupon under the law of contract. However, on the touch stone of parameters laid down in the 26 W.P Nos.7805/2016 & 16746/2016 administrative law to adjudge a decision as are arbitrary or not, when such a decision is found to be bonafide and not actuated with arbitrariness, such a contention in administrative law is not admissible namely how and why a concluded contract is terminated.
28. to 32. xxx xxx xxx
33. We have already indicated above that the of the doctrine of fairness as well as promissory estoppel are in the realm of administrative law, whereas the issue as to whether a concluded contract was entered into between the parties and if so, the question of enforcement of such a contract would be in the field of law of contract. Bearing in mind this distinction becomes more important as the High Court was dealing with the petition filed by the appellant under Article 226 of the Constitution.
34. to 36. xxx xxx xxx
37. The question before the Supreme Court in Kisan Sahkari Chini Mills Ltd. 2008 (12) SCC 500 were: (i) Whether the High Court was right in concluding/assuming that there was a valid contract? and (ii) Whether the High Court was justified in quashing the order of the Secretary (Sugar)? This court answered the aforesaid questions in the negative and set aside the judgment of the High Court holding that:(SCC pp.501-02) "Ordinarily, the remedy available for a party complaining of breach of contract lies for seeking damages. He would be entitled to the relief of specific 27 W.P Nos.7805/2016 & 16746/2016 performance, if the contract was capable of being specifically enforced in law. The remedies for a breach of contract being purely in the realm of contract are dealt with by civil courts.
The public law remedy, by way of a writ petition under Article 226 of the Constitution, is not available to seek damages for breach of contract or specific performance of contract.
However, where the contractual dispute has a public law element, the power of judicial review under Article 226 may be invoked."
It is clear that the aforesaid case is closest to the facts of the present case.
38. & 39. xxx xxx xxx
40. In so far as the issue regarding concluded contract in the present case is concerned, this falls squarely in the realm of the contract law, without any hue or shade of any public law. In fact, that is not even pleaded or argued. At the same time, whether there was a concluded contract or not is seriously disputed by the respondents and, therefore, in the first instance it was not even necessary for the High Court to go into this issue and could have relegated the appellant to ordinary civil remedy. We are conscious of the position that merely because one of the authorities raises a dispute in regard to the facts, it may not be always necessary to relegate the parties to a suit. This was so stated in ABL International Ltd. & Anr. v. Export Credit Guarantee Corporation 28 W.P Nos.7805/2016 & 16746/2016 of India Ltd. & Ors. 2004 (3) scc 553; in the following manner:-(SCC p.573,para 37) "37. In our opinion, this limited areas of dispute can be settled by looking into the terms of the contract of insurance as well as the export contract, and the same does not require consideration of any oral evidence or any other documentary evidence other than what is already on record. The claim of the contesting parties will stand or fall on the terms of the contracts, interpretation of which, as stated above, does not require any external aid."
41. At the same time, as already noted in Kisan Sahkari (Supra) this Court had taken a view that where the question whether there was a contract or not is seriously disputed, the court is not to assume that there was a valid contract and on that basis examined the validity of the administrative action. Therefore, keeping in view the aforesaid understanding of the law, a very limited inquiry on this aspect is permissible."
26. In the light of the law laid down by the Supreme Court, limiting the issue raised in this petition in terms of and to the limited extent of judicial review permissible in accordance with the law laid down therein, we proceed to examine the validity of the impugned order to determine whether it is arbitrary or unreasonable. 29 W.P Nos.7805/2016 & 16746/2016
27. Before we proceed any further in the matter and record a conclusion in respect of the aforesaid issues, it is necessary to take into consideration certain Clauses of the General Instructions to Tenderers filed by the petitioner in W.P. No.7805/2016 as Annexure P/1. The dispute involved in the present petition basically revolves around interpretation of Clauses 38, 39, 41, 42, 43 and 45 of the General Instructions to Tenderers, which are reproduced below:-
38. Tender Inviting Authority's Right to accept any tender and to reject any or all tenders.
38.1 The Tender Inviting Authority reserves the right to accept in part or in full any tender or reject any or more tender(s) without assigning any reason or to cancel the tendering process and reject all tenders at any time prior to award of contract, without incurring any liability, whatsoever to the affected bidder or Bidders.
39. Award Criteria 39.1 Subject to GIT clause 38 above, the contract will be awarded to the lowest evaluated responsive bidder decided by the Tender Inviting Authority in terms of GIT Clause 36.
40. xxx xxx xxx
41. Intimation Letter to successful bidder / Notification of Award 30 W.P Nos.7805/2016 & 16746/2016 41.1 Before expiry of the tender validity period, the Tender Inviting Authority will notify the successful bidder(s) in writing, only by registered / speed post or by e-order (to be confirmed by registered / speed post) that its tender for goods & services, which have been selected by the Tender Inviting Authority, has been accepted, also briefly indicating therein the essential details like description, specification and quantity of the goods & services and corresponding prices accepted. The successful bidder must furnish to the Tender Inviting Authority the required performance securitywithin21 days along with the contract agreement from the date of dispatch of this notification, failing which the EMD will forfeited and the award will be cancelled.
Relevant details about the performance security have been provided under GCC Clause 5 under Section IV.
41.2 The Notification of Award shall constitute the conclusion of the Contract.
41.3 The rates quoted and accepted will be binding on the bidder for the duration of currency of contract and any increase in price will not be entertained till the completion of this contract period. Accordingly this clause will be applicable for all orders placed during the contract period. 41.4 All supply orders shall be placed by the TIA/Ordering Authority (ies). All terms and conditions of supply order (s) shall be governed by the conditions of this tender document. Relevant details about the performance security have been provided under GCC Clause 5 under Section IV.
31 W.P Nos.7805/2016 &16746/2016
42. Issue of Contract 42.1 Promptly after notification of award, the Tender Inviting Authority will mail the contract form (as per Section XV) duly completed and signed, in duplicate, to the successful bidder by registered / speed post. 42.2 Within twenty one days from the date of the Notification of Award (at GIT Clause 41 above), the successful bidder shall return the original copy of the contract, duly signed and dated, to the Tender Inviting Authority by registered / speed post.
43. Non-receipt of Performance Security and Contract by the Tender Inviting Authority/Ordering Authority 43.1 Failure of the successful bidder in providing performance security and / or returning contract copy duly signed in terms of GIT clauses 41 and 42 above shall make the bidder liable for forfeiture of its EMD and, also, for further actions by the Tender Inviting Authority against it as per the clause 24 of GCC - Termination of default.
44. xxx xxx xxx
45. Publication of Tender Result 45.1 The name and address of the successful bidder(s) receiving the contract(s) will be mentioned in the notice board/bulletin/web site of the Tender Inviting Authority."
28. On a conjoint reading of the aforesaid Clauses, it is apparent that the Tender Inviting Authority has a right to accept or reject a tender or tenders without assigning 32 W.P Nos.7805/2016 & 16746/2016 any reason or to cancel the tender process at any time prior to the award of the contract. Under Clause 39 of the General Instructions to Tenderer, the criteria for awarding the contract will be to the lowest evaluated responsive bidder decided by the Tender Inviting Authority in terms of GIT Clause 36.
29. Clause 41 of GIT provides that the tender inviting authority shall notify the successful bidder in writing that his bid has been accepted and on the successful bidder, being so informed, must furnish to the tender inviting authority, the required performance security deposit within 21 days alongwith the draft of the contract agreement, failing which the earnest money deposited would be forfeited and the award would be cancelled. Clause 41.2 provides that the notification of award shall constitute the conclusion of the contract. Clause 42, which relates to the issue of the contract, provides that promptly after the issuance of NOA and receiving the contract agreement from the successful bidder, the tender inviting authority shall mail the contract form duly completed and signed in duplicate to the successful bidder by registered/speed post, whereafter the successful bidder shall return the original copy of the contract duly signed and dated by him to the tender 33 W.P Nos.7805/2016 & 16746/2016 inviting authority by registered/speed post. Clause 43, lays down that on the failure of the successful bidder to provide the performance security and/or returning the contract copy without duly signed in terms of the GIT Clauses 41 and 42, the bidder shall be liable for forfeiture of his earnest money deposited as well as for further action by the tender inviting authority against him as per Clause 24 of the General Conditions of Contract relating to termination of contract. Clause 45 provides that the name and address of the successful bidder who receives the contract would be mentioned in the notice board / bulletin / website of the tender inviting authority. It is also worth noting that the G.I.T makes it absolutely clear that the contract would be for a period of one year from the date of signing the contract.
30. From the facts of the present case, it is evident that, after the tenders were received by the respondent authorities, though the petitioner Godrej & Boyce was initially the lowest and L-1 bidder, however in view of the objections filed by the rival parties, as the petitioner Janak Health Care was the only tenderer who remained in the fray, the notification of award in its favour was issued by the authorities initially on 31.12.2015 and 34 W.P Nos.7805/2016 & 16746/2016 thereafter, the revised NOA was finally issued on 13.1.2016 pursuant to which the petitioner Janak Health Care submitted the necessary performance bank guarantee on 21.1.2016 alongwith the proforma of the contract agreement, however, the respondent authorities instead of proceeding further immediately issued a letter to the petitioner Janak Health Care on 22.1.2016 directing them to hold any type of process for the rate contract and supply of 8 items of tender No.29 by stating that the petitioner Janak Health Care was L-2 as per the attached sheet. The petitioner Janak Health Care was directed to keep on hold the process of NOA till the next decision.
31. It is also undisputed that after issuance of the communication dated 22.1.2016, no further steps relating to completing and signing the contract agreement submitted to them by the petitioner was taken up, nor was the signed and completed contract sent to the petitioner Janak Health Care by the respondents nor was such a signed agreement by the respondent, countersigned by the petitioner and returned in original to the respondents as required by Clauses 42.1 and 42.2. It is also undisputed that the respondents, in the instant case, have not forfeited the 35 W.P Nos.7805/2016 & 16746/2016 performance bank guarantee submitted by the petitioner Janak Health Care, nor have they taken any steps under Clause 24 of the General Conditions of the Contract, terminating the contract on account of default. Infact facts on record brought by the parties indicate that the respondents, pursuant to the audit objection, the CVC guidelines and the objection filed by Godrej & Boyce, finding that the petitioner Janak Health Care remained the single and only bidder in the contract, cancelled the NOA issued to the petitioner Janak Health Care under Clause 41 of the agreement and refunded the performance bank guarantee as well as the Earnest Money deposited by the petitioner Janak Health Care on 3.5.2016 by Annexure R-5 to which the petitioner objected on the ground that it was in violation of the interim order passed by this Court in the present petition.
32. When the aforesaid facts are taken into consideration in view of Clauses 38, 39, 41, 42, 43 and 45 of the GIT, it is apparent that prima facie the petitioner Janak Health Care was found to be the successful bidder and was issued a notification of award. However, subsequent steps as enumerated in Clause 42 were not taken for actually signing and entering into a 36 W.P Nos.7805/2016 & 16746/2016 registered agreement and contract of the nature which has been defined in Clauses 2(1)(ii) of the GIT which defines the same to mean the written agreement entered into between the tender inviting authority and/or the consignee and the supplier together with all documents mentioned therein and including all attachments, annexures etc. therein.
33. It is also apparent that in the absence of any such written agreement and contract between the parties, the respondents have not taken any steps under Clause 43 relating to forfeiture of the earnest money deposited or the performance bank guarantee submitted by Janak Health Care or for termination of the contract as per Clause 24 of the General Conditions of Contract as no such written contract had come into existence. The respondents have infact cancelled the NOA issued under clause 41 of the GIT on the ground that the same was not in public interest as there was no competitive bidding on account of the fact that the petitioner Janak Health Care was the single and only tenderer remaining in the fray as well as in view of the audit objections, the CVC guidelines as well as the objection of the other tenderer Godrej & Boyce who had infact quoted lesser rates for the same items and had initially been enlisted 37 W.P Nos.7805/2016 & 16746/2016 as L-1. The respondents have brought on record the decision taken by them on 3.3.2016 to that effect as Annexure R-6.
34. On a perusal of the impugned communication issued to the petitioner on 21.4.2016, it appears that the said communication has been served upon the petitioner by the respondents informing it regarding cancellation of the NOA issued in their favour and for returning the performance bank guarantee with reference to the decision taken by them on 3.3.2016, though it is an admitted fact that the decision dated 3.3.2016 taken by the respondent authorities to cancel the single tender in favour of petitioner Janak Health Care was never informed or communicated to petitioner Janak Health Care. However, at the same time, it is pertinent to note that though this decision taken by the respondents to cancel the NOA dated 3.3.2016 was placed on record by the respondents alongwith the return before this Court, the same has not been challenged and is not the subject matter of dispute in the present petitions and the only order challenged by the petitioner Janak Health Care in W.P.7805/2016 is the communication dated 21.4.2016 cancelling the NOA issued in their favour. 38 W.P Nos.7805/2016 & 16746/2016
35. Though the learned Senior Counsel for the petitioners submits that the respondents in the past as well as in tender No.30, which has been quoted by the petitioner Janak Health Care, had proceeded further in the contract by treating the NOA issued to the petitioner as a concluded binding contract between the parties, however, while continuing with the contract for purchase of health care materials from the petitioner in respect of tender No.30, the respondents have subjected the petitioner to hostile discrimination only in respect of contract No.29 by cancelling it and by treating it as an unconcluded contract. It is submitted that such a discriminatory treatment had been meted out to the petitioner inspite of the fact that the provision of Clause 42 of the GIT has not been followed even in tender No.30 which has been awarded to the petitioner and, therefore, entering into a written agreement is not mandatory and compliance of the procedure under Clause 42 is also not mandatory as reflected from the steps taken by the respondents in respect to tender No.30, inspite of which the petitioner has been deprived of its rights in that regard in tender no.29 wherein in similar circumstances the respondents have not treated the contract to be a concluded one.
39 W.P Nos.7805/2016 &16746/2016
36. In response to the same, the learned Senior Counsel for the respondents has filed an affidavit bringing on record the signed agreement between the parties in respect of tender no.30 which fact is again disputed by the learned Senior Counsel for the petitioner by stating that infact the said written contract in Tender No.30 is still not concluded and finalized in terms of Clause 42 of the GIT as counter signing and other necessary procedural requirements have not been formally undertaken by the respondent authorities.
37. From the aforesaid rival contention of the learned counsel for the parties it is apparent that there is serious dispute between the parties in this regard which cannot be gone into by this Court under Article 226 of the Constitution of India, moreso in view of the decision rendered by the Supreme Court in the cases of Kisan Sahkari Chini Mills Ltd. (supra) and Rishi Kiran Logistics Private Ltd. (supra).
38. On properly considering the clauses of the GIT in juxtaposition with the facts of the case, we are of the considered opinion that while the issuance of the NOA would amount to conclusion of the proceedings for award of the contract, however, it would not bring into 40 W.P Nos.7805/2016 & 16746/2016 existence a binding and concluded contract between the parties which would come into existence only on the due and full execution of the written contract between the parties. We are constrained to say so in view of the specific clauses of the GIT defining the word "contract" to mean the signed and written contract; the clause providing that the period of contract would be one year from the date of signing of the written contract and clause 43 of the GIT which enumerates the consequences of not executing the written contract even though the NOA has been issued. We are, therefore, of the opinion that mere issuance of a NOA would not bring into existence a final binding written contract between the parties.
39. In the backdrop of the conclusion recorded by us, when the validity of the decision and the decision making process of the impugned communication dated 21.4.2016, which was issued pursuant to the decision of the respondents dated 3.3.2016 which has not been challenged in this petition is examined, it is observed that though a NOA was issued in favour of the petitioner on 13.1.2016 and it submitted the performance bank guarantee pursuant thereto within the stipulated period 41 W.P Nos.7805/2016 & 16746/2016 on 21.1.2016, however in view of certain objections raised by petitioner Godrej & Boyce, the audit objection as well as the CVC guidelines, the respondents immediately on the next day itself, i.e. on 22.1.2016 put the NOA on hold informing the petitioner that it was infact L-2 and that further steps pursuant to the rate contract should not be taken up by it. It is also apparent that after issuing the impugned hold order, the respondents examined the matter again on 3.3.2016 and thereafter, taking into consideration the fact that though two persons namely; M/s Godrej & Boyce Ltd. and M/s Janak Health Care were shortlisted, as responsive, however, subsequently on objections being filed by the petitioner Janak Health Care, M/s Godrej & Boyce Ltd. was declared as non-responsive on account of which the petitioner Janak Health Care remained the single tenderer in the fray as well as the fact that the audit authorities have also taken objection in respect of the award of the tender to petitioner Janak Health Care as there were no contesting rates and as the petitioner Janak Health Care was the only tenderer remaining in the fray and that the amount for which the purchases have to be made was huge and that there were no contesting or comparative rates for the Health Care equipments, 42 W.P Nos.7805/2016 & 16746/2016 took a decision to cancel the NOA issued in favour of petitioner Janak Health Care in respect of the 9 items awarded to it for which the NOA had been issued to the petitioner Janak Health Care in tender No.29 and which had been put on hold and also took a decision to take up fresh tender proceedings for the aforesaid items.
40. The respondents in the return and the petitioner in W.P. 16746/2016 have also stated that infact the rates quoted by petitioner Godrej & Boyce were much less than the rates quoted by the petitioner Janak Health Care, however, the petitioner Godrej & Boyce was declared non-responsive on account of technical objections which were raised by petitioner Janak Health Care. The respondents in the return have stated that in view of the aforesaid facts the respondents, being a public authority, took a decision to cancel the NOA with a view to ensure transparency and to make sure that the process of awarding of the contract was free, fair and open.
41. In view of the aforesaid facts and circumstances, we are of the considered opinion that no fault can be found with the impugned administrative decision taken by the respondent authorities on 21.4.2016 cancelling the NOA issued in favour of the petitioner Janak Health 43 W.P Nos.7805/2016 & 16746/2016 Care nor can the same be said to be arbitrary or unreasonable specifically in view of the law laid down by the Supreme Court in the cases of Rajasthan Housing Board and another vs. G. S. Investments and another (2007) 1 SCC 477, Laxmikant vs. Satyawan (1996) 6 SCC 208, Haryana State Agricultural Marketing Board and others vs. Sadhu Ram (2008) 16 SCC 405, Meerut Development Authority vs. Association of Management Studies and another, (2009) 6 SCC 171 and of this Court in the case of Sanjay Agrawal vs. M. P. Housing and Infrastructure and others, (2013) 1 M.P.L.J 308, wherein it has been held that merely because a person is a successful bidder in the auction/tender proceedings, he does not acquire any indefeasible right for issuance of a contract to him moreso where the cancellation of the tender proceedings is not shown to be malafide, unfair or arbitrary.
42. As far as the contention of the petitioners regarding working out and performing part of the contract is concerned, it is pertinent to note that after issuance of the NOA to the petitioner on 13.1.2016, the NOA was put on hold by the respondents on 22.1.2016. It is also an admitted and undisputed fact that as no written contract 44 W.P Nos.7805/2016 & 16746/2016 was entered into between the parties and the name of the petitioner Janak Health Care was not reflected by the respondents as the successful bidder in the notice board / bulletin / website by the Tender Inviting Authority and in such circumstances the petitioner had been clearly informed and infact directed not to take any further steps in the rate contract and, therefore, we are of the considered opinion that even if certain items were supplied by the petitioner Janak Health Care to certain purchasing authorities inspite of having been directed not to do so, that would not result in creating an irrevocable contract in their favour, specially as the NOA and the rate contract had been put up on hold by the respondents and was ultimately cancelled by them and that admittedly no written agreement was entered into between the parties.
43. It is noteworthy that on a query being made by this Court on the assertion of the learned Senior Counsel for the petitioners, the respondents have filed an affidavit on 30.3.2017 before this Court alongwith documents and have stated that they had not permitted or authorized any person to purchase health care material from petitioner Janak Health Care, however by virtue of the fact that they had been issued a NOA for Tender No.29 45 W.P Nos.7805/2016 & 16746/2016 some orders were placed upon them by one of the CM & HO but thereafter the respondents, on coming to know of the same, issued strict instructions for not undertaking any purchase from the petitioner Janak Health Care and infact also issued a show cause notice to the CM & HO, Datia, vide document Annexure A-3 filed alongwith the affidavit. The respondents have also stated that before the said clarification could be issued, health care materials were purchased by some CM & HO from petitioner Janak Health Care for a sum of about Rs.62 Lakhs and that the petitioner has been paid for the health care materials supplied by them to the CM&HO concerned. It is, however, stated that the aforesaid purchases were made by the CM&HO under the mistaken impression that the contract had been awarded to petitioner Janak Health Care without taking note of the fact that the NOA had been put on hold and that there was no written agreement or contract between the parties as required by Clause 42 of the GIT, nor had the petitioner been notified as the successful bidder in the notice board / bulletin / website of the tender inviting authority.
44. There is yet another important reason for which we uphold the order cancelling the NOA. From a perusal of 46 W.P Nos.7805/2016 & 16746/2016 the document, Annexure P-6, it is apparent that online tender for supply of Maternal and Child Healthcare equipments was for a period of one year from the date of "signing of the contract" and apparently in the instant case there is no signed contract between the parties. It is also clear that while the NOA was issued in favour of the petitioner Janak Healthcare on 13.1.2016 and was put on hold on 22.1.2016, therefore, as no signed contract came into existence between the parties, the period of one year for which the tender was issued is now over and, therefore, no relief in this regard can be granted. It is noteworthy that even from the date of issuance of the NOA one year has already elapsed.
45. In view of the aforesaid facts and circumstances, while we uphold the order passed by the respondents dated 21.4.2016, cancelling the NOA issued to petitioner Janak Health Care, however, in view of the law laid down by the Supreme Court referred to in the preceding paragraphs, we refrain from entering into the other purely contractual issues raised by the petitioners in the present petitions leaving it to the discretion of the petitioners to take them up, if so advised, before the competent Civil Court.
47 W.P Nos.7805/2016 &16746/2016
46. The petitions filed by the petitioners, are accordingly, dismissed.
(R. S. JHA) (A. K. JOSHI) JUDGE JUDGE mms/-