Orissa High Court
Ms. Sical Logistics Ltd. vs Mahanadi Coalfields Limited And Others on 8 September, 2017
Equivalent citations: AIR 2018 (NOC) 253 (ORI.)
Author: Vineet Saran
Bench: Vineet Saran
HIGH COURT OF ORISSA : CUTTACK
W.P.(C) No. 5272 of 2017
In the matter of an application under Article 226 of the
Constitution of India.
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M/s. Sical Logistics Ltd. ........ Petitioner
AFR -Versus-
Mahanadi Coalfields Limited
and others ......... Opp. Parties
For petitioner : Mr. S.K. Setty, Sr. Counsel and
Mr. J. Das, Sr. Counsel
along with M/s. A.N. Das,
N. Sarkar, E.A. Das and M. Muduli,
Advocates.
For opp. parties : Mr. S.D. Das, Sr. Counsel
along with M/s D. Mohanty,
A. Mishra, B.P. Panda, D. Behera,
H.K. Behera and H. Mohanty,
Advocates.
M/s. A. Pattnaik, S. Mohapatra,
S. Pattnaik, R. Pati, P.P. Mulia,
S.P. Maharana and S. Satpathy,
Advocates.
(For intervenor)
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PRESENT
THE HONOURABLE THE CHIEF JUSTICE MR. VINEET SARAN
AND
THE HONOURABLE DR. JUSTICE B.R. SARANGI
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Date of hearing : 23.08.2017 :: Date of judgment: 08.09.2017
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DR. B.R. SARANGI, J M/s. Sical Logistics Limited, a company
registered under the Companies Act, 1913, has filed this
application challenging the order dated 17.03.2017 cancelling e-
tender notice dated 13.10.2016, as well as consequential re-
tender notice issued on 20.03.2017 on the ground that the same
is arbitrary, discriminatory and mala fide.
2. The factual matrix of the case is that the petitioner is
one of the India's leading integrated logistics solutions providers.
It has over five decades of experience in providing end to end
logistic solutions. As such, the petitioner has made significant
investments in logistics elated infrastructure and operates
mechanized port terminals (container and bulk), container freight
stations, container rakes, rail and road terminals and also
undertakes surface mining of coal and transportation, removal of
overburden and transportation, and mining development
operations. An e-tender notice was floated on 13.10.2016 by
opposite party no.1 inviting offers from eligible bidders for
"Extraction of coal/coal measure strata by deploying Surface
Miners on hiring basis, mechanical transfer of the same by Pay
loaders into tipping trucks and transportation from Surface Miner
face to different destinations of Hingula OCP, Hingula area for a
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total quantity of 161,96,655 Cum (267,24,480 Te)." The said
notice inviting tender was widely published in private and public
portals all over the country. In compliance of` the conditions
stipulated in the notice inviting tender, the petitioner submitted
its bid on 03.11.2016. The bid of the petitioner, along with other
participants to the tender, was opened on 04.11.2016, and four
participants were qualified to participate in the reverse auction
process, including the petitioner.
3. In the reverse auction process, which took place on
04.11.2016, the petitioner emerged as L1 (lowest bidder) having quoted the lowest price and was declared as L1. As a result, the price quoted by the petitioner in its price bid was made public and published. After being declared L1, the petitioner requested on several occasions to opposite party no.1 to issue letter of acceptance (LOA) in accordance with the terms and conditions of the notice inviting tender. Though assurance was given, but the letter of acceptance was not issued. Since it is a time bound project, the petitioner proceeded to make arrangements recruiting manpower and procuring equipment. The validity of the tender, being for a period of 120 days as per clause-25 of the e-tender notice dated 13.10.2016, opposite party no.2 vide its letter dated 25.02.2017 requested the petitioner to extend the bid validity 4 period up to 30.04.2017, to which the petitioner agreed vide its letter dated 28.02.2017. Even though four months expired from the date of declaration of petitioner as L1, no letter of acceptance was issued. Consequentially, the petitioner vide its letter dated 09.03.2017 requested opposite party no.1 to issue such letter of acceptance at the earliest. But the petitioner received an e-mail on 17.03.2017, wherein it was informed that the tender has been cancelled and the petitioner may visit the portal for further details, if any. Accordingly, the petitioner visited the portal and found that the tender has been cancelled "due to administrative reason". Followed by the same, with identical parameters, quantity and base price as of the original tender dated 13.10.2016, opposite party no.1 issued re-tender notice on 20.03.2017 in its website. Being aggrieved by such cancellation of tender, as well as issuance of re-tender notice, this application has been filed.
4. Mr. S.K. Setty, learned Senior Counsel and Mr. J. Das, learned Senior Counsel appearing along with Mr. A.N. Das, learned counsel for the petitioner contended that the communication dated 17.03.2017 in Annexure-5 intimating the cancellation of tender does not contain any reason, save and except to visit the official portal for further details. On visiting the 5 official portal, as would be evident from Annexure-6, it was found that "due to administrative reason" the tender has been cancelled. It is contended that the order cancelling the tender, having been passed without assigning any reason, cannot sustain in the eye of law. It is further contended that any explanation given in the counter affidavit subsequent to filing of the writ petition cannot also be taken into consideration. Therefore, while seeking interference of this Court, it is prayed that the order of cancellation dated 17.03.2017 in Annexures-5 and 6 of the writ petition be quashed. It is also contended that the re-tender notice dated 20.03.2017, having been issued for the selfsame quantity of works with similar terms and conditions, there was no valid and justifiable reason to cancel the tender where petitioner was declared as L1 pursuant to reverse auction held on 04.11.2016, as its price bid was made public and published. Therefore, the subsequent action taken by the authority in issuing re-tender notice, cannot sustain in the eye of law. It is contended that the contention of learned counsel for the opposite parties, that due to financial implication the cancellation has been made, is an afterthought, and as such, reduction of financial implication pursuant to subsequent tender cannot be a ground to cancel the tender in which the petitioner was declared as L1, and that itself amounts to arbitrary and unreasonable exercise of power by the 6 authority. Therefore, in exercise of power of judicial review, this Court can interfere with such decision of the authority concerned and quash the order of cancellation of tender dated 17.03.2017 and consequential issuance of re-tender dated 20.03.2017, as the authorities have exercised the power arbitrarily, unreasonably and malafidely. To substantiate the contention, learned Senior Counsel for the petitioner relied upon the judgments of the apex Court in Mohinder Singh Gill v. The Chief Election Commissioner, New Delhi, AIR 1978 SC 851; M/s. Shree Ganesh Construction v. State of Orissa, 2016 (II) OLR 237; State of Punjab v. Bandeep Singh, (2016) 1 SCC 724; and M/s Star Enterprises v. City and Industrial Development Corporation of Maharastra Ltd., (1990) 3 SCC 280.
5. Mr. S.D. Das, learned Senior Counsel appearing along with Mr. S.K. Behera and Mr. H. Mohanty, learned counsel for the opposite parties admitted the factual contention raised by learned Senior Counsel for the petitioner, but stated that in view of 186th Board of Directors' meeting held on 28.02.2017 decision has been taken to cancel the existing tender. Consequentially, the petitioner was intimated that its tender has been cancelled and to visit the portal for the reasons for cancellation of such tender. It is contended that in view of the decision taken by the Management 7 for cancellation of the tender "due to administrative reason", as a consequential follow up action, the cancellation order was passed on 17.03.2017 and accordingly fresh re-tender notice was issued for giving wide publication. Thereby, the authorities have not committed any illegality or irregularity in cancelling the tender of the petitioner. To substantiate his contention, he has relied upon the judgments of the apex Court in State of Uttar Pradesh and another v. AL Faheem Meetex Private Limited and another, (2016) 4 SCC 716; State of Jharkhand and others v. CWE- SOMA Consortium, (2016) 14 SCC 172 : AIR 2016 SC 3366; Maa Binda Express Carrier and another v. North-East Frontier Railway and others, (2014) 3 SCC 760; South Delhi Municipal Corporation v. Ravinder Kumar and another, (2015) 15 SCC 545; State of Assam and others v. Susrita Holdings Private Limited, (2014) 11 SCC 192; Rajasthan Housing Board and another v. G.S. Investments and another, (2007) 1 SCC 477; Rishi Kiran Logistics Private Limited v. Board of Trustees of Kandla Port Trust and others, (2015) 13 SCC 233; and Chandra Sekhar Swain v. State of Odisha and others, 2017 (I) OLR 666.
6. Mr. A. Pattnaik, learned counsel, though filed an application, being Misc. Case No.8369 of 2016, for intervention on 8 behalf of M/s JRMS UH NKBPL JV, the same was not allowed, but he was given opportunity of hearing. He contended that pursuant to re-tender notice the intervenor company participated in the tender process and was declared as L1 in reverse auction and accordingly qualified to enter into an agreement with the opposite parties to execute the work as per the terms and conditions of the re-tender notice dated 20.03.2017. It is further contended that, though vide order dated 28.03.2017 this Court directed that till the next date of listing, the e-tender process might go on, but no contract would be finanlized in favour of any party in pursuance of the e-tender notice dated 20.03.2017. It was however made clear that the petitioner would be at liberty to participate in the fresh tender call notice without prejudice to its rights. After the e-tender process, since the intervenor became L1 and eligible to make contract with the opposite parties, in the event any further order is passed, it will cause prejudice to the intervenor. Therefore, he has filed the intervention application to be impleaded as a party to the proceeding.
7. Having heard learned counsel for the parties and after perusing the records, since pleadings between the parties have been exchanged, with the consent of the learned counsel for 9 the parties, this writ petition is being disposed of finally at the stage of admission.
8. The undisputed fact is that pursuant to tender call notice dated 13.10.2016, the petitioner was the lowest bidder in the tender process, which was conducted by following due procedure. In the reverse auction process which took place on 04.11.2016, the petitioner emerged as L1, having quoted lowest price, and was waiting for letter of acceptance in accordance with the notice inviting tender. As finalization the same was delayed, opposite party no.1 vide letter dated 25.02.2017 requested the petitioner to extend the bid validity period up to 30.04.2017, to which the petitioner agreed by its letter dated 28.02.2017. By this process, four months elapsed. Consequentially, the petitioner made a request on 09.03.2017 to issue necessary letter of acceptance so as to execute the work. But all on a sudden, the petitioner received an e-mail on 17.03.2017 in Annexure-5 that its tender has been cancelled and for further details it may visit the portal. On perusal of the official portal the order dated 17.03.2017 cancelling the tender was found, which is marked as Annexure-6, in which the reason for cancellation has been assigned as "due to administrative reason".
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9. It is well settled principle of law laid down by the apex Court time and again that the authority should pass reasoned order. Reasons being a necessary concomitant to passing an order, the authority can thus discharge its duty in a meaningful manner either by furnishing the same expressly or by necessary reference.
In Union of India v. Mohan Lal Capoor, AIR 1974 SC 87, it has been held that reasons are the links between the materials on which certain conclusions are based and the actual conclusions. They disclose how the mind is applied to the subject- matter for a decision whether it is purely administrative or quasi- judicial and reveal a rational nexus between the facts considered and conclusions reached. The reasons assure an inbuilt support to the conclusion and decision reached. Recording of reasons is also an assurance that the authority concerned applied its mind to the facts on record. It is vital for the purpose of showing a person that he is receiving justice.
Similar view has also been taken in Uma Charan v. State of Madhya Pradesh, AIR 1981 SC 1915 and in Patitapaban Pala v. Orissa Forest Development Corporation Ltd. & another, 2017 (I) OLR 5 and in Banambar Parida v. 11 Orissa Forest Development Corporation Limited, 2017 (I) OLR
625.
10. As it appears from the counter affidavit, in paragraph-6 details of steps taken by the opposite parties in respect of tender notice dated 13.10.2016 have been indicated. In paragraph-7 it is contended that after due deliberation, the Board of Directors in its 186th meeting held on 28.02.2017 directed to cancel the existing tender, as the tender documents were not published due to non-finalization of the Directorate of Advertising and Visual Publicity (DAVP) rates and these were simply uploaded. As the matter regarding DAVP rates has since been resolved, the Board was of the view that such tenders may be advertised to give wide publicity in compliance of the directive of Coal India Limited (CIL). In paragraph-8 of the counter affidavit, the opposite parties have admitted as follows;
"......The one most suitable and appropriate reason was indicated. Ultimately it was informed that the tender has been cancelled. You may kindly visit the portal for further details, if any, wherein the reasons for cancellation was due to the "administrative reason", which term is available in the portal has been indicated."
Corroborative statements have been made by the opposite parties in paragraphs-11 and 12, which are extracted below:
"That in view of the decision taken by the
Management, which indicates the reason for
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cancellation of the tender, i.e. due to administrative reason, as a consequential follows of action the cancellation order was passed on 17.03.2017, which is as per Annexure-5 and 6 to the writ application. As the Tender Notices were not published print media due DAVP rates as stated in the preceding paragraphs the Tender was cancelled.
That though the order has been challenged to be cryptic one as would be clear from the entire process as has been indicated above, the Tender Committee has suggested steps and also requested the petitioner to extend the validity period, but ultimately accepting authority, i.e. the Management of the Company which is evidently the Board of Directors of the Company having taken a decision to cancel the tender process, the tender was cancelled as per the direction and observation of the Board of Directors quoted above." The sequence of events, as mentioned in the counter affidavit, clearly indicate that admittedly the petitioner was not communicated with the reasons for cancellation of tender in Annexure-5 dated 17.03.2017, save and except to visit the portal. On perusal of the portal, the cancellation order dated 17.03.2017, which is annexed as Annexure-6, was found and it was mentioned therein that "due to administrative reason" the tender has been cancelled. In order to justify the administrative reason, in the counter affidavit subsequent explanation has been given that due to the decision taken by the Board of Directors in its 186th meeting held on 28.02.2017 the tender has been cancelled, but however admitted the fact of issuance of letter dated 17.03.2017 in paragraphs-11 and 12 of the counter affidavit. 13
11. It is well settled principle of law laid down by the Apex Court in Mohinder Singh Gill and another v. The Chief Election Commissioner, New Delhi and others, AIR 1978 SC 851 that :
"When a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise an order bad in the beginning may by the time it comes to Court on account of a challenge, get validated by additional grounds later brought out."
In Commissioner of Police, Bombay v. Gordhandas Bhanji, AIR 1952 SC 16, the Apex Court held as follows :
"Public orders publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the acting and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself. Orders are not like old wine becoming better as they grow older."
Similar view has also been taken in Bhikhubhai Vithlabhai Patel and others v. State of Gujarat and another, (2008) 4 SCC 144 as well as in M/s. Shree Ganesh Construction (supra).
In the case of Bandeep Singh (supra) the apex Court held that the validity of administrative orders/decisions/executive 14 instructions/orders/circulars must be judged by reasons stated in decision or order itself. Subsequent explanations or reasons cannot be accepted to sustain decision or order.
12. Reliance has been placed by opposite parties on Chandra Sekhar Swain (supra). In paragraph 21 of the said judgment it has been observed as follows:
"21. Annexure-7 dated 30.11.2016 is the order impugned, whereby the bid in respect of the work in question has been cancelled. The contention raised by learned Senior Counsel for the petitioner is that no reason has been assigned in support of such cancellation. To buttress his contention, he has placed reliance on M/s. Shree Ganesh Construction (supra). On perusal of the materials available on record, it appears that on 28.11.2016 the technical evaluation committee scrutinized the technical bids afresh on the basis of communication made on 17.11.2016. The proceedings of the technical evaluation committee held on 28.11.2016, which indicate the reasons for cancellation of the tender in question, were evidently made available on the website. On the basis of such reasons, as a consequential follow up action, the cancellation order was passed on 30.11.2016 in Annexure-7. In view of that, it cannot be said that the order of cancellation is a cryptic one, particularly when the same has been explained subsequently in the counter affidavit. If the reasons were available to the parties on the website on the date of cancellation, i.e., on 28.11.2016 itself, the communication vide Annexure-7, which was made on 30.11.2016, cannot be held to be unsustainable in the eye of law for not containing the reasons for cancellation of the bid in question. As such, the ratio decided in M/s. Shree Ganesh Construction (supra) is absolutely not applicable to the present case."15
In the said case, though the reasons had not been assigned, but it was specifically mentioned that the proceedings of the technical evaluation committee held on 28.11.2016 which indicates reasons for cancellation of the tender in question was evidently made available on the website. Therefore, if the reasons were made available on the website itself, the communication made without assigning any reasons cannot be said to be illegal or arbitrary or unreasonable. Therefore, the case of Chandra Sekhar Swain (supra) is distinguishable from the present factual context and more so the law laid in M/s Shree Ganesh Construction (supra) is applicable to the present case.
13. The contention of learned Senior Counsel for the petitioner to the aforesaid effect is fortified by the office order no.15/3/05 dated 24.03.2005 issued by the Central Vigilance Commission, which reads as follows:-
"The Commission has observed that some of the Notice Inviting Tenders (NITs) have a clause that the tender applications could be rejected without assigning any reason. This clause is apparently incorporated in tender enquiries to safeguard the interest of the organisation in exceptional circumstance and to avoid any legal dispute, in such cases.
2. The Commission has discussed the issue and it is emphasized that the above clause in the bid document does not mean that the tender accepting authority is free to take decision in an arbitrary manner. He is bound to record clear, logical reasons for any such action of rejection/recall of tenders on the file"16
14. In view of the aforesaid facts and circumstances, this Court is of the considered view that by way of subsequent explanation given in the counter affidavit the communications dated 17.03.2017 in Annexures-5 and 6 cancelling the tender in question without assigning any reason cannot sustain in the eye of law. More so, in view of the Central Vigilance Commission guidelines dated 24.03.2005, the tender accepting authority is not free to take any decision in an arbitrary manner and is bound to record clear and logical reasons for any such action of rejection/recall of tenders on the file. In view of such position, in absence of any reason communicated to the petitioner, the order so passed in Annexures-5 and 6 dated 17.03.2017 cannot sustain.
15. Coming to the decisions relied upon by learned Senior Counsel appearing for the opposite parties, in AL Faheem Meetex Private Ltd. (supra) the High Court, having quashed the decision of the bid evaluation committee dated 22.11.2010 cancelling its earlier decision dated 08.09.2010 in view of receipt of inadequate number of valid tenders, directed for inviting fresh tenders for construction of modern slaughterhouse. But the apex Court held that the bid, as accepted on 08.09.2010, is unsustainable. The 17 reason assigned by the apex Court was that when a decision making process has not reached its finality and was still in embryo there was no acceptance of the bid of respondent no.1 by the competent authority and, as such, no right much less enforceable right accrued to respondent no.1. Factually, the said case is not applicable to the present case.
16. In Maa Binda Express Carrier (supra), the apex Court held that submission of a bid/tender in response to a notice inviting tenders is only an offer which State or its agencies are under no obligation to accept. Bidders participating in the tender process cannot insist that their bids/tenders should be accepted simply because a bid is the highest or lowest. All that participating bidders are entitled to is a fair, equal and non- discriminatory treatment in evaluation of their bids/tenders. Therefore, the decision to cancel the tender process was in no way discriminatory or mala fide nor violated any fundamental right of appellants so as to warrant any interference by Court. There is no dispute in the proposition laid down by the apex Court, but the said proposition has to be taken into consideration on the factual matrix of each case. So far as the facts of the present case are concerned, the petitioner having been found as L1 and request letter having been issued by the opposite parties seeking 18 extension of the period of tender which the petitioner agreed and the same was extended by the opposite parties, for such conduct of the opposite parties it can be safely said that offer submitted by the petitioner was accepted and only formal letter of acceptance was to be issued in its favour. Therefore, the present case is quite distinguishable from that case.
17. In Ravinder Kumar (supra) the apex Court held that the Government being guardian of public finance it has right to refuse lowest or any other tender bid or bids submitted by bidders to it provided its decision is neither arbitrary nor unreasonable as it amounts to violation of Article 14 of Constitution of India. Similarly, in Susrita Holdings Priviate Limited (supra), the apex Court held the validity of tender process has to be considered in the light of fairness and reasonableness and of being in the public interest. In G.S. Investments (supra), similar view has also been taken by the apex Court. To the propositions, as advanced by the apex Court in the above mentioned judgments, there is no dispute save and except each case has been decided on its own facts and circumstances which is absolutely different from that of the present case.
18. In CWE-SOMA CONSORTIUM (supra), the apex Court categorically held that there is no obligation on the part of the 19 person issuing tender notice to accept any tender or even lower tender. On perusing tenders if it is found that there is no competition, person issuing tender may decide not to enter into contract and thereby cancel tender. But the said factual matrix is not available in the present case because in the instant case the participants had participated and as such a fair opportunity was given to the petitioner. But the tender has been cancelled without assigning any reason in the order of cancellation issued on 17.03.2017. In paragraph 23 of the said judgment, the apex Court categorically observed as follows:
"The right to refuse the lowest or nay other tender is always available to the Government. In the case in hand, the respondent has neither pleaded nor established mala fide exercise of power by the appellant. While so, the decision of the Tender Committee ought not to have been interfered with by the High Court. In our considered view, the High Court erred in sitting in appeal over the decision of the appellant to cancel the tender and float a fresh tender. Equally, the High Court was not right in going into the financial implication of a fresh tender."
19. The intervenor contended that pursuant to subsequent tender dated 20.03.2017 it had quoted lower price than that of the petitioner quoted pursuant to earlier tender dated 13.10.2016. But that itself cannot be said to be a ground to cancel the tender which has not seen the light of the day and in which this price bid of the petitioner was disclosed and known to 20 all after the reverse bidding was over. As such, the cancellation of tender dated 17.03.2017 being without assigning any reason, subsequent issuance of fresh tender quoting a lower price than that of petitioner pursuant to earlier tender dated 13.10.2016 cannot be justified, more particularly this Court cannot go into the financial implication of a fresh tender in view of ratio decided by CWE-SOMA CONSORTIUM (supra).
20. In view of the factual and legal discussions made above, this Court is of the considered view that the orders of cancellation of tender dated 17.03.2017 passed in Annexures-5 and 6 cannot sustain in the eye of law and the same are hereby quashed. Consequentially, the re-tender notice dated 20.03.2017 issued by opposite party no.1 in Annexure-7 also cannot sustain in the eye of law and the same is accordingly quashed.
21. The writ petition is thus allowed. There shall be no order as to cost.
Sd/-
(VINEET SARAN) CHIEF JUSTICE Sd/-
Orissa High Court, Cuttack (DR. B.R. SARANGI) The 8th September, 2017, GDS/Ashok/Ajaya JUDGE True Copy Sr. Secretary