Gujarat High Court
Shah Paper Mills Limited & vs Director - Gujarat State Board Of School ... on 9 March, 2015
Bench: Vijay Manohar Sahai, R.P.Dholaria
C/SCA/3685/2015 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 3685 of 2015
FOR APPROVAL AND SIGNATURE:
HONOURABLE THE ACTING CHIEF JUSTICE MR. VIJAY MANOHAR
SAHAI
and
HONOURABLE MR.JUSTICE R.P.DHOLARIA
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1 Whether Reporters of Local Papers may be allowed to see
the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law as
to the interpretation of the Constitution of India or any order
made thereunder ?
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SHAH PAPER MILLS LIMITED & 1....Petitioner(s)
Versus
DIRECTOR - GUJARAT STATE BOARD OF SCHOOL TEXT BOOKS &
2....Respondent(s)
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Appearance:
MR. MIHIR THAKORE, SR. ADVOCATE WITH MR. MITUL K SHELAT,
ADVOCATE for the Petitioner(s) No. 1 - 2
MR. UTKARSH SHARMA, AGP, for the Respondent(s) No. 3
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C/SCA/3685/2015 JUDGMENT
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CORAM: HONOURABLE THE ACTING CHIEF JUSTICE MR.
VIJAY MANOHAR SAHAI
and
HONOURABLE MR.JUSTICE R.P.DHOLARIA
Date : 09/03/2015
ORAL JUDGMENT
(PER : HONOURABLE THE ACTING CHIEF JUSTICE MR. VIJAY MANOHAR SAHAI) We have heard learned senior advocate Mr. Mihir Thakore assisted by learned advocate Mr. Mitul Shelat for the petitioners.
2. This writ petition has been filed by the petitioners for issuance of directions to the respondents and prayer has been made to the Court for holding the condition of "paper should be made from virgin pulp only" and consequential conditions contained in online e-tender 2014-15 issued by respondent Nos. 1 and 2 on its official website dated 19.2.2015 for purchase of maplitho printing papers 20500 MT approximately as unreasonable, illegal and unconstitutional and be pleased to delete the said conditions and further be pleased to direct the respondents to process the subject tender without reference to the conditions "paper should be made from virgin pulp only" and consequential conditions appearing in the tender notice.
3. Learned senior advocate Mr. Mihir Thakore has urged that in earlier years the tenders invited by the respondents were to the effect that manufacturers of paper for work order participation in the tender process, there was no Page 2 of 13 C/SCA/3685/2015 JUDGMENT such condition as to whether they should be manufacturers of virgin pulp or recycled paper pulp but in the present tender notice they have added a condition that the tenderers must have own plant for manufacturing of virgin pulp in its premises. Learned senior counsel has further urged that the petitioners are made all the ISI specifications as far as quality of paper is concerned but they are not manufacturers of virgin pulp and due to which they are ousted from participating in the tender. The respondents in the tender notice have very clearly stated that the quality of paper should be as under:
Quality of the paper:
1. Paper should be made from virgin pulp only
2. Paper should be of uniform foundation, evenly finished and generally free from specks, holes and other blemishes
3. Paper should be suitable for high speed sheet feed offset printing and web offset printing.
4. Variance of GSM in reel and sheet is not allowed
5. Quality of stores shall be accounted on the basis of actual weight of paper in sheet/reels i.e. excluding weight of core pipe, and plugs, packing/wrapping materials etc.
6. Marking shall be as per clause 5.2 of IS: 1848/2007 and net mass shall also be marked
7. Firm shall take care of process control so that paper shall be free from static charge.
8. The paper shall bear water mark at 16 places on A-1 size and 8 places on A-2 size. For other sizes/reels, the number shall be proportionate. The design of watermarks will be indicated by GSBSTB and Minimum 4 (four) watermark on each sheet of paper with watermark Mill logo.
9. The manufacturer should have certification for environmental management.Page 3 of 13
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4. Learned senior counsel for the petitioner has urged that addition of condition that the manufacturer of paper must have own plant for manufacturing of virgin pulp in its premises is in violation of Article 14 of the Constitution of India and such condition has been inserted which is tailor-made to only suit those manufacturers of paper who are manufacturers of virgin pulp. Learned senior counsel for the petitioner has vehemently urged that such a condition which is tailor-made for manufacturers of virgin pulp is contrary to law and is liable to be struck down. He has placed reliance on the decision of Hon'ble Apex Court in the matter of MEERUT DEVELOPMENT AUTHORITY VS. ASSN. OF MANAGEMENT STUDIES reported in (2009) 6 SCC 171 wherein at paragraph No. 26 it has been held that `the terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. However, the Apex Court observed that only a limited judicial review is available in cases where it is established that the terms of the invitation to tender were so tailor-made to suit the convenience of any particular person with a view to eliminate all others from participating in the bidding process.
5. Similar view has been taken by the Apex Court in the case of MAA BINDA EXPRESS CARRIER AND ANOTHER VS.
NORTH-EAST FRONTIER RAILWAY AND OTHERS reported in (2014) 3 SCC 760 wherein after considering a catena of decisions, the Apex Court has held in paragraph No. 8 that award of a contract is essentially a commercial transaction which must be determined on the basis of consideration that are relevant to such commercial decision. This implies that terms subject to which tenders are invited are not open to the judicial scrutiny unless it is found that the same have been Page 4 of 13 C/SCA/3685/2015 JUDGMENT tailor-made to benefit any particular tenderer or class of tenderers. Learned senior counsel for the petitioners has placed reliance on a Division Bench decision of the Delhi High Court in GHARDA CHEMICALS LIMITED VS. CENTRAL WAREHOUSING CORPORATION reported in 118 (2005) DLT 159, particularly, paragraph Nos. 17 and 19 and on the strength of the two paragraphs, he has urged that insertion of criteria for quality of paper should be of virgin pulp being manufactured by the industry which is manufacturing virgin pulp has absolutely no nexus with the object sought to be achieved, namely, textbook or quality of textbook to be produced by the manufacturer.
6. Having heard learned senior counsel for the petitioners, we are of the opinion that it is always open to the Government to put any such condition in the tender notice which according to them, is suitable and in larger public interest. If the Government has intended to provide the book of better quality papers which is made of virgin pulp, the petitioners cannot insist that the textbooks should be printed on recycled papers because quality of textbooks printed in recycled paper would of inferior quality whereas textbooks printed on virgin pulp papers would be, prima facie, it appears to us, of superior quality which cannot be matched by recycled paper. According to us, the object sought to be achieved by inserting criteria of virgin pulp paper is to provide textbooks of better quality paper to the students. If the students are provided the textbooks printed on better paper which may be of recycled paper then the different would be apparent and if the textbooks are printed on a better quality papers of virgin pulp paper, it will make more interest in reading for the students of better quality paper than the recycled paper.
Page 5 of 13C/SCA/3685/2015 JUDGMENT 7. Learned senior advocate Mr. Mihir Thakore
appearing for the petitioners has further urged that if the paper of the petitioners which is recycled paper is accepted and on that textbooks are printed then the price would be reduced by 10 per cent. It is the Government which is best judge to decide as to whether they compromise with quality for the price or they should go for better quality of books which is to be studied by the students which is in the domain of the Government and we cannot substitute the wisdom of the Government by our own decision. It is always open to the Government to decide as to what is best for the students and on which paper good textbooks should be printed.
8. Learned senior advocate Mr. Mihir Thakore has further urged that it is not mentioned that virgin pulp should be made directly of wood and virgin pulp may also be made of material other than bamboo as mentioned at page No. 52 of the paper book. Relevant paragraph No. 4.8.2 is reproduced as under:
"4.8.2 - Specific requirements -
The material shall be of the following two types depending on the raw material used in the manufacture:
(a) Type - A Manufactured from pulp containing not less than 60 per cent by mass of pulp made from materials other than bamboo, hardwood, softwood and reed.
(b) Type - B Manufactured from pulp made from 100 percent waste paper."
9. We have carefully considered this specific requirements which is mentioned by ISI. This does not clearly reflect as to what virgin pulp paper. It mentioned two types of papers. Virgin pulp paper may be superior because we do not Page 6 of 13 C/SCA/3685/2015 JUDGMENT find at any place the words "virgin pulp" have been mentioned by ISI. Neither paragraph 4.8.2 mentions the words "virgin pulp". What it only says is that ISI requirement would be fulfilled if type-A and type-B material is used. It does not lay down anywhere that ISI specification would not be fulfilled if superior quality paper is manufactured by virgin pulp.
10. Learned senior advocate Mr. Mihir Thakore has taken us to the detailed facts of the case and has placed before us the details about the online tender which shows that in the year 2011-12 estimated cost is Rs. 80 crores whereas there was no requirement of virgin pulp paper. He also took us to the online tender notice for the year 2012-13 wherein quality of paper was mentioned that paper should be made from virgin pulp only. It was provided that paper should be made from virgin pulp only but it was not provided that virgin pulp manufacturers would be eligible for the contract. Similarly, for the year 2013-14, there was no requirement of paper being of virgin pulp only.
11. Learned senior counsel has placed before us minutes of the meeting of the working group on Pulp and Paper Industry held under the Chairmanship of the Secretary, Department of Industrial Policy and Promotion, Government of India, Udyog Bhavan, on 30.5.2011 at Annexure-P9 to this petition wherein at the end of the meeting advice has been given by the Chairman that DGS&D be requested to call the tenders for purchase of paper based BIS specification alone and not limit the participation to the manufacturers using virgin pulp only. On the strength of this document, learned senior counsel for the petitioners has urged that once the Chairman has directed that the Government is advised not to insist on purchase of papers from manufacturers using virgin Page 7 of 13 C/SCA/3685/2015 JUDGMENT pulp only that has to be followed by the Government.
12. Having carefully gone through it, we are of the opinion that in one year, namely, 2012-13, requirement of quality of paper was of virgin pulp and it was awarded to the petitioner not on the basis of the tender. The advice given by the Chairman on 30.5.2011 in the meeting of the Working Group on Pulp and Paper Industry is merely an advice. It is always open to the State Government to decide as to that they want textbooks to be printed on which quality of paper. If the State Government decides that they want good quality textbooks on virgin pulp paper it cannot be said that they are discriminating the petitioner or the discrimination is based by creating a separate class. There is no violation of Article 14 of the Constitution of India as they are not creating any class amongst the class. If they would have stated between the manufacturers of virgin pulp papers then there would arise a question of violation of Article 14 of the Constitution of India but there are different classes, one which manufactures recycled papers and the other which manufactures virgin pulp paper and the Industry is also manufacturing virgin pulp papers as well as papers but they are both different classes and there is no discrimination amongst two different classes and they cannot be treated as one class. Therefore, the argument that there is violation of Article 14 of the Constitution of India or arbitrariness in the action of the respondents made by learned senior counsel is liable to be rejected.
12. Further, reliance has been placed on the following decisions:
1. (1993) 2 SCC 279 (Mahesh Chandra Vs Regional Manager, U.P. Financial Corporation and others).Page 8 of 13
C/SCA/3685/2015 JUDGMENT Paragraph 15 reads as under:
".....Every wide power, the exercise of which has far-
reaching repercussion, has inherent limitation on it. It should be exercised to effectuate the purpose of the Act. In legislations enacted for general benefit and common good the responsibility is far graver. It demands purposeful approach. The exercise of discretion should be objective. Test of reasonableness is more strict. The public functionaries should be duty conscious rather than power charged. Its actions and decisions which touch the common man have to be tested on the touchstone of fairness and justice. That which is not fair and just is unreasonable. And what is unreasonable is arbitrary. An arbitrary action is ultra vires. It does not become bona fide and in good faith merely because no personal gain or benefit to the person exercising discretion should be established. An action is mala fide if it is contrary to the purpose for which it was authorised to be exercised. Dishonesty in discharge of duty vitiates the action without anything more. An action is bad even without proof of motive of dishonesty, if the authority is found to have acted contrary to reason...."
2. (2011) 5 SCC 430 (Larsen and Toubro Limited and another Vs Union of India and others). Paragraph 21 reads as under:
"21. As far as the decision in Ramana Dayaram Shetty case is concerned, the same does not in any way help the petitioner's case and, on the other hand, has very clearly laid down that where tenders are invited for grant of government contract, the standard of eligibility laid down in the notice for tenders could not be changed arbitrarily as that would be hit by the provisions of Article 14 of the Constitution. It was also observed by this Court that an executive authority has to be rigorously held to the standards by which it professes its actions to be judged and it must scrupulously observe those standards on pain of invalidation. It has been repeatedly stated by this Court that every action of the executive Government must be informed with reason and should be free from arbitrariness, the same being the very essence of the rule of law. The said decision, in fact, supports the case of Respondent No.4."Page 9 of 13
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3. (2012) 8 SCC 216 (Michigan Rubber (India) Limited Vs State of Karnataka and others). Paragraphs 21, 23 and 35 read as under.
"21. In Jagdish Mandal vs. State of Orissa and Others, (2007) 14 SCC 517, the following conclusion is relevant:
(SCC pp.531-32, para 22) "22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made 'lawfully' and not to check whether choice or decision is 'sound'. When 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. 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. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. Therefore, a 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 Page 10 of 13 C/SCA/3685/2015 JUDGMENT 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';
(ii) Whether public interest is affected.
If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action."
xxx xxx xxx "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;
(c) In the matter of formulating conditions of a tender
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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."
xxx xxx xxx "35. As observed earlier, the Court would not normally interfere with the policy decision and in matters challenging the award of contract by the State or public authorities. In view of the above, the appellant has failed to establish that the same was contrary to public interest and beyond the pale of discrimination or unreasonable.
We are satisfied that to have the best of the equipment for the vehicles, which ply on road carrying passengers, the 2nd respondent thought it fit that the criteria for applying for tender for procuring tyres should be at a high standard and thought it fit that only those manufacturers who satisfy the eligibility criteria should be permitted to participate in the tender. As noted in various decisions, the Government and their undertakings must have a free hand in setting terms of the tender and only if it is arbitrary, discriminatory, mala fide or actuated by bias, the Courts would interfere. The Courts cannot interfere with the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. In the case on hand, we have already noted that taking into account various aspects including the safety of the passengers and public interest, the CMG consisting of experienced persons, revised the tender conditions. We are satisfied that the said Committee had discussed the subject in detail and for specifying these two conditions regarding prequalification criteria and the evaluation criteria. On perusal of all the materials, we are satisfied that the impugned conditions do not, in any Page 12 of 13 C/SCA/3685/2015 JUDGMENT way, could be classified as arbitrary, discriminatory or mala fide."
13. So far as specification of recycled pulp and virgin pulp paper is concerned, if the State Government decides to use virgin pulp paper, the object appears to be to provide good quality of textbooks to the students an object that the paper quality may be good which may make interest in reading to the students and if the quality of paper is poor, undoubtedly, it is not accepted by the students.
14. For the aforesaid reasons, we do not find any merit in this writ petition. This writ petition fails and is accordingly dismissed.
(V.M.SAHAI, ACJ.) (R.P.DHOLARIA,J.) (pkn) Page 13 of 13