Chattisgarh High Court
M/S Rajhara Engineering Works Sahkari ... vs Steel Aurhority Of India Limited on 26 November, 2024
Author: Ramesh Sinha
Bench: Ramesh Sinha
1 / 13
2024:CGHC:46216-DB
Digitally
signed by
RAGHVENDRA
JAT NAFR
HIGH COURT OF CHHATTISGARH AT BILASPUR
WPC No. 5862 of 2024
• M/s Rajhara Engineering Works Sahkari Samiti Through Its
President Anil Kumar Yadav Aged About 58 Years, S/o Late Shri
M.L Yadav R/o Bsp Shopping Complex No. 29 Township Dalli-
Rajhara, District- Balod Chhattisgarh
... Petitioner
versus
1. Steel Aurhority Of India Limited, Bhilai Steel Plant , Through The
Chief Executive Officer, Bhilai Steel Plant, Bhilai , District- Durg,
Chhattisgarh.
2. General Manager, ( Contract Cell ) Non-Works, Bhilai Steel Plant ,
5th Floor, Ispat Bhawan, Bhilai, District - Durg, Chhattisgarh.
3. Chief General Manager, Iron Ore Complex , Dali Rajhara, District -
Balod, Chhattisgarh.
4. The Union Of India Through The Secretary, Ministry Of Steel,
Udyog Bhawan New Delhi, Delhi 110107
... Respondents
For Petitioner : Mr. Harshmander Rastogi, Advocate. For Respondents : Mr. Himanshu Pandey, Advocate. No. 1 & 2 2 / 13 Hon'ble Mr. Ramesh Sinha, Chief Justice Hon'ble Mr. Amitendra Kishore Prasad, Judge Order on Board Per Ramesh Sinha, Chief Justice 26/11/2024
1. Heard Mr. Harshmander Rastogi, learned Advocate appearing for the petitioner and Mr. Himanshu Pandey, learned Advocate appearing for respondents No. 1 & 2.
2. The present writ petition has been filed by the petitioner with the following reliefs:-
"10.1 That, this Hon'ble Court may kindly order to modify the tender of the tenders bearing bid. process no. GEM/2024/B/5410416 (Annexure P/1) and bid no. GEM/2024/B/5415504 (Annexure P/2) from Non-
Reverse Auction (Non-RA) to Reverse Auction (RA) before awarding it to any of the applicants.
10.2 That, this Hon'ble Court may kindly be pleased to direct the respondent authorities to end/close the Non-Reverse Auction (Non-RA) process of bidding which is based on lottery system for tenders published for work in respondent SAIL Bhilai Steel Plant.3 / 13
10.3 That, this Hon'ble Court may kindly be pleased to direct the respondent authorities to cancel all the previous tenders issued through the Non-Reverse (Non-RA) process and direct the respondents to issue the new tenders for the same using Reverse auction bidding process.
10.4 That, this Hon'ble Court may kindly be pleased to grant any other relief(s), which is deemed fit and proper in the aforesaid facts and circumstances of the case".
3. Brief facts of the case, is that, the present petition is challenging the action of the respondent authorities who in arbitrary manner have stopped the issuance of the Reverse Auction process in many tenders including the recent tender bearing bid no. GEM/2024/B/5410416 & bid no. GEM/2024/B/5415504 and is continuing with the Non-Reverse Auction (Non-RA) process which is totally based on lottery system and luck and not on skills, competition, business strategies and work experience etc. The petitioner is a Co-operative society who works as a Contractor and is involved in the various works that are carried out in the mechanized mines of Dalli-Rajhara and is a registered and approved Contractor of the Bhilai Steel Plant. The respondent SAIL- Bhilai Steel Plant, since long has been using the SAP-SRM (System Application and Products Supplier Relationship Management) bidding engine software for conducting of e-bidding 4 / 13 process of various tenders which are floated time to time for different works. That in SAP SRM process, the bidding was done by either Limited Tender process in which the L1 is declared as tenderer or by Reverse Auction (RA) Process in which the lowest bidders further go through the process of auction and the lowest auctioneer would be awarded the Tender. That subsequently from the year 2023 onwards the Respondent SAIL Bhilai Steel Plant started using a new portal introduced by the Union Government namely GeM portal. It is important to mention here that the Respondent SAIL Bhilai Steel Plant categorised the current tender process mostly as either Reverse Auction (RA) or the Non- Reverse Auction (Non-RA) process. The main problem that the Non-Reverse Auction (Non-RA) is causing to the petitioner and the similar contractors is that the Non RA process is similar to that of the Lottery system and is entirely based on luck and doesn't let to involve any kind of competition, work experience or bidding or auction process. It is pertinent to mention here that in the Non-RA process, there is a clause that the applicant shall not hid lower than the threshold amount or else the applicant shall be considered as ineligible, therefore, in order to become eligible, most of the applicants bid the lowest threshold amount resulting in many number of LI and after that in absence of all the applicants, one of the applicant from all the LI through alleged computerised lottery process is selected and is informed personally that they have been selected for the particular tender. Rest of the 5 / 13 applicants were informed about the same later. Due to the lottery system which is followed by the respondent SAIL Bhilai Steel Plant in the tenders, the petitioner which is a cooperative society of more than 300+ labours are suffering from huge losses because the tenders are not being awarded based on the skills, competition or by business rules rather than by the lottery system. Recently out of 7 Non-RA tenders which the petitioner generally used to get awarded because of its quotation and low rates and high quality of work, only 1 is awarded to the petitioner even after being L1 in all of them. That other than the above-mentioned anomaly, it is also pertinent to mention here that the respondent SAIL - Bhilai Steel Plant, arbitrarily and without any criteria chooses that which contract is qualified for Reverse Auction (RA) process and which qualified for Non RA process. Also, in all the tender qualified for Non RA process, the awardees whosoever it may be, is required to give 0.45% of the tender value as the fees to the respondents. On enquiring the criteria from the authorities or any specific rule, it was informed that the tender work which are based on Manpower are classified as Non RA tenders and which are without Manpower are classified as RA tenders, however, the same is not followed in many of the contracts. That moreover, the Non-RA process is also financially harmful to the public money as the reverse auction process even allows the auctioneer to bid less than the threshold limit making the least expensive bidder to win the tender, however, in the Non-RA process the threshold limit is 6 / 13 fixed and anyone who wishes to bid less than that would become ineligible making it more expensive. Also the Non RA is also less secure and risky than the RA process of tender bidding since in Non-RA process there is no requirement for the awardee to submit a bank guarantee and if the bidder runs away in the mid of the work no bank guarantee could be forfeited on the other hand in the RA process the awardee has to submit the bank guarantee after the tender is awarded and it gets forfeited if the contractor doesn't completes the work. Petitioner being an established cooperative contractor group consisting of more than 350+ workers working in the respondent SAIL - Bhilai Steel Plant since many years and with most sincerity and quality. Even after being L1 in most of its tenders if the petitioner is getting only few of the contracts because of the lottery system it not only will lead to unemployment to the labours of the petitioner but also would reduce the turn over and experience of the petitioner making it automatically ineligible in many of the future tenders and hence the present petition.
4. Learned counsel for the petitioner has submitted that respondent authorities in arbitrary manner have stopped the issuance of the Reverse Auction process in many tenders and is continuing with the Non-Reverse Auction (Non-RA) process which is totally based on lottery system and luck and not on skills, competition, business strategies and work experience etc. He further submits that respondent authorities in most arbitrary and in unlawful manner 7 / 13 decides which contract/tender is to be classified as RA or Non-RA and doesn't have any specific criteria to decide the same but totally dependent on the whims and fancies of the respondent authorities. He further submits that respondent SAIL Bhilai Steel Plant carries out the lottery system in absence of all the participants and directly informed the selected bidder and later to other participants which clearly raises the doubt in the lottery system as well and hints towards the chances of non- transparency and corruption. He further submits that the respondent authorities unlike in the RA process is charging a fee of amount equal to that of 0.45% of the total value of the tender as the bidding fees from the awardee of the tender whosoever it may be, selected by the lottery system in the Non-RA process. He further submits that the Non-RA process is also financially harmful to the public money as the reverse auction process even allows the auctioneer to bid less than the threshold limit making the least expensive bidder to win the tender, however, in the Non-RA process the threshold limit is fixed and anyone who wishes to bid less than that would become ineligible making it more expensive. He further submits that the main purpose of the tender business is to increase the competition so that the best can be allotted the work, however, in the current scenario the tender is totally allotted on the basis of luck and lottery system. He further submits that the Non RA is also less secure and risky than the RA process of tender bidding since in Non-RA process there is no requirement 8 / 13 for the awardee to submit a bank guarantee and if the bidder runs away in the mid of the work no bank guarantee could be forfeited on the other hand in the RA process the awardee has to submit the bank guarantee after the tender is awarded and it gets forfeited if the contractor doesn't completes the work. He further submits that the petitioner is an established cooperative contractor group consisting of more than 350+ workers working in the respondent SAIL Bhilai Steel Plant since many years and with most sincerity and quality. Even after being L1 in most of its tenders if the petitioner is getting only few of the contracts because of the lottery system it not only will lead to unemployment to the labours of the petitioner but also would reduce the turn over and experience of the petitioner making it automatically ineligible in many of the future tenders.
5. Learned counsel for respondents No. 1 & 2 oppose the arguments raised on behalf of the petitioner and has supported the impugned action.
6. We have heard learned counsel for the petitioner as well as counsel for respondents No. 1 & 2 and we have also perused the petition as well as documents annexed with the petition.
7. From the perusal of the petition, it seems that earlier the respondents No. 1 & 2 were issuing tender notice of Reverse Auction (RA) process which has been followed in many of the tender bid, however, in a recent development the respondent Nos. 9 / 13 1 & 2 have stopped the said process of Reverse Auction (RA) process and now they are issuing tender on the basis of Non- Reverse Auction (Non-RA) process which is akin to lottery system and by this there would be no any kind of competition, work experience or bidding or auction process. It is well settled settled principles of law that the condition of tender can be made by the authorities who are issuing tender notice and the interference of the writ court is very minimal in these cases. When the process has been changed without any blemish and arbitrariness the conditions of process of tender cannot be challenged.
8. In this respect judgment of Tata Cellular vs. Union of India, reported in (1994) 6 SCC 651, the Hon'ble Supreme Court observed as under:-
"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 favoritism. 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 tender 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".
71. Judicial quest in administrative matters has been to find the right balance between the administrative discretion to decide matters whether contractual or political in nature or issues of social policy; thus they 10 / 13 are not essentially justifiable and the need to remedy any unfairness. Such an unfairness is set right by judicial review.
74. Judicial review is concerned with reviewing not the merits of the decision in support of which the application for judicial review is made, but 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,
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 fulfillment 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) Irrationality, namely, Wednesday
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 Brind28, Lord Diplock refers specifically to one development, namely, the possible 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".
9. In the case of Jagdish Mandal vs. State of Orissa, reported in (2007) 14 SCC 517, Hon'ble Supreme Court observed as under:- 11 / 13
22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and malafides. Its purpose is to check whether choice or decision is made 'lawfully' and not to check whether choice or decision is 'sound. 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 of 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 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 black-listing or imposition of penal consequences 12 / 13 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.
10. In case of Afcons Infrastructure Ltd. Vs. Nagpur Metro Rail Corporation and another, reported in (2016) 16 SCC 818., the Hon'ble Supreme Court held as follows:-
13. In other words, a mere disagreement with the decision making process or the decision of the administrative authority is no reason for a constitutional Court to interfere. The threshold of mala fides, intention to favour someone or arbitrariness, irrationality or perversity must be met before the constitutional Court interferes with the decision making process or the decision.
11. In case of Silppi Constructions Contractors Vs. Union of India and others reported in (2020) 16 SCC 489 it has been held as under:-
"20. The essence of the law laid down in the judgments referred to above is the exercise of restraint and caution, the need for overwhelming public interest to justify judicial intervention in matters of contract involving the state instrumentalities, the courts should give way to the opinion of the experts unless the decision is totally arbitrary or unreasonable; the court does not sit like a court of appeal over the appropriate authority; the court must realise that the authority floating the tender is the best judge of its Court of requirements and, therefore, the court's interference should be minimal. The authority which floats the contract or tender, and has authored the tender documents is the best judge as to how the documents have to be interpreted. If two interpretations are possible then the interpretation of the author must be accepted. The courts will only interfere to prevent arbitrariness, irrationality, bias, mala fides or perversity......"
12. Taking into consideration of the aforesaid aspect of the matter and also taking into consideration into the order passed by the Hon'ble 13 / 13 Supreme Court, that earlier the respondents No. 1 & 2 were issuing tender notice of Reverse Auction (RA) process which has been followed in many of the tender bid, however, in a recent development the respondents No. 1 & 2 have stopped the said process of Reverse Auction (RA) process and thereafter issuing tender on the basis of Non-Reverse Auction (Non-RA) process which is similar to lottery system and by this there will be no any kind of auction process, bidding, work experience and any kind of competition. It is well settled principles of law that the condition of tender can be made by the authorities who are issuing tender notice and the interference of the writ court is very minimal in these cases. We are of the considered opinion that no interference is required for in the condition of tender as well as process issued by respondent Nos. 1 & 2.
13. Accordingly, the instant petition being devoid of merits is hereby dismissed.
Sd/- Sd/-
(Amitendra Kishore Prasad) (Ramesh Sinha)
Judge Chief Justice
Raghu Jat