Gujarat High Court
Raja Bhailal Shah vs Oil And Natural Gas Corporation Ltd on 18 August, 2021
Author: J.B.Pardiwala
Bench: J.B.Pardiwala, Vaibhavi D. Nanavati
C/SCA/11514/2020 JUDGMENT DATED: 18/08/2021
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 11514 of 2020
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
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1 Whether Reporters of Local Papers may be allowed YES
to see the judgment ?
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy NO
of the judgment ?
4 Whether this case involves a substantial question NO
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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RAJA BHAILAL SHAH
Versus
OIL AND NATURAL GAS CORPORATION LTD.
==========================================================
Appearance:
MR JIGAR G GADHAVI(5613) for the Petitioner(s) No. 1,2,3,4
MR DEVANG VYAS, ASSISTANT SOLICITOR GENERAL OF INDIA WITH
MR RITURAJ M MEENA(3224) for the Respondent(s) No. 1
NOTICE SERVED(4) for the Respondent(s) No. 2,3
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CORAM:HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI
Date : 18/08/2021
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) Page 1 of 21 Downloaded on : Sun Jan 16 08:46:43 IST 2022 C/SCA/11514/2020 JUDGMENT DATED: 18/08/2021
1. The respondents nos.2 and 3 although served with the notice issued by this Court, yet have chosen not to appear before this Court either in person or through an advocate and oppose this writ- application.
2. By this writ-application under Article 226 of the Constitution of India, the writ-applicants have prayed for the following reliefs:-
"6(a) Be pleased to issue a writ of mandamus and/or writ in the nature of mandamus or any other appropriate writ, order or direction quashing and setting aside the tender being tender No.E-Tender No.B26SC20009 issued by the respondent (Annexure A);
(b) Be pleased to declare the clause of Empanelment of Pharmacy chains with multiple Outlets especially the eligibility criteria indicated at No.B.1.2 Annexure-IV in the E-Tender No.B26SC20009 (Annexure-A) as illegal, arbitrary, irrational unjust and unconstitutional and may be pleased to quash the same;
(c) That pending admission, final hearing and disposal of this petition, be pleased to direct the respondent to accept the forms of the petitioners and permit the petitioners to take part in the exercise undertaken pursuant to the tender E-Tender No.B26SC20009 (Annexure-A).
(d) Pending admission, hearing and final disposal of the present petition, be pleased to stay the further operation, implementation and execution of the tender process initiated under Tender E-
Tender No.B26SC20009 (Annexure-A).
(e) That any other relief which this Hon'ble Court deems fit and expedient be granted in the interest of justice."
3. The facts giving rise to this litigation may be summarized as under:-
Page 2 of 21 Downloaded on : Sun Jan 16 08:46:43 IST 2022C/SCA/11514/2020 JUDGMENT DATED: 18/08/2021 3.1 All the writ-applicants before us are in the business of running medical store/pharmacy store in the City of Vadodara, more particularly, in the area of Tarsali, Makarpura and Karelibaug respectively.
3.2 The writ-applicant no.1 is running his medical store past 14 years. The writ-applicant no.2 is running his medical store past 33 years. The writ-applicant no.3 is running his medical store past 25 years. The writ-applicant no.4 is running his medical store past 20 years. All the writ-applicants in the past had entered into a contract with the ONGC for supply of medicines to its beneficiaries at a discounted price or rate. It appears that as the period of contract was coming to an end, the ONGC issued fresh tender notice dated 15.08.2020 inviting bids for the 'Empanelment of Pharmacy chain with multiple outlets' across the City of Vadodara for a period of 03 years.
3.3 One of the eligibility criterias as prescribed in the tender document is as under:-
Sl. Description Confirmed/ Not Refer
No. Confirmed/ Not Sl./Page
applicable, as No. of bid/
applicable Location
B.1.2 Eligibility of the bidder (i.e. Single bidder/ Indian Joint Venture company Incorporated) Confirmed The bidder should have at least five Not Confirmed operational pharmacy outlets within the limits of Vadodara City, with alteast one pharmacy outlet in Makarpura? Manjalpur area and one such outlet in Tarsali area.
The bidder(s) having at least three Page 3 of 21 Downloaded on : Sun Jan 16 08:46:43 IST 2022 C/SCA/11514/2020 JUDGMENT DATED: 18/08/2021 operational pharmacy outlets within the limits of Vadodara City, shall also be eligible to bid subject to condition and submission of undertaking that the bidder shall open two more outlets within 30 days of placement of LOA so that they have minimum of five outlets within the limits of Vadodara City, with atleast one pharmacy outlet in Makarpura/Manjalpur area and one such outlet in Tarsali area.
3.4 Indisputably, none of the writ-applicants before us are fulfilling the above referred eligibility criteria. In other words, none of the writ-applicants have five operational pharmacy outlets within the limits of Vadodara City.
4. In such circumstances referred to above, the writ-applicants have come before this Court complaining about the stringent/ onerous eligibility criteria of owning atleast five operational pharmacy outlets within the limits of Vadodara City. It is the case of the writ-applicants that on account of such stringent and unreasonable eligibility criteria as prescribed in the tender document, they are unable to participate in the tender process and offer their bids.
5. Mr. Jigar Gadhavi, the learned counsel appearing for the writ-applicants vehemently submitted that the Corporation has prescribed the specific condition of possessing multiple outlets only with a view to ensure that the M/s. Apollo Hospitals Enterprise Ltd. i.e. the respondent no.2 herein gets the contract. It is alleged that such stringent eligibility criteria has been prescribed only with a view to ensure that no one is able to participate in the tender process except the respondent no.2. According to Mr. Gadhavi, the Page 4 of 21 Downloaded on : Sun Jan 16 08:46:43 IST 2022 C/SCA/11514/2020 JUDGMENT DATED: 18/08/2021 impugned eligibility criteria is a tailor-made condition and has been incorporated only to favour the respondent no.2 .
6. Mr. Gadhavi would submit that having realized that some day the allegations may be levelled that undue favour has been shown by the Corporation to the respondent no.2, the Corporation thought fit to award part of the contract to the respondent no.3 also. According to Mr. Gadhavi, the respondent no.3 came into picture only because the Corporation wanted to avoid any criticism or challenge to the tender process or to put it in other words, to show that the Corporation has not shown any undue favour to the respondent no.2.
7. Mr. Gadhavi seeks to invoke the doctrine of 'level playing field'. The principal argument in this regard is that by prescribing a very onerous and stringent eligibility criteria, the doctrine of 'level playing field' stood frustrated.
8. Mr. Gadhavi seeks to place strong reliance on the decision of the Supreme Court in the case of Reliance Energy Limited & Others Vs. Maharashtra State Road Development Corporation Limited reported in 2007 (8) SCC 1. Mr. Gadhavi seeks to rely upon the observations made by the Supreme Court that when Article 19(1)(g) of the Constitution confers the fundamental right to carry on business to a company or a proprietary concern, it is entitled to invoke the said doctrine of 'level playing field'.
9. Mr. Gadhavi also seeks to rely upon the following other Page 5 of 21 Downloaded on : Sun Jan 16 08:46:43 IST 2022 C/SCA/11514/2020 JUDGMENT DATED: 18/08/2021 decisions.
2) 2021 SCC Online Del 3033 Omega Elevators Vs. Union of India & Another.
3) 2020 SCC Online TS 2525
OMEGA Elevators Vs. State of Telangana
4) (2019) 15 SCC 718
Vaishnorani Mahila Bachat Gat Vs. State of Maharashtra
5) 2019 0 Supreme (Kar) 57 Ashodaya Cement Products Vs. Bangalore Electricity Supply Company Ltd.
6) (2006) 11 SCC 548 B.S.N. Joshi & Sons Ltd. Vs. Nair Coal Services Ltd. & Ors.
10. In such circumstances referred to above, Mr. Gadhavi prays that there being merit in his writ-application, the same may be allowed and the eligibility criteria indicated at condition no.B.1.2 in the E-tender notice be declared as illegal, arbitrary, irrational, unjust and unconstitutional.
11. On the other hand, this writ-application has been vehemently opposed by Mr. Devang Vyas, the learned Assistant Solicitor General of India assisted by Mr. Ritutaj Meena, the learned counsel appearing for the Corporation submitting that the writ-applicants are not entitled to invoke the doctrine of 'level playing field' as the said doctrine would come into play among equal and among equals Page 6 of 21 Downloaded on : Sun Jan 16 08:46:43 IST 2022 C/SCA/11514/2020 JUDGMENT DATED: 18/08/2021 and not unequal. It is argued that the writ-applicants are not one among equals and as such, they cannot maintain a complaint against the conditions of the Tender, merely because, it does not suit them. Mr. Vyas would argue that the terms of the invitation to tender are not open to judicial scrutiny, the same being in the realm of contract. He would submit that the impugned eligibility criteria cannot be termed in any manner as arbitrary, discriminatory, malafide or actuated by bias. Mr. Vyas invited the attention of this Court to some of the averments made in the affidavit-in-reply filed on behalf of the Corporation, which reads thus:-
8. It is submitted that since the current on-going contracts for the provision of Corporate Medical Services/medicine needs/supplies for ONGC beneficiaries for the city of Vadodara were coming to an end on 27.09.2020 and 02.10.2020 and more particularly in view of the on-going COVID-19 pandemic where by various beneficiaries are likely to require more assured/committed services for medications than in regular course, the Respondent issued the tender on 17.08.2020 incorporating the requirement of the circular dated 25.05.2018 for empanelling chain pharmacies. As per the terms and conditions of the tender, the period to procure the tender document was upto 14.09.2020. The last date for receipt of queries for pre-bid conference was 24.08.2020, the pre-bid conference was fixed on 25.08.2020 and the techo commercial bids were to be opened on 14.09.2020. Petitioner no.1 and M/s.
Apollo Hospitals Enterprises Limited participated in the pre-bid meeting on 25.08.2020. A record of the notes of the pre bid meeting along with reply by the Respondent to the queries were uploaded on the e-portal on 27.08.2020 (pages 278 to 282 of the petition). Subsequently, the tender conditions including clause B- 1.2 of the Bid Evaluation Criteria was amended and uploaded on the e-portal on 31.08.2020 which was followed by a further amendment on 01.09.2020. Finally, the amended clause B-1.2 of the Bid Evaluation Criteria for the tender read as under:-
"A The bidder should have at least five operational pharmacy outlets within the limits of Vadodara Citym with atleast one Page 7 of 21 Downloaded on : Sun Jan 16 08:46:43 IST 2022 C/SCA/11514/2020 JUDGMENT DATED: 18/08/2021 pharmacy outlet in Makarpura/ Manjalpur area and one such outlet in Tarsali area.
B. The bidder(s) having at least three operational pharmacy outlets within the limits of Vadodara City, shall also be eligible to bid subject to condition and submission of undertaking that the bidder shall open necessary outlets within 45 days of placement of LOA so that they have minimum of five operational outlets within the limits of Vadodara City with atleast one pharmacy outlet in Makarpura/ Manjalpur area and one such outlet in Tarsali area.
C. Further the bidder(s) having at least three operational pharmacy outlets within the limits of Vadodara City and not having atleast one pharmacy outlet in Makarpura/ Manjalpur area and one such outlet in Tarsali area, shall also be eligible to bid subject to condition and submission of undertaking that the bidder shall open necessary outlets within 45 days of placement of LOA so that they have minimum of five operational outlets within the limits of Vadodara City with atleast one pharmacy outlet in Makarpura/ Manjalpur area and one such outlet in Tarsali area.
D. Further bidder(s) having at least five operational pharmacy outlets anywhere in India, shall also be eligible to bid subject to condition and submission of undertaking that the bidder shall open necessary outlets within 45 days of placement of LOA so that they have minimum of five operational outlets within the limits of Vadodara City within atleast one pharmacy outlet in Makarpura/ Manjalpur area and one such outlet in Tarsali area."
As per the aforesaid criteria, the bidders were expected to have a minimum of five pharmacies/outlets in the city of Vadodara either at the time of bidding for the tender or within 45 days of placement of the LOA/NOA, solely for the convenience of the beneficiaries of the Respondent. It is submitted that the sole reason the petitioners are making a hue and cry about the issuing the tender to pharmacy chains is that none of the petitioners are eligible to bid in the tender process as they do not meet with the minimum required outlets either in Vadodara or across India. At the cost of repetition, it is reiterated that the chain pharmacy criteria fixed was for all work centers of ONGC in India and hence it cannot be alleged that the same is tailor Page 8 of 21 Downloaded on : Sun Jan 16 08:46:43 IST 2022 C/SCA/11514/2020 JUDGMENT DATED: 18/08/2021 made to only include particular bidders or to exclude the petitioners. In the circumstances, the petitioners allegation of the tender being tailor made are not correct.
9. Subsequently, it is submitted that the petitioner no.1 addressed a representation dated 31.08.2020 to the respondent. The respondent vide letter dated 10.09.2020 replied to the said letter of the petitioner and answered all the queries as were raised by the petitioners letter dated 31.08.2020.
10. Subsequently, by letter dated 11.09.2020 the petitioner No.1 and 2 requested the respondent for extension of time for submitting the bid documents. However, considering the fact that the existing contracts were due to expire on 02.10.2020 and in view of the severity of the on-going pandemic whereby close to 12,000 beneficiaries may require urgent medicines and also on the fact that at the request of the whims and fancies of prospective bidders the tender time lines cannot be altered, by email dated 12/13.09.2020 the petitioners were informed that there request for extension was not accepted.
11. A grievance by the petitioners of hiring 'pharmacy chains' was also made to the HRE, ONGC, Corporate Affairs and Parliament Cell, New Delhi through the Centralized Public Grievance Redressal and Monitoring System (CPGRAMS). The respondent responded to the said grievance vide email dated 16.09.2020 and clarified the position to the petitioner with regard to hiring pharmacy chains.
12. The techo-commercial bids were opened on 14.09.2020 and the offers were received from two bidders viz.(i) M/s. Apollo Pharmacies Limited ("Apollo") and (ii) M/s. Storks Medi Tek Private Limited ("Storks"). Thereafter, on 21.09.2020 letters were addressed to both the bidders i.e. Apollo and Storks to seek confirmation, clarification and deficient documents. The post bid conference took place through video conferencing on 22.09.2020. On 22.09.2020 both the bidders also submitted their respective clarifications. After receipt of the replies, in the tender committee meeting held on 24.09.2020 it was recommended to accept offers of both the bidders. Thereafter, on 25.09.2020 the price bids of both the shortlisted bidders were opened and representatives of both these bidders were present through video conferencing.
13. As per the price bids, Apollo was lowest bidder L-1 and Storks was L-2. The respondent vide email dated 25.09.2020 requested Apollo to offer their best price. Apollo vide emails Page 9 of 21 Downloaded on : Sun Jan 16 08:46:43 IST 2022 C/SCA/11514/2020 JUDGMENT DATED: 18/08/2021 dated 26.09.2020 and 28.09.2020 submitted their best offer rates. On 28.09.2020 the respondent issued LOA/NOA to Apollo for empanelment for a period of 3 years at the discount rate of 18.50% on MRP (inclusive of all takes/ duties etc.) for supply of medicines to the respondent's beneficiaries. The L-2 bidder vide letter dated 28.09.2020 was given an opportunity to match the rates of L-1 bidder as per provisions of the tender and after receipt of confirmation of matching of rates, NOA was issued to M/s. Storks Medi Tek Private Limited on 30.09.2020.
14. It is thus submitted that the tender process for the empanelment for chain pharmacies is completed and LOAs/NOAs are issued to Apollo and Storks.
15. It is submitted that the criteria to appoint chain pharmacies at all centers/ assets is made applicable pan-India since May, 2018 to provide efficient medical needs/supplies in all areas of the city to ONGC beneficiaries for their convenience and to see that the beneficiaries do not have to travel long distances to procure medicines. It is submitted that the petitioners cannot command/direct the eligibility criteria's which the respondent should/ should not incorporate in its tender terms and conditions. It is completely the respondent's prerogative to include the terms to cater to its needs. The petitioners have no right to insist with the mode and manner in which the respondent called for offers by tender when the same is for priority of the health of its beneficiaries.
16. It is submitted that for the respondent's Ahmedabad Assetidentical tenders were issued wherein similar criteria for chain pharmacies were incorporated in the Bid Evaluation Criteria. The contract for medical needs/ supplies has been awarded to the chain pharmacy. In fact, since Ahmedabad is a metro city, the criteria to the bidders was to have a minimum of 10 outlets as compared to 5 as required in the city of Vadodara. It is submitted that the contract in Ahmedabad is successfully running.
17. It is submitted that the clause B.1.2 of the Bid Evaluation Criteria are essential conditions of the tender and hence cannot be altered. It is submitted that the words used in the tender document are final and cannot be ignored or treated as redundant of superfluous. All words must be given meaning to their necessary significance. An essential tender condition which has to be strictly complied have to be complied with under all circumstances."
Page 10 of 21 Downloaded on : Sun Jan 16 08:46:43 IST 2022C/SCA/11514/2020 JUDGMENT DATED: 18/08/2021
12. The idea in referring to the averments made in the reply referred to above is to highlight that it is the policy of the Corporation to appoint chain pharmacies at all centres/assets to provide efficient medical needs/supplies in all areas of the City to the ONGC beneficiaries for their convenience and to ensure that the beneficiaries do not have to travel long distances to procure the medicines.
13. Mr. Vyas, in the last, submitted that the allegations levelled by the writ-applicants that the impugned eligibility criteria is tailor- made to suit the private respondents is absolutely baseless and false.
14. In such circumstances referred to above, Mr. Vyas prays that there being no merit in the present writ-application, the same be rejected.
ANALYSIS:-
15. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the impugned eligibility criteria could be termed as one violative of Article 14 of the Constitution or could be termed as arbitrary, unjust or prescribed only with a view to favour the respondents nos.2 and 3 respectively?
16. A tender is an offer. It is something which invites and is communicated to notify acceptance. Broadly stated it must be Page 11 of 21 Downloaded on : Sun Jan 16 08:46:43 IST 2022 C/SCA/11514/2020 JUDGMENT DATED: 18/08/2021 unconditional; must be in the proper form, the person by whom tender is made must be able to and willing to perform his obligations. The terms of the invitation to tender are not open to judicial scrutiny because the invitation to tender is in the realm of contract. However, a limited judicial review may be 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.
17. In the matters of formulating tender conditions, the employer has wider latitude and scope of judicial review is minimal. At the threshold, the Court should not interject the tender process on the ground that some of the terms of invitation to tender are not palatable to a person who is not fitting into the parameters. It is within the domain of employer to prescribe tender conditions. The Court may interfere, in exercise of power of judicial review, to assess the terms of tender notification within the limited parameters of judicial review, if such conditions are palpably and demonstrably illegal, irrational, tailor-made to suit a contractor, malafide, against the public interest and no reasonable man could have stipulated such conditions.
18. The wholesome rule in regard to judicial interference in administrative decisions is that if the employer takes into consideration all relevant factors, eschews from considering irrelevant factors and acts reasonably within the parameters of the law, Courts should keep off the same [paragraph 18, Federation of Page 12 of 21 Downloaded on : Sun Jan 16 08:46:43 IST 2022 C/SCA/11514/2020 JUDGMENT DATED: 18/08/2021 Rly. Officers Assn. v. Union of India 1 : (2003) 4 SCC 289 ]. Legality of policy and not the wisdom or soundness of the policy is the subject of judicial review [paragraph 16, Directorate of Film Festivals v. Gauraw Ashwin Jain 2 : (2007) 4 SCC 737]. On the scope of judicial review against the decisions of executive, more particularly decisions involving technical matters, in Union of India v. J.O., Suryavamshi3 : (2011) 13 SCC 167, Supreme Court warned the Courts to resist the temptation to usurp the power of executive.
19. At this stage a brief recapitulation of the law on judicial review on contracts and particularly on tender conditions is necessary.
20. In the case of MICHIGAN RUBBER (INDIA) LTD. V. STATE OF KARNATAKA4 reported in (2012) 8 SCC 216, the Supreme Court held:
"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 the 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 document and awarding a contract, greater latitude is required to be Page 13 of 21 Downloaded on : Sun Jan 16 08:46:43 IST 2022 C/SCA/11514/2020 JUDGMENT DATED: 18/08/2021 conceded to the State authorities unless the action of the 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 a fundamental right to carry on business with the Government.
(emphasis supplied)
21. In the case of Asia Foundation & Construction Ltd. Vs. Trafalgar House Construction (I) Ltd.5 reported in (1997) 1 SCC 738, while referring to guidelines laid down in Tata Cellular v. Union of India [(1994) 6 SCC 651], the Supreme Court held as under:
"9. ....... The High Court in construing certain clauses of the bid documents has come to the conclusion that such a correction was permissible and, therefore, the Bank could not have insisted upon granting the contract in favour of the appellant. We are of the considered opinion that it was not within the permissible limits of interference for a court of law, particularly when there has been no allegation of malice or ulterior motive and particularly when the court has not found any mala fides or favouritism in the grant of contract in favour of the appellant. In Tata Cellular v. Union of India [(1994) 6 SCC 651] this Court has held that:
"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 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 Page 14 of 21 Downloaded on : Sun Jan 16 08:46:43 IST 2022 C/SCA/11514/2020 JUDGMENT DATED: 18/08/2021 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, 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."
(emphasis supplied)
22. In the case of Reliance Airport Developers (P) Ltd. v. Airports Authority of India6 reported in (2006) 10 SCC 1, the Supreme Court elaborated on these three parameters. The Supreme Court observed:
"65. In other words, to characterize a decision of the administrator as "irrational" the court has to hold, on material, that it is a decision "so outrageous" as to be in total defiance of logic or moral standards. Adoption of "proportionality" into administrative law was left for the future.
23. In the case of Directorate of Education and others Vs. Educomp Datamatics Ltd and Others 7 reported in AIR 2004 SC 1962, the Supreme Court held as under:
"9. It is well settled now that the courts can scrutinize the award of the contracts by the Government or its agencies in exercise of their powers of judicial review to prevent arbitrariness or favouritism. However, there are inherent limitations in the exercise of the power of judicial review in such matters. The point as to the extent of judicial review permissible in contractual matters while inviting bids by issuing tenders has been examined in depth by this Court in Tata Cellular v. Union of India [(1994) 6 SCC 651] .
10. In Air India Ltd. v. Cochin International Airport Ltd. [(2000) 2 SCC 617] this Court observed: (SCC p. 623, para 7) "The award of a contract, whether it is by a private party or by a Page 15 of 21 Downloaded on : Sun Jan 16 08:46:43 IST 2022 C/SCA/11514/2020 JUDGMENT DATED: 18/08/2021 public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedure laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decision- making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness."
11. This principle was again restated by this Court in Monarch Infrastructure (P) Ltd. v. Commr., Ulhasnagar Municipal Corpn. [(2000) 5 SCC 287] It was held that the terms and conditions in the tender are prescribed by the Government bearing in mind the nature of contract and in such matters the authority calling for the tender is the best judge to prescribe the terms and conditions of the tender. It is not for the courts to say whether the conditions prescribed in the tender under consideration were better than the ones prescribed in the earlier tender invitations.
12. It has clearly been held in these decisions that the terms of the invitation to tender are not open to judicial scrutiny, the same being in the realm of contract. That the Government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. The courts cannot strike down 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. The courts can interfere only if the policy decision is arbitrary, discriminatory or mala fide.
(emphasis supplied)
24. In the case of Meerut Development Authority Vs Assn. of Page 16 of 21 Downloaded on : Sun Jan 16 08:46:43 IST 2022 C/SCA/11514/2020 JUDGMENT DATED: 18/08/2021 Management Studies8 reported in (2009) 6 SCC 171, the Supreme Court held as under:
"27. The bidders participating in the tender process have no other right except the right to equality and fair treatment in the matter of evaluation of competitive bids offered by interested persons in response to notice inviting tenders in a transparent manner and free from hidden agenda. One cannot challenge the terms and conditions of the tender except on the above stated ground, the reason being the terms of the invitation to tender are in the realm of the contract. No bidder is entitled as a matter of right to insist the authority inviting tenders to enter into further negotiations unless the terms and conditions of notice so provided for such negotiations."
25. In the case of The Krishna District Petrol & HSD Dealers Association, Vijayawada and The Executive Director, IOCL, A.P.State Office, Himayathnagar, Hyderabad 9; W.P. No. 572 of 2014, decided on 30.12.2014 the scope of counter offer by the employer to accept transportation contract at the rate offered by L-1 tenderer was considered. In the judgment dated 30.12.2014 on considering the precedent decisions, the Court held:
"33. The principles that emerge from the above precedents are, the writ court has limited jurisdiction in matters concerning contracts and invitation to bid for contract; Court must adopt restraint in contract matters; the Court does not sit as a Court of appeal in such matters; the State/its instrumentalities have to be given greater latitude in formulating tender conditions and awarding of contracts; In matters concerning financial implications it should be left to the concerned authority to decide the conditions of eligibility and the price at which contract can be awarded; Courts cannot interfere in terms of invitation to tender; No one has a right to insist that the contract to be awarded to him; Courts can interfere only if actions of tendering authority is found to be malicious or misused statutory powers; That the process adopted and decision made is so arbitrary and irrational that no authority acting reasonably and in accordance with relevant law could have reached and if public interest is affected."Page 17 of 21 Downloaded on : Sun Jan 16 08:46:43 IST 2022
C/SCA/11514/2020 JUDGMENT DATED: 18/08/2021
26. We take notice of the fact that the very same eligibility criteria as sought to be challenged in the present writ-application was a subject matter of challenge before the Gauhati High Court. It appears that a learned Single Judge of the Gauhati High Court took the view that the eligibility criteria as prescribed by the Corporation was violative of Article 14, 19(1)(g) as well as Article 21 of the Constitution. The learned Single Judge took the view that the doctrine of 'level playing field' was being frustrated by stipulating such stringent eligibility criteria. The decision of the learned Single Judge was challenged in appeal by the ONGC. In the Writ Appeal No.116 of 2021, the Appeal Court while upholding the legality and validity of the eligibility criteria observed as under:-
"24. Coming to the submission of Mr. M.K. Choudhury, learned senior counsel for the respondents who submits that the eligibility condition has ousted the petitioners and others and it is tailor-made to suit big corporate houses, it must be stated that the ONGC is the best judge to evaluate as to what is most suitable to its employees and if in its judgment they have come to the conclusion that the present process would suit them better, then the process cannot be faulted merely because the petitioners are now ineligible to meet the pre-conditions. On our consideration of all the relevant factors, we have absolutely no doubt in our mind that under the new scheme the interest and well being of the employees of ONGC was the prime considerations. The scheme and its conditions are in public interest and therefore even if the implementation of the scheme is contrary to the interest of a few chemists and pharmacists, it will not run contrary to the overall merit of the scheme.
25. The contention of the learned senior counsel appearing for the respondents that the decision of the ONGC is only to implement the scheme in metropolitan cities is also not correct. This Court has been informed that the process is being carried out even in smaller towns like Rajahmundry in Andhra Pradesh and Agartala in Tripura, both of which have a much smaller Page 18 of 21 Downloaded on : Sun Jan 16 08:46:43 IST 2022 C/SCA/11514/2020 JUDGMENT DATED: 18/08/2021 population compared to Sivasagar which has a population of 11.5 lakhs. The contention of the learned senior counsel for the respondents that the eligibility conditions have absolutely no nexus with the object sought to be achieved is also not correct. There is definitely a purpose in bringing out the scheme, which is to get better quality medicines at cheaper rates 24 X 7 to its employees. It has already been come in the interim orders of this Court that it is an admitted case that the petitioners will not be able to supply medicines at the rates required by the ONGC. So, in any case, they are not qualified now to participate in the bid. We do not agree with the reasoning given by the learned Single Judge that the action of the ONGC violates the fundamental rights of the petitioners given to them under Articles 14, 19(1)(g) and 21 of the Constitution of India. We are afraid that the findings of the learned Single Judge that the estimated annualize contract value in all the centres comes up to only Rs.91,50,000/- is a finding which is not reflected either form the record or the pleadings. In fact, the total value of all the running contracts which were awarded to total thirteen numbers of suppliers for different locations comes to Rs.36 Crores and it is on this basis that projections of Rs.54 Crores have been calculated for next three years. Similarly, there is nothing on record to show that the land of the petitioners was acquired by the ONGC. Consequently, we allow these writ appeals and set aside the order of the learned Single Judge dated 02.03.2021 passed in WP(C) No.3230/2020 and WP(C) No.3079/2020.
We must, however, note that since the ongoing contract in favour of the petitioners has been extended till 18.08.2021, that shall not be disturbed till 18.08.2021."
27. It appears that the Appeal Court of the Gauhati High Court excepted the argument canvassed on behalf of the ONGC that the existing procedure of supply of medicines had several loopholes and weakness, such as the inability of the shops to provide medicines in time; delay in bulk procurement of medicines; substitution of low quality medicine brand without consulting the prescribing ONGC Doctors; logistic difficulty in obtaining the prescribed medicines; non-availability of 24 X 7 medicines and/or qualified pharmacists; malpractices/fraud committed by dealers in billing and/or Page 19 of 21 Downloaded on : Sun Jan 16 08:46:43 IST 2022 C/SCA/11514/2020 JUDGMENT DATED: 18/08/2021 documentation; and less discount offered over the MRP. The aforesaid were some of the reasons, which required the ONGC to remove the lacuna in its existing system and the same was done after proper research and due consideration of available facts in order to serve the best interest of ONGC and its employees.
28. The Appeal Court ultimately held that if the ONGC thought fit to prescribe the eligibility criteria that the bidder should have atleast five operational pharmacy outlets within the limits of Vadodara City with atleast one pharmacy outlet in Makarpura/ Manjalpur area and one such outlet in Tarsali area, then it cannot be said that such decision is arbitrary or discriminatory or tailor- made in any manner. The Appeal Court observed as under:
"We have also seen that the decision to implement "Retail Chain Pharmacy" is not a decision taken in a hurry, rather it is a well thought out decision, keeping the best interests of the employees of ONGC in mind. Further, it is also incorrect to hold that this new system was limited to metropolitan cities. Though initially it was introduced in metros but the policy of ONGC was, as is clearly reflected from the decisions of its Executive Committees to spread it to all the work centres of ONGC."
29. We are not impressed by the submissions of Mr. Gadhavi as regards the doctrine of 'level playing field'. In commerce, a 'level playing field' is a concept about fairness, not that each player has an equal chance to succeed, but they all play by the same set of rules. We are not impressed by the submissions canvassed on behalf of the writ-applicants that onerous/stringent eligibility criteria of having five medical stores in the City has led to frustrating the doctrine of 'level playing field'. The Supreme Court, in Reliance Energy Limited [Supra] upon which strong reliance has been placed Page 20 of 21 Downloaded on : Sun Jan 16 08:46:43 IST 2022 C/SCA/11514/2020 JUDGMENT DATED: 18/08/2021 by Mr. Gadhavi has said, in so many words, that the doctrine of 'level playing field' is subject to public interest. Just because the writ-applicants also happen to be running medical stores, the same, by itself is not sufficient to invoke the doctrine of 'level playing field'. The doctrine provides space within which the equally placed competitors are allowed to bid so as to subserve the larger public interest.
30. We are also not impressed by the allegations of favouritism etc. In fact, there is no sound foundation to level such allegation. Mere pleadings in the memo of the writ-application as regards favouritism is not sufficient. There has to be something more on the basis of which the Court can come to a definite conclusion that the onerous/stringent eligibility criteria has been prescribed only with a view to eliminate others and favour only one particular party. As discussed above, there is a rational which has been explained by the Corporation in providing such eligibility criteria. By no means, it can be termed as discriminatory or arbitrary.
31. In the overall view of the matter, we are convinced that we should not interfere in the present litigation.
32. In the result, this writ-application fails and is hereby rejected.
(J. B. PARDIWALA, J) (VAIBHAVI D. NANAVATI,J) A. B. VAGHELA Page 21 of 21 Downloaded on : Sun Jan 16 08:46:43 IST 2022