Orissa High Court
M/S Subhadarsini Supply Agency vs State Of Orissa & Others ... Opp. Parties on 14 December, 2011
Author: V.Gopala Gowda
Bench: V.Gopala Gowda
HIGH COURT OF ORISSA: CUTTACK
W.P.(C) No.22362 of 2011
In the matter of an application under Article 226 of the Constitution of
India.
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M/s Subhadarsini Supply Agency,
AT: Tinigharia, PO: Naya Bazar,
Dist: Cuttack-4, represented by it's
Proprietor Bharat Bhusan Swain
& others
... Petitioners
-Versus-
State of Orissa & Others ... Opp. Parties
For Petitioner : Mr. Sanjit Mohanty, Sr. Advocate
M/s B.S.Tripathy-1
For Opp. Parties : Advocate General
(For O.Ps. 1 and 2)
M/s Pitambar Acharya, S.Rath,
B.Bhadra, B.K.Jena & S.Rout
(For O.P. No.3)
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P R E S E N T:
THE HONOURABLE THE CHIEF JUSTICE SHRI.V.GOPALA GOWDA
AND
THE HONOURABLE SHRI JUSTICE B.N.MAHAPATRA
Date of Judgment: 14.12.2011
B.N. Mahapatra, J.Normally, a writ petition is disposed of by a reasoned order and the practice of delivering the concluding paragraph and giving detailed reason in separate sheet is not usually adopted. In the present case, taking note of the immediate and urgent requirement to effect the 2 purchase of medicines, chemicals and instruments & equipments for livestock, we had delivered the concluding part of the judgment on 14.12.2011 and are now delivering the detailed judgment giving reasons for our conclusion on the contentious point that is formulated in this case.
2. This Writ Petition has been filed for quashing the Tender Call Notices under Annexures 1, 2 and 3, and tender documents under Annexures 4, 5 and 6 on the ground that those are bad, illegal and violative of Wednesbury principles of reasonableness and Article 14 and 19(1)(g) of the Constitution of India as well as the Government Circulars under Annexures 7 and 8. The further prayer of the petitioners is for a direction to opposite party No.1 to first settle the 'Terms and Conditions of Tender"
keeping in view the Wednesbury principles of reasonabless and Article 14 of the Constitution of India and thereafter issue fresh tender call notice in a reasonable and rational manner so as to have a transparent tender process providing wider participation of tenderers and pass such other order(s) as deemed fit and proper in the bona fide interest of justice and fair play.
3. Petitioners in the present case are registered dealers having up-to-date VAT and IT clearance certificate and are desirous of participating in tender call notice published in "The Samaja/The New Indian Express" on 19.07.2011 issued by opposite party No.2 separately inviting sealed tenders in the prescribed form from manufacturers/authorized distributors / authorized agencies/authorized 3 representatives having valid registration of the product for supply of medicine, chemicals and instruments & equipments for the year 2011-12 for Veterinary institutions under Directorate of Animal Husbandry & Veterinary Services, Orissa. In all the three tender call notices, it has been stipulated that the tenderers who would qualify in the technical bid would be intimated through the Department website to attend the date of opening of price bid. According to the petitioners, the present tender call notices issued for the years 2011-12 suffer from various irregularities and the terms and conditions of said notices are full of ambiguities and have been inserted only with a view to favour a particular tenderer and deprive / debar others from participating in the tender process through transparent manner.
4. Mr.Sanjit Mohanty, learned Senior Advocate appearing for the petitioners submitted that the Government have prescribed guidelines and procedures in their Departmental letter No.6660/FARD dt.23.06.2010, according to which the Department concerned is to first estimate the requirement and classify the articles under different trade groups, to draw tender specification correctly without any ambiguity etc. Subsequently, additional instructions and guidelines were issued in Fisheries & ARD Department letter No.6269 dtd. 24.05.2011 stipulating certain conditions which have been violated.
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5. According to condition No.2 of tender call notices the tenderer should have proof of annual turnover of minimum Rs.1.50 crore, Rs.0.25 crore and Rs.1.25 crore in supply of medicines, chemicals, and instruments & equipments respectively in each financial year for preceding three years. Paragraph 4 of the instructions, guidelines and procedure issued by the Government in Fisheries and ARD Department vide letter dated 24.05.2011 stipulates that the quantum of procurement of medicines/chemicals/instruments and equipments during the year 2011- 12 shall be notified in the three separate schedules. The terms and conditions have been put in such a manner as to favour only one particular party, who has been supplying materials since more than ten years in the name of three different firms of which the party himself and his son and wife are proprietors. Before issuance of tender call notices for the year 2010-11 on 07.07.2010, no tender call notice was issued for the preceding four years. One composite annual tender call notice was issued in the year 2006-07 for supply of instruments and equipments, medicines and chemicals for the year 2006-07. Basing on the composite tender finalized during 2006-07, 95% of the business has been provided to the said particular tenderer Krushna Chandra Tripathy and in the name of his wife and son. When tender call notice was issued separately on 30.06.2010 with terms and conditions favouring the said particular tenderer, the present petitioner No.1 approached this Court in W.P.(C) No.12178 of 2010 5 assailing the irregularities committed by the departmental authorities and the said writ petition was disposed of on 28.07.2010 with a direction to opposite party No.2 to issue fresh tender call notices separating instruments and equipments from medicines. Another writ petition bearing W.P.(C) No.15329 of 2010 was filed by one Trimurty Chemicals challenging the legality of the impugned decision of the Director of AH & VS, Orissa in finalizing the tender in favour of the opposite parties 3,4 and 5 therein. The said writ petition was, however, dismissed as there was a defect in the writ petition filed by the said writ petitioner.
6. The petitioners and others have filed a number of complaints before the Hon'ble Chief Minister/Government in Fisheries & ARD Department/Director of AHVS, Orissa, alleging unholy nexus of the officers in the Directorate with previous year's supplier in the matter of finalization of terms and conditions of the tender. The objections/complaints also highlighted irregularities and illegalities committed in the Directorate. In the meantime, petitioners have obtained information under R.T.I. Act that there has been commission of large scale irregularities in the tender process by the Directorate of AH & VS in the matter of purchases for last so many years until 2010-11 and particularly favouring a particular family having three business units in the name of father, mother and son, namely, M/s Kamala Agencies, M/s Cosmic Laboratory and M/s National Enterprises and the object behind insertion of tender conditions is only to 6 favour the aforesaid firms of one family. Independent inquiries were made by the State Vigilance Department in Cuttack Vigilance over the allegations of irregularities in tender process of the Directorate of Animal Husbandry & Veterinary Services, Orissa, Cuttack.
7. Perusal of conditions under Annexures 4 to 6 reveals that there has been wide variance in the present impugned tender call notices under Annexures-4 to 6, insofar as the 'Tender Paper cost', 'EMD', 'turnover' and 'experience' in comparison to other States. A comparative statement would indicate that the differential cost in respect of the aforesaid contingencies is exorbitantly at higher side and obviously for the oblique object of restricting wider participation in the tender process. Though the petitioners have brought the aforesaid fact to the knowledge of the opposite parties, yet there has been no response. When the cost of tender for the year 2006-07 was Rs.1,000/- and cost of EMD was for Rs.15,000/- with no condition regarding turnover and past experience in supplying veterinary medicines to Government/ semi Government organizations, yet since 2010-11 including in the annual tender document the cost of each tender document has been fixed at Rs.10,000/-. Earnest Money Deposit has been fixed at Rs.3.0 lakhs for supply of medicines, Rs. 0.5 lakh for supply of chemicals and Rs.2.50 lakhs for supply of instruments & equipments. The said condition has been put to favour the last year's supplier. This is bad in law 7 as it is intended to restrict the wide participation contrary to Government norms, public policy and public good.
8. The eligibility criteria as provided in all the three tender papers are not reasonable. The eligibility condition in condition No.1 is that the tenderer should be a manufacturer or authorized distributor or authorized agency or authorized representative having valid registration of the product. This means the tenderer should be a manufacturer only who is permitted to file tender offer either by itself or through its authorized distributors or through its authorized agents or through its authorized representative. A manufacturer requires valid registration of the product in his manufacturing concern/company. No such clause was/is ever applicable to the authorized distributors/authorized agency/authorized representatives as no such registration of product would be required for them. The term valid registration of product has been deliberately and willfully inserted in the eligibility condition to show undue favour to the parties of choice. Such term is rather confusing in nature and it intended to create confusion with the tenderer, who is not a manufacturer.
9. The procedures indicated in paragraphs 4, 5 and 6 under the heading 'eligibility' are unknown to any tender process and such a process would be susceptible to manipulation of tender documents, favouritism and corruption. Such process, cannot in law, be said to be transparent process, especially when before opening of the technical bid by the tender committee 8 in presence of the tenderers and its authorized representative, documents attached to the tender would be verified by the Screening Officers of the Department and would be handled by other committees. Therefore, the impugned tender call notices and tender documents under Annexures 1 to 6 are liable to be quashed.
10. Government Circular dated 24.05.2011 has been violated by the opposite party no.2 in not notifying the quantum of procurement of medicines/chemicals/instruments and equipments during the year 2011- 12 in three separate schedules either in Tender Call Notice under Annexures-1 to 3 and/or the annual tender documents under Annexures-4 to 6. Without aforesaid stipulations in the annual tender documents no tenderer can be able to file its tender in a meaningful manner and he would be debarred and prevented from filing a meaningful bid in its proper perspective and further there would be every possibility of cancellation of his tender by the Screening Officers/Screening Committee/Technical Committee/DLPC/Tender Committee/Purchase Committee. According to the aforesaid Government Circular, the bid documents should be comprehensive and without any ambiguity. In the proposed provision for Technical Bid, specific criteria are required to be mentioned in detail in the documents along with chemical terms and conditions so that it will be easier for evaluation of the Technical Bid. But all these provisions have been completely ignored. In the terms and conditions under the heading in 9 para-B Instruments to Tenderers while submitting "Tender Papers" it has been stipulated in Clause -7 thereof that tendering firm should not quote any item in respect of which they do not have endorsement in their Manufacturing Licence. Such a condition is redundant as not required for any tenderer other than manufacturer. If a tender is filed by authorized distributor/authorized agency/authorized representative, the same would be liable to be rejected as they would not be having any manufacturing licence of their own nor would be able to quote any item for the tender in question. Referring to clause 17, Mr. Mohanty submitted that tender conditions have been put in such a manner so as to deprive any firm newly constituted from participating in the tender process. Such condition is violative of Wednesbury principle of reasonableness, natural justice and Articles 14 & 19 (1)(g) of the Constitution of India. Admittedly, the supplier is not permitted and/or authorized to submit tender, yet clause -22 indicates that a supplier has to furnish up-to-date VAT clearance certificate. The word "supplier" has been deliberately put to create confusion in the matter of submission of tender.
11. According to Mr.Mohanty, a conjoint reading of the tender conditions would reveal that a person who is found to be eligible under the conditions of "Eligibility" would be debarred from participating in the tender process in terms of the conditions incorporated under "Right to acceptance/Rejection of tender" and "Instructions to tenderers while 10 submitting tender papers." The conditions so incorporated under the aforesaid 3 headings are demonstratively ambiguous and uncertain. Therefore, though the petitioners are eligible under the eligibility condition, yet would not maintain their tender because of the ambiguity in the conditions under "Right of acceptance/ Rejection of tender" and "Instructions to tenderers while submitting tender papers."
12. Registered dealers are excluded from participating in the tender process though they were included in the previous year. Exclusion of registered dealers is unreasonable. By deleting registered dealers, the tender inviting authority has made the competition limited.
13. Law is well settled that the principle of judicial review would apply to the exercise of contractual powers by Government bids in order to prevent arbitrariness and favouritism. Concluding his argument, Mr. Mohanty submitted that for various irregularities the impugned tender call notice under Annexures- 1 to 3 and tender documents under Annexures- 4 to 6 are liable to be set aside and cancelled with direction to opposite party no.2 to fix appropriate criteria, terms and conditions pertaining to supply of medicines, chemicals and instruments & equipments for the year 2011-12 in a most transparent manner.
14. Per contra, learned Advocate General submitted that the writ petition is not maintainable as similar tender condition has been examined by this Court in W.P.(c) Nos. 12178 of 2010 and 15329 of 2010 and 11 therefore, the present writ petition is hit by both principles of res judicata and estoppel. The present writ petition is also not maintainable as the main allegation of the petitioners is against a family, i.e., father, mother and son, who allegedly have floated three different firms, namely, M/s. National Enterprisers, M/s. Kosmic Laboratories and M/s. Kamala Agencies. The present writ petitioners have miserably failed to make out a case for judicial review of the tender conditions. The first petitioner-M/s. Subhadarsini Supply Agency was a petitioner in W.P.(C) No. 12178 of 2010 and by order dated 28.7.2010 this Court disposed of the said writ application with a direction to issue fresh tender notice separating the equipments and instruments from the medicine which was complied with by the opposite parties by separately tendering the medicine, chemicals and instruments & equipments. In that writ application also the present petitioners made similar allegations against the Departments as well as the private opposite parties and therefore, it is apparent that the present writ petitioners have not come with a clean hand to this Court, which is a Court of equity and fair play. Another writ petitioner M/s. Trimurty Chemicals also filed a writ application bearing W.P.(c) No.15329 of 2010 challenging similar tender condition as in the present case and this Court disposed of the same on 06.10.2010 by a speaking and reasoned order without interfering with the tender condition for the year 2010-11 and declaring the tender process valid and thus, the present writ application also suffers from vice of res judicata. 12 Therefore, this Court should not interfere with the present writ petition.
15. The total purchase for the year 2011-12 in respect of all articles comes to near about four times in comparison to the year 2010-11. The tender condition for the year 2011-12 has been fixed keeping in view three years experience criteria, i.e., approximately 25% of the total estimated budget cost as turn over criteria, which is apparently necessary. Such tender condition is in conformity with recommendations of the Central Vigilance Commission and in consonance with reasonable restrictions and in conformity with Rule 18 of the Orissa Government Finance Rules. The required aim and objective of the tender is to find out the right product at a comparatively low price as well as timely supply so as to achieve the objective of the programmes and schemes. Therefore, grievance of the writ petitioners that the tender eligibility criteria debar some of them cannot be a ground for declaring such clause illegal, irrational or unreasonable or actuated by malice. The entire process is transparent and made by a high level committee and not a single clause in the contract is illegal and contrary to public policy.
16. There was a wide participation in the tender process and around 17 participants both from inside and outside State participated in the tender for medicine and so far as participation in the tender for chemicals and equipment & instruments are concerned, the tender is yet to be opened. For the year 2010-11, in medicine there were 15 participants, 3 13 in chemicals and 10 in Instruments & Equipments, out of which in Medicine 6, in chemicals 3 and in Instruments and Equipments 7 bidders were selected. Therefore, the petitioners have not made out a case for interference of this Court in the tender process.
17. Keeping in view the F.D. Circular No.48317 (230)/F Dated 23.11.2010 and office memorandum no.12-2-1-CTE 6 dt. 17.12.2002 and Rule 18 of OGFR Vol-I, the prequalification for eligibility like turnover, experience, EMD etc. were fixed. While doing so, taking into account the additional guidelines communicated by the Government in Fisheries & ARD Department, in their letter No.6269 dated 24.5.2011, the annual tender has been floated for the year 2011-12. Therefore, the tender notice floated for the annual tender 2011-12 is very much clear. The allegation that there is ambiguity and uncertainty in the tender condition is not at all correct. In the tender paper, it has been provided that if at all the tenderer has any doubt or confusion in his mind, he should inform the Director and obtain clarification in writing prior to submission of the tender. Petitioners' allegation, that opposite party no.2 has made an endeavor to show undue, unwarranted and uncalled for favour to one particular tenderer is totally misconceived and mala fide.
18. In the year 2006-07, more than 20 bidders participated for supply of medicine and more than 30 bidders participated for supply of instruments & equipments and more than 6 bidders for chemicals, out of 14 which 11 nos. of firms were awarded with contract for supply of medicines, 13 nos. for supply of instrument & equipments and 6 nos. for supply of chemicals. Therefore, the allegation that 95% of the business was awarded to a single bidder during the year 2006-07 is not correct. Though annual tender was not floated during the years 2007-08, 2008-09 & 2009-10, short tenders were floated during those years. The petitioners are habitual litigants and busy in dislocating the livestock service in the State of Orissa by causing disturbance in the fair and transparent tender process. In doing so, the petitioners have also taken recourse for making false allegations against public officials suppressing the fact before this Court. The petitioners filed petitions at different times, some time individually and some times jointly on the same ground of challenge that have been disposed of by this Court many a times.
19. Fixation of EMD is to establish the earnestness of the bidder, so that he does not withdraw, impair or modify the offer within the validity of the bid. As per OPWD Code, the cost of tender paper is fixed. Therefore, there is no arbitrariness in floating the tender notice. The condition noted in the invitation for bids under heading "eligibility is in the greater interest of the department" so as to keep the frivolous and incapable dealers away from competition. Therefore, the three tier scrutiny system, i.e., a Screening Committee for preliminary scrutiny, Technical Committee for technical evaluation of specification and lastly a Committee to finalize the L-I & L-II 15 bidders, has been adopted to ensure transparency and fairness in the two bid system of tender process as compatible to para 3.5.9 note (vii) of OPWD Code, Vol-I. The Director has taken all the measures not only to ensure transparency and fairness in tender process but also emphasized on value of money, quality and time so as to prevent any dislocation in livestock service. Therefore, as check measure, such conditions of eligibility have been put in paras-2, 4, 5, 6 of the tender notice. The schedule for medicine, chemicals and instruments & equipments consists of about three hundred items which has to pass through a rigorous process of examination of technical specification with reference to the specification as notified. Therefore, an expert committee is required to examine and after recommending the items and selecting the technical bids, the final stage of scrutiny takes place at DLPC. Prior to that, a Screening Committee is inevitable to conduct preliminary scrutiny of the documents like EMD, money receipt, manufacturing licence, ISO certificate and other required documents.
20. The allegation that the scrutiny of documents was made before opening of technical bid is false allegation made only with a view to misguide the Court. Under the heading "eligibility" clauses 4, 5 & 6 the tenderers are required to produce the original documents for verification by the screening committee on the day following the date of opening of tender (Technical Bid)". This shows that no such verification is insisted upon before opening of the technical bid. Therefore, three tier scrutiny has been 16 provided and conducted in presence of technical expert and other members. The apprehension is also not sustainable because, in presence of all bidders, the bid documents are taken out from sealed box, displayed before all bidders, signed by all bidders or their representatives and then bid documents are opened and pagination is made in the presence of all bidders. All these check measuring are made only to ensure transparency and fairness instead of the alleged favoritism and corruption. As such, there is no violation of Government Circular dated 23.06.2010 or 24.05.2011. Goods intended to be purchased were not individually quantified as the requirement may vary depending upon natural calamity, epidemic etc. and as per actual indent from the districts from time to time.
21. The annual turnover for the tender has been fixed as per the guidelines communicated by the Government in FARD Department in their letter no. 6269 dated 24.05.2011 on the basis of F.D. UOR.No. 124/ES-1/ dated 19.04.2011 in order to ascertain the financial capability of the tenderers for supply of item to meet the requirement of the Department. The terms and conditions have been legally drafted in conformity with general financial rules of Government of Orissa as well as Government of India. The estimates for fixing turn over criteria including EMD as well as the cost of tender paper has been rationally made in consultation with the Finance Department and inconsonance with the codal provisions of law. The alleged grounds of favoritism and arbitrariness against the opposite 17 parties cannot be sustained in view of wide publicity made in the National/local Daily newspapers including Indian Trade Journal and in view of earlier observation of this Court made in W.P.(C) No.15329 of 2010 dated 06.10.2010. Concluding his argument Mr. A.Mohanty, learned Advocate General prayed for dismissal of the writ application.
22. Mr. P. Acharya, learned counsel appearing on behalf of the intervener submitted that the petitioners have no locus standi to challenge the tender call notices. They have not participated in the tender in question. It is trite law that an individual has no right to compel the Government to enter into any contract with him. The State can, on the basis of fair principles, invite tender to execute the contract in the public interest. Placing reliance on the cases of C.K.Achutan Vrs. State of Kerala (AIR 1959 SC 490); Erusian Equipment & Chemicals Ltd. Vrs. State of West Bengal (AIR 1975 SC 266) Mr. Acharya submitted that it is open to the Government, even as it is to a private party, to choose a person of their liking to fulfill contracts which they wish to be performed. The aggrieved party cannot claim the protection of Article 14 of the Constitution. As such, there is no discrimination on the part of the opposite parties in such action. The petitioners have suppressed many vital material facts and have approached this Court with unclean hands therefore, they are not entitled to the equitable relief. Though the petitioners have made several allegations against the present intervener, they have not made him a party to the writ 18 petition to avoid presentation of proper facts before this Court for effective adjudication of the case.
23. Mr. Acharya adopting the counter affidavit filed by the State Government submitted that the eligibility as prescribed in tender call notice conforms to all standards of reasonableness and rationality in as much as the same is confined to manufacturers/authorized distributors/authorized agencies/ authorized representatives having valid registration of product for supply of medicines. The impugned tender call notice is not meant for bulk purchase and/or supply of medicines at a time, but it is a tender call for short listing the eligible firms/bidders and to prepare a list of rate contract in respect of various categories of products like medicines, chemicals and equipments. The purchases are required to be made as and when exigencies arise. The employer cannot foresee and predict the exact quantum of purchases to be made during a particular year since the purchase of medicines etc. depends upon several factors like natural calamities, such as floods, cyclones etc. which may have adverse effect on the life and health of live stock resources of the State. If the quantum of the product would be specified then in the event of finalization of the bid, a bidder would compel the Government to purchase the same quantum of medicines/chemicals and equipments through out the year even if there is no necessity of the same. Moreover, the tender call notice is not meant to purchase the materials at a stroke as the medicines have specific expiry 19 dates. Opposite party no.2 is not the sole authority who is inviting similar kind of bids. The Directorate of Health Services, Orissa, the Office of the Dean of Research, Orissa University of Agriculture and Technology, Orissa, Capital Hospital, Bhubaneswar, and MKCG Medical College and Hospital, Berhampur who have made similar types of purchases also floated tenders wherein the quantum of products has not been specified as the same is due to non-ascertainment of the exact quantity of purchase of a particular product throughout the year.
24. Mr.Acharya further submitted that to ensure a transparent process of procurement, detailed tender guidelines have been prepared with much care and caution to provide wider participation and equal opportunity to the tenderers/participants. While floating tender for medicines, 88 nos. of items of medicines have been quantified basing on the broad classification of specific drugs and medicinal compositions. Therefore, the allegation that the tender notice floated by opposite party No.2 does not have any quantification of medicines, is false and is denied. Though the petitioners have challenged the terms and conditions of the tender call notice for the year 2011-2012 but all throughout in the writ petition they have taken averments which relate to the year 2006-07 and 2009-10, wherein allegations have been made against the intervener- petitioner who has not even been made a party to the present proceeding. This speaks volumes of ill motive of the petitioners either to wreck personal 20 vengeance upon the intervening applicant or to obstruct finalization of a legal bid. The allegation that there is a vigilance report against the intervener-petitioner is not correct. None of the petitioners has got the eligibility criteria on any count. They don't have the financial capability in terms of turnover, experience in supply of veterinary medicines and drugs. In fact, one of the petitioners, namely Shivam Distributors, is facing a vigilance proceeding in Vigilance P.S. Case No.32 of 2011. Therefore, the writ petition is not maintainable in law and liable to be dismissed.
25. On the rival contentions advanced on behalf of the parties, the only question that falls for consideration of this Court is as to whether the tender call notice floated by opposite party No.2 for the year 2011-12 for procurement of medicines, chemicals and instruments & equipments and also tender documents (terms and conditions) are violative of Wednesbury principles of reasonableness, Articles 14, 19(1)(g) of the Constitution of India and Government Circular in letters dated 24.05.2011 and 23.06.2010.
26. Mr. Mohanty, learned Senior Advocate for the petitioners though argued the above basic question from different angles, the essence of the argument is same. The petitioners challenge the tender call notice basically on the ground that the eligibility criteria like fixation of turnover, EMD, experience and cost of tender paper are arbitrary, discriminatory and have been fixed to favour one particular party who has been supplying 21 goods since last more than ten years in the name of three different firms of which the said party himself, his son and wife are proprietors. It is also the case of the petitioners that as per the eligibility criteria, only the manufactures could be able to participate in the tender process and other registered dealers are excluded and therefore, the sphere of competition is squeezed. It is further alleged that there is no wide publication of the tender call notice.
27. On the other hand, the case of opposite parties is that the entire process is transparent and made by High Level Committee. The entire writ petition is itself actuated by bias against a particular family without making them as party to the writ petition. According to opposite party-State Authorities for the ensuing year 2011-2012, the estimated procurement value of medicines, chemicals and instruments & equipments has almost gone four times, i.e. Rs.6.00 crores for medicines as against around Rs.2.00 Crores in 2010-2011, Rs.1.00 Crore for Chemicals as opposed to Rs.0.50 Crore in the year 2010-2011 and Rs.5.00 Crores for instruments and equipments as opposed to Rs.1.00 crore for the year 2010-2011 totaling to Rs.12.00 Crores for the year 2011-2012 as opposed to Rs.3.5 Crores for the year 2010-2011.
28. As regards the turnover criterion, the specific stand of the State Authorities is that after due deliberation with all concern, the tender condition for the year 2011-12 has been fixed keeping three years 22 experience criterion which is approximately 25% of the total estimated budget cost as turn over criterion. The said criterion is in conformity with recommendations of the Central Vigilance Commission and is in consonance with reasonable restrictions and in conformity with Rule 18 of the Orissa Government Finance Rules. Further case of the State Authorities is that success of the purchase jointly depends upon the financial and technical capability of a bidder. Therefore, the purpose was to select the reputed, financially capable prospective bidders for which fixation of annual turnover is inevitable.
29. In the instant case, we find that the estimated requirement of medicines, chemicals and instruments & equipments for the year 2011- 2012 is Rs.6.00 Crores, Rs.1.00 Crores and Rs.5.00 Crores respectively. Keeping in view such estimated requirement, the tender inviting authority fixed the annual turnover of the tenderer at Rs.1.50 Crores, Rs.0.25 Crores and Rs.1.25 Crores respectively for supply of medicines, chemicals and instruments & equipments in each financial year for the three preceding years. Fixing the turnover guideline has a definite purpose. Primarily, it is to weed out non-serious fly-by-night persons dealing with products. Further case of the opposite party-State Authorities is that the annual turnover for tender has been fixed as per the guideline communicated by the Government in FARD Department in their letter No.6269 dated 24.05.2011 on the basis of the Finance Department UOR No.124/ES-I/Dtd. 23 19.04.2011 in order to ascertain the financial capacity of the tenderer for supply of the items to meet the requirement of the department. Therefore, we don't find any infirmity or illegality or any mala fide or unreasonableness in fixing such annual turnover for the tender as a condition in the tender notice.
30. So far as EMD is concerned, the specific case of the opposite party-State Authorities is that the primary objective of submission of EMD is to establish the earnestness of the bidder so that he does not withdraw, impair or modify the offer within the validity of the bid. It also helps in restricting, if not eliminating, speculative frivolous or wait and see bids. Any relaxation regarding submission of EMD has financial implication besides giving encouragement to the bidders for submission of frivolous bids. Therefore, a reasonable amount of EMD was felt necessary on the basis of estimated value of purchase. Estimates for fixation of turnover criteria including EMD as well as cost of the tender paper have been rationally made in consultation with the Finance Department and incompatible with the codal provisions of law. In view of the above, it cannot be said that the decision of fixing EMD at Rs.3.00 lakhs considering the expected quantity of purchase is unreasonable and with arbitrary and mala fide intention.
31. So far as experience criterion is concerned, the case of opposite-party authorities is that in Office Memorandum No.12-2-1-CTE6 24 dated 17.12.2002, the CVC has categorically suggested for stores/purchases contract through tender process. The pre- qualification/post qualification shall be based entirely upon the capability and resources of prospective bidder to perform a particular contract satisfactorily. While doing so, the CVC in its office Memorandum at paragraph-B for store/purchase contract has emphasized on financial status of at least three years with cut off date by 31 st March and finally the bidders should have credibility. Keeping in view the above guidelines read with Rule 18 of the OGFR Vol-I, the pre qualification for eligibility like turnover, experience EMD etc. was fixed. As per the additional guidelines communicated by the Government in FARD Department in letter No.6269 dated 24.05.2011, the tender has been floated for the year 2011-2012.
32. Needless to say that to ensure timely supply of medicines, chemicals and instruments & equipments, experience and credibility of a supplier has to be ensured and for that purpose fixation of the experience criteria has rightly been done by opposite party authorities. Therefore, it cannot be said that the fixation of such criteria is arbitrary or unreasonable.
33. The other grievance of the petitioners is that the tender was invited from the manufacturers/authorized distributors/authorized representatives having valid registration for supply of materials. There are registered dealers, who deal with various types of medicines required by the 25 tender inviting authority but because of the conditions stipulated in the tender call notice, they have been excluded from participating in the tender process. According to Mr. Mohanty, by fixing a guideline that the participants should have VAT licence in Odisha, the outside manufacturers were excluded from participating in the tender process.
The case of the opposite party-State Authorities is that every manufacturer of a product has its own valid product registration/license. Thus, onus lies on every authorized agency or representative taking part on behalf of the manufacturer to produce their registration certificate of the product from their respective manufacturer which remains valid as on the date of the bid. Moreover, the authorized distributors/authorized agencies/ authorized representatives are quoting the product of particular manufacturer not on behalf of the manufacturer as their power of attorney holder but for the purpose of their own business interest and activity as individual firms. The product which they quote belongs to a manufacturer having valid licence which the authorized distributors/authorized agencies/authorized representatives of the said manufacturers subsequently sell to this organization after being approved in the tender. Therefore, to check the quality and prevent supply of spurious items in the process of procurement by any such individual bidders including their authorized representatives or authorized agencies or distributors having manufacturing licence in respect of the product as well as the detail 26 address of the manufactures become imperative and inevitable. Therefore, copies of the registration certificate in respect of manufacturing/VAT registration ISO or ISI have been insisted upon. This condition is stipulated in the greater interest of the Department so as to keep the frivolous and incapable dealers away from the competition.
34. FD Circular No.48317 (230)/F dated 23.06.2010 provides that for procurement of stores and materials decided to be made directly from the manufacturer or outside the State, the purchase shall be regulated through local billing after making price comparison. The terms and conditions fixed in paragraph 11 of the tender read with Corrigendum dated 21.07.2011 indicate that "the outside manufacturers/distributors/ agencies/ representatives, if selected for award of contract shall either open their branches and obtain VAT registration in the State of Orissa or their supply shall be regulated as per FD Circular No.48317 (230-F)/F dated 23.11.2010. Thus, the said Circular has been notified only to make the tenderers/manufacturers aware of the objective of the facts for consumption of VAT in the State of Odisha. The condition itself makes it clear that registration for VAT is not for bidding purposes. Only after selection of the party it is required to open a branch or to get it registered under VAT provision in Odisha. Therefore, the grievance of the petitioners that outside State manufactures are kept out of tender process is contrary to the clear stipulation made in the tender notice.
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35. It is needless to say that the stipulation of the above conditions is barely necessary to ensure the quality of the products and prevent supply of spurious items in the process of procurement. The above condition has also a bearing on the cost of procurement and timely supply of live stock services without any dislocation. This is necessary for immediate and urgent procurement of the materials/goods under different contingencies like natural calamities, such as flood, cyclone etc. and unprecedented break out of epidemic and other calamities which may have adverse effect on the life and health of live stock resources of the State. The standard regarding possibility of exclusion of manufacturers of outside the State even otherwise is not a ground available to the petitioners without any challenge by any such manufacturer. This may be available to the manufacturer of outside the State in a given case. Therefore, we do not think it necessary to discuss such a hypothetical case. Hence, such conditions are reasonable and not discriminatory.
36. The allegation as regards lack of wide publication is also not acceptable for the following reasons:
According to the State Authorities, the tender call notice was published in two leading Odia dailies so also one National English newspaper as well as in the Government website and in the Indian Trade Journal for wide publication of bids. Because of such wide publication, 17 number of firms including firms of Delhi, Kolkata and from other States 28 have participated in the tender for the year 2011-2012. Therefore, it cannot be said that there is no wide publication of the tender notice. Moreover, the allegation that there was no wide publication of impugned tender call notice cannot be a ground available to the petitioners, who being aware of such notice challenge the same in this writ petition on several grounds.
37. The other allegation of the petitioners that there is some ambiguity in the tender call notice, does not appear to be correct. The case of the petitioners is that the tender call notice floated for the year 2011-2012 is very much clear that there is neither ambiguity, uncertainty nor the same is tainted with arbitrariness, mala fide, favouritism. Moreover, in the tender paper in clause "TENDERER'S UNDERSTANDING OF THE TENDER DOCUMENT" at page 7, it has been provided as follows"
"The tenderer shall carefully go through the tender documents and fully inform himself to all the terms and conditions contained there in before submission of the tender. If the tenderer find discrepancies or omission or should be in doubt as to their meaning relating to tender documents, he should at once inform the Director and obtain clarification in writing prior to submission of this tender. Verbal clarification or information given by the Director or the employees working under him or his representatives shall not be binding on the Director."
In view of the above, it is difficult to accept that because of some confusion in the tender paper, any interested party is affected. 29
38. No relevant material has been placed for our consideration that the tender condition has been put in a manner to favour any particular business concern. Moreover, though several allegations have been made against some private business concern, they have not been made parties to the writ petition. Therefore, the allegation that the tender condition under challenge are moulded in such a manner by the Department so as to only facilitate such private business concerns to procure the tender in a mala fide manner, does not merit consideration.
39. For the reasons stated above, the allegations that the conditions of eligibility as have been put in paragraphs, 2,4,5 and 6 of the tender are not sustainable in law are without any basis. There is no infirmity or inherent defect or unreasonableness in the tender terms and conditions as contained in tender notices (Annexures 1 to 3) and in tender documents (Annexures-4, 5 and 6) respectively and none of the terms and conditions of the tender violates the constitutional provisions under Articles 14 and 19(1)(g) of the Constitution, or contrary to Wednesbury principle of reasonableness or circular in letters dated 23.06.2010 and 24.05.2011.
40. Considering the entire fact situation of the case, the argument advanced by the parties and that there is extremely limited scope of judicial review in policy matters, we do not find any reason to 30 interfere with the decision taken by opposite party authorities. This is not a case where there is any infirmity in the decision making process.
41. The writ petition is dismissed being devoid of any merit.
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B.N. Mahapatra,J .................................
Chief Justice Orissa High Court Date 14th December, 2011/ssd/ss/skj