Delhi High Court
Misrilall Mines Pvt Ltd And Anr vs Mmtc Ltd And Ors on 12 February, 2013
Author: Sanjay Kishan Kaul
Bench: Sanjay Kishan Kaul, Indermeet Kaur
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 12.02.2013
+ W.P.(C) 5709/2012
MISRILALL MINES PVT LTD AND ANR ..... Petitioners
Through: Mr. S. Dasgupta, Mr. Sandip Kr. Dutta &
Mr. Siddharth Gautam, Advs.
versus
MMTC LTD AND ORS ..... Respondents
Through: Mr. Sanjeev Puri, Sr. Adv. with
Mr. Gautam Awasthi, Adv. for R-1 to 5.
Mr. Sunil Kumar, Adv. for R-6.
CORAM:
HON'BLE MR. JUSTICE SANJAY KISHAN KAUL
HON'BLE MS. JUSTICE INDERMEET KAUR
1. The petitioner No.1 claims to be a producer of Friable Chrome Ore and
Chrome Concentrate having a mine containing natural reserve in the
State of Orissa. Respondent No.6/Union of India constituted,
designated and nominated respondent No.1/MMTC as the sole
canalizing agency under the Export & Import Policy framed from time
to time under the Foreign Trade (Development & Regulation) Act, 1992
(hereinafter referred to as the „said Act‟).
2. The dispute originally arose on account of a meeting of Chrome Ore
Producers held on 10.7.2012 wherein representatives of petitioner No.1
were present. The minutes recorded of the said meeting show that when
respondent No.1 introduced e-auction method for sale of chrome ore
and chrome ore concentrates to seven enlisted empanelled buyers, the
same was challenged by the petitioners by filing a writ petition before
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the High Court of Calcutta. The said writ petition is stated to be still
pending though no interim orders were granted in those proceedings.
Petitioner No.1 is stated to have sent communication to respondent No.1
suggesting that a global tender with certain conditions would be the
appropriate methodology rather than having an empanelled list of
buyers who would be entitled to purchase through the process of e-
auction. The views expressed by the representatives of other sellers are
also noticed in the said minutes.
3. Petitioner No.1 claims that though the e-tender system was introduced
by respondent No.1, later on the said respondent exempted petitioner
No.1 from reserve price fixation and also online forward auction with
regard to the export of cargo of petitioner No.1. However, practically
speaking petitioner No.1 was not permitted to make export on one
pretext or the other.
4. The respondent No.1 sought to introduce global e-tender system for
export vide communication dated 20.7.2012. The said letter reads as
under:
"MMTC LOGO
By Courier
No.MMTC/2012-13/CR/7554 20th July, 2012
To,
Shri S.K. Jain,
Director, M/s. Misrilal Mines Pvt. Ltd.,
"MINERAL HOUSE" 27 A, Camac Street
KOLKATA-700016.
Sub: Global E tender for export of Chrome ore/Concentrate
Dear Sir,
During the Chrome Producers Meet held on 10th July, 2012, the selling
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WP (C) No.5709 of 2012 Page 2 of 11
mechanism of chrome ore and chrome concentrate was discussed.
Besides in the pre bid conference held on 15th June, 2012 the
prospective bidders had also suggested for adoption of global tender for
exports of chrome ore/concentrate.
Now it has been decided that MMTC shall invite global E tender for
sale of chrome ore/concentrate offered quantity by the suppliers. There
shall be two bid systems (Part I: Technical Bid and Part II: Price Bid)
in the tender. The brief details of Global tender are as under:
i) TECHNICAL BID
Bidder shall fulfill the following criteria and submit supporting
documents in tender box.
(a) Turnover: Minimum average annual turnover of US$50 millions
(Average turnover for last 3 years; in case of years of operation being
less than 3 years, average of completed years of operation).
(b) Networth: Minimum networth of US$ 5 million as on last annual
balance sheet.
(c) Past experience: Minimum experience of one year in minerals business.
(d) Credit rating: Minimum „satisfactory‟ or equivalent (i.e. from D&B,
S&P, Moody‟s ICRA, CRISIL, CARE etc.).
(e) Bank reference report along with letter of credit limit.
(f) EMD: Bidder shall submit an EMD for amount equivalent to 3% of the
cargo value in the form of BG/FUND TRANSFER.
(g) Performance guarantee: An undertaking to furnish PBG for 10% of the
total contract value.
(h) Payment term: An undertaking to make payment through an
irrevocable letter of credit with TT reimbursement clause. Load port
results are final and LC shall be negotiated for 100% payment on
Loadport results basis.
(i) MTPL, Singapore a 100% subsidiary of MMTC will be exempted from
submission of security deposit, performance guarantee bond and
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WP (C) No.5709 of 2012 Page 3 of 11
establishment of letter of credit towards the value of cargo.
ii) PRICE BID (E-TENDER MODE)
Bidder shall submit Price bid in MMTC e-portal and indicate prices in
USD per MT FOBT, Paradip
MMTC shall endeavour to issue global tender at least twice in a
calendar quarter. The global tender shall be kept open for minimum 21
days. The bidder shall submit their technical bid in physical mode in
the drop box and price bid through electronic mode in our E portal.
The successful bidder shall furnish PBG within 10 calendar days from
the date of communication.
In view of the above, we request you to kindly arrange to intimate us
the following:
1. Quantity to be offered for export during the quarter.
2. Lotwise quantity details.
3. Complete physical and chemical specifications.
4. Shipment schedule.
Kindly arrange to send your offer on or before 24th July, 2012.
Thanking you,
Yours faithfully,
For MMTC Ltd.
Sd/-
(A Hembram)
Dy. General Manager (Minerals)"
5. The petitioner is now aggrieved by the introduction of clauses (a) to (d)
of condition (i) "Technical Bid", which are stated to be impeding
competition. It is the say of the petitioners that the objective of any
process for the benefit of respondent No.1 should be to get the best
possible revenue and security for the said revenue, an aspect stated to be
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WP (C) No.5709 of 2012 Page 4 of 11
set out in clause (h) of condition (i). The petitioners want the right to
locate its prospective foreign buyers at such price which may be
mutually agreed to between the parties and not to disallow the
petitioners from exporting their cargo for want of compliance of clauses
(a) to (d) of condition (i).
6. We have noticed the contentions aforesaid of learned counsel for the
petitioners on 12.9.2012 while issuing notice and had directed by an
interim order that, in the mean time, offer made by the petitioners vide
annexure P-6 be examined by respondents 1 to 5. This annexure P-6
was qua the interest expressed by one of the foreign buyers Avani
Resources of Singapore made through their letter dated 26.6.2012
showing interest for purchasing the material of the petitioners.
7. We are informed that insofar as this communication is concerned, Avani
Resources satisfied clauses (a) to (d) of condition (i) and the exports
were made.
8. The writ petition has been contested by the respondents on various
accounts including of misleading the Court, an endeavour at forum
shopping in view of the earlier petition filed in the Calcutta High Court
and mixing up the issues of the earlier enlisted seven (7) overseas
buyers under the e-auction process as compared to the current
endeavour of a global tender through e-process. Another serious
objection raised by the respondents is qua the locus standi of the
petitioners as according to the respondents, if anyone can have
objections as to the terms & conditions sought to be introduced, being
clauses (a) to (d) of condition (i) it is the buyers and not the sellers like
petitioner No.1.
9. Learned senior counsel for respondents 1 to 5 sought to canvas before
us that in the capacity of a canalizing agent, petitioner No.1 enters into
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WP (C) No.5709 of 2012 Page 5 of 11
separate contracts with the buyers and sellers. It, thus, has obligations
towards both. Once there are buyers available in the market as per the
terms & conditions set out by respondent No.1 as a canalizing agency,
the purchase offers are then put up to the sellers like petitioner No.1. It
is, thus, his say that the discretion lies with respondent No.1 to lay down
such terms & conditions as would secure the payment and in order to
deal with the category of buyers, terms & conditions can be set out by
respondent No.1.
10. Learned senior counsel for respondents 1 to 5 seeks to rely upon the
judgement of the Supreme Court in Michigan Rubber (India) Ltd. Vs.
The State of Karnataka & Ors. (2012) 8 SCC 216. Learned counsel has
drawn our attention to the observations made in para 21 of that
judgement which quotes the conclusion from Jagdish Mandan Vs. State
of Orissa & Ors. (2007) 14 SCC 517 as under:
"21. xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx xxxx
"22. Judicial review of administrative action is intended to prevent
arbitrariness, irrationality, unreasonableness, bias and mala fides.
Its purpose is to check whether choice or decision is made 'lawfully'
and not to check whether choice or decision is 'sound'. When the
power of judicial review is invoked in matters relating to tenders or
award of contracts, certain special features should be borne in mind.
A contract is a commercial transaction. Evaluating tenders and
awarding contracts are essentially commercial functions. Principles
of equity and natural justice stay at a distance. If the decision
relating to award of contract is bona fide and is in public interest,
courts will not, in exercise of power of judicial review, interfere even
if a procedural aberration or error in assessment or prejudice to a
tenderer, is made out. The power of judicial review will not be
permitted to be invoked to protect private interest at the cost of
public interest, or to decide contractual disputes. The tenderer or
contractor with a grievance can always seek damages in a civil
court. Attempts by unsuccessful tenderers with imaginary
grievances, wounded pride and business rivalry, to make mountains
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WP (C) No.5709 of 2012 Page 6 of 11
out of molehills of some technical/procedural violation or some
prejudice to self, and persuade courts to interfere by exercising
power of judicial review, should be resisted. Such interferences,
either interim or final, may hold up public works for years, or delay
relief and succour to thousands and millions and may increase the
project cost manifold. Therefore, a court before interfering in tender
or contractual matters in exercise of power of judicial review,
should pose to itself the following questions:
(i) Whether the process adopted or decision made by the authority is
mala fide or intended to favour someone;
OR
Whether the process adopted or decision made is so arbitrary and
irrational that the court can say: 'the decision is such that no
responsible authority acting reasonably and in accordance with
relevant law could have reached';
(ii) Whether public interest is affected.
If the answers are in the negative, there should be no interference under
Article 226. Cases involving blacklisting or imposition of penal
consequences on a tenderer/contractor or distribution of State largesse
(allotment of sites/shops, grant of licences, dealerships and franchises)
stand on a different footing as they may require a higher degree of
fairness in action."
In fact, references have been made to different pronouncements and
principles culled out in para 23 as under:
"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;
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WP (C) No.5709 of 2012 Page 7 of 11
(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 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."
Lastly para 35 has been referred to which states as under:
"35. As observed earlier, the Court would not normally interfere
with the policy decision and in matters challenging the award of
contract by the State or public authorities. In view of the above, the
appellant has failed to establish that the same was contrary to public
interest and beyond the pale of discrimination or unreasonable. We
are satisfied that to have the best of the equipment for the vehicles,
which ply on road carrying passengers, the 2nd respondent thought it
fit that the criteria for applying for tender for procuring tyres should
be at a high standard and thought it fit that only those manufacturers
who satisfy the eligibility criteria should be permitted to participate
in the tender. As noted in various decisions, the Government and
their undertakings must have a free hand in setting terms of the
tender and only if it is arbitrary, discriminatory, mala fide or
actuated by bias, the courts would interfere. The courts cannot
interfere with the terms of the tender prescribed by the Government
because it feels that some other terms in the tender would have been
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WP (C) No.5709 of 2012 Page 8 of 11
fair, wiser or logical. In the case on hand, we have already noted that
taking into account various aspects including the safety of the
passengers and public interest, CMG consisting of experienced
persons, revised the tender conditions. We are satisfied that the said
Committee had discussed the subject in detail and for specifying
these two conditions regarding pre-qualification criteria and the
evaluation criteria. On perusal of all the materials, we are satisfied
that the impugned conditions do not, in any way, could be classified
as arbitrary, discriminatory or mala fide."
11. We have heard learned counsel for the parties. We have also taken note
of the submissions of the learned counsel for the petitioners that
respondent No.1 cannot have an uncanalized power as the power has
been conferred under the said Act by the Government of India and the
function of respondent No.1 is to only carry out the export and import
policy of the Central Government. We are, however, of the view that as
far as the controversy in the present writ petition is concerned, it really
pertains to the mode and manner in which respondent No.1 seeks to
work out its role as a canalizing agency in terms of the export and
import policy. The petitioner No.1 had a grievance with the earlier
policy enlisting seven (7) buyers. It is the petitioners who proposed that
global tender would be the answer. Such a course of action was
accepted by respondent No.1. Of course, learned counsel for the
petitioners submits that the proposal for the global tender through e-
process was not accompanied with suggestions or a consent on the part
of the petitioners qua clauses (a) to (d) of condition (i) but what we have
to consider is whether the conditions so imposed can be said to be so
arbitrary or illegal that no reasonable person could come to the
conclusion of framing such a policy (Wednesbury‟s principle) or that
the terms & conditions have been tailor made to suit a particular
person/entity [Decision Oriented Systematic Analysis (DOSA)].
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12. The averments made in the writ petition do not seek to even suggest the
second one. It is within the parameters of the first that learned counsel
for the petitioners has made an endeavour to bring his case in. It is also
cannot be disputed that it is not the function of this Court to sit as an
appellate court over policy decisions and it is within the domain of
respondent No.1 to lay down the policies. It is true that respondent
No.1 holds a dual obligation arising from the role it performs, i.e., the
first one arising from the process culminating in the contract with the
buyer and the second one when those offers are put to the sellers. In
order to safeguard its commercial interests, insofar as the contract with
the buyer is concerned, clauses (a) to (d) of condition (i) have been
inserted as part of "Technical Bid". No doubt clauses (g) & (h) of
condition (i) also seek to safeguard the interest of respondent No.1 but
then it cannot be said that respondent No.1 is devoid of the authority of
creating additional assurances to safeguard its commercial interests as is
sought to be done by clauses (a) to (d) of condition (i).
13. There is also force in the contention of the learned senior counsel for
respondents 1 to 5 that petitioner No.1 cannot really make a grievance
as a seller as it is the buyers who can be aggrieved by the terms &
conditions. It cannot be that a proxy battle can be fought by petitioner
No.1. Of course interest of petitioner No.1 is to safeguard its economic
interest but that cannot be at the cost of compromising the financial
interest of respondent No.1 as a canalizing agent who has taken steps to
safeguard those interests.
14. Insofar as proceedings at Calcutta are concerned, learned counsel for the
petitioners fairly stated that the petition filed has become infructuous by
reason of the fact that the earlier policy stands amended and the present
endeavour being one arising from a fresh policy, the petitioner was
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WP (C) No.5709 of 2012 Page 10 of 11
within its right to assail the new policy.
15. We are, thus, of the view that respondent No.1 acted within its domain
to lay down terms & conditions for safeguarding its interest qua
independent contracts with the buyers and sellers separately.
16. We are, thus, not inclined to exercise jurisdiction under Article 226 of
the Constitution of India.
17. The writ petition is dismissed leaving the parties to bear their own costs.
SANJAY KISHAN KAUL, J.
FEBRUARY 12, 2013 INDERMEET KAUR, J. b'nesh _____________________________________________________________________________ WP (C) No.5709 of 2012 Page 11 of 11