Gauhati High Court
WP(C)/5826/2021 on 18 February, 2022
Author: Manish Choudhury
Bench: Manish Choudhury
Page No.# 1/30
GAHC010210882021
THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : WP(C) 5826 of 2021
1. M/s NAD & Associates
A partnership firm having its office situated at Oswal Complex,
1st Floor, MG Road, Fancy Bazar, Guwahati-781001.
Represented by Sri Paras Didwania,
Age-37, Son of Sri Mohal Lal Didwania,
Resident of Oswal Complex, 1st Floor,
M G Road, Fancy Bazar, Guwahati-781001.
2. Sri Paras Didwania,
Age-37, one of the partners of the Petitioner No. 1 Firm.
Son of Sri Mohan Lal Didwania, resident of Oswal Complex,
1st Floor, MG Road, Fancy Bazar, Guwahati-781001.
.................. Petitioners
-Versus-
1. The Union of India,
Represented by Secretary,
Ministry of Railways, Railway Board, New Delhi.
2. The North East Frontier Railway,
Represented by the General Manager,
N.F. Railway, Maligaon, Guwahati-11.
3. The Principal Financial Adviser,
N.F. Railway, Maligaon, Guwahati-11.
4. The Deputy Chief Accounts Officer/T,
N.F. Railway, Maligaon, Guwahati-11.
Page No.# 2/30
5. The Sr. Assistant Financial Adviser/T-II,
N.F. Railway, Maligaon, Guwahati-11.
6. M/s Rao & Emmar,
Room No. 306, Royal Plaza, Purvoday Bhawan
[Opposite Apollo Hospital], Christian Basti,
Guwahati-05.
...................Respondents
Advocate for the Petitioner : Mr. A. Goyal
Advocate for the Respondent nos. 1 to 5 : Mr. S. Chakraborty,
Standing Counsel, N.F. Railway.
Date of Hearing & Judgment : 18.02.2022
BEFORE
HON'BLE MR. JUSTICE MANISH CHOUDHURY
JUDGMENT & ORDER
By invoking the extraordinary and discretionary jurisdiction of this Court under Article 226 of the Constitution of India, the petitioners have filed this writ petition assailing firstly, the decision of the respondent authorities to discharge the tender process initiated by a Notice Inviting Tender dated 22.07.2021 [hereinafter referred to as '1st NIT', for convenience] wherein the petitioner no. 1 firm emerged as the sole eligible bidder; secondly, a Letter of Acceptance [LoA] dated 12.10.2021 whereby the respondent no. 6 was allotted to do the work of GST return filing and any other services with regard to GST related issues of N.F. Railway for a period of 2 [two] months w.e.f. 17.10.2021 to 16.12.2021; and thirdly, a Notice Inviting Tender dated 08.10.2021 [hereinafter referred to as '2nd NIT', for convenience] whereby the respondent N.F. Railway authorities have invited bids for the Contract-Work in question again.
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2. The work for which the 1 st NIT was and the 2nd NIT has been published is the same which is 'GST return filing and other services with regard to GST related issues of N.F. Railway for 3 years' ['hereinbefore and hereinafter referred to as 'the Contract-Work', for short]. It was/is an open tender process and the bid system was/is single packet system.
3. As the exchange of pleadings between the parties have already been completed and notices upon all the parties have been duly served, the writ petition is taken up for final consideration at the admission stage itself at the request of the learned counsel for the parties. In order to appreciate the rival contentions raised by the parties, it would be apposite to delineate the background events, in brief, leading to the institution of this writ petition, at first.
4. By the 1st NIT dated 22.07.2021, bids were invited from reputed and experienced contractors/firms for the Contract-Work, with reference to Tender no. TA/GST/Contract/RT/2021-22 dated 22.07.2021. The advertised tender value was mentioned as Rs. 48,09,574.98/- and the period of completion was mentioned as 36 [thirty six] months. The last date of submission of bids as per the 1st NIT was 23.08.2021. However, by a Corrigendum dated 03.08.2021, the period of completion of the Contract-Work was reduced to 33 [thirty three] months instead of the earlier 36 [thirty six] months and the advertised tender value of the Contract-Work was reduced to Rs. 44,17,275.72/- instead of the earlier advertised tender value of Rs. 48,09,574.98/-. By the Corrigendum, the eligibility conditions for the bidders were not changed.
Page No.# 4/30 4.1. The relevant clauses in the tender document which are at issue in this writ petition read as under :
4. ELIGIBILITY CONDITIONS Special Technical Criteria S.No. Description Confirmation Remarks Documents Required Allowed Uploading The bidder should have satisfactorily completed in the last three previous financial years and the current financial year up to the date of opening of the tender, one similar single service contract for a minimum of 35% of the advertised value of the bid. Completed service contract includes on- Allowed 1 No. No. going service contract subject to payment of bills amounting (Mandatory) to at least 35% of the advertised value of the bid. In the instant contract, similar service means Railway GST return filing, computation on applicability on GST and any other services related to GST with Railway.
Special Technical Criteria S.No. Description Confirmation Remarks Documents Required Allowed Uploading He must have 3 years working experience with Railway in Allowed 1 respect of GST return filing and other services with regards No No (Mandatory) to GST related issues in last 3 FY.
[Emphasis supplied]
5. In response to the 1st NIT, the petitioner no. 1 partnership firm [hereinafter referred to as 'the petitioner firm' and/or 'the petitioner', for convenience] submitted its bid along with other bidders. It is the case of the petitioner firm that it had fulfilled all the eligibility conditions mentioned in the tender document including the clauses referred to hereinabove. When the petitioner firm was expecting acceptance of its bid pursuant to the 1 st NIT by the respondent N.F. Railway authorities, it came to learn that the respondent N.F. Railway authorities had published the 2nd NIT and in the 2nd NIT, changes have made with respect to the eligibility conditions contained in the clauses, Page No.# 5/30 referred to hereinabove. The petitioner firm also came to learn that by the LoA dated 12.10.2021, the respondent N.F. Railway authorities had entrusted the same work to the respondent no. 6 for a period of 2 [two] months whereas, according to the petitioner, the respondent no. 6 firm did not fulfill the eligibility conditions laid down in the 1st NIT itself.
6. I have heard Mr. A. Goyal, learned counsel for the petitioner and Mr. S. Chakraborty, learned Standing Counsel, N.F. Railway for the respondent nos. 1-
5. Though the respondent no. 6 was duly served with the notice, the respondent no. 6 has not entered appearance in the writ petition.
7. Mr. Goyal, learned counsel for the petitioner has submitted that the decision to discharge the tender process initiated by the 1 st NIT was not communicated to the petitioner firm. The petitioner came to learn about it only from the Minutes of the Tender Committee and the decision of the Tender Accepting Authority later on that the petitioner emerged as the only eligible bidder in the said tender process. Yet, the Tender Accepting Authority did not accept the bid of the petitioner firm and by discharging the tender process, it has gone to initiate another tender process with the issuance of the 2 nd NIT. Mr. Goyal has stressed on the point that two NITs have been published with changed eligibility conditions only to bestow the benefit upon the respondent no. 6 firm. The respondent no. 6 firm was declared disqualified in the tender process initiated pursuant to the 1 st NIT and hence, the eligibility conditions have been changed in the 2nd NIT in order to accommodate the respondent no. 6 firm. With regard to the LoA dated 12.10.2021, he has submitted that the entrustment of the work for the period of 2 [two] months by the said LoA to the Page No.# 6/30 respondent no. 6 is in violation of a Circular dated 05.03.2009 of the Railway Board, Ministry of Railways. The Circular has stipulated that the quotations should normally be invited only from experienced contractors/agencies. After being declared disqualified in the tender process initiated by the 1 st NIT, the respondent N.F. Railway authorities could not have entrusted the work to the respondent no. 6 firm vide the LoA. As such, the LoA is also liable to be set aside. By changing the eligibility conditions with deletion of the criterion of having working experience of 3 [three] years with Railway, the respondent authorities have acted in an arbitrary and biased manner. In support of his submissions, Mr. Goyal has relied in the decisions in Sri-la Sri Subramania Desika Gnanasambanda Pandarasannidi vs. State of Madras and another, reported in AIR 1965 SC 1578, para 17; Minku Hazarika vs. State of Assam and others, reported in [2017] 5 GLR 610, para 29; and G.B. Holdings Private Ltd. vs. Food Corporation of India and another, reported in [2019] 5 GLR 311, para
18.
8. Mr. Chakraborty, learned Standing Counsel, N.F. Railway responding to the submissions of Mr. Goyal, has submitted that the Tender Committee had recorded reasons as to why the tender process initiated by the 1 st NIT was not to be finalized and the same were found well reasoned by the Tender Accepting Authority. In view of the reasons recorded in the Minutes of the Tender Committee recommending for initiation of another tender process with changed eligibility criteria, the Tender Accepting Authority decided to discharge the tender process initiated by the 1st NIT and to review the eligibility criteria before initiation of a fresh tender process with the issuance of another NIT. As the reasons are duly recorded, the decision to discharge the tender process initiated Page No.# 7/30 by the 1st NIT cannot be termed as arbitrary and unreasonable. According to Mr. Chakraborty, the petitioner firm has failed to show any mala fide or to establish the fact that the eligibility criteria have been changed only to accommodate the respondent no. 6 firm. The actual reasons had been discussed in the Minutes of the Tender Committee. In the tender process initiated by the 1 st NIT, in spite of availability of many experienced bidders, the tender process resulted in emergence of only one eligible bidder and the prime reason appeared to be the 3 [three] years' prior working experience with Railways that was sought for from bidders. In respect of the issuance of the LoA dated 12.10.2021, he has submitted that the process was a stop-gap arrangement. In respect of such stop-gap arrangement, quotations are generally invited from experienced firms, not necessarily from shortlisted firms. The necessity to invite quotations in the case arose because of non-finalisation of and the delay occurred in the tender process initiated by the 1st NIT. The matter of stop-gap arrangement has to be considered in the context of the fact situation obtaining during the period in question and the same cannot be made relatable to the Circular dated 05.03.2009. He has strenuously contended that the Circular of the Railway Board was of the year 2009 when the GST regime was not in existence. It is his further submission that the Circular has not stipulated that the agencies must have experience of working with Railway only. It is his contention that the petitioner firm cannot challenge the LoA dated 10.12.2021 because the petitioner firm itself was intimated about the process by issuance of a notice to invite a quotation from it and in response to the said notice for quotation, the petitioner firm had also participated in it by submitting its quotation. By submitting so, Mr. Chakraborty has submitted that there is deliberate suppression of material facts on the part of the petitioner firm in approaching Page No.# 8/30 this Court by this writ petition and on that ground itself, the writ petition should be dismissed, notwithstanding the fact that the writ petition is also bereft of merits for the reasons above. In support of his submissions regarding suppression of material facts, he has placed reliance in the decisions in K.D. Sharma vs. Steel Authority of India Limited and others , reported in [2008] 12 SCC 481; and Kishore Samrite vs. State of Uttar Pradesh and others , reported in [2013] 2 SCC 398.
9. I have duly considered the submissions of the learned counsel for the parties and have also gone through the materials brought on record by the parties through their pleadings. I have also gone through the decisions cited by the learned counsel for the parties.
10. As has been noted above, the respondent Railway Authorities had initiated a tender process earlier by the 1 st NIT inter-alia with the clauses quoted hereinabove. In response to the 1st NIT, 5 [five] nos. of bidders submitted their bids and they were :
Table Sl. No. Name of the Bidder Advertised value 1 M/s Bijay Bagaria and Associates, Guwahati 55% below 2 M/s Rao and Emmar, Guwahati [the respondent no. 6 firm]. 21.21% below 3 M/s A. Ray Choudhury and Co., Guwahati 2% below 4 M/s NAD & Associates, Guwahati [the petitioner firm]. 1% below 5 M/s Poddar & Agarwal, Jorhat At par
11. After opening of the bids, the same were evaluated and the Tender Committee constituted for the purpose, recorded its remarks in respect of the offers in Paragraph 5.0 of the Minutes of the Tender Committee proceeding. For Page No.# 9/30 ready reference, the same are extracted herein :
5.0. DISCUSSION ON OFFERS 5.1.
1. The L-1 firm M/s Bijay Bagaria & Associates, Guwahati has quoted 55% below the advertised rate [SN-133], but not enclosed any valid supportive documents against the Minimum Eligibility Criteria and hence, the Direct Accepting Authority has rejected his bid through his Speaking Order [SN-
345]
2. The L-2 firm M/s Rao & Emmar, Guwahati has quoted 21.21% below the advertised value [SN-337] but not submitted valid credentials as per the requirement in the tender. The firm submitted documents issued from the following organization.
[i] NBCC [India] Ltd. [A Govt. of India Enterprise] [SN-267,303]. [ii] Brahmaputra Valley Fertilizer Corp. Ltd. [BVFCL] [SN-301]. [iii] Agriculture Insurance Company of India Ltd. [SN-296]. [iv] Chief Medical & Health Officer, Uttar Bastar Kanker [Chhattisgarh] [SN-295].
[v] Airports Authority of India [SN-266].
[vi] Mission Director: Amrut Assam [Govt. of Assam] [SN-264,265]. [vii] Ministry of Earth Science [Govt. of India] [SN-262, 263]. [viii] Chhattisgarh East-West Railway Ltd. [A Subsidiary of South Eastern Coalfields Ltd.] for engagement as Internal Auditor of CEWRL for FY 2017-18, 2018-19 & 2019-20 [SN-269, 281 & 293].
It is noted that the organizations from [i] to [vii] are not Railway organization. In case of organization at [vii] i.e. Chhattisgarh East-West Railway Ltd. he has worked as their Internal Auditor. According to the condition of the tender, contractor must have minimum 3 years working experience of GST return filing and other related services. As such, the offer of M/s Rao & Emmar, does not qualify to be a valid bid. Hence, his bid is rejected.
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3. The L-3 firm M/s A. Ray Choudhury & Co. Guwahati has quoted 2% below the advertised value [SN-111] but, has not submitted valid credentials of his experience of performing GST works. He has submitted the working experience from the following organisations :
[i] Software Technology Parks of India [An autonomous society under Ministry of Electronics & IT, Govt. of India] [SN-102 to 106]. [ii] Guwahati Biotech Park [SN-95].
[iii] Pollution Control Board of Assam [SN-94].
[iv] IIIT, Guwahati, Bongora [SN-93].
[v] Indian Statistical Institute [SN-92.1].
Since none of the above organization is a Railway organization, their bid is also rejected.
4. The L-4 firm M/s NAD & Associates, Guwahati has quoted 1% below the advertised value [SN-197]. He is the current CA of N.F. Railway. He has submitted all the valid credentials of his works on GST with the N.F. Railway, viz.
[i] 4 years working experience with N.F. Railway on similar work [SN- 147, 148, 192].
[ii] Payment received for similar work [SN-163].
2017-18 520187
2018-19 2255959
2019-20 1642754
Total 4418900
[iii] Total Turnover [SN-1914]:
2018-19 5924702
2019-20 4717006
2020-21 3144863
2021-22 2645163
Total 16431734
Page No.# 11/30
Besides, he has also attached documents of:-
· Special Power of Attorney [SN-165]
· Solvency Certificate [SN-146]
· Detailed list of completed works and works in hand [SN-144].
· According to the instant tender's eligibility criteria, M/s NAD
& Associates has complied all the requirements.
5. The L-5 firm M/s Poddar & Agarwal, Jorhat has quoted at par with the advertised value but submitted experience certificates from :-
[i] Assam State Textbook Production and Publication Corp. Ltd. [SN-243, 256].
[ii] National Highways Authority of India [SN-246, 247, 249].
[iii] Sports Authority of India [SN-248].
[iv] Tea Research Association [SN-245].
[v] Jorhat Municipal Board [SN-244].
It is noted that the organizations from [i] to [v] are not Railway organization. So, his bid is also rejected."
12. During evaluation, the bids of 4 [four] nos. of bidders out of the 5 [five] bids of the participating bidders were found non-compliant to the terms and conditions incorporated in the tender document of the 1 st NIT. It was the petitioner firm which was found to have complied with all the terms and conditions of the tender document of the 1 st NIT. After recording the responsiveness and non-responsiveness of the bidders in the manner above, the Tender Committee in Paragraph 6.0 had recorded its discussion on the aspect of reasonableness of rates as under :
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"6.0 REASONABLENESS OF RATES 6.1 The L-4 firm M/s NAD & Associates has quoted 1% below the advertised value. He has submitted all the valid credentials as per the requirement of the Minimum Eligibility Criteria set forth for the tender.
Keeping in view the complexities of the working of Railways, 3 years working experience on GST return filing and other services with Railway was incorporated in the Special Technical Criteria under Minimum Eligibility of the instant tender. However, before the opening of the tender, many representations from the other intending bidders were received against the very special condition of "3 years working experience with Railway on GST works". It was stated by the bidders that this criteria is too restrictive to allow any fair competition. Representations from the following firms were received.
1. M/s Vijay Sharma & Associates, Silchar [SN-75].
2. M/s K N P P and Associates, Guwahati [SN-75.3].
3. M/s Bijay Bagaria & Associates, Guwahati [SN-75.5].
4. Sri Asish Singh, Guwahati [SN-82].
5. M/s Krishna Sharma & Associates [SN-347].
Finance member is of the view that after going through the bid, only the current contractor is found eligible as per the condition. Hence, it is important to deliberate this aspect in details. This special condition of "3 years working experience with Railway in respect of GST return filing and other related services" was inserted with an intention to get an experienced firm. It was expected that other firms working in various zonal Railways / PSUs would participate through formation of JV or having a Branch Office in Guwahati. However, no such firm has shown interest in the tender. The purpose of calling Open Tender is to get a competitive price from the eligible bidders. So, it is felt that the bidding in the tender has failed to ensure competition. The expectation of administration that firm working in Page No.# 13/30 other Railways / PSUs would participate has not materialized. And, it has practically become a Single Tender, which was never intended by the administration.
It is also observed that in other Railways, similar work is being performed at much lower rates. The LAR of ER, SR, NWR, NR, SWR placed at SN side from 349 to 352 and the following table will prove the same.
SN Railway Basic Amount 18% GST [INR] Total Amount Remarks
[INR] [INR]
1 N F Rly. 13,58,637.00 2,44,554.66 16,03,191.66 SN-58
2 E. Rly. 3,18,000.00 57,240.00 3,75,240.00 SN-352
3 S. Rly. 4,50,000.00 81,000.00 5,31,000.00 SN-351
4 NW Rly. 4,80,000.00 86,400.00 5,66,400.00 SN-350
5 N. Rly. 7,79,000.00 1,40,220.00 9,19,220.00 SN-349
6 SW Rly. 8,46,000.00 1,52,280.00 9,98,280.00 SN-348
NR is comparable with NRF, as they have also 8 states for filing GST returns. In the light of these, current rate of the eligible bidder, i.e. L-4 does not seem to be reasonable."
13. Having observed as above, the Tender Committee had arrived at an opinion that the tender process initiated by the 1 st NIT should be discharged and the eligibility criteria be reviewed. It recommended accordingly. The Tender Committee had also kept in mind the reasonability of the rates received through the bids and made a recommendation to the Tender Accepting Authority either to accept, reject or modify the Tender Committee's recommendations. The Tender Accepting Authority had accordingly made its decision as under :
"Decision: TCR Accepted for Retender (all items) After going through the detailed discussion of TC members and considering the Page No.# 14/30 nature of bids received it certainly raises the question that whether eligibility criteria was too restrictive. From the hindsight, it is obvious that our expectation of other experienced bidder participating in this bid has not materialized. This has defeated the purpose of having an open tender as Railways is not getting the competitive price. As per the Vigilance Manual, 2017 Chapter-IX : one of the common irregularity in public procurement is making eligibility criteria either too lax or restrictive. Considering all this, TC recommendations are accepted for discharge of this tender and eligibility criteria needs to be reviewed."
14. It is in the above obtaining fact situation, the assailments made by the petitioner firm with regard to unsustainability of the decision of the respondent N.F. Railway authorities to discharge/cancel the tender process initiated by the 1st NIT and the initiation of another tender process by the 2 nd NIT are to be considered as they are intricately connected.
15. The contours of the power of judicial review available under Article 226 of the Constitution of India in respect of a competitive bidding process initiated with issuance of a notice inviting tender is limited in its extent. It is not the decision which is under challenge but it is the decision-making process which can be reviewed in the limited scope and ambit of judicial review, as has been settled by a catena of decisions of the Hon'ble Supreme Court and of this Court. It is also not the soundness of the decision which can be reviewed. But this Court in its power of judicial review can examine whether the decision was legal or otherwise.
16. With regard to the first contention of the petitioner that it was not informed of the decision to discharge the tender process initiated by the 1 st NIT, it can be said that the cancellation of a tender process is not a quasi-judicial act Page No.# 15/30 and hence it is not necessary to observe the principles of natural justice. [Ref :
Silppi Constructions Contractors vs. Union of India and another, [2020] 16 SCC
489.].
17. In the context of the submissions made by the learned counsel for the petitioner that the tender conditions have been changed from the 1 st NIT to the 2nd NIT in order to bestow the benefit upon the respondent no. 6 only it has become relevant to see as to what extent the eligibility criteria for the bidders have been changed in the 2nd NIT. In place of the eligibility conditions contained in the 1st NIT, as quoted above, the same have been replaced by the following eligibility conditions :
4. ELIGIBILITY CONDITIONS Special Technical Criteria S.No. Description Confirmation Remarks Documents required Allowed Uploading The bidder should have satisfactorily completed in the last three previous financial years and the current financial year up to the date of opening of the tender, one similar single service contract for a minimum of 35% of the advertised value of the bid. Completed service contract includes on-
Allowed 1 going service contract subject to payment of bills No No (Mandatory) amounting to at least 35 percent of the advertised value of the bid. In the instant contract, 'similar service contract' means "GST return filing, computation on applicability on GST and any other services related to GST with any Central Government, State Government or PSU office".
18. When the clause of the 1st NIT and the 2nd NIT are considered together, it is found that the words, ' similar service means Railway GST return filing, computation on applicability on GST and any other services related to GST with Railway' from the 1st NIT have been replaced by the words, ' similar Page No.# 16/30 service contract means GST return filing, computation on applicability on GST and any other services related to GST with any Central Government, State Government or PSU office'. The words 'Railway' and 'with Railway' have been found replaced in the 2nd NIT. The other eligibility criterion regarding 3 [three] years working experience 'with Railway' in respect of GST return filing and other services with regard to GST related issues in last 3 [three] financial years, appearing in the 1st NIT, has also been deleted.
19. On reverting back to the Minutes of the Tender Committee, it is noticed that there are other bidders apart from the respondent no. 6, who had no prior experience of working with Railway in matters relating to GST but had experience of working with either the Central Government or the State Government or Public Sector Undertakings, etc. The respondent no. 6 has also experience of working with the Central Government, State Government as well as Public Sector Undertakings. Thus, an inference cannot be drawn that the tender condition regarding experience of working with Railway had been dropped from the 1st NIT keeping the interests of the respondent no. 6 solely in mind by the respondent N.F. Railway authorities. The Tender Committee recorded that incorporation of the eligibility criteria of having working experience with Railways had made the competitive bidding process initiated by the 1st NIT a restrictive one and as a result, there was lesser participation contrary to the expectation of wider participation.
20. The respondents have averred in the affidavit-in-opposition that the Goods and Service Tax [GST] regime has been introduced in the Country only in the year 2017. There is force in the submission of the learned Standing Counsel Page No.# 17/30 for the N.F. Railway that as the GST regime has only been introduced in the Country in the year 2017, the incorporation of the condition of having 3 [three] years experience in GST 'with Railway' has resulted into lesser participation as it is only 4 [four] years since 2017. The 2nd reason which has been contended by the respondent authorities is that if the eligibility criterion of having experience of working in GST only with Railway is removed and if the same is replaced with the eligibility criterion of having experience of working on GST with any Central Government or State Government or Public Sector Undertaking offices is incorporated, the same might result in wider participation in the tender process.
21. After publication of the 1st NIT, representations were also received by the respondent N.F. Railway authorities from a number of intending bidders wherein it was represented that the eligibility criterion of having working experience with Railway on GST appearing in the 1st NIT was a restrictive one and it was also represented that it would not allow a fair competition. The reason for which the tender process initiated with the 1 st NIT had resulted in lesser competition came to be comprehended by the respondent authorities only after evaluation of the bids when it resulted in one eligible bidder.
22. The other recommendation the Tender Committee had made and the Tender Accepting Authority had accepted is the competitiveness of the price offered by the participating bidders. From the Table above which has been prepared from the minutes of the Tender Committee, it is demonstrable that there is substantial difference in the rates offered by similarly situated bidders in respect of other Railway zones with that of the respondent N.F. Railway Zone. The Tender Committee further considered the rates at which similar work was Page No.# 18/30 awarded in the Northern Railway Zone, a zone having 8 [eight] states, for filing GST returns vis-à-vis the rates offered by the bidders in the N.F. Railway Zone having 8 [eight] states for filing GST returns. After such comparison, the Tender Committee had arrived at an opinion that the rate offered by the sole eligible bidder whose offered bid value emerged as 'L-4' did not seem to be reasonable.
23. It cannot be denied that the Government and for that matter, the respondent Railway have a duty to keep in mind the matter of public finance and it is obligatory on their part, in order to protect public money, to get the best price for execution of a work on their behalf and at the same time, to ensure optimal quality for the work. The respondent authorities are well within their rights in finding out the rates which truly represent the rates for the similar work in the country. It is within the authority of the respondent Railway authorities to examine the justification of rates offered by the participating bidders and to compare the same with the rates offered at which similar works were awarded in the near past in favour of successful bidders by other Railway zones under the Ministry of Railways. If upon analysis of the rates offered by the participating bidders or the eligible bidder in the N.F. Railway Zone in comparison with the rates offered by the successful bidders for similar works in other Railway Zones under the same Ministry of Railways which had happened in the tender process initiated by the 1st NIT are or is found higher and if upon such analysis the decision is taken to discharge/cancel entire tender process then such a decision cannot be termed as arbitrary, irrational or unreasonable. The petitioner has failed to show that the decision-making process adopted by the respondent Railway authorities in discharging/cancelling the tender process initiated by the 1st NIT is not fair or transparent in any manner. The respondent Page No.# 19/30 authorities being the custodian of public finance can take its decision objectively with an intention to serve the best interests of the public in general and its own interest particularly. Then in such a case, it cannot be held that the respondent authorities have committed any wrong in discharging/cancelling the tender process initiated by the 1st NIT and in issuing the 2nd Tender Notice afresh inviting bids from eligible bidders.
24. The decision to initiate the tender process with changes in eligibility criteria by the 2nd NIT has already been discussed above and the same is not reiterated again. It is also not the case of the petitioner that with the changes and deletions in the eligibility criteria from the 1 st tender process, the respondent authorities have compromised with the quality of service they are likely to get or have decided against any public interest. It is also not the case of the petitioner that with the change in the eligibility criteria the respondent authorities had made the petitioner ineligible. In fact, in response to the 2 nd NIT, the petitioner has also submitted its bid on 04.11.2021, which was after filing of the writ petition on 30.10.2021 and before the last date of submission of the bids, 08.11.2021.
25. It has been observed time and again that the basic requirement of Article 14 of the Constitution is fairness in action by the State or the instrumentalities of the State and non-arbitrariness in essence and substance is the heartbeat of fairplay. While exercising the power of judicial review under Article 226 of the Constitution the Court does not and is expected to act as a court of appeal to examine any administrative decision taken in matters like evaluation of tenders or awarding of tender or not awarding of tender. It is not Page No.# 20/30 supposed to give a finding in respect of matters like an administration decision made in relation to any tender process as to whether the decision could have been made in a different manner in the facts and circumstances of the case. When the Court exercises the power of judicial review in respect of any tender process it primarily examines whether there has been any infirmity in the decision-making process or whether the decision-making process in vitiated due to non-adherence to any of the essential conditions or any statutory provisions or is guided by any irrelevant or extraneous factors or mala fide, etc. It is settled that the State or an instrumentality of the State as a tendering authority has a free hand in setting the terms and conditions of a tender and only in the event the terms and conditions of the tender are found to be arbitrary, discriminatory or mala fide or actuated by favourism the Court in exercise of its power of judicial review can interfere. The Court does not ordinarily interfere with the terms and conditions of the tender prescribed by the State or an instrumentality of the State as the tendering authority because it feels that some other terms in the tender would have been fair, wiser or logical. The Court does not ordinarily make any direction to revise the tender conditions.
26. The administrative discretion is available to the tendering authority to/discharge cancel the entire tender process in public interest provided such action is not actuated with any ulterior motive or vitiated by a kind of arbitrariness or irrationality or in violation of any statutory provisions. In State of Jharkhand and others vs. CWE-SOMA consortium , reported in [2016] 14 SCC 172, the matter of dispute related to construction of a dam in the State of Jharkhand. Pursuant to the NIT and a pre-bid meeting where 10 tenderers participated, only 3 [three] bidders finally submitted their bids. The tendering Page No.# 21/30 authority after evaluation found only the bid of the respondent as a responsive one and the bids of the other two bidders were declared non-responsive. Thereafter, the tender committee took a decision to cancel the tender and to go for re-tender to make the tender process more competitive. Aggrieved by the decision to cancel the tender process, the respondent filed the writ petition. The Hon'ble Supreme Court of India had observed that the tendering authority had the right to cancel the tender without assigning any reason but in that case, the tendering authority was found to have assigned a cogent and acceptable reason of lack of adequate competition to cancel the tender and to invite a fresh tender. The Hon'ble Supreme Court of India had further observed that in case of a tender, there is no obligation on the part of the person issuing tender notice to accept any of the tenders or even the lowest tender. After a tender is called for and on seeing the rates or the status of the contractors who have given tenders that there is no competition, the person issuing tender may decide not to enter into any contract and thereby cancel the tender. So long as the bid has not been accepted, the highest bidder acquires no vested right to have the process concluded in his favour.
26.1. The Hon'ble Supreme Court in CWE-Soma Consortium [supra] has observed in the following manner :-
"13. In case of a tender, there is no obligation on the part of the person issuing tender notice to accept any of the tenders or even the lowest tender. After a tender is called for and on seeing the rates or the status of the contractors who have given tenders that there is no competition, the person issuing tender may decide not to enter into any contract and thereby cancel the tender. It is well-settled that so long as the bid has not been accepted, the highest bidder acquires no vested right to have the auction concluded in his favour [vide Laxmikant vs. Satyawan, [1996] 4 SCC 208;
Page No.# 22/30 Rajasthan Housing Board vs. G.S. Investments, [2007] 1 SCC 477; and Uttar Pradesh Avas Evam Vikash Parishad vs. Om Prakash Sharma, [2013] 5 SCC 182].
15. The State derives its power to enter into a contract under Article 298 of the Constitution of India and has the right to decide whether to enter into a contract with a person or not subject only to the requirement of reasonableness under Article 14 of the Constitution of India. In the case in hand, in view of lack of real competition, the state found it advisable not to proceed with the tender with only one responsive bid available before it. When there was only one tenderer, in order to make the tender more competitive, the tender committee decided to cancel the tender and invited a fresh tender and the decision of the appellant did not suffer from any arbitrariness or unreasonableness.
20. Admittedly, in the pre-bid meeting held on 24.03.2014, ten tenderers have participated. After conclusion of the pre-bid meeting on 24.03.2014, as a result of stringent conditions prescribed in clause 4.5 [A][a] and 4.5 [A][c], only three tenderers could participate in the bidding process and submit their bids. As noticed earlier, upon scrutiny two were found non-responsive. In our considered view, High Court erred in presuming that there was adequate competition. In order to make the tender more competitive, tender committee in its collective wisdom has taken the decision to cancel and re-invite tenders in the light of SBD norms. As noticed earlier, the same was reiterated in a subsequent meeting held on 09.07.2014. While so, the High Court was not justified to sit in judgment over the decision of tender committee and substitute its opinion on the cancellation of tender. Decision of the State issuing tender notice to cancel the tender and invite fresh tenders could not have been interfered with by the High Court unless found to be mala fide or arbitrary. When the authority took a decision to cancel the tender due to lack of adequate competition and in order to make it more competitive, it decided to invite fresh tenders, it cannot be said that there is any mala fide or want of bona fide in such decision. While exercising judicial review in the matter of government contracts, the primary concern of the Court is to see whether there is any infirmity in the decision-making process or whether it is vitiated by mala fide, unreasonableness or arbitrariness.
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23. The right to refuse the lowest or any other tender is always available to the government. In the case in hand, the respondent has neither pleaded nor established mala fide exercise of power by the appellant. While so, the decision of tender committee ought not to have been interfered with by the High Court. In our considered view, the High Court erred in sitting in appeal over the decision of the appellant to cancel the tender and float a fresh tender. Equally, the High Court was not right in going into the financial implication of a fresh tender."
27. In this connection, it is also apt to refer to the following observations made by the Hon'ble Supreme Court of India in the celebrated decision of Tata Cellular vs. Union of India, reported in [1994] 6 SCC 651, :-
"70. It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism, However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down."
28. At this juncture, it is also apt to refer to the observations made by the Hon'ble Supreme Court of India in the decision in Maa Binda Express Carrier and another vs. Northeast Frontier Railway and others , reported in [2014] 3 SCC 760 with regard to a bidder's right and the tendering authority's right to lay down the terms and conditions in the tender document. Therein, it has been Page No.# 24/30 observed in the following manner :
"8. .......While these decisions clearly recognize that power exercised by the Government and its instrumentalities in regard to allotment of contract is subject to judicial review at the instance of an aggrieved party, submission of a tender in response to a notice inviting such tenders is no more than making an offer which the State or its agencies are under no obligation to accept. The bidders participating in the tender process cannot, therefore, insist that their tenders should be accepted simply because a given tender is the highest or lowest depending upon whether the contract is for sale of public property or for execution of works on behalf of the Government. All that participating bidders are entitled to is a fair, equal and non- discriminatory treatment in the matter of evaluation of their tenders. It is also fairly well-settled that award of a contract is essentially a commercial transaction which must be determined on the basis of consideration that are relevant to such commercial decision. This implies that terms subject to which tenders are invited are not open to the judicial scrutiny unless it is found that the same have been tailor made to benefit any particular tenderer or class of tenderers....."
29. In G.P. Holdings Private Ltd. [supra], the tendering authority issued the 1st NIT on 30.10.2017 for a contract work for a period of 2 [two] years. Responding to the said NIT, 3 [three] bidders including the petitioner therein, participated in the bidding process. After evaluation of the bids, the lowest bidder [L-1] was found technically not responsive and the petitioner's valid bid was the second lowest [L-2] followed by the third bidder [L-3]. Assigning administrative reasons, the bidding process initiated by the NIT dated 30.10.2017 was cancelled on 12.12.2017 and the earnest money of the petitioner was refunded on 13.12.2017 on the ground that he was unsuccessful/could not participate in the tender. Thereafter, the 2 nd NIT dated 12.12.2017 was published initiating a fresh tender process and with similar Page No.# 25/30 terms and conditions as contained in the 1 st NIT dated 30.10.2017. It was in such fact situation, the Court had interfered with the 2 nd NIT. Thus, the decision in G.P. Holdings Private Ltd. [supra] is distinguishable on facts.
30. In Minku Hazarika [supra], the subject-matter was settlement of a truck stand in favour of the respondent no. 7 therein. The Court had found that the priced bids were evaluated by applying a criteria which was evolved after opening of the bids and the same was found to be irrational. With the application of such undisclosed and irrational evaluation criteria, the tendering authority had accepted the bid of the respondent no. 7 by rejecting the tenders which quoted three times higher than that of the respondent no. 7, thereby, resulting into heavy financial loss to the respondent Board. It was in that situation the Court had interfered with the process. The decision in Minku Hazarika [supra] is not found applicable to the case in hand.
31. When the fact situations obtaining in the case in hand are considered together with the propositions deducible from the aforesaid decisions, this Court does not find any kind of infirmity whatsoever in the decision making process of the respondent N.F. Railway authorities. The tendering authority has taken the decision to re-tender the Contract-Work after finding a lesser competition in the tender process initiated by the 1 st NIT with only one eligible bidder. The tendering authority's decision to relax one of the eligibility criteria in the 2 nd NIT cannot be termed to be arbitrary or actuated by favouritism to give the benefit of participation only to the respondent no. 6 as there were other bidders who were also declared disqualified for not having working experience with Railway. Further, a number of other intending chartered accountants' firms had also Page No.# 26/30 represented after publication of the 1st NIT that the tender condition of having working experience of 3 [three] years on GST with Railway would be a restrictive one as the GST regime has been introduced in the country only in the year 2017. The tendering authority is guided by the factor that there would be not be many bidders fulfilling the eligibility criterion of having 3 [three] years' working experience on GST with Railway as the GST regime has been only introduced about 4 [four] years earlier in 2017. The decision to replace the eligibility criterion of working experience with Railway in the 1st NIT by working experience with any Central Government, State Government or PSU office in the 2nd NIT is a decision taken by the tendering authority, which according to it is an appropriate one in the context of the Contract-Work. The tendering authority is in the best position to know its requirements and to formulate the conditions accordingly in the tender document and the Court does not ordinarily substitute its view in such matters. It is not for a bidder to say that the tendering authority by relaxing any eligibility criterion has compromised with the quality of work it is likely to get. In the case in hand, the tendering authority is found to have taken note also of the cost factor by comparing the bid value offered by the bidders in the 1st NIT with the bid values with which similar contract works have been settled in other Railway zones within the Ministry of Railway. The tendering authority has taken the decision to re-tender in order to have a wider participation and with the object to get offers at competitive rate and such approach adopted by the respondent N.F. Railway authorities cannot be termed as arbitrary or irrational in any manner. In such view of the matter, none of the contentions of the petitioner assailing the decision to discharge/cancel the tender process initiated by the 1 st NIT and the decision to initiate a fresh tender Page No.# 27/30 process for the same Contract-Work by the 2nd NIT is found merited.
32. The petitioner has raised another plea that it was to their utter shock and surprise the respondent authorities had issued the LoA dated 12.10.2021 awarding the work of GST return filing and any other services with regard to GST related issues of N.F. Railway for a period of 2 [two] months w.e.f. 17.10.2021 to 16.12.2021 without floating any tender in utter violation of direction of the Hon'ble Supreme Court of India and order dated 05.07.2007 issued by the Central Vigilance Commission". The stand of the respondent authorities in that connection is that as the tender process initiated by the 1 st NIT was taking time for conclusion, it invited quotations from few experienced agencies for the work for a short period of 2 [two] months as a stop-gap arrangement. Apart from other agencies, quotation was also invited from the petitioner firm to submit its quotation. Thus, there could be no occasion for the petitioner firm to be shocked and surprised with the issuance of LoA dated 12.10.2021. It is seen that the petitioner firm had submitted its quotation for the period of 2 [two] months to the respondent authorities on 08.10.2021 offering an amount of Rs. 2,64,320/-. The petitioner firm had submitted its quotation in reference to a Notice Inviting Quotation dated 05.10.2021 addressed to it. Having participated and submitted its quotation in response to the Notice Inviting Quotation dated 05.10.2021 and after having lost out to the respondent no. 6 in the race because of the petitioner's firm's higher rate, it is not open for the petitioner firm to allege that the LoA dated 12.10.2021 was issued without issuance of any tender notice.
32.1. The learned Standing Counsel for the respondent N.F. Railway Page No.# 28/30 authorities has canvassed the point that due to suppression of such facts regarding participation of the petitioner firm by submitting its quotation itself in the process leading to the LoA dated 12.10.2021 the writ petition should be dismissed for abusing the process of law with the support of the decisions, mentioned above. As the petitioner firm has also laid challenge to the cancellation of the tender process initiated by the 1 st NIT where it emerged as the sole responsive bidder and to the publication of the 2 nd NIT, this Court has not non-suited the petitioner solely on that ground as the decision-making process with regard to the cancellation of the tender process initiated by the 1 st NIT and the publication of the 2 nd NIT for the same Contract-Work are required to be decided on merits.
33. The ground of challenge to the LoA is also not sustainable on another point. The Circular dated 05.03.2009 of the Railway Board, Ministry of Railway is on the subject of power to dispense with calling of tenders [calling of quotation]. Clause [vii] has stated that the quotations should normally be invited from at least three well experienced contractors/agencies not necessarily borne on the approved list. Mr. Goyal has canvassed that since the respondent no. 6 did not have any experience of working with Railway which fact has been established when its bid was declared not responsive during the process of evaluation pursuant to the 1st NIT, the respondent no. 6 could not have been given the LoA, even for a period of 2 [two] months. On a closure look at Clause [vii] of the Circular dated 05.03.2009, it is seen that the experienced contractors/agencies is not qualified with the word 'Railways'. In the case in hand, the work that was awarded by the LoA dated 12.10.2021 was to the Page No.# 29/30 respondent no. 6, a Chartered Accountant firm like the petitioner firm. Checks and balances are also incorporated in the said Circular dated 05.03.2009 in Clause [viii] and Clause [x]. The accepting authority has to take precautions to see that the quotations are from genuine firms and not from fictitious firms. Under Clause [x], the powers to accept such quotations are available only to Field Officers and their Controlling Head of the Departments in order to ensure that the decision to invite quotation is made by a responsible authority. The LoA dated 12.10.2021 was awarded to the respondent no. 6 at its quoted offer of Rs. 1,51,040/- qua an amount of Rs. 2,64,320/- offered by the petitioner firm. In such view of the matter, it is open for the petitioner firm after having participated and failed in the said process which led to the issuance of the LoA dated 12.10.2021, to make a U-turn to challenge the LoA and as such, the assailment made by the petitioner firm in respect of the LoA dated 12.10.2021 is found not sustainable.
34. Mr. Goyal has also raised one more contention that during the pendency of this writ petition, the respondent N.F. Railway authorities had awarded the same work again to the respondent no. 6 for a period of another 6 [six] months without floating any tender. For such contention, he has relied in the decision in Sri-la Sri Subramania Desika Gnanasambanda Pandarasannidi [supra], wherein a notification dated 04.08.1956 was challenged in the writ petition. A ground was taken in the affidavit-in-rejoinder by the petitioner therein that no prior opportunity to show cause was given to it as to why the notification should not be issued. It was in such factual matrix, the Hon'ble Supreme Court held that the respondents had full notice of the ground. But in the case in hand, save and except a bald assertion, the petitioner has not Page No.# 30/30 brought on record the details of the Letter of Award [LoA], not to speak of the copy of the Letter of Award [LoA], by which the respondent authorities have allegedly awarded a work to the respondent no. 6 again for another period of 6 [six] months. It is settled that an order which has not been brought on record in a writ petition cannot be set aside by this Court in exercise of its power of judicial review. As such, the challenge made on behalf of the petitioner with regard to any subsequent Letter of Award [LoA] made in favour of the respondent no. 6 cannot be entertained and the same is negated.
35. In view of the discussions made and for the reasons stated above, this Court has not found any arbitrariness, irrationality or mala fide on the part of the respondent Railway authorities in discharging/cancelling the tender process initiated by the 1st NIT and in intiating a fresh tender process with changed eligibility criteria by the 2nd NIT. Consequently, this writ petition is found to be bereft of any merit and the same is liable to be dismissed. It is accordingly dismissed. There shall, however, be no order as to cost.
JUDGE Comparing Assistant