Uttarakhand High Court
Pratap Trading Company vs State Of Uttarakhand And Others on 22 November, 2017
Bench: K.M. Joseph, V.K. Bist
IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL
Special Appeal No. 977 of 2017
Pratap Trading Company .......... Appellant
Versus
The State of Uttarakhand and others .......... Respondents
With
Special Appeal No. 980 of 2017
With
Impleadment Application No. 15173 of 2017
Shakti Matsya Jeevi Sahkari Samiti Ltd. .......... Appellant
Versus
The Secretary, State of Uttarakhand Matsya
Palak Vikas Abhikaran and another .......... Respondents
Mr. Subhash Upadhyay and Mr. Jitendra Chaudhary, Advocates for the appellant in
Special Appeal No. 977 of 2017.
Mr. Arvind Vashistha, Senior Advocate assisted by Mr. Ashish Sinha, Advocate for
the appellant in Special Appeal no. 980 of 2017.
Mr. S.N. Babulkar, Advocate General for the State of Uttarakhand.
Mr. Paresh Tripathi and Mr. Yogesh Pacholia, Advocates for the Board/respondent
nos. 2 and 3 in Special Appeal No. 977 of 2017 and for respondent no. 1 in Special
Appeal no. 980 of 2017.
Mr. Rakesh Thapliyal and Mr. Pankaj Chaturvedi, Advocates for respondent no. 5 in
Special Appeal No. 977 of 2017.
Mr. Narendra Bali, Advocate for respondent no. 6 in Special Appeal No. 977 of 2017.
Dated : 22nd November, 2017
Coram: Hon'ble K.M. Joseph, C.J.
Hon'ble V.K. Bist, J.
K.M. Joseph, C.J. (Oral) Since these appeals raise common issues, we are disposing of the same by this common judgment. Special Appeal No. 977 of 2017 is filed against Writ Petition (M/S) No. 2191 of 2017 whereas Special Appeal No. 980 of 2017 is filed against Writ Petition (M/S) No. 2060 of 2017. The petitioners in the aforesaid writ petitions are the appellants.
2. Respondent no. 2 issued a tender on 04.08.2017 for the purpose of granting fishing contracts in relation to Dhaura and Baigul Reservoirs, which are situated in District Udham Singh Nagar of the State. It is the 2 case of the appellant (see Writ Petition (M/S) No. 2191 of 2017) that in District Udham Singh Nagar total five reservoirs, namely, Nanak Sagar, Baigul, Dhaura, Baur & Haripura and Tumariya are present and all these reservoirs are under the control of the respondent-Fisheries Board. Annexure No. 3 order dated 09.08.2012 was issued by the Government by which, certain guidelines have been issued for awarding of contracts as well as for issuing of tender notices. The process contemplated settling the right by way of a two stage bid process. The first stage was the technical bid and the final stage was the financial bid. Only those persons, who were found to be prequalified at the technical bid, could be considered for opening up their financial bid. The technical bid of the appellants in both these cases was found to be not responsive and it is, in such circumstances, that they have approached this Court seeking the reliefs as follows:
Reliefs sought in Writ Petition (M/S) No. 2191 of 2017 are as follows:
"(i-a) Issue a writ, order or direction in the nature of certiorari, calling for the original record and pleased to quash the impugned office order dated 29th August 2017 (Uploaded on 31-8-2017), passed by the respondent no. 2 i.e. Secretary, Uttarakhand State Matasya Palak Vikas Abhikaran, Barasi Grant (Dhanyari), Raipur Road, Dehradun.
(i-b) Issue a writ, order or direction in the nature of certiorari, calling for the original record and pleased to quash the impugned order/letter dated 4th September 2017 (Annexure-
8) issued by the respondent no. 2. i.e. Secretary, Uttarakhand State Matasya Palak Vikas Abhikaran, Barasi Grant (Dhanyari), Raipur Road, Dehradun.
(i) Issue a writ, order or direction in the nature of mandamus, directing and commanding the respondents to the effect that they shall treat to the petitioner as a successful bidder in technical bid round and his bid may be declared as a responsive bid and further be pleased to include his name in the list of successful bidders for opening financial bids and then pleased to open his financial bid along with other successful bidders on 1-9-2017 as per their fixed schedule in pursuance to tender notice dated 4-8-2017.3
(ii) Issue a writ, order or direction in the nature of mandamus, directing and commanding the respondents to the effect that they shall reject the bids of the private respondents due to non-availability of correct no dues certificates with their tender forms and pleased to declare their bids as non-
responsive and further names of the respondents may be deleted from the list of successful bidders for the purpose of opening financial bids on 1-9-2017 as per fixed schedule.
(iii) Issue a writ order or direction in the nature of certiorari, calling for the original record and pleased to quash the impugned comparative chart dated 29-08-2017 (Annexure-2) prepared by the tender committee, headed by the respondent no. 2.
Reliefs sought in Writ Petition (M/S) No. 2060 of 2017 are as follows:
"a) Issue a writ, order or direction in the nature of certiorari quashing the condition no. 6 and 10 of the terms and conditions of the tender notice no. 02/avHkh / tyk'k;
fufonk@2017&18 dated 04.08.2017 issued by respondent no. 1 for Dhoura and Begul dam in District Udham Singh Nagar.
b) Issue a writ, order or direction in the nature of Mandamus directing the respondent to let the petitioner for participate in the tendering process initiated on 04.08.2017 for Dhoura and Begul dam in District Udham Singh Nagar."
3. In the case of the appellant in Special Appeal No. 980 of 2017, the challenge raised by the appellant, in the writ petition, as noticed, is to Clauses 6 and 10. Clause 6 provided that the tenderer must have annual turnover of Rs. 5 crores for the previous three years. Clause 10 provided that the tenderer must have obtained registration from Provident Fund and Employee State Insurance and three months returns under those enactments. Admittedly, the appellant, which is a cooperative society, did not have the turnover as provided in Clause 6. In regard to Clause 10, there is a case for the appellant that the Evaluating Committee has not rejected the tender of the appellant on the basis of non-compliance of Clause 10 (there is no doubt a case for the Board that appellant did not comply even with Clause 10 insofar as the appellant did not have the 4 registration under the enactments in question). However, the case of the appellant is that it is not rejected on the said basis by the Committee.
4. As far as the appellant in Special Appeal No. 977 of 2017 is concerned, it's technical bid has been rejected on the score that the appellant has not produced the certificate under Form 3CB and Form 3CD of the Income Tax Rules and also on the basis that the appellant has not produced the Net worth Certificate.
5. The writ petitions have been found to be meritless and were dismissed by the learned Single Judge.
6. We heard Mr. Subhash Upadhyay and Mr. Jitendra Chaudhary, learned counsel appearing on behalf of the appellant in Special Appeal No. 977 of 2017 and Mr. Arvind Vashistha, learned Senior counsel appearing on behalf of the appellant in Special Appeal no. 980 of 2017 besides we also heard Mr. S.N. Babulkar, learned Advocate General on behalf of the State of Uttarakhand, Mr. Paresh Tripathi and Mr. Yogesh Pacholia, learned counsel on behalf of the Board/respondent nos. 2 and 3 in Special Appeal No. 977 of 2017, Mr. Rakesh Thapliyal, learned counsel on behalf of respondent no. 5/party respondent in Special Appeal No. 977 of 2017 and Mr. Narendra Bali, learned counsel on behalf of respondent no. 6 in Special Appeal No. 977 of 2017.
7. Mr. Subhash Upadhyay, learned counsel for the appellant in Special Appeal No. 977 of 2017 would contend that this is a case where there is no evenhandedness on the part of the authority in the matter of appreciation of responsiveness of the bids. In the case of the appellant, the bid has been rejected, as noted, on the basis that the appellant has not produced certificate in Form 3CB and Form 3CD; whereas, according to learned counsel for the appellant, in respect of the party respondent, there has been no compunction on the part of the respondent-Board in diluting in and departing from the mandatory conditions, namely, that successful 5 bidders must produce a No Dues Certificate issued by the District Magistrate. In this regard Mr. Subhash Upadhyay, learned counsel for the appellant sought to draw support from the order dated 09.08.2012 and the enclosure issued along with the tender conditions. He would, therefore, submit that when the mandatory conditions have been relaxed in favour of the party respondent, there is no reason at all to treat the appellant differently and discriminating against the appellant. He would next contend that under the tendering process, the evaluation is to be done by a Committee consisting of five members. He would submit that in violation of this stipulation, when the matter relating to the controversy as to whether the District Magistrate alone could issue the No Dues Certificate was raised, two foreign elements were introduced into the consideration insofar as the Additional Secretary (Law) and the Chartered Accountant came to participate in the deliberations of the Committee. This, in his submission, is sufficient to vitiate the deliberations and the decision making process. In this regard, he also drew our attention to the Uttarakhand Procurement Rules, 2008, which according to him, is admittedly applicable. Clause 24(2)(x) of the Procurement Rules provides as follows:
"24(2)(x) Determination of a bid's responsiveness should be based on the contents of the bid itself without recourse to extrinsic evidence or oral discussions."
8. He would, in other words, submit that the issue as to whether the No Dues Certificate can be issued by the District Magistrate or anybody else is a matter to be discerned from the Government Order and the tender conditions and when they are clear, there is no basis at all for seeking extraneous advice and permitting others to participate in the deliberations; this is clearly illegal. He would further submit that there were also procedural illegalities in the matter of opening the tender. He would submit that the proceedings would show that on 26.08.2017 all the five members have signed the proceedings; this is besides all the participants in the tendering process. That apart, he would point out that the document would show that all the documents were sealed in the presence of the 6 members of the Evaluating Committee. When it comes to the proceedings on 28.08.2017 and 29.08.2017, to which dates, admittedly, the matter spilled over, the signatures of all the five members of the Evaluating Committee are conspicuous by their absence. Foul play is sought to be attributed, as the documents were there with the members of the Committee. This argument, we appreciate, is essentially taken to buttress the case that the appellant had produced all the documents including the Audited Balance Sheet along with Form 3CB and Form 3CD and there was no justification for the finding that they were not produced, apparently. Next, he would submit, with reference to page 165 of the paper book of the writ petition that the Chart would show that the members of the Evaluation Committee found that the appellant complied with the conditions which provided for the production of the Net worth Certificate. Yet, he would submit that when it comes to the order dated 04.09.2017, which is subsequently produced and challenged, which is the order by which the technical bid of the appellant is rejected, it is noted, apart from non-compliance of the condition relating to production of Form 3CB and Form 3CD, that appellant has also not fulfilled the condition relating to the Net worth Certificate and this is not permissible and it is contrary to the findings of the Evaluation Committee. Next, he would submit that actually there is no provision even for production of Form 3CB and Form CD. Mr. Jitendra Chaudhary, learned counsel seeking to supplement the arguments of Mr. Subhash Upadhyay, learned counsel would also draw our attention to the provisions of the Income Tax Act, Income Tax Rules and the judgment of the Andhra Pradesh High Court in the case of A.S. Sarma and others Vs. Union of India reported in (1989) 175 ITR 254 to contend that actually the production of the Form 3CB and Form 3CD is unnecessary. According to him, a perusal of the Form and the decision relied on by him in Andhra Pradesh High Court in the case of A.S. Sarma and others Vs. Union of India reported in (1989) 175 ITR 254 would bear out his arguments that when the Audited Balance Sheet is produced, there is no particular purpose served in the context of this case by production of the Form 3CB and Form 3CD. There is a case for 7 Mr. Subhash Upadhyay, learned counsel for the appellant in Special Appeal No. 977 of 2017 that there is also unequal operation of the method by the respondents and he points the case of Naukuchiyatal and that has been answered in paragraph nos. 26 and 27 of the counter affidavit as follows:
26. It is submitted that the tender notice for Naukuchiyatal Lake (Annexure Nos. 5 & to the writ petition) that the Petitioner is referring to was issued by the Department of Fisheries, Uttarakhand and not by the Abhikaran that has issued the tender notice dated 04.08.2017 that is relevant to this Petition. The Petitioner is equating tender conditions for a different lake issued by a different authority to the present case to invoke Article 14 without demonstrating how the two can be equated or without giving any background for this comparison.
27. On a plain comparison of the tender notices for Baigul and Dhaura with the tender notice for Naukuchiyatal shows a stark difference between the two notices in terms of the contract period and reserve price set out for each tender. The reserve price for Dhaura is Rs. 23.49 Lakhs and for Baigul it is Rs. 63.35 Lakhs while the reserve price for Naukuchiyatal is Rs. 5.25 Lakhs only. The contract period for the Naukuchiyatal tender is a mere 3 years while the contract period for Baigul and Dhaura is 5 years. Further Naukuchiyatal is a restricted tender with respect to the entitites who are working in the field of fisheries for the last 10 years which can only participate in it (which shows that the State is taking care and protecting the interests of the small and local entities as well) whereas participation in Baigul and Dhaura is open to one and all. Further Naukuchiyatal is a very small lake whereas Baigul and Dhaura are very large dams. These differences substantiate the point that the two tender processes cannot be equated for the purpose of Article 14."
9. The case of Mr. Arvind Vashistha, learned senior counsel appearing for the appellant in Special Appeal No. 980 of 2017 is that the writ petitioner is a Society having members, who are fishermen. The writ petitioner stands ousted from the competitive process only for the reason that it has not complied with Clause 6, which insists on the candidate having Rs. 5 crores turnover for the preceding three years. He would submit that prescribing such a condition is not at all necessary, having 8 regard to the nature of the contract involved. He would submit that what is involved is the contract of sale. This is not a case where previous turnover is being insisted upon as a means of establishing the competence of the tenderer to carry out the work. What is involved is only settling of the right to catch fish from the two dams in question and for that there is no need to have turnover. He would next submit, that if the anxiety of the respondents, which is the justification, turned out, namely, that from the experience of the respondents in many cases they have found that the contractors after right is settled on them, leave midstream and this has resulted in serious difficulties to the Government, this problem has been addressed by inserting various clauses in the tender conditions. In turn, he would point out that a good portion of the amount has to be deposited in cash in the beginning. Thereafter, the Clauses provide for the execution of a Bank Guarantee for their whole amount. Since there is an increase of 10 per cent every year, that is also taken care of by the Clause, which provides that after the payment of the amount for which the Bank Guarantee is executed during the course of the year, for the next year, the Bank Guarantee would have to be kept alive for the balance amount falling due for the succeeding years. By this method the apprehension regarding successful non-completion of the contract by the contractor is taken care of. Therefore, this condition has the effect of taking away the rights of the appellant, who, we may remind ourselves, is a Society of fishermen to participate in the process. The appellant, it be noted, was in fact having the right in respect of one of the Dams for a long period of time. He would submit that the case sought to be projected that this condition in Clause 6 is necessary having regard to the past experience is belied by the experience of the appellant itself as the appellant has completed the full terms of the contract in respect of the rights granted to the appellant. Mr. Arvind Vashistha, learned senior counsel would also point out that the evolution of this condition contained in the Government Order dated 09.08.2012 has its beginning in the Minister making a visit and stipulating for conditions and also the Member Secretary of the Society, who had no right to do so, writing to the Government. Therefore, 9 the very procedure, by which the conditions came to evolve, is called in question. The parties drew our attention to the following decisions in this regard:
(i) Directorate of Education & others Vs. Educomp Datamatics Ltd. & others reported in (2004) 4 SCC 19.
(ii) Association of Registration Plates Vs. Union of India and others reported in (2005) 1 SCC 679.
(iii) Michigan Rubber (India) Ltd. Vs. State of Karnataka & others reported in (2012) 8 SCC 216.
(iv) Union of India and others Vs. Rafique Shaikh Bhikan and another reported in (2012) 6 SCC 266.
(v) Om Prakash Sharma Vs. Ramesh Chandra Prashar & others reported in (2016) 12 SCC 632.
(vi) State of Orissa and others Vs. Utkal Pharmaceuticals Manufacturers Association and another reported in (2016) 12 SCC 780.
(vii) Afcons Infrastructure Ltd. Vs. Nagpur Metro Rail Corporation Ltd. & another reported in (2016) 16 SCC
818.
(viii) Central Coalfields Ltd. and another Vs. SLL-SML (Joint Venture Consortium) and others reported in (2016) 8 SCC
622.
10. The case of the appellants is controverted by Mr. Paresh Tripathi, learned counsel for the respondent-Board. He would point out the following paragraphs in answer to the case set up by the appellant in Special Appeal No. 980 of 2017.
"12. That on the analysis of the past experience gained from the year 200-08 till 2016-17 of the allotments made by way of tenders with respect to three of the dams namely Nanak Sagar dam, Tumadia dam and Tihari dam it was noticed that the tenderers who were allotted the dams have filed to complete the entire term of 5 years of the allotment made to them which has resulted in retendering of the same over and over again which has entailed huge financial losses (loss of Royalty etc.) to the Abhikaran and has also led to unnecessary delays and wasteful expenditure for retendering the same. It has been further found such parties were 10 financially unsound coupled with inadequate turnover and had lack of adequate infrastructure which resulted in their incapacity to perform their part of the contract which necessitated the Abhikaran to think about a solution to this recurring and major problem.
14. It is submitted that tender condition no. 6 was stipulated in light of public interest, proper utilization of natural resources and financial interest of the Abhikaran which is a self- financed organization without any financial help from the State Government. It is imperative that the tenderer after award of tender remains financially stable and has the requisite financial and infrastructural resources so that the tenderer completes the entire term of the tender period of 5 years. That if a tenderer abandons the contract mid-term because of incapacity then and does not leave mid-term it may compel the Respondents to re-tender again and again thereby causing loss of revenue, delay and unnecessary expenditure for such retendering.
It is also submitted that tender Condition No. 10 was stipulated to protect the interest of the labourers/employees employed by the successful bidder(s) as the work involved in the carrying out of fishing activities in such large dams in highly labour intensive job and a necessity was felt to protect the interest and welfare of such employees and proper declaration of manpower employed and compliance with all the labour laws such payment of minimum wages, provident fund, employees state insurance, etc. which are social security measures are properly complied with by the successful bidders and no exploitation of labour is done by the bidders.
15. It is submitted that the Abhikaran requires that only persons who are well established and financially sound should participate in the tender process and complete the entire term of allotment made to them which is a term of 5 years. The condition No. 6 does not prescribe that the requisite turnover be from the fisheries business itself, therefore the contention of the Petitioner that the highest amounts fetched by the tender of Baigul and Dhaura Dam was nowhere close to Rs. 5 Crores cannot be the basis for declaring the condition as arbitrary and unreasonable. This requirement is essential for the Abhikaran to ensure that the tenderer possesses the capability to execute the full term of the tender. Further Condition NO. 10 has been stipulated for protection of the labourers/employees of the bidders as stated herein above.
16. That on 03.08.2017 by way of G.O. No. 344/XV-3/2017- 06(04)/2004, approval of the Hon'ble Governor was 11 communicated by the State Government for inclusion of the additional conditions as proposed in the letter dt. 21.07.2017 of the Abhikaran. A copy of G.O. No. 344/XV-3/2017- 06(04)/2004 dated 03.08.2017 has been annexed herewith as Annexure CA5.
11. Therefore, as far as the condition in Clause 6 is concerned, it is sought to be supported on the basis of the past experience in respect of the three dams and five dams come under the jurisdiction of the Respondent- board, as noticed. He would further submit that the Minister is none other than the Chairman of the Agency and it cannot be said that it has nothing to do with the matter. He would, of course, harp upon the limits of the judicial review particularly in matters of this nature with reference to the case law, which is being relied on.
12. In regard to Special Appeal No. 977 of 2017, he drew our attention to the following paragraph of the writ petition:
"25. That the petitioner while submitted tender form annexed complete balance sheet inclosing therein form no. 3-CB and 3-CD because at the relevant point of time, the petitioner was having those forms and there was no occasion before the petitioner to submit incomplete balance sheet when he was possession relevant form no. 3-CB and 3-CD with him but the contention of the petitioner is that the respondent officials who were having entire and complete original record with the, with the connivance of private respondents for the purpose of eliminating him from the zone of responsive bidders, these relevant documents were snatched out from the tender form and later on declared him as a non responsive bidder so that the private respondents may get tender work."
13. It is also, however, relevant to notice paragraph no. 27. It reads as follows:
"27. That when the petitioner came to know about the aforesaid deficiency then he tried to persuade them to the effect that they can see his entire balance sheet through on line process and for that purpose he can provide code to them then and there so that his bid may be declared responsive but said request was not accepted nor any further time for curing the defect was given to him."12
14. Mr. Paresh Tripathi, learned counsel for the respondent-Board further points out Annexure No. 4. He would further point out, with reference to the order dated 09.08.2012, the enclosure along with the tender documents that the case of the appellant that No Dues Certificate is to be issued only by the District Magistrate cannot be accepted. In fact, he drew our attention to Annexure no. 3 to point out that the document itself does not contain the actual terms of the tender. He would point out that a comma is missing after providing for the condition that the District Magistrate should give the Solvency Certificate and the Character Certificate. Therefore, his case is that the Solvency Certificate and the Character Certificate alone are to be given by the District Magistrate, whereas the No Dues Certificate need not be given by the District Magistrate. In fact, he answers the case of Shri Subhash Upadhyay that in the order dated 09.08.2012, a distinction is brought about between Character Certificate and Solvency Certificate on the one hand and the No Dues Certificate on the other hand. The case of Mr. Subhash Upadhyay is that in respect of the Character Certificate and the Solvency Certificate there is a distinction brought about in respect of the certificates to be issued in favour of individuals and non-individuals; whereas, No Dues Certificate is treated without indicating, who it is to issue the No Dues Certificate. Therefore, he would submit that having regard to the terms of the Government Order dated 09.08.2012 No Dues Certificate must be issued by the District Magistrate.
15. Regarding the participation of the Additional Secretary (Law) and Chartered Accountant, Mr. Paresh Tripathi, learned counsel for the respondent-Board would point out that this is not the case where the said authorities participated in the proceedings as such. It is a case where out of the sense of fairness as disputes were raised, not by the appellant in question, but by the common representative for both the appellants and it was to resolve the controversy in a fair manner that the Additional Secretary (Law) and the Chartered Accountant were called and they gave their opinion; in that way they participated and this will not vitiate the 13 proceedings. In fact, he would submit that what would vitiate the proceedings is accepting the argument of Mr. Subhash Upadhyay to relax the conditions, which are provided in relation to production of the documents. The respondents have a clear case that the balance sheet, to be complete, must be accompanied by the Auditor's certificates mentioned in Form 3CB and Form 3CD. In fact, Mr. Rakesh Thapliyal, learned counsel appearing for respondent no. 5 in Special Appeal No. 977 of 2017, drew our attention to the following paragraphs in the writ petition:
"13. That it would be relevant to point out here that in bid tender document dated 4-8-2017, two types of terms and conditions are present, one set of conditions are general in nature and other set of conditions are mandatory in nature meaning thereby the respondents while evaluating the tenders the terms and conditions which are mandatory in nature cannot relax in any manner and during evaluation, if the tender committee will find out that a particular tenderer is not fulfilling mandatory conditions then in that contingency, the only option available to the tender committee is to reject the bid of that tenderer.
14. That in the present writ petition, the sole dispute revolves around the mandatory conditions contained in clause no. 3 (3) as well as clause 3 (5) of the tender notice dated 4-8-
2017 annexed as annexure-01.
15. That as per clause 3(3) of tender notice dated 4-8-2017, the intending tenderer ought to have submit last three financial years turnover of the firm or a company upto Rs. 5 Crore and for that purpose, the tenderer have to submit a requisite certificate issued by the concerned C.A. (charted accountant) along with certified audited balance sheet as well as profit and loss account summary.
16. That as per clause 3 (5) of tender notice dated 4-8-2017, the intending tenderer ought to have submit its no dues certificate, issued by the concerned District Magistrate because as per proforma tender form-ka, annexed with annexure-1 of the tender form, prescribes to the effect that solvency certificate, character certificate and no dues certificate issued by the concern District Magistrate was liable to be submitted."
16. As regards the finding that the Net worth Certificate is there, the case of the respondents appears to be that the proceedings only betray a 14 lapse; but, in the order, rejecting the case of the appellant, it is specifically mentioned also that the Net worth Certificate was actually not produced. He points out that if such a certificate is there, it could have been produced by the appellant. Appellant has not cared to produce the certificate. Regarding the Certificate in Form 3CB and Form 3CD being not necessary, which is the argument of Mr. Jitendra Chaudhary, learned counsel, he would submit that, in fact, a perusal of the decision relied on by the learned counsel for the appellant itself would show the actual use of the said certificate. At a glance, the certificate will reveal various vital information relating to the financial condition of the party and, therefore, it cannot be relaxed; it is an essential condition. There is also no violation of the Procurement Rules, he would submit, by the participation on one occasion by the Additional Secretary (Law) and the Chartered Accountant. They only gave their legal opinion with respect to a vexed issue.
17. No doubt, Mr. Subhash Upadhyay, learned counsel has a case that reference to the persons was not really necessary and this is shown by the fact that the authorities do not have a case at any stage that the certificate by the District Magistrate was not necessary.
18. Mr. S.N. Babulkar, learned Advocate General appearing on behalf of the State of Uttarakhand would point out, with reference to Clause 6, in fact, that the concept of stability is very significant and it is for the employer to decide what are the conditions, be it by a private employer or a State; it is essentially a commercial transaction and the Court will not sit in judgment over the terms and conditions, unless it is as provided by the decision of the Hon'ble Apex Court.
19. We are not dealing with a matter, which is res integra. This question has engaged the attention of the Hon'ble Apex Court on a number of occasions. The first decision, which we may advert to, is the decision, which was rendered in the context of a question, as to whether 15 the condition is essential or not, in the case of Poddar Steel Corporation Vs. Ganesh Engineering Works and others reported in (1991) 3 SCC
273. Therein, the Bench of the two learned Judges took the view that the condition relating to the production of the financial document was substantially complied with and the Court spoke about the essential and non-essential conditions. In case of condition, which is not essential, it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases. It is unnecessary to multiply the decisions having regard to what we would consider the latest pronouncement on this point by another Bench of two learned Judges of the Hon'ble Apex Court in the matter of Central Coalfields Limited and another vs. SLL-SML (Joint Venture Consortium) and others reported in (2016) 8 SCC 622. Therein, after tracing the entire case law, the Bench of two Judges had this to say:
"24. Additionally, it was held that since there was substantial compliance with the requirement of the bank guarantee being in the format prescribed by CCL, the rejection of JVC's bid was unjustified. This was more so since the bank guarantee furnished by JVC had stricter terms than the bank guarantee in the form prescribed by CCL.
27. What is extraordinary about this case is that the employer, that is, CCL, seeks to adhere to the terms of NIT and the GTC issued by it, but the submission of JVC is that CCL should actually deviate from the terms of these documents so as to benefit JVC. Indeed, in spite of a specific requirement that the bank guarantee should be submitted in the prescribed format, JVC claims an entitlement to a deviation in this regard on the ground that the prescribed format was a non- essential term of NIT and the GTC. Who is to decide this issue of essentiality? Does CCL with whom the contract has to be entered into by the successful bidder have no say in the matter? Before adverting to this, it is necessary to get clarity on some circumstances.
33. In Ramana Dayaram Shetty v. International Airport Authority of India5 this Court held that the words used in a document are not superfluous or redundant but must be given some meaning and weightage: (SCC p. 500, para 7) "7. ... It is a well-settled rule of interpretation applicable alike to documents as to statutes that, save 16 for compelling necessity, the Court should not be prompt to ascribe superfluity to the language of a document "and should be rather at the outset inclined to suppose every word intended to have some effect or be of some use". To reject words as insensible should be the last resort of judicial interpretation, for it is an elementary rule based on common sense that no author of a formal document intended to be acted upon by the others should be presumed to use words without a meaning. The court must, as far as possible, avoid a construction which would render the words used by the author of the document meaningless and futile or reduce to silence any part of the document and make it altogether inapplicable."
34. In Ramana Dayaram Shetty case, the expression "registered IInd Class hotelier" was recognised as being inapt and perhaps ungrammatical; nevertheless common sense was not offended in describing a person running a registered IInd grade hotel as a registered IInd class hotelier. Despite this construction in its favour, Respondent 4 in that case were held to be factually ineligible to participate in the bidding process.
35. It was further held that if others (such as the appellant in Ramana Dayaram Shetty case) were aware that non-
fulfilment of the eligibility condition of being a registered IInd class hotelier would not be a bar for consideration, they too would have submitted a tender, but were prevented from doing so due to the eligibility condition, which was relaxed in the case of Respondent 4. This resulted in unequal treatment in favour of Respondent 4 -- treatment that was constitutionally impermissible. Expounding on this, it was held: (SCC p. 504, para 10) "10. ... It is indeed unthinkable that in a democracy governed by the rule of law the executive Government or any of its officers should possess arbitrary power over the interests of the individual. Every action of the executive Government must be informed with reason and should be free from arbitrariness. That is the very essence of the rule of law and its bare minimal requirement. And to the application of this principle it makes no difference whether the exercise of the power involves affectation of some right or denial of some privilege."
(emphasis supplied) 17
46. It is true that in Poddar Steel and in Rashmi Metaliks a distinction has been drawn by this Court between essential and ancillary and subsidiary conditions in the bid documents. A similar distinction was adverted to more recently in Bakshi Security and Personnel Services (P) Ltd. v. Devkishan Computed (P) Ltd. through a reference made to Poddar Steel. In that case, this Court held a particular term of NIT as essential (confirming the view of the employer) and also referred to the "admonition" given in Jagdish Mandal followed in Michigan Rubber (India) Ltd. v. State of Karnataka. Thereafter, this Court rejected the challenge to the employer's decision holding Bakshi Security and Personnel Services ineligible to participate in the tender.
47. The result of this discussion is that the issue of the acceptance or rejection of a bid or a bidder should be looked at not only from the point of view of the unsuccessful party but also from the point of view of the employer. As held in Ramana Dayaram Shetty the terms of NIT cannot be ignored as being redundant or superfluous. They must be given a meaning and the necessary significance. As pointed out in Tata Cellular there must be judicial restraint in interfering with administrative action. Ordinarily, the soundness of the decision taken by the employer ought not to be questioned but the decision-making process can certainly be subject to judicial review. The soundness of the decision may be questioned if it is irrational or mala fide or intended to favour someone or a decision "that no responsible authority acting reasonably and in accordance with relevant law could have reached" as held in Jagdish Mandal followed in Michigan Rubber."
20. Therefore, we have to take it that the question relating to the conditions being mandatory, whether it is essential or non-essential, is ordinarily within the province of the employer. It is the employer, who knows, which are the conditions, which are required for the efficient and smooth working of a contract, which is essentially a commercial transaction and there can be no distinction in this matter in between a contract by a State and a contract by a private party. The area for interference by a Constitutional Court in these matters is based on well settled principles of judicial review. In this regard, we may notice the judgment of the Hon'ble Apex Court in the matter of Michigan Rubber 18 (India) Limited vs. State of Karnataka and others, reported in (2012) 8 SCC 216. Paragraph nos. 21, 24 & 26 of the said judgment read as under:
"21. In Jagdish Mandal v. State of Orissa the following conclusion is relevant: (SCC pp. 531-32, para 22) "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 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.
19If 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."
24. 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"? and
(ii) Whether the public interest is affected?
If the answers to the above questions are in the negative, then there should be no interference under Article 226.
26. It is also pointed out by the respondent State that in order to ensure procurement of tyres, tubes and flaps from reliable sources, the manufactures of the same with an annual average turnover of Rs 200 crores during the preceding three years, were made eligible to participate in the tenders. In the tender issued for procurement of these sets during October 2004, the appellant participated and based on the L1 rates, the orders for supply for 16,000 sets of tyres were placed on the firm. It is also pointed out that the appellant supplied 10,240 sets of tyres and the remaining quantity was cancelled due to quality problems."
21. In the context of the said judgment, the interference with the tender conditions can be successfully premised only on two elements. Either the action must be intended to favour a person or secondly, there must be occasioned violation of a statute. In this case, admittedly, there is no violation of any statute involved. As far as contention of the parties in Special Appeal No. 980 of 2017, namely, relating to the condition that there should be turnover of Rs. 5 cores for past 3 years is concerned, out of the 23 bidders, according to Mr. Arvind Vashistha, learned senior counsel 12 out of 23 did not comply. But, we are not resting our 20 conclusion on the basis of number of persons who possess the qualification and the number of persons who did not possess the qualification. No doubt, there are 2 points, which remain to be considered. The first question is whether in its inherent right the clause can be sustained, or in other words, whether it was permissible for the State to have prescribed the condition that the tenderer must have Rs. 5 crores turnover for the preceding 3 years. The second question would be, even if such a condition is prescribed, whether the State was justified in fixing the turnover restriction at Rs. 5 crores per year, having regard to the volume of the work involved, namely, the Solvency Certificate being fixed at less than Rs. 50 lakhs and Rs. 5 crores being the ten times of the Solvency Certificate, as argued by Mr. Arvind Vashishta, learned Senior Counsel for the appellant.
22. In answering this question, we have already noticed the stand of the State. The stand of the State and also advocated by the learned Advocate General is one that there must be stability. We must, at once, distinguish the judgment relied on by the appellant, in the case of Om Prakash Sharma Vs. Ramesh Chandra Prashar & others reported in (2016) 12 SCC 632. That was a case where the tender related to the sale of the right of site. It was a onetime affair. In this regard, it is apposite to peruse paragraph no. 12 of the said judgment. It reads as follows:
"12. In the present case, the site in question was to be sold on outright sale basis. The advertisement or the stipulations therein did not contemplate creation and or continuation of any relationship between the parties calling for continued existence of any particular level of financial parameters on part of the bidder, except the ability to pay the price as per his bid. The condition was not an essential condition at all but was merely ancillary to achieve the main object that was to ensure that the bid amount was paid promptly. The advertisement contemplated payment of bid amount whereafter the Sale Deed would be executed and not a relationship which would have continued for considerable period warranting an assurance of continued ability on part of the bidder to fulfill his obligations under the arrangement. Nor was this condition aimed at ensuring a particular level of financial ability on part of the bidder, for example in cases 21 where the benefit is designed to be given to a person coming from a particular financial segment, in which case the condition could well be termed essential. The idea was pure and clear sale simplicitor. As a matter of fact, the appellant did pay the entire bid amount within the prescribed period and the Sale Deed was also executed in his favor."
23. In this case, on the other hand, the contract is spread over for a period of five years; the relationship is to last for a period of five years. Secondly, the nature of the work that is to be done by the contractor is also to be seen. While it is settling of the right to fish for a period of five years, it is brought to our notice that the scope of the work involved is to sow the seeds in a vast expanse of land and, it is here, we must notice that the work in respect of these dams is spread over by 1295 hectares for Dhaura and 2995 hectares for Begul. The maintenance work also has to be done. In such circumstances, if the State felt that in case there has been a premature closure of the agreement, as a result of the contractor walking out of the contract by not fulfilling its obligations, resulting in prejudice to the public interest, loss to the State Exchequer and also to the coffers of the society, the persons should have sufficient financial stability, which is reflected in the business activity reaching a particular level consistently in the immediate recent past, namely, the past 3 years, we cannot possibly think that, that is a Clause which would brook interference under Article 226 of the Constitution of India. Though, it may be true that this is not a civil work like the construction of a road where such conditions relating to turnover are ordinarily fixed; but, at the same time, this is not an outright one time sale and it is a sale of a right, which is to last for a long period of time. The argument of Mr. Arvind Vashishta, learned Senior Counsel for the appellant that the apprehensions of the State are best allayed and taken care of by the other conditions, including the provisions for bank guarantee and, therefore, the Court should strike down this Clause, do not appeal to us. It is here again that we must remind ourselves of the four walls of our jurisdiction in interfering with a commercial transaction. The Court does not make the terms for the Government. It is the Government like a private employer, which makes its own terms. The interference is 22 premised only when it is found that the clause is so arbitrary or it is found to be made to suit the interest of a particular person or it is in transgression of a statutory provision. It may be true, as Mr. Arvind Vashishta, learned senior counsel points out in his rejoinder affidavit, that in the case of the appellant, the appellant did carry out the contract in the dam for which he was given the rights. But, that again is a value judgment of the employer, having regard to its experience for the past several years in the three dams, which are mentioned in paragraph no. 12 of the counter affidavit.
24. No doubt, it is true that in the case of State of Orissa and others Vs. Utkal Pharmaceuticals Manufacturers Association and another reported in (2016) 12 SCC 780, the Court was dealing with a writ petition filed by a Small Scale manufacturer of Drugs, who was sought to be ousted on the score that it does not satisfy the huge turnover requirements and the Court remanded the matter back to the High Court for dealing with the case, which was sought to be set up by the State in the Appeal, that there were reasons. It is, however, relevant to notice the following paragraph, as pointed out by Mr. Paresh Tripathi, learned counsel for the respondent/Board:
"2. Clause 2.1 assailed by the writ petitioner stipulates that principal manufacturing units with an annual turnover of 10 crores for the last three financial years alone shall be eligible for participating in the tender process for supply of drugs to the State of Orissa. The challenge mounted by the writ petitioner primarily proceeded on the ground that the condition aforementioned disqualifying smaller units from empanelment for supply of drugs was arbitrary, discriminatory and contrary to Industrial Policy Resolution 2007 (IPR 2007) as well as the Orissa Micro, Small and Medium Enterprise Development Policy, 2009 declared under notification dated 17.02.2009 published in the Orissa Gazette on 09.03.2009. That contention, it is noteworthy, has found favour with the High Court who has in terms of the impugned judgment and order struck down clause 2.1 of the Tender Conditions insofar as the same makes an annual turnover of 10 crores as the only basis for determining whether a manufacturing unit does or does not qualify for empanelment. The High Court has while doing so held that 23 Clause 2.1 of the tender conditions was contrary to the State Government policies under which small scale industrial units, including drug manufacturing units are entitled to certain specific benefits in terms of payment of earnest money, price preference and price comparison by reference to VAT payable in Orissa."
Therefore, it appears to have been a case where it was found that the Clause in question fell foul of the policy of the Government.
25. In the case of Directorate of Education & others Vs. Educomp Datamatics Ltd. & others reported in (2004) 4 SCC 19, the question arose with reference to the Computer Labs, which were to be established for which a tender was called. Originally, the condition was that the person should have turnover of Rs. 2 crores and that was enhanced to Rs. 20 crores for the last three financial years. We notice the following paragraphs of the said judgment:
"9. It is well settled now that the courts can scrutinise the award of the contracts by the government or its agencies in exercise of its powers of judicial review to prevent arbitrariness or favoritism. However, there are inherent limitations in the exercise of the power of judicial review in such matters. The point as to the extent of judicial review permissible in contractual matters while inviting bids by issuing tenders has been examined in depth by this Court in Tata Cellular vs. Union of India [1994 (6) SCC 651]. After examining the entire case law the following principles have been deduced:
(SCC pp. 687-88, para 94) "94. The principles deducible from the above are:
(1) The modern trend points to judicial restraint in administrative action.
(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.
(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract 24 is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-
administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.
[Emphasis supplied]
10. In Air India Limited vs. Cochin International Airport Limited [2000 (2) SCC 617], this Court observed:
"The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decision-making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness."
(emphasis supplied)
13. Directorate of Education, Government of NCT of Delhi had invited open tender with prescribed eligibility criteria in general terms and conditions under tender document for leasing of supply, installation and commissioning of computer systems, peripherals and provision of computer education services in various government/ government aided 25 senior secondary, secondary and middle schools under the Directorate of Education, Delhi. In the year 2002-2003, 748 schools were to be covered. Since the expenditure involved per annum was to the tune of Rs. 100 crores the competent authority took a decision after consulting the technical advisory committee for finalisation of the terms and conditions of the tender documents providing therein that tenders be invited from firms having a turnover of more than Rs. 20 crores over the last three years. The hardware cost itself was to be Rs.40-45 crores. The government introduced the criteria of turnover of Rs. 20 crores to enable the companies with real competence having financial stability and capacity to participate in the tender particularly in view of the past experience. We do not agree with the view taken by the High Court that the term providing a turnover of at least Rs. 20 crores did not have a nexus with either the increase in the number of schools or the quality of education to be provided. Because of the increase in the number of schools the hardware cost itself went upto Rs. 40-50 crores. The total cost of the project was more than 100 crores. A company having a turnover of Rs. 2 crores may not have the financial viability to implement such a project. As a matter of policy government took a conscious decision to deal with one firm having financial capacity to take up such a big project instead of dealing with multiple small companies which is a relevant consideration while awarding such a big project. Moreover, it was for the authority to set the terms of the tender. The courts would not interfere with the terms of the tender notice unless it was shown to be either arbitrary or discriminatory or actuated by malice. While exercising the power of judicial review of the terms of the tender notice the court cannot say that the terms of the earlier tender notice would serve the purpose sought to be achieved better than the terms of tender notice under consideration and order change in them, unless it is of the opinion that the terms were either arbitrary or discriminatory or actuated by malice. The provision of the terms inviting tenders from firms having a turnover of more than Rs. 20 crores has not been shown to be either arbitrary or discriminatory or actuated by malice."
26. In other words, the Court must also consider the effect of the interference on public interest. It is only if the overwhelming public interest is in favour of interference, the Court should interfere in such matters. Even proceeding on the basis, therefore, that the appellant can lay store by passing muster at the hands of the Evaluation Committee in regard to the requirement under Clause 10 on the basis of another entity 26 producing a certificate, which is pointed out to be a lapse and confining to the non-compliance of Clause 6, we would think that the appellant in Special Appeal No. 980 of 2017 has not made out any case. Therefore, we are of the view, particularly, having regard to the stand, which apparently led to the imposition of the condition in Clause 6 that it cannot be said to be arbitrary or meant to suit anyone in particular or it is in violation of any statute. The financial stability, which was sought to be introduced by insisting on the turnover in a sum of Rs. 5 crores, apparently, is the premise for the said clause and if the State wanted to go the extra mile to ensure that a contractor, who is successful stays put till the end of the contract and the contractual obligations are fulfilled in the best possible optimal way and, therefore, in public interest, as it is a case of a contract by a public authority, we do not think that any case is made out for interference in exercise of Article 226 of the Constitution of India and we agree with the learned Single Judge that the case of the appellant did not deserve interference.
27. As far as Special Appeal No. 977 of 2017 is concerned, we have noticed the stand of the appellant from the pleadings itself that the appellant himself has understood the condition to be a mandatory condition. The case of the appellant, sought to be set up, is that the appellant had actually produced it and there was some sort of manipulation. We have already noted the fact that the signatures are not found in the meetings, which took place on 28.08.2017 and 29.08.2017. Here again, we agree with the learned Single Judge, who was particularly rightly drawn on the averments in paragraph no. 27 to hold that the appellant did not comply with the mandatory condition in the matter of the production of the financial record in question. The case set up by the appellant that he had produced it cannot be accepted. As far as No Dues Certificate is concerned, we would think that having regard to the presence of the comma after the words "Character Certificate and Solvency Certificate to be issued by the District Magistrate", the argument of the State that what was contemplated is that the two certificates in 27 question must be issued by the District Magistrate; whereas, in respect of No Dues Certificate, there is no requirement that it should only be issued by the District Magistrate appears to be plausible. In this regard, we may also notice the following paragraphs of the judgment rendered in the case of Afcons Infrastructure Ltd. Vs. Nagpur Metro Rail Corporation Ltd. & another reported in (2016) 16 SCC 818:
"15. We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional Courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional Courts but that by itself is not a reason for interfering with the interpretation given.
16. In the present appeals, although there does not appear to be any ambiguity or doubt about the interpretation given by NMRCL to the tender conditions, we are of the view that even if there was such an ambiguity or doubt, the High Court ought to have refrained from giving its own interpretation unless it had come to a clear conclusion that the interpretation given by NMRCL was perverse or mala fide or intended to favour one of the bidders. This was certainly not the case either before the High Court or before this Court."
28. As far as taking of the opinion of the Additional Secretary (Law) and the Chartered Accountant is concerned, in the facts of this case, in the circumstances, which led them to do it and also taking note of the fact that the limited scope of the advice, which was given, related to the question as to whether the No Dues Certificate is to be issued by the District Magistrate or not or by any other authority, we would think that it cannot be treated, as such, an abdication of the functions of the Evaluation Committee that it vitiates its proceedings. A statutory authority may have to take legal advice; but as long as the ultimate discretion is exercised by the statutory authority, a decision cannot be flawed. Therefore, we cannot also treat this as a case where the extrinsic evidence which is tabooed 28 under Clause 24(2)(x) of the Procurement Rules has been taken. As far as the signatures of the Committee Members not being there in the record of the proceedings dated 28.08.2017 and 29.08.2017 is concerned, it is essentially connected with the plea that there was some manipulation to contend that appellant had actually produced the documents, with which case, we cannot possibly agree. Even if the Evaluation Committee has not marked in the negative in regard to the requirement under column relating to the Net worth Certificate, we would think, at any rate, quite apart from the fact that appellant has not produced the Net worth Certificate, the appellant, in any way is disqualified having regard to the fact that the appellant had not produced the Form 3CB and Form 3CD. As far as the case that there is no requirement to produce Form 3CB and Form 3CD is concerned, it is clearly belied by the pleadings of the appellant himself, which we have already adverted to. Having not produced the forms, it is not open to the appellant to turn around and contend that it was not necessary. In this regard, the stand of the respondent-Board as to the necessity of production of these certificates is contained in the following paragraphs:
"21. That to be an audited balance sheet and profit and loss account it has to be accompanied by an Audit Report prepared by the Chartered Accountant of the firm which states that the same are based on records produced. It may be specified here that the audit report of the Chartered Accountant specifies that the true and fair financial picture is reflected in the audited balance sheet and profit and loss account, and it also states that the balance sheet and profit and loss account that has been prepared by the party has been drawn in conformity with the books of accounts maintained by the party. It also contains the comments of the Chartered Accountant which are necessary and compulsory for the Chartered Accountant to declare as per the Standards laid down by Institute of Chartered Accountants of India. That without the copy of the Audit Report of the Chartered Accountant, the balance sheet and profit and loss account are neither authentic nor valid in the eyes of the law.
22. That the case of the Petitioner is also contrary to itself. At paragraph no. 2 of the Petition the Petitioner clearly admits that he was duly informed of the rejection of his technical bid. However, this is contrary to his stand at paragraph no. 26 29 of the Writ Petition that he was not informed about the disqualification. Such a contrary stand clearly exposes the inconsistencies in the Petitioner's case leading to the inescapable conclusion that the instant Writ Petition is misconceived and a malafide abuse of process of the law. Furthermore, by way of paragraph 27 of the Writ Petition wherein the Petitioner clearly admits that he was informed of the deficiency in the documents and that he sought to rectify the same after the deadline for submission of documents was overwhich contradicts his own case once more.
29. As regards the contention raised by Mr. Jitendra Chaudhary, learned counsel that production of Form 3CB and Form 3CD is not really necessary having regard to the production of the balance sheet is concerned, we have no hesitation in rejecting it. When a business concern, for the purpose of Income Tax Act, which comes under Section 44AB of the Income Tax Act is made subject to compulsory audit and the financial documents are audited by the Chartered Accountant, the Chartered Accountant is an expert and he prepares the certificate in the form, which is provided under the Income Tax Rules. The form contains a wealth of information regarding the persons concerned; it is available at a glance for the authorities. From the same, it will be open to the authorities to gauge the financial condition of the party. Therefore, if the balance sheet and the documents are to have any value for the purpose of evaluating their financial wealth, the nonproduction of Form 3CB and Form 3CD would be fatal and, as already noticed, the case of the appellant itself is that the appellant has complied with the conditions and it is clear that it has not been complied with, having regard to the circumstances of the case. We would think that no case is made out by the appellants for interference in this matter.
30. The Appeals fail; they are dismissed without any order as to cost. Consequently, impleadment application will also stand rejected.
(V.K. Bist, J.) (K.M. Joseph, C.J.)
22.11.2017 22.11.2017
Rahul