Punjab-Haryana High Court
M/S Poonam Concrete vs Uttar Haryana Bijli Vitran Nigam Ltd And ... on 28 October, 2014
Equivalent citations: AIR 2015 PUNJAB AND HARYANA 6
Author: Anupinder Singh Grewal
Bench: Ashutosh Mohunta, Anupinder Singh Grewal
CWP-16557 of 2014 1
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
CWP-16557 of 2014
Date of decision : 28-10-2014
M/s Poonam Concrete ...... Petitioner
Versus
Uttar Haryana Bijli Vitran Nigam Ltd. & others ...... Respondents
CORAM: HON'BLE MR.JUSTICE ASHUTOSH MOHUNTA,ACTING CHIEF JUSTICE
HON'BLE MR. JUSTICE ANUPINDER SINGH GREWAL
Present: Mr. Vivek Khatri, Advocate
for the petitioner.
Mr. Pardeep Singh Poonia, Advocate
for respondent Nos.1 and 2.
***
1. Whether Reporters of Local papers may be allowed to see the judgment? Yes
2. To be referred to the Reporters or not? Yes
3. Whether the judgment should be reported in the Digest? Yes
ANUPINDER SINGH GREWAL, J.
The present writ petition is directed against order dated 11.07.2014 whereby the tender of work was allocated to respondent No.3. The petitioner had submitted its bid in response to NIT for work of supply of 9 Mtr. long PCC 200 Kg- WL poles conforming to Uttar Haryana Bijli Vitran Nigam, technical specification No. CSC-2009-10 and all relevant ISS with latest amendments vide a notice dated 11.07.2014. The tenders were opened by the official respondents on 28.07.2014 and the rates quoted by the petitioner were the lowest at Rs.2353/- per pole in comparison to other firms. The petitioner was called for a meeting with the High Powered Purchase Committee and during negotiations was further asked to reduce its rates. The petitioner-firm indicated its willingness to reduce the rates from Rs.2353/- to Rs.2310/-. The official respondents are stated to have allocated the work to respondent No.3 as negotiations were also held with it MOHAN SINGHand respondent No.3 had indicated willingness to supply the poles @ 2014.10.29 12:26 I attest to the accuracy and authenticity of this document CWP-16557 of 2014 2 Rs.2100/- per pole.
The petitioner has further submitted that the negotiations with the other firms, are against the instructions dated 18.11.1998 issued by the CVC, wherein it is stated that the post tender negotiations are banned with immediate effect except in the case of negotiations with L-1 (i.e. lowest tender).
In support of his submissions, the counsel for the petitioner has relied on the judgments titled as Harminder Singh Arora v. Union of India and others 1986 AIR (SC) 1527, Raj Singh v. State of Haryana and others 2006(1) RCR (Civil) 335 and Brahlerics India Pvt. Ltd. v. Union of India and others 2002(96) DLT 309.
In the written statement filed by the Uttar Haryana Bijli Vitran Nigam Ltd.-respondent No.2, it is stated that the NIT was in two parts. Part one was technical and financial bid and part two was price bid.
Along with the petitioner, six firms had participated in the tendering process. Five, including the petitioner were found to be qualified after the technical bid was opened on 28.07.2014. The price bid was, thereafter, opened on 07.08.2014 and in merit-cum-comparative statement of the qualified firms, the petitioner emerged as lowest bidder (L-1) with the quoted price of Rs.2353/- per pole for a quantity of 23000-34500 numbers against the requirement of 60000-90000 numbers poles. The respondent No.3 was found to be the second lowest bidder, quoting price of Rs.2390/- per pole for a quantity of 40000 numbers poles. As such, the first two firms (petitioner and respondent No.3) offered to meet the total quantity required in the tender.
It is further submitted that as the price submitted by the MOHAN SINGH 2014.10.29 12:26 I attest to the accuracy and authenticity of this document CWP-16557 of 2014 3 petitioner was on the higher side, the High Powered Purchase Committee formed by the Government of Haryana, negotiated the rates with the bidders in view of policy of Government of Haryana dated 16.06.2014 (Annexure R1), duly adopted by the Uttar Haryana Bijli Vitran Nigam Ltd. In the policy, it is stated that if the rates quoted by L-1 are not found reasonable then further negotiations could be held upto L-3 bidder if the difference between L-1 quoted rates and those quoted by L-2 and L-3 are within 5% of the L-1 quoted rates. In case the L-1 bidder refuses to further reduce its offered price and L-2 and L-3 bidders come forward to offer a price which is better than the price of L-1 bidder, then such bidder becomes L-1 bidder. It has also been provided in the policy that whenever such a situation arises, the original L-1 bidder may be given one more opportunity to improve upon his original quoted price. If he does so during the negotiations, he would be treated as L-1. It is stated that the policy (Annexure R1) was part and parcel of the instant NIT and all the bidders had given their unconditional acceptance to the terms and conditions of the NIT including this policy. A copy of the acceptance by the petitioner is also annexed with the reply (Annexure R2).
We have heard the learned counsel for the parties and bestowed our thoughtful consideration to the matter.
The action of the Uttar Haryana Bijli Vitran Nigam Ltd. in awarding contract to respondent No.3 appears to be just and reasonable and cannot be termed as arbitrary. It is worthwhile to mention that when the matter came up for hearing before this Court on 11.09.2014, the counsel for the petitioner had sought time to seek instructions with regard to the rate the petitioner is ready to offer for the electricity poles. The counsel for the MOHAN SINGH 2014.10.29 12:26 I attest to the accuracy and authenticity of this document CWP-16557 of 2014 4 petitioner has submitted before us that the petitioner is not willing to further reduce the rate from Rs.2310/- which it had offered during the negotiations. It is worthwhile to mention that the respondent No.3 who had submitted the second lowest bid quoting price of Rs.2390/- had come down to Rs.2100/- during negotiations. The petitioner was given a counter offer of the lowest discovered price of Rs.2100/- per pole, as offered by the respondent No.3, by the committee. However, the petitioner had not accepted the same. It is, thus, patent that there is substantial difference of Rs.210/- per pole in the rates submitted by the petitioner and respondent No.3.
Moreover, the petitioner having accepted the terms and conditions of the NIT including the policy with regard to negotiations could not turn around and challenge the same. The petitioner submitted its tender and participated in the negotiations as per the terms and conditions laid down in the NIT. It was only after it did not succeed in getting the contract that the petitioner is seeking to challenge the process of negotiations.
As far as the contention of the petitioner that the action of the respondent Nos.1 and 2 is in violation of the instructions dated 18.11.1998 is concerned, we are of the view that these are the CVC guidelines which are primarily meant to ensure a more transparent and effective system to eliminate corruption. The policy of the Haryana Government (Annexure R1) as adopted by the Uttar Haryana Bijli Vitran Nigam Ltd. clearly spells out that the negotiations could be held upto L-3 bidder only if the difference between the rates quoted by L-1 and those quoted by L-2 and L-3 is within 5% of the L-1 rates. This policy appears to be reasonable inasmuch as the 5% price difference is quite rationale and in the interest of competitive bidding. Even otherwise, in this policy the interest of the original L-1 MOHAN SINGH 2014.10.29 12:26 I attest to the accuracy and authenticity of this document CWP-16557 of 2014 5 bidder has been safeguarded, as he has to be given one more opportunity to improve upon his original quoted price. It was precisely for this reason that the petitioner was asked to offer the lowest price of Rs.2100/- per pole as offered by respondent No.3 which was not accepted by the petitioner.
The judgments relied upon by the petitioner are clearly distinguishable on facts and not applicable to the instant case.
In the judgment cited as Harminder Singh v. Union of India AIR 1986 SC 1527, the tenders were invited for supply of fresh milk whereas respondent No.4 had submitted tender for supply of pasteurized milk which was accepted. It was in that factual backdrop, Hon'ble Supreme Court of India had held that the petitioner's tender, being the lowest, should have been accepted as it was for supply of fresh milk.
In Raj Singh Vs. State of Haryana 2006(1) RCR (Civil) 335 (P&H), it was stipulated in the instructions applicable thereto that the tender committee could negotiate only with the lowest tenderer and not with all the bidders. Hence, it was held that the negotiations with all the tenderers were in violation of the departmental instructions/guidelines.
Brahlerics India Pvt. Ltd. v. Union of India and others 2002 (96) DLT 309 (Delhi High Court) pertains to the tenders awarded by the CPWD which had adopted the CVC guidelines inasmuch as the said guidelines found part of the CPWD manual, while in the instant case the negotiations were carried out in terms of the Haryana Government policy dated 16.06.2014 (Annexure R-1) as adopted by the Uttar Haryana Bijli Vitran Nigam Ltd.
Judicial review in contractual matters is confined to the manner in which the decision is taken rather than the decision itself. The Courts MOHAN SINGH 2014.10.29 12:26 I attest to the accuracy and authenticity of this document CWP-16557 of 2014 6 would interfere if the decision is arbitrary, unreasonable or actuated by malafide. Public interest has also to be kept in mind while testing the award of contract. We draw support from the law settled by the Hon'ble Supreme Court of India in Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd. (2005) 6 SCC 138 wherein it has been held as under:
"11. The principles which have to be applied in judicial review of administrative decisions, especially those relating to acceptance of tender and award of contract, have been considered in great detail by a three-Judge Bench in Tata Cellular v. Union of India. It was observed 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. (See para 85 of the Report, SCC para 70.)
12. After an exhaustive consideration of a large number of decisions and standard books on administrative law, the Court enunciated the principle that the modern trend points to MOHAN SINGH judicial restraint in administrative action. The court does not 2014.10.29 12:26 I attest to the accuracy and authenticity of this document CWP-16557 of 2014 7 sit as a court of appeal but merely reviews the manner in which the decision was made. 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. The Government must have freedom of contract. In other words, 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 principles of reasonableness but also must be free from arbitrariness not affected by bias or actuated by mala fides. It was also pointed out that quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. (See para 113 of the Report, SCC para 94.)
13. In Sterling Computers Ltd. v. M & N Publications Ltd. it was held as under: (SCC p. 458, paras 18-19) "18. While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the court is concerned primarily as to whether there has been any infirmity in the 'decision- making process'. ... By way of judicial review the court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State. Courts have inherent limitations on the scope of any such enquiry. But at the same time ... the courts can certainly examine whether 'decision-making process' was reasonable, rational, not arbitrary and violative of Article 14 of the MOHAN SINGH 2014.10.29 12:26 I attest to the accuracy and authenticity of this document CWP-16557 of 2014 8 Constitution.
19. If the contract has been entered into without ignoring the procedure which can be said to be basic in nature and after an objective consideration of different options available taking into account the interest of the State and the public, then court cannot act as an appellate authority by substituting its opinion in respect of selection made for entering into such contract."
14. In Raunaq International Ltd. v. I.V.R. Construction Ltd. it was observed that 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 of paramount importance are commercial considerations, which would include, inter alia, the price at which the party is willing to work, whether the goods or services offered are of the requisite specifications and whether the person tendering is of ability to deliver the goods or services as per specifications.
15. The law relating to award of contract by State and public sector corporations was reviewed in Air India Ltd. v. Cochin International Airport Ltd. and it was held that the award of a contract, whether by a private party or by a State, is essentially a commercial transaction. It can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation. It was further held that the State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision making process, the Court must exercise MOHAN SINGH 2014.10.29 12:26 I attest to the accuracy and authenticity of this document CWP-16557 of 2014 9 its discretionary powers under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should interfere. "
These principles have been reiterated by the Hon'ble Supreme Court of India in Sanjay Kumar Shukla v. Bharat Petroleum Corporation Ltd. and Ors. reported as 2014 (3) SCC 493.
Hence, the award of contract to respondent No.3 cannot be termed as arbitrary, unreasonable, affected by bias or actuated by malafide warranting interference under Article 226 of the Constitution of India.
Therefore, for the aforestated reasons, the petition is dismissed with no order as to costs.
(ASHUTOSH MOHUNTA)
ACTING CHIEF JUSTICE
Dated: 28/10/2014 (ANUPINDER SINGH GREWAL)
Mohan JUDGE
MOHAN SINGH
2014.10.29 12:26
I attest to the accuracy and
authenticity of this document