Rajasthan High Court - Jaipur
M/S Sai Trading &Anr; vs R R S Upbhokta on 9 September, 2016
Author: Alok Sharma
Bench: Alok Sharma
1
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN
AT JAIPUR BENCH
ORDER
(S.B. Civil Writ Petition No.9449/2016)
1. M/s. Sai Trading Flat No.202, Second Floor Kamal kunj, Ahinsa Circle, Jaipur through
proprietor Kanwaljeet Dhanraj Singh Mangrole.
2. M/s. R.M. Kabra, Proprietorship firm through its proprietor Gaurav Kabra, having its
office at Kabra Building near Vijay Hotel Bazaar No.2, Bhilwara.
--- Petitioners
Versus
1. Rajasthan Rajya Sahkari Upbhokta Sangh Limited, through its Managing Director,
237, Second Floor, Nehru Sahkar Bhawan, Bhawani Singh Road, Jaipur.
2. The Directopr & Joint Secretary (Admn.) Department of Social Justice &
Empowerment, Ambedkar Bhawan, Civil Lines Crossing, Jaipur.
3. Administrator and Registrar, Cooperative Societies, Rajasthan Rajya Sahkari
Upbhokta Sangh Limited, Jaipur.
4. M/s. Mohan Traders, 144-145 Krishi Upaj Mandi Sector-11, Udaipur and C/o.
CONFED.
--- Respondents.
Date of Order: September 9, 2016.
PRESENT
HON'BLE MR. JUSTICE ALOK SHARMA
Mr. R.P. Singh, Senior Advocate with
Ms. Anita Agrawal, for the petitioners.
Mr. S.K. Gupta, AAG for the State.
Mr. K.K. Sharma, Senior Advocate with
Mr. Sandeep Pathak, for respondent No.4.
2
BY THE COURT:
The petitioners challenge the award of work order and the agreement both dated 13-7-2016 executed by the Rajasthan Rajya Sahakari Upbhokta Sangh Limited (hereinafter `the Upbhokta Sangh') in favour of respondent No.4 M/s. Mohan Traders pursuant to e-tender dated 16-6-2016.
Briefly stated the facts are that the Upbhokta Sangh issued an e-tender inviting two part bids i.e. technical and financial for specified branded commodities as detailed in Annexure-L on rate contract basis for hostels for under privileged students run by the Social Justice and Empowerment Department (hereinafter `the Department') all over the Rajasthan. The terms and conditions of e- tender inter alia prescribed eligibility of a minimum average annual turn over of Rs.8 crores for the three financial years immediately following. The bidders were further required to have executed work of similar nature for an amount of Rs.8 crores during one of the last three preceding years. A declaration regarding infrastructure prescribed was also required to be submitted as per Annexure-I. The contract value was fixed at Rs.40 crores consequent to which a bid security amount @ 2% i.e. Rs.80 lacs was required in terms of clause 33 of the e-tender. Only those whose technical bids were accepted 3 were entitled for consideration of their financial bids. In response to the e-tender, last date whereof was 30-6-2016, two bids were received. One from the successful bidder M/s. Mohan Traders and the other firm M/s. Sonika Trading Corporation (P) Ltd. Technical bids were opened on 1-7-2016 and of the two bidders only respondent No.4 M/s. Mohan Traders was found eligible. The other bidder M/s. Sonika Trading Corporation (P) Ltd. having submitted its bid without the requisite bid security was consequently found to be technically ineligible. The financial bid of the technically qualified bidder was opened on 6-7-2016. Resultantly work order was issued in favour of the respondent No.4 M/s. Mohan Taders on 8-7-2016 and the agreement with the successful bidder was executed on 13- 7-2016. This writ petition has been filed on 12-7-2016.
Mr. R.P. Singh Senior Advocate appearing with Ms. Anita Agrawal on behalf of the two petitioners submitted that the condition of the e-tender fixing the contract value at Rs.40 crores was wholly arbitrary consequent to which an unconscionably high bid security amount of Rs.80 lacs was required from the bidders. It was submitted that the contract value ought not to have been for ten months of supplies of the specified branded commodities to the students of hostels run by the Department, but only for two months as at a given point of time supplies were required only for two 4 months as evident from the department's letter dated 23-6-2016 to the Upbhokta Sangh. The said demand of the department ought to have entailed a corrigendum in the e-tender dated 16-6-2016 resulting wherefrom the contract value and the bid security amount would have been only Rs.8 crores odd and Rs.16 lac odd as against Rs.40 crores and Rs. 80 lacs respectively and ensured maximisation of participation in the bid process in consonance with the object of the Rajasthan Transparency in Public Procurement Act, 2012 (hereinafter `the Act of 2012') Mr. R.P. Singh submitted that the discretion in fixing the terms of the tender qua the contract value/ bid security amount aforesaid was arbitrarily and malafidely used, therefore warranting interference at the hands of this court. It was submitted that representations/ protestations by the petitioners with regard to the arbitrariness and illegality of conditions of the tender made to the benefit of those with deep pockets went abegging and remained unaddressed. It was further submitted in the alternative that with the respondent No.4 being the sole eligible bidder at the conclusion of evaluation of technical bids, the safeguards incorporated in Rule 68 of the Rajasthan Transparency in Public Procurement Rules, 2013 (hereinafter the `Rules of 2013') were jettisoned and the work order awarded to it and agreement signed on 13-7-2016. Mr. R.P. Singh prayed that hence acceptance of the respondent's bid on 8-7-2016, the work order and agreement dated 5 13-7-2016 are liable to be quashed and set aside. It was submitted that even otherwise the respondent No.4 M/s. Mohan Trader did not fulfill other requisite pre-conditions set out in the e-tender dated 16-6-2016 neither as to infrastructure nor on the requirement of experience.
Per contra, Mr. S.K. Gupta, learned Additional Advocate General (AAG) appearing for the Upbhokta Sangh submitted that the writ petition is liable to be dismissed as not being maintainable for the reason that both the petitioners did not participate in the bid process and cannot be aggrieved in respect thereto or the award of work order/ agreement dated 13-7-2016 in favour of the respondent M/s. Mohan Traders. The learned AAG submitted that even otherwise the writ petition should be dismissed for laches inasmuch as while the e-tender was published on 16-6-2016, its conditions have been challenged after the acceptance of the respondent's financial bid on 8-7-2016 and only a day before grant of work order and execution of agreement on 13-7-2016. It was submitted that thus evidently the writ petition does not seek vindication of a legal right, correction of a legal injury, but is an exercise to obtain litigious advantage by stalling the supplies under the work order/ agreement dated 13-7-2016 such that the petitioner No.1 and the unsuccessful bidder M/s. Sonika Corporation 6 Pvt. Ltd. having commonality of proprietor and director, one Kanwaljeet Dhanraj Singh Mangrole, can continue with their supply to the 725 hostels of the department which they were carrying out in financial year 2015-16. Profiteering is the object of this writ petition submitted the AAG. It was submitted that the successful bidder M/s. Mohan Traders pursuant to the work order/ agreement dated 13-7-2016 has commenced supplies of specified branded commodities to the 725 hostels run by the Department and completed the supplies for the month of July, 2016. It was further submitted that even otherwise the petitioners have no legal ground whatsoever to lay a challenge to the terms and conditions of the e- tender dated 16-6-2016, inasmuch as it has been consistently held by the Apex Court as well as by various High Courts that the terms and conditions of a tender are a matter of contract and unless they are palpably and ex facie arbitrary, malafide or discriminatory no interference is warranted by courts in the exercise of their jurisdiction under Article 226 of the Constitution of India. The learned AAG submitted that none of the aforesaid situations for impugning the terms and conditions of the e-tender dated 16-6- 2016, under challenge, obtain in the present case. The learned AAG submitted that the contract value in respect of the e-tender in issue is eminently just and proper as the supplies thereunder pertains to specified branded items in combo pack to about 42691 students of 7 725 hostels run by the Department through the year 2016-17. An academic year 2016-17, is constituted of ten months of studies with two months of vacations. It was submitted that the quantum of supplies for each month admittedly and unquestionably is approximately Rs.4 crores and by a simple arithmetical calculation, the contract value of the supplies for a year 2016-17 is Rs.40 crores. There is and cannot be any arbitrariness or malafides about the contract value with the intent to exclude the petitioners. It was submitted that the Department in its meeting on 29-4-2016 had consciously taken a decision for procuring specified branded goods in a combo pack for the 42691 students in its 725 hostels for the academic year 2016-17 for the reason that in the previous academic year 2015-16, supplies of items similar in nature, but unbranded, to students had been on adhoc basis by way of contracts of supplies for a few months on each occasion by private negotiation and had been a subject of the adverse attention of the press on issues of lack of transparency and poor quality of goods supplied. During this period the supplies were made inter alia by one M/s. Sonika Corporation Private Limited and petitioner No.1 M/s. Sai Trading. Mr. Kanwaljit Singh Mangalore is the Proprietor of M/s. Sai Trading and Director of M/s. Sonika Corporation Private Limited. This link establishes, argued the AAG that this petition is a proxy litigation by the petitioner No.1 for M/s Sonika Corporation Private Limited, which 8 participated unsuccessfully in the e-tender and was technically rejected for failure to furnish the bid security amount of Rs.80 lacs as was mandatory required under rule 43 of the Rules of 2013 being 2% of the contract value of Rs.40 crores. It was further submitted that rule 68 of the Rules of 2013 was fully complied with as the Bid Evaluation Committee prepared a justification note for the grant of contract to the sole bidder. This justification note received concurrence on 8-7-2016 of the Accounts Members, and the Administrator of the Upbhokta Sangh, also the Registrar of Cooperative Societies.
Mr. Kamlakar Sharma, Senior Advocate appearing with Mr. Sandeep Pathak, on behalf of the successful bidder M/s. Mohan Traders aside of reiterating the submissions of the AAG submitted that the successfully bidder was wholly complaint with the terms and conditions of the e-tender dated 16-6-2016 and has since after acceptance of the financial bid on 8-7-2016 been awarded the work order, followed by execution of the agreement on 13-7-2016. It has already made supplies of the contracted goods for the month of July, 2016.
Heard. Considered.
The jurisdiction of this court under Article 226 of the 9 Constitution of India with regard to a challenge to terms and conditions of a tender is quite limited. This aspect of the matter has been considered by the Apex Court in the case of Michigan Rubber (India) Limited Vs. State of Karnataka [(2012)8 SCC 216]. Therein the Apex Court has held that fixation of value of tender is entirely within the purview of executive and the court has little role to play in the tender process except interfere with such actions of executive which are palpably arbitrary or unreasonable in the sense of having no nexus at all with the procurement process. But if the government acts in conformity with healthy standards and norms for awarding of contract, no interference by the court would be called for. The Apex Court further held that the terms and conditions of the tender being a matter of policy choices, greater latitude is required to be conceded to the Government, where aside of arbitrariness and discrimination, no case of malice or breach of statutory processes can be/ is made out. The Apex Court in its aforesaid opinion in Michigan Rubber (India) Ltd. (supra) recognized that the State thus has prerogative to impose pre conditions and/ or qualifications for bidders to ensure that the successful bidder has the capacity and the resources to successfully execute the contract awarded. The Apex Court reiterated the well settled and oft repeated proposition that no person can claim a fundamental right to carry on business with the Government and in the absence of unreasonableness, unfairness and 10 detriment to public interest, the tender process and award of contract after due process cannot be interfered with. In the case of Meerut Development Authority Vs. Association of Management Studies [(2009)6 SCC 171] the Apex Court held that the terms and conditions of invitation of tender cannot ordinarily be open to judicial scrutiny as it is in the realm of the contract and only limited judicial review would be available where it is established that the terms and conditions of invitation of tender were tailor made to benefit of a particular person with a view to avoid the participation of others in the bidding process. In the case of Villianur Iyarkkai Padukappu Maiyam Vs. Union of India [(2009)7 SCC 561] a Three Judge Bench of the Apex court held that a person who has not participated in the tender process cannot be allowed to lay a challenge to the award of the contract following the completion of the processes to the successful bidder, and where such a challenge is made inter alia on the ground of allegation of public detriment such as environmental degradation if the contract were to be sustained and executed, the court would eschew a consideration of the merits of the award of the contract to successful bidder and only focus on the issue of the alleged public detriment resulting from environmental degradation in the execution of the contract.
In the context of the aforesaid enunciation of law by the Apex 11 Court, reverting to the facts of the present case, it is quite apparent that the petitioners have no case and have yet approached this court not so much for the vindication of their legal or fundamental rights but only to stall the grant/ execution of the contract validly executed by the respondent department in favour of the successful bidder respondent No.4 M/s Mohan Traders. The case at hand is evidently a gross misuse of salutary jurisdiction of this court under Article 226 of the Constitution of India as would be apparent from the admitted facts: that the Department runs about 725 hostels in State of Rajasthan providing facilities to about 42691 students; various consumer goods are to be supplied under the policy of the State Government to under privileged students residing in the said hostels and pursuing academics; for the purpose of providing the aforesaid facilities to the students, the State Government in the department of Social Empowerment and Justice required in its meeting on 29-4- 2016 that procurement of specified branded goods be made for the academic year 2016-17; the academic year entails ten months of study and corresponding running of hostels necessitating supply of requisite goods of good quality (hence branded) for ten months with two months of vacation; and the supply of specified branded goods in each month admittedly is about Rs.4 crores and by a simple arithmetical calculation ten months supply aggregates to Rs.40 crores for the year 2016-17. Rule 43 of the Rules of 2013 provides 12 for 2% bid security qua the contract value in respect of the tenders to inter alia be a condition of eligibility. In the context of the contract value of the contract of Rs.40 crores for supplies of specified branded items for the academic year 2016-17, bid security 2% (Rs.80 lacs) was thus fixed by the Upbhokta Sangh as eligibility. Nothing arbitrary, unreasonable or discriminatory can be attributed to the said condition of bid security of Rs.80 lacs. It does not lie in the mouth of the petitioner to determine the period for which supplies were to be sought. Nothing arbitrary nor malicious can be attributed to the decision of the department in its letter of 29-4- 2016 to seek supplies of specified branded commodities for academic year 2016-17. It can be no one's case that any law requires bids to be called only for two months supply. Besides the letter dated 23-6-2016 has been misconstrued by the petitioners. The said letter does override the decision of 29-4-2016 and only speaks of initial supply for two months in the academic year 2016- 17 with remainder to follow. An arrangement of floating tenders every two months would entail chaos and render smooth supplies impossible. The decision by the department under its letter dated 29- 4-2016 to seek supplies for the whole academic year 2016-17 was wholly reasonable. The tender of 16-6-2016 was accordingly for academic year 2016-17 and rightly valued (contract) at Rs.40 crores. The bid security amount of Rs.80 lacs @ 2% of the contract 13 value was the inexorable legal consequence. The challenge to the terms and conditions of the e-tender dated 16-6-2016 on this count is wholly untenable and liable to fail.
I am of the further considered view that not having participated in bidding process, the petitioners have no locus standi for laying the writ petition--as with non participation neither of their legal or fundamental right can be infringed. This conclusion is buttressed by the judgment of the Apex Court in Villianur Iyarkkai Padukappu Maiyam Vs. Union of India (supra). As far as compliance with rule 68 of the Rules of 2013 is concerned, it is apparent from the reply of the Upbhokta Sangh that safeguards mandated have been adhered to; a justification note was prepared by the Tender Committee and approved by the superior authority.
Aside of lacking in merits, and liable to be dismissed for reason of the petitioners not having locus standi, the petition is also liable to be dismissed on ground of laches. The terms and conditions of the e-tender dated 16-6-2016 were available to the petitioners as on that date, yet the challenge to the conditions of tender, acceptance of the financial bid of M/s. Mohan Traders on 8-7-2016 has been laid on 12-7-2016, only a day prior to the award of the work order and execution of the contract on 13-7-2016. It appears 14 that the petitioners were standing on the sidelines and keeping a watch. They resorted to the salutary jurisdiction of this court under Article 226 of the Constitution of India only when they found that the contract was being indeed awarded to respondent No.4, discontinuing the supplies being made to the department/ Upbhokta Sangh by M/s.Sonika Corporation Private Limited and petitioner No.1 M/s. Sai Trading in 2015-16. These two suppliers have a commonality of persons interested with the proprietor of the petitioner No.1 M/s.Sai Trading one Kanwaljeet Singh Mangrole also being a Director of M/s. Sonika Corporation Private Limited.
The inevitable conclusion is that the petitioners have approached this court not for the vindication of their legal rights and/ or to prevent public detriment but just to stall the legally valid work order/ agreement dated 13-7-2016 following a transparent tender process in accordance with the Act of 2012 and the Rules of 2013. The effort has been to obtain litigious advantage and continue with the supplies of unbranded goods made by M/s. Sai Trading and M/s. Sonika Corporation Private Limited in 2015-16 and make huge profits.
The writ petition is therefore dismissed with costs of Rs.50,000/-. Rs.25,000/- be paid to Rajasthan State Legal Services 15 Authority Jaipur and remainder Rs.25,000/- be paid to Rajasthan High Court Bar Association, Jaipur, in equal measure by the petitioners within a period of four months from today.
Non compliance of the order shall be punishable as contempt of court.
(Alok Sharma), J.
arn/ 16 All corrections made in the order have been incorporated in the order being emailed.
Arun Kumar Sharma, Private Secretary.