Rajasthan High Court - Jaipur
Star Agriwarehousing And Collateral ... vs Rajasthan State Warehousing ... on 29 November, 2018
Bench: Mohammad Rafiq, Goverdhan Bardhar
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
(1) D. B. Special Appeal (Writ) No. 1153/2018
In
S. B. Civil Writ Petition No. 17412/2018
1. Rajasthan State Warehousing Corporation (A Government
Undertaking) through its Managing Director having Its Head Office
at Bhawani Singh Road, Jaipur-302015, Rajasthan.
2. Managing Director, Rajasthan State Warehousing Corporation (A
Government Undertaking), Tender/Bid Inviting Authority having its
Head Office at Bhawani Singh Road, Jaipur-302015, Rajasthan.
...Non-Petitioner Nos. 2 & 3-Appellants
Versus
1. Shree Shubham Logistics Limited, A Company incorporated and
registered under the provisions of the Companies Act, 1956
having its Registered Office at, At A-1 and A-2, GIDC Electronic
Estate Sector-25 Gandhinagar-382004, Gujarat and the Corporate
Office at Unit No. 72, Seventh Floor, Kalpataru Square, Kondivita
Lane, Off Andheri Kurla Road, Andheri (East) Mumbai-400059
through its Authorized Representative Mr. Rakesh Purohit.
...Petitioner-Respondent.
2. State of Rajasthan through its Principal Secretary, Department of Agriculture and Marketing, Government of Rajasthan, Government Secretariat, Bhagwan Das Road, Jaipur.
....Non-petitioner No. 1-Proforma Respondent
3. Star Agri Warehousing and Collateral Management Limited, A Company incorporated and registered in India having their Registered Office at 1st Floor, B Wing, Litolier Chambers, Andheri Kurla Road, Marol, Andheri (E) Mumbai-400059, Maharashtra.
....Non-petitioner No. 4-Respondent With (2) D. B. Special Appeal (Writ) No. 1154/2018 In S. B. Civil Writ Petition No. 17725/2018 Rajasthan State Warehousing Corporation (RSWC) Through Its Managing Director, Bhavani Singh Road, Near JDA, Jaipur-302015.
...Non-petitioner No. 1-Appellant.
Versus
1. Origo Commodities India Private Limited, Registered Office Plot No. 37, First Floor, Sector 18, Institutional Area, Gurgaon (Haryana).
...Petitioner-Respondent.
2. Star Agri Warehousing And Collateral Management Limited, 1 st Floor, B Wing, Litolier Chambers, Andheri Kurla Road, Marol, Andheri (E) Mumbai-400059, Maharashtra.
....Non-Petitioner No. 2-/Respondent
(2 of 53) [SAW-1153/2018]
With
(3) D. B. Special Appeal (Writ) No. 1155/2018
In
S. B. Civil Misc. Writ Petition No. 17725/2018 Star Agriwarehousing and Collateral Management Limited, a company incorporated and registered in India, having their registered office at 1st Floor, B Wing, Litolier Chambers, Andheri Kurla Road, Marol Andheri (E), Mumbai-400059, Maharashtra.
...Respondent No. 2/Appellant.
Versus
1. Rajasthan State Warehousing Corporation (RSWC), through its Managing Director, Bhawani Singh Road, Near JDA, Jaipur-302015, Rajasthan.
...Respondent No. 1/Non-Appellants.
2. Origo Commodities India Private Limited, registered office at Plot No. 37, First Floor, Sector 18, Institutional Area, Gurgaon (Haryana).
....Petitioner/Non-Appellants With (4) D. B. Special Appeal (Writ) No. 1156/2018 In S. B. Civil Writ Petition No. 17412/2018 Star Agriwarehousing and Collateral Management Limited, a company incorporated and registered in India, having their registered office at 1st Floor, B Wing, Litolier Chambers, Andheri Kurla Road, Marol, Andheri (E), Mumbai-400059, Maharashtra.
...Respondent No. 4/Appellant.
Versus
1. State of Rajasthan, through its Principal Secretary, Department of Agriculture and Marketing, Government of Rajasthan, Government Secretariat, Bhagwan Das Road, Jaipur.
2. Rajasthan State Warehousing Corporation (a government undertaking), through its Managing Director, having its head office at Bhawani Singh Road, Jaipur-302015, Rajasthan.
3. Managing Director, Rajasthan State Warehousing Corporation (a government undertaking), Tender/Bid Inviting Authority, havint its head office at Bhawani Singh Road, Jaipur-302015, Rajasthan.
....Respondents/Non-Appellants
4. Shree Shubham Logistics Limited, a company incorporated and registered under the provision of the Companies Act, 1956, having its registered office at A-1 and A-2, Gidc Electronic Estate, Sector- 25, Gandhinagar-382004, Gujrat and the Corporate Office at Unit NO. 72, seventh floor, Kalpatru Square, Kondivita Lane, off. Andheri Kurla Road, Andheri (E), Mumbai-400059, through its authorized representative Mr. Rakesh Purohit.
...Petitioner/Non-Appellants
(3 of 53) [SAW-1153/2018]
With
(5) D. B. Writ Special Appeal No. 1268/2018
In
S. B. Civil Writ Petition No. 17725/2018
In the matter of:
Origo Commodities India Pvt. Ltd., Plot No. 37, First Floor, Sector- 18, Institutional Area, Gurgaon, Haryana.
...Appellant.
Versus
1. Rajasthan Sate Warehousing Corporation, Through its Managing Director, Bhavani Singh Road, Near JDA, Jaipur, Rajasthan.
2. Star Agri Warehousing & Collateral Management Ltd., 1 st Floor, B Wing, Litolier Chambers, Andheri Kurla Road, Marol, Andheri (E) Mumbai-400059, Maharashtra.
....Respondents For Appellant(s) : Mr. Rajendra Prasad, AAG assisted by Ms. Alankrita Sharma, Mr. Madhusudan Singh Rajpurohit and Mr. Karan Tibrewal for appellant-RSWC in SAW No. 1153/2018.
Mr. Ajeet Kumar Sharma, Senior Counsel assisted by Ms. Alankrita Sharma and Mr. Rachit Sharma for appellant-RSWC in SAW No. 1154/2018.
Mr. R.K. Mathur, Senior Counsel assisted by Mr. Aditya Mathur for appellant-Star Agri in SAW No. 1155/2018 and 1156/2018.
Mr. Sushil Sehgal with Mr. Sanjay Srivastava for appellant-Origo Commodities in SAW No. 1268/2018 and for respondent-Origo Commodities in SAW No. 1154/2018.
For Respondent(s) : Mr. Sudhir Gupta, Senior Counsel assisted by Mr. Harsh Sahu, Mr. Vikas Mishra, Mr. Umang Gupta, Ms. Shweta Chauhan, Mr. Tanuj Gupta, Ms. Anukriti Jain, Ms. Aditi Khandelwal for respondent-Shree Shubham Logistics in SAW No. 1153/2018 and 1156/2018.
HON'BLE MR. JUSTICE MOHAMMAD RAFIQ
HON'BLE MR. JUSTICE GOVERDHAN BARDHAR
(4 of 53) [SAW-1153/2018]
Judgment
REPORTABLE
29/11/2018
(Per Hon'ble Mr. Justice Mohammad Rafiq)
All these appeals are directed against the common judgment dated 30.08.2018 whereby the learned Single Judge of this Court allowed the writ petitions filed by Shree Shubham Logistics Limited (for short 'Shree Shubham Logistics') and Origo Commodities India Private Limited (for short 'Origo Commodities') by quashing Notice Inviting Bid (for short 'the NIB') dated 11.07.2008 issued by Rajasthan State Warehousing Corporation (for short 'RSWC') with the direction to issue fresh notice inviting bid in consonance with the Rajasthan Transparency in Public Procurement Act, 2012 (for short 'the RTPP Act'). Appeals No. 1153/2018 and 1154/2018 have been filed by RSWC, Appeals No. 1155/2018 and 1156/2018 have been filed by M/s. Star Agri Warehousing & Collateral Management Limited (for short 'Star Agri') which was impleaded as respondent in both the writ petitions. Appeal No. 1268/2018 has been filed by Origo Commodities to the extent of challenge made by it to Clause 5(5)
(v) of the NIB was rejected in the aforementioned judgment by the learned Single Judge.
RSWC floated a tender for managing and operating its 33 warehouses located in different parts of the State under Public Private Participation (PPP) Mode on 11.07.2018. Last date and time for submission of the bid was on 14.08.2018 up to 6.00 P.M. RSWC issued a corrigendum on 12.07.2018 to rectify certain inadvertent typographical mistakes in the NIB. Precise case set up (5 of 53) [SAW-1153/2018] in the writ petition by Origo Commodities was that eligibility criteria introduced by RSWC favoured only Star Agri for the reasons of mala fides. Such eligibility criteria have no nexus with the aim of the tender and have been purposely inserted to ensure that all the competitors of Star Agri are disqualified. They have been cherry picked/tailor made to ensure that only Star Agri fulfills all the conditions. The action of the respondent-RSWC in doing so is arbitrary inasmuch as discriminatory being violative of Articles 14, 19(1)(g) and 21 of the Constitution of India. It also violates Sections 4 and 6 of the RTPP Act and various provisions of Rajasthan Transparency in Public Procurement Rules, 2013 (for short 'the RTPP Rules'). Similar writ petition on substantially similar grounds was filed by Shree Shubham Logistics. Challenge in particular was made by Shree Shubham Logistics and Origo Commodities to Clause 5(3), 5(5)(i), 5(5)(iv), 5(5)(v), 5(5)(vi) of the NIB. In addition, challenge to Clause 17(vii) of the NIB, which disqualified an existing service provider, was also made by Shree Shubham Logistics. RSWC contested the writ petitions denying allegations of mala fides and arbitrariness and sought to justify various clauses of the NIB. Star Agri also contested the writ petitions by filing counter affidavit and denied the allegation that conditions have been tailor made to suit it. The learned Single Judge by the impugned judgment upheld the challenge to all other conditions, which he declared ultra vires to Article 14 and 19(1)(g) of the Constitution of India, except those in Clause 5(3) and 5(5)
(v).
Mr. Rajendra Prasad, learned Additional Advocate General and Mr. Ajeet Kumar Sharma, learned Senior Counsel (6 of 53) [SAW-1153/2018] appearing on behalf of RSWC contended that scope of the work under the tender, apart from management and operation of the warehouses, also includes procurement of agri and non-agri commodities so as to develop an efficient warehousing system. Work is to be awarded for 10 long years. Clause 15 of the NIB deals with the work and responsibilities of the service provider. Reference is made to sub-clauses (vi), (vii), (viii) and especially to sub-clause (xi) of the NIB, which requires the service provider also to undertake and manage entire procurement activities jointly with RSWC for the Government/ Corporation/ Private parties. The condition of Private Sub e-Market licence was inducted so as to make the current warehouses as a trading hub for facilities of the farmers. The current APMC regulated market yards limit the scope of trading in agricultural commodities at the first point of sale where the farmers offer produce after the harvest in the local mandi, typically at the level of Taluka/ Tehsil or at best, at the level of the District. Private Sub e-Market creates the present warehousing to be turned into a trading hub through an online trading portal, enabling buyers/farmers to participate in trading. For the farmers, the system offers more options for sale of their produce online without shifting the material stored at warehouses, thereby reducing their intermediation costs including damage, pilferation and transportation. It is argued that Rule 56-B was purposely added to the Rajasthan State Agriculture Marketing Rules, 1963 (for short 'the Rules of 1963'), which provides for licence for Sub e-Market and requires the licensee to perform certain functions which are aimed at evolving a modern warehousing system. The conditions enumerated therein show (7 of 53) [SAW-1153/2018] that requiring such licence has nexus with the efficient warehousing system. The entity having the said licence is equipped with the required infrastructure, which will benefit the warehouses of RSWC and convert these warehouses into more efficient trading terminals.
It is argued that as per Section 24 of the Warehousing Corporation Act, 1962 and Rule 25 of the Rajasthan State Warehousing Corporation Rules, 1975, RSWC acts as an agent of the Central Warehousing Corporation for purpose of trading and procurement of agri/non-agri produce. The allegation that said condition has been imposed only to minimize the competition and to oust all other competitors except Star Agri has been refuted. In fact, in the comparative chart given by Origo Commodities at page 22 and 23 of its memo of writ petition, there are still four players, who possess the said licence. This is however not to suggest that only these four players would submit their tenders. Both the writ petitioners have raised the argument of mala fides but neither of them has impleaded anyone as party to the writ petition on such allegations. The allegation that Private Sub e-Market was introduced in the NIB only for the reason that Star Agri had already got the said licence, is denied. This and other technical qualifications had been determined by the High Powered Committee on 28.06.2018, which is evident from perusal of the note-sheet filed by RSWC with its reply. Licence of Private Sub e- Market was granted to Star Agri much after the said decision was taken by RSWC. Star Agri had applied for the licence in the year 2017 whereas Shree Shubham Logistics had applied for the licence after issuance of the NIB. Licence has also been granted (8 of 53) [SAW-1153/2018] to Shree Shubham Logistics during pendency of these appeals by RSAMB.
It is argued that the Supreme Court in umpteen number of cases has held that the tender is in the realm of contract or commercial function where the procuring entity is free to set the terms thereof. The courts would be loath to interfere in the tender conditions except when it is absolutely arbitrary, unreasonable or mala fide. Learned Senior Counsels in support of this argument relied upon the judgment in Afcons Infrastructure Limited Vs. Nagpur Metro Rail Corporation Limited & Another, (2016) 16, SCC 818; Montecarlo Limited Vs. National Thermal Power Corporation Limited, (2016) 15 SCC 272, Michigan Rubber (India) Limited Vs. State of Karnataka & Others, (2012) 8 SCC 216 and Kalinga Mining Corporation Vs. Union of India & Others, (2013) 5 SCC 252.
With regard to Clause 17(vii) of the NIB regarding exclusion of existing service provider, i.e., Shree Shubham Logistics, it is submitted that a review meeting was held on 11.01.2014, which was chaired by the Hon'ble Chief Minister wherein the issue of only one private company managing most of the warehouses of RSWC in the State was discussed. The Government, therefore, took a decision to avoid a situation where all the warehouses are managed and operated by any particular individual, company or group of companies so as not to create monopoly in its favour. This was a policy decision based on larger public interest, which in the absence of any mala fides or unreasonableness, is not open to interference. The functioning of the warehouses involves public distribution of foods and grains. In (9 of 53) [SAW-1153/2018] case the private player fails to fulfill its obligations, the entire warehousing system of RSWC will come to a standstill and will have adverse impact in the entire State. Also, the tender is not merely for one or two years, but for a period of ten long years. In taking that decision, RSWC relied upon the report of CAG in relation to State of Punjab where it specifically observed that giving the whole warehousing operation to one single private player had adversely affected the entire warehousing operations of the Punjab State Grains Procurement Corporation Limited. RSWC has total 515 godowns at 93 different locations of the State. Out of these, 38 locations were being already managed and operated by Shree Shubham Logistics and warehouses at 55 locations are presently managed by RSWC. Bid has been invited for 33 locations for awarding contract for management and operation of at least 300 warehouses thereat. If Shree Shubham Logistics is awarded this contract, it would have warehouses of 71 locations out of total 93 locations in the State. In this way, it would get 80% of the total warehouses of RSWC. The learned Single Judge has misunderstood the argument relating to monopoly by observing that so long as the contract is not awarded to Star Agri, it cannot be supposed that this would create a monopoly in its favour. He, therefore, held that exclusion of the existing service provider, could only be done by the procuring entity at the stage of inviting bids by incorporating the said condition in the bid document. The learned Single Judge failed to appreciate that the procuring entity after having invited the bids cannot possibly change its terms and conditions to disqualify the bidder after acceptance of his bid on a condition which was not mentioned at the time of floating of the (10 of 53) [SAW-1153/2018] tender. Finding of the learned Single Judge that decision of RSWC in inserting the said condition is based on assumptions and farfetched is absolutely unjustified.
It is argued that the procuring entity derives its power under Section 7 of the RTPP Act to lay down the qualifications as also disqualifications of bidders. It can under Section 7(2)(e) of the RTPP Act and Rule 81 of the RTPP Rules provides a disqualification if the bidder has "conflict of interest" which could affect the fair competition. There was no requirement of issuing the notification under Section 6 thereabout. The conflict is also a situation where the bidder tends to create a monopoly or a situation where the procuring entity will be restrained from taking any penal action against the service provider, if the entire warehousing system is managed and operated by a single entity. Reliance is placed on the judgment of the Supreme Court in APM Terminals B.V. Vs. Union of India & Another, (2011) 6 SCC 756, to argue that monopoly over the resources of procuring entity would not be in public interest and thus for promoting competition and avoiding monopoly, the existing service provider can be excluded from participation in public interest. Such exclusion would neither be discriminatory nor an unreasonable restriction. Reliance in this behalf is placed on judgments of the Supreme Court in Competition Commission of India Vs. Steel Authority of India Limited & Another, (2010) 10 SCC 744 and Excel Crop Care Limited Vs. Competition Commission of India & Another, AIR 2017 SC 2734.
Learned Senior Counsel for RSWC submitted that the writ petitioners raised the argument that Shree Shubham Logistics (11 of 53) [SAW-1153/2018] is not the only existing service provider for RSWC whereas Star Agri, which was issued work order in the month of May, 2018, has not been treated as existing service provider, which according to them proves discrimination and shows the mala fide. It is submitted that the present adjudication is regarding the challenge made to the technical qualifications. The alleged breach of MOU by giving work order to Star Agri at certain locations, as alleged by Shree Shubham Logistics, is not the subject matter of present adjudication. If there is any alleged breach of MOU, it can invoke the arbitration clause contained therein. It is submitted that under the said MOU, Shri Shubham Ligistics was required to manage and operate the various godowns of RSWC at 38 locations along with 13 Agri Logistics Parks (ALP's) as mentioned in Annexure I and II of the said MOU. As per the MOU, Shree Shubham Logistics was bound to provide additional capacity to RSWC as and when the need would arise as the RSWC also acts as an agent for Centre as well as the State for procurement and storage of PDS articles. In the month of May, due to Rabi season, RSWC was faced with a situation to urgently make arrangement for bulk storage. The RSWC asked Shree Shubham Logistics to provide the additional storage at various locations. During the course of arguments, bunch of letters were submitted on behalf of Shree Shubham Logistics to argue that it was not given any godowns for storage despite writing letters to RSWC to offer the same, which is totally incorrect. RSWC had positively responded to the said letters and even taken the godowns of Shree Shubham Logistics for storage which is evident from the table submitted before this Court. It is only at four locations where the Shree Shubham Logistics was not (12 of 53) [SAW-1153/2018] able to provide godowns, that the work order was issued to Star Agri only for a period of four months. Role and responsibilities of Shree Shubham Logistics under the MOU are extensive and the same are not being performed by Star Agri, which is reflected from the work order dated 26.05.2018. Under the MOU, Shree Shubham Logistics was required to manage warehouses of RSWC. It was not the case with Star Agri which has only provided storage facilities for the additional material in the godowns offered by it. Both therefore do not stand on the same footings.
It is submitted that Origo Commodities challenged the condition contained in Clause 5(5)(i) for the bidder to have its own warehouses of the capacity of 1 lac MT in Rajasthan. It is evident from the chart given in the writ petition of Origo Commodities that most of the prospective bidders mentioned therein duly qualify the said condition. The condition contained in Clause 15 (xx) that the service provider has to provide additional capacity as may be required by RSWC is also just and reasonable. Perusal of the said condition shows that RSWC requires the bidder to provide additional capacity as may be needed by it at the locations apart from 33 locations for which the tender is floated. Therefore, the technical qualification under Clause 5(5)(i) was inserted to ensure that only those bidders who could comply with clause 15(xx) of the NIB will qualify. It is argued that the State Government, NAFED, RAJFED on various occasions required RSWC to act as a Nodal Agency for storing the agri-commodities. RSWC has to therefore fulfill the said demand and ensure that it had additional capacity for warehousing purposes. Argument raised on behalf of Origo Commodities that as per Clause 15(xx), the words, (13 of 53) [SAW-1153/2018] 'owned' as well as 'hired' are used for the warehouses whereas under Clause 5(5)(i), the requirement is only of owned warehouses and not hired, which shows a mismatch at two places in the tender, was never specifically raised before the learned Single Judge nor was reflected in the pleadings of the writ petition. According to learned Senior Counsel, there is no disjoint in the tender conditions regarding hired or owned mentioned in the clause 5(5)(i) and clause 15(xx) as alleged.
Learned Senior Counsel argued that Clause 5(5)(iv) of the NIB required that the bidders should have experience of NCDEX warehouse service provider business for last three financial years and not that of the other online exchanges. It is argued that most of the bidders fulfill the said eligibility, therefore, it cannot be said that the present condition in any manner restricted the competition. NCDEX and NCME are the only two exchanges which focus on agricultural commodities. NCDEX is the largest agricultural commodity stock exchange wherein most of the large players are trading. Most of the bidders except Origo Commodities duly qualify the said condition. Even in the MOU executed with Shree Shubham Logistics in the year 2010, RSWC required it to have NCDEX experience as it is the largest agri commodity exchange. The learned Single Judge in striking down the said condition has wrongly held that this condition would limit the participation of bidders for which no declaration or reasons were provided as required under Section 6 of the RTPP Act, therefore, the same is violative of Section 30 of the RTPP Act. If this view of the learned Single Judge were to be accepted, any one bidder or more than one bidder, failing to fulfill any one of the (14 of 53) [SAW-1153/2018] eligibility criteria, could allege that the same limits participation or ousts the bidder from participating and the procuring entity would have to issue a declaration under Section 6 of the RTPP Act, which is not the purpose and intention of the Legislature. Laying down of the eligibility criteria does not amount to limiting the participation of bidders as envisaged in Section 6 of the RTPP Act. Objection raised by Origo Commodities for giving temporary work of warehouses to Star Agri and not to Origo in the month of May, 2018, is also wholly unjustified. The said temporary work order was given to Star Agri on the basis of decision taken on 11.05.2018. Origo Commodities has accepted in para 18 of the memo of its writ petition that it wrote letter to RSWC on 04.06.2018 offering its proposal which was not considered whereas the fact is that the work order had by then already been issued in favour of Star Agri on 26.05.2018. Proposal of Origo Commodities thus could not have been considered. Award of such work, which gives rise to an independent cause of action, was never challenged before any legal forum by Origo or any other party.
It is submitted that so far as appeal filed by Origo Commodities is concerned, it has reiterated its challenge to condition no. 5(5)(v) of the NIB which provides that the bidder (either directly or through its 100% owned subsidiary) must have experience of offering procurement services for agri-commodities to any Centre/State level Institution during last 3 years. The learned Single Judge has rightly rejected the challenge to this condition. If argument of Origo Commodities was not correctly understood by the learned Single Judge, it was free to file a (15 of 53) [SAW-1153/2018] review petition. Additional documents now filed before this Court in appeal relating to the tender conditions of other States, cannot be relied in the present case. Neither was there any pleading in this regard, nor were these documents produced before the learned Single Judge. Contention that the procuring entity has required the experience of any State/ Central Agency over the private entity is wholly untenable. In any case, RSWC issued corrigendum on 08.08.2018 clarifying Clause 5(5)(v) in terms that the last three financial years means 2014-2017.
It is argued that the terms of invitation of tender are contractual in nature, which are not open to judicial review. Learned Senior Counsel in support of this argument relied upon the judgments in Meerut Development Authority Vs. Association of Management Studies & Another, (2009) 6 SCC 171, Jagdish Mandal Vs. State of Orissa & Others, (2007) 14 SCC 517; Directorate of Education & Others Vs. Educomp Datamatics Limited & Others, (2004) 4 SCC 19. Learned Senior Counsel in support of their arguments also relied upon the judgments in P and O Australia Ports PTY Limited & Others Vs. Board of Trustees, JNPT & Another, 2003 (2) Mh.L.J. 717, P & O Australia Pvt. Ltd. & Others Vs. Board of Trustees, J.N. Port Trust & Another (Special Lave to Appeal (Civil) No. 7488/2003 decided on 28.01.2003 in WP No. 3083/2002); JSW Infrastructure Limited & Another Vs. Kakinada Seaports Limited & Others, (2017) 4 SCC 170, A.B. Grain Spirits Pvt. Ltd. Anr. Vs. Government of National Capital Territory of Delhi, 2018 SCC OnLine Del 7523.
(16 of 53) [SAW-1153/2018] Mr. R.K. Mathur, learned Senior Counsel appearing on behalf of Star Agri in Appeals No. 1155 and 1156 of 2018, in addition to adopting the arguments advanced on behalf of the appellant-RSWC, has submitted that the learned Single Judge while quashing condition contained in Claus 5(5)(vi) of the NIB for having a licence from RSAMB to operate Private Sub e-Market in the State of Rajasthan has wrongly observed in para 71 of the judgment that such licence was available only for Star Agri and not for the petitioners, who applied for the same long time ago and yet the same was not granted to them. This condition was wrongly held to have been tailor made to benefit Star Agri. It is submitted that Shree Shubham Logistics in its writ petition has clearly mentioned that NCDEX e-Markets Limited (NEML) & CGR Collateral Management Limited (CGR), a Jaipur based company has licence from RSAMB to operate Private Sub e-Market. Copy of the said licence was produced by Shree Shubham Logistics in its additional affidavit as Annexure-13. The licence has not been issued in a single day but it took about one year. The appellant through its company namely Star Agribazar Technology Limited had applied with the authority for grant of licence to operate Private Sub e-Market in State of Rajasthan a long back and after fulfilling various qualifications, terms and conditions had got the licence issued on 05.07.2018. The learned Single Judge failed to consider that Shree Shubham Logistics applied for licence on 31.07.2018 only and was granted the same in a month's time. Even the learned Single Judge has observed that one of the other prospective bidders, who had challenged the said condition, was granted licence during pendency of the writ petition. This writ (17 of 53) [SAW-1153/2018] petitioner was National Collateral Management Services Limited (NCML), which fact has been admitted by Shree Shubham Logistics during the course of hearing before this Court. Argument that the condition has been tailor made to suit Star Agri and non-suit all others is, therefore, liable to be rejected. In any case, the appellant, Star Agri applied for such licence almost a year before the issue of NIB and when it applied, it did not visualize any one of such conditions in the tender. If the Star Agri possesses said qualifications and other players in the market do not fulfills the same, that cannot be become a ground for annulling the said condition. The learned Single Judge has recorded a finding of undue favour to the Star Agri on the basis of false and frivolous pleas set up by Shree Shubham Logistics. In any case, the writ petitioner has not alleged any mala fide against any official of RSWC. It is argued that the appellant Star Agri does not fall within the purview of disqualification envisaged in Clause 17(vii) of the tender document as an existing service provider whereas Shree Shubham Logistics was indeed an existing service provider on the date of issuance of NIB, as it has been managing and operating warehouses of RSWC at as many as 38 locations since 2010. The appellant is not an existing service provider for the simple reason that it is not managing and operating warehouses of RSWC anywhere in the State. It has simply given its own warehouses on lease to RSWC on temporary basis to fulfill all urgent requirements. Learned Senior Counsel therefore prayed that adverse observations made by the learned Single Judge in para 71 of the impugned judgment should be struck down.
(18 of 53) [SAW-1153/2018] Mr. Sushil Sehgal, learned Counsel appearing on behalf of Origo Commodities as appellant in Appeal No. 1268/2018 and as respondent in Appeal No. 1154/2018, argued that attempt of RSWC was to trip each party on one condition or the other to ensure that finally there remained only one bidder, i.e., Star Agri left in the pool to qualify the bid for the said tender. The conditions laid down in the tender documents were very restrictive to fair competition and violative of various provisions of RTPP Act. Rule 68 of the RTPP Rules is relied upon to argue that if the bid process is restrictive, then fresh bidding process ought to be invited. Clause 5(3) of the NIB which required the minimum average turnover of the bidder from Postharvest Management Services for the last three financial years, i.e., FY 2014-15 to 2016-17, must not be less than Rs. 113.00 crores, included not only procurement but all other services which came within the purview of management and operation. If the experience in procurement was to be considered as mandatory, then turn over eligibility in Clause 5(3) should not have been based on Postharvest Management Services, which included all services from harvesting to final consumption of agri produce viz. procurement, storage, handling, transportation, stock keeping, pest preservation/control, receipts/dispatches/trading etc. The procurement is not even the main objective of the tender process which as per the NIB was managing and operating RSWC warehouses. Even the note sheets of RSWC at Page 245 of the reply clearly shows that the approval was granted only for the operation and management of the warehouses and that too on compliance of Sections 6 and 7 of the RTPP Act. Perusal of Clause (19 of 53) [SAW-1153/2018] 5(5)(iv) and Clause 5(5)(i) of the NIB would show that the last financial year has been mentioned as ending on 31.03.2018, whereas for Clause 5(3) and 5(5)(v), the same has been defined as ending on 31.03.2017. Hence, there is apparent disparity in the definition of last three/five financial years which have been cherry picked to ensure that only Star Agri qualifies the NIB. It is argued that merely because procurement may be one of the ancillary requirements under the tender process, the same could not be made a restrictive condition under the bid document and the note sheets annexed at page no. 243-245 of the RSWC's reply do not indicate any application of mind as to why the said restrictive clause was inserted in contravention of the RTPP Act.
Learned Counsel invited attention of the Court towards tender documents relating to various States and other Central entities filed before the Division Bench directly and contended that not a single entity in India has asked for mandatory experience in procurement for an operation and management agreement. In a purely procurement agreement, the minimum criteria is both for procurement and/or storage of food grains, i.e., operation and management. To justify the judgment of the learned Single Judge quashing Clause 5(5)(v) of the NIB, it is argued that there is no difference between private and government procurement and hence the additional requirement of experience under Clause 5(5)
(v) to be only in Central/State level institution is again arbitrary as procedure followed both for government and private procurement is the same. In fact, RSWC itself has not done any procurement after 2014-15 and then also, it suffered losses of more than 27 crores in the said process. Having learnt a lesson, RSWC stayed (20 of 53) [SAW-1153/2018] away from the procurement process. Tenor of the impugned judgment would clearly show that the writ petition was allowed by the learned Single Judge in toto. Therefore, observations made by the learned Single Judge in para 63 to 65 with regard to condition no. 5(5)(v) of the NIB are liable to be struck down being illegal and violative of various provisions of RTPP Act and the rules made thereunder. The appeal filed by Origo Commodities be allowed to that extent.
Mr. Sudhir Gupta, learned Senior Counsel appearing on behalf of Shree Shubham Logistic, submitted that various Clauses of the NIB were tailor made to favour only Star Agri. An addendum dated 08.08.2018 was issued by RSWC whereby the term existing service provider under Clause 17(vii) was specified saying that there is only one service provider viz. Shree Shubham Logistics, whereas Star Agri was also an existing service operator which was operating and managing warehouses for RSWC in terms of work order dated 06.06.2018, identical to MOU dated 05.03.2012, executed between RSWC and Shree Shubham Logistics. Incorporating the eligibility criteria under Clause 5 in a manner so as to oust all other prospective bidders, leaving out only Star Agri as the successful bidder for award of the contract proves the mala fides of RSWC through a comparative chart in memo of its writ petition. Reference was specifically made to grant of licence by Agriculture Marketing Department to a subsidiary of Star Agri on 05.07.2018, which resulted into incorporation of Clause 5(5)(vi) as no other prospective bidders had such a licence.
(21 of 53) [SAW-1153/2018] Learned Senior Counsel argued that the reliance placed on the provisions of the Competition Act, 2002, contending that if the entire work was awarded to Shree Shubham Logistics, it would be in a dominant position, not permitted by the said Act, is wholly misconceived. Stand of the RSWC that the said condition was inserted so as to avoid "conflict of interest", which would have material effect on competition and further that even with the existing eligibility criteria and disqualifying conditions prescribed in the NIB, there were many other players and enough competition, but no such eligible player has been named. Clause 17(vii) was sought to be justified raising issue of monopoly and on the basis of note sheet dated 28.06.2018, Section 7(2)(e) read with Section 25(d) of the RTPP Act and the provisions of Competition Act, 2002. The learned Single Judge was perfectly justified in holding that Clause 5(5)(vi) is tailor made condition to suit Star Agri alone. MOU dated 05.03.2010 entered between RSWC and Shree Shubham Logistics provides for operation and management of warehouses at 38 locations for a period of ten years. Clause 20 of the said MOU specifically prohibits RSWC from entering into similar agreements or relationship with any other public or private entity and also from competing, directly or indirectly, with business of Shree Shubham Logistic during the currency of the MOU at the agreed locations. RSWC has entered into an agreement with Star Agri on 06.06.2018 in violation of the said binding condition, for operation and management of warehouses at Kota, Bikaner and Sri Ganganagar, which are the agreed locations of MOU with Shree Shubham Logistics. The said work order was issued to Star Agri without following any tender process (22 of 53) [SAW-1153/2018] and in complete violation of Section 30 of the RTPP Act. Since no letter/communication was sent to Shree Shubham Logistics to provide additional storage at these locations, there was no question of its refusal to do so. Shree Shubham Logistics addressed various letters to RSWC regarding its willingness to hire more warehouses on rent/lease basis, which have been produced. It by letter dated 27.06.2018 lodged protest with RSWC handing over three of its locations to Star Agri.
It is argued that Clause No. 17(vii) has been purposely inserted to oust Shree Shubham Logistics and favour Star Agri. The Additional Chief Secretary, Agriculture Department of the State of Rajasthan, is also the Managing Director of RSWC. The Director of RSAMB, which has granted licence to the subsidiary of Star Agri on 05.07.2018, is a subordinate under the control and supervision of the Additional Chief Secretary, Agriculture Department of the State of Rajasthan. NIB was issued on 11.07.2018, clearly proves mala fides on their part. There is no law either in State of Rajathan or otherwise which empowers RSWC to debar Shree Shubham Logistics from participating in the bid on the ground of it being an existing service provider. Such prescription is dehors any law and, therefore, violative of Article 19(1)(g) of the Constitution of India. Even otherwise, this cannot be justified on the anvil of Section 7(2)(e) and Section 25(d) of the RTPP Act. Section 7(2)(e) of the RTPP Act opens with the words, "any bidder participating" which meant that this provision would be applicable to a bidder who is participating in the procurement process whereas the aforementioned Clause 17(vii) has prevented Shree Shubham Logistics from participation which (23 of 53) [SAW-1153/2018] is inconceivable. The "conflict of interest" under Section 7(2)(e) of the RTPP Act is a disqualification which already forms part of the bid document in the form of Clause 7(b) read with Clause 32. A plain reading of Section 7(2)(e) of the RTPP Act with Rule 80 and 81 of the RTPP Rules clearly indicates that a "conflict of interest" is attracted only in a situation in which a party has interest that could improperly influence that party's performance of official duties or responsibilities, contractual obligations etc. which would include situations like a bidder or any of its executive participation in the preparation of a project report for the appellants regarding the procurement process or a bidder entity in which appellant no.1 has some shareholding. Even if Shree Shubham Logistics is awarded contract for 33 locations under the NIB in question then also it will not be in dominant position so as to abuse the same as it would be merely a service provider and a price taker out of a revenue sharing mechanism and would in no manner control the price of any good or services.
Learned Senior Counsel argued that the disqualification prescribed in Clause 17(vii) is contrary to Section 6(1) of the RTPP Act, which mandates that the procuring entity shall not establish any requirement which aims at limiting participation of bidders in the procurement process that discriminates against or among bidders or against any category thereof, except when authorised or required to do so by this Act or the rules or guidelines made thereunder or by the provisions of any other law for the time being in force. The condition contained in Clause 17(vii) is also contrary to the mandate of Section 4 of the RTPP Act as it cannot ensure efficiency, economy and transparency and does not provide (24 of 53) [SAW-1153/2018] fair and equitable treatment to bidders and promote competition. Right to participate in a bid is a fundamental right guaranteed under Article 19(1)(g) of the Constitution of India as held by the Supreme Court in Reliance Energy Ltd. & Another vs. Maharashtra State Road Development Corporation Limited & Others, (2007) 8 SCC 1. It is trite law that reasons in support of decision ought to be given at the time of taking decision and not post decision. Reliance in this connection has been placed on the judgment of the Supreme Court in Mohinder Singh Gill & Another Vs. The Chief Election Commissioner, New Delhi & Others, (1978) 1 SCC 405. This also cannot be considered as a policy decision as said decision does not comply with the mandate of Article 166 of the Constitution of India. Reliance in this behalf has been placed on the judgment of the Supreme Court in Jaipur Development Authority & Others Vs. Vijay Kumar Data & Others, (2011) 12 SCC 94. It is argued that Star Agri is also an existing service provider and, therefore, not eligible as per Clause 17(vii) vitiating the addendum dated 08.08.2018 because it is also undertaking operation and management of services of 175 warehouses including warehouses owned and hired by it. Shree Shubham Logistics is presently managing 757 warehouses across India and having total storage capacity of more than 18 lac Metric Tons, out of them total 177 warehouses are owned and hired by it in the State of Rajasthan with total storage capacity of 14 lacs MT. Its existing turnover is almost 200 crores from Postharvest Management Services as defined in the corrigendum dated 08.08.2018 and its net worth is more than 122 crores for the financial year ending 31.03.2017.
(25 of 53) [SAW-1153/2018] It is further argued that the condition contained in Clause 5(5)(v) of the NIB which requires that the bidder either directly or through its 100% owned subsidiary must have licence from RSAMB to operate Private Sub e-Market in the State has rightly been struck down for the reason that 100% subsidiary of the Star Agri has been granted such licence only 6 days before the bid in question was floated which clearly proves that this condition has been is tailor made to benefit Star Agri in violation of Rule 80 of the RTPP Rules. Absence of licence to operate Private Sub e- Market cannot be said to be vital to scope of the work and the said licence, if required can be taken even during execution of the work awarded under the tender. Learned Senior Counsel argued that when the term of the contract awarded to Shri Shubham Logistics at 38 locations expires after two years, condition restricting participation of existing service provider, if eventually awarded contract at 33 locations in the present dispute, would have no meaning. Learned Senior Counsel in support of his arguments relied upon the judgments in Kharak Singh Vs. State of U.P. & Others, AIR 1963 SC 1295; M/s. Erusian Equipment & Chemicals Limited Vs. State of West Bengal & Another, (1975) 1 SCC 70; Patel Engineering Limited Vs. Union of India & Another, (2012) 11 SCC 257; Association of Registration Plates Vs. Union of India & Others, (2004) 5 SCC 364; Naraindas Indurkhya Vs. The State of Madhya Pradesh & Others, (1974) 4 SCC 788; Delhi High Court judgment in Sumitomo Chemical India Pvt. Ltd. Vs. HLL Lifecare Ltd. & Ors. (WP (C) No. 4647/2012 decided on 24.09.2012).
(26 of 53) [SAW-1153/2018] We have bestowed our anxious consideration to rival submissions and examined the material on record.
We may at the outset make it clear that we shall examine the correctness of the judgment of the learned Single Judge on the basis of whatever material was placed in the writ petitions and what was argued before him. Shree Shubham Logistics and Origo Commodities have filed certain new documents and on that basis, they want to raise such arguments, which were not canvassed before the learned Single Judge. We, however, do not wish to entertain any such argument and, therefore, eschew them from consideration.
The scope of the work in the tender documents has been stated in Clause 1 under the heading 'General' in the terms that both RSWC and the contractor "will work together towards providing various facilities to farmers, traders and other trade participants related to agri/non agri/commodities and to provide better storage facilities to farmers and traders and other trade participants and to facilitate availability of finance and evolve functional models for the purpose of development of an efficient warehousing system." The warehousing was not simply confined to storage but also required the service provider to perform various other activities like procurement including services to the farmers, traders and other participants, so as to develop the warehouses as a trading hub.
Before we proceed to examine the rival submissions with reference to the findings recorded by the learned Single Judge in the impugned judgment with respect to validity or otherwise of the eligibility conditions in NIB for award of the (27 of 53) [SAW-1153/2018] contract. It is trite that the tender is in the realm of contract or commercial function where the procuring entity is free to set the terms of the tender. The procuring entity is the best judge in deciding the requirements of the tender. In Tata Cellular Vs. Union of India, (1994) 6 SCC 651, the Supreme Court considered certain principles namely the modern trend pointing to judicial restraint on administrative action; the role of the court is only to review the manner in which the decision has been taken; the lack of expertise on the part of the Court to correct the administrative decision; the conferment of freedom of contract on the government which recognises a fair play in the joints as a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. It was held that the administrative decision must not only be tested by the application of Wednesbury principle of reasonableness but also must be free from arbitrariness not affected by bias or actuated by mala fides. In Jagdish Mandal (supra), the Supreme Court held that if the decision relating to award of contract is bona fide and is in public interest, the 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. In Afcons Infrastructure Ltd. (supra), it was held that the constitutional courts should not interfere with the principle that interpretation placed to appreciate the tender requirements and to interpret the documents by owner or employer unless mala fide or perverse in their understanding or appreciation is reflected. It was observed in that case that it is possible that the owner or employer of a project may give an interpretation to the tender documents that is (28 of 53) [SAW-1153/2018] not acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given. The Supreme Court in Montecarlo Limited (supra) while dealing with the scope of interference by the courts in such matters held in para 26 as under:
"26.xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. Exercise of power of judicial review would be called for if the approach is arbitrary or mala fide or procedure adopted is meant to favour one. The decision-making process should clearly show that the said maladies are kept at bay. But where a decision is taken that is manifestly in consonance with the language of the tender document or subserves the purpose for which the tender is floated, the court should follow the principle of restraint. Technical evaluation or comparison by the court would be impermissible. The principle that is applied to scan and understand an ordinary instrument relatable to contract in other spheres has to be treated differently than interpreting and appreciating tender documents relating to technical works and projects requiring special skills. The owner should be allowed to carry out the purpose and there has to be allowance of free play in the joints."
In Cellular Operators Association of India and Others Vs. Union of India & Others, (2003) 3 SCC 186, the Supreme Court held that where legal issues are intertwined with those involving determination of policy and a plethora of technical issues, courts of law have to be very wary and must exercise their jurisdiction with circumspection for they must not transgress into the realm of policy-making, unless the policy is inconsistent with the Constitution and the laws. In Census Commissioner Vs. R. Krishnamurthy, (2015) 2 SCC 796, the Supreme Court held that it is not within the domain of the courts to embark upon an enquiry as to whether a particular policy is wise and acceptable or whether a better policy could be evolved and the courts can only (29 of 53) [SAW-1153/2018] interfere if the policy framed is absolutely capricious or not informed by reasons or totally arbitrary and founded on ipse dixit offending the basic requirement of Article 14 of the Constitution. In Michigan Rubber (India) Ltd. (supra), the Supreme Court on consideration of number of precedents in the matter held that the action of the State in awarding contract is amenable to judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by courts is very limited unless the action of the tendering authority is found to be malacious and a misuse of its statutory powers and greater latitude is required to be conceded to the State authorities in the matter of formulating conditions of a tender document and awarding a contract. Certain pre-conditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work, held the Supreme Court.
The Supreme Court in recently delivered judgment in Municipal Corporation, Ujjain and Another Vs. BVG India Limited & Others, (2018) 5 SCC 462, after referring to judgment in Tata Cellular (supra) held that there are inherent limitations in exercise of the power of judicial review by the constitutional courts. The Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. There can be no question of infringement of Article 14 of the Constitution of India if the Government tries to (30 of 53) [SAW-1153/2018] 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. The Supreme Court in para 9 and 10 of the Report held as under:
"9.xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. However, there are inherent limitations in exercise of that power of judicial review. The 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.
10. The modern trend points to judicial restraint in administrative action. The Court does not 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 order words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or a quasi-administrative sphere. However, the decision must not only be tested by the application of the Wednesbury [Associated Provincial Picture Houses v. Wednesbury Corpn., (1948) 1KB 223 (CA)] principle of reasonableness, but must also be free from arbitrariness and not affected by bias or actuated by mala fides."
We shall now proceed to examine the correctness of the impugned judgment wherein Clause Nos. 5(5)(i); 5(5)(iv), 5(5)
(vi) and 17(vii) of the NIB have been struck down by the learned (31 of 53) [SAW-1153/2018] Single Judge being arbitrary, illegal, unconstitutional and violative of Articles 14, 19(1)(g) and 21 of the Constitution of India.
The most significant of the eligibility criteria under challenge, which debars existing service providers is contained in Clause 17(vii), which is reproduced hereunder:
"17. Disqualification Conditions:
i. xxxxx ii. xxxxxx iii. Xxxxxx vii. The existing service provider will not be eligible to participate in the Bid."
According to the learned Single Judge, Section 6 of the RTPP Act provides for limitation of participation of bidder but it also requires that it should be so declared in the bid document itself. Section 7 of the RTPP Act lays down qualifications of bidders. The procuring entity may disqualify those who do not possess such qualifications. The learned Single Judge negated argument of RSWC about "conflict of interest" with reference to Section 7(2)(e) of the RTPP Act, holding that it would be attracted in relation to claim of a particular person just opposite to that of RSWC. Only because Shree Shubham Logistics is already an existing service provider having augmented the business and turnover of RSWC, it cannot be held to have any "conflict of interest" with RSWC. Section 25(d) of the RTPP Act relied by RSWC would in the opinion of the learned Single Judge come into play only after a bidder has submitted its bid. As per Section 25(3) of the RTPP Act, the decision to exclude a bidder should be taken on the basis of cogent reasons to be recorded in writing and has to be subsequently communicated to the concerned bidder in terms of Section 25(4) of that Act. The condition in Clause 17(vii) (32 of 53) [SAW-1153/2018] of the NIB was declared arbitrary and perverse. It was held that a bidder can be held to have materially affected fair competition only after he may form a cartel and affect the fair competition. However, a provision in the bid document itself excluding a particular prospective bidder under the apprehension that his participation may not allow any other bidder in competition, has to be considered as a prejudged action, held the learned Single Judge.
The findings with regard to challenge to validity of Clause 17(vii) of the NIB have been recorded by the learned Single Judge from para 27 to 41 of the impugned judgment, but neither any discussion has been made, nor any conclusion has been recorded with regard to specific stand of the RSWC why it did not want to have monopoly in the hands of a single player. Shree Shubham Logistics already has a contract to operate and manage warehouses of RSWC at 38 locations in the State on their behalf. In the present case, NIB has been floated for awarding management and operation of warehouses at 33 locations. If eventually all these locations are awarded to the same service provider, it would result into monopolising control of one service provider over 80% of total locations. What this Court has to see is whether this policy decision could legally be incorporated by RSWC as an eligibility criteria in the tender document. Undeniably, functioning of the warehouses involves public distribution of foods and grains. The procuring entity by way of an abundant caution for safeguarding the public interest is certainly within its right to avoid such a situation. Apprehension of the respondent-RSWC that if in a given situation, private player fails to fulfill its obligation, (33 of 53) [SAW-1153/2018] then the whole warehousing system could be jeopardised and will have adverse impact in the entire State of Rajasthan, especially qua those who are catered through the public distribution system, cannot be said to be wholly unfounded. The question in such circumstances is whether the condition of this kind can be held to be unreasonable and arbitrary for being quashed and set aside, especially when the contract has to be awarded for long period of ten years. The respondents have relied upon the report of CAG in relation to State of Punjab where it was specifically observed that giving the entire warehousing operation to one single private player had adversely affected the entire warehousing operations of the Punjab State Grains Procurement Corporation Limited. The learned Single Judge recorded a finding that the respondents could not have proceeded on the assumption and jeopardised the participation of Shree Shubham Logistics on the presumption that if it is allowed to bid, it would necessarily be a successful bidder, which would thereupon result into monopoly in its favour, which according to the learned Single Judge was far fetched conclusion to be drawn for including such a condition in the bid document. We are, however, inclined to countenance argument of RSWC that exclusion of the existing service provider could only be done by the procuring entity at the stage of inviting bids by incorporating the such condition in the bid documents because once such an existing service provider is allowed to participate in the tender process and if eventually it turns out to be successful bidder, there is no way that he could be excluded.
The learned Single Judge has extensively relied on the provisions of the RTPP Act especially Sections 6, 7 and 25 of the (34 of 53) [SAW-1153/2018] RTPP Act. Section 6(1) of the RTPP Act provides that the procuring entity shall not establish any requirement aimed at limiting participation of bidders in the procurement process that discriminates against or amongst bidders or against any category thereof, except when authorised are required to do so by the Act or the rules or guidelines made thereunder or by the provisions of any other law for the time being in force. The condition limiting participation of bidders shall have to be decided on the anvil of reasonableness. Sub-section (3) to Section 6 of the RTPP Act provides that the procuring entity, when inviting the participation of bidders in the procurement process, shall declare whether participation of bidders is limited pursuant to this section and if so, on what ground; and any such declaration may not ordinarily be later altered. The condition of exclusion of existing service provider in our considered opinion in itself is a declaration on the ground of which participation of the bidders like Shree Shubham Logistics has been limited. The learned Single Judge has noticed Section 7 of the RTPP Act which lays down the qualifications of bidders and held that the procuring entity can only disqualify those who do not possess those qualifications and not otherwise but he did not accept the argument of the respondent-RSWC that exclusion of the existing bidder would be covered by Section 7(2)
(e) of the RTPP Act which inter alia provides that any bidder participating in the procurement process shall not have a "conflict of interest" as may be prescribed and specified in the pre- qualification documents, bidder registration documents or bidding documents, which materially affects fair competition. According to the learned Single Judge, "conflict of interest", as mentioned in (35 of 53) [SAW-1153/2018] Section 7(2)(e) of the RTPP Act, would only be in relation to claim of a particular person just opposite to that of RSWC. Shree Shubham Logistics being an existing service provider and having augmented the business and turnover of RSWC cannot be held to have any conflict of interest with it, held the learned Single Judge.
The procuring entity derives its power under Section 7 of the RTPP Act to lay down the qualifications of bidders. As per Section 7(1), it may determine and apply one or more of the requirements specified in sub-section (2) for a bidder to be qualified for participating in a procurement process which are enumerated in Clause (a) to (f) of sub-section (2) of Section 7 of the RTPP Act. Conflict of interest is one such a situation which will jeopardise the participation of a bidder in the procurement process. The learned Single Judge in our considered view has failed to consider wider import of the term "conflict of interest". The dependence of the RSWC only on one service provider in the entire warehousing system would actually be not advisable as in case it commits any default in performance of pre-existing condition with reference to previous MOU, then the action taken against it under that MOU would impact its performance of the subsequent contract, if eventually awarded under the present tender. Therefore, purposive as also contextual interpretation has to be given to Section 7(2)(e) of the RTPP Act. At this stage, we may also refer to Section 25 of the RTPP Act, which in its sub- section (1)(a) stipulates that a procuring entity shall exclude a bid if the bidder is not qualified in terms of Section 7 and sub-section (1)(d) thereof provides that the procuring entity shall exclude a bid if a bidder, in the opinion of the procuring entity, has a "conflict (36 of 53) [SAW-1153/2018] of interest" materially affecting fair competition. We do not agree with the view taken by the learned Single Judge about applicability of Section 25(3) of the RTPP Act to the present matter which requires that every decision of the procuring entity to exclude a bid shall be taken for reasons to be recorded in writing. Then Section 25(4) requires that every decision of the procuring entity under sub-section (3) shall be communicated to the concerned bidder in writing and published on the State Public Procurement Portal. In our considered opinion, compliance of these provisions cannot be insisted here because these provisions are not attracted to the fact situation of the present case. These provisions are attracted in a case where disqualifications contained in Section 25(1) (a) to (d) are discovered after submission of bid, which is why sub-section (2) of Section 25 provides that a bid shall be excluded as soon as the cause for its exclusion is discovered and then comes the necessity of recording reasons with reference to Section 25(3) RTPP Act for communicating the same to the concerned bidder and its publication on the State Public Procurement Portal in terms of Section 25(4) of the RTPP Act. Merely because "conflict of interest" with reference to Section 7(2)
(e) is one of the disqualifications under Section 25(1)(a), does not mean that the procuring entity was obliged to first receive the bids of an existing bidder and then notify his disqualification on the ground of "conflict of interest" on its portal. The findings recorded by the learned Single Judge in this behalf are in tune with what he has concluded in earlier part of the judgment that the procuring entity could not have restricted participation of existing service provider by incorporating condition such as Clause 17(vii) because (37 of 53) [SAW-1153/2018] in the opinion of the learned Single Judge, it could not proceed on the assumption that if eventually such service provider submitted bid, it would necessarily be successful in the new tender process. In the procedure suggested by the learned Single Judge, firstly it should be allowed to participate in the biding process and later it could be excluded only after it had been found to be successful bidder. Such a course does commend to us. We, therefore, find ourselves in respectful disagreement with the view taken by the learned Single Judge in this behalf.
Section 7(2)(e) of the RTPP Act permits prescription of disqualification on the ground of "conflict of interest" having material effect upon fair competition. The learned Single Judge, in our view, has taken a very narrow and restrictive view of the words, "conflict of interest" ignoring Rule 81 of the RTPP Rules. Rule 81(1) of the RTPP Rules clearly provides that a conflict of interest should be of a bidder with (i) procuring entity; (ii) personnel of procuring entity; (iii) the other bidders. This may arise because of existing interest of a party in relation to any of the aforesaid three situations which improperly influences that party's performance of (i) official duties or responsibilities; (ii) contractual obligations or (iii) compliance with applicable laws and regulations. Sub-rule (2) and (3) of Rule 81 of the RTPP Rules are illustrative as they are inclusive and not exhaustive. It clearly states that "but not limited to". They give certain examples of existing relationships in given situations. However, "conflict of interest" may arise in varies situations which cannot be detailed exhaustively. RSWC would be justified in contending that control of almost all the warehouses owned by it by one single entity is (38 of 53) [SAW-1153/2018] bound to have adverse influence upon the performance of contractual obligations. It would not be carrying out only storage of goods, but also the activities related to procurement on behalf of governments which are inextricably linked with the food security of citizens of the entire State. Control of resources in single hand is bound to generate slackness in performance and the procuring entity would be in a great amount of disability and disadvantage in taking appropriate actions to remedy the likely defaults or negligence on the part of such party. The word 'competition' is not limited to permitting all eligible to participate in the process. This can be only a bidder's perspective. For the procuring entity, the ultimate goal is to hire the services and such hiring should also promote fair and healthy competition at the level of performance of the contract. The benefits of competition can be reaped effectively only when such competition is promoted at the level of performances. The directive principles of State Policy require avoiding of concentration of national resources in few hands. The object of competition law is to promote allocative efficiency which ensures the effective allocation of resources, productive efficiency, which ensures that the costs of production are kept at a minimum and dynamic efficiency which promotes innovative practices.
Challenge was also made by the respondents-writ petitioners to the validity of Clause 5(3) of the NIB which inter alia provides that the minimum average annual turnover of the bidder from Postharvest Management Services for last three financial years, i.e., FY 2014-15 to FY 2016-17 must be not less than Rs. 113 crores. The learned Single Judge has repelled challenge (39 of 53) [SAW-1153/2018] thereto by observing that eligibility criteria with regard to requirement of turn over cannot be said to be arbitrary. It is for the concerned procuring entity to lay down a particular financial criteria for the satisfaction of the authority and the same is not amenable to judicial interference and does not call for interference. We, therefore, fully endorse the view expressed by the learned Single Judge on this aspect. Though Shree Shubham Logistics has not filed any appeal against that finding, but it is argued on its behalf that originally when NIB was issued on 11.07.2018, the average annual turnover from Postharvest Management Services for last three financial years was Rs. 135 Crores, which in the corrigendum dated 12.07.2018 was corrected to Rs. 113 crores as Star Agri on the originally fixed amount would not have been eligible as it was having such turnover of only at Rs. 129.36 crores. This argument was not raised before the learned Single Judge. Besides that, it has been amply clarified by RSWC that it happened due to inadvertent typographical error in the bid document dated 11.07.2018 and in the note sheet duly approved and signed, the figure was indicated to be Rs. 113 crores.
The Argument that if Shree Shubham Logistics is being treated as existing service provider, Star Agri, which has also been awarded warehousing work of RSWC in the month of May, 2018, has also to be treated as existing service provider and, therefore, the action of procuring entity suffers from the vice of malice, is noted to be rejected for the stated reasons. Shree Shubham Logistics and Origo Commodities have set up a case that they were willing to offer warehousing services to RSWC at the (40 of 53) [SAW-1153/2018] locations wherefor it has issued work order in favour of Star Agri and in fact they offered to do so, yet RSWC preferred Star Agri over them. We do not wish to entertain this argument because what is under challenge before us is the judgment of the learned Single Judge with regard to floating of the NIB dated 11.07.2018. Correctness and validity of work order issued to Star Agri could have been subjected to challenge in independent proceedings. Admittedly neither Shree Shubham Logistics nor Origo challenged the same before any forum known to law. We are, therefore, not inclined to go into that aspect. Coming back to the question whether Star Agri can be treated as an existing service provider, here we find distinction between the status of Shree Shubham Logistics and Star Agri, which is significant one. Shree Shubham Logistics has been awarded contract for managing and operating warehouses/godowns of RSWC at 38 locations along with 13 Agri Logistics Parks (ALPs) as mentioned in Annexure I and II of the MOU executed between them. Shree Shubham Logistics had to therefore perform various roles and responsibilities under the said MOU, details of which are contained in Clause 3 of MOU as Annexure 1. It had to provide storage of additional capacity to RSWC if and when the need would arise as the RSWC also acts as an agent for Centre as well as the State for procurement and storage of PDS articles. RSWC has placed on record letter dated 26.05.2018 and 06.06.2018 to contend that work order issued to Star Agri was temporary in nature. Star Agri, however, has not been provided management and operation of any warehouse of the RSWC. It is only providing the storage services for stocking (41 of 53) [SAW-1153/2018] the additional material. Therefore, the two cannot be placed at the same pedestal.
Coming now to the next clause, i.e., Clause 5(5)(i) of the NIB which the learned Single Judge has struck down being bad in law, arbitrary and unjustified, we deem it appropriate to extract the eligibility criteria of aforesaid Clause here below:
"i. The bidder (either directly or through its 100% owned subsidiary) should have its owned warehouses in the State of Rajasthan with a minimum total capacity of 1,00,000 MT."
According to RSWC, the bidder has to provide additional capacity as may be required by it at different locations, apart from 33 locations for which the tender is floated. Therefore, the technical qualification under Clause 5(5)(i) was inserted to ensure that only those bidders, who could comply with Clause 15(xx) of the NIB will qualify. On various occasions, the State Government, NAFED, RAJFED requires the RSWC to act as a nodal agency for storing the agri-commodities. Here we may also notice Clause 15 of the NIB deals with the responsibilities of the service provider which is also relevant on the subject. Clause 15(xx) of the NIB puts an onus on the service provider to provide additional capacity as may be required by RSWC to meet the emergent situation which reads as under:
"15. RESPONSIBILITIES OF THE SERVICE PROVIDER i. xxxxxxxx ii. xxxxxxxxx xx. The bidder may continue with owned/hired capacity at locations under agreement, he is operating on the date of work order. The Bidder will be bound to provide the additional capacity as may be required by RSWC, other than locations as mentioned in Annexure I and sharing in this case will be in the ratio as 15 (RSWC): 85 (Bidder)".
(42 of 53) [SAW-1153/2018] The writ petitioners have, for the first time, raised this argument before the Division Bench with regard to disparity between Clause 5(5)(i) and Clause 15(xx) of the NIB which has been amply clarified by RSWC. According to RSWC, Clause 15(xx) is in two parts. While the first part refers to the locations which the bidder would be operating and managing under the agreement, the second part requires that the bidder will be bound to provide additional capacity as may be required by RSWC at other locations than those mentioned in Annexure I. Obviously, this pertains to locations other than those for which MOU is entered into between the service provider and the procuring entity. RSWC is looking for a very sound player in the field of warehousing, who apart from managing its warehouses at 33 locations, owns, either directly or through its 100% subsidiary, warehouses in the State of Rajasthan with minimum capacity of 1 lac MT. This Court, therefore, in exercise of its power of judicial review cannot insist on the procuring entity not to have a requirement like this when its purpose is to ensure availability of sufficient warehousing capacity with the proposed service provider throughout the State. It is clear from comparative chart of the prospective bidders given in the writ petition of Origo Commodities that there are many players in the field, who possess warehousing capacity of 1 lac MT and three out of six prospective bidders named therein qualify this condition. Such condition in the NIB can neither be said to be unreasonable, unconstitutional, illegal, arbitrary or in any manner restricting scope of competition. The principles of judicial review would apply to the exercise of (43 of 53) [SAW-1153/2018] contractual powers by the Government bodies in order to prevent arbitrariness or favourtism, but there are inherent limitations in exercise of that power of judicial review, as held by the Supreme Court in Tata Cellular (supra).
The learned Single Judge in para 52 of the judgment has held that if a condition is incorporated to limit persons from participation, reasons have to be assigned in terms of Section 6 of the RTPP Act. If a prospective bidder is denied participation only because it does not have its personally owned warehouses in Rajasthan, the same would amount to exclusion by default and would thus be arbitrary condition as it seeks to deny participation. No reason has come forward in the bid document and such condition is thus not transparent, held the learned Single Judge. Section 6(2) of the RTPP Act empowers the State Government to provide by notification for mandatory procurement of any subject matter of procurement from any category of bidders and purchase or price preference in procurement from any category of bidders on the grounds namely (a) the promotion of domestic industry;
(b) socio-economic policy of the Central Government or the State Government; (c) any other consideration in public interest in furtherance of a duly notified policy of the Central Government or the State Government. Section 30 of the RTPP Act refers to limited bidding. Sub-section (1) of Section 30 of the RTPP Act provides that a procuring entity may choose to procure the subject matter of procurement by the method of limited bidding if (a) the subject matter of procurement can be supplied only by a limited number of bidders; or (b) the time and cost involved to examine and evaluate a large number of bids may not be commensurate (44 of 53) [SAW-1153/2018] with the value of the subject matter of procurement; or (c) owing to an urgency brought about by unforeseen events, the procuring entity is of the opinion that the subject matter of procurement cannot be usefully obtained by adopting the method of open competitive bidding; or (d) procurement from a category of prospective bidders is necessary in terms of sub-section (2) of section 6. Rule 13(1) of the RTPP Rules requires that the procuring entity at the time of inviting the participation of bidders in the procurement process, shall declare whether participation of bidders is limited or not and if limited, grounds thereof. Such declaration may not ordinarily be altered later. Rule 16(1) of the RTPP Rules provides that in case of procurement of a subject matter as per clause (b) of sub-section (1) of Section 30 of the RTPP Act, a procuring entity may adopt the method of limited bidding if the estimated cost or value of the subject matter is less than Rupees two lakh on one occasion but it shall not exceed Rupees ten lakh in a financial year. Sub-rule (2) of Rule 16 of the RTPP Rules provides for the procedure for limited bidding. In our considered view, none of the aforesaid provisions would be attracted in the present case as the tender in the present case was floated by the RSWC on Pan India basis and thus the bid was never intended to be limited bid in the manner it is envisaged in Section 30 of the RTPP Act as well as Rule 16 of the RTPP Rules.
The next condition which has not found favour with the learned Single Judge is the eligibility criteria in Clause 5(5)(iv) of the NIB, which reads as under:
"iv. The bidder must have experience of NCDEX warehouse service provider business for last three financial years ending on 31st March, 2018."
(45 of 53) [SAW-1153/2018] This Clause has been held to be unjust and contrary to the provisions of RTPP Act by the learned Single Judge on the premise that experience of particular exchange, which in this case is NCDEX alone, and exclusion of all other exchanges, would amount to limitation of the competition and unless the procedure laid down under Section 6 and 30 of the RTPP Act and rules contained thereunder are followed and reasons are provided as discussed herein above, such a limitation condition without assigning reasons would amount to violation of those provisions.
According to RSWC, NCDEX and NCME are the only two exchanges which focus on agricultural commodities. NCDEX is the largest agricultural commodity stock exchange wherein most of the large players are trading. Even as per the comparative chart given by Origo Commodities in memo of its writ petition, four out of six prospective bidders qualify that condition. This condition was there even when the MOU was executed by RSWC with Shree Shubham Logistics way back in 2010. At that time also, RSWC required Shree Shubham Logistics to have NCDEX experience as it is the largest agri commodity exchange. Freedom of the procuring entity to have any valid experience of bidder in agri commodity exchange like NCDEX can, in our considered view, in no manner be considered as arbitrary and unjust. Here it may be noted that as per Section 7(1) of the RTPP Act, the procuring entity may determine and apply one or more of the requirements specified in sub-section (2) for a bidder to be qualified for participating in a procurement process. Section 7(2)(a) of the RTPP Act specifically provides that any bidder participating in the procurement process (46 of 53) [SAW-1153/2018] shall possess the necessary professional, technical, financial and managerial resources and competence required by the bidding documents, pre-qualification documents or bidder registration documents, as the case may be, issued by the procuring entity.
The approach taken by the learned Single Judge in describing Clauses 5(5)(i), 5(5)(iv) and 5(5)(vi) of having limited participation in the bid only because one or the other condition is not palatable to certain bidders cannot be accepted. In this way, one or more number of bidders, failing to meet any one of the eligibility criteria, can describe all eligibility conditions of the tender as limited bidding process so as to insist on compliance of Section 6(2) and Section 30 of the RTPP Act and issuance of declaration giving reasons. If this is expanded further, it would require the procuring entity to give detailed justification for each and every technical specifications and qualifications inserted in the NIB. In our considered view, intention of these provisions is not to require the procuring entity to give reasons and make declarations in this manner in respect of each and every eligibility criteria condition in the bid documents. Limited bidding is envisaged only in regard to subject matter of procurement specifically covered by notice under Section 7(2) of the RTPP Act.
Declaration whereof is required to be made in terms of Section 7(3) of the RTPP Act.
This now takes us to Clause 5(5)(vi) of NIB, eligibility criteria of which reads as under:
"vi. The bidder (either directly or through its 100% owned subsidiary) must have license from Rajasthan State Agriculture Marketing Board (RSAMB) to operate Private Sub e-Market in the State."
(47 of 53) [SAW-1153/2018] The learned Single Judge in Para 71 of the impugned judgment has recorded a finding that the condition of having licence as a Private Sub e-Market from RSAMB does not have any nexus with the purpose of the contract. The same is in no manner related to the management and storage infrastructure. Scope of the work was only for operation and management of warehouses on revenue sharing basis and to provide better storage facilities to farmers, traders and other trade participants facilitating availability of finance and evolving functional model for the purpose of development of an efficient warehousing system. The learned Single Judge has held that this condition has been tailor made to benefit only Star Agri which was granted such licence, though writ petitioners have not yet been granted licence. One of the petitioners who challenged the said condition was granted licence after the last date was extended due to pendency of present case. The writ petitioners have challenged this condition on the ground that the scope of the work in the bidding document was described to be only operation and management of the warehouses and not the procurement of the commodities. We on perusal of the tender documents find that general scope in the technical bid in part A captioned "Technical Bid" refers to the tenders for providing warehousing management services and describes the work that both the parties RSWC and the Contractor, will work together towards providing various facilities to farmers traders and other trade participants related to agri/non agri/commodities and to provide better storage facilities to farmers and traders and other trade participants and to facilitate (48 of 53) [SAW-1153/2018] availability of finance and evolve functional models for the purpose of development of an efficient warehousing system. Clause 15 of NIB pertains to technical bid under the caption, "Responsibilities of the service provider". Sub clause (xi) thereof provides as under:
"xi. To undertake and manage entire procurement activities jointly with RSWC for Govt./Coop./Private Parties."
General scope of the tender as well as role and responsibilities of service provider given therein show that the tender is for developing the warehouses as trading hubs. According to RSWC, earlier warehouses were limited to storage where there was none or very less trading activity. Moreover, the commodities were damaged/pilfered in transit as there were multiple handlings. The farmers used to visit different warehouses/mandis carrying their commodities physically in order to sell the commodities as there were no trading facilities at the warehouses itself. During this process, the commodities used to get damaged/pilfered in transit as there were multiple handlings. The condition of Private Sub e-Market licence was inducted so as to facilitate the farmers and to make the current warehouses as a trading hub. The current APMC regulated market yards limit the scope of trading in agricultural commodities at the first point of sale in local mandi, typically at the level of Taluka/Tehsil or at best the District. Private Sub e-Market licence enables the service provider to have the benefit of a virtual market for agricultural commodities and has availability of a physical market at warehouse where actual material flow will take place. It facilitates the present warehousing to be turned into a trading hub through (49 of 53) [SAW-1153/2018] an online trading portal, enabling buyers/farmers to participate in trading. We may in this connection refer to Rule 56-B(8) of the Rajasthan Agricultural Produce Markets Rules, 1963, wherein the licensee is required to perform certain functions which are aimed to evolve the current warehousing system. The aforesaid provision reads as under:
"56-B. Private sub e-market.-(1) xxxxxxx (2)xxxxxxxx (3)xxxxxxxx (8) The Licensee of private sub e-market shall,-
(i) install trading terminals in the one or more market area for on-line trading at prominent locations, which are easily accessible to agriculturists;
(ii) provide real time price and trade related information relating to notified agricultural produces through its trading terminal and web site;
(iii) make arrangements for warehousing, weighment, grading and certification and for sanitary and phyto-sanitary provisions;
(iv) not sell or purchase notified agricultural produce for him self;
(v) facilitate collateral financing and borrowing against warehouse receipt;
(vi) ensure that the payment of notified agricultural produce to the produce seller on the same day as per provision of Sec. 15-D of the Act. The deliveries of the sold agricultural produce shall be made only after the full payment of price to produce seller.
The price quoted by the buyer shall be net payable to the producer seller, the market fees, brokerage charges etc. shall be borne by the purchaser, notwithstanding any default committed by the buyer, the Licensee of private sub e-market shall ensure the payment strictly as per provisions of Sec. 15-D of the Act;
(vii) collect the market fees and deposit the same with the Market Committee concerned, along with the details of the Agricultural Produce transacted;
(viii) maintain a settlement guarantee fund, as may be specified by the State Government from time to time, and adopt proper risk management system to ensure smooth settlement;
(ix) guarantee the performance of contracts executed on its platform.
(x) submit market area wise monthly return of deliveries of notified agricultural produce in his designated warehouses. He shall also give separate figures of delivery of market fees paid (50 of 53) [SAW-1153/2018] goods/agricultural produce (where market fees was already paid before its delivery into designated warehouses) and such deliveries where it has been traded for the first time on private sub e-market platform;
(xi) collect market fees from buyer as per provisions of the Act, in respect of sale of agricultural produce, for which market fees is not paid earlier.
(xii) pay the market fees collected by him to the concerned market committee as per provision of Act, rules, by-laws."
All the aforementioned conditions thus clearly show that the prescribing Private Sub e-Market licence as eligibility criteria for the prospective bidder has a reasonable nexus with the object sought to be achieved. Instead of, therefore, indicating all these conditions separately, the procuring entity has merely incorporated the requirement of such licence as necessary eligibility criteria. In fact, the entity having the said licence is equipped with the required infrastructure which will benefit the RSWC to convert its warehouses into more efficient trading terminals. The licence ensures more revenue generation under the PPP model. The Private Sub e-Market licence facilitates the online trading at the warehouses which are in consonance with the scheme of NAM introduced by the Government of India in the year 2016. Under the NAM, the Government of India has asked the State Government to develop the current mandis into a trading hub which not only benefits farmers but also traders. Considering that the work was to be awarded for a period of ten years, this Court would not be justified in describing such condition to be arbitrary and unreasonable. The RSWC insists on such condition, particularly when the future requirements due to advancement of technology.
(51 of 53) [SAW-1153/2018]
During the course of arguments, learned Senior
Counsel appearing on behalf of RSWC drew our attention towards Clause 8.5 of the operational guidelines published by the Government of India, Ministry of Agriculture and Farmers' Welfare Department of Agriculture, Cooperation and Farmers' Welfare, which also justifies inclusion of the condition of having Private Sub e-Market Licence in the NIB. Clause 8.5 reads as under:
"8.5 State Governments/UT Administration:
State/UT Agricultural Marketing
Department/Directorate/Agricultural Marketing
Boards in accordance with the powers vested in them shall ensure-
(v) that market outreach is enhanced, farmers' transportation costs are reduced, by notifying warehouses/cold storages with infrastructure and facilities, as prescribed, preferably by the Warehousing Development and Regulatory Authority (WDRA) shall be declared as market sub-yards to function as delivery and sale point. The minimum infrastructure and facilities may include existence of adequate safety, internet, sorting, cleaning, grading and quality assaying lab etc. Further, on-line trading of Negotiable Warehouse Receipts (NWRs) issued by WDRA registered warehouses under Negotiable Warehouse Receipts System (NWRS) also needs to be promoted;"
As regards the argument of mala fide on the part of RSWC, the writ petitioners have not impleaded anyone as party on the allegation of mala fide and have in the course of arguments sought to develop an argument that the Managing Director of RSWC is also the Additional Chief Secretary, Agriculture Department of the State of Rajasthan and Office of the Director of the Department of Agriculture Marketing, Jaipur, is a subordinate office falling under the control and supervision of Additional Chief Secretary, Agriculture Department of the State of Rajasthan, which has granted licence to the subsidiary of Star Agri on (52 of 53) [SAW-1153/2018] 05.07.2018, few days before the issuance of NIB on 11.07.2018, the condition aforesaid should be held to have been tailor made to suit Star Agri and non-suit others. Even though the writ petitioners have not made any specific allegation of mala fides in their pleadings against any individual or state functionary, yet the learned Single Judge has upheld this argument. Mere fact that Additional Chief Secretary of the State happens to be ex-officio Managing Director of the RSWC does not prove anything against him if RSAMB has issued the licence to Star Agri. Besides, it is not disputed that Star Agri applied for obtaining aforesaid licence almost a year before the date of issuance of NIB. One of the writ petitions filed with these matters was withdrawn as the petitioner therein was issued licence during pendency of writ petition. Even the writ petitioner Shree Shubham Logistics has been granted licence during pendency of its appeal. If those who applied earlier were granted licence earlier in point of time. Conversely, if others who applied later were granted licence at a later stage, there is thus no inhibition why others cannot apply and obtain licence. No explanation can, therefore, be taken to the factum of issuance of licence to Star Agri few days prior to issuance of NIB.
In view of our conclusion with regard to various eligibility conditions based on the position of law extracted above, we find ourselves unable to concur with the view expressed by the learned Single Judge. Impugned judgment is, therefore, liable to be set aside and the same is hereby set aside. Writ petitions filed by Shree Shubham Logistics and Origo Commodities are dismissed. Consequently, Appeal Nos. 1153/2018, 1154/2018, (53 of 53) [SAW-1153/2018] 1155/2018 and 1156/2018 are allowed and Appeal No. 1268/2018 is dismissed. Parties shall bear their own costs.
All the pending applications stand disposed of. Office is directed to place a copy of this judgment on record of each connected appeal.
(GOVERDHAN BARDHAR),J (MOHAMMAD RAFIQ),J
Manoj.
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