Madras High Court
Gimplex Ltd., Rep. By Its Commercial ... vs The State Of Tamil Nadu, Rep. By Its ... on 14 September, 1999
Equivalent citations: 2000(2)CTC541
ORDER
1. The petitioner submitted tender for setting up joint ventures with the 2nd respondent for-
(a) manufacture and marketing of high quality Quarts Powder/Fused Quarts;
(b) Garnet Mining and Beneficiation;
by way of separate sealed covers on 24.8.1998 along with banker's cheque for Rs.1,00,000 towards EMD for the 'Quarts project' bid. The petitioner submitted the said bid pursuant to the Notification issued by the 2nd respondent in the newspaper dated 20.7.1998. According to the petitioner there were two participants for the 'Quarts project", namely the petitioner and the 3rd respondent. Even with respect to the Garnet Project, the petitioner and Transworld Garnet India Pvt. Ltd., were the participants. According to the tender conditions, the tender documents for both the project will be opened by the 2nd respondent on 24.8.1998 at 4.00 p.m. before the representatives of the tenderers who will be present at that time. It is the case of the petitioner that the representatives of the tenderers were informed that the date and time of opening of the commercial bid for both the projects would be informed at a later date. On 14.9.1998 when the petitioner had gone to the 2nd respondent office to attend the commercial bids opening of the 'grant Project Tender', pursuant to a telephonic intimation received from the 2nd respondent, the petitioner was informed by the Assistant General Manager (Project) of the 2nd respondent that by mistake the commercial bids of 'Quarts Project' had been opened without informing the petitioner and the 3rd respondent. The petitioner and the 3rd respondent were asked to come to the 2nd respondent's office the next day, i.e. on 15.9.1998 when the price bids as quoted in pro-forma III of the tender document were read out to them and signatures were obtained. Thereafter on 26.3.1999 the petitioner was informed that the 2nd respondent proposed to refund the EMD paid towards Quartz Project, by the petitioner. A letter dated 29.3.1999 to the 2nd respondent asking about the fate of the tender filed by the petitioner was sent. Again on 2.4.1999 the 2nd respondent sent a cheque for a sum of Rs.1,00,000 towards refund of EMD amount paid by the petitioner. On seeing the newspaper report oil 21.4.1999, the petitioner approached this Court by filing the writ petition in W.P.No.11170 of 1999, seeking to issue a writ of mandamus, forbearing the 2nd respondent from entering into any agreement or arrangement with the 3rd respondent pursuant to tender No.15836/PCC-4/96-l dated 20.7.1998 for manufacture of high quality Quartz Power/fused Quartz or taking any further steps pursuant to any agreement between 2nd and 3rd respondents.
2. The petitioner also filed another writ petition in W.P.No.11171 of 1999 seeking to issue a writ of mandamus, directing the 2nd respondent to award to the petitioner the contract for Joint Venture for manufacture and marketing of high quality Quarts Powder/Fused Quarts pursuant to the tender dated 20.7.1998. While ordering notice of motion dated 30.6.1999, the learned Judge, directed to maintain status-quo.
3. It is relevant to mention here that though the tender relates to joint ventures with the 2nd respondent for two projects, the petitioner now is questioning the acceptance of the tender of the 3rd respondent only with respect to the manufacturer and marketing of high quality of Quartz/Powder/Fused Quartz.
4. Learned Counsel appearing for the petitioner has submitted that though on 24.9.1998 the covers relating to technical bid with respect to the said project were opened in the presence of there representatives of the parties, the 2nd respondent, admittedly did not Inform the petitioner about the date of opening of covers relating to financial bid. The 2nd respondent opened the said bid unilaterally and behind the back of the petitioner and so there is a lack of conspiracy in dealing with the tender. On that basis, the learned counsel has submitted that the award of contract by opening the financial bid without any information to the petitioner vitiates the entire proceedings and so the 2nd respondent cannot proceed further on the bids. The learned counsel has also submitted that the petitioner's bid is better one and the 2nd respondent has not applied his mind with reference to the tender condition while accepting the tender of the 3rd respondent. According to him, the 2nd respondent has not properly compared the offers made by the petitioner and the 3rd respondent with reference to the conditions mentioned in the tender.
5. The learned counsel appearing for the 2nd respondent has submitted that the writ petitions cannot be maintained as the petitioner cannot challenge the decision of the 2nd respondent in accepting the lender of the 3rd respondent. According to him, by accepting the tender without informing the petitioner, the petitioner has no prejudice at all, as the 3rd respondent also was not informed about the same. Moreover, accord to him, it is not the case of the petitioner that by opening the financial bid, without informing the petitioner and the 3rd respondent, there was tampering or manipulation of the tenders. While referring to the jurisdiction of this Court, the learned counsel has submitted that a judicial review is possible only with reference to decision making process and not the decision itself.
6. The learned counsel appearing for the 3rd respondent has submitted that merely because the 2nd respondent did not open the financial bid in the presence of the petitioner, it cannot be said that it would nullify the entire proceedings. Bona fide error will not stand in the way of the 2nd respondent to proceed with the tender process. Ultimately, the learned counsel has also submitted that the writ petitions have to be dismissed on the basis of laches as they were filed after six months. Both the learned counsel appearing for the 2nd and 3rd respondents have submitted that the 2nd respondent has accepted the bid submitted by the 3rd respondent on valid reasons and this Court cannot sit on appeal on those reasons and so the submission of the learned counsel appearing for the petitioner regarding the merits and demerits of the terms mentioned in the bid cannot be gone into.
7. As stated already, it is not in dispute that the financial bids with reference to Quarts Project were opened without any information to the petitioner and the 3rd respondent. It is not the case of the petitioner that the 2nd respondent informed about the same to the 3rd respondent. It is also not the case of the petitioner that by opening the financial bid without informing the petitioner, there was tampering or manipulating of the documents. The learned counsel for the petitioner has submitted that if such an attitude of the 2nd respondent is accepted, then there is a possibility of such manipulation or tampering of tender documents. Though I am able to accept such a submission, in these cases, no material is available before this Court or there is no suggestion by the petitioner that such act of the 2nd respondent in not informing the petitioner resulted in tampering or manipulation of records. The only submission of the learned counsel is that since it is an open bid, the bid has to be opened in the presence of the parties, which has not been done so, and therefore the entire proceedings endured with the acceptance of the bid of the 3rd respondent are vitiated. According to the learned counsel, the 2nd respondent being a corporation owned by the Government, it should follow openness transparency and fair dealing with the acceptance of tenders. According to him, in these case, there is no transparency by not opening the financial bids in the presence of the parties and so it is unfair on the part of the 2nd respondent, which vitiates entire action of the 2nd respondent. In support of his submission, the learned counsel has relied on the decision in Dutta Associates Pvt., Ltd., v. Indo Merchantiles Pvt. Ltd., , in which it is held as follows:-
It is thus clear that the entire procedure followed by the Commissioner and the Government of Assam in accepting the tender of Dutta Associates (appellant herein) is unfair and opposed to the norms which the Government should follow in such matters, viz., openness, transparency and fair dealing. The grounds 1 and 2, which we have indicated hereinabove, are more fundamental than the third ground upon which the High Court has allowed the writ appeal".
Though in principle I accept the submission of the learned counsel, in these cases, in view of the facts established, such an act of the 2nd respondent in not informing the parties before opening the financial bid would not vitiate the proceedings, in accepting the tender in favour of the 3rd respondent. As stated already, it is not the case of the petitioner that by opening the bids behind the back of the petitioner, the tender documents have been tampered or manipulated. It is also established that the 3rd respondent also was not given any notice. Merely on the basis of assumption that there is a possibility of tampering with, the tender documents, this Court cannot decide the issue. Courts have recognised the administrator's right to trial and error, as long as the same are bona fide and within the limits of authority. In G.B. Mahajan v. Jalgaum Municipal Council , the Apex Court has taken the said view, which is as follows:-
"With the expansion of the State's presence in the field of these and commerce and of the range of economic and commercial enterprise of government and its instrumentalities there is an increasing dimension to governmental concern for stimulating efficiency, keeping costs down, improved management methods, prevention of time and cost overruns in project, balancing of cost against the time scales, quality control, cost-benefit ratios etc. In search of these values it might become necessary to adopt appropriate techniques of management of projects with concomitant economic expediencies. These are essentially matters of economic policy which lack adjudicate disposition, unless they violate constitutional or legal limits on power or have demonstrable pejorative environmental implications or amount to clear abuse of power. This again is the judicial recognition of administrator's right to trial and error, as long as both trial and error are bona fide and within the limits of authority".
8. There is no doubt that an authority inviting tenders is bound to give effect to every term mentioned in the notice in meticulous detail. It is open to the authorities to deviate which are merely ancillary or subsidiary with the main object. In this case, in the absence of any specific averment regarding the prejudice or the grievance only on the basis of the fact that no notice was issued before opening the financial bid, the petitioner cannot succeed in his attempt to challenge the acceptance of the tender of the 3rd respondent, on the basis that the authorities have deviated from the terms mentioned in the tender notice. To arrive at such a conclusion. I seek support from the decision in Poddar Steel Corporation v. Ganesh Engineering Works, , wherein it is held as follows:-
"It is true that in submitting its tender accompanied by a cheque of the Union Bank of India and not of the State Bank clause 6 of the tender notice was not obeyed literally, but the question is as to whether the said non-compliance deprived the Diesel Locomotive Works of the authority to accept the bid. As a matter of general proposition it cannot be held that an authority inviting tenders is bound to give effect to every term mentioned in the notice in meticulous detail, and is not entitled to waive even a technical irregularity of little or no significance. The requirements in a tender notice can be classified into two categories - those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the lender may be required to enforce them rigidly. In the other cases it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases".
9. Even in the decision cited by the learned counsel appearing for the petitioner in Dutta Associates Pvt., Ltd., v. Indo Merchantiles Pvt. Ltd., , the Apex Court while affirming the judgment of the Division Pench in the writ appeal, has held as follows:-
"The consideration of the tenders received and the procedure to be followed in the matter of acceptance of a tender should be transparent, fair and open. While a bona fide error or error of judgment would not certainly matter, any abuse of power for extraneous reasons, it is obvious, would expose the authorities concerned, whether it is the Minister for Excise or the Commissioner of Excise, to appropriate penalties at the hands of the courts, following the law laid down by this Court in Shiv sagar Tiwari v. Union of India, and "
In these case, there is no proof to show that there is an abuse of power by the 2nd respondent in opening the financial bid without notice, much less such opening of the tender is without notice for extraneous reasons.
10. Even in the decision in G.J. Fernandez v. State of Karnataka, , the Apex Court has held that any non-conformity with or relaxation in the prescribed standard allowed in case of any intending tenderer, if not resulting in substantial prejudice or injustice to any of the parties or to public interest in general, would not be bad, and, where the instrumentality of State consistently and bona fide interpreting the standards so prescribed in a particular manner and acting accordingly, Court would not interfere and substitute an interpretation which it considers to be correct.
11. From the above discussion and also in view of the settled legal principles, it is very clear that merely by not issuing notice by the 2nd respondent in these case, to the petitioner informing the date of opening the financial bid, will not vitiate the further process with reference to the said tender.
12. The next submission of the learned counsel for the petitioner is that thought the petitioner's bid is better one, the 2nd respondent has accepted the bid of the 3rd respondent, and so the 2nd respondent should be directed to accept the bid of the petitioner. The learned counsel has taken me to the particulars given in the tender form of the petitioner and that of the 3rd respondent to establish his case. The 2nd respondent in the counter in paras 14 and 15 has elaborately set out as to why they have accepted the offer of the 3rd respondent. It is well settled that this Court cannot go into the correctness of the decision of the 2nd respondent, and this Court can only vouch whether the 2nd respondent has correctly followed the process while making decision. While dealing with the scope of judicial review of contractual matters, the Supreme Court in the decision in TATA Cellular v. Union of India, , has held as follows:-
The duty of the court is to confine itself to the question of legality. Its concern should be:
(1) Whether a decision-making authority exceed its powers?
(2) Committed an error if law.
(3) Committed a breach of the rules of natural justice.
(4) reached a decision which no reasonable tribunal would have reached or.
(5) abused its powers.
Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of the policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under:
(i) illegality : This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it.
(ii) Irrationality, namely, Wednesbury unreasonableness
(iii) Procedural impropriety.
The above are only the broad grounds but it does not rule out addition or further grounds in course of time. As a matter of fact, in R. v. Secretary of State for the Home Department, ex Brind, 1991 (1) AC 696, Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should, 'consider whether something has gone wrong of a nature and degree which requires its intervention'"
13. In the decision in Raunaq International Ltd. v. I.V.R. Construction Ltd., , relying on the abovesaid decision of the Supreme Court, the Apex Court has held as follows:-
"When a writ petition is filed in the High Court challenging the award of a contract by a public authority or the State, the court must be satisfied that there is some element of public interest involved in entertaining such a petition. If, for example, the dispute is purely between two tenderers, the court must be very careful to see if there is any element of public interest involved in the litigation. A mere difference in the price offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. It is important to bear in mind that by court intervention, the proposed project may be considerably delayed thus escalating the cost far more than any saving which the court would ultimately effect in public money by deciding the dispute in favour of one tenderer or the other tenderer. Therefore, unless the court is public interest, or the transaction is entered into mala fide, the court should not intervene under Article 226 in dispute between two rival tenderers.
"12. ..........
"13. ..........
"14. Where there is an allegation of mala fides or an allegation that the contract has been entered into for collateral purposes and the court is satisfied on the material before it that the allegation needs further examination, the court would be entitled to entertain the petition. But even there, the court must weigh the consequence in balance before granting interim orders.
15. Where the decision-making process has been structured and the tender conditions set out the requirements, the court is entitled to examine whether these requirements have been considered. However, if any relaxation is granted for bona fide reasons, the tender conditions permit such relaxation and the decision is arrived at for legitimate reasons after a fair consideration of all offers, the court should hesitate to intervene.
16. It is also necessary to remember that price may not always be the sole criterior for awarding a contract Often when an evaluation committee of experts is appointed to evaluate offers, the expert committee's special knowledge plays a decisive role in deciding which is the best offer. Price offered is only one of the criteria. The past record of the tenderers, the quality of the goods or services which are offered, assessing such quality on the basis of the past performance of the tenderer, its market reputation and so on, all play an important role in deciding to whom the contract should be awarded. At times, a higher price for a such better quality of work can be legitimately paid in order to secure proper performance of the contract and good quality of work - which is as much in public interest as a low price. The court should not substitute its own decision for the decision of an expert evaluation committee".
14. In these writ petitions, there is no allegations mala fides, and the averments made in the counter in paras 14 and 15 would clearly prove that in the interest of the 2nd respondent's Corporation, the tender has been accepted. From the reasons stated in the counter for accepting the tender of the 3rd respondent, I do not find any merits to come to a conclusion that the 2nd respondent has accepted the said bid of the 3rd respondent against the public interest.
15. In view of the above discussion, these writ petitions filed by the petitioners cannot be sustained and the same are dismissed. No costs. Consequently, W.M.P.No.15781 is also dismissed.