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Vyankatesh Trading Company Vs. Food Corporation of India, through General Manager, (Maharashtra) and Another - Court Judgment

LegalCrystal Citation
CourtMumbai Nagpur High Court
Decided On
Case NumberWrit Petition No. 4648 of 2016
Judge
AppellantVyankatesh Trading Company
RespondentFood Corporation of India, through General Manager, (Maharashtra) and Another
Excerpt:
.....sll-sml (joint venture consortium) and ors (decided on 17.08.2016) submits that as to whether the tender condition was an essential or not, has to be viewed from the angle of the employer. he submits that from the view point of the employer, affixing a photograph on the forwarding letter is an essential condition and the rejection of the tender on such ground cannot be faulted with. on a specific query as to whether the petitioner's technical bid is rejected on any other ground also, the learned counsel fairly concedes that it is rejected only on the said ground and that the petitioner is otherwise qualified in the technical bid. 9. mr. dawada, learned counsel appearing on behalf of the intervenor submits that the petitioner is also disqualified in view of sub-clauses (ii) and (iii) of.....
Judgment:

Oral Judgment: (B.R. Gavai, J.)

1. Civil Application No. 1964 of 2016 for intervention is allowed. The applicant is permitted to intervene.

2. Rule. Rule made returnable forthwith. Heard finally by consent of learned counsel appearing for the parties.

3. The petitioner has approached this Court being aggrieved by the rejection of the technical bid of the petitioner.

4. Respondent Nos. 1 and 2 have published a tender notice for appointment of Regular Handling and Transport Contractor at FCI, FSD Wardha for the period of two years. In response to the said tender notice, the petitioner submitted his tender online. The tender was to be in two parts. Part one contains the technical bid regarding the financial and experience qualification of the tenderer and the second part contains the price bid. The petitioner was communicated on 3.8.2016 that the technical bid of the petitioner was rejected. The reason given for rejection of the technical bid of the petitioner was that the petitioner had not affixed his photograph on a forwarding letter. Being aggrieved thereby, the petitioner has approached this Court.

5. Heard Mr. R.S. Parsodkar, learned counsel for the petitioner, Mr. C.S. Samudra, learned counsel for respondent nos. 1 and 2 and Mr. R.R. Dawada, learned counsel for the intervenor-lowest bidder.

6. Mr. Parsodkar, learned counsel for the petitioner submits that the petitioner's bid is rejected on a hyper technical ground that he had not affixed the photograph on a forwarding letter. He submits that on the very next page i.e. an undertaking, the petitioner had very much affixed his photograph. Relying on the judgments of the Apex Court in the case of G.J. Fernandez .vs. State of Karnataka and others reported in (1990) 2 Supreme Court Cases 488 and in the case of Poddar Steel Corporation .vs. M/s Ganesh Engineering Works reported in AIR 1991 Supreme Court 1579, the learned counsel submits that the condition of affixing a photograph on a forwarding letter cannot be construed to be an essential condition. He, therefore, submits that the rejection of the petitioner's bid on a hyper technical ground is not sustainable.

7. Mr. Parsodkar further submits that the petitioner's bid is 40% above schedule of rates (hereinafter referred to as "ASOR" for short) or even lesser than that, whereas the intervenor's bid is 89% ASOR. It is, therefore, submitted that a huge financial burden would be put on respondent nos. 1 and 2 if the bid of the intervenor is accepted and the petitioner is kept out of fray.

8. Mr. Samudra, learned counsel appearing on behalf of respondent nos. 1 and 2, relying on the recent judgment of the Apex Court in the case of Central Coalfields Limited and Anr .vs. SLL-SML (Joint Venture Consortium) and ors (decided on 17.08.2016) submits that as to whether the tender condition was an essential or not, has to be viewed from the angle of the employer. He submits that from the view point of the employer, affixing a photograph on the forwarding letter is an essential condition and the rejection of the tender on such ground cannot be faulted with. On a specific query as to whether the petitioner's technical bid is rejected on any other ground also, the learned counsel fairly concedes that it is rejected only on the said ground and that the petitioner is otherwise qualified in the technical bid.

9. Mr. Dawada, learned counsel appearing on behalf of the intervenor submits that the petitioner is also disqualified in view of sub-clauses (ii) and (iii) of Clause 4 of the tender document inasmuch as the tender awarded to him by the Collector, Nagpur for supply of sugar was terminated by the Additional Collector, Nagpur on 19.1.2011 for the tender period between 2010 and 2013 and that his earnest money deposit was also forfeited. The learned counsel submits that since the said tender was to expire in 2013, disqualification would start from 2013. He, therefore, submits that on this ground also the petitioner is not permitted to participate in the tender.

10. For appreciating rival submissions, it will be relevant to refer to sub-clause (ii) and sub-clause (iii) of Clause 4 and sub-clause (g) and sub-clause (i) of Clause 8 of the tender notice:-

"4. (ii). Any Tenderer whose contract with the Food Corporation of India, or any department of Central or State Government or any other Public Sector Undertaking has been terminated before the expiry of the contract period at any point of time during last five years, will be ineligible.

(iii) Tenderer whose Earnest Money Deposit and/or Security Deposit has been forfeited by Food Corporation of India or any department of Central or State Government or any other Public Sector Undertaking, during the last five years, will be ineligible."

"8. (g) Tenders not accompanied by all the Schedules/Annexures intact and duly filled in and signed may be ignored.

(i) Any attempt by tenderer to change the format of any of the supporting documents of the MTF while uploading or any attempt to tinker with the software of the portal will render his tender liable for cancellation and his subsequent blacklisting."

The perusal of sub-clause (ii) of Clause 4 would reveal that any tenderer whose contract with the Food Corporation of India, or any department of Central or State Government or any other Public Sector Undertaking has been terminated before the expiry of the contract period at any point of time during last five years, will be ineligible. Sub-clause (iii) provides that tenderer whose Earnest Money Deposit and/or Security Deposit has been forfeited by Food Corporation of India or any department of Central or State Government or any other Public Sector Undertaking, during the last five years, will also be ineligible. The document placed on record by the intervenor along with his application is dated 19.1.2011. Vide the said document, the contract awarded to the petitioner is terminated and the earnest money deposit is forfeited. In our considered view the period of five years will have to be reckoned from the date on which the contact is terminated and the earnest money is forfeited. The said date would be 19.1.2011 and as such the prohibited period would come to an end on 19.1.2016. Undisputedly the tender notice in question is dated 18.5.2016. As such we find that sub-clauses (ii) and (iii) of Clause 4 would not be applicable in the facts of the present case. No doubt that Mr. Parsodkar tried to urge that this Court in Writ Petition No. 948/2013 has come to the conclusion that the intervenor had formed a cartel and the employer therein had prevented the petitioner and the other bidders from entering into the fray and as such the Court had quashed and set aside the contract. However, since the qualification of the intervenor is not challenged in the present writ petition, we do not find it necessary to go into the allegations made by Mr. Parsodkar.

11. That leaves us with sub-clause (g) and sub-clause (i) of the Clause 8 of the tender document. Sub-clause (g) provides that tenders not accompanied by all the Schedules/Annexures intact and duly filled in and signed may be ignored. It is not contended by the employer that the tender of the petitioner is not accompanied by any of the Schedules or Annexures. The only ground pressed into service for rejection of the petitioner's tender is that his photograph though is affixed on the tender documents, has been affixed at a different place. Insofar as sub-clause (i) is concerned, it provides that any attempt by tenderer to change the format of any of the supporting documents of the MTF while uploading or any attempt to tinker with the software of the portal will render his tender liable for cancellation and his subsequent blacklisting. Sub-clause (i) deals with severe consequences of blacklisting and, therefore, will have to be interpreted in strict manner. Sub-clause (i) deals with attempt by tenderer to change the format of any of the supporting documents of the MTF while uploading or any attempt to tinker with the software of the portal. It is not even the allegation of the employer that an attempt has been made by the petitioner to change the format of any of the supporting documents of the MTF while uploading or to tinker with the software of the portal. The only allegation of the respondent-employer is that the photograph is affixed at a different place. Nothing is placed on record to show that the petitioner has either attempted to change the format of any of the documents. As such in our considered view the said sub-clause would also not be applicable in the facts of the present case.

12. Then the only question that will be required to be considered is as to whether affixing the photograph on the forwarding letter could be construed to be an essential condition or a non-essential condition. The question as to whether the rejection of the technical bid of the petitioner was justified or not, would depend on the answer to the first question. The Apex Court in the case of G.J. Fernandex (supra) had an occasion to consider the question as to what would be the essential condition or a non-essential condition. In the said case, Their Lordships have held that supply of the documents referred to in Para V of the tender document was indispensable to assess whether the applicant fulfills the prequalifying requirements set out in para I. However, Their Lordships further held that it will be too extreme to hold that the omission to supply every small detail referred to in para V would affect the eligibility under Para I and disqualify the tenderer.

13. Their Lordships also had an occasion to consider the question as to which of the documents referred to in tender notice are to be construed as an essential and which are non-essential in the case of M/s Poddar Steel Corporation (supra). The judgment of the Hon'ble Supreme Court in the case of G.J. Fernandex (supra) was also considered by Their Lordships of the Apex Court in the case of M/s Poddar Steel Corporation. It will be relevant to refer to the following observations of Their Lordships:-

"6. ...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 tender 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. This aspect was examined by this Court in GJ Fernandez v. State of Karnataka 7 Ors., [1990] 2 SCC 488 a case dealing with tenders. Although not in an entirely identical situation as the present one, the observations in the judgment support our view. The High Court has, in the impugned decision, relied upon Ramana Dayaram Shetty v. International Airport Authority of India and Ors., [1979] 3 SCC 489 but has failed to appreciate that the reported case belonged to the first category where the strict compliance of the condition could be insisted upon. The authority in that case, by not insisting upon the requirement in the tender notice which was an essential condition of eligibility, bestowed a favour on one of the bidders, which amounted to illegal discrimination. The judgment indicates that the Court closely examined the nature of the condition which had been relaxed and its impact before answering the question whether it could have validly condoned the shortcoming in the tender in question. This part of the judgment demonstrates the difference between the two categories of the conditions discussed above. However it remains to be seen as to which of the two clauses, the present case belongs."

It could thus be seen that Their Lordships of the Apex Court have held that the requirements in a tender notice can be classified into two categories, (i) those which lay down the essential conditions of eligibility and (ii) which are merely ancillary or subsidiary with the main object to be achieved by the condition. It is further held that in the first case the authority issuing the tender 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.

14. No doubt that the reliance placed by Mr. Samudra on the judgment of the Hon'ble Apex Court in the case of Central Coalfields Limited (supra) is justified. It will be relevant to refer to the following observations of the Apex Court in the case of Central Coalfields Limited:

"47. The result of this discussion is that the issue of the acceptance or rejection of a bid or a bidder should be looked at not only from the point of view of the unsuccessful party but also from the point of view of the employer. As held in Ramana Dayaram Shetty the terms of the NIT cannot be ignored as being redundant or superflous. They must be given a meaning and the necessary significance. As pointed out in Tata Cellular there must be judicial restraint in interfering with administrative action. Ordinarily, the soundness of the decision taken by the employer ought not to be questioned but the decision making process can certainly be subject to judicial review. The soundness of the decision may be questioned if it is irrational or mala fide or intended to favour someone or a decision "that no responsible authority acting reasonably and in accordance with relevant law could have reached" as held in Jagdish Mandal followed in Michigan Rubber."

The perusal of the aforesaid judgment would reveal that Their Lordships have held that the issue of the acceptance or rejection of a bid or a bidder should be looked at not only from the point of view of the unsuccessful party but also from the point of view of the employer. As a matter of fact in the last week itself relying on the aforesaid judgment of Their Lordships, in Writ Petition No.234/2016 ( M/s K.K.Vidyut .vs. Union of India and others decided on 24.08.2016) we have dismissed the petition of an unsuccessful bidder who had not submitted the documents which were essential for finding out as to whether he possesses the technical qualification or not.

15. As to what amounts to ratio decidenti has been succinctly explained by Their Lordships of the Apex Court in the case of the Regional Manager .vs. Pawan Kumar reported in AIR 1976 Supreme Court 1766. It will be relevant to refer to the following observations of the Hon'ble Apex Court:-

"It is the rule deducible from the application of law to the facts and circumstances of a case which constitutes its ratio decidendi and not some conclusion based upon facts which may appear to be similar. One additional or different fact can make a world of difference between conclusions in two cases even when the same principles are applied in each case to similar facts."

It could thus be seen that Their Lordships have clearly held that the ratio decidenti is the rule deducible from the application of law to the facts and circumstance of the case. It has been held that ratio decidenti is not some conclusion based upon facts which may appear to be similar. It has been further held that one additional or different fact can make a world of difference between conclusions in two cases even when the same principles are applied in each case to similar facts.

16. In the present case it is not as if that the petitioner had failed to submit a single document which was relevant to determine as to whether he possesses the necessary technical or financial qualification. The only flaw in the tender of the petitioner is that the petitioner has not affixed his photograph on the forwarding letter of the tender document but had affixed on the undertaking which was required to be submitted as per the tender document. It appears that due to inadvertence the petitioner has affixed his photograph on a page after the page on which it was required to be affixed. In any case, we find that it can hardly be said that the photograph of a person submitting his bid had any relevance to find out as to whether he possesses the technical or financial qualification to determine his eligibility. If the purpose of affixing the photograph was to determine as to whether the tenderer is really a person who has submitted the tender or not, the photograph was very much available in the tender bid, albeit at a different page.

17. We may gainfully refer to the case of Tata Cellular .vs. Union of India reported in AIR 1996 Supreme Court 11(1), which still is considered to be leading judgment in the matter of scope of judicial review in contractual matters. In the said case, the Government of India had invited the tenders for grant of licence for operation of cellular mobile telephone services. Various bidders submitted their bids. After the long drawn process, the Tender Evaluation Committee had shortlisted the bidders. The four participants who were not shortlisted approached the High court by way of writ petition. One of them was Hutchison Max Telecom Private Limited. Insofar as Hutchison Max is concerned, the Delhi High Court directed its bid to be reconsidered. The matter went before Their Lordships of the Apex court. Their Lordships have considered the case of the Hutchison Max from paragraph nos. 195 to 203 of the said judgment. The perusal of the said paragraphs would reveal that the bid of Hutchison Max was rejected on the ground that the compliance statement which was submitted by it was not in the prescribed format. Though the prescribed format requires that the Company had to mention:

"this company also hereby agrees to fully comply with all paragraphs of Chapter II General Conditions, Chapter III Operating Conditions, Chapter IV Financial Conditions and Chapter V Tariffs of document No. 44/24/91 MMC (Financial) without any deviations and reservations".

However, the compliance statement refers only to Chapter II and Chapter V. There was no reference in the compliance report to Chapter III and Chapter IV. However, a letter was addressed to rectify the error. In this background, Their Lordships observed thus:-

"203. ... Where the matter is purely technical the Court should not exercise the power of judicial review. We find great force in this submission. We are clearly of the opinion that the mistake is in relation to a non-essential matter that is in relation to peripheral or collateral matter. There has been every intention to comply with the terms of the bid, for an accidental omission it cannot be punished. We concur with the High Court."

It could thus been seen that Their Lordships have clearly observed that where the matter is purely technical, the Court should not exercise the power of judicial review. However, Their Lordships have observed that when the mistake is in relation to a non-essential matter, that is in relation to peripheral or collateral matter, then for an accidental omission, a party cannot be punished.

18. As already discussed hereinabove, we do not find any direct nexus or relation of the photograph of a bidder with the technical or financial qualification/eligibility of a bidder. In that view of the matter, we find that such a condition will have to be held of a non-essential matter. In any case, the photograph of the petitioner is very much available on the tender documents though on a different page. We are, therefore, of the considered view that the present case is more nearer to the facts in the case of Hutchison Max discussed in the case of Tata Cellular (supra). In any case, the judgment in the case of Tata Cellular is delivered by the three Hon'ble Judges of the Supreme Court.

19. There is another angle in the present lis. The petitioner makes a categorical statement that his bid is either 40 % below ASOR or even lower than that whereas the bid of the intervenor is 89% ASOR. It could thus be seen that there is a huge difference between the financial bid of the petitioner and the financial bid of the intervenor. As to what is exactly the financial bid of the petitioner is not within anybody's knowledge since it is now locked in the computer system. It is only after the petitioner is held to be technically eligible, his financial bid would be opened. We have made it clear to the petitioner that the petitioner's bid would be considered only in the event it is either 40% or below 40 % ASOR.

20. The Apex Court in the case of Jagdish Mandal .vs. State of Orissa reported in (2007) 14 Supreme Court Cases 517 had again an occasion to consider the scope of the judicial review in the contractual matters. It will be relevant to refer to the following observations of Their Lordships in the said case:-

"Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions:

(i) whether the process adopted or decision made by the authority is mala fide or intended to favour someone; or

whether the process adopted or decision made is so arbitrary and irrational that the court can say:

"the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached";

(ii) Whether public interest is affected."

21. It could thus be seen that Their Lordships have mandated that before a Court interferes in tender or contractual matters in exercise of power of judicial review, it should pose to itself two questions: - (i) whether the process adopted or decision made by the authority is mala fide or intended to favour someone or whether the process or decision made is so arbitrary and irrational that the Court can say that the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached and (ii) whether public interest is affected. In our considered view, the present case would not fall under category (i) inasmuch as it cannot be said that the decision made by the authority is mala fide or intended to favour someone or so arbitrary and irrational. However, the case would be squarely covered in the second category. If the petitioner is deprived of competing in the tender process for affixing a photograph on a different page and when he is otherwise technically and financially qualified, the public interest would be affected inasmuch as the difference between the bids is substantially high and unnecessarily loss will be caused to the public exchequer.

22. In that view of the matter, we find that the petition deserves to be allowed , however, with a rider that the financial bid of the petitioner would be considered only if his bid is 40 % ASOR or lower than that. Hence the following order:-

(i) The impugned decision of the petitioner holding the petitioner to be not technically qualified is quashed and set aside. It is held that the rejection of the petitioner's technical bid was on a non-essential condition.

(ii) Respondent No.1 and 2 are directed to open the financial bid of the petitioner. However, the petitioner would be permitted to participate in the allotment of tender only if his bid is found to be 40 % ASOR or lower than that. We direct the respondents-Authorities to complete the tender process within a period of 15 days from today.

23. Rule is, therefore, made absolute in the aforesaid terms.

There shall be no order as to costs.


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