HON'BLE SRI JUSTICE K. LAKSHMAN
WRIT PETITION No.15881 OF 2021
ORDER:
Heard Mr. S. Sridhar, learned counsel for the petitioner, Mr. M. Roopender, learned Standing Counsel for the Telangana State Tourism Development Corporation Limited (TSTDCL) appearing on behalf of respondent Nos.1 and 2 and Mr. M.V.S. Suresh Kumar, learned senior counsel representing Mr. Mr. Srinivas Karra, learned counsel for respondent No.3.
2. This writ petition is filed to declare the action of respondent Nos.1 and 2 in issuing the Letter of Intent No. AMC/TENDERS/8/2016, dated 03.07.2021 in favour of respondent No.3 as illegal, and for a consequential direction to respondent Nos.1 and 2 to issue Letter of Intent in favour of the petitioner for operation and maintenance of Food Courts at Buddhavanam, Nagarjuna Sagar on 'License to Operate basis'.
3. FACTS:
i) Respondent No.1 had issued a Tender Notification on 12.05.2021, for selection of operator (s) for operation and maintenance of Haritha Restaurants on 'license to operate basis' and 'as is where is basis'. The last date for submission of bids was 14.06.2021.
ii) Respondent No.1 has not given any schedule with regard to the opening of both technical and financial bids. A single stage envelope bidding process was adopted by respondent No.1. 2
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iii) Pursuant to the said Notification, both the petitioner and respondent No.3 had submitted their bids in respect of Food Courts at Buddhavanam, Nagarjuna Sagar.
iv) The petitioner was declared as the highest bidder (H1) on 24.06.2021. However, no Letter of Intent was issued in its favour.
v) On 08.07.2021, the petitioner had submitted a representation to respondent No.1 with a request to issue a letter of intent in its favour, as it stood Highest Bidder in the subject tender in respect of the restaurant at Buddhavanam.
vi) According to the petitioner, it came to know that the letter of intent was already issued in favour of respondent No.3 on 03.07.2021, whereas, according to respondent Nos.1 and 2, since the petitioner had submitted a conditional bid which would be disadvantageous to other bidders, the letter of intent was issued in favour of respondent No.3, who was the next highest bidder.
vii) Respondent No.1 had also issued a show-cause notice dated 12.07.2021 to the petitioner calling for his explanation as to why it should not be blacklisted for tampering and unauthorized modification of the Financial Bid format.
viii) Similarly, respondent No.1 also issued a notice dated 27.07.2021 to respondent No.3 calling for its explanation for submission of fake GST Registration number with fake address mentioned therein and, thereafter being dissatisfied with the explanation submitted by it, 3 KL,J W.P.No.15881 of 2021 issued a show-cause notice dated 18.08.2021 to respondent No.3 for termination of agreement for violating the terms of agreement.
4. CONTENTIONS ON BEHALF OF PETITIONER:
i) Mr. S. Sridhar, learned counsel for the petitioner, would submit that respondent No.3 had submitted a fake GST Registration number along with tender documents as the said GST Registration Certificate stood cancelled on 25.11.2020 itself. The address mentioned by respondent No.3 does not belong to it and it belongs to another firm i.e., Hotel Airport International Limited'.
ii) The learned counsel would further submit that respondent No.1 without issuing any notice and without giving any opportunity rejected the bid of the petitioner though he was declared as the highest bidder. According to him, on consideration of both technical and financial bid, the petitioner was the highest bidder and, therefore, the letter of intent should have been issued only in favour of the petitioner, whereas in the present case, respondent No.1 had issued the same in favour of respondent No.3. The show-cause notice dated 12.07.2021 issued to the petitioner for tampering the terms of Request for Proposal (RFP) document is illegal.
iii) The learned counsel would further submit that on enquiry the petitioner came to know that respondent No.1 has not considered the issuance of letter of intent in favour of the petitioner on the ground that it had tampered the RFP document and the tender submitted by it is not in 4 KL,J W.P.No.15881 of 2021 accordance with the terms of tender notification. He would further submit that the petitioner did not tamper the RFP document and it was only due to inadvertence and oversight that it had interchanged the serial number and, therefore, it would not amount to tampering of RFP document. He would further submit that despite respondent No.3 submitting a fake GST registration certificate as it was cancelled on 25.11.2020 and furnishing the address which does not belong to it, respondent No.1 issued the letter of intent in favour of respondent No.3, which is illegal and against the principles of natural justice.
iv) With the aforesaid submissions, the learned counsel sought to declare the letter of intent issued in favour of respondent No.3 as illegal and for a consequential direction to issue a letter of intent in its favour.
5. CONTENTIONS OF RESPONDENT Nos.1 AND 2:
i) Referring to the contents of the counter affidavit filed by respondent Nos.1 and 2, the learned Standing Counsel would contend that the bid of the petitioner was disqualified since it had tampered the terms of the RFP document and submitted a conditional bid. The modification creates disadvantages to other bidders. Respondent No.1 has specifically mentioned the bid conditions in the tender document.
ii) Referring to Clauses - 2.11.1; 2.11; 2.12; 3.2.3; 30.1.3; 30.1.4 and 30.1.5, the learned standing counsel would contend that the petitioner did not submit its bid in terms of the RFP document, and there is modification and tampering which amounts to alteration of tender 5 KL,J W.P.No.15881 of 2021 condition, and that the bid cannot be a conditional one. Therefore, there is no error or irregularity on the part of respondent No.1 in not considering the bid of the petitioner and in not issuing the letter of intent in its favour.
iii) The learned standing counsel further contends that respondent No.3 has submitted a fake GST registration number and the address mentioned by it in the tender document does not belong to it, and having come to know the same, respondent No.1 had issued notice and show- cause notice to respondent No.3. All the said information was brought to the notice of respondent Nos.1 and 2 only after opening the bids, both technical and financial. According to him, the Bid Tender Authority does not have power to cancel the tender notification without assigning any reasons, whereas, in the present case, there are serious lapses on the part of the petitioner as well as respondent No.3, and both of them had not submitted tender documents in terms of the tender conditions. Therefore, by following the due procedure laid down under law, respondent No.1 had cancelled the letter of intent dated 03.07.2021 issued in favour of respondent No.3.
iv) The learned standing counsel would also contend that the petitioner having submitted a conditional bid with modification in RFP document, has no right to seek the relief of issuance of a direction to respondent No.1 to issue a letter of intent in its favour.
v) With the aforesaid submissions, the learned standing counsel sought to dismiss the writ petition.
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6. CONTENTIONS ON BEHALF OF RESPONDENT No.3:
i) Mr. M.V.S. Suresh Kumar, learned senior counsel representing Mr. Srinivas Karra, learned counsel for respondent No.3, would contend that the GST registration certificate submitted by respondent No.3 was cancelled, but it was not a fake document. Since there was no business on account of COVID-19 pandemic, all the restaurants were closed and, therefore, respondent No.3 could not take steps to get the GST registration certificate renewed. While producing the registration certificate along with tender proposal, the relevant column with regard to the period for registration was left blank.
ii) With regard to the address mentioned by respondent No.3 in the tender document, the learned senior counsel would contend that the business was shifted on 01.02.2020 to the premises bearing No.281, Vidya Nagar Cross, New Airport Road, Bengaluru, BBMP North, Karnataka, and the business at No. 007, Ground Floor, New Airport Road, Doddajala Bengaluru - 562 157 was done from 30.10.2019 to 01.02.2020 by a sub-lease agreement executed by one Narayana, who is the lessee of one Buchanna, the owner of the property. Therefore, there is no irregularity in submission of the bid by mentioning the said address and it is not a serious lapse. There is no violation of terms of bid.
iii) The learned senior counsel would further contend that respondent No.3 had received a letter on 02.07.2021, wherein it was stated that the bid of the petitioner was not considered and the contract at 7 KL,J W.P.No.15881 of 2021 Budhhavanam was offered to it to match the price quoted by the highest bidder. Accordingly, respondent No. 3 had accepted the offer and a letter of intent was issued in its favour on 03.07.2021. Thereafter, respondent No. 3 had executed the agreement and deposited Rs.15.50 Lakhs towards first six month's annual fee as security deposit. Respondent No. 3 had incurred heavy expenditure for modification of the restaurant. If the letter of intent is cancelled, it would suffer grave, irreparable loss and injury.
iv) The learned senior counsel would also contend that the petitioner having submitted a conditional bid which is not in accordance with the terms of the tender document does not have a right to seek a direction to respondent No.1 for issuance of letter of intent in its favour.
v) With the aforesaid submissions, the learned senior counsel sought to dismiss the writ petition.
7. ANALYSIS AND FINDING OF THE COURT:
i) In view of the above submissions, respondent No.1, Tendering Authority, had issued tender notification on 12.05.2021 calling for tenders to maintain Haritha Restaurants at various places including the restaurant at Buddhavanam, Nagarjuna Sagar, on 'license to operate basis' and 'as is where is basis'. Both the petitioner and respondent No.3 had submitted their bids in respect of the restaurant at Buddhavanam. It is not in dispute that on consideration of both technical and financial bids, the petitioner stood as the highest bidder, but respondent No.1 did not issue any letter of intent in its favour. According to respondent No.1, 8 KL,J W.P.No.15881 of 2021 the petitioner herein did not submit the bid in terms of the tender document, and the bid submitted by it is a conditional one tampered and modified RFP document.
ii) Even according to respondent No.1, respondent No.3 had submitted fake GST registration certificate, which was not valid as on the date of the submission of tender. Respondent No.3 was not running the business at the address shown in the tender. After coming to know the same, respondent No.1 had issued a notice dated 27.07.2021 to respondent No.1 calling for its explanation. Respondent No.3 sought two weeks time, but no explanation was submitted. Therefore, respondent No.1 issued a show-cause notice dated 18.08.2021 to respondent No.3 terminating the agreement on account of violation of its terms and conditions of agreement, more particularly Clauses - 30.1.3, 30.1.4 and 30.1.5. Thus, both the petitioner and respondent No.3 had submitted the tender bids which are in violation of the terms and conditions of tender document. In view of the same, it is relevant to refer to certain conditions of the tender document, which are as under:
"2.11.1 Bidders should submit the Technical Proposal and Financial Proposal in the in the manner set out in Clause 2.11 and Clause 2.12. The Authority would evaluate only those proposals that are received in the required format and complete in all respects. Incomplete and/or conditional Proposals shall be liable to rejection.
2.12 Sealing and Marking of Proposals 2.12.1 The bidder shall submit all the documents sought under the RFP, together with the documents 9 KL,J W.P.No.15881 of 2021 mentioned in Clause 2.12.2 in the format provided under the RFP and in the manner specified in Clause 2.12.2.
2.12.2 The bidder shall submit the proposal in two separate envelops comprising the following documents and marked as "TECHNICAL PROPOSAL" and "FINANCIAL PROPOSAL".
3.2.3 Bidders may note that the Authority will not entertain any deviations to the RFP at the time of submission of the Proposal or thereafter. The Proposal to be submitted by the Bidders would have to be unconditional and unqualified and the Bidders would be deemed to have accepted the terms and conditions of the RFP with all its contents including the Draft License Agreement. Any conditional Proposal shall be regarded as non-responsive and would be liable for rejection.
30.1.3 Subject to Force Majeure, the SECOND PARTY fails to substantially perform or comply with any commitment, agreement, covenant, term or condition (other than those specifically described in any other subparagraph of this Clause) of this Agreement.
30.1.4 If the SECOND PARTY fails to remedy any such act of default as stipulated in this Agreement within 30 (thirty) days after receipt of written notice of default with respect thereto from FIRST PARTY. 30.1.5 If any representation or warranty made by SECOND PARTY hereunder is intentionally false or misleading in any material respect when made and such false or misleading representation or warranty either has a material adverse effect on the Development or has resulted in an unfair competitive advantage materially benefiting the SECOND 10 KL,J W.P.No.15881 of 2021 PARTY in the offer selection process considering SECOND PARTY'S response to the offer in total. Subject to Force Majeure, on the happening of any one of the Events of Default by SECOND PARTY as enumerated in Clause 28.1."
iii) It is also relevant to mention that respondent Nos.1 and 2 in their counter mentioned about the details of bid conditions modified by the petitioner in a tabular form, which are as under:
As per Request for Proposal (RFP) Petitioner modified as Appendix F follows:
We understand that, for the purpose of computation or Sl. No.5: payment of annual license fee, I/We understand that the Authority is not annual/year denotes 12 (twelve) bound to accept any proposal(s) received. calendar months after 6 (six) months from the date of signing of the Agreement.
Note(ii): The Annual Fee offered by the
The Annual Fee offered by the Succesful Succesful bidder shall be payable
bidder shall be payable to the authority to the authority from the seventh
from the second month of execution of month of execution of the
the agreement and shall be escalated by agreement and shall be escalated
5% (five percent) compounding annually by 5% (five percent)
throughout the agreement period. compounding annually
throughout the agreement period.
Note (vi) Totally removed Note (vi) from
For the purpose of computation or the format.
payment of annual license fee, annual/year
denotes 12 (twelve) calendar months after
1 (one) month from the date of signing of
the agreement.
iv) It is relevant to note that the petitioner did not dispute with regard to the submission of modified RFP document, and it only says that it had submitted the modified document by interchanging the serial numbers which is due to inadvertence and oversight and, therefore, it does not amount to tampering. In view of the same, it is clear that the petitioner herein is admitting that it had submitted the bid by modification. It is also relevant to note that according to respondent 11 KL,J W.P.No.15881 of 2021 No.3, the GST registration certificate submitted by it is not renewed and it is not valid as on the date of submission of the bid. Even according to respondent No.3, it is not continuing the business in the address mentioned in the bid. Thus, both the petitioner and respondent No.3 had submitted the bids in violation of the terms and conditions mentioned in the tender document. It is also relevant to note that respondent No.1 has cancelled the letter of intent dated 03.07.2021 issued in favour of respondent No.3 after issuing notice and show-cause notice. Respondent No.3 did not challenge the proceedings cancelling the letter of intent in its favour by respondent No.1.
iv) The petitioner herein is seeking a direction to respondent No.1 to issue letter of intent in its favour. If the Court considers the said direction, it will lead to revival of an illegal action i.e., direction to issue a letter of intent in favour of the petitioner, who has not submitted the bid in terms of the tender notification. The petitioner having submitted the bid in violation of tender conditions cannot seek such a direction as it is impermissible in law as held by the Hon'ble Apex Court in Aligarh Muslim University v. Mansoor Ali Khan1. In the said judgment, the Apex Court referring to judgments in M.C. Mehta v. Union of India [1999) 3 SCR 1173] and Gadde Venkateswara Rao v. Government of Andhra Pradesh [1966) 2 SCR 172] held as under:
"21. As pointed recently in M.C. Mehta v. Union of India [1999]3SCR1173, there can be certain situations in which an order passed in violation of natural justice 1 . (2000) 7 SCC 529 12 KL,J W.P.No.15881 of 2021 need not be set aside under Article 226 of the Constitution of India. For example, where no prejudice is caused to the person concerned, interference under Article 226 is not necessary. Similarly, if the quashing of the order which is in breach of natural justice is likely to result in revival of another order which is in itself illegal as in GaddeVenkateswara Rao v. Government of Andhra Pradesh [1966]2SCR172, it is not necessary to quash the order merely because of violation of principles of natural justice."
v) The contentions of the petitioner that respondent No.1 has not assigned any reasons for not issuing the letter of intent in its favour and has not given any notice before issuing the letter of intent in favour of respondent No.3 etc., would amount to violation of principles of natural justice. Though there is no explanation by respondent Nos.1 and 2 in their counter for the same, letter dated 12.07.2021 addressed by respondent No.1 to the petitioner, would answer the same.
8. CONCLUSION:
i) In view of the above discussion, since both the petitioner and respondent No.3 had submitted their bids in violation of terms and conditions of tender notification dated 12.05.2021, the Tender Notification dated 21.05.2021 issued by respondent No.1 is liable to be set aside. It is relevant to note that though respondent No.3 contends that it had incurred huge expenses for renovation of restaurant and on account of cancellation of letter of intent by respondent No.1, it would suffer serious loss and injury, it has not filed any proof. In the absence of 13 KL,J W.P.No.15881 of 2021 same, the said contention cannot be accepted. However, it is contended by respondent No.3 that it had deposited an amount of Rs.15.50 lakhs with respondent No.1 towards security deposit and the same is not refuted by respondent No.1 and 2. In view of the same and on account of setting aside the tender notification and consequential cancellation of letter of intent, the said amount is ordered to be refunded to respondent No.3.
ii) The present Writ Petition is accordingly disposed of, and the Tender Notification dated 12.05.2021 issued by respondent No.1 for selection of operator (s) for operation and maintenance of Haritha Restaurants on 'license to operate basis' and 'as is where is basis' in respect of Haritha Restaurant, Buddhavanam, is hereby set aside. Respondent No.1 is directed to issue a fresh Tender Notification in respect of Haritha Restaurant, Buddhavanam, by following the procedure laid down under law.
iii) Respondent Nos.1 and 2 are also directed to refund the security deposit amount of Rs.15.50 lakhs to respondent No.3 forthwith.
iv) In the circumstances of the case, there shall be no order as to costs.
As a sequel, the miscellaneous petitions, if any, pending in the writ petition shall stand closed.
_________________ K. LAKSHMAN, J 4th October, 2021 Mgr