THE HONOURABLE SRI JUSTICE K.LAKSHMAN
WRIT PETITION No.31427 OF 2022
ORDER:
The writ petition is filed:-
"...........to declare the impugned work order of contract dated 05.07.2022 awarded by 1st respondent in favour of 4th respondent as illegal and consequential direction to the 5th respondent/the Commissioner, Central Vigilance Commission, New Delhi, to launch an inquiry in accordance to its Circular No.04/04/21, dated 06.04.2021 and to take appropriate action....."
2. Heard Sri Prem Kumar Pothina, learned counsel for the petitioner and Sri T. Suryakaran Reddy, learned Additional Solicitor General of India, representing Ms. Pallavi, learned counsel appearing for the respondent Nos.1 to 3 and Sri K.Seetharam, learned counsel appearing for 4th respondent. Perused the record.
3. 3rd respondent had issued a tender dated 31.05.2021 inviting customized bids for digitization of official documents/archival material (Manual copies of inscription taken on paper called Estampages) preserved in the office of the Director (Epigraphy), Archaeological Survey of India, Mysore vide Notification F.No. 97/2 (A)/21-22. The petitioner did not participate in the said tender. Total five (5) bidders were participated in the tender which was opened on 19.07.2021. On opening of the aforesaid bids, according to the respondent Nos.1 to 3, it was found that none of the bidders were qualified on the eligibility criteria leading to a scrapping of the 2 tender. The Second tender notice was issued on 26.10.2021, wherein the petitioner herein had also submitted its tender. On the request of the respondent Nos.1 to 3, the petitioner herein had traveled to Mysore and delivered a physical demo of the work as required to be executed under the pre-qualification criteria. The said bid was opened on 16.11.2021. According to the respondent Nos.1 to 3, the Tender Evaluation Committee (for short, TEC') observed that only one of the bidder (and not M/s Ravi Press Photo, Hyderabad, petitioner herein) had come closest to the expectation, but still was not technically qualified, and also the solution proposed by it was not technically ideal, as it would require both handling of the estampages in a manner that was less than ideal, and would also require stitching. Therefore, the second tender was also cancelled on 15.06.2022. Thereafter, the respondents have allotted the said work to 4th respondent on nomination basis vide work order dated 05.07.2022. Challenging the said work order, the petitioner herein filed the present writ petition.
4. Learned counsel for the petitioner would submit that it is mandatory on the part of 1st respondent to evaluate the process of procurement of goods and services by the Central Government Ministries through GeM Website (Government e-Market Place) only. It is an online platform hosted by Directorate General of 3 Supplies and Disposals under Ministry of Commerce and Industry (for short, 'DGS&DMCI). The main object of GeM is for centralized procurement of both produce and services for all the departments and agencies of the Central Government Ministries. It eliminates the barriers to bona fide suppliers who wish to do business with the Government at competitive prices. The petitioner is also registered on GeM Website and he is an accomplished Photographer. He holds Diploma in Photography with decades of experience. Though the petitioner has qualified and he is having required eligibility criteria, respondent Nos.1 to 3 have cancelled the second tender notice dated 26.10.2021 after lapse of almost eight months only to favour 4th respondent. The act of respondents is unfair and non-transparent contrary to guidelines issued by Central Vigilance Committee vide the Circular No.04/04/2021 dated 06.04.2021.
5. As per the said circular issued by the Central Vigilance Commission, award of contract through open competitive bid should remain the most preferred mode of tendering. Therefore, work order dated 05.07.2022 is in violation of Clause-5 of said circular. He has also relied on the principle laid down by the Hon'ble Apex Court in 4 Ramana Dayaram Shetty Vs.International Airports Authority of India1, and Tata Cellular Vs. Union of India2 .
6. Whereas, respondent Nos.1 to 3 have filed counter contending that in both two tenders dated 31.05.2021 and 26.10.2021 the TEC observed that all the tenders submitted by the tenderers are technically not qualified. Therefore, they have cancelled the tenders. The Petitioner herein did not participate in the first tender dated 31.05.2021. Therefore, under the said circumstances, where a technologically superior solution was being offered, which secured the safety of the estampages, it was decided to engage PIQL on a nomination basis in accordance with Rule 194(iv) of the General Financial Rules, 2017 (for short, 'the GF Rules'). The reasons for adoption of this single nomination process was explained by the respondents in a tabular form in paragraph No.17 of counter affidavit of the respondents and the same is extracted below:-
AWA Technical solution Photography solution Non-Invasive (through 3D Non-Invasive (using long-shot Scanning combined with Photography) Photogrammetry) As it is Cloud Point data, the Quality hovering around 300-
quality would be higher than 400 dpi 500 dpi No stitching needed Stitching would be needed 1 (1979) 3 SCC 489 2 (1994) 6 SCC 651 5 Various formats like PDF, TIFF, JPG, JPEG JPG, JPEG possible; even a 3D 500-600 estampages per day 80- Each estampage has to be 90 in one scan cycle of 30 min);photographed singly, and post-processing will involve camera to be set up according only segregating variousto the size of estampages. Not estampages, and no stitching more than 100 estampages skills needed. each day, plus stitching time in each.
Fragile estampages can be Light issues to set the camera, scanned using handheld scanner, and the estampages may be being just spread on the floor needed to be put up on a canvas.
7. Based on the above considerations where 4th respondent was offering a technologically superior solution, and given that none of the bidders, including the petitioner, fulfilled the prescribed qualifications, a work order was issued to 4th respondent on 05.07.2022. Therefore, according to them, there is no irregularity or illegality committed by them in awarding work to 4th respondent, on nomination basis.
8. It is relevant to note that despite granting ample opportunity, 4th respondent has not filed counter. However, Sri K.Seetharam, learned counsel appearing for 4th respondent made his submissions.
9. The above stated facts would reveal that the respondent Nos.1 to 3 have issued two tender Notifications i.e. on 31.05.2021 and 26.10.2021. According to them on evaluation of the said tenders by the TEC, none of the tenderers were technically qualified and therefore, the same were cancelled. They have allotted work to 4th 6 respondent by invoking its power under Rule 194(iv) of the GF Rules, 2017,by way of nomination.
10. Circular No.4/4/2021, dated 06.04.2021 issued by the Central Vigilance Commission deals with transparency in works/ purchase/consultancy contracts awarded on nomination basis and in the said circular, Central Vigilance Commission has given certain guidelines, reiterated earlier guidelines and the same are mentioned below:-
i) All works/purchase/consultancy contracts awarded on nomination basis should be brought to the notice of following authorities for information:
a. the Secretary, in case of the ministries/
departments;
b. The Board of Directors or equivalent managing body, in case of Public Sector Undertakings, Public Sector Banks, Insurance Companies, etc;
c. The Chief Executive of the organization where such a managing body is not in existence
ii) The report relating to such awards on nomination basis shall be submitted to the Secretary/Board/Chief Executive/equivalent managing body, every quarter,
iii) The audit committee or similar unit in the organization may be required to check at least 10% of such cases.
11. The details of all tenders, awarded on nomination basis, shall be posted on website of the organization concerned, in public domain, along with brief reasons for doing so. The Central Vigilance Commission has categorically stated in the aforesaid circular that the above guidelines may be noted for strict compliance. The 7 Commission has issued aforesaid guidelines as part of its drive to ensure transparency, to promote healthy competition and to provide fair and equitable treatment to all interested parties in matters of public procurement and has issued guidelines from time to time emphasizing on the need to adopt tendering process as a basic requirement, before award of contract to any party.
12. It is also relevant to discuss Clause-194 (iv) of the GF Rules, 2017 which is extracted below:-
Rule 194- Single Source Selection/Consultancy by nomination. The selection by direct negotiation/nomination, on the lines of Single Tender mode of procurement of goods, is considered appropriate only under exceptional circumstance such as:
(i) tasks that represent a natural continuation of previous work carried out by the firm;
(ii) in case of an emergency situation, situations arising after natural disasters, situations where timely completion of the assignment is of utmost importance; and
(iii) situations where execution of the assignment may involve use of proprietary techniques or only one consultant has requisite expertise.
(iv) Under some special circumstances, it may become necessary to select a particular consultant where adequate justification is available for such single-source selection in the context of the overall interest of the Ministry or Department. Full justification for single source selection should be recorded in the file and approval of the competent authority obtained before resorting to such single-source selection.
(v) It shall ensure fairness and equity, and shall have a procedure in place to ensure that the prices are reasonable and consistent with market rates for tasks of a similar nature; and the required consultancy services are not split into smaller sized procurement.
8
13. According to respondent Nos.1 to 3, they have awarded the subject work to 4th respondent by invoking its power under Rule 194
(iv) of the GF Rules, 2017. Thus, as per the said Rule, there should be some special circumstances and full justification for Single Source Selection and the same should be recorded in the file and approval of the competent authority obtained before resorting to such single source selection. They shall ensure fairness and equity and shall have a procedure contemplating to ensure that the prices are reasonable consisting with market rates etc.
14. It is the specific case of the petitioner herein that the name of 4th respondent was struck off by the Ministry of Corporate Affairs for violation of the provisions of the Companies Act.
15. According to the company master data available in the website, contribution of 4th respondent was one lakh and thus, paid up capital of 4th respondent is only one lakh. Learned counsel for the petitioner had also filed a copy of the said Company master-data and field search report of GMR Associates, Company Secretaries, in proof of the same. He has also filed Directors' report of 4th respondent Company which shows that 4th respondent company is having unsecured loans of 4644225 and total indebtedness is 4644225. Referring to Extract to Annual Return as on financial year ended on 31.03.2020, learned counsel for the petitioner would 9 submit that the data preservation, microfilming services and percentage of turnover of 4th respondent company is 100%. Its annual turn over for last four financial years is nil. Referring to the same, learned counsel for the petitioner would submit 4th respondent is a strike off company and even then, without considering the said facts, respondent Nos.1 to 3 have awarded said work to 4th respondent vide impugned work order dated 05.07.2022 on nomination contrary to the guidelines issued by Central Vigilance Commission, vide Circular dated 06.04.2021.
16. As stated supra, though the petitioner herein filed the aforesaid documents along with the memo vide USR No.77812 of 2022, dated 02.09.2022, neither respondent Nos.1 to 3 nor 4th respondent filed any reply/rejoinder of denying the same.
17. Respondent Nos.1 to 3 have filed entire Note File related to work order being issued to 4th respondent along with counter. Perusal of the said Note File would reveal that the respondent Nos.1 to 3 have not mentioned any special circumstances that necessitated them to select 4th respondent, a single source of selection. There is no mention about full justification reasons for single source of selection. There is no approval of the competent authority obtained before resorting to single source of selection. Even, the counter filed by the respondent Nos.1 to 3 is silent with regard to the same. 10 However, in the counter, they have stated that the award of work on the nomination basis is well within the Rules, and there is no unlawful exercise of power. As per GF Rules, 2017 and TEC guidelines and measure of transparency, decision taken to award work on single nomination basis is available on website in public domain. The respondents are also trying to justify their action by citing the judgment in W.P.(MD) No.17399 of 2020 dated 19.08.2021 of Madras High Court, Madurai Bench,
18. According to respondent Nos.1 to 3, the petitioner was found to be not qualified to be awarded the work of digital preservation of national heritage i.e. the estampages of epigraphs, cannot be something that should be given to unqualified persons, and is a fit case for exercise of grant of work on nomination basis. The qualifications of 4th respondent were exempted and as a matter of fact, their work was seen. The technological capacity of the 4th respondent was found too far superior to anything that the two tenders had thrown up, and the pilot project by 4th respondent, clearly demonstrated that the estampages would not be endangered in any manner by the processes adopted by 4th respondent. The sole motive of placing work order on 4th respondent was the proper preservation of estampages which are national heritage. 11
19. As discussed supra, as per the aforesaid circular No.04/04/21, dated 06.04.2021, respondent Nos.1 to 3 have to follow the guidelines issued by the Central Vigilance Commission. As per Rule 194(iv) of GF Rules, 2017, the respondent Nos.1 to 3 have to award work on single source selection under special circumstances by giving reasons for full justification for that and the same has to be recorded in full and obtaining approval approval of competent authority before resorting to such single source selection, is must.
20. As discussed supra, the respondent Nos.1 to 3, though issued two tenders viz: tender notification dated 31.05.2021 and 26.10.2021, they have cancelled both the tenders.
21. In the first tender, minimum average annual turnover for the last three financial years i.e. pre-qualification criteria to be fulfilled by the interested bidders was shown as Rs.1.00 Crore with estimated value of work Rs.3.75 Crores. In the second tender estimates for revised and the value of work was shown as Rs.1.5 Crores with pre-qualification criteria at Rs.4.5 Lakhs.
22. A perusal of work order dated 05.07.2022 would reveal that the same has been awarded at a cost of Rs.5.6 Crores, whereas, the estimated cost was Rs.3.75 Crores in first tender which was further 12 revised to Rs.1.5 Crores in second tender. Thus, there was cost escalation of 200 - 250%.
23. 4th respondent is a strike off company. Its annual turnover for last four financial years was nil. The said company is not eligible to award the said work. Thus, there is lack of transparency and fairness in awarding work in favour of 4th respondent on nomination basis. There are no special and justifiable circumstances in awarding the work in favour of 4th respondent. Therefore, awarding of the subject contract in favour of 4th respondent vide work order dated 05.07.2022 on nomination basis is arbitrary, illegal, unfair, non- transparent and in violation of guidelines issued by the Central Vigilance Commission, vide Circular No.04/04/2021, dated 06.04.2021.
24. It is trite to note that second tender was issued on 26.10.2021 and last date for submission of tenders was 08.11.2021. On the request of the respondent Nos.1 to 3, the petitioner has also traveled to Mysore to give demonstration which is a pre-requisite as per the tender notification dated 26.10.2021. The said tenders were opened on 16.11.2021. According to the respondent Nos.1 to 3, the TEC on evaluating the tenders submitted by the above bidders, found that none of them were qualified technologically. Therefore, they have cancelled the said tenders on 15.06.2022. Thus, 13 respondent Nos.1 to 3 have taken seven months to cancel the second tender i.e. 16.11.2022, the date on which second tender was opened and on 15.06.2022, the date on which the tender was cancelled. Thus, there is lack of transparency in awarding the said work to 4th respondent by the respondent Nos.1 to 3 vide impugned work order of contract dated 05.07.2022.
25. In this regard, it is trite to note that the Hon'ble Apex Court in Ramana Dayaram Shetty (supra), held that a nominee who has no real interest in the subject matter could not be given any relief.
26. It is trite to discuss the relevant principles dealing with the exercise of jurisdiction in tender matters under Article 226 of the Constitution of India.
27. The Hon'ble Apex Court In Tata Cellular v. Union of India3 held as follows:-
69. A tender is an offer. It is something which invites and is communicated to notify acceptance. Broadly stated, the following are the requisites of a valid tender :
1. It must be unconditional.
2. Must be made at the proper place.
3. Must conform to the terms of obligation.
4. Must be made at the proper time.
5. Must be made in the proper form.
6. The person by whom the tender is made must be able and willing to perform his obligations.
7. There must be reasonable opportunity for inspection.
8. Tender must be made to the proper person.3
(1994) 6 SCC 651.14
9. It must be of full amount.
77. The duty of the court is to confine itself to the question of legality. Its concern should be :
1. Whether a decision-making authority exceeded its powers?
2. Committed an error of 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 fulfillment of that 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, Wednesday unreasonableness.
(iii) Procedural impropriety.
The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact, in R. v. Secretary of State for the Home Department, ex Brind28, 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".
Similar view was taken by the Hon'ble Apex Court in Uflex Ltd. v. Govt. of T.N.4.
28. The Apex Court in National High Speed Rail Corporation Vs. Montecarlo Limited5 held that the High Court while exercising judicial review under Article 226 of the Constitution of India has to consider:-
4
2021 SCC OnLine SC 738.5 2022 6 SCC 401 15
i) whether the process adopted or decision made by the authority is mala fide or intended to favour someone; or
ii) whether the process adopted or decision made is 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 would have reached; and
iii) whether the public interest is affected, If answer is yes, the Court can interfere, if the answer is no, the Court cannot interfere.
29. As discussed supra, the respondents though issued two tenders, cancelled the same on the ground that none of the tenderers have qualified technologically. At the cost of repetition, as discussed surpa, second tender opened on 16.11.2021 was cancelled on 15.06.2022 i.e. after lapse of almost seven months. Therefore, there is no transparency and fairness at all in awarding work to 4th respondent. Therefore, awarding work to 4th respondent vide work order of contract dated 05.07.2022 is in violation of circular No. 04/04/21, dated 06.04.2021 and also Rule 194(iv) of the GF Rules, 2017. The same is also contrary to the principle laid down by the Hon'ble Apex Court in the aforesaid three judgments.
30. Viewed from any angle, the impugned work order of contract dated 05.07.2022 awarded by 1st respondent in favour of 4th respondent is illegal and in violation of the Circular No.04/04/21, dated 06.04.2021 issued by the Commissioner, Central Vigilance Commission, New Delhi and Rule 194(iv) of the GF Rules, 2017 16 and in violation of the principles laid down by the Hon'ble Apex Court in the aforesaid judgments and the same is liable to be dismissed.
31. In view of the above discussion, the writ petition is allowed. The impugned work order of contract dated 05.07.2022 awarded by 1st respondent in favour of 4th respondent is set aside. However, liberty is granted to the respondents to issue fresh tender and award work to the successful tenderers.
Consequently, miscellaneous Petitions, if any, pending, shall also stand closed.
_________________ K. LAKSHMAN, J Date: 12 .10.2022 Note:
Registry is directed to mark a copy of this order to respondent No.5 i.e. The Commissioner, Central Vigilance Commission, Satark Bhawan, G.P.O. Complex, Block-A, INA, New Delhi 110023, for perusal and taking necessary action in the matter.
b/o.Vvr