Andhra Pradesh High Court - Amravati

Vinishma Technologies Pvt. Ltd. vs State Of Andhra Pradesh, on 8 March, 2021

Bench: Kongara Vijaya Lakshmi

            HON'BLE SMT JUSTICE KONGARA VIJAYA LAKSHMI

                    Writ Petition No.5366 of 2021

ORDER:

This Writ Petition is filed 'to declare the action of the

respondents in disqualifying the petitioner from the tender process with

respect to tender notification dated 21.01.2021 by rejecting the

petitioner's technical bid and not opening the price bid of the

petitioner and in further not permitting the petitioner to participate in

the reverse auction process held on 26.02.2021, as arbitrary and

illegal'.

2. Case of the petitioner is that, the second respondent issued e-

procurement tender notification on 21.01.2021 for supply of shoes and

socks and as per the tender notification, last date for uploading of

corrigendum is 03.02.2021, bid closing date is 06.02.2021, technical

evaluation is on 08.02.2021, opening of financial bid is on 09.02.2021

and reverse auction is on 09.02.2021. As per corrigendum-3, last date

for uploading of corrigendum is 08.02.2021, bid closing date is

10.02.2021, technical evaluation is on 11.02.2021 and 13.02.2021,

opening of financial bids is on 16.02.2021 and reverse auction is on

16.02.2021. Section II of the tender document deals with instructions to

the bidders and as per Clause 1.1 (h) of Section II, the firm should

furnish solvency certificate; the second respondent issued corrigendum-

I on 08.02.2021 amending clause (h) of Clause 1.1 as "the firm should

furnish latest solvency certificate for minimum value of 50% of ECV"; as

per the said amended clause, petitioner uploaded the solvency

certificate dated 10.02.2021 issued by the Auditors and the bid closing

date as per the corrigendum I is 10.02.2021; the respondent-authorities

had not opened the technical bids on 10.02.2021 and there was no

KVL, J WP No.5366 of 2021 further communication from the respondents; it is not mentioned

either in the original bid document or in the corrigendum-I that the

solvency certificate should be issued by the Bank; petitioner submitted

solvency certificate issued by the Auditors on 10.02.2021; as the tender

process was not completed yet, petitioner procured a solvency

certificate from its bankers ICICI Bank for a sum of Rs.39.00 crores and

furnished the same on 18.02.2021; pursuant to further submission of

information to its bankers, the banker issued a solvency certificate for

a sum of Rs.45.00 crores on 25.02.2021 and the same was also furnished

to the respondents on the same day; pursuant to the evaluation of

technical bids, the financial bids were opened on 26.02.2021 and

reverse bidding process was completed within a span of 2 hours from

opening the financial bids and the tender was awarded to the 4th

respondent; on 26.02.2021, petitioner was shocked to receive an

update on the tender portal that the petitioner's bid has been

rejected; one Manjeet Plastic Industries also submitted solvency

certificate around the same time, but it was technically qualified.

Hence, the writ petition.

3. Counter affidavit is filed by the second respondent stating,

inter alia, that Section II point 1.1(h) clearly states that 'the firm

should furnish latest solvency certificate'; subsequently in the

procurement committee meeting which was held on 05.02.2021, it was

decided to replace the said clause as 'the firm should furnish latest

solvency certificate for a minimum value of 50% of the ECV'; the

statement made by the petitioner that 'due to paucity of time the

petitioner procured a solvency certificate from its auditors and

uploaded the same along with the bid documents on 10.02.2021' is

false; the fact remains that the petitioner neither uploaded the

KVL, J WP No.5366 of 2021 solvency certificate in the e-procurement portal on 10.02.2021 nor

furnished any hard copy to the tender inviting authority by the date of

bid closing i.e., 11.02.2021; even though, the petitioner has furnished

the solvency certificate on 18.02.2021 for Rs.39.00 crores and on

25.02.2021 for Rs.45.00 crores through mail, he has not furnished the

other mandatory documents i.e., (1) the annual turnover duly certified

by a Chartered Accountant for the financial years 2017-18, 2018-19 and

2019-20, (2) positive net worth certified by a Chartered Accountant and

(3) solvency certificate for Rs.43.89 crores, in order to get qualified in

the technical bid.

4. Heard Sri Kailash Nath, P.S.S., learned counsel for the

petitioner, learned Advocate General, appearing on behalf of

respondents 1 to 3 and Sri Ch. Dhanamjaya, learned counsel appearing

for the 4th respondent.

5. In the light of the above pleadings, whether the respondents

were justified in rejecting the tender or not have to be looked into.

6. Learned counsel for the petitioner relied upon the judgment

of this Court in 'Aditya Housing and Infrastructure Development

Corporation Pvt. Ltd., vs. State of Andhra Pradesh' while referring to the

principles of judicial review in tender process, wherein it was held as

under:

"The Hon'ble Supreme Court in Tata Cellular vs. Union of India held that principle of judicial review cannot be denied even in contractual matters or matters in which the Government exercises its contractual powers but it should be exercised in larger public interest because judicial review is intended to prevent arbitrariness. It classified the grounds of judicial review to be 'illegality', 'irrationality' and 'procedural impropriety', the well known Wednesbury rules. It observed:

KVL, J WP No.5366 of 2021 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,          Wednesbury
                       unreasonableness;
      (iii)            Procedural impropriety."

He also submits that not adhering to the timelines under the

corrigendum and in further opening the technical bids on 26.02.2021

without any written communication is violative of the established

procedure and relied upon the judgment of the Apex Court In 'Union of

India vs. International Trading Company1', wherein it was held as

follows:

"Where a particular mode is prescribed for doing an act and there is not impediment in adopting the procedure, the deviation to act in different manner which does not disclose any discernible principle which is reasonable itself shall be labelled as arbitrary. Every State action must be informed by reason and it follows that an act uninformed by reason is per se arbitrary".

7. Section II of the tender document deals with instructions to

bidders. Clause 1 deals with minimum eligibility criteria for

participating in the bid and as per clause 1.1(h), the firm should furnish

solvency certificate. Corrigendum was issued on 08.02.2021 and clause

1.1(h) was amended as 'the firm should furnish latest solvency

certificate for a minimum value of 50% of the ECV', and the

Corrigendum-I does not say that the solvency certificate should be

issued by the bank.

(2003)5SCC437

KVL, J WP No.5366 of 2021

8. Learned Advocate General submits that petitioner's bid was

disqualified as the petitioner did not submit the relevant documents. In

view of the same, the judgments relied upon by the petitioner does not

come to its aid.

9. As seen from the counter-affidavit, apart from the solvency

certificate, petitioner also did not furnish annual turnover certificate

duly certified by a Chartered Accountant for the financial years 2017-

18, 2018-19 and 2019-30 and the positive net worth certified by a

Chartered Accountant. As the petitioner has not submitted the said

required documents, he cannot plead that his bid was unjustly