Bng Fashion Gears Private ... vs The State Of Andhra Pradesh ...
2021 Latest Caselaw 1431 AP

          HON'BLE SMT JUSTICE KONGARA VIJAYA LAKSHMI

                     Writ Petition No.5094 of 2021

ORDER:

This Writ Petition is filed to declare the action of the

respondents in conducting the tender process with respect to tender

notification dated 21.01.2021 and rejecting the petitioner's technical

bid 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 11.02.2021 issued by the Chartered Accountant; it is

not mentioned either in the original bid document or in the

corrigendums that the solvency certificate should be issued by the

Bank; along with the petitioner Four other bidders participated in the

tender and among them only Bata India Limited and the Fourth

KVL, J WP No.5094 of 2021

respondent submitted solvency certificates furnished by the Bank and

one Manjeet Plastic Industries initially submitted solvency certificate

issued by the chartered accountant, but later, after the bid closing

date, they furnished solvency certificate issued by the Bank; the

officers of the respondents informed the said Manjeet Plastic Industries

about the requirement of submission of solvency certificate issued by

the Bank in advance and hence they furnished the same and got

themselves qualified in technical evaluation and participated in the

reverse auction; on 23.02.2021 petitioner received a phone call from

one Bharat Kumar, Joint Director, asking him to submit solvency

certificate issued by the Bank and on 24.02.2021 the authorized

signatory of the petitioner addressed a mail to the second respondent

stating that as per the tender document petitioner has already

submitted all the documents and if the petitioner has to submit any

other document a request was made to send a mail, however no reply

was received to the said mail and that on 25.02.2021 petitioner

submitted solvency certificate issued by the bank through mail and

informed the same to the second respondent i.e., Mr. Vijay Kumar and

on 26.02.2021 morning petitioner tried to contact the second

respondent, but there was no response; it was also informed to the

Project Director through Whatsapp that the petitioner sent solvency

certificate issued by the Bank through mail which was acknowledged by

the said Vijay Kumar and in the noon the Project Director informed the

petitioner that the time has lapsed for submission of solvency

certificate; had the petitioner been informed about the requirement of

furnishing of the solvency certificate issued by the Bank, the petitioner

would have furnished the same at the earliest; the respondents

informed about the requirement of furnishing of solvency certificate by

KVL, J WP No.5094 of 2021

the bank to some other bidders in advance with an intention to

eliminate the petitioner and the Third respondent disqualified the

petitioner in the technical evaluation and the reverse tendering was

conducted on 26.02.2021 and the Fourth respondent was declared as

L1; the procedure adopted is mala fide and to favour someone.

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

inter alia, that as per Clause 6(b) of Section I of the tender document

the bidder has to keep track of any changes by viewing addendum/

corrigendum on time to time basis in the e-procurement platform and

in response to the notification, seven bidders participated and out of

seven bidders only two firms i.e., Bata India Limited and the Fourth

respondent herein have submitted all the required documents and the

petitioner and another firm by name Manjeet Plastic Industries were

asked on 17.02.2021 over phone to submit solvency certificates issued

by the Bank by 24.02.2021 and subsequently the said Manjeet Plastic

Industries submitted the solvency certificate dated 16.02.2021, issued

by the Bank on 24.02.2021 and when the matter was placed before the

procurement committee on 24.02.2021 and the committee took a

decision to disqualify those firms who have not furnished the required

documents as on 24.02.2021 and decided to qualify Manjeet Plastic

Industries and disqualified the petitioner herein; Mr. Bharat Kumar,

Joint Director, called the petitioner only to remind about the solvency

certificate; three firms i.e., Bata, Lehar-4th respondent herein and

Manjeet Plastic Industries have become technically qualified and

hence, their financial bids were opened and reverse tendering was

done.

KVL, J WP No.5094 of 2021

4. Reply-affidavit is filed by the petitioner stating inter-alia

that, other two firms also submitted solvency certificate issued by the

Chartered Accountant and not bank, which shows that there is

ambiguity in the said condition; even in the corrigendum-I issued on

08.02.2021, it is not stated that the solvency certificate has to be

issued by the bank and no time limit is prescribed for submission of the

solvency certificate; as per clause 3.2 of Section II the tender

document any such addenda/corrigenda shall be posted on the e-

procurement website only and no other communication shall be made

to any firm in this regard; petitioner was not informed on 17.02.2021

and that it was informed only on 23.02.2021 through telephone call

with regard to furnishing of solvency certificate issued by the bank,

without prescribing any time limit for submission of the same;

petitioner submitted solvency certificate issued by the bank on

25.02.2021 and that the respondents did not dispute the submission of

the solvency certificate issued by the bank on 25.02.2021 in the

counter-affidavit.

5. Additional counter-affidavit is filed by the 2nd respondent

after reply affidavit has been filed, stating inter-alia that the tender

evaluation committee has decided in its meeting held on 16.02.2021 to

extend the time limit by one week to submit the solvency certificate

issued by the bank and informed all four bidders on the very same day

i.e., 16.2.2021, which was confirmed by the petitioner at page 66 of

the writ affidavit (whatsapp message) and that the petitioner despite

receiving the information did not submit the said document by cut-off

date i.e., 23.02.2021.

KVL, J WP No.5094 of 2021

6. In the light of the above pleadings, whether tender process

adopted by the respondents 1 to 3 is fair and transparent or not has to

be analyzed.

7. Heard Sri C.Subodh, 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.

8. 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'. Complying with the

said condition in corrigendum, petitioner submitted solvency

certificate, issued by the Chartered Accountant, as the original bid

document and the Corrigendum-I does not say that the solvency

certificate should be issued by the bank. As seen from the counter-

affidavit, in addition to the petitioner, two other firms also submitted

solvency certificates issued by the Chartered Accountant which shows

that the tender document is vague. According to the petitioner, he

received a phone call on 23.02.2021 from one Bharath Kumar, Joint

Director, asking him to submit solvency certificate issued by the bank

and he submitted the same on 25.02.2021 and informed the same

through e-mail and also informed to one Mr. Vijay Kumar on 26.02.2021

and also informed the Project Director through whatsapp message that

the petitioner sent solvency certificate through email. In the counter-

affidavit, which was filed on 01.03.2021, the 2nd respondent did not

KVL, J WP No.5094 of 2021

deny making of a phone call to the petitioner on 23.02.2021, but

according to him, it was only a reminder call and that the petitioner

was asked to submit solvency certificate issued by the bank on

17.02.2021 itself. In the additional counter-affidavit, at paragraph 7 of

the affidavit, it is stated that all the four bidders were informed to

submit solvency certificate issued by the bank on 16.02.2021. In the

additional counter-affidavit, at paragraph 8, it is also stated that the

same was confirmed by the petitioner at page 66 of the writ petition.

Page 66 of the writ papers show a whatsapp message sent by the

petitioner's employee by name Kavitha. It shows that the said

employee sent the said message informing that one day before they

have submitted solvency certificate and the same was confirmed by Mr.

Vijay Kumar and they also pasted the copy of the solvency certificate in

the said whatsapp message. It also shows that a reply has been sent by

the 2nd respondent stating that the time has lapsed for submission of

the solvency certificate. But no date is visible in the said whatsapp

message. There is no confirmation by the petitioner in the said

whatsapp message about the receipt of information with regard to

submission of solvency certificate on 16.02.2021 as is stated in the

additional counter-affidavit, in the whatsapp message.

9. Though Sri Ch. Dhanamjaya, learned counsel appearing for the

4th respondent submits that the petitioner was informed about the

solvency certificate by the bank much prior to 23.02.2021 and that a

reminder phone call was made on 23.02.2021, there is no proof

produced to that effect by the respondents.

10. As seen from the pleadings, admittedly, petitioner submitted

solvency certificate issued by the bank on 25.02.2021 and the financial

KVL, J WP No.5094 of 2021

bid was opened on 26.02.2021 and the reverse tender was also

conducted on the same day. Assuming for a moment that the petitioner

was only reminded on 23.02.2021 to give solvency certificate issued by

the bank and that he was originally informed on 17.02.2021 according

to the first counter-affidavit and according to the additional counter-

affidavit on 16.02.2021, petitioner has in fact submitted the same on

25.02.2021 that is one day before the financial bids were opened, but

the same was not taken into consideration.

11. In the counter-affidavit, it is stated that petitioner and

Manjeet Plastic Industries were informed through phone on 17.02.2021

about furnishing of the solvency certificate issued by the bank. It is also

admitted by the 2nd respondent that the said Manjeet Plastic Industries

has submitted the solvency certificate of the bank which is dated

16.02.2021 on 23.02.2021. The allegation of the petitioner is that as

the said Manjeet Plastic Industries was informed in advance with regard

to submission of the solvency certificate issued by the bank and hence

the said Manjeet Plastic Industries could obtain the same on

16.02.2021. As the said Manjeet Plastic Industries is not a party to the

present writ petition, this court is not going into further details of the

said aspect.

12. According to the first counter-affidavit filed by the 2nd

respondent, the e-procurement committee has decided in its meeting

held on 24.02.2021 to disqualify the firms who have not submitted the

said certificates, even though admittedly petitioner was asked to

furnish the same on 23.02.2021. A reasonable time of two days is also

not given to the petitioner herein. Admittedly he submitted the said

certificate before opening of financial bid. It is also relevant to note

KVL, J WP No.5094 of 2021

that according to the corrigendum-3, financial bids have to be opened

on 16.02.2021, but in fact, they were opened on 26.02.2021.

13. The discrepancies in the two counter-affidavits filed by the

respondents are, (a) in the first counter-affidavit, it is stated that in

the Procurement Committee meeting it was decided to disqualify those

firms who have not furnished the required documents as on 24.02.2021.

In the additional counter-affidavit, it is stated that the petitioner did

not submit the certificate by the cut-off date i.e., 23.02.2021. Both the

counter-affidavits gave different cut-off dates. (b) In the first counter-

affidavit, it is stated that the petitioner was informed about the

solvency certificate issued by the Bank on 17.02.2021 and according to

the additional counter-affidavit, petitioner was informed on

16.02.2021.

14. Clause 3 of Section II deals with amendment of bid

document. Clause 3 of Section II reads as follows:

"3.1 At any time prior to the deadline for submission of bids, the tender calling authority may, for any reasons, whether at its own initiative or in response to a clarification requested by a prospective bidder, modify the bidding documents by amendment.

3.2 Any such addenda/corrigenda shall be posted on the e-procurement website only and no other communication shall be made to any firm in this regard.

3.3 In order to allow prospective bidders reasonable time in which to take the amendment into account in preparing their bids, the purchaser, at its discretion, may extend the deadline for the submission of bids."

15. As seen from the said clause, any addenda/corrigenda shall

be posted on the e-procurement website only and no other

communication shall be made to any firm in this regard. But

admittedly, in this case, communication was made through phone calls

to produce the solvency certificate issued by the bank.

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16. Learned Advocate General relies upon the Clause 5.1 (o.p.q)

of Section-II of the tender document, which reads as under:

"5.1 (o) Balance sheet, P&L account for the financial years 2017-18, 2018-19 & 2019-20 duly certified by the CA shall be uploaded.

(p) CA certified audit reports for last 3 years shall be uploaded and

(q) Positive net worth certified by CA for the last 2 years shall be uploaded."

and submits that the petitioner ought to have submitted solvency

certificate of the bank as per the above clauses.

17. Clause 5.1 'o' and 'p' did not deal with the solvency

certificate at all. As seen from 5.1 (q), it only says that positive net

worth certified by the Chartered Accountant for the last 2 years has to

be uploaded. Even the said clauses deal with the Chartered Accountant

certificates and not the Bank certificates. The said certificate is

different from what is sought now according to the corrigendum.

Admittedly, petitioner has submitted the solvency certificate issued by

the Chartered Accountant for Rs.44.00 crores vide letter dated

11.02.2021.

18. Learned Advocate General also relied upon G.O.Ms.No.94

Irrigation and CAD (PW-COD) Department dated 01.07.2003, which is

issued by the Irrigation and CAD Department with regard to tender

procedures and registration of contractors. Annexure-II of the said G.O.

deals with the rules for registration of contractors. Relying upon the

said Annexure-II learned Advocate General submits that the solvency

certificate has to be produced only from the scheduled bank.

19. Clause (1)(f) of Annexure-II reads as follows:

KVL, J WP No.5094 of 2021

"(f) The following documents shall be submitted along with the application seeking registration as a contractor in a particular class or category.

(i) Application form (in the proforma prescribed in the Annexure-VI with Rs.2/- court fee stamp, affixed thereon.

(ii) Proof of payment of registration fees;

(iii) Solvency certificate:

(a) The solvency certificate for the amounts shown under item (iv) of the Annexure-III shall be obtained from the officer of the Revenue Department of the rank not below the Tahsildar in the proforma in Annexure (V)(a);

(b) The certificates may also be obtained from a scheduled bank in the proforma given in the Annexure (V)(b)."

20. As seen from clause 1(f), the said documents are required for

seeking registration of contractor and not for submission of the bid in a

tender document. Secondly, Clause 1(f)(iii)(b) says that the solvency

certificate may also be obtained from the scheduled bank. Burt it does

not say that compulsorily it has to be obtained from the bank. The

word 'may' is mentioned therein and hence, the above G.O. does not

come to the aid of the respondents.

21. Learned Advocate General also relies upon the copy of the

solvency certificate issued by the bank in favour of the petitioner on

03.04.2020 for submission along with a bid and states that the

petitioner is aware of the said condition even in 2020. But the tender

document for which such a solvency certificate is submitted by the

petitioner is not available on record and hence, it is not known as to

what was the tender condition at that particular period of time, which

mandated the petitioner to produce such a certificate.

KVL, J WP No.5094 of 2021

22. Learned Advocate General submits that it is not the case of

the petitioner that tender conditions are tailor made, or to qualify

some one or disqualify some one, or they are impossible of

performance and that the condition with regard to solvency certificate

is also not challenged. The challenge of the petitioner is not with

regard to tender condition and that it is impossible of performance but

his contention is that proper procedure is not followed before finalizing

the tender and that the tender is vague.

23. The judgment of the Division Bench of this Court relied upon

by the learned Advocate General in 'Universal Cables Ltd. vs. State of

Andhra Pradesh1' will not come to the aid of the respondents.

24. As seen from the facts of the present case, there is violation

of doctrine of a level playing field. The Division Bench of this Court in

the above mentioned judgment at paras 15 and 16 held as follows:

"Although a citizen has a fundamental right, under Article 19(1)(g), to carry on a trade or business, he does not have the fundamental right to insist that the Government, or any other individual, should carry on business with him. The Government, or the individual concerned, has the right to enter into a contract with a particular person or to determine person or persons with whom he or it will deal. Krishnan Kakkanth v. Government of Kerala, (1997) 9 SCC 495). If the State, or its instrumentalities, act reasonably, fairly and in public interest, interference by Courts is restricted, since no person can claim a fundamental right to carry on business with the Government. (Michigan Rubber (India) Ltd.'s case (supra)). All that such a person can claim is that, in competing for the contract, he should not be unfairly treated and discriminated to the detriment of public interest. (Association of Registration Plate's case (supra); Erusian Equipment & Chemicals Ltd. v. State of W.B.,: (1975) 1 SCC 70). In determining the infringement of the right, guaranteed under Article 19(1) of the

2018(5) ALD 130

KVL, J WP No.5094 of 2021

Constitution of India, the nature of the right alleged to have been infringed, the underlying purpose of the restriction imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, enter into the judicial verdict. (Laxmi Khandsari v. State of U.P.,: AIR 1981 SC 873; Treveli v. State of Gujarat, AIR 1968 SC 1323; Herekchand Ratanchand Banthia v. Union of India, : AIR 1970 SC 1453; Krishnan Kakkanth's case (supra)).

A "level playing field" is a situation in which everyone has a fair and equal chance of succeeding. This, in commercial parlance, is a concept of fairness and requires all eligible players to be permitted to play by the same set of rules. A playing field is at a level if no external interference affects the ability of players to compete fairly. In the matter of awarding Government contracts, the doctrine of 'level playing field' plays an important role. (Shree Ostwal Builders v. State of Maharashtra, : 2008 (4) Mh. LJ 404). This doctrine, embodied in Article 19(1)(g) of the Constitution, provides space within which equally-placed competitors are allowed to bid so as to subserve larger public interest. The terms and conditions, of the invitation to tender, must indicate, with legal certainty, norms and benchmarks. If there is vagueness or subjectivity in the said norms it may result in unequal and discriminatory treatment, and may violate the doctrine of "level playing field". (Reliance Energy Ltd. v. Maharashtra State Road Development Corporation Ltd., (2007) 8 SCC 1). In the matter of inviting tenders, and in awarding Government contracts, public interest is the paramount consideration. (Shree Ostwal Builder's case (supra))."

25. In the said case, the Division bench of this Court held that

although a citizen has no fundamental right to contract, in competing

for the contract, he should not be unfairly treated and discriminated to

the detriment of public interest. All the participating bidders are

entitled to a fair and equal treatment. It was also held that the High

Court should, normally, exercise judicial restraint unless illegality or

arbitrariness, on the part of the employer, is apparent on the face of

KVL, J WP No.5094 of 2021

the record and that the courts can examine the decision making process

and interfere if it is found vitiated by unreasonableness and

arbitrariness. The court does not sit as a court of appeal, but merely

reviews the manner in which the decision is made.

26. But as seen from the facts of this case, this is not a simple

procedural violation, but because of the procedure adopted, prejudice

is caused to the petitioner herein. When the petitioner has admittedly

submitted the solvency certificate on 25.02.2021 itself, the

respondents ought to have considered the case of the petitioner also

instead of disqualifying him on 26.02.2021 as there is vagueness in the

conditions of tender which resulted in unequal and discriminatory

treatment and violated the doctrine of 'level playing field'.

Admittedly, the tender notification does not say that the solvency

certificate has to be produced from the Bank. No proof is produced by

the respondents to show that the petitioner was in fact informed on

17.02.2021 about the submission of solvency certificate issued by the

Bank. But it is admitted by the respondents that a phone call was made

asking or reminding about the solvency certificate on 23.02.2021 and

the same was produced on 25.02.2021. In these circumstances, it

cannot be presumed that the petitioner was informed about the

submission of solvency certificate on 17th or 16th February, 2021 and in

spite of the same, he could not produce the same till 25.02.2021.

27. In the facts and circumstances stated above, the writ

petition is allowed setting aside the impugned tender notification dated

21.01.2021 and the respondents are directed to issue fresh tender

notification without any vagueness, as expeditiously as possible, as the

issue pertains to supply of shoes and socks to the students studying in

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various schools. No order as to costs. Miscellaneous petitions, if any, in

this writ petition, shall stand closed.

_________________________ KONGARA VIJAYA LAKSHMI, J

Date: 08.03.2021 Note: Furnish CC forthwith.

(BO) NSR/BSS

KVL, J WP No.5094 of 2021

HON'BLE SMT. JUSTICE KONGARA VIJAYA LAKSHMI

Writ Petition No.5094 of 2021 URGENT

Date: 08.03.2021 NSR/BSSs