Bombay High Court
Nirlac Chemicals And Anr vs Haffkine Bio-Pharmaceutical ... on 7 October, 2016
Bench: S.C. Dharmadhikari
WP 1911 OF 2016.docx
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 1911 OF 2016
1. M/s Nirlac Chemicals, ]
14th Floor, Nirmal Building, ]
241/242, Nariman Point, ]
Mumbai 400 021 ]
]
2. Universal Exim FZE, UAE ]
an enterprise organized and existing ]
under the laws of United Arab ]
Emirates, having address at P.O. Box 8600,]
Saif Zone, Sharjah, UAE ]... Petitioners
v/s
1. Haffkine Bio-Pharmaceutical Corporation ]
Ltd., a Government of Maharashtra ]
Undertaking, having its office at Acharya ]
Donde Marg, Parel, Mumbai 400 012 ]
]
2. State of Maharashtra, through the ]
Ministry of Food, Civil Supplies, Consumer ]
Protection, Food and Drug Administration, ]
Mantralaya, Mumbai 400 021 ]
]
3. BioNet-Asia Co.Ltd., a Company organized ]
and existing under The Laws of Thailand, ]
having office 19 Soi Udomsuk 37, ]
Sukhumvit 103 Road, Bankjak, Prakanong,]
Bangkok 10260, Thailand ]... Respondents
Mr Janak Dwarkadas, Sr. Counsel with Mr Chirag Mody, Mr Harshil
Parekh and Mr Manish Parekh i/b M/s Purnanand and Co. for the
Petitioners.
Ms Usha Kiran Srivastav i/b M/s Counsulta Juris for Respondent
No.1.
Mr Mohit Jadhav, AGP for Respondent No.2.
Mr Sanjay Jain with Mr Vivek Phadke for Respondent No.3.
vrd 1/43
::: Uploaded on - 07/10/2016 ::: Downloaded on - 08/10/2016 01:00:13 :::
WP 1911 OF 2016.docx
CORAM : S.C. DHARMADHIKARI &
B.P. COLABAWALLA, JJ.
Reserved On : September 1, 2016.
Pronounced On : October 7, 2016.
JUDGMENT [ PER B. P. COLABAWALLA J. ] :-
1. Rule. Respondents waive service. By consent of parties,
rule made returnable forthwith and heard finally.
2. This Writ Petition has been filed under Article 226 of the
Constitution of India seeking a writ of certiorari to quash and set
aside the decision of Respondent No.1 in rejecting the "techno-
commercial" bid of the Petitioners in relation to the tender (dated
20th January, 2016) floated for the supply of "Bivalent Oral Polio
Vaccine Bulk" ["bOPV"] manufactured by a Company called PT. Bio-
Farma, Indonesia. The rejection of the Petitioners' techno-
commercial bid was informed to them by Respondent No.1 vide its
letter dated 22nd June, 2016 [the "impugned letter"] (Exh. "I" to
the Petition). Consequently, the Petitioners have also prayed that
Respondent No.1 be directed to revoke / cancel the tender / contract
awarded to Respondent No.3 (BioNet-Asia Co. Ltd.) for the supply of
the said bOPV.
vrd 2/43
WP 1911 OF 2016.docx
3. In a nutshell, the tender process has been challenged
before us on the ground that the same has been carried out in an
arbitrary and discriminatory manner and only with a view to favour
Respondent No.3. According to the Petitioners, the entire tender
process is in flagrant violation of Central Vigilance Commission
Guidelines ("CVC Guidelines") relating to tenders floated by the
Government and its Public Sector Undertakings, and hence, the
present challenge.
4. At the outset, we must mention that this Writ Petition
was initially heard on 25th August, 2016. On the said date, we had
called upon Respondent No.1 to produce the original records and
files of the aforesaid tender for our perusal. Accordingly, the
original records and files were produced before us on 30th August,
2016 and we recorded the statement of Ms Srivastav, learned
counsel appearing on behalf of Respondent No.1, that there is
nothing on the files or in the records of the 1st Respondent, other
than the record produced before us. She stated that this Court can
rest its conclusions on the tender papers, originals of which were
produced for our perusal. This Court, by its order dated 30th August,
2016 had also ordered that considering the fact that this Court had
called for the original records and which were now produced, none
vrd 3/43
WP 1911 OF 2016.docx
of the parties would be allowed to file any affidavits (other than the
ones already on record). However, in order to ensure fairness and
transparency in Court proceedings, we had allowed the parties to
inspect the original records. It is only after this process was
completed that we have heard this Writ Petition finally.
5. Before we deal with the rival contentions, it would be
necessary to set out the brief facts in the present case. They are as
follows :-
(a) Petitioner No.1 is a registered partnership firm and
carries on business in distribution, import and export of
pharmaceutical and biotech products. Petitioner No.2 is
an enterprise organized and existing under the laws of
the United Arab Emirates and is engaged inter alia in the
business of distributing in India and other countries,
vaccines and other biological products. Petitioner No.1
is the local network partner of Petitioner No.2 in India
and helps Petitioner No.2 to sell vaccines and other
biological products in India.
(b) Respondent No.1 is a Government of Maharashtra
Undertaking engaged in the business of manufacturing
vrd 4/43
WP 1911 OF 2016.docx
vaccines and other pharmaceuticals and/or biological
products. Respondent No.1 has floated the tender dated
20th January, 2016 inviting offers from distributors of a
company called PT. Bio-Farma, Indonesia for supply of
bOPV. It is not in dispute before us that Respondent No.1
is a State within the meaning of Article 12 of the
Constitution of India. Respondent No.2 is the State of
Maharashtra, through the Ministry of Food, Civil
Supplies, ig Consumer Protection, Food and Drug
Administration, and exercises control over Respondent
No.1. Respondent No.3 is a competitor of the Petitioners
and also a distributor of PT. Bio-Farma. It is the case of
the Petitioners that Respondent No.3 has been
wrongfully and illegally awarded the tender/contract
forming the subject matter of the present Writ Petition.
(c) It's the Petitoners' case that pursuant to a Sale Purchase
Agreement entered into by Petitioner No.2 with PT. Bio-
Farma, Petitioner No.2 was appointed as an exclusive
distributor by PT. Bio-Farma for distribution of its
vaccines for human consumption in India and other
territories, as more particularly set out therein. This
Agreement was initially valid upto 31st March, 2014 and
vrd 5/43
WP 1911 OF 2016.docx
was extended from time to time. As on today, this
Agreement, according to the Petitioners, is valid upto
31st March, 2019.
(d) Pursuant to the aforesaid Agreement, it is the case of the
Petitioners that they have been supplying bOPV
(procured from the said PT. Bio-Farma) to Respondent
No.1 since the year 2000 without any complaint. The
details of the supply made by the Petitioners to
Respondent No.1 from the year 2012 to 2015 have been
set out by the Petitioners in paragraph 4(d) of the
Petition.
(e) It is thereafter stated that Petitioner No.2 had entered
into a Sale Purchase Agreement dated 2nd January, 2014
with Respondent No.1 for exclusive supply of bOPV until
31st March, 2016. According to the Petitioners, under
this Agreement, Respondent No.1 was to exclusively
purchase bOPV from Petitioner No.2 during the
subsistence of this Agreement. Thereafter, though it is
averred that Respondent No.1 had breached the
aforesaid Agreement by purchasing about 60 million
doses of the said bOPV from Respondent No.3, Mr
vrd 6/43
WP 1911 OF 2016.docx
Dwarkadas, learned Sr. Counsel appearing on behalf of
the Petitioners, has not addressed us on this issue at all.
He very fairly stated that he is restricting his arguments
to only challenge the tender process and has accordingly
addressed us only on this issue.
(f) Be that as it may, it is the case of the Petitioners that
Respondent No.1 had initially uploaded on their website
an undated tender notice some time in January 2016, to
be opened on 29th January 2016. The Petitioners
accidentally learnt about this tender while browsing the
website of Respondent No.1. However, subsequently
Respondent No.1 withdrew the said tender notice from
its website. Thereafter, on 20th January, 2016, the 1st
Respondent once again issued another tender notice
calling for bids from distributors for supply of the said
bOPV manufactured by PT. Bio-Farma only. Despite the
fact that the Petitioners were the past suppliers of the
said bOPV to Respondent No.1, the 1st Respondent did not
inform the Petitioners about floating of the said tender
and the Petitioners learnt of the same only while
browsing the website of Respondent No.1. This tender
provided for issuing two separate bids viz. the techno-
vrd 7/43
WP 1911 OF 2016.docx
commercial bid and the price bid respectively.
(g) Accordingly, the Petitioners submitted their bid vide
their letter dated 25th January, 2016. A copy of the bid
submitted by the Petitioners alongwith the documents
are annexed at Exh. "D" to the Petition. As per the said
tender notice, the bids received by Respondent No.1 were
scheduled not to be opened before 10th February, 2016.
Respondent ig No.1 accordingly decided that the
bids/tenders would be opened on 12th February, 2016. It
is the case of the Petitioners that no prior intimation was
given to them of this date and the Petitioners, on 12th
February, 2016 itself, at around 10.37 a.m., received an
e-mail from Respondent No.1 informing the Petitioners
that the bids/tenders would be opened on 12th February,
2016 at 12.00 noon. With great difficulties, the
Petitioners managed to reach the office of Respondent
No.1 and attended the tender opening meeting. At that
time, the Petitioners were informed that the tender
opening would take place at around 1.00 p.m.
(h) During the tender opening (at around 1.00 p.m.), the
Petitioners were informed by Respondent No.1 that they
vrd 8/43
WP 1911 OF 2016.docx
had received two bids viz. one from the Petitioners and
the other from Respondent No.3. However, none were
present on behalf of Respondent No.3. This fact has been
duly admitted during the course of arguments by Mr
Jain, learned counsel appearing on behalf of Respondent
No.3, stating that on the date when the tenders were
opened, none of the representatives of Respondent No.3
were present in India.
(i)
Be that as it may, at about 1.00 p.m. (on 12th February,
2016) the Petitioners' techno-commercial bid was
opened and the Petitioners were informed that they
would have to return after the lunch break. What is
important to note and which fact is now admitted before
us, is that the bid submitted by Respondent No.3 was not
opened by Respondent No.1 in the presence of the
Petitioners and the Petitioners were asked to return after
the lunch break without opening the tender of
Respondent No.3.
(j) It is the case of the Petitioners that after the lunch break,
the representatives of the Petitioners' were made to wait
till 5.00 p.m. and thereafter at around 5.15 p.m. they met
vrd 9/43
WP 1911 OF 2016.docx
Mr Shankarwar, who was in charge of opening the
tenders. To their shock and surprise, the Petitioners
were informed that the bid of Respondent No.3 was
already opened. At this juncture, the Petitioners called
upon Respondent No.1 to show the bid submitted by
Respondent No.3 and the documents relating thereto.
However, the representatives of the Petitioners were
informed that they could not be shown the bid or the
documents submitted by Respondent No.3 as they were
confidential in nature. Thereafter, the Petitioners'
representatives were made to wait till 5.45 p.m. when a
comparative analysis sheet of the techno-commercial
bids was shown to the representatives of the Petitioners.
At this juncture, the Petitioners found that Respondent
No.1 had put negative marks against their techno-
commercial bid under the following headings :-
"1. List of current buyers in India with quantities supplied
for 3 consecutive years.
2. Company turn over should be in excess of Rs.100
crores.
3. Detailed background of Bidders.
4. Audited Annual Report of last 3 years.
5. List of WHO pre-qualified human vaccines supplied in
last 3 years.
6. Supply of minimum 70 million doses.
7. Experience for more than 15 years in the field of
human vaccines."
(k) According to the Petitioners, they had provided all the
vrd 10/43
WP 1911 OF 2016.docx
details in its tender document as sought for by
Respondent No.1. These details have been set out in
paragraph 17 of the Petition.
(l) Accordingly, the Petitioners, immediately by their letter
dated 12th February, 2016 addressed to the Managing
Director of Respondent No.1, inter alia pointed out the
various irregularities committed in opening its techno-
commercial bid and also called upon Respondent No.1 not
to reject its bid on totally false, flimsy and frivolous
grounds. The Petitioners further sought inspection of the
techno-commercial bid of Respondent No.3 as also the
letter of authorization purportedly issued to Respondent
No.3 by the said PT. Bio-Farma.
(m) Thereafter, the Petitioners, by their letters dated 16th
February, 2016 and 24th February, 2016 (Exhs. "G" and
"H" to the Petition) also made complaints to Respondent
No.2 herein (being the concerned Ministry of the
Government of Maharashtra) placing the true and
correct facts on record and pointed out the various
irregularities committed in opening the techno-
commercial bid of the Petitioners. It was also pointed out
vrd 11/43
WP 1911 OF 2016.docx
to the said Ministry that favoritism was being shown to
Respondent No.3 as was evident from the conduct of
Respondent No.1. Accordingly, Respondent No.2 was
called upon to look into and investigate the tender floated
by Respondent No.1.
(n) Pursuant to these letters, a meeting took place when
Respondent No.2 asked Respondent No.1 to look into the
grievances of the Petitioners, and after considering the
same, if Respondent No.1 felt that the bid of the
Petitioners was disqualified, then the same was to be
communicated to the Petitioners alongwith the reasons
for disqualification, so as to enable the Petitioners to take
appropriate steps, if they so desired.
(o) After this meeting, no communication was received by
the Petitioners for almost three months. However, on
30th June, 2016, the Petitioners received an e-mail from
Respondent No.1 enclosing a letter dated 22nd June,
2016 (the impugned letter), wherein the Petitioners
were informed that Respondent No.1 had constituted a
Committee for the purpose of assessing the technical
documents submitted by the Petitioners and Respondent
vrd 12/43
WP 1911 OF 2016.docx
No.3. This Committee had observed that the techno-
commercial bid submitted by the Petitioners was not in
compliance with the technical requirements of
Respondent No.1. However, without elaborating any
further and without assigning any reasons, the
Petitioners' bid was rejected. Since the Petitioners'
techno-commercial bid failed to meet the technical
requirements of Respondent No.1, the Petitioners were
also informed that their price bid was not opened. It is on
receipt of this letter, and the Petitioners being informed
for the first time that their bid is rejected, that the
Petitioners have approached this Court under Article
226 of the Constitution of India challenging the entire
tender process for procurement of the said bOPV by
Respondent No.1.
6. In this factual backdrop, Mr Dwarkadas, learned Sr.
Counsel appearing on behalf of the Petitioners, submitted that the
entire tender process is vitiated by discriminatory treatment of the
Petitioners and arbitrariness in the process itself. Awarding the said
tender to Respondent No.3 and disqualifying the Petitioners at
techno-commercial bid stage itself, smacks of malafides, is arbitrary
and discriminatory, and was done only to favour Respondent No.3,
vrd 13/43
WP 1911 OF 2016.docx
was the submission. Mr Dwarkadas submitted that in a matter like
this, Respondent No.1 ought to have issued a global tender inviting
bids from all pharmaceutical companies. In a public tender process,
as per the CVC Guidelines, issuance of global tender was the most
preferred and transparent mode of procurement of goods and
services, was the submission. Mr Dwarkadas submitted that
however this was not done only with a view to favour Respondent
No.3.
7.
In particular, Mr Dwarkadas submitted that when the
Petitioners reached the office of Respondent No.1 at around 1.00
p.m. on 12th February, 2016 the following Officers of Respondent
No.1 were present at the meeting for opening the bids/tenders:-
(1) General Manager (Production);
(2) Manager (Marketing);
(3) Manager (Quality Assurances);
(4) Materials Manager;
(5) Audit Officer, HBPCL.
8. The techno-commercial bid of the Petitioners was opened
in the presence of the Petitioners and thereafter the meeting was
adjourned for lunch without opening the bid/tender of Respondent
No.3. Thereafter, the Petitioners were made to wait till 5.45 p.m.
without any information about the techno-commercial bid received
vrd 14/43
WP 1911 OF 2016.docx
from Respondent No.3. At 5.45 p.m., a comparative analysis sheet
drawn up by the above Officers was shown to the representative of
the Petitioners and the Petitioners were marked Negative in respect
of seven items. Mr Dwarkadas submitted that on the date when the
comparative analysis sheet was shown to the Petitioners, only the
aforesaid Officers were present and the Managing Director of
Respondent No.1 was not present at the said meeting. It is in these
circumstances that the Petitioners had addressed a letter dated 12th
February, 2016 to the Managing Director of Respondent No.1
placing on record the events that had transpired on the said date.
Mr Dwarkadas submitted that this comparative analysis sheet that
was shown to the Petitioners did not bear any signatures at the
bottom. However, it now transpires from the original record
produced before the Court, and inspection of which was taken by the
Petitioners, that the comparative analysis sheet bears not only the
signature of the aforesaid five Officers but also that of the Managing
Director, when in fact the Managing Director was not even present
during the tender opening. He submitted that the record also
indicates that the techno-commercial bid of Respondent No.3 was
not opened in the presence of the Petitioners and in fact there is no
mention in the minutes of the meeting dated 12th February, 2016 of
the bids being opened either in the presence of the Petitioners or
Respondent No.3. In fact, the record does not indicate as to when
vrd 15/43
WP 1911 OF 2016.docx
and by whom the bid of Respondent No.3 was opened. Further,
despite a specific request being made by the Petitioner, the techno-
commercial bid of Respondent No.3 was not shown to the
representative of the Petitioners citing confidentiality, and which
according to Mr Dwarkadas, was in total contravention of the CVC
Guidelines.
9. Mr Dwarkadas submitted that from a perusal of the
record produced before this Court and more particularly the minutes
of the meeting held on 12th February, 2016, the Petitioners have now
for the first time learnt the process followed by Respondent No.1 for
assessing the bids submitted by the Petitioners and Respondent
No.3. He submitted that it appears that one Committee was
constituted (purportedly called a newly constituted Committee) of
Officers (more particularly set out above) to assess the outcome of
the tender. These Officers opened the techno-commercial bids of the
Petitioners and Respondent No.3 in the absence of the two bidders
and handed over the documents to the Committee for their
appraisal. Thereafter, the Committee purportedly verified and
scrutinized all the documents and unanimously decided that the
documents submitted by the Petitioners were not in sync with the
terms and conditions of the tender and hence, the price bid of the
Petitioners was not opened. The minutes record that the price bid of
vrd 16/43
WP 1911 OF 2016.docx
the Petitioners was proposed to be returned to the Petitioners,
however, the same has not been done till date. He submitted that
in the minutes of the meeting of 12th February, 2016, there is no
reference of the comparative analysis sheet of the technical bids of
the Petitioners and Respondent No.3. Significantly, in the hand-
written comparative analysis sheet shown to the Petitioners, there
were seven deficiencies in the Petitioners' bid whereas in the typed
comparative analysis sheet, there were six deficiencies contained in
the Petitioners' technical ig bid. He submitted that although the
Managing Director of Respondent No.1 is shown to be present and
has also signed the minutes of the meeting dated 12th February,
2016, it appears that she was not a part of the newly constituted
committee which assessed the technical bids. It would therefore
follow that if the Managing Director was present as indicated in the
minutes of the meeting, and that the newly constituted Committee
had unanimously decided that the technical bid of the Petitioners
was not in sync with the tender conditions and therefore rejected,
there is no explanation as to why the Managing Director has
intimated to the Petitioners only for the first time on 30th June,
2016 that their techno-commercial bid was rejected. He submitted
that it now appears from the affidavit in reply filed by Respondent
No.1 that much prior to informing the Petitioners that their techno-
commercial bid was rejected, on 9th March, 2016 itself, the tender /
vrd 17/43
WP 1911 OF 2016.docx
contract was awarded to Respondent No.3. According to Mr
Dwarkadas, all this clearly shows that the actions of Respondent
No.1 in awarding the tender to Respondent No.3 smacks of malafides
and only to favour Respondent No.3 and somehow disqualify the
Petitioners on false and flimsy grounds. He submitted that in the
facts of the present case, this is even more evident because the
Petitioners have been supplying bOPV to Respondent No.1 since the
year 2000 and that too without any complaint in respect of the said
supply. Therefore, it was strange that Respondent No.1 found the
techno-commercial bid of the Petitioners not in sync with the tender
conditions, which tender was floated to procure the very same bOPV
that was being supplied by the Petitioners to Respondent No.1 from
the year 2000.
10. Mr. Dwarkadas submitted that according to the
Petitioners, the Managing Director of Respondent No.1 was never
present in the tender evaluation process and it is for this very
reason that the Petitioners had addressed the letter dated 12th
February, 2016 to the Managing Director and asked her to look into
the irregularities and sought her intervention to ensure that the
Petitioners' techno-commercial bid was not rejected on flimsy
grounds. Mr Dwarkadas submitted that admittedly there is no
communication by Respondent No.1 of the decision taken by it in the
vrd 18/43
WP 1911 OF 2016.docx
purported meeting held on 12th February, 2016 and neither these
decisions have ever been posted on the website of Respondent No.1.
Apart from the comparative analysis sheet, Mr Dwarkadas
submitted that there is no document on record which gives a detailed
analysis of the technical bid submitted by the Petitioners and
Respondent No.3 and the reasons for rejection of Petitioners' bid and
acceptance of Respondent No.3's bid. He therefore submitted that
the entire tender process and awarding the tender to Respondent
No.3 is vitiated on the ground that it is discriminatory, smacks of
malafides and arbitrariness, and only to favour Respondent No.3.
11. Mr Dwarkadas submitted that being aggrieved by these
actions of Respondent No.1, the Petitioners by their letters /
complaints dated 16th February, 2016 and 24th February, 2016
(pages 217 to 219 of the paper-book) requested Respondent No.2 to
look into the irregularities in the tender process. Pursuant to the
aforesaid complaints, a meeting was held in the office of Respondent
No.2. At this meeting Respondent No.1 was asked to look into the
grievances of the Petitioners and if it felt that the bid of the
Petitioners was disqualified, then the same was to be communicated
to the Petitioners in writing. Mr Dwarkadas submitted that in this
meeting, Respondent No.1 never mentioned that the techno-
commercial bid of the Petitioners was already rejected and that the
vrd 19/43
WP 1911 OF 2016.docx
tender was already awarded to Respondent No.3 on 9th March, 2016.
The Petitioners were informed for the first time only 30th June, 2016
that the tender documents submitted by the Petitioners were not in
compliance with the technical requirements and therefore, the
Petitioners were disqualified on this ground. Mr Dwarkadas
submitted that what is also important to note is that in the original
record produced before us, there is absolutely no reference of the
letter dated 22nd June, 2016 or any internal note prepared for the
purposes of issuing the said letter. The entire record is completely
silent and does not indicate as to why and in what circumstances,
the letter dated 22nd June, 2016 was issued by the Managing
Director of Respondent No.1, especially in view of the fact that
according to Respondent No.1, the Petitioners' bid was disqualified
on 12th February, 2016 itself. He submitted that even though the
affidavit in reply mentions that the tender was awarded to
Respondent No.3 on 9th March 2016, there is nothing in the original
record produced, with reference to this contract. In fact, this
contract has not been produced alongwith the original record and
nor is there any reference to the quantities of supply made by
Respondent No.3 to Respondent No.1. He submitted that there is
nothing in the original record to show or indicate that there was any
contract entered into on 9th March, 2016 with Respondent No.3. Mr
Dwarkadas submitted that while looking to all these facts and
vrd 20/43
WP 1911 OF 2016.docx
specially after taking inspection of the original records, it is clear
that the techno-commercial bid of the Petitioners was rejected on
specious grounds and the tender was awarded to Respondent No.3.
He accordingly submitted that the entire tender process was vitiated
as it suffers from arbitrariness, is discriminatory, and violative of
the CVC Guidelines. In these circumstances, it was the submission of
Mr. Dwarkadas, that the Writ Petition be allowed and Respondent
No.1 be directed to float a fresh tender for procurement of the said
bOPV.
12. On the other hand, Ms Srivastav, learned counsel
appearing on behalf of Respondent No.1, submitted that the entire
tender process was carried out in a fair and transparent manner.
She submitted that from the averments in the Petition itself, it was
clear that the Petitioners were aware that their techno-commercial
bid was rejected on 12th February, 2016. She submitted that as the
Petitioners were made aware on 12th February, 2016 itself that their
techno-commercial bid was rejected, Respondent No.1 did not feel it
necessary to deal with the contentions raised by the Petitioners in
their letter dated 12th February, 2016. Ms Srivastav submitted that
after opening the techno-commercial bids of the Petitioners and
Respondent No.3 the same were placed before a Committee,
expressly constituted for the purposes of assessing the said bids.
vrd 21/43
WP 1911 OF 2016.docx
This Committee found that the technical papers submitted by the
Petitioners were not in compliance with the technical requirements
as mentioned in the tender document. The tender document clearly
stated that if any participating firm failed to comply with the
requirements contained therein, the said firm would be disqualified
and their price bid would not be opened. In these circumstances, Ms.
Srivastav submitted that Respondent No.1 had followed the tender
process in a fair and transparent manner, and after evaluation of the
respective tenders of the Petitioners and Respondent No.3, awarded
the contract / tender to Respondent No.3. Thereafter, a Supply
Agreement was executed between Respondent No.1 and Respondent
No.3 on 9th March, 2016.
13. Ms Srivastav submitted that despite the Petitioners
being fully aware that they had not complied with the technical
requirements of the tender document, they continued writing letters
complaining to the authorities. It is in this light, and since the
Petitioners insisted that their bid wasn't rejected in writing, that
Respondent No.1 issued the the letter dated 22nd June, 2016
formally rejecting the tecno-commercial bid of the Petitioners. She
submitted that the Petitioners were always aware that their techno-
commercial bid was rejected on 12th February, 2016 itself and this
decision was formally communicated to the Petitioners vide
vrd 22/43
WP 1911 OF 2016.docx
Respondent No.1's letter dated 22nd June, 2016. To conclude, Ms
Srivastav submitted that there are no irregularities in the tender
process and Respondent No.1 has acted in a transparent, fair and
honest manner not only in the process but also in awarding the
contract to Respondent No.3. She therefore submitted that there is
no merit in this Writ Petition and the same ought to be dismissed.
14. Mr Jain, learned counsel appearing on behalf of
Respondent No.3, apart from adopting the arguments of Ms
Srivastav, additionally submitted that in the present Writ petition,
there is no challenge to the conditions of the tender document. He
submitted that the conditions are mandatory and if one does not
satisfy these mandatory conditions, their techno-commercial bid
would stand disqualified. He submitted that in the facts of the
present case, the record would clearly indicate that the Petitioners
had not complied with the mandatory conditions of the tender
document and therefore, they could not make any grievance of their
techno-commercial bid being rejected by Respondent No.1. He
submitted that even assuming that Respondent No.3's bid was not
opened in the presence of the Petitioners, there was no irregularity
committed because the outcome was known to them and this was
also evident from the Petitioners' own letter dated 12th February,
2016. He submitted that it is true that none of the representatives of
vrd 23/43
WP 1911 OF 2016.docx
Respondent No.3 were present when the bids were opened as none of
them were in India on the said date and the bid of Respondent No.3
was opened in their absence. He submitted that Respondent No.3,
not having any grievance that their bid was opened in their absence,
the Petitioners could not make the said grievance. He submitted that
after 12th February, 2016 and up until 22nd June 2016, not a single
letter or other correspondence was addressed by the Petitioners to
Respondent No.1 making any grievance. He submitted that to vitiate
a tender, the Court has to be satisfied that - (a) there is a mistake or
fault in the process itself; (b) that favoritism has been shown to a
particular party and (c) in public interest, the tender ought to be
struck down. He submitted that in the facts of the present case,
none of these conditions have been satisfied and therefore, no
interference is called for by us in our equitable, extraordinary and
discretionary jurisdiction under Article 226 of the Constitution of
India. Accordingly, the Writ Petition be dismissed, was the
submission of Mr. Jain.
15. We have heard the learned counsel for the parties at
length and perused the papers and proceedings in the Writ Petition
alongwith the annexures thereto. We have also gone through the
original record and files produced by Respondent No.1 for our
perusal. Before dealing with the rival contentions, we would like to
vrd 24/43
WP 1911 OF 2016.docx
reiterate briefly the scope of judicial review in matters like the
present one. The principles covering judicial review of
administrative decisions are now very well settled by a long line of
decisions rendered by the Supreme Court. The Supreme Court has
time and again reiterated that judicial review would apply even to
the exercise of contractual powers of the Government and its
instrumentalities, in order to prevent arbitrariness and favoritism.
This, of course, does not mean that the State is not free to protect its
interest as guardian of its finances. There could be no infringement
of Article 14 of the Constitution of India if the Government or its
instrumentalities tried to get the best person or the best price. The
right to choose could not be considered to be an arbitrary power
unless that power was exercised for any collateral purposes.
Basically, the scope of judicial review was confined in a broad sense
to the following three distinct aspects;
(i) Whether there was any illegality in the decision, which
would imply whether the decision making authority has
correctly understood the law that regulates its decision
making power and whether it has given effect to it;
(ii) Whether there was any irrationality in the decision taken
by the authority, implying thereby, whether the decision
vrd 25/43
WP 1911 OF 2016.docx
is so outrageous in its defiance of logic or accepted moral
standards that no sensible person who had applied his
mind to the question to be decided could have arrived at
the same; and
(iii) Whether there was any procedural impropriety
committed by the decision making authority while
arriving at the decision.
16.
What the Court has to bear in mind is that it does not sit
in appeal but merely reviews the manner in which the decision is
made. The Government and its instrumentalities must have the
freedom to contract and for that purpose a fair play in the joints is
necessary for an administrative body functioning in an
administrative or quasi-administrative sphere. However, the
decision must not only be tested by application of the Wednesbury
principle of reasonableness but must be free from arbitrariness and
not affected by bias or actuated by mala fides. To put it in a nutshell,
in a matter like the present one, what can be questioned on certain
grounds, is the decision making process and not the decision itself. If
the Court finds no fault in the decision making process, it cannot
substitute its own decision for that of the authority, merely because
it feels that its decision (rather than that of the authority) would be
vrd 26/43
WP 1911 OF 2016.docx
a more correct and/or prudent decision. The aforesaid principles are
too well settled, but if one must refer to any authority on this subject,
a useful reference can be made to a decision of the Supreme Court in
the case of Siemens Aktiengeselischaft and Siemens Ltd. Vs. Delhi
Metro Rail Corporation Ltd. & Ors.1 [paragraphs 18 to 23 of the
SCC Report] where the aforesaid principles have been succinctly set
out.
17.
Having said this, we shall now examine the rival
contentions as put forth by the learned counsel for respective
parties. The first contention advanced by Mr Dwarkadas was that
the techno-commercial bid of the Petitioners was opened in the
presence of the Petitioners and thereafter the meeting was
adjourned for lunch without opening the bid / tender of Respondent
No.3. In this regard, we must note and the record indicates that it is
an admitted fact that the bid / tender of Respondent No.3 was not
shown or opened in the presence of the Petitioners. In fact, on
perusal of the original record, we find that it is completely silent as
to when and by whom the bid of Respondent No.3 was opened. It is
also an admitted fact that Respondent No.3 was not present during
the tender opening meeting. The record is also completely silent as
to who instructed Respondent No.1 to open the bid of Respondent
1 (2014) 11 SCC 288
vrd 27/43
WP 1911 OF 2016.docx
No.3 in their absence. All this is really undisputed. In this factual
scenario, it would be important to refer a publication from the Chief
Examiners' Organisation of the Central Vigilance Commission. This
publication was published in view of the several pitfalls and lapses
that were observed in awarding contracts etc. In light of this, the
Central Vigilance Commission had directed that every Executive
ought to go through this publication and avoid mistakes as
enumerated therein. It was directed that the Executive adhere to
the various circulars and instructions before making any decision,
and the time-tested methods should never be given a go-bye in the
name of urgency. Part I of this publication deals with common
irregularities / lapses observed in award and execution of electrical,
mechanical and other contracts, and the guidelines for improvement
thereof. Clause 12 deals with opening of tenders. Clause 12.1 takes
note of the fact that in some organisations, tenders are not opened in
the presence of bidders or their representatives on the plea of
maintaining absolute secrecy. The pitfalls of following this practice
have been set out in the said clause. For ready reference, clauses
12.1 and 12.2 read thus :-
"12.1 In some organisations, the tenders are not opened in the
presence of the bidders' representatives on the plea of maintaining
absolute secrecy. Such a practice of not opening tenders in public
and of not disclosing the rates quoted by all bidders to other firms
is against the sanctity of the tendering system, and is a non-
transparent method of handling tenders. The possibility of
vrd 28/43
WP 1911 OF 2016.docx
tampering and interpolation of offers, after opening of tenders, in
such cases cannot be ruled out. Some organisations do not even
maintain tender opening registers. The rates at times are not
quoted both in figures and words, cuttings / overwritings are not
attested by bidders.
• The opening of tenders in presence of the bidders'
representatives needs to be scrupulously followed. While opening
the tenders it needs to be ensured that each page of tender,
particularly the price and important terms and conditions should be
encircled and initialled with the date. Any cutting/overwriting
should be encircled and initialled in red ink by the tender opening
officer/committee. The tender opening officer/committee should
also prepare an 'on the spot statement' giving details of the
quotations received and other particulars like the prices,
taxes/duties, EMD, any rebates etc. as read out during the opening
of tenders. A proper tender opening register in a printed format
should be maintained containing information viz. date of opening
including extensions, if any, names and signatures of all the persons
present to witness the tender opening which should include the
bidders representatives also.
12.2 In cases involving the two bid system, it has been noticed
that after opening of the technical bids, the price bids, which are to
be opened subsequently, are kept as loose envelopes. In such
cases, the possibility of tampering of bids prior to tender opening
cannot be ruled out.
• In order to make the system fool-proof, it needs to be
ensured that the tender opening officer/committee should sign on
the envelope containing the price bids and the due date of opening
of price bids should be clearly mentioned on the envelopes and
should again be placed in the tender box."
(emphasis supplied)
18. On a perusal of these clauses, it is clear that the
Government and its instrumentalities have been asked to ensure
that opening of tenders in the presence of bidders' representatives
needs to be scrupulously followed. This is to ensure that there is no
vrd 29/43
WP 1911 OF 2016.docx
possibility of tampering and interpolation of offers after opening all
the tenders. In the facts of the present case, it is not in dispute that
the techno-commercial bid of the Petitioners was opened in the
presence of the Petitioners and without opening the bid / tender of
Respondent No.3. In fact, Respondent No.3's bid / tender was never
opened in front of the Petitioners and neither was the same shown to
them. When and what time the bid of Respondent No.3 was opened is
not indicated in the original record produced for our perusal. In fact,
on a perusal of the said original record and files, one can safely say
that the same can be used as a perfect example of how one ought not
to maintain the original records. This is more so when it comes to an
instrumentality of the State. We must note that the Petitioners have
time and again asked for seeing the bid of Respondent No.3 but the
same was denied to them on the ground of confidentiality. Once the
CVC has clearly stated that the bids have to be opened in the
presence of the bidders and / or their representatives, and the same
ought to be scrupulously followed, we fail to understand why the bid
of Respondent No.3 was not shown to the Petitioners. This is more
so in the facts of the present case, considering that Respondent No.3
was not even present at the time when its bid was opened by
Respondent No.1 and had never ever objected to its bid being shown
to the Petitioners on the alleged ground of confidentiality. We
therefore find that Respondent No.1 refusing to show the bid of
vrd 30/43
WP 1911 OF 2016.docx
Respondent No.3 to the Petitioners, despite repeated demands, and
in fact not even opening the said bid in the presence of the
Petitioners, goes to the very root of the matter and would indicate
that the entire tendering process has not been conducted in a fair
and transparent manner as mandated by a catena of decisions of the
Supreme Court and which have been referred to in Siemens
Aktiengeselischaft and Siemens Ltd. Vs. Delhi Metro Rail
Corporation Ltd. & Ors.1 (supra).
19. If this was the only irregularity, with nothing more, it
may not have persuaded us to interfere under Article 226 of the
Constitution of India. Unfortunately, the matter does not stop here.
Apart from the fact that there was a serious irregularity and
impropriety as indicated earlier, there are several other
irregularities committed by Respondent No.1 in opening the tender.
Another serious irregularity committed by Respondent No.1 is that
even though according to it, the tender of the Petitioners was not
technically compliant as early as on 12th February, 2016, there is no
explanation at all in the original records and files produced before
us, as to why the Petitioners were informed about the rejection of
their tender only by the letter dated 22nd June, 2016 and which was
communicated to the Petitioners only on 30th June, 2016. The only
1 (2014) 11 SCC 288
vrd 31/43
WP 1911 OF 2016.docx
explanation given for this by Ms Srivastav, and which is also the
stand taken in the affidavit in reply, is that the Petitioners were
aware that its techno-commercial bid was non-compliant as early as
on 12th February, 2016 and Respondent No.1 issued the letter dated
22nd June, 2016 only because the Petitioners insisted on the same.
We are afraid, we are unable to accept this submission for more than
one reason. Firstly an instrumentality of the State like Respondent
No.1, and in a matter like this, which involves procurement of
vaccines through a public tender process, cannot take a stand that
the Petitioners knew that their bid was non-compliant and therefore
Respondent No.1 did not feel the need to reject the Petitioners' bid in
writing. This is not how an instrumentality of the State is expected
to behave and this is certainly not acting in a fair and transparent
manner. What is also disturbing is that the original record produced
for our perusal has the minutes of the meeting held on 12th February
2016. These minutes record that the Audit Officer of Respondent
No.1, after opening the technical bids submitted by the two
distributors of M/s PT. Bio-Farma, Indonesia, handed over the
documents to the Committee for its appraisal. Neither do these
minutes reflect that the bids of both the distributors were opened
simultaneously and nor do we find from the record that the
Committee called both the distributors at the time of verification and
scrutiny of their documents. Even the Committee did not think it fit
vrd 32/43
WP 1911 OF 2016.docx
to call the Petitioner and Respondent No.3 when the bids were
submitted to it. Further, these minutes do not record at what time
the bids were opened. Further, even though the minutes of the
meeting record that the Committee has unanimously declared that
the documents submitted by the Petitioners were not in sync with
the terms and conditions of the tender, the Committee did not deem
it fit to record in the minutes to communicate this decision to the
Petitioners immediately. In fact, in these minutes of the meeting
there is no mention at all about communicating its decision to the
Petitioners. What is also important to note is that according to
Respondent No.1, a contract of supply has been entered into by it
with Respondent No.3 on 9th March, 2016. What is curious is that
this contract is not in the original file and records produced for our
perusal. This would certainly create a suspicion that all these
documents dated 12th February, 2016 and which are there in the
original file could have been prepared much later only to justify
entering into the contract with Respondent No.3. This entire action
therefore is clearly not carried out in a manner which is fair and
transparent as mandated by a catena of decisions of the Supreme
Court and referred to by us earlier. Secondly, it is not in dispute that
because the Petitioners were aggrieved by the way Respondent No.1
had conducted the opening of the tender, the Petitioners (by their
letters dated 16th February, 2016 and 24th February, 2016) had
vrd 33/43
WP 1911 OF 2016.docx
complained to Respondent No.2 about the same and requested it to
look into and investigate the subject tender. Thereafter, a meeting
took place before Respondent No.2 when Respondent No.1 was asked
to look into the grievances of the Petitioners, and if Respondent No.1
felt that the bid of the Petitioners was disqualified, then the same be
communicated to them in writing alongwith the reasons for
disqualification. What is important to note is that at this meeting,
Respondent No.1 did not inform Respondent No.2 that the bid of the
Petitioners was already rejected and the contract was already
awarded to Respondent No.3. If according to Resondent No.1, the bid
of the Petitioners was rejected on 12th February, 2016 itself, and
nothing further needed to be done, the same could have been
expressly brought to the notice of Respondent No.2 in the aforesaid
meeting. The specific averments with reference to this meeting and
what transpired therein, can be found at paragraph 21 of the
Petition. Even though Respondent No.1 has filed an affidavit in reply
dated 16th August, 2016, there is no denial of this meeting or what
transpired therein.
20. Another cause for concern is that the original record
produced for our perusal, does not contain any document which does
any detailed analysis of the technical bids submitted by the
Petitioners and Respondent No.3. The only thing that can be found
vrd 34/43
WP 1911 OF 2016.docx
in the record is the comparative analysis sheet that has been
prepared by the Officers of Respondent No.1. For ready reference,
the said sheet (as appearing in the original record and files) is
reproduced hereunder :-
vrd 35/43
WP 1911 OF 2016.docx
21. As can be seen from the aforesaid comparative analysis
sheet, the Petitioners have been marked as non-compliant / Negative
in as many as seven conditions. We shall deal with each of them
individually hereafter:-
(i) Condition (d) [which deals with the list of current buyers
in India with quantities supplied for three consecutive
years] is marked in the negative for the Petitioners.
Over here, we must observe that the Petitioners, in their
bid, have furnished a list of customers (page 61 of the
Petition) as well as the quantities supplied to Respondent
No.1. However, due to the confidential nature of the
data, the Petitioners had not mentioned the quantity
supplied to each of its customers individually. In
contrast, Respondent No.3 has also not furnished the
break-up of the quantities supplied to each of its
customers. Despite this, Respondent No.3's bid is shown
as compliant whereas the Petitioner's bid has been shown
as non-compliant.
(ii) As far as Condition (f) is concerned [which stipulates
that the Company's turnover should be certified by a
vrd 36/43
WP 1911 OF 2016.docx
Chartered Accountant and should be in excess of
Rs.100/- crores], the Petitioners' bid is marked as
compliant alongwith the bid of Respondent No.3.
However, what is important to note is that the
Respondent No.3's bid is shown as compliant even though
the turnover of Respondent No.3 has been submitted
only for the years 2013 and 2014 and the same has not
been certified by the Chartered Accountant as required
by Condition (f).
ig Despite this, for some inexplicable
reason, we find that the bid of Respondent No.3 is shown
to be compliant with the aforesaid condition.
(iii) The next condition in which the Petitioner has been
shown as non-compliant is Condition (g) [which deals
with the detailed background of the bidder with the
organization brochure alongwith the overview of all
human vaccines that are manufactured or marketed].
As far as this condition is concerned, we find that the
Petitioners have submitted their detailed profile as can
be seen from pages 61 to 68 of the Petition. Despite this,
the Petitioners have been declared as non-compliant of
the aforesaid condition.
vrd 37/43
WP 1911 OF 2016.docx
(iv) As far as the Condition (h) is concerned [relating to
audited annual report of the bidders for the last three
years], the Petitioners have been marked as non-
compliant despite the fact that the Petitioners have
submitted the audited annual reports of the last three
years which can be seen from page 62 read with page 69
of the Petition. What is more important to note here is
that Respondent No.3 has admittedly submitted its
audited annual report only for two years instead of three
years. Despite the fact that the bidders had to submit
their audited annual reports for the last three years and
this was not done by Respondent No.3, for no reasons
that are coming forth, the bid of Respondent No.3 has yet
been marked as compliant.
(v) Thereafter, the Petitioners have been marked as non-
compliant with Condition (i) [which requires a list of
WHO pre-qualified human vaccines which the bidder has
supplied for the last three years]. As far as this is
concerned, we must mention here that the tender notice
itself specifically invited tenders from distributors of PT.
Bio-Farma, Indonesia. PT. Bio-Farma, Indonesia is a
WHO pre-qualified bulk manufacturer. In these
vrd 38/43
WP 1911 OF 2016.docx
circumstances, Respondent No.1 was aware that both the
bidders viz. the Petitioners and Respondent No.3 would
be supplying the same WHO pre-qualified bulk drug
manufactured by the said PT. Bio-Farma, Indonesia.
From the record we find that the Petitioners have
furnished the list of pre-qualified human vaccines which
it had supplied in the last three years (page 62 of the
Petition). Over and above this, the Petitioners have also
submitted the Certificate issued by WHO to PT. Bio-
Farma, Indonesia (page 94 of the Petition) as well as the
Certificate of Pharmaceutical Product (COPP) [at page 95
of the Petition]. Despite all these documents, the
Petitioners have been marked as non-compliant with the
aforesaid condition.
(vi) The next condition where the Petitioners have been
marked as non-compliant, is Condition (j) [which
stipulates that the bidder should be able generate
business for Respondent No.1 of a minimum of 70 million
doses]. As far as this condition is concerned, we find that
the Petitioners (at page 62 of the Petition) have
categorically stated that they would supply 70 million
doses of the said bOPV as required by Respondent No.1.
vrd 39/43
WP 1911 OF 2016.docx
Despite this, and without assigning any reasons, the
Petitioners' bid has been marked as non-compliant. What
is also important to note here is that in the observations
made in the said comparative analysis sheet against the
bid of Respondent No.3, Respondent No.1 has stated
"Clarity for buyback". However, the record and files
produced before us do not indidcate any such subsequent
clarification given by Respondent No.3. Despite this,
Respondent No.3's bid is marked as compliant.
(vii) Thereafter, comes condition (k) [which deals with having
experience for more than 15 years]. Here too, the
Petitioners have been marked as non-compliant despite
the fact that the Petitioners have submitted a Certificate
from M/s PT. Bio-Farma, Indonesia (page 62 read with
the certificate at page 70 of the Petition) certifying that
the Petitioners have been associated with PT. Bio-Farma,
Indonesia since year 2000 as their marketing agent, for
marketing in India, vaccines manufactured by them. In
contrast, Respondent No.3 (in their techno-commercial
bid), have merely stated that the Company has been
incorporated in 2001, without furnishing any details or
producing any Certificate. In fact, the same does not
vrd 40/43
WP 1911 OF 2016.docx
even disclose whether Respondent No.3 was in the
business of supply of the said bOPV since its inception in
2001. Despite this, the Petitioners have been marked as
non-compliant and Respondent No.3 has been marked as
compliant with the aforesaid condition.
22. When all these facts are seen together and cumulatively,
it a cause for grave concern as to how the tender, and the subsequent
award of the contract (to Respondent No.3), has been conducted by
Respondent No.1. To our mind, this entire process is anything but
fair and transparent. It certainly does not inspire any confidence.
When we noticed all this, we put it to Ms. Srivastav whether
Respondent No.1 was willing to float a fresh tender for procurement
of the said bOPV. However, for reasons best known to Respondent
No.1, they insisted, without any real basis, that no irregularity has
been committed, either in the tendering process, or the award of the
contract to Respondent No.3. It is in view of this stand taken by
Respondent No.1, that we have been constrained to analyse in detail
the actions of Respondents No.1 for procurement of the said bOPV by
a public tender process.
23. In view of the foregoing discussion, the tender dated 20th
January 2016 (Exh.'C' to the Petition) floated for procurement of
vrd 41/43
WP 1911 OF 2016.docx
Bivalent Oral Polio Vaccine Bulk (bOPV) manufactured by a
Company called PT. Bio-Farma, Indonesia, is quashed and set aside.
Consequently, the letter dated 22nd June, 2016 issued by
Respondent No.1 rejecting the techno-commercial bid of the
Petitioners is also quashed and set aside. In addition thereto, the
contract / tender / bid awarded to Respondent No.3 (pursuant to the
aforesaid tender dated 20th January, 2016) is also hereby quashed
and set aside. However, considering the fact that Respondent No.1 is
procuring the said bOPV from Respondent No.3 and which
procurement is in public interest, we do not wish to stop the supply
of the said bOPV by Respondent No.3 to Respondent No.1, whilst a
fresh tender is floated for the said purpose. In these circumstances,
we direct the State Government, and through the Department of
Public Health, to float a fresh tender for the procurement of the said
bOPV within a period of eight weeks from today, and on such terms
and conditions as it may deem fit and complete the entire process
within a period of eight weeks thereafter. This tender shall be floated
in accordance with the CVC guidelines and in accordance with law.
In the interregnum, and in order to ensure that the supply of the
said bOPV is not interrupted, Respondent No.3, for this period of 16
weeks, shall continue to supply the said bOPV to Respondent No.1.
We clarify that merely by allowing Respondent No.3 to continue to
supply the said bOPV to Respondent No.1 during the aforesaid
vrd 42/43
WP 1911 OF 2016.docx
period, will not create any equities either in favour of Respondent
No.1 or Respondent No.3. The procurement of the said bOPV shall be
done only by floating a tender and in the terms indicated
hereinabove. Rule is made absolute in the aforesaid terms. However,
in the facts and circumstances of the case, we leave the parties to
bear their own costs.
(B. P. COLABAWALLA, J.) (S. C. DHARMADHIKARI, J.)
24. At this stage, the learned advocate appearing for
Respondent No.1 seeks a stay of this order so that it can decide on
the future course of action including challenging this judgment and
order in a Higher Court. That request is opposed by the learned
counsel for the Petitioner.
25. Having heard both counsel on this limited point, we are of
the view that by giving the directions which we have issued in the
foregoing paragraphs and clarified in open Court, we had adequately
protected the interest of Respondent No.1. We are really surprised
that Respondent No.1 seeks to obtain a stay of this order so as to
override the larger public interest when the law mandates
procurement only through a transparent and fair process of public
tender. In these circumstances, the request is refused.
(B. P. COLABAWALLA, J.) (S. C. DHARMADHIKARI, J.)
vrd 43/43
