Bombay High Court
M/S. Joshi Freight Carriers, Thr. ... vs Central Ware Housing ... on 7 April, 2017
Bench: B.P. Dharmadhikari
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH, NAGPUR.
WRIT PETITION No. 5790 OF 2016.
M/s. Joshi Freight Carriers,
a Proprietary concern, through its
Proprietor Shri Anil Biharilal Joshi,
aged about 39 years, Occupation-
Business, having its office at
Beside Hotel Residence Park,
Agra Road, Dhulia,
Maharashtra - 424 311. ....PETITIONER.
VERSUS
1. Central Ware Housing Corporation,
through its Regional Manager,
Regional Office, Mumbai, Sector 20,
Near APMC Fruit Market, Washi,
Navi Mumbai - 400 703.
2. M/s. Subline Warehousing Pvt. Ltd.,
through its Director Shri Awesh
Zunzunwala, flat No.702,
Rachna Galaxy, Shivaji Nagar,
Nagpur - 440 010.
3. M/s. B. Balanagulu,
Flat No. 302, 3rd Floor, Plot no.16,
17, 18, Sriman Sai & Kalyan
Arcade, Miyapur X Road,
Miyaur, Hyderabad 500 049.
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4. M/s. Sun Sun Roadways,
Flat No.502, Sairaj CHS Ltd.,
Sector 29, Washi, Navi Mumbai. ....RESPONDENTS
.
-----------------------------------
Mr. M.G. Bhangde, Senior Advocate with
Shri R.S. Kurekar, Advocate for Petitioner.
Mr. C.V. Kale, Advocate for Respondent No.1.
Mr. R.S. Parsodkar, Advocate with Mr. R. Dawada,
Advocate for Respondent No.2.
Mr. S.M. Ghodeshwar, Advocate for respondent no.4.
------------------------------------
CORAM : B.P. DHARMADHIKARI &
MRS. SWAPNA JOSHI, JJ.
Date of Reserving the Judgment : 02.03.2017
Date of Pronouncement : 07.04.2017
JUDGMENT. (Per B.P. Dharmadhikari, J)
By this petition filed under Article 226 of the Constitution of India,
the petitioner - a Company, questions communication dated 09.09.2006
holding that petitioner does not satisfy experience criterion and therefore, is
not eligible to participate in tender for handling and transportation work of
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food grains and allied materials at C.W. Washim. This warehouse at
Washim is of respondent no.1.
2. On 04.10.2016, while issuing notice in the matter, this Court
directed that financial bids shall not be opened. Thereafter applications for
intervention were filed and the same were allowed. Those intervenors who
are other participants in tender process have been added as
intervenor/respondent nos. 2, 3 and 4 respectively.
3. As interim orders were operating and the matter pertains to
contract of movement of food grains, as requested by the parties jointly it
has been hard finally by issuing Rule and making the same returnable
forthwith. Accordingly, we have heard Shri M.G. Bhangde, learned Senior
Counsel with Shri R.S. Kurekar, learned Counsel for the petitioner, Shri C.V.
Kale, learned Counsel for respondent no.1, Shri R.S. Parsodkar, with Shri R.
Dawada, learned Counsel for respondent no.3 and Shri S.M. Ghodeshwar,
learned Counsel for respondent no.4.
4. Shri Bhangde, learned Senior Counsel invited attention to Clause 4
of the e-tender notice dated 31.05.2016 to urge that there eligibility
conditions require at least completion of 25% of the estimated value of
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construction to be awarded in one single contract or 50% of the estimated
value of contract to be awarded in different contracts. He submits that
petitioner fulfills these conditions. Our attention is drawn to relevant
minutes in which this eligibility of petitioner has been evaluated to show
that the estimated value of contract was Rs. 11,25,19,000/-. 25% of the
value of the contract works out to Rs. 2,81,29,750/-, while 50% of the value
of the contract works out at Rs. 5,62,58,500/-. He submits that necessary
certificates issued by IFFCO and M/s. Orient Cement were enclosed along
with the tender form. He contends that though some technical error was
found in the initial certificate issued on behalf of M/s. Orient Cement, later
correct certificate does not militate with the data contained in the first
certificate, and therefore, fortifies competency and capacity of petitioner.
Petitioner therefore fulfills Clause [b] of the qualifying conditions. He has
taken up through the certificate dated 23.11.2015, issued by Orient Cement
Limited, letter dated 21.01.2016 issued by the said Company through its
General Manager, letter dated 22.02.2016 given by that Company and
certificate of Chartered Accountant dated 26.01.2016. He submits that all
these documents have been lost sight of and have not been properly
appreciated. According to him reason for discarding these documents that
income from M/s. Orient Cement of 2014-15 is not shown in ITR, runs
counter to legal provisions. He has pointed out Section 194C of the Income
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Tax Act, particularly sub-section [6] thereof, to urge that this finding is
therefore, incorrect.
5. In the alternative and without prejudice, he states that certificate
issued by Indian Farmers Fertilizer Cooperative Limited (IFFCO) dated
21.06.2016 independently establishes the eligibility of petitioner in terms of
Clause [a] of the eligibility norms mentioned supra, and hence, those norms
should have been looked into and commercial bid of petitioner needed to be
opened and considered.
6. Further rejoinder filed by petitioner vide stamp no. 13732/2016,
particularly its paragraph nos.3 to 9 are pressed into service by him to show
how petitioner qualifies and fulfills the tender conditions. He submits that
deliberately wrong and erroneous approach has been adopted and by
ignoring correct provisions of Income Tax Act, 1961, petitioner is
disqualified. Representation was moved on 10.09.2016 and it was followed
by Lawyer's notice, but, correct position of law mentioned therein has been
deliberately overlooked. Though there is an incorrect approach and
certificate issued by M/s. Orient Cement has been arbitrarily discarded, fact
that petitioner qualifies because of independent certificate issued by IFFCO,
could have been looked into by respondent no.1. Our attention is drawn to
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note appearing below the eligibility condition to point out how word "year"
needs to be understood. He invites attention to fact that certificate issued
by M/s. Orient Cement was used in Writ Petition filed before the
Aurangabad Bench vide Writ Petition Nos. 3393/2016 and 4349/2016.
Stand that certificate produced by petitioner was not issued by an authorized
person of M/s. Orient Cement, has been examined in paragraph nos. 40 and
41 of the judgment delivered therein. There, Maharashtra State
Warehousing Corporation was party respondent. In the light of observations
made in paragraph nos. 40 and 41, the Aurangabad Bench of this Court
directed the Maharashtra State Warehousing Corporation to reconsider those
documents. He urges for adopting the same course if on merits this Court is
not accepting the eligibility of the petitioner.
7. Shri C.V. Kale, learned counsel for respondent no.1 submits that
experience certificates produced by the petitioner are not in requisite format
and do not show that it posses experience in terms of prescription thereof in
tender conditions. Petitioner has given its own certificate based on some
data which could not have been relied upon.
8. Inviting attention to note explaining how term "year" needs to be
construed, he states that petitioner has deliberately avoided to produce any
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such specific certificate. He points out that documents tendered by M/s.
Orient Cement and produced by petitioner are not certificates, but, letters
only. Orient Cement has on 14.01.2016 issued a show cause notice to an
employee who issued certificate dated 23.11.2015 to the petitioner. Our
attention is also drawn to reply given by that employee tendering
unconditional apology and letter dated 28.01.2016 issued by Orient Cement
to Maharashtra State Warehousing Corporation, refusing to authenticate
contents of the certificate dated 23.11.2015 and distancing itself from it.
9. He relies upon judgment of Hon'ble Supreme Court reported at
2016 (8) SCC 622 (Central Coalfields Ltd. Vrs. SLL-SML [Joint Venture
Consortium] and others), to urge that format prescribed by respondent
no.1 is circumstances, is with some object and that object cannot be allowed
to be defeated. Failure of petitioner to submit certificate in prescribed
format is itself fatal.
10. To support the rejection of work with Orient Cement, he points
out that provisions in Section 194C[6] of the Income Tax Act,1961 to urge
that as petitioner has violated that provision, respondent no.1 has rightly
refused to accept said document.
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11. Shri Parsodkar, learned counsel submits that cancellation of
certificate dated 23.11.2015 by M/s. Orient Cement was not pointed out to
the Division Bench at Aurangabad. He relies upon tender conditions
particularly clause [6][b] appearing at page no.39 of the Writ Petition to
urge that for falsehood, the tenderer can be blacklisted and debarred from
participation for next 5 years, besides forfeiture of earnest money deposit by
him. He further adds that in tender process, petitioner has relied upon the
certificate dated 21.06.2016 issued by IFFCO only. He further adds that
IFFCO's certificate is also not for a period of a year. According to him, if
entries of works at Sr. Nos. 1,3 and 5 appearing in that certificate are
clubbed together, during period of 01.08.2013 to 31.03.2014, petitioner
carried out work worth Rs. 1,80,16,000/- only. Entries at Sr. Nos. 2,4 and 6
are for period from 01.04.2014 to 31.03.2015. Total work during this
period is worth Rs. 1,05,00,000/- only. Last entry for period from
01.04.2015 to 31.03.2016 is for work worth Rs. 80.92 lakhs. Even this
certificate does not show completion of 25% of work and petitioner
therefore, can not become eligible under clause [a]. He further adds that
communication dated 21.01.2016 is a reply sent by Orient Cement to
Maharashtra State Warehousing Corporation. It is therefore, not a
certificate to be used for the purpose of present tender being a confidential
letter between Oriental Cement and Maharashtra State Warehousing
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Corporation. Letter dated 22.02.2016 by Oriental Cement Limited to
petitioner is again not a certificate, but, a letter and therefore, cannot be
used. Similarly all transactions with petitioner stated therein also can not
enter zone of consideration. It can not tantamount to a certificate as it
cannot fasten desired responsibility upon M/s. Orient Cement. Without
prejudice, he submits that value of work done directly for Orient Cement is
less than Rs. 4 Crores, and it does not make petitioner eligible.
12. He relies upon judgment of Hon'ble Supreme Court dated
15.07.2016 in Civil Appeal No. 9078/2016 - (Afcons Infrastructure Ltd .vrs.
Nagpur Metro Rail Corporation Ltd and another) particularly paragraph no.9
to demonstrate how employers honest view in such matters needs to be
sustained. Clause 16 of tender conditions is pressed into service to show
that the employer [respondent no.1] has absolute power to reject any tender
and there is no challenge to this power.
13. Shri Parsodkar, learned Counsel submits that petitioner has not
filed any affidavit in support of certificate dated 21.06.2016 issued by
IFFCO, certificate dated 21.03.2015 issued by Orient Cement and letter
dated 21.01.2016 issued by the General Manager of Orient Cement to
Maharashtra State Warehousing Corporation. There is no whisper about
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these documents in the petition.
14. Shri Bhangde, learned Senior Counsel, in reply, submits that in
Writ Petition in paragraph no.8, petitioner has made its submissions on
documents. Documents filed with tender are also pleaded in paragraph
no.9. Annexures- F, G, H and I are specifically pointed out with submissions,
that without looking into these documents and without any application of
mind, petitioner has been found disqualified on 09.09.2016. Minutes of
Tender Committee are relied upon to urge that necessary documents were
available, but, have not been looked into. The Committee finds that
experience certificate in proforma prescribed at Appendix-VI have been
produced. Only for convenience, petitioner also gave an extract of works
appearing in its own certificate. He also invites our attention to Civil
Application No.253/2017 filed on 05.12.2016, seeking leave to amend the
Writ Petition. According to him, position emerging from the audited
accounts of petitioner is disclosed in those paragraphs.
15. In the light of these arguments, we have perused the records and
considered the controversy. Though petitioner has been found disqualified
and experience certificate of M/s. Orient Cement is thrown out of
consideration as income earned from M/s. Orient Cement of 2014-15 is not
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shown in ITR, this application of mind by the tender committee is wrong.
Tender has been floated on 31.05.2016 and documents submitted by
petitioner and issued by M/s. Orient Cement was not for the year 2015-16.
As per note appearing at page no.4 of the tender document, after
qualification conditions, "year" for the purpose of experience is to be taken
as financial year, excluding the financial year in which the tender enquiry is
floated. Financial year runs from 1st April to 31st March, as stipulated in
this note. Thus, the tender enquiry in the present matter is floated the year
2016-17. The said year therefore, gets excluded. Petitioner therefore,
could have shown its competency and experience with reference to five
financial year counted backwards i.e., prior to 31.3.2016. The documents
looked into by the Tender Committee are for the financial year 2014-15.
Tender Committee takes note of the fact that Orient Cement Limited has
given experience certificate of Rs. 1205.69 lakhs for the financial year 2014-
15. Thereafter the Tender Committee notes that income tax return reveals
TDS deduction by Orient Cement only for work done worth Rs. 18.37 Lakhs
and not for whole figure certified therein. Hence this certificate has been
disbelieved. Reasons recorded by the Tender Committee are reproduced
below for ready reference.
"Experience criteria not met as experience certificate of
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M/s. Oriental Cement is not taken into consideration since
income of M/s. Oriental Cement of 2014-15 is not shown
in ITR.
Technically disqualified."
16. This finding of the Tender Committee needs to be seen in the
backdrop of Section 194C. Sub-section [6] thereof has been amended w.e.f.
01.06.2015. Tender Committee was considering the period of 2014-15
when said amendment was not applicable. However, in present facts,
impact of this consideration needs to be looked into in the backdrop of other
submissions recorded supra. The judgment of Hon'ble Supreme Court in
case of Central Coalfields Ltd. Vrs. SLL-SML (Joint Venture Consortium) and
others (supra), relied upon by Shri Parsodkar, learned counsel, reveals that
the Court before interfering in tender or contractual matters in exercise of
powers of judicial review, has to ponder over the issue whether process
adopted or decision made by the employer is malafide or intended to favour
some one, or then whether the process adopted or decision made is so
arbitrary and irrational to enable the court to hold that it could not have
been reached by any authority acting reasonably and in accordance with the
relevant law. The judgment of Hon'ble Supreme Court dated 15.09.2016 in
Civil Appeal No. 9078/2016 (Afcons Infrastructure Ltd .vrs. Nagpur Metro
Rail Corporation Ltd and another), is delivered by the same Bench of
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Hon'ble Supreme Court. Therein from paragraph no.9 onwards the Hon'ble
Supreme Court has explained the approach to be adopted. Judgment in case
of Central Coalfields Ltd. vrs. SLL-SML (Joint Venture Consortium) and others
(supra), also finds mention in its paragraph no.11. After considering these
judgments in paragraph no.13, the Hon'ble Supreme Court points out that
mere disagreement with the decision making process or the decision of the
administrative authority, cannot constitute a ground to interfere therewith.
Malafides, intention to favour some one or arbitrariness, irrationality or
perversity must exist before the Constitutional Court interferes with such
decisions. In paragraph no.15, again the same principle has been reiterated
and Hon'ble Supreme Court states that owner or employer inviting tender
may give an interpretation to the terms and conditions thereof which may
not be acceptable to the Constitutional Court, but, that by itself is not a
reason for interfering with the interpretation given. In paragraph no.18,
opinion of High Court that all eligible bidders need not be impleaded in Writ
Petition before it, and they were not entitled to be heard, is not accepted by
the Apex Court. The Hon'ble Supreme Court finds that an eligible bidder
can bring to the notice of the employer or owner of the project that the
ineligible person was so disqualified even for additional reasons not within
contemplation of such owner or employer. The Hon'ble Supreme Court
therefore, has held that it would be more appropriate for the Constitutional
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Courts to insist that all eligible bidders be made parties to the proceedings
filed by un-successful bidder. Though before this Court, there is no attempt
to demonstrate that all eligible bidders are not impleaded, respondent no.2
has attempted to invite our attention to the letter written by M/s. Orient
Cement Limited to Maharashtra State Warehousing Corporation disowning
the certificate dated 23.11.2015 and distancing itself from that certificate.
This letter dated 28.01.2016 is produced by the said respondent as
Annexure-R-II-F with its written submissions filed in this Court. It is not in
dispute that this communication was not pointed out to the Aurangabad
Bench of this Court which decided Writ Petition Nos. 3393/2016,
3578/2016, 3787/2016 and 4349/2016 on 11.07.2016. There the
controversy regrading very same certificate dated 23.11.2015, has been
looked into in paragraph no.40 and then in paragraph no.41 the Division
Bench found it proper to leave it for reconsideration by Maharashtra State
Warehousing Corporation.
17. Page No.3 of e-tender document, vide Clause-4 lays down the
qualification condition as under :
"4.QUALIFICATION CONDITION-
(A) Tenderer should have experience of Rake Handling
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and/or Transportation duly obtained from
manufacturer/PSU/Govt. Dept./Public Ltd. Company/
Private Limited Company dealing in the field of Fertilizer,
Foodgrains, Cement, Sugar, Coarse grains or any other
commodity. Tenderer should have executed in any of the
immediate preceding five years the work of value;
(a) At least 25% of the estimated value of the contract
to be awarded, in one single contract.
OR
(b) 50% of the estimated value of the contract to be
awarded, in different contracts.
(B) Experience certificate in the proforma prescribed at
Appendix-VI shall be produced from customers stating proof
of satisfactory execution and completion of the contract[s]
besides duly certifying nature, period of contract, and value
of work handled.
(C) Where the estimated contract value of Handling and
Transport contract is less than Rs. Five Crores, tenderer
without the requisite experience as mentioned above may
also participate subject to providing an undertaking that an
additional performance Guarantee in the form of Bank
guarantee of 10% of the total contract value from SBI Bank
or its Associate Bank or in other Public Sector Banks will be
given, if selected. The format of the Bank Guarantee to be
provided in such cases at Appendix-V of Annexure-A.
(D) If the tenderer is a partnership firm, there shall not be
any re-constitution of the partnership without the prior
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written consent of the Corporation till the satisfactory
completion of the contract.
Note : The year for the purpose of experience will be taken
as financial year [1st April to 31st March] excluding the
financial year in which tender enquiry is floated."
According to petitioner it qualifies in terms of sub-clause [a], as also sub-
clause [b] of Clause (A). It is contended that certificate issued by IFFCO on
21.06.2016 needed independent evaluation and works therein make
petitioner eligible in terms of sub-clause [a], where 25% of the estimated
value of the contract is shown to have been completed in one single contract.
According to the petitioner, if period of 01.09.2013 till 31.03.2016 is
included in preceding 5 years and total work done is of Rs.3,67,02,000/-
The other certificate issued by M/s. Orient Cement for period from
01.04.2014 to 31.03.2015 showing total quantity only and total amount
paid, is also relied upon to urge that it shows fulfillment of sub-clause [b]
i.e. 50% of the estimated value of contract to be awarded under different
contracts. As there is some dispute about this certificate dated 23.11.2015,
accompanying letters showing rendering of transportation services for an
amount of Rs. 4 Crores in 2014-15 from Cement Plant of M/s. Orient
Cement is also relied upon. According to petitioner this work worth Rs. 4
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crores in the year 2014-15 again qualifies it and makes it eligible. Petitioner
has also claimed that along with tender document, it has supplied all these
letters as also certificate of its Chartered Accountant dated 26.01.2016. This
specific assertion in Writ Petition has not been traversed by taking any
express stand in relation thereto by respondent no.1.
18. Shri Bhangde, learned Senior Counsel submits that 25% of the
estimated value in one single contract can be spread over the period of
immediate preceding 5 years. Similarly 50% of the estimated value under
different contracts should be shown to be discharged in a period spread over
preceding 5 years. That period of 5 years expires on 31.03.2016. According
to learned Senior Counsel, therefore, the work done under a single contract
after 01.04.2011 upto 31.03.2016 or under different contracts during said
period needs to be looked into. He claims that accordingly certificate issued
by IFFCO or then by M/s. Orient Cement establish this quantum of work,
19. Respondents claim that 25% of the estimated value or 50% of the
estimated value must have been handled in one financial year in any of the
preceding 5 years. According to them if this quantity is allowed to be spread
over the period of 5 years, the entire scheme in paragraph no.4[A]
reproduced supra, becomes arbitrary and unworkable. They therefore insist
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that experience certificate has to be in the prescribed proforma i.e. Form 'VI'.
According to petitioner format used by it for certificate is proper and has not
been objected by respondent no.1.
20. As already noted supra, the Tender Committee has given only one
reason for holding that the experience criterion is not met with. It has
eliminated experience certificate of M/s. Orient Cement and has not taken
it into consideration. No fault is found with the proforma of certificates
issued by IFFCO and with proforma of Orient Cement. While mentioning
certificate of Orient Cement, the Tender Committee records that a certificate
and accompanying letter were also enclosed. It has also given date wise
break up of all these certificates with quantum of work. The Tender
Committee expressly holds and notes that the experience certificate in
proforma prescribed at Appendix-VI has been supplied.
21. Only reason for not accepting the experience certificate of M/s.
Orient Cement recorded by the Tender Committee is as under :
" Experience certificate has been given by Oriental Cement
Ltd. for Rs. 1205.69 lakhs for F.Y. 2014-15. However ITR
doc. shows that Orient Cement Ltd has deducted the TDS
amount for the work done Rs. 18.37 lakhs. Hence, the
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experience certificate from M/s. Oriental Cement does not
reflect the true and fair view."
This remark appears above the remark of Tender Committee already
reproduced supra. The committee has found petitioner technically
disqualified as there was no deduction of TDS amount for the work done
over and above Rs. 18.37 lakhs. Impact of Section 194C[6] in force during
the financial year 2014-15 has thus not been considered by the Committee.
Not only this, but, the fact that said amendment requiring deduction of TDS
has come into force w.e.f. 01.06.2015, is also lost sight of. Material on
record i.e. note of Tender Committee however shows some inconsistency in
the matter. If entire payment was for the period prior to 01.06.2015, TDS
on any payment itself was not warranted. No light has been thrown before
us on this aspect by any of the respondents. Unilateral wrongful deduction
of TDS by M/s. Orient Cement from petitioner may be faulty, and therefore,
may not be material in present tender process. We can not and need not
conclude this aspect.
22. However, as we find that the certificate issued by IFFCO has not
been discarded by recording any reasons and also, has not been
independently looked into to consider the eligibility of petitioner in terms of
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paragraph no.4[A] [a]. Similarly, the certificate issued by M/s. Orient
Cement has been eliminated from consideration on erroneous ground.
Hence, we are not in a position to sustain the consideration by the tender
committee. Any responsible body entrusted with such a vital duty would not
have committed such an error by failing to evaluate the documents on
record or by not applying the correct legal provisions. The other bidders
have pointed out some additional material alleging it to be adequate to
disqualify the petitioner. Thus applying the yardsticks mentioned supra in
the judgment of the Hon'ble Apex Court, the present exercise and
consideration by the tender committee definitely calls for intervention by
this Court. That exercise and the order disqualifying the petitioner is
unsustainable. Respondent no.2 has pointed out to this court additional
material i.e. letter dated 28.01.2016 sent by the Vice President, Human
Resources of Orient Cement Ltd., to Maharashtra State Warehousing
Corporation. This communication also needs due verification and its
impact on the offer of petitioner deserves to be considered by respondent
no.1 through its tender committee.
23. In this situation, taking over all view of the matter, we quash and
set aside the order dated 09.09.2016, and restore the tender process back to
the table of the Tender Committee for taking fresh decision on eligibility of
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petitioner in the light of material becoming available to it. Whether
certificates made available by the petitioner are in proper format or not and
how the period of preceding five years should be understood, implications
emanating therefrom are the questions which we leave open for tender
committee to ponder upon. This exercise be completed within a period of
two weeks from today.
24. Writ Petition is thus partly allowed and disposed of. Rule is made
absolute in the aforesaid terms, with no order as to costs.
JUDGE JUDGE
Rgd.
