Bombay High Court
M/S. Balaji Surgical, Through Its ... vs Mr. Manoj Saunik, Chief Secretary, ... on 6 February, 2024
Digitally signed
2024:BHC-AS:6204-DB
by LAXMIKANT
LAXMIKANT GOPAL
GOPAL CHANDAN
CHANDAN Date: 1 (906) wp-9202.23-AW-IA-18412.23.doc
2024.02.08
15:25:03 +0530
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.9202 OF 2023
WITH
INTERIM APPLICATION NO.18412 OF 2023
IN
WRIT PETITION NO.9202 OF 2023
M/s. Balaji Surgical,
Through its Proprietor,
Mr. Prasanna Sudam Shinkar,
Add.: Sr. No. 98, Plot No. 3, Gilankar Nagar,
MG Petrol Pump Road, Opp. MSG College,
Malegaon Camp, Nashik - 423203 : Petitioner
Vs.
1. State of Maharashtra,
Through the Government Pleader,
Bombay High Court, Fort, Mumbai-32.
2. Malegaon Municipal Corporation,
Through its,
Commissioner and Health Department,
Add.: Sapati Bazar, Malegaon-423203
3. M. S. Pharma,
Add.: Shop No.1, DVS Tower,
Near Sankalp Hospital, Malegaon,
Nashik-423203.
4. Om Medicines,
Add.: Shop No. 8, Tirupati Complex,
Mosam Bridge Road, Malegaon,
Nashik - 423203.
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5. The Nasik Medical Agencies,
Add.: 480/20 Parijat House, Gole Colony,
Nashik - 422002. : Respondents.
-----
Mr. Amit A Gharte for the Petitioner.
Mr. P. P. Kakade, GP a/w Mr. O. A. Chandurkar, Addl. GP and Mr.
M. M. Pabale, AGP for Respondent No.1-State.
Mr. S. S. Patwardhan for Respondent No.2.
Mr. Sanjiv A Sawant i/by Mr. Abhishek P Deshmukh for
Respondent No.4.
----
CORAM : DEVENDRA KUMAR UPADHYAYA, CJ. &
ARIF S. DOCTOR, J.
DATE : 6th FEBRUARY, 2024
JUDGMENT.: (PER ARIF S. DOCTOR, J.)
1. Rule. Rule made returnable forthwith. With the
consent of the learned counsel for parties, the present Writ
Petition is taken up for final hearing.
2. The Petition essentially impugns the Petitioner's
disqualification from the tender process floated by Respondent
No. 2 - Malegaon Municipal Corporation for the supply of
medicines, materials, laboratory chemicals and equipment's for
hospitals/clinics ("the said tender") on the ground that the
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Petitioner had failed to submit a " No Conviction Certificate" in
terms of a corrigendum dated 19th April, 2023 issued by
Respondent No. 2.
3. Before adverting to the rival contentions, it is useful
to set out the following facts, viz.
i. Respondent No.2 had vide a notice dated 15 th April
2023 published an advertisement for calling for bids in
respect of the said tender for which the last date for
submission of bids was 5.00 p.m. on 21st April 2023.
ii. It is not in dispute that (a) Respondent No. 2
thereafter on 19th April 2023 at 9.11 p.m. i.e.
effectively one day prior to the submission of bids,
required as a mandatory eligibility criteria bidders to
submit a "No Conviction Certificate" and (b) that this
corrigendum was neither published/advertised nor
communicated to the Petitioner but was merely
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uploaded on the website of Respondent No. 2.
iii. Though strictly not relevant to the present challenge, it
is the Petitioner's contention that the Petitioner was
made aware of this corrigendum by one of the officers
of Respondent No. 2 only on 20th April 2023 and that
the said corrigendum prior to 25 th April 2023 was not
opening on the website of Respondent No. 2. It is the
Petitioner's contention that the said corrigendum
opened for the first time only on 25th April 2023.
iv. On 26th April, 2023, three things happened (a) the
Petitioner's technical bid was opened and the Petitioner
was held to be technically qualified (b) the Petitioner
requested the Food and Drugs Administration,
Maharashtra to issue a "No Conviction Certificate" to
the Petitioner and (c) the Petitioner requested
Respondent No. 2 to extend the time for submission of
the "No Conviction Certificate".
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v. It is again not in dispute that thereafter by a letter
dated 12th May 2023 Respondent No. 2 granted the
Petitioner an extension of time till 16 th May 2023 to
submit the said "No Conviction Certificate" and that
the Petitioner thereafter infact submitted the said "No
Conviction Certificate" dated 4th May 2023 issued by
the Food & Drugs Administration, Nashik Zone 3
District on 12th May, 2023 i.e. within the extended
time.
vi. However, despite the above, i.e., submission of a "No
Conviction Certificate" by the Petitioner within the
extended time, Respondent No. 2 (a) published its
scrutiny letter dated 13th July 2023 disqualifying the
Petitioner on the ground that the Petitioner had not
submitted "No Conviction Certificate" and (b) published
its Tender Summary Report on 19th July 2023
disqualifying the Petitioner on technical grounds and
accepting Respondent Nos. 3, 4 and 5 as technically
qualified. Respondent No. 4 was thereafter, it appears
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declared as the successful bidder.
4. It is in the aforesaid factual matrix that the Petitioner
has essentially impugned (i) the Scrutiny Letter dated 13 th July
2023 and (ii) the Tender Summary Report dated 19th July 2023.
5. Before proceeding further, we must at this stage note
that this Court had vide an order dated 25 th July 2023 inter alia
granted interim relief by directing that if the work order had not
been granted, the same should not be issued till the next date.
Thereafter after a detailed hearing on interim reliefs this Court
had vide an order dated 4th November 2023 inter alia held that
the conduct of Respondent No. 2 in not opening the Petitioner's
technical bid was not only truly unreasonable in the wednesbury
sense but also perverse and directed Respondent No. 2 to open
the technical bid of the Petitioner and submit a report.
Thereafter by an order dated 18th January 2024, this Court
directed Respondent No. 2 to open the Petitioner's financial bid.
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6. Respondent No. 4 filed a Special Leave Petition1 (SLP)
challenging both the order dated 4th November 2023 and the
order dated 18th January 2024. The SLP was however dismissed
by the Hon'ble Supreme Court by an order dated 29th January
2024.
thereafter in compliance with the orders passed by this Court
albeit after some delay, opened the financial bid of the Petitioner
and filed its Affidavit dated 29th January 2024 placing on record
that "the Petitioner would have been the L1 bidder, had his bids
been considered2."
8. Hence from the above facts the admitted position that
emerges is that the Petitioner would have been declared L1 had
the Petitioner not been disqualified by Respondent No. 2 on the
ground that the Petitioner had not submitted a " No Conviction
Certificate" as required by the said corrigendum dated 19 th April,
2023. Thus, what falls for our consideration is whether in the
2 Para 3 page 266 -Additional Affidavit of Respondent No. 2 dated 29 th January 2024
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aforesaid facts, the Petitioner's disqualification can be said to be
justified or whether the same was arbitrary, unfair, and irrational
and thus susceptible to challenge and judicial review.
9. Mr. Gharte, at the outset submitted that requirement
for submission of a "No Conviction Certificate" admittedly was
not part of the tender conditions as published. He then
submitted that such a substantive term could never be
introduced by way of a corrigendum, much less in the manner
that had been done by Respondent No. 2 i.e., at 9.11pm
effectively one day before the last date of submission and
without notice to the Petitioner. In support of his contention that
a corrigendum was meant only to correct typographical and
clerical errors and could never introduce substantive terms in a
tender/contract, he placed reliance upon a judgement of the
Hon'ble Supreme Court in State of Andhra Pradesh (Now State of
Telangana) Vs. A. P. State Wakf Board and others3.
10. Mr. Gharte then submitted that the entire conduct of
3 2022 SCC OnLine SC 159
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Respondent No. 2 smacked of malafides and was clearly only to
favour Respondent No. 4. In support of this contention, he first
pointed that the corrigendum was issued effectively one day
prior to the last date for submission of bids and was without
intimating the Petitioner nor publishing and/or advertising the
same. He then submitted that even though time to submit the
"No Conviction Certificate" was extended and the Petitioner had
admittedly submitted the same within the extended time,
Respondent No. 2 had disqualified the Petitioner on the sole
ground that the certificate was dated after 21st April 2023. He
thus submitted that this conduct apart from being completely
arbitrarily, unreasonable, and illogical also reeked of malafides.
11. Mr. Gharte then took pains to point out that the said
contract awarded to Respondent No. 4 was a rate contract which
had been stayed by this Court by the order dated 4 th November
2023. He submitted that the rates quoted by the Petitioner were
much lower, than those submitted by Respondent No.2, in his
submission 60% lower. He submitted that for the period upto 4 th
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November 2023, Respondent No. 4 would be entitled to
payments for the supplies made, however for work orders
pending post November 2023, the same should be awarded to
the Petitioner. He submitted that not only would no prejudice be
caused to any party, but infact the state exchequer would benefit
substantially since the rates quoted by the Petitioner were
admittedly lower than the rates at which Respondent No. 4 was
effecting supplies.
12. Mr. Gharte then submitted that clause 24 of the
tender conditions specifically provided that Respondent No. 2
could extend the present contract at its sole discretion. He
submitted that given the manner in which Respondent No. 2 had
acted to favour Respondent No. 4, there was every reason for
Petitioners to believe that Respondent No. 2 would infact extend
the term of the contract to favour Respondent No. 4 and to the
detriment of the public exchequer.
13. Mr. Gharte then placed reliance upon a judgment of
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the Hon'ble Supreme Court in the case of Maa Binda Express
Carrier and another Vs. North-East Frontier Railway and others 4
to submit that all the participating bidders were entitled to fair,
equal and non-discriminatory treatment in matters of evaluation
of a tender and/or their bids. He submitted that in the event it
was found that the authority concerned had acted in an
arbitrary, unfair or unreasonable basis, the tender evaluation
process was open to judicial scrutiny. It was his submission that
in the present case, the Petitioner had been discriminated
against and had been treated arbitrarily and unfairly only to
benefit Respondent No. 4. Basis this, he submitted that the
conduct of Respondent No. 2 was not only completely arbitrary,
irrational and unreasonable but was plainly biased and perverse.
It is thus he submitted that the same was liable to be judicially
reviewed.
14. Per contra, Mr. Patwardhan, Learned Counsel
appearing on behalf of Respondent No.2 did not dispute the fact
that (a) the original tender did not have any requirement for
4 (2014) 3 SCC 760
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submission of a "No Conviction Certificate" (b) the Corrigendum
was uploaded only at 9.11 p.m. on 19th April 2023 without
notice to the Petitioner nor was the same published in any
newspaper (c) that Respondent No. 2 had extended the time for
submission of the "No Conviction Certificate" and (d) that the
Petitioner had infact submitted the certificate within the
extended time. He, however, justified the rejection on the
ground that the certificate ought to have been date prior to 21 st
April 2023 i.e., the last date for submission of bids. It was his
submission that since the Petitioner had only applied for the
certificate post 21st April 2021 the Petitioner could not be said to
have acted diligently and in conformity with the corrigendum
which contained a mandatory condition of the tender.
15. Mr. Patwardhan further submitted that the
requirement of submitting the "No Conviction Certificate" being a
mandatory precondition failure to comply with the same justified
Respondent No. 2 in disqualifying the Petitioner. In support of his
contention that the Court shall not interfere in a decision of
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disqualification of tenderer if such tenderer has failed to comply
with a mandatory condition of the tender, he placed reliance
upon a judgement of the Hon'ble Supreme Court in the case of
Ram Gajadhar Nishad Vs. State of U.P. and Others5.
16. Mr. Sawant, Learned Counsel appearing on behalf of
Respondent No.4 submitted that the term of the contract
awarded to Respondent No. 4 was to come to an end on 31 st
March 2024. He submitted that the bulk of the tenure of the
contract was thus already over and therefore no interference at
this stage was warranted. He invited our attention to the order
dated 29th January 2024 passed by the Hon'ble Supreme Court
and pointed out that the Hon'ble Supreme Court had specifically
recorded that this fact could be brought to the attention of this
Court at the time of the hearing of the present Petition.
17. Mr. Sawant then pointed out that Respondent No. 2
had on 18th January 2024 infact floated a fresh tender for the
supply of medicines, materials, laboratory chemicals and
5 (1990) 2 SCC 486
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equipment for hospitals/clinics which was to commence from
April 2024. He pointed out that the Petitioner had participated in
the said tender, the question of the Petitioner proceeding with
the present Writ Petition did not arise. He placed reliance upon
the judgements of the Hon'ble Supreme Court in the case of
namely, Jagdish Mandal Vs. State of Orissa and Others 6, N. G.
Projects Limited Vs. Vinod Kumar Jain and Others7 and Tata
Motors Limited Vs. The Brihan Mumbai Electric Supply &
Transport undertaking (Best) and Others8 to submit that the
scope of judicial review in tender matters was extremely limited
and that a contract was a commercial transaction and once
entered into if bona fide, the Courts would be loath in their
exercise of power of judicial review to interfere, even if a
procedural aberration or error in assessment or prejudice to a
tenderer is made out. He submitted that the power of judicial
review will not be permitted to be invoked to protect private
interest at the cost of public interest or to decide contractual
disputes.
6 (2007) 14 SCC 517
7 (2022) 6 SCC 127
8 2023 SCC OnLine SC 671
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18. Mr. Sawant then submitted that it was not open to
Respondent No. 2 to consider the " No Conviction Certificate"
since the same was submitted after the last date of submission
of bids. He submitted that any act of Respondent No. 2 in doing
so would itself be arbitrary and illegal. In support of his
contention, he placed reliance upon a judgment of Punjab and
Haryana High Court in case of M/s. Zimidara Transport Company
Vs. State of Punjab and others9.
19. Mr. Sawant then additionally submitted that the
Petitioner had infact accepted the condition for submission of a
"No Conviction Certificate" and not challenged the same. He
submitted that the Petitioner thus having accepted the condition
was necessarily required to comply with the same. He submitted
that the requirement of submission of a " No Conviction
Certificate" was introduced at the discretion of Respondent No. 2
and to ensure sanctity of the tender process is maintained and it
was not open to the Petitioner to now make any grievance in
9 2015 SCC OnLine P&H 10654
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that regard. He further submitted that the requirement for
submission of a "No Conviction Certificate" was a technical
requirement/issue with which the Courts should not interfere
with. Basis the above, he submitted that the present Petition
must necessarily be dismissed.
20. We have heard learned Counsel at length, considered
the rival contentions as also the case law cited by them. We are
conscious of the fact that the scope of judicial intervention in
tender and/or contractual matters is extremely limited. However,
when it is found that a public authority and/or body has acted in
an arbitrary, unreasonable and unfair manner, such conduct can
be set right by judicial review as held by the Hon'ble Supreme
Court in the case of Tata Cellular vs Union of India 10 as also
when there exists a clear -cut case of malafide conduct on the
part of a public authority as held in the case of Tata Motors Ltd.
(supra) In the facts of the present case, we find as already
recorded by us in our order dated 4 th November 2023, that the
conduct of Respondent No. 2 is not only arbitrary, irrational and
10 (1994) 6 SCC 651
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unfair but also perverse. It is thus that we are inclined to
interfere in the extraordinary jurisdiction vested in us under
Article 226 of the Constitution of India, for the following reasons
viz.
A. As we have noted above, Respondent No. 2 has in its
affidavit dated 29th January 2024 admitted "the Petitioner
would have been the L1 bidder, had his bids been
considered." It is not in dispute that the only reason for
disqualifying the Petitioner was that the Petitioner had not
submitted a "No Conviction Certificate" in terms of the
corrigendum dated 19th April, 2023. We have in our order
dated 4th November, 2023 recorded the reasons as to why
such conduct on the part of Respondent No. 2 was not
only arbitrary, unreasonable and unfair, but also was
perverse, the same is extracted and reiterated herein, viz.
"We say so because (a) the original tender did not have
any condition for submission of a "No Conviction Certificate";
(b) the condition was inserted by way of a corrigendum
(neither published nor communicated to the Petitioner) at the
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nth hour (c) the Petitioner is granted time to submit such "No
Conviction Certificate" which the Petitioner does within the
extended time granted (d) despite this, the Petitioner is
disqualified on the ground that the certificate bears a date
posterior to the last date of submission. Such conduct can
only be termed as arbitrary and unreasonable given the fact
(i) the corrigendum did not require the date of the "No
Conviction Certificate" to be prior to submission of the bids
and (ii) even assuming it did, what is crucial is the factum of
the Petitioner having never being convicted under proceedings
qua the FDA and not the date of the certificate. The date of
the certificate is entirely irrelevant to the issue at hand. There
is today no dispute by any party qua the bona fides or
genuineness of the said certificate. Hence, the condition
required by the said corrigendum was duly satisfied by the
Petitioner. Given this background, for Respondent No.2 to now
contend that the certificate ought to have been dated before
21st April, 2023 can only be termed to be irrational and
without any justification".
In the order extracted, the word "posterior" should be
read as "post". As already noted above, the SLP from the
said order was dismissed. However, what is manifestly
clear is that Respondent No.2 had surreptitiously
introduced a material tender qualification condition
without notice to the Petitioner. Additionally, there is no
dispute that (a) the Petitioner had technically qualified (b)
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the Petitioner had obtained the "No Conviction Certificate"
and (c) submitted the same within the extended time
despite which the Petitioner was disqualified. Thus,
Respondent No. 2 proceeded to disqualify the Petitioner
despite not disputing the fact that the Petitioner was
never convicted, only on the ground that the certificate
ought to have been dated prior to 21 st April, 2021. This to
our minds is entirely unreasonable in the wednesbury
sense, irrational and perverse. Such conduct and the
manner in which Respondent No. 2 has sought to justify
the same make it abundantly clear that Respondent No. 2
has not acted in a fair, transparent, and non-
discriminatory manner but strongly leads us to believe
that Respondent No. 2 has acted only to favour
Respondent No. 4. Such conduct in our view cannot be
condoned and/or countenanced as it would give an
impetus to public authorities and/or bodies to act in a
completely, arbitrary, unreasonable, and unfair manner
and as a result thereof cause loss to the public
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exchequer.
B. Hence in the above given facts of the present case, we
find that the judgements in the case of Jagdish Mandal
(supra) , N. G. Projects Limited (supra) and Tata Motors
Limited (supra) relied upon by Mr. Sawant on behalf of
Respondent No. 4 would be of no assistance to him. Infact
we must note that the judgement in the case of Jagdish
Mandal (supra) itself caveats that judicial review shall not
be foreclosed when it can be established inter alia that the
process adopted, or decision made is malafide or to favour
someone or where the decision is so arbitrary and
irrational that no responsible authority acting reasonably
could have reached such decision. The judgement in the
case of N.G. Projects (supra) also calls upon Courts to
refrain from interference when such interference would
cause loss to the public exchequer. In the facts of the
present case, the situation is infact to the contrary since
the rates at which Respondent No. 4 is effecting supplies
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is much higher than the rates offered by the Petitioner.
Thus, the continuation of the contract would cause a loss
to the exchequer. As we have already noted above, the
Hon'ble Supreme Court in the case of Tata Motors (supra)
expressly lays down that in cases of clear-cut
arbitrariness, irrationality, malafides and bias, judicial
intervention is permissible. In the present case as noted
above, each of these parameters for interference exist. Mr.
Sawant also relied upon the decision of the Punjab and
Haryana High Court in the case of Zimidara Transport
Company (supra) to submit that the act of the tendering
authority in considering documents after the closing of
bids would be illegal. However, the said judgement would
also not be applicable for two reasons, firstly, in the facts
of that case, the tendering authority had not extended
time as has been submitted in the present case and the
financial bid of the Petitioner was opened under orders of
the Court and not the authority. Equally we find that the
judgment in the case of Ram Gajadhar Nishad (supra)
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relied upon by Mr. Patwardhan is entirely inapplicable to
the facts of the present case since again in that case
documents were submitted after the closing of the bid,
whereas in the present, it is not in dispute that (i) the
time for submission was extended and (ii) the Petitioner
submitted the "No Conviction Certificate" within the
extended time.
C. Additionally, we must note that the contention of
Respondent No. 4 that most of the tenure of the contract
is over and thus this Court ought not to interfere at this
stage is also equally untenable for three reasons (i) the
work order issued to Respondent No. 4 is a rate contract
which contemplated supplies to be made thereunder from
time to time (ii) this Court had vide the order dated 4 th
November, 2023 stayed further work orders from being
issued to Respondent No. 4 and (iii) the rates quoted by
the Petitioner are substantially lower (stated to be 60%
lower) than those quoted by Respondent No. 4. This
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coupled with the fact that we have found the conduct of
Respondent No. 2 to be manifestly arbitrary and perverse
and clearly to favour Respondent No. 4, in these
circumstances allowing the contract to continue even for a
day would effectively mean perpetuating such illegality.
Also, we must note that if Respondent No. 4 is permitted
to make further supplies under the rates offered, a direct
loss would be caused to the state exchequer. On the other
hand, no prejudice would be caused to Respondent No. 4
since Respondent No. 4 would be entitled to payment for
the supplies already effected. Therefore, we find that
every principle of justice, equity and good conscious
would demand that no further work orders be issued to
Respondent No. 4.
D. Having found that the conduct of Respondent No.2 to be
arbitrary, unreasonable and accentuated by bias and/or
mala fides if such conduct is to be condoned, it would
embolden the Authorities to continue to act in an arbitrary
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and/or unreasonable manner when awarding public
contracts as also to favour certain entities which has been
done in the present case at a huge loss to the exchequer.
This conduct in awarding tenders, to our mind, is entirely
impermissible and if allowed to be perpetuated, would
amount to putting a premium on dishonesty and thus
cannot be countenanced. Thus, the fact that a fresh
tender has been floated in which the Petitioner has
participated would also by itself make no difference and
cannot be used as a reason to perpetuate an illegality.
21. In view of the aforesaid observations, we pass the
following order :-
(i) Writ Petition is allowed in terms of prayer
clauses (a) and (b).
(ii) It is directed that no further work orders shall
be granted to Respondent No. 4 under the
subsisting contract.
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(iii) Respondent No. 2 is directed to consider the
Petitioner as L1.
22. Rule is made absolute accordingly.
23. In view of disposal of the Writ Petition, the Interim
Application does not survive and the same is accordingly
disposed of.
24. After the pronouncement of this order, Mr. Sawant
Learned Counsel appearing on behalf of Respondent No. 4
sought a stay on this order for the period of two weeks. For the
reasons already mentioned above the request is rejected.
(ARIF S. DOCTOR, J.) (CHIEF JUSTICE)
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