Aroni Tubes Private Limited vs West Bengal Agro Industries ...
2021 Latest Caselaw 1521 Cal

                      In the High Court at Calcutta
                     Constitutional Writ Jurisdiction
                              Appellate Side

The Hon'ble Justice Sabyasachi Bhattacharyya
                           WPA No.2504 of 2021
                                   With
                           IA No: CAN 1 of 2021
                     Aroni Tubes Private Limited
                                  Vs.
      West Bengal Agro Industries Corporation Limited and others


For the petitioner                   :     Mr. Ayan Banerjee,
                                           Ms. Debasree Dhamali

For the respondent-authorities       :     Mr. Joydip Kar,

Ms. Sarmila Das

Hearing concluded on : 12.02.2021

Judgment on : 23.02.2021

Sabyasachi Bhattacharyya, J:-

1. The petitioner challenges a Notice Inviting e-Tender (NIT) dated

January 9, 2021 floated by respondent no.1 for the work of

installation of Solar Submersible Pump (50 nos.) at Jhargram District.

Learned counsel for the petitioner argues that Clause 2.12 of the NIT,

debarring Joint Ventures and consortia from participating in the

tender, was illegal, being violative of Article 14 of the Constitution of

India. That apart, the said Clause contravenes an Order dated

December 18, 2020 issued by the Department of Water Resources

Investigation & Development, Government of West Bengal, wherein it

was stipulated that Joint Ventures, if required, will also be allowed in

the tender processes as contemplated therein, which covers the

present tender as well.

2. Learned counsel next argues that Clause 22 of the NIT, disallowing

price preference and other concessions, violates the Notification dated

November 19, 2004 issued by the Finance Department, Audit Branch

of the Government of West Bengal. By the said Notification, Rule 47A

was inserted in the West Bengal Financial Rules, Volume I, which

provides that the State Government

Departments/Directorates/Offices, etc., shall adopt the measures

stipulated therein in the matter of making of purchases and execution

of all works. Sub-rule (1) of Rule 47A stipulates that all registered SSI

units of the State are to be given 15 per cent price preference vis-à-vis

large and small scale Industrial Units and other SSI units located

outside the State.

3. It is further argued on behalf of the petitioner that, by the same

Notification dated November 19, 2004, it was provided that registered

SSI units of the State shall be exempted from payment of earnest

money for tenders. Such clause was violated in the impugned NIT,

since online bids for the said tender could not be uploaded without

prior payment of earnest money.

4. Learned counsel for the petitioner argues that tenders having similar

illegal clauses were floated earlier by respondent no.1, on which

representations were made by a sister concern of the petitioner.

Pursuant to such representation, such previous tenders were

withdrawn, but again the same illegalities were repeated in the

present impugned tender. The petitioner made a representation on

January 11, 2021, pointing out the illegalities and asking for

withdrawal of such illegal tender. Without considering such

representation in the pre-bid meeting, the authorities proceeded with

the tender and opened the technical bid on February 1, 2021,

subsequently uploading it on February 4, 2021.

5. After service of the writ petition and filing of the same, the matter was

enlisted on February 5, 2021, when the respondents went

unrepresented. Subsequently, despite having full knowledge of the

writ petition, work order was issued in favour of a third party on the

morning of February 8, 2021, on which date the writ petition was

taken up for hearing.

6. Learned counsel argues that Joint Ventures are independent legal

entities and enjoy similar rights as partnerships, while participating in

Government Tenders. Thus, such Ventures are protected under Article

14 of the Constitution of India, vitiating the clause of the impugned

NIT preventing Joint Ventures from participating in the tender.

7. In this context, learned counsel relies on New Horizons Limited and

another vs. Union of India and others, reported at (1995) 1 SCC 478

and Gammon India Limited vs. Commissioner of Customs, Mumbai,

reported at (2011) 12 SCC 499, where the concept of Joint Venture

was discussed.

8. Learned counsel for the petitioner lastly contends that the clauses of

the tender were tailor-made to suit the purpose of some chosen

contractors. A comparison of the respective quotations, evident after

opening of the price bid, proves such fact. The financial bid was

opened on February 6, 2021, on a Holiday, to frustrate the instant

writ petition. At least two participants have quoted the same rates,

which match each other completely, which could not have been

possible unless the bidding was done by such bidders in consultation.

9. It is further argued that five the bidders have varied their rates for the

same item (50 Submersible Pumps) in respect of different tenders in

such a synchronized manner that each participant has been awarded

two work orders. Learned counsel argues that it is extremely

improbable that, for the same item, five participants have quoted

different rates in respect of the eight tenders, which ultimately led to

each of such participants being awarded two work orders. This clearly

shows the understanding between the bidders and formation of a

cartel, which has been prohibited by the Supreme Court in Excel Crop

Care Limited vs. Competition Commission of India and another,

reported at (2017) 8 SCC 47. In the said judgment, the Supreme Court

deprecated the formation of cartels, which has an adverse effect on

competition resulting in increase in price bid and is, therefore,

prohibited by Section 3 of the Competition Act, 2002.

10. Learned counsel appearing for the respondents submits that the writ

petition is not maintainable at the instance of the petitioner, since the

petitioner does not have the credentials as contemplated under Clause

2 of the NIT. The petitioner has failed to plead or prove in the writ

petition that it has done one work of similar nature in the magnitude

of 40 per cent or two similar nature of works, each of a minimum

value of 30 per cent, of the estimated amount of the tender.

11. Moreover, the petitioner has not submitted any bid in the tender

process and, thus, cannot contend to be aggrieved by or show

affectation of any right of the petitioner in not being able to participate

in the tender process.

12. As regards the challenge to Clause 2.12 of the NIT, regarding Joint

Ventures and consortia being debarred, learned counsel for the

respondents contends that the writ petitioner has failed to show that

the said clause violates either any fundamental right or any other law

or guidelines of the Government.

13. The Government Order dated December 18, 2020, relied on by the

petitioner on such score, merely provides that Joint Ventures will also

be allowed in the tender process, "if required". Hence, the said Order

does not create any mandate that in every tender Joint Ventures

should be allowed.

14. That apart, the respondents argue that it is settled law that the terms

of an NIT cannot be open to judicial scrutiny because it is in the realm

of contract, unless it is established that the terms of the tender were

so tailor-made as to suit the convenience of any particular person with

a view to eliminate all others from participating in the bidding process.

Learned counsel places reliance on Meerut Development Authority vs.

Association of Management Studies and another, reported at (2009) 6

SCC 171, in support of such proposition.

15. With regard to applicability of Rule 47A, as introduced by the

Notification dated November 19, 2004, learned counsel for the

respondents argues that the impugned tender was floated for a works

contract and the tenderer is required to procure materials for the

purpose of carrying out the works contract. The petitioner, it is

argued, does not manufacture any Solar Unit, nor Pumps or PVC

Pipes. The present contract is not for supply of materials by a

manufacturer but a contract where the tenderers have to procure

such materials like Solar Panel, Pump, PVC Pipes, cement and brick

and thereafter construct a structure, do boring and sinking of the

pump and connecting it to a solar panel for automatic operation.

16. The expression "means and includes" in the explanation to Rule 47A

clearly indicates that the same is an exhaustive explanation of the

meaning. For such proposition, learned counsel relies on N.D.P.

Namboodripad (Dead) by LRs. vs. Union of India and others, reported at

(2007) 4 SCC 502.

17. The language of Rule 47A, it is argued, leaves no doubt that the

facilities incorporated therein are required to be extended to

manufacturing units of the State. The impugned tender, however, is

not restricted to supply of any manufactured item by a manufacturing

unit but is a works contract to be executed upon procuring various

materials from various manufacturers. Thus, Rule 47A, it is

submitted, has no manner of application to the instant case.

18. Learned counsel submits that no single manufacturing unit is capable

of executing the job contemplated in the impugned tender. The job is

to be executed by a bidder who has the infrastructure not only to

procure various materials but also to erect and install the same.

19. Learned counsel for the respondents further submits that eight

tenders have already been finalized and work orders issued. The work

is in public interest and any delay in executing the same shall have an

adverse effect against such interest.

20. Upon hearing counsel and perusing the materials on record, it is

evident from Clause 22.0 of the impugned NIT that no price preference

and other concession would be allowed for the tender-in-question. The

question which arises is whether the said clause contravenes the

Notification issued by the Finance Department of the Government of

West Bengal on November 19, 2004. Rule 47A, introduced by such

Notification, covers all purchases and execution of all works and is not

confined to purchases alone.

21. Sub-rule (1) of Rule 47A specifically provides that all registered "SSI

Units of the State" are to be given 15 per cent price preference vis-à-

vis large and small scale Industrial Units and SSI Units located

outside the State.

22. The said sub-rule also provides that registered "SSI Units of the State"

shall be exempted from payment of earnest money for tenders.

23. However, in contradistinction with Sub-rule (1), the expression used

in Sub-Rule (2)(b) is "State-based medium and large scale units",

which will also be given 10 per cent price preference over large and

medium units and SSI Units of other States.

24. The explanation to Rule 47A defines the term "State-based Unit",

which are restricted to manufacturing units.

25. The argument of the respondents, that the units covered by Rule 47A

have to be manufacturing units, is belied by the language used in the

said Rule itself. The distinction between the expressions "SSI Units of

the State" and "State-based Unit" makes it amply clear that two

different categories of units are envisaged in the rule. The expression

"State-based unit" has only been used in Sub-rule (2)(b) of Rule 47A,

which relates to medium and large scale units, whereas the SSI Units

of the nature of the writ petitioner, being "units of the State" have

been provided for in Sub-rule (1) of Rule 47A.

26. Such distinction also becomes clear from the use of the term "major"

used to qualify the manufacturing units which are covered by the

expression "State-based Units". Hence, the explanation, by its

language makes it abundantly clear that the State-based medium and

large scale units covered by Rule 47A (2)(b) have to be manufacturing

units situated within the State. The expression "major" preceding the

term "manufacturing unit" in the explanation is a further indicator in

that regard and shows that the expression pertains to medium or

large scale units and not small scale industrial (SSI) units.

27. The language used in Rule 47A(1), however, relates to registered SSI

Units of the State, which are to be given 15 per cent price preference.

Since the definition of "State-based Units" does not cover the price

preference given to SSI "Units of the State" as envisaged in Sub-rule

(1) of Rule 47A, such units cannot be confined to manufacturing

units. Thus, the defence of the respondents on that score is invalid.

Hence, Clause 22.0 of the NIT was clearly in contravention of the

Finance Department Notification dated November 19, 2004. The

exemption of earnest money, also contemplated in the said

Notification, was violated as well by making it a mandatory pre-

requiite to deposit earnest money for participating in the online

bidding process. The NIT is also de hors the Notification on such

score.

28. However, the petitioner's objection as regards Clause 2.12, preventing

Joint Ventures and consortia from participating in the tender, cannot

be labelled as illegal, since the Government Order dated December 18,

2020 makes it optional ("if required") to include Joint Ventures in

respect of a tender process. It falls within the discretion of the

Tendering Authority as to what type of participants it wants to execute

the work contemplated in the tender. A classification between the Joint

Ventures/consortia and other juristic entities cannot be said to be so

unreasonable as to violate Article 14 of the Constitution of India. As

held by the Supreme Court in Meerut Development Authority (supra), a

tender process is not open to judicial scrutiny unless it is established

to be so tailor-made as to suit the convenience of any particular

person.

29. In such context, the allegation of cartelization levelled by the petitioner

assumes importance. The petitioner has sought to make out a case

that the NIT was tailor-made to suit the purpose of a particular cartel/

cartels. For such proposition, the petitioner relies on the matching

bids of at least two of the participants and the plan behind

synchronization of the price quoted by five out of the eight bidders,

which ensured that each of the said five bidders would be awarded two

work contracts. A careful perusal of the materials produced by the

petitioner vindicates such stand. Not only were some of the bids

exactly identical, the synchronicity between the bids of five tenderers,

being the B.K. Enterprise, Equipments & Spare Agency, Bingas

Electrical Electronics, S.N. Polymer Pvt. Ltd. and Z Star Commotrade,

is clearly reflected in the Financial Bid Chart of the tenders opened on

February 6, 2021.

30. Although such cartelization has not been proved beyond reasonable

doubt, sufficient presumption is raised in that regard by the

synchronicity between a majority of the bidders.

31. Such attempt at catering to the participation of only some of the

bidders, in conjunction with gross violation of the Finance Department

Notification dated November 19, 2004, by precluding price preference

and concession in Clause 22.0 of the NIT and making it compulsory to

deposit earnest money prior to online uploading of the bids, vitiates

the impugned tender process.

32. The respondents could not provide sufficient justification for such

patent contravention of the Notification dated November 19, 2004,

which binds respondent no.1, the Tendering Authority, which is a

Government of West Bengal Undertaking. As such, the impugned

tender was de hors the Government Notification and contravened

principles of natural justice. Hence, the impugned tender has to be

set aside.

33. Accordingly, WPA No.2504 of 2021 is allowed, thereby setting aside

the Notice Inviting e-Tender (NIT) dated January 9, 2021 (Annexure

P-3 at page 23 of the writ petition), impugned in the present writ

petition. Any action and/or work order taken/issued pursuant to

such NIT are also hereby set aside and quashed. All connected

pending applications are disposed of accordingly.

34. There will be no order as to costs.

35. Urgent certified copies of this order shall be supplied to the parties

applying for the same, upon due compliance of all requisite

formalities.

( Sabyasachi Bhattacharyya, J. )