United Order And Supply ... vs The State Of West Bengal And Others
2021 Latest Caselaw 30 Cal

                      In the High Court at Calcutta
                     Constitutional Writ Jurisdiction
                              Appellate Side

The Hon'ble Justice Sabyasachi Bhattacharyya

                        W.P.A. No. 10800 of 2020
           United Order and Supply Co-Operative Society Ltd.
                                  Vs.
                  The State of West Bengal and others


For the petitioner                  :     Mr. Saptangshu Basu,
                                          Mr. Swarup Paul,
                                          Mr. Surya Maity,
                                          Ms. Amrita Maji,
                                          Ms. Mrinalini Majumder
For the respondent-authorities      :     Mr. Samrat Sen,

Ms. Manali Ali

Hearing concluded on : 22.12.2020

Judgment on : 05.01.2021

Sabyasachi Bhattacharyya, J:-

1. Respondent no. 4 floated a two-tier (technical and financial) re-tender

for supply of cooked diet to indoor patients of Durgapur ESI Hospital

vide ESI/DGP/NIT-04/DIET/20/Re 1/847 on June 25, 2020. The

petitioner participated in the re-tender along with sixteen other

bidders and succeeded in the technical bid. Tender Summary Reports

were uploaded on September 10, 2020, indicating that financial bid

was to be accepted in respect of the petitioner and four other bidders,

while the other bidders had been rejected in the technical bid.

However, vide Memo no. ESIH/DGP/1607 dated November 10, 2020,

all sixteen bidders apart from the petitioner were requested to upload

certain shortfall documents to validate their technical bids. On

November 27, 2020, Memo no. ESIH/DGP/1682 was issued,

requesting the petitioner and four other bidders to attend a selection

process where the successful bidder was to be chosen by draw of lots.

2. Learned senior counsel for the petitioner submits that Rule 47C of the

West Bengal Finance Rules provides for a "two-bid" system for high

value purchase exceeding Rs. 10 lakh or for purchasing plant,

machinery, equipment etc. of complex and technical nature which

indicates that bids shall be invited in two parts, first the technical bid

and then, only in respect of technically acceptable offers, the financial

bid. Taking a cue from such Rule, counsel argues that unless the

technical bid of a bidder is accepted on being eligible, the stage of

financial bid does not arise.

3. Learned senior counsel next places reliance on a Memorandum dated

February 14, 2017, which sets out the revised norms for acceptance of

L1/H1 bid/Single bid when the number of qualified bidders during

second call is less than three. Clause II thereof stipulates the

situations on the basis of which the Tender Inviting Authority shall

take a decision if the number of qualified bidders during tender/re-

tender/re-auction is less than three.

4. Sub-clause 'A' of Clause II governs tenders where the estimate is less

than Rs. 5 lakh. Sub-clause 'B' provides for tenders where the

estimate is equal to or more than Rs. 5 lakh but not more than 1

crore. The "Case I" in both sub-clauses provide, inter alia, that if the

number of qualified bidder is one during re-tender, the Departmental

Head Secretary may accept the tender in consultation with the

financial advisor of the department (in case of 'B' , further on

recommendation of the Departmental Tender Committee).

5. It is argued that, in the present case, the request dated November 10,

2020 to all the sixteen bidders other than the petitioner, to upload

'shortfall documents' to validate their technical bids, is sufficient proof

of the deficiency of all such other bidders in their technical bids.

Thus, the petitioner was the only successful bidder at the technical

bid stage. Drawing analogy from the principle laid down in Rule 47C

of the West Bengal Finance Rules, unless a bidder succeeded at the

technical stage, the bidder would not be eligible for the next stage,

that is, the financial bid. As the petitioner was the only successful

bidder at the technical stage, the revised norms for re-tenders dated

February 14, 2017 apply and the Departmental Head Secretary was to

accept the petitioner's tender and issue work order to the petitioner.

Instead, the other sixteen technically ineligible bidders were permitted

afresh to validate their deficient technical bids and four other bidders

were selected from the said pool of bidders, thereby undertaking a de

novo bid invitation process contrary to the revised norms for re-

tender, which vitiates the process, for which this court ought to set it

aside, according to the petitioner.

6. Learned senior counsel for the petitioner cites Monarch Infrastructure

(P) Ltd. v. Commissioner, Ulhasnagar Municipal Corporation and Others

[ (2000) 5 SCC 287 ] where the Supreme Court endorsed the view of

the Bombay High Court that if a term of a tender was deleted after the

players entered into the arena it was like changing the rules of the

game after it had begun and therefore, if the Government or the

Municipal Corporation was free to alter the conditions, fresh process

of tender was the only alternative permissible.

7. The petitioner next relies on a Division Bench judgment of this court,

reported at 2018 SCC OnLine Cal 5612 [The Berhampore Construction

Syndicate Private Limited and Another v. The State of West Bengal and

Others] where the court, while passing an interim order, dealt with

Rule 216 (3) of the PWD Code, which stipulated that even if, after

taking appropriate steps the response to a Re-Tender is less than

three, the tender may be accepted without reference to the Finance

Department. It was observed by the Division Bench that the relevant

provision only requires a reference of the rate to the Finance

Department for concurrence and not the cancellation of the tender

process.

8. The process of inviting further documents to cover up the technical

deficiencies of the other sixteen bids and subsequent approval of four

out of those for selection with the petitioner by draw of lots is

challenged by the petitioner on the above grounds.

9. Learned senior counsel appearing for the respondents submits at the

outset that the petitioner did not participate in the draw of lots

pursuant to the invitation to do so and work order has already been

issued in respect of the re-tender to the successful bidder, thus

rendering the challenge academic.

10. The impugned notice to furnish shortfall documents, dated November

10, 2020, only called for uploading of documents and cannot be the

subject-matter of challenge in a writ petition. Thus, the dispute raised

in the writ petition is premature and stands infructuous upon

subsequent selection of a successful bidder upon drawing lots and

issuance of work order to the successful bidder.

11. Counsel submits that essential conditions of a notice inviting tender

and norms thereof are to be rigidly construed, but

ancillary/subsidiary conditions can be deviated from, without vitiating

the tender process sufficient for it to be cancelled. The norms dated

February 14, 2017, governing re-tenders, provides merely that, in case

there is a single qualified bidder during re-tender, the Departmental

Head Secretary may accept the tender in consultation with the

financial advisor of the department (in case of 'B' , further on

recommendation of the Departmental Tender Committee). The

expression "may" is directory and the tendering authority is not bound

to accept the tender of the single qualified bidder. The said norm is

only a guideline and is the authority is not bound to follow it

meticulously.

12. Learned senior counsel for the respondents relies on Poddar Steel

Corporation v. Ganesh Engineering Works and Others, reported at AIR

1991 SC 1579, also reported at (1991) 3 SCC 273 where the Supreme

Court, in paragraph no. 6 held that as a matter of general proposition

it cannot be held that an authority inviting tenders is bound to give

effect to every term mentioned in the notice in meticulous detail, and

is not entitled to waive even a technical irregularity of little or no

significance. The requirements in a tender notice can be classified into

two categories - those which lay down the essential conditions of

eligibility and the others which are merely ancillary or subsidiary with

the main object to be achieved by the condition. In the first case, it

was held, the authority issuing the tender may be required to enforce

them rigidly. In other cases it must be open to the authority to deviate

from and not to insist upon the strict literal compliance of the

condition in appropriate cases.

13. Thus, the respondents submit, the further invitation to the other

sixteen bidders, the choice of four successful bidders out of them and

subsequent request to participate in the draw of lots for selection were

part of a perfectly valid process, requiring no interference by court;

more so, since the petitioner chose not to participate in the draw of

lots despite being invited to do so.

14. The case hinges on the question as to how far the revised norms

regarding re-tender, dated February 14, 2017, are binding on the

respondent-authorities insofar as the procedure is concerned, in cases

of re-tender where there is only a single qualified bidder.

15. The principle to be followed was laid down by the Supreme Court in

Poddar Steel Corporation (supra), where essential and

ancillary/subsidiary conditions of eligibility were distinguished. The

first category, it was held, has to be enforced rigidly, while in case of

the second, it is open for the authority to deviate from and not to

insist upon the strict literal compliance in appropriate cases.

16. Even in the second case, the scope of deviation was circumscribed by

the rider "in appropriate cases". In the present instance, no exception

to justify deviation has been made out by the respondent-authorities;

rather, the fresh opportunity to the technically ineligible bidders to fill

in the lacunae in their technical bids would novate the process and

consume more time, which might be detrimental keeping in view the

urgent nature of the work to be awarded, being supply of cooked diet

to indoor patients of Durgapur ESI Hospital.

17. In order to derive the nature of the condition-in-question, whether

essential or ancillary, a comprehensive reading of the revised norms

dated February 14, 2017 is necessary. The expression "norms", in its

general sense, connotes rules or expectations. The first paragraph of

the revised norms (Annexure P3 at page 29 of the writ petition)

mentions that, prior to invitation of tender/auction, the eligibility

criteria and other terms and conditions are required to be prepared

carefully by the tender inviting authority. It was mentioned in the next

paragraph, after the sub-clauses of the first paragraph, that in many

cases the provisions and procedures of reviewing the eligibility criteria

and wide publication of the NIT for tender/second call are not being

properly observed by the tender inviting authority and the

departments; also, in some cases, extending the time for submission

of bids after the expiry of normal time is regarded as equivalent to re-

tender or fresh tender. Under such circumstances, in partial

modification of an earlier department memorandum dated December

2, 2012 and related orders, the following provisions regarding

extension of last date of submission of bids and acceptance of bids

when the numbers of qualified bidders during re-tender is less than

three are to be followed, as per the revised norms.

18. Clause II of the norms, as mentioned thereafter, is captioned : "If the

number of qualified bidders during tender/re-tender/re-Auction is

less than 3". In such event, the Tender Inviting Authority shall take a

decision based on the situations given thereunder.

19. Clause A thereunder provides for estimates less than Rs. 5 lakh. Case

I, falling within such clause, stipulates that if the number of qualified

bidder is one during re-tender, the Departmental Head Secretary may

accept the tender in consultation with the FA of the Department.

20. Case I under Clause B, pertaining to estimates equal to or more than

Rs. 5 lakh but not more than Rs. 1 crore, is similar as Case I under

Clause B, adding that the acceptance would additionally be on

recommendation of the Departmental Tender Committee.

21. The expression "may" in the aforementioned two clauses is highlighted

by the respondents to argue that the condition is ancillary/subsidiary

and not essential.

22. The first report relied on by the petitioner, that is, Monarch

Infrastructure (P) Ltd. (supra), the Supreme Court endorsed the view of

the Bombay High Court that if a term of the tender having been

deleted after the players entered into the arena it is like changing the

rules of the game after it had begun, and, therefore, if the Government

or the Municipal Corporation was free to alter the conditions fresh

process of tender was the only alternative permissible.

23. The said ratio, however, is not relevant for the present case. Here, the

rules of the games have not been changed but sought to be

interpreted to be directory, affording scope for the tendering authority

to deviate therefrom.

24. The Berhampore Construction Syndicate (supra), the second report

cited by the petitioner, does not deal with or lay down any proposition

of law with regard to the mandatory/directory nature of provisions

similar to the provisions of the 2017 norms applicable in the present

case. The Division Bench, in the cited report, considered the third

paragraph of Rule 216 (3) of the PWD Code, which provides for cases

where the response to the re-tender is less than three that such

tender may be accepted without reference to the Finance Department,

provided that the rates do not exceed the estimated or the schedule

rates beyond 3% in case of works estimate and reasonable prevailing

market price for goods and service in other cases; otherwise, such

cases should be referred to the Finance Department for decision. It

was held that the last paragraph of the Rule provides a 3% limit or

cap, but it does not provide for the cancellation of the tender process

in the event the rate exceeds 3%, but only requires a reference of the

rate to the Finance Department for concurrence.

25. Thus, in Rule 216 (3) of the PWD Code tenders may be accepted

without reference to the Finance Department if the response to a re-

tender is less than three. In the event the rates exceed the estimated

or scheduled rates beyond 3%, the cases "should be" referred to the

Finance Department for decision. The above language, in no uncertain

terms, indicates that the existing tenders shall be referred only if the

rate exceeds 3%, implying necessarily that the tenders have to be

accepted if the rates are within 3%.

26. The language of the clauses under consideration in the instant tender,

however, differ in language from Rule 216(3) of the PWD Code. The

2017 norms provide that if the number of qualified bidder is one

during re-tender for estimates under Rs. 5 lakh, the Departmental

Head "may" accept the tender in consultation with other

authority/authorities as stipulated. For estimates equal to/more than

Rs. 5 lakh but not more than Rs. 1 crore, an additional rider is

provided that if the bid is within 2% of the estimate the Departmental

Head/Secretary "may" accept the tender in consultation with the FA of

the Department on recommendation of the Departmental Tender

Committee; if it is beyond 2% of the estimate, there will be a reference

to the Finance Department.

27. A subsequent paragraph of the 2017 norms add that certain

procedures are to be observed in all cases, covering Clauses A, B and

C. As per the said paragraph, in cases where the tender is to be

accepted by the Head of the Administrative Department/Secretary, the

process ultimately culminates in the said Head, after necessary

consultation and recommendation, taking the decision and according

approval at his level. Thus, both Clauses A and B, pertaining to

estimates from less than Rs. 5 lakh up to Rs. 1 crore, are covered by

such culmination of the decision-making process. The parties in the

present case have indicated that the estimate, although not

specifically reflected in the notice inviting tender, is less than Rs. 1

crore, thus falling under either Clause A or Clause B. Hence, despite

the expression "may" used in Clauses A and B, relating to acceptance

by the Departmental Head/Secretary on reference/recommendation,

the process of acceptance ultimately ends with the stipulation in the

last few provisions of the 2017 norms that the Head of the

Administrative Department, upon consultation/recommendation, "will

take the decision and accord approval at his level". A composite

reading of the 2017 norms, thus, reveals that the process of

acceptance of the single bid is mandatory, on the necessary conditions

stipulated therein being satisfied, without further invitation of bids.

The initial expression, "may" has to be read in the context of the last

few paragraphs of the revised norms, 2017, to give a mandatory

meaning to it.

28. The initial paragraphs of the 2017 norms are categorical as to the

necessity of review of the "eligibility criteria". The provisions "are to be

followed", stipulates the third paragraph of the norms. The

predominant purpose of the publication of revised norms on February

14, 2017 was to avoid maladies afflicting the system as regards re-

tender and extensions of time for submission of bids. A holistic

reading of the norms leaves no scope of relegating the stipulations

therein to mere administrative advice, which might be directory in

nature. Rather, the object of the revised norms, as mentioned therein,

was to address defects in re-tender processes and to streamline the

same. If the stipulations in the norm are attributed a directory

interpretation, their very efficacy would be lost and there would be no

compulsion on the tender inviting authorities to review the first tender

conditions or streamline the process. Only a mandatory interpretation

can lend teeth to the 2017 norms to address the systemic drawbacks

pertaining to re-tenders, sought to be remedied by the norms. If the

norms were to be optional/directory, a de novo tender process would

entail, wasting much time and resources and rendering the first

tender process entirely futile. On the contrary, a mandatory

enforcement of the revised norms would streamline the process,

reduce expenses of time and resources and would lend more

transparency to re-tender processes.

29. In the present case, the act of the respondents in inviting the ineligible

technical bidders to validate their lacunae, thereby initiating a fresh

tender process, despite the availability of the petitioner as a single

successful bidder, without any reference as envisaged under

categories A and B under Clause II of the norms, was patently

arbitrary and baseless. No person of ordinary prudence can justify

such action on the part of the authorities. Thus, even in the absence

of express proof of mala fides, the arbitrariness implicit in the

impugned action itself vitiates such action.

30. Although the bidder(s) in whose favour work order(s) has/have been

issued, if any, pursuant to the impugned memoranda have not been

impleaded in the present writ petition, since such persons are the

beneficiaries of the illegal action of the respondents and in view of the

respondents having proceeded with the tender process despite having

notice of the writ petition, the said persons are not parties to the writ

and their non-impleadment does not hinder the disposal of the writ

petition in their absence. Such beneficiaries of the illegal acts of the

respondents will be bound by the consequences thereof.

31. In the circumstances, W.P.A. No.10800 of 2020 is allowed. The

impugned Memo No. ESIC/DGP/1607 dated November 10, 2020 and

Memo No. ESIH/DGP/1682 dated November 27, 2020 are cancelled.

Work order(s) and/or other consequence, if any, issued in pursuance

of such Memoranda stand hereby revoked.

32. There will be no order as to costs.

33. Urgent certified website copies of the order, if applied for, be supplied

to the parties upon compliance of all requisite formalities.

( Sabyasachi Bhattacharyya, J. )