Sumantra Guha & Ors vs West Bengal State Electricity ...
2022 Latest Caselaw 8574 Cal

               IN THE HIGH COURT AT CALCUTTA
                      Constitutional Writ Jurisdiction
                              Appellate Side


Present :-

The Hon'ble Justice Moushumi Bhattacharya.

                           W.P.A 7162 of 2022

                         Sumantra Guha & Ors.

                                    Vs.

        West Bengal State Electricity Distribution Company

                              Limited & Ors.



For the petitioners                       :    Mr. Srijib Chakraborty, Adv.
                                               Mr. Suryaneel Das, Adv.
                                               Mr. Jibantaraj Das Roy, Adv.
                                               Mr. Chiranjit Pal, Adv.
                                               Mr. Deeptangshu Kar, Adv.


For the WBSEDCL                           :    Mr. S.S. Koley, Adv.




For the Proforma respondent no. 2         :    Mr. Anish Kumar Mukherjee, Adv.


Last Heard on                             :    14.12.2022

Delivered on                              :    21.12.2022.
                                          2



Moushumi Bhattacharya, J.

1. The petitioners are 12 partners of different Chartered Accountant (CA)

Firms who are aggrieved by a letter issued by the West Bengal State

Electricity Distribution Company Limited (WBSEDCL) on 11.3.2022 by which

the petitioners were requested to accept the lowest rate of professional fees for

key personnel of the CA Firm as provided in the impugned letter. The

petitioners seek quashing and cancellation of this letter.

2. The cause for the petitioners' grievance with regard to the impugned

letter will appear from the following briefly stated facts.

3. WBSEDCL issued a Notice Inviting Request For Proposal (NIRFP) for

Empanelment of Internal Auditor for 850 auditable locations all over the

State. Experienced and reputed professional firms of Chartered Accountants,

Cost Accountants, Engineers, Information Technology professionals with

specialisation in internal audit were asked to submit their proposal after

fulfillment of the qualifications in the Notice. Qualifying criteria and

specifications of the audit team were indicated in the NIRFP. The Reserve

Price for professional fees cum Price Bid was also indicated in the Notice

(Clause 11.0). The Clause provides the Reserve Price for professional fees,

daily allowance of the Partner and the Team Leader in a chart set out under

Clause 11.0 and the Firm / bidder was required to match the price offered by

the L1 bidder.

4. According to learned counsel appearing for the petitioner, the price

offered by two of the L1 bidders were subsequently again negotiated with the

respective two bidders by WBSEDCL and revised L1 prices were

communicated to the petitioners by way of the impugned letter. Counsel

submits that the petitioners were present at the time of the initial offer made

by the L1 bidder which was substantially higher than the renegotiated price

subsequently arrived at between the L1 bidders and WBSEDCL. Counsel

submits that the fee chart in the impugned letter dated 11.3.2022 reflects

the renegotiated price which is substantially lower than the initial price

offered by the L1 bidders. It is also submitted that the revised offer was

unviable for CA Firms.

5. Learned counsel appearing for the respondents/WBSEDCL relies on a

Report filed by the WBSEDCL which states that 15 out of 27 Firms qualified

for the tender and the price bid was opened on 22.2.2022 in the presence of

the representatives of all 15 Firms.

6. All the 15 Firms were found to be successful in terms of the technical

part of their respective bids. Counsel submits that the tender Committee of

WBSEDCL having found the L1 rates to be significantly lower than the

Reserve Price mentioned in the NIRFP, decided to ask the other 13 Firms to

match the revised price offer made by the two L1 bidders. It was on 9.3.2022

that the Tender Committee arrived at the subsequent negotiated rates which

were then shared with all the 15 eligible Firms by way of the impugned letter

dated 11.3.2022. Counsel submits that the petitioners were excluded from

the bid and were free to participate in the tender at the revised prices stated

in the impugned letter of 11.3.2022.

7. The controversy in this writ petition revolves around the renegotiation

of rates between WBSEDCL and the two L1 bidders. The price quoted in the

impugned letter of 11.3.2022 was actually a revised offer that was

subsequently arrived at between the WBSEDCL and the two L1 bidders is an

admitted fact. The contents of the impugned letter, as well as the statements

made in the Report of WBSEDCL, confirm the fact of renegotiation. The

question is, whether the subsequent negotiation with the two L1 bidders

warrants judicial review of the said action under Article 226 of the

Constitution of India.

8. Notwithstanding, the limited scope of interference with respect to

tenders in writ jurisdiction, a Writ Court would not hesitate to interdict an

action taken by a tendering authority if the action falls short of acceptable

standards of accountability and transparency. A tender may be challenged

on the anvil of an unreasonable clause or the method of selection which

favours a particular bidder or a group of bidders and excludes others from

the fray. Any act which would casts a shadow on transparent processes and

mechanisms would be amenable to judicial review. Public bodies,

particularly those engaged in public utility services, have a higher

benchmark of accountability in tender matters.

9. The act of subsequently negotiating with the two L1 bidders after the

closure of the Request for Proposal submission date, fails the test of

transparency in the following ways.

10. First, Clause 9.9 of the NIRFP provides that

"The RFP once submitted by intending firm cannot be revised, modified

or re-submitted"

Clause 20.7 provides that empanelled Firm/s shall be selected after giving

them the option to match the L1 price.

Clause 20.9 provides that the confirmations received from the firms

matching the L1 bidder price shall be considered for subsequent selection

and empanelment.

11. The above Clauses indicate that the fulfillment of the eligibility

conditions by the intending Firms, the Price Bids given by the Firms, the

selection of the L1 offer (the lowest Price Bid offered by the eligible Firm /

bidder) and the subsequent matching of the L1 price by the other firms were

to take place and be considered by the tendering authority at one go. In other

words, each of the aforesaid stages of the tender, particularly the selection of

the L1 bidder/s and the other bidders asked to match the L1 price, were to

take place in a linear and sequential manner as provided in the Notice. More

importantly, each of the stages was to be governed by Clause 9.9- which has

been set out above- which prohibits any subsequent revision, modification or

re-submission from the stage of submitting the Price Bids till the stage of

matching of Price Bids to the L1 offer. The admitted renegotiation between

the tendering authority / WBSEDCL and the two L1 bidders on 9.3.2022

(Paragraph 5 of WBSEDCL Report) is hence a departure from the tender

conditions and particularly Clause 9.9 thereof.

.

12. Second, paragraph 5 of the writ petition states that the financial bids

of the successful bidders were opened on 22.2.2022 and the L1 rates being

Rs. 2,000/- professional fees for Partner, Rs. 2,000/- professional fees for

Team Leader and Rs. 1,500/- daily allowance for Partner and Rs. 1,000/-

daily allowance for Team Leader were announced to all the bidders.

WBSEDCL has not controverted the L1 rates quoted in the impugned letter

of 11.3.2022 where the professional fees of Partner is reduced from Rs.

2,000/- to Rs. 865/-; for the Team Leader from Rs. 2,000/- to Rs. 1,200/-;

the daily allowance for Partner reduced from Rs. 1,500/- to Rs. 1,200/-. The

subsequent figures are the result of the renegotiation which admittedly was

arrived at in the absence of the other 13 Firms. The absence of the

petitioners from the subsequent negotiation makes the process susceptible to

challenge including for the distinct possibility of arm-twisting the L1 bidders

to offer lower rates which would then have to be matched by the other 12

bidders in accordance with Clause 11.0 of the NIRFP.

13. The probity of conduct which is expected of a public sector enterprise

is singularly lacking in the present case. The terms and conditions of the

Notice contemplate a bidder exercising an informed choice before

participating in the bid. The decision to participate is based on a particular

set of information which is made available to a prospective bidder at the

relevant point of time. The bidders expressed interest to participate in the bid

on the basis of whether the bidder considered the information provided as an

attractive proposition to throw his hat into the ring. The information

provided at a given point of time also presumes that the information will

remain unchanged during the tenure of the bid. This presumption is

crystallised in clause 9.9 of the tender conditions. Hence, the subsequent

negotiation with the two L1 bidders after the other 13 bidders had been

informed of the initial price bid put in by the two L1 bidders, is not only a

departure from the tender conditions but also akin to changing the rules of

the game after the bidders had entered the field of play on a set of rules

provided at the start of the match. If the rules were at all to be changed, the

bidders would certainly have a legitimate expectation to be made aware of

the changed rules, which was not done in the present case.

14. The objective of a tender is to ensure broad-based participation of all

eligible bidders who would then be selected in accordance with the terms of

the tender and in a fair and transparent manner without any arbitrary or

unfair selection of one particular bidder / group of bidders. Any tender term

which has the effect of narrowing down the competition to a select few by

opaque means would attract the intervention of a Writ Court.

15. In the present case, the Reserve Price fixed in clause 11.0 was the

ceiling limit beyond which a bidder could not submit a price bid. The price

bids of two L1 bidders were opened on 22.2.2022 in the presence of the

representatives of all 15 Firms (paragraph 3 of WBSEDCL Report). Hence,

the 13 other bidders were made aware of the price offered by the L1 bidders

as disclosed to them on 22.2.2022. The other 13 bidders were hence required

to match this price - set out in paragraph 5 of the writ petition. The

negotiation meeting between WBSEDCL and the two L1 bidders took place

on 9.3.2022 where the other 13 bidders were not present. The revised offer,

as stated in the impugned letter of 11.3.2022, being substantially lower than

the initial price bid of the L1 bidders on 22.2.2022, was given to the 13 other

bidders of 11.3.2022 and the 13 other bidders were asked to match the

revised price.

16. The effect is that the 13 other bidders - 12 of who are before this Court

- were given a new ceiling to match without being given an opportunity to

participate or contest the renegotiated offer. The new price/revised offer has

not only narrowed down the competition but is also reflective of a "take it or

leave it" conduct of WBSEDCL. In other words, WBSEDCL has successfully

excluded the 12 petitioners from the bid after negotiating the price it wanted

with the two L1 bidders. There is an unmistakable sense of manipulation in

asking the petitioners to match a price which was arrived at behind the back

of the petitioners. The revised offer/price is not one of volition or informed

decision-making, even from the view of the two L1 bidders, but a unilateral

act of a dominant party prevailing over a weaker party who has a limited

choice in the matter.

17. The above factors are sufficient to persuade this Court to interfere in

the manner of arriving at the revised/renegotiated offer and asking the

petitioners to match that offer.

18. The defence of WBSEDCL that there is no arbitrariness in the

impugned letter since the petitioners are free to accept or reject the revised

offer is not a satisfactory answer. Besides the reasons stated above,

WBSEDCL has unilaterally departed from the terms of the NIRFP and

circumvented free participation of all the bidders including the petitioners

before this Court. The bidders are essentially being asked to exercise their

choice of matching the revised offer in changed circumstances of which the

bidders were not given any notice. Hence, this defence does not dispel the

arbitrariness in the tender process.

19. For these reasons, this Court is of the view that the impugned letter

dated 11.3.2022 asking the petitioners to accept the renegotiated L1 bid

price is arbitrary and unreasonable. The impugned letter hence deserves to

be recalled and cancelled. WBSEDCL is accordingly directed to withdraw the

impugned letter of 11.3.2022 and revisit the process envisaged in the NIRFP

after discussions with the petitioners and the two L1 bidders. The process

shall be concluded within four weeks from the date of the first discussion

and WBSEDCL shall ensure that the selection of firms for empanelment of

internal auditors is done in a fair and transparent manner.

20. WPA 7162 of 2022 is disposed of in terms of the above.

Urgent Photostat certified copies of this judgment, if applied for, be

supplied to the parties upon fulfillment of the requisite formalities.

(Moushumi Bhattacharya, J.)