Plain Cargo Solution (Opc) ... vs Indian Oil Corporation Limited & ...
2022 Latest Caselaw 4277 Cal

               IN THE HIGH COURT AT CALCUTTA
                   Civil Appellate Jurisdiction
                          Appellate Side

Present:-   Hon'ble Mr. Justice I. P. Mukerji
            Hon'ble Mr. Justice Ajoy Kumar Mukherjee.


                         MAT 687 of 2022
                               in
                          CAN 1 of 2022

       Plain Cargo Solution (OPC) Private Limited & Anr.
                              Vs.
             Indian Oil Corporation Limited & Ors.




For the Appellants             :      Mr.   Debabrata Saha Roy,
                                      Mr.   Pingal Bhattacharya,
                                      Mr.   Subhankar Das,
                                      Mr.   Neil Basu, Advocates.

For the Respondents            :      Mr. Jishnu Saha,

Mr. Amit Kumar Nag, Mr. Abhishek Nag, Advocates.

Judgment on                    :      18.07.2022.



I. P. MUKERJI, J.-

This appeal arises out of a tender. The facts are unique. This case gives

occasion to us to formulate some new principles of law.

First, some statements of the applicable law need to be noticed. One who

is entrusted with considering bids or offers in response to an invitation to

tender made by the government or a body akin to it, is obliged to strictly

follow the tender rules and instructions. He cannot discard any such

norm as "a pedantic approach or else it would encourage and provide

scope for discrimination, arbitrariness and favouritism which are totally

opposed to the rule of law and our constitutional values". Otherwise, "the

rule of law should be a casualty"......... "relaxation or waiver.....in favour

of one bidder would create justifiable doubts in the minds of other

bidders, would impair the rule of transparency and fairness" and

promote "manipulation and "picking and choosing a bidder for awarding contracts....". This was stated by Justice Quadri delivering the judgment

in W.B. State Electricity Board vs. Patel Engineering Co. Ltd. and

Ors. reported in (2001) 2 SCC 451.

In B.S.N. Joshi & Sons Ltd. vs. Nair Coal Services Ltd. and Ors.

reported in (2006) 11 SCC 548 Mr. Justice Satya Brata Sinha delivering

the judgment of the highest court held that under the rules the employer

should have the power to relax certain terms and conditions of the

tender. Only then he could relax them and to the extent permitted only. If

there was no power to relax them, the employer could not relax any term.

The power to relax any term could also be derived from the practice

followed in the past. If the power existed then it ought to be exercised in

a "fair, reasonable and bonafide" manner.

Again in Afcons Infrastructure Ltd. vs. Nagpur Metro Rail

Corporation Ltd. and Anr. reported in (2016) 16 SCC 818, Mr. Justice

Lokur cautioned the courts against interference with the decision making

process in a tender unless it was so arbitrary or irrational or perverse

that the court could say that no responsible authority acting reasonably

and lawfully would have taken the decision. The terms and conditions of

a tender had to be strictly adhered to. The Supreme Court opined:-

"13. In other words, a mere disagreement with the decision- making process or the decision of the administrative authority is no reason for a constitutional court to interfere. The threshold of mala fides, intention to favour someone or arbitrariness, irrationality or perversity must be met before the constitutional court interferes with the decision-making process or the decision.

14. We must reiterate the words of caution that this Court has stated right from the time when Ramana Dayaram Shetty v. International Airport Authority of India was decided almost 40 years ago, namely, that the words used in the tender documents cannot be ignored or treated as redundant or superfluous -- they must be given meaning and their necessary significance. In this context, the use of the word

"metro" in Clause 4.2(a) of Section III of the bid documents and its connotation in ordinary parlance cannot be overlooked."

Now, the facts of the case in brief.

The appellants (hereinafter appellant) bought five tank trucks on 23rd

March, 2021 and 9th April, 2021. On 15th June, 2021 the registering

authority registered two of the tank trucks and on 17th September, 2021

registered the other three.

The respondent corporation (hereinafter respondent) on or about 25th

August, 2021 made an invitation inviting offers from eligible persons to

provide fifty two tank trucks of 16 MT and above weight to them for their

Paradip terminal. The last date for submitting bids in terms of the tender

was 1st November, 2021.

This litigation arises out of the following dispute. According to the terms

and conditions of the tender as interpreted by the respondent, the

appellant at the time of submission of the bid had to possess the

registration certificates of tank trucks it had offered to provide to the

respondent. They had to be furnished with the offer. Without it the

tender would not be considered as valid and be liable to be rejected.

The appellant obtained the registration certificate or smart card only on

3rd December, 2021, although the tank trucks had been registered much

earlier on 15th June, 2021 and 17th September, 2021. There was delay in

the issuance of the smart card because of the effect of the Covid

pandemic, according to the appellant. This assertion was not disputed by

the respondent. The appellant's offer was rejected at the time of technical

bid consideration by the respondent on the ground that the said

certificate was not furnished with the offer. According to the appellant, a

valid registration at the time of submission of bid was sufficient

particularly in the Covid period when issuance of the registration

certificate was delayed by the registering authority and not because of

any fault of the respondent.

Mr. Debabrata Saha Roy, learned counsel appearing for the appellant

submitted that his client was disqualified on the above ground in the

technical evaluation on 1st February, 2022 and was not considered in the

financial bid held on 19th February, 2022. After finalization of the bids

and award of contracts, the respondent has taken only forty tank trucks

out of the fifty two shown as required in the tender document and that

they were in a position to take twelve more tank trucks. Hence, this court

should direct the appellant to take the five tank trucks of his client. He

also submitted that his client, belonging to the scheduled caste was

running the appellant company as a single woman run micro enterprise

and on that ground should have privilege.

He also referred to a communication of the Ministry of Road Transport

and Highways (MVL Section), Government of India dated 26th March,

2021 to the Director General of Police, Principal Secretaries, Department

of Transport and The Transport Commissioners of all the states and

Union Territories.

"2. In view of the above, Ministry of Road Transport and Highways had issued advisories dated 30th March, 2020, 9th June, 2020, 24th August, 2020 and 27th December, 2020 to all States and Union Territories regarding extension of validity of the documents related to Motor Vehicles Act, 1988 and Central Motor Vehicle Rules, 1989. It was advised that with respect to the validity of Fitness, Permit (all types), Driving License, Registration or any other concerned document(s) whose extension of validity could not be, or was not likely to be, granted due to lock-down and which had expired since 1st of Feb, 2020, or would expire by 31st of March 2021, the same may be treated to be valid till 31st of March, 2021. Enforcement authorities were advised to treat such documents valid till 31st of March 2021."

He argued that on the basis of this notification, the respondent was

obliged to accept registration of the five tank trucks as fulfillment of the

eligibility criteria and not insist on production of physical smart cards.

Mr. Saha Roy argued that under Clause 13 of the tender document

keeping in line with the "public procurement policy for micro and small

enterprises (MSEs) Order, 2018", 25% of the total quantity was required

to be procured from micro and small enterprises out of which 16% (4 out

of 25) should be earmarked for procurement from MSEs by scheduled

caste and scheduled tribe enterprises and 12% or 3 out of 25 for

procurement from such MSEs owned by woman entrepreneurs. In other

words, out of fifty tank trucks, six should have been taken from the

scheduled caste bidders.

He also showed us Clause IV(b) of the tender document where it was

stated that tender could be made by scheduled caste bidders on the

basis of booking documents for tank trucks.

He also argued that as per Clause 6, priority should have been given to

new tank trucks.

Mr. Jishnu Saha, learned senior advocate, appearing for the respondent

took us through the facts elaborately. He showed us the terms and

conditions of the tender. First of all, he showed us Clauses (IV)(a) and 11

of the terms and conditions which stipulated that a bid for a tank truck

owner by the bidder should be accompanied by the registration

certificate. In the absence of the certificate, a bid could not be considered

and was liable to be rejected at the technical bid evaluation stage. Since

the bid of the appellant was not accompanied by registration certificates,

they were disqualified at the technical bid stage. Learned counsel cited

the authorities enumerated above, W.B. State Electricity Board vs.

Patel Engineering Co. Ltd. and Ors. reported in (2001) 2 SCC 451,

B.S.N. Joshi & Sons Ltd. vs. Nair Coal Services Ltd. and Ors. reported

in (2006) 11 SCC 548, Afcons Infrastructure Ltd. vs. Nagpur Metro

Rail Corporation Ltd. and Anr. reported in (2016) 16 SCC 818 to argue

that the terms and conditions of the tender had to be scrupulously

followed. The authority conducting the tender had no power to relax any

term or condition of the tender, unless permitted to do so by the terms of

the tender. He argued that a fair relaxation had been made for scheduled

caste bidders to submit bids on the basis of booking documents. But it

did not follow from it that a bid in respect of a purchased tank truck

could be accepted without a registration certificate.

He said that the Central government notification had extended the time

period for renewal of insurance, registration etc. The appellant had

applied for initial or original registration and not for renewal of an

existing registration.

Learned counsel also submitted that the appellant's case could not be

considered in isolation because the bids of similarly placed bidders who

had obtained registration but did not possess the registration certificate

had not been considered. (Annexure P-13 Pg. 286 of the stay petition).

Discussion:-

It is an admitted position that the appellant is the owner of five new tank

trucks, bought by them on 23rd March, 2021 and 9th April, 2021. All five

have been registered with the registering authority on 15th June, 2021

and 17th September, 2021. Due to the raging covid pandemic during that

period, issuance of the physical registration certificate (RC) was delayed

by the registering authority and could not be made available for

submission before the last date for submission of the tender i.e. 1st

November, 2021. The smart card was available to the appellant on 3rd

December, 2021 which was notified by them to the respondent. Apart

from this, there was no flaw in the application form submitted by the

appellant. At that time, the respondent had not started the technical bid.

It was undertaken in February, 2022. The tender of the appellant was

not considered on the ground that the registration certificate had not

been submitted with the form. So, no question of the appellant's bid

being considered at the "financial bid" stage on 19th February, 2022. Was

the appellant entitled to consideration? Or was the respondent's rejection

of the appellant's tender most arbitrary and unreasonable?

Mr. Saha Roy, learned senior counsel appearing for the appellant pointed

out from the terms and conditions of the tender that ownership and

possession of the tank truck or of the registration certificate were not

mandatory before making a bid by the bidder. An application by a

scheduled caste bidder could be made on the basis of a booking order for

the vehicle. However, in the case of bidders who had already acquired the

vehicle physical registration certificate had to be furnished. Therefore,

according to Mr. Saha Roy, the registration certificate along with the

application was not such an essential term of the terms and conditions

that it could not be dispensed with.

We look at it from another angle. The terms and conditions of tender

stipulated that the owner of a tank truck making the bid would have to

submit the registration certificate. A scheduled caste bidder, who had

entered into an agreement for sale of the vehicle but had not obtained

ownership or possession of it could apply with the booking document.

What follows from this is that two types of situations were contemplated

by the framers of the tender. Any other was unforeseen. It occurred

because of the Covid onset. Registration was granted but the physical

certificate could not be made available by the registering authority to the

appellant. If for this reason the certificate could not be submitted by

them before the date of closure for receiving applications but could be

produced before consideration of the technical bid, could the bidder be

disqualified and his application rejected?

In my opinion, a statutory authority is enjoined with a duty to act

lawfully, fairly, reasonably and without arbitrariness.

This situation was in nobody's contemplation when the tender terms

were drafted. The authority conducting the tender process is not

supposed to fold his hands and plead helplessness to tackle a situation

like this arising out of an unforeseen circumstance.

It is to be read into the terms and conditions of any tender that in an

extraordinary situation, the authority conducting the tender process has

an implied power to take a decision to tackle it and complete the tender

process. It is required to do so by suitably modifying or relaxing the

terms and conditions of the tender, without changing its essential terms

and conditions as held by the Supreme Court in W.B. State Electricity

Board vs. Patel Engineering Co. Ltd. and Ors. reported in (2001) 2

SCC 451, B.S.N. Joshi & Sons Ltd. vs. Nair Coal Services Ltd. and

Ors. reported in (2006) 11 SCC 548, Afcons Infrastructure Ltd. vs.

Nagpur Metro Rail Corporation Ltd. and Anr. reported in (2016) 16

SCC 818. The action of the authority in such a situation should be fair

and reasonable and strictly addressed towards dealing with the

unforeseen situation.

The tender was concluded by acceptance of forty tank trucks.

According to the tender documents, the respondent could still take

twelve tank trucks.

I think the ends of justice would be subserved if notionally the tender is

reopened and reconsidered by including the five tank trucks offered by

the appellant along with other applications at Annexure P-13 at page 286

of the stay petition which were similarly not considered as pointed out by

Mr. Jishnu Saha.

Notionally, the financial bid of the tender should be reopened and

reconsidered strictly according to the terms and conditions of the tender.

The bids already accepted are not to be interfered with. Then, it is to be

seen whether the five tank trucks offered by the appellant or which of

them have qualified in the financial bid without disturbing the bids

already accepted.

Those tank trucks of the appellant which qualify may be accepted and a

letter of acceptance issued to the appellant. This exercise is to be

completed within two months of communication of this order. The

impugned judgment and order dated 19th April, 2022 is set aside.

The appeal is disposed of accordingly.

The connected application (CAN 1 of 2022) is disposed of accordingly.

Certified photocopy of this order, if applied for, be supplied to the parties

upon compliance with all requisite formalities.

I agree.

(AJOY KUMAR MUKHERJEE, J.)                             (I. P. MUKERJI, J.)