Calcutta High Court (Appellete Side)

Bingas Electrical Electronics & ... vs Aroni Tubes Private Limited & Ors on 15 March, 2023

                                     1




                   IN THE HIGH COURT AT CALCUTTA
                      (Civil Appellate Jurisdiction)
                             APPELLATE SIDE
Present:

The Hon'ble Justice Subrata Talukdar
               and
The Hon'ble Justice Saugata Bhattacharyya


                             MAT 279 of 2021
                                   With
                            IA No. CAN 1 of 2021
              Bingas Electrical Electronics & Solar System
                                   -Vs.-
                   Aroni Tubes Private Limited & Ors.
                                   With
                              COT 16 of 2021
                       Aroni Tubes Pvt. Ltd. & Ors.
                                   -Vs.-
           Bingas Electrical Electronics & Solar System & Ors.
                                   With
                              COT 20 of 2021
           West Bengal Agro Industries Corporation Ltd. & Ors.
                                   -Vs.-
           Bingas Electrical Electronics & Solar System & Ors.



For the Appellant and for           : Mr. Debdeep Sinha
The Respondent in COT 16             Mr. Bhaskar Dwivedi

Of 2021& COT 20 of 2021

For the Respondent/Writ Petitioner : Mr. Ayan Banerjee

Ms. Debasree Dhamali

For the Respondent Nos. 2, 3 & 4 : Mr. Jaydip Kar in MAT 279 of 2021 and for the Ms. Sarmila Das Appellant in COT 20 of 2021

Last Heard on : 16.12.2022

Judgment on : 15.03.2023

Subrata Talukdar, J.:- In this appeal, being MAT 279 of 2021 (for short, the

said appeal), the Judgement and Order dated 23rd of February, 2021 passed

by the Hon'ble Single Bench in the Writ Petition, being WPA 2504 of 2021

with CAN 1 of 2021, is under challenge. In the Writ Petition a Notice Inviting

e-Tender (for short NIT) dated 9th of January, 2021 floated by the West

Bengal Agro Industries Corporation Ltd. (for short, the Corporation) was

challenged by an allegedly disqualified bidder. The NIT was floated for

installation of 50 numbers of Solar Submersible Pumps in Jhargram

District.

Along with this appeal, the Corporation has filed a Cross-Objection,

being COT 20 of 2021 and the Writ Petitioner has also filed a Cross-

Objection, being COT 16 of 2021.

The Hon'ble Single Bench, inter alia, noted that in terms of Clause

22.0 of the NIT no price preference or other concessions were allowed for the

tender in question. Taking notice of the Notification dated 19th November,

2004 issued by the Finance Department, Government of West Bengal, the

Hon'ble Single Bench found that Rule 47A as introduced by the said

Notification covers all purchases and execution of works by the State

Government and Government entities such as the Corporation.

The Hon'ble Single Bench interpreted Rule 47A (supra) as follows:-

"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-àvis 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 prerequisite to deposit earnest money for participating in the online bidding process. The NIT is also de hors the Notification on such score."

The next limb of the findings arrived at by the Hon'ble Single Bench

pertained to the allegation of cartelisation levelled by the writ petitioner, Ms.

Aroni Tubes Pvt. Ltd. (for short Ms. Aroni). The Hon'ble Single Bench,

although holding that cartelisation has not been proved beyond reasonable

doubt, sufficient presumption has been raised in such regard by the

synchronicity of bids between a majority of the bidders.

On the second aspect pertaining to the allegation of cartelisation, the

Hon'ble Single Bench held as follows:-

"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."

Concluding its findings, the Hon'ble Single Bench ultimately held as

follows:-

"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."

The appellant, Ms. Bingas Electrical Electronics & Solar System (for

short, Ms. Bingas), in MAT 279 of 2021 was a successful bidder. The

application filed by the appellant for intervening in the writ petition was not

allowed by the Hon'ble Single Bench. The appellant has argued in the appeal

that the Hon'ble Single Bench failed to appreciate the fact that the Writ

Petitioner, being an outsider who did not participate in the NIT having failed

to meet the eligibility criteria, did not have the locus standi to file the writ

petition. Since, the Writ Petitioner, Ms. Aroni, could not be a person

aggrieved by the NIT and the writ petition not being in the nature of a Public

Interest Litigation, the Hon'ble Single Bench erred in admitting the writ

petition and more so, in allowing the same.

The appellant/Ms. Bingas also submits that Rule 47A of the said

Notification has no manner of application to a Works Contract as floated by

the NIT. Rule 47A only applies to purchases of products from

manufacturers which are SSI Units.

Relying on several judicial authorities reported in 2009) 6 SCC 171,

2018) 5 SCC 462, 2020) 16 SCC 489 and 2022) 6 SCC 127, the appellant/

Ms. Bingas takes the position that it is therefore the sole prerogative of the

tendering authority to decide on the scope of application of Rule 47A. The

Writ Court could not sit in appeal over such decision. Since the NIT

pertained to only a Works Contracts, the Hon'ble Single Bench could not

have interpreted Rule 47A in a manner so as to substitute its view in place

of the decision taken by the tendering authority.

On the second aspect pertaining to a presumption of cartelisation as

held by the Hon'ble Single Bench, the appellant submits that such

presumption is purely academic based on the writ petitioner' insinuations

being a wounded business rival. It is submitted that in terms of Clause 5.0

appellant has invested heavily for executing the tender works and thereby

stands to be irretrievably prejudiced if the Judgement and Order impugned

is not set aside.

The position taken by the appellant/Ms. Bingas in MAT 279 of 2021

(supra) is adopted by the Corporation in its Cross-Objection being COT 20 of

2021. The Corporation takes the position that the writ petition was allowed

without allowing the Corporation, being a material respondent, an

opportunity to file its affidavit-in-opposition.

The Corporation reiterates the argument that Courts have no

jurisdiction to alter the terms of a tender. Additionally, the writ petitioner

could not show any legal injury suffered by it as a participating tenderer.

Furthermore, since the NIT pertains to a Works Contract, the application of

Rule 47A (supra) does not arise.

The Corporation therefore submits that the Hon'ble Single Bench

embarked on a purely academic exercise apropos to its discussion on tender

costs, exemption of earnest money deposit and price preference. It is pointed

out that in the event the Hon'ble Single Bench had allowed the Corporation

to file an affidavit, the true nature and scope of Rule 47A (supra) could have

been explained.

The Writ Petitioner, Ms. Aroni, who is also the Cross Objector in COT

16 of 2021, has argued as follows.

It is submitted that suspicious circumstances have been generated

qua the NIT particularly with regard to the rates floated by the tendering

authority which were higher than the Government schedule of rates. Since

the Corporation had thereafter revised the rates of the NIT to make such

rates compatible with the Government schedule of rates, the entire

tendering process stood vitiated.

It is particularly pointed out by the writ petitioner/Ms. Aroni that in

view of the serious financial irregularities discovered, the Corporation had

previously cancelled nine similar tenders, although the Hon'ble Single Bench

had decided against the Corporation in respect of a single tender.

It is submitted that a sister concern of the writ petitioner/Ms. Aroni

had communicated to the tendering authority on the 23rd of November, 2020

with regard to the alleged illegal clauses in respect of tenders which were

floated previous to the present NIT. Pursuant to the said communication

dated 23rd November, 2020, the earlier tenders were withdrawn by the

tendering authority. However, the NIT in issue in the present appeal was

floated on the 9th of January, 2021, again incorporating the illegal clauses.

The writ petitioner therefore filed a representation on the 11th of

January, 2021 pointing out to the alleged illegal clauses and praying for

withdrawal of the tender. However, without considering such representation

in the pre-bid meeting, the technical bid of the NIT was opened on the 1st of

February, 2021 and uploaded on the 4th of February, 2021. The financial bid

was opened on the 6th of February, 2021 when the instant writ petition was

pending before the Hon'ble Single Bench having been filed on the 22nd of

January, 2021. It is submitted that the Work Order was issue on the 8th of

February, 2021, on which date the writ petition was appearing as a fixed

matter before the Hon'ble Single Bench.

Reiterating its arguments that the NIT contravened the said

Notification dated 19th of November, 2004, the writ petitioner points out that

the rates of the NIT were found to be higher than the prescribed official

tender rates circulated by the Chief Engineer, Water Resource Investigation

Department, Government of West Bengal, being the controlling authority of

the Corporation. The writ petitioner has also relied on a Comparative

Compilation disclosing the difference between the Government Schedule of

Rates and the rates floated by the NIT.

Relying on authorities reported in 1995) 1 SCC 478 and 2011) 12 SCC

499, the writ petitioner takes the position that the refusal on the part of the

Corporation not to waive the earnest money and not to allow Joint Ventures

(for short JVs) the right of participation in the NIT, the entire tendering

process and particularly Clause 22 thereof stands vitiated being in conflict

with the West Bengal Financial Rules.

With reference to the arguments on alleged cartelisation, the writ

petitioner has relied on the price bids submitted by the participating

tenderers. It is pleaded that all the tenderers 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. Relying on 2017) 8 SCC 47, the writ petitioner points out that it is

extremely improbable that for the same item, the five participants have all

quoted different rates in respect of the eight tenders. It clearly shows the

understanding between the tenderers and formation of a cartel which has

been viewed with displeasure by the Hon'ble Apex Court in 2017) 8 SCC 47

(supra).

It is submitted that the financial bid was opened on 6th of February,

2021, which was a holiday. The participants quoted the same rates, which is

an impossibility unless the bidding is done in consultation with each other.

Having heard the parties and considering the materials placed, this

Court must notice that the Corporation is admittedly a body which is

expected to be guided by its parent Department namely, the Department of

Water Resources Investigation and Development, Government of West

Bengal. Equally therefore, the Corporation cannot institute a tender process

such as the present NIT in violation of a Notification issued by the Finance

Department, Audit Branch, Government of West Bengal as in this case,

being the Notification dated 19th of November, 2004, incorporating Rule 47A

as inserted by the West Bengal Financial Rules, Volume 1.

This Court finds sufficient force in the cognizance taken by the

Hon'ble Single Bench of the fact that instead of engaging in a discussion in

the pre-bid meeting on the points raised by the writ petitioner, the

Corporation proceeded with the present NIT which repeated the illegalities

committed in the earlier tenders which were withdrawn by the Corporation.

The haste on the part of the Corporation became aggravated when the Work

Order was issued in favour of the appellant/Ms. Bingas on the morning of

8th February, 2021, on which date the writ petition was to be taken up for

hearing. Besides, although the matter was enlisted before the Hon'ble Single

Bench on the 5th of February, 2021, the Financial Bid was opened on 6th of

February, 2021, being a holiday, in order to frustrate the instant writ

petition.

This Court also finds sufficient force in the reasoning of the Hon'ble

Single Bench, having regard to the identical bids/synchronicity of bids

submitted by a majority of bidders, that the Hon'ble Single Bench had

reason to draw sufficient presumption against the bona fides of the

tendering process. The details of the bids disclosed by way of a Chart by the

writ petitioner showing their synchronicity could not be controverted either

by appellant/Ms. Bingas or the Corporation at the hearing. The only

argument advanced by the present appellant/Ms. Bingas as well as the

Corporation on the charge of synchronicity of bids is that the writ petitioner

had no locus standi to maintain the writ petition, being not a person directly

aggrieved by the NIT.

In the facts of the present case it is noticed that the Writ Petitioner

had pointed out to the defects in the NIT by way of a representation filed

before the Tendering Authority. The said representation raised issues which

were also raised before the Tendering Authority by a sister concern of the

Writ Petitioner. On the basis of the issues raised by the sister concern of the

Writ Petitioner, similar tenders earlier issued by the Tendering Authority

were cancelled.

However, without examining the representation of the Writ Petitioner

at the pre-bid meeting, the Technical Bid was hastily opened and uploaded.

The Financial Bid was also hastily opened and the Work Order allotted even

as the Hon'ble Single Bench was in seisin of the matter.

The Hon'ble Apex Court In Re: Noble Resources Ltd. vs. State of Orissa

and Another, 2006) 10 SCC 236, at Paragraphs 26, 27, 28, 29, 30 and 31 has

held as follows:-

"26. In ABL International Ltd. (supra), this Court opined that on a given set of facts, if a State acts in an arbitrary manner even in a matter of contract, a writ petition would be maintainable. It was opined :

"23. It is clear from the above observations of this Court, once the State or an instrumentality of the State is a party of the contract, it has an obligation in law to act fairly, justly and reasonably which is the requirement of Article 14 of the Constitution of India. Therefore, if by the impugned repudiation of the claim of the appellants the first respondent as an instrumentality of the State has acted in contravention of the abovesaid requirement of Article 14, then we have no hesitation in holding that a writ court can issue suitable directions to set right the arbitrary actions of the first respondent"

27. Contractual matters are, thus, not beyond the realm of judicial review. Its application may, however, be limited.

28. Although terms of the invitation to tender may not be open to judicial scrutiny, but the courts can scrutinize the award of contract by the Government or its agencies in exercise of their power of judicial review to prevent arbitrariness or favouritism. [See Directorate of Education and Others v. Educomp Datamatics Ltd.] However, the court may refuse to exercise its jurisdiction, if it does not involve any public interest.

29. Although the scope of judicial review or the development of law in this field has been noticed hereinbefore particularly in the light of the decision of this Court in ABL International Ltd. (supra), each case, however, must be decided on its own facts. Public interest as noticed hereinbefore, may be one of the factors to exercise power of judicial review. In a case where a public law element is involved, judicial review may be permissible. [See Binny Ltd. and Another v. V. Sadasivan and G.B. Mahajan and Others v. Jalgaon Municipal Council.

30. In State of U.P and Another. v. Johri Mal, it was held : "30. It is well settled that while exercising the power of judicial review the court is more concerned with the decision-making process than the merit of the decision itself. In doing so, it is often argued by the defender of an impugned decision that the court is not competent to exercise its power when there are serious disputed questions of facts; when the decision of the Tribunal or the decision of the fact-finding body or the arbitrator is given finality by the statute which governs a given situation or which, by nature of the activity the decision- maker's

opinion on facts is final. But while examining and scrutinising the decision-making process it becomes inevitable to also appreciate the facts of a given case as otherwise the decision cannot be tested under the grounds of illegality, irrationality or procedural impropriety. How far the court of judicial review can reappreciate the findings of facts depends on the ground of judicial review. For example, if a decision is challenged as irrational, it would be well-nigh impossible to record a finding whether a decision is rational or irrational without first evaluating the facts of the case and coming to a plausible conclusion and then testing the decision of the authority on the touchstone of the tests laid down by the court with special reference to a given case. This position is well settled in the Indian administrative law. Therefore, to a limited extent of scrutinising the decision- making process, it is always open to the court to review the evaluation of facts by the decision-maker."

31. Another field where judicial review is permissible would be when mala fide or ulterior motives is attributed. In Asia Foundation and Construction Ltd. v. Trafalgar House Construction India Ltd. and Others, this Court held :

"We are of the considered opinion that it was not within the permissible limits of interference for a court of law, particularly when there has been no allegation of malice or ulterior motive and particularly when the court has not found any mala fides or favouritism in the grant of contract in favour of the appellant"

It was further held :

"10. Therefore, though the principle of judicial review cannot be denied so far as exercise of contractual powers of government bodies are concerned, but it is intended to prevent arbitrariness or favouritism and it is exercised in the larger public interest or if it is brought to the notice of the court that in the matter of award of a contract power has been exercised for any collateral purpose. But on examining the facts and circumstances of the present case and on going through the records we are of the considered opinion that none of the criteria has been satisfied justifying Court's interference in the grant of contract in favour of the appellant".

It is clear from the legal position stated above that the Hon'ble Single

Bench found the issues raised by the Writ Petitioner to be of a nature which

entitled the Writ Court to scrutinise the decision-making process even to the

limited extent to review the evaluation of facts by the decision-maker

(emphasis supplied).

Additionally, the synchronicity in the rates quoted by the bidders in a

public tender has resulted in vitiating the tender process. The Writ Court

had to take judicial notice of the fact that on the basis of similar illegalities

pointed out in respect of earlier tenders, the said earlier tenders were

withdrawn, however followed by the impugned NIT incorporating similar

illegal terms.

This Court finds no infirmity in the reasoning of the Hon'ble Single