Natvar Parikh Industries Ltd. vs Union Of India Through The ...
1995 Latest Caselaw 118 Del

JUDGMENT

D.P. Wadhwa, J.

(1) This petition under Article 226 of the Constitution is directed against the order/decision of respondents 2 and 3 Central Warehousing Corporation (CWC) awarding the contract of handling and transport of Iso Containers and allied services at Container Freight Station, Patparganj, Delhi, to the fourth respondent M/s. National Freight Carriers (NFC). Petitioner is an existing handling and transporting agent.

(2) Cwc invited offers on 5 December 1994 for tenders for handling and transport of Iso Containers and allied services at Container Freight Station at Patparganj, Delhi. The tenderers were required to submit tenders in two separate sealed envelopes - (1) that containing the technical and professional qualifications; and (2) that containing item rates as per the schedule given in the tender documents. Both these covers were to be separately super scribed as 'technical qualifications' and 'rate quotations'. Tender super scribed 'technical qualifications' was only to be opened at the regional office of the Cwc at 3.30 P.M. on 30 December 1994, and that containing 'rate quotations' was to be opened on 2 January 1995 at 3.30 P.M. Tender was to remain open for acceptance up to and inclusive of 15 March 1995. Six tenders had been received by 3 P.M. of 30 December 1994 while the tender of the fourth respondent was received at 4.30 P.M. and that of another firm M/s. Hill Son & Dilshaw Ltd. at 5.20 P.M. on the same day. The Regional Tender Committee of the second respondent and other officers of the region opened the technical bids at 3.30 P.M. of the six tenderers whose tenders had been received by 3 P.M. on 30 December 1994. The said Committee after technical evaluation found five tenders as technically qualified. The rate bids of these five technically qualified tenders and the two tenders who had been received late were forwarded to the head office of Cwc for further necessary action as it is stated that under the delegation of financial powers in respect of the award of the contract in question, the powers of Regional Manager were only to an extent of Rs.15 lakhs and in view of the fact that the annual value of H&T contract exceeded Rs.1 crore the case fell within the exclusive competency of the Managing Director of the CWC. The envelope super scribed 'technical qualification' was to contain -

1.Earnest Money Deposit of Rs.1,00,000.00 (Rupees One Lakh only) in the prescribed format. 2. Experience certificate showing the proven experience in the trade. 3. A certificate from the Bankers about the financial status/credibility showing the solvency position. 4. Constitution of the firm, if the tenderer is not a sole proprietory concern; for partnership firm a partnership deed, for a registered company, its Memorandum & Articles of Association. 5. Latest Income Tax Clearance Certificate. 6. The annual gross turnover of the company for the last two years certified by a Chartered Accountancy firm, which should not be less than Rs.50 lakhs per annum. 7. Details of equipment, vehicles and machinery owned and possessed on date of submission of tender such as (1) Top lifter 10 Mt forklift for handling of empty containers, low mast forklifts (battery operated or diesel operated with an exhaust purifier (2) Heavy duty mobile cranes with capacity (3) Road vehicles for transporting containers (4) Spreaders (5) other appropriate equipments including attachments for fork lifters for handling various diversified type of packages. The tenderer should provide prescribed equipments in good working condition and the source of availability with the documentary proof such as manufacturing year, ownership title etc. must be furnished while submitting the tender. 8. Photostat copy of stevedoring license, if any other relevant details. 9. Organisational structure to be made available for handling and transport work at the Container Freight Station and the name of the master mariner being attached for this job.

It was mentioned in the notice inviting tender that tender received after 3.00 P.M. on 30 December 1994 would not be considered. Then there are two conditions in the tender document which are relevant for our purpose, and these are -

"1.29DELAYEDtenders consist of tenders or modifications received after the due date and time of receipt but before the due date and time of opening as may be clear from the post mark on the envelopes and endorsed under the signature of the officer responsible for the receipt and custody of tenders. The Competent Authority may, at its discretion, admit such tenders, if the response to the tenders is found to be poor or the rate received is on the higher side due to forming of a cartel/pooling the rate by the tenderers."

"1.30Late tender, i.e., tenders received after the specified time for opening the tender shall not be considered at all and returned to the tenderer forthwith."

The scene then shifts to the head office of CWC. Here the High Power Tender Committee comprising the Managing Director as Chairman, General Manager, Financial Adviser, Commercial Manager, Chief Engineer and Manager (Business) held its meeting on 11 January 1995 and decided to open the two tenders which had been received late. It is stated that the said decision was taken to have competitive rates and in the light of the fact that the tenders consisted of technical and rate bids separately and that the two delayed tenders had been received prior to the opening of the rate bids and, therefore, could not be said to be late tenders. The High Power Tender Committee also noted as under :- "IT Reference has been seen that the tenderers have quoted comparatively competitive rates. After considering various pros and cons of the matter, the committee decided to open the two late tenders of M/s. National Freight Carriers and M/s. Hill Son & Dinshaw Co. as the stipulation in the purchase manual is with regard to rate tenders and not for technical bids."

A comparative statement was thereafter prepared of the rates offered by the six tenderers, there being five tenderers who had been earlier found to be technically qualified and the sixth tenderer, i.e., the fourth respondent whom, it will

(3) In a tender there could be two types of conditions, namely, essential and non-essential. Technical conditions only relate to the furnishing of the earnest money; existence of past experience; the financial status/credibility of the tenderer; its constitution; income-tax clearance ce certificate; annual gross turnover which should not be less than Rs.50 lakhs per annum; and the details of the equipments which the tenderer would be having to execute the contract. Mr. Lekhi, learned counsel for the fourth respondent, said that technical qualifications would be non- essential and there was nothing wrong if Cwc decided to open the tender of the fourth respondent containing technical qualifications and then having found the fourth respondent to be technically qualified to consider the rates quoted by him with the other technically qualified tenderers. Nobody has questioned the technical expertness of the fourth respondent to execute the job. Mr. Jaitley said he should have been thrown out when the tender was received late and by which time bids containing technical qualifications had already been opened. We think in a case like this it is the rate which is essential part of the contract. When the High Power Tender Committee of the Cwc interpreted the relevant clause in the tender documents to mean that it applied only with regard to rate tenders and not for technical bids, we find nothing irrational about it. We should not, however, be understood as laying down the proposition that in all cases and for all times to come that technical qualifications of a tender would always be non-essential or ancillary. Nobody knew the rates which the fourth respondent offered till all the bids containing rates of all the tenders had been opened. Mr. Jaitley, learned counsel for the petitioner, not only questioned the interpretation put by the High Power Tender Committee for treating the bids given by the fourth respondent as valid notwithstanding that it was received late after the expiry of the time and in contravention of the condition that tenders received late would be rejected, but said that nevertheless the negotiations could not have gone in with the fourth respondent only even if it was found to be the lowest tenderer. Mr. Jaitley said that some sort of secret parlays had gne in between the Cwc and the fourth respondent and in this connection he referred to a fax message from the fourth respondent to Cwc which is dated 19 January 1995 and reads as under :- "TOCWC DELHI-ATTN Mr. Mathur ATTN. Mr. Mathur A P (GENERAL MANAGER) Fm Nfc Bombay Mr. R.SALVE (MANAGING DITRECTOR) RE: Patparganj Cfs REF. NO. CWC-BD/H&T-CFS PATPARGANJ/94 Of 18/1/95. Refrence Your Fax Dated 18/1/95 And The Meeting In Bombay On 10/1/95. At The Outset We Sincerely Appreciate The Confidence Exhibited By Cwc In Willingness To Award Above Contract To NFC. However The Rates Requested By Cwc Is Not Acceptable To NFC. As Per Your Various Advises We Understand That There Is A Marginal Difference Between Rates Requested By Cwc And Rates Quoted By NFC. We Confirm Our Willingness To Take On The Contract Only On CWC'S Acceptance Of Our Quoted RATES. Under No Circumstances Is Nfc Willing To Come Down On Rates Since Our Quotes Are Anyhow Very Competitive, Only Concession Nfc Can Consider Is To Offer Cwc An Annual Discount Of IND. Rupees 400,000.00 (RUPEES Four Lacs ONLY) Your Interest In Above Proposal Is AWAITED. Thanks And Our Appreciation Is REITERATED. "

(4) Mr. Jaitley said that this was all wrong and undue benefit has been sought to be conferred on the fourth respondent. Mr. Altaf Ahmed, learned Additional Solicitor General appearing for Cwc, strongly defended the action of the CWC. He said no mala fides had been alleged and the decision to award the contract to the fourth respondent was taken in public interest and to save the public revenue. He also criticised the rate charged by the petitioner for the past years which he said was on the higher side, but we do not think we should go into that question. If any higher rate has been given one cannot merely blame the contractor. In Tata Cellular v. Union of India, , the Supreme Court has laid the guidelines and the scope of judicial review in matters like the present one. There has to be a judicial restraint in administrative action and the court does not sit as a court of appeal but merely reviews the manner in which the decision was made. The public authority must have freedom of contract. In other words, a "fair play in the joints" is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. The decision so arrived at must be free from arbitrariness and should not be affected by bias or actuated by malafides. The Supreme Court also laid down that quashing the decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.

(5) In the present case, all the tenders had been considered by the High Power Tender Committee in its meetings held on 12 January 1995, 17 January 1995 and 19 January 1995. All the relevant considerations for award of the contract were duly examined and the Committee in its meeting on 21 January 1995 resolved to award the contract to the fourth respondent at the price quoted by it less Rs.7 lakhs per annum. As a matter of fact, in its meeting held on 19 January 1995 the Committee noted its earlier decision that since the rates received in tender enquiry were competitive no negotiations were required to reduce the rates, yet the Committee said that after taking all the relevant factors into consideration it recommended that the fourth respondent, who was the lowest tenderer, might be offered the rates quoted by them and they should give an annual discount of Rs.7 lakhs to Cwc instead of Rs.4 lakhs. It will be seen that though the High Power Tender Committee was of the view that there was no need of any negotiations and yet negotiations were held with the fourth respondent for reducing its offer though the terminology used was discount. We do not think that would make any difference. Meetings had been held with the fourth respondent to reduce the rates quoted by the fourth respondent who was the lowest tenderer.

(6) In Food Corporation of India v. M/s. Kamdhenu Cattle Feed Industries, , Fci had invited tenders for sale of stock of damaged foodgrains in accordance with the terms and conditions contained in the tender notice. Respondent had offered the highest price. Fci was not satisfied about the adequacy of the amount offered in the highest tender and, therefore, instead of accepting any of the tenders submitted, Fci invited all the tenderers to participate in the negotiations. The respondent refused to revise the rates offered in its tender. After negotiations Fci was offered an excess amount of Rs.22 lakhs over and above that offered by the respondent. In this case all the tenderers including the respondent were given equal opportunity to participate. The court upheld the action of the Fci who though had lost before the High Court. The court said that procuring the highest price for the commodity was undoubtedly in public interest since the amount so collected went to public fund. The court approved the action of the Fci and observed that inadequacy of the price offered in the highest tender would be a cogent ground for negotiating with the tenderers giving them equal opportunity to revise their bids with a view to obtain the highest available price.

(7) In the present case before us, if the Cwc had given the contract to the fourth respondent as per the rates quoted by it, nothing could have been said to challenge its action inasmuch as we have held that the clause in the tender notice for not considering the tender received after the due date and time would not be applicable to technical bids in the facts and circumstances of the present case and also as interpreted by the CWC. In the first instance Mr. Jaitley appeared to be right in his submission that where negotiations are held only with one party, though that may be lowest, other tenderers should have also been given the opportunity to revise their tenders. In these circumstances, we could have set aside the decision of the Cwc to award the contract to the fourth respondent and would have directed that all the tenderers whose technical bids were found to be in order be given opportunity to revise their bids regarding the rates. We, however, do not think we should adopt such a course to set aside the decision of the Cwc to award the contract to the fourth respondent. During the course of arguments Mr. Jaitley said he was even prepared to lower his rate which would be lower than that offered by the fourth respondent and accepted by the CWC. We would not like a cut throat competition where just for the sake of getting a contract and making the same as prestige issue the rates are quoted which have no element of profit and are not competitive. If such a tender is awarded situation may arise where it would be difficult for that tenderer to perform the contract causing disruption in the smooth working of Cwc for which action public interest is likely to suffer. The action of the Cwc in accepting the tender of the fourth respondent after it had offered the discount appears to be just and reasonable. It would certainly be an anomalous situation that when lowest tender is accepted no objection could be raised, but when that lowest tenderer is asked to go further down in the rates the objection is that other tenderers should also have been given opportunity to revise their bids. When the fourth respondent has given discount bringing down the offer, it is difficult to see how that offer would be matched by other tenderers who had quoted much higher rates. Quashing such a decision of the Cwc is likely to impose heavy administrative burden on Cwc and the delay that would occur in that course would harm the public interest. Decision of the Supreme Court in Food Corporation of India v. M/s . Kamdhenu Cattle Feed Industries, Air 1993 Supreme Court, is distinguishable as in that case it was not the lowest tenderer who was called for negotiations. It is not that the court must interfere in the exercise of its jurisdiction under Article 226 of the Constitution in all cases where there may be some infraction of the procedure adopted by the authority. Nothing has been shown as to how it could be said that the action of Cwc in awarding the tender to the fourth respondent was in any way motivated by extraneous considerations.

(8) We would, therefore, dismiss this petition. No costs.