Rameshwar Dass Bishan Dyal vs M/S. Steel Authority Of India Ltd. ...
1995 Latest Caselaw 279 Del

ORDER

1. Defendants advertised for invitation of quotations for appointment of handling contractor at their stock yard at Allahabad. The plaintiff in response to the said advertisement submitted his tender in time. According to the terms of the tender, the same was to be submitted up to 18th August, 1994. The tenders were to he valid for a period of 90 days from the date of opening of the tender. Part I of the tender was opened on 18th August, 1994. Accordingly, the validity of the tender was to expire on 16th Nov. 1994. It is further the case of the plaintiff that he was eligible for being considered for appointment as handling contractor. He had submitted complete documents as per the terms of the tender notice and also deposited the demand draft of Rs. 25,000/- being the earnest money for the tender. Plaintiff's allegations are that the defendants, deliberately with an ulterior motive knowing that the plaintiff's quotation was lowest against the tenders quoted by others, did not open the tender for a considerable long period. The defendant wanted to oblige M/s. S. K. Sharma, the present handling contractor. In collusion with M/s. S.K. Sharma, defendant No. 3 and other members of the Tender Committee tried to exclude the plaintiff from being considered as successful tenderer. The defendant No. 3 wanted to open to the price bid of the other tenderers on 23rd Sept. 1994 thereby excluding the plaintiff. Finding that the name of the plaintiff was not going to be considered, the plaintiff filed a complaint with the higher officers of the defendant No. 3. The allegations were made that M/s. S.K. Sharma was favored by appointing him as the handling contractor initially on ad hoc basis w.e.f. 23rd May, 1993 for a period of six months and thereafter defendant No. 3 in order to favor M/s. S.K. Sharma did not open the price bid tenders. Defendant No. 3 had given an undertaking to the Allahabad High Court that in future tenders would be invited after giving advertisement for fresh tenders in order lo finalise the contract within six months from 23rd May, 1993. Defendant No. 3 awarded on ad hoc basis the handling work to M/s. S. K. Sharma at very exhorbitant rates. Therefore, it was not in their interest to open to the present tenders. When the complaint was lodged against defendant No. 3, the defendants with ulterior motive and to favor M/s. S.K. Sharma did not open the price bid. The defendants without communicating to the plaintiff as to whether his tender has been accepted or not are now intending to float fresh tenders. By this act the defendants would deprive the plaintiff of his right to be considered for the tender already furnished, which according to his estimation was the lowest tender. The defendant deliberately wanted the validity period of 90 days to expire on 16th Nov. 1994. The present suit was filed on 15th Nov. 1994 apprehending that the defendants will cancel the contract under the garb of efflux of time and then fresh tenders would be invited. In the meantime, plaintiff would become ineligible to apply for the tender. Had the tender been opened and the price bid also opened, it would have been clear that the plaintiff was the lowest tenderer. The defendants have decided not to open the tender in order to allow M/s. S. K. Sharma to operate handling contract on ad hoc basis. The apprehension of the plaintiff that the defendants would cancel the contract without assigning any reason has come out true. Defendant being a statutory organisation and a State covered under Art. 12 of the Constitution, cannot act arbitrarily, illegally nor can cancel the tender documents without opening the price bid. The plaintiff has in fact quoted the rate of Rs. 51 per month for four major operations which according to the plaintiff's estimate is almost half the rate of other tenderers quoted and definitely less than half the rate at which M/s. S.K.. Sharma is working on ad hoc basis. Since the defendants has deliberately not opened the price bid and allowed the tender to lapse on account of efflux of time, therefore, the plaintiff has suffered monetary loss as well as the loss in eligibility. Had the tender documents been opened and the contract allotted, the plaintiff would have continued for four and half years and thereafter could apply for the fresh tender. That way he would have become eligible to file fresh offers as on 1999. But if the tenders are not opened, the plaintiff will become ineligible in future.

2. It is in this background that the plaintiff filed this suit seeking relief of damages for depriving him the contract which he would have got it being the lowest tenderer. He has also sought declaration that he would remain eligible in respect of handling contract to be awarded in future. He has also sought restraining order against the defendants from parting with possession of the price bid which is available with the defendants pursuant to the tender opened on 18th Aug., 1994 and a declaration that he is eligible tenderer with the defendant No. 1 for the purpose of considering his experience and that he would remain eligible till 5 years from 25th May, 1999.

3. The defendants filed the written statement and took preliminary objection that the suit does not disclose any cause of action. In fact there is no surviving cause of action to file the present suit. The validity of all the tenders including that of the plaintiff has expired on 16th Nov., 1994. That none of the tenderers have been awarded the contract. In terms of Clause 7.0 of the Tender Terms, all tenders were to be kept valid for a period of 90 days from the date of opening of Part-I of the tender. Part-I was opened on 18th Aug., 199.4 and the price bid was to be opened within 90 days thereafter. Since the period was to expire on 18th Nov., 1994, therefore, no cause of action survived thereafter. Moreover, the plaintiff made a representation to the Director (Commercial) of defendant No. 1 and pointed out Clause 7.0 of the Tender Terms. Their tender stood withdrawn in terms thereof, hence the plaintiff's tender became non est. The alleged representation was a clarification given by the plaintiff in regard to their tender in question. Thus the plaint does not disclose any cause of action. Besides taking legal objections, defendants also submitted their reply.

4. Mr. Jagdeep Dhankar, Senior Advocate appearing for the defendants contended that since the plaint does not disclose any cause of action, therefore, it should be rejected under Order 7, Rule 11 of C.P.C.

5. I have heard Mr. Vikas Singh, Advocate appearing for the plaintiff and Mr. Jagdeep Dhankar, Senior Advocate appearing for the defendants. Rule 11(a) of Order 7, which is reproduced as under, envisages that if the plaint does not disclose any cause of action then same can be rejected.

11. The plaint shall be rejected on following cases:

(a) Where it does not disclose a cause of action;

6. It is well settled principle of law that in order to appreciate whether the plaint discloses cause of action or not, reference can be made to the defense set up by the defendants in the written statement or in their pleadings. To arrive at a conclusion whether the plaint discloses any cause of action, the court has to confine itself to the pleadings contained in the plaint only.

7. Keeping the above principle in view we have to see whether plaint discloses any cause or not, Mr. Dhankar contended that by mere offering in response to notice inviting tender no right of any nature accrued in favor of the plaintiff. Nor the plaintiff on the basis of that offer can force the defendants to enter into an agreement. The sealed tenders Part-I relating to Technical were opened on 18th Aug., 1994, thereafter the defendant did not deem it proper to open the price bid. In the meantime, the validity period of opening the tender expired. Hence, in the absence of any agreement subsisting between the parties, claim for damages does not lie. Plaintiff has based his reliefs on hypothetical proposition that had the tender been accepted, he would have earned the profit. That had his tender been accepted the eligibility period would have automatically extended for another period of five years. These arguments are in the realm of imagination based on the hypothetical propositions. In the absence of subsisting contract no cause of action accrued in favor of the plaintiff. Hence, the suit is liable to be rejected. I am afraid this argument of the learned counsel for the defendants is devoid of merits. The main grievance of the plaintiff is that the defendant deliberately allowed the time to elapse. Defendants did not open the tenders in time deliberately in order to favor M/s. S. K. Sharma and thus acted arbitrarily. Plaintiff has also alleged mala fides against the defendants. According to him, defendant No. 3 wanted to favor M/s. S. K. Sharma who was working on ad hoc basis and was getting exorbitant rates as handling contractor. It is in this background, the plaintiff built his case. The cause of action is nothing but bundle of facts. The facts stated in the plaint clearly show that plaintiff is aggrieved for opening the tender within 90 days. Plaintiff's right has thus been deprived. According to him he was the lowest tenderer. Had the tender been allowed to be opened, the benefit of ad hoc handling contract would not have gone to M/s. Sharma. Plaintiff being the lowest tenderer would won the contract. These facts as pleaded, to my mind give cause of action to the plaintiff to seek relief. These averments require serious consideration. If what Mr, Dhankar states is accepted to be correct that with the passage of time the invitation to tender automatically get cancelled, then in every case whenever department does not like the lowest tenderer the department can frustrate the contract by applying the principle of efflux of time. And thereby leave the tenders high and dry. Can the Court be a silent spectator and allow such a situation to happen and leave the plaintiff remedyless. Plaintiff has raised moot questions in the plaint which require determination. Admittedly, the terms of the tender indicate that the time will clapse within 90 days. But was it due to the fault of the plaintiff or of the defendants who for an ulterior motive in order to favor another contractor did not open the price bid of all the tenders. This is again a question which require evidence and thus give cause of action to the plaintiff to justify his allegations. As per record the technical tender Part-I was opened on 18th Aug., 1994. Thereafter clarification was sought from the plaintiff on 7th Sept., 1994. Plaintiff replied and gave the clarification on 14th Sept.. 1994. Whereas on 16th Sept., 1994, the defendant tried to open the price bid of other parties excluding the plaintiff. This itself gives cause to the plaintiff to challenge the action of the defendants. He has a right to seek justification for excluding his tender/price bid while defendant tried to open the price bid of others. This is one of the grievances in the plaint. The suit had been filed on 15th Nov., 1994 when plaintiff found that defendants was going to cancel the tender under the garb of efflux of time, as the time of 90 days was going to expire on 16th Nov., 1994. The object of the defendant was to frustrate all the tenderers and to facilitate ad hoc extension to M/s. S. K. Sharma. If at the sake of repetition these facts are taken note of then to my mind, these constitute cause of action. If the plaintiff succeeds in proving the mala fide in cancelling the tenders on account of favoring M/s. S. K. Sharma then he has a right to challenge the same. This right could only be exercised by the plaintiff by filing this suit. The plaintiff can challenge the action of the defendants. This Court has to consider those grievances by lifting the veil and peep through it, in order to find out the true reason for cancelling the lowest bid in comparison to the ad hoc contact allegedly given at double the rates, that consideration weighed with the defendant to cancel the contract without even opening the price bid is a cause which requires determination. Further cause shown by the plaintiff is that had he been given the contract, his experience of preceding five years would be counted from the year 1999 (sic). But since the defendant without even opening price hid has cancelled the tender, in that eventuality the plaintiff will be ousted for all times to come to give the bid in future. This lapse on the part of the defendant gives a cause to the plaintiff and this is so apparent from the reading of the plaint as a whole. The Supreme Court in the case of Sterling Computers Ltd. v. M./s. M. & N. Publications Ltd., opined that decision taken by public authority in commercially contractual transactions of State or its instrumentality and decision making process is open to judicial review though the Court cannot act as an appellate authority, but if the process is violation of Art. 14, Court can strike down the decision and action taken pursuant thereto. The doctrine that powers must be exercised reasonably has to be reconciled with the no less important doctrine that the Court must not usurp the discretion of the public authority which Parliament appointed to take the decision. Within the bounds of legal reasonableness is the area in which the deciding authority has genuinely free discretion. If it passes these bounds, it acts ultra vires. The decisions which are extravagant or capricious cannot be legitimate. But if the decision is within the confines of reasonableness, it is no part of the Court's function to look further into its merits. Therefore, to arrive at this decision as to whether the action of the defendants in this case was extravagant or capricious, the Court can do so only after recording evidence. As already observed above the bundle of facts stated in the plaint prima facie show that the defendants acted arbitrarily when they cancelled the tenders without even opening the price bid. Hence defendants prima facie passed the bounds of reasonableness. T'nir, itself is a ground giving cause of action to the plaintiff. It was further observed by the Supreme Court in the case of Sterling Computers Limited (1993 AIR SCW 683 at pp. 692-93) (supra) that :

"if the contract has been entered into without ignoring the procedure which can be said to be basis in nature and after an objective consideration of different options available taking into account the interest of the State and the public, then Court cannot act as an appellate authority by substituting its opinion in respect of selection made for entering into such contract. But, once the procedure adopted by an authority for purpose of entering into a contract is held to be against the mandate of Art. 14 of the Constitution, the Courts cannot ignore such action saying that the authorities concerned must have some latitude or liberty in contractual matters and any interference by Court amounts to encroachment on the exclusive right of the executive to take such decision."

8. The above observation of the Supreme Court aptly apply to the facts of this case. The plaintiff has pleaded that the defendants by their act allowed the time to elapse and in the garb of efflux of time cancelled the tenders of all the tenderers in order to favor M/s. S. K. Sharma by giving him handling contract on ad hoc basis at exorbitant rates. These are the facts which have to be gone into by the Court to arrive at the decision whether the action of the defendants was in violation of Art. 14 of the Constitution or not. This itself gives a cause to the plaintiff against the defendants. To the same extent are the observations of the Supreme Court in the case of M/s. Star Enterprises v. City and Industrial Development Corporation of Maharashtra Ltd., . The Supreme Court in the case of New Horizons Limited v. Union of India, observed that State action should be in consonance with standards or norms which should not be arbitrary, irrational or irrelevant. Therefore, in order to ascertain on the basis of the allegation made in the plaint whether the act of the defendants is bona fide or arbitrary, irrational or irrelevant, we have to decide the case on merits.

9. Mr. Jagdeep Dhankar, Senior Advocate appearing for the defendant on the other hand placed reliance on the case of Purshottama Ramanta Quenim v. Makan Kal-

yan Tandel, and Ramana Dayaram Shetty v. International Airport Authority of India, . Relying on these judgments Mr. Dhankar contended that there cannot be any challenge by the plaintiff to the grant of Government contract to any other bidder Government reserves the right to take any decision without assigning any reason. The Supreme Court in the above cases upheld this discretion of the department. In the present contract also the discretion vest with the defendants to reject the other tenders without assigning reasons. There cannot he any quarrel with this proposition. In those cases the observations were made after recording of evidence. But, in the case in hand, the question whether the tenders have been cancelled or not is a moot question. It has to be considered on merits. These objections fall into the realm of evidence. I am not concerned at the moment as to whether cancellation or rejection of the plaintiff's tender was rightly done or not. It will be decided after recording evidence. Suffice it to say from the facts pleaded in the plaint that the plaintiff has shown the cause of action. The very fact that the defendants allege that they reserved the right to cancel the contract gives cause of action to the plaintiff to allege that such a cancellation was motivated, arbitrary and against the procedure and the norms. And that is what precisely is to the grievance of the plaintiff in this suit.

10. For the reasons stated above, I find no merits in this application. The same is accordingly rejected.

11. Application dismissed.