Continental & Eastern Agency vs Union Of India (Uoi) And Ors.
2003 Latest Caselaw 243 Del

JUDGMENT

Badar Durrez Ahmed, J.

1. Rule. With the consent of the parties the petition is taken up for final hearing and is accordingly being disposed of.

2. The petitioner is seeking the quashing of the order of the Respondent in refloating the limited tender allegedly ignoring the claim of the petitioner. The petitioner also seeks a direction awarding the tender in favor of the petitioner.

3. Respondent No.5 (Directorate General of Ordnance Services, hereinafter referred to as DGOS) floated a tender enquiry on 20.2.2001 for 39 tester fuel injector pumps ( hereinafter referred to as the said goods) as per specifications detailed in the said tender enquiry and specified in appendix "E "in the tender enquiry documents. Thereafter, by a letter dated 23.3.2001 addressed to the petitioner, the respondent No.1 invited the petitioner to submit its tender, if it so desired, by the closing date which was 1000 hours on 14.3.2001. The petitioner in response to the said tender enquiry and invitation submitted its offer for the said goods.

4. It is an admitted fact that the petitioner firm is not registered with respondent No.5 (DGOS) as a defense supplier for the said goods. In this connection it would be pertinent to refer to the Joint Services Guide on Assessment and Registration of Vendors for defense (JSG: 015:02:1995) issued by the Directorate of Standardisation, Department of defense Production and Supplies, Ministry of defense, New Delhi. The said Joint Services Guide lays down the guidelines for capacity assessment, vendor grading, vendor rating and registration of manufacturers for defense. This guide has been prepared by the Directorate General of Quality Assurance (hereinafter referred to DGQA) for use in defense and has been issued on the authority of the Standardisation Committee, Ministry of defense. As mentioned in paragraph 1 of the said Joint Services Guide, defense equipments and stores are subjected to a wide variety of end uses under varying operational and climatic conditions. defense also has very special and critical requirements of storage, transportation, ease of maintenance/repair and ever changing personnel to operate and maintain the equipment. It is further stated in the said paragraph that it is essential that quality and product reliability of defense equipment should be of a very high order and that to a large measure, the quality and reliability of products depend on the technical components and capacity of the vendors. It is further stated therein that due to the special requirements of defense, the task of capacity assessment and registration of the vendors for stores and equipments is more exacting for defense use than for common civil users.

5. While the said Joint Services Guide is intended to give general guidelines for carrying out vendor assessment of new/potential defense suppliers and grading them based on their assessed capabilities for initial registration and for its periodic renewal, special situations may also arise where purchase agencies advertise tenders and non-registered firms offer competitive quotations. To meet these special situations provisions have been made in paragraph 24 of the said Joint Services Guide.

6. Respondent No. 4 (Directorate General Quality Assurance) through its Collectorate of Quality Assurance Engineering Equipment, Aundh Camp, Pune (hereinafter referred as CGAE) by a letter dated 16.5.2001 gave its vetting comments on the quotations in respect of the said goods against the said tender enquiry dated 20.2.2001. From the said letter it is clear that five quotations had been received and the same were scrutinised with respect to the governing specification No. CGAE/4910/1452 (which was appendix E to the tender enquiry document). It is further clear that out of the five quotations received three were considered to be technically acceptable. The petitioner firm, along with Mico Limited and Indian Machine Tools, was amongst the three found to be technically acceptable. Insofar as the Petitioner was concerned, it was mentioned therein that the petitioner had offered three models : M-6(TT), E6(TT) and E-6(LCD/CRT). Out of these only Models M-6(TT) and E-6(TT) met the requirements of the governing specifications. In paragraph 13 of the said letter dated 16.5.2001, it is clearly pointed out that the petitioner firm was not registered with CQAE, Pune as a defense Supplier for the said goods. However, capacity assessment form appendix B had been forwarded to the petitioner vide letter dated 20.3.2001 for general assessment as requested by the firm and that the same would be completed within two to three months.

7. It would be pertinent to note here that in terms of paragraph 24 of the said joint services guide, in special situations where non-registered firms offered competitive quotations, the purchase agencies are required to ask such firms to submit their details and documents as per requirements of Appendix B of the said Guide.

8. Thereafter, the assessment of the petitioner firm was carried out by the CQAE and by a letter dated 4.7.2001 the Respondent No.4 (DGQA) informed the respondent No.5 (DGOS) that the petitioner firm had been assessed and was "not recommended". This letter of 4.7.2001 was based on a communication also dated 4.7.2001 which was sent by CQAE, Pune to CQAE, New Delhi wherein it has been clearly mentioned that the petitioner was assessed for the said goods on 6.6.2001 and was not recommended for the following reasons:

"(a) Essential plant machinery and test facilities not available.

(b) No qualified technical persons are available.

(c) Components are being made in their sister concern in Verma & Sons.

(d) Firm is not the actual manufacturer of the test benches."

9. In the meanwhile, by a letter dated 7.6.2001 respondent No.5 informed the petitioner that the commercial bids in respect of the said tender enquiry was scheduled to be opened at 10.30 hours on 12.6.2001. According to the petitioner, after the comparison of the prices quoted by others, its price was the lowest by more than 30% than L-2.

10. Subsequent to the price bid opening, by another letter dated 24.7.2001 respondent No.5 sought confirmation that the petitioner's model M-6(TT) and E-6(TT) offered by the petitioner could also calibrate rotary FIPs (Fuel Injection Pumps) in addition to conventional type of FIPs. In response to this, the petitioner by a letter dated 30.7.2001 informed respondent No.5 :-

"That as, a more precise control and stability of RPM is required in respect of the calibration of the Rotary Pumps, which is possible only in case of our Model E6(TT), in which only the Microprocessor controlled speed variation and the control is incorporated, it will only be possible only in the said Model E6 (TT) and not in the Model M6 (TT)."

11. It is pertinent to note that from the relevant record pertaining to the tender enquiry in question it appears that subsequent to the tender publication and opening, the EME Directorate which was the user of the said goods, desired that the equipment under procurement should be suitable for carrying out test phasing, calibration and repair of rotary FIPs. It appears that it is in this context of change specifications that the letter dated 24.7.2001 was sent to the petitioner asking it to confirm that its model could also calibrate rotary FIPs. From the above it is clear that the petitioner firm had confirmed such capability only in respect of model E-6 (TT). As such, the only model that was left in the fray was model E-6 (TT).

12. As per the note dated 6.11.2002 of the Director OS(Engg.) in the record produced by the Respondents, it appears that from the ranking statement, the price quoted by the petitioner in respect of Model E-6 (TT) was, in fact, more than that quoted by the other two firms for this very model. In the Tender Purchase Committee meeting held on 27.2.2002, it was pointed out that the petitioner firm was not registered with DGQA and that CQAE, Pune had also not been recommended pursuant to their capacity assessment. Accordingly, the deliberations were then limited to the offers of the other two technically acceptable vendors ie., Mico Limited and Indian Machine Tools.

13. Another Tender Purchase Committee Meeting was held on 26.2.2002 and the minutes thereof disclose that due to the change in specification as required by the user i.e., EME Directorate after opening of the tender, the ideal course according to the Tender Purchase Committee would have been to re-tender the enquiry. However, it was noted therein, considering the urgency of the requirement of the item, the Tender Purchase Committee decided to float a limited tender enquiry to both the firms (Mico Limited and Indian Machine Tools) as these were the only registered firms and that they be asked to respond within two to three weeks.

14. Thereafter, on 11/18.9.2002 a limited tender enquiry for the said goods was issued to Mico Limited and Indian Machine Tools. The petitioner is aggrieved by the fact that it had not been included in the limited tender.

15. The question before us is whether the exclusion of the petitioner from the limited tender is justifiable and/or reasonable or is it arbitrary and unreasonable? Learned counsel for the petitioner submitted that he is not really challenging the limited tender as such but the decision to exclude him from participation in it. In the same breath he also submits that the limited tender is contrary to the provisions of sub-rule 36 of Rule 128 of the General Finance Rules, 1963 (hereinafter referred to as the said Finance Rules). According to the petitioner, in the facts and circumstances of the present case there should have been an open tender and not a limited tender as none of the circumstances mentioned in paragraphs (a) to (c) of the said sub-rule 36 had been fulfillled.

16. Learned counsel for the petitioner also cited Supreme Court decision in Tata Cellular v. Union of India, and in particular paragraph 77 at page 677 thereof which reads as under:-

 "The  duty of the court is to confine itself to the question of    legality.  Its concern should be :  

 

      1.  Whether a decision-making authority exceeded its
 powers?  

 

 2. Committed an error of law,  
 

 3. committed a breach of the rules of natural justice.  
 

 4. reached a decision which no reasonable tribunal would    have  reached or,  
 

 5. abused its powers.   

 

Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfillment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under:-

(i) Illegality: This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it.

(ii) Irrationality,namely,Wednesbury unreasonableness.

(iii) Procedural impropriety.

The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact, in R. V. Secretary of State for the Home Department, ex Brind [(1991) 1 AC 696], Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should, "consider whether something has gone wrong of a nature and degree which requires its intervention." (portion in brickets added)

17. These observations of the Supreme Court in no way help the case advanced by the petitioner as will be evident from the discussion below. In fact, it would be appropriate to point out that in the said decision in Tata Cellular v. U.O.I. (supra) the Supreme Court, after a review of the case law and several texts held that:-

"94. The principles deducible from the above are :

(1) The modern trend points to judicial restraints in administrative action.

(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.

(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.

(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.

(5) The Government 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. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts (sic) pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.

(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure."

18. The CQAE is the expert body in the present case. In the opinion of the CQAE the petitioner was assessed and was not recommended for the reasons mentioned in paragraph 8 above. These reasons were communicated to the petitioner by its letter dated 11.7.2001the contents of which are set out in paragraph 3 of the affidavit of Shri Ravi Iyar, Director O.S. (Engineering), Army Head Quarters, New Delhi dated 31.1.2003.

19. Moreover, the petitioner had approached Respondent No.4 for reassessment and review of the case. Respondent No.4 by its letter dated 20.3.2002 communicated to the petitioner that its case had been reviewed once again and that the shortcomings found earlier held good even then as there was no improvement. In the said letter it was clearly mentioned that the defense cannot depend upon the suppliers who do not have premises of their own, no plant/machinery, no technical know-how and poor financial health. The respondent No.4 is the expert body and, if in its opinion the petitioner cannot be recommended, the court cannot interfere in this decision as the court has no expertise in this matter. As laid down by the Supreme Court in the Tata Cellular case (supra), the Court does not sit as a court of appeal but merely reviews the manner in which the decision was made. The expert body examined and assessed the petitioner firm not once but twice and did not find it fit for recommendation for reasons which it recorded in writing and which were also communicated to the petitioner. The Court is not equipped with the technical felicity to examine the technical aspects of this case and, indeed, it should not so examine.

20. It is well settled that the Government must have freedom of contract. A condition to this, however, is that this freedom must be exercised reasonably and must be free from arbitrariness not affected by bias or actuated by mala fides. In the facts of the present case, we find that the grievance of the petitioner that it has not been invited to participate in the limited tender is without any basis. This is so, because, the petitioner has been found unsuitable and had not been recommended by the expert body. If that be the case, an invitation to it for participation in the limited tender would be of no consequence inasmuch as it would still be unsuitable for acceptance particularly in view of paragraph 24 of the said Joint Services Guide. The submission of the petitioner that by the said letter dated 16.5.2001 its offer was considered to be technically acceptable and, therefore, it should have also been invited for the limited tender, is untenable. The said letter dated 16.5.2001 also makes it clear that the petitioner firm was not registered with the CQAE, Pune as a defense supplier for the items in question and that capacity assessment form as per Appendix B had been forwarded to the firm for general assessment as requested by the firm. It is pertinent to note that this requirement of assessment was necessary in view of the provisions of paragraph 24 of the said Joint Services Guide which catered to the special situation where purchase agencies advertise tenders and non-registered firms offer competitive quotations. In such cases, firms are required to submit details as per appendix B to the said Guide and assessment of the firms is required to be carried out. After this exercise was carried out in the present case, the expert body i.e. the respondent No.4, came to the conclusion that the petitioner's case could not be recommended. In view of these facts the procedure followed by the respondents in scrutinising the petitioner firm's offer and capacity/capability cannot be faulted.

21. We also do not find any force in the petitioner's argument that the limited tender was in violation of sub-rule 36 of Rule 128 of the General Finance Rules, 1963. First of all, the petitioner cannot be allowed to approbate and reprobate. The petitioner alleges that he does not challenge the limited tender but that only the decision to exclude him from participating therein is being questioned by him. If this be the case, then, the petitioner cannot at the same time challenge the limited tender on the ground that it is violative of the said provisions of the General Finance Rules. Secondly, in any event, the said sub-rule 36 itself provides circumstances under which a limited tender system may be adopted instead of the open tender system. It has been noticed above that the change in specifications at the instance of the user (EME Directorate) so as to provide for testing of rotary FIPs necessitated confirmation by the three parties including the petitioner to confirm whether the products offered by them would be capable of testing rotary FIPs. All the three parties gave their confirmations. However, the offer of the petitioner was not considered because it was not registered with CQAE and after assessment it was not recommended by the expert body. Although, this is immaterial for deciding this case, the record produced by the respondents reveal that the price offered by the petitioner was also higher than that offered by the other two in respect of its model E-6(TT) which was the only one capable of testing rotary FIPs. The petitioner's allegation that it was L-1, therefore, does not appear to be correct. Anyway, we need not go into this question as nothing turns upon it. In fact, clause 21 of the tender enquiry also makes it clear that the respondents were not bound to accept the lowest tender.

23.In view of the changed circumstances with regard to the specifications as required by the user i.e. EME Directorate, the Tender Purchase Committee in its meeting held on 26.7.2002 came to the conclusion that, although the ideal course would be to re-tender the enquiry, considering the urgency of the requirement of the item, a limited tender enquiry be floated to the two firms which were the only registered firms. The reason for having a limited tender was the urgency. The situation could not be anticipated earlier as the user had requested for a change in the specification after the opening of the tender. This action on the part of the respondents is neither arbitrary not actuated by any bias or mala fides. On the contrary, it is one which any reasonable person could have taken in the facts and circumstances of the case.

24. Therefore, the challenge by the petitioner to the limited tender excluding the petitioner is not sustainable in law. No interference is called for. The petition is dismissed. Parties are left to bear their own costs.