Hotel Pradeep And Anr. vs Indian Railways Catering And ...
2007 Latest Caselaw 788 Del

JUDGMENT

Manmohan Sarin, J.

1. This appeal has been preferred by M/s Hotel Pradeep through its Managing Partner Shri Pradeep Narain Singh, assailing the judgment dated 1st December, 2006 by the learned Single Judge in WP(C) 17880-81/2006. The learned Single Judge by the said judgment dated 1st December, 2006 hereinafter referred to as the impugned judgment dismissed the above writ petition. The writ petition had sought quashing of the tender issued on 22nd November, 2006 by the Indian Railways Catering & Tourism Corporation Ltd in respect of cell kitchen at Varansi Railway Station. The petitioner in the writ petition had challenged the eligibility criteria in the NIT and had also sought a direction for issuance of a fresh NIT to run cell kitchen as per the eligibility criteria as prescribed earlier and terms set out in the notice inviting applications for empanelment. The learned Single Judge in his reasoned and comprehensive judgment found that there was no illegality or procedural unreasonableness or malafide warranting interference by the court under Article 226 of the Constitution of India, hence he dismissed the petition as being without merit.

2. The facts relevant for the purposes of disposal of this writ petition may be noticed in brief:

(i) Respondent had issued a notice inviting tender on 25th September, 2006 for license to manage cell kitchens (base kitchens) with eating facilities at different railway stations including those at Jhansi, Tundla, Kanpur, Varanasi etc. The date of sale of tender documents was extended up to 6th November, 2006 by issuance of a corrigendum dated 28.10.2006. The respondent by issuance of another corrigendum dated 7.11.2006 had extended the date of submission of tender documents up to 23rd November, 2006. The respondent on 20th November, 2006 took out another notice to the effect that tender process for license to manage cell kitchens at railway stations for which NIT was published on 25th September, 2006 and corrigendums published on 28th October, 2006 and 7th November, 2006 had been discharged.

(ii) Respondent on 22nd November, 2006 issued a NIT for license to manage cell kitchens (base kitchens) with eating facility at the same places. The appellants obtained the tender documents but were aggrieved on scrutiny that changes had been effected in the eligibility criteria to ensure that appellants were no longer eligible. Appellants' case is that as per Clause 8 of the NIT now issued, minimum annual turn over of Rs. 3 crores has been prescribed in the last two completed financial years. Security Deposit requirement was reduced to only Rs. 1.32 lacs from Rs. 8 lakhs. The clause forbidding the licensee to sub-license the cell kitchen to any other party had been substantially diluted.

(iii) The appellants contend that action of the respondent is vitiated by malafides and has been designed so as to render the appellant ineligible. In this connection, it is stated that the appellant had earlier submitted their bid for setting up a food plaza at Varanasi Railway station. The technical bid of the appellant had been rejected entailing filing of WP(C) 16422/2006 where notice had been issued to the respondent and award of license to other parties was stayed.

(iv) At this stage, it may be noticed that a Public Interest Litigation being WP(C) 6420/2006 and WP(C) 6421/2006 had been filed with regard to poor conditions prevailing in the pantry cars of various trains. The Court had appointed a Committee to carry out random checks and inspection of the railway kitchens and pursuant to the findings of the Committee, certain directions had been given regarding modernization and sanitization of the kitchens.

3. In the present appeal, the appellants contend that the learned Single Judge had wrongly concluded that changes in the eligibility criteria had been brought about on account of the said PIL.

4. Notice in the appeal was issued and counter affidavit has been filed by respondent. It has been averred in the counter affidavit that several steps have been taken by the respondent for improvement and modernization in the catering services and in view of the orders passed by the High Court in PIL and in particular order dated 22nd November, 2006 regarding the poor hygienic conditions in the refreshment room and base kitchen, it had been decided that the existing base kitchens and refreshment rooms should be replaced with Cell Kitchen to be fitted with the most modern and latest equipment. The respondent also contended that reference to the appellant's tender for food plaza is unconnected to the issues in the present case. The appellant's bid had been rejected at the stage of technical evaluation as it was found that it had not submitted the tax audit report and requisite certificates of net worth and annual turn over.

5. Having perused the Memorandum of Appeal, counter affidavit and the impugned judgment and having heard learned Senior Counsel for the appellant Mr. Manmohan, we find that the main plank of the appellant's submission is that alterations in the NIT are vitiated by malafides inasuch as it is designed to exclude the appellant. Mr. Manmohan submits that hitherto before, eligibility condition was that a tenderer ought to have a minimum annual turnover of Rs. 3 crores in the last completed financial year. The appellant had duly participated in the tender. This NIT has been abandoned midstream. Another NIT which is in respect of Food Plazas/Fast Food units appearing at page 155 of the paper book still retains the condition of annual turn over of Rs. 3 crores for categories A and C stations for Food Plazas in the last completed financial year. However, in respect of present NIT which is for Cell Kitchen, the eligibility criteria has been modified to annual turnover of Rs. 3 crores for the last two completed financial years. This , it is alleged, has been done to exclude the appellant and to encourage a cartel which wants to retain its hold and monopoly over these kitchens.

The second submission made by learned Counsel was reduction in security amount from Rs. 8 lakhs to Rs. 1.32 lakhs is actuated by consideration to enable more members of the cartel to bid by offering reduced security. Last submission while assailing the eligibility criteria with respect to alterations to the provisions in sub-licensing. Counsel submitted that there was an absolute prohibition on sub-licensing. Clause 6.15 was in the following terms:

The licensee shall not be permitted to sub-license the Cell Kitchen to any other party.

The aforesaid clause has been modified to Clause 4.1 which reads as under:

4.1 Sub Licensing: For setting up and operation of Cell Kitchen, licensee is permitted to sub-license some of the activities, subject to the approval of IRCTC. The licensee shall have to operate at least one portion of the Cell Kitchen under his own management i.e. licensee will not be allowed to sub-license the whole operation of Cell Kitchen. The decision of IRCTC in this regard shall be final and binding.

6. Mr. Manmohan submitted that this alteration or dilution in the clause runs in the teeth of the claim of the respondent of ensuring quality and complying with the various directions given in the PIL by the High Court. He urged that permitting a sub licensee without adherence to quality would be a self defeating exercise. Besides, it is likely to be used as a tool by the cartel to bring in their own sub licensees/contractors and to capture the tenders and operate them through sub licensees. Learned Counsel submitted that appellant is sought to be penalised for having approached the court earlier and obtaining stay in respect of food plaza tender. As a result it was contended that the tender of cell kitchen was discharged midway. Counsel further relied on the judgment in the case of Gharda Chemicals Limited v. Central Warehousing Corporation where the Division Bench found that the insertion of the pre-qualification condition of " at least three years" manufacturing experience of ISI marked Chemical as irrational and arbitrary and having absolutely no nexus with the stated object, namely, the quality and consistency of supplies. The court while noticing that such a change in the criteria had resulted in the ousting of remaining manufacturers, leaving one of the manufacturers in the fray as fulfillling the criteria. The court intervened in public interest and quashed the impugned elgibility condition.

7. We are not persuaded to accept the submissions of learned Counsel for appellants. It is an admitted position that directions had been issued in the PIL for improvements and for maintenance of hygiene and sanitary conditions in pantry cars. Respondent authority have chosen to issue a corrigendum in the tender process for cell kitchen being introduced. The allegation of the appellant that the eligibility criteria has been changed so as to exclude the appellant and favoring others is found to be incorrect. The respondent has stated that no quotation was received in response to the tender with altered eligibility condition. The allegation, therefore, that eligibility criteria was modified to exclude the appellant and to favor others is without any factual foundation inasmuch as no bids were received by the respondent and fresh tenders are to be called. It cannot be said that respondent had acted malafide since events that unfolded demonstrated that there is no other contender in the field. Learned Single Judge while recapitulating the legal position has correctly concluded that the decision taken by the authorities to provide for eligibility of Rs. 3 crore turnover for the last two completed financial years and not the last completed year cannot be said to be arbitrary, unreasonable or subverting the objectives sought to be achieved.

8. The second submission of the appellant that the reduction in security amount from Rs. 8 lakhs to Rs. 1.32 lakhs would promote a cartel and will be conducive in creation of a monopoly is devoid of any merits. On the face of it, the reduction in the amount of security deposit would enable more parties to offer bids and therefore it cannot be said that reduction in the security amount shall result in favoring the cartel or in creation of a monopoly. As noted earlier, the executive or administrative authority is entitled to some play in the joints and discretion in fixing these limits depending upon their requirements unless the action is shown to be vitiated by arbitrariness or any unreasonableness, the court would not interfere.

Reliance placed on the case of Gharda Chemicals Limited (Supra) would not advance the appellant's case as the court in the said case had found that the pre qualification condition of manufacturing experience of at least three years does not sub serve the purpose for which it was intended inasmuch as it had observed that the samples of the company which had qualified, had failed repeatedly. It was not a case where the term was providing for experience of at least three preceding years would achieve the desired object of ensuring the quality of the product. The facts of the aforesaid case are clearly distinguishable. Besides in the present case there is no bidder who has been kept out.

9. Coming to the last submission of the appellant regarding the prohibition on the provision of sub-licensing, the learned Counsel for the appellant submitted that when the respondents are claiming that all steps are being taken to adhere to quality and ensure that hygienic food is being served, then permitting sub licensing would be counter productive. Secondly it was submitted that Clause 4.1 of NIT is vague and confers unfettered discretion on the respondent to permit the licensee to sub license substantial portion of the work as long as the whole work was not being sub licensed, without laying down any guidelines for exercising such a discretion.

10. After hearing the counsel on 2nd April, 2007, we had put to Mr. Gourab Banerjee, learned senior counsel appearing for the respondent submits that sub-licensing clause in its present form appears to confer unfettered discretion without having any guidelines for the respondent to follow. Learned Counsel took time for obtaining instructions and apprising the court of the guidelines in respect of sub licensing and how the respondent proposed to operate the same. On 3rd April, 2007, when the matter was taken up, draft guidelines were produced before the court and were perused. After hearing the counsel for appellant as well as respondent and considering the matter, it was put to the respondent that rather than framing the clause in the form of prohibition on sub licensing the whole operation and the licensee being required to perform one portion of the cell kitchen under him, it may be prudent to provide that in no case the main activity shall be permitted to be sub licensed. Further sub licensing be permitted in respect of specialized or local cuisine food and for provision of sale of packed food, aerated drinks of popular brands and desserts etc. The Respondent has accepted the same and it was stated that the e guidelines shall be modified accordingly.

We are of the view that the guidelines and modalities of implementing the clause of sub licensing as aforesaid are workable in a manner so as to achieve the objective for which they are intended while at the same time retaining the responsibility of the licensee and ensuring adherence to quality and hygiene of the food to be supplied.

In view of the foregoing discussion, we find that there is no merit in the appeal and the concern or challenge to the clause containing provision of sub licensing also stands duly addressed and explained in view of the guidelines formulated.

Appeal is accordingly dismissed.