Harri Ban Communication (P) Ltd. & ... vs Prasar Bharti & Ors.
2009 Latest Caselaw 2197 Del

*    IN THE HIGH COURT OF DELHI AT NEW DELHI

+                 WRIT PETITION (CIVIL) 8066/2008

                             Reserved on :     1st May, 2009
                         Date of Decision :    21st May, 2009

1.   M/s. Harri Ban Communication (P) Ltd.
     Having its registered office at S-547 A
     1st Floor, School Block
     Shakarpur, Delhi-110092
     Through its Director Mr. Surinder Gupta

2.   Mr. V.K. Mehra
     Son of Mr. N.N. Mehra
     Resident of B-II/159
     Safdarjung Enclave
     New Delhi-110029

3.   R.V.R. Electtronica S.p.A.
     Broadcast Equipment
     40138 Bolonga, Italy
     Through its representative
     Mr. V.K. Mehra.                             .... Petitioners
                       Through:   Mr. Chetan Sharma, Sr. Adv. with
                                  Mr. Manish Makhija, Adv.

                        Versus
1.   Prasar Bharti
     (Broadcasting Corporation of India)
     All India Radio
     Through its Chief Executive Officer
     PTI Building
     New Delhi-110001

2.   M/s Able Technologies
     Sahaj Anand Business Centre
     10 Park Place, Manchester M4-4EX,
     U.K. Thru Respondent No.3

3.   M/s Falcon Technologies
     102, Empire Apartments, Sultan Pur
     98, M.G. Road
     New Delhi-110030                            .... Respondents
                     Through: Mr. Arvind Nigam, Sr. Adv. with
                                 Mr. V.K.Rao, Adv. for
                                 R-1.
                                 Mr. Amit Singh, Pasrich and Ms.
                                 Mohana Malhotra, Adv. for R-2 and
                                 R-3.


WP(C) 8066/2008                                           Page 1 of 12
 %    CORAM:
     HON'BLE MR. JUSTICE MADAN B. LOKUR
     HON'BLE MR. JUSTICE SIDDHARTH MRIDUL

     1.      Whether reporters of local papers may be allowed to see
             the judgment?                                      Yes.
     2.      To be referred to the Reporter or not?             Yes.
     3.      Whether the judgment should be reported in
             the Digest?                                        Yes.
                                JUDGMENT

SIDDHARTH MRIDUL, J.

1. By way of the present petition the Petitioner challenges the

award of tender to Respondent Nos. 2 and 3, for supply of 42 numbers

of 10 KW FM transmitters, without adhering to the essential

conditions of technical eligibility and without following the

parameters to be followed in the Award of tenders, and for setting

aside and quashing the decision to place the order on Respondent

Nos.2 and 3.

2. It may be mentioned at the outset that on 18th April, 2009

Petitioner No.1 withdrew its case. However, since an amended Memo

of Parties was not filed, the cause title of the case continues

unchanged.

2. The facts as are relevant for the adjudication of the present writ

petition are that the Prasar Bharti (Respondent No.1 herein) floated

tender in 2007 for award of 36 numbers (subsequently increased to 42

numbers) of 10 KW FM transmitters for installation in various stations

of All India Radio (AIR) for broadcasting audio programs for rural and

urban public as well as listeners of neighbouring countries.

3. Out of the eleven parties who initially bid, only four companies

were shortlisted after technical scrutiny.

4. The commercial bid was opened on the 14th December, 2007 and

the Respondent Nos. 2 and 3 were found to be L-1.

5. The Petitioner immediately wrote a letter to the Prasar Bharti

and pointed out therein that the offer of Respondent Nos. 2 and 3 is

conditional and full of oddities and peculiarities and, therefore, in

contravention of tender conditions.

6. Vide its letter dated 18th December, 2007 the Petitioners once

again informed the Prasar Bharti of all the illegalities in the bid

submitted by Respondents 2 and 3.

7. Not satisfied by the response received on behalf of Prasar

Bharti, the Petitioner filed a Writ Petition (Civil) No.1480/2008 titled

M/s Harri Ban and Ors. vs. Prasar Bharti and Anr.

8. Vide order dated 21st April, 2008 a Division Bench of this Court

disposed of the Writ Petition (Civil) No.1480/2008 with the following

order:-

"Issue Notice. Mr. Sikri accepts notice. The learned counsel for the petitioner states that he withdraws the present writ petition as the tender has not yet been awarded. The writ petition is accordingly dismissed as withdrawn with liberty to the petitioners to approach this Court after the award of the tender, in case they are aggrieved by such Award. The writ petition and the applications stand disposed of accordingly. The Respondent shall give a notice of one week in writing to the petitioner before the award of the tender."

9. The Prasar Bharti vide its fax message dated 17th October, 2008

informed the Petitioner that it was going to award the tender.

10. Aggrieved by the decision to award the tender to Respondents 2

and 3, the Petitioner has filed the present writ petition.

11. Mr. Chetan Sharma, Senior Advocate appearing on behalf of the

Petitioner firstly urged that the offer made by the Respondents 2 and

3 was a conditional offer and should have been rejected as such.

Learned senior counsel next submitted that the Respondents 2 and 3

had not furnished the FOB price as required by the terms of the

tender.

12. The third submission made on behalf of the Petitioners was that

the bid of the Respondent Nos. 2 and 3 did not specify the Per Unit

Price, as required by the terms and conditions of the tender. It was

lastly urged on behalf of the Petitioner that Respondent Nos. 2 and 3

had sold similar transmitters to the Indira Gandhi National Open

University (IGNOU) at a cheaper price and were thus disqualified

from the award of the present tender.

13. Per contra, it was argued by Mr. Arvind Nigam, Senior Advocate

that the tender was for a complete integrated system and not for any

part thereof and it would be extremely difficult for the Prasar Bharti

to set up and maintain the whole system if the tender was to be split

up in two parts.

14. It was next urged on behalf of the Prasar Bharti that FOB was

not an essential condition and that the bids submitted by Respondents

2 and 3 clearly establish that some items were to be procured

domestically.

15. It was also urged on behalf of the Respondent that goods were

available locally and the evaluation made by the Respondent

demonstrated that the bid offered by Respondent Nos. 2 and 3 saved

the Respondent No.1 a little over 2.2 crores. Lastly, it was urged by

the Respondent that the items sold to IGNOU by Respondent Nos. 2

and 3 did not include duty, freight and warranty in its price.

16. Before adverting to the relative merits of the submissions made

on behalf of the parties, it would be necessary to extract the relevant

terms and conditions of the subject tender:

"6. PRICE: FOR FOREIGN BIDDERS

6.1 The price quoted must be net for per unit and must include packing and delivery charges.

6.3 The tenderer must quote the following prices and information:-

i) Firm FOB/FAS rate stating the port of Embarkation and currency in which Letter of Credit is to be opened.

ii) Firm C&F/CIF as required in the price stating freight and insurance separately. The insurance and freight structure must be based on the rate applicable for AIR- INDIA (IATA) and National Insurance Companies of Government of India.

iii) Gross weight and volume of each item. If volume & weight of the consignment and freight and insurance charges are not quoted separately, then 5% will be loaded in their FOB Cost for calculating CIF prices for the purpose of Commercial evaluation and an additional 5% of CIF will be loaded in the FOB quotes as Inland Handling Clearance charges for an equitable comparison of FOB offers vis-à-vis FOR destination quotes.

6.4 FOB/C & F/CIF AND EX.WORKS price should be exclusive of Indian Agent's commission, if any, which should be shown as a separate item in Indian Rupees. The Indian Agent's commission will be paid in non-convertible Indian currency.

6.5 The tenderers are requested to quote their firm prices. Any change or modification to the offer after opening of the tender will not be

considered at all. Further, post tender negotiations are also banned except in the case of negotiations with L-I (i.e., Lowest Tenderer).

6.6 Any offer not indicating firm FOB prices shall not be considered. This Organisation reserves the right to place the order either on FOB or C&F/CIF basis.

6.8 to 6.11 and 7 to 11 xxxxxxxxxxx

12. Consideration of offer in full or in part.

This Organisation may reject/accept or prefer any tender without having to assign any reason whatsoever. This Organisation also reserves to itself the right to accept any tender in part or split the order between two or more bidders, Tenderers are at liberty to quote separate rates for the whole quantity as well as reduced quantity.

            23. FALL CLAUSE

            i)    The price for the stores/services/works under
                  the      contract/Supply     order     by     the

contractor/Supplier shall in no event exceed the lowest price at which supplier/contractor or his agent/principal/dealer as the case may be, sells the stores/services/works or offers to sell stores/services/works of identical description to any persons/organizations including the purchaser or any department of the Central Govt. or any Deptt. of State Govt. or any Statutory undertaking of the Central or State Govt., as the case may be, during the currency of the contract supply/work order.

ii) If at any time, during the said period, the contractor/supplier or his agent/principal/dealer as the case may be, reduces the sales price, sells or offers to sell such stores/services/works to any persons/organizations including the purchaser or any Deptt. of Central Govt. of any Deptt. of a State Govt. or any statutory undertaking of the Central or State Govt. as the case may be, at a price lower than the price chargeable under the contract/supply order, he shall forthwith notify such reduction or sale or offer of sale to the Purchase Authority who has issued this contract/supply order and price payable under the contract/supply order for the stores supplied/services rendered/works carried

out after the date coming into force of such reduction or sale or offer of Sale shall stand correspondingly reduced. The above stipulation will however, not apply to:

                   a)    Exports by the contractor/supplier; or
                   b)    Sale of goods as original equipment at
                         prices lower than the prices charged for
                         normal replacement.

iii) The contractor/supplier shall furnish the following certificate to the concerned Paying Authority alongwith each bill for payment for supplies made against this supply order/contract:

"I/We certify that there has been no reduction in sale price of the stores/services of description identical to the stores/services supplied to the (..........Name of the Organisation) under the contract/supply order here in and such stores/services have not been offered/sold by me/us to any person organization including the purchaser or any Deptt. of Central Govt. or any Deptt. of a State Govt. or any statutory Undertaking of the Central or State Govt. as the case may be upto the date of bill during the currency of the supply order contract whichever is later at a price lower than the price charged to the Organisation under the contract/supply order except for quantity of stores categories under sub-clauses (a) and (b) of sub para (ii) above, details of which are as follows:..."

17. It would be relevant to consider the law laid down in respect of

award of a contract in the present circumstances by the State, its

corporations and bodies acting as instrumentalities and agencies of

the Government. The Supreme Court in Master Marine Services

(P) Ltd. vs. Metcalfe & Hodgkinson (P) Ltd. & Anr-(2005) 6 SCC

138 held that:-

"Principles of judicial review would apply to the exercise of contractual powers by government bodies in order to prevent arbitrariness and favouritism. However, there are inherent limitations

in exercise of that power of judicial review. The modern trends point to judicial restraint in reviewing Administrative action. The court does not sit as a Court of Appeal but merely reviews the way in which the decision was made. The court does not have the expertise to review Administrative decisions. 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. The Government must have freedom to contract. 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 principles of reasonableness but must be free from arbitrariness, not affected by bias or actuated by mala fides. Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.

            (para 12)

            xxx              xxx               xxx            xxx

The state, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process, the court must exercise its discretionary powers under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the court should interfere. (para 15)"

18. In the present case it is pertinent to note that twice in the past

Respondent No.1 has attempted to float a tender for the same

equipment and each and every time they have been unable to bring it

to fruition because of the actions of the Petitioner. The first time the

tender was floated in 2002, Petitioner No.3 was one of the bidders.

That entire tender had to be scrapped because of post tender

modifications by Petitioner No.3, costing the Respondent No.1 in

terms of time and effort. The second time, Respondent No.1 floated

the tender in 2004, the Petitioner No.3 along with Petitioner No.2 was

declared the successful bidder. After the advance A/T was issued to

them, they failed to submit the security deposit, a condition precedent

in the NIT. Presently when the present tender has been issued and

the Petitioners have not been awarded the contract as not being the

lowest bidders, the Petitioners have invoked the writ jurisdiction of

this Court.

19. In the present case it is seen that Respondent No.2 has

submitted a tender for Rs.17,01,64,944/- and the Petitioner has

furnished a bid in the sum of Rs.19,22,44,440/-. Resultantly, as is

clear from the above, Respondent No.2 has emerged as lowest

tenderer saving the Respondent a little over Rs.2.2 crores from the

second lowest tender submitted by the Petitioner.

20. It is seen that the Petitioner submits that the bid of the

Respondent No.2 is conditional since they had stated that the prices

given were only valid if the complete tenders were placed on them,

which was really the objective of Respondent No.1 since the tender

was for a complete Integrated System and not for any part thereof.

According to the Official Respondent if the tender was to be split, it

would be extremely difficult for them to set up and maintain the whole

system. Therefore, the bid of Respondent No.2 was not conditional at

all. It is also seen that as per DGS&D Form 229, Para 14 (a), a

purchaser has the right to accept or reject any bid without assigning

any reason thereof and that the tenderer has the right to state that

the prices are valid only if the entire quantity of the tender is taken

from him. Thus, there is no restriction in quoting the rates in totality.

Further, Clause 6 under the tender document directs tenderer's to

quote firm prices and the Respondent No.1 has ensured that

Respondent No.2 has complied with that condition.

21. The Petitioners have then alleged that a foreign bidder must

necessarily offer the price bid in FOB. This is patently wrong. As per

the tender document a bid is acceptable even if it is given in CIF

format, which is what the Respondent No.2 has done. This is so

because a bid given in CIF format can be loaded for an equitable

comparison as provided in Clause 6.3 of the tender document.

22. The Petitioner has next alleged that the installation material

price offered by Respondent No.2 is much higher than that of the

other bidders and that the Per Unit Price has not been given. In this

behalf it is seen that Respondent No.1 urges that they have applied

their minds while evaluating the overall bid and have been conscious

of the fact that the overall bid of Respondent No.2 in fact amounted to

a saving of Rs.2.2 crores to Respondent No.1, which is the reason why

the Respondent No.1 has decided to award the contract to

Respondent No.2. Further as aforementioned, the tender is not to be

split as it is for a complete Integrated System and the Respondent

No.1 would find it extremely hard to set up and maintain the whole

system, if they were to break up the bid and assemble the system

themselves. In this behalf it is also seen that there was no restriction

in the tender on the procurement of equipment made by different

manufacturers, Indian or foreign, being quoted in the bid.

23. Insofar as, the allegation of the Petitioner in respect of

Respondent No.2 and 3 having sold to IGNOU at a lesser price is

concerned, in the first instance it is seen that this was an allegation

leveled by the Petitioner for the first time in the rejoinder affidavit.

Secondly, it is seen that the prices of the items sold to IGNOU by

Respondent Nos. 2 and 3 did not include duty, freight and warranty in

its price. It may be reiterated here that the tender has been awarded

after evaluation to the lowest bidder.

24. From the above discussion, it is observed that the Petitioner has

not been able to point out any arbitrariness or unreasonableness in

the award of the tender to Respondent Nos. 2 and 3. The award of a

contract whether it is by a private party or by a public body or the

State, is essentially a commercial transaction. The State can choose

its own method to arrive at a decision. It can fix its own terms of

invitation to tender and that is not open to judicial scrutiny. The

Court can examine the decision making process and interfere if it is

found that the decision taken by the State in this behalf is vitiated by

mala fides, unreasonableness or arbitrariness. The Court should not

exercise its discretionary power merely on the making out of a legal

point and should exercise it only in furtherance of public interest. In

the present case, it is seen that the award of the tender to Respondent

Nos. 2 and 3 has resulted in saving of a sum over Rs.2 crores to the

Official Respondent. Therefore, keeping in mind the larger public

interest, the present is not a petition which warrants any interference

by this Court. In any case we have not been shown anything arbitrary

or unreasonable in the decision making process.

25. For the foregoing reasons we do not find any merit in the

present petition and the same is hereby dismissed.

SIDDHARTH MRIDUL, J.

MADAN B. LOKUR, J.

MAY 21, 2009 dn