Delhi High Court

M/S Om Prakash And Co. vs M.C.D And Ors on 7 January, 2011

Author: Rajiv Sahai Endlaw

             *IN THE HIGH COURT OF DELHI AT NEW DELHI

                                            Date of decision: 7th January, 2011.

+        W.P.(C) 13906/2009 & CM No.15821/2009 (u/S 151 CPC for stay)

%        M/S OM PRAKASH AND CO.                  ..... Petitioner
                     Through: Mr. M.M. Gangadeb with Mr. Sewa
                              Ram & Mr. R.K. Bachchan,
                              Advocates.

                                   Versus

         M.C.D AND ORS                                      ..... Respondents
                            Through:      Ms. Suparna Srivastava & Mr.
                                          Anshum Jain, Advocates for MCD.
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1.       Whether reporters of Local papers may
         be allowed to see the judgment?                     No

2.       To be referred to the reporter or not?              No

3.       Whether the judgment should be reported             No
         in the Digest?

RAJIV SAHAI ENDLAW, J.

1. The petitioner is aggrieved from the action of the respondent MCD of,

inspite of having taken a decision to hand over the operation and

maintenance of public toilets to an outside agency and inspite of having

taken out tenders for the same, not awarding the tenders to any person

whosoever and keeping the operation and maintenance of the said public

toilets to itself. The counsel for the petitioner has argued that the officials of

the respondent MCD are not interested in entrusting the operation and

maintenance to the outside agency because MCD is receiving funds for

maintenance of the said public toilets and which funds are being

misappropriated. It is argued that implementation of decisions lawfully

taken cannot be allowed to be so scuttled. It is the case of the petitioner that

though the respondent MCD successively brought out four tenders for award

of the contract but on each occasion, for some reason or the other, no tender

was accepted. The petitioner in the writ petition claims the relief of

directing the respondent MCD to open the financial bid of the petitioner

(only whose technical bid was accepted) in pursuance to the fourth tender

and to take a decision on the award of the tender expeditiously and to

abstain from taking out any fresh tender for the same. The petitioner also

claims damages from the respondent MCD for having deprived the

petitioner from carrying on the business upon the tender being accepted.

2. Notice of the writ petition was issued. Counter affidavit and rejoinder

have been filed. The counsels have been heard.

3. The public toilets have been classified by the MCD into three

categories i.e. A, B & C. The counsel for the respondent MCD has argued

that though the petitioner on each of the four occasions has bid for only

category B & C toilets and never for category A toilets but has made vague

allegations with respect to category A toilets also; it is informed that the

contract with respect to category A toilets has been awarded. It is further

argued that the bid of the petitioner in response to the first tender was found

ineligible; that there was only one eligible bid at that time and it was decided

to not proceed with the matter without any competition; that though in

response to the second tender, four bids were received but none of the

bidders was found eligible and accordingly the process was abandoned;

with respect to the third tender, it is stated that the same was also abandoned

because only two companies participated and which was not found

expedient for healthy competition; similarly, with respect to the fourth

tender it is contended that the technical bid of the petitioner only was found

eligible and the technical bid of the only other bidder was not found eligible

and accordingly the process was abandoned. The counsel for the

respondent MCD has further stated that with a view to broad base the bids,

the tender is now being revised and a fresh Notice Inviting Tender will be

issued shortly.

4. The counsel for the petitioner has rebutted the aforesaid case of the

respondent MCD by contending that in response to the first tender, the

petitioner was wrongly excluded. Reliance is sought to be placed upon the

file notings of the respondent MCD in this regard. However, it is not

deemed expedient to enter into the said controversy inasmuch as the relief

claimed in the writ petition is with respect to the fourth tender only and not

with respect to the first tender.

5. The reason given by the MCD for abandoning the fourth tender owing

to the petitioner being the only eligible bidder therein cannot be faulted

with. Even otherwise, the tender was merely a notice inviting offers and the

petitioner can have no right to insist that the offer made by the petitioner

through his bid should be accepted by the respondent MCD. Undoubtedly,

the Notice Inviting Tender did not contain the usual condition entitling the

person inviting the tenders to cancel/abandon the process at any time.

However, even in the absence of such stipulation, in law the person inviting

tender cannot be forced to accept the best bid.

6. The Division Bench of this Court in PES Installation (Pvt.) Ltd. Vs.

AIIMS MANU/DE/1273/2002 was faced with a similar argument. It was

held that unless the cancellation of the tender is found to be arbitrary or

irrational so as to attract the Wednesbury's principles of unreasonableness or

wrath of Article 14 of the Constitution of India, the Court would not

interfere. The judgment in Tata Cellular Vs. UOI (1994) 6 SCC 651 was

relied upon to hold that the Government must have freedom of contract and

the right to choose cannot be considered to be an arbitrary power unless

shown to be exercised for collateral purpose. Reliance was also placed on

Air India Ltd. Vs. Cochin International Airport Ltd. (2000) 2 SCC 617 to

hold that the person inviting tenders may not accept the offer even though it

happens to be the highest or lowest. The same principles were reiterated

recently in Shimnit Utsch India (P) Ltd. Vs. W.B. Transport Infrastructure

Development Corp. Ltd. (2010) 6 SCC 303 and it was held that the

administrative discretion to cancel the entire tender process in public interest

provided such action is not actuated with ulterior motive or is otherwise not

vitiated by any vice of arbitrariness or irrationality or is not in violation of

any statutory provision cannot be taken away. Reference in this regard may

also be made to State of U.P. Vs. Vijay Bahadur Singh (1982) 2 SCC 365,

Food Corporation of India Vs. Kamdhenu Cattle Feed Industries

(1993) 1 SCC 71, Haryana State Agricultural Mktg. Board Vs. Sadhu Ram

(2008) 16 SCC 405, Meerut Development Authority Vs. Association of

Mgt. Studies (2009) 6 SCC 171. In the present case, the reason stated by the

respondent for abandoning/cancelling the fourth tender are found to be

cogent and logical and in proper exercise of discretion. Another Division

Bench of this Court in S.B. Movers & Lifters (P) Ltd. Vs. Steel Authority of

India Ltd. MANU/DE/2995/2007 held that the only right of a bidder is to a

fair consideration of its offer and which is found to have been done in the

present case. Yet another Division Bench, recently in Era Infra

Engineering Ltd. Vs. DDA 166 (2010) DLT 402 held that reasons for

rejection of tender need not be communicated and a person merely for the

reason of being the lowest bidder has no enforceable right to be awarded the

contract.

7. The counsel for the petitioner has however contended that the

respondent MCD has been repeatedly receiving monies from the petitioner

under repeated tenders and though abandoning the tender process on its

own, has not even been refunding the said monies.

8. The counsel for the respondent MCD in response thereto has drawn

attention to the notice inviting tender where the "application processing fee"

of `20,000/- per Group has been described as "non-refundable". The

counsel for the petitioner states that since the petitioner had submitted the

bid in both Groups B & C, he had submitted the processing fee of `40,000/-

besides the costs of `5,000/- of each application form i.e. total `50,000/-.

9. The counsel for the petitioner has handed over in the Court a booklet

containing the photocopies of the file notings of the respondent MCD. The

counsel for the respondent MCD on the basis thereof states that the

applications were processed and thus the processing fee deposited by the

petitioner were consumed. It is further contended that the petitioner having

deposited the same with the clear understanding that the same was not

refundable, cannot be heard to complain about the same.

10. A perusal of the Notice Inviting Tenders does not disclose that the

respondent MCD had informed therein that the tender process would be

abandoned if there were less than any number of eligible bids or if there

were no sufficient applications. Similarly, it was not provided that the

tender process will be abandoned if the bids do not comply with various

conditions. The bid of the petitioner in pursuance to the fourth tender

having admittedly being found eligible, the MCD if deciding to abandon the

tender process at that stage and opting to invite fresh tenders, cannot be

heard to say that it is not liable to refund the amounts to the petitioner. The

respondent MCD was entitled to the said amounts only if the tender process

had been taken to its logical conclusion and is not found entitled to retain the

said monies having for its own reasons decided to abandon the process

midway. Thus the petitioner is found entitle to refund a sum of `50,000/-

deposited towards processing charges and tender fee of the fourth tender.

The Supreme Court in Ramgarh Cantonment Board Vs. State of

Jharkhand (2008) 11 SCC 223 in similar circumstances gave a similar

direction, "keeping the well known legal principle of equity, fairness and

good conscience in view". As far as the claim of the petitioner for the said

charges for the earlier tenders is concerned, the petitioner is not found

entitled to the same, the petitioner having not pressed the said claim at that

stage and having successively participated in the fresh tender.

11. With respect to the argument of the counsel for the petitioner that the

respondent MCD is not giving effect to its decision to award the work of

operation and maintenance of the public toilets of Group B & C category to

the outside agencies and is scuttling the decision of the Standing Committee,

the purpose would be served by directing the respondent MCD to, if of the

view that it is best equipped to operate and maintain the said public toilets

itself, have the said decision revoked altered from its Standing Committee or

to implement the decision to award operation and maintenance of Group B

& C public toilets also to private players.

12. The writ petition is therefore disposed of with the directions:-

(i) to the MCD to in accordance with the decision of the Standing

Committee to either implement the decision of the Standing

Committee with respect to the Group B & C public toilets also or to

have the said decision revoked within six months from today.

(ii) to refund to the petitioner the sum of `50,000/- within four

weeks of today failing which the MCD shall also be liable for interest

thereon at the rate of 10% per annum from the date of payment to the

date of refund.