Gauhati High Court
Page No.# 1/13 vs The State Of Assam And 2 Ors on 11 January, 2024
Author: Sanjay Kumar Medhi
Bench: Sanjay Kumar Medhi
Page No.# 1/13
GAHC010190572023
THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : WP(C)/4920/2023
KARNATAKA AGRO CHEMICALS AND ANR.
A COMPANY WITHIN THE MEANING OF THE COMPANIES ACT, 2013
HAVING ITS REGISTERED OFFICE AT 180, 1ST MAIN ROAD,
MAHALAKSHMI LAYOUT, BANGALORE-560086, KARNATAKA
2: BHOLANATH KUNDU
THE OFFICER INCHARGE AND AUTHORIZED PERSON OF KARNATAKA
AGRO CHEMICALS
S/O LATE SUDHIR KUMAR KUNDU
HAVING OFFICE AT SADANA WAREHOUSING AND AGENCIES PVT. LTD
1ST FLOOR
RUKMINIGAON
G.S. ROAD
GUWHATI-781022
DIST- KAMRUP (M)
ASSA
VERSUS
THE STATE OF ASSAM AND 2 ORS.
REPRESENTED THROUGH THE CHIEF SECRETARY, HAVING OFFICE AT
ASSAM SACHIVALAYA, DISPUR, GUWAHATI-781006, DIST- KAMRUP (M),
ASSAM
2:THE ADDITIONAL CHIEF SECRETARY
GOVT. OF ASSAM AND AGRICULTURE PRODUCTION COMMISSIONER
(APC)
ASSAM AGRICULTURE DEPARTMENT
HAVING OFFICE AT ASSAM SACHIVALAYA
DISPUR
GUWAHATI-781006
DIST- KAMRUP (M)
ASSAM
Page No.# 2/13
3:THE DIRECTORATE OF AGRICULTURE
ASSAM
REPRESENTED BY ITS DIRECTOR
HAVING ITS OFFICE AT KHANAPARA
GUWAHATI
ASSAM-78102
Advocate for the Petitioner : MR. P KHATANIAR
Advocate for the Respondent : GA, ASSAM
Linked Case : WP(C)/4922/2023
GREEN PLANET BIO PRODUCTS AND ANR.
A COMPANY WITHIN THE MEANING OF THE COMPANIES ACT
2013 HAVING ITS REGISTERED OFFICE AT GP TOWER PLOT NO. 1 AMAR
GARDEN NH-1
AMRITSAR BYE PASS
JALANDAR-144004
PUNJAB
2: ANIL DEKA
THE OFFICER INCHARGE AND THE AUTHORIZED PERSON OF GREEN
PLANET BIO PRODUCTS
S/O SRI DHANESWAR DEKA
HAVING OFFICE AT SREE NAGAR PATH
SUBHASH PALLY
BELTOLA TINIALI
GUWAHATI-781028
DIST- KAMRUP (M)
ASSAM
VERSUS
THE STATE OF ASSAM AND 2 ORS.
REPRESENTED THROUGH THE CHIEF SECRETARY
HAVING OFFICE AT ASSAM SACHIVALAYA
DISPUR
GUWAHATI-781006
DIST- KAMRUP (M)
ASSAM
2:THE ADDITIONAL CHIEF SECRETARY
GOVT. OF ASSAM AND AGRICULTURE PRODUCTION COMMISSIONER
(APC)
Page No.# 3/13
ASSAM AGRICULTURE DEPARTMENT
HAVING OFFICE AT ASSAM SACHIVALAYA
DISPUR
GUWAHATI-781006
DIST- KAMRUP (M)
ASSAM
3:THE DIRECTORATE OF AGRICULTURE
ASSAM
REPRESENTED BY ITS DIRECTOR
HAVING ITS OFFICE AT KHANAPARA
GUWAHATI
ASSAM-781022
------------
BEFORE
HON'BLE MR. JUSTICE SANJAY KUMAR MEDHI
Advocates for the petitioners : Shri P. Khataniar, Advocate.
Advocates for respondents : Shri B. Choudhury, SC, Agriculture Department.
Date(s) of hearing : 19.12.2023 & 05.01.2024
Date of judgment : 11.01.2024
JUDGMENT & ORDER (CAV)
Both the writ petitions being analogous and pertaining to the same subject
have been heard together and are being disposed of by this common judgment
and order. The petitioners in these two cases have challenged the action of the
respondent authorities in cancelling a tender process. Such tender process was
for supply of fertilizers. The petitioners, amongst various grounds have
submitted that such action is arbitrary and unreasonable and also in violation of
the statutes holding the field.
2. Before going to the issue which has arisen for adjudication, the facts
pleaded by the parties may be narrated in brief.
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3. The Directorate of Agriculture had issued a tender notice dated 19.09.2022,
inviting bids from eligible bidders for supply of various natures of fertilizers for
the year 2022-2023. The petitioners being interested with the aforesaid tender
process had participated in the said process. It has been specifically pleaded
that the bid documents were released on 20.09.2022, which was followed by a
pre-bid meeting held on 26.09.2022 and the last date of submission of bids was
14.10.2022. The authorities had thereafter issued a corrigendum dated
29.09.2022, whereby the last date was extended upto 20.10.2022. The same
was followed by further corrigenda whereby there were further extensions of
the last date which was ultimately fixed on 04.11.2022. The bids were to be
opened on 05.11.2022.
4. It has been pleaded that a number of bidders had participated in the said
tender process and a substantial amount was collected by the Directorate from
the bidders in terms of the price of the bid document and other processing fees.
The tenders were opened on 05.11.2022 as stated above but no evaluation of
the technical bids were made. As per the petitioners, they qualify in all the
respects and their bids were valid for a period of 365 days. While it is the case
of the petitioners that they were expecting the process to be brought to a
logical conclusion, vide the impugned notice dated 28.07.2023, the tender
process was cancelled. Such cancellation was as per the decision of the
Departmental Bid Committee Meeting held on 28.07.2023. Further, the
provisions of Section-III of Clause-26 of the bid document were also taken into
consideration. It is the legality and validity of the aforesaid action by which the
tender process has been cancelled which is the subject matter of these writ
petitions.
5. I have heard Shri P. Khataniar, learned counsel for the petitioners whereas
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the Agriculture Department is represented by Shri B. Choudhury, its Standing
Counsel, who has also placed before this Court the records of the case in
original which have been examined.
6. Sri Khataniar, the learned counsel for the petitioners has submitted that the
cancellation of the tender process by taking recourse of Section-III of Clause-26
of the bid document is arbitrary and unreasonable. It is submitted that once a
valid tender process was initiated at the expense of the public exchequer, the
same could not have been cancelled in the manner as has been done. He
submits that such action has been resorted to with mala fide intention so as to
give undue benefit to certain blue eyed parties. It is submitted that no valid
reasons are cited for issuing the cancellation order. The impugned order only
mentions about the decision of the meeting held on 28.07.2023 and Clause-26
of Section-III and it is accordingly submitted that the same is cryptic.
7. By referring to Clause-26, the learned counsel has submitted that though
the authorities have reserved the right to accept or reject any or all bids, such
Clause is general in nature and cannot be resorted to arbitrarily.
8. By referring to the Assam Public Procurement Act, 2017 and the
Assam Public Procurement Rules, 2020, (hereinafter the Act and Rules
respectively) the learned counsel for the petitioners has submitted that under
Section 26, the procedure has been prescribed for cancellation of a procurement
process. Under Section 26 (3), communication of reasons is mandatory. He has
also referred to Section 4 which lays down the fundamental principles of public
procurement and Section 9 which prescribes the time for such process.
Reference has also been made to Rule 10 which lays down the time-frame for
procurement process and has submitted that both the provisions of the Act and
the Rules are mandatory in nature as there is a provision for penalty in case of
Page No.# 6/13
non-compliance. He submits that the Rules are sought to be circumvented by
causing intentional delay in finalization of the process. By referring to Section V
of the tender conditions which deals with the schedule of requirements, it is
submitted that the tentative quantity of the supply was huge. By dealing with
the ground projected on behalf of the respondents that in the meantime, certain
supplies have been done through the North Eastern Regional Agricultural
Marketing Corporation Ltd. (NERAMAC), he submits that the said supply
constitutes only a very minor part of the quantity connected with the impugned
cancellation order which has been quantified to be around 10%.
9. By referring to the documents, Shri Khataniar, the learned counsel has
submitted that even before the cancellation order which has been impugned in
this writ petition, it appears that negotiations were on which would suggest that
the impugned action was pre-determined. As regards the alleged ground of
cancellation on the expiry of the validity of the bid, he submits that apart from
the fact that such grounds have not been cited in the impugned order, as per
the tender conditions, the validity period of a bid can be extended with the
consent of the bidders and in any case, the bid of the petitioner was valid upto
365 days. He has referred to Clause 13 (b) and Rule 23 (4) in this regard and
has submitted that expiry of bid validity cannot be taken as a ground as validity
can be extended in accordance with law.
10. In support of his submission, Shri Khataniar, the learned counsel for the
petitioners relies upon the following case laws:-
i. (2023) 6 GLT 541 [M/s Leon Barua and Associates & Anr.
Vs The State of Assam & Ors.]
ii. (2001) 8 SCC 491 [Union of India & Ors. etc. Vs Dinesh
Engineering Corporation & Anr. etc.]
iii. 2011 (3) GLT 695 [Ackruti Security Plates Private Limited
Page No.# 7/13
Vs The State of Tripura represented by the Chief Secretary to the
Govt. of Tripura and Ors.]
iv. (2010) 10 SCC 388 [M/s Sushila Chemicals Pvt. Ltd. & Anr.
Vs Bharat Coking Coal Ltd. & Ors.]
v. 2023 0 Supreme (Kar) 108 [Karnataka Commercial and
Industrial Corporation Pvt. Ltd. Vs State of Karnataka,
Represented by the Director of Horticulture Department of
Horticulture & Ors.]
11. In the case of Leon Boruah (supra), this Court was examining a similar
Clause giving right to the authorities to reject any bid or cancel a tender
process. It was held that such rights cannot be an unfettered right of the
authorities.
12. The case of Dinesh Engineering (supra) has been cited to bring home
the contention that mere existence of a clause to reject any tender offer without
any reasons may not give a free power to the authorities. The aforesaid view
has also been endorsed by this court in the cases of Leon Baruah and Ackruti
Security (supra).
13. The case of Sushila Chemicals (supra) has been cited to support the
contention that even in contractual matters, High Court may entertain a petition
on grounds of violation of Article 14 of the Constitution of India.
14. The Case of Karnataka Commercial (supra) has been cited to support
the contention that the provisions of the procurement act and the rules are
mandatory in nature.
15. Per contra, Shri B. Choudhury, the learned Standing Counsel, Agriculture
Department has raised a preliminary objection questioning the maintainability of
the writ petition by submitting that no right, whatsoever has accrued to the
petitioners in the tender process and therefore the writ petitions are liable to be
Page No.# 8/13
dismissed. He has also submitted that by the impugned action, no rights of the
petitioners have been violated and the cancellation of the process was at the
stage of technical evaluation. He submits that when the financial evaluation was
not even done and the technical responsiveness of the petitioners itself was
required to be evaluated, the petitioners cannot claim that they would be the
successful bidders.
16. With regard to the contention on the validity of the bids, by referring to
Rule 23 (4), Shri Choudhury, the learned counsel has submitted that the last
date for submission of bids was fixed on 04.11.2022. By referring to Sub clause
(ii), he submits that the extension has to be during the subsistence of the bid
validity period.
17. He further submits that the sowing season was running out and therefore
response was sought for from NERAMAC and National Agricultural Cooperative
Marketing Federation of India Ltd. (NAFED) both of which are Government
entities. In response thereto, NERAMAC had made an offer and accordingly new
tender was floated as per Rules. He submits that there is no allegation of any
mala fide and the work done through NERAMAC is strictly in accordance with
law as NERAMAC is only an empanelling agency of the Central Government and
the works of supply are given to empanelled vendors. The learned Standing
Counsel accordingly submits that the writ petitions are liable to be dismissed.
18. In support of his submission, Shri Choudhury, the learned counsel for the
Department has placed reliance upon the following case laws:-
i. (2016) 14 SCC 172 [State of Jharkahand Vs CWE-SOMA
Consortium]
ii. (2022) 3 GLR 567 [NAD & Associates Vs Union of India]
iii. (2023) SCC Online 671 [Tata Motors Limited Vs Brihan
Page No.# 9/13
Mumbai Electric Supply & Transport Undertaking (Best) & Ors.
19. In the case of CWE-SOMA (supra), the Hon'ble Supreme Court has laid
down that when a tender process is cancelled, no rights of the bidders are
violated. In the similar line, this Court in the case of NAD (supra) has laid down
that no vested rights accrue upon a bidder to challenge a process of cancellation
of an NIT. The case of Tata Motors (supra) have been cited to bring home this
submission regarding the limited scope of judicial review. For ready reference,
the relevant extracts are quoted herein below:-
" 48. This Court being the guardian of fundamental rights is duty bound to
interfere when there is arbitrariness, irrationality, mala fides and bias. However,
this Court has cautioned time and again that courts should exercise a lot of
restraint while exercising their powers of judicial review in contractual or
commercial matters. This Court is normally loathe to interfere in contractual
matters unless a clear-cut case of arbitrariness or mala fides or bias or
irrationality is made out. One must remember that today many public sector
undertakings compete with the private industry. The contracts entered into
between private parties are not subject to scrutiny under writ jurisdiction. No
doubt, the bodies which are State within the meaning of Article 12 of the
Constitution are bound to act fairly and are amenable to the writ jurisdiction of
superior courts but this discretionary power must be exercised with a great deal
of restraint and caution. The Courts must realize their limitations and the havoc
which needless interference in commercial matters can cause. In contracts
involving technical issues the courts should be even more reluctant because
most of us in Judges' robes do not have the necessary expertise to adjudicate
upon technical issues beyond our domain. The courts should not use a
magnifying glass while scanning the tenders and make every small mistake
appear like a big blunder. In fact, the courts must give "fair play in the joints" to
the government and public sector undertakings in matters of contract. Courts
must also not interfere where such interference will cause unnecessary loss to
the public exchequer."
20. In his rejoinder, Shri Khataniar, the learned counsel for the petitioners has
submitted that the quantity which has been sought to be supplied through
NERAMAC is a very small one and therefore the justification given by the
Page No.# 10/13
Department is not acceptable. However, on a pointed query, the learned counsel
for the petitioners has submitted that there is no embargo for the petitioners to
participate in future tender process. The learned counsel however, hastily adds
that all future tender process may be directed to be carried out strictly in
accordance with law.
21. The rival submissions made by the learned counsel for the parties have
been duly considered. The records in original have been examined.
22. At the outset, this Court notices and records that both the writ petitions
have been structured with similar grounds of challenge and only the items of
supply are different.
23. The challenge is against an order dated 28.07.2023 whereby the tender
process has been cancelled. Though it is submitted that no reasons have been
assigned, the minutes of meeting which has been referred in the cancellation
order would reveal that the Committee in its meeting held on 28.07.2023 had
taken a conscious decision for cancellation of the process. Though the
cancellation notice also refers to Clause-26 of Section (III) which gives the
power to the authorities to cancel authorities to reserve to accept or reject any
bid and to annul the bidding process and reject all bids at any time prior to
contract award without incurring any liability, this Court is of the view that
though such Clause may be there in a tender document, resorting to such
powers without any reason may not be held to be justified in all conditions. At
the same time, the instant case is not one where the bids of the petitioners
have been rejected per se but the entire tender process has been cancelled.
There is a huge difference in the two situations of rejecting one bid of a party
and cancellation of the process as a whole. This Court has also noted that such
cancellation was even prior to the technical evaluation. Under those
Page No.# 11/13
circumstances, the right of the petitioners to institute the present challenge
itself becomes questionable. Accepting such challenge would be in the realm of
speculation as a party has, at first to overcome the technical evaluation and
thereafter emerge as the L1 bidder and only then, a challenge may be
maintainable. However, in the instant case, the process had not been started
and therefore this Court is inclined to accept the submission made on behalf of
the respondent authorities that no rights, whatsoever have accrued upon the
petitioners.
24. The learned Standing Counsel has fortified his argument by citing the case
of CWE-SOMA (supra). For ready reference, the relevant paragraph is
extracted herein below:-
"13. In case of a tender, there is no obligation on the part of the person issuing
tender notice to accept any of the tenders or even the lowest tender. After a
tender is called for and on seeing the rates or the status of the contractors who
have given tenders that there is no competition, the person issuing tender may
decide not to enter into any contract and thereby cancel the tender. It is well
settled that so long as the bid has not been accepted, the highest bidder
acquires no vested right to have the auction concluded in his favour."
25. As regards the work done through NERAMAC, though this Court has
noticed that the quantity is less, NERAMAC being an instrumentality of the
Centre and an empanelling agency and also taking into account the urgency
expressed as the sowing seasons were running out, this Court is not inclined to
endorse the contention made on behalf of the petitioners. This Court has further
noticed that though mala fide has been alleged, no individual by name has been
made party and therefore such allegations have to be termed as vague. This
Court has also noticed that there would be no embargo upon the petitioners to
submit their bids in subsequent process of tender for similar supplies.
Page No.# 12/13
26. As regards, the case laws relied upon on behalf of the petitioners, this
Court has noticed that facts are different. On the point of a clause to reject any
tender, the same has been adequately explained in the case of Dinesh
Engineering (supra) itself by the Hon'ble Supreme Court in the following
manner:-
" 15. Coming to the second question involved in these appeals, namely, the
rejection of the tender of the writ petitioner, it was argued on behalf of the
appellants that the Railways under clause 16 of the Guidelines was entitled to
reject any tender offer without assigning any reasons and it also has the power
to accept or not to accept the lowest offer. We do not dispute this power
provided the same is exercised within the realm of the object for which this
clause is incorporated. This does not give an arbitrary power to the Railways to
reject the bid offered by a party merely because it has that power. This is a
power which can be exercised on the existence of certain conditions which in
the opinion of the Railways are not in the interest of the Railways to accept the
offer. No such ground has been taken when the writ petitioner's tender was
rejected. Therefore, we agree with the High Court that it is not open to the
Railways to rely upon this clause in the Guidelines to reject any or every offer
that may be made by the writ petitioner while responding to a tender that may
be called for supply of spare parts by the Railways. Mr. Iyer, learned senior
counsel appearing for the EDC, drew our attention to a judgment of this Court
in Sterling Computers Ltd. etc. v. M/s. M & N Publications Ltd. & Ors. (1993 1
SCC 445) which has held :
"Under some special circumstances a discretion has to be conceded
to the authorities who have to enter into contract giving them
liberty to assess the overall situation for purpose of taking a
decision as to whom the contract be awarded and at what terms. If
the decisions have been taken in bona fide manner although not
strictly following the norms laid down by the courts, such decisions
are upheld on the principle laid down by Justice Holmes, that courts
while judging the constitutional validity of executive decisions must
grant certain measure of freedom of "play in the joints" to the
executive.""
27. Further, the instant case is not with regard to rejection of a particular bid,
but cancellation of the entire tender process as such.
Page No.# 13/13
28. With regard to the case of Sushila Chemicals (supra), there is absolutely
no dispute to the fact regarding the powers of a High Court under article 226 of
the Constitution of India to entertain a petition concerning a contract matter if
there is violation of Article 14 of the Constitution of India and inappropriate
cases where in the impend suffers from legal malice.
29. Shri Khataniar, the learned counsel for the petitioners has given much
emphasis on the requirement of following the Act and the Rules. There cannot
be any dispute with the proposition that the supplies of similar nature which are
governed by the Act of 2017 and the Rules of 2020 are to be undertaken strictly
in accordance with the Rules. Therefore, while the impugned challenge is held
to be without any merits, it is directed that all future process undertaken by the
Directorate for supply of similar natures are to be done strictly in accordance
with the Act and the Rules governing the fields. This Court also gets support
from the case of Karnataka Commercial (supra) cited on behalf of the
parties.
30. Both the writ petitions are accordingly disposed of.
31. No order as to cost.
32. The records are returned herewith to the learned Standing Counsel.
JUDGE
Comparing Assistant
