Gujarat High Court

M/S. Grace Castings Limited vs Uttar Gujarat Vij Company Ltd on 22 August, 2022

Bench: Ashutosh J. Shastri

     C/SCA/14472/2021                              CAV ORDER DATED: 22/08/2022




              IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

               R/SPECIAL CIVIL APPLICATION NO. 14472 of 2021
                                   With
               R/SPECIAL CIVIL APPLICATION NO. 14468 of 2021
                                   With
               R/SPECIAL CIVIL APPLICATION NO. 14466 of 2021
                                   With
               R/SPECIAL CIVIL APPLICATION NO. 14481 of 2021
==========================================================

M/S. GRACE CASTINGS LIMITED Versus UTTAR GUJARAT VIJ COMPANY LTD ========================================================== Appearance:

ARPIT R SINGHVI(9524) for the PETITIONERS MR DIPAK R DAVE(1232) for the Respondent(s) No.1 ========================================================== CORAM:HONOURABLE THE CHIEF JUSTICE MR. JUSTICE ARAVIND KUMAR and HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI

Date : 22/08/2022

COMMON CAV ORDER (PER : HONOURABLE MR. JUSTICE ASHUTOSH J. SHASTRI)

1. Present group of petitions is arising out of almost similar

controversy and respondent being common in all petitions,

learned advocates appearing on behalf of both sides have

requested to take up the present set of petitions conjointly and

since same being tagged together, we deem it proper to deal

with same accordingly.

2. Since common controversy has arisen and challenge to the

impugned order dated 15.9.2021 is common in all the petitions,

C/SCA/14472/2021 CAV ORDER DATED: 22/08/2022

for sake of convenience, Special Civil Application No.14472 of

2021 is treated as a lead matter.

3. So far as Special Civil Application No.14472 of 2021 is

concerned, petitioner is a public limited company engaged in the

business of manufacturing and supplying M.S. Structural Rolling

products, like M.S. Angle, Channel, Flat, Round, Square and M.S.

Ingot. For products of various M.S. steel items, on behalf of

respondents of all distribution companies against requirement of

2021-22, a public advertisement in daily newspaper dated

10.1.2021 came to be issued by respondent No.1. Last date of

submission of online preliminary, technical and price bid was

1.2.2021. Along with tender notice, commercial terms and

conditions as well as technical specifications were also issued

and pursuant to the bid so tendered by the petitioner, it had

participated by submission of required documents, vide letter

dated 30.1.2021. Later on, respondent No.1, vide its letter dated

13.5.2021 requested the petitioner to extend validity of

petitioner's offer till 31.8.2021 due to changed circumstance. In

response thereto, petitioner vide reply dated 19.5.2021 rejected

respondent No.1's request to extend validity of offer in view of

C/SCA/14472/2021 CAV ORDER DATED: 22/08/2022

Covid-19 pandemic situation, wherein there was stoppage of

oxygen supply to the industrial units. Respondent No.1 issued

another letter dated 24.5.2021 requesting the petitioner to

depute representative for negotiation of prices of M.S. Angle 65 x

65 x 6 mm and thereafter, letter of acceptance came to be

issued by respondent in favour of petitioner to supply Angle 65 x

65 x 6 mm on behalf of all respondents. Said letter of acceptance

is dated 31.5.2021 and in response to it, letter of acceptance

dated 1.6.2021 was issued by respondent No.2, same was also

issued by respondent No.3 on 2.6.2021 and letter of acceptance

by respondent No.4 came to be issued on 1.6.2021.

4. On account of unprecedented second wave of Covid-19

pandemic and disruption of supply of oxygen to petitioner and

other industries, petitioner was unable to respond to the letter of

acceptance issued by respondent and as such, vide

communication dated 2.6.2021, it was informed to respondent

No.1. that petitioner will not be in a position to accept the terms

and conditions and letter of acceptance and as a result of it,

respondent No.1 rejected petitioner's representation and

consequently, issued a communication on 4.6.2021 inter alia

C/SCA/14472/2021 CAV ORDER DATED: 22/08/2022

informing the petitioner to execute the order as per letter of

acceptance, as agreed upon originally. To this, petitioner wrote a

letter dated 15.6.2021 as also on 14.7.2021 inter alia reiterating

its difficulty of scarcity of raw material, shortage of labourer in

the ship recycling industries, etc., additional time was sought to

complete the tender formality. Even GUVNL Steel Supplier Group

to which petitioner is a member, also requested and posted with

difficulties faced by them. But, according to petitioner, without

considering such hardships, a show cause notice came to be

issued on 23.8.2021 by respondent No.1 as also issued by

respondent No.3 on 2.9.2021, calling upon petitioner to explain

as to why stern action should not be taken like forfeiture of EMD/

SD, stop deal / banned of business dealing/ blacklisting or any

other action against petitioner. It is the case of petitioner that a

personal meeting was sought to represent in person which was

scheduled on 7.9.2021, but then even after representing,

authority did not consider any reason offered by the petitioner

and was pleased to pass order impugned in the petition on

15.9.2021, whereby petitioner's EMD has been forfeited and

action to stop the deal has been taken against petitioner as well

C/SCA/14472/2021 CAV ORDER DATED: 22/08/2022

as its Directors for a period of six months.

5. Petitioner states that simultaneously, respondent has

issued a fresh tender notice for purchase of steel items and

petitioner will not be in a position to participate in the said

tender as it has been blacklisted and the last date for submission

of tender being 27.9.2021, petitioner has been constrained to

approach this Court for setting aside impugned order dated

15.9.2021.

6. So far as Special Civil Application No.14468 of 2021 is

concerned, almost similar circumstance is there, in which

petitioner was plugged and on the same line and is faced with an

order of similar nature dated 15.9.2021 and as such, had to

approach this Court. Only slight distinction in the present case is

that out of 4 items, petitioner stood as L-2 in three items for

which also EMD was paid along with submission of tender as

required. Petitioner of this petition stood as L1 in M.S. Angle 65 x

65 x 6 mm, whereas in respect of other 3 items, stood as L2 and

as such additional relief prayed for in this petition is specified in

relief clause No.31(B) namely sought for refund of EMD in

C/SCA/14472/2021 CAV ORDER DATED: 22/08/2022

respect of items in which petitioner had been declared as L2.

Rest of the challenge is almost similar to challenge the legality

and validity of impugned order dated 15.9.2021.

7. So far as Special Civil Application No.14466 of 2021 is

concerned, same is also almost similar with respect to very same

tender items and petitioner is faced with similar impugned order

dated 15.9.2021.

8. In respect of Special Civil Application No.14481 of 2021

also, for the very same tender items, petitioner had not been

able to respond to letter of acceptance and representation

having not been considered, authority has passed same kind of

order on 15.9.2021, which is the subject matter of challenge in

this Special Civil Application.

9. With a view to avoid unnecessary burdening of order,

minute details as urged in these petitions have not been

incorporated here-under, but it would suffice to note that sum

and substance of challenge in these petitions relates to laying

challenge to order dated 15.9.2021.

C/SCA/14472/2021 CAV ORDER DATED: 22/08/2022

10. Notice issued by this Court being served upon respondents,

respondent No.1 which is an authority which has passed the

impugned order, has filed a detailed reply affidavit and since

pleadings having been complete and learned advocates having

jointly requested to take up the matters for its disposal and

considering said request, we have heard this batch of petitions.

11. Learned advocate Mr. Arpit Sanghvi appearing for the

petitioners has vehemently contended initially that respondent

No.1 authority has taken an absolutely arbitrary and

unreasonable stand and in an illegal manner, without considering

all the circumstances then prevalent and has passed an order of

blacklisting the petitioner. According to him, there was no

concluded contract between parties and as such no action ought

to have been initiated and as such action is apparently arbitrary

and is violative of Article 14 of the Constitution of India. It has

been further submitted that impugned action of blacklisting the

petitioner has been passed without considering the detailed

cogent explanation and thereto for an unreasonable period,

petitioners and its Directors were dealt with disproportionately,

practically ousting them from future tender process for quite

C/SCA/14472/2021 CAV ORDER DATED: 22/08/2022

some time, which has a far-reaching consequence upon the

petitioners and impugned order being arbitrary and

unreasonable, same is liable to be quashed in the interest of

justice.

12. As against this, learned advocate Mr. Dipak R. Dave,

appearing on behalf of respondent No.1 in all these petitions has

vehemently contended that petitioners are not entitled to

challenge the impugned order as same is passed in consonance

with the terms and conditions of the tender document. It has

been vehemently contended that though on several occasions,

office has reminded the petitioners to complete all formalities, as

required under the Master LoA, including submission of S.D. and

execution of specific document and supply of material, as per the

delivery schedule, which has already been prescribed, which is

well within the knowledge of petitioners from the beginning, but

under one pretext or the other, petitioners have miserably failed

to meet with the request and despite opportunity extended to

them. As a result of this, it is not open for the petitioners with

this conduct to invoke the extraordinary equitable jurisdiction. It

has been submitted that looking to the gravity of issue and

C/SCA/14472/2021 CAV ORDER DATED: 22/08/2022

tender requirement, before taking impugned decision, not only

frequent reminders were sent, but also is in personal visit,

significance of work was pointed out and there being no positive

response forthcoming from any of the petitioners, as a last resort

impugned action was taken. Even in the show cause notice itself,

while extending an opportunity, specifically, it was indicated that

non-compliance would result in stern action, but same has also

not been adhered to. Even a personal meeting was also

scheduled allowing the petitioners of an opportunity, but none of

the petitioners have come forward to complete the formalities of

Master LoA and had not supplied the material. Even in piecemeal

basis also, petitioners have not supplied the material which

resulted in shortage of critical item at all DISCOMs, which had

affected the ongoing electrification work at all DISCOMs and as

such, public work had suffered to a great extent, which has

necessitated the authority to take action against petitioners and

therefore, there is nothing arbitrary or unreasonable in passing

the impugned order. Though sufficient time has been granted,

petitioners have miserably failed to pay even Security Deposit to

execute the agreement and supply of material which has

C/SCA/14472/2021 CAV ORDER DATED: 22/08/2022

seriously prejudiced the public work which is being undertaken

by DISCOMs. He would also contend that when petitioners were

quite aware about significance of the work for which tender was

floated had to be carried out and despite respondent having

called upon petitioners to supply was not responded, respondent

No.1 was led to a situation where there was no alternative left

but to take stern action as such, it is rather a self-invited order

by petitioners and hence no equitable relief deserves to be

granted.

13. It has been pointed out that though in personal

representation, it was brought to the notice that all DISCOMs

were bereft of any material and lot of inconvenience and great

damage would be caused in electrification, petitioners have

failed to respond to the work and admittedly, petitioners have

failed to furnish deposit performance guarantee towards

execution and as such, respondent No.1 was justified in not

returning the Performance Guarantees and was also justified in

forfeiting the EMD. Since it is the petitioners who have

committed a serious default, the authority is justified in passing

the impugned order. Hence, he prays for order in question not

C/SCA/14472/2021 CAV ORDER DATED: 22/08/2022

being disturbed in the interest of justice.

14. However, learned advocate Mr. Dave on instructions has

candidly submitted that in respect of one of the petitioners, i.e.

petitioner of Special Civil Application No.14468 of 2021, in

respect of 3 items, said petitioner stood and was declared as L2,

Earnest Money Deposit in respect of these three items, deserves

to be refunded and respective respondents will refund said

Earnest Money Deposit insofar as three items are concerned.

Said items are reflecting on page 132 of the said petition in

which tabular form of communication dated 22.2.2021, it is

reflected as item No.1, 2 and 4 wherein petitioner remained L2

and therefore, an amount totaling around Rs.7 lakh deserves to

be refunded of EMD, which would be refunded within a period of

four weeks from now. However, in respect of rest of challenge in

all petitions, a request is made not to exercise equitable

jurisdiction.

15. In rejoinder to this, learned advocate Mr. Singhvi appearing

on behalf of petitioners in all the petitions has then submitted

that if Hon'ble is not inclined to disturb the action impugned in

C/SCA/14472/2021 CAV ORDER DATED: 22/08/2022

the petitions, then in that case, in an alternative form, Hon'ble

Court may observe this impugned action may not come in the

way of petitioner in future in tendering bid in respect

respondents company. At least that observation would give

respite to the petitioner and as such, requested that same

deserves to be made while disposing of the petitions and

petitioners would not insist for refund of EMD in case where

petitioner stood as L1 and hence by making aforesaid

submission, under instruction, has requested the Court to pass

suitable order in the interest of justice.

16. Having heard the learned advocates appearing for the

parties and having gone through the material on record, it

appears from the pleadings as well as perusal of the impugned

order that while inviting tender, all petitioners were made aware

completely about the terms and conditions, period of supply,

requirement of tender, as well as significance of work and with

open eyes, petitioners have tendered their bids. It further

appears that none of the petitioners have pointed out that

petitioners were deprived of any opportunity or reasonable time

to meet with the circumstance and it is also not in dispute that

C/SCA/14472/2021 CAV ORDER DATED: 22/08/2022

petitioners were reminded on several occasions for completion of

all formalities, including S.D. submission, supply of material and

delivery of schedule, but despite several requests and reminders

having been made by respondents, petitioners have miserably

failed in mitigating the same. Further, after issuance of show

cause notice, petitioners have also been granted an opportunity

of personal hearing which has also been made on 7.9.2021 and

having realized the situation and difficulties which were faced by

DISCOMs, a stern action has been taken and as such, impugned

action apparently does not call for any interference, more

particularly when decision making process is completely in

consonance with the principle of natural justice and as also

based upon few undisputed situation about inaction of all

petitioners, impugned order has been passed. We see no reason

to exercise equitable jurisdiction for setting aside the impugned

orders dated 15.9.2021.

17. At this stage, we may refer to the law propounded by

Hon'ble Apex Court in the matter of M/s. N.G. Projects

Limited v. M/s. Vinod Kumar Jain & Ors., rendered in Civil

Appeal No. 1846 of 2022 decided on 21.03.2022, where-under it

C/SCA/14472/2021 CAV ORDER DATED: 22/08/2022

came to be held that approach of the Courts should be not to

find fault with magnifying glass in its hands. It has been further

held:

23. In view of the above judgments of this Court, the Writ Court should refrain itself from imposing its decision over the decision of the employer as to whether or not to accept the bid of a tenderer. The Court does not have the expertise to examine the terms and conditions of the present day economic activities of the State and this limitation should be kept in view. Courts should be even more reluctant in interfering with contracts involving technical issues as there is a requirement of the necessary expertise to adjudicate upon such issues. The approach of the Court should be not to find fault with magnifying glass in its hands, rather the Court should examine as to whether the decision-making process is after complying with the procedure contemplated by the tender conditions. If the Court finds that there is total arbitrariness or that the tender has been granted in a malafide manner, still the Court should refrain from interfering in the grant of tender but instead relegate the parties to seek damages for the wrongful exclusion rather than to injunct the execution of the contract. The injunction or interference in the tender leads to additional costs on the State and is also against public interest. Therefore, the State and its citizens suffer twice, firstly by paying escalation costs and secondly, by being deprived of the infrastructure for which the present- day Governments are expected to work.

26. A word of caution ought to be mentioned herein that any contract of public service should not be interfered with lightly and in any case, there should not be any interim order derailing the entire process of the services meant for larger public good. The grant of interim injunction by the learned Single Bench of the High Court has helped no-one except a contractor who lost a contract bid and has only caused loss to the State with no corresponding gain to

C/SCA/14472/2021 CAV ORDER DATED: 22/08/2022

anyone."

In the case of Reliance Energy Limited & Anr., v.

Maharashtra State Road Development Corporation

Limited & Ors., reported in (2007) 8 SCC 1, it came to be held

that judicial review of decision making process is permissible and

not the decision. It has been further observed:

39. In the case of Reliance Airport Developers (P) Ltd. v. Airports Authority of India and others -(2006) 10 SCC 1, the Division Bench of this Court has held that in matters of judicial review the basic test is to see whether there is any infirmity in the decision-making process and not in the decision itself. This means that the decision-maker must understand correctly the law that regulates his decision- making power and he must give effect to it otherwise it may result in illegality. The principle of "judicial review" cannot be denied even in contractual matters or matters in which the Government exercises its contractual powers, but judicial review is intended to prevent arbitrariness and it must be exercised in larger public interest. Expression of different views and opinions in exercise of contractual powers may be there, however, such difference of opinion must be based on specified norms. Those norms may be legal norms or accounting norms. As long as the norms are clear and properly understood by the decision-maker and the bidders and other stakeholders, uncertainty and thereby breach of rule of law will not arise. The grounds upon which administrative action is subjected to control by judicial review are classifiable broadly under three heads, namely, illegality, irrationality and procedural impropriety. In the said judgment it has been held that all errors of law are jurisdictional errors. One of the important principles laid down in the aforesaid judgment is that whenever a norm/benchmark is prescribed in the tender process in order to provide certainty that norm/standard should be clear. As stated above "certainty" is an important aspect of rule of law. In the case of Reliance Airport Developers (supra), the scoring system formed part of the evaluation process. The object of that system was to provide identification of factors, allocation of marks of each of the said factors and giving of marks had different stages. Objectivity was thus provided.

C/SCA/14472/2021 CAV ORDER DATED: 22/08/2022

The aforesaid propositions of law when applied to facts on hand

the irreversible conclusion which has to be drawn would be that

under no circumstance, the impugned order can be held as

contrary to principles of natural justice and we see no reason to

hold the action as bad in law. No case is made out by the

petitioners to grant any relief.

18. However, we deem it proper to consider the alternate

prayer made by the learned counsel appearing for petitioners in

view of peculiar background of facts and more particularly when

same is not opposed by the learned counsel representing the

respondent authority and same is based upon broad consensus