M/S Narmada Road Lines vs Food Corporation Of India
2021 Latest Caselaw 3000 MP

  HIGH COURT OF MADHYA PRADESH : JABALPUR
                              (Division Bench)

                            W.P. No.18300/2020

                  M/s Narmada Road Lines, Jabalpur
                               -Versus-
                 Food Corporation of India and another

Shri Sankalp Kochar, Advocate for the petitioner.
Shri Mukesh Agrawal, Advocate for the respondents.
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CORAM :

       Hon'ble Shri Justice Mohammad Rafiq, Chief Justice.
       Hon'ble Shri Justice Vijay Kumar Shukla, Judge.
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Order reserved on                          :     28-6-2021
Date of pronouncement                      :     06-7-2021
Whether approved for reporting             :

         [Hearing convened through video conferencing]

                                ORDER

(Jabalpur, dtd. 06.07.2021)

Per : Vijay Kumar Shukla, J.-

The instant petition has been preferred under Article 226

of the Constitution of India, assailing the order dated 06-11-2020

whereby the respondents/Food Corporation of India [for short, "The

Corporation"] has dismissed the claim submitted by the petitioner as

per Clause XX(b) of the Bid Documents and also the order dated 24-

8-2020 passed by the respondent No.2 by which the contract

executed in favour of the petitioner for transportation of

foodgrains/sugar between Seoni (M.P.) to Tumsar (M.H.) has been

annulled and further the petitioner has been debarred from

participating in the tender of the respondents-Corporation for a

period of five years on the ground that the petitioner has failed to

furnish the requisite security deposit within the stipulated period.

2. The facts of the case adumbrated in a nutshell, are that

the petitioner submitted its claim as per Clause XX(b) of the Bid

Documents before the Corporation, in pursuance of the order dated

28-9-2020 passed by this Court in WP-13148-2020, whereby the

petitioner was directed to file a claim before the Grievances

Redressal Committee and the same was directed to be decided by the

respondents-Corporation within a period of 45 days after affording

due opportunity of hearing to the parties.

3. The learned counsel for the petitioner submits that the

Corporation has failed to show any justifiable reason attributing any

fault on the part of the petitioner, which necessitated passing of the

impugned order dated 24-8-2020 as well as the consequent rejection

of the claim vide impugned order dated 6-11-2020. Further, the

Corporation has taken an arbitrary decision without appreciating the

fact that the petitioner has duly furnished the security deposit as well

as bank guarantee. It is putforth that a conjoint reading of the receipt

appended as Annexure-P/6 to the writ petition as well as letter dated

19-10-2019 (Annexure-P/8) makes it axiomatic that the security

deposit and the bank guarantee were duly received by the

Corporation. It is submitted that the Corporation ought to have

appreciated that M/s Tirupati Cargo has neither sought any claim

over the security deposit nor has ever claimed any refund, even then

submitted an affidavit wherein it has unequivocally stated that it has

furnished the security deposit on behalf of the petitioner.

4. The respondents have filed return and raised objection

regarding res judicata on the ground that this is the second approach

of the petitioner. It is putforth that the petitioner had earlier filed a

writ petition forming the subject-matter of WP-13148-2020. This

Court on 12-01-2021 decided the preliminary objection and rejected

the same on the ground that the earlier writ petition was disposed of

with the consent of the parties and with liberty to the petitioner to file

a dispute before the Grievance Redressal Committee, as per Clause

XX(b) of the Bid Documents and the same was directed to be

decided by the respondents within a period of 45 days after affording

opportunity of hearing to the parties. Thereafter, the impugned order

has been passed by the Committee vide Annexure-P/17, dated 6-11-

2020 rejecting the representation of the petitioner.

5. The respondents-Corporation issued an NIT for

appointment of transporter for transportation of foodgrains/sugar

from the Corporation, from owned/hired designated

Depots/Mandis/railheads to various destinations. It is putforth that

the petitioner as well as M/s Tirupati Cargo submitted their bids for

being appointed as transporters of foodgrains/sugar between Seoni

(M.P.) to Tumsar (M.H.). On 12-9-2019 the Corporation issued an

offer letter in favour of the petitioner appointing it as a transporter of

foodgrains/sugar between Seoni (M.P.) to Tumsar (M.H.). It is stated

that M/s Tirupati Cargo inadvertently, owing to oversight, furnished

the security deposit of Rs.1,40,000/-, ref. No.CTH201815.

6. According to the petitioner M/s Tirupati Cargo is sister

concern of the petitioner. Security amount was furnished by them on

the pretext that they have been appointed as transporter for the route

- Seoni (M.P.) to Tumsar (M.H.). The bid submitted by the M/s

Tirupati Cargo was rejected and the tender was awarded in favour of

the petitioner. The petitioner sent a letter to the Corporation for

rectifying the mistake and stated that it has duly furnished the

security deposit having reference No.CTH201815. It is submitted

that the petitioner deposited the later payment charge of 1% as it was

not in a position to furnish the bank guarantee. The petitioner

furnished bank guarantee of Rs.8,40,000/- ref. No.CTH2082033.

7. A show cause notice was issued to the petitioner by the

Corporation on 26-11-2019 and reply was submitted by the

petitioner. It is stated that M/s Tirupati Cargo submitted an affidavit

stating that it has furnished security deposit on behalf of the

petitioner. The respondents-Corporation appointed the petitioner as

transporter for contract of HTC work at Gadarwara (MP) under DO

Jabalpur. By order dated 30-3-2020 the Corporation issued an ad-

hoc tender for appointment of contractor for transportation of

foodgrains/sugar between Seoni (MP) to Tumsar (MH).

8. It is pleaded that on 11-4-2020 the petitioner participated

in the said tender as per directions of the respondents-Corporation.

Despite that the Corporation issued the impugned order on the

ground that the petitioner has failed to furnish the security deposit

and debarred it from participating in the tender for a period of 5 years

and the security deposit as well as bank guarantee furnished by the

petitioner has been forfeited.

9. Being aggrieved by the said order the petitioner filed the

writ petition (WP-13148-2020) which was disposed of by order

dated 28-9-2020, directing the petitioner to approach the Grievance

Redressal Committee. It is strenuously urged that the petitioner

submitted its claim as per Clause XX(b) of the Bid Documents,

however, by the impugned order dated 6-11-2020, the claim of the

petitioner has been rejected by the respondents/Corporation.

10. It is putforth by the petitioner that Ratnesh Agrawal son

of Ravishankar Agrawal, is the proprietor of M/s Tirupati Cargo and

Ravishankar Agrawal is also proprietor of M/s Tirupati Cargo, which

is sister concern of the petitioner. The petitioner as well as M/s

Tirupati Cargo submitted their bids for being appointed as

transporters of foodgrains/sugar between Seoni (M.P.) to Tumsar

(MH). The Bid submitted by M/s Tirupati Cargo was rejected and

tender was awarded in favour of the petitioner. The security amount

was furnished on the pretext that they have been appointed as

transporters for the route Seoni (MP) to Tumsar (MH). Though the

bids submitted by M/s Tirupati Cargo was rejected and the tender

was awarded to the petitioner but M/s Tirupati Cargo has never

sought refund of the security deposit. The petitioner sent a letter to

the Corporation for rectifying the mistake and stated that it has duly

furnished the security deposit having ref. No.CTH201815.

11. To substantiate his submission, the learned counsel for

the petitioner placed reliance on the judgment of the Apex Court

rendered in the case of Kulja Industries Ltd. vs. Chief General

Manager, Western Telecom Project Bharat Sanchar Nigam

Limited and others, (2014) 14 SCC 731, to contend that the present

case is a fit case for interfering with the arbitrary decision of the

respondents-Corporation terminating the contract of the petitioner

and blacklisting it for a period of 5 years.

12. The law laid down in the case of Kulja Industries Ltd.

(supra) is not in dispute by any of the parties. In para 20 of the order

it is held - it is well settled that even though the right of the writ

petitioner, the method and the motive behind the decision of the

authority whether or not to enter into a contract is subject to judicial

review on the touchstone of fairness, relevance, natural justice, non-

discrimination, equality and proportionality.

13. Now, we proceed to examine the facts of the present case.

The petitioner once again reiterated that the security deposit of

Rs.1,40,000/- was furnished on 30-9-2019 having

ref.No.CTH201815. It is submitted that the respondents-Corporation

have always made all official communications vide e-mails, however,

no such e-mail with regard to issuance of show cause notice was ever

received. It is urged that assurance was given by the respondents that

no action is being taken as an ad hoc tender is being issued for

appointment of contractor. The petitioner participated in the said

tender as per the directions of the respondents-Corporation. It is

stated that M/s Tirupati Cargo has never sought refund of the security

deposit. Thus, the impugned order has been passed on the ground

that the petitioner has failed to furnish the security deposit whereby it

has been debarred from participating in the tender of the respondent-

Corporation for a period of 5 years and the security deposit as well

as bank guarantee furnished by the petitioner was forfeited. It is

vehemently urged by the petitioner that they are not raising any

objection with regard to issuance of show cause notice and have

prayed that the competent authority may be directed to adjudicate the

instant dispute on merits without dwelling upon the hyper-technical

assertions.

14. The respondents/Corporation submitted that the

impugned orders dated 24-8-2020 and 6-11-2020 have been passed

strictly in accordance with the terms and conditions of the contract

entered into between the petitioner and the answering respondents.

According to the respondents there is no record in their office in

order to show that M/s Tirupati Cargo is sister concern of the

petitioner and before furnishing the security deposit the petitioner

had not disclosed that the security deposit has been furnished by M/s

Tirupati Cargo on behalf of the petitioner.

15. We have heard the learned counsel for the parties and

bestowed our anxious consideration on the arguments advanced. We

do not find any merit in the present petition. The submission of the

petitioner that the security deposit, on behalf of the petitioner, was

deposited by its sister concern M/s Tirupati Cargo, is not worth

acceptance, for the reasons that no record has been produced before

us to establish that M/s Tirupati Cargo is sister concern of the

petitioner. Further, the petitioner has not disclosed that the security

deposit has been furnished by M/s Tirupati Cargo on behalf of the

petitioner. A bare perusal of Annexure-P/5 makes it vivid that M/s

Tirupati Cargo wanted to adjust their own dues against security

deposited by them in the NIT, which is subject-matter of the present

petition in which M/s Tirupati Cargo has been technically

disqualified.

16. It is pleaded that in the letter (Annexure-P/5), M/s

Tirupati Cargo has not stated that it intended to deposit the security

amount on behalf of M/s Narmada Road Line (the petitioner herein).

As per Clause 7(i) of the terms and conditions, the Security Deposit

has to be deposited by the successful tenderer. The relevant portion

of Clause 7(i) reads thus :

"The successful tenderer shall furnish within fifteen working days of acceptance of his tender, a security deposit

for the due performance of his obligations under the contract."

17. Clause 9 of the terms and conditions further provides that

security is to be furnished by the "successful tenderer", but in the

case in hand, the security amount is not deposited by the petitioner

itself and it was never paid by M/s Tirupati Cargo as a deposit in the

name of the petitioner. On the contrary, M/s Tirupati Cargo wanted

to adjust their own dues against the security deposited by them in the

NIT, which is subject-matter of challenge in the present petition, in

which M/s Tirupati Cargo was technically disqualified.

18. That apart, a show cause notice was issued to the

petitioner, which was duly received by it. The petitioner sought time

to file reply. On 4-01-2020 upon request the petitioner was granted

further time of 15 days to file reply. But, even after lapse of 15 days

when no reply was submitted by the petitioner, the respondents

passed the impugned order on 24-8-2020.

19. Furthermore, trite it is that the scope of interference in

the matter relating to awarding of contracts by the Government or

public undertaking is limited to the extent of decision making

process. In Master Marine Services (P) Ltd. vs Metcalfe &

Hodgkinson (P) Ltd., (2005) 6 SCC 138 it was held that while

exercising power of judicial review in respect of contracts, the Court

should concern itself primarily with the question, whether there has

been any infirmity in the decision making process. By way of judicial

review, Court cannot examine details of terms of contract which have

been entered into by public bodies or State. Further, in Michigan

Rubber (India) Ltd. vs State of Karnataka, (2012) 8 SCC 216 it

was held that if State or its instrumentalities acted reasonably, fairly

and in public interest in awarding contract, interference by Court

would be very restrictive since no person could claim fundamental

right to carry on business with the Government. Therefore, the

Courts would not normally interfere in policy decisions and in

matters challenging award of contract by State or public authorities.

In the cases at hand, evidently no such procedural irregularity in the

decision making process is shown. In our considered opinion, non-

acceptance of bid for non-compliance of essential condition cannot

be termed to be a procedural irregularity.

20. In Afcons Infrastructure Ltd. vs. Nagpur Metro Rail

Corporation Ltd. and another , (2016) 16 SCC 818, it was held

that a mere disagreement with the decision-making process or the

decision of the administrative authority is no reason for a

constitutional Court to interfere. The threshold of mala fides,

intention to favour someone or arbitrariness, irrationality or

perversity must be met before the constitutional Court interferes with

the decision-making process or the decision. The owner or the

employer of a project, having authored the tender documents, is the

best person to understand and appreciate its requirements and

interpret its documents. It is possible that the owner or employer of a

project may give an interpretation to the tender documents that is not

acceptable to the constitutional Courts but that by itself is not a

reason for interfering with the interpretation given. Furthermore, in

Montecarlo Ltd. vs NTPC Ltd., (2016) 15 SCC 272, it was held

that where a decision is taken that is manifestly in consonance with

the language of the tender document or sub-serves the purpose for

which the tender is floated, the court should follow the principle of

restraint. Technical evaluation or comparison by the court would be

impermissible. The principle that is applied to scan and understand

an ordinary instrument relatable to contract in other spheres has to be

treated differently than interpreting and appreciating tender

documents relating to technical works and projects requiring special

skills. The owner should be allowed to carry out the purpose and

there has to be allowance of free play in the joints.

21. In Siemens Aktiengeselischaft & Siemens Ltd. vs

DMRC Ltd. (2014) 11 SCC 288, it is held :

"23. There is no gainsaying that in any challenge to the award of contract before the High Court and so also before this Court what is to be examined is the legality and regularity of the process leading to award of contract. What the Court has to constantly keep in mind is that it does not sit in appeal over the soundness of the decision. The Court can only examine whether the decision-making process was fair, reasonable and transparent. In cases involving award of contracts, the Court ought to exercise judicial restraint where the decision is bona fide with no perceptible injury to public interest."

22. In Sunflag Iron and Steel Co. Ltd. vs State of M.P.

(2019) 1 MPLJ 689, it is held :

"15. ... It is a decision taken by the Technical Evaluation and Tender Approval Committee, which is a committee of experts. Therefore, such decision taken by the experts cannot be interfered with while exercising writ jurisdiction of this Court, as this Court while exercising power of judicial review examines the decision making process and not the ultimate decision. ..."

23. In view of the aforesaid enunciation of law, we do not

perceive any illegality or infirmity in the decision of the respondents

warranting interference under Article 226 of the Constitution of

India. Accordingly, the writ petition being sans substance is

dismissed without any order as to cost.

             (Mohammad Rafiq)                                 (Vijay Kumar Shukla)
               Chief Justice                                          Judge



 ac.

Digitally signed by AJAY KUMAR CHATURVEDI
Date: 2021.07.07 15:50:24 +05'30'