M/S Amar Goods Transport vs Mp. State Cooperative Marketing ...
2021 Latest Caselaw 2170 MP

                               1                      WP.7734.2021

              The High Court of Madhya Pradesh
                          WP.7734.2021
                   M/s Amar Goods Transport
                                Vs.
     M.P. State Co-operative Marketing Federation & Ors.


Jabalpur, dated 08.06.2021

      Shri Sankalp Kochar, learned counsel for the petitioner.

      Shri Vijayendra Singh Choudhary, learned counsel for

respondents No.1 to 4.

Shri Prashant Singh, learned Senior Counsel with Shri

Anshul Tiwari, learned counsel for intervenor.

Heard through video conferencing.

1. Present petition u/Art.226 of Constitution of India is

preferred challenging action on the part of official respondents in

declining to accept the acceptance of counter offer and issuing

fresh NIT.

2. The foundational facts are that in response to the NIT, the

petitioner made an offer which was though L-1 but the official

respondents found it to be on the higher side leading to the official

respondents making a cross-offer lowering the initial bid from

119% above SOR to 110% above SOR. The petitioner accepted

this cross-offer. In this factual backdrop, are the official

respondents justified in law to have gone in for fresh NIT ignoring

the acceptance of the petitioner of the lower cross-offer.

3. Pertinently, NIT under challenge relates to Narsinghpur

sector [District Narsinghpur]. For the sake of clarity, the factual 2 WP.7734.2021

matrix attending the present writ petition is detailed below in a

tabular illustration:

S.No.                 Events                     WP.7734.21
1       NIT issued for transportation of          Qua Sector
        select food-grains and gunny             Narsinghpur
        bags - cum-unloading work for        [District Narsinghpur]
        the period from March, 2021 to
        February, 2022
2       Petitioner's L-1 offer                       119%
                                                  above SOR
3       Since the offer received was                110%
        higher than the last year's offer,        above SOR
        the official respondents gave a
        reduced cross-offer vide Annex.
        P/3 & P/4.


4       Vide Annexure P/5, petitioner
        consents to the reduced cross-
        offer

4. On 04.03.2021, the official respondents submit that various

objections were received as regards the offer being on higher side.

Consequently, the matter was considered by District Procurement

Committee which on 23.03.2021 found that even the reduced

cross-offer of 110% above SOR would lead to incurring of loss to

the public exchequer and would not be in public interest

especially when compared with the L-1 offer of 60% above SOR

qua adjoining sector Gadarwara within the same district of

Narsinghpur. The matter was also placed before the State Level

Committee which was of the same view as the District Level

Committee and thus a decision was taken to proceed for re-

3 WP.7734.2021

tendering the work qua Narsinghpur sector, District Narsinghpur.

Consequently, fresh NIT was published on 25.03.2021, pursuant

to which the intervenor M/s Pankajam Enterprises was awarded

the contract and an agreement in that regard was executed on

08.04.2021.

5. Learned counsel for the petitioner has primarily raised the

following grounds in support of the challenge to the fresh NIT:

1. Once the petitioner accepted the reduced cross-

offer of 110% above SOR a concluded and binding

contract came into existence thereby foreclosing the

official respondents from ignoring/cancelling the

contract and issuing fresh NIT.

2. The reason assigned to decline execution of

agreement in favour of petitioner and issuing fresh NIT,

that the cross-offer is on the higher side, is untenable

since in Jhabua & Dindori sectors cross-offer as high as

127% above SOR was accepted by the official

respondents.

3. The lowest bid of the petitioner and the

consequential acceptance of cross-offer could not have

been rejected/ignored for untenable reasons.

5.1 As such it is submitted by learned counsel for the petitioner

that once the cross-offer made by the official respondents was

accepted by the petitioner a concluded contract came into

existence which was binding on the rival parties and thus the

official respondents could not have resiled from the same.

4 WP.7734.2021

5.2 Learned counsel for the petitioner has relied upon the

decisions of the Apex Court in "Fair Air Engineers Pvt. Ltd.

And Another Vs. N.K. Modi [(1996) 6 SCC 385 para 6]",

"Deokar Exports Private Limited Vs. New India Assurance

Company Limited [(2008) 14 SCC 598 para 13]" and

"Michigan Rubber (India) Limited Vs. State of Karnataka

And Others [(2012) 8 SCC 216 para 22, 23 & 24]".

6. On the other hand, Shri Vijayendra Singh Choudhary

learned counsel appearing on behalf of the official respondents

and Shri Prashant Singh, learned Senior Counsel with Shri Anshul

Tiwari, learned counsel appearing on behalf of intervenor contend

as following:

1. There was no concluded and binding contract

between the rival parties in the absence of execution of

agreement. Since there was no agreement executed, a

binding contract did not come into existence.

2. The decision to publish fresh NIT was taken in

public interest. The bid of the petitioner being higher as

compared to the bid received for the same work in the

previous year and the expected loss to the public

exchequer compelled the official respondents in public

interest to re-start the process afresh.

3. The petitioner has not challenged the decision of

District Level Committee and so also of State Level

Committee for issuance of fresh NIT.

5 WP.7734.2021

4. M/s Pankajam Enterprises, in whose favour the

official respondents have executed the agreement

pursuant to the fresh NIT, has not been made party. Thus,

the present petition suffers from non-joinder of necessary

party.

5. There is no discrimination as alleged by the

petitioner since Dindori and Jhabua sectors are

incomparable with Narsinghpur sector owing to entire

district of Dindori and of Jhabua have only one sector

whereas district Narsinghpur comprises of two sectors

[Narsinghpur sector and Gadarwara sector]. Thus, the

area to be covered for transportation qua Narsinghpur

sector is much smaller as compared to the area qua

Dindori and Jhabua sectors. It is thus submitted that two

unequals cannot be compared to allege discrimination.

6. Qua Narsinghpur sector, the adjoining sector is

Gadarwara where the work was awarded by accepting

the bid/cross-offer which was only 60% above the SOR

whereas in case of Narsinghpur sector situated

contiguous to Gadarwara sector the original bid and the

cross-offer both were nearly double than the bid on

which the work was allotted for Gadarwara sector.

7. After having heard learned counsel for the rival parties,

having perused the pleadings and the attached documents, this

Court is of the considered view that there is no case for 6 WP.7734.2021

interference for the reasons infra.

8. The decision to re-tender was a conscious decision taken by

the official respondents by keeping public interest in mind. The

facts reveal that if the petitioner had been allotted work based

even on the cross-offer of 110% above SOR, the public exchequer

would have incurred considerable financial loss. One of the

paramount considerations in matters of commercial transactions

involving State or its instrumentalities, is that of public interest.

The official respondents have assigned cogent reasons which

render the impugned decision immune from judicial review.

9. As regards the objection of learned counsel for the

petitioner that a concluded and binding contract had come into

being on the acceptance by the petitioner of the cross-offer of

official respondents is concerned, the same cannot retain this

Court for long since it is based on misconception of law relating

to tender/contract.

9.1 As and when NIT is issued, it is not an offer as defined in

the Contract Act but an invitation to make an offer. Once the

tenderer offers a bid he makes an offer/proposal. However, during

tender process if any cross offer is made by the NIT issuing

authority then the said cross offer yet again assumes the character

of an invitation for an offer. If the cross-offer made by the

authority issuing NIT is accepted by the tenderer then the

acceptance of the tenderer is essentially an offer/proposal, either

to be accepted or rejected by the authority issuing NIT.

7 WP.7734.2021

10. In the instant case, the initial offer of petitioner of 119%

above SOR was responded by the official respondents by making

a reduced cross-offer. The nomenclature "cross-offer" used by the

official respondents is a misnomer. The cross-offer with reduced

rate was in fact a fresh invitation to the petitioner to make its

proposal/offer. Once the petitioner accepted the reduced cross-

offer of the official respondents, the petitioner made its fresh

offer/proposal which herein did not find favour with the official

respondents for reasons as explained above. Thus, the fresh

offer/proposal of petitioner was not accepted by official

respondents and therefore a concluded & binding contract did not

come into existence.

11. To make things clear, it would be apt to reproduce the

extract of the judgment of Apex Court in the case of "Maa Binda

Express Carrier And Another Vs. North-East Frontier

Railway And Others [(2014) 3 SCC 760]" explaining the subtle

but vivid difference between a normal contract and a contract

entered into pursuant to issuance of NIT:

"8. The scope of judicial review in matters relating to award of contract by the State and its instrumentalities is settled by a long line of decisions of this Court. While these decisions clearly recognize that power exercised by the Government and its instrumentalities in regard to allotment of contract is subject to judicial review at the instance of an aggrieved party, submission of a tender in response to a notice inviting such tenders is no more than making an offer which the State or its agencies are under no obligation to accept. The bidders participating in the 8 WP.7734.2021

tender process cannot, therefore, insist that their tenders should be accepted simply because a given tender is the highest or lowest depending upon whether the contract is for sale of public property or for execution of works on behalf of the Government. All that participating bidders are entitled to is a fair, equal and non-discriminatory treatment in the matter of evaluation of their tenders. It is also fairly well-settled that award of a contract is essentially a commercial transaction which must be determined on the basis of consideration that are relevant to such commercial decision. This implies that terms subject to which tenders are invited are not open to the judicial scrutiny unless it is found that the same have been tailor made to benefit any particular tenderer or class of tenderers. So also the authority inviting tenders can enter into negotiations or grant relaxation for bona fide and cogent reasons provided such relaxation is permissible under the terms governing the tender process.

9. Suffice it to say that in the matter of award of contracts the Government and its agencies have to act reasonably and fairly at all points of time. To that extent the tenderer has an enforceable right in the court who is competent to examine whether the aggrieved party has been treated unfairly or discriminated against to the detriment of public interest. (See Meerut Development Authority v. Association of Management Studies and Anr. etc. (2009) 6 SCC 171 and Air India Ltd. v. Cochin International Airport Ltd. (2000) 1 SCR 505).

10. The scope of judicial review in contractual matters was further examined by this Court in Tata Cellular v. Union of India (1994) 6 SCC 651, Raunaq International Ltd. case (supra) and in Jagdish Mandal v. State of Orissa and Ors. (2007) 14 SCC 517 besides several other decisions to which we need not refer. In Michigan 9 WP.7734.2021

Rubber (India) Ltd. v. State of Karnataka and Ors. (2012) 8 SCC 216 the legal position on the subject was summed up after a comprehensive review and principles of law applicable to the process for judicial review identified in the following words:

"19. From the above decisions, the following principles emerge:

(a) the basic requirement of Article 14 is fairness in action by the State, and non- arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities;

(b) fixation of a value of the tender is entirely within the purview of the executive and courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by Courts is very limited;

(c) In the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities unless the action of tendering authority is found to be malicious and a misuse of its statutory powers, interference by Courts is not warranted;

(d) Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work; and

(e) If the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interference by Court is very restrictive since no person can 10 WP.7734.2021

claim fundamental right to carry on business with the Government.

20. Therefore, a Court before interfering in tender or contractual matters, in exercise of power of judicial review, should pose to itself the following questions:

(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; or whether the process adopted or decision made is so arbitrary and irrational that the court can say: "the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached"; and

(ii) Whether the public interest is affected. If the answers to the above questions are in negative, then there should be no interference under Article 226." (emphasis supplied)

11. As pointed out in the earlier part of this order the decision to cancel the tender process was in no way discriminatory or mala fide. On the contrary, if a contract had been awarded despite the deficiencies in the tender process serious questions touching the legality and propriety affecting the validity of the tender process would have arisen. Inasmuch as the competent authority decided to cancel the tender process, it did not violate any fundamental right of the appellant nor could the action of the respondent be termed unreasonable so as to warrant any interference from this Court. The Division Bench of the High Court was, in that view, perfectly justified in setting aside the order passed by the Single Judge and dismissing the writ petition.

12. In the result this appeal fails and is hereby dismissed with costs assessed at Rs.25,000/-."

12. From the aforesaid discussion, what comes out loud and

clear is that the acceptance by the petitioner of the counter offer 11 WP.7734.2021

made by the official respondents was not actually an acceptance in

the eyes of law but a fresh proposal/offer for the official

respondents to accept or not to accept. The official respondents

took a conscious decision on relevant and cogent considerations

by keeping in mind the public interest thereby saving their

decision from being sacrificed at the alter of Article 14 of

Constitution of India.

12.1 In all commercial activities where instrumentalities of State

are parties, public interest is one of the paramount considerations.

Public Interest includes the attempt to ensure that the lowest and

the best offer is accepted. In this exercise, it is incumbent upon the

instrumentalities of the State to ensure that the work which is

allotted is executed without wastage of public money which in

turn can be ensured by lowering down the offer received by way

of negotiations or other lawful means and if not possible then to

even by calling tenders afresh.

13. The fallout of the above discussion is that there was neither

any concluded nor binding contract between the rival parties.

14. In the conspectus of above discussion, this Court does not

see any reason to interfere with the conscious and reasonable

decision taken by the official respondents in declining to accept

the so-called acceptance of counter offer and issuing fresh NIT.

15. The judicial pronouncements relied upon by the petitioner

are attended with facts and circumstances which are not similar to

the one involved herein and therefore are of no avail to the 12 WP.7734.2021

petitioner.

16. This Court need not go into the prolixity of considering

citations relied upon by the respondents since prayer made in the

present petition is being declined.

17. Consequent upon the above, impugned order does not suffer

from any illegality, perversity or rampant irregularity and

therefore need not be interfered with.

18. Accordingly, present petition stands dismissed without

cost. Interim order passed by this Court on earlier occasion stands

vacated.

                                                  (Sheel Nagu)              (Rajeev Kumar Shrivastava)
                                                     Judge                           Judge

                     pd

PAWAN Digitally signed by PAWAN DHARKAR DN: c=IN, o=HIGH COURT OF MADHYA PRADESH BENCH

DHARK GWALIOR, ou=HIGH COURT OF MADHYA PRADESH BENCH GWALIOR, postalCode=474011, st=Madhya Pradesh, 2.5.4.20=345b3604d572ed9dd1492fe

AR 82dc3b1eef67eff2cb59f3ac97e920ac 264de7828, cn=PAWAN DHARKAR Date: 2021.06.11 08:26:43 +05'30'