Telangana High Court

M/S. P. S. Man Power Suppliers vs The Director The Nizams Institute ... on 24 March, 2021

Bench: T.Amarnath Goud

        HE HON'BLE SRI JUSTICE T.AMARNATH GOUD

                WRIT PETITION No.4911 of 2021
ORDER:

1 This Writ Petition is filed seeking to issue a writ of

Mandamus declaring the action of the 2nd respondent in issuing

notification dated 20.01.2021 in Rc.Plng-1/55/2019/LC, inviting

tenders to supply semi-skilled and unskilled workers for a period

of two years without assigning any valid reasons for setting aside

the tenders received in response to tender notification No.RC

No.Plng-1/55/2019/LC, dated 26.8.2020, as arbitrary and illegal.

2 Petitioner firm is in the business of supplying contract

workers on out sourcing basis to hospital, government and private

companies. The petitioner has been supplying semi-skilled and

unskilled workers to the second respondent since 2007 till date.

The petitioner further asserts that the respondent has issued a

tender notice dated 26.8.2020, inviting sealed tenders from eligible

contractors for the supply of semi-skilled and unskilled workers.

The petitioner participated in the said tender and bid for 7.6% and

7.5% for areas 1 and 4 respectively. After opening the financial

bid, the respondents called the petitioner for negotiations on

31.10.2020 and in pursuance of the letter submitted by the

petitioner agreeing to reduce its commission to 5% as suggested by

the negotiating team representing the 2nd respondent, had decided

to issue orders to award the labour contract to the petitioner on

31.10.2020. However, in spite of reducing the commission by the

petitioner to 5%, the respondents have decided to call for fresh

tenders without assigning any justifiable reason for cancelling the

tender. Hence the Writ Petition.

3 The respondents filed counter denying the various averments

made in the affidavit filed in support of the Writ Petition. In brief,

the case of the respondent is that as per Clause 7.6(b) of the

Tender Notice, the Director, NIMS reserves the right to accept /

cancel / recall the Tender of all the Tenders without assigning any

reason thereof. The respondent denied the contention of the

petitioner that the respondents have decided the matter to award

the tender in favour of the petitioner. It is further submitted that

the tender was cancelled in terms of the Central Vigilance

Commission (CVC) guidelines which empowers the Director to take

a decision to cancel the Tender Notification wherever the rates

quoted by the qualified bidders in the financial bid found to be

abnormally higher side and that the quoted commission by the

bidders should be less than 5%. Hence prayed to dismiss the Writ

Petition.

4 The learned counsel for the petitioner submitted that the

initial Tender Notification dated 26.8.2020 was cancelled without

assigning any reasons at the stage of final bids were opened

though the petitioner has agreed for scaling down the commission

to 5% the respondent has unilaterally cancelled the Tender

Notification. He further submitted that the impugned action of the

respondent cancelling the Tender Notification dated 26.8.2020

without any complaint even after reducing the commission to 5%,

which is the same percentage granted in the earlier contract is

arbitrary. He further submitted that the respondents are relying

on the CVC guidelines to justify their action to cancel the tender

which are not applicable to the present tender. He further

submitted that the petitioner having participated and spent huge

amounts, has, therefore, legitimate expectation for his tender to be

considered. He further submitted that the services are presently

being provided at 5% commission. He further submitted that the

action of the respondents in repeatedly canceling the tenders

would go to show that it is only to accommodate someone else and

to pickup the persons of their choice. By relying on the judgments

delivered in Ajay Hasia V. Khalid Mujib Sehravardi1 and Ramana

Dyaram Shetty V. International Airport Authority of India2 the

learned counsel for the petitioner submitted that the respondent is

a State under Article 12 of the Constitution of India and is bound

to act reasonably and without arbitrariness.

5 The learned counsel for the respondent submitted that in

every Tender Notification the respondent has reserved right to

cancel the Tender without assigning reasons and that the

petitioner has participated in the Tender having knowledge of the

same, therefore, he cannot complain of the same. He further

submitted that Condition No.7.6(b) of the tender notification

stipulates that the Director of the respondent has right to accept or

cancel any tender without assigning any reason. He further

submitted that the respondent has power to cancel the Tenders if

the percentage of commission is high since it should be less than

1 (1981) 1 SCC 722 2 (1979) 3 SCC 489

5% as per the guidelines of the CVC. He relied on the judgment of

the Hon'ble apex Court in State of Jharkhand V. M/s. CWE-Soma

Consortium3.

6 That after hearing both sides, Mr. A.Sudershan Reddy,

learned counsel appearing for the petitioner submitted that his

instructing counsel would put a word to the petitioner with regard

to any further reduction of the percentage. But there was no

response.

7 As seen from the record and also as rightly submitted by the

learned counsel for the respondent, the respondent is justified in

cancelling the Tender Notification in view of condition No.7.6 (b) of

the Tender Notification dated 26.8.2020, reading, "The Director,

NIMS reserves the right to accept / cancel / recall the Tender of all

the Tenders without assigning any reason thereof. The decision of

the Director NIMS in this regard will be final." Therefore, the

participation of the petitioner in the Tender gives a reasonable

thought that the petitioner has knowledge of the said condition

and having accepted the terms and conditions of the tender, he

cannot complain that the action of the respondent is illegal.

Moreover, it is prerogative of the respondents either to cancel a

tender or to give a fresh tender if the bid is not competitive because

it should be beneficial to the institution.

8 Further, the plea of the petitioner is that though the

petitioner agreed to reduce the percentage of commission from

7.6% to 5%, the Tender was cancelled. However, as seen from the

3 (2016) 14 SCC 172

record it is manifest that as per the CVC guidelines and also as per

the Government instructions, the quoted percentage of commission

should be less than 5%. In the case on hand, the petitioner

initially quoted the percentage of commission as 7.6%, but

subsequently reduced to 5%. Therefore, the action of the

respondent on this aspect also is justified since it was noticed that

the rates quoted by the petitioner in the financial bids are found to

be on the higher side.

9 As rightly submitted by the learned counsel for the

respondent as per Article 127 of the Financial Code, no tenderer

has any right to be told the reasons for rejecting his tender and the

reasons for rejection should not be communicated to any tenderer.

Since the respondents have already given a fresh tender

notification dated 20.01.2021 and since the petitioner is contractor

since 2007, the petitioner is always at liberty to participate in the

new tender.

10 In M/s. CWE-Soma Consortium case (3 supra) the Hon'ble

apex Court held as under:

18. ...........While so, the High Court was not justified to sit in judgment over the decision of tender Committee and substitute its opinion on the cancellation of tender. Decision of the state issuing tender notice to cancel the tender and invite fresh tenders could not have been interfered with by the High Court unless found to be mala fide or arbitrary. When the authority took a decision to cancel the tender due to lack of adequate competition and in order to make it more competitive, it decided to invite fresh tenders, it cannot be said that there is any mala fide or want of bona fide in such decision. While exercising judicial review in the matter of government contracts, the primary concern of the court is to see whether there is any infirmity in the decision-making process or whether it is vitiated by mala fide, unreasonableness or arbitrariness.

19. Observing that while exercising power of judicial review, court does not sit as appellate court over the decision of the government but merely reviews the manner

in which the decision was made, in Tata Cellular v. Union of India (1994) 6 SCC 651, in para (70) it was held as under:- "70. It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down."

11 Taking into the totality of the facts and circumstances of the

case into consideration and also having regard to the principle

enunciated in Cwe-Soma Consortium case (supra), this Court is of

the considered view that at every stage the respondents are

justified in cancelling the Tenders and this Court finds no

unreasonable or inexcusable action on the part of the respondents

and the complaint of the petitioner is misconceived.

12 The petitioner's allegation that the respondents are trying to

corner the participants and by way of repeated cancellation of

tenders the respondents are trying to accommodate the candidate

of their choice is a bald allegation without any basis. The

petitioner failed to establish any such malafides on the part of the