M/S. Suraj Ram Hotels India Pvt. ... vs Telangana State Tourism ...
2021 Latest Caselaw 2876 Tel

             HON'BLE SRI JUSTICE K. LAKSHMAN

                WRIT PETITION No.15881 OF 2021
ORDER:

Heard Mr. S. Sridhar, learned counsel for the petitioner, Mr. M.

Roopender, learned Standing Counsel for the Telangana State Tourism

Development Corporation Limited (TSTDCL) appearing on behalf of

respondent Nos.1 and 2 and Mr. M.V.S. Suresh Kumar, learned senior

counsel representing Mr. Mr. Srinivas Karra, learned counsel for

respondent No.3.

2. This writ petition is filed to declare the action of respondent

Nos.1 and 2 in issuing the Letter of Intent No. AMC/TENDERS/8/2016,

dated 03.07.2021 in favour of respondent No.3 as illegal, and for a

consequential direction to respondent Nos.1 and 2 to issue Letter of

Intent in favour of the petitioner for operation and maintenance of Food

Courts at Buddhavanam, Nagarjuna Sagar on 'License to Operate basis'.

3. FACTS:

i) Respondent No.1 had issued a Tender Notification on

12.05.2021, for selection of operator (s) for operation and maintenance of

Haritha Restaurants on 'license to operate basis' and 'as is where is

basis'. The last date for submission of bids was 14.06.2021.

ii) Respondent No.1 has not given any schedule with regard to the

opening of both technical and financial bids. A single stage envelope

bidding process was adopted by respondent No.1.

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iii) Pursuant to the said Notification, both the petitioner and

respondent No.3 had submitted their bids in respect of Food Courts at

Buddhavanam, Nagarjuna Sagar.

iv) The petitioner was declared as the highest bidder (H1) on

24.06.2021. However, no Letter of Intent was issued in its favour.

v) On 08.07.2021, the petitioner had submitted a representation to

respondent No.1 with a request to issue a letter of intent in its favour, as

it stood Highest Bidder in the subject tender in respect of the restaurant at

Buddhavanam.

vi) According to the petitioner, it came to know that the letter of

intent was already issued in favour of respondent No.3 on 03.07.2021,

whereas, according to respondent Nos.1 and 2, since the petitioner had

submitted a conditional bid which would be disadvantageous to other

bidders, the letter of intent was issued in favour of respondent No.3, who

was the next highest bidder.

vii) Respondent No.1 had also issued a show-cause notice dated

12.07.2021 to the petitioner calling for his explanation as to why it

should not be blacklisted for tampering and unauthorized modification of

the Financial Bid format.

viii) Similarly, respondent No.1 also issued a notice dated

27.07.2021 to respondent No.3 calling for its explanation for submission

of fake GST Registration number with fake address mentioned therein

and, thereafter being dissatisfied with the explanation submitted by it,

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issued a show-cause notice dated 18.08.2021 to respondent No.3 for

termination of agreement for violating the terms of agreement.

4. CONTENTIONS ON BEHALF OF PETITIONER:

i) Mr. S. Sridhar, learned counsel for the petitioner, would submit

that respondent No.3 had submitted a fake GST Registration number

along with tender documents as the said GST Registration Certificate

stood cancelled on 25.11.2020 itself. The address mentioned by

respondent No.3 does not belong to it and it belongs to another firm i.e.,

Hotel Airport International Limited'.

ii) The learned counsel would further submit that respondent No.1

without issuing any notice and without giving any opportunity rejected

the bid of the petitioner though he was declared as the highest bidder.

According to him, on consideration of both technical and financial bid,

the petitioner was the highest bidder and, therefore, the letter of intent

should have been issued only in favour of the petitioner, whereas in the

present case, respondent No.1 had issued the same in favour of

respondent No.3. The show-cause notice dated 12.07.2021 issued to the

petitioner for tampering the terms of Request for Proposal (RFP)

document is illegal.

iii) The learned counsel would further submit that on enquiry the

petitioner came to know that respondent No.1 has not considered the

issuance of letter of intent in favour of the petitioner on the ground that it

had tampered the RFP document and the tender submitted by it is not in

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accordance with the terms of tender notification. He would further

submit that the petitioner did not tamper the RFP document and it was

only due to inadvertence and oversight that it had interchanged the serial

number and, therefore, it would not amount to tampering of RFP

document. He would further submit that despite respondent No.3

submitting a fake GST registration certificate as it was cancelled on

25.11.2020 and furnishing the address which does not belong to it,

respondent No.1 issued the letter of intent in favour of respondent No.3,

which is illegal and against the principles of natural justice.

iv) With the aforesaid submissions, the learned counsel sought to

declare the letter of intent issued in favour of respondent No.3 as illegal

and for a consequential direction to issue a letter of intent in its favour.

5. CONTENTIONS OF RESPONDENT Nos.1 AND 2:

i) Referring to the contents of the counter affidavit filed by

respondent Nos.1 and 2, the learned Standing Counsel would contend

that the bid of the petitioner was disqualified since it had tampered the

terms of the RFP document and submitted a conditional bid. The

modification creates disadvantages to other bidders. Respondent No.1

has specifically mentioned the bid conditions in the tender document.

ii) Referring to Clauses - 2.11.1; 2.11; 2.12; 3.2.3; 30.1.3; 30.1.4

and 30.1.5, the learned standing counsel would contend that the petitioner

did not submit its bid in terms of the RFP document, and there is

modification and tampering which amounts to alteration of tender

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condition, and that the bid cannot be a conditional one. Therefore, there

is no error or irregularity on the part of respondent No.1 in not

considering the bid of the petitioner and in not issuing the letter of intent

in its favour.

iii) The learned standing counsel further contends that respondent

No.3 has submitted a fake GST registration number and the address

mentioned by it in the tender document does not belong to it, and having

come to know the same, respondent No.1 had issued notice and show-

cause notice to respondent No.3. All the said information was brought to

the notice of respondent Nos.1 and 2 only after opening the bids, both

technical and financial. According to him, the Bid Tender Authority

does not have power to cancel the tender notification without assigning

any reasons, whereas, in the present case, there are serious lapses on the

part of the petitioner as well as respondent No.3, and both of them had

not submitted tender documents in terms of the tender conditions.

Therefore, by following the due procedure laid down under law,

respondent No.1 had cancelled the letter of intent dated 03.07.2021

issued in favour of respondent No.3.

iv) The learned standing counsel would also contend that the

petitioner having submitted a conditional bid with modification in RFP

document, has no right to seek the relief of issuance of a direction to

respondent No.1 to issue a letter of intent in its favour.

v) With the aforesaid submissions, the learned standing counsel

sought to dismiss the writ petition.

KL,J W.P.No.15881 of 2021

6. CONTENTIONS ON BEHALF OF RESPONDENT No.3:

i) Mr. M.V.S. Suresh Kumar, learned senior counsel representing

Mr. Srinivas Karra, learned counsel for respondent No.3, would contend

that the GST registration certificate submitted by respondent No.3 was

cancelled, but it was not a fake document. Since there was no business

on account of COVID-19 pandemic, all the restaurants were closed and,

therefore, respondent No.3 could not take steps to get the GST

registration certificate renewed. While producing the registration

certificate along with tender proposal, the relevant column with regard to

the period for registration was left blank.

ii) With regard to the address mentioned by respondent No.3 in

the tender document, the learned senior counsel would contend that the

business was shifted on 01.02.2020 to the premises bearing No.281,

Vidya Nagar Cross, New Airport Road, Bengaluru, BBMP North,

Karnataka, and the business at No. 007, Ground Floor, New Airport

Road, Doddajala Bengaluru - 562 157 was done from 30.10.2019 to

01.02.2020 by a sub-lease agreement executed by one Narayana, who is

the lessee of one Buchanna, the owner of the property. Therefore, there

is no irregularity in submission of the bid by mentioning the said address

and it is not a serious lapse. There is no violation of terms of bid.

iii) The learned senior counsel would further contend that

respondent No.3 had received a letter on 02.07.2021, wherein it was

stated that the bid of the petitioner was not considered and the contract at

KL,J W.P.No.15881 of 2021

Budhhavanam was offered to it to match the price quoted by the highest

bidder. Accordingly, respondent No. 3 had accepted the offer and a letter

of intent was issued in its favour on 03.07.2021. Thereafter, respondent

No. 3 had executed the agreement and deposited Rs.15.50 Lakhs towards

first six month's annual fee as security deposit. Respondent No. 3 had

incurred heavy expenditure for modification of the restaurant. If the

letter of intent is cancelled, it would suffer grave, irreparable loss and

injury.

iv) The learned senior counsel would also contend that the

petitioner having submitted a conditional bid which is not in accordance

with the terms of the tender document does not have a right to seek a

direction to respondent No.1 for issuance of letter of intent in its favour.

v) With the aforesaid submissions, the learned senior counsel

sought to dismiss the writ petition.

7. ANALYSIS AND FINDING OF THE COURT:

i) In view of the above submissions, respondent No.1, Tendering

Authority, had issued tender notification on 12.05.2021 calling for

tenders to maintain Haritha Restaurants at various places including the

restaurant at Buddhavanam, Nagarjuna Sagar, on 'license to operate

basis' and 'as is where is basis'. Both the petitioner and respondent No.3

had submitted their bids in respect of the restaurant at Buddhavanam. It

is not in dispute that on consideration of both technical and financial

bids, the petitioner stood as the highest bidder, but respondent No.1 did

not issue any letter of intent in its favour. According to respondent No.1,

KL,J W.P.No.15881 of 2021

the petitioner herein did not submit the bid in terms of the tender

document, and the bid submitted by it is a conditional one tampered and

modified RFP document.

ii) Even according to respondent No.1, respondent No.3 had

submitted fake GST registration certificate, which was not valid as on the

date of the submission of tender. Respondent No.3 was not running the

business at the address shown in the tender. After coming to know the

same, respondent No.1 had issued a notice dated 27.07.2021 to

respondent No.1 calling for its explanation. Respondent No.3 sought two

weeks time, but no explanation was submitted. Therefore, respondent

No.1 issued a show-cause notice dated 18.08.2021 to respondent No.3

terminating the agreement on account of violation of its terms and

conditions of agreement, more particularly Clauses - 30.1.3, 30.1.4 and

30.1.5. Thus, both the petitioner and respondent No.3 had submitted the

tender bids which are in violation of the terms and conditions of tender

document. In view of the same, it is relevant to refer to certain

conditions of the tender document, which are as under:

"2.11.1 Bidders should submit the Technical Proposal and Financial Proposal in the in the manner set out in Clause 2.11 and Clause 2.12. The Authority would evaluate only those proposals that are received in the required format and complete in all respects. Incomplete and/or conditional Proposals shall be liable to rejection.

2.12 Sealing and Marking of Proposals 2.12.1 The bidder shall submit all the documents sought under the RFP, together with the documents

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mentioned in Clause 2.12.2 in the format provided under the RFP and in the manner specified in Clause 2.12.2.

2.12.2 The bidder shall submit the proposal in two separate envelops comprising the following documents and marked as "TECHNICAL PROPOSAL" and "FINANCIAL PROPOSAL".

3.2.3 Bidders may note that the Authority will not entertain any deviations to the RFP at the time of submission of the Proposal or thereafter. The Proposal to be submitted by the Bidders would have to be unconditional and unqualified and the Bidders would be deemed to have accepted the terms and conditions of the RFP with all its contents including the Draft License Agreement. Any conditional Proposal shall be regarded as non-responsive and would be liable for rejection.

30.1.3 Subject to Force Majeure, the SECOND PARTY fails to substantially perform or comply with any commitment, agreement, covenant, term or condition (other than those specifically described in any other subparagraph of this Clause) of this Agreement.

30.1.4 If the SECOND PARTY fails to remedy any such act of default as stipulated in this Agreement within 30 (thirty) days after receipt of written notice of default with respect thereto from FIRST PARTY. 30.1.5 If any representation or warranty made by SECOND PARTY hereunder is intentionally false or misleading in any material respect when made and such false or misleading representation or warranty either has a material adverse effect on the Development or has resulted in an unfair competitive advantage materially benefiting the SECOND

KL,J W.P.No.15881 of 2021

PARTY in the offer selection process considering SECOND PARTY'S response to the offer in total. Subject to Force Majeure, on the happening of any one of the Events of Default by SECOND PARTY as enumerated in Clause 28.1."

iii) It is also relevant to mention that respondent Nos.1 and 2 in

their counter mentioned about the details of bid conditions modified by

the petitioner in a tabular form, which are as under:

As per Request for Proposal (RFP) Petitioner modified as Appendix F follows:

We understand that, for the purpose of computation or Sl. No.5: payment of annual license fee, I/We understand that the Authority is not annual/year denotes 12 (twelve) bound to accept any proposal(s) received. calendar months after 6 (six) months from the date of signing of the Agreement.

   Note(ii):                                    The Annual Fee offered by the
   The Annual Fee offered by the Succesful      Succesful bidder shall be payable
   bidder shall be payable to the authority     to the authority from the seventh
   from the second month of execution of        month of execution of the
   the agreement and shall be escalated by      agreement and shall be escalated
   5% (five percent) compounding annually       by       5%      (five     percent)
   throughout the agreement period.             compounding                annually
                                                throughout the agreement period.
   Note (vi)                                    Totally removed Note (vi) from
   For the purpose of computation or            the format.
   payment of annual license fee, annual/year
   denotes 12 (twelve) calendar months after
   1 (one) month from the date of signing of
   the agreement.

iv) It is relevant to note that the petitioner did not dispute with

regard to the submission of modified RFP document, and it only says that

it had submitted the modified document by interchanging the serial

numbers which is due to inadvertence and oversight and, therefore, it

does not amount to tampering. In view of the same, it is clear that the

petitioner herein is admitting that it had submitted the bid by

modification. It is also relevant to note that according to respondent

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No.3, the GST registration certificate submitted by it is not renewed and

it is not valid as on the date of submission of the bid. Even according to

respondent No.3, it is not continuing the business in the address

mentioned in the bid. Thus, both the petitioner and respondent No.3 had

submitted the bids in violation of the terms and conditions mentioned in

the tender document. It is also relevant to note that respondent No.1 has

cancelled the letter of intent dated 03.07.2021 issued in favour of

respondent No.3 after issuing notice and show-cause notice. Respondent

No.3 did not challenge the proceedings cancelling the letter of intent in

its favour by respondent No.1.

iv) The petitioner herein is seeking a direction to respondent No.1

to issue letter of intent in its favour. If the Court considers the said

direction, it will lead to revival of an illegal action i.e., direction to issue

a letter of intent in favour of the petitioner, who has not submitted the bid

in terms of the tender notification. The petitioner having submitted the

bid in violation of tender conditions cannot seek such a direction as it is

impermissible in law as held by the Hon'ble Apex Court in Aligarh

Muslim University v. Mansoor Ali Khan1. In the said judgment, the

Apex Court referring to judgments in M.C. Mehta v. Union of India

[1999) 3 SCR 1173] and Gadde Venkateswara Rao v. Government of

Andhra Pradesh [1966) 2 SCR 172] held as under:

"21. As pointed recently in M.C. Mehta v. Union of India [1999]3SCR1173, there can be certain situations in which an order passed in violation of natural justice

. (2000) 7 SCC 529

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need not be set aside under Article 226 of the Constitution of India. For example, where no prejudice is caused to the person concerned, interference under Article 226 is not necessary. Similarly, if the quashing of the order which is in breach of natural justice is likely to result in revival of another order which is in itself illegal as in GaddeVenkateswara Rao v. Government of Andhra Pradesh [1966]2SCR172, it is not necessary to quash the order merely because of violation of principles of natural justice."

v) The contentions of the petitioner that respondent No.1 has not

assigned any reasons for not issuing the letter of intent in its favour and

has not given any notice before issuing the letter of intent in favour of

respondent No.3 etc., would amount to violation of principles of natural

justice. Though there is no explanation by respondent Nos.1 and 2 in

their counter for the same, letter dated 12.07.2021 addressed by

respondent No.1 to the petitioner, would answer the same.

8. CONCLUSION:

i) In view of the above discussion, since both the petitioner and

respondent No.3 had submitted their bids in violation of terms and

conditions of tender notification dated 12.05.2021, the Tender

Notification dated 21.05.2021 issued by respondent No.1 is liable to be

set aside. It is relevant to note that though respondent No.3 contends

that it had incurred huge expenses for renovation of restaurant and on

account of cancellation of letter of intent by respondent No.1, it would

suffer serious loss and injury, it has not filed any proof. In the absence of

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same, the said contention cannot be accepted. However, it is contended

by respondent No.3 that it had deposited an amount of Rs.15.50 lakhs

with respondent No.1 towards security deposit and the same is not

refuted by respondent No.1 and 2. In view of the same and on account of

setting aside the tender notification and consequential cancellation of

letter of intent, the said amount is ordered to be refunded to respondent

No.3.

ii) The present Writ Petition is accordingly disposed of, and the

Tender Notification dated 12.05.2021 issued by respondent No.1 for

selection of operator (s) for operation and maintenance of Haritha

Restaurants on 'license to operate basis' and 'as is where is basis' in

respect of Haritha Restaurant, Buddhavanam, is hereby set aside.

Respondent No.1 is directed to issue a fresh Tender Notification in

respect of Haritha Restaurant, Buddhavanam, by following the procedure

laid down under law.

iii) Respondent Nos.1 and 2 are also directed to refund the

security deposit amount of Rs.15.50 lakhs to respondent No.3 forthwith.

iv) In the circumstances of the case, there shall be no order as to

costs.

As a sequel, the miscellaneous petitions, if any, pending in the writ

petition shall stand closed.

_________________ K. LAKSHMAN, J 4th October, 2021 Mgr