Telangana High Court
M/S. Venkata Vijaya Poultries ... vs The State Of Telangana And Another on 31 January, 2023
Bench: J Sreenivas Rao
HIGH COURT FOR THE STATE OF TELANGANA
WRIT PETITION No.43886 OF 2022,
AND
WP.No.46306 OF 2022 & WP.No.236 OF 2023
W.P. No.43886 of 2022
Between :
Nomula Poultry Farm rep. by its Proprietor
Nomula Ashok, and 7 others. ...Petitioners
And
The State of Telangana rep. by its Principal Secretary,
Women Development & Child Welfare Department,
Secretariat Buildings, Secretariat, Hyderabad & another. ...Respondents
W.P. No.46306 of 2022
Between :
M/s. Geeta Poultry rep. by its partner
I.Kashinatha & Naother ...Petitioners
And
The State of Telangana rep. by its Principal Secretary,
Women Development & Child Welfare Department,
Secretariat Buildings, Secretariat, Hyderabad & another. ...Respondents
W.P. No.46306 of 2022
Between :
M/s. Geeta Poultry rep. by its partner
I.Kashinatha & Naother ...Petitioners
And
The State of Telangana rep. by its Principal Secretary,
Women Development & Child Welfare Department,
Secretariat Buildings, Secretariat, Hyderabad & another. ...Respondents
W.P. No.236 of 2023
Between :
M/s. Venkata Vijaya Poultries Pvt. Ltd.
Vemsoor Village, rep. by its Director M. Suresh Babu ...Petitioner
And
The State of Telangana rep. by its Principal Secretary,
Women Development & Child Welfare Department,
Secretariat Buildings, Secretariat, Hyderabad & another. ...Respondents
DATE OF COMMON ORDER PRONOUNCED: 31.01.2023
HONOURABLE SRI JUSTICE J. SREENIVAS RAO
1. Whether Reporters of Local newspapers No
may be allowed to see the judgment?
2. Whether the copies of judgment may be Yes
marked to Law Reporters/Journals
3. Whether Their Lordships wish to No
see the fair copy of the judgment?
____________________
J. SREENIVAS RAO, J
* HONOURABLE SRI JUSTICE J. SREENIVAS RAO
+ WRIT PETITION No.43886 OF 2022,
AND
WP.No.46306 OF 2022 & WP.No.236 OF 2023
% DATED 31st JANUARY, 2023
Gist:
>Head Note:
! Counsel for the Petitioners : Petitioner's counsel in WP No.43886/22
Sri Madas Bharath Chandra
Sri R.N. Hemendranath Reddy
Petitioner's counsel in WP No.46306/22
Sri Aadesh Varma
Sri Sanjeev Kumar, Spl.G.P.
On behalf of Add. Advocate General.
Petitioner's counsel in WP No.236/22
Sri M. Nagaiah
Sri Sanjeev Kumar Spl.G.P.
On behalf of Add. Advocate General.
^Counsel for Respondents : Respondent's counsel in WP No.43886/22
Sri R.N. Hemendranath Reddy, Sr. Advocate.
Respondent's counsel in WP No.46306/22
Sri Sanjeev Kumar, Spl.G.P.
On behalf of Add. Advocate General.
Respondent's counsel in WP No.236/22
Sri Sanjeev Kumar, Spl.G.P.
On behalf of Add. Advocate General.
? CASES REFERRED:
1. 2016 SCC OnLine Hyd. 330 : (2017) 4 ALD 31 (DB) : (2017) 1 ALT 47
2. AIR 1954 SC 728 + 1955 (1) SCR 707
3. (1997) 9 SCC 495
4. 48 L.ed 971
5. (2008) 1 SCC 683
6. Civil Appeal No.4020-4023 of 2003 decided on 7.5.2003
Supreme Court of India (From Delhi)
7. (2004) 11 Supreme Court Cases 485 : 2004 SCC Online SC 660
8. (2000) 2 supreme Court Cases 617
9. (2002) 6 Supreme Court Cases 127
10. (2022) 6 Supreme Court Cases 401
HONOURABLE SRI JUSTICE J. SREENIVAS RAO
WRIT PETITION No.43886 OF 2022,
AND
WP.No.46306 OF 2022 & WP.No.236 OF 2023
COMMON ORDER :
Heard Sri R.N. Hemendernath Reddy, learned Senior Counsel
representing Sri Madas Bharath Chandra, learned counsel for the petitioner in
WP.No.43886 of 2022, learned Special Government Pleader representing learned
Additional Advocate General for respondents 1 and 2, and Sri A. Sudershan
Reddy, learned Senior Counsel representing Sri A. Prabhakar Rao, learned
counsel for the respondent No.3. Sri Addesh Varma learned counsel for the
petitioner in WP.No.46306 of 2022, Sri M. Nagaiah, learned counsel for the
petitioner in WP.No.236 of 2022 and learned Special Government Pleader
representing learned Additional Advocate General for the respondents.
2. In WP.No.43886/2022 and W.P.No.46306/2022 the petitioners have
challenged the Tender Reference No.3347/SNP/2022, dated 21.11.2022 issued by
the respondent No.2/Commissioner, Women Development and Child Welfare
Department (WD & CW) Department, Hyderabad.
3. In W.P.No.236/2023, the petitioner questioned the action of the
respondents in not examining and not considering the e-mail representations
dated 29.12.2022 and 31.12.2022 as illegal.
4. As a common question of fact and law are involved in all three writ
petitions, they were heard together and are being disposed of by way of common
order with the consent of the learned Counsel for the petitioners as well as
respondents.
5. The petitioners in WP.No.43886 of 2022 and WP.No.46306 of 2022 are
challenging the impugned Tender Reference No.3347/SNP/2022 dated
21.11.2022 issued by the respondent No.2, which is against the interest of small
poultry farmers and floating the present tender by implementing the zonal
system in place of existing I.C.D.S. projects for procurement of eggs and
consequently to direct the respondents to float back to I.C.D.S. project-wise
tender for procurement of eggs by revising the terms and conditions in the
interests of poultry farmers, and to pass such other suitable order as this Court
may deem fit and proper in the circumstances of the case.
6. The petitioner in WP.No.236 of 2023 is challenging the impugned action of
the respondents in not considering the e-mail representations, dated 29.12.2022
and 31.12.2022 respectively as illegal and sought consequential direction to
declare the petitioner's firm, as a qualified participant in a technical bid along
with others in respect of Zonal-IV and V, pending disposal of the writ petition.
7. Brief facts leading to the filing of this writ petitions emerge from the writ
affidavits are as follows:
Respondent No.2 issued Tender Reference dated 21.11.2022 calling tenders
at State Level Zonal Tender for the procurement and supply of Eggs (Hen) as per
"Agmark" specifications and other processing/grading conditions mentioned in
the tender for a period of two years i.e., January 2023- December 2024 to the
beneficiaries under the flagship Arogyalaxmi and supplementary nutrition
programme. In the said tender reference, respondent No.2 stated the
procurement of eggs by floating state-level zonal tender for seven zones as per
the zonal system of the Government of Telangana and further mentioned that the
tenderer can bid for a maximum of two zones. The qualifying condition
prescribed for the tender document should be fulfilled by the tenderer
separately. The successful tenderer after agreeing with the Department of
Women Development & Child Welfare has to supply eggs (Hen) as per
"Agmark" specification (Medium Agmark quality eggs each weighing 45 to 52
grams) and other specifications mentioned in the tender document for two years
as per the monthly indent given by the Department of Women Development &
Child Welfare. The supply should be done to Anganwadi Centres (AWCs) as per
the schedule specified by the Department of Women Development & Child
Welfare. The downloading bid document starts from 22.11.2022 at 11:00 a.m;
pre-bid meeting was scheduled in the Chamber of the Commissioner, WD&CW
Department on 24.11.2022; closing date for downloading bid document and also
the last date for submission of online bids was 08.12.2022; and the last date, time
and place for submission of hard copies including E.M.D was fixed as
09.12.2022; date of technical bid opening was scheduled on 12.12.2022; and price
bid opening was scheduled on 14.12.2022.
8. According to the tender conditions, the qualifying conditions for the
tenderer are as follows :
1. The tenderer should be a poultry farmer with their farm located within
the geographical limits of Telangana in the production of eggs (hen), for the
past three years (i.e., 2019-20, 2020-21, 2021-22). The tenderer should submit a
proof of owning a poultry farm for production of eggs (hen) certified by local
bodies (Gram Panchayat/Municipal authorities). Leased farmers, i.e.,
individuals not having their own poultry farm but having other poultry farms
on lease are not eligible to participate.
2. The tenderer should supply eggs (hen) as per AGMARK specifications as
specified in Annexure-I of the tender document. The tenderer should possess
AGMARK Certificate of Authorization for eggs (hen), AGMARK Certificate
valid as on date should be enclosed with the bid.
3. The tenderer can bid for a maximum of only two (2) zones, bidders have
to submit Annexure-II separately for each zone app[lied.
4. The tenderer should have the capacity to produce minimum of 40% of the
tendered quantity for the zone for which they are bidding. For the rest of the
capacity upto 100%, the tenderer shall submit proof of agreements entered with
other poultry farmers. In proof of this, a certificate has to be obtained from the
respective District Veterinary and Animal Husbandry Officer, Animal
Husbandry Department of the respective district - certifying the per day
production capacity of eggs (hen) of their own poultry farm and other poultry
farms with whom tenderer has entered into an agreement and submitted along
with bid.
a) Any or all of these poultry farms will be inspected by
officials/third party nominated by the Commissioner, Women
Development and Child Welfare Department to verify the
production capacity,
b) The tenderer should not show their production capacity over
and above their actual production capacity. If found other wise,
the bid is liable to be rejected.
5. The Tenderer should have satisfactorily executed a single contract for
having supplied Eggs (hen) for a value not less than Rs.5 Crores in any one year
of last 3 preceding years.
6. The annual turnover of the tenderer should not less than Rs.5 crores per
annum during each of the last 3 (three) completed financial years i.e., 2019-20,
2020-21, 2021-22, irrespective of the number of zones the tenderer is bidding.
7. In order to ensure the proven processing/grading and hazard analysis
competency, the tenderer should possess a valid ISO-22000:2005 certificate for
their egg storage and processing godown, as on date, which should be enclosed
with the bid.
8. The tenderer should submit Earnest Money Deposit of Rs.10 lakhs per
zone. In case, the tenderer is applying for 2 zones, they have to submit separate
EMD amount of Rs.10 lakhs for each zone.
9. The tenderer should possess a valid license under Food Safety and
Standard Act - 2006 (FSSAI license) and rules and regulations of 2011 and same
certificate should be valid on the date of opening of tender. In proof of this, a
valid certificate should be submitted along with the bid. If the tenderer has
applied for re-validation, the proof of the same should be submitted with the
bid.
10. The tenderer should quote price for one egg for the entire period of two
year duration for the zone, which they are bidding including all overhead
charges and transportation charges upto anganwadi centres, inclusive of taxes,
if any, etc.
11. The tenderer should have the capability for delivering eggs upto
anganwadi centre level and should have experience in supply of eggs to
anganwadi centres or other Government institutions.
12. The tenderer should have technical capabilities for supply of eggs of at
least 40% of tendered quantity in the particular zone as per AGMARK
specification and marking. In proof of this, the tenderer should submit copy of
certificate of grading issued by Director of Marketing and Inspection as per
Agriculture Produce (Grading and Marketing) Act and Rules or authorized
person of Marketing and Inspection (District Agricultural Marketing Officer).
9. Sri R.N. Hemendernath Reddy, learned Senior Counsel for the petitioners
in WP.No.43886 of 2022 vehemently contended that the conditions mentioned in
the impugned tender Reference dated 21.11.2022 are not feasible to the
petitioners, who are the small poultry farmers and the conditions are depriving
the interest of small and medium poultry farmers and there is ever need to
amend/rectify/annul such conditions. He would submit that the tender
contains certain contentious conditions, which are tailor-made for the purpose of
granting the contract to the previously identified offerers. He further contended
that the petitioners are poultry farmers/contractors supplying eggs under
Integrated Child Development Services (I.C.D.S) project having registered with
N.E.C.C.
9.1. He further contended that in the impugned tender reference, the
respondents have changed the terms and conditions to bid for the tender. A
poultry farmer needs "Agmark" certification, a valid ISO 2000:2005 certificate and
an FSSAI license under Food Safety and Standard Act. He further contended that
for obtaining "Agmark" certification, and an FSSAI license under Food Safety and
Standard Act, the petitioners at least require 60 days time but the respondents
without affording any opportunity and without discussing with the poultry
farmers included onerous conditions of "Agmark" certification. Moreover, the
person who wants to submit tender needs to have a turnover of not less than Rs.5
crores per annum in any one year of last 3 preceding years i.e., 2019-20, 2020-21
and 2021-2022. The above-said two conditions were included in the impugned
tender notification to disqualify/ debar/exclude the petitioners, the majority of
the poultry farmers, leading to lesser participation which seems to be tailored to
benefit certain applicants.
9.2 He further contended that the other conditions mentioned for tender
processing, grading go-down to be within the zone or at a nearby place where
eggs can be located. The respondents in the impugned tender notice for the first
time introduced a zonal system for the procurement and supply of eggs (hen) as
per the "Agmark" specification. He also contended that the respondents have
not conducted any preliminary meeting with the poultry farm owners before
designing/preparing the tender bid document and the poultry farm owners have
not been given a reasonable opportunity of hearing before inviting the tenders at
the zonal level. He further contended that respondent No.1/ Government issued
G.O.Ms.No.12, Department for Women, Children, Disabled and Senior Citizens
(Schemes), dated 26.11.2014, for implementation of One Full Meal Programme
for I.C.D.S., beneficiaries. In the above said G.O., respondent No.1 specifically
mentioned that to implement the Scheme One Full Meal Programme for I.C.D.S.,
and provide eggs for 30 days in all ICDS Projects and provide eggs for 30 days in
a month for all children from 7 months to 6 years of age in all Anganwadi
Centres by bridging the gaps in the existing Schemes as follows :
(a) To extend "One Full Meal" to all Pregnant and Lactating Women in the
remaining uncovered 68 ICDS Projects covering 16,021 Anganwadi Centres.
(b) To extend Milk and Egg from 25 days per month to 30 days per month in the
present "One full Meal" programme implemented in all (149) ICDS projects
covering all (35,973) Anganwadi Centres.
(c) The Government has decided to scale up the programme by providing 30 eggs
per month instead of 8 eggs per month to the Children in the age group of 7
months to the Children in the age group of 3 - 6 years, in 35,973 Anganwadi
Centres in 149 Projects.
(d) An honorarium for Rs.250/- per month is additionally provided to Anganwadi
helpers for implementation of One Full Meal programme, in the newly covered 68
ICDS Projects covering 16,021 Anganwadi Centres.
9.3. In pursuance of the said G.O., respondent No.1 issued Memo No.3462/
Schemes/A1/2014, dated 09.12.2014, framing guidelines for implementation of
the One Full Meal Programme. The learned Senior Counsel contended that
G.O.Ms.No.12 issued by respondent No.1 dated 26.11.2014 and Memo, dated
09.12.2014 are existing. Now respondent No.2 issued an impugned tender
reference contrary to the guidelines framed in Memo dated 09.12.2014 and
contrary to G.O.Rt.No.298 and 276 dated 29-11-2016 and 11-10-2016. According
to the learned Senior Counsel, the earlier Scheme N.E.C.C. registration certificate
was sufficient, now the respondents modified the said condition and included a
new condition that the tenderer should submit "Agmarks" certification for
preventing the petitioners and similarly situated farmers in participation of
tender reference. Also included other condition of Rs.5 crores turnover in any
one year of last 3 preceding years.
9.4. The learned Senior Counsel further contended that respondent No.2
submitted revised/modified guidelines vide Lr. No.3347/SNP/2022, dated
21.11.2022 to the Special Secretary/Commissioner, DW&CW Department,
Telangana, Hyderabad, wherein the Women Development and Child Welfare
Department shall:
(a) Invite centralized tender for procurement of eggs, cluster-wise
as per erstwhile districts of the state, at the state level, towards
bringing uniformity in egg procurement cycle and setting uniform
quality standards.
(b) Allow egg traders, aggregators with sufficient experience in eggs
business, to participate in the centralized cluster-wise tender in
addition to the poultry farmers, such that the trader/aggregators tie-
up with poultry farmers to procure eggs at competitive prices so that
both have a win-win situation.
(c) Insist for specific egg processing, grading activities and safety
and quality standards including "AGMARK" in the procurement of
eggs in the new centralized tender.
9.5. Based on the said recommendations only, respondent No.1 issued Memo.
No.3462/Prog.1/1/2014, dated 13.10.2022. According to the learned Senior
Counsel for the petitioners, respondent No.2 is not having any power or
authority to recommend the proposals for revised guidelines. Respondent No.1
without framing guidelines issued impugned tender notification contrary to the
guidelines framed under G.O.Ms.No.12, dated 26.11.2014, which is in existence.
9.6. He further submits that in the Memo. No. 3462/Prog.1/1/2014, dated
13.10.2022 respondent No.1 has not mentioned in the reference with regard to
earlier G.O.Ms.No.12, dated 26.11.2014, the guidelines framed in Memo.
No.3462/Schemes.A-1/2014, dated 09.12.2014. On the other hand, respondent
No.1 had issued Memo. No. 3462/ Prog.1/1/2014, dated 13.10.2022 based upon
the recommendations made by respondent No.2 and the same is not permissible
under law. Hence, the impugned tender reference issued by respondent No.2 is
in clear violation of Articles 14 and 19 (1) of the Constitution of India as well as
contrary to the Scheme of I.C.D.S. Scheme under G.O.Ms.No.12, dated 26.11.2014
and Memo.No.3462/Schemes.A-1/2014, dated 09.12.2014 and the same is liable
to be set aside and consequently to direct the respondents to revert to I.C.D.S.
project-wise tender for procurement of eggs by revising the terms and conditions
as per G.O.Ms.No.12, dated 26.11.2014 and Memo. No.3462/Schemes.A-1/2014,
dated 09.12.2014.
9.7. In support of his contention, the learned Senior Counsel for the petitioners
relied on a judgment of the Division Bench of High Court of Andhra Pradesh in
State of Telangana, rep. by its Prl. Secretary, Women and Child Welfare Dept ,
& Others Vs. M/s. SRI VENKATESWARA INDUSTRIES, Mahaboobnagar
District, represented by its Proprietor, B.Damodar Reddy and Ors1 ., wherein
the Division Bench of the Court held at Para Nos. 14, 16, 18, 40 and 52 as
hereunder :
14. As the proceedings under challenge in this Writ Petition is the
tender notification dated 16.07.2016, G.O.Ms. No.12 dated 26.11.2014
and the consequential Government memos dated 09.12.2014 and
17.12.2014, it is useful to note its contents. The 2nd respondent issued
tender notice dated 16.07.2016, inviting applications from NECC
registered poultry farmers in Mahaboobnagar District to participate in
the supply of eggs under any one of the projects. The tender notification
stipulates the number of egg required to be supplied each month to
each of the projects, the EMD amount to be deposited, and the EMD
amount to be produced along with the tender form. The notification
informs the tenderers that the other details are available in the
website; the tender processing fee, and the earnest money deposit,
should be paid to the Director, District Women and Child Development
Agency, Mahaboobnagar; the tender should be submitted online; the
documents, relating to the technical bid, the EMD, and other processing
fees, should be submitted in the office; and the tender, submitted
without EMD and processing fee, will be rejected. The last date for
submission of the tender was 28.07.2016, and the technical bids and
financial bids were to be opened on 29.07.2016.
16. Pursuant to the Scheme formulated in G.O.Ms. No.12 dated
26.11.2014, the Government had issued Memo No.3462/Schemes.
A1/2014 dated 09.12.2014 prescribing operational guidelines for
implementation of the One Full Meal Programme. The guidelines
provides for the constitution of a One Full Meal Committee. It
prescribes the duties and responsibilities of the committee, the mode of
procurement, the food model for spot feeding of pregnant and lactating
women, and other beneficiaries, in the ICDS one full meal programme.
It stipulates that eggs should be procured only from NECC registered
poultry farmers without third party intervention, and that NECC should
monitor the supply and the quality of eggs, and support the department
in enforcing the guidelines. In terms thereof, 30 eggs per month,
costing Rs.3.50 each, is required to be provided to pregnant and
lactating women. For children between 7 months and 3 years, 30 eggs
per month is required to be provided for spot feeding i.e., 1 egg per day
of 50 grams each at the cost of Rs.3.50 per egg. While one egg is to be
2016 SCC OnLine Hyd 330 : (2017) 4 ALD 31 (DB) : (2017) 1 ALT‐47
provided from Monday to Friday, two eggs are required to be provided
on Saturday. Similarly one egg of 50 grams each, at a cost of Rs.3.50
per egg, is required to be provided for spot feeding of children aged
between 3 to 6 years.
18. The petitioners are all traders, and are not poultry farmers. The
tender conditions exclude them from consideration, as it restricts
supply of eggs, to the 20 ICDS centres in Mahaboobnagar District, only
by NECC registered poultry farmers. This, by itself, cannot be said to
have violated the petitioners fundamental rights under Article 19(1)(g)
of the Constitution of India to carry on any trade or business. Under
Clause (1) (g) of Article 19, every citizen has the freedom and right to
choose his own employment or take up any trade or calling subject only
to the limits as may be imposed by the State in the interests of public
welfare and the other grounds mentioned in clause (6) of Article 19.
(Saghir v. State of U.P.2; Krishnan Kakkanth v. Govt. of Kerala3).
40. The basis of the classification of persons or things may appear on
the face of the policy or may be gathered from the surrounding
circumstances known to or brought to the notice of the Court. (Ram
Krishna Dalmia28; Gauri Shanker52). Relevant material is always
admissible to show the reason and the justification for the
classification. Such reasons need not appear on the face of the Rule or
the law or the policy which effects the classification. (Triloki Nath
Khosa35). We are satisfied that the classification of suppliers under
the impugned notification, and restriction on supply of eggs only by
NECC registered poultry farmers, neither suffers from the vice of
discrimination nor can it be said to be arbitrary and in violation of
Article 14 of the Constitution of India. The petitioners are not poultry
farmers and it is, therefore, unnecessary for this Court, in a Writ
Petition instituted by them, to examine whether excluding non-NECC
registered poultry farmers from consideration would violate the equality
clause under Article 14 of the Constitution of India.
52. Article 14 cannot be interpreted in a doctrinaire or dogmatic
manner. Excessive interference by the judiciary in the functions of the
executive is not proper. In view of the inherent complexities involved in
modern society, some free play must be given to the executive.
(Transport and Dock Workers Union48; Missouri, Kansas and
Texas Railway Co. v. May4; Aravali Golf Club v. Chander Hass5).
If a decision has been taken in a bonafide manner, although not strictly
following the norms laid down by Courts, such decisions are upheld on
the principle that Courts, while judging the validity of executive policy
decisions, must grant certain measure of freedom or "play in the joints" to
the executive. (Sterling Computers Ltd.18). The Government has,
2 AIR 1954 SC 728 = 1955 (1) SCR 707
3 (1997) 9 SCC 495
4 48 L Ed 971
5 (2008) 1 SCC 683
while taking a policy decision, the right to 'trial and error' as long as
both trial and error are bonafide and within the limits of authority.
(BALCO Employees' Union (Regd.)66; Netai Bag65; Ram Singh Vijay
Pal Singh64).
9.8. He further relied on another decision of the Hon'ble Supreme Court in
UNION OF INDIA Vs. INTERNATIONAL TRADING COMPANY 6., wherein
it was held at Para No.16 as follows :
16. While the discretion to change the policy in exercise of the executive power,
when not trammelled by any statute or rule is wide enough, what is imperative
and implicit in terms of Article 14 is that a change in policy must be made fairly
and should not give impression that it was so done arbitrarily on by any
ulterior criteria. The wide sweep of Article 14 and the requirement of every
State action qualifying for its validity on this touchstone irrespective of the field
of activity of the State is an accepted tenet. The basic requirement of Article
14 is fairness in action by the state, and non-arbitrariness in essence and
substance is the heart beat of fair play. Actions are amenable, in the panorama
of judicial review only to the extent that the State must act validly for a
discernible reason, not whimsically for any ulterior purpose. The meaning and
true import and concept of arbitrariness is more easily visualized than precisely
defined. A question whether the impugned action is arbitrary or not is to be
ultimately answered on the facts and circumstances of a given case. A basic and
obvious test to apply in such cases is to see whether there is any discernible
principle emerging from the impugned action and if so, does it really satisfy the
test of reasonableness.
6.9. The learned Senior Counsel for the petitioners relied on a decision of the
Hon'ble Supreme Court in JESPARI. SLONG Vs. STATE OF MEGHALAYA
AND ORS 7., wherein it was held at Para No.19 as follows :
19. It goes without saying that the Government while entering into
contracts is expected not to act like a private individual but should act in
conformity with certain healthy standards and norms. Such actions should not
be arbitrary, irrational or irrelevant. The awarding of contracts by inviting
tenders is considered to be one of the fair methods. If there are any reservations
6 Civil Appeal No. 4020-4023 of 2003 Decided on 07 May, 2003
Supreme Court of India (From Delhi)
(2004) 11 Supreme Court Cases 485 : 2004 SCC OnLine SC‐660
or restrictions then they should not be arbitrary and must be justifiable on the
basis of some policy or valid principles which by themselves should be
reasonable and not discriminatory. [See Para 7 of Hindustan Development case
(supra)]. The said judgment also states that any act which excluded
competition from any part of the trade or commerce by forming cartels should
not be permitted.
9.10. The learned Senior Counsel for the petitioners lastly relied on a judgment
of the Hon'ble Supreme Court in AIR INDIA LTD. Vs. COCHIN
INTERNATIONAL AIRPORT LTD. & OTHERS8 ., wherein it was held at Para
No.7 as hereunder :
7. The law relating to award of a contract by the State, its corporations and
bodies acting as instrumentalities and agencies of the Government has been
settled by the decision of this Court in R. D. Shetty v. International Airport
Authority 1979 (3) SCC 488 ), Fertilizer Corporation Kamgar Union v. Union
of India 1981 (1) SCC 568 ), Assistant Collector, Central Excise v. Dunlop India
Ltd. 1985 (1) SCC 260 = 1984 (2) SCALE 819), Tata Cellular v. Union of
India 1994 (6) SCC 651 = 1995 (1) Arb. LR 193), Ramniklal N. Bhutta v. State
of Maharashtra 1997 (1) SCC 134 = 1996 (8) SCALE 417), and Raunaq
International Ltd. v. I.V.R. Construction Ltd. 1999 (1) SCC 492 = 1999 (1) Arb.
LR 431 (SC). The award of a contract, whether it is by a private party or by a
public body or the State, is essentially a commercial transaction. In arriving at a
commercial decision considerations which are of paramount are commercial
considerations. The State can choose its own method to arrive at a decision. It
can fix its own terms of invitation to tender and that is not open to judicial
scrutiny. It can enter into negotiations before finally deciding to accept one of the
offers made to it. Price need not always be the sole criterion for awarding a
contract. It is free to grant any relaxation, for bona fide reasons, if the tender
conditions permit such a relaxation. It may not accept the offer even though it
happens to be the highest or the lowest. But the State, its corporations,
instrumentalities and agencies are bound to adhere to the norms, standards and
procedures laid down by them and cannot depart from them arbitrarily. Though
that decision is not amendable to judicial review, the Court can examine the
decision making process and interfere if it is found vitiated by mala fides,
unreasonableness and arbitrariness. The State, its corporations, instrumentalities
and agencies have the public duty to be fair to all concerned. Even when some
(2000) 2 Supreme Court Cases 617
defect is found in the decision making process the Court must exercise its
discretionary power under Article 226 with great caution and should exercise it
only in furtherance of public interest and not merely on the making out of a legal
point. The Court should always keep the larger public interest in mind in order
to decide whether its intervention is called for or not. Only when it comes to a
conclusion that overwhelming public interest requires interference, the Court
should intervene.
10. Per contra, the learned Special Government Pleader appearing on behalf of
respondents 1 and 2 would seek to contend that respondent No.1/Government
framed the I.C.D.S. Scheme, which is one of the largest unique programmes for
early childhood and development introduced in India. In writ petition No.43886
of 2022, respondent No.2 filed its counter, wherein it is averred that as per the
Scheme, the beneficiaries under the Scheme are the children in the age group of
0-6 years, pregnant women and lactating mothers. The main objective of the
Scheme is to improve the nutritional and health status of children in the age
group of 0-6 years, nursing and lactating mothers. It is stated that after the
formation of the State of Telangana, Government introduced the
"Arogyalakshmi" Scheme in order to improve upon the existing I.C.D.S.
Government Scheme and accordingly issued orders to implement revised and
new feeding norms of the One Full Meal Programme/Aarogyalakshmi for all
Pregnant and Lactating Mothers and also to scale-up the programme by
providing 16 eggs per month instead of 8 eggs per month to the children in the
age group of 7 months to 3 years and for providing 30 eggs instead of 16 eggs in
a month to the children in the age group of 3 to 6 years in Anganwadi Centres.
10.1. It is further averred that the respondents received several complaints
about substandard quality of eggs being supplied. To resolve the issue of the
supply of substandard quality eggs, the Government in various meetings with
the stakeholders put them on notice and several directions were issued to
improve the quality of eggs supplied. Considering the importance of the Scheme
and the commitment of the State to improve the nourishment of mother and
child, it was decided to revamp, evolve and design the implementation of the
Scheme in a transparent manner decentralization, multiple players, adequate
infrastructure and logistic supply were found to be the most prominent issues in
the egg supply mechanism. It is averred that respondent No.2 constituted a team
to visit and study the best practices adopted across other States with regard to
the procurement and supply of eggs under the I.C.D.S. Scheme. Accordingly, the
team submitted a report identifying various best practices followed in the State
of Tamil Nadu, especially with respect to grading, processing, quality and safety
of eggs.
10.2. Respondent No.2 further averred that on 03.09.2022 the Commissioner,
WD&CW, addressed Lr. No.3347/SNP/2022, to the Special Secretary and
Commissioner, the WD&CW department proposing for centralized procurement
of eggs, insisting on egg processing, grading activities and safety and quality
standards including "Agmark" to bring in quality improvements in the supply of
eggs. Respondent No.1 after examining the entire matter, issued Memo.
No.3462/Prog.1/1/2014, dated 13.10.2022, Department of WCD&SC according
permission to Commissioner, WD&CW Department to procure eggs by floating
zonal tenders and also insisted on specific safety and quality standards including
"Agmark".
10.3. The learned Special Government Pleader specifically contended that the
quality criteria as mentioned in the tender document, namely "Agmark"
certification, ISO certificate and FSSAI license are intended to avoid the supply of
substandard quality of eggs. He further contended that the duty of the
Government is to provide safety to its citizen and in furtherance of its duty, the
Government enacted the Food Safety and Standard Act and under the Act, a new
National Regulatory Body, the Food Safety and Standards Authority of India
(FSSAI) was established to develop science-based standards for food and to
regulate and monitor the manufacture, processing, storage, distribution, sale and
import of food so as to ensure the availability of safe and wholesome food and
one of the key provisions of the Prevention of sale of misbranded, unsafe/
contaminated or sub-standard food. In view of the same, to regulate the quality
of the eggs supplied, the certification of "Agmark" and certificate of FSSAI were
made mandatory.
10.4. It is further contended that subsequent to the issuance of tender reference,
the condition with regard to a security deposit of 3% of the contract value has
been modified by corrigendum, dated 05.12.2022 by fixing an upper limit of
Rs.50 lakhs as a security deposit for each zone. He further submits that earlier the
weight of the eggs to be supplied was specified as 50 grams. However, the eggs
supplied weighed much below the specified standard and it was difficult to
ensure compliance. In view of the same, it was decided to insist on "Agmark"
certification, as it has greater compliance and quality control mechanism.
"Agmark" gradation of eggs is based on their weight. The corresponding grade
for an egg weighing in the range of 50 grams was A - medium (lower limit of 45
grams and higher limit of 52 grams). Therefore, he submitted that the allegation
made by the petitioners in the writ affidavit that the tender reference was issued
to prevent the petitioners from in participating the tender and seems tailored to
benefit certain applicants is not true and correct.
10.5. He further contended that the allegations made by the petitioners that
respondent No.2 has made the inclusion of condition that the tenderer should
have satisfactorily executed a single contract for having supplied eggs (hen) for a
value not less than Rs.5 crores in any one year of last 3 preceding years
intentionally to deprive the petitioners and similarly situated poultry farmers in
participating to bid tender is also not correct on the ground that pursuant to the
tender reference, several tenderers have submitted their tenders and the
respondents have opened the technical bids on 21.12.2022, wherein 37 bids from
24 unique bidders were received and the petitioners in W.P.No. 46306 of 2022
and W.P.No.236 of 2023 are not qualified in technical bid.
10.6. In support of his contention, the learned Special Government Pleader
relied upon the same judgment of the Division Bench of this Court in State of
Telangana, rep. by its Prl. Secretary, Women and Child Welfare Dept., &
Others (supra) in W.A.No.751 of 2016 and WPMP.No.36043 of 2016 in
W.P.No.24599 of 2016 which was relied by the learned Senior Counsel for the
petitioners in W.P.No.43886 of 2022. The Hon'ble Division Bench after
considering the various judgments of the Hon'ble Supreme Court, held as
follows :
"Although a citizen has a fundamental right to carry on a trade or business, he has
no fundamental right to insist that the Government or any other individual should
carry on business with him. The government, or the individual concerned, has the
right to enter into contract with a particular person or to determine person or 6
AIR 1958 SC 731 7 AIR 1981 SC 873 8 AIR 1968 SC 1323 9 AIR 1970 SC 1453
10 AIR 1960 SC 801 11 (1974) 1 SCC 468 12 AIR 1967 SC 829 = 1967(1) SCR
1012 23 persons with whom he or it will deal. (Krishnan Kakkanth5). The
Constitution does not recognise franchise or rights to business which are
dependent on grants by the State or business affected by public interest. (Saghir4;
Krishnan Kakkanth5). No person can claim a fundamental right to carry on
business with the government, and all that he can claim is that, in competing for
the contract, he should not be unfairly treated and discriminated to the detriment
of public interest. (Association of Registration Plates v. Union of India13; Erusian
Equipment & Chemicals Ltd. v. State of W.B.14). As the petitioners cannot insist
that the Government should carry on business with them, or procure eggs from
them alone, refusal by the respondents to include traders, among the categories
from whom eggs for these 20 ICDS centres in Mahaboobnagar District would be
procured, does not violate the petitioners fundamental rights under Article
19(1)(g) of the Constitution of India. The challenge to the validity of the impugned
tender notification, and to G.O.Ms. No.12 dated 26.11.2014 and the memos issued
pursuant thereto, on this ground necessitates rejection.
Before examining whether or not the aforesaid tender condition, G.O.Ms.
No.12 dated 26.11.2014 and the Government memos dated 09.12.2014 and
17.12.2014 are in violation of Article 14 of the Constitution of India, it is necessary
to consider the scope of judicial review of prescription of conditions by the
Government in an invitation to tender. While contractual matters are not beyond
the realm of judicial review, its application is limited (Noble Resources Ltd. v.
State of Orissa15; Indian Oil Corpn. Ltd. v. Amritsar Gas Service16; and LIC of
India v. Escorts Ltd.17) primarily to the 13 (2005) 1 SCC 679 14 (1975) 1 SCC 70
15 (2006) 10 SCC 236 16 (1991) 1 SCC 533 = 1990 4 JT 601 17 AIR 1986 SC
1370 24 infirmity in the decision making process, and whether it is reasonable and
rational or arbitrary and in violation of Article 14 of the Constitution of India.
(Sterling Computers Ltd v. M & N Publications Ltd18). The Court does not sit as
a Court of appeal, but merely reviews the manner in which the decision was made.
Although the terms of the invitation to tender is not open to judicial scrutiny as it
is in the contractual realm, Courts can examine the award of contract, by the
Government or its agencies, to prevent arbitrariness or favouritism. (Noble
Resources Ltd.15; Binny Ltd. v. V. Sadasivan19; G.B. Mahajan v. Jalgaon
Municipal Council20; Directorate of Education v. Educomp Datamatics Ltd.21).
There are inherent limitations in the exercise of judicial review of
contractual powers as the Government must have the freedom of contract and a
free-play in the joints. The duty to act fairly will vary in extent, depending upon
the nature of cases to which the said principle is sought to be applied. (Tata
Cellular v. Union of India22). The actions of the State are amenable to judicial
review only to the extent that the State must act validly for a discernible reason
and not whimsically for any ulterior purpose. In the matter of formulating
conditions of a tender document, and in awarding a contract, greater latitude is
required to be conceded to the State authorities. Unless the action of the tendering
authority is found to be malicious, interference by Courts is not warranted. If the
State or its instrumentalities act reasonably, fairly and in public interest in
awarding the contract, interference by the Court is limited. (M/s. 18 AIR 1996 SC
51 19 (2005) 6 SCC 657 20 1991 1 JT 605 21 (2004) 4 SCC 19 22 AIR 1996 SC
11 25 Michigan Rubber (I) Ltd. v. State of Karnataka23; C.S.R. Infratech India
Pvt. Ltd, Hyderabad1).
The State can choose its own method to arrive at a decision. It can fix its
own terms of invitation to tender, and that is not open to judicial scrutiny. (Air
India Ltd.2). Price need not always be the sole criterion for awarding a contract.
But the State is bound to adhere to the norms, standards and procedures laid down,
and cannot depart from them arbitrarily. Though that decision is not amendable to
judicial review, the Court can examine the decision making process and interfere if
it is found vitiated by mala fides, unreasonableness and arbitrariness. (Air India
Ltd.2). If two views are possible, and no mala fides or arbitrariness is alleged or
shown, there is little scope for interference with the view taken by the authorities in
inviting tenders. (Reliance Airport Developers (P) Ltd. v. Airports Authority of
India24; Siemens Public Communication Networks (P) Ltd. v. Union of India25).
Bearing the aforesaid principles in mind, let us now examine the
petitioners challenge to the validity of the tender notification, the impugned G.O
and memos, on the ground that it violates Article 14 of the Constitution of India.
Sri D. Prakash Reddy, Learned Senior Counsel, would submit that the
classification between NECC registered poultry farmers on the one hand, and
poultry traders on the other, has no nexus with the object sought to be achieved
which is to provide eggs to the beneficiaries, of the One Full Meal Scheme in terms
of G.O.Ms. No.12 dated 26.11.2014, at the lowest possible price. According to the
Learned Senior Counsel since the price of the eggs is fixed at the NECC rate of
Rs.3.50 per egg, the tender notification is, in effect, an invitation for bids for a
transport contract, 23 Judgment of the Supreme Court in Civil Appeal No.5898 of
2012 dated 17.08.2012 24 (2006) 10 SCC 1 25 (2008) 16 SCC 215 26 and the
object sought to be achieved thereby is to transport the eggs to the ICDS centres at
the minimum stipulated price; and, in the light of the aforesaid object, it hardly
matters whether the eggs are transported by traders or by poultry farmers. Before
examining this contention, it is necessary to first consider the tests prescribed for a
valid classification under Article 14 of the Constitution of India. In order to pass
the test of a permissible classification under Article 14 two conditions must be
fulfilled, namely, (i) the classification must be founded on an intelligible differentia
which distinguishes persons or things that are grouped together from others left
out of the group and (ii) the differentia must have a rational relation to the object
sought to be achieved. In order to accept a classification as permissible, and not hit
by Article 14, the measure in question will have to pass these twin tests. (Dimapati
Sadasiva Reddi, Vice-Chancellor, Osmania University v. Chancellor26; Budhan
Choudhry v. State of Bihar27; Ram Krishna Dalmia v. Shri Justice S.R.
Tendolkar28). The classification may be founded on different basis. What is
necessary is that there must be a nexus between the basis of classification and the
object of the policy under consideration. (State of Maharashtra v. Indian Hotel &
Restaurants Assn.29; Budhan Choudhry27).
Article 14 forbids class legislation, and not a reasonable classification.
Persons similarly situated must be similarly treated. Where, however, the persons
are not similarly situated, there is no prohibition to treat them separately, provided
of course there is a reasonable nexus between the basis of classification and the
object sought to be achieved. (K. Muthusamy v. Government of 26 AIR 1967 SC
1305 27 (1955) 1 SCR 1045 28 (1959) SCR 279 29 (2013) 8 SCC 519 27
Tamilnadu30). Every instance of discrimination does not necessarily fall within
the ambit of Article 14 of the Constitution. Discrimination means an unjust and
unfair action in favour of one and against another. It involves an element of
intentional and purposeful differentiation and unfavourable bias, an unfair
classification. (Rajasthan State Industrial Development & Investment Corporation
v. Subhash Sindhi Coop. Hs. Society31; The State of M.P. v. Narmada Bachao
Andolan32; Madhu Kishwar v. State of Bihar33).
A valid classification based on a just objective is truly a valid
discrimination. The result to be achieved by the just objective presupposes the
choice of some for differential consideration/treatment over others. Legalistically,
the test for a valid classification may be summarized as a distinction, based on a
classification founded on an intelligible differentia, which has a rational
relationship with the object sought to be achieved. (Kallakkurichi Taluk Retired
Officials Assn. v. State of T.N.34). Classification must be truly founded on
substantial differences which distinguish persons grouped together from those left
out of the group and such differential attributes must bear a just and rational
relation to the object sought to be achieved. (Indian Hotel & Restaurants Assn.29;
State of Jammu and Kashmir v. Triloki Nath Khosa35).
The doctrine of reasonable classification recognises that the classification
must be reasonable. It should ensure that persons or things similarly situated are
all similarly treated. The measure of reasonableness of a classification is the degree
of its success in treating similarly those similarly situated. The question is: what
does 30 LAWS -TLMAD 2003-0-582: MANU/TN/0192/2003 31 (2013) 5 SCC
427 32 (2011) 7 SCC 639 33 (1996) 5 SCC 125 34 (2013) 2 SCC 772 35 (1974) 1
SCC 19 28 this ambiguous and crucial phrase "similarly situated" mean? The test
which has been evolved for this purpose is that the classification must be founded
on an intelligible differentia which distinguishes certain persons or things that are
grouped together from others and that differentia must have a rational relation to
the object sought to be achieved. (Mohd. Shujat Ali v. Union of India36).
It is not even urged by Sri D. Prakash Reddy, Learned Senior Counsel for
the petitioners, that poultry farmers (be they registered with NECC or not), and
poultry traders, do not constitute two different and distinct classes. The question
whether non-NECC registered poultry farmers have been discriminated against is
a question which need not detain us in the present Writ Petition, as the challenge
to the validity of the notification is not by poultry farmers who are not registered
with the NECC, but by traders all of whom are not being considered for supply of
eggs to the ICDS centres in Mahaboobnagar District. While poultry farmers
supply eggs from their farms, traders have to procure eggs from the poultry
farmers and, in turn, supply them to the 2nd respondent at the respective ICDS
centres. It is evident, therefore, that poultry farmers and traders constitute two
distinct and different classes. The only question which necessitates examination is
whether such classification has a reasonable nexus with the object sought to be
achieved.
In order to examine this question, it is necessary to take note of the objects
which the Government claims that it seeks to achieve by way of the present
classification. As noted hereinabove, the impugned tender notification was issued
pursuant to G.O.Ms. No.12 dated 26.11.2014, and the memos issued by the
Government dated 09.12.2014 and 17.12.2014. By G.O.Ms. No.12 dated
26.11.2014 the State Government revised the earlier orders regarding the 36 AIR
1974 SC 1631 29 supplementary nutrition programme under the Integrated Child
Development Scheme for implementation of the One Full Meal Programme for all
pregnant and lactating mothers, and for children aged between 7 months and 6
years in all the Anganwadi centres. In terms of the policy in G.O.Ms. No.12 dated
26.11.2014, the Government decided to supply 30 eggs a month i.e. one egg per
day between Monday and Friday and two eggs on Saturday. The Scheme attempts
to provide all pregnant women, lactating mothers and infants a quality meal each
day, and requires the beneficiaries to consume the eggs at the centre itself, and not
carry it home as it may then be consumed by other members of their respective
families. The object of G.O.Ms. No.12 dated 26.11.2014 is to reduce the incidence
of infant mortality and maternal mortality. In addition to the existing budget, the
Government sanctioned Rs.84.83 crores as an additional budget under this
Scheme.
The operational guidelines, in Government memo dated 09.12.2014,
prescribe the modalities of supply for effective implementation of the One Full Meal
Programme, and to improve the nutritional status of pregnant and lactating
women, and reduce low birth weight and mortality of infants and children under 6
years. Clause II (2) thereof stipulates that the eggs shall be procured by the District
Procurement Committees from NECC registered poultry farmers without third
party involvement, and the average annual cost of an egg, including transport
charges, should not exceed Rs.3.50. Clause II (3)(d) of the said guidelines requires
NECC to monitor the supplies and the quality of eggs, and support the department
in enforcing the guidelines. The Government memo dated 17.12.2014 was issued in
partial modification of the operational guidelines issued under the Government
memo dated 09.12.2014 and, instead of the 30 cost of an egg including transport
being stipulated at Rs.3.50 per egg, it was decided that the NECC rate and
transport charges be paid based on the distance duly following the terms and
conditions."
10.7. He further relied on a decision of the Hon'ble Supreme Court in N.G.
PROJECTS LIMITED Vs. VINOD KUMAR JAIN AND ORS., 9 wherein it was
held at Para No's. 22 and 23 as hereunder :
"22. The satisfaction whether a bidder satisfies the tender condition is primarily
upon the authority inviting the bids. Such authority is aware of expectations from
the tenderers while evaluating the consequences of non-performance. In the tender
in question, there were 15 bidders. Bids of 13 tenderers were found to be
unresponsive i.e., not satisfying the tender conditions. The writ petitioner was one
(2022) 6 Supreme Court Cases 127
of them. It is not the case of the writ petitioner that action of the Technical
Evaluation Committee was actuated by extraneous considerations or was malafide.
Therefore, on the same set of facts, different conclusions can be arrived at in a
bona-fide manner by the Technical Evaluation Committee. Since the view of the
Technical Evaluation Committee was not to the liking of the writ petitioner, such
decision does not warrant for interference in a grant of contract to a successful
bidder.
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."
10.8. He also relied on another decision of the Hon'ble Supreme Court in
NATIONAL HIGH SPEED RAIL CORPORATION LIMITED Vs.
MONTECARLO LIMITED AND ANOTHER10., wherein the Hon'ble Apex
Court held at para Nos. 47 and 48 as follows :
"47. The result of this discussion is that the issue of the acceptance or
rejection of a bid or a bidder should be looked at not only from the point
of view of the unsuccessful party but also from the point of view of the
employer. As held in Ramana Dayaram Shetty the terms of NIT
cannot be ignored as being redundant or superfluous. They must be
given a meaning and the necessary significance. As pointed out in Tata
Cellular there must be judicial restraint in interfering with
administrative action. Ordinarily, the soundness of the decision taken
(2022) 6 Supreme Court Cases 401
by the employer ought not to be questioned but the decision-making
process can certainly be subject to judicial review. The soundness of the
decision may be questioned if it is irrational or mala fide or intended to
favour someone or a decision "that no responsible authority acting
reasonably and in accordance with relevant law could have reached" as
held in Jagdish Mandal followed in Michigan Rubber.
48. Therefore, whether a term of NIT is essential or not is a decision
taken by the employer which should be respected. Even if the term is
essential, the employer has the inherent authority to deviate from it
provided the deviation is made applicable to all bidders and potential
bidders as held in Ramana Dayaram Shetty. However, if the term is
held by the employer to be ancillary or subsidiary, even that decision
should be respected. The lawfulness of that decision can be questioned
on very limited grounds, as mentioned in the various decisions
discussed above, but the soundness of the decision cannot be
questioned, otherwise this Court would be taking over the function of
the tender issuing authority, which it cannot."
10.9. While relying upon the aforesaid judgments, the learned Special
Government Pleader lastly contended that the dispute raised by the petitioners is
not amenable for writ jurisdiction. As this is a purely contractual dispute the
petitioners are not entitled to seek a writ of Mandamus. The petitioners are not
pleaded or attributed any mala fides are not pleaded. The impugned tender
reference was issued pursuant to the memo issued by respondent
No.1/Government and there is no illegality. It is a policy framed by the
respondents, and there is no violation of Article 14 of the Constitution of India.
The petitioners have not questioned the policy/decision taken by the
respondents through Memo. No.3462/Prog.1/1/2014, dated 13.12.2022 and also
there is no allegation of discrimination. He further submitted that the petitioners
in W.P.No.46306/2022 have submitted their tender pursuant to the impugned
tender reference and they are not entitled to challenge the tender conditions
while participating in the tender process. Further, the petitioners have not
qualified in Technical bid. In W.P.No.236/2023 also the petitioner's firm has not
qualified in Technical bid and the petitioner is not entitled any relief much less
consideration of e-mail representations.
11. Sri A. Sudershan Reddy, learned Senior Counsel representing respondent
No.3 submits that the impugned tender reference issued by respondent No.2 is
not tailor-made and the respondents included the tender condition of enclosure
of "Agmark" certificate and the "Agmark" certificate is a quality certificate. The
particular condition is included in the tender in the larger interest of the public.
Clause No.3 (2) (b) of tender reference specifically mentioned weighment.
"2 (b): WEIGHMENT : Each egg must be checked for its weight by
weighing scales i.e., whether each egg measures 45-52 grams in weight.
Eggs that are less than 45 grams in weight shall be rejected. Only those eggs
measuring between 45-52 grams in weight as per "AGMARK" MEDIUM
'A' grade standards shall be sent for further grading and processing. It must
be noted that the suppliers should have separate weighing scales, properly
maintained for measuring the weight of eggs and shall not use weighing
scales used for weighment of other stocks like poultry feed, mixtures, etc. In
the poultry farm. The godown should have sufficient number of weighing
balances for this purpose of weighment of eggs.
2 (c): CLEANING: Eggs weighing 45-52 grams must be cleaned off
their exterior surfaces using permissible cleaning agents for any foreign
particles, faecal mater, dirt or other waste particles."
11.1. The above-said conditions were included in the larger interest of the
public. He further submits that the tender condition further stipulated that the
successful tenderer has to fulfill the following condition:
"11 (b) The successful tenderer's premises will be visited by
officials/third party officials nominated by the Commissioner, WD&CW
department to ensure that the poultry farms/processing/grading and
sorting/storage premises are maintained properly.
19. Penalty on default/extension time:
19 (4) If eggs are supplied without labelling/stamping(unstamped) as
prescribed by WD&CW department, the Commissioner, WD&CW
Department will impose a penalty to the L-1 bidder equivalent to double the
cost.
19 (6) It is to be ensured that the stocks are supplied as per the indented
quantity. If the ordered quantity is not supplied in full, within the
stipulated time the EMD and Security Deposit will be forfeited besides
blacklisting. Further for any defaults in supplies either wholly or partially
on account of quality aspect (or) quantity aspect and delay in supply, apart
from not only forfeiture of security deposit, further action will be initiated
as per terms and conditions mentioned in tender document and Acts/rules
in vogue.
19 (7) In the event of failure to supply the ordered quantity by the
successful bidder within the stipulated time, the Commissioner, WD&CW
Department reserves the right to cancel the orders for the unsupplied
quantity and place orders with the remaining supplier (s) for the supply of
the said quantity or purchase the unsupplied quantity from open
market/other Government Agencies or has the discretion to re-tender the
desired quantity through e-procurement to ensure un-interrupted supplies.
In such circumstances, the differential cost, transportation cost, incidental
charges and other excess expenditure, if any will be recovered from the
successful L-1 bidder. If the rate is cheaper, the benefit will not accrue to the
L-1 bidder."
11.2. The decision taken by the respondents is only for the purpose of supplying
quality eggs under the particular Scheme in the interest of children, pregnant
women and lactating women. The respondents have taken a particular decision
as a policy decision in the larger interest of the public. The respondents have not
violated the ICDS Scheme or operational guidelines of the One Full Meal
Programme and Memo dated 09.12.2014. He further submits that the petitioners
are not entitled to challenge the tender conditions. The tender reference issued by
respondent No.2 is for a public purpose only.
11.3. In support of his contention, the learned Senior Counsel relied upon the
judgment of the Hon'ble Supreme Court in MICHIGAN RUBBER (INDIA)
LIMITED Vs. STATE OF KARNATAKA AND OTHERS11 ., wherein it was
held at para No's. 9 and 35 as hereunder:
"9. It is the grievance of the appellant-Company that the pre-qualification criteria as
specified in Condition Nos. 2(a) and 2(b) (amended Condition Nos. 4(a) and 4(b)) of
the tender in question is unreasonable, arbitrary, discriminatory and opposed to
public interest in general. It is also their grievance that the said conditions were
incorporated to exclude the appellant-Company and other similarly situated
companies from the tender process on wholly extraneous grounds which is
unsustainable in law. In other words, according to the appellant-Company, the
decision of the KSRTC in restricting their participation in the tender to Original
Equipment Manufacturer (OEM) suppliers is totally unfair and discriminatory.
35. As observed earlier, the Court would not normally interfere with the
policy decision and in matters challenging the award of contract by the State or
public authorities. In view of the above, the appellant has failed to establish that the
same was contrary to public interest and beyond the pale of discrimination or
unreasonable. We are satisfied that to have the best of the equipment for the vehicles,
which ply on road carrying passengers, the 2nd respondent thought it fit that the
criteria for applying for tender for procuring tyres should be at a high standard and
thought it fit that only those manufacturers who satisfy the eligibility criteria should
be permitted to participate in the tender. As noted in various decisions, the
Government and their undertakings must have a free hand in setting terms of the
(2012) 8 Supreme Court Cases 216
tender and only if it is arbitrary, discriminatory, mala fide or actuated by bias, the
Courts would interfere. The Courts cannot interfere with the terms of the tender
prescribed by the Government because it feels that some other terms in the tender
would have been fair, wiser or logical. In the case on hand, we have already noted
that taking into account various aspects including the safety of the passengers and
public interest, the CMG consisting of experienced persons, revised the tender
conditions. We are satisfied that the said Committee had discussed the subject in
detail and for specifying these two conditions regarding pre-qualification criteria
and the evaluation criteria. On perusal of all the materials, we are satisfied that the
impugned conditions do not, in any way, could be classified as arbitrary,
discriminatory or mala fide."
12. Having considered the rival submissions and also the material placed on
record and the arguments advanced by the respective parties, the points that
arise for consideration are as follows :
(i) Whether the tender reference issued by the respondent No.2 dated
21.11.2022 is valid under law and/or in violation of Article 14 of the
Constitution of India ?
(ii) Whether the respondents have violated ICDS Scheme issued by the
State Government under G.O.Ms.No.12, dated 26.11.2014 and violated
the operational guidelines for implementation of One Full Meal
Programme vide Memo.No.3462/Schemes.A1, dated 05.12.2014 ?
Point Nos. (i) & (ii):
13. Before dealing with these issues, it is pertinent to mention herein that
earlier in similar circumstances, the poultry farmers have filed
WP.No.24599/2016 questioning the tender notice issued by the Respondents
therein, restricting the eligibility of poultry farmers/association with NECC
Certification and eliminating other suppliers/traders like the petitioners therein
from participating in the tender process as illegal, discriminatory, violative of
Articles 14, 19 (1)(g) and 21 of the Constitution of India. The learned single Judge
passed an interim order in WPMP.No.36043 of 2016 in W.P.No.24599 of 2016.
Challenging the said interim order, the respondents therein filed WA.No.751 of
2016. The Division Bench of this Court heard WA.No.751 of 2016 as well as
WP.No.24599 of 2016 and passed a common judgment, dated 26.09.2016, wherein
WP.No.24599 of 2016 was dismissed and WA.No.751 of 2016 was allowed.
14. The Division Bench held that the petitioners under Article 226 of the
Constitution of India would not make a comparative evaluation of the merits and
demerits of the policy decision of the Government or examine whether the
interest of the beneficiaries under the ICDS would have been better served by
permitting traders also to participate in the tender process. In the said case, the
poultry farmers have questioned the tender notice for insisting NECC certificate.
In the policy decision of the Government in G.O.Ms.No.12, dated 26.11.2014 and
the orders issued by the Government in Memo's dated 09.12.2014 and 17.12.2014,
it is held that implementing the policy decision of the Government in
G.O.Ms.No.12, dated 26.11.2014, do not necessitate interference.
15. It is pertinent to mention herein that in the present tender reference, the
only difference is that the respondents have included the clause in the tender
reference that the tenderer should possess an "Agmark" Certificate in place of
NECC. The NECC Certificate is only for the registration of farmers in the
particular organization and whereas the "Agmark" Certificate is issued by the
particular authority certifying the quality of eggs (hen). The particular "Agmark"
is the quality certificate, which is included in the tender reference in the larger
interests of the public, children, pregnant women and lactating women. To
improve the quality of eggs (hen), the "Agmark" Certificate is included in the
tender reference, therefore, it cannot be said that there is any mala fide intention
on the part of the respondents. The proposal submitted by respondent No.2 in
Lr. No.3347/SNP/2022, dated 03.09.2022 is only for modification and revision of
existing guidelines. Respondent No.1/Government-issued Memo. No.3462/
Prog.1/1/2014, dated 13.10.2022, according to permission to respondent No.2 for
procurement system of eggs under Arogya Lakshmi and Supplementary
Nutrition programme with the following conditions; viz.
a) Floating zone wise tenders to all zones at a time at State level.
b) Allowing Poultry farmers of the State as per existing system.
c) Insisting for specific egg processing, grading activities and safety and quality
standards including "AGMARK" in the procurement of eggs in the tender.
16. Pursuant to the said Memo only the impugned tender reference was issued
by respondent No.2. It is appropriate to note that what is under challenge is
only the condition of inclusion of 'Agmark' in the tender reference but not the
Memo dated 13.10.2022 wherein such requirement is specified. As the policy
decision is not under challenge but consequential notification is only challenged
the challenge should fail on that ground. The petitioners in WP.No.43886 of 2022
and WP.No.46306 of 2022 have not questioned the said Memo. The challenge to
the consequential tender reference questioning only the tender condition of
inclusion of "Agmark", is not permissible.
17. It is next contended that inclusion of clause that the tenderer should have
satisfactorily executed a single contract for having supplied eggs (hen) for a
value of not less than Rs.5 crores in any one year in the last 3 preceding years is
illegal and arbitrary. The inclusion of the said condition in the tender reference
is also not amenable to question on the ground that in the counter affidavit, the
respondent No.2 specifically averred that pursuant to the tender
reference/schedule, the respondent No.2 opened the technical bids on
21.12.2022, wherein 37 bids from 24 unique bidders were received. The learned
Special Government Pleader rightly contended that the allegation made by the
petitioners that the tender reference issued by respondent No.2 is tailor-made,
not correct in view of 24 unique bidders were received.
18. It is pertinent to mention herein that the inclusion of condition of
"Agmark" and also the inclusion of more than Rs.5 crores turnover in the
impugned tender notification to supply the quality eggs (hen) to the children,
pregnant women and lactating woman is in the interest of a larger public. The
inclusion of particular conditions is a policy decision of the Government in the
larger interest of the public. Such those conditions cannot be questioned by
invoking the extraordinary jurisdiction of this Court under Article 226 of the
Constitution of India. The Hon'ble Supreme Court in the decision in
MICHIGAN RUBBER (INDIA) LTD., (supra), specifically held that "the courts
cannot interfere with the terms of the tender prescribed by the Government because it
feels that some other terms in the tender would have been fair, wiser or logical. In the
instant case on hand, the inclusion of condition of "Agmark" and also the
inclusion of more than Rs.5 crores turnover in the impugned tender reference to
supply the quality eggs (hen) to the children, pregnant women and lactating
women is in the interest of a larger public.
19. Moreover, the impugned tender reference was not issued as tailor-made
and the petitioners have not established or proved that there is any mala fide
intention on the part of the respondents while issuing the impugned tender
reference. The decisions of the Hon'ble Supreme Court in UNION OF INDIA
Vs INTERNATIONAL TRADING COMPANY, JESPER I. SLONG Vs. STATE
OF MEGHALAYA AND ORS, and AIR INDIA LTD. Vs COCHIN
INTERNATIONAL AIRPORT LTD & ORS., relied by the learned Senior
Counsel appearing for the petitioners in WP.No.43886 of 2022 are not applicable
to the facts of this case.
20. It is specifically asserted by the respondent No.2 that 37 bids from 24
unique bidders were received. This shows huge response. Imposing higher
requirements by participants in a tender process can not be said as illegal or
arbitrary. The stand of the respondents 1 and 2 that on review of previous
experience higher standards of eligibility is found desirable to ensure supply of
quality eggs to needy children cannot be said as vitiated or intended to favour a
particular group of tenderers. In fact, in a given situation, the State can
customize tender terms to choose the best contractor in the business in the larger
public interest. In view of the same, the petitioners' contention that in the entire
state, no poultry farmers are having more than Rs.5 crores turnover in one year
of 3 consecutive years is not correct.
21. The judgment of the Division Bench in W.A. No.751 of 2016 has become
final and the same is binding. For the reasons mentioned supra and also the
principles laid down by the Division Bench of this Court, the impugned tender
reference issued by respondent No.2 is valid in law and there is no violation of
Articles 14 and 19 of the Constitution of India.
22. The learned Special Government Pleader appearing on behalf of
respondents 1 and 2 has rightly submitted that the petitioners in W.P.No.46306 of
2022 and WP.No.236 of 2023 have submitted their tenders pursuant to the tender
reference but they are not qualified in a technical bid, which is opened on
21.12.2022 and they are not entitled to claim any relief.
23. When the petitioners have participated in the tender process, pursuant to
the tender reference, wherein they were declared not qualified technically they
cannot turn around or question tender conditions or seek any other relief much
less consideration of e-mail representations.
24. For the foregoing reasons mentioned herein above, all three writ petitions
are accordingly dismissed. As a sequel, miscellaneous applications if any,
pending in all the above writ petitions shall stand disposed of.
___________________________
JUSTICE J. SREENIVAS RAO.
Date:31-01-2023
ISL/SKJ
Note:
L.R. Copy to be marked.
HONOURABLE SRI JUSTICE J. SREENIVAS RAO
WRIT PETITION No.43886 OF 2022,
AND
WP.No.46306 OF 2022 & WP.No.236 OF 2023
Date : 31-01-2023.
ISL
