Telangana High Court

M/S. A1 Royal Services vs The Singareni Collieries Company Ltd. , on 26 April, 2024

Author: Nagesh Bheemapaka

Bench: Nagesh Bheemapaka

       HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA

            WRIT PETITION No. 25570 OF 2023

ORDER:

The present Writ Petition is filed to declare the

action of the respondents, particularly Respondents 4 and 5 in

issuing the notice dated 28.08.2023 rejecting petitioner's

Application, technically accepting and considering the 7th

respondent's Application who is next in the list issued by the

Government of Telangana without considering the

representation dated 24.08.2023, as illegal, arbitrary and

against the principles of natural justice. A consequential

direction is sought to set-aside the notice dated 28.08.2023.

2. Petitioner is stated to be running outsourcing

services under the name of M/s A1 Royal Services, duly

obtaining license from the Government of Telangana dated

05.01.2016, valid from 5.01.2016 to 04.01.2017 and thereafter,

the same was renewed from time to time. Pursuant to the

tender ID No. 371121 having Enquiry No. EMN2200105, dated

24.11.2022 issued by the 4th respondent, inviting Applications

for awarding contract for deploying private security personnel

(127 members and 3 supervisors) under unit trade system at

Managuru Area for a period of 2 years, petitioner and other

outsources submitted their respective bids in time and after

verification of the same, Respondents 4 and 5 issued the

impugned notice rejecting petitioner's Application stating that

'Technically not acceptable' and accepting the 7th respondent

outsourcer.

It is contended, petitioner is the L-I bidder and also

satisfied all the terms and conditions specified in Eligible

Criteria (c) in Annexure-I which says "The tender should have

experience in similar work for at least one year in any of the last

five completed financial years at SCCL/Govt.

Organizations/PSUs and Private Organisations. Relevant

experience/Performance certificates shall be enclosed."

According to petitioner, they have experience in providing

services to Delhi Public School in 2015-22, Louis Dreyfus

Company India Pvt. Ltd in 2016-22, M/s Rachana Educational

Society in 2022-23 and Deccan Jewelery Pvt. Ltd. in 2015-20,

but Respondents 4 and 5 did not consider the same.

Petitioner is therefore, stated to have submitted

representation dated 24.08.2023 even before issuance of

impugned notice informing the 2nd respondent - Director,

Singareni Collieries Company Limited that authorities are

intending to give tenders to others in the list without giving the

tender to petitioner who is very much eligible. According to

petitioner, they are having vast experience and providing

security guards to the required organisations, but Singareni

Collieries Company Limited illegally rejected the Application on

the ground that "Technically not acceptable" which is highly

illegal and arbitrary.

3. This Court by order dated 14.09.2023, issued notice

before admission and directed the 2nd respondent to consider

the representation of petitioner dated 24.08.2023 within one

week from the date of receipt of a copy of the said order and

communicate the decision to petitioner.

4. Pursuant to receipt of notice, on behalf of

Respondents 1 to 6, a counter-affidavit was filed by the General

Manager stating that enquiry was floated vide Enquiry No.

EMN2200105, dated 24.11.2022 through Tender ID: 371121

inviting Applications for awarding contract for deploying

security personnel (127 members and 3 supervisors) for a period

of 2 years, under the unit rate system at Manuguru area of the

respondent company, in response to which, 44 vendors

submitted their bids. As per the tender procedure, drawl of lots

was conducted on 19.05.2023 amongst 44 vendors for selecting

one successful vendor and three standby vendors, wherein

petitioner stood as L-1 and the 7th respondent as L-2. It is

stated that a Committee was constituted to examine / verify the

documents submitted by petitioner firm along with three other

firms which have been kept as standby. The Committee with the

help of Vigilance Department conducted discreet enquiry and

submitted a report, wherein it was recommended to award

contract to the technically and commercially-qualified L2 firm

i.e. the 7th respondent as petitioner firm did not submit any

experience certificates related to government organizations

falling in the last five years period to fulfil at least one year

experience in both private and government sectors, the firm's

offer is technically not acceptable. In this case, the tenderer

does not have the experience of either SCCL or Govt.

Organizations or PSUs, but he has experience only in private

organization which itself disentitle him to meet the eligibility

criteria as per clause 1(c) of the NIT conditions.

It is stated that experience accrued by petitioner is

not in line with the NIT eligibility criteria, though they stood as

L-1. Petitioner submitted experience certificates along with

performance certificates and relevant Labour license in engaging

security man-power services in private organizations only and

has not submitted the relevant documents for having experience

in SCCL/government organizations / PSUs as per eligibility

criteria. Petitioner was technically-disqualified as per the

Technical evaluation report furnished by the Committee on

25.07.2023 after verification of Tender documents submitted by

him. While submitting the bid for participating in the tender,

the petitioner has given an undertaking vide Annexure-III that

"If any information furnished by me/us online towards eligibility

in this tender is found to be incorrect at any time, penal action

as deemed fit may be taken against me/us for which I/we shall

have no claim against SCCL". But the petitioner submitted fake

certificate which is in contravention of the conditions stipulated

in NIT. Though the other two experience certificates are

genuine, L1 is not eligible to award contract in view of

submission of one fake experience certificate, which was

declared by M/s Deccan Jewellers Pvt. Ltd vide letter dated

21.12.2022. It is evident from the above that petitioner not only

deserves disqualification from the existing tender but also penal

action as per NIT guidelines

5. In the counter-affidavit filed on behalf of the 7th

respondent, it is stated, in specific, that the action of the

respondent authorities in considering / accepting their

Application is not illegal as the same was done according to the

terms and conditions issued by the respondent authorities in

the Tender notification, in accordance with Eligibility and

Evaluation criteria. It is pertinent to mention here that contract

would be awarded to person who emerges successful by

qualifying the technical and commercial criteria and if either of

the criteria is not satisfied by top most person, the next

immediate person in the list of successful bidders would

automatically be considered for awarding the contract. As such,

qualifying in technical and commercial requirements is must

and necessary for any firm.

It is submitted that the 7th respondent does not

have knowledge regarding the representation given by petitioner

on 24.08.2023. It is denied specifically that petitioner's

Application was rejected as a result of collusion between the 7th

respondent and the authorities.

6. Heard Sri Srikanth Pulipaka, learned counsel for

petitioner, Sri P. Sri Harsha Reddy, learned Standing Counsel

for Singareni Collieries Company Limited and Sri Radha

Krishna, learned counsel for the 7th respondent.

7. From a perusal of the facts noted above, this Court

is of the opinion that Writ Petition is liable to be dismissed at

the threshold, for the Hon'ble Supreme Court in a catena of

judgments, has, time and again, reinforced the principles of

minimal interference of the Constitutional Courts in contractual

/ tender jurisdiction.

8. In Michigan Rubber (India) Ltd. V. State of

Karnataka 1, the Hon'ble Supreme Court held thus:

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

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

(ii) Whether the public interest is affected?

If the answers to the above questions are in the negative, then there should be no interference under Article 226.

In the instant case, the private party is trying to

assert its own rights, as such grant of judicial relief is not

permissible.

9. In TATA Motors Limited v. The Brihan Mumbai Electric Supply & Transport Undertaking (BEST) 2, the Hon'ble Apex Court observed that...

" 52. Ordinarily, a 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 unless something very gross or palpable is pointed out. The court ordinarily should not interfere in matters relating to tender or contract."

10. Likewise, in Jagadish Mandal v. State of Orissa 3,

it has been held by the Hon'ble Supreme Court as under:

(2012) 8 SCC 216

2023 SCC Online SC 671

" When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions.

Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions:

(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone;

Whether the process adopted or decision made is so arbitrary and irrational that the court can say: "the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached";

(ii) Whether public interest is affected.

If the answers are in the negative, there should be no interference under Article 226."

11. In N.G. Projects Limited v. Vinod Kumar Jain 4,

the Hon'ble Supreme Court held as under:

(2007) 14 SCC 517

(2022) SCC Online SC 336

" 16. In Galaxy Transport Agencies v. New J.K. Roadways [Galaxy Transport Agencies v. New J.K. Roadways, (2021) 16 SCC 808 : 2020 SCC OnLine SC 1035] , a three-

Judge Bench again reiterated that the authority that authors the tender document is the best person to understand and appreciate its requirements, and thus, its interpretation should not be second-guessed by a court in judicial review proceedings. It was observed as thus : (SCC paras 17-18 & 20)

17. In accordance with these judgments and noting that the interpretation of the tendering authority in this case cannot be said to be a perverse one, the Division Bench [New JK Roadways v. UT of J&K, 2020 SCC OnLine J&K 733] ought not to have interfered with it by giving its own interpretation and not giving proper credence to the word "both" appearing in Condition No. 31 of the NIT. For this reason, the Division Bench's conclusion that JK Roadways was wrongly declared to be ineligible, is set aside.

18. Insofar as Condition No. 27 of the NIT prescribing work experience of at least 5 years of not less than the value of Rs 2 crores is concerned, suffice it to say that the expert body, being the Tender Opening Committee, consisting of four members, clearly found that this eligibility condition had been satisfied by the Appellant before us. Without therefore going into the assessment of the documents that have been supplied to this Court, it is well settled that unless arbitrariness or mala fide on the part of the tendering authority is alleged, the expert evaluation of a particular tender, particularly when it comes to technical evaluation, is not to be second-guessed by a writ court. Thus, in Jagdish Mandal v. State of Orissa [Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517] , this Court noted :

(SCC pp. 531-32, para 22)

22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound". When the power of judicial review is invoked

in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold.

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

(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone;

or Whether the process adopted or decision made is so arbitrary and irrational that the court can say:'the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached';

(ii) Whether public interest is affected.

If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of

licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.'

12. In view of the above precedents set by the Hon'ble

Apex Court, this 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. Further, it is held that the Courts before interfering in

tender or contractual matters in exercise of power of judicial