Telangana High Court

Sri Sai Veerabhadra Furnitures vs The State Of Telangana on 1 August, 2024

Author: Surepalli Nanda

Bench: Surepalli Nanda

     HON'BLE MRS JUSTICE SUREPALLI NANDA


           WRIT PETITION No.18339 of 2024

ORDER:

Heard Sri S. Sridhar, learned counsel appearing on

behalf of the petitioner and learned Additional Advocate

General Sri Rajnikanth Reddy representing the learned

Government Pleader for Women and Child Welfare

appearing on behalf of respondent Nos.1 and 2.

2. The petitioner approached the Court seeking

prayer as under:

"...to issue a Writ, Order or Direction more particularly one in the nature of Writ of Mandamus declaring the action of the 2nd respondent in disqualifying bid of the petitioner vide Tender ID No.522961 in the Tender Document bearing No.1460/ICDS-ECCE/2024 dated 27.07.2024 as illegal, arbitrary, in violation of principles of Natural Justice and contrary to the Tender conditions and set-aside the same and consequently direct the 2nd respondent to open the Technical and Financial Bid of the petitioner vide Tender ID No.522961 as per the conditions of the Tender Document bearing No.1460/ICDS-ECCE/2024 dated 27.07.2024 and declare the petitioner herein as Lower 1 (L1) for the Tender Notification and pass such other order or orders."

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3. The brief facts of the case are that the petitioner had

participated in the tender Notification issued by the 2nd

respondent vide tender document bearing No.1460/ISDS-

ECCE/2024 dated 27.07.2024. Subsequently, for the financial

bid, the petitioner had submitted the bid with all the required

documents and when the technical bid was open, the

petitioner had verified the results and found that the

petitioner is disqualified and no reasons are displayed on the

official website for the said disqualification. Aggrieved by the

same, the petitioner filed the present writ petition.

PERUSED THE RECORD.

4. The counter affidavit has been filed on behalf of

respondent Nos.1 and 2 and paragraph Nos.3, 13, 22,

23, 24, 25, 26, 27 of the counter affidavit is extracted

hereinunder:

"3. In reply to para No.2, it is humbly submitted that the present writ petition is file is challenging the disqualification of Marc-M Furniture in Tender No.522961 vide tender notice 1460/ICDS- ECCE/2024, Dt: 26.06.2024. As the petitioner has not submitted the required documents i.e. Non- blacklisted certificate should be submitted with notary on Rs.100/- non-judicial stamp paper. A certificate/undertaking should be submitted along

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with the Tender Form that the firm has not been convicted for any criminal Act or black listed for any fraudulent activities any time prior to this tender. And the same has been informed to the petitioner before opening of the financial bid.

13. In reply to para No.5 and 6, it is humbly submitted that, the bidder has not furnished the "Non-blacklisted certificate with notary on Rs.100/- non-judicial stamp paper. Which is essential for pre qualification criteria and the same has been mentioned at page No.9 of bid document and also informed during pre bid meeting conducted on 29.06.2024 in which the petitioner also participated.

22. It is humbly submitted that the IPC has confirmed the L1 and the final statement of rate quoted have been obtained from the portal. After negotiation with the L1 Bidder and after further negotiation, the L1 bidder has accepted for reducing the unit cost from Rs.14,900/- to Rs.14,500/- (i.e., reduced for an amount of Rs.400/- per unit and total amount is reduced by Rs.62,56,000/- from the total cost) including all Taxes and transportation till the doorstep of the AWCs. The same has been obtained in writing on the statement.

Therefore, the final amount for the quantities mentioned in the tender document is as detailed below:

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S Item Total Each Unit Amount Total Amount No. Quantity Quantity per unit

Table Size 4 x 2 Feet

Table Size 3 Feet in Dia 3 Books 15640 1 14,500 22,67,80,000/-

Racks Size 3X2½X1 ½

Size 2X2+4 Feet (10 to each AWC) Totals: 203320 13 14500 22,67,80,000/-

23. It is humbly submitted that, after finalization of amount for Rs.22,67,80,000/- towards supply of 2,03,320 quantities of the above items, the L2 has requested the IPC for allocation of some supply order by splitting the quantises at the same rate as agreed by the L1.

24. It is humbly submitted that, after mutual acceptance and agreement between L1 namely Shruthikesh Industries Private Ltd. and L2 namely Kendriya Bhandar, they came forward before the IPC and requested for allocation of orders @ 75% to the Shruthikesh Industries Private Ltd. and 25% to the Kendriya Bhandar.

25. It is humbly submitted that after submission of the consent letter from both the bidders, the IPC has accepted for allocation of orders @ 75% to the

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Shruthikesh Industries Private Ltd. and 25% to the Kendriya Bhandar.

26. It is humbly submitted that accordingly, work orders have been issued to the Shruthikesh Industries Private Ltd and Kendriya Bhandar, Hyderabad on 09.07.2024 (copy enclosed). The firms have started manufacturing of the Items to supply the 20% Quantity Items within 10 days as per the terms and condition mentioned in the bid document.

27. It is humbly submitted that the bidders have been clearly explained about the documents which are required and which are essential to participate in the bidding during the pre bid meeting and also the same are clearly mentioned in the Pre qualification criteria. However the bidder has failed to submit the required documents which are essential for the pre qualification criteria."

5. Learned counsel appearing on behalf of the petitioner

mainly puts forth the following submissions:

The plea of the respondents that the petitioner failed to

submit a notary affidavit disclosing that it has not been

blacklisted by any of the Government Department, had not

been communicated to the petitioner and except stating that

the petitioner has been disqualified, no reason has been

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communicated to the petitioner. It is the specific case of the

petitioner that the respondents are bound to disclose the

reasons for disqualifying the petitioner herein and in the

absence of the same on the E-procurement Portal amounts to

be arbitrary action on the part of respondents.

6. On the other hand, the learned Additional Advocate

General placed reliance on the averments made in the counter

affidavit filed on behalf of the respondents and contended that

it is specifically notified in the tender conditions that the

bidder should furnish non blacklisted certificate with notary on

Rs.100/- non-judicial stamp paper which is an essential

pre-requisite as per pre-qualification criteria and further a

certificate/undertaking should be submitted along with the

Tender Form that the firm has not been convicted for any

criminal Act or black listed for any fraudulent activities any

time prior to this tender and the petitioner is fully aware and

had perused the said conditions and in fact the specific

format of the subject tender bid document indicates on the

right side of the said document, a column for signature of the

bidder and seal below the said conditions, and the same is

mentioned at page 9 of the bid document and also informed

during pre bid meeting conducted on 29.06.2024 in which

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petitioner also had participated. The learned Additional

Advocate General further contends that since the petitioner

failed to submit "Non-black listed certificate with notary on

Rs.100/- non Judicial Stamp Paper the petitioner had been

disqualified since it is an essential pre-requisite as per the

terms and conditions of the bid document.

7. The learned Additional Advocate General placed reliance

on the judgment of the Hon'ble Apex Court reported in (2020)

16 SCC 489 in "Silppi Constructions Contractors Vs.

Union of India and another", and in particular paragraph

No.19 of the said judgment which is extracted hereinunder:

"19. This Court being the guardian of fundamental rights is duty-bound to interfere when there is arbitrariness, irrationality, mala fides and bias. However, this Court in all the aforesaid decisions has cautioned time and again that courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters. This Court is normally loathe to interfere in contractual matters unless a clear-cut case of arbitrariness or mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution. The Courts must realize their limitations

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and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in Judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. As laid down in the judgments cited above the courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give "fair play in the joints" to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer."

Basing on the aforesaid submissions, the learned

Additional Advocate General Sri. Rajnikanth Reddy

contended that the Writ Petition needs to be dismissed

in limini.

DISCUSSION AND CONCLUSION:

8. A bare perusal of the record clearly indicates

certain specific conditions of the said subject tender

document bearing No.1460/ICDS-ECCE/2024 dated

27.07.2024 and the same are extracted hereinunder:

"A contract agreement between two parties i.e.

Department and successful bidder should execute on

non-judicial stamp paper worth Rs.100/- (2Nos.) with

terms and conditions along with notary.

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i. Supply Order will be issued to the successful bidder only after submission / receipt of Security Deposit.

ii. Non-blacklisted certificate should be submitted with notary on Rs.100/- non-

judicial stamp paper. A certificate/undertaking should be submitted along with the Tender Form that the firm has not been convicted for any criminal Act or black listed for any fraudulent activities any time prior to this tender.

iii. With regard to past performance, a satisfactory performance certificate issued by respective buyer Organizations should be uploaded/ enclosed with bid.

iv. The Bidder or the OEM of the offered products must have ISO 9001 certification. Bidder's offer is liable to be rejected if they don't upload any of the certificates/documents sought in the Bid document, ATC and Corrigendum if any.

v. OEM must provide valid ISO 9001 certification."

QUALITY INSPECTION

• Inspection teams from user department will visit the bidder godown place for verification and quality inspection of stock material.

• The user Department/Tender Committee/his representatives shall have the right to inspect the work at the location where material is carried on to check the confirmation to the contract specifications.

• The bidder shall arrange necessary manpower and equipment for such inspections.

SIGNATURE OF THE BIDDER AND SEAL"

9. This Court opines that the plea of the petitioner that the

tender document does not stipulate the aforesaid conditions

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at the significant place, cannot be considered and the said

plea is rejected since it is a part of the tender document with

the heading "OTHER CONDITIONS" and the petitioner had

to duly sign the said document on the right side and even

affix the seal of the petitioner company and the same

indicates that the petitioner had been aware of the said

conditions at the time of submitting the tender document, but

however failed to comply with the same. The material

document filed along with the counter affidavit which pertains

to the opening of the subject technical bid clearly indicates as

under at serial No.8, which is extracted hereunder:

"Sri Sai Veerabhadra Furniture's - Not qualified Non Black listed certificate not furnished."

10. The Apex Court in its judgment dated 11.12.2006

passed in Jagdish Mandal vs. State of Orissa reported in

(2007) 14 SCC 517 observed as under:

"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

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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 is 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 thousand and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power

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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. Posing the above questions to itself, this Court

opines that the answers are in the negative, and the

pleas as put forth by the petitioner cannot be

considered in the present writ petition in view of the

specific averments made at paragraph Nos.3, 13, 22 to

27 (referred to and extracted above) in the Counter

affidavit filed on behalf of the respondents in I.A.No.2

of 2024 in W.P.No.18339 of 2024 (referred to and

extracted above) and since the petitioner had

participated in the tender process of the present

tender, and undertook to abide by all the terms and

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conditions of the said document the petitioner is

estopped from challenging the tender process and the

prayer as sought for by the petitioner in the present

writ petition cannot be granted to the petitioner.

12. In Afcons Infrastructure Ltd. v. Nagpur Metro Rail

Corpn. Ltd. reported in 2016 (16) SCC 818 the Apex

Court has observed and held at paras 11, 13 and 15 as

under:

"11. Recently, in Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium) reported in 2016(8) SCC 622 it was held by this Court, relying on a host of decisions that the decision making process of the employer or owner of the project in accepting or rejecting the bid of a tenderer should not be interfered with. Interference is permissible only if the decision making process is mala fide or is intended to favour someone. Similarly, the decision should not be interfered with unless the decision is so arbitrary or irrational that the Court could say that the decision is one which no responsible authority acting reasonably and in accordance with law could have reached. In other words, the decision making process or the decision should be perverse and not merely faulty or incorrect or erroneous. This Court opines that no such extreme case is made out by the petitioner herein before this Court in the present case.

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"13. In other words, a mere disagreement with the decision-making process or the decision of the administrative authority is no reason for a constitutional court to interfere. The threshold of mala fides, intention to favour someone or arbitrariness, irrationality or perversity must be met before the constitutional court interferes with the decision-making process or the decision.

15. We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given."

13. The Apex Court in its Judgment in "Tata Cellular v.

Union of India", reported in 1994 (6) SCC Page 651

went a step further and held that a decision if

challenged (the decision having been arrived at

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through a valid process), the constitutional courts can

interfere if the decision is perverse. However, the

constitutional courts are expected to exercise restraint

in interfering with the administrative decision and

ought not to substitute its view for that of the

administrative authority.

14. The Division Bench of the Apex Court in the

judgment dated 09.12.1998 in Raunaq International Ltd

v I.V.R. Construction Ltd. and others reported in

1999(1) SCC page 492 very clearly observed that any

judicial relief at the instance of a party which does not

fulfill the requisite criteria seems to be misplaced and

further it is observed that the Court should not

substitute its own decision for the decision of an expert

evaluation committee. The Head Note of the said

judgment, reads as under:

"This is not a case where any mala fides have been alleged against any member of the Board. Nor is there any allegation of any collateral motive for awarding the contract to the appellant. The only ground of challenge was that the appellant did not fulfil the qualifying criterion of having laid such pipeline for a distance of 3 kms. But the challenger, the respondent, also did not

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fulfil the qualifying criterion. Therefore, any judicial relief at the instance of a party which does not fulfil the requisite criteria seems to be misplaced.

When a writ petition is filed in the High Court challenging the award of a contract by a public authority or the State, the court must be satisfied that there is some element of public interest involved in entertaining such a petition. If, for example, the dispute is purely between two tenderers, the court must be very careful to see if there is any element of public interest involved in the litigation. A mere reference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. Price may not always be the sole criterion for awarding a contract. Often men an evaluation committee of experts is appointed to evaluate offers, the expert committee's special knowledge plays a decisive role in deciding which is the best offer. Price offered is only one of the criteria. The past record of the tenderers, the quality of the goods or services which are offered, assessing such quality on the basis the past performance of the tenderer, its market reputation and so on, all play an important role in deciding to whom the contract should be awarded. At times, a higher price for a much better quality of work can be legitimately paid in order to secure proper performance of the contract and good quality of work which is as much in public interest as a low price. The court should not substitute its own

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decision for the decision of an expert evaluation committee.

15. The recent Division Bench judgment of the Apex

Court, dated 06.03.2024 in The Travancore Devaswom

board Vs. Ayyappa Spices & Ors. reported in (2024) 3

S.C.R. 363 and in particular para No.19, which reads as

under:-

19. The principle that in matters of public tenders for procurement, judicial review is restrained is well established. In cases where a party invoking writ jurisdiction has been a participant in the tender process, courts should be slow and cautious in exercising the power of judicial review. In a recent decision, UFLEX Ltd. v. Government of Tamil Nadu, Civil Appeal Nos. 4862-63 of 2021, this Court has held that constitutional courts should exercise caution while interfering in contractual and tender matters, disguised as public interest litigations. The following observations are important for the purpose of this case:

"1. The enlarged role of the Government in economic activity and its corresponding ability to give economic "largesse" was the bedrock of creating what is commonly called the "tender jurisdiction". The objective was to have greater transparency and the consequent right of an aggrieved party to invoke the jurisdiction of the High Court under Article 226 of the Constitution of India, beyond the issue of strict enforcement of contractual rights under the civil jurisdiction. However, the ground reality today is that almost no tender remains unchallenged. Unsuccessful parties or parties not even participating in the tender seek to invoke the jurisdiction of the High Court under Article 226 of the

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Constitution. The public interest litigation (PIL) jurisdiction is also invoked towards the same objective, an aspect normally deterred by the Court because this causes proxy litigation in purely contractual matters.

2. The judicial review of such contractual matters has its own limitations. It is in this context of judicial review of administrative actions that this Court has opined that it is intended to prevent arbitrariness, irrationality, unreasonableness, bias, and mala fides. The purpose is to check whether the choice of decision is made lawfully and not to check whether the choice of decision is sound. In evaluating tenders and awarding contracts, the parties are to be governed by principles of commercial prudence. To that extent, principles of equity and natural justice have to stay at a distance.

3. We cannot lose sight of the fact that a tenderer or contractor with a grievance can always seek damages in a civil court and thus, "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."

16. The recent Full Bench judgment of the full Bench

of the Apex Court, dated 19.05.2023 in Civil Appeal

No.3897 of 2023 in Tata Motors Limited Vs. The Brihan

Mumbai Electric Supply & Transport Undertaking

(BEST) and Others. and in particular paragraph Nos.48

and 52, read as under:-

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48. This Court being the guardian of fundamental rights is duty-bound to interfere when there is arbitrariness, irrationality, mala fides and bias.

However, this Court has cautioned time and again that courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters. This Court is normally loathe to interfere in contractual matters unless a clear-cut case of arbitrariness or mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution. The courts must realise their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in Judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. The courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give "fair play in the joints" to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer.

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. To set at naught the entire tender process at the stage when the contract is well underway, would not be in public interest. Initiating

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a fresh tender process at this stage may consume lot of time and also loss to the public exchequer to the tune of crores of rupees. The financial burden/implications on the public exchequer that the State may have to meet with if the Court directs issue of a fresh tender notice, should be one of the guiding factors that the Court should keep in mind. This is evident from a three-Judge Bench decision of this Court in Association of Registration Plates v. Union of India and Others, reported in (2005) 1 SCC 679.

17. It is also brought to the notice of this Court that on

09.07.2024, itself the said contract had been awarded to the

third parties i.e., much prior to the passing of the interim

orders of this Court on 12.07.2024. A bare perusal of the

averments made in the counter affidavit filed on behalf of the

respondents para Nos.3, 13, 22 to 27 (referred to and

extracted above) clearly indicates that there is no illegality on

the part of the respondents in finalizing the subject tender

and the present writ petition is devoid of merits.

18. Taking into consideration:-

a) The submissions put forth by the learned Additional

Advocate General

b) The averments made in the counter affidavit filed on

behalf of the respondents

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c) On perusal of the relevant documents, the views and

observations of the Hon'ble Apex Court in the

judgments (referred to and extracted above):-

i) Silppi Constructions Contractors Vs. Union of

India and another", reported in (2020) 16 SCC

ii) Jagdish Mandal vs. State of Orissa reported in

(2007) 14 SCC 517

iii) Afcons Infrastructure Ltd. v. Nagpur Metro

Rail Corpn. Ltd. reported in 2016 (16) SCC 818

iv) Tata Cellular v. Union of India", reported in

1994 (6) SCC Page 651

v) Raunaq International Ltd v I.V.R. Construction

Ltd. and others reported in 1999(1) SCC page 492

vi) The Travancore Devaswom board Vs. Ayyappa

Spices & Ors. reported in (2024) 3 S.C.R. 363

vii Tata Motors Limited Vs. The Brihan Mumbai

Electric Supply & Transport Undertaking (BEST)

and Others. in Civil Appeal No.3897 of 2023

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This Court opines that the writ petition is devoid of

merits and warrants no judicial interference since the

petitioner failed to fulfill the requisite criteria and is

accordingly, dismissed. However, there shall be no

order as to costs.