Telangana High Court
M/S Sri Venkata Ramana Medical And ... vs Employees State Insurance Corporation ... on 26 February, 2024
Author: Surepalli Nanda
Bench: Surepalli Nanda
1
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IN THE HIGH COURT OF TELANGANA AT HYDERABAD
W.P. No. 34167 of 2023
Between:
M/s Sri Venkata Ramana Medical and General Stores
... Petitioner
And
Employees State Insurance Corporation and another
... Respondents
JUDGMENT PRONOUNCED ON: 26.02.2024
THE HON'BLE MRS JUSTICE SUREPALLI NANDA
1. Whether Reporters of Local newspapers : Yes
may be allowed to see the Judgment?
2. Whether the copies of judgment may be
marked to Law Reporters/Journals? : Yes
3. Whether Their Lordships wish to
see the fair copy of the Judgment? : Yes
_________________
SUREPALLI NANDA, J
2
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THE HON'BLE MRS JUSTICE SUREPALLI NANDA
W.P. No. 34167 of 2023
% 26.02.2024
Between:
# M/s Sri Venkata Ramana Medical and General Stores
..... Petitioner
And
$ Employees State Insurance Corporation and another
... Respondents
< Gist:
> Head Note:
!Counsel for the Petitioner: Mr.N.Sridhar Reddy
^ counsel for respondent No.1: Mr.Muppu Ravinder Reddy
^Counsel for respondent No.2: Mrs.P.Vijayalakshmi
? Cases Referred:
1. (1979) 3 SCC 489
2. (1991) 3 SCC 273
3. (2007) 14 SCC 517
3
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THE HON'BLE MRS JUSTICE SUREPALLI NANDA
W.P. No. 34167 of 2023
ORDER:
Heard Learned Counsel Mr. N. Sridhar Reddy
appearing on behalf of the Petitioner, Mr. Muppu
Ravinder Reddy appearing on behalf of 1st Respondent
and Mrs. P. Vijayalakshmi on behalf of Respondent
No.2.
2. The Petitioner approached the Court seeking
prayer as under :
"To issue Writ of Mandamus or any other appropriate
writ/writs declaring the actions of 1st respondent in
qualifying the 2nd respondent in technical bid and
opening his financial, and also seeking to award the
contract for empanelment of local chemist for purchase
of drugs required by the ESIC Hospital and College for
the patients, pursuant to Tender Document issued vide
Tender Enquiry No.799-U-16/A/Local chemist/2023-24
dated 24.08.2023, Bid No.GEM/2023/B/3902528, dated
04.09.2023 has wholly illegal, arbitrary and without
jurisdiction and consequentially directing the first
respondent to disqualify the 2nd respondent and
empanel the petitioner herein as their local chemist for
the supply of drugs required by them Award costs."
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3. The case of the Petitioner as per the averments
made in the affidavit filed in support of the present writ
petition is as follows :
a) The Petitioner herein is a registered Propriety Firm and
conducts Wholesale and Retail business in supply of Medical,
Surgical and Consumables, established in the year 2007 and
has been doing business in the said field since then. The 1st
Respondent had called for bids for supply of non-anti cancer
drugs, anti cancer drugs, Vaccines, Inj, Immunoglobulins Inj,
Human Albumin and for local chemist empanelment vide
Proceedings No. Tender Enquiry No. 799-U-16/A/Local
Chemist/2023-24, dated 24.08.2023. As per the tender
conditions the bid has to be filed Online in the Government e-
Market place (GEM Portal) Bid No.GEM/2023/B/3902528,
dated 04.09.2023 according to which the last date for filing of
the Bid was 14.09.2023 at 16.00 hours. The date of opening
of the Bid was also 14.09.2023 at 16.30 hours. In so far as
the prerequisite criteria is concerned as per the Bid document,
the minimum average annual turnover of the bidder for the
last 3 (three) years shall be Rs.200 lakhs and the Original
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Equipment Manufacturer (OEM) average annual turnover for
the last 3 years shall be Rs.800 lakhs and the bidder shall
have minimum experience of 3 years. The Petitioner and the
2nd Respondent participated in the said tender notification.
The details of the Technical Evaluation undertaken by the 1st
Respondent declared the Petitioner as Qualified and 2nd
Respondent as disqualified. Later on, the 2nd respondent was
made qualified in the technical bid and was placed as L3. It is
the specific case of the Petitioner that the 2nd Respondent had
not submitted all the documents in time and was disqualified
in the technical evaluation and had submitted the documents
at a later stage which were considered by the 1st Respondent
and the Petitioner was later declared as successful bidder
considering the documents submitted by the 2nd Respondent
at a later date.
b) Thereafter, as per the GEM web portal the petitioner
was placed as L1 and the 2nd respondent as L3. Thus, the
petitioner has approached the first respondent to invite the
petitioner for entering into the agreement as per the tender
result. However, the 2nd respondent was invited to sign the
contract. Hence, the process of entering into contract with
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the 2nd respondent, who has been qualified in the technical
bid as L3, by the 1st respondent is wholly illegal. Thus,
aggrieved by action of the 1st respondent, the present writ
petition is filed.
4. The learned Counsel appearing on behalf of the
Petitioner mainly puts forth the following submissions :
a) On 18-12-2023 when the present writ petition
came up for admission the Learned Counsel appearing
on behalf of the 1st Respondent on instructions from 1st
Respondent has specifically informed the Court that the
2nd Respondent has been disqualified in the subject
tender and also black listed. The said statement is in
fact part of the docket order dated 18.12.2022 in the
present W.P.No.34167 of 2023.
b) The 2nd Respondent having been declared
disqualified cannot be entrusted with work and the 1st
Respondent cannot proceed and enter into an
agreement with the 2nd Respondent.
c) The 2nd Respondent having been disqualified in
the technical evaluation cannot be later declared as
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qualified and the same amounts to favouritism of the
1st Respondent in favour of the 2nd Respondent.
d) The 1st Respondent has gone beyond the scope of
the tender conditions.
e) The 1st Respondent ought not have considered the
documents submitted by the 2nd Respondent at a later
date.
f) The action of the 1st Respondent in declaring the
2nd Respondent as qualified at the later date having
declared the 2nd Respondent disqualified on 01.12.2023
and having declared the Petitioner and another
tenderer by name M/s. Sai Pharmacy as qualified.
g) On 16.12.2023 a communication is received by the
Petitioner declaring the 2nd Respondent as qualified in
the technical bid and the 1st Respondent thus failed to
act in a fair and transparent manner since admittedly
the 2nd Respondent had been disqualified on
01.12.2023 and as per tender notification no person
can be permitted to file any documents after the bid
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end time i.e., 14.09.2023 at 16.00 hours since the said
date is the last date for the filing of bid.
h) The Learned Counsel appearing on behalf of the
Petitioner in support of the said submissions placed
reliance in order dated 12.12.2023 passed by the High
Court of Calcutta in Saheli Nandi vs. Union of India &
Others and Judgment dated 02.05.2017 in KKSP -
Oliner JV vs. Delhi Jai Board and Another in support of
his submissions and contended that the Petitioner is
entitled for the relief as prayed for.
5) Counter affidavit has been filed by the 1st
Respondent and the relevant para 5, clause (b) and (c)
of the said counter affidavit is extracted hereunder :
"5. I submit that the petitioner had suppressed the
material facts and had misconstrued the tender
procedure and filed the above writ petition. The
respondent herein would submit the facts and the
circumstances which are been suppressed by the
petitioner hereunder.
(b)That the petitioner herein, respondent No.2 herein
and Sai Pharma had submitted its bids through the GeM
Portal. Upon such submission the respondent No.1
Medical Hospital had technically evaluated the said bids,
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in such bids the respondent No.2 has submitted
documents mentioned in the tender notification such as
office allotment orders, the time of evaluation of
technical bid. The respondent No.1 Medical Hospital
asked office order along with the indent orders
regarding supply of medicine. The respondent No.2 has
submitted the same hence, declared as a successful
bidder. It is needless to add that the respondent
No.2 was disqualified in the technical evaluation
but not blacklisted in the bid.
(c) That the respondent No.1 is the statutory authority
had followed due procedure in inviting the tenders for
the Local Chemist for purchase of drugs. Further the
respondent No.1 had evaluated the bids as per the
terms and conditions of the tender notification,
and the respondent No.2 stood as the successful
bidder by quoting the highest discounts in the
Drugs.
6) Counter affidavit has been filed by the 2nd
Respondent and the relevant paras 3 and 7 read as
under :
"3. At the outset, the present writ petition filed by the
Petitioner herein is not maintainable, neither under law
nor on the facts of the case. That this Respondent had
also participated in the tender Date 04.09.2023 vide Bid
No. GEM/2023/B/3902528 and had submitted all the
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necessary documents during the bid. That the
Respondent No.1 during the technical evaluation
had disqualified the 2nd Respondent for non-
submission of previous purchase orders, while
giving an opportunity of 48 hours for giving the
clarifications and to submit the necessary documents.
That this Respondent upon noticing the said objection
had found that the Respondent No.1 had disqualified it,
for which this Respondent had clarified the said
objection while submitting the necessary previous
purchase orders. The Respondent No.1 upon considering
the said clarification and Purchase orders had qualified
this Respondent for the Financial Bid. Thus this
Respondent stood successful bidder as L-3 in the
said tender. In fact, the GEM portal clearly mentioned
that after the technical evaluation, the disqualified bids
were uploaded in the tender portal and given an
opportunity to give their representations within 48/24
hours to buyers decision of normal or shorter bids if
they feel that their tender were wrongly disqualified in
the representation/challenge, rejection, option
obligation, challenge rejection option in the participated,
bid list page. Hence, there is no arbitrariness in granting
the tender in favour of this Respondent. Hence, Writ
Petition is liable to be dismissed on this ground alone.
7. In reply to para 6 of the affidavit annexed to the writ
petition, the petitioner admitted that after the technical
evaluation the qualified and disqualified bidders were
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uploaded in the Tender Portal and given an opportunity
to give their representations (within 48/24hrs of buyers
decision for normal/shorter bids) if they feel that their
tenders were wrongly disqualified in the
(representation/challenge Rejection option available on
the participated bid list page. In view of the said tender
GeM portal this respondent had submitted all required
documents along with the representation within time
specified. Hence, there is nothing arbitrary or illegal.
7) Para 4 of the Reply Affidavit filed by the Petitioner
reads as under:
"4. I submit that a person who is declared as
disqualified in the technical evaluation cannot be
qualified thereafter by considering the documents which
were submitted at a later date. It may be true that the
2nd Respondent has participated and was successful in
many tenders which are stated in the Counter Affidavit
but that itself does not give them any scope or
chance to submit the documents at a later date in
the present case, more so after declaring as
disqualified in the technical evaluation. It is
further submitted that it is also false to state that
in the financial bid, the 2nd Respondent was the
lowest bidder. It is submitted that admittedly the
2nd Respondent was placed as L-3 which shows
that they have bid the highest amount and not the
lowest.
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DISCUSSION AND CONCLUSION :
8. A bare perusal of the material document i.e.
Annexure-V pertaining to Tender Terms and Conditions
filed by the Petitioner in support of the present writ
petition and in particular Clause 15 reads as under :
Clause 15 : DOCUMENTS REQUIRED
The Contractor (Local Chemist) will have to
submit the following documents along with the
Tender :
i) Valid drug license for retail chemists as per Drugs and
Cosmetics Act.
ii) No conviction Certificate from State Drug Controller
that there is no case pending under the drugs and
cosmetics Act and Rules there under as well as under
Drug Price Control Order against the firm during the last
5 year. No conviction Certificate should be of the recent
calendar year.
iii) Valid Trade License.
iv) GST registration certificate.
v) Mandate Form for e-payment purposes.
vi) Audited Annual Turnover of Rs. 2 crores or more
duly certified by Chartered Accountant along with profit
and loss account and income & expenditure statement
of the firm for the last three years.
9. The bid details read as under :
Bid End Date / Time - 14.09.2023 - 16.00.00
Bid Opening Date / Time - 14.09.2023 - 16.30.00
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10. The Apex Court in the judgment reported in
(1979) 3 SCC 489 in Ramana Dayaram Shetty vs.
International Airport Authority of India clearly
observed that the words used in the tender document
cannot be ignored or treated as redundant or
superfluous - they must be given their necessary
significance.
11. The Apex Court in the judgment reported in
Bakshi Security and Personnel Services (Private)
Limited vs. Devkishan Computed (Private) Limited
reported in (1991) 3 SCC 273 observed that law is
settled that an essential condition of a tender has to be
strictly complied with.
12. In the Apex Court judgment dated 11.12.2006 in
Jagdish Mandal vs. State of Orissa reported in (2007)
14 SCC 517 it is 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. Evalutating 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;
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.' "
13. A bare perusal of the relevant portion of the Apex
Court judgement extracted above, clearly indicates that
a tender process can be interdicted in judicial review
when the process adopted or decision made by the
Authority is mala fide or intended to favour someone.
This Court opines that the present case falls under
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Clause (i) of the Apex Court judgement extracted
above.
14. A bare perusal of para 7 of the affidavit filed by
the Petitioner in support of the present writ petition
indicates that the web portal communication dated
16.12.2023 received by the Petitioner clearly and
categorically stated that the Petitioner stood as L1,
M/s. Sai Pharmacy stood as L2 and the 2nd Respondent
herein stood as L3. The counter affidavit filed by the 2nd
respondent also at para 3 clearly indicates that the 2nd
respondent stood as L3 in the tender (referred to and
extracted above). The counter affidavit filed by the 1st
Respondent however, at para 5 clause (c) (referred to
and extracted above) clearly states that the 2nd
Respondent stood as the successful bidder by quoting
the highest discounts in the drugs which is factually
incorrect.
15. Clause 15 of Annexure-V of the tender terms and
conditions clearly indicates that the contractor (local
chemist) will have to submit certain documents
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specified there under in the said Clause 15 along with
the tender and the same is an essential condition of the
tender which has to be strictly complied with.
Admittedly even as per the counter of the 1st and 2nd
Respondents herein on 01.12.2023 the 2nd Respondent
had been declared as disqualified by the 1st
Respondent. Even as per the tender notification it is
borne on record that no person can be permitted to file
any documents after the bid end time i.e., 14.09.2023 -
16.00 hours, and it is also stipulated in the tender
conditions that all the bidders are requested to
participate the tenders online through the website
https//gem.gov.in and further that there was no need
of submitting the hard copy of the bid. In the present
case the same had not been admittedly followed by the
2nd Respondent.
16. This Court opines that 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 and the Respondents herein are bound to
act validly and not whimsically for any ulterior purpose,
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the Respondents cannot give a goby to their own
tender conditions more so when Clause 15 of Annexure-
V of Tender Terms and Conditions clearly stipulates that
the contractor (local chemist) will have to submit
certain documents as stipulated in the said Clause
along with the Tender which admittedly had not been
followed by the 2nd Respondent and it is admitted in the
counter filed by the Official Respondent No.1 that the
2nd Respondent had been disqualified at the first
instance on 01.12.2023, but subsequently however, the
2nd Respondent had been declared as qualified in the
Technical Bid when the Tender Notification clearly
stipulated Bid End Date/Time as 14.09.2023 - 16.00.00
and the Bid Opening Date/Time as 14.09.2023 -
16.30.00. Though the Docket Order of this Court dated
18.12.2023 clearly brought on record the submission of
the Learned Counsel who appeared on behalf of the
Respondent No.1 on 18.12.2023, that the Respondent
No.2 had been disqualified and blacklisted and
therefore the grant of relief as prayed for by the
Petitioner in the present writ petition at the said stage
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i.e., as on 18.12.2023, was unwarranted but however,
the counter affidavit filed by the 1st Respondent on
10.01.2024 curiously is silent with regard to the said
representation of the Learned Counsel who appeared
on behalf of the 1st Respondent before the Court on
18.12.2023, but however, an affidavit has been filed by
the Junior Counsel representing the learned Standing
Counsel appearing on behalf of the 1st Respondent on
30.01.2024 that due to miscommunication it was
represented that the 2nd Respondent had been black
listed and in the said affidavit also it is clearly admitted
that the 2nd Respondent was disqualified in the
Technical Bid.
17. This Court opines that in the present case an
essential tender condition which had to be strictly
complied with had not been complied and the 1st
Respondent admittedly would have no power to
condone lack of such strict compliance. Any such
condonation, as has been done in the present case
would amount to perversity in the understanding or
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application of the terms of the tender conditions and
the same warrants interference by this Court.
18. Taking into consideration the above said facts and
circumstances and duly considering the averments
made in the counter affidavit filed by the 1st
Respondent in particular para 5 (b) and (c) (referred to
and extracted above) and duly considering that the
action of the 1st Respondent is irrational, mala fide and
is intended to favour the 2nd Respondent and hence the
same is opposed to rule of law and duly considering
the law laid down by the Apex Court in Jagdish Mandal
vs. State of Orissa, reported in (2007) 14 SCC 517,
(referred to and extracted above) the writ petition is
allowed as prayed for.
Miscellaneous petitions, if any, pending shall stand closed.
__________________
SUREPALLI NANDA, J
Dated: 26.02.2024
Note: L.R. copy to be marked
b/o
kvrm
