Uttarakhand High Court
SPA/375/2021 on 16 November, 2021
IN THE HIGH COURT OF UTTARAKHAND
AT NAINITAL
THE HON'BLE THE CHIEF JUSTICE SRI RAGHVENDRA SINGH
CHAUHAN
AND
THE HON'BLE SRI JUSTICE ALOK KUMAR VERMA
SPECIAL APPEAL No. 375 OF 2021
16TH NOVEMBER, 2021
Between:
ONYX Techno System Pvt. Limited. ....Appellant
and
State of Uttarakhand and others. ...Respondents
Counsel for the appellant: Mr. Rajendra Dobhal,
learned Senior Counsel
assisted by Mr.
Dushyant Mainali,
learned counsel.
Counsel for the respondents: Mr. S.S. Chaudhary,
learned Brief Holder for
the State of
Uttarakhand.
Mr. T.A. Khan, learned
Senior Counsel assisted
by Mr. Vinay Bhatt,
learned counsel for
respondent Nos. 2 and
3.
The Court made the following:
JUDGMENT : (per Hon'ble The Chief Justice Sri Raghvendra Singh Chauhan)
With the consent of the learned counsel for
both the parties, this appeal is being decided at the
admission stage itself.
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2. For the sake of convenience, the parties
shall be referred to as arrayed in the writ petition.
3. The petitioner has challenged the legality of
the order, dated 01.10.2021, passed by a learned
Single Judge in Writ Petition (M/S) No. 2032 of 2021,
whereby the learned Single Judge has dismissed the
writ petition filed by the petitioner.
4. Briefly, the facts of the case are that the
Uttarakhand Sahkari Chini Mills Sangh Limited, the
respondent No. 2, had invited competitive E-bids on
03.09.2021 for outsourcing the operation and
maintenance of the Kisan Sahkari Chini Mills Limited,
Sitarganj, District-Udham Singh Nagar, having cane
crushing capacity 2500 TCD for crushing season 2021-
22. The bid document stipulated that the bids shall be
considered on two-tier basis: firstly, a technical bid
and secondly, a financial bid. As per the Schedule of
the Tender Notice, the E-bids had to be submitted
latest by 19.09.2021, and the online bids were to be
opened on 20.09.2021 at 10:30 A.M.
5. Since the petitioner was desirous of being
granted the work-order, the petitioner submitted its E-
bid on 19.09.2021, along with all the relevant
documents attached to its technical bid.
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6. According to the petitioner, there were four
bidders, who participated in the said bid. On
20.09.2021, the Tender Evaluation Committee found
the two bids to be responsive, whereas the technical
bid of the petitioner and of another bidder were
rejected ostensibly on the ground that the documents
uploaded with the E-bids were incomplete. Since the
petitioner was aggrieved by the rejection of its
technical bid, it filed the present writ petition before
the learned Single Judge. However, as mentioned
hereinabove, by the impugned order, the learned
Single Judge has dismissed the writ petition. Hence,
the present appeal before this Court.
7. Mr. Rajendra Dobhal, the learned Senior
Counsel appearing on behalf of the petitioner, submits
that the learned Single Judge has not dealt with the
heart of the matter, which was the legality of the
rejection of the technical bid. According to the learned
Senior Counsel, the learned Single Judge ought to
have examined, whether the technical bid was rejected
on justifiable and legal grounds or on unjustifiable and
illegal grounds? Instead, the learned Single Judge has
considered the existence of Clause-12 of the Tender
Notice, and concluded that in case of any dispute
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between the parties, the parties can approach an
arbitrator in accordance with Clause-12.
8. Secondly, the word "party" has been
defined under the Arbitration and Conciliation Act,
1996 (for short 'the Act'), to mean "a party to an
arbitration agreement". However, according to the
learned Senior Counsel, a tender notice is merely an
offer, and until and unless, a work contract is given, in
fact, no agreement or contract comes into existence.
A tender notice cannot be considered as an agreement.
Therefore, the learned Single Judge is unjustified in
relegating the petitioner to seek its relief in arbitral
proceedings. Therefore, the impugned order deserves
to be set aside.
9. On the other hand, Mr. T.A. Khan, the
learned Senior Counsel appearing on behalf of
respondent No. 2, submits that no fruitful purpose
would be served by setting aside the impugned order,
for the work-order has already been allotted to one of
the bidders.
10. In rejoinder, Mr. Rajendra Dobhal, the
learned Senior Counsel, submits that since the learned
Single Judge has relegated the petitioner to arbitral
proceedings, the petitioner would be preempted from
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approaching the Civil Court for seeking damage against
respondent No. 2. Therefore, the impugned order
deserves to be set aside by this Court.
11. Heard the learned counsel for the parties,
and perused the impugned order.
12. Admittedly, the issue before the Writ Court
was, whether the petitioner's technical bid was
rejected on legal or illegal grounds?
13. A bare perusal of the impugned order
clearly reveals that the learned Single Judge has not
entered into the merits or demerits of the said issue.
Instead, the learned Single Judge has merely noticed
the existence of an arbitration clause, namely Clause-
12.
14. Clause-12 of the Tender Notice is as
under:-
In case of any dispute arising between the
parties, the matter shall be referred to the
Administrator, Uttarakhand Sahkari Chini
Mills Sangh Limited, Dehradun who shall be
the sole arbitrator and his decision shall be
binding on both the parties. Provisions of
Arbitration and Conciliation Act, 1996 shall
apply. Place of arbitration shall be
Dehradun.
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15. The said clause uses the word "parties". The
word "party" has been defined under the Act as "a
party to an arbitration agreement". However, a
tender notice is not an agreement, but is merely a
proposal. Therefore, Clause-12 of the Tender Notice
would not come into effect until and unless an
agreement is entered into between a bidder and the
respondent No. 2. Therefore, the learned Single Judge
is unjustified in concluding that since the arbitration
clause does exist, the petitioner should approach an
arbitrator.
16. Moreover, the arbitration clause deals with
the appointment of the sole arbitrator, who shall be
the Administrator of the Uttarakhand Sahkari Chini
Mills Sangh Limited, Dehradun. But the arbitration
clause is itself against the tenor of Section 12(5) of the
Arbitration and Conciliation Act, 1996.
17. Although it is true that since the work-order
has already been issued, the Writ Court could not have
turned the historical clock back. However, merely
because a work-order has been issued to a third party,
it would not preempt the petitioner from challenging
the action of respondent No. 2 in rejecting its technical
bid. Therefore, the petitioner should have been left
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free to pursue any other legal remedy, which may be
available and, if so advised, to the petitioner.
18. For the reasons stated above, the impugned
order, dated 01.10.2021, passed by the learned Single
Judge, is set-aside. The petitioner shall be free to
pursue the legal remedies available to it.
19. By way of an abundant precaution, it is,
hereby, clarified that if the petitioner pursues the legal
remedies available to it, this Court does expect the
learned Civil Court to decide the dispute unaffected by
this order and strictly in accordance with law.
19. No order as to costs.
_____________________________
RAGHVENDRA SINGH CHAUHAN, C.J.
___________________
ALOK KUMAR VERMA, J.
Dt: 16th November, 2021
Rathour
