P. Kumar & Associates v. Steel Authority Of India Ltd. And Ors. (And Another Case) .

1. While in the first writ petition, the petitioner has challenged the particular tender notice initiated and processed, in the second writ petition, the challenge made is the fresh tender process initiated by the authority, upon cancellation of the earlier one. The petitioner in both the writ petitions is one and the same. Both the writ petitions have been heard together and are being disposed of by this common judgment and order.

2. In the first writ petition, the petitioner has described itself as a partnership firm registered under the Indian Partnership Act, 1932, but in the second writ petition it has described itself as a proprietorship concern. The petitioner, in response to the notice inviting tender (NIT), from resourceful persons, firms and companies, for operating a consignment agency yard at Guwahati submitted its tender. The scope of the work involved transportation, handling and storage of iron and steal materials and the tenure of the contract was for a period of 4 ½ years. The tender comprised of two parts, the first part being Techno-Commercial Bid and the second part being Price Bid. The tender was to be submitted in two separate sealed covers in respect of the said two parts. The relevant clauses of the instruction to the NIT on which the petitioner has put emphasis are quoted below:

“6.7.1 Order in the contract will be placed on the basis of L-1 quotation, if required, negotiations will be held with L-1 tenderer only, however, the L-1 tenderer ma be required to explain/justify the basis of their quoted price as and when asked for. In case the tenderer fails to justify his quoted price or refuses to cooperate in this regard, they will not be considered for participating in the re-tendering if contract is not finalized from the present tender.

6.7.2 If a tenderer quotes unworkable rates, i.e, if the quoted price is less then the lower limit of the estimated price (determined internally by the company) and is considered for placement of order, the party will be asked to justify the rate quoted.

6.7.3 In case, any tenderer fails to perform as per the contract on the lower then workable rates, the tender will be liable to be closed with due notice. Further, they will not be considered for participating in the re-tendering if the contract does not run for the tenure for which the same is awarded to the present tenderer.”

3. Apart from the petitioner, there were 6 other tenderers including that of the respondent Nos. 2 and 3. After opening of the technical bids and evaluation of the same, the tender committee found the said two respondents alongwith the petitioner eligible for the price bid. Accordingly, by letter dated 14.8.2006, the petitioner was informed of the time and venue of the opening of the second part of the tender, i.e price bid and requested the petitioner to be present. Upon opening of the bids, the following position emerged:

CA GUWAHATI RATES OPENED ON 18.8.2006 AT 11 AM AT JEEVANSUDHA, KOLKATA

PARTY NAME BY RAIL 73.000MT BYROAD 18.000MT NET AMOUNT REMARK P. KUMAR Rs. 227 per MT Rs. 63/- per MT INDO ISPAT Rs. 74 per MT Rs. 92 per MT EURO STRIPS Rs. 38 per MT Rs. 47 per MT

4. The price bid of the respondent No. 2 M/s. Indo Ispat (P.) Ltd., was the lowest and the respondent authority by its letter dated 19.8.2006 requested it to justify the rates quoted and also to extend the validity of the offer till 25.9.2006 However, the respondent No. 2 having not done so, the respondent authority by its letter dated 24.8.2006 communicated its decision to cancel the tender with further intimation that the respondent No. 2 upon its deliberate failure to submit justification of rates quoted by it would not be allowed to participate in re-tendering process to be initiated. In this connection clause 6.7.1 of the instruction to the tender was referred to.

5. According to the petitioner, the rates quoted by both the respondent Nos. 2 and 3 were unworkable and the respondent authority rightly asked the respondent No. 2 to justify the rates quoted by it. The petitioner has also attributed motive behind the same on the part of the respondent Nos. 2 and 3. It is the case of the petitioner that the said two respondents represented by their respective directors are closely related and belong to the same family and that being the position, they quoted unworkable rates facilitating cancellation of the tender process so that the respondent No. 2, who was the existing contractor gets the benefit of extension, till such time, the re-tendering process was initiated and completed. It is the case of the petitioner that since it remained in the fray as the lone valid contender, the contract ought to have been awarded to it. Be it stated here that the petitioner had earlier filed the writ petition being WP(C) No. 4279/2006 seeking appropriate directions in this regard, but withdrew the same, as by the time the case was listed, the tender process was cancelled.

6. It is in the aforesaid background, the prayer made in the first writ petition being WP(C) No. 4569/2006 is to interfere with the action of the respondent-authority towards cancellation of the tender process by the impugned letter dated 24.8.2006 Significantly, the petitioner has also made the prayer for a direction to initiate and complete the retendering process within the shortest possible time, preferably on or before 30.9.2006 Thus, really speaking, the petitioner does not have any objection towards initiation of re-tendering process, which is the subject matter of challenge in the second writ petition.

7. During the pendency of the aforesaid writ petition, when the respondent authority, in terms of their aforesaid letter dated 24.8.2006 initiated fresh tender process by Annexure-B NIT dated 29.1.2007, the petitioner filed the second writ petition being WP(C) No. 649/2007, making a grievance the same. According to the petitioner, there was no justification in cancelling the tender process, and instead the contract ought to have been awarded to the petitioner, it having offered valid tender with workable rates. This stand of the petitioner is directly in conflict with the prayer made in the first writ petition for initiation and completion of the re-tendering process within the target date indicated above.

8. The respondents have filed their counter affidavits in both the writ petitions. While denying the contentions and allegations made in the writ petitions, it is the stand of the respondents that there was nothing wrong in cancelling the earlier tender process and initiating the fresh one. According to the respondents, they have done so in accordance with the vigilance guidelines dated 24.8.2000 issued by the Government of India in the Central Vigilance Commission, copies of which have been annexed to the counter affidavit. The relevant clause of the said guidelines (clause No. 3) is quoted below:

“3. Some of the organization have sought clarification as to whether they can consider the L-2 offer or negotiate with that firm if L-1 withdraws his offer before the work order is placed, or before the supply or execution of work order takes place. In this regard, it is clarified that such a situation may be avoided if a two-bid system is flowed (Techno-commercial) so that proper assessment of the offers is made before the award of work order. Therefore, if L-1 party backs out, there should be rendering in a transparent and fair manner. The authority may in such a situation call for limited or short notice tender if so justified in the interest of work and take a decision on the basis of lowest tender.”

9. According to the respondent authority, the respondent No. 2 having failed to justify the rates quoted by it and also to extend the validity of the offer, the tender process had to be cancelled in terms of the aforesaid vigilance guidelines. The respondents have also raised the technical pleas of maintainability of the writ petitions in absence of the necessary party and also in view of contradictions on the part of the petitioner in respect of its identity. Be it stated here that, although in both the writ petitions, the Steal Authority of India Limited has been arrayed as party respondents, but the same is only in relation to its branch office situated at Guwahati and not the real authority within the meaning of article 12 of the Constitution of India.

10. Both Mr. P.G Baruah. learned senior counsel assisted by Mr. S. Dasgupta as well as Mr. R. Sarma, learned counsel for the petitioner arguing their respective case for the petitioner submitted that the respondent authority was not justified in canceling the earlier tender process. According to them, the rates quoted by the respondent Nos. 2 and 3 being not workable, the petitioner being the lone eligible tenderer with workable rate, ought to have been offered the contract. They also emphasized on the purported cohesion and league on the part of the respondent Nos. 2 and 3 in the entire episode to frustrate the tender process. Mr. Baruah, learned senior counsel has placed reliance on four decisions in support of his argument and they are-S.G Jaisinghani v. Union of India, AIR 1967, 1427; Jugal Chandra Chetia v. State of Assam, AIR 1983 Gau 50; Ram & Shyam v. State of Haryana, (1985) 3 SCC 267 and Sarungbam Joykumar Singh v. State of Manipur, (2007) 1 GLR 138.

11. Mr. S.N Sarma, learned senior counsel assisted by Mr. H. Sarma, learned counsel representing the respondent authority, in course of his argument has rather seen unholy alliance between the petitioner and the respondent No. 2. According to him, it is the petitioner trying its best to thwart the fresh tender process to facilitate extension in favour of the respondent No. 2, who was the existing contractor. He submitted that the authority having followed the vigilance guidelines and there being no mala fide and/or colourable exercise of power towards initiation of fresh tender process, the writ court would be reluctant to interfere with the same. He further submitted that the petitioner having not participated in the fresh tender process, is precluded from making a challenge to that. He has placed reliance on the decision of this Court reported in Sargous Tours & Travels v. Union of India, (2004) 2 GLR 283.

12. Mr. A.K Goswami, learned senior counsel assisted by Mr. N. Bora, learned counsel, representing the respondent No. 4, during his course of argument apart from raising the question of maintainability of the writ petitions, in the form in which the same has been presented, justified the action of the respondent-authority towards initiating the fresh tender process. According to him, the petitioner cannot force the respondent authority to adopt a particular course of action favouring the petitioner, unmindful of the attending facts and circumstances.

13. Before proceeding to deal with the writ petitions on merit, it will be appropriate to deal with the technical pleas raised by the learned counsel for the respondents. According to the petitioner, the respondent-authority is an “authority” within the meaning of article 12 of the Constitution of India and it is on that basis, it has invoked the writ jurisdiction of this court. The said authority is the Steel Authority of India Limited, a Government of India enterprise. However, the petitioner in its wisdom has not arrayed the said authority as party respondent, but has only arrayed its branch office. It is in this context, the respondents have raised the technical plea of non-joinder of necessary party.

14. In Shri Ranjeet Mal v. General Manager, Northern Railway, (1977) 1 SCC 484, the Apex Court noticing that the appellant was a servant of Union of India and his removal was from service of the Union, but the said Union of India being not party to the proceeding in which the order of removal was put to challenge, observed that any order which could be passed by any court would have to be enforced against the Union since it represented the Railway Administration. It was observed that the Union carries on administration through different servants and they represent the Union in regard to its activities. Any order, which would be passed on an application under article 226, which would have the effect of setting aside of removal would fasten liability on the Union of India and not on any servant of the Union. In that view of the matter, it was held that the High Court was justified in holding that the Union of India was a necessary party and in its absence, the writ petition was not maintainable.

15. In the instant case also, it is the Steel Authority of India Limited, a Government of India enterprise, which is the “authority” under article 12 of the Constitution of India, but the same has not been arrayed as party respondent. Only its branch office has been made the party respondent. Thus, it cannot be said that the technical plea raised by the learned counsel for the respondents regarding non-joinder of necessary party is a misplaced one, rather is a well founded one.

16. As noted above, the petitioner itself is not sure of its identity. While in the first writ petition being WP(C) No. 4569/2006 it has described itself as a partnership firm registered under the Indian Partnership Act, 1932, but in the second writ petition it has identified itself as a proprietorship firm owned by its proprietor Sri Pradip Kumar, who in the first writ petition has identified himself as one of the partners of the petitioner firm, in his affidavit filed in support of the writ petition. On the other hand, in the affidavit filed in support of the second writ petition, he has identified himself as the proprietor of the petitioner. Even during the course of hearing none of the learned counsel appearing for the petitioner could through any light as to the real identity of the petitioner, although, they were well confronted with the same as per the arguments advanced by the learned counsel for the respondents.

17. Let us now examine the case of the petitioner on merit. As noted above, one of the prayers in the first writ petition is to issue a direction to the respondent-authority to initiate re-tendering process and to complete the same within shortest possible time preferably within 30.9.2006 Such prayer of the petitioner stood granted, when the respondent-authority initiated the fresh tender process, rendering the writ petition infructuous. However, the fresh tender process initiated by the respondent-authority by NIT dated 29.1.2007 was put to challenge in the second writ petition. It is in this context Mr. Sarma, learned senior counsel representing the respondent-authority argued that it has been the design on the part of the petitioner to thwart the tender process at any cost paving the way for the existing contractor to continue with the contractual works on the basis of forced extension.

18. Although, it was argued that that there is a nexus between the private respondents, but nothing could be established towards that end. Mere allegation and/or raising of suspicion, without anything more, cannot establish the case of the petitioner, rather it was well argued by the learned counsel for the respondent-authority that in fact the nexus was other way round. The respondent No. 2 being a business concern, would not have taken the risk of forfeiting its right of participation in the fresh tender process by its alleged action. There is also nothing wrong to have two separate business establishments and/or concern from the same family, which by itself cannot establish the kind of nexus, which the petitioner has sought to attribute.

19. It was also argued by the learned counsel for the petitioner, that the rate offered by the successful bidder is much lower than the rate at which the work was being executed, which according to them would also go to show the unholy nexus between the parties. I am afraid such an argument, which is also not the foundation of the writ petition cannot be accepted. It is for the parties to offer rates, which they feel workable and viable and similarly, it is for the respondent-authority to accept or reject the same. It is in this context, Mr. Goswami, learned senior counsel representing the private respondent argued that various parameters and yardsticks are applicable and considered by the successful party to a tender process and the unsuccessful party cannot make the basis of the foundation of the writ petition merely on some presumptions, surmises and conjectures. It will be pertinent to mention here that the petitioner did not participate in the fresh tender process, but has questioned the validity of the same in respect of the rates, etc.

20. The respondent-authority in its impugned decision has solely acted on the Central Vigilance Commission guidelines referred to above. During the course of hearing, learned counsel for the petitioner submitted that the said guidelines circulated vide Annexure-R/1 letter dated 24.8.2000 is no longer in existence. Such submission was made by producing the circular letter No. 37/10/2006 dated 3rd October, 2006 and circular letter No. 4/3/07 dated 3rd March, 2007. All these circulars are by way of clarifications, which are always in reference to the original circular. Even in the circular dated 3.10.2006, it was emphasized that in no case, should there be any compromise to transparency, equity or fair treatment to all the participants in a tender. In the circular dated 3.3.2007 on the subject of tendering process negotiations with L-1. It was reiterated that in case L-1 backs-out, there should be a re-tender. If that be so, there was nothing, wrong on the part of the authority to go for re-tendering.

21. The Central Vigilance Commission guidelines are statutory in nature, they having been issued by the Central Vigilance Commission under section 81(h) of the CVC Ordinance, 1998. It is in this connection, Mr. Sarma, learned senior counsel for the respondent-authority has placed reliance on the decision of this court in Sargous Tours & Travels (supra) to submit that the action on the part of the respondent-authority is a valid one and there cannot be any direction from the writ court to make a deviation from the said guidelines.

22. The decisions on which Mr. Baruah, learned senior counsel for the petitioner has placed reliance, have been noted above. In S.G Jaisinghani (supra), which was a case relating to appointment to a service from two sources, the Apex Court emphasized on the absence arbitrary power as the first essential of the rule of law upon which our whole constitutional system is based. The case in hand is not a case of any arbitrary exercise of power. Likewise, in Jugal Chandra Chetia (supra), the Division Bench of this court dealing with the settlement of forest coupes as per the provisions of relevant rules emphasized on acceptance of tender on just, proper and appropriate grounds. In the instant case, the respondent-authority decided to initiate fresh tender process on good and valid grounds and it cannot be said to be a case of proceeding with the matter on unjust, improper and inappropriate grounds.

23. In Ram & Shyam (supra), the Apex Court emphasized on equal opportunity to all concerned and endeavour to fetch the best available price in public interest. It was further emphasized that there must be fair play in administrative action. These principles, so well known in the field have also been reiterated in Sarungbam Joykumr Singh (supra). It has already been held that, the case in hand is not one of denial of opportunity to the petitioner and/or administrative foul play. The first tender process, was cancelled on valid ground as per the Central Vigilance Commission guidelines and in the fresh tender process, the petitioner did not participate. In such a situation, it cannot be said to be a case of violation of the said principles. For all the aforesaid discussions, findings and conclusions, both the writ petitions merit dismissal, which I accordingly do.

24. Writ petitions are dismissed, without, however, any order as to costs.