HON’BLE SRI JUSTICE P.NAVEEN RAO WRIT PETITION No.32441 of 2013 DATE: 08.10.2014 Between:
Naidu Bro’s Transport, rep.by its Managing Partner, Thammina Naidu, S/o. Appa Rao, Aged about 42 years, R/o. Plot No.104, Bhavana Hights, Sharmikanagar, Chinagantyada, Gajuwaka Post, Visakhapatnam Dist.
AND Indian Oil Corporations Ltd., Visakhapatnam Terminal, Malkapuram PO, Visakhapatnam, rep.by its Chief Terminal Manager and others.
.. Petitioner .. Respondents The Court made the following:
HON’BLE SRI JUSTICE P.NAVEEN RAO WRIT PETITION No.32441 of 2013 ORDER:
Petitioner is a transport contractor and has been in the business of providing transportation of products of Indian Oil Corporation Limited. On 11.09.2013, tender notification issued by the respondent- corporation was published in the daily newspapers for enlistment of transporters for transportation of bulk black oil. The tender applications were uploaded on the website of the respondent-corporation. Details of tender procedure were uploaded in the website. Persons interested in participating in the tenders were entitled to download the tender applications between 11.09.2013 and 25.09.2013. The last date for submission of the tenders was 08.10.2013. Petitioner and other transport contractors positioned in Visakhapatnam have downloaded the tender applications. However, none of the regular transport contractors positioned in Visakhapatnam submitted their tender applications before the last date. Notice dated 09.10.2013 was published in the daily newspapers i.e., Eenadu and Deccan Chronicle on 10.10.2013 informing the people that last date for submission of tenders is extended to 18.10.2013 and the venue of submission of tenders is shifted to, A.P.State Office of respondent Corporation, located in Himayatnagar, Hyderabad. It was also updated in the website. This writ petition is instituted challenging the amendment published on 10.10.2013.
2. The amended notifications are assailed on the principal ground that if no tenders were submitted before the last date, the competent authority ought to have initiated new tender process and could not have extended the last date which had already expired. The Managing Partner of the petitioner is the president of Oil Tank Truck Association, Visakhapantam. The principal reason for non submission of tenders by the members of the association positioned in Visakhapatnam was that the price offered by the respondent-corporation was uneconomical and unviable. Their request to increase price offered was not acceded. It is alleged that date was extended and venue was shifted only to favour respondents 3 to 6. The respondent corporation illegally negotiated with those respondents regarding price of transportation while rejecting the request of members of the association.
3. In the counter-affidavit filed on behalf of the respondent- corporation, it is asserted that non-locals were interested in participating in the tender process and when they have come to submit the tender forms on 08.10.2013, they were not allowed to submit tender forms, they were seized by the members of the association and lot of commotion was generated and no tenders were submitted. The respondent-corporation has received complaints from outsiders alleging that the tender forms were forcibly taken by the members of the Association and that they were prevented from submission of their tender forms. The authorities of the respondent-corporation have also complained to the local police and sought their help in regulating the tender process. The local police have registered the crime. The Sub- Inspector and Inspector of Police have visited the local office of the respondent-corporation at Visakhapatnam. In view of the peculiar situation obtaining in Vishakapatnam, the respondent-corporation has taken the extreme decision to extend the date for submission of tenders and also to shift the venue to Hyderabad to avoid any further occurrence of such incidents. The respondent-corporation relies on the clauses in the tender notification in support of the decision taken by them.
4. Heard learned counsel Sri M.V.Raja Ram, for the petitioner and learned standing counsel Sri B.Mayur Reddy for respondents 1 and 2- corporation and none appears for the respondents 3 to 6.
5. Learned counsel for the petitioner submits that tenders were not submitted since price offered by respondent corporation was not economical and no untoward incidents took place on 08.10.2013 as alleged. The respondent corporation floated two tenders and the tender concerning branded fuel was successfully conducted and tenders were finalized on 08.12.2013. He submitted that there was no law and order situation as sought to be projected by the respondent- corporation. The so called Police complaint by M/s.Ahsas Transport was false complaint and in fact the complainant has immediately withdrawn the complaint and, therefore no reliance can be placed. He further submitted that the complaint by Smt. Jharana Panda is nothing to do with the tenders called for provision of bulk black oil transportation and the issue on which the allegation was made was relating to branded fuel. Petitioner is no way concerned with said tender. Both complaints are therefore not valid. Those complaints were taken as a basis for the respondent-corporation to extend the date and to shift the venue. Thus, the decision was not bona fidely made and it was intend only to favour the respondents 3 to 6 and deprive the petitioner and other contractors of Vishakapatnam from participating in the tender process.
6. Even assuming that the respondent-corporation is entitled to extend the date and change the venue, the petitioner and the members of the association ought to have been put on notice by personally sending notices to each of them about the change of the venue and the extension of time for submission of tenders and mere publication in the notice board, newspapers and the website is not sufficient. Learned counsel submitted that the tender forms were uploaded in the website. Any person, who was interested to down load the tender form, has to furnish all his personal particulars and register himself and only after such registration, the tender form can be down loaded. Petitioner and the members of the association have registered themselves on the website and down loaded the applications. They have paid the relevant fee and the competent authority has issued receipts of payment of Rs.1000/- as payable, for taking tender forms. Thus, the names of the petitioner and the members of the association who have registered their names for submission of tender forms have already available and, therefore, all of them ought to have been put on notice in person about the extension of date for submission of tender forms and change of venue. Not doing so, vitiates the entire selection process.
7. Learned counsel extensively referred to the C.P.C. guidelines on the procedure for calling tenders in support of his contention that the procedure followed in extending the date for submission of the tenders and shifting of the venue was not in accordance with the guidelines formulated by the C.P.C., which are binding on the respondent- corporation. These guidelines are formulated to ensure transparency in tender process, where the value of the tenders exceed Rs.25,00,000/-. The shifting of venue and extension of date was only to grant undue benefit to the respondents 3 to 6 and, therefore, it was not done in public interest.
8. Learned counsel placed reliance on Monarch Infrastructures (P) Ltd., vs. Commissioner, Ulhasnagar Municipal Corporation [1] and Others and Nagar Nigam, Meerut vs. Al Faheem Meat [2] Exports (P) Ltd., and others .
9. Learned standing counsel Sri B.Mayur Reddy for respondent- corporation submitted that the members of the association have created law and order situation at the premises where tenders were to be submitted. Having decided not to submit tenders, they prevented the persons who have come to submit the tenders and those persons have complained to the respondent-corporation about the prevention of their representatives for submission of tender forms and taking over the tender forms from some of them. A specific allegation was made against the Managing Partner of the petitioner, who is President of the Association. The respondent-corporation has to seek intervention of local police in ensuring smooth conduct of tender process. The complaints given by the individuals were also forwarded to the police. Because of the problems created by the local association members, no tenders were submitted on the last date indicated in the notification. As the situation was alarming and if same thing is continued, the members of the association would never permit the respondent- corporation to award contracts for transportation of the products of the company unless the company agrees for the price they demand for, the corporation was compelled to extend the date of submission of the tenders and also to shift the venue, so that the tender process can be conducted smoothly. There was no illegality in the said decision and in peculiar facts of the case, such decision was taken.
10. Learned counsel submitted that there is no requirement to give personal notices to the persons who intend to submit tenders but have not submitted tenders. There were no irregularities and illegalities in the decision making process by the competent authority warranting interference by this Court. He submitted that the wisdom of authority cannot be subject of judicial review. There was an overarching public interest to take such a decision. Already lot of damage is caused to the respondent-corporation on account of pendency of the writ petition and delay in awarding contracts. He denied of undertaking any private negotiations. The tender process was taken up in terms of the tender notification. He submitted that wide publicity was given for postponement of submission of tenders and shifting of the venue. Petitioner was aware of such changes. He relied on various provisions contained in tender notification in support of his contention.
11. Learned standing counsel placed reliance on Raunaq [3] International Ltd. Vs. I.V.R. Construction Ltd. And others , Tejas Constructions and Infrastructure Private Limited vs. Municipal [4] Council, Sendhwa and another and Michigan Rubber (India) [5] Limited vs. State of Karnataka and others .
12. The issue for consideration in this writ petition is whether the respondent-corporation was justified in extending the date for submission of the tender forms and shifting of venue and in considering the tenders submitted by the respondents 3 to 6.
13. Admittedly, by the last date for submission of tenders as per notification dated 11.09.2013 no tenders were submitted. At this stage, the respondent corporation had an option of going for fresh tenders or to do what is done in this case. The scope of judicial review is confined to the decision making process and not the decision perse.
14. It is settled principle of law that if a competent authority has various options to take a decision on an issue concerning respondent corporation and he chooses one option, it is not for the writ court to hold that he should not have taken that particular decision but ought to have taken some other decision. Para-VI of Part-A: Technical/Commercial Bid – Notice inviting tender vests power in the respondent-corporation to accept or reject any or all the tenders in part or in totality, or to negotiate with any or all the tenderers, or to withdraw/ cancel/modify the tender without assigning any reason whatsoever, or to accept some or all of the tank trucks offered. The terms of tender notification vested very wide discretion in the respondent-corporation. The decision to extend the date of submission of tenders and shifting of venue do not offend the guidelines prescribed by CVC.
15. The averments made in the affidavit filed in support of the writ petition would disclose that the petitioner was aware of the extension of time for submission of tenders as well as shifting of venue. No grievance was made on that issue. Therefore, the course adopted by the respondent corporation cannot be held as without power or competence.
16. The primary grievance, as evident from the pleadings in the writ affidavit, is that the respondent-corporation alleged to have under taken negotiations with respondents 3 to 6, who have submitted the tenders. It is evident from the averments in the affidavit filed in support of the writ petition that petitioner and other transporters belonging to Vishakapatnam were not happy with the price fixed for transportation of bulk black oil and were trying to negotiate. Their request to revise the tariff was not agreed upon and therefore none of the local transporters have submitted the tenders. Thus, when tariff fixed in the tender notification being the main grievance and the reason for not submitting tenders, after extending the date for submission of tenders, the respondent corporation ought not to have entered into negotiations with respondents 3 to 6. It is therefore contended that the entire exercise was not bonafide and such negotiations were not valid and on the said premise the notification dated 10.10.2013 and web copy dated 09.10.2013 are challenged. The contention of the petitioner that negotiations have taken place is denied by the respondents. The stand of the respondent corporation is that the terms and conditions as indicated in the tender notification are fully complied and there is no deviation.
17. As per various clauses in the tender notification, it is permissible for the respondent-corporation to negotiate, but such negotiation can only be with the persons who have submitted the tenders. Admittedly, petitioner has not submitted his tender even in the extended time granted. Therefore, the question of negotiation with the petitioner would not arise. Thus, even assuming that respondent-corporation has negotiated with the contractors, who have participated in the tender process, it is not open for the petitioner to complain of such negotiations when he has not participated in the tender process.
18. The scope of judicial review in tender process is very limited.
19. In Raunaq International Ltd, Supreme Court held as under:
“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.”
20. In Tata Cellular v. Union of India [6] , Supreme Court listed out the points on which writ court can interfere in contractual matters.
“77. The duty of the court is to confine itself to the question of legality. Its concern should be:
1. Whether a decision-making authority exceeded its powers?
2. Committed an error of law,
3. committed a breach of the rules of natural justice,
4. reached a decision which no reasonable tribunal would have reached or,
5. abused its powers.
Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under:
(i) Illegality : This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it.
(ii) Irrationality, namely, Wednesbury unreasonableness.
(iii) Procedural impropriety.
The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact, in R. v. Secretary of State for the Home Department, ex Brind28, Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should, “consider whether something has gone wrong of a nature and degree which requires its intervention”.
…… …….
81. Two other facets of irrationality may be mentioned.
(1) It is open to the court to review the decision-maker’s evaluation of the facts. The court will intervene where the facts taken as a whole could not logically warrant the conclusion of the decision-maker. If the weight of facts pointing to one course of action is overwhelming, then a decision the other way, cannot be upheld. Thus, in Emma Hotels Ltd. v. Secretary of State for Environment34, the Secretary of State referred to a number of factors which led him to the conclusion that a non-resident’s bar in a hotel was operated in such a way that the bar was not an incident of the hotel use for planning purposes, but constituted a separate use. The Divisional Court analysed the factors which led the Secretary of State to that conclusion and, having done so, set it aside. Donaldson, L.J. said that he could not see on what basis the Secretary of State had reached his conclusion.
(2) A decision would be regarded as unreasonable if it is impartial and unequal in its operation as between different classes. On this basis in R. v. Barnet London Borough Council,
ex p Johnson35 the condition imposed by a local authority prohibiting participation by those affiliated with political parties at events to be held in the authority’s parks was struck down.
94. The principles deducible from the above are:
(1) The modern trend points to judicial restraint in administrative action.
(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.
(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.
21. In Tejas Constructions, Supreme Court followed the earlier decision of the Supreme Court in Air India Ltd. V. Cochin [7] International Airport Ltd. In Air India Ltd., Supreme Court held that State can choose its own method on terms of invitation to tender and enter into negotiations. It is also held that State is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. Supreme Court held that award of contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations.
22. In Michigan Rubber (India) Limited, after reviewing the decisions on the principles of tender process and awarding of contracts, Supreme court culled out the principles governing the contracts. The principles that are culled out are enumerated in para 23 of the judgment:
“23. From the above decisions, the following principles emerge:
(a) The basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts which in the bounds of reasonableness, it would be legitimate to take into consideration the national priorities;
(b) fixation of a value of the tender is entirely within the purview of the executive and the courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by courts is very limited;
© in the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities unless the action of the tendering authority is found to be malicious and a misuse of its statutory powers, interference by courts is not warranted;
(d) Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work; and
(e) If the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interference by court is very restrictive since no person can claim a fundamental right to carry on business with the Government.
23. As no tenders were submitted before the last date and the reason for non-submission of the tenders apparently was because of the obstructive attitude by the local transporters, the respondent- corporation has taken the extreme step of extending the date of submission of tenders and also the shifting of venue of submission of the tenders.
24. The stand of the respondent-corporation is that two complaints were received, one from M/s. Ahsas Transport and another from Smt. Jharana Panda. Smt. Jharana Panda specifically alleges that the Managing Partner of the petitioner has taken the tender forms of the complainant and not submitted the tenders. Both complain that they were not allowed to submit the tenders. Three officers of respondent- corporation have submitted a report of what had happened on 08.10.2013. The report would disclose that out station contractors were prevented from submission of tenders. There was lot of commotion. At their instance, police have visited and have received the complaints given by the Chief Terminal Manager and registered the crime. Admittedly, no tenders were submitted before the last date.
25. The stand of the respondents regarding obstruction of contractors who intend to submit tenders and commotion on 08-10- 2013 has to be tested with reference to averments of petitioner in the affidavit filed in support of the Writ Petition. The deponent, who is the President of the local transport association, avers that members of the association were not happy with the price offered by the respondent- corporation for transportation of oil. They have approached the respondent-corporation and requested to enhance the price offered keeping in view of the escalation of the transport expenses, but the respondent-corporation refused to reconsider the price offered. Thus, though members of the association have down loaded the tender forms, none of them have submitted the tender applications. The events narrated by the petitioner and the respondent-corporation would disclose that things were not normal and that all was not well on the last day of submission of tenders. The fact that after the extension of date for submission of tenders and shifting of venue, tenders were submitted would show that all was not well in Vishakapatnam on 08- 10-2013. Therefore, the stand of the respondent corporation that the atmosphere in Vishakapatnam was not conducive to identify contractors who can undertake transportation of bulk black oil can not be brushed aside.
26. The writ court can interference in tender process and contract matters only if the court finds that the decision made by the competent authority is so arbitrary and irrational that no responsible authority acting reasonably and in accordance with relevant law could have come to such decision and that such decision affect the public interest. “A fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi- administrative sphere” (para 94, TATA CELLULAR). The parameters set out by the Supreme Court in the above decisions are not satisfied in this case. Wide discretion is vested in the respondent-corporation on various aspects concerning the tender processing and short listing of the tenders for the purpose of awarding of transport contract. The tender clauses empower the competent authority to enter into negotiations and also to change the tender conditions, if necessary, in the larger interest of the corporation. Nothing prevented the petitioner to participate in the tender process. In the facts of this case, it cannot be said that the decision making process leading to extend the date for submission of tenders and the shifting of venue is vitiated on account of arbitrary exercise of power and cannot be classified as irrational warranting interference by this court in exercise of power of judicial review.
27. The decisions relied upon by the learned counsel for the petitioner does not come to his aid with reference to the contentions urged in the writ petition.
28. I see no merit in the submissions of the writ petitioner. The writ petition fails and it is accordingly dismissed. No costs.
Miscellaneous petitions if any pending in this writ petition shall stand closed.
Date : 08.10.2014 Kkm/tvk JUSTICE P.NAVEEN RAO HON’BLE SRI JUSTICE P.NAVEEN RAO WRIT PETITION No.32441 of 2013 Date: 08.10.2014 kkm
[1] (2000) 5 SCC 287
[2] (2006) 13 SCC 382
[3] (1999) 1 SCC 492
[4] (2012) 6 SCC 464
[5] (2012) 8 SCC 216.
[6] (1994) 6 SCC 651
[7] (2000) 2 SCC 617.