Arijit Banerjee JUDGMENT
Arijit Banerjee, J.
1. A Notice Inviting Tender (in short 'NIT') dated 06.06.2016 was issued by Eastern Coalfields Limited (in short 'ECL') for supplying and laying of Tarfelt, removal of old Tarfelt and grading for water proofing treatment for three years in respect of staff quarters of ECL. The appellant/writ petitioner submitted its bid. Its technical bid was rejected by the Tender Committee. The appellant challenged the tender process claiming that its technical bid was wrongfully rejected by the ECL Authorities. Being satisfied that a prima facie case had been made out the learned Single Judge passed an interim order dated 13 January, 2017 restraining ECL from proceeding any further with the subject tender until disposal of the writ application. Direction was given for exchange of affidavits.
2. The said interim order was carried in appeal before the Division Bench. The appeal was dismissed by a judgment and order dated 30 June, 2017.
3. Subsequently ECL filed an application before the learned Single Judge being CAN 9049 of 2017 praying for leave to issue a fresh tender in supersession of the tender notice impugned in the writ petition. By a judgment and order dated 3 November, 2017 the learned Single Judge allowed the said application permitting the ECL Authorities to cancel the tender impugned in the writ petition and to proceed with fresh tender. The writ petitioner was granted liberty to participate in the fresh tender process. The application and the writ petition were both disposed of by the said order. Being aggrieved by the said order, the writ petitioner is before us by way of the present appeal.
4. Pursuant to the leave granted by the learned First Court, ECL floated fresh tender. The private respondent is the successful bidder. The writ petitioner did not participate in the fresh tender process.
5. Mr. Abhijit Chatterjee, learned Sr. Advocate appearing for the appellant drew our attention to Clauses 22.1 to 22.7 of the earlier NIT which read as follows:-
"22.1 Reverse Auction will be initiated after opening of price bids, as detailed above in case of normal tenders.
22.2 There will be no participation fees for e-Reverse auction.
22.3 Upon opening of the price bids, a reverse auction platform will be created, displaying only the item wise L1 price received. No indication will be available in the portal to anybody regarding number of bids and names of the bidders.
22.4 System displays L1 landed price automatically in auction creation form and allows TIA to edit the value as 'start bid' price. L1 price will be the start bid price for tenders for goods. The BOQ shall be designed taking into consideration CENVAT Credit, VAT set off etc., as applicable, so that it is reflected in the landed price.
22.5 The L1 price/start bid price is landed/cost to the company price on which the auction will be initiated. At the end of reverse auction, the L1 bidder has to submit break up of prices conforming to the lowest landed rate quoted by him in the reverse auction.
22.6 The Reverse Auction will start within 2 hours of opening of bids. The reverse auction schedule will be intimated through SMS and e-mail by the e-procurement system. However, bidders are requested to check the details in dash board in the 'MY AUCTION' or 'live Auction List' tab.
22.7 The L1 bidder after the reverse auction has to upload the breakup of Landed Prices in the confirmatory documents. The detailed Break-up of offered landed price, uploaded by the bidder shall be considered and order, if placed, shall be with the same break-up of prices. The L1 bidder after reverse auction will be responsible to ensure that the landed rate as per the breakup of prices provided by him after the reverse auction and the L1 landed rate offered by him in the reverse auction is exactly same, otherwise it may be treated as withdrawal of offer and will attract penal action. While giving the break up, the bidder will have to consider same rate of taxes and duties as quoted while submitting the e-price bid. In case the L1 bidder fails to submit the break-up of landed price within stipulate period, the Company will be at liberty to place order on the basis of the breakup of the e-price bid submitted by the bidder along with the initial offer and the same will be binding on the bidder."
6. He submitted that the appellant became the lowest tenderer (in short 'L1') and was therefore, called upon to follow the procedure prescribed in clause 22.7 which the appellant did. He further referred to ECL's letter dated 24 December, 2016 and submitted that ECL admitted in the said letter that the appellant was L1.
7. By the said letter dated 24 December, 2016 ECL informed the appellant that the latter's offer was technically not acceptable and not 'proven' as per the conditions of NIT.
8. Learned Sr. Counsel then referred to Clause 10 of the Technical Section of the NIT which is the 'provenness criteria'. The relevant portion of Clause 10 and its sub-Clauses read as follows:-
"10. Provenness criteria: The offered item shall be considered proven provided it meets any of the criteria noted below; otherwise the offer shall be liable for rejection. The decision of ECL for considering any firm as proven will be final and binding upon the tenderers. Bidders should upload scanned copies of documents in support of proneness criteria, after getting the same certified by the Notary Public. Item wise provenness criteria is given below:
(ii) If the tenderer can submit self-attested and notarized copies of formal orders received from CIL/Hq of other subsidiaries of CIL/other Public Sector/Govt. Organization, placed within last 7 years, of same or higher capacity/size/version/specification etc with order qty for at least 25% of tender qty alongwith satisfactory performance report issued by the user dept.
(vii) For proprietary item/tendered items of specific brand/model/source, provenness criteria shall not be applicable."
9. Mr. Chatterjee submitted that Tarfelt is a specific branded product and hence as per Clause 10(vii) of the NIT the provenness criterion was not applicable to the appellant. He drew our attention to a copy of a certificate issued by the Trade Marks Registry, Government of India, certifying that the mark 'Tarfelt' is a registered mark of STP Limited having its office at 8 Camac Street, Kolkata 700017 in respect of water proofing and damp proofing materials for building and construction purposes, bituminous and asphalt based roof sealants and roof coatings. He submitted that the appellant is an authorized dealer of STP limited which is the proprietor of the mark 'Tarfelt'. In support of this submission he drew our attention to a letter issued by STP Limited.
10. Mr. Chatterjee submitted that in the application made by ECL before the Learned Single Judge praying for leave to issue fresh tender in supersession of the earlier NIT, it was stated that considering the nature and volume of the works involved, ECL had issued the tender dated 6 June, 2016. However, in view of initiation of the writ proceedings and the interim order passed therein, the authority could not complete the job covered by the said tender. Consequently the volume of work increased over time. Learned Sr. Counsel submitted that these statements are incorrect. He drew our attention to paragraph 13 of CAN 3266 of 2018 filed by the appellant wherein a comparative chart has been given which is as follows:-
Mr. Chatterjee submitted that the entire basis of the order impugned permitting ECL to issue fresh tender in supersession of the earlier NIT is bad. The volume of work has not increased and this has not been disputed by ECL in the Affidavit in opposition filed in connection with CAN 3266 of 2018.
11. Mr. Chatterjee then submitted that the appellant's bid was rejected on 24 December, 2016. On the same day, the representatives of the private respondent were called for discussion as would appear from a letter dated 24 December, 2016 which is to be found at page 17 of affidavit affirmed on behalf of the private respondent on 15 June, 2018 before the Appeal Court. This hot haste on the part of the ECL is indicative of mala fides and indicative of the fact that the authorities were favouring a chosen party being the private respondent to whom the contract has been awarded pursuant to the fresh tender.
12. Mr. Chatterjee finally submitted that the letter communicating to the appellant the decision of the ECL to reject the appellant's bid did not contain any reason as to why the appellant's bid was being rejected nor any reason was communicated to the appellant separately at any point of time. Referring to the decision in the well-known decision of the Apex Court in Mohinder Singh Gill & Anr. vs. Chief Election Commissioner & Ors., MANU/SC/0209/1977 : AIR 1978 SC 851, he submitted that reasons cannot be supplemented subsequently by way of affidavits filed in the present proceedings. The letter of rejection is devoid of any reason and as such is liable to be set aside.
13. Appearing for the ECL Authorities, Mr. Arijit Choudhuri, learned Sr. Counsel referred to the NIT dated 6 June, 2016 and submitted that Tarfelt is a common product. It is not a branded or specific product. In the trade, Tarfelt refers to any bituminous product used for water proofing.
14 Mr. Choudhuri next referred to page 71 of the stay petition and drew our attention to the descriptions of the items of work. He submitted that not only supply of materials was involved, repairing work was also to be done. Serial No. 1 under the heading item description was described as 'providing and laying four course water proofing treatment on sloped roof/flat roof with bitumen felt over roof................the preparation of surface on which the damp proofing treatment is to be laid shall be cement, sand mortar....................". He submitted that this item of work did not mention Tarfelt.
15. Regarding the provenness criterion, learned Sr. Counsel submitted that since no proprietary or specific item was involved, provenness criterion was applicable to the appellant. The proposed contract was not for supply of materials alone but also involved job work. For that reason also, provenness criterion was relevant.
16. Mr. Choudhuri referred to ECL's application before the learned Single Judge for leave to issue fresh tender and submitted that any change in the nature and volume of work would necessarily warrant issuance of fresh tender. He further submitted that in any event the contract was not concluded with the appellant. Hence, the appellant cannot have any vested right in being awarded the contract in spite of the appellant being L1 in so far as the financial bid is concerned.
17. Mr. Choudhuri submitted that it is the usual process of ECL that after receipt of the price bid and also the information/data as per technical section of the NIT, the price bid would be opened and considered in terms of the provisions contained in Clauses 21.5 and 22 of the NIT and thereafter the technical bid would be opened and if the same is found to be in order then only the tender would be offered to the successful bidder. However, in the present case the appellant's bid was found to be technically not acceptable and hence was rejected. Mr. Choudhuri relied on a decision of the Apex Court in the case of Rishi Kiran Logistics Private Limited vs. Board of Trustees of Kandla Port Trust And Others, MANU/SC/0370/2014 : (2015) 13 SCC 233, in support of his submissions, firstly that unless the decision of an authority is completely arbitrary the same should not be interfered with by the Courts, and secondly, the Court should not in judicial review, sit in judgment over the decision of a public body which is of the view that it should not proceed with a particular tender process.
18. Appearing for the private respondent Mr. Monoj Roy, learned Adv., adopted the submission made by Mr. Arijit Choudhuri, learned Sr. Counsel and supported the impugned action of ECL. Mr. Roy further submitted that the appellant's remedy is to file a suit for damages. The appellant cannot force ECL to proceed with its earlier tender as that would amount to specific performance of a contract which is impermissible under the Specific Relief Act. He submitted that even assuming that a contract had been awarded in favour of the appellant pursuant to the earlier NIT, the appellant could not have specifically enforced such contract even if the same was terminated illegally by ECL because Sec. 14 of the Specific Relief Act provides that a contract for the non-performance of which compensation is an adequate relief, cannot be specifically enforced.
19. Mr. Roy relied on three decisions of the Apex Court in support of his submission that in tender matters the Courts will be extremely slow to interfere. They are:-
(i) B.S.N. Joshi & Sons Ltd. vs. Nair Coal Services Ltd. & Ors., MANU/SC/8598/2006 : (2006) 11 SCC 548.
(ii) Michigan Rubber (India) Ltd. vs. State of Karnataka & Ors., MANU/SC/0662/2012 : (2012) 8 SCC 216.
(iii) State of Jharkhand & Ors. vs. CWE-Soma Consortium, MANU/SC/0760/2016 : (2016) 14 SCC 172.
20. We have given our anxious consideration to the rival contentions of the parties.
21. Two questions arise for our consideration. Firstly, whether or not the rejection of the appellant's bid by the ECL Authorities is sustainable? Secondly, whether or not the learned Single Judge was justified in permitting the ECL Authorities to cancel/withdraw their earlier tender and float a new tender.
22. Taking the first question first, it is not in dispute that the appellant's financial bid was the lowest. Financially speaking, the appellant was L1. However, the appellant's offer was found to be technically not acceptable since the 'provenness criterion' was not satisfied by the appellant. It is recorded in the letter dated 24 December, 2016 communicating the rejection of the appellant's offer that even after two opportunities having been allowed to the appellant to submit confirmatory documents, the same was not done. Hence, the ability/eligibility of the appellant was not proven.
23. The appellant argued that it is covered by Clause 10(vii) of the Technical Section of the NIT (set out hereinabove) and hence, the provenness criterion was not applicable to it. We are unable to agree with this contention of the appellant. Tarfelt is not a proprietary item of specific brand. Tarfelt is a product produced with saturate hessian with straight grade bitumen and coating it with special grade of oxidized bitumen compound. It is a product containing numerous organic compounds that is obtained by the destructive distillation of coal and used as a roof, water proofing and insulating compound. It is a common product used widely in water proofing trade. 'Tarfelt' may be a registered mark of STP Limited but Tarfelt in the trade has acquired a meaning that indicates a common product as discussed above. Hence, we are of the opinion that the provenness criterion cannot be exempted in so far as the appellant is concerned and the appellant does not come within the exception in Clause 10(vii) of the Technical Section of the NIT.
24. For another reason we are of the view that the provenness criterion cannot be dispensed with in so far as the appellant is concerned. Even assuming for the sake of argument that the appellant was required to supply Tarfelt being the specific product of STP Limited, the tender work envisaged not only supply of Tarfelt but also job work. Repairing and damp proofing treatment works were also involved. For this kind of work, experience and other credentials of a contractor are of vital importance. The tender work was not the kind of work contemplated by Clause 10(vii) of the Technical Section of the NIT. The proposed contract was not for mere supply of a particular product specified by the employer/principal. Hence, we are unable to accept the appellant's submission that the provenness criterion did not apply to it. It is also pertinent to note that the concerned NIT did not refer to Tarfelt manufactured by STP Limited.
25. It cannot also be said that the letter communicating rejection of the appellant's bid was totally unreasoned. The letter specifically mentioned that the appellant's bid was being rejected as its offer was technically not acceptable 'as well as not proven as per conditions of NIT'. In our view, the decision of the ECL Authorities does not suffer from the vice of arbitrariness.
26. Coming to the second question, we are of the considered opinion that the learned Single Judge did not commit any error by permitting the ECL Authorities to withdraw their earlier tender and proceed afresh by issuing a fresh tender. The rejection of the appellant's bid was communicated to it by a letter dated 24 December, 2016. The writ petition was affirmed on 4 January, 2017. An interim order was passed by the learned First Court on 13 January, 2017 staying the tender process. The interim order was confirmed by the Division Bench on 30 June, 2017. The subject work was one of repairing of staff quarters of ECL. Precious time was passing. It is not inconceivable that with the passage of time the nature and volume of work was likely to change. In fact, this was the positive case of the ECL Authorities when they approached the learned Single Judge by filing CAN 9094 of 2017 in September 2017 praying for leave to issue fresh tender in supersession of the earlier tender notice. While passing the order dated 3 November, 2017 which is impugned before us, the learned Judge observed that a period of one year has elapsed and there is every likelihood of the scope of work to undergo changes. We are in complete agreement with the learned Judge and with His Lordship's finding that the decision of the ECL Authorities to undertake a fresh tender process cannot be faulted as arbitrary. The learned Judge specifically granted liberty to the appellant/writ petitioner to participate in the fresh tender process but the appellant chose not to do so. The appellant could have participated without prejudice to its rights and contentions. Not having participated in the tender process, the appellant cannot be permitted to make any grievance in respect of the fresh tender.
27. It is also important to note that no concluded contract came into existence between the appellant and the ECL Authorities. The appellant's bid was not accepted. The appellant's financial bid might have been the lowest but from an overall point of view it cannot be said that the appellant was declared as L1. It is well settled that so long as the bid has not been accepted, the highest or lowest bidder as the case may be, acquires no vested right to have the tender concluded in his favour. In case of a tender there is no obligation on the part of the person issuing the tender notice to accept any of the tenders or even the lowest/highest tender as the case may be. In the context of a tender floated by the State, it derives its power to enter into a contract from Art. 298 of the Constitution of India and has the right to decide whether to enter into a contract with a person or not subject only to the requirement of reasonableness under Art. 14 of the Constitution. While exercising power of judicial review in the matter such contracts, the primary concern of the Court is not to see whether the decision of the authority is correct or not but to see whether there is any glaring infirmity in the decision making process or whether the decision making process is vitiated by mala fides, unreasonableness or arbitrariness. The Writ Court does not sit as an Appellate Court over the decision of an authority while exercising power of judicial review but merely reviews the manner in which the decision was made. The court does not have the expertise to correct an administrative decision. If review of an administrative decision is permitted, it will amount to substituting its own decision, without the necessary expertise, which itself may be fallible. The Government must have freedom of contract. 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 should be tested by the application of Wednesbury principles of reasonableness, must be free from arbitrariness and must not be affected by bias or actuated by mala fides. The right to refuse the lowest or any other tender is always available to the Government and public authorities. (See:-Master Marine Services (P) Ltd. vs. Metcalfe & Hodgkinson (P) Ltd., MANU/SC/0300/2005 : (2005) 6 SCC 138; Laxmikant vs. Satyawan, MANU/SC/0508/1996 : (1996) 4 SCC 208; Rajasthan Housing Board vs. G.S. Investments MANU/SC/4683/2006 : (2007) 1 SCC 477; UP Avas Evam Vikash Parishad vs. Om Prakash Sharma, MANU/SC/0393/2013 : (2013) 5 SCC 182 & State of Jharkhand & Ors. vs. CWE-Soma Consortium (supra).
28. In Jagdish Swarup's Constitution of India, 2nd Ed., at page 286 it is stated that if a decision has been taken by a public authority in a bona fide manner although not strictly following the norms laid down by the Courts, such decision is upheld on the principle that the Courts, while judging the constitutional validity of executive decisions, must grant certain measure of freedom of 'play in the joints' to the executive. In BSN Joshi & Sons Ltd. (supra), at para 56 of the reported judgment the Apex Court observed that a contract need not be given to the lowest tenderer and the employer is the best judge therefore; the same ordinarily being within its domain, Court's interference in such matter should be minimal. The High Court's jurisdiction in such matters being limited, the Court should normally exercise judicial restraint unless illegality or arbitrariness on the part of the employer is apparent on the face of the record.
29. In Michigan Rubber (India) Ltd. (supra), at paragraphs 23 and 24 of the judgment the Apex Court observed as follows:-
(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 within 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 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;
(c) 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 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 fundamental right to carry on business with the Government.
(24) Therefore, a Court before interfering in tender or contractual matters, in exercise of power 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"? and
(ii) Whether the public interest is affected?
If the answers to the above questions are in negative, then there should be no interference under Article 226."
30. No case that the ECL Authority's decision to withdraw its earlier tender and proceed afresh was mala fide or actuated by malice has been made out by the appellant. Mere bald allegations will not suffice. Allegations of malice and mala fide are of a serious nature and must be established by cogent material. The appellant has not been able to do so. We do not find that the decision of the respondent authorities is unreasonable or arbitrary or whimsical or perverse. Hence, we are of the view that the learned Single Judge correctly permitted the ECL Authorities to implement their decision to cancel the earlier tender process and issue fresh tender notice. We find no infirmity in the order of the learned Single Judge and no reason to interfere with the same.
31. For the reasons aforestated, this appeal fails and is dismissed along with the stay application with costs assessed at Rs. 15,000/-.
32. Urgent certified photocopy of this judgment and order, if applied for, be given to the parties upon compliance of necessary formalities.
Jyotirmay Bhattacharya, J.
I agree.
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