GAHC010026852016

THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

Case No. : WP(C) 6064/2016

1:M/S JAYSHREE ENTRADE PRIVATE LIMITED A COMPANY REGD. UNDER THE COMPANIES ACT, 1956 HAVING ITS REGD. OFFICE AT NABIN BHAWAN, LAMB ROAD, AMBARI, GHY-1, REP. BY ITS MANAGING DIRECTOR, SHRI PARASH KUMAR BHATTACHARJEE, S/O LT. S.N. BHATTACHARJEE, R/O ASHOKA APARTMENT, BOKUL PATH, BHAGADATTAPUR, BELTOLA, GHY-28

VERSUS

1:THE UNION OF INDIA and 7 ORS MINISTRY OF RAILWAYS, REP. BY THE SECY. TO THE GOVT. OF INDIA, DEPTT. OF RAILWAYS, NEW DELHI-1

2:THE NORTH EASTERN FRONTIER RAILWAY MALIGAON GUWAHATI REP. BY THE GENERAL MANAGER N.F. RAILWAY GHY-11

3:THE CHIEF ELECTRICAL ENGINEER N.F. RAILWAY MALIGAON GHY-11

4:THE FINANCIAL ADVISOR AND CHIEF ACCOUNTS OFFICER N.F. RAILWAY MALIGAON GHY-11

5:THE DIVISIONAL FINANCE MANAGER N.F. RAILWAY GHY-11

6:THE SENIOR DIVISIONAL ELECTRICAL ENGINEER N.F. RAILWAY GUWAHATI-01

7:THE DIVISIONAL ELECTRICAL ENGINEER N.F. RAILWAY MALIGAON GHY-11

8:THE DIVISIONAL ELECTRICAL ENGINEER COACHING N.F. RAILWAY GUWAHATI-0

Advocate for the Petitioner : MR.P K BHATTACHARJEE

Advocate for the Respondent : MR.S C BISWAS

BEFORE HONOURABLE MR. JUSTICE KALYAN RAI SURANA

ORDER

Date : 12-02-2019

For the Petitioner	: Mr. P K. Bhattacharjee Adv.
For the Respondents	: Mr. S.C. Biswas, SC, N.F. Railway
Date of hearing

Date of judgment

& : 12.02.2019

JUDGMENT & ORDER (ORAL)

Heard Mr. P.K. Bhattacharjee, claiming to be one of the Managing Directors of the petitioner. He is hereinafter referred to as the petitioner- in- person. Also heard Mr. S.C. Biswas, learned Special Counsel assisting Mr. A. Dasgupta, learned senior counsel for the Respondents i.e. N.F. Railway.

2. In this writ petition, it is projected that the N.F. Railway had issued a NIT a vide Tender

Notice No. SR.DEE/GH/02 of 2015-16 for the works under (i) Tender No. EL/GH/671(R) dated 28.04.2015, for "At PNO-Augmentation of power supply and pumping system for KYQ Laundry, Station and Coaching Complex. (Part-A)" and (ii) Tender Notice No. EL/GH/672 (R) dated 28.04.2015 for "At PNO- Augmentation of power supply and pumping system for KYQ Laundry, Station and Coaching Complex. (Part-B)". The petitioner had submitted his bid in respect of the said works. The tenders were opened on 05.06.2015 and the petitioner was the 2nd lowest bidder (L-2 for short). As the lowest i.e. L-1 bidder did not fulfill the criteria, his bid was rejected and the bid submitted by the petitioner remained as the lowest valid bid. Therefore, the petitioner was expecting the contract to be awarded to him. However, the tender process was cancelled vide the impugned communication dated 06.04.2016, without assigning any reason.

3. It is submitted that the evaluation process of the said tender was being carried out in violation of all norms in the guise of examining the credentials of the petitioners. It is submitted that as the respondent No. 7 was under the scrutiny of the Vigilance Department of N.F. Railway, the petitioner was suspicious of respondent No. 7 and, as such, he had written a letter to respondent No. 6 i.e. the Senior Divisional Electrical Engineer, N.F. Railway to ensure the transparency in the matter of evaluation of the matter. It is projected that the respondent No. 7 could not have appointed as the Convener of the "tender evaluation committee", as such, the petitioner had made a complain to the respondent No. 6 and thereafter, by a registered letter dated 23.01.2016, the petitioner had also made a complaint before the Vigilance Department of the N.F. Railway.

4. The petitioner- in- person has submitted that the respondent No. 7 could not have the requisite power to process the tender and therefore, for some extraneous reasons the authorities were causing inordinate delay in accepting the valid bid of the petitioner. Therefore, when the petitioner had submitted a complaint before the Vigilance Authorities, the officers evaluating the tender had caused inordinate delay in taking a decision in the awarding of contract under the said tender and ultimately the tender was discharged on 06.04.2016, which was communicated to the petitioner vide memorandum dated 06.04.2016. It is submitted that as the tender were issued only after the tender conditions were vetted by the competent authority, hence, the tender evaluation committee could only have accepted or rejected the bids in accordance with law, but they could not have discharged the tender. It is submitted that in view of his complaint before the Vigilance Department, on 28.04.2015, the tender evaluation committee had hurriedly taken a decision for discharging the tender almost a year after floating the tender. Hence, the petitioner has challenged the legality of the communication dated 06.04.2016 by which the tender in question was discharged. It is further submitted that pursuant to the order dated 10.12.2018 passed in this case, he has given an undertaking that he would not be claiming any escalation and that he would carry out the contract work in terms of his bid.

5. The learned Special counsel N.F. Railway has submitted that as per instructions received, under the revised allotment for the financial year 2018-19, at present there is no fund available for the work proposed to be under the said tenders. Accordingly, it is submitted that even if the petitioner is ready to execute the work at the rates quoted by the petitioner in his bid, the respondents would not have any funds to make any payment to the petitioner against the aforesaid tender, the process of which had already been scrapped. It is further submitted that at the relevant time, the officials of the respondents were in the process of credential verification of the petitioner. At that stage, by virtue of the minutes of the Tender Committee meeting held on 26.03.2016, a decision was taken to recommend for discharge of the said tender on technical ground. Consequently, vide the impugned Memorandum No. EL-29-GH-778-Contract-14/15 dated 06.04.2016, the Railway authorities had informed the petitioner- in- person that his deposited earnest money of Rs.1,56,000/- was being released and the tender was discharged.

6. The learned Special counsel for the N.F. Railway has referred to the minutes of the Tender Committee meeting held on 26.03.2016, which is annexed to his affidavit-inopposition, by which while recommending discharging of the instant tender on technical grounds, the observation of the tender committee on technical specification and the electrical pumps sets and motors, intended to be purchased under the tender in question, is quoted herein below:-

8. OBSERVATIONS OF TENDER COMMITTEE ON TECHNICAL SPECIFICATIONS OF THE ELECTRICAL PUMP SETS INCLUDED IN THE INSTANT TENDER.

In the tender schedule, the nomenclature of the works against item No. 1&2 are supply, installation and commissioning of electrical centrifugal pumps of discharge capacity 80,000 GPH at 60 meter head and pump set of 55,000 GPH at 55 meter head respectively. The specification no. SDEE/GH/SPN/106 dt 21.12.2011 is mentioned in the nomenclature of the schedule item no. 1 for centrifugal pump of 120 HP(SN-78 to 82) & SDEE/GH/SPN/122 dt 12.05.2015 is for pump set of 75 HP (SN-75 to77). All the three participated tenderers has agreed to supply pump sets as per above said specification. It is also clearly mentioned in the description of the schedule item no. 1&2 that pumps should be coupled with energy efficient electrical motors in terms of Rly Board letter no. 2006/Elect(G)/150/5 dt 17.05.2007 (SN-385) which has specifically advised to procure energy efficient pump sets only for Railway pumping installations. One careful study of both the specifications by the Tender Committee, it is observed that in item No. 11 of both the specifications, the type of motor to be coupled with the pump is confirming to IS:325 of 1973 (SN-282 & 278). But IS:325 actually specify all the 3 phase induction motor in general (SN-392). For getting energy efficient 3 phase squirrel cage induction motor the appropriate IS specification is IS: 12615 (SN-393).

Of course, the specification of all different variety of induction motors are covered under IS:325 which also include IS: 12615. Until and unless IS: 12615 is specifically mentioned for energy efficient motors, there is hardly any possibility go get energy efficient motors from the tenderers as these variety of motors are much more costlier than normal induction motors. The energy efficient star rated induction motors of efficiency class IE2, IE2(+), IE2(+),IE3, IE3(+) & IE3(++) as specified in the cluster of motors standarasied by Bureau of Energy Efficiency at SN-380 to 384. It is also observed that in the specification No. SDEE/GH/SPN/122 dt 12.05.2015 at item No. 8(s) the efficiency of pump is given as 71.59% (SN-279). On the other hand as per data given in pump performance sheet of KIRLOSKAR make pumps placed at SN.387, the pumps set of 84% efficiency level coupled with 75 HP motor is available in market. From the above discussion it is quite clear that the enclosed specifications SDEE/GH/SPN/106 dt 21.12.2011 & SDEE/GH/SPN/122 dt 12.05.2015) with item No. 1&2 is quite inadequate and cannot ensure supply of energy efficient pump sets. Again, Rly. Board vide their letter No. 2006/Elect(G)/ 150/5 dated 17.05.2007 (SN-385) has specifically advised to procure energy efficient pump sets only for Railway pumping installations. If the pump set supplied by the tenderers as per enclosed specification, Railway have to bear substantial revenue loss in term of energy charges. On the other hand if

pumps coupled with energy efficient motors as specified in IS: 12615 and recommended by BEE are installed, there will be a substantial gain of revenue and payback period against each pump will be sharply reduced than the normal pumps. At this point of time Tender Committee is of the opinion that procurement of energy efficient pump sets against this tender work would be a much more wise decision."

7. It is submitted by the learned Special Counsel N.F Railway is that since the year 2007, there was a standing order from the Railway Board by which the railway authorities were required to procure energy efficient pumps set in the railway pumping installations. Therefore, the Tender Committee was of the view in its meeting that if energy efficient motors and pumps were not installed, there would be substantial revenue lose in terms of electricity charges. They were of the further view that if pumps coupled with energy efficient motors as specified in IS:12615 and recommended by BEE are installed, there will be sufficient gain of revenue and payback period against each pump will be sharply reduced than normal pumps. Accordingly, in view of the observations made by the Tender Committee, it is submitted that the decision to discharge the tender was not vitiated with any mala fide or ulterior motive against the petitioner, but it was actuated by commercial and economical factors, in the best interest of the railways. It is further submitted that the railways was the sole authority to decide whether it wanted to continue with the tender process or if it would be in their interest to scrap the tender. By referring to the decision of the Hon'ble Supreme Court in Maa Binda Express Carrier and Anr. Vs. Northeast Frontier Railways and Ors. (2014) 3 SCC 716, it is submitted that the scope of interference by the Courts in the award of contract by the State and its instrumentalities was well settled and that it has been held that the submission of tender in respect of the notice inviting such tender is not more than making an offer, which the State or its agency are under no obligation to accept. It is also submitted that the award of the contract is essentially commercial transaction which must be determined on the basis of consideration that are relevant to such commercial transaction and accordingly, when the respondents have taken a decision essentially on relevant a commercial factors, this Court ought not to interfere with the said decision.

8. Before appreciating the submissions made by both sides, it would be relevant to extract the relevant paragraphs 8 to 11 of the case of Maa Binda Express Carrier (supra):-

8. The scope of judicial review in matters relating to award of contract by the State and its instrumentalities is settled by a long line of decisions of this Court. While these decisions clearly recognize that power exercised by the Government and its instrumentalities in regard to allotment of contract is subject to judicial review at the instance of an aggrieved party, submission of a tender in response to a notice inviting such tenders is no more than making an offer which the State or its agencies are under no obligation to accept. The bidders participating in the tender process cannot, therefore, insist that their tenders should be accepted simply because a given tender is the highest or lowest depending upon whether the contract is for sale of public property or for execution of works on behalf of the Government. All that participating bidders are entitled to is a fair, equal and non-discriminatory treatment in the matter of evaluation of their tenders. It is also fairly well-settled that award of a contract is essentially a commercial transaction which must be determined on the basis of consideration that are relevant to such commercial decision. This implies that terms subject to which tenders are invited are not open to the judicial scrutiny unless it is found that the same have been tailor made to benefit any particular tenderer or class of tenderers. So also the authority inviting tenders can enter into negotiations or grant relaxation for bona fide and cogent reasons provided such relaxation is permissible under the terms governing the tender process.

9. Suffice it to say that in the matter of award of contracts the Government and its agencies have to act reasonably and fairly at all points of time. To that extent the tenderer has an enforceable right in the Court who is competent to examine whether the aggrieved party has been treated unfairly or discriminated against to the detriment of public interest. [See: Meerut Development Authority v. Association of Management Studies and Anr. etc. (2009) 6 SCC 171 and Air India Ltd. v. Cochin International Airport Ltd. (2000) 1 SCR 505].

10. The scope of judicial review in contractual matters was further examined by this Court in Tata Cellular v. Union of India (1994) 6 SCC 651, Raunaq International Ltd.'s case (supra) and in Jagdish Mandal v. State of Orissa and Ors. (2007) 14 SCC 517 besides several other decisions to which we need not refer.

11. In Michigan Rubber (India) Ltd. v. State of Karnataka and Ors. (2012) 8 SCC 216 the legal position on the subject was summed up after a comprehensive review and principles of law applicable to the process for judicial review identified in the following words:

"19. 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.

20. 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."

9. It is seen that in the present case in hand, there is no doubt that calculated from the date of issuance of tender notice, there is a huge delay on part of the respondents to take a decision to discharge the tender. However, from the perusal of the reasons for recommending discharge of the tender process, as taken in the Tender Committee meeting held on 26.03.2016, the Tender Committee had taken a decision to discharge the tender on technical grounds. The reason for arriving at such decision has been explained therein, which has already been reproduced herein before. This Court finds that the relevant factors which had influenced the Tender Committee to recommend discharge the tender was the requirement to use energy efficient pumps coupled energy efficient motors. Therefore, the commercial aspect of installing energy efficient pumps and motors prevailed over the tender committee to make such a recommendation, which, according to them would reduce the revenue loss in terms of electricity energy charges. Moreover, it is seen that the Tender Committee had relied on the recommendation made by the Railway Board Circular No. 2006/ELECT(G)/150/5 dated 17.05.2007, this Court is unable to agree with the submissions made by the petitioner that the decision to scrap the tender was mala fide. Notwithstanding the fact that there was an inordinate delay in taking such a decision, but this Court does not find that the said decision was tainted with mala fide or discriminatory or that such a decision was taken as a retaliatory measure against the petitioner for lodging complaints against a particular official of the respondents. The petitioner has not questioned the competency of the authorities that had decided to cancel the tender process. In the present case in hand, the discharge of the tender process did not violate any fundamental right of the petitioner. Moreover, having scrutinized the recommendation made by the Tender Committee, this Court cannot term the action of the respondents to be unreasonable so as to warrant any interference from this Court.

10. It is seen that pursuant to the order dated 10.12.2018 passed in this case, the petitioner has given an undertaking that it would be claiming any escalation and would be doing the supplies as per the terms of the tender and his bid. In this regard, this Court is of the considered opinion that as this Court has not found any fault in the decision making process to scrap the tender process by discharging it. Furthermore, this Court has also considered the present stand of the respondents that in the present financial year, the respondents have no budgetary allocation for doing the said work, which is one additional reason for not considering the readiness of the petitioner to carry out the work in question in terms of the tender and petitioner's bid. Moreover, this Court finds no good reason for insisting that the respondents should install pumps and motors, which are not energy efficient, which would ultimately lead to revenue loss to public exchequer.

11. In the present case, as indicated above, the decision of discharging the tender was actuated by commercial considerations, in view of the ratio laid down by the Supreme Court of India in the case of Maa Binda Express Courier (supra), this Court is not inclined to interfere with the said decision of the railway authorities to discharge the tender. Consequently, no interference is called for in respect of the impugned communication vide Memorandum No. EL/29/GH/778/Contract/2014-2015 dated 06.04.2016 by the Senior Divisional Electrical Engineer, NF Railway.

12. In view of the discussions above, the writ petition fails and the same is dismissed, leaving the parties to bear their own cost.

JUDGE

Comparing Assistant