w w w . L a w y e r S e r v i c e s . i n


M/s. Kashmir Kissan Agriculture Co-operative Marketing Limited v/s National Fertilizer Limited & Others

    WP(C). No. 849 of 2021, CM Nos. 2637, 2901 of 2021
    Decided On, 19 May 2021
    At, High Court of Jammu and Kashmir
    By, THE HONOURABLE MR. JUSTICE ALI MOHAMMAD MAGREY
    For the Petitioner: Tasaduq H. Khawja, Advocate. For the Respondents: R1 to R5, Tahir Majid Shamsi, ASGI, J.A. Kawoosa, Senior Advocate, Areeb Javed Kawoosa, Advocate.


Judgment Text
1. The precise case of the petitioner, as set up in the petition, is that the petitioner society is an association of farmers constituted to ameliorate socio-economic status of its members and, among other things, deals in distribution and sale of agricultural inputs, including fertilizers for and on behalf of its members. The petitioner claims to have been particularly engaged in handling and transportation of fertilizers from Udhampur to different destinations in Kashmir Division. It is stated that the respondent company is engaged in procurement, manufacture, distribution and sale of various fertilizers throughout India. The respondent company, through its Zonal Office, is stated to have invited tenders, bearing E-Tender No- NFL/ZO/ CHD/ H&T/ e-Tender/ 2021 / 100, for handling and transportation of fertilizer from its Rake Point at Udhampur to various destinations in Kashmir Division. Being engaged in transportation and handling of fertilizers, the petitioner also claims to have responded to the aforesaid NIT. After obtaining tender documents, the petitioner submitted its bid on-line in time as was required in terms of the tender document. The bids submitted had to be evaluated in two stages viz. technical and financial. The technical bid of the petitioner was evaluated/ accepted and the petitioner, accordingly, informed about the decision that his bid has been accepted. Thereafter, the financial bid of the petitioner, together with the bids of those bidders who had been declared successful in technical evaluation, was opened on 5th of April, 2021. Upon comparison, as claimed, the rates offered by the petitioner (Rs.8,24,63,412/-) were found to be lowest with the second lowest bid (Rs.8,76,00,185/-) almost Rupees 50 Lacs higher than the bid of petitioner. In such circumstances, the petitioner society has contended that it was expecting that its bid would be accepted and formal orders issued in a day or two as per procedure in vogue, however, despite lapse of more than 10 days no formal information was received by it. The petitioner has proceeded to state that it has learnt from reliable sources that its bid is sought to be ousted from the zone of consideration on the specious ground that it did not quote rates in respect to columns relating to godowns and storage and that the functionaries of the respondent company are in touch with the second lowest bidder whose bid is about Rs. 50 Lacs higher than the bid of the petitioner. It is further pleaded in the Writ petition that this entire exercise has been initiated on extraneous considerations in order to pave way for allotment of contract to the second lowest bidder. Feeling aggrieved thereby, the petitioner has filed the instant Writ petition seeking a direction upon the respondents to allot contract to the petitioner, being the lowest bidder, uninfluenced by the fact that the petitioner has not quoted any rates against columns relating to godowns and storage.

2. Mr Tasaduq H. Khawja, the learned counsel representing the petitioner, submitted that in terms of the tender document, the bids had been invited for transportation and handling only and that the material was/is required to be delivered directly at destination points to retail dealers. The process, as stated, did not involve any storage in godowns and, as such, the storage and godown rates could not and have not been factored while evaluating the rates. In this behalf, the learned counsel submitted that there, thus was/ is no basis to exclude the bid of the petitioner for not quoting rates against an item which was not involved in the execution of the contract.

3. The learned counsel for the petitioner has further submitted that after the petitioner was declared successful on technical evaluation, the financial bid of the petitioner has been found to be the lowest and, therefore, public interest demands that the bid of the petitioner is accepted and contract allotted in favour of the petitioner.

4. It is further pleaded by Mr Khawja that the stage of rejecting any bid has already passed and that if the bid of the petitioner was defective, the same ought not to have been taken into consideration for making comparative evaluation of financial bids. Elaborating further, it is argued that having compared the bid of petitioner and found it lowest, the respondents cannot exclude the bid of the petitioner from the zone of consideration.

5. Objections stand filed on behalf of the respondents, resisting and controverting the averments made by the petitioner in its petition. It is stated that the petition has been filed with malafide intention to derail the process for finalization of contract and supply of essential commodity, i.e., urea and other fertilizers to the farmers. It is contended that the petitioner had to quote the rates for all jobs and, by not submitting the required rates, it has violated the terms and conditions of the tender document, thereby rendering the bid of the petitioner liable for rejection. It is further submitted that since the petitioner did not quote rates for all required jobs/ columns in consonance with the terms and conditions of the tender document, therefore, the petitioner cannot claim to be the lowest bidder.

6. Mr J. A. Kawoosa, the learned Senior Counsel, assisted by Mr Areeb Javed Kawoosa, learned counsel, appearing on behalf of the Caveator/ applicant-M/S Kashmir Kissan Agriculture Co-Operative Marketing Limited H/O Khanday Colony, Nowgam, By-Pass, Srinagar through its Chairman Gh. Hassan Bhat S/o Abdul Rehman Bhat R/o Kenihama, B. K. Pora, Budgam, submitted that the applicant company participated in the tendering process in question and was declared as the second lowest bidder, after the petitioner. It is pleaded that the bid of the petitioner was rejected by the official respondents on the ground that it had not quoted the rates for all items/ columns as provided in the tender document and that, in such circumstances, it was the applicant, being the second lowest bidder, who was required to be allotted the contract. It is further submitted that the petitioner has filed the Writ petition on misrepresentation/ concealment of facts, besides deliberately not arraying the applicant as party respondent despite seeking relief against the applicant.

7. Heard the learned counsel for the parties and considered the matter. I have also perused the relevant record made available by Mr Tahir Majid Shamsi, learned Assistant Solicitor General of India (ASGI).

8. When this matter was taken up for consideration on 28th of April, 2021, the Court, after hearing the learned counsel for the petitioner, while directing the respondents to file objections and producing the relevant records, order that the tender process in question shall not be finalized till the next date of hearing before the Bench. Thereafter, the learned appearing counsel for the parties were finally heard on 17th of May, 2021 and matter reserved for judgment. Besides, the record made available by Mr Shamsi, was also retained.

9. At the very outset, what requires to be stated is that the official respondents have rejected the bid of the petitioner company on the ground that the petitioner company has not followed certain terms and conditions prescribed in the tender document itself by not quoting rates with respect to all items/ columns. Once the petitioner company did not quote the rates for all jobs/ columns in consonance with the terms and conditions prescribed in the tender document, the petitioner company cannot claim itself to be the lowest bidder. Such a claim would only lie in the mouth of the petitioner company in case the bid of the petitioner was in accordance with the agreed terms and conditions stipulated vide the tender document. Besides, a minute examination of the relevant records made available before the Court by the respondents not only make it axiomatic that the petitioner company did not quote rates with respect to storage/ godowns while submitting the tender document, but also bring it to the fore that upon negotiations, M/S Kisan Apex Agriculture Co-Operative Supply and Marketing Society Ltd. have agreed to accept the contract at rates more than Rs. 39 lacs lower than the rates quoted by the petitioner company.

10. It needs to be mentioned here that in the matters of Contract, there is a golden principle prevalent which provides that where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all and any other methods of performance are necessarily forbidden. This principle is applied in contractual disputes, particularly in commercial contracts or bids leading up to commercial contracts, where there is stiff competition. It must follow from the application of this principle that if the tender issuing authority prescribes certain specific terms and conditions to be complied with by the concerned bidders, then all the bidders ought to comply with the same without any default. Any decision taken by the tender issuing authority in accepting or rejecting a tender document not in consonance with the terms and conditions prescribed in the tender document, it could lead to unnecessary/ avoidable litigation requiring the authority to justify the rejection or acceptance of each tender document. This is hardly conducive to a smoother and hassle-free bidding process.

11. It is well settled principle of law that there must be judicial restraint in interfering with the administrative action, particularly in matter of tender or contract. Ordinarily, the soundness of the decision taken by the tendering issuing authority ought not to be questioned, but the decision- making process can certainly be subject to judicial review. The soundness of the decision may be questioned, firstly, if the decision made is so arbitrary and irrational that the Court can say that the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached or, second, if the process adopted or decision made by the authority is malafide or intended to favour someone or, third, if the public interest is affected. In the case on hand, when the petitioner company has failed to comply with the terms and conditions prescribed in the tender document, in such eventuality, the decision of the official respondents to reject the bid of the petitioner company cannot be said to be one where they have acted in a manner in which no responsible authority acting reasonably and in accordance with the relevant law would have acted. Furthermore, a perusal of the relevant records, as produced by Mr Shamsi, coupled with the perusal of the pleadings of the parties, does not indicate that the decision made by the authority is malafide or intended to favour someone. Likewise, the third ground of public interest is also not affected in the present case because while it may be in public interest to have greater competition, it is also in public interest that the tender conditions are complied with and that there is no uncertainty in that area. The contention of the petitioner company that the official respondents have rejected the bid of the petitioner only in order to accommodate their blue- eyed bidder is also belied by the records.

12. Now, I proceed to analyze the case of the petitioner in the light of the judicial position governing the subject, as enunciated by the Hon'ble Supreme Court on the country.

13. In case titled 'Tata Cellular V. Union of India; (1994) 6 Supreme Court Cases 651', at Paragraph No.94, Hon'ble the Supreme Court of the country, while dealing with this issue, evolved the following principles:

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 expe4rtise 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; and

6. Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure."

14. In case titled 'Sterling Computers Limited V. M&N Publications Ltd.; (1993) 1 SCC 445', the Apex Court, at Paragraph No.12, has laid down as under:

"In contracts having commercial element, some more discretion has to be conceded to the authorities so that they may enter into contracts with persons, keeping an eye on the augmentation of the revenue. But even in such matters they have to follow the norms recognized by courts while dealing with public property. It is not possible for courts to question and adjudicate every decision taken by an authority, because many of the Government Undertakings which in due course have acquired the monopolist position in matters of sale and purchase of products and with so many ventures in hand, they can come out with a plea that it is not always possible to act like a quasi-judicial authority while awarding contracts. Under some special circumstances a discretion has to be conceded to the authorities who have to enter into contract giving them liberty to assess the overall situation for purpose of taking a decision as to whom the contract be awarded and at what terms. If the decisions have been taken in bona fide manner although not strictly following the norms laid down by the courts, such decisions are upheld on the principle laid down by Justice Holmes, that courts while judging the constitutional validity of executive decisions must grant certain measure of freedom of 'play in the joints' to the executive."

15. Again, the Apex Court, in case titled 'Directorate of Education & Ors. V. Educomp Datamatics Ltd. And Ors.; (2004) 4 SCC 19', while applying the principles enunciated in Tata Cellular's case (supra), at Paragraph No.12, observed, thus:

"12. It has been held in these decisions that the terms of the invitation to tender are not open to judicial scrutiny, the same being in the realm of contract. That the Government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The Courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, malafide or actuated by bias. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. The Courts cannot strike down the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wise or logical. The Courts can interfere only if the policy decision is arbitrary, discretionary or malafide."

On an appreciation of the law laid down above, what comes to limelight is that the modern trend points to judicial restraint in administrative action and that the Court does not sit as a 'Court of Appeal', but merely reviews the manner in which the decision was made. It has also been declared that Court does not have the expertise to correct the administrative decision and that 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. Furthermore, fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere and quashing administrative decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.

16. It is thus, settled that public authorities must be left with the same liberty as they have in framing the policies, even while entering into contracts because many contracts amount to implementation or projection of policies of the Government. But it cannot be overlooked that unlike policies, contracts are legally binding commitments and they commit the authority which may be held to be a State within the meaning of Article 12 of the Constitution of India in many cases for years. It is for this reason that the Courts have impressed that even in contractual matters the public authority should not have unfettered discretion. In contracts having commercial element, some more discretion has to be conceded to the authorities so that they may enter into contracts with persons keeping an eye on the augmentation of the revenue. But, even in such matters, they have to follow the norms recognized by Courts while dealing with public property. It is not possible for the Courts to question and adjudicate every decision taken by an authority because many of the Government Undertakings, which in due course have acquired the monopolist position in matters of sale and purchase of products and with so many ventures in hand, they can come out with a plea that it is not always possible to act like a quasi-judicial authority while awarding contracts. Under some special circumstances, a discretion has to be conceded to the authorities who have to enter into contract by giving them liberty to assess the overall situation for purpose of taking a decision as to whom the contract be awarded and at what terms. If the decisions have been taken in bonafide manner, although not strictly following the norms laid down by the Courts, such decisions are upheld on the principle laid down by Justice Holmes that Courts, while judging the constitutional validity of executive decisions, must grant certain measure of freedom of 'play in the joints' to the executive. Looking at the instant case in the above perspectiv

Please Login To View The Full Judgment!
e, the petitioner has not been able to establish before the Court that the decision taken by the respondents in rejecting its bid was/ is an arbitrary exercise of power or that the same was/ is malafide in nature. In 'Jagdish Mandal v. State of Orissa; (2007) 14 SCC 517', at Paragraph No.22, the Hon'ble Supreme Court held, thus: "22. .... 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"; (ii) Whether public interest is affected. If the answers are in the negative, there should be no interference under Article 226." From a bare perusal of the pleadings placed on record by the parties as well as having gone through the relevant records made available by the respondents before this Court, it is more than apparent that the decision taken by the respondents in rejecting the bid of the petitioner was certainly not irrational in any manner whatsoever or intended to favour anyone. This decision, apart from being lawful and sound, appears to have been taken by the respondents in view of the failure of the petitioner to comply with all the terms and conditions stipulated in the tender document. 17. For the foregoing reasons, this Writ petition is found to be devoid of any merit, as a sequel thereto, same shall stand dismissed. Interim directions, if any, subsisting as on date shall stand vacated. Pending miscellaneous applications, if any, shall also stand disposed of, accordingly. 18. Parties are left free to bear their own costs. 19. Bench Secretary to forthwith return the records to Mr Shamsi against proper receipt.
O R