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



M/s. Narang Cold Storage v/s State of M.P. & Others


Company & Directors' Information:- R J COLD STORAGE PRIVATE LIMITED [Active] CIN = U74899DL1992PTC049659

Company & Directors' Information:- S. D. COLD STORAGE PRIVATE LIMITED [Active] CIN = U15132UP1995PTC018791

Company & Directors' Information:- D G COLD STORAGE PRIVATE LIMITED [Active] CIN = U45209WB2001PTC092809

Company & Directors' Information:- N P S COLD STORAGE PRIVATE LIMITED [Active] CIN = U15549WB1997PTC085229

Company & Directors' Information:- G M COLD STORAGE PVT LTD [Active] CIN = U63022WB1986PTC041010

Company & Directors' Information:- G C G COLD STORAGE PRIVATE LIMITED [Active] CIN = U01400MH2012PTC235712

Company & Directors' Information:- L P COLD STORAGE PRIVATE LIMITED [Active] CIN = U15133UP1997PTC021864

Company & Directors' Information:- P D COLD STORAGE PRIVATE LIMITED [Active] CIN = U74900UP2010PTC039698

Company & Directors' Information:- N R S COLD STORAGE PVT LTD [Active] CIN = U63022WB1978PTC031524

Company & Directors' Information:- S M COLD STORAGE PVT LTD [Active] CIN = U63022WB1986PTC040843

Company & Directors' Information:- A TO Z COLD STORAGE PRIVATE LIMITED [Active] CIN = U15122UP2010PTC040956

Company & Directors' Information:- A-1 COLD STORAGE PRIVATE LIMITED [Active] CIN = U74900TG2015PTC100777

Company & Directors' Information:- D N COLD STORAGE PRIVATE LIMITED [Active] CIN = U15133UP1989PTC010708

Company & Directors' Information:- P S COLD STORAGE PRIVATE LIMITED [Active] CIN = U15139UP2001PTC026373

Company & Directors' Information:- N L COLD STORAGE PRIVATE LIMITED [Strike Off] CIN = U63022ML2001PTC006536

Company & Directors' Information:- K H I COLD STORAGE PRIVATE LIMITED [Active] CIN = U63022DL1999PTC100373

Company & Directors' Information:- K J COLD STORAGE PRIVATE LIMITED [Active] CIN = U63022PB1996PTC018274

Company & Directors' Information:- V K COLD STORAGE PRIVATE LIMITED [Active] CIN = U63022RJ1998PTC014964

Company & Directors' Information:- R M COLD STORAGE PRIVATE LIMITED [Active] CIN = U15133UP1999PTC024532

Company & Directors' Information:- S L P COLD STORAGE PRIVATE LIMITED [Converted to LLP] CIN = U00063KA1997PTC022544

Company & Directors' Information:- M D COLD STORAGE PRIVATE LIMITED [Active] CIN = U15133UP2001PTC025987

Company & Directors' Information:- S N COLD STORAGE PVT LTD [Active] CIN = U15132WB1977PTC031040

Company & Directors' Information:- A K COLD STORAGE PRIVATE LIMITED [Active] CIN = U15133UP1999PTC024374

Company & Directors' Information:- G. T. COLD STORAGE PRIVATE LIMITED [Active] CIN = U70101UP1999PTC024239

Company & Directors' Information:- G D COLD STORAGE PRIVATE LIMITED [Strike Off] CIN = U63022WB1997PTC084601

Company & Directors' Information:- J S COLD STORAGE PRIVATE LIMITED [Active] CIN = U63022PB1997PTC020250

Company & Directors' Information:- B C COLD STORAGE PRIVATE LIMITED [Active] CIN = U45302PB1997PTC019355

Company & Directors' Information:- G S P COLD STORAGE PRIVATE LIMITED [Active] CIN = U74899DL1995PTC069618

Company & Directors' Information:- R R COLD STORAGE PRIVATE LIMITED [Active] CIN = U63022TZ1995PTC006478

Company & Directors' Information:- H J COLD STORAGE PRIVATE LIMITED [Strike Off] CIN = U63022WB1999PTC089452

Company & Directors' Information:- B K COLD STORAGE PRIVATE LIMITED [Active] CIN = U63022PB1997PTC020070

Company & Directors' Information:- J T S COLD STORAGE PRIVATE LIMITED [Active] CIN = U74900UP2011PTC044733

Company & Directors' Information:- COLD STORAGE CORPORATION OF INDIA LIMITED [Active] CIN = U25193UP1946PLC001472

Company & Directors' Information:- M K R S S COLD STORAGE PRIVATE LIMITED [Active] CIN = U63090WB2020PTC241530

Company & Directors' Information:- R G P COLD STORAGE PRIVATE LIMITED [Active] CIN = U74999KA2006PTC039844

Company & Directors' Information:- J P G A COLD STORAGE PRIVATE LIMITED [Active] CIN = U63022PB2005PTC028831

Company & Directors' Information:- R B COLD STORAGE PRIVATE LIMITED [Active] CIN = U63022BR1979PTC001418

Company & Directors' Information:- N J COLD STORAGE PRIVATE LIMITED [Active] CIN = U63020DL2010PTC207001

Company & Directors' Information:- G M COLD STORAGE PVT LTD [Strike Off] CIN = U63022OR1985PTC001574

Company & Directors' Information:- S V S COLD STORAGE PRIVATE LIMITED [Strike Off] CIN = U74999AP1999PTC033134

Company & Directors' Information:- R V COLD STORAGE PVT LTD [Strike Off] CIN = U15133UP1988PTC010122

Company & Directors' Information:- V L S COLD STORAGE PRIVATE LIMITED [Strike Off] CIN = U63010TG2011PTC072072

Company & Directors' Information:- NARANG COLD STORAGE PRIVATE LIMITED [Strike Off] CIN = U74999DL1999PTC099835

Company & Directors' Information:- NARANG AND NARANG PRIVATE LIMITED [Converted to LLP] CIN = U92100MH1973PTC016992

Company & Directors' Information:- M Y COLD STORAGE PRIVATE LIMITED [Active] CIN = U15122UP2012PTC053516

Company & Directors' Information:- C P NARANG PVT LTD [Strike Off] CIN = U22110DL1981PTC011535

Company & Directors' Information:- K T COLD STORAGE PRIVATE LIMITED [Strike Off] CIN = U63022NL2001PTC006616

Company & Directors' Information:- M M COLD STORAGE PRIVATE LIMITED [Strike Off] CIN = U63090TG2013PTC090068

Company & Directors' Information:- H. R. COLD STORAGE PRIVATE LIMITED [Active] CIN = U63030GJ2016PTC092718

Company & Directors' Information:- A K STORAGE PRIVATE LIMITED [Strike Off] CIN = U99999MH1978PTC020884

Company & Directors' Information:- COLD STORAGE (INDIA) LTD. [Dissolved] CIN = U99999MH1922PTC000998

Company & Directors' Information:- INDIA COLD STORAGE CO. LTD. [Not available for efiling] CIN = U99999MH1948PLC006673

    Writ Petition No. 7608 of 2020

    Decided On, 10 June 2020

    At, High Court of Madhya Pradesh Bench at Indore

    By, THE HONOURABLE MR. JUSTICE S.C. SHARMA & THE HONOURABLE MR. JUSTICE VIVEK RUSIA

    For the Appearing Parties: Vinay Saraf, Amit Bhatia, Pushyamitra Bhargava, Amol Shrivastava, Advocates.



Judgment Text

Vivek Rusia, J.

The Petitioner has filed the present petition through its partner Mr.Abhimanyu Narang being aggrieved by the order dated 04.05.2020 (Annexure P/1), order dated 06.05.2020 (Annexure P/9) & fresh NIT No.764 dated 07.05.2020 (Annexure P/10).

2. The petitioner being a registered partnership firm is engaged in the operation, maintenance and management of the cold storage since 2009 situated at New Sabzi Mandi Campus, Indore by virtue of the contract given by the M.P. State Co-Operative Marketing Federation Ltd. (hereinafter referred to as 'the MARKFED') The period of the lease had been expired in September 2019, therefore, respondent No.2 Federation issued an NIT No.684 for operation, maintenance, and management of the aforesaid cold storage on lease for ten years period. The last date for submission of the tender was on 27.01.2020 and the opening of the technical bid was scheduled on 29.01.2020 at 10.30 A.M. However, later on, certain conditions of NIT were amended and the date of opening of technical bid was extended up to 08.02.2020. Apart from others, the petitioner also participated in the said tender process. The technical bids were opened on 18.02.2020 and out of 7 tenderers, the petitioner was declared qualified for opening of financial bid. On 18.02.2020 the financial bids were opened and the petitioner was declared successful tenderer as H1. The final result of the opening of the bid was uploaded on the Government official website displaying the petitioner as H1.

3. It is important to mention here that no Letter of Acceptance (LOA) was issued to the petitioner by the respondents. All of a sudden, the Chief Engineer, M.P State Co-operative Marketing Federation, Bhopal vide letter dated 04.05.2020 (Annexure P/1) has cancelled the NIT No.684 due to some technical reasons. Being aggrieved by the aforesaid action, the petitioner submitted a detailed representation to the Chief Engineer on 05.05.2020. The tender inviting authority vide E-mail dated 06.05.2020 has informed the petitioner that the tender has been rejected during financial evaluation by duly constituted committee for the reason H1 RATES NOT ACCEPTED.

4. Respondent No.3 issued a fresh tender NIT No.764 for operation, maintenance, and management contract of the same cold storage at New Sabzi Mandi Campus, Indore for a period of ten years. Being aggrieved by the aforesaid action of the respondents, the petitioner has filed the present petition before this Court on 26.05.2020.

5. The writ petition came up for hearing on 28.05.2020 and on that date this Court has directed the Government Advocate to seek instructions from the respondents. The respondents No.2 & 3 have filed a return. According to the respondents, the petitioner did participate in the NIT No.684 dated 30.12.2019 and stood at No.1 being the highest bidder but no LOA or work order was issued by the respondents. The respondents have placed reliance over clause J (v) & (vi) of the NIT by which the MARKFED had reserved the right to accept or reject any bid and to annul the bidding process at any time before awarding the contract . Clause L provides that the Chief Engineer, MARKFED shall notify the successful bidder by issuing a letter of acceptance. Since in this case no such letter of acceptance (LAO) was issued in favour of the petitioner, therefore, the petitioner does not have any right to seek conclusion of any contract in view of the law laid down by the Apex Court in the case of Rajasthan High Court vs. G.S Investments, (2007) 1 SCC 477; uttar Pradesh Avas Evam Vikas Parishad & others vs. Om Prakash Sharma, (2013) 5 SCC 182 & State of Jharkhand vs. CWE-SOMA Consortium, (2016) 14 SCC 172. It is further submitted in the return that certain objections were received inter alia on two conditions of the earlier NIT. According to the respondents, the bidder shall have to quote the user charge in a format referred to in the bid document on a yearly basis. The tender committee examined the matter in detail and after thorough deliberation on 27.04.2020, it was observed that due to lack of any condition specifying how the user charges are to be quoted for each year certain bidders have quoted from lower user charges for the first 1 to 3 years while they have quoted much higher charges for last few years. The committee apprehended that by doing this the bidders have been able to achieve and quote an overall higher amount in the bid than their counterparts. By doing this the bidders would accumulate the profit for the initial few years and after performing the contract for the initial few years they may choose to abandon the contract and it would have an unfair advantage of accumulating profit for those earlier years by paying a small portion of total user charges. The petitioner has quoted the rate of Rs.28,40,000/-, 31,00,000/- & 34,30,000/- for initial 3 years and quoted Rs.84,00,000/- and 1,08,00,000/- for last 8 & 9 years as compare to others bidders in total to make the highest bid of Rs.5,41,00,000/-. The second objection was also considered by the committee that no period of experience was prescribed for private individuals in respect of post-harvest management facility but for the marketing co-operative societies two years experience was prescribed and due to such discriminatory conditions, the committee thought it proper to cancel the entire NIT. In the fresh tender, such an anomaly and discrimination have been rectified by inserting two conditions viz. (1) user charges must be quoted and consolidated one amount for 10 years and it must be deposited in equal distribution per year in advance (2) for eligibility criteria to bidder condition No.10 is proposed as "in case of marketing co-operative societies relaxation for EMD will be given." It is further submitted that the judicial interference by the High Court in contractual matters is very limited to the extent of mala fide, arbitrariness, or violation of equality and prayed for dismissal of the writ petition.

6. We have heard learned counsel for the parties and perused the documents.

7. Shri Vinay Saraf learned Senior Counsel for the petitioner has emphasized that before cancellation of the tender process no opportunity of hearing was given to the petitioner. Once the petitioner has been found the highest bidder, an enforceable right has been accrued in his favour. The respondents may have the authority to cancel or annul the bidding process but they ought to have assign valid reasons. In the impugned order, no such reason has been assigned, therefore, such an order is bad in law and liable to be set aside. The petitioner is performing the same work since the last ten years and there is no complaint against him, however, without any justifiable reason and arbitrarily the respondents have cancelled the entire tender process which will cause heavy financial burden to the State Govt.

8. Shri Pushyamitra Bhargava, learned Additional Advocate General appearing for the respondents submits that though the petitioner was found the highest bidder but no such LOA or work order was issued in favour of the petitioner as such no concluded contract was arrived at, therefore, the petitioner has no vested right to seek a writ of mandamus. There is also no arbitrariness on the part of the respondents. The tender inviting committee has duly considered the objections raised by the bidders as well as the marketing co-operative societies. The fresh NIT was published on 06.05.2020. The pre-bid meeting was held on 28.05.2020 and the bids were opened on 05.06.2020. In the subsequent tender process, only 3 bidders have participated and quoted much higher rate than the rate quoted by the petitioner in the earlier round of NIT. By this subsequent fresh bid, the MARKFED is going to get more than Rs.3 crore extra revenue, therefore, the present petition is liable to be dismissed.

9. Facts of the case are not in much dispute. In NIT No.684 the petitioner participated and stood at H1 but the fact remains that no such LOA or work order was issued by the respondents. The condition 'L' of the NIT provides that the Chief Engineer shall notify the successful bidder by issuing a LOA and as per clause-'M' before signing of the contract the bidder to whom LOA has been issued shall have to furnish advance performance security in the form of FDR. Thereafter, clause 9 provides for the signing of the contract. In the case of the petitioner, neither the LOA was issued nor the performance security was deposited, therefore, there was no question of signing of concluded contract agreement between the parties. Before issuance of the LOA clause J (v) gives a right to the MARKFED to accept or reject any bid and to annul the bidding process at any time prior to contract award and in all such cases the reasons shall be recorded. In the impugned order no such reason has been assigned but by the filing of the return the respondents have disclosed the reasons for cancelling the bidding process and we do not find any infirmity and illegality in it , hence there is ground to interfere with the impugned decision taken by the respondents. The apprehension of the respondents is not baseless as the petitioner has quoted very low rate for initial 3-4 years and exorbitant high rate for the last 2 years in the ten years contract which makes it highest bid of Rs.5 crore 41 lakhs whereas the other bidders have quoted almost equivalent rate for all the 10 years. The petitioner has quoted Rs.1 core 8 lakhs for the tenth years as compared to 28 lakhs for the first year, therefore, in such circumstances, the apprehension of abandoning the work by the petitioner after performing the contract for initial 2-3 years is not baseless and in the new NIT the respondents have specifically put the condition that the users' charges must be quoted in a consolidated one amount for ten years and it must be deposited in equal distribution per year in advance. The condition of two years' experience has been relaxed for the marketing co-operative society like the private bidders in order to avoid discrimination.

10. The Apex Court in the case of Manohar Lal Sharma v. Narendra Damodardas Modi, (2019) 3 SCC 25 has held that the Courts should not exercise the power of judicial review even if a procedural error is committed to the prejudice of the tenderer since private interests cannot be protected while exercising such judicial review. Para-7 & 8 of the said judgment is reproduced below:

7. Parameters of judicial review of administrative decisions with regard to award of tenders and contracts has really developed from the increased participation of the State in commercial and economic activity. In Jagdish Mandal v. State of Orissa this Court, conscious of the limitations in commercial transactions, confined its scrutiny to the decision-making process and on the parameters of unreasonableness and mala fides. In fact, the Court held that it was not to exercise the power of judicial review even if a procedural error is committed to the prejudice of the tenderer since private interests cannot be protected while exercising such judicial review. The award of contract, being essentially a commercial transaction, has to be determined on the basis of considerations that are relevant to such commercial decisions, and this implies that terms subject to which tenders are invited are not open to judicial scrutiny unless it is found that the same have been tailor-made to benefit any particular tenderer or a class of tenderers. (See Maa Binda Express Carrier v. North-East Frontier Railway).

8. Various judicial pronouncements commencing from Tata Cellular v. Union of India, all emphasise the aspect that scrutiny should be limited to the Wednesbury principle of reasonableness and the absence of mala fides or favouritism.

11. In the case of Municipal Council, Neemuch v. Mahadeo Real Estate, (2019) 10 SCC 738, the Apex Court has examined the scope of power of the High Court for judicial review of administrative action and summarized the ground upon which the administrative action is subject to control by judicial review i.e. (i) illegality- means the decision-maker must understand correctly the law that regulates his decision-making power (ii) irrationality & (iii) procedural impropriety. The Apex Court has further held that the Commissioner had acted rightly as custodian of the public property by pointing out the anomalies in the proposal of the Municipal Council to the State Govt. and acted in a larger public interest. The Apex Court was of the considered view that the decision of the Commissioner which is set aside by the High Court is undoubtedly in a larger public interest which would ensure that the Municipal Council earns a higher revenue by enlarging the scope of competition. The relevant portion of the judgment is reproduced below:

13. In the present case, the learned Judges of the Division Bench have arrived at a finding that such a sanction was, in fact, granted. We will examine the correctness of the said finding of fact at a subsequent stage. However, before doing that, we propose to examine the scope of the powers of the High Court of judicial review of an administrative action. Though, there are a catena of judgments of this Court on the said issue, the law laid down by this Court in Tata Cellular v. Union of India3 lays down the basic principles which still hold the field. Para 77 of the said judgment reads thus: (SCC pp. 677-78)

"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. Secy. of State for Home Department, ex p Brind4, 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'."

14. It could thus be seen that the scope of judicial review of an administrative action is very limited. Unless the Court comes to a conclusion that the decision-maker has not understood the law correctly that regulates his decision-making power or when it is found that the decision of the decision-maker is vitiated by irrationality and that too on the principle of "Wednesbury unreasonableness" or unless it is found that there has been a procedural impropriety in the decision-making process, it would not be permissible for the High Court to interfere in the decision-making process. It is also equally well settled that it is not permissible for the Court to examine the validity of the decision but this Court can examine only the correctness of the decision-making process.

15. This Court recently in W.B. Central School Service Commission v. Abdul Halim5 had again an occasion to consider the scope of interference under Article 226 in an administrative action:

"31. In exercise of its power of judicial review, the Court is to see whether the decision impugned is vitiated by an apparent error of law. The test to determine whether a decision is vitiated by error apparent on the face of the record is whether the error is self-evident on the face of the record or whether the error requires examination or argument to establish it. If an error has to be established by a process of reasoning, on points where there may reasonably be two opinions, it cannot be said to be an error on the face of the record, as held by this Court in Satyanarayan Laxminarayan Hegde v. Millikarjun Bhavanappa Tirumale6. If the provision of a statutory rule is reasonably capable of two or more constructions and one construction has been adopted, the decision would not be open to interference by the writ court. It is only an obvious misinterpretation of a relevant statutory provision, or ignorance or disregard thereof, or a decision founded on reasons which are clearly wrong in law, which can be corrected by the writ court by issuance of writ of certiorari.

32. The sweep of power under Article 226 may be wide enough to quash unreasonable orders. If a decision is so arbitrary and capricious that no reasonable person could have ever arrived at it, the same is liable to be struck down by a writ court. If the decision cannot rationally be supported by the materials on record, the same may be regarded as perverse.

33. However, the power of the Court to examine the reasonableness of an order of the authorities does not enable the Court to look into the sufficiency of the grounds in support of a decision to examine the merits of the decision, sitting as if in appeal over the decision. The test is not what the Court considers reasonable or unreasonable but a decision which the Court thinks that no reasonable person could have taken, which has led to manifest injustice. The writ court does not interfere, because a decision is not perfect.

16. It could thus be seen that an interference by the High Court would be warranted only when the decision impugned is vitiated by an apparent error of law i.e. when the error is apparent on the face of the record and is self-evident. The High Court would be empowered to exercise the powers when it finds that the decision impugned is so arbitrary and capricious that no reasonable person would have ever arrived at. It has been reiterated that the test is not what the Court considers reasonable or unreasonable but a decision which the Court thinks that no reasonable person could have taken. Not only this but such a decision must have led to manifest injustice.

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24. In the present case, we find that the Commissioner had acted rightly as a custodian of the public property by pointing out the anomalies in the proposal of the Municipal Council to the State Government and the State Government has also responded in the right perspective by authorising the

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Commissioner to take an appropriate decision. We are of the considered view that both, the Commissioner as well as the State Government, have acted in the larger public interest. We are unable to appreciate as to how the High Court, in the present matter, could have come to a conclusion that it was empowered to exercise the power of judicial review to prevent arbitrariness or favouritism on the part of the State authorities, as has been observed by it in para 13. We are also unable to appreciate the finding of the High Court in para 17 wherein it has observed that the impugned decision of the authorities are found not to be in the public interest. We ask the question to us, as to whether directing re-tendering by inviting fresh tenders after giving wide publicity at the national level so as to obtain the best price for the public property, would be in the public interest or as to whether awarding contract to a bidder in the tender process where it is found that there was no adequate publicity and also a possibility of there being a cartel of bidders, would be in the public interest. We are of the considered view that the decision of the Commissioner which is set aside by the High Court is undoubtedly in larger public interest, which would ensure that the Municipal Council earns a higher revenue by enlarging the scope of the competition. By no stretch of imagination, the decision of the State Government or the Commissioner could be termed as illegal, improper, unreasonable or irrational, which parameters only could have permitted the High Court to interfere. Interference by the High Court when none of such parameters exist, in our view, was totally improper. On the contrary, we find that it is the High Court, which has failed to take into consideration relevant material. 12. In the present case also by issuing the fresh tender, the respondents have received the bids of much higher than the bid price offered by the present petitioner, hence in the larger public interest, we do not find any ground to entertain the writ petition. Accordingly, the petition is dismissed. No order as to cost.
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