1. This Writ Appeal by the appellant-writ petitioner is directed against the order of the learned Single Judge dated 16.10.2012 in W.P.No.19517 of 2012 dismissing the writ petition filed by him to declare the action of the 2nd respondent in not disqualifying the 3rd respondent for the breach of conditions of tender Document IFB.No.09/RBLISP/2011-12 dated 24.3.2012 as illegal and arbitrary and consequently to direct the respondent Nos.1 and 2 to disqualify Sri M.V.V. Satyanarayana, the 3rd respondent herein, by awarding contract in favour of the petitioner.
2. During the pendency of the writ petition, the 2nd respondent allotted the work through Letter No.SE/RBLISP/TS/TP/Viaduct/2012-13/116 dated 28.6.2012. Pursuant thereto, the petitioner filed W.P.M.P.No.33179 of 2012 to amend the prayer that the action of the 2nd respondent in allotting the work as arbitrary and violative of the terms and conditions of the tender notification.
3. The parties will be referred to by their status in the writ petition. The dispute herein relate to award of contract for construction of a Viaduct at K.M. 8.125 and earth work excavation and forming embankment from K.M. 7.500 to K.M. 9.000 of Low Level Right Main Canal of Sangambanda Balancing Reservoir, Makthal Mandal, Mahabubnagar District under Rajiv Bhima Lift Irrigation Scheme Project as per tender notification dated 24.3.2012. A period of nine months is prescribed for completion of the work. The tender process is in two stages viz., technical evaluation and financial evaluation. Technical evaluation to be undertaken in the first stage pertains to the qualification and eligibility of tenderers and in the second stage the financial bids of the qualified tenderers will be opened. Petitioner as well as Respondent No.3 applied through e-Procurement and both of them were qualified in the first stage for opening of their price bids. At this stage, the petitioner objected in qualifying the 3rd respondent on the ground that Respondent No.3 has not satisfied the mandatory conditions of the eligibility criteria of the tender notification i.e. filing of PAN Card proof and latest Income Tax Return in his name and 2. Filing of VAT registration and VAT latest clearance.
4. The tender notification dated 24.3.2012 details about the terms and conditions of the tender. Clause 24 deals with eligibility criteria. To qualify for consideration of award of the contract each tenderer should fulfill the criteria laid down therein. Sub-Clause (ii) of Clause 24 provides that the details and certificates are to be furnished as per the proforma available in the tender schedules. Details of documents mentioned therein provide that as many as 18 documents are required to be furnished by an intending tenderer. S.No.10 of the list of documents provides for furnishing proof of Income Tax PAN Card and latest Income Tax return and S.No.18 provides for furnishing of VAT (Value Added Tax) Registration and latest VAT clearance.
5. It was argued before the learned single Judge that the 3rd respondent filed his tender in his individual capacity whereas he has filed PAN Card and proof of the latest ITRs pertaining to M/s Meher Engineering, a partnership firm of which he is only a Managing partner. For the purpose of Income Tax Act, 1961 the partnership firm has a separate legal existence by virtue of Section 184 of the Income Tax Act, therefore, Respondent No.3 who filed the tender in his individual capacity cannot utilize the PAN and ITRs of the partnership firm. It was also argued that as the tender process had commenced in March, 2012, filing of the latest VAT clearance, which is a mandatory condition, would mean that the clearance would be in respect of the financial year immediately preceding the issue of the tender notice i.e. 2010-11, but Respondent No.3 filed VAT Clearance Certificate of the financial year 2009-10, therefore, Respondent No.3 who has not fulfilled the requisite conditions of the terms and conditions of the tender is not entitled to be awarded with the contract.
On the other hand, the learned counsel for Respondent No.3 placing reliance on the judgment of this Court in M.V.V. SASTYANARAYANA V. ENGINEER-IN- CHIEF, R & B, HYDERABAD. (2008 (1) ALT 715) submitted that since as per Clause (6) of the Partnership Amendment Deed dated 2.4.1993 of M/s Meher Engineerings respondent No.3 shall be deemed to be representing the said partnership firm and for all purposes all the works executed by him are deemed to have been executed on behalf of the said partnership firm and, therefore, filing of the ITRs of the firm satisfies the requirement of the tender condition. As regards VAT clearance certificate dated 21.1.2011 filed by respondent No.3, it was argued that it is the latest clearance certificate issued and the same together with the VAT Return Report dated 27.1.2012 issued by the Commercial Taxes Department would satisfy the tender condition.
Learned Government appearing for the official respondents supported the arguments of the learned counsel for the petitioner.
6. The learned single Judge placing reliance on the decision of this Court in S. KIREETENDERANATH REDDY v. A.P. TRANSACO (1995 (5) ALT 47) and the decision in M.V.V. SATYANARAYANA v. ENGINEER-IN-CHIEF, R & B, HYDERABAD (1 supra) and on a consideration of the legal relationship between the partners and Section 184 of the Income Tax Act, was of the view that the filing of the income tax return and the PAN card standing in the name of the firm of which the petitioner is the managing partner, would amount to compliance of the requirement. It was also held that in view of Clause 6 of the Partnership Amendment Deed, respondent No.3 shall be treated as a representative of the firm and placing reliance on the said clause and the decision of this Court in M.V.V. Satyanarayana's case it was held that the ITRs filed in the name of the firm would enure to the benefit of respondent No.3 even though he has not filed the ITRs standing in his name. As regards the VAT clearance certificate, the learned single Judge held that none of the respondents have disputed the authenticity of the VAT Returns Report dated 27.1.2012 which was upto December 2011, therefore, Clause 24 of the tender conditions was duly satisfied and as such the technical bid of respondent No.3 is not liable for rejection on a hyper-technical ground that the formal latest VAT clearance certificate was not filed by him.
Holding as above, the learned single Judge dismissed the writ petition as well as the miscellaneous petition filed for amendment of the prayer.
7. Learned counsel for the petitioner submitted that the learned single erred in holding that respondent No.3 can make use of the returns even though the individual partners are liable for getting their individual incomes separately assessed under section 10 of the Income Tax Act. The learned single Judge heavily placed reliance on Clause 6 of the unregistered partnership deed and did not consider that the firm is a legal entity and respondent No.3 cannot make use of the returns of the firm. He further submitted that VAT clearance certificate includes filing of VAT return and filing of copies of the return. Respondent No.3 has not filed the latest VAT clearance certificate for the year 2010-11 together with the return, therefore, he has not satisfied the conditions and thus not eligible to be considered for award of contract.
8. Learned counsel for the respondent No.3 reiterated the submissions urged before the learned single Judge and submitted that the learned single has rightly placed reliance on the decision of this Court in M.V.V. Satyanarayana's case which relates to none other than Respondent No.3 himself which dealt with Clause 6 of the Partnership Amendment Deed. The learned single Judge was justified in coming to the conclusion that a bid cannot be liable for rejection on mere hyper-technical ground; therefore, no interference is warranted with the order impugned.
9. There is no dispute that Respondent No.3 filed the tender in his individual capacity. But, he has filed the ITRs assessed in the name of M/s Meher Engineerings to which he is the managing partner. He filed the VAT clearance certificate immediately for the preceding year 2009-10 along with the VAT Return Report dated 27.1.2012 issued by the Commercial Taxes Department for the period from December, 2010 to December, 2011. Material placed on record discloses that Respondent No.3 along with his family members formed a partnership firm in the name and style of M/s Meher Engineerings through a registered partnership deed dated 1.4.1993. Clauses 5 and 6 of the original partnership deed were, however, amended by an unregistered amendment deed dated 2.4.1993. The amended Clause 6 which was considered in M.V.V. Satyanarayana's case read thus:
"Petitioner No.1, viz., Sri M.V.V. Satyanarayana shall be the Managing Partner of the Firm who shall have the power of control and management of the affairs of the business. He shall have the power individually to apply for tenders and negotiate the terms thereof, to enter into agreements, to accept measurements, to sign the bills and to receive payments etc. He shall also have the power to appoint necessary staff, to maintain the books of accounts and to incur necessary expenses and to do all acts and things necessary and incidental to carry on the business of the Firm. Any of the works tendered and obtained in the name of Sri M.V.V. Satyanarayana shall be deemed to have been taken on behalf of this Firm".
10. Therefore, from the above it is seen that any of the works tendered and obtained in the name of respondent No.3 shall be deemed to have been taken on behalf of the firm. In view of this, it can be said that respondent No.3, though has filed the tender in his individual capacity; it is actually on behalf of the firm and for the benefit of the firm only. In such view of the mater, the respondent No.3 has filed the ITR as managing partner of the firm. Under the amended clause 6, respondent No.3 has power to apply individually for tenders and negotiate the terms thereof, to enter into agreements, to accept measurements, to sign the bills and to receive payments etc. In Kireetenderanath Reddy case (2 supra) on which the learned single Judge has placed reliance this Court held that a firm is neither a legal entity nor a person and has no legal existence apart from its partners, that a firm's name is merely a description of the individuals who composed it and that the essential characteristic of a firm is that each partner is a representative of the other partners and that each of the partners is an agent and a principal. In the said case, the A.P. Transco has disqualified the petitioner therein in not taking into consideration the experience of the firm as his experience as a partner therein. The principle deduced in the above decision has application to the case of the petitioner herein.
11. M.V.V. Satyanarayana's case (supra) where in similar circumstances the learned single Judge has considered sub-Clause (f) of Clause 3.3(B) of the Notice Inviting Tenders (NIT) is akin to the requirement of filing of PAN card and filing of return as is herein. The petitioner therein who is none else than the Respondent No.3 herein filed the ITRs of the firm as was done in the instant case. When his technical bid was rejected he filed the writ petition. It was held:
"...Once it is legally conceded that a partnership firm has no independent legal existence, I do not see any justification whatsoever in respondent No.2 not considering the income tax return filed in the name of the firm of which admittedly the petitioner is the managing partner. Respondent No.2 seems to be obsessed with the fact that the income tax return was not 'on the same name' of the petitioner and this objection looks to me to be hyper-technical. As concluded supra, the purpose of sub-clause (f) of Clause 3.3(B) appears to be limited only to ensure that the bidder holds a PAN card meaning thereby that he should be an assessee. The proof in respect of such fact could be shown only by producing the latest income tax return. With the filing of the income tax return and the PAN card standing in the name of the firm of which the petitioner is the managing partner, the requirement of sub-clause (f) is adequately complied with".
We find no reason to disagree with the view expressed by the learned single Judge.
12. Section 184 of the Income Tax Act on which reliance was placed by the learned counsel for the petitioner provides that a firm shall be assessed as a firm for the purposes of the Act, if (i) the partnership is evidenced by an instrument and (ii) the individual shares of the partners are specified in that instrument. From this, it can be construed that the firm is a legal entity only for the purpose of assessment under the provisions of Income Tax Act. As rightly pointed out by the learned single Judge there is no prohibition to make use of the PAN card and ITRs filed by the firm for the purpose of satisfying the pre-qualification criteria of a tender document, particularly when Clause (6) of the amended partnership deed clearly provides that any works tendered and obtained in the name of respondent No.3 shall be deemed to have been taken on behalf of the firm. Therefore, we are in agreement with the view taken by the learned single Judge that the fiction introduced in section 184 of the Act, whereby a legal status is conferred on a partnership firm, cannot be extended to destroy the legal relationship between the partners and the firm and once the firm is assessed under the Act, such assessment would enure to the benefit of its partners for the purposes such as the present one, where proof of assessment of the tenderer is required. In our view, so long as there is no fetter created by a statute, for the limited purpose of showing proof of PAN Card and filing of return, the partners of the firm can utilize the assessment of the firm under the provisions of the Income Tax Act.
13. The contention of the petitioner that non-filing of the Income Tax Returns by the 3rd respondent as required under section 10 of the Income Tax Act amounts to evasion of tax has also no merit. At this stage, it is apt to quote the statement made by Respondent at para 8 of his writ affidavit which reads thus:
"Thus from the recitals of the amended Partnership Deed any assets created, amounts received, advantage gained from out of the work obtained on the name of this Respondent shall accrue to the benefit of the Firm and hence the Tax returns of the Firm include the payments received by this Respondent on his personal name only to the benefit of the Firm. From the reading of the said amended clause it is also clear that whenever contracts are obtained on the name of this Respondent shall automatically go to the credit and benefit of the Firm. Hence this Respondent had to invariably and necessarily submit the Tax returns of the Firm since the proceeds of the contracts obtained on this Respondent's name stand transferred to the Firm and this Respondent has no individual and independent existence and the individual name is only notional."
In view of the categorical statement of Respondent No.3, it cannot be said that there will be tax evasion by respondent No.3.
14. As regards submission of VAT latest clearance, it may be noted that S.No.18 of details of documents to be furnished has not indicated that VAT Return should also form part of the VAT clearance. It only says that latest VAT clearance is required to be filed and there is no indication that filing of a return under VAT is mandatory. Be that as it may, respondent No.3 filed the return immediately for the preceding year i.e. 2009-10 together with VAT clearance certificate dated 21.1.2011 and VAT Return Report dated 27.1.l2012 issued by the Commercial Taxes Department. There is no dispute about the authenticity of the said certificates. Admittedly, the tender process has commenced in March, 2012 and the respondent No.3, though not filed the return, however, filed the VAT clearance certificate for the period from December, 2010 to December, 2011 which was ratified by the VAT Return Report dated 27.1.2012 issued by
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the Commercial Taxes Department. In the absence of any indication in the details of documents to be furnished that VAT clearance Certificate for the year 2010-11 should be filed, it cannot be said that VAT clearance certificate dated 21.1.2011 together with VAT Return Report dated 27.1.2012 are not valid for the purpose of satisfying the condition of tender notification. At the time of entering into contract, it would also be open for the authorities to insist for furnishing copy of return filed under VAT before the Commercial Taxes Department. Therefore, we find no merit in the contention of the learned counsel for the petitioner that Respondent No.3 is not eligible to be considered for award of contract for non filing of VAT return. 15. It is not the case of the petitioner that the respondent No.3 has not fulfilled any technical criteria; he wants only that respondent No.3 should be dislodged from consideration of awarding of contract on hyper-technicalities. As held by the Supreme Court in TATA CELLUR v. UNION OF INDIA (1994) 6 SCC 651) the scope of judicial review of administrative decision in matters dealing with tender process is very limited. Review is permissible only in cases where it was established there was unreasonableness, arbitrariness and the decision making process is affected by bias or actuated by mala fides or favouritism. In the instant case, it is not the case of the petitioner that tender process has been actuated by mala fides or there was unreasonableness or arbitrariness in the decision making process. Therefore, no relief can be granted in exercise of the power of judicial review under Article 226 of the Constitution of India. 16. For the reasons aforesaid, we find no merit in the writ appeal and it is accordingly dismissed. There shall be no order as to costs.