IA No. 1386/2020 is an application for vacating stay. With the consent of the parties, the matter was heard through Video Conferencing and it is being disposed of finally.
The petitioner before this Court, a Company registered under the Companies Act, in the name of Orion Security Solutions Private Limited, under the Companies Act, 1956 has filed this present writ petition being aggrieved by one of the conditions in the NIT No. ED/IR/2019-20/PUR/TS-300, issued by the Executive Director / Chief Engineer, Madhya Pradesh Paschim Kshetra Vidyut Vitran Company Ltd., (hereinafter referred to as, 'the MPPKVV Co. Ltd.,) The contention of the petitioner is that the petitioner Company was incorporated on 10/6/2020 and it is also registered the the Ministry of Labour and Employment. The Company is also registered with the Employees' State Insurance Corporation and is engaged in the business of outsourcing the manpower to various institutions / Central Government and State Government undertakings / Power Distribution Companies, Banks, etc., in different States of the country. Petitioner has further stated that the NIT was issued on 9/12/2019 for outsourcing of unskilled, semi- skilled, skilled and highly skilled manpower to carry out miscellaneous works of the MPPKVV Co. Ltd., Indore and the last date for submission of the bid was 17/3/2020. The petitioner is aggrieved by the condition inserted vide clause No. 39.1 of Sec. 3 of the Instructions to the Bidders. The contention of the petitioner is that initially there was no such condition and later on by issuing revised instructions / amendment new conditions have been incorporated. The petitioner has challenged the following conditions, as detailed in Clause 39.1 of Sec. 3 of the Instructions to the Bidder and it reads as under :
39. Tie-breaking 39.1. In case of tie-breaking ie., more than one bidder adjusged as L1, following order of priority shall be adhered to (in sequential manner) until single L1 bidder is decided:
1. The bidder with highest techno-commercial score shall be adjusted as final L1 bidder.
The bidder with second highest techno-commercial score shall be adjusted as L2 bidder(s). Similarly, descending order of bidders techno-commercial score shall be used to adjust L3, L4 and so on bidders. If there is still more than one bidder with the same score, next step shall be followed.
2. The bidder with highest total contract value in all awarded outsourcing contracts, in financial year 2018-19, in any Central / State PSU(S) / Government Department(s) serving in the State of Madhya Pradesh as per Annex-XIX shall be adjudged as final L1 bidder.
The bidder with second highest total contract value in all awarded outsourcing contracts, in financial year 2018-19 in any Central / State PSU(s) / Government Department(s) serging in State of Madhya Pradesh as per Annex-XIX shall be adjudted as L2 bidder(s). Similarly, descending order of bidders, total contract value, in all awarded outsourcing contracts, in financial year 2018-19, in any Central / State PSU(S) / Government Department(s) serving in State of Madhya Pradesh as per Annex-XIX shall be used to adjust L3, L4 and so on bidders. If there is still more than one bidder with the same score, next step shall be followed.
3. The bidder with highest 'total contract value' in all awarded outsourcing contracts, in financial year 2018-19 in any Central / State PSU(s) / Government Department(s), serving in India, as per Annexure XVII shall be adjudged as final L1 bidder.
The bidder with with second highest 'total contract value' in all awarded outsourcing contracts in financial year 2018-19 in any Central / State PSU(S) / Government Department(s), serving in India, as per Annex-XVII shall be adjudged as L2 bidder(s). Similarly, descending order of bidders, total contract value, in all awarded outsourcing contracts, in financial year 2018-19, in any Central / State PSU(s) / Government Department(s) serving in India as per Annex-XVII shall be used to adjust L3, Lr and so on bidders. If there is still more than one bidder with the same score, next step shall be followed.
4. The bidder with highest average annual turnover figure for last 3 financial years from manpower outsourcing shall be adjusted as final L1 bidder.
The bidder with second highest average annual turnover figure for last 3 financial years shall be adjusted as L2 bidder. Similarly, descending order of bidders, average annual turnover figure for last 3 financial years shall be used to adjust L3, L4 and so on bidders.
The grievance of the petitioner is that the Contractor who has worked with the Government and is serving with the State of Madhya Pradesh will be given priority, meaning thereby, if there is a tie-breaking between two bidders, then the bidder working with the State of Madhya Pradesh will be selected.
Mr. Rishi Tiwari, learned counsel for the petitioner has argued before this Court that the impugned condition is highly unreasonable, arbitrary, discretionary and violative of Article 14, 19 and 301 of the Constitution of India. He has further contended that by giving preference to the bidders who are working the State of Madhya Pradesh is an afterthought and has been introduced with oblique and ulterior motive. He has further contended that the condition of supplying unskilled labour by the bidders who are working in the State of Madhya Pradesh is highly unreasonable and Companies who are supplying unskilled labour to other States are also entitled to be treated at par and, therefore, the condition is violative of Article 14, 16 and 20 of the Constitution of India. He has also argued that no such condition was earlier in existence in the previous tender and the condition introduced is an afterthought. The petitioner has also filed a rejoinder and it has been stated that there is no urgency in the matter as the earlier contractor has been given an extension upto 30/6/2020 and, therefore, the question of vacating the stay does not arise. It has also been stated that the respondents under the garb of COVID-19 has shown unholy haste in getting the matter decided.
Mr. Rishi Tiwari, learned counsel for the petitioner has placed reliance upon the judgment delivered by the apex Court in the case of Tata Cellular Vs. Union of India reported in 1994 (6) SCC 651 and his contention is that in the light of the aforesaid judgment delivered by the Hon'ble Supreme Court, the condition, as it is unreasonable, it smacks from mala-fides and as it has been framed to favour the local contractors, deserves to be quashed.
On the other hand, Mr. Prasanna Prasad, learned counsel for the respondents has vehemently argued before this Court that after issuance of NIT, a Pre-bid Meeting took place and almost 36 participants have participated in the Pre- bid Meeting including the present petitioner. The NIT was issued on 9/12/2019 and queries were raised in the matter and in those circumstances, a Pre-bid Meeting took place and as many as 36 participants participated in the meeting and in this backdrop various amendments were made in respect of extension of date, addendum and corrigendum and later on corrigendum was issued. He has also argued that the question of giving preferential treatment does not arise. However, only in case of tie-breaking the Companies who have experience with the Central Government, with the State Government and with the Public Sector Undertakings in the State of Madhya Pradesh are being given preference. It has also been stated that the petitioner's only grievance is with the tie-breaking clause. The respondents have stated that the tie-breaking Clause will come into existence only when the financial bid of the participants is opened and two Companies are found L1. It has been argued that in the past respondents have faced various issues in respect of the Companies situated outside the State of Madhya Pradesh like delayed payment of salary, non payment of EPF / ESIC Contribution, GST Contribution, submission of bills etc., it has been stated that keeping in view the COVID-19, as there is an acute shortage of manpower, a prayer has been made to hear the matter urgently, the monsoon season is approaching very fast, maintenance of lines is to be done, the equipments are to be protected from theft and, therefore, they cannot continue without the manpower, otherwise the entire State will face power crunch.
Learned counsel for the respondent has stated that by no stretch of imagination the conditions can be treated as arbitrary, as argued by the learned counsel for the petitioner. Learned counsel for the respondent has placed reliance upon the judgment delivered by the apex Court in the case of Bharat Sancher Nigam Ltd. Vs. Telephone Cables Ltd. Reported in (2010) 5 SCC 213; Michigan Rubber (India) Ltd. Vs. State of Karnataka and others reported in (2012) 8 SCC 216; Master Marine Services (P) Ltd. Vs. Metcalfe & Hodgkinson (P) Ltd. Reported in (2005) 6 SCC 138; and in the case of Centre for Public Interest Litigation and another Vs. Union of India reported in (2000) 8 SCC 606.
Heard learned counsel for the parties at length and perused the record. The matter is being disposed of finally with the consent of the parties.
The undisputed facts of the case reveal that the petitioner is one of the participants in respect of the NIT issued on 9/12/2012 which is in respect of outsourcing of unskilled, semi-skilled, skilled and highly skilled manpower required for miscellaneous works of the MPPKVV Co. Ltd., Indore. The last date for submission of bid was 19/3/2020 and various queries were raised by the probable bidders and a pre-bid meeting took place in which 36 participants have participated and they raised various queries. Deliberations took place and the petitioner was also one of the persons who attended the pre-bid meeting. A corrigendum was issued which is in respect of tie-breaking and it will come into play only when there are two persons or more than two persons who have given the same offer (L1). As per clause 39 tie- breaking, a person who has worked in the State of Madhya Pradesh either with the Central Government or with the State Government, the Public Sector Undertakings or with the Government Department will be given preference and priority. It is not a case where the person who have not worked with the State Government / Central Government / Public Secotr Undertakings in the State of Madhya Pradesh is being excluded to participated in the process. It is only when there is a tie-breaking the aforesaid clause will come into existence. Even the Companies which are situated out of State of Madhya Pradesh are eligible to participate and are also eligible to take advantage of the tie-breaking clause in case in the past they have worked with any Organisation / Public Sector Undertakings in the State of Madhya Pradesh and, therefore, this Court is of the considered opinion that such a Clause cannot be termed as unreasonable and arbitrary.
This Court is of the considered opinion that by no stretch of imagination, the insertion of the tie-breaking clause is violative of Article 14, 19(1)(g) and 301 of the Constitution of India. The tie-breaking clause comes into existence only when two participants are equal and have quoted the same rates and, therefore, the person who is already working with the Government Departments / Public Sector Undertakings is being given preference, as some criteria has to be evolved in case of a tie.
The Hon'ble Apex Court in the case of Michigan Rubber (India) Limited v/s The State of Karnataka & Others reported in 2012 (8) SCC 216 in paragraphs-25 to 37 has held as under:-
"25. Respondent No. 1-the State, in their counter affidavit, highlighted that tyre is very critical and a high value item being procured by the KSRTC and it procured 900x20 14 Ply Nylon tyres along with the tubes and flaps in sets and these types of tyres are being used only by the State Transport Units and not in the domestic market extensively. It is highlighted that the quality of the tyre plays a major role in providing safe and comfort transportation facility to the commuters.
26. It is also pointed out by the Respondent-State that in order to ensure procurement of tyres, tubes and flaps from reliable sources, the manufacturers of the same with an annual average turnover of Rs. 200 crores during the preceding three years, were made eligible to participate in the tenders. In the tender issued for procurement of these sets during October, 2004, the appellant participated and based on the L1 rates, the orders for supply for 16,000 sets of tyres were placed on the firm. It is also pointed out that the appellant supplied 10,240 sets of tyres and remaining quantity was cancelled due to quality problems.
27. Materials has also been placed to show that the appellant participated in subsequent tenders and orders were released for supply of 900 x 20 14 PR tyres, tubes and flaps from October 2006 to September, 2007. It is also explained that after going into various complaints, in order to achieve good results, new tyre mileage and safety of the public etc., and after noting that vehicle/chassis manufacturers such as M/s Ashok Leyland, M/s Tata Motors etc. have strict quality control system, it was thought fit to incorporate similar criteria as a pre-qualification for procurement of tyres.
28. It is also highlighted by the State as well as by the KSRTC that the tender conditions were stipulated by way of policy decision after due deliberation by the KSRTC. Both the respondents highlighted that the said conditions were imposed with a view to obtain good quality materials from reliable and experienced suppliers. In other words, according to them, the conditions were aimed at the sole purpose of obtaining good quality and reliable supply of materials and there was no ulterior motive in stipulating the said conditions.
(a) Managing Director, Bangalore Metropolitan Transport Corporation
(b) Managing Directors of four sister Corporations
(c) Director, Security & Vigilance
(d) Director, Personnel and Environment
(e) Chief Accounts Officer
(f) Chief Engineer (Production)
(g) Chief Engineer (Maintenance)
(h) Chief Accounts Officer (Internal Audit)
(i) Controller of Stores and Purchase
29. Thus it is clear that the said CMG is a widely represented body within the Respondent No. 2-KSRTC.
30. Further materials placed by KSRTC show that the CMG met on 17.05.2007 and deliberated on the question of conditions to be incorporated in the matter of calling of tenders for supply of tyres, tubes and flaps. It is pointed out that in view of the experience gained over the years, it was felt by the said Group that the impugned two conditions should be essential qualifications of any tenderer. The said policy decision was taken in the best interest of the KSRTC and the members of the traveling public to whom it is committed to provide the best possible service. In the course of hearing, learned counsel for the respondents have also brought to our notice the Minutes of Meeting of the CMG held on 17.05.2007. The said recommendation of the CMG was ultimately approved by the Vice Chairman of KSRTC. In the circumstances, the said impugned two conditions were incorporated in the tender notice dated 05.07.2007.
31. It is also brought to our notice that the KSRTC is governed by the provisions of the Karnataka Transparency in Public Procurements Act, 1999 and the Rules made thereunder, viz., Karnataka Transparency in Public Procurements Rules, 2000. Though in Condition No 2(a) in the tender notice dated 05.07.2007, the names of certain vehicle manufacturers were mentioned, after finding that it was inappropriate to mention the names of specific manufacturers in the said condition, it was decided to delete their names. Accordingly, a corrigendum was put up before the CMG and by decision dated 04.08.2007, CMG decided to revise the pre-qualification criteria by deleting the names of those manufacturers. Learned counsel for the respondents have also placed the Minutes of Meeting of the CMG held on 04.08.2007. It is also brought to our notice that the said corrigendum was also approved by the competent authority.
32. In addition to the same, it was not in dispute that the appellant- Company was well aware of both the original tender notices and the corrigendum issued. It is also brought to our notice that the appellant wrote a letter making certain queries with regard to the corrigendum issued by the KSRTC and the said queries were suitably replied by the letter dated 11.08.2007.
33. It is also seen from the records that pursuant to the tender notice dated 05.07.2007, seven bids were received including that of the appellant- Company. They are:
(i) M/s Apollo Tyres
(ii) M/s Birla Tyres
(iii) M/s Ceat Ltd
(iv) M/s Good Year India
(v) M/s JK Industries
(vi) M/s MRF Ltd
(vii) M/s Michigan Rubber (Former Betul Tyres)
It is brought to our notice that successful bidders were CEAT and JK Tyres. Accordingly, contracts were entered into with the said two companies by the KSRTC and the purchase orders were placed and they have also effected supplies and completed the contract and the KSRTC also made payments to the said suppliers.
34. It is pertinent to point out that the second respondent has also issued 4 (four) more tender notices after the tender notice dated 05.07.2007. The said tender notices were dated 04.03.2008, 22.08.2008, 24.10.2008 and 19.03.2009. Pursuant to the tender notices dated 04.03.2008, 22.08.2008 and 24.10.2008, contracts have been awarded and have been substantially performed. It is also brought to our notice that all the said four subsequent tender notices also contained identical conditions as that of the impugned conditions contained in tender notice dated 05.07.2007.
35. As observed earlier, the Court would not normally interfere with the policy decision and in matters challenging the award of contract by the State or public authorities. In view of the above, the appellant has failed to establish that the same was contrary to public interest and beyond the pale of discrimination or unreasonable. We are satisfied that to have the best of the equipment for the vehicles, which ply on road carrying passengers, the 2nd respondent thought it fit that the criteria for applying for tender for procuring tyres should be at a high standard and thought it fit that only those manufacturers who satisfy the eligibility criteria should be permitted to participate in the tender. As noted in various decisions, the Government and their undertakings must have a free hand in setting terms of the tender and only if it is arbitrary, discriminatory, mala fide or actuated by bias, the Courts would interfere. The Courts cannot interfere with the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. In the case on hand, we have already noted that taking into account various aspects including the safety of the passengers and public interest, the CMG consisting of experienced persons, revised the tender conditions. We are satisfied that the said Committee had discussed the subject in detail and for specifying these two conditions regarding pre- qualification criteria and the evaluation criteria. On perusal of all the materials, we are satisfied that the impugned conditions do not, in any way, could be classified as arbitrary, discriminatory or mala fide.
36. The learned single Judge considered all these aspects in detail and after finding that those two conditions cannot be said to be discriminatory and unreasonable refused to interfere exercising jurisdiction under Article 226 of the Constitution and dismissed the writ petition. The well reasoned judgment of the learned single Judge was affirmed by the Division Bench of the High Court.
37. In the light of what is stated above, we fully agree with the reasoning of the High Court and do not find any valid ground for interference. Consequently, the appeal fails and the same is dismissed with no order as to costs."
In light of the aforesaid judgment, it can safely be gathered that the Government and their undertakings do have a free hand in setting terms of a tender and unless the terms and conditions are arbitrary, discriminatory, malafide or actuated by bias, the scope of interference by Courts does not arise. In the aforesaid judgment it has also been held that the Court would not interfere in a matter because it feels that some other terms in the tender would have been fairer, wiser or more logical.
The scope of judicial scrutiny has been considered by the Hon'ble Apex Court time and again. In the case of Afcons Infrastructure Limited v/s Nagpur Metro Rail Corporation Limited reported in 2016 (16) SCC 818, the Apex Court has held as under:-
"We may add the owner or the employer of a project, having authored the tender documents, is the best persons to understand and appreciate its requirements and interpret its documents. The constitutional Courts must defer to this understanding and appreciation of the tender documents, unless there a malafide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner of employer of a project may give an interpretation to the tender documents that is no acceptable to the constitutional Courts but that by itself is not a reason for interfering with the interpretation given".
The Apex Court in the case of Reliance Telecom Limited & Others v/s Union of India & Others reported in 2017 (4) SCC 269 has again dealt with scope of interference in respect of the tender.
In the case of Tata Cellular v/s Union of India reported in 1994 (6) SCC 651 again the scope of judicial review has been looked into by the Hon'ble Apex Court. In the aforesaid ca
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se, it has been held that the terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract and the Government must be allowed to have a fair play in the joints as it is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. The Apex Court in the case of Monarch Infrastructure (P) Limited v/s Ulhasnagar Municipal Corporation & Others reported in 2000 (5) SCC 287 was again dealing with the N.I.T. and it has been held that it cannot say whether the conditions are better than what were prescribed earlier, for in such matters, the authority calling the tenders is the best judge. The Court declined to restore status quo ante. In the case of Cellular Operator Association of India & Others v/s Union of India & Others reported in 2003 (3) SCC 186, the Apex Court has held that in respect of the matters affecting policy and those that require technical expertise, the Court should show deference to, and follow the recommendations of the Committee which is more qualified to address the issues. In the considered opinion of this Court, the petitioner has failed to establish that the criteria adopted by the respondents is contrary to public interest, discriminatory or unreasonable. Hence, the question of interference by this Court does not arise. In the light of the aforesaid, this Court is of the considered opinion that the condition in respect of tie, is certainly not at all unreasonable, it has not been framed to favour a particular person and the petitioner has not been able to establish mala-fide, hence the question of interference by this Court does not arise. The respondents, have stated before this Court, that they do not have the manpower on account of the lockdown, they are not able to engage daily wagers also as most of the migrant labours have left for their native places, they should be given liberty to open the financial bid immediately and to allot the work in order to ensrue that there is uninterrupted supply of electricity in the State of Madhya Pradesh keeping in view the rainy season which is approaching very fast. Resultantly, the respondents shall open the financial bid also and shall allot the work in question keeping in view the terms and conditions of the NIT. With the aforesaid, the Writ Petition stands dismissed. No order as to costs.