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Padgilwar Agro Industries v/s The Director, Directorate of Sericulture, Government of Maharashtra & Others

    Writ Petition No. 789 of 2015

    Decided On, 09 April 2015

    At, In the High Court of Bombay at Nagpur

    By, THE HONOURABLE MR. JUSTICE B.P. DHARMADHIKARI & THE HONOURABLE MR. JUSTICE S.B. SHUKRE

    For the Petitioner: R.S. Parsodkar, Advocate. For the Respondents: R1 & R2, B.H. Dangre, Govt. Pleader, R3, A.V. Muley, Advocate.



Judgment Text

B.P. Dharmadhikari, J.

1. By this petition under Article 226 of the Constitution of India, the Petitioner seeks a writ to set aside acceptance of bid of respondent no.3 by the respondent nos.1 and 2 on the ground that said respondent no.3 does not fulfill essential conditions of the tender invitation with further prayer to direct respondent nos. 1 and 2 to issue work order to the petitioner. The E-tenders were invited for Engine oriented Mulberry Pruner/ shoot/Brush cutting machine. On 13,02.2015, while issuing notice to the respondents, this Court prohibited issuance of work order. Matter has been heard finally on 27.03.2015, and considering the fact that the pruners are meant for farmers and approaching financial year end, we have passed suitable interim orders to see that the grants do not lapse.

2. Considering the nature of controversy and with consent of all the parties, we have heard the matter finally by issuing 'Rule' and making it returnable forthwith. We have heard Shri R.S. Parsodkar, learned Counsel for the petitioner, Mrs. B.H. Dangre, learned Government Pleader for Respondent nos. 1 and 2 and Shri A.V. Muley, learned Counsel for the Respondent no.3.

3. Shri Parsodkar, has urged that the sample of pruner was to be submitted to Directorate of Sericulture on 04.02.2015 with commercial test report of the Central Government or recognized institute, any agriculture University of India or State Government Recognized Institute. Petitioner complied with this mandatory condition while respondent No. 3 did not have such test report. It only submitted a physical report dated 28.01.2015 of Manufacturer and a practical field test report dated 24.01.2011 of Birsa Agricultural University, Ranchi. The later report is also not a commercial test report but, it is more on the trial on land and not on performance or working of machine under all parameters. The report dated 28.01.2015 only points out the length, speed in RPM and maximum sound power level. Petitioner gave the requisite report as per clause 7 of the Annexure-A i.e., technical bid. As respondent No.3 could not comply with this mandatory term, petitioner raised an objection on 06.02.2015, but, that has not been looked into and respondent Nos. 1 and 2 have attempted to fabricate its receipt on 11.02.2015. Date 06.02.2015, put on it by petitioner has been scored off and inward entry is alleged to be made on 13.02.2015. Attention is also invited to commercial test report submitted by the petitioner to point out how various parameters are required to be applied. Appreciation of those details by the respondent Nos. 1 and 2, as seen in para 10 of reply affidavit of respondent Nos. 1 and 2 is also pressed into service with the contention that such an application of mind, qua the pruner of respondent No.3 is not possible in absence of relevant data. It is stated that the respondent Nos. 1 and 2 have found pruner of petitioner technically sound and hence, work order be issued to it by revoking the same issued to respondent No.3. Support is drawn from the rejoinder filed by the petitioner on 118.3.2015, particularly its para 12.

4. Learned Government Pleader appearing on behalf of respondent Nos. 1 and 2 invites attention to stand of said respondents in affidavit in reply. She pleads that perusal of test reports, particularly item nos. 11 to 13 show that petitioner itself did not meet all the technical requirements. Commercial test report submitted by the petitioner is relied upon to demonstrate that his pruner does not comply with the prescribed parameters. Respondent No.3 submitted necessary commercial test report online.

She states that as there are no ISI specifications or any standard parameters for uniform testing, the test report dated 24.01.2011 furnished by respondent No.3 needs to be accepted and has been accordingly accepted and acted upon. Though the commercial test reports of petitioner were not up to the mark, the pruner of the petitioner was not rejected and it was considered along with the pruner of respondent No.3, and as price quoted by respondent No.3 was lowest, its bid was accepted.

5. Shri Muley, learned Counsel adopts arguments of Mrs. Dangre, learned Government Pleader and adds that when the pruner of petitioner was not up to the mark, there was and is no scope for consideration thereof, and there can not be any comparison between them. As the offer of respondent No.3 is lowest and even otherwise, as petitioner is not eligible, the tender of respondent No.3 being only legal and valid one, it needed acceptance.

6. Before proceeding further, it would be appropriate to mention the extent of jurisdiction available to this Court in such matters. In Tata Cellular v. Union of India, ((1994) 6 SCC 651), at page 675, Hon'ble Apex Court observes:

'70. It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down.'

Judgment of Hon'ble Supreme Court in Reliance Energy Limited Vs. Maharashtra State Road Development Corporation Ltd. & Ors. (2007 (8) SCC 1), is important. In Global Tender for completing Mumbai Trans Harbour Link on BOT basis, REL/HDEC-Consortium was disqualified to participate in the second phase/stage as the consortium partner HDEC has not satisfied the Net Cash Profit criteria. Consultants for MSRDC treated the provision for doubtful debt as a cash expense though conceptually it is a non-cash expense. Two methods of "cash flow reporting" i.e. direct and indirect give identical results in the matter of the final total and they differ only in presentation of the data. No reason was given by the Consultants of MSRDC for rejecting the indirect method invoked by the Chartered Accountants of REL/HDEC. In the evaluation process, the Consultants for MSRDC mixed-up two concepts of non-compliance of financial criteria and the impact in future years on cash flow. For non-consideration of the Reconciliation Method under cash flow reporting system, the impugned decision-making process stood vitiated. Decision to exclude REL/HDEC, was held arbitrary, whimsical and unreasonable. Allowing the appeal Hon'ble Supreme Court held that REL/HDEC (Consortium) was erroneously excluded from the second stage of bidding process. It also has pointed out that the doctrine of "level playing field" is embodied in Article 19(1)(g) of the Constitution and provides space within which equally-placed competitors are allowed to bid so as to sub-serve the larger public interest. Decisions or acts which result in unequal and discriminatory treatment, violate the doctrine of "level playing field" When tenders are invited, the terms and conditions must indicate with legal certainty, norms and benchmarks. "Legal certainty" is an important aspect of the rule of law. Vagueness or subjectivity in the said norms may result in unequal and discriminatory treatment and may violate doctrine of "level playing field". In Michigan Rubber (India) Ltd. v. State of Karnataka, ((2012) 8 SCC 216), at page 229, Hon'ble Apex Court explains:

'24. 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 the negative, then there should be no interference under Article 226.'

7. Question in present matter is whether the bids of rival parties have been assessed on same parameters ? The commercial test report on petitioner's pruner shows a remark that fatigue was seen after half hour of operation due to excessive vibrations and noise level and the operator complained of pain in different parts of body like arms, shoulder, right side thigh etc. During 26.1 hour field operation, fuel leakage was observed from the carburetor. Noise at operators ear and bystander's ear level was at higher level as against warning or danger limits of 85dB(A) and 90dB(A) for continuous exposure of 8 hours per day. Expert has suggested reduction in noise level to improve operational safety and comfort. Respondent No.3's pruner was tested at BAU,Kanke, Ranchi. It was found to function satisfactorily in normal conditions. Parameters of test applied in practical field test are a) Condition of field i.e., land; b) source of draft power and implementation, and c) condition of operator. The factors like safety provision, engine performance test, mechanical vibration measurement, noise measurement, hardness and chemical composition of critical components like 3 teeth blade, circular disc do not find mention in test report of respondent No.3. Even field tests in case of petitioner appear to be more extensive and comprehensive and put forth more data on operational performance of the pruner. Field tests for 26.1 hours duration comprising of paddy harvesting with circular disc and brush /weeds cutting 3 teeth blade attachments were carried out for 10.6 hours and 15.5 hours respectively. Total 9 test trials were conducted. Thus commercial test reports in case of machine of the respondent no.3 appear to be superficial in nature. Learned Government Pleader has attempted to explain this by pointing out the absence of any accepted uniform standards in the matter.

8. We can not delve more into the niceties and technicalities of the pruners of parties before us. If the uniform norms are not available, it was open to the respondent nos. 1 and 2 to lay down its own parameters for evaluating the performance of such machines. If it found a particular commercial test report shallow, it ought to have consulted the experts in the field to enable it to reach suitable decision. It could not have compared two unequal reports in an effort to find out the best pruner. It should have beforehand laid down the relevant parameters and demanded compliance with it instead of leaving it to individuals to devise their own standards or tests. Here, we have to reiterate that the respondent nos. 1 and 2 have not refused to consider the bid of petitioner, but having matched it with that of respondent no.3, they arrive at the conclusion that commercial bid of the respondent no.3 is lower than that of petitioner.

9. Hon'ble Apex Court has explained the position in B.S. Minhas v. Indian Statistical Institute, (1983) 4 SCC 582), at page 594:

'23. The next question that arises for consideration is whether the appointment of Respondent 4 as Director of Respondent 1 is illegal because of non-compliance with bye-law 2. Bye-law 2 does require that before appointment, the vacancy in the post of Director should be suitably publicized. In the instant case, it is admitted on both sides that no publicity whatsoever was given in respect of the vacancy. The contention of Shri Garg, however, is that the bye-law having no force of statute, non-compliance with its requirement cannot in any way affect the appointment of Respondent 4 as Director of Respondent no.1. Shri Tarkunde, however, contended that assuming that the bye-law is not statutory, even so Respondent no.1 was bound to comply with it. In support of his contention he strongly relied upon Ramana Dayaram Shetty v. International Airport Authority of India. The Court in that case held: (SCC p. 503, para 10)

'It is a well-settled rule of administrative law that an executive authority must be rigorously held to the standards by which it professes its actions to be judged and it must scrupulously observe those standards on pain of invalidation of an act in violation of them. This rule was enunciated by Mr Justice Frankfurter in Vitarelli v. Seaton where the learned Judge said:

An executive agency must be rigorously held to the standards by which it professes its action to be judged.... Accordingly, if dismissal from employment is based on a defined procedure, even though generous beyond the requirements that bind such agency, that procedure must be scrupulously observed.... This judicially evolved rule of administrative law is now firmly established and, if I may add, rightly so. He that takes the procedural sword shall perish with the sword.’'

The aforesaid principle laid down by Mr Justice Frankfurter in Vitarelli v. Seaton has been accepted as applicable in India by this Court in Amarjit Singh Ahluwalia v. State of Punjab and in subsequent decision given in Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi. Mathew, J. quoted the above-referred observation of Mr Justice Frankfurter with approval.

24. In view of the pronouncement of this Court on the point it must be held to be obligatory on the part of Respondent no.1 to follow the bye-laws, if the bye-laws have been framed for the conduct of its affairs to avoid arbitrariness. Respondent no.1 cannot, therefore, escape the liability for not following the procedure prescribed by bye-law 2.'

Thus, when the respondent nos. 1 and 2 are obliged to offer level playing field and choose the best pruner for the farmers, it was and it is their duty to evolve proper parameters for judging the said machines. Here, the respondent nos. 1 and 2 did not refuse to consider the bid of petitioner, but, have treated it as a valid commercial offer. Therefore only, they compared it with bid of respondent no.3. They also reach the conclusion that bid of the respondent no.3 is lower than that of petitioner. While undertaking this exercise, it was aware of the technical factors that needed a look before holding any pruner to be technically sound. It was also alive to the test reports of petitioner and hence of the fact that commercial test report of the respondent no.3 is technically incomplete. It could not have therefore treated the offer of the respondent no.3 as suitable offer. Being 'State' within Article 12 of the Constitution of India, and also bound to take every such step in the public interest, it should have called upon the respondent no.3 to submit the commercial test report also under the heads on which it could scrutinize the pruner of the petitioner. It can not escape this responsibility under the pretext that there are no ISI or other well-settled accepted norms for said machine. Such a self serving plea may at times indicate lack of bonafides. It has deviated from the right perspective in the matter. Respondent nos. 1 and 2 who are executing the welfare measure that too, in favour of agriculturist class on one hand and manufacturers of pruner or brush cutting machines like the petitioner or respondent no.3 who operate commercially on the other hand, can not come together and force wrong appliances on farmers. Having accepted to discharge such an obligation, respondent nos. 1 and 2 can not avoid to take necessary precautionary measures and must show that it has acted with complete diligence to safeguard the farmers. Otherwise it will not be duly honouring the faith reposed in it. It will lead to arbitrariness, abuse of authority and refusal to act fairly. Division Bench of this Court in Bharat Biotech International Ltd. vs. Directorate of Medical Education & Research & Others. (2011 (1) All MR 668), has held that such public authority is duty bound to comply with the norms of fairness cast upon it by Article 14. Whether petitioner submitted any objection on 06.02.2015 or then its entry was taken in inward register by respondent nos. 1 and 2 later on is hardly relevant. We have in our order dated 27.03.2015 noted how the inward entries were not taken every day by the office of these respondents. As said register is not being maintained regularly, it is not creditworthy at least at this stage in these proceedings.

10. We can not forget that during arguments, Shri Parsodkar, learned counsel upon instructions also stated that petitioner is ready and willing to supply its pruner at the same rate as quoted by respondent no.3. This offer raises other vital issues which again may require attention of other respondents. Support drawn by learned Counsel for petitioner from SorahBuilders vs. Shreejikrupa Buildcon Ltd. (2009) 11 SCC 9) to urge that next lowest tender of petitioner needs to be accepted is misconceived in these facts. In this background when we put the questions –

(i) Whether the decision

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to accept tender of respondent no.3 is such that no responsible authority acting reasonably and in accordance with law could have reached it ? and (ii) Whether the public interest is affected?, we find the answer to both in affirmative, in present facts. Hence as laid down by the Hon'ble Apex Court in Michigan Rubber (India) Ltd. v. State of Karnataka (supra), we are inclined to intervene in this matter. 11. Accordingly, we quash and set aside the acceptance of tender of as also work order, if any, issued to respondent no.3 by the respondent nos. 1 and 2. We direct said respondent to have proper evaluation of the bids of the petitioner and respondent no.3 on necessary touch stones. These touch stones or the parameters for tests be evolved in advance and in consultation with the experts in the field keeping in mind the need of the farmers. These standards be determined before embarking upon the exercise and with notice to all concerned. If after such standards are decided, the respondent nos. 1 and 2 deem it in public interest to invite fresh tenders, we leave it free to do so. If it finds it appropriate to examine the offers of the petitioner and respondent no.3 on said parameters, it is also free to do so. 12. Only to enable the respondent nos. 1 and 2 to undertake this exercise, we partly allow the writ petition. The offers of the petitioner and respondent no.3 are restored back, and kept open for fresh consideration as per law in terms of the directions given in paragraph above. Respondent nos. 1 and 2 have undertaken this exercise in the interest of farmers as a part of State welfare activity. Hence, directions issued by this Court on 27.03.2015, with view to save the budget grants from lapsing are continued and shall remain in force till the said respondents procure the standard pruners to suit its requirements. 13. Rule is made absolute in these terms with no orders as to costs.
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