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Poorvanchal Caterers & Another v/s Indian Railway Catering & Tourism Corporation Ltd.

    W.P (C ) No. 22653-54 of 2005

    Decided On, 22 December 2005

    At, High Court of Delhi

    By, THE HONOURABLE CHIEF JUSTICE MR. MARKANDEYA KATJU & THE HONOURABLE MR. JUSTICE MADAN B. LOKUR

    For the Petitioner: Krishnamani, Sr. Advocate with Brajesh Kumar, Advocate. For the Respondents: R1 & R2, V.K. Makhija, Senior Advocate with Akshay Makhija, Advocate, R3, Sudhir Chandra, Senior Advocate with Ms. Bharti Tyagi, Advocate.



Judgment Text

Markandeya Katju, C.J.

1. This writ petition has been filed for a direction that the respondent No. 1, the Indian Railway Catering & Tourism Corporation Ltd. be directed not to deviate from the terms of the tender and general conditions of the licence in awarding the contract to operate and manage on board catering services on Train No. 3351-52 to respondent No. 3.

2. As stated in para 4 of the writ petition, the respondent No. 1 advertised in the National Newspapers on 27.6.2005 inviting bids in sealed cover for operation and management of catering and onboard services on as many as 22 trains including the train No. 3351-52, Dhanbad/Tata-Alleppy Express (herein after referred to as the ‘train’). A true copy of the advertisement is annexure P1 to the writ petition.

3. The petitioner submitted its bid within time in response to the said advertisement Clause 5.2 of the general conditions of licence stated that the licence to manage catering services will normally be awarded to the party quoting the highest amount of licence fee subject to fulfilment of the terms and conditions of the licence.

4. Clauses 7.1 & 7.2 of the same state as under:

'7.1 Acceptance of award of Licence and submission of Security Deposit-

Successful parties would be given 7 (seven) days time, or less time as the case may be, from the date of issue of the letter of award of licence for payment of the Security Deposit and the first instalment of licence fee and to convey his acceptance of award of licence. In case the Licensee fails to accept the offer of award of licence, the Licensee shall be debarred from participating in the future projects of IRECTC for a period of one year.'

'7.2 Submission of Licence Fee/Security Deposit-

The Licensee shall deposit the licence fee as intimated by IRCTC within the stipulated period and Licensee would be allowed 15 (fifteen) days or less time as advised by IRCTC, from the date of issue of letter for award of licence, to provide on board and catering services in train.'

5. It is alleged in para 4 (xiv) of the petition that the respondent No. 3 M/s. Ambuja Hotel & Real Estate Pvt. Ltd. was the highest bidder and was directed to deposit the security money and the licence fee within the time stipulated in the letter of award. However, respondent No. 3 failed to deposit the security money and licence fee till 10.11.2005, even after having been granted several opportunities to deposit the same. It is alleged that respondent No. 3 had earlier defaulted in depositing the security money and licence/concession fee with respect to train Nos. 2429-30, letter of award for which had been issued to respondent No. 3 earlier.

6. Clause 5.5 of the general conditions prescribed that a successful bidder will be debarred from participating in the bidding process of future projects of respondent No. 1 for a period of one year if he refuses to accept the offer of award of licence. It is alleged that respondent No. 3 having defaulted once was liable to be debarred from participating in future projects of the IRCTC for a period of one year and in the instant case was debarred from bidding for the train in question i.e. 3351-3352 as well.

7. Clause 4 of the letter issued by respondent No. 1 to respondent No. 3 dated 10.11.2005 makes it clear that respondent No. 3 had sought extension of time to deposit the amount by 20.11.2005 and the respondent No. 1, in response, has directed the respondent No. 3 to first accept the award of licences in respect of train Nos. 2429-2430 and 3351-3352 along with payment of security deposit latest by 14.11.2005 and the licence/concession fee by 20.11.2005. It is alleged that this leads to an inevitable conclusion that in the matter of award of licence to the respondent No. 3, the respondent No. 1 by granting extension time and again has violated Clause 7.1 of the general conditions of the tender. True copy of the letter dated 10.11.2005 is Annexure P3 to the writ petition.

8. The petitioner requested the respondent No. 1 to reject the bid of respondent No. 3 for having defaulted,vide letter dated 26.10.2005, Annexures P4 & P5. However, it is alleged that respondent No. 1 was bent upon granting the contract to respondent No. 3, and hence this petition.

9. A counter affidavit has been filed by respondent Nos. 1 & 2 and we have perused the same. In para (II) of the preliminary submissions in the counter affidavit, it is stated that though Clause 7.1 is couched in a mandatory form, the answering respondents have to be given some leverage in order to meet the operational exigencies. Even otherwise, the extension of time granted in the present case has been done keeping in mind the peculiar facts and circumstances of the case. It is submitted that the cost of re-tendering would cause unnecessary burden on the exchequer, which can be avoided by allowing small and reasonable extensions, as has been done in the present case.

10. The respondent No. 3 was the highest bidder quoting an amount of Rs. 79.13 lakh. The petitioner was the second highest bidder. Respondent No. 1 despatched the letter dated 18.10.2005 informing the respondent No. 3 that it has been decided to award the licence for the management of onboard catering services on Train No. 3351-52 to the said respondent No. 3. He was further asked to deposit Rs. 14.21 lakh towards security deposit and Rs. 79.13 lakh towards annual licence fee on or before 26.10.2005. True copy of the letter dated 18.10.2005 in this connection is Annexure R-1.

11. It appears that the respondent No. 3vide letter dated 26.10.2005 deposited a sum of Rs. 78 lakh towards train Nos. 9045-46, 9047-48 Tapti-Ganga Express but the said contract could not be handed over to respondent No. 3 in view of an order of status quo passed by the Orissa High Court dated 6.10.2005 in a writ petition. The said order was extended from time to timevide annexure R-4 to the counter affidavit.

12. On 31.10.2005 the respondent No. 1 issued a show cause notice to respondent No. 3 stating that it had failed to deposit the security deposit and annual licence fee in respect of train No. 3351-52 in terms of the letter dated 18.10.2005, and it should accept the award of the licence and pay the amount; failing which respondent No. 1 would take suitable action as per the terms and conditions of the tender. However, it appears that a representation was made by respondent No. 3 stating that in view of the fact that the respondent No. 3 had already deposited an amount of Rs. 78 lakh in respect of Tapti-Ganga Express whose contract could not be handed over to the said respondent No. 3, the respondent No. 1 may kindly extend the time for depositing the amount in respect of train No. 3351-52. Hence respondent No. 1 by letter dated 10.11.2005 extended the time for payment of security deposit for the said train No.3351-52 till 14.11.2005 and the time for paying the licence fee till 20.11.2005. True copy of the letter dated 10.11.2005 is annexure as 5A to the writ petition. Thereafter on 22.11.2005 respondent No. 3 pursuant to meetings with respondent No. 1 made a written representation to adjust the licence fee deposited towards Tapti-Ganga Express in respect of train No. 3351-52. Copy of letter of respondent No.3 dated 22.11.2005 is annexed as R-6 to the writ petition. Thereafter on 24.11.2005 respondent No.3 deposited the balance amount payable in respect of train No. 3351-52 by telegraphic transfer. A true copy of the letter dated 24.11.2005 is annexure as R-7 to the writ petition.

13. In para 4(ix), it is alleged that in view of the peculiar circumstances of the case and in view of the fact that respondent No. 1 could not hand over the contract in respect of Tapti-Ganga Express for which respondent No. 3 had made full payment it had been decided to accept the representation of respondent No. 3 and award the licence of Train No.3351-52 to respondent No. 3. The said decision was taken on 25.11.2005 and copy of the said office order dated 25.11.2005 is Annexure R-8.

13A. In para 4(xiii), it is alleged that the 7-day time period stipulated in Clause 7.1 cannot be read in such a rigid manner so as to bar the answering respondents from taking a decision as may be required by administrative exigencies. In this case the cost of re-tendering would cause an unnecessary burden on the exchequer. This could be avoided by allowing small and reasonable extensions, as has been done in the present case.

14. A counter affidavit has also been filed by respondent No. 3 and we have perused the same. It is stated that undoubtedly the respondent No. 3 was the highest bidder in the contract. It is alleged in para 4(iv) that the security amount as well as licence fee with regard to two trains had already been deposited by respondent No. 3 within time, and they were ready to start those train from 1.11.2005. As regards the other two trains, which included the present train No. 3351-52, the respondent No. 3 requested the respondent No. 1 for extending the time to deposit the security money and the licence fee due to the difficulties referred to above. The respondent No. 1 in response to the letter dated 7.11.2005 wrote a letter dated 10.11.2005 to respondent No. 3 stating that it had decided to extend the time for depositing the security till 14.11.2005 and the licence fee by 20.11.2005. True copy of the letter dated 10.11.2005 is annexure as CA-6 to the counter affidavit.

15. The respondent No.3 complied with the directions in the letter dated 10.11.2005, and accordingly respondent No. 1 appointed respondent No. 3 as the licencee to provide catering services in train Nos. 3351-52 w.e.f 1.12.2005vide annexure CA-7 to the counter affidavit.

16. The respondent No. 3 has relied on Clause 7.9 of the general conditions which gives the right to the parties to vary the agreement on certain conditions. Learned Cousel for respondent No. 3 has contended that Clause 7.9 has not been annexed to the writ petition, and hence the petitioner has concealed relevant facts by not annexing the entire tender document with the writ petition. Hence he has not come with clean hands.

17. After hearing learned Cousel for the parties we are of the opinion that there is no merit in this petition. It appears that the entire tender document was not annexed by the petitioner. Hence Clause 7.9 was not before us when we granted the interim order dated 29.11.2005 in this case.

18. In our opinion, it was the duty of the petitioner to file the entire tender document and not merely the quoted portion of it in para 4(II) of the writ petition. Had the entire document been before us, it is quite possible that we may not have passed the interim order dated 29.11.2005. Hence, in our opinion the petitioner has not come with clean hands and the writ petition is liable to be dismissed on this ground alone.

19. The said Clause 7.9 of the general conditions reads as follows:

'Verbal or written arrangements other than the agreement'-

Except as hereby otherwise provided any verbal or written arrangements abandoning, varying or supplementing this agreement or any of the terms hereof shall be deemed conditional and shall not be binding on the IRCTC unless until the same is endorsed on the agreement or incorporated in a formal instrument and signed by the party(s).'

20. A perusal of the above Clause 7.9 shows that the tender conditions can be varied but that can only be done if the IRCTC agrees to the variation. In other words, Clause 7.9 means that the person getting the contract, cannot change the tender conditions unilaterally and without the consent of the IRCTC. This itself means that if both the parties are agreed the tender conditions can be varied.

21. It is surprising that in the writ petition, Clause 7.9 which is of vital importance has not been disclosed but was suppressed.22. We cannot approve this kind of practice in filing writ petitions. In our opinion, Clause 7.9 which was a vital condition, should have been disclosed to us by filing the entire tender document. The petitioner quoted only Clause 7.1 and suppressed the other Clauses in the tender conditions, and hence he has not come with clean hands to this Court.

23. It is well settled that since writ is a discretionary jurisdiction a writ petition is liable to be dismissed if the petitioner does not come with clean hands.

24. Moreover, in Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd and Another, III (2005) SLT 664=119 (2005) DLT 139 (SC)=II (2005) BC 574 (SC)=(2005) 6 SCC 138 the Supreme Court observed:

'The law relating to award of contract by the State and public sector corporations was reviewed in Air India Ltd. v. Cochin International Airport Ltd. and it was held that the award of a contract, whether by a private party or by a State, is essentially a commercial transaction. It can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation. It was further held that the State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process, the Court must exercise its discretionary powers under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should interfere'.

25. This view has followed the decision in Raunaq International Ltd. v. IVR Construction Ltd. and Ors., (1999) 1 SCC 492 and in Directorate of Education v. Educomp Datamatics, II (2004) SLT 540=110 (2004) DLT 311 (SC)=II (2004) BC 386 (SC)=(2004) 4 SCC 19

26. Mr. Krishnamani, learned Cousel for the petitioner submitted that Clause 7.1 was a mandatory condition and since respondent No. 3 did not comply with it he could not get the contract. He submitted that Rs.14.21 lakh towards security deposit and Rs. 79.13 lakh towards annual licence fee was to be deposited on or before 26.10.2005vide Annexure R-1 to the counter affidavit of respondent No. 1 which is the copy of the letter dated 18.10.2005 issued by respondent No. 1 to respondent No. 3 stating that it has been decided to award the contract for train No. 3351-52 to respondent No. 3.

27. Mr. Krishnamani submitted that the security money was deposited only on 14.11.2005 and the annual licence fee was paid on 24.11.2005. Hence he submitted that Clause 7.1 to the tender conditions was violated. He has relied on the decisions of the Supreme Court in W.B. State Electricity Board v.Patel Engg. Co. Ltd., I (2001) SLT 534= (2001) CLT 103 (SC)=(2001) 2 SCC 451 and R.D. Shetty v. International Airport Authority of India, (1979) 3 SCC 489.

28. As already pointed out by us, Clause 7.9 permits relaxing the terms of the contract, which was done in this case. Moreover, we are of the opinion that the authorities have to be given some leverage in order to meet operational exigencies. As observed by the Supreme Court in Master Marine Services (P) Ltd. v. Metcalfe and Hodgkinson (P) Ltd. (supra), even when some defect is found in the decision making process the Court need not interfere in its discretionary jurisdiction under Article 226. In the peculiar facts and circumstances of the present case the action of the respondent No. 1 cannot be faulted and we are not inclined to exercise our discretion under Article 226. These peculiar facts were that respondent No. 3 had paid the entire money in respect of Train Nos. 9045-46 and 9047-48 (Tapti-Ganga Express) but the contract could not be handed over to respondent No. 3 in view of the status quo order passed by the Orissa High Court which was extended from time to time (though the same has now been vacated by the Supreme Court on 14.12.2005).

29. Respondent No. 1 had issued a show cause notice on 31.10.2005 to respondent No. 3 but on the representation made by the respondent No. 3 that it had already deposited the amount of Rs. 55,64,000/- in respect of Tapti-Ganga Express, but the contract could not be handed over to it, it wanted extension of time to make the payments. The respondent No. 1 by letter dated 10.11.2005 extended the time for payment of security deposit till 14.11.2005 and the time for paying licence fee till 20.11.2005. Thereafter on 22.11.2005, respondent No. 3 pursuant to meetings with respondent No. 1 made a written representation to adjust the licence fee deposited with regard to Tapti-Ganga Express in respect of Train No

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. 3351-52. Thereafter on 24.11.2005 respondent No. 3 deposited the balance amount payable in respect of Train No. 3351-52 by telegraphic transfer. The aforesaid adjustments were de hors the sum of Rs. 57/- lacs in respect of bills of respondent No. 4 pending with IRCTC, in respect of Tapti Ganga Express. 30. Apart from the fact that Clause 7.9 permits variation in the tender conditions, we are also of the opinion that this is not a fit case for interference under Article 226 of the Constitution. 31. It is well settled that writ jurisdiction is discretionary jurisdictionvide Chandra Singh and Ors. v. State of Rajasthan and Anr., IV (2003) SLT 567=2003 (6) SCC 543. Hence, even if there is violation of law we are not bound to interfere. 32. Mr. Krishnamani, learned Cousel for the petitioner submitted that if a mandatory condition is violated the Court exercising writ jurisdiction has no discretion in the matter, and it must interfere. We do not agree. The question whether to exercise our discretion under Article 226 or not arises only in cases where a mandatory provision of law is said to be violated. Where the provision is directory this question would not even arise, because a directory provision is not enforceable. Hence to say that we have no discretion in writ jurisdiction when a mandatory provision is being violated would really mean that we have no discretion at all under Article 226. This is clearly an untenable position, and has only to be stated to be rejected. The correct position in law is that even when a mandatory provision is violated the High Court under Article 226 is not bound to interfere on the facts of the case, though of course this discretion must not be exercised arbitrarily but in a reasonable manner taking into account the facts of that particular case. The petition is dismissed. Interim order is vacated.
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