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Pragati Agribiz LLP v/s Managing Director

    Writ Petition No. 7682 of 2021

    Decided On, 07 April 2021

    At, High Court of Madhya Pradesh Bench at Indore


    For the Appearing Parties: Vijay Panwar, Vivek Patva, Advocates.

Judgment Text

Sujoy Paul, J.

1. This petition filed under Article 226 of the Constitution assails the order dated 4th March 2021 (Annexure P/1) whereby petitioner's bid has been rejected during technical evaluation for the reason i.e. "disqualified due to non submission of partnership deed".

2. The relevant facts necessary for adjudication are that petitioner is a limited liability partnership (LLP) Firm registered pursuant to Sec.58 of the Limited Liability Partnership Act, 2008 (for short "the Act"). Petitioner filed copy of registration certificate as Annexure P/2. The respondent issued an e-tender cum auction notice on 2/2/2021 (Annexure P/3). The petitioner submitted bid on 2/3/2021 which was duly acknowledged by respondent on the same date (Annexure P/4). Petitioner filed his bid document as Annexure P/5. Prior to this, petitioner's enrollment requisition was also acknowledged by the respondent through e-mail dated 2/3/2021 (Annexure P/6). The respondent by e-mail communication dated 4/3/2021 (Annexure P/7) at 12.40 PM confirmed that petitioner's bid has been admitted by the Committee.

3. Shri Panwar, learned counsel for petitioner submits that on the same day i.e. 4/3/2021 at around 3.58 PM the respondent sent another e-mail letter to petitioner informing that for non submission of partnership deed his bid has been rejected. Learned counsel for petitioner submits that as per tender document there was no requirement to submit any partnership deed. The petitioner has already filed the certificate of registration on conversion issued by the Ministry of Corporate Affairs, Government of India (Annexure P/2). In addition, petitioner filed the power of attorney (Annexure P/5) whereby Mr. Akhtar Hussain was authorised on behalf of petitioner to take all necessary steps. The rejection of petitioner's bid is arbitrary, unjustifiable and impermissible in law.

4. Per contra, Shri Vivek Patva supported the impugned order on the basis of reply. He submits that petitioner has an alternative remedy under Clause 3.7 of NIT. Petitioner may prefer representation before the Managing Director who, in turn, will take a decision within 30 days. It is further submitted that petitioner himself filed the LLP agreement with the petition (page 77). The petitioner should have filed this document along with the tender. The relevant clause of NIT makes it obligatory for the bidder to provide partnership deed in case of partnership firm and authorization by other partners.

5. In the reply, the respondent further urged that as per terms of the NIT, the technical valuation of all the offers received by the respondent was done by a Valuation Committee on 4/3/2021. The Valuation Committee in its report dated 4/3/2021 (Annexure R/2) opined that petitioner has submitted power of attorney only and partnership deed is not submitted. In absence of filing the partnership deed, the authenticity and validity of a bidder could not be checked and, therefore, his bid was rightly rejected. The registration certificate of petitioner (Annexure R/3) shows that if petitioner is a company, then also it was required to submit its board resolution which has not been submitted. For this reason also petitioner was not eligible.

6. No other point is pressed by the parties.

7. We have heard the learned counsel for parties at length and perused the record.

8. At the outset, we deem it proper to deal with the objection of availability of alternative remedy. Clause 3.7 of NIT shows that a representation can be made before the Managing Director. Further 30 days time is granted for Managing Director to take a decision on such representation. No powers for grant of interim direction etc. are spelled out in Clause 3.7 aforesaid. The remedy aforesaid, in our view is not an efficacious remedy. If petitioner is relegated to avail that remedy, by efflux of time and by the time his representation would be decided, the tender process will be over. There are no disputed questions of fact in the present case. In this backdrop, we are not inclined to relgate the petitioner to avail the said remedy.

9. Clause 2.6 of NIT deals with "eligibility documents". Relevant portion reads as under:-

"In case of A Firm/Company/Society/Trust/PSU registered in India under Companies Act.

1. Letter of intent having identity & particulars of the Applicant (Annexure A)

2. Copy of e-Payment Receipt of Earnest Money Deposit (Annexure B)

3. PAN Card of the Applicant/Organization (Annexure B)

4. Valid Incorporation (CIN)/Registration Certificate/Trust Deed (Annexure B)

5. Power of Attorney to authorize the person signing the bid (Annexure C)."

(emphasis supplied)

10. Clause 4 is relevant for the purpose of present matter. It makes it obligatory for a Firm/Company/Society/Trust/PSU to provide registration certificate/trust deed/valid incorporation (CIN). This clause does not deal with an LLP organization. The petitioner's by their communication dated 4/3/2021 (Annexure P/10) and other communications of same nature sent on the same date made it clear that their company is not a partnership company. Hence, they did not provide any partnership deed. We also find substance in the argument of learned counsel for petitioner that the power of attorney in prescribed format (Annexure P/5) was already submitted by the petitioner. Legal existence of petitioner and authorization both cannot be doubted because the petitioner filed the registration certificate issued by the Ministry of Corporate Affairs (Annexure P/2). The authorization aforesaid was filed in the manner prescribed in the NIT.

11. It is noteworthy that by communication dated 4/3/2021 (at 12.40 PM) the petitioner was informed that his bid has been admitted by the Committee. Within few hours on the same day, by impugned communication, petitioner was informed that because of non submission of partnership deed, his bid was rejected. At the cost of repetition, in our opinion, the relevant clauses of NIT reproduced herein above does not make it obligatory for the petitioner's to file the partnership deed. The LLP agreement available with the petitioner could have been filed by them provided there existed any such requirement as per Clause 2.6 aforesaid. The petitioner's bid cannot be rejected for impermissible reasons and on extraneous considerations.

12. The Apex Court in catena of judgments held that the judicial review of a contractual matter is permissible on certain parameters. In Tata Cellular vs. Union of India, (1994) 6 SCC 651 and Elektron Lighting Systems (P) Ltd. vs. Shah Investments Financial Developments & Consultants (P) Ltd., (2015) 15 SCC 137, the Apex Court opined that the judicial review in contract matter is permissible if action impugned is shown to be arbitrary. In Ramana Dayaram Shetty vs. International Airport Authority of India,1979 1 SCC 489, Dutta Associates (P) Ltd. v. Indo Merchantiles (P) Ltd., (1997) 1 SCC 53, Heinz India (P) Ltd. v. State of U.P., (2012) 5 SCC 443 and Kalinga Mining Corpn. v. Union of India, (2013) 5 SCC 252, the Supreme Court ruled that if decision making process or the decision is unreasonable, interference can be made even in contractual matters. In Sterling Computers Ltd. v. M & N Publications Ltd.,1993 1 SCC 44, Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd., (2005) 6 SCC 138, Michigan Rubber (India) Ltd. v. State of Karnataka, (2012) 8 SCC 216 and State of Jharkhand v. CWE-SOMA Consortium, (2016) 14 SCC 172, the Wednesbury principle is also applied to test the decision making process adopted in a contractual matter. Reference may be made to Raunaq International Ltd. v. I.V.R. Constructi

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on Ltd., (1999) 1 SCC 492, Air India Ltd. v. Cochin International Airport Ltd., (2000) 2 SCC 617, Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517, Reliance Energy Ltd. v. Maharashtra State Road Development Corpn. Ltd., (2007) 8 SCC 1, Sanjay Kumar Shukla v. Bharat Petroleum Corpn. Ltd., (2014) 3 SCC 493 and Siemens Aktiengeselischaft & Siemens Ltd. v. DMRC Ltd., (2014) 11 SCC 288. 13. In view of principles laid down in the aforesaid cases decided by the Supreme Court, the interference can be made against the impugned order if it is arbitrary or it hits Wednesbury principles. As analysed above, the decision to reject the bid of petitioner is outside the scope of Clause 2.6. Thus, the impugned order cannot sustain judicial scrutiny. Accordingly, impugned order rejecting petitioner's technical bid is set aside. 14. Petition is allowed.