WP/16395/2004 of M/s. Srinivasa Medical Hall, Vs Government of India, on 30 December 2004

O r d e r:

The petitioner, namely M/s. Srinivasa Medical Hall, Tarnaka, Secunderabad in effectseek a direction to the respondent to consider and process their tender schedule aseligible one in accordance with law, for supply of medicines/drugs to the CentralGovernment Health Scheme (CGHS) dispensaries covered in Zone-VII i.e. Tarnakaof Secunderabad city.

The petitioner states that the bid offered by them for supply of medicines/drugs to theZone in question pursuant to the tender notice dated 02-08-2004 issued by therespondent, was made known as the lowest price quotation being 12.00% less thanthe maximum retail price quoted for various Medicines & Drugs, when all the tenderscalled for in respect thereof were opened by the respondent on 10-08-2004. It isalleged that though the tender of the petitioner emerged as the lowest quotation, therespondent is attempting to disqualify/eliminate it in preference to some othercompeting bidder. Though, it is stated that respondent has not passed any orderindicating the grounds on which the bid of the petitioner has been rejected orexcluded from consideration, the petitioner came to know that it has beendisqualified on the following grounds.

1. The tender has not been signed on each and every page by thetenderer.tenderer.

2. The tender bid has been separated from the schedules.

3. The petitioner did not produce warranty certificate indicating that itwould supply only standard material or non-invalidated materialduring currency of the contract.would supply only standard material or non-invalidated materialduring currency of the contract.

Hence, this writ petition.

Heard the learned counsel for the petitioner and the learned Senior StandingCounsel for the Central Government for the respondent.

The learned counsel for the petitioner submits that the grounds on which the

petitioner’s tender is sought to be disqualified, are untenable and perverse. Hesubmits that inasmuch as nowhere in the tender documents, it is stipulated that thetenderer should sign on each and every page of the tender bid, non-signing on eachpage, cannot be taken as a ground for disqualifying the tender. Inasmuch as Clause-3 of the Tender Conditions stipulates that the bid security and bid price of the tendershould be submitted separately in two envelops, the question of the petitionersubmitting them together does not arise, and even assuming they were placedtogether, the condition being self-contradictory, cannot be enforced against thebidder to disqualify his tender. He submits that if the security bid was found to bedefective, there was no warrant for the authorities to open the envelop containing theprice bid, and since both envelops were opened by the authorities, no infirmitywhatsoever was there in submitting of security bid or price bid. He submits that in theabsence of any condition requiring submission of warranty certificate along with theprice bid, non-enclosing the same along with the price bid cannot be taken as aground to disqualify the tender, and more so when as per Clause 20, suggestssubmission of warranty certificate after supply of the medicines. He submits thatexcept for the circumstances mentioned in Clause 2, on no other grounds a tendercan be disqualified, and the grounds on which the petitioner’s bid is sought to bedisqualified not falling within the circumstances mentioned in Clause-2, the action ofthe respondent in seeking to disqualify the petitioner’s bid is illegal and arbitrary,and more so when the petitioner in the submission of his bid, had substantiallycomplied with the tender conditions.

Disputing the averments made in the affidavit filed in support of the writpetition, the respondent filed counter-affidavit. The learned Senior Standing Counselfor the Central Government while reiterating the counter-averments submitted that asper para-4 of the Tender Notice, the bidder is required to submit bid security andprice bid separately in two envelops, which are again to be placed in a sealed cover.The petitioner instead of keeping them in the above manner, had kept the bidsecurity amount along with the price bid envelope and removed the price bid pageNos.13 and 14 from the tender documents and enclosed them in another envelope,which is in violation of the instructions given in the tender notice, and thereby, histender was disqualified at the stage of opening of the tenders itself. He furthersubmitted that the tender documents and the schedule to the bid, being legaldocuments, are required to be signed on each and every page by the Proprietor orthe Partners in case of partnership firm as token of acceptance of the conditions oftender, and there need be no specific instruction in that regard. He further submittedthat as per Item-20 in page 8 of the tender document, the bidder shall furnish theprescribed warranty certificate along with the quotation, but the petitioner failed to doso, and therefore, the tender of the petitioner was liable to be disqualified on thisground also. At the time of opening the tenders, the petitioner was informed of thenon-compliance of the above tender requirements, and when the tender of thepetitioner was ineligible to be opened, whether the tender of the petitioner being thelowest quotation would not matter, for the petitioner by failing to comply with thetender conditions, which were required to be complied with all the tenderers, hadearned disqualification, and no exception can be taken to the action of therespondent in seeking to disqualify the tender, more so on the grounds mentioned above, and particularly when tender conditions in the Tender Notice itself reservedthe right to reject any tender without assigning any reasons, in the respondent. Thelearned Senior Standing Counsel for Central Government submitted that the scopeof judicial review in matters relating to tenders is very limited, this Court in exerciseof its jurisdiction shall not interfere, and in support of this argument, he placedreliance on the judgement of the apex Court in Tata Cellular v. Union of India, andof this Court in Vijayashanti Instruments Corpn. v. Directorate of W.D. & C.W.,Government of A.P. and TCI Seaways Ltd. v. FCI, Regional Officer, HACABhavan, Hyd.

In matters relating to tenders and award of contracts, the power of judicialreview of an administrative action by this Court in exercise of its extraordinaryjurisdiction under Article 226 of the Constitution of India, it is well-settled and needsno emphasis, is limited to illegality, irrationality and procedural impropriety, and thatthe Court would not assume the role of an appellate authority to substitute itsdecision with that of the decision making authority in matters relating to tenders (SeeTata Cellular v. Union of India).

A Division Bench of this Court, in TCI Seaways Ltd. v. FCI, RegionalOfficer, HACA Bhavan, Hyd., after referring to the various decisions of the apexCourt on the subject, had succinctly summarized the principles to be applied inexercise of power of judicial review in contractual matters, and it would be appositeto quote:

While examining legality of the action of the administrative authority, the Court must confineitself to the aspects – whether the decision making authority has exceeded its powers, committed anerror of law or there is breach of principles of natural justice or abused its powers or reached decisionwhich no reasonable Tribunal would have reached. The Court is not empowered to determine whether aparticular policy is fair. An administrative action is subject to control by judicial review only in regard toillegality or irrationality, namely Wednesbury unreasonableness and procedural impropriety. Themodern trend points to judicial restraint in administrative action. The Court is not empowered tointerfere with the decision taken by an expert body and substitute its opinion to that of the body unlessthe decision is tainted with mala fides or for extraneous considerations. Where the matter involvedrequired commercial or technical prudence and the decision reached is based on the opinion of atechnical committee, the High Court in exercise of its jurisdiction under Article 226 of the Constitutionof India cannot interfere with such decision unless the allegations regarding unreasonableness, malafides and collateral considerations are unassailable or can be assailed on a finding of mala fides orextraneous considerations. The terms of the invitation to tender cannot be open to judicial scrutiny asthe invitation to tender is in the realm of contract. Where the matter relates to commercialconsiderations, the State, its corporations, instrumentalities and agencies can choose its ownmethod to arrive at a decision and it may not accept the offer even though it happens to be thehighest or the lowest, subject, of course to the adherence to the norms, standards andprocedure laid down by them. The Court can examine the decision making process andinterfere only if it is found vitiated by mala fides, unreasonableness, favouritism andarbitrariness. Even when some defect is found in the decision making process, the Court mustexercise its discretionary power under Article 226 with great caution and restraint and exercise it onlyin furtherance of public interest and not merely on the making out of a legal point. The Court shouldalways keep the larger public interest in mind whether any intervention is called for or not. Unless thedecision making process is manifestly arbitrary or unreasonable or the authority committed anyprocedural impropriety, it cannot be called in question.

(emphasis supplied)

This being the legal position, we may consider whether the decision taken by the respondent to reject the tender of the petitioner on the grounds enumerated below, isfraught with illegality, irrationality and procedural impropriety:

1. Tender schedules separated.

2. The tender schedule not signed on each and every page by the tenderer.

3. Warranty certificate not produced along with quotation.

According to the terms and conditions of the Tender Document, the biddersare required to submit their bid in two envelopes – (i) containing the bid security, and(ii) containing the price bid, and the envelopes should be superscribed as “bidsecurity” and “price bid”, which again are required to be placed in a sealed cover,superscribed thereon “bid for supply of medicine/drug to CGHS dispensaries”. It isthe contention of the respondent that though the petitioner submitted the tender bidin two envelopes, he had kept the “bid security” amount along with the “price bid”envelope and detached the “price bid pages”, namely page Nos. 13 and 14 from theTender Document, and enclosed the same in another envelope. As the petitionerdetached Page Nos. 13 and 14 from the Tender Document, his tender wasdisqualified, and more so when as per Clause 1 of the Tender Conditions, theschedule to the bid form should be retained and not detached, and in case of anymodification of the schedule, the bidder was required to communicate the same byseparate letter sent along with the bid. The petitioner, though detached Page Nos.13 and 14 from the Tender Document, he did not communicate the same to therespondent by separate letter sent along with the bid, and had he communicatedabout the modification to the respondent by separate letter, his tender would nothave been disqualified. Inasmuch as it is stated that the petitioner had kept the “bidsecurity” along with the “price bid”, in that in one envelope and placed the detachedPage Nos. 13 and 14 of the Tender Document in another envelope meant for “pricebid”, no exception can be taken to the action of the respondent in disqualifying thetender of the petitioner on that ground. When the Tender Document required thepetitioner to submit the tender in the manner prescribed, it is not open for thepetitioner to deviate from the same, and contend that as the deviation in thesubmission of the tender not being so serious so as to cause prejudice to anybody,his tender could not have been rejected, and merely because the respondent hasopened both the envelopes, it does not give any right to the petitioner to contend thathis bid should be qualified because he came to know that his was the lowest tender.

Tender Documents and Schedules, admittedly, are legal documents, for they confercontractual duties and obligations on the petitioner in case his tender is accepted,and therefore, it is obligatory on the part of the tenderer to sign on all on the pages ofthe Tender Document, irrespective of whether there exists a condition to that effect,for in case any page is left unsigned or is removed or any disputes arise out of thesame, there is every scope of the document being invalidated on account of all thepages in the document not being signed. Be that as it may, it is not the case of thepetitioner that the tenders of those persons who have not signed on all the pages have been qualified for participation in the tender, and that he has beendiscriminated. Therefore, no exception can be taken to the action of the respondentin rejecting the tender of the petitioner on that ground also.

As per Clause No. 20 of the Tender Conditions, the bidder is required to furnishalong with the quotation, the warranty certificate. Irrespective of whether the warrantycertificate asked for by the respondent, was in the nature of a requirement to be metin the event of the bid being accepted and that too before or making the supplies, thefact remains that the petitioner has himself admitted that he had not furnished thewarranty certificate along with the quotation. When Clause 20 of the TenderDocument clearly stipulated that the bidder shall furnish along with the quotation thewarranty mentioned thereunder, it was incumbent upon the petitioner to furnish thesame, without reading into the provision and contend that the warranty certificateasked for by the respondent would arise or would be required to be furnished only inthe event his bid being accepted and he makes the supplies under the contract.

Though the petitioner has contended that the respondent had mala fide rejected histender to show favoritism to his rivals in the business, he has not named who hisrival is, and in the absence of any specific attribution made to the respondent that therespondent was favouring a particular person, the said contention cannot becountenanced. Further, it is not the case of the petitioner that the respondent in thecase of tenders of his rivals or persons, even though not having been submitted inaccordance with the Tender Conditions, yet had entertained them and discriminatedhim. Be that as it may, the petitioner having violated the conditions of the tender, noexception can be taken to the action of the respondent in rejecting the tender of thepetitioner, and more so when the right of acceptance or rejection of the tenderwithout assigning any reasons is vested in the respondent.

In the rejection of the tender, the respondent has followed the Tender Conditions,and the action of the respondent in doing so, by no means can be said to be fraughtwith illegality, irrationality or procedural impropriety, warranting interference by thisCourt in exercise of its jurisdiction under Article 226 of the Constitution of India.

There is no merit in the writ petition, and the same is accordingly dismissed. Nocosts.

Date: 30[th] December, 2004.

SVV/KSR

_________________

N.V. RAMANA, J.

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