Dismissed

Gaurav Kumar v. State of U.P. and 4 Others

Allahabad HC5 Oct 2021WRIC/392/2020

Case brief

AI extract

What is this about?

The High Court dismissed writ petitions challenging the rejection of tenders by the UP State Warehousing Corporation. The Court held that commercial decisions regarding tender pricing, where work volumes differed significantly between centers, are not amenable to judicial review absent arbitrariness or mala fides.

What did the court decide?

The writ petitions filed by the petitioners against the impugned orders of the Managing Director were allowed to fail and dismissed.

Gaurav Kumar Vs State of U.P. and 4 Others — Public Procurement and Tenders | Allahabad HC (2021)

¶1

¶2

Court No. - 44- 44 44

¶3

Court No. - 44- 44 44 Reserved on 29.07.2021 Case :- WRIT - C No. - 392 of 2020 Delivered on 05.10.2021 Petitioner :- Gaurav Kumar Respondent :- State Of U.P. And 4 Others Counsel for Petitioner :- Ishwar Kumar Upadhyay,H.N. Singh (Sr. Adv) Counsel for Respondent :- C.S.C.,Kunal Shah,Sunil Kumar Singh,Sushil Kumar Rao

¶4

with Case :- WRIT - C No. - 286 of 2020 Petitioner :- Gaurav Kumar Respondent :- State Of U.P. And 4 Others Counsel for Petitioner :- Ishwar Kumar Upadhyay,H. N. Singh (Sr. Adv.) Counsel for Respondent :- C.S.C.,Sushil Kumar Rao with

¶5

Case :- WRIT - C No. - 966 of 2020 Petitioner :- M/S Sadique Ahmad And Another Respondent :- State Of U.P. And 4 Others Counsel for Petitioner :- Ishwar Kumar Upadhyay,Sri H.N. Singh (Sr. Adv.) Counsel for Respondent :- C.S.C.,Sushil Kumar Rao

¶6

Hon'ble Mrs. Sunita Agarwal,J. Hon'ble Mrs. Sadhna Rani (Thakur),J.

¶7

The petitioners herein claim to be the registered Contractors of the Corporation namely U.P. State Warehousing Corporation, its Regional Office at Varanasi and submit that they are “Class A” Contractor for handling, transporting, loading and unloading of food grains in the Corporation's Godowns. The Regional Manager, U.P., State Warehousing Corporation Regional Office, Varanasi published e-tender notices inviting tenders for the Godowns within Varanasi Region, namely for P.E.G. Phateullahpur, District Ghazipur, P.E.G Chandauli-II, District Chandauli, P.E.G. Chitbadagaon, District-Ballia, P.E.G. Mubarakpur Kalan, DistrictBallia and P.E.G Chakwal, District-Azamgarh. One of the e-tender notices

¶8

¶9

dated 17.9.2019 appended as Annexure-'1' state that the tenders were invited from registered and unregistered contractors through e-mode. The petitioners herein claim to have submitted e-tenders for P.E.G Mubarakpur Kalan, District-Ballia, P.E.G Chitbadagaon, District Ballia, P.E.G Phateullahpur, District Ghazipur.

¶10

The technical bids were opened on 28.2.2019 and the financial bid for all eligible contractors was opened on 8.11.2019, wherein rates of the petitioners were found to be 158% 168% and 137.86% above the Scheduled Rate ('ASOR').

¶11

It is contended by the petitioners that after scrutiny of their technical bids, the petitioners being the lowest bidder were entitled to be awarded the contract. However, the Incharge General Manager (Commercial) U.P Warehousing Corporation, Lucknow had rejected the bid on the premise that the Adhoc contractors were performing the work of transporting and handling at the rate about 81% (ASOR) above the scheduled rate and the lowest rate submitted by the petitioners were almost double to the rate at which the works were being performed on adhoc basis.

¶12

Challenging the order of the Managing Director of the Corporation dated 18.12.2019, the arguments of the learned counsel for the petitioners are two folds. Firstly, the order impugned has been assailed on the ground that it was not passed by the competent authority i.e Managing Director as the copy of the order received by the petitioners is unsigned and that the copy of the orders impugned appended with the counter affidavit is a fabricated copy. On the said dispute raised by the petitioners regarding passing of the order by the competent authority and the genuineness of the documents appended along with counter affidavits, we have summoned the original record vide order dated 27.7.2021.

¶13

Having perused the original record, we find that the orders of the same date i.e. 18.12.2019 passed by the Managing Director (appended as Annexure CA-'12' of the counter affidavits) were properly on record. It could not be said that the copies of the orders appended with the counter

¶14

¶15

affidavit of the respondent Corporation are fabricated document. The challenge to the impugned orders on the plea of jurisdiction is, therefore, turned down.

¶16

The second argument of the learned Senior counsel for the petitioners was that for P.E.G. Chandauli-II, lowest tender at the rate of 167% ASOR was accepted by the respondent who had rejected the tender of the petitioners for the Godowns-in-question. No reason for not accepting the lowest tender of the petitioners has been provided in the orders impugned. The reasons given in the counter affidavits will not supplement the orders impugned, in as much as, the stand of the respondent in rejecting the bid of the petitioners cannot be improved by any averment in the counter affidavit. The petitioners herein have been discriminated as compared to the contractor to whom the work has been allotted for warehouse at Chandauli II, where tender at the rate higher than that offered by the petitioners had been approved. There is utter violation of Article 14 of the Constitution of India by the Corporation which is a State instrumentality for which no explanation could be offered by the respondents. It is contended that the competition was limited only to the registered contractors and the petitioners have been deprived of on account of the hostile discrimination by the respondents. Pick and choose method had been adopted by the respondents while rejecting the bids of the petitioners and continuing with the adhoc arrangement.

¶17

The petitioners have also challenged the notices dated 26.12.2019 published in the Newspaper inviting fresh e-tenders from 27.12.2019 till 14.1.2019 by the Regional Manager U.P. State Warehousing Corporation, Varanasi for the works in question.

¶18

Sri Kunal Shah learned Advocate for the respondents in rebuttal vehemently argued that the decisions taken by the Corporation to reject the price bid of the petitioners are in the interest of the public revenue. The petitioners being bidders though had right to participate in the tenders but they cannot insist that their tenders be accepted simply because of the

¶19

¶20

fact that the bids submitted by them were the lowest.

¶21

It is settled law that even the highest bidder has no vested right to get contract in his favour. Re-biding by the notice dated 26.12.2019 was on account of the desire of the competent authority to get a better price. On the plea of hostile discrimination, it is submitted that Chandauli-II Center unlike Chitbaragaon, and other Centres does not have regular work. The Chandauli II Centre being a contingent Centre, the tender was floated only by way of abundant caution so that if in a given agricultural year, the yield is high and there is requirement of storage of excessive food crops, i.e. if the Food Corporation of India or any other Corporation hire the centre, there should be a regular contractor available for carrying out handling and transport work so that no time is wasted for the purpose. As against this, Chitbaragaon Centre of the Corporation remains regularly hired by the Food Corporation of India and similarly two other centres namely Mubarakpur Kalan and Chandauli II are also regularly hired by the Food Corporation of India and there exists regular work throughout any given year. It is common trade practice that where there is a regular work, the price bid would be less as opposed to the places where there is no regular work. Since in Chandauli II Centre, there is no regular work as juxtaposed to Chitbadagaon, Mubarakpur Kalan, Ballia Centres the offered rate being high at Chandauli II Centre cannot be said to have resulted in discrimination. The distinguishing feature is the value of the work which is to be executed at Chandauli II Center as against the three other centers namely P.E.G. Chitbadagaon, P.E.G Mubarakpur Kalan, & Phateullahpur Centres.

¶22

A perusal of the tender notice itself makes it clear that the estimated value of the work in these three centers were about Rs.2 Crores and above, whereas, the estimated value of work at Chandauli II Centre was about 50 lakhs. The copies of the tender notices of two centres showing the value of work to be executed at the respective centres have been filed as CA-'6' to the counter affidavit. It is then contended that the common feature of

¶23

¶24

handling and transporting trade is that the cost incurred in execution of the work per metric tonne is inversely proportional to the quantum of the work to be executed. Thus, at such centres, where the quantum of the work is comparatively more, the price bid offered is comparatively less as the cost incurred in execution of the work per metric ton would be less. Likewise, where the quantum of work is comparatively less in a centre, the price bid offered is comparatively more.

¶25

As regards the stand of the petitioners that the adhoc arrangement made at Chandauli II Centre had been discontinued by the engagement of the regular contractor by the tender notice dated 4.1.2019 and the bid at a higher rate than that granted to the adhoc contractor had been awarded, it is submitted that the Chandauli II Centre was hired for a brief period of six months for stocking of food grains and for carrying out handling and transportation work at the warehouse, the adhoc arrangement was not workable. For the first time, the tender was floated on 4.1.2019 and the lowest bid was accepted at the rate which may be higher than that awarded to the adhoc contractor but since the work in the said centre is intermittent, the offer and price/cost of the work looking to the less quantum of work would be comparatively less.

¶26

In any case, the order impugned recorded sufficient reason for non acceptance of the price bid which is exponentially high than the price at which work is being conducted in the centres in question. Reliance is placed on the decision of the Apex Court in case of Air India Ltd vs Cochin International Airport ltd and others reported in ( 2000) 2 SCC 617 to assert that the decision to not accept the offer/tender whether highest or the lowest is not amenable to judicial review as the Court cannot see the correctness of the reasoning given in such decision. Within the scope of judicial review, the Court will only examine the decision making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The fairness on the part of the State or its instrumentalities in coming to a decision while discharging public duty

¶27

¶28

can be examined while exercising discretionary jurisdiction under Article 226 of the Constitution of India. In any case, the court will always keep the larger public interest in mind in order to decide whether its intervention is called for or not.

¶29

Considering the rival submissions of the learned counsel for the parties, suffice it to note that for the reasoning given in the orders impugned passed by the Managing Director of the Corporation, the challenge to the same is beyond the scope of the judicial review. The law relating to award of a contract by the State or its instrumentalities or a public body is well settled by a catena of decisions of the Apex Court as discussed in Air India Ltd (supra). The legal position is that the State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and the decisions wherein paramount considerations are commercial are not open to judicial scrutiny. The State is free to enter into negotiation before the final decision to accept one of the offers made to it. It is free to accept or not an offer though it happens to be highest or the lowest. It is free to grant any relaxation, for bonafide reasons, if the tender conditions permit such a relaxation, price may not always be the sole criterion for awarding a contract. However, in arriving such a decision, the State or its instrumentality or the Corporations are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. The decision though is not amenable to judicial review but the Court can examine the decision making process and interfere if it is found vitiated by mala fide, unreasonableness and arbitrariness. The State, its corporations, instrumentalities or agencies have the public duty to be fair to all concerned. A caution is added for the Courts to the effect that even when some defect is found in the decision making process, the Court will exercise its discretionary power 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 larger public interest in mind in order to decide

¶30

¶31

whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should intervene. Reference para '7' of Air India Ltd (supra). In the light of the above legal position, when we examine the decision of the Corporation, we find that the tenders submitted by the petitioners were cancelled on the ground that they were much higher than the rate at which the works of handling and transporting were being done by the adhoc contractors. The stand of the respondent that three centres at Mubarakpur Kalan, Chitbadagaon are having regular work and the Chandauli II Center is only its contingent center could not be successfully disputed by the petitioners herein. As the volume of work at the abovenoted three centres. is higher than the volume of work in Chandauli II Center, we are afraid to accept the plea of hostile discrimination taken by the petitioners where two category of centres are not equal in status and the quantity of work, the rates approved for one centre cannot be applied to another for the above reason. The action of the respondent cannot be held to be discriminatory.

¶32

This apart, no flaw could be pointed out in the decision making process. The tenders were invited in the open bids and no one having offered higher rates than that of the petitioners has been selected for the centres in question. No mala fide can be attached to the decision of the competent authority. The reasons given in the order impugned that the bids offered by the petitioners were exponentially high than the above scheduled rate (ASOR) for transporting and handling fixed by the Board cannot be said to be arbitrary or discriminatory.

¶33

In the facts and circumstances of the instant case, for the above discussion, this Court finds that in the larger public interest the intervention is wholly uncalled for.

¶34

All the writ petition are, thus, found devoid of merit and hence dismissed. Order Date :- 05.10.2021 Harshita

Gaurav Kumar v. State of U.P. and 4 Others

Case brief

What is this about?

What did the court decide?

Gaurav Kumar v. State of U.P. and 4 Others

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Pappu Harijan Vs State of U.P. and 10 Others

Nadeem Vs State of U.P. and 2 Others

Geeta Devi Vs State of U.P. and 4 Others

Gaurav Kumar Vs State of U.P. and 4 Others

M/S Sadique Ahmad and Another Vs State of U.P. and 4 Others

Saroj Kumar Singh Vs State of U.P. and 11 Others