Allowed

Divya Jyothi Enterprises, v. The State of Andhra Pradesh

Andhra Pradesh HC12 Dec 2019WP/18036/2019

Case brief

AI extract

What is this about?

In a writ petition under Article 226, the court set aside the declaration of a successful bidder who failed to submit mandatory income tax returns. The court directed the 3rd respondent to withdraw work from the disqualified bidder, call for fresh tenders within three months, and declare the petitioner as the successful bidder, distinguishing PIL precedents from this private litigation.

What did the court decide?

Petitioner declared as successful bidder; work entrusted to 4th respondent withdrawn; 3rd respondent directed to call for fresh tenders within three months.

Divya Jyothi Enterprises, Vs The State… — Public Procurement and Tenders | Andhra Pradesh HC (2019)

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THE HON’BLE SRI JUSTICE M. SATYANARAYANA MURTHY

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Writ Petition No.18036 of 2019

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ORDER:

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This petition is filed under Article 226 of the Constitution of India to issue a Writ of Mandamus , questioning the action of the 3^rd respondent in declaring the 4^th respondent as highest bidder is contrary to clause 2 of the conditions attached to the tender notification dated 14-10-2019, and declare the same as illegal, arbitrary and violative of natural justice, consequently direct the 3^rd respondent to declare the 4^th respondent as disqualified, and further declare the petitioner as a successful bidder, who is the 2^nd highest bidder in the tender notification dated 14-10-2019 as per Clause 15 of the conditions attached to the tender notification. The petitioner is a resident of Visakhapatnam, started a manufacturing unit in the name and style of M/s Sri Divya Jyothi Enterprises (Gobar and Cow Ghee Lamps Manufacturers) having its office at Shop No.16, Sri Varshini Homes, Appannapalem, Vepagunta, Visakhapatnam-47. Petitioner used to supply Gobar and Cow Ghee lamps to various temples in and around state of Andhra Pradesh including 3^rd respondent temple herein.

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The 3^rd respondent called for tenders to supply ghee lamps from 14-11-2018 to 13-11-2019, for which the petitioner became highest bidder and supplied ghee lamps as required and demanded by the 3^rd respondent temple. The petitioner discharged her duties honestly and sincerely with unblemished record from

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the commencement of business. Not only to the 3^rd respondent but also supplied to various temples in and around the state of Andhra Pradesh. The 3^rd respondent called for tenders from the intended persons, who supplied the ghee lamps from the date of giving order for the period of 2 years. The tender schedule has to be submitted to the competent authority on 14-10-2019 between 10.00 a.m., to 2.00 p.m., and tender schedule will be opened at 3.00 p.m., on the same day in the presence of committee members and tenderers. The 3^rd respondent put several conditions for the intended tenders, who filed their tender, which are attached with tender notification.

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The petitioner himself and 4^th respondent participated in the tender along with others. The tenders have to be opened after verification that the bidder complied the pre-conditions, which are attached to tender notification. But, in the present case, the authorities of the 3^rd respondent temple without following rules and regulations contemplated there under, opened the tenders and declared the 4^th respondent as successful bidder, who filed highest bid at an amount of Rs.5,50,000/-, whereas the petitioner stood as 2^nd highest bidder and quoted an amount of Rs.5,45,000/-. The difference between the petitioner and 4^th respondent is an amount of Rs.5,000/- only.

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As per Clause No.2 of tender notification, the intended persons participating in the sealed tenders have to submit initial deposit of Rs.5,000/- by demand draft drawn in favour of the Executive Officer, Sri Veera Venkata Satyanarayana Swami

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Temple, Annavaram, East Godavari District should be attached to the original tender schedule. Those who does not sign on the

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tender, will be rejected and as per tender schedule 3 years income tax returns, passport size photo, any photo identify has to be attached and should possess G.S.T registration also.

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But, in the present case, the 4^th respondent did not submit income tax returns for a period of three years, which is mandatory requirement as per Clause 2 of the tender notification and the petitioner reliably came to know that the 4^th respondent herein has to submit the income tax returns for a period of 2 years, which is contrary and in violation of the Clause No.2 of the tender notification. But, the 3^rd respondent declared the 4^th respondent as highest bidder and accepted his offer.

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The petitioner is the 2^nd highest bidder and as per Clause 15 of the tender notification, the petitioner has to be declared as highest bidder, when the first highest bidder i.e., the 4^th respondent did not comply the mandatory requirement of the tender notification. But, the 3^rd respondent did not accept the representation of this petitioner and declared the 4^th respondent as highest bidder and entrusted work to 4^th respondent, who is the successful bidder, who did not comply mandatory requirements as per Clause No.2 of the tender notification. Therefore, the petitioner sought reliefs as stated supra.

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The 3^rd respondent filed counter denying the material allegations admitting calling for tenders and acceptance of the tender of the b4^th respondent by the 3^rd respondent, as he quoted highest price i.e., Rs.5,50,000/- for supply of ghee lamps etc., and participation of this petitioner, who quoted Rs.5,45,000/-, and who is next to the 4^th respondent.

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But, the main contention of the petitioner is that the petitioner is not entitled to claim any relief since no public interest is involved in view of the judgment in Raunaq International Ltd., vs. I.V.R. Construction Ltd., and others¹ and in the absence of any public interest the Writ of Mandamus is not maintainable under Article 226 of the Constitution of India.

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The 3^rd respondent also contended that the Executive Officer is conferred with power to relax any condition in terms of Clause Nos.3 and 4 and that the selection of highest bidder is by two ways i.e., tender-cum-open auction and this petitioner and 4^th respondent also participated in both, thereby the 3^rd respondent accepted the offer made by the 4th respondent, who is the highest tenderer who offered Rs.5,50,000/- for 2 years period. Therefore, the petitioner is disentitled to claim any relief in this Writ Petition.

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During hearing, the learned counsel for petitioner Sri K.V.L.Narasimha Rao drawn the attention of this Court to the conditions of tender notification, more particularly to 2^nd condition, which prescribed certain conditions including submission of income tax returns for three preceding years. But, the 4^th respondent did not comply the conditions i.e., furnishing income tax returns for 3 consecutive years. The 4^th respondent did not participate in the open auction, but his tender alone was accepted, and it is an arbitrary exercise of power by the respondents in declaring him as highest bidder to entrust the work and requested to set aside the same.

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1 (1991) 1 Supreme Court Cases 492

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Learned Standing Counsel for Endowments appearing for 3^rd respondent fairly contended that the petitioner participated both in tender process and open auction since the selection of bidders is in two modes and that the 3^rd respondent can exercise power to relax any one mode in terms of condition Nos.3 and 4 of the tender notification. In such a case, declaration of 4^th respondent as highest bidder is arbitrary. Moreover, no public interest is involved. In such a case, this Court cannot exercise power under Article 226 of the Constitution of India and he placed reliance on judgments of Apex Court in Air India Ltd., vs. Cochin International Airport Ltd., and others² , Raunaq International Ltd., vs. I.V.R. Construction Ltd., and others and Municipal Corporation, Ujjain and Another vs. BVG India Limited and others³ .

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On the strength of the principles laid down in the above judgements the power is vested on the Executive Officer to relax the conditions, the acceptance of tender of 4^th respondent cannot be faulted, since it is strictly in compliance of terms and conditions of the tender notification. The learned Standing Counsel also brought to the notice of this Court that the tender of 4^th respondent was already accepted and the 4^th respondent started discharging his obligations as per the contract. Therefore, the petitioner is not entitled to claim any relief and requested to dismiss the petition.

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The facts are not in dispute except to the extent of relaxing the conditions and participation of the 4^th respondent in open auction. The 3^rd respondent has called for sealed tenders to be

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2 (2000) 2 Supreme Court Cases 617

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3 (2018) 5 Supreme Court Cases 462

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submitted before 14-10-2019 between 10.00 a.m., to 12.00 a.m., with the information that the tenders will be opened at 3.00 pm., on the same day and attached certain tender conditions. Condition Nos.3 and 4 are relevant which are required to be considered in view of the submission of the learned Standing Counsel for the 3^rd respondent temple, it runs as follows:-

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Condition No.3: Eligibility to participate in the tender will be the final decision of the Executive Officer.

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Condition No.4: Those who did not file tender can also participate at the time of the public auction by depositing the fixed bid amount. Those who submitted tender can also participate in the tender without depositing additional amount. For the tender schedule Rs.1,000/- + GST + 18% has to be remitted to the temple.

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The main contention of the learned counsel for petitioner is that the 4^th respondent failed to submit three years income tax returns along with the tender schedule. This fact is not disputed by the 3^rd respondent in the counter. Therefore, acceptance of tender of the 4^th respondent by the 3^rd respondent, without insisting compliance of mandatory requirement as per Clause 2 of the tender notification i.e., furnishing 3 years income tax returns, is totally relaxed.

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The learned Standing Counsel for the 3^rd respondent contended that such power can be exercised by the Executive Officer i.e., the 3^rd respondent herein. No doubt, the 3^rd respondent may have vested with such power, but there is absolutely nothing to show that the Executive Officer, the 3^rd respondent relaxed such condition, even, as per the allegations made in the counter affidavit filed by the 3^rd respondent, during hearing, conveniently by the Standing Counsel for the 3^rd respondent to overcome difficulty to

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meet the contentions of the learned counsel for petitioner invented such theory of relaxation. Therefore, exercise of power by the 3^rd respondent to relax any such condition and granting of working to the 4^th respondent, is not acceptable.

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Yet, another contentions urged by the learned Standing Counsel for the 3^rd respondent is that the 4^th respondent submitted his tender and also participated in open auction, since the selection of bidders is in two ways i.e., tender process and open auction. But, as seen from the allegations made in the petition, the 4^th respondent participated in the tender process, but not in the open auction, the counter is silent as to the participation of the 4^th respondent in open auction, but on instructions, the learned Standing Counsel for the 3^rd respondent submitted that the 3^rd respondent participated in public auction, but no piece of paper is produced to establish such contention raised before this Court, for the first time, based on instructions received by the learned Standing Counsel for the 3^rd respondent without any pleading in counter affidavit. Therefore, such contention is liable to be rejected.

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The major contention of the learned counsel for the petitioner is that the jurisdiction of this Court under Article 226 of the Constitution of India, while exercising power of judicial review is limited and such power cannot be exercised as a matter of course, more particularly in tenders, unless public interest is involved, the Court cannot exercise power of judicial review under Article 226 of the Constitution of India. To substantiate his contention, the learned Standing Counsel for 3^rd respondent has

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drawn the attention of this Court to the three judgments referred supra, where the question was as to the maintainability of the writ petitioner by way of Public Interest Litigation in tenders. The Courts concluded that unless public interest is involved. The tender process cannot be challenged by filing public interest litigation viz., Air India Ltd., vs. Cochin International Airport Ltd., and others² as well as in Raunaq International Ltd., vs. I.V.R. Construction Ltd., and others referred supra.

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In any view of the matter, the learned Standing Counsel for the 3^rd respondent contended that whether the principle is laid down in public interest litigation or private litigation, it is binding to precedent under Article 149 of the Constitution of India on the sub-ordinate Courts and High Courts in this Country. There is no doubt about precedential value, but such precedent is to be applied to the facts before the Courts depending upon the facts of the case. In all the three judgments, the dispute was as to the maintainability of public interest litigation, and not private interest litigation, but, here it is not public interest litigation admittedly.

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Hence, the principles laid down in all the three judgments which dealt with maintainability of public interest litigation cannot be applied to purely private litigation. On this ground, the principles laid down in the above judgments cannot be applied to the preset facts of the case.

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In the recent judgment the Supreme Court held that the High Court can not exercise power under Article 226 of the Constitution of India to relax the terms and conditions of tender notification, the judgment related to private litigation and this

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2 (2000) 2 Supreme Court Cases 617

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principle if applied to the facts of the present case, this Court has no alternative except to accept the contention of the learned counsel for petitioner.

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Sri K.Madhava Reddy, who is the Standing Counsel for 3^rd respondent temple having engaged by the temple is not bound to support the litigations relating to temple pending before the Court if the action is blatant violation of law though the temple is under the Control of State Government and bound by the state litigation policy, adopted by the State.

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The Division Bench of High Court of Judicature at Hyderabad for the State of Telangana and the State of Andhra

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Pradesh in Indian National Centre for Ocean Information Sciences v. M/s Unity Infra Projects Limited., in Civil Revision Petition No.6435 of 2018 observed as follows:-

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“The State is expected to be a model litigant maintaining ethical standards in prosecuting the litigation being a compulsive litigant. The Government of India in view of certain observations made in various Judgments by the Apex Court in State of Punjab v. M/s.Geeta Iron & Brass Works Ltd.,¹ and Chief Conservator of Forest v. Collector² adopted National Litigation Policy, but it did not yield fruitful results and it totally failed. But, the Government of India being a model litigant is under obligation in common law has not always been clear, but the written policies seek to provide clarity and guidance and what conduct is required of a model litigant. Behind each of the duties is an overarching duty to act honestly, fairly, with complete propriety and in accordance with the highest professional standards. It goes beyond the requirement for lawyers to act in accordance with their ethical obligations and merely acting honestly or in

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1 (1978) 1 SCC 68

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2 (2003) 3 SCC 472

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accordance with law and court rules. The policies all variously refer to the following specific duties, some of which have long been recognized by the Courts:

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a) Dealing with claims promptly;

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b) Minimizing delay in proceedings’;

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c) Making an early assessment of the prospects of success and potential liability in claims;

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d) Paying legitimate claims without litigation;

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e) Acting consistently in the handling of claims and litigation;

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f) Endeavouring to avoid, prevent or limit the scope of litigation and participating in alternative dispute resolution where appropriate;

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g) Missing costs in proceedings;

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h) Not taking advantage of a claimant who lacks the resources to litigate a legitimate claim;

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i) Not taking technical points unless the agencies interests would be compromised;

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j) Not understanding and pursuing appeals unless there are reasonable prospects for success or the appeal is otherwise justified in the public interest; and k) Apologising when the Government or its lawyers have acted wrongfully or improperly.

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These guidelines as recognized by Common Wealth Countries, the litigation in the courts would be minimized though the Government of India or State adopted Litigation Policy, but it did not serve any useful purpose.

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Therefore, the Government being litigant is at least expected to follow the ethical issues and practical considerations while dealing with a citizen in litigation before the Court and the government is expected to be honest litigant, to minimize the litigation, instead of it, second respondent being public Officer is a litigant not acting fairly and prosecuting proceedings, not even filed counter explaining the mistake of occurred, but Tahsildar filed counter without raising any specific contention as to the mistake in the date of inspection.

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In fact second respondent is the competent person to substantiate the order passed by him, conveniently second respondent avoided to file counter, but prosecuting proceedings in unfair manner.

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The Andhra Pradesh State also adopted State Litigation Policy dated 30.08.2011 and certain guidelines have been issued with objects mentioned in second para of litigation policy. The main objects are to manage and conduct litigation in a coordinated and time bound manner; ensure that strong cases are won and weak cases are not pursued needlessly; reduce over all government litigation in courts thereby providing relief to the judiciary etc., and also issued certain directions to prevent and control avoidable litigation and settlement of disputes in alternative dispute resolution system, guidelines for filing of appeals. But without keeping in mind, the litigation policy, framed by State dated 30.08.2011, government agencies and authorities are proliferating the litigation by evasive and unsubstantive pleas before court, thereby increasing litigation in the courts, which is contrary to guidelines issued by Apex Court in the judgments referred supra.

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Even if these principles are applied to the facts of the present

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case, the Government Pleaders and the Standing Counsel are required to represent the cases before the Court in terms of State Litigation Policy formulated by the State itself. They are bound to support legal action of the State or its instrumentalities, if such action is in accordance with law and not otherwise being officer of Court. But, in the present case, unfortunately, the learned Standing Counsel for the 3^rd respondent sincerely and honestly supported illegal action of the 3^rd respondent and the attempt made by the learned Standing Counsel is appreciable as the counsel engaged by the 3^rd respondent.

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When the action of the 3^rd respondent temple in accepting the tender of the 4^th respondent. Though, failed to comply mandatory requirements under Clause 2 of the tender conditions, it is nothing but an arbitrary exercise of power in accepting the

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tender of the 4^th respondent, obviously, for different reasons. But, such arbitrary exercise of power by the 3^rd respondent temple in accepting the tender of 4^th respondent is contrary to the tender conditions and such conduct of the 3^rd respondent is reprehensible.

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When the 3^rd respondent accepted such tender of the 4^th respondent without complying mandatory requirements, the order of acceptance of the tender of the 4^th respondent, is liable to be set aside and in terms of Clause 15, the 3^rd respondent has to take decision immediately declaring the petitioner as second highest bidder for the work to be entrusted. Since, the 4^th respondent discharged his contractual obligation for the part of contract period, it is not proper to declare the petitioner as successful bidder. In those circumstances, 3^rd respondent is directed to call for fresh tenders immediately, and complete the process with three months, while withdrawing the work entrusted to 4^th respondent.

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With the above direction, this Writ Petition is allowed. There shall be no order as to costs.

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Consequently, miscellaneous petitions pending, if any, shall also stand closed.

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_________________________________________ JUSTICE M. SATYANARAYANA MURTHY

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Date: 12-12-2019

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Note: Furnish CC by 27-01-2020. B/o. IS

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