Allowed

Paldewar Prashant Agrotech Pvt.Ltd. v. the State of Maharashtra and Others

Bombay HC10 Apr 2014WP/686/2014

Case brief

AI extract

What is this about?

The petitioners challenged the rejection of their e-tender for transporting sugar under the public distribution system. The court held the rejection arbitrary, noting the petitioner met experience requirements via director shareholding and exceeded financial thresholds, allowing the petition.

What did the court decide?

The writ petition was allowed; the impugned order rejecting the tender was set aside, and the petitioner was directed to participate in the tender for the period 2013-2015.

Paldewar Prashant Agrotech Pvt.Ltd. Vs the State of… — Writ and Judicial Review | Bombay HC (2014)

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 WP 686/14

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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BENCH AT AURANGABAD

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 WRIT PETITION NO.686/2014

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Paldewar Prashant Agrotech Pvt.Ltd.,
having its office address
Shop No.32, New Mondha, Nanded.
Through its Managing Director
Prashant Nagnathrao Paldewar.
...Petitioner..

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Versus

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1] The State of Maharashtra, Department of Food, Civil Supply & Consumer Protection, Through its Secretary, Mantralaya, Mumbai.

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2] The Divisional Commissioner, Aurangabad Division, Aurangabad.

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3] The Collector, Nanded. Dist.Nanded.

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4] The District Supply Officer Nanded.

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...Respondents...

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 .....

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Shri P.V. Mandlik, Senior Advocate i/b Shri M.D.
Narwadkar, Advocate for petitioner.
Shri S.G. Karlekar, AGP for respondent nos.1 to 4.

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 .....

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CORAM: R.M. BORDE &

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 A.M. BADAR, JJ.

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JUDGMENT RESERVED ON 28.03.2014
 JUDGMENT PRONOUNCED ON 10.04.2014

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 WP 686/14

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JUDGMENT(Per A.M. Badar, J.) :

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1] By this petition, the petitioner - company -
Paldewar Prashant Agrotech Pvt.Ltd. is challenging
rejection of e-tender submitted by it to the Collector,
Nanded, vide order dated 8.1.2014 by contending that
tender condition nos.11 and 12 of the tender dated
30.8.2013 are illegal and arbitrary.

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2]Heard learned counsel for the parties. Rule. Rule

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made returnable forthwith and the petition is taken up
for final hearing with the consent of learned counsel for
the parties.

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3]Brief facts necessary for deciding the instant
petition can be summarized thus:-

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Respondent no.1 - State issued e-tender notice on
17.8.2013 inviting tenders from the interested bidders

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for transport of controlled sugar from sugar factory to
godown of the Government under the public distribution
system. The District Collector, Nanded, was accordingly
permitted to invite open quotations for various schemes
under the public distribution system. The tender notice

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 WP 686/14

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is having several terms and conditions but for the
purpose of instant petition, condition nos.11 and 12 are
material. Condition no.11 is regarding experience of the
tenderer and prescribes that for submitting quotations,
the tenderer - transporter needs to have minimum two

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years experience in transportation work of the Central
Government, State Government or semi-Government offices
and institutions. It further provides that experience of
transportation of articles such as food-grains, levy

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sugar, cement, fertilizers, cotton belonging to the
Central Government, State Government, semi-Government
offices and institutions shall be taken into
consideration while allotting the tender work. Condition
no.12 is concerning financial capacity of the bidder. It
provides that turnover of the tenderer for last three

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years must be at least up to expenditure incurred for
transportation of sugar under public distribution system

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at Nanded for last three years. It is mentioned in
condition no.12 that such average expenditure per annum

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for transport of sugar at Nanded District for last three
years is Rs.64,00,000/-.

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The petitioner company, in pursuance to e-tender

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 WP 686/14

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notice issued by the State, submitted its bid along with
technical bid for tender work of transport of sugar. It
is seen that another bidder namely M/s Parsewar and
Company objected the technical bid of the petitioner
company by raising objection in respect of experience as
well as financial capacity of the petitioner - company.
Considering the objection so raised, the District Supply
Officer, Nanded, by the communication dated 8.1.2014
informed the rejection of bid of the petitioner - company
on the ground that the petitioner company is not having
requisite experience in the field of transportation and
the experience certificate is in the name of another
firm. It is further informed by this letter that annual
turn-over of the petitioner - company for the last three
years is not as per the tender condition. Rejection of
tender submitted by the petitioner company on this reason
is challenged in the instant petition.

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4]Heard the learned Senior Counsel for the petitioner.
According to him, rejection of tender of the petitioner -

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company is totally arbitrary, discriminatory and
erroneous. He further contended that respondent - State
failed to take into consideration the experience

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 WP 686/14

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certificates submitted by the petitioner - company so
also the documents reflecting financial condition of the
petitioner company. Therefore, according to the learned
Senior Counsel, the petitioner company has substantially
complied with the tender conditions enumerated in Clause
Nos.11 and 12 of the tender issued by the respondent -
State.

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5]Per contra, according to the learned AGP, the
petitioner company itself was not in existence for a
period of two years and, therefore, it has not fulfilled
the requirement of condition no.11 of the e-tender in
question. He further argued that experience certificate
of another firm cannot be taken into consideration as the
said firm is totally distinct legal entity. Similarly,
according to the learned AGP, the petitioner company is
not fulfilling the requirement of three years turn over
as per condition no.12.

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6] Let us, therefore, examine whether rejection of the tender submitted by the petitioner company vide

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communication dated 8.1.2014 is sustainable in the eyes
of law. At the outset, one will have to keep in mind the

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 WP 686/14

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law laid down by the Hon'ble Apex Court in the matter of Ramana Dayaram Shetty V/s The International Airport Authority of India & others (AIR 1979 SC 1628), which lays down the test to avoid arbitrariness and discrimination when the Government enters into contract. The Apex Court has laid down, thus, in paragraph no.12 as under:-

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"........It must, therefore, be taken to be the

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law that where the Government is dealing with the
public, whether by way of giving jobs or entering
quotas or licences or granting other forms of
largess, the Government cannot act arbitrarily as
its sweet will and, like a private individual,
deal with any person it pleases, but its action
must be in conformity with standard of norm which
is not arbitrary, irrational or irrelevant. The

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power or discretion of the Government in the
matter of grant of largess including award of
jobs, contracts quotas, licences etc., must be
confined and structured by rational, relevant and

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non-discriminatory standard or norm and if the
government departs from such standard of norm in

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 WP 686/14

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any particular case or cases, the action of the
Government would be liable to be struck down,
unless it can be shown by the Government that the
departure was not arbitrary, but was based on some

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valid principle which in itself was not
irrational, unreasonable or discriminatory."

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7] Considering the controversy involved in the instant petition, the decision of the Hon'ble Apex Court in the matter of Jespar I. Slong V/s State of Meghalaya & others [ (2004) 11 SCC 485) ] is also relevant as it deals with the role of Government while entering into contract. Legal principle on the subject is reiterated in paragraph no.19 of the said ruling, which reads thus:-

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"It goes without saying that the Government while

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entering into contracts is expected not to act
like a private individual but should act in
conformity with certain healthy standards and
norms. Such actions should not be arbitrary,
irrational or irrelevant. The awarding of

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contracts by inviting tenders is considered to be
one of the fair methods. If there are any
reservations or restrictions then they should not

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be arbitrary and must be justifiable on the basis of some policy or valid principles which by themselves should be reasonable and not discriminatory. (See para 7 of Hindustan Development Corpn. case (1993) 3 SCC 499) The said judgment also states that any act which excluded competition from any part of the trade or commerce by forming cartels should not be permitted."

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8] Keeping in mind the legal principles enunciated by
the Hon'ble Apex Court in the foregoing paragraphs, let

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us examine the case in hand. True it is that as per
tender condition no.11, experience of two years of
working as a transporter with Central / State Government
or semi-Government authorities is said to be mandatory,
but it is further mentioned in Clause 3 of tender
condition no.11 that in case of partnership firms or
cooperative societies, experience certificate of
directors or members thereof shall be accepted for
ascertaining fulfillment of tender condition no.11. It
is not controverted that Shri Paldewar Transport Company
Ltd. is a share-holder of the petitioner company and
certificate to that effect is placed on record by the

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petitioner. The directors of the petitioner company are
also the directors of Shri Paldewar Transport Company
Ltd. Therefore, experience certificates of directors of
both the companies as well as experience certificate of
Shri Paldewar Transport Company in the matter of
transportation work with the Central or State Government

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or semi-Government authorities needs to be taken into consideration while examining the eligibility of the petitioner company vis-a-vis tender condition no.11.

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9]At this juncture, it is apposite to note that the
petitioner company had submitted an affidavit in support
of its technical bid and the copy of the same is annexed
as Exhibit C - page 33. This affidavit sworn by the
petitioner company is in respect of its experience with
the Government in the field of transportation of food-
grains and fertilizers. This duly sworn affidavit
submitted by the petitioner with technical bid do show

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that Shri Paldewar Transport Company Ltd. was awarded
contract for transport of sugar by the Collector, Nanded,

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for the period from the year 2003 to the year 2006.
Apart from this, the petitioner company has also placed
on record the work order dated 29.6.2005 issued by the

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 WP 686/14

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office of the Collector, Nanded, reflecting the fact that
Shri Paldewar Transport Company Ltd. was awarded contract
of transport of sugar by the Collector, Nanded, for the

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period from the year 2003 to the year 2005. The

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petitioner company has also placed on record an
experience certificate dated 29.1.2013 issued by the

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District Supply Officer, Nanded, showing that Shri
Paldewar Transport Company Ltd. undertook the work of
transportation of levy sugar from 1.8.2003 to 31.5.2006.

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That apart, the affidavit sworn for the purpose of
technical bid by the petitioner company further shows
that the Central Warehousing Corporation Ltd. had awarded
work of transportation of wheat, rice and fertilizers to

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Shri Paldewar Transport Company Ltd. for the period from

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1.4.2005 to 31.3.2010. The petitioner company has placed
on record an experience certificate dated 12.12.2012

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issued by the Central Warehousing Corporation Ltd. to

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this effect. It is well settled rule of interpretation
that like provisions of statute, the language and words

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used in the tender document are supposed to have same
effect or same use in the context in which they are used.
What was required by the State by incorporating condition

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 WP 686/14

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no.11 in the tender notice is experience of two years of
working as a transporter with the Government and semi-
Government authorities. Ascribing full meaning to the
words used in this tender condition, it cannot be said
that the petitioner company is not fulfilling this
condition as even experience certificate of director can
be taken into consideration while judging the eligibility
of the tenderer, in terms of condition no.11 of the
tender notice. Viewed from this angle, the communication
at Annexure E dated 8.1.2014 issued by the District

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Supply Officer rejecting the tender submitted by the
petitioner company on the ground that the experience
certificate submitted by the petitioner company is in the
name of other firm; cannot be sustained.

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10] Now let us examine other ground for rejecting of
tender submitted by the petitioner company. According to
the respondent - State, the other reason for rejection of
tender submitted by the petitioner company is its failure
to comply with the tender condition regarding annual
turnover for last three financial years. The relevant
clause of the tender notice is Clause No.12. As per this
clause regarding financial capacity of the tenderer,

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 WP 686/14

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turnover of the tenderer for last three years must be at
least up to the expenditure incurred for transportation
of sugar under the public distribution system at Nanded

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for the last three years. This Clause No.12 of the
tender notice further gives a data regarding average
annual expenditure incurred by the State during last

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three years for transportation of sugar under public
distribution system. It is clarified in condition no.12
that such average expenditure per annum for
transportation of sugar at Nanded District for last three

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years is Rs.64,00,000/-. Let us examine whether the
petitioner company is fulfilling this condition regarding
financial capacity. It is not in dispute that from
1.4.2010 to 31.3.2011, the petitioner company was a
proprietary concern having annual turnover of Rs.
5,87,000- as certified by the chartered accountant of the
petitioner. From April, 2011, the petitioner company

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came into existence and the certificate of the chartered
accountant placed on record at Exhibit C do show that
annual turnover of the petitioner company for the period
from 1.4.2011 to 31.3.2012 was Rs.10,26,08,084/-. Then

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for the period from 1.4.2012 to 31.3.2013, annual

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 WP 686/14

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turnover of the petitioner company as seen from the
certificate of the chartered accountant placed on record
at Exhibit C was Rs.52,52,71,890/-. Thus, it is seen

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that turnover of the petitioner company for the last
three years was Rs.62,84,66,974/- as against the required
amount of Rs.64,00,000/-. If one goes by average

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turnover per annum, then it is seen that the petitioner
company had average turnover of more than Rs.27/- crores
for last three consecutive years i.e. from the year 2010
to 2013. It is, thus, clear that the petitioner company

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has substantially fulfilled the condition no.12 of the
tender notice as it is having turnover of more than Rs.
64,00,000/- for last three consecutive years as desired
by the respondents. It thus makes it clear that action
of the respondents in rejecting the tender submitted by
the petitioner company is totally unsustainable and it
amounts to denying the fair opportunity to the petitioner

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in participating the tender process. The communication
dated 8.1.2014 issued by the District Supply Officer,

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Nanded, rejecting the tender virtually amounts to
excluding competition by eliminating the petitioner in
the matter of transportation of sugar in Nanded District.

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 WP 686/14

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11] For the reasons stated in the foregoing paragraphs, we are of the considered view that the act of the respondents in rejecting the tender submitted by the petitioner company is not in conformity with the standard of fair-play in the matter of award of contract by the Government and smacks of mala-fides . There is total departure from the standard of reasonableness expected of the State.

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12]In this view of the matter, the writ petition
deserves to be allowed by setting aside the order dated
8.1.2014 issued by the District Supply Officer, Nanded,
rejecting the tender of the petitioner company and is
accordingly allowed. The respondents are directed to
allow the petitioner company to participate in the tender
for transportation of controlled sugar issued by the
Collector, Nanded, for the period from 2013 to 2015.
Rule is made absolute in above terms. In the facts of

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the case, there shall be no order as to costs.

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ndk/c28314

Paldewar Prashant Agrotech Pvt.Ltd. v. the State of Maharashtra and Others

Case brief

What is this about?

What did the court decide?

Paldewar Prashant Agrotech Pvt.Ltd. v. the State of Maharashtra and Others

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

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