Allowed

Peppermint Clothing Pvt. Ltd. v. Education Board, Pune Municipal Corporation and Ors.

Bombay HC3 Aug 2016WP/5677/2016

Case brief

AI extract

What is this about?

This writ petition challenged the Pune Municipal Corporation's decision to relax essential eligibility conditions in a tender for school uniforms. The Court held that relaxing fundamental conditions after the process started to favor an unqualified bidder was arbitrary and illegal, quashing the decision and directing fresh bids.

What did the court decide?

The decision of the Municipal Corporation and the work order are quashed. The Corporation is directed to invite fresh bids.

Peppermint Clothing Pvt. Ltd. Vs Education… — Public Procurement and Tenders | Bombay HC (2016)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION

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WRIT PETITION NO.5677 OF 2016

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Peppermint Clothing Private Limited ...Petitioner vs.

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Education Board, Pune Municipal Corporation

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Mafatlal Industries Limited ...Respondents

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Mr. M.V. Thorat a/w. Ms. Pooja Thorat for the Petitioner Mr. S.J. Raikar a/w. Mr. N.R. Vidwans, for Respondent No. 1. Mr. S.S. Kanetkar i/b. M/s. Fedaral & Rashmikant, for Respdt. No. 2.

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ORDER RESERVED ON : 25TH JULY, 2016 ORDER PRONOUNCED ON : 3RD AUGUST, 2016

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CORAM : SHANTANU KEMKAR & MAKARAND KARNIK, JJ.

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ORDER: (Per Shantanu Kemkar, J.)

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. Brief facts necessary for the disposal of this Petition may be stated as under:

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On 1^st March, 2016 the first Respondent Pune Municipal Corporation (for short “ Municipal Corporation ”) had published a

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Notice Inviting Tenders (for short “ NIT ”) for the supply of ready-made school uniforms and readymade physical training uniforms for the students studying in the various schools established by the Municipal

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Corporation. One of the eligibility condition of NIT was that the tenderer for supply of the readymade uniforms should be either the manufacturer of the uniform or its authorized agent. The manufacturer is required to be having ISO certificate to that effect and the same was to be attached with the tender. In case the tender is submitted by its authorized agent then the authority letter was to be annexed. The tender was to be submitted in two envelopes namely Technical Bid and Commercial Bid. After opening the technical bid, if the tenderer was found to be fulfilling the requisite conditions of the NIT, the commercial bid of eligible tenderer was to be opened.

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In pursuance to the said NIT six bids were received including that of the Petitioner and of the second Respondent. The bids of the three bidders including the Petitioner, were found to be fulfilling the aforesaid requisite condition. However instead of rejecting the bids of other unqualified bidders including the second Respondent the Municipal Corporation took a decision to treat all bids to be eligible and to allow all the bidders to participate in the process. Accordingly the commercial bids of all the bidders were opened and

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the samples of the bidders who were L-1, L-2 and L-3 were sent for

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testing to Government approved laboratory. After getting the test reports of the samples, the bid of the second Respondent in respect of readymade school uniform was accepted. None of the tenderer was found to have passed the sample, test in respect of readymade physical training uniforms. So in that regard it was decided to issue fresh NIT.

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Feeling aggrieved by the acceptance of bid of the second Respondent and issuance of work order to it the Petitioner has filed this Petition. The case of the Petitioner is that the decision of the Municipal Corporation to hold the bidders who were not fulfilling the essential pre condition and who were not qualified including the second Respondent to be eligible by relaxing the essential condition and then to open their Commercial Bid and thereafter to issue work order in favour of the second Respondent as its samples were successful in the laboratory test is illegal, arbitrary and is in excess of its powers. According to the Petitioner, acceptance of the Second Respondent's bid though was not fulfilling the essential eligibility condition of being manufacturer of readymade uniforms is only to favour the second Respondent. It is stated that the second Respondent

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Mafatlal Industries Limited is neither a manufacturer of readymade school uniforms nor is having ISO certification for that purpose and the condition that the tenderer should be manufacturer of readymade uniforms possessing ISO certificate or should be its authorized agent being a fundamental pre condition for the eligibility to submit the tender, the same could not have been relaxed by the Municipal Corporation in the garb of exercise of powers vested under clause 35 of the tender document.

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The learned counsel for Respondent No. 1 Municipal Corporation has filed reply and stated that the tender process contemplated two Bid system namely Technical Bid and Commercial Bid. The eligibility criterion for qualifying the technical bid has been provided for in the tender document itself. The commercial bid of the participating tenderer could be opened, if such tenderer gets qualified in the technical bid. The tender document further provided for obtaining the Test Report of the sample/specimen School Uniforms, as supplied by the eligible tenderer to this Respondent, from the Government approved laboratory. It has been stated that for the Pre Tender Meeting held on 3^rd March, 2016 seeking clarification on the

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points/ issues as noted in the minutes of the meeting abovementioned, the Petitioner never raised any query concerning the submission of the various certificates by the participating bidders/tenderer for being qualified in the technical bid. The Municipal Corporation for having healthy competition amongst the tenderer and to obtain best quality product at cheaper rate in the public interest vide its Resolution No. 13 dated 22^nd April, 2016 resolved to sanction to relax the terms and conditions of eligibility concerning the Technical Bid of all the bidders /tenderer with reference to Envelope 'A' by exercising the powers of relaxation of the terms and conditions as contained in Clause No. 35 of the tender as also to open the financial bids, on scrutinizing and after forwarding the specimen/samples of the products, the laboratory tests reports were obtained and as per the report, the second Respondent was ranked as L1 and its tender was accepted and the work order was issued in its favour. As per the said work order dated 26^th May, 2016 the second Respondent will now start the supply of readymade school uniforms to the Municipal Corporation.

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The second Respondent in its reply has supported the

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action of the Municipal Corporation. According to the second Respondent, though it is not manufacturer of readymade uniforms but the two companies viz. “Darshan Uniforms” and “Virgin apparels (India) Pvt. Ltd.” undertake stitching assignments exclusively of the Respondent No. 2 and these two companies are having ISO certificate of manufacturing readymade uniforms. The certificates were obtained from the said companies and were submitted to the Municipal Corporation when the same were asked for and therefore it cannot be said that it is not fulfilling the requisite condition. It is argued that even otherwise in view of clause No. 35 of the tender document the Municipal Corporation could have and has rightly relaxed the said condition to have more competition.

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Heard learned counsel for parties and perused the record.

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In support of his contention the learned counsel for the Petitioner has placed reliance on the judgment of the Division Bench of this Court in the case of “Konark Infracture Pvt. Ltd. vs. Commissioner, Ulhasnagar Municipal Corporation and Ors.”¹ and

1 AIR 2000 Bom 389.

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“ W.B.State Electricity Board vs. Patel Engineering Co. Ltd. & Ors. ”¹ .

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On the other hand, the learned counsel for the Municipal Corporation has placed reliance on the following cases: (1) Air India Ltd. vs. Cochin International Airport Ltd. & Anr.2 (2) Kailash Constructions vs. Vidarbha Irrigation Development Municipal Corporation and Others3

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(3) Alok Parshuram Jalan and Another vs. Brihanmumbai Electric Supply and Transport and Others4 (4) Kashim Faridsaheb and Another vs. Naseer Mohammad and Ahmed and Others.5

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(5) Lanco Infratech Limited vs. Mormugao Port Trust6

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In support of the stand taken by the Municipal Corporation, the learned counsel appearing for the second Respondent has relied on the following case laws:

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(1) Michigan Rubber (India) Ltd. vs. State of Karnataka & Ors.7 (2) Tejas Constructions and Infrastructure Private Limited vs. Municipal Council, Sendhwa and Another8.

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1 (2001) 2 Supreme Court Cases 451.

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2 AIR 2000 SUPREME COURT 801.

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3 2011 (4) Mh.L.J.719.

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4 2009(1) ALL MR 319.

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5 2009(1) ALL MR 334.

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6 2009(3) Bom. C.R. 353.

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7 (2012) 8 Supreme Court Cases 216.

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8 (2012) 6 Supreme Court Cases 464.

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11. In Konark Infracture Pvt. Ltd. (supra), a Division Bench

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of this Court in para 9 and 10 has observed thus:

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“9: A distinction must be made between those terms and conditions of tender which are essential terms of eligibility and on the other hand those which are of an incidental or inconsequential nature. In G.J. Fernandez v. State of Karnataka, (1990) 2 SCC 488 : (AIR 1990 SC 958), the Supreme Court held that “the conditions and stipulations in a tender notice have two types of consequences. The first is that the party issuing the tender has the right to punctiliously and rigidly enforce them. The second consequence, indicated by this Court in earlier decision is not that the K.P.C. cannot, deviate from these guidelines at all any situation but that any deviation, if made, should not result in arbitrariness or discrimination”. (Para 15 at page 501). The Court noted that the rule in Ramanna's case will be readily applied by Courts to a case where a person complains that a departure from qualifications has kept him out of the place. In the present case the deletion was of an essential condition of eligibility and the underlying object was to ensure that the bidding process was not confined to a few bidders, often times existing contractors who alone would meet a stringent norm of turnover. Once a decision was taken to delete the application to clause 6(a) and the offers which were received on 23-32000 were on the basis of the position that original clause 6(a) would be applicable, fairness and equal treatment required that the process should be carried out afresh to determine whether better or higher officers would be received upon the deletion of clause 6(a). This was evidently not done. As a result of a restricted application of the modified tender conditions to only the existing bidders, the Municipal Corporation has been deprived of the opportunity which it could have had of obtaining higher or better bids”.

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“10: In conclusion therefore, the Municipal Corporation has acted arbitrarily in considering the bid of the 3^rd Respondent which did not fulfill the eligibility conditions on the last date which was prescribed for the submission of bids. The attempt by the 3^rd Respondent after the prescribed last date of meeting

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the eligibility condition by submitting a certificate of the Chartered Accountant could not have been taken into consideration by the Municipal Corporation for holding the bid of 3^rd Respondent as eligible under the tender conditions. This, particularly in the light of the fact that upon submitting its bid, the 3^rd Respondent confirmed its ineligibility under tender conditions 6(a) and 6(b). The Municipal Corporation, in view of the well settled position of law, was bound to consider each bid in terms of the tender conditions which had been prescribed and which were in existence on the date prescribed for the submission of offers. Even if the tender conditions were to be relaxed thereafter, the benefit of relaxation could not have been made available only to the existing bidders since the relaxation operated to widen the field of eligibility and competition”.

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12. In W.B.State Electricity Board (supra) the Hon'ble

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Supreme Court in para 24 has observed as under :

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“24: The controversy in this case has arisen at the threshold. It cannot be disputed that this is an international competitive bidding which postulates keen competition and high efficiency. The bidders have or should have assistance of technical experts. The degree of care required in such a bidding is greater than in ordinary local bids for small works. It is essential to maintain the sanctity and integrity of process of tender/bid and also award of a contract. The appellant, respondent Nos.1 to 4 and respondent Nos.10 & 11 are all bound by the ITB which should be complied with scrupulously. In a work of this nature and magnitude where bidders who fulfil pre-qualification alone are invited to bid, adherence to the instructions cannot be given a go-bye by branding it as a pedantic approach otherwise it will encourage and provide scope for discrimination, arbitrariness and favouritism which are totally opposed to the Rule of law and our Constitutional values. The very purpose of issuing Rules/instructions is to ensure their enforcement lest the Rule of law should be a casuality. Relaxation or waiver of a rule or condition, unless so provided under ITB, by the State or its

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agencies (the appellant) in favour of one bidder would create justifiable doubts in the minds of other bidders, would impair the rule of transparency and fairness and provide room for manipulation to suit the whims of the State agencies in picking and choosing a bidder for awarding contracts as in the case of distributing bounty or charity. In our view such approach should always be avoided. Where power to relax or waive a rule or a condition exists under the Rules, it has to be done strictly in compliance with the Rules. We have, therefore, no hesitation in concluding that adherence to ITB or Rules is the best principle to be followed, which is also in the best public interest”

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13. In the case of Air India Limited (supra) in para 7 the Hon'ble Supreme Court held that

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“7: The law relating to award of a contract by the State, its Municipal Corporations and bodies acting as instrumentalities and agencies of the Government has been settled by the decision of this Court in R.D. Shetty v. International Airport Authority, 1979 (3) SCC 488; Fertilizer Municipal Corporation Kamgar Union v. Union of India, ; Asstt. Collector, Central Excise v. Dunlop India Ltd, Tata Cellular v. Union of India, Ramniklal N. Bhutta v. State of Maharashtra, and Raunaq International Ltd. v. I.V.R. Construction Ltd., The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are of paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its Municipal Corporations, instrumentalities and agencies are bound to

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adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the Court can examine the decision making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its Municipal Corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision making process the Court must 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 the larger public interest in mind in order to decide 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.”

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14. In the case of Kailash Constructions (supra) a Division

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Bench of this Court in para 6, 7, 8 and 9 held as under:

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“6: We have considered the contentions canvassed by the respective parties and perused relevant clauses of tender document. In this case, it is not in dispute that one of the clauses of tender document gives power to the Department to relax the qualifying conditions and, therefore, this is not a case where the power exercised by the Department in relaxing the conditions was without authority or jurisdiction. In the instant case, looking to the nature of work required to be done by the tenderer, the relaxation which was given by the Department cannot be said to be against the public purpose or affects the public interest. It is, no doubt, true that the public contract given by the Public Authority must be transparent, free from malice and should serve the public purpose. In the present case, it is not in dispute that the tender submitted by respondent no. 5 was lowest and, therefore, it is obvious that the action of the Department in accepting the same served the public purpose. It is, no doubt, true that the Department did have power to relax the qualifying conditions of the tender. However, the action of the Department while granting tender

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must be free from arbitrariness and malice. In the instant case, relaxation of condition in bringing down length of transmission line from 32 kms to 20 kms does not appear to be either arbitrary or against the public interest since this relaxation is made applicable to all the tenderers including the petitioner. It is submitted that in all the Department had received three offers and such relaxation was made applicable to all the tenderers and, therefore, action of relaxation in the facts and circumstances of the present case, cannot be treated to be either arbitrary or unreasonable”.

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“7: So far as submitting two documents in envelope no. 1 is concerned, it appears that respondent no. 5 had submitted only one document in it and, therefore, was permitted to submit photo copy of the tender documents. So far as aspect of security deposit is concerned, learned counsel for the Department has brought to our notice that prior approval/ permission from the Chief Engineer, Mumbai was obtained by the Department and, therefore, action of the Department in permitting respondent no. 5 to make security deposit on 13.10.2010 also does not appear to be unreasonable.”

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“8: In the instant case, in order to attract more competition, the power of relaxation of qualifying conditions has been exercised by the Authority. If the condition stipulated in clause 1.13.2 (a) would not have been relaxed by bringing down the length of successfully completed work of supply and installation of 132 KV and above voltage level transmission line from 32 kms to 20 kms, the only tender would have been of the petitioner, which would have resulted in eliminating the competition. By virtue of relaxing the said condition, the sphere of competition has been increased and the respondents received two more tenders. The tender submitted by respondent no. 5 was 29% below the estimated price which has not only benefited the public exchequer, but also served the public purpose. Respondent no. 5, though permitted to rectify certain deficiencies by the Authority, however, those deficiencies being of a formal nature, the act of respondents no. 1 to 4 in permitting respondent no. 5 to rectify them does not result in arbitrariness or unreasonableness, particularly,

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keeping in view that the tender submitted by respondent no. 5 was the lowest one. It is, no doubt, true that the petitioner is now ready and willing to perform the job at the price which is quoted by respondent no. 5. However, that would not render the decision of the Department to accept the tender of respondent no. 5 which was lowest, either unreasonable or arbitrary.”

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“9: Mr Mardikar, learned counsel for the petitioner has relied on the decisions of the Supreme Court in Jagdish Mandal v. State of Orissa reported in (2007) 14 SCC 517 and W. B. State Electricity Board v. Patel Engineering and ors reported in (2001) 2 SCC 451. So far as the decision of the Supreme Court in Jagdish Mandal's case is concerned, the Apex Court in paragraph 22 has observed thus :

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"Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound". When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self and persuade courts to interfere by exercising

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power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succor to thousands and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions : (i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; OR Whether the process adopted or decision made is so arbitrary and irrational that the court can say : "the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached"; (ii) Whether public interest is affected.

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If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action."

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In the case of Michigan Rubber (India) Ltd. (supra) the Hon'ble Supreme Court in para 35 held that:

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“35: As observed earlier, the Court would not normally interfere with the policy decision and in matters challenging the award of contract by the State or public authorities. In view of the above, the appellant has failed to establish that the same was contrary to public interest and beyond the pale of discrimination or unreasonable. We are satisfied that to have the best of the equipment for the vehicles, which ply on road carrying passengers, the 2nd respondent thought it fit that the criteria for applying for tender for procuring tyres should be at a high standard and thought it fit that only those manufacturers who satisfy the eligibility criteria should be permitted to participate in the tender. As noted in various decisions, the Government and their undertakings must have

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a free hand in setting terms of the tender and only if it is arbitrary, discriminatory, mala fide or actuated by bias, the Courts would interfere. The Courts cannot interfere with the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. In the case on hand, we have already noted that taking into account various aspects including the safety of the passengers and public interest, the CMG consisting of experienced persons, revised the tender conditions. We are satisfied that the said Committee had discussed the subject in detail and for specifying these two conditions regarding pre-qualification criteria and the evaluation criteria. On perusal of all the materials, we are satisfied that the impugned conditions do not, in any way, could be classified as arbitrary, discriminatory or mala fide.”

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16. In the case of Tejas Constructions and Infrastructure

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(supra) the Hon'ble Apex Court in para 25 and 26 while upholding the decision of the High Court observed thus:

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“25: It is true that the date of submission of tender was initially fixed upto 25th March, 2011 but the same was extended upto 7th April, 2011. That being so, 5 years immediately preceding the issue of the tender notice would have included the year 2010- 11 also for which financial year, audit of the company’s books, accounts & documents had not been completed. Such being the case, respondent No.2 could not possibly comply with the requirement of tender notice or produce certified copy of audited balance-sheet. All that it could possibly do was to obtain certificate based on relevant books, registers, records accounts etc., of the company, which certificate was indeed produced by the said respondent.”

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“26: The High Court has rightly observed that the appellant had not disputed the correctness of the turnover certified by the Chartered Accountant for the year 2010-2011 nor was it

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disputed that the same satisfied the requirement of the tender notice. In that view, therefore, there was no question of respondent No.2 being ineligible or committing a deliberate default in producing the requisite documents to establish its eligibility to offer a bid. The first limb of the challenge to the finding of the High Court on the above aspect must, therefore, fail and is accordingly rejected.”

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17. In the case of Association of Registration Plates (supra)

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the Hon'ble Supreme Court in para 43 and 44 held as under:

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“43: Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work. Article 14 of the Constitution prohibits the Government from arbitrarily choosing a contractor at its will and pleasure. It has to act reasonably, fairly and in public interest in awarding contract. At the same time, no person can claim a fundamental right to carry on business with the Government. All that he can claim is that in competing for the contract, he should not be unfairly treated and discriminated, to the detriment of public interest. Undisputedly, the legal position which has been firmly established from various decisions of this Court, cited at the Bar (supra) is that Government contracts are highly valuable assets and the Court should be prepared to enforce standards of fairness on the Government in its dealings with tenderers and contractors.”

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“44: The grievance that the terms of notice inviting tenders in the present case virtually create a monopoly in favour of parties having foreign collaborations, is without substance. Selection of competent contractor for assigning job of supply of a sophisticated article through an open-tender procedure, is not an act of creating monopoly, as in sought to be suggested on behalf of the petitioners. What has been argued is that the terms of the notices inviting tenders deliberately exclude domestic manufacturers and new entrepreneurs in the field. In the absence of any indication from the record

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that the terms and conditions were tailor-made to promote parties with foreign collaborations and to exclude indigenous manufacturers, judicial interference is uncalled for.”

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18. In the case of Directorate of Education and Others vs.

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Educomp Datamatics Ltd. and Others1 the Hon'ble Supreme Court

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held that,

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“ The terms of invitation of tenders are not open to judicial scrutiny, the same being in the realm of contract. The Courts can scrutinize the award of the contracts by the Government or its agencies in exercise of their powers of judicial review to prevent arbitrariness or favouritism. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. The Courts can not strike down the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. ”

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19. In the case of Tata Cellular vs. Union of India vs. Union

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of India2 the Apex Court has observed at para 93 that

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“93: The duty of Court is to confine itself to the question of legality. Its concern should be (i) whether decision making authority exceeded its powers, (ii) committed an error of law, (iii) committed a breach of rules of natural justice, (iv) reached a decision which no reasonable Tribunal would have reached or (v) abused its powers.”

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In para 113 of the judgment of Tata Cellular (supra) the Supreme

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Court has carved out the principles in regard to judicial interference.

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1 (2004) 4 SCC 19.

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2 AIR 1996 SC 11.

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Keeping in view the aforesaid legal position, it is emerged

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that the powers of the Government is not unlimited in such matters

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and the Government cannot give or withhold largess in its arbitrary discretion or its sweet will. The Government action should be based on standards that are not arbitrary or unauthorized. The Government cannot be permitted to say that it will give jobs or enter into contracts or issue quotas or licences only in favour of those having grey hair or belonging to a particular political party or professing a particular religious faith. The Government is still the Government when it acts in the matter of granting largess and it cannot act arbitrarily. It does not stand in the same position as a private individual. Its action must be in confirmity with the standards or norms which is are arbitrary, irrational or irrelevant. The Court can interfere when the decision making authority exceeds its powers or commits error of law or breach of natural justice or abuse its powers, also see:

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(1) Ramana Dayaram Shetty vs. The International Airport Authority of India and Others.1

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(2) Jespar I. Slong vs. State of Meghalaya and Others2 (3) Association of Regitration Plates vs. Union of India & Others3

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1 AIR 1979 SC 1628.

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2 (2004) 11 SCC 485.

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3 (2005) 1 SCC 679.

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In order to appreciate the controversy in its correct

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perspective, we feel it appropriate to extract few clauses of NIT as also few clauses of GR issued by the State Government which also undisputedly is applicable to the NIT in question.

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Clause 9 of NIT reads thus:

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(9) mRiknd laLFkk vk;,lvks izekf.kr vl.ks vko';d vkgs-

¶153

The clauses 5, 6, 13, 34 and 35 of conditions of NIT reads

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as under:

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(5) fufonknkjkus vk;,lvks izek.ki= tksM.ks ca/kudkjd vkgs-

¶156

(6) mRiknd daiuh vFkok daiuhps izkf/kd`r fodzsrs ;kauhp fufonk Hkj.ks ca/kudkjd jkghy- rlsp mRiknd daiuhpk ewGi= (Authorised Letter) lacaf/kr fufonslkscr ^v ikfdVkr lekfo”V dj.ks ca/kudkjd jkghy-*

¶157

(13) vko';drk HkklY;kl] xjtsuqlkj lnjps ueqU;kph 'kkldh;@,u,ch,y ekU;rkizkIr iz;ksx'kkGsdMwu f'k{k.k eaMG dk;kZy; d:u ?ksbZy R;kdkeh ;s.kkjk loZ [kpZ fufonknkjkus f'k{k.k eaMG dk;kZy;kdMs ^v ikfdV m?kMY;koj ik= fufonknkjkl f'k{k.k eaMG dk;kZy;kr rhu fnolkr Hkj.ks ca/kudkjd vkgs- rikl.kh vgoky vkY;kuarj ^c ikfdV m?kM.;kr ;sbZy-**

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(34) iq.ks egkuxjikfydsP;k lq/kkjhr fufonk izfdz;k dk;Ziz.kkyh 661 fn- 23@03@2011 e/khy loZ vVh 'krhZ rlsp fufonkackcr 'kklukus osGksosGh fuxZehr dsysys 'kklu fu.kZ; o eqacbZ izkFkfed f'k{k.k

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vf/kfu;e 1947 o fu;e 1949 e/khy fufonkckcrP;k loZ fu;e] vVh o 'krhZ ;k fufonsyk ykxw jkgrhy-

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(35) ;k fufonk e/khy vVh o 'krhZ f'kfFky dj.;kps fof'k”B izlaxh vko';drk vlY;kl rs f'kfFky @ cny dj.;kph vf/kdkj ek- f'k{k.k eaMG] iq.ks euik ;kauk vkgs o jkfgy-

¶164

The conditions 8 and 14 of Annexure “A” to the tender which are also relevant are extracted as under:

¶165

(8) mRiknd daiuh vFkok daiuhps izkf/kd`r fodzsrs ;kauhp fufonk Hkjko;kph vkgs rls mRiknd daiuhps ewGi= lacaf/kr fufonsckcr Authorised Letter fufonklkscr tksM.ks ca/kudkjd vkgs- (14) mRiknd laLFkk vk;,lvks izekf.kr vl.ks vko';d vkgs-

¶166

The relevant clause of the condition 3.4.2( M ) of the

¶167

Government Resolution reads thus:

¶168

3.4.2( M ): [kjsnhP;k vVh o 'krhZe/;s lq/kkj.kk djrkuk] [kjsnh dk;kZy; [kjsnhP;k ewyHkwr Lo:ikr QsjQkj dj.kkj ukgh] ijarq [kjsnhP;k oLrwP;k@fo”k;kP;k dks.kR;kgh ri'khyokj oSf'k”V;kr fdaok ewY;kadukP;k fud”kke/;s Hkj ?kkyw fdaok lq/kkj.kk d: 'kdsy fdaok oxGw 'kdsy-

¶169

Having regard to the tender conditions and the power of relaxation vested in the Corporation it is clear that though the Municipal Corporation was having powers to relax the terms and

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conditions of the tender but the power cannot be exercised to relax the fundamental condition. In the circumstances, we have to see as to whether the decision of the Municipal Corporation to relax the said condition so as to allow the unqualified bidders to participate in the tender process is legal and proper or not ?

¶174

On going through the record produced before us, we find that when the Technical Bids were opened, the Municipal Corporation found the Petitioner as also two other tenderers to be fulfilling the requisite eligibility condition as they are manufacturer of readymade uniforms and holding ISO certificate in that regard. Thus there were three bidders in the field. Whereas in regard to Respondent No. 2 Mafatlal Industries Limited it was found that its certificate was to the effect that it is a textile manufacturer with the ISO certificate for that purpose. Thus, undisputedly the second Respondent was the manufacturer of the textile and was not manufacturing the readymade school uniforms and not having ISO certificate to that effect. It is only at the time of issuance of work order, the second Respondent furnished certificates of two companies as stated above from whom they are getting the readymade school uniforms

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manufactured on being asked by the Corporation. Therefore it is clear that the second Respondent was not fulfilling the pre condition of the tender document when its technical bid was accepted. In the circumstances, in the meeting held by the Municipal Corporation by exercising the powers of relaxation of conditions under clause 35 extracted above, it was resolved that though the Technical Bid of three tenderers (including the second Respondent) is not as per the tender conditions but looking to the repeated complaints being received in regard to the purchase of school uniforms and to have more competition, all the tenderers are treated to be eligible for participation.

¶179

Having gone through the entire record and the aforesaid condition, we find that the second Respondent was admittedly and undisputedly was not the manufacturer of readymade uniforms and was not having ISO certification to that effect in its favour. Therefore, its Technical Bid could not have been accepted and it could not have been declared eligible for further participation in the tender process as in our considered view by relaxing the eligibility condition the Municipal Corporation has relaxed the fundamental and essential

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condition of eligibility under the garb of having better competition. True it is that under clause 35 of the tender condition the Municipal Corporation is given power to relax the terms and conditions of the tender under special circumstances, but that power is controlled by clause 3.4.2(5) of the Government Resolution which stipulates that while relaxing the terms and conditions of the tender conditions the fundamental conditions will not be modified.

¶184

In the present case we find that in the Technical Bid, three bidders were successful. As a result, there was already competition, and if the Municipal Corporation was of the view that more competition was required in the larger public interest in all fairness fresh tenders should been invited by relaxing the said condition as in that case there would have many more bidders and there would have been wide competition. Having not done so and having relaxed the essential and fundamental eligibility condition, after the tender process started, in our considered view the Municipal Corporation has not acted fairly but in fact has acted arbitrarily and illegally. Thus the action of the Municipal Corporation is abuse of and in excess of its powers. As a result the decision making process of the Municipal

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Corporation is vitiated. The same is illegal, arbitrary and impermissible . Therefore, it is liable to be and is hereby quashed.

¶189