The petitioner challenged the award of food grain transportation work to a private union without completing the tender process. The High Court found the award was in public interest, not arbitrary, mala fide or intended to favour anyone, and declined to interfere in tender matters under judicial review. The writ petition was dismissed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
HIGH COURT OF HIMACHAL PRADESH AT SHIMLA
| CWP No. 553 of 2017 Decided on: August 17,2017 |
|
|---|---|
| Issar Goods Carrier | ...Petitioner |
| Versus | |
| The State of Himacha -------------------------- |
l Pradesh and others ….Respondents --------------------------------------------------- |
Coram Hon'ble Mr. Justice |
Sanjay Karol, Acting Chief Justice |
| Hon’ble Mr. Justice Whether approved for |
Sandeep Sharma, Judge reporting?1Yes. |
| -------------------------- For the petitioner |
--------------------------------------------------- Mr. Dalip K. Sharma, Advocate. |
| For the respondents: | Mr. Shrawan Dogra, Advocate General with Mr. Anup Rattan and Mr. Romesh |
| Verma, Additional Advocate Generals and Mr. J.K. Verma, Deputy Advocate General, for respondents No. 1 to 3. |
|
| Mr. Arvind Sharma, Advocate, for respondent No.4. |
|
| -------------------------- | Mr. Pratap Singh Goverdhan, Advocate, for respondent No.5. --------------------------------------------------- |
Per Sandeep Sharma |
, Judge: |
Petitioner being aggrieved and dissatisfied with the issuance of communication dated 21.3.2017 (Annexure P-4), whereby work for transportation of food grains i.e. specified articles from Principal Distribution Centres ( Pramkush Vitaran Kendra ) of Food Corporation of India to HP State Civil Supplies Corporation whole godowns in District Solan, came to be allotted to respondent No.5 i.e. M/s Kalka Shimla Goods Transport Union, Solan, for the years 2017-2018, preferred instant petition, seeking therein following main reliefs:
1 Whether the reporters of the local papers may be allowed to see the judgment?
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2. Facts as emerge from the record are that respondents No. 1 to 3, with a view to ensure smooth supply of specified articles under targeted public distribution system, available with the whole sale godowns of the HP State Civil Supplies Corporation, located in Solan District, invited tenders for transportation of food grains i.e. specified articles from Principal Distribution Centre of Food Corporation of India to HP State Civil Supplies Corporation whole sale godowns located in different locations of the District, with the prior approval of the Deputy Commissioner, Solan. It also emerges from the record that there are two Principal Distribution Centre of Food Corporation of India in Solan District, namely at Solan and Parwanoo. HP State Civil Supplies Corporation, Solan, Dharampur, Kandaghat and Arki are fed from Solan Principal Distribution Centres and Nalagarh and Ramshahar godowns are fed from Principal Distribution Centre, Parwanoo. For the financial years 2017-18, Food, Civil Supplies and Consumer Affairs Department invited tender vide Notice
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Inviting Tender dated 8.3.207 (Annexure P-3) from the interested parties, to participate and submit their quotations, in a sealed cover, on or before 28.3.2017, in the office of District Controller, Food, Civil Supplies and Consumer Affairs, Solan, for Principal Distribution Centres, Solan and Parwanoo. Petitioner had submitted its application on 24.1.2017. Respondents, vide annexure P-3, intimated/circulated that tenders/applications submitted by interested parties would be opened on 28.3.2017, in the presence of the Deputy Commissioner, Solan, however, the fact remains that, on 21.3.2017, a communication came to be issued by District Controller, Food, Civil Supplies and Consumer Affairs, disclosing therein that work stands allotted to respondent No.5, who, vide its communication dated 2.3.2017, had agreed to work at a rate 5% less than those of the previous years. Perusal of aforesaid communication (Annexure P-4), further suggests that work pertaining to Solan and Parwanoo was awarded to respondent No.5, whereas, tenders with regard to transportation from Principal Distribution Centres, Parwanoo to Nalagarh and Ramshahar was to be opened on 28.3.2017. Vide Annexure P-5, i.e. communication addressed to respondents No.3 and 4, petitioner, while making protest against decision of the respondents, in awarding work to respondent No.5 also submitted that it is also ready and willing to work at rate 10% less. However, the fact remains
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that aforesaid offer made by the petitioner was not accepted by the authorities concerned. In the aforesaid background, petitioner, terming action of the respondents, in awarding work to respondent No. 5 to be illegal, unjust and colourable exercise of power, approached this Court, seeking reliefs as have been reproduced herein above.
3. Mr. Dalip K. Sharma, learned counsel representing the petitioner, while inviting attention of this Court to annexure P- 3, (Notice Inviting Tender), strenuously argued that once, specific tender for transportation of food grains from Principal Distribution Centres, of Food Corporation of India to HP State Civil Supplies Corporation whole sale godowns situate in different locations, in the District Solan, was floated there was no occasion for the Deputy Commissioner, Solan as well other respondents to award work to respondent No.5, merely on the basis of its representation dated 2.3.2017, if any, having been furnished by respondent No.5, without following due process of law. Mr. Sharma, further contended that since work came to be awarded to respondent No.5, without completion of tender process, communication dated 21.3.2017, annexure P-4, deserves to be quashed and set aside, being arbitrary, illegal, and unconstitutional and against all canons of law and principles of natural justice. Mr. Sharma, learned counsel representing the petitioner, further contended that the respondent-State, being a ‘welfare State’, is expected to act
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judiciously and its all actions should be beyond suspicion, but, in the instant case, as clearly emerges from the record, authorities, solely with a view to favour respondent No.5, bid goodbye to the settled principles of law and natural justice.
4. We have heard the learned counsel representing the parties and also gone through the record.
5. Respondent No.3 i.e. Deputy Commissioner, in his affidavit filed in compliance to direction issued by this Court on 22.7.2017, admitted that tender notice was issued on 8.3.2017, asking interested parties to participate and submit their quotations on or before 28.3.2017. Deputy Commissioner has further stated that before the actual bidding took place, it was brought to his notice that M/s Kalka Shimla Goods Transporters Union, respondent No.5, has been supplying food grains for the last more than thirty years and it is ready and willing to transport the food grains, at 5% less rates than the rates for the previous years i.e. 2016-17. It also emerges from the affidavit that as per office record of District Controller, Food, Civil Supplies and Consumer Affairs, Solan, that since the year 2006-07, work was being awarded on the basis of tender, however, for the year 2007-08, no tender was called and rates approved for 2006-07 were extended. Deputy Commissioner, further submitted in his affidavit that since year 2000, every year the rates have increased for subsequent year after the tender except for the years 2015-16, when there
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was a decrease as compared to the years 2014-15, therefore, proposal of the Union was considered in the light of prices and inflation and it was felt that the rates of transportation were likely to increase in tender. Deputy Commissioner, while justifying aforesaid action of the respondents further cited example of tender invited for Principal Distribution Centre, Parwanoo, where rates increased by 12% as compared to that of previous year. It has also come in the affidavit of the Deputy Commissioner that the Union (respondent No.5) had about 100 trucks and there had been no serious complaint against Union for the last three decades and as such, keeping in view past record of the Union and to reduce financial burden on State Exchequer, and further to ensure that food grains are transported in time, without any problem, he accepted the offer made by respondent No.5 in the public interest, and, accordingly, allotted transportation work to respondent No.5, in respect of Principal Distribution Centre, Solan. It also emerges from the affidavit having been filed by respondents No.1 to 3 that area of Principal Distribution Centre, Solan was inadvertently mentioned in the notice, since respondent No.5 had already requested the Deputy Commissioner, vide communication dated 2.3.2017 that it is ready and willing to work at rates 5% less than that of 2016-17, there was no occasion for respondents No. 1 to 3 for calling /inviting tender for transportation of food grains from Principal Distribution
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Centre, Solan. At this stage, it may be taken note of that annexure P-3 i.e. Notice Inviting Tender, for transportation of food grains, for the year 2017-18, came to be issued on 8.3.2017 i.e. definitely after submission of letter dated 2.3.2017 by respondent No.5, wherein it had agreed to do the work at 5% less than rates for the year 2016-17. It also emerges from the affidavit of respondent No.3 that since respondent No.5 had a fleet of approximately hundred trucks with it, it had unblemished past record, respondents vide notice dated 21.3.2017 decided to drop the area of Principal Distribution Centre, Solan from the notice dated 8.3.2017, issued by the respondents.
6. Though this Court, after having perused annexure P-3, finds considerable force in the submissions having been made by Mr. Dalip K. Sharma, learned counsel representing the petitioner that respondents ought to have awarded work strictly in terms of Notice Inviting Tender, issued vide communication dated 8.3.2017, wherein, admittedly work pertaining to Solan Principal Distribution Centre, was also included, but, this Court, is unable to accept the contention of learned counsel representing the petitioner that petitioner had the ability to carry out work of such a magnitude and it had the capacity to execute work at 10% lesser rates. There is no document placed on record by the petitioner to the effect that
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it had past experience in the field of transportation and it had actually worked in this field.
7. True it is, that perusal of annexure P-5, suggest that petitioner had offered to work at 10% lesser rates, but it is not understood, that 10% of what rate, petitioner was ready and willing to do the transportation work, rather, there is nothing on record, from where it can be inferred that petitioner had earlier rendered its services to the respondents in transportation of food grains.
8. Similarly, petitioner has not placed on record any material suggestive of the fact that it has sufficient vehicles as compared to respondent No. 5, who, admittedly, has/had a fleet of hundred trucks. Apart from above, this is not the case of the petitioner that decision to award work to respondent No.5 by Deputy Commissioner, Solan was taken after opening bids furnished by other bidders including petitioner, rather, it is admitted case of the parties that decision to award work to respondent Nno.5 with regard to Solan Principal Distribution Centre, was taken prior to 28.3.2017, the scheduled date of opening tenders.
9. It is also not in dispute that respondent No.5 had offered to work at rates 5% less than as compared to rates offered by it for the year 2016-17, vide communication dated 2.3.2017, whereas Notice Inviting Tender, annexure P-3 came to be issued on 8.3.2017, as such, this Court, is inclined to accept
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the contention put forth by respondents No.1 to 3 that area of Principal Distribution Centre, Solan was inadvertently mentioned in Notice Inviting Tender.
10. Leaving everything aside, it clearly emerges from the affidavit having been filed by Deputy Commissioner, Solan that decision to award work to respondent No. 5 was taken in public interest. It also emerges from the affidavit of Deputy Commissioner, Solan that respondents had also awarded work of transportation without inviting any tenders in the year 2007-08 and at that time, rates approved for the year 2006-07 were extended. Deputy Commissioner, Solan, keeping in view likely increase in the rates of transportation, coupled with the fact that respondent No. 5 has/had a fleet of approximately hundred trucks, proceeded to award work to respondent No. 5, which had unblemished record for the last three decades.
11. This court can not lose sight of the fact that food grains are required to be transported in time, without any problem and as such, this Court finds no infirmity and illegality in the decision of respondents/Deputy Commissioner, who awarded work qua Principal Distribution Centre, Solan to respondent No.5, in larger public interest.
12. Reasoning offered by Deputy Commissioner, in his affidavit for awarding work to respondent No. 5, appears to be justified in view of rates offered by various bidders for Parwanoo, Principal Distribution Centre, wherein, admittedly
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rates came to be increased by 12% as compared to previous years rates. Condition No. 13 of the terms and conditions of the Notice Inviting Tender, annexure P-3, specifically empowers the Deputy Commissioner to cancel the tender notice or re-invite tenders, without citing any reason. No doubt, aforesaid power as is vested with Deputy Commissioner, can not be exercised arbitrarily, rather same is required to be exercised sparingly, with utmost circumspection, but, in the instant case, decision to award work to respondent No. 5 came to be taken by respondents before opening of tenders and more over no right as such has accrued in favour of petitioner to lay challenge to the action of respondent, especially when no acceptance, if any, of tender submitted by petitioner was communicated to it, rather, tender was cancelled before actual opening, in the public interest. 13. It is well settled by now that the Courts would normally not interfere in the tender/contractual matters while exercising powers of judicial review. Power of judicial review can only be exercised by constitutional courts if it is proved on record that process adopted or decision so made by the authorities is intended to favour someone or the authority has acted with malafide or decision made is so arbitrary and irrational that no responsible authority acting reasonably could have reached. Needless to say that Court can also exercise power of judicial review in case it is shown that public
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interest is affected. In this regard, reliance is placed upon judgment rendered by Hon'ble Apex Court in Tata Cellular versus Union of India , reported in (1994) 6 SCC 651.
14. Hon'ble Apex Court in Air India Ltd. versus Cochin International Airport Ltd. reported in (2000) 2 SCC 617 held that 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.
15. Hon'ble Apex Court, in Michigan Rubber (India) Limited versus State of Karnataka and others , reported in (2012) 8 SCC 216, while discussing power of an authority in setting up terms and conditions of a tender, has specifically held that the Government undertakings should have a free hand while framing terms and conditions and Courts should only interfere in case there is material on record to demonstrate that same are arbitrary, discriminatory, malafide or actuated by bias. The Hon'ble Apex Court has held as under:
“35…….As noted in various decisions, the Government and their undertakings must have a free hand in setting terms of the
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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…….”
16. Recently, Hon'ble Apex Court in Reliance Telecom Ltd.
& Anr. v Union of India & Anr , reported in 2017 SCC OnLine 36 has specifically held that the condition to put a cap and make a classification not allowing certain entities to bid is not an arbitrary one as it is based on the acceptable rationale of serving the cause of public interest. Hon'ble Apex Court has further held that aforesaid exercise allows new entrants and enabled the existing entities to increase their cap to make the service more efficient. Moreover, the Court cannot get and dwell as an appellate authority into complex economic issues on the foundation of competitors advancing the contention that they were not allowed to bid in certain spheres. Hon'ble Apex Court, in the aforesaid case has further approved the action of the authorities concerned, who put stringent conditions to ensure competition in the market by preventing large/big operators from acquiring large amount of spectrum. The Hon'ble Apex Court held as under:
“33. The objective behind Spectrum capping is to ensure competition in the market by preventing large/big operators from acquiring large amount of spectrum, which they may not require but only hoard to prevent the small operators from effectively competing in the market, and that is why, TRAI has recommended on 02.07.2015 that the basic objective of prescribing a spectrum cap is to prevent a TSP from acquiring large holdings of spectrum through auction, M&A or trading, as it may lead to non-level playing field thereby disturbing the competition in the market. It cannot be left to the market forces alone to decide the maximum spectrum holding as a TSP and, hence, the provision of cap should continue on the spectrum
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holding that a TSP may acquire or otherwise. The argument that the respondent should have notionally included the spectrum surrendered by BSNL/MTNL would result in creating a situation where though the spectrum put to auction remains the same (i.e., limited), yet a large/big player will be able to bid for the entire spectrum (which it otherwise could not have done due to Clause 5.3.1.) thereby effectively giving a tool to the large/big operators to deprive/starve small operators, who quite avowedly, cannot match the buying power of larger operators of spectrum.
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thereafter opined that though the principle of judicial review cannot be denied so far as exercise of contractual powers of government bodies are concerned, but it is intended to prevent arbitrariness or favouritism and it is exercised I the larger public interest or if it is brought to the notice of the court that in the matter of award of a contract power has been exercised for any collateral purpose. In the instant case, we are unable to perceive any arbitrariness or favouritism or exercise of power for any collateral purpose in the NIA. In the absence of the same, to exercise the power of judicial review is not warranted. In the case at hand, we think, it is a prudent decision once there is increase of revenue and expansion of the range of service.”
17. The Apex Court in State of Jharkhand v. M/s. CWE-
SOMA Consortium reported in AIR 2016 SCW 3366, has held that the State derives its power to enter into a contract under Article 298 of the Constitution of India and has the right to decide whether to enter into a contract with a person or not subject only to the requirement of reasonableness under Article 14 of the Constitution of India. Apex Court held as
under:
“13. The appellant-state was well within its rights to reject the bid without assigning any reason thereof. This is apparent from clause 24 of NIT and clause 32.1 of SBD which reads as under:-
“Clause 24 of NIT: “Authority reserves the right to reject any or all of the tender(s) received without assigning any reason thereof.” Clause 32.1 of SBD: “…the Employer reserves the right to accept or reject any Bid to cancel the bidding process and reject all bids, at any time prior to award of Contract, without thereby incurring any liability to the affected Bidder or Bidders or any obligation to inform the affected Bidder or Bidders of the grounds for the Employer’s action.” In terms of the above clause 24 of NIT and clause 32.1 of SBD, though Government has the right to cancel the tender without assigning any reason, appellant-state did assign a cogent and acceptable reason of lack of adequate competition to cancel the tender and invite a fresh tender. The High Court, in our view, did not keep in view the above clauses and right of the government to cancel the tender.
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decide whether to enter into a contract with a person or not subject only to the requirement of reasonableness under Article 14 of the Constitution of India. In the case in hand, in view of lack of real competition, the state found it advisable not to proceed with the tender with only one responsive bid available before it. When there was only one tenderer, in order to make the tender more competitive, the tender committee decided to cancel the tender and invited a fresh tender and the decision of the appellant did not suffer from any arbitrariness or unreasonableness.”
18. The Apex Court in Central Coalfields Limited v. SLLSML (Joint Venture Consortium) reported in AIR 2016 SCW 3814, has further held that Court can go into the question of malafides raised by a litigant, but in order to succeed, much more than a mere allegation is required. Bald and unfounded allegations of malafides are not sustainable and that malafides must be specifically pleaded and proved. Hon'ble Apex Court has held as under:
“44. On asking these questions in the present appeals, it is more than apparent that the decision taken by CCL to adhere to the terms and conditions of the NIT and the GTC was certainly not irrational in any manner whatsoever or intended to favour anyone. The decision was lawful and not unsound.
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19. By now it is settled law that burden of proving malafides is on the person making allegations and burden is very heavy as has been held by the Hon'ble Apex Court in E.P. Royappa v. State of Tamil Nadu (1974) 4 SCC 3.
20. In Gulam Mustafa Vs. State of Maharashtra (1976) 1 SCC 800 Hon'ble Apex Court has held, “It (malafides) is the last refuge of a losing litigant.”
21. In the judgments referred herein above, Hon'ble Apex Court has held that there is every presumption in favour of the administration that the power has been exercised bona fide and in good faith. It is to be remembered that the allegations of malafides are often more easily made than proved and proof of high degree is required to prove the same.
22. In the instant case, it would be profitable to have a look at judgment passed by Hon'ble Apex Court in case Union of India v. Ashok Kumar , reported in (2005) 8 SCC 760, wherein it has been held that seriousness of allegations of malafides demands proof of high order of credibility and the Courts should be slow to draw dubious inferences from incomplete facts placed before them by a party, particularly when the imputations are grave and they are made against the holder of an office having high responsibility. It was held:
“21. Doubtless, he who seeks to invalidate or nullify any act or order must establish the charge of bad faith, an abuse or a misuse by the authority of its powers. While the indirect motive or purpose, or bad faith or personal ill- will is not to be held established except on clear proof thereof, it is obviously difficult to establish the state of a man's mind, for that is what the
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employee has to establish in this case, though this may sometimes be done. The difficulty is not lessened when one has to establish that a person apparently acting on the legitimate exercise of power has, in fact, been acting mala fide in the sense of pursuing an illegitimate aim. It is not the law that mala fide in the sense of improper motive should be established only by direct evidence. But it must be discernible from the order impugned or must be shown from the established surrounding factors which preceded the order. If bad faith would vitiate the order, the same can, in our opinion, be deduced as a reasonable and inescapable inference from proved facts. (S. Pratap Singh v. State of Punjab AIR 1964 SC 72). It cannot be overlooked that burden of establishing mala fides is very heavy on the person who alleges it. The allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations demand proof of a high order of credibility. As noted by this Court in E. P. Royappa v. State of Tamil Nadu and Another (AIR 1974 SC 555), Courts would be slow to draw dubious inferences from incomplete facts placed before it by a party, particularly when the imputations are grave and they are made against the holder of an office which has a high responsibility in the administration. (See Indian Railway Construction Co. Ltd. v. Ajay Kumar (2003) 4 SCC 579).”
23. Careful perusal of expositions of law, as discussed herein above, certainly suggests that Courts should normally not interfere in the contractual matters in exercise of powers of judicial review and it can only be exercised in case it is satisfied that process adopted was malafide or made to favour someone or process adopted or decision made is so arbitrary that no man of ordinary prudence could have reached.
24. This Court, while placing reliance upon aforesaid judgments having been passed by Hon'ble Apex Court, has repeatedly held in CWP No. 9337 of 2013 titled Ashok Thakur v. State of Himachal Pradesh and others decided on 6.5.2014, CWP No. 765 of 2014 titled Namit Gupta v. State of H.P. and others decided on 27.3.2014 and CWP No. 2544 of
2016 titled M/s Quality Industries Corporation v. State of
Himachal Pradesh and another decided on 7.12.2016, that in
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cases involving award of contracts/tenders, courts should not exercise judicial review where decision appears to be bonafide without any perceptible injury to the public interest.
25. After having carefully perused the pleadings and material adduced on record by the respective parties, this Court has no hesitation to conclude that the decision of the Deputy Commissioner, in awarding work to respondent No. 5, is in public interest and, by no stretch of imagination, it can be said that process adopted by the authorities concerned, was malafide or made to favour respondent No. 5, rather, respondents by way of awarding work of transportation to respondent No. 5, which had a fleet of about hundred trucks, not only saved the public money but also ensured timely supply of essential articles.
26. Applying the aforesaid test to the instant writ petition, same deserves to be dismissed and is accordingly dismissed. Pending applications, if any, are also disposed of.
(Sanjay Karol) Acting Chief Justice
August 17, 2017 (Vikrant)
3 issues framed by the court
Whether the award of transportation work to respondent No.5 without completing the tender process was arbitrary, illegal or mala fide and liable to be quashed?
Whether the High Court should interfere in the State's tender/contractual decision in exercise of its power of judicial review?
Whether the decision to award work to respondent No.5 was taken in public interest and without favouritism?
Colour shows how this judgement treated each authority
Tata Cellular v. Union of IndiaRelied on¶13
(1994) 6 SCC 651 · Who else cites this
Air India Ltd. v. Cochin International Airport Ltd.Relied on¶14
(2000) 2 SCC 617 · Who else cites this
Michigan Rubber (India) Limited v. State of Karnataka and othersRelied on¶15
(2012) 8 SCC 216 · Who else cites this
Reliance Telecom Ltd. & Anr. v. Union of India & Anr.Relied on¶16
2017 SCC OnLine 36 · Who else cites this
State of Jharkhand v. M/s. CWE-SOMA ConsortiumRelied on¶17
AIR 2016 SCW 3366 · Who else cites this
Central Coalfields Limited v. SLLSML (Joint Venture Consortium)Relied on¶18
AIR 2016 SCW 3814 · Who else cites this
E.P. Royappa v. State of Tamil NaduRelied on¶19
(1974) 4 SCC 3 · Who else cites this
Gulam Mustafa v. State of MaharashtraRelied on¶20
(1976) 1 SCC 800 · Who else cites this
Union of India v. Ashok KumarRelied on¶22
(2005) 8 SCC 760 · Who else cites this
Ashok Thakur v. State of Himachal Pradesh and othersRelied on¶24
CWP No. 9337 of 2013
Namit Gupta v. State of H.P. and othersRelied on¶24
CWP No. 765 of 2014
M/s Quality Industries Corporation v. State of Himachal Pradesh and anotherRelied on¶24
CWP No. 2544 of 2016
3 provisions across 1 enactments
Issar Goods Carrier
The State of Himachal Pradesh
Deputy Commissioner, Solan
HP State Civil Supplies Corporation
M/s Kalka Shimla Goods Transport Union, Solan
Sanjay Karol
Sandeep Sharma
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
