Dismissed

Shaneeb K.Jose v. Kerala Kera Karshaka Sahakarana Federation Ltd.

Kerala HC19 Sept 2016WP(C)/29186/2016

Case brief

AI extract

What is this about?

Petitioner challenged a tender award, arguing that the consultation process labeled as 'negotiation' under the tender document was merely a demand for revised rates without deliberation. The court held that the respondent had the absolute right to negotiate, the procedure was valid, and the petitioner could not challenge it after participating in it.

What did the court decide?

The writ petition seeking to quash the tender award letter and declaring the procedure illegal was dismissed.

Shaneeb K.Jose Vs Kerala Kera Karshaka Sahakarana… — Company and Corporate | Kerala HC (2016)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR. JUSTICE SHAJI P.CHALY

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MONDAY, THE 19TH DAY OF SEPTEMBER 2016/28TH BHADRA, 19382016

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WP(C).No. 29186 of 2016 (W)

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PETITIONER:

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SHANEEB K.JOSE S/O.K.A.JOSE, AGED 33 YEARS, KUZHIKKATTUMALLIL HOUSE, VETTUKAD PO, KAINOOR, PIN-680 014, THRISSUR.

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BY ADVS.SRI.S.SREEKUMAR (SR.) SRI.P.MARTIN JOSE SRI.P.PRIJITH SRI.THOMAS P.KURUVILLA

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RESPONDENTS:

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1. KERALA KERA KARSHAKA SAHAKARANA FEDERATION LTD. NO.4370, HEAD OFFICE, KERALA TOWER, WATER WORKS COMPOUND, VELLAYAMBALAM, TRIVANDRUM-690 053.

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2. THE MANAGER MARKETING KERALA KERA KARSHAKA SAHAKARANA FEDERATION LTD. NO.4370, HEAD OFFICE, KERALA TOWER, WATER WORKS COMPOUND, VELLAYAMBALAM, TRIVANDRUM-690 053.

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3. CENTRAL ENGINEERING COMPANY S-28, FIRST FLOOR, SAKTHAN ARCADE, SAKTHAN NAGAR, THRISSUR-1.

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4. THE STATE OF KERALA REPRESENTED BY ITS SECRETARY, AGRICULTURE DEPARTMENT, GOVERNMENT SECRETARIAT, TRIVANDRUM-695 001.

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R1 AND R2 BY ADV. SRI.GEORGE POONTHOTTAM, SC, KERAFED R4 BY GOVERNMENT PLEADER SRI. S. KANNAN

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 19-09-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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DCS

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WP(C).No. 29186 of 2016 (W)

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APPENDIX

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PETITIONER(S)' EXHIBITS

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EXHIBIT P1 : TRUE COPY OF TENDER NOTICE PUBLISHED BY THE 1ST RESPONDENT.

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EXHIBIT P2 : TRUE COPY OF NOTICE DATED 12-7-2016 ISSUED BY THE 2ND RESPONDENT.

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EXHIBIT P3 : TRUE COPY OF FORM FILLED UP BY THE PETITIONER BY QUOTING REVISED RATES ON 15-7-2016.

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EXHIBIT P4 : TRUE COPY OF LETTER DATED 25-8-2016 ISSUED BY THE 1ST RESPONDENT TO THE 3RD RESPONDENT.

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RESPONDENT(S)' EXHIBITS:-

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EXHIBIT R1(a): TRUE COPY OF THE CHART PREPARED SHOWING THE RATES QUOTED.

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EXHIBIT R1(b): TRUE COPY OF THE TENDER FORM DATED 30.05.2016 EXHIBIT R1(c): TRUE COPY OF THE CHART OF THE RATES QUOTED BY THE PETITIONER AND THE THIRD RESPONDENT

/TRUE COPY/

P.A. TO JUDGE

DCS

SHAJI P. CHALY, J.

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W.P.(C). NO. 29186 OF 2016

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Dated this the 19^th day of September, 2016

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JUDGMENT

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This writ petition is filed seeking to declare that Ext. P4 is illegal whereby tender was finalised in favour of the third respondent, and for other related reliefs. Material facts for the disposal of the writ petition are as follows:-

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First respondent is a Government of Kerala enterprise,

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engaged in the procurement of raw coconuts and converting it into copra and coconut oil. It also procures copra and coconut oil from the coconut cultivators and sell through its outlets.

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First respondent invited tenders from registered transport contractors for the transportation of raw coconuts (Coconuts Region II) from Krishi Bhavans in various districts to processing centres within/outside districts, evident from Ext. P1 tender notice. Accordingly, petitioner submitted his tender for transportation of coconut, copra

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W.P.(C). NO. 29186 OF 2016 2

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and coconut oil and the rates were specified separately. Besides the third respondent, two others also submitted their tenders. Among the quoted rates, the rate quoted by the petitioner was the lowest. While so, second respondent issued Ext.P2 notice dated 12.07.2016 calling upon the petitioner for negotiation of rates on 05.07.2016. Petitioner attended the negotiation and he was issued with a printed form containing the details to be filled up. Accordingly, petitioner submitted Ext. P3 revised rates. All other tenderors were also present for negotiation and similar sheets as per Ext. P3 were obtained from them also. According to the petitioner, there was no negotiation in the real sense with respect to the rates with the tenderors. It is also urged by the petitioner that when called for negotiation, petitioner expected that there would be a negotiation with the second respondent so that the rates would be reduced.

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That apart, it is contended that at the time of negotiation, even though the petitioner was called upon to

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W.P.(C). NO. 29186 OF 2016 3

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quote fresh rates on 15.07.2016 that does not amount to negotiation, but it only tantamounts to submission of a fresh rate. So also, it is stated, after submitting Ext. P3 nothing was heard from respondents 1 and 2. However, from the website of the first respondent, petitioner obtained a copy of the letter dated 25.08.2016 issued to the third respondent calling upon him to execute an agreement, evident from Ext. P4. Therefore, it is the contention of the petitioner that the procedure adopted by the second respondent is totally illegal. The rates quoted by the petitioner as per Ext. P3 is lower than the rates fixed in Ext. P4. Hence, the decision to award the contract to the third respondent is illegal, arbitrary and unsustainable under law. It is in this background seeking to quash Ext. P4, this writ petition is filed.

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The first and second respondents have filed a counter affidavit refuting the allegations, claims and demands made by the petitioner. According to the said respondents in Clause 19 of the tender, it is clearly stated

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that the first respondent reserves the right to conduct negotiations with any tenderor or tenderors, if necessary, before finalising the contract and that no tenderor shall have the right to insist on negotiations by the Federation or challenge it for resorting to negotiations, evident from Ext. R1(b). According to the said respondents, after the receipt of the tender, Ext. P2 notice was issued to the petitioner and the third respondent to participate in negotiations and in the negotiations conducted each bidder submitted revised quotes, evident from Ext. R1(c). It is also contented that the third respondent has quoted significantly lesser rate in each slab and there is substantial difference and the total difference for the estimated quantity will come to about Rs. 30 Lakhs. It was accordingly that, it decided to award contract to the third respondent and Ext. P4 was issued. It is also stated that the contract for transportation was awarded in a manner most profitable for the first respondent and the methodology adopted was transparent and after considering the claims of all competing bidders.

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W.P.(C). NO. 29186 OF 2016 5

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Therefore, it is the contention of the said respondents that the attempt of the petitioner is nothing but the desperate act of a defeated bidder.

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Heard the learned counsel for the petitioner, learned counsel for respondents 1 and 2 and the learned Government Pleader. Even though notice was served on the third respondent on 08.09.2016, there is no appearance. Perused the documents on record and the pleadings put forth by the rival parties.

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The question to be considered is whether Ext. P4 is suffering from any manner of illegality or arbitrariness warranting interference of this Court by exercising the power of discretion under Article 226 of the Constitution of India. On an evaluation of the pleadings put forth by the respective parties, the material facts with respect to the invitation of tender, submission of the same by the petitioner as well as the other tenderors and calling for negotiation are all admitted facts. The sole question to be considered is whether the acceptance of the rates in writing

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W.P.(C). NO. 29186 OF 2016 6

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during the course of negotiation amounts to a re-tender.

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According to the learned counsel for the petitioner, negotiation in the literal and legal sense means the discussion and deliberations that takes place with all the tenderors, which thus enables every tenderor to negotiate the rates at each point of time, enabling the first and second respondents from substantially saving their amounts for the transportation of the products in question. According to the counsel, there was no negotiation at all, and on the other hand when the tenderors appeared before the second respondent on the appointed day, they were served with a proforma wherein they were directed to quote their rates slashing down from the original quoted rates. The dictionary meaning of the word 'negotiation' as per the Chambers Concise Dictionary, New Edition is “to confer for the purpose of mutual agreement; to bargain; to arrange for by agreement; to manage; to transfer or exchange for value; to cope with successfully”. Therefore according to the counsel, what is intended by Clause 19 of Ext.R1(b) is

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W.P.(C). NO. 29186 OF 2016

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deliberation among the tenderors, in order to bring down the quoted price to the benefit of the first and second respondents. No such deliberations have taken place in terms of Clause 19 of Ext.R1(b) and therefore merely by receiving the quoted rates from the tenderors, the stipulations contained in Clause 19 will not be complied with.

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On the other hand, learned counsel for respondents 1 and 2 submitted that Clause 19 of Ext. R1(b) was virtually complied with, evident from Ext. P2 notice. Counsel also contends that it is an admitted fact that the petitioner as well as the third respondent participated in the negotiation held on 15.07.2016 and thereafter in order to have record of the price quoted by the respective parties, they were served with proforma and requested to submit their rates. Therefore, according to the counsel, by virtue of Clause 19, the authorities vested with power to conduct negotiation not only with the petitioner but also with the third respondent either collectively or individually and

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W.P.(C). NO. 29186 OF 2016

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therefore the petitioner cannot turn around and say that the procedure adopted by respondents 1 and 2 cannot be sustained under law. Moreover, it is contended that the petitioner participated in the process and submitted the proforma after filling up the same and thereafter the petitioner cannot turn around and contend that the procedure adopted was bad.

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On an evaluation of respective submissions made across the bar and perusal of the documents, the issue centres around Clause 19 of Ext. R1(b) which reads thus:-

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“19. The Kerala Kerakarshaka Sahakarana Federation Ltd. Reserves the right to conduct negotiations with any tenderer or tenderers if necessary before finalising the contract. No tenderer shall have right to insist on negotiations by the Federation or challenge it for resorting to negotiations.”

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On a reading of Clause 19, it is categoric that the right to conduct negotiations with any tenderor or tenderors if necessary before finalising the contract was vested absolutely with the first respondent. The first respondent

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has invited all the parties for negotiation and it adopted a procedure after the discussion to submit their rates in the printed proforma. It was accordingly petitioner as well as the third respondent submitted their rates slashing down from their original quote. It is true, petitioner was the lowest tenderor in the original tender submitted and it was thereupon, all tenderors were invited, in order to explore the possibility of slashing down the rates so as to benefit the first respondent. According to the petitioner, if deliberations were held on a table with all the tenderors sitting together, the rates would have come down, thus enabling the first respondent with more financial benefits. It is also the case of the learned counsel for the petitioner that negotiation contemplated under Clause 19 did not comprehend a sealed cover process again, which is objected to by learned counsel for the respondents 1 and 2.

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The learned counsel for the respondents 1 and 2 has invited my attention to the judgment in Air India Ltd. v. Cochin International Airport Ltd. and Others

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W.P.(C). NO. 29186 OF 2016

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[(2000) 2 Supreme Court Cases 617] and specifically to paragraph 7 which reads thus:-

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“7. The law relating to award of a contract by the State, its corporations and bodies acting as instrumentalities and agencies of the Government has been settled by the decision of this Court in Ramana Dayaram Shetty v. International Airport Authority of India, Fertilizer Corpn. Kamgar Union (Regd.) v. Union of India, CCE 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 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 corporations, instrumentalities and agencies are bound to 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

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the decision making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its 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 pubic 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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Therefore on a reading of the findings rendered by the Apex Court in the decision cited supra, it is clear, it is for the authority to adopt a methodology for finalising the tender. After all, the same is a transport contract and unless and until the transport contractor is suffering from any infirmity for transporting the products, the attempt of the first respondent is to ensure maximum negotiated rate for transporting the products. However, it has adopted a procedure after receiving the tenders, to invoke Clause 19 of Ext.R1(b), in order to explore the possibility of slashing

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W.P.(C). NO. 29186 OF 2016

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down the quoted rates. When the parties appeared, it thought it fit, may be after negotiation to serve proforma in order to have record of the quoted rates. It is accordingly proformas were supplied to all the tenderors and they were asked to quote the slashed rates in the proforma supplied. Therefore the question is whether there is any illegality in such a procedure adopted by the second respondent. In my considered opinion, Clause 19 speaks of a negotiation only. Nothing is preventing the first and second respondents from receiving a rate slashing down the prices quoted in the original quotations in a sealed procedure. All the parties new the rates submitted since the quotation were opened and thereafter only the tenderors were invited for negotiations.

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Therefore in my considered opinion, it cannot be said that the procedure adopted by the first and second respondents with respect to negotiation is totally an illegal or arbitrary action. Moreover, what is significant is, petitioner also participated in such a procedure adopted by

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the second respondent and therefore having participated in such a procedure, it is not open for the petitioner to turn around and contend that the procedure adopted by the authority is bad and illegal. In that view of the matter also, I am of the considered opinion that petitioner has not made out a case enabling this court to exercise the power of discretion.

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Resultantly, the writ petition fails and accordingly same is dismissed.

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SHAJI P. CHALY JUDGE

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DCS

Shaneeb K.Jose v. Kerala Kera Karshaka Sahakarana Federation Ltd.

Case brief

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Shaneeb K.Jose v. Kerala Kera Karshaka Sahakarana Federation Ltd.

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