AI Structured Summary
Not yet generated for this judgment
Judgment
Arijit Banerjee, J
(1) This is an appeal against the judgment and order dated 3 July, 2018 whereby WP 217 of 2018 challenging a tender process was dismissed by the
learned Single Judge.
(2) The Kolkata Port Trust (in short ‘KPT’) issued a tender inviting offers for “allotment of a plot of land/structure/property at Remount
Road as detailed in the tender document, on long term lease of 30 years, an ‘as is where is’ basis, without renewal option, against payment of
annual rent or upfront, to willing bidders through e-tendercum-e-auctionâ€. KPT received five bids including those of the appellant/writ petitioner (in
short ‘Lohia’) and the private respondent (in short ‘IRC’). KPT found IRC’s bid to be the highest and accepted the same. Being
aggrieved Lohia approached learned Single Judge by filing WP 217 of 2018. Lohia’s main contention before the learned Single Judge was that in
fact Lohia was the highest bidder and the land should be allotted to him. In support of such case Lohia relied on a statement in the website of KPT to
the effect that he was the H1 bidder. He also submitted a status report which showed the land to be ‘sold’ to him. He challenged the
communication dated 18 May, 2018 whereby he was intimated that he had been declared as an unsuccessful bidder. Lohia challenged KPT’s
action as arbitrary and unreasonable. It was also argued on behalf of Lohia that as on the date of issuance of the NIT there were dues from IRC to
KPT but IRC falsely declared that there were no dues. This suppression/misrepresentation disqualifies IRC and IRC’s bid should have been
rejected and Lohia’s bid should have been accepted. The learned Judge found that in fact there was nothing due and payable by IRC to KPT as
on the date of issuance of the NIT. The statement to the contrary in the report of the Tender Committee was erroneous as was demonstrated by
IRC’s learned Counsel by bringing on record certain documents and as was admitted by KPT’s learned Counsel. The learned Judge held that
the Writ Court cannot act as appellate authority. The scope of judicial review regarding award of contract is very limited. No mala fide could be
attributed to KPT nor its action could be said to be arbitrary or unreasonable. Accordingly, the learned Judge dismissed the writ petition.
(3) Appearing for the appellant/writ petitioner i.e., Lohia, Mr. Bikash Ranjan Bhattacharyya assisted by Mr. Biswaroop Bhattacharyya drew our
attention to the eligibility clause in the tender documents, the relevant portion whereof reads as follows:-
“Non-pendency of mutually admitted Port Estate dues (for all existing/past plates under KDS and HDC of the prospective bidder) on the date of
publication of NIT.
Note: In case there are any unpaid dues, the prospective bidder may be allowed to participate in tender only if he agrees to pay the rent for the entire
lease period on upfront basis as per appendix VI on becoming the successful bidderâ€.
(4) Learned Counsel then referred to the “Recommendation of the Tender Committee†wherein it was stated inter alia as follows:-
“TC was also informed that as per KDS record, M/s. IRC Commercial Pvt. Ltd., the highest bidder, has an estate dues of Rs. 17,66,935.55 as on
12.12.2017 (that is the date of NIT) as against the bidders statement of nil dues during bid submission.
It was also noted by the Tender Committee that as per Clause 9(ii) of Annexure V of the tender document, the successful bidders should not have
mutually admitted estate port dues as on the date of NIT. Else, they would have to pay the Annual Rent by upfrontâ€.
Mr. Bhattacharyya submitted that the aforesaid clearly shows that IRC made a misstatement/misrepresentation while submitting its bid. He then
referred to Clause 15 of Part I which was the technocommercial bid which was to the effect, inter alia that furnishing any false/misleading/incomplete
information in the tender/offer before finalization of tender by the bidder will be sufficient ground for forfeiture of the Earnest Money Deposit (in short
‘EMD’). He submitted that since IRC made a false statement while submitting its bid to the effect that there were no port dues as on the date
of NIT, its EMD should have been forfeited and its offer should have been rejected.
(5) Mr. Bhattacharyya also referred to Clause 4.6 of Part I to the effect, inter alia, that no deviation of the terms and conditions of the tender
document is acceptable. Learned Counsel submitted that KPT itself having laid down that furnishing of false information would be a ground for
disqualifying a bidder, it was incumbent upon KPT to adhere to such condition and reject IRC’s bid. By not doing so, KPT has acted arbitrarily.
(6) In this connection learned Counsel relied on an Apex Court decision in the case of Ramana Dayaram Shetty-vs.-International Airport Authority of
India & Ors., (1979) 3 SCC 489, in support of his contention that where a public authority lays down certain standards and norms regarding eligibility
of a bidder in a tender process, the authority is bound to conform to such standards and norms. He also relied on a decision of the Apex Court in
Monarch Infrastructure (P) Ltd.-vs.-Commissioner, Ulashnagar Municipal Corporation & Ors., (2000) 5 SCC 287, and in particular he relied on
paragraphs 10 to 12 of the said judgment which read as follows:-
“10. There have been several decisions rendered by this Court on the question of tender process, the award of contract and evolved several
principles in regard to the same. Ultimately what prevails with the courts in these matters is that while public interest is paramount there should be no
arbitrariness in the matter of award of contract and all participants in the tender process should be treated alike. We may sum up the legal position
thus:
(i) The Government is free to enter into any contractwith citizens but the court may interfere where it acts arbitrarily or contrary to public interest.
(ii) The Government cannot arbitrarily choose anyperson it likes for entering into such a relationship or to discriminate between persons similarly
situate.
(iii) It is open to the Government to reject even thehighest bid at a tender where such rejection is not arbitrary or unreasonable or such rejection is in
public interest for valid and good reasons.
Broadly stated, the courts would not interferewith the matter of administrative action or changes made therein unless the Government's action is
arbitrary or discriminatory or the policy adopted has no nexus with the object it seeks to achieve or is mala fide.
If we bear thee principles in mind, the HighCourt is justified in setting aside the award of contract in favour of M/s. Monarch Infrastructure (P)
Ltd. because it had not fulfilled the conditions relating to Clause 6(a) of the Tender Notice but the same was deleted subsequent to the last date of
acceptance of the tenders. If that is so, the arguments advanced on behalf of M/s. Konark Infrastructure (P) Ltd. in regard to allegation of mala fides
of the Commissioner of the Municipal Corporation in showing special favour to M/s. Monarch Infrastructure (P) Ltd. or the other contentions raised in
the High Court and reiterated before us are insignificant because the High Court had set aside the award made in favour of M/s. Monarch
Infrastructure (P) Ltd. The only question therefore remaining is whether any contract should have been awarded in favour of M/s. Konark
Infrastructure (P) Ltd.. The High Court had taken the view that if a term of the tender having been deleted after the players entered into the arena it
is like changing the rules of the game after it had begun and, therefore, if the Government or the Municipal Corporation was tree to alter the conditions
fresh process of tender was the only alternative permissible. Therefore, we find that the course adopted by the High Court in the circumstances is
justified because by reason of deletion of a particular condition the wider net will be permissible and a larger participation or more attractive bids could
be offered.â€
(7) Appearing for KPT, Mr. Jayanta Mitra, learned Sr. Counsel submitted in unequivocal terms that the statement of the Tender Committee in its
recommendation which has been the fulcrum of Lohia’s case, was an erroneous statement. The sum of Rs. 17.66 lakhs approximately was due
from IRC in connection with another transaction. IRC had tendered a cheque for such amount to KPT much prior to issuance of the NIT in question.
However, KPT did not deposit such cheque in the Bank. This was an inadvertent omission. Validity period of the said cheque lapsed. Thereafter, on
the request of KPT, IRC tendered fresh cheque which was duly honoured. As on the date of issuance of the subject NIT, there were no dues from
IRC to KPT.
(8) Mr. Mitra further submitted that in any event, there being dues from a bidder to KPT as on the date of NIT would not disqualify the bidder from
participating in the tender process. In such a case KPT would be entitled to require the successful bidder to pay upfront full lease rent for the entire
period of lease.
(9) Mr. Mitra further explained to us that in the tender price bid IRC offered Rs. 73,40,894.55 as the annual lease rent whereas Lohia offered Rs.
61,41,810.55. The price bid was opened after the eauction took place. In the e-auction IRC did not participate. Lohia offered Rs. 72,11,011.00 in the
e-auction. Tender price bids are opened after the e-auction. Since IRC did not participate in the eauction, Lohia’s bid was reflected as the highest
and hence its status in the website was reflected as H1. However, after opening of the tender price bids it was seen that IRC’s offer was higher.
Hence, IRC’s bid was accepted and regret letter was sent to Lohia.
(10) Mr. Mitra finally submitted that even assuming something was due from IRC to KPT as on the date of the subject NIT, there was no mutually
admitted unpaid dues. The word ‘mutually’ must be given some meaning, submitted Mr. Mitra.
(11) Appearing for IRC, Mr. Jaydip Kar, learned Senior Advocate, adopted the arguments of Mr. Mitra. He further drew our attention to certain
documents which clearly show that as on the date of issuance of the subject NIT, nothing was due or payable by IRC to KPT.
(12) We have carefully considered the rival contentions of the parties.
(13) The entire basis of Lohia’s case is the recording of the Tender Committee that as on the date of the subject NIT, Rs. 17.66 lacs
approximately was due from IRC to KPT but IRC had made a contrary statement of there being no dues while submitting its bid. Lohia contends that
because of such misrepresentation, IRC’s EMD should have been forfeited and its bid should have been rejected. In any event, IRC was ineligible
because of such outstanding from it to KPT as on the date of the subject NIT.
(14) However, Mr. Mitra appearing for KPT unequivocally admitted that such recording by the Tender Committee in its recommendation was
erroneous and resulted from a communication gap. Such being the clear stand of KPT the entire basis of Lohia’s case goes and its case falls flat
to the ground.
(15) Even assuming that there were dues from IRC to KPT as on the date of publication of the subject NIT, in our opinion, the same would not have
made IRC ineligible to participate in the tender process. At the highest, KPT could have insisted that IRC pays the rent for the entire lease period
upfront. Obviously, that would have been to negate any chance of default in payment of lease rent. We have extracted above the relevant portion of
the eligibility clause which appears to us to be very clear.
(16) As regards the clause regarding forfeiture of EMD, factually speaking, the same does not come into play in view of the clear stand of KPT.
Assuming for the sake of argument that IRC had indeed made a misstatement regarding pendency of dues to KPT, the forfeiture clause would have
given KPT an option to forfeit the EMD and reject IRC’s bid. The clause, in our opinion, does not have any automatic operation. However, this is
an academic discussion for the reasons stated above.
(17) Regarding the two decisions cited by Mr. Bhattacharyya, there can be no quarrel with the proposition of law laid down therein. However, in our
considered opinion, the said two decisions have no manner of application to the facts of the present case. As regards Ramana Dayaram Shetty
(supra), it is established law that a public/statutory authority issuing a NIT containing terms and conditions formulated by it, must adhere to such terms
and conditions on the pain of having its action invalidated if it acts contrary to such terms and conditions. However, in the present case, we do not find
that KPT has deviated in any manner from the terms and conditions of the NIT.
(18) Similarly, in Monarch Infrastructure (P) Ltd. (supra), the Apex Court has reiterated the established law that although a Government has freedom
to enter into a contract with citizens, it cannot arbitrarily choose any person it likes or discriminate between persons who are similarly situate. Although
the Government may reject even the highest bid, such rejection cannot be arbitrary or unreasonable. Relaxing some condition of the tender to benefit a
particular party would also vitiate the Government’s action. However, in the present case none of these situations arise. Admittedly, IRC is the
highest bidder. Admittedly, there were no port dues from IRC as on the date of issuance of the subject tender to KPT. We find no unreasonable or
arbitrary action on the part of KPT. No case of any malice or nepotism has been made out.
(19) We are in complete agreement with the observations and findings of the learned Single Judge. We find no reason to interfere with the judgment
and order impugned before us. This appeal fails and is dismissed with costs assessed at Rs. 15,000/-.
(20) Urgent certified photocopy of this judgment and order, if applied for, be given to the parties upon compliance of necessary formalities.
I agree.