Food Labour Contract Co-operative Society Ltd. vs Food Corporation of India and Others

This matter coming up for preliminary hearing after notice to respondents and after hearing the Counsel for parties is disposed of by the fol1lowing order.

The petitioner is a Co-operative Society'' registered under the Karnataka Co-operative Societies Act, 1959. It is asserted that its members are all working as loading and unloading labourers under different contractors of the Food Corporation of India lst respondent (hereinafter referred to as the Corporation). It is alleged that the Ist respondent-Corporate ion invited tenders to handle loading, unloading and transport commodities al per the advertisement dated 23-11-1986 which is to be found at Annexure A to the petition. The petitioner was one of the tenders along with nine others. It is aggrieved that it was not selected to do the handling, loading and unloading etc., but the 3rd respondent Mahatma Transport was selected arbitrarily violating the equality of treatment and protection of laws guaranteed under Art. 14 of the Constitution.

On notice, the Corporation represented by its Regional Manager at Bangalore has filed the statement of objections on behalf of the Ist respondent. While the basic facts are not denied, it has explained in paras 3 and 4 of the statement of objections, the reasons for not preferring the petitioner-Co-operative Society to do the handling, loading and unload rig to which reference will be made later in the course of this order. Similarly, in paragraph-5 of the statement of objections, it has given the reasons as to why respondent-3 was awarded the contract to which also reference will be made in the course of this order. Otherwise, the Corporation has denied that there has been any breach of the legal rights of the pet it bonier Cooperative Society or the selection of the 3rd respondent has in any event offended the rights of the petitioner under Art. 14 of the Constitution.

There is an application filed by the Bangalore Labour Contract Co-operative Society Ltd., under O. 1, R. 10(2) read with S. 151 of the C.P.C. to implead itself. At the time of hearing the petition today, Shri B. N. Srikant6swamy for Shri D. Leelakrishnan, learned Counsel for the impleading applicant does not press the application. Therefore, I.A. No. 11 is rejected as not pressed.

Shri P. Ganapathy 9hat, learned Counsel appearing for Shri A. S. Krishna Murthy, has submitted the following points for the Court''s consideration. First, he has asserted that the Regional Manager of the respondent Corporation at Bangalore erred in inviting for negotiation the 3rd respondent to the exclusion of the petitioner and the other tenderers thereby treating similarly .placed persons unequally. This, according to him, is in violation of Art. 14 of the Constitution and clearly an arbitrary action as held by this Court in the case of M/s. do not think the point is well taken. his Court indeed has observed in the said case in orally different circumstances having regard to the conduct of the .Government. in dealing with the tenders invited for supply of Sprinkler Irrigation Equipment for deciding the award of rate contract. The observations came to be made on the complaint of one of the petitioners in the group of petitions decided by a common order that he had not been called for participating to demonstrate his Sprinkler Irrigation Equipment and later though he: was a signatory to the complaint filed by several of the tenderers in regard to the mode of selection and treatment he was excluded from being invited for the negotiation once again when other signifies to the Wine Were called and -negotiated with. No such situation arises on the facts of this case. is Annexure-A, advertisement inviting tenders, describes the nature of work for which the tender is invited. The volume of work is set out; the information required to be furnished by the tenderers is set out; signing of the tenders, the amount of earnest money to be deposited; the amount of security, deposit, the place and time at which the tenders must be delivered, the place at which the tenders will be opened are all set out. At paragraph 10 of Part-C of the advertisement, interviews and acceptances of tenders are set out. From ''''that it is clear the tenders are examined by the'' Regional. Manager or persons authorised by him and the tendered chosen. would be intimated while the Regional Manager reserves for himself the right to reject any tender without assigning reasons. The tendered when the tender is accepted would be informed by telegram or letter the fact of the acceptance of his tender. In other words, :the mode of selection was clearly indicated to all tenders'' and therefore the complaint that every one ''of the tenderers must be invited, ,is without any foundation. After all the State"! iron any instrumentality of the State which has ;to make'' purchases or which has to get work executed or which has to get work done or ,goods, grains etc., transported has to invite tenders in order to b e free from the accusing ,finger of violating Art. 14 of the Constitution. But it is not for the Courts to dictate the manner in which. the selection of the, contractors or the suppliers or the carriers is to be made as long as whatever method is followed, is reasonable and does not result in discrimination or arbitrariness. In this case the invitation is to give the required details, stipulated in the advertisement and send it in a sealed cover to pre-determined address as, well as pre-determined time and place at which the tenders will be opened is also ''indicated. In other words, it is an indirect invitation to the tenders to be present is they please. There is no favoritism practiced !or other tenders, substituted in place of the ,actual tender in order to favour one or the ,other. It is only after scrutiny after tenders the ground is made out to choose one of the it tenders. It is that which has been explained n the statement of objections of the Ist ''respondent in paras 4 and 5 of the said statement.

In paras 3 and 4 it is stated that the petition or Co-operate Society was not having sufficient experience while it was newly formed in the year 1986; that most of its members did not have the experience of having handled goods or grains of the Corporation- either at its depots or at. the railway-stations. It was also considered that financially it was not sound in the-opinion of the Corporation. It was in '' that circumstance coupled with the fact that the Society depended for its transport vehicles on a particular firm and on an examination of the regist6tiori numbers of the vehicles of that transport firm gave rise to doubts about the authenticity and efficiency of that Transport Company. This would not have been the case for the Corporation if its scrutiny had not :been somewhat methodical and quite exhaustive. The findings recorded by it may be right or may be wrong. It cannot be said that it has neither applied its mind nor has acted arbitrarily as contended by the learned Counsel for the petitioner Shri Ganapathy Bhat.

Similarly, in para 5 of the statement of objections the reasons have been given as to why the 3rd respondent has been preferred. That again shows due application of mind, proper scrutiny of the tender of the 3rd respondent and the comparative assessment of that tender with the other tenders. Therefore, the process of selection, prima facie, has been made as any prudent man would have done in similar circumstances.

There is no material placed before the Court that such scrutiny or opening of the tenders at the time and place indicated in the invitation to tender has been arbitrary or has been surreptitious or otherwise defective rendering the selection void and arbitrary. Mere assertion cannot take the place of proof of even prima facie case. I therefore do not, see that having rejected the other tenders negotiating with the selected tenderer in any way violates the rights of the petitioner under Art. 14 of the Constitution much less as ruled by this Court in Jindal Aluminium Ltd. Vs. State of Karnataka, .

It was next contended by Mr. P. Ganapathy Bhat that as held by the Supreme Court in the case of Harminder Singh Arora Vs. Union of India (UOI) and Others, the lowest tenderer not being accepted affected the public even us and therefore the award of contract to the 3rd respondent who had quoted higher rate for handling and transport charges than the rates quoted by the petitioner and two others would be contrary to law. In Harminder Singh''s case the facts were as follows. The Union of India invited tenders for supply of fresh buffalo7s and cow''s milk stipulating among other things that the lowest tendered rate shall be accepted. Among the tenders, the General Manager of the Government Milk Scheme was one. He tendered to supply pasteurized milk which normally means either cows milk or buffalo''s milk-or the mixture of the two-or the milk otherwise con(Auctioned by addition of milk, powder and put through the process of heating to the boiling point and then being cooled instantly by the pasteurization process. That tender came to be accepted. When challenged, the High Court did not interfere. The Supreme Court on appeal by the lowest tenderer held that the tender by the General Manager, Government Milk Scheme, was unacceptable as it was not fresh milk of the. cow or the buffalo and certainly the rate quoted by the, General Manager of the Government Milk Scheme was not the lowest and therefore contrary to the conditions stipulated in the tenders itself. It is on those facts and in that circumstance the Supreme Court came to observe that public revenues must be safeguarded and therefore the lowest tender or fresh cows or buffalos milk should. have been accepted and not at higher rate a commodity for which there was no invitation to tender and therefore on the .facts of that case it was impossible to come to, any other conclusion than the one Supreme Court. Drew. But that will not be of any assistance to the petitioner. here because there is no stipulation in the invitation as per. Annexure-A to the petition to the effect that the lowest rate quoted by the tenderer would be accepted. In fact as explained by the 1st respondent in, its statement of objections it has to look for such qualities. as the experience, reliability, financial stability etc., to award the contract for transporting food grains from place to place for which the Corporation is established. These cannot be said to be standards which are arbitrary. The movement of food grains within the Country from on area to another is very important to the economy of the Country as well as to the welfare of the people. Therefore, the three qualities mentioned'' above by no means can be said to be arbitrary standards adopted in order to exclude one or the other of the tenderers. Therefore, the reliance placed on the decision of the Supreme Court in Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, is not of any consequence. Violation of Art. 14 of the Constitution occurs only when the standards applied for selection or rejection is arbitrary and not one intended for maintaining the very object for which the tender is invited. Therefore, even that argument of Shri P. Ganapathy Bhat is liable ,to be rejected.

Lastly, it was contended that the Ist respondent erred in rejecting the claims of the petitioner on the ground (1) that he had no experience; and (2) that he was not financially sound.

He drew the attention of the Court to para 6(i) of the invitation i n where new. Entrants are also permitted to tender. He therefore ,contends. that lack of experience cannot be a ground for rejection. Similarly, he drew my attention that all the financial requirements of the security deposit and the earnest money deposit had been made by the petitioner and therefore he cannot be excluded on those grounds. Though one does get the impression by reading paragraphs 3 and 4 of the statement of objections, on a proper understanding of the averments therein, the reasonable conclusion to reach is that those observations are made only in comparison with the other tenderers. While new entrants may be permitted, it does not preclude the preferring of experienced tenderers who have more experience. Experience itself may not be the criteria if new entrants is otherwise better qualified. Therefore, in assessing the merit or de-merit, of the tenderers, as long as the yard-stick applied is, uniform, that certain yard-stick was applied could not itself be held to be arbitrary.

It was also contended that even as will be no order as to costs. per the policy of the Corporation itself, the preferred And in failing to do so, the Corporation has violated the law. As such the, award of contract in favour of 3rd respondent is liable to be set aside by this Court. This argument is founded on Annexure-B to the petition. Annexure-B is a letter written to the Zonal Manager, Senior Regional Manager and the Joint Manager by one B. R. Agnihotri who is also -said to be Joint Manager in the Corporation. In the said letter dated 30th September, 1985, he has stated that having regard to the difficulties experienced by the Corporation in all. Its Depots in various places on account of labour unrest and strikes, the lack of interest shown by the Regional Managers in resolving the disputes between the labourers and the contractors, the delay caused has seriously affected-the movement of food grains of the Corporation and therefore keeping those factors in mind the Labour Co-operative Societies may be given preference for awarding handling contract and conciliation proceedings before the Labour Welfare Officer should not be allowed to go by default. This is no more than an advice given by one person knowledgeable to others who may not, be so knowledgeable. But that letter should not be held to have declared the policy of the Corporation. It is somewhat beyond MY comprehension how it should be construed as the policy of the Corporation. Police is not made by one of its Joint Managers. It is further asserted by the Counsel for Corporation that the Corporation having its own Board of Management and the Board has its specified duties and they declare the policy in accordance with the guidelines issued by the Government. It cannot be said that the letter lays down the law which is required to be obeyed by the Regional Managers.

It should be given due weight and respect is a matter of the internal arrangement of the Corporation and, not the concern of this Court. Much less does that give any legal right to the petitioner.

For all the reasons above I do not think there is merit in this petition and it is therefore rejected.

In the circumstances of the case, there will be no order as to costs.

Petition dismissed.