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Judgment
Heard Mr. B.K. Sharma, learned Sr. counsel assisted by Mr. R. Mazumdar, learned counsel for the petitioner and Mr. R. Debnath, learned CGC for the respondents.
The present writ petition has been filed impugning the action of the respondents in cancelling the tender process by corrigendum dated 4th September, 2018. The pleaded case of the writ petitioner is that in terms of Notice Inviting Tender dated 13th March, 2018 published by the respondents No. 2 calling for online tenders for procurement of Coat Combat Disruptive for Assam Rifles, the writ petitioner had furnished tender papers along with all requisites and on being declared the successful bidder was issued offer letter/letter of acceptance dated 2nd July, 2018. However, even after deposit of the security deposit and sample, the writ petitioner was not issued the work order but instead the respondent authority uploaded information regarding cancellation of tender process in terms of an order dated 4th September, 2018. A writ petition being WP(C) No. 312 of 2018 was filed by the writ petitioner challenging the same and vide order dated 20th December, 2018; this Court directed that hearing be afforded to the petitioner prior to arriving at any decision to cancel the tender. The respondents however, after affording an opportunity as directed, have rejected the case of the writ petitioner and have conveyed the decision to go for re-tendering. As such being aggrieved the writ petitioner is once again before this Court by way of this petition.
Mr. B.K. Sharma, learned senior counsel assisted by Mr. R. Mazumdar, learned counsel for the petitioner submits that pursuant to the NIT dated 13thMarch, 2018 on behalf of the Assam Rifles, which invited online tenders under two bid system (technical and financial bid) for procurement of coat combat disruptive for Assam Rifles, the petitioner being an eligible proprietorship firm had participated in the tender process along with the other bidders. He submits that the petitioner was declared as a successful bidder having quoted the lowest bid for the supply as was reflected in the tender summary report dated 20th June, 2018 published by the Respondents. Learned senior counsel submits that in pursuance to the tender summary report, the Respondent Authority vide Offer letter dated 2nd July, 2018 requested the petitioner to comply with the conditions as set forth in the Offer letter. Learned counsel then submits that the writ petitioner accordingly complied with the requirements and submitted the advance sample of the product on 2nd July, 2018, and also further furnished the Security Deposit of Rs.30,00,000/- (Rupees Thirty Lakhs) on 16th July, 2018 along with other relevant documents.
The learned senior counsel submits that thereafter, as there was no word from the respondents with regard to issue of any supply order, it prompted the petitioner to make a representation on 13th August, 2018 and it was also mentioned therein that the petitioner had already placed order to the manufacturers for the product. Learned senior counsel submits that after receiving no reply whatsoever, they again submitted another representation on 5th September, 2018 but the same also was to no avail and were shocked when the respondents vide corrigendum dated 4th September, 2018 which was uploaded in e-portal showed that the tender notice dated 13th March, 2018 had been cancelled due to administrative reasons.
Learned senior counsel then submitted that being aggrieved with the action of the respondents had challenged the same before this Court by way of a writ petition which was numbered as WP(C) No. 312 of 2018. He submits that this Court vide order dated 20th December, 2018 disposed of the writ petition and granted liberty to the respondents to go for re-tendering but after giving the petitioner an opportunity of being heard before cancelling the tender.
Learned senior counsel further submits that in compliance to the orders of this Court, a hearing was conducted on 18th January, 2019 and a representative of the petitioner was made to sign a certificate stating that he was given an opportunity to be heard and also was required to note down the points that he wanted to raise. Learned senior counsel further submits that the representative of the petitioner at the proceeding, also offered to furnish fresh samples as per the tender sample, to establish that there was no difference between the tender samples and the material sought to be supplied.
Learned senior counsel submits that the petitioner was then informed about the order dated 7th February, 2019, whereby the contentions of the writ petitioner had been rejected and the directions for issuance of a fresh NIT for the said items. Learned senior counsel then draws the attention of this Court to the NIT dated 13th March, 2018 (Annexure 1) and to the contents and conditions contained therein especially Clause 26 and Clause 39. He submits that as provided in Clause 26, the factum of his being a successful tenderer was intimated by the Offer letter dated 2nd July, 2018 and as required by Clause 39(b) the petitioner had submitted an advance sample to the Respondent Authority; but even after due compliance and after passage of considerable time, the Respondent Authority failed to issue any supply order.
Learned senior counsel then submits that as divulged by an affidavit filed in the earlier writ proceedings, the decision of re-tender was already taken and conveyed on 2nd August, 2018, prior to the Board of Officers Meeting, which was convened for tallying the advance samples with Master Tender Samples and which had rejected the advance samples for being a mismatch. He submits that the Board of Officers Meeting on 8th August, 2018 was a mere eyewash and had been done just to comply with the decision of the respondent No. 2 to re-tender the item.
In the earlier round of litigation, the learned senior counsel submits, the petitioner had contended that the rejection of the samples was an afterthought to substantiate the cancellation of the tender process, and that on this ground, this Court after hearing the parties had disposed of the earlier writ petition by granting liberty to the respondents to go for re-tendering but with a direction that the petitioner be given an opportunity of being heard before the cancellation of the tender.
Learned senior counsel submits that thereafter hearing was conducted on 18th January, 2019 and the representative of the petitioner's firm in the proceedings, was made to sign a paper certifying that they had been heard, and that certain points were also put down therein by the said representative, including the fact that the writ petitioner was ready to submit fresh advance samples as per the tender samples with the Assam Rifles logo. Senior counsel submits that thereafter, vide speaking order dated 7th February, 2019, which was communicated vide letter dated 15th February, 2019 the respondents directed for re-tendering and for issuing fresh NIT. Learned senior counsel submits that the action of the respondents is highly arbitrary and that the action, is not in conformity with the standards which are reasonable and rational. He submits that while cancelling the tender process after issuance of acceptance letter, Clause 7.5.11 of Chapter 7 of "Manual for Procurement of Goods, 2017" had been violated, inasmuch as, it would be open to the respondents to cancel the process of procurement or rejecting bids, only before intimating the acceptance of a successful bid. He contends that Clause 7.6.1 mandates that the letter of acceptance will result in a binding contract and as such, and the petitioner having accepted the offer and the acceptance being complete, the respondent was estopped from resiling from the contract and was bound by the same.
The learned senior counsel has referred to the following decisions in support of his contentions:-
i) State of Punjab & Ors. vs. Dhanjit Singh Sandhu reported in (2014) 15 SCC 144 and
ii) Laxminarayan R. Bhattad & Ors. vs. State of Maharashtra & Anr. reported in (2003) 5 SCC 413
Mr. R. Debnath, learned CGC for the respondents submits that firstly, in view of this Hon'ble Court's judgment passed in WP(C) No. 312 of 2018, the respondents were directed to give the petitioner an opportunity of hearing before cancellation of the tender which has been duly complied with. He further submits that the petitioner was never awarded any tender and was merely issued an offer letter for supply of Coat Combat Disruptive vide letter No. IV.19021/PROV/2017-18/DP/Coat Combat/132 dated 2nd July, 2018 and that the offer letter issued to the petitioner was by no means an award of contract, as it was subject to fulfillment of various conditions as given in the offer letter.
The learned CGC also submits that the petitioner submitted an advance sample on 2nd July, 2018, but deposited the performance security deposit of Rs. 30,00,000/- only on 16th July, 2018, though the date for depositing the security deposit was within 10 days from the date of issue of the offer letter. Learned CGC submits that the delay in normal circumstances would have caused disqualification; however, the respondents had taken a lenient view and had accepted the same. The learned CGC further submits that there was serious discrepancy in the samples as the Board of Officers, detailed for matching the advance samples submitted by the petitioner with the tender samples, found that the advance samples, did not tally with the approved tender sample. Learned CGC submits that the Board of Officers rejected the advance samples submitted by the petitioner, as the petitioner had tried to supply inferior quality coat combat to the respondents.
The learned CGC then submits that the entire procurement scenario has now changed, inasmuch as, Rule 149 of the General Financial Rules, 2017 issued by the Ministry of Finance, Department of Expenditure, has mandated that all Government Organizations procure all goods and services available in GeM (Government e-Marketplace) through GeM only.
He submits that at the time of issuance of the tender, the subject item i.e. Coat Combat Disruptive with Assam Rifles logo was not available on GeM, whereas the subject item is now available on GeM and as such it is now mandatory to procure the same though GeM and that the subject item will be procured accordingly as per the mandate and directions contained in the General Financial Rules.
The learned CGC then refers to the conditions of the NIT which enable cancellation of the tender, and further submits that all these terms have been agreed upon by the petitioner. The learned CGC has enumerated the said clauses which are contained in the NIT such as Paras-36, 57, 60, 63(e), Para-1 of Appendix-4 Chapter V of the NIT and also Para-15 of offer letter dated 2nd July, 2018. He submits that these conditions such as Para-36 vest the respondents with the right to cancel any tender without assigning any reasons. Para-57, 60 and 63 also speak of termination on non-fulfillment of certain conditions named therein. He submits that the petitioner in this regard had submitted an undertaking to the respondents vide letter dated 16th July, 2018, therefore is estopped from challenging the impugned order.
The learned CGC then submits that in compliance with the judgment and order dated 20th December, 2018 passed in WP(C) No. 312 of 2018, the respondent authority had constituted a departmental committee and the petitioner was given adequate opportunity to be heard on 19th January, 2019. He submits that the representative of the petitioner's firm was present personally, and submitted that the petitioner was ready to submit a fresh sample and ready to supply the subject item with the Assam Rifles Logo. The learned CGC submits that though the request of the petitioner was reviewed the same was not acceded to as there were no terms and conditions in the NIT which would enable the petitioner to be given an additional opportunity for resubmission of the advance sample. Learned CGC then reiterated his earlier submissions and added that this Court in its order dated 20th December, 2018 had observed that the NIT is the ground for tender and both the parties are bound by the terms and conditions of the tender. As such, he submits keeping in view the order passed by this Court and the terms and conditions of the NIT, the respondents rejected the offer of the petitioner to resubmit fresh samples.
The learned CGC submits that the respondents had already cancelled the instant tender vide corrigendum dated 4th September, 2018 and also as opportunity of hearing was granted to the petitioner, and there being no change in circumstance, the instant tender stood cancelled and the extended validity of the tender had also expired and moreover, as the respondents have now considered to procure Coat Combat by way of tendering/bidding on Government e-Marketplace (GeM) nothing remains to be adjudicated.
In support of his contentions the learned counsel has placed reliance in the following judgments :-
(i) In the cases of Rajasthan Cooperative Dairy Federation Ltd. vs. Maha Laxmi Mingrate Marketing Service Pvt. Ltd. & Ors. reported in (1996) 10 SCC 405
(ii) State of Punjab & Ors. vs. Dhanjit Singh Sandhu reported in (2014) 15 SCC 144
(iii) South Delhi Municipal Corporation vs. Ravinder Kumar & Anr. reported in (2015) 15 SCC 545 and
(iv) Laxminarayan R. Bhattad & Ors. vs. State of Maharashtra & Anr. reported in (2003) 5 SCC 413
Mr. R. Debnath, learned CGC submits that these judgments as placed above will be of assistance and support to the stand of the respondents, inasmuch as, firstly there was no concluded contract and that more importantly the earlier tender proceedings were cancelled vide the impugned corrigendum was with a bona fide intention and in the interest of the Assam Rifles Forces and also in view of the changed situation with regard to the procurement of the subject item that was necessarily to be acquired from a different source i.e. through GeM.
He concludes his submission by reverting to the offer letter dated 2nd July, 2018 and stressed the fact that the said letter merely expressed an intention to enter into the contract with the understanding that if the conditions stipulated therein were not fulfilled by the petitioner, and if the conduct or otherwise would not generate confidence, the respondents were entitled to withdraw the letter of intent. He submits that Court's interference would only be warranted if the decisions taken by the authorities were found to be arbitrary, unreasonable or a misuse of power or in violation of principles of natural justice or not taken in public interest. He submits that this is not being the case, and the cancellation being warranted by the circumstances as portrayed, the writ petition should be dismissed.
I have heard learned counsels for the parties and have given my thoughtful consideration to the submissions and examined the materials on record.
This Court in earlier round of litigation vide order dated 20th December, 2018 passed in WP(C) No. 312 of 2018 at Para-8 had directed as follows:-
"8. However, in this case I agree that since the petitioner was a successful bidder and initially his bid was accepted both in technical and financial bid but the authority had taken the decision to cancel the tender on the ground of mismatch of samples, in such circumstances, respondents should have given the petitioner an opportunity of being heard and thereafter take the decision for re-tendering. Therefore, if the respondents want to go for re-tendering they are at liberty to do so but they are directed to give the petitioner an opportunity of being heard before cancelling the tender on the ground of mismatch or any other grounds which violates the terms and conditions of the Notice Inviting Tender."
The purport of the said order was that liberty was granted to the respondents to go for re-tendering but with a direction that an opportunity of hearing be given to the petitioner before cancellation. As can be seen from the records and submissions, the respondents had accordingly afforded opportunity to the petitioner to be heard. Thereafter, for the reasons recorded in the impugned letter dated 7th February, 2019, the tender was cancelled. The submissions by the learned senior counsel for the petitioner is primarily confined to the contention that the offer letter dated 2th July, 2018 was in fact an acceptance of the bids of the petitioner and that for all practical purposes, the supply order has been settled with the petitioner and in that situation the respondents could not retreat from the same. On the other hand, the stand of the respondents is that the offer was conditional and it was in no manner a letter signifying final acceptance which would result in binding contract.
It would be expedient at this point to examine the offer letter whether it would constitute a final letter of acceptance from the side of the respondents. Para-2 of the offer letter is as follows:-
"2. Please confirm your acceptance for supply of Coat Combat Disruptive to be delivered by Road Transport at our OMCs located at Dimapur (Nagaland), Silchar (Assam), Jorhat (Assam) and Maram (Manipur) as per qty, rate and total amt mentioned as under: -
Ser No
Item
Qty
Rate(Rs)
Amount (Rs)
(a)
Coat Combat Disruptive
18,667 Nos
1,638.78 (incl GST)
3,05,91,106.26
Total Rs
3,05,91,106.26
A plain reading of Para-2 would convey the meaning that it was the petitioner who was to confirm the acceptance and further Para-3(e) of the said offer letter also shows that the offer is conditional upon fulfillment of the conditions. Para-3(e) is quoted herein below.
"3. Consignee wise qty distribution will be given in the Supply Order. In case the offer is acceptable, you are hereby requested to furnish the following documents: -
(e) Advance Sample. Submit 07 Nos advance sample of Coat Combat Disruptive specified in para 39 of TE. Non submission of Advance samples by the due date can lead to cancellation of the offer. Supply order will be issued only once the Advance sample are approved by this Directorate."
These two paragraphs in the offer letter itself would go to show that the same cannot be construed to have created a binding contract that would have irrevocably bound the parties. The supply of the advance samples by the petitioner which was rejected by the respondents for mis-match is also an undisputed fact. This fact is further reinforced by the note on the letter of the petitioner itself before the Departmental Hearing Committee, wherein an offer was made to allow submission of fresh advance samples as per the tender samples. This aspect is too glaring, and cannot be ignored by this Court, as it amounts to non-fulfillment of the stipulated conditions as prescribed by the offer letter, which would in turn render the transaction voidable. This observation by this Court on this count, flows from Para-3(e) of the offer letter itself, wherein it was clearly spelt out that supply order would be issued only once the advance samples were approved by the Directorate.
The other aspect that deserves consideration is to whether the respondents are within their rights and justified to cancel the tender. In this regard, clause 39 (b) (i) (ii) speaks about samples‟ i.e. tender samples and advance samples. 39(b) stipulates that the successful firm would be required to submit the advance samples for approval. The offer letter over and above the tender clause, having also incorporated this stipulation, the recourse taken by the respondents cannot be held to be arbitrary or unreasonable.
It is to be noted that the petitioner had raised the question that there may have been a mix up with other samples that resulted in the mis-match of the advance samples submitted by them, this contention in my opinion cannot be accepted, as the respondents had clearly stated that since the offer letter was issued only to the petitioner for satisfying the conditions of the NIT by way of submission of advance samples, the plea that there was a mis-match with other samples was not possible and is not sustainable. It is also to be noted that the petitioner has also raised the plea of irregularity in the proceedings with regard to the noting by the officer in the note sheet whereby it is contended by the petitioner that the decision to cancel the tender was taken prior to the Board of Officers which was convened for tallying the advance samples with the tender samples. However, this fact pales into insignificance, as there was a pointed offer by the petitioner to offer fresh advance samples, thereby acknowledging the fact that there was a mis-match. This point therefore deserves no further consideration, more so, as the petitioner had been afforded adequate opportunities and this plea stood lapsed with the disposal of the earlier writ petition. Another contention that had been advanced by the petitioner is that the petitioner on receipt of the offer letter had placed an order for supply of the materials from other vendors and the cancellation of the tender will result in huge financial loss to the petitioner. However, this contention cannot be given weightage or relief be considered, inasmuch as, though the offer letter was given to the petitioner to confirm acceptance which was however contingent upon the satisfaction of other conditions, on the non fulfillment of the conditions, the transaction cannot be construed to mean that there was a final acceptance of the tender. Further, the question of determining this aspect will not be a subject matter to be gone into in this proceeding and as such, is disregarded.
The point that has been placed by the respondents with regard the mandatory requirements to procure through GeM also cannot be ignored. Rule 149 of the General Financial Rules, 2017 contains the said mandate and the same is quoted herein below:-
"Rule 149. Government e-Market place (GeM). DGS&D or any other agency authorized by the Government will host an online Government e-Marketplace (GeM) for common use Goods and Services. DGS&D will ensure adequate publicity including periodic advertisement of the items to be procured through GeM for the prospective suppliers. The Procurement of Goods and Services by Ministries or Departments will be mandatory for Goods or Services available on GeM. The credentials of suppliers on GeM shall be certified by DGS&D. The procuring authorities will certify the reasonability of rates. The GeM portal shall be utilized by the Government buyers for direct on-line purchases as under: -
(i) Up to Rs.50,000/- through any of the available suppliers on the GeM, meeting the requisite quality, specification and delivery period.
(ii) Above Rs.50,000/- and up to Rs. 30,00,000/-through the GeM Seller having lowest price amongst the available sellers, of at least three different manufacturers, on GeM, meeting the requisite quality, specification and delivery period. The tools for online bidding and online reverse auction available on GeM can be used by the Buyer if decided by the competent authority.
(iii) Above Rs. 30,00,000/- through the supplier having lowest price meeting the requisite quality, specification and delivery period after mandatorily obtaining bids, using online bidding or reverse auction tool provided on GeM.
(iv) The invitation for the online e-bidding/reverse auction will be available to all the existing Sellers or other Sellers registered on the portal and who have offered their goods/services under the particular product/service category, as per terms and conditions of GeM.
(v) The above mentioned monetary ceiling is applicable only for purchases made through GeM. For purchases, if any, outside GeM, relevant GFR Rules shall apply.
(vi) The Ministries/Departments shall work out their procurement requirements of Goods and Services on either "OPEX" model or "CAPEX" model as per their requirement/ suitability at the time of preparation of Budget Estimates (BE) and shall project their Annual Procurement Plan of goods"
The entire sequence of events viewed in the backdrop of the NIT, offer letter, cancellation by the corrigendum, rejection of the tender of the petitioner as discussed above, undoubtedly portray a situation as sought to be made out by the petitioner for interference by this court. However, the basic requirement for compliance of the offer letter not having been met with the correct advance samples not being supplied resulting in the mis-match has however severely eroded the case of the petitioner. The factum of the offer to re-supply the same by the petitioner, though not permitted had not only upset the tender process but also the confidence of the respondents on the question of the petitioner's bona fides.
The decision relied upon by the petitioner's counsel will not come to their assistance. In the case of State of Punjab & Ors. vs. Dhanjit Singh Sandhu (Supra) though the principles with regard 'approbate and reprobate' have been enunciated therein but as the facts of the case stands in a different footing, the ratio of the decision will not be attracted in the present case.
The decisions as relied upon by the respondents in the case of South Delhi Municipal Corporation vs. Ravinder Kumar & Anr. reported in (2015) 15 SCC 545 to support their contention that the decision is not arbitrary or visited by mala fides is relevant for the instant case. Para 18.6 is quoted herein below:-
"18.6. Further, the High Court has failed to consider another important fact that the Government being guardian of public finance it has right to refuse the lowest or any other tender bid or bids submitted by the bidders to it provided its decision is neither arbitrary nor unreasonable as it amounts to violation of Article 14 of the Constitution of India. The appellant Corporation's decision in cancelling its earlier tender is not in violation of Article 14 of the Constitution of India, as the High Court did not find any malafide intention on the part of the appellant Corporation to favour someone in taking such decision. The appellant Corporation's decision in cancelling the earlier tender notice vide corrigendum dated 30.11.2012 and then issuing a subsequent tender notice dated13.12.2012 inviting fresh bids from eligible persons for the same works was with a bonafide intention to get better and reasonable rates from the bidders for the execution of the works and not to show favouritism in favour of any bidder."
With regard to the letter of intent, the decision in the case of Rajasthan Cooperative Dairy Federation Ltd. vs. Maha Laxmi Mingrate Marketing Service Pvt. Ltd. & Ors reported in (1996) 10 SCC 405 at Para 7 is also germane for the purposes of this case. Para-7 is quoted herein below:-
"7. The High Court was also not right in importing the doctrine of audi alteram partem in these circumstances. If the conduct of Respondent No. 1 was such that it did not inspire any confidence in the appellant, the appellant was entitled to decline entering into any legal relationship with Respondent No. 1 as its selling agent. The Letter of Intent merely expressed an intention to enter into a contract. If the conditions stipulated in the Letter of Intent were not fulfilled by Respondent No. 1and if the conduct of Respondent No. 1 was otherwise not such as would generate confidence, the appellant was entitled to withdraw the Letter of Intent. There was no binding legal relationship between the appellant and Respondent No. 1 at this stage and the appellant was entitled to look at the totality of circumstance in deciding whether to enter into a binding contract with Respondent No.1 or not."
In view of the foregoing discussions and facts and circumstances of the case, moreover in the light of the petitioner having been afforded adequate opportunity to agitate his case and the said proceeding having been disposed of by a speaking order, encapsuling the reasons for cancellation of the tender, the impugned decisions cannot be said to be arbitrary or unreasonable. As such, no interference is called for by this Court and the writ petition is accordingly dismissed.
No order as to costs.