N. Nattathy vs The General Manager, Food Corporation of India and Others

R. Subbiah, J.—This Writ Petition has been filed challenging the impugned re-tender notice dated 26.05.2015 issued by the first respondent vide Letter No. S & C. 13/5/6/2014-15/NML/PEG/CONT. VOL. II and consequential direction to the first respondent to finalise the tender as per the original e-tender notice by appointing the petitioner as regular handling and transport contractor for movement of food grains and allied materials, etc. from Namakkal Railhead to Namakkal PEG Godown and vice versa for a period of two years.

It is the case of the petitioner that she is a Transport Contractor having experience in handling and transporting materials for more than 10 years. She had successfully executed several contracts for Food Corporation of India, Tamil Nadu Civil Supplies Corporation, Tamilnadu Warehousing Corporation and other Public Sector Undertakings. While so, the first respondent herein invited e-tenders from interested contractors for appointment of regular handling and transport contractor for movement of food grains and allied materials, etc. from Namakkal Railhead to Namakkal PEG Godown and vise versa for a period of two years by an e-tender notice. The same was also published in "Indian Express" and "Dinamani" by way of press notice dated 09.03.2015. The tender was invited on "Two Bid System". The last date for receipt of the tenders was fixed on 30.03.2015 (up to 2.00 p.m.) and the opening of technical bid was fixed at 3.00 p.m. on 30.03.2015. The estimated value of the contract is Rs. 6,72,00,000/-. The participating tenderers are required to pay a sum of Rs. 13.44 lakhs towards Earnest Money Deposit and the successful tenderer should furnish a security deposit by way of Demand Draft for a sum of Rs. 33,60,000/- or through Electronic Clearing System within 15 working days of acceptance of its tender. The other terms of the tender and instructions to the tenderers were also made available to all the tenderers through the official web-site of the first respondent. The petitioner participated in the tender for being appointed as handling and transport contractor for handling and transporting materials from Namakkal Railhead to PEG Godown at Namakkal. The petitioner had submitted her tender on 30.03.2015. Since the petitioner was technically qualified as per the tender conditions, her tender was admitted during technical evaluation. Thereafter, by communication dated 30.04.2015, the petitioner was informed that her tender had been accepted during technical evaluation by the Duly Constituted Committee and that the Financial Bid opening of the tender has been fixed on 06.05.2015 at 3.00 p.m. But, on the same day by another mail, the information earlier given was once again confirmed. Further, it is stated that apart from the petitioner, the respondents 3 and 4 also participated in the tender for the same work. However, during technical evaluation of the bids, the third respondent was disqualified. As per the terms and conditions of tender, the price bids of only those tenderers whose technical bid was accepted shall be opened. Hence, only the price bids of the two eligible bidders were opened on 06.05.2015 and at the time of opening the price bid, the petitioner was found LI (Lowest Tenderer) as her bid was the lowest. The difference between the petitioner''s bid and the bid of the fourth respondent is more than 20%. Thereafter, the petitioner also received a letter dated 13.05.2015 from the first respondent whereby the validity of the tender was extended for another 30 days with effect from 15.05.2015 to 13.06.2015. Again on 26.05.2015, the first respondent through e-mail informed the petitioner that her bid had been admitted by the Committee. Further, as the petitioner had received communication from the first respondent and as she was found as Lowest Tenderer, she was eagerly waiting for the award of contract in her favour or a call letter from the first respondent for negotiation of rates, in case the first respondent had sufficient reasons to believe that by negotiation the rates can be further reduced. The petitioner''s offer was just about 14.25% above the value of contract which is arrived at by calculating the rate prevailing for the previous two years and the volume of work. While the situation stood thus, quite surprisingly, after giving an intimation to the petitioner on 26.05.2015 about the admission/acceptance of her bid, on the same day the first respondent had issued a fresh e-tender notice (i.e. on 26.05.2015), inviting e-tenders for appointment of regular handling and transport contractor for movement of food grains and allied materials from Namakkal Railhead to Namakkal PEG Godown. Challenging the fresh e-tender notice dated 26.05.2015, the present Writ Petition has been filed.

When this Court ordering notice to the respondents has granted interim stay on 10.06.2015.

On appearance, the first respondent has filed counter affidavit inter alia stating that before opening the price bid, the corporation would ascertain the value based upon the rates quoted in other areas for transportation of food grains from goods shed to other Private Entrepreneur Guarantee godown. Accordingly, on the opening of the price bid of the present tender, the genuineness of the rates quoted by the lowest tenderer has been evaluated based on the rates received from similar nature of handling of transportation of food grains from goods shed to other PEG godowns. On such evaluation, it was revealed that the rates quoted by the LI tenderer/the petitioner is on the higher side i.e. 45% over and above, the prevailing rate in other godowns. Hence, the competent authority has scrapped the tender and desired to go for fresh tender on account of exorbitant rate quoted by the L1 tenderer/petitioner. Since the issue of fresh tender would take considerable amount of time, it was necessitated by the competent authority to extend the validity of the tenderer for a further period of 30 days from 15.05.2015 to 13.06.2015 in terms of the tender conditions. There is absolutely no question of any arbitrariness on the part of the corporation to scrap the tender, particularly when it is found that the rates quoted by the petitioner is 45% higher than the market rate. Since it is an e-tender, the moment the bid is admitted, the intimation would go in emails to all the successful tenderers. While so, it does not mean that the lowest tender was accepted by the corporation and that she should be called for any negotiation. In fact, it has been clearly stated in Clause 3 of the tender condition, no negotiation will be held with any bidder/tenderer and that the tenderer are requested to indicate their lowest rate at the very first instance itself. Since the rate quoted by the petitioner was on the higher side, it necessitated the respondents to scrap the tender and go for fresh tender. If that is so, question of negotiation with the writ petitioner for reduction of rates would not arise. More over, the tender conditions clearly stipulates that no negotiation will be held with any bidder/tenderer. It is incorrect on the part of the petitioner to say that her offer was just about 14.25% above the value of the contract which is arrived at by calculating the rate prevailing for the previous two years and the volume of work. It is however relevant to point out that the rates quoted by the petitioner is 42.28% more than the rates awarded to similar contractor of H & T at Ariyalur under PEG godown. Being a public authority, it is the primordial duty of the respondent corporation to minimise the expenditure so as to avoid awarding tenders at a higher rates. The competent authority has thus acted well within his power and has not committed any error of law or breach of rules of natural justice. Thus, they sought dismissal of the writ petition.

The learned counsel for the petitioner would submit that the petitioner''s tender was accepted by the respondent corporation since her bid was lowest for appointing her as regular handling and transport contractor for movement of food grains and allied materials, etc. from Namakkal Railhead to Namakkal PEG Godown and vice versa for a period of two years. In fact, an intimation was also sent to the petitioner accepting her bid on 26.05.2015. While so, on the very same day, the first respondent had issued the present impugned e-tender notice for appointment of a regular handling and transport contractor for movement of food grains and allied materials, etc. from Namakkal Railhead to Namakkal PEG Godown and vice versa for a period of two years. He would further submit that according to the respondent corporation, the rate quoted by the petitioner is 45% higher than the prevailing rate in other godowns. But, the said reason assigned by the respondent corporation is not correct. In this regard, the learned counsel appearing for the petitioner drew the attention of this Court to the rate quoted by the petitioner was just about 14.25% above the value of contract which is arrived at by calculating the rate prevailing for the previous two years and the volume of work. Whereas the fourth respondent has quoted more than 20% of the petitioner and that is the reason why the petitioner was found as the lowest tenderer. The learned counsel for the petitioner would further submit that when the respondent corporation had accepted the petitioner''s tender, now by scraping the tender and deciding to go for fresh tender is totally arbitrary in nature. Therefore, the petitioner has come forward with this writ petition challenging the fresh e-tender notice dated 26.05.2015 and consequential direction to the first respondent to finalise the tender as per the original e-tender notice by appointing the petitioner as regular handling and transport contractor for movement of food grains and allied materials, etc. from Namakkal Railhead to Namakkal PEG Godown and vice versa for a period of two years.

Per contra, the learned counsel appearing for the respondent corporation would submit that since the petitioner quoted the lowest price than the L2, a communication was sent to her appointing her as L1 contractor but the actual difference between L1 and L2 is 7.81% and not 20% as claimed by the petitioner. Subsequently, the rate quoted by the petitioner was evaluated by the competent authority of the Food Corporation of India and it was found that the rate quoted by the petitioner is 42.2% higher than the market rate and hence, the first respondent authority has scrapped the tender and decided to go for fresh tender. In this regard, the learned counsel for the respondent corporation also submitted that while the competent authority examined the rates quoted by the petitioner and compared the same with the rate quoted in other locality, it was found that the petitioner had quoted a higher rate. He would also submitted that for example, the rate quoted by the petitioner is 42.2% more than the rates awarded to similar contractor of H & T at Ariyalur under PEG godown. Since the first respondent being a public authority, with an intention to minimise the expenditure, has scrapped the earlier tender and issued a fresh e-tender notice on 26.05.2015. The learned counsel for the respondent corporation also drew the attention of this Court to clause 11 and Clause XVIII of the tender conditions and submitted that the respondent corporation is having the right to reject any or all the tenders without assigning any reason and does not bind it to accept the lowest or any tender. In case of any dispute arising out of and touching upon the contract, the same will be first referred to the Dispute/Grievance Redressal Committee constituted and functioning at the Zonal Office of the Corporation, with a view to settle the disputes. If any disputes remain thereafter, the same will be settled in the Court of Law having competent jurisdiction. Therefore, the Writ Petition is not maintainable and thus they sought dismissal of the writ petition.

By way of reply, the learned counsel for the petitioner submitted that it is not correct to say that the rate quoted by the petitioner is 42.2% more than the rates awarded to similar contractor of H & T at Ariyalur under PEG godown. The rate has to be quoted only based on the distance between the PEG Godown and the railhead. Since the distance between the Namakkal Railhead and Namakkal PEG Godown is more than the distance between the two places in other areas, the petitioner had quoted the present rate. Having found that the petitioner was the lowest tenderer, as regular handling and transport contractor for movement of food grains and allied materials, etc. from Namakkal Railhead to Namakkal PEG Godown and vice versa for a period of two years, the first respondent now cannot scrap earlier tender and go for a fresh tender. Thus, he sought quashing of the impugned e-tender notice dated 26.05.2015 and consequential direction to the first respondent to finalise the tender as per the original e-tender notice by appointing the petitioner as regular handling and transport contractor for movement of food grains and allied materials, etc. from Namakkal Railhead to Namakkal PEG Godown and vice versa for a period of two years.

Heard the submissions of the learned counsels appearing on either side and perused the entire materials available on record.

Though very many contentions have been raised on the factual aspects, this Court is not inclined to go into all those aspects and is not inclined to conduct any roving enquiry or a trial in this writ petition sitting under Article 226 of the Constitution of India. However, the issues to be decided in this case are that whether the writ petition is maintainable and whether this Court sitting under Article 226 of the Constitution of India, can interfere with the tender process. Before answering to the above points, it would be appropriate to extract the relevant clauses of the tender conditions viz., Clause 11 and Clause XVII which reads as under:

"11. Food Corporation of India reserves the right to reject any or all the tenders without assigning any reason and does not bind it to accept the lowest or any tender. The successful Tenderer will be intimated of the acceptance of his tender by a letter/telegram/fax/email.

XVIII. Laws Governing The Contract and Dispute Resolution:-

(a) The contract will be governed by the laws of India for the time being in force.

(b) In case of any dispute arising out of and touching upon the contract, the same will be first referred to the Dispute/Grievance Redressal Committee constituted and functioning at the Zonal Office of the Corporation, with a view to settle the disputes. If any disputes remain thereafter, the same will be settled in the Court of Law having competent jurisdiction.

A reading of the said clauses would show that the Food Corporation of India reserves the right to reject any or all the tenders without assigning any reason and does not bind it to accept the lowest or any tender. Therefore, the petitioner is bound by the said condition. Even if there is any dispute arising out of and touching upon the contract, the petitioner has to first refer the matter only to the Dispute/Grievance Redressal Committee constituted and functioning at the Zonal Office of the Corporation, with a view to settle the disputes. If any disputes remain thereafter, the same will be settled in the Court of Law having competent jurisdiction. Therefore, I am of the opinion that the petitioner has alternative remedy before the Dispute/Grievance Redressal Committee constituted and functioning at the Zonal Office of the Corporation but without exhausting the same, she has straight away approached this Court by filing this Writ Petition. Further, time and again, the Supreme Court has reiterated the fact that in the matter of tenders, the scope of interference of the Court is limited in nature. Similarly, the judicial review in the administrative action in awarding the tender is also limited in nature. Hence, this Court does not find any merit in the case of the petitioner and hence, the Writ Petition is liable to be dismissed.

For the reasons stated above, the Writ Petition fails and the same is dismissed. No costs, consequently, connected miscellaneous petitions are closed.