Shivalik Foods vs Union of India (UOI) and Others

S.K. Gupta, J.—I have Mr. D.C. Raina, learned counsel appearing for the petitioner, as well as Mr. S.S. Nanda, Sr. CGSC, for

respondents-1 to 3, and Mr. K.S. Johal, learned counsel for respondent-4, it extenso.

The petitioner seeks to quash the tender document issued in favour of respondent-4 for the supply of fowl frozen for Ladakh Sector for the

period from 1.4.2003 to 31.3.2006, on the ground that respondent-4, who has also tendered for the job, should not be allotted the contract being

ineligible, as he does not possess freezing facilities at Chandigarh, owned by him or can be hired, nor Memorandum of Understanding produced at

the time of collection of tenders; Whereas the tender submitted by the petitioner is complete in all respects and the same was entertained by the

respondents.

Respondents-1 to 3 have filed their reply. Respondent-4 has also filed his reply separately. Paras 6 and 7 of the reply filed by respondents-1 to

3 are extracted as under:

That is reply to the averments of para No. 2 of the petition it is respectfully submitted that Respondent No. 4 has submitted Memorandum of

Understanding for hiring of freezing facilities which was considered adequate at the tendering stage.

That in reply to the averments of para No. 3 it is respectfully submitted that the contract has not yet been finalized. Respondent No. 4 vide his

letter no nil dated 14 Feb. 2003 has stated that he will submit lease deed within 15 days of contract being sanctioned in his favour as stamp duty is

to be paid and till the contract is sanctioned in his favour it is not feasible to incur the expenditure on stamp duty and also the total value of the

contract was not known.

Respondent-4 has, thus, submitted Memorandum of Understanding for hiring of freezing facility at the stage of collection of tender as per

requirements of the official-respondents. It is also elicited from the reply of respondents-1 to 3 that as per Government of India, Ministry of

Defence letter No. 69011/Q/ST5/6401/D (QS) dated 29th August, 1997, Memorandum of Understanding is to be given at tendering stage and

valid lease deed at the contract security deposit stage, i.e., after sanctioning of the contract.

It was next contended by Mr. D.C. Raina that respondent-4 had submitted incomplete and deficient tender documents and did not fulfil the

requisite conditions. As a matter of fact, respondent-4 had committed the breach of contract of the tender documents by joining hands with M/s

Viking Food Products Private Limited, another registered A-Class Contractor, who owned a freezing facility which respondent-4 did not possess

as per the requirements of the tender documents. It is also further submitted by Mr. Raina, learned counsel for the petitioner that when two

Contractors join hands in getting contract allotted by facilitating cash other, tender documents are liable to be rejected. This contention, however,

stood controverted by respondents-1 to 3 in making a detailed reply in para No. 15 of their objections, which is extracted as under:

That the averments of para No. 12 of the petition being wrong and false hence denied. It is respectfully submitted that Respondent No. 4 had

submitted complete document and had submitted two Memorandum of Understanding with M/s. Viking's Food Products and M/s Guru Nanak

Frozen Foods. He had also not committed breach of contract of tender documents. By hiring freezing plant from other petitioners for operation of

contract does not mean jointing hands with another person. Moreover he had submitted another Memorandum of Understanding with M/s Guru

Nanak Frozen Foods who is not ASC contractor. The contention of the petitioner therefore is not agreed.

According to Mr. Nanda, Sr. CGSC, no violation of tender documents has been committed by respondent-3 and has strictly proceeded in

accordance with the procedure laid down in this behalf. The tender submitted by respondent-4 was considered adequate in terms of the

Government of India, Ministry of Defence letter No. 69011/Q/ST5/6401/D(QS) dated 29th August, 1997, for conclusion of the contract. It is

also stated that the contract is to be allotted to the lowest tenderer; if the rates are found to be reasonable and workable. It is, however, not

disputed that respondent-4 is the lowest tenderer in this case.

The question relating to permissibility of relaxation of pre-qualifications in tender notice came up for consideration before the Apex Court in

M/s. G. J. Fernandez Vs. State of Karnataka and others, , and it is was held as under:

It is not that the authority inviting tenders cannot deviate or relax the prescribed standard in any situation. But any deviation, if made, should not

result in arbitrariness or discrimination. The rule laid down in Airport Authority case 7979 (3) SCR 1014 comes in for application where the non-

conformity with, or relaxation from, the prescribed standards results in some substantial prejudice or injustice to any of the parties involved or to

public interest in general. In the instant case the Karnataka Power Corporation issued notification inviting tenders (NIT) for construction of main

Station Building of power house. Pre-qualifications, such as experience in insulation, brick word etc. were stipulated in the NIT for obtaining blank

tender books by prospective tenderers. Some documents which had bearing on or were indicative of the fulfillment of experience etc. of tenderer

were required to be furnished along with the application for blank tender books. One of the proposed tender submitted a required document not

alongwith the application for issue of blank tender books but belatedly. The corporation considered those documents and eventually the contract

was granted to him. The consideration of the belatedly submitted document by the Corporation was objected to by the appellant.

Held, the fact that a document was belatedly entertained from one of the applicants will cause substantial prejudice to another party who wanted,

likewise, an extension of time for filing a similar certificate or document but was declined the benefit. It may perhaps be said to cause prejudice also

to a party which can show that it had refrained from applying for the tender documents only because it thought it would not be able to produce the

documents by the time stipulated but would have applied had it known that the rule was likely to the relaxed. But when the appellant and other

parties had already submitted all the documents in time and sought no extension at all it could not be said that any real prejudice had been caused

to them because of the course adopted by the Corporation. The slight deviation from the terms of the NIT has not deprived the appellant of its

right to be considered for the contract; on the other hand, its tender has received due and full consideration. If, save for the delay in filing one of the

relevant documents, the respondent tenderer is also found to be qualified to tender for the contract, no injustice can be said to have been done to

the appellant by the consideration of his tender side by side with that of the respondent tenderer and in the KPC going in for a choice of the better

on the merits.

The scope of judicial review in case of Government contracts is well defined. Only the decision making process and not the merits of the

decision itself is reviewable as the Court does not sit as Appellant Court while exercising power of judicial review so as to substitute its own

decision. The Court would interfere only when the selection or rejection is arbitrary. In order to prevent arbitrariness and favouritism, the principles

of the judicial review would apply in case of contractual powers of the Government. Reason is obvious that the Government is the guardian of the

finances of the State. It is expected to protect the finances of the State. The right to choose cannot be considered to be an arbitrary power. As

regards the approval or rejection of the tenders, it is clearly indicated in the document-Invitation to tenders and instructions to tenderers-

(Annexure-B), and is extracted as under:

The approval or rejection of tenders rests with QMG Army HQ/GOC-in-C Northern Command who reserves himself right of rejecting any

tenders in whole or in part in respect of any or all the delivery points shown in the schedule (i.e. IAFZ-2121) without cause assigned. The lowest

tender will not necessary be accepted

Having clearly borne out from the reply of respondents-1 to 3 that Memorandum of Understanding for hiring of freezing facility submitted by

respondent-4 at the stage of collection of tender as per requirements of the respondents to fulfil the eligibility conditions, and the failure of the

petitioner to show any substantial prejudice caused to him because of the course adopted by respondents-1 to 3 in the tender process, the

inevitable conclusion reached is that no prima facie case for admission of the writ petition is made out. The writ petition is, therefore, dismissed at

the preliminary stage of admission. Interim relief granted shall also stand vacated in resultant thereof.