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Judgment
R. Banumathi, J.—Whether the learned single Judge was right in directing the Appellants to place order with the Respondent for supply of
100 numbers of Mini Portable Sprinklers Irrigation System with accessories and as to whether the said direction would continue to hold good
inspite of the closure of the project and cancellation of the very contract on account of efflux of time and the tender and conditions of the National
Agricultural Development Programme are the points falling for consideration in this intra court appeal. Brief facts:-1st Appellant called for sealed
tenders for supply of 100 numbers of Mini Portable Sprinklers Irrigation System with accessories under two cover system (technical and price).
Last date for receipt of bid was 16.8.2010 at 3.00 P.M. and the date for opening of the final bid was scheduled on 16.8.2010 at 3.30 P.M. As
per the tender conditions, Respondent has deposited the bid security of Rs. 15,000/- and appeared before the 1st Appellant on 16.8.2010 at the
opening of bids. The price bid was opened on 18.8.2010 and the 1st Appellant by letter dated 02.09.2010 requested the Respondent to appear
before the Technical Committee for price bid negotiation on 06.9.2010 at 3.00 P.M. According to the Respondent, he had appeared before the
Technical Committee for price bid negotiation on 06.9.2010 and after negotiation, it was agreed to accept the price at Rs. 23,000/- per unit. The
bid submitted by the Respondent was accepted at Rs. 23,000/- per unit of Mini Portable Sprinklers Irrigation System. Respondent obtained bank
guarantee from State Bank of India, Adyar Branch for Rs. 1,15,000/-. Respondent complied with all the tender conditions viz., execution of
contract, production of guarantee towards performance security.
Case of Respondent is that 2nd Appellant by letter dated 14.12.2010 alleged that the demo machine supplied originally was heavier in weight
and therefore, insisted for supply of another demo machine and that Respondent has been delaying to implement the project and because of further
delay, steps will be taken to stop purchase without notice. By the reply through e-mail dated 15.12.2010, Respondent informed the 2nd Appellant
that the supplied engine pumpset was very much lighter and accepted by the farmers and there was a great demand. 1st Appellant unilaterally
issued the order DRVI/CSRC-RMD/NADP/Mini Portable Sprinkler/Cancellation of Tender dated 31.12.2010 cancelling the tender in view of
not offering the machine in accordance with the specifications given in the tender and also issued re-tender notification on the same day on
31.12.2010. Challenging the cancellation of tender dated 31.12.2010 and consequential re-tender notification dated 31.12.2010, Respondent filed
W.P. No. 967 of 2011 contending that cancellation of tender dated 31.12.2010 is arbitrary, unreasonable, malafide and is in violation of principles
of natural justice. Case of Respondent is that Appellants having been satisfied with the technical know-how of the product and with the portability
of its character and also the lowest price quoted by them, the Appellants ought not to have unilaterally cancelled the tender and the cancellation is
arbitrary. Respondent filed Writ Petition challenging the Proceedings dated 31.12.2010 and sought for a direction to the Appellants to place
supply orders with them for supply of 100 numbers of Mini Portable Sprinklers Irrigation System.
Counter:-Appellants resisted the Writ Petition contending that as per the guidelines of the tender for supply of Mini Portable Sprinkler Irrigation
System, the performance security of Rs. 1,15,000/- have to be submitted by the bidder within 15 days from the date of receipt of the notice.
Though the Respondent received the notice on 21.10.2010, the same was received by the 2nd Appellant only after the lapse of one month i.e. on
23.11.2010. As against 1.8 H.P. Motor, the bidder demonstrated 1.5 H.P. motor which weighs more and no longer a portable one. Since the
Respondent did not supply the Sprinklers as per the specifications, the tender was cancelled by the 1st Appellant by order dated 31.12.2010.
Appellants have followed the procedure as per the norms prescribed in the tender conditions and there is no deviation on the part of the Appellants
to issue a fresh tender notification.
Finding of the single Judge:-Referring to Tata Cellular Vs. Union of India, , the learned single Judge held that the authorities concerned after
accepting the technical bid and the price bid and at the stage of issuing order of work to the Respondent, for some technical reasons have not
issued the contract to the Respondent and 1st Appellant unilaterally issued the order dated 31.12.2010 cancelling the tender on the ground of not
offering the machine by the Respondent to the specifications given in the tender and issued re-tender notification on the same day. Finding that the
act of Appellants in cancelling the tender is arbitrary, the learned single Judge quashed the impugned Proceedings of the 1st Appellant dated
31.12.2010 cancelling the tender and consequential re-tender notification dated 31.12.2010 and directed the Appellants to place purchase order
to the Respondent for supply of 100 numbers of Mini Portable Sprinkler Irrigation System.
Contentions:-Challenging the order of single Judge, Mr. Abdul Saleem, learned counsel for Appellants contended that the piece of machine
demonstrated and the machine sought to be supplied are totally different which necessitated the Appellants to cancel the tender. According to the
Appellants, the contract has not been finalised between the Appellants and the Respondent and the stage was only at the level of issuance of work
order, wherein the Appellants have noticed variation in the supply of machine from that of the machine demonstrated at the time of the bid and the
learned single Judge did not properly appreciate the right of the Appellants to reject the tender. According to the Appellants, they have followed
the procedure as per the norms and there is no deviation on the part of the 1st Appellant to issue a fresh tender notification and while so, the
Respondent cannot compel the Appellants with the inferior quality of machine which does not meet the requirement of portable sprinkler.
Mr. R. Gandhi, learned Senior Counsel for Respondent submitted that cancellation of tender dated 31.12.2010 and consequential re-tender
notification dated 31.12.2010 is arbitrary and unreasonable and in violation of principles of natural justice and doctrine of ""promissory estoppel"".
Learned Senior Counsel contended that Appellants were satisfied with the product and the price and have rightly awarded the contract infavour of
the Respondent. It was further submitted that when the Respondent invested huge amount for purchase of engines and for importing the
accessories based on the contract awarded and executed by the Appellants, the impugned order is nothing with malafide intention to award tender
to some third party and the learned single Judge has rightly issued the direction to the Appellants for purchase of 100 numbers of Mini Portable
Sprinkler Irrigation System from the Respondent.
Discussion:-The Project on introduction of Mini Portable Sprinkler Irrigation System for Coastal Sandy Soil of Tamil Nadu was sanctioned for
implementation at Coastal Saline Research Centre (for short ""CSRC""), Ramanathapuram for the period 2010-2011 and extended till 2011-2012
under National Agricultural Development Programme (for short ""NADP"") Scheme for a budget of Rs. 45.00 lakhs. The project included supply of
pumping system to the identified farmers at 50% subsidy. Respondent''s bid was accepted and by letter dated 09.10.2010, tender bid was
awarded to the Respondent and contract of agreement has been entered into between the 2nd Appellant and the Respondent on 10.11.2010.
Clause 3.1 of General Conditions of Contract stipulates that the goods supplied under the contract shall conform to the standards mentioned in
the Technical Specifications. The dispute between the Appellants and Respondent relates to the cancellation of tender for supply of 100 numbers
of Mini Portable Sprinkler Irrigation System on the ground that the sprinkler did not conform to the specifications prescribed. According to the
Appellants, the bidder demonstrated 1.5 H.P. motor as against 1.8 H.P. motor and that the Mini Portable Sprinkler Irrigation System weighing
more than 34 kilo grams which is too heavy.
Stating that the specifications shown in the label of received machine weighing more than 34 kilo grams which is too heavy and that there is a
delay of two months from the date of approval and calling upon the Respondent to supply Mini Portable Sprinkler Irrigation System as per the
specifications required by the Appellants, Appellants sent a letter dated 14.12.2010 to the Respondent. The said letter (14.12.2010) reads as
follows:-
... I am to inform that the sample piece of sprinkler machine sent by you to this office for demo consists of no accessories such as delivery hose,
suction pipe and iron plate attached sprinkler head which were specified in the tender dt. 14.07.2010 of this office. Also, on noticing the
specifications shown in the label of received machine, it clearly indicates that there were no specifications which were actually prescribed by the
bidder M/s. Green Earth, Chennai in his bid despite the machine weighing more than 34 kg which is too heavy even without the above mentioned
accessories unlike the mini portable sprinkler irrigation system and hence it could not be carried by the farmer without any assistance. It was almost
two months is over from the date of approval of the university to purchase the machine from your concerned. The same was also brought to the
notice of concerned over phone and in person several times regarding supply of the machine as per specifications prescribed in the tender and in
your price bid.
In this regard, he has been explained by this office staff personnel in detail two weeks before in person to make necessary arrangement for demo
prior to the supply of the machine and he has also agreed to send another piece of the machine for demo and for verifying its specifications
required by us. On the other hand we have received neither the machine nor the reply till date which results in undue delay in implementing the
project besides affecting other activities related to the ongoing project. If this situation continues further, no other way except finding out the
alternative, since, the above said machine is one of the key components of the project without which the project could not be continued. Now,
only because of inordinate delay in issuance of the machine, almost all the activities of the project are held up too and the conditions becomes
worst to the core despite the project period is nearing end after which no use of purchasing the machine.
Since the machines were not offered to the specifications given in the tender and in view of the inordinate delay in arranging for supply, inspite of
the notification dated 10.11.2010 and 14.12.2010 respectively, the tender towards supply of 100 numbers of Mini Portable Sprinkler Irrigation
System was cancelled by order dated 31.12.2010 by the 1st Appellant.
As per the tender conditions, Respondent is to supply 100 numbers of Mini Portable Sprinkler Irrigation System which consist of the following
parts:-
a. Sprinkler;
b. Steel plate fitted with an elbow and towing hook with nylon rope and mount the sprinkler;
c. Hose pipe of length 30 meters.
d. Suction pipe and accessories which comprise a valve, and
e. Engine pumpset of 1.8 H.P. And RPM 4200, which starts on petrol and runs on kerosene. It is the case of Respondent that the specifications of
the Sprinkler including its weight has not been specified, the quality, make or brand for hose pipe, suction pipe and engine pumpset have also not
been specified.
Learned single Judge held that pursuant to the satisfaction of technical bid and price bid, the Respondent has been awarded with tender and a
contract was entered into between the parties on 10.11.2010. Learned single Judge further held that after accepting the technical bid and price bid
and at the stage of issuing work order to the Respondent, for some technical reason, Appellants have not issued the contract to the Respondent
and instead they proceeded to issue a show cause notice. Pointing out that power of the Writ Court is confined only to the question of legality or
otherwise and that the Court cannot substitute its own decision in the matters of contract, the learned single Judge quashed the order dated
31.12.2010 on the ground that cancellation of tender is arbitrary and illegal.
On behalf of Appellants, it was contended that Clause 27 of the General Conditions of the Contract contains provision for resolution of
disputes arising between the parties either by negotiation or by referring to the formal mechanisms specified in the special conditions of the
contract.
Clause 27 of General Conditions of Contract (Section-III) reads as under:-
Resolution of Disputes.
27.1 The Purchaser and the supplier shall make every effort to resolve amicably by direct informal negotiation any disagreement or dispute arising
between them under or in connection with the Contract.
27.2 If, after thirty (30) days from the commencement of such informal negotiations, the Purchaser and the Supplier have been unable to resolve
amicably a Contract dispute, either party may require that the dispute be referred for ''resolution to the formal mechanisms specified in the Special
Conditions of Contract. These mechanisms may include, but or not limited to, conciliation mediated by a third Party, adjudication in an agreed
national forum and national arbitration.
Case of Appellants is that when General Conditions of Contract contain provision for resolution of disputes either by negotiation or by other
mechanism, Respondent was not justified in filing the Writ Petition. It was further submitted that Appellants Tamil Nadu Agricultural University are
acting to aid the farming community who are in need of the sprinklers and they have purchased the same by paying money as subsidised by the
Central Government and hence, it is the duty of the Respondent to supply the standard equipments to meet the purpose for which the sprinkler is
intended to be used by the farmers for years to come.
Contention of Appellants is that the factual dispute whether the sprinkler intended to be supplied by the Respondent conforms to the quality
and the specifications specified by the Appellants or whether it does not meet the requirements are all factual disputes and such disputes cannot be
gone into under Article 226 of Constitution of India.
In matters of Government contract, power of the Writ Court is very limited. Court does not have expertise to go into the question of
correctness of administrative decision and the Court cannot substitute its own decision for that of the State Government. According to Appellants
there are serious questions of fact involved, the Court will not normally entertain the Writ Petition.
The Supreme Court in Jagdish Mandal Vs. State of Orissa and Others, , laid down the following test to decide as to whether judicial
interference is necessary in a particular case of contract.
22..... Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the
following questions:
(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone;
OR
Whether the process adopted or decision made is so arbitrary and irrational that the court can say: the decision is such that no responsible
authority acting reasonably and in accordance with relevant law could have reached;
(ii) Whether public interest is affected.
If the answers are in the negative, there should be no interference under Article 226.
We are not inclined to go into the question of law, in view of the duration of the project and escalation of input cost which resulted in closure of
the scheme itself. Earlier, when the Writ Appeal was taken up (17.12.2012), the Respondent undertook to supply 100 numbers of Mini Portable
Sprinkler Irrigation System as per the technical specification mentioned in Clause 3.1 of General Conditions of Contract without any deviation and
at the same price agreed in the contract dated 10.11.2010. Learned counsel for Appellants requested time to get instructions from the Appellants
in this regard. On instruction, learned counsel for Appellants submitted that the project on introduction of Mini Portable Sprinkler Irrigation System
for Coastal Sandy Soil of Tamil Nadu was sanctioned for implementation at CSRC, Ramanathapuram for the period 2010-2011 which was
subsequently extended by the Proceedings No. DR/P3/S2/AO/CSRC/RMD/Admn. Sanction order/2011 dated 14.06.2011 under NADP
Scheme at the cost of Rs. 45.00 lakhs for 2011-2012 and the project included supply of pumping system to the identified farmers at 50% subsidy.
According to the Appellants, the project was sanctioned only for one year period i.e. until March 2012 and the same cannot be extended
further in view of escalation of cost of materials to be supplied to the farmers. Learned counsel for Appellants drew our attention to the tabular
column prepared by the University showing escalation of price for cost of inputs to 2 to 2= times. Hence, the Appellants cancelled the proposal for
purchase of 100 numbers of Mini Portable Sprinkler Irrigation System with accessories under two cover system from the Respondent. It was also
informed that based on the special package for Cauvery Delta Districts announced by the Hon''ble Chief Minister for Tamil Nadu, the Government
have accorded permission to invite short tenders for procurement of ""Mini Portable Sprinklers and Multi purpose Boom Sprayers"" which are
different from the machines under dispute.
The judicial review is essentially directed only against the decision making process. The extraordinary jurisdiction cannot be extended to test
the rationale behind the prescription of time limit in a particular project. The project was live when the writ petition was heard by the learned Single
Judge. The project which was originally launched for a period of one year was subsequently extended by another year, expiring by 31 March
2013. The respondent would be justified only in case the appellant contemplated to issue a fresh tender notification for the very same project.
Since the project itself has been abandoned, there is no question of giving a direction to the appellant to purchase the sprinkler from the
respondent.
In view of the closure of the project and introduction of ""Mini Portable Sprinkler Irrigation System and Multi purpose Boom Sprayers"",
Appellants cannot be compelled to purchase Mini Portable Sprinklers Irrigation System from the Respondent. Similarly on account of the closure
of the project, the order of single Judge cannot be sustained. However, we make it clear that the dispute pertaining to Mini Portable Sprinkler shall
not preclude the Respondent to participate in the fresh tender if any, to be floated by the Appellant-University in future.
On behalf of Respondent, it was submitted that Respondent has invested huge amount for purchasing the engines and for importing the
accessories from Hong Kong based on the contract. As pointed out earlier, Clause 27 of General Conditions of Contract contain mechanism for
resolution of disputes. If the Respondent has suffered damages, it is for the Respondent to work out his remedy in accordance with law. We make
it clear that this judgment would not stand in the way of the Respondent to take appropriate action to claim damages, if so advised. In the result,
the order of single Judge in W.P. No. 967 of 2011 (29.03.2011) is set aside and the Writ Appeal is allowed. Consequently, connected M.P. is
closed. No costs.