JUDGMENT
N.K. Sodhi, J.
1. This order will dispose of two Civil Writ Petition No. 9560 and 9561 of 2002 which were heard together and in which identical questions of law and fact arise.
By a notice published in the Punjab Kesri, Ambala on March 25, 2002, the Food Corporation of India (for short the Corporation) through its Regional Office, Chandigarh invited sealed tenders from financially sound parties who had the capacity to undertake the work of handling and transport of food stocks from different depots of the Corporation to Delhi and Himachal Pradesh. The handling and transport contract (hereinafter called the contract) was to be given for a period of two years in regard to different depots of the Corporation referred to in the notice. Parties were required to submit their tenders by 3.00 P.M. on 8.4.2002 along with the security amount referred to therein and those were to be opened at 3.30 P.M. on the same day in the presence of the parties if they wished to be present. It may be mentioned that the Corporation has fixed its schedule of rates for tenders and the tenderer normally submit their tenders on percentage basis i.e. below or above the schedule of rates fixed by the Corporation. In response to the notice inviting tenders the following six parties submitted their tenders for the Mulana depot quoting rates as mentioned against their names:-
1)
M/s Kulbir Singh and
Company.
6% below the scheduled
rates.
2)
M/s Shiv Shakti Transport Company
Scheduled rates.
3)
M/s Guru Nanak Transport
Company
Scheduled rates.
4)
M/s Jagjivan Pal and Company
9% above the scheduled
rates.
5)
M/s Kurukshetra Co-operative Ekta Society
25% above the scheduled
rates.
6)
M/s Virk Transport
Company
48% above the scheduled
rates.
It will be noticed that the petitioner submitted its tender for this depot at 6% below the scheduled rates whereas M/s Guru Nanak Transport Company which is the 3rd respondent in CWP 9560 of 2002, submitted its tender on the scheduled rates. For the depot at Barara, as many as 12 parties including the petitioner submitted their tenders which are as under: –
1)
M/s Guru Nanak Transport
Company.
37% below the scheduled
rates.
2)
M/s Kulbir Singh and Company.
36% below the scheduledrates.
3)
M/s Shiv Shakti Transport Company
27% below the scheduled
rates.
4)
M/s Virk Transport Company.
23% below the scheduled
rates.
5)
Jaswinder Singh
16% below the scheduled
rates.
6)
SV Transport Company
12% below the Scheduled
rates.
7)
Kam ail Singh
1% above the Scheduled
rates.
8)
Kulsher Singh
5% above the Scheduled
rates.
9)
Ram Kumar
8% above the Scheduled
rates.
10)
M/s Kurukshetra Co-operative Ekta Society.
11% above the scheduled
rates.
11)
M/s Jagjivan Pal and
Company.
26% above the Scheduled
rates.
12)
Mohabbat Pal and
Company.
42% above the Scheduled
rates.
The rate quoted by the petitioner for the depot at Barara was 36% below the scheduled rates whereas SV Transport Company, respondent No. 3 in CWP 9561 of 2002, quoted the rate at 12% below the scheduled rates.
3. Both the tenders submitted by the petitioner have been rejected for reasons which we will discuss hereinafter and the contract for the depot at Mulana has been granted to Guru Nanak Transport Company whereas the contract for the depot at Barara has been granted to M/s SV Transport Company and both these contractors are respondent 3 -one in CWP 9560 of 2002 and the other in CWP 9561 of 2002. Both these respondents are also newly constituted partnership firms.
4. The primary grievance of the petitioner is that even though the rates quoted by it for both the depots were lower than the ones quoted by respondents No. 3 in the two writ petitions, yet the contract has been given to the respondent-contractors which action of the Corporation, according to the petitioner, is arbitrary and against its own financial interests. Another grievance of the petitioner is that it is only respondents No. 3 in the two writ petitions who were called for further negotiations and that no tenderer including the petitioner was given such an opportunity and this, too, according to the petitioner, is violative of their right to equality and principles of natural justice. It is alleged that Jagjivan Pal Singh Virk and Suresh Sharma are two contractors who have a monopoly and that they have been taking the contracts for Mulana and Barara depots for the last 18 years continuously even if their tenders are higher. According to the petitioner, they have their pockets of influence and that they managed with the Regional office of the Corporation, It is further alleged that Jagjivan Pal Singh Virk or Suresh Sharma either directly or indirectly are partners in one firm or the other and their modus operandi is to file two or three tenders in the name of different partnership firms and then get the tender of their competitors rejected on one pretext or the other. It is further alleged that Jagjivan Pal Singh Virk and Suresh Sharma are major partners in SV Transport Company which has been allotted the contract for the depot at Barara.
5. In response to the notice of motion, the respondents have filed their reply controverting the allegations made by the petitioner. The stand taken by the Corporation is that respondents No. 3 in both the writ petition were the lowest valid tenderer and, therefore, according to the guidelines/instructions issued by the Corporation and the Central Vigilance Commissioner, New Delhi, they alone were called for negotiations for the award of the contract in regard to the depots and that the contract has been awarded to them at the most competitive rates. A short reply has also been filed on behalf of respondents No. 3 in both the writ petitions in which it is averred that these respondents are financially sound and viable contractors who can undertake the work allotted by the Corporation and that their partners have an experience of 10 to 12 years in the line and they have been handling this work for the Corporation for the last more than a decade.
6. The two questions which arise for our consideration are whether the tender submitted by the petitioner for the two depots was validly rejected and whether the Corporation was justified in awarding the contract to the two contractors who are respondents No. 3 in the two writ petition.
7. Let us first examine whether the tender submitted by the petitioner was validly rejected or not. Petitioner la a partnership firm and, as already observed, a newly constituted one with three partners having shares in the firm as under:-
1) Kulbir Singh :50%
2) Kanwarjit Singh : 40%
3) Satinder Pal Singh : 10%
Kulbir Singh and Kanwarjit Singh hold a general power of attorney to act on behalf of the firm jointly and individually, Tenders were required to be submitted in the prescribed tender forms which were to, be purchased from the Corporation. A perusal of one of the Model Tender Forms which was placed before us at the time of argument, would make it clear that the persons signing the tender have to state in what capacity they are signing the tender i.e. whether as sole proprietor of a firm or as a Secretary/Director etc. of a limited company. In the case of partnership firms, the names of all the partners are required to be disclosed and the tender is required to be signed by all the partners or their duly constituted attorney having authority to bind all the partners in the matters pertaining to the contract. The original or an attested copy of the partnership deed is required to be furnished along with the tender. Appendix-II to the tender form has a column pertaining to experience of working. This clause reads as under: –
“IV. Experience of working:- Full particulars should be given if the tenderer has worked as a labour and transport contractor of the Central Government, State Government or Public. Private Companies. The period for which the work has been done should be clearly indicated. The certificates to support the statements may be attached. The tenderer should indicate clearly whether they are working as contractors on behalf of any Departments of Central or State Governments or Railways etc.” While submitting the tender form, Kulbir Singh signed the same on behalf of the petitioner firm. He had also signed Appendix-II and with reference to Clause IV regarding past experience of working, he only mentioned the past working experience of Satinder Pal Singh with the Corporation. He did not mention that he had also worked with the Corporation in the past and this material fact had been withheld. On receipt of the tenders, the Corporation made its inquiries regarding each tenderer including the petitioner and on a comparative consideration of the merits and, demerits of each tenderer it found in regard to the petitioner that it was the lowest tenderer from amongst all those who applied for the contract and after noticing the properties owned by the three partners of the petitioner firm, the Corporation found that it was financially sound as regards the business competency, the following observations were made which are finally accepted by the competent authority :-
“As regards to business competency Sh. Kulbir Singh has stray working experience as Transport Contractor in Seeds Corporation and as MLC with FCI for which no documentary proof has been made available. The third partner Shri Satinder Pal Singh has worked as HTC Ladwa and Radaur and both the District Manager Karnal & Kurukshetra have reported its performance not up to markpoor and conduct also not cordial.”
The original records were produced before us at the time of the arguments and We have perused the same. Since the past performance of Satinder Pal Singh, one of the partners of the petitioner firm, had been poor and the conduct not cordial, the Corporation decided to reject its tender. Since the tender form did not state about the past experience of Kulbir Singh, no comments were made regarding his past performance with the Corporation because it appears that the Corporation could not find out whether Kulbir Singh had worked with it as a handling and transport contractor in the past. However, at the time of arguments, the learned counsel appearing for the Corporation, on the basis of the original record produced before us, strenuously urged that there was yet another reason for which the petitioner firm & ineligible though that reason was not considered by the Corporation at the time of rejecting the tender of the petitioner firm because Kulbir Singh while submitting the tender had withheld the material information regarding his past working as a handling and transport contractor for the Corporation during the period from 1992 to 1994, Normally, when the Corporation passes an order and records the reasons, the court is required to examine those very reasons to see whether the order part be upheld or not but in the peculiar circumstances of this case, we are inclined to entertain the additional ground which has now been urged before us as already mentioned above, Appendix-II to the tender form requires a tenderer to furnish complete details regarding his past working/experience with any State undertaking. In terms of that clause, Kulbir Singh who filed the tender on behalf of the petitioner-firm was required to submit the details of his past working with the Corporation. If he had furnished those details, the Corporation could have verified as to whether his working in the past had been successful or not. Since he withheld those details and it did not come to the notice of the Corporation that Kulbir Singh had worked for it in the past as a handling and transport contractor, it made no comments on his working and rejected the tender form only on the basis of the past experience/working of Satinder Pal Singh – one of the partners. At the time of arguments, the Corporation had come to know that Kulbir Singh as a major partner in a firm known as Shri Guru Nanak Motor Company which had undertaken the handling and transport contract for the Corporation for the period 1992 to 1994 and that its performance was not only poor but it has been recommended that a sum of Rs. 3,75,000/- be recovered from it by way of penalty for causing loss to the Corporation and that the security deposited by that firm be forfeited. Kulbir Singh who was a major partner of that firm is now a major partner in the petitioner firm. It is, thus, clear that not only the performance of Satinder Pal Singh in the past was very poor but even the performance of Kulbir Singh who is a major partner in the petitioner firm was worse and had the fact of his past working been mentioned in the tender form, the Corporation would have made inquiries and rejected the tender on this ground also. Since the tender of the petitioner firm has been rejected on the basis of the past experience of its partners, we are clearly of the view that no fault can be found with the action of the Corporation in this regard. It may be mentioned that while considering the past performance of the partnership firms, it is a matter of practice with the Corporation to examine the working of all the partners constituting the firms and this procedure has been uniformly adopted in regard to all of the tenderer. Since the experience of the Corporation with the partners of the petitioners firm in the past had not been good and the tender has been rejected on that ground, it is not really of any consequence as to what was the rate quoted by the petitioner in its tender and even if it was the lowest, it had to be rejected, It is pertinent to mention that the Corporation deals in the storage and transportation of food grains and it is, therefore, of utmost importance to it that the handling and transport contractors arc efficient persons/firms who can effectively carry out the contracts. Sometimes when a handling contractor is unable to execute the contract and leaves the same midway it causes all sorts of problems for the Corporation because the work has to be completed at the cost and risk of the contractor who left the same. This quite often causes huge loss to the Corporation and also affects adversely the transportation of food stocks in the country. The Corporation is, therefore, justified in looking to the past experience of the tenderer in the matter of handling and transporting food grains. It is for this reasons that Appendix-II to the tender form requires each tenderer to give full particulars/details of his/its past performance with State Undertakings.
8. In the result, it has to be held that the tender submitted by the petitioner was validly rejected by the Corporation on account of poor performance of two of its partners.
9. We may now deal with the other contention raised by the learned senior counsel appearing for the petitioner. Since the petitioner was not a valid tenderer for the reasons which we have already stated above, it was open to the Corporation to deal with the other tenderer. In regard to the depot at Mulana, there were six renderers in all including the petitioner, If the petitioner is excluded, which it has to be, then five tenderer were left to be considered for the grant of the contract. M/s Shiv Shakti Transport company and respondent No. 3 were the two tenderers who quoted the same rates, namely, the rates as per the schedule which were the lowest, as compared to the other tenderer. The tender of Shiv Shakti Transport Company has been rejected on account of the poor past experience of its partners. This tenderer has not challenged the rejection of its tender and has not filed a writ petition to challenge the grant of contract to respondent No. 3. With the exclusion of Shiv Shakti Transport Company, respondent No. 3 was the only lowest valid tenderer left in the field and, therefore, in terms of the instructions issued by the Corporation and the directions issued by the Central Vigilance Commissioner, this respondent alone was called for negotiations. In Clause 25.21 of the “Storage and Contract Manual” issued by the Corporation, the following guidelines are prescribed for the conduct of negotiations: –
1. Ordinarily quotations received as a result of open or limited tender enquiry should be accepted at competitive rates.
2. In case there is obvious indication of any ring formation amongst the tenderers or where the lowest rate is unreasonably high as compared to rates prevailing in or near the area of operations action may be taken to re-invite tenders,
3. In case the time left is short and does not permit re-invitation of tenders, negotiations may be held only with the lowest valid tenderer.
4. Negotiations should not be resorted to or entered as a matter of routine but should be undertaken only in exceptional cases with the valid lowest tenderer. If there is a general impression that each tender enquiry will be followed by negotiations the rates received in tenders would be high and it is in the best interest of the Corporation to remove this mis-apprehension by deciding on the basis of quotations received in the open tender, otherwise the sanctity of the tender is lost. It would be better to reject tenders and re-invite them, if there are definite reasons to believe that the quotations in response to the tender are abnormally high.”
The directions issued by the Chief Vigilance Commissioner under Section 8 of the CVC Ordinance, 1998 are also reproduced hereunder:-
“Tenders are generally a major source of corruption. In order to avoid corruption, a more transparent and collective system must be introduced. As tender negotiations are the main source of corruption, post tender negotiations are banned with immediate effect except in the case of negotiations with L-T (i.e. Lowest tenderer).”
As already noticed above, respondent No. 3 was the lowest valid tenderer for the depot at Mulana and, therefore, the Corporation was justified in calling this respondent for further negotiations. It cannot be said that by not calling the petitioner and other tenderers the Corporation had violated the principles of natural justice or their right to equality. The validity of the instructions and directions issued by the Corporation and the Central Vigilance Commissioner have not been challenged before us. After calling respondent No. 3 for negotiations the tender submitted by it was accepted by the competent authority for the Mulana depot on the scheduled rates.
10. Now coming to the contract that has been awarded for the depot at Barara in District Ambala. It has been allotted to SV Transport Company (respondent No. 3) at the rate of 15% below schedule of rates in preference to the other tenderers. In response to the notice inviting tenders there were in all 12 tenders received including the tenders from the petitioner and respondent No. 3 the details of which have been mentioned in the earlier part of the order. We have already held that the tender of the petitioner had been validly rejected. The tender of Guru Nanak Transport Company was the lowest in terms of rates quoted therein. The tenderers from serial No. 7 to 12 have quoted rates above the schedule of rates and since they were higher as compared to the rates quoted by others, these were rightly rejected by the Corporation. This leaves us with five tenders at serial Nos. 1 and 3 to 6. From amongst these tenderers the rates quoted by SV Transport Company-respondent No. 3 were the highest and those of Guru Nanak Transport Company were the lowest. M/s Shiv Shakti Transport Company, M/s Virk Transport Company and Jaswinder Singh are the other three tenderers who quoted their rates at 27%, 23% and 16% below the schedule of rates (BSOR). The tenders of these applicants were considered in detail and it was found that the partners of Shiv Shakti Transport Company had a background which did not inspire confidence in the Corporation to allot the contract to this firm. Some reasons have been given to exclude this tenderer and since this tenderer has not challenged the rejection of its tender, we need not examine the matter further and for the purpose of this case we treat the rejection as valid. The tender submitted by Virk Transport Company was also considered along with the details of its partners and the properties held by them. It was found that the partners were financially sound and had working experience with the Corporation as handling and transport contractors at various centres and as such the firm was capable to undertake the contract. Similarly, the tender submitted by Jaswinder and Company which is the sole proprietorship concern of Jaswinder Singh, was considered and it was found that he was financially sound and had worked for the Corporation at Naraingarh and was, therefore, competent to handle the work. The case of Guru Nanak Transport Company was considered and it was found that the firm was financially sound and keeping in view the past satisfactory performance of its partners it was competent to undertake the contract. It is really surprising that having found that Guru Nanak Transport Company, Virk Transport Company and Jaswinder & Company were all financially sound and capable of handling the contract and even though the rates quoted by them were much lower than the rates quoted by SV Transport Company (respondent No. 3), the Corporation chose to call only the latter for negotiations and not the other three tenderers and allotted the contract to this respondent by reducing the rate to 15% BSOR though it had initially quoted 12% BSOR. This action of the Corporation cannot but be termed as arbitrary. It has suffered a huge financial loss in allotting the contract to respondent No. 3 whose higher rates have been accepted in preference to the lower rates quoted by other valid tenderers. That the action of the Corporation in allotting the contract to respondent No. 3 is arbitrary can also be seen from the fact that the contract to this respondent was allotted at the rate of 15% BSOR whereas Jaswinder Singh had quoted the rate at 16% BSOR i.e. 1% lower than the rate on which the contract has been given to respondent No. 3. Jaswinder Singh has been found to be financially sound and capable of undertaking the contract. Why then he was not called for negotiations and allotment of the contract. No explanation whatsoever has been furnished by the Corporation in this regard and there is nothing on the record to show what weighed with the Corporation in not considering his tender and in giving preference to respondent No. 3. Similarly, Virk Transport Company which had quoted the at 23% BSOR i.e. much lower than the rate quoted by respondent No. 3, was also not considered for the allotment of the contract and there is no explanation for this on the record of the Corporation which was produced before us. Guru Nanak Transport Company which was considered a valid tenderer and had been allotted the tender for the depot at Mulana was not considered for the allotment of the contract at Barara even though the rates quoted by it were the lowest. The only explanation furnished is that the rate quoted was too low and that it would not be viable for any contractor to work at those rates. This is hardly an explanation. If a financially sound contractor having worked successfully for the Corporation in the past is willing to accept the tender at the rate of 37% BSOR, we fail to understand why the Corporation should not offer the contract to such a tenderer. Be that as it may, even if the Corporation had any doubt regarding the viability of the contract on account of very low rates being quoted in the tender, the Corporation should have at least sent for the tenderer for negotiations to satisfy itself whether the firm will be able to execute the contract at the rates quoted by it. No such attempt was made and all this raises doubts about the impartiality of the Corporation in awarding the contract. Not only this, every successful tenderer was required to submit security and if the lowest tender had been accepted the interest of the Corporation would have been protected because security would have been deposited by the tenderer. We are, therefore, satisfied that the action of the Corporation in awarding the contract to respondent No. 3 and ignoring the claim of the other valid tenderers whose rates were far lower than the one on which the contract has been given, is not only arbitrary but also smacks of extraneous considerations because we cannot appreciate the corporation allotting the contract at a higher rate when lower rates were offered to it by persons capable of undertaking and handling the contract. It is true that M/s Virk Transport Company, Jaswinder and M/s Guru Nanak Transport Company have not approached this court to challenge the award of the contract to respondent No. 3 but that makes no difference. The entire record as produced by the Corporation has been perused by us minutely and it is a well settled principle of law that if the court in the exercise of its jurisdiction under Article 226 of the Constitution is satisfied from the record that a particular action of the respondents is arbitrary, illegal and unfair and that in such circumstances no reasonable person on proper application of mind would take such a decision, it has ample powers to set aside the same even if the persons affected thereby may not approach the court.
11. For the reasons recorded above, the answer to the two questions posed in the earlier part of the judgment is that the tenders submitted by the petitioner for the two depots at Mulana and Barara were validly rejected by the Corporation and that the contract was validly allotted to Guru Nanak Transport Company for the depot at Mulana but the contract for the depot at Barara has been allotted to SV Transport Company arbitrarily. Resultantly, Civil Writ Petition No. 9560 of 2002 is dismissed whereas Civil Writ Petition No. 9561 of 2002 is partly allowed and the contract awarded to respondent No. 3 quashed leaving the parties to bear their own costs. The Corporation is directed to invite fresh tenders for the depot at Barara and allot the same in accordance with law, The petitioner has deposited a sum of Rs. 50,000/- towards costs in each of the two writ petitions. It will be open to it to withdraw the same.
Sd/- Virinder Singh, J.