{"id":118143,"date":"2010-04-16T00:00:00","date_gmt":"2010-04-15T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/biodigital-p-limited-vs-state-of-kerala-on-16-april-2010-2"},"modified":"2015-04-04T06:08:55","modified_gmt":"2015-04-04T00:38:55","slug":"biodigital-p-limited-vs-state-of-kerala-on-16-april-2010-2","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/biodigital-p-limited-vs-state-of-kerala-on-16-april-2010-2","title":{"rendered":"Biodigital (P) Limited vs State Of Kerala on 16 April, 2010"},"content":{"rendered":"
Kerala High Court<\/div>\n
Biodigital (P) Limited vs State Of Kerala on 16 April, 2010<\/div>\n
       \n\n  \n\n  \n\n \n \n  IN THE HIGH COURT OF KERALA AT ERNAKULAM\n\nWP(C).No. 11190 of 2010(W)\n\n\n1. BIODIGITAL (P) LIMITED, R-731,\n                      ...  Petitioner\n\n                        Vs\n\n\n\n1. STATE OF KERALA, REPRESENTED BY THE\n                       ...       Respondent\n\n2. THE DIRECTOR, DIRECTORATE OF ANIMAL\n\n3. HINDUSTAN LATES LIFE CARE LIMITED,\n\n                For Petitioner  :DR.K.P.SATHEESAN\n\n                For Respondent  :GOVERNMENT PLEADER\n\nThe Hon'ble MR. Justice T.R.RAMACHANDRAN NAIR\n\n Dated :16\/04\/2010\n\n O R D E R\n                      T.R. Ramachandran Nair, J.\n                  - - - - - - - - - - - - - - - - - - - - - - - -\n                     W.P.(C) No.11190 of 2010-W\n                  - - - - -- - - - - - - - - - - - - - - - - - - - -\n               Dated this the 16th day of April, 2010.\n\n                                JUDGMENT\n<\/pre>\n
      The petitioner, a tenderer, is aggrieved by Ext.P9 order issued by the<\/p>\n
Government by which sanction has been granted to the second respondent<\/p>\n
to accept the tender submitted by the third respondent.<\/p>\n
      2. The petitioner is a private limited company.                The second<\/p>\n
respondent invited tender for the supply, installation and commissioning of<\/p>\n
Freeze Dryer (cGMP\/FDA COMPLAINT) for the year 2009-2010 under<\/p>\n
“Two Cover System”.      The first cover should contain the technical bid and<\/p>\n
the second cover should contain the financial bid.\n<\/p>\n
      3. There were three tenderers and one of the tenderers was not<\/p>\n
qualified.  Therefore, the      petitioner and the third respondent        were<\/p>\n
remaining in the field. When the covers were opened, it was noted that the<\/p>\n
petitioner has quoted lowest rate than the third respondent. The petitioner<\/p>\n
had submitted three offers for the equipment, viz. Rs.3,09,08,451\/-,<\/p>\n
Rs.2,61,83,592\/- and Rs.1,93,83,912\/-.\n<\/p>\n
      4. The second respondent initiated the process of negotiation and the<\/p>\n
petitioner was accordingly called, which is evident from Ext.P5<\/p>\n
wpc11190 \/2010                         2<\/span><\/p>\n
communication. After participation in the price negotiation meeting, the<\/p>\n
petitioner gave a reply to the second respondent as per Ext.P6. By Ext.P7<\/p>\n
communication, the petitioner confirmed the special negotiated price to the<\/p>\n
second respondent. By Ext.P8, the petitioner informed the time limit within<\/p>\n
which the offered machineries will be delivered and also other conditions<\/p>\n
attached to the said delivery. It is averred in the writ petition that thereafter<\/p>\n
the second respondent informed the petitioner that the final order could be<\/p>\n
issued only after getting concurrence from the Government.<\/p>\n
      5. On coming to know about the steps taken to award the contract to<\/p>\n
the third respondent, the petitioner filed W.P.(C) No.9929\/2010 before this<\/p>\n
Court and the same was withdrawn with liberty to challenge the order<\/p>\n
passed by the Government awarding the contract to the third respondent,<\/p>\n
which was produced by the respondents therein.\n<\/p>\n
      6. Mainly, it is contended that the non acceptance of the tender<\/p>\n
submitted by the petitioner is violative of the assurance given by the second<\/p>\n
respondent that confirmation letter will be given to the petitioner after<\/p>\n
getting concurrence from the Government. The proceedings Ext.P9 shows<\/p>\n
that the third respondent, after negotiation, offered a lower rate than the<\/p>\n
petitioner and the said negotiation was done behind the back of the<\/p>\n
petitioner. It is pointed out that the petitioner ought to have been given a<\/p>\n
wpc11190 \/2010                         3<\/span><\/p>\n
further opportunity for negotiation. It is also pointed out that the acceptance<\/p>\n
of the tender submitted by the third respondent is also on the ground that it<\/p>\n
is a public limited company and no special preference has been provided in<\/p>\n
the tender notification, to the said companies.\n<\/p>\n
       7.  The second respondent has filed a statement in the matter<\/p>\n
explaining various aspects. It is mainly contended that the petitioner was<\/p>\n
the lowest tenderer and negotiations were initiated with the petitioner.     In<\/p>\n
the negotiation which was held on 16.12.2009, the petitioner informed that<\/p>\n
negotiated rates will be informed      at the earliest.  It is stated that even<\/p>\n
after six days, as there was no information, a latter by fax was issued to the<\/p>\n
petitioner on 23.12.2009 and the petitioner furnished a reply on 26.12.2009<\/p>\n
agreeing the various conditions        including delivery period, warranty,<\/p>\n
payment of AMC charges, etc. But therein also, no negotiated rate was<\/p>\n
furnished. Only on 2.1.2010 vide letter dated 30.12.2009 the negotiated<\/p>\n
rate was received in the Department and the amount thus informed is<\/p>\n
Rs.2,33,65,990\/-.\n<\/p>\n
       8. It is also pointed out that no further assurance was given to the<\/p>\n
petitioner and it was only informed that various procedures are there to be<\/p>\n
completed.     It is   pointed out that in the negotiation with the third<\/p>\n
respondent, they have agreed to reduce the rates considerably to<\/p>\n
wpc11190 \/2010                         4<\/span><\/p>\n
Rs.2,27,00,000\/-, i.e. Rs.5.6 lakhs lesser than the negotiated rate of the<\/p>\n
petitioner. The third respondent is a Governmental agency also. Various<\/p>\n
details were examined while accepting the offer of the third respondent.<\/p>\n
Evidently, both the tenderers, viz. the petitioner and the third respondent are<\/p>\n
suppliers and not manufacturers.      Various     advantages, if the work is<\/p>\n
allotted to the third respondent, were considered. The stand taken by the<\/p>\n
second respondent is that orders have already been placed for the supply for<\/p>\n
the materials.\n<\/p>\n
       9. Heard learned counsel for the petitioner, Govt. Pleader and learned<\/p>\n
counsel for the third respondent.\n<\/p>\n
       10.    Learned counsel for the petitioner submitted that no         fair<\/p>\n
procedures have been adopted by the second respondent in awarding the<\/p>\n
contract to the third respondent. It is submitted that the petitioner was the<\/p>\n
lowest tenderer and in the negotiation also the petitioner had come down<\/p>\n
with respect to the amount in question and the negotiation with the third<\/p>\n
respondent was conducted behind the back of the petitioner.            It was<\/p>\n
vehemently argued that after the third respondent’s rate was offered, there<\/p>\n
should have been a further negotiation with the petitioner and an<\/p>\n
opportunity ought to have been allowed to the petitioner in the matter. It is<\/p>\n
submitted that the non furnishing of the opportunity vitiates the entire<\/p>\n
wpc11190 \/2010                        5<\/span><\/p>\n
procedure. It is further pointed out that a preference to a Governmental<\/p>\n
agency, being not part of the tender conditions, the same cannot be a<\/p>\n
ground for acceptance of the tender of the third respondent and the award<\/p>\n
of contract to them. The petitioner relied upon various decisions of the<\/p>\n
Apex Court and this Court, viz. Rasbihari Pada etc. v. State of Orissa<\/p>\n
(AIR 1969 SC 1081), Shri Harminder Singh Arora v. Union of India<\/p>\n
and others (AIR<\/a> 1986 SC 1527), Union of India and others v. Dinesh<\/p>\n
Engineering<\/a> corporation and another {(2001) 8 SCC 491), Asian Tech<\/p>\n
Ltd. v. State of Kerala ( 2001 (3) KLT 357) and Den & Co. v. Mathai<\/p>\n
(2006 (3) KLT SN 43, Case No.61).\n<\/p>\n
      11. True that the petitioner was the lowest tenderer and there were<\/p>\n
only two valid tenderers also. Evidently, a negotiation was held with the<\/p>\n
petitioner on 1.12.2009.     Exts.P7 and P8 are letters submitted by the<\/p>\n
petitioner pursuant to the negotiation thus held. Various aspects have been<\/p>\n
pointed out therein. The question is whether merely because the petitioner<\/p>\n
was the lowest tenderer, any right is conferred on the petitioner to contend<\/p>\n
that the award of work ought to have been given to them. Plainly, such a<\/p>\n
contention cannot be accepted as there is no procedure as such, that the<\/p>\n
lowest tenderer should be awarded the contract as such. What is pointed out<\/p>\n
wpc11190 \/2010                        6<\/span><\/p>\n
by Shri K.P. Satheesan, the learned counsel for the petitioner is that the<\/p>\n
negotiation with the other tenderer, viz. the third respondent was held<\/p>\n
behind the back of the petitioner and the authorities never came back to the<\/p>\n
petitioner to confirm whether the petitioner is prepared to put up any new<\/p>\n
offer.\n<\/p>\n
      12. Evidently, the offer now made by the third respondent, which<\/p>\n
was accepted, is lesser than that of the petitioner. What is involved is a<\/p>\n
commercial transaction. It is up to the second respondent to decide, as to<\/p>\n
which tender will suit their commercial and financial interest.<\/p>\n
      13. In such cases, it is well settled that there should be a fair<\/p>\n
procedure to various tenderers. The question is whether merely because the<\/p>\n
second respondent did not again negotiate with the petitioner and a non<\/p>\n
communication of the offer made by the third respondent, will have an<\/p>\n
impact on the fair procedure at all?\n<\/p>\n
      14. The principles in this regard are well known from various<\/p>\n
decisions of the Apex Court. In Tata Cellular v. Union of India<\/a> ( AIR<\/p>\n
1996 SC 1), their Lordships laid down the various principles with regard to<\/p>\n
the same. After referring to various decisions of the Apex Court it was held<\/p>\n
thus in para 85:\n<\/p>\n
       “The right to refuse the lowest or any other tender is always available<\/p>\n
wpc11190 \/2010                          7<\/span><\/p>\n
        to the Government. But, the principles laid down in Article 14 of the<\/p>\n
        Constitution have to be kept in view while accepting or refusing a<\/p>\n
        tender. There can be no question of infringement of Article 14, if the<\/p>\n
        Government tries to get the best person or the best quotation. The<\/p>\n
        right to choose cannot be considered to be an arbitrary power. Of<\/p>\n
        course, if the said power is exercised for any collateral purpose the<\/p>\n
        exercise of that power will be struck down.”\n<\/p><\/blockquote>\n
It is therefore clear that as far as the award of contracts are concerned, this<\/p>\n
Court cannot sit in appeal over the decision and the judicial review is only<\/p>\n
confined to the decision making process. In fact, in Asian Techs Ltd.’s<\/p>\n
case (2001 (3) KLT 357), the Division Bench, after relying upon the above<\/p>\n
judgment and other judgments of the Apex Court, held that “for the only<\/p>\n
reason that the financial offer made by the petitioner happened to be the<\/p>\n
lowest, it cannot be said that the work should have been awarded to the<\/p>\n
petitioner.”\n<\/p>\n
       15. Coming to the decisions relied upon by the learned counsel for<\/p>\n
the petitioner, the first is the decision of the Apex Court in Rasbihari<\/p>\n
Panda’s case (AIR 1969 SC 1081). Therein, the question considered was<\/p>\n
different.   While inviting offers for advance purchase, the Government<\/p>\n
limited it by calling offers only from purchasers during previous year, who<\/p>\n
had carried out their obligation to the satisfaction of Government in<\/p>\n
wpc11190 \/2010                        8<\/span><\/p>\n
preference to open competition. This was held to be in violation of Articles<\/p>\n
14 and 19 of the Constitution of India. In the subsequent decision in Shri<\/p>\n
Harminder Singh Arora’s case (AIR 1986 SC 1527), the tenders were<\/p>\n
invited for supply of      fresh buffalo and cow milk and the appellant<\/p>\n
responded to the same.       The appellant’s tender was the lowest.      The<\/p>\n
Government Milk Scheme also submitted tender for pasteurised milk which<\/p>\n
was accepted. It was held that the same is illegal. It was also held that the<\/p>\n
tenders were to be adjudged on their own intrinsic merits in accordance with<\/p>\n
the terms and conditions of the tender notice.      Herein, the situation is<\/p>\n
different.\n<\/p>\n
      16. In    Dinesh Engineering Corporation’s case {(2001) 8 SCC<\/p>\n
491},   a policy decision to award      contract to a particular party    till<\/p>\n
availability of alternate sources, was under challenge. It was held that the<\/p>\n
policy decision is taken without considering the relevant facts.<\/p>\n
      17. The circumstances wherein      the Apex Court considered various<\/p>\n
aspects in the above cases are different from those that have emerged in the<\/p>\n
present case. Herein, the only question is whether after the negotiation with<\/p>\n
the third respondent, there was any obligation to come to the petitioner<\/p>\n
again.\n<\/p>\n
wpc11190 \/2010                          9<\/span><\/p>\n
      18. More or less a similar issue was considered by the Apex Court<\/p>\n
in Air India Ltd. v. Cochin International Airport Ltd.<\/a> {(2000) 2 SCC<\/p>\n
617}. A similar contention was raised therein, in which case also the offer<\/p>\n
made by the Air India Ltd. was considered, as it is a National agency. The<\/p>\n
writ petitioner’s offer was initially recommended for award of work and in<\/p>\n
later deliberations it was not accepted which was under challenge in this<\/p>\n
writ petition. The writ petition was dismissed, but the Division Bench<\/p>\n
reversed the same and it was also held that the award of contract to the Air<\/p>\n
India Ltd. is arbitrary, illegal and oppose to the principles of natural justice.<\/p>\n
The Apex Court laid down general principles regarding the award of<\/p>\n
contract in the following words in para 7:\n<\/p>\n
       “The award of a contract, whether it is by a private party or by a<\/p>\n
       public body or the State, is essentially a commercial transaction. In<\/p>\n
       arriving at a commercial decision considerations which are<\/p>\n
       paramount are commercial considerations. The State can choose its<\/p>\n
       own method to arrive at a decision. It can fix its own terms of<\/p>\n
       invitation to tender and that is not open to judicial scrutiny. It can<\/p>\n
       enter into negotiations before finally deciding to accept tone of the<\/p>\n
       offers made to it. Price need not always be the sole criteria for<\/p>\n
       awarding a contract. It is free to grant any relaxation, for bona fide<\/p>\n
       reasons, if the tender conditions permit such a relaxation. It may not<\/p>\n
       accept the offer even though it happens to be the highest or the<\/p>\n
wpc11190 \/2010                        10<\/span><\/p>\n
       lowest.    But the State, its corporations, instrumentalities and<\/p>\n
       agencies are bound to adhere to the norms, standards and procedures<\/p>\n
       laid down by them and cannot depart from them arbitrarily. Though<\/p>\n
       that decision is not amenable to judicial review, the court can<\/p>\n
       examine the decision-making process and interfere if it is found<\/p>\n
       vitiated by mala fides, unreasonableness and arbitrariness.        The<\/p>\n
       State, its corporations, instrumentalities and agencies have the<\/p>\n
       public duty to be fair to all concerned. Even when some defect is<\/p>\n
       found in the decision-making process the court must exercise its<\/p>\n
       discretionary power under Article 226 with great caution and should<\/p>\n
       exercise it only in furtherance of public interest and not merely on<\/p>\n
       the making out of a legal point. The court should always keep the<\/p>\n
       larger public interest in mind in order to decide whether its<\/p>\n
       intervention is called for or not. Only when it comes to a conclusion<\/p>\n
       that overwhelming public interest requires interference, the court<\/p>\n
       should intervene.”<\/p><\/blockquote>\n
      19. In paragraphs 10 and 12, the contention that the offer made by<\/p>\n
the Air India Ltd. was not disclosed to the writ petitioner and that no<\/p>\n
preference ought to have been made to Air India Ltd., was considered and<\/p>\n
it was held that the authorities did not go wrong in considering an offer<\/p>\n
made by a National Carrier. After analysing the various aspects, it was held<\/p>\n
thus:\n<\/p>\n
      “We do not think that CIAL did any wrong in taking into<\/p>\n
      consideration the fact that Air India is an airline and being a national<\/p>\n
wpc11190 \/2010                        11<\/span><\/p>\n
       carrier would be in a position to bring more traffic of Air India and<\/p>\n
       other domestic airlines if it was awarded the contract. As regards the<\/p>\n
       merits of the rival offers, we do not think it proper to look at only the<\/p>\n
       financial aspect and hold that CIAL did not accept Cambatta’s offer,<\/p>\n
       even though it was better, because it wanted to favour Air India or<\/p>\n
       that it had acted under the influence of Air India and the Ministry of<\/p>\n
       Civil Aviation. In a commercial transaction of a complex nature<\/p>\n
       what may appear to be better, on the face of it, may not be considered<\/p>\n
       so when an overall view is taken. In such matters the court cannot<\/p>\n
       substitute its decision for the decision of the party awarding the<\/p>\n
       contract. On the basis of the material placed on record we find that<\/p>\n
       CIAL bona fide believed that involving a public sector undertaking<\/p>\n
       and a national carrier would, in the long run, prove to be more<\/p>\n
       beneficial to CIAL. For all these reasons it is not possible to agree<\/p>\n
       with the finding of the High Court that CIAL had acted arbitrarily<\/p>\n
       and unreasonably and was also             influenced    by extraneous<\/p>\n
       considerations during its decision-making process.”<\/p><\/blockquote>\n
      20. Herein also, I find that in Ext.P9 the Government took the view<\/p>\n
that the the third respondent is a public sector enterprises and their offer is<\/p>\n
at a lower rate than the negotiated rate of the petitioner and the AMC<\/p>\n
offered is economical and justifiable. In the statement also it is mentioned<\/p>\n
that the third respondent being a Governmental agency, their offer for<\/p>\n
negotiation was considered and in the negotiation they have offered a rate<\/p>\n
lesser than that was offered by the petitioner.\n<\/p>\n
wpc11190 \/2010                         12<\/span><\/p>\n
       21. It is not the law that after the initiation of negotiation at every<\/p>\n
point of time, the authority should come back to various tenderers. Herein,<\/p>\n
after the negotiation with the petitioner, the petitioner had given their final<\/p>\n
offer as per Ext.P7. No confirmation was given to the said offer made by<\/p>\n
the petitioner.   The respondents have denied the averment in the writ<\/p>\n
petition that the petitioner was given an assurance in the matter. There is no<\/p>\n
written communication in that regard to support the plea raised by the<\/p>\n
petitioner that there was an assurance that the petitioner’s offer will be<\/p>\n
accepted.    As rightly pointed out by the learned counsel for the third<\/p>\n
respondent, there is nothing in law to obliges the second respondent to<\/p>\n
inform the petitioner about the amount offered by the third respondent, as<\/p>\n
according to the learned counsel, otherwise it will not be termed as a<\/p>\n
process of negotiation, but it will be termed only as an auction. I find force<\/p>\n
in the said submission also. As held by the Apex Court in Air India Ltd.’s<\/p>\n
case (supra), the second respondent can enter into negotiations before<\/p>\n
finally deciding to accept one of the offers made to it. Herein, various<\/p>\n
aspects including the price was considered for awarding the contract.<\/p>\n
Being a commercial transaction, it cannot be said that the second respondent<\/p>\n
had acted illegally in the matter. The Government is entrusted with the<\/p>\n
wpc11190 \/2010                        13<\/span><\/p>\n
power to take a decision for sanctioning the offer for an amount which is<\/p>\n
more beneficial to them.\n<\/p>\n
     For all these reasons, I do not find any reason to interfere with Ext.P9<\/p>\n
and hence, the writ petition is dismissed. No costs.\n<\/p>\n<\/p>\n
                                     (T.R. Ramachandran Nair, Judge.)<\/p>\n
kav\/<\/p>\n","protected":false},"excerpt":{"rendered":"
Kerala High Court Biodigital (P) Limited vs State Of Kerala on 16 April, 2010 IN THE HIGH COURT OF KERALA AT ERNAKULAM WP(C).No. 11190 of 2010(W) 1. BIODIGITAL (P) LIMITED, R-731, … Petitioner Vs 1. STATE OF KERALA, REPRESENTED BY THE … Respondent 2. THE DIRECTOR, DIRECTORATE OF ANIMAL 3. HINDUSTAN LATES LIFE CARE LIMITED, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,21],"tags":[],"class_list":["post-118143","post","type-post","status-publish","format-standard","hentry","category-high-court","category-kerala-high-court"],"yoast_head":"\nBiodigital (P) Limited vs State Of Kerala on 16 April, 2010 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/biodigital-p-limited-vs-state-of-kerala-on-16-april-2010-2\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Biodigital (P) Limited vs State Of Kerala on 16 April, 2010 - 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