Hindustan Paper Corporation Ltd v. NONE

The writ petitions were filed challenging the incorporation of c ertain clauses as part of the pre-qualification criteria in the Tender notice d ated 11.05.2012 for the works of handling and transportation of bamboo/waste wo od/fire-wood by road from Nagoan Paper Mill, Kagaznagar to Cachar Paper Mill, Pa nchgram. The said clauses being Clause 12(a) and Clause 12(c) provide, inter ali a, for possessing of experience in handling and transportation of at least 3000 MT of Bamboo/Wood in any one year during the last year and having completed work s not less than Rs.30.00 lakh and also having at least 25 nos. of self owned tru cks, which are not more than 10 years old. The said Clauses 12(a) and 12(c) of the Tender notice dated 11.0 5.2012 have been challenged by the petitioners contending primarily that the sai d clauses have been included as (cid:28)ouster clauses (cid:29) to prevent most of the tenderer s including the present petitioners from taking part in the tender process and t o favour a certain tenderer. The petitioners contend that the said clauses which have been incorporated in the impugned Tender notice dated 11.05.2012 were abse nt in the previous tenders relating to same or similar works. It was also contended that the said clauses are not in conformit y with the Procurement Manual applicable to the Hindustan Paper Corporation Ltd. The said Procurement Manual has been issued by the authorities to provide trans parency and uniformity in the tender process. Learned counsel appearing for the writ petitioners states that t he work in issue was earlier advertised vide Tender notice dated 17.4.2012 which did not contain the aforesaid offensive clauses. The pre-qualification criteria in the aid Tender notice dated 17.4.2012 provided that bidder should have exper ience in handling and transportation of any materials and should have executed w ork order for a minimum of Rs.50 lakhs in any one year during the last 7 financi al year. The said previous notice dated 17.4.2012 was slightly modified b y issuing a corrigendum on 30.4.2012. However, without proceeding with the said previous tender notice dated 17.4.2012, the authorities issued a fresh Tender no tice dated 11.05.2012 which incorporated for the first time the said clauses 12 (a) and 12(c) as stated above, which are quoted below:- (cid:28)12: a) Bidder should have the experience in handling and transportation of at least 3000 MT of bamboo/Wood in any one year during last 5(five) years and shou ld submit documentary evidence along with ’Techno-Commercial Bid’ towards expe rience in the form of work completion certificate etc. Minimum value of such wo rk in single year should not be less than Rs. 30.00 Lakh. ..... ..... (cid:28)c) of the trucks should be more than 10 years old. The bidder should submit copy of Valid Registration Certificate, Insurance, Road Tax Certificate and Pollution C The Bidder should have at least 25 nos. of trucks of their own and none ..... ..... .... .... ontrol Certificate against each of the trucks. (cid:29) Learned counsel appearing for the petitioners submits that the s aid clauses 12(a) and 12(c) were subsequently incorporated in the fresh Tender n otice by renouncing the earlier Tender notice dated 17.04.2012 merely to accommo date certain tenderer as most of the tenderers do not have the kind of experienc e required and also do not possess 25 nos. of trucks which are also not older th an 10 years. Learned counsel appearing for the petitioners submits that such inc orporation of the stringent clauses was merely to exclude most of the contractor s who have been dealing with the Corporation and to induct a new contractor of t heir choice. Learned counsel appearing for the writ petitioners submits that there is no need to incorporate such stringent clauses in as much as the work ca n be easily executed under the prevailing terms and conditions prior to issue of the said fresh Tender notice dated 11.05.2012. In the previous Notice dated 17.4.2012, the requirement was that the bidders should have the experience in handling and transportation of any ma terial with work order for a minimum value of Rs.50 lakh executed in any one yea r during the last 7 financial years and capability for placement of minimum 15 trucks as an owner or under lease or rent. Learned counsel appearing for the wr it petitioners also submits that as can be seen from the Procurement Manual, it was not a mandatory requirement to have ownership of the trucks for transportati on of the goods. Therefore, learned counsel appearing for the writ petitioners h as submitted that the real intention of the Corporation was to exclude most of t he bidders in favour of a particular tenderer and accordingly, this clearly amou nts to an ouster clause, which is not permissible in law. Learned counsel appear ing for the petitioners submitted that the said clauses being arbitrary, discrim inatory and malafide in nature would render the tender process illegal. Learned counsel appearing for the writ petitioners has submitted that there is no need t o insist on such a stringent clause in as much as the same and similar works had been and are being and can be undertaken by various contractors without possess ing such a large number of vehicles as owner thereof. Therefore, learned counsel appearing for the writ petitioners ha s submitted that if the tender process is allowed to proceed, it would result in to disqualification of most of the bidders except the favoured one and cannot be said to be real competition which is the very basis of floating the tender i.e. to get the most competitive bid. Learned counsel appearing for the petitioners, therefore, has s ubmitted that by inserting the aforesaid offending clauses, it violates the doct rine of level playing field and the said clauses have no reasonable nexus with t he object the tender process seeks to achieve. In this regard, learned counsel appearing for the petitioners, b y relying on the judgments of Hon’ble Supreme Court reported in Meerut Developme nt Authority vs. Association of Management Studies & anr. (2009) 6 SCC 171 and B .S.N.Joshi & Sons Ltd. Vs. Nair Coal Services Ltd. & ors. (2006) 11 SCC 548 has submitted that this Court can always intervene when it is established that the terms of the tender were so tailor-made to suit the convenience of any particul ar person with a view to eliminate all others from participating in the bidding process. Learned counsel appearing for the writ petitioners has also relied on t he judgment rendered in Reliance Energy Ltd. & anr. Vs. Maharashtra Road Develop ment Corpn. Ltd. & ors., (2007) 8 SCC 1 to contend that inclusion of such clause is discriminatory as it violates the doctrine of level playing field. Countering the aforesaid contention of the writ petitioners, the applicant and the Corporation have stated that the authorities have included th e aforesaid clauses/conditions which may seem to be stringent, based on certain policy decision taken by the authorities after considering all the relevant mate rials before it. In the affidavit-in-opposition filed on behalf of the responden ts No.1 and 2 in the writ petitions, it has been stated that the main mode of tr ansportation for transporting bamboo/pulpwood is road transportation by trucks a nd it had been witnessed under the previous tenders for transportation that tran sporters had failed to place the required number of trucks on various occasions even though they had submitted documents indicating that the trucks had been tak en on lease by the transporters. Therefore, because of the failure to make avail able the necessary trucks in time, the smooth running of the Mill was adversely affected, as the bamboo/materials were required to be constantly and regularly t ransported and supplied. The decision to incorporate the said clause for insisti ng on ownership of 25 nos. of trucks in good conditions of not more than 10 year s was thus taken considering the past experience of the Corporation and in the i nterest of smooth running and function of the Mill and therefore, it cannot be s aid that the said clause is arbitrary or unreasonable and stated that it has nex us to the efficacious and efficient running of the Mill. As regards the work experience of handling and transportation of at least 3000 MT of Bamboo/Wood in any one year during last 5 years, it was als o included considering the requirement of the Corporation. It was stated that wh ile in the previous Tender notice, the volume of work to be executed was only 30 ,000 MT, it was increased subsequently to 50,000 MT for which second Tender noti ce was issued. Therefore, because of the increased volume of work to be executed , the said clause relating to past experience was also included. Therefore, it w as contended that inclusion of the aforesaid clauses cannot be said to be unreas onable or discriminatory and it was done on the basis of certain requirement of the Corporation, as stated above. Learned counsel appearing for the applicants and the Corporation have relied on the judgments of the Supreme Court rendered in Union of India & ors. Vs. Hindustan Development Corporation & ors.; (1993) 3 SCC 499, Poddar Ste el Corporation vs. Ganesh Engineering Works & ors., (1991) 3 SCC 273; Director ate of Education & ors. Vs. Educomp Datamatics Ltd. & ors., (2004) 4 SCC 19; Rau naq International Ltd. Vs. I.V.R.Construction Ltd. & ors., (1999) 1 SCC 492 and Pooja Fortune Pvt. Ltd. & anr. Vs. State of Nagaland & ors., 2012 (3) GLT 527. Learned counsel appearing for the applicants and Corporation by relying on the decision of the Hon’ble Supreme Court in Union of India & ors. V s. Hindustan Development Corporation & ors. (supra) have submitted that even if it is presumed that there are reservations or restrictions in the said terms of the tender, they are not arbitrary and the same are justifiable on the basis of policy taken by the Corporation which by themselves are reasonable and not disc riminatory. It has been submitted that in the present case, the said Clauses we re based on the policy decision of the Corporation taken on the basis of past ex periences faced by the Corporation in failing by the contractors to make availab le adequate number of trucks in time. Failure on the part of the contractors to make available trucks in time disrupted the smooth and efficient running of the mill, which the Corporation wanted to avoid in future transactions. It has been also submitted by the learned counsel appearing for the applicants and Corporati on by relying on the judgment of the Hon’ble Supreme Court rendered in Directora te of Education & ors. Vs. Educomp Datamatics Ltd. & ors. (supra) that there ar e inherent limitations in the exercise of power of judicial review in the matter of award of contract and the Court cannot strike down the terms of the contrac t prescribed by the authorities because it feels that some other terms in the t ender would have been fair, wiser or logical. The Court can interfere only if th e policy decision is arbitrary, discriminatory or mala fide. Learned counsel appearing for the applicants and the Corporation have submitted that far from being arbitrary and discriminatory, the said claus es have been incorporated for the smooth running of the paper Mill. Accordingly, they have submitted that no case has been made out for continuation of the inte rim order passed by this Court on 24.05.2012 passed in W.P(C) No.2493 of 2012. Heard the learned counsel appearing for both the parties. This Court is considering the limited issue as to whether earlie r interim order passed by this Court should be continued or not and as such, wou ld refrain from dealing extensively with the merit of the case. However, it woul d be necessary to examine certain aspects of the matter only for the purpose of satisfaction of this Court as to whether any prima-facie case has been made out for intervention by this Court so as to pass any interim restraint order. True, this Court can certainly intervene if it is found that cer tain terms and conditions of the Tender are arbitrary, discriminatory and mala f ide. Though this issue whether the terms of the contract, as discussed above, ar e discriminatory, arbitrary or mala fide has to be ultimately decided by examini ng in greater detail at the time of hearing of this writ petition, at this stage , this Court has to examine whether any prima facie case has been made out to pa ss any interim order interfering with the tender process. Having heard the parties and on examination of the materials on record, this Cou rt has observed that the authorities have sought to provide the reasons for inco rporating such stringent clauses, as mentioned in their affidavit-in-opposition i.e. the past unsatisfactory experience, i.e., the failure of the contractors to make available adequate number of trucks which had disrupted the smooth functio ning of the Mill. Therefore, incorporation of the aforesaid clauses cannot be sa id to be without any basis and the said basis not be said to be wholly unreasona ble. In this regard, we may remind ourselves the cautionary remark of the Hon’ble Supreme Court in the case of Raunaq International Ltd. Vs. I.V.R.Co nstruction Ltd. & ors. (supra) of the requirement of the Courts in approaching very cautiously in passing interim orders staying the process of tender. In para No.14 of the said judgment, the Hon’ble Supreme Court observed as:- (cid:28)14. Where there is an allegation of mala fides or an allegation that th e contract has been entered into for collateral purposes and the court is satisf ied on the material before it that the allegation needs further examination, the court would be entitled to certain the petition. But even here, the court must weigh the consequences in balance before granting interim orders (cid:29). In the present case, what is also observed is that the said cont ract is for a period of one year only and as transportation by road by truck is the main means of transportation of materials to the Mill and because of the co mmunication problems prevailing in this area of the country, insistence on the c ertain numbers of vehicles on the basis of ownership of not old trucks cannot be said to be wholly irrational or unreasonable for smooth and uninterrupted supp ly of raw materials or transportation of materials, though the same issue has to be conclusively decided by this Court at the time of final consideration of the matter. The said clause also can be said to have no nexus with the smooth and e fficient running of the Mill. No prima facie has been also made out to show that the new work experience clause is unreasonable considering the increased volume of work being sought to be implemented. It may be also noted that any delay in the award of contract and the execution of the work may entail increased costs on the part of the Corpora tion in view of the increasing price of HSD oil. In other words, delay in the co nclusion of the contract may result in the escalation of costs, which will not b e in the public interest. Therefore, taking a holistic view of the matter, and i n view of the limited scope of interference by this Court at the interim stage r elating to tender matters, as discussed above, this Court is of the view that it may not be appropriate for this Court at this stage to place any hindrance on t he finalisation of the contract in issue, pursuant to the impugned Tender notice dated 11.05.2012. This Court may pass appropriate final orders, after further a nd detail consideration of the matter on merit. It is also clarified that finali sation of the contract will be subject to final decision of this Court. Accordingly, this Court is of the view that the interim order dated 24.05.2012 p assed in W.P(C) No.2493 of 2012 and order dated 30.05.2012 passed in W.P(C) No.2 569 of 2012 need not be extended any further. Accordingly, these Misc. Cases sta nd disposed of.