High Court · 2012

WP(C) No.4489/2011 The Divisional Commercial Manager, N.F. Railway, Maligaon, Guwahati, flo 3. ated a tender notice under No.C/24 of 2011 dated 17.01.2011 (Annexure-1 to the w rit petition) for leasing of 23 tonne space in VPH for a period of 3(three) year s. The writ petitioner firm being ’A’ category lease holder in the N.F. Railway, submitted the tender for leasing in response to the said NIT in the train No.12 502/12501 Purbattar Sampark Kranti Express, on the last date of submission i.e. on 01.03.2011. The tenders were also opened on the same day in the office of the respondent No.5, but the respondent No.5 after opening did not prepare any comp arative statement (CS). However, from the office of the respondent No.5 the writ petitioner firm gathered the information that his bid to the extent of Rs.3,12, 012/- was found to be the highest in the process. Be that as it may, the petitio ner’s firm did not receive any communication in the intervening period till 04.0 7.2011 from the date of opening of the tender. On 04.07.2011 the Divisional Rail way Manager, Lumding, by letter under No.C/442/SLR-VPU/Leasing/10-17 dated 04.07 .2011 (Annexure-2 to the writ petition) communicated that the tender has been di scharged but no reason whatsoever was assigned in the said letter desperately. T he petitioner’s firm requested for disclosure of information why the tender was discharged so unceremoniously when the petitioner’s firm was found to be the hig hest bidder. Ultimately by a letter dated 22.07.2011 the Public Information Offi cer, N.F. Railway HQ under No.NFR/RTI Cell/2011/2015 dated 25.07.2011 (Annexure- 5 to the writ petition), informed the writ petitioner firm that the information as sought for be only transmitted directly to him within the stipulated period a s provided after charging necessary documentation fee, if any. The writ petition er firm sensing that there was some deliberate act on the part of the railway re spondents not to furnish the relevant information as regard to why the tender wa s discharged, filed the writ petition.

4. The railway respondents filed a very short affidavit-in-opposition, wher ein it has been admitted that the petitioner’s firm was the highest bidder, but for being the highest bidder the petitioner’s firm does not have any indefeasibl e right to get the contracted work awarded in his favour. The reason as assigned in paragraph 6 of the said affidavit-in-opposition for discharging the tender i s that the competent authority on technical ground ’discharged’ the tender and t he same was intimated by the Divisional Railway Manager(C), Lumding, by his lett er under No.C/442/SLR-VPU/Leasing/10-17 dated 04/08.07.2011, requesting the peti tioner’s firm to collect their earnest money from their accounts office. It is f urther stated that while the Tender Committee was considering the tenders noted the observation of the Accepting Authority that there was a variance in the agre ement involved with the provisions of the Freight Marketing Circular No.12 of 20 06 issued on 09.02.2010. Apart that, it was also observed that the tender condit ions were interpreted in the tender without the same being vetted by the Finance and Legal sections before floating of the tender. The Tender Committee on exami nation of the paragraph 5 of the Accepting Authority’s observation give a note i n the relevant file, which has been extracted by the railway respondents in thei r paragraph 6. It is apparent from that note that the Tender Committee is not em powered to modify any clause of agreement. The tenderers have given their bids a s per the terms and conditions as published by the railways. In case of any modi fication in the clauses of the agreement, the Tender Committee has to call for n egotiation with the highest bidder as per Extant Rule. The negotiation on condit ions of tender at this stage is not considered to be in order in view of other t enderers being excluded from the purview of any such negotiation. In view of this, according to the railway respondents, the tender was di 5. scharged. Ultimately the railway respondents contended that the petitioner faile d to make any case which warrants adjudication of this Court. The railway respon dents produced the records relating to the tender in question and it appears fro m the note of CCM dated 18.05.2011 as under: Para 99 of the proposed agreement appears to be in variance with the para 20 of the Amendment to Freight Marketing Circular No.12 of 2006, issued on 09.02.2010. The Board circular insists that in case of violation of this provision, the lea se contract will be cancelled. But the agreement provides, (cid:28)in addition to this, his registration may also be cancelled depending upon the seriousness of the of fence and if excess weight is detected to have been loaded in the leased Brake V an, the leaseholder shall be penalized (cid:29). This need be checked whether the agreem ent has been properly vetted by Finance and legal branch of the division and/or the headquarters. It also further appears from the records that the tabulation she et was prepared and in the said the petitioner’s firm was found highest bidder i n the said tender process. WP(C) No.4668/2011 6. The writ petitioner firm is a registered leaseholder with the railway re spondents. In response to the tender notice No.CM/SLR/VPU/TSK-09 dated 12.07.201 1 as issued by the respondent No.5, Divisional Commercial Manager for leasing of 23 tonne VPH (Parcel Van) on round trip basis on train No.15960/15959 Kamrup Ex press for a period of 3(three) years the writ petitioner firm quoted the rate wi th all requisite documents. In terms of the said tender notification dated 12.07 .2011 (Annexure-P3 to the writ petition), the tender opened on 16.08.2011 in pre sence of all the tenderers. After opening the tender it was found that the writ petitioner firm was the highest bidder, who had quoted a rate of Rs.1,46,872/-. But no letter of acceptance was issued in pursuance to the said tenderer till 17 .08.2011 when the respondent No.5, the Divisional Commercial Manager with copies to the respondent Nos.2 and 3 requested the writ petitioner firm to operate the lease at the price as offered. Subsequent thereto the writ petitioner firm came to know through reliable sources that the leasing operation in train No.15960/1 5959 was a subject matter of a litigation pending before the High Court at Kolka ta. Initially there was an interim order of stay in the proceeding and thereafte r the said order was vacated. In that proceeding the learned counsel engaged by the railway respondents submitted before the High Court at Kolkata on 30.08.2011 that the tender dated 12.07.2011 was withdrawn/cancelled and a copy of internal communication was also placed before the said Hon’ble Court. On 06.09.2011 the petitioner received a communication, which was dated 29.08.2011 purportedly info rming that the tender has been discharged by the competent authority on the tech nical and administrative reasons without prejudice. The writ petitioner firm cha llenged the legality and validity of the decision as embodied in the said letter dated 29.08.2011 by this petitin. The railway respondents have also filed a ver y short affidavit-in-opposition denying any right of the writ petitioner firm to be awarded with the tender work and asserting that the Accepting Authority has observed some procedural lapses in the process apart from complaints of criminal intimidation. Situated as such, the competent authority had decided to discharg e the tender.

7. It is also stated therein that the competent authority in the course of processing of the tender observed that the tender form was issued without the te rms and conditions required to be attached along with such tender. The penal cla use as mandated for operation of the lease in question having not been incorpora ted with, the tender was decided to be discharged. The discharge of the tender w as final and fresh tender process was being contemplated. They have also resorte d to the clause 9 of the tender notification under No.CM/SLR/VPU/TSK/09 dated 12 .07.2011, where it has been provided that the railway administration reserves th e right to cancel/withdraw any train from bidding even in last minute without as signing any reason whatsoever. Since the procedural lapses had been noticed, the railway respondents were within the authority to discharge the same and no prej udice has been caused to the writ petitioner firm giving rise to a cause of acti on in filing the writ petition. From the records as presented related to the ten der process, it is found that some complaints were received by the railway respo ndents that some of the aspiring tenderers were resisted from participation in t he tender process. But for the discharge, only non-incorporation of the penal cl ause (as executed in CCM’s note dated 18.05.2011 herein above) was alone conside red.

8. The common question of law in the factual backdrop, which connects both the writ petitions is whether after exposition of the bid, the tendering authori ty can discharge the tender in the mode as has been done in the impugned tender process that to without assigning any reason in the letter communicating such di scharge.

9. I have heard Mr. A.K. Bhattacharjee, learned Sr. counsel appearing for t he writ petitioner in WP(C) No.4668/2011 and Mr. K.C. Roy, learned counsel appea ring for the petitioner in WP(C) No.4489/2011 as well as Mr. A.K. Sarkar, learne d standing counsel appearing for the N.F. Railway. Mr. Bhattacharjee, learned Sr. counsel strongly contended before this Co 10. urt that the railway respondents have acted arbitrarily while discharging the te nder without assigning any reason. Even if there is a provision of discharging t he tender at any stage if any deficiency as noticed clause 9 of the tender notif ication that would not armed the railway respondents to act arbitrarily without sufficient reasons and with prejudice to the tenderers. In support of his conten tion Mr. Bhattacharjee, learned Sr. counsel relied the decision in Commissioner of Police, Bombay Vs. Gordhandas Bhanji as reported in AIR 1952 SC 16. In para 9 of that decision the Apex Court has held that it is clear that the public order s, publicly made, in exercise of a statutory authority cannot be construed in th e light of explanations subsequently given by the officer making the order of wh at he meant, or of what was in his mind, or what he intended to do. Public order s made by public authorities are meant to have public effect and are intended to affect the acting and conduct of those to whom they are addressed and must be c onstrued objectively with reference to the language used in the order itself. In para 9 of the said law report, it has been further stated that public authoriti es cannot play fast and loose with the powers vested in them, and persons to who se detriment orders are made are entitled to know with exactness and precision w hat they are expected to do or forbear from doing and exactly what authority is making the order. The learned Sr. counsel for the petitioner also relied a decision in Uni 11. on of India Vs. M.L. Capoor and ors. as reported in AIR 1974 SC 87. In that law report the Apex Court in para 28 held that in the context of the effect upon the rights of aggrieved persons, as members of a public service who are entitled to just and reasonable treatment by reason of protections conferred upon them by A rticles 14 and 16 of the Constitution, which are available to them throughout th eir service, it was incumbent on the Selection Committee to have stated reasons in a manner which would disclose how the record of each officer superseded stood in relation to records of others who were to be preferred, particularly as this is practically the only remaining visible safeguard against possible injustice and arbitrariness, in making selections. If that had been done, facts on service records of officers considered by the Selection Committee would have been corre lated to the conclusions reached. Reasons are the links between the materials on which certain conclusions are based and the actual conclusions. They disclose h ow the mind is applied to the subject matter for a decision whether it is purely administrative or quasi-judicial. They should reveal a rational nexus between t he facts considered and the conclusions reached. Only in this way can opinions o r decisions recorded be shown to be manifestly just and reasonable.

12. Another larger bench decision in Mohinder Singh Gill & anr. Vs. The Chie f Election Commissioner, New Delhi & ors. as reported in AIR 1978 SC 851(1) was pressed into operation by the learned Sr. counsel appearing for the petitioner. In para 8 of the said law report, which was relied is extracted hereunder: 8. The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reas ons so mentioned and cannot be supplemented by fresh reasons in the shape of aff idavit or otherwise. Otherwise, an order bad in the beginning may, by the time i t comes to court on account of a challenge, get validated by additional grounds later brought out. We may here draw attention to the observations of Bose J. in Gordhandas Bhanji: (cid:28)Public orders publicly made, in exercise of a statutory authority cannot be con strued in the light of explanations subsequently given by the officer making the order of what he intended to do. Public orders made by the public authorities a re meant to have public effect and are intended to affect the acting and conduct of those to whom they are addressed and must be construed objectively with refe rence to the language used in the order itself. (cid:29)

13. Referring to a decision of the Apex Court in Star Enterprises Vs. City a nd Industrial Development Corporation as reported in (1990)3 SCC 280, the learne d Sr. counsel contended that when highest offers of the type in question are rej ected, reasons sufficient to indicate the stand of the appropriate authority sho uld be made available and ordinarily the same should be communicated to the conc erned parties unless there be any specific justification not to do so. Profitabl y para 9 and 10 of that law report are extracted hereunder: 9. The question which still remains to be answered is as to whether when th e highest offer in respondent to an invitation is rejected would not the public authority be required to provide reasons for such action? Mr. Dwivedi has not as ked us to look for a reasoned decision but has submitted that it is in the inter est of the public authority itself, the State and everyone in the society at lar ge that reasons for State action are placed on record and are even communicated to the persons from whom the offers came so that the dealings remain above board ; the interest of the public authority is adequately protected and a citizen kno ws where he stands with reference to his offer. What this court said in State of U.P. V. Raj Narain may be usefully recalled here: (cid:28)In a government of responsibility like ours, where all the agents of th e public must be responsible for their conduct, there can be but few secrets. Th e people of this country have a right to know every public act, everything that is done in a public way, by their public functionaries. They are entitled to kno w the particulars of every public transaction in all its bearing. The right to k now, which is derived from the concept of freedom of speech, though not absolute , is a factor which should make one wary, when secrecy is claimed for transactio ns which can, at any rate, have no repercussion on public security. To cover wit h veil of secrecy, the common routine business, is not in the interest of the pu blic. (cid:29)

10. In recent times, judicial review of administrative action has become exp ansive and is becoming wider day by day. The traditional limitations have been v anishing and the sphere of judicial scrutiny is being expanded. State activity t oo is becoming fast pervasive. As the State has descended into the commercial fi eld and giant public sector undertakings have grown up, the stake of the public exchequer is also large justifying larger social audit, judicial control and rev iew by opening of the public gaze; these necessitate recording of reasons for ex ecutive actions including cases of rejection of highest offers. That very often involves large stakes and availability of reasons for actions on the record assu res credibility to the action; disciplines public conduct and improves the cultu re of accountability. Looking for reasons in support of such action provides an opportunity for an objective review in appropriate cases both by the administrat ive superior and by the judicial process. The submission of Mr. Dwivedi, therefo re, commends itself to our acceptance, namely, that when highest offers of the t ype in question are rejected reasons sufficient to indicate the stand of the app ropriate authority should be made available and ordinarily the same should be co mmunicated to the concerned parties unless there be any specific justification n ot to do so.

14. The Apex Court has resounded the similar position of law in East Coast R ailway & anr. Vs. Mahadev Appa Rao & ors. as reported in AIR2010 SC 2794. Relyin g paragraph 10 thereof, the learned Sr. counsel appearing for the petitioner con tended that there is no quarrel with the well-settled proposition of law that an order passed by a public authority exercising administrative/executive or statu tory powers must be judged by the reasons stated in the order or any record or f ile contemporaneously maintained. It follows that the infirmity arising out of t he absence of reasons cannot be cured by the authority passing the order stating such reasons in an affidavit filed before the Court where the validity of any s uch order is under challenge. The legal position in this regard has been settled by the decision of the Apex Court in Gordhandas Bhanji(supra).

15. Mr. Roy, learned counsel appearing for the writ petitioner in WP(C) No.4 489/2011 adopted the submissions as offered by Mr. Bhattacharjee, learned Sr. co unsel appearing for the petitioner in WP(C) No.4668/2011.

16. While countering the contentions of the learned counsels appearing for t he petitioners, the learned standing counsel appearing for the railway responden ts submitted that though in the impugned communications no reason has been assig ned but in the relevant files reasons are available and the reasons has also bee n disclosed in the affidavit-in-opposition referred the note in the relevant fil es and as such those decisions as regard to the absence of reasons in public act ion cannot be stated to have any bearing in the factual matrix of the writ petit ions. As such the writ petitions are liable to be dismissed.

17. In Union of India & ors. Vs. Dinesh Engineering Corporation & anr. as re ported in (2001)8 SCC 491, the Apex Court in paragraph 15 held that coming to th e second question involved in these appeals, namely, the rejection of the tender of the writ petitioner, it was argued on behalf of the appellants that the Rail ways under clause 16 of the Guidelines was entitled to reject any tender offer w ithout assigning any reasons and it also has the power to accept or not to accep t the lowest offer. In paragraph 16 of the said report it has been laid down tha t (cid:28) & & &a public authority even in contractual matters should not have unfettered discretion and in contracts having commercial element even though some extra dis cretion is to be conceded in such authorities, they are bound to follow the norm s recognized by courts while dealing with public property. This requirement is n ecessary to avoid unreasonable and arbitrary decisions being taken by public aut horities whose actions are amenable to judicial review. Therefore, merely becaus e the authority has certain elbow room available for use of discretion in accept ing offer in contracts, the same will have to be done within the four corners of the requirements of law, especially Article 14 of the Constitution. (cid:29)

18. Regarding the scope and ambit of the judicial review in tender or contra ctual matters in Ramchandra Murarilal Bhattad & ors. Vs. State of Maharashtra & ors. as reported in (2007)2 SCC 588, the Apex Court reiterated the law as expoun ded in Dinesh Engineering Corporation (supra).

19. This High Court also in Ackruti Security Plates (P) Ltd. & ors. Vs. Stat e of Tripura & ors. as reported in (2011)5 GLT 662 has held that even the decisi on cancelling the notice inviting tenders and going for fresh tender can be inte rfered with and the appropriate authority can be directed to take appropriate ac tion without causing prejudice to the tenderers subject to valid and justified r easons. It appears from the records that for any criminal intimidation nowhere t he involvement of the writ petitioners is noted and the nature of complaints or the complaints are not part of records. The casual reference to criminal intimid ation was not diluted any manner warranting scintillating scrutiny. Now this Co urt is inclined to consider whether for mistake as committed by the railway resp ondents by not incorporating the modified clause as emphasized herein, the tende r after exposition of the rates/bid can be discharged in the treaded manner. It is apparent on the face of records that the modified clause was not incorporated as the tender condition which warranted to be incorporated in the public intere st. Necessity of such incorporation is not questioned by this court in exercise of its power of judicial review. In as much as such clause emanates from a publi c policy and that policy cannot be stigmatized for being arbitrary or offensive to Article 14 of the Constitution of India. In the highly competitive arena of c ommercial bids exposition of rate is an element which cannot be so casually brus hed aside.

20. Both the writ petitioners have exposed their rates and if the fresh bids are floated for the same space, the rival competitors would be in an advantageo us situation while deducing their rattles. Such exposition no doubt has severely prejudiced the writ petitioner, if those are not acted upon for purpose of sett lement of the tender. On aggregate consideration of the fact and law as stated, this Court is strongly persuaded to interfere with the decision of discharging t he tender. As such the decision contained in the communication dated 04.07.2011 (Annexure-2 of WP(C) No.4489/2011) and letter dated 29.08.2011 (Annexure-P10 of WP(C) No.4668/2011) is set aside. But it is made clear that if the highest bidde rs i.e. the writ petitioners’ firms undertake to accept the non-incorporated cla use (as executed in the CCM’s note dated 18.05.2011), which could not be made pa rt of the tender, the railway respondents shall consider their highest bid for a cceptance. If the writ petitioners are ready to undertake that they would abide by the said non-incorporated clause, they shall furnish an undertaking in writin g to the tendering authority within a period of 7(seven) days from this day and the tendering authority i.e. the railway respondents shall determine the tender within 15 days from the date of receipt of the said undertaking.

21. owed. No order as to cost. With the above observations and directions, these writ petitions are all