High Court · 2024
Facts
1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABADWRIT PETITION NO. 6917 OF 2024Geocon Consultancy,Through its Proprietor,Akshay S/o. Arun Nikam,Age. 31 years, Occ. Business,R/o. C-15/16, 3rd Floor,Chandrabhaga Niwas,Near Tin Hatti Chowk, Sambhaji Nagar,Dhankawadi, Pune. ...PetitionerVersus1.The State of MaharashtraThrough its Principal Secretary, Urban Development Department,Mantralaya, Mumbai-32.2.The Latur City Municipal Corporation, LaturThrough its Administrator @ Commissioner,Municipal Corporation Latur,Taluka and District Latur....Respondents ...Advocate for Petitioner : Mr. Sachin Deshmukh i/b. Mr. V.B.JadhavAGP for Respondent No. 1 : Mr. R.S. WaniAdvocate for Respondent No.2 : Mr.S.B.Deshpande Senior Counseli/b. Mr. S.P. Urgunde…CORAM : MANGESH S. PATIL & SHAILESH P. BRAHME, JJ. RESERVED ON : 29 JULY 2024 PRONOUNCED ON: 19 AUGUST 2024JUDGMENT [Shailesh P. Brahme, J.] : 2 .Rule. Rule is made returnable forthwith with theconsent of the parties. Heard litigating sides finally.2.Petitioner is a proprietary firm working in themanagement, treatment and disposal of solid waste. It hasapproached this Court challenging the request for proposal floatedthrough e-tender notice dated 10.06.2024 for selection of anoperator for collection, transportation and processing of MunicipalSolid Waste for Latur Municipal Corporation and seekingdirections to issue fresh tender process.3.Previously, respondent no. 2 – Corporation floated atender notice dated 07.02.2024 for selection of operator for solidwaste management for Latur City. It was challenged by JanadharSevabhavi Sanstha, Latur, by preferring Writ Petition No. 2717 of2024 in the High Court. It was allowed by judgment and orderdated 02.04.2024, thereby, quashing e-tender notice and directingrespondent no. 2 -Corporation to undertake fresh tender processas per existing laws and Government Resolution. In pursuance ofthe order of the High Court, respondent no. 2 – Corporation hasundertaken fresh tender process vide tender notice dated10.06.2024, which is sought to be quashed. 3 4.There is no controversy about following facts :(a)Earlier tender process was quashed by the High Courtin Writ Petition No. 2717/2024.(b)Fresh tender process is being undertaken by issuingnotice dated 10.06.2024.(c)Respondent received three bids and the technical bidwas to be opened on 08.07.2024.(d)Petitioner has not participated in the current tenderprocess but it is challenging certain tender conditions.(e)Petitioner seeks to challenge following tenderconditions, as can be seen from paragraph no. 10 of thememo of the petition :“19)Eligibility CriteriaII.Bidder should have minimum seven years of experience inlast Ten years for providing service of Door to Door collection andtransportation of Municipal Solid Waste, Drain Cleaning, RoadSweeping, Toilet Cleaning, Fogging and Spraying. Experience letterfrom Executive engineer and above will only be considered as valid.III.Bidder should have minimum Seven years of continuousexperience in operation and Maintenance of Municipal Solid WasteProcessing Plant along with Operation and Maintenance of landfillsite of minimum 150 TPD capacity in last seven years.VII.Certificate from a Chartered Accountant that the totalturnover for the last three years is Rs. 90.00 Crores.VIII.Net worth of the tenderer should be at-least 50 Crore andshould be positive as on 31st March 2024.IX.The bidder should submit a solvency certificate fromnationalized bank of Rs. 50 Cr.”
Legal Reasoning
10 tender conditions. We do not find any arbitrariness orhighhandedness in prescribing the tender conditions. It is the solediscretion and wisdom of the respondent no. 2 – Corporationwhich cannot be faulted with. Even in earlier round of litigationthe co-ordinate bench did not accept the submission of thepetitioner regarding eligibility criteria assailed in that matter saveand except what is recorded in paragraph nos. 9 to 11 of thejudgment.15.The tender notice dated 10.06.2024, which is atexhibit ‘D’ shows that no tender price is fixed. In earlier round oflitigation the co-ordinate bench expressed reservations for notfixing the tender price. In our view the nature of the work to beperformed would be relevant for fixing the tender amount. Thework pertains to collection, transportation and processing of solidwaste in the Latur City. The duration of the contract is of fiveyears. This is service oriented contract. There are different natureof contracts namely service, supply of goods/food/articles,construction, sale/ purchase. In case of contract of supply ofgoods/food items/ articles, with the assistance of technical expertsand available data, it would be possible to fix the tender price.When it comes to service oriented contract, a quantum of the 11 expenses and quantum of work are uncertain. Even with the helpof expert persons, it would not be possible to determine a figure.Therefore, it cannot be expected that each and every kind ofcontract should mandatorily prescribe the tender amount.16.In the present matter, Corporation can not anticipatequantity of garbage collection. It can anticipate availability ofminimum infrastructure like vehicles, machines and man power tocollect, transport and dispose of solid waste. Even without fixingthe definite tender price in the present matter, the Corporationreceived three bids. We do not find any arbitrariness orhighhandedness in this regard. The submissions of the petitionercannot be countenanced.17.Just because the tender price has not been fixed andthe impugned eligibility conditions are reiterated cannot be aground to infer that the Corporation indulged into favoritism orthere are mala fides in floating the tender. There is no material onrecord to indicate that with the oblique motive and to eliminatethe petitioner the impugned conditions are incorporated. Wepropose to follow our view taken in the matter of M/s. WatergraceProducts (supra) in following paragraphs : 12 “25.Having considered impugned clause and other clauses of thetender document, we do not find that the respondent/Corporationhas deliberately incorporated clauses to eliminate petitioner or fewprospective bidders. Equally, no material is placed on record toindicate that endeavour of the respondent/Corporation is to favourparticular bidder. The parameters laid down by the tenderconditions/clauses would be applicable to all interested biddersequally. Just because the Corporation did not respond to theobjection of the petitioner would not make the conditions/clausesvulnerable. We are unable to accept the submission of thepetitioner, pertaining to mala fides and favoritism.26.It is a matter of record that the respondent/Corporation hasreceived four bids. Had the tender conditions and impugned clausesbeen arbitrary, perverse or leading to impossibility, the Corporationwould not have received the response. There is no reason for us toentertain any doubt about the genuineness of the conditions or theprocess reached, so far. We have no hesitation to hold that theimpugned clause cannot be said to be uncalled for, arbitrary oragainst public health or public interest.27.Petitioner’s term of earlier contract expired on14.02.2023. As an ad hoc arrangement, it is permitted to executethe work till new contractor takes the charge. The petitioner didnot submit bid in the tender process. Rather it preferred tochallenge the tender clauses. Grounds (S) and (T) raised in memo ofthe writ petition would go to suggest that in all probabilities,petitioner wants to continue with the contract and he was expectingextension of work. In such a situation, we have our reservations forthe bona fides of the petitioner in challenging the impugnedclauses.”18.Learned counsel for respondent no. 2 relies on theparagraph nos. 14, 16 and 17 of the judgment of Galaxy TransportAgencies, Contractors, Traders, Transports and Suppliers (supra),which are as follows :“14.In a series of judgments, this Court has held that theauthority that authors the tender document is the best person tounderstand and appreciate its requirements, and thus, itsinterpretation should not be second-guessed by a court in judicialreview proceedings. In Afcons Infrastructure Ltd. v. Nagpur MetroRail Corpn. Ltd., (2016) 16 SCC 818, this Court held :“15.We may add that the owner or the employer of aproject, having authored the tender documents, is the best 13 person to understand and appreciate its requirements andinterpret its documents. The constitutional courts must deferto this understanding and appreciation of the tenderdocuments, unless there is mala fide or perversity in theunderstanding or appreciation or in the application of theterms of the tender conditions. It is possible that the owneror employer of a project may give an interpretation to thetender documents that is not acceptable to the constitutionalcourts but that by itself is not a reason for interfering withthe interpretation given.”16.Further, in the recent judgment in SilppiConstructions Contractors Versus Union of India, (2020) 16 SCC489, this Court held as follows :“20.The essence of the law laid down in the judgmentsreferred to above is the exercise of restraint and caution;the need for overwhelming public interest to justify judicialintervention in matters of contract involving the Stateinstrumentalities; the courts should give way to the opinionof the experts unless the decision is totally arbitrary orunreasonable’ the court does not sit like a court of appealover the appropriate authority’ the court must realise thatthe authority floating the tender is the best judge of itsrequirements and, therefore, the court’s interference shouldbe minimal. The authority which floats the contract ortender, and has authored the tender documents is the bestjudge as to how the documents have to be interpreted. Iftwo interpretations are possible then the interpretation ofthe author must be accepted. The courts will only interfereto prevent arbitrariness, irrationality, bias, mala fides orperversity. With this approach in mind we shall deal withthe present case.”17.In accordance with these judgments and noting that theinterpretation of the tendering authority in this case cannot be saidto be perverse one, the Division Bench ought not to have interferedwith it by giving its own interpretation and not giving propercredence to the word “both” appearing in Condition 31 of the NIT.For this reason, the Division Bench’s judgment in New J.K.Roadways Versus State (UT of J&K), 2020 SCC Online J&K 733,conclusion that J.K. Roadways was wrongly declared to beineligible, is set aside.”We are merely following the ratio laid down in thisjudgment. 14 19.So far as scope of judicial review in the tender mattersis concerned the ratio laid down in N.G. Protects Limited (supra)are Tata Motors Limited (supra) guide us. Applying thoseparameters we are of the considered view that no case is made outto interfere in the tender process.20.As the tender conditions are challenged in the presentmatter, it is apposite to refer to principles laid down by SupremeCourt in the matter of Airport Authority of India Versus Centre forAviation Policy, Safety and Research (CAPSR) and Others, AIR2022 SC 4749, which is as follows :“7.While considering the scope and ambit of the High Courtunder Article 226 of the Constitution of India with respect tojudicial scrutiny of the eligibility criteria/tender conditions, fewdecisions of this Court are required to be referred to, which are asunder:In the case of Maa Binda Express Carrier (supra), inparagraph 8, this Court observed and held as under:“8. The scope of judicial review in matters relating to award ofcontracts by the State and its instrumentalities is settled by a longline of decisions of this Court. While these decisions clearlyrecognise that power exercised by the Government and itsinstrumentalities in regard to allotment of contract is subject tojudicial review at the instance of an aggrieved party, submission ofa tender in response to a notice inviting such tenders is no morethan making an offer which the State or its agencies are under noobligation to accept. The bidders participating in the tender processcannot, therefore, insist that their tenders should be acceptedsimply because a given tender is the highest or lowest dependingupon whether the contract is for sale of public property or forexecution of works on behalf of the Government. All thatparticipating bidders are entitled to is a fair, equal and non-discriminatory treatment in the matter of evaluation of theirtenders. It is also fairly well settled that award of a contract is 15 essentially a commercial transaction which must be determined onthe basis of consideration that are relevant to such commercialdecision. This implies that terms subject to which tenders areinvited are not open to the judicial scrutiny unless it is found thatthe same have been tailor-made to benefit any particular tendereror class of tenderers. So also, the authority inviting tenders canenter into negotiations or grant relaxation for bona fide andcogent reasons provided such relaxation is permissible under theterms governing the tender process.”In the case of Michigan Rubber (India) Ltd. (supra), afterconsidering the law on the judicial scrutiny with respect to tenderconditions, ultimately it is concluded in paragraph 23 as under:“23. From the above decisions, the following principles emerge:(a) The basic requirement of Article 14 is fairness in action by theState, and non-arbitrariness in essence and substance is theheartbeat of fair play.These actions are amenable to the judicial review only to theextent that the State must act validly for a discernible reason andnot whimsically for any ulterior purpose. If the State acts withinthe bounds of reasonableness, it would be legitimate to take intoconsideration the national priorities;(b) Fixation of a value of the tender is entirely within thepurview of the executive and the courts hardly have any role toplay in this process except for striking down such action of theexecutive as is proved to be arbitrary or unreasonable. If theGovernment acts in conformity with certain healthy standards andnorms such as awarding of contracts by inviting tenders, in thosecircumstances, the interference by courts is very limited;(c) In the matter of formulating conditions of a tender documentand awarding a contract, greater latitude is required to beconceded to the State authorities unless the action of the tenderingauthority is found to be malicious and a misuse of its statutorypowers, interference by courts is not warranted;(d) Certain preconditions or qualifications for tenders have to belaid down to ensure that the contractor has the capacity and theresources to successfully execute the work; and(e) If the State or its instrumentalities act reasonably, fairly and inpublic interest in awarding contract, here again, interference bycourt is very restrictive since no person can claim a fundamentalright to carry on business with the Government.”In the aforesaid decision, it is further observed that theGovernment and their undertakings must have a free hand insetting terms of the tender and only if it is arbitrary,discriminatory, mala fide or actuated by bias, the courts wouldinterfere. It is further observed that the courts cannot interferewith the terms of the tender prescribed by the Governmentbecause it feels that some other terms in the tender would havebeen fair, wiser or logical.
Arguments
4 (f)Tender process has been challenged on other groundsalso, relying on Government Resolution dated 27.09.2018.5.Learned counsel for the petitioner Mr. Sachin S.Deshmukh submits that petitioner is entitled to challenge tenderprocess and the tender conditions without participating in thetender process if there is arbitrariness, mala fides andhighhandedness. He would submit that the respondent no. 2 –Corporation has audacity to retain the conditions which wereearlier criticized by the High Court, which amounts toarbitrariness and highhandedness. It is further contended that notender price was fixed which is arbitrary and against the findingsof High Court in the earlier round of litigation.6.He submits that the eligibility conditions stipulated inclause 19 vide condition nos. II, III, VII, VIII and IX stated inparagraph no. 10 of the memo of the petition are unjustified,arbitrary and irrational. The tender process is against guidelinesprovided by Government Resolution dated 27.09.2018. He furthersubmits that impugned tender notice is against Solid WasteManagement Rules of 2016. It is contended that impugned tenderconditions are designed to favour particular bidder and to excludethe tenderers like petitioner. 5 7.Respondent no. 2 – Corporation has filed affidavit-in-reply. Learned Senior Counsel Mr. S.B. Deshpande appearing forrespondent no. 2 submits that the petitioner has no locus tochallenge the tender process or conditions as it has notparticipated in the process. The condition nos. VII and IX were notquashed by the High Court in earlier round of litigation. Theimpugned tender conditions are formulated considering thenature and the magnitude of the work and to ensure smooth andeffective execution of the contract. It is contended that it is theprerogative of the Corporation to select the tender conditionwhich would be beneficial and best suited to the purpose soughtto be achieved. The Corporation has every right to ensure financialcapacity of the bidder.8.Learned Senior Counsel would submit that it wouldnot be possible to fix particular amount of contract or estimatedamount of contract considering the nature of the work. It isfurther submitted that considering scope of judicial review, nocase is made out to cause any interference in the tender process.The Corporation received three bids in the present process. Herelies on following judgments : 6 i.Galaxy Transport Agencies, Contractors, Traders, Transportsand Suppliers Versus New J.K. Roadways, Fleet Owners andTransport Contractors and others, (2021) 16 SCCC 808 ;ii.Tata Motors Limited Versus The Brihan Mumbai ElectricSupply and Transport Undertaking, 2023 (5) ALL MR 306 (S.C.) ;iii.N.G. Projects Limited Versus Vinod Kumar Jain and others,(2022) 6 SCC 127 ;9.We have considered rival submissions of the parties.Learned counsel for the petitioner restricts the submission to theextent of condition nos. II, III, VII, VIII and IX of clause 19 of thetender document and fact that no estimated cost is quoted in thetender notice. He would point out clause nos. 2.2 and 2.3 to shownature and gravity of the work. He would further submit that inthe absence of contract value or estimated price, it would bedifficult to determine amount of earnest money deposit as perclause no. 3.1.10.The tender notice dated 07.02.2024 sufferedadjudication by judgment and order dated 02.04.2024 in WritPetition No. 2717/2024. The co-ordinate bench quashed theprocess and recorded following findings : 7 i.The guidelines issued by Government Resolution dated27.09.2018 were not followed to the extent of opening ofbids.ii.The Corporation should have resorted to re-invitationof the tenders.iii.The price of the tender was not fixed.iv.Amount of bank guarantee fixed at Rs. 4 Croresinstead of 20 % of the tender amount was arbitrary.v.Petitioner cannot be estopped from participating in thetender process on account of conduct.vi.The Corporation was responsible for potential loss tothe public exchequer for not following GovernmentResolution dated 27.09.2018.11.The petitioner is raising objection to the tender processand to the tender conditions. It is not necessary that it shouldparticipate in the tender process for challenging the conditions. Byfollowing judgment of Ramana Dayaram Shetty VersusInternational Airport Authority of India and others, (1979) 3 SCC489, we have already taken view in the matter of M/s. WatergraceProducts Versus The State of Maharashtra and others, in WritPetition No. 7446/2024, that such a petition is maintainable evenwithout taking part in the tender process. We, therefore, over rulethe objection of the respondents regarding locus and themaintainability of the petition. 8 12.Though same tender conditions and the eligibilitycriteria were part of earlier tender process which was quashed bya co-ordinate bench, following two tender conditions were notchallenged or suffered adjudication :“VII.List of works in tenderer on the date of submission of thethis tender.IX.Details of Technical personnel’s available with thecontractor.”The co-ordinate bench criticized for not fixing thetender price and fixing Rs. 4 Crores as bank guarantee.13.So far as eligibility criteria provided by clause (19) –II, III, VII, VIII and IX are concerned. Respondent no. 2 –Corporation has filed affidavit-in-reply justifying the tenderconditions. The following explanation in the reply is relevant :“6]The deponent respectfully says and submits that, insofar as,the allegations regarding arbitrariness of conditions, it is submittedthat, as per Clause 19 of the tender process, the bidder shouldhave minimum 07 years of experience in last 10 years forprovision service is concerned, the area of Latur MunicipalCorporation vast, therefore, it is necessary the tenderer havingmore experience of collection of Solid Waste, Drain Cleaning, Roadsweeping etc. because solid waste management is very importantfor the safe disposal of wastes and to reduce environmentalpollution and avoid any health hazards, if the management is notexperienced and therefore, the condition of 07 years is imposed.Further, the turnover of 90 Crores shows the ability of tenderer tomanage the daily affairs regarding collection of solid waste anddisposal of waste, otherwise it would cause great prejudice to thehealth of public. Hence, the contentions of petitioner that, theconditions regarding 07 years’ experience and turnover of 90Crores is baseless, deserves no consideration. Moreover, as per thegovernment policy every municipal Corporation will received 15th 9 financial commission grands, but unfortunately since last 1 year thepresent deponent has not received any grands and as such due tothe lack of grands the financial position of the present dependentCorporation is poor and as such the condition in respect ofworking capital is incorporated as per the central business vigilancecommission guidelines. Considering financial position, the workingcapital condition was incorporation in the contract. However, thepresent petitioner cannot make any grievance in respect of theterms and conditions of the contract. It is purely domain of thecorporation, what is the pre-qualification criteria for every bidder,therefore the contention in respect of conditions raised by thepetitioner is frivolous and need not to be consider.7]The deponent says and submits that, the main dispute ofthe petitioner is in respect of conditions mentioned in the tenderprocess, more particularly, the condition Clause 19 EligibilityCriteria i.e. condition regarding minimum 07 years’ experience ofproviding service of door to door transportation and certificatefrom C.A. regarding 90 Crores turnover in three years isconcerned, it is submitted that, it is the power and right of theMunicipal Corporation to insert any condition, which would for thebeneficial for the corporation and public at large and same cannotbe challenge in the writ petition and the court will not interfere inthe said conditions, such issue very well considered by thisHon’ble Court as well as Hon’ble Court in cantina of judgments,therefore, the writ petition deserves to be dismiss with cost.”[As verbatim]14.We find that, the Corporation is dealing with SolidWaste Management for Latur City. It would be reasonable for it toensure smooth and timely execution of the contract. It is the bestjudge to select the condition to suit the purpose and the objectsought to be achieved. There is no wonder if it expects andensures that most experienced, skilled and financially ablecontractor is selected. Keeping in view financial condition of theCorporation, eligibility conditions are designed. Under the judicialreview and in writ jurisdiction, we cannot sit in an appeal over
Decision
16 Similar views have been expressed in the case of EducompDatamatics Ltd. (supra) and Meerut Development Authority(supra).”21.The upshot, the petition is devoid of merits.22.The writ petition is dismissed. Rule is discharged.[ SHAILESH P. BRAHME, J. ] [ MANGESH S. PATIL, J. ]LATER ON : 23.After pronouncement of the order, the learnedadvocate for the petitioner submits that interim order granted bythe order dated 08.07.2024 continues till date and it may beextended for a reasonable time.24.The learned advocate for the respondent – MunicipalCorporation strongly opposes the request. He submits that thetender in process is for garbage collection and the condition ispathetic. Any delay in completing the tender process would add tothe misery of the citizens.25.In order to extend a fair chance, particularly when theinterim relief is operating till date, it shall continue for a period oftwo weeks.[ SHAILESH P. BRAHME, J. ] [ MANGESH S. PATIL, J. ]Thakur-Chauhan/-