Saga Transports vs. Hll Lifecare LTD. - Kerala High Court, 21 August 2019

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE SHAJI P.CHALY WEDNE AY, THE 21ST DAY OF AUGUST 2019 / 30TH SRAVANA, 1941 WP(C).No.14228 OF 2019(C) PETITIONER: SAGA TRANSPORTS, REPRESENTED BY T. GANGADHARAN, PROPRIETOR, NORTH FORT GATE, TRIPUNITHURA, KOCHI - 682 301. BY ADVS. SRI.N.JAMES KOSHY SRI.T.SANJAY SRI.R.REJI KUMAR RESPONDENTS: 1 HLL LIFECARE LTD., REPRESENTED BY ITS GENERAL MANAGER (OPERATIONS), UNIT CHIEF, HLL LIFE CARE LTD, PEROORKADA FACTORY, THIRUVANANTHAPURAM - 695 005. 2 THE CHAIRMAN AND MANAGING DIRECTOR, HLL LIFECARE LTD.,MAHILAMANDIRAM ROAD, POOJAPPURA, TRIVANDRUM - 695 012. 3 THE SR. MANAGER (PURCHASE) HLL LIFE CARE LTD, PEROORKADA FACTORY, THIRUVANANTHAPURAM - 695 005. 4 THE DIRECTOR (TECHNICAL AND OPERATIONS) HLL BHAVAN, POOJAPPURA P.O, THIRUVANANTHAPURAM - 695 005. 5 E. A. SUBRAMANIAN DIRECTOR (TECHNICAL AND OPERATIONS), HLL BHAVAN, POOJAPPURA. P.O., THIRUVANANTHAPURAM - 695 005. 6 M/S. SRI. SASTHA CARRIERS 'SAROJ NIVAS', PUTHIYA ROAD JUNCTION, IRUMPANAM P.O, TRIPUNITHURA, ERANAKULA, - 682 309. 7 M/S. SOUTHERN ROADLINES 33/2165, AYROOKUZHIYIL HOUSE, VENNALA P.O, COCHIN BYPASS, ERNAKULAM - 682 028. WP(C).14228/2019 & Con.Case(C).910/2019 2 8 M/S. ROY ANTONY OIL TRANSPORTS THOPPIL HOUSE, ALAPPUZHA - 688 013. R1-R5 BY ADV. SRI.V.KRISHNA MENON SMT.P.VIJAYAMMA SMT.J.SURYA SRI.U.K.RAMAKRISHNAN (SR.) SRI.E.K.MADHAVAN THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 08.08.2019, ALONG WITH Con.Case(C).910/2019, THE COURT ON 21.8.2019 DELIVERED THE FOLLOWING:

WP(C).14228/2019 & Con.Case(C).910/2019 3 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE SHAJI P.CHALY WEDNE AY, THE 21ST DAY OF AUGUST 2019 / 30TH SRAVANA, 1941 Con.Case(C).No.910 OF 2019 IN WP(C). 10355/2019 AGAINST THE JUDGMENT IN WP(C) 10355/2019(T) OF HIGH COURT OF KERALA PETITIONER: SAGA TRANSPORTS REPRESENTED BY T. GANGADHARAN, PROPRIETOR, NORTH FORT GATE, TRIPUNITHURA, KOCHI - 682 301. BY ADVS. SRI.T.SANJAY SRI.N.JAMES KOSHY SRI.R.REJI KUMAR RESPONDENTS: 1 K.BEJI GEORGE (AGE AND FATHER'S NAME NOT KNOWN TO THE PETITIONER), THE CHAIRMAN AND MANAGING DIRECTOR, HLL LIFE CARE LTD, MAHILAMANDIRAM ROAD, POOJAPPURA, TRIVANDRUM - 695 012. 2 ANIL SHANKAR R. S. (AGE AND FATHER'S NAME NOT KNOWN TO THE PETITIONER), THE SR. MANAGER (PURCHASE), HLL LIFE CARE LTD, PEROORKADA FACTORY, THIRUVANANTHAPURAM - 695 005. R1-R2 BY ADV. SRI.V.KRISHNA MENON SMT.P.VIJAYAMMA SMT.J.SURYA SRI.U.K.RAMAKRISHNAN (SR.) SRI.E.K.MADHAVAN THIS CONTEMPT OF COURT CASE (CIVIL) HAVING BEEN FINALLY HEARD ON 21.08.2019, ALONG WITH WP(C).14228/2019(C), THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C).14228/2019 & Con.Case(C).910/2019 4 J U D G M E N T

The writ petition and the contempt case are filed by one and the same petitioner. While the writ petition is filed challenging Ext.P11 re-tender notice and seeking other consequential reliefs, the contempt case is filed contending that, the directions contained in the judgment dated 3.4.2019 in respect of Ext.P1 tender notification issued by the 1st respondent in the writ petition was not complied with. Therefore, I heard them together and propose to pass this common judgment.

Brief material facts for the disposal of the writ petition are as follows; petitioner took part in Ext.P1 tender proceedings for the transportation of furnace oil from IOCL, Kochi to HLL Life Care Units in Thiruvananthapuram. The last date of receipt of tender was 21.2.2019 and the bid was opened on the very same day. Five firms participated in the tender. According to the petitioner, in gross violation of the tender conditions, one firm neither paid Earnest Money Deposit nor produced copy of SSI/MSME certificate and

WP(C).14228/2019 & Con.Case(C).910/2019 5 two firms did not remit the EMD as stipulated in the conditions. That apart it is pointed out that, the said infirmities were noted in the minutes of the Tender Evaluation Committee, which opened the price bid. When it was noticed that the 1st respondent did not disqualify the said unqualified companies, petitioner company submitted a representation before the 2nd respondent i.e., the the Chairman and Managing Director of the 1st respondent with a copy to the 3rd respondent i.e., the Senior Manager (Purchase) of the 1st respondent Company. However, as per letter dated 28.2.2019, the 4th respondent i.e., the Director (Technical & Operations) of the 1st respondent company replied that, 1st respondent is proceeding with the tender process treating the tenders submitted by the said firms as valid without adhering to the terms and conditions of the tender notifications. Aggrieved by the said attempt of the 1st respondent company, petitioner has approached this court by filing W.P. (C) No.10355/2019 and has secured Ext.P9 judgment dated 3.4.2019 whereby the 2nd respondent was directed to finalise Ext.P8 representation and also directing

WP(C).14228/2019 & Con.Case(C).910/2019 6 to proceed with the technically qualified bids keeping in mind clauses 3 & 4 of Ext.P1 tender notification. According to the petitioner, in gross violation of the directions contained in Ext.P1 judgment, 2nd respondent refused to consider the directions contained thereunder and went ahead to consider the unqualified tenders. That apart it is pointed out, one of the unqualified firms is found as L1. However, that firm withdrew from the tender proceedings under mysterious circumstances and the 1st respondent is continuing with the previous contractor, who quoted exorbitant rates years back. Instead of awarding the contract to the qualified firms, among which petitioner is the L1, respondents have decided to re-tender the same as per Ext.P11 re-tender notice, violating the directions issued by this court. Since the 1st respondent company is a Central Government organisation and 2nd and 3rd respondents being its officers, they are duty bound to act fairly but overlooking the lowest bid submitted by the petitioner is absolutely an illegal and arbitrary action liable to be interfered with by this court under Article 226 of the Constitution of

WP(C).14228/2019 & Con.Case(C).910/2019 7 India.

A statement is filed by the 1st respondent disputing the allegations and claims and demands raised by the petitioner. Among other contentions, it is submitted that, in response to tender notice dated 12.11.2018, 1st respondent received tenders from six persons. The 6th respondent herein has furnished EMD of Rs.75,000/- as per D/D No.188519 dated 28.11.2018 and the 7th respondent has also furnished EMD of Rs.75,000/- as per D/D No.128671 dated 26.11.2018. The 8th respondent being a Micro, Small and Medium Enterprises (MSME) claimed exemption from furnishing EMD and paying tender fee and produced Udyog Adhaar Memorandum, evident from Annexure B. First respondent had issued receipts dated 3.12.2018 to the 6th and 7th respondents acknowledging the receipt of the EMD, which are produced as Annexures C&D. The tenders received pursuant to Annexure A was scrutinized by the Technical Evaluation Committee consisting of Deputy General Manager (Engg.), Senior Manager (Purch.), Senior Manager (Uty.) and Manager (Purch.). The Committee after scrutiny prequalified all the six

WP(C).14228/2019 & Con.Case(C).910/2019 8 parties. Bids were opened on 20.12.2018 and the Committee found that, the rate quoted by Padhavi Road Lines was the lowest, however, it did not respond after opening of the price bid inspite of repeated requests made through various e-mails and a registered letter. In view of this, the procuring department of the 1st respondent company recommended for limited re- tender and the same was sanctioned by the Director (Technical & Operations) of the 1st respondent. Pursuant to the inaction of the successful bidder, 1st respondent decided to invite limited tender notice. In view of this, Ext.P1 was issued inviting for transportation of furnace oil from IOCL, Kochi to the factories of the 1st respondent at Peroorkada and Akkulam. The EMD to be furnished with the tender as per Ext.P1 was fixed at Rs.50,000/-. First respondent received tenders from five persons i.e., the petitioner, Sree Narayana Transports and respondents 6 to 8. Respondent Nos.6 and 7 by letters dated 17.2.2019 and 23.2.2019 requested to adjust the EMD furnished in the previous tender towards EMD against Ext.P1 tender. Likewise, respondent No.8 by letter

WP(C).14228/2019 & Con.Case(C).910/2019 9 dated 22.2.2019 requested for waiver of EMD in view of Udyog Adhaar, copy of which was submitted along with earlier tender. The tenders received in response to Ext.P1 were scrutinized and evaluated by Stores Purchase Committee consisting of Manager (Purchase), Manager (Finance) and Sr.Manager (Purchase) of the 1st respondent and five parties were pre-qualified including petitioner and respondents 6 & 8. The rates quoted by the petitioner, respondents 6 & 7, and Sree Narayana Transports were excluding the GST, at 5% applicable to the quoted rates. However, the rate quoted by the 8th respondent was inclusive of 5% GST. The Stores Purchase Committee on 28.3.2019 decided to invite the 8th respondent for negotiation on 30.3.2019 at 1.45 p.m., pursuant to which, 8th respondent attended the negotiation and agreed to reduce the rate, and accordingly it was decided to issue work order to the 8th respondent, evident from Annexure E. The work order dated 1.4.2019 was sent to the 8th respondent by e-mail on 2.4.2019, which was received by the 8th respondent on the same day itself and they accepted the said work order. Accordingly, 1st

WP(C).14228/2019 & Con.Case(C).910/2019 10 respondent on 2.4.2019 requested the 8th respondent to provide a vehicle at IOCL, Kochi on 3.4.2019 for transportation of 17 Metric Tonnes of furnace oil to the factory at Peroorkada. As per e-mail dated 3.4.2019, 8th respondent requested the 1st respondent to issue an authorisation letter to IOCl and HLL and accordingly it was issued on 3.4.2019. But the 8th respondent did not provide the vehicles at IOCL. Thereupon 1st respondent issued delivery schedule through e-mail dated 4.4.2019 for providing confirmation for furnace oil transportation during the month of April, 2019 to the factory at Peroorkada. However, as per e-mail dated 5.4.2019, 8th respondent has informed that, it is not interested in taking up the work and requested to cancel the work order issued to it.

It is the case of the 1st respondent that, the Central Vigilance Commission has issued a communication dated 3.8.2019 stipulating that in the case of lowest tenderer (L1) backing out, there should be re-tendering as per instructions, which was reiterated as per Annexure F order dated 3.10.2006. In

WP(C).14228/2019 & Con.Case(C).910/2019 11 view of the said circular of the Central Vigilance Commission, the Stores Purchase Committee recommended for re-tender of the works covered by Ext.P1. It was accordingly that, 1st respondent issued Ext.P11 re- tender notice dated 17.5.2019, and forwarded the tender document to the petitioner and respondents 6 & 7 through e-mail dated 17.5.2019 and also under covering letter dated 21.5.2019. In response to the tender notice dated 17.5.2019, four tenders were received and the committee after scrutiny and evaluation of the tenders pre-qualified, all the parties i.e., petitioner, respondents 6 & 7, and one Sree Narayana Transports. The price bids were opened on 27.5.2019 and it was found that the rate quoted by the petitioner for transportation of furnace oil from IOCL, Kochi to 1st respondent's factory at Peroorkada is the lowest while the rate quoted by Sree Narayana Transports for transportation of furnace oil to the 1st respondent's factory at Akkulam is the lowest, evident from Annexure H & I respectively. As per the willingness provided by the petitioner Annexure J work order was issued and petitioner commenced

WP(C).14228/2019 & Con.Case(C).910/2019 12 transportation of furnace oil. The other successful bidder also started operations.

Therefore, the sum and substance of the contention advanced by the 1st respondent is that, the contentions advanced by the petitioner that the other bidders have not provided EMD to Ext.P1 tender notice is not at all true or correct and all the parties have complied with the requirements as per the tender documents and it was thereupon that all of them were pre-qualified. It is also submitted that, the lowest bidder i.e., the 8th respondent had backed out from the tender and it was thereupon that the 1st respondent decided to conduct re-tender in accordance with the directions of the Central Vigilance Commission as per the notification referred to above. Therefore, according to the 1st respondent, there is no manner of illegality, arbitrariness or unfairness on the part of the respondents in processing the bid submitted by the participants and later cancelling the same since the lowest tenderer backed out from the bid.

So far as the contempt case is concerned, as I have pointed out earlier, the contention of the

WP(C).14228/2019 & Con.Case(C).910/2019 13 petitioner is that, the directions to consider Ext.P8 representation was not considered by the respondents and the bid was cancelled abruptly unmindful of the directions contained in the judgment dated 3.4.2019. 7. A typical statement as is filed in the writ petition is filed by the 1st respondent narrating the facts and circumstances leading to the award of the tender and the cancellation, pursuant to Ext.P1 notice inviting tender justifying the actions of the 1st respondent. A reply affidavit is filed by the petitioner reiterating the stand adopted in the contempt of court case.

I have heard learned counsel for petitioner Sri.T.Sanjay, learned Senior counsel appearing for respondents Sri.U.K.Ramakrishnan, assisted by Sri.V. Krishna Menon and perused the pleadings and documents on record.

The questions emerge for consideration in the writ petition is as to, whether there was any illegality, arbitrariness or malafides on the part of respondents 1 to 3 in cancelling Ext.P1 tender, and inviting fresh tender, and as to whether the said

WP(C).14228/2019 & Con.Case(C).910/2019 14 authorities have overlooked the directions contained in the judgment rendered by this court on 3.4.2019 ? The discussion of facts made above would make it clear that, pursuant to the opening of the commercial bid, the lowest tenderer i.e., the 8th respondent was issued with work order after conducting negotiation on 30.3.2019 and thereafter work order was issued to the 8th respondent on 1.4.2019, evident from Annexure E, which was received by the 8th respondent on 2.4.2019. The 1st respondent as per a correspondence dated 2.4.2019 requested the 8th respondent to provide vehicle at IOCL, Kochi on 3.4.2019 for transportation of furnace oil to the factory at Peroorkada but the 8th respondent did not provide the vehicle, and later as per communication dated 5.4.2019 expressed its intension to withdraw from the tender and it was accordingly Ext.P11 re-tender was issued.

10.

The case projected by the 1st respondent is that, consequent to CVC notifications dated 3.8.2001, & 3.10.2006 produced as Annexure F, if the lowest tenderer backs out from any concluded tender, re- tendering shall be done. It was accordingly that 1st

WP(C).14228/2019 & Con.Case(C).910/2019 15 respondent issued Ext.P11 re-tender and in the said tender process contract is awarded to the petitioner to transport furnace oil from IOCL, Kochi to Peroorkada.

11.

In my considered opinion, though various contentions are raised by the petitioner with respect to the infirmities, and the violation of the conditions of pre-qualification of Ext.P1 tender, the discussions made above would make it clear that, sufficient explanations are offered by the 1st respondent, from where it is clear that, the infirmities pointed out by the petitioner in respect of the EMD and MSME were not existing in reality, since the amounts and certificate of the tenderers were available with the 1st respondent consequent to the EMD and certificate submitted in the previously cancelled tender invited in the year 2018. It is also an admitted fact that, the negotiation as well as the work order was issued to the 8th respondent prior to the judgment rendered by this court and the judgment was rendered by this court thinking that the process was yet to be finalised by the 1st respondent. The

WP(C).14228/2019 & Con.Case(C).910/2019 16 statement submitted by the 1st respondent would show that nothing was remaining to be considered in accordance with the directions issued by this court since tender proceedings were over and the day after the judgment, the 8th respondent has expressed its inability to continue with the contract.

12.

True, the 1st respondent ought to have informed the matter to this court, however, fact remains petitioner could not establish before this court that steps were taken for finalisation of the tender as per Ext.P1 tender notice in order to get over any directions that are likely to be issued by this court. It is also evident that, proceedings that have taken place pursuant to Ext.P1 tender notice negotiation with the 8th respondent and the issuance of work order dated 1.4.2019 on 2.4.2019 and the consequential actions are not disputed by the petitioner. Though petitioner has a contention that Annexure F notification issued by the Central Vigilance Commission is not an authenticated one, I am of the considered opinion that, a Central Government Undertaking like the 1st respondent would not venture

WP(C).14228/2019 & Con.Case(C).910/2019 17 to produce fabricated documents before this court.

13.

On an evaluation of Annexure F circular of CVC, it is categoric and clear that, if L1 backs out, there should be a re-tender. Therefore, it cannot be said that, the re-tender as per Ext.P11 is illegal and arbitrary, or overlooking the directions contained in the judgment of this court dated 3.4.2019. I am also of the view, petitioner has not made out any case of malafides or manifest injustice on the part of respondents 1 to 3 in cancelling the earlier tender and issuing Ext.P11 fresh tender notice. It is also worthwhile to note that, as per the interim order passed by this court in the present writ petition, petitioner participated in Ext.P11 tender and was a successful bidder for transportation of furnace oil to one destination i.e., from IOCL, Kochi to Peroorkada. Accordingly, the writ petition would stand dismissed and hold that the proceedings conducted as per Ext.P11 tender notification is valid and proper. So much so, the sum and substance of the evaluation made above would make it clear that, there was no deliberate, wilful or contumacious act on the part of

WP(C).14228/2019 & Con.Case(C).910/2019 18 the respondents in complying with any directions issued by this court in the judgment dated 3.4.2019. Therefore, I do not think petitioner has made out any case against the respondents in the contempt petition also. The contempt petition fails, accordingly it is dismissed. SHAJI P.CHALY Smv 16.8.2019 JUDGE

WP(C).14228/2019 & Con.Case(C).910/2019 19 APPENDIX OF WP(C) 14228/2019 PETITIONER'S EXHIBITS: EXHIBIT P1OF THE TECHNO-COMMERCIAL BID TENDER NO.HLL/PFT/PUT/FOT(2)/2019-20 DATED 15.02.2019. EXHIBIT P2OF REPRESENTATION DATED 21.02.2019 SUBMITTED BY THE PETITIONER. EXHIBIT P3OF EMAIL DATED 27.02.2019 SENT TO HLL LIFE CARE LTD. EXHIBIT P4OF LETTER DATED 28.02.2019 SENT BY THE 3RD RESPONDENT. EXHIBIT P5OF REPRESENTATION DATED 01.03.2019 SUBMITTED TO HLL LIFECARE LTD. EXHIBIT P6OF OFFICE ORDER DATED 04.09.2003 ISSUED BY THE CVC. EXHIBIT P7OF LETTER NO.HLL/CHO/DT&O/2019/7817 DATED 27.03.2019 ISSUED BY THE 4TH RESPONDENT. EXHIBIT P8OF PETITIONER'S REPRESENTATION DATED 30.03.2019 TO THE 2ND RESPONDENT. EXHIBIT P9OF THE JUDGMENT DATED 03.04.2019 IN W.P.NO.10355/2019 OF THE HIGH COURT OF KERALA. EXHIBIT P10OF LETTER DATED 14.05.2019 SENT TO PETITIONER BY 3RD RESPONDENT. EXHIBIT P11OF RELEVANT PAGES OF TECHNO- COMMERCIAL BID TENDER NO.HLL/PFT/PUT/FOT(3)/2019-20 DATED 17.05.2019 ISSUED BY HLL LIFE CARE LIMITED. ANNEXURE AOF THE TENDER NOTICE NO.HLL/PFT/PUR/FOT(2)/2019-20 DATED 12/11/2018. ANNEXURE BOF UDYOG AADHAR NO. KL 01E 0005447 FURNISHED BY THE EIGHTH RESPONDENT. ANNEXURE COF THE RECEIPT NO.100109281 DATED 03/12/2018 TO THE 6TH RESPONDENT. ANNEXURE DOF THE RECEIPT NO.100109279 DATED

WP(C).14228/2019 & Con.Case(C).910/2019 20 03/12/2018 TO THE 7TH RESPONDENT. ANNEXURE EOF THE WORK ORDER DATED 01/04/2019 ISSUED TO THE 8TH RESPONDENT. ANNEXURE FOF THE CIRCULAR NO.005/CRD/012 DATED 03/10/2006. ANNEXURE GOF THE TENDER NOTICE NO.HLL/PFT/PUR/FOT(3)/2019-20 DATED 17/05/2019 ISSUED BY THE FIRST RESPONDENT. ANNEXURE HOF THE RATE COMPARATIVE STATEMENT FOR THE TRANSPORTATION OF FURNACE OIL FROM IOCL KOCHI TO PEROORKADA FACTORY. ANNEXURE IOF THE RATE COMPARATIVE STATEMENT FOR THE TRANSPORTATION OF FURNACE OIL FROM IOCL KOCHI TO AKKULAM FACTORY. ANNEXURE JOF THE WORK ORDER NO. HLL/PFT/PUR/FOT/2019-20 DATED 06/06/2019. WP(C).14228/2019 & Con.Case(C).910/2019 21 APPENDIX OF Con.Case(C) 910/2019 PETITIONER'S

ANNEXURES

: ANNEXURE A1OF THE JUDGMENT DATED 03/04/2019 IN WPC NO.10355/2019 OF THIS HONOURABLE COURT. ANNEXURE A2OF THE REPRESENTATION DATED 03.04.2019 SENT TO THE HLL LIFE CARE LIMITED. ANNEXURE A3 THEOF THE PETITIONER'S REPRESENTATION DATED 06.04.2019. ANNEXURE A4OF THE DELIVERY RECEIPT DATED 10.04.2019 ISSUED BY THE PROFESSIONAL COURIER COMPANY. ANNEXURE A5OF THE LETTER DATED 14.05.2019 SENT BY THE 2ND RESPONDENT. ANNEXURE A6 THEOF THE NOTICE DATED 18.05.2019.