Madhya Pradesh High Court
Om Sai Vision Through Proprietor … vs The State Of Madhya Pradesh on 3 December, 2024
Author: Vivek Rusia
Bench: Vivek Rusia
NEUTRAL CITATION NO. 2024:MPHC-IND:34445
1 W.P. No. 16667 of 2024
IN THE HIGH COURT OF MADHYA PRADESH
AT I N D O R E
BEFORE
HON'BLE SHRI JUSTICE VIVEK RUSIA
&
HON'BLE SHRI JUSTICE GAJENDRA SINGH
ON THE 3rd OF NOVEMBER, 2024
WRIT PETITION No. 16667 of 2024
OM SAI VISION THROUGH PROPRIETOR SANTOSH KUMAR
AGRAWAL
Versus
THE STATE OF MADHYA PRADESH AND OTHERS
---------------------------------------------------------------------------------------------------------
Appearance:
Shri Vikram Bhatnagar - Advocate for the petitioner.
Shri Sudeep Bhargava - Dy. A.G. for respondent/State.
Shri Ambar Pare - Advocate for the respondent No.2.
ORDER
Per: Justice Vivek Rusia
The petitioner has filed this present petition under Article 226
of the Constitution of India seeking the quashment of NIT dated
14.06.2024 and seeking further direction for allotment of work in
process to the NIT dated 04.10.2023.
FACTS OF THE CASE IN BRIEF ARE THAT:-
2. The respondent No.2 has issued an NIT dated 04.10.2023 for
selecting the agency to carry out Information, Education and
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Communication Activities (IEC), support MIS data collection and
conduct survey for Solid and Liquid Waste Management in Ratlam
Municipal Corporation in line with Swachh Bharat Mission (SBM),
Urban (hereinafter referred to as “work in question”). The probable
amount of the contract was Rs. 3,14,40,000/- and the period of work
was 24 months. Including petitioner as may as six firms submitted a
bid. The respondent No. 6 quoted the lowest rate Rs. 12,18,400/- and
found L1. The petitioner was placed at Serial No. 2 as L2. Thereafter,
the respondent No. 2 issued a Letter of Acceptance dated 29.12.2023 to
the respondent No. 6. The respondent No. 6 send a letter that the rates
have wrongly been quoted on monthly basis in the tender documents,
therefore, he be permitted to change the rates or tender be cancelled.
3. The Commissioner, Nagar Palika Nigam, Ratlam vide letter
dated 02.05.2024 has sought an opinion from Mission Director, Swachh
Bharat Mission (Urban) on two points firstly the rate Rs. 12,18,400/- be
treated as monthly rate secondly PNB amount be returned to respondent
No. 6 and tender be allotted to L2 i.e. the petitioner who has quoted Rs.
2,38,08,000/-. Instead of issuing work order to the petitioner being L2
the respondent Municipal Corporation Ratlam has issued a second NIT
dated 14.06.2024 for the same work at the same rate. The petitioner and
others have participated in the said tender but the petitioner has also
approached this Court by way of this writ petition contending that being
a L2 the respondent No.2 be directed to allot the tender @ Rs.
2,38,08,000/-. Vide order dated 01.07.2024, this Court has directed the
parties to maintain the status quo, therefore, the respondent No.2 did not
proceed with the second NIT in which the date of opening bid was
01.07.2024.
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3 W.P. No. 16667 of 2024
4. The respondent No.2 Ratlam Municipal Corporation which is a
main contesting respondent in this matter has filed reply by submitting
that there was a discrepancy in quoting the estimated price by
respondent No.6 who stood as L1, therefore, a decision was taken to
cancel the contract under the under the provisions of Madhya Pradesh
Municipal Corporation (Account and Finance) Rules, 2018. It is further
submitted that there is specific clause in the NIT which authorizes the
Municipal Corporation to cancel the tender process at any stage. The
petitioner has no vested right to seek a writ for allotment of a tender,
hence writ petition be dismissed.
5. Learned counsel appearing for the respondent has placed
reliance on the judgment passed by the Apex Court in the case of Maa
Binda Express Carrier and Another vs. North-East Frontier
Railway and Others reported in (2014) 3 SCC 760 as well as the
judgment passed by the Division Bench of this Court in the case of
Narang Cold Storage vs. State of M.P. And others reported in
2021(3) MPLJ, in which the scope of interference by High Court in
Government contract/ tender matter has been discussed.
Heard.
6. The first NIT was issued on 04.10.2023. As per clause 5 of
Section 2 “the proposal remains valid for 120 days after the submission
date indicated in the Bid Data Sheet”, therefore, the rate quoted by the
parties had already been expired after expiry of 120 days. As per clause
5.7 “All prices should be valid for the duration specified in the Bid Data
Sheet”. Clause 7.7 gives right to the Municipal Corporation to accept or
reject any proposal, and to annul the bidding process and reject all
proposals at any time prior to contract award, without thereby incurring
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4 W.P. No. 16667 of 2024
any liability to the Agency”.
7. Now the petitioner has already participated in the second NIT.
Even now in second tender process, the respondent may get a lower
rates for this work which may save the revenue.
8. The Apex Court in the case of Maa Binda Express Carrier
(Supra) has held as under:-
” The scope of judicial review in matters relating to
award of contract by the State and its instrumentalities
is settled by a long line of decisions of this Court. While
these decisions clearly recognize that power exercised
by the Government and its instrumentalities in regard
to allotment of contract is subject to judicial review at
the instance of an aggrieved party, submission of a
tender in response to a notice inviting such tenders is
no more than making an offer which the State or its
agencies are under no obligation to accept. The bidders
participating in the tender process cannot, therefore,
insist that their tenders should be accepted simply
because a given tender is the highest or lowest
depending upon whether the contract is for sale of
public property or for execution of works on behalf of
the Government. All that participating bidders are
entitled to is a fair, equal and non-discriminatory
treatment in the matter of evaluation of their tenders. It
is also fairly well-settled that award of a contract is
essentially a commercial transaction which must be
determined on the basis of consideration that are
relevant to such commercial decision. This implies that
terms subject to which tenders are invited are not open
to the judicial scrutiny unless it is found that the same
have been tailor made to benefit any particular
tenderer or class of tenderers. So also the authority
inviting tenders can enter into negotiations or grant
relaxation for bona fide and cogent reasons provided
such relaxation is permissible under the terms
governing the tender process”.
9. The Division Bench of this Court in the case of Narang Cold
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5 W.P. No. 16667 of 2024
Storage (supra) has held as under:-
10. The Apex Court in the case of Manohar Lal Sharma
v. Narendra Damodardas Modi, (2019) 3 SCC 25 has
held that the Courts should not exercise the power of
judicial review even if a procedural error is committed
to the prejudice of the tenderer since private interests
cannot be protected while exercising such judicial
review. Para-7 & 8 of the said judgment is reproduced
below:-
7. Parameters of judicial review of
administrative decisions with regard to award
of tenders and contracts has really developed
from the increased participation of the State in
commercial and economic activity. In Jagdish
Mandal v. State of Orissa this Court, conscious
of the limitations in commercial transactions,
confined its scrutiny to the decision-making
process and on the parameters of
unreasonableness and mala fides. In fact, the
Court held that it was not to exercise the power
of judicial review even if a procedural error is
committed to the prejudice of the tenderer since
private interests cannot be protected while
exercising such judicial review. The award of
contract, being essentially a commercial
transaction, has to be determined on the basis
of considerations that are relevant to such
commercial decisions, and this implies that
terms subject to which tenders are invited are
not open to judicial scrutiny unless it is found
that the same have been tailor-made to benefit
any particular tenderer or a class of tenderers.
(See Maa Binda Express Carrier v. North-East
Frontier Railway).
8. Various judicial pronouncements
commencing from Tata Cellular v. Union of
India, all emphasise the aspect that scrutiny
should be limited to the Wednesbury principle
of reasonableness and the absence of mala
fides or favouritism.
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10. The Apex Court in SLP (C) No. 9940 of 2022 (Indore Vikas
Pradhikaran vs. Shri Humud Jain Samaj Trust and Another) in
paragraphs 13, 14 and 15 has held as under:-
” 13. This Court in the aforesaid case has held that
while exercising power of judicial review, the Court does
not sit as an appellate Court over the decision of the
government but merely reviews the manner in which the
decision was made [Tata Cellular v. Union of India,
(1994) 6 SCC 651]. In the considered opinion of this
Court, the Division Bench should not have interfered in
the matter and could not have gone to the extent of fixing
the base price/modifying the offer made by respondent
and, therefore, in light of the aforesaid judgment as the
High Court has virtually passed an order sitting in
appeal over the decision of the government in absence of
any mala fide exercise of power by the IDA, the
judgment passed by the Division Bench of the High
Court deserves to be set aside and is, accordingly set
aside. This Court in the case of Haryana Urban
Development Authority Vs. Orchid Infrastructure
Developers Pvt. Ltd. (supra) again dealing with the
cancellation of a bid of the highest bidder, in paragraphs
12,13,14,15, 16 and 30 has held as under:
“12. Firstly, we examine the question whether
there being no concluded contract in the absence
of acceptance of bid and issuance of allotment
letter, the suit could be said to be maintainable
for the declaratory relief and mandatory
injunction sought by the plaintiff. The plaintiff
has prayed for a declaration that rejection of the
bid was illegal. Merely by that, the plaintiff could
not have become entitled for consequential
mandatory injunction for issuance of formal
letter of allotment. The court while exercising
judicial review could not have accepted the bid.
The bid had never been accepted by the
authorities concerned. It was not a case of
cancellation of bid after being accepted. Thus,
even assuming as per the plaintiff’s case that the
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Administrator was not equipped with the power
and the Chief Administrator had the power to
accept or refuse the bid, there had been no
decision by the Chief Administrator. Thus, merely
by declaration that rejection of the bid by the
Administrator was illegal, the plaintiff could not
have become entitled to consequential relief of
issuance of allotment letter. Thus the suit, in the
form it was filed, was not maintainable for relief
sought in view of the fact that there was no
concluded contract in the absence of allotment
letter being issued to the plaintiff, which was a
sine qua non for filing the civil suit.
13. It is a settled law that the highest bidder has
no vested right to have the auction concluded in
his favour. The Government or its authority could
validly retain power to accept or reject the
highest bid in the interest of public revenue. We
are of the considered opinion that there was no
right acquired and no vested right accrued in
favour of the plaintiff merely because his bid
amount was highest and had deposited 10% of
the bid amount. As per Regulation 6(2) of the
1978 Regulations, allotment letter has to be
issued on acceptance of the bid by the Chief
Administrator and within 30 days thereof, the
successful bidder has to deposit another 15% of
the bid amount. In the instant case, allotment
letter has never been issued to the petitioner as
per Regulation 6(2) in view of non-acceptance of
the bid. Thus, there was no concluded contract.
Regulation 6 of the 1978 Regulations is extracted
hereunder:
“6. Sale of lease of land or building by auction.
–(1) In the case of sale or lease by auction, the
price/premium to be charged shall be such reserve
price/premium as may be determined taking into
consideration the various factors as indicated in
sub-regulation (1) of Regulation 4 or any higher
amount determined as a result of bidding in open
auction.
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(2) 10 per cent of the highest bid shall be paid on
the spot by the highest bidder in cash or by means
of a demand draft in the manner specified in sub-
regulation (2) of Regulation 5. The successful
bidder shall be issued allotment letter in Form CC
or C-II by registered post and another 15 per cent
of the bid accepted shall be payable by the
successful bidder, in the manner indicated, within
thirty days of the date of allotment letter
conveying acceptance of the bid by the Chief
Administrator; failing which the 10 per cent
amount already deposited shall stand forfeited to
the authority and the successful bidder shall have
no claim to the land or building auctioned.
(3) The payment of balance of the price/premium,
rate of interest chargeable and the recovery of
interest shall be in the same manner as provided
in sub-regulations (6) and (7) of Regulation 5.
(4) The general terms and conditions of the
auction shall be such as may be framed by the
Chief Administrator from time to time and
announced to the public before auction on the
spot.”
14. We are fortified in our view by a decision of
this Court in U.P. Avas Evam Vikas Parishad v.
Om Prakash Sharma [U.P. Avas Evam Vikas
Parishad v. Om Prakash Sharma, (2013) 5 SCC
182: (2013) 2 SCC (Civ) 737] , wherein the
questions arose for its consideration that :
whether there is any vested right upon the
plaintiff bidder until the bid is accepted by the
competent authority in relation to the property in
question? Merely because the plaintiff is the
highest bidder by depositing 20% of the bid
amount without there being approval of the same
by the competent authority and it amounts to a
concluded contract in relation to the plot in
question; and whether the plaintiff could have
maintained the suit in the absence of a concluded
contract? Considering the aforesaid questions,
this Court has discussed the matter thus : (SCC
pp. 195-97, paras 30-31)
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“30. In support of the said proposition, the
learned Senior Counsel for the defendant, Mr
Rakesh Dwivedi has also placed reliance upon
another decision of this Court in State of U.P. v.
Vijay Bahadur Singh [State of U.P. v. Vijay
Bahadur Singh, (1982) 2 SCC 365] . The
learned Senior Counsel has rightly placed
reliance upon the judgment of this Court in
Rajasthan Housing Board case [Rajasthan
Housing Board v. G.S. Investments, (2007) 1
SCC 477] which reads as under : (SCC p. 483,
para 9)
‘9. This being the settled legal position, the
respondent acquired no right to claim that the
auction be concluded in its favour and the High
Court clearly erred in entertaining the writ
petition and in not only issuing a direction for
consideration of the representation but also
issuing a further direction to the appellant to
issue a demand note of the balance amount. The
direction relating to issuance of the demand
note for balance amount virtually amounted to
confirmation of the auction in favour of the
respondent which was not the function of the
High Court.’
In State of Orissa v. Harinarayan Jaiswal [State
of Orissa v. Harinarayan Jaiswal, (1972) 2 SCC
36] case, relevant paragraph of which reads as
under : (SCC pp. 44-45, para 13)
’13. … There is no concluded contract till the
bid is accepted. Before there was a concluded
contract, it was open to the bidders to withdraw
their bids (see Union of India v. Bhim Sen
Walaiti Ram [Union of India v. Bhim Sen Walaiti
Ram, (1969) 3 SCC 146] ). [Ed.: The matter
between two asterisks has been emphasised in
Avam Evam Vikas Parishad case, (2013) 5 SCC
182.] By merely giving bids, the bidders had not
acquired any vested rights [Ed.: The matter
between two asterisks has been emphasised in
Avam Evam Vikas Parishad case, (2013) 5 SCC
182.]
31. In view of the law laid down by this Court in
the aforesaid decisions, the learned Senior
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10 W.P. No. 16667 of 2024
Counsel Mr Rakesh Dwivedi has rightly placed
reliance upon the same in support of the case of
the first defendant, which would clearly go to
show that the plaintiff had not acquired any
right and no vested right has been accrued in
his favour in respect of the plot in question
merely because his bid amount is highest and he
had deposited 20% of the highest bid amount
along with the earnest money with the Board. In
the absence of acceptance of bid offered by the
plaintiff to the competent authority of the first
defendant, there is no concluded contract in
respect of the plot in question, which is evident
from letters dated 26-5-1977 and 8-7-1977
wherein the third defendant had rejected the bid
amount deposited by the plaintiff and the same
was refunded to him by way of demand draft,
which is an undisputed fact and it is also not his
case that the then Assistant Housing
Commissioner who has conducted the public
auction had accepted the bid of the plaintiff.”
15. This Court in Om Prakash Sharma case
[U.P. Avas Evam Vikas Parishad v. Om Prakash
Sharma, (2013) 5 SCC 182 : (2013) 2 SCC (Civ)
737] has held that in the absence of a concluded
contract which takes place by issuance of
allotment letter, suit could not be said to be
maintainable as there is no vested right in the
plaintiff without approval of the bid by the
competent authority. Thus, in the wake of the
aforesaid decision, in the absence of a concluded
contract, the suit could not have been decreed
for mandatory injunction. It amounted to
enforcing of contract in the absence thereof.
16. In the light of the aforesaid discussion, it
is evident that in the absence of a concluded
contract i.e. in the absence of allotment letter
and acceptance of highest bid, the suit filed by
the plaintiff was wholly misconceived. Even if
non-acceptance of the bid was by an incompetent
authority, the court had no power to accept the
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11 W.P. No. 16667 of 2024
bid and to direct the allotment letter to be issued.
Merely on granting the declaration which was
sought that rejection was illegal and arbitrary
and by incompetent authority, further relief of
mandatory injunction could not have been
granted, on the basis of findings recorded, to
issue the allotment letter, as it would then
become necessary to forward the bid to
competent authority–Chief Administrator–for
its acceptance, if at all it was required.
30. In Meerut Development Authority v. Assn. of
Management Studies [Meerut Development
Authority v. Assn. of Management Studies,
(2009) 6 SCC 171 : (2009) 2 SCC (Civ) 803] ,
this Court has laid down that a bidder has no
right in the matter of bid except of fair treatment
in the matter and cannot insist for further
negotiation. The authority has a right to reject
the highest bid. This Court has laid down thus :
(SCC p. 182, paras 27 & 29)
“27. The bidders participating in the tender
process have no other right except the right to
equality and fair treatment in the matter of
evaluation of competitive bids offered by
interested persons in response to notice inviting
tenders in a transparent manner and free from
hidden agenda. One cannot challenge the terms
and conditions of the tender except on the
above stated ground, the reason being the terms
of the invitation to tender are in the realm of the
contract. No bidder is entitled as a matter of
right to insist the authority inviting tenders to
enter into further negotiations unless the terms
and conditions of notice so provided for such
negotiations.
29. The Authority has the right not to accept the
highest bid and even to prefer a tender other
than the highest bidder, if there exist good and
sufficient reasons, such as, the highest bid not
representing the market price but there cannot
be any doubt that the Authority’s action in
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accepting or refusing the bid must be free
from arbitrariness or favouritism.”
14. Keeping in view of the aforesaid judgments, this Court
is of the considered opinion that in the absence of allotment
letter and acceptance of highest bid, no relief could have
been granted in favour of respondent No.1 as there was no
concluded contract in the matter and the decision taken by
the Tender Evaluation Committee to generate more
revenues could not have been interfered with in the manner
and method as has been done by the Division Bench of the
High Court of Madhya Pradesh at Indore Bench. The
bidder has no right in the matter of bid except of fair
treatment and cannot insist for further negotiation as has
been done in the present case. The terms and conditions of
NIT, particularly condition No. 6, empowers the IDA to
accept or reject any or all bids. In the present case, the bid
was rejected for valid and cogent reasons and, therefore,
the order passed by the Division Bench of the High Court of
Madhya Pradesh is set aside.
15. Learned Counsels for respondent No. 1 placed heavy
reliance on Eva Agro (supra) stating that the Appellant
does not have absolute or unfettered discretion to cancel
the auction. While we agree with the principle that the
auctioning authority must adhere to the rule of law, the
facts of the present case are entirely distinguishable from
Eva Agro (supra). In that case, after the Appellant therein
was declared the highest bidder, the auction was cancelled
without providing any reason. This decision was found to
be manifestly arbitrary by this Court and therefore, the
appeal was allowed. However, in the present case, the
decision to cancel the auction was not unfounded, it was
undertaken to remedy the erroneous minimum rate provided
in the NIT dated 07.07.2020, as noted in the report of the
Div. Commissioner of the IDA. Therefore, the Appellants
were well within their rights to cancel the auction. More
importantly, in the present case, pursuant to the
cancellation of the first NIT, a second NIT was issued
wherein the respondent No. 1 did not participate. Despite
this fact, the Division Bench of the High Court effectively
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usurped the powers of the auctioning authority and fixed
the price at Rs. 26,000/- per square meter. Hence, being
entirely distinguishable on facts, the reliance placed is of
no assistance to respondent No. 1.”
11. Taking note of the judgments passed by the Apex Court as well
as by the Division Bench of this Court in the aforesaid cases, we are not
inclined to entertain the present writ petition.
12. Accordingly, the writ petition is hereby dismissed.
(VIVEK RUSIA) (GAJENDRA SINGH)
JUDGE JUDGE
Vatan
VATAN Digitally signed by VATAN SHRIVASTAVA
DN: c=IN, o=HIGH COURT OF MADHYA
PRADESH BENCH INDORE, ou=HIGH
COURT OF MADHYA PRADESH BENCH
SHRIVAS
INDORE,
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serialNumber=9D9855F2478546B3489381TAVA
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Date: 2024.12.06 17:19:33 +05’30’