//
you're reading...
legal issues

Govt. Tenders -Refusing to accept the tender at end as in the earlier tender the parties failed to perform the contract – In earlier litigation, the clause 7 was invoked but high court refused to accept the same for debarring the parties for 7 years – Apex court held that the high court failed to interpret it’ own order properly and as such set aside the same and allowed the appeal = CIVIL APPEAL NO. 9379 OF 2014 (Arising out of SLP (Civil) No.33798/2012) SHREE SHYAMJI TRANSPORT COMPANY … Appellant Versus FOOD CORPORATION OF INDIA & ORS. …Respondents = 2014-Oct. month-http://judis.nic.in/supremecourt/imgst.aspx?filename=41981

Govt. Tenders -Refusing to accept the tender at end as in the earlier tender the parties failed to perform the contract – In earlier litigation, the clause 7 was invoked but high  court refused to accept the same for debarring the parties for 7 years – Apex court held that the high court failed to interpret it’ own order properly and as such set aside the same and allowed the appeal =

FCI invited tenders for Mandi Labour Contract  (MLC)  for

its centres at Uchana, Sonepat,  Narwana  and  Safidon  and  the  appellants

applied for the tender.  The tender consisted of two parts –  technical  bid

and price bid.   As  per  the  procedure,  on  successfully  qualifying  the

technical bid, the  price  bid  was  to  be  opened.   The  appellants  were

eligible in technical bid thereby making themselves  qualified  for  opening

of price bid.  The said price bid was opened on 2.3.2012.   The  appellants’

bid was not considered by FCI, in view of  the  fact  that  in  the  earlier

tender of Road Transport Contract (RTC) of Hathin–Rajasthan, the  appellants

had failed to deposit the security deposit and  bank  guarantee  within  the

stipulated period as required and the Earnest Money  Deposit  (EMD)  of  the

appellants had been forfeited vide Order  dated  5.11.2011  and  hence,  the

appellants’ MLC tender was rejected invoking sub clause (III)  of  Clause  4

of the Disqualification Conditions.=

Clause 7 of the MTF      to debar the appellants for  the  contract  period.

It appears that apprehension of debarment of appellants  invoking  Clause  7

was brought to the notice of the Court and the High Court did  consider  the

same as a necessary point.  In our view, the finding of  the  Court  on  the

same is binding  on  FCI.   Inspite  of  FCI’s  modification  petition,  the

finding that there was no intentional lapse on the part  of  the  appellant-

Shree Shyamji Transport Company, was neither modified nor set aside.    That

being so, while considering  the appellant’s  tender  for  MLC, FCI was  not

justified in invoking Clause 4 (III) of the MTF  on the  ground   that   the

tender of the appellants pertaining  to  RTC  Hathin–Rajasthan  was  earlier

rejected and that appellant’s EMD was forfeited. High Court,  in  our  view,

has not properly appreciated its own observations in CWP No.21694/2011  that

FCI has not invoked Clause 7 of the MTF to  debar  the  appellants  for  the

contract period.

    2014-Oct. month-http://judis.nic.in/supremecourt/imgst.aspx?filename=41981

REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 9379 OF 2014
(Arising out of SLP (Civil) No.33798/2012)
SHREE SHYAMJI TRANSPORT COMPANY … Appellant

Versus

FOOD CORPORATION OF INDIA & ORS. …Respondents

WITH

CIVIL APPEAL NO. 9380 OF 2014
(Arising out of SLP (Civil) No. 3928/2013)
M/S R.S. LABOUR AND TPT. CONTRACTOR ..Appellant

Versus

FOOD CORPORATION OF INDIA & ORS. ..Respondents

J U D G M E N T
R. BANUMATHI, J.
Leave granted. These appeals arise out of common order of the
Punjab and Haryana High Court dated 26.7.2012 passed in CWP Nos. 8415/2012
& 8416/2012 whereby the High Court declined to interfere with the action of
the Food Corporation of India (FCI) rejecting tender of the appellants-
firms.
2. Brief facts leading to the filing of these appeals are as
follows:- The appellants are partnership firms having five partners.
Respondent No. 2 – FCI invited tenders for Mandi Labour Contract (MLC) for
its centres at Uchana, Sonepat, Narwana and Safidon and the appellants
applied for the tender. The tender consisted of two parts – technical bid
and price bid. As per the procedure, on successfully qualifying the
technical bid, the price bid was to be opened. The appellants were
eligible in technical bid thereby making themselves qualified for opening
of price bid. The said price bid was opened on 2.3.2012. The appellants’
bid was not considered by FCI, in view of the fact that in the earlier
tender of Road Transport Contract (RTC) of Hathin–Rajasthan, the appellants
had failed to deposit the security deposit and bank guarantee within the
stipulated period as required and the Earnest Money Deposit (EMD) of the
appellants had been forfeited vide Order dated 5.11.2011 and hence, the
appellants’ MLC tender was rejected invoking sub clause (III) of Clause 4
of the Disqualification Conditions. According to the appellants, earlier
tender of the appellants was rejected by an Order dated 5.11.2011 invoking
Clause 7 of the Model Tender Form (MTF). The appellant-Shree Shyamji
Transport Company challenged the said Order dated 5.11.2011 by filing CWP
No.21694/2011 which was disposed of by Order dated 6.3.2012 in which the
Court observed that FCI had not invoked Clause 7 of the MTF to debar the
appellant-Shree Shyamji Transport Company for the contract period and the
apprehension of the appellant was ill-founded. In the light of the
observations in CWP No.21694/2011, appellants contend that the Order dated
21.3.2012 rejecting the appellants’ tender for MLC invoking Clause 4 (III)
is unsustainable.
3. Challenging action of the respondents – FCI in not considering
their MLC tender, the appellants filed two writ petitions bearing Nos. CWP
8415/2012 and 8416/2012 to quash the communication dated 21.3.2012 and also
prayed for consideration of their price bid with regard to MLC tender dated
14.3.2012. The High Court dismissed the writ petitions by a common Order
dated 26.7.2012, interalia, on the grounds:- (i) In the Writ Petition
No.21694/2011, forfeiture of Earnest Money Deposit (EMD) of the appellants
was not set aside by the Court and forfeiture of earnest money stood
sustained justifying the invocation of Clause 4 (III); (ii)
appellants had also not challenged the action of the respondents declaring
it to be disqualified under Clause 4 (III) of the MTF. Aggrieved
appellants are before us.
4. Assailing the impugned order, Mr. Jasbir Singh Malik, learned
counsel appearing for the appellants submitted that in the light of the
order dated 6.3.2012 passed in CWP No.21694/2011, it was not open to the
respondents to forfeit the earnest money in respect of Hathin –Rajasthan
RTC tender by invoking Clause 7 of the MTF and the learned High Court did
not correctly interpret its earlier order passed in CWP No.21694/2011.
Learned counsel further submitted that the High Court has committed an
error in observing that the appellant has not challenged the action of the
respondents declaring it to be disqualified under Clause 4 (III) of the MTF
whereas the appellant-firm had actually challenged the action of the FCI
disqualifying the appellant under Clause 4 (III) of the MTF in CWP No.
8415/2012, contending that Clause 4 (III) could not have been invoked
against the appellants.
5. Refuting the above contentions, Mr. Ajit Pudussery, learned
counsel appearing for the respondents, submitted that admittedly EMD of
the appellant-firm in RTC Hathin–Rajasthan
tender was forfeited and forfeiture of EMD was not set aside by the High
Court in the CWP No.21694/2011 and FCI rightly invoked
clause 4(III) of the MTF against the appellants in MLC Tender. It was
submitted that in CWP No.21694/2011, the High Court has wrongly assumed
that Clause 7 of the MTF was not being invoked, when in fact action had
been taken under Clause 7 only and thus the presumption made by the
High Court in CWP No.21694/2011 is contrary to the record. Learned
counsel further submitted that strict compliance of tender conditions are
provided to ensure that only serious tenderers participate in the bids as
in case after the award of contract if the tenderer fails to perform his
due obligations, huge amount of public money is wasted in re-tendering and
also creating a situation affecting the movement and distribution of food
grains which is not in public interest and the High Court rightly
interpreted Clause 4(III) and the impugned order warrants no interference.
6. We have considered the rival submissions made by the learned
counsel for the parties and perused the record. The question falling for
consideration is that in the light of the observations made in CWP
No.21694/2011 whether the High Court was right in upholding the action of
the respondents-FCI declaring the appellants-firms to be disqualified under
Clause 4 (III) of the MTF.
7. Clause 4 (III) of the MTF stipulates that the tenderer whose
EMD was forfeited in any other contract with FCI during the last five years
will be ineligible to participate in the bid. For better appreciation, we
may refer to the relevant clause 4 (III) and relevant paras in Clause 5 of
the MTF which read as under:-
“Clause 4. Disqualification Conditions
………
(III) Tenderer whose Earnest Money Deposit and/or Security Deposit
has been forfeited by Food Corporation of India or any Department of
Central or State Government or any other Public Sector/Undertaking, during
the last five years, will be ineligible.

“Clause 5. Details of Sister Concerns.
………..
(i) The blacklisted parties by FCI or Govt./Quasi Govt. Organization will
not be qualified.
(ii) The parties whose EMD is forfeited by FCI will not be qualified.
(iii) Food Corporation of India reserves the right not to consider parties
having any dispute with Food Corporation of India in order to protect its
interest.”
8. According to the respondents, EMD of the appellant- Shree
Shyamji Transport Company was forfeited in the earlier tender of Road
Transport Contract (RTC) -Hathin-Rajasthan, making the
appellant ineligible to bid in the MLC tender and therefore, the bid of
the appellant for MLC was rightly rejected by the respondents-FCI by Order
dated 21.3.2012.
9. Insofar as RTC tender for Hathin–Rajasthan is concerned, it
appears from the record and the observations of the High Court in CWP No.
21694/2011 that there was no intentional lapse on the part of the appellant
and the delay in furnishing the security and the bank guarantee appeared
to be on account of failure of banking operations. As per Clause 7
(iii) of MTF, the successful tenderer within fifteen days of acceptance of
its tender, must furnish security deposit for the due performance of his
obligation under the contract. While dismissing the writ petition CWP No.
21694/2011 on 6.3.2012, High Court observed that respondents-FCI did not
have any intention to invoke that part of Clause 7 of the MTF indicating
that the respondents-FCI preferred not to debar the appellant for the
contract period. For proper appreciation of the contention of the parties,
it is relevant to refer to the order of the High Court in CWP No.21694/2011
which reads as under:-
“In so far as the argument of the learned counsel for the petitioner
apprehending debarment under clause 7 of the MTF is concerned, we are of
the view that there is nothing in the impugned order dated 05.11.2011 (P-
16) which may indicate that the respondents have any intention to invoke
that part of clause 7 against the petitioner. The reason for not invoking
clause 7 of the MTF appears to be that there is no intentional lapse
committed by the petitioner and the delay in furnishing the security and
the bank guarantee appears to be on account of failure of banking
operations. Therefore, we appreciate the respondents for not having
invoked clause 7 of the MTF to debar the petitioner for the contract
period. Therefore, the apprehension of the petitioner expressed through
their counsel is ill founded.”

10. The respondents-FCI, in fact, filed Civil Miscellaneous
Application No.4480/2012 seeking modification of the above order dated
6.3.2012 and prayed to hold that Clause 7(iii) of the MTF includes the
debarring of the contractor and its partners i.e. the appellants from
participating in any future tender of the FCI for a period of three years.
By order dated 2.4.2012, the Division Bench of the High Court disposed of
the said application and other applications reiterating its earlier order
dated 6.3.2012 that FCI in its order dated 5.11.2011 (pertaining to RTC
Hathin–Rajasthan) did not indicate any intention to invoke that part of
Clause 7 of MTF to debar the appellants’ firm for the contract period. The
said Order of the High Court dated 2.4.2012 reads as under:-

“It is thus evident that this Bench has taken the view that in the order
dated 05.11.2011 (P-16), the respondents did not indicate any intention of
invoking that part of clause 7 of MTF which could debar the petitioner.
The reason for adopting the aforesaid course has also been noted by the
Division Bench by observing that there was no intentional lapse
committed by the petitioner and the delay in furnishing the security and
the bank guarantee was on account of failure of banking operations. The
Bench, in fact, appreciated the respondents for not invoking the part of
clause 7 of the MTF to debar the petitioner for the contract period.”

11. Insofar as RTC Hathin–Rajasthan is concerned, finding of the
High Court that there was no intentional lapse on the part of the appellant
and that delay in furnishing the security and bank guarantee was on account
of failure of banking operation had attained finality. In response to
appellants’ apprehension of debarment under Clause 7 of MTF, Division Bench
has recorded its finding that it appreciates that FCI has not invoked
Clause 7 of the MTF to debar the appellants for the contract period.
It appears that apprehension of debarment of appellants invoking Clause 7
was brought to the notice of the Court and the High Court did consider the
same as a necessary point. In our view, the finding of the Court on the
same is binding on FCI. Inspite of FCI’s modification petition, the
finding that there was no intentional lapse on the part of the appellant-
Shree Shyamji Transport Company, was neither modified nor set aside. That
being so, while considering the appellant’s tender for MLC, FCI was not
justified in invoking Clause 4 (III) of the MTF on the ground that the
tender of the appellants pertaining to RTC Hathin–Rajasthan was earlier
rejected and that appellant’s EMD was forfeited. High Court, in our view,
has not properly appreciated its own observations in CWP No.21694/2011 that
FCI has not invoked Clause 7 of the MTF to debar the appellants for the
contract period.
12. The impugned tenders pertain to Mandi Labour Contract (MLC) for
which the appellants submitted their bid on 2.3.2012 and the appellants
have already suffered debarment for about three years. Considering the
facts and circumstances of the case and in the light of High Court’s
observation made in CWP No.21694/2011, in our view, the debarment of the
appellants is not justifiable and the impugned order of the High Court
cannot be sustained.
13. In the result, the impugned order of the High Court is set
aside and the appeals are allowed. No order as to costs.
…………………….J.
(T.S. Thakur)
…………………….J.
(R. Banumathi)

New Delhi;
October 9, 2014
———————–
11

Advertisements

About advocatemmmohan

ADVOCATE

Discussion

Comments are closed.

Blog Stats

  • 1,936,806 hits

ADVOCATE MMMOHAN

archieves

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 1,874 other followers

Follow advocatemmmohan on WordPress.com