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Thursday, November 6, 2014

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
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