Kiran Global Chems Limited v State of Kerala and others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON** **MONDAY, THE 26TH DAY OF AUGUST 2013/4TH BHADRA, 1935** ## **WP(C).No. 7529 of 2013 (M)** **--------------------------------------** ## **PETITIONER(S):** **-----------------------** **KIRAN GLOBAL CHEMS LIMITED, CORPORATE OFFICE, NEW NO.42, OLD NO.81, NEW AVADI ROAD, KILPOLK, CHENNAI - 600 010, TAMIL NADU, INDIA REPRESENTED BY ITS AUTHORISED REPRESENTATIVE SRI. ANISH.K.V.** ## **BY ADVS.SRI.JOSEPH SEBASTIAN PURAYIDAM SRI.MOHAN PULIKKAL** ## **RESPONDENT(S):** **--------------------------** ## **1. STATE OF KERALA,** **REPRESENTED BY ITS CHIEF SECRETARY, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM - 695001.** **2. SECRETARY TO GOVERNMENT, INDUSTRIES DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM 695 001.** **3. THE KERALA MINERALS & METALS LTD. SANKARAMANGALAM, CHAVARA 691 583, KOLLAM, KERALA, INDIA, REPRESENTED BY ITS MANAGING DIRECTOR.** **4. SHANTI CHEMICAL WORKS, 709/2, NEAR GOGTE INSTITUTE OF TECHNOLOGY, UDYAMBAG INDUSTRIAL AREA, BELGAUM - 590 008, KARNATAKA STATE, REPRESENTED BY ITS MANAGER.** **R1-2 BY GOVERNMENT PLEADER SMT.K.A.SANJEETHA R3 BY ADV. SRI.E.K.MADHAVAN** **SRI.V.KRISHNA MENON R4 BY ADV. DR.V.N.SANKARJEE** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 26-08-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **PJ** ## **WP(C).No. 7529 of 2013 (M)** ## **--------------------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS** ## **-------------------------------------** - **EXHIBIT P1 TRUE COPY OF THE PURCHASE ORDER WITH NO.TP/MTL/SDS/3774/2010-2011 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER FOR THE SUPPLY OS SODIUM SILICATE.** - **EXHIBIT P2 TRUE COPY OF THE TENDER NO.TP/MTL/SOD.SILI/2011-2012 DATED 1/12/2011** - **EXHIBIT P3 TRUE COPY OF THE TECHNICAL BID (PART A) SUBMITTED BY THE PETITIONER COMPANY TO THE THIRD RESPONDENT IN RESPONSE TO EXHIBIT P2, DATED 26/12/2011** - **EXHIBIT P4 TRUE COPY OF THE COMMERCIAL BID DATED 26/12/2011 SUBMITTED BY THE PETITIONER TO THE THIRD RESPONDENT** - **EXHIBIT P5 TRUE COPY OF THE LETTER WITH NO.TP/MTL/SOD.SIL DATED 29/5/2012 ISSUED BY THE ASSISTANT GENERAL MANAGER OF THE THIRD RESPONDENT TO THE PETITIONER.** - **EXHIBIT P6 TRUE COPY OF THE LETTER DATED 1/6/2012 ISSUED BY THE PETITIONER TO THE 3RD RESPONDENT** - **EXHIBIT P7 TRUE COPY OF THE LETTER DATED 14/8/2012 ISSUED BY THE PETITIONER COMPANY TO THE 3RD RESPONDENT** - **EXHIBIT P8 TRUE COPY OF THE PURCHASE ORDER WITH NO.TP/MTL/SGS/1449/2012-2013 DATED 11/9/2012 TO THE PETITIONER** - **EXHIBIT P9 TRUE COPY OF THE LETTER DATED 17/9/2012 ISSUED BY THE PETITIONER TO THE 3RD RESPONDENT** - **EXHIBIT P10 TRUE COPY OF THE LETTER DATED 1/10/2012 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER** - **EXHIBIT P11 TRUE COPY OF THE LETTER DATED 3/10/2012 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER** - **EXHIBIT P12 TRUE COPY OF THE LETTER DATED 6/10/2012** - **EXHIBIT P13 TRUE COPY OF THE LETTER DATED 8/10/2012 ISSUED BY THE PETITIONER TO THE 3RD RESPONDENT** - **EXHIBIT P14 TRUE COPY OF THE LETTER DATED 20/10/2012 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER** - **EXHIBIT P15 TRUE COPY OF THE LETTER DATED 22/10/2012** **PJ** **...2/-** **..2..** ## **WP(C).No. 7529 of 2013 (M)** **--------------------------------------** - **EXHIBIT P16 TRUE COPY OF THE LETTER DATED 7/11/2012 ISSUED BY THE PETITIONER TO THE THIRD RESPONDENT** - **EXHIBIT P17 TRUE COPY OF THE LETTER DATED 15/11/2012 ISSUED BY THE THIRD RESPONDENT TO THE PETITIONER** - **EXHIBIT P18 TRUE COPY OF THE LETTER DATED 16/11/2012 ISSUED BY THE PETITIONER TO THE THIRD RESPONDENT** - **EXHIBIT P19 TRUE COPY OF THE LETTER DATED 20/11/2012 ISSUED BY THE THIRD RESPONDENT TO THE PETITIONER** - **EXHIBIT P20 TRUE COPY OF LETTER DATED 1/12/2012 ISSUED BY THE PETITIONER COMPANY TO THE THIRD RESPONDENT** - **EXHIBIT P21 TRUE COPY OF THE LETTER DATED 11/12/12 ISSUED BY THE THIRD RESPONDENT TO THE PETITIONER** - **EXHIBIT P22 TRUE COPY OF THE LETTER DATED 18/12/2012 ISSUED BY THE PETITIONER TO THE 3RD RESPONDENT** - **EXHIBIT P23 TRUE COPY OF THE LETTER DATED 29/10/12 ISSUED BY THE THIRD RESPONDENT TO THE PETITIONER** - **EXHIBIT P24 TRUE COPY OF THE LETTER DATED 4/1/2013 ISSUED BY THE PETITIONER TO THE 3RD RESPONDENT** - **EXHIBIT P25 TRUE COPY OF THE LETTER DATED 19/1/2013 ISSUED BY THE THIRD RESPONDENT TO THE PETITIONER** - **EXHIBIT P26 TRUE COPY OF THE LETTER DATED 24/1/2013** - **EXHIBIT P27 TRUE COPY OF THE TENDER NO.TP/MTL/SOD.SIL/2012-2013 DATED 8/11/2012** - **EXHIBIT P28 TRUE COPY OF THE TECHNICAL BID DATED 22/1/2012 , SUBMITTED BY THE PETITIONER** - **EXHIBIT P29 TRUE COPY OF THE EMAIL SEND BY THE SENIOR GENERAL MANAGER OF THE PETITIONER ON 24/11/2012 WITH THE LETTER ATTACHED WITH THE SAID EMAIL SENT TO THE ASSISTANT GENERAL MANAGER (MATERIALS ) OF THE 3RD RESPONDENT DATED 23/11/2012** - **EXHIBIT P30 TRUE COPY OF THE THIRD RESPONDENT FILED A STATEMENT IN THE WRIT PETITION** - **EXHIBIT P31 TRUE COPY OF THE LETTER DATED 22/2/2013 ISSUED BY THE 3RD RESPONDENT AWARDING CONTRACT TO THE 4TH RESPONDENT** ## **PJ** **...3/-** **..3..** ## **WP(C).No. 7529 of 2013 (M)** ## **--------------------------------------** - **EXHIBIT P32 TRUE COPY OF THE NEWS REPORT DATED 11/3/2013 APPEARD IN MALAYALAM DAILY, MALAYALA MANORAMA REGARDING THE THIRD RESPONDENT** - **EXHIBIT P33 TRUE COPY OF THE NEWS REPORT APPEARD IN MALAYALA MANORAMA DAILY DATED 15/3/2013 REGARDING RETENDER BY THIRD RESPONDENT** - **EXHIBIT P34 TRUE COPY OF THE NEW REPORT APPEARED IN MALAYALA MANORAMA DAILY DATED 22/2/2013 REGARDING THE THIRD RESPONDENT** - **EXHIBIT P35 COPY OF THE NEWS REPORT APPEARED IN THE MALAYALAM DAILY, KERALA KAUMUDI, ON 10/6/2013.** - **EXHIBIT P36 COPY OF THE NEWS REPORT APPEARD IN THE MALAYALAM DAILY, KERALA KAUMUDI, ON 11/6/13.** - **EXHIBIT P37 COPY OF THE NEWS REPORT APPEARED IN THE MALAYALAM DAILY, KERALA KAUMUDI, ON 12/6/2013.** - **EXHIBIT P38 COPY OF THE NEWS REPORT APPEARD IN THE MALAYALAM DAILY, KERALA KAUMUDI, ON 13/6/2013.** **EXHIBIT P39 COPY OF THE NEWS REPORT DATED 19/6/13 PUBLISHED IN ENGLISH DAILY, NEW INDIAN EXPRESS** **RESPONDENT(S)' EXHIBITS** **---------------------------------------** - **R3(A) COPY OF THE PURCHASE ORDER NO.TP/MTL/SDS/2502/2012-13 DATED 14/2/13.** - **R4(A) COPY OF THE PURCHASE ORDER DATED 28/6/1995.** - **R4(B) COPY OF THE PURCHASE ORDER DATED 7/4/97** - **R4(C) COPY OF THE PURCHASE ORDER DATED 6/7/98** - **R4(D) COPY OF THE PURCHASE ORDER DATED 28/7/99** - **R4(E) COPY OF THE PURCHASE ORDER DATED 19/7/2001.** - **R4(F) COPY OF THE PURCHASE ORDER DATED 11/9/2001 R4(G) COPY OF THE PURCHASE ORDER DATED 14/9/2001** **PJ** **...4/-** **..4..** ## **WP(C).No. 7529 of 2013 (M)** ## **--------------------------------------** - **R4(H) COPY OF THE PURCHASE ORDER DATED 3/10/2001 R4(I) COPY OF THE PURCHASE ORDER DATED 22/10/2001 R4(J) COPY OF THE PURCHASE ORDER DATED 23/11/2011 R4(K) COPY OF THE PURCHASE ORDER DATED 9/12/2005 R4(L) COPY OF THE PURCHASE ORDER DATED 19/10/2006** - **R4(M) COPY OF THE PURCHASE ORDER DATED 30/4/2007** - **R4(N) COPY OF THE PURCHASE ORDER DATED 2/7/2008** - **R4(O) COPY OF THE PURCHASE ORDER DATED 10/7/2008** - **R4(P) COPY OF THE PURCHASE ORDER DATED 1/9/2008 R4(Q) COPY OF THE PURCHASE ORDER DATED 25/7/2011 R4(R) COPY OF THE PURCHASE ORDER DATED 30/7/2011 R4(S) COPY OF THE PURCHASE ORDER DATED 19/10/2012** - **R4(T) COPY OF THE PURCHASE ORDER DATED 3/1/2013** |**R4(U)**|**COPY OF THE LEDGER ACCOUNT OF THE 4TH RESPONDENT FROM 1/10/2012**| |---|---| ||**TO 16/12/2012.**| - **R4(V) COPY OF THE LETTER DATED 19/1/2013 FROM THE 4TH RESPONDENT TO THE 3RD RESPONDENT.** **/ TRUE COPY /** **P.S. TO JUDGE** **PJ** ## **P.R. RAMACHANDRA MENON, J.** .............................................................................. ## **W.P.(C)No. 7529 OF 2013** ......................................................................... **Dated this the 26[th] August, 2013** ## **J U D G M E N T** Non disbursement of the amounts due to the petitioner in respect of the materials supplied earlier, withholding the same referring to the alleged loss caused to the third respondent Company (because of the procurement of the materials from elsewhere at the risk and cost of the petitioner) and the exclusion of the petitioner from participating in the subsequent tender referring to the pendency of an _'unresolved dispute_ ', is under challenge in this writ petition. The petitioner also seeks to set aside the 'Bid' in respect of the 'Single Tender' finalised in favour of the the 4th respondent; in turn seeking to direct the third respondent to go in for a 'Fresh Tender' for procurement of Sodium Silicate, thereby enabling the petitioner to participate in the Tender proceedings. 2. The petitioner Company contends that, it is engaged in manufacturing and supplying the raw material of 'Sodium Silicate' (Neutral Grade) to the third respondent for more than one decade. The said raw material is being used by the third respondent in connection with the production of 'Titanium **2** ## **W.P.(C)No. 7529 OF 2013** Dioxide'. The third respondent has got two units, namely, the Mineral Separation unit and the Titanium Dioxide Pigment unit. 3. In connection with the activities as above, the third respondent had issued a Tender for the supply of 3500 MT of Sodium Silicate for the year 2010-11 and the petitioner was awarded Ext.P1 Purchase Order in this regard, it being the lowest one. The supply was being effected accordingly. It is pointed out that, there was some confusion with regard to the actual quantity of materials supplied and the requisite extent to be supplied under the contract and as such, time was being extended to clear the balance quantity, from time to time. 4. While so, Ext.P2 Tender dated 01.12.2011 was notified by the 3rd respondent for supply of 3454 MT of Sodium Silicate and the petitioner submitted its offer as well, vide Ext.P3 Technical Bid and Ext.P4 Commercial Bid. As per Clause 4 of Ext.P2 Tender, _the price quoted was to be valid for a period of 'three months' from the date of opening of the Price Part/Bid_ . Even though Ext.P4 Price Part was opened on 23.02.2012 and the petitioner turned out to be the lowest tenderer, Purchase Order **3** ## **W.P.(C)No. 7529 OF 2013** was not awarded for quite long. Finally, Ext.P8 Purchase Order dated 11.09.2012 came to be issued, accepting the Bid quoted by the petitioner, which was served to the petitioner on 17.09.2012. 5. As per Clause 4 of the Purchase Order, it was stipulated that, if there was any failure on the part of the petitioner in adhering to the schedule of supply and in meeting the requirement during each month as specified, the third respondent would reserve the right to have supply from other sources _at the risk and cost of the petitioner_ . Similarly, under Clause 6 of Ext.P8 Purchase Order, it was stipulated that _**in case of any increase in the requirement of the material during the contract period, over and above the quantity covered by Ext.P2 tender, it was to be supplied by the bidder at the same price, and terms and conditions and no claim for any reduction in quantity would be entertained.**_ _**6.**_ Since the Purchase Order was issued much belatedly in September, 2012, despite the opening of the tender on 23.02.2012, the petitioner, on receipt of Ext.P8, sent Ext. P9 **4** ## **W.P.(C)No. 7529 OF 2013** communication dated 17.09.2012 expressing its readiness to supply the material, however with two riders, that : (i) in case of alternate procurement, the price should be at the price mentioned in the Purchase Order ( **i.e. virtually without any risk and cost - in respect of Clause '4')** ; and (ii) if any increased requirement is felt, it shall be supplied only at the revised rate to be arrived at in the due course, considering the relative increase of operational cost - in respect of Clause '6'. There was no reply and according to the petitioner, discussions were going on and finally, the third respondent orally directed the petitioner to supply the material. Accordingly, the first supply was effected on 25.09.2012. It was thereafter, that the third respondent issued Ext.P10 reply to Ext.P9, dated 01.10.2012, contending that the Purchase Order was issued as per the Tender conditions and that the petitioner had accepted it in its _entirety,_ which could only be subject to Clauses '4' and '6' of Ext.P8 and hence that, Ext. P9 request could not be considered. **5** ## **W.P.(C)No. 7529 OF 2013** The petitioner was required to honour the offer as per the Bid quoted on 26.12.2011. By the time Ext.P10 reached the hands of the petitioner, the petitioner had supplied further materials on other dates as well. 7. Just two days after the issuance of Ext.P10, the third respondent issued Ext.P11 communication dated 03.10.2012, pointing out that the material supplied by the petitioner was not maintaining proper quality standards, and that the same was informed to the petitioner's personnel, and that it was confirmed that the subsequent supplies would be of good quality. Despite this, the supplies effected on 30.09.2012 and 02.10.2012 had to be rejected due to the same _turbidity problem_ of the Sodium Silicate solution. The petitioner was alerted that the third respondent was facing difficulties because of the low stock levels, who hence had procured materials from other parties to sustain the Plant operation, at the risk and cost of the petitioner. The lapse on the part of the petitioner in supplying good quality material and the rejection of the same is reiterated in Ext.P12 communication dated 06.10.2012 as well, referring **6** ## **W.P.(C)No. 7529 OF 2013** to the necessity to procure materials from elsewhere at the risk and cost of the petitioner, if the petitioner could not supply the materials with the right specifications. 8. On receipt of Ext.P12, the petitioner sent Ext.P13 reply dated 08.10.2012, pointing out that Ext.P8 Purchase Order was accepted only 'conditionally'; that the **'firm period/validity period** ' of ''three months' in respect of the Price Bid/Part, opened on 23.02.2012, had expired long ago and that, since the Purchase Order was issued only on **11.09.2012** , after a lapse of seven months, from the date of opening of the Price part, the change in Market conditions made the petitioner to accept the Purchase Order conditionally. The petitioner refused to accept the stand of the third respondent in deducting any amount from the quantum payable to the petitioner, in respect of the supply already effected, referring to the alleged procurement from outside sources. The third respondent sent Ext.P14 communication dated 20.10.2012, referring to the commencement of supply effected by the petitioner on receipt of Ext.P8 Purchase Order. It was also pointed out that, if the **7** ## **W.P.(C)No. 7529 OF 2013** Purchase Order was not acceptable to the petitioner under any circumstances, it should have been pointed out at that stage itself . ## 9. It is further stated in Ext.P14 letter as follows: _" It may be noted that no delivery of material had been made by you since the rejection of the last consignment on 02.10.2012. As per the Purchase Order terms, you have to supply at the rate of 9- 10 MT/day , based on which you should have supplied at least 380 MT till date. However, as on date you have supplied only 120.04 MT of acceptable quality material. This is badly affecting our operations, and we are forced to procure the required quantities from other sources at your risk and cost. We request you to kindly take immediate remedial actions and commence supplies as per the specifications mentioned in the Purchase Order placed on you and to forward the accepted Purchase Order ."_ This was replied by the petitioner as per Ext. P15 dated 22.10.2012, reiterating the stand taken already, holding that the Purchase Order was not valid, since it was **8** ## **W.P.(C)No. 7529 OF 2013** finalised after the validity period and pointing out that till the issue was settled, the petitioner would not be inclined to effect any supply. This was followed by Ext.P16 demand dated 07.11.2012, seeking to release a sum of Rs.26,30,846/- in respect of the supplies already effected. It was replied by the third respondent, as per Ext.P17 dated 15.11.2012, referring to the lapse on the part of the petitioner and also informing that steps were being taken to procure materials from elsewhere at the risk and cost of the petitioner, forfeiting all amounts due to the petitioner. Several communications followed between the petitioner and the third respondent in this regard. Subsequently, the petitioner, as per Ext.P22 dated 18.12.2012 informed the third respondent that the petitioner was willing to resume the supply, in view of the long term association with the third respondent, on receipt of the third respondent's **clearance/instructions** , subject to the condition that the further resumption of supply of Sodium Silicate shall not be considered as acceptance of the legal and factual contentions raised by the third respondent and that it shall be without **9** ## **W.P.(C)No. 7529 OF 2013** prejudice to have the dispute between the petitioner and the third respondent settled/finalised/adjudicated, in accordance with law through appropriate procedure before the appropriate Forum, also expressing the desire to have the matter sorted out. There were still more communications between them, attributing default on either side and justifying the stand taken by the parties concerned. 10. In the meanwhile, Ext.P27 Tender came to be notified by the third respondent on 08.11.2012 for supply of **2880 MT** of Sodium Silicate, to be effected for the year 2012-13. The Tender was in two parts- _**Part I- Technical and Commercial Bids**_ and _**Part II- Price Bid**_ respectively. The Part I-Technical Bid was to be opened on **26.11.2012.** As per **Clause 6(VIII)of** **Ext.P27,** it was stipulated that _tenderers who were having 'unresolved disputes' with the third respondent would not be considered under any circumstances,_ which according to the petitioner was only to oust the petitioner, who is stated to be the only other manufacturer in India, than the 4th respondent. Still, the petitioner submitted Ext.P28(11) Bid. But there was **10** ## **W.P.(C)No. 7529 OF 2013** some defect in the System in uploading the 'e-Tender', which made the petitioner to submit Ext.P29 representation on 24.11.2012. It is contended that the petitioner had forwarded the Tender along with the EMD, to the third respondent in a sealed cover within the stipulated time and apprehending that the petitioner would be ousted from the field, **WP.(C)No.2659 of 2013** was filed before this Court . While so, the third respondent issued Ext.P31 **Award of Contract** in favour of the 4th respondent, which made the petitioner to withdraw the above said writ petition without prejudice to the rights and liberties of the petitioner to file a fresh one and thus the present writ petition, challenging the finalisation of the Tender in favour of the 4th respondent. 11. A counter affidavit has been filed by the third respondent seeking to sustain their stand as borne out from the various communications issued from their side, as mentioned already. It has been asserted that the petitioner did not submit any Bid in response to Ext.P27 Tender Notification, through _**etendering portal e tenders.kerala.gov.in**_ of the State **11** ## **W.P.(C)No. 7529 OF 2013** Government. It is also pointed out that the petitioner is not eligible to participate in the said Tender, in view of the tender condition which stipulates that tenderers, having 'unresolved dispute' with the third respondent will not be considered. It is conceded that there was only one Bid quoted by the 4th respondent, which was considered by the Tender Committee and after negotiations, the price recommended by the Tender Committee was accepted by the competent authority and the Tender was finalised in favour of the 4th respondent issuing Ext.R3(a) Purchase Order dated 14.02.2013, (which is stated as effective from 17.12.2012). A reply affidavit has been filed from the part of the petitioner virtually reiterating the contentions in the writ petition and seeking to rebut the averments in the counter affidavit. 12. The 4th respondent has filed a counter affidavit seeking to sustain the credentials of the 4th respondent, also pointing out that the petitioner came to the scene only in 2001 and even much prior to that, the 4th respondent was supplying materials to the third respondent. It is stated that, even during the tenure **12** ## **W.P.(C)No. 7529 OF 2013** of the contract with the petitioner, because of the shortage of supply, purchases were made by the third respondent from the 4[th] respondent and the requisite quantities were supplied by them, which fact is sought to be established with reference to various purchase orders, viz., Ext.R4(a) to R4(t). 13. The petitioner has filed several Interlocutory Applications producing additional documents, particularly, newspaper reports showing the alleged dubious course being pursued by the third respondent in _**accepting single bids**_ , that too, at exorbitant rates and the loss caused to the public exchequer leading to raid by the Vigilance Department and further steps by the concerned authorities. 14. Heard the learned Counsel for the petitioner, the learned Standing Counsel for the third respondent and the learned Counsel appearing for the 4th respondent, besides the learned Government Pleader who appears for respondents 1 and 2. 15. In the course of hearing, it was mainly asserted from the part of the respondents that the writ petition itself was not **13** ## **W.P.(C)No. 7529 OF 2013** maintainable, since, as regards the claim of the petitioner, for getting the due amount or for enforcement of contractual rights, the petitioner has to approach other appropriate Forum. The limited scope of judicial scrutiny was sought to be asserted with reference to the law declared by the Supreme Court in _**Siemons Public Communication Pvt. Ltd vs. Union of India**_ _**(**_ . **AIR 2009 SUPREME COURT 1204 )** _**Tejas Constructions and Infrastructure Private Limited vs. Municipal Council, Sendhwa**_ [ **(2012) 6 SCC 464** ], and _**Jagdish Mandal vs. State of Orissa [**_ ( **2007) 14 SCC 517** ]. 16. The petitioner, on the other hand, pointed out that the alternate remedy is not a bar to pursue the writ petition and that interference is possible when the course/action pursued by the concerned respondent is quite arbitrary in all respects, as in the instant case. It is also pointed out that the petitioner has been consciously ousted from the field, in respect of the subsequent tender as well, incorporating an **unconscionable clause, i.e. Clause 6(VIII)** to Ext. P27, which hence is under challenge. The tender awarded in favour of the 4th respondent is sought to be **14** ## **W.P.(C)No. 7529 OF 2013** set aside, also seeking to have re-tender, which cannot be effectively adjudicated before any other Forum. The learned Counsel also placed reliance on the decision rendered by a Division Bench of this Court in W.A.No.3332 of 2001 with regard to the scope of _acceptance of_ _**'Single Tender'**_ and the decision rendered by the Apex Court in _**Central Bank of India vs. Devi Espat Ltd.**_ [ **2010(3) KLT SN 71 Case No.78** ] to sustain interference by way of writ petition, also placing reliance on the decision of the Division Bench of this Court on the very same point as reported in _**Shriram Engineering Construction Co. Ltd. vs. KSIDC**_ (2007(2) KLT 388). Reliance is also placed on the decision in _**Union of India vs. Tantia Construction**_ _**Private Limited**_ [(2011) 5 SCC 697] to sustain the reliefs sought for, and to direct the third respondent to disburse the amounts payable to the petitioner, which has been withheld in respect of the materials already supplied. 17. The pleadings and proceedings reveal that three different proceedings are involved by way of Ext. P1 Tender for 2010-11; Ext.P2 Tender for 2011-12 and Ext.P27 Tender in **15** ## **W.P.(C)No. 7529 OF 2013** respect of 2012-13. With regard to Ext.P1 Tender, it is pointed out by both the sides, that there was some dispute with regard to the requisite quantity of material to be supplied as per the contract and the actual quantity supplied during the contract period, which led to extension of time for various spells. As per the last extension ordered, time was extended by three months from 14.12.2011 to 13.03.2012 or till the balance quantity of 808 MT was supplied (paragraph 8 of the counter affidavit of the third respondent). With regard to Ext.P8 Purchase Order, only some initial supplies were effected by the petitioner and then came the dispute with reference to Clauses '4' and '6'. In the meanwhile, some supplies were effected by the petitioner, out of which some were noted as defective and rejected. The defective quality pointed out and the rejection communicated to the petitioner as per Exts.P11, P12 and P14 communications of the third respondent have not been answered or explained by the petitioner either in Exts. P13, P15 or Ext.P16 replies and no objection is raised against such rejection or as to the quality of the material sought to be rejected. As such, the question is in **16** ## **W.P.(C)No. 7529 OF 2013** respect of the liability, if any, to be satisfied by the third respondent in respect of the material already supplied by the petitioner, which was not found to be defective . 18. Admittedly, there is no dispute for the third respondent with regard to the specific entry vide Clause '4' of Ext.P2 Tender, which stipulated that the price quoted was to be 'firm/valid' for a period of three months from the date of opening of the Price Part (Part II). The Price Part/Price Bid was opened on **23.02.2012.** As such, the **'firm period/validity period'** expired on **23.05.2012.** But admittedly, there was no withdrawal of the offer made by the petitioner till the date of issuance of Ext.P8 **Purchase Order dated 11.09.2012** . It is true, that the Purchase Order was issued nearly 'seven months' after the opening of the Price Part/Bid, which made the petitioner to send Ext.P9 communication, expressing its readiness to supply the materials at the same rate, however, with some riders. 19. Clauses 4 and 6 of Ext.P8 Purchase Order and the riders placed by the petitioner vide Ext.P9 are relevant and are extracted below: **17** ## **W.P.(C)No. 7529 OF 2013** ## "4. **Delivery:** _Delivery shall be at the rate of 300 MT per month with a minimum supply of 10 MT (1 tanker load) per day, unless otherwise specified. However we reserve the right to regulate the supplies as per our monthly production schedule, which you are liable to follow. We also reserve the right to arrange supplies from other sources at your risk an cost , in case you do not adhere to the above schedule or you fail to meet our entire requirement during each month._ _**If you fail to supply Sodium Silicate as per our requirement we reserve the right to cancel this order and make alternate arrangements at your risk and** ”_ _**cost** ._ ## _“6._ _**Quantity**_ _Total quantity of Sodium Silicate to be supplied against this purchase order is 3454 MT. In case of any increase in the requirement of the material during the contract period, apart from the above mentioned quantity, you shall have to cater the same at the same price and terms and conditions, but you are not entitled to raise any claim for any reduction in quantity during_ **18** ## **W.P.(C)No. 7529 OF 2013** _the contract period._ The two riders placed by the petitioner as per Ext.P9 are as follows: _“1. As regards Clause No.4 of terms and conditions of the P.O., we agree that you can make alternate arrangements to procure materials, in case we fail to supply as per your requirement of 300 MT per month; but the alternate procurement price should be at the price mentioned in the above referred Purchase Order._ _2. As regards Clause No.6 of the P.O. terms and conditions, pertaining to the quantity, we agree to supply 3454 MT. In case, there is any increase in the requirement of Sodium Silicate above the mentioned quantity, the supply shall be at the revised rate, which will be arrived at taking into consideration, the various factors prevailing at that time. Since the market conditions are very volatile due to abrupt change in the policies of Govt. of India with regard to price of Diesel, Customs Duty, imposition of Anti Dumping duty etc., even holding the price for 15 months from the date of receipt of this PO itself, is very difficult. But still we have to_ **19** ## **W.P.(C)No. 7529 OF 2013** _agree keeping the price firm in accordance with Clause No.3 of the P.O.”_ The first question to be considered is whether the petitioner is justified in placing the riders and refusing to effect further supplies because of non-settlement of the dispute. 20. It is to be noted that the offer made by the petitioner was to be valid/firm for 'three months' from the date of opening of the Price Part/Bid i.e. From 23.02.2012. If it was accepted and communicated to the petitioner within that time, there could have been no variation in any manner and the party would be bound to effect supply of the requisite materials within 12 months from the date of the Purchase Order at the same rate. In other words, the total period to have the material procured from the petitioner, by the third respondent at the price quoted may be for a period of 3 months plus 12 months (= 15 months). As such, merely for the reason that Ext.P8 Purchase Order came to be issued after 'seven months', by itself cannot exonerate the petitioner from the liability to effect the supply. This is more so, when the petitioner accepted Ext.P8 Purchase Order and **20** ## **W.P.(C)No. 7529 OF 2013** assured to effect the supply without expressing any desire to back out from the contract. 21. Similarly, there is absolutely no basis for the stipulation from the part of the petitioner that, if at all any short supply was there, it should be procured from elsewhere at the same price, as finalised in Ext.P8 Purchase Order; which otherwise will only give premium to the defaulter, who accepted the liability to satisfy the material as per the Tender. The price quoted on Ext.P8 is the one quoted by the petitioner and if there is any default on the part of the petitioner to have it supplied within the contract period, nobody may be available or willing to supply the deficit quantity as and when required by the third respondent, for the same price. But a further question arises, as to which extent, the third respondent can go on mulcting the liability upon the petitioner to have the materials procured from elsewhere at the cost and risk of the petitioner. 22. As mentioned hereinbefore, there is considerable lapse/delay on the part of the third respondent as well, in not finalising the bid, inspite of opening the price bid on 23.02.2012 ## **W.P.(C)No. 7529 OF 2013** ## **21** and took more than seven months to have issued Ext.P8 purchase order, by which time, the cost of material , cost of production, cost for arranging infrastructure and cost on such other heads could have gone up. Still, the petitioner expressed willingness to honour the commitment to supply the tender quantity at the same price and the rider sought to be placed was in respect of excess quantity, if necessitated to be supplied over and above the tender quantity, with claim to have revised rate. Immediately on receipt of Ext.P8 purchase order, the position was let known by the petitioner vide Ext.P9 dated 17.09.2012. If the riders placed by the petitioner were not acceptable to the third respondent, the tender could have been cancelled then and there, going for fresh tender; more so, since the contributory to the turn of events was none other than the third respondent, in view of the delay on their side and not the petitioner. Instead of cancelling the tender, the third respondent went on issuing letters after letters, referring to the supply already effected by the petitioner after receipt of Ext.P8 and hence that it was binding upon the petitioner. It is specifically pointed out by the **22** ## **W.P.(C)No. 7529 OF 2013** petitioner that, despite sending Ext.P9, no communication was received and hence no material was supplied; later effecting the first supply on 25.9.2012, on the basis of the instructions given by the officers of the third respondent. Ext.P10 communication comes up for the first time (with reference to Ext.P9) only on 1.10.2012 and by the time it was served to the petitioner, they had effected some supplies as discernible from Ext.P11 communication issued by the third respondent itself. This being the position, it cannot but be said, that the course pursued by the third respondent is also liable to be deprecated for the stalemate created and hence the petitioner and the third respondent are equally responsible for the same. As such, to what extent the liability, if at all any can be mulcted upon the petitioner, has to be finalised, also taking note of the value of the goods already supplied and the extent which was rejected; for which, the petitioner has to be relegated to approach other appropriate forum by raising necessary pleadings and letting in evidence in respect of the transaction pursuant to Ext.P2 Tender. 23. With regard to Ext.P1 Tender for the year 2010-11, **23** ## **W.P.(C)No. 7529 OF 2013** supply was being effected by the petitioner and it is brought on record that the supply was not complete in all respects and further that time was being extended by the third respondent from time to time. In any view of the matter, no dispute is stated as raised in respect of Ext.P1 Tender/supply and as such, the amount payable to the petitioner in respect of the supplies effected pursuant to Ext.P1 Tender, to the extent it is payable as per the terms of the said tender, has necessarily to be released to the petitioner, notwithstanding the subsequent transactions pursuant to Ext.P2. The amount due as above shall be worked out and shall be released to the petitioner in respect of Ext.P1 Tender at the earliest, at any rate within 'one month' from the date of receipt of a copy of this judgment, lest it should carry interest @ 9% per annum. 24. With regard to the challenge raised by the petitioner as to the finalisation of Ext.P27 Tender in favour of the fourth respondent, two contentions are mainly raised from the part of the third respondent to the effect that, the petitioner was bound to submit the tender through 'e-tendering process' and that no **24** ## **W.P.(C)No. 7529 OF 2013** offer from the part of the petitioner was ever received through e- tendering portal (e-tenders.kerala.gov.in) of the State Government. The lapse in the uploading of e-tender is virtually conceded by the petitioner, who realised that there was some defect in the system, which made the petitioner to submit Ext.P29 representation. The fact that the fourth respondent had submitted their tender through the above portal is not disputed by the petitioner. No material is produced before this Court to substantiate that the petitioner had complied with all the requirements of Ext.P27 Tender, also submitting the same through e-tendering portal as specified. As such, the petitioner cannot be heard to say that the petitioner is having any vested right to be considered in the said tender. 25. The fact remains as disclosed from the pleadings of respondents 3 and 4 that there was only 'one tender' which was quoted by the fourth respondent . The third respondent is a Government Company as contemplated under Section 617 of the Indian Companies Act, 1956 and is dealing with public money . There is substantial variation between the rates quoted by the **25** ## **W.P.(C)No. 7529 OF 2013** petitioner as per Ext.P28 ( tender submitted manually) and the rate quoted by the fourth respondent, accepted and awarded accordingly, as per Ext.R3(a) purchase order dated 14.2.2013. As a prudent awarder dealing with public money, the third respondent ought to have explored the possibilities of obtaining more bids by means of re-tender after giving wide publicity. Though some negotiation is stated as made with the fourth respondent and the amount originally quoted by the fourth respondent had been subsequently reduced to some extent, this by itself cannot be taken as a prudent step, sufficient enough to guard the field. This is more so, in view of the pleadings and proceedings, to the effect that the petitioner and the fourth respondent are the only two manufactures of Sodium Silicate ( Natural) in India. If there is no other manufacturer, chances to procure raw material through 'dealers' ( who may be importing the same from elsewhere ) could also have been considered by the third respondent . This is more so, in view of the serious allegations raised against the course and proceedings being pursued by the third respondent in respect of procurement of raw **26** ## **W.P.(C)No. 7529 OF 2013** materials such as Magnesium, Petroleum coke etc. which led to Vigilance/SIT probe ordered by the Lok Ayukta and such other proceedings which attracted the attention of the mass media, as reflected from various news paper reports produced along with the writ petition/I.As. (with regard to the correctness of which no opinion is being expressed by this Court). 26. The acceptance of 'single tender' by public sector undertakings has been severely deprecated by the Courts on various occasions including by a Division Bench of this Court as per judgment dated 29.10.2001 in W.A.No.3332/2001. However, since the petitioner had not fully complied with the requirements in submitting the tender as specified in Ext.P27 notification and further since, the tendered quantity is for supply of 2880 metric tons, in respect of which the petitioner made the offer as per proceedings dated 22.11.2012 ( forming part of Ext.P28) showing the offered quantity as '2450' metric tons; and since more than six months are already over after awarding the contract to the fourth respondent and if any interception is made at this stage, it is likely to stall the operations of the third respondent, resulting **27** ## **W.P.(C)No. 7529 OF 2013** in drainage of public money and also since it was conceded during the course of hearing that it was time for issuance of fresh tender notification in respect of the subsequent year 2013-14, this Court reluctantly refrains from intercepting Ext.P31( award of the tender in favour of the fourth respondent). 27. However, the contention of the third respondent that the petitioner is not eligible to participate in Ext.P27 Tender because of Clause 6(VIII) requires a scrutiny. The said clause reads as follows : “ _6(VIII) Tenderers who are having unresolved dispute with KMML will not be considered under any circumstance.”_ Even a plain reading of the above clause reveals that it is unconscionable in so far as the nature, extent and the consequence of the so called “unresolved dispute” is not discernible from the tender proceedings. Even in cases where there is no default at all from the part of the supplier/bidder and if the due payment is not effected on time as assured/ as per the terms of the tender or if any unsustainable rejection is made on some or other account which is beyond the terms of the tender, it **28** ## **W.P.(C)No. 7529 OF 2013** may of course give rise to dispute. If any such dispute is raised by the bidder, who is legally entitled to have the due amount, he can be easily excluded from the zone of consideration, denying participation in the tender proceedings with reference to Clause 6 (VIII) of Ext.P27. In other words, it can only be regarded as a pressurising technique to make the bidder/supplier yield to the unlawful demand/specification of the Awarder. As such, this Court does not require any second thought to hold that it is a unilateral Clause, which has no nexus with the object, if any to be achieved and that, it does not reflect transparency of action on the part of the third respondent who is a public sector undertaking, dealing with public money, which is no more liable to be sustained. Clause 6(VIII) of Ext.P27 is declared as unconscionable and is set aside accordingly. However, this cannot promote the case of the petitioner any further with regard to Ext.P27 Tender, as he had not submitted the tender complete in all respects as specified in Ext.P27, as held hereinbefore, and the benefit can only be in respect of the subsequent tenders notified/to be notified by the third respondent. **29** ## **W.P.(C)No. 7529 OF 2013** 28. In the above circumstances, it is declared that the petitioner shall stand permitted to participate in the tender notified/to be notified by the third respondent in respect of similar supplies of raw materials for the forthcoming years as and when the same is notified, subject to the satisfaction of other norms, notwithstanding the pendency of “unresolved dispute”, if any, with regard to the rights and liberties of the petitioner in respect of the previous tenders. The writ petition stands partly allowed. No cost. ## **P.R.RAMACHANDRA MENON JUDGE** _lk/sv_