Muhammed Abdul Hakkim v. Kerala State Civil Supplies Corporation Ltd. (and connected cases)

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR** ## **TUESDAY, THE 4TH DAY OF JULY 2017/13TH ASHADHA, 1939** ## **WP(C).No. 14050 of 2017 (E)** ## **--------------------------------------------** **PETITIONER(S) :** **-------------------------** **MUHAMMED ABDUL HAKKIM, M.A.HAKKIM TRADING COMPANY, A.R.NAGAR P.O., 676 305, MALAPPURAM DISTRICT.** ## **BY ADV. SRI.K.K.MOHAMED RAVUF** **RESPONDENT(S) :** **-----------------------------** **1. KERALA STATE CIVIL SUPPLIES CORPORATION LTD., POST BOX NO. 2030, MAVELI BHAVAN, GANDHI NAGAR, KOCHI-682 020, REPRESENTED BY ITS MANAGING DIRECTOR.** **2. THE REGIONAL MANAGER, KERALA STATE CIVIL SUPPLIES CORPORATION LTD., REGIONAL OFFICE, PALAKKAD-678 014.** **3. THE DEPOT MANAGER, SUPPLYCO DEPOT, KAKKANCHERRY, TIRURANGADI, CALICUT UNIVERSITY P.O., 673 632, MALAPPURAM DISTRICT.** - **BY ADV. SRI.R.LAKSHMI NARAYAN, S.C ADV. SMT.MOLLY JACOB, S.C** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 15-06-2017, ALONG WITH W.P(C).NO. 16335 OF 2017 AND CONNECTED CASES, THE COURT ON 04-07-2017 DELIVERED THE FOLLOWING:** Msd. **WP(C).No. 14050 of 2017 (E) ------------------------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS :** - **EXHIBIT P1 TRUE COPY OF THE NOTIFICATION NO.C1-22310/16 DATED NIL OF THE 1ST RESPONDENT.** - **EXHIBIT P2 TRUE COPY OF THE RECEIPT EVIDENCING THE PAYMENT OF TENDER PROCESSING FEE FOR TIRURANGADI TALUK.** - **EXHIBIT P3 TRUE COPY OF THE DEMAND DRAFT DATED 20.01.2017 TAKEN IN FAVOUR OF THE 3RD RESPONDENT FOR RS.25,000/-** - **EXHIBIT P4 TRUE COPY OF THE COMMUNICATION NO.A117/16 DATED 17.02.2017 ISSUED BY THE 3RD RESPONDENT.** - **EXHIBIT P5 TRUE COPY OF THE PAYMENT ACKNOWLEDGEMENT FOR HAVING PAID THE TENDER PROCESSING FEE FOR KONDOTTY TALUK DATED 24.02.2017.** - **EXHIBIT P6 TRUE COPY OF THE DEMAND DRAFT DATED 23.02.2017 TAKEN IN FAVOUR OF THE 3RD RESPONDENT FOR RS.25,000/-** - **EXHIBIT P7 TRUE COPY OF THE COMMUNICATION NO.A1117/16 DATED 28.02.2017 ISSUED BY THE 3RD RESPONDENT.** - **EXHIBIT P8 TRUE COPY OF THE COMMUNICATION NO.A117/16 DATED 01.03.2017 ISSUED BY THE 3RD RESPONDENT.** **EXHIBIT P9 TRUE COPY OF THE COMMUNICATION NO. A-1117/16 DATED 15.04.2017 OF THE 3RD RESPONDENT.** **EXHIBIT P10 TRUE COPY OF THE JUDGMENT DATED 29.03.2017 IN W.P(C).NO. 9902/2017 OF THIS HON'BLE COURT.** **RESPONDENT(S)' EXHIBITS :** **EXHIBIT R1(A): THE PHOTOCOPY OF THE JUDGMENT DATED 29.03.2017 IN W.P(C).NO. 9902/2017.** **EXHIBIT R1(B): THE PHOTOCOPY OF THE LETTER DATED 02.05.2017. EXHIBIT R1(C): THE PHOTOCOPY OF THE ORDER DATED 26.05.2017. EXHIBIT R1(D): THE PHOTOCOPY OF THE REPORT DATED 29.05.2017. EXHIBIT R1(E): THE PHOTOCOPY OF THE LETTER DATED 22.04.2017. EXHIBIT R1(F): THE PHOTOCOPY OF THE ORDER NO. C1-22310/16 DATED 12.01.2007.** **WP(C).No. 14050 of 2017 (E)** **------------------------------------------** **EXHIBIT R1(G): THE PHOTOCOPY OF THE SUSPENSION ORDER DATED 31.05.2017. EXHIBIT R1(H): THE PHOTOCOPY OF COMMON JUDGMENT DATED 05.04.2017 IN WRIT APPEAL NO. 692 OF 2017.** **//TRUE COPY//** **P.A.TO JUDGE.** Msd. ## **P.B.SURESH KUMAR, J.** ## **= = = = = = = = = = = = = = =** ## **W.P.(C).Nos.14050, 16335,** ## **16563, 17060, 17611, 17794,** ## **18125 & 18403 of 2017** ## **= = = = = = = = = = = = = = =** Dated this the 4[th] day of July, 2017. ## **J U D G M E N T** Petitioners in this batch of writ petitions are transporting contractors. They challenge in these writ petitions the notice dated 12.05.2017 of the Kerala State Civil Supplies Corporation Ltd., (Supplyco) inviting tenders for transportation of food grains to the fair price shops in some of the Taluks in the State. 2. Under the National Food Security Act, 2013, food grains are to be distributed through fair price shops at subsidised rates. The Supplyco is the authorised agency of the State Government for the implementation of the National Food Security Act in the State. Handling and transportation of the food grains within the State is, therefore, the responsibility of the Supplyco. For the said purpose, the Supplyco has to lift the food grains **WP.(C).No.14050/2017 & con.cases.** 2 from the storage godowns of the Food Corporation of India, transport the same to the District Depots of the Supplyco and thereafter to the fair price shops located in different Taluks. Since the Supplyco do not have the infrastructure to undertake the handling and transportation works involved in the distribution of food grains, during January, 2017, they have invited tenders for carrying out the said works, from private transporters. Petitioners in all these writ petitions have participated in the said tender process. The Supplyco did not, however, finalise the said tender process. Instead, they have invited fresh bids for the very same works as per the notice impugned in the writ petitions. 3. The petitioner in W.P.(C).No.16335 of 2017 is a contractor who participated in the earlier tender process for distribution of food grains in Kodungalloor Taluk. The case set up by the petitioner in the said writ petition is that the bid submitted by him pursuant to the earlier invitation has been accepted by the Supplyco being the lowest and he was directed to execute the necessary agreement for the same with the Depot Manager of the Supplyco. According to him, the Supplyco is, therefore, not justified in inviting fresh bids for the very same work. It is alleged by the petitioner in the said case that the impugned **WP.(C).No.14050/2017 & con.cases.** 3 tender notice has been issued only to give the contractors who did not participate and who could not be successful in the earlier tender process, yet another opportunity to get the tenders. In other words, the impugned tender notice is challenged by the petitioner in the said case on the ground of malafides. The petitioners in W.P.(C).Nos.17794 of 2017, 17611 of 2017, 18403 of 2017, 18125 of 2017 and 16563 of 2017 are contractors who have participated in the earlier tender process for distribution of food grains in Kanjirappilly, Thodupuzha, Vaikom, Kanayannor and North Paravur Taluks. The case set up by the petitioners in the said cases is also that since the bids submitted by them being the lowest and since they were directed to execute agreements with the Depot Managers concerned, the Supplyco is not justified in inviting fresh bids for the very same works. 4. The petitioner in W.P.(C).No.14050 of 2017 is a contractor who participated in the earlier tender process for distribution of food grains at Thiroorangadi and Kondotty Taluks. The case set up by him in the writ petition is that though he was the lowest tenderer for the said works, the works were not awarded to him in the light of Ext.P10 judgment of this Court. **WP.(C).No.14050/2017 & con.cases.** 4 According to the petitioner, he is not disqualified in participating the tender in terms of Ext.P10 judgment. It is his case that Ext.P10 judgment was rendered in a public interest litigation seeking directions to the Supplyco to refrain from engaging persons who have criminal background, persons who are facing prosecution in respect of offences punishable under the Essential Commodities Act, etc., for the transportation works of food grains and the said writ petition was disposed of by this Court based on affidavits filed by the State Government as also the Supplyco to the effect that such persons will not be engaged for distribution of food grains. It is the case of the petitioner that no case whatsoever has ever been registered against him under the Essential Commodities Act or any other penal statutes and therefore, the decision of the Supplyco to disqualify him in executing the works for which he is selected is arbitrary. 5. The petitioner in W.P.(C).No.17060 of 2017 is a contractor who participated in the earlier tender process for distribution of food grains in Palakkad Taluk. The case set up by the petitioner in the said case is that the bid submitted by him for the said work being the lowest, the same was accepted by the Supplyco and he has executed Ext.P2 agreement for the same **WP.(C).No.14050/2017 & con.cases.** 5 with the Depot Manager concerned. As such, according to him, since there is a concluded contract between him and the Supplyco for the transportation works covered by the agreement, the supply is not justified in inviting fresh bids for the very same work. 6. A common counter affidavit has been filed in W.P.(C).No.17060 of 2017. As far as Writ Petition Nos.16563 of 2017, 18125 of 2017, 18403 of 2017, 17611 of 2017, 17794 of 2017 and 16335 of 2017 are concerned, the stand taken by the Supplyco in the counter affidavit is that the rates quoted by the contractors pursuant to the earlier invitations were not in a uniform pattern and as such, it was very difficult for the Supplyco to evaluate and finalise the contracts and it is on account of the said reason that fresh invitation was made for assigning the works. It is stated in the counter affidavit that the confusion arose since some contractors have quoted their rates excluding the handling charges and some others including the handling charges. Paragraph 4 of the counter affidavit dealing with the said facts reads thus: “Accordingly, public tenders were invited by this respondent on 03.01.2017 for transportation contract. The last date of the **WP.(C).No.14050/2017 & con.cases.** 6 tender was fixed on 21.01.2017 and subsequently extended up to 27.01.2017. The proposed contract was for one year and the transporter has to lift the ration articles from FCI/CMR Mills to the destination godowns of Supplyco and there from to the door step of Fair Price Shops. The rates quoted by various participants in this tender was not in a uniform pattern. Many tenderers quoted rates for transportation only (Excluding handling charges) and some tenderers quoted rates including handling charges, which caused much difficulties in processing and evaluation of tenders. The L1 tenderers were not willing to enter into agreement at the quoted rates.” As far as W.P.(C).No.17060 of 2017 is concerned, it is contended in the counter affidavit that the agreement has been entered into by the petitioner with the Depot Manager without the knowledge of the Supplyco; that on receiving information regarding the execution of the agreement, an enquiry has been ordered; that the officer who conducted the enquiry found that the agreement relied on by the petitioner is a false document brought into existence as a result of the fraud played by the petitioner in connivance with the Depot Manager and that the Depot Manager has fixed handling charges for the work without ascertaining the prevailing rates. According to the Supplyco, the petitioner, therefore, cannot claim any right on the strength of the said fraudulent document. 7. Heard the learned counsel for the petitioners as **WP.(C).No.14050/2017 & con.cases.** 7 also the learned Standing Counsel for the Supplyco. 8. The law relating to award of contracts by the State, its Corporations and bodies acting as its instrumentalities and agencies has been settled by a catena of decisions rendered by the Apex Court. The award of contract, whether it is by a private party or by a public body or by a State, is essentially a commercial transaction. In arriving at a commercial decision, commercial considerations shall be of paramount importance. The State can fix its own terms while inviting tenders and such terms shall never be open to the judicial scrutiny. It can also choose its own method to arrive at a decision. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the criterion for awarding a contract. The State is free to grant any relaxation, for bonafide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its Corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them. Though their decision is not amenable to judicial review, the Court can examine the decision making **WP.(C).No.14050/2017 & con.cases.** 8 process and interfere in it, if it is found that the same is vitiated by malafides, unreasonableness or arbitrariness. The State, its instrumentalities and agencies have a public duty to be fair to all concerned. Even when some defect is found in a decision making process, the court must exercise its discretionary power under Article 226 of the Constitution and shall interfere in the matter only in furtherance of public interest and not merely on the making out a legal point. [See **Air India Ltd.** v. **Cochin International Airport Ltd.** (2000)2 SCC 617]. The facts of these cases have to be analysed in the light of the aforesaid principles. 9. It is seen that the Depot Managers concerned of the Supplyco have issued communications to the petitioners in Writ Petition Nos.16563 of 2017, 18125 of 2017, 18403 of 2017, 17611 of 2017, 17794 of 2017 and 16335 of 2017 informing them that the offers made by them for undertaking the works are acceptable to Supplyco and they are free to enter into necessary agreements for the said purpose with the Supplyco. The petitioners, in the said cases, however, have no case that they have executed agreements with the Depot Managers concerned of the Supplyco nor do they have a case that they have started **WP.(C).No.14050/2017 & con.cases.** 9 the works. As such, it cannot be contended that there is concluded contracts between the petitioners in the said cases with the Supplyco in respect of the works referred to in the said writ petitions. The question, therefore, is whether the Supplyco is precluded from inviting fresh bids in such cases. As noted above, the specific case of the Supplyco is that in response to the earlier tender invitation, some of the tenderers have quoted their rates including the handling charges and some others excluding the handling charges. As such, it is their case that they were unable to evaluate and finalise the offers. It is also pointed out by the Supplyco that the lowest tenderers were not willing to execute the works on account of the disputes as to the handling charges. The said stand of the Supplyco would indicate that the fresh invitation has been made to select contractors after following a fair procedure not only to enable the Supplyco to get competitive rates for the transportation and handling works but also to provide the bidders an opportunity to submit their bids in identical manner. According to me, in a case of this nature, there cannot be any impediment in inviting fresh bids and the decision of the Supplyco in inviting fresh bids cannot be said to be illegal on any grounds, whatsoever. Though it is alleged **WP.(C).No.14050/2017 & con.cases.** 10 by some among the petitioners that the fresh invitation is made for the purpose of giving yet another opportunity to the contractors who have not participated and who were not successful in the earlier tender process, there is nothing on record to substantiate the said allegation. 10. Coming to W.P.(C).No.14050 of 2017, the case of the petitioner, as noted above, is that he is not disqualified in any manner whatsoever and he should have been awarded the works in relation to Thiroorangadi and Kondotty Taluks as he was the lowest tenderer for the said works. I do not think it is necessary to consider the said contention since the Supplyco has decided to invite fresh bids and the issue referred to above would arise for consideration only if the petitioner participates in the fresh bid and becomes the lowest tenderer again in relation to the said Taluks. 11. Coming to W.P.(C).No.17060 of 2017, as noted above, the specific case of the Supplyco is that Ext.P2 agreement is vitiated by fraud. True, fraud vitiates solemn among the solemn acts. But, in the instant case, the said stand is one unilaterally taken by the Supplyco. According to the petitioner, Ext.P2 is a genuine document. In so far as the Depot Manager of **WP.(C).No.14050/2017 & con.cases.** 11 the Supplyco has entered into a contract, according to me, the Supplyco has to hear the petitioner before they take a decision to ignore the contract. In the circumstances, the writ petitions are disposed of as follows : (i) Writ Petition Nos.16563 of 2017, 18125 of 2017, 18403 of 2017, 17611 of 2017, 17794 of 2017, 16335 of 2017 and 14050 of 2017 are dismissed. It is, however, made clear that if the petitioner in W.P.(C).No.14050 of 2017 becomes the lowest in the fresh tender process also in relation to Thiroorangadi and Kondotty Taluks, and if he is denied the works in relation to the said Taluks on the very same ground referred to in the writ petition, he will be free to challenge the said decision at the appropriate time. (ii) If Supplyco is unable to finalise rates with contractors pursuant to the revised invitation below the rates finalised with the petitioners in W.P.(C) Nos.16563 of 2017, 18125 of 2017, 18403 of 2017, 17611 of 2017, 17794 of 2017 and 16335 of 2017 pursuant to the earlier invitation, the works shall be awarded to the successful bidders pursuant to the impugned tender notice only if the petitioners are not willing to **WP.(C).No.14050/2017 & con.cases.** 12 execute the works at the lower rates finalised with them pursuant to the earlier tender notice, if they are otherwise qualified for the works. (iii) W.P.(C).No.17060 of 2017 is disposed of directing the Supplyco to take a decision as to whether Ext.P2 agreement in the said case is vitiated by fraud, after affording the petitioner also an opportunity of hearing. It is made clear that if it is found that the agreement is not vitiated by fraud, that agreement can be terminated only in accordance with the terms contained therein. _**Sd/-**_ **P.B.SURESH KUMAR, JUDGE.** ## _**Kvs/-**_ _**// true copy //**_