Pratichhaya Pvt. Ltd. v. Keala Books and Publications Society; Muller Martini (India) Pvt. Ltd.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **FRIDAY, THE 25TH DAY OF NOVEMBER 2016/4TH AGRAHAYANA, 1938** **WP(C).No. 19335 of 2016 (N) ----------------------------** ## **PETITIONER:** **-----------** **PRATICHHAYA PVT. LTD., A COMPANY INCORPORATED UNDER THE COMPANIES ACT, HAVING REGISTERED OFFICE AT E3, JANANDEWALA ESTATE, RANI JHANSI ROAD, NEW DELHI-110055, REPRESENTED BY ITS AUTHORIZED OFFICER, VIKAS KUMAR BAID, AGED 29, S/O RATNA LAL BAID, ACCOUNTANT, PRATICHHAYA PVT. LTD., E-3, JANANDEWALA ESTATE, RANI JHANSI ROAD, NEW DELHI-110 055.** **BY ADVS.SRI.P.VISWANATHAN SRI.SUNIL N.SHENOI** **RESPONDENT(S):** **--------------** **1. KEALA BOOKS AND PUBLICATIONS SOCIETY, KAKKANAD, KOCHI-682 030, REPRESENTED BY ITS CHAIRMAN AND MANAGING DIRECTOR.** **2. M/S.MULLER MARTINI (INDIA) PVT. LTD., R.M. TOWER, IST FLOOR, MMTC/STC COMMERCIAL CENTER, GEETANJALI ENDAVE, NEW DELHI - 110 017, REPRESENTED BY ITS AUTHORIZED OFFICER.** **R1 BY ADV. SMT.LATHA ANAND, SC R2 BY ADVS. SRI.ANTONY MUKKATH SRI.P.ABDUL NISHAD** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 17-11-2016, THE COURT ON 25-11-2016 DELIVERED THE FOLLOWING:** **mbr/** ## **WP(C).No. 19335 of 2016 (N) ----------------------------** ## **APPENDIX** - **PETITIONER(S)' EXHIBITS: ----------------------EXHIBIT P1: THE CERTIFICATE OF INCORPORATION OF THE PETITIONER COMPANY.** - **EXHIBIT P2: TRUE COPY OF THE RESOLUTION APPOINTING SRI. VIKAS KUMAR BAID TO REPRESENT THE PETITIONER COMPANY IN THE ACCOUNTANT.** - **EXHIBIT P3: TRUE COPY OF THE E-TENDER NOTICE DATED 15.4.2016 PUBLISHED BY THE IST RESPONDENT.** - **EXHIBIT P4: TRUE COPY OF THE QUOTATION SUBMITTED BY THE PETITIONER.** - **EXHIBIT P5: TRUE COPY OF THE QUOTATION SUBMITTED BY THE 2ND RESPONDENT.** - **EXHIBIT P6: TRUE COPY OF THE STATEMENT SUBMITTED BY THE PETITIONER TO THE IST RESPONDENT DATED 3.5.2016.** - **EXHIBIT P7: A TRUE PHOTOCOPY OF SUCH THE BROCHURE SENT BY THE PETITIONER.** - **EXHIBIT P8: TRUE COPY OF THE E-MAIL SENT BY THE IST RESPONDENT TO THE PETITIONER.** - **EXHIBIT P9: TRUE COPY OF THE REPLY SUBMITTED BY THE PETITIONER.** - **EXHIBIT P10: TRUE COPY OF THE TENDER SUMMARY REPORT DATED 28.5.2016 BY THE IST RESPONDENT.** - **EXHIBIT P11: TRUE COPY OF THE TECHNICAL COMMITTEE REPORT DATED 27.5.2016.** - **EXHIBIT P12: TRUE COPY OF THE REPRESENTATION SUBMITTED BY THE PETITIONER DATED 28.5.2016.** - **EXHIBIT P13: TRUE COPY OF THE DETAILS OF INSTALLATIONS OF THE MACHINES OF THE PETITIONER INDIA AND OVERSEAS.** **RESPONDENT(S)' EXHIBITS: NIL ----------------------//TRUE COPY//** **P.S. TO JUDGE** **mbr/** ## **SHAJI P. CHALY, J.** ## **------------------------------W.P.(C)No.19335 of 2016** **------------------------------Dated this the 25[th] day of November, 2016** ## **J U D G M E N T** **-------------------** This writ petition is filed by the petitioner seeking direction to the 1[st] respondent to accept Ext.P4 offer submitted by the petitioner and to set aside Ext.P11, and for other related reliefs. 2. Material facts for the disposal of the writ petition are as follows:- Petitioner is a company registered under the Companies Act, 1956, engaged in conducting business in manufacture and sale of post-press (binding) machineries/equipments under the brand name 'Pramod Engineering Works' (PEW). 1[st] respondent invited e-tender for supplying, erection, installation, testing and commissioning of Flow Line machine at its premises at Kakkanad. On coming to know about the e-tender of the 1[st] respondent petitioner submitted its quotation, quoting an amount of Rs.87,50,000/- without tax. 2[nd] respondent W.P.(C)No.19335 of 2016 2 quoted an amount of Rs.2,40,00,000 without tax. Petitioner had also sent details regarding the technical and financial statements of the machine and the brochure to the 1[st] respondent as required by it. The technical bid list uploaded by the 1[st] respondent shows, the names of the petitioner and the 2[nd] respondent as bidders. 3. However, on 28.05.2016, petitioner noticed that, 1[st] respondent had uploaded a technical committee report on 27.05.2016 in its website, were it is stated, that the offer made by the 2[nd] respondent is accepted and petitioner's offer cannot be accepted. According to the petitioner, he fulfilled all requirement of the tender notice, so the reason for rejecting the offer made by the petitioner is incorrect. Moreover, 1[st] respondent accepted the offer of the 2[nd] respondent, who had quoted a very high price than that of the petitioner. Hence, there is malafides in accepting the offer of the 2[nd] respondent. It is thus aggrieved by the action of the 1[st] respondent in accepting the offer made by the 2[nd] respondent, this writ petition is filed. W.P.(C)No.19335 of 2016 3 4. 1[st] respondent has filed a counter affidavit refuting the allegations and claims and demands made by the petitioner. It is submitted that, 1[st] respondent has invited e-tender dated 15.04.2016 for supplying, erection, installation, testing and commissioning of one number of Flow Line machine, scrupulously following Stores Purchase Manual/rules in toto and clause 7.50 of Stores Purchase Manual 2013 in particular, in the two bid system. Accordingly, 1[st] respondent has received two offers from petitioner and the 2[nd] respondent. In continuation with the clause 7.50 of the Stores Purchase Manual 2013, technical bids were opened in the first instance at the prescribed date ie;(10.05.2016) and the same was scrutinized and evaluated by a competent technical committee with reference to the parameters prescribed in the tender document and the offers received from the tenderers. In the initial scrutiny, the technical parameters of the 2[nd] respondent was found matching with the technical specifications laid out in the tender notice and that of the petitioner, was found to be lacking W.P.(C)No.19335 of 2016 4 in specific details required for evaluating with respect to the technical parameters prescribed in the tender. In order to clarify/avail the missing date, 1[st] respondent sent an e-mail dated 24.05.2016 to the petitioner, requesting it to furnish clause by clause statement of the technical specifications, to proceed further. 5. Accordingly, petitioner furnished information vide e-mail dated 25.05.2016. The competent technical committee, further scrutinized the technical data/specification supplied by the petitioner with respect to the technical specification laid out in the tender and found that the specifications provided by the petitioner is not matching with the technical specifications given in the tender, and a vital component; 'servo drive' which is part of the machine as per the technical specification was found to be not provided/incorporated in the machine details provided by the party. Hence, the technical committee took into account the following clauses of Stores Purchase Manual 2013, applicable to Government Organisations like the 1[st] respondent. W.P.(C)No.19335 of 2016 5 a. Clause 9.7 - 2 (vi): The Stores quoted are substandard, not meeting the required specification, etc. b. Clause 9.7 - 2 (vii): Against a schedule in the list of requirement (incorporated in the tender enquiry), the tenderer has not quoted for the entire requirement as specified in the schedule. c. clause 9.7 - 2(x): The tenderer who do not meet the required qualification criteria are to be declared ineligible and not to be considered further; d. and the clauses 5, 6 and 40 of the tender document (which is duly accepted and signed by the petitioner as part of tender procedures), found that the offer of the petitioner is not technically acceptable as per the technical specifications mentioned in the tender, and furnished Technical Committee Report accordingly. 6. In continuation to the tender procedures, as per clause 7.50 of Stores Purchase Manual 2013 in the second stage, the financial bids of only the technically acceptable offers are to be opened for further scrutiny evaluation, ranking and placement of contract and the financial bid of W.P.(C)No.19335 of 2016 6 the 2[nd] respondent was opened and it was decided to award the contract to the technically acceptable tenderer. 7. It is also submitted that, the contention of the petitioner that the acceptance of the tender made by the 2[nd] respondent rejecting the tender of the petitioner is illegal and arbitrary, citing that the 2nd respondent has quoted a huge sum of 2.4 crores without tax for their machine and the petitioner has quoted only Rs.87.5 lakhs, which has more specification offered by the 2[nd] respondent is not in accordance with the facts and therefore not sustainable. The actual fact is that the 1[st] respondent has followed the two bid system in accordance with clause 7.50 of Stores Purchase Manual, wherein, the financial bid of the petitioner is not opened, since their offer was not technically accepted and the financial offer (price of the machine) of the petitioner is not at all known to the 1[st] respondent till it is stated in the writ petition. The technical committee after evaluation of the machine specification given by the petitioner observed that the following parameters were not matching as per required W.P.(C)No.19335 of 2016 7 ## tender specification. ## _**(i) Size of Un-trimmed Section**_ Our tender requirement Max: 350 - 370 mm x 290 - 330 mm Min: 100-130 mm x 114 - 118 mm Specification of M.s Pratichhaya Max: **510 mm** x 330 mm Private Limited Min: 100 mm x **110 mm** 8. It is also submitted the reason for rejection is that, the book - length and the book - width quoted by the petitioner exceeds required un-trimmed book specifications. This additional parameter proposed by the petitioner is a disadvantage for the Flow Line machine, as per the requirements of the 1[st] respondent, because of the fact, 1[st] respondent does not require such a finished books size and moreover it seriously affects the accuracy and finishing of textbooks, journals etc. Accordingly, the extreme book size offered by the petitioner is not as per the requirement of the 1[st] respondent, which is as follows: ## _**(i) Size of Un-trimmed Section**_ Our tender requirement Max: 340 - 370 mm x 280 - 301 mm Min: 117-119 mm x 50 - 70 mm Specification of M.s Pratichhaya Max: 500 mm x 280 mm Private Limited Min: 50 mm x 70 mm 9. It is also found that the automation required as W.P.(C)No.19335 of 2016 8 per the tender invited by the 1[st] respondent, needs Servo drive with PLC controls and touch screen. The servo drive is an essential component in the tender specification mentioned, because the accuracy of the finished books has to be continuously maintained. This is a crucial part in the machine as the credibility of the organization depends on the quality of the finished books. The servo drive also favours easy operation of the machine and are almost maintenance-free. Moreover, servo driven machines are highly efficient that can result in less power consumption. It is also stated, machine will be operational almost 365 days x 24 hours in order to meet the production target of distributing entire Government school text books in a time bound manner. Therefore a machine that will be power efficient and maintenance free is highly essential. If a machine with specifications as provided by the petitioner is accepted there will be enormous consumption of electricity and same will always require maintenance work, enhancement of the cost of maintenance and wastage of paper due to inaccurate W.P.(C)No.19335 of 2016 9 product output. Therefore, according to the 1[st] respondent petitioner has not made out any case warranting interference of this Court exercising the power of discretion under Article 226 of the Constitution of India. 10. Petitioner has filed reply affidavit reiterating the stand adopted in the writ petition. However, refuting the statements made in the counter affidavit on the basis of the report of the technical committee. According to the petitioner he has offered a machinery with additional facility to contain books with more width. It is also submitted that the maximum size of the un-trimmed section provided by the petitioner is 510 mm, hence it covers the maximum size of 370 mm also as specified in the tender. The minimum size of 110 mm provided by the petitioner's machine, cover the minimum size of 114 mm and also specified in the tender. Petitioner's machine has large size so that the printing press can bind two standard books of A4 size (210 X 297 mm) at one time, and thereby doubling the production within the same operation. Hence the industry requirement is W.P.(C)No.19335 of 2016 10 420x297 mm of the finished book block, therefore anything higher than this gives the press owner optimal production at very efficient cost. So the contention that, the parameters of the book-length and book-width quoted by the petitioner exceeds the 1[st] respondent's specifications is irrational and incorrect. It is submitted that the machine of the petitioner is having 'servo drive' with PLC control and touch screen, this can very well seen from Ext.P7 brochure submitted by the petitioner to the 1[st] respondent. It is also stated that petitioner's machines are power saving and do not require much maintenance and they are tuned to Indian working condition. Therefore, it the contention of the petitioner, petitioner is entitled to get the reliefs sought for in the writ petition. 11. Heard learned Senior Counsel for the petitioner, learned Senior Counsel appearing for the 1[st] respondent and counsel appearing for the 2[nd] respondent, and perused the documents on record and pleadings put forth by the petitioner. 12. The issue to be considered is whether any W.P.(C)No.19335 of 2016 11 manner of interference is required to Ext.P11 report of the technical committee. As discussed above technical committee has found that the machine offered by the 2[nd] respondent meets all technical specifications as per the tender notification. However, machine offered by the petitioner does not fall in the size and range specified in the tender notice and that the machine is not provided with servo drive as per the tender specification and hence the offer cannot be accepted. In Ext.P3 the tender notification, machine specification is provided by which the size of the un-trimmed section is mentioned. Admittedly, the machine offered by the petitioner is not in accordance with the size of the machine invited by the 1[st] respondent. The said aspect is not in dispute. The case projected by the learned counsel for the petitioner is that the machine offered by the petitioner is having more facilities and therefore 1[st] respondent is in an advantageous position and more number of books can be simultaneously printed, which will save the electrical energy and secure more benefits to the 1[st] respondent. W.P.(C)No.19335 of 2016 12 13. Per contra, learned Senior Counsel for the petitioner submitted that a particular specification is mentioned in Ext.P3. Taking note of the requirements of the 1[st] respondent, 1[st] respondent requires the machine of the category mentioned under Ext.P3 and it was bearing in mind the requirement alone, the tender notification was issued with clear specifications. If the 1[st] respondent did not have any intention to buy a machine of a particular specification, the exact specifications should not have been provided in Ext.P3. When specific parameters and stipulations for the supply of a machine is made, the tender specification is to be complied with by the tenderer in accordance with the tender notification. Petitioner has not cared to do so. Therefore, technical bid submitted by the petitioner in that regard is unable to be accepted. 14. Learned counsel for the petitioner submitted that Ext.P6 tender submitted by the petitioner shows that the machine has PLC control and touch screen however, in Ext.P3 automaton is specified in clause N, which read thus:- W.P.(C)No.19335 of 2016 13 I) ' “ Servo drive” with PLC controls and touch screen,' therefore it is apparently clear that the automation specification provided in the tender notification is not available in Ext.P6 tender submitted by the petitioner contained under clause M of Ext.P6. The contention advanced by the learned counsel for the petitioner is that as per Ext.P7 brochure servo drive with PLC control and touch screen is available to the machine offered by the petitioner. True in Ext.P7 it is mentioned so, however learned Senior Counsel for the 1[st] respondent submitted that, the question remains to be considered is, whether when the offer was made by the petitioner, such a requirement of the 1[st] respondent was met with. On an appreciation of Ext.P6 tender submitted by the petitioner it is unequivocally clear, the said specification is not met with by the petitioner, even though in Ext.P7 it is provided so. Therefore, the contention of the learned counsel for the respondent is that, petitioner has failed to comply with the tender specifications contained in Ext.P3 tender notice issued by the 1[st] respondent. It was W.P.(C)No.19335 of 2016 14 thereupon that technical committee evaluated the bid of the petitioner and the 2[nd] respondent, and arrived in Ext.P11 report. 15. Learned counsel for 1[st] respondent also invited my attention to the judgment of the Apex Court in **Michigan Rubber (India) limited v. State of Karnataka and others** (2012) 8 SCC 216 wherein, the scope of judicial review was considered by the Apex Court in Government contracts and held that discretion is available to the tendering authority to set tender conditions/eligibility criteria in tender. It was further held that the scope of courts interference is very restricted and limited, where State acts reasonably, fairly and in public interest, since no person can claim a fundamental right to carry on business with the Government. Further, following judgment in **Tejas Construction & Infrastructure (P) Ltd. v. Municipal council sendhwa** it is held as follows in paragraph 23. “ _23. From the above decisions, the following principles emerge:_ W.P.(C)No.19335 of 2016 15 _a) The basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities;_ _b) Fixation of a value of the tender is entirely within the purview of the executive and the courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by courts is very limited;_ _c) In the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities unless the action of the tendering authority is found to be malicious and a misuse of its statutory powers, interference by courts is not warranted;_ _d) Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity, has the resources to successfully execute the work ; and_ _e) If the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract here again, interference by court is very restrictive since no person can claim a fundamental right to carry on business with the Government.”_ W.P.(C)No.19335 of 2016 16 16. Learned counsel also invited my attention to the judgment of the Apex Court in Air India v. Cochin International Airport Ltd. dated 31.01.2000 and held in paragraph 7 as follows: “ _7.xxxxxxxxxxxx The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It 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 corporation, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the Court can examine the decision making process and interfere if it is found vitiated by malafides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision making process the Court must exercise its discretionary power under Article 226 with great caution and point. The Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it_ W.P.(C)No.19335 of 2016 17 _comes to a conclusion that overwhelming public interest requires interference, the Court should intervene.”_ 17. Therefore, it is the contention of the learnd Senior counsel that the parameters provided by the Apex Court in the matter of Government contracts is strictly followed by the 1[st] respondent, however petitioner has not cared to confine his tender to the tender conditions and stipulations. Therefore, petitioner was not technically qualified, enabling the petitioner to take part in the 2[nd] bid namely the financial bid. A contention is also made by the 1[st] respondent that since the petitioner lost in the technical bid, the financial bid submitted by the petitioner was not opened. This is not disputed by the petitioner. Therefore, the allegation made by the petitioner that, the acceptance of the tender of the 2[nd] respondent which is very much higher than the tender offered by the petitioner is accepted by the 1[st] respondent on extraneous consideration, cannot be said to be established for the reason that 1[st] respondent was not aware at all of the financial bid of the petitioner, since same was not opened. W.P.(C)No.19335 of 2016 18 18. Taking note of the respective submissions made across the bar and reckoning the factual situations from the pleadings and document, and the legal circumstances, I am of the considered opinion that petitioner has not adhered to the tender conditions as per Ext.P3 invitation made by the 1[st] respondent and therefore petitioner is not entitled to succeed. When specific parameters are stipulated in the tender notification, it is with the specific object, and requirement of the 1[st] respondent. It is not for the petitioner to say that the machine offered by the petitioner has better qualities than the tender specifications invited by the 1[st] respondent. The requirement of the machine can only be specified, by the tender inviting authority. 19. The stipulations in tender notification are made, to be strictly followed by the tenderer, failing which it will operate as components for elimination. This is what exactly happened in this case. Yet another contention advanced by the petitioner, is in respect of the substantial difference in the financial bid by and between the parties. W.P.(C)No.19335 of 2016 19 For two reasons such a contention advanced by the petitioner cannot be accepted, 1) Petitioner has not qualified in the technical bid to advance such a contention, and 2) the difference in financial bid is not made as an exclusive criteria for elimination of a tenderer. Totality of the circumstances establish that, petitioner has not made out a case of arbitrariness, illegality, malafides or any other vital aspects affecting public interest. The process adopted by the 1[st] respondent in tender invitation, evaluation of bid and consequential actions cannot be said to be in any manner illegal and unfair. Sequel to the discussions made above is, petitioner has failed to establish a case, warranting interference of this Court exercising the power of judicial review under Article 226 of the Constitution of India. Accordingly, writ petition is dismissed. Sd/- **SHAJI P. CHALY, JUDGE.** rmm/23/11/2016 _[ True copy]_ _P.A. to Judge_