R. N. Anoop Chandran v. Kerala State Road Transport Corporation & Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM** ## **MONDAY, THE 4TH DAY OF NOVEMBER 2013/13TH KARTHIKA, 1935** ## **WP(C).No. 23813 of 2013 (B)** **----------------------------** ## **PETITIONER(S):** - **--------------------------** ## **R.N.ANOOP CHANDRAN,** **PROPRIETOR, ZINDH ADVERTISER, T.C.7/871, NOOHU BUILDING, VIZHINJAM, THIRUVANANTHAPURAM.** **BY ADVS.SRI.D.KISHORE SMT.MINI GOPINATH** **RESPONDENT(S):** - **---------------------------** **1. THE KERALA STATE ROAD TRANSPORT CORPORATION, REPRESENTED BY ITS MANAGING DIRECTOR, TRANSPORT BHAVAN, THIRUVANANTHAPURAM-695 001.** **2. THE CHAIRMAN AND MANAGING DIRECTOR, THE KERALA STATE ROAD TRANSPORT CORPORATION, TRANSPORT BAHVAN, THIRUVANANTHAPURAM-695 001.** **3. THE CHIEF TAFFIC OFFICER(INCHARGE OF ESTATE OFFICER), THE KERALA STATE ROAD TRANSPORT CORPORATION, TRANSPORT BHAVAN, THIRUVANANTHAPURAM-695 001.** **4. MANOJ S.VISWOM,502,PEARL HOUSE, KUMARANASAN ROAD,KADAVANTHRA, KOCHI-682 020.** - ***ADDL.R5 IMPLEADED:** - **R5. SANAL KUMAR, AGED 43 YEARS, SON OF D.STEEPHENSUN, SUKRITHAM, KESAVADASAPURAM, THIRUVANANTHAPURAM- 695 004.** - **(*ADDL.R5 IS IMPLEADED AS PER ORDER DTD. 4/11/2013 IN IA.NO.13865/2013)** **R1 TO R3 BY ADV. SRI.BABU JOSEPH KURUVATHAZHA,SC,KSRTC R4 BY ADVS.SRI.P.S.SREEDHARAN PILLAI** **SRI.ARJUN SREEDHAR SRI.T.K.SANDEEP** **SRI.ARUN KRISHNA DHAN** **SRI.N.JAMES KOSHY R5 BY ADV. SRI.N.ANILKUMAR** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 04-11-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **Kss** ## **WP(C).No. 23813 of 2013 (B)** **-----------------------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS:** **---------------------------------------** ## **P1:TRUE COPY OF THE TENDER NOTIFICATION DTD 18/6/2013 ISSUED BY THE 2ND RESPONDENT.** **P2:-TRUE COPY OF THE PROCEEDINGS NO E.S3/030120/12 DTD 25/5/2013 OF THE 3RD RESPONDENT.** **P3:-TRUE COPY OF THE COMMUNICATION DTD 16/4/2013 GIVEN BY THE PETITIONER TO THE 2ND RESPONDENT.** ## **P4:-TRUE COPY OF THE PROCEEDINGS NO ES3-030120/2012 DTD 11/7/2013 OF THE 3RD RESPONDENT.** **P5:-TRUE COPY OF THE LAWYER'S NOTICE DTD 27/8/2013 SEND BY THE PETITIONER TO THE 2ND RESPONDENT.** **P5(a):-TRUE COPY OF THE POSTAL ACKNOWLEDGEMENT EVIDENCING THE RECEIPT OF EXHIBIT P5.** **P6: TRUE COPY OF PROCEEDINGS NO.P10 NO.0856/13 DTD. 27/09/2013 OF THE PUBLIC INFORMATION OFFICER OF THE 1ST RESPONDENT.** **RESPONDENT(S)' EXHIBITS: ------------------------------------------** **R3(a): COPY OF THE LETTER DTD. 17/04/2013 SUBMITTED BY THE PETITIONER.** - **R3(b): COPY OF THE TENDER SUBMITTED BY THE PETITIONER IN THE TENDER HELD ON 10/07/2013.** - **R3(c): COPY OF THE LETTER DTD. 10/07/2013 SUBMITTED BY THE 4TH RESPONDENT.** - **R3(d): COPY OF THE ADVERTISEMENTS PUBLISHED ON 9/05/2013 AND 15/5/2013 IN THE MATHRUBHUMI DAILY.** - **R3(e): COPY OF THE AGREEMENT DTD. 26/09/2013 EXECUTED BETWEEN THE 1ST AND 4TH RESPONDENTS.** - **R4(a): COPY OF AUCTION MAHAZAR DTD. 18/06/2013 ISSUED BY THE STATE PUBLIC INFORMATION OFFICER, OFFICE OF THE MANAGING DIRECTOR OF 1ST RESPONDENT, UNDER RIGHT TO INFORMATION ACT TO THE 4TH RESPONDENT.** **..2/-** **Kss** **...2....** ## **WPC.NO.23813/2013 (B)** - **R4(b): COPY OF ORDER NO.ESI-030120/12 DTD. 10/07/2013 ISSUED FROM THE OFFICE OF THE 1ST RESPONDENT.** - **R4(c): COPY OF ORDER NO.ES3-030120/2012 DTD. 11/07/2013 ISSUED BY THE 1ST RESPONDENT.** - **R4(d): COPY OF THE FINAL CONFIRMATION ORDER NO.ES3-030120/2012 DTD. 15/08/2013 ISSUED BY THE 1ST RESPONDENT.** - **R4(e): COPY OF LETTER DTD. 28/08/2013 ISSUED BY PETITIONER TO SECRETARY, KERALA ADVERTISING INDUSTRIES ASSOCIATION, THIRUVANANTHAPURAM DISTRICT COMMITTEE.** - **R4(f): COPY OF LETTER DTD. 7/10/2013 ISSUED TO THE 4TH RESPONDENT BY A SUB CONTRACTOR MR. SRI. SUNIL KUMAR S.** - **R4(g): COPY OF DRAFT NOTE PREPARED BY THE KSRTC IN RESPECT OF THE PROCEEDINGS OF THE CONTRACT DTD. 10/07/2013 ISSUED TO THE 4TH RESPONDENT.** - **R4(h): COPY OF RECEIPT OF THE DEMAND DRAFT SUBMITTED FOR EMD BY THE PETITIONER ON 10/07/2013.** - **R4(i): COPY OF STATEMENT SHOWING THE AMOUNT SPENT BY THE 4TH RESPONDENT AFTER THE CONTRACT IS FIXED IN HIS NAME.** ## **/TRUE COPY/** **P.S.TO JUDGE** **Kss** ## **C.K. ABDUL REHIM, J. -----------------------------------W.P.(C). No. 23813 of 2013 --------------------------------------------------Dated this the 4[th] day of November, 2013** ## **JUDGMENT** Ext.P4 order issued by the 2[nd] respondent confirming the tender submitted by the 4[th] respondent, awarding licence for display of advertisements in the Bus stations, shelters and certain lands by installing static hoardings/ electronic hoardings/screens, for a period of 3 years, is under challenge in this Writ Petition. 2. Initially tender was invited through notification dated 18.02.2013. The petitioner alone had participated in the tender. Hence the tender proceedings was dropped. Subsequently another tender notification was published on 16.03.2013. The petitioner quoted a sum of `75,00,000/- towards licence fee for the above said period. The petitioner was informed through Ext.P2 that his tender cannot be accepted because the amount of `75,00,000/- is too low when compared with the rate of `2.05 crores obtained for the previous year. On receipt of Ext.P2 the petitioner issued Ext.P3 letter to the 2[nd] respondent intimating WP(C). 23813 of 2013 2 that he is willing to raise the amount to `1,50,00,000/-. But without considering the offer, Ext.P1 notification of tender was published on 18.06.2013, for the third time. Conditions stipulated in Ext.P1 was that, tenders will be received only till 15.00 Hours on 09.07.2013 and tenders will be opened at 11.00 Hours on 10.07.2013. It is further mentioned that licence will be confirmed to party who quote the highest amount in the tender/auction. Tender submitted by the 4[th] respondent was the highest for `1,25,25,251/-. The petitioner had quoted only an amount of `1,15,00,000/-. It is stated that the respondents have suggest for an auction fixing the upset price at `1,50,00,000/-. But the upset price fixed was not acceptable to both the petitioner and the 4[th] respondent. Therefore the auction was cancelled and it was intimated that further tender notification will be issued. But subsequently the petitioner came to know that the tender was confirmed in favour of the 4[th] respondent through the impugned order. It is mentioned in Ext.P4 that the 4[th] respondent, eventhought had quoted only `1,25,25,251/- had later agreed to enhance the amount to `1,50,10,000/- in the WP(C). 23813 of 2013 3 negotiations conducted on the very same day. The Corporation had accepted such offer and awarded the tender to the 4[th] respondent on his remitting 2% of the contract amount towards assured advance, is the version in Ext.P4. 3. The petitioner is challenging Ext.P4 on the ground that it is vitiated by malafides, nepotism and arbitrariness. According to the petitioner, had he been invited for negotiations along with the 4[th] respondent, he could have offered more amount. It is stated that the petitioner is even prepared to quote an amount of `2.05 crores, as in the case of last year's contract. It is alleged that the contract was awarded to the 4[th] respondent only after the petitioner had left the scene on 10.07.2013. Since the petitioner was not invited for the negotiations and the tender was settled in a fraudulent manner, the action cannot be sustained, is the contention. Hence the petitioner is seeking for a direction to respondents 1 to 3 to re-tender the contract. 4. In the counter affidavit of the respondents 1 to 3 it is mentioned that, on 10.07.2013 the petitioner as well as the 4[th] respondent had participated in the tender opening process. After WP(C). 23813 of 2013 4 opening the tenders received, the 3[rd] respondent had declared that if either of the **tenderers raises** the amount to `1.5 crores, the Corporation would award the work. But there was no response from either the petitioner or the 4[th] respondent. Under such circumstance it was decided to contact the 4[th] respondent for reconsidering his earlier decision and to raise the amount to `1.5 crores or more. It is mentioned that such a decision was taken by the tender committee because in the earlier tender the petitioner alone had participated. It is further mentioned that, with respect to the tender submitted by the petitioner there was discrepancy in the amount mentioned in figures and words. The respondents 1 to 3 have admitted about receipt of Ext.P3 letter (e-mail communication). But it is mentioned that the petitioner had not accepted the suggestion to raise the amount to `1.5 crores or above. In Ext.R3(a) letter the petitioner had requested for return of the E.M.D. According to respondents 1 to 3, the 4[th] respondent had issued a letter accepting the suggestion made by the 3[rd] respondent by raising the amount to `1,50,10,000/-. The tender was finalised in favour of the 4[th] respondent considering WP(C). 23813 of 2013 5 the huge expenditure which may be involved in publishing and conducting a re-tender. It is also mentioned that pursuant to awarding of the tender the 4[th] respondent had already executed Ext.R3(e) agreement. 5. In the counter affidavit of the 4[th] respondent it is mentioned that on the date of opening of the tenders the respondents 1 to 3 had informed that auction will be conducted before opening of the tenders. But the petitioner as well as the 4[th] respondent was not interested in participating in the auction, because the minimum rate fixed at `1,50,00,000/-. It is stated that both parties have signed in the 'Auction Mahazar' to the effect that they were not interested to raise the amount before opening the tender. Hence the tenders were opened and when it was found that the amount quoted by the 4[th] respondent is much higher, the petitioner had left the place without making any complaint. Since the amount quoted by the 4[th] respondent is the highest, he was invited for a negotiation. In the negotiation the 4[th] respondent had accepted the suggestion of the KSRTC to enhance the amount to `1,50,10,000/-. Accordingly, the tender WP(C). 23813 of 2013 6 was confirmed and agreement was executed, is the contention. 6. According to the petitioner, the negotiation conducted with the 4[th] respondent, without informing the petitioner, was only due to _malafides_ . When the auction was proposed, both of them have expressed that they are not prepared to enhance the amount to `1.50 crores. But the tender was awarded in favour of the 4[th] respondent through a secret negotiation, ignoring the earlier offer made by the petitioner through Ext.P3. The whole procedure adopted is illegal and vitiated by fraud and nepotism. Therefore the entire tender process is vitiated, is the contention. 7. Fact that an auction was proposed on the date of opening of the tender is not in dispute. It is also not in dispute that both the petitioner and the 4[th] respondent had declared that they are not prepared to raise the amount up to `1.5 crores. According to the petitioner, the authorities have informed that a re-tender will be conducted. It is accepted by respondents 1 to 3 that only thereafter the 4[th] respondent was persuaded to reconsider the offer and he had agreed to raise the amount to `1,50,10,000/-. It is not disputed that the petitioner was not WP(C). 23813 of 2013 7 invited for the negotiations and he was never informed about any negotiation being conducted. 8. According to learned counsel for the 4[th] respondent, the negotiation conducted with the 4[th] respondent alone is legal and valid because he was the highest bidder. But the fact remains that, the petitioner had agreed for a sum of `1.5 crores in the earlier tender through Ext.P3 letter. It is true that both the petitioner and the 4[th] respondent had declined to increase the amount to `1.5 crores when they were invited for public auction. Hence the question remains as to whether awarding of the tender in favour of the 4[th] respondent, based on a negotiation conducted without intimation to the petitioner is valid or not. 9. Contention of the petitioner is that, there is a clear denial of equal opportunity to all the intending bidders in the tender, and therefore the tender process is totally vitiated. Learned counsel placed reliance on a decision of the hon'ble Supreme Court in **Food Corporation of India V. M/s Kamdhenu Cattle Feed Industries (1993 (1) SCC 71)** . It is held that, the inadequacy of the price offered in the highest WP(C). 23813 of 2013 8 tender could be a cogent ground for negotiations with the tenderers, giving them equal opportunity to revise their bids, with a view to obtain highest available price. In such case resorting auction to accept the highest tender, in case the negotiation would not yield a significantly highest amount, would be fair. Such a procedure involves giving due weight to the highest offer and it should be made after giving equal opportunity to all the intending bidders. In the case at hand, the respondents 1 to 3 had conducted only a secret negotiation, which according to the learned counsel for the petitioner is a process which is totally arbitrary and irrational and which no responsible authority acting reasonably and in accordance with law would have resorted to. Therefore interference of the court is warranted, is the contention. 10. Learned counsel for petitioner had further placed reliance on a decision of the hon'ble Supreme Court in **Michigan** **Rubber (India) Ltd. vs. State of Karnataka and others (2012 (8) SCC 216)** and decision of a Division Bench of this court in **Standard Metals vs. Kerala Small Industries** WP(C). 23813 of 2013 9 ## **Development Corporation and another (2012 (2) KHC 157)** in order to canvass the position that interference of this court is justified when there is an element of public interest. 11. On the other hand learned counsel appearing for the 4[th] respondent contended that the impugned decision is taken in a fair manner and respondents 1 to 3 had only acted validly for a discernible reason and not whimsically with any ulterior purpose. Fixation of value of tender is entirely within the authority of the decision of the executive and courts do not have any role to play in that process. If the State or its instrumentalities had acted reasonably and fairly and in public interest in awarding of a contract, interference by court should very restrictive, because no person can claim fundamental right to carry on business with the Government. Since the petitioner cannot substantiate that the decision was made malafidely with an intention to favour the 4[th] respondent, interference by this court is not at all warranted, is the contention. He had placed reliance on the very same decision in **Michigan Rubber (India) Ltd.** (cited supra) in support of the proposition. Learned counsel had also pointed out WP(C). 23813 of 2013 10 a decision of the Patna High Court in **Mandar Madhusudan Bahudhandhi Swablambi Sahkari Sammittee Ltd. vs. State** **of Bihar and others (2007 KHC 7615)** inorder to contend that any higher offer made on a subsequent date cannot be taken note of to unsettle an arrangement legally entered, which is binding on the parties. 12. While considering the entire factual scenario on the basis of the legal principles contended, this court is inclined to observe that, invitation of the 4[th] respondent alone for a negotiation without notice to the petitioner, is highly irregular and unreasonable. This is especially because when an open auction was attempted on the same day and when both of them were not prepared to enhance the rates. Eventhough the petitioner could not plead and establish malafides on the part of any particular officer or authority, it should be taken note of that, reasonableness or fairness of such an action need to be tested on the touch stone as to whether such a decision would be taken by any responsible authority acting reasonably in accordance with law. The answer can only be on the negative. Involvement of WP(C). 23813 of 2013 11 public interest in any such action is of prime importance to arrive at a conclusion regarding justifiability of such an action and to decide as to whether the court need to be interfered. It is revealed that the amount of licence fee for the previous year was Rs.2.05 crores. The petitioner had offered that he is prepared to take the licence for the said amount. It has also come out in evidence that on a previous occasion the petitioner had offered a sum of Rs.1.5 Crores, through Ext.P3. But in the subsequent tender the petitioner had quoted only an amount of Rs.1,15,00,000/- and the 4[th] respondent had quoted only a sum of Rs.1,25,25,251/-. In this regard it is pertinent to note that the 4[th] respondent had produced Ext.R4 (e) document which is the copy of a complaint submitted by the petitioner before the Kerala Advertising Industries Association, raising complaint that the 4[th] respondent had violated the understanding and agreement arrived mutually with respect to the tender in question. This indicates clearly that there was a specific understanding to under quote the amount in the tender. Being a public sector organisation, loss if any to the 1[st] respondent will be a loss of WP(C). 23813 of 2013 12 public money, which the court is bound to protect. Considering all such circumstances, this court is of the view that public interest need to be protected. It can be achieved only by conducting negotiation participating both the competing tenderers, instead of negotiation conducted exclusively with the 4[th] respondent. Bearing in mind the limitations of judicial review in the process of tenders, this court feels that this is a fit case where interference can be to the extent of holding that there is unreasonable and arbitrary decision on the part of the tendering authority and prejudice has been caused to public interest. 13. Under the above mentioned circumstances this court is of the considered opinion that public interest can be well protected by directing negotiation participating both the parties, keeping the rights of the highest tenderer protected to proceed with on the basis of the confirmation granted in case such negotiation do not yield a significantly higher offer. 14. Therefore the writ petition is allowed in part. The 3[rd] respondent is directed to invite the petitioner as well as the 4[th] respondent for a negotiation on the basis of the tenders WP(C). 23813 of 2013 13 submitted by both of them pursuant to Ext.P1 notification. The negotiation shall be conducted after issuing registered notice to both of them requiring to be present, at the office of the 3[rd] respondent on any particular day at a particular time. Both the petitioner as well as the 4[th] respondent will be at liberty to submit their highest offers if any, in sealed covers before the 3[rd] respondent, on the date on which they will be invited for the negotiation. If the 3[rd] respondent finds it proper to have an open negotiation after opening of the sealed offers, he will be at liberty to do so. The tender shall be confirmed in favour of either of them if the highest offer either by way of the sealed tender or by way of negotiation comes to a sum of Rs.1,75,00,000/- or above, by cancelling Ext.P4. 15. In case the highest offer received is only below Rs.1,75,00,000/-, the 4[th] respondent should be permitted to proceed further on the basis of Ext.P4 letter and Ext.R1 (e) agreement executed. 16. Necessary steps to comply with the above directions shall be taken by the 3[rd] respondent at the earliest and the WP(C). 23813 of 2013 14 process shall be finalised at any rate within one month from the date of receipt of a copy of this judgment. C.K.ABDUL REHIM, JUDGE pmn/