Safari Bikes Limited v State of Kerala and others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM** **THURSDAY, THE 8TH DAY OF DECEMBER 2011/17TH AGRAHAYANA 1933** ## **WP(C).No. 25831 of 2011 (D)** **---------------------------** ## **PETITIONER(S):** ## **-----------------------------** **SAFARI BIKES LIMITED, E-650, PHASE-V, FOCAL POINT, LUDHIANA - 141 010 (INDIA), REPRESENTED BY ITS AUTHORISED REPRESENTATIVE SHRI.DAVID LALY, B4-SHARON TOCH REACH, VYTTILA P.O.** **BY SRI.K.JAYAKUMAR, SENIOR ADVOCATE ADVS.SRI.P.B.KRISHNAN** **SMT.GEETHA P.MENON SRI.N.AJITH SRI.P.B.SUBRAMANYAN** ## **RESPONDENT(S):** - **-----------------------------** **1. THE STATE OF KERALA, REPRESENTED BY THE CHIEF SECRETARY, GOVERNMENTOF KERALA, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM. PIN - 695 001.** **2. THE PRINCIPAL SECRETARY TO GOVERNMENT, SCHEDULED CASTES/SCHEDULED TRIBES DEVELOPMENT DEPARTMENT, GOVERNMENT OF KERALA,GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM,PIN - 695 001.** **3. KERALA SOCIAL SECURITY MISSION, REP. BY ITS EXECUTIVE DIRECTOR, II FLOOR, DAY CARE CENTRE FOR AGED, SOCIAL WELFARE INSTITUTIONAL COMPLEX, POOJAPPURA,THIRUVANANTHAPURAM - 695 012.** **4. THE EXECUTIVE DIRECTOR, KERALA SOCIAL SECURITY MISSION, II FLOOR ADDITIONAL DAY CARE CENTRE FOR AGED, SOCIAL WELFARE INSTITUTIONAL COMPLEX, POOJAPPURA, THIRUVANANTHAPURAM - 695 012.** **5. DR.S.SUBBAIAH, PRINCIPAL SECRETARY, SCHEDULED CASTES/SCHEDULED TRIBES DEVELOPMENT DEPARTMENT, GOVERNMENT OF KERALA, GOVERNMENT** **SECRETARIAT, THIRUVANANTHAPURAM, PIN - 695001.** **BY SRI.K.P.DANDAPANI,SENIOR ADVOCATE, (ADVOCATE GENERAL) R5 BY ADV. SMT.A.P.LALY @ LALY VINCENT** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 08-12-2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **sts** ## **WP(C)NO.25831/2011** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** - **P1 COPY OF THE G.O.(MS)NO.73/2011/SCSTDD ISSUED BY RESPONDENT NO.1 DATED 18/7/2011.** - **P2 COPY OF THE TENDER NOTICE ISSUED BY RESPONDENT NO.4, DATED 25/7/2011** - **P3 COPY OF THE PRICE BID SUBMITTED BY THE PETITIONER'S DEALER, DATED 10/08/2011** - **P4 COPY OF THE REPRESENTATION SUBMITTED BY THE PETITIONER'S DEALER DATED 11/8/2011.** - **P5 COPY OF THE SECOND TENDER NOTICE DATED 27/8/2011.** - **P6 COPY OF THE BID SUBMITTED BY THE PETITIONER DATED 27/8/2011** - **P7 COPY OF THE G.O.(MS)NO.90/11/SCSTDD ISSUED BY RESPONDENT NO.1** - **P8 COPY OF THE 100 DAY ANNOUNCEMENT OBTAINED FROM THE WEB-SITE OF RESPONDENT NO.1 DATED NIL.** - **P9 COPY OF THE INSTRUCTIONS NO.8(1)(H)98(1) ISSUED BY THE CENTRAL VIGILANCE COMMISSION, DATED 18/11/1998** - **P10 COPY OF THE OFFICE ORDER NO.15/3/05 ISSUEDBY THE CENTRAL VIGILANCE COMMISSION, DATED 24/3/2005.** - **P11 COPY OF THE CIRCULAR NO.4/3/07 ISSUED BY THE CENTRAL VIGILANCE COMMISSION DATED 3/3/2007.** - **P12 COPY OF THE CIRCULAR NO.01/01/10 ISSUED BY THE CENTRAL VIGILANCE COMMISSION DATED 20/1/2012.** - **P13 COPY OF THE CERTIFICATE ISSUED BY THE GENERAL MANAGER, DISTRICT INDUSTRIES CENTRE, LUDHIANA,DATED 11/5/2011.** - **P14 COPY OF THE GOVERNMENT PURCHASE ENLISTMENT CERTIFICATE ISSUEDBY THE NATIONAL SMALL INDUSTRIES CORPORATION LTD, DATED 16/2/2010** - **P15 COPY OF THE ISO CERTIFICATION OF THE PETITIONER, DATED NIL** - **P16 COPY OF THE NATIONAL AWARD CERTIFICATE AWARDED TO THE PETITIONER DATED 7/10/2006** - **P17 COPY OF THE CERTIFICATE ISSUED BY BUREAU OF INDIAN STANDARDS TO THE PETITIONER IN RESPECT OF BICYCLE FRAMES, DATED 27/12/2010** - **P18 COPY OF THE CERTIFICATE ISSUED BY BUREAU OF INDIAN STANDARDS TO THE PETITIONER IN RESPECT OF BICYCLE MUDGUARDS, DATED 27/12/2010** - **P19 COPY OF THE CERTIFICATE ISSUEDBY BUREAU OF INDIAN STANDARDS TO THE PETITIONER IN RESPECT OF BICYCLE FRONT FORKS DATED 28/1/2011** **2/-** **sts** **-2-** **WP(C)NO.25831/2011** **P20 COPY OF THE CERTIFICATE ISSUED BY BUREAU OF INDIAN STANDARDS TO METRO TYRES LTD, IN RESPECT OF SHORT PITCH TRANSMISSION ROLLER CHAINS AND CHAIN WHEELS DATED 18/7/2011.** **P21 COPY OF THE CERTIFICATE ISSUED BY BUREAU OF INDIAN STANDARDS TO METRO TYRES LTD, IN RESPECT OF CYCLE PNEUMATIC TYRES, DATED 25/5/2011 P22 COPY OF THE CERTIFICATE ISSUEDBY BUREAU OF INDIAN STANDARDS TO METRO TYRES LTD, IN RESPECT OF CYCLE RUBBER TUBES, DATED 28/2/2011.** ## **RESPONDENT'S EXHIBITS:** **R2(A) COPY OF THE TENDER NOTICE 27/08/2011 PUBLISHED IN HINDU 28/08/2011** ## **/TRUE COPY/** ## **P.A.TO.JUDGE** **sts** ## **C.K.ABDUL REHIM,J.** --------------------------------W.P.(C) No. 25831 OF 2011 --------------------------------Dated this the 8[th] day of December, 2011 ## **J U D G M E N T** Issue involved in this writ petition pertains to a tender invited by the State Government consequent to Ext.P1 order. In Ext.P1 Government accorded Administrative Sanction for the project named “Vidya Yathra” which is meant to provide bicycles to students belonging to Scheduled Castes studying in Std. VIII in all Government and Aided Schools within the state. The scheme envisaged supply of about 55,000 bicycles. Kerala Social Security Mission was assigned with the task of monitoring the scheme and to submit evaluations. In Ext.P1 it was contemplated that the scheme can be implemented through store purchase of popular branded bicycles with ISI mark, at a unit price not exceeding Rs.2,750/-. Through Ext.P2, tenders were invited from manufacturers, authorized dealers and leading distributors for purchase of bicycles. The dealer of the petitioner in W.P.(C) No. 25831 OF 2011 2 Kerala submitted Ext.P3 bid. Ext.P4 representation was submitted before the 3[rd] respondent, explaining about qualities of the product and requesting to treat the tender as the lowest. But subsequently the said tender was cancelled and a fresh notification was issued as per Ext.P5. Through Ext.P5, tenders were invited only from manufacturers of bicycles. The petitioner had participated in the tender and submitted Ext.P6 bid. According to the petitioner, his bid was the lowest one and the specifications contained in the technical bid indicated that the bicycle offered by the petitioner is having the maximum number of parts with ISI approval. But the first respondent had cancelled the tender and decided to distribute an amount of Rs.3,000/- to each of the students who are the beneficiaries, instead of purchasing and supplying the bicycles. Ext.P7 is the order issued by the first respondent in this regard. Allegation of the petitioner is that, the cancellation of the tender was only because that the 4[th] respondent found that the tender cannot be awarded to a company which is favoured by him, and that no undue pecuniary benefit could be gained out of the tender. W.P.(C) No. 25831 OF 2011 3 It is also alleged that, by cancellation of the tender a new device has been adopted to siphon off the public funds. It is also alleged that the second respondent, who is also impleaded in his personal capacity as the 5[th] respondent, had furnished the list of schools and students to his favoured bicycle manufacturer in order to facilitate them for supply of bicycles to those students selected. The petitioner is seeking to quash Ext.P7 based on the above said allegations. 2. Contention of the petitioner is that, Ext.P7 decision was engineered by the second respondent with a corrupt motive which had resulted in wasteful expenditure of about Rs.2.5crores out of the State exchequer. The cancellation of the tender is challenged as illegal, arbitrary and unsustainable. Ext.P7 will not withstand scrutiny on the touchstone of Article 14 of the constitution of India, because the decision is taken in an irrational manner without any valid basis, is the contention. Ext.P7 is also challenged as one vitiated by malafides. According to the petitioner, the respondents, who are expected to protect financial interests of the state, have acted in a W.P.(C) No. 25831 OF 2011 4 manner resulting in wastefull expenditure and public money to the extent of about Rs.2.5 crores,which could have been saved and utilized for other development activities for the benefit of the Scheduled Castes. 3. In the counter affidavit of the respondents it is contented that, by mere submission of tender the petitioner is not acquiring any right to compel the Government to procure bicycles only through the said process of tender. The decision to cancel the tender is a matter coming within the policy decision of the Government in which judicial review is not warranted . It is stated that, the scheme envisaged under Ext.P1 was included in the '100 days programme' declared by the Government which was expected to be completed in a time bound manner. But the 4[th] respondent failed in implementing the scheme within the time stipulated and therefore the Government have assigned the task of implementation with the Director of the Scheduled Castes Development Department. Thereafter fresh tenders were invited as per Ext.P5 and technical and finance committees were constituted W.P.(C) No. 25831 OF 2011 5 under leadership of the Director of Scheduled Castes Development Department, in order to monitor the scheme and for finalization of tenders. The team considered tenders received from 3 manufacturers and it was found that the tender submitted by the petitioner herein contained the lowest price bid. But the technical committee recommendations were not in favour of the petitioner, as the rating with respect to bicycles offered by the petitioner was only noted as 'satisfactory' compared with the 'best' and 'good' ratings given to other two competitors. It is stated that when the purchase procedure was about to be completed, the media spread scandals attributing chances of irregularities and corruption in the process of purchase of bicycles. Therefore the Government decided to cancel the tender in order to implement the scheme in a more transperant manner. Accordingly, the Government decided to issue a grant at the rate of Rs.3,000/- per student, for the purchase of bicycles and its accessories, such as, cycle pump, dynamo light, mirror,mudguard, seat cover etc. It is also stated that, in Ext.P7 Government Order sufficient safeguard W.P.(C) No. 25831 OF 2011 6 has been taken to ensure that the students are utilising the grant for purchase of bicycles itself. According to the Government, the amount will be released directly to the beneficiaries inorder to avoid any suspicion in the minds of the public. Further contention raised is to the effect that, as per the terms and conditions of the tender it was clarified that the tenders are liable to be suspended or cancelled at any time at the discretion of the Scheduled Caste Development Department, without assigning any reason. It is further stated that the scheme has already been inaugrated by the Honourable Chief Minister on 16-9-2011 by distributing grant to five students in Wayanad District and the progress of the implementation is in an advanced stage in other Districts. Committees envisaged under Ext.P7 has been constituted in each school with membership of the Head of the Institution, president of PTA and Officer of the Scheduled Caste Development Department, for implementation of the scheme. It is contended that there is no malafides with respect to the impugned decision and that the decision is based only on a W.P.(C) No. 25831 OF 2011 7 change in the policy, which is not amenable to any challenge. 4. In the reply affidavit, almost all the contentions raised in the counter affidavit has been refuted. It is specifically pointed out that the allegations made against the 2nd respondent has not been answered in the counter affidavit. Further contention raised is that the counter affidavit filed by the respondents 1 to 4 through the Government Pleader cannot be accepted, since the 5[th] respondent is impleaded in his personal capacity. In the reply affidavit the petitioner had raised further contentions that the cancellation of tender is a decision which violates the guidelines and norms formulated by the Chief Vigilance Commission with respect to procedures to be followed in the matter of inviting and finalising tenders in public sector. Exts.P9,P10,P11 and P12 are copies of various circulars issued by the Central Vigilance Commission in this regard. The petitioner had produced various other documents which are testimonials to prove that the product manufactured by him is of good quality and has got accreditation from various competent authorities recognized by the Government. W.P.(C) No. 25831 OF 2011 8 5. Sri.K.Jayakumar, learned Senior Counsel and the learned Advocate General had addressed extensive arguments. On behalf of the petitioner it is contended that, in exercise of power under Article 226 this Court need to look into the rationale involved in the decision of Ext.P7. If such decision is motivated by extraneous reasons like malafides or if the basis for such decision is quite unreasonable and arbitrary, this court should interfere is the contention. It is further contended that the irrational decision had resulted in wastage of public money to a considerable extent, which this court is bound to protect in public interest. It is contended that the allegations of malafides attributed against the 5[th] respondent has not been specifically answered and hence those allegations remains untraversed. 6. Per contra, learned Advocate General contended that the petitioner has no locus standi to file this writ petition. It is pointed out that in Ext.P itself the reasoning which lead to the change of policy has been revealed. It is on the basis of complaints received with respect to the tender procedure that the Government have decided to cancel the tender. The W.P.(C) No. 25831 OF 2011 9 decision to distribute grant of Rs.3,000/- to individual students has been adopted in order to ensure transperancy, and it is meant only to enable the beneficiaries to purchase the bicycles as well as its accessories. It is further pointed out that, through Ext.P7 constitution of committees were insisted in each institutions, with representation of the head of institution, PTA president and Scheduled Caste Development Officer, in order to ensure that the beneficiaries are utilising the grant only for purchase of bicycles. Therefore, being a policy decision of the Government which is taken on valid reasons, it is not amenable for any challenge. 7. Learned Advocate General also challenged locus standi of the petitioner contending that the petitioner being a tenderer is a person interested in the subject matter involved and therefore he cannot step into shoes of a public interest litigant to raise allegations of any wastage of money or siphoning off public exchequer. Further it is contended that Ext.P7 decision is only intended to prevent any wastage of public money and to ensure that the amount marked for the W.P.(C) No. 25831 OF 2011 10 scheme is reaching the real beneficiaries in a more feasible manner. 8. Learned Senior counsel for the petitioner had placed reliance on the decision of the hon'ble Supreme court in _**Union of India and others vs. Dinesh Engineering Corporation and Another ((2001) 8 SCC 491)**_ inorder to content that judicial review is possible in policy matters when it is convinced, keeping in mind of all relevant facts, that such policy decision cannot withstand the test of reasonableness and discrimination. On the facts of that case, it is a matter where the Government had decided to procure certain articles from a sole supplier on the basis of an assumption that the said supplier alone can procure the articles and nobody else is capable of making such supply. It is pointed out that when tenders have been received promising supply of bicycles at the rate of Rs.2,539/-, the decision to distribute an amount of Rs.3,000/- to the beneficiaries is quite unreasonable and arbitrary. It is further contended that after adopting the course of tender and after proceeding with the tender process W.P.(C) No. 25831 OF 2011 11 upto its finalization, there was no reasonable or rational grounds existed for the Government to decide cancellation of the tender, merely saying that there were complaints received. Coupled with the unreasonableness and arbitrariness of the decision there is clear allegations of malafides, which remains untraversed, is the contention. Therefore it is contended that there exists justifiable circumstances under which this court can exercise its discretionary jurisdiction inorder to protect the interest of the public at large. 9. Learned Advocate General had placed on the decision reported in _**Ramachandra Murarilal Bhattad and others vs. State of Maharashtra and others ((2007) 2 SCC 588)**_ . The Apex Court observed that a policy decision may subject to change from time to time , but only because a change is effected that by itself does not render a policy decision to be illegal or otherwise vitiated. The court is called upon to exercise the discretionary jurisdiction only in cases where the policy decision has to be held in controversy to a statute or against public policy. When the cancellation was pursuant to W.P.(C) No. 25831 OF 2011 12 change in the policy decision, no reason need to be assigned, provided the policy decision is not contrary to any statute or to public policy. He points out a further decision of the Honourable Supreme court in **Shimnit Utsch India privat Limited and another vs. West Bengal Transport Infrastructure develoment Corporation Limited and others ((2010) 6 SCC 303)** where in the honourable Supreme Court evaluated permissibility with respect to change in policy in an occasion of cancellation of a tender . It is held that the Government policy can be changed with changing circumstance and only on the ground of change no such policy will be fully vitiated. The Government has got discretion to adopt a different policy or to alter or change the policy, calculated to serve public interest and to make it more effective. But it is held that the change of policy must be in conformity with wednesbury reasonableness and should be free from arbitrariness,irrationality and bias and malice. Various other decisions were also placed for my consideration in order to support the dictum that any alteration or change in W.P.(C) No. 25831 OF 2011 13 policy decision are permissible and unless it is violative of any statutory provisions or it is vitiated by malafides, unreasonableness or arbitrariness, the court cannot interfere. It is also contended based on the decisions that a mere change in the policy for administrative reasond does not necessarily mean that there has been legal malafides. 10. From the rival contentions raised at the bar, the question mooted for consideration can be refined and consolidated into the aspect as to whether there is any unreasonableness or arbitrariness or malafides with respect to cancellation of the tender and with respect to adoption of a new policy for distribution of the grant directly to the beneficiaries. Before deciding that questions it is necessary for this court to look into the contentions raised with respect to locus standi of the petitioner. As contended on behalf of the respondents the petitioner is a person who has participated in the tender and is having interest in the subject matter of the case. He cannot therefore step into the shoes of a public interest litigant, seeking interference of this court alleging W.P.(C) No. 25831 OF 2011 14 malafides, wastage of public exchequer, interest of the public at large etc. Therefore, I am of the view that the petitioner cannot be permitted to pursue the matter on the basis of public interest seeking for an interdiction to prevent an alleged public mischief . But that by itself will not preclude this court from looking into the various aspects, in order to decide as to whether there is any extreme circumstances where an irrational decision is taken in an unreasonable and arbitrary manner which had resulted in the public interest seriously affected and resulted in siphoning off public money to a considerable extent. According to me such an interference is warranted only if there is an extreme situation striking conscience of the court that, inspite of the restrain in interfering with the policy decisions of the executive, the court should not abstain from interference due to the gross calamity which may occur by virtue of the unreasonable and arbitrary decision. In the case at hand, on analysing the factual aspects, I do not find any such alarming situation. It is evident that the Government had entrusted implementation of the policy at the W.P.(C) No. 25831 OF 2011 15 first instance with the 3[rd] respondent . Subsequently, on finding that the respondents 3 and 4 are not acting in accordance with the time frame formulated, the matter was entrusted with the Director of Scheduled Caste Department. Even after inviting fresh tenders, the committee constituted for evaluation of the tenders have not rated the product of the petitioner as best, even though he quoted the least amount . According to the Government, there arose some hue and cry in the media raising allegations regarding the tendering process and alleging corruption in the implementation of the scheme. It is stated that the Government, in order to ensure transparency, have decided to cancel the tender and to distribute the benefits directly to the students. Considering these factors I do not find any extreme circumstances warranting interference to hold that the change of policy decision was totally irrational or unreasonable or arbitrary. The petitioner, in his capacity as a tenderor cannot raise any successful challenge against the decision in cancelling the tender process, because such right is perfectly vested with the W.P.(C) No. 25831 OF 2011 16 awarder, at any point of time, at any stage of the tender. Even though the petitioner had raised certain allegations of malafides , which even assuming remains ultraversed, there is no sufficient materials produced to support such allegations or to prima facie convince the conscience of this court to arrive at a conclusion that the change in the decision was motived by any malafide intention as alleged. Under the above mentioned circumstance, I decline to interfere with the decision taken by the Government under Ext.P7. Resultantly the writ petition fails and the same is accordingly dismissed. **C.K.ABDUL REHIM JUDGE** **smm** W.P.(C) No. 25831 OF 2011 17 W.P.(C) No. 25831 OF 2011 18