1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 2415 OF 2010 S. Motilal Plywood House Head Office at 2988, Teen Galli, Ganj Bazar, Ahmednagar 414 116 Through its Manager, Shri Rakesh Rameshchandra Mehta, Age 45 yrs., Occ: Service, R/at Lale Plot, Mamta Building, Madhavnagar Road, Sa ngli. .. Petitioner Versus. 1. The State of Maharashtra, Through Secretary, Urban Development Department, Mantralaya, Mumbai 400 032. 2. Nashik Municipal Corporation Through its Commissioner, Rajiv Gandhi Bhavan, Sharanpur Road, Nashik. 3. Konark Intrastructure Ltd., Konark Plaza, 1st floor, Near Sapna Theatre Link Road, Ulhasnagar 421 003. 4. Sahakar Agencies Pvt. Ltd., 8/8, Dayabhai Compound, S.V.Road, Malad (W), Mumbai 400 064. .. Respondents WITH WRIT PETITION NO.2872 OF 2010 1. Dr. Hemlata Ninad Patil Age: 44 yrs., Occupation: Doctor, 2 R/o. Daulat Bungalow, Tilak Wadi, Nashik, Dist. Nashik. .. Petitioner V/s. 1. Nashik Municipal Corporation Through it’s Commissioner, Having address as Rajiv Gandhi Bhavan, Sharanpur Road, Nashik 422 002. 1-A M/s. Konark Infrastructure Ltd., Tal. Kalyan, District Thane. 2. The Secretary, Government of Maharashtra, Urban Development Department, Mantralaya, Mumbai 400 032. .. Respondents Mr. K.K. Singhvi, Sr. Advocate with Mr. G.S. Godbole i/b. Mr. Amit Sale, advocate for the petitioner in WP 2415/2010. Mr. V.A. Thorat, Sr. Advocate with Mr. S.K. Shinde i/b. Satjeet Dighe, advocate for the petitioner in WP No. 2872/2010. Mr. Shriram Aney, sr. Advocate with Mr. L.M. Acharya i/b. Mr. M.L. Patil, advocate for respondent no. 1 in WP 2415/10 and respondent no. 1 in WP. No. 2872/2010. Mr. P.K. Dehakephalkar i/b. Mr. R.S. Shekhawat, advocate for respondent no.4 in WP No. 2415/10 and for respondent no. 5 in WP No. 2872/10. Mr. A.A. Kumbhakoni with Smt. Chandana Salgaonkar-Radia for respondent no. 3 in WP 2415/2010 and for respondent no.4 in WP 2872/2010. Mr. V.S. Gokhale-AGP for respondent no.1 in WP 2415/10 and for respondents 2 & 3 in WP 2872/2010. 3 CORAM:- A.M.KHANWILKAR AND R.M.SAVANT, JJ JUDGMENT RESERVED ON:- April 19, 2010. JUDGMENT PRONOUNCED ON:- April 29 , 2010. Per Court (PER A.M. KHANWILKAR, J) This Common order will dispose of both the Writ Petitions as overlapping questions have been raised in relation to the decision of the General Body of the Corporation and more particularly in respect of the tender notice inviting offers for appointment of Agent for collection of Octroi and escort fees of the Corporation for the year 2010-2011. 2. Heard. Rule. Counsel for the Respondents in the respective Petitions waive notice. By consent, both Petitions are proceeded for final disposal at admission stage itself, considering the urgency. 3. In so far as the first Writ Petition (WP No. 2415/2010) filed under Article 226 of the Constitution of India, the Petitioner prays for quashing and setting aside the terms and conditions of eligibility in Para No. 5 of tender notice-2nd call dated 24-3-2010 issued by the Respondent No.2 on the ground that the same is illegal, arbitrary and capricious and intended to favour the predetermined bidders. 4. The tender notice was in respect of inviting bids for appointment of agent for collection of octroi imposed, assessed and levied by the 4 Corporation on the entry of goods within the octroi limits of Municipal Corporation, Nashik as per the provisions of Provincial Municipal Corporation Act, 1949 and Nashik Municipal Corporation Octroi Rules, 2005 and the Standing Orders framed thereunder. The tender is known as ‘octroi tender 2010-2011.’. The first such tender was issued on 12th March, 2010 which was challenged by way of present Writ Petition on diverse grounds. As there was no response to the said tender notice, the Corporation has now issued fresh tender notice dated 24th March, 2010 for the same contract of agent for collection of octroi. The Petitioner has amended the present Writ Petition and asked for relief which is referred to earlier. In view of the subsequent developments, only the above stated relief survives for consideration. It may be relevant to note that the Petitioner, had enlisted as interested bidder pursuant to the first tender notice dated 12th March, 2010 - which however has been worked out. However, after issuance of the 2nd tender notice dated 24th March, 2010, the Petitioner has not enlisted itself as interested bidder. Yet has impugned the 2nd tender notice in this Petition by amending the pending Petition. 5. Be that as it may, we shall straightway advert to the relevant clauses of the impugned tender notice which have been pressed into service by the Counsel appearing for the parties. We may refer to clause-2 which deals with earnest money to be deposited by the bidders in favour of Commissioner of the Corporation. The same reads thus:- “2. Earnest Money: Bidders are required to give a Demand Draft or For (Fix Deposit Receipt) of Nationalised Bank drawn in favour of 5 Commissioner, Nashik Municipal Corporation, Nashik on account of bidder and payable at Nashik, (valid for 180 days from the due date of the tender) for Rs.23,57,50,000/- (Rupees Twenty Three Crores Fifty Seven Lakhs Fifty Thousand only) as Earnest money Deposit (EMD) along with their offer. Offers made without E.M.D. will be rejected. Nashik Municipal Corporation will not pay any interest on the E.M.D. The Nashik Municipal Corporation will not accept Bank Guarantee in lieu of EMD. Bidder has to upload the Demand Draft or FOR (Fix Deposit Receipt): Number and bank name with validation period while bidding (Uploading). Original Demand Draft or For (Fix Deposit Receipt) should be submitted on 08/04/2010 upto 3.00 p.m. in the office of Dy. Commissioner (Tax), Nashik Municipal Corporation Rajiv Gandhi Bhavan, Sharanpur Road, Nashik, failing to which is treated as disqualification of the bidder.” 6. The other relevant clause is clause-3 which deals with the security deposit in the form of deposit or bank guarantee of nationalized Bank which reads thus: “3. Security Deposit: Security Deposit in the form of Deposit or Bank Guarantee of Nationalized Bank to the tune of 16% of contractual amount excluding the probable recovery of Octroi through current account in 4 (Four) equal Bank Guarantee. The NMC shall have right to retain the above bank guarantees or deposit given by the current account holders. The decision of the Commissioner Nashik Municipal Corporation is the respect of security deposit shall be final and binding on the Agent. The successful Agent has to submit Cash deposit or Bank Guarantee for any Nationalized Bank to the tune of 16% of the bid amount. After deducting Current Accounts recovery for the year 2009-10. However if by any reason the Current Account facility of any firm is cancelled than the bidder shall have to deposit additional Cash amount or Bank Guarantee to the tune of 16% of expected annual Octroi of that Current Account holder. The decision of the Commissioner, NMC on this account shall be final and binding on the bidder. 6 The Bank Guarantees are to be divided in four equal parts (Le. 4% each) Out of which three Bank Guarantee should be of validity period of 13 months and one Bank Guarantee shall have validity of 18 months from the date of commencement of work. Also if its found that the unclaimed deposit or Octroi claim pending to settled by the bidder on the last day contract, the bidder has to submit additional Bank Guarantee (if required) of such amount as decided by the Commissioner, NMC and his decision to that effect shall be final and binding on the bidder. 7. The crucial clause around which the entire controversy revolves is clause-5 dealing with the matter of eligibility of the interested bidders which reads thus:- “5. Eligibility: (a) The bidders shall have experience of minimum one year of collection of Octroi of Rs.100 crores or above of anyone Municipal Corporation and the bidders shall have successfully executed the tender for one full year. The certificate to this effect should have been issued by the Municipal Commissioner or the competent authority. (b) The bidder should have net worth of Rs. Twenty Five Crores and above. The bidder should submit their audited balance sheet for year 2008-2009 duly certified by Chartered Accountant. (c) The bidder should have an annual turnover of Rs.100 Crores or above for the year 2006-2007, 2007-2008 and 2008-2009 and should submit audited balance sheet duly certified by Chartered Accountant. (d) The bidder shall submit a solvency certificate of Nationalized Bank along with the tender, certifying that the financial status (solvency) of the bidder is to the extent of Rs. 50 Crores. (e) No joint venture is permitted. 7 (f) The bidder will have to submit the Character Certificate of individual in case of proprietary firm, of all partners is case of partnership firm and of all directors in case of registered company duly signed by the authorized Police Officer or District or Sub-Divisional Magistrate in which the bidder reside.” 8. The gamut of the grievance of the Petitioner is that the condition specified in clause-5 is couched in such a manner so as to ensure that only predecided interested bidders would qualify and can be awarded contract in question. It was argued that conditions specified regarding eligibility are tailor-made so that only two persons throughout India would qualify and other interested bidders who have sufficient experience and ability to undertake the job would be excluded from the zone of consideration at the threshold. That results in unfair competition, if not of creating monopoly of the two prospective bidders who would qualify the eligibility conditions. More so because, such condition results in denial of equal level playing field to compete between the persons possessing experience to handle the contract of collection of octroi. It is argued that the conditions are unreasonable and have no nexus with the nature of work to be discharged by the Agent under contract. Moreover, the bidder if appointed would not only pay the earnest money to the extent of Rs. 23,57,50,000/- but also furnish security deposit to the tune of 16% of the contractual amount. On complying these onerous terms there was absolutely no need to then provide for condition, as are provided in sub-clauses (a) to (e) of clause 5. To buttress the argument that such conditions are tailor-made only to accommodate predecided interested bidders, for which the same cannot be sustained, reliance is placed on the decision of the Apex Court in the case of Meerut Development Authority v/s. Association of Management Studies & anr. reported in AIR 2009 SC 8 2894 in particular Paragraph 17 thereof. Reliance is also placed on another decision of the Apex Court in the case of Reliance Energy Ltd. & anr. v/s. Maharashtra State Road Development Corporation Ltd. & ors. reported in (2007) 8 SCC page-1 in particular Paragraph 36 thereof. 9. In so far as second Petition (Writ Petition No. 2872/2010) is concerned, although the grounds raised in the Petition are to question the policy decision of the Corporation and also the procedure followed in passing of the Resolution dated 2nd March, 2010, it is fairly stated before us that the Petitioner may have to take recourse to statutory remedy to question the Corporation Resolution dated 2nd March, 2010 before appropriate forum and in those proceedings all aspects can be considered. In other words, the challenge in the 2nd Petition is confined only to the terms and conditions, in particular, about the eligibility clause being arbitrary, unjust and unreasonable. It is stated that the policy decision articulated in Resolution dated 2nd March, 2010 on the basis of which impugned tender notice has been issued, cannot be sustained. The Counsel appearing for the said Petitioner argued that it is not a case of usual tender notice for supply of products or goods but pertains to contract of collection of octroi for and on behalf of Corporation which would essentially require deployment of sufficient men at the counters who need not possess expertise or special qualification. At any rate, the eligibility condition has been couched in such a way so as to forbid free and fair competition to get maximum price. This Petitioner supports and adopts the argument canvassed in the first Petition, in so far as the challenge to the impugned tender notice is concerned. 10. The Corporation has filed reply affidavit of Dy. Municipal 9 Commissioner to controvert the assertions made in the Writ Petition. In the first place, it is contended that the Petitioner in the first Writ Petition has no locus standi as he has not even enlisted himself after issuance of the 2nd tender notice. It is then asserted that the Petitioner in the first Petition is not only ineligible but also incompetent to handle the contract in question which would be in the magnitude of over Rs. 470 crores or thereabout. The Petitioner, however, has total contract of mere Rs. 55 crores which is to be paid in 50 equal installments and even in respect of such contract, the Petitioner has failed to pay the installments on time. It is then stated that the present Petition is not bonafide but abuse of process of law. To justify the reserved price, the Corporation has relied on the figures of the octroi collection in financial years from 2005-2006 till 2009-2010, which ranges from Rs. 258.84 crores to 376.63 crores (upto 19th March, 2010). Considering the trend of increase, the Corporation has assumed that the octroi collection for the financial year 2010-2011 should be around Rs. 470 crores or thereabout and it is on that basis the offers have been invited from the interested bidders. It is stated that the question regarding appropriateness of the eligibility conditions is not open to judicial review. According to the Corporation, the conditions regarding eligibility specified in the tender notice can neither be said to be unreasonable, unfair or arbitrary, but the same are rational and logical having regard to the magnitude of the contract amount which would exceed over Rs. 470 crores . The principal grievance made by the Petitioners in the respective Petitions that the conditions were so couched so as to facilitate allotting the contract to pre- determined interested bidders, the same has been denied. On the other hand, it is stated that in response to the 2nd tender notice, three bidders have submitted their tenders which falsifies the claim of the Petitioners. Besides, 10 the tender notice was floated publicly and everyone right across India have been invited to bid for the tender. The substance of the stand taken on behalf of the Corporation is that the Corporation has exercised its prerogative in providing for eligibility conditions and it is not open to question the same as it is neither irrational nor illogical or arbitrary and discriminatory. 11. Counsel for the Respondents to buttress the above submission have placed reliance on the decision of the Apex Court in the case of Directorate of Education & ors. v/s Educomp Datamatics Ltd. & ors. reported in (2004) SCC page-19. Reliance is placed on the another decision of the Apex Court in the case of Association of Registration Plates v/s. Union of India & ors. reported in (2005) I SCC page 679. In addition, reliance is placed on the unreported decision of our High Court at Aurangabad Bench dated 6th February, 2007 in the case of the Megha Enterprises v/s. State of Maharashtra & ors. in WP No. 607/07 and companion cases which decision was upheld by the Apex Court in SLP Civil No. 3090/2007 decided on 26th February, 2007. 12. Besides the Corporation, even the interested bidders who have been made party to this Writ Petition have appeared before this Court. Counsel appearing for the interested bidders who have submitted their bid in response to the said tender notice have adopted the argument of the Counsel for the Corporation and in addition submitted that the contract of collection of octroi is incomparable to the contract of supply of any product or goods. He submits that mere presence of sufficient men at the counters is not enough. They must possess rudimentary knowledge of provisions relating to levy of octroi. In as much as, collection of octroi would require experience of 11 applying octroi laws and issues arising in that context. It is a statutory function of the Corporation which would be in a way outsourced to the Agency. According to the Learned Counsel for the interested bidders, none of the conditions providing for eligibility can be said to be unreasonable, irrational or for that matter arbitrary and discriminatory considering the magnitude of the tender amount exceeding Rs. 470 crores for the financial year in question. The Counsel for the interested tenderers has relied on the principle stated in the decisions of the Supreme Court pressed into service by the Counsel of the Corporation and in addition on the unreported decision of our High Court again of Aurangabad Bench dated 15th January, 2007 in the case of Srikrishna.. Sugar Mills v/s. The State of Maharashtra in Writ Petition No. 177/2007. 13. On the above basis it was argued that both the Writ Petitions be dismissed being devoid of merits. 14. The foremost question that needs to be considered is whether the Petitioners in the respective Petitions have locus standi to maintain the challenge before this Court in respect of the tender conditions. In so far as Petitioner in Writ Petition No. 2415/2010 is concerned, it is noticed that he has not even enlisted himself after the publication of 2nd tender notice. If it is so, there is force in the argument of the Respondents that such person cannot be permitted to assail the terms and conditions which are essentially a contractual matter. 15. To get over this position, it was argued on behalf of said Petitioner that he had enlisted himself after publication of the first tender notice and 12 immediately thereafter challenged the terms and conditions of the first tender notice which are paramateria with the 2nd tender notice. In other words, the basis of challenge is common in respect of both the tender notices. We are not impressed with this submission. So long as the Petitioner is not participating in the tender process, it cannot be heard to question the validity of the tender process in question. 16. Similarly, in so far as the Petitioner in Writ Petition No. 2872/2010 is concerned, we find force in the submission canvassed on behalf of the Respondents that even this Petitioner cannot be heard to make grievance about the tender conditions in question for the simple reason that this Petitioner was party to the policy decision taken by the General Body of the Respondent No. 2 Corporation of privatising the octroi collection as also to provide stringent terms and conditions prescribed in the tender in question. It is a different matter that the Petitioner had opposed the said resolution passed in the General Body, but being party to majority decision of the General Body, will be bound by the said decision. If the Petitioner has any grievance about the said policy decision taken by the General Body, will have to take recourse to remedy under Section 451 of the Act. The questions raised by this Petitioner in the present Petition, in our opinion, can also be considered by the said Authority in exercise of powers under Section 451 of the Act as to whether the tender conditions are appropriate or otherwise. 17. Reverting to the question of locus of the Petitioner in the first Writ Petition No. 2415/2010, it is stated on behalf of the Respondents that the said Petitioner is not even eligible to be considered having regard to his past record. Indeed, the Petitioner has disputed the stand taken by the 13 Respondents in this behalf. We will not burden this Judgment with the said aspect of the matter and instead would proceed with the other issues. 18. It is noticed from the record that the Corporation published first tender notice providing for same terms and conditions, however, no response was received. As a result, the Corporation decided to issue 2nd public tender notice. It is stated on affidavit that the said tender notice was given wide publicity by different modes of publication. The fact so stated is not in dispute. This is a significant fact to be kept in mind while examining other aspects of the matter. It is also noticed that the fact stated in the reply affidavit about the amount of octroi collection in different financial years by the Petitioner Corporation is also not in dispute. From the said figures it is obvious that there is steep rise in the octroi collection on year to year basis from financial year 2005-2006. To augment further income to the Corporation, taking the benchmark of the octroi collection figure for the financial year 2009-2010, the Corporation decided to privatise the octroi collection so as to optimise the income of the Corporation and for that purpose, the estimated price of the contract for privatisation of the octroi collection was determined at Rs. 471.50 crores, which is almost 100 crores in excess of the octroi collection during the financial year 2009-2010. It is in the context of magnitude of the stakes involved, the Respondent Corporation took a policy decision to impose strict conditions so as to ensure that proper persons would come forward as interested bidders. The Respondents have also placed reliance on the volume of octroi collection in so far as Respondent Corporation is concerned, as compared to the other ‘C’ class Municipal Corporations. In so far as those Municipal Corporations are concerned, the octroi collection hinges around Rs. 100-127 crores; whereas 14 the octroi collection of the Respondent Corporation for the financial year 2009-2010 has already achieved the figures of Rs. 376.63 crores. 19. Keeping in mind the stakes involved, the Corporation has imposed conditions amongst others referred to in clause-5 providing for stringent eligibility of interested bidders to participate in the tender process. The conditions specified in sub-clauses (a) to (f) thereof, therefore, cannot be said to be unreasonable, arbitrary, irrational or capricious. If it is so, there is hardly any scope for judicial review of the said terms and conditions merely because the said conditions are onerous. That by itself can be no basis to interfere in the matter. The Apex Court in the case of Association of Registration Plates v/s. Union of India & ors. Reported in (2005) I SCC 679 has expounded that the implementing Authority has to ensure that the Scheme is effectively implemented. It is open for the State to insist for an expert person with sound financial and technical capacity. Insistence thereof cannot be misunderstood as malicious or misuse of the statutory powers. In Paragraph 38 of the said decision, the Apex Court observed that in the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the Authorities. It further observed that unless action of tendering authority is found to be malicious and misuse of its statutory powers, tender conditions are unassailable. On the same lines, the Apex Court in the decision reported in (2004) 4 Supreme Court Cases 19 in the case of Directorate of Education and others v/s. Educomp Datamatics Ltd. & ors. has observed that the High Court while exercising jurisdiction under Article 226 of the Constitution, does not sit as a Court of Appeal. It merely reviews the manner in which the decision has been taken. Further, it cannot transgress into the field of policy decision 15 taken by the Authorities. It has further observed that the Courts can scrutinise the award of the contracts by the Government or its agencies in exercise of their powers of judicial review to prevent arbitrariness or favoritism but there is inherent limitation in exercise of such powers. The Court usefully made reference to the decision in Tata Cellular vs. Union of India reported in (1994) 6 SCCF 651. In Paragraph 94 of the said decision, the parameters for interference by the Court have been restated. The exposition