1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION (LODGING) NO.2666 OF 2008 M/s. A.M. Yusuf, ) Proprietary concerned, having its office ) at Chinoy Building, 3rd Floor, ) 7th Khaja Cross-Lane, Nal Bajar, ) Mumbai – 400 003. ).. Petitioner Versus 1. Mumbai Municipal Corporation, ) Municipal Corporation established ) under Bombay Municipal ) Corporation, having its office at ) Mumbai – 400 011. ) 2. The Chief Engineer, ) Central Purchase Authority Dept. ) (CPA), ) Brahan Mumbai Mahanagar Palika, ) 566, N.M. Joshi Marg, Bhailkhala, ) Mumbai – 400 011. ) 3. The State of Maharashtra, ) (Summons should be served on Ld. ) Govt. Pleader, high Court, OOCJ. ).. Respondents -- Shri A.V. Anturkar i/by S.B. Deshmukh for the Petitioner. Shri K.K. Singhvi along with Shri S.S. Pakale and Ms A.R. Joshi for the BMC. Shri J.S. Saluja, AGP for the State. -- CORAM : SWATANTER KUMAR, C.J. & 2 S.A. BOBDE, J JUDGMENT RESERVED ON : 26TH NOVEMBER, 2008 JUDGMENT PRONOUNCED ON: 11TH DECEMBER, 2008 JUDGMENT : ( PER SWATANTER KUMAR, C.J. ) Heard learned Counsel for the parties. 2. Rule. Returnable forthwith. By consent of parties, the Petition is taken up for hearing and final disposal at the admission stage itself. 3. Respondent No.1 Mumbai Municipal Corporation issued different six tenders for supply of different articles such as Uniform sets for MCGM students, socks, shoes, school bags, stationery, etc., for the students studying in the schools of the Corporation. This notice was published on 22nd October, 2008. 4. The Petitioner, being interested in submitting his tender in response to the above tender notice, purchased the tender form. The Earnest Money Deposit for the first tender relating to supply of 3 Uniforms, was Rs.38,01,000/- i.e. 0.5% of the value amount. However, after the issuance of the first tender notice on 22nd October, 2008, a corrigendum was issued by the Corporation increasing the Earnest Money Deposit from Rs.38,01,000/- to Rs.1,52,04,000/- i.e. From 0.5% to 2%. Such a deposit was to be made between the period from 11th to 18th November, 2008. Similarly, the deposits in relation to other tenders were also increased. A tabulated statement was signed and displayed by Respondent No.2. It is the case of the Petitioner that the Government of Maharashtra issued Resolutions bearing No.BHKHaSA-2002/(2990)Udyog-6, Industries, Energy and the Labour Welfare Department dated 4th February, 2003 and another No.BHKHaSA-1088/(2512)Udyog-6, Industries, Energy and the Labour Welfare Department dated 2nd January, 1992 annexed to the Writ Petition at Exhibits D and E, respectively. These Resolutions regulate the purchase of items from the Central Stores. It was provided in paragraph 5.1 of the Manual Office Procedure for Purchase of the Stores by the Government Departments that:- “Indents to be processed under Urgent Order Procedure: 4 The different between the routine Normal Tender Enquiry (public/open Tender Enquiry) and the limited Tender Enquiry under Urgent Order Procedure is mainly the time factor in processing the same. The normal tender enquiry viz. The open public tender enquiry is published in the weekly Government Gazette and is open for all interested tenderers to participate and it is opened after period of 3 weeks.” In case of normal tender inquiry a period of 10 days was given. Further, according to the Petitioner, the procedure adopted by Respondent Nos.1 and 2 is not fair because after the tender was published on 22nd October, 2008 suddenly on 11th November, 2008 the tender – deposits were abnormally raised to such a high level that it almost became impossible for any person to come with such huge deposit amount within a short period of seven days. It was also stated that the period of one week, which was specified and which, under the procedure, was essential, was also not adhered to by the Respondents. In terms of the Resolution of 2nd January, 1992, the maximum Earnest Money Deposit is Rs.5,000/-. Thus, the Respondents could not have demanded higher deposit amount. On these premises, according to the Petitioner, the procedure adopted for 5 finalization of the tenders is arbitrary, violative of the prescribed procedure and the process has further caused unjustifiable discrimination, inasmuch as, the tenderers who are regular contractors of the Corporation were only required to deposit a sum of Rs. 7.5 lakhs instead of prescribed deposits. The entire tender process suffers from infirmities of procedure and law and same should be set aside. It is prayed that the Respondents be directed to invite fresh tenders in accordance with law. 5. In the reply filed on behalf of the Respondents, the facts are not much in dispute. However, the Respondents specifically denied the challenge of the Petitioner that there was arbitrary exercise of powers and that the prescribed procedure was not adhered to. According to the Respondents, in furtherance to the advertisement given on 21st October, 2008 the tenders were invited for the supply of uniforms and other school items for 4,60,000 children. The Circular dated 20th March, 2002, provided that the tenderers will have to deposit an amount of 2% of the estimated value of the tender as Earnest Money Deposit. However, relying on the practice followed in 6 the previous year of requiring the deposit at 0.5% of the estimated value on the tender and in anticipation of getting sanction to the same from the competent authority the said advertisement was issued. However, the competent authority of Respondent No.1 did not grant the required sanction and therefore, the corrigendum was issued on 11th November, 2008 raising the deposit of 2% of the estimated value of the tender works. By the same circular it was also decided that Class A, B, C and D contractors, according t that contractor's tendering were required to deposit a sum of Rs. 7.5 lakhs. The said sum is always in the deposit with the Corporation from such contractors. The corrigendum was published on the notice board of the Corporation on 11th November, 2008s and the local newspapers separately. The last date for depositing the earnest money was 17th November, 2008 and for submitting the tenders, the last date was 18th November, 2008. It was contended that the Petitioner was not interested in participating in the tender process and the excuse put forth was without any basis. The amount of deposit was refundable if the tender was not accepted. The tenders were invited well in advance so as to see that when the uniforms are given on the 7 opening of the schools for distribution to the children in accordance with the policy of the Corporation. 6. Having noticed the factual matrix of the case, the contentions of the Petitioner are that the Government Resolutions would have the force of law as they are issued in furtherance of the statutory powers vested in the Government under Section 520 of the Bombay Municipal Corporation Act, 1888 and even if it is not so, it will be in exercise of the powers under Article 162 of the Constitution of India. That being the source of powers, the Corporation could not have acted contrary to the directions contained in both the circulars referred to above. 7. In support of his contentions in relation to the arbitrary exercise of powers and violation of the prescribed procedure, reliance is placed on Section 72 of the Bombay Municipal Corporation Act. Section 72 provides that the Commissioner shall give at least seven days' notice by advertisement in the local newspaper before entering into any contract for execution of any work of supply of any of the 8 goods which will involve expenditure of more than Rs.50,000/-. Reliance is also placed on the judgment of the Supreme Court in A.Umarani Vs Registrar, Cooperative Societies and Others, (2004)7 SCC 112. 8. As far as the principle of law stated in A.Umarani' s case (supra) is concerned there can hardly be any dispute. In that case, the Court was concerned with the exercise of powers to issue circulars in the face of the provisions of Tamil Nadu Cooperative Societies Act. The Supreme Court observed that the Government had no powers to issue the Government Order as issued in that behalf. In that context, it was stated that Article 162 of the Constitution cannot be invoked, as, in such cases; the source of powers of the State to pass such orders must be traced to the provisions of the Act itself. The facts of the said case have hardly any application to the case in hand. Furthermore, in the instant case, there has been compliance with the provisions of Section 72 of the Corporation Act, inasmuch as, in furtherance to the Resolutions dated 4rh February, 203 and 2nd February, 1992 the corrigendum dated 11th 9 November, 2008 was issued by the competent authority of the Corporation to enhance Earnest Money Deposit. The last date for submission of the tenders was 18th November, 2008. Thus, there was one week notice and therefore, there was sufficient compliance with the provisions of Section 72 of the Corporation Act. Similarly, it was a commercial decision taken by the competent authority of the Corporation to enhance EMD to protect the interests vis-a-vis supplies to be made by the contractor, which, of course, were of considerable huge amount. The decision merely to enhance the deposits of EMD cannot be termed as unreasonable or entirely irrational decision. 9. The next argument on behalf of the Petitioner is that the Government Resolutions dated 4th February, 2003 and 2nd February, 1992 are issued in exercise of powers of the Government vested in it under Section 520(c) of the Act, as in any case, are directions under Article 162 of the Constitution of India and thus have a binding force. Learned Counsel appearing for the Corporation however contended that the provisions of this Section have no applicability to the facts and circumstances of the case in hand and those Resolutions are 10 meant for a very restricted purpose and are not applicable to the matters related to inviting tenders of the present nature. The power of the Government to issue directions cannot be disputed in face of the language of Section 520(c) of the Act. The basis of issuance of directions under Section 520(c) of the Act is in public interest and that too after following the procedure prescribed in the proviso to Section 520(c) of the Act. The directions which are capable of being issued under Section 520(c) of the Act have to have a greater impact for following of the prescribed procedure that too in larger public interest. These directions are intended in subject of greater importance even if it is assumed that even in such matters like inviting tenders in a particular case, the Government could issue directions even then for these directions to be legal and valid the following of the prescribed procedure is a condition precedent. It is not in dispute before us and fairly stated even on behalf of the State that no such procedure was followed while issuing these two Resolutions. Thus, the question of legally enforcing these Resolutions in the present case does not arise. 10. Now we may even examine whether these circulars are 11 strictly applicable to the cases where the Corporation or any Competent Authority intends to invite tenders for such huge supplies. The Resolutions Exhibits- D and E, both, show that they are intended for Purchase of Stores for various departments and have been issued by the Department of Industries, State of Maharashtra. A reading of these Resolutions does not demonstrate that these Resolutions have been issued for general conduct of inviting tenders. They are more tilted in favour of a limited scope and application and are primarily directions issued to the Government to its own Department where they have to purchase the materials for their day to day needs and also indications are given as to which Department such purchases may be effected. The cumulative reading of both these Resolutions, in our view, does not state any absolute terms which could be applicable to the cases where the Corporation proposes to invite tenders for supplies of such huge nature. The Corporation has provided a fair competition and has made no attempt to exclude any particular Applicant from the group of Applicants. Alterations in regard to the deposit of EMD from 0.5% to 2% is neither arbitrary nor irrational. As already noticed, six tenders involved huge amount of 12 public money and for procurement of supplies and for due performance of the tender conditions if the Corporation has asked for higher deposit, it cannot be said to be entirely arbitrary or irrational act. These are the commercial decisions which are made by the Competent Authority in the interest of the organisation and to ensure proper supplies. Merely because the Applicants would have to deposit more amounts does not mean that they stand ousted from applying and/or being considered for grant of tender in accordance with the terms and conditions of the notice inviting tenders. We are also unable to see as to how the conditions requiring higher deposit prejudices the rights of the parties. Apparently, they were given one week's notice as corrigendum was published on 11th November, 2008 and last date of submission of tenders was 18th November, 2008. The parties, thus, had sufficient time as contemplated under Section 72 of the Act for satisfying the terms and conditions of the tender as pre- requisite terms and conditions for submission of their tenders. In the event of an Applicant was successful, obviously, he will have the benefit of deposit and where the Applicant is not considered or his bid is not accepted, the EMD would be returned to the Applicant. Ex 13 facie, this condition does not show any exercise of arbitrariness and in fact is in consonance with the common practice prevalent in such contracts. There is also no legal infirmity in the Corporation directing “A” class Contractors to deposit Rs.7.5 lakhs and no further amount as such Contractors are 'A' class in itself and have been tried and tested by the Corporation in the previous years in relation to the requirement of contract. Reliance was also placed on different paragraphs of the judgment of the Supreme Court in the case of Tata Cellular Vs Union of India, (1994) 6 SCC 651. In that case, the Supreme Court stated the principles of judicial intervention in cases involving questions relatable to contracts. It was stated that where arbitrariness is evident in such cases and the criteria fixed for selection is violated or not complied with, the Courts may interfere but where criteria fixed for selection and further deviation or relaxation has even been made and such deviation or relaxation has not resulted in any discrimination or violation of fundamental rights, the Courts would not interfere. The Courts also stated that where the mistake was in relation to non-essential, peripheral or collateral matter, and there was every intention to comply with the terms of bid 14 and for an accidental omission the tenderer cannot be disqualified. 11. No doubt, it is a settled cannon of public law that in the democratic form of Government, equality and absence of arbitrariness and discrimination in action of the Government including transaction relating to contract is essential. Right from the case of Ramana Dayaram Shetty Vs The International Airport Authority of India and Others, AIR 1979 SC 1628, the Supreme Court has unambiguously held that Government action be based on standards that are not arbitrary or unauthorised. But the burden to show that either of these elements exist is upon the Petitioner. In the present case, the Petitioner has not been able to demonstrate either from the averments made in the Writ Petition or from the documents annexed to the Petition the existence of these basic elements. 12. Viewed even from this angle, the Court can hardly find any error or omission, intentional or otherwise. The terms of the tenders and even altered the conditions were uniformly applied while making two different groups i.e. different deposits by all Contractors falling in 15 Class `A' and different classes being all other Applicants. The only condition which was varied related to higher deposit and it provided requisite time of one week to the parties. This is not a deviation of the terms which have either resulted in discriminatory treatment of the Applicants by the Corporation or has unreasonably affected rights of the parties. Every immaterial alterations would not justify Court's intervention. It is obligatory upon the Petitioner to show clear violation of a right of equality before it can raise a challenge on the foundation of Article 14 of the Constitution of India. The Corporation relied upon its earlier Circular dated 11th November, 2008 which had made a general direction in relation to class “A” Contractors and exempted them from paying EMD in excess of Rs.7,5 lakhs deposit if already lying with the Corporation. Thus, we see no merit even in this contention of the Petitioner relating to discrimination of the action of the Corporation being arbitrary. 13. Another important facet which requires examination by the Court is the conduct of the Petitioner. The Petitioner claims to have purchased the tender document in response to the notice dated 20th 16 October, 2008. However, till 11th November, 2008, the Petitioner did not submit the tender documents. Vide Corrigendum dated 11th November, 2008, the deposit of EMD was increased and the parties were given one week time for depositing the amounts. The Petitioner admittedly took no steps to deposit the amount as per the conditions of notice inviting tenders. The Petitioner did not move his little finger in the entire one week and did not approach the Respondents raising his grievance before them that the condition was likely to cause any prejudice to the Petitioner or other Applicants. While number of other Applicants including Class-A Contractors of the Corporation complied with the condition and deposited the amount, the Petitioner despite issuance of tabulated statement dated 14th November, 2008 did not deposit any amount nor had he raised any protest. The Petitioner just at the nick of time on 17th November, 2008 lodged the Writ Petition in this Court which came up for hearing on 19th November, 2008 and interim order was granted by the Court. Even at that stage, the Petitioner neither showed any intention to comply with the terms and conditions of the tender nor did he deposit money at the rate of 0.5% and/or 2% at any point of time. The Petitioner has challenged 17 the tender process before this Court without even submitting tender and being an Applicant ineligible or otherwise. The very locus of the Petitioner in filing this Petition would be looked upon with some suspicion by the Court. This is cause of action, which is a private cause of action, if at all available to the Petitioner, is not an action in public interest. 18 14. The doctrine of Locus Standi is well established in administrative law, law of contract and other allied laws. A person prejudicially affected would have a cause of action while in the specified class of cases a third party may be able to bring an action in public interest despite the fact that he may not have personal interest. But in the cases of present kind, the cause of action would be personal to the aggrieved party and not a cause of action in rem. Even if Litmus Test Principle is not strictly applied keeping in view the developing law, still it is difficult for us to hold that th Petitioner without being an Applicant to the tender process could maintain the present Writ Petition, in the peculiar facts and circumstances of the case. As such an approach would neither subserve the public interest and would also hold in avoidance of public mischief. 15. Examined from the view of public interest, we see no infirmity. The Corporation has admitted to protect the larger interest by raising EMD deposit. The Petitioner having opted of his own accord not to participate in the tender process can hardly be permitted to challenge the said process now at this stage. It is expected of 19 every vigilant litigant or whose rights are effected to approach the Court at an appropriate time. Firstly, there is no indefeasible right vested in the Applicant and secondly, even if right of participation/consideration was available to the Petitioner, the Petitioner has voluntarily given up such right by his conduct. No reason whatsoever has been stated as to why the Applicant did not participate in the tender process or raise protest at an appropriate stage. Despite the fact that the concept of locus standi has since undergone a substantial change, still the basic rule that the person aggrieved or a person directly affected is the person who has right to invoke jurisdiction of the Court under Article 226 of the Constitution holds good. The impugned action normally should produce a change in the Petitioner's legal right and more particularly adversely. We have already discussed that the variation effected by Corrigendum dated 11th November, 2008 has no way prejudicially effected any of the applicants and it provided a fair and equal opportunity to the Applicants to participate in the tender process. The Petitioner having lost that opportunity of his own accord can hardly be permitted to raise a grievance now. 20 16. In the facts and circumstances of the case, we see no reason to interfere in the Writ Petition. The same is dismissed, leaving the parties to bear their own costs. Rule discharged. Interim relief stands vacated. CHIEF JUSTICE S.A. BOBDE, J Sep.08/res.js/wp-l-2666.08.sxw