IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 4811 OF 2007 1. Santosh G. Patne, age 42, Occ. Business, resident of Post Khed, Shivaji Chowk, Tal. Khed, Dist. Ratnagiri. 2 . Mrs. Pragati B. Kanade, age 44, Occ. Business, Res. Matoshri Kirana, Shivaji Nagar, at Post and Tal. Khed, Dist. Ratnagiri. 3. Shekhar R. Redij, age 45, Occ. Business, resident of F/5, Plaza Markhandi, at Post Tal. Chiplun , Dist. Ratnagiri. 4. Vidyadhar R. Pawaskar, age 44, Occ. Business, resident at Post Harkul Bdk., Tal. Kankavali, Dist. Sindudurga. 5. Jalamsingh S. Purohit, age 40, Occ. Business, Shri Renuka Sweet Marg, Bazarphet, Kudal, Tal. Kudal, Dist. Sindudurga. 6. Ramesh Raghunath Redij, age 68 99-D Central Co-op. Housing Society, Salaiwada, Tal. Sawantwadi, Dist. Sindudurg. .... Petitioners. 1 vs. 1. M/s. Konkan Railway Corporation Ltd., through the Managing Director, having his office at Belapur Bhavan, Sector, 11, CBD Belapur – 400 614. Konkan Railway Corporation Ltd., Dist. Ratnagiri. 3. L.K. Varma, Senior Railway Traffic Manager, R.N., MIDC, Mighol, Ratnagiri. 4. Union of India, through the Ministry of Railways, Rail Bhavan, New Delhi. .... Respondents. Mr. Y.S. Jahagirdar, Sr. Adv. I/by Mr. S.P. Kanuga for Petitioners. Ms. Kiran Bagalia i/by Ms. Asha Bhombwani for Respondent Nos. 1 to 3. CORAM : J.N. PATEL AND A.A. SAYED, JJ. DATE : 27TH AUGUST, 2007. ORAL JUDGMENT (Per J.N. Patel, J.) : Heard the learned counsel for the parties. 2 2. The Regional Railway Manager of Konkan Railway Corporation Limited , District Ratnagiri invited tenders on 30th April 2007 for allotment of tea stalls and STD/PCO booths at various stations in Ratnagiri region of Konkan Railway. The respondent Konkan Railway has formulated a policy which came into force on 26th January 2007 in respect of grant of commercial contracts over Konkan Railway. As per the policy all commercial contracts i.e. static and mobile units come under the purview of the catering policy and it was decided that the commercial contracts on Konkan Railway would be awarded through open tender based on two-bid system i.e. technical and financial bid OR direct bidding, except for Halt agency, TBA an in-train vending for holiday specials and commercial establishments under reserved category. The commercial contract policy covers various aspects. One of the aspects of the policy which is relevant for deciding the issue in this petition is serial no. (f) which relates to the eligibility criteria where it has been decided that a three fold eligibility criteria including land losers, existing contractors and experienced contractors has been provided in detail. The policy also provides for reservation in allotment of commercial units and 3 while allotting minor catering units and STD booths at stations on Konkan Railway, reservations to SC/ST/OBC/minorities, etc., have been kept and it operates according to the category of station for which contracts are to be given. 3. In so far as category (f) is concerned, it relates to the eligibility criteria. The allotment of all commercial contracts is to be made by inviting applications through press notification except otherwise specified, from the eligible parties on the following criteria: Group List of Contracts Priority 1 1)House-Keeping contracts 2)In-train vending contract 3)TBA agency 4) AVMs 5) Contracts at class “A” Stations * All general Minor Catering Contracts. * All minor non-catering units excluding book-stall, Hal agents and STD booths. * Veg-N/Veg restaurant 1) Land Loser with relevant Experience and the “existing contractor on successful completion of six years tenure. 2) Land-losers in partnership/society with an experience contractor. 3) Contractor with experience with approval of MD. 4 Group List of Contracts Priority 2 1) Contracts at B, D and E stations * All general minor catering contract. * All minor non-catering units except book-stall & STD booths * Veg-N/Veg restaurants. 1) Land loser and “existing contractor” on successful completion of six years 2) Land losers in partnership/society. 3) Other than land-losers with approval of MD. 3 Book Stalls. 1) Land loser s with capability to run the contract and *existing book stall contractors. 2) Co-operative society, association, partnership, partnership unemployed graduate, National Book trust. 4 STD Booths (open category) 1) Land loser and *existing contractor. 2) Open to all category. 5 AVMs, ATMs, Personal weighing machines, Maintenance of Rest Room for Passengers Assistance, Advertisement Interior & Exterior of trains, Weigh bridge for Trucks No priority and No reservation. 5 4. It is the case of the Petitioners that the Respondent No. 2 invited tenders on 30th April, 2007 for allotment of tea stalls and STD/PCO booths at various stations over Ratnagiri Region of Konkan Railway. The tender document contains the terms and conditions and further lays down the scope of the contract as well as mode of finalisation of the contract. It was provided that the tenderer should offer two packets consisting of a technical bid, that is to say, Packet-A and financial bid, that is to say, Packet-B. Both the bids have to be separately sealed in envelope-A and envelope-B and it should be tendered in the sealed master envelope. The requirements of envelope A which is the technical bid was that it should contain basic document laid down in the terms and conditions of the tender which, inter alia, included name of the applicant, priority code, details of experience, form of organisation, financial status, income-tax assessment order for the last three years, earnest money deposit and its details, bank solvency certificate, educational proof, caste certificate in case of SC, ST, OBC, certificate of disability, details of Permanent Account Number and in case of the applicants falling in land loser category certain documents in support of the same were required to be furnished. The tender notice contained clear 6 instructions that if the tender submitted by the tenderer was not accompanied by all or any of the documents mentioned above, the tender will be outrightly rejected. In so far as the envelope B i.e. the financial bid is concerned, it was only to quote the bid and no other documents were required to be enclosed in the financial bid. Selection procedure was that the technical bid of priority-1 will be opened first. After technical scrutiny, financial bid of those found suitable would be opened. If there are no applications under priority-1 and nobody is found suitable after technical evaluation, bids received under priority-2 would be considered for technical evaluation. If no application is received under priority nos. 1 and 2 or nobody qualifies after technical evaluation, the applications received under priority-3 would be considered. The last date for collection of the tenders or downloading of the tenders was 31st May, 2007 till 16.00 hrs. The tenders were required to reach the office of the respondents on or before 1st June, 2007 till 16.00 hrs. The tender form laid down the time schedule for submission of tenders, opening of technical bid, opening of financial bid and thereafter personal interviews. The tender document also provided that the Corporation reserves the right to reject or accept application without any 7 reason and no correspondence will be entertained in this behalf. 5. It is the case of the Petitioners that they filed their tenders for stalls i.e. Petitioner No. 1 for Khed Railway Station, Petitioner No. 2 for Chiplun Railway Station, Petitioner No. 3 for Ratnagiri Railway Station, Petitioner No. 4 for Kankavali Railway Station, Petitioner No. 5 for Kudal Railway Station and Petitioner No. 6 for Sawantwadi Railway Station. 6. According to the Petitioners, on 1st June, 2007, a Committee nominated opened the tenders in front of the tenderers in the Conference Hall of Respondent No. 2. The Committee took tender by tender and paginated the tender and accompanied documents and initialed the same in the presence of the tenderer. Thereafter the tenders were entered in the register maintained by the respondents and signatures of the tenderer were obtained on the register. Thereafter the Committee scrutinised the tenders so received with reference to the terms and conditions laid down in the notice inviting tenders and called all the tenderers on 15th June, 2007 at the premises of respondent no. 2. In the presence of the tenderers the Committee announced 8 the qualified persons whose financial bids could be opened thereafter. The list of finalised tenderers was signed by the Senior Regional Traffic Manager and put up on the notice board. The Petitioners were present at the said meeting and were informed that the financial bids would be opened after about 16.00 hrs. after having put up the list of the qualified persons on the notice board of the respondents. It is the case of the Petitioners that in the list so published , the Petitioner Nos. 1, 3, 5 and 6 alone qualified and whose bids could be opened and if the bids were above the reserve price fixed by the respondents could be awarded contract for tea stalls at the Railway Stations at Khed, Ratnagiri, Kudal and Sawantwadi respectively. As regards the Petitioner Nos. 2 and 4 there were other bids from one more person and in such a case after opening of the financial bid packet, the successful bidder who has given higher offer would be awarded the contract. It is submitted that in respect of STD/PCO booths, there were no tenders and therefore none qualified. It is the case of the Petitioners that the Petitioners assembled at the due time in the office of the Respondent No. 2 for opening of the financial bids, declaration of allotment of contract and award of the contract. The Respondent No. 3 announced that the tenders called for allotment of tea 9 stalls and STD/PCO booths have been cancelled and that fresh tenders would be invited in due course which has been communicated by putting up a notice dated 15th June, 2007. It is the said notice of cancellation of tenders, which is the subject matter of challenge in this petition. The notice reads as under :- “KONKAN RAILAY CORPORATION LTD., Date : 15-06-2007. NOTICE It has been decided by competent authority that, the tenders called for allotment of tea stall & STD/PCO booth has been cancelled. The case will be retendered in due course and necessary advertised. Tender will be called through vide publicity as was done in earlier case. 10 Sd/- (L.K. Varma) Sr. RTM/RN” According to the Petitioners, the respondents have cancelled the tenders on account of political pressure brought by the unsuccessful tenderer who have taken law into their hands and pressurised the Committee to cancel the tenders as their bids were found not meeting with the terms and conditions of the tender and, therefore, according to the Petitioners the decision of the respondents cancelling and rejecting the tenders received is arbitrary and is capricious and violates the doctrine of legitimate expectation which has seriously prejudiced the petitioners in as much as the petitioners had participated in the tender process, incurred expenses and the petitioners tenders were bound to be considered unless the justification for cancellation was based on cogent and valid reasons warranted by the facts subsequently noticed or found. 7. It is the case of the Petitioners that the process of advertising the tender widely and receiving the applications numbering about 40 itself 11 suggests that the steps taken in calling for the tenders were fair and just. Therefore, the Petitioners submit that there exists no valid ground or cogent reason entitling the respondents to cancel the tender in the manner in which they have done and, therefore, the Petitioners are challenging the impugned decision of the respondents cancelling the tender on the ground of malafides and arbitrary exercise of power having cancelled the process of tender after opening the technical bid packets and determination of the eligibility as per criteria laid down and that therefore they seek an appropriate writ, order or direction from this Court to order the respondents to award the contract to the qualified persons mentioned in the list at Exhibit “C ” to the petition by opening the financial bid packets and the successful tenderer should be awarded the contract in respect of the Railway Stations mentioned in Exhibit “C” against their names. 8. In response to the notice issued to the respondents, affidavit in reply has been filed by the Senior Regional Traffic Manager of Konkan Railway Corporation Ltd. The fact of floating the tender and inviting the bids are not disputed. It is also not disputed that the respondent took a 12 decision to cancel the tender but it is contended that the Petitioners do not have the right to challenge the right of the respondents to cancel the tender in as much as the Petitioners can take part in the fresh bid and that no prejudice is caused to the Petitioners. It is submitted on behalf of the respondents that the tender came to be cancelled before the process was completed for justifiable reasons which cannot be questioned by the Petitioners as no right accrued in favour of the Petitioners until a contract is executed in as much as issuance of tender is only an invitation to act and that the Respondent No. 1 has reserved its right in the tender document itself to reject the tender. 9. The respondents have tried to justify their decision on the ground that this decision is taken to ensure that all the desiring persons have an equal opportunity of entering into such contracts. It is their case that the subject matter was relating to nine tenders for tea stalls at Veer, Karanjadi, Khed, Anjani, Chiplun, Ratnagiri, Kankavali, Kudal and Savantwadi and four tenders for STD/PCO booths at the Railway Stations at Khed, Chiplun, Ratnagiri and Kudal. According to them, the tenders were issued so as to synchronize with the expiration of the tenure of ongoing contracts in both the 13 categories. As per the policy, the land losers who have lost their lands to Konkan Railway Project are one among the top priority categories. It is being stated that in all the respondent no. 1 received 40 applications for both Tea-stalls and S.T.D. Booths and the screening of the applications was done by the Screening Committee in the meeting held on 14/6/2007. As many as 30 applications came to be rejected as the applicants have not filled up the necessary particulars. The technical bids were opened in the presence of all the applicants. The rejection of the 30 bids caused tremendous unrest amongst about 100 people who had gathered for the opening of the bids. It became apparent that the local people were seriously handicapped because the tenders' conditions were in English. Many local people are not well conversant with English and found it difficult to fill up the tenders properly in all respects. On the other hand, the Petitioners are all existing contractors who are well versed in the bidding process. It was felt that the local people were handicapped in filling up the technical bid and most of the applications were rejected because the applications were incomplete. The Scrutiny Committee reported this matter to the Managing Director of the Respondent No. 1. The matter was discussed and in order to ensure maximum 14 participation in the biding process and equal opportunity to the local residents and especially the land losers, the respondent no. 1 took the decision to re-issue the tenders. The respondent No. 1 also decided to offer help and assistance in filing up the tenders and, therefore, the decision to re- issue tenders is done in public interest and is also in consonance with the policy to afford opportunity to all those who wish to participate. 10. In reply to the contention of the respondents that the local people were handicapped as the tender conditions were in English it has been stated by the Petitioners that the tenders always have been in English language as any resident in any part of India can apply and English is widely spoken. It is further contended that the tender was not restricted to local area and that the stand taken by the respondents that the tender process was cancelled as the local people did not understand English but the re-tender process which has now been adopted, the language remains English thereby showing that the purported cancellation is in fact frivolous and malafide. It is also contended that the tender terms and conditions for allotment of commercial contracts clearly provide, “Applications received without the requisite 15 enclosures and Earnest Money Deposit will be rejected.” and, therefore, according to the Petitioners as most of the applications were rejected on the ground that they being incomplete and not accompanied by essential documents, it is not open to the Respondents to play favourite and purport to cancel the entire tender which it does not have the power to do. It is further contended that though there was a month's time to respond to the tender, no complaint from any local resident is alleged to have been received during the period and, therefore, the reason put forth for cancellation of the tender smacks of malafides. It is contended that the process of issuing tender has received wide spread publicity and every person had an opportunity to participate and in the reply filed by the respondents they have specifically accepted that most of the applications were rejected because the applications were incomplete and that as a matter of fact many tenders were rejected because the earnest money pay orders were not furnished or solvency certificates were not furnished or character certificate was not furnished and, therefore, the justification put forth by the Petitioners cannot be accepted. 11. Mr. Jahagirdar, the learned Senior Advocate, appearing for the 16 Petitioners submitted that though there is no doubt that the respondents reserved the right to cancel the tender it could not have done so without assigning any reason. On the other hand, what now stands revealed is that the decision has been taken for extraneous consideration and this is nothing but arbitrary exercise of the discretion vested in the Respondent No. 1 authority, which is a wholly owned subsidiary of the Ministry of Railways. In support of his contention Mr. Jahagirdar has placed reliance on the decision tendered by the Supreme Court in the case of Ramchandra Murarilal Bhattad and Ors. vs. State of Maharashtra & Ors., reported in (2007) 2 SCC 588. Mr. Jahagirdar pointed out to the Court that in the affidavit in Sur-rejoinder the case put up before the Court is that when the technical bids were opened and the list of those who had completed the Technical Bids in accordance with the instructions was published, to the naked eye it became evident that out of only 10 applications which were properly submitted, 9 belonged to the existing contractors and only one was that of a local resident. The local residents were agitated and formed an impression that they would not have a chance to compete with the existing contractors. According to Mr. Jahagirdar such an impression cannot tilt the 17 discretion in favour of the cancellation of the tender process. It is further submitted that the respondents have taken a stand that this was for the first time that tender process was initiated for allotment of Tea Stalls and S.T.D. Booths on Konkan Railway Stations and high percentage of local residents in Konkan region are poor and illiterate and they are not well-versed with the commercial processes and the implications and lacunae in filling up the Tender Applications. As against this, the existing contractors are well- versed in filling up tenders and, therefore, it was apparent that the local residents including land losers were handicapped due to their ignorance. Out of 40 tender applications, which were received, as many as 30 were incomplete and, therefore, in order to give full effect to the policy of Konkan Railway Corporation Ltd., a decision was taken to provide fresh opportunity to the local residents to re-submit the tenders. It is, therefore, submitted that this by itself cannot be a justifiable reason to cancel tender process. Further, it is contended that the tender process came to be cancelled in midway due to political pressures as there was an agitation led by Youth Congress and National Congress Party leaders which clearly indicates that the tender process was cancelled due to political pressure. It is, therefore, submitted 18 that the award of contract is alleged to be influenced by bringing political pressure which would send a wrong signal to the society as one cannot say that in future fanatics of the political parties who are not successful in getting the contracts, will not bring political pressure. Such a modus operandi would be again adopted and it would make a mockery of the whole tender process and, therefore, intervention of this court is required to quash and set aside the impugned decision. 12. Per contra, Mrs. Kokil, the learned counsel appearing for the Respondents, submitted that the respondents have exercised their discretion of the cancellation of the tender process which was just and fair in the facts and circumstances as placed on record. It is submitted that as observed in the decision cited by her rendered by the Supreme Court, in the case of Rajasthan Housing Board and Another vs. G.S. Investments and Another, reported in (2007) 1 SCC 477, this Court has a very limited jurisdiction in writ petition filed under Article 226 of the Constitution of India where the challenge is to a cancellation of the auction held by the Petitioner and, therefore, this decision does not require any interference by 19 this Court. It is specifically argued that this being essentially a commercial transaction the respondent can choose its own method to arrive at its decision. It is free to cancel the tender process and that the Court should always keep the larger interest in mind in order to decide whether its interference is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should interfere. According to her, this is not a fit case where the Court ought to have interfered in the matter. It is submitted that as the financial bid was not opened, the petitioners are in no way prejudiced or can make a grievance in the matter. It is submitted that the language of the tender remains English, extensive information in Marathi (local language) on the requirements and protocol for submitting the tender applications has been published in all prominent local newspapers. The desiring applicants can also avail of on the spot assistance in submitting the tender applications. The officers of the Respondent No. 1 have also spoken to the respective bank officers to read the tender document and assist the applicants in producing the proper solvency certificates and, therefore, the Petitioners should consider the decision to discharge the earlier tender was correctly taken considering the 20 hardships faced by the applicants most of whom were the local persons whose lands have been acquired for the project. It is submitted that the recommendation to discharge the tender was approved by the Regional Railway Manager who is the head of the regional office and this was also taken by the Managing Director upon exhaustive discussions with the convener of the Tender Committee as well as with the local leaders who pointed out the difficulties faced by the local residents in filling up the tender applications and that the decision has been taken in public interest which does not call for any interference. Ms. Kokil submitted that she has no quarrel over the principles under which the High Court can interfere with the decision making process in the matter of contractual matters and has also placed reliance on the judgment rendered by the Supreme court in the case of Union of India and others vs. Dinesh Engineering Corporation and Another, reported in (2001) 8 SCC 491 in which it was held that the power to reject any tender offer without assigning any reasons or to accept or not to accept the lowest offer –