IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) TUESDAY THE TWENTY THIRD DAY OF SEPTEMBER TWO THOUSAND AND EIGHT PRESENT THE HON'BLE SRI JUSTICE V.V.S.RAO WRIT PETITION No.18650 of 2005 Between: Shaik Qayyoom, S/o. Shaik Imam, R/o. H.No.16-5-513/A, Azampura Hyderabad. ..... PETITIONER AND 1 The Vice Chairman & Managing Director, the A.P. State Civil Supplies Corporation Ltd, Regd. Office: 6-3-655/1/A, C.S. Bhavan, Somajiguda, Hyderabad. 2 The General Manager (Finance), A.P.S.Civil Supplies Corporations Ltd, C.S.Bhavan, Somajigauda, Hyderabad. 3 The General Manager (PDS) A.P.S.Civil Supplies, Corporations Ltd, C.S.Bhavan, Somajiguda, Hyderabad. 4 The Collector& District Magistrate, Nampally Railway Station Road, Abids, Hyd. 5 The District Manager, A.P.S.Civil Supplies Corporation Ltd, C.H. Bhavan, Somajiguda, Hyderabad. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Aﬃdavit ﬁled herein the High Court will be pleased to issue a writ in the nature of certiorari or any other appropriate writ, order or direction by calling for the records relating to the proceedings of the 1st respondent hearing No.PDS. 2/Movt/Fo. 5(15)/11382/2005-06, dt 17-8-2005 and quash the same by declaring it as illegal, arbitrary and unjust and to pass such other order or orders as this Hon'ble court may deem fit an proper in the circumstances of the case. Counsel for the Petitioner: SRI S.GOPAL RAO Counsel for the Respondents: GP FOR COOPERATION The Court made the following Order: THE HON'BLE SRI JUSTICE V.V.S.RAO WRIT PETITION No.18650 of 2005 ORDER: The Andhra Pradesh State Civil Supplies Corporation Limited (the Corporation, for brevity), invited tenders on 25.06.2005 for transportation of foodgrains, pulses and other essential commodities from various places within district and outside district to various places within the district. The contract is for a period from 01.08.2005 to 31.07.2006. The tenderers are required to deposit a sum of Rs.2,50,000/- towards Earnest Money Deposit (EMD). As per tender condition No.16 of terms and conditions of tender a successful tenderer should enter into agreement within three days duly paying security deposit of Rs.8,00,000/- and after adjusting EMD, the balance amount can be paid. Condition No.29 thereof, stipulates that a tenderer, who fails to fulﬁll the tender conditions at any stage after acceptance, shall be disqualiﬁed and blacklisted in addition to forfeiture of EMD and security deposit as the case may be. The petitioner submitted tender for Hyderabad District. He quoted Rs.10/- for metric ton (MT) per Kilometre (KM) for the ﬁrst 16 KMs and Rs.10/- per MT per KM beyond 16 KMs. He alleges that he quoted these rates under a mistake. Therefore, he submitted a one line representation to the ﬁrst respondent requesting to consider the rate of Rs.200/- per MT/KM up to 16 KMs instead of Rs.10/- per MT/KM. He also alleges that on 16.07.2005 there were negotiations with the tender committee, but decision was not communicated. However, on 20.07.2005 the ﬁrst respondent issued proceedings accepting the tender of the petitioner under System – 2 (Escom System) for Hyderabad district, and awarded transport contract to him. The petitioner was also asked to enter into agreement within three days and furnish bank guarantee for Rs.11,00,000/- within fourteen days, failing which, he was informed that Security deposit would be forfeited besides cancellation of award of contract, blacklisting and liquidated damages without any further notice. The petitioner did not complete the formality, but addressed communications on 28.07.2005 and 03.08.2005 informing that by miskate he quoted Rs.10/- instead of Rs.200/-. First respondent on 17.08.2005 passed orders canceling the award of contract, blacklisting the petitioner and forfeiting EMD amount of Rs.2,50,000/-. In this writ petition the said order is assailed as illegal and arbitrary. The Corporation through its General Manager has ﬁled a counter aﬃdavit. The contents thereof in brief may be noticed. Tenderers are required to quote rates in two systems. As per System–1, rates may be quoted per MT per KM irrespective of distance and under System–2 rates will be quoted in rupees per MT per KM for slabs i.e., up to 16 KMs per MT (ﬂat rate) and beyond 16 KMs per MT per KM. The calculations for working out the transportation charges are contained in condition Nos.7, 8 and 9 of the terms and conditions. As per condition No.12, the corporation in its discretion may either accept the rates quoted as per System–1 or rates quoted as per System–2 whichever is lowest. Condition No.13 does not permit any tenderer to quote higher rates at any point of time than rates quoted in the tender and if any tenderer quotes rate more than rate already quoted, the lowest rate would be ﬁnal and binding. The petitioner participated in the tenders for Hyderabad along with four others. He quoted his rates on his own volition after going through the terms and conditions. After opening tenders rates quotes by all tenderers have been verified with reference to actual rates of 2004–2005. It was found that rates quoted by the petitioner were lowest. On 16.07.2005 negotiations were held, but petitioner did not participate in the negotiations. On 15.07.2005 he gave a representation stating that by oversight he quoted Rs.10/- in the ﬁrst slab instead of Rs.200/- and requested to consider his rate as Rs.200/- in the ﬁrst slab. In his representation dated 28.07.2005 the petitioner stated that he has quoted rate in the ﬁrst part at Rs.10/-, second part up to 16 KMs Rs.10/- and above 16 KMs Rs.10/- instead of Rs.200/-, Rs.200/- and Rs.200/- respectively. He addressed a similar letter on 16.08.2005. These contentions of the petitioner are on afterthought. The petitioner quoted Rs.10/- in flat rate system as Rs.10/- in the first slab as well as second slab system. These representations were rejected by the Corporation, and as the petitioner was lowest tenderer, proceedings dated 20.07.2005 were issued appointing him as the transport contractor. In spite of speciﬁc terms and conditions for completing execution of agreement/contract, petitioner failed to do so, and therefore, impugned proceedings were issued after considering the representations made by petitioner. The counter aﬃdavit also refers to rates quoted by petitioner in his tender for award of transport contract in respect of Adilabad, Mahaboobnagar, Medak and Ranga Reddy districts as well. Learned Counsel for the petitioner submits that the petitioner submitted tenders by quoting Rs.10/- in ﬁrst slab as well as second slab under mistaken impression, and therefore, he immediately submitted representation on 15.07.2005, even before tenders were opened, seeking consideration of his tender treating the rate quoted as Rs.200/-. As there was no concluded contract by that time, respondents ought to have considered tender of petitioner treating rate as Rs.200/- per KM. Secondly, he submits that forfeiture of EMD is unsustainable, arbitrary and illegal. According to the learned Counsel such a drastic action is violative of Article 14 of the Constitution of India. He also placed reliance on an unreported decision of a learned single Judge of this Court in Kushal Industries v The Vice Chairman & Managing Director, A.P.Civil Supplies Corporation Limited (W.P.No.17605 of 2005, dated 21.10.2005), wherein a similar writ petition was allowed. Per contra, the learned Standing Counsel for Corporation submits that the award of contract to petitioner is regulated by the terms and conditions, which is important part of tender documents to which tenderer as well as the Corporation are bound by. Terms and conditions are in the nature of binding administrative instructions (See Ramana Dayaram Shetty v. International Airport Authority of India[1]). There is no dispute with regard to this position. All the tenderers were required to quote rates per MT per KM in ﬂat rate as well as the rate as per Escom System i.e., rate per MT up to 16 KMs (ﬂat rate) and rate per MT per KM beyond 16 KMs. The petitioner quoted the rates in his tender dated 15.07.2005 uniformly at Rs.10/- per MT for the ﬁrst 16 KMs and Rs.10/- for MT/KM beyond 16 KMs. After doing so, he realized that said rate is not workable and proﬁtable for him. Therefore, he sent a one line representation expressing to change the rates for slabs 1 and 2 at Rs.200/- per MT/KM. As required under condition No.23, negotiations were held on 16.07.2005, but petitioner did not participate. This lapse on the part of the petitioner results in waiver of his right to negotiate for upward revision of the rates quoted. After completing process of negotiations ﬁrst respondent accepted petitioner as successful bidder and awarded contract accepting the rate of Rs.10/- per MT/KM under both the slabs. Condition No.29 enables the Corporation to disqualify, blacklist and forfeit the EMD if the successful bidder fails to execute the agreement within three days as per condition No.16. He did not ﬁle any objections after receiving the communication dated 20.07.2005 accepting the tender. It is only thereafter, on 28.07.2005, 03.08.2005 and 16.08.2005 he sent representations. These were considered and rejected, and the impugned order was issued. The sequence of the events as noticed hereinabove would not leave any doubt that Corporation acted reasonably within parameters of terms and conditions and was fair enough in calling petitioner for negotiating on 16.07.2005. If the opportunity was not availed by him, petitioner has to blame himself. There is no inﬁrmity or illegality in the impugned order in forfeiting deposit and blacklisting petitioner. This Court has sent for the order of this Court dated 21.07.1995 in W.P.No.8086 of 1995 and perused the same. Having noticed that whenever transport contracts are awarded, unscrupulous owners of vehicles are filing tenders with fancy rates and at the nick of moment are withdrawing and causing inconvenience to Corporation, this Court opined that a clause in the tender conditions for forfeiture and blacklisting of such contractors be considered. Pursuant thereto, condition No.29 was incorporated. Hence submission of the petitioner that the order in W.P.No.8086 of 1995 is irrelevant, is wholly misconceived. I n Kushal Industries (supra) no doubt this Court allowed the writ petition directing the Corporation to negotiate with the petitioner therein and further directed to continue the contract in its favour till a new contractor is in place. It is also brought to the notice of this Court that the judgment in Kushal Industries (supra) is subject matter of W.A.No.2206 of 2005, and by an order dated 18.11.2005 in W.A.M.P.No.3941 of 2005 the judgment of the learned single Judge was stayed. In addition to this, learned Standing Counsel for Corporation has brought to the notice of this Court an unreported judgment of the Division Bench i n The Vice Chairman and Managing Director, Andhra Pradesh State Civil Supplies Corporation Limited v R.Basava Raj (W.A.No.1299 of 2006, dated 13.12.2006) wherein the judgment of another learned single Judge was set aside. The Division Bench in R.Basava Raj (supra) observed as under. We are further of the view that the learned Single Judge could not have entertained the respondent’s challenge to the action taken by the competent authority of the Corporation without adverting to the terms and conditions of the tender notice and the detailed facts incorporated in the counter ﬁled on behalf of the appellant which clearly shows that the forfeiture of Earnest Money Deposit was brought about strictly in accordance with the terms and conditions of the tender notice. The observations made by the learned Single Judge that no contractor of prudence could have quoted Rs.0.55 Ps. per metric tonne per kilo meter and no oﬃcer of prudence could have accepted the same are clearly based on conjectures. If the rates quoted by the respondent (in words and ﬁgures) are read as a whole, it is impossible to agree with the learned Single Judge that no person of reasonable prudence could have quoted those rates. The actual amount which could have been paid to the respondent was Rs.98.00 per kilo meter up to 16 kilo meters and Rs.3.44 beyond the distance of 16 kilo meters. Therefore, the learned Single Judge was not right in considering the issue in isolation with reference to only one component of the rate quoted by the respondent. The decision of Division Bench in R.Basava Raj (supra) came to be rendered in a case with similar set of facts, and applies with all force to the facts of the present case. Learned Standing Counsel also relied on National Highways Authority of India v Ganga Enterprises[2]. In the said case National Highways Authority of India (NHAI) called tenders for collection of toll on a portion of Highway in Rajasthan. As per the tender conditions the bid shall remain valid for a period of 120 days. Respondent’s tender was accepted, but it withdrew the tender before expiry of 120 days. Nonetheless, NHAI encashed the bank guarantee of Rs.50,00,000/- paid as bid security. Respondent’s writ petition for refund of the amount was allowed by Delhi High Court. It was argued for the respondent that withdrawal of the bid by the tenderer before expiry of validity period disentitles NHAI from encashing bid security. The plea was rejected. The Supreme Court while allowing the appeal of NHAI observed as under. …A person may have a right to withdraw his oﬀer but if he has made his oﬀer on a condition that some earnest money will be forfeited for not entering into contract or if some act is not performed, then even though he may have a right to withdraw his oﬀer, he has no right to claim that the earnest/security be returned to him. Forfeiture of such earnest/security, in no way, aﬀects any statutory right under the Indian Contract Act. Such earnest/security is given and taken to ensure that a contract comes into existence. It would be an anomalous situation that a person who, by his own conduct, precludes the coming into existence of the contract is then given advantage or beneﬁt of his own wrong by not allowing forfeiture. It must be remembered that, particularly in Government contracts, such a term is always included in order to ensure that only a genuine party makes a bid. If such a term was not there even a person who does not have the capacity or a person who has no intention of entering into the contract will make a bid. The whole purpose of such a clause i.e. to see that only genuine bids are received would be lost if forfeiture was not permitted. (emphasis supplied) In this case, though the petitioner addressed a letter on 15.07.2005 before negotiations were held on 16.07.2005 he never categorically withdrew his tender. He only wanted to change his oﬀer, which was not permissible. In such a case, it must be held that the petitioner failed to withdraw the tender and in fact there is no such provision enabling the tenderer to withdraw his oﬀer. The writ petition, for the above reasons, is misconceived, and it must fail. The writ petition is accordingly dismissed with costs. ____________ (V.V.S.RAO, J) 23.09.2008 vs To 1 The Vice Chairman & Managing Director, the A.P. State Civil Supplies Corporation Ltd, Regd. Office: 6-3-655/1/A, C.S. Bhavan, Somajiguda, Hyderabad. 2 The General Manager (Finance), A.P.S.Civil Supplies Corporations Ltd, C.S.Bhavan, Somajigauda, Hyderabad. 3 The General Manager (PDS) A.P.S.Civil Supplies, Corporations Ltd, C.S.Bhavan, Somajiguda, Hyderabad. 4 The Collector& District Magistrate, Nampally Railway Station Road, Abids, Hyd. 5 The District Manager, A.P.S.Civil Supplies Corporation Ltd, C.H. Bhavan, Somajiguda, Hyderabad. 6 2CCs to G.P for Corporation, High Court of A.P., Hyderabad. 7 2CD copies Form-NIC-OGS/WP{CTMP} [1] AIR 1979 SC 1628 [2] (2003) 7 SCC 410