WP(C) 6578/2007 BEFORE THE HON’BLE MR JUSTICE B.P.KATAKEY JUDGMENT AND ORDERS(CAV) The petitioner, which is a registered partnership firm, favoured with a contract by the respondent Railways for washing of bedroll linens, pursuant to t he notice inviting tender(NIT) dated 19.5.2006, by the present writ petition has challenged the said NIT to the extent of prescribing relaxation of eligibility criteria and splitting up of the work, as well as the order dated 8.5.07 (Annexu re-F) issued by the respondent No.4, requesting the respondent No.5 to develop i ts infrastructure for washing of bedroll linens at the place mentioned in its te nder paper and to complete the work within 06-09 months so that 20% work of bedr oll washing can be allotted to it in the first year which may increase up-to 50% of daily offered quantity on satisfactory performance during the subsequent con tractual period as per terms and conditions of the NIT and further requesting it to intimate the completion of necessary infrastructure as per its commitment gi ven in the tender papers so that the necessary agreement can be executed after s pot verification by the Railways. 2. A notice inviting tender (NIT) was issued by the NF Railway authority on 19.5.06 inviting sealed tenders from reputed and financially sound business par ties/washing firms for steam cleaning/mechanized washing, disinfecting and ironi ng of linens and dry cleaning of blankets for bedrolls in trains, public retirin g rooms, etc at Guwahati Railway Station with the eligibility condition that the concerned firm should be well established in the field of professional washing and cleaning; should be sound in financial capability; should submit a solvency certificate from a nationalized bank for an amount not less than 1/4th of the es timated cost of the work; and should be experienced and qualified having proven credentials of performance in reputed/major establishments for similar work(stea m cleaning/mechanized washing of linen and dry cleaning), besides having the spe cified plant equipment and assets in Guwahati area. It has also been mentioned t hat the contract amount received during the last three financial years and in th e current financial year should be a minimum of 50% of annualized advertised ten der value and the Committee constituted for the purpose would satisfy themselves about the authenticity of the certificates produced by the tenderer(s) to this effect. A ’Note’ was appended to the eligibility conditions to the effect that a ny party, who does not fulfill any or all of the eligibility conditions specifie d above may still bid for a development/trial order for a part quantify (maximum 20% of the tender quantity in the 1st year which can increase up-to 50% of dail y offered quantity during the rest of the contract period) subject to the follow ing: i) The firm shall have a sound financial health and proven track record in any filed of business actively. This should be supported by published annual fin ancial statement for last three years; ii) The firm shall produce a solvency certificate from any nationalized sche duled bank for the full amount of advertised tender value; and iii) A brief project report for setting up a mechanized laundry as per tender specifications should be given along with the tender. It was further stipulated in the said NIT that if the administration decides to award a trial order, the selected tender shall be given 6-9 months to set up the plants/requirements from the date of giving Letter of Intent (L.O.I). 3. The petitioner, who was for the previous period i.e. up-to 4.7.07 favour ed with a contract for washing of bedrolls and linens, had challenged the said N IT dated 19.5.06 in this Court in WP(C) No.2779/06, wherein an interim order was passed on 7.6.06 directing the Railway authority not to pass any final order pu rsuant to the NIT dated 19.5.06, while allowing them to proceed with the NIT and by observing that no order is necessary as regards petitioner’s participation i n the tender process. Thereafter, the petitioner participated in the tender proc ess initiated vide NIT dated 19.5.06 by submitting his offer for awarding the co ntract. After that, the writ petition, being WP(C) No.2779/06 filed by the petit ioner was allowed to be withdrawn, with liberty to file afresh, vide order dated 21.2.07 passed at the instance of the petitioner. A conditional order awarding the contract (hereinafter referred to as regular work) dated 28.2.2007 was there after issued in favour of the petitioner by the Senior Commercial Manager/G, NF Railways, on the basis of the offer made by the petitioner pursuant to the NIT d ated 19.5.06, for washing of bedrolls and linens for a period of two years from 23.2.2007 to 22.2.2009 with the condition that the petitioner will undertake all works and continue to do so for about 6/9 months till finalisation of contract and completion of other allied works by the selected tenderer under trial and de velopment basis (20%) as per press notification and terms and conditions and fur ther intimating that 6/9 months time from the date of LOI will be given to set u p the plants/requirements for 20% works under trial and development basis by the selected tender and after satisfactory completion of the aforesaid works by the selected tenderer, 20% of the total works will be given to such tenderer for 1 year with intimation in due course and the same may increase up-to 50% of the da ily offered quantity during the rest of the contract period. The petitioner ther eafter filed an undertaking before the Railway administration on 2.3.07 agreeing to accept all the terms and conditions enumerated in the contract as well as in the subsequent communications unconditionally and to abide by the same. The agr eement was thereafter executed by the petitioner with the NF Railways on 16.7.07 which contains the stipulation as under: At present the contractor will undertake all works and continue to do so for ab out 6/9 months till finalisation of awarding contract and completion of other al lied works by selected tenderer under trial and development basis (20%) as per P ress Notification and terms and conditions. In this connection it may be mention ed that 6/9 months time from the date of LOI will be given to set up the plants/ requirements for 20% works under trial and development basis by the selected ten derer and after satisfactory completion of the aforesaid works by the selected t enderer, 20% of total works will be given to him(selected tenderer) for first ye ar with intimation to the contractor in due course and the same may increase up- to 50% of the daily offered quan6tity during the rest of the contract period. Ra ilway reserves the right to increase or decrease the contractual quantity by 50% during the currency of the contract. . 5. Thereafter, vide the proceeding dated 8.5.07 the railway administration by accepting the offer made by the respondent No.5 for a development/trial order , pursuant to the NIT dated 19.5.06, has awarded the contract for developing the infrastructure for washing of bedrolls and linens with the stipulation that it has to develop the infrastructure for washing the bedrolls and linens at the pla ce mentioned in its tender paper and to complete the work within 6/9 months so t hat 20% work of bed roll washing can be allotted to it in the first year, which may be increased up-to 50% of the daily offered quantity on satisfactory perform ance during subsequent contract period as per the terms and conditions of the NI T. It may also be noticed here that the respondent No.5 also submitted the tende r paper pursuant to the NIT dated 19.5.06 who owns a mechanized washing plant at Shillong for regular work, apart from the development/trial work, which was, ho wever, found to be non-responsive, on account of non-conformity with the conditi ons of the NIT relating to not having the plant in the Guwahati area. The petiti oner by the present petition has challenged the NIT dated 19.5.06 and awarding t he contract for development work in favour of respondent No.5, basically on the ground of violation of the Railway Board’s circular in that regard and also on t he ground that such actions suffer from colourable exercise of powers, arbitrari ness and malafide and that before issuing the order dated 8.5.2007 in favour of the respondent No.5, the petitioner was not intimated, as required pursuant to t he order awarding the contract in its favour dated 28.2.07. 6. I have heard Mr KN Choudhury, learned senior counsel for the petitioner; Mr S. Sarma, learned Standing Counsel for the respondent Railways; and also Mr S. Kataki, learned counsel for the respondent No.5. 7. Challenging the decision of awarding the contract on trial/development b asis, as incorporated in the NIT dated 19.5.06, it has been submitted by Mr Chou dhury that such decision by the Zonal Railway being contrary to the commercial C ircular No.3/03 dated 24.1.03 as well as the Notification dated 9.9.03, cannot b e sustained in law and, consequently, the decision to award the contract for tri al/development vide order dated 8.5.07 in favour of the respondent No.5 needs to be interfered with. It has further been submitted that the Railway Board’s noti fication dated 9.9.03 empowers the Zonal Railways to modify/downgrade the eligib ility criteria as stipulated in sub-clause C-1(a)(i) to (v), in some cases, if i t is found that it is impracticable to adhere to, on account of local conditions , but it cannot give a complete go-bye to the eligibility criteria as laid down by the Railway Board in its Commercial Circular dated 24.1.03, in the name of mo difying/downgrading, as has been done in the instant case. It has been contended that the ’Note’ appended to the NIT dated 19.5.06 has the effect of rendering t he tender process a farce and such an action on the part of the Railway authorit y is, apart from being highly irrational, violative of Article 14 of the Constit ution of India, as there is no nexus between the insertion of the ’Note’ and the object sought to be achieved by such insertion. Mr Choudhury, learned senior co unsel for the petitioner has contended that the so-called policy of relaxation e xercised by the Zonal Railway does not appear to be uniform as in respect of the NITs issued for Dibrugarh Town Station and Tinsukia Railway Station no such rel axation has been given, though such relaxation has been given in case of the Guw ahati Station. It has further been contended that such a relaxation in respect o f Guwahati Station has been given with a view to favour the respondent No.5 who though submitted his tender for the regular work was found to be non-responsive on account of the non-conformity with the conditions of the NIT. Therefore, Mr C houdhury submits that the decision making process in so far it relates to the pu rported decision of the Zonal Railways for conceiving of a trial/ development or der in respect of Guwahati Railway Station and the consequent decision as contai ned in the proceeding dated 8.5.07, apart from being without jurisdiction, vitia tes on account of abject arbitrariness, colourable exercise of power and malafid es. 8. Referring to the decision of the Apex Court in Union of India vs. Dinesh Engineering Corporation etc., (2001) 8 SCC 491, Mr Choudhury has further submit ted that even in the contractual matters the public authorities do not enjoy any unfettered discretion and the exercise of the discretion in the matter of accep ting offers in contracts must conform to Article 14 of the Constitution of India . In the instant case, according to Mr Choudhury, there is nothing in the Commer cial Circular No.3/03 dated 24.1.03 and the subsequent Notification dated 9.9.03 , which enables the Zonal Railway to adopt the course as has been adopted in the instant case. Mr Choudhury has also placed reliance on the decisions of the Ape x Court in E.P.Royappa vs. State of Tamil Nadu, (1974) 4 SCC 3 and in Ajay Haisa vs. Khalid Mujib Sehravardi, (1981) 1 SCC 722 in support of the contention that the impugned action taken by the Zonal Railway of awarding the trial/developmen t order, suffers from arbitrariness and amounts to malafide exercise of power. 9. It has been contended by Mr Choudhury that the communication dated 2.3.0 7, which has been issued by the petitioner and on which much emphasis has been l aid by the respondents, cannot operate as a bar against the petitioner to file t he present writ petition challenging the decision of the Zonal Railway to introd uce the trial/ development order, which is contrary to the Railway Board’s circu lar laying down the guidelines issued for the purpose of the settlement. It has further been contended that the right to challenge the action of awarding the co ntract in favour of any one on trial/development basis by an aggrieved party can not be taken away by communication dated 2.3.07 whereby the petitioner has agree d to accept the terms and conditions of the contract as well as the agreement, a s at that point of time no such decision was taken by the Railway authority to a ward the trial/development order in favour of any one and such decision was take n much thereafter i.e. on 8.5.07. Mr Choudhury has also contended that in any ca se there cannot be any estoppel against the statute, inasmuch as the decision ma king process following the issuance of the award letter dated 28.2.07 in favour of the writ petitioner having vitiated, the petitioner can maintain a writ petit ion. It has been submitted that the undertaking given on 2.3.07 was in the form as stipulated in clause-(2) of the award letter dated 28.2.07 and it cannot oper ate as a bar to file the present writ petition as it is evident from the award l etter dated 28.2.07 that the terms and conditions envisaged in the NIT and in th e general conditions are sought to be enforced subsequently. It has further been submitted that Clause-(1) of the award letter dated 28.2.07 visualizes the modi fication of the terms and conditions as contained in the original terms and cond itions by envisaging the role of IRCTC in the performance of the contract follow ing the issuance of NIT dated 19.5.06 and that is why in the award letter dated 28.2.07 which was provided that since the IRCTC is programmed to take over the f uture contract, the petitioner was informed that it will have to execute a tripa rtite agreement with the NF Railways and the IRCTC. However, no such tripartite agreement was executed. Placing reliance on the decision of the Apex Court in Ne w Bihar Bidi Leaves Company vs. State of Bihar, (1981) 1 SCC 537 it has been sub mitted that a person cannot be debarred from enforcing his fundamental rights on the ground of estoppel or waiver and, in the instant case, as the fundamental r ight of the petitioner guaranteed under Article 14 of the Constitution of India has been violated, the petitioner cannot be non-suited because of the undertakin g given on 2.3.2007. 10. Mr Choudhury further submits that as because it has participated in the tender process pursuant to the NIT dated 19.5.06, which contains the ’Note’, it cannot be debarred from challenging such a condition in the NIT on that count al one, on the ground of violation of Article 14 of the Constitution of India as, i f a contract or clause in a contract is found unreasonable or unfair or irration al, one must look at the relevant bargaining power of the contracting parties an d the party with a lesser or no bargaining power has either to accept the unreas onable and unfair term or to forego the services for ever. In the instant case, according to Mr Choudhury, the petitioner had no bargaining power and was bound to accept the unreasonable and unfair term in the NIT and submit its tender pape r pursuant to such NIT having the ’Note’ though such provisions in the NIT is mo st unreasonable, unfair and irrational and, therefore, it violates Article 14 o f the Constitution. Hence, according to Mr Choudhury, the petitioner cannot be d ebarred from challenging such an unreasonable, unfair and irrational condition i n the NIT. In support of his contention, Mr Choudhury has placed reliance on the decision of the Apex Court in LICI vs. Consumer Education & Research Centre, (1 995) 5 SCC 482; Central Inland Water Transport Corporation vs. Brojo Nath Gangul y, (1986) 3 SCC 156; and also in Kumari Shrileka Vidyarthi vs. State of Uttar Pr adesh, (1991) 1 SCC 212. It has further been contended that in order to survive a State action, it must not be susceptible to the vice of the arbitrariness and, in the instant case, as the action on the part of the respondent authority suff ers from arbitrariness and thereby violates the provisions of Article 14 of the Constitution, such action needs to be struck down Mr Choudhury in this regard ha s also placed reliance on a decision of this Court in Sumit Enterprise vs. Union of India, (2005) 4 GLT 227. 11. Referring to the award letter dated 28.2.07, it has been submitted by Mr Choudhury that it is evident from the said award letter issued in favour of the petitioner that the Railway authority has informed the petitioner that before t aking a decision relating to the trial/development order, the petitioner would b e intimated, but the Railway authority admittedly has issued the impugned order dated 8.5.07 in favour of the respondent No.5 without prior intimation to the pe titioner and as such, such an order cannot stand the scrutiny of law, being viol ative of the award letter dated 28.2.07. In any case, according to Mr Choudhury, the respondent No.5 being a bidder in the regular work and his bid for such wor k having been found to be non-responsive on account of non-conformity with the c ondition in the NIT, he cannot be awarded with the contract for trial and develo pment and that too in the guise of breaking the monopoly of the petitioner in su ch work and to enter into a healthy competition. According to Mr Choudhury, the Railway authority has taken such a decision in awarding the trial/development or der in favour of the respondent No.5 only with a view to favour him and not in a ny public interest. 12. Mr Sarma, learned Standing Counsel for the respondent Railways has, on t he contrary, submitted that the writ petition filed by the petitioner is not mai ntainable as the same is based on disputed question of facts arising out of a co ntract between the parties and such writ petition has been filed without exhaust ing the alternative remedy available to it. It has further been submitted that s ince the dispute arises out of an agreement executed between the petitioner and the Railway authority, which has an arbitration clause in it, the Writ Court may not entertain the writ petition. In this connection, Mr Sarma has placed relian ce on a decision of this Court in Principal Secretary to the Govt of Nagaland vs . Dimapur Contractors & Suppliers Union, 2007 (2) GLT 260. 13. It has further been contended by Mr Sarma that the petitioner having wit hdrawn the earlier writ petition being WP(C) No.2779/06 filed challenging the co nditions in the impugned NIT dated 19.5.06 and thereafter having accepted the co nditional order awarding contract in its favour dated 28.2.07 and entering into an agreement on 16.7.07 and also having given an undertaking dated 2.3.07 that h e will abide by all the conditions, is estopped from challenging the conditions in the NIT dated 19.5.06 as well as the order issued by the Railway administrati on in favour of the respondent No.5 dated 8.5.07. According to Mr Sarma, the Rai lway Board circular dated 21.4.03 read with the subsequent circular dated 9.9.03 empowers the Zonal Railway to modify/downgrade the eligibility criteria if it i s found that it is impracticable to adhere to any eligibility condition on accou nt of the local conditions and, accordingly, the Zonal Railway with the approval of the General Manager has relaxed the eligibility criteria, strictly in terms of the Railway Board circulars, giving emphasis on the public interest and as s uch, the contention of the petitioner that such a decision of the Zonal Railway is contrary to the Railway Board circulars cannot be sustained. It has further b een contended by Mr Sarma that in the NIT dated 19.5.06, it has specifically bee n mentioned that any party who does not fulfill any or all of the eligibility co nditions specified in the NIT may still bid for development/trial order subject to the conditions stipulated therein, including the condition that if the admini stration decides to award a trial order, the selected tenderer shall be given 6/ 9 months to set up the plant requirements. According to the learned counsel, the petitioner having accepted such conditions in the NIT, submitted its bid for th e regular work and having done so, the petitioner cannot turn around and challen ge the conditions in the NIT on the ground that it is arbitrary and unreasonable being contrary to the Railway Board’s circular, more so when the petitioner has failed to demonstrate any arbitrary or malafide action in the writ petition. 14. Referring to the conditional order awarding the contract in favour of th e petitioner, Mr Sarma further contends that in the said order dated 28.2.07 the petitioner was informed that it will undertake all works and continue to do so for about 6/9 months till the finalisation of awarding the contract and completi on of other allied works by the selected tenderer on trial/development basis (20 %) and about the requirement of setting up of the plant within 6/9 months time f rom the date of issuance of LOI to the selected tenderer and that on trial and d evelopment basis 20% of the work will be allotted to it i.e. to such selected te nderer in the first year with intimation to it in due course and which may be in creased up-to 50% of the daily offered quantity during the rest of the contract period. According to Mr Sarma, the petitioner was also informed that the Railway reserves the right to increase or decrease the quantity of work by 50% during t he current year of the contract. Such conditions having been accepted by the pet itioner by accepting the conditional award of the contract and by giving an unde rtaking dated 2.3.07 and also by executing the agreement dated 16.7.07 which als o contains such clause, according to Mr Sarma, the petitioner cannot subsequentl y turn around and challenge the conditions in the NIT as well as the communicati on issued to the respondent No.5 on 8.5.2007. It has further been submitted that the petitioner having not challenged the award of contract dated 28.2.07 cannot challenge the conditions stipulated therein. 15. Mr Sarma further submits that the intimation which is required to be giv en to the petitioner about the selected tenderer for issuing LOI under trial and development basis, as envisaged in the order of awarding contract in favour of the petitioner dated 28.2.07, does not mean that the petitioner has to be inform ed prior to taking a decision in that regard by the Railway administration. Such a stipulation in the said order dated 28.2.07 requires the Railway administrati on to inform the petitioner after taking a decision and allowing the selected te nderer to set up the plant . Therefore, according to