Case: State Of Assam  Vs. M/S. Abhinandan Trading (P) Ltd.

2. On 29th January, 2005, tenders were invited by the State of Assam under Rule 91 of the Assam Excise Rules, 1945 for the granting of exclusive privilege of supplying potable alcohol/rectified spirit (Gr.I) to its excise warehouse at Tinsukia for a period of three years from the date of settlement. The estimated annual consumption of country spirit in the area covered by the Tinsukia Warehouse was contemplated by the Notice Inviting Tender (NIT) to be approximately 15,60,000.000 London Proof Litre (for short LPL).3. Clause 28 of the NIT reads aswill be considered to the suitable valid tenderer in the viable range for smooth and continuous supply of Spirit as may be recommended by the Commissioner of Excise, Assam with the approval of Government. The viable range will be determined on the basis of analysis of cost price, export duty, transportation cost etc. by the Commissioner of Excise, Assam.As will appear from the materials on record, in all 8 tenders were received pursuant to the said NIT dated 29th January, 2005 and the same were opened in the presence of the tenderers on 11th March, 2005. After processing the same, the Commissioner of Excise submitted his report to the State Government on 10th May, 2005 in which he found three of the said tenders to be defective. The remaining five tenders were forwarded to the State Government for consideration. In the said report submitted to the State Government, the Commissioner of Excise worked out the viable/reasonable rate for supply of potable alcohol/rectified spirit to the excise warehouse at Tinsukia at Rs.18.23 per LPL. The stand of the State Government is that the said viable/reasonable rate was worked out by the Commissioner of Excise after taking into consideration the various factors referred to in Clause 28 of the NIT. Pursuant to the said NIT, one M/s. Satya Capital Services (P) Ltd. submitted its tender quoting an amount of Rs.15.10 per LPL for award of the contract. One M/s. Abhinandan Trading (P) Ltd. quoted a rate of Rs.18.95 per LPL for award of the contract and M/s. Rangpur Trading Company (P) Ltd. quoted a rate of Rs.17.11 per LPL. Ultimately, the contract was awarded to M/s. Rangpur Trading Company (P) Ltd. Such grant of contract to M/s. Rangpur Trading Company (P) Ltd. was challenged by M/s. Satya Capital Services (P) Ltd. by way of Writ Petition, being No.5305/2005, and also by M/s. Abhinandan Trading (P) Ltd. by way of Writ Petition, being No.5132/2005. The learned Single Judge allowed the said writ petitions and set aside the grant of contract in favour of M/s. Rangpur Trading Company (P) Ltd. upon holding that such grant did not disclose any logical, acceptable and/or reasonable basis. The State Government was directed to take a fresh decision in accordance with law and without any further delay.5. The aforesaid judgment of the learned Single Judge dated 27th September, 2005, was challenged by way of three separate appeals - one by the State of Assam, being Writ Appeal No.585/2005, and the other two by the successful tenderer, M/s. Rangpur Trading Company (P) Ltd., being Writ Appeal Nos. 581 and 582 of 2005. The three Writ Appeals having been filed against the common judgment and order passed by the learned Single Judge dated 27th September, 2005 in W.P.) No.5132/05 and 5305/05, they were taken up for hearing and disposal together and were disposed of by the Division Bench by a common judgment and order dated 6th October, 2005. Agreeing with the findings of the learned Single Judge holding that the Commissioner of Excise had failed to comply with the stipulation contained in Clause 28 of the NIT and had fixed a viable rate at Rs.18.23 per LPL instead of determining the viable price range, the Division Bench held that the entire process of granting the contract had been vitiated resulting in an arbitrary decision. The Division Bench took note of the fact that the Commissioner and Secretary to the Government of Assam, Excise Department, had been of the view that the viable rate should be Rs. 24/- per LPL, but the same had not been accepted and the contract had been awarded to M/s. Rangpur Trading Company (P) Ltd. at the rate of Rs.17.11 per LPL.6. The State of Assam has filed SLP.No.23889/2005 against the judgment of the Division Bench of the Gauhati High Court affirming the judgment of the learned Single Judge allowing the Writ Petitions filed by M/s. Satya Capital Services (P) Ltd. and M/s. Abhinandan Trading Company (P) Ltd. M/s. Rangpur Trading Company (P) Ltd., whose contract had been quashed by the learned Single Judge, has filed two Special Leave Petitions, namely, SLP.Nos.24565 and 24566/2005. Since all the three Special Leave Petitions arise out of the common judgment of the Division Bench of the Gauhati High Court, in the three Writ Appeals referred to hereinbefore, they have been taken up for hearing and disposal together and special leave has been granted in all the three matters.

Court's reasoning:
15. All the learned counsel appearing in this matter had occasion to refer to and rely upon the decision of this Court in Dutta Associates (supra). In the said case, the tender notice did not specify the "viability range" nor did it indicate that only the tenders coming within the viability range" would be considered. Such omission led this Court to observe that fairness demanded that the authority should have notified in the tender notice itself the procedure which they proposed to adopt while accepting the tender.16. The doubts expressed by this Court in the aforesaid decision were taken note of by the Government of Assam and it led to the inclusion of Clause 28 in the Notice Inviting Tender where the aforesaid omission was sought to be remedied. Clause 28 of the NIT which has been extracted hereinbefore, specifies that the contract would be given to the tenderer found suitable from the "viable range" which was to be determined on the basis of analysis of the cost price, export duty, transport cost etc. by the Commissioner of Excise, Assam. What had been left unspecified in the Notice Inviting Tender was, therefore, introduced subsequent to the decision in the case of Dutta Associates and the applicants for grant of the contract can have no further grievance on such score.17. However, apart from expressing doubts over the decision of the Government of Assam of taking recourse to the concept of "viability range", the discussion thereupon was not taken any further and the decision was rendered on a different set of facts, namely, that for granting the contract negotiations were entered into with one of the applicants only.18. It is no doubt true that there is scope of the concept of "viability range" being misused to favour a particular applicant, but there is no such allegation in the instant case, nor has any mala fides been attributed to the action taken by the authorities in awarding the contract to M/s. Rangpur Trading Company (P) Ltd. whose offer was much lower than the fixed rate. One of the arguments advanced was that the offer made by M/s. Abhinandan Trading (P) Ltd. was, in fact, closer to the fixed rate than that of M/s. Rangpur Trading Company (P) Ltd.19. Considering the submissions made and the ground realities regarding supply of potable spirit to Assam, we are inclined to accept Dr. Singhvis submission and to reject those made by Mr. Altaf Ahmed and Mr. M.N. Rao. Although, doubts were expressed by this Court in Dutta Associates (supra) regarding the concept of "viability range", its necessity or its real purpose, the decision of the Government of Assam to resort to such a procedure has to be left to the Government of Assam itself. Unless, it can be shown that the said procedure had been misused to favour any particular individual, which is not so in the instant case, it would not be proper for us to express any opinion as to the procedure the government should adopt except to say that whatever procedure is adopted should be open, fair and transparent.20. In the instant case, the methodology adopted for fixing the viable price range, as explained by Dr. Singhvi, indicates that even if the said method may not be the ideal method for granting of contracts, an average of different rates quoted against different heads by all the applicants are taken together and the ratio thereof is arrived at for fixing the viable range. It may be more prudent for the Government of Assam to adopt a different procedure in future, but as far as the present case is concerned, although the Commissioner of Excise had fixed the "viable rate" at Rs.18.23 per LPL, a "viable range" was computed between Rs. 17.11 per LPL and Rs. 18.95 per LPL. Considering the fact that the offer made by M/s. Abhinandan Trading (P) Ltd. (Rs.18.95 per LPL) was higher than the rate fixed by the Excise Commissioner, the Government in its wisdom thought it best to award the contract to M/s. Rangpur Trading Company (P) Ltd. whose offer of Rs.17.11 per LPL was lower than the fixed price.21. More than one and a half years have elapsed in respect of the period for which the contract had been awarded in favour of M/s. Rangpur Trading Company (P) Ltd. and as we have been informed, despite the orders passed by the learned single Judge and the Division Bench of the Gauhati High Court, they have still been supplying potable spirit to the Government of Assam on the basis of such agreement. In our view, it will not be in the interest either of the Government of Assam or the people of Assam to prevent M/s. Rangpur Trading Company (P) Ltd. from continuing such supply, especially when the correctness of the learned Single Judges order is capable of being disputed. The Division Bench merely gave a stamp of approval to the learned Single Judges judgment without examining the legal proposition involved.