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2016 Supreme(Cal) 409
IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
SANJEEB BANERJEE, J.
Debasis Ghosh and others – Petitioner
Versus
State of West Bengal and others – Respondent
WP 20546 (W) of 2016
Decided on : 26-09-2016
Advocate Appeared:
For the Petitioner: Mr Partha Sarathi Sengupta Mr Surajit Mitra Mr Kishore Datta Mr Debabrata Saha Roy Ms Soma Kar Ghosh
For the Respondent: Mr Sadananda Ganguli Mr S.N. Biswas, Mr Arunava Ghosh Mr Swarup Paul Mr. D.K. Adhikari Mr Surya Maity Mr Asish Dutta Mr Anirban Chakraborty
The doctrine of proportionality requires that the means employed to achieve a legitimate aim must be proportionate to the aim pursued and must not be excessive or disproportionate to the objective sought to be achieved.
Headnote:
TENDER - EXEMPTION FROM PERFORMANCE SECURITY - SSI UNIT - MICRO ENTERPRISE CERTIFICATE - PROPORTIONALITY - CONTRACTUAL TERM - EXTENSION OF TIME - ELIGIBILITY CRITERIA - FINANCIAL RULES - Rule 47A - MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 - SECTION 3(2) - WEST BENGAL FINANCIAL RULES - Rule 47A - PROVISO
Fact of the Case:
In a tender for supplying cooked diet to a government hospital, petitioners and private respondent no. 5 were found eligible. Both quoted the same rate and were chosen by a draw of lots. The work order was issued to the petitioners, who were required to furnish a performance security equivalent to two months' estimated gross bill value. Petitioners did not furnish the security within the stipulated time. Private respondent filed a petition under Article 226 of the Constitution, which was disposed of by an order directing the concerned Chief Medical Officer of Health (CMOH) to take a decision after affording the petitioners a hearing. The CMOH rejected the petitioners' claim for exemption from furnishing the performance security, and the private respondent was called upon to undertake the work. Petitioners challenged the CMOH's order.
Finding of the Court:
The court found that the petitioners had been asserting their rights to be regarded as an SSI unit in the State by virtue of their registration as a micro enterprise or their application as such. The court also found that a superior officer had, tentatively, accepted the same contention of the petitioners herein and had referred the matter for clarification to the Finance Department. The court further found that the petitioners were not disqualified for the contract to be awarded in their favor and that the petitioners' failure to furnish the requisite amount was not without any basis. The court also found that the CMOH's order was possible on the strict interpretation of the provision that the petitioners cited for the exemption.
Issues: 1. Whether the petitioners were eligible for exemption from furnishing performance security as an SSI unit under the Micro, Small and Medium Enterprises Development Act, 2006? 2. Whether the CMOH erred in rejecting the petitioners' claim for exemption? 3. Whether the CMOH's order was disproportionate in not affording the petitioners an opportunity to make good the default?
Ratio Decidendi: 1. The court held that the petitioners were not registered as an SSI unit in the State and Rule 47A of the Financial Rules, in terms, applies only to registered SSI units in the State. 2. The court held that the CMOH's order was possible on the strict interpretation of the provision that the petitioners cited for the exemption. 3. The court held that the CMOH's order was disproportionate in not affording the petitioners an opportunity to make good the default.
Final Decision: The court modified the CMOH's order and directed the petitioners to furnish a further sum of Rs.2.60 lakh by September 30, 2016, whereupon the petitioners' obligation of furnishing the performance security would stand satisfied. The court also directed that in default of the additional amount being put in within the time permitted, the CMOH's order would prevail and the petitioners would be entitled to the immediate refund of the earlier deposit of Rs.15 lakh.
1. The matter which was virtually concluded by the order of September 19, 2016 has been sought to be resurrected by a spirited challenge of the private respondent. The facts are mostly recorded in the order of September 19, 2016, but the essential features warrant a repetition.
2. Both the petitioners and the private respondent no.5 applied for obtaining the work for supply of cooked diet to a government hospital in Barasat. Both the tenderers were found to be eligible and the matter progressed to the commercial stage. The petitioners and the private respondent quoted the same rate and it was decided that the successful candidate would be chosen by a draw of lots. Upon the agreement of all concerned, lots were drawn and the petitioners came up trumps. The work order was issued to the petitioners on or about January 26, 2016 and the supply was to commence on February 1, 2016. There is a dispute as to when the agreement was signed and, though the petitioners claim that the agreement was signed by February 1, 2016, it is possible that the agreement may have been signed sometime after March 9, 2016 but before March 19, 2016. However, since affidavits have not been called for, the date of signing of the agreement cannot be confirmed; but nothing much turns on such aspect of the matter.
3. There is no dispute that clause 5.1 of the tender documents required the contractor to furnish an appropriate performance security to the relevant health facility for an amount equivalent to two months’ estimated gross bill value for supply of full rice diet at full bed-occupancy of the facility. The clause also provided for the performance security to be retained upto six months after the completion of all the contractual obligations by the contractor. Clause 27.1 of the tender documents clearly stipulated that unless the performance security was furnished within fifteen days of the notification of the award in favour of the contractor, the earnest deposit of the contractor “will be forfeited and the award will be cancelled.”
4. Upon the petitioners not furnishing the performance security for a substantial period after the issuance of the work order, the private respondent instituted a petition under Article 226 of the Constitution in this court which was disposed of by an order of July 22, 2016. The petitioners herein were not impleaded in the private respondent’s petition. The order therein was for the concerned Chief Medical Officer of Health to take a decision after affording the present petitioners a hearing.
5. In course of the hearing before the concerned CMOH, the petitioners referred to the petitioners’ registration as a micro enterprise under the Micro, Small and Medium Enterprises Development Act, 2006. The petitioners insisted that by virtue of such registration, the petitioners ought to be regarded as an SSI unit in the State and, as a consequence, the petitioners would be covered by the last sentence in the proviso to Rule 47A of the West Bengal Financial Rules that exempts the furnishing of performance security by units registered as SSI in the State.
6. The CMOH noted the submission and contention on behalf of the petitioners but found that the petitioners had not complied with the terms and conditions of the notice inviting tender dated March 19, 2015. The CMOH rejected the claim for exemption in furnishing the performance security. The net result of such finding was that the private respondent was called upon to undertake the work of supplying cooked diet to the relevant health facility at Barasat.
7. When the present petition was received on September 15, 2016, the issue involved therein was noticed and the petitioners were permitted to continue to supply cooked diet to the relevant hospital since the private respondent had not commenced its supply to such facility. By a further order of September 19, 2016, the petitioners were directed to furnish a deposit of Rs.15 lakh in lieu of performance security. The State had been c
