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High Court Of Orissa
R. N. Misra, C. J. And J. K. Mohanty, J.
B.RAJKUMAR PATRA - Appellant
Versus
UNION OF INDIA - Respondent
Original Jurn. Case 1569 Of 1979
Decided On : 03/18/1981
TENDER - ACCEPTANCE - DELAY IN SUBMISSION - INSTRUMENTALITY OF STATE - INDIAN RARE EARTHS LIMITED - NOT AN INSTRUMENTALITY OF STATE - INDIAN ELECTRICITY RULES, 1956 - RULE 45 - SUB-AGENCY - VALIDITY.
Fact of the Case:
Petitioner, an electrical engineer and contractor, submitted a tender for electrical work at the Orissa Sands Complex (OSCOM), a project of Indian Rare Earths Limited (IREL), a government company. The tender notice specified that no tenders would be received after 2.30 P.M. on the appointed date and that tenders would be opened at 3 P.M. that day. Petitioner's tender was the lowest of the four received within the appointed time. However, IREL negotiated with Laguna Engineering (Laguna), a Calcutta-based company that had not submitted a tender within the appointed time, and accepted Laguna's tender. Petitioner challenged IREL's action, alleging discrimination and violation of the tender notice and the Indian Electricity Rules, 1956.
Finding of the Court:
The court held that IREL's acceptance of Laguna's tender was not justified. The tender notice clearly stated that no tenders would be received after the appointed time, and Laguna's tender was not opened at the appointed time along with the other tenders. The court also held that IREL was not an instrumentality of the State and, therefore, was not subject to the equality clause of Article 12 of the Constitution. The court further held that Rule 45 of the Indian Electricity Rules, which requires contractors to have a certificate of competency, did not apply to Laguna because it was not the prime contractor but a sub-agency.
Issues: 1. Whether IREL's acceptance of Laguna's tender was justified. 2. Whether IREL is an instrumentality of the State. 3. Whether Rule 45 of the Indian Electricity Rules applies to Laguna.
Ratio Decidendi: 1. The court held that IREL's acceptance of Laguna's tender was not justified because the tender notice clearly stated that no tenders would be received after the appointed time, and Laguna's tender was not opened at the appointed time along with the other tenders. 2. The court held that IREL was not an instrumentality of the State because it did not have the special features that have been highlighted in the case of Ramana dayaram Shetty v. International Airport Authority of India, AIR 1979 SC 1628. 3. The court held that Rule 45 of the Indian Electricity Rules did not apply to Laguna because it was not the prime contractor but a sub-agency.
Final Decision: The court dismissed the writ application, but without any order for costs.
MISRA, C. J.
( 1 ) OPPOSITE party No. 2, Indian Rare Earths Limited, is a 'government company' with its registered office at Bombay in which all the shares are held by the Government of India. The Orissa Sands Complex (opposite party No. 3) (hereinafter referred to as 'oscom') is a project under the said Company operating at Chatrapur within the territorial jurisdiction of this Court, which is engaged in manufacture of radio-active sand and Thorium in terms of the provisions of the Atomic Energy Act, 1962. By notice (Annexure 1) tenders were invited from competent contractors for execution of certain electrical work for OSCOM against specification No. OSCOM/e-25, the estimated cost of the work being Rs. 2,50,900. In paragraph 2 of the notice of invitation, it was stipulated:--
"no tender will be received after 2. 30 P. M. on 23-5-1979 under any circumstances whatsoever. "
and tenders were to be opened at 3 P. M. that day. The tender notice contained the usual clause that without assignment of any reason, right to reject the lowest or any tender was reserved by the employer. Petitioner who claims to be a qualified electrical engineer and carries on business as a contractor submitted his tender in accordance with the requirements of the terms along with three others. According to the writ application, the tenders were opened at the appointed hour in presence of the tenderers and they were given the impression that the tenders would be considered in due course. It is alleged in the writ application that petitioner's tender was the lowest of the four that had been received within the appointed time. No intimation was, however, sent to the petitioner or the other tenderers about acceptance or rejection of the tenders. Petitioner upon enquiry gathered that the opposite parties negotiated with a firm who had not submitted any tender within time --M/s. Laguna engineering (opposite party No. 5) (hereinafter referred to as 'laguna') which is a Calcutta based company. Upon enquiry, petitioner further came to learn that laguna had not given any tender by the time appointed nor was its tender opened at 3 P. M. on the appointed date. The Chief Project Manager wrote back to petitioner in answer to petitioner's query vide Annexure 3 to the following effect:--
"please refer to your telex of 11th September, 1979 and subsequent letter dated 12th September, 1979 regarding your tender dated 23-579 for OSCOM construction power distribution system against specification No. OSCOM/e-25. We looked into the details of the case and would like to assure you that the tender was decided on merits. The offer of M/s. Laguna was accepted under bona fide circumstances and in the best interests of our company. We hope, this will dispel any misapprehension you may have on the subject. "
Petitioner thereafter filed this writ application challenging the action of opposite parties 2 and 3 in entrusting the work to opposite party No. 5 on various allegations.
( 2 ) AT the hearing Mr. Mohanty for the petitioner confined his submissions mainly to two aspects:--
(i) Opposite Party No. 2 is an instrumentality of the State and, therefore, comes within the meaning of 'state' in Article 12 of the constitution. It was not entitled to make any discrimination between citizen and citizen and denial of equal opportunity to citizens carrying on business with it is justiciable; and (ii) Laguna did not satisfy the requirements of Rule 45 of the Indian electricity Rules, 1956 and, therefore, the work could not have been entrusted to it.
( 3 ) THERE is no dispute that in the tender notice there was a categorical stipulation that after 2. 30 P. M. on the appointed date, no tender would be received under any circumstances whatsoever. Admittedly, Laguna did not submit the tender within the appointed time. In fact, its tender was not opened at 3 P. M. along with the other tenders. Mr. Jayanta Das appearing for opposite party No. 3 contended that conceding that opposite party No. 2 was an
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