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IN THE HIGH COURT OF MADHYA PRADESH
SHEEL NAGU, RAJEEV KUMAR SHRIVASTAVA, JJ.
M/s Amar Goods Transport – Appellant
Versus
M.P. State Co-operative Marketing Federation & Ors. – Respondents
WP.7734 of 2021
Decided on : 08-06-2021
NIT - Transportation Contract - [Art.226 of Constitution of India] - [NIT issued for transportation of select food-grains and gunny bags – cum-unloading work for the period from March, 2021 to February, 2022 Qua Sector Narsinghpur [District Narsinghpur] - Petitioner's L-1 offer 119% above SOR - Since the offer received was higher than the last year's offer, the official respondents gave a reduced cross-offer vide Annex. P/3 & P/4. 110% above SOR - Vide Annexure P/5, petitioner consents to the reduced cross-offer - Official respondents submit that various objections were received as regards the offer being on higher side. Consequently, the matter was considered by District Procurement Committee which on 23.03.2021 found that even the reduced cross-offer of 110% above SOR would lead to incurring of loss to the public exchequer and would not be in public interest especially when compared with the L-1 offer of 60% above SOR qua adjoining sector Gadarwara within the same district of Narsinghpur. The matter was also placed before the State Level Committee which was of the same view as the District Level Committee and thus a decision was taken to proceed for re-tendering the work qua Narsinghpur sector, District Narsinghpur. Consequently, fresh NIT was published on 25.03.2021, pursuant to which the intervenor M/s Pankajam Enterprises was awarded the contract and an agreement in that regard was executed on 08.04.2021.
Fact of the Case:
The petitioner challenged the official respondents' action in declining to accept the acceptance of the counter offer and issuing a fresh NIT for a transportation contract. The petitioner's offer was initially L-1 at 119% above SOR, which was reduced to 110% above SOR by the official respondents. The petitioner accepted this reduced cross-offer, but the official respondents declined to execute the agreement and issued a fresh NIT.
Finding of the Court:
The court found that there was no concluded and binding contract between the parties, as the acceptance of the reduced cross-offer by the petitioner was not a binding contract but a fresh proposal for the official respondents to accept or reject. The decision to re-tender was taken in public interest to prevent financial loss to the public exchequer. The court held that the official respondents' decision was conscious and reasonable, considering public interest.
Issues: The issues raised included the existence of a concluded and binding contract, the public interest in re-tendering, alleged discrimination in comparison to other sectors, and non-joinder of necessary party.
Ratio Decidendi: The court emphasized that the acceptance of a cross-offer in a tender process does not necessarily lead to a concluded and binding contract. It also highlighted the importance of public interest in commercial transactions involving the State or its instrumentalities. The court's decision was influenced by the legal principles of fairness, non-discrimination, and reasonableness in the award of contracts by the government and its agencies.
Final Decision: The petition was dismissed, and the court upheld the official respondents' decision to decline the acceptance of the counter offer and issue a fresh NIT. The interim order passed by the court was vacated.
JUDGMENT :
Heard through video conferencing.
1. Present petition u/Art.226 of Constitution of India is preferred challenging action on the part of official respondents in declining to accept the acceptance of counter offer and issuing fresh NIT.
2. The foundational facts are that in response to the NIT, the petitioner made an offer which was though L-1 but the official respondents found it to be on the higher side leading to the official respondents making a cross-offer lowering the initial bid from 119% above SOR to 110% above SOR. The petitioner accepted this cross-offer. In this factual backdrop, are the official respondents justified in law to have gone in for fresh NIT ignoring the acceptance of the petitioner of the lower cross-offer.
3. Pertinently, NIT under challenge relates to Narsinghpur sector [District Narsinghpur]. For the sake of clarity, the factual matrix attending the present writ petition is detailed below in a tabular illustration:
| S.No. | Events | WP.7734.21 |
| 1 | NIT issued for transportation of select food-grains and gunny bags – cum-unloading work for the period from March, 2021 to February, 2022 | Qua Sector Narsinghpur [District Narsinghpur] |
| 2 | Petitioner's L-1 offer | 119% above SOR |
| 3 | Since the offer received was higher than the last year's offer, the official respondents gave a reduced cross-offer vide Annex. P/3 & P/4. | 110% above SOR |
| 4 | Vide Annexure P/5, petitioner consents to the reduced cross-offer |
|
4 Vide Annexure P/5, petitioner consents to the reduced cross-offer
4. On 04.03.2021, the official respondents submit that various objections were received as regards the offer being on higher side. Consequently, the matter was considered by District Procurement Committee which on 23.03.2021 found that even the reduced cross-offer of 110% above SOR would lead to incurring of loss to the public exchequer and would not be in public interest especially when compared with the L-1 offer of 60% above SOR qua adjoining sector Gadarwara within the same district of Narsinghpur. The matter was also placed before the State Level Committee which was of the same view as the District Level Committee and thus a decision was taken to proceed for re-tendering the work qua Narsinghpur sector, District Narsinghpur. Consequently, fresh NIT was published on 25.03.2021, pursuant to which the intervenor M/s Pankajam Enterprises was awarded the contract and an agreement in that regard was executed on 08.04.2021.
5. Learned counsel for the petitioner has primarily raised the following grounds in support of the challenge to the fresh NIT:
2. The reason assigned to decline execution of agreement in favour of petitioner and issuing fresh NIT, that the cross-offer is on the higher side, is untenable since in Jhabua & Dindori sectors cross-offer as high as 127% above SOR was accepted by the official respondents.
3. The lowest bid of the petitioner and the consequential acceptance of cross-offer could not have been rejected/ignored for untenable reasons.
5.1 As such it is submitted by learned counsel for the petitioner that once the cross-offer made by the official respondents was accepted by the petitioner a concluded contract came into existence which was binding on the rival parties and thus the official respondents could not have resiled from the same.
5.2 Learned counsel for the petitioner has relied upon the decisions of the Apex Court in “Fair Air Engineers Pvt. Ltd. And Another Vs. N.K. Modi [(1996) 6 SCC 385 para 6]”, “Deokar Exports Private Limited Vs. New India Assurance Company Limited [(2008) 14 SCC 598 para 13]” and “Michigan Rubber (India
The main legal point established in the judgment is that the acceptance of a cross-offer in a tender process does not necessarily result in a concluded and binding contract. The court emphasized the ....
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Judicial review in public procurement is limited; courts refrain from interference unless clear evidence of arbitrariness or bad faith is established.
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