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IN THE HIGH COURT OF MADHYA PRADESH
Sushrut Arvind Dharmadhikari and Pranay Verma, JJ.
Balaji Security Services Pvt. Ltd. v. The State of Madhya Pradesh & Others
Writ Petition No. 26434 of 2023 (Indore);
Decided on 6.2.2024
(1) Tender -- scope of judicial scrutiny -- award of contract, whether by private party or by public body or State, is essentially a commercial transaction -- paramount considerations are commercial -- State can choose its own method to arrive at decision -- it can fix its own terms of invitation to tender -- that is not open to judicial scrutiny -- but State, its corporations, instrumentalities and agencies are bound to adhere to norms, stands and procedures laid down by them and cannot depart from them arbitrarily -- though decision-making process is not amenable to judicial review, Court can examine decision-making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness -- State and its agencies have public duty to be fair to all concerned. (2007) 14 SCC 517 followed. [Para 30]
(2) Tender -- scope of judicial scrutiny -- need for overwhelming public interest should always be kept in mind to justify judicial intervention in contracts involving State and its instrumentality -- while exercising power of judicial review in relation to contracts, Court should consider primarily whether there has been any infirmity in decision-making process. [Para 44]
(3) Constitution of India -- Art. 226 -- scope of judicial review -- contract -- Courts being custodian of fundamental rights, are under obligation to interfere where there is arbitrariness, irrationality, unreasonableness, mala fides and biasness -- at the same time, Courts should exercise power of judicial review with lot of restraint -- particularly in commercial and contractual matters. [Para 45]
(4) Tender -- tie-breaking clause -- choosing L-1 on basis of maximum number of manpower supplied by such bidder not in any financial year or years, but specifically in calendar year 2022, obtained through only single work order -- no justification put forth -- no nexus between tender clauses and objects sought to be achieved by it -- such incorporation apparently made to accommodate respondent No. 3 -- in earlier tenders, respondent No. 2 chose L-1 by checking and examining EPF certificates instead of calling for single work orders obtained by bidders -- Cl. 37.3 expressly provides that successful bidder would be eligible for work only 1 out of 3 groups/divisions falling under jurisdiction of respondent No. 2/Mandi Board -- respondent No. 2 acted illegally and in contravention to Cl. 37.3 in issuing single work order for all three groups in favour of respondent No. 3 -- failure of petitioner to raise objections in pre-bid meeting does not estop him from challenging impugned tender at later stage -- similar objection raised by one bidder was dismissed by respondent without assigning any cogent reasons -- Court interfered on ground of arbitrariness and violation of principle of natural justice -- such mala fide or intent to accommodate a bidder tantamounts to affect public interest as other bidders who had equal scores, lost tender due to inclusion of some clauses which are suitable only for respondent No. 3 -- condition discriminatory -- result of arbitrary action of respondent No. 2 -- not liable to be sustained -- impugned tender and consequential award of contract in favour of respondent No. 3 quashed. (1999) 1 SCC 492, 2000 (3) SCR 1159, (1997) 1 SCC 53, (1996) 6 SCC 558, 2000 (1) SCR 505, (2012) 6 SCC 464, (2012) 8 SCC 216, (1993) 1 SCC 71, (1985) 3 SCC 398, (2004) 7 SCC 166, (2022) 6 SCC 127, (2016) 8 SCC 622, Writ Petition No. 15239 of 2020 and (2000) 5 SCC 287 referred to. [Paras 47, 51 to 53, 57 & 58]
(5) Tender -- expected of State authorities to act in fair, transparent and non-partisan manner -- fair play in joints is necessary concomitant for administrative body in administrative sphere or quasi-administrative sphere -- however, decision must not only be tested by application of Wednesbury principle of reasonableness, but must be free of arbitrariness, not affected by bias or actuated by mala fides. (1994) 6 SCC 651 followed. [Para 55]
(6) State -- duty -- contract -- when State is trading with public, democratic form of Government demands equality and absence of arbitrariness and discrimination in such transactions -- activities of Government have a public element therefore there should be fairness and equity. [Para 56]
¼1½ fufonk & U;kf;d laoh{kk dh O;kfIr & lafonk fn;k tkuk] pkgs og futh i{kdkj }kjk gks vFkok lkoZtfud fudk; ;k jkT; }kjk] lkjr% okf.kfT;d laO;ogkj gS & çeq[k fopkj.kh; ckrsa okf.kfT;d gksrh gSa & jkT; fofu'p; ij igq¡pus ds fy, Lo;a dh i)fr pqu ldrk gS & og fufonk vkea=.k ds fy, vius fuca/ku fu;r dj ldrk gS & mldh U;kf;d laoh{kk ugha gks ldrh & ijarq jkT;] mlds fuxe] ifjdj.k vkSj vfHkdj.k Lo;a }kjk vf/kdfFkr ekudksa] ekunaMksa vkSj çfØ;kvksa dk ikyu djus ds fy, vkc) gSa vkSj og euekus ढax ls muls fopfyr ugha gks ldrs & ;|fi fofu'p;u çfØ;k U;kf;d laoh{kk ds v/;/khu ugha gS] rFkkfi U;k;ky; fofu'p;u çfØ;k dk voyksdu dj ldrk gS vkSj ;fn og vln~Hkko- v;qfä;qärk vkSj euekuh ls nwf"kr ikbZ tkrh gS rks gLr{ksi dj ldrk gS & ljksdkj j[kus okys leLr yksxksa ds çfr fu"i{k jguk jkT; vkSj mlds vfHkdj.kksa dk yksd drZO; gSA ¼2007½ 14 ,llhlh 517 vuqlfjrA ¼iSjk 30½
¼2½ fufonk & U;kf;d laoh{kk dh O;kfIr & ftu lafonkvksa esa jkT; vkSj mlds ifjdj.k varoZfyr gSa muesa U;kf;d e/;{ksi U;k;ksfpr Bgjkus ds fy, vifjgk;Z yksd fgr dh vko';drk lnSo /;ku esa j[kh tkuk pkfg, & lafonkvksa ds laca/k esa U;kf;d laoh{kk dh 'kfä ç;qä djrs le; U;k;ky; dks çkFkfedr% bl ij fopkj djuk pkfg, fd fofu'p;u çfØ;k esa dksbZ f'kfFkyrk gqbZ gS ;k ughaA ¼iSjk 44½
¼3½ Hkkjr dk lafo/kku & vuqPNsn 226 & U;kf;d laoh{kk dh O;kfIr & lafonk & ewy vf/kdkjksa ds laj{kd gksus ds dkj.k U;k;ky; ogk¡ gLr{ksi djus dks ck/; gSa tgk¡ euekuh] rdZghurk] v;qfä;qärk] vln~Hkko vkSj i{kikr gS & mlh le;] U;k;ky;ksa dks U;kf;d laoh{kk dh 'kfä vR;f/kd la;e ls ç;qä djuk pkfg, & fof'k"Vr% okf.kfT;d vkSj lafonkRed fo"k;ksa esaA ¼iSjk 45½
¼4½ fufonk & fu.kkZ;d [kaM & ,yŒ 1 dks fdlh foÙkh; o"kZ ;k fdUgha foÙkh; o"kksZ esa ,sls cksyh yxkus okys }kjk çnk; dh xbZ tu'kfä dh vf/kdre la[;k ds vk/kkj ij ugha] vfirq fofufnZ"Vr% dSysaMj o"kZ 2022 esa dsoy ,dy dk;kZns'k ds ek/;e ls vfHkçkIr] tu'kfä dh vf/kdre la[;k ds vk/kkj ij pquuk & dksbZ vkSfpR; ugha crk;k x;k & fufonk [kaMksa vkSj mlds }kjk çkIr fd, tkus okys mn~ns';ksa esa dksbZ varlaca/k ugha & ;g [kaM lqçdVr% çR;FkhZ Øekad 3 dks lqfo/kk nsus ds fy, lekfo"V fd;k x;k & iwoZrj fufonkvksa esa- çR;FkhZ Øekad 2 us cksyh yxkus okyksa }kjk vfHkçkIr ,dy dk;kZns'kksa dks e‚axus ds ctk; deZpkjh Hkfo"; fuf/k çek.ki=ksa dks ns[k vkSj ij[k dj ,yŒ 1 dks pquk & [kaM 37-3 esa lqO;är% micafèkr fd lQy cksyh yxkus okyk çR;FkhZ Øekad 2 eaMh cksMZ dh vf/kdkfjrk esa vkus okys 3 lewgksa laHkkxksa esa ls dsoy 1 dk dk;Z djus dk ik= gksxk & çR;FkhZ Øekad 2 us lHkh rhu lewgksa ds fy, çR;FkhZ Øekad 3 ds i{k esa ,dy dk;kZns'k tkjh dj voS/k :i ls vkSj [kaM 37-3 ds mYya?ku esa dk;Z fd;k & cksyh&iwoZ cSBd esa ;kph }kjk vkifÙk ugha mBk, tkus ls og ijorhZ çØe ij vkf{kIr fufonk ij vkifÙk djus ls focafèkr ugha gksrk & ,d cksyh yxkus okys }kjk dh xbZ blh çdkj dh vkifÙk çR;FkhZ }kjk dksbZ Hkh rdZiw.kZ dkj.k fn, fcuk gh [kkfjt dj nh xbZ Fkh & U;k;ky; us euekuh vkSj uSlfxZd U;k; ds fl)kar ds vfrØe.k ds vk/kkj ij gLr{ksi fd;k & ,slk vln~Hkko vFkok fdlh cksyh yxkus okys dks lqfo/kk nsus dk vk'k; yksd fgr çHkkfor djus dh dksfV esa vkrk gS D;ksafd ftu vU; cksyh yxkus okyksa ds leku vad Fks] mUgsa dqN ,sls [kaMksa ds lekos'k ds dkj.k fufonk ls gkFk /kksuk iM+k tks dsoy çR;FkhZ Øekad 3 ds fy, mi;qä gSa & 'krZ foHksndkjh & çR;FkhZ Øekad 2 ds euekus dk;Z dk ifj.kke & fLFkj j[ks tkus ;ksX; ugha & vkf{kIr fufonk rFkk çR;FkhZ Øekad 3 ds i{k esa nh xbZ ikfj.kkkfed lafonk vfHk[kafMrA ¼1999½ 1 ,llhlh 492] 2000 ¼3½ ,llhvkj 1159] ¼1997½ 1 ,llhlh 53] ¼1996½ 6 ,llhlh 558] 2000 ¼1½ ,llhvkj 505] ¼2012½ 6 ,llhlh 464] ¼2012½ 8 ,llhlh 216] ¼1993½ 1 ,llhlh 71] ¼1985½ 3 ,llhlh 398] ¼2004½ 7 ,llhlh 166] ¼2022½ 6 ,llhlh 127] ¼2016½ 8 ,llhlh 622] fjV ;kfpdk Øekad 15239 lu~ 2020 rFkk ¼2000½ 5 ,llhlh 287 fufnZ"VA ¼iSjk 47] 51 ls 53] 57 ,oa 58½
¼5½ fufonk & jkT; çkf/kdkfj;ksa }kjk _tq] ikjn'khZ vkSj i{kikrghu jhfr esa dk;Z fd;k tkuk çR;kf'kr & ç'kklfud {ks= ;k v/kZ&ç'kklfud {ks= esa U;k;ksfpr ढhy ç'kklfud fudk; ds fy, vko';d vlgxkeh gS & rFkkfi] fofu'p; dks dsoy ;qfä;qärk dk oSUlcjh fl)kar ykxw djds gh ugha ij[kk tkuk gksrk] vfirq og euekuh ls eqä gksuk pkfg,] i{kikr ls çHkkfor ;k vln~Hkko ls çsfjr ugha gksuk pkfg,A ¼1994½ 6 ,llhlh 651 vuqlfjrA ¼iSjk 55½
¼6½ jkT; & drZO; & lafonk & tc jkT; loZlk/kkj.k ls O;kikj djrk gS rks ljdkj dh yksdrkaf=d i)fr ,sls laO;ogkjksa esa lekurk dh vkSj euekuh ,oa foHksn dh vfo|ekurk dh e‚ax djrh gS & ljdkj dh xfrfof/k;ksa esa yksd rRo varoZfyr gksrk gS blfy, _tqrk vkSj lkE;k gksuk pkfg,A ¼iSjk 56½
ORDER
Dharmadhikari, J. -- 1. The present petition under Article 226 of the Constitution of India, petitioner is inter alia challenging certain provisions included in impugned notice inviting tender (NIT) issued by the respondent No.2 as published on 6.9.2023 bearing Specification No. TS-001 and Tender No. 2023 – MPSAM-3850 for outsourcing of human resources required for various tasks at Mandi Board Divisional Office, Technical Division Office and Mandi Samiti/Committee Campus as well as impugned award of contract and work order dated 6.10.2023 issued by the respondent No.2 in favour of the respondent No. 3 on the ground that the whole process in awarding the contract is unreasonable, arbitrary, discriminatory and biased.
2. Facts in nutshell are that petitioner is a private company and was incorporated on 1.4.1999 under the name and style 'M/s Balaji Detective and Security Services (India) Pvt. Limited. Thereafter, its name was changed to its present name vide Certificate of Incorporation dated 30.10.2015 issued by the Registrar of Companies, Gwalior under the provisions of Companies Act, 2013. The respondent No.2 is a statutory authority created under the provisions of M.P. Krishi Upaj mandi Adhiniyam, 1972(hereinafter referred to as “ Adhiniyam, 1972”) and functions under the respondent No.1. Thus, respondent No.2 is “State” within the meaning of Article 12 of the Constitution of India and is an instrumentality of State.
3. Pursuant of the publication of NIT issued by the respondent No.2 on 8.9.2023inviting tender (Annexure P-2) dated 6.9.2023, for outsourcing of human resources required for various tasks at Mandi Board Divisional Office, Technical Division Office and Mandi Samiti/Committee Campus which functions for procurement of agricultural produce at the Local/District Level, the bidders submitted various objections which were responded by way of issuance of a corrigendum dated 25.9.2023.
4. Petitioner herein also submitted bid on 3.9.2023. The respondent No.3 and other bidders including the petitioner participated in the bid process. After submission of bids and after examining the bid submitted by the respondent No.3, it came to the knowledge of petitioner that certain specific/tailor made conditions have been incorporated in the tender specifications to eliminate all the other bidders including petitioner, basically to accommodate the respondent No.3.
5. It is the case of the petitioner that being a state-authority under Article 12 of the Constitution of India, the respondent No.1 and 2 are legally obliged to adhere to the requirements of the Article 14 of the Constitution and act in a fair and transparent manner without discriminating between the parties. However, respondent No.2 acting in gross violation of Article 14 of the Constitution of India has awarded the contract emanating out of the impugned tender to respondent No.3. Hence, the present petition is filed.
6. Learned Sr. counsel for the petitioner has began the arguments raising various grounds which are as under:
CLAUSE 39 – TIE BREAKING MECHANISM
^^39- Vkb czsfdax
39-1 Vkb czsfdax ds ekeys esa ;kuh ,d ls vf/kd fufonkdkjksa ds ,y&1 gksus dh fLFkfr esa fuEufyf[kr Øe esa izkFkfedrk dk ikyu ¼Øfrd rjhds ls½ rc rd fd;k tk,xk tc rd fd ,dy ,y&1 fufonkdkjksa dk fu.kZ; ugha gks tkrk&
1- mPpre rduhdh&okf.kfTd Ldksj okys fufonkldkj dks vafre ,y&1 fufonkdkj ekuk tk,xkA
nwljs mPpre rduhdh&okf.kTd Ldksj okys fufonkdkj dks ,y&2 fufonkldkj ekuk tk,xkA
blh izdkj fufonkdkjksa ds rduhdh&okf.kfTd Ldksj ds vijksgh Øe dk mi;ksx fufonkdkjksa ij ,y&3] ,y&4 vkSj blh rjg ds fu.kZ; ds fy;s fd;k tk,xkA ;fn leku vad ds lkFk vHkh Hkh ,d ls vf/kd fufonkdkj gS] rks vxys pj.k dk ikyu fd;k tk,xkA
2- eŒizŒ jkT; ljdkj ds fdlh Hkh foHkkx@'kkldh; miØe@'kkldh; laLFkk ds dk;kZns'k ds ek/;e ls e/;izns'k ds lHkh ftyksa esa eSuikWoj miyC/k djkus dk vuqHko gksus okys fufonkdkj dks vafre ,u&1 fufonkdkj ds :i esa ekuk tk,xkA ;fn vHkh Hkh ,d ls vf/kd fufonkdkj gS] rks vxys pj.k dk ikyu fd;k tk,xkA
3- eŒizŒ j
The participation in a tender process waives the right to subsequently challenge its conditions unless proven arbitrary or illegal.
Judicial review in public procurement is limited; courts refrain from interference unless clear evidence of arbitrariness or bad faith is established.
Judicial review of tender conditions is limited; courts should not interfere unless actions are arbitrary, discriminatory, or mala fide, ensuring public interest is prioritized.
The court established that significant deviations from tender guidelines and arbitrary evaluation criteria violate the principles of fairness and proportionality under Article 14 of the Constitution.
The court affirmed that a bidder's disqualification due to false declarations in tender processes is valid, emphasizing limited judicial review in contractual matters.
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