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TMI Blog2010 (5) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... India Private Limited (for short, `Shimnit') being aggrieved by the judgment dated June 27, 2006 of the Calcutta High Court whereby the Division Bench dismissed their appeal and affirmed the order dated February 20, 2006 of the Single Judge dismissing their writ petition and the other at the instance of M/s Tonnjes Eastern Security Technologies Private Limited (for short, `Tonnjes') challenging the order dated March 23, 2010 whereby the Division Bench of Orissa High Court dismissed their writ petition. The Issue 3. The common question that arises for consideration in the two appeals is, whether after decision of this Court in Association of Registration Plates v. Union of India and Ors. (2005) 1 SCC 679 wherein the conditions provided for experience in the field of registration plates in the foreign countries and a minimum annual turnover from such business were upheld as essential conditions in the Notices Inviting Tenders (NIT) for award of contract for manufacture and supply of High Security Registration Plates (HSRP) for motor vehicles, it is necessary for the State Governments to continue with these conditions or it is permissible for them to do away with such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust furnish proof of past experience/expertise in this area or proof of the same with the collaborator. By further communication dated June 14, 2002 the aforenoticed NIT guidelines were modified by the Central Government and it was suggested that the bidders may be asked to provide details about the experience/capability of its collaborator to the satisfaction of the State authorities. By another communication dated November 13, 2002, the Central Government clarified to the States and UTs that the guidelines are suggestive in nature and left the discretion to the States and UTs in the matter of issuing NIT but reiterated security concern. 7. In the light of the guidelines suggested by the Central Government, several States/UTs issued NIT which, inter alia, included conditions, namely, (i) experience in the field of registration plates i.e., bidder should be working at least in five countries for licence plates and in a minimum of three countries with licence plates having security features worldwide; (ii) the bidder must have had a minimum annual turnover equivalent to INR 30 crores immediately preceding last year; at least 25% of this turnover must be from the licence plate bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e State is not fly-by-night operator but is personally experienced enough and capable enough to carry out such an activity.... ....The power therefore is wide enough to include aspects, which may not have been provided specifically elsewhere in the Act. The Central Government is well within its powers to prescribe the fact that the State Government has the power to select the manufacturer of HSRPs as it is State Government which understood its specific requirements and needs and has to be satisfied about the competence of the manufacturer that whom it has to work jointly in order to ensure that the objective behind the HSRPs scheme is not deviated. In the absence of such a provision the whole scheme of HSRPs which means towards achieving public safety and security by ensuring that there is issuing control and supervision of HSRPs by the State Government will get deviated. ...The State under the Tender wishes to choose a person who is already worked in connection with HSRPs rather than chose a person who merely claims that it can deliver. Surely in a project of such a large scale concerning public safety and security the State cannot be justified to employ the hit and trial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ror method would prove hazardous. The State Government's right to get the right and most competent person cannot be questioned. The State Government has to eliminate manufacturers who have developed recently just to enter into the new field. The insistence of the State to search for an experienced manufacturer with sound financial and technical capacity cannot be misunderstood. The terms and conditions in NITs are so formulated to enable the State to adjudge the capability of a particular tenderer who can provide a fail-safe and sustainable delivery capacity. Only such tenderer has to be selected who can take responsibility for marketing, servicing and providing continuously the specified plates for vehicles in large numbers, firstly in the initial two years, and annually in the next 13 years. 7 Capacity and capability are the two most relevant criteria for framing suitable conditions of any notices inviting tenders and the conditions of experience and turnover incorporated as essential conditions are to ensure that the manufacturer selected would be technically and financially competent to fulfill the contractual obligations, which, looking to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds submitted by those Bidders could not yet be processed, evaluated and finalized and whereas due to such non-evaluation of the Technical Bids the Financial Bids as submitted by those Bidders could not also be opened. AND WHEREAS it has come to the notice of the State Government that subsequent to issue of the said NIT a considerable number of Manufactures of such High Security Registration Plates have obtained the requisite Type Approval Certificates from the Institution approved by the Central Government as per provisions of the Motor Vehicles Act, 1989 and Rules framed thereunder; AND WHEREAS due passage of time and consequent change in the relevant field due to coming up of a very good number of duly approved manufacturers as aforesaid and keeping in view the observations of the Hon'ble Supreme Court of India in Writ Petition (Civil) No. 41 of 2003 and other connected cases as stated hereinabove, the Governor deems it fit that in greater public interest and also in the interest of public safety security the terms and conditions of the said Notice Inviting Tenders (NIT) for supply and fitment of High Security Registration Plates for Motor Vehicles be reviewed and d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in two designated zones of the States on Build, Operate and Transport (BOT) basis. The intending Bidders which may be single firm, Joint Venture or a Consortium should have in addition to above a minimum annual average Turnover of ₹ 50 crores and net worth of ₹ 20 crores as per audit balance sheet of 2003-04. Bid documents containing detail scope of work and other terms and conditions may be purchased from the office of the Managing Director, WBTIDC, between 04.10.2005 and 20.10.2005 both days inclusive during office hours, but excluding holidays, by paying a non- refundable cost of the same amount of ₹ 50,000/- (Rupees Fifty Thousand only) for each set of two copies of Bid Documents, in the form of Demand Draft drawn in favour of West Bengal Transport Infrastructure Development Corporation Ltd. payable in Kolkata. Bid must be accompanied with the Earnest Money Deposit (EMD) of ₹ 25,00,000/- (Rupees Twenty five lacs only) in the form as specified in bid documents. No exemption certificate in this regard will be accepted. Bids completed in all respect must be submitted in a sealed cover super scribed Bid for HSRP, WB at the office of the M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntations to the Government of Orissa on May 9, 2007 and May 15, 2007 requesting for amendment/modification of the tender conditions so as to bring it in conformity with the conditions approved by this Court in Association of Registration Plates (2005) 1 SCC 379. 19. On May 16, 2007, a Corrigendum-III was issued by the Transport Commissioner-cum-Chairman, State Transport Authority, Government of Orissa extending the due date beyond May 24, 2007. It is the case of Tonnjes that no further steps were taken by the Government of Orissa in pursuance of the said NIT. 20. On July 6, 2009, a fresh NIT was issued by the Government of Orissa for manufacture, distribution and affixation of HSRP at a Build Own Operate (BOO) basis. Tonnjes again made a representation to the Government of Orissa for bringing the terms and conditions of the fresh NIT in conformity with the decision of this Court in Association of Registration Plates (2005) 1 SCC 379. When nothing was heard from the Government of Orissa, Tonnjes filed a writ petition before the Orissa High Court for quashing that NIT. The High Court, by way of an interim order, directed that the bids pursuant to the said NIT may be permitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sues. The States and UTs were requested to implement the scheme of HSRP as early as possible. 26. On behalf of Union of India, few applications came to be filed (I.A. Nos. 6-9) before this Court in disposed of writ petition No. 510 of 2005 (Maninderjit Singh Bitta) for extension of time to ensure compliance with the directions contained in order dated May 5, 2009. These applications were disposed of by this Court on December 15, 2009 by extending time upto May 31, 2010. Contentions 27. Mr. F.S. Nariman, learned senior counsel appearing for Shimnit submitted that in Association of Registration Plates (2005) 1 SCC 379, after considering the scheme of HSRP including the guidelines issued by the Central Government and the conditions in the NIT pertaining to experience in the foreign countries and the turnover from the said business, this Court held that these are essential conditions of the tender aimed to ensure that the manufacturer selected would be technically and financially competent to fulfill the contractual obligations keeping in view the magnitude of the job and the huge investment required in the project. He submitted that these conditions having got the seal of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity. Mr. S. Ganesh extensively read the reasoning given by the Division Bench of the Calcutta High Court in the impugned order and submitted that no interference was called for in that order. 30. Mr. F.S. Nariman, learned senior counsel, in rejoinder vehemently contended that the judgment of this Court in Association of Registration Plates (2005) 1 SCC 379 must be read as read by this Court subsequently in Maninderjit Singh Bitta's case. He would contend that acquisition of Type of Approval Certificates (TAC) does not mean that such manufacturers are commercially competent to manufacture HSRP as TAC have limited efficacy. Learned senior counsel also submitted that if public interest could be served by the fulfillment of conditions in first NIT, then how by deleting these essential conditions, public interest could be achieved. Tenders, Government contracts and change in policy : Judicial Review 31. Before we refer to some of the important decisions of this Court dealing with the aspects of judicial review in the matters of government contracts, tenders and change in policy, it is appropriate to notice the observations made in a couple of English decisions and one Aus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reason for change of policy given by the Government is that it realised that making settlement for five years would give rise to monopolistic tendency, which will not be in public interest, at the same time the interest of revenue was not fully protected in the former policy. This clearly goes to show that the Government wanted to adopt a new policy in public interest to be made applicable from the year 1991-92. Learned Counsel appearing on behalf of the State of Bihar submitted in clear terms that the earlier policy was wrong and the Government realised its mistake and thus adopted a new policy to augment its revenue and to avoid monopolistic tendency. We do not find anything wrong in taking such view by the State Government and to change its policy considering the same to be in public interest.... 36. This Court in Sterling Computers Limited v. M N Publications Limited and Ors. (1993) 1 SCC 445, while dealing with judicial review in a matter relating to publication of telephone directories of Mahanagar Telephone Nigam Limited (a Government of India Undertaking) made the following observations: 12. At times it is said that public authorities must have the same liberty a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts. (5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi- administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. 38. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vits of the Union of India to which we have already referred, show that there are other States in the country where the percentage of telephones is far less than what it is in Eastern U.P. The said facts are the reason for the change in the policy of the Government and for giving up the notification calling for bids for Eastern U.P. Such a change in policy cannot, in our opinion, be said to be irrational or perverse according to Wednesbury principles. In the circumstances, on the basis of the clear principles laid down in ex p Hargreaves and ex p Unilever, the Wednesbury principle of irrationality or perversity is not attracted and the revised policy cannot be said to be in such gross violation of any substantive legitimate expectation of the appellant which warrants interference in judicial review proceedings. 40. In the case of Monarch Infrastructure (P) Ltd. v. Commissioner., Ulhasnagar Municipal Corporation and Ors. (2000) 5 SCC 287, this Court was concerned with the question relating to NIT issued by Ulhasnagar Municipal Corporation for appointment of agents for collection of octroi and revision of terms and conditions thereof. This Court held: ...The High Court had dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ict. The reasonableness of the legitimate expectation has to be determined with respect to the circumstances relating to the trade or business in question. Canalisation of a particular business in favour of even a specified individual is reasonable where the interests of the country are concerned or where the business affects the economy of the country. 42. In the case of Directorate of Education and Ors. v. Educomp Datamatics Ltd. and Ors. (2004) 4 SCC 19, this Court, inter alia, applied the principles enunciated in Tata Cellular(1994) 6 SCC 651 and Monarch Infrastructure (P) Ltd. (2000) 5 SCC 287 and held as follows: 12. It has clearly been held in these decisions that the terms of the invitation to tender are not open to judicial scrutiny, the same being in the realm of contract. That the Government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. It is entitled to pragmatic adjustments which may be cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bleness but also must be free from arbitrariness not affected by bias or actuated by mala fides. It was also pointed out that quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. Our View 46. In the light of the afore-noticed legal position, we shall now examine whether judicial intervention is called for in NIT issued by the State of West Bengal and State of Orissa for manufacture and supply of HSRP. Insofar as State of West Bengal is concerned, the first NIT was issued in the month of July, 2003 fixing August 6, 2003 as the last date for submission of tender papers. Pursuant thereto, four bidders participated. The finalization of the tender process could not take place because of interim order passed by this Court in Association of Registration Plates1 and other connected cases. These cases were decided by this Court on November 30, 2004. Of the four bidders, who initially participated in the tender process, one withdrew and as regards Promuk, an objection was raised by Shimnit about their eligibility. Shimnit approached Calcutta High Court and obtained an interim order from the Single Judge that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge its policy calculated to serve public interest and make it more effective. Choice in the balancing of the pros and cons relevant to the change in policy lies with the authority. But like any discretion exercisable by the government or public authority, change in policy must be in conformity with Wednesbury reasonableness and free from arbitrariness, irrationality, bias and malice. 47. In Association of Registration Plates (2005) 1 SCC 379, this Court while dealing with the challenge to the conditions with regard to experience in foreign countries and prescribed minimum turnover from that business observed that these conditions have been framed in the NIT to ensure that the manufacturer selected would be technically and financially competent to fulfill the contractual obligations and to eliminate fly-by-night operators and that the insistence of the State to search for an experienced manufacturer with sound financial and technical capacity cannot be misunderstood. While maintaining the State Government's right to get the right and most competent person, it was held that in the matter of formulating conditions of a tender document and awarding a contract of the nature of en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be got corrected by a higher court or by an application for clarification, modification or recall of the order and not by ignoring the order by any authority actively or passively or disobeying it expressly or impliedly. Even if the order has been improperly obtained the authorities cannot assume on themselves the role of substituting it or clarifying and modifying it as they consider proper. In Halsbury's Laws of England (Fourth Edn., Vol. 9, p. 35, para 55) the law on orders improperly obtained is stated thus: The opinion has been expressed that the fact that an order ought not to have been made is not a sufficient excuse for disobeying it, that disobedience to it constitutes a contempt, and that the party aggrieved should apply to the court for relief from compliance with the order. Any order passed by a court of law, more so by the higher courts and especially this Court whose decisions are declarations of law are not only entitled to respect but are binding and have to be enforced and obeyed strictly. No court much less an authority howsoever high can ignore it. Any doubt or ambiguity can be removed by the court which passed the order and not by an authority accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17, 2009 before this Court for extension of time wherein the following statement was made: The primary reason for non implementation of the scheme has been the challenges to certain conditions of the tender floated by various States. The issues such as experience in foreign countries, minimum net worth and turnover with a certain prescribed percentage of turn over from number plate business in the immediately preceding last three years and long term contract to a single vendor for the entire State had been the subject matter of WP(C) No. 41 of 2003--Association of Registration Plates v. UOI and Ors. That this Hon'ble Court in the judgment dated 30th November, 2004, laid to rest all such issues by holding that all such conditions were essential and mandatory conditions of the HSRP tender to ensure that the vendors selected by the States would be technically and financially competent to fulfill the contractual obligations which looking to the magnitude of the job requires huge investment qualitatively and quantitatively. By order dated December 15, 2009, this Court extended the time for implementation of HSRP upto May 31, 2010. None of these orders holds that while impleme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he State to give effect to new policy which it wished to pursue keeping in view `overriding public interest' and subject to principles of Wednesbury reasonableness. The judgment of Guwahati High Court in Real Mazon India Ltd. v. State of Assam and Ors. 2008 (1) GLT 1020 was also pressed into service by the appellants. In that case, the corrigenda dated December 26, 2006, January 6, 2007 and January 16, 2007 issued by the State of Assam deleting the conditions of experience, expertise and exposure of the bidders in the manufacture and supply of HSRP were challenged. Guwahati High Court quashed the impugned corrigenda. We are unable to approve the judgment of the Guwahati High Court in Real Mazon India Ltd. 2008 (1) GLT 1020 for the reasons given above. 55. As regards the State of Orissa, it is an admitted position that it issued NIT for the first time on April 11, 2007 inviting bids for the manufacture and supply of HSRP in respect of the existing motor vehicles and vehicles to be registered in the State of Orissa. The said NIT was not taken to logical conclusion and a fresh NIT was issued on July 6, 2009 on BOO basis. In that NIT, inter alia, eligibility criteria has been pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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