THE HON'BLE SRI JUSTICE NOOTY RAMAMOHANA RAO
WRIT PETITION No.5323 of 2012
28.2.2012
M/s. Lavanya Enterprises
Sri Bhramaramba Mallikarjuna Swamyvarla Devasthanam, Srisailam represented by
its Executive Officer and others
Counsel for the Petitioner: Sri W.B. Srinivas Counsel for Respondent No.1: Sri
V.T.M. Prasad rep. By Advocate General
Counsel for Respondent Nos. 2 to 4: G.P. for Endowments
<Gist :
>Head Note:
? Cases referred:
ORDER:
The writ petitioner has mounted a challenge to the Notice inviting Tender
(online version) floated by the 1st-respondent-Devasthanam for
granting a licence for procurement of human hair through e-procurement-cum-
Public auction.
The 1st respondent-Devasthanam has floated Notice Inviting Tender (online
version) (henceforth referred to as "N.I.T.") inviting bids for grant of licence
for procurement of human hair through e-procurement-Cum-public auction for a
period of one year commencing from 1.4.2012 upto 31.3.2013. The bid documents
were allowed to be down- loaded from 11.00 A.M. on 13.2.2012 and they are
required to be submitted latest by 4.00 P.M. on 27.2.2012. The bid validity
period is prescribed as one year and the bid process comprised of two parts.
The first part is comprising of a technical bid and the second part is
comprising of the price bid and the technical bid is slated to be opened at
11.A.M. on 28.2.2012; while the price bid is slated to be opened at 2.00 P.M. on
29.2.2012. Thereafterwards, the public auction is slated to be conducted from
3.30 P.M. onwards on 29.2.2012 in the office of the Commissioner of Endowments,
Tilak Road, Hyderabad. The eligibility criterion prescribed for participation
are (1) the tenderer should possess Certificates like Registration of Firm, I.T.
PAN Number (obviously, Income Tax Permanent Account Number), VAT Registration
and he shall not be a defaulter in payment to any of the major temples and he is
also required to enclose a demand draft drawn in a sum of Rs.50.00 lakhs in
favour of the Executive Officer of the Devasthanam payable on Andhra Bank/State
Bank of Hyderabad, Srisailam or State Bank of India, Srisailam Project Colony
Branch. The participating bidders are required to register themselves free of
cost on E-procurement platform on the website w.w.w.eprocurement.gov.in or
https://tender.eprocurement.gov.in. This process of granting licence has been
challenged for various reasons including the violations of the Rules on the
subject.
Heard Sri W.B. Srinivas, learned counsel for the writ petitioner and the
learned Advocate General in the company of Sri V.T.M.Prasad, learned Standing
Counsel appearing for all the respondents.
Sri Srinivas, learned counsel for the petitioner would submit that the
Governor of Andhra Pradesh in exercise of the powers available under Section 82
read with Section 153 of the Andhra Pradesh Charitable and Hindu Religious
Institutions & Endowments Act, 1987 (henceforth referred to as "Act" for
brevity) has framed the Rules called Andhra Pradesh Charitable and Hindu
Religious Institutions and Endowments Immovable Properties and other Rights
(other than Agricultural Lands) Leases and Licenses Rules, 2003 (henceforth
referred to as "Rules"). As per Rules 3,4,6 and 7, all leases or licences are
required mandatorily to be conferred only through public auction and any
departure therefrom is bound to be declared as an illegal exercise. The
expression "public auction", according to the learned counsel for the writ
petitioner, does not comprise the process of tendering. The expression "public
auction" normally and generally connotes the auction process at which all
prospective bidders are entitled to participate and offer their bids, competing
with each other so that the best possible price for lease or licence of the
right would be fetched. Public auction is intended to protect the interest of
the institution inasmuch as at a fair competition, the best price with all
transparency can be secured.
Per contra, the tendering process is a closed circuit affair shrouded in
secrecy, mystery and capable of being manipulated by handful of men, who could
form a cartel. According to the learned counsel for the petitioner, when the
Rules required the public auction to be conducted, any departure therefrom by
adopting any other mode or method for granting licences is illegal. Learned
counsel, in support of this contention has pointedly drawn my attention to the
fact that only those tenderers, who have participated in the N.I.T. alone are
entitled to participate in the public auctions that are slated to be conducted
from 3.30 P.M. on 29.2.2012 onwards. Thus, the public auction is curtailed to a
limited auction. Learned counsel for the writ petitioner has also pointedly
drawn my attention to an interim order passed by this Court on an earlier
occasion in W.P.M.P. No. 5386 of 2011 in W.P. No. 4350 of 2011. Incidentally,
the respondents 1 to 3 herein are also respondents to the said writ petition
wherein this Court has found that the circular instructions issued on 9.2.2011
by the Commissioner of Endowments directing adoption of E-procurement method as
an alternative to the method prescribed under the Rules cannot be sustained.
Learned counsel for the writ petitioner has also pointed out that non-
refundable transaction fee together with service tax component thereof is now
asked to be paid to the 4th respondent with whom the bidders or participants at
the public auction have nothing to do with. This again, is a contravention
from the rule position prescribed in the Rules. Learned counsel for the
petitioner would further submit that the entire process is a coercive mechanism
adopted to secure limited competition and consequently the interests of the
institution are sought to be compromised. Finally, since the writ petitioner is
a bona fide bidder for procurement of human hair, he shall not be prevented from
participating at the public auction slated to be conducted at 3.30 P.M. on
29.2.2012 at the office premises of the Commissioner of Endowments and he shall
be allowed to participate along with many others, who might be willing to
participate thereat without necessarily obliging to lodge their response to
N.I.T. Incidentally, learned counsel for the writ petitioner has also mounted
criticism on the contents of paragraph-8 of the Conditions specified under the
caption "technical bid".
The Rules have been framed in exercise of the powers available under
Section 82 read with Section 153 of the Act and consequently, they have
statutory enforceability. Rule-3 thereof made the position crisply clear that
all leases or licences shall be made by way of public auction, provided that,
the Commissioner may, on a request made in writing by the executive authority
permit the lease of any property or right otherwise than by way of public
auction, if he is satisfied, for reasons to be recorded in writing that the
interest of the institution or endowments will not suffer thereby.
The position that emerges is that all leases and licences are required to be
conferred only after undertaking public auctions. Rule-4 made this position
that much more explicitly clear by specifying that the licence for collecting
human hair also shall be granted by way of public auction only. Rule 6 spelt
out the various requirements to be contained in the auction notice. Rule-7
required the copy of the auction notice to be published in the language of the
locality at least ten days prior to the date fixed for auction, by affixture,
(1) on the notice board or on the front door of the institution concerned, (2)
on the notice board of the Office of the Municipality or Gram Panchayat as the
case may be where the property in question is situate and (3) finally on the
notice board of the office of the Assistant Commissioner having jurisdiction
over the area in which the property is situate. Further the contents of the
auction notice were also required to be published by way of beat of tom tom in
the inhabited area of the Gram Panchayat in which the property is situate, and
also by way of publication in the local language in any of the local daily
newspapers of the local language having circulation in the area etc.
The whole controversy now is riveted around public auction. If we analyse
the N.I.T., it comprised of two parts. The first part related to the
entertainment of tenders and the second part comprised of the element of public
auction. It is explicitly made clear in the N.I.T. that the public auctions
will be conducted from 3.30 P.M. onwards on 29.2.2012 in the Office of the
Commissioner of Endowments, Hyderabad. This, to my mind, is an absolute
compliance with the requirement of the Rules. Public auction has not been
dispensed with by the respondents 1 to 3 herein at all. But the whole exercise
is that the entry at that public auction has been confined only to those, who
submit their tenders by responding to the N.I.T. In other words, the
participation at the public auction is sought to be regulated. Public auction
is now confined to those who respond to the N.I.T. only.
N.I.T., again comprises of two parts. The first part relates to the
technical bid and the technical bids are slated to be opened at 11.00 A.M. on
28.2.2012. Thereafter, the price bids were slated to be opened at 2.00 P.M. on
29.2.2012. Highest offer received thus far is sought to be taken as the minimum
upset price or the floor price at the public auctions to be held from 3.30 P.M.
on 29.2.2012. In other words, the N.I.T. is floated by the respondents 1 to 3
herein for the purposes of working out as to the amount of upset price that
should be fixed and also to regulate the participants at the said public
auction. To put it differently, even if one of the tenderers, who happens to
offer the lowest price, he is as much entitled to participate at the public
auction on the same terms and conditions as the highest bidder at the N.I.T.
would have. Illustratively put, if the highest bid received is in a sum of
rupees one crore, while the lowest bid is in a sum of let us say, one lakh of
rupees, all those who have submitted their tenders, including the one who has
given the bid for rupees one lakh is granted an entry pass to enter the public
auction house. He can compete and give his competitive bid at the public
auction. There would be nothing wrong thereafter if such a lowest tenderer were
to ultimately emerge as the highest bidder. Therefore, the N.I.T. is intended
to serve the purpose of not only securing the minimum upset price at which the
public auctions are to be commenced, but it is also intended to secure a fair
and adequate competition. Experience at public auctions held in the past would
offer adequate lessons for the public administration to keep on refining the
process. It is not hard to imagine that the integrity of the tender process is
found, of late, to be tinkered and tampered with by the manipulative kind of
bidders. Tendering process is increasingly prone for criticism that cartels are
formed before hand and necessary adjustments are made outside to duly eliminate
severe and sincere competition amongst the tenderers. To frustrate any such
designed move, E-Procurement platforms are opened up. The E-procurement method
is not only most visible and transparent method devised, but at the same time,
the element of secrecy with which the bids are lodged and received will offer
the necessary amount of security in the mind of the tenderer, to come up with a
realistic offer. Such tenderers would mostly remain unidentified till the very
last minute, i.e., till the time the tenders are opened. One can thus avoid the
uneasy gaze and remain obscure from inducements. Excepting the tenderer
himself, the other persons may not be knowing who are all his likely competitors
at the tendering process. This is a safety mechanism which would help to
prevent information from being freely shared by those in the business. Secondly
whatever apprehensions one might entertain for participation in an open tender
process would be conspicuous with their absence in the E-tender procurement
process. Therefore a sense of security is enveloped around E-
procurement process. Further, the tendering process can be built in two or
three two stages. When certain technical qualifications are essentially
required to be possessed, the process of the tender can legitimately be split
into two bids, the first bid being the technical bid and the second bid
comprising of a financial bid is not an uncommon concept. By allowing the
tenderer to satisfy all the technical requirements first and then only pass
through to the next phase of consideration, namely, financial or price bid, a
fair amount of competition is ensured, but at the same time, such competition is
finetuned amongst the genuine bidders. The non-serious variety, such as those
who casually intend to interdict the entire process of bidding, can be filtered
and eliminated at the technical bid stage. The integrity of the tendering
process gets preserved. Therefore, receiving bids at two different stages, has
proved its cutting edge and effectiveness. I therefore, do not find anything
improper in that regard. To my mind, by conducting public auction from 3.30
P.M. on 29.2.2012, the requirements of Rules, 3,4,6 and 7 are totally satisfied.
Limiting the number of participants at the public auction is a measure,
obviously intended to filter the non-serious variety of bidders. Hence, the
N.I.T. floated by the 1st respondent cannot be declared as illegal.
The criticism of Sri Srinivas, learned counsel for the writ petitioner
that additional burden or obligation of paying the transaction fee to the
unconcerned 4th respondent vitiates the N.I.T. does not impress me at all. It
is not uncommon for the employer or the principal to offer for sale the tenders
or the bid documents at a particular price. Such a price is mostly non-
refundable. That is a price fixed for ensuring that only the serious kind of
participants would get attracted instead of all and sundry people. When we
consider the transaction fee, which is now sought to be charged from each
bidder, it only amounts to a different form of bid document charges. The
transaction fee, at a fixed percentage, ultimately at 0.03% of the estimated
contract value, is almost the same as that of the bid document price. What is
additionally charged thereon is a Value Added Tax, which is the requirement of
law and that cannot be opposed by any participant.
That takes me to the last of the criticisms of Sri Srinivas, that
paragraph-8 of the technical bid contained, according to the learned counsel for
the petitioner, vield threats to the bidders.
I am conscious and I am equally confident that the respondents 1 to 4 are
aware that it is the most significant and salient feature of our Indian
Constitution that Right to seek legal remedy against any violation of any of the
Fundamental Rights is itself a guaranteed Fundamental Right and consequently,
the right to seek such a legal remedy to any of our citizens cannot be
curtailed. What has been contained in paragraph-8 is a mere caveat. The first
respondent-Devasthanam has been playing safe by trying to caution the bidders
not to indulge in litigative zeal or uncalled for adventurism. If for any
unjust reasons and causes, the process of granting licences is sought to be
stopped or interdicted with, a caveat is entered by the 1st respondent-
Devasthanam that the bidder is exposing himself to the risk of being sued for
the recovery of damages. As is too well known, the right to seek damages for
any civil wrong is an assured Civil Right available to every other individual
including an institution such as the 1st respondent. Therefore, the contents of
paragraph-8 of the technical bid, far from wielding any threats or any coercive
measures upon the proposing bidders, but, is only intended to alert them of the
perils of indulging in acts which are likely to sabotage the process and thus
cause loss and damage to the 1st respondent institution. Nothing more sinister
deserves to be read into the contents of paragraph-8 and therefore, I am not in
a position to agree with the submissions of the learned counsel for the writ
petitioner.
Finally, learned counsel for the writ petitioner has drawn my attention to
the interlocutory order passed by this Court on 23.2.2011 in W.P.M.P. No. 5386
of 2011 in W.P. No. 4350 of 2011. It will be appropriate to quote the relevant
portion of the said order, which is to the following effect:--
"Prima facie, in the face of the Andhra Pradesh Charitable & Hindu
Religious Institutions & Endowments Immovable Properties and other Right (Other
than Agricultural) Leases and Lincenses Rules, 2003 notified under G.O.Ms.
No.866, dated 8.8.2003, (for short 'the Rules') the impugned circular dated
9.2.2011, directing adoption of e-procurement method as alternative to the
method prescribed under the Rules cannot be sustained."
The learned Judge, in the above order, had made the position very clear
that the impugned Circular dated 9.2.2011 directing adoption of E-procurement
method as an alternative to the method prescribed under the Rules cannot be
sustained. It is needless for me to remind myself that if the E-procurement
method is substituted for public auction, the same result it would have followed
perhaps even in this case. Far from substituting the E-Procurement method in
the instant case, if I may say so, very wisely the respondents 1 to 3 have used
the E-procurement method as a mere regulatory process, but not as a substitute
for the public auction. I, therefore, do not find that the same interim order
as was passed, as referred to supra, should follow even in this case.
Since I am not able to find any merit in the contentions canvassed in this
writ petition, I have no hesitation to dismiss this writ petition at the
admission stage. But, however, it is made abundantly clear to the respondents
that unconcerned and uninfluenced by any of the observations made in the
foregoing paragraphs of this judgment, if the writ petitioner has already filed
his response to the N.I.T. along with other similarly placed persons, his bid
also will be considered and he will be allowed to participate in the public
auction.
The writ petition is accordingly dismissed. No costs.
______________________________
NOOTY RAMAMOHANA RAO,J
DATE: 28th February, 2012
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