Pawan Kumar vs Food Corporation of India and Others

Jawahar Lal Gupta, J.—On February 19, 1998, the Food Corporation of India invited tenders for appointment of transport contractors for transportation of food grains etc. It was inter alia provided that "the tenders will be received up to 2.00 p.m. on 27-2-98....." The petitioner and respondent No. 7 along with three others submitted tenders for transportation of food grains from Bhundri to Mullanpur and from Hambran to Mullanpur. The following rates were quoted by different parties :--

Sr. No

Party

Mandi

To Depot

Rate quoted

1.

Sh. Pawan Kumar s/o Megh Raj V&PO Dakha (LDH)

(i) (ii)

Hambran Bhundri

Mullanpur Mullanpur/ Jagraon

Rs. 8.45P (The petitioner) Rs. 12.95P

2.

Sh. Jas Pal s/o Mohan Singh Mullanpur.

(i)

Hambran

Mullanpur

Rs. 9.00P

3.

Mohinder Singh s/o Sh. Ajaib Singh, Mullanpur.

(i)

Bhundri -do-

Mullanpur Jagraon

Rs. 13.90P

Rs. 14.00P

4.

Sh. Som Nath s/o Sh. Sant Ram. Mullanpur

(i) (ii)

Hambran Bhundri

Mullanpur Mullanpur/ Jagraon

Rs. 12.50P (Respondent Rs. 17.00P (No. 7)

5.

Only Pb. Truck Opt. Union, Mullanpur

(i)

Hambran Bhundri

Mullanpur Mullanpur/ Jagraon

Rs. 18.00P

Rs. 24.00P

A perusal of the above would show that the petitioner''s rates were the lowest. It appears from the original file produced by Mr. Hemant Gupta, counsel for the Respondent-Corporation that a committee consisting of three Assistant Managers considered the matter on April 16, 1998. It was of the view that respondent No. 7 "may be called for negotiations to reduce the rates..... and tender submitted by Shri Pawan Kumar.....may not be treated as valid....." On April 17, 1998, the seventh respondent was telegraphically called for negotiation "to reduce rate of transportation". It appears that he attended the negotiation proceedings on April 18, 1998 and gave it in writing that he was not prepared to reduce the rates as given by him. Thereupon, the Committee met again and observed that the rates quoted by the seventh respondent were lower than those which were prevalent during the previous year. It, thus, expressed the opinion that the offer of respondent No. 7 may be accepted. Then a telegram dated April 19, 1998 was issued to the seventh respondent. He was informed that his tender had been accepted for a period of one year from April 1, 1998 to March 31, 1999. Aggrieved by this action, the petitioner approached this court through the present writ petition with the grievance that the respondent-corporation had acted arbitrarily in accepting the higher rates and in ignoring his claim in spite of the fact that his offer had been kept pending till April 27, 1998.

Separate written statements have been filed on behalf of the private and official respondents. It has been inter alia alleged that the action was legal as the work had been finally allotted to respondent No. 7 at rates lower than those quoted by the petitioner.

Mr. Hari Singh Mann, counsel for the petitioner has made a two-fold submission. Firstly, it has been contended that the action of the respondent-Corporation in accepting higher rates and in rejecting his claim, was totally arbitrary. Secondly, the learned counsel has submitted that even if it is assumed as alleged by the Corporation and the seventh respondent that the initial order of acceptance of the tender submitted by respondent No. 7 had been withdrawn and that he was given an opportunity to revise his offer, the action was violative of Article 14 in as much as a similar opportunity for negotiation and revision of rates had not been given to him .

Mr. Hemant Gupta, counsel for the Respondent-Corporation and its officers does not dispute that the petitioner was not called for negotiation. He was not asked if he was willing to reduce his rates. Thus, the opportunity granted to respondent No. 2 had not been given to the petitioner. His only explanation for this omission is that the Committee had recommended the name of respondent No. 7 after considering the fiscal fitness of the various parties that had submitted the tenders.

After the matter had been argued at some length, counsel for the Respondent-Corporation stated that the matter can be reconsidered and that in case, the Corporation can find transporters to carry the goods at a lower rate and save some money, it would only promote public interest. He prayed for adjournment. However, Mr. P.K. Mutneja, counsel for respondent No. 7 opposed the request and has contended that the Corporation had the right to choose the transporter and it having done so, this Court cannot examine the matter in proceedings under Article 226 of the Constitution. Counsel has further pointed out that the petitioner did not have a sound financial position so as to be considered suitable for the allotment of work.

It is undoubtedly true that a Public Sector Undertaking like the Food Corporation of India is entitled to choose a suitable party for transportation of food grains. The writ Court is always slow to interfere when the competent authority takes a possible view. It is also correct that the financial position of a party is one of the relevant factors. However, in the circumstances of this case, we do not find that there was any substantial difference between the petitioner and respondent No. 7 so as to justify the view that the petitioner was unsuitable and that respondent No. 7 was only suitable candidate.

A perusal of the original file produced by Mr. Hemant Gupta clearly indicates that in the meeting held on April 16, 1998, the Committee had decided to select respondent No. 7 even though the rates quoted by him were Rs. 12.50 per qtl. for transportation of food grains from Hambran to Mullanpur and Rs. 17A for transportation from Bhundri to Mullanpur. As against this, the rates quoted by the petitioner were Rs. 8.45 and Rs. 12.95 per qtl. Still further, when the seventh respondent was called for negotiation, he had given in writing vide his letter dated April 18, 1998 that he was not willing to reduce the rates. Photocopy is placed on record as Mark ''A''. In view of this situation, the rates as quoted by him and as mentioned above, were accepted. A telegram dated April 19, 1998 was sent to him. A copy of this telegram has been produced by the petitioner as Annexure P. 1/A along with this petition. On the same day, another telegram dated April 19, 1998 is alleged to have been prepared. In this telegram, it was inter alia observed that "acceptance of transportation rates from Mandi Hambran to Mullanpur @ Rs. 12.50 and Bhundri to Mullanpur/Jagraon @ Rs. 17/- per qtl. which were conveyed inadvertently and same may not be treated as accepted. You are directed to attend District Office, Ludhiana for re-negotiation on 20-4-98 in the chamber of District Manager. FCI, Ludhiana failing which action will be taken as per tender notice." Curiously, this telegram docs not appear to have been issued. While all the other telegrams on the file bear a number, there is none on this telegram. On the contrary, there is an endorsement on this telegram by respondent No. 7 that he had received two copies on April 19, 1998. How was he present in the office of the District Manager on that date? After having received the telegram No. 98T dated April 19, 1998, what was the reason for him to be personally present in the office of the Respondent-Corporation? There is no explanation either in the pleadings or at the stage of arguments. Still further, it has been claimed that on April 20, 1998, the seventh respondent who had rejected the request of the Corporation for reduction of rates on April 18, 1998 by submitting a written letter, had agreed to revise the rates to Rs. 12.90 for transportation from Bhundri to Mullanpur/Jagraon and Rs. 8.40 per qtl. from Hambran to Mullanpur. It does not appear to be a mere co-incidence that the rates were reduced to a level of 5 ps. qtl. below those quoted by the petitioner. Still further, the file shows that the Committee which had initially accepted the rates quoted by respondent No. 7, on April 19, 1998, had again met on April 20, 1998 and observed that "re-negotiated rates are lesser. Hence the Committee is of the view that renegotiated rates of transportation from Hambran to Mullanpur. .. may be accepted for a period of one year w.e.f. 1-4-1998 to 31-3-1999". On this basis, a telegram was issued regarding acceptance on April 22, 1998.

The sequence of events clearly shows that while respondent No. 7 was afforded two Opportunities for negotiation of rates, no opportunity was given to any other applicant. Still further, it is not disputed that even the Truck Union regarding which no adverse finding in so far as the financial aspect was concerned had been recorded by the Committee and whose claim had been rejected only on the ground that its rates were higher than those quoted by respondent No. 7 was never afforded any opportunity to revise its rates. It appears clearly to be a case where the action was not fair. Equality of opportunity had not been afforded to the applicants.

Counsel for the respondents have been at pains to point out that the petitioner''s financial position was not sound. Thus, the Corporation was entitled to select a party with a sound financial position. It is not disputed that the Truck Operators Union has a large fleet of vehicles. Its financial position was the best out of all the applicants. Yet, no opportunity for negotiation was afforded to the Union. Secondly, it is clear that no standard regarding fiscal fitness had been laid down. No limit had been prescribed. Thus, it appears that the plea of financial soundness has been trotted out only to eliminate persons who had quoted lower rates. Still further, the evidence on record does not indicate any substantial difference between the petitioner and respondent No. 7. While the petitioner had claimed that he had two trucks and had also furnished a collateral security in respect of land through one Pritam Singh, Respondent No. 7 had claimed that he owned one truck and had a house worth Rs. 7 lacs. There is nothing on record to indicate that the Committee had conducted any investigation to find out the truth about the claim made by the parties or that it had made any independent enquiry about their fiscal status. It had accepted the affidavit and the rates quoted by respondent No. 7 only on the plea of financial status without even caring to make the least possible enquiry. In the circumstances of the case, we are satisfied that the Committee had chosen respondent No. 7 and initially accepted the higher rates in a purely arbitrary manner. Later on, it had persuaded the seventh respondent to bring his rates lower by 5 ps to those quoted by the petitioner. The entire sequence of events is indicative of an approach which was not fair. It appears that the entire effort was to exclude persons who had quoted lower rates.

Taking the totality of circumstances into consideration, we are satisfied that the action of the Respondent-Corporation in selecting respondent No. 7 and accepting his tender for the transportation of food grains was arbitrary and violative of Article 14. We, thus, quash that order. The Corporation shall now proceed to invite fresh tenders and consider the matter in accordance with law. The writ petition is, accordingly, disposed of. In the circumstances, there will be no order as to costs. The original file has been returned to Mr. Hemant Gupta.