SRRAK-REIPL JV and Others vs Union of India (UOI) and Others

Jayanta Kumar Biswas, J.—The Court: The Petitioners in this Article 226 petition dated November 20, 2010 are seeking the following principal reliefs:

a) Declaration to the effect that the selection process of the successful tender is vitiated by irregularity, favoritism, nepotism and thus is void and/or set aside;

b) Declaration to the effect that process for selection of successful tenderer is bad and wholly illegal;

c) A writ of and/or in the nature of mandamus do issue directing the concerned Respondents, their men, agents and subordinates to process the tender documents afresh and in accordance with law;

d) A writ in the nature of Prohibition do issue restraining the Respondents Coal India Authorities and/or their subordinates from taking any action and/or further action pursuant to and in furtherance of letter of intent issued in favour of the alleged successful tenderer being the private Respondent herein;

Northern Coalfields Limited (in short NCL) of P.O. Singrauli, Dist-Singrauli (MP) put a notice dated April 24, 2010 inviting sealed tenders in two parts (Part-I and Part-II) for the following job:

Excavation of Over Burden of First Dig (Solid) by Hiring of Equipment such as Excavators, Tippers/Dumpers, Drills, Dozers, Graders and Water Sprinklers for Composite Work Consisting of Blast Hole Drilling, Excavation, Loading, Transportation of Broken Rocks/Soil/ Earth, Unloading/Dumping, Spreading, Dozing, Water Sprinnkling and Grading etc. by Mechanical Means as per Instruction of Engineer Incharge at specified places at AMLOHRI OCP of NCL.

The first Petitioner, a consortium of one Stevin Rock L.L.C. of Ras Al Khaimah in the United Arab Emirates and the second Petitioner, Reacon Engineers (India) Pvt. Ltd. of Kolkata, submitted its bid. Part-I (technical bid) of the bids were opened on June 3, 2010. According to cl.21.2 of the instructions to the bidders NCL was to evaluate the Part-I of the bids, choose the substantially responsive ones, inform the bidders fulfilling the requisite qualifying criteria and then to open the Part-II (price bid) of the bids of only the qualified bidders.

On September 9, 2010 the first Petitioner wrote a letter requesting NCL not to reject its technical bid on the grounds of "certain missing/short documents" without first getting "the SRRAK documents verified from respective Embassy." On October 18, 2010 the price bids of the bidders whose technical bids had been found to be substantially responsive were opened and the name of the eighth Respondent (Girija Pathi Reddy B Co.) was announced as the successful bidder.

The first Petitioner wrote a letter dated October 22, 2010 stating and asking NCL as follows:

We have come to know on 21.10.2010 that you have announced the name of the successful bidders on 18.10.2010.

Though our technical bid was perfect and as well we are eligible and our financial bid is lower than the organization to whom the contract has been awarded, yet our offer has been rejected without reason, without hearing.

Infact after opening of the technical bid, you have not communicated with us till you have announced the name of the successful bidders on 18.10.2010 behind the back and surreptitiously. Your action is fully arbitrary, unreasonable, discriminatory and de-horse the principle of fair-play and natural justice.

Please disclose us the reasons for not awarding the bid to us in terms of the provisions of the tender document forthwith.

Under the circumstances, contending (in para.8) that the decision making process was "faulty, unfair, unreasonable, arbitrary, discriminatory and dehors the principles of natural justice and fair play", the Petitioners brought this petition.

Counsel for the Respondents have raised a preliminary objection that this Court has no territorial jurisdiction to entertain the petition, because Coal India Limited (in short CIL), the Superintending Engineer (E and M)/In-charge, NCL Desk Office and Allahabad Bank, J.L. Nehru Branch whose seats are in Kolkata have nothing to do with the reliefs sought in the petition or its cause of action, no part whereof has arisen within the territories in relation to which this Court exercises jurisdiction.

Mr Pal, counsel for the Petitioners, has argued that this Court has jurisdiction on twofold basis: (i) parts of the cause of action have arisen within the territories in relation to which this Court exercises jurisdiction; and (ii) seat of CIL whose hundred per cent subsidiary is NCL is in Kolkata.

As to parts of the cause of action, Mr Pal''s submissions are these. Bank guarantee for bid security and solvency certificate for working capital were obtained from a Kolkata bank, which confirmed them when NCL officials visited it for verification. Situs of the fleet of equipment whose ownership evidence was produced is Kolkata. These all are related to essential eligibility criteria. Most importantly, after opening the technical bid NCL sent bid validity extension request to Kolkata wherefrom the Petitioners, accepting the request, extended the bid validity period.

Mr Pal has argued that since the object of the 15th Constitution amendment (in response to indication of the Supreme Court i Lt. Col. Khajoor Singh Vs. The Union of India and Another, inserting the concept of cause of action wholly or in part in Article 226, notwithstanding the existing seat concept, was to mitigate the considerable hardship the litigants from distant places had been facing, it must receive an interpretation consistent with: (a) removing considerable hardship to litigants; (b) ensuring access to justice which is a human right Tashi Delek Gaming Solutions Ltd. and Another Vs. State of Karnataka and Others, and Arunima Baruah Vs. Union of India (UOI) and Others, ; (c) a purposive approach, i.e. object oriented approach S.R. Chaudhuri Vs. State of Punjab and Others, ; (d) the basic principle that Article 226 provides speedy and efficacious remedy to citizens including those residing or carrying on business far away from the seat of the authority for vindication of their fundamental rights (particularly under arts.14 and 21) and strikes at arbitrary exercise of Navinchandra N. Majithia Vs. State of Maharashtra and Others, widening area)]; (e) ensuring observance of Rule of Law; (f) the principles that Article 226 is a feature of the basic structure of the Constitution, and that its reach, unless liberally interpreted, would render the Constitutional Court''s jurisdiction an illusion.

Mr Pal has said that on a proper reading of the decisions of the Supreme Court on the expression "part of cause of action" it will appear that the Supreme Court is moving more towards the following tests: i) Kusum Ingots and Alloys Ltd. Vs. Union of India (UOI) and Another, ; ii) occurrence of operative facts principles Om Prakash Srivastava Vs. Union of India (UOI) and Another, and Navinchandra N. Majithia Vs. State of Maharashtra and Others, iii) genesis of the issues - even alerting would suffice Rajendran Chingaravelu v. R.K. Mishra and Ors. (2010) 1 SCC 457.

Mr Pal has argued that all these tests are satisfied in this case in which events related to the eligibility criteria happened in Kolkata; and that even applying a restrictive interpretation borrowed from a private law 19th century English Case: Cooke v. Gill (1873) 8 CP 107 as adopted in some cases, e.g. Alchemist Limited and Another Vs. State Bank of Sikkim and Others, , and the view taken in Oil and Natural Gas Commission Vs. Utpal Kumar Basu and Others, and State of Rajasthan and Others Vs. Swaika Properties and Another, and other cases, it cannot be disputed that cause of action refers to the situs of those facts which the Petitioner must prove to succeed.

Mr Pal has also relied on the decisions in Serajuddin and Co. Vs. The State of Orissa and Others, (a part of the cause of action arises at the place where the impugned order is served); Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, ; Som Prakash Rekhi Vs. Union of India (UOI) and Another, ; Ajay Hasia and Others Vs. Khalid Mujib Sehravardi and Others, ; Umasankar Chatterjee v. Union of India and Ors. 1982 (1) CHN 100; Union of India (UOI) and Others Vs. Hindustan Aluminium Corporation Limited and Another, (part of the cause of action arises at the place where the impugned order causes loss to the Petitioner); M/s. Monarch Infrastructure (P) Ltd. Vs. Commissioner, Ulhasnagar Municipal Corporation and Others, (importance of earnest money deposit and consequential effect in determining responsiveness); Pradeep Kumar Biswas and Others Vs. Indian Institute of Chemical Biology and Others, Om Prakash Srivastava Vs. Union of India (UOI) and Another, forum convenience is not the correct approach); and Bikash Bhushan Ghosh and Others Vs. Novartis India Limited and Another, (situs is where the order is to operate; even if it is at two places, both will have jurisdiction).

Mr Bandopadhyay, counsel for NCL, the second Respondent, has submitted as follows. No part of the cause of action has arisen within the territories in relation to which this Court exercises jurisdiction. Everything concerning the tender process happened in Madhya Pradesh. The officials who came to Kolkata for verifying certain facts had no role to play in the rejection of the Petitioners'' technical bid. Extension of bid validity and bank guarantee from Kolkata has nothing to do with the prayers made in the petition.

Mr Bandopadhyay has relied on Lt. Col. Khajoor Singh Vs. The Union of India and Another, ; IFB Automotive Seating and System Ltd. and Others Vs. Union of India (UOI), Kusum Ingots and Alloys Ltd. Vs. Union of India (UOI) and Another, Ashok Kumar Sahoo (HUF) and Another Vs. Hindustan Paper Corpn. Ltd. (HPCL) and Others, Musaraf Hossain Khan Vs. Bhagheeratha Engg. Ltd. and Others, ; Alchemist Limited and Another Vs. State Bank of Sikkim and Others, ; Ambica Industries Vs. Commissioner of Central Excise, ; an unreported decision dated July 16 and 20, 2009 in W.P. No. 7030 (W) of 2007 Sonic Surgical Vs. National Insurance Company Ltd.,

Mr Saptangshu Basu, counsel for CIL, the third Respondent, has argued as follows. The amendment of the petition to bring the lis within the territorial jurisdiction of this Court was not permissible. In any case, even if a part of the cause of action arose within the territories in relation to which this Court exercises jurisdiction, on the grounds of balance of convenience and inconvenience of the parties this Court should not entertain the petition. All records pertaining to the lis are lying at Singrauli in Madhya Pradesh.

Mr Basu has relied on Madanlal Jalan v. Madanlal and Ors. AIR 1949 Cal 495 ; The State of Bihar Vs. Barakar Engineering and Foundry Works Ltd. (Oriental Coal Co), ; Mst. Zohra Khatoon Vs. Janab Mohammad Jane Alam and Others, Union of India (UOI) Vs. Kuppuswamy Naicker, ; Ultra Engineering Industries P. Ltd. Vs. Spintex Industries Pvt. Ltd., and Assam Co. Ltd. and Ors. v. The State of Andhra Pradesh and Ors. (2010) WBLR 148.

Mr Banerjee, counsel for Girija Pathi, the eighth Respondent, has submitted as follows. In a tender case facts pertaining to consideration of the bid are only relevant for cause of action. Since all relevant events happened in Madhya Pradesh, this Court has no jurisdiction to entertain the petition. The Petitioners'' case is that they are aggrieved by the selection of the eighth Respondent. Hence no event prior to the selection can form a part of the their cause of action. They obtained bank guarantee from Kolkata for their convenience. NCL did not require bank guarantees from the places of business of the bidders. Claim that extension of bid validity from Kolkata is a part of the cause of action is erroneous. NCL officials verifying certain documents in Kolkata did not have any role to play in the decision making process.

Mr Banerjee has relied on Union of India and Others Vs. Adani Exports Ltd. and Another, IFB Automotive Seating and System Ltd. and Others Vs. Union of India (UOI), and Ambica Industries Vs. Commissioner of Central Excise,

Mr Pal is right in saying that in view of the Supreme Court decision in Om Prakash Srivastava Vs. Union of India (UOI) and Another, a High Court having jurisdiction to entertain and decide an Article 226 petition cannot refuse to entertain the petition citing forum convenience. Forum convenience not a question falling for decision in any earlier case of the Supreme Court was the question for decision in Om Prakash, and hence the ratio of Om Prakash is binding.

This means that if a part of the cause of action has arisen within the territories in relation to which this Court exercises jurisdiction, then it will not be appropriate for this Court to refuse to entertain this petition citing forum convenience. A High Court possesses no discretion to refuse to exercise power to entertain a petition under Article 226 on the grounds of forum convenience. The forum convenience concept is not consistent with the cause of action concept in Clause (2) of Article 226 inserted for the benefit of the Petitioners, not of the Respondents, usually the Governments.

I hope I will not be considered unappreciative of the very impressive arguments of counsel for the parties and disrespectful to the formidable authorities cited by them, if I say that in view of my decision in Heiza Boilers that I gave after considering the Supreme Court decisions i State of Rajasthan and Others Vs. Swaika Properties and Another, , Oil and Natural Gas Commission Vs. Utpal Kumar Basu and Others, Kusum Ingots and Alloys Ltd. Vs. Union of India (UOI) and Another, and Om Prakash Srivastava Vs. Union of India (UOI) and Another, , for brevity''s sake, instead of dealing with the cited decisions separately, I can reiterate the principles summarized in Heiza Boilers.

The principles summarized by me in Heiza Boilers are as follows:

Facts which have no bearing on the lis or the dispute involved in the case do not give rise to a cause of action so as to confer territorial jurisdiction on a court. What is to be seen is whether a particular fact is of substance and can be said to be material, integral or essential part of the lis between the parties. If it is, it forms a part of the cause of action. If it is not, it does not form a part of the cause of action. In determining the question the substance of the matter, and not the form thereof, is to be considered. The answer to the question whether the service of a notice is an integral part of the cause of action within the meaning of Article 226(2) must depend upon the nature of the impugned order or action giving rise to the cause of action, and the test to ascertain this is whether for questioning the order or action it is necessary to plead the fact of service of the notice in the writ petition and prove it. Only those facts without the proof of which the action must fail are material and essential facts in the bundle of facts constituting the cause of action. Hence a fact without the proof of which a writ petition will not fail is not an integral part of the cause of action, and, accordingly, it cannot be said that a part of the cause of action has arisen at the place where the event concerning the fact has happened.

In view of the unexceptionable principles laid down by the Supreme Court and summarized in my decision in Heiza Boilers, I am unable to agree with Mr Pal that things done in Kolkata by the Petitioners for making their bid responsive and extending the bid validity period, and by NCL for verification of some documents forming part of the Petitioners'' bid and getting the bid validity extended by the Petitioners are parts of the cause of action on which this petition has been brought. Here the Petitioners'' cause of action is in NCL''s evident decision that their technical bid was not substantially responsive.

It is true that for succeeding in getting a Court order upsetting such decision the Petitioners are required to plead and prove that their bid was substantially responsive. But this does not mean that parts of the cause of action have arisen at the places wherefrom they had obtained or collected bank guarantee and solvency certificate, or extended the bid validity period, or at the situs of the fleet of equipment they own. NCL had not created their obligation to do all these from Kolkata. These all have nothing to do with the cause of action whose genesis was in the evaluation of the technical bid and not in anything preceding that. Evaluation was the first NCL action having the potentiality of a cause of action, and it actually gave rise to one.

A fact to become a part of the cause of action, essentially in an action, inaction or decision of the Respondent, must be related to a prior or subsequent action, inaction or decision of the Respondent forming integral part of the main action, inaction or decision and intended to affect the Petitioner. No voluntary or responsive or reactive action, inaction or decision of the Petitioner prior or subsequent to the action, inaction or decision of the Respondent giving rise to the cause of action, can form a part of the Petitioner''s cause of action, for his own action, inaction or decision cannot give him a cause of action against the Respondent. Here till evaluation of the technical bid NCL did not do anything to affect the Petitioners.

I am also unable to agree with Mr Pal that since NCL''s failure to communicate the reasons for holding that the Petitioners'' technical bid was not substantially responsive infringed their right under Article 14 and situs of the right is Kolkata, they are rightly asserting that a part of the cause of action has arisen in Kolkata.

It is true that in view of what was said in Star Enterprises and Others Vs. City and Industrial Development Corporation of Maharashtra Ltd. and Others, NCL was under an obligation to record the reasons for concluding that the Petitioners'' technical bid was not substantially responsive and to communicate them to the Petitioners.

But a part of the cause of action in NCL''s failure to communicate the reasons taking place in Madhya Pradesh, is not in the automatic consequences the Petitioners suffer in Kolkata, because even the fact of communication of the reasons to the Petitioners in Kolkata, without anything more done by NCL in Kolkata to bring about any consequence benefiting it and at once affecting the Petitioners, would not have formed a part of the cause of action that is in its decision taken in Madhya Pradesh that the Petitioners'' technical bid was not substantially responsive.

In my opinion, it is not correct to say that views such as the foregoing ones will make the provisions of Clause (2) of Article 226 otiose. In the name of giving them a liberal objective oriented purposive interpretation with a view to removing hardship to litigants and ensuring access to justice, a human right, things not forming parts of a cause of action cannot be treated as such. In my opinion, in this case no part of the cause of action has arisen within the territories in relation to which this Court exercises jurisdiction.

As to seats of CIL, NCL through its Desk Office and Allahabad Bank in Kolkata, a place within the territories in relation to which this Court exercises jurisdiction, it is evident that none of them has anything to do with the NCL decision that the Petitioners'' technical bid was not substantially responsive.

Neither any action, inaction or decision of any one of them affecting the Petitioners led to the NCL decision that the Petitioners'' technical bid was not substantially responsive, nor has any one of them taken any action or decision against the Petitioners in furtherance of the decision of NCL.

For these reasons, I hold that this Court has no jurisdiction to entertain this petition. It is, accordingly, dismissed. No costs. Certified xerox.