CENTER FOR DEVELOPMENT COMMUNICATION V. MUNICIPAL COMMISSIONER

SCA/8574/2014

AI Insights

The case involves the petitioner, Center for Development Communication, challenging the tender process initiated by the Vadodara Municipal Corporation (respondent) for the collection and transportation of solid waste. The petitioner had previously been awarded contracts for these services but did not participate in a new tender process in 2013. Subsequently, the respondent awarded contracts to other bidders, which led the petitioner to file this challenge. The court examined whether the respondent's actions violated the terms of the existing contract and whether the petitioner had a valid claim to contest the new tender process.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 726719 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 07-08-2014
• Assessment Year: misc
• Other Referred Cases: State of Orissa and Others vs. Mesco Steels Limited and Another, HMT Ltd. Represented by its Dy. General Manager (HRM) and Another vs. Mudappa and Others, Behram Khurshid Pesikaka vs. State of Bombay, Basheshar Nath vs. Commissioner of Income-Tax, Delhi and Rajasthan and Another, Olga Tellis and Others vs. Bombay Municipal Corporation and Others, Vayyapuri Kuppusami and Others vs. State of Maharashtra and others, Sanjay Kumar Shukla vs. Bharat Petroleum Corporation Limited and Others, Raunaq International Ltd. vs. I.V.R. Construction Ltd
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: NIRAL MEHTA; RR MARSHALL; SHALIN MEHTA
• Assessee Lawyers: PERCY KAVINA; KEDAR BINIWALE
• Keywords: Contract Termination; Permanent injunction; Public interest; Tender process; Solid waste collection
• Section: 61

Judgement Text

"C/SCA/8574/2014 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 8574 of 2014 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE A.G.URAIZEE ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ CENTER FOR DEVELOPMENT COMMUNICATION....Petitioner(s) Versus MUNICIPAL COMMISSIONER & 4....Respondent(s) ================================================================ Appearance: MR PERCY KAVINA, SENIOR COUNSEL WITH MR KEDAR B BINIWALE, ADVOCATE for the Petitioner(s) No. 1 MR NIRAL R MEHTA, ADVOCATE for the Respondent(s) No. 1 - 3 MR RR MARSHALL, SENIOR COUNSEL WITH MR VILAV K BHATIA, ADVOCATE for the Respondent(s) No. 5 MR SHALIN MEHTA, SENIOR COUNSEL WITH MR KSHITIJ P VAKIL, ADVOCATE for the Respondent(s) No. 4 =========================================================== Page 1 of 30 C/SCA/8574/2014 JUDGMENT CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE A.G.URAIZEE Date : 07/08/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. The petitioner herein has challenged the the tender process initiated by the respondent Corporation by way of public notice dated 16.08.2013 and has prayed for a direction granting permanent injunction in favour of the petitioner restraining the respondent from acting upon the resolutions dated 04.03.2014 passed by the Standing Committee of respondent no. 3. The petitioner has also sought for a dirction granting permanent injunction in favour of the petitioner restraining the respondents from terminating the contract executed in favour of the petitioner, thereby awarding the petitioner work of collecting and transporting solid waste from the all four zones of Vadodara City. The petitioner further has sought for quashing and setting aside the work orders issued by Vadodara Municipal Corporation pursuant to tender dated 16.08.2013. 2. The facts of the case as laid down in the petition in a nutshell could be set out as under: 2.1 Respondent no. 1 issued a public notice on 10.07.2010 inviting tender for collection and transportation of solid waste from door/gate for all the four zones of Vadodara city. The petitioner was awarded work order for South and West zones in September 2010 and thereafter for East and North zones in Page 2 of 30 C/SCA/8574/2014 JUDGMENT the year Jan 2011. Thereafter in the year 2013, respondent no. 2 issued a public notice inviting tender for the work of collection of solid waste from door/gate and transportation and disposal of the same for all the four zones. The petitioner did not participate in the said tender. The rates quoted by the bidders in tender dated 16.08.2013 were almost double than the rate at which the petitioner was executing the contract and therefore no actions were taken by the respondents in respect to the new tender. 2.2 Thereafter in November 2013 and February 2014 the contract of the petitioner was renewed for another year. However, on 04.03.2014, a communication was issued by respondent no. 2 informing the petitioner that the standing committee by its resolution no. 781 and 782 resolved that the work of collection of waste from south zone and west zone be allotted to respondents no. 4 & 5 respectively. The rates agreed by the respondents no. 4 & 5 are higher than the rate at which the petitioner is executing the contract. 2.3 Being aggrieved by the said decision, the petitioner has approached this Court by way of the present petition. 3. Mr. P.C. Kavina, learned Senior Counsel appearing with Mr. Kedar Biniwale, learned advocate for the petitioner submitted that the action of the respondent Corporation in inviting fresh tender is high handed and with ulterior motive and in violation of principles of natural justice. He has drawn the attention of this Court to the tender notice dated 16.08.2013 and submitted that the respondent Corporation had no right to issue fresh tenders during the pendency of the Page 3 of 30 C/SCA/8574/2014 JUDGMENT current contract without giving any valid reason when in fact the rates quoted by the petitioner in the year 2010 were quoted for a period of five years and when the rates quoted by the petitioner were much lower than the rates on which the tender is awarded to respondents no. 4 & 5. He submitted that the petitioner’s term of five years is coming to an end only in the next 18 months. 3.1 Mr. Kavina submitted that no steps were taken by the Corporation for almost six months pursuant to the issuance of fresh tender. He submitted that the invoices raised by the petitioner in the month of May were also honoured and payment was made and that this shows that the petitioner’s contract was still continued. He contended that the petitioner is inter alia challenging the validity of the action of initiating a fresh tender process while the contract in favour of the petitioner was current/in continuity. He submitted that in this process, the facts and circumstances existing on the day when the process was initiated have to be seen and not the events which followed thereafter. 3.2 Mr. Kavina contended that the two communications of the petitioner are being misconstrued as acceptance of termination of waiver. He contended that this interpretation is wrong for four reasons : (I) that since there was no termination of the petitioner’s contract any legal challenge would have been premature. If there was a chance that the petitioner’s challenge in court could be characterized as premature, the petitioner can Page 4 of 30 C/SCA/8574/2014 JUDGMENT never be said to have agreed to the termination of its contract; (II) the other test would be to question whether, in the absence of a termination of contract, would the petitioner not be open to a charge of abandonment of work, inviting penal consequences. If that be so, the respondents cannot rely upon the petitioner’s communications. (III) There can never be a waiver of the right not to be treated fairly. In no manner of doubt, the right not to be treated unfairly and to be protected from arbitrary action by ‘State’ can never be waived. (IV) The petitioner has explained in what circumstances the letter of 24.03.2014 was written by the petitioner and the representation on the basis of which it was written. These uncontroverted facts established the correctness of the petitioner’s submission. 3.3 Mr. Kavina submitted that after the admission of the present petition, the petitioner has diligently and efficiently carried out the work of the contract and the respondents have not shown further cause as to why the petition should not be allowed. He has drawn the attention of this Court to the communications dated 06.09.2013 and 24.03.2014 addressed by the petitioner and submitted that in fact the petitioner was shocked when two letters dated 04.03.2014 which seems to be misprinted as 04.03.2012 were served upon the petitioner on 07.03.2014 and that in these letters, the petitioner was informed that the standing committee, by its resolution no. Page 5 of 30 C/SCA/8574/2014 JUDGMENT 781 and 782 had decided to allot the work of collection of waste from south zone and west zone to respondents no. 4 & 5. He submitted that however since no further details were provided, the petitioner inferred that respondents no. 4 & 5 in a private negotiation had lowered their bids below the price at which the petitioner was executing the contract and therefore immediately after receipt of the aforementioned letters, the petitioner replied stating that the petitioner is ready to hand over the work to the new contractors. 3.4 Mr. Kavina has taken this Court to the definition of decree nisi which is synonymous to rule nisi and the same is extracted hereunder: “decree nisi - A court’s decree that will become absolute unless the adversely affected party shows the court, within a specified time, why it should be set aside.“ 3.5 Mr. Kavina submitted that no further pleadings are filed on the subject and therefore the impugned communications are required to be set aside. He submitted that in view of the aforesaid definition, the order dated 07.07.2014 is required to be confirmed. 3.6 In support of his submissions, Mr. Kavina has relied upon the following decisions: (a) State of Orissa and Others vs. Mesco Steels Limited and Another reported in (2013) 4 SCC 340, more particularly paras 18, 19 & 20 and the same are extracted as under: Page 6 of 30 C/SCA/8574/2014 JUDGMENT “18. The writ petition, as already noticed above, was directed against a communication that had emanated from the office of Director of Mines and brought forward certain factual aspects relevant to the question whether a lease deed could be immediately executed in favour of the respondent- company. A careful reading of the said communication would show that it was issued in pursuance of a letter dated 12th January, 2006 from the Joint Secretary, Government of Orissa to the Director of Mines and another letter dated 29th August, 2006. By the former letter the Joint Secretary to the Government had instructed the Director of Mines to take action pursuant to certain directions issued by the Chief Minister of Orissa. This included making a real assessment of the requirement of respondent-company and permitting execution of a lease deed subject to clearance of the Ministry of Environment and Forest, Government of India. The instructions issued to the Director of Mines also required him to resume the excess area for reallocation of the same to other deserving parties. The Director of Mines had responded to the said communication and assessed the mineral deposits in the area by reference to maps and surveys and made a recommendation back to the State Government. 19. It is obvious from a conjoint reading of letter dated 12th January, 2006 and communication dated 19th September, 2006 sent by the Director of Mines in response thereto that a final decision on the subject had yet to be taken by the Government, no matter the Government may have provisionally decided to follow the line of action indicated in its communication dated 12th January, 2006 issued under the signature of the Joint Secretary, Department of Steel and Mines. It is noteworthy that there was no challenge to the communication dated 12th January, 2006 before the High Court nor was any material placed before us to suggest that any final decision was ever taken by the Government on the question of deduction of the area granted in favour of the respondent so as to Page 7 of 30 C/SCA/8574/2014 JUDGMENT render the process of issue of show cause notice for hearing the respondent-company an exercise in futility. 20. On the contrary, the issue of the show cause notice setting out the reasons that impelled the Government to claim resumption of a part of the proposed lease area from the respondent-company clearly suggested that the entire process leading up to the issue of the show cause notice was tentative and no final decision on the subject had been taken at any level. It is only after the Government provisionally decided to resume the area in part or full that a show cause notice could have been issued. To put the matter beyond any pale of controversy, Mr. Lalit made an unequivocal statement at the bar on behalf of the State Government that no final decision regarding resumption of any part of the lease area has been taken by the State Government so far and all that had transpired till date must necessarily be taken as provisional. Such being the case the High Court was in error in proceeding on an assumption that a final decision had been taken and in quashing what was no more than an inter-departmental communication constituting at best a step in the process of taking a final decision by the Government. The writ petition in that view was pre- mature and ought to have been disposed of as such. Our answer to question No.1 is accordingly in the affirmative.” (b) HMT Ltd. Represented by its Dy. General Manager (HRM) and Another vs. Mudappa and Others reported in (2007) 9 SCC 768, more particularly paras 16, 19 & 21 and the same are extracted as under: “16. Having heard the learned counsel for the parties, in our opinion, the High Court was not right in quashing the notification issued under the Act, particularly, when it was a preliminary notification reflecting the intention of the State to acquire land for public purpose, i.e. for the purpose Page 8 of 30 C/SCA/8574/2014 JUDGMENT of developing industry. It is, no doubt, true that the land bearing Survey No. 113/3 comprises of 2 acres, 37 gunthas and the respondents are the owners thereof. It is equally true that by notification dated June 29, 1978, 1 acre, 38 gunthas had been acquired and award was passed in respect of the said area. It is also correct that instead of acquiring and taking over possession of 1 acre, 38 gunthas, the appellants took over possession of the entire land of Survey No. 113/3 admeasuring 2 acres, 37 gunthas thereby illegally and unauthorisedly taking possession of 0 acre, 39 gunthas. Obviously, therefore, it was open to the owners to make complaint and also to take appropriate proceedings as they were illegally deprived of ownership and possession of 39 gunthas of land. 19. In our considered view, however, this approach is neither legal nor permissible. Passing of a decree by a competent court is one thing and exercise of statutory power by the authority is altogether a different thing. It is possible in a given case to come to a conclusion on the basis of evidence produced and materials placed on record to conclude that the action has been taken mala fide or for a collateral purpose or in colourable exercise of power. But, in our opinion, issuance of preliminary notification after a decree by a court of law would not ipso facto make it vulnerable and exercise of power mala fide. To us, therefore, the authorities were right in raising a preliminary objection that the petition was premature as by issuance of notification under sub- section (1) of Section 28 of the Act, an intention was declared by the State to acquire the land for public purpose i.e. for developing industry. 21. The scheme of Section 28 is thus similar to the scheme of acquisition of land under the Land Acquisition Act, 1894 under which such preliminary notification is issued, opportunity of being heard is afforded to the persons interested in the land and only thereafter final notification can be issued. At the stage of raising objections against acquisition, it is open to the respondents herein to Page 9 of 30 C/SCA/8574/2014 JUDGMENT raise all contentions. In spite of such objections, if final notification is issued by the State, it is open to them to take appropriate proceedings or to invoke jurisdiction of the High Court under Article 226 of the Constitution. Unfortunately, however, the High Court entertained the petition and quashed the preliminary notification overruling well-founded objection as to maintainability of petition raised by the State and the appellants herein.” (c ) Behram Khurshid Pesikaka vs. State of Bombay reported in AIR 1955 SC 123, more particularly para 52 which is reproduced as under: “52. Again, we are not able to subscribe to the view that in a criminal prosecution it is open to an accused person to waive his constitutional right and get convicted. A reference to Cooley's Constitutional Limitations. Vol. I, p. 371, makes the proposition clear. Therein the learned professor says that a party may consent to waive rights of property, but the trial and punishment for public offences are not within the province of individual consent or agreement. In our opinion, the doctrine of waiver enunciated by some American Judges in construing the American Constitution cannot be introduced in our Constitution without a fuller discussion of the matter. No inference in deciding the case should have been raised on the basis of such a theory. The learned Attorney-General when questioned about the doctrine did not seem to be very enthusiastic about it. Without finally expressing an opinion on this question we are not for the moment convinced that this theory has any relevancy in construing the fundamental rights conferred by Part III of our Constitution. We think that the rights described as fundamental rights are a necessary consequence of the declaration in the preamble that the people of Indian have solemnly resolved to constitute India into a sovereign democratic republic and to secure to all its citizens justice, social, economic and political; liberty of thought, expression, belief, faith and worship; Page 10 of 30 C/SCA/8574/2014 JUDGMENT equality of status and of opportunity. These fundamental rights have not been put in the Constitution merely for individual benefit, though ultimately they come into operation in considering individual rights. They have been put there as a matter of public policy and the doctrine of waiver can have no application to provisions of law which have been enacted as a matter of constitutional policy. Reference to some of the articles, inter alia, articles 15(1), 20, 21 makes the proposition quite plain. A citizen cannot get discrimination by telling the State \"You can discriminate\", or get convicted by waiving the protection given under articles 20 and 21.” (d) Basheshar Nath vs. Commissioner of Income-Tax, Delhi and Rajasthan and Another reported in AIR 1959 SC 149, more particularly para 14 which is reproduced hereunder: “14. Such being the true intent and effect of Art. 14 the question arises, can a breach of the obligation imposed on the State be waived by any person ? In the face of such an unequivocal admonition administered by the Constitution, which is the supreme law of the land, is it open to the State to disobey the constitutional mandate merely because 'a person tells the State that it may do so ? If the Constitution asks the State as to why the State did not carry out its behest, will it be any answer for the State to make that \" true, you directed me not to deny any person equality before the law, but this person said that I could do so, for he had no objection to my doing it.\" I do not think the State will be in any better position than the positions in which Adam found himself when God asked him as to why he had eaten the forbidden fruit and the State's above answer will be as futile as was that of Adam who pleaded that the woman had tempted him and so he ate the forbidden fruit. It seems to us absolutely clear, on the language of Art. 14 that it is a command issued by the Constitution to the State as a matter of public Page 11 of 30 C/SCA/8574/2014 JUDGMENT policy with a view to implement its object of ensuring the equality of status and opportunity which every welfare State, such as India, is by her Constitution expected to do and no person can, by any act or conduct, relieve the State of the solemn obligation imposed on it by the Constitution. What. ever breach of other fundamental right a person or a citizen may or may not waive, he cannot certainly give up or waive a breach of the fundamental right that is indirectly conferred on him by this constitutional mandate directed to the State.” (e) Olga Tellis and Others vs. Bombay Municipal Corporation and Others and Vayyapuri Kuppusami and Others vs. State of Maharashtra and others reported in (1985) 3 SCC 545, wherein para 28 reads as under: It is not possible to accept the contention that the petitioners are estopped from setting up their fundamental rights as a defence to the demolition of the huts put up by them on pavements or parts of public roads. There can be no estoppel against the Constitution. The Constitution is not only the paramount law of the land but, it is the source and substance of all laws. Its provisions are conceived in public interest and are intended to serve a public purpose. The doctrine of estoppel is based on the principle that consistency in word and action imparts certainty and honesty to human affairs. If a person makes a representation to another, on the faith of which the latter acts to his prejudice, the former cannot resile from the representation made by him. He must make it good. This principle can have no application to representations made regarding the assertion or enforcement of fundamental rights. For example, the concession made by a person that he does not possess and would not exercise his right to free speech and expression or the right to move freely throughout the territory of India cannot deprive him of those constitutional rights, any more than a concession that a person has no right of personal liberty can justify his detention contrary to the terms of Article Page 12 of 30 C/SCA/8574/2014 JUDGMENT 22 of the Constitution. Fundamental rights are undoubtedly conferred by the Constitution upon individuals which have to be asserted and enforced by them, if those rights are violated. But, the high purpose which the Constitution seeks to achieve by conferment of fundamental rights is not only to benefit individuals but to secure the larger interests of the community. The Preamble of the Constitution says that India is a democratic Republic. It is in order to fulfil the promise of the Preamble that fundamental rights are conferred by the Constitution, some on citizens like those guaranteed by Articles 15,16,19,21 and 29, and some on citizens and non- citizens alike, like those guaranteed by Articles 78 14,21,22 and 25 of the Constitution. No individual can barter away the freedoms conferred upon him by the Constitution. A concession made by him in a proceeding, whether under a mistake of law or otherwise, that he does not possess or will not enforce any particular fundamental right, cannot create an estoppel against him in that or any subsequent proceeding. Such a concession, if enforced, would defeat the purpose of the Constitution. Were the argument of estoppel valid, an all-powerful state could easily tempt an individual to forego his precious personal freedoms on promise of transitory, immediate benefits. Therefore, notwithstanding the fact that the petitioners had conceded in the Bombay High Court that they have no fundamental right to construct hutments on pavements and that they will not object to their demolition after October 15, 1981, they are entitled to assert that any such action on the part of public authorities will be in violation of their fundamental rights. How far the argument regarding the existence and scope of the right claimed by the petitioners is well- founded is another matter. But, the argument has to be examined despite the concession.” 4. Mr. RR Marshall, learned Senior Counsel appearing with Mr. Vilav Bhatia for respondent no. 5 submitted that the petition filed by the petitioner is liable to be dismissed as the Page 13 of 30 C/SCA/8574/2014 JUDGMENT petitioner is not entitled to any relief sought for in the petition. He submitted that after renunciation of contract and relinquishing his rights, the petitioner is estopped from filing the present petition. 4.1 Mr. Marshall submitted that there is delay and latches on the part of the petitioner. He submitted that the tender notice was dated 06.08.2013 whereas the petition is filed on 07.06.2014 which is after almost ten months. He submitted that the standing committee resolution was passed on 04.03.2014 and received by him on 07.03.2014. He submitted that the petitioner remained silent for almost 100 days and approached this Court only on 07.06.2014 by way of the present petition which is nothing but a luxury petition. 4.2 Mr. Marshall contended that it is pertinent to note that pursuant to the express admission made by the petitioner about his inability to procure required number of men and materials, the work order was issued to respondents no. 4 & 5 and the petitioner was intimated about the same on 07.03.2014. He submitted that the petitioner approached this court only on 07.06.2014 and during the interim period of 90 days, respondent no. 5 made huge investments for the contract and purchased vehicles and employed manpower. He submitted that respondent no. 5 has invested more than Rs. 4 crores towards purchasing new vehicles, two wheelers for supervisors, employed men and procured materials, obtained accommodation for supervisors on rental basis etc. He submitted that therefore the petitioner cannot be allowed to challenge the tender and the termination of contract notice after a delay of 90 days as doing so will cause irreparable loss Page 14 of 30 C/SCA/8574/2014 JUDGMENT to respondent no. 5. 4.3 Mr. Marshall contended that the petitioner has not participated in the tender process and therefore in the facts and circumstances of the case, he is not entitled for any relief sought for in the petition. He has drawn the attention of this Court to the letters dated 26.08.2013 and 06.09.2013 addressed by the petitioners and submitted that the petitioner himself expressed his inability and inefficiency in rendering the service. He submitted that the petitioner assigned the reasons of steep escalation in prices of diesel, labour, wholesale price index and requested to make payment at the enhanced rate and therefore the petitioner cannot claim that the respondent Corporation has wrongly awarded the contract at a price higher than the one on which the petitioner was working. 4.4 Mr. Marshall has drawn the attention of this Court to clause 61 of the contract and submitted that going by the communications dated 04.03.2014, it is impliedly very clear that the contention of the petitioner that clause 61 of the contract is not complied with cannot be accepted in asmuch as the said contention is diluted by way of substantial compliance and the petitioner was made aware by way of the said communications that the tender contract in which the petitioner had not even taken part was awarded to some other bidder. 4.5 Mr. Marshall further contended that in fact there is suppression of material of facts on the part of the petitioner. He submitted that in fact respondent no. 4 is a joint venture Page 15 of 30 C/SCA/8574/2014 JUDGMENT company promoted by IL and FS Environmental Infrastructure and Services Ltd as well as the petitioner company. He submitted that the petitioner and respondent no. 4 have jointed hands together to align the business interest of the corporate with that of the development initiatives of the petitioner’s trust. He submitted that the trust secretary of the petitioner trust is also the Managing Director of respondent no. 4. He submitted that just to safeguard the business interest of the joint venture between the petitioner and respondent no. 4 and to continue the existing contract, abusing the process of law, the petitioner did not participate in the tender process and instead respondent no. 4 participated in the tender process in all the four zones and therefore in those circumstances the petitioner expressed his consent for awarding the contract and to issue work order in the tender process. 4.6 In support of his submissions, Mr. Marshall relied upon the decision of the Apex Court in the case of Sanjay Kumar Shukla vs. Bharat Petroleum Corporation Limited and Others reported in (2104) 3 SCC 493 wherein in para 16 the Apex Court has relied upon another decision of a co- ordinate bench in the case of Raunaq International Ltd. vs. I.V.R. Construction Ltd reported in (1999) 1 SCC 492. The relevant paragraphs of the decision in the case of Raunaq International Ltd (supra) read as under: “9. The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are of paramount importance are commercial considerations. These would be : Page 16 of 30 C/SCA/8574/2014 JUDGMENT (1) the price at which the other side is willing to do the work; (2) whether the goods or services offered are of the requisite specifications; (3) whether the person tendering has the ability to deliver the goods or services as per specifications. When large works contracts involving engagement of substantial manpower or requiring specific skills are to be offered, the financial ability of the tenderer to fulfil the requirements of the job is also important; (4) the ability of the tenderer to deliver goods or services or to do the work of the requisite standard and quality; (5) past experience of the tenderer, and whether he has successfully completed similar work earlier; (6) time which will be taken to deliver the goods or services; and often (7) the ability of the tenderer to take follow up action, rectify defects or to give post contract services. Even when the State or a public body enters into a commercial transaction, considerations which would prevail in its decision to award the contract to a given party would be the same. However, because the State or a public body or an agency of the State enters into such a contract, there could be, in a given case, an element of public law or public interest involved even in such a commercial transaction. 10. What are these elements of public interest ? (1) Public money would be expended for the purposes of the contract; (2) The goods or services which are being commissioned could be for a public purpose, such as, construction of roads, public buildings, power plants or other public utilities. (3) The public would be directly interested in the timely fulfilment of the contract so that the services become available to the public expeditiously. (4) The public would also be interested in the quality of the work undertaken or goods supplied by the tenderer. Poor quality of Page 17 of 30 C/SCA/8574/2014 JUDGMENT work or goods can lead to tremendous public hardship and substantial financial outlay either in correcting mistakes or in rectifying defects or even at times in re-doing the entire work - thus involving larger outlays or public money and delaying the availability of services, facilities or goods. e.g. A delay in commissioning a power project, as in the present case, could lead to power shortages, retardation of industrial development, hardship to the general public and substantial cost escalation. 11. When a writ petition is filed in the High court challenging the award of a contract by a public authority or the State, the court must be satisfied that there is some element of public interest involved in entertaining such a petition. If, for example, the dispute is purely between two tenderers, the court must be very careful to see if there is any element of public interest involved in the litigation. A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. It is important to bear in mind that by court intervention, the proposed project may be considerably delayed thus escalating the cost far more than any saving which the court Would ultimately effect in public money by deciding the dispute in favour of one tenderer or the other tenderer. Therefore, unless the court is satisfied that there is a substantial amount of public interest, or the transaction is entered into mala fide. the court should not intervene under Article 226 in disputes between two rival tenderers. 12. When a petition is filed as a public interest litigation challenging the award of a contract by the State or any public body to a particular tenderer, the court must satisfy itself that party which has brought the litigation is litigating bona fide for public good. The public interest litigation should not be merely a cloak for attaining private ends of a third party or of the party bringing the petition. The court can examine the previous record of public service rendered by the organisation bringing public interest litigation. Even when a public interest litigation is Page 18 of 30 C/SCA/8574/2014 JUDGMENT entertained the court must be careful to weigh conflicting public interests before intervening. Intervention by the court may ultimately result in delay in the execution of the project The obvious: consequence of such delay is price escalation. If any re-tendering is prescribed, cost of the project can escalate substantially. What is more important, ultimately the public would have to pay a much higher price in the form of delay in the commissioning of the project and the consequent delay in the contemplated public service becoming available to the public. If it is a power project which is thus delayed, the public may lose substantially because of shortage in electric supply and the consequent obstruction in industrial development. If the project is for the construction of a road, or an irrigation canal, the delay in transportation facility becoming available or the delay in water supply for agriculture being available, can be a substantial set back to the country's economic development. Where the decision has been taken bona fide and a choice has been exercised on legitimate considerations and not arbitrarily, there is no reason why the court should entertain a petition under Article 226.” 5. Mr. Niral Mehta, learned advocate appearing for respondents no. 1 to 3 – Corporation submitted that the present petition deserves to be dismissed on the ground of principles of waiver and/or acquiescence because at the time of issuance of new tender dated 16.08.2013, the petitioner was well aware about the same and at that point of time no objection, protest and/or challenge was made. He submitted that vide letter dated 06.09.2013, the petitioner has not only requested for increase in price but also shown concern about the new players proposed to be introduced by way of tender dated 16.08.2013. 5.1 Mr. Mehta submitted that the present petition may be Page 19 of 30 C/SCA/8574/2014 JUDGMENT dismissed on the ground of principle of estoppel because the respondents vide communication dated 04.03.2014 intimated the petitioner that the work order for west zone came to be allotted to respondent no. 5 and thereby directed the petitioner to close down his services gradually. He submitted that at this stage the petitioner did not make any grievance and in fact vide letter dated 24.03.2014 agreed to withdraw the services. 5.2 Mr. Mehta further submitted that the present petition may be dismissed even on the ground of delay and latches as well as on the ground of sheer abuse of process of law because the petitioner was well aware of the tender dated 16.08.2013, the very fact which can be fortified from various communications dated 06.09.2013, 04.03.2014 and 24.03.2014. He submitted that in spite of the same, the petition is filed on 19.06.2014 and thus the petitioner has approached this Court after three months by which time the entire tender process and allotment of work to respondent no. 5 was completed. 5.3 Mr. Mehta submitted that the petitioner has not challenged the communication dated 04.03.2014 whereby the termination of agreement was already conveyed to the petitioner and the petitioner vide his letter dated 24.03.2014 accepted the same and now at a belated stage the petitioner cannot seek directions to restrain the respondent Corporation from terminating the contract. 5.4 Mr. Mehta has drawn the attention of this Court to clause 42 of the original tender contract and submitted that Page 20 of 30 C/SCA/8574/2014 JUDGMENT the petitioner cannot claim to work on exclusive basis because as per clause 42, the respondent – Corporation has reserved its right to engage more than one party to work in any of the zones. He submitted that therefore if the prayers made in the petition are granted would amount to alter clause 42 of the agreement. 5.5 Mr. Mehta has drawn the attention to the original records of the tender which were produced during the course of argument and submitted that it is clear that the price bids were not referred to in the two letters addressed to the petitioner but were disclosed in detail by the statutory committee of the Corporation. He submitted that while exercising jurisdiction under section 226 of the Constitution of India, the Court may evaluate the evidence on record in its entirety. 6. Mr. Shalin Mehta, learned Senior Counsel appearing for respondent no. 4 contended that respondent no. 4 has in fact invested around 15 crores in the work process pursuant to the award of contract and that though respondent no. 4 was L1 for three out of four zones for which work order was issued for south zone only. He submitted that the respondent Corporation has in fact favoured respondent no. 5 and allotted only one zone of the three zones for which the bid of respondent no .4 was lowest. 6.1 Mr. Mehta submitted that the petitioner vide letter dated 24.03.2014 had given consent to the respondent Corporation for awarding the contract to respondents no. 4 & 5 and thus had relinquished its right to challenge the same. He Page 21 of 30 C/SCA/8574/2014 JUDGMENT submitted that the petition is required to be dismissed. 7. This Court while admitting the matter on 07.07.2014 had granted stay of the implementation and operation of order dated 04.03.2014. The said order was passed prima facie pursuant to the petitioner’s contention of breach of clause 61 of the tender conditions. However, as a result of hearing learned counsels for the parties finally today and going by the evidence on record in depth we find that there are certain points coming up in the present petition which require our consideration and which are beyond alleged breach of clause 61 of the tender conditions. 7.1 The first point which emerges for the consideration of this Court is that whether there is a breach of clause 61 of the contract condition. In order to come to a rational conclusion with regard to the said issue, we think it fit to extract clause 61 of the tender conditions as well as the two communications dated 06.09.2013 addressed by the petitioner to the respondent Corporation and the same is reproduced hereunder: “61. It shall be open to Vadodara Municipal Corporation to terminate the tender even in the middle of the contract after issuing 30 days’ notice if the Corporation finds that the work carried out by the Contractor during the contract period is bad or for any other reason is not satisfactory and/or the said work is not required any more. Further, in the event of unsatisfactory work, it shall also be open to the Corporation to to proceed against the contractor even to the extent of blacklisting the contractor and no dispute shall be entertained in this regard and the same shall be acceptable to the Contractor as well.” Page 22 of 30 C/SCA/8574/2014 JUDGMENT Letter dated 06.09.2013 “... This is to bring to your notice that Centre for Development Communication (the “CDC”) had been allotted the tender to provide the service of door to door collection of solid waste and its transportation to the disposal site in the city of Vadodara (the “C&T work”) by Vadodara Municipal Corporation (the “VMC”). CDC would like to make the following representations with regards to the current execution of the said C&T work for your kind consideration: 1. In the prevalent economic scenario, in addition to the periodic revision of minimum wages, there has also been a steep escalation in the prices of diesel (Refer : enclosed Annexure – I: Indicative variation in the fuel process and minimum wages from 2009-10 onwards). The cost incurred in the execution of the said C&T work constitutes majorly of 30% fuel charges and 30% wages. In such scenario, the cost input has increased substantially as against the constant tipping fee paid to the said CDC and therefore sustenance is at a crucial juncture. We request you to consider the enclosed annexure II: price escalation formula as against the fixed price escalation. 2. Currently, VMC has provided only one transfer station at Atladhara for the purpose of dumping the solid waste collected from all the four zones. As such the said C&T work suffers on account of disrupted collection and transportation schedules int eh North and East zones of the city. Despite deploying over 40% more vehicles than required as per the said Tender, CDC is finding it difficult to provide efficient C&T work in the aforementioned zones due to the long distance between the transfer station and collection points. CDC has on several occasions humbly requested the VMC to Page 23 of 30 C/SCA/8574/2014 JUDGMENT provide at least one transfer station in each zone. (Refer:Annexure III, IV, V, VI and VII: List of correspondences and Annexure VIII: Photographs of the current condition of the transfer station. Therefore, we request you to look into the matter at the earliest. Also with reference to the recent invitation of bids to tender notice no. 447/2013-14 dated August 16, 2013 issued by the said VMC for the said C&T work in Vadodara, we understand and appreciate VMC’s interest in bringing forth a new player on board than renew the agreement with CDC. In this regard, CDC would like to express that the aforementioned concerns mentioned in point 1 and point 2 are not subjective to CDC only but would continue to be areas of concern with any other player as well. Therefore, CDC assures you that the timely resolution of the aforementioned concerns is the only way forward and would ensure efficient and effective C&T work in Vadodara and would together be able to make it a cleaner city. ...” Letter dated 24.03.2014 “... With reference to the aforementioned letter correspondence received by us, regarding the continuation of the C & T work in the said zones till such time that the same is taken over by the new tender awardees or to voluntarily discontinue the same. In this regard, we hereby agree to withdraw our services rendered in the said zones in accordance with the terms agreed between CDC and VMC. Kindly provide us with the detailed timelines and schedule for discontinuation of the C & T work in the said zones as accordingly we need to channelize our resources. Page 24 of 30 C/SCA/8574/2014 JUDGMENT ... “ [Emphasis Supplied] 7.2 It is borne out that the petitioner was awarded contract for providing services in all the four zones but it was realized thereafter that the petitioner alone was not capable enough to cope up with more work particularly with the rates agreed upon by the petitioner as is evident from its letter dated 06.09.2013. It is the contention of the respondent Corporation that to render better services to the society at large it was decided to have zone wise contractor so that internal competition be benefited to the public at large. This is clear from the copies of the news paper articles published from time to time with regard to non effective solid waste management which are annexed to the reply filed by the respondent Corporation. 7.3 From the two letters of the petitioner, it is clear that as the petitioner failed to discharge his contractual obligations, the respondent Corporation after affording opportunity to the petitioner and considering the express admission made by the petitioner about his inability to procure required number of men and materials, proceeded to issue fresh tender notification dated 16.08.2013. The petitioner was aware of the resolution passed by the Standing Committee on various occasions. The petitioner had acquiesced his rights and the communications addressed by the petitioner shall clearly establish the petitioner’s express consent for termination of contract. The petitioner has expressed his difficulty of performance as well as impossibility of performance of the contract. Page 25 of 30 C/SCA/8574/2014 JUDGMENT 8. It is pertinent to be noted that an element of public interest is involved in the present contract and the Corporation has after issuance of tender notice, considered the successful bidder and issued work order dated 04.03.2014. Pursuant to the work order dated 04.03.2014, the petitioner has promised for waiver, relinquishment of his claim. Thus, in the case of abandonment of work by the petitioner and his acquiescence in this regard we do not find that clause 61 shall come in the way of the respondent Corporation. In fact vide letter dated 04.03.2014, it was made clear to the petitioner that its services in the concerned zones shall have to be discontinued gradually meaning thereby till new contractor takes charge of entire zone the petitioner will have to render its service so that the change of contractor would not create chaos and the public at large may not suffer. It is borne out that the payment of bill raised for the month of May 2014 was also made. Thus, the petitioner was continued till the month of May 2014 which means that the notice period of 30 days was also complied with. 9. The next issue which is required to be considered is whether there is delay in approaching this Court. The petitioner was aware about the issuance of tender notice dated 16.08.2013 during the course of the contract period. The petitioner did not object or protest to the same. The petitioner did not challenge the tender dated 16.08.2013 and its process at the threshold but in fact vide its letter dated 24.03.2014 agreed to withdraw its services from the concerned zones as and when new contractors start providing services. The petitioner did not participate in the new tender process. The petitioner did not challenge the work orders Page 26 of 30 C/SCA/8574/2014 JUDGMENT issued in favour of respondents no. 4 & 5. The petitioner did not challenge the resolution dated 04.03.2014 passed by the standing committee either before this Court or before any other forum. 9.1 The petitioner seems to have been informed about the discontinuation of the tender contract vide communication dated 07.03.2014 and this petition is filed on 07.06.2014 i.e. after three months by which the respondents no. 4 & 5 had been awarded the work contract and issued with the work order. No plausible explanation has been given by the petitioner for the delay in approaching this Court. The petitioner did not even challenge the tender notice for a period of almost ten months pursuant to its advertisement. There is definitely an inordinate delay in approaching this Court and when the stakes are high each single day is crucial. 10. The next aspect which is required to be delved by us is that whether respondents no. 4 & 5 shall be put to irreparable loss in case of any order in favour of the petitioner is granted by this Court. It is required to be borne in mind that the petitioner had given his consent to proceed with the new tender process and thereafter tender notification was issued on 16.08.2013. In response to the said tender notification, respondent no. 5 quoted his bid at the rate of Rs. 1137/- per metric ton for west and north zone only. Respondent no. 4 quoted Rs. 1151/- per metric ton for all the four zones of the respondent Corporation. The standing committee of the respondent Corporation passed a resolution to award contract at the rate of Rs. 950/- per metric ton to respondents no. 4 & Page 27 of 30 C/SCA/8574/2014 JUDGMENT 5. Pursuant to the letter dated 24.03.2014 issued by the petitioner mentioning withdrawal of his services, respondent no. 5 deposited Rs. 15,00,000/- towards security deposit and the agreement was executed on 26.03.2014. It appears that respondents no. 4 & 5 have invested heavily pursuant to the work order till the time the petition is filed and therefore any order in favour of the petitioner, who seems to have purposefully delayed filing this petition, shall definitely cause irreparable loss to respondents no. 4 & 5. 10.1 However, we do find that as respondent no. 4 participated in the tender process, the petitioner did not choose to participate in view of the fact that the petitioner and respondent no. 4 joined hands together to align business interest. On one hand the petitioner states that his contract is for RS. 559/- per metric ton in the year 2010 and on the other hand through its subsidiary the petitioner has quoted more than respondent no. 5. In fact as the work order has already been issued in faovur of respondent no. 4 in respect of north zone, the petitioner’s business interest is already safeguarded. 10.2 Nevertheless, the award of contracts in favour of respondents no. 4 & 5 as considered by the standing committee are reasonable and hence acceptable. The petitioner had also appreciated the efforts of the respondent Corporation in this regard. The contention of the petitioner is that the respondent Corporation awarded the contract to the petitioner in the month of September 2010 at the rate of Rs. 559/- per metric ton and despite admitting his inability and inefficiency, the petitioner requested the Corporation for enhancing the payment and had indicated variation in fuel Page 28 of 30 C/SCA/8574/2014 JUDGMENT prices, minimum wages and tipping fees from 2010 onwards and in these circumstances, we are of the opinion that the contracts awarded in favour of respondents no. 4 & 5 are reasonable and acceptable. 11. Mr. Kavina has canvassed the contention of principle of rule nisi. While admitting the petition, we had observed that the respondents no. 4 & 5 were awarded the contract by the respondent Corporation in violation of clause 61 of the tender conditions in spite of the fact that the rates quoted by them were higher. However, the said observations were prima facie and tentative. When the court finally hears a writ petition, it is duty bound to examine the documents placed on record and the conduct of the parties. In a case of writ petition under Article 226 of the Constitution of India, the Courts also have to bear in mind the loss likely to be caused to the respondents. In the present case the petitioner has filed the writ petition at a belated stage and in fact colluded with respondent no. 4 for safeguarding its interest. We do not find any reason for exercising extraordinary powers under Article 226 of the Constitution of India, as we are of the opinion that the petitioner is not entitled to claim for restraining orders which would otherwise result in granting injunction against discharging the statutory duties by the respondent Corporation as public interest is more important and shall prevail over the private and pecuniary interest of the petitioner. As a result of final hearing of the matter today, we are of the view that the respondent Corporation was justified in awarding the contracts to respondents no. 4 & 5. 12. For the foregoing reasons, petition is dismissed. Rule is Page 29 of 30 C/SCA/8574/2014 JUDGMENT discharged. Interim relief stands vacated. (K.S.JHAVERI, J.) (A.G.URAIZEE,J) divya Page 30 of 30 "