In W.P.(C) 6454/2022-DEL HC- Court will not interfere in tender matters even if procedural aberration or prejudice exists, as long as tender process was carried out bonafide and in public interest: Delhi HC Justice Manoj Kumar Ohri [29-04-2022]

Read Order: SANJAY YADAV Vs. NORTH DELHI MUNICIPAL CORPORATION 

Mansimran Kaur

New Delhi, April 30, 2022: While dealing with a writ petition assailing the allotment process of a parking site, the Delhi High Court has observed that tendering and cancellation of the initial tender by the respondent and the subsequent issuance of a corrigendum/addendum, cannot be said to have been arbitrary or unreasonable. 

The Bench of Justice Manoj Kumar Ohri referred to the judgments of the Apex Court in Jagdish Mandal v. State of Orissa and Others, Maa Binda Express Carrier and Another, Bharat Coking Coal Limited and Others v. AMR Dev Prabha and Others wherein the scope of judicial review in tender/contractual matters, while exercising extraordinary jurisdiction under Article 226 of the Constitution of India, has been indicated to be limited.

The present petition was preferred by the petitioner under Article 226 of the Constitution. The facts of the case that led to institution of the petition were that the a parking contractor (petitioner) and the respondent North Delhi Municipal Corporation  issued a notice inviting e- tender for licensing of various parking sites falling under its jurisdiction on advance payment of Monthly License Fee Basis. The parking site in question was at Timarpur. The last date for submission of bid was November 5, 2020. The bid was accompanied by a sum of Rs. 9, 45, 000 as security deposit. As per the terms and conditions of the NIT, the successful bidder was also required to submit 1 month advance license fee, 3 months security deposit and 4 months earnest money deposit, within 7 days of the receipt of Letter of Intent. 

Consequently, the petitioner submitted a bid of Rs. 36, 51,000. Almost after one year, the petitioner was declared as a successful bidder and the LOI was intimated to him by the respondent through an e-mail dated October 11, 2021 and The same was accepted by the petitioner through mail. The petitioner sought 5-6 months’ more time to deposit the balance amount of Rs.2,46,12,000 in terms of the NIT, after taking physical possession of the site. A provisional Allotment Letter was issued by the respondent with certain conditions and the physical possession of the parking site was handed over to the petitioner.

The cause of action arose from the point when the petitioner claimed that when he started operating the parking site, he was not allowed to use the entire parking area and was requested to use only 5,005 sq. m. by the association of local shopkeepers. Thereafter, the petitioner issued a letter dated December 22, 2021 to the respondent to look into the matter and resolve the issue. Even the officials of DDA told the petitioner not to use the area beyond 5,005 sq.m., for parking purposes and also communicated to the respondent that only 5,005 sq. m. of parking area was transferred to it, however, on inspection it had come to notice that excess area was being used at the site in an unauthorized manner. On being apprised of the same, the petitioner equested the respondent to take up the issue with the DDA and Traders Welfare Association.

It further emerged from the facts that thereafter that the DDA had handed over only 5,005 sq. m. area to the respondent for parking purposes. Later, the respondent, by a corrigendum/addendum had put the aforesaid parking site for re-tender. Aggrieved by the same, the petitioner had earlier approached the High Court through writ petition. However after perusal of letter dated April 18, 2022 furnished by the respondent at the time of hearing, the said petition was withdrawn with liberty to file a fresh petition also assailing the aforesaid letter.  

After considering the rival submissions of the parties, the Court observed that the issue was not just restricted to the failure of the petitioner to adhere to the payment terms of the provisional allotment letter as contended by the respondent, but was also concerning the respondent’s failure to handover the complete tendered parking area of 38,015.62 sq. m. to the petitioner.  As, after the site was handed over to the petitioner, he was prevented from operating the complete tendered area of 38,015.62 sq. m., and was restricted to a significantly reduced area of 5,005 sq. m.  Thus, the parking area tendered by the respondent in the first place was a mistake of fact from the side of the respondent. 

The question of law which was primarily to be dealt by this Court was whether or not the petitioner can prevent the respondent from re- tendering the parking site by inviting fresh bids on the plea of legitimate expectation. The answer was given by the Court in negative. It was observed by the Court that the petitioner itself contended that the act of the respondent in handing over a parking site was fraudulent and illegal, yet at the same time the petitioner was seeking allotment of the parking area in question along with the request of proportionate reduction in the security deposit that was required to be made as per the provisional letter dated November 11, 2021. 

Therefore, the Court submitted that once petitioner had assailed the allotment and presented his case for refusal of making deposits on the ground that the allotment was not enforceable, he couldn’t then simultaneously seek allotment of the parking site with amended terms and conditions through an order of the Court. 

It was further submitted that it was upon the respondent to allot the parking area in question to the petitioner or to re-tender the same. Since there was no communication of offer of concession by the respondent to the petitioner and indeed the respondent chose to re-tender the parking site, thus the petitioner by virtue of his right could not have demanded that the respondent be directed to allot him the parking site with reduced area on modified terms and conditions. 

It was further observed by this Court that the petitioner’s right to seek redressal of his legal injury, if any, due to respondent’s faulty actions in inviting tender for a parking site, which it did not fully own, as well as was incompetent to tender, and the right of the respondent to retender the site, were mutually exclusive. Additionally the Court opined that the respondent’s decision to re-tender the parking site was not flawed since the subject matter of tender was fundamentally changed. 

Further on the question of Judicial Review reliance was placed in a catena of decisions of the Top Court in Jagdish Mandal v. State of Orissa and Others, Maa Binda Express Carrier and Another, Bharat Coking Coal Limited and Others v. AMR Dev Prabha and Others. The proposition that was deduced in the aforesaid cases was that the scope of judicial review in tender/ contractual matters, while exercising extraordinary jurisdiction under Article 226 of the Constitution of India is confined and narrow. In the case Bharat Coking Coal Limited Case (supra) it was held that constitutional courts are concerned only with the lawfulness of a decision, and not its soundness.

As far as the question of malafide was concerned, the Court opined that the act of re- tendering the parking site by the respondent couldnot be stretched to an extent of casting doubts on the intention of the respondent. It was further submitted that the Court did not see any public interest involved in the instant case that would attract the Court’s intervention. 

On the aspect as to whether there was a concluded contract between the parties, this Court was  guided by the observations made by the Supreme Court in Rishi Kiran Logistics Private Limited , wherein the right of the respondent/Port Trust to cancel the initial tender process in absence of a concluded contract was recognized and it was held that in a given case even if it is held that there was a concluded contract, whether specific performance can be ordered or not would be a moot question in writ proceedings. The appellant took the calculated risk in not going to the civil court and choosing to invoke extraordinary jurisdiction of the High Court, which is also discretionary in nature.

 Further reference may also be made to South Delhi Municipal Corporation, wherein  the Supreme Court was in seisin of a case similar to the present case, in as much as the tender initially invited by the South Delhi Municipal Corporation was canceled  and a fresh tender issued. The Court observed that the decision of the Corporation to cancel the initial tender was not violative of Article 14 of the Constitution of India, as the same was not established to have been actuated by malafide in order to favor any particular bidder. 

Also  before concluding,  the Court  also noted that prima facie, the respondent appeared to have been under a “mistake of fact” regarding the parking area available with it at the time of inviting the initial tender, which was clarified only when the petitioner started operating at the parking site and faced resistance. For that reason, it was necessitated that the parking area be retendered. As such, the act of tendering and cancellation of the initial tender by the respondent, and the subsequent issuance of a corrigendum/addendum, could not be said to have been arbitrary or unreasonable. Moreover, in case the respondent had continued with the process of allotment under the initial tender, which suffered from a deficiency/error, the same would have eventually raised questions of legality and propriety.

Therefore, in view of the above observations and findings made in the precedents, the Court refused to entertain the writ petition by saying, “Notably, in exercise of power under Article 226 of the Constitution of India, the Court would not interfere in a tender/contractual matter even if a procedural aberration or prejudice to a tenderer is made out, as long as the award of contract and/or the tender process was carried out bonafide and in public interest. Accordingly, under writ jurisdiction, this Court is not inclined to entertain a disguised plea of specific performance.

However, liberty was granted to the petitioner to act upon the actions of the respondent and seek remedy by instituting a civil suit. The respondent was also directed to issue an appropriate NOC, to enable the petitioner to participate in the retender, if he so desires.