2020 (4) TMI 630 - HC - Indian Laws

Court upholds eligibility criteria in tender notification, dismissing challenge as reasonable and transparent.

M/s CP Bhatia and Associates Versus State of Chhattisgarh Through The Secretary, Managing Director Chhattisgarh State Marketing Corporation Limited (CSMCL)

The Court dismissed the writ petition challenging the eligibility criteria in a tender notification set by Respondent-CSMCL. The Court found the criteria ... Tender for appointment of Chartered Accountants Firms for assignment of internal audit of retail vending liquor shops - Eligibility criteria prescribed by Respondent-Chhattisgarh State Marketing Corporation Limited (CSMCL) to participate in tender proceedings - Clause 2.1 of the tender notification, which holds that firm of Chartered Accountants who have experience of audit for at least 2 years in last 3 financial years, of Government Organization/Govt. PSU in Liquor business are only eligible to apply as Internal Auditors of Shops - whether Clause 2.1 is arbitrary or it is inserted to extend undue benefit to any specific Firm of Chartered Accountants? HELD THAT:- Undisputedly, the tender notification is for engagement of the professionals i.e. Firm of Chartered Accountants for the purpose of internal audit of retail vending liquor shops. It is also not in dispute that prior to year 2017, the retail sale of liquor was not managed by the Respondent-CSMCL, but it is managed by the private entities/persons after obtaining yearly contract for sale of country made liquor and foreign liquor separately. The explanation offered by learned counsel for the Respondent-CSMCL that the reason for inserting Clause 2.1 in the tender notification on account of the new tax system has been brought into effect by introducing a new Act known as “Central Goods and Services Tax Act, 2017” cannot be ignored - The submission of learned counsel for the Petitioner that Clause 2.1 has been inserted only to extend benefit to the Chartered Accountants Firms already engaged by Respondent-CSMCL in the previous years also do not appear to be correct when the pleading made by Respondent-CSMCL in its reply to the writ petition and application for grant of interim relief that out of five zones, in three zones, new Chartered Accountants Firms participated and this pleading has not been reverted by learned counsel for the Petitioner. As the submission of learned counsel for the Respondent has not been controverted by the learned counsel for the Petitioner that in three zones, new Firms of Chartered Accountants have participated and out of which, one of the Firm is outside of the State of Chhattisgarh also shows that the argument raised by learned counsel for the Petitioner that eligibility criteria, particularly, Clause 2.1 of the tender notification is tailor-made to extend the benefit to existing Chartered Accountants Firms, is also not sustainable and hereby repelled. The allegation/ground raised by learned counsel for the Petitioner that Clause 2.1 of the tender notification is only to extend benefit to existing Chartered Accountants Firms do not stand - Petition dismissed. Issues Involved:1. Challenge to the eligibility criteria in the tender notification.2. Allegation of arbitrary and discriminatory actions by Respondent-CSMCL.3. Compliance with guidelines issued by the Central Vigilance Commission.4. Timing of the tender notification publication.5. Judicial review of tender conditions and decision-making process.Issue-wise Detailed Analysis:1. Challenge to the eligibility criteria in the tender notification:The Petitioner challenged the eligibility criteria prescribed by Respondent-CSMCL in Clause 2.1 of the tender notification, which required Chartered Accountants Firms to have at least 2 years of audit experience in the last 3 financial years with Government Organizations/Govt. PSUs in the liquor business. The Petitioner argued that this clause was framed to benefit firms previously engaged with Respondent-CSMCL and was arbitrary.2. Allegation of arbitrary and discriminatory actions by Respondent-CSMCL:The Petitioner contended that the eligibility criteria were designed to exclude certain firms and extend undue benefits to previously engaged firms, violating Articles 14 and 19 of the Constitution of India. The Petitioner also claimed that the cancellation of earlier tenders was a deliberate attempt to achieve hidden objectives.3. Compliance with guidelines issued by the Central Vigilance Commission:The Petitioner argued that the eligibility criteria violated the directions issued by the Central Vigilance Commission. However, Respondent-CSMCL defended the criteria, stating that it was essential due to the new tax system introduced by the Central Goods and Services Tax Act, 2017, and their past financial losses due to inexperienced auditors.4. Timing of the tender notification publication:The Petitioner claimed that the tender notification was published during the Diwali festival to limit participation. Respondent-CSMCL countered this by stating that the tender was widely circulated through the State Agency 'Chhattisgarh Samvad,' and new firms, including one from outside Chhattisgarh, participated, indicating no foul play.5. Judicial review of tender conditions and decision-making process:The Court referred to various Supreme Court judgments, emphasizing that the terms of the invitation to tender are not open to judicial scrutiny unless they are wholly arbitrary, discriminatory, or actuated by malice. The Court found that Respondent-CSMCL's actions were transparent, reasonable, and based on valid reasons, such as past financial losses and the new tax system. The Court also noted that new firms participated in the tender, disproving the Petitioner's claim of favoritism.Conclusion:The Court concluded that the Petitioner failed to demonstrate any arbitrariness or malafide intent in Respondent-CSMCL's actions. The eligibility criteria were justified, and the decision-making process was found to be reasonable and rational. Hence, the writ petition was dismissed.