TaxTMI 
TaxTMI 
TaxTMI 
2018 (2) TMI 847
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....ation formed that provides and maintains civic amenities and, inter alia, maintains various parking lots, advertisement sites etc within its jurisdiction in the NCT of Delhi. 3. The NDMC, through a Notice Inviting Tenders (NITs)/E-Auction Notice dated 22.04.2016 invited e-tenders for allotment for cluster-wise display of advertisement in its jurisdiction on payment of an advance monthly licence fee on quarterly basis for a period of three years (further extendable). Thereafter, the NDMC on 02.05.2016 issued a corrigendum and amended certain conditions of the NIT/e-auction. Honshu, being desirous of displaying the advertisement on cluster basis as above, submitted its bid in respect of Civil Line Zone Cluster No. 04 and deposited the requisite EMD amounting to 20% of the minimum reserved price as stipulated in NIT/E-auction Notice. Honshu also deposited the requisite amount towards the cost of the e-tender form as well as offered a monthly licence fee ("MLF") of Rs. 18,50,000/-. After the closing of the e-bidding process by the NDMC on 13.05.2016, it issued a Letter of Intent ("LoI") bearing No. ADC (Advtt.)/NDMC/2016/D-3021 dated 17.05.2016 to Honshu, being the successful (H1) bid....
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....05.2016 confirmed to the NDMC of having signed and uploaded the LoI dated 17.05.2016 and having paid the requisite e-auction processing fee on the e-portal of the NDMC. By this letter it also deposited a pay order dated 31.05.2016 for Rs. 17,63,310/- towards the remaining amount of security deposit and licence fee of the said advertisement cluster after adjustment of Rs. 72,09,330/- being the security deposit of the 22 Unipole sites already having been supposedly deposited by the directors in their individual capacity. Honshu, through letter, dated 02.06.2016 requested the NDMC to issue an allotment letter in respect of Civil Line Zone Cluster No.4. Mr. Mohsin Anwar and Mr. Akram Khan by their letters (both dated 15.06.2016) reiterated to the NDMC of their request to adjust the security deposit of Rs. 72,09,330/- mentioned above. 8. Thereafter, the NDMC by its letter, dated 16.06.2016 informed Honshu that there was no provision for adjustment and no prescribed mode of payment by "adjustments". It was stated that if at all, any deposits were to be refunded, with respect to any sites, they were to be carried out only by the prescribed procedure. Consequently, the request was decline....
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...., dated 16.06.2016 and adjust the security amount and refrain from taking any coercive action against it. 10. Honshu received a Show Cause Notice dated 30.06.2016 from the NDMC, by it (the NDMC) while referring to clause 1(i) of NIT, which provides "in case an individual whether in person or as a part of the company / firm etc. is a defaulter is debarred from some reason, any other company where the above individual has an interest will not be allowed to participate in the auction", alleged that it (Honshu) had a direct connection with certain defaulter companies which violated the terms and conditions of the NIT and asked Honshu to explain why its application submitted for participation in the e-auction held on 13.05.2016 for the Civil Line Zone Cluster No.04 should not be cancelled and further action not be initiated against them for submission of facts as per the Delhi Municipal Corporation Act. Honshu was also asked by the NDMC also informed that in case it wished to be heard, appearance was to be effected before the ADC (Advtt.) on 01.07.2016 or 04.07.2016, failing which further necessary action was to be initiated against it without further notice. 11. On receipt of the Sho....
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....ely to facilitate the issuance of LoI in respect of the e-auction of Pole Kiosks of Karol Bagh Zone. 14. On receipt of the aforesaid letter dated 24.06.2016 from NDMC, Reihen by its letter dated 27.06.2016 informed the former that in view of clause 1(c) of the e-tender document, intending bidders were not directed/required to submit any such affidavit as being demanded, but in order to avoid any controversies, Reihen furnished an affidavit verifying that the information/statement /details sought by NDMC. By that letter Reihen asked NDMC to acknowledge the affidavit it enclosed as required and issue the LoI in respect of the Karol Bagh Zone at the earliest. NDMC, on receipt of letter and affidavit dated 27.06.2016 from Reihen and being satisfied with the statement/declaration (as well as documents submitted at the time of e-tender), issued the Letter of Intent bearing No. ADC (Advtt.)/NDMC/2016/D-3160 dated 28.06.2016 to Reihen as the successful (HI) bidder in respect of the e- auction for display of Media through Kiosk on Lamp Posts/ Street Light Poles in the central verge of Commercial and MLU Roads maintained by PWD or MCD in the jurisdiction of North DMC at a monthly licence fe....
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.... Infrastructures Pvt. Ltd and M/s Shri Sai Nath as alleged, and pointed out that the NDMC had not disclosed the alleged sums of money, which were said to have been regularly transferred into the accounts of these two companies. It stated that in absence of such information, it was unable to provide any clarification on the same. Reihen requested the Respondent to withdraw the Show Cause Notice alongwith letter dated 28/29.06.2016, stating that it was devoid of any merit. Not receiving a subsequent response from the NDMC, Reihen approached this High Court by way of writ petition W.P. (C) 5881/2016; however, it was withdrawn as the final order was not passed on the Show Cause Notice dated 01.07.2016.Reihen was permitted to approach the Court in case a final order, adverse to it, was made. 18. Thereafter, the NDMC cancelled the LoI bearing No. AD (Advtt.)/NDMC/20l6/D-3160 dated 28.06.2016 issued to Reihen and also forfeited the EMD amount of Rs. 2,37,500/- deposited by it in respect of the Karol Bagh Zone. Being aggrieved by this action of the NDMC Reihen filed W.P. (C) 7135/2016. 19. Mr. Rajesh Gupta, learned counsel for Honshu and Reihen argued that NDMC's assumption of nexus betw....
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....luded; they are only surmises and allegations. In any case, they did not lead to any prosecution or definitive conclusions, much less a charge sheet in any criminal proceeding. NDMC could not have denied the contract to Reihen, based merely on such sketchy and inconclusive material. Therefore, NDMC's actions are utterly whimsical and unjustified. 22. Ms. Mini Pushkarna, learned counsel for NDMC, produced the original files in relation to both the tenders, containing all the relevant documents and file notings. She argued that Honshu's submission that some amounts were outstanding to it, as security deposits were lying with NDMC, is incorrect. In this regard, it was urged that those security deposit amounts were not adjustable as they related to ongoing contracts, entered into by Honshu at the time of its bid for the current parking lots. It was submitted that Honshu's plea of innocence and lack of any nexus between it and other concerns is not justified. Counsel submitted that Honshu as well as Reihen were issued a Show Cause Notice alleging its nexus and connection with the other concerns, such as Ashima Infrastructure, M/s. Trigen Electronics Pvt. Ltd., M/s. USB Enterprises, Shr....
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.... highlighted that with respect to Reihen, the relative transactions between that concern and Ashima Infrastructure, inter se, in the form of credits and debits, were to the extent of over Rs. 55 lakhs. Learned counsel also relied upon orders made by NDMC, blacklisting Ashima Infrastructure and Trigen Electronics (P) Ltd and Shri Sai Nath Enterprises (all dated 28.03.2015). Analysis and Conclusions 25. In the NIT issued by the NDMC in respect of the allotment of cluster- wise display of advertisement in the jurisdiction of North Delhi Municipal Corporation, the clause that speaks about interest free security deposit (in the NIT to which Honshu submitted its bid), is as follows: "17.1 The selected Bidder shall deposit an amount equivalent to 02 months quoted MLF as security deposit within 5 (five) days from the date of issue of the acceptance letter by the North D.M.C. ..." 26. Further the corresponding license agreement has the following clause: "4.2 In case of failure to deposit the license fee in time, interest @ 24 %per annum will be levied from the due date of deposit until the date of deposit. In case of delay up-to 15 days, interest shall be payable for 15 days and for ....
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....T stating the same, in the two cases, are as follows. 29. The relevant condition in the NIT, advertised by the NDMC calling for parking contract bids, reads as follows in Honshu's case: "(c) The Bidder, whose license has been cancelled/ blacklisted/ debarred in the past for breach of terms and conditions of the agreement signed with any Central/ State Government Department/ Autonomous Bodies anywhere in India, shall not be eligible for participating in this e-auction process of North D.M.C. The Bidder shall furnish an undertaking to this effect along with e-auction form. (d) If any of the Bidder's Partner (s)/ Proprietor (s)/ Director(s)/ Member (s) have been blacklisted in the past for breach of terms and conditions of the agreement signed with any Central/ State Government Department/ Autonomous Bodies anywhere in India, shall not be eligible for participating in this e-Auction process of North D.M.C. The Bidder shall furnish an undertaking to this effect along with e-auction form." 30. In the case of Reihen, the relevant tender condition was as follows: "b. Any individual / partnership firm / public limited company / private limited company /sole proprietor firm/co....
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....3(i) of the NIT to which Petitioner No. 2 submitted their bid, states: "North DMC reserves the right to reject any or all bids without assigning any reason thereof and without incurring any liability to the affected Bidder(s) or any obligation to inform the affected Bidder(s) of the grounds of such decision." 33. The final call with respect to acceptance or rejection of the bids is reserved by the NDMC. The Petitioners accepted that condition when they lodged their bids. Therefore, what is in issue is the power exercised by NDMC, as a public tendering agency, to not enter into contract with any bidder. The decision of a public agency to enter into a contract, or not into a contract with anyone or any concern, is subject of very limited judicial scrutiny, under Article 226 of the Constitution of India. 34. It was held in Central Coalfields Limited and Ors. V. SLL-SML (Joint Venture Consortium) and Ors. AIR 2016 SC 3814, that a Court before interfering in tender or contractual matters in exercise of power of judicial review, considers whether the decision (to award contract, or not) was actuated by malafide, was the process adopted arbitrary and irrational, and whether the publi....
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.... Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd. & Anr. 2016 (16) SCC 818); BECIL v. Arraycom India Ltd. & Ors. 2010 (1) SCC 139; Michigan Rubber (India) Limited Vs. State of Karnataka & Others (2012) 8 SCC 216; JSW Infrastructure v Kakinada Seaports 2017 (4) SCC 740 and Sterling Computers Limited and Ors. v. M & N Publications Limited and Ors. AIR 1996 SC 51 etc.) to primarily carve the line of discretion in the exercise of judicial review in administrative matters. In BECIL (supra) it was held as below: "16. In administrative matters, the scope of judicial review is limited and the judiciary must exercise judicial restrained in such matters, as held by this Court in Tata Cellular v. Union of India: AIR 1996 SC 11 : (1994) 6 SCC 651. Moreover, the view of Prasar Bharti also appears reasonable because Prasar Bharti has to pay the amount inclusive of sales tax, since there is no concessional forms. If Prasar Bharti has taken up one possible interpretation, the High Court should not have intervened. The scope of judicial review in administrative matters is limited." 37. The limited scope of judicial review in public contractual matters was iterated time and again, in Ja....
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....xpenditure of substantial public money. Therefore, it is quite crucial to ensure that no anomaly arises that could jeopardise such expenditure. The fact that the petitioners were found to have relations with black-listed companies not only violates the clauses of the NIT, but also emerge as red flags to the safe and effective implementation of public resources. These considerations have been given due regard by the administrative authorities in arriving at its decision, as observed above. 39. As regards cancellation of the letters of intent initially issued to the petitioners, the Court has to be mindful of the fact that a letter of intent is not a binding agreement enforceable in Courts, and neither is it a promise to issue a subsequent allotment letter. This has been stated in Rishi Kiran Logistics Pvt. Ltd. v. Board of Trustees of Kandla Port Trust and Ors. AIR 2014 SC 3358 as follows: "...merely a Letter of Intent was issued and this expressed an intention of the parties to enter into a contract but no concluded contract ultimately fructified nor there was any promise given by the Port Trust. The Court reproduced the following discussion from its earlier judgment in Nikhil Ad....
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.... actuated with malafides and on whose part. Even at the time of arguments Mr. Vikas Singh did not even advert to this aspect. In fact, the entire emphasis of Mr. Vikas Singh was that since there was a concluded contract between the parties, cancellation of such a contract amounted to arbitrariness. As already pointed out above that can hardly be a ground to test the validity of a decision in administrative law. For the sake of argument, even if you presume that there a concluded contract, mere termination thereof cannot be dubbed as arbitrary. A concluded contract if terminated in a bonafide manner, that may amount to breach of contract and certain consequences may follow thereupon under the law of contract. However, on the touch stone of parameters laid down in the administrative law to adjudge a decision as are arbitrary or not, when such a decision is found to be bonafide and not actuated with arbitrariness, such a contention in administrative law is not admissible namely how and why a concluded contract is terminated." 42. What emerges from the above factual discussion and analysis of the judicial decisions is that the impugned letters of the NDMC withdrawing the LoIs is base....