IN THE GAUHATI HIGH COURT

Transcription

1 1 IN THE GAUHATI HIGH COURT (THE HIGH COURT OF ASSAM; NAGALAND; MIZORAM & ARUNACHAL PRADESH) WP(C) 738/ M/S Kakoti Engineering Works Represented by its partner Sri Rohit Prasad Kakoti, A.T. Road, Sivasagar, PIN , Assam. 2. Sri Rohit Prasad Kakoti S/o- Rpendra Prasad Kakoti R/o- Phukan Nagar, P.S.- Sivasagar, Dist-Sivasagar, Assam..PETITIONERS -versus- 1. The Oil and Natural Gas Corporation Limited Represented by the Chairman having its registered at Jeevan Bharati, Tower-II, 124, Indira Chowk, New Delhi The Chairman, The Oil and Natural Gas Corporation Limited Jeevan Bharati, Tower-II, 124, Indira Chowk, New Delhi The Chief Managing Director, The Oil and Natural Gas Corporation Limited Jeevan Bharati, Tower-II, 124, Indira Chowk, New Delhi

2 2 4. The General Manager (MM) Material Management Department Contract Cell, Assam Asset, ROB-II, First Floor, Nazira, Assam. 5. The Head MM Material Management Department Contract Cell, Assam Asset, ROB-II, First Floor, Nazira, Assam. 6. The Executive Director, Oil and Natural Gas Corporation Limited, Assam Asset, Nazira, Sivasagar, Dist-Sivasagar, PIN , Assam. 7. The General Manager, District Industries & Commerce Centre, Sivasagar, Assam. 8. Bid Evaluation Committee/Technical Committee Material Management Department C/o- General Manager Head Material Management Department ONGC Ltd., Assam Asset, Nazira, Dist-Sivasagar, Assam. 9. Raju Ali R/o- Gelakey Kal Gaon PO-Gelakey, P.S. Sivasagar, Dist-Sivasagar, Assam. RESPONDENTS BEFORE HON BLE MR. JUSTICE MANOJIT BHUYAN For the petitioners - Mr. P.K. Goswami, Senior Advocate Mr. B.D. Goswami,

3 3 Mr. S. Borthakur, Mr. A. Borgohain, Advocates For the Respondent Nos.1 to 8 - Mr. G.N. Sahewalla, Senior Advocate Ms S. Senapati, Advocate For the Respondent No.9 - Mr. D.K. Mishra, Senior Advocate Mrs. M. Hazarika Senior Advocate Ms. S. Khound, Advocate Date of hearing Date of delivery of judgment - JUDGMENT AND ORDER (CAV) Heard Mr. P.K. Goswami, learned Senior counsel assisted by Mr. B.D. Goswami, Advocate for the petitioner. Also heard Mr. G.N. Sahewalla, learned Senior counsel assisted by Ms. S. Senapati, Advocate representing ONGC Ltd. as well as Mr. D.K. Mishra, learned Senior counsel and Mrs. M. Hazarika, learned Senior counsel assisted by Ms. S. Khound, Advocate representing the Private Respondent No The petitioner M/s Kakoti Engineering Works is a registered firm having its own engineering workshop in the district of Sivasagar with experience in repair and fabrication job of Oil Field/Rig Equipment and is registered under Entrepreneur Memorandum Part II (hereinafter referred to as EM Part II ) and is also registered under the Assam Preferential Stores Purchase Act, 1989.

4 4 3. By e-tender dated , issued from the Office of the Respondent No.4, bids were invited for rate contract in repair/fabrication work, painting rigs and equipment and bunk houses repairing. The scheme of the bid was a two bid system, i.e. technical and financial. The last date of submission of bid as well as for opening of technical bid was fixed on Pursuant thereto, both the petitioner and the private Respondent No.9, i.e. Raju Ali submitted their bids through e-tender. Be it mentioned that the parameters for evaluation of bid was governed under the Bid Evaluation Criteria as well as under the Scope of Work and Technical Specification as provided in Annexure-III, III(A) and IV to the Bid Document. On , the Respondent ONGC opened the technocommercial bids of both the petitioner and the Respondent No.9. It is the case of the petitioner that on the date of opening of the technical bid, certain glaring irregularities were found in the technical bid of the Respondent No According to the petitioner, the Respondent No.9 did not have the experience in repair and fabrication job related to drilling operations in terms of Clause 2.1(a)(i) of the Bid Evaluation Criteria read with Clause A of the Scope of Works and Technical Specifications governing the tender. Also, the Respondent No.9 did not have its own workshop in Sivasagar district duly registered in its name under the statute of the Government of Assam in terms of Clause 3.0 of the Bid Evaluation Criteria. 5. Accordingly, the petitioner represented before the Respondent No.4 immediately on , in writing, pointing out the defects in the technical bid of Respondent No.9, followed by another representation dated with copy forwarded to the General Manager, District Industries and Commerce Centre ( DICC for short), Sivasagar with prayer to verify as to whether the Respondent No.9 has its own registered workshop in Sivasagar district or not.

5 5 6. The reply received from the General Manager, DICC, indicated that the Respondent No.9 is a registered unit as EM Part II vide Acknowledgement No.18/16/12/01483 dated Violation of the terms and conditions of the tender was also alleged, in that, ONGC had permitted the Respondent No.9 to submit documents even after the last date of submission of bid. One such document is the Factory Licence of Respondent No.9 which, according to the petitioner, in any case proves that the actual existence of a workshop was from a date subsequent to the last date of submission of tender. Petitioner had raised objection before the Respondent No.4 vide letter dated According to the petitioner, the various objections raised in respect of the deficiencies appearing in the techno-commercial bid of Respondent No.9 remained unheeded to. Through an received on , the petitioner came to learn that the price bid would be opened on at 3 PM and that ONGC authority had also decided to open the price bid of the Respondent No.9 along with that of the petitioner. Constrained thus, the instant writ petition came to be filed and by order of this Court dated , the Respondent ONGC was restrained from opening the price bid until the next date fixed. 8. The challenge made to the action of the Respondent ONGC in accepting the Technical Bid of Respondent No.9 and to open the price bid of the said Respondent No.9 along with that of the petitioner is laid primarily on two grounds; i) The Respondent No.9 does not fulfill the requirement of Clause 2.1(a)(i) of the Bid Evaluation Criteria as well as Clause (A) of the Scope of Works, in that, he does not have the experience in repair and fabrication job related to drilling operations for the minimum period of three years as stipulated;

6 6 ii) Respondent No.9 does not fulfill the requirement under Clause 3.0 of the Bid Evaluation Criteria, in that, he has no workshop of his own in Sivasagar district duly registered in his name under the Act of the Government of Assam. According to the petitioner, on both the counts above, the techno-commercial bid of Respondent No.9 suffered rejection, which, however, has been overruled by the Respondent ONGC. Be that as it may, an adjudication to (ii) above is first taken up for consideration in view of the fact that a decision thereof would indicate as to whether or not the point at (i) above would require further attention of the Court. For better appreciation, Clause 3.0 is extracted hereunder: 3.0- Workshop facilities:- The bidder/indian joint venture company/technical collaborator should have his own workshop in Sivasagar district duly registered in the name of the bidder/consortium member/indian joint venture company or partner/technical collaborator, under Act of Govt. of Assam. The workshop should be equipped with the equipment & facilities as mentioned in special conditions of contract. * The bidder should submit details of workshop facilities available. * The workshop should be on bidders name only and documentary evidence of ownership of the workshop should be submitted. * Proof of workshop along with above equipments should be certified by District

7 7 Industries office. The certificate is to be submitted. * ONGC may also inspect the workshop for assessment if required. * All original certificates are to be shown to ONGC for scrutiny, if required. 9. In so far as Clause 3.0 of the Bid Evaluation Criteria is concerned, Mr. P.K. Goswami, learned Senior counsel submits that the existence of own workshop in Sivasagar district, duly registered in the name of the bidder etc. and under the Act of the Govt. of Assam and equipped with the equipment and facilities as mentioned in the Special Conditions of the Contract is a vital technical condition, in absence of which, a bid would stand rejected in terms of Clause-B relating to Rejection Criteria under the Bid Evaluation Criteria. 10. Referring to the letter dated , received from ONGC, Mr. Goswami, learned Senior counsel submits that the requirement of a Factory Licence and the supporting documents submitted along with the tender of a date not later than the closing date of submission of bids, is an indispensable condition. 11. Whether or not the Respondent No.9 had discharged/fulfilled the requirement of a Factory Licence which is of a date prior to the closing date of submission of bid and whether or not a Factory Licence is at all necessary for the purpose of Clause 3.0 of the Bid Evaluation Criteria, the following points have been urged by the learned Senior counsel, Mr. Goswami. 12. Referring to the affidavit-in-opposition filed by ONGC and to the documents at Annexure-A thereof, Mr. Goswami, learned Senior counsel submits that on the basis of the Memorandum filed for a manufacturing enterprise at Gelakey Kal Gaon, Nazira in the district of Sivasagar, the

8 8 Respondent No.9 was granted the Certificate of Issuance (EM Part II) on by DICC, Sivasagar. As per the Note appended to the said Certificate, it was made clear that the Certificate would not bestow any legal right and the enterprise concerned is required to seek requisite clearance/licence/permit required under the statutory obligations stipulated under the laws of Central / State Govt. / UT Administration/Court s order. Further, referring to the Sl. No.3 under N.B thereof, learned Senior counsel submits that the acknowledgement of Part II is only for the purpose of enabling the unit to apply for various incentives under the State/Central Govt. 13. In so far as the Application Form for EM Part-II of Respondent No.9 is concerned, Mr. Goswami, learned Senior counsel contends that while making the application, Respondent No.9 had inappropriately declared that it is registered under Section 2(m)(i), 2(m)(ii) of the Factories Act, 1948, having plant and machineries installed in May, 2010 with a proposed installed capacity of 800 tonnes per annum and having anticipated power load of 5 KW with a work force of 28 workers. 14. From the list of plant and machineries enclosed to the application for EM Part II with the date of commissioning shown as read with the Certificate dated issued by APDCL, Gorgaon, learned Senior counsel submits that with a sanctioned load of 5 KWs it is improbable that the type of heavy machineries, as indicated in the list, can at all be operated with a power load of 5 KWs. In fact, and as would be apparent from the certificate of APDCL, electricity with 5 KW load was sanctioned only for running welding machine in the premises of Respondent No Reference to the list of plant and machineries and the sanctioned load of 5 KW has been made by the petitioner for the purpose of urging that the Respondent No.9 was not equipped with the equipments and facilities as mentioned in the Special Conditions of Contract, which is,

9 9 Annexure-III (A) of the Bid Document and a requirement under Clause 3.0, as above. According to Mr. Goswami, learned Senior counsel, the list of plant and machineries submitted by Respondent No.9 was only for the purpose of showing fulfillment of Clause 7 of the Special Conditions of Contract on paper. 16. Learned Senior counsel also refers to the documents at Annexure-C and Annexure-D enclosed to the affidavit-in-opposition of ONGC to show that the Respondent No.9 had applied for a Factory Licence before the Office of the Chief Inspector of Factories, Assam on , which was granted only on As such, the contention is that the Respondent No.9 did not possess a Factory Licence on any date prior to the closing date of submission of bid. In this connection, attention has also been drawn to Annexure-13 of the affidavit-in-reply filed by the petitioner, which is a letter issued by the Chief Inspector of Factories, Assam and addressed to the Respondent No.9. By the said letter, Respondent no.9 was restrained from carrying out manufacturing process until the Certificate of Stability is obtained from the competent person and accepted by the Chief Inspector of Factories, Assam. 17. All the factors above, according to Mr. Goswami, learned Senior counsel, lead to the inevitable conclusion that until , the Respondent No.9 did not possess a Factory Licence. Notwithstanding the fact that the Respondent No.9 was granted Factory Licence on by the letter issued by the Chief Inspector of Factories, Assam, the Respondent No.9 was restrained from carrying out manufacturing process until fulfillment of the conditions stipulated in the said letter. The said letter was only limited to the extent of permitting the Respondent No.9 to go ahead with the construction of the proposed factory. Attention has also been drawn to the document at Annexure-2 of the affidavit-in-opposition filed by the Respondent No.9, which is a certificate issued by the General Manager, DICC, Sivasagar, to say that

10 10 being a small enterprise registered with DICC, Sivasagar for EM Part II under the Micro, Small and Medium Enterprise Development Act, 2006 (hereinafter referred to as MSME Act, 2006), the Respondent No.9 was only entitled to the benefits under the MSME Scheme. 18. What is the Act of Govt. of Assam, as mentioned in Clause 3.0 of the Bid Evaluation Criteria, under which a workshop needs to be duly registered. This is the core question involved for adjudication of the point at (ii) above and also looking at the other requirements of technical conditions at Clause Senior counsel, Mr. Goswami, refers to the meaning of factory as given in Section 2(m)(i) and 2(m)(ii) of the Factories Act, 1948 (hereinafter referred to as Act, 1948 ). In terms of the said provisions it means any premises including the precincts thereof where a manufacturing process is being carried on, with or without the aid of power subject to number of workers employed therein and as clearly specified in Section 2(m)(i) and 2 (m)(ii). Mr. Goswami further submits that the expression manufacturing process, as defined in Section 2(k)(i) of the Act, 1948, takes within its fold the nature of the work for which the tender was invited. The power of the State Government to make Rules, as envisaged under Section 6 of the Act, 1948 is also referred to by making special reference to Section 6(aa) and 6(d) thereof. For ready reference, the relevant portions are extracted hereunder: 6. Approval, licensing and registration of factories.- (1) The State Government may make rules- (a). (aa) requiring the previous permission in writing of the [State Government] or the Chief Inspector to be obtained for the site on which the factory is to be

11 11 situated and for the construction or extension of any factory or class or description of factories; (b).. (c).. (d) requiring the registration and licensing of factories or any class or description of factories, and prescribing the fees payable for such registration and licensing and for the renewal of licences; (e) According to Mr. Goswami, the State of Assam has enacted the Assam Factories Rules, 1950 (hereinafter referred to as the Rules, 1950). In terms of Rule 3-A of the Rules, 1950, no site is to be used for the location of a factory or no building in a factory be construed as a factory unless previous permission in writing is obtained from the State Government or the Chief Inspector of Factories. Application for such permission is to be made in Form I accompanied by the documents specified therein. Under Rule 3-B of the Rules, 1950, no manufacturing process is to be carried on in the premises so specified which has been taken into use as factory or part of a factory until a certificate of stability is received from the Manager or occupier of the factory and accepted by the Chief Inspector of Factories. Rule 4 of the Rules, 1950, prescribes for application for registration and grant or renewal of licence and notice of occupation and Rule 6 thereof postulates grant of licence by the Chief Inspector of Factories in Form No.4 prescribed for the purpose. 21. A conjoint and harmonious reading of the Rules, 1950, according to Mr. Goswami, leaves no room for doubt that a factory within the meaning of Section 2(m)(i) and 2(m)(ii) of the Act, 1948 must require a Licence in terms of Rule 3-A, Rule 4 and Rule 5 of the Rules, 1950.

12 Taking it forward, Mr. Goswami submits that another vital technical condition envisaged in Clause 3.0 is that the workshop should be equipped with the equipment and facilities as mentioned in the Special Conditions of Contract, which is Annexure-III(A) of the Bid Document. Clause 7 thereof which lists the equipments reads as: 7. WORKSHOP FACILITIES The workshop should be equipped with the following equipments: 1) Lathe :- 02 No s Bed length :- 12 ft Hollow spindle :- 05 inch Centre length :- 500 mm 2) Small lathe :- 02 nos. Bed length :- 6 ft Hollow spindle :- 75 mm Centre length :- 300 mm 3) Radial drilling machine, 2-inch capacity :- 02 nos. 4) Welding generator 350 amps :- 05 nos. 5) Welding transformer 450 amps :- 10 nos. 6) Angle grinder :- 05 nos. 7) Gas cutting sets :- 05 nos. 8) Hoisting device/crane of cap 20 MT. :- 01 no 9) Plate bending machine to handle up to 15 mm thick MS plate :-01 no. 10) Sheet bending machine up to 4 mm Thickness MS plate :-01 no The bidders should also have sufficient covered and uncovered space for executing the jobs at his premises. Having regard to the list of equipments which are required as a vital technical condition and the electricity power that would be required to run the same, it is urged that the premises, be it called a workshop, is

13 13 a factory for which a Licence is a pre-condition for carrying on manufacturing process. It is further urged that the requirement of a Factory Licence is implicit and is a necessary condition imposed by the respondent ONGC, as would be evident from the ONGC letter dated (Annexure-12 to writ petition) whereby the petitioner was asked to provide valid Factory Licence (notary attested) which expired on The said letter also indicated that in the case of furnishing deficient documents, such supporting documents must be of a date not later than the closing date of submission of bids. In this connection and by referring to the relevant documents available on record, it is submitted that the Respondent No.9 was granted Factory Licence only on pursuant to the application dated Apparently, a Factory Licence being a sine qua non under Clause 3.0 and a valid Licence not being with Respondent No.9 on any date prior to the closing date of submission of bid, as such, the technical bid of Respondent No.9 automatically suffered rejection on account of Clause Touching upon another important aspect of the matter with regard to the applicability of the Micro, Small and Medium Enterprises Development Act, 2006 (MSME Act, 2006), Mr. Goswami submits that, contrary to the arguments advanced by the respondents, as would be noticed later in this judgment, it is only an Act to provide for facilitating the promotion and development and enhancing the competitiveness of micro, small and medium enterprises. This is an Act framed as per the declaration as to expediency of control by the Union under Section 2 of the Industries (Development and Regulation) Act, Referring to Section 8 of the MSME Act, 2006 and in the backdrop of the Statements of Objects and Reasons thereto, Mr. Goswami submits that if any person intends to establish a micro or small or a medium enterprise, he is required to file a Memorandum with such authority as specified by the State Government under sub-section (4) or the Central Government under sub-section (3) of Section 8 of the MSME Act, In terms of

14 14 the amended format for the Entrepreneur Memorandum under the MSME Act, 2006 after inclusion of the amendments vide Notification No. S.O. 941(E) dated , the Memorandum is required to be filed with the District Industries Centre under which jurisdiction the enterprise is proposed to be located. The form of Memorandum is in two parts. Part I is in respect of the intention to establish the enterprise in question and Part II is when the enterprise starts production or starts providing or rendering services. For Part II, an Acknowledgement has to be issued by the concerned office, i.e. the District Industries Centre in the form of a Certificate of Issuance (EM Part-II). 24. Referring to the Certificate of Issuance (EM Part-II) dated in favour of Respondent No.9, issued by the General Manager, DICC, Sivasagar, Mr. Goswami submits that, commensurate to the objects of the MSME Act, 2006, the said Certificate only enables the unit to apply for various incentives under the State/Central Government. It does not bestow any legal right and the entrepreneur is required to seek requisite clearance/licence/permit required under statutory obligation stipulated under the laws of Central Government/State Government/UT Administration/Court Orders. According to the senior counsel, the said prescriptions can be had from the Note and Serial No.(3) of NB mentioned in the said Certificate of Issuance. 25. The sum and substance of Mr. Goswami s contentions is that the MSME Act, 2006 has nothing to do with the registration of a workshop for the purpose of carrying on manufacturing process. It only contemplates an acknowledgement in the form of a Certificate of Issuance (EM Part-II) for getting or enabling the unit to apply for incentives under the State/Central Government. It is the Factory Licence which is a statutory requirement under the Assam Factories Rules, 1950 that is envisaged as under Act of Govt. of Assam in Clause 3.0 of the Bid Evaluation Criteria.

15 Lastly, Mr. Goswami submits that the requirement of a Factory s Licence was all along within the comprehension of ONGC authority. A waiver of the statutory requirement would only render the action as arbitrary and discriminatory in the teeth of the law laid down by the Apex Court in the case of Ramana Dayaram Shetty vs. International Airport Authority of India and others, reported in (1979) 3 SCC 489=AIR 1979 SC Such waiver, if it had been expressly declared in the Tender, would have had the participation of more bidders. Reference is also made to the case of Khudiram Das vs. The State of W.B., reported in AIR 1975 SC 550 to say that the Court has the power to interfere when an authority has come to a conclusion so unreasonable that no reasonable authority could ever come to it. A legitimate inference may be drawn that either the authority did not honestly form that view or that in forming it could not have applied its mind to the relevant facts. In such a case the power of the Court to interfere is not as an appellate authority to override the decision of the authority, but as a judicial authority which is concerned only to see whether the statutory authority has contravened the law by acting in excess of the power the legislature has confided in it. Mr. Goswami emphasizes that there is nothing like unfettered discretion immune from judicial reviewability. 27. On the grounds above, prayer has been made for setting aside the decision of the ONGC authority in accepting the technical bid of Respondent No.9 as well as for a direction to the respondent ONGC not to go ahead with the opening of price bid of Respondent No.9 along with the petitioner in connection with the e-tender dated Mr. G.N. Sahewalla, learned Senior counsel representing the ONGC Ltd, opens his arguments by saying that for the work in question the significant purpose is to ensure whether a person would be capable to execute the work or not. Referring to the affidavit-in-opposition it is averred that the Respondent No.9 owns a running workshop which

16 16 satisfied the requirement of Clause 3.0. Further, a Committee of three senior ONGC Executives had visited the workshop of Respondent No.9 and had carried out inspection of the plant and machinery, manpower as well as verification of documents. According to the Report of the Committee dated , the Respondent No.9 was found to be the owner of the workshop and the machines/worker were found to be in operation. On the basis of the Report, the ONGC authority held that the contention of the petitioner was baseless and motivated. According to Mr. Sahewalla, learned senior counsel, the system for seeking documents after the opening of tender, without alteration of the original bid structure, is as per the internal guidelines of ONGC. The same is resorted to in order to enhance competition amongst the participating bidders. 29. In so far as the question of requirement of Factory Licence is concerned, Mr. Sahewalla submits that in the present case the ownership of the workshop was established by carrying out Inspections on and respectively. The requirement of Factory Licence not being essential, as such, there was no lacunae on the part of the Respondent No.9 in not submitting the Factory Licence along with the bid. According to Mr. Sahewalla, although there was no requirement for a Licence, nevertheless the Respondent No.9 had submitted the letter from the Additional Chief Inspector of Factories certifying that Respondent No.9 had applied for the Factory Licence on In the opinion of ONGC, the Respondent No.9 was found technically acceptable after a detailed technical scrutiny and inspections so carried out in terms of Clause 3.0 of the Bid Evaluation Criteria. 30. Mr. Sahewalla, learned Senior counsel, further submits that since Clause 3.0 only makes reference to a workshop and not a factory, as such, the applicability of the Factories Act, 1948 and that of the Assam Factories Rules, 1950 is irrelevant in the context of the case.

17 Reliance is placed in the case of B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd. And ors, reported in (2006) 11 SCC 548 to say that right accrues upon the party issuing the tender to punctiliously and rigidly enforce it but at the same time can deviate from the guidelines in a given situation subject to the fact that it does not result in arbitrariness or discrimination. Further, as a matter of general proposition an authority issuing the tender has the latitude not to give effect to every term indicated in the tender in meticulous details, save and except a technical irregularity which cannot be waived. As the requirements of a tender come within two categories - those which lay down the essential conditions of eligibility and others which are merely ancillary or subsidiary with the main object to be achieved by the condition, it is urged that the dominant object in the present case is the decision of ONGC Ltd as to whether the person would be capable to achieve successful completion of the work or not. On judicial review of administrative action, reliance is placed in the case of Jagdish Mandal v. State of Orissa, reported in (2007) 14 SCC 517 as well as in the case of Michigan Rubber (India) Ltd. v. State of Karnataka, reported in (2012) 8 SCC 216. On the grounds where interference under Article 226 of the Constitution of India is called for, reference is made to paragraph 24 in Michigan Rubber (India) Ltd. (supra), which is extracted hereunder; 24. Therefore, a court before interfering in tender or contractual matters, in exercise of power of judicial review, should pose to itself the following questions; (i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; or whether the process adopted or decision made is so arbitrary and irrational that the court can say: the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached? and

18 18 (ii) Whether the public interest is affected? If the answers to the above questions are in the negative, then there should be no interference under Article According to Mr. Sahewalla, learned Senior counsel, in the teeth of the Apex Court decisions laying down the power of the Court and the parameters for exercise of powers of judicial review over administrative actions, it is contended that in the absence of malafide, arbitrariness, irrationality and any intention to favour the Respondent No.9, no interference is called for in respect of the decision of the ONGC authority in allowing the technical bid of Respondent No Lastly, Mr. Sahewalla submits that the price bid not having been opened, the writ petition is premature, in as much as, the award of the work will be dependent upon the outcome of the price bids and it is not a case where the petitioner has been thrown out of the competition. 34. Mr. D.K. Mishra, learned Senior counsel representing the Respondent No.9, opens his argument by saying that Factory Licence is not a requirement under Clause 3.0. It is only the assumption of the petitioner. What is essentially required is the existence of a workshop in Sivasagar district. From the very pleadings in the writ petition, any controversy that the Respondent No.9 did not have a workshop in Sivasagar, stands dispelled. The basic foundation of the petitioner s case is that from inputs received from field-level personnel there is no government registered workshop standing in the name of the Respondent No.9 in Sivasagar district, save and except, being a registered unit as Entrepreneur Memorandum Part-II under the provisions of the MSME Act, Reference is made to the Certificate of Issuance dated issued in favour of the Respondent No.9 and also to the List of Plant & Machineries installed in the Factory/Workshop to say that the same are in due compliance of the requirements under Clause 3.0. Attention is also drawn to the Certificate dated

19 19 (Annexure-2 to the Affidavit-in-opposition of Respondent No.9) to show that the unit is registered with the District Industries & Commerce Centre, Sivasagar vide EM Part-II of MSME Act, The fact that Respondent No.9 has a running workshop satisfying the requirements of Clause 3.0 has been reinforced and established by the Inspection Report of the Committee which had visited the workshop site on and On the question that in the Application Form for EM Part-II the Respondent No.9 had indicated that it is registered under Sections 2(m)(i), 2(m)(ii) of the Factories Act, 1948, without actually being so, Mr. Mishra submits that the same was done in contemplation of setting up of a factory for some other work. As regards the sanctioned power load of 5 KWs, which the petitioner argues that under no circumstances it is sufficient to run the machines as given in the List of Plant & Machineries alleged to have been installed in the workshop of Respondent No.9, Mr. Mishra counters the same by saying that apart from the three Welding Generators at serial nos. 4, 5 and 6 of the List, the remaining machines can be operated with power load of 5 KWs. The nature of the business of Respondent No.9 necessitates utilization of the Welding Generators at field-sites mostly. Lathe machines can be operated by a minimum load of 1.5 KW and so in the case of the other machines apart from the Welding Generators. In respect of the manpower indicated in the said Application Form, standing at 28 nos., Mr. Mishra submits that they had been working in other places and are not covered by the Factories Act, Mr. Mishra further submits that if the Certificate of Issuance (EM Part-II) is held to be not in compliance of Clause 3.0, it would only mean that no workshop employing ten or more workers, with or without the aid of power, will ever be able to run/operate in the absence of a Factory Licence. According to Mr. Mishra, this is too extreme a proposition.

20 20 Taking it forward, it is contended that the requirement of a Factory Licence is nowhere stipulated as an essential condition of the tender. 37. Once again the issue boils down to the point - what is the meaning of Act of Govt. of Assam. Whether the registration of the workshop, as required of under Clause 3.0, would find due compliance with the registration of the unit as EM Part-II under the MSME Act, 2006 or with registration and licence under the Factories Act, 1948 read with the Assam Factories Rule, 1950 in the given facts of this case. 38. Mr. Mishra, learned Senior counsel, refers to the Industries (Development and Regulation) Act, 1951 (IDR Act) to say that by virtue of Section 2 thereof, a comprehensive central enactment for providing an appropriate legal framework facilitating the growth and development of micro, small and medium enterprises was brought about by the statute called the Micro, Small and Medium Enterprises Development Act, 2006 (MSME Act, 2006). A reading of Section 11 B of the IDR Act as well as Section 8 of the MSME Act, 2006 would go to show that it is not just a beneficial enactment, as made out by the petitioner. The filing of Memorandum under Section 8 of the MSME Act, 2006 is a mandatory provision, contravention of which would invite penalty under Section 27 thereof. Mr. Mishra further submits that it is rather the Factories Act, 1948, which is a beneficial piece of legislation, as would be apparent from the Statement of Objects and Reasons thereof. 39. To sum it up, Mr. Mishra contends that the e-tender does not specify that participation is only open to units coming under the purview of the Factories Act, 1948 and the Rules framed thereunder by the State. Mr. Mishra emphasizes that Clause 3.0 only contemplates registration of the workshop with the DICC as EM Part-II and not under the Factories Act, 1948.

21 On the principles of judicial restraint in administrative action and the contours of power of the Court under Article 226 of the Constitution of India, Mr. Mishra places reliance on the following case laws: (i) (1991) 3 SCC 273 (Poddar Steel Corporation v. Ganesh Engineering Works & ors.) (ii) (2007) 1 SCC 477 (Rajasthan Housing Board & anr. v. G.S. Investments & anr.) (iii) (2007) 14 SCC 517 (Jagdish Mandal v. State of Orissa & ors.) (iv) (2013) 10 SCC 95 (Rashmi Metaliks Limited & anr. v. Kolkata Metropolitan Development Authority & ors.) (v) (2014) 11 SCC 288 (Siemens Aktiengselischaft and Siemens Ltd. V. Delhi Metro Rail Corporation Limited) The general proposition as laid down in the case laws above, as in the case laws relied upon by Mr. Sahewalla, are in the same vein. Mr. Mishra contends that the modern trend points to judicial restraint in administrative action and the Court does not sit as a court of appeal but merely reviews the manner in which the decision was made. The Government must have freedom of contract as a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere. 41. Lastly, Mr. Mishra argues that having regard to the aspect that EM Part-II is due compliance of Clause 3.0 and in the absence of any element of arbitrariness, malafides and bias, as such, no interference is warranted in respect of the decision of the ONGC authority in holding that Respondent No.9 had qualified in the technical bid.

22 Having noticed the rival pleadings, the first endeavour would be to deal with the scope of judicial review in government contracts having regard to the Apex Court decisions placed by the parties. 43. In Ramana Dayaram Shetty (supra), the respondent authority had bestowed a favour on one of the bidders without insisting upon a requirement in the tender notice, which was an essential condition of eligibility. The Apex Court having examined the question as to whether the respondent authority could have validly condoned the shortcoming in the tender of the beneficiary, held that the action amounted to illegal discrimination. Regarding the power or discretion of the Government in the matter of grant of largesse, the Apex Court held that such power or discretion must be confined and structured by rational, relevant and non-discriminatory standard or norm. A departure thereof would make the action of the Government liable to be struck down unless it can be shown that the departure was not arbitrary but was based on some valid principle which in itself was not irrational, unreasonable and discriminatory. 44. In Khudiram Das (supra), the proposition of law laid down is that where in a case the authority has reached a conclusion so unreasonable that no reasonable authority could ever come to it, then interference by the Court is not as an appellate authority but as a judicial authority, in as much as, there is nothing like unfettered discretion immune from judicial reviewability. 45. In B.S.N. Joshi & Sons Ltd. (supra), it was held that the requirements in a tender notice generally fall into two categoriesessential and ancillary or subsidiary. Whereas the essential conditions of eligibility are to be rigidly enforced, the latter can be deviated from without insistence upon a strict literal compliance with the condition in appropriate cases. The common thread in the cases of Jagdish Mandal (supra) and Michigan Rubber (supra) is with regard to the caveat in the

23 23 exercise of power of judicial review. Interference under Article 226 comes into play only if the process adopted or decision made by the authority is malafide or intended to favour someone or is so arbitrary and irrational that the Court can hold that the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached. 46. The case of Poddar Steel Corporation (supra) is a precursor to the case of BSN Joshi & Sons Ltd. (supra) in the exposition of the essential and ancillary conditions in a tender notice. In the same vein are the other cases relied upon by the Respondent No.9. In Rajasthan Housing Board (supra), the Apex Court relied and referred to earlier decisions touching upon the principles which have to be applied in judicial review of administrative decisions, especially those relating to acceptance of tender and award of contract. Under quotes, the Apex Court referred to the propositions that the principles of judicial review shall apply in order to prevent arbitrariness or favouritism on the part of government bodies. Further, although the modern trend points to judicial restraint in administrative action and a fair play in the joints is a necessary concomitant for an administrative body, however, the decision must be tested by the application of Wednesbury principles of reasonableness and must be free from arbitrariness, bias and malafides. Although the State can choose its own method to arrive at a decision and grant any relaxation for bonafide reasons, such relaxation is permissible only if the tender conditions permit. 47. A conspectus of the case laws cited above makes it abundantly clear that notwithstanding the freedom of contract, fair play in the joints, power of granting relaxation and to choose its own method available with the State, the Court in exercise of power of judicial review can certainly examine whether the decision-making process was reasonable, rational, not arbitrary and not violative of Article 14 of the Constitution.

24 It now takes us to Clause 3.0 of the Bid Evaluation Criteria to first ascertain as to whether the requirement is an essential condition in the tender notice that cannot be permitted to be relaxed or is ancillary or subsidiary where a strict literal compliance cannot be insisted upon. From the Bid Document pertaining to e-tender No.R16SC14012, Annexure II thereof relates to Bid Evaluation Criteria. Clause A of the said Criteria prescribes the vital criteria for acceptance of bids; clause B with regard to rejection criteria, which takes within its fold the requirement of eligibility and experience of the bidder as well as the requirement of workshop facilities etc. For the purpose of this instant case, sub-clause B.1.1 and B finds relevance. According to sub-clause B.1.1. the vital technical conditions under Clause B are to be strictly complied with, failing which the bid stands to be rejected. In other words, the prescription is that incomplete and non-conforming bids will suffer rejection outright. Amongst the vital technical conditions is sub-clause B relating to the requirements of workshop facilities. Without much elucidation and having regard to the plain language in Clause B under the heading of Rejection Criteria, there is no manner of doubt that the requirements of workshop facilities under clause B or 3.0 simply put, is an essential condition of the tender notice that has to be rigidly enforced without permitting any deviations therefrom. 49. Even at the cost of repetition, the essential condition under Clause 3.0 prescribes the requirement of a workshop in Sivasagar district, duly registered in the name of the bidder etc. under the Act of the Government of Assam. Further, the workshop must be equipped with the equipments and facilities as mentioned in the Special Conditions of Contract and proof of the workshop along with the listed equipments should have certification of the District Industries office. 50. Registration under which statute? - is the foremost point to be decided first. To start with the Factories Act, 1948, Section 112 thereof confers power upon the State Government to make rules providing for

25 25 any matter which, under any of the provisions of the Act of 1948 is to be or may prescribed or which may be considered expedient in order to give effect to the purposes of the Act of This brings us to the provisions under Section 6 of the Act of 1948 which empowers the State Government to make rules, amongst others, requiring the registration and licensing of factories or any class or description of factories, and prescribing the fees payable for registration and licensing and for renewal of licence. Section 6 also provides the requirement of previous permission in writing of the Chief Inspector to be obtained for the site on which the factory is located and for the construction or extension of any factory or class or description of factories. 51. Before proceeding further it would be relevant to first ascertain the status/category of the establishment of Respondent No.9. Considering the fact that the establishment employs more than 20 persons, with or without the aid of power and on the own showing by respondent no. 9 with regard to the particulars given in his Application for EM Part-II, it falls within the definition of factory given in Section 2(m) of the Act, What then are the requirements and the conditions precedent for the purpose of carrying out any manufacturing process as defined in Section 2(k) of the Act, 1948, in the said establishment. 52. In exercise of powers conferred by Section 112 of the said Factories Act, 1948, the State of Assam has enacted the Assam Factories Rules, As noticed earlier, Rule 3-A of the Rules, 1950 requires permission in writing of the State Government or the Chief Inspector of Factories before any site is used for the location of a factory or to be construed as a factory. In so far as carrying out manufacturing process, Section 3-B or the Rules, 1950 prescribes for a certificate of stability in respect of the establishment to be sent by the occupier or Manager of the factory to the Chief Inspector and accepted by him. The said certificate of stability has to be in the form prescribed under the Rules.

26 26 Rule 4 thereof requires submission of application for registration as well as for grant or renewal of licence and notice of occupation to the Chief Inspector, whereof a licence for a factory shall be granted by the Chief Inspector in the prescribed format in exercise of powers under Rule In the instant case, the Respondent No.9 made application for a factory licence before the office of the Chief Inspector on , which was granted on Without any dispute, Respondent No.9 did not possess the Factory Licence on or before the last date of submission and/or on the date and time of opening of the technocommercial bids. 54. Whether a Factory Licence was required or not for the purpose of the work in question, attention may be had to the ONGC letter dated (Annexure-12 to the writ petition) whereby the petitioner was asked to provide Factory Licence (notary attested) which expired on By the said letter dated , although dated post the opening date of techno-commercial bid, it clearly indicates that submission of deficient documents/supporting documents must be of a date not later than the closing date of submission of bids. In paragraph 9 of the affidavit-in-opposition of ONGC, it is indicated that the Respondent No.9 was asked to submit the Factory Licence, although there was no such requirement in the tender document. In response thereto, the Respondent No.9 submitted the Factory Licence dated Statement is also made to the effect that the Respondent No.9 had submitted the letter of the Additional Chief Inspector of Factories certifying that Respondent No.9 had applied for the factory licence on This was done prior to the opening of tender on Also, amongst the documents submitted by Respondent No.9 along with bid is the Certificate of Issuance (EM Part-II), which makes mention at Sl. No.10 of the Application Form enclosed therewith, to the effect that the unit of Respondent No.9 is registered under the Factories Act, albeit incorrectly at that point of time.

27 From the foregoing discussion it is amply clear that the requirement of a Factory Licence has been one of the dominant factors and a necessary condition in respect of the work in question. 56. At Clause 3.0 of the Bid Evaluation Criteria, a fine distinction is made to show that the requirement of registration under Act of Govt. of Assam, on the one hand, and the requirement of proof of workshop, on the other, are two different factors altogether. Whereas, the former is a requirement that can be had by means of a licence, the latter can be had by a certificate issued from the office of the concerned District Industries. One cannot be a substitute for the other. 57. The Certificate of the District Industries is directly proportional to the provisions under the MSME Act, Read with the Statements of Objects and Reasons thereto, any person intending to establish a micro or small or medium enterprise has to submit a Memorandum before the appropriate authority as specified by the State Government which, according to the Notification No. S.O. 941 (E) dated , is the District Industries Centre under which jurisdiction the enterprise is proposed to be located. The Certificate of Issuance in the form of Entrepreneur Memorandum Part-II, in proof of the establishment of the enterprise as well as commencement of production/activity, comes with an Acknowledgement issued by the District Industries Centre. The filing of a Memorandum under section 8 of the MSME Act, 2006 is a mandatory requirement and attracts the penalty under section 27 in case of contravention. Without any doubt, the unit of respondent no. 9 is registered with the District Industries & Commerce Centre, Sivasagar vide EM Part-II under the MSME Act, It is a running workshop and proof thereof can be had not only from the Certificate of Issuance (EM Part-II) dated but also from the Inspection Report of the Committee deputed by the respondent ONGC, which had visited the workshop site of respondent no. 9 on and

28 To what extent a Certificate of Issuance (EM Part-II) is beneficial? The answer can be had from the Certificate itself. It enables the unit to apply for various incentives under the State/Central Government, as is apparent from serial no. (3) of the NB thereto. The issuance of an Acknowledgement does not confer any right, in as much as, the entrepreneur is required to seek requisite clearance/licence/permit as statutorily required under the laws of the Central Government/State Government/UT Administration/Court Orders. This part is clarified in the Note appearing in the Certificate itself. The MSME Act, 2006 which came about by virtue of the declaration made under section 2 of the IDR Act, 1951 is a central enactment providing for an appropriate legal framework in order to facilitate the growth and development of micro, small and medium enterprises. The legal framework involves the grant of Certificate of Issuance (EM Part-II) by the District Industries Centre in proof of the existence of the workshop/unit as well as the basis for seeking incentives under the various schemes of the State/Central Government. 59. The foregoing discussions points to the direction that the provisions under the MSME Act, 2006, to the extent applicable in the facts and circumstances of this case, is for ascertaining due compliance of proof of existence of the workshop. Registration of the unit for the purpose of carrying on manufacturing process would require a Factory Licence under the Assam Factories Rules, 1950, framed under the provisions of the Factories Act, Clause 3.0 of the Bid Evaluation Criteria is an essential condition of the tender which has to be rigidly enforced. The Factory Licence under the Assam Factories Rules, 1950 is sine qua non for due compliance of the requirement of registration under Act of Govt. of Assam. At the same time there is also the requirement of a Certificate to be issued from the District Industries office, but only to the extent of