hc259 Asraya Caterers vs The State Of Andhra Pradesh on 15 February, 2022

Andhra Pradesh High Court – Amravati

1. sraya Caterers vs The State Of Andhra Pradesh on 15 February, 2022
2. ench: R Raghunandan Rao

HON’BLE SRI JUSTICE R. RAGHUNANDAN RAO

W.P.Nos.26767 & 27354 of 2021

ORDER:

The petitioners in both these cases are aggrieved by the award of contract for supply of diet etc., by letter date 11.11.2021, by the Convenor of the 2nd respondent District Diet Management Committee, Guntur, to the 7th respondent in W.P.No.26767 of 2021 and the 8th respondent in W.P.No.27354 of 2021 by the official respondents for supply of diet to in-patients and duty Doctors in Government General Hospital, Guntur, (hereinafter referred to as the Hospital) whose superintendent has been arrayed as the 4th Respondent in W.P.No. 27354 of 2021. They pray for setting aside the same.

• As both these writ petitions are essentially seeking to challenge the same order, these writ petitions are being disposed of by this common order.

• The case of the petitioner in W.P.No.26767 of 2021 is that he is a diet contractor, who was interested in p artic i pating in the tender floated by the 2nd respondent vide Rc.No.1581/HDS/2020-21, dated 15.09.2021 for supply of diet in the Hospital. However, he had not participated in the said tender as he was unable to file the VAT / GST clearance certificate, which is a mandatory requirement under the terms and conditions of the tender document. The petitioner contends that he is aggrieved by the fact that the 7th respondent in the W. P. No. 26767 of 2021, who was similarly situated and had not furnished the latest VAT / GST clearance certificate, had been awarded the contract by waiver of the said conditions. The petitioner contends that the said waiver should have been communicated to all the concerned and persons like him should 2 RRR,J W.P.Nos.26767 & 27354 of 2021 have been given an opportunity to participate in the tender. He relies upon the judgment of the Hon’ble Supreme Court in Ramana Dayaram Shetty vs. International Airport Authority of India and Ors.,1.

• The case of the petitioner in W.P.No.27354 of 2021 is as follows:

1. The tender process to be followed under the above tender notification was that the interested bidders had to submit their bid in two separate covers. The first cover, termed technical bid, was to contain the eligibility, technical and financial criteria and the second cover, termed financial bid, was to contain the price quoted by the bidder. The tender committee was to evaluate the technical bid to ascertain whether the bidders had complied with all the mandatory requirements and were qualified to participate in the tender. Thereafter, only the second covers of the bidders, who had qualified in the technical bid, were to be opened and considered for award of the contract.

• The petitioner, who is said to have cleared the technical bid, contends that the 8th respondent in the writ petition did not file VAT / GST returns for the immediately preceding years and should have been disqualified on that ground. The petitioner further contends that the 8 th respondent did not

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Asraya Caterers vs The State Of Andhra Pradesh on 15 February, 2022

have a GST licence, which was another ground for disqualifying the 8th respondent. The petitioner further contends that despite these difficulties, the bid of the 8th respondent was cleared and the contract was awarded to the 8th respondent.

• It is the further case of the petitioner that the 8th respondent was earlier supplying diet to Niloufer Hospital, Hyderabad and the Superintendent, Niloufer Hospital, Hyderabad, had requested the District (1979) 3 SCC 489 3 RRR,J W.P.Nos.26767 & 27354 of 2021 Collector, Ranga Reddy to recover an amount of Rs.1,13,28,320/- from the 8th respondent for having claimed excess bills without supplying proper and required diet. A Criminal Complaint being Cr.No.98 of 2021 was also registered against the 8th respondent in CCS, Hyderabad on 17.06.2021.

• In the light of the above facts, it is the contention of the petitioner that the official respondents modified the tender conditions contrary to the terms laid down in G.O.Ms.No.325, MH&FW, dated 01.11.2011 and the award of such contract is clearly in violation of the tender conditions as well as G.O.Ms.No.325, dated 01.11.2011.

• The 4th respondent, who is the Superintendent of the Hospital and the 8th respondent have filed their counter affidavits. The 4th respondent stated that five bidders had participated in the tender and all of them were found to be eligible to participate in the financial bid. As far as the allegations relating to non-filing of GST returns is concerned, the 4th respondent at paragraph-11 of the counter affidavit states that the tender committee unanimously decided not to consider GST complaints due to pending diet bills in various institutions in the State and that the committee kept aside the GST issue. Further, the 8th respondent in this writ petition had submitted insufficient set of GST documents relating to the State of A.P. but had filed a complete set of GST returns for the State of Telangana and hence the committee considered the documents of Telangana State and awarded marks in the technical bid.

• The 4th respondent, in paragraph-12, also states that one of the members of the committee had raised the issue of the 8 th respondent’s GST registration being cancelled and the same was considered and essentially set aside on the ground that an official of the 4 RRR,J W.P.Nos.26767 & 27354 of 2021 GST department had given an opinion that the GST registration number can be retrieved on payment of all the taxes due along with penalties etc.

• Paragraph-17 of the counter of the 4th respondent states that certain grievances had been expressed by the patients in relation to the quality and time of diet supplied in the Hospital, due to which alternative arrangements had been made for supply of diet to the A.P. Tourism Development Corporation from 23.06.2021 and the said Corporation had supplied diet from 23.06.2021 to 30.09.2021 after which the 8th respondent, who was the existing diet contractor had supplied diet to the Covid-19 patients from 01.10.2021 onwards without any remarks about the present quality and time of the diet supplied.

• The 4th respondent, after justifying the acceptance of the technical bid of the 8th respondent, further stated that all the bidders had quoted a uniform minimum rate of Rs.36/- per patient. On account of this uniform rate, the 2nd respondent committee, which was processing the tenders,

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Asraya Caterers vs The State Of Andhra Pradesh on 15 February, 2022

decided to verify the past supply of diet by the bidders as a method of finalising the bidder and awarding of contract. In that process, the hospitals to which the bidders had supplied diet were contacted and the information obtained from those hospitals was placed before the committee. In view of the favourable reports received in relation to the 8 th respondent, it was decided to award the contract to the 8th respondent. It is stated that the hospitals contacted by a Member of the Tender Committee in relation to the performance of the 8th respondent were the Government General Hospital, Vijayawada and the Chest and T.B. Hospital, Hyderabad.

• The 8th respondent filed a counter affidavit in which it was stated that the complaints made against the 8th respondent in relation to 5 RRR,J W.P.Nos.26767 & 27354 of 2021 the supply of diet in Niloufer Hospital, had been challenged by him before the Hon’ble High Court and as such those issues are still pending before the Hon’ble High Court and no finding of fact has been given against the 8th respondent. The 8th respondent also states that GST registrations in the State of Telangana and the State of Andhra Pradesh had been cancelled/suspended on account of non-payment of GST dues. He submits that this occurred due to the non-payment of dues by the respective States for the diet supply by the 8th respondent and as such the 8th respondent was unable to pay the GST dues. He submits that non- payment of GST dues was on account of conduct of the State of Telangana and the State of Andhra Pradesh and as such the same cannot be held against him.

1. The petitioner filed a reply in which the petitioner stated that the requirement of filing of returns had not been complied with by the 8th respondent as he had filed returns for only one year in the state of Telangana as can be seen from the returns filed by him along with his counter. Further, the petitioner also contended that the 8th respondent was the supplier of diet in the Hospital itself, and the 8th respondent had been warned that the quantity and quality of diet supplied by the 8th respondent was below the standard by the 4th respondent on 22.05.2021 and that supply of diet by the 8th respondent was stopped and the A.P. Tourism Development Corporation was called upon to supply diet from 19.06.2021 onwards by the 4th respondent by proceedings dated 19.06.2021. The proceedings bearing Rc.No.1581/HDS-II/2020-21, dated 22.05.2021 and the proceedings Rc.No.158/HDS-11/2020-21, dated 19.06.2021 were filed along with reply affidavit. These documents have not been denied by either the 4th respondent or the 8th respondent. The 6 RRR,J W.P.Nos.26767 & 27354 of 2021 petitioner had also filed the printouts from the website of the GST authorities to show that the GST registration of the 8th respondent in the State of Telangana had been cancelled with effect from 03.02.2021 and suspended with effect from 02.09.2021 in the State of Andhra Pradesh. These documents are also not disputed.

1. Heard Sri P. Sai Surya Teja, learned counsel appearing for the petitioner in W.P.No.26767 of 2021, Sri Posani Venkateswarlu, learned counsel appearing for the petitioner in W.P.No.27354 of 2021, learned Government pleader for Medical and Health and Sri K.M. Krishna Reddy, learned counsel appearing for the 8th respondent.

1. The terms and conditions of the tender had been formulated in accordance with G.O.Ms.No.325, dated 01.11.2011. The documents required to be submitted as per the terms of the tender, are :-

C. Documents to be submitted under ‘A’ above

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Asraya Caterers vs The State Of Andhra Pradesh on 15 February, 2022

• (a) Registration certificates of local authority/sales tax authorities in case of a proprietorship firm along with the latest Income Tax Return filed; (b) Registration certificate under the Indian Partnership Act along with the partnership deed and the latest Income Tax Return filed in case of Partnership firm; (c) Incorporation certificate/certificate of commencement of business under the Companies Act in case of a company, as the case may be.

• xxxxxxx

• xxxxxxx

• Xxxx D. Documents to be submitted under ‘B’ above

• Experience Certificate/s issued by the concerned hospital authorities or institutions, as the case may be, duly signed by the authorised and competent official affixing the seal.

• xxxx

• Income Tax returns filed for the immediate preceding 3 years.

• VAT returns filed for the immediate preceding 3 years.

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W.P.Nos.26767 & 27354 of 2021

Where the tender is for hospital of below 50 beds and the Tenderer is not able to submit the IT & VAT returns on valid and reasonable grounds, the District Diet Management Committee being the tender inviting authority, shall have the right to accept the tender on such terms and conditions as it may consider necessary and appropriate.

• xxxx

• xxxx

13. Therefore the documents that need to be filed by the 8 th respondent along with his tender documents are (1) sales tax registration or the registration certificates of local authorities or the sales tax authorities along with latest income tax returns; (2) experience certificate issued by the concerned hospital authorities; (3) income tax returns filed for the immediately preceding three years; and (4) VAT returns filed for the immediately preceding three years.

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Asraya Caterers vs The State Of Andhra Pradesh on 15 February, 2022

1. Condition – C (i) extracted above sets out different documents required from the bidders, depending upon the business/organisation of the bidder. In the case of a partnership firm registration certificate under the Indian Partnership Act is required. In the case of Company, incorporation certificate of the company / certificate of commencement of business of the company are required. In the case of an individual, registration certificate of local authority/sales tax authority is required. In the case of partnership firms and individuals, the latest income tax return filed is also required. It would appear that the purpose for which these documents are being sought is to ensure that the bidder is a business entity, which is carrying on business.

1. Keeping in view the purpose for which these documents are sought, non-filing of these documents would be fatal to the case of the 8 RRR,J W.P.Nos.26767 & 27354 of 2021 bidder. In the present case, it is an admitted fact on both sides that the 8th respondent did not have a registration certificate issued by the GST authorities nor did the 8th respondent produce any registration certificate of a local authority such as a certificate under the Shops and Establishments Act.

1. The petitioner contends that the 8th respondent had not complied with the requirement of the filing of VAT returns for the immediately preceding three years. It is true that the value Added Tax Act in both the States of Telangana and Andhra Pradesh are now not in force as far as the present contract is concerned. However, this provision would have to be construed to mean that the GST returns as it is the GST Act, which is in force in relation to sales tax.

1. It is the case of the 4th and 8th respondents that even though the 8th respondent had not filed the GST returns for the immediately preceding three years, as far as the State of Andhra Pradesh is concerned, the GST returns filed by the 8th respondent pertaining to the State of Telangana were taken into account as they were a complete set. The 4th respondent had produced the file relating to the tender documents filed by all the bidders and the process undertaken by the tender committee for finalising the bids.

1. The papers placed before this Court contains a statement showing the details of documents produced by the bidders in the technical bid (cover-1). The documents submitted by the 8th respondent were considered at Sl.No.3 of that statement. In the columns relating to VAT returns for immediately preceding three years, (which was corrected with pencil to 5) shows that the returns for the years 2017-2018 and 2020- 2021 were considered for the Sate of Telangana and the returns for the 9 RRR,J W.P.Nos.26767 & 27354 of 2021 years 2017-2018 and 2019-2020 were considered for the State of Andhra Pradesh.

1. The requirement of Clause-D (iv) is that the bidders are required to file returns for the immediately preceding three years. The tender was floated on 15.09.2021. The immediately preceding three years would be 2018-2019, 2019-2020 and 2020-2021. The evaluation statement, relating to the 8th respondent, shows that only two years each were considered for each of the States. This would mean that the 2nd respondent committee had not evaluated the GST returns for three years. The file of the 8th respondent placed before this Court shows that the 8th respondent had filed the GST returns, in the State of Telangana for the years 2017-2018 to 2020-2021. However, the VAT returns for the year 2020-2021 is only for the months of April, May and June, 2020. The

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Asraya Caterers vs The State Of Andhra Pradesh on 15 February, 2022

returns for the remaining period have not been filed along with the tender document.

• The requirement of the tender document was filing of VAT / GST returns for the immediately preceding three years of 2018-2019 to 2020-2021. The 8th respondent filed the GST returns of 2017-2018, 2018- 2019 and 2019-2020, and the returns for three months for the year 2020- 2021. The 2nd respondent committee did not consider all these returns and appears to have evaluated only the returns for two years. Even otherwise, the returns for the 3 immediately preceding years, can only be taken into account and the returns for the year 2017-18 cannot be taken into account. The returns available for consideration before 2nd Respondent committee, are the returns for 2018-19, 2019-20 and the returns for 3 months in the year 2020-21. Viewed from any angle, the requirement of filing the VAT / GST returns for the immediately preceding 10 RRR,J W.P.Nos.26767 & 27354 of 2021 three years has not been complied with. The question that would then arise is whether, this requirement can be waived by the 2nd respondent diet committee. The note appended after Instruction D (iv) stipulates that the Diet Committee can waive that requirement in cases where the tender relates to a hospital which has less than 50 beds. This would mean that the power of the Diet Committee to waive such requirements is restricted to tenders called for hospitals ,which have less than 50 beds, and such power is not available for tenders called for bigger hospitals.

• The 4th Respondent, in his counter, at paragraph No.2, has set out the provisions of G.O.Ms.No. 325, which stipulates that I.T. and VAT returns for 5 years need to be filed for tenders relating to Teaching/District Hospitals. If these terms were to be applied, there would be an even greater breach of the requirements.

• A further issue that has come up, in the course of hearing of the writ petition, is whether the contract could have been awarded to the 8th respondent on account of the feed back obtained about the superior performance of the 8th respondent. This feed back is said to have been obtained from the Government General Hospital, Vijayawada and Chest and T.B. Hospital Hyderabad. However, the 4th respondent is absolutely silent over the fact that the 8th respondent was supplying diet to the Hospital itself and that the 4th respondent superintendent of the Hospital, had issued a written caution to the 8th respondent in May, 2021 about the quality of the diet and the delays in serving diet within time to the patients. The 4th respondent is also silent about the fact that the supply of diet by the 8th respondent had been suspended from June, 2021 and the A.P. Tourism Development Corporation was called upon to supply diet to the patients for the months of June to September, 2021.

11 RRR,J W.P.Nos.26767 & 27354 of 2021

23. It is a peculiar and curious situation that the 4th respondent refuses to look at the diet experience of the of the Hospital, relating to the quality and performance of the 8th respondent and opinions are sought from other hospitals as to the performance of the 8th respondent for awarding the contract of supply of diet by the 8th respondent in the Hospital.

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• A conspectus of the above facts would show that the 8th respondent had not complied with the two requirements of furnishing the registration certificate under the GST Act and the GST returns for the immediately preceding three years. Further, the 4th respondent refuses to look at the performance of the 8th respondent in his own hospital and certifies the superior performance of the 8th respondent on the basis of the feed back obtained from other hospitals.

• Apart from the aforesaid lacunae, the fact also remains that the 4th respondent in its counter affidavit, has specifically stated that the issue of production of GST documents had been set aside in its entirety by the committee. This was beyond the power of the 2nd respondent committee and is fatal to the entire tender process. Further, even if such a course of action was available, the judgment of the Hon’ble Supreme Court in Ramana Dayaram Shetty vs. International Airport Authority of India and Ors., would apply on all fours. The Hon’ble Supreme Court in the above judgment had categorically held that where there is a departure from the standard of eligibility laid down in the notice for tenders, the said departure would have to be held to be a denial of the equality of opportunity to those, who have not applied, considering themselves ineligible.

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• For all these reasons, it must be held that the qualification of the 8th respondent as a person eligible to participate in the financial bid and the award of contract to the 8th respondent would have to be set aside on account of the violation of the tender conditions and on account of the fact that the direct experience of the hospital in question was not taken into account while evaluating the performance of the 8 th respondent.

• Accordingly, the writ petition is allowed and the award of contract for supply of diet etc., by letter date 11.11.2021, by the Convenor of the 2nd respondent District Diet Management Committee, Guntur, to the 8th respondent, is set aside. It would be open to respondents 1 to 4 to take such steps, as are necessary for issuing a fresh notification for conduct of a fresh tender process for supply of diet to patients in the Government General Hospital, Guntur. There shall be no order as to costs.

As a sequel, pending miscellaneous petitions, if any, shall stand closed. _________________________ R. RAGHUNANDAN RAO, J.

15th February, 2022 Js.

13 RRR,J

W.P.Nos.26767 & 27354 of 2021

HON’BLE SRI JUSTICE R. RAGHUNANDAN RAO

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Asraya Caterers vs The State Of Andhra Pradesh on 15 February, 2022

W.P.Nos.26767 & 27354 of 2021

15th February, 2022

Js.

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