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NON – REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1437 OF 2016 (ARISING OUT OF SLP (C) NO. 9170 OF 2012)

STATE OF UTTAR PRADESH & ANR. …..APPELLANT(S)

VERSUS

M/S. AL FAHEEM MEETEX PRIVATE LTD. & ANR. .....RESPONDENT(S)

J U D G M E N T

A.K. SIKRI, J.

Leave granted.

2) This appeal is directed against the final judgment and order dated

July 26, 2011 passed by the High Court of Judicature at Allahabad

in Civil Misc. Writ Petition No. 71568 of 2010.  The High Court,

vide  the  impugned  judgment,  was  pleased  to  allow  the  writ

petition  preferred  by  respondent  No.1  herein  by  quashing  the

decision  dated  November  22,  2010  of  the  Bid  Evaluation

Committee  (for  short,  'BEC')  and  directed  that  the  bid  of  the

appellant, as accepted by it on September 08, 2010, be dealt with

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in accordance with law from the stage of such acceptance.

3) The  dispute  pertains  to  the  construction,  maintenance  and

operation of  a slaughter house in Meerut,  Uttar  Pradesh.  The

appellants are intending to construct a slaughter house with ultra

modern technology.  Origin of this plan of the Government can be

traced  to  the  directions  which  were  given  by  this  Court  vide

judgment dated December 07, 2006 in the case of Nagar Nigam,

Meerut v. Al Faheem Meat Exports Pvt. Ltd. & Ors., (2006) 13

SCC 382 emphasizing the  need for  modernising  the slaughter

houses according to the prescribed standards.  Pursuant to the

aforesaid directions of this Court, the State Government vide its

G.O.  dated  August  06,  2008,  laid  down  Policy  Guidelines  for

operation  of  animal  slaughter  houses  owned  by  urban  local

bodies in the State on the basis of  Private Public Participation

(PPP) Model.  It was provided that slaughter houses owned by

urban local bodies can be given on PPP Model to private persons

by public auction/tender process on the condition that the private

participants will have to modernise slaughter houses according to

the  prescribed  standards.   Accordingly,  the  State  Government

vide  its  G.O.  dated September  29,  2009 constituted BEC with

regard  to  the  operation  of  animal  slaughter  houses  owned  by

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urban local  bodies in  the State on the basis  of  PPP Model  in

accordance with G.O. dated August 06, 2008 and June 26, 2009.

The BEC was required to follow the Guidelines as laid down vide

G.O.  dated  June  29,  2007  for  selection,  contracting  and

monitoring  of  Consultants  and  Private  Developers  for  PPP

Projects in the State.  As per the Guidelines, the selection of the

Developer was to be made through two stage bidding process,

i.e.:

Stage I – Shortlisting of Developer through EOIs in the form of Request for Qualification (RFQs)

Stage II – Selection of Developer from shortlisted, developer on the basis of Request for Proposal (RFPs) submitted by them containing two stage bids i.e. Technical and financial bids.

4) The Guidelines provide for a PPP.  The BEC was empowered to

examine  all  aspects  and  stages  of  developer  selection,  i.e.

issuance of  EOI,  evaluation  of  EOI,  shortlisting  of  Developers,

deciding terms of  reference,  issuance of  Request  for  Proposal

(RFP),  evaluation  of  technical  and  financial  proposals,

negotiations and final selection of Developer.  After the requisite

evaluations,  the  BEC  was  to  recommend  the  name  of  a

Bidder/Developer to the Competent Authority for award of contract

and the final approval of the Developer for the PPP project was to

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be granted by the Competent Authority.  As per the Guidelines,

the  Competent  Authority  was  the  Cabinet  of  Ministers  of  the

Government of Uttar Pradesh.

5) The  Nagar  Nigam,  Meerut,  published  a  Notice  dated  May  26,

2010  inviting  tenders  of  Request  for  Qualification  (RFQ)  for

establishment  of  a  new  modern  slaughter  house  at  village

Ghosipur, Meerut on Build-Operate and Transfer (BOT) basis.  In

the Notice,  the estimated cost  of  the project  was shown to be

101.76 crores and the project was to be implemented within 24₹

months.  Pursuant to the aforesaid Notice, financial and technical

bids were received from three firms and the consultant had found

all the three bids to be deficient and recommended for invitation of

fresh  bids.   Accordingly,  the  Nagar  Nigam  again  published  a

Notice dated June 29, 2010 inviting tenders of RFQ.  Pursuant to

the  aforesaid  Notice,  five  financial  and  technical  bids  were

received  from  five  firms.   Out  of  them,  four  companies  were

permitted  to  participate  in  the  RFP stage.   Subsequently,  the

Nagar  Nigam  issued  RFP  for  construction,  operation  and

maintenance of modern slaughter house at Ghosipur, Meerut on

July  29,  2010.   Pursuant  to  the  aforesaid  RFP, tenders  were

submitted by only three firms.

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6) The BEC in its meeting dated September 08, 2010 opened the

sealed tenders of RFP of three firms, namely, (i) Figro Rifico Ilana

Ltd., Ghaziabad, (ii) M/s. Hind Agro Industries Ltd., and (iii) M/s. Al

Faheem Meat Exports Pvt. Ltd., i.e. respondent No.1 herein.  Out

of the above three bids, the bid offered by Figro Rifico Ilana Ltd.,

Ghaziabad was found to be incomplete as the documents as per

the terms of RFP were not annexed.  Thus, only two bids were

found eligible for consideration.  M/s. Hind Agro Industries Ltd. in

its bid had offered concession period of 19 years and respondent

No.1  had  offered  the  concession  period  of  12  years.   As

respondent No.1 had offered minimum concession period, it was

selected by the BEC for recommendation as a Developer.

7) Before  the  recommendation  could  even  be  forwarded,

inter-departmental  consultation in accordance with the Rules of

Business  took  place.   It  was  done  prior  to  the  placing  of  the

recommendations  of  the  BEC before  the  Cabinet  of  Ministers/

Competent  Authority.   In  the  said  consultation,  the  Finance

Department  pointed  out  certain  procedural  irregularities  in  the

process and suggested for reviewing the matter as the number of

valid  tenders  received  was  very  less.   Following  issues  were

raised by the Finance Department:

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(i)  Only two bids were found to be valid by the BEC.  In view of Rule 21

of the Financial Handbook, decision has to be normally taken on

the  basis  of  three  or  more  bids.   If  less  number  of  bids  are

received, then it  is presumed that there must have been some

deficiency in making wide publicity in inviting tenders.

(ii)  Municipal Corporation being a separate Constitutional body from

that  of  the  State  Government,  it  is  necessary  to  consider  the

provisions of Article 19A of the Constitution of India to consider as

to who is the Competent Authority for taking final decision.

(iii)   Since the number of  valid tenders are very less,  therefore,  the

matter should be reviewed and if deemed proper decision should

be taken for re-invitation of tenders.

8) Pursuant  to  the  abovesaid  suggestions  of  the  Finance

Department,  the  matter  was  placed  before  the  BEC.  After

deliberating upon the comments of the Finance Department, the

BEC, in its meeting dated November 22, 2010, took the following

decisions:

(i)   Decisions  taken  by  the  BEC  in  its  earlier  meeting  held  on

September  08,  2010  are  cancelled  in  view  of  receipt  of  less

number of valid tenders.

(ii)  Fresh tenders of RFQ/RFP be published for construction of modern

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slaughter house on PPP model at village Ghosipur, Meerut.

(iii)  Meeting of pre-bid of RFQ be convened on December 07, 2010,

and last date for submission of RFQ be fixed as December 15,

2010.

(iv)  With regard to determining the issue of Competent Authority who

will  take  the  final  decision,  it  was  decided  that  appropriate

decision for the schemes to be implemented on PPP Model by

Corporation be taken at the level of the State Government.

9) Pursuant to the decision of BEC in its meeting dated November

22, 2010, the Nagar Nigam, Meerut issued fresh advertisement

on  December  01,  2010  inviting  applications  for  RFQ.   Being

aggrieved,  respondent  No.1  herein  preferred  Civil  Misc.  Writ

Petition No. 71568 of 2010 before the High Court of Judicature at

Allahabad.  The High Court, by means of the impugned judgment,

has allowed the same by quashing the decision of  BEC dated

November 22, 2010.

10) A perusal of the judgment of the High Court would reveal that the

High Court has primarily been persuaded by the fact that once the

BEC in its first meeting held on September 08, 2010, had found

that respondent No.1 was suitable for  award of  the contract  in

question,  it  could  not  have  revisited  the  issue  and  review the

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same in its subsequent meeting dated November 22, 2010, that

too without any notice to respondent No.1.

11) It is argued by the learned counsel for the appellant that the High

Court is not justified in quashing the decision of the BEC dated

November 22, 2010 without considering the terms as contained in

Clause 2.7.1 of the RFP and the Guidelines laid down vide G.O.

dated June 29, 2007 for selection of Developers for PPP Projects

wherein discretion is conferred on the authority to accept or reject

any or all bid proposals.  The steps for selection of consultant as

laid  down  in  Part-I  of  the  Guidelines  are  applicable  for  the

selection  of  Developer  as  well.   Chapter  II  of  Part  I  of  the

Guidelines specifically provides that  the employer will  have the

right to reject all proposals.  The relevant portion of the Guidelines

are as under:

“Rejection of All Proposals, and re-invitation

The  Employer  will  have  the  right  to  reject  all proposals.   However,  such  rejections  should  be well considered and normally be in cases where all the bids are either substantially in deviation to the TOR or considered unreasonably high in cost.  If it is  decided  to  re-invite  the  bids,  the  terms  of reference should be critically reviewed/modified so as  to  address  the  reasons  of  not  getting  any acceptable bid in the earlier invitation for Bids.”

Learned counsel also pointed out that Clause 2.7 of the RFP is

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also to the same effect which empowers the Authority to accept or

reject any bid proposal and annul the whole bidding process.

12) Learned  counsel  for  respondent  No.1,  on  the  other  hand,

impressed  upon  the  reasons  given  by  the  High  Court  and

submitted that the appeal be dismissed.

13) We find force in the aforesaid argument of the learned counsel for

the appellants.  In the first instance, it is to be noted that BEC is

only a recommendatory authority.  It is the Competent Authority

which is to ultimately decide as to whether the recommendation of

BEC is  to  be  accepted  or  not.   We are  not  entering  into  the

discussion as to whether this Competent Authority is the State

Government  or  the  Municipal  Corporation.   Fact  remains  that

there  is  no  approval  by  either  of  them.   Matter  has  not  even

reached the Competent Authority and no final decision was taken

to accept the bid of respondent No.1 herein.  Much before that,

when the BEC was informed that there were only two valid bids

before  it  when it  made its  recommendation  on  September  08,

2010 and as per the Financial Rules there must be three or more

bids  to  ensure  that  bidding  process  becomes  competitive,  the

BEC realised its mistake and recalled its recommendation dated

September 08, 2010.  It cannot be said that such a decision was

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unfair,  mala  fide  or  based  on  irrelevant  considerations.   This,

coupled with the fact that the authority has right to accept or reject

any bid and even to annul the whole bidding process, the High

Court was not justified in interfering with such a decision of the

BEC.

14) The  High  Court  has  also  gone  wrong in  finding  fault  with  the

decision of the BEC by holding that such a subsequent decision

could not have been taken by the BEC without notice to or in the

absence of the appellant.  When the decision making process had

not reached any finality and was still in embryo and there was no

acceptance  of  the  bid  of  respondent  No.1  by  the  Competent

Authority,  no  right  (much  less  enforceable  right)  accrued  to

respondent No.1.  In such a situation, there was no question of

giving any notice or hearing to respondent No.1.

15) In any case, there is yet another very forceful and strong reason

to interfere with the decision taken by the High Court.   Notice

inviting  tenders  of  RFQ was  published  way  back  on  May  26,

2010.  Almost six years have passed.  With this passage of time,

it  becomes  all  the  more  important  to  have  fresh  tendering  for

establishment of 'New Modern Slaughter House', Meerut by giving

wide publicity.

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16) We,  thus,  allow this  appeal  and set  aside the impugned order

passed by the High Court.  There shall, however, be no order as

to costs.

.............................................CJI. (T.S. THAKUR)

................................................J. (A.K. SIKRI)

................................................J. (R. BANUMATHI)

NEW DELHI; FEBRUARY 17, 2016.

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