05 Feb 2121

Specific guidelines should be made by corporation to avoid ambiguity in settlement - Gauhati High Court

Case : The Assam Fisheries Development Corporation Ltd. and Ors. v. Nihar Ranjan Hazarika and Ors. Writ Appeal no. 8/2021

Court : Gauhati High Court

Bench : Chief Justice Sudhanshu Dhulia

Decided on : 05 Feb 2121

The Relevant Statutes

Rule 8(c)(ii), 12 of Assam Fishery Rules, 1953

Brief Facts of the Case

1. A notice inviting tender (NIT) was given by the Corporation on 18th February 2020. Bids were invited only for people belonging to fishing communities and from “Samabai Samitis”, cooperative societies of fishermen, for settlement of lakes and ponds for purpose of fisheries which is located within the jurisdiction of Corporation of various districts of State of Assam.

2. Bids were invited for 36 “Beels”. Teliadonga Krishnachia Kurjan Beel “Min Mahal” bid was accepted which was located in the district of Shivsagar and they had land and a water area of 13.69 and 13.19 Hectors, respectively and which was at item no. 35 of notice inviting tender issued on 18th February 2020. The conditions mentioned in the tender were that no tender would be accepted whose value would be less than the minimum value mentioned against the Min Mahal and the minimum value for Teliadonga Krishnachia Kurjan Beel “Min Mahal” was Rupees 5,26,800.00 per year.

3. There were 4 bidders against Min Mahal named: Dilip Hazarika, Nihar Ranjan Hazarika, Sanjib Das, Babul Das. There were 2 bid processes i.e., technical bid and financial bid, only if they would qualify technical bid their financial bid would open. All 4 of them qualified for technical bid and their financial bid opened as follows:

a. Dilip Hazarika: Rupees 73,92,007.00 for 7 years and for 1-year Rupees 10,56,001.00

b. Nihar Ranjan Hazarika: Rupees 61,95,007.00 for 7 years and for 1-year Rupees 8,85,001.00

c. Sanjib Das: Rupees 54,66,000 for 7 years and for 1-year Rupees 7,80,857.00

d. Babul Das: Rupees 45,66,007 for 7 years and for 1-year Rupees 6,52,286.00

4. Bid of the lowest bidder was accepted i.e., Babul Das and not of 3 highest bidders. So the writ was filed in court regarding this issue.

The Issue of the Case

Whether Corporation was right in accepting the bid of the lowest bidder?

The Observations of the Court

1. The Honourable Gauhati High Court opined that Corporation is justified in rejecting the bid of the highest bidder as the rate quoted by them was extremely exorbitant and if the bid was accepted in his favour, it would cause loss to Corporation as the highest bidder can leave in midway and Corporation was within its rights to evaluate the stipulation of the bids in between the viable range as per clause 5(1) of Memorandum of Association and Article of Association. As per clause 4.7 if the bidder quotes exorbitant rates, then Corporation has the discretion to accept or reject the tender.

2. The Honourable Gauhati High Court opined that in terms of Regulation 5.1 of the Regulations, Corporation should have quoted minimum and maximum tender values, so that bidder can only quote the rate between those values. If both values are not quoted and only the minimum value is quoted, so Corporation doesn’t have the right to say that the bid is exorbitant. The technical bid quoted by Babul Das was more reasonable as compared to other bidders and it was beneficial for the Corporation and Babul Das. 

3. The Honourable Gauhati High Court opined that as the technical committee and finance committee evaluated the bid of bidders and applied mind in viability aspect and Corporation viability did not support the documents presented by them before the court. As the highest bidder qualified technical bid and his financial bid was opened. So, it can’t be expected that the highest bidder didn’t have knowledge and experience of fishing. The reason given by Corporation for not accepting the highest bid is that the bidder would leave the Corporation midway and Corporation would suffer loss.

4. The Honorable Gauhati High Court opined that provision of contingency is there for corporations and they can recover their financial loss and corporations can also take additional security, so it can’t be made the reason for not accepting the bid of the highest bidder.

5. The Honorable Gauhati High Court relied on the judgment of Jewti NGO vs. State of Assam and Ors. reported in 2017(4) GLT 762, in this case, it was held that process of elimination of superficial bidders should be transparent and not ambiguous. If the authorities are of the view that they will not be accepting an exorbitant amount, they should mention it in the clause of notice inviting tender. Authorities can also mention strict rules and regulations regarding default as it would deter parties from quoting exorbitant rates.

6. The Honorable Gauhati High Court relied on the judgment of M/s 129 Haria Dablong Min Mahal Samabai Samiti Ltd. And etc. vs. Assam Fisheries Development Corporation Ltd. reported in AIR 2001 Gau 139, in this case, it was held that Assam Fishery Rule 1953 gives the Corporation the right to reject the bid of a bidder in a given contingency.

The Decision Held by the Court

1. Writ appeals were dismissed

2. The settlement must be made in favour of Dilip Hazarika i.e., the Highest bidder and Corporation would be at liberty to take additional security including a bank guarantee from him as permissible under law.

Click here to view/download the judgement >