Contractors Registration Rules, 2007 (Bihar)
- Order suspending registration of a firm has got civil consequence as it is
likely to affect not only the business concern but all those who are attached
therewith. Such decision are, therefore, required to be taken with much care
and circumspection.
IN
THE HIGH COURT OF JUDICATURE AT PATNA
CORAM:
HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD
Date
: 23-01-2019
Civil
Writ Jurisdiction Case No.22216 of 2018
M/s Topline
Infra Projects Pvt. Ltd. Having it’s place of business at Ambedkar Chowk,
Mirchai Bari, Katihar thorugh it’s authorized signatory namely, Rakesh Kumar,
son of Sri Nand Lal Khudania Resident of Deharai Bara Bazar, P.S. and District-
Katihar ... ... Petitioner
Versus
1. The State
of Bihar through the Principal Secretary, Department of Building Construction,
Govt. of Bihar, Patna.
2. The
Principal Secretary, Department of Construction,Govt. of Bihar, Patna.
3. The
Engineer-in-Chief-cum-Additional Commissioner cum Special Secretary, Department
of Building Construction , Govt. of Bihar, Patna.
4. The The
Additional Secretary-cum-Commissioner Financial Advisor, Department of Building
Construction, Govt. of Bihar, Patna.
5. The Chief
Engineer (North) Department of Building Construction Vishveshwariya Bhawan,
Bailey Road, Patna.
6. The
Executive Engineer, Department of Building Construction, Katihar. ... ...
Respondents
Appearance : For the Petitioner/s :
Mr.Gautam Kumar Kejriwal, Advocate Mr. Alok Kumar Jha, Advocate For the
Respondent/s : Mr. Uday Prasad, AC to GP-22
J U D G M E N T
Heard
learned counsel for the petitioner and learned counsel representing the State.
2. Petitioner is aggrieved by office order, as contained in letter no.
407 dated 05.11.2018, issued under the signature of Engineer-in-Chief cum
Additional Commissioner cum Special Secretary, Building Construction Department,
Government of Bihar, by which a decision has been taken in terms of
paragraph-11(ka) of the
Bihar Contractors Registration Rules, 2007 (hereinafter referred to as the “Rules
2007”) to place the registration of the petitioner under suspension for a
period of one year from the date of issuance of letter.
3. Mr. Gautam Kejriwal, learned counsel representing the petitioner has
raised a short point for consideration by this court. Attention of this court
has been drawn towards earlier round of litigation in CWJC No. 598/2018 and
CWJC No. 9127/2018, on both the occasions this court had been pleased to quash
the impugned order and directed the Engineer-in-Chief to consider the matter afresh
after due consideration of the reply of the petitioner.
4. It is pointed out that after the last order dated 16.05.2018 was
passed in CWJC No. 9127/2018, once again the respondent no. 3 has passed the
order dated 05.11.2018 by which the registration of the petitioner has been
placed under suspension for a period of one year.
5. Mr. Kejriwal, learned counsel submits that a perusal of the concluding
part of paragraph-1 of the impugned order would show that respondent no. 3 has reached
to a conclusion that the two contractors while filling up the tender had quoted
identical rates with respect to six items under non-scheduled category by
forming a cartel. The conclusion so arrived is not based on any positive
material or evidence rather it appears that the respondent no. 3 has drawn an
adverse inference against the petitioner only because he was of the view that
submission of tender by two contractors quoting identical rates as regard six
items cannot be a mere coincidence.
6. Learned counsel submits that in the case of Rajasthan Cylinders and Containers Limited Vs. Union of India and
Another (Civil Appeal No. 3546/2014), decided on
October 1, 2018, the Hon’ble Supreme Court was dealing with a question as to
whether the competition Commission of India (For short, ‘CCI’) had reached to a
conclusion with regard to entering into an agreement by the parties thereto
creating a cartel by drawing a mere inference. In the said case as many as 60
bidders had submitted their bid giving identical rate/cost and on a complaint
made before the CCI when it was examined the Commission came to a conclusion
that because the various suppliers submitted identical bids despite varying
cost and also that they have appointed common changes etc. there was a
possibility of an agreement among the bidders. CCI had come to a conclusion that
there was cartelization among the appellants in the said case with an intention
to rig the bids which were submitted pursuant to the tenders issued by the
Indian Oil Corporation Limited (in short, ‘IOCL’).
7. While dealing with the aforesaid issue the Hon’ble Supreme Court in
paragraph-93 and 98 of it’s judgment quoted the test laid down for this purpose.
Paragraph-93 and 98 of the judgment of the Hon’ble Supreme Court in the case of
Rajasthan Cylinders (supra) is quoted hereunder for a ready reference:
“93. To
recapitulate, the two prime factors against the appellants, which are discussed
by the CCI, are that there was a collusive tendering, which is inferred from
the parallel behaviour of the appellants, namely, quoting almost the same rates
in their bids. The parameters on the basis of which these aspects are to be
judged are stated in Excel Crop Care
Limited as follows:
“50. It
needs to be emphasised that collusive tendering is a practice whereby firms
agree amongst themselves to collaborate over their response to invitations to
tender. Main purpose for such collusive tendering is the need to concert their
bargaining power, though, such a collusive tendering has other benefits apart
from the fact that it can lead to higher prices. Motive may be that fewer
contractors actually bother to price any particular deal so that overheads are kept
lower. It may also be for the reason that a contractor can make a tender which
it knows will not be accepted (because it has been agreed that another firm
will tender at a lower price) and yet it indicates that the said contractor is still
interested in doing business, so that it will not be deleted from the tenderee’s
list. It may also mean that a contractor can retain the business of its established,
favoured customers without worrying that they will be poached by its competitors.
51. Collusive tendering takes many forms.
Simplest form is to agree to quote identical prices with the hope that all will
receive their fair share of orders. That is what has happened in the present
case. However, since such a conduct becomes suspicious and would easily attract
the attention of the competition authorities, more subtle arrangements of
different forms are also made between colluding parties. One system which has
been noticed by certain competition authorities in other countries is to notify
intended quotes to each other, or more likely to a Central secretariat, which
will then cost the order and eliminate those quotes that it considers would
result in a loss to some or all members of the cartel. Another system, which
has come to light, is to rotate orders. In such a case, the firm whose turn is
to receive an order will ensure that its quote is lower than the quotes of
others.
52. We are
here concerned with parallel behaviour. We are conscious of the argument put
forth by Mr. Venugopal that in an oligopoly situation parallel behaviour may
not, by itself, amount to a concerted practice. It would be apposite to take
note of the following observations made by European court of Justice in
Dyestuffs:
“By its very
nature, then, the concerted practice does not have all the elements of a
contract but may inter alia arise out of coordination which becomes apparent from
the behaviour of the participants. Although parallel behaviour may not itself
be identified with a concerted practice, it may however amount to strong
evidence of such a practice if it leads to conditions of competition which do
not respond to the normal conditions of the market, having regard to the nature
of the products, the size and number of the undertakings, and the volume of the
said market. Such is the case especially where the parallel behaviour is such
as to permit the parties to seek price equilibrium at a different level from
that which would have resulted from competition, and to crystallize the status
quo to the detriment of effective freedom of movement of the products in the [internal]
market and free choice by consumers of their suppliers.”
(emphasis
supplied)
At the same
time, the Court also added that the existence of a concerted practice could be
appraised correctly by keeping in mind the following test:
“If the
evidence upon which the contested decision is based is considered, not in
isolation, but as a whole, account being taken of the specific features of the
products in question.”
Having
regard to the aforesaid principles in mind, we deal with the argument on oligopsony
raised by the appellant.”
“98. In this
regard, the test laid down by the Supreme Court of United States in Monsanto
Co. v. Spray- Rite Service Corp. is relevant and is reproduced hereunder:
“The correct
standard is that there must be
evidence that tends to exclude the possibility (emphasis supplied) that the manufacturer and non-terminated distributors
were acting independently. That is, there must be direct or circumstantial
evidence that reasonably tends to prove that the manufacturer and others had a
conscious commitment to a common scheme designed to achieve an unlawful
objective.”
8. Learned counsel thus submits that in the said case the Hon’ble Supreme
Court held that there was no sufficient evidence to hold that there was any
agreement among the appellants for bid rigging. The judgment of the CCI was
thus set aside.
9. Referring to the present case, it is submitted that the situation in
the present case is no better as the respondent no. 3 has come to a conclusion
that the petitioner indulged in cartelization only on his own perception. There
was no positive material or evidence before him to come to this conclusion.
10. On the other hand, learned counsel representing the State submits that
the petitioner has got a remedy of statutory appeal against the impugned order which
he has not availed. It is also submitted that the respondent no. 3 has passed
the impugned order on consideration of the reply of the petitioner and the
impugned order being a reasoned order, no interference is required. It is
pointed out that in the financial bid of the two bidders, it was found that
they were verbatively the same and on analysis of the rates, both scheduled and
non-scheduled it was apparently clear that they had formed a cartel and such an
action could not have been merely by chance.
11. Having heard learned counsel for the parties and on perusal of the
records, this court is of the considered opinion that save and except the
conjectures and surmises, the respondent no. 3 had no positive material in hand
to come to a conclusion that the petitioner had formed a cartelization. No
material has been referred in the impugned order which could have excluded the
possibility that the petitioner was acting independently. Order suspending
registration of a firm has got civil consequence as it is likely to affect not
only the business concern but all those who are attached therewith. Such
decision are, therefore, required to be taken with much care and circumspection.
It appears that the respondent no. 3 has passed the impugned order without
there being any material available on record, and, therefore, the order passed
by him being perverse suffers from jurisdictional error.
12. In this view of the matter alone, the plea of alternative remedy taken
on behalf of the State cannot be accepted. It is well-settled that plea of
alternative remedy is a rule of convenience and not a rule of law. This court is
of the considered opinion that the test laid down by the Hon’ble Supreme Court
in the case of Rajasthan Cylinders (Supra)
are not satisfied in the present case.
13. In result, the impugned order dated 05.11.2018 issued by the
respondent no. 3, as contained in Annexure-14 to the writ application, is
hereby set aside.
14. The writ application is allowed.