Procuring Entity Cannot Be The First Appellate Authority In A Tender Process, Reasonable Apprehension Of Bias: Rajasthan High Court

Rajasthan High Court has iterated that the procuring entity and the First Appellate Authority cannot be the same in tenders for the Municipal Corporation.

The single-judge bench of Justice Anoop Kumar Dhand was shocked that the Deputy Commissioner (Development) of Ajmer Municipal Corporation was both the procuring entity as well as the First Appellate Authority in tenders invited for implementing GIS Enabled Cloud Based Property Tax Information Management System (PTIMS).

“…It is well settled proposition of law that the procuring entity and the First Appellate Authority cannot be one and the same, though the orders in this regard were passed by the Department of Local Bodies way back in the year 2019 by issuing an order dated 12.06.2019, wherein, the First and Second Appellate Authorities were designated as the Director, Department of Local Bodies and the Secretary, Department of Local Bodies respectively”, the court noted in the order while also pointing out the contradiction in the grievance redressal mechanism prescribed in Annexure C attached to the tender document in question.

According to the petitioner, the 4^th respondent which is All India Institute Of Local Self Government, was already disqualified due to the non-deposit of the Earnest Money Deposit which is a breach of a condition in the Request for Proposal.

It was submitted that in this scenario, the first lowest bid made by the 4^th respondent must be discarded and the second lowest bid made by the petitioner must be given due consideration by the respondent authorities, the petitioner further submitted in the writ petition. The first petitioner had initially approached the Deputy Director (Development) to set aside and quash the acceptance of the technical and financial bids made by the 4^th respondent, alleging a violation of the terms and conditions of the tender process.

Proceedings before the High Court

As per the grievance redressal mechanism contemplated for the procurement process, contrary to the 2019 order made by the Department, Deputy Commissioner (Development) was given the charge of the First Appellate Authority and the Commissioner, Ajmer Municipal Corporation was designated as the Second Appellate Authority.

Pertinently, the Deputy Commissioner issued another clarification order on 13.09.2023 to rectify this contradiction in the Annexure as objected to by the petitioner firm. Accordingly, the petitioner was directed to proceed as per the Department's 2019 order and file the appeal before the Director of the Department.

“…In spite of the above, the Deputy Commissioner on the same day i.e. 13.09.2023 decided the objections taken by the petitioner and justified the action of the respondent Nos.2 and 3 [Municipal Corporation & Deputy Commissioner respectively]”, the bench sitting at Jaipur pointed out.

This order of the Deputy Commissioner upholding the legality of the Deputy Commissioner as the First Appellate Authority has been challenged by the petitioner, who was the second lowest bidder in the tender process.

The respondent counsel argued that the petitioner should have exhausted the remedy available before the Second Appellate Authority before approaching the High Court. Section 38(4) of Rajasthan Transparency in Public Procurement Act, 2012 also denotes taking this recourse, the counsel submitted.

“When the Deputy Commissioner was well aware of this fact that he is the Procuring Entity and he was not the First Appellate Authority and he clarified this situation to the petitioner by writing a letter on 13.09.2023, then it may have been more apposite for him to have recused from being First Appellate Authority…He should have restrained himself to justify his own stand, by hearing the appeal against the decision taken by himself. His role as First Appellate Authority reflected his interference in the matter...”, the court, however, clarified the manifest error in the proceedings due to the likelihood of biases.

The court also underscored that the order was not sustainable because of the creation of 'reasonable apprehension' in the minds of others that there is a likelihood of bias and not necessarily because the authority was biased in the decision-making process. No matter the circumstances, 'no one can be a judge in his own cause' and it is also mandatory that 'the other side is heard', to ensure the adherence to the two most basic natural principles, the court added by placing reliance on A.K.Kraipak v. Union of India (1969) 2 SCC 262.

The court also briefly discussed the interpretation given by the apex court to the legal maxim “nemo debet esse judex in propria sua causa” which means "justice should not only be done but should manifestly be seen to be done".

While setting aside the impugned order, the court also clarified that the proceedings were not terminated. The petitioner firm has been asked to file a statutory appeal before the real First Appellate Authority, i.e., the Director (Local Self Government Department) under Section 38 of the Act of 2012.

The court also granted the petitioner liberty to file a stay application under Section 39 of the Act of 2012. The appellate authority would be under the obligation to dispose of the appeal preferably within 15 days from the date of filing the appeal, it added.

Case Title: Yashi Consulting Services Pvt. Ltd v. State of Rajasthan, Local Self Government Department & Ors.

Case No: S.B. Civil Writ Petition No. 15034/2023

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