Andhra HC (Pre-Telangana)
Y. Konda Reddy vs State Of Andhra Pradesh And Others on 21 October, 1996
Equivalent citations: AIR1997AP121, AIR 1997 ANDHRA PRADESH 121, (1997) 1 ANDHWR 369
Author: B. Sudershan Reddy
Bench: B. Sudershan Reddy
ORDER
1. The petitioner is aggrieved by the proceedings in letter No. T/O/DB/D9/ 1325, Dt. 16-7-1996 on the file of the third respondent herein cancelling the tender under instructions from the Chief Engineer, Medium Irrigation. The petitioner prays for a writ of certiorari to call for the records contained in the said proceedings dt. 16-7-1996. The petitioners also prays for a direction to the respondents to proceed with the acceptance of the tender communicated to the petitioner in letter No. FM-10.NABARD. Spillway/DB/D9/694-M dated 30-3-1996.
2. The factual matrix: the third respondent herein invited tenders on 5-1-1996 from the eligible contractors with respect to Maddileru project from elevation 363 to elevation 379 metres including road, overbridge, over spillway regulator. The petitioner submitted his tender within the time prescribed along with the six other contractors. The tenders were opened on 2-2-1996 and the tender submitted by the petitioner is the lowest, as the petitioner's offer was Rs. S,63,14,500/-. The petitioner was requested by the third respondent to come for negotiations and during the negotiations the petitioner reduced his offer from 8,63,14,500/- to Rupees 8,49,91,350/-. In the final negotiations on 19-2-1996 the petitioner offered a further reduction of Rupees 5.86 lakhs which works out to 1% over and above the rates reduced by the petitioner before the third respondent. The second respondent herein by his letter dt.-26-2-1996 recommended the bid of the petitioner at Rs. 8,49,91,350/- for acceptance. All the offers received with respect to Maddilem project were placed before the Commissariat of Tenders (for short Commissionerate) on 25-3-1996. The Commissariat after having considered various aspects of the matter accepted the offer made by the petitioner for a value of Rs. 8,49,91,350/- (Rupees eight crore forty nine lakhs ninety one thousand three hundred and fifty only). The offer made by the petitioner would be at Plus 55.07% excess over the estimated value.
3. The third respondent herein through letter dated 30-3-1996 informed the petitioner about the acceptance of his tender by the Commissariat of lenders and requested the petitioner to deposit a sum of Rupees 4,75,000/- towards the balance of Earnest Money Deposit and the same was deposited by the petitioner through his letter dt. 3-4-1996. However, the agreement cannot be entered into by the third, respondent herein with the petitioner in spite of the repealed requests made by the petitioner. The third respondent herein by his proceedings dt. 1-6-1996 informed the petitioner that the orders of the Government were awaited in the matter for concluding the contract.
4. It is stated that the matter was unnecessarily kept pending with the ulterior motive and under political pressure. The respondents were bound to enter into the contract as the offer made by the petitioner v/as already accepted and entering into the contract was only a formality. It is stated that the matter was kept pending in view of the statement alleged to have been made by the Chief Minister at a public meeting at Uruvakonda that the tenders received for Maddileru project would be cancelled.
5. The third respondent herein through the impugned letter dt. 16-7-1996 informed the petitioner that the tender for the work in question was cancelled as per the instructions received from the Chief Engineer, Medium Irrigation, Hyderabad. The petitioner was requested to take return the Earnest Money Deposit and the balance Earnest money deposit paid by the petitioner. This order is under challenge.
6. It is submitted by the petitioner that the third respondent by proceedings dt. 30-3-1996 communicated the acceptance of his offer and therefore, the same would amount to a concluded contract and signing of a contract/ agreement is only a formality. The cancellation of the tender is therefore illegal and without jurisdiction. It is also stated that the tender was processed by the commissariat, which is assisted by a technical cell which is an expert body. It is stated that even the Government has no power or authority to cancel the acceptance of the tender after the same is processed and approved by the Commissionerate. What remains according to the petitioner is only a ritual or formality of the third respondent signing the agreement. It is also stated that the cancellation of the tender is in violation of principles of natural justice and no reasons whatsoever are assigned for cancellation of the tenders. The petitioner submits that the cancellation is only for a political consideration and therefore based on extraneous reasons. It is also staled that the action is discriminatory for the reason that in the same district with respect to Pedapalli project which is also finalised by NABARD, the offers accepted by the Commissionerate were not interfered with by the Government though the said offers are also in excess of the estimated amount.
7. In the counter-affidavit filed it is stated that administrative approval was a accorded in G.O.Ms. No. 330 dt. 23-12-1995 for 9 medium irrigation projects for taking under the schemes under NABARD loan assistance for Rs. 346.10 crore. Out of the above 9 medium irrigation schemes Maddileru Reservoir project is one of the schemes for which an amount of Rs. 5028.34 lakhs is allocated. Estimates for the work in question was technically sanctioned for Rs. 570 lakhs. The offer made by the petitioner herein at Rs. 8,49,91,350/-works out to Plus 55.07%excess over the estimated value. It is stated in categorical terms that there is no written agreement so far entered into between the contractor and the Government and therefore there is no concluded contract as such between the petitioner and the Government. The acceptance of the offer by the Commissariat unless followed by written agreement and contract is of no consequences and the same cannot form basis or foundation for asserting any right as such by the petitioner. It is stated that at the most the acceptance conveyed by the Commissariat could be one more preliminary step in the process of finalisation of the contract. The petitioner cannot claim any right and there is no corresponding obligation on the part of the State unless there is a concluded contract as per para 2.6.5 of part I of general conditions of the contract Vol. 1 of the Tender Schedule. It is stated that the contract in question is not a complete one as the clause 2.6.5 of general conditions of the contract appended to volume I of the Tender Schedule stipulate that the written agreement to be entered into by the Government and the contractor for creation of rights and obligations of both the parties and contract shall not be treated as final until the agreement is signed by the Contractor and then by the Officer authorised to enter into the contract on behalf of the Government
8. It is stated that entire matter was reviewed at the highest level in the Government before a decision was taken to cancel the tenders. All the relevant factors were taken into consideration and the decision was taken to cancel the tenders in public interest. The work in question is scheduled to be completed by March, 1997 as per the terms and conditions stipulated by NABARD. Since the period under consideration was July, 1997 that is to say the threshold of monsoon, completion of work cannot be expected. The Government had also considered the observations made by the second respondent regarding the need to complete the works and the observations of Commissariat and came to the conclusion that it would only help the petitioner to prefer the claims of increased rates due to prolongation of contract caused due to delayed entrustment, in the meanwhile number of allegations in the matter relating to the work in question and the request for cancellation of the works from responsible quarters came to the notice of the Government. The rates concluded are very high. In view of all these factors it has been decided to recall the tenders as these works are taken up with NABARD loan assistance with 13% interest and such decision was taken in the public interest. It is stated that the Commissariat of Tenders is a body constituted by the State under the administration and control of Chief Secretary of the Government and the Government has every right to exercise its power and review the decision taken by the Commissariat.
9. It is averred in the counter-affidavit that the petitioner did not submit detailed monthly construction programme though he was addressed in this regard by the third respondent through his letter dt. 4-5-1996 and therefore it cannot be said that the petitioner had acted upon the offer made by the Commissionerate. It is also stated that work of Peddapalli project which is situated at far away from the Maddileru project and the work is of different nature due to field conditions and hence the same is not comparable-Therefore, the plea of descrimination is totally misconceived. It is also stated that the principles of natural justice have no application whatsoever in cases of this nature.
10. Sri K. Subramanyam Rcddy, learned senior counsel appearing on behalf of the petitioner raised manifold contentions mainly:
(a) That the decision of the Government cancelling the acceptance of tender of the petitioner is totally illegal and without jurisdiction as the Government has no power whatsoever to review the orders of the Commissariat of Tenders constituted under G.O. 234 dt. 3-6-87.
(b) The decision of the Government in cancelling the acceptance of the tender of the petitioner is arbitrary, unreasonable and against to Article 14 of the Constitution of India.
(c) The Government is bound by principle of promissory estoppel and under no circumstances can go back on the letter of acceptance of tender dt. 30-3-1996. The respondents cannot unilaterally act and cancel the tender after conveying the acceptance through letter dt. 30-3-1996 and therefore the impugned action is vilative of principles of natural justice.
(d) A legitimate expectation is created in favour of the petitioner by letter 30-3-96 and annulment of tender in favour of the petitioner without adopting a fair procedure and without giving an opportunity to the petitioner is thus bad in law.
Re-contentions: (a)
11. The Government of Andhra Pradesh through G.O. Ms. No. 243 dt.-3-6-87 constituted a state level Commissariat of Tenders which would function directly under the administrative directions, of Chief Secretary, a full time body consisting of following three members.
(1) Engineer in Chief or a Chief Engineer I from Irrigation Department.
(2) Chief Engineer from R & B Department.
(3) C.T.E. of Irrigation Department (Part time).
12. The Chief Engineer whose departmental tender is being processed by the Commissariat would be associated as Special invitee for the concerned meeting. The Government Order further envisages that the Commissariat will be assisted by a Technical Cell headed by the Superintending Engineer with supporting Technical and Non-Technical staff. The Commissariat of Tenders is entrusted with the task of finalisation of tenders of the value of Rs. 30 lakhs and above. The Commissariat was created and constituted by the Government with a view to overcome several deficiencies and to ensure an all-round perception of objectivity and impartiality in the process of finalisation.
13. The Commissariat is created and constituted by the Government in exercise of its Executive power with a particular objective. The body has to function directly under the administrative control of the Chief Secretary. Its duty is to process and finalise tenders of the value of Rs. 30 lakhs and above. The Commissariat is assisted by a technical cell and the body of experts.
14. I find it very difficult to accept the submission made by the learned senior counsel that the decision taken by the Commissionerate cannot be reviewed by the Government. According to the learned senior counsel the decision of the Commissariat is the decision of the Government itself and therefore there is no further appeal or revision against the decision of the Commissariat. The submission on the face of it appears to be paradoxical. The Commissariat is not created under or by any statute and its power and functions are not regulated by any statutory provisions. It is an authority created by Government itself with a particular objective in mind to process and finalise the tenders in an objective and impartial manner. The Government in no manner had surrendered its ultimate authority in the matter in favour of the Commissariat constituted by itself.
The Government cannot create anybody which could be said to be superior to itself. It is further submitted that the Commissariat ,, acts as the limb of the Government in view of Article 154 of the Constitution of India and not as a delegate of the Government. The learned senior counsel relied upon Carltona Limited v. Commissioner of Works, (1943) 2 All ER 560, Shamsher Singh v. State of Punjab, and Roopchand v. State of Punjab, .
15. In my considered opinion none of the decisions relied upon by the learned counsel for petitioner support the principle that is canvassed. The submissions made by the learned senior counsel are contrary to the judgment in A. Sanjeevi Naidu v. State of Madras, in which it is observed 'when a civil servant takes a decision he does not do it as delegate of his Minister. He does it on behalf of the Government. It is always open to a Minister to call for any file in his ministry and pass orders, he may also issue directions to the officers in his ministry regarding the disposal of Government business either general or as regards in any specific case. Subject to over all power the officers designated by the rules or the standing orders can take decisions on behalf of the Government. Thus officers are the limbs of the Government and not its delegates'. Thus it is clear that even a decision taken by the designated officer under the business rules is susceptible to review by the Minister concerned.
16. In Shamsher Singh case, (cited supra) the Supreme Court has not said any thing which would support the case or the petitioner. The Apex Court held that the decision of any ministerial officer under rules of business is a decision of the President of the Governor respectively, the Governor means, the Governor aided and advised by the Ministers. Neither Article 77 nor 166(3) of the Constitution provides for any delegation of power. It is held that the executive power of the State although is vested in the Governor but actually it is carried on by Ministers under rules of business made under Article 166(3) of the Constitution of India. Allocation of business of Government is the decision of the President or the Governor itself is on the aid and advise of Ministers.
"In the administration of Government in this Country the functions which are given to ministers (and constitutionally properly given to ministers because they are constitutionally responsible) are functions so multifarious that no minister could ever personally attend to them. To take the example of the present case no doubt there have been thousands of requisitions in this country by individual ministers. It cannot be supposed that this regulation meant that, in each case, the minister in person should direct his mind to the matter. The duties imposed upon ministers and the powers given to ministers are normally exercised under the authority of the ministers by responsible officials of the department. Public business could not be carried on if that were not the case. Constitutionally, the decision of such an official is, of course, the decision of the minister."
17. There is no quarrel with the principle enunciated, if the decision taken by the Commissariat is to be understood as that of Government itself, nothing prevents the Government to review its own decision. It is not a case of Government exercising any appellate power over the orders passed by the Commissariat. The decision of the Government would amount to reconsideration of issue in exercise of its executive power. It is the Government which is ultimately responsible to the legilature for all its actions whether taken by individual Minister or by the Council of Ministers or by any officer or group of officers on behalf of the Government. The Government's accountability can not be ensured unless the Government is at liberty to review revise or reconsider its own decisions. A wrong decision taken by the Government either by itself or by an officer can always be corrected by the Government unless such a decision is taken by an authority in exercise of its statutory power and where such reconsideration or review is prohibited by the statute itself. Such is not the case on hand.
18. In our constitution the executive power is not defined and even Article 73 and 163 of the constitution of India are primarily concerned with the extent of the executive power. It may not be possible to lay down as to the exact nature of executive power under our constitution except to understand it under context of constitutional Scheme. In Ramjawaya Kapoor v. State of Punjab, it is observed that it may not he possible to fame an exhaustive definition of what executive function means and implies ordinarily the executive power connotes the residue of Governmental functions that remain after legislative and judicial functions are taken-away.
19. In such view of the matter it is not possible to agree with the submissions made by the learned senior counsel for the petitioner that the Government has no power whatsoever to review or reconsider or set aside the decision taken by the Commissariat. After all, the Commissariat itself is a creature of the Government. It may be disbanded by the Government at any time. Its composition can be altered at any time, infact it is directed to function under the administrative control of the Chief Secretary of the State Government. Its duty is to process and finalise the tenders. The Commissariat by its action does not enter into any agreement which would have the effect of binding both the Government and the Contractor. It plays the role of an advisory expert body entrusted with the duty to process and finalise the tenders in an objective and impartial manner.
Re contention :
20. The second submission relates to the validity of the proceedings dated 16-7-1996. The action of the Government in terminating the acceptance of the tender is arbitrary and offends Article 14 of the Constitution of India. The petitioner places heavy reliance upon the proceedings dt. 30-3-1996 on the file of the 3rd respondent. It is clear from the said proceedings that the 3rd respondent was informed about the acceptance of the tender by the Commissariat by its proceedings dt. 27-3-1996 and the petitioner was requested to produce certain documents for entering-into proper departmental form. The petitioner pursuant to the said letter paid further E.M.D. of Rs. 4,75,000/- and also stated to have made available the other information sought for by the 3rd respondent. It Is submitted that at this stage there was no other option before the 3rd respondent except to enter into the agreement in the required formal. It is the petitioner's case that letter dt. 30-3-1996 is foundation for the purpose to hold that the contract between the petitioner and the respondent is a concluded one.
21. The learned Advocate General submits that the Government enters info contract in exercise of its power conferred upon by Articles 288 and 299 of Constitution of India. The letter Dt. 30-3-1996 addressed to the petitioner by 3rd respondent is a conditional one and subject to the entering into formal agreement in accordance with Article 299 of the Constitution of India. Since no agreement as such was entered between the peititoner and the Government, no concluded contract has been formed. Apart from that the learned Advocate General relied upon the terms and conditions of the tender schedule itself. It would be appropriate to refer to condition No. 2.6.5 of general conditions of the contract which reads as follows :
"When a tender is to be accepted, the tenderer whose tender is under consideration shall attend the Superintending Engineer's Officer on the date fixed by written intimation to him. He shall forthwith upon intimation being given to him by the Superintending Engineer of acceptance of his tender make payment of balance E.M.D. and difference in retention amounts as specified in 2.3.2 and 2.3.3 above and sign an agreement in the proper departmental form for the due fulfilment of this contract. This security deposit together with earnest money and the amount with held according to Clause 68 of P.S. to A.P.S.S. shall be retained as security for the due fulfilment of the contract. If a cash security deposit is made by the contractor he shall follow the procedure laid down in the preceding paragraphs for payment of E.M.D. and such deposit will not bear interest. Failure to attend the Superintending Engineer's Office on the date fixed in the written intimation from such office or to enter into the required agreement shall entail forfeiture of the earnest money. The written agreement to be entered into between the Contractor and Government shall be the foundation of the rights and obligations of both the parties and the contract shall not be deemed to be complete until the agreement has first been signed by the contractor and then by the officer authorised to enter into contracts on behalf of Government."
22. The Condition is very specific and stipulates that the written agreement entered into between the contractor and the Government shall be the found action _of the rights and obligations of both the parties and the contract shall not be deemed to be complete until the agreement has first been signed by the contractor and then by the officer authorised to enter into contracts on behalf of the Government. It can-not be said that the requirement of entering into the contract in accordance with Article 299(1) of the Constitution of India is not for the sake of mere form, the intention is to safeguard the Government against unauthorised contracts. It is based on the ground of public policy and the required formalities cannot be waived or dispensed with. The Condition require that the contract made in the exercise of the Executive power of a State must satisfy three conditions viz., (1) It must be expressed to be made by the Government of the State.
(2) It must be executed on behalf of the Governor.
(3) The Execution must be by such a person and in such a manner as the Government may direct or authorise.
23. Failure to comply with these requirements nullify it and renders contract void and unenforceable See : The Bihar Eastern Gangetic Fishermen Co-operative Society Limited v. Sipahi Singh . In these circumstances, I am of the considered opinion that the letter docs not give any right to the petitioner and the same cannot constitute as foundation forgiving rise to any cause to be agitated in this writ petition.
However, the learned senior counsel paloes reliance upon weilknown decision in Ramana Davarara Shelly v. The International Airport Authority, . There is absolutely no difficulty whatsoever in agreeing with the submission made by the learned senior counsel that all the actions of the State and its instrumentality are bound to be fair and reasonable. The actions are liable to be tested on the touchstone of Article 14 of the Constitution of India. The State and its instrumentality cannot be allowed to function in an arbitrary manner even in the matter of entering into contracts. The decision of the State cither in entering into the contract or refusing to enter into a contract must be fair and reasonable. It cannot be allowed to pick and choose the persons and entrust the contract according to its whims and fancies. Like all its actions, the action even in the contractual field is bound to be fair. It is settled law that the rights and obligations arising out of a contract after entering into the same is regulated by terms and conditions of the contract itself. Normally, this Court would not exercise its extraordinary jurisdiction under Article 226 of the Constitution of India and issue writ for the purpose of enforcing any of the terms and conditions of the contract. The scrutiny in a judicial review proceedings is normally confined to the threshold stage and appropriate directions can always be issued by this Court to ensure that awarding of the contract is in accordance with law.
24. The issue relating to finalisation of tender was considered elaborately by the Government and the Government came to the conclusion that the work cannot be completed by March, 1997 as per the terms Imposed by NABARD. The Government further observed that the very observation made by the NABARD regarding need to complete the work and observation made by the Commissariat will only help the contractor to prefer claims of increased rates due to prolongation of contract caused because of delayed entrustment. The Government has also taken into consideration the allegations levelled in the matter and also the fact that the rates quoted were very high. For the aforesaid reasons recorded in the file, the concerned authorities were directed to cancel the tenders and call the tenders afresh. In my considered view the decision cannot be said to be unfair and unreasonable. No person has any fundamental right to insist that the Government must enter into contract with him merely because his tender is lowest. The right to choose the person with whom the Government could enter into contract may depend upon the variety of circumstances and the Government for good reasons can refuse to enter into a contract with the lowest tenderer. However, such decision must be based upon some reasons which would satisfy and meet the requirements of Article 14 of the Constitution of India.
25. In Tata Cellular v. Union of India, the Apex Court speaking through Sri. Mohan, J. observed :
"In the case of Bharati Cellular the attack is that the cut-off came to be reduced to 80,000 subscribers to accommodate it. Bharati Cellular mentioned in its tender, as on 31-12-1991 the name of S.F.R. France which had 80,000 subscribers. By 31-12-1991, it would have got increased to more than one lakh. In August, 1992, when the bids were submitted S.F.R.'s line of experience could reasonably be expected to be more than one lakh, S.F.R. France had a G.S.M. licence. Having regard to these facts, it would not be an unreasonable entimate, for the experts, to conclude that Bharati Cellular was having experience of over one lakh lines.
It is alleged that the debt equity ratio of Skycell has not been properly taken. Skycell ratio was 1.5 and was correctly assigned 3 marks.
In the evaluation of process open market purchase was left out of consideration."
26. It is thus clear that the right to choose itself cannot be considered to be an arbitrary power unless it is, however, shown that such power is used by the State for any collateral or unauthorised purpose. In the instant case having denied the contract to the petitioner who is the lowest tenderer, the Government called for fresh tenders and not assigned the contract to any other tenderer. The action can-not be said to be arbitrary or unreasonable. The petitioner cannot insist that the contract should be assigned to him. There is no such legal or fundamental right Conferred upon him.
Re : Contention C and D.
27. The submissions made on behalf of the petitioner regarding the applicability of doctrine of promissory estoppel and legitimate expectations can be conveniently disposed of together. It is submitted that a right has been created in favour of the petitioner by proceedings dt. 30-3-1996 issued by the third respondent after finalisation of the petitioner's tender by the Commissariat. It is averred that the petitioner not only furnished E.M.D. also appointed technical supervisory staff by paying huge amounts and advances and purchased material and given labour advances. The petitioner is stated to have palced order for some machinery worth about lakhs. It is submitted that he has altered his position in view of the assurance given by' the Commissariat and consequential letter of acceptance issued by the third respondent on 30-3-1996. Though a formal agreement has to be entered into in accordance with Article 299 of the Constitution of India yet, the principle of equitable estoppel will apply in the case. I find it difficult to accept the submission made on behalf of the petitioner. The letter upon which the reliance is placed by the petitioner does not induce the petitioner to spend any money on the assumption that the contract is Already given to him. The offer made by the third respondent at the most could be said to be a provisional or tentative one, the Offer made by the third respondent through the letter is to be understood in the background of the terms and conditions referred to hereinabove in the tender terms viz., 2.6.5. It is true that the Apex Court in Motilal Padampat Sugar Mills Company Limitted v. The State of Uttar Pradesh, after referring to the previous decisions on the subject observed, "It was laid down that a party who is giving any reliance in promise made by the Government, altered his position, is entitled to enforce the terms against the Government, even though the terms are not in the form of a formal contract as required by Article 299 of the Constitution of India and that Article does not militate against the applicability of the doctrine of promissory estoppel against the Government". The Court further held that, "Where the Government makes promise informing that it would be act on promisee and, in fact the promisee, acting in reliance on it, altered his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, notwithstanding that there is no consideration for the promise" and the promise is not recorded in the form of a formal contract as required by Article 229 of the Constitution of India. But in the very same judgment the Apex Court speaking through Bhagwati, 'J. in categorical terms held as follows:
"But it is necessary to point out that since the doctrine of promissory estoppel is as equitable doctrine, it must yield when the equity so requires. If it can be shown by the Government that having regard to the facts as they have subsequently transpired, it would be inequitable to hold the Government to the promise made by it, the Court would not raise an equity in favour of the promisee' and enforce the promise against the Government. The doctrine of promissory estoppel would be displaced in such a case because, on the facts, equity would not require that the Government should be held bound by the promise made by it. When the Government is able to show that in view of the facts which have transpired since the making of the promise, public interest would be prejudiced if the Government were required to carry out the promise, the Court would have to balance the public interest in the Government carrying out a promise made to a citizen which has induced the citizen to act upon it and alter his position and the public interest likely to suffer if the promise were required to be carried out by the Government and determine which way the equity lies. It would not be enough for the Government just to say that public interest requires that the Government should not be compelled to carry out the promise or that the public interest would suffer if the Government were required to honour it. The Government cannot, as Shah, J. pointed out in the Indo-Afghan Agencies case claim to be exempt from the liability to carry out the promise "on some indefinite and undisclosed ground of necessity or expediency" nor can the Government claim to be the sole judge of its liability and repudiate it "on an ex parte appraisement of the circumstances". If the Government wants to resist the liability, it will have to disclose to the Court what are the subsequent events on account of which the Government claims to be exempt from the liability and it would be for the Court to decide whether those events are such as to render it inequitable to enforce the liability against the Government. Mere claim of change of policy would not be sufficient to exonerate the Government from the liability; the Government would have to show what precisely is the changed policy and also its reason and justification so the Court can judge for itself which way the public interest lies and what the equity of the case demands. It is only if the Court is satisfied on proper and adequate material placed by the Government, that overriding public interest requires that the Government should not be held bound by the promise but should be free to act unfettered by it, that the Court would refuse to enforce the promise against the Govern-men:."
28. It is clear from the records that consideration of public interest weighed with the Government in taking decision to cancel the tenders. The initial promise if any is made by the 3rd respondent. Superintending Engineer whereas, the Government after elaborate consideration of the matter and subsequent-events that have come to the notice of the Government has decided not to proceed further in the matter and cancel the tenders. After all, public interest is of paramount consideration. It is not as if, the Government has choosen its own person and entrusted the contract. In State of Himachal Pradesh v. Ganesh Wood Products (1995 AIR SCW 3847), B. P. Jeevan Reddy, J. speaking for the Court after reviewing the entire case law on the subject held as follows (at Pp. 1365 to 1368 of AIR (SCW) :
"The doctrine of promissory estoppel is by now well recognised in this country. Even so it should be noticed that it is an evolving doctrine, the contours of which are not yet fully and finally demarcated. It would be instructive to bear in mind what Viscount Hailsham said in Woodhouse Limited v. Nigerian Produce Limited, (1972) AC 741:
"I desire to add that the time may soon come when the whole sequence of cases based upon promissory estoppel since the war, beginning with Central London Property Trust Ltd. v. High Trees House Limited, (1947) 1 K B 130, may need to be reviewed and reducedtoacoherentbodyofdoctrine bythe regarded with (sic) suspicion. But as is common with an expanding doctrine, they do raise problems of coherent exposition which have never been systematically explored."
Though the above view was expressed as far back as 1972, it is no less valid today. The dissonance in the view expressed by this Court in some of its decisions on the subject emphasise such a need. The view expounded in M/s. Motilal Padampat Sugar Mills Company Limited v. State of Uttar Pradesh, was departed from in certain respects in Jit Ram Shiv Kumar v. State of Haryana, , which was in turn criticised in Union of India v. Godfrey Philips India Ltd., . The divergence in approach adopted in Shri Bakul Oil Industries v. State Gujarat. and Poumami Oil Mills ,v. State of Kerala, , is another instance. The fact that the recent decision in Kasinka Trading v. Union of India, , is being reconsidered by larger Bench is yet another affirmation of the need stressed by Lord Hailsham for enunciating "a coheren0t body of doctrine by the Courts". An aspect needing a clear exposition -- and which is of immediate relevance herein -- is what is the precise meaning of the words "the promisee ...... alters his position", in the statement of the doctrine. The doctrine has been formulated in the following words in M/s. Motilal Padampat Sugar Mills Co. Ltd., . "The law may, therefore, now be taken to be settled as a result of this decision, that where the Government makes a promise knowing or intending the promisee, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 299 of the constitution."
What does altering the position mean? Does it mean such a change in the position of the promisee (as a result of acting on the faith of representation of the promissor that compensating him in money would not be just and equitable to him, i.e., a situalion where the ends of justice and requirements of equity demand that the promissor should not be allowed to go back on his representation and must be held to it or does altering his position mean doing of some act, big or small, which the promisee does acting on the faith of the representation which he would not have done but for the representation ? In other words, is it enough that the promisee has spent some money or has taken some step acting on the basis of representation, which can be recompensed in money or otherwise ? Is it not ultimately a matter of doing equity and justice between the parties a case of holding the scales even between the parties and deciding whether in the interest of justice and equity the promissor can be allowed to resile from his promise and compensate the promisee appropriately or the promissor ought to be held to his promise and not allowed to go back since such a course is necessary in view of the change in position of promisee ? Our view of the matter is probably evident from the way we have posed the above questions. To wit, the rule of promissory estoppel being an equitable doctrine, has to be moulded to suit the particular situation. It is not a hard and fast rule but an elastic one, the objective of which is to do justice between the parties and to extend an equitable treatment to them. If it is more just from the point of view of both promissor and promisee that the latter is compensated appropriately and allow the promissor to go hack on his promise, that should be done; but if the Court is of the opinion that the interests of justice and equity demand that the promissor should not be allowed to resile from his representation in the facts and circumstances of that case, it will do so. This, in our respectful opinion, is the proper way of understanding the words "promisee altering his position". Altering his position should mean such alteration in the position of the promisee as it makes it appear to the Court that holding the promissor to his representation is necessary to do justice between the parties. The doctrine should nor be reduced to a rule of thumb. Being an equitable doctrine it should be kept elastic enough in the hands of the Court to do complete just ice between the parties. Now can the doctrine of promissory estoppel be put on the higher pedestal than the written contract between the parties ? Take a case where there is a contract between the parties containing the very same terms as are found in the "approval" granted by IPARA (Sub-Committee) and then the Government resile from the contract and terminates the contract. The promisee will then have to file a suit for specific performance of the contract in which case the Court will decide, having regard to the facts and circumstances of the case and the provisions of the Specific Relief Act, whether the plaintiff should be granted specific performance of the contract or only a decree for damages for breach of contract. It must be remembered that the doctrine of promissory estoppel was evolved to protect a promisee who acts on the faith of a promise/representation made by promissor and alters his position even though there is no consideration for the promise and even though the promise is not recorded in the form of a formal contract. Surely a representation made or undertaking given in a formal contract is as good as, if not better than, a mere representation. All that we wish emphasise is that anything and everything done by the promisee on the faith of the representation does not necessarily amount to altering his position so as to preclude the promissor from resiling from his representation. If the equity demands that the promissor is allowed to resile and the promisee is compensated appropriately, that ought to be done. If, however, equity demands, in the light of the things done by the prpmisee on the faith of the representation, that the promissor should be precluded from resiling and that he should be held fast to his representation, that should be done. To repeat, it is a matter of holding the scales even between the parties --to do justice between them. This is the equity implicit in the doctrine.
29. I am not impressed by the submission that the petitioner had altered his position and spent huge amounts on the promise made by the third respondent. There is no promise as such made by the third respondent except intimating the petitioner that the Commissariat has finalised the tender by accepting the same. The contents of the letter would not support the case of the petitioner that he has spent money or altered his position to his disadvantage basing upon the same.
30. It is urged that by issuing letter of acceptance dt. 30-3-1996 a legitimate expectation has been created in favour of the petitioner that the contract would be entered into with him and, therefore, it is not open to the respondents to annul the acceptance letter dt. 30-3-1996 without proper procedure and without giving opportunity. The respondents have not adopted a fair procedure and violated the legitimate expectation of the petitioner. The petitioner places reliance upon two well known decisions of the Supreme Court, viz., Navjyoti Co-Group Housing Society v. Union of India, , Union of India v. Hindustan Development Corporation, .
31. The doctrine of legitimate expectation also known as reasonable expectation relates to procedural fairness in decision making and is an aspect of the rule of non-arbitrariness. In matters of this nature the letter itself does not confer any right and no legitimate expectation could arise on these facts. There is no statutory restriction in resiling from that decision if the public interest required. After all, public interest is of paramount consideration in matters of this nature. In an appropriate case public interest can outweigh the legitimate expectation of a person particularly in the sphere of contractual relations.
32. It is as if some beneficial advantage has been conferred upon the petitioner giving rise to a legitimate expectation that the would be permitted to continue to enjoy the same benefit until he was given reasons for withdrawal and the opportunity to give it on such reasons, Therefore the decisions relied upon by the learned counsel do not lend any support. The petitioner himself stated in the affidavit that in spite of repeated requests for conclusion of the agreement so as to enable him to start the work, the third respondent had not taken any steps for concluding the contract/agreement. Ultimately, the third respondent by his proceedings dt. 1-6-1996 informed the petitioner that the orders of the Government are awaited for concluding the contract. The petitioner filed this writ petition on 22-7-1996 in this Court. It is clear that the petitioner himself knew that the matter was under consideration by the Government and in such circumstances, it would be rather difficult to accept the petitioner's plea that he had spent huge amounts under the expectations that the work would be entrusted to him There is no material on record, which could be said to be the foundation for making the petitioner to believe that the work was likely to be entrusted to him. The matter was being processed at various levels and it is not as if the ultimate decision makers made any representation or induced the petitioner to act pursuant to such representation. There may be circumstances where even the decision maker may resile "from an objectively clear but erroneously made, representation, where it can be shown that it would not be unfair or inconsistent with gpod administration for the decision maker to be permitted to withdraw the representation." R. v. Secretary of State for Home Depatment Exp. Silva, Judicial Review of Adminsitration Action De Swith, Woolf & Jowel.
33. The facts and circumstances of the case, ultimately show that the decision to cancel the tenders is fair and consistent with good administration. There were obvious compelling reasons for the Government to act in the matter and as a guardian of the public finances, it was bound to consider and review the decision of the Commissariat of Tenders.
34. The next argument relates to the action being violative of principles of natural justice. It is urged that the Commissariat through the third respondent having issued the acceptance letter on tender of the petitioner, it is not open to the Government to annul or cancel the acceptance letter without an opportunity and without assigning any reason. So far as the complaint regarding the action being without any reason is required to be noted only to be rejected. The record would show that the matter was considered on various stages and the entire course of events would reveal that the Government has taken into account all relevant considerations. It is not a case where an order is passed by statutory authority in exercise of any statutory power. It is not a decision of an individual decision maker in exercise of any statutory power with reference to any particular statute. It is an executive decision involving more than one person and authority. In Shri Sachidahand Pandey v. The State of West Bengal, AIR 1987 SC 1109.
"The proposition that a decision must be arrived at after taking into account all relevant considerations, eschewing all irrelevant considerations cannot for a moment be doubted. We have already pointed out that relevant considerations were not ignored and, indeed, were taken into account by the Government of West Bengal. It is not one of these cases where the evidence is first gathered and a decision is later arrived at one fine morning and the decision is incorporated in a reasoned order. This is a case where discussions have necessarily to stretch over a long period of time. Several factors have to be independently and separately weighed and considered. This is a case where the decision and the reasons for the decision can only be gathered by looking at the entire course of events and circumstacnes stretching over the period from the initiation of the proposal to the taking of the final decision. It is important to note that unlike Mohinder Singh Gill's case where the Court was dealing with a statutory order made by a statutory functionary who couid not, therefore, be allowed to supplement the grounds of his order by later explanations, the present is a case where neither a statutory function nor a statutory functionary is involved but the transaction bears commercial though public character which can only be settled after protracted discussion, clarification and consultation with ill interested persons. The principle of Mohinder Singh Gill's case has no application to the factual situation here." '
35. The petitioner further places reliance upon Tata Cellular case (cited supra) in support of submission that a notice ought to have been issued before cancelling the acceptance of tender. The Apex Court in the said decision with reference to the facts and circumstances of the case held as follows :
"From this letter we are not able to fethorn the reason for omission. As seen above, Tata Cellular was originally selected for Delhi. By implementation of the judgement of the High Court it has been left out. Before doing so, as rightly urged by Mr. Soli, J. Sorabjee, the appellant ought to have been heard. Therefore, there is a clear violation of the principle of natural justice. On an overall view we find it has two distinctive qualifications. In that :
(1) It has not borrowed from any commercial bank.
(2) It has an annual turnover from Indian parameters of Rs. 12,000 crores and the annual turnover of the foreign parameters, Rs. 51,000 crores. Comparatively speaking, the other companies do not possess such high credentials yet it has been awarded low marks with regard to the reliance on Indian public financial institutions and the financial strength of the parameters/ partner companies.
These qualifications could have been validly urged had it been heard. Then, we do not know what decision could have been arrived at.
36. The observation of the Apex Court that there is a clear violation of principles of natural justice is to be understood in the context of facts and circumstances and the submission made in that case. In Tata Cellular (MR 1996 SC 11) appellant therein was eliminated from consideration by implementation of the judgment of the Delhi High Court and the precise argument in this regard is required to be noticed, which reads as follows :
"Even otherwise in the implementation of the judgment of the High Court of Delhi, if this appellant is to be eliminated, it ought to have been afforded an opportunity. Had that been done it would have pointed out several factors, namely, the omission to consider relevant material, namely, parameter seven, the prejudice caused by the award of marks after the bids were opened. The DoT was obliged to disclose the maximum marks for each criterion at the threshold of the financial bid in the interest of transparency and to ensure a non-arbitrary selection."
37. It was a case where the bids of various competing tenderers were under consideration and elimination of one bidder on the basis that the reconsideration of the matter in the light of judgment by the High Court of Delhi without any notice to the provisionally selected bidder was held to be violative of principles of natural justice. I find it difficult to accept the submission made on behalf of the petitioner that the action of the respondents in the instant case is violative of principles of natural justice. The decision-relied upon by the petitioner does not really support his case.
38. It is alleged that the Government have acted on political and extraneous considerations and adopted different stand in setting aside the acceptance letter issued to the petitioner. The Government having made a statement on the floor of the Assembly that they would be cancelling Peddapally and Maddileru projects in view of the rates being higher than the estimated rates and ultimately cancelled the acceptance of Maddileru project alone. The Government thus acted on extraneous and political considerations, as M/s. Balaji Constructions to which Pedapalli project was allotted is the follower of authority in power. The allegations made in the affidavit filed in support of the writ petition are totally indefinite and vague. No details whatsoever about the work relating to Pedapalli project are stated in the affidavit and it is not possible to express any opinion under what circumstances the tender in the said case was not cancelled. The acceptance of the tender in that case is not the subject-matter of debate before this Court. In such view of the matter, the same cannot form the basis for holding that the action of the Government is discriminatory.
39. In the affidavit filed in support of the writ petition in ground No. F it is alleged that the cancellation was effected by the Chief Engineer at the instance of the Government "particularly the Chief Minister, purely due to political reasons". The Chief Minister is not made a party to this writ petition. The allegation that the decision is taken at the instance of the Chief Minister by the Chief Engineer is totally baseless. The decision was taken by the Government itself at various levels and ultimately the matter was reserved for consideration by the Chief Minister himself. It is thus clear that the allegations are levelled by the petitioner without ascertaining the true and correct facts. It is settled law that the burden of establishing mala fides is very heavy on the person who alleges it. Such allegations are more often made than proved. The Court cannot come to conclusion on the basis of allegations, no inference could be drawn from incomplete facts brought before the Court. The facts alleged by the petitioner are totally vague and indefinite and it is not possible to draw any adverse inference under the facts and circumstances of the case.
40. For the aforesaid reasons, the writ petition fails and accordingly dismissed. No costs.
41. Petition dismissed.