Karnataka High Court
M/S.Sadhav Shipping Ltd vs Government Of India on 29 April, 2025
Author: M.Nagaprasanna
Bench: M.Nagaprasanna
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Reserved on : 25.04.2025
Pronounced on : 29.04.2025
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 29TH DAY OF APRIL, 2025
BEFORE
THE HON'BLE MR. JUSTICE M. NAGAPRASANNA
WRIT PETITION No.9212 OF 2025 (GM - TEN)
BETWEEN:
M/S.SADHAV SHIPPING LTD.,
(A COMPANY REGISTERED UNDER
THE COMPANIES ACT 1956)
REPRESENTED BY ITS MANAGING DIRECTOR,
KAMAL KANT BISWANATH CHOUDHURY,
HAVING REG OFFICE AT 618,
LAXMI PALZA, NEW LINK ROAD,
ANDHERI(W), MUMBAI - 400 053.
... PETITIONER
(BY SRI. AITYA D, ADVOCATE)
AND:
1. GOVERNMENT OF INDIA,
REPRESENTED BY ITS SECRETARY,
MINISTRY OF PORTS SHIPPING AND WATERWAYS,
TRANSPORT BHAWAN NO.1,
PARLIAMENT STREET,
NEW DELHI - 110 001.
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2. NEW MANGALORE PORT AUTHORITY,
REPRESENTED BY ITS CHAIRMAN
AND BOARD OF TRUSTEES,
GOVERNMENT OF INDIA, MINISTRY OF PORTS,
SHIPPING AND WATERWASY,
PANAMBURU, MANGALURU - 575 010.
3. NEW MANGALORE PORT AUTHORITY,
REPRESENTED BY DEPUTY CONSERVATOR,
DEPARTMENT OF MARINE PANAMBURU,
MANGALURU - 575 010.
4. TENDER COMMITTEE,
DEPARTMENT OF MARINE,
REPRESENTED BY DEPUTY CONSERVATOR,
NEW MANGALORE PORT AUTHORITY PANAMBURU,
MANGALURU - 575 010.
5. M/S. YOJAKA INDIA PRIVATE LIMITED,
(A COMPANY REGISTERED UNDER
THE COMPANIES ACT 1956)
REPRESENTED BY ITS MANAGING DIRECTOR,
SRI. JAGADISH BOLOOR,
OFICE AT D.NO. 3-2B/43,
2ND FLOOR, ABCO TRADE CENTRE,
NH 17, KOTTARA CHOWKI,
MANGALURU - 575 006.
... RESPONDENTS
(BY SRI. H. SHANTHI BHUSHAN, DSGI A/W
SRI. GIREESHA KODGI, ADVOCATE FOR R1;
SRI. R. SUBRAMANYA, ADVOCATE FOR R2 TO R4)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO A) ORDER
SETTING ASIDE THE FINANCIAL BID REPORT OF THE R4 DATED
19/03/2025 AT ANNX-Q; B) DIRECTION TO THE R4 TO ISSUE THE
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WORK ORDER TO THE PETITIONER AS PER ANNX-M FINANCIAL BID
REPORT DATED 18/02/2025 AND ETC.,
THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 25.04.2025, COMING ON FOR PRONOUNCEMENT
THIS DAY, THE COURT MADE THE FOLLOWING:-
CORAM: THE HON'BLE MR JUSTICE M.NAGAPRASANNA
CAV ORDER
The petitioner is before this Court calling in question an order
dated 19.03.2025 passed by the fourth respondent, which accepts
the financial bid of the fifth respondent and seeks a consequential
direction to not to issue work order to the fifth respondent.
2. Facts in brief germane are as follows:
A notice inviting tender is issued on 21.09.2023 for the
purpose of supply of two boats with manning and manpower for
operation and maintenance of oil spill response equipment and
combating oil pollution for a period of five years. Pursuant to the
notice inviting tender, a pre-bid meeting was called for all the
potential tenderers on 29.09.2023. The last date for submission of
the tender was 12.10.2023. The date fixed in the tender for
opening of the technical bid was 13.10.2023. Before the said date,
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a corrigendum comes to be issued extending the date of submission
of the tender till 20.10.2023. A pre-bid clarification is said to have
been uploaded on the New Mangalore Port Authority website
(hereinafter referred to as 'the authority' for short). The petitioner
is said to have submitted his bid on 13.11.2023. The technical bid is
opened and four tenderers are said to be qualified qua the technical
aspects; one is the petitioner, the fifth respondent is the other and
there are two others. On 08.02.2024, it transpires that the fifth
respondent is declared to be a technically disqualified bidder and
the financial bid is later opened on 09.02.2024. The petitioner finds
his place as L1 on the portal of the authority. The fifth respondent
then files a writ petition before this Court in WP.No.4435/2024, this
Court directed maintenance of status-quo, till the next date of
hearing, in terms of an order dated 24.10.2024. The impugned
action of the fifth respondent being technically disqualified is set
aside and a direction is issued to consider the bid of the fifth
respondent. Consideration of the bid of the fifth respondent, leads
the fifth respondent to get the work order. It is therefore, the
petitioner is before this Court seeking the afore-quoted prayer.
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3. Heard Shri Aditya D., learned counsel appearing for the
petitioner; Shri H. Shanthi Bhushan, learned Deputy Solicitor
General of India along with Shri Gireesha Kodgi, learned counsel
appearing for respondent No.1; Shri R. Subramanya, learned
counsel appearing for respondents No.2 to 4 and Shri Venugopal
M.S., learned counsel appearing for respondent No.5.
4. The learned counsel appearing for the petitioner would
vehemently contend that the petitioner was declared as L1, but no
work order is issued. Notwithstanding the said declaration, work
order is issued in favour of the fifth respondent. In support of his
submission, he would take this Court through the document, which
declared him to be the L1 bidder to contend that once having been
declared as L1, his work order ought to have been issued only in his
favour.
5. Per contra, Sri S. Subramanya, learned counsel
representing the authority would vehemently refute the submission
contending that when the petitioner was declared as L1, the bid of
fifth respondent was not available on the website, due to certain
technical glitch. Once the fifth respondent bid was available, the
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financial assessment took place and the tender of the fifth
respondent was found to be more responsive, he is therefore,
issued the work order. The learned counsel would submit no fault
can be found, as the petitioner was never the L1. He would seek
dismissal of the petition.
6. Learned counsel appearing for the fifth respondent
would also toe the lines of Shri S. Subramanya, learned counsel
appearing for respondents No.2 to 4 in seeking dismissal of the
petition, on the score that the work order is already issued in favour
of the petitioner.
7. I have given my anxious consideration to the
submissions made by the respective learned counsel and have
perused the material available on record.
8. The afore-narrated facts are not in dispute. The
petitioner and the fifth respondent along with two others submit
their bid, pursuant to the notice inviting tender on 21.09.2023. The
technical bid of all the four are opened on 15.11.2023. The
technical summary was uploaded on 08.02.2024. While so
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uploading, the fifth respondent was declared disqualified and the
prize bid of the petitioner was opened on 09.02.2024.
9. The fifth respondent, who suffered a technical
disqualification approached this Court in WP.No.4435/2024. This
Court directs maintenance of status-quo on 13.02.2024. Therefore,
the assessment did not take place. The Co-ordinate Bench of this
Court allows the petition filed by the fifth respondent, sets aside the
order, which had technically disqualified the petitioner, by the
following order disposed on 24.10.2024:
"10. Sub-clause (2) of Clause 2.20 of the tender
document states that, the technical bid of the petitioner
can be rejected for records of poor performance during
the last five years, as on the date of application, such as
abandoning the work, rescission of the contract for
reasons which are attributable to non-performance of the
contractor, inordinate delays in completion, consistent
history of litigation resulting in awards against the
contractor.
11. In the present case, the petitioner had not
abandoned the work nor the contract awarded in favour
of the petitioner was rescinded. Annexure-R2 to the
statement of objections filed by the respondent indicated
that the penalty was imposed on the petitioner for
shortage of staff on 6 occasions under the contract which
commenced from 27.02.2022 and also penalty was
imposed on 7 occasions for low speed.
12. Although penalties have been imposed on
the petitioner under the provisions of a prior contract, it is
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pertinent to note that the petitioner has neither
abandoned the work awarded nor had the contract been
rescinded for reasons attributable to non-performance.
Consequently, the imposition of penalties alone cannot be
construed as evidence of poor performance so as to
disqualify the petitioner under Clause 2.20 of the tender
document.
13. The respondents have annexed details of
various legal proceedings initiated by the petitioner,
purportedly to establish a "consistent history of litigation."
A conjunctive reading of the orders dated 19.04.2021
passed by this Hon'ble Court in W.P. No. 6892/2021 and
23.02.2022 passed in W.P. No. 11165/2021, however,
does not support the respondents' claims.
14. These proceedings arose in the context of a
tender issued by the respondents vide NIT dated
21.12.2020 for dredging and reclamation works. The
Tender Evaluation Committee (TEC) had disqualified the
petitioner's bid as non-responsive at the pre-qualification
stage. Aggrieved by this disqualification and alleging
irregularities in the tender process, the petitioner had
approached this Hon'ble Court in W.P. No. 6892/2021.
Additionally, the petitioner filed a complaint with the
Central Government, seeking redress for the irregularities
allegedly committed by the officials.
15. In W.P. No. 6892/2021, this Hon'ble Court
noted the petitioner's allegations and observed that the
Central Government had constituted a committee to
conduct a detailed inquiry into the alleged irregularities.
In view of this development, the co-ordinate Bench
disposed of the writ petition, granting liberty to the
petitioner to challenge any adverse decision rendered by
the Central Government pursuant to its inquiry.
16. Subsequently, the successful tenderer in the
same NIT preferred W.P. No. 11165/2021, seeking a
review of the earlier order dated 19.04.2021 on the
grounds that the successful tenderer had not been
impleaded as a party to the proceedings in W.P. No.
6892/2021. This Hon'ble Court, in its order dated
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23.02.2022, allowed the writ petition and directed the
award of the tender to the successful tenderer.
17. While adjudicating the matter, the Court also
observed that the petitioner's bid had substantive defects.
Specifically, it was found that in the petitioner's
consortium, only one joint venture (JV) member had
authorized itself as the lead member, whereas the tender
document required collective authorization from all
consortium members.
18. The petitioner challenged the order dated
23.02.2022 by filing a writ appeal in W.A. No. 233/2022.
This appeal was dismissed by the Division Bench vide
order dated 04.07.2022. However, the Division Bench
explicitly noted that there had been "no adjudication of
the rights of the parties" in W.P. No. 6892/2021.
19. A careful examination of the aforementioned
orders reveals that no adjudication of rights occurred in
the earlier proceedings before this Hon'ble Court. More
importantly, the petitioner did not suffer any award or
finding against it for reasons such as non-performance,
financial failure, or other disqualifying criteria under
Clause 2.20 of the tender document.
20. The disqualification of the petitioner's bid in
relation to the NIT dated 21.12.2020, which was the
subject of litigation, occurred at the pre-qualification
stage and was based on procedural grounds related to
consortium authorization. This cannot be equated with
the disqualifying criterion of "a consistent history of
litigation resulting in awards against the contractor or any
of its constituents" as stipulated under Clause 2.20(2).
21. The rejection of the petitioner's technical bid
in the present case is, therefore, irrational, arbitrary, and
discriminatory. It fails to satisfy the criteria laid down in
Clause 2.20(2) and disregards the principles of fairness
and non-discrimination enshrined under Article 14 of the
Constitution of India.
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22. The respondents' reliance on a history
of litigation involving the petitioner is misplaced, as
the cited instances neither demonstrate poor
performance nor establish adverse awards resulting
from consistent litigation. Consequently, the
rejection of the petitioner's technical bid amounts
to an unlawful exercise of administrative discretion
and is liable to be set aside.
Accordingly, I order the following:
ORDER
i. The impugned communication dated 08.02.2024 issued by the respondent No. 4 rejecting the bid of the petitioner is hereby quashed.
ii. The respondent No. 4 is to consider the financial bid of the petitioner in accordance with the terms of the tender document."
(Emphasis supplied) The Co-ordinate Bench holds that reliance on the history of litigation involving the fifth respondent, who was petitioner therein was misplaced. The rejection of the technical bid of the fifth respondent was quashed and the fifth respondent financial bid was directed to be considered. The consideration in terms of the order of this Court leads to publication of the successful bidders on the portal of the authority. The display on the portal, reads as follows:
11The entire submission of the learned counsel appearing for the petitioner is on the afore-quoted display on the portal.
10. A perusal at the display in the first blush would indicate that the petitioner was declared as L1, but on a deeper scrutiny of the display is indicative of the fact that the bid amount of the fifth respondent was not even found. The submission of Sri S. Subramanya, learned counsel is that there was a technical glitch and help was sought from the helpline of the portal. The help comes about after a month. The moment help comes about, the 12 financial bids are assessed and the bid of the fifth respondent is held to be responsive and the work order is issued to the fifth respondent. The entire timeline of what has happened in the case at hand is vividly bought out by respondents No.2 to 4, by way of the chart. I deem it appropriate to depict the paraphrase of the chart:
"Schedule table for the tender "Supply of two boats with manning and manpower for operation & maintenance of Oil Spill Response equipment & combating oil pollution for a period of 05 years"
Content DATE
Date of Tender Document Published in CPP 21-09-2023
and NMPA Website (re-tender)
Date of Starting of online Pre-bid queries 21-09-2023
Date of Closing of online Pre-bid queries 28-09-2023
Approval accorded by CA for publishing 13-10-2023
Pre-Bid Clarifications
Pre-bid Clarifications uploaded in CPP and 16-10-2023
NMPA Website
Accordingly 02 times extensions were Till 02-11-2023
made for submission of bids after (1st Exntn.)
uploading of Pre-Bid Clarifications Till 14-11-2023
(2nd Exntn.)
Technical Bid opening date 15-11-2023
Tender committee suggested to obtain 19-12-2023
legal opinion
Approval of the CA was sought for 10-01-2024
obtaining legal opinion from Port
empanelled Advocate
Legal opinion obtained to NMPA from Port 29-01-2024
empanelled Advocate
Approval of the CA was accorded for 01-02-2024
acceptance of legal opinion from Port
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empanelled Advocate
Tender committee meeting for evaluation 02-02-2024
of Technical bids
Approval of the CA was accorded for 07-02-2024
acceptance of tender committee
recommendation and opening of Price bids Technical bid minutes uploaded in CPP 08-02-2024 Portal Price bids were opened 09-02-2024 Tender committee meeting for evaluation 09-02-2024 of Price bids However, before placing the Work Order to 13-02-2024 L-1 bidder, one of the disqualified bidder M/s Yojaka (India) Pvt. Ltd., Mangalore filed a petition in the Hon'ble High court of Karnataka and vide interim order dated 13-02-2024 in WP 4435/2024 Final certified Order by the Hon'ble High 01-01-2025 Court of Karnataka dated 24-10-2024 for case No. WP 4435/2024 was forwarded by the Legal Cell Based on the order of the Hon'ble High 07-01-2025 Court of Karnataka, Tender Committee met on 07-01-2025 and recommended to technically qualify and open the Price Bid of M/s. Yojaka (India) Private Limited, Mangalore On approval of the NMPA Board, all the 07-02-2025 participated bidders were informed on 07-02-2025 regarding tender revocation The tender has been revoked on 10-02-2025 10-02-2025 and brought to the technical opening stage in the system from current stage of financial bid opening to open the Price bid After tender revocation, Price bids were 18-02-2025 opened and downloaded from CPP website on 18-02-2025.
Note: Financial bid of Yojaka (India) Pvt. Ltd. has been opened. However, CPP system generated BOQ Comparative Chart had issues wherein the rate of M/s. Yojaka 14 (India) Pvt. Ltd. is not reflected. (L1 bidder reflected as M/s. Sadhav Shipping limited instead of M/s. Yojaka (India) Pvt. Ltd.) Email received from CPP helpdesk 18-03-2025 regarding resolving the issue in BOQ Comparative Chart.
As per instructions from CPP, tender 19-03-2025 revocation was done again and Price bids were opened again on 19-03-2025. Issue in BOQ Comparative Chart was resolved and M/s. Yojaka (India) Pvt. Ltd. was Ll bidder Approval obtained from the NMPA Board 28-03-2024 for the recommendations tender committee and award of work to the L1 bidder M/s. Yojaka (India) Pvt. Ltd., Mangalore Work Order placed on M/s.Yojaka (India) 28-03-2024 Pvt. Ltd., Mangalore Financial bid evaluation and award of work 28-03-2024 procedure completed on CPP portal Justification is also furnished by the respondent, as to why there has been a month delay in work order being issued, after the financial bid was opened, the explanation is plausible. All of this would lead to an unmistakable inference that the petitioner was never declared L1.
11. In the teeth of what is aforesaid, if this Court would again interfere with the imaginary plea of the petitioner that he has been declared L1, it would run counter to plethora of judgments rendered by the Apex Court that this Court unless the decision 15 making process in a tender is arbitrary and such arbitrariness is palpable or demonstrable, this Court would not interfere in a challenge to such tender.
12. It becomes apposite to refer to the judgment of the Apex Court in the case of INDORE VIKAS PRAADHIKARAN (IDA) Vs. SHRI HUMUD JAIN SAMAJ TRUST1, has held as follows:
".... .... ....
12. In the present case, the undisputed facts reveal that first NIT was issued on 17.07.2020 and respondent No. 1 was certainly the highest bidder by offering a bid of Rs. 25,671.90/- per square meter. The Tender Evaluation Committee after examining the bid arrived at a conclusion to cancel the tender as it came to its notice that an outstanding property tax demand amounting to Rs. 1,25,82,262/- was not taken into account while fixing the base price. It was resolved to issue a fresh NIT and, therefore, a fresh NIT was issued on 17.11.2021 and for the reasons best known to the respondent No. 1, it did not participate in the second NIT and instead preferred a writ petition on 24.11.2021 before the High Court of Madhya Pradesh. Learned Single Judge was justified in dismissing the writ petition on the ground that merely by offering highest bid, the respondent No. 1 did not acquire any vested right for the execution of the contract in its favour. The Division Bench of the High Court, however, allowed the writ appeal and has gone to the extent in directing the IDA to accept the offer of respondent No. 1 which was made before the Court for an amount of Rs. 26,000/- per square meter in respect of the land in question, and further directing IDA to allot the land in question to respondent No. 1. This Court in the case of State of Jharkhand v. CWE-SOMA Consortium (supra) while dealing with 1 2024 SCC ONLINE SC 3511 16 the similar issue of annulment of tender process, in paras 21, 22 and 23 has held as under:
"21. Observing that while exercising power of judicial review, the Court does not sit as appellate court over the decision of the Government but merely reviews the manner in which the decision was made, in Tata Cellular v. Union of India [Tata Cellular v. Union of India, (1994) 6 SCC 651], SCC in para 70 it was held as under : (SCC p. 675) "70. It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down."
22. The Government must have freedom of contract. In Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd. [Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd., (2005) 6 SCC 138], SCC in para 12 this Court held as under : (SCC p. 147) "12. After an exhaustive consideration of a large number of decisions and standard books on administrative law, the Court enunciated the principle that the modern trend points to judicial restraint in administrative action. The court does not sit as a court of appeal but merely reviews the manner in which the 17 decision was made. The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise, which itself may be fallible. The Government must have freedom of contract. In other words, fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi- administrative sphere. However, the decision must not only be tested by the application of Wednesbury principles of reasonableness but also must be free from arbitrariness not affected by bias or actuated by mala fides. It was also pointed out that quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. (See para 113 of the Report, SCC para 94.)"
The Court does not have the expertise to correct the administrative decision as held in Laxmikant v. Satyawan [Laxmikant v. Satyawan, (1996) 4 SCC 208], the Government must have freedom of contract.
23. The right to refuse the lowest or any other tender is always available to the Government. In the case in hand, the respondent has neither pleaded nor established mala fide exercise of power by the appellant. While so, the decision of the Tender Committee ought not to have been interfered with by the High Court. In our considered view, the High Court erred in sitting in appeal over the decision of the appellant to cancel the tender and float a fresh tender. Equally, the High Court was not right in going into the financial implication of a fresh tender."
13. This Court in the aforesaid case has held that while exercising power of judicial review, the Court does not sit as an appellate Court over the decision of the government but merely reviews the manner in which the decision was made [Tata Cellular v. Union of India, (1994) 6 SCC 651]. In the considered opinion of this Court, the Division Bench should not have interfered in the matter and could not have gone to the extent of fixing the base price/modifying the offer made by respondent and, 18 therefore, in light of the aforesaid judgment as the High Court has virtually passed an order sitting in appeal over the decision of the government in absence of any mala fide exercise of power by the IDA, the judgment passed by the Division Bench of the High Court deserves to be set aside and is, accordingly set aside. This Court in the case of Haryana Urban Development Authority v. Orchid Infrastructure Developers Pvt. Ltd. (supra) again dealing with the cancellation of a bid of the highest bidder, in paragraphs 12, 13, 14, 15, 16 and 30 has held as under:
"12. Firstly, we examine the question whether there being no concluded contract in the absence of acceptance of bid and issuance of allotment letter, the suit could be said to be maintainable for the declaratory relief and mandatory injunction sought by the plaintiff. The plaintiff has prayed for a declaration that rejection of the bid was illegal. Merely by that, the plaintiff could not have become entitled for consequential mandatory injunction for issuance of formal letter of allotment. The court while exercising judicial review could not have accepted the bid. The bid had never been accepted by the authorities concerned. It was not a case of cancellation of bid after being accepted. Thus, even assuming as per the plaintiff's case that the Administrator was not equipped with the power and the Chief Administrator had the power to accept or refuse the bid, there had been no decision by the Chief Administrator. Thus, merely by declaration that rejection of the bid by the Administrator was illegal, the plaintiff could not have become entitled to consequential relief of issuance of allotment letter. Thus the suit, in the form it was filed, was not maintainable for relief sought in view of the fact that there was no concluded contract in the absence of allotment letter being issued to the plaintiff, which was a sine qua non for filing the civil suit.
13. It is a settled law that the highest bidder has no vested right to have the auction concluded in his favour. The Government or its authority could validly retain power to accept or reject the highest bid in the interest of public revenue. We are of the considered opinion that there was no right acquired and no vested right accrued in favour of the plaintiff merely because his bid amount was highest and had 19 deposited 10% of the bid amount. As per Regulation 6(2) of the 1978 Regulations, allotment letter has to be issued on acceptance of the bid by the Chief Administrator and within 30 days thereof, the successful bidder has to deposit another 15% of the bid amount. In the instant case, allotment letter has never been issued to the petitioner as per Regulation 6(2) in view of non-acceptance of the bid. Thus, there was no concluded contract. Regulation 6 of the 1978 Regulations is extracted hereunder:
"6. Sale of lease of land or building by auction.-- (1) In the case of sale or lease by auction, the price/premium to be charged shall be such reserve price/premium as may be determined taking into consideration the various factors as indicated in sub-
regulation (1) of Regulation 4 or any higher amount determined as a result of bidding in open auction.
(2) 10 per cent of the highest bid shall be paid on the spot by the highest bidder in cash or by means of a demand draft in the manner specified in sub-regulation (2) of Regulation 5. The successful bidder shall be issued allotment letter in Form CC or C-II by registered post and another 15 per cent of the bid accepted shall be payable by the successful bidder, in the manner indicated, within thirty days of the date of allotment letter conveying acceptance of the bid by the Chief Administrator; failing which the 10 per cent amount already deposited shall stand forfeited to the authority and the successful bidder shall have no claim to the land or building auctioned.
(3) The payment of balance of the price/premium, rate of interest chargeable and the recovery of interest shall be in the same manner as provided in sub-regulations (6) and (7) of Regulation 5.
(4) The general terms and conditions of the auction shall be such as may be framed by the Chief 20 Administrator from time to time and announced to the public before auction on the spot."
14. We are fortified in our view by a decision of this Court in U.P. Avas Evam Vikas Parishad v. Om Prakash Sharma [U.P. Avas Evam Vikas Parishad v. Om Prakash Sharma, (2013) 5 SCC 182 : (2013) 2 SCC (Civ) 737], wherein the questions arose for its consideration that :
whether there is any vested right upon the plaintiff bidder until the bid is accepted by the competent authority in relation to the property in question? Merely because the plaintiff is the highest bidder by depositing 20% of the bid amount without there being approval of the same by the competent authority and it amounts to a concluded contract in relation to the plot in question; and whether the plaintiff could have maintained the suit in the absence of a concluded contract? Considering the aforesaid questions, this Court has discussed the matter thus : (SCC pp. 195-97, paras 30-31) "30. In support of the said proposition, the learned Senior Counsel for the defendant, Mr. Rakesh Dwivedi has also placed reliance upon another decision of this Court in State of U.P. v. Vijay Bahadur Singh [State of U.P. v. Vijay Bahadur Singh, (1982) 2 SCC 365]. The learned Senior Counsel has rightly placed reliance upon the judgment of this Court in Rajasthan Housing Board case [Rajasthan Housing Board v. G.S. Investments, (2007) 1 SCC 477] which reads as under :
(SCC p. 483, para 9) '9. This being the settled legal position, the respondent acquired no right to claim that the auction be concluded in its favour and the High Court clearly erred in entertaining the writ petition and in not only issuing a direction for consideration of the representation but also issuing a further direction to the appellant to issue a demand note of the balance amount. The direction relating to issuance of the demand note for balance amount virtually amounted to confirmation of the auction in favour of the 21 respondent which was not the function of the High Court.' In State of Orissa v. Harinarayan Jaiswal [State of Orissa v. Harinarayan Jaiswal, (1972) 2 SCC 36] case, relevant paragraph of which reads as under : (SCC pp. 44-45, para 13) '13. ... There is no concluded contract till the bid is accepted. Before there was a concluded contract, it was open to the bidders to withdraw their bids (see Union of India v. Bhim Sen Walaiti Ram [Union of India v. Bhim Sen Walaiti Ram, (1969) 3 SCC 146] ). [Ed. : The matter between two asterisks has been emphasised in Avam Evam Vikas Parishad case, (2013) 5 SCC 182.] By merely giving bids, the bidders had not acquired any vested rights [Ed. : The matter between two asterisks has been emphasised in Avam Evam Vikas Parishad case, (2013) 5 SCC 182.]'.
31. In view of the law laid down by this Court in the aforesaid decisions, the learned Senior Counsel Mr. Rakesh Dwivedi has rightly placed reliance upon the same in support of the case of the first defendant, which would clearly go to show that the plaintiff had not acquired any right and no vested right has been accrued in his favour in respect of the plot in question merely because his bid amount is highest and he had deposited 20% of the highest bid amount along with the earnest money with the Board. In the absence of acceptance of bid offered by the plaintiff to the competent authority of the first defendant, there is no concluded contract in respect of the plot in question, which is evident from letters dated 26-5-1977 and 8-7-1977 wherein the third defendant had rejected the bid amount deposited by the plaintiff and the same was refunded to him by way of demand draft, which is an undisputed fact and it is also not his case that the then Assistant Housing Commissioner who has conducted the public auction had accepted the bid of the plaintiff."22
15. This Court in Om Prakash Sharma case [U.P. Avas Evam Vikas Parishad v. Om Prakash Sharma, (2013) 5 SCC 182 : (2013) 2 SCC (Civ) 737] has held that in the absence of a concluded contract which takes place by issuance of allotment letter, suit could not be said to be maintainable as there is no vested right in the plaintiff without approval of the bid by the competent authority. Thus, in the wake of the aforesaid decision, in the absence of a concluded contract, the suit could not have been decreed for mandatory injunction. It amounted to enforcing of contract in the absence thereof.
16. In the light of the aforesaid discussion, it is evident that in the absence of a concluded contract i.e. in the absence of allotment letter and acceptance of highest bid, the suit filed by the plaintiff was wholly misconceived. Even if non-acceptance of the bid was by an incompetent authority, the court had no power to accept the bid and to direct the allotment letter to be issued. Merely on granting the declaration which was sought that rejection was illegal and arbitrary and by incompetent authority, further relief of mandatory injunction could not have been granted, on the basis of findings recorded, to issue the allotment letter, as it would then become necessary to forward the bid to competent authority--Chief Administrator--for its acceptance, if at all it was required.
30. In Meerut Development Authority v. Assn. of Management Studies [Meerut Development Authority v. Assn. of Management Studies, (2009) 6 SCC 171 : (2009) 2 SCC (Civ) 803], this Court has laid down that a bidder has no right in the matter of bid except of fair treatment in the matter and cannot insist for further negotiation. The authority has a right to reject the highest bid. This Court has laid down thus : (SCC p. 182, paras 27 &
29) "27. The bidders participating in the tender process have no other right except the right to equality and fair treatment in the matter of evaluation of competitive bids 23 offered by interested persons in response to notice inviting tenders in a transparent manner and free from hidden agenda. One cannot challenge the terms and conditions of the tender except on the above stated ground, the reason being the terms of the invitation to tender are in the realm of the contract. No bidder is entitled as a matter of right to insist the authority inviting tenders to enter into further negotiations unless the terms and conditions of notice so provided for such negotiations.
29. The Authority has the right not to accept the highest bid and even to prefer a tender other than the highest bidder, if there exist good and sufficient reasons, such as, the highest bid not representing the market price but there cannot be any doubt that the Authority's action in accepting or refusing the bid must be free from arbitrariness or favouritism."
14. Keeping in view of the aforesaid judgments, this Court is of the considered opinion that in the absence of allotment letter and acceptance of highest bid, no relief could have been granted in favour of respondent No. 1 as there was no concluded contract in the matter and the decision taken by the Tender Evaluation Committee to generate more revenues could not have been interfered with in the manner and method as has been done by the Division Bench of the High Court of Madhya Pradesh at Indore Bench. The bidder has no right in the matter of bid except of fair treatment and cannot insist for further negotiation as has been done in the present case. The terms and conditions of NIT, particularly condition No. 6, empowers the IDA to accept or reject any or all bids. In the present case, the bid was rejected for valid and cogent reasons and, therefore, the order passed by the Division Bench of the High Court of Madhya Pradesh is set aside."
(Emphasis supplied) 24 Later, the judgment of the Apex Court in the case of BANSHIDHAR CONSTRUCTION (P) LTD. Vs. BHARAT COKING COAL LTD.,2 has held as follows:
".... .... ....
31. In Sterling Computers Ltd. v. M & N Publications Ltd. [Sterling Computers Ltd. v. M & N Publications Ltd., (1993) 1 SCC 445] , this Court while dealing with the scope of judicial review of award of contracts held : (SCC p. 458, para 18) "18. While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the Court is concerned primarily as to whether there has been any infirmity in the "decision making process". In this connection reference may be made to Chief Constable of the North Wales Police v. Evans [Chief Constable of the North Wales Police v. Evans, (1982) 1 WLR 1155 (HL)] where it was said that : (p. 1161) '... The purpose of judicial review is to ensure that the individual receives fair treatment, and not to ensure that the authority, after according fair treatment, reaches on a matter which it is authorised or enjoined by law to decide for itself a conclusion which is correct in the eyes of the court.' By way of judicial review the court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State. Courts have inherent limitations on the scope of any such enquiry. But at the same time as was said by the House of Lords in the aforesaid case, Chief Constable of the North Wales Police v. Evans [Chief Constable of the North Wales Police v. Evans, (1982) 1 WLR 1155 (HL)] the courts can certainly examine whether "decision-making process"
2(2024) 10 SCC 273 25 was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution."
32. In Tata Cellular v. Union of India [Tata Cellular v. Union of India, (1994) 6 SCC 651] , this Court had laid down certain principles for the judicial review of administrative action : (SCC pp. 687-88, para 94) "94. The principles deducible from the above are:
(1) The modern trend points to judicial restraint in administrative action.
(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.
(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers.
More often than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application ofWednesbury [Associated Provincial Picture Houses v. Wednesbury Corpn., (1948) 1 KB 223 (CA)] principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.
26Based on these principles we will examine the facts of this case since they commend to us as the correct principles."
(emphasis in original and supplied)
33. It has also been held in ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd. [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC 553] , as under : (SCC p. 580, para 53) "53. From the above, it is clear that when an instrumentality of the State acts contrary to public good and public interest, unfairly, unjustly and unreasonably, in its contractual, constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution."
34. In Jagdish Mandal v. State of Orissa [Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517] , this Court after discussing number of judgments laid down two tests to determine the extent of judicial interference in tender matters. They are : (SCC pp. 531-32, para 22) "22. ... (i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone;
or Whether the process adopted or decision made is so arbitrary and irrational that the court can say:'the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached;'
(ii) Whether public interest is affected. If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action."
2735. In Mihan (India) Ltd. v. GMR Airports Ltd. [Mihan (India) Ltd. v. GMR Airports Ltd., (2022) 19 SCC 69 : 2022 SCC OnLine SC 574] , while observing that the government contracts granted by the government bodies must uphold fairness, equality and rule of law while dealing with the contractual matters, it was observed in SCC para 65 as under:
"65. In view of the above, it is apparent that in government contracts, if granted by the government bodies, it is expected to uphold fairness, equality and rule of law while dealing with contractual matters. Right to equality under Article 14 of the Constitution of India abhors arbitrariness. The transparent bidding process is favoured by the Court to ensure that constitutional requirements are satisfied. It is said that the constitutional guarantee as provided under Article 14 of the Constitution of India demands the State to act in a fair and reasonable manner unless public interest demands otherwise. It is expedient that the degree of compromise of any private legitimate interest must correspond proportionately to the public interest."
36. It was sought to be submitted by the learned counsel for the respondents relying upon the observations made in Central Coalfields Ltd. v. SLL-SML (JVC) [Central Coalfields Ltd. v. SLL- SML (JVC), (2016) 8 SCC 622 : (2016) 4 SCC (Civ) 106] , that whether a term of NIT is essential or not is a decision taken by the employer which should be respected. However, in the said judgment also it is observed that if the employer has exercised the inherent authority to deviate from the essential term, such deviation has to be made applicable to all the bidders and potential bidders. It was observed in paras 47 and 48 as under :
(SCC p. 638) "47. The result of this discussion is that the issue of the acceptance or rejection of a bid or a bidder should be looked at not only from the point of view of the unsuccessful party but also from the point of view of the employer. As held in Ramana Dayaram Shetty [Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCC 489] the terms of NIT cannot be ignored as being 28 redundant or superfluous. They must be given a meaning and the necessary significance. As pointed out in Tata Cellular [Tata Cellular v. Union of India, (1994) 6 SCC 651] there must be judicial restraint in interfering with administrative action. Ordinarily, the soundness of the decision taken by the employer ought not to be questioned but the decision-making process can certainly be subject to judicial review. The soundness of the decision may be questioned if it is irrational or mala fide or intended to favour someone or a decision 'that no responsible authority acting reasonably and in accordance with relevant law could have reached' as held in Jagdish Mandal [Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517] followed in Michigan Rubber [Michigan Rubber (India) Ltd. v. State of Karnataka, (2012) 8 SCC 216] .
48. Therefore, whether a term of NIT is essential or not is a decision taken by the employer which should be respected. Even if the term is essential, the employer has the inherent authority to deviate from it provided the deviation is made applicable to all bidders and potential bidders as held in Ramana Dayaram Shetty [Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCC 489] . However, if the term is held by the employer to be ancillary or subsidiary, even that decision should be respected. The lawfulness of that decision can be questioned on very limited grounds, as mentioned in the various decisions discussed above, but the soundness of the decision cannot be questioned, otherwise this Court would be taking over the function of the tender issuing authority, which it cannot."
(Emphasis supplied) In the light of the judgment of the Apex Court, quoted supra and the unequivocal fact that the petitioner was never legally declared L1, he cannot now hinge upon the fact that for one month he was L1 and therefore, he should be awarded the contract. As observed 29 hereinabove, was on a technical glitch of the absence of the bid of the fifth respondent shown as L1, he was never declared as L1.
13. For the aforesaid reasons, finding no merit, the petition stands rejected.
Interim order of any kind stands dissolved.
SD/-
(M.NAGAPRASANNA) JUDGE JY CT:BHK