Andhra Pradesh High Court - Amravati
B Srinivas vs The Andhra Pradesh State Civil Supplies ... on 5 March, 2021
Author: Kongara Vijaya Lakshmi
Bench: Kongara Vijaya Lakshmi
HIGH COURT OF ANDHRA PRADESH : AT AMARAVATI
Writ Petition NO.4780 OF 2021
Between:
B Srinivas, S/o Satyanarayan,
aged about 60 years, Occ Business,
R/o D.No.4-164/18, Ganesh Nagar,
1st Ward, Tadepalligudem - 534 101,
West Godavari District.
Writ Petitioner
And
1. The Andhra Pradesh State Civil Supplies Corporation Limited,
Rep by its Vice Chairman and Managing Director,
D.No.10-152/1, Sri Sai Towers, 4th Floor, Ashoknagar
Besides Siris Company, Bandar Road, Kanuru,
Vijayawada - 520 007.
2. Sri Kottu Sathyanarayana,
MLA of Tadepalligudem, S/o Venkateswara Rao,
aged about 65 years, Occ: Business, R/o 30th Ward,
Tadepalligudem - 534 102.
Respondents
DATE OF JUDGMENT PRONOUNCED: 05.03.2021
SUBMITTED FOR APPROVAL:
4. Whether Reporters of Local Newspapers
May be allowed to see the judgment? : No
5. Whether the copies of judgment may be
Marked to Law Reporters/Journals? : Yes
6. Whether Your Lordships wish to
See the fair copy of the judgment? : Yes
____________________________
KONGARA VIJAYA LAKSHMI, J
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WP No.4780 of 2021
HON'BLE SMT. JUSTICE KONGARA VIJAYA LAKSHMI
+ Writ Petition NO.4780 OF 2021
% 05.03.2021
Between:
B Srinivas, S/o Satyanarayan,
aged about 60 years, Occ Business,
R/o D.No.4-164/18, Ganesh Nagar,
1st Ward, Tadepalligudem - 534 101,
West Godavari District.
Writ Petitioner
And
1. The Andhra Pradesh State Civil Supplies Corporation Limited,
Rep by its Vice Chairman and Managing Director,
D.No.10-152/1, Sri Sai Towers, 4th Floor, Ashoknagar
Besides Siris Company, Bandar Road, Kanuru,
Vijayawada - 520 007.
2. Sri Kottu Sathyanarayana,
MLA of Tadepalligudem, S/o Venkateswara Rao,
aged about 65 years, Occ: Business, R/o 30th Ward,
Tadepalligudem - 534 102.
Respondents
! Counsel for Petitioner : Sri L. Ravi Chander, learned Senior Counsel,
representing learned counsel for the
petitioner Sri Bobbili Srinivas
^ Counsel for Respondent No.1: learned Government Pleader Mr.
Vivekananda, appearing on behalf of
learned Additional Advocate-General II
Mr. Jasti Naga Bhushan
Counsel for Respondent No.2: --
< Gist:
> Head Note:
? Cases referred:
1. (2017) 4 SCC 269
2. 2013(3) ALT 572
3. 2020 SCC Online SC 335
4. (2012) 8 SCC 216
5. (2000) 5 SCC 287
6. (2003) 5 SCC 437
7. (2004) 4 SCC 19
8. (2005) 4 SCC 435
9. (2005) 6 SCC 138
10.(2014) 3 SCC 760
11.(2015) 2 SCC 796
12. (2009) 6 SCC 171
13. 2021 (1) JLJ 173
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WP No.4780 of 2021
HON'BLE SMT. JUSTICE KONGARA VIJAYA LAKSHMI
Writ Petition NO.4780 OF 2021
Order:
This Writ Petition is filed "to declare the tender notice bearing
reference Lr.No.Mktg/M2/G/291220/WB/KMS/2020-21, dated 08.02.2021
and corrigendum in Lr.No.Mktg/M2/291220/WB/KMS/2020-21, dated
15.02.2021, which were prepared by the first respondent with a mala fide
intention to prohibit the existing transport contractors from Gunny Bales
Transportation and to appoint big contractors only as transport
contractors as illegal and arbitrary".
2. Heard Sri L. Ravi Chander, learned Senior Counsel, representing
learned counsel for the petitioner Sri Bobbili Srinivas and learned
Government Pleader Mr. Vivekananda, appearing on behalf of learned
Additional Advocate-General II Mr. Jasti Naga Bhushan for the first
respondent and with their consent the Writ Petition is being disposed of at
the admission stage.
3. The petitioner is a transport contractor and has been transporting
jute gunny bales from various jute mills. The first respondent Corporation
issued tender notice dated 16.11.2019 for transportation of jute gunny
bales from West Bengal to Andhra Pradesh and the basic condition of the
tender document is that the bidders should have a turn over of Rs.30.00
Crores for the last three years and they should have 10 own lorries and 20
own/hired lorries; e-reverse auction was conducted on 05.12.2019 and
one Balaji Transport has become L1 and the petitioner's son is one of the
partners in the said Balaji Transport; the petitioner's son is doing his own
business independent of the petitioner; in the assembly elections that
were conducted in 2019, petitioner contested for the office of MLA as a
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candidate of Janasena party, but the second respondent was elected as
MLA and as the petitioner is protesting the activities of the second
respondent, he bore a grudge against him and addressed a letter
dt.Nil.12.2019 to the Hon'ble Chief Minister requesting to cancel the said
tenders, which reads as follows.
"In this connection, I submit that in previous TDP
Government, the TDP and Janasena party people managed
the tenders call for in local papers so as to get those renders
without any competition. Thereby our State Government is
getting heavy loss. Sri B. Srinivas, Ex.Municipal Chair
Person, TDP is managed to get the tender in his favour by
publishing the tender notice through local news papers. He
contested as MLA candidate for 62 - Tadepalligudem
Assembly Constituency on behalf of Janasena Party during
last elections. Now he again filed the single tender with 8%
excess. I therefore, request the Hon'ble Chief Minister to
cancel the above single tender and issue orders to cause
necessary enquiry about the single tender and take action
against the persons responsible. I also request the Hon'ble
Chief Minister to call for the fresh tender."
7. The Chief Minister's office forwarded the said letter to the first
respondent and thereafter the second respondent personally approached
the first respondent and pressurized them not to appoint Balaji Transport;
even though they became L1, the same was not finalized; the said Balaji
Transport filed WP No.21562 of 2019 questioning the action of the first
respondent in taking steps to re-tender and an interim direction was
granted on 02.01.2020 directing the first respondent not to conduct re-
auction and during the subsistence of the said interim order the first
respondent issued tender notice dated 31.12.2020 with the same basic
conditions and as the petitioner is having the required qualifications he
wanted to participate in the tender process; at that stage the second
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WP No.4780 of 2021
respondent again approached the first respondent and forced the first
respondent to cancel the said tender and to issue another tender notice
by incorporating new conditions which should disqualify the petitioner
from participating in the tender process; the first respondent, at the
instance of the second respondent, cancelled the tender notice dated
31.12.2020 vide proceedings dated 12.01.2021 and issued the impugned
tender notice dated 08.02.2021 with a view to prohibit the petitioner from
participating in the tender process; as against the existing requirement of
having turn over of Rs.30.00 Crores, the first respondent imposed new
condition that the turn over should be Rs.100.00 Crores, as against the
existing requirement of having 10 own lorries, the first respondent
imposed a new condition that the bidder should have 100 own lorries and
as against the existing requirement of having 20 own/hired lorries, the
first respondent imposed a new condition that the bidder should have 100
own/hired vehicles and that the bidder who has a pending litigation with
the first respondent as on the date of application is not eligible to
participate in the tender; in the pre-bid meeting held on 12.02.2021 the
petitioner personally requested the first respondent to fix the conditions as
were prescribed in the tender notice dated 31.12.2020, pursuant to which
the first respondent issued corrigendum on 15.02.2021 reducing the turn
over requirement to Rs.65.00 Crores and the number of vehicles which
should be owned to 75 and the number of vehicles which can be
owned/hired to 75 vehicles and now the first respondent is taking steps to
conduct e-reverse auction; such a condition was incorporated at the
instance of the second respondent with a mala fide intention to prohibit
the petitioner from participating in the tender process. Hence, the Writ
Petition.
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8. Counter affidavit is filed by the first respondent stating, inter alia,
that the petitioner has no locus standi to file the present Writ Petition, as
he failed to assert and prove his eligibility to participate in the impugned
tender process, the present Writ Petition is filed only to protect the
interest of his son who is an existing contractor; the present tender is for
two years from March 2021 to April 2023 and due to increase in the
requirement of gunny bags, due to increase in paddy production and to
have sufficient number of gunny bags positioned at depots within time
schedule to avoid interruption in the procurement of paddy from farmers
basic requirement is increased; the petitioner did not give any specific
details of his turnover and the number of lorries which he owns; basic
conditions that were stipulated at that time were based on the assessment
during that time; at present the volume of work and requirement of jute
gunnies has drastically increased as the tender is for the year 2021-2023;
Balaji Transport has become L1 in the previous tender, but as the rate
quoted by him was very high the said tender was recalled and the
Corporation has got such a right as per tender clause 11 (xix); in view of
stay granted by this Court in WP No.21562 of 2019, the first respondent
has not finalized the tenders from 2019 to 2021 and the said Balaji
Transport dragged on the matter for 2 ½ years and continued the
contract with old rates till now and the said Writ Petition was withdrawn
on 22.02.2021 and the present Writ Petition is filed only to help his son to
continue the same contract in favour of Balaji Transport; the first
respondent has conducted pre-bid meeting on 12.02.2021 and eight (8)
bidders have participated in the meeting and they have given their inputs
and their representations were considered to some extent; the trucks may
take 4 to 6 days time to reach its destination and in turn to go to West
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Bengal for another load trip and hence 150 trucks are needed for hassle
free transportation; the petitioner cannot be allowed to determine and
dictate the conditions of the tender and the conditions of the tender are
designed keeping in view the requirements of the first respondent; the
first respondent has issued the notification keeping in view of the existing
requirement, no mala fides can be attributed, the same is not amenable to
judicial review, no fundamental right of the petitioner has been violated
and prayed to dismiss the Writ Petition.
9. The contention of the learned Senior Counsel Sri L. Ravi Chander,
representing the learned counsel for the petitioner on record Sri Bobbili
Srinivas, is that the conditions imposed are onerous, no reasons are
forthcoming with regard to imposition of new conditions in the impugned
tender and clause 4.1.1 of the tender condition is violative of the
fundamental rights of the petitioner herein and that the petitioner is
qualified to participate in the tender. The first respondent at the instance
of the second respondent incorporated the impossible condition with a
mala fide intention to prohibit the petitioner from participating in the
tender. He further contends that the decision making process itself is
faulty, mala fide and the same amounts to colourable exercise of power.
In support of his contentions, he relied upon the decisions reported in
Reliance Telecom Limited v. Union of India1, and IBC Limited v.
The A.P. Mineral Development Corporation Limited2.
7. Learned Government Pleader Mr. Vivekananda, appearing on behalf
of learned Additional Advocate-General II Mr. Jasti Naga Bhushan, submits
that the petitioner is the father of the existing contractor who is a partner
in Balaji Transport, admittedly, and the prayer in the Writ Petition itself
1
(2017) 4 SCC 269
2
2013(3) ALT 572
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demonstrates that the Writ Petition is filed to stall the process and to see
that the existing contractor continues. He further contends that the
petitioner is only a proxy to his son and that the petitioner never
participated in the previous tender and that the tender dated 16.11.2019
is for the year 2019-20 and the tender dated 31.12.2020 is for the year
2020-2021 and the present impugned tender dated 08.02.2021 is for the
years 2021 to 2023 and that the petitioner is trying to give a political
colour to the tender even though the first respondent acted according to
its requirements and that the petitioner does not have any locus standi to
file the present Writ Petition. He further contends that the first
respondent did not cancel the bid of Balaji Transport and that it did not
participate in recall of tenders held on 02.01.2021 intentionally, hence no
mala fides can be attributed to the first respondent as the first respondent
imposed such a condition to see that there is no distress sale by the
farmers and that the petitioner cannot dictate the terms of the tender. He
placed reliance on the decisions reported in Bharat Coking Coal
Limited v. AMR Dev. Prabha3, and Michigan Rubber (India)
Limited v. State of Karnataka4.
8. IA No.2 of 2021 is filed to implead one of the bidders who
participated and the learned counsel Sri Balaji Medamalli appears on its
behalf.
9. The present controversy has to be decided on the touch stone of
the parameters of judicial review. The admitted facts for the purpose of
disposal of the present Writ Petition are that the first tender notice was
issued on 16.11.2019 and the requirement is that the bidder should have
Rs.30.00 Crores turn over for the past three years and he should own 10
3
2020 SCC Online SC 335
4
(2012) 8 SCC 216
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WP No.4780 of 2021
lorries and had 20 own/hired lorries. One Balaji Transport has become L1
in the said tender and the petitioner's son is a partner of the said Balaji
Transport. They filed a Writ Petition and obtained an interim order on
02.01.2020 directing the first respondent Corporation not to conduct
reauction. During the subsistence of the said order, the first respondent
issued tender notice dated 31.12.2020 and the basic requirements to bid
are the same. The petitioner did not participate in the tender that was
floated on 16.11.2019. The tender which was floated on 31.12.2020 was
also cancelled on 12.01.2021 and the impugned tender notice is issued on
08.02.2021 by enhancing the basic condition of turn over of the bidder to
Rs.100.00 Crores, 100 own lorries and 100 own/hired lorries and the same
was reduced to Rs.65.00 Crores and 75 own lorries and 75 own/hired
lorries by way of a corrigendum dated 15.02.2021.
10. In the affidavit filed in support of the Writ Petition, except stating
that the petitioner is having more than 10 own lorries, more than 20 hired
lorries and having the required turnover of Rs.30.00 Crores for the last
three years, no document is filed to show that the petitioner is eligible to
participate in the tender that was floated on 16.11.2019 and on
31.12.2020. Even in the letter which is addressed by the petitioner on
20.02.2021 to the Hon'ble Chief Minister, his request is to permit the
contractors who have Rs.30.00 Crores turnover and 10 own vehicles and
20 hired vehicles to participate in the tender. He does not say that he
may be permitted to participate. The interim direction that was granted
by this Court, staying the conduct of re-tendering was granted to Balaji
Transport and that pertains to the year 2019-2020 admittedly. The tender
notice dated 31.12.2020, is for the year 2020-2021 and the present
impugned tender dated 08.02.2021 is for the period from April 2021 to
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March 2023. As the period of contract is different in each tender,
definitely there will be a change in the requirement of gunny bags. The
first respondent Corporation has not finalized the tenders from 2019 to
2021 in view of the pendency of the Writ Petition and according to the
first respondent the petitioner's son (Balaji Transport) continued the
contract with old rates for 2 ½ years and the said Writ Petition was
withdrawn by Balaji Transport on 22.02.2021 i.e., one day before filing
the present Writ Petition. It is the specific case of the first respondent
that the present Writ Petition is filed to help his son to continue with the
contract. The counter affidavit also specifically states that in the tender
quoted by Balaji Transport in which petitioner's son is a partner, the price
quoted was + 4.60 per cent more due to which there will be an additional
burden of Rs.1.06 Crores on the first respondent and to avoid the same,
the first respondent has recalled the tender and that from the year 2016
the said Balaji Transport is continuing to supply gunny bales. No reply
affidavit is filed denying the contents of the counter affidavit.
11. It is also specifically stated in the counter affidavit that there is an
increase in the requirement of gunny bags due to increase in paddy
production. It is stated that as the expected production for the Kharif
season is on higher level when compared to previous years, the conditions
were changed to suit the requirements and to safeguard the interest of
farmers and taking into consideration the standing instructions of the
Central Government. As, admittedly, the petitioner is not an existing
transport contractor, he cannot say that the impugned tender notice is
issued by the first respondent with a mala fide intention to prohibit the
existing contractor to participate in the tender process.
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12. The main contention of the learned Senior Counsel is that the basic
conditions which are incorporated in the impugned tender are onerous,
mala fide and will amount to colourable exercise of power. Except stating
that it is mala fide exercise of power, the petitioner could not demonstrate
as to how the same is mala fide exercise of power. In the letter
addressed by the second respondent to the Hon'ble Chief Minister, what is
stated is that the TDP and Janasena Party people managed to get the
tenders by publishing in local newspapers, due to which the State
Government has suffered heavy loss and that the petitioner also managed
to get the tender by publishing the tender notice in local newspapers and
that the petitioner filed "single tender with 8% excess and requested the
Hon'ble Chief Minister to cancel the said tender and enquire into the
matter". The said letter only states that the petitioner herein managed to
get the tender with excess amount. Even the counter affidavit shows that
the previous tender in which Balaji Transport has become L1 has quoted a
very high rate and that if the same is accepted there would be an
additional burden of Rs.1.06 Crores on the First Respondent. Merely
because such a letter has been addressed by the Second Respondent, it
cannot be presumed that basing on the said letter, basic conditions have
been modified. It is not as though the existing contractor has approached
this Court and contends that only to eliminate him such a condition has
been incorporated this year.
13. In the counter affidavit it is specifically stated that the existing
contractor has also placed 50 to 60 trucks per day by incurring additional
expenditure in view of the representation of the Indian Jute Mills
Association stating that the transporters are not lifting the gunny bales in
time. This contention is also not denied by the petitioner. As seen from
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the communication received from the Deputy Jute Commissioner dated
14.03.2019, food grains are required to be packed compulsorily in jute
bags which have been manufactured in India. The letter of Jute
Commissioner addressed to Joint Secretary to Government of India, dated
02.07.2019 reads as follows.
"It has been informed by Indian Jute Mills
Association that a substantial quantity of jute bags to the
tune of around 19.576 bales which have been inspected
and passed has not yet been lifted by 3 State Procuring
Agencies of Government of Andhra Pradesh (5,434 b/s),
Odisha (8.362 b/s) and Telangana (5.780 b/s). These three
states generally lift the inspected gunny bales by their
authorized road transporters. Thus, it is the responsibility
of SPAs to lift the inspected gunny bales as soon as the
same is inspected.
2. It is brought to your kind notice that non-
lifting or delay in lifting of bags from jute mills adversely
impacts the smooth working of mill due to limitations of
finished goods godown space. Moreover, accumulation of
finished goods in the floor of the mills leads to
difficulties/delay in manufacture and conducting further
inspection of goods on accounts of other indenting
agencies.
3. When the responsibility in lifting of goods
rests with the indenting agencies, they require to be
prompt enough to lift the goods from jute mill premises for
overall smooth supply of bags not only to these 3 SPAs but
also to other indenting agencies.
4. In view of above, it is requested to kindly
issue appropriate advice to the States of Andhra Pradesh.
Odisha and Telangana so that inspected goods are lifted
immediately. These States may also be advised to be
prompt enough so that no delay takes place in lifting of
goods in future."
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WP No.4780 of 2021
14. Pursuant to the said letter, the Under Secretary, Government of
India addressed a letter to the Principal Secretary (Food), Government of
AP, requesting to take appropriate and immediate action with regard to
lifting of jute bags to resolve the problem.
15. The second tender dated 31.12.2020 was called for, after the said
letter of the second respondent dated Nil.12.2019, with the same
conditions. Except alleging that the said tender was also cancelled at the
behest of the second respondent, no material is placed before the Court
to substantiate the same.
16. Even though the learned Senior Counsel contended that the
condition that prohibits the bidders, who have a pending litigation, from
participating is arbitrary, illegal and violative of his fundamental right, as
the petitioner is not disqualified/ineligible on that count, it is not necessary
for this Court to go into that aspect.
17. This Court cannot go into the aspect of requirement of the first
respondent which will depend on various aspects like, production,
previous experience etc.
18. In matters of tender and award of contract, if a decision, relating
to the award of contract, was bona fide and in public interest, Courts
would not, in the exercise of their power of judicial review, interfere
even if a procedural aberration or error in assessment or prejudice to a
tenderer was made out.
19. Although a citizen has a fundamental right, under Article
19(1)(g), to carry on a trade or business, he does not have the
fundamental right to insist that the Government, or any other
individual, should carry on business with him. The government, or the
individual concerned, has the right to enter into a contract with a
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particular person or to determine person or persons with whom he or it
will deal (Krishnan Kakkanth v. Govt. of Kerala, (1997) 9 SCC
495).
20. All that such a person can claim is that, in competing for the
contract, he should not be unfairly treated and discriminated to the
detriment of public interest. (Erusian Equipment & Chemicals Ltd.
v. State of W.B., (1975) 1 SCC 70).
21. In determining the infringement of the right, guaranteed
under Article 19(1) of the Constitution of India, the nature of the right
alleged to have been infringed, the underlying purpose of the
restriction imposed, the extent and urgency of the evil sought to be
remedied thereby, the disproportion of the imposition, the prevailing
conditions at the time, enter into the judicial verdict. (Laxmi
Khandsari v. State of U.P (AIR 1981 SC 873).
22. In the matter of inviting tenders, and in awarding Government
contracts, public interest is the paramount consideration. (Shree
Ostwal Builders v. State of Maharashtra, 2008 (4) Mh.LJ 404).
23. In examining the contention, urged on behalf of the petitioner,
regarding the validity of the qualification requirements stipulated in the
tender notification, Courts must remain conscious that the scope of
judicial review in such matters is extremely limited. In economic and
commercial matters, decisions are taken by the government or its
instrumentalities keeping in view several factors, and it is not possible
for the Courts to consider competing claims and conflicting interests,
and conclude which way the balance tilts. There are no objective,
justiciable or manageable standards to judge these issues nor can such
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questions be decided on a priori considerations. (Dhampur Sugar
(Kashipur) Ltd. v. State of Uttaranchal, (2007) 8 SCC 418).
24. All that the participating bidders are entitled to is a fair, equal
and non-discriminatory treatment (Tata Cellular v. Union of India,
((1994) 6 SCC 651 : AIR 1996 SC 11).
25. Courts are, generally, slow to interfere in such matters, unless it
is shown that the decision is tainted by lack of fairness in procedure,
illegality and irrationality.
26. Before interfering in tenders or contractual matters, in the
exercise of its power of judicial review, the Court should pose to itself
the following questions : (i) Whether the process adopted or decision
made by the authority is mala fide or is intended to favour someone or
the process adopted or the 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 the relevant law
could have reached'; and (ii) Whether public interest is affected. If the
answers are in the negative, there should be no interference in
proceedings under Article 226 of the Constitution of India. (M/s.
Michigan Rubber (India) Ltd (supra);
27. The State can choose its own method to arrive at a decision. It
can fix its own terms of invitation to tender, and that is not open to
judicial scrutiny. Though that decision is not amendable to judicial review,
the Court can examine the decision making process and interfere if it is
found vitiated by mala fides, unreasonableness and arbitrariness. (Air
India Ltd V. Cochin International Airport Ltd (2000) 2 SCC 617).
28. The terms, subject to which tenders are invited, are not open to
judicial scrutiny unless it is found to have been tailor-made to benefit a
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particular tenderer or class of tenderers. If a reasonable procedure has
been followed, the decision should not be challenged except on the
Wednesbury principle of reasonableness and, unless the decision is so
unreasonable that no sensible person would have arrived at such a
decision, it should not be upset. (New Horizons Ltd v. Union of
India (1995) 1 SCC 478).
29. The nature of qualification requirements to be stipulated, in the
tender notification by the tendering authorities, would depend on the
nature of the work to be executed and the quantity and quality of
material required, are all the matters for the contractee to determine.
Save prescription of tender conditions for extraneous reasons, or where
the stipulated qualification requirements are so arbitrary and
unreasonable as to violate Article 14 of the Constitution of India,
interference by this Court would not be justified. In examining the
validity of the qualification requirements, prescribed in the tender
notification by the contractee, this Court must remain conscious of its
lack of expertise in these matters, and should, ordinarily, defer to the
wisdom of experts who have designed such conditions.
30. The purpose of judicial review is to check whether the choice or
decision is made 'lawfully', and not to check whether the choice or
decision is 'sound'. Attempts by persons with imaginary grievances,
wounded pride and business rivalry to make mountains out of molehills of
some technical/procedural violation or some prejudice to self, and to
persuade courts to interfere by exercising the power of judicial review,
should be resisted. (B.S.N. Joshi v. Nair Coal Services Ltd, (AIR
2007 SC 437).
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31. Learned Senior Counsel for the petitioner has relied upon the
judgment in IBC Limited (supra) for the proposition that the rule
inhibiting arbitrary action by the Government would equally apply to a
Corporation dealing with public, whether by way of giving jobs or entering
into contracts, or otherwise, and it cannot act arbitrarily and that its
actions must be in conformity with some principle which meets the test of
reason and relevance.
32. There is no dispute with regard to said proposition and such a plea
is not taken by the respondents.
33. The second judgment relied upon by the learned counsel for the
petitioner is on Reliance Telecom Limited (supra) for the proposition
that power of judicial review would be called for if the approach is
arbitrary and mala fide or the procedure adopted is meant to favour
someone. In the said judgment, three-Judge Bench judgment in Tata
Cellular's case (supra) has been relied upon. In the said judgment it
was observed that the Court does not have the expertise to correct the
administrative decision and 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. It was further held in the said case
that the terms of the invitation to tender cannot be open to judicial
scrutiny because the invitation to tender is in the realm of contract and
the Government must be allowed to have a fair play in the joints as it is a
necessary concomitant for an administrative body functioning in an
administrative sphere or quasi-administrative sphere. It was also
observed that the decision must not only be tested by the application of
Wednesbury principle of reasonableness but must also be free from
arbitrariness and must not be affected by bias or actuated by mala fides
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and while quashing decisions, burden on the administration and increase
in expenditure have to be kept in view.
34. In Monarch Infrastructure (P) Ltd. v. Ulhasnagar Municipal
Corpn. and Ors5, the Hon'ble Supreme Court was concerned with the
question relating to NIT issued by Ulhasnagar Municipal Corporation for
appointment of agents for collection of octroi and revision of terms and
conditions thereof. The Court held that it cannot say whether the
conditions are better than what were prescribed earlier, for in such
matters, the authority calling for tenders is the best judge. The Court
declined to restore status quo ante.
35. In Union of India v. International Trading Co. and Anr6, the
Hon'ble Supreme Court held that non-renewal of permit by the
Government to a private party on the ground of change in its policy
cannot be faulted if such change is founded on reasonableness and is
otherwise not arbitrary, irrational and perverse. It was observed that if the
State acts within the bounds of reasonableness, it would be legitimate to
take into consideration the national priorities and adopt trade policies and
the ultimate test is whether, on the touchstone of reasonableness, the
policy decision comes out unscathed. It further ruled that reasonableness
of restriction is to be determined in an objective manner and from the
standpoint of the interests of the general public and not from the
standpoint of the interests of the persons upon whom the restrictions
have been imposed or upon abstract consideration. A restriction cannot be
said to be unreasonable merely because in a given case, it operates
harshly. In determining whether there is any unfairness involved, the
nature of the right alleged to have been infringed, the underlying purpose
5
(2000) 5 SCC 287
6
(2003) 5 SCC 437
19
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of the restriction imposed, the extent and urgency of the evil sought to be
remedied thereby, the disproportion of the imposition and the prevailing
condition at the relevant time enter into the judicial verdict. The Court
further held that the reasonableness of the legitimate expectation has to
be determined with respect to the circumstances relating to the trade or
business in question and canalisation of a particular business in favour of
even a specified individual is reasonable where the interests of the
country are concerned or where the business affects the economy of the
country.
36. In Directorate of Education v. Educomp Datamatics Ltd. and
Ors.7, the Hon'ble Supreme Court, applying the principles enunciated in
Tata Cellular (supra) and Monarch Infrastructure (P) Ltd. (supra),
held that the terms of the invitation to tender are not open to judicial
scrutiny, the same being in the realm of contract; that the Government
must have a free hand in setting the terms of the tender; that it must
have reasonable play in its joints as a necessary concomitant for an
administrative body in an administrative sphere and the courts would
interfere with the administrative policy decision only if it is arbitrary,
discriminatory, mala fide or actuated by bias and the courts cannot strike
down the terms of the tender prescribed by the Government because it
feels that some other terms in the tender would have been fair, wiser or
logical. The courts can interfere only if the policy decision is arbitrary,
discriminatory or mala fide.
37. In Global Energy Ltd. and Anr. v. Adani Exports Ltd. and
Ors8, the Hon'ble Supreme Court reiterated the principles that the terms
of the invitation to tender are not open to judicial scrutiny and the courts
7
(2004) 4 SCC 19
8
(2005) 4 SCC 435
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cannot whittle down the terms of the tender as they are in the realm of
contract unless they are wholly arbitrary, discriminatory or actuated by
malice.
38. In Master Marine Services (P) Ltd. v. Metcalfe &
Hodgkinson (P) Ltd. and Anr9, the Hon'ble Supreme Court, after
referring to the principles stated in Tata Cellular (supra), observed that
the government policy can be changed with changing circumstances and
only on the ground of change, such policy will not be vitiated and the
Government has discretion to adopt a different policy or alter or change
its policy calculated to serve the public interest and make it more effective
as the choice in the balancing of the pros and cons relevant to the change
in policy lies with the authority, but change in policy must be in conformity
with Wednesbury reasonableness and free from arbitrariness, irrationality,
bias and malice.
39. In Maa Binda Express Carrier and Anr. v. North-East
Frontier Railway and Ors10, the Hon'ble Supreme Court held that the
bidders participating in the tender process cannot insist that their tenders
should be accepted simply because a given tender is the highest or
lowest.
40. In Census Commissioner and Ors. v. R. Krishnamurthy11, a
three-Judge Bench of this Court, after noting several decisions, held that it
is not within the domain of the courts to embark upon an enquiry as to
whether a particular public policy is wise and acceptable or whether a
better policy could be evolved and the courts can only interfere if the
policy framed is absolutely capricious or not informed by reasons or totally
arbitrary and founded ipse dixit offending the basic requirement of Article
9
(2005) 6 SCC 138
10
(2014) 3 SCC 760
11
(2015) 2 SCC 796
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14 of the Constitution. It further observed that in certain matters, as often
said, there can be opinions but the court is not expected to sit as an
appellate authority on an opinion.
41. Learned Government Pleader has relied upon a decision reported in
Meerut Development Authority v. Association of Management
Studies12, wherein it was held as follows.
"WHAT IS THE NATURE OF RIGHTS OF A BIDDER
PARTICIPATING IN THE TENDER PROCESS?
A tender is an offer. It is something which invites
and is communicated to notify acceptance. Broadly stated it
must be unconditional; must be in the proper form, the
person by whom tender is made must be able to and
willing to perform his obligations. The terms of the
invitation to tender cannot be open to judicial scrutiny
because the invitation to tender is in the realm of contract.
However, a limited judicial review may be available in cases
where it is established that the terms of the invitation to
tender were so tailor made to suit the convenience of any
particular person with a view to eliminate all others from
participating in the biding process.
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
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."
12
(2009) 6 SCC 171
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42. In Michigan Rubber (India) Limited (supra), the Hon'ble
Supreme Court observed as follows.
"21. In Jagdish Mandal v. State of Orissa and Ors.
MANU/SC/0090/2007 : (2007) 14 SCC 517, the following
conclusion is relevant:
"22. Judicial review of administrative action is
intended to prevent arbitrariness, irrationality,
unreasonableness, bias and mala fides. Its purpose is to
check whether choice or decision is made "lawfully" and not
to check whether choice or decision is "sound". When the
power of judicial review is invoked in matters relating to
tenders or award of contracts, certain special features
should be borne in mind. A contract is a commercial
transaction. Evaluating tenders and awarding contracts are
essentially commercial functions. Principles of equity and
natural justice stay at a distance. If the decision relating to
award of contract is bona fide and is in public interest,
courts will not, in exercise of power of judicial review,
interfere even if a procedural aberration or error in
assessment or prejudice to a tenderer, is made out. The
power of judicial review will not be permitted to be invoked
to protect private interest at the cost of public interest, or to
decide contractual disputes. The tenderer or contractor with
a grievance can always seek damages in a civil court.
Attempts by unsuccessful tenderers with imaginary
grievances, wounded pride and business rivalry, to make
mountains out of molehills of some technical/procedural
violation or some prejudice to self, and persuade courts to
interfere by exercising power of judicial review, should be
resisted. Such interferences, either interim or final, may hold
up public works for years, or delay relief and succour to
thousands and millions and may increase the project cost
manifold. Therefore, a court before interfering in tender or
contractual matters in exercise of power of judicial review,
should pose to itself the following questions:
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(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.
22. The same principles have been reiterated in a
recent decision of this Court in Tejas Constructions and
Infrastructure Pvt. Ltd. v. Municipal Council, Sendhwa and
Anr. MANU/SC/0406/2012 : (2012) 6 SCC 464.
23. From the above decisions, the following principles
emerge:
(a) the basic requirement of Article 14 is fairness in
action by the State, and non-arbitrariness in essence and
substance is the heartbeat of fair play. These actions are
amenable to the judicial review only to the extent that the
State must act validly for a discernible reason and not
whimsically for any ulterior purpose. If the State acts within
the bounds of reasonableness, it would be legitimate to take
into consideration the national priorities;
(b) fixation of a value of the tender is entirely within
the purview of the executive and courts hardly have any role
to play in this process except for striking down such action
of the executive as is proved to be arbitrary or
unreasonable. If the Government acts in conformity with
certain healthy standards and norms such as awarding of
24
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contracts by inviting tenders, in those circumstances, the
interference by Courts is very limited;
(c) In the matter of formulating conditions of a tender
document and awarding a contract, greater latitude is
required to be conceded to the State authorities unless the
action of tendering authority is found to be malicious and a
misuse of its statutory powers, interference by Courts is not
warranted;
(d) Certain preconditions or qualifications for tenders
have to be laid down to ensure that the contractor has the
capacity and the resources to successfully execute the work;
and
(e) If the State or its instrumentalities act reasonably,
fairly and in public interest in awarding contract, here again,
interference by Court is very restrictive since no person can
claim fundamental right to carry on business with the
Government.
..........................
35. As observed earlier, the Court would not normally
interfere with the policy decision and in matters challenging
the award of contract by the State or public authorities. In
view of the above, the Appellant has failed to establish that
the same was contrary to public interest and beyond the
pale of discrimination or unreasonable. We are satisfied that
to have the best of the equipment for the vehicles, which ply
on road carrying passengers, the 2nd Respondent thought it
fit that the criteria for applying for tender for procuring tyres
should be at a high standard and thought it fit that only
those manufacturers who satisfy the eligibility criteria should
be permitted to participate in the tender. As noted in various
decisions, the Government and their undertakings must have
a free hand in setting terms of the tender and only if it is
arbitrary, discriminatory, mala fide or actuated by bias, the
Courts would interfere. The Courts cannot interfere with the
terms of the tender prescribed by the Government because
it feels that some other terms in the tender would have been
25
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fair, wiser or logical. In the case on hand, we have already
noted that taking into account various aspects including the
safety of the passengers and public interest, the CMG
consisting of experienced persons, revised the tender
conditions. We are satisfied that the said Committee had
discussed the subject in detail and for specifying these two
conditions regarding pre-qualification criteria and the
evaluation criteria. On perusal of all the materials, we are
satisfied that the impugned conditions do not, in any way,
could be classified as arbitrary, discriminatory or mala fide."
43. In Bharat Coking Coal Limited (supra), the Hon'ble Supreme
Court observed as follows.
"(I) Maintainability of Writ Petition
29. The scope of judicial review in tenders has been
explored in-depth in a catena of cases. It is settled that
constitutional courts are concerned only with lawfulness of a
decision, and not its soundness.1 Phrased differently, Courts
ought not to sit in appeal over decisions of executive
authorities or instrumentalities. Plausible decisions need not
be overturned, and latitude ought to be granted to the State
in exercise of executive power so that the constitutional
separation of powers is not encroached upon.2 However,
allegations of illegality, irrationality and procedural
impropriety would be enough grounds for courts to assume
jurisdiction and remedy such ills. This is especially true given
our unique domestic circumstances, which have
demonstrated the need for judicial intervention numerous
times. Hence, it would only be the decision-making process
which would be the subject of judicial enquiry, and not the
end result (save as may be necessary to guide determination
of the former).
30. This position of law has been succinctly summed
up in Tata Cellular v. Union of India (supra), where it was
famously opined that:
26
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WP No.4780 of 2021
77.... Therefore, it is not for the court to determine
whether a particular policy or particular decision taken in the
fulfilment of that policy is fair. It is only concerned with the
manner in which those decisions have been taken. The
extent of the duty to act fairly will vary from case to case.
Shortly put, the grounds upon which an administrative action
is subject to control by judicial review can be classified as
under:
(i) Illegality: This means the decision-maker must
understand correctly the law that regulates his decision-
making power and must give effect to it.
(ii) Irrationality, namely, Wednesbury
unreasonableness,
(iii) Procedural impropriety.
.............
32. In cases where a constitutional right is infringed,
writs would ordinarily be the appropriate remedy. In tender
matters, such can be either when a party seeks to hold the
State to its duty of treating all persons equally or prohibit it
from acting arbitrarily; or when executive actions or
legislative instruments are challenged for being in
contravention to the freedom of carrying on trade and
commerce. However, writs are impermissible when the
allegation is solely with regard to violation of a contractual
right or duty. Hence, the persons seeking writ relief must
also actively satisfy the Court that the right it is seeking is
one in public law, and not merely contractual. In doing so, a
balance is maintained between the need for commercial
freedom and the very real possibility of collusion, illegality
and squandering of public resources.
33. Such a proposition has been noticed by this Court
even earlier in Jagdish Mandal v. State of Orissa
MANU/SC/0090/2007 : (2007) 14 SCC 517 in the following
words:
"22. Judicial review of administrative action is
intended to prevent arbitrariness, irrationality,
27
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WP No.4780 of 2021
unreasonableness, bias and mala fides. Its purpose is to
check whether choice or decision is made "lawfully" and not
to check whether choice or decision is "sound". When the
power of judicial review is invoked in matters relating to
tenders or award of contracts, certain special features
should be borne in mind. A contract is a commercial
transaction. Evaluating tenders and awarding contracts are
essentially commercial functions. Principles of equity and
natural justice stay at a distance. If the decision relating to
award of contract is bona fide and is in public interest,
courts will not, in exercise of power of judicial review,
interfere even if a procedural aberration or error in
assessment or prejudice to a tenderer, is made out. The
power of judicial review will not be permitted to be invoked
to protect private interest at the cost of public interest, or to
decide contractual disputes. The tenderer or contractor with
a grievance can always seek damages in a civil court.
Attempts by unsuccessful tenderers with imaginary
grievances, wounded pride and business rivalry, to make
mountains out of molehills of some technical/procedural
violation or some prejudice to self, and persuade courts to
interfere by exercising power of judicial review, should be
resisted. Such interferences, either interim or final, may hold
up public works for years, or delay relief and succour to
thousands and millions and may increase the project cost
manifold."
44. In the light of the law laid down by the Hon'ble Supreme Court in
the judgments referred to above, the powers of judicial review are limited
and while exercising such power the Court has to see whether the process
adopted or decision made by the authority is mala fide or is intended to
favour someone or is so arbitrary and irrational that no reasonable
authority acting reasonably and in accordance with the relevant law could
have reached to such a conclusion and as to whether public interest is
28
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WP No.4780 of 2021
affected. Even though mala fides are pleaded, the same could not be
proved as discussed in the previous paras. In the light of the facts of the
present case, it cannot be said that the conditions are onerous and
reasons are given by the first respondent with regard to the enhancement
of basic requirements. Judicial review is concerned, with reviewing not
the merits of the decision by an executive authority, but the decision
making process itself. This Court cannot go into the aspect of
requirement of the first respondent which will depend on various
aspects like, production, previous experience etc.
45. The Hon'ble Supreme Court, in its latest judgment decided on
08.12.2020 and reported in the State of Madhya Pradesh v. U.P.
State Bridge Corporation Limited13, observed as under.
"13. We have heard all the learned counsel for the
parties. The parameters of judicial review in matters
such as the present have been well stated in many
decisions of this Court, beginning with the
celebrated Tata Cellular v. Union of India, (1994) 6 SCC
651, in which a 3 judge bench of this Court laid down
the following principles:
"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
13
2021(1) JLJ 173
29
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WP No.4780 of 2021
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 of Wednesbury 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."
46. In view of the facts and circumstances of the case and in the light
of the guidelines framed in the judgments referred to herein, it would be
wholly inappropriate, therefore, for this Court to interfere with the basic
requirements prescribed by the first respondent, and that too, at the
behest of the petitioner, who did not even participate in the tender that
was called on the previous occasion for the same work.
47. In view of the facts and circumstances of the case, I see no reason
to interdict the impugned tender notification.
48. Accordingly, the Writ Petition is dismissed. There shall be no order
as to costs.
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WP No.4780 of 2021
49. In view of dismissal of the Writ Petition, no orders need be passed
in IA No.2 of 2021 and the same is, accordingly, closed.
50. As a sequel thereto, the miscellaneous petitions, if any, pending in
this Writ Petition, shall stand closed.
_____________________________
KONGARA VIJAYA LAKSHMI, J.
Date:05.03.2021.
Note:
LR copy to be marked (B/O) Nsr 31 KVL, J WP No.4780 of 2021 HON'BLE SMT. JUSTICE KONGARA VIJAYA LAKSHMI Writ Petition NO.4780 OF 2021 Date: 05.03.2021 Nsr