Madhya Pradesh High Court
Vedvyas Logistics Pvt. Ltd. Throught ... vs The State Of Madhya Pradesh on 15 May, 2025
1
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE SURESH KUMAR KAIT,
CHIEF JUSTICE
&
HON'BLE SHRI JUSTICE VIVEK JAIN
WRIT PETITION No. 40518 of 2024
VEDVYAS LOGISTICS PVT. LTD. THROUGHT ITS AUTHORIZED SIGNATORY
MANOJ TIWARI
Versus
THE STATE OF MADHYA PRADESH AND OTHERS
WITH
WRIT PETITION No. 40539 of 2024
VEDVYAS LOGISTICS PVT. LTD. THROUGHT ITS AUTHORIZED SIGNATORY
MANOJ TIWARI
Versus
THE STATE OF MADHYA PRADESH AND OTHERS
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Appearance:
Shri Shashank Shekhar - Senior Advocate with Shri Anshul Tiwari and Arjit Tiwari -
Advocate for petitioner.
Shri Arpan Pawar - Senior Advocate with Shri Akshat Arjaria - Advocate for
respondent/State 2 and 3.
Shri Prashant Singh -Senior Advocate with Shri Parag Tiwari - Advocate for
respondent No.4. Shri Abhijeet Awasthi - Deputy Advocate General for respondent/State.
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ORDER
(Reserved on : 24/04/2025)
(Pronounced on : 15/05/2025)
Per: Hon'ble Shri Justice Vivek Jain.
These two petitions have been filed by the same petitioner being aggrieved by the rejection of its tender upon being disqualified in technical evaluation. As the cancellation in both the cases is for tender issued by the same authority for Signature Not Verified Signed by: 453 Signing time: 15-05- 2025 17:28:09 2 identical works and for same reasons, therefore, both the petitions are heard analogously and decided by this common order.
2. W.P. No. 40518/2024 relates to Tender of transportation of Run of Mines (RoM) Coal from SECL Bishrampur mines to Railway siding and loading in Railway Wagons for end-to-end Road-Cum-Rail to SGTPS, Birsinghpur District Umaria (M.P.), while W.P. No. 40539/2024 relates to same nature of work of transportation of coal by road from SECL-Hasdeo mines to railway siding and loading in Railway Wagons for onward transportation through end-to-end Road- Cum-Rail mode to , Birsinghpur District Umaria (M.P.) For the sake of convenience, facts are taken from W.P. No. 40518/2024.
3. The present matter arises out of tender evaluation summary report dated 10.12.2024 (Annexure P/1) issued by the respondents whereby the tender of the petitioner has been rejected by the Tender Evaluation Committee for the reasons of disqualification which are as under:-
"due to non-submission of documents:-
1. CA certificate as per Clause No. (5) A(ii) of NIT.
2. NoC/Permission/Notification for Railway Siding as per clause No.; (5) D of NIT."
4. Learned counsel for the petitioner while pressing the case of the petitioner has submitted that an NIT was issued by M.P. Power Generating Company Limited, a power utility owned by the State of Madhya Pradesh on 04.10.2024 for the work of Transportation of RoM (Run-of-Mine) coal from SECL (Bishrampur area) mines to Railway Siding and loading in Indian Railway wagons for onward transportation through end-to-end Road-Cum-Rail (RCR) mode to SGTPS, Birsinghpur (M.P.). The tendered quantity for transport was four Lakh Metric Tonne for 12 months and the last date for submission of Online tenders was 21.10.2024. The petitioner duly participated in the tender process by submitting the requisite fees and tender documents on 01.11.2024 which was the extended date for submission of tenders. It is contended that the tender of the petitioner was complete in all respects despite which the tender has been rejected Signature Not Verified Signed by: 453 Signing time: 15-05- 2025 17:28:09 3 and the petitioner has been held disqualified on the two grounds that CA certificate as per Clause 5-A (ii) of NIT and NoC/Permission/consent for Railway Siding is not annexed as per clause 5-D of NIT. It is contended that the technical bids were opened on 10.12.2024 and despite the petitioner submitting all the necessary and valid documents strictly and despite adherence to the tender requirement, he was informed that his bid has been rejected on unspecified and arbitrary technical grounds. It is contended that the petitioner was required to submit Chartered Accountant's ("CA" for short) certificate for the current financial year and last two financial years that he is not in the business of the coal trading as per their audited balance sheet and the turn over certificate issued by the practicing CA containing UDIN number should specifically mention that coal trading is not done by the bidder in current as well as last 2 financial years. It is the case of the petitioner that he had submitted the C.A. certificate mentioning therein that the petitioner is not engaged in the business of trading of coal for the last three financial years and the respondents have not taken the said CA certificate in consideration and bid has been rejected without giving any meaningful consideration to the case of the petitioner and the respondents No. 1 to 3 wanted to favour the respondent No. 4 whose price bids were at slightly higher side than the petitioner and in the event the petitioner had been declared qualified in technical bid, then the respondents would have got the work done by the petitioner at somewhat lower cost.
5. It is further contended by the learned senior counsel for the petitioner that while rejecting bid of the petitioner the respondents have relied on the condition that petitioner has not submitted CA certificate however, the clause quoted by the respondents would demonstrate that bidder has to upload an affidavit stating the fact that neither the bidder nor any of its sister/subsidiary company/concern are involved in business of coal trading i.e. they are not purchasing or selling coal from/to any other company/firm in current and last two financial years. Further in the said affidavit has to be mentioned about turn over certificate of the bidder Signature Not Verified Signed by: 453 Signing time: 15-05- 2025 17:28:09 4 and the said affidavit has to be duly filed by the petitioner alongwith the bid documents and it is argued that the same has also been placed on record.
6. It is further argued that since the audit of the petitioner firm did not take place for the financial year 2023-24 because the last date of audit of companies was extended by the Central Government by virtue of notification dated 29.09.2024 and vide circular dated 29.10.2024, last date for furnishing audit report was extended to 15.11.2024, therefore, audit of the accounts of the petitioner's company was not carried out and the same was done on 31.12.2024 and the delay was on account of bona fide reasons i.e. health problems suffered by the accountant of the petitioner. The subsequent audit report dated 31.12.2024 is stated to be placed on record as Annexure D/2 alongwith the written submissions.
7. It is further contended that even the late audit report submission was condoned by the Tax Authority and no penalty was imposed against the petitioner. It is contended that the respondents have failed to take into consideration all the requisite and valid documents which were placed by the petitioner on record before the respondents. It is contended the even a certificate dated 31.10.2024 has been issued by the CA wherein it has been confirmed that the petitioner is not engaged in sale or purchase of coal during the last three financial years.
8. On the second issue of not providing permission/consent for stacking, loading & dispatch of coal from Karonji Goods-shed Railway Siding to Power plant of MPPGCL (respondents No. 1 to 3), it is argued that the said goods shed of Railways is a open goods shed and therefore, no special permission or consent or NOC from the Railway is required. It contended that the public goods shed operated by the Railway and declared by the Railways is open for every one who wishes to load and unload the goods from the said Railway shed and it does not require any special consent or permission or NOC from the Railways and Signature Not Verified Signed by: 453 Signing time: 15-05- 2025 17:28:09 5 therefore, the bid of the petitioner could not have been rejected for this flimsy reason which is highly formalistic in nature because the respondents No. 1 to 3 could not have stressed on any special permission or consent to operate, good shed operated by the Railways which has been declared open for public and any transporter or any person can operate from the said shed and siding.
9. By relying on the letter dated 02.02.2023 issued by the South East Central Railway, Bilaspur (Annexure P/9), it is argued that Karonji and Kamalpurgram goods shed has been declared open for loading of non-programmed Coal and now they are declared opened for inward traffic of Fly Ash also. Therefore, it is argued that the said good shed has been declared open for Coal. By further referring to letter dated 27.01.2014 issued by the Deputy Chief Commercial Manager South East Central Railway Bilaspur, it is argued that Bijuri goods shed is notified for booking of outward as well as inward non-programmed Coal. By further placing reliance on letter dated 16.12.2024 issued to the petitioner by Senior Division Commercial Manager, South East Central Railway Bilaspur, it is submitted that consent for loading coal from Karoni and Bijuri shed and siding is not required because these sheds are opened to all customers and petitioner may place indents and proceed for arrangement of loading coal as per prevailing guidelines.
10. On the aforesaid assertions, it is contended that once the said Railway sidings and goods shed are opened to public, then the Respondents could not have stressed on any specific consent or permission or NOC from the Railways being issued to the petitioner. Therefore, the rejection of bids of the petitioner and declaring him disqualified is absolutely an arbitrary exercise of powers and deserves to be interfered by this Court in exercise of writ jurisdiction as the same amounts to violation of natural justice, fair-play and transparency and deserves to be struck down in terms of the principles laid down by the Hon'ble Supreme Court in the case of Tata Cellular v. Union of India, (1994) 6 SCC 651.
Signature Not Verified Signed by: 453 Signing time: 15-05- 2025 17:28:09 611. Per contra, it is contended by learned counsel for the respondents that as per clause 5(A)(ii) of NIT, bidder is required to submit turn over certificate of the current financial year i.e. FY 2023-24 and last two financial year i.e. FY 2021-22 and 2022-23 but he submitted turn over certificate of the financial year 2020-21, 2021-22 and 2022-23 and did not submit any turn over certificate for the immediate last completed financial year i.e. FY 2023-24 though the said financial year was over and tenders were called in the month of October 2024. It is contended that though the last date for audit might have been extended by the Government of India by a general extension notification, but nothing stopped the petitioner from carrying out its audit once it was participating in the tender process which was more than six months later to the date of close of financial year concerned. It is contended that apart except the petitioner all other qualified bidders have provided turn over certificate of the financial year 2023-24 as per the tender condition and the same are placed on record as Annexure R/3. Therefore, the excuses being placed by the petitioner that due to extension of date for carrying out audit, audit could not take place is nothing but an lame excuse.
12. It is further argued that the respondents No. 1 to 3 have carved out the condition that the tenderer should produce CA certificate based upon the turn over, that the tenderer or its subsidiary/sister concern do not indulge in coal trading business. This is because the work was of transportation of coal and if the same firm indulges in coal trading business, then there are conflicts of interest and various malpractices can occur. To avoid all such disputes and malpractices that may occur at an later stage, it was thought proper that the transporter of coal should not be a trader of coal so that there would not be any possibility of malpractice in the work of transportation from the coal mine to Railway siding. Therefore, it is argued that no case is made out by the petitioner so far as the issue of non-submission of CA Certificate is concerned. It is further argued that what was required to be submitted was CA Certificate but on the contrary the Signature Not Verified Signed by: 453 Signing time: 15-05- 2025 17:28:09 7 petitioner submitted its own affidavit of Managing Director which cannot be said to be a CA Certificate. The respondents No.1 to 3 being a Government owned public sector company are bound to follow the required parameters as laid down in the tender document and cannot deviate from the same and they are bound to ensure equal playing ground for all the contenders.
13. So far as the issue of non-submission of consent/ permission from Railway Authority is concerned, it is argued by learned counsel for respondents No. 1 to 3 that though the Railway siding may be open for all, but the other tenderers duly submitted such consent letters from the Railway Authority and the letter dated 16.12.2024 which now been filed along with petition by the petitioner could have been procured by him and filed along with tender documents but the said documents has been procured by him after rejection of the bid, just at the time of filing of this petition. It is further argued that though it is true that the Railway siding is open for public but such consent letter was required so as to ensure that the Railways has no objection to the petitioner operating in the area which was to ensure that the tenderer has no subsisting dispute with the Railways because even if a goods siding and the shed is open to public but there might be some subsisting dispute with the Railways on account which the Railways may not give access to a particular transporter and to avoid such subsequent disputes coming to light, hence, condition was incorporated in the tender which cannot be said to be arbitrary because none of the other qualified tenderers had any problem in obtaining this consent/permission from the Railways. Therefore, on these assertions, it is prayed to dismiss the petition.
14. Heard.
15. In the present case the tender of the petitioner has been rejected on account of non-compliance of two conditions in the tender document, and the operative part of the rejection communication has been reproduced in the earlier part of this order.
Signature Not Verified Signed by: 453 Signing time: 15-05- 2025 17:28:09 816. The two tenders were issued for transportation of Run-of-Mine (RoM) Coal from different SECL mines to nearby Railway sidings and loading in Indian Railways wagons so that they could be onwards transported through rail to SGTPS, Birsinghpur, Distt. Umaria (M.P.). The role of the contractor in this transportation of coal from coal mine to power plant was to load the coal from power plant in trucks and get the coal loaded on the Railway wagons in the nearby Railway sidings.
17. The violations of conditions in the Clause 5A(ii) of the tender document is taken up first. The said clause 5 is as under:-
"(ii) The bidders involved, directly or through their Sister concern/Subsidiary company/Partners in the business of coal trading i.e. purchasing or selling coal from/to any other company/firms shall be disqualified from participating in the bid. Following condition should be fulfilled by the bidder: -
(a) Bidder and its sister concern/subsidiary company/Partners are not in the business of coal trading in current FY.
(b) Bidder and its sister concern/subsidiary company/ Partners were not in the business of coal trading in last 2 FYs as per their Audited balance sheet.
Following documents in support of above is to be uploaded:
(c) Turnover certificate of bidder issued by the practicing CA with UDIN specifically mentioned that coal trading i.e. selling/purchasing of coal is not done by the bidder in current FY and last 2 FYs as per their audited balance sheet.
(d) Bidder is required to upload notarized affidavit in the prescribed format as per Annexure-II of NIT on non-
judicial stamp paper of appropriate value (which is presently Rs. 100/-) that Neither the bidder nor any of its Sister concern/Subsidiary company/ Partners are involved in the business of coal trading i.e. they are not purchasing or selling coal from/to any other companies/firms etc. in current FY and last 2 FYs and that bidder/Sister concern/Subsidiary company/Partners shall not involve in the business of coal trading i.e., purchasing or selling coal from/to any other company/firms during the period of contract if awarded to them by MPPGCL"
Signature Not Verified Signed by: 453 Signing time: 15-05- 2025 17:28:09 918. As per the aforesaid tender condition, the bidder is required to establish to the satisfaction of respondents No.1 to 3 that the bidder as well its sister concerns /subsidiary company/partners are not in the business of coal trading in current financial year as well as last two financial years and to substantiate the said position, they were required to upload turnover certificate (certificate with UDIN number) of bidder issued by an practicing Chartered Accountant that coal trading is not done by the bidder in current financial year as well as in the last two financial years, this is as per Clause 5A(ii)(c). The second requirement as per Clause 5A(ii)(d) was that bidder was required to upload notarized affidavit that neither the bidder nor any of its sister concern /subsidiary company are involved in the business of coal trading i.e. they are not purchasing or selling coal to any company or firm in the current and last two financial years and that they shall not involve in such business during the period contract if awarded to them by the respondents No. 1 to 3.
19. From the aforesaid, it is clear that there were two documents which were to be submitted by tenderer in this matter of Clause 5-A (ii). First was CA certificate and second was his own affidavit. So far as CA certificate is concerned, it is vehemently argued by learned senior counsel for the petitioner that the Government of India, Ministry of Finance had extended the time line for statutory audit of the companies. Reliance was placed on notification dated 29.09.2024 issued by CBDT in the matter whereby the date was extended up to 07.10.2024. Further it is contended that the extension of date was up to 15.11.2024 vide circular dated 26.10.2024.
20. However, upon perusal of the circular dated 26.10.2024, it is not extension of date for audit but extension of date for furnishing return of income for assessment year 2024-25 (FY 2023-24). No document of extension of date of audit is placed on record extending the date beyond 07.10.2024. Even assuming that there was a general extension of date beyond 07.10.2024 it was the last date fixed by the CBDT for the purpose and there was nothing stopping the petitioner Signature Not Verified Signed by: 453 Signing time: 15-05- 2025 17:28:09 10 from getting its audit done even earlier if it wanted to participate in the tender in question. In para-4 of written submissions, it has been contended that audit could not be done on time due to health problems of Accountant of the company. Therefore, it is admitted that no audit of the petitioner-company took place prior to last date of submission of bids.
21. Reliance is also placed on certain documents placed on record as Annexure D-2 along with the written submissions stating that these are the audit reports. However, the said document is only an intimation under Section 143(1) of Income Tax Act, 1961 for self assessment of tax. Thus, it is the submission of return of income and not an audit report. Even this income tax return was filed on 31.12.2024.
22. The submission of the income tax return for FY 2023-24 was not at all relevant factor for participating in the tender in question and is not the reason for disqualification. What was relevant was submission of CA certificate for last three financial years to the effect that the tenderer has not indulged in the business of trading of coal in such period.
23. The petitioner has relied on a CA certificate, which is at page 226 of the writ petition, which is undated and wherein the Chartered Accountant has mentioned that the net worth of the petitioner in FY 2022-23 and 2023-24 is Rs.810.46 Lacs and Rs.892.62 Lacs respectively. Therefore, this certificate only mentions net worth of the petitioner and does not mention the fact that petitioner has not indulged in trading of coal in the said two financial years, particularly in FY 2023-24. The operative part of this undated certificate is as under :-
"This is to certify that the company M/s Vedvyas Logistic Private Limited having its registered office at- Thanapada PO - Rangadhipa, Dist-Sundargarh, Odisha-770002 has Net worth in the FY 2022-23 and 2023-24 as follows:
1. FY 22-23 having Net Worth of 810.46 Lacs.Signature Not Verified Signed by: 453 Signing time: 15-05- 2025 17:28:09 11
2. FY 23-24 having Net Worth of 892.62 Lacs.
This certificate is issued at the request of M/s Vedvyas Logistic Pvt Ltd for the purpose of, Participating in tender/s."
24. Another CA certificate is placed on record which is dated 21.10.2024 at page 228 of the petition which indeed certifies that the petitioner hast not engaged in sale or purchase of coal during last three financial years. However, this certificate is in respect of financial years 2020-21, 2021-22 and 2022-23 and not for FY 2023-24. The tender was issued in October 2024 and as discussed above, what was lacking is the CA certificate for the financial year 2023-24 which the main bone of contention between the parties. There is no CA certificate available on record for the financial year 2023-24 mentioning that the petitioner has not indulged in trading of coal in the financial year 2023-24, though a net worth certificate is there. The certificate relied upon and attached at page 226 as discussed above, does not speak about the issue of Coal trading, but is simply a net worth certificate.
25. The petitioner had also relied on an affidavit filed by him which is at page 271 of the writ petition. However, the said affidavit is own affidavit of the Managing Director of petitioner and is in compliance of Clause 5A(ii)(d) and not as per Clause 5A(ii)(c). Therefore, it is clear that compliance of Section 5A(ii)(c) was not made by the petitioner.
26. The petitioner has no CA certificate for the financial year 2023-24 certifying the fact that he has not engaged in coal trading in financial year 2023-
24. It was produced neither before the respondents, nor even before this Court in the writ petition. Therefore, it is clear that the petitioner did not comply with the condition 5A(ii)(c) of the tender document and the contentions made by the petitioner in that regard are misconceived.
27. So far as the other condition of not providing consent / permission of the Railways to use its goods-shed and sidings is concerned, the petitioner Signature Not Verified Signed by: 453 Signing time: 15-05- 2025 17:28:09 12 admittedly did not provide any such consent/permission letter of the Railways. The letter was obtained by the petitioner lateron and has been filed along with the petition which is dated 16.12.2024 whereas his tender stood rejected on 10.12.2024.
The relevant condition of tender document in Clause 5-D (2) reads as under:-
"2. Arrangement of Railway Siding for coal transportation:-
Bidder should have valid permission /consent for stacking, loading & dispatch of coal from Karonji Goods-shed Railway Siding (Alpha code -KJZ) to Power plants of MPPGCL."
28. Though it is true that the Railway sheds and sidings were open to public and any transporter could unload coal from trucks and get loaded onto Railways wagons after which it was not the responsibility of the petitioner, but of the Railways, however, there seems to be some force in contention of learned counsel for the respondents that it required to be verified whether Railways have any objection to the particular bidder operating in its sidings and sheds because there might be cases where the bidder may be having certain dues or other disputes with the Railways on account of which the railways may not permit the bidder to operate from its sheds and sidings and the transportation of coal in that event would have been unnecessarily hampered. Therefore, only to avoid this pre-existence of any dispute or resultant hampering the coal transport operation, this condition was inserted and was complied with by all other qualified bidders. Therefore, it cannot be said that it was an impossible condition. Even with this writ petition the petitioner has indeed produced the consent letter which shows that such letter could have been procured by him even at the time of submission of bids. The said condition cannot be said to be an illegal or arbitrary condition and compliance of the said condition cannot be said to be something which was impossible for the petitioner to carry out because other qualified bidders have duly carried out the said condition and even the petitioner along with the present Signature Not Verified Signed by: 453 Signing time: 15-05- 2025 17:28:09 13 petition has duly placed on record the consent letter of the Railways which has been procured after rejection of bid.
29. We may hasten to add that so far as CA certificate is concerned, the same has not even been filed along with the present petition to the effect that during the financial year 2023-24 the petitioner has not engaged in business of trading of coal.
30. It is settled in law that so far as judicial review in matters involving award of tenders is very limited that is restricted to bias, arbitrariness and non- transparency in the bidding and allotment process.
31. In the case of Tata Cellular v. Union of India, (1994) 6 SCC 651 the Hon'ble Supreme Court has held as under:-
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.
71. Judicial quest in administrative matters has been to find the right balance between the administrative discretion to decide matters whether contractual or political in nature or issues of social policy; thus they are not essentially justiciable and the need to remedy any unfairness. Such an unfairness is set right by judicial review.
32. In the case of Air India Ltd. v. Cochin International Airport Ltd., (2000) 2 SCC 617, the Hon'ble Supreme Court has held as under:-
"7. The law relating to award of a contract by the State, its corporations and bodies acting as instrumentalities and agencies of the Government has been settled by the decision of this Court in Ramana Dayaram Shetty v. International Airport Authority of India [(1979) 3 SCC 489] Signature Not Verified Signed by: 453 Signing time: 15-05- 2025 17:28:09 14 , Fertilizer Corpn. Kamgar Union (Regd.) v. Union of India [(1981) 1 SCC 568] , CCE v. Dunlop India Ltd. [(1985) 1 SCC 260 : 1985 SCC (Tax) 75] , Tata Cellular v. Union of India [(1994) 6 SCC 651] , Ramniklal N. Bhutta v. State of Maharashtra [(1997) 1 SCC 134] and Raunaq International Ltd. v. I.V.R. Construction Ltd. [(1999) 1 SCC 492] The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. 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. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decision-making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process the court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the court should intervene."
33. In the case of Directorate of Education v. Educomp Datamatics Ltd., (2004) 4 SCC 19, the Hon'ble Supreme Court has held as under:-
9. It is well settled now that the courts can scrutinise the award of the contracts by the Government or its agencies in exercise of their powers of judicial review to prevent arbitrariness or favouritism. However, there are inherent limitations in the exercise of the power of judicial review in such matters. The point as to the extent of judicial review permissible in contractual matters while inviting bids by issuing tenders has been examined in depth by this Court in Tata Cellular v. Union of India [(1994) 6 SCC 651] . After examining the entire case-law the following principles have been deduced: (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.Signature Not Verified Signed by: 453 Signing time: 15-05- 2025 17:28:09 15
(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 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."
(emphasis supplied)
12. It has clearly been held in these decisions 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. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. 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.
34. In the case of Michigan Rubber (India) Ltd. v. State of Karnataka, (2012) 8 SCC 216, the Hon'ble Supreme Court has held as under:-
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 the 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 Signature Not Verified Signed by: 453 Signing time: 15-05- 2025 17:28:09 16 unreasonable. If the Government acts in conformity with certain healthy standards and norms such as awarding of 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 the 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 a fundamental right to carry on business with the Government.
24. Therefore, a court before interfering in tender or contractual matters, in exercise of power of judicial review, should pose to itself the following questions:
(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"? and
(ii) Whether the public interest is affected?
If the answers to the above questions are in the negative, then there should be no interference under Article 226.
35. In the case of In the case of JSW Infrastructure Ltd. v. Kakinada Seaports Ltd., (2017) 4 SCC 170, the Hon'ble Supreme Court has held as under:-
10. In Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd. [Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd., (2016) 16 SCC 818] this Court held as follows : (SCC pp. 825-26, paras 13 & 15-16) "13. ... a mere disagreement with the decision-making process or the decision of the administrative authority is no reason for a constitutional court to interfere. The threshold of mala fides, intention to favour someone or arbitrariness, irrationality or perversity must be met before the constitutional court interferes with the decision-making process or the decision.
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15. We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional courts must defer to this understanding and appreciation of the tender Signature Not Verified Signed by: 453 Signing time: 15-05- 2025 17:28:09 17 documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given.
16. In the present appeals, although there does not appear to be any ambiguity or doubt about the interpretation given by NMRCL to the tender conditions, we are of the view that even if there was such an ambiguity or doubt, the High Court ought to have refrained from giving its own interpretation unless it had come to a clear conclusion that the interpretation given by NMRCL was perverse or mala fide or intended to favour one of the bidders. This was certainly not the case either before the High Court or before this Court."
The view taken in Afcons [Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd., (2016) 16 SCC 818] was followed in Montecarlo Ltd. v. NTPC Ltd. [Montecarlo Ltd. v. NTPC Ltd., (2016) 15 SCC 272] Thus it is apparent that in contractual matters, the writ courts should not interfere unless the decision taken is totally arbitrary, perverse or mala fide.
36. In the case of Holoflex Ltd. Vs. The State of Madhya Pradesh reported in 2016 SCC Online MP 2584, a Division bench of this Court held as under :-
21. The principles regarding award of contract were again reiterated by the Supreme Court in the case of Director of Education (supra) and it was held that Government must have a free hand in setting the terms of tender and the Courts cannot strike down the terms of tender prescribed by the Government because it feels that some other terms in the tender would have been fairer, wiser or more logical. The Courts can interfere only if the policy decision is arbitrary, discriminatory or actuated by malice. In the case of Shimnit Utsch India Private Limited v. West Bengal Transport Infrastructure Development Corporation Limited, (2010) 6 SCC 303, the Supreme Court while taking note of the law laid down in Assn. of Registration Plates (supra), reiterated that State Government has the right to get the right and most competent person and in the matter of formulating conditions of tender documents, unless the action of tendering authority is found to be malicious and is a misuse of statutory powers, the tender conditions are unassailable. In the case of Siemens Aktiengeselischaft and Seimens Limited v. Delhi Metro Rail Corporation Limited, (2014) 11 SCC 288, it was held that tenders floated by the Government are amenable to judicial review only in order to prevent arbitrariness and favoritism and protect the financial interest of the State and the public interest. Thus, the scope of judicial review is confined as to whether there was any illegality, irrationality or procedural impropriety committed by the decision making authority. It has further been held that the Court cannot sit in appeal over the soundness of the decision made by the competent authority and the Court can only examine whether the decision making process was fair, reasonable, transparent and bona fide with no perceptible injury to public interest. From the various decisions cited on both sides, following legal principles are deducible:--
(i) The procedure adopted by 'State' under Article 12 while awarding contract can be adjudged and tested on the touchstone of Article 14 of the Constitution of India.Signature Not Verified Signed by: 453 Signing time: 15-05- 2025 17:28:09 18
(ii) The Government cannot act in a manner which would benefit a private party at the expense of the State as the same would be unreasonable and contrary to public interest.
(iii) While exercising power of judicial review the Court will not examine the details of contract but only are concerned with decision making process and whether the same was reasonable, rational and arbitrary or is violative of Article 14 of the Constitution of India.
(iv) The State while inviting tenders cannot take into account the factors which are irrelevant and detrimental to public interest.
(v) An administrative action is subject to control by judicial review on the grounds of illegality, irrationality and procedural impropriety.
(vi) The power of judicial review is available in cases where it is established that terms of invitation to tender are tailor-made to suit the convenience of any particular person with a view to eliminate all others from participating in the bidding process, unless the tender conditions are wholly arbitrary, discriminatory or actuated by malice, the terms of tender notice are not subject to judicial review.
(vii) Level Playing Field is an important concept while construing Article 19(1)(g) of the Constitution of India, which confers fundamental right to carry on business. However, the aforesaid doctrine is subject to public interest.
(viii) The power of judicial review is also available in a case where the action of the respondent is not only arbitrary, unreasonable and curtails public participation which vitally affects public interest and if permitted would result in causing loss to public exchequer for want of adequate competition. The Court would intervene if tender conditions give rise to formation of cartel which is against public policy.
(ix) The Government while entering into contract or issuing quotas is expected not to act like a private individual but should act in conformity with certain healthy standards and norms which are not arbitrary, irrational or irrelevant.
(x) The terms of invitation to tender are not subject to judicial scrutiny and more often than not such decisions are made by experts and it is not open for the Courts, whenever there are different alternatives, to suggest that particular alternative is more justified. Greater latitude is to be conceded to State authorities in the matter of formulating conditions of tender and awarding contracts.
(xi) The Government has freedom of contract and Court cannot strike down terms of tender merely because it feels that some other conditions in the tender would have been fairer, wiser or more logical. The Courts can interfere only when conditions of tender are arbitrary, discriminatory and actuated by malice.
(xii) The award of contract, whether it is by a private party or a public body or the State, is essentially a commercial transaction. The State can chose its own method to arrive at its decision and can fix its own terms of invitation of tender and that is not open to judicial scrutiny. Even when some defect is found in decision making process, the Court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely of making out a legal point.Signature Not Verified Signed by: 453 Signing time: 15-05- 2025 17:28:09 19
(xiii) No person can claim a fundamental right to carry on business with the Government. All that he can claim is that, in competing for the contract, he should not be unfairly treated and discriminated to the detriment of public interest.
(xiv) The Government is the guardian of State finances and is expected to protect it. The right to choose cannot be considered as arbitrary as long as it complies with requirement of principles of Article 14 of the Constitution of India.
(xv) The test to be adopted is whether something has gone wrong of a nature and degree which requires Court's intervention. See, R. v. Secy, of State for Home Deptt. Ex P. Brind, (1991) 1 All ER 720 (HL).
33. We may advert to third issue, namely, whether the impugned tender conditions are contrary to the guidelines issued by the Central Vigilance Commission. It is trite law that terms of invitation to tender cannot be open to judicial scrutiny because invitation to tender is in the realm of contract. The State Government has the right to get the right and most competent person and should have freedom in the matter of formulating conditions of tender documents, unless the action of tendering authority is found to be malicious and is a misuse of statutory powers, the tender conditions are unassailable. [See, Shimnit Utsch India Private Limited v. West Bengal Transport Infrastructure Development Corporation Limited, (2010) 6 SCC 303]. Therefore, the Commissioner Excise has the authority to lay down the terms and conditions of the Notice Inviting Tender and even if the same are violative of the guidelines issued by the Central Vigilance Commission, which even otherwise are directory in nature, the same have no bearing on the issue involved in this petition. Accordingly, the aforesaid issue is answered.
37. In the present case, as evident from the discussion made hereinabove, the petitioner admittedly had failed to comply with the condition of Clause 5-A(ii)(c) and 5-D (2) of the tender conditions. Though later compliance of Clause 5-D (2) has been shown in the present petition, but there has been no compliance of Clause 5-A (ii) (c) of the Tender conditions. The petitioner cannot claim any relaxation from such conditions because if after submission of bids one tenderer seeks any exemption or relaxation, then it would amount to creation of non-level playing field for other bidders who could not participate in bids due to non- fulfillment of conditions and might have been similarly situated. The condition barring the firms trading in Coal from participating in Coal transportation seems to be in public interest, so as to avoid conflicts of interest. No malice or arbitrariness could be shown either in framing the impugned condition, or in enforcing the said condition.
Signature Not Verified Signed by: 453 Signing time: 15-05- 2025 17:28:09 2038. In view of the above, we are of the opinion that the petitioner is not entitled for any relief. The petitions deserve to be and are hereby dismissed.
(SURESH KUMAR KAIT) (VIVEK JAIN)
CHIF JUSTICE JUDGE
MISHRA/NKS
Signature Not Verified
Signed by: 453
Signing time: 15-05-
2025 17:28:09