Gauhati High Court
Bibhu Bhushan Choudhury vs Union Of India (Uoi) And Ors. on 7 January, 2000
Equivalent citations: AIR2000GAU192, AIR 2000 GAUHATI 192, (2000) 3 GAU LR 173
ORDER D.N. Chowdhury, J.
1. The rationale behind the exercise of discretion in awarding a contract by the official respondents (Railways authority) is the key note of this proceeding under Article 226 of the Constitution of India, which has surfaced in the following circumstances:
The respondent No. 4 issued Notice Inviting Tender (NIT) for the balance work against CA. No. CON/GOP/90 dated 13-8-1996 at Dudhnoi for construction of staff quarters, station approach road, colony road, drainage, Hume Pipe Septic Tank Circulating area etc including other ancillary and development works in connection with construction of anew Broad Gauge Rly line from Jogighopa to Guwahati. The notice mentioned above had specified the period of completion of the work, earnest money, approximate value of the contract by the said authority insisted that the earnest money should be in cash or in any of the acceptable forms i.e. Deposit receipts. Pay orders. Demand Drafts, Aters. TDRS, NSCs which should be drawn in favour of Financial Adviser and Chief Accounts Officer/Construction. N.F. Railway, Maligaon except Bank Guarantee Bond earnest Money in the form of Bank Guarantee Bonds i.e. to be accepted. The Petitioner along with others including the Applicant/ Respondent No. 5 submitted their respective tender. According to the Petitioner tenders were opened in presence of the tenderers and the petitioner was found lowest tenderer as per his quoted bid money was Rs. 87,21,145/- and the Applicant/Respondent No. 5 was found to be the 2nd lowest tenderer as his bid value was Rs. 91,17,075/-. The petitioner asserted that the Official Respondents instead of negotiating with him as the lowest tenderer in defiance of its own circular dated 15-1-1999 they started negotiation with the applicant/respondent No. 5 over looking the legitimate right and expectation of the petitioner. The petitioner further contended that his tender was going to be rejected on the pretext that his earnest money in F.D.R. was wrongly shown in favour of Dy. FA and CAO/Construction N.F. Railway, Maligaon instead of FA and CAO Construction N.F. Rly, Maligaon, in spite of his letter in writing dated 27-9-1999 sent to the Bank Authority admitting the clerical mistake. The Bank Authority by its letter dated 1-10-1999 requested the Railway Authority to treat the aforesaid FDR as issued in the name of Financial Adviser and Chief Accounts Officer, construction, N.F. Railway Maligaon. By the said letter the authority also requested to treat the same as integral part of the above FDR for all practical purposes. According to the Applicant/respondent No. 5 petitioner's tender was summarily rejected as per the rule and regulations of the NIT. According to the petitioner the respondents in a most illegal fashion were bent upon to allot the contract with the applicant/respondent No. 5 overlooking the genuine claim of the petitioner. Hence the writ petition challenging the legality and validity of the impugned contract.
2. This Court by its order dated 20-11-1999 issued a notice of motion and in the interregnum passed an order restraining the official respondents to finalise the tender process.
3. The respondent No. 5 applicant herein submitted an application praying for vacation or modification of the interim order dated 30-11-1999 of this Court which was numbered and Registered as Misc. case No, 1340/99. In the said application the respondent No. 5 --Applicant has stated that the application of the petitioner was summarily rejected for not fulfilling the terms of the NIT and he was called upon by the official respondents for negotiation vide a letter dated 23-10-1999 for achieving the reduction of the rates in connection with the tender on 26-10-1999 at 15.00 hours. In terms of the aforesaid communication the respondent No. 5 applicant went for negotiation and rates were finally lowered down to the extent of Rs. 84,85,306/- which was accepted by the Railway authority and by order dated 2-12-1999 the respondent No. 5 applicant was advised to attend the office within seven days from the receipt of that letter of acceptance to sign the contract agreement, the documents of which were made ready for signature. The letter also authorised the respondent No. 5 Applicant to commence the work on the strength of the said letter of acceptance to ensure completion of the work within a continuous period of four months from the date of issue of the acceptance letter and accordingly asked him to contact Dy. Chief Engineer/Con. N.F. Rallway/Goalpara/Assistant Engineer/ CON-II/N.F. Railway Dudhnoi to undertake the work early.
4. The respondent Nos. 1 to 4 also submitted its affidavit, denied and disputed the contention and asserted that since the petitioner failed to fulfil the terms and conditions of the Tender Notice, his tender was rejected. The Railway authority entered into the negotiation with the respondent No. 5 applicant as the lowest bidder of the valid bids, and he being an experienced Railway contractor with good track record who successfully completed several works of similar magnitude during last 3 to 4 years who agreed to reduce his bid valued from 91.56 lakhs to 84.85 lakhs which was even lowest by more than 3 (three) percent of petitioner's bid value of Rs. 85.51 lakhs, The respondents therefore in the circumstances supported the decision making process.
5. Mr. N. Dutta, the learned Sr. Counsel appearing on behalf of the petitioner has drawn my attention to the tender notice more particularly to the condition specified in the tender notice pertaining to the pledging of the earnest money. Mr. Dutta. the learned Sr. counsel submitted that the earnest money represents a guarantee that contract will be fulfilled and "earnest" is given to bind the contract. As per the stipulation contained in the NIT the petitioner pledged the guarantee that the contract will be fulfilled to the Railway Authority. The fixed deposit receipt was issued by the concerned Bank at the instance of the petitioner who asked the bank for issuance of one fixed deposit of Rs. 42,600/- in favour of Financial Adviser and Chief Accounts Officer/ CON/N.F. Railway, Maligaon against the tender floated by the Railway Authority. The Bank Authority mistakenly issued the FDR in the name of Dy Financial Adviser and Chief Accounts Officer/Construction Maligaon instead of Financial Adviser and Chief Accounts Officer/Con/N.F. Railway. Maligaon, The Bank Authority as a matter of fact by its communication No. PG 15/GLP/ 42/10/99 dated 1-10-1999 clarified the matter and advised the Railway authority to treat the F.D.R. in question as if the same was issued in the name of Financial Adviser and Chief Accounts Officer, Construction N.F. Railway Maligaon. By the aforesaid communication the Branch Manager reiterated that the letter in question would form part of the F.D.R. for all practical purposes. Mr. Dutta, the learned Sr. Counsel submitted that after the clarification issued by the Bank Authority there was no justification for refusing to accept the tender of the petitioner. Mr. Dutta, the learned Sr. counsel therefore submitted that the authority in a most arbitrary fashion refused to accept the tender of the petitioner giving undue importance to the form instead of the substance. Mr. Dutta, the learned counsel, submitted that the tender that was submitted by the petitioner was strictly in conformity with the essential condition of the eligibility and the alleged deficiency as was pointed by the respondents did not affect the substance and the earnestness of the petitioner to fulfil the contractual obligation. Mr. Dutta, the learned counsel in support of his contention also referred to the decision of this Court in Mufosin All Barbhuyan v. Stale of Assam reported in AIR 1971 Assam 171 Rohit Ch. Das v. State of Assam reported in AIR 1972 Gauhati 32. Karuna Kanta Sonowal v. State of Assam reported in (1983) 2 Gauhati LR (NOC) 43, Azharul Islam v. State of Assam reported in (1996) 2 Gauhati LR 330. In support of his contention the learned counsel also relied on decision of the Supreme Court in Poddar Steel Corporation Ltd. v. Ganesh Engineering works reported in (1991) 3 SCC 273 : (AIR 1991 SC 1579).
6. Mr. Joginder Singh, the learned counsel appearing on behalf of the Railway submitted that the tender committee duly considered the communication sent by the Bank and considering all the aspects of the matter did not accept the plea of the petitioner. The offer of the petitioner was received after opening of the Tender. The learned counsel submitted that the authority in its wisdom did not thlnkit fit to relax or waive the tender condition. The action of the Railway Authority in not deviating the tender condition under the circumstances cannot be labelled as unlawful requiring interference from this Court under Article 226 of the Constitution of India, submitted Mr. Singh the learned advocate for the Railway. After rejection of the offer of the petitioner, the offer of the respondent No. 5 became lowest and accordingly the respondent No. 5 was called for negotiation in terms of the standing order No. 9 dated 15-1-1999, so argued Mr. Singh. The learned counsel submitted that the Railway authority acted bona fide and lawfully entered into the negotiation with the respondent No. 5. Mr. Singh, the learned counsel submitted that the Railway authority not only accepted the lowest bid but it also allotted the contract to an experienced hand with proven antecedents.
7. Mr. Anupam Sarma, the learned counsel appearing on behalf of the respondent No. 5 Applicant submitted that the petitioner never questioned the tender Notice and as per the tender notice the earnest money is to be furnished in proper form. The tender itself indicated that the tender not accompanied any requisite earnest money that was to be furnished in proper form would be summarily rejected. In the circumstances it was the obligation on the part of the tenderer to submit the tender with the requisite earnest money in proper form in favour of the Financial Adviser and Chief Accounts Officer/Construction N.F. Railway. The respondents authority was not obliged as a matter of fact to deviate from the Condition laid down in the tender. At any rate the respondents did not commit any illegality by not exercising discretion and relax the tender condition.
8. From the foregoing discussion it thus emerges that the tender of the petitioner was accompanied by the fixed deposit receipt of Rs. 42,600/- in favour of the Deputy Financial Adviser and Chief Accounts Officer construction N.F. Railway Maligaon. The F.D.R. represented the earnest money that was required to be submitted by a tenderer. Giving an earnest or earnest money is a mode of signifying assent to a contract by giving the offerer a sum as a token that the party is earnest to perform his contract. The Railway Authority could have exercised its discretion in favour of the Petitioner by making a little diagression from the NIT. In the event the authority would have exercised its discretion in favour of the petitioner, it might not have amounted to unlawful or arbitrary exercise of discretion. The authority however was not inclined to exercise the discretion and thought it fit to adhere strictly with the terms and conditions of the tender notice. In the case in hand the Railway authority gave more emphasis to the cold letter of NIT. As pointed by Mr. Dutta. the learned counsel for the petitioner that the authority was in a position to accept the tender lawfully rather than taking a too technical view on the subject. Mr. Joginder Singh the learned counsel appearing on behalf of the Railway on the other submitted that it was the Railway which was to make the choice out of the alternatives. The Railway, in its wisdom preferred to adhere to the letter of the NIT instead of relaxing/waiving the condition of the NIT pertaining to the earnest money. The discretion to choose one of the alternatives is/was vested on the Railway authority and therefore it has had the jurisdiction to decide wrongly. The discretion conferred on the Railway authority carries with it the discretion to commit errors on facts or errors of law within its jurisdiction unless the said error can be said to be error in beyond or excess of its jurisdiction. The remedy provided under Article 226 of the Constitution of India is a remedy that falls in the area of public law, A proceeding in public law is distinct from private law proceeding in a public law proceeding the Court is concerned with legitimacy of exercise of power which will in its sweep will take into account the rights of the persons those who challenge the Governmental action as well as the rights and duties of the public body that acts on both the sides. Nonetheless, the Court in its dispensation of justice is to keep in mind the public interest and the public benefit in the exercise of discretion the Court is to make a balance between conflicting interest. As alluded earlier a public law proceeding is not like that of a private law proceeding in private law proceeding it normally affects the parties in question in a public law proceeding it affects the public besides the parties in the case in hand, the authority exercised its discretion and decided to adhere to the condition prescribed in the tender notice. Mr. Singh, the learned counsel for the Railway, apart from the above submissions pointed out to the decision, those were referred to by Mr. Dutta, and argued that the above decisions are the decisions on facts. Mr. Singh submitted that in the aforementioned cases it was the authority concerned decided to relax the tender conditions which were not of essential character in the setting the Court upheld the exercise of discretion of the concerned authority, pleaded Mr. Singh the learned Railway Advocate. The Court found that the authority exercised discretion in one way which could not be faulted as arbitrary or discriminatory. The authority duly applied its mind and made its choice which cannot be said to unreasonable. Mr. Singh the learned counsel submitted that in deciding the issue the authority took into consideration the financial viability as well as the public interest. The respondents (Railway authority) while making its choice over the respondent No. 5 took into consideration the financial interest of the Railways. The Railway authority has had the right to refuse the lowest tender or any tender is/was implicit subject to right guaranteed under Article 14 of the Constitution. There cannot be any question of violation of Article 14 of the Constitution of India where the authority made endeavour to have the right choice from amongst the tenderers, submitted Mr. Joginder Singh the learned counsel for the Railways.
A right to choose one tender from the others cannot be said to be arbitrary unless the said power is found to be exercised for any collateral purpose. Article 226 of the Constitution is a form of judicial review to keep the authorities within the bonds of law. The Court is concerned with the legitimacy of the decision making process. The balancing and weighing the situation and thereafter reaching its decision is primarily matter for the public authority and not for the Court. Judicial review is meant for upholding of the rule of law and the Constitution. The Indian Constitution enshrined the rule of law guaranteed constitutional rights to the subjects, it also guaranteed remedy for enforcement of its rights. Article 226 is aimed to secure that the State and its instrumentalities are kept within the limits of the power and Judicial Review is meant to render justice to the individual concerned. Judicial review under Article 226 is concerned with the legality of the decision making process and not with the merits of the judgment. The discretion to find out the right person among the tenderers is entrusted upon the administrative authority. But then the Court is entrusted with the duty to uphold the law and decide what is lawful. A decision that is absurd or perverse is unreasonable and therefore arbitrary. A judgment arrived at by the lawful authority that is oppressive to the subject is violative of Article 14 of the Constitution of India. A decision may also be arbitrary and discriminatory where it is unduly oppressive and unjustifiably inflict excessive hardship to a citizen by invading his right or interest. No doubt the administrative authority is authorised to have a free play within the joints a margin of appreciation is to be allowed to the maker of the decision. But the Court is equally charged with the duty to see as to whether the authority acted within the limits set down by law in R.V. Tower Hamlets London Borough Council, ex chentik Developments Ltd. reported in (1988) 1 All ER 961 the Court summarised the principles in the following passages:
".. ., The Court is entitled to investigate the action of the local authority with a view to seeing whether or not they have taken into account matters which they ought not to have taken into account, or conversely, have refused to take into account or neglected to take into account matter which they ought to take into account. Once that question is answered in favour of the local authority it may still be possible to say that, although the local authority had kept within the four corners of the matters which they ought to consider they have nevertheless come to a conclusion so unreasonable that no reasonable authority could ever have come to it in such a case again I think the Court can interfere. The power of the Court to interfere in each case is not as an appellate authority to override a decision of the local authority, but as a judicial authority which is concerned and concerned only to see whether the local authority has contravened the law by acting in excess of the power which Parliament has confided in them..."
As alluded earlier the choice to the right person to be entrusted with the contract is reposed on the authority to attain its own objective, by taking into account the relevant consideration having nexus to the objective to be attained. As per the English jurisprudence judicial review is concerned with the legitimacy of the decision making process and is not concerned with the merits of the decision. Under the system judicial review represents the means by which the Court oversee the exercise of Governmental power. The Courts are concerned with the legality of the decision and not with the merits of the particular decision. Even under the English systems judicial review is no longer confined to the traditional perspective, it has now much more expanded and the Courts wield its power to keep the decision making bodies within their powers and to provide remedy for abuse of powers. The rule of English Court in judicial review is relatable to the exercise of supervisory powers distinct from the appellate powers in India it has a constitutional dimension specifically provided under Articles 32 and 226 of the Constitution. Part III of the Constitution embodies a guarantee against the State action. Article 14 assures all persons equality before law or equal protection of laws within the territory of India. The Supreme Court of India expanded the scope and sweep of Article 14 which enlivened it to a dynamic concept of equality. The content and reach of Article 14 is not confined to the doctrine of classification but it has now been widened and expanded to ensure fairness and equality of treatment. Where an action is Arbitrary it amounts to denial of equality. Article 14 strikes at arbitrariness of a State action in any form. Where a decision infringes the right to equality the same should receive most anxious consideration from the Court. A decision to be just and fair must maintain proper balance between the adverse facts which its decision may have on rights, liberties or interest of the persons and the process in which it pursues.
In the case in hand the Respondents-authorities issued public notice inviting sealed open tender for the works in question. By the said notice, it invited offers from all concerned, as per the accepted norms the lowest tender is to be accepted. All offers those are lawfully made within the specified period are to be considered. The real object behind the exercise is to find out the most suitable contractor amongst the tenderer who would be able to perform the work in question. As per the NIT one was to deposit the earnest money to bind the bargain. It is some form of price or consideration when the contract goes through. It is liable to be forfeited in case of default. Earnest money is a guarantee that the contract will be fulfilled in the present case the earnest money was no doubt deposited but according to the respondents it was in the name of a wrong person which was subsequently clarified by the bank itself which stood as the guarantor. The dispute was more on the form not on the substance. If there was any doubt in the mind of respondents authorities, it was open for it to ask for further assurance from the Bank and the party. The defect indicated by the Railway authority is/was curable in nature which did not affect the substance of the tender. The objective that was sought to be achieved by the means employed i.e. by refusing to consider tender thrown out the petitioner from the arena of consideration. The decision of the respondents is unreasonably harsh, onerous, oppressive which infringes the rights, liberties and interest of the petitioner guaranteed by Part-Ill of the Constitution read with instruction contained in Articles 39(a) and 41 of the directive principles of State policies contained in Part-IV of the Constitution of India. The Railway authority while hudging the tender of the petitioner overlooked the material consideration and failed to maintain a proper balance between the evil impact of the decision on the rights and liberties of a tenderer and the purpose and objective sought to be achieved. The respondents in the case in hand fell into serious error in its decision making by failing to maintain the right balance between rights and liberties of an individual citizen and the object and purpose of the exercise of inviting tender. The respondents by refusing to accept the tender on the ground mentioned above overlooked the material and relevant consideration which affected its ultimate decision making process. The discretion conferred on the Railway authority in reaching tender is not arbitrary. The power itself is conditioned with purpose to subserve the public interest. The Railway authority was entrusted with the discretion and power that was conditioned with objective and purpose and the respondents authority in the instant case overlooked those purposes and exercised the power on irrelevant consideration which affected the final outcome. For the foregoing reasons the impugned order of rejection of the tender of the petitioner on the ground set out cannot be sustained and the acceptance of the tender of the respondent No. 5 vide order dated 2-12-1999 leaving the offer of the petitioner also cannot be upheld. It may further be mentioned here that this Court by an order dated 30-11-1999 ordered the respondents not to finalise the contract and that order was passed in presence of the learned counsel for the Railway authority. When an order was passed in presence of the parties it was the duty of the authority to comply with the order of the Court. At any rate, the impugned actions of the respondents are beyond the confines of reasonableness and accordingly the impugned allotment of contract in favour of respondent No. 5 is set aside leaving the Railways to initiate steps to allot the contract as per law with utmost despatch. While passing the order and thereby quashing the process of selection of the tenders. I fully kept in mind the needs of the public administration. Despite my awareness I was constrained to interfere in the matter on the ground of arbitrariness by the application of the acceptable framework of judicial review to set right the decision making process. The writ petition is allowed to the extent indicated in the facts and circumstances of the case there shall however be no order as to costs.