Karnataka High Court
Basweshwara Enterprises vs The State Of Karnataka on 16 December, 2024
Author: Suraj Govindaraj
Bench: Suraj Govindaraj
-1-
NC: 2024:KHC-K:9888
WP No. 202094 of 2024
C/W WP No. 201984 of 2024
WP No. 202199 of 2024
AND 6 OTHERS
IN THE HIGH COURT OF KARNATAKA,
KALABURAGI BENCH
R
DATED THIS THE 16TH DAY OF DECEMBER, 2024
BEFORE
THE HON'BLE MR. JUSTICE SURAJ GOVINDARAJ
WRIT PETITION NO. 202094 OF 2024 (GM-TEN)
C/W
WRIT PETITION NO. 201984 OF 2024 (GM-TEN)
WRIT PETITION NO. 202199 OF 2024 (GM-TEN)
WRIT PETITION NO. 202230 OF 2024 (GM-TEN)
WRIT PETITION NO. 202248 OF 2024 (GM-TEN)
WRIT PETITION NO. 202263 OF 2024 (GM-TEN)
WRIT PETITION NO. 202345 OF 2024 (GM-TEN)
WRIT PETITION NO. 202368 OF 2024 (GM-TEN)
WRIT PETITION NO. 202390 OF 2024 (GM-TEN)
IN W.P.NO. 202094/2024
BETWEEN:
Digitally signed
by SHWETHA M/S SHIV SHAKTHI DAL INDUSTRIES
RAGHAVENDRA
PLOT NO 86 NANDUR INDUSTRIAL AREA
Location: HIGH SHAHABAD ROAD, KALABURGI-585103.
COURT OF
KARNATAKA REPRESENTED BY ITS PROP.
SRI VISHWANATH B. PATIL
S/O BASAVARAJ PATIL
AGED ABOUT 35 YEARS
...PETITIONER
(BY SRI. V. SRINIVAS, ADVOCATE)
AND:
1. STATE OF KARNATAKA
REPRESENTED BY ITS SECRETARY
TO BACKWARD CLASS WELFARE DEPARTMENT
-2-
NC: 2024:KHC-K:9888
WP No. 202094 of 2024
C/W WP No. 201984 of 2024
WP No. 202199 of 2024
AND 6 OTHERS
MS BUILDING, BANGALORE-560001.
2 . THE COMMISSIONER
DEPARTMENT OF BACKWARD CLASS WELFARE
NO. 16-D 3RD FLOOR DEVARAJ URS BHAVAN
MILLERS TANK BUND AREA
VASANTH NAGAR
BENGALURU-560001.
3 . THE DEPUTY COMMISSIONER
KALABURAGI DISTRICT
KALABURAGI-585102.
4 . THE DISTRICT OFFICER AND
TENDER INVITING AUTHORITY
BACKWARD CLASSES WELFARE DEPARTMENT
TARFAIL 8THCROSS, NEAR DANKIN BAVI
GDA LAYOUT, AMBIKA NAGAR
D.DEVARAJ URS BHAVAN
KALABURAGI-585102.
... RESPONDENTS
(BY SRI. Y.H. VIJAYKUMAR., AAG &
SMT. MAYA T.R., HCGP FOR R1 TO R4)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF
CERTIORARI OR ANY OTHER WRIT OF LIKE NATURE AND QUASH THE
TENDER BEARING NO. BCWD/KLB/FOOD/TENDER/2024-25 DATED
05.08.2024 INVITED BY THE RESPONDENT NO.4 VIDE ANNEXURE F
TO THE WRIT PETITION AND ETC.
*****
IN W.P.NO. 201984/2024
BETWEEN:
M/S PATIL TRADERS TOTNALLIKAR
SHAHTRIGUNJ
SEDAM 585222
REPRESENTED BY ITS PROP.
NAGARAJPATIL
S/O VEERABADRAPPA PATIL
AGED ABOUT 38 YEARS
...PETITIONER
(BY SRI. V. SRINIVAS., ADVOCATE)
-3-
NC: 2024:KHC-K:9888
WP No. 202094 of 2024
C/W WP No. 201984 of 2024
WP No. 202199 of 2024
AND 6 OTHERS
AND:
1. STATE OF KARNATAKA
REPRESENTED BY ITS SECRETARY
TO BACKWARD CLASS WELFARE DEPARTMENT
M S BUILDING
BENGALURU 560001
2. THE COMMISSIONER
DEPARTMENT OF BACKWARD CLASSES WELFARE
NO.16-D, 3RD FLOOR, DEVARAJ URS BHAVAN,
MILLERS TANK BUND AREA,
VASANTH NAGAR,
BENGALURU 560001
3. THE DEPUTY COMMISSIONER
YADGIRI DISTRCIT
YADGIRI 509210
4. THE DEPUTY COMMISSIONER
VIJAYAPURA DISTRICT
VIJAYPURA 586109
5. THE DISTRICT OFFICER AND
TENDER INVITING AUTHORITY
BACKWARD CLASSES WELFARE DEPARTMENT
YADGIRI DISTRICT
DISTRICT ADMINISTRATIVE BUILDING
SECOND FLOOR, ROOM NO.C-4
CHITTAPUR ROAD,
YADGIRI 509210
6. THE DISTRICT OFFICER AND
TENDER INVITING AUTHORITY
BACKWARD CLASSES WELFARE DEPARTMENT
VIJAYAPURA DISTRICT
KANKADAS BADAVANE ZP COMPOUND,
VIJAYAPURA 586109
... RESPONDENTS
(BY SRI. Y.H. VIJAYKUMAR., AAG &
SMT. MAYA T.R., HCGP FOR R1 TO R4)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF
-4-
NC: 2024:KHC-K:9888
WP No. 202094 of 2024
C/W WP No. 201984 of 2024
WP No. 202199 of 2024
AND 6 OTHERS
CERTIORARI OR ANY OTHER WRIT OF LIKE NATURE AND QUASH THE
TENDER BEARING NO.BCWD/E-TENDER/FOOD/CR-2/2024-25 DATED
24.07.2024 INVITED BY THE RESPONDENT NO.6 VIDE ANNEXURE F
TO THE WRIT PETITION AND ETC.
*****
IN W.P.NO. 202199/2024
BETWEEN:
VIJAYAPUR CENTRAL CO-OPERATIVE
WHOLESALE STORE LTD.,
JANATA BAZAR VIJAYAPUR
M G ROAD VIJAYAPURA-586101
REPRESENTED BY ITS GENERAL MANAGER
HANAMANTARAO
S/O GUNDERAO KULKARNI
AGE 68 YEARS
OCC GENERAL MANAGER
VIJAYAPURA CENTRAL CO-OPERATIVE
WHOLESALE STORES LTD
JANATA BAZAR, VIJAYAPURA
M G ROAD VIJAYPAURA-586101.
...PETITIONER
(BY SRI. GANESH S. KALBURGI., ADVOCATE)
AND:
1. THE STATE OF KARNATAKA
DEPARTMENT OF BACKWARD CLASS WELFARE
REPRESENTED BY ITS
PRINCIPAL SECRETARY
MS BUILDING
BENGALURU-01.
2. DEPUTY COMMISSIONERAND PRESIDENT OF
DISTRICT LEVEL FOOD MATERIALS
PROCUREMENT COMMITTEE
VIJAYAPURA-586101.
3. DISTRICT WELFARE OFFICER
DEPARTMENT OF BACKWARD CLASS
TQ AND DIST VIJAYAPURA-586101.
... RESPONDENTS
(BY SRI. Y.H. VIJAYKUMAR., AAG &
SMT. MAYA T.R., HCGP FOR R1 TO R3)
-5-
NC: 2024:KHC-K:9888
WP No. 202094 of 2024
C/W WP No. 201984 of 2024
WP No. 202199 of 2024
AND 6 OTHERS
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE
IMPUGNED E-PROCUREMENT TENDER NOTIFICATION BEARING NO.
BCWD/E-TENDER-FOOD/CR-2/2024-25 DATED 24.07.2024 SO FAR
AS CLAUSE 2 SL.NO.2 & 3 WITH REGARD TO PRODUCTION OF
AVERAGE ANNUAL TURNOVER & 80% SUPPLY TO FOOD ITEMS IN
PRECEDING 3 FINANCIAL YEARS IS CONCERNED, ISSUED BY
RESPONDENT NO.2, THE COPY OF WHICH OBTAINED FROM THE
WEBSITE OF RESPONDENT NO.2 IS AT ANNEXURE-A AND ETC.
*****
IN W.P.NO. 202230/2024
BETWEEN:
BASWESHWARA ENTERPRISES
GANDHI GUNJ BIDAR-585403
REPRESENTED BY ITS PROPRIETOR
CHANDRASHEKAR
S/O SHIVARAI HEBBALE
AGED ABOUT 59 YEARS
OCC PROPRIETOR
BASWSHWARA ENTERPRISES
GANDHI GUNJ, BIDAR-585403.
...PETITIONER
(BY SRI. GANESH S. KALBURGI, ADVOCATE)
AND:
1. THE STATE OF KARNATAKA
DEPARTMENT OF BACKWARD CLASS WELFARE
REPRESENTED BY ITS PRINCIPAL SECRETARY
M.S.BUILDING, BENGALURU-01.
2. DEPUTY COMMISSIONERAND PRESIDENT OF
DISTRICT LEVEL FOOD MATERIALS
PROCUREMENT COMMITTEE, BIDAR-585401.
3. DISTRICT WELFARE OFFICER
DEPARTMENT OF BACKWARD CLASS
TQ AND DIST BIDAR-585401.
... RESPONDENTS
(BY SRI.Y.H. VIJAY KUMAR., AAG &
SMT. MAYA T.R., HCGP FOR R1 TO R3)
-6-
NC: 2024:KHC-K:9888
WP No. 202094 of 2024
C/W WP No. 201984 of 2024
WP No. 202199 of 2024
AND 6 OTHERS
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE
IMPUGNED E-PROCURMENT TENDER NOTIFICATION DATED
05.08.2024 SO FAR AS CLAUSE 2 SL.NO.2 & 3 WITH REGARD TO
PRODUCTION OF AVERAGE ANNUAL TURNOVER & 80% SUPPLY OF
FOOD ITEMS IN PRECEDING 3 FINANCIAL YEARS IS CONCERNED,
ISSUED BY RESPONDENT NO.2, THE COPY OF WHICH OBTAINED
FROM THE WEBSITE OF RESPONDENT NO.2 IS AT ANNEXURE-A AND
ETC.
*****
IN W.P.NO. 202248/2024
BETWEEN:
GULBARGA DISTRICT BACKWARD CLASSES
AND MINORITIES LADIES MULTIPURPOSE
CO OPERATIVE SOCIETY
HAVING OFFICE AT HOUSE NO. 1-629,
UPPER LINE, STATION BAZAR,
GULBARGA 585102,
REPRESENTED BY ITS SECRETARY
SRI. MASOOD ALI
S/O YAKUB ALI KAMTHAN
AGED ABOUT 58 YEARS
...PETITIONER
(BY SRI. V. SRINIVAS., ADVOCATE)
AND:
1. STATE OF KARNATAKA
REPRESENTED BY ITS SECRETARY
TO BACKWARD CLASS WELFARE DEPARTMENT
M S BUILDING
BENGALURU 560001
2. THE COMMISSIONER
DEPARTMENT OF BACKWARD CLASSES WELFARE NO.
16-D, 3RDFLOOR, DEVARAJ URS BHAVAN,
MILLERS TANK BUND AREA,
VASANTH NAGAR,
BENGALURU 560001
3. THE DEPUTY COMMISSIONER
KALABURAGI DISTRICT
KALABURAGI 585102
-7-
NC: 2024:KHC-K:9888
WP No. 202094 of 2024
C/W WP No. 201984 of 2024
WP No. 202199 of 2024
AND 6 OTHERS
4. THE DEPUTY COMMISSIONER
YADGIIR DISTRICT
YADGIRI 509210
5. THE DEPUTY COMMISSIONER
RAICHUR DISTRICT
RAICHUR 584101
6. THE DISTRICT OFFICER AND
TENDER INVITING AUTHORITY
BACKWARD CLASSES WELFARE DEPARTMENT
TARFAIL 8THCROSS, NEAR DANKIN BAVI
GDA LAYOUT, AMBIKA NAGAR,
D.DEVARAJ URS BHAVAN,
KALABURAGI 585102
7. THE DISTRICT OFFICER AND
TENDER INVITING AUTOHRITY
BACKWARD CLASSES WELFARE DEPARTMENT
YADGIRI DISTRICT
DISTRICT ADMINISTRATIVE BUILDING,
SECOND FLOOR, ROOM NO. C-4,
CHITTAPUR ROAD, YADGIRI 509210
8. THE DISTRICT OFFICER BACKWARD
CLASSES WELFARE DEPARTMENT
RAICHUR DISTRICT
NEAR JUSTICE SHIVARAJ PATIL PU COLLEGE,
LINGASUGUR ROAD, RAICHUR 584101
... RESPONDENTS
(BY SRI. Y.H. VIJAYKUMAR., AAG &
SMT. MAYA T.R., HCGP FOR R1 TO R8)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OR
CERTIORARI OR ANY OTHER WRIT OF LIKE NATURE AND QUASH THE
TENDER BEARING NO.BCWD/KLB/FOOD/TENDER/2024-25 DATED
05.08.2024 INVITED BY THE RESPONDENT NO.6 VIDE ANNEXURE-E
TO THE WRIT PETITION AND ETC.
*****
IN W.P.NO.202263/2024
BETWEEN:
-8-
NC: 2024:KHC-K:9888
WP No. 202094 of 2024
C/W WP No. 201984 of 2024
WP No. 202199 of 2024
AND 6 OTHERS
M/S TALUKA MAHILA MULTIPURPOSE
CO-OPERATIVE SOCIETY
OPPOSITE TO CHENNA REDDY
TUNNER HOUSE CHAKKARA KATTA
YADAGIR 585201
REPRESENTED BY ITS SECRETARY
ANIL KUMAR
S/O THIMANNA HEDGI MADRI
AGED ABOUT 36 YEARS
...PETITIONER
(BY SRI. V. SRINIVAS., ADVOCATE)
AND:
1. STATE OF KARNATAKA
REPRESENTED BY ITS SECRETARY
TO BACKWARD CLASS WELFARE DEPARTMENT
M S BUILDING, BENGALURU 560001
2. THE COMMISSIONER
DEPARTMENT OF BACKWARD CLASSES WELFARE
NO.16-D 3RD FLOOR DEVARAJ URS BHAVAN
MILLERS TANK BUND AREA,
VASANTH NAGAR, BENGALURU 560001
3. THE DEPUTY COMMISSIONER
YADGIRI DISTRICT, YADGIRI 509210
4. THE DISTRICT OFFICER AND
TENDER INVITING AUTHORITY
BACKWARD CLASSES WELFARE DEPARTMENT
YADGIRI DISTRICT
DISTRICT ADMINISTRATIVE BUILDING
SECOND FLOOR, ROOM NO. C-4,
CHITTAPUR ROAD, YADGIRI 509210
... RESPONDENTS
(BY SRI. Y.H. VIJAYKUMAR., AAG &
SMT. MAYA T.R., HCGP FOR R1 TO R4)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF
CERTIORARI OR ANY OTHER WRIT OF LIKE NATURE AND QUASH THE
TENDER BEARING NO.BCWDY/ACCOUNT.FOOD TENDER/CR/2024-25
-9-
NC: 2024:KHC-K:9888
WP No. 202094 of 2024
C/W WP No. 201984 of 2024
WP No. 202199 of 2024
AND 6 OTHERS
DATED 25.07.2024 INVITED BY THE RESPONDENT NO.4 VIDE
ANNEXURE-E TO THE WRIT PETITION AND ETC.
*****
IN W.P.NO. 202345/2024
BETWEEN:
M/S THE BANGALORE NORTH TALUK
AGRL. PRODUCE CO-OP MARKETING SOCEITY LTD
FIRST FLOOR 497, 60 FEET ROAD,
F BLOCK SAHAKARANAGAR
BENGALURU URBAN-560092,
REPRESNTED BY ITS SECRETARY
SRI MANJUNATH D.R
S/O RAJANNA
AGED ABOUT 30 YEARS,
...PETITIONER
(BY SRI. V. SRINIVAS., ADVOCATE)
AND:
1. STATE OF KARNATAKA
REPRESENTED BY ITS SECRETARY
TO BACKWARD CLASS WELFARE DEPARTMENT
M.S BUILDING
BANGALORE-560001.
2. THE COMMISSIONER
DEPARTMENT OF BACKWARD CLASSES WELFARE
NO. 16-D 3RDFLOOR, DEVARAJ URS BHAVAN
MILLERS TANK BUND AREA
VASANTH NAGAR, BENGALURU-560001.
3. THE DEPUTY COMMISSIONER
BIDAR DISTRICT, BIDAR-585401.
4. THE DISTRICT OFFICE BACKWARD CLASSES
WELFARE DEPARTMENT
BIDAR DISTRICT
ADDRESS JANWADA ROAD
NAVADGERI, BIDAR-585401.
... RESPONDENTS
(BY SRI. Y.H. VIJAYKUMAR., AAG &
SMT. MAYA T.R., HCGP FOR R1 TO R4)
- 10 -
NC: 2024:KHC-K:9888
WP No. 202094 of 2024
C/W WP No. 201984 of 2024
WP No. 202199 of 2024
AND 6 OTHERS
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF
CERTIORARI OR ANY OTHER WRIT OF LIKE NATURE AND QUASH THE
TENDER BEARING NO. BCWD/ADM/TENDER/CR/2024-25 DATED
05.08.2024 INVITED BY THE RESPONDENT NO.4 VIDE ANNEXURE-E
TO THE WRIT PETITION AND ETC.
*****
IN W.P.NO. 202368/2024
BETWEEN:
MALLIKARJUN TRADERS
REP. BY ITS PROPRIETOR
BASAWARAJ
S/O KASEPPA DEVAGAON
AGED ABOUT 36 YEARS,
OCC. BUSINESS,
R/O C/O WARD NO.31, TAJ BOUDI ROAD
NAVABAGH VTC, BIJAPUR-586101.
...PETITIONER
(BY SRI. R.J. BHUSARE., ADVOCATE)
AND:
1. THE STATE OF KARNATAKA
BACKWARD CLASSES WELFARE DEPARTMENT
REP BY PRINCIPAL SECRETARY
M.S. BUILDING BENGALURU-560001.
2. DEPUTY COMMISSIONER
BIDAR DISTRICT
AND DISTRICT LEVEL FOOD
MATERIAL PROCUREMENT COMMITTEE
BIDAR-585401
DIST. AND TQ. BIDAR
3. DISTRICT OFFICER
BACKWARD CLASSSES
WELFARE DEPARTMENT
BIDAR DISTRICT-585401.
... RESPONDENTS
(BY SRI. Y.H. VIJAYKUMAR., AAG &
SMT. MAYA T.R., HCGP FOR R1 TO R3)
- 11 -
NC: 2024:KHC-K:9888
WP No. 202094 of 2024
C/W WP No. 201984 of 2024
WP No. 202199 of 2024
AND 6 OTHERS
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE
IMPUGNED E-PROCUREMENT TENDER NOTIFICATION DATED
05.08.2024 BEARING NO. BCWD/ADM/TENDER/CR/2024-25 SO FAR
AS CLAUSE 2 SL.NO.3 & 3 WITH REGARD TO PRODUCTION OF
AVERAGE ANNUAL TURNOVER & 80% SUPPLY OF FOOD ITEMS IN
PRECEDING 3 FINANCIAL YEARS, IS CONCERNED, ISSUED BY
RESPONDENT NO. 2 & 3 THE COPY OF WHICH OBTAINED FROM THE
WEBSITE OF RESPONDENT NO.2 IS AT ANNEXURE-A AND ETC.
*****
IN W.P.NO. 202390/2024
BETWEEN:
M/S PADMAVATHI ENTERPRISES
RAICHUR R/O 11-6-77
BRESWARPET ROAD, RAICHUR
REPRESENTED BY ITS PROPRIETOR
SRI. MATISAGAR S/O KASTURI CHAND
AGED ABOUT 48 YEARS
NO.11-6-59 BRESTWAR PET
RAICHUR-584101.
..PETITIONER
(BY SMT. RATNA N. SHIVAYOGIMATH., ADVOCATE)
AND:
1. THE STATE OF KARNATAKA
REP. BY ITS SECRETARY
BACKWARD CLASSES
WELFARE DEPARTMENT
M. S.BUILDING BENGALURU-1
2. THE DEPUTY COMMISSIONER
RAICHUR, DIST., RAICHUR
3. THE DISTRICT OFFICER AND
TENDER INVITING AUTHORITY
BACKWARD CLASSES
WELFARE DEPARTMENT
RAICHUR, DIST RAICHUR
... RESPONDENTS
(BY SRI. Y.H. VIJAYKUMAR., AAG &
SMT. MAYA T.R., HCGP FOR R1 TO R3)
- 12 -
NC: 2024:KHC-K:9888
WP No. 202094 of 2024
C/W WP No. 201984 of 2024
WP No. 202199 of 2024
AND 6 OTHERS
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE ANY WRIT OR
ORDER, WRIT IN THE NATURE OF CERTIORARI, QUASHING THE
IMPUGNED TENDER NOTIFICATION DATED 1.8.2024 IN
NO.JHINVAKAERA/ACCOUNTS/CR-2024-25 VIDE ANNEXUE-A AND
ETC.
*****
THESE WRIT PETITIONS COMING ON FOR ORDERS AND
HAVING BEEN RESERVED FOR ORDERS ON 24.09.2024, THIS DAY,
THE COURT PRONOUNCED THE FOLLOWING:
CORAM: HON'BLE MR. JUSTICE SURAJ GOVINDARAJ
CAV ORDER
(PER: HON'BLE MR. JUSTICE SURAJ GOVINDARAJ)
A. Prayers
1. The Petitioner in W.P.No.202094/2024 is before this
Court seeking for the following reliefs:
i. Issue a writ of certiorari or any other writ of like
nature and quash the tender bearing No.
BWCD/klb/food/tender/2024-25 dated 05.08.2024
invited by the respondent no.4 vide Annexure F to
the writ petition.
ii. Issue a writ of Mandamus or any other writ of like
nature and direct the respondents to call for the
fresh tender either taluka wise or not to insist upon
financial conditions and,
iii. Grant any other remedy that this Hon'ble Court
deems fit in the facts and circumstances of the
case.
- 13 -
NC: 2024:KHC-K:9888
WP No. 202094 of 2024
C/W WP No. 201984 of 2024
WP No. 202199 of 2024
AND 6 OTHERS
2. The Petitioner in W.P.No.201984/2024 is before this
Court seeking for the following reliefs:
a. Issue a writ of Certiorari or any other writ of like
nature and quash the tender bearing No. BWCD/E-
Tender/Food/CR-2/2024-25 dated 24.07.2024
invited by the respondent No.6 vide Annexure F to
the writ petition.
b. Issue a writ of Certiorari or any other writ of like
nature and quash the tender bearing No.
BWCDY/Account.Food Tender/CR/2024-25 dated
25.07.2024 invited by the respondent No.5 vide
Anenxure-F1 to the writ petition.
c. Issue writ of Mandamus or any other writ of like
nature and direct the respondents to call for a fresh
tender either taluka wise or not to insist upon
financial conditions and;
d. Grant any other remedy that this Hon'ble Court
deems fit in the facts and circumstances of the
case.
3. The Petitioner in W.P.No.202199/2024 is before this
Court seeking for the following reliefs:
a. Quash the impugned E-Procurement tender bearing
No. BCWD/E-Tender/Food/Cr-2/2024-25 dated
24.07.2024 so far as clause 2 Sl.No.2 and 3 with
regard to production of Average annual turnover &
80% supply of food items in preceding 3 financial
years is concerned issued by respondent no.2,the
copy of which obtained from the website of
respondent no.2 is at Annexure-A
b. Direct respondent No.2 & 3 representation dated
05.08.2024 submitted by petitioner the copy of
which is at Annexure-D
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WP No. 202094 of 2024
C/W WP No. 201984 of 2024
WP No. 202199 of 2024
AND 6 OTHERS
c. Grant any other order or writ which this Hon'ble
Court may deem necessary in the circumstances of
the case.
4. The Petitioner in W.P.No.202230/2024 is before this
Court seeking for the following reliefs:
a. Quash the impugned E-Procurement tender
notification dated 05.08.2024 so far as clause 2
Sl.No.2 & 3 with regard to production of Average
annual turnover & 80% supply of food items in
preceding 3 financial years is concerned, issued by
respondent no.2, the copy of which obtained from
the website of respondent no.2 is at Annexure-A
b. Direct respondent No.2 & 3 representation dated
12.08.2024 submitted by petitioner the copy of
which is at Annexure-D
c. Grant any other order or writ which this Hon'ble
Court may deem necessary in the circumstances of
the case.
5. The Petitioner in W.P.No.202248/2024 is before this
Court seeking for the following reliefs:
1. Issue a writ of Certiorari or any other writ of like
nature and quash the tender bearing No.
BCWD/klb/food/tender/2024-25 dated
05.08.2024 invited by the respondent no.6 vide
Annexure-E to the writ petition.
2. Issue a writ of Certiorari or any other writ of like
nature and quash the tender bearing No.
BCWD/Account/Food Tender/Cr/2024-25 dated
25.07.2024 invited by the respondent No.7 vide
Annexure-E to the writ petition.
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NC: 2024:KHC-K:9888
WP No. 202094 of 2024
C/W WP No. 201984 of 2024
WP No. 202199 of 2024
AND 6 OTHERS
3. Issue a writ of Certiorari or any other writ of like
nature and quash the tender dated 01.08.2024
invited by the respondent No.8 vide Annexure-E2
to the writ petition.
4. Issue writ of Mandamus or any other writ of like
nature and direct the respondents to call for a
fresh tender either taluka wise or not to insist
upon financial conditions and;
5. Grant any other remedy that this Hon'ble Court
deems fit in the facts and circumstances of the
case.
6. The Petitioner in W.P.No.202263/2024 is before this
Court seeking for the following reliefs:
a) Issue a writ of Certiorari or any other writ of like
nature and quash the tender bearing No.
BCWDY/Account.Food Tender/CR/2024-25 dated
25.07.2024 invited by the respondent No.4 vide
Annexure-E to the writ petition.
b) Issue writ of mandamus or any other writ of like
nature and direct the respondents to call for a
fresh tender either taluka wise or not to insist
upon financial conditions and;
c) Grant any other remedy that this Hon'ble Court
deems fit in the facts and circumstances of the
case.
7. The Petitioner in W.P.No.202345/2024 is before this
Court seeking for the following reliefs:
a. Issue a writ of Certiorari or any other writ of like
nature and quash the tender bearing No.
BCWD/ADM/TENDER/CR/2024-25 dated
05.08.2024 invited by the Respondent No.4 vide
Annexure-E to the writ petition.
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NC: 2024:KHC-K:9888
WP No. 202094 of 2024
C/W WP No. 201984 of 2024
WP No. 202199 of 2024
AND 6 OTHERS
b. Issue a writ of Mandamus or any other writ of like
nature and direct the respondents to call for a
fresh tender either taluka wise or not to insist
upon financial conditions and;
c. Grant any other remedy that this Hon'ble Court
deems fit in the facta and circumstances of the
case.
8. The Petitioner in W.P.No.202368/2024 is before this
Court seeking for the following reliefs:
a. Quash the impugned E-Procurement
tender notification dated 05.08.2024 bearing No.
BCWD/ADM/TENDER/CR/2024-25 so far as clause
2 Sl.No.2 & 3 with regard to production of
Average annual turnover & 80% supply of food
items in preceding 3 financial years is concerned,
issued by Respondent No. 2 & 3 the copy of which
is obtained from the website of respondent No.2
is at Annexure-A;
b. Grant any other order or writ which
this Hon'ble Court may deem necessary in the
circumstances of the case.
9. The Petitioner in W.P.No.202390/2024 is before this
Court seeking for the following reliefs:
a. Issue any writ or order, writ in the nature of
Certiorari, quashing the impugned Tender
Notification dated 1.8.2024 in No.
JhinVaKkkaEra/Accounts/CR-2024-25 vide
Annexure-A
b. Issue any writ or order, writ in the nature of
Mandamus directing R3 to invite fresh Taluk Level
Tender for supply of food grains and other article
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to the Pre-Matric, Post Metric Hostels and
Ashrama Schools under BCW in Raichur District.
c. Issue any writ or order, writ in the nature of
Mandamus, directing R2 and R3 to consider the
representations dated 27.8.2024 vide Annexure-D
and E and
d. Pass any such other order orders as this Hon'ble
Court deems fit in the facts and circumstances of
the case, in the interest of justice and equity.
B. Challenge
10. The challenges in the above petitions are all the
same. Each of the petitioners claiming that they had
earlier been supplying food articles to various schools
and colleges on a tender issued by the Department
of Backward Classes. It is claimed that earlier, the
tenders were issued for a one-year period taluka
wise, which enabled local businesses/contractors to
participate in the tender process and also to supply
the food articles at a lesser price, cost of transport
being lesser.
11. It is claimed that now by the impugned tenders
which have been issued across the State, have been
so issued districtwise requiring the successful
tenderer to supply food articles to colleges and
schools on a district basis for the entire district as a
unit as also the quality of the food prescribed are at
the higher end, making it unreasonable and difficult
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for local contractors to participate in the tender
processes.
12. Essentially, what has been challenged are clauses 2,
3 and 9 of the eligibility citeria of the tender
notifications, which are reproduced hereunder for
easy reference:
ELIGIBILITY CRITERIA
Sl CRITERIA MANDATORY SUPPORTING DOCUMENTS
1 The bidder should be a a) Company/establishment/ organisation
Company/Firm/Individual Registration certificate
Proprietorship registered under
law, Co-operative Societies
registered under Society's act
b) Copy of Work orders issued by any of the
State/Central Government
Departments/Institutions/Organisations to
The bidder shall have in the establish years of experience in supply of food
business of Bulk Supply of materials for at least for a period of 5 Years
Perishable/Non-Perishable food out of preceding 7 years i.e., from 2016-17 to
items to any of the State/Central 2023-24.
Government
Departments/Institutions/
Organisations for at least for a
c) Details of the Bidder shall be submitted as
period of 5 Years out of preceding
per Annexure A
7 years i.e., from 2016-17 to 2023-
24
2 The average annual financial All the documents below for 3 financial
turnover of the bidder should years i.e..
be twice the estimated cost of
the quantity mentioned in the
Tender document during the
a) Audited Statement of Accounts viz.
preceding 3 financial years i.e.,
Balance Sheet, Trading/Profit and Loss
2020-2021, 2021-22 and 2022-
Account
23.
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b) IT Returns
c) Certificate issued by the CA as per
Annexure B
3 Should have supplied food All the documents below:
items to any of the
State/Central Government
Department/
a) Details as per format in Annexure C.
Institutions/Organisations in
India at least 80% of the
requirement of the quantity
mentioned in the tender b) Copies of the Purchase/work orders
document in any one of the last
3 financial years 2021-22,
2022-23 and 2023-24.
c) Satisfactory completion certificate
issued clients (Must tally with the work
orders furnished)
4 The bidder should have valid Copy of the valid License Certificate (Form-C)
License.Certificate (Form-C) issued issued by Food Safety and Standards
by Food Safety and Standards Authority of India as per individual/category of
Authority of India - FSSAI for the the food items shall be submitted.
food products offered in the tender
wherever applicable.
5 Local Presence: In order to Copy of the Licence certificate issued by the
ensure supplies across the district, Competent Local authority as proof of having
as on the last day of bid the supply centre/warehouse/Godown (with
submission the bidder should have address) in the respective District and the
local supply details as per Annexure-D
centre/warehouse/Godown within
the district for which they are
submitting the tender
In case the bidder do not have supply
centre/warehouse/Godown in the district as
on the date of the Tender submission, the
bidder should submit an undertaking to setup
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or such centre in the district within 30 days of
award of Contract/ issue of Purchase order as
per Annexure E
agree to setup such centre in the
district within 30 days of award of
Contract/issue of Purchase order
6 The bidder should not have been Should provide an undertaking in the form of
debarred/blacklisted by any State an Affidavit as per Annexure G
Government, Central Government,
Central & State Govt.
Undertakings/enterprises/
Organizations and by any other
Quasi Government
bodies/Organizations, Govt E-
marketing portal or any major
Enterprise/ Organization in India
for non-satisfactory performance,
corrupt & Fraudulent or any other
unethical business practices, not
meeting critical conditions/security
clearance etc during the past.
7 The Products offered by the bidder The bidder should submit the statement of
shall meet the specification as per compliance to specification for each of the
Appendix II of the Bid Document. item.
8 Earnest Money Deposit as per the Shall be submitted as mentioned under Tem
Tender notification Notification.
The EMD for NSIC Registered units un single
point registration system of Government of
India is exempted. The bidder shall select the
relevant option in the Public Procurement
Portal against EMD payment clause and
upload the NSIC registra certificate
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Bids claiming EMD exemption against
certificate like Udyam/Udyog Adhaar or any
other MSE Registrations other than NSIC
SPRS will be rejected at initial stage itself
9 Consortiums are not allowed to Should comply
participate in the Tender
C. Submissions of the Petitioners:
13. There being several petitioners, lead arguments were
advanced by Sri. V. Srinivas, learned counsel for the
petitioners, who submits that;
13.1. Once earlier, a similar tender had been issued
with similar conditions which had been
challenged before this Court in
W.P.No.12515/2024, W.P.No.12520/2024,
W.P.No.12525/2024 and W.P.No.102980/2024,
where an interim order was granted allowing
the petitioners therein to participate in the
tender process without the state insisting on
the aforesaid conditions.
13.2. He contends that taking note of the deficiencies
pointed out by the petitioners, the
Commissioner, Department of Backward Classes
Welfare, by an order dated 05.06.2024 directed
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all Deputy Directors, District Officers of the
Backward Classes Welfare Department to cancel
the tender and call for a fresh tender. Thus, he
submits that the Department had accepted the
fallacy and the lacunae pointed out by the
petitioners in the aforesaid writ petitions.
Hence, the question of issuing a fresh tender on
the same conditions would not arise.
13.3. It is taking note of the cancellation of the
tender that the above writ petitions were
dismissed as withdrawn.
13.4. Now once again, Respondent No.4, District
Officer and the Tender Inviting Officer has
called for tenders for supply of food articles to
Pre/Post-Metric Hostels as also Ashrama
Schools coming within their respective
jurisdictions as per the tender notification
mentioned in the prayer columns extracted
hereinabove, for a period of two years or until
next tender is issued on the same conditions as
had been challenged earlier.
13.5. He contends that the said conditions are
unsustainable, being radically different from the
past practices which had been followed by the
Department, inasmuch as the earlier tenders
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were for a period of one year and the qualifying
conditions were much lesser, whereas in the
present tender, they are completely onerous
and manifestly arbitrary. The conditions have
been introduced so as to exclude the petitioners
thereby violating Article 14 of the Constitution
of India.
13.6. Further, the said conditions have been imposed
and included so as to favor bigger businesses,
thereby impinging on the rights of the
petitioners who are Micro, Small & Medium
Enterprises (MSMEs). The avowed policy of the
State being to encourage MSMEs. These clauses
would go against the said policy.
13.7. In the event of the tenders having been issued
at the local taluka level, there would be more
persons who would have participated in the
tender process, thereby providing better rates.
By calling for tenders district-wise, the State
itself is going to be adversely affected,
inasmuch as the prices that would be quoted
and would have to be paid would be on a higher
side.
13.8. The tender conditions have been so included to
favour economically stronger businesses,
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thereby violating the right and freedom of
carrying out business and trade of the
petitioners under Article 19 of the Constitution
of India. There is no nexus insofar as the period
fixed for two years in the tender when earlier
the requirement of the tenders was floated for
one year. This increase in the period of time is
completely arbitrary, there are no reasons
which have been provided for the same.
13.9. The objective of the tender which is a State
largesse, is to enable larger and wider
participation of businesses to provide them a
source of livelihood. By increasing the period,
as also increasing the area, small businesses
have been discriminated against by excluding
small businesses and giving an unreasonable
advantage to big businesses, thereby violating
Article 14 of the Constitution of India.
13.10. The terms of the tender have been tailormade
to suit the convenience of persons favoured by
the establishment. Hence, it is only those
persons who would participate and be
successful in the tender processes.
13.11. The conditions which have been imposed are
malicious and misuse of statutory powers made
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with the intention of favoring certain persons or
establishments/lobbies.
13.12. The eligibility restriction has been made
stringent so as to exclude the petitioners who
have been supplying food grains for last several
years and thereby impinging on their right to
carry out business. The past practices for over
25 years has been to call for tenders taluka-
wise, which has suddenly been changed to
district-wise, which is not sustainable either in
law or facts. There are no reasons provided by
the State as to why there is a change of this
policy from the taluka level to the district level.
13.13. He submits that there is a violation of Section
6C of the Karnataka Transparency in Public
Procurement Act, 1999 (for short, hereinafter
referred to as 'the Act'), which requires
preference to Micro, Small and Medium
Enterprises. By virtue of the present tender,
such MSMEs have been discriminated against
giving a complete go-by to Section 6C of the
Act.
13.14. Section 6C of the above referred to Act has
been reproduced hereunder for easy reference:
6C. Preferences to Micro & Small Enterprises :
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To encourage Micro and Small Enterprises, preferences
may be given to them in such manner subject to such
conditions as may be prescribed by the Government.
Explanation:- "For the purpose of this Section, Micro
and Small Enterprises shall have the same meaning as
defined in the Micro, Small and Medium Enterprises
Development Act, 2006 (Central Act 27 of 2006
13.15. He relies upon the decision of the Hon'ble Apex
Court in the case of Meerut Development
Authority vs. Association of Management
Studies and Another1, more particularly para
no.17 thereof, which is reproduced hereunder
for easy reference:
17. 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
1
(2009) 6 SCC 171
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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.
13.16. He submits by relying on the Meerut
Development Authority's case that there is a
scope of judicial review which is available to
this Court to interfere where the actions of the
State and/or the Tendering Authority are
discriminatory in nature. All the conditions laid
down in Meerut Development Authority's
case are satisfied in the present case and
therefore, he submits that the actions on part
of the State are required to be deprecated and
the tender notification quashed.
13.17. He relies upon the decision of a co-ordinate
bench of this Court in the case of Chinnappa
Reddy vs State of Karnataka2, more
particularly para No.13 thereof, which is
reproduced hereunder for easy reference:
13. If Rule 27 and the Government Order are read
in tandem, what would unmistakably emerge is
experience and past performance in the execution
of similar contract cannot be given up in any
tender to be floated by the State. If on all the
aforesaid the subject Expression of Interest is
noticed, the eligibility criteria quoted supra clearly
2
WP No.28866/2023
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gives up the work experience and even the
turnover for each year. Therefore, the subject
Expression of Interest is undoubtedly contrary to
the statute and the Government Order dated
14.10.2008 depicting a standard tender
documents for inviting tender. For all these years,
it is again an admitted fact that Expression of
Interest or tender was invited strictly in
consonance with Rule 27 of the Rules and the
standard tender documents. It is for the first time
it is being given a go-bye.
13.18. By relying on the decision in Chinnappa
Reddy's case, he submits that when the terms
of the tender are contrary to the statute and
the Government Order dated 14.10.2008,
thereby being contrary to the standard tender
documents, the same is required to be set
aside. In this regard, he relies upon the
Government Order dated 14.10.2008 which is
reproduced hereunder for easy reference:
"PREAMBLE:
In Government Order dated:6-8-2005, Standard
Tender Documents given in Annexure 1 to 6
appended there with were prescribed to be used in
certain identified divisions of PWD and WRD and the
corporations under WRD for procurement of works
from 1st September 2005 for a period of six months
initially on an experimental basis, so that any
problems encountered in use of these Standard
Tender Documents can be suitably addressed before
making the Standard Tender Documents mandatory
for procurement of works.
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"Government order No.FD 4 PCL 2008, Bangalore,
dated: 14.10.2008
Under the circumstances explained in the preamble,
the following clauses of the Standard Tender
Documents as prescribed in Government Order
dated: 6-8-2005 are modified to the extent noted
below:
Sl. Reference Existing Modified
to Clauses
No. Standard Clauses
Tender
Documents
1 Clause Work experience: a)Mandating
3.2.b. Satisfactorily satisfactory
completion as a
prime contractor for
at least one similar
Page 5 work to an extent of
completed (at
least 90% of the 50% of the cost of
contract value), the work, for all
KW-1,2/3/4 as prime works costing up to
contractor, at and Rs.100 lakh.
least one similar
work such as
.....of value not
less than Rs. b) Mandating
(usually not Less satisfactory
than 80%
estimated Value
of Contract)
completion as a
prime contractor for
at least one similar
work to an extent of
80% of the cost of
the work, for all
works costing more
than Rs. 100 lakh.
The PWG Form 65
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will be discontinued.
The relevant
Paragraphs of the
KPWD Code will be
amended.
- - - -
3 Clause Qualification: To Qualification:
3.2(a) qualify for award
of this Contract,
Page Page 5 each Tenderer in
K/W- 4 its name should To qualify for award
have in the last of this contract each
five years tenderer in his name
i.e.,2000-2001 to should have in the
2004-2005 (a) last five years'
achieved in at period (a) achieved
least two in atleast two
financial years a financial years an
Minimum average annual
financial turn financial turnover of
over (in all Rs..... (usually not
classes of civil less than the
engineering estimated cost
construction under this contract
works only) for works costing
upto Rs.100 lakh).
Of Rs. (usually
not
Rs......(usually
less than two However the
times not less existing clause
than the remains the same
estimated annual for works costing
payments under more than Rs.100
this contract) lakh...."
13.19. His submission is that the above conditions
which are stated to be standard conditions are
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not found mentioned in the present tender. The
present tender contains different conditions
than the standard tender documents.
Therefore, the present tender is in violation of
the standard conditions requiring it to be set
aside.
13.20. In terms of Clause-3 of the above standard
conditions, a tenderer has to achieve for atleast
two financial years out of five years, an average
turnover equivalent to the tender amount
whereas in the present tender, Clause-2
requires an average annual financial turnover of
the bidder to be twice the estimated cost of the
quantity mentioned in the tender document
during the preceding three financial years of
2020-21, 2021-22, 2022-23. Thus, Clause-2 of
the eligibility criteria of the present tender is
contrary to Clause-3 of the standard terms.
13.21. By referring to Clause-4 of the standard terms,
he submits that for a tenderer to qualify, the
tenderer would have to have executed in any
one year minimum quantities of work of 80% of
the annual requirement for works costing up to
Rs.100 lakhs and for works costing more than
Rs.100 lakhs, the tenderer should have
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executed in any one financial year the minimum
quantities of work, usually 80% of the peak
annual rate of construction. By referring to the
same, he submits that the same relates to only
the State of Karnataka, whereas in Clause-3 of
the eligibility criteria, the tenderer to qualify to
supply should have supplied food items to any
of the State, Central Government
Department/Institutions/ Organizations in
India, at least 80% of the requirement of the
quantity mentioned in the tender document in
any one of the three financial years - 2021-22,
2022-23 and 2023-24. Thus, he submits that
by Clause-3, a person otherwise than carrying
on business in Karnataka could also participate
and secondly, he submits that 80% of the
requirement being for any one financial year
should have been for the earlier financial year,
whereas in the present tender, the financial
year taking into consideration is three earlier
years. Thus, he submits that Clause-3 of the
present tender violates Clause-4 of the
standard terms.
13.22. By referring to Clause-9 of the tender terms, he
submits that consortiums are not allowed to
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participate in the tender, which goes against the
business principles in permitting different
businesses to get together and participate in
the tender. On all the above grounds, he
submits that the writ petitions are required to
be allowed.
14. Smt. Ratna N. Shivayogimath, learned counsel for
petitioner in W.P.No.202390/2024 adopts the
submissions of Sri.V. Srinivas, learned counsel. In
addition, she relies on Clause-III of Clause-4.1 of the
tender documents and submits that there is a
preference which is required to be given to MSME
categories and the eligibility prescribed in Clause-2
and 3 as regards the eligibility criteria at Clause-2
and 3 and for 15% price preference, she submits
that this has not been made available to the
petitioners, firstly on the ground that MSMEs would
not be eligible to participate given the arbitrary
increase in the qualification criteria and that MSMEs
would not be able to participate in a tender
constituted district-wise and claim the benefit of 15%
price preference.
15. Sri. R.J.Bhusare, learned counsel appearing for the
petitioner in W.P.No.202368/2024 also adopts the
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submissions of Sri. V. Srinivas, and Smt. Ratna N.
Shivayogimath, learned counsels and reiterates their
submissions. The other counsels adopt the
submissions of the aforesaid counsels.
16. Sri. Y.H. VijayKumar, learned Additional Advocate
General for the State would submit that;
16.1. The powers of judicial review in commercial
contracts are limited, unless there is any
arbitrary exercise of power established by the
petitioners, this Court ought not to intervene in
a commercial activity of the State.
16.2. The State has taken into consideration all the
relevant aspects and thereafter, drafted the
terms and conditions of the tender. He submits
that the conditions of the tender on earlier
occasions, when tenders were called for taluka-
wise, the State and its authorities had to face
severe criticism and problems, inasmuch as the
supply which was made was of inferior quality.
16.3. Many a times, the children who consume the
food, fell ill, the food articles were found to be
adulterated and it is in that background that a
Committee had been set up to look into these
aspects and the Committee considered all the
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aspects and gave its recommendations and
issued revised guidelines which were
communicated by the Secretary to the
Government, Department of Backward Classes
Welfare to the Commissioner, Department of
Backward Classes Welfare under cover of his
letter dated 01.07.2024. The revised guidelines
having been issued on 01.07.2024, the said
guidelines have taken into consideration all the
relevant aspects which are material for the
purpose of inviting a tender, taking into
consideration the interest of all stakeholders.
The revised guidelines have been issued so as
to protect the interest and wellbeing of the
students.
16.4. The revised guidelines are reproduced
hereunder for easy reference:
Government of Karnataka
No.Him Va Ka 499 BMS 2023 Karnataka Government Secretariat
Vidhana Soudha
Bangalore dated 01.07.2024
From:
Secretary to Government
Department of Backward Classes Welfare,
Vikasa Soudha
To:
The Commissioner
Department of Backward Classes Welfare,
Bangalore
Sir,
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Sub: Issuing revised guidelines for supply of food materials to
Pre metric and post metric hostels and Ashrama schools of the
Department of Backward Classes Welfare-reg
Reference: 1. G.O.No, Him Va Ka 499 BMS 2023
dated 22-01-2024
2. Government letter no Him Va Ka 499 BMS 2023 dated
14-02-2024
With reference to the above subject an order is issued as in ref.1 for
supply of food materials. to Pre metric and Post metric hostels and
Ashrama schools of the Department and in the letter at ref.2 the
Guidelines were enclosed and sent. At present the guidelines enclosed
in Ref.2 is rescinded with immediate effect and the revised guidelines
are enclosed with this letter. I am directed to request you to take
necessary immediate action accordingly,
Yours sincerely
Sd/-
(K.Ashwath) 1-07-25
Under Secretary to Government-2
Department of Backward Classes Welfare,
Government Order No: Him Va Ka 499 BMS 2023
Dated:01.07.2024. Revised Guidelines for Inviting Tenders
for Food Supply to Pre-Matric, Post-Matric and Ashram
Schools of the Backward Classes Welfare Department.
The following authorities have been appointed under the
Karnataka Transparency in Public Procurement Act 1999
and Rules 2000 to invite a single tender to the district for
supply of food items and other materials to Pre-Matric and
Post-Matric Student Hostels and Ashram Schools of the
Backward Classes Welfare Department.
I. Tender Authority
1. Tender Inviting District Backward Classes
Authority Welfare Officer.
2. Tender Accepting District Level Food
Authority Commodities Purchase
Committee
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3. Tender Appellate Secretary to Government,
Authority
Backward Classes
Welfare Department
Bangalore.
II. District Level Food commodites Purchase Committee
1. Deputy Commissioners of the The President
respective district
2. Zilla Panchayat Chief Executive Vice President
Officer
3. Deputy Director, Food and Civil Member
Supplies Department
4. Joint Director, Department of Member
Commerce and Industry
5. District Food Safety and Member
Designated Officer
6. Chief Accounts officer, Zilla Member
Panchayat
7. District Backward Classes Welfare Member
Officer
Functions of the Committee
1. The District Level Committee shall, as regards the
respective district jurisdiction conduct the tender process
in a transparent manner as per the order of the
Government and the KTPP rules.
2. Tender shall be called District wise once in every two
years. However, fresh tenders shall be invited immediately
in the districts where the tender period has already
expired.
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3. The quantity of food items required for two years for
the Pre-matric, Post-matric hostels and Ashram Schools
coming under the jurisdiction of the Backward Classes
Welfare Department shall be calculated and consolidated
item-wise and a single tender shall be called and the
quantity of food items required for the two-year period
shall invariably be published in the tender notice.
4. While publishing the prices of all the materials is the
sender, the committee shall get the prevailing market
prices (Market Survey) from the Food and Civil Supplies
Department, APMC and other wholesale markets including
Super Markets and the average of the said prices shall be
computed and the item-wise average price shall be fired.
If there is significant difference in item-wise prices in the
L-1 bid received in the tender from the fixed average
prices shall get proper explanation by the bidder if
necessary negotiate the rates and then issue the work
order.
If the tender of the successful bidder is seriously
unbalanced in relation to the cost of the items to be
procured under the contract, the procurement entity may
require the bidder to produce detailed price analyses for
any or all items of the Bill of Quantities, to demonstrate
the internal consistency of those prices with the Market
Price. After evaluations of the price analyses, the
procurement entity may require that the amount of the
performance security be obtained for a value as deemed
fit at the expense of the successful Tenderer to a level
sufficient to protect the procurement entity against
financial loss in the event of default of the successful
bidder under the contract.
5. It is the responsibility of the District Level Committee to
ensure timely supply of food items to the hostels.
6. The conditions stipulated in the Government order shall
be compulsorily followed while inviting tenders. Neither
the conditions shall be breached nor amended for any
reason what so ever. If desirous to get the conditions
changed, the prior permission of the Government shall
invariably be obtained.
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District Level Scrutiny Committee
1. Chief Executive Officer, Zilla President
Panchayat
2. Deputy Director, Food and Civil Member
Supplies Department
3. Joint Director, Department of Member
Commerce and Industry
4. District Food Safety and Member
Designated Officer
5. Chief Accounts officer, Zilla Member
Panchayat
6. District Backward Classes Welfare Member
Officer
Functions of the Committee
1. District Level Scrutiny Committee shall Scrutiny entire
documents submined by the bidders in the tender for their
eligibility under the rules.
2. A minute shall be prepared recording the reasons
detailing the eligible and ineligible bidders.
3. They shall check all the documents submitted by the
bidders and prepare a comparative statement of
preliminarily and technically qualified or disqualified
bidders and recommend them to the tender accepting
authority and obtain approval to open the financial bid.
4. They shall verify at the time of opening of tender
technical bids as per Government Circular No: FD 850
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EXP-12/15, Dt:15.12.2016 and FD 537 exp-12/2021 Dt
25/07/2022 the NSIC and Udyam registration certificates
submitted by bidders to avail EMD exemption and rate
preference of 15% available to MSE entrepreneurs and
duly certify them.
5. To ensure the quality of food supplied by bidders it is
requested while submitting technical bid to submit FSSAI
license certificate (regarding applicable food materials).
Such certificates shall be verified and attested..
IV. District Level Food Quality Inspection and
Monitoring Committee
1. Chief Executive Officer, Zilla President
Panchayat
2. Deputy Director, Food and Civil Member
Supplies Department
3. District Food Safety and Member
Designated Officer
4. District Health Officer, Health Member
and Family Welfare Department
5. District Backward Classes Member
Welfare Officer Secretary
Functions of the Committee
1. The said committee shall exercise full supervision over
the quality of food supplies supplied to all the hostels in
the district.
2. The Committee shall time to time hold a meeting and
issue necessary instructions regarding food quality to the
supervisors of all the hostels in the district, the
representatives of the suppliers must attend the said
meeting.
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3. After the tenderers get the work order and supplied the
first batch of supplied materials, the random samples of
food materials supplied shall be compulsorily sent to the
lab (From Govt. or NABL Accredited Laboratories) by
randomly selecting ten hostels covering all the taluks of
the district and the food quality shall be ascertained.
Thereafter, once in every three months, the committee
shall randomly select 10 hostels covering all the taluks of
the district and submit random samples of the supplied
food items to the lab test (from Govt. or NABL Accredited
Laboratories) to ensure the quality.
4. The expenses for the said lab test shall be incurred
from the grant provided by District sector account head:
2225-00-103-0-26(090). If it is found in the lab test that
the quality of the food material supplied is not good, the
tenderer should be notified about this, and the
replacement of the food material be obtained. They shall
send the sample of the replaced food material again for
lab test, and the cost of the second time lab test should be
borne by the supplier. (Applicable to each sample test
done).
5. If it is found in the lab test that the quality of any of the
food materials supplied is not good, the total quantity of
the supplied batch of the said material should be
withdrawn and the good quality material should be re-
supplied. A time of Rs.500- per day shall be levied on the
said supplier during the period of food supply variation in
between
Further, it in the lah test theve out of four samples of the
materials supplied by any one supplier are found to be of
substandard, he shall be subjected is Debarment Process
under section 25(A)(B)(C) vide notification No NO:FD 884
Exp-12/2019, Bangalore Dated 7th May 2020 B of KTPP
rules amendment
6. They shall keep all lab test reports available for
inspection at the district office concemod during the visit
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of the senior officers of the department and shall submit
copies to the Commissioner's office.
V. Tender Document (RFP): In order to facilitate
district-wise render calling in uniform manmer across the
state, "Model Tender Document" will be prepared by the
Commissioner, Backward Classes Welfare Department and
circulated to all District Backward Classes Welfare OffSens.
The said tender document is only a model and the Welfare
Officers of backward classes shall scrutinize the District
Backward Classes document of the concerned districts and
finallire the tender document and publish it only after
finalizing the woder document after discussing it in the
District Level Food Materials Purchase Committee in
accordance with the KTPP rules, notifications and circulars
and Government ceders issued by the Government from
time to time. The tender inviting authority concerned shall
be directly responsible for any defects found in the tender
documents.
VI. Minimum criteria to be fixed regarding eligibility
of tenderers.
1. The tenderer should be engaged in foodstuff supply
activity for at least more than 5 years
2. The said bidder should be a registered organisation
society/company/proprietorship firm parmership firm (in
this regard appropriate pres shall be submitted)
3. The Bidders should have obtained certificate (for
applicable food items) from the Food Safety and
Standards Authority of India (FSSAI).
4. The average annual financial turnover of the bidder
during the preceding 3 financial years ie, 2020-2021,
2021-22 and 2022-23 should be twice the estimated cost
of the quantity memtioned in the Tender Document
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5. The tenderer should have supplied food items to any of
State Central Government Department Institutions
Organizations in India at least 80% of the requirement of
the quantity mentioned in the Tender Document in any
one of the last 3 financial years, 2021-2022 2022- 23 and
2023-24.
6. Regarding the Bidding Capacity of Tenderers conditions
shall be prescribed in the render documents as per the
Government Circular No: PWD 1359 SO/FC 2001 (P-2)
Dated: 03.12.2002.
7. There shall be a proper office and go down warehouse
for the storage of food items at the district level
concerned. In the absence of which, if the bidder receives
a tender, within 30 days from the date of work order, an
undertaking agreeing to provide a suitable office and a
suitable go down/warehouse for the storage of food items
in the district should be issued (In this regard the District
Level Tender Scrutiny Committee shall visit the site and
ascertain such arrangements).
VII. Other measures to be taken by the District
Level Purchase Committee.
1 The rice and wheat procured at ration rates shall be
lifted by the successful tenderers from the warehouses of
the Food Corporation of India and shall be supplied
directly to the hostels. The rice and wheat lifted shall not
be stored by the bidders in their go downs for any reason
whatsoever. The transportation cost incurred for this
should be given to the supplier. A provision shall be made
in the financial bid in the tender document to enter the
transportation cost.
2. The Bidders must install GPS in their supply vehicles,
record the Geo Location of the vehicle during delivery and
attach a printed copy of the information available in the
GPS software to the invoice for payment in order to
confirm that the food items have been supplied to the
doorsteps of the hostels/ashram schools.
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3. Method of calling tender: The commodities shall be
divided into separate groups
(A,B,C,D...) Perishable, Non-Perishable and other
materials and a single tender notice shall be issued. While
placing tender in Public Procurement Portal Non-ECV
element be selected.
4. The Bidders participating in the tender shall
compulsorily quote the rates for each item, in case of not
mentioning the rates for any of the items, the tenders
shall be rejected, while accepting the financial bids, the
bidder who has quoted the lowest rate for the total value
of all the materials of all the groups shall be selected as L-
1.
5. The successful bidder after receiving the work order,
within 21 days, shall enter into a contract by obtaining a
bank guarantee or e-bank guarantee from a nationalized
bank for 5% performance security on the amount fixed for
the tender (Performance Security should be valid for 30
months).
6. The taluk level officer shall consolidate the demand list
for all the hostels/ashram schools of a taluk and issue
indent to the approved suppliers by 25th of every month.
The supplier shall supply the food commodities to the
doorsteps of the hostels/ashram schools within 7 days
from the date of receipt of such indent. In case the supply
is not delivered within the stipulated time, a sum
equivalent to 0.5% of the delivered price of the delayed
goods or unperformed supplies/services for each week or
part thereof shall be levied until actual delivery or
performance, up to a maximum deduction of 10% of the
contract price. Once the maximum is reached, the
purchaser may consider termination of the contract
pursuant to the general conditions of the contract.
7. After the finalization of the tender, a written contract
should be entered in to, between the bidders and the
district level officers concerned within 21 days of issuing of
work order, and the quality and rates agreed in the said
contract should be delivered to the doorsteps of the hostel
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within the specified time and a delivery note should be
issued compulsorily. It will be the primary responsibility of
the concerned Taluk Welfare Officers/District Backward
Classes Welfare Officers to receive the supply of the food
commodities at the doorsteps of the hostel.
8. The supply of Food commodities shall be received in the
presence of hostel warden/hostel 8 supervisor, student
representative of the hostel (on rotation basis) and the
cook. The Taluk backward classes welfare officer
concerned should visit the hostels on random basis and
check the food materials supplied.
9. In case any of the food items supplied to the hostels
are found to be of substandard quality, the supplier shall
be responsible for immediately replacing such food items
to the respective hostels/Ashram schools.
10. Eligible bidders shall supply fresh vegetables to the
hostels twice a week as per demand.
11 . The District Backward Classes Welfare Officers/Taluk
Backward Classes Welfare Officers shall visit the hostels
and submit a report from time to time to the District Level
Quality Inspection and Supervision Committee regarding
the proper supply of food items of approved quality by the
suppliers and the correct quantity of food items are served
to the students by the hostel
wardens/wardens/supervisors of the hostels.
12. The District Level Food Materials Purchase Committee
shall hold a meeting at least once in 3 months under the
chairmanship of the Deputy Commissioner, check the
proper supply of food materials to all the hostels, and take
appropriate action if there are any grievances and
complaints about the quality.
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13. The guidelines dated: 14.02.2024 issued vide order
dated: 22.01.2024 are hereby rescinded with immediate
effect.
Sd/-
(K.Ashwath)07/24
No: Hin Va Ka 499 BMS 2023
Under Secretary to Govt.-2
Backward Classes Welfare Department.
16.5. He submits that these guidelines have been
followed while issuing the present tender
notification. Furthermore, different Committees
have been formed to look into different aspects
of the tender, like supply, purchase, scrutiny,
food quality and inspection. A monitoring
mechanism has also been established, as could
be seen from the revised guidelines.
16.6. These guidelines have been formulated after a
detailed study by a Committee formulated in
that regard, there is an application of mind by
the State which cannot be found fault with by
the petitioners in the manner it is done.
16.7. The State and its authorities have acted in the
interest of the schools and the children so as to
obviate any adulteration and/or improper
quality of food grains and articles being
supplied.
16.8. There is an inspection and monitoring
committee which has been set up. The same
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cannot be done at the taluka level and as such,
being done at the district level, supervising over
each of the talukas, the State in its wisdom is
of the opinion that the tender can only be
district-wise and not taluka- wise and as such,
has issued the present tender notification.
16.9. His submission is that there would be a proper
electronic monitoring system to monitor the
supply and consumption of food grains. The
district level Food Quality Inspection Monitoring
Committee would randomly select, the supply
made, get the supply tested from a government
or a NABL accredited laboratory. All these
aspects would be webhosted on the website of
the Department of Backward Classes Welfare so
as to provide a transparent mechanism for the
working of the tender. The test done, results of
the test, the authority which has done the test
would all be uploaded onto the website giving
access to one and all to keep track of the
quality of goods supplied.
16.10. He submits that once earlier the petitioners in
W.P.No.202094/2024 and W.P.No.202263/2024
had approached this Court by filing
W.P.No.201223/2024 and W.P.No.201224/2024,
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though they were represented by different
counsels at that point of time, the orders
passed on 14.05.2024 in the aforesaid matters
has been suppressed by the petitioners. This
Court, vide the aforesaid order dated
14.05.2024, has held that the condition for the
change of calling for tenders from taluka to
district-wise is in the wisdom of the State and
this Court has declined to interfere in the
matter and dismissed the writ petitions.
16.11. These orders have not even been brought to
the notice of this Court, there is deliberate
suppression of material facts which has resulted
in the interim orders being passed. If those
orders had been brought to the notice of this
Court, no interim order would have been
passed and as such, he submits that on account
of the petitioners not having approached this
Court with clean hands and having suppressed
the material facts, all the petitioners being
aware of the orders passed by a Co-ordinate
Bench of this Court, on the ground of deliberate
suppression, the writ petitions would have to be
dismissed.
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16.12. He relies upon the decision of the Hon'ble Apex
Court in Arun Kumar Agarwal vs Union of
India3, more particularly para nos. 41-49, 53
and 70 thereof, which have been reproduced
hereunder for easy reference:
41. We notice that ONGC and the Government of
India have considered various commercial and
technical aspects flowing from the PSC and also its
advantages that ONGC would derive if the Cairn and
Vedanta deal was approved. This Court sitting in the
jurisdiction cannot sit in judgment over the
commercial or business decision taken by parties to
the agreement, after evaluating and assessing its
monetary and financial implications, unless the
decision is in clear violation of any statutory
provisions or perverse or taken for extraneous
considerations or improper motives. States and its
instrumentalities can enter into various contracts
which may involve complex economic factors. State
or the State undertaking being a party to a contract,
have to make various decisions which they deem just
and proper. There is always an element of risk in such
decisions, ultimately it may turn out to be correct
decision or a wrong one. But if the decision is taken
bona fide and in public interest, the mere fact that
decision has ultimately proved to be wrong, that itself
is not a ground to hold that the decision was mala
fide or taken with ulterior motives.
42. Matters relating to economic issues, have always
an element of trial and error, so long as a trial and
error is bona fide and with best intentions, such
decisions cannot be questioned as arbitrary,
capricious or illegal. This Court in State of M.P. v.
Nandlal Jaiswal [(1986) 4 SCC 566] referring to the
judgment of Frankfurter, J. in Morey v. Doud [1 L Ed
2d 1485 : 354 US 457 (1957)] held that: (Nandlal
Jaiswal case [(1986) 4 SCC 566] , SCC p. 605, para
34)
3
(2013) 7 SCC 1 | 2013 INSC 330
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"34. ... We must not forget that in complex economic
matters every decision is necessarily empiric and it is
based on experimentation or what one may call 'trial
and error method' and, therefore, its validity cannot
be tested on any rigid 'a priori' considerations or on
the application of any straitjacket formula."
43. In Metropolis Theatre Co. v. Chicago [57 L Ed 730
: 228 US 61 (1913)] the Supreme Court of the United
States held as follows: (L Ed p. 734)
"... The problems of Government are practical ones
and may justify, if they do not require, rough
accommodation, illogical, if may be, and unscientific.
But even such criticism should not be hastily
expressed. What is best is not always discernible; the
wisdom of any choice may be disputed or condemned.
Mere errors of Government are not subject to our
judicial review. It is only its palpably arbitrary
exercises which can be declared void...."
44. In LIC v. Escorts Ltd. [(1986) 1 SCC 264] this
Court held that: (SCC p. 344, para 102)
"102. ... The court will not debate academic matters
or concern itself with intricacies of trade and
commerce."
The Court held that: (SCC p. 344, para 102)
"102. ... When the State or an instrumentality of the
State ventures into corporate world and purchases
the shares of a company, it assumes to itself the
ordinary role of a shareholder, and dons the robes of
a shareholder, with all the rights available to such a
shareholder. There is no reason why the State as a
shareholder should be expected to state its reasons
when it seeks to change the management, by a
resolution of the company, like any other
shareholder."
45. In Liberty Oil Mills v. Union of India [(1984) 3
SCC 465] , this Court held that expertise in public and
political, national and international economy is
necessary, when one may engage in the making or in
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the criticism of an import policy. Obviously, courts do
not possess the expertise and are consequently,
incompetent to pass judgments on the
appropriateness or the adequacy of a particular
import policy.
46. In Villianur Iyarkkai Padukappu Maiyam v. Union
of India [(2009) 7 SCC 561] this Court held as
follows: (SCC p. 605, para 169)
"169. It is neither within the domain of the courts nor
the scope of judicial review to embark upon an
enquiry as to whether a particular public policy is wise
or whether better public policy can be evolved. Nor
are the courts inclined to strike down a policy at the
behest of a petitioner merely because it has been
urged that a different policy would have been fairer or
wiser or more scientific or more logical. Wisdom and
advisability of economic policy are ordinarily not
amenable to judicial review. In matters relating to
economic issues the Government has, while taking a
decision, right to 'trial and error' as long as both trial
and error are bona fide and within the limits of the
authority. For testing the correctness of a policy, the
appropriate forum is Parliament and not the courts."
47. In Bajaj Hindustan Ltd. v. Sir Shadi Lal
Enterprises Ltd. [(2011) 1 SCC 640] , this Court held
that: (SCC p. 655, para 40)
"40. Economic and fiscal regulatory measures are a
field where Judges should encroach upon very wearily
as Judges are not experts in these matters."
48. This Court in Bhavesh D. Parish v. Union of India
[(2000) 5 SCC 471] , took the view that: (SCC p.
473)
"... in the context of the changed economic scenario,
the expertise of people dealing with the subject
should not be lightly interfered with. The
consequences of such interdiction can have large-
scale ramifications and can put the clock back for a
number of years. The process of rationalisation of the
infirmities in the economy can be put in serious
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jeopardy and, therefore, it is necessary that while
dealing with economic legislations, [this] Court, while
not jettisoning its jurisdiction to curb arbitrary action
or unconstitutional legislation, should interfere only in
those few cases where the view reflected in the
legislation is not possible to be taken at all."
49. In Centre for Public Interest Litigation v. Union of
India [(2000) 8 SCC 606] , this Court held as follows:
(SCC p. 621, para 20)
"20. It is clear from the above observations of this
Court that it will be very difficult for the courts to
visualise the various factors like commercial/technical
aspects of the contract, prevailing market conditions,
both national and international and immediate needs
of the country, etc. which will have to be taken note
of while accepting the bid offer. In such a case, unless
the court is satisfied that the allegations levelled are
unassailable and there could be no doubt as to the
unreasonableness, mala fide, collateral considerations
alleged, it will not be possible for the courts to come
to the conclusion that such a contract can be prima
facie or otherwise held to be vitiated so as to call for
an independent investigation, as prayed for by the
appellants."
53. We are of the view that on facts, as well as in
law, ONGC and the Government of India have taken a
prudent commercial and economic decision in the
public interest. We are not prepared to say that the
decision is mala fide or actuated by any extraneous or
irrelevant considerations or improper motive.
70. In such circumstances, we find no merits in the
writ petition which was filed without appreciating or
understanding the scope of the decision or the
decision-making process concerning economic and
commercial matters which gives liberty to the State
and its instrumentalities to take an appropriate
decision after weighing the advantages and
disadvantages of the same and this Court sitting in
this jurisdiction, as already indicated, is not justified
in interfering with those decisions, especially when
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there is nothing to show that those decisions are
contrary to law or actuated by mala fide or irrelevant
considerations. The writ petition, therefore, lacks
merits. Hence, the same is dismissed.
16.13. By relying on Arun Kumar Agarwal's case,
his submission is that the economic factors
which are considered by the State cannot be
questioned as arbitrary, capricious or illegal, so
long as the same is bonafide, so long as the
decision making process is proper and correct,
the decision itself cannot be questioned. The
State and its instrumentalities would be at
liberty to make such decisions after weighing
the advantages and disadvantages, which he
submits the Court, would not be justified in
interfering with those decisions, when there is
nothing to show that those decisions are
contrary to law or actuated by malafide or
irrelevant consideration. In the present case,
the State has taken into account the practical
problems in implementation of a methodology
for proper supply of food grains. The State
being of the considered opinion that tenders
would have to be called at the District level in
order to maintain the quality and standards as
revised the other earlier methodology, from
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supply at the Taluka level to the District level.
This being made on the basis of the
recommendation of a Committee, taking into
consideration all relevant aspects, this Court
ought not to intercede in the matter.
16.14. He relies upon the decision of the Hon'ble Apex
Court in Peerless General Finance and
Investment Co. Ltd. vs RBI4, more
particularly para nos. 31, 36, 37, 38 and 39
thereof, which have been reproduced hereunder
for easy reference:
31. The function of the Court is to see that lawful
authority is not abused but not to appropriate to itself
the task entrusted to that authority. It is well settled
that a public body invested with statutory powers must
take care not to exceed or abuse its power. It must keep
within the limits of the authority committed to it. It must
act in good faith and it must act reasonably. Courts are
not to interfere with economic policy which is the
function of experts. It is not the function of the courts to
sit in judgment over matters of economic policy and it
must necessarily be left to the expert bodies. In such
matters even experts can seriously and doubtlessly
differ. Courts cannot be expected to decide them without
even the aid of experts.
36. Paragraph 5 of the directions relates to the
minimum rate of return fixed at 10 per cent per annum
for a deposit with a maturity of 10 years. It is a matter
of common knowledge that in the present times even
the public sector corporations and banks and other
financial and non-financial companies pay interest at
much more higher rates ranging from 14 to 18 per cent.
Thus according to the above scheme the respondent
companies and the others doing such business can
4
(1992) 2 SCC 343 | 1992 INSC 32
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easily earn a profit of 4 to 5 per cent on their
investments. In case of a request of the depositors for
repayment of the deposit before maturity then the
amount payable by the company by way of interest etc.,
shall be 2 per cent less than what could have been
ordinarily paid by the company by way of interest if the
deposit had run the full contractual period. However, the
question of repayment before maturity or after how
many years will depend entirely on the terms and
conditions of the contract of such deposit. Paragraph 12
of the directions of 1987 enjoins upon the company to
disclose as liabilities in its books of accounts and balance
sheets the total amount of deposits received together
with interest, bonus, premium or other advantage,
accrued or payable to the depositors. Under clause (a)
to the explanation to clause 3 paragraph (6) "Aggregate
amounts of liabilities" shall mean total amount of
deposits received together with interest, premium,
bonus or other advantage by whatever name called,
accrued on the amount of deposits according to the
terms of contract. Thus the company is required to
deposit or invest the aggregate amounts of its liabilities
having accrued on the amount of deposits according to
the terms of contract. Without going into the figures
shown in the various charts, it is clear that if the
directions contained in paragraphs (6) and (12) of the
directions of 1987 are to be carried out, the companies
are not left to utilise any amount out of the deposits as
working capital to meet the expenses. In our view the
Reserve Bank is right in taking the stand that if these
companies want to do their business, they should invest
their own working capital and find such resources
elsewhere with which the Reserve Bank has no concern.
If we look at the Annual Report and Accounts of Peerless
for the years 1988, 1989 and 1990 it is clear that it had
conducted its business following the impugned directions
of 1987 and still had earned substantial profits in these
years. It is clear that Peerless is a company having been
established as far back as in 1932 and had substantial
funds to invest the entire amount of deposits and had
met the expenses out of its accumulated profits of the
past years. This shows that the business can be run and
profit can be earned even after complying with the
impugned directions of 1987 issued by the Reserve
Bank. It is not the concern of this Court to find out as to
whether actuarial method of accounting or any other
method would be feasible or possible to adopt by the
companies while carrying out the conditions contained in
paragraphs (6) and (12) of the directions of 1987. The
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companies are free to adopt any mode of accounting
permissible under the law but it is certain that they will
have to follow the entire terms and conditions contained
in the impugned directions of 1987 including those
contained in paragraphs (6) and (12). It is not the
function of the Court to amend and lay down some other
directions and the High Court was totally wrong in doing
so. The function of the Court is not to advise in matters
relating to financial and economic policies for which
bodies like Reserve Bank are fully competent. The Court
can only strike down some or entire directions issued by
the Reserve Bank in case the Court is satisfied that the
directions were wholly unreasonable or violative of any
provisions of the Constitution or any statute. It would be
hazardous and risky for the courts to tread an unknown
path and should leave such task to the expert bodies.
This Court has repeatedly said that matters of economic
policy ought to be left to the government. While dealing
with the validity of an order passed on September 30,
1977 fixing a retail price of mustard oil not exceeding Rs
10 per kilogram in exercise of powers conferred by
Section 3 of the Essential Commodities Act, a bench of
Seven Judges of this Court in Prag Ice & Oil Mills v.
Union of India and Nav Bharat Oil Mills v. Union of India
[(1978) 3 SCC 459 : AIR 1978 SC 1296 : 1978 Cri LJ
1281] observed as under: (SCC p. 478, para 24)
"We have listened to long arguments directed at
showing us that producers and sellers of oil in various
parts of the country will suffer so that they would give
up producing or dealing in mustard oil. It was urged that
this would, quite naturally, have its repercussions on
consumers for whom mustard oil will become even more
scarce than ever ultimately. We do not think that it is
the function of this Court or of any court to sit in
judgment over such matters of economic policy as must
necessarily be left to the government of the day to
decide. Many of them, as a measure of price fixation
must necessarily be, are matters of prediction of
ultimate results on which even experts can seriously err
and doubtlessly differ. Courts can certainly not be
expected to decide them without even the aid of
experts."
37. In Shri Sitaram Sugar Company Limited v. Union of
India with U.P. State Sugar Corporation Ltd. v. Union of
India [(1990) 3 SCC 223] this Court observed as under:
(SCC pp. 255-56, para 57)
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"Judicial review is not concerned with matters of
economic policy. The Court does not substitute its
judgment for that of the legislature or its agents as to
matters within the province of either. The Court does
not supplant the 'feel of expert' by its own views. When
the legislature acts within the sphere of its authority and
delegates power to an agent, it may empower the agent
to make findings of fact which are conclusive provided
such findings satisfy the test of reasonableness. In all
such cases, judicial inquiry is confined to the question
whether the findings of fact are reasonably based on
evidence and whether such findings are consistent with
the laws of the land."
38. In R.K. Garg v. Union of India [(1981) 4 SCC 675,
690 : 1982 SCC (Tax) 30] a Constitution Bench of this
Court observed as under: (SCC pp. 690-91, para 8)
"Another rule of equal importance is that laws relating to
economic activities should be viewed with greater
latitude than laws touching civil rights such as freedom
of speech, religion etc. It has been said by no less a
person than Holmes, J. that the legislature should be
allowed some play in the joints, because it has to deal
with complex problems which do not admit of solution
through any doctrinaire or strait-jacket formula and this
is particularly true in case of legislation dealing with
economic matters, where, having regard to the nature of
the problems required to be dealt with, greater play in
the joints has to be allowed to the legislature. The Court
should feel more inclined to give judicial deference to
legislative judgment in the field of economic regulation
than in other areas where fundamental human rights are
involved. Nowhere has this admonition been more
felicitously expressed than in Morey v. Doud [354 US
457 : 1 L Ed 2d 1485 (1957)] where Frankfurter, J. said
in his inimitable style:
'In the utilities, tax and economic regulation cases, there
are good reasons for judicial self-restraint if not judicial
deference to legislative judgment. The legislature after
all has the affirmative responsibility. The courts have
only the power to destroy, not to reconstruct. When
these are added to the complexity of economic
regulation, the uncertainty, the liability to error, the
bewildering conflict of the experts, and the number of
times the judges have been overruled by events -- self-
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limitation can be seen to be the path to judicial wisdom
and institutional prestige and stability'."
39. It may also be noted that it is not possible for the
Court to determine as to how percentage of deposit of
first instalment should be allowed towards expenses
which may consist of commission to agents, office
expenses etc. Even amongst the three companies -- viz.
Peerless, Timex and Favourite, there is a difference in
this regard. According to the Peerless 25 per cent, Timex
50 per cent and Favourite 60 per cent of the deposits of
the first instalment would be necessary for generating
the working capital for meeting the genuine expenses.
Thus it would depend from company to company based
on various factors such as paid-up capital, percentage of
commission paid to the agents, rate of interest paid to
the depositors, period of maturity for repayment, office
expenses and various other factors necessary to mop up
working capital out of the depositors' money. We cannot
ignore the possibility of persons having no stake of their
own starting such business and after collecting huge
deposits from the investors belonging to the poor and
weaker sections of the society residing in rural areas,
and to stop such business after a few years and thus
devouring the hard earned money of the small investors.
It cannot be lost sight of that in such kind of business,
the agents always take interest in finding new depositors
because they get a high rate of commission out of the
first instalment, but they do not have same enthusiasm
in respect of deposit of subsequent instalments. In these
circumstances, if the Reserve Bank has issued the
directions of 1987 to safeguard the larger interest of the
public and small depositors it cannot be said that the
directions are so unreasonable as to be declared
constitutionally invalid.
16.15. By relying upon the decision in Peerless
General Finance's case, he submits that
judicial review is not concerned with matters of
economic policy and the Court ought not to
substitute its judgment for that of the
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legislature or its agents. If the decision is
reasonably based on evidence, then this Court
ought not to intercede. The function of the
Court is therefore limited to see that lawful
authority is not abused. The function is not to
appropriate to itself the task entrusted with
such authority, so long as there is no abuse of
the authority and the authority is within the
limits, as also the decision and actions taken
are in good faith, the Court ought not to
interfere with the policy of the State. Insofar
as the present case is concerned, he submits
that the decision taken by the State to call for
tenders at the District level, increase the period
from one year to two years, permit competition
across the country by enabling tenderers to bid
for the tender, even if they are located outside
the State of Karnataka and at the same time,
setting up a monitoring mechanism is with an
intention to better service the students who are
to be provided food at the respective schools
and law schools. The consideration which has
been taken by the State is in the interest of
such schools and students. There is absolutely
no malafide which has been established by the
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petitioners, let alone established and as such,
he submits that the Writ Petition is required to
be dismissed.
16.16. He relies upon the decision of the Hon'ble Apex
Court in Federation of Railway Officers
Association vs Union of India5, more
particularly para nos. 7, 8, 9, 10, 11 and 12
thereof, which have been reproduced hereunder
for easy reference:
7. The learned Attorney-General also placed reliance on
the decision of this Court in Rustom Cavasjee Cooper v.
Union of India [(1970) 1 SCC 248 : (1970) 3 SCR 530]
wherein whether a right arising under Article 19(1)(g) is
not protected against operation of any law imposed in
the interest of the general public to be reasonable
restrictions on the exercise of the right conferred by the
said sub-clause was considered. In this context, an
argument was raised that the enactment of bank
nationalisation was not in the larger interest of the
nation but to subserve political ends, that is, not with
the object to ensure better banking facilities, or to make
them available to a wider public, but only to take control
over the deposits of the public with the major banks,
and to use them as a political lever against industrialists
who had built up industries by decades of industrial
planning and careful management and the Court's
attention was invited to a mass of evidence from the
speeches of the Deputy Prime Minister and of the
Governor and the Deputy Governor of Reserve Bank and
also extracts from the Reserve Bank bulletins issued
from time to time and other statistical information
collected from official sources in support of the thesis of
the petitioner that the performance of the named banks
exceed the targets laid down by Reserve Bank in its
directives; that the named banks had effectively
complied with the requirements of the law and they had
served the diverse interests including the small-scale
5
(2003) 4 SCC 289 | 2003 INSC 178
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sector and so on. On the other hand, the learned
Attorney-General in that case contended that the
commercial banks followed a conservative policy
because they had to look primarily to the interests of the
shareholders and on that account could not adopt bold
policies or schemes for financing the needy and worthy
causes and that if the resources of the banking industry
are properly utilised for the weaker sections of the
people economic regeneration of the nation may be
speedily achieved; that 28% of the towns in India were
not served by commercial banks; that there had been
unequal development of facilities in different parts of the
country and deserving sections were deprived of the
benefit of an important national resource resulting in
economic disparities.
8. This Court held that court is not the forum in which
these conflicting claims may be debated; that whether
there is a genuine need for banking facility in the rural
areas, whether certain classes of the community are
deprived of the benefit of the resources of the banking
industry, whether administration by the Government of
the commercial banking sector will not prove beneficial
to the community and will lead to rigidity in the
administration, whether the government administration
will eschew the profit motive and even if it be eschewed,
there will accrue substantial benefits to the public,
whether an undue accent on banking as a means of
social regeneration, especially in the backward areas, is
a doctrinaire approach to a rational order of priorities for
attaining the national objectives enshrined in our
Constitution and whether the policy followed by the
Government in office or the policy propounded by its
opponents may reasonably attain the national objectives
are matters which have little relevance in determining
the legality of the measure and it is again not for this
Court to consider the relative merits of the different
political theories or economic policies.
9. The learned Attorney-General also relied upon the
decision in BALCO Employees' Union (Regd.) v. Union of
India [(2002) 2 SCC 333] wherein it is observed that:
(SCC p. 362, para 46)
"46. It is evident from the above that it is neither within
the domain of the courts nor the scope of the judicial
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review to embark upon an enquiry as to whether a
particular public policy is wise or whether better public
policy can be evolved. Nor are our courts inclined to
strike down a policy at the behest of a petitioner merely
because it has been urged that a different policy would
have been fairer or wiser or more scientific or more
logical."
10. The learned Attorney-General also pointed out
similar observations in Narmada Bachao Andolan v.
Union of India [(2000) 10 SCC 664] .
11. Dr Pal insisted that the provisions of Section 3 of the
Act provide the norms upon which a railway zone can be
formed and that is administrative efficiency. Shri
Prashant Bhushan and Dr Pal have, as set forth earlier,
contended that on the basis of the material placed by
them the formation of zones now under challenge will
only result in deterioration of the efficiency of the
administrative system and not improve, while the stand
of the learned Attorney-General is that the Government
has taken note of the workload index, geographical
spread, strength of manpower, traffic streams and
patterns for determining optimum size of a zone or a
division and, in this context, territorial, ethnic, linguistic
or such other considerations are not the basis for
reorganisation of the railway zones.
12. In examining a question of this nature where a
policy is evolved by the Government judicial review
thereof is limited. When policy according to which or the
purpose for which discretion is to be exercised is clearly
expressed in the statute, it cannot be said to be an
unrestricted discretion. On matters affecting policy and
requiring technical expertise the court would leave the
matter for decision of those who are qualified to address
the issues. Unless the policy or action is inconsistent
with the Constitution and the laws or arbitrary or
irrational or abuse of power, the court will not interfere
with such matters.
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16.17. By relying on Federation of Railway Officers
Association's case, he submits that the policy
of the Government is not amenable for judicial
review. Whenever there are matters affecting
policy and/or required technical expertise, the
Court ought to leave the matter of the decision
making to those who are qualified, unless the
policy or action is inconsistent with the
Constitution and the laws, for arbitrary or
irrational or would amount to abuse of power.
In the present case, he submits that none of
these aspects have either been pleaded or
established by the petitioners. The decision
which has been taken by the State is on the
basis of recommendation of committee
constituted in this regard of the concerned
experts. That decision cannot be negated on
the basis of vague assertions or allegations
made by the petitioners.
16.18. He relies upon the decision of the Hon'ble Apex
Court in Dhampur Sugars (Kashipur) vs
State of Uttranchal6, more particularly para
nos. 63-79, 81, 82 and 83 thereof, which have
been reproduced hereunder for easy reference:
6
(2007) 8 SCC 418 | 2007 INSC 963
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63. In our judgment, it is well settled that public
authorities must have liberty and freedom in framing
policies. No doubt, the discretion is not absolute,
unqualified, unfettered or uncanalised and judiciary has
control over all executive actions. At the same time,
however, it is well established that courts are ill-
equipped to deal with these matters. In complex social,
economic and commercial matters, decisions have to be
taken by governmental authorities keeping in view
several factors, and it is not possible for courts to
consider competing claims and conflicting interests and
to conclude which way the balance tilts. There are no
objective, justiciable or manageable standards to judge
the issues nor such questions can be decided on a priori
considerations.
64. As observed by Holmes, J. in Metropolis Theater Co.
v. State of Chicago [57 L Ed 730 : 228 US 61 (1912)] in
such matters, the courts must grant certain measure of
"play in the joints" to the executive.
65. In the leading case of Bennett Coleman & Co. v.
Union of India [(1972) 2 SCC 788 : AIR 1973 SC 106]
constitutional validity of the import policy for the
newsprint adopted by the Government was challenged in
this Court. The Court refused to adjudicate the policy
matters unless it was shown to be arbitrary, capricious
or mala fide. Speaking for the Court, Mathew, J.
observed: (SCC p. 834, para 125)
"125. ... The argument of the petitioners that
Government should have accorded greater priority to
the import of newsprint to supply the need of all
newspaper proprietor to the maximum extent is a
matter relating to the policy of import and this Court
cannot be propelled into the unchartered ocean of
governmental policy."
(emphasis supplied)
66. Similarly, in State of Maharashtra v. Lok Shikshan
Sanstha [(1971) 2 SCC 410 : AIR 1973 SC 588] the
applications made by the petitioners for opening new
schools were rejected by the authorities. The said action
was challenged by the petitioners by filing writ petitions
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in the High Court on various grounds. The High Court
allowed the petitions and directed the authorities to
grant permission to the petitioners to start schools.
67. Reversing the judgment, this Court observed that
the High Court has thoroughly misunderstood the nature
of the jurisdiction that was exercised by it.
"9. ... So long as there is no violation of any fundamental
rights and if the principles of natural justice are not
offended, it was not for the High Court to lay down the
policy that should be adopted by the educational
authorities in the matter of granting permission for
starting schools. The question of policy is essentially for
the State and such policy will depend upon an overall
assessment and summary of the requirements of
residents of a particular locality and other categories of
persons for whom it is essential to provide facilities for
education. If the overall assessment is arrived at after a
proper classification on a reasonable basis, it is not for
the courts to interfere with the policy leading up to such
assessment." [Ibid., SCC p. 415, para 9]
(emphasis supplied)
68. In R.K. Garg v. Union of India [(1981) 4 SCC 675 :
1982 SCC (Tax) 30 : AIR 1981 SC 2138 : (1982) 1 SCR
947] constitutional validity of the Special Bearer Bonds
(Immunities and Exemptions) Act, 1981 was challenged
being arbitrary and having no reasonable nexus with the
object sought to be achieved. Holding the Act intra vires
and constitutional and describing it as a policy
legislation, the majority stated: (SCC p. 691, para 8)
"8. ... The Court must always remember that 'legislation
is directed to practical problems, that the economic
mechanism is highly sensitive and complex, that many
problems are singular and contingent, that laws are not
abstract propositions and do not relate to abstract units
and are not to be measured by abstract symmetry', 'that
exact wisdom and nice adaption of remedy are not
always possible' and that 'judgment is largely a
prophecy based on meagre and uninterrupted
experience'. Every legislation particularly in economic
matters is essentially empiric and it is based on
experimentation or what one may call trial and error
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method and therefore it cannot provide for all possible
situations or anticipate all possible abuses. There may
be crudities and inequities in complicated experimental
economic legislation but on that account alone it cannot
be struck down as invalid."
(emphasis supplied)
69. In Liberty Oil Mills v. Union of India [(1984) 3 SCC
465] dealing with the import and export policy followed
by the Government, this Court observed: (SCC p. 478,
para 6)
"6. ... The import policy of any country, particularly a
developing country, has necessarily to be tuned to its
general economic policy founded upon its constitutional
goals, the requirements of its internal and international
trade, its agricultural and industrial development plans,
its monetary and financial strategies and last but not the
least the international political and diplomatic overtones
depending on 'friendship, neutrality or hostility with
other countries'. There must also be a considerable
number of other factors which go into the making of an
import policy. Expertise in public and political, national
and international economy is necessary before one may
engage in the making or in the criticism of an import
policy. Obviously courts do not possess the expertise
and are consequently incompetent to pass judgment on
the appropriateness or the adequacy of a particular
import policy."
(emphasis supplied)
70. Again, in State of M.P. v. Nandlal Jaiswal [(1986) 4
SCC 566 : AIR 1987 SC 251 : JT 1986 SC 701] a licence
to run liquor shop granted in favour of A was challenged
as arbitrary and unreasonable. This Court held that
there was no fundamental right in a citizen to carry on
trade or business in liquor. However, the State was
bound to act in accordance with law and not according
to its sweet will or in an arbitrary manner and it could
not escape the rigour of Article 14. Therefore, the
contention that Article 14 would have no application in a
case where the licence to manufacture or sell liquor was
to be granted by the State Government was negatived
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by this Court. The Court, however, observed: (SCC p.
605, para 34)
"34. But, while considering the applicability of Article 14
in such a case, we must bear in mind that, having
regard to the nature of the trade or business, the court
would be slow to interfere with the policy laid down by
the State Government for grant of licences for
manufacture and sale of liquor. The court would, in view
of the inherently pernicious nature of the commodity
allow a large measure of latitude to the State
Government in determining its policy of regulating,
manufacture and trade in liquor. Moreover, the grant of
licences for manufacture and sale of liquor would
essentially be a matter of economic policy where the
court would hesitate to intervene and strike down what
the State Government has done, unless it appears to be
plainly arbitrary, irrational or mala fide."
(emphasis supplied)
71. Referring to the decision of the Supreme Court of
the United States in Metropolis Theater Co. [57 L Ed 730
: 228 US 61 (1912)] the Court observed: (Nandlal
Jaiswal case [(1986) 4 SCC 566 : AIR 1987 SC 251 : JT
1986 SC 701] , SCC pp. 605-06, para 34)
"34. ... We must not forget that in complex economic
matters every decision is necessarily empiric and it is
based on experimentation or what one may call 'trial
and error method' and, therefore, its validity cannot be
tested on any rigid 'a priori' considerations or on the
application of any straitjacket formula. The court must
while adjudging the constitutional validity of an
executive decision relating to economic matters grant a
certain measure of freedom or 'play in the joints' to the
executive. ...
'... Mere errors of Government are not subject to our
judicial review. It is only its palpably arbitrary exercises
which can be declared void....'
... The court cannot strike down a policy decision taken
by the State Government merely because it feels that
another policy decision would have been fairer or wiser
or more scientific or logical. The court can interfere only
if the policy decision is patently arbitrary, discriminatory
or mala fide."
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(emphasis supplied)
72. In Shri Sitaram Sugar Co. Ltd. v. Union of India
[(1990) 3 SCC 223 : AIR 1990 SC 1277 : JT (1990) 1 SC
462] prices of levy sugar were fixed by the Government
by grouping sugar factories on the basis of geographical
location. The said action was challenged by certain sugar
companies as arbitrary, unreasonable and ultra vires.
Dismissing the petitions and holding it to be a policy
decision of the Central Government, this Court
observed: (SCC p. 256, para 59)
"59. ... What is best for the sugar industry and in what
manner the policy should be formulated and
implemented, bearing in mind the fundamental object of
the statute viz. supply and equitable distribution of
essential commodity at fair prices in the best interest of
the general public, is a matter for decision exclusively
within the province of the Central Government. Such
matters do not ordinarily attract the power of judicial
review."
(emphasis supplied)
73. In Ugar Sugar Works Ltd. v. Delhi Admn. [(2001) 3
SCC 635 : AIR 2001 SC 1447 : JT (2001) 4 SC 31]
dealing with the executive policy regulating trade in
liquor in Delhi, this Court stated that: (SCC p. 643, para
8)
It was well settled that the courts, in exercise of power
of judicial review do not ordinarily interfere with the
policy decisions unless such policy could be faulted on
the grounds of mala fide, unreasonableness,
arbitrariness, unfairness, etc. But the mere fact that it
would hurt business interests of a party would not justify
invalidating the policy. In tax and economic regulation
cases, there are good reasons for judicial restraint, if not
judicial deference, to judgment of the executive. The
courts are not expected to express their opinion as to
whether at a particular point of time or in a particular
situation any such policy should have been adopted or
not. It is best left to the discretion of the State.
(emphasis supplied)
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(See also SIEL Ltd. v. Union of India [(1998) 7 SCC 26 :
AIR 1998 SC 3076] .)
74. In BALCO Employees' Union (Regd.) v. Union of
India [(2002) 2 SCC 333 : AIR 2002 SC 350 : JT (2001)
10 SC 466] a decision of the Government of India of
transferring its majority shares in favour of M/s Bharat
Aluminium Company Ltd. was challenged by the
employees as illegal, unlawful and ultra vires Articles 14
and 16 of the Constitution. Negativing the contention
and upholding the decision of the Government, after
referring to several cases on the point, this Court stated:
(SCC p. 362, para 47)
"47. Process of disinvestment is a policy decision
involving complex economic factors. The courts have
consistently refrained from interfering with economic
decisions as it has been recognised that economic
expediencies lack adjudicative disposition and unless the
economic decision, based on economic expediencies, is
demonstrated to be so violative of constitutional or legal
limits on power or so abhorrent to reason, that the
courts would decline to interfere. In matters relating to
economic issues, the Government has, while taking a
decision, right to 'trial and error' as long as both trial
and error are bona fide and within limits of authority."
(emphasis supplied)
75. The State and its instrumentality has also power to
change policy. The executive power is not limited to
frame a particular policy. It has untrammelled power to
change, rechange, adjust and readjust the policy taking
into account the relevant and germane considerations. It
is entirely in the discretion of the Government how a
policy should be shaped. It should not, however, be
arbitrary, capricious or unreasonable.
76. In Col. A.S. Sangwan v. Union of India [1980 Supp
SCC 559 : 1981 SCC (L&S) 378 : AIR 1981 SC 1545]
this Court observed that: (SCC p. 561, para 4)
"4. ... A policy once formulated is not good for ever; it is
perfectly within the competence of the Union of India to
change it, rechange it, adjust it and readjust it according
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to the compulsions of circumstances and the imperatives
of national considerations."
77. In Union of India v. S.L. Dutta [(1991) 1 SCC 505 :
1991 SCC (L&S) 406 : (1991) 15 ATC 737 : AIR 1991
SC 363 : JT (1990) 4 SC 741] the old policy of
promotion was changed and new policy was adopted.
The High Court interfered with the decision taken by the
authorities observing that "the new promotion policy
was not framed after an in-depth study" and directed
the Government to consider the case of the petitioner on
the basis of the old policy.
78. Setting aside the said order and upholding the
policy, this Court observed: (SCC p. 513, para 18)
"18. ... These are matters regarding which judges and
the lawyers of courts can hardly be expected to have
much knowledge by reasons of their training and
experience."
79. In our opinion, Chagla, C.J. was right in making the
following observations in State of Bombay v. Laxmidas
Ranchhoddas [AIR 1952 Bom 468] : (AIR p. 475, para
12)
"12. ... We are not oblivious of the fact that in order that
the modern State should function the Government must
be armed with very large powers. But the High Court
does not interfere with the exercise of those powers. The
High Court only interferes when it finds that those
powers are not exercised in accordance with the
mandate of the legislature. Therefore, far from
interfering with the good governance of the State, the
Court helps the good governance by constantly
reminding Government and its officers that they should
act within the four corners of the statute and not
contravene any of the conditions laid down as a
limitation upon their undoubtedly wide powers.
Therefore, even from a practical point of view, even
from the point of view of the good governance of the
State, we think that the High Court should not be
reluctant to issue its prerogative writ whenever it finds
that the sovereign legislature has not been obeyed and
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powers have been assumed which the legislature never
conferred upon the executive."
(emphasis supplied)
81. Now, it is well settled and needs no authority for
holding that every power must be exercised bona fide
and in good faith. Before more than hundred years, Lord
Lindley said in General Assembly of Free Church of
Scotland v. Overtoun [1904 AC 515 : 20 TLR 370 :
(1904-1907) All ER Rep Ext 1448 (HL)] :
"I take it to be clear that there is a condition implied in
this as well as in other instruments which create power,
namely, that the powers shall be used bona fide for the
purpose for which they are conferred."
In other words, every action of a public authority must
be based on utmost good faith, genuine satisfaction and
ought to be supported by reason and rationale. It is,
therefore, not only the power but the duty of the court
to ensure that all authorities exercise their powers
properly, lawfully and in good faith. If powers are
exercised with oblique motive, bad faith or for
extraneous or irrelevant considerations, there is no
exercise of power known to law and the action cannot be
termed as action in accordance with law.
82. But as already discussed earlier, a court of law is
not expected to propel into "the unchartered ocean" of
government policies. Once it is held that the
Government has power to frame and reframe, change
and rechange, adjust and readjust policy, the said action
cannot be declared illegal, arbitrary or ultra vires the
provisions of the Constitution only on the ground that
the earlier policy had been given up, changed or not
adhered to. It also cannot be attacked on the plea that
the earlier policy was better and suited to the prevailing
situation.
83. Allegations of mala fide are serious in nature and
they essentially raise a question of fact. It is, therefore,
necessary for the person making such allegations to
supply full particulars in the petition. If sufficient
averments and requisite materials are not on record, the
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court would not make "fishing" or roving inquiry. Mere
assertion, vague averment or bald statement is not
enough to hold the action to be mala fide. It must be
demonstrated by facts. Moreover, the burden of proving
mala fide is on the person levelling such allegations and
the burden is "very heavy" (vide E.P. Royappa v. State
of T.N. [(1974) 4 SCC 3 : 1974 SCC (L&S) 165 : (1974)
2 SCR 348] ). The charge of mala fide is more easily
made than made out. As stated by Krishna Iyer, J. in
Gulam Mustafa v. State of Maharashtra [(1976) 1 SCC
800 : AIR 1977 SC 448] it is the last refuge of a losing
litigant (see also Ajit Kumar Nag v. GM(PJ), Indian Oil
Corpn. [(2005) 7 SCC 764 : 2005 SCC (L&S) 1020] ). In
the case on hand, except alleging that the policy was
altered by the Government, to extend the benefit to
Respondent 4, no material whatsoever has been placed
on record by the appellant. We are, therefore, unable to
uphold the contention of the learned counsel that the
impugned action is mala fide or malicious.
16.19. By relying on Dhampur Sugar's case, he
submits that the Government has power to
frame and reframe, change and re-change,
adjust and re-adjust policy. Such change or re-
change cannot be declared illegal or arbitrary or
ultravires the Constitution only on the ground
that the earlier policy has been given up. The
State is required to have play in the joints, so
as to make such changes, modifications or
improvements from time to time as may be
necessary to better achieve the objectives of
the Government. Merely because the State in
the present matter had earlier been issuing
tender notifications, taluka wise, it is not
required for the State to continue issuance of
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tenders taluka wise in future also. It is up to
the State to consider any modification and as
such, the State has modified the policy now
from taluka to district wise tenders. There
being no malafides established, the burden of
proving malafides being on the petitioners, such
burden being a very heavy burden, this Court
ought not to intercede in the present matter.
16.20. He relies upon the decision of the Hon'ble Apex
Court in PTR Exports vs Union of India7,
more particularly para no. 3 thereof, which has
been reproduced hereunder for easy reference:
3. In the light of the above policy question emerges
whether the Government is bound by the previous policy
or whether it can revise its policy in view of the changed
potential foreign markets and the need for earning
foreign exchange? It is true that in a given set of facts,
the Government may in the appropriate case be bound
by the doctrine of promissory estoppel evolved in Union
of India v. Indo-Afghan Agencies Ltd. [(1968) 2 SCR 366
: AIR 1968 SC 718] But the question revolves upon the
validity of the withdrawal of the previous policy and
introduction of the new policy. The doctrine of legitimate
expectations again requires to be angulated thus:
whether it was revised by a policy in the public interest
or the decision is based upon any abuse of the power?
The power to lay policy by executive decision or by
legislation includes power to withdraw the same unless
in the former case, it is by mala fide exercise of power
or the decision or action taken is in abuse of power. The
doctrine of legitimate expectation plays no role when the
appropriate authority is empowered to take a decision
by an executive policy or under law. The court leaves
the authority to decide its full range of choice within the
executive or legislative power. In matters of economic
7
(1996) 5 SCC 268 | 1996 INSC 656
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policy, it is a settled law that the court gives a large
leeway to the executive and the legislature. Granting
licences for import or export is by executive or
legislative policy. Government would take diverse factors
for formulating the policy for import or export of the
goods granting relatively greater priorities to various
items in the overall larger interest of the economy of the
country. It is, therefore, by exercise of the power given
to the executive or as the case may be, the legislature is
at liberty to evolve such policies.
16.21. By relying on PTR Exports' case, he once
again submits that the Government is not
bound by the previous policy. It can always
revise its policy, so long as the policy is in
public interest and such change in policy is not
an abuse of power. In the present case, the
revision in the policy from taluka level tenders
to district level tenders being in the interest of
general public, more particularly the students of
the schools, the petitioners cannot claim
legitimate expectation on the ground that till
now the tenders have been issued taluka wise
and as such, they will have to be continued to
be issued taluka wise.
16.22. He relies upon the decision of the Hon'ble Apex
Court in BALCO Employees Union vs Union
of India8, more particularly para no. 93
8
(2002) 2 SCC 333 | 2001 INSC 601
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thereof, which has been reproduced hereunder
for easy reference:
93. Wisdom and advisability of economic policies are
ordinarily not amenable to judicial review unless it can
be demonstrated that the policy is contrary to any
statutory provision or the Constitution. In other words, it
is not for the courts to consider relative merits of
different economic policies and consider whether a wiser
or better one can be evolved. For testing the correctness
of a policy, the appropriate forum is Parliament and not
the courts. Here the policy was tested and the motion
defeated in the Lok Sabha on 1-3-2001.
16.23. By relying on BALCO Employees Union case,
he submits that economic policies are not
amenable for judicial review unless such policy
is demonstrably shown to be contrary to any
statutory provision of the Constitution. In the
present case, nothing of that kind has been
demonstrated. The claim of the petitioners is
completely misconceived.
16.24. He relies upon the decision of this Hon'ble Court
in Tungamma vs State of Karnataka9, more
particularly para no. 2 thereof, which has been
reproduced hereunder for easy reference:
2. Petitioners have contended in the writ petition that,
at an election held on 24-7-1997 petitioners and 2
others were elected for the Committee, while 3 others
were nominated to the Committee of management of
Davangere, APMC. The term of office was for 5 years.
The third respondent herein was elected as the President
of the Committee. While the Committee was functioning,
9
ILR 2001 KAR 2785
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respondent 1 issued a notification dated 28-6-1999 vide
Annexure-B proposing to bifurcate the APMC, Davangere
and inviting objections. Petitioner/Committee had
passed a resolution opposing the bifurcation. Though
respondent had notified the proposal hut did not take
any further action on this proposal, until a vote of no
confidence was moved against the 3rd respondent-
President on 15-11-2000 charging the latter of showing
undue favour in allotting certain land to Bapuji Bank
under the control of the Hon'ble Minister Mallikar-jun,
similarly allotting two acres of land to the cold storage to
one I.P. Vishwaradhya, Chairman of sister concern of
Bapuji Education Association besides selling shops to the
tenants though the shops were fetching huge rents of
Rs. 50,000/- p.m. and without prior sanction awarding
contract to the tune of two and half crores. It is only to
frustrate this no confidence motion, the 3rd respondent
influencing the Minister got the final notification
Annexures-E and El under Section 145 published. The
notifications Annexures-E and El is liable to be quashed
on the grounds that the notifications are issued without
applying its mind to the objections filed and providing
opportunity to personally hear the petitioners and also
on the ground of being issued with a mala fide intention
to frustrate the no confidence motion.
16.25. He relies upon the decision of the Hon'ble Apex
Court in Uflex Ltd. vs State of T.N.10, more
particularly para nos. 1-7, 52 and 53 thereof,
which have been reproduced hereunder for
easy reference:
1. The enlarged role of the Government in economic
activity and its corresponding ability to give economic
"largesse" was the bedrock of creating what is
commonly called the "tender jurisdiction". The objective
was to have greater transparency and the consequent
right of an aggrieved party to invoke the jurisdiction of
the High Court under Article 226 of the Constitution of
India (hereinafter referred to as "the Constitution"),
beyond the issue of strict enforcement of contractual
rights under the civil jurisdiction. However, the ground
reality today is that almost no tender remains
10
(2022) 1 SCC 165 | 2021 INSC 492
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unchallenged. Unsuccessful parties or parties not even
participating in the tender seek to invoke the jurisdiction
of the High Court under Article 226 of the Constitution.
The public interest litigation ("PIL") jurisdiction is also
invoked towards the same objective, an aspect normally
deterred by the Court because this causes proxy
litigation in purely contractual matters.
2. The judicial review of such contractual matters has its
own limitations. It is in this context of judicial review of
administrative actions that this Court has opined that it
is intended to prevent arbitrariness, irrationality,
unreasonableness, bias and mala fides. The purpose is
to check whether the choice of decision is made lawfully
and not to check whether the choice of decision is
sound. In evaluating tenders and awarding contracts,
the parties are to be governed by principles of
commercial prudence. To that extent, principles of
equity and natural justice have to stay at a distance.
[Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517]
3. We cannot lose sight of the fact that a tenderer or
contractor with a grievance can always seek damages in
a civil court and thus, "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". [Jagdish
Mandal v. State of Orissa, (2007) 14 SCC 517]
4. In a sense the Wednesbury principle is imported to
the concept i.e. the decision is so arbitrary and irrational
that it can never be that any responsible authority acting
reasonably and in accordance with law would have
reached such a decision. One other aspect which would
always be kept in mind is that the public interest is not
affected. In the conspectus of the aforesaid principles, it
was observed in Michigan Rubber (India) Ltd. v. State of
Karnataka [Michigan Rubber (India) Ltd. v. State of
Karnataka, (2012) 8 SCC 216] as under : (SCC p. 229,
para 23)
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"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 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."
5. One other aspect examined by this Court is whether
the terms and conditions of the tender have been tailor-
made to suit a person/entity. In fact, this is what is
sought to be contended in the facts of the present case
by the respondents who were the original petitioners
before the Court. In order to award a contract to a
particular party, a reverse engineering process is
evolved to achieve that objective by making the tender
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conditions such that only one party may fit the bill. Such
an endeavour has been categorised as "Decision
Oriented Systematic Analysis" (for short "DOSA").
[Misrilall Mines (P) Ltd. v. MMTC Ltd., 2013 SCC OnLine
Del 563]
6. The burgeoning litigation in this field and the same
being carried to this Court in most matters was the
cause we set forth an epilogue in Caretel Infotech Ltd. v.
Hindustan Petroleum Corpn. Ltd. [Caretel Infotech Ltd.
v. Hindustan Petroleum Corpn. Ltd., (2019) 14 SCC 81]
Even if it amounts to repetition, we believe that it needs
to be emphasised in view of the controversy arising in
the present case to appreciate the contours within which
the factual matrix of the present case has to be analysed
and tested : (SCC pp. 92-95, paras 37-43)
"37. We consider it appropriate to make certain
observations in the context of the nature of dispute
which is before us. Normally parties would be governed
by their contracts and the tender terms, and really no
writ would be maintainable under Article 226 of the
Constitution of India. In view of Government and public
sector enterprises venturing into economic activities,
this Court found it appropriate to build in certain checks
and balances of fairness in procedure. It is this approach
which has given rise to scrutiny of tenders in writ
proceedings under Article 226 of the Constitution of
India. It, however, appears that the window has been
opened too wide as almost every small or big tender is
now sought to be challenged in writ proceedings almost
as a matter of routine. This in turn, affects the efficacy
of commercial activities of the public sectors, which may
be in competition with the private sector. This could
hardly have been the objective in mind. An unnecessary,
close scrutiny of minute details, contrary to the view of
the tendering authority, makes awarding of contracts by
Government and Public Sectors a cumbersome exercise,
with long-drawn out litigation at the threshold. The
private sector is competing often in the same field.
Promptness and efficiency levels in private contracts,
thus, often tend to make the tenders of the public sector
a non-competitive exercise. This works to a great
disadvantage to the Government and the public sector.
38. 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 has
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expounded further on this aspect, while observing that
the decision-making process in accepting or rejecting
the bid should not be interfered with. Interference is
permissible only if the decision-making process is
arbitrary or irrational to an extent that no responsible
authority, acting reasonably and in accordance with law,
could have reached such a decision. It has been
cautioned that constitutional courts are expected to
exercise restraint in interfering with the administrative
decision and ought not to substitute their view for that
of the administrative authority. Mere disagreement with
the decision-making process would not suffice.
39. Another aspect emphasised is that the author of the
document is the best person to understand and
appreciate its requirements. In the facts of the present
case, the view, on interpreting the tender documents, of
Respondent 1 must prevail. Respondent 1 itself,
appreciative of the wording of Clause 20 and the format,
has taken a considered view. Respondent 3 cannot
compel its own interpretation of the contract to be thrust
on Respondent 1, or ask the Court to compel
Respondent 1 to accept that interpretation. In fact, the
Court went on to observe in the aforesaid judgment that
it is possible that the author of the tender may give an
interpretation that is not acceptable to the constitutional
court, but that itself would not be a reason for
interfering with the interpretation given. We reproduce
the observations in this behalf as under : (Afcons
Infrastructure case [Afcons Infrastructure Ltd. v. Nagpur
Metro Rail Corpn. Ltd., (2016) 16 SCC 818] , SCC p.
825, para 15)
'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 documents, unless there
are mala fides 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.'
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40. We may also refer to the judgment of this Court in
Nabha Power Ltd. v. Punjab State Power Corpn. Ltd.
[Nabha Power Ltd. v. Punjab State Power Corpn. Ltd.,
(2018) 11 SCC 508 : (2018) 5 SCC (Civ) 1] authored by
one of us (Sanjay Kishan Kaul, J.). The legal principles
for interpretation of commercial contracts have been
discussed. In the said judgment, a reference was made
to the observations of the Privy Council in Attorney
General of Belize v. Belize Telecom Ltd. [Attorney
General of Belize v. Belize Telecom Ltd., 2009 Bus LR
1316 : (2009) 1 WLR 1988 (PC)] as under : (Nabha
Power case [Nabha Power Ltd. v. Punjab State Power
Corpn. Ltd., (2018) 11 SCC 508 : (2018) 5 SCC (Civ) 1]
, SCC pp. 534-36, para 45)
'45. ... "16. Before discussing in greater detail the
reasoning of the Court of Appeal, the Board will make
some general observations about the process of
implication. The court has no power to improve upon the
instrument which it is called upon to construe, whether
it be a contract, a statute or articles of association. It
cannot introduce terms to make it fairer or more
reasonable. It is concerned only to discover what the
instrument means. However, that meaning is not
necessarily or always what the authors or parties to the
document would have intended. ...
***
19. ... In Trollope & Colls Ltd. v. North West Metropolitan
Regl. Hospital Board [Trollope & Colls Ltd. v. North West
Metropolitan Regl. Hospital Board, (1973) 1 WLR 601
(HL)] Lord Pearson, with whom Lord Guest and Lord
Diplock agreed, said : (WLR p. 609)
'... the court does not make a contract for the parties.
The court will not even improve the contract which the
parties have made for themselves, however desirable
the improvement might be. The court's function is to
interpret and apply the contract which the parties have
made for themselves. If the express terms are perfectly
clear and free from ambiguity, there is no choice to be
made between different possible meanings : the clear
terms must be applied even if the court thinks some
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other terms would have been more suitable. An
unexpressed term can be implied if and only if the court
finds that the parties must have intended that term to
form part of their contract : it is not enough for the
court to find that such a term would have been adopted
by the parties as reasonable men if it had been
suggested to them : it must have been a term that went
without saying, a term necessary to give business
efficacy to the contract, a term which, though tacit,
formed part of the contract which the parties made for
themselves.' " (Attorney General of Belize case
[Attorney General of Belize v. Belize Telecom Ltd., 2009
Bus LR 1316 : (2009) 1 WLR 1988 (PC)] , WLR pp.
1993-94, paras 16 & 19)'
(emphasis in original)
41. Nabha Power Ltd. [Nabha Power Ltd. v. Punjab State
Power Corpn. Ltd., (2018) 11 SCC 508 : (2018) 5 SCC
(Civ) 1] also took note of the earlier judgment of this
Court in Satya Jain v. Anis Ahmed Rushdie [Satya Jain v.
Anis Ahmed Rushdie, (2013) 8 SCC 131 : (2013) 3 SCC
(Civ) 738] , which discussed the principle of business
efficacy as proposed by Bowen, L.J. in Moorcock
[Moorcock, (1889) LR 14 PD 64 (CA)] . It has been
elucidated that this test requires that terms can be
implied only if it is necessary to give business efficacy to
the contract to avoid failure of the contract and only the
bare minimum of implication is to be there to achieve
this goal. Thus, if the contract makes business sense
without the implication of terms, the courts will not
imply the same.
42. The judgment in Nabha Power Ltd. [Nabha Power
Ltd. v. Punjab State Power Corpn. Ltd., (2018) 11 SCC
508 : (2018) 5 SCC (Civ) 1] concluded with the
following observations in para 72 : (SCC p. 546)
'72. We may, however, in the end, extend a word of
caution. It should certainly not be an endeavour of
commercial courts to look to implied terms of contract.
In the current day and age, making of contracts is a
matter of high technical expertise with legal brains from
all sides involved in the process of drafting a contract. It
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is even preceded by opportunities of seeking
clarifications and doubts so that the parties know what
they are getting into. Thus, normally a contract should
be read as it reads, as per its express terms. The
implied terms is a concept, which is necessitated only
when the Penta test referred to aforesaid comes into
play. There has to be a strict necessity for it. In the
present case, we have really only read the contract in
the manner it reads. We have not really read into it any
"implied term" but from the collection of clauses, come
to a conclusion as to what the contract says. The
formula for energy charges, to our mind, was quite
clear. We have only expounded it in accordance to its
natural grammatical contour, keeping in mind the nature
of the contract.'
43. We have considered it appropriate to, once again,
emphasise the aforesaid aspects, especially in the
context of endeavours of courts to give their own
interpretation to contracts, more specifically tender
terms, at the behest of a third party competing for the
tender, rather than what is propounded by the party
framing the tender. The object cannot be that in every
contract, where some parties would lose out, they
should get the opportunity to somehow pick holes, to
disqualify the successful parties, on grounds on which
even the party floating the tender finds no merit."
7. It may also be pertinent to note the principles
elucidated in Tata Cellular v. Union of India [Tata
Cellular v. Union of India, (1994) 6 SCC 651] : (SCC pp.
687-88, para 94)
"94. The principles deducible from the above are:
(1) The modern trend points to judicial restraint in
administrative action.
(2) The court does not sit as a court of appeal but
merely reviews the manner in which the decision was
made.
(3) The court does not have the expertise to correct the
administrative decision. If a review of the administrative
decision is permitted it will be substituting its own
decision, without the necessary expertise which itself
may be fallible.
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(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 in original)
52. We are thus unequivocally of the view that the
impugned order cannot be sustained for all the aforesaid
reasons and must be set aside and the appeals are
accordingly allowed.
53. The costs following cause is a principle which is
followed in most countries. There seems to be often a
hesitancy in our judicial system to impose costs,
presuming as if it is a reflection on the counsel. This is
not the correct approach. In a tussle for enforcement of
rights against a State different principle apply but in
commercial matters costs must follow the cause.
16.26. By relying on Uflex Ltd., case, his submission
is that a bald allegation that the tender
conditions have been drafted to suit a particular
bidder, cannot be accepted unless there is
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sufficient pleadings and evidence to satisfy such
an allegation. It is for the Petitioners to have
made good the statement by stating as to for
whose benefit or which tenderer's benefit the
conditions have been tweaked and how such
tweaking of conditions would work favourably
to such a tenderer. The State and its
instrumentalities issuing several thousands of
tenders, the bonafide action of the State cannot
be questioned in each of those tenders by
making reckless and unsubstantiated
allegations. Apart therefrom, he submits that if
this Court were to entertain such baseless
contentions, the tendering process itself would
get delayed, thus having an impact not only on
the State and its agencies, but also on the
beneficiaries and the successful tenderer due to
increase or otherwise of the cost. He again
reiterates Wednesbury's principles of
arbitrariness and submits that this Court ought
to interfere only if the decision is so arbitrary
and irrational that a responsible authority
acting reasonably or in accordance with the law
could not have reached such a decision. In the
present case, the decision taken by the
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authorities, the methodology adopted by the
authorities are reasonable. In the interest of all
concerned, the bidders/tenderers are now put
to account, and as such, the present Petitioners
who do not wish to be held to account are
making baseless allegations which are not
substantiated in any manner, and therefore, the
petition is liable to be dismissed by imposing
exemplary cost.
16.27. He relies upon the decision of the Hon'ble Apex
Court in National High Speed Rail Corpn.
Ltd. vs Montecarlo Ltd. and Ors11, more
particularly para nos. 28 and 29 thereof, which
have been reproduced hereunder for easy
reference:
28. At this stage, few decisions of this Court on the
interference by the courts in the tender matters are
required to be referred to:
28.1. 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 in paras
11 to 13 and 15 has observed and held as under : (SCC
pp. 824-25)
"11. Recently, in Central Coalfields Ltd. v. SLL-SML (Joint
Venture Consortium) [Central Coalfields Ltd. v. SLL-SML
(Joint Venture Consortium), (2016) 8 SCC 622 : (2016) 4
SCC (Civ) 106] , it was held by this Court, relying on a
host of decisions that the decision-making process of the
11
(2022) 6 SCC 401 | 2022 INSC 124
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employer or owner of the project in accepting or rejecting
the bid of a tenderer should not be interfered with.
Interference is permissible only if the decision-making
process is mala fide or is intended to favour someone.
Similarly, the decision should not be interfered with
unless the decision is so arbitrary or irrational that the
Court could say that the decision is one which no
responsible authority acting reasonably and in
accordance with law could have reached. In other words,
the decision-making process or the decision should be
perverse and not merely faulty or incorrect or erroneous.
No such extreme case was made out by GYT-TPL JV in
the High Court or before us.
12. In Dwarkadas Marfatia & Sons v. Port of Bombay
[Dwarkadas Marfatia & Sons v. Port of Bombay, (1989) 3
SCC 293] , it was held that the constitutional courts are
concerned with the decision-making process. Tata
Cellular v. Union of India [Tata Cellular v. Union of India,
(1994) 6 SCC 651] went a step further and held that a
decision if challenged (the decision having been arrived
at through a valid process), the constitutional courts can
interfere if the decision is perverse. However, the
constitutional courts are expected to exercise restraint in
interfering with the administrative decision and ought not
to substitute its view for that of the administrative
authority. This was confirmed in Jagdish Mandal v. State
of Orissa [Jagdish Mandal v. State of Orissa, (2007) 14
SCC 517] , as mentioned in Central Coalfields Ltd. v. SLL-
SML (Joint Venture Consortium) [Central Coalfields Ltd.
v. SLL-SML (Joint Venture Consortium), (2016) 8 SCC
622 : (2016) 4 SCC (Civ) 106] .
13. In other words, 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.
***
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 documents, unless there is
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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."
28.2. In B.S.N. Joshi & Sons Ltd. v. Nair Coal Services
Ltd. [B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd.,
(2006) 11 SCC 548] , after considering the various
decisions of this Court on the point enumerated in para
66, this Court has observed and held as under : (SCC pp.
571-72)
"66. We are also not shutting our eyes towards the new
principles of judicial review which are being developed;
but the law as it stands now having regard to the
principles laid down in the aforementioned decisions may
be summarised as under:
(i) if there are essential conditions, the same must be
adhered to;
(ii) if there is no power of general relaxation, ordinarily
the same shall not be exercised and the principle of strict
compliance would be applied where it is possible for all
the parties to comply with all such conditions fully;
(iii) if, however, a deviation is made in relation to all the
parties in regard to any of such conditions, ordinarily
again a power of relaxation may be held to be existing;
(iv) the parties who have taken the benefit of such
relaxation should not ordinarily be allowed to take a
different stand in relation to compliance with another part
of tender contract, particularly when he was also not in a
position to comply with all the conditions of tender fully,
unless the court otherwise finds relaxation of a condition
which being essential in nature could not be relaxed and
thus the same was wholly illegal and without jurisdiction;
(v) when a decision is taken by the appropriate authority
upon due consideration of the tender document
submitted by all the tenderers on their own merits and if
it is ultimately found that successful bidders had in fact
substantially complied with the purport and object for
which essential conditions were laid down, the same may
not ordinarily be interfered with;
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(vi) the contractors cannot form a cartel. If despite the
same, their bids are considered and they are given an
offer to match with the rates quoted by the lowest
tenderer, public interest would be given priority;
(vii) where a decision has been taken purely on public
interest, the court ordinarily should exercise judicial
restraint."
28.3. In Michigan Rubber (India) Ltd. v. State of
Karnataka [Michigan Rubber (India) Ltd. v. State of
Karnataka, (2012) 8 SCC 216] , after considering various
other decisions of this Court on the point, more
particularly, after considering the decisions in Jagdish
Mandal [Jagdish Mandal v. State of Orissa, (2007) 14
SCC 517] and Tejas Constructions & Infrastructure (P)
Ltd. v. Municipal Council, Sendhwa [Tejas Constructions
& Infrastructure (P) Ltd. v. Municipal Council, Sendhwa,
(2012) 6 SCC 464] , in paras 23 and 24, this Court has
observed and held as under : (Michigan Rubber case
[Michigan Rubber (India) Ltd. v. State of Karnataka,
(2012) 8 SCC 216] , SCC p. 229)
"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
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
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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."
28.4. In Central Coalfields Ltd. v. SLL-SML (Joint Venture
Consortium) [Central Coalfields Ltd. v. SLL-SML (Joint
Venture Consortium), (2016) 8 SCC 622 : (2016) 4 SCC
(Civ) 106] , it is specifically observed and held by this
Court that the Court must, as far as possible, avoid a
construction which would render the words used by the
author of the document meaningless and futile or reduce
to silence any part of the document and make it
altogether inapplicable. It is further observed that
whether a term of NIT is essential or not is a decision
taken by the employer, which should be respected and
soundness of that decision cannot be questioned by
Court. In the case before this Court, the bid was rejected
for non-furnishing of bank guarantee in prescribed
format. While submitting EMD by furnishing bank
guarantee in format prescribed by GTC of another tender
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and the bidder took the plea that bank guarantee format
of present tender was ambiguous.
28.5. Rejecting the claim of the bidder and upholding the
decision of the employer of rejection of bid for non-
compliance of submitting the bank guarantee in
prescribed format, this Court in paras 31 to 38, 42 to 44,
47 to 49, 52, 55 and 56 has observed and held as under
: (Central Coalfields case [Central Coalfields Ltd. v. SLL-
SML (Joint Venture Consortium), (2016) 8 SCC 622 :
(2016) 4 SCC (Civ) 106] , SCC pp. 632-36 & 638-40)
"31. We were informed by the learned Attorney General
that 9 of the 11 bidders furnished a bank guarantee in
the prescribed and correct format. Under these
circumstances, even after stretching our credulity, it is
extremely difficult to understand why JVC was unable to
access the prescribed format for the bank guarantee or
furnish a bank guarantee in the prescribed format when
every other bidder could do so or why it could not seek a
clarification or why it could not represent against any
perceived ambiguity. The objection and the conduct of
JVC regarding the prescribed format of the bank
guarantee or a supposed ambiguity in NIT does not
appear to be fully above board.
32. The core issue in these appeals is not of judicial
review of the administrative action of CCL in adhering to
the terms of NIT and the GTC prescribed by it while
dealing with bids furnished by participants in the bidding
process. The core issue is whether CCL acted perversely
enough in rejecting the bank guarantee of JVC on the
ground that it was not in the prescribed format, thereby
calling for judicial review by a constitutional court and
interfering with CCL's decision.
33. In Ramana Dayaram Shetty v. International Airport
Authority of India [Ramana Dayaram Shetty v.
International Airport Authority of India, (1979) 3 SCC
489] , this Court held that the words used in a document
are not superfluous or redundant but must be given some
meaning and weightage : (SCC p. 500, para 7)
'7. ... It is a well-settled rule of interpretation applicable
alike to documents as to statutes that, save for
compelling necessity, the Court should not be prompt to
ascribe superfluity to the language of a document 'and
should be rather at the outset inclined to suppose every
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word intended to have some effect or be of some use'. To
reject words as insensible should be the last resort of
judicial interpretation, for it is an elementary rule based
on common sense that no author of a formal document
intended to be acted upon by the others should be
presumed to use words without a meaning. The court
must, as far as possible, avoid a construction which
would render the words used by the author of the
document meaningless and futile or reduce to silence any
part of the document and make it altogether
inapplicable.'
34. In Ramana Dayaram Shetty case [Ramana Dayaram
Shetty v. International Airport Authority of India, (1979)
3 SCC 489] , the expression "registered IInd Class
hotelier" was recognised as being inapt and perhaps
ungrammatical; nevertheless common sense was not
offended in describing a person running a registered IInd
grade hotel as a registered IInd class hotelier. Despite
this construction in its favour, Respondent 4 in that case
were held to be factually ineligible to participate in the
bidding process.
35. It was further held that if others (such as the
appellant in Ramana Dayaram Shetty case [Ramana
Dayaram Shetty v. International Airport Authority of
India, (1979) 3 SCC 489] ) were aware that non-
fulfilment of the eligibility condition of being a registered
IInd class hotelier would not be a bar for consideration,
they too would have submitted a tender, but were
prevented from doing so due to the eligibility condition,
which was relaxed in the case of Respondent 4. This
resulted in unequal treatment in favour of Respondent 4
-- treatment that was constitutionally impermissible.
Expounding on this, it was held : (SCC p. 504, para 10)
'10. ... It is indeed unthinkable that in a democracy
governed by the rule of law the executive Government or
any of its officers should possess arbitrary power over the
interests of the individual. Every action of the executive
Government must be informed with reason and should be
free from arbitrariness. That is the very essence of the
rule of law and its bare minimal requirement. And to the
application of this principle it makes no difference
whether the exercise of the power involves affectation of
some right or denial of some privilege.'
36. Applying this principle to the present appeals, other
bidders and those who had not bid could very well
contend that if they had known that the prescribed
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format of the bank guarantee was not mandatory or that
some other term(s) of NIT or GTC were not mandatory
for compliance, they too would have meaningfully
participated in the bidding process. In other words, by
rearranging the goalposts, they were denied the
"privilege" of participation.
37. For JVC to say that its bank guarantee was in terms
stricter than the prescribed format is neither here nor
there. It is not for the employer or this Court to scrutinise
every bank guarantee to determine whether it is stricter
than the prescribed format or less rigorous. The fact is
that a format was prescribed and there was no reason
not to adhere to it. The goalposts cannot be rearranged
or asked to be rearranged during the bidding process to
affect the right of some or deny a privilege to some.
38. In G.J. Fernandez v. State of Karnataka [G.J.
Fernandez v. State of Karnataka, (1990) 2 SCC 488] ,
both the principles laid down in Ramana Dayaram Shetty
[Ramana Dayaram Shetty v. International Airport
Authority of India, (1979) 3 SCC 489] were reaffirmed. It
was reaffirmed that the party issuing the tender (the
employer) "has the right to punctiliously and rigidly"
enforce the terms of the tender. If a party approaches a
court for an order restraining the employer from strict
enforcement of the terms of the tender, the court would
decline to do so. It was also reaffirmed that the employer
could deviate from the terms and conditions of the tender
if the "changes affected all intending applicants alike and
were not objectionable". Therefore, deviation from the
terms and conditions is permissible so long as the level
playing field is maintained and it does not result in any
arbitrariness or discrimination in Ramana Dayaram
Shetty [Ramana Dayaram Shetty v. International Airport
Authority of India, (1979) 3 SCC 489] sense.
***
42. Unfortunately, this Court in Poddar Steel Corpn. v.
Ganesh Engg. Works [Poddar Steel Corpn. v. Ganesh
Engg. Works, (1991) 3 SCC 273] did not at all advert to
the privilege-of-participation principle laid down in
Ramana Dayaram Shetty [Ramana Dayaram Shetty v.
International Airport Authority of India, (1979) 3 SCC
489] and accepted in G.J. Fernandez [G.J. Fernandez v.
State of Karnataka, (1990) 2 SCC 488] . In other words,
this Court did not consider whether, as a result of the
deviation, others could also have become eligible to
participate in the bidding process. This principle was
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ignored in Poddar Steel [Poddar Steel Corpn. v. Ganesh
Engg. Works, (1991) 3 SCC 273] .
43. Continuing in the vein of accepting the inherent
authority of an employer to deviate from the terms and
conditions of an NIT, and reintroducing the privilege-of-
participation principle and the level playing field concept,
this Court laid emphasis on the decision-making process,
particularly in respect of a commercial contract. One of
the more significant cases on the subject is the three-
Judge decision in Tata Cellular v. Union of India [Tata
Cellular v. Union of India, (1994) 6 SCC 651] which gave
importance to the lawfulness of a decision and not its
soundness. If an administrative decision, such as a
deviation in the terms of NIT is not arbitrary, irrational,
unreasonable, mala fide or biased, the courts will not
judicially review the decision taken. Similarly, the courts
will not countenance interference with the decision at the
behest of an unsuccessful bidder in respect of a technical
or procedural violation. This was quite clearly stated by
this Court (following Tata Cellular [Tata Cellular v. Union
of India, (1994) 6 SCC 651] ) in Jagdish Mandal v. State
of Orissa [Jagdish Mandal v. State of Orissa, (2007) 14
SCC 517] ] in the following words : (Jagdish Mandal case
[Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517] ,
SCC p. 531, para 22)
'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,
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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.'
This Court then laid down the questions that ought to be
asked in such a situation. It was said : (Jagdish Mandal
case [Jagdish Mandal v. State of Orissa, (2007) 14 SCC
517] , SCC p. 531, para 22)
'22. ... 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';
(ii) Whether public interest is affected.
If the answers are in the negative, there should be no
interference under Article 226.'
44. On asking these questions in the present appeals, it
is more than apparent that the decision taken by CCL to
adhere to the terms and conditions of NIT and the GTC
was certainly not irrational in any manner whatsoever or
intended to favour anyone. The decision was lawful and
not unsound.
***
47. The result of this discussion is that the issue of the
acceptance or rejection of a bid or a bidder should be
looked at not only from the point of view of the
unsuccessful party but also from the point of view of the
employer. As held in Ramana Dayaram Shetty [Ramana
Dayaram Shetty v. International Airport Authority of
India, (1979) 3 SCC 489] the terms of NIT cannot be
ignored as being redundant or superfluous. They must be
given a meaning and the necessary significance. As
pointed out in Tata Cellular [Tata Cellular v. Union of
India, (1994) 6 SCC 651] there must be judicial restraint
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in interfering with administrative action. Ordinarily, the
soundness of the decision taken by the employer ought
not to be questioned but the decision-making process can
certainly be subject to judicial review. The soundness of
the decision may be questioned if it is irrational or mala
fide or intended to favour someone or a decision 'that no
responsible authority acting reasonably and in
accordance with relevant law could have reached' as held
in Jagdish Mandal [Jagdish Mandal v. State of Orissa,
(2007) 14 SCC 517] followed in Michigan Rubber
[Michigan Rubber (India) Ltd. v. State of Karnataka,
(2012) 8 SCC 216] .
48. Therefore, whether a term of NIT is essential or not is
a decision taken by the employer which should be
respected. Even if the term is essential, the employer has
the inherent authority to deviate from it provided the
deviation is made applicable to all bidders and potential
bidders as held in Ramana Dayaram Shetty [Ramana
Dayaram Shetty v. International Airport Authority of
India, (1979) 3 SCC 489] . However, if the term is held
by the employer to be ancillary or subsidiary, even that
decision should be respected. The lawfulness of that
decision can be questioned on very limited grounds, as
mentioned in the various decisions discussed above, but
the soundness of the decision cannot be questioned,
otherwise this Court would be taking over the function of
the tender issuing authority, which it cannot.
49. Again, looked at from the point of view of the
employer if the courts take over the decision-making
function of the employer and make a distinction between
essential and non-essential terms contrary to the
intention of the employer and thereby rewrite the
arrangement, it could lead to all sorts of problems
including the one that we are grappling with. For
example, the GTC that we are concerned with specifically
states in Clause 15.2 that 'Any bid not accompanied by
an acceptable bid Security/EMD shall be rejected by the
employer as non-responsive'. Surely, CCL ex facie
intended this term to be mandatory, yet the High Court
held [SLL-SML (Joint Venture Consortium) v. Central
Coalfields Ltd., 2015 SCC OnLine Jhar 4819] that the
bank guarantee in a format not prescribed by it ought to
be accepted since that requirement was a non-essential
term of the GTC. From the point of view of CCL, the GTC
has been impermissibly rewritten by the High Court.
***
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52. There is a wholesome principle that the courts have
been following for a very long time and which was
articulated in Nazir Ahmad v. King Emperor [Nazir Ahmad
v. King Emperor, 1936 SCC OnLine PC 41 : AIR 1936 PC
253 (2)] , namely : (SCC OnLine PC)
'... where a power is given to do a certain thing in a
certain way the thing must be done in that way or not at
all. Other methods of performance are necessarily
forbidden.'
There is no valid reason to give up this salutary principle
or not to apply it mutatis mutandis to bid documents.
This principle deserves to be applied in contractual
disputes, particularly in commercial contracts or bids
leading up to commercial contracts, where there is stiff
competition. It must follow from the application of the
principle laid down in Nazir Ahmad [Nazir Ahmad v. King
Emperor, 1936 SCC OnLine PC 41 : AIR 1936 PC 253 (2)]
that if the employer prescribes a particular format of the
bank guarantee to be furnished, then a bidder ought to
submit the bank guarantee in that particular format only
and not in any other format. However, as mentioned
above, there is no inflexibility in this regard and an
employer could deviate from the terms of the bid
document but only within the parameters mentioned
above.
***
55. On the basis of the available case law, we are of the
view that since CCL had not relaxed or deviated from the
requirement of furnishing a bank guarantee in the
prescribed format, insofar as the present appeals are
concerned every bidder was obliged to adhere to the
prescribed format of the bank guarantee. Consequently,
the failure of JVC to furnish the bank guarantee in the
prescribed format was sufficient reason for CCL to reject
its bid.
56. There is nothing to indicate that the process by which
the decision was taken by CCL that the bank guarantee
furnished by JVC ought to be rejected was flawed in any
manner whatsoever. Similarly, there is nothing to
indicate that the decision taken by CCL to reject the bank
guarantee furnished by JVC and to adhere to the
requirements of NIT and the GTC was arbitrary or
unreasonable or perverse in any manner whatsoever."
(emphasis in original)
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28.6. In Maa Binda Express Carrier v. North-East Frontier
Railway [Maa Binda Express Carrier v. North-East
Frontier Railway, (2014) 3 SCC 760] , this Court had an
occasion to consider the scope of judicial review in the
matters relating to award of contracts by the State and
its instrumentalities. In paras 8 to 10 this Court has
observed and held as under : (SCC pp. 764-65)
"8. The scope of judicial review in matters relating to
award of contracts by the State and its instrumentalities
is settled by a long line of decisions of this Court. While
these decisions clearly recognise that power exercised by
the Government and its instrumentalities in regard to
allotment of contract is subject to judicial review at the
instance of an aggrieved party, submission of a tender in
response to a notice inviting such tenders is no more
than making an offer which the State or its agencies are
under no obligation to accept. The bidders participating in
the tender process cannot, therefore, insist that their
tenders should be accepted simply because a given
tender is the highest or lowest depending upon whether
the contract is for sale of public property or for execution
of works on behalf of the Government. All that
participating bidders are entitled to is a fair, equal and
non-discriminatory treatment in the matter of evaluation
of their tenders. It is also fairly well settled that award of
a contract is essentially a commercial transaction which
must be determined on the basis of consideration that
are relevant to such commercial decision. This implies
that terms subject to which tenders are invited are not
open to the judicial scrutiny unless it is found that the
same have been tailor-made to benefit any particular
tenderer or class of tenderers. So also, the authority
inviting tenders can enter into negotiations or grant
relaxation for bona fide and cogent reasons provided
such relaxation is permissible under the terms governing
the tender process.
9. Suffice it to say that in the matter of award of
contracts the Government and its agencies have to act
reasonably and fairly at all points of time. To that extent
the tenderer has an enforceable right in the court which
is competent to examine whether the aggrieved party
has been treated unfairly or discriminated against to the
detriment of public interest. (See Meerut Development
Authority v. Assn. of Management Studies [Meerut
Development Authority v. Assn. of Management Studies,
(2009) 6 SCC 171 : (2009) 2 SCC (Civ) 803] and Air
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India Ltd. v. Cochin International Airport Ltd. [Air India
Ltd. v. Cochin International Airport Ltd., (2000) 2 SCC
617] )
10. The scope of judicial review in contractual matters
was further examined by this Court in Tata Cellular v.
Union of India [Tata Cellular v. Union of India, (1994) 6
SCC 651] , Raunaq International Ltd. case [Raunaq
International Ltd. v. I.V.R. Construction Ltd., (1999) 1
SCC 492] and in Jagdish Mandal v. State of Orissa
[Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517]
besides several other decisions to which we need not
refer."
29. Thus, from the aforesaid decisions, it can be seen
that a court before interfering in a contract matter in
exercise of powers 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.
16.28. By relying on Montecarlo Ltd.,'s case, he
submits that Courts ought not to permit a
petitioner challenging a tender to make a
mountain of a molehill on technicalities. The
Court would always have to consider whether
the decision making process is proper or not.
The methodology of requiring a particular
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document to be submitted in a particular
format, the requirement of minimum turnover
value of the tender is all within the domain of
the employers/tendering authority so also are
the wording of the required documents being
the Bank guarantee, performance guarantee or
the like. These are aspects which the employer
can fix on the basis of its own requirement
taking into consideration the nature of work,
the possibility of breach being committed and
the manner in which the State and/or its
instrumentalities need to be protected on
account of breach if any by the successful
tenderer which would ultimately enure to the
benefit of the general public. So long as the
requirements are the same for each and every
bidder, one of the bidders cannot attribute
discrimination and/or malafides without
categorically establishing the said allegations.
Merely by contending that there is a change
and/or that there is a different process adopted
would not suffice for this Court to interfere in
tender matters unless the Petitioners were to
establish that the same was malafide, arbitrary,
irrational and contrary to applicable law and the
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Constitution. None of them having been done,
he submits that this Court ought not to
intercede in the present tender.
16.29. He relies upon the decision of the Hon'ble Apex
Court in Silppi Constructions Contractors vs
Union of India12, more particularly para nos.
1-15, 19 and 20 thereof, which have been
reproduced hereunder for easy reference:
1. Keeping in view the urgency of the matter, after
detailed hearing the special leave petitions were
dismissed and we had directed that a reasoned
order would follow. Hence the present order.
2. Respondents 1 and 2 issued notice inviting tenders for
two works at Kochi. The estimated cost of the works
were Rs 53 crores and Rs 72 crores respectively.
The petitioner "The Silppi Constructions
Contractors", (hereinafter referred to as "the firm")
uploaded its competitive bid on the site and
complied with all the conditions. The technical bids
of the petitioner were rejected by the tendering
authorities on 28-3-2019. The petitioner filed
appeals before the appellate authority on 28-3-2019
itself which were rejected on 9-4-2019.
3. Thereafter, the petitioner filed a writ petition in the
High Court of Kerala and the main ground raised
was that no reasons were given either while
rejecting its tender or the appeals. In the counter
filed to the writ petition the stand taken by the
respondents was that the petitioner's tenders were
rejected since the petitioner did not satisfy the
eligibility criteria for submission of the bid. It was
also specifically urged that a sister concern of the
petitioner's firm, namely, "M/s Silppi Realtors and
Contractors Pvt. Ltd.", (hereinafter referred to as
"the sister company"), had not renewed its
enlistment and had adverse remarks against it in
respect of workload return of "SS" Class Contractors
12
(2020) 16 SCC 489 | 2019 INSC 696
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for the quarter ending September 2017. It was
urged that since the adverse remarks had been
given to the sister company the petitioner firm could
not be awarded the contract.
4. The learned Single Judge allowed [Silppi
Constructions & Contractors v. Union of India, 2019
SCC OnLine Ker 2830] the appeal holding that the
order passed by the appellate authority was not a
speaking order and, therefore, not legally
sustainable. The learned Single Judge also observed
that the adverse remarks made against the sister
company could not be used against the petitioner.
The learned Single Judge went on to hold that the
remarks against the sister company were not
justified. The writ petition was accordingly allowed
and Respondents 1 and 2 were directed to consider
the financial bid of the petitioner.
5. Respondents 1 and 2 and some of the tenderers who
were not parties before the learned Single Judge
filed writ appeals. These writ appeals were allowed
[Pushkarraj Constructions (P) Ltd. v. Silppi
Constructions & Contractors, 2019 SCC OnLine Ker
1932 : (2019) 3 KLJ 353] by the Division Bench
holding firstly, that the scope of interference in
contractual matters is very limited; secondly, that
the learned Single Judge ought not to have
interfered with the decision of the administrative
authorities with regard to the sister company since it
was not shown that the said decision was mala fide;
thirdly, since the sister company had not challenged
the adverse remark the learned Single Judge could
not have set aside the same in the writ petition filed
by the petitioner firm; and lastly, the direction of the
learned Single Judge to direct the tendering
authorities to consider the financial bid of the
petitioner virtually meant that the technical bid of
the petitioner was accepted.
6. Aggrieved, the original writ petitioner is before us in
these petitions. This Court in a catena of judgments has
laid down the principles with regard to judicial review in
contractual matters. It is settled law that the writ courts
should not easily interfere in commercial activities just
because public sector undertakings or government
agencies are involved.
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7. In Tata Cellular v. Union of India [Tata Cellular v.
Union of India, (1994) 6 SCC 651] , it was held that
judicial review of government contracts was permissible
in order to prevent arbitrariness or favouritism. The
principles enunciated in this case are: (SCC pp. 687-88,
para 94)
"94. ...
(1) The modern trend points to judicial restraint in
administrative action.
(2) The court does not sit as a court of appeal but
merely reviews the manner in which the decision was
made.
(3) The court does not have the expertise to correct the
administrative decision. If a review of the administrative
decision is permitted it will be substituting its own
decision, without the necessary expertise which itself
may be fallible.
(4) The terms of the invitation to tender cannot be open
to judicial scrutiny because the invitation to tender is in
the realm of contract.
Normally speaking, the decision to accept the tender or
award the contract is reached by process of negotiations
through several tiers. More often than not, such
decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In
other words, a fair play in the joints is a necessary
concomitant for an administrative body functioning in an
administrative sphere or quasi-administrative sphere.
However, the decision must not only be tested by the
application 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 in original)
8. In Raunaq International Ltd. v. I.V.R. Construction
Ltd. [Raunaq International Ltd. v. I.V.R. Construction
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Ltd., (1999) 1 SCC 492] , this Court held that the
superior courts should not interfere in matters of tenders
unless substantial public interest was involved or the
transaction was mala fide.
9. In Air India Ltd. v. Cochin International Airport Ltd.
[Air India Ltd. v. Cochin International Airport Ltd.,
(2000) 2 SCC 617] , this Court once again stressed the
need for overwhelming public interest to justify judicial
intervention in contracts involving the State and its
instrumentalities. It was held that the courts must
proceed with great caution while exercising their
discretionary powers and should exercise these powers
only in furtherance of public interest and not merely on
making out a legal point.
10. In Karnataka Siidc Ltd. v. Cavalet (India) Ltd.
[Karnataka Siidc Ltd. v. Cavalet (India) Ltd., (2005) 4
SCC 456] it was held that while effective steps must be
taken to realise the maximum amount, the High Court
exercising its power under Article 226 of the Constitution
is not competent to decide the correctness of the sale
effected by the Corporation.
11. In Master Marine Services (P) Ltd. v. Metcalfe &
Hodgkinson (P) Ltd. [Master Marine Services (P) Ltd. v.
Metcalfe & Hodgkinson (P) Ltd., (2005) 6 SCC 138] it
was held that while exercising power of judicial review in
respect of contracts, the court should concern itself
primarily with the question, whether there has been any
infirmity in the decision-making process. By way of
judicial review, the court cannot examine details of
terms of contract which have been entered into by public
bodies or the State.
12. In B.S.N. Joshi & Sons Ltd. v. Nair Coal Services
Ltd. [B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd.,
(2006) 11 SCC 548] it was held that it is not always
necessary that a contract be awarded to the lowest
tenderer and it must be kept in mind that the employer
is the best judge therefor; the same ordinarily being
within its domain. Therefore, the court's interference in
such matters should be minimal. The High Court's
jurisdiction in such matters being limited, the Court
should normally exercise judicial restraint unless
illegality or arbitrariness on the part of the employer is
apparent on the face of the record.
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13. In Jagdish Mandal v. State of Orissa [Jagdish Mandal
v. State of Orissa, (2007) 14 SCC 517] it was held:
(SCC p. 531, para 22)
"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."
14. In Michigan Rubber (India) Ltd. v. State of
Karnataka [Michigan Rubber (India) Ltd. v. State of
Karnataka, (2012) 8 SCC 216] it was held that if the
State or its instrumentalities acted reasonably, fairly and
in public interest in awarding contract, interference by
court would be very restrictive since no person could
claim fundamental right to carry on business with the
Government. Therefore, the courts would not normally
interfere in policy decisions and in matters challenging
award of contract by the State or public authorities.
15. In Afcons Infrastructure Ltd. v. Nagpur Metro Rail
Corpn. Ltd. [Afcons Infrastructure Ltd. v. Nagpur Metro
Rail Corpn. Ltd., (2016) 16 SCC 818] it was held that 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
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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. 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. 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.
19. This Court being the guardian of fundamental rights
is duty-bound to interfere when there is arbitrariness,
irrationality, mala fides and bias. However, this Court in
all the aforesaid decisions has cautioned time and again
that courts should exercise a lot of restraint while
exercising their powers of judicial review in contractual
or commercial matters. This Court is normally loathe to
interfere in contractual matters unless a clear-cut case
of arbitrariness or mala fides or bias or irrationality is
made out. One must remember that today many public
sector undertakings compete with the private industry.
The contracts entered into between private parties are
not subject to scrutiny under writ jurisdiction. No doubt,
the bodies which are State within the meaning of Article
12 of the Constitution are bound to act fairly and are
amenable to the writ jurisdiction of superior courts but
this discretionary power must be exercised with a great
deal of restraint and caution. The courts must realise
their limitations and the havoc which needless
interference in commercial matters can cause. In
contracts involving technical issues the courts should be
even more reluctant because most of us in Judges' robes
do not have the necessary expertise to adjudicate upon
technical issues beyond our domain. As laid down in the
judgments cited above the courts should not use a
magnifying glass while scanning the tenders and make
every small mistake appear like a big blunder. In fact,
the courts must give "fair play in the joints" to the
government and public sector undertakings in matters of
contract. Courts must also not interfere where such
interference will cause unnecessary loss to the public
exchequer.
20. The essence of the law laid down in the judgments
referred to above is the exercise of restraint and
caution; the need for overwhelming public interest to
justify judicial intervention in matters of contract
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involving the State instrumentalities; the courts should
give way to the opinion of the experts unless the
decision is totally arbitrary or unreasonable; the court
does not sit like a court of appeal over the appropriate
authority; the court must realise that the authority
floating the tender is the best judge of its requirements
and, therefore, the court's interference should be
minimal. The authority which floats the contract or
tender, and has authored the tender documents is the
best judge as to how the documents have to be
interpreted. If two interpretations are possible then the
interpretation of the author must be accepted. The
courts will only interfere to prevent arbitrariness,
irrationality, bias, mala fides or perversity. With this
approach in mind we shall deal with the present case.
16.30. By relying on Silppi Constructions case, he
submits that Writ Court should not easily
interfere in commercial activities just because
public sector undertakings or government
agencies are involved. Unless substantial public
interest was involved or the transaction was
malafide. The High Court exercising powers
under Article 226/227 of the Constitution is not
competent to decide the technical issues in a
tender matter. These are best to be left to the
employer who has formulated the tender to
choose and apply such conditions as the
employer believes required in a particular
matter. A contract being a commercial
transaction, evaluating of tenders and awarding
contracts is also an essential commercial
function. So long as such evaluation and
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awardal is in public interest, Courts ought not
to by exercise of judicial review interfere in the
matter. He submits that merely because the
petitioners do not satisfy their technical and
qualification requirements, they cannot be
permitted to seek redressal of their imaginary
grievances or business rivalries by making
mountains out of molehills of some technical or
procedural violations or on account of certain
alleged prejudice caused to them. His
submission is that neither the petitioners can
nor the Court ought to use a magnifying glass
while scanning the tenders and make every
small mistake appear to be a big blunder. The
State and its instrumentalities are to be given
fair play in the joints to implement the
executive necessities. The State in the present
matter having faced brick bats and adverse
comments as regards the manner in which food
grains are supplied to schools as also relating to
the quality thereof has now come up with a new
methodology which cannot therefore be
questioned only on the ground of change in
methodology.
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16.31. He relies upon the decision of the Hon'ble Apex
Court in Afcons Infrastructure Ltd. vs
Nagpur Metro Rail Corporation Ltd. &
Anr.13, more particularly para nos. 11, 12, 13,
14 and 15 thereof, which have been reproduced
hereunder for easy reference:
11. Recently, in Central Coalfields Ltd. v. SLL-SML (Joint
Venture Consortium) [Central Coalfields Ltd. v. SLL-SML
(Joint Venture Consortium), (2016) 8 SCC 622 : (2016)
4 SCC (Civ) 106 : (2016) 8 Scale 99] it was held by this
Court, relying on a host of decisions that the decision-
making process of the employer or owner of the project
in accepting or rejecting the bid of a tenderer should not
be interfered with. Interference is permissible only if the
decision-making process is mala fide or is intended to
favour someone. Similarly, the decision should not be
interfered with unless the decision is so arbitrary or
irrational that the Court could say that the decision is
one which no responsible authority acting reasonably
and in accordance with law could have reached. In other
words, the decision-making process or the decision
should be perverse and not merely faulty or incorrect or
erroneous. No such extreme case was made out by GYT-
TPL JV in the High Court or before us.
12. In Dwarkadas Marfatia and Sons v. Port of Bombay
[Dwarkadas Marfatia and Sons v. Port of Bombay,
(1989) 3 SCC 293] it was held that the constitutional
courts are concerned with the decision-making process.
Tata Cellular v. Union of India [Tata Cellular v. Union of
India, (1994) 6 SCC 651] went a step further and held
that a decision if challenged (the decision having been
arrived at through a valid process), the constitutional
courts can interfere if the decision is perverse. However,
the constitutional courts are expected to exercise
restraint in interfering with the administrative decision
and ought not to substitute its view for that of the
administrative authority. This was confirmed in Jagdish
Mandal v. State of Orissa [Jagdish Mandal v. State of
Orissa, (2007) 14 SCC 517] as mentioned in Central
Coalfields [Central Coalfields Ltd. v. SLL-SML (Joint
13
(2016) 16 SCC 818 | 2016 INSC 874
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Venture Consortium), (2016) 8 SCC 622 : (2016) 4 SCC
(Civ) 106 : (2016) 8 Scale 99] .
13. In other words, 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.
14. We must reiterate the words of caution that this
Court has stated right from the time when Ramana
Dayaram Shetty v. International Airport Authority of
India [Ramana Dayaram Shetty v. International Airport
Authority of India, (1979) 3 SCC 489] was decided
almost 40 years ago, namely, that the words used in the
tender documents cannot be ignored or treated as
redundant or superfluous -- they must be given
meaning and their necessary significance. In this
context, the use of the word "metro" in Clause 4.2(a) of
Section III of the bid documents and its connotation in
ordinary parlance cannot be overlooked.
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 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.
16.32. By relying on AFCON's infrastructure case,
he reiterates that the owner or the employer of
the project, having authored the tender
documents, is the best person to understand
and appreciate the requirements. Constitutional
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courts must defer to such understanding of the
owner or the employer unless there is a
malafide or perversity established by a person
challenging such tender. In the present case,
there is no malafide or perversity established
by the petitioners and as such, petitions are
required to be dismissed.
16.33. He relies upon the decision of the Hon'ble Apex
Court in Montecarlo Ltd. vs NTPC Ltd.14,
more particularly para nos. 19, 20, 21, 22, 23,
24 and 25 thereof, which have been reproduced
hereunder for easy reference:
19. In Sterling Computers Ltd. v. M&N Publications Ltd.
[Sterling Computers Ltd. v. M&N Publications Ltd.,
(1993) 1 SCC 445] , the Court has held that under some
special circumstances a discretion has to be conceded to
the authorities who have to enter into contract giving
them liberty to assess the overall situation for purpose
of taking a decision as to whom the contract be awarded
and at what terms. It has also been observed that by
way of judicial review the Court cannot examine the
details of the terms of the contract which have been
entered into by the public bodies or the State. Courts
have inherent limitations on the scope of any such
enquiry.
20. In Tata Cellular [Tata Cellular v. Union of India,
(1994) 6 SCC 651] a three-Judge Bench after referring
to earlier decisions culled out certain principles, namely,
(a) the modern trend points to judicial restraint in
administrative action, (b) the Court does not sit as a
court of appeal but merely reviews the manner in which
the decision was made, (c) the Court does not have the
expertise to correct the administrative decision. If a
review of the administrative decision is permitted it will
14
(2016) 15 SCC 272 | 2016 INSC 976
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be substituting its own decision, without the necessary
expertise which itself may be fallible, and (d) the
Government must have freedom of contract and that
permits a fair play in the joints as a necessary
concomitant for an administrative body functioning in an
administrative sphere or quasi-administrative sphere.
Hence, the Court has laid down that the decision must
not only be tested by the application of the Wednesbury
principle [Associated Provincial Picture Houses Ltd. v.
Wednesbury Corpn., (1948) 1 KB 223 (CA)] of
reasonableness (including its other facts pointed out
above) but must be free from arbitrariness not affected
by bias or actuated by mala fides.
21. In Jagdish Mandal v. State of Orissa [Jagdish Mandal
v. State of Orissa, (2007) 14 SCC 517] the Court has
held that : (SCC p. 531, para 22)
"22. ... 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."
22. In Master Marine Services (P) Ltd. v. Metcalfe &
Hodgkinson (P) Ltd. [Master Marine Services (P) Ltd. v.
Metcalfe & Hodgkinson (P) Ltd., (2005) 6 SCC 138] , it
has been ruled that (SCC p. 148, para 15) the State can
choose its own method to arrive at a decision and it is
free to grant any relaxation for bona fide reasons, if the
tender conditions permit such a relaxation. It has been
further held that 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 powers 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.
23. In B.S.N. Joshi & Sons Ltd. v. Nair Coal Services
Ltd. [B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd.,
(2006) 11 SCC 548] a two-Judge Bench, after referring
to series of judgments has culled out certain principles
which include the one that where a decision has been
taken purely on public interest, the Court ordinarily
should apply judicial restraint.
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24. In Michigan Rubber (India) Ltd. [Michigan Rubber
(India) Ltd. v. State of Karnataka, (2012) 8 SCC 216]
the Court referred to the earlier judgments and opined
that before a court interferes in tender or contractual
matters, in exercise of power of judicial review, it should
pose to itself the question 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 judicial conscience cannot countenance. The
emphasis was laid on the test, that is, whether award of
contract is against public interest.
25. Recently in Afcons Infrastructure Ltd. v. Nagpur
Metro Rail Corpn. Ltd. [Afcons Infrastructure Ltd. v.
Nagpur Metro Rail Corpn. Ltd., (2016) 16 SCC 818 :
(2016) 8 Scale 765] a two-Judge Bench eloquently
exposited the test which is to the following effect:
"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 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."
16.34. By relying upon Montecarlo Ltd.'s case, he
submits that technical bids are prepared by
technical persons which would ensure
objectivity. Insofar as those technical aspects
are concerned requiring technical expertise,
constitutional Courts ought not to interfere
subject again however that the decision made
is neither arbitrary, malafide or adopted to
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favour any particular entity so long as there is
no infirmity in the same, this Court ought not to
interfere.
16.35. He relies upon the decision of the Hon'ble Apex
Court in Michigan Rubber (India) Ltd. vs
State of Karnataka & Ors.15, more
particularly para nos. 11-22, 23 and 24 thereof,
which have been reproduced hereunder for
easy reference:
11. In Tata Cellular v. Union of India [(1994) 6 SCC
651] this Court emphasised the need to find a right
balance between administrative discretion to decide the
matters on the one hand, and the need to remedy any
unfairness on the other, and observed: (SCC pp. 687-
88, para 94)
"(1) The modern trend points to judicial restraint in
administrative action.
(2) The court does not sit as a court of appeal but
merely reviews the manner in which the decision was
made.
(3) The court does not have the expertise to correct the
administrative decision. If a review of the administrative
decision is permitted it will be substituting its own
decision, without the necessary expertise, which itself
may be fallible.
(4) The terms of the invitation to tender cannot be open
to judicial scrutiny because the invitation to tender is in
the realm of contract. ...
(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
15
(2012) 8 SCC 216 | 2012 INSC 338
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application of Wednesbury principle [Associated
Provincial Picture Houses Ltd. v. Wednesbury Corpn.,
(1948) 1 KB 223 : (1947) 2 All ER 680 (CA)] 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 in original)
12. In Raunaq International Ltd. v. I.V.R. Construction
Ltd. [(1999) 1 SCC 492] this Court reiterated the
principle governing the process of judicial review and
held that the writ court would not be justified in
interfering with commercial transactions in which the
State is one of the parties except where there is
substantial public interest involved and in cases where
the transaction is mala fide.
13. In Union of India v. International Trading Co.
[(2003) 5 SCC 437] this Court, in similar circumstances,
held as under: (SCC pp. 445 & 447, paras 15-16 & 22-
23)
"15. While the discretion to change the policy in exercise
of the executive power, when not trammelled by any
statute or rule is wide enough, what is imperative and
implicit in terms of Article
14 is that a change in policy must be made fairly and
should not give the impression that it was so done
arbitrarily or by any ulterior criteria. The wide sweep of
Article 14 and the requirement of every State action
qualifying for its validity on this touchstone irrespective
of the field of activity of the State is an accepted tenet.
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. Actions are
amenable, in the panorama of judicial review only to the
extent that the State must act validly for a discernible
reason, not whimsically for any ulterior purpose. The
meaning and true import and concept of arbitrariness is
more easily visualised than precisely defined. A question
whether the impugned action is arbitrary or not is to be
ultimately answered on the facts and circumstances of a
given case. A basic and obvious test to apply in such
cases is to see whether there is any discernible principle
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emerging from the impugned action and if so, does it
really satisfy the test of reasonableness.
16. Where a particular mode is prescribed for doing an
act and there is no impediment in adopting the
procedure, the deviation to act in a different manner
which does not disclose any discernible principle which is
reasonable itself shall be labelled as arbitrary. Every
State action must be informed by reason and it follows
that an act uninformed by reason is per se arbitrary.
***
22. If the State acts within the bounds of
reasonableness, it would be legitimate to take into
consideration the national priorities and adopt trade
policies. As noted above, the ultimate test is whether on
the touchstone of reasonableness the policy decision
comes out unscathed.
23. Reasonableness of restriction is to be determined in
an objective manner and from the standpoint of
interests of the general public and not from the
standpoint of the interests of 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 of the
restriction imposed, the extent and urgency of the evil
sought to be remedied thereby, the disproportion of the
imposition, the prevailing condition at the relevant time,
enter into judicial verdict. The reasonableness of the
legitimate expectation has to be determined with respect
to the circumstances relating to the trade or business in
question. 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. (See
Parbhani Transport Coop. Society Ltd. v. RTA [AIR 1960
SC 801] , Shree Meenakshi Mills Ltd. v. Union of India
[(1974) 1 SCC 468] , Hari Chand Sarda v. Mizo District
Council [AIR 1967 SC 829] and Krishnan Kakkanth v.
Govt. of Kerala [(1997) 9 SCC 495] .)"
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14. In Jespar I. Slong v. State of Meghalaya [(2004) 11
SCC 485] this Court, in para 17, held as under: (SCC p.
494)
"17. ... 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."
15. In Assn. of Registration Plates v. Union of India
[(2005) 1 SCC 679] a similar issue was considered by a
Bench of three Judges. In that case, the dispute was
about the terms and conditions of notices inviting
tenders (NITs) for supply of high security registration
plates for motor vehicles. The tenders had been issued
by various State Governments on the guidelines
circulated by the Central Government for implementing
the provisions of the Motor Vehicles Act, 1988 and the
newly amended Central Motor Vehicles Rules, 1989. The
main grievance of the appellant therein was that all
notices inviting tenders (NITs) which were issued by
various State Governments, contained conditions which
were tailored to favour companies having foreign
collaboration. Their further grievance was that the
tender conditions were discriminatory as per Article 14
of the Constitution and were being aimed at excluding
indigenous manufacturers from the tender process. It
was also contended that in all the cases, the work of
supply of high security registration plates for all existing
vehicles and new vehicles was being entrusted to a
single licence plates manufacturer in a State or a region
and for a long period of 15 years, thus creating
monopoly in favour of selected bidders to the complete
exclusion of all others in the field.
16. The further contention advanced in Assn. of
Registration Plates case [(2005) 1 SCC 679] was that
creation of monopoly in favour of a few parties having
connection with foreign concerns is violative of the
fundamental right of trade under Article 19(1)(g) and
discriminatory under Article 14 of the Constitution. It
was also pointed out that in the name of implementing
the amended Rule 50 of the Motor Vehicles Rules, 1989,
the States are imposing conditions in the tender that
would take away the existing rights of the
manufacturers of plates in India.
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17. On the condition laid down for prescribed minimum
turnover of business, the challenge made on behalf of
the petitioners in Assn. of Registration Plates case
[(2005) 1 SCC 679] was that fixing such high turnover
for such a new business is only for the purpose of
advancing the business interests of a group of
companies having foreign links and support. That it was
impossible for any indigenous manufacturer of security
plates to have a turnover of approximately Rs 12.5
crores from the high security registration plates which
were sought to be introduced in India for the first time
and the implementation of the project has not yet
started in any of the States.
18. On behalf of the Union of India, the State authorities
and the counsel appearing for the contesting
manufacturers, in their replies, have tried to justify the
manner and implementation of the policy contained in
Rule 50 of the Motor Vehicles Rules. On behalf of the
Union of India, the learned ASG submitted that under
Rule 50 read with the Statutory Order of 2001 issued
under Section 109(3) of the Motor Vehicles Act, the
State Governments are legally competent to formulate
an appropriate policy for choosing a sole or more
manufacturers in order to fulfil the object of affixation of
security plates. The Scheme contained in Rule 50 read
with the Statutory Order of 2001 leaves it to the
discretion of the State concerned to even choose a
single manufacturer for the entire State or more than
one manufacturer regionwise. It was pointed out that
such a selection cannot be said to confer any monopoly
right by the State on any private individual or concern.
He further pointed out that the tender conditions were
formulated taking into account the public interest
consideration and aspects of high security.
19. While considering the above submissions, the three-
Judge Bench held as under: (Assn. of Registration Plates
case [(2005) 1 SCC 679] , SCC pp. 698-701, paras 38-
40 & 43-44)
"38. In the matter of formulating conditions of a tender
document and awarding a contract of the nature of
ensuring supply of high security registration plates,
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, tender conditions are unassailable. On intensive
examination of tender conditions, we do not find that
they violate the equality clause under Article 14 or
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encroach on fundamental rights of the class of intending
tenderers under Article 19 of the Constitution. On the
basis of the submissions made on behalf of the Union
and the State authorities and the justification shown for
the terms of the impugned tender conditions, we do not
find that the clauses requiring experience in the field of
supplying registration plates in foreign countries and the
quantum of business turnover are intended only to keep
indigenous manufacturers out of the field. It is explained
that on the date of formulation of scheme in Rule 50 and
issuance of guidelines thereunder by the Central
Government, there were not many indigenous
manufacturers in India with technical and financial
capability to undertake the job of supply of such high
dimension, on a long-term basis and in a manner to
ensure safety and security which is the prime object to
be achieved by the introduction of new sophisticated
registration plates.
39. The notice inviting tender is open to response by all
and even if one single manufacturer is ultimately
selected for a region or State, it cannot be said that the
State has created a monopoly of business in favour of a
private party. Rule 50 permits the RTOs concerned
themselves to implement the policy or to get it
implemented through a selected approved
manufacturer.
40. Selecting one manufacturer through a process of
open competition is not creation of any monopoly, as
contended, in violation of Article 19(1)(g) of the
Constitution read with clause (6) of the said article. As is
sought to be pointed out, the implementation involves
large network of operations of highly sophisticated
materials. The manufacturer has to have embossing
stations within the premises of the RTO. He has to
maintain the data of each plate which he would be
getting from his main unit. It has to be cross-checked by
the RTO data. There has to be a server in the RTO's
office which is linked with all RTOs in each State and
thereon linked to the whole nation. Maintenance of the
record by one and supervision over its activity would be
simpler for the State if there is one manufacturer
instead of multi-manufacturers as suppliers. The actual
operation of the scheme through the RTOs in their
premises would get complicated and confused if multi-
manufacturers are involved. That would also seriously
impair the high security concept in affixation of new
plates on the vehicles. If there is a single manufacturer
he can be forced to go and serve rural areas with thin
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vehicular population and less volume of business. Multi-
manufacturers might concentrate only on urban areas
with higher vehicular population.
***
43. 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. Article 14 of the Constitution prohibits the
Government from arbitrarily choosing a contractor at its
will and pleasure. It has to act reasonably, fairly and in
public interest in awarding contract. At the same time,
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. Undisputedly, the legal position which
has been firmly established from various decisions of
this Court, cited at the Bar [Ed.: Reference may be
made to the decisions in Air India Ltd. v. Cochin
International Airport Ltd., (2000) 2 SCC 617; Asia
Foundation & Construction Ltd. v. Trafalgar House
Construction (I) Ltd., (1997) 1 SCC 738; Krishnan
Kakkanth v. Govt. of Kerala, (1997) 9 SCC 495; Ugar
Sugar Works Ltd. v. Delhi Admn., (2001) 3 SCC 635;
Sterling Computers Ltd. v. M&N Publications Ltd., (1993)
1 SCC 445; Union of India v. Dinesh Engg. Corpn.,
(2001) 8 SCC 491.] is that government contracts are
highly valuable assets and the court should be prepared
to enforce standards of fairness on the Government in
its dealings with tenderers and contractors.
44. The grievance that the terms of notice inviting
tenders in the present case virtually create a monopoly
in favour of parties having foreign collaborations, is
without substance. Selection of a competent contractor
for assigning job of supply of a sophisticated article
through an open-tender procedure, is not an act of
creating monopoly, as is sought to be suggested on
behalf of the petitioners. What has been argued is that
the terms of the notices inviting tenders deliberately
exclude domestic manufacturers and new entrepreneurs
in the field. In the absence of any indication from the
record that the terms and conditions were tailor-made to
promote parties with foreign collaborations and to
exclude indigenous manufacturers, judicial interference
is uncalled for."
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After observing so, this Court dismissed all the writ
petitions directly filed in this Court and transferred to
this Court from the High Courts.
20. In Reliance Airport Developers (P) Ltd. v. Airports
Authority of India [(2006) 10 SCC 1] this Court held that
while judicial review cannot be denied in contractual
matters or matters in which the Government exercises
its contractual powers, such review is intended to
prevent arbitrariness and must be exercised in larger
public interest.
21. In Jagdish Mandal v. State of Orissa [(2007) 14
SCC 517] the following conclusion is relevant: (SCC pp.
531-32, para 22)
"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 &
Infrastructure (P) Ltd. v. Municipal Council, Sendhwa
[(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 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
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
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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.
16.36. By relying on the decision in the Michigan
Rubber Ltd.'s case, he submits that fixation of
value of the tender is entirely within the
purview of the executive. Formulation of
condition of a tender document and awarding a
contract is also within the purview of the State
authorities unless the fixation of value is
indicated to be arbitrary or unreasonable and
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the conditions formulated are found to be
malicious and a misuse of statutory powers, the
Courts ought not to interfere.
16.37. He relies upon the decision of the Hon'ble Apex
Court in B.S.N. Joshi & Sons Ltd. vs Nair
Coal Services Ltd & Ors.16, more particularly
para nos. 58-64, 65 and 66 thereof, which have
been reproduced hereunder for easy reference:
58. In Jagdish Swarup's Constitution of India, 2nd Edn.,
p. 286, it is stated:
"It is equally true that even in contractual matters, a
public authority does not have an unfettered decision to
ignore the norms recognised by the courts, but at the
same time if a decision has been taken by a public
authority in a bona fide manner, although not strictly
following the norms laid down by the courts, such
decision is upheld on the principle that the courts, while
judging the constitutional validity of executing decisions,
must grant a certain measure of freedom of 'play in the
joints' to the executive."
59. Recently, in Master Marine Services (P) Ltd. v.
Metcalfe & Hodgkinson (P) Ltd. [(2005) 6 SCC 138] ,
upon noticing a large number of decisions, this Court
stated: (SCC p. 148, para 15)
"15. The law relating to award of contract by the State
and public sector corporations was reviewed in Air India
Ltd. v. Cochin International Airport Ltd. [(2000) 2 SCC
617] and it was held that the award of a contract,
whether by a private party or by a State, is essentially a
commercial transaction. It can choose its own method to
arrive at a decision and it is free to grant any relaxation
for bona fide reasons, if the tender conditions permit
such a relaxation. It was further held that the State, its
corporations, instrumentalities and agencies have the
16
(2006) 11 SCC 548 | 2006 INSC 750
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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 powers 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 interfere."
(See also Noble Resources Ltd. v. State of Orissa
[(2006) 10 SCC 236 : (2006) 9 Scale 181] .)
60. Strong reliance has been placed by Mr Tankha on
G.J. Fernandez v. State of Karnataka [(1990) 2 SCC
488] wherein this Court observed: (SCC p. 501, para
15)
"15. Thirdly, the conditions and stipulations in a tender
notice like this have two types of consequences. The
first is that the party issuing the tender has the right to
punctiliously and rigidly enforce them. Thus, if a party
does not strictly comply with the requirements of para
III, V or VI of the NIT, it is open to the KPC to decline to
consider the party for the contract and if a party comes
to court saying that the KPC should be stopped from
doing so, the court will decline relief. The second
consequence, indicated by this Court in earlier decisions,
is not that the KPC cannot deviate from these guidelines
at all in any situation but that any deviation, if made,
should not result in arbitrariness or discrimination. It
comes in for application where the non-conformity with,
or relaxation from, the prescribed standards results in
some substantial prejudice or injustice to any of the
parties involved or to public interest in general. For
example, in this very case, the KPC made some changes
in the time-frame originally prescribed. These changes
affected all intending applicants alike and were not
objectionable. In the same way, changes or relaxations
in other directions would be unobjectionable unless the
benefit of those changes or relaxations were extended to
some but denied to others. The fact that a document
was belatedly entertained from one of the applicants will
cause substantial prejudice to another party who
wanted, likewise, an extension of time for filing a similar
certificate or document but was declined the benefit. It
may perhaps be said to cause prejudice also to a party
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which can show that it had refrained from applying for
the tender documents only because it thought it would
not be able to produce the document by the time
stipulated but would have applied had it known that the
rule was likely to be relaxed."
(emphasis supplied)
No such case of prejudice was made out by the
respondent before the High Court or before us.
61. Law on the similar term has been laid down in
Poddar Steel Corpn. v. Ganesh Engg. Works [(1991) 3
SCC 273] in the following terms: (SCC p. 276, para 6)
"6. It is true that in submitting its tender accompanied
by a cheque of the Union Bank of India and not of the
State Bank clause 6 of the tender notice was not obeyed
literally, but the question is as to whether the said non-
compliance deprived the Diesel Locomotive Works of the
authority to accept the bid. As a matter of general
proposition it cannot be held that an authority inviting
tenders is bound to give effect to every term mentioned
in the notice in meticulous detail, and is not entitled to
waive even a technical irregularity of little or no
significance. The requirements in a tender notice can be
classified into two categories -- those which lay down
the essential conditions of eligibility and the others
which are merely ancillary or subsidiary with the main
object to be achieved by the condition. In the first case
the authority issuing the tender may be required to
enforce them rigidly. In the other cases it must be open
to the authority to deviate from and not to insist upon
the strict literal compliance with the condition in
appropriate cases."
62. In Indian Rly. Construction Co. Ltd. v. Ajay Kumar
[(2003) 4 SCC 579 : 2003 SCC (L&S) 528] this Court
explained as to what would amount to bad faith and
non-application of mind in regard to exercise of power
on the part of the employer. It further opined that the
burden would be on the person who seeks to invalidate
or nullify the act or order to prove charge of bad faith
and abuse or mistake by the authority of its power. It
opined that an attempt should be made to balance the
conflicting interest.
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63. In Delhi Development Authority v. UEE Electricals
Engg. (P) Ltd. [(2004) 11 SCC 213] the Court was
considering a case where conduct of the Director of the
company was found to be relevant. However, the Court
opined that if the authority felt that in view of the
background facts, it would be undesirable to accept the
tender, the power of judicial review should not be
exercised in absence of any mala fides or irrationality.
64. In State of NCT of Delhi v. Sanjeev [(2005) 5 SCC
181 : 2005 SCC (Cri) 1025] the Court reiterated the
principles of judicial review.
65. We are not oblivious of the expansive role of the
superior courts in judicial review.
66. We are also not shutting our eyes towards the new
principles of judicial review which are being developed;
but the law as it stands now having regard to the
principles laid down in the aforementioned decisions
may be summarised as under:
(i) if there are essential conditions, the same must be
adhered to;
(ii) if there is no power of general relaxation, ordinarily
the same shall not be exercised and the principle of
strict compliance would be applied where it is possible
for all the parties to comply with all such conditions
fully;
(iii) if, however, a deviation is made in relation to all the
parties in regard to any of such conditions, ordinarily
again a power of relaxation may be held to be existing;
(iv) the parties who have taken the benefit of such
relaxation should not ordinarily be allowed to take a
different stand in relation to compliance with another
part of tender contract, particularly when he was also
not in a position to comply with all the conditions of
tender fully, unless the court otherwise finds relaxation
of a condition which being essential in nature could not
be relaxed and thus the same was wholly illegal and
without jurisdiction;
(v) when a decision is taken by the appropriate authority
upon due consideration of the tender document
submitted by all the tenderers on their own merits and if
it is ultimately found that successful bidders had in fact
substantially complied with the purport and object for
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which essential conditions were laid down, the same
may not ordinarily be interfered with;
(vi) the contractors cannot form a cartel. If despite the
same, their bids are considered and they are given an
offer to match with the rates quoted by the lowest
tenderer, public interest would be given priority;
(vii) where a decision has been taken purely on public
interest, the court ordinarily should exercise judicial
restraint.
16.38. By relying on B.S.N.Joshi's case, he submits
that bad faith and non-application of mind in
regard to excise of power on part of the
employer as alleged by the petitioner would
have to be established by the petitioner since
the burden is on the person who seeks to make
such an allegation. If the same were not to be
so discharged, this Court would be required to
presume that even if there is a deviation made
in relation to the terms of the contract, the
employer has such power of relaxation or
making a deviation and so long as such
relaxation or deviation is made by the
employer/tendering authority in the interest of
the project and/or in the interest of the public,
the same ought not to be interfered with and
the Constitution Courts would have to excise
judicial restraint. He further submits that even
this vague allegation made by the petitioner
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that the period of tender and/or the quantum of
tender being fixed at the district level having
been alleged to have been made to favour a
third parties has not been established. Even
inasmuch as the name of such third party has
not been pointed out by the petitioners.
16.39. He relies upon the decision of the Hon'ble Apex
Court in Asia Foundation & Constructions
Ltd vs Trafalgar House Constructions (I)
Ltd. & Ors.17, more particularly para no. 9
thereof, which has been reproduced hereunder
for easy reference:
9. The Asian Development Bank came into existence
under an Act called the Asian Development Act, 1966, in
pursuance of an international agreement to which India
was a signatory. This new financial institution was
established for accelerating the economic development
of Asia and the Far East. Under the Act the Bank and its
officers have been granted certain immunities,
exemption and privileges. It is well known that it is
difficult for the country to go ahead with such high cost
projects unless the financial institutions like the World
Bank or the Asian Development Bank grant loan or
subsidy, as the case may be. When such financial
institutions grant such huge loans they always insist that
any project for which loan has been sanctioned must be
carried out in accordance with the specification and
within the scheduled time and the procedure for
granting the award must be duly adhered to. In the
aforesaid premises on getting the evaluation bids of the
appellant and Respondent 1 together with the
consultant's opinion after the so-called corrections made
the conclusion of the Bank to the effect "the lowest
evaluated substantially responsive bidder is
consequently AFCONS" cannot be said to be either
17
(1997) 1 SCC 738 | 1996 INSC 1497
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arbitrary or capricious or illegal requiring Court's
interference in the matter of an award of contract. There
was some dispute between the Bank on one hand and
the consultant who was called upon to evaluate on the
other on the question whether there is any power of
making any correction to the bid documents after a
specified period. The High Court in construing certain
clauses of the bid documents has come to the conclusion
that such a correction was permissible and, therefore,
the Bank could not have insisted upon granting the
contract in favour of the appellant. We are of the
considered opinion that it was not within the permissible
limits of interference for a court of law, particularly when
there has been no allegation of malice or ulterior motive
and particularly when the court has not found any mala
fides or favouritism in the grant of contract in favour of
the appellant. In Tata Cellular v. Union of India [(1994)
6 SCC 651] this Court has held that:
"The duty of the court is to confine itself to the question
of legality. Its concern should be:
1. Whether a decision-making authority exceeded its
powers,
2. committed an error of law,
3. committed a breach of the rules of natural justice,
4. reached a decision which no reasonable tribunal
would have reached or,
5. abused its powers.
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.
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The above are only the broad grounds but it does not
rule out addition of further grounds in course of time."
16.40. By relying on Trafalgar House
Constructions's case, he submits that it is not
permissible for the Court to hold that some
corrections have to be made in a contract when
in fact there is no allegation of malice or
ulterior motive and/or when the Court has not
found any malafide or favouritism in the grant
of contract in favour of the successful tenderer.
16.41. He relies upon the decision of the Hon'ble Apex
Court in Tata Cellular vs Union of India18,
more particularly para nos. 70-92, 93 and 94
thereof, which have been reproduced hereunder
for easy reference:
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.
18
(1994) 6 SCC 651 | 1994 INSC 283
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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.
72. Lord Scarman in Nottinghamshire County Council v.
Secretary of State for the Environment [1986 AC 240,
251 : (1986) 1 All ER 199] proclaimed:
" 'Judicial review' is a great weapon in the hands of the
judges; but the judges must observe the constitutional
limits set by our parliamentary system upon the exercise
of this beneficial power."
Commenting upon this Michael Supperstone and James
Goudie in their work Judicial Review (1992 Edn.) at p.
16 say:
"If anyone were prompted to dismiss this sage warning
as a mere obiter dictum from the most radical member
of the higher judiciary of recent times, and therefore to
be treated as an idiosyncratic aberration, it has received
the endorsement of the Law Lords generally. The words
of Lord Scarman were echoed by Lord Bridge of Harwich,
speaking on behalf of the Board when reversing an
interventionist decision of the New Zealand Court of
Appeal in Butcher v. Petrocorp Exploration Ltd. 18-3-
1991."
73. Observance of judicial restraint is currently the
mood in England. The judicial power of review is
exercised to rein in any unbridled executive functioning.
The restraint has two contemporary manifestations. One
is the ambit of judicial intervention; the other covers the
scope of the court's ability to quash an administrative
decision on its merits. These restraints bear the
hallmarks of judicial control over administrative action.
74. Judicial review is concerned with reviewing not the
merits of the decision in support of which the application
for judicial review is made, but the decision-making
process itself.
75. In Chief Constable of the North Wales Police v.
Evans [(1982) 3 All ER 141, 154] Lord Brightman said:
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"Judicial review, as the words imply, is not an appeal
from a decision, but a review of the manner in which the
decision was made.
***
Judicial review is concerned, not with the decision, but
with the decision-making process. Unless that restriction
on the power of the court is observed, the court will in
my view, under the guise of preventing the abuse of
power, be itself guilty of usurping power."
In the same case Lord Hailsham commented on the
purpose of the remedy by way of judicial review under
RSC, Ord. 53 in the following terms:
"This remedy, vastly increased in extent, and rendered,
over a long period in recent years, of infinitely more
convenient access than that provided by the old
prerogative writs and actions for a declaration, is
intended to protect the individual against the abuse of
power by a wide range of authorities, judicial, quasi-
judicial, and, as would originally have been thought
when I first practised at the Bar, administrative. It is not
intended to take away from those authorities the powers
and discretions properly vested in them by law and to
substitute the courts as the bodies making the decisions.
It is intended to see that the relevant authorities use
their powers in a proper manner (p. 1160)."
In R. v. Panel on Take-overs and Mergers, ex p Datafin
plc [(1987) 1 All ER 564] , Sir John Donaldson, M.R.
commented:
"An application for judicial review is not an appeal."
In Lonrho plc v. Secretary of State for Trade and
Industry [(1989) 2 All ER 609] , Lord Keith said:
"Judicial review is a protection and not a weapon."
It is thus different from an appeal. When hearing an
appeal the Court is concerned with the merits of the
decision under appeal. In Amin, Re [Amin v. Entry
Clearance Officer, (1983) 2 All ER 864] , Lord Fraser
observed that:
"Judicial review is concerned not with the merits of a
decision but with the manner in which the decision was
made.... Judicial review is entirely different from an
ordinary appeal. It is made effective by the court
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quashing the administrative decision without substituting
its own decision, and is to be contrasted with an appeal
where the appellate tribunal substitutes its own decision
on the merits for that of the administrative officer."
76. In R. v. Panel on Take-overs and Mergers, ex p in
Guinness plc [(1990) 1 QB 146 : (1989) 1 All ER 509] ,
Lord Donaldson, M.R. referred to the judicial review
jurisdiction as being supervisory or 'longstop'
jurisdiction. Unless that restriction on the power of the
court is observed, the court will, under the guise of
preventing the abuse of power, be itself guilty of
usurping power.
77. The duty of the court is to confine itself to the
question of legality. Its concern should be:
1. Whether a decision-making authority exceeded its
powers?
2. Committed an error of law,
3. committed a breach of the rules of natural justice,
4. reached a decision which no reasonable tribunal
would have reached or,
5. abused its powers.
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.
The above are only the broad grounds but it does not
rule out addition of further grounds in course of time. As
a matter of fact, in R. v. Secretary of State for the Home
Department, ex Brind [(1991) 1 AC 696] , Lord Diplock
refers specifically to one development, namely, the
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possible recognition of the principle of proportionality. In
all these cases the test to be adopted is that the court
should, "consider whether something has gone wrong of
a nature and degree which requires its intervention".
78. What is this charming principle of Wednesbury
unreasonableness? Is it a magical formula? In R. v.
Askew [(1768) 4 Burr 2186 : 98 ER 139] , Lord
Mansfield considered the question whether mandamus
should be granted against the College of Physicians. He
expressed the relevant principles in two eloquent
sentences. They gained greater value two centuries
later:
"It is true, that the judgment and discretion of
determining upon this skill, ability, learning and
sufficiency to exercise and practise this profession is
trusted to the College of Physicians and this Court will
not take it from them, nor interrupt them in the due and
proper exercise of it. But their conduct in the exercise of
this trust thus committed to them ought to be fair,
candid and unprejudiced; not arbitrary, capricious, or
biased; much less, warped by resentment, or personal
dislike."
79. To quote again, Michael Supperstone and James
Goudie; in their work Judicial Review (1992 Edn.) it is
observed at pp. 119 to 121 as under:
"The assertion of a claim to examine the reasonableness
been done by a public authority inevitably led to
differences of judicial opinion as to the circumstances in
which the court should intervene. These differences of
opinion were resolved in two landmark cases which
confined the circumstances for intervention to narrow
limits. In Kruse v. Johnson [(1898) 2 QB 91 : (1895-9)
All ER Rep 105] a specially constituted divisional court
had to consider the validity of a bye-law made by a local
authority. In the leading judgment of Lord Russell of
Killowen, C.J., the approach to be adopted by the court
was set out. Such bye-laws ought to be 'benevolently'
interpreted, and credit ought to be given to those who
have to administer them that they would be reasonably
administered. They could be held invalid if unreasonable
: Where for instance bye-laws were found to be partial
and unequal in their operation as between different
classes, if they were manifestly unjust, if they disclosed
bad faith, or if they involved such oppressive or
gratuitous interference with the rights of citizens as
could find no justification in the minds of reasonable
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men. Lord Russell emphasised that a bye-law is not
unreasonable just because particular judges might think
it went further than was prudent or necessary or
convenient.
In 1947 the Court of Appeal confirmed a similar
approach for the review of executive discretion generally
in Associated Provincial Picture Houses Ltd. v.
Wednesbury Corpn [(1948) 1 KB 223 : (1947) 2 All ER
680] . This case was concerned with a complaint by the
owners of a cinema in Wednesbury that it was
unreasonable of the local authority to licence
performances on Sunday only subject to a condition that
'no children under the age of 15 years shall be admitted
to any entertainment whether accompanied by an adult
or not'. In an extempore judgment, Lord Greene, M.R.
drew attention to the fact that the word 'unreasonable'
had often been used in a sense which comprehended
different grounds of review. (At p. 229, where it was
said that the dismissal of a teacher for having red hair
(cited by Warrington, L.J. in Short v. Poole Corpn.
[(1926) 1 Ch 66, 91 : 1925 All ER Rep 74] , as an
example of a 'frivolous and foolish reason') was, in
another sense, taking into consideration extraneous
matters, and might be so unreasonable that it could
almost be described as being done in bad faith; see also
R. v. Tower Hamlets London Borough Council, ex p
Chetnik Developments Ltd. [1988 AC 858, 873 : (1988)
2 WLR 654 : (1988) 1 All ER 961] (Chapter 4, p. 73,
supra). He summarised the principles as follows:
'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.'
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This summary by Lord Greene has been applied in
countless subsequent cases.
"The modern statement of the principle is found in a
passage in the speech of Lord Diplock in Council of Civil
Service Unions v. Minister for Civil Service [(1985) 1 AC
374 : (1984) 3 All ER 935 : (1984) 3 WLR 1174] :
'By "irrationality" I mean what can now be succinctly
referred to as "Wednesbury unreasonableness".
(Associated Provincial Picture Houses Ltd. v.
Wednesbury Corpn. [(1948) 1 KB 223 : (1947) 2 All ER
680] ) It applies to a decision which is so outrageous in
its defiance of logic or of accepted moral standards that
no sensible person who had applied his mind to the
question to be decided could have arrived at.' "
80. At this stage, The Supreme Court Practice, 1993,
Vol. 1, pp. 849-850, may be quoted:
"4. Wednesbury principle.-- A decision of a public
authority will be liable to be quashed or otherwise dealt
with by an appropriate order in judicial review
proceedings where the court concludes that the decision
is such that no authority properly directing itself on the
relevant law and acting reasonably could have reached
it. (Associated Provincial Picture Houses Ltd. v.
Wednesbury Corpn. [(1948) 1 KB 223 : (1947) 2 All ER
680] , per Lord Greene, M.R.)"
81. Two other facets of irrationality may be mentioned.
(1) It is open to the court to review the decision-maker's
evaluation of the facts. The court will intervene where
the facts taken as a whole could not logically warrant
the conclusion of the decision-maker. If the weight of
facts pointing to one course of action is overwhelming,
then a decision the other way, cannot be upheld. Thus,
in Emma Hotels Ltd. v. Secretary of State for
Environment [(1980) 41 P & CR 255] , the Secretary of
State referred to a number of factors which led him to
the conclusion that a non-resident's bar in a hotel was
operated in such a way that the bar was not an incident
of the hotel use for planning purposes, but constituted a
separate use. The Divisional Court analysed the factors
which led the Secretary of State to that conclusion and,
having done so, set it aside. Donaldson, L.J. said that he
could not see on what basis the Secretary of State had
reached his conclusion.
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(2) A decision would be regarded as unreasonable if it is
impartial and unequal in its operation as between
different classes. On this basis in R. v. Barnet London
Borough Council, ex p Johnson [(1989) 88 LGR 73] the
condition imposed by a local authority prohibiting
participation by those affiliated with political parties at
events to be held in the authority's parks was struck
down.
82. Bernard Schwartz in Administrative Law, 2nd Edn.,
p. 584 has this to say:
"If the scope of review is too broad, agencies are turned
into little more than media for the transmission of cases
to the courts. That would destroy the values of agencies
created to secure the benefit of special knowledge
acquired through continuous administration in
complicated fields. At the same time, the scope of
judicial inquiry must not be so restricted that it prevents
full inquiry into the question of legality. If that question
cannot be properly explored by the judge, the right to
review becomes meaningless. 'It makes judicial review
of administrative orders a hopeless formality for the
litigant. ... It reduces the judicial process in such cases
to a mere feint.'
Two overriding considerations have combined to narrow
the scope of review. The first is that of deference to the
administrative expert. In Chief Justice Neely's words:
'I have very few illusions about my own limitations as a
judge and from those limitations I generalise to the
inherent limitations of all appellate courts reviewing rate
cases. It must be remembered that this Court sees
approximately 1262 cases a year with five judges. I am
not an accountant, electrical engineer, financier, banker,
stock broker, or systems management analyst. It is the
height of folly to expect judges intelligently to review a
5000 page record addressing the intricacies of public
utility operation.'
It is not the function of a judge to act as a superboard,
or with the zeal of a pedantic schoolmaster substituting
its judgment for that of the administrator.
The result is a theory of review that limits the extent to
which the discretion of the expert may be scrutinised by
the non-expert judge. The alternative is for the court to
overrule the agency on technical matters where all the
advantages of expertise lie with the agencies. If a court
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were to review fully the decision of a body such as state
board of medical examiners 'it would find itself
wandering amid the maze of therapeutics or boggling at
the mysteries of the pharmacopoeia'. Such a situation as
a state court expressed it many years ago 'is not a case
of the blind leading the blind but of one who has always
been deaf and blind insisting that he can see and hear
better than one who has always had his eyesight and
hearing and has always used them to the utmost
advantage in ascertaining the truth in regard to the
matter in question'.
The second consideration leading to narrow review is
that of calendar pressure. In practical terms it may be
the more important consideration. More than any theory
of limited review it is the pressure of the judicial
calendar combined with the elephantine bulk of the
record in so many review proceedings which leads to
perfunctory affirmance of the vast majority of agency
decisions."
83. A modern comprehensive statement about judicial
review by Lord Denning is very apposite; it is perhaps
worthwhile noting that he stresses the supervisory
nature of the jurisdiction:
"Parliament often entrusts the decision of a matter to a
specified person or body, without providing for any
appeal. It may be a judicial decision, or a quasi-judicial
decision, or an administrative decision. Sometimes
Parliament says its decision is to be final. At other times
it says nothing about it. In all these cases the courts will
not themselves take the place of the body to whom
Parliament has entrusted the decision. The courts will
not themselves embark on a rehearing of the matter.
See Healey v. Minister of Health [(1955) 1 QB 221 :
(1954) 3 All ER 449 : (1954) 3 WLR 815] . But
nevertheless, the courts will, if called upon, act in a
supervisory capacity. They will see that the decision-
making body acts fairly. See H.K. (an infant), Re
[(1967) 2 QB 617, 630 : (1967) 1 All ER 226 : (1967) 2
WLR 692] , and R. v. Gaming Board for Great Britain, ex
p Benaim and Khaida [(1970) 2 QB 417 : (1970) 2 All
ER 528 : (1970) 2 WLR 1009] . The courts will ensure
that the body acts in accordance with the law. If a
question arises on the interpretation of words, the courts
will decide it by declaring what is the correct
interpretation. See Punton v. Ministry of Pensions and
National Insurance [(1963) 1 WLR 186 : (1963) 1 All ER
275] . And if the decision-making body has gone wrong
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in its interpretation they can set its order aside. See
Ashbridge Investments Ltd. v. Minister of Housing and
Local Government [(1965) 1 WLR 1320 : (1965) 3 All ER
371] . (I know of some expressions to the contrary but
they are not correct). If the decision-making body is
influenced by considerations which ought not to
influence it; or fails to take into account matters which it
ought to take into account, the court will interfere. See
Padfield v. Minister of Agriculture, Fisheries and Food
[1968 AC 997 : (1968) 1 All ER 694] . If the decision-
making body comes to its decision on no evidence or
comes to an unreasonable finding -- so unreasonable
that a reasonable person would not have come to it --
then again the courts will interfere. See Associated
Provincial Picture Houses Ltd. v. Wednesbury Corpn.
[(1948) 1 KB 223 : (1947) 2 All ER 680] If the decision-
making body goes outside its powers or misconstrues
the extent of its powers, then, too the courts can
interfere. See Anisminic Ltd. v. Foreign Compensation
Commission [(1969) 2 AC 147 : (1969) 1 All ER 208 :
(1969) 2 WLR 163] . And, of course, if the body acts in
bad faith or for an ulterior object, which is not
authorised by law, its decision will be set aside. See
Sydney Municipal Council v. Campbell [1925 AC 338 :
1924 All ER Rep 930] . In exercising these powers, the
courts will take into account any reasons which the body
may give for its decisions. If it gives no reasons -- in a
case when it may reasonably be expected to do so, the
courts may infer that it has no good reason for reaching
its conclusion, and act accordingly. See Padfield case (as
AC pp. 1007, 1061) [1968 AC 997 : (1968) 1 All ER
694] ."
84. We may usefully refer to Administrative Law
Rethinking Judicial Control of Bureaucracy by
Christopher F. Edley, JR (1990 Edn.). At p. 96 it is
stated thus:
"A great deal of administrative law boils down to the
scope of review problem; defining what degree of
deference a court will accord to an agency's findings,
conclusions, and choices, including choice of procedures.
It is misleading to speak of a 'doctrine', or 'the law', of
scope of review. It is instead just a big problem, that is
addressed piecemeal by a large collection of doctrines.
Kenneth Culp Davis has offered a condensed summary
of the subject:
'Courts usually substitute (their own) judgment on the
kind of questions of law that are within their special
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competence, but on other question they limit themselves
to deciding reasonableness; they do not clarify the
meaning of reasonableness but retain full discretion in
each case to stretch it in either direction.' "
85. In Universal Camera Corpn. v. National Labor
Relations Board [340 US 474, 488-89 : 95 L Ed 456
(1950)] Justice Frankfurter stated:
"A formula for judicial review of administrative action
may afford grounds for certitude but cannot assure
certainty of application. Some scope for judicial
discretion in applying the formula can be avoided only
by falsifying the actual process of judging or by using
the formula as an instrument of futile casuistry. It
cannot be too often repeated that judges are not
automata. The ultimate reliance for the fair operation of
any standard is a judiciary of high competence and
character and the constant play of an informed
professional critique upon its work. Since the precise
way in which courts interfere with agency findings
cannot be imprisoned within any form of words, new
formulas attempting to rephrase the old are not likely to
be more helpful than the old. There are no talismanic
words that can avoid the process of judgment. The
difficulty is that we cannot escape, in relation to this
problem, the use of undefined defining terms."
86. An innovative approach is made by Clive Lewis as to
why the courts should be slow in quashing
administrative decisions (in his Judicial Remedies in
Public Law 1992 Edn. at pp. 294-95). The illuminating
passage reads as under:
"The courts now recognise that the impact on the
administration is relevant in the exercise of their
remedial jurisdiction. Quashing decisions may impose
heavy administrative burdens on the administration,
divert resources towards reopening decisions, and lead
to increased and unbudgeted expenditure. Earlier cases
took the robust line that the law had to be observed,
and the decision invalidated whatever the administrative
inconvenience caused. The courts nowadays recognise
that such an approach is not always appropriate and
may not be in the wider public interest. The effect on
the administrative process is relevant to the courts'
remedial discretion and may prove decisive. This is
particularly the case when the challenge is procedural
rather than substantive, or if the courts can be certain
that the administrator would not reach a different
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decision even if the original decisions were quashed.
Judges may differ in the importance they attach to the
disruption that quashing a decision will cause. They may
also be influenced by the extent to which the illegality
arises from the conduct of the administrative body itself,
and their view of that conduct.
The current approach is best exemplified by R. v.
Monopolies and Mergers Commission, ex p Argyll Group
plc [(1986) 1 WLR 736, 774 : (1986) 2 All ER 257, CA]
."
87. Sir John Donaldson, M.R. in R. v. Monopolies and
Mergers Commission, ex p Argyll Group plc [(1986) 1
WLR 736, 774 : (1986) 2 All ER 257, CA] observed thus:
"We are sitting as a public law court concerned to review
an administrative decision, albeit one which has to be
reached by the application of judicial or quasi-judicial
principles. We have to approach our duties with a proper
awareness of the needs of public administration. I
cannot catalogue them all but, in the present context,
would draw attention to a few which are relevant.
Good public administration is concerned with substance
rather than form.
... Good public administration is concerned with the
speed of decision, particularly in the financial field.
... Good public administration requires a proper
consideration of the public interest. In this context, the
Secretary of State is the guardian of the public interest.
... Good public administration requires a proper
consideration of the legitimate interests of individual
citizens, however rich and powerful they may be and
whether they are natural or juridical persons. But in
judging the relevance of an interest, however legitimate,
regard has to be had to the purpose of the
administrative process concerned.
... Lastly, good public administration requires
decisiveness and finality, unless there are compelling
reasons to the contrary."
88. We may now look at some of the pronouncements of
this Court including the authorities cited by Mr Ashoke
Sen. Fasih Chaudhary v. Director General, Doordarshan
[(1989) 1 SCC 89] was a case in which the Court was
concerned with the award of a contract for show of
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sponsored TV serial. At p. 92 in paragraphs 5 and 6 it
was held thus:
"It is well settled that there should be fair play in action
in a situation like the present one, as was observed by
this Court in Ram & Shyam Co. v. State of Haryana
[(1985) 3 SCC 267, 268-69] . It is also well settled that
the authorities like Doordarshan should act fairly and
their action should be legitimate and fair and transaction
should be without any aversion, malice or affection.
Nothing should be done which gives the impression of
favouritism or nepotism. See the observations of this
Court in Haji T.M. Hassan Rawther v. Kerala Financial
Corpn. [(1988) 1 SCC 166, 173 (para 14)]
While, as mentioned hereinbefore, fair play in action in
matters like the present one is an essential requirement,
similarly, however, 'free play in the joints' is also a
necessary concomitant for an administrative body
functioning in an administrative sphere or quasi-
administrative sphere as the present one. Judged from
that standpoint of view, though all the proposals might
not have been considered strictly in accordance with
order of precedence, it appears that these were
considered fairly, reasonably, objectively and without
any malice or ill-will."
89. In G.B. Mahajan v. Jalgaon Municipal Council
[(1991) 3 SCC 91 (para 43-46)] the concept of
reasonableness in administrative law came to be dealt
with elaborately by one of us, Venkatachaliah, J. (as he
then was). In paragraphs 37 to 41 the Court observed
thus:
"It was urged that the basic concept of the manner of
the development of the real estate and disposal of
occupancy rights were vitiated by unreasonableness. It
is a truism, doctrinally, that powers must be exercised
reasonably. But as Prof. Wade points out:
'The doctrine that powers must be exercised reasonably
has to be reconciled with the no less important doctrine
that the court must not usurp the discretion of the public
authority which Parliament appointed to take the
decision. Within the bounds of legal reasonableness is
the area in which the deciding authority has genuinely
free discretion. If it passes those bounds, it acts ultra
vires. The court must therefore resist the temptation to
draw the bounds too tightly, merely according to its own
opinion. It must strive to apply an objective standard
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which leaves to the deciding authority the full range of
choices which the legislature is presumed to have
intended. Decisions which are extravagant or capricious
cannot be legitimate. But if the decision is within the
confines of reasonableness, it is no part of the court's
function to look further into its merits. "With the
question whether a particular policy is wise or foolish the
court is not concerned; it can only interfere if to pursue
it is beyond the powers of the authority"...'
In the arguments there is some general
misapprehension of the scope of the 'reasonableness'
test in administrative law. By whose standards of
reasonableness that a matter is to be decided? Some
phrases which pass from one branch of law to another --
as did the expressions 'void' and 'voidable' from private
law areas to public law situations -- carry over with
them meanings that may be inapposite in the changed
context. Some such thing has happened to the words
'reasonable', 'reasonableness' etc. In Tiller v. Atlantic
Coast Line Rail Road Co. [318 US 54 : 87 L Ed 610
(1942)] , Justice Frankfurter said:
'A phrase begins life as a literary expression; its felicity
leads to its lazy repetition; and repetition soon
establishes it as a legal formula, undiscriminatingly used
to express different and sometimes contradictory ideas.'
Different contexts in which the operation of
'reasonableness' as test of validity operates must be
kept distinguished. For instance as the arguments in the
present case invoke, the administrative law test of
'reasonableness' as the touchstone of validity of the
impugned resolutions is different from the test of the
'reasonable man' familiar to the law of torts, whom
English law figuratively identifies as the 'man on the
Clapham omnibus'. In the latter case the standards of
the 'reasonable man', to the extent such a 'reasonable
man' is court's creation, is in a manner of saying, a
mere transferred epithet. Lord Radcliffe observed : (All
ER p. 160)
'By this time, it might seem that the parties themselves
have become so far disembodied spirits that their actual
persons should be allowed to rest in peace. In their
place there rises the figure of the fair and reasonable
man. And the spokesman of the fair and reasonable
man, who represents after all no more than the
anthropomorphic conception of justice, is, and must be,
the court itself....'
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(emphasis supplied)
See Davis Contractors Ltd. v. Fareham U.D.C. [(1956) 2
All ER 145, 160 : 1956 AC 696 : (1956) 3 WLR 37]
Yet another area of reasonableness which must be
distinguished is the constitutional standards of
'reasonableness' of the restrictions on the fundamental
rights of which the court of judicial review is the arbiter.
The administrative law test of reasonableness is not by
the standards of the 'reasonable man' of the torts law.
Prof. Wade says:
'This is not therefore the standard of "the man on the
Clapham omnibus". It is the standard indicated by a true
construction of the Act which distinguishes between
what the statutory authority may or may not be
authorised to do. It distinguishes between proper use
and improper abuse of power. It is often expressed by
saying that the decision is unlawful if it is one to which
no reasonable authority could have come. This is the
essence of what is now commonly called "Wednesbury
unreasonableness", after the now famous case in which
Lord Greene, M.R. expounded it.' "
(emphasis supplied)
90. Referring to the doctrine of unreasonableness, Prof.
Wade says in Administrative Law (supra):
"The point to note is that a thing is not unreasonable in
the legal sense merely because the court thinks it is
unwise."
91. In Food Corpn. of India v. Kamdhenu Cattle Feed
Industries [(1993) 1 SCC 71] it was observed thus :
(SCC p. 76, para 7)
"In contractual sphere as in all other State actions, the
State and all its instrumentalities have to conform to
Article 14 of the Constitution of which non-arbitrariness
is a significant facet. There is no unfettered discretion in
public law : A public authority possesses powers only to
use them for public good. This imposes the duty to act
fairly and to adopt a procedure which is 'fairplay in
action'."
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92. In Sterling Computers Limited v. M&N Publications
Ltd. [(1993) 1 SCC 445] this Court observed thus : (SCC
p. 455, para 12)
"In contracts having commercial element, some more
discretion has to be conceded to the authorities so that
they may enter into contracts with persons, keeping an
eye on the augmentation of the revenue. But even in
such matters they have to follow the norms recognised
by courts while dealing with public property. It is not
possible for courts to question and adjudicate every
decision taken by an authority, because many of the
Government Undertakings which in due course have
acquired the monopolist position in matters of sale and
purchase of products and with so many ventures in
hand, they can come out with a plea that it is not always
possible to act like a quasi-judicial authority while
awarding contracts. Under some special circumstances a
discretion has to be conceded to the authorities who
have to enter into contract giving them liberty to assess
the overall situation for purpose of taking a decision as
to whom the contract be awarded and at what terms. If
the decisions have been taken in bona fide manner
although not strictly following the norms laid down by
the courts, such decisions are upheld on the principle
laid down by Justice Holmes, that courts while judging
the constitutional validity of executive decisions must
grant certain measure of freedom of 'play in the joints'
to the executive."
93. In Union of India v. Hindustan Development Corpn.
[(1993) 3 SCC 499] this Court held thus : (SCC p. 515,
para 9)
"... the Government had the right to either accept or
reject the lowest offer but that of course, if done on a
policy, should be on some rational and reasonable
grounds. In Erusian Equipment & Chemicals Ltd. v. State
of W.B. [(1975) 1 SCC 70 : (1975) 2 SCR 674] this
Court observed as under : (SCC p. 75, para 17)
'When the Government is trading with the public, "the
democratic form of Government demands equality and
absence of arbitrariness and discrimination in such
transactions". The activities of the Government have a
public element and, therefore, there should be fairness
and equality. The State need not enter into any contract
with anyone, but if it does so, it must do so fairly
without discrimination and without unfair procedure.' "
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94. The principles deducible from the above are:
(1) The modern trend points to judicial restraint in
administrative action.
(2) The court does not sit as a court of appeal but
merely reviews the manner in which the decision was
made.
(3) The court does not have the expertise to correct the
administrative decision. If a review of the administrative
decision is permitted it will be substituting its own
decision, without the necessary expertise which itself
may be fallible.
(4) The terms of the invitation to tender cannot be open
to judicial scrutiny because the invitation to tender is in
the realm of contract. Normally speaking, the decision to
accept the tender or award the contract is reached by
process of negotiations through several tiers. More often
than not, such decisions are made qualitatively by
experts.
(5) The Government must have freedom of contract. In
other words, a fair play in the joints is a necessary
concomitant for an administrative body functioning in an
administrative sphere or quasi-administrative sphere.
However, the decision must not only be tested by the
application 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.
Based on these principles we will examine the facts of
this case since they commend to us as the correct
principles.
16.42. He submits that the decision of the Hon'ble
Apex Court in Tata Cellular's case is one of
the leading decisions insofar as the power of
the Courts to interfere in administrative actions
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which should include contractual matters like
tenders and submits that the modern trend is
for the Courts to excise judicial restraint in
administrative or economic matters where
decisions have been taken by persons who have
expertise in the field. The power of judicial
review vested with Constitutional Courts in
contractual matters is not one of an appeal but
is only to excise power to ascertain if there is
no wrongdoing by the executive. The Courts
not having any expertise in such fields ought
not to try and substitute its wisdom for that of
the State or its agencies and on that basis, he
submits that the Government should
necessarily have the freedom to contract and
any action taken by the State and/or its
agencies can be tested by the application of the
Wednesbury's principles of reasonableness and
as also ascertaining whether the decision and
action on part of the States or its authorities
are free from arbitrariness, not affected by bias
or actuated by malafides. Again, needless to
say all these aspects are required to be
established by the person alleging that there is
arbitrariness, bias or malafides. In the present
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case, he submits that except for making a
vague allegation of arbitrariness, bias and
malafides, the petitioners have not established
the same. The respondents having the
necessary expertise and formulated and issued
the tender which is applicable to one and all,
the petitioners not having been able to
establish that the tender conditions were
drafted to suit a particular person or entity, the
petitioners have miserably failed in establishing
any lacunae in the tender process.
16.43. He relies upon the decision of the Hon'ble Apex
Court in Airport Authority of India vs
Centre for Aviation Policy, Safety &
Research & Ors.19, more particularly para nos.
26-32, 33 and 34 thereof, which have been
reproduced hereunder for easy reference:
26. At the outset, it is required to be noted that
respondent No. 1 claiming to be a non-profit
organisation carrying out research, advisory and
advocacy in the field of civil aviation had filed a writ
petition challenging the tender conditions in the
respective RFPs. It is required to be noted that none of
the GHAs who participated in the tender process and/or
could have participated in the tender process have
challenged the tender conditions. It is required to be
noted that the writ petition before the High Court was
not in the nature of Public Interest Litigation. In that
view of the matter, it is not appreciable how respondent
No. 1 - original writ petitioner being an NGO would have
19
(2022) SCC OnLine SC 1334
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any locus standi to maintain the writ petition challenging
the tender conditions in the respective RFPs. Respondent
No. 1 cannot be said to be an" aggrieved party".
Therefore, in the present case, the High Court has erred
in entertaining the writ petition at the instance of
respondent No. 1, challenging the eligibility
criteria/tender conditions mentioned in the respective
RFPs. The High Court ought to have dismissed the writ
petition on the ground of locus standi of respondent No.
1 - original writ petitioner to maintain the writ petition.
27. Even otherwise, even on merits also, the High Court
has erred in quashing and setting aside the eligibility
criteria/tender conditions mentioned in the respective
RFPs, while exercising the powers under Article 226 of
the Constitution of India. As per the settled position of
law, the terms and conditions of the Invitation to Tender
are within the domain of the tenderer/tender making
authority and are not open to judicial scrutiny, unless
they are arbitrary, discriminatory or mala fide. As per
the settled position of law, the terms of the Invitation to
Tender are not open to judicial scrutiny, the same being
in the realm of contract. The
Government/tenderer/tender making authority must
have a free hand in setting the terms of the tender.
28. While considering the scope and ambit of the High
Court under Article 226 of the Constitution of India with
respect to judicial scrutiny of the eligibility
criteria/tender conditions, few decisions of this Court are
required to be referred to, which are as under:
29. In the case of Maa Binda Express Carrier (supra), in
paragraph 8, this Court observed and held as under:
"8. The scope of judicial review in matters relating to
award of contracts by the State and its instrumentalities
is settled by a long line of decisions of this Court. While
these decisions clearly recognise that power exercised
by the Government and its instrumentalities in regard to
allotment of contract is subject to judicial review at the
instance of an aggrieved party, submission of a tender in
response to a notice inviting such tenders is no more
than making an offer which the State or its agencies are
under no obligation to accept. The bidders participating
in the tender process cannot, therefore, insist that their
tenders should be accepted simply because a given
tender is the highest or lowest depending upon whether
the contract is for sale of public property or for
execution of works on behalf of the Government. All that
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participating bidders are entitled to is a fair, equal and
non-discriminatory treatment in the matter of evaluation
of their tenders. It is also fairly well settled that award
of a contract is essentially a commercial transaction
which must be determined on the basis of consideration
that are relevant to such commercial decision. This
implies that terms subject to which tenders are invited
are not open to the judicial scrutiny unless it is found
that the same have been tailor-made to benefit any
particular tenderer or class of tenderers. So also, the
authority inviting tenders can enter into negotiations or
grant relaxation for bona fide and cogent reasons
provided such relaxation is permissible under the terms
governing the tender process."
30. In the case of Michigan Rubber (India) Ltd. (supra),
after considering the law on the judicial scrutiny with
respect to tender conditions, ultimately it is concluded in
paragraph 23 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
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;
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(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."
31. In the aforesaid decision, it is further observed that
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. It is further observed that 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 fair,
wiser or logical.
32. Similar views have been expressed in the case of
Educomp Datamatics Ltd. (supra) and Meerut
Development Authority (supra).
33. In the present case, the AAI explained before the
High Court the rationale behind the respective
conditions, namely, clustering of 49 airports into 4
region-wise sub-categories/clusters; criteria for
evaluation - 36 months experience in past 7 years in
providing 3 out of 7 Core GHS and the financial capacity
- Annual Turnover of Rs. 30 crores (modified as Rs. 18
crores) in any one of last three financial years.
34. Having gone through the respective
clauses/conditions which are held to be arbitrary and
illegal by the High Court, we are of the opinion that the
same cannot be said to be arbitrary and/or mala fide
and/or actuated by bias. It was for the AAI to decide its
own terms and fix the eligibility criteria.
16.44. By relying on Airport Authority of India's
case, he submits that it is the settled position
of law that the terms and conditions of
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invitation to tenders are within the domain of
the tenderers or Tender Making Authority and
are not open to judicial scrutiny unless they are
arbitrary, discriminatory or malafide. Thus, as
such, apart from those circumstances, the
invitation to tender is not open to judicial
scrutiny, the same being in the realm of
contract. The State, having provided a
reasonable explanation as to why the earlier
policy of inviting tenders at the Taluka level has
now been changed to the District level. This
explanation not being arbitrary, malafide or
discriminatory is required to be accepted by this
Court and the petition is required to be
dismissed.
16.45. He relies upon the decision of the Hon'ble Apex
Court in Air India Ltd. vs Cochin
International Airport Ltd. & Ors.20, more
particularly para nos. 7, 8 and 9 thereof, which
have been reproduced hereunder for easy
reference:
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] , Fertilizer Corpn. Kamgar Union (Regd.) v. Union
20
(2000) 2 SCC 617 | 2000 INSC 39
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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.
8. In view of this settled legal position, Mr Andhyarujina,
learned Senior Counsel appearing for Cambatta rightly
and fairly did not dispute that CIAL was not bound to
accept the highest offer or that it was entitled to enter
into negotiations with Air India. What he contended was
that CIAL ought to have treated all the tenderers fairly.
As Air India was given an opportunity to give a
presentation and revise its offer it ought to have given a
chance to Cambatta also to have its say with respect to
the offer made by Air India and to match its offer with
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the offer of Air India. He submitted that the Evaluation
Committee had recommended Cambatta for awarding
the contract after considering all the relevant factors
and, therefore, it was incumbent upon the Board of
Directors to disclose why they differed from the said
recommendation and decided to accept the offer of Air
India. He also submitted that the decision of CIAL was
vitiated because of the influence exercised by Air India
and the Ministry of Civil Aviation and also because it
took into consideration an irrelevant consideration that
Air India is a public sector undertaking and a national
carrier.
9. What was emphasised by Mr Nariman and Mr
Venugopal is that CIAL was incorporated to set up a new
private international airport. At all airports, permissions
for operating aircraft, maintenance, licensing of crew
and flying schedules of airlines is controlled by the
Directorate General of Civil Aviation. Applications for
hangar space, landing and parking facilities and ground-
handling are made to and granted by the Airports
Authority of India. This was the first attempt to
privatise. Therefore, CIAL, in order to make its project
viable and successful, after taking into consideration
various factors, decided to entrust the task of providing
ground-handling services for all airlines operating from
the airport to one single agency. For achieving this
purpose it invited offers by writing letters to eight
reputed agencies to enable it to decide the best terms
and conditions for awarding the contract and to select
the best agency. They submitted that, for these reasons,
it did not choose to adopt the public tender mode. In its
counter-affidavit filed in the High Court this position was
made clear. What was stated in the counter-affidavit
was as under:
"The object of inviting their offers was only to get the
terms and conditions of the respective companies for
consideration by the Board of Directors of this
respondent and to select the best-suited to the interest
of the respondent. Being a new project implemented by
raising finance from various sources all efforts were
made to make the project viable. Hence when Ext. R-
1(a) letter was sent inviting offers the paramount
consideration was to get the best offer for the benefit of
the 1st respondent. There was no minimum estimated
amount or other conditions for acceptance and rejection
like the usual tender procedure."
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The High Court was also of the view that if the offers
were made only pursuant to the letter dated 12-11-1997
the respondents would have a good case. But in view of
the Board of Directors' decision to be fair and CIAL's
letter dated 13-7-1998 calling upon the tenderers to
give the best offer before it took a final decision and
informing them that the contract period would be 10
years and the subsequent letter dated 5-8-1998
requiring the tenderers to give a bank guarantee, CIAL
was bound to treat this case as a case of public tender
and for that reason it was not open to it to say that it
was free to accept that offer which was best suited to it.
It is, however, not necessary to deal with this aspect
more elaborately and point out how the High Court's
view is wrong as it was not disputed by the learned
counsel appearing for Cambatta that it was open to CIAL
not to accept the highest offer of Cambatta if it had
good reasons to do so. It was at no point of time
declared by CIAL that it would accept the highest offer
or accept the offer on a particular basis. All along it had
made clear that it would accept that offer which was
found to be the best in their interest.
16.46. By relying on Cochin International Airport
Ltd's case, he submits that the State can
choose its own method of arriving at
commercial decisions. It can fix its own terms
of invitation to tender, enter into negotiation
before finally accepting an offer. It was also
free to grant any relaxation for bonafide
reasons if the tender conditions permit such
relaxation. The only manner such a decision
can be challenged is if the State or its
instrumentalities do not adhere to the norms,
standards and procedures laid down and it is
only in respect of this aspect that powers of
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judicial review can be exercised. Merely
because there is a defect found in the decision
making process, the Court ought not to
interfere. Even in such cases, the Court ought
to exercise great caution and exercise the
power of judicial review only in public interest
and not merely on a legal issue, since any delay
in issuance of tender and completion of the
work would adversely affect public interest.
16.47. He relies upon the decision of the Hon'ble Apex
Court in Association of Registration Plates
vs Union of India & Ors.21, more particularly
para nos. 38, 43 and 44 thereof, which have
been reproduced hereunder for easy reference:
38. In the matter of formulating conditions of a tender
document and awarding a contract of the nature of
ensuring supply of high security registration plates,
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, tender conditions are unassailable. On intensive
examination of tender conditions, we do not find that
they violate the equality clause under Article 14 or
encroach on fundamental rights of the class of intending
tenderers under Article 19 of the Constitution. On the
basis of the submissions made on behalf of the Union
and State authorities and the justification shown for the
terms of the impugned tender conditions, we do not find
that the clauses requiring experience in the field of
supplying registration plates in foreign countries and the
quantum of business turnover are intended only to keep
indigenous manufacturers out of the field. It is explained
that on the date of formulation of scheme in Rule 50 and
21
(2005) 1 SCC 679 | 2004 INSC 682
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issuance of guidelines thereunder by the Central
Government, there were not many indigenous
manufacturers in India with technical and financial
capability to undertake the job of supply of such high
dimension, on a long-term basis and in a manner to
ensure safety and security which is the prime object to
be achieved by the introduction of new sophisticated
registration plates.
42. There is no material on record to infer any mala fide
design on the part of the tendering authority to favour
parties having foreign collaborations and to keep out of
the fray indigenous manufacturers. The high security
plate is a sophisticated article -- new for a manufacturer
in India. It is being introduced for the first time under
the scheme contained in Rule 50 of the Rules and the
Act. At the time of issuance of notices of tender,
technical know-how for manufacture of plates and its
further development was undoubtedly outside the
country. Only a few concerns in India having
collaboration with foreign parties possessed the
expertise and were available in the market. The terms of
the notice inviting tenders were formulated after joint
deliberations of Central and State authorities and the
available manufacturers in the field. The terms of the
tender prescribing quantum of turnover of its business
and business in plates with fixation of long-term period
of the contract are said to have been incorporated to
ensure uninterrupted supply of plates to a large number
of existing vehicles within a period of two years and new
vehicles for a long period in the coming years. It is easy
to allege but difficult to accept that terms of the notices
inviting tenders which were fixed after joint deliberations
between State authorities and intending tenderers were
so tailored as to benefit only a certain identified
manufacturers having foreign collaboration. Merely
because a few manufacturers like the petitioners do not
qualify to submit the tender, being not in a position to
satisfy the terms and conditions laid down, the tender
conditions cannot be held to be discriminatory.
43. 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. Article 14 of the Constitution prohibits the
Government from arbitrarily choosing a contractor at its
will and pleasure. It has to act reasonably, fairly and in
public interest in awarding contract. At the same time,
no person can claim a fundamental right to carry on
business with the Government. All that he can claim is
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that in competing for the contract, he should not be
unfairly treated and discriminated, to the detriment of
public interest. Undisputedly, the legal position which
has been firmly established from various decisions of
this Court, cited at the Bar (supra) is that government
contracts are highly valuable assets and the court should
be prepared to enforce standards of fairness on the
Government in its dealings with tenderers and
contractors.
44. The grievance that the terms of notice inviting
tenders in the present case virtually create a monopoly
in favour of parties having foreign collaborations, is
without substance. Selection of a competent contractor
for assigning job of supply of a sophisticated article
through an open-tender procedure, is not an act of
creating monopoly, as is sought to be suggested on
behalf of the petitioners. What has been argued is that
the terms of the notices inviting tenders deliberately
exclude domestic manufacturers and new entrepreneurs
in the field. In the absence of any indication from the
record that the terms and conditions were tailor-made to
promote parties with foreign collaborations and to
exclude indigenous manufacturers, judicial interference
is uncalled for.
16.48. By relying on Association of Registration
Plates's case, he submits that unless the
action of Tendering Authority is found to be
malicious and a misuse of statutory powers, the
tender conditions in a invitation for tender are
unassailable. No person, including any of the
petitioners herein can claim a fundamental right
to carry on business with the Government. All
that the petitioners can claim for is that while
bidding for or competing in a contract/tender,
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he should not be treated unfairly or
discriminated against. In the present case, the
petitioners have not been able to establish that
there is any maliciousness on part of the
respondent authorities or that there is any
misuse of statutory power or that the petitioner
has been unfairly treated or discriminated
against. Hence on this ground also he submits
that the above petitions are required to be
dismissed.
17. Heard Sri.V.Srinivas, Smt.Ratna N.Shivayogimath,
Sri.R.J.Bhusare, learned counsel for petitioners and
Sri. Y.S. Vijay Kumar, learned Additional Advocate
General for the State. Perused papers.
18. On the basis of the submissions made by all the
counsel, I am of the considered opinion that the
following points would arise for consideration:
1. Can the change from taluka to the district
level be said to be Arbitrary and
unreasonable?
2. Can the change of period of the Tender
from 1 year to 2 years be said to
be arbitrary and unreasonable?
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3. Whether the change in the methodology of
the tender can be said to be manifestly
arbitrary?
4. Whether the conditions have been
introduced so as to exclude the petitioners
and favour any other tenderer, thereby
violating Article 14 of the Constitution of
India?
5. Whether the tender can be said to be
violating Section 6C of The Karnataka
Transparency In Public Procurements Act,
1999, on account of the tender favouring
bigger businesses, thereby impinging on
the rights of the petitioners who are Micro,
Small & Medium Enterprises (MSMEs).
6. Whether the tender is bad for not
providing 15% price preference available
for MSME's
7. Is the tender violative of the Standard
terms of Contract?
8. Whether there is any legal infirmity in the
nature of the tender or its process
requiring interference at the hands of this
Court?
9. What Order?
19. Before I answer the above points, let me deal with
the scope of a Writ Petition pertaining to the
challenge to a tender. The aspects relating to
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tenders is highly litigated, more so, on account of the
economic advantages that a successful tender would
derive.
20. The Hon'ble Apex Court has laid down the applicable
law in the manner, mode and circumstances in which
a Court can intervene in a tender matter in several of
the judgments rendered by it. They are detailed as
under:-
20.1. Judicial review is not concerned with matters of
economic policy and the Court ought not to
substitute its judgment for that of the
legislature or its agents. If the decision is
reasonably based on evidence, then Court
ought not to intercede. The function of the
Court is therefore limited to see that lawful
authority is not abused. The function is not to
appropriate to itself the task entrusted with
such authority, so long as there is no abuse of
the authority and the authority is within the
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limits, as also the decision and actions taken
are in good faith, the Court ought not to
interfere with the policy of the State.
[Peerless General Finance and Investment
Co. Ltd. vs RBI, (1992) 2 SCC 343]
20.2. The modern trend is for the Courts to exercise
judicial restraint in administrative or economic
matters where decisions have been taken by
persons who have expertise in the field. The
power of judicial review vested with
Constitutional Courts in contractual matters is
not one of an appeal but is only to exercise of
power to ascertain if there is no wrongdoing by
the executive. The Courts not having any
expertise in such fields ought not to try and
substitute its wisdom for that of the State or its
agencies. The Government should necessarily
have the freedom to contract and any action
taken by the State and/or its agencies can be
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tested by the application of the Wednesbury's
principles of reasonableness and as also
ascertaining whether the decision and action on
part of the States or its authorities are free
from arbitrariness, not affected by bias or
actuated by malafides. Again, needless to say
all these aspects are required to be established
by the person alleging that there is
arbitrariness, bias or malafides. [Tata
Cellular vs Union of India, (1994) 6 SCC
651]
20.3. The Government is not bound by the previous
policy. It can always revise its policy, so long
as the policy is in public interest and such
change in policy is not an abuse of power.
[PTR Exports vs Union of India, (1996) 5
SCC 268]
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20.4. It is not permissible for the Court to hold that
some corrections have to be made in a contract
when in fact there is no allegation of malice or
ulterior motive and/or when the Court has not
found any malafide or favouritism in the grant
of contract in favour of the successful tenderer.
[Asia Foundation & Constructions Ltd vs
Trafalgar House Constructions (I) Ltd. &
Ors. (1997) 1 SCC 738]
20.5. State can choose its own method of arriving at
commercial decisions. It can fix its own terms
of invitation to tender, enter into negotiation
before finally accepting an offer. It was also
free to grant any relaxation for bonafide
reasons if the tender conditions permit such
relaxation. The only manner such a decision
can be challenged is if the State or its
instrumentalities do not adhere to the norms,
standards and procedures laid down and it is
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only in respect of this aspect that powers of
judicial review can be exercised. Merely
because there is a defect found in the decision
making process, the Court ought not to
interfere. Even in such cases, the Court ought
to exercise great caution and exercise the
power of judicial review only in public interest
and not merely on a legal issue, since any delay
in issuance of tender and completion of the
work would adversely affect public interest.
[Air India Ltd. vs Cochin International
Airport Ltd. & Ors. (2000) 2 SCC 617]
20.6. Economic policies are not amenable for judicial
review unless such policy is demonstrably
shown to be contrary to any statutory provision
of the Constitution. [BALCO Employees
Union vs Union of India, (2002) 2 SCC
333]
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20.7. The policy of the Government is not amenable
for judicial review. Whenever there are matters
affecting policy and/or required technical
expertise, the Court ought to leave the matter
of the decision making to those who are
qualified, unless the policy or action is
inconsistent with the Constitution and the laws,
for arbitrary or irrational or would amount to
abuse of power. [Federation of Railway
Officers Association vs Union of India,
(2003) 4 SCC 289]
20.8. Unless the action of Tendering Authority is
found to be malicious and a misuse of statutory
powers, the tender conditions in a invitation for
tender are unassailable. No person, can claim
a fundamental right to carry on business with
the Government. All that a petitioner can claim
for is that while bidding for or competing in a
contract/tender, he should not be treated
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unfairly or discriminated against. [Association
of Registration Plates vs Union of India &
Ors., (2005) 1 SCC 679]
20.9. Bad faith and non-application of mind in regard
to exercise of power on part of the employer
would have to be established by the petitioner
since the burden is on the person who seeks to
make such an allegation. If the same were not
to be so discharged, this Court would be
required to presume that even if there is a
deviation made in relation to the terms of the
contract, the employer has such power of
relaxation or making a deviation and so long as
such relaxation or deviation is made by the
employer/tendering authority in the interest of
the project and/or in the interest of the public,
the same ought not to be interfered with and
the Constitution Courts would have to excise
judicial restraint. [B.S.N. Joshi & Sons Ltd.
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vs Nair Coal Services Ltd & Ors. (2006) 11
SCC 548]
20.10. The Government has power to frame and
reframe, change and re-change, adjust and re-
adjust policy. Such change or re-change cannot
be declared illegal or arbitrary or ultravires the
Constitution only on the ground that the earlier
policy has been given up. The State is required
to have play in the joints, so as to make such
changes, modifications or improvements from
time to time as may be necessary to better
achieve the objectives of the Government.
[Dhampur Sugars (Kashipur) vs State of
Uttranchal (2007) 8 SCC 418]
20.11. Fixation of value of the tender is entirely within
the purview of the executive. Formulation of
condition of a tender document and awarding a
contract is also within the purview of the State
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authorities unless the fixation of value is
indicated to be arbitrary or unreasonable and
the conditions formulated are found to be
malicious and a misuse of statutory powers, the
Courts ought not to interfere. [Michigan
Rubber (India) Ltd. vs State of Karnataka
& Ors., (2012) 8 SCC 216]
20.12. The economic factors which are considered by
the State cannot be questioned as arbitrary,
capricious or illegal, so long as the same is
bonafide, so long as the decision making
process is proper and correct, the decision itself
cannot be questioned. The State and its
instrumentalities would be at liberty to make
such decisions after weighing the advantages
and disadvantages. [Arun Kumar Agarwal vs
Union of India, (2013) 7 SCC 1].
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20.13. Technical bids are prepared by technical
persons which would ensure objectivity. Insofar
as those technical aspects are concerned
requiring technical expertise, constitutional
Courts ought not to interfere subject again
however that the decision made is neither
arbitrary, malafide or adopted to favour any
particular entity so long as there is no infirmity
in the same, this Court ought not to interfere.
[Montecarlo Ltd. vs NTPC Ltd. (2016) 15
SCC 272]
20.14. The owner or the employer of the project,
having authored the tender documents, is the
best person to understand and appreciate the
requirements. Constitutional courts must defer
to such understanding of the owner or the
employer unless there is a malafide or
perversity established by a person challenging
such tender. [Afcons Infrastructure Ltd. vs
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Nagpur Metro Rail Corporation Ltd. & Anr.
(2016) 16 SCC 818]
20.15. The terms and conditions of invitation to
tenders are within the domain of the Tender
Making Authority and are not open to judicial
scrutiny unless they are arbitrary,
discriminatory or malafide. Thus, as such,
apart from those circumstances, the invitation
to tender is not open to judicial scrutiny, the
same being in the realm of contract. [Airport
Authority of India vs Centre for Aviation
Policy, Safety & Research & Ors (2022)
SCC OnLine SC 1334]
20.16. Writ Court should not easily interfere in
commercial activities just because public sector
undertakings or government agencies are
involved. Unless substantial public interest was
involved or the transaction was malafide. The
High Court exercising powers under Article
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226/227 of the Constitution is not competent to
decide the technical issues in a tender matter.
These are best to be left to the employer who
has formulated the tender to choose and apply
such conditions as the employer believes
required in a particular matter. A contract
being a commercial transaction, evaluating of
tenders and awarding contracts is also an
essential commercial function. So long as such
evaluation and awardal is in public interest,
Courts ought not to by exercise of judicial
review interfere in the matter. [Silppi
Constructions Contractors vs Union of
India, (2020) 16 SCC 489]
20.17. Bald allegation that the tender conditions have
been drafted to suit a particular bidder, cannot
be accepted unless there is sufficient pleadings
and evidence to satisfy such an allegation. It is
for the Petitioners to have made good the
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statement by stating as to for whose benefit or
which tenderer's benefit the conditions have
been tweaked and how such tweaking of
conditions would work favourably to such a
tenderer. The State and its instrumentalities
issuing several thousands of tenders, the
bonafide action of the State cannot be
questioned in each of those tenders by making
reckless and unsubstantiated allegations.
[Uflex Ltd. vs State of T.N., (2022) 1 SCC
165]
20.18. Courts ought not to permit a petitioner
challenging a tender to make a mountain of a
molehill on technicalities. The Court would
always have to consider whether the decision
making process is proper or not. The
methodology of requiring a particular document
to be submitted in a particular format, the
requirement of minimum turnover value of the
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tender is all within the domain of the
employers/tendering authority so also are the
wording of the required documents being the
Bank guarantee, performance guarantee or the
like. These are aspects which the employer can
fix on the basis of its own requirement taking
into consideration the nature of work, the
possibility of breach being committed and the
manner in which the State and/or its
instrumentalities need to be protected on
account of breach if any by the successful
tenderer which would ultimately enure to the
benefit of the general public. So long as the
requirements are the same for each and every
bidder, one of the bidders cannot attribute
discrimination and/or malafides without
categorically establishing the said allegations.
Merely by contending that there is a change
and/or that there is a different process adopted
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would not suffice for this Court to interfere in
tender matters unless the Petitioners were to
establish that the same was malafide, arbitrary,
irrational and contrary to applicable law and the
Constitution. [National High Speed Rail
Corpn. Ltd. vs Montecarlo Ltd. and Ors
(2022) 6 SCC 401]
21. The above being the guidelines laid down by the
Hon'ble Apex Court, let me now deal with the points
which have been raised in the present matter.
22. Answer to point No.1: Can the change from
taluka to the district level be said to be
Arbitrary and unreasonable?
22.1. The contention of the counsel for the petitioners
is that earlier the tenders were floated taluka-
wise wise and now the same has been floated
at the district level on account of which the
petitioners would be deprived from participating
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in the tender process inasmuch as the financial
requirements and other requirements to
participate in a district level tender is much
much higher than that required for the taluka
level tender and on that basis, firstly, it is
contended that the petitioners would be
deprived of participating in the tender.
Secondly, it is contended that it is only large
business persons who would be eligible to
participate in the tender. Thereby, it is
contended that the same is not small business
friendly.
22.2. In this regard, Sri Vijaya Kumar, learned
Additional Advocate General had submitted that
over the last several years, there being several
allegations and complaints as regards the
quality of food grains and foodstuff supplied,
the tenders having floated for the purpose of
providing food to students in government
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schools, the interest of the said children is
being adversely affected by poor quality of food
supply and the State, despite its best efforts,
has not been able to control the quality at the
taluka level. There being hundreds of talukas
within the State of Karnataka. The supply
being so distributed at taluka level, no proper
monitoring could take place and it is in that
background, revised guidelines have been
issued by the State calling for the tenders at
the district level.
22.3. Having heard both the counsel and perused the
papers, more particularly, the Government
Order in relation thereto, it is seen that from
now on, District Level Food Commodities
Purchase Committee has been set up, which
will take care of the purchase of the entire
district. There is also a District Level Scrutiny
Committee, which will be set up, which will
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scrutinize all the bids received at the district
level, prepare a comparative statement of the
technically qualified or disqualified bidders and
ensure the quality of food supplied by the
bidders. More importantly, a District Level Food
Quality Inspection and Monitoring committee
has been set up, which will exercise full
supervision over the quality of food supplies
made to the hostels in the district. The said
committee shall be entitled to check random
samples of food material by collecting samples
thereof and forwarding the same to the NABL
Accredited Laboratories. Such random selection
and checks will be done every three months
and necessary action to be taken on the basis
of the lab test report received by the Monitoring
Committee. Apart there from, there are several
other changes which have been brought about,
in the manner and methodology of calling for
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tenders. Though there was a practice earlier
for calling for tender at the taluka level, it is
faced with the several problems where the
same has been changed to district level. This is
a policy decision which is being taken by the
State, taking into account the several
inadequacies of the Taluka Level Tendering
System and the advantages of the District Level
Tendering System.
22.4. Merely because some of the tenderers who are
petitioners before this Court would get
disqualified would not make the tender
arbitrary or unreasonable. Karnataka having 31
districts, there will be 31 tenders which would
be floated and the supply would be monitored
at the district level. The tender documentation
and the conditions being equally applicable to
all the districts, there is no discrimination
resulting out of the said tender documentation
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since the terms and conditions would be
common for each and every district.
22.5. The reason for shifting from taluka level to the
district level having been explained
hereinabove, I do not find the same to be
arbitrary or unreasonable more so taking into
account the policy decision made by the State.
Thus, I answer Point No.1 by holding that a
change from taluka level to district level
tendering system is neither arbitrary nor
unreasonable.
23. Answer to Point No.2: Can the change of period
of the Tender from 1 year to 2 years be said to
be arbitrary and unreasonable?
23.1. The contention of the petitioners is that earlier
the tender was for a period of one year. Now
that it has been made for two years. The
concomitant requirements of bank guarantee,
annual turnover, etc., have also been increased.
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Thus, making this increase, also arbitrary and
unreasonable.
23.2. A tendering process normally takes some time
and many a time, these tenders are subject
matter of litigation before Constitutional Courts.
During the time that a tender is in Court, the
existing successful tenderer, many times
engineers litigation to continue to render
services under the contract and if so successful,
many a time the next one year period would
also be completed, thus, requiring a fresh
tender to be issued. The above methodology
could be resorted to once again, thus enabling
the once-successful tenderer to continue for a
long period of time.
23.3. The increase in the time period of tender per se
would be in the benefit of the successful
tenderer inasmuch as the successful tenderer
would get two years time to recover any
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expenses or investment made by the tenderer
and as such, taking into consideration length
and duration of the tender, the participants
could also furnish their bids taking into account
the income that they may earn over a period of
time.
23.4. The above being one of the advantages, there
could be several disadvantages also. Be that as
it may, the increase of the term of the tender
from one year to two years is also a policy
decision taken by the State on the basis of
expert reports.
23.5. Having looked at it legally and considering the
same on the basis of the submission which has
been made, I am of the considered opinion and
I answer point No.2 by holding that the
increase of the tender period from one year to
two years is neither arbitrary nor unreasonable.
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The same is based on technical inputs received
by the expert committee.
24. Answer to Point No.3: Whether the change in
the methodology of the tender can be said to be
manifestly arbitrary?
24.1. Much of this has been dealt with in answer to
Point No.1 and Point No.2, that is, as regards
the area of operation and the term of operation.
Apart from these two changes, there are other
changes which have been brought about in
terms of selection and monitoring. For any
action of the State to be manifestly arbitrary, it
would be required for the petitioners to
establish that the process and procedure which
has been followed and the net effect of the
action on part of the State is so unreasonable,
so improbable and so unjust that it is apparent
on the face of the said tender document, when
it can be said to be manifestly arbitrary.
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24.2. In the present tender, after having assessed the
matter from all angles, I am of the considered
opinion that the change in methodology etc.,
has been made taking into account the
changing circumstances and the requirement to
provide the best quality food articles to the
students at the schools and the hostels run by
the State. Thus, this methodology which has
been adopted by the State cannot be said to be
manifestly arbitrary as contended by the
petitioners.
25. Answer to Point No.4: Whether the conditions
have been introduced so as to exclude the
petitioners and favour any other tenderer,
thereby violating Article 14 of the Constitution
of India?
25.1. The contention of the petitioners is that the
increase in the area of operation, the increase
in the period of operation has also resulted in
the requirement for the bidder to furnish annual
financial turnover at twice the estimated cost of
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the quantity. The submission in this regard is
that petitioners are small traders would not be
able to satisfy the requirement of twice the
value of the tender and as such would not be
able to participate in the tender, resulting in
their exclusion which would be violative of
Article 14 of the Constitution.
25.2. The mere fact that somebody would get
excluded would not amount to discrimination in
terms of Article 14 of the Constitution so long
as the qualifications which are prescribed can
be met by a large number of people or entities
and/or that the qualification which has been
prescribed is not to favour any particular
tenderer or group of tenderers.
25.3. In the present case, the contention is that
because there is a requirement to have a higher
turnover, the petitioners would not qualify.
Turnover by itself cannot result in any
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discrimination. Inasmuch as considering the
value of the contracts in the present manner,
there would be several persons who would
qualify the aspect of annual financial turnover,
the same in my considered opinion has not
been introduced to exclude the petitioners.
25.4. There being no proof or documents placed on
record to indicate that this condition is made to
favour anybody, more so when the tender is yet
to be issued, I am of the considered opinion
that changed tender conditions does not violate
Article 14 of the Constitution.
26. Answer to Point No.5: Whether the tender can
be said to be violating Section 6C of The
Karnataka Transparency In Public
Procurements Act, 1999, on account of the
tender favouring bigger businesses, thereby
impinging on the rights of the petitioners who
are Micro, Small & Medium Enterprises
(MSMEs)?
AND
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27. Answer to Point No.6: Whether the tender is
bad for not providing 15% price preference
available for MSME's?
27.1. Section 6(a) of the KTPP Act is reproduced
hereunder for easy reference:
6C. Preferences to Micro & Small Enterprises:
To encourage Micro and Small Enterprises,
preferences may be given to them in such manner
subject to such conditions as may be prescribed by the
Government.
Explanation:- "For the purpose of this Section, Micro
and Small Enterprises shall have the same meaning as
defined in the Micro, Small and Medium Enterprises
Development Act, 2006 (Central Act 27 of 2006 )"
27.2. The contention of the petitioners is that due to
the increase in the area of the tender and the
period of tender, small enterprises like the
petitioners would not be eligible to participate
in the tender. This contention of the petitioners
is assuaged by the learned Additional Advocate
General by submitting that whatever the
benefits are available to the MSMEs under any
tender would be made available to any
petitioner who qualifies the said requirement.
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Thus, such benefits being made available, there
will be no violation of Section 6(c) of the KTPP
Act.
27.3. This submission answers the grievance of the
petitioners inasmuch as any benefit that they
can derive on being a micro, small or a medium
enterprise would be made available by the
State to such qualifying tenderer. In that view
of the matter, I do not find that there is a
violation of Section 6(c) of the KTPP Act as
alleged or otherwise.
27.4. Insofar as price preference is concerned, the
submission of Sri.Vijaya Kumar, learned
Additional Advocate General is that even this
price preference will be provided to entities
which qualify to be MSMEs. In that view of the
matter, the requirement of the KTPP Act having
complied with, in the event of the petitioners
qualifying to be MSMEs, they would be entitled
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to all benefits under the MSME Act. As such, no
fault can be found to the tender on this
account.
28. Answer to Point No.7: Is the tender violative of
the Standard terms of Contract?
28.1. The contention of the petitioners is that the
condition of the tender are violative of the
standard terms of the contract which have been
fixed by High-Level Committee.
28.2. This contention has been taken up in respect to
Clause (ii) of the eligibility criteria relating to
average annual financial turnover and Clause
(iii) relating to the past track record of the
tenderer. The average annual financial turnover
is now prescribed to be twice the estimated
cost of the quantity during the preceding three
financial years, whereas under the standard
terms of contract, the qualification which has
been fixed was that in last five years period,
should have achieved in at least two financial
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years, an annual financial turnover of an
amount not less than the estimated cost under
the contract for works costing up to 100 lakhs
and for works more than 100 lakhs, the
tenderer should have in the last five years
achieved in at least two financial years a
minimum financial turnover of not less than two
times the estimated annual payments under the
contract.
28.3. The submission of Sri.Vijaya Kumar, learned
Additional Advocate General, is that in most of
the cases, the contract value will be more than
100 lakhs per district. Thus, he submits that
the condition which has been imposed does not
in any material manner negate the standard
terms of contract/standard tender document.
28.4. Having perused both the clauses, the difference
that is seen is that under the standard tender
documents, it is in three out of the last five
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years that the requirement has to be met
whereas in the present tender, it has been
specifically fixed for last three years. I do not
therefore find any violation of the standard
tender documents. Inasmuch as, the amount
being twice the estimated cost of the contract,
the requirement being established for last three
financial years does not in any manner
materially differ from the term in the standard
tender document.
28.5. Insofar as the past track record is concerned,
under the present contract, the requirement is
to have supplied food items to any of the State,
Central Government Departments/
Institutions/organizations in India, at least 80%
of the requirement of the quantity mentioned in
the tender document to have been supplied in
any one of the last three financial years. As per
the standard tender documents, what is
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required is for execution of works in any one
year, the minimum quantity of work of 80% of
the annual requirement for works costing up to
Rs.100 lakhs and insofar as works costing more
than Rs.100 lakhs should have executed in any
one financial year, the minimum quantity of the
work of which is usually 80% of the peak
annual rate.
28.6. The qualifications which is now prescribed
under the present contract is a little more
stringent than that under the standard tender
documents inasmuch as though the quantity of
work required to be done is same at 80%, the
period under the standard contract is one year
out of last five years, whereas in the present
tender it is one year out of the last three
financial years. The same does not in my
considered opinion create any injustice or
favour any particular tenderer.
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28.7. The petitioners having failed to establish any
such favoritism resorted to by the State. Thus,
I am of the considered opinion that the present
tender is not in violation of the Standard Terms
of Contract fixed by the State as a guiding
factor.
29. Answer to Point No.8: Whether there is any
legal infirmity in the nature of the tender or its
process requiring interference at the hands of
this Court?
29.1. In view of my answers to Points No.1 to 7
above, the actions taken by the State and its
authorities being proper and correct, there is no
legal infirmity in the nature of the tender or the
process requiring interference at the hands of
this Court.
29.2. However, taking into consideration the
submission of the learned Additional Advocate
General that an IT portal would be set up
wherein the details of all the successful
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tenderers with the details of supply being made
by them enabling the students or anyone else
to lodge their online complaints if any against
such supply, the action taken by the concerned
authorities as regards the said complaints, the
details of the periodic random inspection carried
out by the concerned authorities with the report
thereof being uploaded on to the IT portal and
in the event of there being any violation, the
action taken in respect of such violation, the
report of the NABL Accredited Laboratories etc.,
being web hosted on the portal of the
respondents, I am of the considered opinion
that this being one of the basis for rejecting the
above petitions. It is required for the
respondents to place on record the details of
the portal created and the details of the upload
made and submit a detailed action taken within
a period of four weeks from today.
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30. Answer to Point No.9: What Order?
30.1. In view of above discussion, I pass the
following:
ORDER
i) No grounds having been made out, the above Writ Petitions are dismissed.
ii) Though the above petitions are dismissed, re-list on 30th January 2025, for the purpose of placing on record the detailed action taken report.
SD/-
(SURAJ GOVINDARAJ) JUDGE VNR/PRS/LN List No.: 19 Sl No.: 1