Madhya Pradesh High Court
S.K. Bikes (P) Limited, vs The State Of Madhya Pradesh on 15 May, 2025
1
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE SURESH KUMAR KAIT,
CHIEF JUSTICE
&
HON'BLE SHRI JUSTICE VIVEK JAIN
WRIT PETITION No. 13484 of 2025
S.K. BIKES (P) LIMITED,
Versus
THE STATE OF MADHYA PRADESH AND OTHERS
........................................................................................................
Appearance:
Shri Shashank Verma - Senior Advocate (through VC) with Shri Kaustubh
Singh - Advocate for the petitioner.
Shri H.S. Ruprah - Additional Advocate General with Shri Nilesh Yadav -
Additional Advocate General and Shri Akash Malpani - Advocate for the
respondents.
..........................................................................................................
ORDER
(Reserved on : 08.05.2025) (Pronounced on : 15.05.2025) Per: Hon'ble Shri Justice Vivek Jain.
The present petition has been filed challenging the tender conditions as laid down in the Notice Inviting the Tenders (NIT) dated 07.04.2025 issued by the respondent No.2 on the allegation that the tender conditions have been tweaked to favour the chosen ones and to oust the petitioner from participation in tender process and also that the said tender conditions would amount to Signature Not Verified Signed by: RAJESH KUMAR JYOTISHI Signing time: 15-05-2025 13:48:50 2 cartelization and monopoly of only a handful bidders because in the entire country there will not be more than 2 - 3 eligible bidders to participate in the tender process.
2. To elaborate, it is contended by learned counsel for the petitioner that the respondents have issued a NIT inviting E-bids for 4,30,000 bicycles to be supplied to School Education Department in the State of Madhya Pradesh for being given to school students in the State of Madhya Pradesh in the Session 2025-26 and the product to be supplied is bicycles with safety and performance requirements conforming to IS-10613.
3. Learned counsel for the petitioner has argued that the petitioner is aggrieved by the clause at serial No.10 in the tender document dealing with the 'eligibility criteria' for technical bids. It is argued that the said clause requires that the bidder must have supplied at least an average 3.00 lakhs bicycles each year in the last three financial years, i.e. 2021-22, 2022-23 and 2023-24 to the Central/State Governments or their undertakings. In this manner, the bidder must have supplied total 9.00 lakhs bicycles in the last three financial years so as to make an average of 3.00 lakh bicycles in every year in the last three financial years.
4. Learned counsel further submits that the aforesaid criteria is totally unjustified and uncalled for and has been framed only to create cartelization and qualify only two or three bidders in the entire country. It is submitted that the aforesaid criteria is irrational for the reason that in the past years the bid quantity was greater, but the average Government supply in the last three financial years was kept at lower side, but now the average Government supply in the last three years has been enhanced, which is without any reason or justification. It is contended that in the last four years the bid quantity and the average supply in the last three financial years required in the tender document has been as under:-
Signature Not Verified Signed by: RAJESH KUMAR JYOTISHI Signing time: 15-05-2025 13:48:50 3Financial Year Bid quantity Average Govt. supply in the last three Financial Years (FYs) 2022-23 5,30,000 1.00 lakh any of last three FYs 2023-24 4,50,000 1.5 lakhs per FY 2024-25 4,50,000 1.5 lakhs per FY 2025-26 4,30,000 3.00 lakhs per FY
5. By relying on the aforesaid criteria being followed since the last four financial years, it is contended that as compared to the last years of supply, i.e. 2024-25 where the bid quantity was slightly more, but the average supply in the last three years was required at 1.5 lakhs per annum but now though the bid quantity in the present year 2025-26 has been slightly lowered down to 4,30,000, but average supply required in last three financial years has been enhanced to 3,00,000. It is contended that there has been no reasoning or justification in such enhancement of criteria and this enhancement of criteria has been made only to favour a few blue-eyed boys of the respondent, who will be declared qualified to enter the bidding process.
6. It is further contended that as per the tender document the bids can be split amongst three lowest bidders in the ratio of 50:30:20 and therefore, three of the qualified bidders will get some supply orders, but the petitioner has been unlawfully left-out of bidding process by abruptly raising the qualification criteria in the current financial year.
7. Learned counsel for the petitioner at the time of arguments also criticized some more provisions of the tender document though no challenge was made to the said provisions in the pleadings with the writ petitions. In this manner, the clause 4 relating to past performance as contained in bid details of the NIT has been criticized whereby the bidder or its OEM should have supplied same or similar category products for 80% of the bid quantity in at least one of Signature Not Verified Signed by: RAJESH KUMAR JYOTISHI Signing time: 15-05-2025 13:48:50 4 the last three financial years before the bid opening date to any Central/State Government organization/PSU. It is contended that once such supply to the State Government/Central Government/their undertakings in the last three financial years is sought at an average of 3.00 lakhs, then there was no reason to insert another condition of having supply 80% of bid quantity in any one of the last three financial years, i.e. to supply 3.44 lakhs in any one of the three last Financial Years. On these assertions, the petitioner has criticized the requirement of eligibility criteria in the tender document.
8. Learned counsel for the petitioner further relied on judgment of the Division Bench of Delhi High Court in the case ofGharda Chemicals Limited vs. Central Warehousing Corporation reported in 2005 (80) DRJ 542 so also judgment of the Bombay High Court in the case Mahesh Verma vs. State of Maharashtra reported in 2008 (4) MH LJ 657.Learned Senior Counsel for the petitioner has also referred to para 9 of the reply of the respondents, whereby the respondents have disclosed that the technical bid has been opened on 28.04.2025, wherein the technical committee has evaluated the bid of all four bidders and have found that the petitioner may disqualify in the technical bid, if the impugned condition in the tender process is enforced and remaining three bidders have qualified by satisfying the impugned condition and therefore, the bidders are available with the State Government to supply the bicycles as per requirement of the State. It is contended that this is nothing but cartelization, which was the intention of the respondents in carving out the impugned condition.
9. Per contra, it is vehemently argued by learned counsel for the respondent/State that the impugned tender conditions are fully valid and justified and looking to the past experience, it has been decided to enforce the aforesaid condition No.10, which is impugned in the present petition. It is contended that the condition is only with a view to get the capable and Signature Not Verified Signed by: RAJESH KUMAR JYOTISHI Signing time: 15-05-2025 13:48:50 5 competent bidder, who will be in a position to supply the quantity required by the State, because the supply is for a huge quantity of 4,30,000 bicycles, which is to be made within a period of 120 days from the date of acceptance of bid, because these bicycles have to be given to the students, who will take admission in the Secondary/Higher secondary classes in the Session 2025-26 in the State of M.P. in June-July 2025. It is further contended that the requirement in the present bid is for the Year 2025-26,whereby the criteria has been increased from average 1.5 lakh supply to State Government/Central Government/their Undertakings in the last three financial years to average quantity of three lakhs in last three years.
10. It is also contended that the petitioner has no grievance to be aggrieved by such condition, because the petitioner even during the last two Years, i.e. 2024-25 and 2023-24 was not qualified in the bids, when the average quantity was 1.5 lakhs in last three years. Therefore, it is contended that the petitioner has failed to submit and substantiate that even if the last years criteria had been maintained, then the petitioner would have still been eligible to participate in the bids, because during the immediate last two financial years when the criteria was lesser, which the petitioner wants to be maintained, he was still not qualified for the bidding process. Therefore, it is contended that the petitioner has no real locus to challenge the impugned NIT condition, because petitioner has not contended in the petition at all that if the earlier criteria had been maintained, then he would have been qualified to participate in the bid. Learned counsel for the respondent has relied on various judgments of the Hon'ble Supreme Court and of this Court to contend that the interference in tender matters is very limited and unless some favoritism or biasor arbitrariness is evident on the face of the record, the Court should not interfere in the tender process in a routine manner. It is argued that in the present case no such established ground on which interference in the tender process can be made in Signature Not Verified Signed by: RAJESH KUMAR JYOTISHI Signing time: 15-05-2025 13:48:50 6 exercise of judicial review has been made out by the writ petitioner. Therefore, it is prayed to dismiss the present petition.
11. Learned counsel for the petitioner in rejoinder submissions has referred to two supply orders one of which is dated 05.03.2019, whereby the petitioner is stated to have supplied about 1.15 lakh pieces of bicycles in the year 2019-20 and another order dated 18.08.2022, whereby the petitioner is stated to have supplied 1.5 lakh bicycles in the year 2022-23.
12. Heard learned counsel for the parties.
13. The petitioner has put to challenge condition No.10 in the tender document of eligibility criteria, which is as under:-
"10. The bidder must have supplied at least an average 3.00 lakh Bicycles in the last 3 financial years i.e. 2021-22, 2022-23 and 2023-24 to State/Central Government Department or their undertaking."
14. The aforesaid condition has been challenged on the ground that there has been a drastic change in the last three years average supply criteria for the year 2025-26 inasmuch the criteria has been enhanced from average 1.5 lakh bicycles supply in last three years to average of 3.00 lakhs in last three years. Therefore, it has been argued vehemently before this Court that the said drastic increase in the number of average supply made in during the last three years is only with a view to create a cartelization and create monopoly in favour of select few suppliers.
15. The petitioner has vehemently relied on the chart, which is placed on record as Annexure P-10, whereby it has been brought out that in what manner the qualification criteria has been modified from time to time during the last four financial years. From a perusal of the said criteria, it is seen that for the financial years 2023-24 and 2024-25 though the criteria was 1.5 lakh average Signature Not Verified Signed by: RAJESH KUMAR JYOTISHI Signing time: 15-05-2025 13:48:50 7 supply in last three years, but the petitioner did not qualify in the bidding process. Only three firms had qualified, i.e. (1) Hero Cycles Ltd., (2) Avon Cycles Ltd. and (3) Hero Ecotech. Ltd. From a bare perusal of this chart Annexure P-10, it is evident that the petitioner had qualified only in the year 2022-23, when the qualification criteria was 1.00 lakh government supply in any one of the last three years.
16. Learned Senior Counsel for the petitioner during the course of his rejoinder submissions had produced across the bar two supply orders of the year 2019-20 and 2022-23 for supply of 1.15 lakh and 1.50 lakh pieces of bicycles respectively. Looking to the position that the petitioner had supplied 1.15 lakh bicycles in the year 2019-20, he must have qualified in the bidding process in the year 2022-23, because the criteria was one lakh bicycles supply in any one of last three years, i.e. 2017-18, 2018-19 and 2019-20. Therefore, the other supply order of 2022-23 seems to be issued in favour of the petitioner, whereby he supplied 1.5 lakh bicycles to the State of M.P.
17. However, for the year 2023-24 onwards the criteria was enhanced to average 1.5 lakh government supply of bicycles in last three years, which remained the same in the next financial year, i.e. 2024-25 also and now, in the present financial year 2025-26, it has been enhanced to average of 3.00 lakhs government supply in the last three years.
18. The petitioner evidently did not qualify in the bidding process in the years 2023-24 and 2024-25, when the criteria was average of 1.5 lakh government supply in last three years, which the petitioner wants to be maintained. In the entire petition, there is not a single whisper that the petitioner is qualified, if the criteria of Government supply in the last three years is maintained as was in the immediately preceding year, i.e. 1.5 lakh of average Government supply in the last three years. Even the two supply orders submitted by learned counsel for the petitioner for perusal of this Court across Signature Not Verified Signed by: RAJESH KUMAR JYOTISHI Signing time: 15-05-2025 13:48:50 8 the bar only indicate that the petitioner has supplied 1.15 lakh bicycles in the year 2019-20, which is not one of the three preceding financial year prior to 2025-26 and the only Government supply he made during the last three preceding financial year is 1.5 lakh bicycles in the year 2022-23, which obviously would not amount to average 1.5 lakh bicycle supply in the last preceding three years, which was the criteria in the years 2023-24 and 2024-25, because to meet even the previous criteria the petitioner had to show that he had supplied average of 1.5 lakh bicycles in the last preceding three years i.e. total 4.5 lakh bicycles in last three financial years. There is no such pleading in the entire petition to that effect and nothing has been shown by the petitioner that even if the previous criteria is maintained, he would be qualified to participate in the bidding process.
19. Petitioner has also relied on an interim order passed by the High Court of Rajasthan in Civil Writ Petition No.13015/2023, however, it is not disputed that subsequently, the said petition was dismissed by the Rajasthan High Court as the petitioner therein failed to participate in the tender process and therefore, there was nothing conclusive determination on the legal issue by the Rajasthan High Court in the said matter.
20. In the present matter, the petitioner has miserably failed to establish or even plead that even if the earlier criteria of 1.5 lakh bicycles in the preceding three years having been supplied to Government institutions/undertakings in the last three years is maintained, then the petitioner would be qualified.
21. There seems to be substance in the contention of learned counsel for the State that the petitioner would have had a lawful grievance only if he had qualified in the bidding process as per the last preceding year's criteria and now there is abrupt change in the criteria as a result of which, he was getting disqualified and then only, he could have raised his grievance that the change in Signature Not Verified Signed by: RAJESH KUMAR JYOTISHI Signing time: 15-05-2025 13:48:50 9 the criteria is only with a view of oust him from the tender process. There seems to be force in the contention of learned counsel for the State that there is nothing in the change of criteria in the present year, which seems to be with objective to eliminate the petitioner from the tender process, because even if the earlier pre- qualification criteria is maintained, there is nothing on record to show that the petitioner would be qualified.
22. Learned Additional Advocate General for the State seems to be right in submitting that the impugned condition in fact ensures competence of suppliers and timely supply of the tendered article/bicycles and by incorporating the said condition the credibility and credentials of the bidder can be assessed since in 55 districts in the State of M.P. having 313 Blocks, the bicycles have to be supplied to Government Schools across the vast area of the State and for this purpose, the intention of the State was that a bidder having proper credibility should participate in the tender process so that his capability to supply the huge quantity required by the State can be assessed so that he would be allowed to participate in the bidding purpose.
23. It is settled in law that the scope of interference in tender matters in exercise of judicial review is very limited and the constitutional courts would interfere in the tender process only if the tender conditions are held to be arbitrary, discriminatory or oppressive just to favour particular chosen ones. However, in the present case in view of the aforesaid discussion made by us above, the petitioner has been unable to make out that the tender conditions were arbitrary or discriminatory or that the authority while exercising freedom to impose tender conditions, did so in an oppressive or arbitrary manner to favour few chosen ones. It is settled in law that the State has a right to get the right and most competent person in tender matters and for this purpose, it can frame the tender conditions. Interference is permissible in tender conditions Signature Not Verified Signed by: RAJESH KUMAR JYOTISHI Signing time: 15-05-2025 13:48:50 10 only if they are unconstitutional or illegal and demonstrate arbitrariness, unreasonableness, malice and bias.
24. In the case of Tata Cellular v. Union of India, (1994) 6 SCC 651 , the Hon'ble Supreme Court has held as under:-
"70. It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down.
71. Judicial quest in administrative matters has been to find the right balance between the administrative discretion to decide matters whether contractual or political in nature or issues of social policy; thus they are not essentially justiciable and the need to remedy any unfairness. Such an unfairness is set right by judicial review."
25. In the case of Air India Ltd. v. Cochin International Airport Ltd., (2000) 2 SCC 617, the Hon'ble Supreme Court has held as under:-
"7. The law relating to award of a contract by the State, its corporations and bodies acting as instrumentalities and agencies of the Government has been settled by the decision of this Court in Ramana Dayaram Shetty v. International Airport Authority of India [(1979) 3 SCC 489] , Fertilizer Corpn. Kamgar Union (Regd.) v. Union of India [(1981) 1 SCC 568] , CCE v. Dunlop India Ltd. [(1985) 1 SCC 260 : 1985 SCC (Tax) 75] , Tata Cellular v. Union of India [(1994) 6 SCC 651] , Ramniklal N. Bhutta v. State of Maharashtra [(1997) 1 SCC 134] and Raunaq International Ltd. v. I.V.R. Construction Ltd. [(1999) 1 SCC 492] The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of Signature Not Verified Signed by: RAJESH KUMAR JYOTISHI Signing time: 15-05-2025 13:48:50 11 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."
26. In the case of Directorate of Education v. Educomp Datamatics Ltd., (2004) 4 SCC 19, the Hon'ble Supreme Court has held as under:-
"9. It is well settled now that the courts can scrutinise the award of the contracts by the Government or its agencies in exercise of their powers of judicial review to prevent arbitrariness or favouritism. However, there are inherent limitations in the exercise of the power of judicial review in such matters. The point as to the extent of judicial review permissible in contractual matters while inviting bids by issuing tenders has been examined in depth by this Court in Tata Cellular v. Union of India [(1994) 6 SCC 651] . After examining the entire case-law the following principles have been deduced: (SCC pp. 687-88, para 94) "94. The principles deducible from the above are:
(1) The modern trend points to judicial restraint in administrative action.
(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.Signature Not Verified Signed by: RAJESH KUMAR JYOTISHI Signing time: 15-05-2025 13:48:50 12
(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts. (5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure."
(emphasis supplied)
12. It has clearly been held in these decisions that the terms of the invitation to tender are not open to judicial scrutiny, the same being in the realm of contract. That the Government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. The courts cannot strike down the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. The courts can interfere only if the policy decision is arbitrary, discriminatory or mala fide.
27. In the case of Michigan Rubber (India) Ltd. v. State of Karnataka, (2012) 8 SCC 216, the Hon'ble Supreme Court has held as under:-
"23. From the above decisions, the following principles emerge:
(a) The basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities;Signature Not Verified Signed by: RAJESH KUMAR JYOTISHI Signing time: 15-05-2025 13:48:50 13
(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;
(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. In the case of In the case of JSW Infrastructure Ltd. v. Kakinada Seaports Ltd., (2017) 4 SCC 170, the Hon'ble Supreme Court has held as under:-
"10. In Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd. [Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd., (2016) 16 SCC 818] this Court held as follows : (SCC pp. 825-26, paras 13 & 15-16) "13. ... a mere disagreement with the decision-making process or the decision of the administrative authority is no reason for a constitutional court to interfere. The threshold of Signature Not Verified Signed by: RAJESH KUMAR JYOTISHI Signing time: 15-05-2025 13:48:50 14 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 mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given.
16. In the present appeals, although there does not appear to be any ambiguity or doubt about the interpretation given by NMRCL to the tender conditions, we are of the view that even if there was such an ambiguity or doubt, the High Court ought to have refrained from giving its own interpretation unless it had come to a clear conclusion that the interpretation given by NMRCL was perverse or mala fide or intended to favour one of the bidders. This was certainly not the case either before the High Court or before this Court."
The view taken in Afcons [Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd., (2016) 16 SCC 818] was followed in Montecarlo Ltd. v. NTPC Ltd. [Montecarlo Ltd. v. NTPC Ltd., (2016) 15 SCC 272] Thus it is apparent that in contractual matters, the writ courts should not interfere unless the decision taken is totally arbitrary, perverse or mala fide."
29. In the case of Association of Registration Plates Vs. Union of India, (2005) 1 SCC 679, it has been held as under :-
"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.Signature Not Verified Signed by: RAJESH KUMAR JYOTISHI Signing time: 15-05-2025 13:48:50 15
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 vehicular population and less volume of business. Multi-manufacturers might concentrate only on urban areas with higher vehicular population.
41. The fifteen years' contract period has also been supported by the Union of India and State authorities. We find great substance in the submissions made on the data supplied as a justification for awarding the contract for a long period of 15 years. There would be a huge investment required towards the infrastructure by the selected manufacturer and the major return would be expected in initial period of two years although he would be bound down to render his services for future vehicles periodically for a long period. Looking to the huge investment required and the nature of the job which is most sophisticated, requiring network and infrastructure, a long-term contract, if thought viable and feasible, cannot be faulted by the court. If there are two alternatives available of giving a short-term or a long- term contract, it is not for the court to suggest that the short-term contract should be given. On the subject of business management, expertise is available with the State authorities. The policy has been chalked out and the tender conditions have been formulated after joint deliberations between authorities of the State and the intending manufacturers. A contract providing for technical expertise, financial capability and experience qualifications with a long term of 15 years would serve the dual purpose of attracting sound parties to stake their money in undertaking the job of supply and safeguard the public interest by ensuring that for a long period the work of affixation of security plates would continue uninterrupted in fulfilment of the object of the scheme contained in Rule 50. Our considered opinion, therefore, is that none of the impugned clauses in the tender conditions can be Signature Not Verified Signed by: RAJESH KUMAR JYOTISHI Signing time: 15-05-2025 13:48:50 16 held to be arbitrary or discriminatory deserving their striking down as prayed for on behalf of the petitioners."
30. In the case of Holoflex Ltd. Vs. State of Madhya Pradesh reported in 2016 SCC OnLine MP 2584, a Division bench of this Court held as under :-
"21. The principles regarding award of contract were again reiterated by the Supreme Court in the case of Director of Education (supra) and it was held that Government must have a free hand in setting the terms of tender and the Courts cannot strike down the terms of tender prescribed by the Government because it feels that some other terms in the tender would have been fairer, wiser or more logical. The Courts can interfere only if the policy decision is arbitrary, discriminatory or actuated by malice. In the case of Shimnit Utsch India Private Limited v. West Bengal Transport Infrastructure Development Corporation Limited, (2010) 6 SCC 303, the Supreme Court while taking note of the law laid down in Assn. of Registration Plates (supra), reiterated that State Government has the right to get the right and most competent person and in the matter of formulating conditions of tender documents, unless the action of tendering authority is found to be malicious and is a misuse of statutory powers, the tender conditions are unassailable. In the case of Siemens Aktiengeselischaft and Seimens Limited v. Delhi Metro Rail Corporation Limited, (2014) 11 SCC 288, it was held that tenders floated by the Government are amenable to judicial review only in order to prevent arbitrariness and favoritism and protect the financial interest of the State and the public interest. Thus, the scope of judicial review is confined as to whether there was any illegality, irrationality or procedural impropriety committed by the decision making authority. It has further been held that the Court cannot sit in appeal over the soundness of the decision made by the competent authority and the Court can only examine whether the decision making process was fair, reasonable, transparent and bona fide with no perceptible injury to public interest. From the various decisions cited on both sides, following legal principles are deducible:--
(i) The procedure adopted by 'State' under Article 12 while awarding contract can be adjudged and tested on the touchstone of Article 14 of the Constitution of India.
(ii) The Government cannot act in a manner which would benefit a private party at the expense of the State as the same would be unreasonable and contrary to public interest.
(iii) While exercising power of judicial review the Court will not examine the details of contract but only are concerned with decision making process and whether the same was reasonable, rational and arbitrary or is violative of Article 14 of the Constitution of India.Signature Not Verified Signed by: RAJESH KUMAR JYOTISHI Signing time: 15-05-2025 13:48:50 17
(iv) The State while inviting tenders cannot take into account the factors which are irrelevant and detrimental to public interest.
(v) An administrative action is subject to control by judicial review on the grounds of illegality, irrationality and procedural impropriety.
(vi) The power of judicial review is available in cases where it is established that terms of invitation to tender are tailor-made to suit the convenience of any particular person with a view to eliminate all others from participating in the bidding process, unless the tender conditions are wholly arbitrary, discriminatory or actuated by malice, the terms of tender notice are not subject to judicial review.
(vii) Level Playing Field is an important concept while construing Article 19(1)(g) of the Constitution of India, which confers fundamental right to carry on business. However, the aforesaid doctrine is subject to public interest.
(viii) The power of judicial review is also available in a case where the action of the respondent is not only arbitrary, unreasonable and curtails public participation which vitally affects public interest and if permitted would result in causing loss to public exchequer for want of adequate competition.
The Court would intervene if tender conditions give rise to formation of cartel which is against public policy.
(ix) The Government while entering into contract or issuing quotas is expected not to act like a private individual but should act in conformity with certain healthy standards and norms which are not arbitrary, irrational or irrelevant.
(x) The terms of invitation to tender are not subject to judicial scrutiny and more often than not such decisions are made by experts and it is not open for the Courts, whenever there are different alternatives, to suggest that particular alternative is more justified. Greater latitude is to be conceded to State authorities in the matter of formulating conditions of tender and awarding contracts.
(xi) The Government has freedom of contract and Court cannot strike down terms of tender merely because it feels that some other conditions in the tender would have been fairer, wiser or more logical. The Courts can interfere only when conditions of tender are arbitrary, discriminatory and actuated by malice.
(xii) The award of contract, whether it is by a private party or a public body or the State, is essentially a commercial transaction. The State can chose its own method to arrive at its decision and can fix its own terms of invitation of tender and Signature Not Verified Signed by: RAJESH KUMAR JYOTISHI Signing time: 15-05-2025 13:48:50 18 that is not open to judicial scrutiny. Even when some defect is found in decision making process, the Court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely of making out a legal point.
(xiii) No person can claim a fundamental right to carry on business with the Government. All that he can claim is that, in competing for the contract, he should not be unfairly treated and discriminated to the detriment of public interest.
(xiv) The Government is the guardian of State finances and is expected to protect it. The right to choose cannot be considered as arbitrary as long as it complies with requirement of principles of Article 14 of the Constitution of India.
(xv) The test to be adopted is whether something has gone wrong of a nature and degree which requires Court's intervention. See, R. v. Secy, of State for Home Deptt. Ex P. Brind, (1991) 1 All ER 720 (HL).
33. We may advert to third issue, namely, whether the impugned tender conditions are contrary to the guidelines issued by the Central Vigilance Commission. It is trite law that terms of invitation to tender cannot be open to judicial scrutiny because invitation to tender is in the realm of contract. The State Government has the right to get the right and most competent person and should have freedom in the matter of formulating conditions of tender documents, unless the action of tendering authority is found to be malicious and is a misuse of statutory powers, the tender conditions are unassailable. [See, Shimnit Utsch India Private Limited v. West Bengal Transport Infrastructure Development Corporation Limited, (2010) 6 SCC 303]. Therefore, the Commissioner Excise has the authority to lay down the terms and conditions of the Notice Inviting Tender and even if the same are violative of the guidelines issued by the Central Vigilance Commission, which even otherwise are directory in nature, the same have no bearing on the issue involved in this petition. Accordingly, the aforesaid issue is answered."
31. The State is free to impose any condition including the one imposed herein, which appears to be reasonable, as the same has a reasonable nexus with the object of the tender process sought to be achieved. The action of the State impugned herein can neither be termed as discriminatory or unreasonable, much less irrational. The petitioner has even failed to make out a case that if the impugned condition enhancing the criteria gets modified, then he is qualified as per the earlier criteria, which was in the previous tenders. In view of the Signature Not Verified Signed by: RAJESH KUMAR JYOTISHI Signing time: 15-05-2025 13:48:50 19 aforesaid, the petitioner has failed to make out any ground for interference in the present matter.
32. The petition sans merits, it deserves to be and is hereby dismissed.
(SURESH KUMAR KAIT) (VIVEK JAIN)
CHIEF JUSTICE JUDGE
rj
Signature Not Verified
Signed by: RAJESH KUMAR
JYOTISHI
Signing time: 15-05-2025
13:48:50