Himachal Pradesh High Court
M/S Ss Construction Company vs State Of H.P. And Others on 11 January, 2023
Bench: Tarlok Singh Chauhan, Virender Singh
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA .
CWP No. 7492 of 2022
Reserved on: 21.12.2022
Decided on : 11.01.2023
M/s SS Construction Company ...Petitioner
Versus
State of H.P. and others ...Respondents
Coram
The Hon'ble Mr. Justice Tarlok Singh Chauhan, Judge. The Hon'ble Mr. Justice Virender Singh, Judge.
Yes.
Whether approved for reporting?1 For the petitioner: Mr. Ramakant Sharma, Advocate.
For the respondents: Mr. Anup Rattan, Advocate General, with Mr. Shiv Pal Manhans, Additional Advocate General and Mr. Rajat Chauhan, Law Officer, for respondents No. 1 to 4.
Mr. Neeraj Gupta, Senior Advocate, with Mr. Ajeet Pal Singh Jaswal, Advocate, for respondent No. 5.
Mr. Shashipal Dhiman, Executive Engineer, HPPWD Bangana, District Una, H.P., present in person.
1Whether Reporters of local papers may be allowed to see the judgment?
::: Downloaded on - 12/01/2023 20:31:46 :::CIS 2Virender Singh, Judge.
Petitioner-M/s. SS Construction Company has .
invoked the extra ordinary jurisdiction of this Court, under Article 226 of the Constitution of India, seeking the following substantive reliefs:
"I. That the technical bid dated 10.10.2022 at Annexure P-8 may very kindly be quashed and set aside to the extent that the technical bid of the respondent No. 5 Company has been accepted by the respondents No. 3 & 4 contrary to the provisions of standard bidding document at Annexure P-5, in the interest of justice.
II. That the Financial bid dated 10.10.2022 and letter of intent issued in favour of respondent No. 5 may kindly be summoned from the respondents No. 3 & 4 and after perusing the same may very kindly be quashed and set aside and the respondents No. 3 & 4 may very kindly be restrained from award of work of RIDF XXVII for construction and maintenance of road in M/T on link road Saily to Handola Via Kamoon Pattian and construction of link road Saili to Mahadev mandir via GPS Laubowal from 0/0 to 14/640 Kms to the respondent No. 5 Company, in the interest of justice."
2. Factual position, as pleaded, in the writ petition, is that the petitioner-firm is a Government Contractor in Himachal Pradesh.
3. Respondents No. 2 to 4 had uploaded the Standard Bidding Document for the construction of road in M/T on link road Saily to Handola via Kamoon Pattian and construction of ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 3 link road Saili to Mahadev mandir via GPS Laubowal from 0/0 to 14/640 (SH: Formation Cutting, CWO retaining wall, Wire .
crate, CS works CC pavement, P/L GCB, WMM, M/T Road side drain, parapets, P/F km stone and sign board in Km 0/000 to 14/640) under NABARD RIDF/XXVII.
4. In this regard, respondent No. 4, invited online tenders on 1st July, 2022, for the construction of M/T on link road Saily to Handola via Kamoon Pattian and construction of link road Saili to Mahadev mandir via GPS Laubowal from 0/0 to 14/640 (SH: Formation Cutting, CWO retaining wall, Wire crate, CS works CC pavement, P/L GCB, WMM, M/T Road side drain, parapets, P/F km stone and sign board in Km 0/000 to 14/640) under NABARD RIDF/XXVII, for construction and maintenance.
5. The online tenders were invited from 18th July, 2022 to 1st August, 2022. Thereafter, the physical submission of EMD and cost of tender documents was fixed for 2 nd August, 2022. Date for opening of technical bid was fixed as 2 nd August, 2022.
6. In response to the said notice inviting tender, the petitioner-firm has also submitted its bid, alongwith other ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 4 bidders. However, the said tender has been cancelled by respondents No. 3 and 4, on 17th September, 2022 and the .
same was again notified. Consequently, the petitioner-firm had again made its bid. Respondent No. 4 opened the technical bid on 10th October 2022, whereby the technical bid of the petitioner as well as respondent No. 5 was accepted by respondents No. 3 and 4.
7. According to the petitioner, respondent No. 5 was not eligible in view of Clause 3.2 of the instruction to bidder (ITB) and Clause 31.3 of the Standard Bidding Document, as the affidavit sworn by the authorized representative of respondent No. 5 was contrary to the factual position.
Moreover, respondent No. 5 has submitted the certificate of quality control consultant after the opening of the technical bid.
8. Similarly, the petitioner has also pleaded that the technical bid was opened on 10th October, 2022 at 5.13 p.m. and financial bid was opened on 11 th October, 2022 at 11.00 a.m., which, according to the stand of the petitioner, is in contravention of Clause 22.6 of the bid opening and evaluation of the Standard Bidding Document.
::: Downloaded on - 12/01/2023 20:31:46 :::CIS 59. According to the petitioner, respondent No. 4 had pointed out that agreement with the quality control consultant .
has not been attached at the time of submission of bid, however, on the same day, i.e. on 10 th October, 2022, it has been informed by the petitioner to respondent No. 4 that the said document has already been attached in pdf format.
10. Highlighting Clause 3.2 of the Standard Bidding Document, it is the case of the petitioner that the above clause provides that the bidder shall not be debarred/held ineligible for corrupt and fraudulent practices by the Central Government or the State Government or any public undertaking, autonomous body or Government authority.
11. In the similar way, Clause 31.3 of the General Conditions of Contract of the Standard Bidding Document has also been highlighted, by virtue of which, the contractor was bound to engage a competent and independent quality control consultant or any Engineer, in the rank of Executive Engineer and above, retired from HPPWD, to be approved by the employer/Superintending Engineer to exercise effective control over the construction operations, so as to produce quality works.
::: Downloaded on - 12/01/2023 20:31:46 :::CIS 612. It is the further case of the petitioner that respondent No. 5 was not eligible to participate in the bid as it .
was debarred from participating in any tender under HPPWD, Hamirpur Zone, for a period of six months, with effect from 30th November, 2021, whereas, the contrary factual position has been mentioned in the affidavit, submitted by respondent No. 5. Respondent No. 5 could not furnish the certificate from the eligible quality control consultant alongwith the bid and its bid has wrongly been accepted by respondents No. 3 and 4 .
13. Highlighting another violation, the petitioner has pleaded that Clause 22.6 of the bid opening and the evaluation of the Standard Bidding Document, provides that the result of the evaluation of Part-I of the bid shall be published on e-
procurement system by giving the opportunity to file such complaint, within a period of five working days. The complaint, if any, is liable to be considered before opening Part-II of the bid.
14. The petitioner has also made the representation to respondents No. 1 to 4 with a request to reject the bid of respondent No. 5, but, respondents No. 3 and 4, without verifying the documents, firstly accepted the technical bid of ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 7 respondent No. 5 and later on, letter of intent has been issued to it despite the irregularities, so highlighted, as well as, the .
concealment of material facts by respondent No. 5.
15. Alleging that the act of respondents No. 3 and 4, is contrary to the provisions of Standard Bidding Document, the reliefs, as claimed in the petition, have been sought.
16. When put on notice, the stand of the petitioner has been contested by the respondents. Respondents No. 1 to 4 have filed their joint reply, wherein, they have taken various preliminary objections, viz., the petition is not maintainable;
the petitioner has no right to file the present petition; the petitioner has no locus standi to file the present petition; the relief, as sought, by the petitioner, is not sustainable in the eyes of law.
17. It is the stand of respondents No. 1 to 4 that the tender, as detailed in the petition, was floated on 1 st July, 2022. The technical part of the bid was opened on 5 th August, 2022. The same was technically evaluated by the circle Level Evaluation Committee on 1st September, 2022 and the proceedings of the same were uploaded on the e-procurement portal on 7th September, 2022. The petitioner, respondent No. ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 8 5 and six other bidders had participated in the e-tender process, at the first instance, however, the same was cancelled .
by respondent No. 4, on 16th September, 2022.
18. The petitioner has never raised any question regarding the disqualification of respondent No. 5, in the tender floated, at the first instance, i.e. with effect from 5 th August, 2022 (date of opening of bid) till 16 th September, 2022 (cancellation of the tender).
19. The tender, thereafter, was re-invited by respondent No. 4 on 16th September, 2022, published on e-
procurement portal with effect from 22 nd September, 2022 to 6th October, 2022. Three persons had submitted their technical bid, which was downloaded on 7 th October, 2022 by the Tender Opening Committee and was sent to 15 th Circle, HPPWD, Una for technical evaluation.
20. The clarification was sought from respondent No. 5 by respondent No. 4, as well as, from the petitioner. In response to the said query, respondent No. 5, as well as, the petitioner has responded on 10th October, 2022 through e-mail.
After the evaluation by the Tender Evaluation Committee, at the Circle Level, the tenders of three persons were found ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 9 eligible and thereafter, the proceedings of technical bid evaluation were uploaded on the e-procurement portal on 10 th .
October, 2022 at 05.13 p.m. and financial bid of all the eligible bidders was opened on 11th October, 2022 at 01.34 p.m.
21. Explaining Clause 22.6 of the Standard Bidding Document, it is the case of the respondents that the said clause gives an opportunity to the non-responsive bidders to file complaint/grievances. Since, in this case, no bidder was found to be non-responsive and all the bidders were found to be responsive, so five days' time period was not granted. The project under consideration is also stated to be sanctioned under NABARD RIDF-XXVII and technical sanction of ₹ 1118.09 Lakh has already been accorded.
22. Another ground regarding the non-compliance of Clause 22.6 of the Standard Bidding Document has also been pleaded that the respondents were apprehending that the "model code of conduct" for ensuing Vidhan Sabha Elections, 2022, will be promulgated, if the time, as per Clause 22.6 of the Standard Bidding Document, is granted for objections.
::: Downloaded on - 12/01/2023 20:31:46 :::CIS 1023. The other reason, which has been assigned in the reply, is that the time has not been granted just to achieve the .
target fixed by NABARD, for the project in question.
24. The prayer of the petitioner has further been opposed on the ground that the petitioner had represented on 11th October, 2022, at 3.55 p.m., after getting the knowledge, on opening of the financial part of the bid at 1.34 p.m., that it was not a successful bidder, being L-2.
r The petitioner had raised its objection that respondent No. 5 had not attached the documents relating to quality control with its bid. On 12 th October, 2022, the petitioner had again represented to respondents No. 1 to 4 that respondent No. 5, the lowest bidder, has not uploaded the required documents and it has been debarred by the Chief Engineer (HZ), HPPWD, Hamirpur, for a period of six months.
25. Admitting the fact that the Chief Engineer (HZ), HPPWD, Hamirpur, had debarred respondent No. 5 from participating in any tender under Hamirpur Zone, for a period of six months, from the date of the issuance of the order, i.e. 30th November, 2021, the stand of respondents No. 1 to 4 is that the period, for which, respondent No. 5 has been ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 11 debarred, has already been over on 29th May, 2022, as such, respondent No. 5 can participate in any tender in Hamirpur .
Zone.
26. Relying upon the award letter, uploaded by respondent No. 5, with its bid, the instances have been cited that respondent No. 5 had also participated in the tendering of HPPWD Sangrah Division and Sundernagar Division.
According to respondents No. 1 to 4, respondent No. 5 was not blacklisted, but, was debarred only for a period of six months and the said time has already been over.
27. So far as engagement of the consultant for quality control is concerned, respondents No. 1 to 4, while admitting that the agreement with the quality control consultant was not attached by respondent No. 5, at the time of submission of the bid, have relied upon Clause 31.3 of the Standard Bidding Document, to contend that the department can ask any clarification from the bidder for technical evaluation, as per the instructions issued by respondent No. 1, vide letter, dated 8th March, 2022.
28. It is the further stand of respondents No. 1 to 4 that all the bidders, in the present case, were found responsive ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 12 in technical bid evaluation at Circle Level and accordingly, the financial part of the bid was opened on 11 th October, 2022 at .
1.34 p.m., however, the financial evaluation of the tender could not be uploaded on the website due to network problem, heavy rush of work and shortage of staff in HPPWD Division. The representation of the petitioner, dated 14th October, 2022, is stated to have been duly replied by respondent No. 4 on 19 th October, 2022. r
29. Refuting the allegation of the petitioner that the financial bid has been opened in a haste manner, it is the stand of respondents No. 1 to 4 that, since all the bidders were qualified in the Circle Level Technical Evaluation and no one was non-responsive bidder, to whom, time was to be granted, to file complaint/grievances, as per the instructions contained in the Standard Bidding Document, it cannot be said that they had opened the financial bid, in a haste manner.
30. It has been submitted on behalf of respondents No. 1 to 4 that respondent No 4 had requested respondent No. 5 on 12th October, 2022, to start the execution of the work, but, in view of the order, dated 21st October, 2022, passed by this ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 13 Court, the contractor has been requested to stop the execution of the work.
.
31. On all these submissions, a prayer has been made by respondents No. 1 to 4 to dismiss the writ petition.
32. Respondent No. 5 has filed its reply, taking the preliminary objections that the writ is not maintainable; the petitioner is having no fundamental right to file the present writ petition; the petitioner had raised its grievances after opening of the technical bid and the financial bid.
33. On merit, supporting the stand, as taken by respondents No. 1 to 4, it is the case of respondent No. 5 that all the documents, which were submitted by it, were in order and have rightly been considered by respondents No. 1 to 4.
The petitioner, as well as, respondent No. 5 had participated in the tendering process. Respondents No. 3 and 4, after accepting the technical bid, had proceeded to open the financial bid on 11th October, 2022, which was found to be in order and in conformity with the procedure laid down in the Standard Bidding Document. Clause 22.6 of the Standard Bidding Document is stated to be not applicable, in the present ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 14 case. The other contents of the writ petitions have also been denied.
.
34. The petitioner has filed the rejoinders to the replies filed by the respondents, denying the stand taken by them and re-asserting that of the writ petition.
35. Before dwelling upon the controversy involved, in the present case, the material question, which arises for consideration before this Court, is, about the scope of interference by this Court, in tender matters.
36. The scope of judicial review in tender matters has elaborately been discussed by the three Judges' Bench of the Hon'ble Supreme Court in case titled as Tata Cellular versus Union of India, reported in (1994) 6 Supreme Court Cases 651. The relevant portion of the judgment, as contained in paras 70 to 94, is reproduced, 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 ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 15 question of infringement of Article 14 if the government tries to get the best person or the best a 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.
72. Lord Scarman in Nottinghamshire County council v. secretary of State for the Environment, 1986 AC 240, 251, 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 courts ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 16 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:
"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."::: Downloaded on - 12/01/2023 20:31:46 :::CIS 17
In R. v. Panel on Take-overs and Mergers, ex p Datafin plc, (1987) 1All 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 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 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, 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, ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 18
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 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, Lord Mansfield considered the question whether mandamus should be granted against the College of Physicians. He expressed the relevant principles in two eloquent ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 19 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 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 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 a convenient.::: Downloaded on - 12/01/2023 20:31:46 :::CIS 20
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 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. 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. Ch. 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 ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 21 law by acting in excess of the power which Parliament has confided in them.' 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 :
By "irrationality" I mean what can now be succinctly referred to as "Wednesbury unreasonableness". (Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn. 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. 849850, 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. 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 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 ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 22 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.
(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 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 ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 23 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 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 ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 24 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 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 and R. v. Gaming Board for Great Britain, ex p Benaim and Khaida 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 And if the decision-making body has gone wrong in its interpretation they can set its order aside. See Ashbridge Investments Ltd. v. Minister of Housing and Local government. (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 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 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 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 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 ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 25 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, 106141."
.
84. We may usefully refer to Administrative Law Rethinking Judicial Control of Bureaucracy by Christopher F. Ediey, 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 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 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 ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 26 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 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, exp Argyll Group plc."
87. Sir John Donaldson, M.R. in R. v. Monopolies and Mergers Commission, ex p Argyll Group plc 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 ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 27 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 was a case in which the court was concerned with the award of a contract for show of 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 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 ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 28 this court in Haji T.M. Hassan Rawther v. Kerala Financial Corpn.
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, 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 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 ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 29 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 , 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....' (emphasis supplied) ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 30 See Davis Contractors Ltd. v. Fareham U.D.C. 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. Karndhenu Cattle Feed Industries "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'."
::: Downloaded on - 12/01/2023 20:31:46 :::CIS 3192. In Sterling Computers Limited v. M&N Publications Ltd, 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., 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. 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 ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 32 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.' "
94. The principles deducible from the above are :
(1) The modem 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 malaf ides.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure."
(self emphasis supplied) ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 33
37. This view has again been reiterated by a two Judges' Bench of the Hon'ble Supreme Court in case titled as .
Global Energy Ltd. and another versus Adani Exports Ltd. and others, reported in (2005) 4 Supreme Court Cases 435. The relevant para-10 of the judgment is reproduced, as under:
"10. The principle is, therefore, well settled that the terms of the invitation to tender are not open to judicial scrutiny and the Courts cannot whittle down the terms of the tender as they are in the realm of contract unless they are wholly arbitrary, discriminatory or actuated by malice. This being the position of law, settled by a catena of decisions of this Court, it is rather surprising that the learned Single Judge passed an interim direction on the very first day of admission hearing of the writ petition and allowed the appellants to deposit the earnest money by furnishing a bank guarantee or a bankers' cheque till three days after the actual date of opening of the tender. The order of the learned Single Judge being wholly illegal, was, therefore, rightly set aside by the Division Bench."
38. Even otherwise, in a later judgment in case titled as B.S.N. Joshi & Sons Ltd. versus Nair Coal Services Ltd. and others, reported in (2006) 11 Supreme Court Cases 548, the Hon'ble Supreme Court has classified the terms and conditions of the tender notice into two categories :
(a) essential conditions; and (b) ancillary or subsidiary ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 34 conditions. Relevant paras-66 and 67 of the judgment, are reproduced, as under:
.
"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 summarized 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 of 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;::: Downloaded on - 12/01/2023 20:31:46 :::CIS 35
(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.
67. Law operating in the field is no long res integra. The application of law, however, would depend upon the facts and circumstances of each case. It is not in dispute before us that there are only a few concerns in India who can handle such a large quantity of coal. Transportation of coal from various collieries to the thermal power stations is essential. For the said purpose, apart from transportation job, the contractor is required to see that coal of appropriate grade is supplied. Appellant herein is in business for the last 52 years. It had been taking part in contracts involving similar jobs in various parts of India. It had all along been quoting a low rate. According to it, despite the same it has been generating profits."
(self emphasis supplied)
39. The Hon'ble Supreme Court, in a decision in case titled as Reliance Energy Ltd. and another versus Maharashtra State Road Development Corpn. Ltd. and others, reported in (2007) 8 Supreme Court Cases 1, has discussed the necessity to satisfy the test of reasonableness and has elaborated the concept of 'level playing field'.
Relevant paras-36 to 39 of the judgment are reproduced, as under:
::: Downloaded on - 12/01/2023 20:31:46 :::CIS 36" 36.We find merit in this civil appeal. Standards applied by courts in judicial review must be justified by constitutional principles which govern the proper exercise of public power in a democracy. Article 14 of .
the Constitution embodies the principle of "non-
discrimination". However, it is not a free-standing provision. It has to be read in conjunction with rights conferred by other articles like Article 21 of the Constitution. The said Article 21 refers to "right to life". In includes "opportunity". In our view, as held in the latest judgment of the Constitution Bench of nine-Judges in the case of I.R. Coelho vs. State of Tamil Nadu, (2007) 2 SCC 1, Article 21/14 is the heart of the chapter on fundamental rights. It covers various aspects of life. "Level playing field" is an important concept while construing Article 19(1)
(g) of the Constitution. It is this doctrine which is invoked by REL/HDEC in the present case. When Article 19(1)(g) confers fundamental right to carry on business to a company, it is entitled to invoke the said doctrine of "level playing field". We may clarify that this doctrine is, however, subject to public interest. In the world of globalization, competition is an important factor to be kept in mind. The doctrine of "level playing field" is an important doctrine which is embodied in Article 19(1)(g) of the Constitution. This is because the said doctrine provides space within which equally-placed competitors are allowed to bid so as to subserve the larger public interest. "Globalization", in essence, is liberalization of trade. Today India has dismantled licence-raj. The economic reforms introduced after 1992 have brought in the concept of "globalization".
Decisions or acts which results in unequal and discriminatory treatment, would violate the doctrine of "level playing field" embodied in Article 19(1)(g). Time has come, therefore, to say that Article 14 which refers to the principle of "equality" should not be read as a stand alone item but it should be read in conjunction with Article 21 which embodies several aspects of life. There is one more aspect which needs to be mentioned in the matter of implementation of the aforestated doctrine of "level playing field". According to Lord Goldsmith - commitment to "rule of law" is the heart of parliamentary democracy. One of the important ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 37 elements of the "rule of law" is legal certainty. Article 14 applies to government policies and if the policy or act of the government, even in contractual matters, fails to satisfy the test of "reasonableness", .
then such an act or decision would be unconstitutional.
37. In Union of India vs. International Trading Co., (2003) 5 SCC 437, the Division Bench of this Court speaking through Pasayat, J. had held :
"14. It is trite law that Article 14 of the Constitution applies also to matters of governmental policy and if the policy or any action of the Government, even in contractual matters, fails to satisfy the test of reasonableness, it would be unconstitutional.
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 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 heart beat 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 reasons, not whimsically for any ulterior purpose. The meaning and true import and concept of arbitrariness is more easily visualized 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 emerging from the impugned action and if so, does it really satisfy the test of reasonableness."::: Downloaded on - 12/01/2023 20:31:46 :::CIS 38
38.When tenders are invited, the terms and conditions must indicate with legal certainty, norms and benchmarks. This "legal certainty" is an .
important aspect of the rule of law. If there is vagueness or subjectivity in the said norms it may result in unequal and discriminatory treatment. It may violate doctrine of "level playing field".
39. In Reliance Airport Developers (P) Ltd. v. Airports Authority of India, (2006) 10 SCC 1, the Division Bench of this Court has held that in matters of judicial review the basic test is to see whether there is any infirmity in the decision- making process and not in the decision itself. This means that the decision-maker must understand correctly the law that regulates his decision-making power and he must give effect to it otherwise it may result in illegality. The principle of "judicial review"
cannot be denied even in contractual matters or matters in which the Government exercises its contractual powers, but judicial review is intended to prevent arbitrariness and it must be exercised in larger public interest. Expression of different views and opinions in exercise of contractual powers may be there, however, such difference of opinion must be based on specified norms. Those norms may be legal norms or accounting norms. As long as the norms are clear and properly understood by the decision- maker and the bidders and other stakeholders, uncertainty and thereby breach of rule of law will not arise. The grounds upon which administrative action is subjected to control by judicial review are classifiable broadly under three heads, namely, illegality, irrationality and procedural impropriety. In the said judgment it has been held that all errors of law are jurisdictional errors. One of the important principles laid down in the aforesaid judgment is that whenever a norm/benchmark is prescribed in the tender process in order to provide certainty that norm/standard should be clear. As stated above "certainty" is an important aspect of rule of law. In the case of Reliance Airport Developers (supra), the scoring system formed part of the evaluation process. The object of that system was to provide identification of factors, allocation of ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 39 marks of each of the said factors and giving of marks had different stages. Objectivity was thus provided."
(self emphasis supplied) .
40. Misuse of the statutory powers has also been held to be one of the grounds, enabling the Court, to interfere in the tender matters, by the Hon'ble Supreme Court in case titled as Michigan Rubber (India) Limited versus State of Karnataka and others, reported in (2012) 8 Supreme Court Cases 216. Relevant paras-23 and 24 of the judgment are reproduced, 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 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;::: Downloaded on - 12/01/2023 20:31:46 :::CIS 40
(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.
20. 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 negative, then there should be no interference under Article 226."
(self emphasis supplied)
41. The earlier view taken by the Hon'ble Supreme Court, especially in Tata Cellular's case (supra), has again been reiterated in a case titled as The Silppi Constructions ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 41 Contractors versus Union of India and anr. etc. etc., reported in 2019 (11) Scale 592. Relevant paras-19 and 20 of .
the judgment are reproduced, as under:
"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 clearcut 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 ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 42 restraint and caution; the need for overwhelming public interest to justify judicial intervention in matters of contract 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."
(self emphasis supplied)
42. In a recent decision, in case titled as Uflex Limited versus Government of Tamil Nadu and others, reported in (2022) 1 Supreme Court Cases 165, the Hon'ble Supreme Court has reiterated the Wednesbury principle. The relevant para-4 of the judgment is reproduced, as under:
"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 v. State of Karnataka, (2012) 8 SCC 216 as under:
"23. From the above decisions, the following principles emerge:::: Downloaded on - 12/01/2023 20:31:46 :::CIS 43
(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."
(self emphasis supplied)
43. In view of the legal position, as settled by the Hon'ble Supreme Court, in the decisions, referred to above, ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 44 now, this Court would advert to the controversy involved, in the present case.
.
44. The notice inviting for bids was published in a weekly newspaper, namely, 'Giriraj' (Annexure P-1).
Thereafter, vide corrigendum, dated 21st July, 2022 (Annexure P-2), the time period for execution of the work was extended from twelve months to twenty four months. However, vide corrigendum, dated 25th July, 2022 (Annexure P-3), the key dates were re-fixed, which are as under:
1. Date of Online Publication 18.07.2022 11:00 HRS
2. Document Download Start and End 18.07.2022 11:30 HRS Date 01.08.2022 upto 17:00 HRS
3. Bid Submission Start and End Date 18.07.2022 11:30 HRS 01.08.2022 upto 17:00 HRS
4. Physical Submission of EMD and 02.08.2022 upto 10:30 HRS Cost of Tender Document
5. Date of Technical Bid Opening 02.08.2022 11:00 HRS
6. Evaluation of Technical Bid Evaluation of technical Bid will be followed after verification of the documents
45. Thereafter, respondents No. 1 to 4 had uploaded the Standard Bidding Document (Annexure P-5), however, this tender was cancelled on 17th September, 2022, as is evident from Annexure P-6, which is copy of e-mail. Vide Annexure P-
::: Downloaded on - 12/01/2023 20:31:46 :::CIS 457, petitioner-company has again applied, in response to the notice inviting tender, issued by respondents No. 1 to 4.
.
46. Annexure P-5 has been issued by the department, after following the format of the MoRTH Bidding Document.
This document, i.e. Annexure P-5, contains the instructions for the bidders as well as the process, in which the bid is to be opened and evaluated.
47. Clause 3 of the Standard Bidding Document contains the eligibility criteria for the bidders. Relevant instructions 3.1 and 3.2, are reproduced as under:
"3. Eligible Bidders:
3.1. This Invitation for Bids is open to all eligible bidders meeting the eligibility criteria as defined in ITB. The applicant should be a private or government-owned legal entity. For package size exceeding Rs. 10 Crore, the Joint Ventures are allowed.
3.2. Bidders shall not be under a declaration of ineligibility for corrupt and fraudulent practices by the Central Government, the State Government or any public undertaking autonomous body, authority by whatever name called under the Central or the State Government."
48. Chapter-E of the Standard Bidding Document contains the procedure regarding the bid opening and ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 46 evaluation of the bid. The relevant clauses 22.1 to 22.6, are reproduced, as under:
.
"22. Bid Opening:
22.1 The Employer inviting the bids or its authorised representative will open the bids online and this could be viewed by the bidders also online. In the event of the specified date for the Opening of bids being declared a holiday for the Employer, the Bids will be opened at the appointed time and location on the next working day.
r to 22.2 The file containing the Part-I of the bid will be opened first.
22.3 In all cases, the amount of Bid Security, cost of bid documents, and the validity of the bid shall be scrutinized. Thereafter the bidders' names and such other details as the Employer may consider appropriate, will be notified as Part-I bid opening summary by the Authority inviting bids at the online opening. A separate electronic summary of the opening is generated and kept on-line.
22.4 The Employer will also prepare minutes of the Bid opening including the information disclosed in accordance with Clause 22.3 of ITB and upload the same for viewing online.
22.5 Evaluation of Part-I of bids with respect to Bid Security, qualification information and other information furnished in Part I of the bid in pursuant to Clause 12.1 of ITB, shall be taken up and completed within five working days of the date of bid opening, and a list will be drawn up of the qualified bidders whose Part-II of bids are eligible for opening.
22.6 The result of evaluation of Part-I of the Bids shall be made public on e-procurement systems following which there will be a period of five working days during which any bidder may submit complaint which shall be ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 47 considered for resolution before opening Part- II of the bid."
49. Part I of Section 4 of the Standard Bidding .
Document contains General Conditions of Contract. As per Clause 31.3 of the said conditions, which is being reproduced hereinbelow, a stipulation is there for the contractors to engage a competent and independent quality control consultant or any Engineer of the rank of Executive Engineer and above retired from HPPWD to be approved by the Employer/Superintending Engineer to exercise the effective control over the construction operation so as to produce the quality work.
"31.3 Consultants for Quality Controls:
It is expected that every Contractor will have proper quality control staff and procedures in order to ensure quality. They are also expected to improve their procedures in line with ISO 9002 and get the certification. The Contractor shall engage a competent and Independent Quality Control Consultant or any Engineer of the rank of Executive Engineer and above retired from HPPWD to be approved by the employer/Superintending Engineer to exercise effective control over the construction operations so as to produce quality works. The fully equipped laboratory shall be set up and trained staff shall be employed by the said consultant in addition to the laboratory/QC staff of the contractor or he will be responsible to conduct required tests from any NABL accredited laboratory at his own cost. The contractor shall supply to the Engineer a copy of his agreement and the fee for quality control should generally be 0.5% of the contract value. The ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 48 payment of the quality control consultant shall be made by the Engineer direct as per the copy of the agreement supplied by the contractor. This payment shall be recoverable from the Contractor. The .
Consultant shall guide the contractor for production of quality works at all stages and shall maintain records, reports and test results so as to indicate the extent of quality achieved. The consultant shall also supply a copy of all these reports, tests and check to the Engineer regularly. The contractor shall also attach a copy of these reports, tests and checks with his bill, without which no payment shall be made. The Employer/Superintending Engineer can also order the change of consultant, if in his opinion he is not performing competently. The Engineer or his representatives will be free to conduct surprise, random or in situ checks so as to have cross check in quality. In case the contractor fails to employ for the whole or part of the period of execution a quality control consultant, the Employer/Superintending Engineer may order employment of consultant at the cost of the Contractor or may order the departmental staff to carry out the quality control checks and a deduction @ 1.5% of the total cost of the work shall be made from the bill of the contractor, even if the actual expenditure incurred on private consultant or departmental quality control is less. Nothing in this clause shall reduce the overall responsibility of the Contractor regarding quality and he shall remain liable for any defect in the execution."
50. The Standard Bidding Document, according to its contents, is the document, containing the terms and conditions for the contractors as well as direction to respondents No. 1 to 4 as to how to award the work to the contractors. Meaning thereby, the conditions, which have been reproduced hereinabove, are essential conditions. By any stretch of ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 49 imagination, these conditions cannot be said to be ample formalities or ancillary conditions.
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51. So far as the condition, as enumerated in Clause 3.2 of the Standard Bidding Document, is concerned, respondent No. 5, in its affidavit, the copy of which has been annexed as Annexure P-13 (colly), has mentioned at serial No. 2 'That I am not been blacklisted by any Govt. Department or any Govt. undertaking etc.' r This affidavit was attested on 1st October, 2022, whereas, respondent No. 5 has been debarred from participating in any tender under HPPWD, Hamirpur Zone, for a period of six months, from the date of issue of the order, dated 30th November, 2021. Meaning thereby, important information has been withheld by respondent No. 5, in the requisite affidavit, filed alongwith the tender document.
No doubt, on the date of filing of the affidavit, the penalty, so imposed upon respondent No. 5 has ceased to exist, but, the fact of the matter is that this material fact has been withheld by respondent No. 5. Although, these facts have been brought to the notice of Executive Engineer, HHPWD, Bangana, by the petitioner, vide letter, dated 14th October, 2022.
::: Downloaded on - 12/01/2023 20:31:46 :::CIS 5052. Another fact, which has rightly been highlighted, is that in the affidavit, which was sworn by the partner of .
respondent No. 5, on 1st October, 2022, he has made a false declaration by stating that the firm M/s. Arya Construction Company, has never been blacklisted or debarred by any State Government/Central Government/autonomous body/authority in law. From this declaration, a futile attempt has been made to conceal the material facts with regard to the passing of the order, dated 30th November, 2021, by the Chief Engineer, HPPWD, Hamirpur.
53. As per Clause 22.6 of the Standard Bidding Document, the result of evaluation of Part-I of the bid shall be made public on e-procurement system, following which, there will be a period of five working days, during which, any bidder may submit complaint(s), which shall be considered for resolution before opening Part-II of the bid. Part-I of the bid is technical evaluation of the bid. As per Annexure P-8, technical bid of respondent No. 5 was opened on 4 th October, 2022 at 1.47 p.m. and the same was accepted. The technical bid of the petitioner was opened on 6th October, 2022 at 4.26 p.m. and the same was also accepted. The Technical ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 51 Evaluation Summary Details were updated on 10 th October, 2022 at 5.13 p.m. and financial bid was opened on 11th October, .
2022 at 11.00 a.m.
54. When the status regarding the technical evaluation of the bids of the petitioner and respondent No. 5, was updated on 10th October, 2022 at 5.13 p.m., then, how the financial bid has been opened, without adhering to the condition, as mentioned in Clause 22.6 of the Standard Bidding Document, is a question, which remained unanswered and unexplained by the respondents, in this case.
55. Bare reading of Clause 22.6, as reproduced hereinabove, makes out a case in favour of the petitioner that the result of the evaluation of Part-I of the bid is to be made public on e-procurement system, so that, any bidder may submit complaint, if any. That valuable right has been snatched by respondents No. 1 to 4, from the petitioner as well as the other bidder, namely M/s Satish Kumar Sharma.
56. The learned Additional Advocate General could not point out any clause in the Standard Bidding Document (Annexure P-5), enabling respondents No. 1 to 4 to relax any of ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 52 the conditions, on the alleged ground qua "meeting the deadline fixed by NABARD".
.
57. Admittedly, there is nothing on the file to demonstrate that any efforts were made by respondent No. 4 to seek the permission of the competent Government to grant relaxation, if any, or to point out that the Standard Bidding Document contains any clause to relax the tender conditions.
58. The requisite documents were not annexed by respondent No. 5, at the time of submission of the initial bid, as per Clause 31.3 of the General Conditions of Contract of the Standard Bidding Document (Annexure P-5). The agreement of respondent No. 5 with NPS Test House was forwarded to respondents No. 1 to 4-authorities on 10 th October, 2022 at 11.28 a.m. The said agreement was executed on the same day.
Meaning thereby, when the bid was submitted by respondent No. 5 online, it has not complied with the provisions of Clause 31.3 of the General Conditions of Contract of the Standard Bidding Document (Annexure P-5).
59. Bare perusal of Clause 31.3 of the General Conditions of Contract of the Standard Bidding Document (Annexure P-5) makes out a case in favour of the petitioner ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 53 that the document, depicting the engagement of the consultant for quality control, has to be annexed with the bid, as per .
Clause 4.2 of the Standard Bidding Document. The said Clause 4.2 of the Standard Bidding Document is reproduced, as under:
"4.2. All bidders shall include the following information and documents with their bids in Section 3, Qualification Information unless otherwise stated in the Appendix to ITB:
(a) copies of original documents defining the constitution or legal status, place of registration, and principal place of business; written power of attorney of the signatory of the Bid to commit the Bidder.
(b) Total monetary value of civil construction works performed for each of the last five years.
(c) Experience in works of a similar nature and size for each of the last five years, and details of works in progress or contractually committed with certificates from the concerned officer not below the rank of Executive Engineer or equivalent.
(d) Evidence of ownership of major items of construction equipment named in Clause 4.4B
(b) (i) of ITB or evidence of arrangement of possessing them on hire/lease/buying as defined therein.
(e) Details of the technical personnel proposed to be employed for the Contract having the qualifications defined in Clause 4.4B(b) (ii) of ITB for the construction.
(f) Reports on the financial standing of the Bidder, such as profit and loss statements and auditor's reports for the past Five (5) years.::: Downloaded on - 12/01/2023 20:31:46 :::CIS 54
(g) Evidence of access to line(s) of credit and availability of other financial resources/facilities (10 percent of the contract value) certified by banker (the certificate being not more than 3 .
months old.)
(h) Authority to seek references from the Bidder's bankers.
(i) Information regarding any litigation or arbitration during the last five years in which the Bidder is involved, the parties concerned, the disputed amount, and the matter.
(j) Proposals for subcontracting the components of the Works for construction/up-gradation, aggregating to not more than 25 percent of the Contract Price and subcontracting of part/full routine maintenance of roads after completion of construction work.
(k) The proposed programme of construction and Quality Management Plan proposed for completion of the work as per technical specifications and within the stipulated period of completion."
60. A futile attempt has been made by respondents No. 1 to 4, in this case, when a stand has been taken that the financial evaluation of the tender could not be uploaded on the website, due to network problem, heavy rush of work and shortage of staff in HPPWD Division. However, no such document, probabilizing the said stand, has been brought before us, for scrutiny. As such, the said plea is liable to be ignored.
::: Downloaded on - 12/01/2023 20:31:46 :::CIS 5561. Respondents No. 1 to 4 have made another feeble attempt to justify the act of respondent No. 5, in submitting .
the document, demonstrating the engagement of quality control services on 11th October, 2022, on the basis of the letter, dated 8th March, 2022 (Annexure R-III). There is nothing, in this letter, that the bidder is free to engage the quality control services, after submitting the bid. The said document is also silent about the fact that the said agreement could be executed even after opening Part-I of the bid.
Annexure R-III provides that if the authorities require any clarification on the submitted scanned copies of the original documents, the bidder will be asked in writing. No help can be derived from this document to justify the act of respondent No. 4 in accepting the document pertaining to hiring of the quality control services, from respondent No. 5, on 10 th October, 2022.
Moreover, from this document, no inference can be drawn that the requisite document could be executed, after opening Part-I of the bid.
62. The technical bid was opened on 10th October, 2022, and financial bid was opened on 11th October, 2022, whereas the requisite document, i.e. document pertaining to ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 56 engaging the quality control services was executed only on 10 th October, 2022, by respondent No. 5. Immediately, after the .
execution of the document, copy of the same was forwarded to respondent No. 4 by e-mail. The agreement, in terms of Clause 31.3 of the General Conditions of Contract of the Standard Bidding Document, was an essential document, to be attached with the bid, as per Clause 4.2.
63. As discussed above, the act of respondents No. 3 and 4, if could be said to be short of "mala fide", the same certainly falls within the "mischief of arbitrariness", thus, giving the occasion for this Court to interfere in the present matter. Respondent No. 4 has exceeded its power by not adhering to the terms and conditions of Annexure P-5.
64. Hence, all the above acts of respondent No. 4 are clothed with arbitrariness and violative of the concept of level playing field.
65. Considering all these facts, the present writ petition is allowed and Annexure P-8 and the letter of intent issued in favour of respondent No. 5, awarding the construction of M/T on link road Saily to Handola via Kamoon Pattian and construction of link road Saili to Mahadev Mandir ::: Downloaded on - 12/01/2023 20:31:46 :::CIS 57 via GPS Laubowal from km. 0/0 to 14/640 (SH: Formation Cutting, C/O retaining wall, Wire crate, CS works CC .
pavement, P/L GSB, WMM, M/T Road side drain, parapets, P/F kilometer stone and sign board in Km 0/000 to 14/640) under NABARD RIDF/XXVII, are set aside. However, respondents No. 1 to 4 are at liberty to float the tender afresh, after following the guidelines, governing the area.
66. Pending miscellaneous applications, if any, are also disposed of accordingly.
( Tarlok Singh Chauhan ) Judge ( Virender Singh ) Judge January 11, 2023 ( rajni ) ::: Downloaded on - 12/01/2023 20:31:46 :::CIS