Karnataka High Court
Sri K B Kumar vs State Of Karnataka on 22 April, 2025
Author: M.Nagaprasanna
Bench: M.Nagaprasanna
1
Reserved on : 09.04.2025
R
Pronounced on : 22.04.2025
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 22ND DAY OF APRIL, 2025
BEFORE
THE HON'BLE MR. JUSTICE M. NAGAPRASANNA
WRIT PETITION No.27111 OF 2024 (GM - TEN)
C/W
WRIT PETITION No.27103 OF 2024 (GM - TEN)
IN WRIT PETITION No.27111 OF 2024
BETWEEN:
SRI K.B.KUMAR
S/O BUDE GOWDA,
AGED ABOUT 52 YEARS,
I GRADE CONTRACTOR,
RESIDING AT NO.155,
4TH MAIN, MOKSHA MARGA,
SIDDARTHANAGAR,
MYSURU - 570 001.
... PETITIONER
(BY SRI MADHUKAR DESHPANDE, ADVOCATE)
AND:
1. STATE OF KARNATAKA
DEPARTMENT OF MINOR IRRIGATION AND
2
GROUND WATER DEVELOPMENT,
VIKASA SOUDHA,
DR. AMBEDKAR VEEDHI ROAD,
BENGALURU - 560 001.
REPRESENTED BY ITS
PRINCIPAL SECRETARY.
2. EXECUTIVE ENGINEER
MINOR IRRIGATION AND
GROUND WATER DEVELOPMENT DIVISION,
OFFICE AT NAZARABAD,
MYSURU - 570 010.
3. SRI S.NARAYANAREDDY,
AGED ABOUT 49 YEARS,
I GRADE CONTRACTOR,
RESIDING AT NAGASAMUDRA ROAD,
CHANNARAYAPATNA,
HASSAN - 573 112.
... RESPONDENTS
(BY SRI C.S.PRADEEP, AAG A/W SRI SHAMANTH NAIK, HCGP FOR R-1 AND R-2;
SRI AKSHAY RAVINDRA KOLLE, ADVOCATE FOR R-3) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH TENDER CORRIGENDUM DTD. 25.09.2024 ISSUED BY THE R-2 FOR MODIFICATION OF THE TENDER CONDITION CLAUSE NO. 3.2(C)(1) AND CLAUSE NO. 3.2(C)(2) IN TENDER NOTIFICATION BEARING NO. MI/2024-25/LI/WORK-INDENT2515 (ANNX-A) ISSUED BY THE R-2 AND ETC., 3 IN WRIT PETITION No.27103 OF 2024 BETWEEN:
SRI K.B.KUMAR S/O BUDE GOWDA, AGED ABOUT 52 YEARS, I GRADE CONTRACTOR, RESIDING AT NO. 155, 4TH MAIN, MOKSHA MARGA, SIDDARTHANAGAR, MYSURU - 570 001.
... PETITIONER (BY SRI MADHUKAR DESHPANDE, ADVOCATE) AND:
1. STATE OF KARNATAKA DEPARTMENT OF MINOR IRRIGATION AND GROUND WATER DEVELOPMENT, VIKASA SOUDHA, DR. AMBEDKAR VEEDHI ROAD, BENGALURU - 560 001, REPRESENTED BY ITS PRINCIPAL SECRETARY.
2. EXECUTIVE ENGINEER MINOR IRRIGATION AND GROUND WATER DEVELOPMENT DIVISION, OFFICE AT NAZARABAD, MYSURU - 570 010.4
3. SRI S. NARAYANAREDDY, AGED ABOUT 49 YEARS, I GRADE CONTRACTOR, RESIDING AT NAGASAMUDRA ROAD, CHANNARAYAPATNA, HASSAN - 573 112.
... RESPONDENTS (BY SRI C.S.PRADEEP, AAG A/W SRI SHAMANTH NAIK, HCGP FOR R-1 AND R-2;
SRI AKSHAY RAVINDRA KOLLE, ADVOCATE FOR R-3) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH TENDER CORRIGENDUM DTD. 25.09.2024 ISSUED BY THE R-2 FOR MODIFICATION OF THE TENDER CONDITION CLAUSE NO.3.2(C)(1) AND CLAUSE NO.3.2(C)(2) IN TENDER NOTIFICATION BEARING NO. MI/2024-25/LI/WORK-INDENT2516 (ANNX-A) ISSUED BY THE R-2 AND ETC., THESE WRIT PETITIONS HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 09.04.2025, COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT MADE THE FOLLOWING:-
5CORAM: THE HON'BLE MR JUSTICE M.NAGAPRASANNA CAV ORDER The petitioner is common in both the cases, as also the kind of challenge. The subject of challenge differs, as the challenge is to two different tenders for identical work, but at different places. It is, therefore, the two are taken up together and considered by this common order. The facts obtaining in writ Petition No.27111 of 2024 would be noted for the purpose of convenience.
2. Heard in both the writ petitions Sri Madhukar Deshpande, learned counsel appearing for the petitioner, Sri C.S. Pradeep, learned Additional Advocate General appearing for respondents 1 and 2 and Sri Akshay Ravindra Kolle, learned counsel appearing for respondent No.3.
3. Facts, in brief, germane are as follows:-
The petitioner claims to be a Grade-I Contractor and has carried out various projects as would be allotted by the Government of Karnataka. The Minor Irrigation and Ground Water Development 6 Department through its Executive Engineer issues a notice inviting tender on 12-09-2024 for the purpose of construction of lift irrigation scheme near Devanuru Village in Nanjangud Taluk, Mysore District. The petitioner finding himself eligible submits his tender on the last date of submission of tender i.e., on 25-09-2024. It appears on 25-09-2024, the last date for submission of tender was extended up to 30-09-2024 by issuing a corrigendum. The corrigendum contained two factors - one, date of extension to 30-09-2024 and the other, change in criteria for submission of bids. The petitioner who had submitted his bid on 25-09-2024 before notification of corrigendum, submits his revised bid on 27-09-2024. By then, the 3rd respondent also submitted his bid and the last date for submission of bids was over. The petitioner, on 30-09-2024, files the subject petitions challenging the corrigendum so issued contending it to be contrary to the Karnataka Transparency in Public Procurement Rules, 2000 (hereinafter referred to as 'the Rules' for short). A coordinate Bench of this Court interdicts further process in tenders and therefore, there is a Impasse. 7
4. The learned counsel Sri Madhukar Deshpande appearing for the petitioner would vehemently contend that the action of the State in issuing corrigendum on the last day is contrary to Rule 14 of the Rules and the time of 5 days rendered in the corrigendum is contrary to Rule 17. He would submit that he had no opportunity to change the price bid, as he had already submitted the bid before the criteria comes to be changed. The learned counsel further contends that the Tender Inviting Authority is the Executive Engineer. The order under Rule 17 is passed by the Superintending Engineer and the corrigendum is issued on the directions of the Superintending Engineer. Therefore, it is issued by an Authority who was not competent to issue the corrigendum. On all the aforesaid grounds, he would seek quashment of the tender. The learned counsel would submit that same submissions would become applicable to the companion petition.
5. Per contra, the learned Additional Advocate General Sri C.S. Pradeep would vehemently refute the submissions in contending that the financial criteria was never changed. What was changed in the corrigendum was the last date for submission of bids 8 and the experience of distance in digging of borewell. This had to be done as the petitioner was the single tenderer. After the extension of 5 days, all the applicants are given opportunity to submit their bid or re-submit their bid, as the case would be. The petitioner also had resubmitted his bid on 27-09-2024 on the corrigendum, but does not alter his price bid. On 30-09-2024, he files the subject petitions realizing that he has not altered the price bid contending that there was server problem due to which he could not change the price bid. The learned Additional Advocate General would submit that there is no arbitrariness in the case at hand.
Only to create a level playing field, corrigendum became necessary.
6. I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material on record. In furtherance whereof, the following issues would arise for my consideration:
(i) Whether issuance of corrigendum has vitiated the entire process of tender?
(ii) Whether reduction of time as obtaining under Rule 17 of the Rules is by an incompetent Authority?9
Issue No.1:
Whether issuance of corrigendum has vitiated the entire process of tender?
7. The afore-narrated fact of notification of tender is not in dispute. The dates qua tender are as follows:
"1. Date of publication of tender 12-09-2024
2. Date of pre-bid meeting 17-09-2024
3. Last date for submission of 24-09-2024 Queries on tender document
4. Last date for submission of 25-09-2024"
Tender In terms of the timeline quoted hereinabove, the last date for submission of tender was 25-09-2024. It is an admitted fact that the petitioner submits his bid on 25-09-2024. On the same day springs the corrigendum. The corrigendum brings in some changes to Clause 3.2(C)(1) and 3.2(C)(2). The comparative chart of what stood prior to 25-09-2024 and what stood from 25-09-2024 through the corrigendum is as follows:
10"Sl. As per Technical Bid To Be Read As
No Documents
1. In Technical bid Clause KW-4 Supplying, laying, testing
3.2(C)(1) supplying, laying, and commissioning of MS
testing and commissioning of MS pipes with
Pipes with Polyurethane/epoxy Polyurethane/epoxy Coating
Coating inside and outer guniting inside and outer guniting
with CM 1:3 mortar for Rising with CM 1:3 mortar for
main/ Gravity main for a length Rising main/Gravity main
covering the minimum Dia of for a length covering the
350.00 mm for a total Length of minimum Dia of 350.00
26.90 km in a single year during mm for a total length of
last five years (2019-20 to 2023- 14.35 km in a single year
24) the work done certificate during last five years (2019-
should be obtained duly signed 10 to 2023-24) the work
from an officer not below the done certificate should be
rank of Executive Engineer of the obtained duly signed from
concerned Division. an Officer not below the
rank of Executive Engineer
of the concerned Division.
2. Clause KW-4 3.2(C)(2): Supplying, laying and
Supplying laying and testing and testing and commissioning
commissioning of HDPE PIPES of HDPE pipes for Rising
for Rising Main and Gravity Main Main and Gravity Main of
of minimum Dia of 200 mm for a minimum Dia of 200mm for
total length of 4.8 km. in a a total length of 2.56 km
single year during last five years in a single year during last (2019-20 to 2023-24) the work five years (2019-20 to done certificate should be 2023-24) the work done obtained duly signed from an certificate should be Officer not below the rank of obtained duly signed from Executive Engineer of the an Officer not below the concerned Division. rank of Executive Engineer of the concerned Division. "
11The tender process would commence, get regulated and taken to its logical conclusion in terms of the Karnataka Transparency in Public Procurements Act, 1999 and the Rules framed thereunder. Rule 14 is germane to be noticed. It reads as follows:
"14. Clarification to tender documents. At any time after the issue of the tender documents and before the opening of the tender, the Tender Inviting Authority may make any changes, modifications or amendments to the tender documents and shall send intimation of such change to all those who have purchased the original tender documents."
Rule 14 permits the Tender Inviting Authority, at any time after the issue of tender and before opening the tender, to make any changes, modifications or amendments. The rider is, intimation of such change should be made known to all those who are participating in the tender. Therefore, change in a tender condition is a permissible exercise of power. In the case at hand, the corrigendum brings in certain changes. It is not that changes have been brought out after opening of technical bid or financial bid. It is brought out on the last date of submission of tender. It is to be noticed that after the last date of submission of tender, the petitioner on 27-09-2024 has re-submitted his tender, but perhaps 12 forgotten to change the price bid. Now, he makes a hue and cry that the corrigendum is contrary to law.
8. As observed, making changes in the tender document before opening of the bid is a legally permissible exercise. The only condition is, that every tenderer who has participated should be made known of those modifications brought out in the document of tender. It is undoubtedly made known to all, in the case at hand.
Therefore, the exercise undertaken by the Authorities is not only within the ambit of law, but also intended to foster greater competition and prevent a single - bid scenario.
Thus, the allegation of arbitrariness fails to withstand scrutiny and the claim that the corrigendum vitiates the tender process is devoid of merit. The issue is answered accordingly against the petitioner.
Issue No.2:
Whether reduction of time as obtaining under Rule 17 of the Rules is by an incompetent Authority?13
9. The learned counsel for the petitioner has projected that the corrigendum did not give him one week's time and the corrigendum is issued by an incompetent Authority. In this regard original records pertaining to the tender were also secured. A perusal at the records would indicate that the Tender Inviting Authority is the Executive Engineer. At the time of issuance of corrigendum, direction of the Superintending Engineer is taken and corrigendum is issued by the Executive Engineer himself. Taking of direction from the hands of the Superintending Engineer is now projected that the corrigendum is issued by an incompetent Authority. As observed hereinabove, the Executive Engineer is the Tender Inviting Authority. If a superior Authority has endorsed the view with regard to issuance of corrigendum, it would not vitiate the tender on account of it being by an incompetent Authority. If the corrigendum were to be issued by an Assistant Executive Engineer, it would have certainly vitiated, as he is lower in rank than the Tender Inviting Authority, which is not the fact in the case at hand. Therefore, the said submission also would not merit any acceptance.
1410. The submission taking cue from the aforesaid fact is that the corrigendum so issued falls foul of Rule 17. The original documents which are secured clearly indicate the reason for giving 5 days' time in the corrigendum. There is no law that corrigendum should not restrict the tenderer to submit his bid in 5 days. It is only an extension that was granted and all the tenderers have submitted their bids in those 5 days, including the petitioner.
Therefore, the allegation of violation of Rule 17 is a figment of imagination of the petitioner and is sans countenance. A cursory perusal at the records would unambiguously establish that the Executive Engineer being the Tender Inviting Authority has issued the corrigendum, albeit upon the guidance of the Superintending Engineer, this can never be usurpation of authority. The 5 day window is, in the considered view of the Court, reasonable extension, which is made uniformly applicable to all bidders and has been availed by them, including the petitioner. The contention that the truncation infringes upon the statutory rule, is a figment of imagination of the petitioner. In that light, the subject issue also goes against the petitioner.
1511. It is trite law that this Court, in exercise of its jurisdiction under Article 226 of the Constitution of India, would not sit in the arm chair of the Tender Inviting Authority or act as an Appellate Authority over the decision of the Government, but merely reviews the manner in which it is made. Judicial review is limited to ensuring fairness in action and obviating arbitrariness. Arbitrariness is not what a tenderer would project before the Court, but it should be palpable and demonstrable. Neither of the two is present in the case at hand.
12. The Apex Court in the case of INDORE VIKAS PRAADHIKARAN v. SHRI HUMUD JAIN SAMAJ TRUST1 has held as follows:
".... .... ....
12. In the present case, the undisputed facts reveal that first NIT was issued on 17.07.2020 and respondent No. 1 was certainly the highest bidder by offering a bid of Rs. 25,671.90/- per square meter. The Tender Evaluation Committee after examining the bid arrived at a conclusion to cancel the tender as it came to its notice that an outstanding property tax demand amounting to Rs. 1,25,82,262/- was not taken into account while fixing the base price. It was resolved to issue a fresh NIT and, therefore, a fresh NIT was issued on 17.11.2021 and for the reasons best known to the respondent No. 1, it did not participate in the second NIT and instead preferred a 1 2024 SCC OnLine SC 3511 16 writ petition on 24.11.2021 before the High Court of Madhya Pradesh. Learned Single Judge was justified in dismissing the writ petition on the ground that merely by offering highest bid, the respondent No. 1 did not acquire any vested right for the execution of the contract in its favour. The Division Bench of the High Court, however, allowed the writ appeal and has gone to the extent in directing the IDA to accept the offer of respondent No. 1 which was made before the Court for an amount of Rs. 26,000/- per square meter in respect of the land in question, and further directing IDA to allot the land in question to respondent No. 1. This Court in the case of State of Jharkhand v. CWE-SOMA Consortium (supra) while dealing with the similar issue of annulment of tender process, in paras 21, 22 and 23 has held as under:
"21. Observing that while exercising power of judicial review, the Court does not sit as appellate court over the decision of the Government but merely reviews the manner in which the decision was made, in Tata Cellular v. Union of India [Tata Cellular v. Union of India, (1994) 6 SCC 651], SCC in para 70 it was held as under : (SCC p. 675) "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."
22. The Government must have freedom of contract. In Master Marine Services (P) Ltd. v. Metcalfe & 17 Hodgkinson (P) Ltd. [Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd., (2005) 6 SCC 138], SCC in para 12 this Court held as under : (SCC p.
147) "12. After an exhaustive consideration of a large number of decisions and standard books on administrative law, the Court enunciated the principle that the modern trend points to judicial restraint in administrative action. The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. 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. The Government must have freedom of contract. In other words, 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 principles of reasonableness but also must be free from arbitrariness not affected by bias or actuated by mala fides. It was also pointed out that quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. (See para 113 of the Report, SCC para 94.)"
The Court does not have the expertise to correct the administrative decision as held in Laxmikant v. Satyawan Laxmikant v. Satyawan,(1996) 4 SCC 208], the Government must have freedom of contract.
23. The right to refuse the lowest or any other tender is always available to the Government. In the case in hand, the respondent has neither pleaded nor established mala fide exercise of power by the appellant. While so, the decision of the Tender Committee ought not to have been interfered with by the High Court. In our considered view, the High Court erred in sitting in appeal over the decision of the appellant to cancel the tender and float a fresh tender. Equally, the High Court was not right in going into the financial implication of a fresh tender."18
... ... ...
14. We are fortified in our view by a decision of this Court in U.P. Avas Evam Vikas Parishad v. Om Prakash Sharma [U.P. Avas Evam Vikas Parishad v. Om Prakash Sharma, (2013) 5 SCC 182 : (2013) 2 SCC (Civ) 737], wherein the questions arose for its consideration that : whether there is any vested right upon the plaintiff bidder until the bid is accepted by the competent authority in relation to the property in question? Merely because the plaintiff is the highest bidder by depositing 20% of the bid amount without there being approval of the same by the competent authority and it amounts to a concluded contract in relation to the plot in question; and whether the plaintiff could have maintained the suit in the absence of a concluded contract? Considering the aforesaid questions, this Court has discussed the matter thus: (SCC pp. 195-97, paras 30-31) "30. In support of the said proposition, the learned Senior Counsel for the defendant, Mr. Rakesh Dwivedi has also placed reliance upon another decision of this Court in State of U.P. v. Vijay Bahadur Singh [State of U.P. v. Vijay Bahadur Singh, (1982) 2 SCC 365]. The learned Senior Counsel has rightly placed reliance upon the judgment of this Court in Rajasthan Housing Board case [Rajasthan Housing Board v. G.S. Investments, (2007) 1 SCC 477] which reads as under : (SCC p. 483, para 9) '9. This being the settled legal position, the respondent acquired no right to claim that the auction be concluded in its favour and the High Court clearly erred in entertaining the writ petition and in not only issuing a direction for consideration of the representation but also issuing a further direction to the appellant to issue a demand note of the balance amount. The direction relating to issuance of the demand note for balance amount virtually amounted to confirmation of the auction in favour of the respondent which was not the function of the High Court.' In State of Orissa v. Harinarayan Jaiswal [State of Orissa v. Harinarayan Jaiswal, (1972) 2 SCC 36] case, 19 relevant paragraph of which reads as under : (SCC pp. 44-45, para 13) '13. ... There is no concluded contract till the bid is accepted. Before there was a concluded contract, it was open to the bidders to withdraw their bids (see Union of India v. Bhim Sen Walaiti Ram [Union of India v. Bhim Sen Walaiti Ram, (1969) 3 SCC 146 ). [Ed.: The matter between two asterisks has been emphasised in Avam Evam Vikas Parishad case, (2013) 5 SCC 182.] By merely giving bids, the bidders had not acquired any vested rights [Ed. :
The matter between two asterisks has been emphasised in Avam Evam Vikas Parishad case, (2013) 5 SCC 182.]'.
31. In view of the law laid down by this Court in the aforesaid decisions, the learned Senior Counsel Mr. Rakesh Dwivedi has rightly placed reliance upon the same in support of the case of the first defendant, which would clearly go to show that the plaintiff had not acquired any right and no vested right has been accrued in his favour in respect of the plot in question merely because his bid amount is highest and he had deposited 20% of the highest bid amount along with the earnest money with the Board. In the absence of acceptance of bid offered by the plaintiff to the competent authority of the first defendant, there is no concluded contract in respect of the plot in question, which is evident from letters dated 26-5-1977 and 8-7-1977 wherein the third defendant had rejected the bid amount deposited by the plaintiff and the same was refunded to him by way of demand draft, which is an undisputed fact and it is also not his case that the then Assistant Housing Commissioner who has conducted the public auction had accepted the bid of the plaintiff.""
(Emphasis supplied) 20 Again, the Apex Court in the case of BANSHIDHAR CONSTRUCTION PRIVATE LIMITED v. BHARAT COKING COAL LIMITED2 has held as follows:
".... .... ....
31. In Sterling Computers Ltd. v. M & N Publications Ltd. [Sterling Computers Ltd. v. M & N Publications Ltd., (1993) 1 SCC 445], this Court while dealing with the scope of judicial review of award of contracts held: (SCC p. 458, para 18) "18. While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the Court is concerned primarily as to whether there has been any infirmity in the "decision making process". In this connection reference may be made to Chief Constable of the North Wales Police v. Evans [Chief Constable of the North Wales Police v. Evans, (1982) 1 WLR 1155 (HL)] where it was said that : (p. 1161) '... The purpose of judicial review is to ensure that the individual receives fair treatment, and not to ensure that the authority, after according fair treatment, reaches on a matter which it is authorised or enjoined by law to decide for itself a conclusion which is correct in the eyes of the court.' By way of judicial review the court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State. Courts have inherent limitations on the scope of any such enquiry. But at the same time as was said by the House of Lords in the aforesaid case, Chief Constable of the North Wales Police v. Evans [Chief Constable of the North Wales Police v. Evans, (1982) 1 WLR 1155 (HL)] the courts can certainly examine whether "decision-making process" was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution."
2(2024) 10 SCC 273 21
32. In Tata Cellular v. Union of India [Tata Cellular v. Union of India, (1994) 6 SCC 651] , this Court had laid down certain principles for the judicial review of administrative action : (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.
(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 ofWednesbury [Associated Provincial Picture Houses v. Wednesbury Corpn., (1948) 1 KB 223 (CA)] 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.
22Based on these principles we will examine the facts of this case since they commend to us as the correct principles."
(emphasis in original and supplied)
33. It has also been held in ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd. [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd., (2004) 3 SCC 553] , as under : (SCC p. 580, para 53) "53. From the above, it is clear that when an instrumentality of the State acts contrary to public good and public interest, unfairly, unjustly and unreasonably, in its contractual, constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution."
34. In Jagdish Mandal v. State of Orissa [Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517] , this Court after discussing number of judgments laid down two tests to determine the extent of judicial interference in tender matters. They are : (SCC pp. 531-32, para 22) "22. ... (i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone;
or Whether the process adopted or decision made is so arbitrary and irrational that the court can say:'the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached;'
(ii) Whether public interest is affected.
If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action."
35. In Mihan (India) Ltd. v. GMR Airports Ltd. [Mihan (India) Ltd. v. GMR Airports Ltd., (2022) 19 SCC 69 : 2022 SCC OnLine SC 574] , while observing that the government contracts 23 granted by the government bodies must uphold fairness, equality and rule of law while dealing with the contractual matters, it was observed in SCC para 65 as under:
"65. In view of the above, it is apparent that in government contracts, if granted by the government bodies, it is expected to uphold fairness, equality and rule of law while dealing with contractual matters. Right to equality under Article 14 of the Constitution of India abhors arbitrariness. The transparent bidding process is favoured by the Court to ensure that constitutional requirements are satisfied. It is said that the constitutional guarantee as provided under Article 14 of the Constitution of India demands the State to act in a fair and reasonable manner unless public interest demands otherwise. It is expedient that the degree of compromise of any private legitimate interest must correspond proportionately to the public interest."
36. It was sought to be submitted by the learned counsel for the respondents relying upon the observations made in Central Coalfields Ltd. v. SLL-SML (JVC) [Central Coalfields Ltd. v. SLL-SML (JVC), (2016) 8 SCC 622 : (2016) 4 SCC (Civ) 106] , that whether a term of NIT is essential or not is a decision taken by the employer which should be respected. However, in the said judgment also it is observed that if the employer has exercised the inherent authority to deviate from the essential term, such deviation has to be made applicable to all the bidders and potential bidders. It was observed in paras 47 and 48 as under : (SCC p. 638) "47. The result of this discussion is that the issue of the acceptance or rejection of a bid or a bidder should be looked at not only from the point of view of the unsuccessful party but also from the point of view of the employer. As held in Ramana Dayaram Shetty [Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCC 489] the terms of NIT cannot be ignored as being redundant or superfluous. They must be given a meaning and the necessary significance. As pointed out in Tata Cellular [Tata Cellular v. Union of India, (1994) 6 SCC 651] there must be judicial restraint in interfering with administrative action. Ordinarily, the soundness of the decision taken by the employer ought not to be questioned 24 but the decision-making process can certainly be subject to judicial review. The soundness of the decision may be questioned if it is irrational or mala fide or intended to favour someone or a decision 'that no responsible authority acting reasonably and in accordance with relevant law could have reached' as held in Jagdish Mandal [Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517] followed in Michigan Rubber [Michigan Rubber (India) Ltd. v. State of Karnataka, (2012) 8 SCC 216] .
48. Therefore, whether a term of NIT is essential or not is a decision taken by the employer which should be respected. Even if the term is essential, the employer has the inherent authority to deviate from it provided the deviation is made applicable to all bidders and potential bidders as held in Ramana Dayaram Shetty [Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCC 489] . However, if the term is held by the employer to be ancillary or subsidiary, even that decision should be respected. The lawfulness of that decision can be questioned on very limited grounds, as mentioned in the various decisions discussed above, but the soundness of the decision cannot be questioned, otherwise this Court would be taking over the function of the tender issuing authority, which it cannot.""
(Emphasis supplied) The Apex Court considers the entire spectrum of law relating to judicial review of Government contracts. The learned counsel for the petitioner has placed heavy reliance upon the judgment of the Apex Court in the case of SUBODH KUMAR SINGH RATHOUR v.
CHIEF EXECUTIVE OFFICER reported in 2024 SCC OnLine SC 1682 to contend that judicial review is permissible when arbitrariness is writ large. There can be no qualm about the 25 principles so laid down by the Apex Court. But, it would not become applicable to the case at hand. The submission of arbitrariness or statutory aberration is nowhere found in the present case. The findings rendered herein would be equally applicable to the companion petition.
13. Finding no merit in both these petitions, the petitions stand rejected. The interim order of any kind subsisting shall stand dissolved.
Pending applications if any, also stand disposed, as a consequence.
Sd/-
(M.NAGAPRASANNA) JUDGE bkp CT:MJ