Gujarat High Court
M/S Shelat Brothers vs State Of Gujarat on 20 June, 2018
Author: M.R. Shah
Bench: M.R. Shah, A.Y. Kogje
C/SCA/8095/2018 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 8095 of 2018
with
R/SPECIAL CIVIL APPLICATION NO. 8826 of 2018
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE M.R. SHAH sd/-
and
HONOURABLE MR.JUSTICE A.Y. KOGJE sd/-
==========================================================
1 Whether Reporters of Local Papers may be allowed to No see the judgment ?
2 To be referred to the Reporter or not ? No 3 Whether their Lordships wish to see the fair copy of the No judgment ?
4 Whether this case involves a substantial question of law No as to the interpretation of the Constitution of India or any order made thereunder ?
========================================================== M/S SHELAT BROTHERS Versus STATE OF GUJARAT ========================================================== Appearance:
In SCA 8095/2018:
MR KV SHELAT, ADVOCATE, MR SHYAM K SHELAT, ADVOCATE (6552) for the PETITIONER(s) No. 1,2,3,4,5 MR DM DEVNANI, ASSISTANT GOVERNMENT PLEADER(1) for RESPONDENT(s) No. 1,2,4 MR MITUL K SHELAT(2419) for RESPONDENT No. 3 In SCA 8826/2018:
MR HARSHADRAY A DAVE, ADVOCATE for the PETITIONER MR DM DEVNANI, ASSISTANT GOVERNMENT PLEADER(1) for RESPONDENT(s) No. 1-3 MR MITUL K SHELAT(2419) for RESPONDENT No.2 ========================================================== CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE A.Y. KOGJE Date : 20/06/2018 Page 1 of 59 C/SCA/8095/2018 CAV JUDGMENT COMMON C.A.V. JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH)
1. As common questions of law and facts arise in these petitions and as such with respect to the same tender notice both these petitions have been preferred, they are being decided and disposed of by this common order.
2. For the sake of convenience, Special Civil Application No.8095/2018 is treated and considered to be lead matter and therefore, the facts in said Special Civil Application are narrated. The facts leading to the present Special Civil Application in nutshell are as under:
2.1 Respondent No.3 - Gujarat Medical Service Corporation Limited is a nodal agency to procure medicines and other medicinal products to be supplied to Civil Hospitals -
Government Hospitals and Primary Health Centers in the State of Gujarat. The said Corporation is concerned with the procurement of drugs, pharmaceuticals, surgical items and medical equipments for all Government Hospitals and medical institutions in the State of Gujarat.
Page 2 of 59 C/SCA/8095/2018 CAV JUDGMENT2.2 That vide Tender being T.E.No.GMSCL/D-
629/RC/2018-19, the respondent - Corporation invited tenders for supply of Tablet, Capsules, Injections, Miscellaneous and Surgical items. The said tender notice came to be issued for purchasing and entering two year rate contract in relation to various items mentioned in the said tender document. The tenders/ bids were invited from reputed manufacturers/ drug importers for supply of various Tablet, Capsules, Injections, Miscellaneous and Surgical items etc. Tender Notice No.D/15/18-19 was issued through Internet and tenders were invited online. That as per the tender document, one of the condition of eligibility as per Clause B(4)(c) is that the manufacturer should have valid WHO-GMP Certificate or valid Certificate of Pharmaceutical Product ("COPP") for individual product in WHO format. As per the said condition, no offer will be acceptable unless the tender is accompanied by requisite WHO-GMP Certificate described above. As per the said clause, manufacturer not having valid WHO-GMP Certificate shall not be entitled to submit the tender.
2.3 Feeling aggrieved and dissatisfied with the said eligibility criteria contained in Clause B(4)(c) regarding holding of WHO-GMP Certificate or COPP Certificate in WHO format, Page 3 of 59 C/SCA/8095/2018 CAV JUDGMENT the petitioners have preferred the present Special Civil Application with the following main prayers:
"(A) Your Lordships may be pleased to issue writ of mandamus or any other appropriate writ, order or direction declaring the condition of eligibility provided in Clause B(4)(c) regarding holding of WHO GMP Certificate or COPP Certificate in WHO format etc. in tender document for Tablet, Capsules, Injections, Miscellaneous and Surgical items bearing in Tender No.T.E.No.GMSCL/D-
629/RC/2018-19 issued by Gujarat Medical Service Corporation Limited (a Government of Gujarat Undertaking) as illegal, unreasonable, arbitrary without any authority of law and violative of Article 14, 19(1)(g) and 21 of the Constitution of India and be pleased to quash such condition of eligibility in the subject tender.
(B) The Hon'ble Court be pleased to issue writ of mandamus or any other appropriate writ, order or direction declaring that the subject tender is a domestic tender floated by Respondent No.3 and therefore, the petitioners who are having legal and valid license for manufacturing and selling the Drugs and medicines etc. under Drugs and Cosmetics Act, 1945, read with rules, are eligible to apply as a bidder in the subject tender."
3. Shri K.V.Shelat, learned advocate has appeared on Page 4 of 59 C/SCA/8095/2018 CAV JUDGMENT behalf of the petitioners of Special Civil Application No.8095/2018 and Shri Harshadray A. Dave, learned advocate has appeared on behalf of the petitioner of Special Civil Application No.8826/2018. Shri Mitul K. Shelat, learned advocate has appeared on behalf of respondent No.3 and Shri D.M.Devnani, learned Assistant Government Pleader has appeared on behalf of respondents Nos.1, 2 and 4 - State authorities.
4. Shri K.V.Shelat, learned advocate appearing on behalf of the petitioners has vehemently submitted that the impugned eligibility provided in Clause B(4)(c) regarding holding of WHO-GMP Certificate or COPP Certificate in WHO format is absolutely unreasonable, arbitrary and not warranted and/or not required.
4.1 It is submitted by Shri K.V.Shelat, learned advocate appearing on behalf of the petitioners that all the petitioners have been issued the licences by the State Government through appropriate authorities under the provisions of the Drugs and Cosmetics Act, 1945, to manufacture the products/ tablets/ medicines and they are all manufacturing and selling the drugs as per the licences issued by the appropriate Page 5 of 59 C/SCA/8095/2018 CAV JUDGMENT authority under the Drugs and Cosmetics Act, 1945. It is submitted that the products in question for which the tenders are invited are to be used in domestic market and therefore, the requirement of holding of WHO GMP Certificate or COPP Certificate in WHO format is absolutely unreasonable, unwarranted and arbitrary.
4.2 It is submitted by Shri K.V.Shelat, learned advocate appearing on behalf of the petitioners that as such, if the drugs are manufactured for the purpose of selling in the domestic market, such a Certificate of WHO GMP or COPP Certificate in WHO format would not be required once the concerned manufacturer is having the licence to manufacture the drugs / medicinal products under the Drugs and Cosmetics Act, 1945.
4.3 It is further submitted by Shri K.V.Shelat, learned advocate appearing on behalf of the petitioners that as such, Drugs Controller General (India), who is the highest authority under the Drugs and Cosmetics Act and Head of Central Drugs Standard Control Organization, New Delhi, has also issued an Office Memorandum dated 08.05.2018 which clearly shows that COPP and WHO-GMP Certificates are for the purpose of Page 6 of 59 C/SCA/8095/2018 CAV JUDGMENT international commerce only. It is submitted that the said communication shows in no uncertain terms that WHO-GMP is a certification needed only for international commerce and when there is domestic commercial transaction, to impost such a condition to have WHO-GMP Certificate as an eligibility requirement is absolutely illegal, arbitrary unreasonable and would tantamount to depriving the legitimate bidders having legal licence to manufacture and sell medicines etc. issued by the Competent Authority of State Government under the Drugs and Cosmetics Act, 1945.
4.4 It is further submitted by Shri K.V.Shelat, learned advocate appearing on behalf of the petitioners that even as per the Circular issued by the Drugs Controller General (India) dated 01.03.2004, it is made clear that the procurement agencies in India may ask for GMP Certificate relating to the compliance of revised Schedule `M' of Drugs and Cosmetic Rules and not for COPP (WHO-GMP) Certificate. It is submitted that by the said Circular of the State, Drug Controllers are requested not to entertain request for issuing of WHO-GMP Certificate by the manufacturers of pharmaceutical products to be supplied in India. It is submitted that therefore, the respective petitioners have not applied for the WHO-GMP Page 7 of 59 C/SCA/8095/2018 CAV JUDGMENT Certificate. It is submitted that as such, the authorities are not issuing the WHO-GMP Certificates to the manufacturers of pharmaceutical products to be supplied in India. It is submitted that therefore, to have the eligibility criteria of having WHO-
GMP Certificate or a valid Certificate of COPP for individual products in WHO format is absolutely unreasonable, arbitrary and takes away the rights of the respective petitioners to compete.
4.5 Shri K.V.Shelat, learned advocate appearing on behalf of the petitioners has further submitted that the said requirement of WHO-GMP has been imposed with an oblique intention of discarding Small Scale Industries like the petitioners and favouring Multinational Pharmaceutical Manufacturers for extraneous reasons and not in public interest.
4.6 It is further submitted by Shri K.V.Shelat, learned advocate appearing on behalf of the petitioners that when drugs are manufactured and supplied, they must meet the standards and specifications as required under the Drugs and Cosmetics Act. It is submitted that by imposing such irrelevant condition of manufacturers having WHO-GMP Page 8 of 59 C/SCA/8095/2018 CAV JUDGMENT Certificate for the tender of 310 medicines and surgical items, the entire tender process has been rendered arbitrary and mala fide.
4.7 It is further submitted by Shri K.V.Shelat, learned advocate appearing on behalf of the petitioners that in State of Gujarat & Anr. v. Baroda Surgical (I) Pvt. Ltd. & Anr. - Letters Patent Appeal No.34/2002 in Special Civil Application No.7327/2001, the Division Bench of this Court has confirmed the decision of the learned Single Judge in Special Civil Application No.7327/2001 whereby the condition imposed in a tender to produce even GMP Certificate, i.e. "Good Manufacturing Practice" Certificate was struck down.
4.8. Shri K.V.Shelat, learned advocate appearing on behalf of the petitioners has heavily relied upon the decision of the High Court of Uttaranchal at Nainital in Civil Writ Petition No.427(M/B) of 2002 in the case of Poddar Pharmaceutical Ltd. and Ors. v. State of Uttaranchal and Ors. decided on 24.05.2003, and has submitted that Uttaranchal High Court in the said decision had come to the conclusion that WHO-GMP Certificate is required by the firms who intend to export the Page 9 of 59 C/SCA/8095/2018 CAV JUDGMENT medicines and where the State Government has issued necessary Certificate which permits the petitioners to manufacture and sell their medicines in open market, the State Government cannot deprive the petitioners to participate in tender process for supply of medicines on the ground that they do not have WHO-GMP Certificate. It is submitted that in the said decision, the High Court has come to the conclusion that as the petitioners are having valid licence for manufacture and sale of drugs under Rule 71 and 76 of the Drugs and Cosmetics Rules, 1945, they cannot be prevented from participating in the tender on the ground that they are not having WHO-GMP Certificate. That the said decision has been confirmed by the Hon'ble Supreme Court.
4.9. Making above submissions and relying upon the above decisions, it is requested to allow the present petitions.
5. Shri Harshadray A.Dave, learned advocate appearing on behalf of petitioner of Special Civil Application No.8826/2018 has adopted the submissions made by Shri K.V.Shelat, learned advocate appearing on behalf of the petitioners of Special Civil Application No.8095/2018. Over and above the same, Shri Dave, learned advocate appearing on Page 10 of 59 C/SCA/8095/2018 CAV JUDGMENT behalf of the petitioner of Special Civil Application No.8826/2018 has relied upon the decision of the learned Single Judge of Jammu and Kashmir High Court in the case of M/s.Rohit Drugs and others v. The State and others reported in AIR 2002 Jammu and Kashmir 127.
6. Both these petitions are opposed by Shri Mitul K. Shelat, learned advocate appearing on behalf of respondent No.3 - Corporation. An affidavit-in-reply is filed on behalf of respondent No.3 opposing the present petition.
6.1 It is submitted by Shri Mitul K. Shelat, learned advocate appearing on behalf of respondent No.3 that the present petition seeks to challenge the imposition of condition requiring WHO-GMP Certification as mandatory requirement for participation in the tender proceedings. It is submitted that the petitioners cannot pray to have the eligibility criteria as desired by them. It is submitted that the petitioners have no fundamental or legal right to insist for the prescription of eligibility conditions/ criteria which suits the petitioners and/or they cannot pray to quash and set aside the eligibility criteria/ condition which do not suit them. It is submitted that therefore, the present petition challenging the tender Page 11 of 59 C/SCA/8095/2018 CAV JUDGMENT conditions/ eligibility criteria not being maintainable in law, may not be entertained as such.
6.2 It is further submitted by Shri Mitul K. Shelat, learned advocate appearing on behalf of respondent No.3 -
Corporation that the respondent - Corporation is concerned with the procurement of drugs, pharmaceuticals and medical equipments for all Government Hospitals and Medical Institutions in the State. It is submitted that the drugs, pharmaceuticals, surgical items etc. are ultimately meant for common people and therefore, as a nodal agency, respondent No.3 - Corporation is entitled to determine and insist that the pharmaceutical products procured by it meet with the most stringent conditions so as to ensure the complete well-being of the patients. It is submitted that endeavour of the respondent-
Corporation is to have the best quality medicines and medicinal products the ultimate beneficiaries of which are the common people. It is submitted that therefore, the impugned eligibility criteria is absolutely in the larger public interest.
6.3 It is further submitted by Shri Mitul K. Shelat, learned advocate appearing on behalf of respondent No.3 that even otherwise, the pre-qualification which is impugned is a Page 12 of 59 C/SCA/8095/2018 CAV JUDGMENT well known and respected criterion worldwide. It is submitted that the petitioners did not possess the said Certification. It is submitted that the prescribed condition is reasonable and has a rationale with the contract to be awarded pursuant to the tender enquiry. It is submitted that the petitioners cannot insist for being considered for the tender despite not being eligible in terms of the tender specifications. It is submitted that in fact, there are other manufacturers in India who are possessing WHO-GMP Certificates.
6.4 Shri Mitul K. Shelat, learned advocate appearing on behalf of respondent No.3 has submitted that as such, in addition to the guidelines issued under the Drugs and Cosmetics Act, 1945, and the Rules framed thereunder, guidelines have been framed by World Health Organization, popularly known as WHO-GMP Guidelines. It is submitted that in terms of the guidelines, Certificate is issued under the joint signature of the State Drugs Control Authority and the Central Drug Control Authority. It is further submitted that in addition to the parameters prescribed under Schedule-M, the WHO-
GMP prescribes additional parameters in relation to (a) Pharmaceutical Quality Systems; (b) Qualify Risk Management,
(c) Quality Management Systems; (d) Suppliers Audit and Page 13 of 59 C/SCA/8095/2018 CAV JUDGMENT Approval and (e) Specifications for Testing Procedure. It is submitted that thus, WHO-GMP ensures that higher and contemporaneous standards relating to manufacturing practices of pharmaceutical products are met with. It is submitted by Shri Mitul K. Shelat, learned advocate appearing on behalf of respondent No.3 that therefore, with a view to procure the best standards for the benefit of the public at large, the respondent-Corporation has decided to incorporate a condition in the tender document pertaining to Drugs, injectables, Miscellaneous Items and Surgical Items, making the WHO-GMP or COPP Certificate compulsory.
6.5 It is further submitted by Shri Mitul K. Shelat, learned advocate appearing on behalf of respondent No.3 that so as to ensure that all manufacturers have sufficient opportunity to meet with the criterion, the said decision was taken in July 2016, and was to be given effect to on and from April 2017. It is submitted that respondent No.3, therefore, accordingly published a general communication on 18.07.2016, on its website, intimating that "WHO-GMP Certificate issued by the Licensing Authority" will be mandatory condition for participating in the bids published by respondent No.3-Corporation with effect from 01.04.2017 for Page 14 of 59 C/SCA/8095/2018 CAV JUDGMENT drugs and medicines. It submitted that it was also informed to all the bidders that they may accordingly prepare themselves to meet with the said conditions. It is submitted that before implementation of WHO-GMP/ COPP condition as eligibility criteria, the respondent - Corporation has provided reasonable time to all the bidders to make necessary process and arrangements to obtain WHO-GMP Certificate. It is submitted that despite the above, none of the petitioners have obtained WHO-GMP/ COPP Certificate. It is submitted that nothing is on record that the petitioners applied for the same and the same has been rejected by the appropriate authority.
6.6 It is further submitted by Shri Mitul K. Shelat, learned advocate appearing on behalf of respondent No.3 that earlier also, when tenders were invited after 2017, the impugned condition was provided and at that time, the petitioners did not challenge the same.
6.7 It is submitted by Shri Mitul K. Shelat, learned advocate appearing on behalf of respondent No.3 that, therefore, respondent No.3 has incorporated requirement of WHO-GMP/ COPP Certificate with a view to procure best quality medicines and surgical items meeting with international Page 15 of 59 C/SCA/8095/2018 CAV JUDGMENT standards for public at large. It is submitted that the purpose of incorporating the said condition is to have best quality product for public at large and improvement in availability and quality of medicines. It is submitted that such condition would enhance acceptance for generic medicines amongst people who have still doubts about quality and availability aspects of generic medicines. It is further submitted by Shri Mitul K. Shelat, learned advocate appearing on behalf of respondent No.3 that similar conditions are imposed in other States also, namely, Kerala and Rajasthan.
6.8 Shri Mitul K. Shelat, learned advocate appearing on behalf of respondent No.3 has heavily relied upon the decision of the Division Bench of this Court in the case of Indian Immunologicals Ltd. v. Gujarat Medical Services Corporation Ltd. and Anr. - Special Civil Application No.11548/2015 decided on 20.08.2015, as well as the decision of the Andhra Pradesh High Court in the case of Association of Drugs And ... v. A.P.Health, Medical, Housing And ... dated 21.02.2002 reported in 2002(2) ALD 609, and has submitted that imposition of similar condition/ eligibility criteria has been confirmed in the aforesaid decisions.
Page 16 of 59 C/SCA/8095/2018 CAV JUDGMENT6.9 Making above submissions and relying upon the above decisions, it is requested to dismiss the present petitions.
7. In rejoinder, Shri K.V.Shelat, learned advocate appearing on behalf of the petitioners, has submitted that the decision of the Division Bench of this Court shall not be applicable to the facts of the case on hand as the same is with respect to the life-saving drugs. Making above submissions, and relying upon the decision of the Hon'ble Supreme Court in the case of Indian Oil Corporation Limited v. Nilofer Siddiqui And Others reported in (2015)16 SCC 125, it is requested to allow the present petitions.
8. Heard learned advocates appearing for the respective parties at length. At the outset, it is required to be noted that by these petitions under Article 226 of the Constitution of India, respective petitioners have challenged the eligibility criteria contained in Clause B(4)(c) of the tender notice/ tender document. Therefore, the question which is posed for consideration of this Court is, can a bidder pray to amend or modify the terms and conditions of the tender document, more Page 17 of 59 C/SCA/8095/2018 CAV JUDGMENT particularly, challenge the eligibility criteria to the extent it suits the bidder to make it eligible to participate? Another question which is posed for consideration of this Court is whether it would be open for some of the bidders to challenge the eligibility criteria on which they are likely to be disqualified on non-fulfilment of the same?
9. In the case of Goldstone Infratech Limited v.
State of Gujarat & Ors. - Special Civil Application No.2097/2018 decided on 22.02.2018, the Division Bench of this Court had an occasion to consider number of decisions of the Hon'ble Supreme Court on the point, more particularly, with respect to judicial scrutiny and/or interference by courts in contract matters. In Paragraphs 8.1 to 9.13, it is observed and held as under:
"[8.1] While considering the aforesaid issue, the scope of judicial review in the contract matter as considered by the Hon'ble Supreme Court in few decisions are required to be dealt with and considered. In the case of Educomp Datamatics Ltd. & Ors (Supra), the Hon'ble Supreme Court has observed and held that terms of initiation to tender are not open to judicial scrutiny, the same being in the realm of contract. It is observed that the Government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a Page 18 of 59 C/SCA/8095/2018 CAV JUDGMENT necessary concomitant for an administrative body in an administrative sphere. It is further observed that the Court can scrutinize the award of the contracts by the Government or its agencies in exercise of their powers of judicial review to prevent arbitrariness or favoritism. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. It is further observed and held that the Courts cannot strike down the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical. While observing that in 9 to 12, the Hon'ble Supreme Court has observed and held as under:
"9. It is well settled now that the courts can scrutinize the award of the contracts by the government or its agencies in exercise of its powers of judicial review to prevent arbitrariness or favoritism. However, there are inherent limitations in the exercise of the power of judicial review in such matters. The point as to the extent of judicial review permissible in contractual matters while inviting bids by issuing tenders has been examined in depth by this Court in Tata Cellular vs. Union of India [1994 (6) SCC 651]. After examining the entire case law the following principles have been deduced.
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 Page 19 of 59 C/SCA/8095/2018 CAV JUDGMENT to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.
10. In Air India Limited vs. Cochin International Airport Limited, this Court observed:
The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decisionmaking process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness.Page 20 of 59 C/SCA/8095/2018 CAV JUDGMENT
11. This principle was again restated by this Court in Monarch Infrastructure (P) Ltd. vs. Commissioner, Ulhasnagar Municipal Corporation and Others [2000 (5) SCC 287]. It was held that the terms and conditions in the tender are prescribed by the government bearing in mind the nature of contract and in such matters the authority calling for the tender is the best judge to prescribe the terms and conditions of the tender. It is not for the courts to say whether the conditions prescribed in the tender under consideration were better than the one prescribed in the earlier tender invitations.
12. It has clearly been held in these decisions that the terms of the invitation to tender are not open to judicial scrutiny the same being in the realm of contract. That the government must have a free hand in setting the terms of the tender. It must have reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. The courts cannot strike down the terms of the tender prescribed by the government because it feels that some other terms in the tender would have been fair, wiser or logical. The courts can interfere only if the policy decision is arbitrary, discriminatory or mala fide.
[8.2] In the case of Central Coalfields Limited and Ors. (Supra), the Hon'ble Supreme Court after considering the host of decisions, has observed and held that the decision making process of the employer or owner of the project in accepting or rejecting the bid of a tenderer should not be interfered with. It is observed and held that interference is permissible only if the decision making process is mala fide or is intended to favour someone. It is further observed that similarly, the decision should not be interfered with unless the decision is so arbitrary or irrational that the Court could say that the decision is one Page 21 of 59 C/SCA/8095/2018 CAV JUDGMENT which no responsible authority acting reasonably and in accordance with law could have reached. It is further observed that in other words, the decision making process or the decision should be perverse and not merely faulty or incorrect or erroneous. In the aforesaid decision, the Hon'ble Supreme Court has considered its earlier decision in the case reported in (1989) 3 SCC 293 as well as decision in the case reported in (1994) 6 SCC 651 as well as in the case of (2007) 4 SCC 517. After considering the aforesaid decisions, the Hon'ble Supreme Court has went a step further and has held that the decision if challenged, the Constitutional Court can interfere if the decision is perverse. However, the Constitutional Courts are expected to exercise restrain in interfering with the administrative decision and ought not to substitute its view for that of the administrative authority. Similar view has been taken by the Hon'ble Supreme Court in the case of Afcons Infrastructure Ltd (Supra).
[8.3] In the case of Central Coalfields Limited (Supra), the Hon'ble Supreme Court has further observed and held that the Court, as far as possible, avoid a construction which would render the words used by the author of the document meaningless and futile or reduce to silence any part of the document and make it altogether inapplicable. It is further observed and held that whether a term is essential or not is a decision taken by the employer, which should be respected and soundness of that decision cannot be questioned by Court. It is further observed in the case of Central Coalfields Limited Page 22 of 59 C/SCA/8095/2018 CAV JUDGMENT (Supra) that it is well settled rule of interpretation applicable alike to documents as to statutes that, save for compelling necessity, the Court should not be prompt to ascribe superfluity to the language of a document and should be rather at the outset inclined to suppose every word intended to have some effect or be of some use. It is further observed that to reject words as insensible should be the last resort of judicial interpretation, for it is an elementary rule based on common sense that no author of a formal document intended to be acted upon by the others should be presumed to use words without a meaning. Even in the case of Michigan Rubber (India) Limited (Supra), the decision which has been relied upon by the learned counsel for the petitioner, the Hon'ble Supreme Court has observed that the Court cannot interfere with the terms of the tender prescribed by the Government because it feels that some other terms in the tender would have been fair, wiser or logical.
The Hon'ble Supreme Court in the case of Central Coalfields Limited (Supra), in paras 31 to 38, 42 to 44, 47 to 49, 52, 55 and 56 has observed and held as under:
"31. We were informed by the learned Attorney General that 9 of the 11 bidders furnished a bank guarantee in the prescribed and correct format. Under these circumstances, even after stretching our credulity, it is extremely difficult to understand why JVC was unable to access the prescribed format for the bank guarantee or furnish a bank guarantee in the prescribed format when every other bidder could do so or why it could not seek a clarification or why it could not represent against any perceived ambiguity. The objection and the conduct of JVC regarding the prescribed format of the bank guarantee or a supposed ambiguity in the NIT does not appear to be fully above board.
32. The core issue in these appeals is not of judicial review of Page 23 of 59 C/SCA/8095/2018 CAV JUDGMENT the administrative action of CCL in adhering to the terms of the NIT and the GTC prescribed by it while dealing with bids furnished by participants in the bidding process. The core issue is whether CCL acted perversely enough in rejecting the bank guarantee of JVC on the ground that it was not in the prescribed format, thereby calling for judicial review by a constitutional court and interfering with CCL's decision.
33. In Ramana Dayaram Shetty v. International Airport Authority of India, 1979 3 SCC 489 this Court held that the words used in a document are not superfluous or redundant but must be given some meaning and weightage: "It is a well settled rule of interpretation applicable alike to documents as to statutes that, save for compelling necessity, the Court should not be prompt to ascribe superfluity to the language of a document "and should be rather at the outset inclined to suppose every word intended to have some effect or be of some use". To reject words as insensible should be the last resort of judicial interpretation, for it is an elementary rule based on common sense that no author of a formal document intended to be acted upon by the others should be presumed to use words without a meaning. The court must, as far as possible, avoid a construction which would render the words used by the author of the document meaningless and futile or reduce to silence any part of the document and make it altogether inapplicable."
34. In Ramana Dayaram Shetty case, the expression "registered IInd Class hotelier" was recognized as being inapt and perhaps ungrammatical; nevertheless common sense was not offended in describing a person running a registered II grade hotel as a registered II Class hotelier. Despite this construction in its favour, respondents 4 in that case were held to be factually ineligible to participate in the bidding process.
35. It was further held that if others (such as the appellant in that case) were aware that non fulfillment of the eligibility condition of being a registered II Class hotelier would not be a bar for consideration, they too would have submitted a tender, but were prevented from doing so due to the eligibility condition, which was relaxed in the case of respondents 4. This resulted in unequal treatment in favour of respondents 4 treatment that was constitutionally impermissible. Expounding on this, it was held:
"It is indeed unthinkable that in a democracy governed by the rule of law the executive Government or any of its officers should possess arbitrary power over the interests of Page 24 of 59 C/SCA/8095/2018 CAV JUDGMENT the individual. Every action of the executive Government must be informed with reason and should be free from arbitrariness. That is the very essence of the rule of law and its bare minimal requirement. And to the application of this principle it makes no difference whether the exercise of the power involves affectation of some right or denial of some privilege."
36. Applying this principle to the present appeals, other bidders and those who had not bid could very well contend that if they had known that the prescribed format of the bank guarantee was not mandatory or that some other term(s) of the NIT or GTC were not mandatory for compliance, they too would have meaningfully participated in the bidding process. In other words, by rearranging the goalposts, they were denied the "privilege" of participation.
37. For JVC to say that its bank guarantee was in terms stricter than the prescribed format is neither here nor there. It is not for the employer or this Court to scrutinize every bank guarantee to determine whether it is stricter than the prescribed format or less rigorous. The fact is that a format was prescribed and there was no reason not to adhere to it. The goalposts cannot be rearranged or asked to be rearranged during the bidding process to affect the right of some or deny a privilege to some.
38. In G.J Fernandez v. State of Karnataka, 1990 2 SCC 488 both the principles laid down in Ramana Dayaram Shetty were reaffirmed. It was reaffirmed that the party issuing the tender (the employer) "has the right to punctiliously and rigidly" enforce the terms of the tender. If a party approaches a Court for an order restraining the employer from strict enforcement of the terms of the tender, the Court would decline to do so. It was also reaffirmed that the employer could deviate from the terms and conditions of the tender if the "changes affected all intending applicants alike and were not objectionable." Therefore, deviation from the terms and conditions is permissible so long as the level playing field is maintained and it does not result in any arbitrariness or discrimination in the Ramana Dayaram Shetty sense.
42. Unfortunately, this Court did not at all advert to the privilege of participation principle laid down in Ramana Dayaram Shetty and accepted in G. J. Fernandez. In other words, this Court did not consider whether, as a result of the deviation, others could also have become eligible to participate Page 25 of 59 C/SCA/8095/2018 CAV JUDGMENT in the bidding process. This principle was ignored in Poddar Steel.
43. Continuing in the vein of accepting the inherent authority of an employer to deviate from the terms and conditions of an NIT, and reintroducing the privilege of participation principle and the level playing field concept, this Court laid emphasis on the decision making process, particularly in respect of a commercial contract. One of the more significant cases on the subject is the three judge decision in Tata Cellular v. Union of India, 1994 6 SCC 651 which gave importance to the lawfulness of a decision and not its soundness. If an administrative decision, such as a deviation in the terms of the NIT is not arbitrary, irrational, unreasonable, mala fide or biased, the Courts will not judicially review the decision taken. Similarly, the Courts will not countenance interference with the decision at the behest of an unsuccessful bidder in respect of a technical or procedural violation. This was quite clearly stated by this Court (following Tata Cellular) in Jagdish Mandal v. State of Orissa, 2007 14 SCC 517 in the following words:
"Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made "lawfully" and not to check whether choice or decision is "sound". When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may Page 26 of 59 C/SCA/8095/2018 CAV JUDGMENT hold up public works for years, or delay relief and succor to thousands and millions and may increase the project cost manifold."
This Court then laid down the questions that ought to be asked in such a situation. It was said :
"Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions:
(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; OR Whether the process adopted or decision made is so arbitrary and irrational that the court can say:
"the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached";
(ii) Whether public interest is affected. If the answers are in the negative, there should be no interference under Article 226."
44. On asking these questions in the present appeals, it is more than apparent that the decision taken by CCL to adhere to the terms and conditions of the NIT and the GTC was certainly not irrational in any manner whatsoever or intended to favour anyone. The decision was lawful and not unsound.
47. The result of this discussion is that the issue of the acceptance or rejection of a bid or a bidder should be looked at not only from the point of view of the unsuccessful party but also from the point of view of the employer. As held in Ramana Dayaram Shetty the terms of the 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 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 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 followed in Michigan Rubber.
48. Therefore, whether a term of the 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 Page 27 of 59 C/SCA/8095/2018 CAV JUDGMENT applicable to all bidders and potential bidders as held in Ramana Dayaram Shetty. However, if the term is held by the employer to be ancillary or subsidiary, even that decision should be respected. The lawfulness of that decision can be questioned on very limited grounds, as mentioned in the various decisions discussed above, but the soundness of the decision cannot be questioned, otherwise this Court would be taking over the function of the tender issuing authority, which it cannot.
49. Again, looked at from the point of view of the employer if the Courts take over the decision making function of the employer and make a distinction between essential and non essential terms contrary to the intention if the employer and thereby rewrite he arrangement, it could lead to all sorts of problems including the one that were grappling with. For example, the GTC that we are concerned with specifically states in Clause 15.2 that "Any Bid not accompanied by an acceptable Bid Security/EMD shall be rejected by the employer as non responsive." Surely, CCL ex facie intended this term to be mandatory, yet the High Court held that the bank guarantee in a format not prescribed by it ought to be accepted since that requirement was a non essential term of the GTC. From the point of view of CCL the GTC has been impermissibly rewritten by the High Court.
52. There is a wholesome principle that the Courts have been following for a very long time and which was articulated in Nazir Ahmed v. King Emperor, 1936 AIR(PC) 253 namely "Where a power is given to do a certain thing in a certain way the thing must be done in that way or not at all. Other methods of performance are necessarily forbidden."
There is no valid reason to give up this salutary principle or not to apply it mutatis mutandis to bid documents. This principle deserves to be applied in contractual disputes, particularly in commercial contracts or bids leading up to commercial contracts, where there is stiff competition. It must follow from the application of the principle laid down in Nazir Ahmed that if the employer prescribes a particular format of the bank guarantee to be furnished, then a bidder ought to submit the bank guarantee in that particular format only and not in any other format. However, as mentioned above, there is no inflexibility in this regard and an employer could deviate from the terms of the bid document but only within the parameters Page 28 of 59 C/SCA/8095/2018 CAV JUDGMENT mentioned above.
55. On the basis of the available case law, we are of the view that since CCL had not relaxed or deviated from the requirement of furnishing a bank guarantee in the prescribed format, in so far as the present appeals are concerned every bidder was obliged to adhere to the prescribed format of the bank guarantee. Consequently, the failure of JVC to furnish the bank guarantee in the prescribed format was sufficient reason for CCL to reject its bid.
56. There is nothing to indicate that the process by which the decision was taken by CCL that the bank guarantee furnished by JVC ought to be rejected was flawed in any manner whatsoever. Similarly, there is nothing to indicate that the decision taken by CCL to reject the bank guarantee furnished by JVC and to adhere to the requirements of the NIT and the GTC was arbitrary or unreasonable or perverse in any manner whatsoever."
[8.4] In the case of Maa Binda Express Carrier & Anr. vs. North Eastern Frontier Railway & Ors. reported in (2014)3 SCC 760, the Hon'ble Supreme Court had an occasion to consider the scope of judicial review in the matters relating to award of contracts by the State and its instrumentalities. In paras 8 to 11 the Hon'ble Supreme Court has observed and held as under :
"8. The scope of judicial review in matters relating to award of contract by the State and its instrumentalities is settled by a long line of decisions of this Court. While these decisions clearly recognize that power exercised by the Government and its instrumentalities in regard to allotment of contract is subject to judicial review at the instance of an aggrieved party, submission of a tender in response to a notice inviting such tenders is no more than making an offer which the State or its agencies are under no obligation to accept. The bidders participating in the tender process cannot, therefore, insist that their tenders should be accepted simply because a given tender is the highest or lowest depending upon whether the contract is for sale of public property or for execution of works on behalf of the Government. All that participating bidders are entitled to is a fair, equal and Page 29 of 59 C/SCA/8095/2018 CAV JUDGMENT non discriminatory treatment in the matter of evaluation of their tenders. It is also fairly well settled that award of a contract is essentially a commercial transaction which must be determined on the basis of consideration that are relevant to such commercial decision. This implies that terms subject to which tenders are invited are not open to the judicial scrutiny unless it is found that the same have been tailor made to benefit any particular tenderer or class of tenderers. So also the authority inviting tenders can enter into negotiations or grant relaxation for bona fide and cogent reasons provided such relaxation is permissible under the terms governing the tender process.
9. Suffice it to say that in the matter of award of contracts the Government and its agencies have to act reasonably and fairly at all points of time. To that extent the tenderer has an enforceable right in the Court who is competent to examine whether the aggrieved party has been treated unfairly or discriminated against to the detriment of public interest. (See Meerut Development Authority v. Assn. Of Management Studies4 and Air India Ltd. v. Cochin International Airport Ltd.
10. The scope of judicial review in contractual matters was further examined by this Court in Tata Cellular v. Union of India, Raunaq International Ltd. case and in Jagdish Mandal v. State of Orissa [Supra] besides several other decisions to which we need not refer."
[8.5] In the case of Tata Cellular (Supra), the Hon'ble Supreme Court in para 94 has observed and held as under:
"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 s 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 subsisting its own decision, without the necessary expertise which itself may be fallible. [4] The terms of the invitation of 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 Page 30 of 59 C/SCA/8095/2018 CAV JUDGMENT 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 quasiadministrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.
[6] Quashing decisions may impose heavy administrative burden on the administration and lead to increased and un budgeted expenditure."
[8.6] In the case of Michigan Rubber [India] Limited (Supra), the Hon'ble Supreme Court has observed and held as under :
"24. It is also highlighted by the State as well as by the KSRTC that the tender conditions were stipulated by way of policy decision after due deliberation by the KSRTC. Both the respondents highlighted that the said conditions were imposed with a view to obtain good quality materials from reliable and experienced suppliers. In other words, according to them, the conditions were aimed at the sole purpose of obtaining good quality and reliable supply of materials and there was no ulterior motive in stipulating the said conditions."
[8.7] In the case of Tamil Nadu Generation & Distribution Corporation Limited [TANGEDCO] & Anr. vs. CSEPDI TRISHE Consortium & Anr., reported in (2017) 4 SCC 318, the Hon'ble Supreme Court has observed and held that in a complex fiscal evaluation, the Court has to apply the doctrine of restraint. Several aspects, clauses, contingencies, etc., have also to be factored.
[9.0] In the case of Raunaq International Limited vs. I.V.R. Construction Ltd. and Ors. reported in (1999)1 SCC 492, it is observed and held by the Hon'ble Supreme Court that (a) Page 31 of 59 C/SCA/8095/2018 CAV JUDGMENT before entertaining a petition, Court must be satisfied that some element of public interest is involved; (b) the dispute purely is not inter se private parties; (c) difference in price offer between the two tenderers may or may not be decisive in deciding the question of public interest; (d) where a decision is taken bonafide and the choice exercised on legitimate consideration, without any arbitrariness, Court should not show indulgence;
(e) While granting interim injunction, Court must carefully weigh conflicting public interest; (f) where the decision making process stands structured and the tender conditions do set out requirements, Court is entitled to examine application thereof to the relevant fact circumstances; (g) relaxation if otherwise permissible, in terms of the conditions must be exercised for legitimate reasons; (h) nature and urgency in getting the project implemented is a relevant factor; (i) judicial review is permissible only on the established grounds, including malafide, arbitrariness or unreasonableness of the variety of Wednesbury principle.
[9.1] The Hon'ble Apex Court in the case of Master Marine Services (P) Ltd. vs. Metlalfe & Hodg Kinson (P) Ltd. and another reported in (2005) 6 SCC 138 (Two Judges), Court reiterated the principles that: (a) State can choose its own method to arrive at a decision; (b) State and its instrumentalities have duty to be fair to all concerned; (c) even when some defect is found in decision making process, Court must exercise its extra ordinary writ jurisdiction with great Page 32 of 59 C/SCA/8095/2018 CAV JUDGMENT caution and that too in furtherance of public interest; and (d) larger public interest in passing an order of intervention is always a relevant consideration.
[9.2] The Hon'ble Apex Court in the case of Jagdish Mandal vs. State of Orissa and others reported in (2007)14 SCC 517 (Two Judges), reiterated the aforesaid principles by stating that before interfering in a tender and contractual matter, in exercise of its power of judicial review, Court should pose itself the following question: "(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 answer is in the negative, there should be no interference under Article 226. Most recently the Hon'ble Supreme Court in the case of Central Coalfields Limited (Supra), observed that: "..........If an administrative decision, such as a deviation in the terms of the NIT is not arbitrary, irrational, unreasonable, mala fide or biased, the Courts will not judicially review the decision taken. Similarly, the Courts will not countenance interference with the decision at the behest of an unsuccessful bidder in respect of a technical or procedural violation....."
[9.3] In the case of Maa Binda Express Carrier and another Page 33 of 59 C/SCA/8095/2018 CAV JUDGMENT (Supra), the Hon'ble Supreme Court relying upon its earlier decisions reiterated the following principles: "23... ...
(a) the basic requirement of Article 14 is fairness in action by the State, and nonarbitrariness 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...."
(Emphasis supplied) [9.4] The principles stand reiterated in Haryana Urban Development Authority and others vs. Orchid Infrastructure Developers Private Limited reported in (2017) 4 SCC 243 (Two Judges) and Reliance Telecom Limited and another vs. Union of India and another Page 34 of 59 C/SCA/8095/2018 CAV JUDGMENT reported in (2017) 4 SCC 269 (Two Judges).
[9.5] In the case of International Trading Co. and Another (Supra), while emphasizing on national priorities, the Hon'ble Supreme Court has observed and held in paras 22 and 23 as under:
"22. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities and adopt trade policies. As noted above, the ultimate test is whether on the touchstone of reasonableness the policy decision comes out unscathed.
23. Reasonableness of restriction is to be determined in an objective manner and from the standpoint of interests of the general public and not from the standpoint of the interest of persons upon whom the restrictions have been imposed or upon abstract consideration. A restriction cannot be said to be unreasonable nearly because in a given case, it operates harshly. In determining whether there is any unfairness involved; the nature of the right alleged to have been infringed the underlying purpose of the restriction imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing condition at the relevant time, enter into judicial verdict. The reasonableness of the legitimate expectation has to be determined with respect to the circumstances relating to the trade or business in question. Canalization of a particular business in favour of even a specified individual is reasonable where the interests of the country are concerned or where the business affects the economy of the country. (See Parbhani Transport Coop. Society Ltd. v. Regional Transport Authority5, Shree Meenakshi Mills Ltd. v. Union of India6, Hari Chand Sarda v. Mizo District Council7 and Krishnan Kakkanth v. Govt. of Kerala8.)"
[9.6] In the case of Global Energy Ltd. and Another V/s. Adani Exports Ltd. and Others reported in (2005)4 SCC 435, it was observed that unless terms of a tender notice are wholly arbitrary, discriminatory or actuated by malice are not subject to judicial review. It was observed as under: Page 35 of 59 C/SCA/8095/2018 CAV JUDGMENT "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."
[9.7] In case of Siemens Aktiengeselischaft and Siemens Limited V/s. Delhi Metro Rail Corporation Ltd. and Others reported in (2014)11 SCC 288, the Hon'ble Supreme Court relying upon the decision in the case of Tata Cellular (Supra), observed as under:: "23. There is no gainsaying that in any challenge to the award of contact before the High Court and so also before this Court what is to be examined is the legality and regularity of the process leading to award of contract. What the Court has to constantly keep in mind is that it does not sit in appeal over the soundness of the decision. The Court can only examine whether the decision making process was fair, reasonable and transparent. In cases involving award of contracts, the Court ought to exercise judicial restraint where the decision is bonafide with no perceptible injury to public interest."
[9.8] In case of Association of Registration Plates V/s. Union of India and Others reported in (2005)1 SCC 679, the Hon'ble Supreme Court examined the validity of the qualifying conditions imposed by the State authorities for procurement of high security number plates for vehicles across the country. In this context, it was observed as under: "30. Looking to the huge vehicular population of the country, the capacity of the manufacturer has to be as great because Page 36 of 59 C/SCA/8095/2018 CAV JUDGMENT plates are to be fitted to a very large number of existing vehicles within first two years. Thereafter, every year about one lakh vehicles in each State would be required to be fitted with the plates. If the bulk of contract is exhausted in the first two years, fresh manufacturers would not come forward to undertake the remaining work as it would not be cost effective. A longterm contract was necessitated for various reasons such as necessity of huge investment for building infrastructure, uninterrupted supply of plates in the first two years and thereafter every year and the investment of such infrastructure requiring recovery over a long duration by way of supply. If the contract period is lowered, the cost of plate might go up as the huge investment will have to be recovered in a shorter period.
35. Taking up first the challenge to the impugned conditions in the Notices Inviting Tenders issued by various State authorities, we find sufficient force in submissions advanced on behalf of the Union and the State authorities and the contesting manufacturers. The State as the implementing authority has to ensure that scheme of high security plates is effectively implemented. Keeping in view the enormous work involved in switching over to new plates within two years for existing vehicles of such large numbers in each State, resort to 'trial and error' method would prove hazardous. Its concern to get the right and most competent person cannot be questioned. It has to eliminate manufacturers who have developed recently just to enter into the new field. The insistence of the State to search for an experienced manufacturer with sound financial and technical capacity cannot be misunderstood. The relevant terms and conditions quoted above are so formulated to enable the State to adjudge the capability of a particular tenderer who can provide a failsafe and sustainable delivery capacity. Only such tenderer has to be selected who can take responsibility for marketing, servicing and providing continuously the specified plates for vehicles in large number firstly in initial two years and annually in the next 13 years. The manufacturer chosen would, in fact, be a sort of an agent or medium of the RTOs concerned for fulfillment of the statutory obligations on them of providing high security plates to vehicles in accordance with rule 50. Capacity and capability are two most relevant criteria for framing suitable conditions of any Notices Inviting Tenders. The impugned clauses by which it is stipulated that the tenderer individually or as a member of jointventure must have an experience in the field of registration plates in at least three countries, a common minimum net worth of Rs. 40 Crores and either jointventure partner having a minimum annual turnover of at least Rs. 50 Crores and a minimum of 15% Page 37 of 59 C/SCA/8095/2018 CAV JUDGMENT turnover of registration plates business have been, as stated, incorporated as essential conditions to ensure that the manufacturer selected would be technically and financially competent to fulfill the contractual obligations which looking to the magnitude of the job requires huge investment qualitatively and quantitatively.
38. In the matter of formulating conditions of a tender document and awarding a contract of the nature of ensuring supply of high security registration plates, greater latitude is required to be conceded to the State authorities. Unless the action of tendering Authority is found to be malicious and misuse of its statutory powers, tender conditions are unassailable. On intensive examination of tender conditions, we do not find that they violate the equality clause under Article 14 or encroach on fundamental rights of a class of intending tenderer under Article 19 of the Constitution. On the basis of the submissions made on behalf of the Union and State authorities and the justification shown for the terms of the impugned tender conditions, we do not find that the clauses requiring experience in the field of supplying registration plates in foreign countries and the quantum of business turnover are intended only to keep out of field indigenous manufacturers. It is explained that on the date of formulation of scheme in rule 50 and issuance of guidelines thereunder by Central Government, there were not many indigenous manufacturers in India with technical and financial capability to undertake the job of supply of such high dimension, on a long term basis and in a manner to ensure safety and security which is the prime object to be achieved by the introduction of new sophisticated registration plates.
39. The notice inviting tender is open to response by all and even if one single manufacture is ultimately selected for a region or State, it cannot be said that the State has created monopoly of business in favour of a private party. Rule 50 permits, the RTOs concerned themselves to implement the policy or to get it implemented through a selected approved manufacturer.
40. Selecting one manufacturer through a process of open competition is not creation of any monopoly, as contended, in violation of Article 19(1)(g) of the Constitution read with clause (6) of the said Article. As is sought to be pointed out, the implementation involves large network of operations of highly sophisticated materials. The manufacturer has to have embossing stations within the premises of the RTO. He has to Page 38 of 59 C/SCA/8095/2018 CAV JUDGMENT maintain a data of each plate which he would be getting from his main unit. It has to be crosschecked by the RTO data. There has to be a server in the RTO's office which is linked with all RTOs' in each State and thereon linked to the whole nation. Maintenance of record by one and supervision over its activity would be simpler for the State if there is one manufacturer instead of multimanufacturers as suppliers. The actual operation of the scheme through the RTOs in their premises would get complicated and confused if multimanufacturers are involved. That would also seriously impair the high security concept in affixation of new plates on the vehicles. If there is a single manufacturer he can be forced to go and serve rural areas with thin vehicular population and less volume of business. Multimanufacturers might concentrate only on urban areas with higher vehicular population."
Thus, the Courts have consistently held that the scope of judicial review in the context of conditions of tenders is limited to examination on the basis of the arbitrariness, discrimination or malice. Therefore, the Court before intervening in tender or contractual matters in exercise of powers of judicial review should pose to itself the following questions.
"(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; or whether the process adopted or decision made is so arbitrary and irrational that the court can say: "the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached" ?
And (ii) Whether the public interest is affected? If the answers to the above questions are in negative, then there should be no interference under Article 226?"
[9.9] Applying the law laid down by the Hon'ble Supreme Page 39 of 59 C/SCA/8095/2018 CAV JUDGMENT Court in the aforesaid decisions to the facts of the case on hand, we are of the opinion that looking to the purpose and object of the supply of electric buses under the FAME Scheme and the main object and purpose of FAME Scheme is to encourage "Make in India", it cannot be said that the conditions impugned in the present petition can be said to be arbitrary and/or non nexus with the object to be achieved. As such considering the law laid down by the Hon'ble Supreme Court in the aforesaid decisions it is ultimately for the employer to stipulate any conditions of eligibility criteria and the same is not required to be interfered with by the Courts in exercise of powers under Article 226 of the Constitution of India unless they are found to be so arbitrary and/or perverse which a prudent person would not impose. Looking to the nature of work the buses to be supplied under the FAME Scheme and that when the concerned supplier ultimately would be getting 65% subsidy, we are of the opinion that the conditions impugned in the present petition being condition Nos. Clause 4.1, Clause 7.1(a), Clause 7.3(a)
(i), Clause 7.3(a)(ii) to VolumeI of the RFP and also Clause 7.1 and Clause 12.1.D to VolumeIII cannot be said to be either arbitrary and/or the same has no nexus at all. It cannot be said that the conditions are such that no prudent person would impose such conditions. Merely because the conditions / eligibility criteria might not suit the bidder like the petitioners and/or by such conditions a prospective bidder is likely to be ineligible and/or excluded from the zone of consideration, such conditions are not required to be amended and/or modified at Page 40 of 59 C/SCA/8095/2018 CAV JUDGMENT the instance of such proposed bidder. Even if by such conditions if some class is likely to be benefitted, such conditions cannot be said to be tailormade to suit only those particular class.
[9.10] As observed by the Hon'ble Supreme Court in the case of Tata Cellular (Supra) when a conscious decision has been taken by the employer to impose certain conditions and/or provide the eligibility criteria and that too after obtaining the opinion of the Experts, normally the Court will not interfere with the same as the Court does not sit as a Court of Appeal but merely reviews the manner in which the decision was made. In the case of Tata Cellular (Supra), the Hon'ble Supreme Court has further observed that the Court does not have expertise to correct the administrative decision. It is further observed that if the review of administrative decision is permitted, it will be substituting its own decision, without necessary expertise which itself may be fallible. At this stage few para No.82 of the decision of the Hon'ble Supreme Court in the case of Tata Cellular (Supra) are required to be referred to and reproduced which are as under:
"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.' Page 41 of 59 C/SCA/8095/2018 CAV JUDGMENT 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 generalize to the inherent limitations of all appellate courts reviewing rate cases. It must be remembered that this Court sees approximately 1262 cases a year with five judges. I am not an accountant, electrical engineer, financier, banker, stock broker, or systems management analyst. It is the height of folly to expect judges intelligently to review a 5000 page record addressing the intricacies of public utility operation.' It is not the function of a judge to act as a superboard, or with the zeal of a pedantic schoolmaster substituting its judgment for that of the administrator.
The result is a theory of review that limits the extent to which the discretion of the expert may be scrutinised by the nonexpert 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 affirmably of the vast majority of agency decisions."
[9.11] In the present case the conditions are imposed and the eligibility criteria is prescribed in the RFP by the respondent Nos.2 and 3 after consulting the Expert - CEPT University and Page 42 of 59 C/SCA/8095/2018 CAV JUDGMENT the conditions are imposed as suggested and/or opined by the Expert / Consultant.
[9.12] In the petition the petitioners seek to challenge the tender conditions contained in Clauses (i) No.4.1; (ii) No.7.1;
(iii) No.7.2; (iv) No.7.3(a)(i); (v) No.7.3(a)(ii) of VolumeI; and (vi) Serial No.7.1; and (vii) Serial No.12.1.D of VolumeIII of the RFP dated 19.01.2018. Looking to the reliefs sought in the present petition the petitioners have requested to issue appropriate writ, direction and order directing the respondents to suitably amend / modify the aforesaid conditions which suits the petitioners' own convenience. Thus, it can be said that the petitioners seek to rewrite and redetermine certain tender conditions of the RFP, so as to tailormake the said tender conditions only with a view to suit the petitioners' own convenience. We are afraid that the petitioners can insist and/or pray to amend and/or modify the terms and conditions / eligibility criteria which suits the petitioners. We are afraid that such reliefs can be granted in exercise of powers under Article 226 of the Constitution of India, unless the eligibility criteria / conditions are found to be so arbitrary which no prudent person would impose and/or are found to be mainfestly tailormade to suit only a particular bidder and/or found to be malafide. In exercise of powers under Article 226 of the Constitution of India more particularly in a case where a prospective bidder / bidder has challenged the eligibility criteria as mentioned in the RFP, the Court is not required to consider Page 43 of 59 C/SCA/8095/2018 CAV JUDGMENT each and every condition / eligibility criteria minutely.
[9.13] As observed by the Hon'ble Supreme Court in the case of Monarch Infrastructure (P) Ltd. vs. Commissioner, Ulhasnagar Municipal Corporation and Others reported in (2000) 5 SCC 287 the terms and conditions in the tender are prescribed by the Government bearing in mind the nature of contract and in such matters the authority calling for the tender is the best Judge to prescribe the terms and conditions of the tender. It is further observed that it is not for the Courts to say whether the conditions prescribed in the tender under consideration were better than the one prescribed in the earlier tender invitations. It is further observed and held that the terms of the invitation to tender are not open to judicial scrutiny, the same being in the realm of contract. It is observed that the Government must have a free hand in setting the terms and conditions of the tender, it must have a reasonable play in its joints as a necessary concomitant for an administrative body in an administrative sphere. The Courts would interfere with the administrative policy decision only if it is arbitrary, discriminatory, mala fide or actuated by bias. It is entitled to pragmatic adjustments which may be called for by the particular circumstances. The Courts cannot strike down the terms of the tender prescribed by the government because it feels that some other terms in the tender would have been fair, wiser or logical. Thus, as observed hereinabove, the Court in exercise of powers under Article 226 of the Constitution of India Page 44 of 59 C/SCA/8095/2018 CAV JUDGMENT is not required to minutely and in depth consider each and every terms and conditions / eligibility criteria more particularly when the terms and conditions / eligibility criteria have been prescribed / provided after getting the opinion of the expert and considering the object and purpose of FAME Scheme under which the electric buses are required to be supplied. In exercise of powers under Article 226 of the Constitution of India and while considering the challenge to the terms and conditions of the eligibility criteria the Court is required to consider whether the terms and conditions are so arbitrary and/or perverse which a prudent person would not impose and/or such conditions have no nexus at all with the object to be achieved."
10. Applying the law laid down by the Hon'ble Supreme Court in the aforesaid decisions referred to and considered by the Division Bench in the case of Goldstone Infratech Limited v. State of Gujarat & Ors. (supra) and the justification given by respondent No.3 to provide the eligibility criteria contained in Clause B(4)(c) of the tender document , we are of the opinion that the eligibility criteria contained in the said clause can be said to be in the larger public interest and there does not seem to be any mala fide intention in providing such eligibility criteria. It is required to be noted that the items for which the tenders/ bids are invited are with respect to procurement of drugs, pharmaceuticals, surgical Page 45 of 59 C/SCA/8095/2018 CAV JUDGMENT items and medical equipments for the Government Hospitals and Medical Institutions in the State and mainly, common people are the beneficiaries. It is also required to be noted that as respondent No.3 is a Nodal Agency for procurement of the aforesaid items, it is entitled to determine the criteria and insist that the pharmaceutical products/ items procured by it meet with the most stringent conditions and see to it that the pharmaceutical products procured are of the best quality so as to ensure the complete well being of patients. Therefore, such an eligibility criteria cannot be said to be irrational and/or arbitrary and/or illegal. As observed hereinabove, the same seems to be in the larger public interest.
11. Now so far as the submission on behalf of the petitioners that as all of them are having the licences to manufacture and sell pharmaceutical products from the competent authority granted under the provisions of the Drugs and Cosmetics Act, 1945 and the Rules framed thereunder and they meet with the criteria and they comply with the recommendations as per Schedule-M and when the products in question can be supplied in the domestic market, WHO-GMP Certificate or COPP Certificate in WHO format is not warranted and/or required is concerned, it is required to be Page 46 of 59 C/SCA/8095/2018 CAV JUDGMENT noted that the question is not whether for the purpose of manufacture and sale by the respective petitioners WHO-GMP Certificate or COPP Certificate in WHO format is required or not. What is required to be considered is the eligibility criteria provided in the tender document as that is the requirement of the purchaser. Therefore, the aforesaid submission is absolutely misconceived so far as challenge to the eligibility criteria contained in Clause B(4)(c) of the tender document is concerned. The eligibility criteria contained in Clause B(4)(c) of the tender document has a direct nexus with the quality and the requirement and need by respondent No.3 -
Purchaser. As observed by the Hon'ble Supreme Court in a catena of decisions, great latitude must be given to the employer and/or the purchaser in insisting for the eligibility criteria. The bidder cannot be permitted to say that such an eligibility criteria is not warranted because it does not suit it and /or some eligibility criteria would be better and/or proper.
12. Now so far as the submission on behalf of the petitioners that as per the Circular issued by the Drugs Controller General (India) dated 01.03.2004, the procurement agencies in India may ask for GMP Certificate relating to the compliance of revised Schedule `M' of Drugs and Cosmetic Page 47 of 59 C/SCA/8095/2018 CAV JUDGMENT Rules and not for COPP (WHO-GMP) Certificate and that by the said Circular of the State, Drug Controllers are requested not to entertain request for issuing of WHO-GMP Certificate by the manufacturers of pharmaceutical products to be supplied in India and that therefore, the respective petitioners have not applied for the WHO-GMP Certificate as the authorities are not issuing the WHO-GMP Certificates to the manufacturers of pharmaceutical products to be supplied in India, is concerned, again, it is required to be noted that the question is with respect to insistence by the purchaser - respondent No.3 to have a particular quality of goods, in the present case, pharmaceutical products. Nothing is on record that the respective petitioners have applied for WHO-GMP Certificate and/or COPP Certificate in WHO format which came to be refused. At this stage, it is required to be noted that under the Drugs and Cosmetics Act, 1945, and the Rules framed thereunder, guidelines have been framed by World Health Organization, known as WHO-GMP Guidelines. In terms of the said guidelines, Certificate is issued under the joint signature of the State Drugs Control Authority and the Central Drug Control Authority. In addition to the parameters prescribed under Schedule-M, the WHO-GMP prescribes additional parameters referred to hereinabove. Therefore, WHO-GMP Page 48 of 59 C/SCA/8095/2018 CAV JUDGMENT ensures that higher and contemporaneous standards relating to manufacturing practices of pharmaceutical products are met with. Therefore, when respondent No.3 has invited the tenders for procurement of Drugs, injectables, Miscellaneous Items and Surgical Items, and WHO-GMP or COPP Certificate is insisted, the same cannot be said to be arbitrary and/or illegal. At this stage, it is required to be noted that there would be many manufacturers who would be having WHO-GMP Certificates and/or COPP Certificates as per WHO format. At this stage, it also required to be noted that since 2016, it was brought to the notice of all concerned that WHO-GMP Certificate issued by the licencing authority will be mandatory condition for participating in bids published by respondent No.3 with effect from 01.04.2017 for drugs and medicines. The said decision was published way back by a general communication dated 18.07.2016 on its website. Therefore, the respective petitioners ought to have prepared themselves and ought to have applied and got WHO-GMPP / COPP Certificates as per WHO format in order to make themselves eligible to compete and submit the bids. Therefore, reasonable time was provided to all the bidders to make necessary process and arrangements to obtain WHO-GMP Certificate or COPP Certificate as per WHO format.
Page 49 of 59 C/SCA/8095/2018 CAV JUDGMENT13. In view of the above and for the reasons stated above therefore, the decision of High Court of Uttaranchal at Nainital in the case of Poddar Pharmaceutical Ltd. and Ors. v. State of Uttaranchal and Ors. (supra) and even the judgment in State of Gujarat & Anr. v. Baroda Surgical (I) Pvt. Ltd. & Anr. (supra) confirming the decision of the learned Single Judge in Special Civil Application No.7327/2001 relied upon by learned advocate appearing on behalf of the petitioners shall not be applicable to the facts of the case on hand and/or the same shall not be of any assistance to the petitioners, more particularly, considering the law laid down by the Hon'ble Supreme Court referred to hereinabove. On the contrary, the recent decision of the Division Bench of this Court in the case of Indian Immunologicals Ltd. v. Gujarat Medical Services Corporation Ltd. and Anr. (supra) and the decision of the Andhra Pradesh High Court in the case of Association of Drugs And ... v. A.P.Health, Medical, Housing And ...
(supra), shall be applicable with full force. It is true that in the case before this Court, the products were life-saving drugs.
However, at the same time, the reasoning given shall be applicable to the facts of the case on hand also as many of the Page 50 of 59 C/SCA/8095/2018 CAV JUDGMENT products in the present case are also life-saving drugs. It is required to be noted that the very condition/ eligibility criteria was under challenge before the Division Bench of this Court in Indian Immunologicals Ltd. v. Gujarat Medical Services Corporation Ltd. and Anr. (supra) and the very submission were made which are not accepted by the Division Bench and thereafter, the Division Bench has specifically observed that such a condition cannot be seen as non-
essential. It is further observed that whether to make certain condition essential or non-essential is the prerogative of the Government agency inviting tenders. It is further observed that as a procuring agency, the State is free to prescribe standards for qualifying an intending tenderer and impose such conditions which would meet with its requirement of strict quality control and such conditions are ordinarily not open to judicial review. Identical question came to be considered by the Andhra Pradesh High Court in the case of Association of Drugs And ... v. A.P.Health, Medical, Housing And ... (supra) and similar submissions were made and eligibility criteria / condition was under challenge and not accepting challenge to such similar eligibility criteria, the Division Bench of Andhra Pradesh High Court observed in Paragraphs 23 and 24 as under:
Page 51 of 59 C/SCA/8095/2018 CAV JUDGMENT"23. It is axiomatic that although citizens have fundamental right to practice any profession or to carry out any occupation, trade or business, there is no fundamental right to insist that any person or the Government should do business with them. Assuming that all the members of the petitioner Association have drug licences in force given under the Drugs Act and the Rules, they cannot, however, urge that stringent standards imposed in the tender conditions would violative their fundamental right. The fundamental right in this case is only to the extent of setting up a drug manufacturing company subject to fulfilling the provisions of law and also conditions of licence and no more. The said right cannot be extended to insist upon the Government to buy the drugs from them even though they do not have WHO GMP standards as on today. The prescription of GMP standards in Schedule M as a due and sufficient compliance with the conditions of licence and relevant rules, has nothing to do with the policy of the respondents to procure drugs and consumables only from primary manufacturers with WHO GMP Certificates. Almost similar question arose in Gopila v. State, . A Division Bench of Orissa High Court considered the question whether in the absence of any fixed standards for any drug, it is permissible to insist upon licence under the Drugs Act. It was submitted before the Orissa High Court that the Government has not fixed Page 52 of 59 C/SCA/8095/2018 CAV JUDGMENT standards of quality for Dantaghasa Gudakhu and, therefore, a manufacturer cannot be called upon to take a licence for the manufacture of Gudakhu. The submission was negatived and it was held that "non fixation of standard quality of Gudhaku has however nothing to do with the taking of licence and mat the provisions of the Drugs Act and the Rules prescribing for standard Gudhaku cannot be enforced until such standards are prescribed."
24. It is, therefore, not possible to accept the submission of the learned Counsel for the petitioner. Be it noted that the Drugs Act in pith and substance only regulates the imports, manufacture, distribution and sale of drugs and cosmetics and it does not regulate or control the power of the State to buy drugs and consumables of higher standards. In a competitive market, manufacturers tend to strive to produce more standard goods to increase their consumer base. Likewise, consumers tend to buy more standard drugs at the same price or at a little higher price. The Government purchases drugs for being supplied to patients in Government hospitals and, therefore, it is always permissible for them to take a policy to purchase the drugs from the manufacturers with worldclass standards. Such condition, therefore, cannot be treated as arbitrary or irrational. A submission was made by the learned Counsel for the petitioner that all the members of the association are small scale industries and if WHO Page 53 of 59 C/SCA/8095/2018 CAV JUDGMENT GMP standards are prescribed for supply of drugs and consumables, the same in turn would seriously result in loss of public money affecting financial budget of the Government. The submission at first blush though looks appealing, the same, on the principle of constitutionalism, is liable to be rejected. In a matter like this, there could always be counter argument that those people who can afford can buy standard drugs, whereas economically poor people who utilise hospital services provided by the Government are supplied cheaper drugs. Further, be it noted, right to a healthy life and health facilities is a fundamental right under Article 21 read with Article 47 of the Constitution and the State does not want to compromise on this aspect. The socalled perceived public loss of money cannot be a ground. In this context, it is apposite to refer to Ram Lubhaya Bagga 's case (supra) wherein it was held:
..........................So far as questioning the validity of Governmental policy is concerned in our view it is not normally within the domain of any Court, to weigh the pros and cons of the policy or to scrutinize it and test the degree of its beneficial or equitable disposition for the purpose of varying, modifying or annulling it, based on howsoever sound and good reasoning, except where it is arbitrary or violative of any constitutional, statutory or any other provision of law. When Government forms its policy, it is based on a number of circumstances on facts, law including constraints based on its resources. It is also based on expert opinion. It would be dangerous if Court is asked to test the utility, beneficial effect of the policy or its appraisal based on facts set out on affidavits. The Court would dissuade itself from entering into this realm which belongs to the executive.Page 54 of 59 C/SCA/8095/2018 CAV JUDGMENT
14. Now so far as reliance placed upon the decision of of the learned Single Judge of Jammu and Kashmir High Court in the case of M/s.Rohit Drugs and others v. The State and others (supra) by learned advocate appearing on behalf of the petitioner of Special Civil Application No.8826/2018 is concerned, in view of the aforesaid discussion, same shall not be applicable to the facts of the case on hand and/ or of any assistance to the petitioner.
15. Similarly, the decision of the Hon'ble Supreme Court in the case of Indian Oil Corporation Limited v.
Nilofer Siddiqui And Others (supra), relied upon by Shri K.V.Shelat, learned advocate for the petitioners also shall not be applicable to the facts of the case on hand. As observed hereinabove, the eligibility criteria contained in Clause B(4)(c) of the tender document is in the larger public interest and is reasonable and has a direct nexus with the purchase/ procurement of the pharmaceutical products and the same cannot be termed as arbitrary and/or illegal.
16. Now so far as the submission on behalf of the petitioners that by insisting for fulfilment of such eligibility criteria, only few will be benefited and the manufacturers/ Page 55 of 59 C/SCA/8095/2018 CAV JUDGMENT sellers like the petitioners shall be excluded as they will not be held eligible and only such manufacturers who are having WHO-GMP and/or COPP Certificates as per WHO format will be held eligible is concerned, it is required to be noted that on the aforesaid ground, a valid eligibility criteria which is found to be in larger public interest cannot be set aside. At this stage, the decision of the Hon'ble Supreme Court in the case of Michigan Rubber (India) Limited v. State of Karnataka and Ors. reported in (2012)8 SCC 216 is required to be referred to and considered. In the said decision, the Hon'ble Supreme Court in Paragraph-19, has considered the decision of the Hon'ble Supreme Court in the case of Association of Registration Plates v. Union of India and Others reported in (2005)1 SCC 679, more particularly, Paragraphs-38-40 and 43-44 of the said decision. Paragraph-19 of the decision in the case of Michigan Rubber (India) Limited v. State of Karnataka and Ors. (supra) reads as under:
"19. While considering the above submissions, the three Judge Bench held as under: (Assn. of Registration Plates case12, SCC pp. 698701, paras 3840 & 4344) "38. In the matter of formulating conditions of a tender document and awarding a contract of the nature of ensuring supply of high security registration plates, greater latitude is required to be conceded to the State authorities. Unless the action of tendering authority is found to be malicious and a misuse of its statutory powers, tender conditions are unassailable. On intensive examination of tender conditions, Page 56 of 59 C/SCA/8095/2018 CAV JUDGMENT we do not find that they violate the equality clause under Article 14 or encroach on fundamental rights of the class of intending tenderers under Article 19 of the Constitution. On the basis of the submissions made on behalf of the Union and State authorities and the justification shown for the terms of the impugned tender conditions, we do not find that the clauses requiring experience in the field of supplying registration plates in foreign countries and the quantum of business turnover are intended only to keep indigenous manufacturers out of the field. It is explained that on the date of formulation of scheme in Rule 50 and issuance of guidelines thereunder by the Central Government, there were not many indigenous manufacturers in India with technical and financial capability to undertake the job of supply of such high dimension, on a longterm basis and in a manner to ensure safety and security which is the prime object to be achieved by the introduction of new sophisticated registration plates.
39. The notice inviting tender is open to response by all and even if one single manufacturer is ultimately selected for a region or State, it cannot be said that the State has created a monopoly of business in favour of a private party. Rule 50 permits the RTOs concerned themselves to implement the policy or to get it implemented through a selected approved manufacturer.
40. Selecting one manufacturer through a process of open competition is not creation of any monopoly, as contended, in violation of Article 19(1)(g) of the Constitution read with clause (6) of the said article. As is sought to be pointed out, the implementation involves large network of operations of highly sophisticated materials. The manufacturer has to have embossing stations within the premises of the RTO. He has to maintain the data of each plate which he would be getting from his main unit. It has to be crosschecked by the RTO data. There has to be a server in the RTO's office which is linked with all RTOs in each State and thereon linked to the whole nation. Maintenance of the record by one and supervision over its activity would be simpler for the State if there is one manufacturer instead of multimanufacturers as suppliers. The actual operation of the scheme through the RTOs in their premises would get complicated and confused if multimanufacturers are involved. That would also seriously impair the high security concept in affixation of new plates on the vehicles. If there is a single manufacturer he can be forced to go and serve rural areas with thin vehicular Page 57 of 59 C/SCA/8095/2018 CAV JUDGMENT population and less volume of business. Multimanufacturers might concentrate only on urban areas with higher vehicular population.
43. Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work. Article 14 of the Constitution prohibits the Government from arbitrarily choosing a contractor at its will and pleasure. It has to act reasonably, fairly and in public interest in awarding contract. At the same time, no person can claim a fundamental right to carry on business with the Government. All that he can claim is that in competing for the contract, he should not be unfairly treated and discriminated, to the detriment of public interest. Undisputedly, the legal position which has been firmly established from various decisions of this Court, cited at the Bar (supra) is that government contracts are highly valuable assets and the court should be prepared to enforce standards of fairness on the Government in its dealings with tenderers and contractors.
44. The grievance that the terms of notice inviting tenders in the present case virtually create a monopoly in favour of parties having foreign collaborations, is without substance. Selection of a competent contractor for assigning job of supply of a sophisticated article through an opentender procedure, is not an act of creating monopoly, as is sought to be suggested on behalf of the petitioners. What has been argued is that the terms of the notices inviting tenders deliberately exclude domestic manufacturers and new entrepreneurs in the field. In the absence of any indication from the record that the terms and conditions were tailor made to promote parties with foreign collaborations and to exclude indigenous manufacturers, judicial interference is uncalled for." After observing so, this Court dismissed all the writ petitions directly filed in this Court and transferred to this Court from the High Courts.""
17. Considering the aforesaid observations and decisions of the Hon'ble Supreme Court, the eligibility criteria contained in Clause B(4)(c) of the tender document cannot be set aside merely because by the aforesaid clause, few bidders Page 58 of 59 C/SCA/8095/2018 CAV JUDGMENT will be held ineligible and/or few bidders who are having WHO-GMP Certificates or COPP Certificates in WHO format only would be held eligible.
18. In view of the above and for the reasons stated above, challenge to the eligibility criteria contained in Clause B(4)(c) of the tender document fails and the present petitions deserve to be dismissed and are accordingly dismissed. Notice is discharged in Special Civil Application No.8095/2018. Ad-
interim relief, granted earlier in Special Civil Application No.8095/2018 stands vacated.
sd/-
(M.R. SHAH, J) sd/-
(A.Y. KOGJE, J) sunil Page 59 of 59