Calcutta High Court (Appellete Side)
Boc India Limited & Anr vs Kolkata Metropolitan Development on 7 May, 2010
Author: Dipankar Datta
Bench: Dipankar Datta
1
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
APPELLATE SIDE
Present : The Hon'ble Justice Dipankar Datta
W.P. 5292 (W) of 2010
BOC India Limited & anr.
...Petitioners
Versus
Kolkata Metropolitan Development
Authority & ors.
...Respondents
For the petitioners : Mr. Ranjan Deb, Senior Advocate Mr. Anil Kumar Gupta, Advocate Mr. Bidyut Dutta, Advocate Mr. Bijon Dutta, Advocate For the respondents : Mr. Partha Sarathi Basu, Advocate Mr. Satyajit Talukdar, Advocate Hearing concluded on : April 28, 2010 Judgment on : May 7, 2010 Kolkata Metropolitan Development Authority, the first respondent (hereafter KMDA), had floated notice inviting tender no.9 of 2009-2010 dated 6.11.2009 (hereafter the first tender) for supply and installation of 'Centralised Medical Gas Pipeline Distribution System' at Jawaharlal Memorial Hospital, Kalyani (hereafter the hospital).
The first petitioner expressed interest and responded to the tender notice. Apart from it, two others expressed interest. However, upon consideration of the 2 technical bids of the three interested parties, the bid of one was found to be informal as it did not follow the clauses of the first tender notice. The other two including the first petitioner were found eligible. By an order dated 20.11.2009 passed by the Superintending Engineer (Works) of KMDA, the second respondent, the process was, however, cancelled.
Upon cancellation of the first tender notice, notice inviting tender no.12 of 2009-10 dated 31.12.2009 (hereafter the second tender notice) for the same work was floated. Unlike the first tender notice, the second tender notice contained a different eligibility criterion. The relevant criterion reads as follows :
"Tenders must have credentials in manufacturing, supply installation testing of centralised Medical Gas pipeline distribution system at least one under any Govt. Hospital or two nos. Semi Govt./Govt. undertaking organisation in a single contract within the last 5 (five) years as a prime contractor/and tenderer should be capable to supply medical gases and liquid medical oxygen as per the demand of the Hospital.
This is a mandatory criteria."
(words in bold font were not there in the first tender notice) The first petitioner applied for purchase of tender documents upon payment of Rs.4,000/-. In due time, it had submitted its tender with KMDA. Apart from the first petitioner, five other parties had expressed interest to participate in the process initiated by the second tender notice and purchased tender documents. Ultimately, however, only three parties including the first petitioner submitted their bids.
In terms of the terms and conditions mentioned in the second tender notice, the bids were to be adjudged on a two-tier process. A party qualifying in the technical bid would be entitled to have its financial bid opened. 3
It is not in dispute that technical bids of the three interested parties were opened on 22.2.2010. Apart from the first petitioner, the other two parties did not succeed in the technical bid and, consequently, their bids were declared informal. Significantly, only the first petitioner satisfied the criterion of 'prime contractor' referred to above.
It was conveyed to the petitioners by the second respondent by his notice dated 24.2.2010 that its financial bid would be opened on 25.2.2010 at 4.30 p.m. "with the approval of the higher authority".
On 25.2.2010, the financial bid of the first petitioner having been opened, it was found that it had quoted Rs.1,02,80,583.58p for executing the work for which the second tender notice had been floated.
It has been claimed in the petition that the representative of the first petitioner, after opening of the financial bid, was informed that its rate being lower than the estimated rate of the respondents, the same would be accepted by the tender committee and that work order would be issued in its favour within a few days. A further request was made to depute a competent engineer of the first petitioner at the project site on the next day in order to finalise the work schedule in consultation with the executive engineer of KMDA and the Principal of the college. It has further been pleaded that the first petitioner deputed its engineer at the project site on 26.2.2010 and the work schedule was finalised. As per telephonic conversation, the representative of the first petitioner had been to the office of KMDA on 26.2.2010 to collect the work order. The work order was not 4 issued on the said date due to some unavoidable circumstances, but it was assured that the same would be issued in due course.
Since the work order was not being issued, the first petitioner made a request by letter dated 5.3.2010. The same, not having yielded any result, on 9.3.2010 the representative of the first petitioner paid a visit to the office of the second respondent when a letter dated 3.3.2010 of the second respondent was made over to him. It was mentioned therein that due to unavoidable circumstances the second tender notice had been cancelled.
It has been pleaded in the petition that on 9.3.2010 itself, the representative of the first petitioner came to learn from the office of the second respondent that a fresh notice had been issued for the selfsame work and that the same had been published in a Bengali newspaper. Searches revealed that notice inviting tender no.15 of 2009-10 (hereafter the third tender notice) had been issued, published in the Ananda Bazar Patrika, inviting sealed tender for the selfsame work.
Further search of the web-site of KMDA revealed particulars of the third tender notice. It was found that the respondents had made a major change regarding eligibility criteria. The condition of 'prime contractor' was deleted. Since the letter dated 3.3.2010 communicating to the first petitioner cancellation of the second tender notice was also forwarded to M/s. Sytco Inc., one of the two unsuccessful bidders, the petitioners apprehended that the eligibility criteria had been changed by deleting the condition of 'prime contractor' only to favour M/s. Sytco Inc. 5 Questioning the action of KMDA and its officers in publishing the third tender notice only in a single newspaper upon arbitrary cancellation of the process initiated by the two earlier tender notices, this petition dated 12.3.2010 was presented before this Court claiming, inter alia, the following relief:
"a) A writ of or in the nature of Mandamus do issue commanding the respondents and each of them, whether by themselves, their men, agents, servants, subordinates or otherwise howsoever to act in accordance with law and forthwith:
i) To issue the Work Order in respect of the 2nd Tender being NIT No.12/SE(W)/C-I/RE/KMDA of 2009-10 dated 31st December, 2009 issued by the Kolkata Metropolitan Development Authority in favour of the petitioner company;
ii) Recall, revoke, rescind, and/or cancel the said decision to cancel the 2nd Tender being NIT No.12/SE(W)/C-I/RE/KMDA of 2009-10 dated 31st December, 2009 issued by the Kolkata Metropolitan Development Authority;
iii) Recall, revoke, rescind, and/or cancel the said decision to cancel the said 3rd Tender being NIT No.15/SE(W)/C-I/RE/KMDA of 2009-10 dated 4th March, 2010 issued by the Kolkata Metropolitan Development Authority for supply, installation, testing and commissioning of centralized medical gas pipeline distribution system stipulated to be opened on 16th March, 2010 at 4.00 p.m.;
iv) Refrain from refusing to issue the Work Order in respect of the 2nd Tender being NIT No.12/SE(W)/C-I/RE/KMDA of 2009-10 dated 31st December, 2009 in favour of the petitioner company;
v) Desist from refusing to recall, revoke, rescind, and/or cancel the said decision to cancel the 2nd Tender being NIT No.12/SE(W)/C-
I/RE/KMDA of 2009-10 dated 31st December, 2009 issued by the Kolkata Metropolitan Development Authority;
vi) Desist from refusing to recall, revoke, rescind, and/or cancel the said decision to cancel the 3rd Tender being NIT No.15/SE(W)/C- I/RE/KMDA of 2009-10 issued by the Kolkata Metropolitan Development Authority and published in Ananda Bazar Patrika on 6th March, 2010;
b) A writ of and/or in the nature of Certiorari do issue calling upon the respondents and each of them, whether by themselves, their servants, agents, subordinates or otherwise howsoever to forthwith certify and transmit to this Hon'ble Court the records of the case so that conscionable justice may be done by quashing the impugned cancellation of the second Tender being2nd Tender being NIT No.12/SE(W)/C-I/RE/KMDA of 2009-10 dated 31st December, 2009 and further quashing the 3rd Tender being No.15/SE(W)/C-I/RE/KMDA of 2009-10 issued by the Kolkata Metropolitan 6 Development Authority and published in Ananda Bazar Patrika on 6th March, 2010 which was stipulated to be opened on 16th March, 2010 at 4.00 p.m." Finding that the petitioners had been successful in making out a strong prima facie case for grant of interim order, I had stayed the process of selection and invited the parties to exchange their affidavits.
The petition has been contested by KMDA and the other two respondents by filing counter affidavit wherein they have denied the material allegations levelled in the petition. The sum and substance of the version of the respondents is that in terms of the second tender notice they enjoy absolute right to accept or reject any or all the tenders without assigning any reason and that they are not bound to accept the lowest tender.
It is further stated therein that M/s. Sytco Inc. was informed of the decision of cancellation of the process pursuant to the second tender notice because it had lodged a complaint dated 26.2.2010 levelling serious allegations in respect of the tendering process whereby only the first petitioner was found to be the single successful tenderer, which was unfair and should have been discouraged. On that basis decision to cancel the tender process outright was reached, which was also a way to deal with the complaint lodged by M/s. Sytco Inc. It has further been contended in the counter affidavit that the petitioners have attempted to mislead the Court by gross suppression of material facts. Contrary to the picture painted in the petition that the third tender notice was published only in one Bengali newspaper, it was brought on record that the third tender notice in fact had been published in four other newspapers and, therefore, 7 the apprehension expressed to the effect that clandestinely efforts were being made to award the contract in favour of M/s. Sytco Inc. is absolutely misconceived.
It was also brought on record that M/s. Sytco Inc. had not emerged as the lowest bidder in course of the process initiated vide the third tender notice and, therefore, there was no merit in the allegations levelled by the petitioners that the respondents intended to favour them by being partial.
At the hearing Mr. Basu, learned advocate for the respondents raised three points in support of his contention that the writ petition merits outright dismissal, viz.
i) suppression of material facts;
ii) the respondents have the power in terms of the tender terms and
conditions to reject any tender or to cancel any process without assigning any reason and the decision to cancel the second tender notice and to issue the third tender notice being backed by public interest, the Court's interference is not warranted; and
iii) in any event, in matters of commercial contracts, the tender issuing authority is the best judge whether to proceed with a particular tender or not and since the first petitioner despite having the opportunity to respond pursuant to the third tender notice had not so responded, it cannot claim to have been prejudiced. On the contrary, the interim order of stay granted by the Court stalling the process has immensely prejudiced the respondents, so much so that 8 because of non-execution of the work at the hospital, it is running the risk of losing the approval of the Medical Council of India. Mr. Basu further submitted that in pursuance of the third tender notice, three out of six interested parties who had responded were found technically eligible to execute the work and upon opening of their bids, MDD Medical Systems (I) Pvt. Ltd. emerged as the lowest bidder. He contended that the hospital is due for inspection by the Medical Council of India very soon and, accordingly, urged that unless the interim order of stay is vacated and the respondents are allowed to entrust the selected agency to execute the work, the deadline for making arrangements for the hospital to run would be missed.
In support of his submissions, Mr. Basu relied on the following decisions of the Supreme Court:
a) AIR 1999 SC 393, Raunaq International Ltd. vs. I.V.R. Construction Ltd.;
b) (2004) 2 SCC 78, Karnataka Rare Earth vs. Senior Geologist, Deptt. of Mines & Geology;
c) AIR 1990 SC 958, M/s. G.J. Fernandez vs. State of Karnataka;
d) (2000) 2 SCC 617, Air India Ltd. vs. Cochin International Airport Ltd.;
e) AIR 1982 SC 1234, State of U.P. vs. Vijay Bahadur Singh; and 9
f) (2007) 1 SCC 477, Rajasthan Housing Board vs. G.S. Investments.
While hearing the writ petition, I had expressed my desire to look into the records leading to cancellation of the second tender notice and issuance of the third tender notice.
The records maintained in a file were produced before the Court. Upon hearing the parties, judgment was reserved. While preparing the judgment, examination of records revealed a shocking state of affairs. I placed the writ petition on board once again and recorded an order recalling the order reserving judgment. The present incumbent in the office of the second respondent was called upon to appear in person in Court and to face examination for explaining his conduct in relation to the documents in the file generated by him, lest it is felt by him that he has been condemned unheard. His deposition is on record. I shall presently refer to his acts which were not explained despite opportunity extended to him (since there could be no plausible explanation), affording sufficient ground to his employer to initiate disciplinary action against him.
I consider it proper to give a composite picture of the incidents in chronological order since the time bids were received in pursuance of the first tender notice, even at the cost of repetition.
Note dated 20.11.2009 was written by the second respondent after only two parties including the first petitioner were found eligible to have their financial bids opened. The same reads as follows :
10
"Sealed short notice tender in KMDA Form No.I was invited by the Superintending Engineer (Works) Circle-I, R.E. Sector, KMDA, Unnayan Bhawan, 'L' Block, 2nd floor, Bidhannagar, Kolkata-91 vide wide publication in the leading dailies and K.M.D.A. website. The date of issue of tender paper was 12.11.09 upto 2 P.M. in response to our N.I.T., 3 (three) Nos. of agencies applied for purchasing tender papers and those 3 (three) participants took part in the tender opening proceedings. Out of 3 (three) tenderers nsp Hospitech India Pvt. Ltd. has become INFORMAL as they did not follow the clauses of the N.I.T. Among other 2 (two), Benson Medical Equipments (India) Pvt. Ltd. has submitted their credentials for Govt. Undertakings and P.W.D. Pondichery and BOC India Ltd. has submitted their credentials which are at par our required N.I.T. In this circumstances, financial bid for two agencies such as (1) Benson Medical Equipments (India) Pvt. Ltd and (2) BOC India Ltd. can not be opened as the proper competition is not possible in between the two agencies and justified rates could not be assessed. Hence, for the interest of work the undersigned proposed for retendering the same and to cancel the N.I.T. as stated above. Your approval is solicited.
Sd/-
20.11.09.
SUPERINTENDING ENGINEER (WORKS) CIRCLE-I:R.E. SECTOR : KMDA "
Upon such note being given, the Chief Engineer, KMDA, recorded in the file on 20.11.2009 the following note :
"You had taken a realistic decision. Your proposal is approved."
Following this decision, the second tender notice was issued. It, however, could not be ascertained as to how the condition of 'prime contractor' was inserted in the second tender notice though not there in the first tender notice. However, nothing turns on this.
After the two parties who had expressed interest were found to be ineligible, the second respondent issued notice dated 24.2.2010 conveying to the first petitioner and M/s. Sytco Inc. that the financial bid of the first petitioner would be opened on 25.2.2010 subject to approval of the appropriate authority. 11 The financial bid was duly opened on that date as noted above, and the rate of the first petitioner became public only on 25.2.2010.
On the following day i.e. 26.2.2010, M/s. Sytco Inc. appears to have addressed a letter of complaint to the Chief Executive Officer of KMDA. It was alleged therein that irregularities had crept in the tender process. Its candidature was rejected unauthorisedly though it fulfilled all the conditions. In the event the bid of a single eligible party is considered that might result in awarding the contract to it 'at much-much higher prices than ours'.
Interestingly, the file contains two originals of the letter of complaint dated 26.2.2010. One of them with the word 'ORIGINAL' hand-written at its top bears several endorsements made by officers of the KMDA between from '1/3' and '9/3'. The other original copy however does not bear any endorsement acknowledging receipt. Copy of the said complaint letter had not been forwarded to any other officer of KMDA. It is, therefore, surprising as to how two originals of the same letter could reach the Chief Executive Officer.
Be that as it may, the one bearing the endorsement 'ORIGINAL' contains an endorsement made by the second respondent on '9/3' to the effect that 'bunch of papers were not submitted with tender papers. These were submitted to CEO by hand'. The above-referred endorsement would suggest that M/s. Sytco Inc. had not furnished necessary documents along with its bid papers pursuant to the second tender notice and by filing the complaint letter was seeking to cure the deficiency that had really resulted in rejection of its candidature. 12
In the meanwhile, however, the second respondent communicated vide a letter dated 3.3.2010 that the second tender notice had been cancelled with the approval of the competent authority due to unavoidable circumstances.
Close on the heels thereof, the third tender notice was published in the daily newspapers on 6.3.2010. The condition relating to 'prime contractor' was deleted.
In pursuance of the third tender notice, three parties were found eligible. On opening of their financial bids, MDD Medical Systems (I) Pvt. Ltd. emerged the lowest bidder quoting Rs.1,46,92,107/-. The rate was scaled down to Rs.1,45,45,186/- on grant of 1% rebate. Incidentally, M/s. Sytco Inc. quoted Rs.1,59,77,941/-.
As has been noticed above, the respondents have sought to justify their action of cancellation of the second tender notice relying upon the terms and conditions of the tender notice and also because of the complaint letter of M/s. Sytco Inc. So far so good; the aforesaid facts would not reveal any patent abnormality for which the Writ Court's interference would be warranted. The respondents would have been justified in contending that they being the best judges in the circumstances, decision had been taken to call for fresh tender and such decision having been taken bonafide the respondents ought to be allowed to proceed.
However, the entire actions of the respondents have to be held to be tainted with malice in view of a note dated 23.2.2010 of the second respondent, being 13 part of the records file, which persuaded me to call upon its maker to appear in Court and explain his stand.
I consider it appropriate to reproduce below the said note dated 23.2.2010 of the second respondent in its entirety whereby he proposed cancellation of the second tender notice. The same reads as follows :
"N.I.T. No.09/SE(W)/C-I/RE/KMDA of 2009-10 dt. 06-11-09 for the above said work was published for selection of contractors. But unfortunately, the number of participating contractors were inaequate for performing wider competition among them.
However, the said N.I.T. was cancelled and 2nd N.I.T. No.12/SE(W)/C- I/RE/KMDA OF 2009-10 DT. 06-11-09 WAS PUBLISHED MAKING SOME MODIFICATIONS IN THE PREVIOUS n.i.t. No.09/SE(W)/C-I/RE/KMDA for making the tender processing much wider and competitive. The N.I.T. was published in the 5 (five) leading newspapers throughout India for its wide publication and accordingly total 6 (six) nos. of agencies as stated below have purchased their tender papers.
(1) M/s. BOC India Ltd.
(2) M/s. BOC Benson Medical Equipments (India) Pvt. Ltd. (3) M/s. Nsp Hospitech India Pvt. Ltd.
(4) M/s MDD Medical Systems (India) Pvt. Ltd. (5) M/s. Praxair India Ltd.
(6) M/s. Sytco Inc. Among those 6(six) Nos. of intending tenderers, only 3 (three) of them such as MDD Medical Systems (India) Pvt. Ltd. and Sytco Inc. and M/s. BOC India Ltd. participated in the tender formalities. On 22-2-10, Part-I of the tender (i.e. Technical Bid) was opened for those 3 (three) nos. of agencies. After scrutinising the Technical Bid, tenders for MDD Medical Systems (India) Pvt. Ltd. became the single tenderer.
After opening of the Financial Bid (i.e. Part-III of the tender) of BOC India Ltd., the only eligible tenderer, quoted their rate at Rs. 1,02,803.58 (Rupees one crore two lakhs eighty thousand five hundred eighty three and paise fifty eight) only to complete the job.
In the meantime, after opening of the Financial Bid of the only eligible tenderer, M/s. BOC India Ltd., M/s. Sytco Inc. made a written complaint to the Chief Executive Officer, KMDA regarding the tendering procedures. In these circumstances, it appears to be justified from the part of the tendering Accepting/Inviting Committee to cancel the said N.I.T. on the ground that the competition in this respect was restricted to only 1 (one) tenderer and as such a fair and competitive rate cannot be obtained from the single tenderer. In this regard, the undersigned seeks approval from the Addl. Chief Engineer-in-Charge, R.E. Sector to give permission for cancellation of the 14 N.I.T. No.12/SE(W)/C-I/RE/KMDA of 2009-10 dated 31-12-09 and allow to float another fresh tender liberalizing the N.I.T. terms and conditions for wider and competitive participation.
Submitted for your kind approval please.
Sd/-
23.2.10 SUPERINTENDING ENGINEER (WORKS) CIRCLE-I: R.E. SECTOR : KMDA The said note of the respondent no.2 was forwarded to the Additional Chief Engineer-in-Charge on 26.2.2010 who appears to have recorded in his handwritten note as follows:
"As proposed this is approved for the better interest of wider competition of forthcoming tender. Cancellation present N.I.T. may be done accordingly."
A bare perusal of the aforesaid note reveals that after opening of the financial bid of the first petitioner, M/s. Sytco Inc. made a written complaint to the Chief Executive Officer and accepting the allegation levelled therein, the decision to cancel the process pursuant to the second tender notice was taken. What a great blunder the second respondent committed without perhaps realizing that there are people, more smarter than him, who would not wink an eye-lid to drag him to Court.
The financial bid of the first petitioner was due to be opened on 25.2.2010 as had been communicated by the respondent no.2 by his notice dated 24.2.2010. It has not been disputed before me by the respondents that the financial bid was opened on 25.2.2010. It is on record that the complaint letter of M/s. Sytco Inc. is dated 26.2.2010. In such circumstances, it is 15 incomprehensible as to how on 23.2.2010 the respondent no.2 could record that the financial bid of the first petitioner was opened and M/s. Sytco Inc. had complained about the tendering procedure in its letter of complaint particularly when the endorsement on its complaint letter marked 'ORIGINAL' referred to above records that it was first dealt with in the office of KMDA on 1.3.2010.
The Additional Chief Engineer-in-charge to whom the note dated 23.2.2010 was directed does not also appear to have taken appropriate care to ascertain whether the note dated 23.2.2010 was factually correct or not.
I am certain that there has been a conscious endeavour of the second respondent to hoodwink his superiors and to indulge in malpractices for achieving personal gains or else the note dated 23.2.2010 with the specific factual contents of opening of financial bid of the first petitioner and receipt of complaint letter of M/s. Sytco Inc. could not have been generated, since as on 23.2.2010 the financial bid of the first petitioner and the complaint letter of M/s. Sytco Inc. had not even seen the light of the day. I cannot resist myself in holding that the respondent no.2 has not discharged his duties bonafide and in the interest of KMDA. Obviously the note dated 23.2.2010 is the product of an evil design of the respondent no.2 which the Chief Executive Officer, while being personally present in Court, assured to unearth. I may record the submission of the Chief Executive Officer in Court. He frankly conceded that he was not aware of the happenings and came to learn of the same only after the second respondent was subjected to examination by Court to elicit his explanation. I hope and trust that he will honour such assurance.
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This is not all; there is more than what meets the eyes.
In its counter affidavit, the respondents averred that there exists a 'High- Power Works and Tender Committee' and that such Committee had 'decided to cancel the 2nd tender also on the ground that the competition in this respect was limited to only one tenderer'. It is further averred that the condition regarding 'prime contractor' was omitted in the third tender notice 'with the sole intention of making the tender process much wider and competitive'. The decision to cancel the second tender notice does not appear to be that of the said Committee but factually is that of the second respondent, since approved by the Additional Chief Engineer. Also, on perusal of the records produced before the Court, I have not been able to gather at whose instance the condition of 'prime contractor' was deleted and why it was deleted. Mr. Basu was also requested to find out the same from the file. He could not locate it. The counter affidavit does not, therefore, reveal the true state of affairs. It has also not been explained why copy of the complaint letter of M/s. Sytco Inc. marked 'ORIGINAL' was not annexed to the counter affidavit and instead copy of the other complaint letter (without any endorsement) was annexed thereto. Possibility of obtaining another original of the complaint letter from M/s. Sytco Inc. for the purpose of contesting the present petition cannot be totally ruled out in the circumstances. Instead of accusing the petitioners of suppression of facts, KMDA must set its house in order to ensure that for some greedy officers it does not have to face the wrath of Court.
It is also worthy of being noted that the first tender notice was cancelled because only two eligible bidders were left in the fray after opening of the 17 technical bids and the respondent no.2 desired more interested parties to compete. His decision received the appreciation of his superior. By applying the same standard, in pursuance of the second tender notice the bid of the first petitioner ought not to have been opened and a third tender notice could have been issued straightway to ensure better competition. In view of the notice dated 24.2.2010 the financial bid of the first petitioner must have been opened "with the approval of the higher authority". The circumstances in which the second tender notice was cancelled, therefore, are mysterious and true to reason could not be explained. In my view, conscious efforts have been made to eliminate the first petitioner from the zone of consideration.
I am conscious of the contention raised on behalf of KMDA by Mr. Basu that the issue in question ought not to be viewed as if I am exercising appellate powers.
In exercise of the power of the Court of Writ to entertain a claim for Certiorari, I am entitled to look into the records and if the process of decision making is likely to gravely affect public interest and is also found to suffer from the vices based whereon judicial review is attracted, the Court of Writ must not sit back and express helplessness but must interfere to set things right.
In its landmark judgment in Tata Cellular vs. Union of India, (1994) 6 SCC 651, the Supreme Court while cautioning the Courts to exercise judicial restraint in matters of commercial transactions carefully delineated principles based whereon judicial review of administrative action would be permissible. Paragraphs 77 and 94 being relevant are quoted below :
18
"77. The duty of the court is to confine itself to the question of legality. Its concern should be :
1. Whether a decision-making authority exceeded its powers?
2. Committed an error of law,
3. committed a breach of the rules of natural justice,
4. reached a decision which no reasonable tribunal would have reached or,
5. abused its powers.
Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under :
(i) Illegality : This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it.
(ii) Irrationality, namely, Wednesbury unreasonableness.
(iii) Procedural impropriety.
The above are only the broad grounds but it does not rule out addition of further grounds in course of time.
94. The principles deducible from the above are :
(1) The modern trend points to judicial restraint in administrative action. (2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.
(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere.
However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed 19 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. .................."
In B.N. Joshi & Sons Ltd. vs. Nair Coal Services Ltd. & ors., (2006) 11 SCC 548, the Court had the occasion to consider several previous decisions including most of the decisions cited by Mr. Basu. In paragraph 56, it was observed as follows :
"56. It may be true that a contract need not be given to the lowest tenderer but it is equally true that the employer is the best judge therefor; the same ordinarily being within its domain, court's interference in such matter should be minimal. The High Court's jurisdiction in such matters being limited in a case of this nature, the Court should normally exercise judicial restraint 'unless illegality or arbitrariness on the part of the employer is apparent on the face of the record'."
(emphasis supplied by me) The objection regarding suppression of facts by the petitioners has not impressed me. The petitioners claimed that they had come to learn that the third tender notice was published in only one Bengali newspaper although it is a fact that it was published in four newspapers. But the respondents have not been able to prove that the petitioners were aware of publication of the said notice in several newspapers, yet referred to only one publication. Even otherwise, if at all there has been a suppression, that is not related to the second tender notice and having regard to the manner in which the entire issue was dealt with, I do not 20 feel persuaded to deny relief on the ground that the petition suffers from suppression.
I have considered the decisions cited by Mr. Basu. None of the decisions declare any law inhibiting the Court of Writ to grant relief in a case of the present nature where arbitrariness, unreasonableness and illegality are palpable.
The decision in M/s. G.J. Fernandes (supra) related to disqualification of a tenderer based on bonafide interpretation of terms of the tender notice. The Court had refused to interfere. The decision in Karnataka Rare Earth (supra), arising out of a public interest litigation, related to grant of leases for quarrying granite on Government land contrary to prohibition contained in statutory provisions. I have failed to comprehend the materiality of the aforesaid decisions to the facts of the present case.
In Vijay Bahadur Singh (supra), the Court recognized the power of the Government not to accept the highest or the lowest bid. In Rajasthan Housing Board (supra) the Court reiterated that the highest bidder does not acquire any right to have the auction concluded in his favour. Law is well-settled and needs no reiteration.
There can be no doubt in respect of the Government's power to reject either the lowest or the highest bid without assigning any reason to the lowest or the highest bidder, as the case may, but no law has been laid down in any of these decisions that the reasons may not also exist therefor. If reasons are said to exist, the same cannot be withheld from the Court. The Court would not be swayed by the lack of sufficiency or adequacy of the reasons but would be justified in 21 interfering with the decision on reaching a satisfaction that the process leading to it does suffer from perversity.
In Air India Ltd. (supra), the Supreme Court observed that the State, its Corporations, instrumentalities and agencies have the public duty to be fair to all concerned and that discretionary power under Article 226 may not be exercised merely on the making out of a legal point as to defect in the decision making process; it ought to intervene only when overwhelming public interest requires interference. I have failed to comprehend as to how acceptance of the lowest bid in pursuance of the third tender notice would sub-serve public interest. Admittedly, the bid of the first petitioner is nearly Rs.43 lakh less than the rate quoted by the lowest bidder in response to the third tender notice and having regard to the fact that the first petitioner also complies with the strict condition of 'prime contractor' which the others do not satisfy, it would only be in furtherance of public interest if its bid is considered in the proper perspective.
In Raunaq International (supra) it was held that the Court must be satisfied that there is some element of public interest involved in entertaining a writ petition before it decides to interfere. Although it has been cautioned that the Court must bear in mind that because of its intervention the proposed project may be considerably delayed thus escalating the costs far more than any saving which the Court would ultimately effect in public money by deciding the dispute one way or the other, the present position in which the respondents find themselves now is because of their own wrong doing and being contrary to public interest, I am left with no other option but to interfere. 22
In the circumstances, I hold that the process of canceling the second tender notice is likely to severely affect public interest and obviously, for reasons discussed above, is infected with vices attracting judicial review. The order of cancellation thereof by the second respondent passed on 23.2.2010 is based on extraneous factors. The factual incidents referred to therein forming the grounds of cancellation did not exist on the material date. In exercise of writ powers, I quash the third tender notice and all proceedings in connection therewith. The Chief Executive Officer, KMDA shall issue necessary direction to the Chief Engineer of KMDA to consider the bid of the first petitioner in pursuance of the second tender notice and to decide whether the same merits acceptance or not. Follow up steps shall be taken in accordance with law. If for any valid reason the bid offered by the first petitioner is not acceptable, due communication shall be made to the petitioners and further steps in such case shall follow, also in accordance with law.
With the aforesaid directions, the writ petition stands allowed with costs of Rs.50,000/- to be paid to the petitioners within a fortnight from date. KMDA shall be at liberty to recover such amount from the erring officials who were instrumental in rendering public interest a casualty and have made KMDA to pay for the lapses committed by them, after giving them an opportunity of hearing.
Urgent photostat certified copy of the judgment and order shall be given to the applicants, if applied for, as early as possible.
(DIPANKAR DATTA, J.) 23 Later:
Mr. Basu prays for stay of operation of the order directing payment of costs. Mr. Gupta opposes the prayer.
Having considered the prayer, time to make payment is enlarged till four weeks from date.
(DIPANKAR DATTA, J.)