The High Court of Andhra Pradesh dismissed a writ petition that aimed to address alleged illegal and arbitrary conditions in a government tender notice. In its ruling, the court emphasized that no individual can assert the right to trade or enter into a contract with the government.
The government should have the freedom to establish contracts. In the administrative or quasi-administrative sphere, it is critical to maintain fair play. However, any decision taken by the government must not only adhere to the principle of reasonableness, including its other relevant factors, but should also be free from any hint of arbitrariness, bias, or malafides, a single-judge bench of Justice Ravi Nath Tilhari said.
The court remarked, “formulation of tender invitation conditions i.e as to what conditions are to be incorporated falls within the administrative domain of the authority. The scope of judicial review of such conditions is limited”.
Brief Facts of the Case
The petitioner, who is the sole proprietor of an unregistered firm called PMR Associates, filed a writ petition under Article 226 of the Indian Constitution. The petition challenged certain conditions in a tender notice issued by Superintendent Engineer (SE) of Kadapa Operation Circle, Andhra Pradesh State Power Distribution Corporation Limited (APSPDCL), Kadapa. The tender notice invited tenders for scanning, printing, and serving spot bills in consumer premises LT Category I, Category II, and Category IV (excluding high-value agriculture services) with GPRS-enabled Spot Billing Machines for a specified period.
The petitioner claimed to be qualified and willing to apply for the tender, but contested condition No. 2 and condition No. 19 of the tender notice as illegal and arbitrary. Condition No. 2 of the tender notice stated that the rates must be quoted in the price schedule in the price bid only, and supervision charges must be between 0% to 6.5%, with no bids below this range being acceptable. Condition No. 19 stated that tenders must be submitted by taking each Electricity Revenue Office (ERO) separately as a unit, and non-quoting of rates would lead to rejection of the tender. Additionally, bidders would not be awarded spot billing work of more than one ERO in the APSPDCL area.
Contentions of the Parties
The petitioner argued that Condition No.2 of the tender notice, which requires participants to quote supervision charges between 0% to 6.5%, with the additional specification that negative quotes will not be accepted, provides excessive discretionary powers to the third respondent. This could lead to arbitrary decision-making and is not in the best interest of the third respondent or the general public. Moreover, it violates the principle of equal treatment. The legal representative further contended that Condition No.19 of the tender notice, which limits bidders from being awarded a spot work of more than one Electricity Revenue Office (ERO) within the APEPDCL area, is onerous. This condition infringes upon the principles of fairness and equality in public procurement and violates the fundamental right guaranteed under Article 19(1)(g) of the Indian Constitution, which allows individuals to practice any profession, trade or business. The legal representative argued that treating each ERO as a separate unit hinders bidders from being awarded work in multiple ERO(s) and imposes unnecessary restrictions.
On the other hand, the standing counsel representing APSPDCL argued that the tender conditions were fair and did not breach the principles of equality. According to the counsel, any person who meets the eligibility criteria can participate in the tender process and must comply with the same conditions as all other participants. Additionally, the counsel stated that the imposition of such conditions falls under the administrative/executive action of the Authority, and thus, the court should not interfere with the exercise of writ jurisdiction. Hence, the counsel maintained that there was no justification for the court to intervene in this case.
High Court’s Observation
According to established legal principles, no individual has the right to carry out business or trade with the government. In the case of Erusian Equipment & Chemicals Ltd. Vs. State of West Bengal & ANR, 1974 Latest Caselaw 235 SC
Erusian Equipment and Chemicals vs. State of West Bengal, the Supreme Court ruled that the government has the authority to form contracts with any individual of their choice, and no person has the right to insist on being contracted by the government. In Michigan Rubber (India) Limited, the Supreme Court reiterated that no individual can assert the fundamental right to carry out business with the government. Additionally, the authority responsible for formulating tender invitation conditions has the administrative power to do so. The judicial review of such conditions is limited in scope.
The court further cited supreme court cases and reiterated that the terms and conditions of a tender are determined by the government, based on the nature of the contract. The entity that issues the tender is the most qualified authority to decide the appropriate terms and conditions for the tender. The court cannot intervene and determine whether the conditions in the current tender are superior to those in prior tender notices.
Due to the reasons stated above, it is important to note that the tender conditions currently in place, specifically conditions 2 and 9, were not present in previous tenders. Therefore, the authorities have the right to impose new or different conditions as they see fit. It is not within the jurisdiction of the court to interfere with the current tender conditions, as they are valid and legal for this particular case under review.
Case Title: Nallacheruvu Obulesu v State of Andhra Pradesh
Case Detail: Writ Petition 7985/2023
Coram: Justice Ravi Nath Tilhari
Advocates for Petitioner: P. Sai Surya Teja, Advocate
Advocates for State: Government Pleader for Energy & V.R Reddy Kovvuri
Read Judgement @LatestLaws.com:
Share this Document :Picture Source :
