M/S. K.Beeran Kutty, vs The State Of Andhra Pradesh,
2021 Latest Caselaw 2270 AP

       HON'BLE SRI JUSTICE R. RAGHUNANDAN RAO

            WRIT PETITION No.10457 of 2021

ORDER:

The petitioner submits that he is a diet contractor and has

been supplied diet to inpatients and doctors at various hospitals

in Tirupati, including the 3rd respondent hospital for the past 34

years. The petitioner is also a diet contractor for the 4th

respondent hospital.

2. Respondents 2 and 4 issued tender notification in

Sl.No.222/DIET/2021, dated 12.04.2021 for supplying diet for

inpatients and duty doctors for a period of two years in sealed

tenders. All bids, in pursuance of the said tender, were to be

considered in two stages, technical bid and financial bid. The

tender document also stipulated that the conditions set out in

G.O.Ms.No.325 HMFW (M1) Department, dated 01.11.2011

would apply to the tender.

3. The technical bid of the tender was duly opened on

05.05.2021 and three of the tenderers, viz., the petitioner, Sri

Y.Koteswara Rao and the 5th respondent were declared as

qualified for participating in the financial bid. All the three

tenderers quoted the minimum rate prescribed by the

Government i.e., Rs.36/- for patient per day (for patient and

attendant of the Tribal Patient). As all the three tenderers had

quoted the lowest rates in the financial bid, the 3rd respondent

committee was given the task of evaluating the three tenderers.

After such evaluation, the 3rd respondent selected the 5th

respondent as the successful tenderer and informed to the 2nd

respondent and 4th respondent. Both the respondents 2 and 4

accepted the recommendation of the 3rd respondent and

awarding the tender to the 5th respondent.

4. The petitioner aggrieved by the award of tender in

favour of the 5th respondent and aggrieved by the rejection of the

tender of the petitioner, has approached this Court by way of

this writ petition.

5. Sri K.G.Krishna Murthy, learned Senior Counsel

appearing for the petitioner would submit that the bid of the

petitioner was rejected on the ground that he did not give

experience certificate for the past three years and all his

experience certificates were for the periods prior to 2017. He

submits that the bid of the petitioner could not have been

rejected on that ground. He submits that the requirement of

furnishing of experience certificate was set out in

G.O.Ms.No.325 in clause 12 of the said G.O which stipulated

that "good conduct certificate from the hospital authority

competent" had been furnished. It is the contention of Sri

K.G.Krishna Murthy learned Senior Counsel appearing for the

petitioner that only requirement was furnishing a good conduct

certificate and in the absence of any stipulation for the period

for which good conduct is required, the 3rd respondent

committee could not have discriminated against the petitioner

on the ground that the 5th respondent furnished experience

certificate up to 2020. He submits that in the absence of any

stipulation relating to the period, for which such certificate

should be submitted, the 3rd respondent committee could not

have brought in a condition that the certificate require to be for

immediate past experience. He submits that in any event, he

was the contractor for supply of diet for the 3rd respondent up to

2020, and had, in fact, made an application to the 3rd

respondent for issuance of such certificate. However, the said

certificate was not issued by the 3rd respondent due to which,

the said certificate could not be given.

5A. Sri K.G.Krishna Murthy, learned Senior Counsel

appearing for the petitioner relied upon the Judgments of the

Hon'ble Supreme Court in Silppi Constructions Contractors

vs. Union of India and another1, Municipal Council,

Neemuch vs. Mahadeo Real Estate and Others2, Michigan

Rubber (India) Limited vs. State of Karnataka and Others3,

ABL International Limited and Another vs. Export Credit

Guarantee Corporation of India Limited and Another4.

6. The official respondents have filed a counter affidavit

setting out their case. In the said counter affidavit, it is stated

that the services of the petitioner were sought to be terminated

by the 2nd respondent on account of the dissatisfaction with the

diet being supplied by the petitioner. This resulted in

W.P.No.38033 of 2018 and W.P.No.15115 of 2017 which came

(2020) 16 SCC 489

(2019) 10 SCC 738

(2012) 8 SCC 216

(2004) 3 SCC 553

to be disposed of by a Division Bench of this Court on

24.02.2021, wherein the Division Bench without going into the

question regarding the legality or otherwise of the termination

order dated 08.10.2018, was pleased to permit the petitioner to

participate in the fresh tender. It is further contended in the

counter that the representation of the petitioner on 19.04.2021

for issue of satisfactory certificate, one day before the

submission of the tender document on 20.04.2021 was not

considered and no certificate was issued as there were various

applications against the petitioner regarding short supply core

quality, skipping of certain items etc. It is stated that on

account of these complainants, a satisfactory certificate was not

given to the petitioner.

7. Sri Dammalapati Srinivas, learned Senior Counsel

appearing for 5th respondent and learned Government Pleader

for Medical and Health have contended that in view of the fact

that all the three tenderers had quoted the same price and there

was no possibility for any reduction in the said price, the 2nd

respondent committee had to consider the matter and take a

call as to who would be more suitable for executing the contract.

In such a situation, the 2nd respondent committee took the view

that it would be appropriate to award the contract to the 5th

respondent as neither the petitioner nor other tenderer to whom

Sri Y.Koteswara Rao had furnished experience certificates which

were up to date.

8. The learned Government Pleader for Medical and

Health would submit that the petitioner having applied for a

satisfactory certificate on 19.04.2021 could not expect such

certificate to be issued in one day. He further submits that the

petitioner was fully aware of the fact that the last date of

submission of tenders was 20.04.2021 and he could not have

applied for a certificate on 19.04.2021.

Consideration of the Court:

9. The tender document stipulated that the intending

bidders could bid for the contract in the price band of Rs.36/- to

Rs.40/- only. In view of the said stipulation, none of the bidders

could have quoted a figure of less than Rs.36/-. Accordingly, all

the three qualified bidders had bid for the tender at the rate of

Rs.36/-.

10. In the light of the bids of all the tenderers being at

the lowest rate possible, the tendering authority was faced with

the requirement of selecting one of the bidders, out of the three

bids available. In the circumstances, the 3rd respondent-

committee was given the task of narrowing the offer to one

bidder. After considering all circumstances, it appears that the

3rd respondent-committee decided to apply the criteria of

satisfactory experience as the deciding factor for finalising the

bid in favour of the 5th respondent, on the ground that only the

5th respondent had a satisfactory certificate, available for the

latest period.

11. The application of the criteria has been challenged

by the petitioner. The question that arises before this Court is

whether the application of such a criteria is permissible or

would amount to an arbitrary action of the respondents which

requires to be set-aside.

12. Before answering that question, it would be

necessary to understand the scope of such an exercise by this

Court under Article 226 of the Constitution of India.

13. The Judgments cited by Sri K.G.Krishna Murthy,

learned Senior Counsel would set out the contours of such

judicial review of government practice. The leading case in this

regard, would be Tata Cellular vs. Union of India5, which has

been followed by the Hon'ble Supreme Court in the Judgments

cited above. In the circumstances, paragraph 94 of the said

Judgment would be relevant.

"94...

(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.

(1994) 6 SCC 651

(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."

14. The said Judgment has been consistently followed by

the Hon'ble Supreme Court. In Jagadish Mandal vs. State of

Orissa6, Para 22 of the said Judgment reads as follows:

"22. 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 hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold........"

15. A conspectus of the above Judgements and the Judgments

of the Hon'ble Supreme Court in Raunaq International Limited.,

vs. I.V.R. Construction Limited7, Air India Limited Vs.Cochin

(2007) 14 SCC 514

(1999) 1 SCC 492

International Airport Limited8, Master Marine Services (P)

Limited vs. Metcalfe & Hodgkinson (P) Limited9, Michigan

Rubber (India) Limited vs. State of Karnataka10, Municipal

Corporation., Ujjain vs. BVG (India) Limited.,11 would lay down

the principle that the Courts should not normally intervene in the

decision making process for award of contracts, unless blatant

illegality and arbitrariness can be pointed out. The contention of

the Court is to ascertain whether there was any illegality or

arbitrariness in the decision making process rather than the

question of whether the decision was a sound decision. In the

present case, the 3rd respondent-committee was left with an

unenviable task of finalising the tender in favour of one bidder

while the bids of all the three qualified bidders were the same.

The 3rd respondent-committee discharged this task, by fixing the

satisfactory conduct of the bidders as the criteria.

16. In the circumstances, such a criteria cannot be treated

as arbitrary criteria. It has been the contention of Sri K.G.Krishna

Murthy, learned Senior Counsel for the petitioner that in the

absence of stipulating such a criteria in the tender document, the

3rd respondent-committee could not have fixed such a criteria

subsequent to the submission of the tenderers. It was further

submitted that fixing such a criteria subsequent to the filing of the

bids, caused prejudice to the petitioner as the petitioner would

(2000) 2 SCC 617

(2005) 6 SCC 138

(2012) 8 SCC 216

(2018) 5 SCC 462

have been able to get a certificate of satisfactory performance up to

2020 from the 3rd respondent-hospital itself.

17. This contention has to be rejected on two grounds.

Firstly, the petitioner did attempt to get such a certificate from the

3rd respondent-hospital, and was unsuccessful, on account of the

complaints given against the petitioner, while he was a diet

contractor, for the 3rd respondent-hospital. Secondly, it cannot be

held that the decision of the 3rd respondent-committee in

considering satisfactory performance as a criteria for finalising the

tender, can be treated as an action which is so arbitrary that no

reasonable person would have taken such a call.

18. In the circumstances, it cannot be held that the

decision taken by the respondents in finalising the tender in

favour of the 5th respondent and awarding the contract to the 5th

respondent is so arbitrary that it requires interference from this

Court.

19. In the circumstances, the Writ Petition has been failed

and accordingly dismissed.

As a sequel, pending miscellaneous petitions, if any, shall

stand closed.

____________________________ R. RAGHUNANDAN RAO, J.

06.07.2021 RJS

HON'BLE SRI JUSTICE R. RAGHUNANDAN RAO

WRIT PETITION No.10457 of 2021

06.07.2021

RJS