Andhra Pradesh High Court - Amravati

B Srinivas vs The Andhra Pradesh State Civil ... on 5 March, 2021

Bench: Kongara Vijaya Lakshmi

      HIGH COURT OF ANDHRA PRADESH : AT AMARAVATI

                  Writ Petition NO.4780 OF 2021


Between:
B Srinivas, S/o Satyanarayan,
aged about 60 years, Occ Business,
R/o D.No.4-164/18, Ganesh Nagar,
1st Ward, Tadepalligudem - 534 101,
West Godavari District.
                                                           Writ Petitioner
And

   1. The Andhra Pradesh State Civil Supplies Corporation Limited,
      Rep by its Vice Chairman and Managing Director,
      D.No.10-152/1, Sri Sai Towers, 4th Floor, Ashoknagar
      Besides Siris Company, Bandar Road, Kanuru,
      Vijayawada - 520 007.

   2. Sri Kottu Sathyanarayana,
      MLA of Tadepalligudem, S/o Venkateswara Rao,
      aged about 65 years, Occ: Business, R/o 30th Ward,
      Tadepalligudem - 534 102.

                                                            Respondents

DATE OF JUDGMENT PRONOUNCED: 05.03.2021

SUBMITTED FOR APPROVAL:

   4. Whether Reporters of Local Newspapers
      May be allowed to see the judgment?           :      No

   5. Whether the copies of judgment may be
      Marked to Law Reporters/Journals?             :      Yes

   6. Whether Your Lordships wish to
      See the fair copy of the judgment?            :      Yes



                                      ____________________________
                                      KONGARA VIJAYA LAKSHMI, J

                                                                         KVL, J
                                                             WP No.4780 of 2021

HON'BLE SMT. JUSTICE KONGARA VIJAYA LAKSHMI

+ Writ Petition NO.4780 OF 2021

% 05.03.2021 Between:

B Srinivas, S/o Satyanarayan, aged about 60 years, Occ Business, R/o D.No.4-164/18, Ganesh Nagar, 1st Ward, Tadepalligudem - 534 101, West Godavari District.

Writ Petitioner And

1. The Andhra Pradesh State Civil Supplies Corporation Limited, Rep by its Vice Chairman and Managing Director, D.No.10-152/1, Sri Sai Towers, 4th Floor, Ashoknagar Besides Siris Company, Bandar Road, Kanuru, Vijayawada - 520 007.

2. Sri Kottu Sathyanarayana, MLA of Tadepalligudem, S/o Venkateswara Rao, aged about 65 years, Occ: Business, R/o 30th Ward, Tadepalligudem - 534 102.

Respondents

! Counsel for Petitioner : Sri L. Ravi Chander, learned Senior Counsel, representing learned counsel for the petitioner Sri Bobbili Srinivas

^ Counsel for Respondent No.1: learned Government Pleader Mr. Vivekananda, appearing on behalf of learned Additional Advocate-General II Mr. Jasti Naga Bhushan

Counsel for Respondent No.2: --

< Gist:

> Head Note:

? Cases referred:

1. (2017) 4 SCC 269

2. 2013(3) ALT 572

3. 2020 SCC Online SC 335

4. (2012) 8 SCC 216

5. (2000) 5 SCC 287

6. (2003) 5 SCC 437

7. (2004) 4 SCC 19

8. (2005) 4 SCC 435

9. (2005) 6 SCC 138

10.(2014) 3 SCC 760

11.(2015) 2 SCC 796

12. (2009) 6 SCC 171

13. 2021 (1) JLJ 173

KVL, J WP No.4780 of 2021

HON'BLE SMT. JUSTICE KONGARA VIJAYA LAKSHMI

Writ Petition NO.4780 OF 2021

Order:

This Writ Petition is filed "to declare the tender notice bearing

reference Lr.No.Mktg/M2/G/291220/WB/KMS/2020-21, dated 08.02.2021

and corrigendum in Lr.No.Mktg/M2/291220/WB/KMS/2020-21, dated

15.02.2021, which were prepared by the first respondent with a mala fide

intention to prohibit the existing transport contractors from Gunny Bales

Transportation and to appoint big contractors only as transport

contractors as illegal and arbitrary".

2. Heard Sri L. Ravi Chander, learned Senior Counsel, representing

learned counsel for the petitioner Sri Bobbili Srinivas and learned

Government Pleader Mr. Vivekananda, appearing on behalf of learned

Additional Advocate-General II Mr. Jasti Naga Bhushan for the first

respondent and with their consent the Writ Petition is being disposed of at

the admission stage.

3. The petitioner is a transport contractor and has been transporting

jute gunny bales from various jute mills. The first respondent Corporation

issued tender notice dated 16.11.2019 for transportation of jute gunny

bales from West Bengal to Andhra Pradesh and the basic condition of the

tender document is that the bidders should have a turn over of Rs.30.00

Crores for the last three years and they should have 10 own lorries and 20

own/hired lorries; e-reverse auction was conducted on 05.12.2019 and

one Balaji Transport has become L1 and the petitioner's son is one of the

partners in the said Balaji Transport; the petitioner's son is doing his own

business independent of the petitioner; in the assembly elections that

were conducted in 2019, petitioner contested for the office of MLA as a

KVL, J WP No.4780 of 2021

candidate of Janasena party, but the second respondent was elected as

MLA and as the petitioner is protesting the activities of the second

respondent, he bore a grudge against him and addressed a letter

dt.Nil.12.2019 to the Hon'ble Chief Minister requesting to cancel the said

tenders, which reads as follows.

"In this connection, I submit that in previous TDP Government, the TDP and Janasena party people managed the tenders call for in local papers so as to get those renders without any competition. Thereby our State Government is getting heavy loss. Sri B. Srinivas, Ex.Municipal Chair Person, TDP is managed to get the tender in his favour by publishing the tender notice through local news papers. He contested as MLA candidate for 62 - Tadepalligudem Assembly Constituency on behalf of Janasena Party during last elections. Now he again filed the single tender with 8% excess. I therefore, request the Hon'ble Chief Minister to cancel the above single tender and issue orders to cause necessary enquiry about the single tender and take action against the persons responsible. I also request the Hon'ble Chief Minister to call for the fresh tender."

7. The Chief Minister's office forwarded the said letter to the first

respondent and thereafter the second respondent personally approached

the first respondent and pressurized them not to appoint Balaji Transport;

even though they became L1, the same was not finalized; the said Balaji

Transport filed WP No.21562 of 2019 questioning the action of the first

respondent in taking steps to re-tender and an interim direction was

granted on 02.01.2020 directing the first respondent not to conduct re-

auction and during the subsistence of the said interim order the first

respondent issued tender notice dated 31.12.2020 with the same basic

conditions and as the petitioner is having the required qualifications he

wanted to participate in the tender process; at that stage the second

KVL, J WP No.4780 of 2021

respondent again approached the first respondent and forced the first

respondent to cancel the said tender and to issue another tender notice

by incorporating new conditions which should disqualify the petitioner

from participating in the tender process; the first respondent, at the

instance of the second respondent, cancelled the tender notice dated

31.12.2020 vide proceedings dated 12.01.2021 and issued the impugned

tender notice dated 08.02.2021 with a view to prohibit the petitioner from

participating in the tender process; as against the existing requirement of

having turn over of Rs.30.00 Crores, the first respondent imposed new

condition that the turn over should be Rs.100.00 Crores, as against the

existing requirement of having 10 own lorries, the first respondent

imposed a new condition that the bidder should have 100 own lorries and

as against the existing requirement of having 20 own/hired lorries, the

first respondent imposed a new condition that the bidder should have 100

own/hired vehicles and that the bidder who has a pending litigation with

the first respondent as on the date of application is not eligible to

participate in the tender; in the pre-bid meeting held on 12.02.2021 the

petitioner personally requested the first respondent to fix the conditions as

were prescribed in the tender notice dated 31.12.2020, pursuant to which

the first respondent issued corrigendum on 15.02.2021 reducing the turn

over requirement to Rs.65.00 Crores and the number of vehicles which

should be owned to 75 and the number of vehicles which can be

owned/hired to 75 vehicles and now the first respondent is taking steps to

conduct e-reverse auction; such a condition was incorporated at the

instance of the second respondent with a mala fide intention to prohibit

the petitioner from participating in the tender process. Hence, the Writ

Petition.

KVL, J WP No.4780 of 2021

8. Counter affidavit is filed by the first respondent stating, inter alia,

that the petitioner has no locus standi to file the present Writ Petition, as

he failed to assert and prove his eligibility to participate in the impugned

tender process, the present Writ Petition is filed only to protect the

interest of his son who is an existing contractor; the present tender is for

two years from March 2021 to April 2023 and due to increase in the

requirement of gunny bags, due to increase in paddy production and to

have sufficient number of gunny bags positioned at depots within time

schedule to avoid interruption in the procurement of paddy from farmers

basic requirement is increased; the petitioner did not give any specific

details of his turnover and the number of lorries which he owns; basic

conditions that were stipulated at that time were based on the assessment

during that time; at present the volume of work and requirement of jute

gunnies has drastically increased as the tender is for the year 2021-2023;

Balaji Transport has become L1 in the previous tender, but as the rate

quoted by him was very high the said tender was recalled and the

Corporation has got such a right as per tender clause 11 (xix); in view of

stay granted by this Court in WP No.21562 of 2019, the first respondent

has not finalized the tenders from 2019 to 2021 and the said Balaji

Transport dragged on the matter for 2 ½ years and continued the

contract with old rates till now and the said Writ Petition was withdrawn

on 22.02.2021 and the present Writ Petition is filed only to help his son to

continue the same contract in favour of Balaji Transport; the first

respondent has conducted pre-bid meeting on 12.02.2021 and eight (8)

bidders have participated in the meeting and they have given their inputs

and their representations were considered to some extent; the trucks may

take 4 to 6 days time to reach its destination and in turn to go to West

KVL, J WP No.4780 of 2021

Bengal for another load trip and hence 150 trucks are needed for hassle

free transportation; the petitioner cannot be allowed to determine and

dictate the conditions of the tender and the conditions of the tender are

designed keeping in view the requirements of the first respondent; the

first respondent has issued the notification keeping in view of the existing

requirement, no mala fides can be attributed, the same is not amenable to

judicial review, no fundamental right of the petitioner has been violated

and prayed to dismiss the Writ Petition.

9. The contention of the learned Senior Counsel Sri L. Ravi Chander,

representing the learned counsel for the petitioner on record Sri Bobbili

Srinivas, is that the conditions imposed are onerous, no reasons are

forthcoming with regard to imposition of new conditions in the impugned

tender and clause 4.1.1 of the tender condition is violative of the

fundamental rights of the petitioner herein and that the petitioner is

qualified to participate in the tender. The first respondent at the instance

of the second respondent incorporated the impossible condition with a

mala fide intention to prohibit the petitioner from participating in the

tender. He further contends that the decision making process itself is

faulty, mala fide and the same amounts to colourable exercise of power.

In support of his contentions, he relied upon the decisions reported in

Reliance Telecom Limited v. Union of India1, and IBC Limited v.

The A.P. Mineral Development Corporation Limited2.

7. Learned Government Pleader Mr. Vivekananda, appearing on behalf

of learned Additional Advocate-General II Mr. Jasti Naga Bhushan, submits

that the petitioner is the father of the existing contractor who is a partner

in Balaji Transport, admittedly, and the prayer in the Writ Petition itself

(2017) 4 SCC 269

2013(3) ALT 572

KVL, J WP No.4780 of 2021

demonstrates that the Writ Petition is filed to stall the process and to see

that the existing contractor continues. He further contends that the

petitioner is only a proxy to his son and that the petitioner never

participated in the previous tender and that the tender dated 16.11.2019

is for the year 2019-20 and the tender dated 31.12.2020 is for the year

2020-2021 and the present impugned tender dated 08.02.2021 is for the

years 2021 to 2023 and that the petitioner is trying to give a political

colour to the tender even though the first respondent acted according to

its requirements and that the petitioner does not have any locus standi to

file the present Writ Petition. He further contends that the first

respondent did not cancel the bid of Balaji Transport and that it did not

participate in recall of tenders held on 02.01.2021 intentionally, hence no

mala fides can be attributed to the first respondent as the first respondent

imposed such a condition to see that there is no distress sale by the

farmers and that the petitioner cannot dictate the terms of the tender. He

placed reliance on the decisions reported in Bharat Coking Coal

Limited v. AMR Dev. Prabha3, and Michigan Rubber (India)

Limited v. State of Karnataka4.

8. IA No.2 of 2021 is filed to implead one of the bidders who

participated and the learned counsel Sri Balaji Medamalli appears on its

behalf.

9. The present controversy has to be decided on the touch stone of

the parameters of judicial review. The admitted facts for the purpose of

disposal of the present Writ Petition are that the first tender notice was

issued on 16.11.2019 and the requirement is that the bidder should have

Rs.30.00 Crores turn over for the past three years and he should own 10

2020 SCC Online SC 335

(2012) 8 SCC 216

KVL, J WP No.4780 of 2021

lorries and had 20 own/hired lorries. One Balaji Transport has become L1

in the said tender and the petitioner's son is a partner of the said Balaji

Transport. They filed a Writ Petition and obtained an interim order on

02.01.2020 directing the first respondent Corporation not to conduct

reauction. During the subsistence of the said order, the first respondent

issued tender notice dated 31.12.2020 and the basic requirements to bid

are the same. The petitioner did not participate in the tender that was

floated on 16.11.2019. The tender which was floated on 31.12.2020 was

also cancelled on 12.01.2021 and the impugned tender notice is issued on

08.02.2021 by enhancing the basic condition of turn over of the bidder to

Rs.100.00 Crores, 100 own lorries and 100 own/hired lorries and the same

was reduced to Rs.65.00 Crores and 75 own lorries and 75 own/hired

lorries by way of a corrigendum dated 15.02.2021.

10. In the affidavit filed in support of the Writ Petition, except stating

that the petitioner is having more than 10 own lorries, more than 20 hired

lorries and having the required turnover of Rs.30.00 Crores for the last

three years, no document is filed to show that the petitioner is eligible to

participate in the tender that was floated on 16.11.2019 and on

31.12.2020. Even in the letter which is addressed by the petitioner on

20.02.2021 to the Hon'ble Chief Minister, his request is to permit the

contractors who have Rs.30.00 Crores turnover and 10 own vehicles and

20 hired vehicles to participate in the tender. He does not say that he

may be permitted to participate. The interim direction that was granted

by this Court, staying the conduct of re-tendering was granted to Balaji

Transport and that pertains to the year 2019-2020 admittedly. The tender

notice dated 31.12.2020, is for the year 2020-2021 and the present

impugned tender dated 08.02.2021 is for the period from April 2021 to

KVL, J WP No.4780 of 2021

March 2023. As the period of contract is different in each tender,

definitely there will be a change in the requirement of gunny bags. The

first respondent Corporation has not finalized the tenders from 2019 to

2021 in view of the pendency of the Writ Petition and according to the

first respondent the petitioner's son (Balaji Transport) continued the

contract with old rates for 2 ½ years and the said Writ Petition was

withdrawn by Balaji Transport on 22.02.2021 i.e., one day before filing

the present Writ Petition. It is the specific case of the first respondent

that the present Writ Petition is filed to help his son to continue with the

contract. The counter affidavit also specifically states that in the tender

quoted by Balaji Transport in which petitioner's son is a partner, the price

quoted was + 4.60 per cent more due to which there will be an additional

burden of Rs.1.06 Crores on the first respondent and to avoid the same,

the first respondent has recalled the tender and that from the year 2016

the said Balaji Transport is continuing to supply gunny bales. No reply

affidavit is filed denying the contents of the counter affidavit.

11. It is also specifically stated in the counter affidavit that there is an

increase in the requirement of gunny bags due to increase in paddy

production. It is stated that as the expected production for the Kharif

season is on higher level when compared to previous years, the conditions

were changed to suit the requirements and to safeguard the interest of

farmers and taking into consideration the standing instructions of the

Central Government. As, admittedly, the petitioner is not an existing

transport contractor, he cannot say that the impugned tender notice is

issued by the first respondent with a mala fide intention to prohibit the

existing contractor to participate in the tender process.

KVL, J WP No.4780 of 2021

12. The main contention of the learned Senior Counsel is that the basic

conditions which are incorporated in the impugned tender are onerous,

mala fide and will amount to colourable exercise of power. Except stating

that it is mala fide exercise of power, the petitioner could not demonstrate

as to how the same is mala fide exercise of power. In the letter

addressed by the second respondent to the Hon'ble Chief Minister, what is

stated is that the TDP and Janasena Party people managed to get the

tenders by publishing in local newspapers, due to which the State

Government has suffered heavy loss and that the petitioner also managed

to get the tender by publishing the tender notice in local newspapers and

that the petitioner filed "single tender with 8% excess and requested the

Hon'ble Chief Minister to cancel the said tender and enquire into the

matter". The said letter only states that the petitioner herein managed to

get the tender with excess amount. Even the counter affidavit shows that

the previous tender in which Balaji Transport has become L1 has quoted a

very high rate and that if the same is accepted there would be an

additional burden of Rs.1.06 Crores on the First Respondent. Merely

because such a letter has been addressed by the Second Respondent, it

cannot be presumed that basing on the said letter, basic conditions have

been modified. It is not as though the existing contractor has approached

this Court and contends that only to eliminate him such a condition has

been incorporated this year.

13. In the counter affidavit it is specifically stated that the existing

contractor has also placed 50 to 60 trucks per day by incurring additional

expenditure in view of the representation of the Indian Jute Mills

Association stating that the transporters are not lifting the gunny bales in

time. This contention is also not denied by the petitioner. As seen from

KVL, J WP No.4780 of 2021

the communication received from the Deputy Jute Commissioner dated

14.03.2019, food grains are required to be packed compulsorily in jute

bags which have been manufactured in India. The letter of Jute

Commissioner addressed to Joint Secretary to Government of India, dated

02.07.2019 reads as follows.

"It has been informed by Indian Jute Mills Association that a substantial quantity of jute bags to the tune of around 19.576 bales which have been inspected and passed has not yet been lifted by 3 State Procuring Agencies of Government of Andhra Pradesh (5,434 b/s), Odisha (8.362 b/s) and Telangana (5.780 b/s). These three states generally lift the inspected gunny bales by their authorized road transporters. Thus, it is the responsibility of SPAs to lift the inspected gunny bales as soon as the same is inspected.

2. It is brought to your kind notice that non-

lifting or delay in lifting of bags from jute mills adversely impacts the smooth working of mill due to limitations of finished goods godown space. Moreover, accumulation of finished goods in the floor of the mills leads to difficulties/delay in manufacture and conducting further inspection of goods on accounts of other indenting agencies.

3. When the responsibility in lifting of goods rests with the indenting agencies, they require to be prompt enough to lift the goods from jute mill premises for overall smooth supply of bags not only to these 3 SPAs but also to other indenting agencies.

4. In view of above, it is requested to kindly issue appropriate advice to the States of Andhra Pradesh. Odisha and Telangana so that inspected goods are lifted immediately. These States may also be advised to be prompt enough so that no delay takes place in lifting of goods in future."

KVL, J WP No.4780 of 2021

14. Pursuant to the said letter, the Under Secretary, Government of

India addressed a letter to the Principal Secretary (Food), Government of

AP, requesting to take appropriate and immediate action with regard to

lifting of jute bags to resolve the problem.

15. The second tender dated 31.12.2020 was called for, after the said

letter of the second respondent dated Nil.12.2019, with the same

conditions. Except alleging that the said tender was also cancelled at the

behest of the second respondent, no material is placed before the Court

to substantiate the same.

16. Even though the learned Senior Counsel contended that the

condition that prohibits the bidders, who have a pending litigation, from

participating is arbitrary, illegal and violative of his fundamental right, as

the petitioner is not disqualified/ineligible on that count, it is not necessary

for this Court to go into that aspect.

17. This Court cannot go into the aspect of requirement of the first

respondent which will depend on various aspects like, production,

previous experience etc.

18. In matters of tender and award of contract, if a decision, relating

to the award of contract, was bona fide and in public interest, Courts

would not, in the exercise of their power of judicial review, interfere

even if a procedural aberration or error in assessment or prejudice to a

tenderer was made out.

19. Although a citizen has a fundamental right, under Article

19(1)(g), to carry on a trade or business, he does not have the

fundamental right to insist that the Government, or any other

individual, should carry on business with him. The government, or the

individual concerned, has the right to enter into a contract with a

KVL, J WP No.4780 of 2021

particular person or to determine person or persons with whom he or it

will deal (Krishnan Kakkanth v. Govt. of Kerala, (1997) 9 SCC

495).

20. All that such a person can claim is that, in competing for the

contract, he should not be unfairly treated and discriminated to the

detriment of public interest. (Erusian Equipment & Chemicals Ltd.

v. State of W.B., (1975) 1 SCC 70).

21. In determining the infringement of the right, guaranteed

under Article 19(1) of the Constitution of India, 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

conditions at the time, enter into the judicial verdict. (Laxmi

Khandsari v. State of U.P (AIR 1981 SC 873).

22. In the matter of inviting tenders, and in awarding Government

contracts, public interest is the paramount consideration. (Shree

Ostwal Builders v. State of Maharashtra, 2008 (4) Mh.LJ 404).

23. In examining the contention, urged on behalf of the petitioner,

regarding the validity of the qualification requirements stipulated in the

tender notification, Courts must remain conscious that the scope of

judicial review in such matters is extremely limited. In economic and

commercial matters, decisions are taken by the government or its

instrumentalities keeping in view several factors, and it is not possible

for the Courts to consider competing claims and conflicting interests,

and conclude which way the balance tilts. There are no objective,

justiciable or manageable standards to judge these issues nor can such

KVL, J WP No.4780 of 2021

questions be decided on a priori considerations. (Dhampur Sugar

(Kashipur) Ltd. v. State of Uttaranchal, (2007) 8 SCC 418).

24. All that the participating bidders are entitled to is a fair, equal

and non-discriminatory treatment (Tata Cellular v. Union of India,

((1994) 6 SCC 651 : AIR 1996 SC 11).

25. Courts are, generally, slow to interfere in such matters, unless it

is shown that the decision is tainted by lack of fairness in procedure,

illegality and irrationality.

26. Before interfering in tenders or contractual matters, in the

exercise of its power of judicial review, the Court should pose to itself

the following questions : (i) Whether the process adopted or decision

made by the authority is mala fide or is intended to favour someone or

the process adopted or the 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 the relevant law

could have reached'; and (ii) Whether public interest is affected. If the

answers are in the negative, there should be no interference in

proceedings under Article 226 of the Constitution of India. (M/s.

Michigan Rubber (India) Ltd (supra);

27. 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. Though that decision is not amendable to judicial review,

the Court can examine the decision making process and interfere if it is

found vitiated by mala fides, unreasonableness and arbitrariness. (Air

India Ltd V. Cochin International Airport Ltd (2000) 2 SCC 617).

28. The terms, subject to which tenders are invited, are not open to

judicial scrutiny unless it is found to have been tailor-made to benefit a

KVL, J WP No.4780 of 2021

particular tenderer or class of tenderers. If a reasonable procedure has

been followed, the decision should not be challenged except on the

Wednesbury principle of reasonableness and, unless the decision is so

unreasonable that no sensible person would have arrived at such a

decision, it should not be upset. (New Horizons Ltd v. Union of

India (1995) 1 SCC 478).

29. The nature of qualification requirements to be stipulated, in the

tender notification by the tendering authorities, would depend on the

nature of the work to be executed and the quantity and quality of

material required, are all the matters for the contractee to determine.

Save prescription of tender conditions for extraneous reasons, or where

the stipulated qualification requirements are so arbitrary and

unreasonable as to violate Article 14 of the Constitution of India,

interference by this Court would not be justified. In examining the

validity of the qualification requirements, prescribed in the tender

notification by the contractee, this Court must remain conscious of its

lack of expertise in these matters, and should, ordinarily, defer to the

wisdom of experts who have designed such conditions.

30. The purpose of judicial review is to check whether the choice or

decision is made 'lawfully', and not to check whether the choice or

decision is 'sound'. Attempts by persons 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 to

persuade courts to interfere by exercising the power of judicial review,

should be resisted. (B.S.N. Joshi v. Nair Coal Services Ltd, (AIR

2007 SC 437).

KVL, J WP No.4780 of 2021

31. Learned Senior Counsel for the petitioner has relied upon the

judgment in IBC Limited (supra) for the proposition that the rule

inhibiting arbitrary action by the Government would equally apply to a

Corporation dealing with public, whether by way of giving jobs or entering

into contracts, or otherwise, and it cannot act arbitrarily and that its

actions must be in conformity with some principle which meets the test of

reason and relevance.

32. There is no dispute with regard to said proposition and such a plea

is not taken by the respondents.

33. The second judgment relied upon by the learned counsel for the

petitioner is on Reliance Telecom Limited (supra) for the proposition

that power of judicial review would be called for if the approach is

arbitrary and mala fide or the procedure adopted is meant to favour

someone. In the said judgment, three-Judge Bench judgment in Tata

Cellular's case (supra) has been relied upon. In the said judgment it

was observed that the Court does not have the expertise to correct the

administrative decision and 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. It was further held in the said case

that the terms of the invitation to tender cannot be open to judicial

scrutiny because the invitation to tender is in the realm of contract and

the Government must be allowed to have a fair play in the joints as it is a

necessary concomitant for an administrative body functioning in an

administrative sphere or quasi-administrative sphere. It was also

observed that the decision must not only be tested by the application of

Wednesbury principle of reasonableness but must also be free from

arbitrariness and must not be affected by bias or actuated by mala fides

KVL, J WP No.4780 of 2021

and while quashing decisions, burden on the administration and increase

in expenditure have to be kept in view.

34. In Monarch Infrastructure (P) Ltd. v. Ulhasnagar Municipal

Corpn. and Ors5, the Hon'ble Supreme Court was concerned with the

question relating to NIT issued by Ulhasnagar Municipal Corporation for

appointment of agents for collection of octroi and revision of terms and

conditions thereof. The Court held that it cannot say whether the

conditions are better than what were prescribed earlier, for in such

matters, the authority calling for tenders is the best judge. The Court

declined to restore status quo ante.

35. In Union of India v. International Trading Co. and Anr6, the

Hon'ble Supreme Court held that non-renewal of permit by the

Government to a private party on the ground of change in its policy

cannot be faulted if such change is founded on reasonableness and is

otherwise not arbitrary, irrational and perverse. It was observed that if the

State acts within the bounds of reasonableness, it would be legitimate to

take into consideration the national priorities and adopt trade policies and

the ultimate test is whether, on the touchstone of reasonableness, the

policy decision comes out unscathed. It further ruled that reasonableness

of restriction is to be determined in an objective manner and from the

standpoint of the interests of the general public and not from the

standpoint of the interests of the persons upon whom the restrictions

have been imposed or upon abstract consideration. A restriction cannot be

said to be unreasonable merely 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

(2000) 5 SCC 287

(2003) 5 SCC 437

KVL, J WP No.4780 of 2021

of the restriction imposed, the extent and urgency of the evil sought to be

remedied thereby, the disproportion of the imposition and the prevailing

condition at the relevant time enter into the judicial verdict. The Court

further held that the reasonableness of the legitimate expectation has to

be determined with respect to the circumstances relating to the trade or

business in question and canalisation 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.

36. In Directorate of Education v. Educomp Datamatics Ltd. and

Ors.7, the Hon'ble Supreme Court, applying the principles enunciated in

Tata Cellular (supra) and Monarch Infrastructure (P) Ltd. (supra),

held 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; that it must

have reasonable play in its joints as a necessary concomitant for an

administrative body in an administrative sphere and the courts would

interfere with the administrative policy decision only if it is arbitrary,

discriminatory, mala fide or actuated by bias and 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.

37. In Global Energy Ltd. and Anr. v. Adani Exports Ltd. and

Ors8, the Hon'ble Supreme Court reiterated the principles that the terms

of the invitation to tender are not open to judicial scrutiny and the courts

(2004) 4 SCC 19

(2005) 4 SCC 435

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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.

38. In Master Marine Services (P) Ltd. v. Metcalfe &

Hodgkinson (P) Ltd. and Anr9, the Hon'ble Supreme Court, after

referring to the principles stated in Tata Cellular (supra), observed that

the government policy can be changed with changing circumstances and

only on the ground of change, such policy will not be vitiated and the

Government has discretion to adopt a different policy or alter or change

its policy calculated to serve the public interest and make it more effective

as the choice in the balancing of the pros and cons relevant to the change

in policy lies with the authority, but change in policy must be in conformity

with Wednesbury reasonableness and free from arbitrariness, irrationality,

bias and malice.

39. In Maa Binda Express Carrier and Anr. v. North-East

Frontier Railway and Ors10, the Hon'ble Supreme Court held that the

bidders participating in the tender process cannot insist that their tenders

should be accepted simply because a given tender is the highest or

lowest.

40. In Census Commissioner and Ors. v. R. Krishnamurthy11, a

three-Judge Bench of this Court, after noting several decisions, held that it

is not within the domain of the courts to embark upon an enquiry as to

whether a particular public policy is wise and acceptable or whether a

better policy could be evolved and the courts can only interfere if the

policy framed is absolutely capricious or not informed by reasons or totally

arbitrary and founded ipse dixit offending the basic requirement of Article

(2005) 6 SCC 138

(2014) 3 SCC 760

(2015) 2 SCC 796

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14 of the Constitution. It further observed that in certain matters, as often

said, there can be opinions but the court is not expected to sit as an

appellate authority on an opinion.

41. Learned Government Pleader has relied upon a decision reported in

Meerut Development Authority v. Association of Management

Studies12, wherein it was held as follows.

"WHAT IS THE NATURE OF RIGHTS OF A BIDDER PARTICIPATING IN THE TENDER PROCESS?

A tender is an offer. It is something which invites and is communicated to notify acceptance. Broadly stated it must be unconditional; must be in the proper form, the person by whom tender is made must be able to and willing to perform his obligations. The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. However, a limited judicial review may be available in cases where it is established that the terms of the invitation to tender were so tailor made to suit the convenience of any particular person with a view to eliminate all others from participating in the biding process.

The bidders participating in the tender process have no other right except the right to equality and fair treatment in the matter of evaluation of competitive bids offered by interested persons in response to notice inviting tenders in a transparent manner and free from hidden agenda. One cannot challenge the terms and conditions of the tender except on the above stated ground, the reason being the terms of the invitation to tender are in the realm of the contract. No bidder is entitled as a matter of right to insist the Authority inviting tenders to enter into further negotiations unless the terms and conditions of notice so provided for such negotiations."

(2009) 6 SCC 171

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42. In Michigan Rubber (India) Limited (supra), the Hon'ble

Supreme Court observed as follows.

"21. In Jagdish Mandal v. State of Orissa and Ors. MANU/SC/0090/2007 : (2007) 14 SCC 517, the following conclusion is relevant:

"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. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions:

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(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone;

OR Whether the process adopted or decision made is so arbitrary and irrational that the court can say: "the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached";

(ii) Whether public interest is affected.

If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.

22. The same principles have been reiterated in a recent decision of this Court in Tejas Constructions and Infrastructure Pvt. Ltd. v. Municipal Council, Sendhwa and Anr. MANU/SC/0406/2012 : (2012) 6 SCC 464.

23. From the above decisions, the following principles emerge:

(a) the basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness 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

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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.

..........................

35. As observed earlier, the Court would not normally interfere with the policy decision and in matters challenging the award of contract by the State or public authorities. In view of the above, the Appellant has failed to establish that the same was contrary to public interest and beyond the pale of discrimination or unreasonable. We are satisfied that to have the best of the equipment for the vehicles, which ply on road carrying passengers, the 2nd Respondent thought it fit that the criteria for applying for tender for procuring tyres should be at a high standard and thought it fit that only those manufacturers who satisfy the eligibility criteria should be permitted to participate in the tender. As noted in various decisions, the Government and their undertakings must have a free hand in setting terms of the tender and only if it is arbitrary, discriminatory, mala fide or actuated by bias, the Courts would interfere. The Courts 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

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fair, wiser or logical. In the case on hand, we have already noted that taking into account various aspects including the safety of the passengers and public interest, the CMG consisting of experienced persons, revised the tender conditions. We are satisfied that the said Committee had discussed the subject in detail and for specifying these two conditions regarding pre-qualification criteria and the evaluation criteria. On perusal of all the materials, we are satisfied that the impugned conditions do not, in any way, could be classified as arbitrary, discriminatory or mala fide."

43. In Bharat Coking Coal Limited (supra), the Hon'ble Supreme

Court observed as follows.

"(I) Maintainability of Writ Petition

29. The scope of judicial review in tenders has been explored in-depth in a catena of cases. It is settled that constitutional courts are concerned only with lawfulness of a decision, and not its soundness.1 Phrased differently, Courts ought not to sit in appeal over decisions of executive authorities or instrumentalities. Plausible decisions need not be overturned, and latitude ought to be granted to the State in exercise of executive power so that the constitutional separation of powers is not encroached upon.2 However, allegations of illegality, irrationality and procedural impropriety would be enough grounds for courts to assume jurisdiction and remedy such ills. This is especially true given our unique domestic circumstances, which have demonstrated the need for judicial intervention numerous times. Hence, it would only be the decision-making process which would be the subject of judicial enquiry, and not the end result (save as may be necessary to guide determination of the former).

30. This position of law has been succinctly summed up in Tata Cellular v. Union of India (supra), where it was famously opined that:

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77.... 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.
         .............

32. In cases where a constitutional right is infringed, writs would ordinarily be the appropriate remedy. In tender matters, such can be either when a party seeks to hold the State to its duty of treating all persons equally or prohibit it from acting arbitrarily; or when executive actions or legislative instruments are challenged for being in contravention to the freedom of carrying on trade and commerce. However, writs are impermissible when the allegation is solely with regard to violation of a contractual right or duty. Hence, the persons seeking writ relief must also actively satisfy the Court that the right it is seeking is one in public law, and not merely contractual. In doing so, a balance is maintained between the need for commercial freedom and the very real possibility of collusion, illegality and squandering of public resources.

33. Such a proposition has been noticed by this Court even earlier in Jagdish Mandal v. State of Orissa MANU/SC/0090/2007 : (2007) 14 SCC 517 in the following words:

"22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality,

KVL, J WP No.4780 of 2021

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."

44. In the light of the law laid down by the Hon'ble Supreme Court in

the judgments referred to above, the powers of judicial review are limited

and while exercising such power the Court has to see whether the process

adopted or decision made by the authority is mala fide or is intended to

favour someone or is so arbitrary and irrational that no reasonable

authority acting reasonably and in accordance with the relevant law could

have reached to such a conclusion and as to whether public interest is

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affected. Even though mala fides are pleaded, the same could not be

proved as discussed in the previous paras. In the light of the facts of the

present case, it cannot be said that the conditions are onerous and

reasons are given by the first respondent with regard to the enhancement

of basic requirements. Judicial review is concerned, with reviewing not

the merits of the decision by an executive authority, but the decision

making process itself. This Court cannot go into the aspect of

requirement of the first respondent which will depend on various

aspects like, production, previous experience etc.

45. The Hon'ble Supreme Court, in its latest judgment decided on

08.12.2020 and reported in the State of Madhya Pradesh v. U.P.

State Bridge Corporation Limited13, observed as under.

"13. We have heard all the learned counsel for the parties. The parameters of judicial review in matters such as the present have been well stated in many decisions of this Court, beginning with the celebrated Tata Cellular v. Union of India, (1994) 6 SCC 651, in which a 3 judge bench of this Court laid down the following principles:

"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

2021(1) JLJ 173

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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 out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.