Unibros vs Ah India Radio And Ors.
1995 Latest Caselaw 511 Del

JUDGMENT

M.K. Sharma, J.

(1) The petitioners have preferred this writ petition seeking a writ of mandamus for setting aside/quashing the award of contract on 28.3.1995 itself to respondent No. 4 for the construction of Doordarshan Bhawan, Mandi House, Phase Ii, New Delhi, with a further direction to the respondents to award the work/contract relating to construction of Doordarshan Bhawan, Mandi House, Phase Ii, New Delhi (Superstructure) to the petitioners. In the writ petition the following prayers have been made by the petitioners:-

1.This Hon'ble Court may graciously be pleased to issue a writ/order or direction in the nature of certiorari/mandamus or any other appropriate writ, direction selling aside/quashing the decision of considering again on 28.3.1995 at 4 P.m. the tender for construction of Doordarshan Bhawan - Mandi House, Phase Ii, New Delhi and quash award of contract on 28.3.1995 itself to respondent No.4.

2.Issue a writ of mandamus directing the respondent to award the work/contract relating to "construction of Doordarshan Bhawan, Mandi House, Phase 11, New Delhi - Super structure to the petitioners".

3.Issue appropriate writ/direction restraining the respondents from awarding the work/contract relating to construction of Doordarshan Bhawan, Mandi House, Phase 11, New Delhi - Super structure to any other agency except petitioners.

(2) The petitioners earlier approached this court in a writ petition namely - C.W.P. No. 3426/ 1994 with the prayer for quashing/setting aside the conditions in the press notice dated 27.6.1994, inasmuch as, according to the petitioners, the said conditions were said to be arbitrary and irrational. This court by judgment and order dated 7.2.1995 allowed the writ petition holding that the petitioners should be allowed to exercise their right to tender in respect of the works as mentioned in the press-tender notice, in view of the fact that the conditions mentioned in the impugned press tender notice in the light of the facts appeared to he arbitrary and untenable. During the course of the hearing of the said writ petition the respondents brought to our notice that an action for blacklisting of the petitioners in C.W.P. 4388/1994 by the respondents was pending. However, as on the dale of disposal of the writ petition No.3426/1994 the petitioners were not blacklisted, it was held by this court in the said judgment that the said fact had no relevance to the facts and circumstances of the case and that the petitioners could not be deprived of their right to participate in the tender proceedings.

(3) During the pendency of the aforesaid writ petition No.3426/1994 an order was issued by the Chief Engineer (Civil), All India Radio, Civil Construction Wing, New Delhi on l0).10).1994 debarring petitioners from tendering against the works in the Construction Wing of All India Radio and the banning of business with the petitioners. In view of the aforesaid order dated 10.10.1994 the petitioners again moved this court seeking to challenge the said order in C.W.P. 4388/1994. This court issued notice on the writ petition to the respondents. The writ petition No.3426/1994 as slated hereinabove was disposed of on 7.2.1995.

(4) In pursuance of the directions issued by this court on 7.2.1995 in C.W.P. 3426/1994 the respondents constituted a Works Advisory Board for Consideration of awarding tender for the work of construction of Doordarshan Bhawan, Mandi House, Phase Ii, (Superstructure). The said Works Advisory Board, it appears, approved the acceptance of the lowest lender submitted by the petitioners. However, on 27.3.1995 a notice was issued fixing 28.3.1995 for reconsidering the tenders for construction of work in dispute and finally on 28.3.1995 the contract for construction of the aforesaid work was awarded to the respondent No.4. Being aggrieved by the aforesaid award of contract in favor of the respondent No.4 by the department the petitioners have filed the present Writ petition.

(5) This court issued notice on the writ petition on 30.3.1995 and on the slay application No.C.M.2055/1995 filed Along with the writ petition notice was issued with a further direction that any final decision taken in the matter would he subject to orders, if any, to be passed in this writ petition.

(6) The respondents appeared in the present writ petition and filed their counter affidavits. This court however, on 8.5.1995 after hearing the counsel for the parties, passed the following order:

"FURTHER to our judgment dated 7.2.1995 it appears that the tender of the petitioner Along with others including that of the 4th respondent was considered and decision taken to award the contract to the petitioner. That was in the meeting of the Works Advisory Board dated 24.2.1995. Thereafter another meeting of this Board was held on 28.3.1995 on a communication received from the Ministry of Information and Broadcasting. That Communication is to the following effect:

'GOVERNMENTis not accepting the Works Advisory Board's decision to award the work relating to construction of Mandi House Phase Ii (Super structure) to the firm M/s. Uni Brothers. The Works Advisory Board may be requested to consider the tenders of other parties, overlooking the lender filed by M/s. Uni Brothers.'

'WEhave also been shown the opinion given by the Ministry of Law on a reference made to it by the Ministry of Information and Broadcasting 'Whether contract should be awarded to the petitioner on the ground that there was some false verification furnished by the petitioner firm on a vital matter and the proceedings for blacklisting the firm had been on an advanced stage'.

ON that very basis it would appear that the Ministry of Law advised that the tender of the petitioner could be overlooked. The question of blacklisting was Very much agitated before us and we have said some thing about that in our judgment. We had also directed by that judgment to consider the tender on merits. That appears not to have been done. On the request of counsel for the respondent we will list this matter on 19.5.1995. Meanwhile we direct that the status quo as of today shall be maintained."

(7) In the mean time, as stated above, being aggrieved by the order dated 10.10.1994 the petitioners challenged the same in this court through C.W.P.No.4388/1994. The said writ petition came up for hearing before this court and after hearing the learned counsel for the parties this court directed the respondents to issue a show cause notice to the petitioners in the proceedings, for blacklisting, against which the petitioners were directed to submit their reply and thereafter to fix the matter for affording personal hearing to the petitioners, if they so desire, and complete the entire proceedings within 10 days thereafter. In the said order it was further observed that before taking a final decision in the matter the respondents should give a personal hearing to the petitioners and would definitely take into consideration the contentions of the petitioners raised before this court and also the papers which might-be placed on behalf of the petitioners.

(8) In pursuance of the aforesaid directions and orders passed by this court in C.W.P. 4388/1994, it appears that show cause notice was issued to the petitioners by the respondents, in reply to which the petitioners submitted their show cause replies and the petitioners were also heard in the proceedings. Thereafter the respondents have passed an order on 15.6.1995 under the signatures of the Joint Secretary to the Government of India, banning the petitioners and its allied firms and partners from business dealings with the Ministry of Information and Broadcasting and its attached subordinate offices for a period of 10 years with immediate effect holding that the petitioners were guilty of malpractice and deliberately and knowingly gave false information and misled the department into pre-qualifying them and thereby securing advantage to them. Against the aforesaid order the petitioners preferred another writ petition which was registered and numbered .as C.W.2295/1995 wherein notices were issued to the respondents on 21.6.1995 to show cause as to why the petition be not admitted. In the connected C.M. 3852/1995 notice was issued to the respondents. However, no interim order was passed by this court on the said miscellaneous application filed by the petitioners.

(9) Mr. Mukul Rohtagi appearing for the petitioners in the present writ petition submitted before us that awarding the contract to respondent No.4, after the Works Advisory Board found the petitioner to be most suitable contractor and approved the acceptance of the lowest tender submitted by the petitioner, is illegal. According to the learned counsel the actions of the respondents in awarding the contract in favor of respondent No.4, inspite of approval of the lowest tender of the petitioners in its earlier meeting, totally ignoring the lender of the petitioners smacks of arbitrariness and fraud and that the respondents have exercised the power for collateral purposes,

(10) Mr. K.T.S.Tulsi, learned Additional Solicitor General appearing for the respondents however, submitted that it is not expected of the respondents to award a contract to the petitioners against whom an action was proposed for blacklisting for furnishing deliberately and knowingly false information and misleading the department into pre-qualifying them. He further submitted that the courts should always exercise restraint in setting aside or interfering with the decision of the Executive authority in the realm of contract. Mr. Tulsi submitted that the contract in question for the building of Doordarshan Bhawan, Mandi House, Phase Ii, New Delhi, which is an important project of national character could not be awarded all this period because of the pendency of various proceedings in this court by the petitioner, and since the contract has now been awarded to respondent No.4 any delay in execution of the same will not be in public interest.

(11) Mr. Arvind Kumar, learned counsel appearing for respondent No.4, also submitted that since the contract has already been awarded in his favor there should not be further interference by this court inasmuch as after negotiations on the price of the contract he had become the lowest tenderer. He further submitted that the respondent No.4 has already made a huge expenditure towards mobilisation and accordingly the writ petition should be dismissed.

(12) We have given our careful consideration to the submissions made by the learned counsel for the parties. While disposing of the writ petition No.3426/1994 this court had specifically held that as the petitioners have not been blacklisted they could not be deprived of their right to participate in the tender proceedings. Subsequent to the aforesaid judgment dated 7.2.1995-it appears that the tender of the petitioners Along with others including that of the 4th respondent was considered and decision taken to award the contract to the petitioners. The said decision was taken in the meeting of the Works Advisory Board dated 28.2.1995. Thereafter however, another meeting of the Board was held on 28.3.1995 on a communication from the Ministry of Information and Broadcasting which, inter alia, stated in the following manner: "Government is not accepting the Works Advisory Board's decision to award the work relating to construction of Mandi House Phase Ii (Superstructure) to the firm M/s. Uni Brothers. The Works Advisory Board may be requested to consider the tenders of other parties, overlooking the tender filed by M/s. Uni Brothers."

(13) Our attention was also drawn to another opinion given by the Ministry of Law on a reference made to it by the Ministry of Information and Broadcasting on the issue as to whether the contract should be awarded to the petitioners on the ground that there was some false verification furnished by the petitioners firm on a vital matter and the proceedings for blacklisting the firm were at an advanced stage. The Ministry of Law advised that the tender of the petitioner could be overlooked.

(14) Considering the entire facts and circumstances of the case including the aforesaid communication and advice given by the Ministry of Law, this court in the present writ petition by order dated 8.5.1995 held that the question of blacklisting was very much agitated before this court and it considered the said aspect of the matter in the judgment dated 7.2.1995 passed in C.W.P. 3426/1994. Since this court directed the respondents by said judgment dated 7.2.1995 to consider the tender of the petitioners and other tenderers on merits and the same having not been done, this court directed that the status quo as on 8.5.1995 should be maintained.

(15) However, subsequent to the passing of the aforesaid order dated 8.5.1995 further events have taken place so far as the petitioners are concerned. Show cause notice in respect of blacklisting the petitioners was issued by the Respondent, in reply to which the petitioners filed their answer and upon hearing the petitioners a final order banning the petitioners and its allied firms and partners in business from dealing with the Ministry of Information and Broadcasting and its subordinate offices for a period of 10 years has already been passed. Though the aforesaid orders and actions have formed part of a separate writ petition being C.W.P. No.2295/1995 no interim order has been passed by this court in respect of the said impugned order. The High Court while exercising writ powers can always take note of subsequent events for the purpose of granting or refusing relief to the petitioners. In view of the subsequent events banning the petitioners , business dealings with the Ministry of Information and Broadcasting and its attached subordinate offices for a period of 10 years, the relief prayed for in the present writ petition cannot be granted to the petitioners, in as much as, no direction could be given by this court to the respondents to award the work/contract relating to the construction of Doordarshan Bhawan, Mandi House, Phase Ii, New Delhi (superstructure) to the petitioners as they have been banned from getting such contract for another 10 years. Besides the Supreme Court in the case of Tata Cellular Vs. Union of India; has held thus:- "IT cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favoritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government.- But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. ' The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down."

AGAIN in paragraph 94, it has been held as follows:-

"THE principles deducible from the above ate:

(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 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 view of the aforesaid principles laid down by the Supreme Court and also in view of the subsequent events that had taken place so far as the petitioners arc concerned as they have since become debarred from being awarded with contract of this nature by the respondents, and also considering the public interest involved in the case as the present contract relates to an important construction work namely - Mandi House, Phase Ii (Superstructure), we dismiss this writ petition &nd also vacate the interim order passed on 8.5.1995. We however, leave the parties to bear their own costs.