Jammu & Kashmir High Court - Srinagar Bench

M/S Bhat Constructions vs Ut Of Jammu And Kashmir And Ors on 4 February, 2021

            HIGH COURT OF JAMMU AND KASHMIR
                      AT SRINAGAR


                                                  WP(C ) 2111/2020,
                                                  CM Nos. 6719/2020,
                                                  6718/2020


                                                  Reserved on : 27.01.2021
                                                  Pronounced on: 04 .02.2021



M/S Bhat Constructions
                                                             .....petitioner(s)

                         Through :- Mr. Altaf Mehraj Advocate.


               V/s

UT of Jammu and Kashmir and ors                     .....Respondent(s)
                     Through :- Mr. Irfan Andleeb Dy.AG




Coram: HON'BLE MR. JUSTICE SANJAY DHAR, JUDGE



                               JUDGMENT

1 Through the medium of instant petition, the petitioner has challenged

Cancellation Notice bearing No. PHQ\3516-22 dated 17/12/202 in terms

whereof e-NIT No. 23 of 2020-21 for item No.1 has been cancelled. A

further direction to the respondents to open the financial bid of the

petitioner along with other eligible tenderers for e-NIT No.23 and to allot

the contract for Retrofitting of Water Supply Scheme Waltengoo in favour

of the lowest tenderer in terms of e-NIT No. 23 of 2020-21 has also been

sought against the respondents. Apart from the above, the petitioner has 2 WP(C ) 2111/2020

also prayed for a Writ of Prohibition, restraining the respondents from

issuing a fresh tender for the aforementioned works.

2 As per case of the petitioner, vide e-NIT bearing no 23/PHEQ of

2020-21 dated 25/09/2020, respondent No.4 issued a tender notice for the

purpose of execution of various works including the work pertaining to

Retrofitting of Water Supply Scheme Waltengoo by way of providing,

laying and fitting of pipes, construction of chain link fencing around SR

Chitergam, laying of dome to existing RR at Wasaknag, including

installation of 198 numbers FHTC's for WSS Waltengoo (under JJM). The

petitioner is stated to have offered his bid in response to the aforesaid

tender notices. As per the contents of the tender notice bearing 23/PHEQ

of 2020-21, the technical bid was to be opened on 07.10.2020.

3 It is the case of the petitioner that regarding item No.1 of e-NIT

No. 23, only two tenderers/bidders including the petitioner had qualified

for the said item in the technical bid. It is contended that having qualified

in the technical bid for item No.1 as aforestated, the petitioner- firm was

having legitimate expectation to qualify in the financial bid in respect of

the aforesaid item which would have entitled it to grant of contract for the

aforesaid work, but the respondents, in terms of the impugned notice dated

17.12.2020 cancelled e-NIT bearing No. 23 of 2020 so far as it pertained

to certain items including item No.1.

4 The petitioner has challenged the aforesaid Cancellation Notice on

the grounds that the action of the respondents is shrouded in mala fides;

that the action of cancellation of e-NIT by the respondents is unreasonable

and unjustified in law; that by the impugned action of the respondents,

larger public interest has been harmed, inasmuch as the work, that was to 3 WP(C ) 2111/2020

be executed, was for the benefit of the public at large; that the ground on

which the impugned notice of cancellation has been issued by the

respondents, is not plausible; that the impugned actions of the respondents

are violative of the rights of the petitioner as it had a legitimate expectation

of being the successful bidder for allotment of the contract.; that the

respondents have resorted to selective cancellation of e-NIT No. 23 while

allowing it to proceed in respect of certain other items.

5 The writ petition has been resisted by the respondents by filing reply

thereto. In their reply, the respondents have submitted that none of the

rights of the petitioner has been violated due to the impugned action of the

respondents, as such, the petition itself is not maintainable. On merits, it

has been submitted that after undertaking technical evaluation of the bids it

was found that only two tenders were received for item No.1 of e-NIT

No. 23 and both the bidders had served notices under Section 80 of CPC

challenging the qualification of technical bid of each other. According to

the respondents, in such an atmosphere coupled with the fact that there was

meager experience of the bidders for execution of similar works, the

respondents were prompted to resort to cancellation of tender and,

accordingly, e-tendering process was cancelled and a decision was taken to

float fresh tender so as to have healthy competition. The respondents have

also disputed the experience of the petitioner in execution of works. It has

also been contended that because only two bids were received, as such,

there was very poor competition which prompted the respondents to cancel

the tender and invite fresh tenders.

6 I have heard learned counsel for the parties and perused the record.

                                      4           WP(C ) 2111/2020



7     The main ground urged by the petitioner during the course of

arguments is that the petitioner had qualified the technical bid and, as

such, legitimate expectation had arisen in its favour that its bid would have

found favour with the respondents which would have paved way for award

of contract in its favour. The other ground urged by the petitioner is that the

action of the respondents is arbitrary and illegal, inasmuch as they have

resorted to cancellation of tender only in respect of selective items and not

in respect of all the items.

8 Before embarking on determination of the merits of the aforesaid

submissions of learned counsel for the petitioner, let me analyze the scope

of jurisdiction of the Court to review the decisions of the public authorities

in matters relating to tenders.

9 The Supreme Court in the case of Tata Cellular v. Union of India,

(1994) 6 SCC 651, has laid down the principles relating to scope of

judicial review in contract and tender matters in the following words:

"(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 WP(C ) 2111/2020

(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"

10 In Dwarkadas Marfatia and Sons v. Port of Bombay,(1989) 3

SCC 293, the Supreme Court has held that the constitutional courts are

concerned with the decision making process and that if a decision, having

been arrived at through a valid process, is challenged, the constitutional

courts can interfere if the decision is perverse. The Court further observed

that the constitutional courts are expected to exercise restraint in interfering

with the administrative decisions and ought not to substitute its view for

that of the administrative authority.

11 In Central Coalfields Limited and another v. SLL- SML (Joint

Venture Consortium) and others, (2016) 8 SCC 622, it was held that the

decision making process of the employer or owner of the project in

accepting or rejecting the bid of a tenderer should not be interfered with

and that the interference is permissible only if the decision making process

is mala fide or is intended to favour someone. The Court further went on to

hold that the decision should not be interfered with unless the decision is so

arbitrary and irrational that the Court could say that the decision is one 6 WP(C ) 2111/2020

which no responsible authority acting reasonably and in accordance with

law could have reached. In other words, the decision-making process or

the decision should be perverse and not merely faulty or incorrect or

erroneous.

12 In Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517, the

Supreme Court laid down tests for judicial interference in administrative

actions. The same are reproduced as under:

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

(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 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."

13 In the backdrop of aforesaid legal position and bearing in mind that

scope of judicial review in administrative matters, especially in those

pertaining to tender matters, is very limited, let me now advert to the facts

of the instant case.

14 The first ground urged by the petitioner is that upon being successful

in the technical bid, the petitioner had a legitimate expectation of getting

the contract. Per contra, the respondents have contended that no right

much less an enforceable legal right had accrued in favour of the petitioner

merely upon submission of its bid.

                                     7           WP(C ) 2111/2020



15    In the instant case, there is no dispute to the fact that the tender has

been cancelled by the respondents at a stage when even the financial bid

was not opened. The petitioner had merely submitted its bid in response to

the tender notice and, according to it, it had qualified the technical bid.

Although, the petitioner has placed on record some office noting to support

his contention that he had qualified the technical bid, yet there is nothing

authentic on record to substantiate this fact. In fact, the respondents have

specifically stated in their reply that petitioner did not have the necessary

work experience. Be that as it may, the fact remains that the respondents

have cancelled the tender notification in respect of the item regarding

which the petitioner had submitted its bid at a stage when the said bid was

yet to be accepted. A tender notice is nothing more than an invitation to

offer. Unless the offer of tenderer in response to such an invitation is

accepted is accepted by the employer, it cannot be stated that a concluded

contract has taken place between the parties.

16 In the backdrop of aforesaid facts, the question, that arises for

consideration, is about the scope of the Writ Court to interfere in matters

pertaining to cancellation of tenders at a stage when the bids are yet to be

accepted.

17 The Supreme Court had an occasion to rule on the scope of judicial

review into the cancellation/discharge of a tender process after submission

of bids/tenders in the Judgment reported at (2014) 3 SCC 760, Maa Binda

Express Carrier and another vs Northeast Frontier Railway and ors.

So far as the right of participants in the bid is concerned, in para 8 of the

said judgment, the Supreme Court has held as under:

"The scope of judicial review in matters relating to award of contract by the State and its instrumentalities is settled by a 8 WP(C ) 2111/2020

long line of decisions of this Court. While these decisions clearly recognize that power exercised by the Government and its instrumentalities in regard to allotment of contract is subject to judicial review at the instance of an aggrieved party, submission of a tender in response to a notice inviting such tenders is no more than making an offer which the State or its agencies are under no obligation to accept. The bidders participating in the tender process cannot, therefore, insist that their tenders should be accepted simply because a given tender is the highest or lowest depending upon whether the contract is for sale of public property or for execution of works on behalf of the Government. All that participating bidders are entitled to is a fair, equal and non-discriminatory treatment in the matter of evaluation of their tenders. It is also fairly well-settled that award of a contract is essentially a commercial transaction which must be determined on the basis of consideration that are relevant to such commercial decision. This implies that terms subject to which tenders are invited are not open to the judicial scrutiny unless it is found that the same have been tailor made to benefit any particular tenderer or class of tenderers. So also the authority inviting tenders can enter into negotiations or grant relaxation for bona fide and cogent reasons provided such relaxation is permissible under the terms governing the tender process".

18 This Court, in the case of Drangdhuran Hydro Power

Consortium and another Vs Chenab Valley Power Projects Private

Limited and others (OWP No.635/2016, decided on 28.01.2017) while

upholding the cancellation of tender notices and issuance of fresh tenders,

held that such actions are immune from judicial review in the absence of

mala fide, prejudice, unreasonableness, arbitrariness and extraneous

consideration.

                                        9              WP(C ) 2111/2020



19    From the aforesaid enunciation of law on the subject, it is clear that

participating   bidders   are   only       entitled    to   a   fair,   equal   and

non-discriminatory treatment in the matter of evaluation of their tenders

and they have no right to insist that their tenders should be accepted.

Unless it is shown that the process adopted or the decision taken by the

respondents with regard to cancellation of tender is mala fide or intended

to favour someone, a tenderer has no right to challenge the same. In the

instant case, although the petitioner has made a vague allegation that the

action of the respondents is mala fide in nature, but neither there is any

specific allegation, nor it has been pleaded as to who is the intended

beneficiary of the action of the respondents. Therefore, the petitioner has

failed to show that the action of cancellation of tender by the respondents is

shrouded in mala fides or favoritism.

20 It has been further contended by learned counsel for the petitioner

that the petitioner had a legitimate expectation of getting the award of

contract in its favour after submitting the bid and after succeeding in the

technical bid. Although, it is disputed by the respondents that the petitioner

had succeeded in the technical bid, yet assuming that the petitioner did so,

still then even in such eventuality, the Court is required to consider as to

whether the respondents had made a representation or held out a promise

to grant contract to the petitioner. Further, even if it could be held that

there was a promise or representation made by the authorities to the

petitioner, it has to be shown that such a promise or representation gives

rise to a basis for holding the Government bound by the same.

21 In the instant case, there was no promise made by the respondents to

grant the contract to the petitioner. The cancellation of tender took place at 10 WP(C ) 2111/2020

a stage when only bids were invited by respondents and even the financial

bids were not opened. Thus, there is no question of holding the respondents

bound by any promise which, in the facts and circumstances of the case,

was not even in existence. Even otherwise, the Government is well within

its powers to withdraw from its representation/promise or change its policy

if the same is in public interest.

22 Apart from the above circumstances, in the instant case, only two

bids were received by the respondents in response to the tender notice

which means that there was poor response to it. The respondents were,

therefore, well within their rights to cancel the entire process and issue

fresh tenders to explore the possibility of having a healthy competition. In

fact, clause 14 of the tender notice authorizes respondent No. 2 to reject

any or all tenders without assigning any reasons thereof. It reads as under:

"14.0 The Chief Engineer PHE Kashmir/Superintending Engineer Hydraulic Circle Anantnag/Kulgam/Anantnag HQ; Anantnag/Executive Engineer, PHE Division, Qazigund ( (whichever applicable) reserves the right to postpone the tendersubmission/opening date and to accept/reject any or all tenders without assigning any resaons thereof. The decision of the Chief Engineer PHE Kashmir/Superintending Engineer Hydraulic Circle Anantnag/Kulgam/Anantnag HQ; Anantnag/Executive Engineer, PHE Division, Qazigund (whichever applicable) after assessment of suitability as per eligibility criteria shall be final and binding"

The aforesaid clause, thus, specifically entitles the tender inviting

authority to reject any or all the tenders without assigning any reasons.

23 The petitioner participated in the tender process accepting the terms

and conditions including the above condition as well. Therefore, having 11 WP(C ) 2111/2020

accepted those conditions, the petitioner is not entitled to question the

cancellation of tender notice, more particularly when it is not put to any

prejudice or hardship by such cancellation. It is not the case of the

petitioner that it could not participate in the fresh tender process, as such,

there is absolutely no prejudice against it.

23 For all the foregoing reasons, I find no merit in this petition. The

same is, accordingly, dismissed. Interim order dated 31.12.2020 passed by

this Court shall stand vacated.