Jammu & Kashmir High Court - Srinagar Bench
Unicorn Dentmart Ltd vs State Of J&K And Ors on 14 June, 2021
+--HIGH COURT OF JAMMU AND KASHMIR
AT SRINAGAR
Reserved on: 3rd of June, 2021
Announced on;14th of June,2021
OWP No. 786/2018
CM No. 5333/2019
C/W
CCP(S) No. 228/2019
1. Unicorn DentMart Ltd.
...Petitioner(s)
2. M/S Confident Dental Equipments Limited
Through:
Mr. Zubair Ahmad, Advocate in OWP No. 786/2018 for petitioner
Mr. M. I. Qadri, Sr. Advocate with Mr. Mir Naveed Gul, Advocate in
CCP(S) No. 228/2019 for petitioner
Vs.
1. State of J&K and Ors.
2. Atal Duloo and Ors.
...Respondent(s)
Through:
Mr. M. I. Qadri, Sr. Advocate with Mr. Mir Naveed Gul, Advocate in
OWP No. 786/2018 for respondent No.4
Mr. Shah Aamir, AAG in OWP No. 786/2018 as well as in CCP(S) No.
228/2019 for respondents 1 to 3
CORAM:
Hon'ble Mr Justice Ali Mohammad Magrey, Judge
JUDGMENT
01. Petitioner, a registered Company, claims to be importer and supplier
of dental chairs, equipments and gadgets and is aggrieved of the cancellation
of NIT for the procurement of "Dental Machinery Equipments" uploaded
vide No. NIT/JKMSCL/Mach/Den/2016/17 dated 27.04.2016, made in terms
of cancellation order bearing No. 12/JKMSCL of 2017 dated 26.02.2017 and
subsequent allotment of the dental machinery and equipments made in terms
of supply order dated 26.02.2018 in favour of respondent No. 4 and
challenges the same in the instant petition with further relief of directing the
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official respondents not to accept the supply of dental chairs and equipments
from respondent No. 4 and not to make any payment, on the grounds
detailed out in the petition.
Brief Facts:-
02. E-bid for procurement of dental machinery and equipments, including
the dental chairs were called vide NIT No. JKMSCL/DentalMach/2015/265
dated 07.12.2015, containing terms and conditions/general conditions and
special conditions as also the instructions to bidders and the petitioner
company being eligible states to have submitted Technical and financial bid
for the aforesaid equipments, machinery and dental chairs. The J&K
Medical Supplies Corporation Limited (hereinafter referred to respondent
Corporation), declared the petitioner company as qualified bidder for
technical bids for dental chairs along with other bidders vide Technical
Evaluation Committee decision taken in the meeting held on 14.02.2017 and
the respondents were required to open the financial bid of the qualified
bidders in tune with the terms and conditions of the NIT, but the respondents
having delayed the decision, compelled the petitioner company to file
representation on 19.01.2018, before the respondent Corporation, asking for
opening of financial bids, respondents instead of conveying the response,
cancelled the bid process in terms of impugned order and asked the bidders to
return back the samples without supplying the reasons for such cancellation
of bid. Petitioner company, therefore, approached this Court and filed a writ
petition bearing OWP No. 536/2018, seeking direction on the respondent
Corporation to finalize the tender process and open the financial bids with
further direction of seeking cancellation of supply order made in favour of
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respondent No. 4 and this Court in terms of order passed on 31.03.2018 on
consideration of the matter while issuing notice to other side, directed that in
case the supply order is made without opening of the financial bids and
without finalizing the contract, the supply order shall stay till next date of
hearing before the Bench. The writ petition is stated to have been withdrawn
on disclosure of the respondent corporation that the bid process stands
cancelled with liberty to file fresh and challenge the order of cancellation,
which order is challenged in the instant writ petition on the following
grounds:-
(I) That the cancellation of bids and subsequent placement of
supply orders with respondent No. 4 is arbitrary, illegal, malafide and
contrary to settled principles of law. It is submitted that the bidding
process was initially uploaded on 07.12.2015 and after granting
extensions in submission of bids the same was extended from time to
time and it was only on 14.02.2017, that the technical bids were finalized
and three out of four bidders were declared qualified, which included the
petitioner and the respondent No. 4. It is submitted that till 2017, two
years had elapsed and the respondents never expressed any urgency in
procurement of the dental machinery and equipments, but since they
were apprehending that the respondent No. 4 could not come as L1, so it
was in that context that the tenders were cancelled for extraneous
considerations and only with a view to confer undue favour to
respondent No. 4. Therefore, the entire action of the respondents is
arbitrary, unreasonable and violative of Article 14 of the Constitution
and the same needs to be quashed.
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(II) That as per the decision of the respondents, the tenders were
cancelled on the ground that the validity period has expired, change in
tax regime and directions conveyed by the Director Finance, Health and
Medical Education Department. It is submitted that in the order of
cancellation of bids it was directed that fresh tenders be called on
priority basis but the official respondents by misusing their official
position with a view to favour undue benefits to respondent No. 4,
resorted to board meetings for ensuring the placement of supply orders
to respondent No. 4, which on the face of it is arbitrary and contrary to
settled principles of law. It is submitted that under a plan the respondents
convened 3rd board meeting on 30.12.2016, but finalized the technical
evaluation bid on 14.02.2017, which speaks of malafides.
(III) That the respondents by taking the refuge of the board meeting
which had proposed three options for the respondents but since they
want to confer undue benefits and in a planned manner allotted the
supply orders to respondent No. 4, who is highly influential. It is also
submitted that the respondent No. 4 has been blacklisted in two states
which fact is even reflected from the communication issued by Punjab
Government. It is further submitted that the rates quoted by the petitioner
are much lower than those of respondent No. 4, therefore, the entire
action of respondents in cancelling the bids and thereafter placing supply
orders with respondent No. 4 is wholly illegal and arbitrary.
(IV) That the so called policy decision of the official respondents is
not in accordance with law as the respondents had no urgency to procure
the said equipments as the tenders were called in 2015, technical bids
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finalized in 2017 so the entire procedure in first cancelling the tenders
and then deciding to procure machinery on the basis of the rate contract
of other states is illegal, unreasonable and contrary to tendering
procedure.
(V) That on one hand the respondents alleged that they have
cancelled the tenders but on the other hand they have placed supply
orders in favour of respondent No. 4 in respect of dental equipments and
allied items in pursuance of the same tender notices.
(VI) That the respondents in league with each other have
manipulated entire records pertaining to such contract for extraneous
considerations. It is submitted that the petitioner was never informed
about any update regarding the cancellation of tenders nor the same was
uploaded on the website of the respondents. It is submitted that it was the
bounden duty of the respondents 1 to 3 to inform and intimate the
bidders regarding cancellation of the tenders and subsequent
development but the respondents 1 to 3 in a clandestine manner issued
purchase orders for procurement of dental chairs which is presently
illegal and unwarranted.
(VII) That the respondents with a view to project a confused state of
affairs have again flouted fresh tenders for procurement of dental
equipment and machinery dated 23.04.2018. It is submitted that the
procedure adopted by respondents is unfair and unreasonable, therefore,
the decision in cancelling the earlier tenders and subsequent placement
of orders with respondent No. 4 is bad in law.
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(VIII) That the action taken by respondents 1 to 3 cannot be sustained
in law as the process adopted by the respondents 1 to 3 in arriving at the
decision of procuring dental chairs on the basis of rate contract of other
states is tainted with malice and this Hon'ble court has to intervene in
order to prevent arbitrariness and favouritism.
(IX) That as per settled principles of law the object of tendering
process is not only to secure the best possible price for the Government
but also to ensure equality of treatment to all the parties intending to
compete by submitting their bids.
03. The respondent No. 2, has filed reply, wherein, it is stated that the
process of allotment of contract for supply of dental machinery
equipment initiated by the respondent Nos. 1 to 3 as per NIT No. JKMSCL/
Mach / Den / 2016/17No. 265 dated 27.04.2016 has been cancelled in terms
of order No. 120/JKMSCL of 2017 dated 26.12.2017 on reasons detailed out
in the meeting held at high level. In view of this position, the present writ
petition does not survives and as such, none of the rights of the petitioner,
fundamental or legal stand violated, therefore, the writ petition merits
dismissal.
04. That petitioner being aware of the cancellation of the NIT issued for
procurement of Dental Machinery and equipments dated 27.042016, vide
above referred cancellation order dated 26.12.2017 and the said fact has
not been brought to the notice of the Hon'ble Court, as such, the
petitioner has suppressed true and correct facts and has tried to mislead
the Hon'ble Court by such suppression, in order to obtain exparte interim
order, as such, on this ground alone the writ petition merits dismissal.
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05. That the respondent Nos. 1 to 3 had initiated a tender process, which
did not culminate into an agreement in between petitioner and respondents,
as such, no right flows from the said process, which would warrant any
judicial review or implementation of the NIT or its terms and conditions
rather once the offer to respond to the NIT has been cancelled, no further
relationship of any, sort exists or continues or gets created, as such,
petitioner has no right to seek the relief prayed for in the present writ
petition, as such, the writ petition merits dismissal.
06. That the petitioner has sought quashment of the supply order issued in
favour of the M/S Unicorn DenMart Ltd. for supply, of dental chairs and
equipments dated 26.02.2018, when the same is not outcome of tender
process relied by petitioner dated 27.04.2016, as such, petitioner cannot
challenge the said process at all, therefore, cannot seek its
quashment, as by issuance of supply order dated 26.02.2018, none of the
rights of the petitioner stands violated, therefore, the relief sought is not
available to the petitioner, as such the writ petition merits dismissal;
that after, cancellation of the NIT, the respondents in order to meet exigency
for procurement of dental chairs decided in a High Level Meeting chaired by
(Hon'ble Chief Minister), wherein it was resolved that assessment be made
from various Medical Supplies Corporations of other states as to how and on
what basis they are procuring the said material but on lowest price. After
assessment of the said exercise, as by decision of the
Board, it came to surface that M/S Confident Dental
Equipments. Ltd. is the lowest supplier of dental chairs to the Rajasthan
Medical Supplies Corporation as against all other prices, and the dental
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chair was found to be suitable and relevant as well as durable by experts,
accordingly, the expert opinions/recommendations were placed before the
Board of the Corporation-respondent Nos. 1- 3 and they decided to place the
order of supply with the respondent no. 4 on the same prices upon which the
dental chairs were supplied by the M/S Unicorn Den Mart Ltd to the
Rajasthan Medical Supplies Corporation, as such, no cause survives to the
petitioner to seek any relief.
07. That the contract is complete as after placement of order by the
respondents 1 to 3 on 26.02.2018 with the MIS Confident Dental
Equipments Ltd., chairs were manufactured as per designs and
requirement of official respondents and also as per the requirement of
Indenting Department as per report of Committee constituted for the
same.
08. That none of rights, constitutional or legal stands violated to the
petitioner as no relationship was created because in presence of offer of NIT
by petitioner when same was not accepted as such no loss was caused to
petitioner nor he can under law compel State Government/J&K Medical
Supplies Corporation to enter into any contract or conclude a tender and
one who has sought offers can also withdraw same thus writ petition is
not maintainable.
09. That the Jammu and Kashmir Medical Supplies Corporation Limited,
is a public sector undertaking of Government of Jammu and Kashmir, which
has been empowered to purchase all machinery equipments, medicine,
etc., for use in the Government Hospitals and Dispensaries, Government
Medical/Dental Colleges. The said supply is made for Medical/ Dental
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Colleges as well as all the Hospitals in the rural and urban areas, which are
under the administrative control of Director Health Services,
Kashmir/Jammu and Principals of Government Medical/Dental Colleges.
10. That Dental Colleges Jammu/Srinagar, placed its requirement orders
with the respondent Corporation for, supply of dental chairs and other
equipments, which were required and above all Director Health Services,
Jammu/Kashmir also placed similar orders, as State Government made
dental services available to dental patients in whole State in rural and
urban areas and in all districts, sub-districts, etc., therefore, the dental
chairs were badly required by dental surgeons in whole State, as in
absence of the same no dental care can be taken, nor dental problems can
be treated by the dental surgeons at all in hospitals/colleges. Since, dental
chairs being primary requirement of Dental surgeons in any type of Hospital
which prompted the Corporation to issue NIT on 07.12.2015 under No. NIT/
JKMSCL/ Machinery/2015/265 and the last date for submission of online
bids as per the said NIT was 30 January, 2016. The Corporation granted
first extension in this behalf on 19.12.2015 and 2nd extension on 20th
January, 2016 and 3rd on 13th February, 2016, because of poor response,
finally the Corporation issued NlTs for, dental chairs vide NIT No.
J KMSC L/Mach/Denc/2016/07 dated 12.04.2016, however, on 19th April
2016, requisition along with specifications was received from Principal
Dental College, Srinagar, so fresh NIT was prepared and uploaded through
e-tendering under No. JKMSCL/Mach/Den/2016/17 dated 27.04.2016, to
which besides petitioner, M/S Confident Dental Equipments Ltd & M/S Suz
Dent (India) Pvt. Ltd. also responded as per NIT. In order to ensure that the
suppliers do not feel any difficulty in responding or in execution of the
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tender process or supply order of pie-bidding was waiting in the office of
respondent no. 2 on 14.05.2016, and after necessary changes tender/Ncr/ re-
uploaded after necessary amendments on 18.05.2016, and the tender
was opened on 28.05.2016 and thereafter evaluation of tenders for three
L1 bids was undertaken and total number of tenders were 124 out of which
three bids tenders were 26 and for two bids were 16 and for single bid were
82 and after undertaking technical evaluation of the all bid documents a
subcommittee was formed, who submitted his report and bidders were
requested for physical demonstration of their equipments for sample items
and catalogues submission for catalogue based items and the
demonstration of equipment was made on 18.07.2016 and 19.07.2016. It is
pertinent to mention that in the month of July, 2016, there was huge turmoil
in the valley, which forced the Corporation to extend the days for
demonstration of the equipments from 25.07.2016 and 26.07.2016 to 5th
ID and 6th August, 2016 and then to 20th and 21st August, 2016 and again
to 5th and 6th September, 2016 and finally it was evaluated by the Technical
Experts from Government Dental Colleges, Srinagar and Jammu on 5th and
7th September, 2016 and consequently on 12.11.2016, report of
comparative statement of technical panel of experts was received by the
respondents 1 to 3 with queries regarding dual authorizations given to the
bidders by Principle manufacturers, as the manufacture had given
authorization to number of bidders, for same item therefore, it was to be
ascertained, who out of them is real bidder so clarification was sought from
the bidders regarding dual authorization and reply was received. The
bidders were required under NIT terms and conditions to sworn an affidavit
duly attested by the first class judicial Magistrate, to the effect that their
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Company has not been blacklisted anywhere before offer more particularly
for supply of dental equipments and it was brought to the notice of the
respondents I and 2 that M/s Unicorn DenMart Ltd. stand involved in a
vigilance enquiry regarding purchases made by the Government Dental
College, Srinagar, and accordingly, the clarification was sought from
Principal Government Dental College, Srinagar, and it was not clear about
the credibility of the firm and accordingly, clarification was sought from
SSP State Vigilance department. In view of this process, the process of 1st
stage of bids got delayed and pressure got developed from all the
Hospitals/Colleges for early supply of the chairs, as the dental care could
not be undertaken by the Government at its Hospitals or colleges, resulting
in huge cry in Print and Electronic Media and these chairs were also
important, keeping in view the MCI visit to Dental colleges of
Srinagar/Jammu. After clearance from the Technical bid, the bidders would
have been processed for final bid and then after preparing comparative
statements, the respondents 1 to 3 would have allotted the tender to any of
the participant, who was eligible and did not entail any disqualification and
his price was lowest. It will be pertinent to mention that as per Standard
Procurement Procedures, the corporation bid remains valid only for 120
days from the date of opening of the bid under single cover system.
Likewise, the bid remains valid for a period of 120' days from the date of
opening of the Cover --A (Technical bid) in case of two cover system.
Moreover, prior to the expiry of the bid periods, the tender inviting authority
(T.l.A) may request the bidders to extend the bid validity for another period
of 30 days, thus total period will be 150 days or five months. The bidders
may refuse extension of bid validity without forfeiting the earnest money
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deposit, as the bid in this case, was opened of 28th May, 2016, therefore,
it expired on 27th October, 2016, as by then even first part of the tender
process, was not complete, therefore, it was likely to , take more time,
therefore, the Board after considering the factual status of the NIT and rule
position made following recommendations to the Government:,-
"i. Tender Inviting Authority (TIA) may be authorized to finalize
the purchase while taking cognizance of already processed
tender.
Or.
ii. The tenders already processed shall be as cancelled and fresh
tenders may be invited after obtaining requisite specifications from
end users.
Or.
iii. Procurement of the tendered items shall be made on the Rate
Contract of other organizations in the following preferential
order- Hindustan Latex Limited (Government of India PSU),
Rajasthan Medical Services Corporation Ltd., Tamil Nadu
Medical Services Corporation Ltd., Kerala Medical Services
Corporation Limited, AIIMS, PGI, DGS&D, EST, after
drawing a comparison for procurement on lowest rates with
due regard to the requirement of indenting departments."
11. That subsequently a meeting was convened under the Chairmanship of
Principal Secretary to Government Health and Medical Education
Department to review the functioning of JKMSCL and among other
decisions taken, respondent No. 2 was asked to expedite the process of
procurement of dental chair and it was decided that expert Committee for
verifying the specifications of the dental sample of Dental Chairs shall
comprise of Principal Government Dental Colleges, Jammu and Srinagar,
Senior Dental Surgeons deputed by the Directors Health Services
Jammu/Kashmir and Director Finance H&ME department and in the
meanwhile, respondent No. 1, vide letter No. HME/Acctts./184/2017 dated
24.11.2017 advised as follows:-
" J&K Medical Supplies Corporation Ltd. to procure the
Dental Machinery and Equipment (Dental Chair) on the rate
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contract of other organizations in the following preferential
order-Hindustan Latex Limited (Government of India PSU),
Rajasthan Medical Services Corporation Ltd, Kerala Medical
Services Corporation Ltd, AIIMS, PGI,DGS&D, ESI after
drawing a comparison for procurement on lowest rates, after
getting certification from the intending Department that the
item(s) is/are as per their requirement be and is hereby
approved".
12. That accordingly, various medical corporations of different states were
approached through e-mails and on Telephones requesting at appropriate
level to make available copy of valid rate contract of dental chair. The
corporation has received the relevant information from outside the State
corporations whose comparative statements has been worked out by
JKMSCL collectively along with rate contract, received from various
corporations/Institutions and the comparison of rates based on the
information provided by the individual dealers has also been taken into
consideration, as the corporation had initiated tender process in the year
2015 for procurement of Dental Machinery and Equipment including the
Dental Chair, which could not be finalized because of following reasons:-
"i. Poor response for the Initial two attempts despite the
extensions allowed.
ii. Suppression of facts with regard to the requirement of the NIT
invited as a third attempt (Filing of incorrect affidavit with regard
to the connected FIR against MI'S Unicorn DenMart Ltd. Principal
Dental College, Srinagar.
iii. Huge elapsing between the uploading and conclusion (more
than a year) of the tender uploaded third time as tender validity
clause of SPP has to be assigned relevance.
iv. In the meanwhile, the tax regime structure got modified with the
implementation of GST rendering the prices of the products
variable significantly.
In the emergent scenario to take stock of the procurement
status commiserating with the urgent requirement of indenting
Departments, it is imperative to cancel the tender invited vide
No. NIT/JKMSCL/Mach/Den/2016/17 dated 27 042016 to
explore the alternatives which was in fact cancelled on
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26.12.2017 to pave the way for proceeding further in this
matter."
13. In view of this position, the case of tenders was sent to the
Corporation for appropriate orders in the 3rd Board meeting of the
Corporation was held, which took various decision, which
was based on letter No. HME/Acctts./1 84/2017 dated 24.11.2017. As per
the decision taken by the Government on 24.11.2017, decision was taken
to cancel the NIT of 2015, which was uploaded on 21 .04.2016 and could
not be concluded within a period of two years, when it remains valid for a
period of 120 days+ 30 days, that means 150 days equal to 5 months,
consequently decision was taken to cancel the NIT dated 27.04.2016 also,
which had not created any right, legal or otherwise in favour of participants,
the tender NIT stands cancelled and followed by alternate procedure of
procuring the dental chairs for two dental colleges as well as to the various
hospitals of the State from original manufacturer viz M/S Confident Dental
Equipments Ltd. expeditiously, who has already supplied the suitable,
comfortable and durable dental chairs to the other State Medical
Corporations, as such, placement of order was because of two facts, one
the original tender could not got concluded even within two years and 2nd
keeping in the emergency the State Government as submitted above an
alternate method of placing the purchase orders with the "original
manufacturer" was decided, who has already supplied the same material to
the other corporations of the country and on a lowest price than the price
mentioned by the petitioner as well as other bidders in the instant case, and
accordingly, meeting was held on 29.12.2017 under the Chairmanship of
respondent no. I taking note of (Annexure-B) and accordingly, it was out of
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three advises of specifications of dental chair units, which were already
tendered by JKMSCL, the specifications of dental chair Unit approved by
Rajasthan Medical Services Corporation Limited, have been found near to
the specifications tendered by JKMSCL and also the rates are lower than
the other approved rates of the corporations/Institutions and the chair
having, make "Mooka MBIKA" which stands approved by Rajasthan
Medical Service Corporation Limited vide their rate contract dated
23.05.2015, and the same has been extended vide their letter dated
28.11.2017 up to 28.02.2018, accordingly on 26.12.2018,
Corporation issued supply order to the M/S Unicorn Den Mart Ltd.
14. On notice respondent No. 4 has filed objections as also the
supplementary affidavit in support of the objections, wherein it is stated that
the writ petition is not maintainable in light and in view of the facts of the
case, as such, merits dismissal.
15. That the petitioner has sought the relief for cancellation of bids/tenders
made vide order No. 12/JKMSCL of 2017 dated 26.12.2018. No such order
stands issued on 26.12.2018, as the said date of 26.12.2018 has not as yet
come, therefore, there is a clear non application of mind of the petitioner in
drafting of the prayer clause, as such, also the writ petition is not
maintainable and deserves to be dismissed. Similarly, the petitioner has
sought quashment of supply order dated 24.02.2018. No such order stands
issued on 24.02.2018, nor such order has been placed on file of
the Hon'ble Court by the petitioner, therefore, in absence of an order, which
has sought to be quashed and which is not existent, no relief can be claimed,
as such, also the writ petition is not maintainable, therefore, is liable to be
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dismissed. Petitioner has also sought the relief of mandamus against the
official respondents, so as to restrain them from accepting the
dental chairs and equipments from the answering respondent. The fact of the
matter is that the said equipments were started to be supplied to the official
respondents on 22.05.2018 and has been completed by 30th June, 2018, and
only a few chairs are required to be installed in couple of days, therefore, the
relief as sought is not available to the petitioner, as the same
has become infructuous, as such, also the writ petition is not maintainable
and is liable to be dismissed.
16. That, no right is created in favour of the petitioner bidder in pursuance
of tender notice of which he can seek implementation and execution, in the
Court of law, in view of settled legal position, as held by the Hon'ble Apex
Court, where it is held that there is no concluded contract till the bid at an
auction is accepted. Before there will a concluded contract, it was open to
the bidders to withdraw their bids. By merely giving bids, the bidders do not
acquire any vested rights, in view of this legal position that petitioner and
answering respondent had only offered their bids to the official respondents,
which was not concluded and accepted, as such, no contract had come into
existence, which would warrant indulgence for any adjudication. Before
that the official respondents cancelled the bids, as such, none of the rights of
the petitioner stands violated, therefore, petitioner cannot maintain the
present petition for any purpose much less for the relief as sought.
Mandamus can be sought only when a right has accrued and same is violated
or is not implemented as submitted above. Petitioner has no case as such for
mandamus.
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17. That a policy decision was taken by the respondents in order to ensure
providing of dental medical care in the dental colleges as well as hospitals
for which procurement of dental chairs is most essential, as without the
dental chairs, a dental surgeon is not able to treat the dental problem of a
dental patient. Similarly, non-availability of the dental chairs in the dental
medical Colleges at Jammu / Srinagar, had affected adversely the curriculum
of PG students. The curriculum and academics cannot be carried without
dental chairs, no practical training can be imparted, which would in turn
affect the PG entrance as the DCI provides to conduct regular practicals and
there was likelihood of cancellation of MDS courses in Dental Colleges of
State, therefore, in order to protect the recognition of MDS degree, it was
essential to have the dental chairs at earliest, as the same were sought to be
procured from 2015 but were not able to procure the same, for one or the
other reasons, as such, in order to overcome the delay and consequential
crisis, a policy decision was taken by the official respondents for
procuring the dental chairs at lowest rates, which cannot be subject matter of
writ petition, as the policy decision for public purpose is always immune
from judicial review, unless the same violates any of the fundamental rights
of a citizen, as in the instant case, petitioner has no vested right to make
supplies or to make offers or to get contract, therefore, procuring the
chairs in pursuance of policy decision from the manufacturer, who has
already provided the said chairs in the country to other medical corporations
of various states on such specification, as the official respondents
require in the J&K State on lowest rates, therefore, it does not violate any
right of the petitioner, as such, also the writ petition is not maintainable.
18. That the order of cancellation of the bid made vide order dated
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26.12.2017 on various grounds as mentioned in the order itself, particularly
on following grounds (1) the rate contract could not be finalized for last
more than two years (2) it has been cancelled due to the expiry of period of
validity of offers, which was only for a period of six months and thereafter
no extension was extended by the bidders (3) there is a change in the tax
regime and GST has come which would affect the rates as well and (4)
directions were conveyed by the Government in a policy decision vide
letter No. HME/Acctts/184/2017 dated 24.11.2017, in pursuance to 3rd
Board of Directors Meeting of JKMSCL, corporation, thus the order is
passed on valid reasons, which has not been questioned in the instant writ
petition by the petitioner on such grounds, as such, also the writ petition
merits dismissal.
19. That petitioner was aware of the cancellation of the NIT
issued for procurement of Dental Machinery and equipments dated
27.04.2016, vide above referred cancellation order dated 26.12.2017 and the
said fact has not been brought to the notice of the Hon'ble Court
in earlier writ petition SWP No. 536/2018, as such, the petitioner has
suppressed true and correct facts and has tried to mislead the Hon'ble Court
by such suppression, in order to obtain exparte interim order, but now is
agitating the same when he is precluded to do so in terms of order 2 rule 2
CPC, as the relief was available to the petitioner, which he failed to avail
without any justification, as such, also the writ petition merits dismissal.
20. That the respondents 1 to 3 had initiated a tender process, which did
not culminate into an agreement in between petitioner and respondents, as
such, no right flows from the said process, which would warrant any
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judicial review or implementation of the NIT or its terms and conditions,
rather once the offer to respond to the NIT has been cancelled, no further
relationship of any sort exists or continues or gets created, as such, petitioner
has no right to seek the relief prayed for in the present writ petition, as such,
the writ petition merits dismissal.
21. That the petitioner has sought quashment of the supply order issued in
favour of the answering respondent for supply of dental chairs and
equipments dated 26.02.2018, when the same is not outcome of tender
process relied by petitioner dated 27.04.2016 though started in 2015, as
such, petitioner has no concern with the said process at all, therefore, cannot
seek its quashment, as by issuance of supply order dated 26.02.2018, none of
the rights of the petitioner stands violated, therefore, the relief sought is not
available to the petitioner, as such the writ petition merits
dismissal.
22. That after cancellation of the NIT, the requirement of supply of dental
chairs became more necessary, as some alternate arrangement was to be
made to ensure early supply of the same, so as to make the dental college as
well as hospitals workable as far as dental medical care was required to be
provided to the patients, therefore, the decision, already taken in the
3rd Board meeting of the Jammu and Kashmir Medical supplies Corporation
of making alternate arrangement was followed, as the same was policy
decision taken under the Chairmanship of Hon'ble CM, who was
chairperson of the corporation, as held in December, 2016, though thereafter
process was followed to complete the NIT, therefore, alternate arrangement
was necessary in a time span for supply of dental chairs, wherein the
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competition was amongst the manufacturers /suppliers to various other
states, not the fresh bidders. It is choice of the department to choose how
best an item required can be procured, wherein competition can be
developed, as petitioner has no right to have a contract for supply of the
dental chairs more particularly in view of delaying tactics as well as
acceptance of the sample after cancellation of the NIT. The process of
conclusion of the contract was not possible, that is why the decision of
cancellation was taken, but at the same time the requirement of availability
of the dental chairs are not being manufactured in the State of Jammu and
Kashmir, was required to supply that is why a competition between
already suppliers/ manufacturers was invoked as that was a proven attempt
by them as accepted by other states of the country. It is submitted that there
are few manufacturers of the dental chairs and it is not
everywhere the dental chairs are being manufactured, therefore, those
manufacturers were put to competition by receiving information on Internet
about their supplies, so made in the year 2017 and out of them
one's supply, which is near to the specifications of the dental chairs required
by the Jammu and Kashmir Medical Supplies corporation hereinafter called
corporation and is at a lowest price amongst all other suppliers made to
various states, so process was initiated, accordingly and on the basis of said
assessment and after report of the specification committee, the order was
placed with respondent No. 4, on the supplies received by Rajasthan Medical
Supplies Corporation.
23. That the action of the official respondents to place the order for supply of
dental chairs in favour of answering respondent is based on reasonableness
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in view of the fact that even during period of two years, the NIT issued in
2015 could not be concluded when the same offer is valid for a period of
120-30 days from the date of offer that means for a period of 5 months offer
is valid and as yet it was at 1st stage of tender process initiated in 2015 and
on other hand the dental patients in the State were adversely getting affected
by non-availability of the dental chairs in dental colleges and hospitals. In
absence of the dental chairs, the dental surgeon, could not examine the
dental patient, therefore, Government was unable to provide dental medical
care, to its citizens, because of non-finalization of the tenders for dental
chairs, as such, the decision was taken to find the manufacturer in the
country, who has already supplied the dental chairs to any dental corporation
of the states of the same specification, as was required by the official
respondents and that too at a lowest price, as such, the action of the official
respondents is not bad but is based on reason as such not amenable to the
judicial review for any valid and solid reasons, as the supply order in the
instant case has been placed with the manufacturer, who has proven
credibility and has come to the expectations of the dental medical care in
Rajasthan and had offered supply of dental chair in lowest price, therefore,
satisfied the criteria fixed in this behalf. In view of the delay occurred in
finalizing the tender in the case, in which offer was valid only for a period of
five months after opening tenders and as such, fresh process was required to
be undertaken and on other hand dental patients care was required to be
tackled which did not allow any further delay, therefore, after placement of
order on 26.02.2018, the supplies were accepted to be received within a
period of one month but because of ex-parte interim direction passed by this
Hon'ble Court, in SWP No. 536/2017, the same could not be received
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by official respondents in time and extension was accordingly granted.
24. That the petitioner at the most may suffer for monetary loss, if any, at
all by non-supply of the dental chairs if he succeeds in lis, for which he has
efficacious and alternate remedy, available under law, to file a suit for
damages but he cannot forestall the process of providing dental medical
service to the dental patients of the State, as two colleges at Jammu and
Srinagar as well as hospitals at various places in rural areas of the State have
become defunct because of non-availability of dental chairs. Failure to
provide dental service in State resulting various dental units in the dental
colleges as well as in the hospitals, to remain idle, shows acute affect on
public purpose, therefore, receipt of dental chair supplies, is not only
essential and important but is emergently required to mitigate loss of
providing dental service to the patients as well, as such is a strong public
service purpose.
25. That the supply for contract of the dental chairs stands already
completed as after placement of order by respondents 1 to 3 on 26.02.2018
with the answering respondent, the specified chairs were manufactured as
per the prescribed designs and specifications and as per requirement of the
official respondents and same stands delivered and installed, thus also the
present writ petition has become infructuous and no relief can be claimed,
thus the writ petition is not maintainable. However, if petitioner has suffered
any loss, he can resort to efficacious and alternate remedies available
under civil procedure code before the court of competent jurisdiction for
appropriate relief.
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26. That the writ petition is not maintainable also for non-joinder of the
necessary parties, as NIT dated 27.04.2016 stands issued by Jammu and
Kashmir Medical Supplies Corporation hereinafter called corporation, which
has not been arrayed as party in the writ petition at all, only its functionaries
has been arrayed as respondents, thus because of failure of the
petitioner to array necessary parties in the writ petition, same is liable to be
dismissed, as in absence of the Corporation as party respondents no effective
adjudication can be initiated or concluded, as it is the Corporation alone
which has to take a decision, not functionaries of the Corporation, as it is
governed by a Board, which is headed by Hon'ble Chief Minister, as its
Chairperson and is also having Vice Chairman and other top functionaries of
the State, as member Secretaries, therefore, competent authority has
decided to procure dental machines and equipment on lowest price in a short
time by resort to competition amongst proven suppliers as such does not
violate any of rights of petitioner.
27. That none of rights, constitutional or legal stands violated to the
petitioner as no relationship was created because in presence of acceptance
of offer of NIT, when same was not accepted as such no loss was
caused to petitioner nor he can under law compel State Government.
Corporation to enter into any contract or conclude a tender and one who has
sought offers can also withdraw same thus writ petition is not
maintainable.
28. Heard the learned counsel for the parties, perused the records
available on file and considered the matter.
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29. Mr. Zubair Ahmad, learned appearing counsel for the petitioner while
strengthening his claim for the relief prayed for in the writ petition on the
strength of the pleadings further supported with his submissions and written
arguments has laid emphasis on the official respondents having indulged in
fraud while cancelling the tender process as initiated, so as to shower benefit
to respondent No. 4, for supply of dental chairs on the same prices upon
which the dental chairs were supplied by the M/S Unicorn Den Mart Ltd to
the Rajasthan Medical Supplies Corporation. Quashment of the decision of
cancellation of the tender process as also subsequent allotment to respondent
No. 4, is further questioned on the ground that the matter is pending
investigation with Anti-Corruption Bureau, Jammu, therefore as the matter is
being proved by Anti-Corruption Bureau, the respondent No. 4, does not
deserve for release of payment of supply of dental chairs by a fraudulent
decision of the official respondents. He has further submitted that there is
infirmity in the decision making process as the process adopted by
respondents in not finalizing bidding process and allotting contract to one of
the competing tenderers is tainted with malice and favouritism and the
official respondents being functionaries of the Government are under law
obliged to maintain the fairness in the decision making process, which
should appear from the approach adopted and not to indulge in any
arbitrariness while making such decision. He has further submitted that the
official respondents for extraneous considerations had not uploaded the
cancellation and order of supply, which shows that they have to only shower
benefit to respondent No. 4. He has relied to the law, which has reference to
the powers of judicial review of the Court under Article 226 of the
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Constitution of India in finalization of Government contracts with particular
reference which is reproduced as under:-
(a) Tata Cellular Vs UOI 1994 (6) SCC page 651
Para 94. Hon'ble Apex Court held that judicial review of Government
contracts is permissible in order to prevent arbitrariness or
favouritism.
(b) Maa Binda Express carrier and another Vs. Northeast Frontier
Railway and Ors. 2014 (3) SCC page 760
In para 10, it was held that the basic requirement of Article 14 is
fairness in action by the State.
(c) 2014 (11) SCC 288 M/s Siemens Aktiengenselischaft and Ltd Vs.
DMRC at para 24 held that the bidding process has to be fair,
transparent and reasonable.
(d) 2004 (4) SCC page 19 Directorate of education and ors. Vs.
Educomp Datamatics Ltd. Para 9
Held that the Court could interfere if the policy decision is arbitrary,
discriminatory, malafide.
(e) 2010 (11) SCC page 186 Zonal Manager Central Bank of India Vs.
Devi Ispat Ltd. & Ors. At page 25 held
If a state acts in an arbitrary manner, aggrieved party can approach
the Court under Article 226 of Constitution.
(f) AIR 1975 SC page 2436
Held that judicial review is permissible against decision making
process and not against the decision.
(g) 2005 (6) SCC Page 138 Master marine Services Pvt. Ltd Vs.
Metcalfe and Hodgkinson (P) Ltd.
Held that while exercising power of judicial review in respect of
contracts, Court should concern itself primarily with the question,
whether there has been any infirmity in the decision making process."
30. Locus of petitioner to challenge the decision of cancellation of bid and
subsequent allotment of the dental chairs is question raised by the
respondents, which needs to be replied on the strength of the pleadings of the
parties and the submissions made.
31. As per settled positon of law violation of right is sine qua non for
maintaining the writ petition for seeking mandamus, on thoughtful
consideration of the matter, the court has come to the conclusion that there is
no violation of any right of the petitioner, seeking such relief. This view is
supported by the Judgments of the Hon'ble Apex Court.
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32. The Hon'ble Apex Court of the country, while dealing with the scope
of 'Mandamus', in case titled 'State of Kerela V. Smt. A. Lakshmikutty &
Ors.; (1986) 4 Supreme Court Cases 632', at Paragraph No.34, has observed
as under:
"34. We must refer to the case of Mani Subrat Jain v. State of
Haryana & Ors., (supra) which was relied upon by learned counsel for
the State Government. It is well-settled that a writ of mandamus is not a
writ of course or a writ of right, but is, as a rule, discretionary. There
must be a judicially enforceable right for the enforcement of which a
mandamus will lie. The legal right to enforce the performance of a duty
must be in the applicant himself. In general, there- fore, the Court will
only enforce the performance of statutory duties by public bodies on
application of a person who can show that he has himself a legal right to
insist on such performance. Applying the principles stated in Halsbury's
Laws of England, 4th edn., vol. 1, paragarph 122, this Court observed
that a person whose name had been recommended for appointment as a
District Judge by the High Court under Art. 233(1) had no legal right to
the post, nor was the Governor bound to act on the advice of the High
Court and therefore he could not ask for a mandamus. It was observed:
"It is elementary though it is to be restated that no one
can ask for a mandamus without a legal right.
The initial appointment of District Judges under Article
233 is within the exclusive jurisdiction of the Government after
consultation with the High Court. The Governor is not bound to
act on the advice of the High Court. The High Court recommends
the names of persons for appointment. If the names are
recommended by the High Court it is not obligatory on the
Governor to accept the recommendation.
The consultation of the Governor with the High Court
does not mean that the Governor must accept whatever advice
of recommendation is given by the High Court. Article 233
requires that the Governor should obtain from the High Court
its views on the merits and demerits of persons selected for
promotion and direct recruitment."
The existence of a right is the foundation of the jurisdiction of a
Court to issue a writ of mandamus. The present trend of judicial
opinion appears to be that in the case of non-selection to a post,
no writ of mandamus lies."
33. Again, in the case of 'State of UP & Ors. V. Harish Chandra & Ors.;
(1996) 9 Supreme Court Cases 309', at Paragraph No.10, the Hon'ble
Supreme Court has held thus:
"10. Notwithstanding the aforesaid Statutory Rule and without applying
the mind to the aforesaid Rule the High Court relying upon some earlier
decisions of the Court came to hold that the list does not expire after a
period of one year which on the face of it is erroneous. Further question
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that arises in this context is whether the High Court was justified in
issuing the mandamus to the appellant to make recruitment of the Writ
Petitioners. Under the Constitution a mandamus can be issued by the
Court when the applicant establishes that he has a legal right to the
performance of legal duty by the party against whom the mandamus is
sought and said right was subsisting on the date of the petition. The duty
that may be enjoined by mandamus may be one imposed by the
Constitution or a Statute or by Rules or orders having the force of law.
But so mandamus can be issued to direct the Government to refrain from
enforcing the provision of law or to do something which is contrary to
law. This being the position and in view of the Statutory Rules contained
in Rule 26 of the Recruitment Rules we really fail to understand how the
High Court could issue the impugned direction to recruit the respondents
who were included in the select list prepared on 4.4.87 and the list no
longer survived after one year and the rights, it any, of persons included
in the list did not subsist. In the course of hearing the learned counsel for
the respondents, no doubt have pointed out some materials which
indicate that the Administrative Authorities have made the appointments
from a list beyond the period of one year from its preparation. The
learned counsel appearing for the appellants submitted that in some
cases pursuance to the direction of the Court some appointments have
been made but in some other cases it might have been done by the
Appointing Authority. Even though we are persuaded to accept the
submission of the learned counsel for the respondents that on some
occasion appointments have been made by the Appointing Authority from
a select list even after the expiry of one year from the data of selection
but such illegal action of the Appointing Authority does not confer a
right on an applicant to be enforced by a Court under Article 226 of the
Constitution. We have no hesitation in coming to the conclusion that
such appointments by the Appointing Authority have been made contrary
to the provisions of the Statutory Rules for some unknown reason and we
deprecate the practice adopted by the Appointing Authority in making
such appointments contrary to the Statutory Rules. But at the same time
it is difficult for us to sustain the direction given by the High Court since,
admittedly, the life of the select list prepared on 4.4.87 had expired long
since and the respondents who claim their rights to be appointed on the
basis of such list did not have a subsisting right on the date they
approached the High Court. We may not be understood to imply that the
High Court must issue such direction, if the writ Petition was filed before
the expiry of the period of one year and the same was disposed of after
the expiry of the statutory period. In view of the aforesaid conclusion of
ours it is not necessary to deal with the question whether the stand of the
State Government that there existed one vacancy in the year 1987 is
correct or not."
From the perusal of the law laid down above, it is crystal clear that
existence of a right is the foundation of the jurisdiction of a Court to issue a
'Writ of Mandamus'. In the case on hand, the petitioner has not been able to
show as to which of his right has been violated by the respondents while
cancelling the tendering process, which can be directed to be enforced by
way of issuing a 'Mandamus' from this Court. In this context, the irrefutable
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conclusion which can be drawn is that none of the rights of the petitioner
stands violated by the respondents in the tendering process for which a 'Writ
of Mandamus' can be issued in his favour.
34. Admittedly, the cancellation of NIT and the subsequent allotment of
the dental chairs though challenged, but no interim order was passed by this
Court, therefore, the contract, which has come in existence between the
official respondents and respondent No. 4, had become final and such
contract is already executed which by no stretch of imagination can be
reversed in a writ petition, which contract is conclusive as executed between
the parties, therefore, the Court is of considered view that the petitioner has
no locus to challenge the cancellation of the contract and subsequent
allotment in favour of respondent No. 4, in a writ petition.
35. Fairness in the contracts is sole base for entertaining a claim in a writ
petition qua the Government contracts, but going through the stand taken by
the official respondents based on records, the Court has come to a definite
conclusion that the decision was taken at high level headed by the then Chief
Minister, only in the interest of the patient care of the hospitals, therefore, a
fair decision and there are no malafides which are visible from the decision
or the Decision Making Body, attributed to the competent authority of the
respondent corporation, not even a single instance is established by the
petitioner qua malafides on the legal structure, therefore, such contention is
also erroneous and not being supported by any record.
36. Now, I proceed to analyze the case of the petitioner in the light of the
judicial position governing the subject, as enunciated by the Hon'ble
Supreme Court of the country.
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37. In case titled 'Tata Cellular V. Union of India; (1994) 6 Supreme
Court Cases 651', at Paragraph No.94, Hon'ble the Supreme Court of the
country, while dealing with this issue, evolved the following principles:
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 expe4rtise 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; and
6. Quashing decisions may impose heavy administrative burden on the
administration and lead to increased and unbudgeted expenditure."
38. In case titled 'Sterling Computers Limited V. M&N Publications Ltd.;
(1993) 1 SCC 445', the Apex Court, at Paragraph No.12, has laid down as
under:
"In contracts having commercial element, some more discretion
has to be conceded to the authorities so that they may enter into
contracts with persons, keeping an eye on the augmentation of the
revenue. But even in such matters they have to follow the norms
recognized by courts while dealing with public property. It is not
possible for courts to question and adjudicate every decision taken by
an authority, because many of the Government Undertakings which in
due course have acquired the monopolist position in matters of sale and
purchase of products and with so many ventures in hand, they can come
out with a plea that it is not always possible to act like a quasi-judicial
authority while awarding contracts. Under some special circumstances
a discretion has to be conceded to the authorities who have to enter into
contract giving them liberty to assess the overall situation for purpose
of taking a decision as to whom the contract be awarded and at what
terms. If the decisions have been taken in bona fide manner although
not strictly following the norms laid down by the courts, such decisions
are upheld on the principle laid down by Justice Holmes, that courts
while judging the constitutional validity of executive decisions must
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grant certain measure of freedom of 'play in the joints' to the
executive."
39. Again, the Apex Court, in case titled 'Directorate of Education & Ors. V.
Educomp Datamatics Ltd. And Ors.; (2004) 4 SCC 19', while applying the
principles enunciated in Tata Cellular's case (supra), at Paragraph No.12,
observed, thus:
"12. It has been held in these decisions 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. It must have reasonable play in its joints as a necessary
concomitant for an administrative body in an administrative sphere. The
Courts would interfere with the administrative policy decision only if it is
arbitrary, discriminatory, malafide or actuated by bias. It is entitled to
pragmatic adjustments which may be called for by the particular
circumstances. 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, wise or logical. The Courts can interfere
only if the policy decision is arbitrary, discretionary or malafide."
On an appreciation of the law laid down above, what comes to
limelight is that the modern trend points to judicial restraint in administrative
action and that the Court does not sit as a 'Court of Appeal', but merely
reviews the manner in which the decision was made. It has also been
declared that Court does not have the expertise to correct the administrative
decision and that 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. Furthermore, fair play in the joints is a necessary
concomitant for an administrative body functioning in an administrative
sphere or quasi administrative sphere and quashing administrative decisions
may impose heavy administrative burden on the administration and lead to
increased and unbudgeted expenditure.
40. It is thus, settled that public authorities must be left with the same
liberty as they have in framing the policies, even while entering into
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contracts because many contracts amount to implementation or projection of
policies of the Government. But it cannot be overlooked that unlike policies,
contracts are legally binding commitments and they commit the authority
which may be held to be a State within the meaning of Article 12 of the
Constitution of India in many cases for years. It is for this reason that the
Courts have impressed that even in contractual matters the public authority
should not have unfettered discretion. In contracts having commercial
element, some more discretion has to be conceded to the authorities so that
they may enter into contracts with persons keeping an eye on the
augmentation of the revenue. But, even in such matters, they have to follow
the norms recognized by Courts while dealing with public property. It is not
possible for the Courts to question and adjudicate every decision taken by an
authority because many of the Government Undertakings, which in due
course have acquired the monopolist position in matters of sale and purchase
of products and with so many ventures in hand, they can come out with a
plea that it is not always possible to act like a quasi-judicial authority while
awarding contracts. Under some special circumstances, a discretion has to be
conceded to the authorities who have to enter into contract by giving them
liberty to assess the overall situation for purpose of taking a decision as to
whom the contract be awarded and at what terms. If the decisions have been
taken in bonafide manner, although not strictly following the norms laid
down by the Courts, such decisions are upheld on the principle laid down by
Justice Holmes that Courts, while judging the constitutional validity of
executive decisions, must grant certain measure of freedom of 'play in the
joints' to the executive.
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Looking at the instant case in the above perspective, the petitioner has
not been able to establish before the Court that the decision taken by the
respondents in cancelling the tender process is an arbitrary exercise of power
or that the same was/ is malafide in nature. In 'Jagdish Mandal v. State of
Orissa; the Hon'ble Supreme Court held, thus:
"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 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."
From a bare perusal of the pleadings placed on record by the parties as
well as having gone through the relevant records made available by the
respondents before this Court, it is more than apparent that the decision
taken by the respondents in cancelling the tender process was certainly not
irrational in any manner whatsoever or intended to favour anyone. This
decision, apart from being lawful and sound, appears to have been taken by
the respondents in view of the immediate exigency qua requirement of chairs
in Dental Hospitals.
41. Mr. M. I. Qadri, learned senior counsel appearing for respondent No.
4, has submitted that the relief claimed in the writ petition is not available to
the petitioner, as none of his right stands violated qua cancellation and
subsequent allotment of the contract in favour of respondent No. 4. Learned
senior counsel has supported this contention by the Judgment of the Hon'ble
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Apex Court reported in AIR 1972 (2) SCC 36. Para 13 of the said Judgment
being relevant is extracted as under:-
"13. Even apart from the power conferred on the Government
under ss. 22 and 29, we fail to see how the power retained by the
Government under cl. (6) of its order dated January 6, 1971 can be
considered as unconstitutional. As held by this Court in Cooverjee
Bharucha's case (supra), one of the important purpose of selling the
exclusive right to sell liquor in wholesale or retail is to raise revenue.
Excise revenue forms an important part of every State's revenue. The
Government is the guardian of the finances of the State. It is expected to
protect the financial interest of the State. Hence quite naturally, the
legislature has empowered the Government to see that there is no leakage
in its revenue. It is for the. Government to decide whether the price offered
in an auction sale is adequate. While accepting or rejecting a bid, it is
merely performing an executive function. The correctness of its conclusion
is not open to judicial review. We fail to see how the plea of contravention
of Art. 19(1)(g) or Art. 14 can arise in these cases. The Government's
power to sell the exclusive privileges set out in s. 22 was not denied. It was
also not disputed that those privileges could be sold by public auction.
Public actions are held to get the best possible price. 'Once these aspects
are recognised, there appears to be, no basis for contending that the
owner of the privileges in question who had offered to sell them cannot
decline to accept the highest bid if he thinks that the price offered is
inadequate.- There is no concluded contract till the bid is accepted. Before
there was a concluded contract, it was open to the bidders to withdraw
their bids-see Union of India and ors. v. M/s. Bhimsen Walaiti Ram (2). By
merely giving bids, the bidders had not acquired any vested rights. The
fact that the Government was the seller does not change legal position
once its exclusive right to deal with those privileges is conceded. If the
Government is the exclusive owner of those privileges, reliance on Art.
19(1)(g) or Art. 14 becomes irrelevant. Citizens cannot have any
fundamental right to trade or carry on business in the properties or rights
belonging to the Government, nor can there be any infringement of Art.
14, if the Government tries to get the best available price for its valuable
rights. The High Court was wholly wrong in thinking that purpose of ss.
22 and 29 of the Act was not to raise revenue. Raising revenue as held by
this Court in Cooverjee Bharucha's case (supra) was one of the important
purposes of such provisions. The fact that the price fetched by the sale of
country liquor is an excise revenue does not change the nature of the right.
The sale in question is but a mode of raising revenue. Assuming that the
question of arbitrary or unguided power can arise in a case of this nature,
it should not be forgotten that the power to accept or reject the highest bid
is given to the highest authority in the State i.e. the Government which is
expected to safeguard the finances of the State. Such a power cannot be
considered as an arbitrary power. If that power is exercised for any
collateral purposes, the exercise of the power will be struck down. It may
also be remembered that herein we are not dealing with a delegated power
but with a power conferred by the legislature.
The High Court erroneously thought that the Government was
bound to satisfy the Court that there was collusion between the bidders.
The High Court was not sitting on appeal against the order made by the
Government. The inference of the Government that there was a collusion
among the bidders may be right or wrong. But that was not open to
judicial review so long as it is not proved that it was a make- believe one.
The real opinion formed by the Government was that the price fetched was
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not adequate. That conclusion is taken on the basis of Government
expectations. The conclusion reached by the. Government does not affect
any one's rights. Hence, in our opinion the High Court misapplied the
ratio of the decision of this Court in Barium Chemicals Ltd. and anr. v.
Company Law Board and ors.(1) and Rohtas Industries Ltd. v. S. T.
Agarwal.
42. Mr. M. I. Qadri, learned senior counsel appearing for respondent No.
4, has submitted that the decision by the Board of Directors headed by the
then Chief Minister was in public interest and by no stretch of imagination
can be said arbitrary, unfair or malafides. Learned senior counsel is
supported by the Judgment in this regard reported in 2000 (8) SCC 262.
Paras 13, 16, 17, 19 and 20 being relevant are extracted as under:-
"13. As noticed earlier, Dr Abhishek Singhvi, learned Senior Counsel
appearing for the appellants has not challenged the legality or
constitutionality of the lease agreement or the action of the respondent
State on the grounds alleged in the writ petition. He has conceded that the
erstwhile owners of the land had no right to ask for the return of the land
to them. Similarly, the Vegetarian Congress, Petitioner 5 was not justified
in seeking the relief of restraining the respondents from utilising the land
for the purposes of abattoir at Mourigram. The sole point urged before us
was with respect to the alleged arbitrariness of the State Government. To
appreciate the only submission made before us we scanned the writ
petition, the counter-affidavit and the accompanying documents and found
that no basis for such a plea was laid in the writ petition and the
arguments addressed before the Division Bench were not referable to any
pleadings. It is contended that as the issue had specifically been pleaded
in the appeal before the High Court and has been urged in the grounds of
appeal in this Court, a decision on the point was warranted,
notwithstanding the absence of sufficient pleadings. We are not impressed
with such an argument. Whether any advertisement was issued or not, or
whether public auction or floating of tenders should have been dispensed
with or not, are such matters which require pleadings in order to enable
the State Government to explain or justify their action in the
circumstances of the case. The appeal before the Division Bench of the
High Court and in this Court being in continuation of the original
proceedings in the form of writ petition, cannot enlarge the scope of
inquiry at this belated stage. In the absence of specific allegations of the
mala fides attributed to any of the respondents, it cannot be said that mere
violation of some alleged statutory provisions are safeguards as spelt out
by this Court, would render the State's action to be arbitrary in all cases.
To buttress his arguments, the learned counsel for the appellants
submitted that as the land was transferred to Respondent 5 for a song and
at a throwaway price, resulting in corresponding loss to the State
exchequer, it reflected the legal mala fides and the arbitrary action of the
respondents. The argument has to be noted to be rejected inasmuch as
nowhere in their writ petition the appellants had alleged that the land had
been sold at a throwaway price.
16. Learned counsel for the appellant has not referred to any statutory
provision mandating the State to adhere to a specified procedure in the
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matter of transfer of its property either by way of sale or by lease. In the
absence of a statutory restriction imposed upon the State, it is to be seen
whether the impugned action is against public interest or actuated by
extraneous considerations or is opposed to fair play or the State is shown
to have conferred undue benefits upon undeserving party.
17. It has been consistently held by this Court that in a democracy
governed by the rule of law, the executive Government or any of its
officers cannot be allowed to possess arbitrary powers over the interests
of the individual. Every action of the executive Government must be in
conformity with reason and should be free from arbitrariness. The
Government cannot be equated with an individual in the matter of
selection of the recipient for its largesse. Dealing with the limits on the
exercise of executive authority in relation to rule of administrative justice,
Mr Justice Frankfurter in Vitarelli v. Seaton 359 US 535 said:
"An executive agency must be rigorously held to the standards by
which it professes it action to be judged. ... Accordingly, if
dismissal from employment is based on a defined procedure, even
though generous beyond the requirements that bind such agency,
that procedure must be scrupulously observed. ... This judicially
evolved rule of administrative law is now firmly established and, if
I may add, rightly so. He that takes the procedural sword shall
perish with that sword."
19. Though the State cannot escape its liability to show its actions to be
fair, reasonable and in accordance with law, yet wherever challenge is
thrown to any of such action, initial burden of showing the prima facie
existence of violation of the mandate of the Constitution lies upon the
person approaching the court. We have found in this case, that the
appellants have miserably failed to place on record or to point out to any
alleged constitutional vice or illegality. Neither the High Court nor this
Court would have ventured to make a rowing inquiry particularly in a writ
petition filed at the instance of the erstwhile owners of the land, whose
main object appeared to get the land back by any means as, admittedly,
with the passage of time and development of the area, the value of the land
had appreciated manifold. It may be noticed that in the year 1961 the
erstwhile owners were paid about Rs 5.5 lakhs and the State Government
assessed the market value of the property which was paid by Respondent 5
at Rs 71,59,820. The appellants have themselves stated that the value of
the land roundabout the time, when it was leased to Respondent 5 was
about Rs 11 crores. There cannot be any dispute with the proposition that
generally when any State land is intended to be transferred or the State
largesse decided to be conferred, resort should be had to public auction or
transfer by way of inviting tenders from the people. That would be a sure
method of guaranteeing compliance with the mandate of Article 14 of the
Constitution. Non-floating of tenders or not holding of public auction
would not in all cases be deemed to be the result of the exercise of the
executive power in an arbitrary manner. Making an exception to the
general rule could be justified by the State executive, if challenged in
appropriate proceedings. The constitutional courts cannot be expected to
presume the alleged irregularities, illegalities or unconstitutionality nor
the courts can substitute their opinion for the bona fide opinion of the
State executive. The courts are not concerned with the ultimate decision
but only with the fairness of the decision-making process.
20. The Government is entitled to make pragmatic adjustments and policy
decision which may be necessary or called for under the prevalent
peculiar circumstances. The court cannot strike down a policy decision
taken by the Government merely because it feels that another decision
would have been fairer or wiser or more scientific or logical. In State of
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M.P v. Nandlal Jaiswal 1986 4 SCC 566 it was held that the policy
decision can be interfered with by the court only if such decision is shown
to be patently arbitrary, discriminatory or mala fide. In the matter of
different modes, under the rule of general application made under the M.P
Excise Act, the Court found that the four different modes, namely, tender,
auction, fixed licence fee or such other manner were alternative to one
another and any one of them could be resorted to. In Sachidanand Pandey
v. State of W.B 1987 2 SCC 295 it was held that as regards the question of
propriety of private negotiation with an individual or corporation, it
should be borne in mind that State-owned or public-owned property is not
to be dealt with at the absolute discretion of the executive. Certain
precepts and principles have to be observed, public interest being the
paramount consideration. One of the methods of securing the public
interest when it is considered necessary to dispose of the property is to sell
the property by public auction or by inviting tenders. But such a rule is not
an invariable rule. There may be situations where there are compelling
reasons necessitating departure from the rule. As and when a departure is
made from the general rule, it must be shown that such an action was
rational and not suggestive of discrimination. In that case on facts the
Court found that on the commercial and financial aspect, the lease
granted in favour of a group of hoteliers, not arbitrary as the method of
"net sales" was held to be fairly well-known method adopted in similar
situations. To the same effect is the judgment in G.D Zalani v. Union of
India 1995 Supp 2 SCC 512. In Kasturi Lal Lakshmi Reddy v. State of
J&K11 this Court, after referring to various judgments, including the
judgment in Ramana Dayaram Shetty case held: (SCC pp. 13-14, para 14)
"It is imperative in a democracy governed by the rule of law that
governmental action must be kept within the limits of the law and if
there is any transgression, the court must be ready to condemn it. It
is a matter of historical experience that there is a tendency in every
Government to assume more and more powers and since it is not an
uncommon phenomenon in some countries that the legislative check
is getting diluted, it is left to the court as the only other reviewing
authority under the Constitution to be increasingly vigilant to ensure
observance with the rule of law and in this task, the court must not
flinch or falter. It may be pointed out that this ground of invalidity,
namely, that the governmental action is unreasonable or lacking in
the quality of public interest, is different from that of mala fides
though it may, in a given case, furnish evidence of mala fides."
43. Mr. M. I. Qadri, learned senior counsel is supported by another
Judgment reported in (1980) 4 Supreme Court Cases 1. Paras 14 and 22
being relevant are extracted as under:-
"14. Where any governmental action fails to satisfy the test of
reasonableness and public interest discussed above and is found to be
wanting in the quality of reasonableness or lacking in the element of
public interest, it would be liable to be struck down as invalid. It must
follow as a necessary corollary from this proposition that the
Government cannot act in a manner which would benefit a private
party at the cost of the State; such an action would be both
unreasonable and contrary to public interest. The Government,
therefore, cannot, for example, give a contract or sell or lease out its
property for a consideration less than the highest that can be obtained
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for it, unless of course there are other considerations which render it
reasonable and in public interest to do so. Such considerations may be
that some Directive Principle is sought to be advanced or implemented
or that the contract or the property is given not with a view to earning
revenue but for the purpose of carrying out a welfare scheme for the
benefit of a particular group or section of people deserving it or that
the person who has offered a higher consideration is not otherwise fit
to be given the contract or the property. We have referred to these
considerations to only illustratively, for there may be an infinite variety
of considerations which may have to be taken into account by the
Government in formulating its policies and it is on a total evaluation of
various considerations which have weighed with the Government in
taking a particular action, that the Court would have to decide whether
the action of the Government is reasonable and in public interest. But
one basic principle which must guide the Court in arriving at its
determination on this question is that there is always a presumption
that the Governmental action is reasonable and in public interest and it
is for the party challenging its validity to show that it is wanting in
reasonableness or is not informed with public interest. This burden is a
heavy one and it has to be discharged to the satisfaction of the Court by
proper and adequate material. The Court cannot lightly assume that the
action taken by the Government is unreasonable or without public
interest because, as we said above, there are a large number of policy
considerations which must necessarily weigh with the Government in
taking action and therefore the Court would not strike Down
governmental action as invalid on this ground, unless it is clearly
satisfied that the action is unreasonable or not in public interest. But
where it is so satisfied, it would be the plainest duty of the Court under
the Constitution to invalidate the governmental action. This is one of
the most important functions of the Court and also one of the most
essential for preservation of the rule of law. It is imperative in a
democracy governed by the rule of law that governmental action must
be kept within the limits of the law if there is any transgression the
Court must be ready to condemn it. It is a matter of historical
experience that there is a tendency in every government to assume more
and more powers and since it is not an uncommon phenomenon in
countries that the legislative check is getting diluted, it is left to the
Court as the only other reviewing authority under the Constitution to be
increasingly vigilant to ensure observance with the rule of law and in
this task, the court must not flinch or falter. It may be pointed out that
this ground of invalidity, namely, that the governmental action is
unreasonable or lacking in the quality of public interest, is different
from that of mala- fides though it may, in a given case, furnish evidence
of mala-fides.
"22. Now the 2nd respondents had made an offer for putting up a
modern plant for manufacture of resin, turpentine oil and other
derivatives within the State provided they were assured a definite
supply of resin every year. But having regard to the commitments
already made by it, it was not possible for the State to make any definite
allocation of resin to the 2nd respondents and a proposal was therefore
mooted that 11,85,414 blazes in inaccessible areas of Reasi, Ramban
and Poonch Divisions could be allocated to the 2nd respondents for
tapping on certain terms and conditions, so that the 2nd respondents
could tap these blazes and out of the resin extracted, obtain for
themselves an assured supply for running the factory to be set up by
them and make the balance quantity available to the State for its own
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purpose. The 2nd respondents were agreeable to this proposal and they
accordingly put forward an alternative proposal on these lines for the
consideration of the State and eventually, the impugned order came to
be made in favour of the 2nd respondents. We have already discussed
the terms of the impugned order and it is clear from what we have said
that the impugned order was unquestionable and without doubt, in the
interest of the State and even with a microscopic examination we Pail
to see anything in it which could possibly incur the reproach of being
condemned as arbitrary or irrational. It is true that no advertisements
were issued by the State inviting tenders for award of tapping contract
in respect of these blazes; or stating that tapping contract would be
given to any party who is prepared to put up a factory for manufacture
of resin, turpentine oil and other derivatives within the State, but it
must be remembered that it was not tapping contract simpliciter which
was being given by the State. The tapping contract was being given by
way of allocation of raw material for feeding the factory to be set up by
the 2nd respondents. The predominant purpose of the transaction was
to ensure setting up of a factory by the 2nd respondents as part of the
process of industrialisation of the State and since the 2nd respondents
wanted assurance of a definite supply of resin as a condition of putting
up the factory, the State awarded the tapping contract to the 2nd
respondents for that purpose. If the State were giving tapping contract
simpliciter there can be no doubt that the State would have to auction
or invite tenders for securing the highest price, subject, of course, to
any other relevant overriding considerations of public weal or interest,
but in a case like this where the State is allocating resources such as
water, power, raw materials etc. for the purpose of encouraging setting
up of industries within the State, we do not think the State is bound to
advertise and tell the people that it wants a particular industry to be set
up within the State and invite those interested to come up with
proposals for the purpose. The State may choose to do so, if it thinks fit
and in a given situation, it may even turn to be advantageous for the
State to do so, but if any private party comes before the State and offers
to set up an industry, the State would not be committing breach of any
constitutional or legal obligation if it negotiates with such party and
agrees to provide resources and other facilities for the purpose of
setting up the industry. The State is not obliged to tell such party;
"Please wait. I will first advertise, see whether any other offers are
forthcoming and then after considering all offers, decide whether I
should let you set up the industry." It would be most unrealistic to insist
on such a procedure particularly in an area like Jammu and Kashmir
which on account of historical, political and other reasons, is not yet
industrially developed and where entrepreneurs have to be offered
attractive terms in order to persuade them to set up an industry. The
State must be free in such a case to negotiate with a private
entrepreneur A with a view to inducing him to set up an industry within
the State and if the State enters into a contract with such entrepreneur
for providing resources and other facilities for setting up an industry,
the contract cannot be assailed as invalid so long as the State had acted
bona fide, reasonably and in public interest. If the terms and conditions
of the contract or the surrounding circumstances show that the State
has acted mala fide or out of improper or corrupt motive or in order to
promote the private interests of someone at the cost of the State, the
Court will undoubtedly interfere and strike down State action as
arbitrary, unreasonable or contrary to public interest. But so long as
the State action is bonafide and reasonable, the Court will not interfere
merely on the ground that no advertisement was given or publicity or
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made or tenders invited. Here, the 2nd respondents approached the
State for the purpose of setting up a modern factory for manufacture of
resin, turpentine oil and other derivatives and asked for allocation or
resin and the State, with a view to offering an incentive to the 2nd
respondents to set up the factory, made the impugned order awarding
the tapping contract in respect of these blazes to the 2nd respondents as
a part of a package deal. We have already pointed out and w need not
repeat again, that the impugned order was reasonable and in the
interest of the State and in the circumstances, we are clearly of the view
that it cannot be assailed as invalid merely because no advertisements
were issued inviting offers for setting up a factory and taking the
tapping contract as an integral part of the transaction.
44. Mr. M. I. Qadri, learned senior counsel is supported by another
Judgment reported in AIR 2000 Supreme Court 801. Paras 9 to 12 being
relevant are extracted as under:-
"9. What was emphasised by Mr. Nariman and Mr. Venugopal is
that C1AL was incorporated to set up a new private International
Airport. At all airports, permissions for operating aircraft,
maintenance, licensing of crew and flying schedules of airlines is
controlled by the Directorate General of Civil Aviation. Applications
for hanger space, landing and parking facilities and ground handling
are made to and granted by the Airport Authority of India. This was the
first attempt to privatise. Therefore, C1AL, in order to make its project
viable and successful, after taking into consideration various factors,
decided to entrust the task of providing ground handling services for all
airlines operating from the airport to one single agency. For achieving
this purpose it invited offers by writing letters to eight reported
agencies to enable it to decide the best terms and conditions for
awarding the contract and to select the best agency. They submitted
that, for these reasons, it did not choose to adopt the public tender
mode. In its counter affidavit filed in the High Court this position was
made clear. What was stated in the counter affidavit was as under:
"The object of inviting their offers was only to get the terms and
conditions of the respective companies for consideration by the Board
of Directors of this respondent and to select the best suited to the
interest of the respondent. Being a new project implemented by raising
finance from various sources all efforts were made to make the project
viable. Hence when Ext. R1 (a) letter was sent inviting offers the
paramount consideration was to get the best offer for the benefit of the
1st respondent. There was no minimum estimated amount or other
conditions for acceptance and rejection like the usual tender
procedure."
The High Court was also of the view that if the offers were made only
pursuant to the letter dated 12.11.1997 the respondents would have a
good case. But in view of Board of Directors' decision to be fair and the
CIAL's letter dated 13.7.1998 calling upon the tenderers to give the
best offer before it took a final decision and informing them that the
contract period would be 10 years and the subsequent letter dated
5.8.1998 requiring the tenderers to give a bank guarantee, C1AL was
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bound to treat this case as a case of public tender and for that reason it
was not open to it to say that it was free to accept that offer which was
best suited to it. It is, however, not necessary to deal with this aspect
more elaborately and point out how the High Court's view is wrong as
it was not disputed by the learned counsel appearing for Cambatta that
it was open to C1AL not to accept the highest offer of Cambatta if it
had good reasons to do so. It was at no point of time declared by C1AL
that it would accept the highest offer or accept the offer on a particular
basis. AH along it had made clear that it would accept that offer which
was found to be the best in their interest.
10. The only point that really falls for consideration is whether C1AL
had acted fairly after it had invited fresh offers by its letter dated
13.7.1998. It was forcefully submitted by Mr. Andhyarujina that after
the High Level Committee had evaluated the proposals and
recommended Air India for the job it was unfair on the part of C1AL to
have permitted Air India to make a fresh presentation and revise its
terms. Even while conceding that C1AL had a right to enter into
negotiations even at that stage, it was submitted that Cambatta also
should have been invited for negotiations and informed about the
revised terms of Air India. It was submitted that like Air India,
Cambatta should have been given an opportunity to match the offer
made by Air India. From the letter written by C1AL to Cambatta on
13.7.1998 and similar letters written to others also, it appears that the
Board of Directors had, in its meeting held on 29.6.1998, taken certain
decisions and felt that in fairness all eligible agencies should be
requested to give their best offers. Air India had submitted its offer on
20.7.1998 and stated therein that its offer was open for negotiations.
Cambatta had submitted its offer on 28.7.1998. It was made on the
basis of certain assumptions. C1AL had in all received five offers. The
High Level Committee constituted for evaluation of offers did not
consider the offer of M/s. P.S.M. Aviation Pvt. Ltd. as it had not
submitted the required bank guarantee. The other four agencies,
namely, Cambatta, DNATA, Air India and Ogden, were found on par as
far as technical competence, organisational capacity and past
experience was concerned. It, however, short listed Cambatta and Air
India on the ground that they are Indian organisations, operate mainly
in India and has better proven adaptability for operating in Indian
conditions. It then recommended Cambatta for undertaking the ground
handling services without giving any reason for its preference for
Cambatta, while making the decision the Committee observed that it
would be for the Board of Directors to consider whether any
negotiation should be held with the qualified agencies. The Board of
Directors had then met on 7.11.1998 and after taking note of the
minutes of the high level committee and taking note of the fact that Air
India is a public sector undertaking and a national carrier, decided to
have a detailed discussion with Air India before taking a final decision.
It, therefore, invited the Managing Director of Air India for giving a
presentation before the Board on 27.11.1998. It was also felt necessary
to take a final decision in its next meeting to be held on 27.11.1998 as
the matter was pending since long and it was necessary to solve the
financial crunch of C1AL. Cambatta had protested against giving of an
opportunity of Air India to make a presentation by its letters dated
12.11.1998 and 23.11.1998 on the ground that what was being done by
C1AL was improper and in violation of global competitive bidding
norms. In spite of the protest of Cambatta the Board of Directors of
C1AL permitted Air India to make a presentation for outlining in detail
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its ground handling capabilities, packages of services which it wished
to offer and other relevant advantages Including financial. Air India by
its letter dated 1.12,1998 recapitulated the details of the offer which it
had already made, and the subsequent presentation and discussion on
27.11.1998. The said letter discloses that some changes were made by
Air India in its original offer to make it more acceptable to C1AL. In
that letter it was also indicated that it would try to enhance Air India
and other Airlines'-domestic and international operations through
C1AL and pointed out that only through maximisation of operations
this new venture can be a profitable one at an early date. Cambatta
again by its letter dated 7.12.1998 reiterated that its offer was the
highest (most favourable to C1AL) and that it would be unfair to accept
the revised bid of Air India. In spite of the protests of Cambatta, C1AL,
by its letter dated 12.12.1998, informed Air India that the Board of
Directors had decided to accept the revised offer of Air India.
11. This narration of facts makes it clear that all along, after the High
Level Committee had recommended Cambatta for awarding the
contract, what Cambatta was contending was that C1AL having
accepted the limited global competitive bidding norms and having
decided 28.7.1998 as, the last date for inviting final offer, it was not
open to it thereafter to negotiate with Air India behind the back of
Cambatta and permit Air India to revise its offer. Even though
Cambatta had written protest letters, it had not requested C1AL to give
it any opportunity to negotiate or to improve upon its offer. The
decision of the High Level Committee was obviously not the final
decision and certainly it was not binding on the Board of Directors who
were the final authority to take the decision. The Board of Directors, at
the meeting held on 7.11.1998. considered the proposals of Air India
and Cambatta and appears to have taken a tentative decision to award
the contract to Air India and, therefore, called it for negotiations with a
view to have better terms and take the final decision. The Board of
Directors did take the final decision on 27.11.1998 as Air India agreed
to make its offer more beneficial to CIAL. That becomes apparent from
Air India's letter dated 1.12.1998. The Board of Directors having taken
tentative decision on 7.11.1998 there was no point in calling Cambatta
thereafter for any negotiation. It may be recalled that Cambatta was
recommended over All India by the High Level Committee only because
Cambatta's financial rating was found higher. What is significant to
note is that even the High Level Committee had in its minutes noted that
financial rating cannot be the sole criterion for taking the final
decision. Moreover, in a commercial transaction of such a complex
nature a lot of balancing work has to be done while weighing all the
relevant factors and the final decision has to be taken after taking an
overall view of the transaction. It is true that even though Cambatta
had called upon CIAL to produce the minutes of the meeting of the
Board of Directors held on 27.11.1998 the same was not made
available to Cambatta. But that did not entitle the High Court to draw
any adverse inference. The High Court had not called upon CIAL to
produce those minutes.
12. As regards the merits of Cambatta's proposal, it was contended by
Mr. Andhyarujina that all the three offers of Cambatta were superior in
terms of parameters laid down by CIAL than Air India's offer. He
submitted that even after CIAL unilaterally raised the license fee of Air
India from 17 per cent to 20 per cent in the 10th year to match
Cambatta's offer and imposed a condition that Air India would not sub-
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contract, it did not become comparable with the offer of Cambatta as
Air India did not offer to pay 2 per cent bonus in license fee. It was also
submitted that Air India's representation that it would be able to bring
more traffic was illusory and for that reason also Air India's proposal
cannot be regarded as superior or even comparable with the proposal
of Cambatta. We do not think that CIAL did any wrong in taking into
consideration the fact that Air India is an airline and being a national
carrier would be in a position to bring more traffic of Air India and
other domestic lines if it was awarded the contract. As regards the
merits of the rival offers, we do not think it proper to look at only the
financial aspect and hold that CIAL did not accept Cambatta's offer,
even though it was better, because it wanted to favour Air India or that
it had acted under the influence of Air India and the Ministry of Civil
Aviation. In a commercial transaction of a complex nature what may
appear to be better, on the face of it, may not be considered so when an
overall view is taken. In such matters the Court cannot substitute its
decision for the decision of the party awarding the contract. On the
basis of the material placed on record we find that CIAL bona fide
believed that involving a public sector undertaking and a national
carrier would, in the long ran, prove to be more beneficial to CIAL.
For all these reasons it is not possible to agree with the finding of the
High Court that CIAL had acted arbitrarily and unreasonably and was
also influenced by extraneous considerations during its decision
making process.
45. Mr. M. I. Qadri, learned senior counsel is supported by another
Judgment reported in AIR (1986) 4 Supreme Court Cases 566. Paras 4 and 5
being relevant are extracted as under:-
"4. It is clear on a plain reading of Rule XXII that a licence for
manufacture or sale of country liquor may be disposed of in any one of
four different modes, viz., tender, auction, fixed licence fee or such
other manner as the State Government may by general or special order
direct. These four different modes are alternative to one another and
any one of them may be resorted to for the purpose of disposing of a
licence. It is not necessary that the mode of disposal by tender must
first be resorted to and if that cannot be acted upon, then only the mode
of disposal by auction and failing that and not otherwise, the third
mode of disposal by fixed licence fee and only in the event of it not
being possible to adopt the first three modes of disposal, the last mode,
namely, 'such other manner as the State Government may by general or
special order direct'. This would seem to be plain and incontrovertible
but Mr. Justice B.M. Lal has rather curiously in his judgment held that
these four modes of disposal are inter-related and "failing in one of the
clauses, the next is to be acted upon and for applying the fourth clause,
it is incumbent for the State to specify the manner by general or special
order and this also includes "specifying how and why the other three
clauses are not possible to be acted upon which compels to take resort
to the fourth clause". This view taken by Mr. Justice B.M. Lal in regard
to the interpretation of Rule XXII is obviously unsustainable. It is
indeed surprising how such a view could possibly be taken. On a plain
grammatical construction of Rule XXII it is obvious that the Collector
or an Officer authorised by him in that behalf can choose any one of
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the four modes set out in that Rule. There is nothing in the language of
Rule XXII to justify the interpretation that an earlier mode of disposal
set out in the Rule excludes a latter mode or that reasons must be
specified where a latter mode is adopted in preference to an earlier
one. The language of Rule XXII in fact militates against such
construction. It is impossible to subscribe to the proposition that it is
only when an earlier mode is not possible to be adopted for reasons to
be specified, that a latter one can be followed. The Collector or an
Officer authorised by him can adopt any one of the four modes of
disposal of licence set out in Rule XXII, but, of course, whichever mode
be adopted, the equality clause of the Constitution should not be
violated in its application.
5. It is also clear from Rules III, IV and V which we have set out
above, that there are two purposes for which a licence in Form D-2 for
construction and working of a distillery may be granted. It may be
granted as an adjunct to the licence in Form D-1 under Rule IV or it
may be granted as an independent licence under Rule V irrespective
whether the grantee holds a licence in Form D-1 or not. There are also
two types of licences for wholesale supply of country liquor to retail
vendors, namely, licence in Form D-1 and licence in Form D-1(s). The
licence in Form D-1 in clause 5 clearly contemplates that the holder of
such licence must also have a licence in Form D-2. No one can have a
licence in Form D-1 unless he has simultaneously a licence in Form D-
2. He must have a distillery in which he distils country spirit in order
that he should be able to make wholesale supply of country liquor to
retail vendors. If for any reason he is unable to obtain licence in Form
D-2 for working a distillery, no licence in Form D-1 can be given to
him and if he has such licence, it would become ineffective. It is for this
reason that when a person is granted a licence in Form D-1 by the
Excise Commissioner under Rule III, he is also simultaneously granted
a licence in Form D-2 under Rule IV and the period of both the licences
is co-terminus. But, though a person cannot be granted a licence in
Form D-1 unless he also obtains licence in Form D-2, the converse
does not hold true. A licence in Form D-2 can be granted to a person
under Rule V even though he does not hold a licence in Form D-1.
Where a person is granted a licence in Form D-2 for working a
distillery under Rule V, without having a licence in Form D-1 for
wholesale supply of country liquor to retail vendors, he cannot make
wholesale supply of country liquor manufactured by him to retail
vendon but he can supply such country liquor to a person holding
licence in Form D-1(s) or he can manufacture rectified spirit,
denatured spirit or foreign liquor as contemplated in condition 3 of the
licence in Form D-2. It is not necessary that a person holding a licence
in Form D-2 must also simultaneously have a licence in Form D-1."
46. In view of the detailed discussion on the subject, the Court has come
to the conclusion that in the instant writ petition there is no merit and
deserves to be dismissed.
47. In view of above, the writ petition being without merit, shall stand
dismissed. However, no order as to costs.
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Mr. M. I. Qadri, Sr. Advocate with Mr. Mir Naveed Gul, Advocate for petitioner.
Mr. Shah Aamir, AAG for respondents.
1. The petitioner alleges violation of order passed by this Court in OWP
No. 2257/2018 on 26th March, 2019, in terms whereof this Court while
disposing of the writ petition, had directed the respondents to determine the
entitlement of amount, if any due to the petitioner and consider the release of
payment of such amount in his favour within a period of two weeks.
2. On notice respondents have filed statement of facts, which reveals that
because of the subject matter being pending decision in OWP No. 786/2018
and also the cognizance taken by the ACB, the payment was not made to the
petitioner. It is stated that the dental chairs have already been installed by the
end user, however, payment to the firm is withheld for want of clearance in
joint surprise check No. JSK-JSC-07/2018 (enquiries) initiated by the
Vigilance Organization (Anti-Corruption Bureau) as well as pendency of the
OWP No. 786/2018 and the interim directions passed therein, as such, a
request has been made to the SSP, Anti-Corruption, Bureau, Jammu to
conclude the joint surprise check (enquiry) on its merits enabling the
respondent corporation to carry out implementation of the Hon'ble Court
orders to determine the entitlement of amount as may be due to the petitioner
so that same is arranged and payment released in favour of the petitioner
firm.
03. Since the Court has decided the writ petition OWP No. 786/2018,
pendency whereof may have formed the ground for official respondents to
withheld the payment of amount of dental chairs supplied by the petitioner,
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as the said writ petition stands dismissed, therefore, this contempt petition
shall stand settled with direction to respondents to implement the final order
made in OWP No. 2257/2018 dated 26.03.2019 in letter and spirit. In the
event the petitioner has still on dismissal of the writ petition not satisfied
with the implementation, he is at liberty to approach this Court for seeking
appropriate relief.
Disposed of.
Registry to place copy of order on each file.
(Ali Mohammad Magrey)
Judge
Srinagar:
14.06.2021
"Mohammad Yasin Dar"
i. Whether the Judgment is reportable? Yes/No.
ii. Whether the Judgment is speaking? Yes/No.
Pronounced today on 14th of June, 2021, in terms of Rule 138 (3) of
Jammu and Kashmir High Court Rules, 1999.
(Sanjeev Kumar)
Judge
MOHAMMAD YASIN DAR
2021.06.14 13:44
I attest to the accuracy and
integrity of this document
