M/S M. R. Industries vs Government Of Jk & Ors
2021 Latest Caselaw 603 j&K/2

              HIGH COURT OF JAMMU AND KASHMIR
                        AT SRINAGAR

                             WP(C) No. 907/2021
                             CM No. 2857/2021


                                                 Reserved On: 28th of May, 2021.
                                               Pronounced On: 29th of May, 2021.

M/S M. R. Industries
                                                              ... Petitioner(s)
                              Through:
                    Mr Nisar Ahmad Bhat, Advocate.

                                   Versus

Government of JK & Ors.
                                                            ... Respondent(s)

Through:

Mr M. A. Chashoo, AAG.

CORAM:

Hon'ble Mr Justice Ali Mohammad Magrey, Judge.

(JUDGMENT)

01. Shorn of details, the case of the Petitioner is that he is an 'A'

Class Contractor and proprietor of the unit 'M/S M. R. Industries' situated at

HMT, Srinagar. In terms of NIT No. 226 of R&B Division, Ganderbal/2020-

21 issued under endorsement No.19627-36 dated 31st of March, 2021, the

Respondents invited e-enters on turnkey basis in EPC mode (Double Cover

System) from approved and eligible firms/ Contractors registered with the

J&K Government, CPWD, Railways and other State/ Central Governments

for Design, Construction and Commissioning of Single Span 1 x 50 Mtr

Motorable 2-Lane Steel Truss Girder Bridge over Nallah Singh at Shallabugh,

Ganderbal. The tender notice, as stated, prescribed 16 th of April, 2021 as the

last date for submission of bids and 17th of April, 2021 as the time of opening

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CM No. 2857 /2021

of technical bids. In response to the aforesaid tender notice, the Petitioner,

besides other eligible Contractors, is stated to have submitted his tender along

with all requisite documents before the Respondents. It is pleaded that the

tender document of the Petitioner was complete in all respects and that the

Petitioner was, thus expecting positive results therefrom, however, on 26 th of

April, 2021, the Petitioner received a message from the Respondents on the

registered telephone number, whereby he was informed that his tender has

been found 'non-responsive'. Feeling aggrieved thereby, the Petitioner has

challenged the vires of the same through the medium of the instant Writ

Petition before this Court under Article 226 of the Constitution of India.

02. When this matter was taken up for consideration on 4 th of May,

2021, the Court, while granting time for the Respondents to file Objections,

directed that while the process of bidding may be finalized, the contract work

shall not be allotted till the next date of hearing before the Bench. Thereafter,

the case came up for hearing on 25th of May, 2021, on which date, the Court,

after hearing the counsel for the parties and going through the Objections so

filed by the Respondents, while fixing the matter for further consideration on

28th of May, 2021, directed the Respondents to file Additional Affidavit.

Subsequently, on 28th of May, 2021, after taking on record the Additional

Affidavit so filed by the Respondents, the parties were finally heard and

matter reserved for orders.

WP(C) No. 907/2021;

CM No. 2857 /2021

03. Mr Nisar Ahmad Bhat, the learned counsel for the Petitioner,

submitted that the impugned action of the Respondents in declaring the bid of

the Petitioner as 'non-responsive' is based on malafide consideration aimed

at depriving the Petitioner from the contract so as to accommodate some blue-

eyed Contractor. It is submitted that the Petitioner fulfilled all the terms and

conditions prescribed in the NIT, but despite that the Respondents have

declared the bid of the Petitioner as non-responsive without assigning any

reasons for the same. It is contended that by excluding the Petitioner from the

zone of consideration, the Respondents have put unnecessary burden on the

public exchequer inasmuch as the Petitioner had quoted the lowest rates,

thereby defeating the very purpose of the tendering process.

04. Per Contra, Mr M. A. Chashoo, the learned Additional Advocate

General, appearing on behalf of the Respondents, while reiterating the

contentions made in the Objections/Additional Affidavit, submitted that as per

condition No.5 of the tender notice, the execution of civil engineering works

should be supported with TDS and ITR and as per the details of financial

turnover uploaded by the Petitioner along with his tender document, he has

not paid the requisite TDS, thereby rendering his bid liable to be rejected. It

is further submitted that upon analysis of the bid of the Petitioner, the technical

expert committee have found that the bidding capacity of the Petitioner is only

Rs.1.63, which is much less than the required bid capacity of Rs.2.16 crores

as prescribed in the tender notice. The learned Additional Advocate General,

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CM No. 2857 /2021

in this behalf, contends that the Petitioner, thus was not fulfilling all the terms

and conditions prescribed in the tender notice and, therefore, his bid has been

rightly declared as 'non-responsive'.

05. Heard the learned counsel for the parties and considered the

matter.

06. Admittedly, the Respondents have declared the bid of the

Petitioner as 'non-responsive' on the ground that the Petitioner did not meet

all the requirements prescribed by the Respondents in the tender notice.

Perusal of the pleadings on record would show that the Technical Expert

Committee constituted by the Respondents for the purpose, while evaluating

the bid of the Petitioner, found the bidding capacity of the Petitioner way

below the one prescribed in the tender notice. Besides, it has also been noticed

that the Petitioner has not deducted the actual amount of TDS in consonance

with its disclosed financial turnover with respect to the last five financial years

which has resulted in violation of Clause 5 of the tender notice. Once the

Petitioner did not meet all the requirements so prescribed in the tender

document while submitting his bid, in such eventuality, the action of the

Respondents in declaring the bid of the Petitioner as 'non-responsive' cannot

be said to be irrational or arbitrary in nature. Such a claim would only lie in

the mouth of the Petitioner in case the bid of the Petitioner was in accordance

with the agreed terms and conditions stipulated vide the tender notice. When

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CM No. 2857 /2021

asked to clarify his stand qua the aforesaid discrepancies highlighted by the

Respondents in the bid of the Petitioner, the learned counsel for the Petitioner

referred to the documents placed on record alongside the petition and

contended that the Petitioner is, in fact, meeting all the requirements stipulated

by the Respondents in terms of the tender notice. This submission of the

learned counsel for the Petitioner, when considered in the context of the details

provided by the Respondents in the Additional Affidavit submitted by them

on 27th of May, 2021 pursuant to order of this Court dated 25th of May, 2021,

however, does not hold good vis-à-vis all the requirements of the tender

notice, more particularly the requirement of deduction of actual TDS and the

required bidding capacity. The Technical Expert Committee constituted by

the Respondents, after minutely examining the bid of the Petitioner along with

the documents submitted by the Petitioner, have given all the details regarding

the discrepancies in the bid of the Petitioner which resulted in the decision of

declaring the bid of the Petitioner as 'non-responsive'.

07. Besides, it is apposite to note here that in the matters of Contract,

there is a golden principle prevalent which provides that where a power is

given to do a certain thing in a certain way, the thing must be done in that way

or not at all and any other methods of performance are necessarily forbidden.

This principle is applied in contractual disputes, particularly in commercial

contracts or bids leading up to commercial contracts, where there is stiff

competition. It must follow from the application of this principle that if the

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CM No. 2857 /2021

tender issuing authority prescribes certain specific terms and conditions to be

complied with by the concerned bidders, then all the bidders ought to comply

with the same without any default. Any decision taken by the tender issuing

authority in accepting or rejecting a tender document not in consonance with

the terms and conditions prescribed in the tender document, it could lead to

unnecessary/ avoidable litigation requiring the authority to justify the

rejection or acceptance of each tender document. This is hardly conducive to

a smoother and hassle-free bidding process.

08. The Courts are expected to exercise judicial restraint in

interfering with the administrative action, particularly in matter of tender or

contract. Ordinarily, the soundness of the decision taken by the tendering

issuing authority ought not to be questioned, but the decision-making process

can certainly be subject to judicial review. The soundness of the decision may

be questioned, firstly, if the decision made is so arbitrary and irrational that

the Court can say that the decision is such that no responsible authority acting

reasonably and in accordance with relevant law could have reached or,

second, if the process adopted or decision made by the authority is malafide

or intended to favour someone or, third, if the public interest is affected. In

the case on hand, when the Petitioner has failed to meet all the requirements

so prescribed by the Respondents in the tender notice, in such eventuality, the

decision of the Respondents in declaring the bid of the Petitioner as 'non-

responsive' cannot be said to be one where they have acted in a manner in

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CM No. 2857 /2021

which no responsible authority acting reasonably and in accordance with the

relevant law would have acted. Furthermore, a bare perusal of the pleadings

on record, does not indicate that the decision made by the authority is malafide

or intended to favour someone. Likewise, the third ground of public interest

is also not affected in the present case because while it may be in public

interest to have greater competition, it is also in public interest that the tender

conditions are complied with and that there is no uncertainty in that area. The

contention of the Petitioner that the Respondents have declared the bid of the

Petitioner 'non-responsive' only in order to accommodate their blue-eyed

bidder is also not substantiated with any sound documentary proof.

09. Law on the subject of scope of judicial review in the matters of

Contract is no more res integra.

10. 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 the issue similar to the one subject matter

of the instant Petition, 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

WP(C) No. 907/2021;

CM No. 2857 /2021

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."

11. 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

WP(C) No. 907/2021;

CM No. 2857 /2021

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 grant certain measure of freedom of 'play in the joints' to the executive."

12. 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."

WP(C) No. 907/2021;

CM No. 2857 /2021

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.

13. 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 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

WP(C) No. 907/2021;

CM No. 2857 /2021

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.

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 declaring the bid of the Petitioner as 'non-

responsive' is an arbitrary exercise of power or that the same was/ is malafide

in nature. In 'Jagdish Mandal v. State of Orissa; (2007) 14 SCC 517', at

Paragraph No.22, the Hon'ble Supreme Court held, thus:

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"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, it is more

than apparent that the decision taken by the Respondents in declaring the bid

of the Petitioner as 'non-responsive' 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 failure of the Petitioner to meet all the requirements stipulated in

the tender notice.

14. The judgments referred to and relied upon by the learned counsel

for the Petitioner, being distinguishable, are not applicable to the facts and

circumstances of the case on hand.

WP(C) No. 907/2021;

CM No. 2857 /2021

15. For all that has been said and done hereinabove, I do not find any

merit in this Petition. It entails dismissal and is, accordingly, hereby

dismissed. Interim directions, if any, subsisting as on date shall stand vacated.

Pending miscellaneous applications, if any, shall also stand disposed of,

accordingly.

16. Parties to bear their own costs.

(Ali Mohammad Magrey) Judge SRINAGAR May 29th, 2021 "TAHIR"

                               i.    Whether the Judgment is reportable?           Yes/ No.
                               ii.   Whether the Judgment is speaking?             Yes/ No.




TAHIR MANZOOR BHAT
2021.05.29 14:22
I attest to the accuracy and
integrity of this document