Madhya Pradesh High Court
G.V. Industries Through Authorized ... vs Managing Director on 31 May, 2024
Author: Sushrut Arvind Dharmadhikari
Bench: Sushrut Arvind Dharmadhikari
1
IN THE HIGH COURT OF MADHYA PRADESH
AT INDORE
BEFORE
HON'BLE SHRI JUSTICE SUSHRUT ARVIND DHARMADHIKARI
&
HON'BLE SHRI JUSTICE GAJENDRA SINGH
ON THE 31 st OF MAY, 2024
WRIT PETITION No. 15187 of 2024
BETWEEN:-
G.V. INDUSTRIES THROUGH AUTHORIZED PERSON /
PARTNER MR. AJIJ KHAN S/O JAMIL REHMAN KHAN
OCCUPATION: SERVICE 22-A, INDUSTRIAL AREA,
DHAR, 18- MAHDYA PRADESH (MADHYA PRADESH)
.....PETITIONER
(BY SHRI ROHIT SHARMA, ADVOCATE)
AND
1. MANAGING DIRECTOR MADHYA PRADESH
LAGHU UDYOG NIGAM LTD. FIRST FLOOR,
PANCHANAND BHAWAN, MALVIYA NAGAR,
BHOPAL (MADHYA PRADESH)
2. STATE OF MADHYA PRADESH THROUGH
PRINCIPAL SECRETARY DEPARTMENT OF
I N D U S T R I E S SATPURA BHAWAN BHOPAL
(MADHYA PRADESH)
3. M/S ESKAY ENTERPRISES THROUGH
AUTHORIZED PERSON 51 JAIN MANDIR ROAD,
BHOPAL (MADHYA PRADESH)
4. M/S METAL PROFILES THROUGH AUTHORIZED
PER SON INDUSTRIAL AREA PITHAMPUR DIST.
DHAR (MADHYA PRADESH)
5. M/S SANSUN INDUSTRIES PVT. LTD. THROUGH
AUTHORIZED PERSON PLOT NO. H 164/165, MIDC,
AMBAD NASHIK (MAHARASHTRA)
.....RESPONDENTS
(NONE FOR THE RESPONDENTS)
Signature Not Verified
Signed by: RAVI PRAKASH
Signing time: 01-06-2024
11:21:02
2
This petition coming on for admission this day, Justice Sushrut Arvind
Dharmadhikari passed the following:
ORDER
Heard on the question of admission.
02. In this writ petition under Article 226 of the Constitution of India the
petitioner is aggrieved by the allotment of tender / bid to respondents No.3 to 5.
03. Brief facts of the case are that respondent No.1 had floated a Notice
Inviting Tender bearing Bid No.23096-A dated 19.01.2024 for supply, fixing,
erection of open gym equipment to various Government Departments of
Madhya Pradesh under rare contract. The petitioner was one of the bidder and
submitted its bid.
04. The grievance of the petitioner is that with an intention to disqualify
the petitioner and other bidders, the bid was awarded to respondents No.3 to 5
by declaring them L-1, L-2 & L-3 on 26.02.2024. Vide email dated 26.02.2024,
the petitioner was informed that their bid has been rejected on the ground that as
per the requirement, they are not having requisite machines. Hence, the present
writ petition is before this Court.
05. Learned counsel for the petitioners contended that strict terms and
conditions of the tender are required to be followed before the allotment. In
order to favour respondents No.3 to 5, bid has been awarded to them. Hence,
the order allotting the tender in favour of respondents No.3 to 5 is arbitrary,
perverse, illegal and unfair. Learned counsel further submits that due to non-
compliance of mandatory conditions, the petitioner's chance for allotment of
bid is highly affected.
06. Heard learned counsel for the appellant.
07. The Apex Court in the case of Silppi Constructions Contractors v/s
Union of India & Another reported in (2020) 16 SCC 489 in paragraphs - 7
to 18 has held as under:-
"7 . In Tata Cellular v. Union of India 3 it was held that judicial review
of government contracts was permissible in order to prevent arbitrariness
or favouritism. The principles enunciated in this case are (SCC pp.687 -
88 para 94):
"94. ......
(1) The modern trend points to judicial restraint in administrative
action.(2) The Court does not sit as a court of appeal but merely
reviews the manner in which the decision was made.(3) The
Court does not have the expertise to correct the administrative
decision. If a review of the administrative decision is permitted it
will be substituting its own decision, without the necessary
expertise which itself may be fallible.(4) The terms of the
invitation to tender cannot be open to judicial scrutiny because
the invitation to tender is in the realm of contract. Normally
speaking, the decision to accept the tender or award the contract
is reached by process of negotiations through several tiers. More
often than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other
words, a fair play in the joints is a necessary concomitant for an
administrative body functioning in an administrative sphere or
quasiadministrative 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 1
must be free from arbitrariness not affected by bias or actuated
by mala fides.(6) Quashing decisions may impose heavy
administrative burden on the administration and lead to increased
and unbudgeted expenditure."
8. In Raunaq International Ltd. vs. I.V.R. Construction Ltd. 2, this Court
held that superior courts should not interfere in matters of tenders unless
substantial public interest was involved or the transaction was mala fide.
9. In Air India Limited vs. Cochin International Airport Ltd.3, this Court
once again stressed the need for overwhelming public interest to justify
judicial intervention in contracts involving the State and its
instrumentalities. It was held that Courts must proceed with great caution
while exercising their discretionary powers and should exercise these
powers only in furtherance of public interest and not merely on making
out a legal point.
10 . In Karnataka SIIDC Ltd. vs. Cavalet India Ltd.4 it was held that
while effective steps must be taken to realise the maximum amount, the
High Court exercising its power under Article 226 of the Constitution is
not competent to decide the correctness of the sale affected by the
Corporation.
11. In Master Marine Services (P) Ltd. vs. Metcalfe & Hodgkinson (P)
Ltd.5 it was held that while exercising power of judicial review in respect
of contracts, the Court should concern itself primarily with the question,
whether there has been any infirmity in the decision making process. By
way of judicial review, Court cannot examine details of terms of contract
which have been entered into by public bodies or State.
12. In B.S.N. Joshi & Sons Ltd. vs. Nair Coal Services Ltd.6 it was held
that it is not always necessary that a contract be awarded to the lowest
tenderer and it must be kept in mind that the employer is the best judge
therefor; the same ordinarily being within its domain. Therefore, the
court's interference in such matters should be minimal. The High Court's
jurisdiction in such matters being limited, the Court should normally
exercise judicial restraint unless illegality or arbitrariness on the part of
the employer is apparent on the face of the record.
13. In Jagdish Mandal vs. State of Orissa 7 it was held:
"22. Judicial review of administrative action is intended to
prevent arbitrariness, irrationality, unreasonableness, bias and
mala fides. Its purpose is to check whether choice or decision is
made "lawfully" and not to check whether choice or decision is
"sound". When the power of judicial review is invoked in matters
relating to tenders or award of contracts, certain special features
should be borne in mind. A contract is a commercial transaction.
Evaluating tenders and awarding contracts are essentially
commercial functions. Principles of equity and natural justice
stay at a distance. If the decision relating to award of contract is
bonafide and is in public interest, courts will not, in exercise of
power of judicial review, interfere even if a procedural
aberration or error in assessment or prejudice to a tenderer, is
made out. The power of judicial review will not be permitted to
be invoked to protect private interest at the cost of public
interest, or to decide contractual disputes. The tenderer or
contractor with a grievance can always seek damages in a civil
court. Attempts by unsuccessful tenderers with imaginary
grievances, wounded pride and business rivalry, to make
mountains out of molehills of some technical/procedural
violation or some prejudice to self, and persuade courts to
interfere by exercising power of judicial review, should be
resisted. Such interferences, either interim or final, may hold up
public works for years, or delay relief and succour to thousands
and millions and may increase the project cost manifold........"
14. In Michigan Rubber (India) Ltd. vs. State of Karnataka & Ors.8 it
was held that if State or its instrumentalities acted reasonably, fairly and
in public interest in awarding contract, interference by Court would be
very restrictive since no person could claim fundamental right to carry on
business with the Government. Therefore, the Courts would not normally
interfere in policy decisions and in matters challenging award of contract
by State or public authorities.
15. In Afcons Infrastructure Ltd. vs. Nagpur Metro Rail Corporation
Ltd.9 it was held that a mere disagreement with the decisionmaking
process or the decision of the administrative authority is no reason for a
constitutional Court to interfere. The threshold of mala fides, intention
to favour someone or arbitrariness, irrationality or perversity must be
met before the constitutional Court interferes with the decisionmaking
process or the decision. The owner or the employer of a project, having
authored the tender documents, is the best person to understand and
appreciate its requirements and interpret its documents. It is possible that
the owner or employer of a project may give an interpretation to the
tender documents that is not acceptable to the constitutional Courts but
that by itself is not a reason for interfering with the interpretation given.
16. In Montecarlo vs. NTPC Ltd.10 it was held that where a decision is
taken that is manifestly in consonance with the language of the tender
document or subserves the purpose for which the tender is floated, the
court should follow the principle of restraint. Technical evaluation or
comparison by the court would be impermissible. The principle that is
applied to scan and understand an ordinary instrument relatable to
contract in other spheres has to be treated differently than interpreting
and appreciating tender documents relating to technical works and
projects requiring special skills. The owner should be allowed to carry
out the purpose and there has to be allowance of free play in the joints.
17. In Municipal Corporation, Ujjain and Another vs. BVG India Ltd.
and Others11 it was held that the authority concerned is in the best
position to find out the best person or the best quotation depending on
the work to be entrusted under the contract. The Court cannot compel the
authority to choose such undeserving person/company to carry out the
work. Poor quality of work or goods can lead to tremendous public
hardship and substantial financial outlay either in correcting mistakes or
in rectifying defects or even at times in re doing the entire work."
08. Normally, the duty of the Court is to confine itself to the question of
legality such as: (i) whether the decision making authority exceeded its power
? (ii) committed any error of law; (iii) committed a breach of rules of natural
justice; (iv) reached a decision which no reasonable tribunal would have
reached or (v) abused its power.
09. This Court being a guardian of fundamental rights is duty bound to
interfere when there is arbitrariness, irrationality, malafides and bias. However,
the Apex Court in the aforesaid cases has cautioned time and again that the
courts should exercise a lot of restraint while exercising their powers of
judicial review in contractual or commercial matters. The Court can only
interfere in contractual matters where clear-cut case of arbitrariness or
malafides or bias or irrationality is made out. As laid down in the aforesaid
judgments stated above, the Courts should not use a magnifying glass while
scanning the tenders and make every small mistake appear like a big
blunder. Hence, no case for interference is made out.
10. In view of the forgoing discussion, Writ Petition stands dismissed at
admission stage itself.
(S. A. DHARMADHIKARI) (GAJENDRA SINGH)
JUDGE JUDGE
Ravi
