DIRECTORATE OF EDUCATION & Ors. v. EDUCOMP DAT AMA TICS LTD & Ors.

The respondents contended that the High Court was right in striking A the tender clause of the Government as being arbitrary; and that fresh tenders should be invited because of the fall in price in the computer hardware for the year 2002-2003. Allowing the appeals, the Court B HELD: 1.

The Courts can scrutinise the award of the contracts by the Government or its agencies in exercise of its powers of judicial review to prevent arbitrariness or favouritism. However, there are inherent limitations in the exercise of the power of judicial review in such matters. 11015-CI C

1.

The terms of the invitation to tender are not open to judicial scrutiny, the same being in the realm of contract. 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 D administrative policy decision only if it is arbitrary, discriminatory, ma/a fide 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, wiser or logical. The Courts can interfere only if the policy decision is arbitrary, E discriminatory or mala fide. [1017-A-C)

1.

The Government introduced the criteria of turnover of Rs. 20 crores to enable the companies with real competence having financial stability and capacity to participate in the tender particularly in view of the past experience. This Court does not agree with the view taken by the F High Court that the term providing a turnover of at least Rs. 20 crores did not have a nexus with either the increase in the number of schools or the quality of education to be provided. Due increase in the number of schools the hardware cost itself went upto Rs. 40-50 crores. The total cost of the project was more than 100 crores. A Company having a turnover G of Rs. 2 crores may not have the financial viability to implement such a project. As a matter of policy, the Government took a conscious decision to deal with one firm having financial capacity to take up such a big project instead of dealing with multiple small companies which is a relevant consideration while awarding such a big project. Moreover, it was for the authority to set the terms of the tender. The Courts would not interfere H - __ ..... 1012 SUPREME COURT REPORTS (2004] 2 S.C.R. A with the terms of the tender notice unless it was shown to be either arbitrary or discriminatory or actuated by malice. While exercising the power of judicial review of the terms of the tender notice the Court cannot say that the terms of the earlier tender notice would serve the purpose sought to be achieved better than the terms of tender notice under consideration and order change in them, unless it is of the opinion that the terms were either arbitrary or discriminatory or actuated by malice. The. provision of the terms inviting tenders from firms having a turnover of more than Rs. 20 crores has not been shown to be either arbitrary or discriminatory or actuated by malice. (1017-E-H; 1018-A-B] B C