High Court · 2012

This appeal has been preferred against order of learned Single Judge qua shing the tender process initiated vide tender notice dated 12.7.2011 and direct ing that the appellant Railway may consider the highest bid of the writ petition ers, if the writ petitioners are ready to abide by the non-incorporated clauses. The Divisional Commercial Manager, N.F. Railways floated tender for leas ing of 23 tonne space in VPH (Parcel Van) on round trip basis for 3 years. The t ender was opened on 16.8.2011 and though the writ petitioner was the highest bid der, the tender process was cancelled on the ground that necessary clauses were not incorporated in the tender notice. The respondent-writ petitioner approached this Court with the submission that cancellation of the tender process was arbitrary and there was no valid re ason for rejection of the highest bid. Learned Single Judge upheld the plea of t he writ petitioner with the observation that the writ petitioner having exposed their rates, it will be in disadvantageous situation in making fresh quotation. Accordingly, the decision to cancel the tender process was set aside. It was obs erved that a public authority was required to act fairly even in the matter of g iving of a contract. Contention raised on behalf of the appellant is that though the authorit y has to act fairly, there was valid reason for cancelling the tender process in the present case, namely, that tender conditions were not specified in the tend er notice. Once it is so, mere prejuidice to the writ petitioner who had quoted the rate cannot be a ground to quash the decision of cancellation of tender proc ess. We have considered rival submissions. It is well settled that judicial review in tender matters is permissible on the grounds of illegality, irrationality and procedural infirmity, particula rly if the decision is malafide or in denial of level playing field. Mere fact t hat the order cancelling the tender process is not reasoned one, where reasons c an be discerned from the records, cannot be ground to interfere in a tender matt er. Mere fact that the petitioner has exposed the rate can also not be a ground to quash the decision of cancellation of tender process if decision was otherwis e bonafide and legal. If valid reasons exist for not accepting even highest bid, mere highest bid may not confer a right in favour of such bidder. If decision is rational, bo na fide, legal and not against public interest, the Court has to be circumspect in interfering in tender matters. In Raunaq International Ltd. -Vs. I.V.R. Const ruction Ltd. and Others (1999) 1 SCC 492, it was observed :- (cid:28) 11. When a writ petition is filed in the High Court challenging the award of a contract by a public authority or the State, the court must be satisfied that there is some element of public interest involved in entertaining such a petiti on. If, for example, the dispute is purely between two tenderers, the court must be very careful to see if there is any element of public interest involved in t he litigation. A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in in tervening in such a commercial transaction. It is important to bear in mind that by court intervention, the proposed project may be considerably delayed thus es calating the cost far more than any saving which the court would ultimately effe ct in public money by deciding the dispute in favour of one tenderer or the othe r tenderer. Therefore, unless the court is satisfied that there is a substantial amount of public interest, or the transaction is entered into mala fide, the co urt should not intervene under Article 226 in disputes between two rival tendere rs. & & & & & & &.

18. The same considerations must weigh with the court when interim orders are pa ssed in such petitions. The party at whose instance interim orders are obtained has to be made accountable for the consequences of the interim order. The interi m order could delay the project, jettison finely worked financial arrangements a nd escalate costs. Hence the petitioner asking for interim orders in appropriate cases should be asked to provide security for any increase in cost as a result of such delay or any damages suffered by the opposite party in consequence of an interim order. Otherwise public detriment may outweigh public benefit in granti ng such interim orders. Stay order or injunction order, if issued, must be mould ed to provide for restitution.

19. A somewhat different approach may be required in the cases of award of a con tract by the Government for the purchase of items for its use. Judicial review w ould be permissible only on the established grounds for such review including ma la fides, arbitrariness or unreasonableness of the Wednesbury variety. Balance o f convenience would play a major role in moulding interim relief. & & & & & & & & & &

22. In Tata Cellular v. Union of India (1994) 6 SCC 651 this Court again examine d the scope of judicial review in the case of a tender awarded by a public autho rity for carrying out certain work. This Court acknowledged that the principles of judicial review can apply to the exercise of contractual powers by government bodies in order to prevent arbitrariness or favouritism. However, there are inh erent limitations in the exercise of that power of judicial review. The Court al so observed that the right to choose cannot be considered as an arbitrary power. Of course, if this power is exercised for any collateral purpose, the exercise of that power will be struck down: (SCC p. 675, para 71) (cid:28)71. Judicial quest in administrative matters has been to find the right balance between the administrative discretion to decide matters ... and the need to rem edy any unfairness. Such an unfairness is set right by judicial review. (cid:29) After examining a number of authorities, the Court concluded (at pp. 687-88) as follows: (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 substitutin g its own decision, without the necessary expertise, which itself may be fallibl e. (4) The terms of the invitation to tender cannot be open to judicial scrutiny be cause the invitation to tender is in the realm of contract. (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 or quasi-administrative sphere. However, the decision can be tested by the application of the (cid:28)Wednesbury principle (cid:29) of reasonableness and th e decision should be free from arbitrariness, not affected by bias or actuated b y mala fides. (6) Quashing decisions may impose heavy administrative burden on the administrat ion and lead to increased and unbudgeted expenditure.

23. The same view has been reiterated in Asia Foundation & Construction Ltd. v. Trafalgar House Construction (I) Ltd (1997) 1 SCC 738 the Court observing that j udicial review of contractual transactions by government bodies is permissible t o prevent arbitrariness, favouritism or use of power for collateral purposes. Th is Court added a further dimension to the undesirability of intervention by poin ting out that where the project is a high-cost project for which loans from the World Bank or other international bodies have been obtained after following the specifications and procedure of such a body, it would be detrimental to public i nterest to interfere. The same principles have also been reaffirmed in New Horiz ons Ltd. v. Union of India(1995) 1 SCC 478 with this Court again emphasising the need to allow for certain flexibility in administrative decision-making, observ ing that the decision can be challenged only on the Wednesbury principle of unre asonableness, i.e., unless the decision is so unreasonable that no sensible pers on would have arrived at such a decision, it should not be upset. In Delhi Scien ce Forum v. Union of India (1996) 2 SCC 405 this Court once again observed that if a reasonable procedure has been followed, the decision should not be challeng ed except on the Wednesbury principle of unreasonableness. (cid:29) In view of above law and facts and circumstances of the present case, we are of the view that the order passed by the learned Single Judge cannot be sus tained. We accordingly allow this appeal, set aside the order of learned Single Judge and dismiss the writ petition. The appellant will be at liberty to proceed with the matter in accordanc e with law.