High Court
Case Details
WP(C) 890/2012 BEFORE THE HON’BLE MR. JUSTICE UJJAL BHUYAN Mr. S. N. Sarma, learned Senior Counsel for the respondents. Heard Mr. P. J. Saikia, learned Counsel for the petitioners and
Legal Reasoning
Matter pertains to tender notice issued by the Indian Oil Corpor 2. ation Limited (Assam Oil Division) (IOCL) for hiring of school buses. Petitioner is aggrieved by some of the conditions incorporated in the tender notice which they contend are unwarranted and have put the petitioners to a disadvantageous p osition.
Decision
3. Both the writ petitions raise identical issue and have been hear d together. However, for easy reference, WP(C) No. 890/2012 is taken up as the r eference case. 4. wing reliefs:- Petitioners have filed the above writ petition seeking the follo (1) as to why the Letter Inviting Tender No. DRC0115234, DRC 0115235 and DRC 01115233 all dated 12.12.2011 shall not be set aside and as to why (2) the incorporation of the clauses in the NIT/LIT published on 12. 12.2011 requiring the tenderer/members of the petitioner No. 1 to comply with th e provisions of various labour laws which have no application on the members of the petitioners or the persons engaged by them as driver and handymen in providi ng transport services to the respondent IOCL as illegal and further as to why (3) the respondent authorities shall not be directed not to incorporate any clau ses requiring the tenderer to observe the provisions of various labour laws whic h have no application on the members of the petitioners or the persons engaged b y them as driver and handymen in providing transport services to the respondent IOCL in the LIT/NIT those may be issued for the purpose from time to time. As per the tender notice dated 12.12.2011, tenders were invited 5. for hiring school buses with drivers and helpers for a period of 3 years on 12 h ourly daily duty basis. As per Clause 15.5 of the bid document, the contractor w ould be responsible for payment of full wages regularly before 7th of each month to each worker employed by them in the work under the contract in accordance wi th the Contract Labour (Regulation and Abolition) Act, 1970. Clause 16.0 require s that the contractor shall enforce the provisions of ESI Act/Scheme with regard to the contract. The Contractor shall conduct employees contribution from the w ages of each of the employees and shall deposit the same together with the emplo yees contribution in their respective ESI Code. 6. Learned counsel for the petitioners submits that drivers and hel pers engaged by the members of petitioner No. 1 are not contractual labour of th e respondents but are engaged by the vehicle owners for providing smooth transpo rt service. Likewise, various labour laws are not attracted in respect of the co ntractors. Insistence on the aforesaid conditions have put the vehicle owners, w ho are members of the petitioner No. 1, to great disadvantage. 7. In their affidavit-in-opposition, respondent Nos. 1, 2 and 3 hav e stated that terms and conditions incorporated in the tender notice, particular ly those objected to by the petitioners, cannot be said to be arbitrary and unre asonable. Terms of invitation to tender cannot be open to judicial scrutiny as i t is in the realm of contract. It is further stated that many tenderers had subm itted tender including some members of the petitioner No. 1. The tenders were pr ocessed and thereafter work orders were issued to the successful tenderers. 8. On the basis of the aforesaid affidavit, Mr. Sarma, learned seni or counsel for the respondents submits that the writ petition is not maintainabl e and should be dismissed. He submits that the fact that tenderers had complied with the conditions shows that those conditions cannot be said to be unworkable. Moreover, the successful tenderers who have been awarded the contract are not b efore the Court. 9. It is a settled law that the power of judicial review extends to scrutiny of award of contracts by the State or by its agencies including examin ation of the decision making process culminating in the award of contract to pre vent arbitrariness or favouritism. However, the Courts have repeatedly stressed that the terms of invitation to tender are not open to judicial scrutiny because invitation to tender is in the realm of contract. In Directorate of Education a nd Ors. Vs. Educomp Datamatics Ltd. and Ors. reported in (2004) 4 SCC 19, the Ho n’ble Supreme Court after referring to various decisions on this aspect, held as under:- It is well settled now that the courts can scrutinize the award of the c (cid:28)9. ontracts by the Government or its agencies in exercise of their powers of judici al review to prevent arbitrariness or favouritism. However, there are inherent l imitations in the exercise of the power of judicial review in such matters. The point as to the extent of judicial review permissible in contractual matters whi le inviting bids by issuing tenders has been examined in depth by this Court in Tata Cellular V. Union of India. After examining the entire case-law the followi ng principles have been deduced (SCC pp.687-88, para 94) (cid:28)94. The principles deducible from the above are: (1) The modern trend points to judicial restraint in administrative action. The court does not sit as a court of appeal but merely reviews the manne (2) r in which the decision was made. (3) The court does not have the expertise to correct the administrative deci sion. If a review of the administrative decision is permitted it will be substit uting its own decision, without the necessary expertise which itself may be fall ible. (4) The terms of the invitation to tender cannot be open to judicial scrutin y because the invitation to tender is in the realm of contract. Normally speakin g, 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 pla y in the joints is a necessary concomitant for an administrative body functionin g in an administrative sphere or quasi administrative sphere. However, the decis ion must not only be tested by the application of Wednesbury principle of reason ableness (including its other facts pointed out above) but must be free from arb itrariness not affected by bias or actuated by mala fides. (6) tration and lead to increased and unbudgeted expenditure (cid:29) Quashing decisions may impose heavy administrative burden on the adminis 10. d : (SCC p.623, para 7) In Air India Ltd. V. Cochin Inernational Airport Ltd. this Court observe (cid:28)The award of a contract, whether it is by a private party or by a public body o r the State, is essentially a commercial transaction. In arriving at a commercia l decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own ter ms of invitation to tender and that is not open to judicial scrutiny. It can ent er into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation for bona fide reasons, if the tender conditions per mit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities an d agencies are bound to adhere to the norms, standards and procedure laid down b y them and cannot depart from them arbitrarily. Though that decision is not amen able to judicial review, the court can examine the decision-making process and i nterfere if it is found vitiated by mala fides, unreasonableness and arbitrarine ss. (cid:29) 11. This principle was again restated by this Court in Monarch Infrastructure (P ) Ltd. Vs. Commr. Ulhasnagar Municipal Corpn. It was held that the terms and con ditions in the tender are prescribed by the Government bearing in mind the natur e of contract and in such matters the authority calling for the tender is the be st judge to prescribe the terms and conditions of the tender. It is not for the courts to say whether the conditions prescribed in the tender under consideratio n were better than the ones prescribed in the earlier tender invitations. 12. It has clearly 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 con tract. That the Government must have a free hand in setting the terms of the ten der. It must have reasonable play in its joints as a necessary concomitant for a n administrative body in an administrative sphere. The courts would interfere wi th the administrative policy decision only if it is arbitrary, discriminatory, m ala 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 oth er terms in the tender would have been fair, wiser or logical. The courts can in terfere only if the policy decision is arbitrary, discriminatory or mala fide. (cid:29) 10. In Meerut Development Authority Vs Association of Management Stu dies and Anr. reported in (2009) 6 SCC 171, Hon’ble Supreme Court held that judi cial scrutiny in matters of tenders and contract would always depend upon the co ntextual facts. 11. Keeping in mind the broad legal parameters relating to the scope of judicial review in matters of tenders and contract as noticed above, more pa rticularly in so far terms and conditions of tender are concerned, Court is of t he view that insistence on the above conditions by the tendering authority canno t be said to be arbitrary, unreasonable or irrational. Moreover, those condition s relate to labour laws concerning the welfare of workmen. Therefore, those cann ot be said to be against public interest. It cannot also said to be unworkable a s similarly placed contractors had fulfilled the required conditions and have be en awarded the contract. The contractors who have been awarded the contract are also not before the Court. 12. In such circumstances, Court is of the considered view that no c ase for interference has been made out by the petitioners. Both the writ petitio ns are devoid of merit and are accordingly dismissed. 13. There shall however be no order as to cost.