High Court
Legal Reasoning
WP 7104 24.odtthat would not preclude the respondents from introducing the impugnedconditions. The impugned conditions are fall out of a policy decision. Thepetitioners fail to point out any perversity, patient illegality and arbitrarinessin the government resolution dated 12.06.2024. 15.The petitioners rely upon the judgment of Reliance Energy Limited(supra). Its paragraph no. 36 reads as follows:“36. We find merit in this civil appeal. Standards applied bycourts in judicial review must be justified by constitutionalprinciples which govern the proper exercise of publicpower in a democracy. Article 14 of the b Constitutionembodies the principle of "non-discrimination". However, itis not a free-standing provision. It has to be read inconjunction with rights conferred by other articles likeArticle 21 of the Constitution. The said Article 21 refers to"right to life". It includes "opportunity". In our view, as heldin the latest judgment of the Constitution Bench of nineJudges in I.R. Coelho v. State of T.N.3, Articles 21/14 arethe heart of the chapter on fundamental rights. They covervarious aspects of life. "Level playing field" is an importantconcept while construing Article 19(1)(g) of theConstitution. It is this doctrine which is invoked byREL/HDEC in the present case. When Article 19(1)(g)confers fundamental right to carry on business to acompany, it is entitled to invoke the said doctrine of "levelplaying field". We may clarify that this doctrine is, however,subject to public interest. In the world of globalisation,competition is an important factor to be kept in mind. Thedoctrine of "level playing field" is an important doctrinewhich is embodied in Article 19(1)(g) of the Constitution.This is because the said doctrine provides space withinwhich equally placed competitors are allowed to bid so asto subserve the larger public interest. "Globalisation", inessence, is liberalisation of trade, Today India hasdismantled licence raj. The economic reforms introducedafter 1992 have brought in the concept of "globalisation".Decisions or acts which result in unequal anddiscriminatory treatment, would violate the doctrine of6/11 WP 7104 24.odt"level playing field" embodied in Article 19(1)(g). Time hascome, therefore, to say that Article 14 which refers to theprinciple of "equality" should not be read as a stand aloneitem but it should be read in conjunction with Article 21which embodies several aspects of life. There is one moreaspect which needs to be mentioned in the matter ofimplementation of the afore stated doctrine of "levelplaying field". According to Lord Goldsmith, commitmentto the "rule of law" is the heart of parliamentary democracy.One of the important elements of the "rule of law" is legalcertainty. Article 14 applies to government policies and ifthe policy or act of the Government, even in contractualmatters, fails to satisfy the test of "reasonableness", thensuch an act or decision would be unconstitutional.” 16.The principles enumerated in the decision are binding. However, inthat case, the petitioners had participated in the process and were excludedfrom second stage of bidding process. The decision of employer waschallenged before the High Court unsuccessfully. Thereafter appeal waspreferred before the Supreme Court which was allowed. In the case in hand,the petitioners fail to make out violation of doctrine of ‘level playing field’.On facts, the case is distinguishable one and is not made applicable to thepresent matter.17.Next judgment cited is of Vaishnorani Mahnila Bachat Gat (supra).Our attention is invited to paragraph no 49. In that matter, the petition wasfiled in the High Court challenging a notice and especially questioning theconditions. By the impugned conditions the local self-help groups wereousted by the money power of large corporate houses. It was a tenderpertaining to supply of ready to cook food to Anganwadi Centres assupplementary nutritional food for children, pregnant women and lactatingmothers, adolescent girls under Integrated Child Development Scheme. Onfacts, it was found by the Supreme Court that the conditions under questionwere arbitrary. It was demonstrated that impugned conditions wereimposed so as to favour big players in the field. In the case in hand, we7/11 WP 7104 24.odthave recorded that the petitioners failed to make out the case ofarbitrariness or favouritism.18.Lastly, the petitioners place reliance on the decision in the matter ofSharma Transport (supra). We have gone through paragraph nos. 11, 12and 13 of the judgment. On facts and circumstances of that case thecondition was found to be unjustified and without there being any nexus tothe object to be achieved. The facts are different from present case. Theratio of the judgment is not applicable to present case. 19.The learned Addl.Govt. Pleader has relied on the judgment ofMichigan Rubber (India) (supra). We have gone through paragraph nos. 22and 24 of the judgment which stipulates scope of judicial review in thetender or contractual matters. Applying the same, we find that neither acase is made out for any mala fides nor of intended favouritism.20.It would be apposite to refer to decision of the Supreme Court in thematter of Airport Authority Vs. Center of Aviation; A.I.R. 2022 SupremeCourt 4742. It would be profitable to refer to following relevantparagraphs :“6. Even otherwise, even on merits also, the High Court haserred in quashing and setting aside the eligibility criteria/tenderconditions mentioned in the respective RFPs, while exercisingthe powers Under Article 226 of the Constitution of India. As perthe settled position of law, the terms and conditions of theInvitation to Tender are within the domain of thetenderer/tender making authority and are not open to judicialscrutiny, unless they are arbitrary, discriminatory or mala fide. Asper the settled position of law, the terms of the Invitation toTender are not open to judicial scrutiny, the same being in therealm of contract. The Government/tenderer/tender makingauthority must have a free hand in setting the terms of thetender.7. While considering the scope and ambit of the High CourtUnder Article 226 of the Constitution of India with respect to8/11 WP 7104 24.odtjudicial scrutiny of the eligibility criteria/tender conditions, fewdecisions of this Court are required to be referred to, which areas under: In the case of Maa Binda Express Carrier (supra), in paragraph8, this Court observed and held as under: 8. The scope of judicial review in matters relating to awardof contracts by the State and its instrumentalities is settled by along line of decisions of this Court. While these decisions clearlyrecognise that power exercised by the Government and itsinstrumentalities in regard to allotment of contract is subject tojudicial review at the instance of an aggrieved party, submissionof a tender in response to a notice inviting such tenders is nomore than making an offer which the State or its agencies areunder no obligation to accept. The bidders participating in thetender process cannot, therefore, insist that their tenders shouldbe accepted simply because a given tender is the highest orlowest depending upon whether the contract is for sale of publicproperty or for execution of works on behalf of the Government.All that participating bidders are entitled to is a fair, equal andnon-discriminatory treatment in the matter of evaluation of theirtenders. It is also fairly well settled that award of a contract isessentially a commercial transaction which must be determinedon the basis of consideration that are relevant to suchcommercial decision. This implies that terms subject to whichtenders are invited are not open to the judicial scrutiny unless itis found that the same have been tailor-made to benefit anyparticular tenderer or class of tenderers. So also, the authorityinviting tenders can enter into negotiations or grant relaxationfor bona fide and cogent reasons provided such relaxation ispermissible under the terms governing the tender process.In the case of Michigan Rubber (India) Ltd. (supra), afterconsidering the law on the judicial scrutiny with respect totender conditions, ultimately it is concluded in paragraph 23 asunder: 23. From the above decisions, the following principlesemerge: (a) The basic requirement of Article 14 is fairness in actionby the State, and non-arbitrariness in essence and substance isthe heartbeat of fair play. These actions are amenable to the9/11 WP 7104 24.odtjudicial review only to the extent that the State must act validlyfor a discernible reason and not whimsically for any ulteriorpurpose. If the State acts within the bounds of reasonableness, itwould be legitimate to take into consideration the nationalpriorities; (b) Fixation of a value of the tender is entirely within thepurview of the executive and the courts hardly have any role toplay in this process except for striking down such action of theexecutive as is proved to be arbitrary or unreasonable. If theGovernment acts in conformity with certain healthy standardsand norms such as awarding of contracts by inviting tenders, inthose circumstances, the interference by courts is very limited; (c) In the matter of formulating conditions of a tenderdocument and awarding a contract, greater latitude is requiredto be conceded to the State authorities unless the action of thetendering authority is found to be malicious and a misuse of itsstatutory powers, interference by courts is not warranted; (d) Certain preconditions or qualifications for tenders haveto be laid down to ensure that the contractor has the capacityand the resources to successfully execute the work; and (e) If the State or its instrumentalities act reasonably, fairlyand in public interest in awarding contract, here again,interference by court is very restrictive since no person can claima fundamental right to carry on business with the Government.In the aforesaid decision, it is further observed that theGovernment and their undertakings must have a free hand insetting terms of the tender and only if it is arbitrary,discriminatory, mala fide or actuated by bias, the courts wouldinterfere. It is further observed that the courts cannot interferewith the terms of the tender prescribed by the Governmentbecause it feels that some other terms in the tender would havebeen fair, wiser or logical.Similar views have been expressed in the case ofEducomp Datamatics Ltd. (supra) and Meerut DevelopmentAuthority (supra).”21.The case in hand represents that respondent no. 1 issued thegovernment resolution dated 12.06.2024 and impugned conditions are10/11
Arguments
WP 7104 24.odtIN THE HIGH COURT OF JUDICATURE AT BOMBAYBENCH AT AURANGABADWRIT PETITION NO. 7104 OF 20241)Moreshwar Mahila Prathamik GrahakSahakari Sanstha Limited at RajurTq. Bhokardan, Dist. Jalna, Through its ManagerShri. Madhukar Sheshrao Shelke,Age 52 years, Occ Service,R/o. Rajur, Tq. Bhokardan, Dist. Jalna.2)Mangal Supplies,Swami Samarthnagar Ambad Road, JalnaDist. Jalna.Through its ProprietorDeepak Baliram Kolte, Age 38 years,Occ. Business, r/o. Swami SamarthnagarAmbad Road, Jalna, Dist. Jalna.…PetitionersVERSUS1)The State of MaharashtraThrough the Secretary forMedical Education and Drugs Department,Mantralaya, Mumbai.2)The Commissioner,Medical Education and ResearchCommissionerate, Saint GeorgesHospital, Mumbai.3)The Director of Medical Educationand Research, Mumbai, Saint GeorgesHospital, Mumbai.…Respondents…Advocate for Petitioners : Mr. V.D. Hon, Senior Advocate, i/b Mr. A.V. Hon Addl. Government Pleader for Respondents/State : Mr. P.S. PatilCORAM: MANGESH S. PATIL & SHAILESH P. BRAHME, JJ.DATE: 20.07.2024 1/11 WP 7104 24.odtJUDGMENT : ( SHAILESH P. BRAHME, J.)Rule. Rule is made returnable forthwith. Heard both sides finally atthe stage of admission.2.The petitioners are challenging clauses no. 19 and 20 of governmentresolution dated 12.06.2024 and analogous condition nos. 15 and 16 of ‘E’tender notice dated 18.06.2024. They are further seeking direction todispense with the conditions under challenge and to accept their bid.3.The petitioners are experienced tenderers/contractors for supply offood grains, vegetables and fruits and they are interested in participating inthe tender process. Petitioner no. 1 had successfully executed a contract forthe year 2019-2020. A government resolution dated 12.06.2024 was issuedstipulating the modality of tender process for supply of food grains,vegetables and fruits to the government colleges and hospitals. Pursuant tothe resolution, respondent no. 2 floated ‘E’ tender notice on 18.06.2024along with the conditions. The impugned conditions are part of thegovernment resolution dated 12.06.2024 as well as tender notice dated18.06.2024. As per tender programme bids were to be opened on22.07.2024.4.It is the case of the petitioners that they raised objections on24.06.2024 to the tender conditions in question. A ‘pre-bid meeting’ wasconducted on 24.06.2024. The objections of all the tenderers includingpetitioner no. 2 were considered. No change was effected to the originaltender conditions. The process is likely to be completed with arbitrary andillegal tender conditions, which are tailor made.5.The learned senior counsel Mr. Hon appearing for the petitionerssubmits that clauses no. 19 and 20 of the government resolution dated12.06.2024 and condition nos. 15 and 16 of tender notice dated 18.06.2024are arbitrary and patently illegal. Those have been incorporated for the first2/11 WP 7104 24.odttime with an oblique motive to eliminate the petitioners and othercompetent bidders. Those have been incorporated to favour only selectedbidders. The impugned conditions are against the principles of ‘level playingfield’. The conditions are onerous and have no nexus to the purpose soughtto be achieved.6.The learned senior counsel further submits that the respondents havenot filed any affidavit in reply to justify the impugned conditions. He wouldsubmit that Schedule E(1) of the tender notice is inconsistent with clausesno. 19 and 20 of the government resolution as well as condition nos. 15 and16 of tender notice. He would submit that clause no. 20 and condition no.16 are patiently arbitrary and perverse. The petitioners seek to rely uponfollowing judgments :1)Reliance Energy Ltd. And another Vs. MaharashtraState Road Development Corporation Ltd and others;(2007) 8 Supreme Court Cases 1.2)Vaishnorani Mahila Bachat Gat Vs. State ofMaharashtra and others; (2019) 15 Supreme Court Cases718.3)Sharma Transports, Banglore Vs. Airport Authority ofIndia and another; 2002 (3) Mh.L.J. 83.7.Per contra, the learned Additional Government Pleader Mr. P.S. Patilwould oppose the submissions of the learned senior counsel for thepetitioners. He would submit that the petitioners did not submit objectionwithin time prescribed. The reply was filed on 01.07.2024 to justify theimpugned conditions and the clauses. In a pre-bid meeting the respondents-authorities considered the objections and overruled them. He would furthersubmit that no material is placed on record to demonstrate any favouritismor violation of ‘level playing field’. He would rely upon the judgment ofMichigan Rubber (India) Limited Vs. State of Karnataka and others; (2012)3/11 WP 7104 24.odt8 Supreme Court Cases 216. It is informed that the respondents havereceived 10 bids, which are to be opened on 22.07.2024. 8.We have considered the rival submissions of the parties.Undisputedly, the condition nos. 15 and 16 of the tender notice dated18.06.2024 are founded on clauses no. 19 and 20 of the governmentresolution dated 12.06.2024. The impugned condition nos. 15 and 16 inverbatim are as follows : “15) At least one work in the last three years up to thelast date of submission of tender to the tenderer for thesaid tender, including experience of supplying food grains,grocery materials, vegetables and fruits and other non-vegetable items to at least 45 Government/Semi-Government Institutions/Government Hospitals/ResidentialSchools/Hostels in Maharashtra or at least 6600 Individualsshould have experience in daily food supply and shouldhave completed work of at least Rs.12 crores by the lastdate of submission of tenders through the same service.16. The tenderer shall also provide the manpower(loading-unloading etc.) required for the supply of goods tothe Government/Semi-Government Institutions in theState, accordingly, in a single work order completed in thelast three years till the last date of submission of tenders inGovernment/ Semi-Government Establishments inMaharashtra at 25 different places should have experienceof providing minimum 50 manpower elsewhere.”9.The tender in question is floated for supply of food grains, vegetables,fruits etc. to the Government Medical Colleges and Hospitals attached to it.The duration of the contract is of three years. The tender conditions arebased upon the government resolution dated 12.06.2024. The impugnedconditions correspond to clauses no. 19 and 20 of the government resolution4/11 WP 7104 24.odtdated 12.06.2024. Though an affidavit in reply is not filed in the presentwrit petition by the respondents, the purpose for incorporating theconditions can be gathered from the reply dated 01.07.2024. 10.Considering the duration of the contract and the nature of work, itwould be reasonable for the respondent-employer to expect moreexperienced and competent contractors to participate in the bids. Thecondition no. 15 and clause no. 19 has an option . This indicates that thereis rationale. It is the wisdom and discretion of the employer to choose theconditions/clauses which are best suited for the work to be performed.11.The impugned conditions are stringent but they cannot be brandedper se arbitrary or illegal. Even if the submission of the learned seniorcounsel for the petitioners are accepted that few bidders are likely to beexcluded because of this stringent conditions, that would not lead toviolation of principles of ‘level playing field’. We have not been shownviolation of any statutory or constitutional provision. 12.Though it is submitted that the impugned conditions are tailor madeand incorporated with an oblique motive, no material is placed on record toshow as to how the petitioners have been targeted for their exclusion in thetender process. There is no material to show that the impugned conditionsare designed to favour a particular bidder. For want of necessary particulars,we are not inclined to accept the submissions of the learned senior counselfor the petitioners.13.It is informed by the learned Addl. Government Pleader that there are10 bidders in the fray. It means there are bidders, who are complying withthe conditions and interested in participating the tender process. Had theimpugned conditions been arbitrary and absurd per se, the respondentswould not have received response. 14.Though, previously such type of conditions were not incorporated,5/11
Decision
WP 7104 24.odtbased on it. It is prerogative of the respondents to settle the terms of thetender based on policy. We, therefore, do not find any substance in thepetition.22.The Writ Petition is dismissed. Rule is discharged. ( SHAILESH P. BRAHME, J.) (MANGESH S. PATIL, J.)mkd/-11/11