Research › Browse › Judgment

Kerala High Court · body

1975 DIGILAW 258 (KER)

K. T. ABRAHAM v. DIVISIONAL FOREST OFFICER, MALAYATTUR

1975-10-06

GEORGE VADAKKEL

body1975
Judgment :- 1. Petitioner is same in these petitions; so also respondents 1 and 2, viz., the Divisional Forest Officer, Malayattoor and the Conservator of Forests, Trichur, respectively. 1st respondent issued Ext. P1 (in the earlier petition) notification inviting tenders in respect of some forest-work; petitioner submitted a tender in time, and it is common case that his was the lowest quotation. However the same was not accepted, nor any of the other tenders some of which were submitted admittedly beyond the stipulated time. The 2nd respondent as per Ext. P2 (in the latter petition) directed the 1st respondent to 're-tender'. It is the petitioner's case that respondents are bound to accept his offer and conclude the contract instead of calling for fresh tenders. 2. The 1st respondent submitted to the 2nd respondent the tenders received pursuant to Ext. P1 notification together with a report recommending the acceptance of petitioner's tender; he (the 1st respondent) on receipt of some tenders after the stipulated time, sent to the 2nd respondent these tenders along with a 2nd report suggesting rejection of these post-offers. One of the post-offers was by one C. C. Ulahannan and Sons, who is not a party to these petitions. They as per a letter dated 14-2-1975 (last date for receipt of tenders was 12-2-75) offered to do the work at 88% of the standard rate as against 93% offered by the petitioner. By Ext. R2 (in O P.1603/1975) dated 26-2-1975 they reduced the rate to 87%. 3. Though the 2nd respondent on receipt of the reports and tenders "solicited orders" of the Chief-Conservator of Forests, forwarding the reports and the tenders to him, the latter directed the 2nd respondent to decide the matter himself. The 2nd respondent thereupon decided not to accept any one of the tenders and directed the 1st respondent to invite fresh tenders by Ext. P2 proceedings as already mentioned. 4. Some efforts were made by the learned counsel for the petitioner to make out a case of concluded contract, for, according to him the 1st respondent's recommendation to accept the tender submitted by the petitioner and his second report suggesting rejection of post-offers (it is his case that 1st respondent rejected the post-offers but the files show that he only suggested rejection) are 'in the eye of law of acceptance of tender'. However, this line of argument was not perused by the learned counsel, and rightly so, in view of the fact that neither of the respondents could be said to have completed communication of acceptance as against the petitioner who is the proposer by putting the communication of acceptance in a course of transmission to the petitioner (the proposer) so as to be out of the power of the respondents. 5. The points pressed before me are: (1) the respondents are in law obliged to accept the petitioner's tender; (2) the respondents failed to follow the procedure set out and adopted by them as the procedure governing the matter; (3) the respondents exercised their discretion (in rejecting the petitioner's tender) dishonestly and unfairly; and (4) the rule of promissory estoppel would govern the case. 6. It is a well settled proposition that the State, as any other, is bound by the terms of a concluded contract to which it is a party; nor can it be postulated that the State is an exception to the general rule that no one can be compelled to enter into a contract (a contract entered into not on the free agreement of parties thereto but on compulsion would not be a contract at all) though however 'if it (the State) enters into a contract, it must do so fairly, without discrimination and without unfair peocedure', (vide E. E. C. Ltd v. State of W. B. (AIR. 1975 S.C. 266 at 269). This is because, as stated in that decision the activities of the Government have a public element and therefore there should be fairness and equality! 7. In my view it is the function of the executive to decide as to what is the most appropriate thing to do in matters of making contracts with reference to the particular circumstances obtained in a given case; and in so deciding the executive would not (and could not) be fettered by incompatible undertakings, if any; and it appears to me that the executive discretion as to whether the Government should or should not make a contract is not liable to be substituted by judicial discretion. In this region of administrative discretion the Court would step in only to examine whether the exercise of that function is tainted by arbitrariness or unfairness in the matter of choice of the person with whom the contract is made or is about to be made. 8. In State of Orissa v. Harinarayan (AIR. 1972 S. C. 1816) the Supreme Court said: "The High Gouri erroneously thought that the Government was bound to satisfy the Court that there was a collusion between the bidders. The High Court was not sitting on appeal against the order made by the Government. The inference of the Government that there was collusion among the bidders may be right or wrong. But that was not open to judicial review so long as it is not proved that it was a make-believe one. The real opinion formed by the Government was that the price fetched was not adequate. That conclusion is taken on the basis of Government's expectations. The conclusion reached by the Government does not affect any one's rights. Hence, in our opinion the High Court misapplied the ratio of the decisions of this Court in Barium Chemicals Ltd. v. Company Law Board, (1966) Supp SCR 311= (AIR 1967 SC 295) and Rohtas Industries Ltd. v. S.T. Agarwal. (1969) 1 SCC 325= (AIR 1.969 SC 707)." And earlier in that decision that court ruled: "Citizens cannot have any fundamental right to trade or carry on business in the properties or rights belonging to the Government, nor can there be any infringement of Art.14, if the Government tries to get the best available price for its valuable rights." (para 17). This case was followed by my learned brother Eradi J in G.E. & E Co. v. Chief Engineer (Projects) (AIR. 1974 Kerala 23) and by my learned brother Poti J. in T. V. Peermohamed v. D.F.O., Tenmala (AIR. 1974 Kerala 192). It is only necessary to emphasise that in entering into a contract the State 'must do so fairly, without discrimination and without unfair procedure' as laid down by the Supreme Court. The above passage that I have read from Harinarayan's case was quoted and followed by the Supreme Court in a recent decision, Har Shankar v. Dy. E. & T. Commr. (AIR. 1975S.C. 1121) (see para 55 at p. 1133). The above passage that I have read from Harinarayan's case was quoted and followed by the Supreme Court in a recent decision, Har Shankar v. Dy. E. & T. Commr. (AIR. 1975S.C. 1121) (see para 55 at p. 1133). To the same effect is the decision of that court in Raghunandan Panda v. State of Orissa (1975) 1 SCC. 106:(1975) 1 S.C.W.R.110) where it was held: "In this case, however, it is difficult to accept the argument put forward on behalf of the appellant that the rules confer any rights on him. No person has a vested right to get a lease of the Government and, of course, he has got a right to get his application for lease disposed of fairly and not arbitrarily. If, therefore, it could be held in favour of the appellant that his claim for lease of the plot in question was capriciously, arbitrarily and unfairly rejected and that the lease granted to respondent No. 3 was arbitrary and unfair a case could be found in his favour." 9. I do not think that the rule in Vitarelli v. Seaton (359 U. S.535) relied on by the learned counsel for the petitioner and applied in Junus v. Auditor General of India (1970 K. L. T. 571-para 4) and discussed in Amarjit Singh Ahluwalia v. State of Punjab (1975) 3 S.C.C. 503) would apply to and govern a decision taken by the Government not to enter into a contract at all or with a particular person despite an assurance in the tender notification that 'the lowest tender will ordinarily be accepted' or some such Code of Conduct having been adopted by the Government to any extent beyond what I have stated in the preceding paragraphs. Regarding the rule in Vitarelli v. Seaton, it is interesting to notice, that the Supreme Court is the above mentioned case said as follows: "This view is of course not based on the equality clause of the United States Constitution and it is evolved as a rule of administrative law. But the principle is the same, namely, that arbitrariness should be eliminated in state action." (at page 510) 10. But the principle is the same, namely, that arbitrariness should be eliminated in state action." (at page 510) 10. In short therefore, even if it be that the State when it enters into a contract ought to do so fairly and not arbitrarily, still the State is not bound to and no court will compel it to enter into a contract, and this is so even in cases where the negotiations have reached the final stages and what remains is only acceptance of the offer; the State like any other person is free to refuse to strike the bargain so long as it has not picked and chosen a person unfairly or arbitrarily for the purpose of entering into a contract, and none of the offerers or proposers has any right to call in question the State's refusal to accept his offer. 11. There is no case before me that any one of the offerers had been selected or chosen by respondents for the award of the work. All tenders, those submitted within and beyond the stipulated time, were rejected; fresh tenders were directed to be invited. This the respondents were competent to do. There is no merit in the contentions raised by the learned counsel for the petitioner. 12. In view of what is said above there is no relevance for the argument that the offers made by C. C. Ulahannan and Sons could not have been considered by the respondents in so far as they did not satisfy one or the other of the conditions made mention of in Clause.3 of Ext. MA (in O. P.1603/1975). The respondents have not considered those offers for acceptance; at any rate, neither of them was accepted by the respondents. 13. It was vehemently argued that the respondents have failed to comply with the conditions mentioned in Clause.3 of Ext. P-1A. In the light of what is stated earlier I need only mention this argument for rejecting the same. Besides, I do not think that Ext. MA lays down the norms and conditions on which tenders or post-offers would be or should be accepted. Ext. MA embodies only certain proposals or scheme sent by the Government to the Accountant General, and there is nothing to indicate that these proposals have been finalised. The 2nd respondent has sworn that no final orders have been passed on the same. 14. Ext. MA embodies only certain proposals or scheme sent by the Government to the Accountant General, and there is nothing to indicate that these proposals have been finalised. The 2nd respondent has sworn that no final orders have been passed on the same. 14. There is no merit in the submission made by the learned counsel for the petitioner that the Full Bench decision of this Court in Simon v. Advocate General (1975 KLT. 78) where the learned Chief Justice pointed out and held (at p. 82) that'even administrative actions or the exercise or discretionary power granted by statutes when it affects persons prejudicially are amenable to judicial review in given circumstances' (underlining by me) would enable me to review Ext. P-2 proceedings in so far as on the authority of Harinarayan's case the conclusion reached by the 2nd respondent not to accept any one of the tenders or post-offers submitted pursuant to Ext. P-1 notification 'does not affect any one's rights.' 15. Petitioner, or for that matter, no one is precluded from getting the work in question by submitting fresh tenders. Ext. P-2 decision was taken on the expectations of the 2nd respondent that it would be more advantageous to the Government to call for fresh tenders. There is no case before me that it was a ruse to preclude the petitioner from getting the work, and there cannot be in so far as the petitioner is also entitled to submit fresh tender, though perhaps, it may be that on re-tender he may have to face stiff competition for which reason re-tender may prove to be disadvantageous or even disastrous to him. But this would not make Ext. P-2 decision dishonest or unfair. 16. It is not clear to me as to how the doctrine of promissory or equitable estoppel would be attracted to the cases on hand in so far as conditions Nos. 8 and 27 of the tender which the petitioner had declared that he would abide by reserves to the competent authority and the 2nd respondent respectively the power of accepting or rejecting the tender in part or in whole without assigning any reason therefore-the conditions of tender and the declaration of the petitioner are in the tender submitted by the petitioner which the learned Government pleader placed before me. The petitioner can therefore have no case that respondents made any representations of facts or that they held out any promises relying on which the petitioner altered his position to his prejudice. 17. These petitions fail and are dismissed. Petitioner has successfully prevented the re-tender till now and therefore these are fit cases where I should order the petitioner to pay the costs of the respondents which I fix at Rs. 200/-in each of the two petitions. I do so. Dismissed.