Usha Mehra ( 1 ) DEFENDANTS advertised for invitation of quotations forappointment of handling contractor at their stock yard at Allahabad. The plaintiff256 in response to the said advertisement submitted his tender in time. According tothe terms of the tender, the same was to be submitted upto 18/08/1994. Thetenders were to be valid for a period of 90 days from the date of opening of thetender. Part-1 of the tender was opened on 18/08/1994. Accordingly, thevalidity of the tender was to expire on 16/11/1994. It is further the case ofthe plaintiff that he was eligible for being considered for appointment as handlingcontractor. He had submited complete documents as per the terms of the tendernotice and also deposited the demand draft of Rs. 25,000. 00 being the earnest moneyfor the tender. Plaintiff s allegations are that the defendants, deliberately with anulterior motive knowing that the plaintiff s quotation was lowest against thetenders quoted by others, did not open the tender for a considerable long period. The defendant wanted to oblige M /s S. K. Sharma, the present handling contractor. In collusion with M/s S. K. Sharma, defendant No. 3 and other members of thetender Committee tried to exclude the plaintiff from being considered as successful tenderer. The defendant No. 3 wanted to open the price bid of the othertenderers on 23/09/1994 thereby excluding the plaintiff. Finding that thename of the plaintiff was not going to be considered, the plaintiff filed a complaintwith the higher officers of the defendant No. 3. The allegations were made thatm/s S. K. Sharma was favoured by appointing him as the handling contractorinitially on ad hoc basis w. e. f. 23/05/1993 for a period of six months andthereafter defendant No. 3 in order to favour M/s S. K. Sharma did not open theprice bid tenders. Defendant No. 3 had given an undertaking to the Allahabad Highcourt that in future tenders would be invited after giving advertisement for freshtenders in order to finalise the contract within six months from 23/05/1993. Defendant No. 3 awarded on ad hoc basis the handling work to M/s S. K. Sharmaat very exorbitant rates. Therefore, it was not in their interest to open the presenttenders. When the complaint was lodged against defendant No. 3, the defendantswith ulterior motive and to favour M/s S. K. Sharma did not open the price bid. Defendant No. 3 awarded on ad hoc basis the handling work to M/s S. K. Sharmaat very exorbitant rates. Therefore, it was not in their interest to open the presenttenders. When the complaint was lodged against defendant No. 3, the defendantswith ulterior motive and to favour M/s S. K. Sharma did not open the price bid. Thedefendants without communicating to the plaintiff as to whether his tender hasbeen accepted or not are now intending to float fresh tenders. By this act thedefendants would deprive the plaintiff of his right to be considered for the tenderalready furnished, which according to his estimation was the lowest tender. Thedefendant deliberately wanted the validity period of 90 days to expire on 1 6/11/1994. The present suit was filed on 15/11/1994 apprehendingthat the defendants will cancel the contract under the garb of aflux of time and thenfresh tenders would be invited. In the meantime, plaintiff would become ineligibleto apply for the tender. Had the tender been opened and the price bid also opened,it would have been clear that the plaintiff was the lowest tenderer. The defendantshave decided not to open the tender in order to allow M/s S. K. Sharma to operatehandling contract on ad hoc basis. The apprehension of the plaintiff that thedefendant would cancel the contract without assigning any reason has come outtrue. Defendant being a statutory organisation and a State covered under Article 12of the Constitution, cannot act arbitrarily, illegally nor can cancel the tenderdocuments without opening the price bid. The plaintiff has in fact quoted the rateof Rs. 51 per month for four major operations which according to the plaintiff sestimate is almost half the rate of other tenderers quoted and definitely less thanhalf the rate at which M/s S. K. Sharma is working on ad hoc basis. Since thedefendants have deliberately not opened the price bid and allowed the tender tolapse on account of aflux of time, therefore, the plaintiff has suffered monetary lossas well as the loss in eligibility. Had the tender documents been opened and thecontract allotted, the plaintiff would have continued for four and half years andthereafter could apply for the fresh tender. That way he would have becomeeligible to file fresh offers as on 1999. But if the tenders are not opened, the plaintiffwill become ineligible in future. Had the tender documents been opened and thecontract allotted, the plaintiff would have continued for four and half years andthereafter could apply for the fresh tender. That way he would have becomeeligible to file fresh offers as on 1999. But if the tenders are not opened, the plaintiffwill become ineligible in future. ( 2 ) IT is in this background that the plaintiff filed this suit seeking relief ofdamages for depriving him the contract which he would, have got it being thelowest tenderer. He has also sought declaration that he would remain eligible inrespect of handling contract to be awarded in future. He has also sought restrainingorder against the defendants from parting with possession of the price bid whichis available with the defendants pursuant to the tender opened on 18/08/1994 and a declaration that he is eligible tenderer with the defendant No. 1 forthe purpose of considering his experience and that he would remain eligible till 5years from 25/05/1999. ( 3 ) THE defendants filed the written statement and took preliminary objectionthat the suit does not disclose any cause of action. In fact there is no surviving causeof action to file the present suit. The validity of all the tenders including that of theplaintiff has expired on 16/11/1994. That none of the tenderers have beenawarded the contract. In terms of Clause 7. 0 of the Tender Terms, all tenders wereto be kept valid for a period of 90 days from the date of opening of Part-1 of thetender. Part-1 was opened on 18/08/1994 and the price bid was to be openedwithin 90 days thereafter. Since the period was to expire on 16/11/1994,therefore, no cause of action survived thereafter. Moreover, the plaintiff made arepresentation to the Director (Commercial) of defendant No. 1 and pointed outclause 7. 0 of the Tender Terms. Their tender stood withdrawn in terms thereof,hence the plaintiff s tender became non-est. The alleged representation was aclarification given by the plaintiff in regard to their tender in question. Thus theplaint does not disclose any cause of action. Besides taking legal objections,defenants also submitted their reply. ( 4 ) MR. Jagdeep Dhankar, Senior Advocate appearing for the defendantscontended that since the plaint does not disclose any cause of action, therefore, itshould be rejected under Order 7 Rule II of C. P. C. ( 5 ) I have heard Mr. Vikas Singh, Advocate appearing for the plaintiff and Mr. Besides taking legal objections,defenants also submitted their reply. ( 4 ) MR. Jagdeep Dhankar, Senior Advocate appearing for the defendantscontended that since the plaint does not disclose any cause of action, therefore, itshould be rejected under Order 7 Rule II of C. P. C. ( 5 ) I have heard Mr. Vikas Singh, Advocate appearing for the plaintiff and Mr. Jagdeep Dhankar, Senior Advocate appearing for the defendants. Rule 11 (a) oforder 7, which is reproduced as under, envisages that if the plaint does not discloseany cause of action then same can be rejected. II. The plaint shall be rejected on following cases : - (a) Where it does not disclose a cause of action; ( 6 ) IT is well settled principle of law that in order to appreciate whether theplaint discloses cause of action or not, reference can be made to the defence set upby the defendants in the written statement or in their pleadings. To arrive at aconclusion whether the plaint discloses any cause of action, the Court has to confineitself to the pleadings contained in the plaint only. ( 7 ) KEEPING the above principle in view we have to see whether plaint discloses any cause or not. Mr. Dhankar contended that by mere offering in response tonotice inviting tender no right of any nature accrued in favour of the plaintiff. Northe plaintiff on the basis of that offer can force the defendants to enter into anagreement. The sealed tenders Part-1 relating to Technical were opened on 1 8/08/1994, thereafter the defendant did not deem it proper to open the price bid. In the meantime, the validity period of opening the tender expired. Hence, in theabsence of any agreement subsisting between the parties, claim for damages doesnot lie. Plaintiff has based his reliefs on hypothetical proposition that had the tenderbeen accepted, he would have earned the profit. That had his tender been acceptedthe eligibility period would have automatically extended for another period of fiveyears. These arguments are in the realm of imagination based on the hypotheticalpropositions. In the absence of subsisting contract no cause of action accrued infavour of the plaintiff. Hence, the suit is liable to be rejected. I am afraid thisargument of the learned Counsel for the defenants is devoid of merits. Themaingrievance of the plaintiff is that the defendant deliberately allowed the time toelapse. In the absence of subsisting contract no cause of action accrued infavour of the plaintiff. Hence, the suit is liable to be rejected. I am afraid thisargument of the learned Counsel for the defenants is devoid of merits. Themaingrievance of the plaintiff is that the defendant deliberately allowed the time toelapse. Defendants did not open the tenders in time deliberately in order to favourm/s S. K. Sharma and thus acted arbitrarily. Plaintiff has also alleged malafidesagainst the defendants. According to him, defendant No. 3 wanted to favourm/s S. K. Sharma who was working on ad hoc basis and was getting exorbitantrates as handling contractor. It is in this background, the plaintiff built his case. Thecause of action is nothing but bundle of facts. The facts stated in the plaint clearlyshow that plaintiff is aggrieved for not opening the tender within 90 days. Plaintiff sright has thus been deprived. According to him he was the lowest tenderer. Had thetender been allowed to be opened, the benefit of ad hoc handling contract wouldnot have gone to M/s S. K. Sharma. Plaintiff being the lowest tenderer would havewon the contract. These facts as pleaded, to my mind, give cause of action to theplaintiff to seek relief. These averments require serious consideration. If what Mr. Dhankar states is accepted to be correct that with the passage of time the invitationto tender automatically get cancelled, then in every case whenever departmentdoes not like the lowest tenderer the department can frustrate the contract byapplying the principle of afflux of time. And thereby leave the tenders high and dry. Can the Court be a silent spectator and allow such a situation to happen and leavethe plaintiff remedyless. Plaintiff has raised moot questions in the plaint whichrequire determination. Admittedly, the terms of the tender indicate that the timewill elapse within 90 days. But was it due to the fault of the plaintiff or of thedefendants who for an ulterior motive in order to favour another contractor did notopen the price bid of all the tenders. This is again a question which require evidenceand thus give cause of action to the plaintiff to justify his allegations. As per recordthe technical tender Part-I was opened on 18/08/1994. Thereafter clarification was sought from the plaintiff on 7/09/1994. Plaintiff replied and gavethe clarification on 14/09/1994. Whereas on 16/09/1994, the defendant tried to open the price bid of other parties excluding the plaintiff. As per recordthe technical tender Part-I was opened on 18/08/1994. Thereafter clarification was sought from the plaintiff on 7/09/1994. Plaintiff replied and gavethe clarification on 14/09/1994. Whereas on 16/09/1994, the defendant tried to open the price bid of other parties excluding the plaintiff. This itselfgives cause to the plaintiff to challenge the action of the defendants. He has a rightto seek justification for excluding his tender/price bid while defendant tried toopen the price bid of others. This is one of the grievances in the plaint. The suit hadbeen filed on 15/11/1994 when plaintiff found that defendant was goingto cancel the tender under the garb of afflux of time, as the time of 90 days was goingto expire on 16/11/1994. The object of the defendant was to frustrate all the tenderers and to facilitate ad hoc extension to M/s S. K. Sharma. If at the sakeof repetitron these facts are taken note of them to my mind, these constitute causeof action. If the plaintiff succeeds in proving the malafide in cancelling the tenderson account of favouring M/s S. K. Sharma then he has a right to challenge the same. This right could only be exercised by the plaintiff by filing this suit. The plaintiff canchallenge the action of the defendants. This Court has to consider those grievancesby lifting the veil and peep through it, in order to find out the true reason forcancelling the lowest bid in comparison to the ad hoc contract allegedly given atdouble the rates, what consideration weighed with the defendant to cancel thecontract without even opening the price bid is a cause which requires determination. Further cause shown by the plaintiff is that had he been given the contract, hisexperience of preceding five years would be counted from the year 1999. But sincethe defendant without even opening price bid has cancelled the tender, in thateventuality the plaintiff will be ousted for all times to come to give the bid in future. This lapse on the part of the defendant gives a cause to the plaintiff and this is soapparent from the reading of the plaint as a whole. The Supreme Court in the caseof Sterling Computers Ltd. v. M/s M and N. Publications Ltd. and Ors. This lapse on the part of the defendant gives a cause to the plaintiff and this is soapparent from the reading of the plaint as a whole. The Supreme Court in the caseof Sterling Computers Ltd. v. M/s M and N. Publications Ltd. and Ors. , (1993) 1 SCC445 opined that decision taken by public authority in commercial/ contractualtransactions of State or its instrumentality and decision making process is open tojudicial review though the Court cannot act as an Appellate Authority, but if theprocess is violative of Article 14, Court can strike down the decision and actiontaken pursuant thereto. The doctrine that powers must be exercised reasonably hasto be reconciled with the no less important doctrine that the Court must not usurpthe discretion of the public authority which Parliament appointed to take thedecision. Within the bounds of legal reasonableness is the area in which thedeciding authority has genuinely free discretion. If it passes those bounds, it actsultra vires. The decisions which are extravagant or capricious Cannot be legitimate. But if the decision is within the confines of reasonableness,. it is no part of thecourt s function to look further into its merits. Therefore, to arrive at this decisionas to whether the action of the defendants in this case was extravagant orcapricious, the Court can do so only after recording evidence. As already observedabove the bundle of facts stated in the plaint prima facie show that the defendantsacted arbitrarily when they cancelled the tenders without even opening the pricebid. Hence defendants primafacie passed the bounds of reasonableness. This itselfis a ground giving cause of action to the plaintiff. It was further observed by thesupreme Court in the case of Sterling Computers Limited (supra) that :"if the contract has been entered into without ignoring the procedure whichcan be said to be basis in nature and after an objective consideration ofdifferent options available taking into account the interest of the State and thepublic, then Court cannot act as an Appellate Authority by substituting itsopinion in respect of selection made for entering into such contract. But,oncethe procedure adopted by an authority for purpose of entering into a contractis held to be against the mandate of Article 14 of the Constitution, the Courtscannot ignore such action saying that the authorities concerned must havesome latitude or liberty in contractual matters and any interference by Courtamounts to encroachment on the exclusive right of the executive to take suchdecision. " ( 8 ) THE above observation of the Supreme Court aptly apply to the facts of thiscase. The plaintiff has pleaded that the defendants by their act allowed the time toelapse and in the garb of afflux of time cancelled the tenders of all the tenderers inorder to favour M/s S. K. Sharma by giving him handling contract on ad hoc basisat exorbitant rates. These are the facts which have to be gone into by the Court toarrive at the decision whether the action of the defendants was in violation ofarticle 14 of the Constitution or not. This itself gives a cause to the plaintiff againstthe defendants. To the same extent are the observations of the Supreme Court in thecase of M/s Star Enterprises and Ors. v. City and Industrial Development Corporation of Maharashtra Ltd. , (1990) 3 SCC 280 . The Supreme Court in the case of Newhorizons Limited and Anr. v. Union of India and Ors. , (1995) I SCC 478 observed thatstate action should be in consonance with standards or norms which should not bearbitrary, irrational or irrelevant. Therefore, in order to ascertain on the basis of theallegation made in the plaint whether the act of the defendants is bonafide orarbitrary, irrational or irrelevant, we have to decide the case on merits. 9. Mr. Jagdeep Dhankar, Senior Advocate appearing for the defendant on theother hand placed reliance on the case of Purxotoma Ramanta Quenim v. Makankalyan Tandel and Ors. , (1974) 2 SCC 169 and Ramana Dayaram Shetty v. International Airport Authority of India and Ors. , (1979) 3 SCC 489 . Relying on thesejudgments Mr. Dhankar contended that there cannot be any challenge by theplaintiff to the grant of Government contract to any other bidder. Governmentreserves the right to take any decision without assigning any reason. The Supremecourt in the above cases upheld this discretion of the department. In the presentcontract also the discretion vest with the defendants to reject the other tenderswithout assigning reasons. There cannot be any quarrel with this proposition. Governmentreserves the right to take any decision without assigning any reason. The Supremecourt in the above cases upheld this discretion of the department. In the presentcontract also the discretion vest with the defendants to reject the other tenderswithout assigning reasons. There cannot be any quarrel with this proposition. Inthose cases the observations were made after recording of evidence. But in the casein hand, the question whether the tenders have been cancelled or not is a mootquestion. It has to be considered on merits. These objections fall into the realm ofevidence. I am not concerned at the moment as to whether cancellation or rejectionof the plaintiff s tender was rightly done or not. It will be decided after recordingevidence. Suffice it to say from the facts pleaded in the plaint that the plaintiff hasshown the cause of action. The very fact that the defendants allege that theyreserved the right to cancel the contract gives Cause of action to the plaintiff to allegethat such a cancellation was motivated, arbitrary and against the procedure and thenorms. And that is what precisely is the grievance of the plaintiff in this suit. For the reasons stated above, I find no merits in this application. The same isaccordingly rejected.