Judgement Shri S. Raghumani Singh, a Special Class Contractor for contract works under the P.W.D., Government of Manipur, has filed the present writ petition, praying for a direction on the respondents to quash the letter of acceptance dated 21-3-1998 (Annexure A/4) and also for a direction to the respondents to dispose of his representation dated 5-12-1997 (Annexure A/3). 2. The respondent No. 2, Superintending Engineer, National Highway Circle, PWD, Govt. of Manipur invited tenders from special Class Contractors to quote rates for road work on N. H. 39, Manipur by Tender Notice No. 4/97 dated 6-6-1997 for strengthening of existing double lane pavement and widening to double lane standard on NH 39 in Manipur including construction of ROC Slab Culverts, etc. etc. In connection with the aforesaid work , a meeting was held on 20-8-1997 where 13 Special Contractors were selected for quoting their rates for the aforesaid works. Tenders were opened on 8-1-1987 at 3.30 p.m. by the respondent No. 2 and the petitioner was found to be the lowest tenderer from amongst the pre-qualified contractors. The respondent No. 2 without assigning any reason, accepted the tender for execution of the aforesaid work in favour of the second lowest tenderer, Shri N. Kumar Meitei, respondent No. 4. Having felt aggrieved by the action of the respondent No. 2 in issuing the work to the second lowest tenderer, the petitioner has filed the present writ petition. 3. It is stated that the respondents have acted arbitrarily in rejecting the lowest rate of the petitioner for implementation of the aforesaid contract work and has illegally accepted the tender of the second lowest tenderer and thereby depriving the petitioner of his right to get the contract work as lowest tendering. The acceptance of the second lowest tenderer is arbitrary and invalid and therefore, such acceptance of tender is liable to be cancelled. It is further stated that the respondents are under obligation to inform the petitioner why the rates quoted by him has not been accepted by them in spite of the fact that the petitioner is the lowest tenderer in the aforesaid contract work. It is further stated that the petitioner has quoted a rate of Rs. 46,45,121.82 paise which is 0.043% above the estimate costs and rate quoted by respondent No. 4 was Rs. 56,03,044.22 paise which 20.67% above the estimated costs prepared by the respondent No. 2. It is further stated that the petitioner has quoted a rate of Rs. 46,45,121.82 paise which is 0.043% above the estimate costs and rate quoted by respondent No. 4 was Rs. 56,03,044.22 paise which 20.67% above the estimated costs prepared by the respondent No. 2. Thereafter, the respondents 1, 2, and 3 entered into a negotiation with the respondent No.4 and in the negotiation, the respondent No. 4 has agreed to implement the contract work at Rs. 49,77,865/- .It is also stated that in the negotiation the petitioner should also have been called and there is no reason to award the contract work in favour of the respondent No. 4 whose rates, even after negotiation is higher than the rates quoted by the petitioner. It is, therefore, submitted that the tender quoted by the respondent No. 4 and accepted by the respondent No. 2 should be quashed. 4. State respondent has filed counter affidavit wherein they have denied the allegations made by the petitioner. It is stated in the counter that the respondent is not bound to accept the lowest tender quoted by any contractor. While accepting the tender, the respondents are under obligation to see that on the rates quoted by a particular contractor and whether he will be in a position to execute the contract work as per specifications and without compromising with the quality of work. It is stated in the counter that estimate prepared for the aforesaid contract work is based on Manipur Schedule Rates of 1995 and after 1995 no fresh schedule of rates has been prepared by the Public Works Department of the Govt. It is further stated in the counter that while accepting the tender, the respondents are to work out the justified estimate in relation to the schedule of rates of 1995. It is stated that along with the 1995 Schedule of rates, 4.9% sale-tax are to be added and carriage charges and increase in cost index are to be taken into consideration while preparing the justified estimate. It is, further, stated that according to Manipur Schedule rates, 1995 the estimated cost of the contract work was indicated in the tender as Rs. 46,42,996/- while calculating the justified rate in 1998 estimated cost of the justified rate in 1998 has gone up to Rupees 49,40.85/- i.e. 5.66% above the modified estimated costs. It is, further, stated that according to Manipur Schedule rates, 1995 the estimated cost of the contract work was indicated in the tender as Rs. 46,42,996/- while calculating the justified rate in 1998 estimated cost of the justified rate in 1998 has gone up to Rupees 49,40.85/- i.e. 5.66% above the modified estimated costs. Since the rate quoted by the petitioner is lower than the justified estimated costs, the respondent No. 2 with the concurrence of the respondent No. 1, came to the conclusion that it is not possible for the petitioner to complete the contract work according to the specification maintained in the quality of work with the rates quoted by him which is below the justified estimated costs worked out by the Department. Consequently, the rate quoted by the petitioner, even though it is the lowest tender, has been rejected by the respondents. It is further stated that according to CPWD Manual which is being followed by the State P.W.D. a contractor cannot be allotted work whose rate is 5% below the justified estimated costs. In the instant case, the rate quoted by the petitioner is below 5% than the justified estimated costs and therefore, his tender has been rejected. With the rejection of the tender of the petitioner , the respondents considered to negotiate with the second lowest tenderer and after such negotiation, the second lowest tenderer brought down his rate from 56,03,044.21 p. to Rs. 49,77,865/- The time for completion of the work being two years, the respondents considered that the negotiated rate of respondent No. 4 is the reasonable rate and accordingly accepted the negotiated rate of respondent No. 4 for implementing the aforesaid contract work. 5. The respondent No. 4 has also filed counter-affidavit wherein it has been stated that the rate quoted by him was found to be 14.33% above the justified estimated costs and therefore respondent No. 2 requested to bring down the rates and in the negotiation the respondent No. 4 has agreed to execute the contract work at Rs. 49,77,865/- which is 1.579 above the justified estimated cost, and accordingly as per the provisions of the C.P.W.D. Manual, the respondent No.2 has accepted his tender. 49,77,865/- which is 1.579 above the justified estimated cost, and accordingly as per the provisions of the C.P.W.D. Manual, the respondent No.2 has accepted his tender. It is further stated that after obtaining the work order, the respondent No. 4 has invested huge amount and has already started the work and a considerable progress has been made by him and therefore there is no reason to cancel the contract work at this state. 6. I have heard Mr. L. Nandakumar Singh, learned counsel appearing on behalf of the petitioner, Mr. R.K. Sanajaoba Singh, learned counsel appearing on behalf of the respondents 1 and 2 and also Mr. H.S. Paonam, learned counsel for the respondent No. 4. 7. Mr. L. Nandakumar Singh, learned counsel appearing on behalf of the petitioner submits that the estimated costs of the work, according to 1995 Manipur Schedule of Rate as indicated in the Tender is Rs. 46,42,996/- and the said estimate has come down on the technical sanction and accorded estimate costs according to the 1995 Schedule of rates came to Rs. 46,37,979.77p. It is further argued by Mr. L. Nandakumar that the petitioner has quoted rate of Rupees 46,45,121,82p. which is 0.0457% above the estimated cost, and 0.108 above the accorded estimate cost according to the technical sanction. It is further argued by Mr. L. Nandakumar Singh that the respondent No. 4 has quoted his rate at Rs. 56,030,044.22 p . which is 20.677% above the estimated cost and 20.80% above the accorded estimated cost according to the technical sanction. Mr. Nandakumar also argued that there is no provision to prepare any justified estimate, because there is a Clause for price escalation and keeping in view the aforesaid Clause, the tenderers are to quote their rates. The petitioner has quoted the rate keeping in view the price escalation and therefore, there is no reason for non-acceptance of the lowest rate quoted by the petitioner. It is also submitted that to deprive the petitioner, the department has worked out a justified estimate after adding sale-tax, carriage charges and increase in cost index. By preparing the justified rate, the rate quoted by the petitioner has come to Rs. 5,254% below the justified estimate costs and this has been done only to deprive the petitioner from getting the contract work. Mr. By preparing the justified rate, the rate quoted by the petitioner has come to Rs. 5,254% below the justified estimate costs and this has been done only to deprive the petitioner from getting the contract work. Mr. L. Nandakumar also argued that even after negotiation the rate quoted by the respondent No. 4 is higher than the rate quoted by the petitioner and therefore, by allotting the work to respondent No. 4 , Government will incur about 2.5 lac extra for the said work. Mr. Nandakumar Singh, consequently, submits that the respondents 1 and 2 in collusion with the respondent No. 4 has negotiated the rate and in the negotiation the petitioner was not even invited to quote his further rate. It is submitted that the public servants should act fairly and in the present case they have acted arbitrarily and in a most unfair manner and thereby causing a loss of Govt. revenue to the tune of about 2.5 lakhs. Mr. Nandakumar, consequently, submits that the tender of the respondent No. 4 accepted by respondent No. 2 should be cancelled immediately as he may be paid for the work he has already done and the remaining work should be allotted to the petitioner. 8. Mr. L. Nandakumar Singh has drawn my attention to the Tata Cellular case reported in (1994) 6 SCC 651 : ( AIR 1996 SC 11 ) and submitted that a judicial review would apply to the exercise of contractual power by the Govt. bodies in order to prevent arbitrariness and favouritism. However, it must be clearly stated that inherent limitation in exercise of that power of judicial review. The Govt. is the guardian of the finance of the State. It is expected to protect financial interest of the State. Mr. Nandakumar Singh consequently submits that in the instant case the respondents 1 and 2 have failed to protect the financial interest of the State and by infringing the provisions of Art. 14 of the Constitution, has acted arbitrarily and made favour to respondent No. 4 by allotting the work to him even though he is the second lowest tenderer. In the instant case it is necessary to examine the methodology adopted by the respondent No. 2 in awarding the contract to respondent No. 4 is just, fair and lawful. 9. Mr. In the instant case it is necessary to examine the methodology adopted by the respondent No. 2 in awarding the contract to respondent No. 4 is just, fair and lawful. 9. Mr. R.K. Sanajaoba Singh, learned counsel appearing on behalf of the respondents 1 and 2 submits that the Govt. is following the CPWD Manual relating to the execution of contract works in the Department. It is submitted by Mr. R.K. Sanajaoba Singh that the Manipur Schedule of rate was prepared in 1995 and thereafter the aforesaid schedule of rate has not been revised or modified by the Govt. It is also submitted that in the aforesaid schedule of rate the sale-tax payable by contractors have not been included and while allotting the work in 19 98, the respondents are to work out the justified estimated costs with regard to the increase of prices during the last three years Mr. R.K. Sanajaoba Singh draws my attention to para 20.10.11 of the CPWD Manual Vol. II which runs as follows :- "20.10.11 In the preparation of justification statement for considering reasonableness of tenders, at present mainly two methods are being followed with slight modifications in CPWD. The first method consists of preparing detailed analysis of rates by taking market rates of labour, materials and cartage etc. The method of analysing item is the same as given in standard CPWD Analysis of rates for major items on the whole costing about 90% of the estimated cost put to tender and working out the justified percentage on this basis. The second method mainly consists of calculating the increase in cost due to (i) above increase in rates of stipulated materials over those adopted in schedule of rates used for estimate, (ii) increase in rates of non-stipulated materials and (iii) increase in cost of labour." 10. It appears from the aforesaid provisions that the Department is to work out the justified estimate when the tender is to be accepted for any particular work. While preparing the justified estimate, three things are to be kept in view, namely, (a) increase in rates of stipulated materials over those adopted in schedule of rates used for estimate, (b) increase in rates of non-stipulated materials, and (c) increase in cost of labour. 11. It is an admitted fact that the price index has gone higher from 1995 to 1998. The Govt. 11. It is an admitted fact that the price index has gone higher from 1995 to 1998. The Govt. has prepared the rate of schedule as back as in 1995 and therefore, while working out the justified cost, the above three things are to be kept in view. It further appears that sale-tax has not been included in the schedule of rates of 1995. Since the sale-tax is payable by contractor then the amount that will be required to be paid by the contractor towards sale-tax has to be included in the estimated cost. In the instant case, the carriage charges has also been included in the estimated cost of the contract work. It is, therefore, evident that the estimated cost prepared by the respondent No. 2 on the basis of 1995 rates of schedule will come up while allotting any work in the year, 1998. From Annexure R/1 , it appears that the respondent No. 2 has worked out the justified estimated cost in the said Annexure each item has been shown and the rate according to 1995 schedule of rates have been indicated and the percentage of increase for such price have also been indicated. A detailed statement has been prepared in Annexure-R/1 of the counter- affidavit which shows that the rate of 1995 schedule rate have been indicated against each item of work and the increase thereof against each item has also been worked out. On perusal of the Annexure-R/1 it is evident that the methodology adopted by the respondent No. 2 in working out the justified rate is sound and proper. It is submitted by Mr. R. K. Sanajaoba Singh that according to the justified estimate, the cost of the contract work came at Rs. 49,00,485/-. It is further submitted by Mr. Sanajaoba Singh that by maintaining the quality and standard of work, it is not possible for any contractor to execute the work at a rate lower than the justified estimated cost. It appears that the petitioner has quoted a rate of Rs. 46,45,121.82 p. which is 5.254% below the justified estimated cost. Mr. Sanajaoba Singh, further, argued that according to the provisions of paragraph 20.10.1 of the aforesaid Manual, the tender quoted by any contractor below 5% of the justified estimated cost cannot be accepted. It appears that the petitioner has quoted a rate of Rs. 46,45,121.82 p. which is 5.254% below the justified estimated cost. Mr. Sanajaoba Singh, further, argued that according to the provisions of paragraph 20.10.1 of the aforesaid Manual, the tender quoted by any contractor below 5% of the justified estimated cost cannot be accepted. It is also submitted that since the petitioner has quoted a rate more than below 5% of the justified estimated cost, the respondent No. 2 cannot accept such tender. There is sufficient force in the submission of Mr. R. K. Sanajaoba Singh, because it appears that the respondent No. 2, before rejecting the tender of the petitioner, has worked out a methodology to find out the justified estimated cost. It further appears that the rate quoted by the petitioner is more than 5% below the justified estimated cost of the work. The authority has taken a view that at such allotted rate, it may not be possible for the contractor to complete the work maintaining the specifications, design and also standard and quality of the work. Further, it appears that after negotiation, the respondent No. 2 has brought down his rate from Rs. 56,03,44.22p. to Rs. 49,77,865/- which is 1.57% above the justified cost. The authority came to the conclusion that having regard to the fact that two years will be required for completion of the work at the negotiated rate to respondent No. 4. The administrative authority is within its jurisdiction to have a free play within its jurisdiction to exercise its discretion and to choose between more than one plausible course of action when the decision is just, fair and within the limit of reasonableness. It is not the function of the Court to look further into the merit. The Court is not concerned as to whether a particular policy is wise or foolish, but the Court is undoubtedly concerned as to whether the decision made by the administrative authority is just, fair and lawful. In the instant case, before taking a decision the respondent No. 2 has prepared a comparative statement showing the 1995 rates schedule and also the rates as are prevelent in the market in the year, 1998. The authority was satisfied that it is not possible for the petitioner to complete the work with such allotted rate with comparison with the standard and quality of work. The authority was satisfied that it is not possible for the petitioner to complete the work with such allotted rate with comparison with the standard and quality of work. The negotiated rate accepted by the respondent No. 2 appears to be 1.57% above the justified estimated cost. Having regard to the facts that the work is to be completed within the next two years during which period there may be further increase in the price index, I am of the view that the negotiated rate by respondent No. 4 as accepted by respondent No. 2 is just, legal and proper. 12. As regards the argument of Mr. L. Nandakumar that at the time of negotiation, the petitioner should have also been called by the respondent No. 2 has got no force. In the negotiation the tenderers are called by the administrative authorities to bring down the price quoted by them. The petitioner has already quoted a price which is far below the justified estimated cost. Therefore, I am of the view that no error has been committed by the respondent No. 2 in not calling the petitioner in the negotiation. Further, in the negotiation the contractor cannot be asked to raise his price earlier quoted by him in the tender. This practice has already been depreciated by the Apex Court. Therefore, I am of the view that no illegality has been committed by the respondent No. 2 in refusing to call the petitioner in the negotiation. I do not find any illegality in accepting the negotiated rate of respondent No. 4 for the contract work. 13. Mr. R. K. Sanajaoba Singh has produced the relevant office file before me. It appears from the office file that since the rate quoted by the petitioner is more than 5% below the justified estimated cost, the respondent No. 1 considered it fit to negotiate with respondent No. 4, the second lowest tenderer, and after negotiation it is found that the negotiated rate is only 1.57% above the justified estimated cost and having regard to the fact that two years time will be required for completion of the work, the respondents thought that the negotiated rate is just reasonable and proper rate for the aforesaid contract work. 14. Mr. H. S. Paonam, ld. 14. Mr. H. S. Paonam, ld. counsel appearing on behalf of the respondent No. 4 submits that the work order has been issued in favour of the respondent No. 4 on 21-3-98 and immediately after obtaining the contract work, the respondent No. 4 has started the work. It is also submitted by Mr. Paonam that the contractor has invested huge amount of money by engaging labourers and also by bringing planks and other materials for the aforesaid work. It is also submitted by Mr. Paonam that the Contractor has already been supplied with materials amounting to Rs. 8,61,652 and apart from the aforesaid materials towards labour and other charges, the petitioner has already invested more than 12 lakhs in the work. The construction of retaining wall as well as widening of the road has been considerably progressed and at this stage if the work order is cancelled, the respondent No. 4 will suffer huge financial loss. Mr. Paonam, consequently, submits that since the contract work has been allotted at the negotiated rate as per provisions of CPWD Manual, there is no reason to cancel the contract work allotted to the respondent No. 4. 15. Having regard to the facts and circumstances stated above and after considering the submissions of the learned counsel of all the parties, I am of the view that there is no merit in this writ petition and it is liable to be dismissed. Accordingly, this writ petition is dismissed. No costs. Petition dismissed.