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1999 DIGILAW 141 (ORI)

SANTILATA SAHOO v. STATE OF ORISSA

1999-04-16

ARIJIT PASAYAT, PRADIPTA RAY

body1999
A. PASAYAT, J. ( 1 ) PETITIONER questions acceptance of bid offered by opposite party No. 2 for supply of goods/equipments in respect of tender floated by the Chief Engineer, Hydrometry and Data Centre, Department of Water Resources, Bhubaneswar (opposite party No. 5) in respect of supply of equipments, namely, Bridge Out-Fits. ( 2 ) FACTUAL position sans unnecessary details is as follows :total number of the required equipments to be supplied in terms of the tender was 42. The work was styled as "package No. H. P. 5/98 (SW)". The tender floated was a national competitive bidding. Section II of the Bid Document related to "instructions to Bidder". Clause 13 related to documents required to establish bidder's eligibility and qualifications. The source of the fund has been indicated in the quotation. It has been stated that the Government of India has received/applied for a Loan/credit from the International Development Association/international Bank for Reconstruction and Development (in short, 'world Bank') in various currencies equivalent to US Dollars 142 Million towards the cost of the Hydrology Project. The documents comprising the Bid are described in Clause 9. Clause 13. 3 (b) is relevant for the purpose of this case. Same reads as follows :"13. 3. The documentary evidence of the Bidder's qualifications to perform the Contract if its bid is accepted, shall establish to the purchaser's satisfaction; (a ). . . . . . . . . . . . . . . . . . (b) that the Bidder has the financial, technical, and production capability necessary to perform the Contract and meets the criteria outlined in the qualification requirements specified in Section VI. A. To this end, all bids submitted shall include the following information; (i) The legal status, place of registration and principal place of business of the company or firm or partnership, etc. ; (ii) Details of experience and past performance of the bidder on equipment offered and on those of similar nature within the past three/five years and details of current contract in hand and other commitments (suggested pro forma given in Section XI);"the bidder should have minimum eligibility criteria as follows : (i) a bidder should have executed structural fabrication works of Rs. 16 lakhs and above per annum; and (ii) he should have executed structural fabrication work of value of not less than Rs. 16 lakhs and above per annum; and (ii) he should have executed structural fabrication work of value of not less than Rs. 8 lakhs in single order during last five years, and shall produce documentary proof in support of the above. ( 3 ) ACCORDING to the petitioner, the certificate required to be filed should be by an Engineer belonging to any Government State or Central Government and any certificate given by non-Government agency or officer is of no consequence. For this purpose reliance is placed on another tender notice where Note to Clause 5. 7 reads as under :"note- The statement showing the value of existing commitments and on-going works as well as the stipulated period of completion remaining for each of the works listed, should be countersigned by the Engineer-in-charge, not below the rank of an Executive Engineer. "according to petitioner, opposite party No. 2 does not fulfil the requirement as the certificate furnished by it was given by a private party, the financial stability of which is in doubt. It is stated that opposite party No. 6 has given the certificate which is of no value as the taxation records would reveal that opposite party No. 2 neither had the capacity nor the financial stability to execute the work and in any event in the taxation returns the transaction in respect of which certificate has been issued has not been reflected. ( 4 ) IN the counter-affidavit filed by the opposite parties 2 and 3 to 5 it has been stated that the Bridge is a time bound project and has been started with the World Bank Assistance from 1995. It is not a requirement that only certificate of a Government Officer not below the Rank of an Executive Engineer under any Government Department has to be accepted. In fact a dispute was raised by the petitioner about authenticity of certificate issued by opposite party No. 6. Reference was made to the said party. It was found that the certificate was issued by opposite party No. 6. That being the position there is no scope for any interference. ( 5 ) LEARNED counsel for petitioner submitted that mere acceptance of opp. party No. 6 is inconsequential as the financial stability and other relevant aspects have not been considered. It was found that the certificate was issued by opposite party No. 6. That being the position there is no scope for any interference. ( 5 ) LEARNED counsel for petitioner submitted that mere acceptance of opp. party No. 6 is inconsequential as the financial stability and other relevant aspects have not been considered. ( 6 ) IT is to be noted that the opposite parties have brought on record that the tender submitted by the petitioner is defective and therefore, has not been accepted. That being the position, the petitioner cannot call in question the action taken in respect of the bid given by opposite party No. 2. Additionally Court's role in contractual matters and scope of judicial review is too well-known. ( 7 ) THE scope of judicial review in matters of administrative decision has been highlighted by the Courts in many cases. In recent times the distinction between administrative orders and judicial or quasi judicial orders have practically ceased to exist in view of primacy of the rule of law. The point that falls for determination is the scope for judicial interference in matters of administrative decision. Administrative action is stated to be referable to broad area of Governmental activities in which the repositories of power may exercise every class of statutory function of executive, quasi-legislative and quasi-judicial nature. It in tribe law that exercise of power, whether legislative or administrative, will be set aside if there is manifest error in the exercise of such power or the exercise of the power is manifestly arbitrary. See State of U. P. v. Renusagar Power Co. , AIR 1988 SC 1737 . At one time, the traditional view in England was that the executive was not answerable where its action was attributable to the exercise of prerogative power. Professor De Smith in his classical work 'judicial Review of Administrative Action' states the legal position in his own terse language that the relevant principles formulated by the Courts may be broadly summarised as follows. The authority in which a discretion is vested can be compelled to exercise that discretion, but not to exercise it in any particular manner. In general, a discretion must be exercised only by the authority to which it is committed. The authority in which a discretion is vested can be compelled to exercise that discretion, but not to exercise it in any particular manner. In general, a discretion must be exercised only by the authority to which it is committed. That authority must genuinely address itself to the matter before it; it must not act under the dictates of another body or disable itself from exercising a discretion in such individual cases. In the purported exercise of its discretion, it must not do what it has been forbidden to do, nor must it do what has been authorised to do. It must act in good faith, must have regard to all relevant considerations and must not be influenced by irrelevant considerations, must not seek to promote purposes alien to the letter or to the spirit of the legislation that gives it power to act, and must not arbitrarily or capriciously. These several principles can be conveniently grouped in two main categories; (i) failure to exercise a discretion; and (ii) excess or abuse of discretionary power. The two classes are not, however, actually exclusive. Thus, discretion may be improperly fettered because irrelevant considerations have been taken into account, and where an authority hands over its discretion to another body insets ultra vires. The present trend of judicial opinion is to restrict the doctrine of immunity from judicial review to those class of cases which relate to deployment of troops entering into international treaties, etc. The distinctive features of some of these recent cases signify the willingness of the Courts to assert their power to scrutinise the factual bases upon which discretionary powers have been exercised. Judicial review has developed to a stage today when, without reiterating any analysis of the steps by which the development has come about. One can conveniently classify under three heads the grounds on which administrative action is subject to control by judicial review. The first ground is 'illegality', the second 'irrationality' and the third 'procedural impropriety'. Those principles were highlighted by Lord Diplock in Council of Civil Service Union v. Minister for the Civil Services, (1984) 3 All ER 935. If the power has been exercised on a non-consideration or non-application of mind to relevant factors, the exercise of power will be regarded as manifestly erroneous. Those principles were highlighted by Lord Diplock in Council of Civil Service Union v. Minister for the Civil Services, (1984) 3 All ER 935. If the power has been exercised on a non-consideration or non-application of mind to relevant factors, the exercise of power will be regarded as manifestly erroneous. If a power (whether legislative or administrative) is exercised on the basis of facts which do not exist and which are patently erroneous such exercise of power will stand vitiated. See Commissioner of Income-tax v. Mahindra and Mahindra Ltd. , AIR 1984 SC 1132 : (1983 Tax LR 1286 ). The effect of several decisions on the question of jurisdiction has been summed up by Grahme Aledous and John Alder in their book 'applications for Judicial Review, Law and Practice' thus :"there is a general presumption against ousting the jurisdiction of the Courts, so that statutory provisions which purport to exclude judicial review are constructed restrictively. There are, however, certain areas of Governmental activity, national security being the paradise, which the course regard themselves as incompetent to investigate, beyond an initial decision as to whether the Government's claim is bona fide. In this kind of non-justiciable area judicial review is not entirely excluded, but very limited. It has also been said that powers conferred by the Royal Prerogative are inherently unreviewable but since the speeches of the House of Lords in Council of Civil Services Union v. Minister for the Civil Service this is doubtful. Lords Diplock, Scorman and Roskill appeared to agree that there is no general distinction between powers, based upon whether their source is statutory or prerogative but that judicial review can be limited by the subject-matter of a particular power, in that case national security. Many prerogative powers are in fact concerned with sensitive, non-justiciable areas for example foreign affairs, but some are reviewable in principle, including the prerogatives relating to the civil service where national security is not involved. Another non-justiciable power is the Attorney-General's prerogative to decide whether to institute legal proceedings on behalf of the public interest. "also See Pedfield v. Minister of Agriculture, Fisheries and Food; L. A. (1968) AC 997; and Council of Civil Service v. Minister for the Civil Service, (1984) 3 All ER 935 (ML ). Another non-justiciable power is the Attorney-General's prerogative to decide whether to institute legal proceedings on behalf of the public interest. "also See Pedfield v. Minister of Agriculture, Fisheries and Food; L. A. (1968) AC 997; and Council of Civil Service v. Minister for the Civil Service, (1984) 3 All ER 935 (ML ). The Court must while adjudicating validity of an executive decision grant a certain measure of freedom of play in the joints to the executive. The problems of Government are practical ones and may justify, if they do not require, rough accommodations; illegal, it may be and unscientific. But even such criticism should not be hastily expressed. What is best is not discernible, the wisdom of any choice may be disputed or commenced. Mere errors of Government are not subject to judicial review. It is only palpably arbitrary exercise which can be declared void. Only when the action of the administrative authority is so unfair or unreasonable that no reasonable person would have taken that action, can the Court intervene. While fairplay is an essential ingredient in accepting and in awarding a contract, similarly 'fair play in the joints' is also a necessary concommittant for administrative body functioning in an administrative sphere or quasi-administrative sphere. Discretion, Lord Mansfield stated in classic terms in John Wilke's case, (1970) 4 Hurr 2528, must be a sound one governed by law and guided by rule, not by humour. Lord Denning put it eloquently in Breen v. Amalgamated Engineering Union, (1971) 1 All ER 1148, that in a Government of Laws "there is nothing like unfettered discretion immune from judicial reviewability". Courts stand between the executive and the subject alert, to see that discretionary power is not exceeded or misused. Discretion is a science of understanding to discern between right or wrong, between shadow and substance, between equity and colourable glosses and pretence and not to do according to one's wills and private effections. Lord Brightman elegently observed in the case of Chief Constable of North Wales Police v. Evans, (1982) 3 All ER 141 that :"judicial review, as the words imply is not an appeal from a decision, but a review of the matter in which the decision was made. Lord Brightman elegently observed in the case of Chief Constable of North Wales Police v. Evans, (1982) 3 All ER 141 that :"judicial review, as the words imply is not an appeal from a decision, but a review of the matter in which the decision was made. "in a recent decision of Tata Cellular v. Union of India, (1994) 6 SCC 651 : ( AIR 1996 SC 11 ) the Apex Court classified the grounds of challenge as under :"therefore, it is not for the Court to determine whether a particular policy or particular decision taken in the fulfilment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. The extent of the duty to act fairly will vary from case to case. Shortly put, the grounds upon which an administrative action is subject to control by judicial review can be classified as under : (i) Illegality : This means the decision maker must understand correctly the law that regulates his decision-making power and must give effect to it. (ii) Irrationality, namely, Wednesbury unreasonableness. (iii) Procedural impropriety. "the action of the State, the instrumentality, any public authority or person whose actions bear insignia or public law element or public character are amenable to judicial review and the validity of such action would be tested on the anvil of Article 14 of the Constitution. The classic passage from the judgment of Lord Greens M. R. in Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation (1948) 1 KB 223 eloquently states the position in law. The same reads as follows :"it is true the discretion must be exercised reasonably. Now what does that mean? Lawyers familiar with the phraseology commonly used in relation to exercise of statutory discretions often use the word 'unreasonable' in a rather comprehensive sense. It has frequently been used as a general description of the things that must not be done. For instance, a person entrusted with the discretion must, so to speak, direct himself properly in law. He must call his own attention to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider. If he does not obey those rules, he may truly be said, and often is said to be acting 'unreasonably'. He must call his own attention to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider. If he does not obey those rules, he may truly be said, and often is said to be acting 'unreasonably'. Similarly there may be something so absurd that no sensible person could overdream that it lay within the powers of the authority. "these aspects have been highlighted by one of us (A. Pasayat, J.) in Geetanjali Patnaik v. State of Orissa, represented through its Secretary, Department of Health (1996) 81 CLT 540, and Sri Rama Ballav Rath v. State of Orissa, represented by the Secretary to Government, General Administration Department (1996) 81 CLT 8. Keeping the aforesaid position in law, it has to be seen how far there is scope for entertaining the writ application. ( 8 ) THERE is no basis for the claim made by the petitioner that any certificate issued by any officer or authority not being a Government officer or authority has no foundation. We have perused the bid document. There is no such requirement. Merely because in some other case it was stipulated that the certificate is to be issued by an officer not below the rank of Executive Engineer the same paripasu cannot apply to the contract under consideration. ( 9 ) HOWEVER, the other contention that merely because a certificate has been issued that cannot be accepted without verification needs consideration. There is no difficulty when the certificate is issued by a Government official. The tenderee at any point of time can verify whether the officer concerned has issued the certificate. Problem arises when a certificate is issued by any non-Government concern. A careful approach has to be adopted and verification has to be done to find out the authenticity of the document and acceptability thereof. By way of illustration, it may be noted that in a given case a man of straw gives a certificate relating to contractual amount which is below his financial stability. That does not merit acceptance without any verification. In such a case the authority is duty bound to make an enquiry. By way of illustration, it may be noted that in a given case a man of straw gives a certificate relating to contractual amount which is below his financial stability. That does not merit acceptance without any verification. In such a case the authority is duty bound to make an enquiry. He can ask the person who has issued the certificate and the person in whose favour certificate has been issued to establish that they have the capacity to award or undertake the work claimed to have been undertaken through the concerned contractor. Suppose in a given case the records reveal that the maximum turnover returned by a person before the taxing authorities under the direct and indirect taxes utilised is Rs. 2 lakhs, yet he has given a certificate that he has got work worth Rs. 10 lakhs executed through another, that certainly has relevance. Otherwise there is likelihood of fraud being practised and without verification being done in respect of genuineness of otherwise, it would be improper to act on the certificate. Therefore, while there is no bar for acting upon a certificate issued by a non-Government concern, care and caution should be exercised while acting on it. More confirmation of the person issuing the certificate in all cases may not suffice and further probe into the matter would be desirable. In the instant case, the authorities have made enquiries and are prima facie satisfied about genuineness of the claim. If, however, any further enquiry is to be made and it is felt desirable to be done that can be done. As indicated above, the petitioner's tender was defective. In the counter affidavit filed by opposite party Nos. 1 and 3 to 5 it has been stated that the petitioner did not furnish the design and drawings of the Bridge Outfit as per the technical specifications stipulated in Section VI of the bid document. A rough drawing with the bid document which has been furnished by the petitioner without specifying any dimensions of the Bridge Outfit is liable for rejection. That being the position, the writ application is dismissed subject to observations about the desirability of enquiry if any in the matter. No costs. ( 10 ) PRADIPTA RAY, J. : -. I agree. Application dismissed.