Precision Technophobe and Engineering Pvt. Ltd. v. State of M. P.
2004-08-02
RAJENDRA MENON
body2004
DigiLaw.ai
ORDER Rajendra Menon, J. 1. By this petition under Article 226/227 of the Constitution, petitioner - company has called in question tenability of a decision taken by the Progressive Review Committee, Water Resources Department, Government of M. P., Bhopal in its 258th meeting held on 10-2-2004 deciding to award a contract for the work of Radial Gates and other items for Madikheda Dam in Shivpuri District to respondent No. 6. 2. Petitioner claiming to be a private limited company having its registered office in the State of Gujarat with Head Office at Ahmedabad contended that it is a registered Class S-V contractor with the Engineer-in-Chief, Water Resources Department, Government of M. P., Bhopal, and has experience of over 25 years in execution of various major turnkey E.P.C., contracts involving design, fabrication, supply, erection, testing and commissioning of all Hydro Mechanical Equipments like Radial Gates, Vertical lift gates, stoplogs, structural steel fabrication and erection of hoist bridges, hoist foundations, electro-mechanical and hydraulic hoist systems, gantry cranes etc., required in major projects. 3. Similarly, respondent No. 6 is also a company registered under the provisions of the Companies Act, registered contractors in the same class and are similarly placed like the petitioner. 4. State of Madhya Pradesh, Water Resources Department had sanctioned a project for irrigation and hydro-electric power generation known as Sindh Project (Phase-II) at Madikheda Masonry Dam, district Shivpuri, Chief Engineer, respondent No. 4 is the head of the project and Superintendent Engineer, respondent No. 5 is in-charge of the said Dam. For the purpose of scrutiny and taking final decision in the matter of awarding such contracts in the State of Madhya Pradesh, a Progressive Review Committee has been constituted with the Chief Secretary of the State as its Chairman, Principal Secretary, Water Resources Department is a member along with Secretary, Control Board for major projects, Water Resources Department as the convener of the said committee. It is the case of the petitioner that tenders were invited vide NIT dated 14-6-2003 for the purpose of execution of the contract in question. Annexure P/3 is the notice inviting tender. It is the case of the petitioners that the tender in question is an Item Rate Tender, and therefore, eligible tenderers are required to submit their tender as per the prescribed Form B of Madhya Pradesh Works Department Manual.
Annexure P/3 is the notice inviting tender. It is the case of the petitioners that the tender in question is an Item Rate Tender, and therefore, eligible tenderers are required to submit their tender as per the prescribed Form B of Madhya Pradesh Works Department Manual. According to the petitioner, State has framed various rules in the form of manual known as Madhya Pradesh Works Department Manual which is binding on the State and the tender has to be filled and processed in accordance with the conditions stipulated in the M. P. Works Department Manual, clause 2.3.1 thereof provides for item rate tenders which are to be in Form-B and clause 2.3.2 contemplates that the rates quoted in the tender for the various items of work will not be altered by the contractor during the term of the contract. It was the case of the petitioners that in pursuance to NIT, petitioners also submitted their offer in accordance with specifications and conditions incorporated therein. The petitioners contend that the tender documents were filled in by them on the basis of the conditions stipulated, so also the clarification furnished in the pre-bid conference. Petitioners contend that they had submitted the tender without any deviation vide Annexure P/4 on 26-8-2003. Similarly, respondent No. 6 also submitted its tender. 5. Petitioners contended that respondent No. 6 deliberately, with an intention to take benefit on a subsequent date introduced certain discrepancy intentionally while quoting the rates with regard to item No. 3 for price schedule No. 6.2 of the tender document. According to the petitioners, this being a Item Rate Tender for price bid, there were 8 Nos. of general schedules of unit rates, against each item of article or service as described in column - 2 of the schedule, the prospective tenderer is required to quote Item rate or Unit price both in words and figures for each item of Article or service as a set or job or specify the number as defined in column No. 4. It was submitted by the petitioners that the quantity of work involved for each item has been distinctly stated both in figures and words in column No. 3.
It was submitted by the petitioners that the quantity of work involved for each item has been distinctly stated both in figures and words in column No. 3. It is the case of the petitioners that as per tender conditions and the provisions of the Public Works Department Manual for item rate tender invited in Form-B, the rate quoted for the item in the prescribed printed format should correspond to the description of the item under the column of Article or service. Any change in the description of item or prescribed format of schedule is strictly prohibited. Petitioners contend that column No. 7, the total amount for this schedule is therefore derived by multiplying the item rate quoted in column No. 6 with the quantity of respective item in column No. 3. Any deviation in the prescribed format entitles summary rejection of the tender. It is the case of the petitioners that in the rate for item No. 3 in schedule 6.2, respondent No. 6 introduced, a deliberate discrepancy. Respondent No. 6, it is stated habitual in introducing such discrepancy and thereafter when they come to know about the rates quoted by other prospective tenderers, they tend to change the same and seek advantage. It is stated that in the item for annual maintenance cost of hydraulic hoists unit rates were quoted for three years after completion of guarantee period of two years. The total number of such hydraulic hoists (the quantity), is contained in column No. 3 which is 10. Column No. 6 according to the petitioners gives the unit rate in words and figures for each number of quantity and the amount given in column No. 6 is to be multiplied by 10. In the case of respondent No. 6, the unit rate in words and figures was mentioned as Rs. 5,40,000/- per year. This being the rate for one quantity of hydraulic hoist has to be multiplied by 10 which would give the figure in column No. 7 to be Rs. 1.62 Crores. Instead, it has been deliberately mentioned to be Rs. 16,20,000/-. It is the case of the petitioners that in the description given for the item vide clause 6.1, the rate to be quoted in column No. 6 is the rate for each set of hydraulic hoist for three years.
1.62 Crores. Instead, it has been deliberately mentioned to be Rs. 16,20,000/-. It is the case of the petitioners that in the description given for the item vide clause 6.1, the rate to be quoted in column No. 6 is the rate for each set of hydraulic hoist for three years. Despite the aforesaid clear stipulation, respondent No. 6 has quoted the rate for one year in place of three years for each set of hoist. Accordingly, it is the case of the petitioners that when the tender documents were processed and initially the Department found that petitioners' tender was the lowest. However, after opening of the tender, respondent No. 6 submitted a representation clarifying that he had quoted item rate per year for all the tendered jobs, and therefore, the total amount quoted in column No. 7, i.e., Rs. 16,20,000/- is the rate for three years for all the ten quantity of hydraulic hoists. It is the case of the petitioners that respondents No. 1 to 3 were influenced by the representation of respondent No. 6 and because of which they have re-evaluated the bid amount of respondent No. 6 and by reducing his bid amount, the contract has been awarded to the respondent No. 6. Taking me through various documents available on record, it was argued by Shri A. M. Naik, learned senior counsel that the estimated cost of the project is Rs. 21.31 lacs. Petitioners tender was for Rs. 19,36,57,800/-. The tender of the respondent No. 6 was for Rs. 19,94,75,000/-. The other tenderers being higher were left out. However, in view of terms and conditions of NIT, no deviation or change is permissible and respondent No. 6 artificially brought down the price from Rs. 19,94,75,000/- to Rs. 18,48,95,000/-despite objection by the petitioners. It is the case of the petitioners that terms and conditions of the tender and the rules do not permit correspondence, canvassing or making representation after the tender is submitted. In the present case, permitting respondent No. 6 to clarify the aforesaid discrepancy which was introduced by him intentionally, petitioners were ousted from the contract. 6.
It is the case of the petitioners that terms and conditions of the tender and the rules do not permit correspondence, canvassing or making representation after the tender is submitted. In the present case, permitting respondent No. 6 to clarify the aforesaid discrepancy which was introduced by him intentionally, petitioners were ousted from the contract. 6. Placing reliance on records produced for inspection on the basis of the order passed by this Court, Shri A. M. Naik, learned senior counsel has pointed out that initially when the comparative rate statement was prepared by the Department on the basis of calculation done considering the rates quoted by respondent No. 6 for item No. 6.1 to be for one year, petitioner was found to be the lowest tenderer. But, subsequently, by permitting respondent No. 6 to clarify his position, the rate quoted by them was treated to be for 10 quantity of hoists per year, it was submitted by learned senior counsel for the petitioners that the Department while processing and evaluating the respective claims have clearly stipulated and mentioned in the note sheet that respondent No. 6 has deliberately introduced the discrepancy. The rate of Rs. 5,40,000/- quoted by them per year in column No. 6 has to be the rate per year for one hydraulic hoist and if it is multiplied by 3 years and then further multiplied by 10, the rate quoted by them was Rs. 1.62 Crores and accordingly, when evaluation was made, petitioners tender was the lowest. 7. Shri A. M. Naik, learned senior counsel for the petitioners has brought to my notice certain observations made by the Chief Engineer on the representation dated 18-10-2003 submitted by respondent No. 6 wherein the Chief Engineer has mentioned that in item rate tender while evaluating the price of any item, unit rates are to be multiplied by number of jobs to get the full value for item of work and if it is done the rate quoted by respondent No. 6 cannot be accepted. Case of the petitioners is that ignoring all these observations made by various authorities of the Department, the Progressive Review Committee of the State Government has taken a arbitrary decision to award contract to the respondent No. 6.
Case of the petitioners is that ignoring all these observations made by various authorities of the Department, the Progressive Review Committee of the State Government has taken a arbitrary decision to award contract to the respondent No. 6. Accordingly, it was submitted by Shri Naik as follows :- R.F. 35 (1) Conditions stipulated in the Madhya Pradesh Public Works Department Manual are binding on the Department and the State Government cannot deviate from the same. Once it is stipulated in the manual that item rate contract has to be quoted by the prospective tenderers by indicating the price for each item separately and then the entire value is to be found out by multiplying it with the total number of jobs, the deviation made by respondent No. 6, in the tender, entitles their tender has to be summarily rejected. (2) Permitting respondent No. 6 to submit representation and considering the same by ignoring the observations made by the Chief Engineer and the evaluation made by the Department amounts arbitrary and unreasonable action. (3) That apart the decision to award contract to respondent No. 6 has been taken in a arbitrary manner, illegally being contrary to the procedure contemplated under the Public Works Department Manual, and therefore, the entire process initiated on the basis of post-tender correspondence is illegal. 8. Placing reliance on the following judgments, it was argued by Shri A. M. Naik, learned senior counsel that the entire action stands vitiated as there is impermissible consideration of the request and post-tender representation of respondent No. 6 by changing the evaluation initially suggested by the Department on the basis of such representation. (1) Ramana Dayaram Shetty v. The International Airport Authority of India and Others, AIR 1979 SC 1628 , (2) Sterling Computers Limited v. M/s M and N Publications Limited and Others, (1993) 1 SCC 445 , (3) Tata Cellular v. Union of India, (1994) 6 SCC 651 , (4) M/s Monarch Infrastructure (P) Ltd. v. Commissioner, Ulhasnagar Municipal Corporation and Others, AIR 2000 SC 2272 , (5) Aristocrat International Pvt. Ltd. v. Union of India and Others, 2001 (1) MPLJ 129 : 2001 3 MPHT 45 , (6) M/s Omprakash Satyapal v. M.P. Electricity Board and others, 2001 5 MPHT 367 , (7) Muluwa s/o Binda and Others v. The State of Madhya Pradesh, AIR 1976 SC 989 . 9.
9. Refuting the aforesaid, Shri S. B. Mishra, learned Additional Advocate General for the State submitted that in the present case total amount submitted in clause No. 7 by respondent No. 6 is the final amount and no change has been made in the same and nothing more than the aforesaid amount is being claimed by the said respondent or being paid to them by the Department. It is the case of the respondents that in column No. 6 with regard to item No. 3 of Schedule 6.2, respondent No. 6 had quoted Rs. 5,40,000/- per year for 10 number of jobs per year. The same has to be multiplied by 3 as the work is for 3 years which comes to Rs. 16,20,000/- which is the tender amount and the same corresponds to the amount in column No. 6 for which rate tender of respondent No. 6 has been accepted. It is pointed out by Shri Mishra that the respondent No. 6 has not committed any mischief which amounts to reducing his rate after submission of the tender. The rate initially submitted by them has been accepted but only the method of calculation made by them in the concerned column was permitted to be clarified and thereafter considering this calculation, the Progressive Review Committee has taken a decision in the interest of the public exchequer to award the contract to respondent No. 6 as the rate quoted by the said respondent was the lowest. 10. Shri S. B. Mishra, learned Additional Advocate General pointed out that the Madhya Pradesh Public Works Manual is not a statutory rule or regulation. It is only a executive instruction. In the present case, the tender document consisted of various provisions. It was a complete document in itself providing for various items including special conditions, Annexures, general rules and directions, technical specifications, general technical specifications, quality assurance compliance, drawings, billing and payment schedule etc., It was submitted by Shri Mishra that the tender document being a complete document in itself containing all the provisions, State Government has acted in accordance with the said document and the quantity prescribed in Form-B in the M. P. Public Works Manual is not applicable in the present case as the NIT and the conditions stipulated therein contemplate the procedure to be followed.
It was submitted by Shri Mishra that it is not a case where the rates quoted by respondent No. 6 were changed. Respondent No. 6 had only given certain clarification and the said clarification was considered by the Progressive Review Committee and after considering the same, evaluation was made and it was found that the rate quoted by respondent No. 6 is 13.20% less than the estimated cost, and therefore, the contract was awarded to them. Referring to the proceedings of the Progressive Review Committee meeting, Annexure R/4, it was submitted by Shri Mishra that merely because the Chief Engineer had made certain comments on the representation of respondent No. 6, that by itself would not mean that the action of considering representation of respondent No. 6 is arbitrary. It was submitted by him that this Court cannot sit over the decision of the administrative authorities in the matter of awarding contract as an appellate authority. In the present case, the High Powered Progressive Review Committee consisting of senior officials of the State Government has evaluated the entire matter and the decision arrived at cannot be said to be arbitrary warranting interference by this Court. It was submitted by him that by accepting the rate quoted by respondent No. 6, the State would be benefited inasmuch as, the rate quoted by respondent No. 6 is less by Rs. 82, 72,800/- than that quoted by petitioner. It was submitted by him that the Progressive Review Committee having applied its mind on the totality of the facts and circumstances of the case and having given reasons for accepting the contract of respondent No. 6, the said process adopted being reasonable does not call for any interference by this Court. In support of his contention, he invited my attention to the following judgments :- (1) Tata Cellular v. Union of India, AIR 1996 SC II, (2) Asia Foundation and Construction Ltd. v. Trafalgar House Construction (I) Ltd. and Others, (1997) 1 SCC 738 , (3) Raunaq International Ltd. v. I.V.R. Construction Ltd. and others, AIR 1999 SC 393 11.
In support of his contention, he invited my attention to the following judgments :- (1) Tata Cellular v. Union of India, AIR 1996 SC II, (2) Asia Foundation and Construction Ltd. v. Trafalgar House Construction (I) Ltd. and Others, (1997) 1 SCC 738 , (3) Raunaq International Ltd. v. I.V.R. Construction Ltd. and others, AIR 1999 SC 393 11. Having heard learned counsel for the parties at length and on due perusal of the record, it is seen that the only dispute between the parties pertains to the rates quoted by respondent No. 6 with regard to rate for item No. 3 in schedule 6.2 at page 314 of the tender document, part of which had been filed as Annexures R/l and R/2 by the State and the originals have been produced for perusal of the Court at the time of hearing. The said item as quoted by respondent No. 6 reads as under :- Sr. No. Article or Services Qnty./No. Unit Unit rate in words and figures Total Amt. in words and figures (1) (2) (3) (4) (5) (6) 3. Annual maintenance cost for 3 (three) years after the completion of Guarantee of 2 years 10 (Ten) JOB Rs. 5,40,000/- per year. (Rs. five lacs forty thousand only) Rs. 16,20,000/-(Rs. Sixteen Lacs twenty thousand only) 12. Contention of Shri A. M. Naik, learned senior counsel is that under the provisions of the M. P. Public Works Manual, clause 2.3.1 and clause 2.3.2 for item rate tender, it is stipulated in these conditions that contractor should quote his rates for the items mentioned in the schedule of item in Annexure-F of NIT. Rate should be quoted in words and figures and unit should be as given by the Department. The contractor will not have the freedom to change the unit. Further, clause 2.3.2 contemplates that the rates quoted in the tender for various items of work will not be altered by the contractor during the term of the contract.
Rate should be quoted in words and figures and unit should be as given by the Department. The contractor will not have the freedom to change the unit. Further, clause 2.3.2 contemplates that the rates quoted in the tender for various items of work will not be altered by the contractor during the term of the contract. Referring to Form B, Appendix 2.14 of the Manual and memorandum given in 4.2.1, it was tried to be emphasised by Shri Naik that the item quoted for the aforesaid clause 6.1 of the Schedule 6.2 at page 314 by respondent No. 6 is one number of hydraulic hoist per year, and therefore, the total amount in column No. 7 has to be derived by multiplying the item given in column No. 6 with column No. 3 and then by 10. Instead what is revealed from the rates quoted by respondent No. 6 is that they have quoted the unit rate per year in column No. 6 and the amount in column No. 7. The explanation given by respondent No. 6 is that the rate quoted in column No. 6 is the rate per year for all the ten quantity of hydraulic hoists and the rate quoted in column No. 7 is for 10 number of hydraulic hoists for the period of three years. The question is whether this is a deliberate mischief played by respondent No. 6 or there is deviation from the terms and conditions of the NIT by the State Government. 13. As far as applicability of the Madhya Pradesh Public Works Department Manual is concerned, it is seen that the Manual only provides various guidelines on the basis of which work is to be done. In this particular case, NIT is a complete document in itself and contains various specific provisions from the time of submitting of tender till completion of the contract and finalization of payment. The tender being a complete document in itself, the contract in question would be governed by this document and the Manual in question can only be used for the purpose of taking guidance in the matter not covered in the NIT. Be it as it may be, the question is with regard to jurisdiction that can be exercised by this Court in interfering in such matters. 14.
Be it as it may be, the question is with regard to jurisdiction that can be exercised by this Court in interfering in such matters. 14. It is will settled in law that even in matters pertaining to finalisation of contract, interference by Courts are permissible only if it is seen from the records that the decision taken is arbitrary, the procedure followed is not transparent, fair or reasonable resulting in unfair treatment to any of the persons or granting undue benefit to any one or is not in the interest of the public and may cause loss to the public exchequer at large. 15. It is the contention of the petitioners that post-tender correspondence is not permissible and by permitting post-tender correspondence, certain undue advantage has been granted to respondent No. 6. Even though, this argument looks attractive but if it is considered in the backdrop of the explanation submitted by respondent No. 6 and the evaluation made by the Progressive Review Committee, it cannot be said that respondent No. 6 have changed or manipulated the rates quoted by them in such a manner that it amounts to changing their entire offer after opening of the tender. Petitioners may have quoted the rate for this item in a particular manner but respondent No. 6 has quoted it in a different manner. The entire matter was processed by the Department concerned and even though the department has made certain observation and evaluation considering the objection canvassed by the petitioners, the entire matter was placed in the meeting of the Progressive Review Committee on 10-2-2004 and this committee which is a very high powered committee presided over by the Chief Secretary of the State, further assisted by three standing committees, i.e. technical advisory committee, hydraulic project co-ordination committee and tender evaluation committee. It has considered the entire matter and recorded a finding that if the explanation submitted by respondent No. 6 is accepted, the rate quoted by him would be 13.20% less than the estimated cost of the project. 16.
It has considered the entire matter and recorded a finding that if the explanation submitted by respondent No. 6 is accepted, the rate quoted by him would be 13.20% less than the estimated cost of the project. 16. In this regard, proceedings of the committee as contained in Annexure R/4 indicates that the committee in paragraph 3.3 has indicated the offers submitted by various parties and thereafter it has considered the comparative statement prepared by the office of the Chief Engineer wherein petitioners rate was found to be 9.08% less than the estimated cost and that of respondent No. 6 was found to be 6.35% less than the estimated cost. In paragraph 3.5, the committee has taken note of the comments made by the Chief Engineer as pointed out by the Secretary of the Control Board for Major Projects, it has recorded the fact that the rates quoted by petitioners is 9.08% less than the estimated cost. In paragraph 3.6, the committee has taken note of the fact that after opening of the tender and before placing the matter before the Progressive Review Committee, out of five tenderers certain objections have been received not only from the petitioners but also from the intervener, M/s D.K.E.M.N.S.J.V. Engineers Company, Ahmedabad, M/s Kerala Electricals and Allied Engineering Company Limited, Cochin and respondent No. 6, Om Metals and Minerals Limited, Kota. These applications have been taken in the agenda and on the basis of the comments and analysis made, the Secretary appraised the committee of the same and thereafter in paragraph 3.7, on the basis of the information submitted by the Secretary, the points have been noted. The evaluation made by the committee in paragraph 3.7 indicated that it has considered the item mentioned in the schedule 6.1, 6.3, 6.4, 6.5 and 6.6 and in particular, the matter pertaining to the rates quoted by the petitioners -and respondent No. 6, observations made by the Chief Engineer and the evaluation chart. Thereafter, the committee has prepared a evaluation chart and made calculation on the basis of the representation submitted by respondent No. 6 and it came to the conclusion that if the rate quoted by respondent No. 6 is taken to be the rate quoted for all the items for 3 years, the rate of respondent No. 6 is 13.20% less than the estimated rate.
The following final figure was arrived at by the committee on the basis of such evaluation :- Sr. No. NAME OF THE TENDER ESTIMATED COST OF THE PROJECT (Rs.) TENDERED AMOUNT (Rs.) PERCENTAGE OF THE ESTIMATED COST 1. M/S PRECISION TECHNOFAB AND ENGINEERING PVT. LTD. 19,31,67,800 9.32 less 2. M/S OM METAL AND MINERALS PVT. LTD, KOTA 21,30,17,889 18,48,95,000 13.20 less 3. M/S D.K.E.M.N.S.J.V. ENGINEERS, AHMEDABAD 20,22,50,000 5.05 less 4. M/S INDIAN FABRICATORS, AHMEDABAD 21,39,75,000 0.004 more 5. M/S TEXMOCO LIMITED, KOLKATA 30,38,35,525 42.63 more 17. The committee has specifically recorded a finding that respondent No. 6 has not introduced this calculation as an afterthought and after assessing the entire rates, the committee has come to the conclusion that if the rate submitted by respondent No. 6 is accepted, the offer would be less than by Rs. 82,72,800/-than that submitted by the petitioners. Thereafter in paragraphs 3.8 and 3.9 after considering the aforesaid fact and keeping in view the rate quoted by respondent No. 6 which is less than 13.20% of the estimated cost, the committee have ordered for grant of contract to the respondent No. 6. 18. From the aforesaid, it is clear that in this case, the decision has been arrived at by a high power committee consisting of senior officials of the State against whom there is no allegation of mala fide, bias or nepotism. This Court can only review the decision making process and cannot sit over the matter as an appellate authority to scrutinise the decision of the expert committee and substitute its own decision to that of the committee. The scope of judicial review in such matters has been considered by various Courts and it clearly lays down the principle that normally judicial review in matters of awarding contract is permissible only if the decision making process is found to be arbitrary, illegal or the decision is irrational. 19. The scope of judicial review in such matters stands settled by various judgments of the Supreme Court, in the case of Tata Cellular v. Union of India, (1994) 6 SCC 651 . It has been held by the Supreme Court that the judicial review is concerned with reviewing not merits of the decision but it is limited to seeing the decision making process itself. 20.
It has been held by the Supreme Court that the judicial review is concerned with reviewing not merits of the decision but it is limited to seeing the decision making process itself. 20. The question was again considered by the Supreme Court in the case of Air India Ltd. v. Cochin International Airport Ltd. and Others, (2000) 2 SCC 617 . In paragraph 7 of the aforesaid judgment, the Supreme Court after considering all the judgments on the question including the judgments referred to by learned counsel for the parties in this petition held as under :- The law relating to award of contract by the State, its corporations and bodies acting as instrumentalities and agencies of the Government has been settled by the decision of this Court in Ramana Dayaram Shetty v. International Airport Authority of India (1979) 3 SCC 489 , Fertilizer Corpn. Kamgar Union (Regd.) v. Union of India, (1981)1 SCC 568 , CCE v. Dunlop India Ltd. (1985) 1 SCC 260 : 1985 SCC (Tax) 75, Tata Cellular v. Union of India, (1994) 6 SCC 651 , Ramniklal N. Bhutta v. State of Maharashtra (1997) 1 SCC 134 and Raunaq International Ltd. v. I.V.R. (1999) 1 SCC 492 . The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decision-making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness.
But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decision-making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process the court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the court should intervene. (Emphasis supplied) 21. Subsequently, again in the year 2004, the scope of judicial review in such matters of contract was considered by the Supreme Court in the case of ABL International Ltd. and Another v. Export Credit Guarantee Corporation of India Ltd. and Others, (2004) 3 SCC 553 and it has been held as under : It is clear that when an instrumentality of the State acts contrary to public good and public interest, unfairly, unjustly and unreasonably, in its contractual, constitutional or statutory obligation, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution. Therefore once the State or an instrumentality of the State is party, it has an obligation in law to act fairly, justly and reasonably to a contract which is the requirement of Article 14 of the Constitution. 22. As indicated hereinabove in matters pertaining to award of contracts by public authorities, the scope of judicial review is limited, this Court can only review the decision making process to see whether it is fair and reasonable and in arriving at the decision, the authority has acted in a fair manner after taking into consideration relevant factors. Interference can be made only if it is established that the authority has acted on the basis of improper motives or upon irrelevant consideration, or to have failed to take into account of relevant consideration so that the action is ultra vires or void.
Interference can be made only if it is established that the authority has acted on the basis of improper motives or upon irrelevant consideration, or to have failed to take into account of relevant consideration so that the action is ultra vires or void. A reasonable decision arrived at on the basis of proper evaluation of all the relevant material cannot be substituted by this Court by its own decision. 23. Considering the facts and circumstances of the present case in the back drop of the aforesaid legal principle, it cannot be said that the decision taken by the High Powered Review Committee is vitiated by any illegality or arbitrariness. There is nothing on record except certain vague statement made by the petitioners to indicate that the decision was taken in arbitrary or illegal manner. Even though, there are certain observations made by the Chief Engineer and other authorities but in view of the fact that Progressive Review Committee consisting of senior officials of the State have applied their mind and have given cogent reasons for accepting the tender of respondent No. 6, the aforesaid argument cannot be accepted. 24. Considering the totality of the facts and circumstances of the present case, I find no ground to interfere in the matter. 25. Accordingly, petition stands dismissed without any order as to cost.