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2014 DIGILAW 700 (ORI)

Life Line Medical Store (Day & Night) v. All India Institute of Medical Science

2014-10-28

AKSHAYA KUMAR RATH, AMITAVA ROY

body2014
JUDGMENT Dr. Akshaya Kumar Rath, J. 1. This writ petition seeks quashing of tender call notice dated 1.10.2014, vide Annexure-1. Bereft of unnecessary details, the short facts of the case of the petitioner are that the Administrative Officer, All India Institute of Medical Sciences, Bhubaneswar, opposite party No. 1 (hereinafter referred to as 'AIIMS') issued a tender call notice on 28.2.2014 inviting bids for the purpose of opening the 24 hour Pharmacy shop in its premises, vide Annexure-2. The petitioner, being the owner of the 24 hour medicine shop, had submitted his bid, but then his technical bid was rejected on the ground that he had not submitted the self-attested photocopy of the license for supply of medicines/drug/surgical/ consumables/implants/Orthotic and Prosthetic Devices etc. Challenging the same, he filed a writ application, being W.P.(C) No. 16544, before this Court. The said writ petition was allowed on 17.7.2014 with a direction to the opposite parties therein to open his financial bid and consider the same along with others. Thereafter, he filed a representation. It is stated that in financial bid he offered the maximum discount. Pursuant to the direction of this Court, the opposite parties opened his financial bid. The opposite parties assured him that the result of the tender process shall be intimated through internet. When the result was not published, he sent a lawyer's notice to the opposite parties. Though the opposite parties received the notice, but maintained a stony like silence. 2. Pursuant to issuance of notice, a counter affidavit has been filed by the opposite parties 1 and 2. The case of the opposite parties is that the tender for 24 x 7 Pharmacy shop for supply of Medicine(s)/Drug(s)/Surgical(s)/Consumable(s)/Implant(s)/Ortho and Prosthetic Devices etc. was opened on 24.3.2014. Twenty eight bidders were participated. After the technical evaluation, 16 bidders were technically qualified and 12 were disqualified. The price-bid of those who were qualified in the technical bid was opened on 15.5.2014. The petitioner, who was disqualified, filed a representation pursuant to the direction of this Court. The price bid of the petitioner was opened on 1.8.2014. In the meantime, it was observed that due to a clerical oversight the price-bid of M/s. Om Sai Medical, Cuttack (wrongly mentioned as Bhubaneswar in technical evaluation) was opened instead of M/s. Aum Sai Medical, Berhampur, which was otherwise technically qualified. The price bid of the petitioner was opened on 1.8.2014. In the meantime, it was observed that due to a clerical oversight the price-bid of M/s. Om Sai Medical, Cuttack (wrongly mentioned as Bhubaneswar in technical evaluation) was opened instead of M/s. Aum Sai Medical, Berhampur, which was otherwise technically qualified. The representative of the said bidder did not point out the error at the time of opening of the price bid. In view of the same, to avoid future legal complications, Central Procurement Committee had recommended to cancel the tender and invite fresh tender. It is further stated that the opposite parties had taken a policy decision that technically qualified bidder giving highest discount to the patients should be selected as H1. The policy decision was taken to help the needy patients, who can purchase the medicines at subsidized rates. After cancellation of the tender, steps were taken for re-tender. Accordingly, the tender notice was published in the newspaper as well as in the official website of the AIIMs. It is further stated that cancellation of the earlier tender process was published on the website for information of the parties on 23.9.2014. 3. We have heard Mr. P.K. Rath, learned counsel for the petitioner and Mr. A.K. Bose, learned Assistant Solicitor General for the opposite parties. 4. Mr. Rath argues with vehemence that action of the opposite parties in issuing a fresh tender call notice is mala fide. He further submits that condition in the tender notice has been designed to select the person of the choice of the opposite parties who was earlier selected by them. Drawing our attention to the tender call notice vide Annexure-1, Mr. Rath submits that the opposite parties invited tender from the manufacturer and their authorized dealers/distributors for providing medicines/drugs/surgical/consumables/ implants/Orthotic and Prosthetic Devices etc. He further submits that there is no rhyme or reason to invite tender from the manufacturer and their authorized dealers/distributors, though the earlier tender notice was issued inviting tender from pharmacy/chemistry shop. He further submits that when the petitioner was waiting for the result of the earlier tender process, without cancelling the same, a fresh tender notice has been issued. To buttress his submission, Mr. Rath relies on a decision of the apex Court in the case of Meerut Development Authority Vrs. Association of Management Studies and another (2009) 6 S.C.C. 171 . 5. Per contra, Mr. To buttress his submission, Mr. Rath relies on a decision of the apex Court in the case of Meerut Development Authority Vrs. Association of Management Studies and another (2009) 6 S.C.C. 171 . 5. Per contra, Mr. Bose, learned Assistant Solicitor General submits that the petitioner was disqualified in technical bid of the earlier tender. Pursuant to the direction of this Court, his financial bid was opened on 1.8.2014. However, it was found that due to clerical oversight, the price bid of M/s. Om Sai Medical, Cuttack (wrongly mentioned as Bhubaneswar in technical evaluation) was opened instead of M/s. Aum Sai Medical, Berhampur, which was otherwise eligible. In order to avoid future legal complications, the Central Procurement Committee unanimously recommended to cancel the tender process and invite fresh tender notice and issued a tender notice. 6. The sole question that hinges for our consideration is as to whether in the facts and circumstances of the case, the decision of the opposite parties to re-tender is liable to be quashed. 7. After survey of the earlier decisions, the apex Court in Siemens Public Communication Networks Private Limited and another Vrs. Union of India and others,: (2008) 16 SCC 215, observed as follows:- "20. In Master Marine Services (P) Ltd. V. Metcalfe and Hodgkinson (P) Ltd.: (2005) 6 SCC 138 , it was observed as follows:- "11. The principles which have to be applied in judicial review of administrative decisions, especially those relating to acceptance of tender and award of contract, have been considered in great detail by a three-judge Bench in Tata Cellular v. Union of India. It was observed that the principles of judicial review would apply to the exercise of contractual powers by government bodies in order to prevent arbitrariness or favoritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. But, the principles laid down in Article 14of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power in exercised for any collateral purpose the exercise of that power will be struck down......" 12. After an exhaustive consideration of a large number of decisions and standard books on administrative law, the Court enunciated the principle that the modern trend points to judicial restraint in administrative action. The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise, which itself may be fallible. The Government must have freedom of contract. In other words, fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principles of reasonableness but also must be free from arbitrariness not affected by bias or actuated by mala fides. It was also pointed out that quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure............" 13. In Sterling Computers Ltd. v. M & N Publications Ltd. (1) SCC 445, it was held as under. '18. While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the Court is concerned primarily as to whether there has been any infirmity in the "decision-making process......." By way of judicial review the court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State. Courts have inherent limitations on the scope of any such enquiry. But at the same time......." the courts can certainly examine whether "decision-making process" was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution. 19. Courts have inherent limitations on the scope of any such enquiry. But at the same time......." the courts can certainly examine whether "decision-making process" was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution. 19. If the contract has been entered into without ignoring the procedure which can be said to be basis in nature and after an objective consideration of different options available taking into account the interest of the State and the public, then court cannot act as an appellate authority by substituting its opinion in respect of selection made for entering into such contract. 14. In Raunaq International Ltd. v. I.V.R. Constitution Ltd. (1999) 1 SCC 49, it was observed that the award of a contract, whether it is by a private party or by a pubic body or the State, is essentially a commercial transaction. In arriving at a commercial decision, considerations which are of paramount importance are commercial considerations, which would include, inter alia, the price at which the party is willing to work, whether the goods or services offered are of the requisite specifications and whether the person tendering is of the ability to deliver the goods or services as per specifications. 15. The law relating to award of contract by the State and public sector corporations was reviewed in Airport Ltd.: (2000) 2 SCC 617 , and it was held that the award of a contract, whether by a private party or by a State, is essentially a commercial transaction. It can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation. It was further held that 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 powers 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 interfere." 21. 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 interfere." 21. In B.S.N. Joshi and Sons Ltd. v. Nair Coal Services Ltd.: (2006) 11 SCC 548 : AIR 2007 SC 437 , while summarizing the scope of judicial review and the interference of superior courts in the award of contracts, it was observed as under: "65. We are not oblivious of the expansive role of the superior courts in judicial review. 66. We are also not shutting our eyes towards the new principles of judicial review which are being developed; but the law as it stands now having regard to the principles laid down in the aforementioned decisions may be summarized as under: (i) if there are essential conditions, the same must be adhered to; (ii) if there is no power of general relaxation, ordinarily the same shall not be exercised and the principle of strict compliance would be applied where it is possible for all the parties to comply with all such conditions fully; (iii) if, however, a deviation is made in relation to all the parties in regard to any of such conditions, ordinarily again a power of relaxation may be held to be existing; (iv) the parties who have taken the benefit of such relaxation should not ordinarily be allowed to take a different stand in relation to compliance with another part of tender contract, particularly when he was also not in a position to comply with all the conditions of tender fully, unless the court otherwise finds relaxation of a condition which being essential in nature could not be relaxed and thus the same was wholly illegal and without jurisdiction; (v) when a decision is taken by the appropriate authority upon due consideration of the tender document submitted by all the tenderers on their own merits and if it is ultimately found that successful bidders had in fact substantially complied with the purport and object for which essential conditions were laid down, the same may not be ordinarily be interfered with; (vi) the contractors cannot form a cartel. If despite the same, their bids are considered and they are given an offer to match with the rates quoted by the lowest tenderer, public interest would be given priority; (vii) where a decision has been taken purely on public interest, the court ordinarily should exercise judicial restraint." 22. In Reliance Airport Developers (P) Ltd. V. Airports Authority of India: (2006) 10 SCC 1 , it was observed as follows: "56. One of the points that falls for determination is the scope for judicial interference in matters of administrative decisions. 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 is trite 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 C., (1998) 4 SCC 59 : 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 classic work Judicial Review of Administrative Action, 4th Edn. At PP. 285-87 states the legal position in his own terse language that the relevant principles formulated by the coats may be broadly summarized 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. That authority must genuinely address itself to the matter before it; it must not act under the dictates or another body or disable itself from exercising a discretion in each individual case. In the purported exercise of its discretion, it must not do what it has been forbidden to do, nor must it do what it has not been authorized to do. It must act in good faith must have regard to all relevant considerations, 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 act arbitrarily or capriciously. It must act in good faith must have regard to all relevant considerations, 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 act arbitrarily or capriciously. These several principles can conveniently be 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, mutually 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 it acts ultra vires. 57. 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 scrutinize the factual basis upon which discretionary powers have been exercised. 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'.These principles were highlighted by Lord Diplock in Council of Civil Service Unions v. Minister for the Civil Service, 1985 AC 374 : (1984) 3 WLR 1174 : (1984) 3 All ER 935(HL) (commonly known as CCSU case). 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 patiently erroneous, such exercise of power will stand vitiated. (See CIT v. Mahindra and Mahindra Ltd.) The effect of several decisions on the question of jurisdiction have been summed up by Grahame Aldous 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 construed restrictively. There are, however, certain areas of governmental activity, national security being the paradigm, which the courts regard themselves as incompetent to investigate, beyond an initial decision as to whether the Government's claim is bone fide. There are, however, certain areas of governmental activity, national security being the paradigm, which the courts regard themselves as incompetent to investigate, beyond an initial decision as to whether the Government's claim is bone 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 Service Unions v. Minister for the Civil Service, 1985 AC 374 : (1984) 3 WLR 1174 : (1984) 3 All ER 935 (HL), this is doubtful. Lords Diplock, Scarman 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.' 77. Expression of different views and discussions in different meetings really lead to a transparent process and transparency in the decision-making process. In the realms of contract, various choices were available. Comparison of the respective merits, offers of choice and whether that chose has been properly exercised are the deciding factors in the judicial review." (emphasis supplied) While arriving at the aforesaid conclusions, this Court took note of the illustrious case of Tata Cellular v. Union of India, (1994) 6 SCC 651 , wherein at paras 77 and 94, it was noted as follows:- "77. The duty of the court is to confine itself to the question of legality. Its concern should be: (1) whether a decision-making authority exceeded its powers? (2) committed an error of law, (3) committed a breach of the rules of natural justice, (4) reached a decision which no reasonable tribunal would have reached, or (5) abused its powers. Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfillment of that policy is fair. It is only concerned with the manner in which those decisions have been taken. Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfillment 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 above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact, in R. v. Secy. of State for the Home Deptt. ex p Brind, Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should, 'consider whether something has gone wrong of a nature and degree which requires its intervention'. 94. The principles deducible from the above are: (1) The modern trend points to judicial restraint in administrative action. (2) The court does not sit as a court of appeal but merely reviews the meaner in which the decision was made. (3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts. (5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure." 23. In Asia Foundation & Construction Ltd. v. Trafalgar House Construction (I) Ltd.: (1997) 1 SCC 738 , it was held as follows: "10. Therefore, though the principle of judicial review cannot be denied so far as exercise of contractual powers of government bodies are concerned, but it is intended to prevent arbitrariness or favoritism and it is exercised in the larger public interest or if it is brought to the notice of the court that in the matter of award of a contract power has been exercised for any collateral purpose. But on examining the facts and circumstances of the present case and on going through the records we are of the considered opinion that none of the criteria has been satisfied justifying Court's interference in the grant of contract in favour of the appellant. We are not entering into the controversy raised by Mr. Parasaran, learned Senior Counsel that the High Court committed a factual error in coming to the conclusion that Respondent 1 was the lowest bidder and the alleged mistake committed by the consultant in the matter of bid evaluation in not taking into account the customs duty and the contention of Mr. Sorabjee, learned Senior Counsel that it has been conceded by all parties concerned before the High Court that on corrections being made Respondent 1 was the lowest bidder. As in our view in the matter of a tender a lowest bidder may not claim an enforceable right to get the contract though ordinarily the authorities concerned should accept the lowest bid. Further, we find from the letter dated 12-7-1996 that Pradip Port Trust itself has come to the following conclusion; 'The technical capability of any of the three bidders to undertake the works is not in question. Two of the bids are very similar in price. If additional commercial information which has now been provided by bidders through Paradip Port Trust, had been available at the time of assessment, the outcome would appear to favour the award to AFCONS." 8. Two of the bids are very similar in price. If additional commercial information which has now been provided by bidders through Paradip Port Trust, had been available at the time of assessment, the outcome would appear to favour the award to AFCONS." 8. In Meerut Development Authority (supra), on which reliance has been placed by Mr. Rath, the apex Court held that the terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is the realm of contract. However, a limited judicial review may be available in cases where it is established that the terms of the invitation to tender were so tailor made to suit the convenience of any particular person with a view to eliminate all others from participating in the binding process. The bidders participating in the tender process have no other right except the right to equality and fair treatment in the matter of evaluation of competitive bids offered by interested persons in response to notice inviting tenders in a transparent manner and free from hidden agenda. One cannot challenge the terms and conditions of the tender except on the above stated ground. 9. On the anvil of the decisions cited supra, we have examined the case. We are unable to hold that the decision of the opposite parties in any manner is illegal, arbitrary or mala fide. The averments are omnibus. AIIMS is a reputed institution of the country. It invited tender from the manufacturer and their authorized dealers/distributors for providing medicines/drug/surgical/consumables/implants/Orthotic and Prosthetic Devices etc. for a period of one year. By no stretch of imagination, it can be comprehended that the condition is tailor made to select a particular person. No personal mala fide has been alleged, nor there is anything to show that the decision is not bona fide or actuated by any extraneous considerations. On an anatomy of the pleadings of the parties and the submissions advanced by the learned counsel for the parties, we are on ad idem that the writ petition, sans any merit, deserves dismissal. Accordingly, the writ petition is dismissed. No costs.