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Himachal Pradesh High Court · body

2015 DIGILAW 26 (HP)

Santosh Kumar v. Director Urban Development

2015-01-06

MANSOOR AHMAD MIR, TARLOK SINGH CHAUHAN

body2015
Judgment Tarlok Singh Chauhan, J. Since these petitions raise common questions of fact and the response filed is the same in all these cases, therefore, they are being disposed of together. 2. The case of the petitioner(s) as set out in these petitions is that he is a Government contractor, who had quoted the lowest tenders and was allotted the following works: (i) Strengthening of drain in Culvert near IPH Pump House at Dabrog Ward RD 0/01 to 00/050 Job No.1 (CWP No. 5685 of 2014); (ii) Strengthening of drain in Culvert near IPH Pump House at Dabrog Ward RD 0/51 to 00/105 (CWP No. 5686 of 2014); and (iii) Strengthening of drain Culvert to upper side tubewell, Dabrog Ward RD 0/51 to 00/100, Job No.4 (CWP No. 5700 of 2014). It is alleged that since the works assigned were required to be complete within two months, the petitioner(s) incurred huge amount of expenditure by hiring labour and developing the site and for carrying out of construction work of strengthening of drain culvert. However, the respondents abruptly vide office order No.1008 dated 27.3.2014 cancelled the aforesaid tenders with immediate effect thereby causing huge financial loss to the petitioner(s), which order is sought to be quashed in the present proceedings. 3. The respondents have filed their reply and have opposed the claim of the petitioner(s) stating therein that because of large scale irregularities which had come to their notice, all the tenders including those of the petitioner(s) had been ordered to be cancelled. 4. We have heard the learned counsel for the parties and gone through the records of the case. 5. Learned counsel for the petitioner(s) has vehemently argued that by canceling the tenders, the petitioner(s) has been put to great loss. The tenders have been cancelled not because of any irregularity or illegality in the same, but have been cancelled so as to give benefit to some political person. It is also contended that in case there was any irregularity in the awarding of tender, then the respondents themselves would not have supplied cement to the petitioner(s) for execution of the work. It is lastly contended that the action of the respondents is otherwise not sustainable as the same was in violation of the principles of natural justice. 6. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. It is lastly contended that the action of the respondents is otherwise not sustainable as the same was in violation of the principles of natural justice. 6. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made “lawfully” and not to check whether choice or decision is “sound”. When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. If the decision to scrap or annul a contract is bonafide and in public interest, the Court will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil Court. (Refer : Jagdish Mandal vs. State of Orissa and others (2007) 14 SCC 517). 7. The remedy available to a party complaining of breach of contract lies in seeking damages and in case the contract is capable of being specifically enforced, he may seek its enforcement. The remedy for breach of contract being purely in the realm of contract is to be dealt with by civil Court. The public law remedy, by way of a writ petition under Article 226 of the Constitution, is not available to seek damages for breach of contract or specific performance of contract. It is only where the contractual dispute has a public law element, the power of judicial review under Article 226 of the Constitution may be invoked. In a civil suit, the emphasis is on the contractual right, while in a writ petition, the focus shifts to the exercise of power by the authority, i.e. whether the order of cancellation passed by the respondent was arbitrary or unreasonable. Therefore, while exercising writ jurisdiction, if this Court finds that the exercise of power in passing an order of cancellation was not arbitrary and unreasonable, it would normally desist from giving any finding on disputed or complicated questions of fact and relegate the parties to the remedy of a civil suit. Therefore, while exercising writ jurisdiction, if this Court finds that the exercise of power in passing an order of cancellation was not arbitrary and unreasonable, it would normally desist from giving any finding on disputed or complicated questions of fact and relegate the parties to the remedy of a civil suit. (See: Kisan Sahkari Chini Mills Limited and others vs. Vardan Linkers and others (2008) 12 SCC 500 ). 8. It has specifically come in the reply of the respondents that on complaints received by the Deputy Commissioner, Mandi, Sub Divisional Officer (C), Sarkaghat and Director, Urban Development, the matter regarding award of tender was enquired into by the Deputy Commissioner, Mandi through SDM, Sarkaghat. In such inquiry, it was revealed that the Nagar Panchayat, Sarkaghat, District Mandi had floated tenders amounting to Rs. 56.00 lacs without observing codal formalities. 9. After going through the contents of the inquiry report, the respondents found that while calling tenders the Nagar Panchayat had not followed the proper procedure as laid down in the rules. Though, under the Rules, the tender notice was required to be published in two dailies having wide circulation in the area, yet the same was only published in Himachal Kesri which was weekly newspaper and was not even circulated or distributed at Sarkaghat. This publication was made only on 28.12.2013 whereas the last date for submission of application form was 30.12.2013. Further in the column meant for date of issue of tender, cutting was made at four places which were not even certified. It was further revealed that the works had been split up in four parts so as to bring these works within the competence of the Assistant Engineer of the Municipality as provided under Rule 4 of the Himachal Pradesh Municipal Works Rules, 2010. It was only after going through this report the competent authority decided to cancel all the tenders with immediate effect. 10. The petitioner(s) has not controverted these allegations by filing a rejoinder and in absence thereof, we have no other option but to accept the same to be true and correct. Even otherwise, there is no material placed on record by the petitioner(s) which may suggest even remotely that the contract was cancelled only to favour certain person. 11. 10. The petitioner(s) has not controverted these allegations by filing a rejoinder and in absence thereof, we have no other option but to accept the same to be true and correct. Even otherwise, there is no material placed on record by the petitioner(s) which may suggest even remotely that the contract was cancelled only to favour certain person. 11. The petitioner(s) would then contend that in case the respondents had found any irregularity or illegality in the tender process, then they themselves would not have supplied the cement to the petitioner(s) for the execution of the work. We find no merit in this submission. Mere supplying of cement for execution of the work would not operate as an estoppel especially when it has come on record that it was on the basis of the inquiry report that the respondents decided to cancel the tender process, therefore, any act of the respondents prior to cancellation in such circumstances cannot operate as an estoppel and the petitioner(s) cannot claim any undue advantage on the basis of the same. 12. In so far as the allegation regarding termination of the tender without observing the principle of natural justice (audi alteram partem) and the same therefore being void is concerned, suffice it to say that the termination is not a quasi-judicial act, hence it was not necessary to observe the principles of natural justice. These contracts were non-statutory contracts and therefore, cannot be said to be an executive or administrative act to attract the duty to act fairly. In taking this view, we are fortified by the judgment of Hon’ble Supreme Court in State of Gujarat and others vs. Meghji Pethraj Shah Charitable Trust and others (1994) 3 SCC 552 wherein it was observed as under: “We are unable to see any substance in the argument that the termination of arrangement without observing the principle of natural justice (audi alteram partem) is void. The termination is not a quasi-judicial act by any stretch of imagination; hence it was not necessary to observe the principles of natural justice. It is not also an executive or administrative act to attract the duty to act fairly. It was – as has been repeatedly urged by Shri Ramaswamy – a matter governed by a contract/agreement between the parties. It is not also an executive or administrative act to attract the duty to act fairly. It was – as has been repeatedly urged by Shri Ramaswamy – a matter governed by a contract/agreement between the parties. If the matter is governed by a contract, the writ petition is not maintainable since it is a public law remedy and is not available in private law field, e.g., where the matter is governed by a non-statutory contract. Be that as it may, in view of our opinion on the main question, it is not necessary to pursue this reasoning further.” 13. On the basis of material which has come on record, the decision of the respondents to cancel all the tenders including those of the petitioner(s) cannot be termed to be arbitrary or unreasonable. Accordingly, we find no merit in these petitions and the same are dismissed. However, the petitioner(s) if still believe that the cancellation of the contract(s) awarded in his/their favour earlier is illegal, it is open for him/them to seek appropriate legal remedy by way of damages or otherwise before the appropriate forum. Pending applications, if any, are also disposed of. The Registry is directed to place a copy of this judgment on the files of connected matters.