Medhaj Techno Concept Pvt. Ltd v. State Of Rajasthan, Through Principal Secretary, Energy Department
2023-08-29
INDERJEET SINGH
body2023
DigiLaw.ai
ORDER : 1. This writ petition has been filed by the petitioner-company with the following prayers :- “It is, therefore, humbly prayed to your lordships may kindly graciously be pleased to accept and allow this writ petition and : i) by appropriate writ, order or direction in the nature thereof the impugned order dated 13.4.2023 issued by the respondent No.4 may kindly be quashed and set aside and restrained the respondent No.5 from dropping/cancelling the present Tender. ii) by appropriate writ, order or direction in the nature thereof the respondents may kindly be directed to award work to the petitioner pursuant to TN-538 dated 15.11.2022 and TNTW-654 dated 15.11.2022 respectively looking to H1 bidder to the petitioner company. iii) Any other order which this Hon’ble Court deemed just and proper in the facts and circumstances of the case may be passed in favour of the petitioner.” 2. Brief facts of the case are that the respondents initiated e-tender process for “Consultancy services for assisting and supporting in Project Management under Revamped Reforms-Linked Results-based Distribution Sector Scheme” for three companies namely Jaipur Vidyut Vitaran Nigam Limited (JVVNL), Ajmer Vidyut Vitaran Nigam Limited (AVVNL) and Jodhpur Vidyut Vitaran Nigam Limited (JdVVNL) and the petitioner is concerned with the JVVNL. In this writ petition, the petitioner seems to be basically aggrieved by the condition incorporated in Clause-4-Bid Capacity provided in the instructions ‘Qualification Requirements for Consultants’ to be followed by the bidders participating in the tender process and the order dated 13.04.2023, which the petitioner has challenged in the present writ petition, appears to be based thereon, issued by the respondents whereby the aforesaid PMA tender for Jaipur Discom has been dropped. 3. The Clause No.4 being relevant to appreciate the controversy raised herein, is quoted as under : 4. Bid Capacity (A) For other than special category states-Bidder cannot be awarded as PMA for Distribution Infrastructure works if bidder has already been awarded 4 or more contracts as on date of publication of this Tender for PMA for Distribution Infrastructure works of Discoms falling under other than special category states under RDSS. 4.
Bid Capacity (A) For other than special category states-Bidder cannot be awarded as PMA for Distribution Infrastructure works if bidder has already been awarded 4 or more contracts as on date of publication of this Tender for PMA for Distribution Infrastructure works of Discoms falling under other than special category states under RDSS. 4. The impugned order dated 13.04.2023 which has been challenged by the petitioner in the present writ petition, is related to the NIT issued by the respondents on 15.11.2022, pursuant to which the petitioner had applied and submitted its tender with the respondents on 13.12.2022 and thereafter the technical bid was opened by the respondents on 14.12.2022, including that of the petitioner and the communication dated 03.01.2023 reveals that the petitioner was declared technically qualified and by the communication dated 04.01.2023, which discloses about opening up of fiscal bids, the petitioner was declared as L-1. The respondents vide their communication dated 19.01.2023 informed the petitioner about the negotiations being held on 20.01.2023 in which the petitioner-company participated and from the communication dated 23.01.2023 it is transpired that the petitioner accepted the counter offer and informed the respondents in this regard accordingly. Thereafter, the respondents, according to the petitioner, without assigning any reason, cancelled the aforesaid tender process vide their order dated 13.04.2023, which is under challenge herein, as observed above. 5. Learned Senior Counsel appearing for the petitioner submits that the action of the respondents in cancelling the tender process clearly shows their non-application of mind. He further submitted that no opportunity of hearing was afforded to the petitioner prior to passing of the order dated 13.04.2023. He further submitted that the action of the respondents in cancelling the tender process is also in violation of the provisions of Section 26 of The Rajasthan Transparency in Public Procurement Act, 2012 (hereinafter to be referred as the “Act of 2012”). He further submitted that once the negotiations were held and the counter offer suggested by the respondents has been accepted by the petitioner, the respondents have no authority to cancel the tender process which reached almost to its final stage. He further submitted that action of the respondents is also in violation of Article 14 of the Constitution of India.
He further submitted that once the negotiations were held and the counter offer suggested by the respondents has been accepted by the petitioner, the respondents have no authority to cancel the tender process which reached almost to its final stage. He further submitted that action of the respondents is also in violation of Article 14 of the Constitution of India. He also submitted that once as per the provisions contained in Section 27(1) of the Act of 2012 the bid of the petitioner stood accepted, the respondents cannot be said to be justified in cancelling the tender process in which the petitioner was declared qualified almost at all the stages by the respondents themselves. 6. In support of the contentions, Learned Senior counsel for the petitioner relied upon the judgment passed by the Hon’ble Supreme Court in the matter of Commissioner of Police, Bombay Vs. Gordhandas Bhanji, reported in (1952) 0 AIR (SC) 16, where in paras no.8 & 9 it has been held under:- “8. It will be necessary at this stage to determine whether this was a cancellation by the commissioner on his own authority acting in the exercise of some power which was either vested in him or of which he bona fide believed himself to be possessed, or whether he merely acted as a post office in forwarding orders issued by some other authority. We have no hesitation in reaching the conclusion that this is not an order of cancellation by the Commissioner but merely intimation by him of an order passed and made by another authority, namely the Government of Bombay. 9. An attempt was made by referring to the Commissioner's affidavit to show that this was really an order of cancellation made by him and that the order was his order and not that of Government. We are clear that public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself.” 7.
Public orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself.” 7. He further relied upon the judgment passed by the Hon’ble Supreme Court in the matter of M/s. Padia Timber Company (P) Ltd. Vs. The Board of Trustees of Visakhapatnam Port Trust through its Secretary, reported in (2021) 0 AIR (SC) 341, where in paras no.50, 55 & 56 it has been held under :- “50. In Raghunandhan Reddy v. The State of Hyderabad thr. The Secretary to Government Revenue Department (supra), a Division Bench of the High Court held: 8. It is a well-established principle of law that only when an offer is accepted that the contract is concluded and binds the parties. It is equally well-settled that before an offer is accepted, the offerer can withdraw his offer, but if the acceptance is conditional or is not final, then there is no concluded contract. 55. The Trial Court relied on Section 4 of the Contract Act, but completely overlooked Section 7. Section 7 of the Indian Contract Act, 1872 is set out hereinbelow for convenience: 7. Acceptance must be absolute.--In order to convert a proposal into a promise the acceptance must----In order to convert a proposal into a promise the acceptance must--" (1) be absolute and unqualified; (2) be expressed in some usual and reasonable manner, unless the proposal prescribes the manner in which it is to be accepted. If the proposal prescribes a manner in which it is to be accepted, and the acceptance is not made in such manner, the proposer may, within a reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise; but, if he fails to do so, he accepts the acceptance. 56. It is a cardinal principle of the law of contract that the offer and acceptance of an offer must be absolute. It can give no room for doubt. The offer and acceptance must be based or founded on three components, that is, certainty, commitment and communication.
56. It is a cardinal principle of the law of contract that the offer and acceptance of an offer must be absolute. It can give no room for doubt. The offer and acceptance must be based or founded on three components, that is, certainty, commitment and communication. However, when the acceptor puts in a new condition while accepting the contract already signed by the proposer, the contract is not complete until the proposer accepts that condition, as held by this Court in Haridwar Singh v. Bagun Sumbrui and Ors., AIR 1972 SC 1242 . An acceptance with a variation is no acceptance. It is, in effect and substance, simply a counter proposal which must be accepted fully by the original proposer, before a contract is made.” 8. He next relied upon the judgment passed by the High Court of Andhra Pradesh in the matter of Raghunandhan Reddy Vs. State of Hyderabad, reported in AIR 1963 AP 110 , where in para no.9 it has been held under :- “9. It is a well-established principle of law that only when an offer is accepted that the contract is concluded and binds the parties. It is equally well settled that before an offer is accepted, the offerer can withdraw his offer, but if the acceptance is conditional or is not final, men there is no concluded contract. Section 5 of the Indian Contract Act states that a proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards, Similarly, an acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards. Generally, in a sale by auction, the auctioneer is the agent of the person whose property or rights are being auctioned. The agent invites offers and every bid is an offer and it is only binding on either side when it is assented to, that is, when the hammer falls at the third bid. Sometimes the owner reserves a right as part of the conditions of auction and even though the bid is the highest it need not necessarily conclude the agreement.
Sometimes the owner reserves a right as part of the conditions of auction and even though the bid is the highest it need not necessarily conclude the agreement. Before the final acceptance of the bid or before the hammer falls, it is always open to the bidder to withdraw his bid and the condition to the contrary in auction that the bid shall not be retracted has been held to be invalid. Following the English rule, in Agra Bank v. Hamlin ILR Mad 235 it was held by a Bench consisting of Muttusami Ayyar and Best, JJ. that it was competent for a bidder at a Court auction to withdraw his bid. Two estates by name 'Chembali' and 'Burnside' being the properties of the judgment debtor, were put up for sale by Court auction. At the sale, one person acting on behalf of the plaintiff made a bid for both the properties, but later intimated to the Nazir that he wished to withdraw these bids and also informed the court the next day of his wish to withdraw. A reference was made to the High Court as to whether it was permissible for bidders at court sales to withdraw their bids. Muttusami Ayyar, J. answered the question in the affirmative and pointed out that until the lot is knocked down and the sale is concluded, the court may, in its discretion, adjourn the sale. He observed: It is clear then that until the lot is knocked down, the court has a loeus penitentiae and it follows, in the absence of some specific provision to the contrary, that bidders are intended to be placed in a similar position.
He observed: It is clear then that until the lot is knocked down, the court has a loeus penitentiae and it follows, in the absence of some specific provision to the contrary, that bidders are intended to be placed in a similar position. Best, J. concurred and said: An offer to buy or sell may be retracted at any time before it is unconditionally and completely accepted, by words or conduct… Later Leach, C. J., delivering the judgment of the bench in Somasundaram Pillai v. provincial Government of Madras MANU/TN/0172/1946 : AIR 1947 Mad 366, referred 1o the dictum of Muttusami Ayyar, J. --Particularly to the observations, "It appears that, in the case under reference, it was not one of the conditions of sale that bidders were not at liberty to with draw their bids" and said at page 368, that they do not regard this statement as a definite acceptance of the proposition that where there is such a condition a bid cannot be withdrawn, and expressed dissent if Muttusami Ayyar intended to hold so. In Somasundaram Pillai's case AIR 1947 Mad 365, the appellant was the highest bidder for four shops and his bids were provisionally accepted by the Sub-Collector, but the Collector accepted only two of them. He refused to confirm the bids made by the appellant for the other two licences and directed that the sale should be continued under the conditions of sale. Pursuant to this the Tahsildar informed the appellant that his bids for the two shops had not been accepted and that the Collector had ordered that the auction sale should be continued from the bids already made by him. The appellant, however, presented a petition to the Tahsildar on the day fixed for the continuance of the auction, in which he stated that he did not require the two shops and asked that the amount of his deposit should be returned to him. This petition was rejected forthwith and subsequently his pleader wrote on his behalf pointing out that his bids had not been accepted by the Government and that he was entitled to withdraw them. The Collector, after referring to the rule that bids could not be withdrawn, rejected this contention and accepted his bid, but the appellant refused to take out licences, which resulted in a loss to the Government of Rupees 1148/-.
The Collector, after referring to the rule that bids could not be withdrawn, rejected this contention and accepted his bid, but the appellant refused to take out licences, which resulted in a loss to the Government of Rupees 1148/-. The Advocate General on behalf of the State conceded that the publication of the conditions of sale did not amount to a notification under Section 69 of the Madras Abkari Act and said that they were merely rules drawn up by the Board for the conduct of sales of liquor licences and had no statutory force. It was consequently held that the lower court was wrong in holding that the conditions of sale had the force of law. The learned Judges referred to the case in Joravarmull Champalal v. Jeygopal das Ghanshamdas ILR Mad 799 : AIR 1922 Mad 488 and the cases considered by that Bench in Payne v. Cave (1789) 3 TR 148 : 100 ER 502 and Cooke v. Oxley (1790) 3 TR 653 : 100 ER 785, approving the dictum in both the cases, particularly of Lord Kenyon in the latter case that nothing could be clearer than that at the time of entering into the contract, the engagement was all on one side and that the other party was not bound and therefore it was a nudum pactum. Leach, C. J., observed at page 367 as follows: "To have an enforceable contract there must be an offer and an unconditional acceptance. A person who makes an offer has the right of withdrawing it before acceptance, in the absence of condition to the contrary supported by consideration. Does the fact that there has been a provisional acceptance, make any difference? We can see no reason why it should. A provisional acceptance cannot itself make a binding contract. There must be a definite acceptance or the fulfilment of the condition on which provisional acceptance is based." In the result it was decided that the appellant was entitled to withdraw his bids, because a prohibition against withdrawal has no force of law. This case is sought to be distinguished by the learned Government Pleader on the ground that under Rule 10, the acceptance was final and not provisional and the condition of cancellation or suspension by the Excise Commissioner within thirty days It only a condition subsequent.
This case is sought to be distinguished by the learned Government Pleader on the ground that under Rule 10, the acceptance was final and not provisional and the condition of cancellation or suspension by the Excise Commissioner within thirty days It only a condition subsequent. In support of this argument he relied on the judgment of Safyanarayana Rao, J., sitting singly in Rajanagaram Village Co-operative Society v. Veerasami Mudaly, MANU/TN/0064/1951 : AIR 1951 Mad 322 and the passage in Pollock and Mulla --8th Edition --|pages 44-45. Satyanarayana Rao, J. in Rajanagaram case, MANU/TN/0064/1951 : AIR 1951 Mad 322 tries to distinguish the Bench decision in Somasundaram Pillai's case, AIR 1947 Mad 366 on the ground that there is a difference between a provisional acceptance and a conditional acceptance. In the former case the officer accepting the offer provisionally has no authority to accept the bid. As such the offeror can withdraw, while in the latter case the offeror cannot withdraw. In his view Somasundaram Pillai's case, AIR 1947 Mad 36B is one where the auctioning authority had only power to accept the bid provisionally and pass it on to the Collector for his confirmation. At page 488 (of Mad LJ): (at pp. 324-325 of AIR) he observed: Under the terms of the sale which were approved by the Board of Revenue, he could only signify a kind of provisional acceptance whatever that expression might mean; but the final and actual acceptance rested with the Collector. The appellant who was the highest bidder in that case did not thereby acquire any rights under the sale as there was no concluded contract in his favour. The learned Judge then proceeds to observe that an absolute acceptance is where the sale officer, or the auctioneer as the case may be, is given full authority to accept a bid unconditionally and that a provisional acceptance means that the auctioneer had only a right to receive the bids and pass them on to his superior who Is the final authority to confirm and conclude the contract, while a conditional acceptance has the effect of binding the highest bidder to the contract If finally there Is the approval or confirmation by the superior person indicated in the terms of sale. As such he cannot resile from the contract, nor is it open to him to withdraw the offer.
As such he cannot resile from the contract, nor is it open to him to withdraw the offer. With great respect, we fail to appreciate this distinction. In our view, where the offer and acceptance culminating in a concluded contract are themselves subject to conditions and are not final, there is no contract at all till these conditions are fulfilled and an offer before the fulfilment of these conditions can be withdrawn. The distinction between a condition and an ordinary term of the agreement must not be confused, for, the non-performance of a term would give rise to a right to an action for the breach of the contract while the failure of a condition acts as a release of the corresponding duty. Such a condition is one where the promisor's obligation becomes effective only if some state of facts exists or if and when some future event happens. In other words, it is said to be a condition precedent. Learned editors of Pollock and Mulla's Indian Contract Act classify both these cases and another case of Chittibobu Adenna v. Garimalla AIR 1916 Mad 75, as cases of a condition precedent where the bidder could have retracted his offer before the final acceptance, as in Sundaram Pillai's case MANU/TN/0172/1946 : AIR 1947 Mad 366. It was further submitted by them that the two cases, viz., Chittibobu's case AIR 1916 Mad 75 and Rajanagaram case 1950 2 MLJ 436 : AIR 1351 Mad 322 were wrongly decided. In the first case, it is said that the Court misunderstood the nature of a condition subsequent. With respect to the second case, it is observed that the acceptance is either absolute or conditional and there is no half-way house between the two. If an acceptance is conditional, the offeror can withdraw at any moment until absolute acceptance has taken place. In that case before Salyanarayanarao, J. the terms of the auction sale were that the sale will be knocked down in favour of the highest bidder subject to the approval or the Mahasabha and the District Bank. The plaintiff had become the highest bidder in the auction and deposited the necessary price money and later on the bank took up the matter for consideration and accepted the bid, but before it could be communicated to the plaintiff, the Bank rescinded it and ordered re-sale. The question was whether there was a concluded contract.
The plaintiff had become the highest bidder in the auction and deposited the necessary price money and later on the bank took up the matter for consideration and accepted the bid, but before it could be communicated to the plaintiff, the Bank rescinded it and ordered re-sale. The question was whether there was a concluded contract. There can be little doubt that where the acceptance is conditional, as in this case, there is no concluded contract and the offeror can withdraw. A condition precedent is a condition which must happen before either party becomes bound by the contract and since there was in fact no approval, there can be no concluded contract and the Bank was justified in ordering the resale. The decision of the single bench of the Madras High Court, was, in our view, not warranted either on principle or on the authority of the Bench decisions which preceded it. An examination of Chittibobu's case, AIR 1916 Mad 75 would show that the decision of the Bench was based on there being a condition precedent and not a condition subsequent. A condition subsequent is one which arises only on there being a concluded contract. A condition subsequent is one, which follows the performance of the contract, and operates to defeat and annul it, upon the subsequent failure of either party to comply with the condition. It goes to the discharge of the obligations under the contract. The statement of Poilock and Mulla at pages 44-45 dealing with Chittibobu's case AIR 1916 Mad 75 which has been relied upon by the learned Government pleader, is in the following terms: It is a resolutive condition, as distinct from a suspensive condition or condition precedent, which prevents the existence of any obligation until the condition is satisfied. Yet the Court clearly decided that there was no binding agreement at any rate until V, the special agent, approved. In other words, their Lordships held that the condition was a condition precedent, for had the condition been a condition subsequent, there would have been a binding contract the moment D's bid was accepted, name to be defeated by V's failure to approve. Appropriate wording to impose a condition subsequent would have been to the effect that the bid was accepted, but if V should not approve the contract was to be at an end.” 9.
Appropriate wording to impose a condition subsequent would have been to the effect that the bid was accepted, but if V should not approve the contract was to be at an end.” 9. He also relied upon the judgment passed by a Coordinate Bench of this Court in the matter of Ashok Kumar Sharma Vs. State of Rajasthan & Ors, reported in (2013) 1 RLW (Raj.) 920, where in para no.8 & 9 it has been held as under :- “8. Section 4 of the Contract Act, 1872 (hereinafter 'the Contract Act') provides that the communication of a proposal is complete when it comes to the knowledge of the person to whom it is made, and that the communication of an acceptance is complete as against the proposer when it comes to the knowledge of the proposer. Section 8 of the Contract Act provides that performance of the conditions of a proposal or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal is an acceptance of the proposal. Section 8 of the Contract Act thus provides that performance of the conditions of a proposal or the acceptance of any consideration for a reciprocal promise which may be offered with a proposal is an acceptance of the proposal. 9. In the instant case the letter dated 5-3- 2008 issued by the UIT on the face of it constituted a proposal. As against the proposal the petitioners deposited the required amount. Under Section 8 of the Contract Act this tantamounted to acceptance of the proposal of the promise. Therefore a concluded contract came into existence. In my considered view a concluded contract having thus come into force, it was binding on the UIT unless there were allegations of fraud or misrepresentation as against the petitioner, based whereupon requisite declaration from a competent court of law could have been sought. No such fraud or misrepresentation has been alleged against the petitioners. No suit for cancellation of a duly formed contract has been filed. The Hon'ble Division Bench of the Delhi High Court in Govt. of NCT of Delhi Vs.
No such fraud or misrepresentation has been alleged against the petitioners. No suit for cancellation of a duly formed contract has been filed. The Hon'ble Division Bench of the Delhi High Court in Govt. of NCT of Delhi Vs. Bhushan Kumar [LPA No. 141 and 168/2006 and WP (C) No. 2040/2007 decided on 18-3-2008], held that allotment having been made specifically mentioning the area and property number allotted to the applicant and consideration having been paid by the applicant a concluded contract came into existence between the parties. It was held that the terms and conditions of the allotment following a concluded contract can only be modified (novation under Section 60 of the Contract Act) with mutual consent and not unilaterally unless there exists a provision in the law or in the contract itself. Similarly no policy decision could obstruct the operation of a concluded contract. A party to a contract can not unilaterally alter the terms and conditions of the contract. Consequently no escape from the inexorable effect of a contract was available to any of the party to the contract. It was further held that even in cases of unilateral mistake, which was not occasioned by the successful allottees who had acted upon proposal and accepted it a duly concluded contract could not be cancelled. Reference was also made to Section 22 of the Contract Act, which provides a contract is not voidable merely because it was caused under a mistake as to a matter of fact, and where allottees were not guilty of fraud, misrepresentation or unfair dealing, their rights could not be stalled by arbitrary action. In the aforesaid case where the allottees parted with money and deposited the sale consideration with the authority, which was accepted and retained by the authority, (as also in the present case where considerable amounts have been deposited for over last four years) the sanctity of the contract had to be maintained as contrarily the allottees would apart from arbitrary action of the authority also suffer loss and damages in circumstances not of their making.” 10. Learned counsel appearing for the respondents opposed the writ petition and submitted that the project for which the tender was floated is funded by the Central Government through REC Limited.
Learned counsel appearing for the respondents opposed the writ petition and submitted that the project for which the tender was floated is funded by the Central Government through REC Limited. He further submitted that since the project is funded by the REC, therefore the respondents are bound to follow the guidelines issued by the REC Limited dated 28.03.2022 whereby the REC Limited directed the JVVNL to ensure implementation of the scheme in accordance with all the prescribed scheme guidelines including SBDs. He further submitted that with regard to the present tender process, a clarification was also sought in respect of appointment of PMA, in response thereto the REC Limited vide letter dated 31.03.2023 informed the respondents as under :- “As per your letter, bid capacity clause was incorporated in the tender. Since the Bid capacity clause was part of the tender document, Bidders were aware about the same while participating in the tender. As Rajasthan is other than Special Category State, in the instant case the L1 bidder would be eligible to be awarded the work of PMA in only one more Discom for Distribution Infrastructure Works as they have already been awarded 3 other Discoms as PMA in other than special category States.“ 11. He further submitted that the REC Limited further advised the respondents to strictly follow the bid capacity clause as mentioned in the tender document. He also submitted that according to the condition incorporated in clause-4 of the instructions booklet, which is the basis of challenge made by the petitioner to the order dated 13.04.2023, the petitioner is entitled for doing the work only upto 4 of such type of contracts and made a reference of clause no.3.1(A)-Bid Capacity which reads as under :- “(A) For other than special category states:-Bidder cannot be awarded as PMA for Distribution Infrastructure works if bidder has already been awarded 4 or more contracts as on date of publication of this Tender for PMA for Distribution Infrastructure works of Discoms falling under other than special category states under RDSS.” 12.
He next submitted that they have followed the procedure prescribed under the Act of 2012 and while passing the order of cancellation the matter was referred to the Principal Secretary, Jaipur Discom, Jaipur who after considering the tender conditions of the bid document as well as the clarification received from the REC Limited has taken a decision for cancellation of the tender process which was communicated to the petitioner dated 13.04.2023. He further submitted that according to section 27(2) of the Act of 2012 the tender process is treated to be complete if approval is received from the competent authority whereas in the present matter no such approval was given by the competent authority rather a decision was taken to cancel the tender process in question on the advice of REC Limited which is the funding agency in the present matter. He also submitted that once the procurement process has been cancelled, the same cannot be reopened and in this regard made a reference of Rule 78 of The Rajasthan Transparency in Public Procurement Rules, 2013 (hereinafter to be referred as the “Rules of 2013”) which provides that if any procurement process has been cancelled, it shall not be reopened and also submitted that the decision taken by them is just and fair and is in the public interest. Counsel further submitted that as per the advice of REC Limited which is the funding agency in the present matter and also based on the condition incorporated in clause no.4-Bid Capacity of the instruction booklet, the petitioner cannot be awarded the such number of contracts, as claimed by it, beyond the number of contracts as provided in the guidelines. He further submitted that since the petitioner is already having 4 contracts including that of Ajmer therefore no further contract in Jaipur Discom was granted to the petitioner. 13. In support of the contentions, he relied upon the judgment passed by the Hon’ble Supreme Court in the matter of Tata Motors Limited Vs. The Brihan Mumbai Electric Supply & Transport Undertaking (Best) & Ors., Civil Appeal No.3897 of 2023, decided on 19.05.2023, where in paras no.48, 52, 53 & 54 it has been held as under :- “48. This Court being the guardian of fundamental rights is duty-bound to interfere when there is arbitrariness, irrationality, mala fides and bias.
The Brihan Mumbai Electric Supply & Transport Undertaking (Best) & Ors., Civil Appeal No.3897 of 2023, decided on 19.05.2023, where in paras no.48, 52, 53 & 54 it has been held as under :- “48. This Court being the guardian of fundamental rights is duty-bound to interfere when there is arbitrariness, irrationality, mala fides and bias. However, this Court has cautioned time and again that courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters. This Court is normally loathe to interfere in contractual matters unless a clear-cut case of arbitrariness or mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts but this discretionary power must be exercised with a great deal of restraint and caution. The courts must realise their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in Judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. The courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give "fair play in the joints" to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer. (See: Silppi Constructions Contractors v. Union of India, (2020) 16 SCC 489 ). 52. Ordinarily, a writ court should refrain itself from imposing its decision over the decision of the employer as to whether or not to accept the bid of a tenderer unless something very gross or palpable is pointed out. The court ordinarily should not interfere in matters relating to tender or contract. To set at naught the entire tender process at the stage when the contract is well underway, would not be in public interest.
The court ordinarily should not interfere in matters relating to tender or contract. To set at naught the entire tender process at the stage when the contract is well underway, would not be in public interest. Initiating a fresh tender process at this stage may consume lot of time and also loss to the public exchequer to the tune of crores of rupees. The financial burden/implications on the public exchequer that the State may have to meet with if the Court directs issue of a fresh tender notice, should be one of the guiding factors that the Court should keep in mind. This is evident from a three-Judge Bench decision of this Court in Association of Registration Plates v. Union of India and Ors. reported in (2005) 1 SCC 679 . 53. The law relating to award of contract by the State and public sector corporations was reviewed in Air India Ltd. v. Cochin International Airport Ltd., reported in (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. 54. As observed by this Court in Jagdish Mandal v. State of Orissa and Ors. reported in (2007) 14 SCC 517 , that while invoking power of judicial review in matters as to tenders or award of contracts, certain special features should be borne in mind that evaluations of tenders and awarding of contracts are essentially commercial functions and principles of equity and natural justice stay at a distance in such matters.
reported in (2007) 14 SCC 517 , that while invoking power of judicial review in matters as to tenders or award of contracts, certain special features should be borne in mind that evaluations of tenders and awarding of contracts are essentially commercial functions and principles of equity and natural justice stay at a distance in such matters. If the decision relating to award of contract is bona fide and is in public interest, courts will not interfere by exercising powers of judicial review even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. Power of judicial review will not be invoked to protect private interest at the cost of public interest, or to decide contractual disputes.” 14. He also relied upon the judgment passed by the Hon’ble Supreme Court in the matter of The Silppi Constructions Contractors Vs. Union of India & Anr, reported in (2020) 16 SCC 489 , where in paras no.25, 30 & 31 it has been held as under :- “25. That brings us to the most contentious issue as to whether the learned single judge of the High Court was right in holding that the appellate orders were bad since they were without reasons. We must remember that we are dealing with purely administrative decisions. These are in the realm of contract. While rejecting the tender the person or authority inviting the tenders is not required to give reasons even if it be a state within the meaning of Article 12 of the Constitution. These decisions are neither judicial nor quasi-judicial. If reasons are to be given at every stage, then the commercial activities of the State would come to a grinding halt. The State must be given sufficient leeway in this regard. The Respondent Nos. 1 and 2 were entitled to give reasons in the counter to the writ petition which they have done. 30. The eligibility criteria provided in the tender lays down that there should be no adverse remarks in the WLR of the competent engineering authority. Admittedly, there are adverse remarks in Work Load Return (WLR) of the sister company. It is obvious that the sister company having realised that it would not be awarded any contract neither got its enlistment renewed nor tried to submit the tender.
Admittedly, there are adverse remarks in Work Load Return (WLR) of the sister company. It is obvious that the sister company having realised that it would not be awarded any contract neither got its enlistment renewed nor tried to submit the tender. The directors of the sister company tried to get over these insurmountable objections by applying for the tender in the name of the Petitioner firm. Not only are the names similar but as pointed above, all the directors of the sister company are partners in the Petitioner firm. Therefore, these adverse remarks passed against the sister company could not be ignored. 31. Another important aspect of the matter is that as per the eligibility criteria for MES enlisted contractors only contractors falling in "SS Class" were eligible to apply. Admittedly, the Petitioner firm was not an enlisted contractor and was therefore required to meet the eligibility criteria for other contractors. Relevant portion of the notice inviting tender reads as follows: 8. Eligibility Criteria (A) For MES enlisted contractor They should satisfy the following criteria: (a)........… (b)........… (c) They should meet the enlistment criteria of Class "SS" MES Contractors and Category a(i), i.e. having satisfactorily completed requisite value works, annual turnover, solvency, working capital, immovable property/fixed assets, T & P, Engineering establishment, no recovery outstanding in govt. department, police verification/passport etc. Enlistment criteria may be seen in para 1.4 of Section 1 of part I of MES Manual on Contracts2007 (Reprint-2102) as available in all MES formation. These firms shall also submit copy of police verification from police authority of the area where the registered office of the firm is located/notarized copy of valid passport of proprietor/each partner/each director. (d) They should not carry adverse remarks in WLR of competent engineer authority. A bare reading of the eligibility criteria would clearly show that as far as MES enlisted contractors are concerned, they should be enlisted in "SS" Category a(i) and secondly, they should not carry adverse remarks in WLR of competent engineer authority. As far as other contractors are concerned, they are required to meet the same criteria as "SS" MES contractors category a(i) and these contractors was specifically told that they could see enlistment criteria in the MES Manual Contracts.” 15. He next relied upon the judgment passed by the Hon’ble Supreme Court in the matter of Michigan Rubber (India) Ltd. Vs.
As far as other contractors are concerned, they are required to meet the same criteria as "SS" MES contractors category a(i) and these contractors was specifically told that they could see enlistment criteria in the MES Manual Contracts.” 15. He next relied upon the judgment passed by the Hon’ble Supreme Court in the matter of Michigan Rubber (India) Ltd. Vs. State of Karnataka & Ors., reported in (2012) 0 AIR(SC) 2915, where in paras no.19 & 20 it has been held as under :- “19. From the above decisions, the following principles emerge: (a) the basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities; (b) fixation of a value of the tender is entirely within the purview of the executive and courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by Courts is very limited; (c) In the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities unless the action of tendering authority is found to be malicious and a misuse of its statutory powers, interference by Courts is not warranted; (d) Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work; and (e) If the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interference by Court is very restrictive since no person can claim fundamental right to carry on business with the Government. 20.
20. Therefore, a Court before interfering in tender or contractual matters, in exercise of power of judicial review, should pose to itself the following questions: (i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone; or whether the process adopted or decision made is so arbitrary and irrational that the court can say: "the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached"; and (ii) Whether the public interest is affected. If the answers to the above questions are in negative, then there should be no interference under Article 226.” 16. Heard counsel for the parties and perused the record. 17.
If the answers to the above questions are in negative, then there should be no interference under Article 226.” 16. Heard counsel for the parties and perused the record. 17. This writ petition filed by the petitioner deserves to be dismissed for the reasons; firstly the respondents while passing the order dated 13.04.2023 cancelling the tender process considered the condition incorporated in clause no.4-Bid capacity of the tender document, secondly, the respondents after obtaining the opinion from REC Limited which is a Government of India Enterprise & funding agency in the present matter, have taken a conscious decision in public interest, of cancelling the present tender process vide order dated 13.04.2023 and the same in the opinion of this Court is not liable to be disturbed under Article 226 of the Constitution of India, thirdly as per Section 27(2) of the Act of 2012 a tender process shall be treated to be complete only after approval of the competent authority whereas in the present matter no such approval was given by the competent authority, therefore the argument of the petitioner that the tender stood complete cannot be accepted; fourthly as per the guidelines issued by the REC Limited total 4 contracts can be awarded to the petitioner and the petitioner was already having three contracts of same nature and therefore was awarded one more contract by Ajmer Discom and thus beyond 4 contracts he cannot be awarded any more contract as prohibited in the guidelines issued by the REC Limited; fifthly the challenge made by the petitioner to the rejection of tender process is not sustainable, as on perusal of the material on record, I am of the view that the decision taken by the respondents cancelling the tender process is perfectly in conformity with the terms and conditions of the tender document as well as with the guidelines issued by the REC Limited and no more justification is required in taking such a decision; sixthly in view of the judgments passed by the Hon’ble Supreme Court in the matter of The Silppi Constructions Contractors and Michigan Rubber (India) Ltd., (both supra) I am not inclined to interfere in the present matter as no allegation of malafide has been levelled by the petitioner and lastly the scope of interference in the tender matters is very limited, therefore, in my view no interference is warranted in this matter by this Court under Article 226 of the Constitution of India.
18. In that view of the matter, the writ petition fails and is hereby dismissed.