hc55 Labex K.K. International vs State Of Gujarat on 9 May, 2019

Labex K.K. International vs State Of Gujarat on 9 May, 2019

Gujarat High Court

Labex K.K. International vs State Of Gujarat on 9 May, 2019

ench: K.M.Thaker, Sangeeta K. Vishen
/SCA/2625/2019

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

R/SPECIAL CIVIL APPLICATION NO. 2625 of 2019

LABEX K.K. INTERNATIONAL

Versus

STATE OF GUJARAT & 1 other(s)

Appearance:

ARPIT R SINGHVI(9524) for the Petitioner(s) No. 1

MR SP MAJMUDAR(3456) for the Petitioner(s) No. 1

MR MANAN MEHTA AGP (99) for the Respondent(s) No. 1

MR MITUL K SHELAT(2419) for the Respondent(s) No. 2 CORAM: HONOURABLE MR.JUSTICE K.M.THAKER

and

HONOURABLE MS. JUSTICE SANGEETA K. VISHEN

Date : 09/05/2019

ORAL ORDER

ORDER

(PER : HONOURABLE MR.JUSTICE K.M.THAKER)

Heard Mr. Majmudar, learned advocate for the petitioner and Mr. Shelat, learned advocate for the respondent.

In present petition, the petitioner has prayed, inter alia, that:-

“33(A)YOUR LORDSHIPS may be pleased to issue a writ of mandamus or writ in the

nature of mandamus or any other appropriate writ, order or direction to quash and

set aside the Impugned decision dated 02.01.2019 issued by Respondent No.2 as well

as quash and set aside decision of Respondent No.2 being Agenda Item No.22/15 and Agenda Item No.22/25 taken in 22nd Board of Director (BOD) meeting held on 23.08.2017;

(B) YOUR LORDSHIPS may be pleased to issue a writ of mandamus or writ in the

nature of mandamus or any other appropriate writ, order or direction to Respondent

No.2 to amend the Acceptance Letter dated 12.01.2018 to the extent that tax per unit

of the Binocular Microscope be calculated at Rs.3239.10/- [amount arrived after applying GST @ 18% to the base price of Rs.17,995/-].

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(C) During the pendency and final disposal of the present petition, YOUR LORDSHIPS may be pleased to stay the operation, implementation and execution of

the Impugned decision.

3. During the pendency of the petition, the petitioner sought leave to amend the petition. The request was granted. Thereupon, the petitioner inserted below quoted additional prayer:-

“33(A)(1) Your Lordships may be pleased to issue a writ of mandamus or writ in the

nature of mandamus or any other appropriate writ, order or direction to quash and

set aside decision taken by the High Level Purchase Committee in its meeting held on 29.10.2018.”

4. So far as factual background is concerned, it has emerged from the record and from submissions by learned counsel for the petitioner and respondent that the petitioner is a proprietary concern engaged in manufacturing/selling Microscope under the brand name of “Labovision”. 4.1 Somewhere in 2017, present respondent No.2 issued E- Tender Notice No.44/2016-17 and invited bids for supply of medical equipments, hospital furnitures, surgical items and other miscellaneous items, which included invitation for bids to supply approximately 956 Binocular Microscope (bearing Item Code 428.01) on Bi-Annual Rate Contract basis.

4.2 According to the petitioner, it submitted its bid for the Page 2 C/SCA/2625/2019 ORDER said item Code No.428.01 within prescribed time limit (on 20.3.2017).

4.3 The petitioner has further claimed that on 3.4.2017, it received email communication whereby it was informed about its selection “in preliminary stage of Bid Evaluation Stage”.

4.4 Undisputedly, said selection/intimation was at screening stage/preliminary stage.

4.5 According to the petitioner, vide intimation dated 6.7.2017, the petitioner was asked to remain present on 11.7.2017 for presentation of “Technical Scrutiny & Demonstration”. The petitioner claims that its representative remained present during said meeting. 4.6 The petitioner has also alleged that subsequently, vide email communication dated 26.10.2017, the respondent No.2 again asked the petitioner to remain present for “re- demonstration” of Binocular Microscope. 4.7 According to the claim of the petitioner, the respondent informed the petitioner vide letter/e-mail dated 5.12.2017 Page 3 C/SCA/2625/2019 ORDER that the petitioner’s technical bid is treated as

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“qualified”. The said document dated 5.12.2017 is placed on record at page 71. The relevant part read thus, “We wish to inform you that you have been selected in Technical Stage of Bid Evaluation stage for this tender.

We wish to inform you that stage Commercial Bid Stage would be open at Mar 30 2017 12:40 PM.”

4.8 The petitioner claims that subsequently it received email communication dated 23.12.2017 whereby the petitioner was asked to remain present before the Purchase Committee on 27.12.2017. The petitioner has also claimed that in response to the said communication its representative attended the meeting on 27.12.2017. 4.9 In this context it is necessary to mention, at this stage, that the respondents have alleged that while making reference of the intimation dated 23.12.2017 and while asserting that its representative attended the meeting which was convened on 27.12.2017, the petitioner has not mentioned other relevant facts more particularly about the fact that during the said meeting the petitioner’s representative had “agreed to absorb GST load without increasing their “final offered price”.

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4.10 The respondent has also asserted that if the petitioner had refused to absorb GST load during the meeting held on 27.12.2017 it (the respondent) would not have issued LoA. The respondents have alleged that the petitioner has conveniently not mentioned anything about the agreement declared by the petitioner’s representative during the meeting on 27.12.2017.

4.11 To continue the narration of events and the chronology, it is necessary to note that the petitioner has then claimed that vide letter dated 12.1.2018 the respondent no.2 informed the petitioner that its tender for supply of Binocular Microscope is accepted and that the petitioner should deposit Rs.9,05,400/- towards security deposits. The relevant part of the Order reads thus:

“Subject: Acceptance letter in respect of Your tender No. LBX/DMA/CL17032002, dt.20/3/2017 against this office Tender Enquiry No. GMSCL/ Eq. Purchase/ F-428/RC/2016-17, Due on 30/03/2017 for the supply of Binocular Microscope.

ear Sirs, Your tender submitted in reference to this office’s Enquiry No. GMSCL/
q. Purchase/ F-428/RC/2016-17, Due on 30/03/2017 for the supply of Binocular Microscope has been accepted. In this regard you are, therefore, request to deposit Rs.9,05,400=00 (Rupees Nine lac Five thousand four hundred only) with this office

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as a Security Deposit for due performance of Contract. This Deposit is liable to

forfeiture to the Gujarat Medical Services Corporation Limited in the event of you

non- fulfillment of the terms and conditions on which acceptance of Tender to be issued, may please be noted.

SCHEDULE NB (1) The above price is accepted on FOR delivery at destination basis inclusive of insurance charges.

Taxes: INCLUSIVE GST.

Delivery Period: Within six weeks from the date of receipt of final A.T. / R.0. by

you or your principal.

(4) Inspection: Inspection is to be done by indenter/ Consignee at place of delivery/

Page 5 C/SCA/2625/2019 ORDER Installation.

Payment Terms: {A}The payment shall be made to the AT. / R.C. holder as under:

(i)For goods requiring installation:

75% of the invoice amount will be paid within 30 days of the receipt of the goods conforming to the required specifications and the balance 25% within 30 days of satisfactory trial and installation of the goods at the destination.

100% of the invoice amount will be paid within 30 days of the satisfactory trial

and installation of the goods at the destination.

7. You will be required to enter into agreement for the due performance of the contract. An agreement form is sent herewith. It should be stamped with an adhesive stamp as per instructions given below and should be signed before any Gazetted Officer of this office or before an 1st Class Magistrate.

Agreement with no Security Deposit : Rs.100/-

Agreement with Security Deposit paid : Rs.100/- for Agreement in Bank Guarantee / G.P. Notes. : Rs.100/- for Bank Guarantee

Agreement with Security Deposit paid in any : Rs.100/- of Adhesive Stamp plus

other manner 8% of the total Value of Security Deposit.

8. All other Terms and condition shall be applicable as mentioned in said tender enquiry.

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9. This office reserves right to cancel / withdraw / suspend this Acceptance Letter at

any time, without assigning of any reason thereof.”

(emphasis supplied) 4.12 According to the petitioner it was at this stage that the dispute and difference arose with the respondent no.2 inasmuch as the petitioner agreed to maintain its base-price i.e. Rs. 17,995/- but it would charge GST as separate head i.e. it would charge GST on Rs.17,995/-.

4.13 The petitioner claims that the respondent no.2, however, insisted that Rs.18,939.74 must be maintained for all purpose and said rate Rs.18,939.74 should be inclusive G.S.T since the petitioner had agreed to absorb GST. According to the petitioner the said stand of the respondent is not acceptable (to the petitioner) and it is also contrary to the terms and conditions of the NIT.

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4.14 According to the respondent, during the meeting dated 27.12.2017 the petitioner had agreed that its finally offered price shall be taken into account and that price (i.e. Rs.18939.74) would absorb GST.

4.15 According to the respondent the petitioner had agreed to absorb GST without increasing the “final offered price” which means that the finally offered price will be treated as inclusive of all components. The respondent has asserted that the petitioner had agreed to and accepted this position and it was in view of the said consent by the petitioner that acceptance letter dated 12.1.2018 was issued. 4.16 The petitioner claims that the acceptance letter is not in consonance with what the petitioner had agreed and that therefore the petitioner submitted representation dated 13.1.2018.

4.17 According to the petitioner the said representation came to be rejected by the respondent vide decision dated 29.10.2018.

4.18 In this backdrop and in view of such differences, the Page 7 C/SCA/2625/2019 ORDER respondent took decision to close the tender process. The respondent also decided to cancel entire tender process and to re-invite bids in respect of the said product / item (Binocular Microscope).

4.19 Feeling aggrieved by the said decision the petitioner has taken out present petition against the decision dated 2.1.2019. The petitioner subsequently amended the petition and also challenged

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decision of the purchase committee taken during the meeting convened on 29.10.2018.

5. The respondents have opposed the petition. A reply is filed by the General Manager (Equipment and Dignostic Services) of the respondent corporation). The respondent has raised certain preliminary objection against maintainability of petition including the contention on the ground that the petitioner should avail arbitration remedy. The respondent has relied on clause no. 3 of tender document which provides for arbitral remedy. Besides this, it is also contended that:-

“3(a) I state that the petitioner is guilty of suppression of material fact. Petitioner has deliberately suppressed the fact that upon his agreement and deliberately on acceptance to absorb GST without increase in quoted price, during the course of price negotiation in the meeting held on 27.12.2017, the Answering Respondent had awarded the tender to the petitioner company. It is only thereafter that the petitioner has sought to represent to the contrary. The petitioner has not disclosed the said Page 8 C/SCA/2625/2019 ORDER material fact in the petition. Therefore, present petition deserves to be dismissed only on the ground of suppression of material facts.

I sate that the dispute raised in the present writ petition is arising out a contract between the parties which are the realm of private law. Any dispute relating to the interpretations of the terms of such a contract cannot be agitated in a writ petition.

I state that the prayer sought for in the writ petition is contrary to the express understanding between the parties. It is on the basis of the express understanding regarding the final price that the contract was awarded in favour of the Petitioner. The Petitioner is now seeking to resile from its representation and seeking alteration in the contract price. I state that a writ petition seeking alteration in the terms and conditions of a contract is not maintainable in law.

I submit that the impugned document is a communication of the Answering Respondent which is in accordance with the rights available to the Answering Respondent under the terms of the contract and is in the realm of private law and is not an order in the realm of public law. The present writ petition is therefore not maintainable in law and may be rejected as such.

I submit that the insistence of the Answering Respondent regarding procurement

at the contracted price does not violate any statutory, legal or fundamental right of

the Petitioner. The present writ petition under Article 226 of the Constitution is therefore not maintainable in law and may therefore not be entertained.”

6. So far respondent’s reply with regard to allegation and submission by the petitioner is concerned, it is brought on record by the respondent that:-

“7. I state that the petitioner has suppressed the fact that on 27.12.2017, Petitioner

was invited to attend the Board Level Committee Meeting for price negotiations. In

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the said meeting, the Petitioner had agreed to absorb GST without increasing their

final offered price. It is in view of the said consent of the Petitioner, the Answering

Respondent had awarded the contract in favour of the Petitioner. If the Petitioner

had refused to absorb the GST during the meeting dated 27.12.2017, the Answering Respondent would not have awarded the contract to the Petitioner. Having persuaded the Answering Respondent to award the contract on the basis of the above, the Petitioner thereafter has sought to resile from its position and sought change in the contract price. The Answering Respondent has, therefore, cancelled the Letter of Acceptance and decided to re-invite the tender. It is submitted that the action of the Answering Respondent is bonafide and in accordance with law. The

present writ petition is devoid of merits and may be rejected as such. …….

8. I state that Section 6 of the Tender document pertains to General Terms and Conditions. I state that as per Clause 6.17 the Managing Director. GMSCL Gendhinagar reserves the right to close the tender enquiry without assigning any reasons at any point of time. For the sake of convenience Clause 6.17 of the tender document is quoted hereunder:

“6.17 The Managing Director, GMSCL Gandhinagar reserves the right to consider or

reject any or all tenders or close the tender enquiry without assigning any reason at

any point of time, at any stage.” In view of the above, it is most respectfully submitted

that the decision of the Answering Respondent to cancel the Letter of Acceptance and

to re-invite tender is in accordance with the rights available under the tender notice

and in accordance with law.

9. Without prejudice to the above objections, I most respectfully state that the relevant facts are asunder:

(i) I state that the Answering Respondent had issued a Letter of Acceptance in favour

of the Petitioner. The said Letter of Acceptance was issued in furtherance of the meeting held on 27.12.2017, where the Petitioner had agreed to accept the price quoted by him inclusive of GST.

(ii) The Petitioner, while submitting the agreement for the purpose of execution, referred to the price as exclusive of GST. The Answer Respondent, therefore, did not execute the contract with the Petitioner.

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(iii) I state that thereafter the Answering Respondent received a representation from

the Petitioner seeking revision of the price of the rate contract by excluding therefrom

the levy of GST. It was represented that the price should be considered as exclusive of

GST.

(iv) I state that the decision to accept the offer of the Petitioner was taken by the

Board Level Committee and thereafter by the Board of Directors of the Corporation

after taking into consideration the representation of the Petitioner in the meeting

held on 27.12.2017 where the Petitioner had agreed to the price as being inclusive of

GST.

(v)I state that as regards the decision dated 23.08.2017 is concerned, the said

decision was taken by the Board after taking into consideration the opinion of the State Government. I state that the said decision has been already challenged and assessed before this Honorable Court as stated hereinabove. The said decision of the Answering Respondent was upheld by the Honorable Court.

I state that the Petitioner was thereafter called to attend the meeting before the Board Level Committee on 27.12.2017. I state that the representatives of the Petitioner participated in the said meeting and agreed to supply the product without any additional claim towards GST. I state that in view of their acceptance, the Answering Respondent issued the Letter of acceptance in their favour.

I state that despite having agreed to supply the product without any additional claim towards GST the Petitioner made a representation to the Answering Respondent after the Letter of Acceptance was issued in favour of the Petitioner.

I state that the Answering Respondent in response to the representations made

by the Petitioner offered an opportunity of personal hearing on 9th August, 2018. In

the said meeting, the Petitioner asserted that since his consent was not given by a

written document, the same could not be taken into consideration. I state that the Managing Director of the Answering Respondent Corporation after due diligence thought it appropriate to present the representations of the Petitioner before the Higher Level Purchase Committee. The said representation was considered by the High Level Purchase Committee (HLPC) in its meeting held on 29.10.2018. The HLPC decided that it is not possible to accede to the representation of the Petitioner and further resolved to cancel the Letter of Allotment and undertake a fresh tender for the product in reference.

10. I state that in identical tenders issued pertaining to medical equipments the

successful bidders have accepted the levy of GST without seeking any variation in the

price already as quoted for the product. Annexed hereto and marked as Annexure R2/4 (colly.) are copies of such specimen Letters of Acceptance and Acceptance Of Tender/Purchase Order.”

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So far as legality of the decision dated 23.8.2017 is concerned the respondent has claimed that the legality and validity of the said decision is already considered by the Court vide decision dated 27.3.2018 in SCA No. 16765 of 2017 and cognate petitions.

In this backdrop learned advocate for the petitioner would submit that the dispute is only with regard to the Page 10 C/SCA/2625/2019 ORDER condition related to tax and not with regard to price. 8.1 The petitioner also accepts that during the meeting held on 27.12.2017 its representative attended the meeting. He would, however, claim that the representative of the petitioner had not given consent, as claimed by the respondent.

2 According to the petitioner, the respondent’s decision with regard to the price to be taken into account for calculating GST and the decision to cancel tender process and re-inviting tender is arbitrary. It is also claimed that once the respondent issued acceptance letter dated 12.1.2018 and that therefore the respondent cannot take decision which results into cancellation of the said acceptance letter.

Learned advocate for the respondent would, on the other hand, claim that there is no accrued right in favour of the petitioner inasmuch as any concluded contract has never been executed between the parties and that therefore the petition should not be entertained. The maintainability of the petition is, as mentioned above, also opposed on the Page 11 C/SCA/2625/2019 ORDER ground of arbitration remedy. It is also claimed that in view of the consent declared by the petitioner during meeting on 27.12.2017 the petition should not be entertained. The petition is also opposed on the ground of suppression of material facts. Besides this, the respondents have also opposed the petition in light of the provision under clause 6.17 and the terms mentioned in the communication dated 12.1.2018 particularly clause No. 7 and 9 thereof. The maintainability of petition is opposed on the ground that the petitioner has no locus to challenge the decision to cancel tender process and to reinvite bids.

1 Learned advocate for the respondent, so as to support the submissions that the petitioner had declared its consent, also relied on paragraph No. 2 of the petitioner’s letter dated 25.10.2018 and paragraph No. 4, 5 and 9 of the petitioner’s letter dated 1.4.2018 and the minutes of the meeting dated 27.12.2017. Learned advocate for the respondent also submitted that it is within the discretion and authority of the corporation to cancel tender process and to invite fresh tenders. Learned advocate for the respondent relied on the decisions in case of Afcons Page 12 C/SCA/2625/2019 ORDER Infrastructure Limited vs. Nagpur Metro Rail Corporation (2016) 16 SCC 818, General Manager Haryana Roadways vs. Jai Bhagwan (2008) 4 SCC 127, Maa Binda Express Carrier vs. North-East Frontier Railway (2014) 3 SCC 760, K.D.Sharma vs Steel Authorities Of India Ltd, (2008) 12 SCC 481.

We have considered rival submissions, impugned decision and order as well as affidavits and material available on record.

10.1 At the outset it is relevant and necessary to note that having regard to the facts and circumstances, more particularly the situation which occurred or came into being and obtained on

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the hands of the competent authority, the competent authority considered it appropriate to cancel the tender process in respect of the item / product in question (i.e. binocular microscope) and to initiate process afresh. 10.2 In this context it is necessary to note that unless it is shown and demonstrated that such decision (to terminate entire tender process and to re-invite entire tender process) is on face of it arbitrary or tainted with malafides, a bidder Page 13 C/SCA/2625/2019 ORDER cannot claim right to challenge such decision. A petition, against such decision, by a bidder does not involve any legal much less, fundamental right of bidder and that therefore Court would be loath and extremely slow and reluctant to entertain a petition against such decision. 10.3 Thus, actually the issue which survives, assuming that the petitioner has locus to raise such issue, is legality or propriety of the competent authority’s decision to cancel the tender process in respect of item / product in question. 10.4 Other circumstantial decisions taken prior to the said final decision viz. decision with regard to commercial bid or price bid are not in dispute and they, even otherwise, now, pale into insignificance in light of the fact that the respondent issued LoA and petitioner raised dispute with regard to the condition and price element of said LoA and thereupon the respondent withdrew / cancelled the LoA as well as entire tender process and re-started tender process.

11. Before proceeding further, it is relevant to take into account certain provisions of NIT / tender document and LoA which read thus:-

Page 14 C/SCA/2625/2019 ORDER “Tender Document:-

6.15 The consolidated rates will be taken into account for preparing price statement. However, the tender which is found to be technically acceptable as well as lowest in terms of evaluated rates only be considered for placing the order but, order will be placed at quoted or mutually agreed price. 6.16 The Managing Director may seek any clarification / explanation / documentary evidence related to offer at any stage from tenderers if required. However any clarification / explanation or documentary evidence leads to implication on quoted price, it shall be considered only for placing the order but not for price evaluation.

17 The Managing Director, GMSCL Gandhinagar reserves the right to consider or reject any or all tenders or close the tender enquiry without assigning any reason at any point of time, at any stage.

2.10 The A.T. / R.C. holder shall not charge VAT / C.S.T if they have been exempted by concerned authority. Further they cannot charge excess amount of C.S.T. to what is applicable. An amount of Sales Tax as applicable to be shown separately in the bill/invoice raised. Further, an amount of Sales Tax so collected should be remitted to the Govt. within prescribed time limit, otherwise strict action will be taken against defaulters.

7.3.4 The payment of the bills shall be withheld in the following circumstances:

i. The goods are found sub-standard or in non-acceptable condition. ii. Breach of

condition of any contract by the A.T. / R.C. holder. iii. Previous Government dues of

A.T / R. C. holder.

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7.3.5 The price escalation clause will not be allowed under any circumstances except statutory taxes

/ duties imposed / withdrawn / increased / decreased on quoted items by the State or Central Govt. during the period between opening of technical bid and stipulated date of delivery. The statutory price variation will not be allowed in the cases where:

Stores offered on ex-stock basis.

Store to be purchased on emergency basis.

Statutory variation not communicated by the tenderer within 45 days of its announcement.

Price break up and prevailing rate as well as amount of taxes / duties not clearly

mentioned in Commercial Bid.

Duties / Taxes applicable due to mere crossing the limit of production / sales.

Duties / Taxes imposed / increased by the Govt. after stipulated delivery period

shown in the contract.

LoA dated 12.1.2018 The items to which this acceptance letter relates is as under:- Item No. Description of Stores Quantity Rate Per No. Type of R.C.

428.01 Binocular Microscope On RC Rs.17,995=0 Main RC

Brand: LABOVISION Basis 0 100% Qty Model: COAX10B

+ Tax Rs.944=74

Total Rs.18,939=7

Specification : As per T.E.

Manufacturer by: LABEX

KK INTERNATIONAL

SCHEDULE NB

The above price is accepted on FOR delivery at destination basis inclusive of insurance charges.
Taxes: INCLUSIVE GST.

Delivery Period: Within six weeks from the date of receipt of final A.T. / R.0. by you Page 15 C/SCA/2625/2019 ORDER or your principal.

Inspection: Inspection is to be done by indenter/ Consignee at place of delivery/ Installation. Payment Terms: {A}The payment shall be made to the AT. / R.C. holder as under:

(i)For goods requiring installation:

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75% of the invoice amount will be paid within 30 days of the receipt of the goods conforming to the required specifications and the balance 25% within 30 days of satisfactory trial and installation of the goods at the destination.

100% of the invoice amount will be paid within 30 days of the satisfactory trial and installation of the goods at the destination.

Agreement with no Security Deposit :Rs.100/-

Agreement with Security Deposit paid :Rs.100/- for Agreement in Bank Guarantee / G.P. Notes. :Rs.100/- for Bank Guarantee

Agreement with Security Deposit paid in any :Rs.100/- of Adhesive Stamp plus other manner 8% of the total Value of Security Deposit.

All other Terms and condition shall be applicable as mentioned in said tender enquiry.

This office reserves right to cancel / withdraw / suspend this Acceptance Letter at any time, without assigning of any reason thereof.” 11.1 The clause 6.17 clarifies that the right to reject the tender or to close the tender inquiry has been reserved since the initial stage. The authority to take such decision is conferred to the Managing Director.

12. On the other hand, above mentioned provisions from the LoA dated 12.1.2018 give out that the respondent corporation had specifically mentioned price (Rs.18,939.74) and clarified that the said price is considered as the price “inclusive GST”. Further, clause 7 of the said LoA makes it clear that the LoA was issued subject to requirement Page 16 C/SCA/2625/2019 ORDER specified under Clause 7 viz. that the bidder (present petitioner) should enter into an agreement for due performance of the contract.

1 Besides this, clause 9 of LoA clearly brings out that the respondent corporation is conferred with / reserved right to cancel / withdraw / suspend the LoA, at any time.

In present case undisputedly the petitioner did not enter into and did not sign / execute such contract. On the contrary, upon receipt of the LoA before / without signing and entering into agreement the petitioner addressed a letter dated 30.1.2018 and raised objection against some of the terms mentioned in the LoA dated 12.1.2018. Consequently any concluded and binding agreement never came into existence between the petitioner and the respondent corporation.

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1 Besides this, clause 9 of LoA clearly brings out that the respondent corporation is conferred with / reserved right to cancel / withdraw / suspend the LoA, at any time.

In light of above mentioned provision it becomes clear Page 17 C/SCA/2625/2019 ORDER that the decision to cancel the tender inquiry / tender process is not unauthorized or incompetent but it is taken in exercise of the authority conferred by NIT / tender document and under the terms of the tender document and the decision is taken by the authority to whom such power is conferred.

14.1 It is also relevant to note that according to the letter of acceptance (on which the petitioner has placed heavy reliance) the petitioner was required to enter into an agreement for due performance of the contract. 14.2 Undisputedly, before the authority took the decision to close the tender inquiry / to terminate the tender process, any agreement or contract was not entered into and executed by and between the petitioner and the respondent. 14.3 Thus, before the said decision came to be taken any right, neither legal nor contractual much less, fundamental right had ever accrued to the petitioner.

14.4 In light of the fact that at any stage, before the authority took the decision (to cancel the tender process Page 18 C/SCA/2625/2019 ORDER and to re-invite the tenders) or even before the petition came to be filed, concluded contract was not entered into and that therefore even contractual relation between the petitioner and the respondent corporation did not come into existence and any right on account of or flowing from valid, concluded and binding agreement/contract did not accrue to the petitioner.

14.5 Mere issuance of conditional LoA, which is not accepted by the petitioner, does not turn into binding contract.

14.6 It is pertinent to note that on receipt of said LoA, the petitioner, instead of accepting it, countered it and conveyed its counter-condition which, according to the respondent, was contrary and opposite to what the petitioner declared during the meeting held on 27.12.2017.

7 Further the said LoA postulate that if all conditions and terms are acceptable to the petitioner, then performance agreement will have to be entered into. Such performance agreement was also not entered into before respondent took final decision. Thus, such conditional LoA Page 19 C/SCA/2625/2019 ORDER which never got transformed into / converted into or metamorphosed into full-fledged and concluded and binding agreement – contract cannot and did not create and did not confer any right to the petitioner. In this view of the matter any right does not and did not accrue to the petitioner on account of or by virtue of or by means of said LoA.

In this context reference may be had to the decision in case of Meerut Development Authority vs. Association of Management Studies (2009) 6 SCC 171 wherein Apex Court observed and held that:-

“26. A tender is an offer. It is something which invites and is communicated to notify acceptance. Broadly stated it must be unconditional; must be in the proper form, the person by whom tender is made must be able to and willing to perform his

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obligations. The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in 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 biding process.

29. The Authority has the right not to accept the highest bid and even to prefer a

tender other than the highest bidder, if there exist good and sufficient reasons, such

as, the highest bid not representing the market price but there cannot be any doubt

that the Authority’s action in accepting or refusing the bid must be free from arbitrariness or favoritism.

35. In Tata Cellular this Court observed that (SCC p.675. Para 71) “Judicial quest in

administrative matters is to strike the just balance between the administrative discretion to decide matters as per government policy, and the need of fairness. Any unfair action must be set right by judicial review.”

36. In Chief Constable of North Wales Police Vs. Evans, Lord Hailsham stated: (WLR

p.1161 A-B) “The underlying object of judicial review is to ensure that the authority

does not abuse its power and the individual receives just and fair treatment and not

to ensure that the authority reaches a conclusion which is correct in the eyes of the court.”

39. The law has been succinctly stated by Wade in his treatise, Administrative Law:

“The powers of public authorities are therefore essentially different from those of private persons. A man making his will may, subject to any rights of his dependants, dispose of his property just as he may wish. He may act out of malice or a spirit of revenge, but in law this does not affect his exercise of his power. In the same way a private person has Page 20 C/SCA/2625/2019 ORDER an absolute power to allow whom he likes to use his land, to release a debtor, or, where the law permits, to evict a tenant, regardless of his motives. This is unfettered discretion. But a public authority may do none of these things unless it acts reasonably and in good faith and upon lawful and relevant grounds of public interest. So a city council acted unlawfully when it refused unreasonably to let a local rugby football club use the city’s sports ground, though a private owner could of course have refused with impunity. Nor may a local authority arbitrarily release debtors, and if it evicts tenants, even though in accordance with a contract, it must act reasonably and `within the limits of fair dealing’. The whole conception of unfettered discretion is inappropriate to a public authority, which possesses powers solely in order that it may use them for the public good.

40. There is no difficulty to hold that the authorities owe a duty to act fairly but it is

equally well settled in judicial review, the court is not concerned with the merits or

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correctness of the decision, but with the manner in which the decision is taken or the order is made. The Court cannot substitute its own opinion for the opinion of the authority deciding the matter.”

15.1 In the said decision Hon’ble Apex Court clarified and explained the distinction between appellate power and judicial review in following terms:-

41. The distinction between appellate power and a judicial review is well known but

needs reiteration. 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. If the contract has been entered into without ignoring the procedure which can be said to be basic in nature and after an objective consideration of different options available taking into account the interest of the State and the public, then the court cannot act as an appellate court by substituting its opinion in respect of selection made for entering into such contract. But at the same time the courts can certainly examine whether `decision making process’ was reasonable, rational, not arbitrary and violative of Article 14. [See: Sterling Computers Ltd.].

42. It may be worthwhile to notice the leading judicial review case in relation to grant

of licences, by competitive tender in R. vs. Independent Television Commission, ex p.

TSW Broadcasting Ltd. The leading speeches in the House of Lords were delivered by Lord Templeman and Lord Goff. Lord Templeman stated:

“Where Parliament has not provided for an appeal from a decision maker the courts must not invent an appeal machinery. In the present case Parliament has conferred powers and discretions and imposed duties on the ITC. Parliament has not provided any appeal machinery. Even if the ITC make mistakes of fact or mistakes of law, there is no appeal from their decision. The courts have invented the remedies of judicial review not to provide the appeal machinery but to ensure that the decision maker does not exceed or abuse his powers… But the rules of natural justice do not 15 [1996 JR 185 and 1996 EMLR 291] render a decision invalid because the decision maker or his advisers make a mistake of fact or a mistake of law. Only if the reasons given by the ITC for the decision to reject the application… disclosed illegality, irrationality or procedural impropriety.. could the decision be open to judicial review.”

In the concluding section of his speech, he added:

“Of course in judicial review proceedings, as in any other proceedings, Page 21

C/SCA/2625/2019 ORDER everything depends on the facts. But judicial review should not be allowed to run riot. The practice of delving through documents and conversations and extracting a few sentences which enable a skilled advocate to produce doubt and confusion where none exists should not be repeated.”

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43. One has to bear in mind the caution administered by Lord Scarman in

Nottinghamshire Country Council Vs. Secretary of State for the Environment that:

(AC pp.250H-251A) “Judicial review’ is a great weapon in the hands of the judges;

but the judges must observe the constitutional limits set by our parliamentary system

upon the exercise of this beneficial power.

44. It is equally necessary that the following observations of Benjamin Cardozo, should always be kept in mind:

“The Judge, even when he is free, is still not wholly free. He is not to innovate at pleasure. He is not a knight-errant roaming at will in pursuit of his own ideal of beauty or of goodness. He is to draw his inspiration from consecrated principles. He is not to yield to spasmodic sentiment, to vague and unregulated benevolence. He is to exercise a discretion informed by tradition, methodized by analogy, disciplined by system, and subordinated to `the primodical necessity of order in the social life’. Wide enough in all conscience is the field of discretion that remains.” (The Nature of Judicial Process P.141)”

15.2 When the respondent’s decision in present case is examined in light of above quoted observations by Hon’ble Apex Court, it becomes clear that the decision by the Corporation is not irrational, unjustified, arbitrary or malafide and it does not warrant any interference.

15.3 The letter of acceptance was conditional viz. the condition that (a) quoted price shall remain unchanged and shall absorb the load of GST and (b) the condition to execute an agreement for due performance of contract. In this context it is relevant to take note of below mentioned details:-

After evaluation and acceptance of technical bid the Page 22 C/SCA/2625/2019 ORDER purchase committee had convened meeting on 27.12.2017;

The petitioner was instructed to remain present;

Undisputedly the petitioner’s representatives attended the said meeting;

The other bidders whose technical bid for the same item and / or other items mentioned in the NIT were also instructed to attend the said meeting;

One of the major points for discussion during said meeting (on 27.12.2017) which concerned or affected almost all bidders, was about applicability of the GST structure;

during the said meeting on 27.12.2017 the respondent desired and demanded that the bidders (qualified at technical bid stage) should absorb the GST load without any change / increase in the “final price quoted” by them (in their respective bids);

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according to the respondent, the petitioner’s representative, like several other bidders, had agreed to and accepted the said condition;

the said acceptance, so far as present petitioner is concerned, was to the effect that the final price quoted by the petitioner i.e. Rs.18939.74 shall remain unchanged and Page 23 C/SCA/2625/2019 ORDER the GST load shall be absorbed by the petitioner within the said originally quoted final price and that so as to absorb GST load price shall not vary and finally quoted price shall remain constant / unchanged.

15.4 The respondent claims that almost all bidders including the petitioner’s representative accepted the said demand and condition and that since the petitioner’s representative declared his acceptance, the letter of acceptance came to be issued.

5 The said letter of acceptance was issued on the premise that the petitioner had accepted the condition to absorb the GST load and to maintain finally quoted price.

On this count the respondent has specifically averred in the reply affidavit that:-

“7. I state that the petitioner has suppressed the fact that on 27.12.2017, Petitioner

was invited to attend the Board Level Committee Meeting for price negotiations. In

the said meeting, th Petitioner had agreed to absorb GST without increasing their

final offered price. It is in view 0 the said consent of the Petitioner, the Answering

Respondent had awarded the contract in favour of the Petitioner. If the Petitioner

had refused to absorb the GST during the meeting dated 27.12.2017, the Answering Respondent would not have awarded the contract to the Petitioner.”

16.1 In this context, it is also appropriate and necessary at this stage to take into account relevant part of the letter of acceptance which reads thus:-

Page 24 C/SCA/2625/2019 ORDER The items to which this acceptance letter relates is as under:-

Item No. Description of Stores Quantity Rate Per No. Type of R.C.

428.01 Binocular Microscope On RC Rs.17,995=0 Main RC

Brand: LABOVISION Basis 0 100% Qty Model: COAX10B

+ Tax Rs.944=74

Total Rs.18,939=7

Specification : As per T.E.

Manufacturer by: LABEX

KK INTERNATIONAL

SCHEDULE NB

(1) The above price is accepted on FOR delivery at destination basis inclusive

insurance charges.

(2) Taxes: INCLUSIVE GST.

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16.2 The table which reflects description of the item and the price clearly gives out

that the price mentioned in the letter of acceptance is Rs.18939.74 and the serial No.

2 of the schedule gives out that the respondent clarified that the said price is inclusive GST.

17. On this count it is also relevant to take into account, at this stage, paragraph/ serial nos. 7,8 and 9 which read thus:-

Agreement with no Security Deposit : Rs.100/-

Agreement with Security Deposit paid : Rs.100/- for Agreement in Bank Guarantee / G.P. Notes. : Rs.100/- for Bank Guarantee

Agreement with Security Deposit paid in any : Rs.100/- of Adhesive Stamp plus other manner 8% of the total Value of Security Deposit.

All other Terms and condition shall be applicable as mentioned in said tender enquiry.

This office reserves right to cancel / withdraw / suspend this Acceptance Letter at any time, without assigning of any reason thereof.” 17.1 It is also pertinent to note that even the petitioner Page 25 C/SCA/2625/2019 ORDER understood the LoA in same sense and that therefore the petitioner addressed letter dated 30.1.2018. 17.2 When above terms and conditions of the letter of acceptance are read conjointly, it emerges that (a) the said LOA is in nature of conditional acceptance inasmuch as it mentions and quotes the price at which or subject to which the petitioner’s bid was accepted and (b) it also intimates the petitioner that the petitioner shall have to enter into an agreement for due performance of contract and (c) that the respondent reserved right to cancel / withdraw / suspend the acceptance letter at any time.

18. What is relevant, at this stage, is the fact that on receipt of the letter of acceptance the petitioner did not accept the said LoA but the petitioner reacted (against said LoA) by means of its letter dated 30.1.2018. 18.1 According to the respondent the petitioner not only reacted but it actually resiled from the agreement declared by its officer / representative during the meeting on 27.12.2017. In its letter dated 30.1.2018 the petitioner conveyed its counter offer that:-

Page 26 C/SCA/2625/2019 ORDER “Sir we are attaching herewith request for

amendment in AT due to Change is statutory taxes. You are requested to amend the

tax rate in AT and send back to us so that we can submit the Security Deposit.

ard copies of the attachments are being sent by Speed Post to your good office.”

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18.2 The said email was followed by petitioner’s letter of even date wherein the petitioner averred and stated that:-

The Tender was quoted by us on 20.03.2017. At the time we were registered under

the Central Sales Tax Act (copy of self attested Registration Certificate attached). The

ales Tax rate for Binocular Microscope was CST @ 5.25% (including surcharge). The same was clearly mentioned in our Commercial Bid. Microscope unit price was mentioned as Rs. 17,995.00 and CST @ 5.25% of Rs. 944.74 was shown in requisite column separately.

he Government of India has thereafter abolished the CST Act 1956 and all indirect taxes have been subsumed into the GST Act 2017. Therefore we have now been registered under the new GST Act 2017 (copy of self attested Provisional Registration Certificate attached). The rate of GST on Binocular Microscopes is 18%, which works out to Rs. 3239.10 per unit on base price of Rs. 17,995.00.

The above variation of Tax rate which is a variation in the statutory taxes, is an act of

the Central Government and we have to abide by the same. It is also covered in the Clause 7.3.5 of the tender which provides for Price Escalation due to variation in Statutory Taxes.

In light of the above we humbly submit that the Acceptance Letter may be amended

accordingly and resent to us at the earliest so we can submit the Security news: for

the same.”

18.3 According to the respondent the petitioner had turned back and made retreat from its acceptance and declaration during the meeting. On this count the respondent has averred and stated, in its reply affidavit that:-

“Having persuaded the Answering Respondent to award the contract on the basis of

the above, the Petitioner thereafter has sought to resile from its position and sought change in the contract price. The Answering Respondent has, therefore, cancelled the Letter of Acceptance and decided to re-invite the tender. It is submitted that the action of the Answering Respondent is bonafide and in accordance with law. The present writ petition is devoid of merits and may be rejected as such.”

18.4 The said submission by the respondent is supported and justified by what the petitioner mentioned in its letter dated 30.1.2018.

18.5 The petitioner’s letter dated 30.1.2018 also makes it Page 27 C/SCA/2625/2019 ORDER clear that a concluded and binding agreement / contract did not come / never came into existence between the petitioner and the respondent.

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19. At this stage the details mentioned by the respondent in paragraph Nos. 9(i) to 9(viii) of its affidavit are relevant. The said paragraph Nos. 9(i) to 9(viii) read thus:-

“9. Without prejudice to the above objections, I most respectfully state that the relevant facts are asunder:

(i) I state that the Answering Respondent had issued a Letter of Acceptance in favour

of the Petitioner. The said Letter of Acceptance was issued in furtherance of the meeting held on 27.12.2017, where the Petitioner had agreed to accept the price quoted by him inclusive of GST.

The Petitioner, while submitting the agreement for the purpose of execution, referred to the price as exclusive of GST. The Answer Respondent, therefore, did not execute the contract with the Petitioner.

I state that thereafter the Answering Respondent received a representation from

the Petitioner seeking revision of the price of the rate contract by excluding therefrom

the levy of GST. It was represented that the price should be considered as exclusive of

GST.

(iv) I state that the decision to accept the offer of the Petitioner was taken by the

Board Level Committee and thereafter by the Board of Directors of the Corporation

after taking into consideration the representation of the Petitioner in the meeting

held on 27.12.2017 where the Petitioner had agreed to the price as being inclusive of

GST.

I state that as regards the decision dated 23.08.2017 is concerned, the said decision was taken by the Board after taking into consideration the opinion of the State Government. I state that the said decision has been already challenged and assessed before this Honorable Court as stated hereinabove. The said decision of the Answering Respondent was upheld by the Honorable Court.

I state that the Petitioner was thereafter called to attend the meeting before the Board Level Committee on 27.12.2017. I state that the representatives of the Petitioner participated in the said meeting and agreed to supply the product without any additional claim towards GST. I state that in view of their acceptance, the Answering Respondent issued the Letter of acceptance in their favour.

I state that despite having agreed to supply the product without any additional claim towards GST the Petitioner made a representation to the Answering Respondent after the Letter of Acceptance was issued in favour of the Petitioner.

I state that the Answering Respondent in response to the representations made

by the Petitioner offered an opportunity of personal hearing on 9th August, 2018. In

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the said meeting, the Petitioner asserted that since his consent was not given by a written document, the same could not be taken into consideration. I state that the Managing Director of the Answering Respondent Corporation after due diligence thought it appropriate to present the representations of the Petitioner before the Higher Level Purchase Committee. The said representation was considered by the High Level Purchase Committee (HLPC) in its meeting held on 29.10.2018. The HLPC decided that it is not possible to accede to the representation of the Petitioner and further resolved to cancel the Letter of Allotment and undertake a fresh tender for the product in reference.”

19.1 The respondent has asserted that other bidders had Page 28 C/SCA/2625/2019 ORDER accepted identical condition with regard to GST and that therefore letters of acceptance in favour of such bidders were also issued and the said LOAs to other bidders also mentioned the finally quoted price (in their respective price bids). This position is clarified by the respondent in its affidavit in following terms:-

“10. I state that in identical tenders issued pertaining to medical equipments the

successful bidders have accepted the levy of GST without seeking any variation in the

price already as quoted for the product. Annexed hereto and marked as Annexure

R2/4 (colly.) are copies of such specimen Letters of Acceptance and Acceptance Of Tender/Purchase Order.”

19.2 From the said details it comes out that since the petitioner did not accept the condition [that originally quoted final price (in case of petitioner Rs.18,939.74) should absorb GST load and it must remain unchanged and the bidder should not charge GST separately] and since the petitioner insisted that the respondent should change the terms of letter of acceptance (so as to allow the petitioner to separately charge rate of GST over its basic price) the respondent corporation, so as to consider petitioner’s response, convened the meeting of purchase committee. 19.3 The purchase committee reached the decision that the stand of the petitioner was not acceptable and that since all other bidders had maintained their original quoted price Page 29 C/SCA/2625/2019 ORDER and had agreed to absorb GST load without increasing the price, any different terms cannot be granted to the petitioner.

19.4 It is pertinent that before accepting the said decision of purchase committee the corporation again called the petitioner and granted opportunity to the petitioner to convey its (petitioner’s) final reply / decision (to the corporation).

5 The petitioner maintained its position viz. to separately charge GST on the basic price quoted by it (Rs.17,995/-). Therefore the petitioner’s reply and purchase committee’s decision was placed before the board (of the respondent corporation)and thereafter the impugned final decision came to be taken.

The details discussed above bring out that the differences between the petitioner and the respondent with regard to the final price (condition to absorb GST load within the same price) are

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serious differences concerning essential part of Tender viz. the price and that it is on account of such differences (i.e. since the parties were not Page 30 C/SCA/2625/2019 ORDER ad-idem) binding and concluded contract did not come into existence.

1 When these aspects are taken into account it becomes clear that (a) the decision of the respondent corporation to not accept the petitioner’s bid / to not award the contract and the decision (b) to cancel entire tender process and to reinvite the bids (so far as the item / product in question (i.e. binocular microscope is concerned) are taken on account of serious differences concerning basic and essential part of the bid-tender viz. price of the product. 20.2 In light of the facts and in light of the reasons and circumstances which led the respondent (after having issued LoA) to take impugned decision, the said decision cannot be declared arbitrary or irrational or unjust or unauthorized, much less malafide.

On this count profitable reference can be made, at this stage, to the observations by Apex Court in case of Michigan Rubber (India) Limited vs. State of Karnataka (2012) 8 SCC 216 wherein Apex Court, in paragraph Nos. 23 and 24 observed, inter alia, that:-

Page 31 C/SCA/2625/2019 ORDER “23. 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;

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;

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

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(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.

24. 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.”

21.1 When the facts of present case and the respondent’s decision are examined in

light of the question or the issue framed by Apex Court in paragraph No. 24 of the judgment then, immediately, the reply with regard to the said issue –

so far as present case is concerned – emerges in the negative.

21.2 In light of the facts of present case it cannot be said that the process adopted and the decision by the Page 32 C/SCA/2625/2019 ORDER Corporation is malafide or irrational or arbitrary or even unjustified and it is not intended to favour someone. 21.3 The said decision is also not such which, ordinarily, may not be taken by the agency which invites tender. 21.4 On the contrary the decision by the corporation appears proper decision which, ordinarily, any agency which invites tender would take in such circumstances. 21.5 At this stage it is relevant to recall the provision under clause 6.17 which reads thus:-

“6.17 The Managing Director, GMSCL Gandhinagar reserves the right to consider or

reject any or all tenders or close the tender enquiry without assigning any reason at

any point of time, at any stage.”

From the said clause it comes out that the Managing Director is conferred the authority to reject the tender or to close entire tender inquiry i.e. to drop the tender process. 21.6 It is also relevant to recall clause / para 9 of the letter of acceptance which reads thus:-

“9. This office reserves right to cancel / withdraw / suspend this Acceptance Letter at any time, without assigning of any reason thereof.” 21.7 The said clause 6.17 of tender / NIT and para / clause 9 of LoA make it clear that the corporation acted bonafide and within purview of its authority in terms of the NIT / tender. The clause 9 of the letter of acceptance also makes it clear that the said letter of acceptance can be cancelled / Page 33 C/SCA/2625/2019 ORDER withdrawn at any time.

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8 It has clearly emerged that serious dispute or difference between agency which invited tender and the petitioner arose in respect of essential component of tender i.e. price. The said difference is of such nature which may frustrate the agreement and / or escalate into dispute or breach or result into further complications either before finalizing the contract or during the implementation and execution of the contract. In such circumstances, when the respondent decided to terminate the tender process before entering into contract and when corporation decided to re- invite the tender, such decision cannot be considered irrational or arbitrary, much less, malafide. 21.9 The action of the respondent corporation is, undisputedly, taken in exercise of the provision of the NIT / tender document and letter of acceptance. Thus, it cannot be said to be unauthorized or incompetent.

In this context profitable reference can be had to the observations by Apex Court in the decision in case of Central Coalfields Limited & Ors. v. SLLSML (Joint Venture Page 34 C/SCA/2625/2019 ORDER Consortium) & Ors. [(2016) 8 SCC 622] wherein Hon’ble Apex Court observed, inter alia, that:-

44. On asking these questions in the present appeals, it is more than apparent that the decision taken by CCL to adhere to the terms and conditions of the NIT and the GTC was certainly not irrational in any manner whatsoever or intended to favour anyone. The decision was lawful and not unsound.

47. The result of this discussion is that the issue of the acceptance or rejection of a bid or a bidder should be looked at not only from the point of view of the unsuccessful party but also from the point of view of the employer. As held in Ramana Dayaram Shetty the terms of the NIT cannot be ignored as being redundant or superfluous. They must be given a meaning and the necessary significance. As pointed out in Tata Cellular there must be judicial restraint in interfering with administrative action. Ordinarily, the soundness of the decision taken by the employer ought not to be questioned but the decision making process can certainly be subject to judicial review. The soundness of the decision may be questioned if it is irrational or mala fide or intended to favour someone or a decision “that no responsible authority acting reasonably and in accordance with relevant law could have reached” as held in Jagdish Mandal followed in Michigan Rubber.”

22.1 Further, the details mentioned by the respondent has also brought out that the decision is taken after proper deliberation and before taking final decision the petitioner was called for meeting. Detailed discussion between the parties, even at that stage, were held. Therefore, the decision is, not hit even by want of opportunity to the bidder.

22.2 The decision of the respondent is bonafide – sans any malafides – and it is purely commercial decision based on commercial prudence and in the interest of the corporation. 22.3 Moreover, it is also relevant and appropriate to keep in focus that the decision impugned by the petitioner is taken Page 35 C/SCA/2625/2019 ORDER with a view to avoiding future disputes and differences or complications and also to avoid difficulties in implementing and executing contract.

22.4 It is clear that such serious disputes and differences arose between the parties before entering into and before finalizing the contract (final terms and conditions – more particularly the basic and

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essential condition viz. price) and on account of such differences parties were not ad-idem. If in light of such situation the agency which invited bids decides – in exercise of power available under the terms of NIT (Tender) – to cancel the Tender process and LoA, the decision cannot termed arbitrary or malafide or unauthorized or irrational, more so when such right and authority is specifically conferred under the tender document and when it was specifically mentioned in the LoA.

5 In this view of the matter the Court would be loath to interfere with the decision / exercise of the right available under the terms of NIT.

At this stage it would be appropriate to take into Page 36 C/SCA/2625/2019 ORDER account observations by Apex Court in the decision in case of Maa Binda Express Carrier & Anr. v. North Eastern Frontier Railway & Ors. [(2014) 3 SCC 760] wherein Hon’ble Apex Court observed and explained that:”

“8. The scope of judicial review in matters relating to award of contract by the State and its instrumentalities is settled by a long line of decisions of this Court. While these decisions clearly recognize that power exercised by the Government and its instrumentalities in regard to allotment of contract is subject to judicial review at the instance of an aggrieved party, submission of a tender in response to a notice inviting such tenders is no more than making an offer which the State or its agencies are under no obligation to accept. The bidders participating in the tender process cannot, therefore, insist that their tenders should be accepted simply because a given tender is the highest or lowest depending upon whether the contract is for sale of public property or for execution of works on behalf of the Government. All that participating bidders are entitled to is a fair, equal and nondiscriminatory treatment in the matter of evaluation of their tenders. It is also fairly wellsettled that award of a contract is essentially a commercial transaction which must be determined on the

basis of consideration that are relevant to such commercial decision. ………..”

(emphasis supplied) 23.1 It would also be appropriate to take into account the decision in case of JSW Infrastructure Ltd. v. Kakinada Seaports Ltd. [(2017) 4 SCC 170], wherein Hon’ble Apex Court clarified and explained that “the employer must have play in the joints i.e. necessary freedom to take administrative decisions within certain boundaries”. In paragraph No.9 of the said decision, Hon’ble Apex Court observed, inter alia, that:

“9. We may also add that the law is well settled that superior courts while exercising their power of judicial review must act with restraint while dealing with contractual matters. A Three Judge Bench of this Court in Tata Cellular vs. Union of India v. Unikon of India (1994) 6 SCC 651 held that (I) there should be judicial restraint in review of administrative action; (ii) the court should not act like court of appeal; it cannot review the decision but can only review the decision making process (iii) the court does not usually have the necessary expertise to correct such technical decisions.; (iv) the employer must have play in the joints I.e., necessary freedom to take administrative decisions within certain boundaries.” (emphasis supplied)

24. Even if it is assumed that impugned decision falls within Page 37 C/SCA/2625/2019 ORDER the purview of judicial review, then also by any standard or yardstick decision cannot be said to be

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arbitrary or unreasonable or malafide much less perverse and without authority.

25. We may, now, end this discussion and support, justify and fortify our conclusion by deriving support and strength from the decision in case of Tata Cellular vs. Union of India (1994) 6 SCC 651 wherein Hon’ble Apex Court observed, inter alia, that:-

“70. It cannot be denied 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 14 of 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 is exercised for any collateral purpose the exercise of that power will be struck down.

Judicial quest in administrative matters has been to find the right balance between the administrative discretion to decide matters whether contractual or political in nature or issues of social policy; thus they are not essentially justifiable and the need to remedy any unfairness. Such an unfairness is set right by judicial review.

Lord Scarman in Nottinghamshire County Council v. Secretary of State for the Environment22 proclaimed :

” ‘Judicial review’ is a great weapon in the hands of the judges; but the judges must

observe the constitutional limits set by our parliamentary system upon the exercise of

this beneficial power.”

Commenting upon this Michael Supperstone and James Goudie in their work Judicial Review (1992 Edn.) at p. 16 say :

“If anyone were prompted to dismiss this sage warning as a mere obiter dictum from

the most radical member of the higher judiciary of recent times, and therefore to be treated as an idiosyncratic aberration, it has received the endorsement of the Law Lords generally. The words of Lord Scarman were echoed by Lord Bridge of Harwich, speaking on behalf of the Board when reversing an interventionist decision of the New Zealand Court of Appeal in Butcher v. Petrocorp Exploration Ltd. 18-3- 1991.”

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C/SCA/2625/2019 ORDER

Observance of judicial restraint is currently the mood in England. The judicial power of review is exercised to rein in any unbridled executive functioning. The restraint has two contemporary manifestations. One is the ambit of judicial intervention; the other covers the scope of the court’s ability to quash an administrative decision on its merits. These restraints bear the hallmarks of judicial control over administrative action.

Judicial review is concerned with reviewing not the merits of the decision in support of which the application for judicial review is made, but the decision-making process itself.

In Chief Constable of the North Wales Police v. Evans23 Lord Brightman said :

“Judicial review, as the words imply, is not an appeal from a decision, but a review of

the manner in which the decision was made. * * * Judicial review is concerned, not

with the decision, but with the decision-making process. Unless that restriction on

the power of the court is observed, the court will in my view, under the guise of preventing the abuse of power, be itself guilty of usurping power.”

In the same case Lord Hailsham commented on the purpose of the remedy by way of judicial review under RSC, Ord. 53 in the following terms :

“This remedy, vastly increased in extent, and rendered, over a long period in recent

years, of infinitely more convenient access than that provided by the old prerogative

writs and actions for a declaration, is intended to protect the individual against the

abuse of power by a wide range of authorities, judicial, quasi-judicial, and, as would originally have been thought when I first practiced at the Bar, administrative. It is not intended to take away from those authorities the powers and 22 1986 AC 240, 251: (1986) 1 All ER 199 23 (1982) 3 All ER 141, 154 677 discretions properly vested in them by law and to substitute the courts as the bodies making the decisions. It is intended to see that the relevant authorities use their powers in a proper manner (p. 1160).”

In R. v. Panel on Takeovers and Mergers, ex p Datafin plc24, Sir John Donaldson, M.R. commented:

“An application for judicial review is not an appeal.” In Lonrho plc v. Secretary of

State for Trade and Industry25, Lord Keith said: “Judicial review is a protection and

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not a weapon.”

It is thus different from an appeal. When hearing an appeal the Court is concerned with the merits

of the decision under appeal. In Amin, Re26, Lord Fraser observed that :

“Judicial review is concerned not with the merits of a decision but with the manner in

which the decision was made…. Judicial review is entirely different from an ordinary

appeal. It is made effective by the court quashing the administrative decision without substituting its own decision, and is to be contrasted with an appeal where the appellate tribunal substitutes its own decision on the merits for that of the administrative officer.”

76. In R. v. Panel on Take-overs and Mergers, ex p in Guinness plc27, Lord Donaldson, M.R. referred to the judicial review jurisdiction as being supervisory or ‘longstop’ jurisdiction. Unless that restriction on the power of the court is observed, the court will, under the guise of preventing the abuse of power, be itself guilty of usurping power.

94. The principles deducible from the above are : (1) The modem trend points to judicial restraint in administrative action. (2) The court does not sit as a court of appeal but merely reviews the manner 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.

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C/SCA/2625/2019 ORDER

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.

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. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. Based on these principles we will examine the facts of this case since they commend to us as the correct principles.

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2. Whether the selection is vitiated by arbitrariness? “

26. For above mentioned reasons and in light of the foregoing discussion and in light of above quoted observation by Apex Court, the Corporation’s decision cannot be faulted. The petition fails and deserves to be rejected and is accordingly rejected. Notice is discharged.

Orders accordingly.

Sd/-

(K.M.THAKER, J) Sd/-

(SANGEETA K. VISHEN,J) SURESH SOLANKI Page 40

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hc55 Labex K.K. International vs State Of Gujarat on 9 May, 2019

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