In the High Court at Calcutta

Civil Appellate Jurisdiction

Appellate Side
Present:

The Hon’ble Justice Surinder Singh Nijjar, Chief Justice

And
The Hon’ble Justice Biswanath Somadder

MAT No. 298 of 2009

M/s. Mannan Travels Transport

Contractor & Ors.
Versus
Durgapur Projects Ltd. & Ors.

For the Appellants : Mr. Kalyan Bandopadhyay,

Mr. Arabinda Chatterjee,
Ms. Kakali Dutta

For the Respondents : Mr. Anindya Mitra,

Nos. 1-3 Mr. Bhaskar Mitra.

Heard on : 27.4.09, 10.6.09, 11.06.09

16.06.09 & 18.06.09

Judgment on : 27.07.2009

SURINDER SINGH NIJJAR, C.J. : This Letters Patent appeal has been filed by the writ

petitioner against the judgment of the learned Single Judge dated 1st of April, 2009 whereby the

writ petition has been dismissed and the award of the contract to Eureka Travels Club (Durgapur)

(herein after referred to as respondent no. 4) has been upheld.

A notice inviting tenders was issued by Durgapur Projects Limited (herein after referred to

respondent no. 1) for transport facilities with the fleet of at least (Seven) buses and (one) luxury

mini-bus. These buses were to be engaged for transporting the workers of respondent no. 1 from

their residences to the work place and their school going children to their respective schools. The

last date for receipt of tenders was 30th of September, 2008. Seven parties including the writ
petitioner and respondent no. 4 submitted their tenders. The tender had to be submitted in four

parts as follows :

I) 1st part should contain E.M.D.

II) 2nd part should contain “MUST CONDITIONS”
III) 3rd part should contain all Technical & Commercial Aspects.
IV) 4th part should contain Price Bid only

Two committees were formed namely, Tender Opening Committee (TOC) for opening

tenders and Tender Consideration Committee (TCC) for considering, evaluating, processing and

completing the intended tender process. At the pre-bid discussions on 22nd September, 2008,

one of the conditions with regard to the third part were relaxed. In the original tender it was

provided that the bidder should have deployed minimum four members of big buses in a single

contract for a minimum period of 12 months in Government/public sector unit/reputed private

concern within last three years. The period of 12 months was reduced to six months. Part II of

the tender was opened on 30th of September, 2008 in presence of all the parties. All the seven

parties successfully completed the second part. Third part of the tender was opened on 11th of

November, 2008. All the parties had been invited to attend the third stage of tender opening

through identical notices dated 4.11.2008. This notice was received by the appellants on 5th of

November, 2008. The appellants participated in the tender opening meeting on 11.11.2008. No

objection was raised by him with regard to the ineligibility of any of the tenders. However by letter

dated 12.11.2008 the appellants raised an issue that respondent no. 4 was not eligible for

participation in the tender. In a written objection it was stated that respondent no. 4 firm has

not got the required credentials and are mere Ticket Booking Agent of South Bengal Transport

Corporation. They have nothing to do with the running of Contract Carriage Buses in any

manner, therefore, did not satisfy the condition that “the bidder should have minimum 4 (four)

big buses in a single/multiple contract for a minimum period of 6 months in Government /PSU/

Reputed Private Organization within last 03 years.” It was stated that the objection may be duly

considered. By notice dated 19th of November, 2008 the appellants were invited to be present at
the time of opening of the fourth parts that is, price bid on 22nd of November, 2008. The

appellants attended the opening of the fourth part of the tender. It came as a complete surprise

to the appellants that respondent no. 4 was also present in the meeting. The appellants,

therefore, submitted an objection against the participation of respondent no. 4 in part four. The

appellants also stated that its participation should be treated “with protest and without prejudice

to our rights and contention and subject to the further step or steps to be taken in the matter”.

After opening the price bid it appears that respondent no. 4 was declared as the lowest bidder (L-

1) whereas the appellants were declared 2nd lowest bidder (L-2). The contract was duly awarded

to respondent no.4. This was challenged by the appellants in the writ petition basically on the

ground that respondent no. 4 did not satisfy the eligibility criteria and its bid ought to have been

rejected, at the opening of the second part. Under any circumstances the bid should have been

rejected after opening the third stage. Learned Single Judge after considering the entire matter

dismissed the writ petition.

This judgment is challenged in the present letters patent appeal.

In the judgment under challenge the learned Single Judge formulated the legal issue as

follows:-

“Question that now arises is whether the law laid down in these cases would
apply in case of a tender process where the challenge is that an ineligible bidder, who
did not fulfill the criteria mentioned in the notice inviting tender, has been selected for
award of the contract though the rival bidder challenging his selection, despite being
aware of the alleged ineligibility, did not object.”

After considering a number of judgments of the Supreme Court and also of this High

Court, it has been held as follows :-

“I am convinced that merely because a bidder does not object to the eligibility of a

rival bidder to participate in the process of selection cannot be a ground that could
legitimately be urged by the tender issuing authority to support the selection of that

ineligible bidder made by it. Such selection strikes at the very root of the process initiated

by the tender issuing authority to enable it choose the best amongst the worthy.”

However, on consideration of the facts the Learned Single Judge holds :-

(1) That the appellant had raised the objection on 12.11.2008. This was not

considered before the opening of the third part. Third part could not be

opened unless one satisfies the ‘must conditions’ comprising the second part.

(2) Knowing this, the appellant participated in the third part without raising any

objection.

(3) There is also no explanation why in spite of no order having been passed on

its objection dated 12.11.2008 the appellant attended at the time of opening

of the fourth part, i.e., price bid on 22.11.2008. No objection was raised prior

to the opening of the price bid of respondent no. 4. The objection dated

22.11.2008 was raised after it became apparent that the rates offered by

respondent no. 4 are the lowest.

Thereafter, the Learned Single Judge concludes as follows :-

“On these facts, this Court is convinced that despite having a cause of action to
move Court after the private respondent was allowed to participate in the 3rd stage and
no response having been given by DPL to the objection dated 12.11.2008, the petitioner
acquiesced so far as participation of the private respondent in the 4th part bid is
concerned and took a calculated chance of being selected by participating in the 4th
stage without, however, expressing the objection which it ultimately did after it was
adjudged L-2. It is a case where the petitioner had initially raised a demur after opening
of bids at the 3rd stage which was not continued at the opening of the price bids at the
4th stage and must, in the circumstances, be deemed to have been waived.
The principle of law laid down by the Division Bench of this Court in NICCO (supra)
squarely applies in a situation of the present nature.
The conclusion is inescapable that the petitioner took a calculated chance of being
selected and having found that it was not the lowest bidder, it recorded its so called
 objection regarding its participation ‘with protest and without prejudice’ vide letter dated
22.11.2008.”

We have heard the Learned Counsel for the parties at length.

Mr. Kalyan Bandopadhyay, Learned Senior Advocate appearing on behalf of the appellants

submits that since respondent no. 4 does not fulfill the ‘must conditions’ he could not have been

considered at the third stage. According to the learned counsel respondent no. 4 had failed to

submit any documentary evidence against condition no. 5 of the ‘must conditions’ –

“5. Financial Background : The Bidder must have sound financial background
supported by Financial Soundness Certificate from the Bankers or Audited Annual Accounts
for the last years.”

Even in the absence of the objection an ineligible candidate cannot be selected. The tender of

respondent no. 4 having been accepted without application of mind, arbitrarily violates Article 14

of the Constitution, and cannot be sustained.

According to the learned senior counsel, on facts the learned Single Judge erred in

holding that no objection had been raised. The objection could only be raised upon opening of

the third part of the tender. Once the objection had been raised it ought to have been decided

before opening the price bid. Even at that stage, the appellants had made it clear that its

participation should be treated as one ‘with protest and without prejudice’. Once the objection

had been raised, it would not be a case of “no objection”. Therefore, the principle of estoppel

would not apply.

It is further submitted that the Learned Single Judge has wrongly applied the ratio in the

case of NICCO Corporation Ltd. vs. Cable Corporation Ltd. [2008 (1) CHN 567]. The

respondents are expected to act bona fide and fairly in selecting the most suitable party for the

award of contract. A statutory authority cannot be permitted to act whimsically and arbitrarily.

Once the objection had been raised respondent no. 4 could not have been permitted to participate

in Part IV of the tender opening process. Learned senior counsel submitted that the notice for

opening the part four of the tender was given on 19th of November 2008 which was to be opened
on the 22nd of November, 2008. There was hardly any time for moving the Court. The appellants,

therefore, participated in the fourth part under compulsion. Therefore, the learned Single Judge

has erred in coming to conclusion that the appellants have acquiesced and waived the objection.

Learned senior counsel also submitted that the learned Single Judge has wrongly presumed that

the objection had been rejected as no formal order had been passed thereon. Such a finding

extends the principle of estoppel beyond recognition.

Learned senior counsel, thereafter, elaborated submissions that the decision of the TOC

and TCC is arbitrary. The relevant factors have not been considered. Even otherwise, Respondent

no. 4 did not submit any worthwhile documentary proof to establish that it had “sound financial

background”. Respondent no. 4 does not have the credentials of a carriage contractor. The profit

and loss account of respondent no.4 for the year ended 31st of March, 2008 shows that the entire

revenue consists of commission received for booking tickets. The only amount spent by

respondent no. 4 on oil and fuel was Rs. 16,402.00/-. These two facts according to the learned

counsel are sufficient to show that respondent no. 4 did not deploy four buses in a single contract

for a minimum of 12 months in the last three years. These factors were totally ignored by the

TCC rendering its decision to be wholly arbitrary. In support of this submission the learned

counsel has relied on the judgments of the Supreme Court in the cases of Nar Singh Pal vs.

Union of India & Ors. [(2000) 3 SCC 588] and Olga Tellis & Ors. vs. Bombay Municipal

Corporation & Ors. [(1985) 3 SCC 545].

Mr. Anindya Mitra, learned senior counsel appearing on behalf of the respondent no. 1, 2

& 3, submits that the appellants have not disclosed that condition no. 6 of the second part had

been relaxed in case of all the parties. This apart, according to the learned counsel, the minutes

of the TCC clearly show that the committee scrutinized all the documents and verified the papers

in all respects and it was found that only one party viz., M/s. Friends Transport have not

submitted the requisite credentials regarding their engagement of buses in the form prescribed in

the minutes of the Pre-Bid Discussions as well as NIT. Therefore, members of the committee
unanimously opined not to open the price bid of that party. The six successful parties out of

seven were recommended for opening the fourth part of the tender. The documents having been

scrutinized by the Committee decision cannot be termed as arbitrary. Learned counsel submitted

that the price bid was opened in the presence of the appellants. Upon consideration of the entire

issue the letter of intent had already been issued to respondent no. 4.

Learned Senior Counsel further submitted that in the present case the contract is of a

purely commercial nature. It involves no public element. Therefore, the Learned Single Judge

has rightly dismissed the writ petition. The appellants having participated in part four, in spite of

there being no decision on the objection dated 12.11.2008, cannot be permitted to approbate and

reprobate. In any event, the Learned Single Judge having declined to exercise its discretionary

jurisdiction under Article 226 of Constitution of India in favour of the appellants cannot be

challenged in the absence of the decision being contrary to any constitutional provisions.

According to the learned senior counsel, the Learned Single Judge has correctly relied upon the

judgment of this Court in NICCO Corporation Ltd. (supra). Further reliance has been placed by

learned senior counsel upon the judgment of the Supreme Court in the case of M/s. G. J.

Fernandez vs. State of Karnataka & Ors. [AIR 1990 SC 958]. Relying on the judgment it is

submitted that the appellants had to establish that some real injustice has been done. In the

present case the appellants were an existing contractor for the last five years. The appellants

were merely trying to scuttle the competition. Learned Senior Counsel also relied on judgments

of the Supreme Court in the cases of Raunaq International Ltd. vs. I.V.R. Construction Ltd. &

Ors. [AIR 1999 SC 393] and Master Marine Services (P) Ltd. vs. Metcalfe & Hodgkinson (P)

Ltd. & Anr. [(2005) 6 SCC 138].

We have considered the submissions made by the Learned Counsel for the parties.

We may notice at the outset that Mr. Bandopadhyay had confined his submissions only to

the question of estoppel. In our opinion, the principle laid down by the Supreme Court in the
case of Olga Tellis & Ors. (supra) would not be applicable to the facts of the present case. In this

case, the Court was concerned with the plight of the pavement, basti or slum dwellers of Bombay

city. It was the claim of the petitioner that they are sought to be forcibly evicted from their

pavement and slum dwellings. Initially, some of the petitioners had challenged the action of the

Municipal Corporation-respondents under Section 314 of the Bombay Municipal Corporation Act

on the ground of violation of their rights and Article 19 and 21. In the writ petition filed before

the Bombay High Court during the pendency of the proceeding before the Bombay High Court the

petitioners had conceded that they did not claim any fundamental right to put up huts on

pavements or public roads and that they will not obstruct demolition of the huts after 15th of

October, 1981. However, in the writ petition under Article 32, while in the Supreme Court the

contention of the petitioners was the procedure prescribed by Section 314 of the B.M.C being

arbitrary and unfair, it was not ‘procedure established by the law’ within the meaning of Article

21 and, therefore, they could not be deprived of their fundamental right to life by resorting to that

procedure. The respondents objected to the maintainability of the petitions on the ground that

having conceded before the Bombay High Court the petitioners were estopped from contending

that the huts constructed by them on the pavements could not be demolished because of their

right to livelihood. In these circumstances, the Supreme Court observed as follows :-

“28. It is not possible to accept the contention that the petitioners are estopped
from setting up their fundamental rights as a defence to the demolition of the huts put up
by them on pavements or parts of public roads. There can be no estoppel against the
Constitution. The Constitution is not only the paramount law of the land but, it is the
source and sustenance of all laws. Its provisions are conceived in public interest and
are intended to serve a public purpose. The doctrine of estoppel is based on the principle
that consistency in word and action imparts certainty and honesty to human affairs. If
a person makes a representation to another, on the faith of which the latter acts to his
prejudice, the former cannot resile from the representation made by him. He must make
it good. This principle can have no application to representations made regarding the
assertion or enforcement of fundamental rights....................”
 29. The plea of estoppel is closely connected with the plea of waiver, the object of
both being to ensure bona fides in day-to-day transactions. In Basheshar Nath v. CIT, a
Constitution Bench of this Court considered the question whether the fundamental rights
conferred by the Constitution can be waived. Two members of the Bench (Das, C.J. and
Kapoor, J.) held that there can be no waiver of the fundamental right founded on Article
14 of the Constitution. Two others (N.H. Bhagwati and Subba Rao, JJ.) held that not
only could there be no waiver of the right conferred by Article 14, but there could be no
waiver of any other fundamental right guaranteed by Part III of the Constitution. The
Constitution makes no distinction, according to the learned Judges, between
fundamental rights enacted for the benefit of an individual and those enacted in public
interest or on grounds of public policy.”

30. We must, therefore, reject the preliminary objection and proceed to consider
the validity of the petitioner’ contentions on merits.”

The aforesaid ratio of law has been reiterated by the Supreme Court in the case of Nar

Singh Pal (supra). In this case, the appellants whose services had been terminated because of

his involvement in a criminal case sought reinstatement upon his acquittal. The appellants who

were not reinstated by the employer, filed a petition before the Central Administrative Tribunal,

Principal Bench, New Delhi on 25-8-1992 which was dismissed by the Tribunal on 4-12-1997.

The writ petition filed against the order of the Tribunal was also dismissed by the High court. The

Supreme Court allowed the appeal of the workman with the observations that the Tribunal as

also the High Court appeared to have been moved by the fact that the appellants had encashed

the cheque through which retrenchment compensation was paid to him. In such circumstances,

the Supreme Court observed as follows :-

“13. …..…….This, we are constrained to observe, was wholly erroneous and was
not the correct approach. The appellant was a casual labour who had attained the
“temporary” status after having put in ten years of service. Like any other employee, he
had to sustain himself, or, maybe, his family members on the wages he got. On the
termination of his services, there was no hope left for payment of salary in future. The
retrenchment compensation paid to him, which was only a meager amount of Rs.6350,
was utilized by him to sustain himself. This does not mean that he had
surrendered all his constitutional rights in favour of the respondents.
 Fundamental Rights under the Constitution cannot be bartered away. They
cannot be compromised nor can there be any estoppel against the exercise of
Fundamental Rights available under the Constitution. As pointed out earlier, the
termination of the appellant from service was punitive in nature and was in violation of
the principles of natural justice and his constitutional rights. Such an order cannot be
sustained.”
In our opinion, the aforesaid two judgments would not be applicable in the facts and

circumstances of this case. No fundamental right of the appellant had been violated. The

appellant had willingly participated in the tender process, at all stages. The Learned Single Judge

has clearly observed that the appellant was well aware that no order had been passed on the

objection dated 12-11-2008. The appellant, therefore, acquiesced so far as the participation of

the private respondent not in the opening of the price bid, i.e., Part IV is concerned. It took a

calculated chance of being selected by participating in the 4th stage. It was only when the

appellant came to know that respondent no.4 had been graded as L-1 that a letter was written

that its participation in the 4th stage was “with protest and without prejudice”. Learned Single

Judge accepted the submission that merely because a bidder does not object to the eligibility of a

rival bidder to participate in the process of selection would not give a justification to the TCC to

select an ineligible bidder. These observations clearly indicate that even the Learned Single

Judge was of the opinion that no fundamental rights of the appellant under Article 14, 19 or 21 of

the Constitution of India have been violated.

It is settled law that even in matters of contract a statutory authority cannot act

arbitrarily. The action of such statutory authority even in the matter of award of ‘contract’, has to

be within the scope and confines of the tender conditions. Therefore, in the present case the

selection had to be made from candidates who fall within the stipulated criteria and fulfill the

qualifications in all parts of the tender notice. Selection of an unqualified bidder would certainly

render the decision of the authority arbitrary and, therefore, violative of Article 14 of the

Constitution of India. We find support for his view from the judgment of the Supreme Court in
the case of Ramana Dayaram Shetty Vs. International Airport Authority of India and Ors.

[(1979) 3 SCC 489] wherein the Supreme Court observed as follows :-

“12………………..It must, therefore, be taken to be the law that where the

Government is dealing with the public, whether by way of giving jobs or entering into
contracts or issuing quotas or licences or granting other forms of largesse, the
Government cannot act arbitrarily at its sweet will and, like a private individual, deal
with any person it pleases, but its action must be in conformity with standard or norms
which is not arbitrary, irrational or irrelevant. The power or discretion of the
Government in the matter of grant of largesse including award of jobs, contracts, quotas,
licences, etc. must be confined and structured by rational, relevant and non-
discriminatory standard or norm and if the Government departs from such standard or
norm in any particular case or cases, the action of the Government would be liable to be
struck down, unless it can be shown by the Government that the departure was not
arbitrary, but was based on some valid principle which in itself was not irrational,
unreasonable or discriminatory.

…… …… ….. ….. ….. ….. …… …… ….

34. It is, therefore, obvious that both having regard to the constitutional mandate
of Article 14 as also the judicially evolved rule of administrative law, respondent 1 was
not entitled to act arbitrarily in accepting the tender of respondents 4, but was bound to
conform to the standard or norm laid down in paragraph 1 of the notice inviting tenders
which required that only a person running a registered IInd Class hotel or restaurant
and having at least 5 years’ experience as such should be eligible to
tender…………………………………………………………….
…………………………………………………………………………………..
The action of respondent 1 in accepting the tender of respondents 4, even though they did
not satisfy the prescribed condition of eligibility, was clearly discriminatory, since it
excluded other persons similarly situate from tendering for the contract and it was also
arbitrary and without reason. The acceptance of the tender of respondents 4 was, in the
circumstances, invalid as being violative of the equality clause of the Constitution as also
of the rule of administrative law inhibiting arbitrary action.”

In the present case, the petitioners/appellants cannot claim that they have been denied

equal opportunity as the appellants clearly participated, at all the four stages of the tender

process.
 The petitioners/appellants cannot now be permitted to urge the ground of discrimination.

The principle of estoppel/waiver/acquiescence would be squarely applicable. We are of the

considered opinion that the matter is squarely covered by the judgment of the Division Bench of

this Court in the case of NICCO Corporation Ltd. (supra). The learned Single Judge has rightly

relied upon the same. In the aforesaid judgment, after taking into consideration the ratio of law

laid down by the Supreme Court, the Division Bench observed as follows :-

“21. We, therefore, hold by relying upon the decision of the three-Judges Bench
of the Apex Court in the case of Om Prakash Shukla vs. Akhilesh Kumar Shukla,
reported in AIR 1986 SC 1043, that if a party has taken a chance of selection without
protest but remained unsuccessful on merit, he cannot be permitted to challenge the
process of selection on the ground of some illegality even if we assume for the sake of
argument that filing of performance certificate was an essential condition……….”

This apart, in our opinion, the writ petitioners/appellant could not be granted any relief in

view of the law laid down in the case of Madan Lal vs. State of J & K [1995 (3) SCC 486]

wherein it is observed as follows :-

“9. Before dealing with this contention, we must keep in view the salient fact that
the petitioners as well as the contesting successful candidates being respondents
concerned herein, were all found eligible in the light of marks obtained in the written test,
to be eligible to be called for oral interview. Up to this stage there is no dispute between
the parties. The petitioners also appeared at the oral interview conducted by the
Members concerned of the Commission who interviewed the petitioners as well as the
contesting respondents concerned. Thus the petitioners took a chance to get themselves
selected at the said oral interview. Only because they did not find themselves to have
emerged successful as a result of their combined performance both at written test and
oral interview, they have filed this petition. It is now well settled that if a candidate
takes a calculated chance and appears at the interview, then, only because the result of
the interview is not palatable to him, he cannot turn round and subsequently contend
that the process of interview was unfair or the Selection Committee was not properly
constituted. In the case of Om Prakash Shukla v. Akhilesh Kumar Shukla (AIR 1986 SC
 1043) it has been clearly laid down by a Bench of three learned Judges of this Court
that when the petitioner appeared at the examination without protest and when he
found that he would not succeed in examination he filed a petition challenging the said
examination, the High Court should not have granted any relief to such a petitioner.

10. Therefore, the result of the interview test on merits cannot be successfully
challenged by a candidate who takes a chance to get selected at the said interview and
who ultimately finds himself to be unsuccessful. It is also to be kept in view that in this
petitioner we cannot sit as a court of appeal and try to reassess the relative merits of the
candidates concerned who had been assessed at the oral interview nor can the
petitioners successfully urge before us that they were given less marks though their
performance was better. It is for the Interview Committee which amongst others
consisted of a sitting High Court Judge to judge the relative merits of the candidates who
were orally interviewed, in the light of the guidelines laid down by the relevant rules
governing such interviews. Therefore, the assessment on merits as made by such an
expert committee cannot be brought in challenge only on the ground that the assessment
was not proper or justified as that would be the function of an appellate body and we
are certainly not acting as a court of appeal over the assessment made by such an
expert committee.”

These observations, in our opinion, would clearly support the view expressed by the

learned Single Judge that the petitioners/appellants are estopped from challenging the

decision of the respondent authorities in selecting respondent no. 4.

However, according to Mr. Bandopadhyay these observations would not be applicable in

the present case as the petitioners/ appellants had clearly raised an objection, whereas the

Division Bench in the case of NICCO Corporation Ltd. (supra) and the Supreme Court in the

cases of Om Prakash Shukla and Madan Lal (supra) were considering cases where no objection

had been filed by the petitioners. We do not find any substance in this submission. As noticed

earlier no decision on the objection raised by the appellants on 12-11-2008 had been

communicated to them. Therefore, the learned Single Judge, in our opinion, correctly observed

that once no order was passed on the appellants’ objection and the private respondent was

invited to participate in the 4th stage, the objection of the appellants must be presumed to have
been rejected. Knowing fully well that no order on its objection had been communicated, the

appellants participated at the time of opening of the fourth part, i.e., price bid on 22-11-2008.

Therefore, the appellants would be presumed to have waived the objection. This apart, even the

objection on 22nd of November, 2008 was lodged after the appellants became aware that

respondent no.4 has been graded as L-1. That being so, we are unable to accept that the

appellants had not waived the objection with regard to the alleged ineligibility of respondent no. 4.

The scope and ambit and the parameters within which judicial review of administrative

action in relation to contract matters is permitted has been settled by the judgment of the

Supreme Court in the case of Tata Cellular Vs. Union of India [(1994) 6 SCC 651]. The law is

declared as follows :-

“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
favouritism. 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.

……. …… …… ….. ….. ….. ….. …. …..

77. The duty of the court is to confine itself to the question of legality. Its
concern should be:
1. Whether a decision-making authority exceeded its powers ?
2. Committed an error of law,
3. committed a breach of the rules of natural justice,
4. reached a decision which no reasonable tribunal would have reached or,
5. abused its powers.
 Therefore, it is not for the court to determine whether a particular policy or particular
decision taken in the fulfillment of that policy is fair. It is only concerned with the
manner in which those decisions have been taken. The extent of the duty to act fairly
will have from case to case. Shortly put, the grounds upon which an administrative
action is subject to control by judicial review can be classified as under :
(i) Illegality : This means the decision-maker must understand correctly the
law that regulates his decision-making power and must give effect to it.
(ii) Irrationality, namely, Wednesbury unreasonableness.
(iii) Procedural impropriety.

The above are only the broad grounds but it does not rule out addition of further grounds in
course of time…… …

…….. ……… ……… ……….. ………. ….

81. Two other facets of irrationality may be mentioned.

(1) It is open to the court to review the decision-maker’s evaluation of the facts. The
court will intervene where the facts taken as a whole could not logically warrant the
conclusion of the decision-maker. If the weight of facts pointing to one course of action is
overwhelming, then a decision the other way, cannot be upheld……………. .
(2) A decision would be regarded as unreasonable if it is impartial and unequal in
its operation as between different classes. ………….

……. ……… …….. …….. ……. ………

94. The principles deducible from the above are :

(1) The modern trend points to judicial restraint in administrative action.

(2) The court does not sit as a court of appeal but merely reviews the 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.
(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the
invitation to tender is in the realm of contract. Normally speaking, the decision to accept
the tender or award the contract is reached by process of negotiations through several
tiers. More often than not, such decisions are made qualitatively by experts.
 (5) The Government must have freedom of contract. In other words, a fair play in the
joints is a necessary concomitant for an administrative body functioning in an
administrative sphere or quasi-administrative sphere. However, the decision must not
only be tested by the application of Wednesbury principle of reasonableness (including
its other facts pointed out above) but must be free from arbitrariness not affected by bias
or actuated by mala fides.
(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.”

The aforesaid judgment has been followed again and again.

An examination of the facts in the present case would clearly show that the TCC upon

examination of the entire material had found all the bidders to be eligible to move from second

stage to third stage. On due scrutiny of the relevant material at the third stage one of the bidders

namely M/s. Friends Transport was held to be not qualified. Therefore, we are unable to accept

the submission of Mr. Bandhyapadhyay that the decision for award the contract to respondent

no.4 is either arbitrary or discriminatory.

At this stage, we may notice the judgment of the Supreme Court in the case of M/s. G. J.

Fernandez (supra) on the basis of which it is submitted by Mr. Anindya Mitra that no real

prejudice has been caused to the appellants. According to the learned senior counsel the

appellants are only trying to gain immunity from competition. In the aforesaid case the Supreme

Court observed as follows :-

“16. The question, then, is whether the course adopted by the KPC has caused
any real prejudice to the appellant and other parties who had already supplied all the
documents in time and sought to extension at all ? It is true that the relaxation of time
schedule in the case of one party does affect even such a person in the sense that he
would otherwise have had one competitor less. But, we are inclined to agree with the
respondent’s contention that while the rule in Ramana’s case (AIR 1979 SC 1628) (supra)
 will be readily applied by Courts to a case where a person complains that a departure
from the qualifications has kept him out of the race, injustice is less apparent where the
attempt of the applicant before Court is only to gain immunity from competition.
Assuming for purposes of argument that there has been a slight deviation from the terms
of the NIT, it has not deprived the appellant of its right to be considered for the contract;
on the other hand, its tender has received due and full consideration. If, save for the
delay in filing one of the relevant documents, MCC is also found to be qualified to tender
for the contract, no injustice can be said to have been done to the appellant by the
consideration of its tender side by side with that of the MCC and in the KPC going in for
a choice of the better on the merits. The appellant had no doubt also urged that the MCC
had no experience in this line of work and that the appellant was much better qualified
for the contract. The comparative merits of the appellant vis-à-vis MCC are, however, a
matter for the KPC (counseled by the TCE) to decide and not for the Courts. We were,
therefore, rightly not called upon to go into this question.”

Learned Counsel also relied on the judgment of the Supreme Court in the case of Raunaq

International Ltd. (supra). In this case, the Supreme Court observed as follows :-

“11. When a writ petition is filed in the High Court challenging the award of a contract
by a public authority or the State, the Court must be satisfied that there is some element
of public interest involved in entertaining such a petition. If, for example, the dispute is
purely between two tenderers, the Court must be very careful to see if there is any
element of public interest involved in the litigation. A mere difference in the prices
offered by the two tenderers may or may not be decisive in deciding whether any public
interest is involved in intervening in such a commercial transaction. It is important to
bear in mind that by Court intervention, the proposed project may be considerably
delayed thus escalating the cost far more than any saving which the Court would
ultimately effect in public money by deciding the dispute in favour of one tenderer or the
other tenderer. Therefore, unless the Court is satisfied that there is a substantial
amount of public interest, or the transaction is entered into mala fide, the Court should
not intervene under Article 226 in disputes between two rival tenderers.”

Learned Counsel submitted that in the present case, the contract does not involve any

public interest. We are of the considered opinion that the observation made in the Supreme
Court in the case of Master Marine Services (supra) are squarely applicable in the facts and

circumstances of this case. In the aforesaid case it is observed as follows :-

“13. In Sterling Computers Ltd. v. M & N Publications Ltd. it was held as under :
(SCC p. 458, paras 18-19)

‘18. While exercising the power of judicial review, in respect of contracts entered
into on behalf of the State, the court is concerned primarily as to whether there
has been any infirmity in the ‘decision-making process’….. By way of judicial
review the court cannot examine the details of the terms of the contract which
have been entered into by the public bodies or the State. Courts have inherent
limitations on the scope of any such enquiry. But at the same time … the
courts can certainly examine whether ‘decision-making process’ was
reasonable, rational, not arbitrary and violative of Article 14 of the Constitution.

19. 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 court cannot act as an appellate authority by substituting its
opinion in respect of selection made for entering into such contract.’”

14. In Raunaq International Ltd. v. I.V.R. Construction Ltd. it was observed that
the award of a contract, whether it is by a private party or by a public body or the State,
is essentially a commercial transaction. In arriving at a commercial decision,
considerations which are of paramount importance are commercial considerations,
which would include, inter alia, the price at which the party is willing to work, whether
the person tendering is of the ability to deliver the goods or services as per specifications.

15. The law relating to award of contract by the State and public sector
corporations was reviewed in Air India Ltd. v. Cochin International Airport Ltd. 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.”
 After laying down the law, the Supreme Court allowed the appeal with the following

observations :-

“16……………….. In such circumstances, no such public interest was involved which

may warrant interference by the High Court in exercise of its extraordinary jurisdiction
under Article 226 of the Constitution while undertaking judicial review of an
administrative action relating to award of a contract . We are, therefore, clearly of the
opinion that the High Court erred in setting aside the order of CONCOR awarding the
contract to the appellant.”
In this case, the appellants herein are existing contractors. From the pleadings, it is

apparent that although the initial work order was issued in favour of the appellants on 19th

August, 2005, for the period up to 1st of June, 2006, the same was extended on numerous

occasions permitting the appellants to continue till September, 2008. Therefore, the submission

of Mr. Mitra that the appellants are only interested in scuttling the competition cannot be said to

be without any justification. We are also informed that respondent no.4 has been providing

service to the satisfaction of respondent no.1 to 3. The period of contract is likely to expire in

three-months’ time.

In such circumstances, we are of the opinion that no injustice has been caused to the

appellant. Therefore, the appeal is dismissed.

(Surinder Singh Nijjar, C.J.)

I agree.

(Biswanath Somadder, J.)