Decided on October 30,2006

Vaishoo Flour Mills Appellant
UNION OF INDIA Respondents


- (1.) CLAIMING to be an approved contractor for grinding wheat etc and registered with Northern Army Command as such the petitioner claims that Army Corps Service at Udhampur invited sealed tenders from Flour Mills registered with him through tender notice dated 15.04.2005 for lifting wheat from FCI Depot and transportation of Atta and Bran etc to different military stations in J&K with date of opening tenders fixed as 5th May, 2005, wherein the petitioner -unit also participated and submitted their tenders for all stations excepting 14th Corps. On due date tenders were opened by a panel comprising of respondents 2 to 4 and comparative statement of rates quoted by different tenderers drawn whereupon it was found that petitioner had quoted lowest rates for the contract pertaining to 16 Corps and KV Depots, while the rate quoted by 6th respondent was found to be lowest for 15 Corps. Accordingly, respondent no.3 asked the petitioner to give an undertaking in writing to justify the rates and commit that he would be able to execute the work which was done on 7th May 2005 but the allotment of contract was delayed by respondents whereupon petitioner made a representation to them on 6th July 2005 which was not disposed of, forcing the petitioner to institute a writ petition being OWP no. 428/05, during proceedings whereupon it transpired that the contract of 16 Corps had, already been allotted to respondent no.6. The petition was however disposed of by setting aside the allotment contract for enabling respondents to calculate the "Reasonable Rates" applicable in the matter afresh in accordance with the policy. In Sept. 2005 the petitioner discovered that after court order aforesaid the contract had again been allotted to 6th respondent which was protested by him but to no avail. Aggrieved thereby, he impugns the same on the ground that allotment of contract as such to respondent no. 6 was arbitrary and malafide and had the effect of virtually nullifying the judgment of the court and seeks to have the allotment of "Transportation and Wheat Grinding Contract" for 16 Corps in favour of respondentno.6 set aside, with a direction for its allotment in his favour.
(2.) IN their reply, respondents 1 to 5 while alleging mis -representation of facts by petitioner have also pleaded that the rates quoted by him were found to be un -realistically low as being more than 20% below the "Reasonable rates" as worked out in terms of relevant policy which were after due deliberations declared by concerned panel of officers as fictitious, and accordingly, the contracts were allotted to second tenderer in the line i.e respondent No.6 without any delay, and as such petitioner has no cause to agitate in the matter. In his cross objections filed to respondents memo of objections, the petitioner has questioned the veracity of the method of calculation employed by respondents in making computations. During course of arguments learned counsel have reiterated the contents of their respective pleadings with reference to annexures on record, and with his agreement the matter was heard for final disposal.
(3.) I have heard learned counsel and considered the matter. Admittedly present one is the second round of litigation between the parties, with first one having concluded with disposal of petitioners earlier writ petition OWP 428/05, wherein the allotment of contract to 6 respondent was set aside on the basis that rates quoted by petitioner had been found to be fictitious on basis of an admittedly faulty calculation of the "Reasonable rates", with a direction for working the same out afresh and decide upon allotment all contract after examining of tenders including that of the petitioner. Respondents claim to have undertaken the exercise whereafter they - again found the rates quoted by petitioner as being fictitious and allotted the contract to respondent no.6 who as per counsel for official respondents has already performed part thereof by undertaking supplies etc. Grievance of the petitioner now is that by again allotting the contract to respondent no.6 the official respondents have acted in an arbitrary manner loaded with malafides and bias. But, not only that nothing has been pleaded to spell out the details of the alleged elements of malafides and bias, no specific allegations have been made against any of the respondents in that behalf. The petitioners sole objection to allotment of contract to 6th respondent appears to rest on ground of arbitrariness only, taken vaguely in para (18) of the petition by pleading that respondents have manipulated the facts and figures to allot the contract to 6th respondent against norms. For saying so he has relied upon the figure of "Reasonable rates" that he has himself worked out, according to which, he claims that rates quoted by him would be the lowest. No specific pleas to question the decision making process undertaken by, respondents to decide upon allotment of contract to respondent 6th have been taken by petitioner in absence whereof it is difficult to assess his allegations of arbitrariness on part of the respondents who in reply to said allegations contained in para (18) of the petition have pleaded that after court directions in the earlier writ petition the appointed panel of officers again assessed all factors including average rates for last three years, the element of inflation, average local market rates, and rate of other commands and prevalent rates in civil hired transport alongwith the hike in transport fuel price and labour charges etc and thereafter re -examined the bids of tenderers and found that the rate quoted by petitioners was below the reasonable rate and thus, fictitious in terms of para 74 of the policy paper of Government of India, according to which, any rate found 20% below the "Reasonable rate" required to be worked out in accordance with prescribed norms, would be treated as being fictitious and not accepted, whereafter the contract was recommended for sanction to the competent financial authority in favour of second lowest tenderer i.e 6th respondent, who ultimately got it. On facts therefore, and in absence of any details regarding alleged arbitrariness on part of respondents, or commission of any illegality, during course of decision making, petitioners claim does not appear to be very well founded. In his supplementary affidavit filed after the reply of respondents he has however tried to indicate certain alleged discrepancies in fixation of RR (Reasonable rates) by respondents by pointing out certain alleged contradictions in different charts furnished by them, which however cannot be taken into consideration as not forming any part of his case as set -up in the writ petition which only has to be taken as the basis of petitioners claim. Even while that is so it would be appropriate to mention that charts referred to by petitioner as aforesaid are appended to the record of recommendations of the appointed panel of officers for working out the "Reasonable rate" afresh, interims of court order in earlier writ petition which contains the summary of proceedings conducted by a panel while making recommendations for allotment of contract in favour of 6th respondent, and regarding which nothing has been alleged to suggest that it suffered from any illegality or irregularity. On the contrary the petitioner has chosen to counter the figure work done, and perhaps from his own stand of point, which cannot be accepted. At this stage it would be apt to observe that while awarding contracts the State like private parties essentially transacts commercial business and like private or public bodies should be at liberty to fix its own norms for allotment of contracts in order to assure, itself about the soundness of tendering parties and successful execution of the allotted work, may be, some times irrespective of the rates, for which the scope of judicial review is limited only to check unfair practices, arbitrariness and favoritism in allotting contracts. Law in this behalf has been lucidly laid down by Honble apex court through Judgment in "Tata Cellular v. Union of India" reported as AIR 1996 11, wherein their lordships were pleased to observe that : - "Para 85. 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 clear -by 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.." Proceeding further the Honble Court while summing up precedents on the subject in para 113, of the judgment observed that the court should not sit as an appeal forum over administrative actions taken in exercise of contractual powers by the Government but should merely review the manner in which the decision was made because it does not have the expertise to substitute such decisions by its own, and that since normally decisions to accept tenders or allot contracts are reached through a process of expert considerations, the government must have freedom of contract but the decision should however be fair and reasonable.;

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