Dismissed

Mr. B S Rajashekar v. State of Karnataka

Karnataka HC18 Oct 2022WP/21257/2021

Case brief

AI extract

What is this about?

Challenge to the award of a work order for supply of manpower, the petitioner and the successful tenderer having quoted an identical 5% service charge. The court held that where two tenderers are equally placed, clause XIII(5) of the NIT leaves the choice to the tender scrutiny committee, and finding no arbitrariness or illegality, declined to interfere under Article 226.

What the court decided

AI extract

Mr. B S Rajashekar Vs State of Karnataka — Public Procurement and Tenders | Karnataka HC (2022)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 18^TH DAY OF OCTOBER, 2022

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BEFORE

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THE HON'BLE MR JUSTICE M.NAGAPRASANNA WRIT PETITION NO. 21257 OF 2021 (GM-TEN)

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BETWEEN:

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MR.B.S.RAJASHEKHAR S/O SANNABASAPPA AGED ABOUT 69 YEARS PROPRIETOR M/S GEMINI SECURITY AND ALLIED SERVICES NO. 2345/19, MUKAMBIKA NILAYA 5^TH CROSS, 2^ND FLOOR, LENIN NAGAR NITTUVALLI NEW EXTENSION DAVANAGERE - 577 004.

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…PETITIONER

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(BY SRI. RAJESHA SHETTIGARA., ADVOCATE)

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AND:

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STATE OF KARNATAKA DEPARTMENT OF INFORMATION AND PUBLIC RELATIONS VIDHANA SOUDHA AMBEDKAR VEEDHI BENGALURU – 560 001 REPRESENTED BY SECRETARY.

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Digitally signed by PADMAVATHI B K Location: HIGH COURT OF KARNATAKA

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THE COMMISSIONER

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DEPARTMENT OF INFORMATION AND PUBLIC RELATIONS ”VAARTHA SOUDHA”

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NO.17, BHAGAVAN MAHAVEERA ROAD

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(INFANTRY ROAD), BENGALURU – 560 001.

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M/S LIBRA DETECTIVE AND SECURITY SERVICES NO.21, 29^TH CROSS

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NEAR BAGALGUNTE ARCH BAGALGUNTE, NAGASANDRA POST BENGALURU – 560 073 REPRESENTED BY ITS PROPRIETOR.

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…RESPONDENTS

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(BY SRI.M.VINOD KUMAR, AGA FOR R1; SRI GOPAL, ADVOCATE FOR R2;

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SRI B.ESHWARAIAH., ADVOCATE FOR R3)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE WORK ORDER DTD. 26.10.2021 ISSUED BY THE R-2 IN FAVOUR OF R-3 VIDE ANNX-A AND DIRECT THE R-2 TO CONSIDER THE BID SUBMITTED BY THE PETITIONER; DIRECT THE R-2 TO CONSIDER THE REPRESENTATION DTD. 17.11.2021 FILED BY THE PETITIONER AND ASSIGN REASONS FOR NON-CONSIDERATION OF BID SUBMITTED BY THE PETITIONER VIDE ANNX-G.

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THIS WRIT PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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The petitioner is before this Court calling in question issuance of work order dated 26.10.2021 in favour of the 3^rd respondent by the 2^nd respondent and seeks a consequential direction by issuance of a writ in the nature of mandamus

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directing the 2^nd respondent to consider his representation dated 17.11.2021.

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Heard Sri.Rajesh Shettigara, learned counsel appearing

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for petitioner, Sri.M.Vinod Kumar, learned Additional Government Advocate for respondent No.1, Sri.Gopal, learned counsel for respondent No.2 and Sri.B.Eshwaraiah, leaned counsel for respondent No.3.

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The facts in brief as borne out from the pleadings are as follows:

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The 2^nd respondent - the Commissioner of Department of Information and Public Relations issues a Notice Inviting Tender (‘NIT’ for short) on 02.08.2021. The tender was for outsourcing of employees such as Typists, Drivers, Group ‘D’ and Security Guards to the District offices of the 2^nd respondent. The petitioner and the 3^rd respondent participate in the tender process. The 3^rd respondent, pursuant to the scrutiny of tender, is awarded work in terms of the order dated

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26.10.2021. It is then the petitioner knocks the doors of this Court in the subject petition.

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This Court, by an order dated 29.11.2021, grants interim order of stay, pursuant to which, work order that is issued in favour of the 3^rd respondent is not given effect to and the 3^rd respondent is continuing to supply manpower as he was doing earlier.

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Learned counsel appearing for the petitioner contends that there has been violation of certain clauses of tender in awarding the contract to the 3^rd respondent. According to the learned counsel, clause XIII of the NIT has been violated and therefore, the 3^rd respondent has become beneficiary of such violation.

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Learned counsel representing the 2^nd respondent would contend that both the petitioner and the 3^rd respondent had quoted 5% service charge for supply of manpower and therefore, the 3^rd respondent who was earlier supplying manpower to the department was chosen as against the

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application of the petitioner. He would submit no fault can be found at the said action as it is neither illegal nor arbitrary.

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Learned counsel for the 3^rd respondent would toe the lines of the submissions made by the learned counsel for the 2^nd respondent.

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I have given my anxious consideration to the submissions made by the learned counsel for both the parties and perused the material on record.

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The afore-narrated fact of issuance of NIT is not in dispute. Since the issue revolves round clause XIII of the notice inviting tender, I deem it appropriate to quote the same for the purpose of ready reference:

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III: mÉAqÀgï CªÁqïð ªÀiÁqÀÄªÀÅzÀÄ:-

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1. DyðPÀ ©qï£À°è ºÉÃ½gÀÄªÀ CA±ÀzÀ ªÉÄÃ¯É CwÃ PÀrªÉÄ zÀgÀªÀ£ÀÄß £ÀªÀÄÆ¢¹zÀ lAqÀgÀÄzÁgÀgÀ£ÀÄß AiÀÄ±À¹é mÉAqÀgïzÁgÀgÉAzÀÄ ¥ÀjUÀtÂ¹ CªÀ±Àå«zÀÝ°è PÀrªÉÄ zÀgÀ £ÀªÀÄÆ¢¹zÀ mÉAqÀgïzÁgÀgÉÆqÀ£É zÀgÀ ¤UÀ¢UÁV

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¸ÀAzsÁ£À (£ÉUÉÆ¶AiÉÄÃµÀ£ï) PÉÊUÉÆAqÀÄ ¸ÀA§A¢ü¹zÀ CºÀðjUÉ PÁAiÀiÁðzÉÃ±À ¤ÃqÀ®Ä mÉAqÀgï DºÁé¤¹gÀÄªÀ ¥Áæ¢üPÁgÀ C¢üPÁgÀ ºÉÆA¢gÀÄvÀÛzÉ.

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2. mÉAqÀgïUÀ¼À DyðPÀ ©qï vÉgÉzÀ £ÀAvÀgÀ M¥ÀÄàªÀ CxÀªÁ wgÀ¸ÀÌj¸ÀÄªÀ C¢üPÁgÀªÀ£ÀÄß DAiÀÄÄPÀÛgÀÄ, ªÁvÁð ªÀÄvÀÄÛ ¸ÁªÀðd¤PÀ ¸ÀA¥ÀPÀð E¯ÁSÉ, ¨ÉAUÀ¼ÀÆgÀÄ ºÁUÀÆ mÉAqÀgï CAVÃPÀj¸ÀÄªÀ ¥Áæ¢üPÁgÀ EªÀgÀÄ ºÉÆA¢gÀÄvÀÛzÉ.

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3. mÉAqÀgï CªÀ¢üAiÀÄÄ PÁAiÀiÁðzÉÃ±À ¤ÃrzÀ ¢£ÁAPÀ¢AzÀ MAzÀÄ ªÀµÀðzÀªÀgÉUÉ CxÀªÁ SÁAiÀÄA ¹§âA¢UÀ¼ÀÄ £ÉÃªÀÄPÀªÁUÀÄªÀªÀgÉUÉ EªÉgÀqÀgÀ°è AiÀiÁªÀÅzÀÄ ªÉÆzÀ¯ÉÆÃ C°èAiÀÄªÀgÉUÉ ¹§âA¢UÀ¼À ¸ÉÃªÉ ¤ÃqÀ¨ÉÃPÀÄ.

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4. MAzÀÄ ªÉÃ¼É mÉAqÀgïzÁgÀgÀÄ °TvÀ M¦àUÉ ¤ÃrzÀÄzÀgÀ ªÉÄÃgÉUÉ «¸ÀÛj¹zÀ CªÀ¢üAiÀÄ°è PÁAiÀiÁðzÉÃ±À ¤ÃqÀ¢zÀÝ°è vÀAvÁ£É mÉAqÀgï gÀzÁÝUÀÄvÀÛzÉ.

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5. DyðPÀ ©qï£À°è ¨sÁUÀªÀ»¹zÀ E§âgÀÄ CxÀªÁ ºÉaÑ£À mÉAqÀgïzÁgÀgÀÄ ¸ÀªÀiÁ£À ¸ÉÃªÁ ªÉZÀÑ £ÀªÀÄÆ¢¹zÀÝ°è DAiÀÄÄPÀÛgÀÄ, ªÁvÁð ªÀÄvÀÄÛ ¸ÁªÀðd¤PÀ ¸ÀA¥ÀPÀð E¯ÁSÉ, ¨ÉAUÀ¼ÀÆgÀÄ ºÁUÀÆ mÉAqÀgï CAVÃPÀj¸ÀÄªÀ ¥Áæ¢üPÁgÀ EªÀgÀ ¤tðAiÀÄªÉÃ CAwªÀÄªÁVgÀÄvÀÛzÉ.”

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(Emphasis added)

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Sub-clause (1) of clause XIII of the NIT directs that the Tender Scrutiny Committee would negotiate with the tenderer whose bid has been of the lowest price. Clause (5) therein indicates that once the financial bid is opened and there are two participants who have emerged as successful on the same terms and conditions, it is the discretion of the Authority to take a final call with regard to the award of work to one of those successful tenderers.

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The situation in the case at hand is that both the petitioner and the 3^rd respondent have quoted 5% service charge and all other credentials of both the petitioner and the 3^rd respondent are equal. Therefore, the power to be exercised would be in terms of clause (5) and not clause (1). Clause 5 empowers the Tender Scrutiny Committee to accept such tender by its discretion and award the contract to a person of its choice. Unless the said choice is arbitrary or illegality shrouds the entire tender process, this Court would not interdict or obliterate the said work order being issued pursuant to the tender notification.

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The issue in this regard is too well settled by plethora of judgments rendered by the Apex Court wherein the Apex Court has clearly held that the jurisdiction of this Court under Article 226 of the Constitution of India qua challenge to the tender is limited. The Apex Court in the case of UFLEX LTD. V. STATE OF T.N.¹ has held as follows:

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1 (2022) 1 SCC 165

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“2. The judicial review of such contractual matters has its own limitations. It is in this context of judicial review of administrative actions that this Court has opined that it is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. The purpose is to check whether the choice of decision is made lawfully and not to check whether the choice of decision is sound. In evaluating tenders and awarding contracts, the parties are to be governed by principles of commercial prudence. To that extent, principles of equity and natural justice have to stay at a distance. [Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517]

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3. We cannot lose sight of the fact that a tenderer or contractor with a grievance can always seek damages in a civil court and thus, “attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted”. [Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517]

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4. In a sense the Wednesbury principle is imported to the concept i.e. the decision is so arbitrary and irrational that it can never be that any responsible authority acting reasonably and in accordance with law would have reached such a decision. One other aspect which would always be kept in mind is that the public interest is not affected. In the conspectus of the aforesaid principles, it was observed in Michigan Rubber (India) Ltd. v. State of Karnataka [Michigan Rubber (India) Ltd. v. State of Karnataka, (2012) 8 SCC 216] as under : (SCC p. 229, para 23)

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“23. From the above decisions, the following principles emerge:

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(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

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within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities;

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(b) Fixation of a value of the tender is entirely within the purview of the executive and courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by Courts is very limited;

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(c) In the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities unless the action of tendering authority is found to be malicious and a misuse of its statutory powers, interference by Courts is not warranted;

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(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.”

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Further, in the case of N.G. PROJECTS LTD. V. VINOD

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KUMAR JAIN² , the Apex Court has held as follows:

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“10. We find that the interference in contract awarded to the appellant is wholly unwarranted and has caused loss to public interest. Construction of roads is

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2 (2022) 6 SCC 127

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an essential part of development of infrastructure in any State. The learned Single Bench and the Division Bench of the High Court were exercising power of judicial review to find out whether the decision of the State was manifestly arbitrary or unjust as laid down by this Court in Tata Cellular v. Union of India [Tata Cellular v. Union of India, (1994) 6 SCC 651] and to act as appellate authority over the decision of the State. This Court in Tata Cellular [Tata Cellular v. Union of India, (1994) 6 SCC 651] held as under: (SCC pp. 675, 677-78 & 68788, paras 70, 77 & 94)

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“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.

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***

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77. The duty of the court is to confine itself to the question of legality. Its concern should be:

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1. Whether a decision-making authority exceeded its powers?

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2. committed an error of law,

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3. committed a breach of the rules of natural justice,

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4. reached a decision which no reasonable tribunal would have reached or,

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5. abused its powers.

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Therefore, it is not for the court to determine whether a particular policy or particular decision taken in the fulfilment 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 vary 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:

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(i) Illegality : This means the decisionmaker must understand correctly the law that regulates his decision-making power and must give effect to it.

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(ii) Irrationality, namely, Wednesbury [Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn., (1948) 1 KB 223 (CA)] unreasonableness.

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(iii) Procedural impropriety.

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The above are only the broad grounds but it does not rule out addition of further grounds in course of time. As a matter of fact, in R. v. Secy. of State for the Home Deptt., ex p Brind [R. v. Secy. of State for the Home Deptt., ex p Brind, (1991) 1 AC 696 : (1991) 2 WLR 588 (HL)] , Lord Diplock refers specifically to one development, namely, the possible recognition of the principle of proportionality. In all these cases the test to be adopted is that the court should, ‘consider whether something has gone wrong of a nature and degree which requires its intervention’.

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94. The principles deducible from the above

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are:

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

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(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.

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(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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(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.

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(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 quasiadministrative sphere. However, the decision must not only be tested by the application of Wednesbury [Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn., (1948) 1 KB 223 (CA)] 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.

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(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.

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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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(emphasis in original)

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12. In Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd. [Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd., (2016) 16 SCC 818] , this Court held that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. It was held as under : (SCC p. 825, paras 13 & 15)

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“13. In other words, a mere disagreement with the decision-making process or the decision of the administrative authority is no reason for a constitutional court to interfere. The threshold of mala fides, intention to favour someone or arbitrariness, irrationality or perversity must be met before the constitutional court interferes with the decision-making process or the decision.

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15. We may add that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate its requirements and interpret its documents. The constitutional courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions. It is possible that the owner or employer of a project may give an interpretation to the tender documents that is not acceptable to the constitutional courts but that by itself is not a reason for interfering with the interpretation given.”

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13. This Court sounded a word of caution in another judgment reported as Silppi Constructions Contractors v. Union of India [Silppi Constructions Contractors v. Union of India, (2020) 16 SCC 489] , wherein it was held that the courts must realise their limitations and the havoc which needless interference in commercial matters could cause. In contracts involving technical issues, the courts should be even more reluctant because most of us in Judges' robes do not

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have the necessary expertise to adjudicate upon technical issues beyond our domain. As laid down in the judgments cited above, the courts should not use a magnifying glass while scanning the tenders and make every small mistake appear like a big blunder. In fact, the courts must give “fair play in the joints” to the government and public sector undertakings in matters of contract. The courts must also not interfere where such interference would cause unnecessary loss to the public exchequer. It was held as under: (SCC p. 501, paras 1920)

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“19. This Court being the guardian of fundamental rights is duty-bound to interfere when there is arbitrariness, irrationality, mala fides and bias. However, this Court in all the aforesaid decisions has cautioned time and again that courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters. This Court is normally loathe to interfere in contractual matters unless a clear-cut case of arbitrariness or mala fides or bias or irrationality is made out. One must remember that today many public sector undertakings compete with the private industry. The contracts entered into between private parties are not subject to scrutiny under writ jurisdiction. No doubt, the bodies which are State within the meaning of Article 12 of the Constitution are bound to act fairly and are amenable to the writ jurisdiction of superior courts, but this discretionary power must be exercised with a great deal of restraint and caution. The courts must realise their limitations and the havoc which needless interference in commercial matters can cause. In contracts involving technical issues the courts should be even more reluctant because most of us in Judges' robes do not have the necessary expertise to adjudicate upon technical issues beyond our domain. As laid down in the judgments cited above the courts should not use a magnifying glass while scanning the tenders and make every

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small mistake appear like a big blunder. In fact, the courts must give “fair play in the joints” to the government and public sector undertakings in matters of contract. Courts must also not interfere where such interference will cause unnecessary loss to the public exchequer.

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20. The essence of the law laid down in the judgments referred to above is the exercise of restraint and caution; the need for overwhelming public interest to justify judicial intervention in matters of contract involving the State instrumentalities; the courts should give way to the opinion of the experts unless the decision is totally arbitrary or unreasonable; the court does not sit like a court of appeal over the appropriate authority; the court must realise that the authority floating the tender is the best judge of its requirements and, therefore, the court's interference should be minimal. The authority which floats the contract or tender, and has authored the tender documents is the best judge as to how the documents have to be interpreted. If two interpretations are possible then the interpretation of the author must be accepted. The courts will only interfere to prevent arbitrariness, irrationality, bias, mala fides or perversity. With this approach in mind, we shall deal with the present case.”

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(emphasis supplied)

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14. In National High Speed Rail Corpn. Ltd. v. Montecarlo Ltd. [National High Speed Rail Corpn. Ltd. v. Montecarlo Ltd., (2022) 6 SCC 401] , this Court sounded a word of caution while entertaining the writ petition and/or granting stay which ultimately may delay the execution of the mega projects. It was held as under : (SCC para 48)

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“48. Even while entertaining the writ petition and/or granting the stay which ultimately may delay the execution of the Mega projects, it must be remembered that it may seriously

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impede the execution of the projects of public importance and disables the State and/or its agencies/instrumentalities from discharging the constitutional and legal obligation towards the citizens. Therefore, the High Courts should be extremely careful and circumspect in exercise of its discretion while entertaining such petitions and/or while granting stay in such matters. Even in a case where the High Court is of the prima facie opinion that the decision is as such perverse and/or arbitrary and/or suffers from mala fides and/or favouritism, while entertaining such writ petition and/or pass any appropriate interim order, High Court may put to the writ petitioner's notice that in case the petitioner loses and there is a delay in execution of the project due to such proceedings initiated by him/it, he/they may be saddled with the damages caused for delay in execution of such projects, which may be due to such frivolous litigations initiated by him/it. With these words of caution and advise, we rest the matter there and leave it to the wisdom of the Court(s) concerned, which ultimately may look to the larger public interest and the national interest involved.”

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15. In Uflex Ltd. v. State of T.N. [Uflex Ltd. v. State of T.N., (2022) 1 SCC 165] , this Court stated that the enlarged role of the Government in economic activity and its corresponding ability to give economic “largesse” was the bedrock of creating what is commonly called the “tender jurisdiction”. The objective was to have greater transparency and the consequent right of an aggrieved party to invoke the jurisdiction of the High Court under Article 226 of the Constitution of India beyond the issue of strict enforcement of contractual rights under the civil jurisdiction. However, the ground reality today is that almost no tender remains unchallenged. Unsuccessful parties or parties not even participating in the tender seek to invoke the jurisdiction of the High Court under Article 226 of the Constitution. The

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Court held as under: (SCC pp. 173-74 & 189-90, paras 2-3 & 42)

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“2. The judicial review of such contractual matters has its own limitations. It is in this context of judicial review of administrative actions that this Court has opined that it is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. The purpose is to check whether the choice of decision is made lawfully and not to check whether the choice of decision is sound. In evaluating tenders and awarding contracts, the parties are to be governed by principles of commercial prudence. To that extent, principles of equity and natural justice have to stay at a distance. [Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517]

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3. We cannot lose sight of the fact that a tenderer or contractor with a grievance can always seek damages in a civil court and thus, ‘attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted’. [Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517]

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***

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42. We must begin by noticing that we are examining the case, as already stated above, on the parameters discussed at the inception. In commercial tender matters there is obviously an aspect of commercial competitiveness. For every succeeding party who gets a tender there may be a couple or more parties who are not awarded the tender as there can be only one L-1. The question is should the judicial process be resorted to for downplaying the freedom which a tendering party has, merely because it is a State or a public authority, making the said process even more cumbersome. We have already noted that element of transparency is always required in

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such tenders because of the nature of economic activity carried on by the State, but the contours under which they are to be examined are restricted as set out in Tata Cellular [Tata Cellular v. Union of India, (1994) 6 SCC 651] and other cases. The objective is not to make the Court an appellate authority for scrutinising as to whom the tender should be awarded. Economics must be permitted to play its role for which the tendering authority knows best as to what is suited in terms of technology and price for them.”

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(emphasis supplied)

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16. In Galaxy Transport Agencies v. New J.K. Roadways [Galaxy Transport Agencies v. New J.K. Roadways, (2021) 16 SCC 808 : 2020 SCC OnLine SC 1035] , a three-Judge Bench again reiterated that the authority that authors the tender document is the best person to understand and appreciate its requirements, and thus, its interpretation should not be secondguessed by a court in judicial review proceedings. It was observed as thus : (SCC paras 17-18 & 20)

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“17. In accordance with these judgments and noting that the interpretation of the tendering authority in this case cannot be said to be a perverse one, the Division Bench [New JK Roadways v. UT of J&K, 2020 SCC OnLine J&K 733] ought not to have interfered with it by giving its own interpretation and not giving proper credence to the word “both” appearing in Condition No. 31 of the NIT. For this reason, the Division Bench's conclusion that JK Roadways was wrongly declared to be ineligible, is set aside.

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18. Insofar as Condition No. 27 of the NIT prescribing work experience of at least 5 years of not less than the value of Rs 2 crores is concerned, suffice it to say that the expert body, being the Tender Opening Committee, consisting of four members, clearly found that this eligibility condition had been satisfied by the Appellant before us. Without therefore going into the

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assessment of the documents that have been supplied to this Court, it is well settled that unless arbitrariness or mala fide on the part of the tendering authority is alleged, the expert evaluation of a particular tender, particularly when it comes to technical evaluation, is not to be second-guessed by a writ court. Thus, in Jagdish Mandal v. State of Orissa [Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517] , this Court noted : (SCC pp. 531-32, para 22)

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‘22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made “lawfully” and not to check whether choice or decision is “sound”. When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial

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review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions:

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(i) Whether the process adopted or decision made by the authority is mala fide or intended to favour someone;

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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’;

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(ii) Whether public interest is affected.

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If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.’

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***

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20. This being the case, we are unable to fathom how the Division Bench, on its own appraisal, arrived at the conclusion that the Appellant held work experience of only 1 year, substituting the appraisal of the expert fourmember Tender Opening Committee with its own.”

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(emphasis supplied)

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17. Therefore, the position of law with regard to the interpretation of terms of the contract is that the question as to whether a term of the contract is essential or not is to be viewed from the perspective of the employer and by the employer. Applying the aforesaid position of law to the present case, it has been the contention of Respondent 1 that the format for bank guarantee was not followed strictly by the State and that the relaxation given was not uniform, in that Respondent 1 was singled out. The said contention has found favour with the courts below.

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… … … …

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21. Since the construction of road is an infrastructure project and keeping in view the intent of the legislature that infrastructure projects should not be stayed, the High Court would have been well advised to hold its hand to stay the construction of the infrastructure project. Such provision should be kept in view even by the writ court while exercising its jurisdiction under Article 226 of the Constitution of India.

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22. The satisfaction whether a bidder satisfies the tender condition is primarily upon the authority inviting the bids. Such authority is aware of expectations from the tenderers while evaluating the consequences of nonperformance. In the tender in question, there were 15 bidders. Bids of 13 tenderers were found to be unresponsive i.e. not satisfying the tender conditions. The writ petitioner was one of them. It is not the case of the writ petitioner that action of the Technical Evaluation Committee was actuated by extraneous considerations or was mala fide. Therefore, on the same set of facts, different conclusions can be arrived at in a bona fide manner by the Technical Evaluation Committee. Since the view of the Technical Evaluation Committee was not to the liking of the writ petitioner, such decision does not warrant for interference in a grant of contract to a successful bidder.

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23. In view of the above judgments of this Court, the writ court should refrain itself from imposing its decision over the decision of the employer as to whether or not to accept the bid of a tenderer. The Court does not have the expertise to examine the terms and conditions of the present day economic activities of the State and this limitation should be kept in view. Courts should be even more reluctant in interfering with contracts involving technical issues as there is a requirement of the necessary expertise to adjudicate upon such issues. The approach of the Court should be not to find fault with magnifying glass in its hands, rather the Court should examine as to whether the decision-making process is after complying with the procedure contemplated by the tender conditions. If the Court finds that there is total arbitrariness or that the tender has been granted in a mala fide manner, still the Court should refrain from interfering in the grant of tender but instead relegate the parties to seek damages for the wrongful exclusion rather than to injunct the execution of the contract. The injunction or interference in the tender leads to additional costs on the State and is also against public interest. Therefore, the State and its citizens suffer twice, firstly by paying escalation costs and secondly, by being deprived of the infrastructure for which the present day Governments are expected to work.

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… … … …

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26. A word of caution ought to be mentioned herein that any contract of public service should not be interfered with lightly and in any case, there should not be any interim order derailing the entire process of the services meant for larger public good. The grant of interim injunction by the learned Single Bench of the High Court has helped no one except a contractor who lost a contract bid and has only caused loss to the State with no corresponding gain to anyone.”

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(Emphasis supplied)

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In the light of the judgments rendered by the Apex

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Court as afore-quoted, I do not find the action of award of the contract to the 3^rd respondent being shrouded with either arbitrariness or illegality. In view of the aforesaid reasons, I do not find any warrant to interfere with the order passed by the

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2^nd respondent in awarding the contract to the 3^rd respondent.

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The Writ Petition lacking in merit is dismissed.

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Sd/JUDGE

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BKP List No.: 1 Sl No.: 52

Mr. B S Rajashekar v. State of Karnataka

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Mr. B S Rajashekar v. State of Karnataka

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