ORDER
Rajendra Menon, J.
1. Petitioner by this petition, has called in question the order (Annexure P-1), issued by the Executive Engineer, Rajghat Canal Division No. 2, Orchha, by which, the acceptance of tender submitted by the petitioner, has been cancelled and the security amount has been forfeited.
2. Petitioner contractor, doing work on contract basis, submitted its tender in pursuance to tender notice dated 24-2-2001, for the purpose of construction of earth work and other works in Rajghat Canal Project. The tender notice is filed as Annexure R-1. According to the aforesaid notice, registered contractors were entitled to submit their tender. It is the case of petitioner that in pursuance to the aforesaid, he had submitted his tender, his tender being the lowest, was accepted and in fact, acceptance of tender was communicated to the petitioner vide letter dated 18-5-2001 (Annexure P-7). The petitioner was called for the purpose of executing the agreement within 7 days. It is the case of petitioner that he submitted all the requisite documents vide Annexure P-8. The petitioner had also got himself registered as a Class A-4 contractor with the department vide Annexure P-9 on 8-5-2001, however, by the impugned order (Annexure P-1), received by the petitioner on 31-5-2001, the tender of petitioner has been cancelled and the security has been forfeited without giving any opportunity of hearing.
3. It is the case of petitioner that his tender was properly accepted and vide Annexure P-10, itself the department circulated with regard to the award of contract and tender. The condition is that the contractor has to get himself registered before execution of agreement. It is submitted by the petitioner that it was only on 18-5-2001, vide Annexure P-7, that he was called for executing the agreement and before that date, i.e., on 8-5-2001, he had obtained necessary registration vide Annexure P-9. That being so, it is contended by him that cancellation of the tender by the impugned order, is arbitrary and illegal and forfeiture of security amount is also unjustified and unwarranted.
4. The respondents have filed return and it is contended that the tender of petitioner was rightly rejected. It is put forth by the respondents that vide Annexure P-3, dated 7-3-2001, the petitioner was issued tender document and Clause 1 of the said letter clearly stipulates that permission is granted to the petitioner to purchase the tender document and it was incumbent upon the petitioner to get itself registered with the department in the appropriate class within 30 days of submission of tender or before acceptance of the tender whichever is early. It is the case of respondents that the petitioner participated in the tender proceedings in pursuance to the aforesaid condition as stipulated vide Annexure P-3, dated 7-3-2001, and his tender was accepted on 1-5-2001, vide Annexure R-2. Acceptance of tender was on 1-5-2001 and this was only
intimated to the petitioner on 18-5-2001 vide Annexure R-2. Accordingly to the respondents, as the petitioner got himself registered, only on 8-5-2001, for which the application was submitted by him on 28-4-2001. That being so, his tender was cancelled, in accordance with the terms and conditions as stipulated vide Annexure P-3. It is the case of respondents that the petitioner cannot have any grievance as he failed to get himself registered in the appropriate class. The petitioner after having obtained tender documents and after having submitted the same, did not get himself registered before acceptance of the tender. It is put forth by respondents that the decision is reasonable and in accordance with the terms and condition of the tender and stipulation indicated in Annexure P-3 and accepted by the petitioner. That being, so, it is argued that no case warranting interference is made out.
5. Shri R.D. Jain, learned Sr. Counsel along with Shri V.K. Bhardwaj appearing for the petitioner, relying upon the judgment of Supreme Court in the case of Tata Cellular v. Union of India, reported in (1994) 6 SCC 651, contended that the decision of respondents, is arbitrary and exercise of power for cancellation has been done in arbitrary manner. That being so, the entire action is liable to be quashed. Placing reliance on the aforesaid judgment, itself put forth by them that when power for issuance and cancellation of tender is made in a arbitrary manner. The petitioner who has quoted the lowest price, have been denied the benefit, this Court can intervene in the matter and grant relief to the petitioner. It is also submitted that registration was required only before execution of the agreement and that having been done, the order is illegal.
6. I have heard Counsel for the parties. Scope of judicial review in connection with awarding the contracts and distribution of states largeness stands concluded by series of judgments rendered by Supreme Court in various cases. It is now a settled principle that judicial review in exercise of power with regard to contractual matters by Govt. bodies is only permissible if the action impugned is arbitrary in nature or indicates favoritism being done to a particular individual or firm. The Govt. is free to exercise its power of awarding contracts keeping in view the aforesaid principle and refusing to accept the lowest tender is permissible provided that the same is not hit by principles laid down in various cases.
7. The matter was considered in the case of Tata Cellular (supra) which is relied upon by the Counsel for the petitioner and in the said case, after considering the series of judgment on the question, the principles to be followed, in such cases, is laid down by the Supreme Court in Para 94 of the judgment as under:–
“The principles deducible from the above are :-
(1)
The modern trend points to judicial restrain 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 malafides;
(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.
Subsequently, aforesaid judgment was followed in the case of Air India Ltd. Vs. Cochin International Airport Ltd., reported in (2000) 2 SCC 617, and in the said case also, it has been held that 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 paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. Price and the lowest price need not be sole criterion in awarding such contracts. Even when some defect is found in the decision making process, Court’s should exercise its discretionary power under Article 226 of the Constitution of India with great caution and should exercise it only in furtherance of public interest and not merely on the making of legal point. This is the principle laid down in the aforesaid case. Similar views have been expressed again by the Supreme Court in the case of Centre for Public Interest Litigation and Anr. Vs. Union of India, reported in (2000) 8 SCC 606, and the scope of judicial review in such matters was considered in the said case. Subsequently, again in the case of West Bengal State Electricity Board v. Patel Engineering Co., reported in (2001) 2 SCC 451, this question was again considered and it has been held that there is no obligation to award contract to the lowest tender. Judicial review in such matter is very limited and it has been held that Courts can interfere in the matter only if the decision is arbitrary or unreasonable. The action of respondents in the present case is to be viewed in the light of principles laid down in the aforementioned cases.
8. A perusal of the impugned order (Annexure P-1), indicates that the petitioner’s tender was cancelled because of non-fulfilment of the conditions stipulated in the letter (Annexure P-3), dated 7-3-2001, and the conditions F.B. 2 as contained in the tender document. Admittedly, when the tender documents were issued to the petitioner, a condition was imposed on him and it was stipulated in Annexure P-3, dated 9-3-2001, that he would get himself registered in the appropriate class at least 30 days before submission of the tender by him or he should be registered before his tender is accepted whichever is earlier. The registration certificate (Annexure P-9), issued to the petitioner indicates that the petitioner moved an application for registration on 27-4-2001 and after completing the procedure, he was registered on 8-5-2001, whereas, he had participated in the tender proceeding on 25-4-2001 itself, the petitioner came to know that his tender was lowest and it is only two days thereafter, that he moved application on 27-4-2001 for getting himself registered. If the petitioner was interested in getting himself registered, he should have registered himself immediately. It seems that the petitioner was watching the position and it was only on 25-4-2001, when he came to know that his tender is lowest, he moved application for registration. In the meanwhile, the ‘tender was accepted vide Annexure R-2, on 1-5-2001 and on this date, the petitioner was not registered contractor in the appropriate class. That, being so, he did not fulfil the requisite condition, necessary for being eligible to participate in the proceedings. Even in the letter of acceptance Annexure R-2, dated 1-5-2001, it has been clearly stipulated that before executing the agreement, it would have to be established that the petitioner had got himself registered in the appropriate category.
9. From the aforesaid narration of fact, it is clear that the petitioner did not get himself registered before acceptance of his tender and that was the reason why the respondents have cancelled the tender. Cancellation of tender in the facts and circumstances of the present case, is clearly as per the terms and conditions stipulated in the tender document and the letters issued to the petitioner vide Annexure P-3, and if the said conditions were not fulfilled by the petitioner, it cannot be said that the respondents have acted unreasonably
or with prejudice. It is his contention that registration was only necessary before execution of agreement. I am afraid, the aforesaid contention cannot be accepted. The condition stipulated in Annexure P-3, clearly indicates that the tender documents are being issued to the petitioner on the conditions contained therein. That being so, it was incumbent upon the petitioner to get himself registered within the stipulated period. Getting himself registered was a pre-condition for acceptance of the tender. It was incumbent upon the petitioner to get the registration before his tender was accepted. The records indicate that the tender was accepted on 1-5-2001, and then the petitioner obtained registration only on 8-5-2001, i.e., after acceptance of the tender. That being so, it is clear that the petitioner failed to comply with the condition which were communicated and accepted by the petitioner on 7-3-2001 Annexure P-3. The contention of the petitioner that he could get registration before execution of the agreement, is not correct, the stipulation and conditions on the basis of which the tender documents were issued, to the petitioner, and which were binding on him clearly shows that registration in the appropriate class was a condition precedent for acceptance/submission of tender. Circulars and letters vide Annexures P-10, P-12, which are general in nature, cannot be applicable in the present case in the light of the specific stipulation in this particular case which is binding on the petitioner.
10. During the course of hearing, learned Counsel for the petitioner placing reliance on the documents Annexures P-11, P-12, submitted that in some cases, registration was permitted even after acceptance of the tender, the correct facts and the terms and conditions in this case, are not available on record. That apart, the petitioner cannot take advantage of the aforesaid case, because of the clear cut stipulation and conditions imposed, in the case of the petitioner vide Annexure P-3, petitioner has to make out his own case on the basis of the conditions applicable to him.
11. Considering the totality of the facts and circumstances of the present case and action of the State viewed in the light of the above, cannot be said to be arbitrary, illegal, malafide or unreasonable warranting interference by this Court. The administrative action taken against the petitioner is beyond the scope of judicial review or the action is as per the terms and conditions on the basis of which the petitioner was permitted to participate in the tender proceedings. The petitioner having accepted the same, cannot run away and make a complaint when the respondents are only taking action in accordance with the agreement.
12. Cancellation of tender of the petitioner in the present case, is in accordance with the conditions stipulated and that being so, no case of the category as indicated in the judgments referred hereinabove, is made out by the petitioner warranting interference by this Court.
13. This is a simple case where the respondent State has refused to enter into the contract with the petitioner because of his inability to fulfil conditions stipulated by the State Govt. That being so, the decision is neither arbitrary nor unreasonable. Administrative decision taken by the State Govt. in the facts and circumstances of the present case, in the light of the well settled legal principles that emerges from the judgments referred to hereinabove indicates that no case for interference in the matter is made out. In fact, the ground and principles laid down in the judgments, wherein, judicial review is permissible, is not made out.
14. Accordingly, petition is dismissed. The parties to bear their own costs.