JUDGMENT
B.R. Gavai, J.
1. By way of present petition the petitioner has prayed for a writ, Order or direction to the State Government to refund the amount of Rs. 30.30 lacs to the petitioner on account of the shortfall in the extracted bamboo vis-a-vis the estimated notional tonnage specified in the tender notice. Petitioner has also prayed for quashing and setting aside the letter – Annexure E by which the respondents have rejected the claim of the petitioner, for refund of the said amount.
2. Though the petitioner has prayed for order directing refund, during the arguments advanced before us the learned counsel for the petitioner has basically challenged the validity of the condition in the tender notice which provides that in case the actual yield is less than the estimated yield, the purchaser will not be entitled to any refund due to loss in yield. Facts giving rise to the filing of the present petition, in brief, are as Under : That vide notice dated 11th January, 1989 the respondent No. 3 invited tenders for sale of Flowered Bamboos and Nistar Felling Series Bamboos in Central Chanda Forest Division, Sironcha Division and Bhamragarh Forest Division. The said tender notice was published on 18th January, 1989. According to the said notice the last date for submission of the tenders was 31st January, 1989. In pursuance of the tender notice the petitioner submitted his tender bid and offered a price of Rs. 913/- per notional ton. It is pertinent to note that, the tender notice itself was invited for notional yield (approximately) and it was also provided in the tender notice that the highest bidder will have to deposit in advance the total amount worked out by multiplying the notional yield into the offer price so also the Sales Tax and the Forest Development Tax on the said Yield.
3. It is undisputed that the petitioner was the highest bidder for the units in question. The petitioner accordingly paid the amount of Rs. 1,11,25,746/- for the notional yield of 10.784 tons. After the Bamboos were fell and lifted by the petitioner it was noticed that out of 4 units, there was a surplus of 122.385 tons in Detachali unit. However, it was noticed that there was a shortfall of 2842.990 tons in Jamalgatta unit of 39.325 tons in Sironcha unit and shortfall of 54.43 tons in Asarali unit. Thus, deducting the surplus in Detachali unit there was shortage of total 2936.745 tons in respect of the aforesaid four units. The petitioner therefore addressed a communication dated 10-5-1990, to respondent No. 3, thereby seeking refund of the amount towards the aforesaid shortfall in the actual yield of bamboo. However, the respondent No. 3 rejected the said claim of the petitioner on the ground that under the tender terms and conditions, the petitioner was not entitled for the refund on account of shortfall in the quantities given in the Schedule ‘A’. It was also the ground for rejection that the intending tenderers were advised to inspect on the spot the bamboo units and satisfy themselves regarding the estimated yield in the area concerned. Petitioner addressed further communication for reconsideration of the decision. However, since there was no response from the respondents, petitioner approached this Court by way of the present petition.
4. We have heard Smt. Naik, learned counsel appearing on behalf of the petitioner and Shri M. P. Badar, learned Special Counsel appearing on behalf of respondents.
5. Smt. Naik, the learned counsel for the petitioner submitted that, the condition on the basis of which the petitioner has been refused the refund of the amount towards shortfall, was inserted for the first time in the tender in question. She submitted that, the petitioner was engaged in the business of manufacturing paper mill, which required bamboo in bulk. She submitted that, though the tenders were issued for various earlier years, no condition of the sort which was inserted in the tender in question was provided for. She submitted that the said condition was inserted for the first time.
6. Smt. Naik, the learned counsel for the petitioner submitted that, the tender notice uses the word ‘approximate quantity of material’. The word ‘approximate’ would mean ‘nearly’ but not ‘exactly’, ‘accurate’ or ‘complete’, ‘very similar’ or ‘almost equal’. Relying on the judgment of Kings Bench in the case of Bellotti v. Chequers Developments Limited reported in Volume I – All England Law Reports Annotated Page 90, she submitted that in the said case the Kings Bench found that even 40 feet would not be approximate 36 feet. In the aforesaid case the Kings Bench observed that 36 feet could be understood to be approximately 35 feet. The learned counsel also relied on the judgment of Allahabad High Court in the case of Om Prakash v. Maya Ram and Ors., .
7. Smt. Naik further submitted that the condition which provides that in case the actual yield is more than estimated yield, the royalty and the taxes, such as Forest Development Tax, Sales Tax at the prevailing rate is required to be paid by the tenderer when such additional quantity is cut, but in case the actual yield is less than the estimated yield the purchasers will not be entitled to any refund due to loss in yield, is totally unconscionable and arbitrary and against public policy. She submits that the said condition cuts it both ways, inasmuch as if the yield is in excess than the contractor is required to pay additional amount towards excess quantity than the notional quantity provided in the notice. However, if the yield is less than the one notified in the said tender notice, the contractor is prohibited from getting the refund of the shortfall than the notional quantity published in the tender notice. She submits that if the tender notice provided that there cannot be any refund for any shortfall, then there could not be a condition which require a tenderer to pay amount towards the additional quantity than the notional quantity notified in the tender notice. She submits that on one hand the petitioner has been required to pay for the additional tonnage in Detachali unit, and on the other hand in the three other unit the petitioner has been denied the amount of refund due to shortfall of the bamboo than the notional tonnage notified in the tender notice. She submits that the petitioner required Bamboo for the Paper Mill and since the State was the sole supplier, the petitioner had no other option than to accept the condition in the tender notice. However, she submits that since the said condition was totally unconscionable and against public policy, the same was liable to be struck down by this Court. As a consequence thereof she submits that the petitioner is entitled to get refund of the amount on account of shortfall of bamboos than the one provided in the tender notice.
8. Smt. Naik, strongly relied on the judgment of the Apex Court in the case of Central Inland Water Transport Corporation Limited and Anr. v. Brojo Nath Ganguly and Anr., , in support of the proposition that when the contract is not between two equal parties and when a party like the petitioner is not in a position of bargaining with the party like the respondent – State, this Court would be justified in invoking its extraordinary jurisdiction Under Article 226 to strike down the condition in the contract. She also relies on this judgment in support of preposition that when the contracts are tainted with illegality and they contain certain terms and conditions which are so unfair and unreasonable that they shock conscience of the Court and that they are opposed to public policy, such tenders are required to be adjudged void.
9. Smt. Naik further relied on the judgment of Apex Court in the case of LIC of India and Anr. v. Consumer Education and Research Centre and Ors. in support of the preposition that an unfair and untenable or irrational clause in contract, is also amenable to judicial review. Seeking reliance from the said judgment, she submits that the State Government was the sole party which drafted the contract and the petitioner had no role to play in drafting the contract and as such had no option but to sign the said contract. She therefore, submits that taking into consideration the relative bargaining power of the contracting parties, petitioner could not be bound by the said condition and the said condition was liable to be declared void. She also relies on the judgment of the Apex Court , Kumari Shrilekha Vidyarthi v. State of U.P. in support of the preposition that each and every action of the State must be guided by fairness and reasonableness. She submits that if any of the condition in the contract is void, unconscionable or arbitrary or against public policy the same cannot be used against a party who had no option but to enter into contract.
10. Smt. Naik further relies on the judgment of the Apex Court in ABL International Ltd. and Anr. v. Export Credit Guarantee Corporation of India Ltd. and Ors. . The Apex Court in the said case has held that even when there are disputed questions of fact in contractual matters, this Court in proper cases would exercise its jurisdiction under Article 226 and will not relegate the party to a normal remedy of a civil suit. Relying on the said judgment she submits that in the appropriate cases writ petition as against the state or an instrumentality of the State arising out of the contract is also maintainable. She seeks support from the observations of the Apex Court in the aforesaid case that when an instrumentality of the State acts contrary to the public good and appear unjustly, unfairly, and unreasonably in its contractual or statutory obligation, the action of the State is liable to be set aside.
11. Smt. Naik further submits that the tender in question enabled the State Government to recover Sales Tax, Forest Development Tax, on the goods which were not yet sold. She submitted that the incidence of levy of Sales Tax so also Forest Development Tax was on ‘sale’ and as such the recovery of Sales Tax as well as Forest Development Tax on unsold goods was illegal.
12. Shri Badar, learned counsel for the respondents submitted that the present petition was not tenable, inasmuch as, in view of Clause 48 in the tender notice and 14 in the agreement, there was an alternate remedy available to the petitioner to approach the Chief Conservator of Forest (Production) for redressal of petitioner’s grievances.
13. Shri Badar, further submitted, that in the petition the petitioner had made averments, that the area in question was not accessible and as such the petitioner could not inspect the area. He submitted, that the respondents have disputed this position and have stated in the return, that a wide network of forest roads was available in the area. He further submitted that it was also specifically stated in the return, that the petitioner had experts in the forestry work who are employed for inspecting and assessing the quantity. He therefore, submitted that the contention of the petitioner, that the area could not be inspected was factually incorrect. He therefore, submitted, that in view of the disputed question of facts, this Court ought not to have entertained the present petition, Under Article 226 of the Constitution of India.
14. Shri Badar, further submitted that the condition in question was made aware to all the intending bidders in the tender notice. He submitted that the words in the tender notice, made it amply clear that the quantity shown in the tender notice was only approximate and that intending purchasers were advised to assess and satisfy themselves regarding yield, area and quantity before submitting the bids. He submitted that the petitioner knowing very well the condition, had submitted its bid. He further submitted that not only did the petitioner submit its bid, but also entered into an agreement and executed the contract with the respondents. He submitted that the ‘said condition, was also specifically included in the agreement and as such the petitioners could not be heard to say after execution of the contract, that the said condition was illegal.
15. He further submitted that the present transaction was a purely commercial transaction and that there was no public element in the contract in question and as such this Court in its jurisdiction Under Article 226 would .not interfere with the contractual obligation between the parties. Shri Badar relied on the judgment of the Apex Court in the case of Har Shankar and Ors. v. Deputy Excise and Taxation Commissioner and Ors. and the case of Raunaq International Limited v. I. V. R. Construction Limited and Ors. and the judgment of Division Bench of this Court in the case of Pratap B. Nalage v. State of Maharashtra and Ors. reported in 2001(2) Mh. L. J. Page 682.
16. Having considered the rival submissions, made on behalf of the parties, we are not inclined to accept the submission of learned counsel for the respondent, regarding tenability of the petition on the ground of alternate remedy. The petition has been filed way back in the year 1999 (sic 1991) and also admitted in the same year. The petitioner having waited in the corridors of justice for more than 15 long years, cannot be non-suited on the technical ground. We therefore, reject the contention of the respondents that the present petition is not tenable on the ground of availability of alternate remedy and non-exhaustion of the same.
17. For considering the contentions of the parties on merits, it will be necessary to refer to certain clauses in the tender notice, as well as in the agreement between the parties. Clause 1 and 2 of the Tender notice dated 11-1-1989 reads thus :
“1. The Yield figures given above are only estimated and approximate and just for information.
2. The intending purchasers are adviced to access and satisfy themselves regarding the yield, area and quantity before filling the tenders and offer rate per Notional Tonnee (N. T.)
The main condition which has been impugned in the present petition and which is the subject matter for consideration in the present petition reads thus :
“The details mentioned in SCHEDULE-A are based on the estimates of quantities and area but are subject to availability. The Conservator of Forest, South Chandrapur Circle, reserves the right to make any change in the particulars of quantities, area and number of coupes by putting such change on the Notice Board of his office till the date prior to the date offender and the same shall be binding on the tenderer. However, the intending Tenderer are adviced to inspect, on the spot, the Bamboos Units and satisfy themselves regarding the’ estimated yield and the Bamboo Unit area. No claim shall lie against the State Government for compensation or any other relief, if the details of the quantities or/and area are subsequently found to be incorrect or the shortfalls, if any, in the quantifies given in the SCHEDULE-A appended herewith, shall NOT be made good from any other area. ”
The condition regarding payment and non-refund reads thus :
“Royalty at the sanctioned tender rate and the taxes such as Sales Tax and Forest Development Tax, Income Tax etc. as per prevalent rates shall be payable in instalments, in advance, as indicated under Tender Condition No. 11 for an estimated quantity of bamboo. In case of the actual yield is more than the estimated yield, the royalty at the sanctioned Rate and taxes such as Sales Tax and Forest Development Tax. Income Tax etc, at the prevailing rates shall be paid by the tenderer as and when such additional quantity is cut in the forests. However, in case the actual yield is less than the estimated yield, the purchaser will not be entitled to any refund due to loss yield.”
Condition No. 38(iv) reads thus :
“38(iv) At the end of the contract period, final accounting will be done on the basis of actual notional tonne. If the actual yield of bamboo from the Bamboo Unit is more than the estimated yield given in SCHEDULE’ “A” the Contractor shall be liable for additional payment at the tendered rate along with the taxes for such excess quantity. In addition to the quantities availed of by the Contractor as above, he shall also be liable for payment of price of following types of bamboo :
a) Bamboo cut but NOT removed. b) Felled bamboos burnt in fire or damages in any way. c) Bamboos available according to condition No. 25 include those bamboos which are available in excess of the estimated yield but NOT felled by the contractor. NOTE :-- Unavailed yield would be estimated on the basis of the actual yield per hectare that has been harvested in the concerned unit or that estimated per Hectare (according to SCHEDULE "A") whichever is higher." Condition No. 39 reads thus: "39(i) If the actual yield is less than the estimated quantity mentioned in SCHEDULE "A". The contractor shall NOT be entitled for any refund of amount for such deficit quantity. (ii) In No case the deficit in the quantity shall be made good from any other areas." Condition No. 42 Reads thus : "42. The conditions given herein shall be deemed to be part of the Agreement. Some of the conditions which have NOT been mentioned in the Tender Sale Notice are mentioned in the Agreement. The draft of the Agreement is available for inspection in the office of the concerned Deputy Conservator of Forest/Divisional Forest Officer, and the Conservator of Forests, South Chandrapur Circle. The prospective Tenderers are advised to go through those conditions during office hours on any working day. " Condition No. 49 reads thus : "It shall be presumed that a, Tenderer has offered his tender after completely accepting, without any reservations, the conditions hereinbefore contained any additional conditions appearing in the Agreement. It shall also be presumed that the Contractor has gone through all the provisions of the Indian Forest Act. 1927 as may be relevant in this respect. " Condition No. 1 of the agreement entered between the petitioner and respondents reads thus :
“1. Unless this Agreement is terminated earlier Under the provisions of Clause (41) hereof, the Government shall sell to the purchaser and the purchaser shall purchase from the Government at the price of Rs. 913.00 (Rupees Nine hundred Thirteen) only per Notional Tonne and on the terms and conditions hereinafter appearing, the said Flowered Bamboos at present standing in the said Forest Areas which are estimated by the Government to the 5612 Notional Tonnes. However, that if the quantity of the said Flowered Bamboos now standing in the said Forest Areas exceeds the aforesaid estimated quantity of Notional Tonnes then the purchaser shall have to purchase and pay for such excess quantity at the said price hereinabove mentioned which excess quantity, be determined by DYCF and whose decision in the matter shall be final and binding on the purchaser provided further that if the quantity of the said Flowered Bamboos falls short of the aforesaid estimated quantity of 5612 Notional Tonnes then the purchaser shall not be entitled to ask and call upon the Government to supply to the purchaser and the Government shall not be liable to supply to the purchaser the quantity of the Flowered bamboos which may fall short of the estimated quantity and the purchaser shall also not be entitled to any compensation therefor.” (the underlining is by us)
18. Though the earlier conservative view as laid down by the Apex Court in various pronouncements was of non-interference in contractual matters between the State or its instrumentality on one hand and the citizens or the private parties on the other hand, law has undergone a sea change. The pragmatic approach, taking into consideration the fact that due to welfare activities State is required to indulge into various activities and that the dealings of the State with the private persons have increased to large extent, requires every action of the State to be guided by reason, justice, fair play, equity and good conscience. Though the earlier view of the Apex Court was that the mandate of Article 14 was applicable only at the stage of entering into contract by the State Government with the private parties, the law now requires that even after entering into contracts, the action of the State must be found to be conforming to reasonableness and further requires that the State should not act arbitrarily or mala fidely.
19. However, whether the action of the State is violative of the mandate of Article 14 or not will depend upon the circumstances of each case and differ from one fact situation to another. No straight jacket formula could be involved to determine as to in what circumstances the action is violative of Article 14 of the Constitution of India or not. In the present case the main thrust of arguments on behalf of the petitioner, is on the condition in the tender notice, as well as in the agreement, which provides that in case of a shortfall of bamboo yield than the quantity which is specified in the tender notice (notional yield), the tenderer would not be entitled to refund of the amount towards the shortfall. It is the contention of the petitioner that the said condition is unjust, unconscionable and contrary to public policy. It is needless to state nor is it disputed that the petitioners were aware of this condition at the stage of submitting their bid and also at the subsequent stage of the entering into contract.
20. The contention of the learned counsel for the petitioner is that the petitioner had no other option but to accept the said condition and enter into agreement and as such even though the petitioner had submitted its bid and entered into agreement, since the petitioner had no bargaining power, said condition which is unconscionable and against the public policy cannot be operated against the petitioner. The learned counsel in support of this preposition has relied on the judgment of the Central Inland Water Transport Corporation (cited supra), Shrilekha Vidyarthi (cited supra) and in the case of L/C of India (cited supra) and ABL, International Limited (cited supra).
21. In the case of Central Inland Water Transport Corporation, the Central Inland Water Transport Corporation which admittedly is an instrumentality of State had imposed a condition in the statutory rules which governed the service conditions of its employees, thereby enabling it to terminate the services of a permanent employee with one month’s notice or salary for one month in lieu thereof. The Apex Court found that such a condition was violative of the mandate of Article 14, as it entrusted uncanalised unguided and arbitrary power in the instrumentality of the State to act as per its whims and fancies to terminate the services of an employee by either giving one month’s notice or in lieu thereof paying salary for one month. The Apex Court found that the employees who were in the employment, had no other option but to enter into such a contract, as the consequence of non-signing of such contract would entail in termination of his services. Admittedly, in the said case the employees had no bargaining powers as against its employer. The Apex Court therefore, held that such a condition which violated the mandate of Article 14 of the Constitution of India cannot be held to be valid in law and binding on the employee. We do not find that the facts in the said case are applicable to the facts of the present case. On the contrary the Apex Court in paragraph 90 of the said judgment itself while giving certain illustrations of the transaction between the parties who are not equal in bargaining powers, has observed that the principle may not apply when the contract is commercial.
22. In the case of Shrilekha Vidyarthi (cited supra) the Government of U.P. in one stroke had terminated the services of all the Government Advocates in the State of U.P. When the said enblock termination was challenged, a defence was taken by the State Government that the appointment order itself contained a clause that the appointment of a District Government Counsel is only provisional engagement terminable at will on either side and that the Government has the power to terminate the appointments at any time “without assigning any cause”. Negativing this contention the Apex Court observed thus :
“22. There is an obvious difference in the contracts between private parties and contracts to which the State is a party. Private parties are concerned only with their personal interest whereas the State while exercising its powers and discharging its functions, acts indubitably, as is expected of it, for public good and in public interest The impact of every State action is also on public interest. This factor alone is sufficient to import at least the minimal requirement of public law obligations and impress with this character the contracts made by the State or its instrumentality, it is a different matter that the scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes. However, to the extent, challenge is made on the ground of violation of Article 14 by alleging that the impugned act is arbitrary, unfair or unreasonable, the fact that the dispute also falls within the domain of contractual obligations would not relieve the State of its obligation to comply with the basic requirement of Article 14. To this extent, the obligation is of a public character invariably in every case irrespective of there being any other right or obligation in addition thereto. An additional contractual obligation cannot divest the claimant of the guarantee Under Article 14 of non-arbitrariness at the hands of the State in any of its actions.
23. Thus, in a case like the present, if it is shown that the impugned State action is arbitrary and, therefore, violative of Article 14 of the Constitution, there can be no impediment in striking down the impugned act irrespective of the question whether an additional right, contractual or statutory, if any, is also available to the aggrieved persons.
24. The State cannot be attributed the split personality of Dr. Jekyll and Mr. Hyde in the contractual field so as to impress on it all characteristics of the State at the threshold while making a contract requiring it to fulfil the obligation of Article 14 of the Constitution and thereafter permitting it to case of its garb of State of adorn the new robe of a private body during the subsistence of the contract enabling it to act arbitrarily subject only to the contractual obligations and remedies flowing from it. It is really the nature of its personality as State which is significant and must characterize all its actions, in whatever field, and not the nature of function, contractual or otherwise, which is decisive of the nature of scrutiny permitted from examining the validity of its act. The requirement of Article 14 being the duty to act fairly, justly and reasonably, there is nothing which militates against the concept of requiring the State always to so act, even in contractual matters. There is a basic difference between the acts of the State which must invariably be in public interest and those of a private individual, engaged in similar activities, being primarily for personal gain, which may or may not promoted public interest. Viewed in this manner, in which we find no conceptual difficulty or anachronism, we find no reason why the requirement of Article 14 should not extend even in the sphere of contractual matters for regulating the conduct of the State activity. ”
Thus it has been held by the Apex Court that the impact of every State action is required to be in public interest. Again the question which fell for consideration before the Apex Court in the aforesaid case was regarding a clause which entrusted an unbridled, unchanalised and unguided power with the State Government to terminate the appointment of any Government Advocate, “without assigning any cause”. Thus the State was entrusted with a power to act as per its whims and fancies to terminate the employment of any of the Government Advocate during the subsistence of the tenure of appointment of such a Government Advocate. Such is not the case in the present case and as such we do not find that the law laid down in Shrilekha Vidyarthi is applicable to the facts of the present case.
23. In the case of L. I. C. Corporation (cited supra) relied upon by the learned counsel for the petitioner, what was the subject matter of challenge before the Court was the Policy issued by the L. I .C. Under a Table, which provided that the proposals for the said policy would be entertained only from persons in Government or Quasi Government Organization or reputed commercial firms and not from other citizens. The Apex Court found that there was no valid basis or reasonable nexus for classification between the Government or Quasi Government Organization or reputed firms on one hand and the other individual citizens on the other hand for considering proposals for policy and as such the said policy of L. I. C. was discriminatory in nature and thus violative of Article 14 of the Constitution of India. In the present case, we do not find that the impugned condition is in any way discriminatory in nature. On the contrary it applies equally to all the tenderers. We thus find that this case is also not applicable to the facts of the present case.
24. The last case cited by learned counsel for the petitioner is of ABL International Limited and Anr.. In the said case, what was for consideration before the Apex Court was an unjust and unfair action on the part of an instrumentality of the State, thereby issuing letter for repudiation. This Court found that the said action of the respondent No. 1 therein was not justified in law. However, the Apex Court in the facts of the said case had found that the terms of the policy did not give room to any ambiguity as to the risk covered by the first respondent. Thus what was found in the said case was that in the terms of the agreement itself the claim which was sought to be made by the petitioner therein was enforceable and refusal to give claim by respondent No. 1 – Corporation amounted to an arbitrary and unreasonable action. In the present case what is challenged is the term of the condition in the tender notice and in the agreement between the parties. We therefore, do not find that the said case is applicable to the facts of the present case. On the contrary in the said case the Apex Court itself has approved the view taken earlier by it in the case Kerala State Electricity Board v. Kurien E. Kalathi , to which we will be referring in later part of our judgment.
25. In the case of Union of India v. Hindusthan Development Corporation , the Apex Court was considering the issuance of Government Contracts for supply of cast steel bogies to Railways. The Apex Court in paragraph 9 of the Judgment observed thus : “Government had the right to either accept or reject the lowest offer but that of course, if done on a policy, should be on some rational and reasonable grounds.”
26. In the case of Erusian Equipment and Chemicals Ltd. v. State of West Bengal and Anr. , the Apex Court observed thus : “When the Government is trading with the public, the democratic form of the government demands equality and absence of arbitrariness and discrimination in such transactions. The activities of the Government have a public element and, therefore, there should be fairness and equality. The State need not enter into any contract with any one but if it does so, it must do so fairly without discrimination and without unfair procedure.”
27. The Apex Court in the case of Tata Cellular v. Union of India while considering the scope of judicial review in the tender matters has observed thus :
“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.
71. Judicial quest in administrative matters has been to find the right balance between the administrative discretion to decide matters whether contractual or political in nature or issues of social policy; thus they are not essentially justiciable and the need to remedy any unfairness. Such an unfairness is set right by judicial review.”
28. After considering entire law laid down on the subject by the Apex Court, in paragraph 94, the Apex Court in the case of Tata Cellular has laid down the principles regarding the scope of judicial review in the tender matters. The relevant principles for adjudication of the present writ petition are principle No. 4 and 5 in paragraph 94 of the said judgment which are as Under :
“(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 is 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. ”
29. The Constitution Bench of the Apex Court in the case of Har Shankar (cited supra) has observed in paragraphs 15 and 16 as Under :
“15. Learned counsel for the respondents raised a preliminary objection to the maintainability of the writ petitions filed by the appellants and to the grant of reliefs claimed by them. He contends that such of the appellants who offered their bids in the auctions did so with a full knowledge of the terms and conditions attaching to the auctions and they cannot, by their writ petitions, be permitted to wriggle out of the contractual obligations arising out of the acceptance of their bids. This objection is well founded and must be accepted.
16. Those interested in running the country liquor vends offered their bids voluntarily in the auctions held by granting licences for the sale of country liquor. The terms and conditions of auctions were announced before the auctions were held and the bidders participated in the auctions without demur and with full knowledge of the commitments which the bids involved. The announcement of conditions governing the auctions were in the nature of an invitation to an offer to those who were interested in the sale of country liquor. The bids given in the auctions were offers made by prospective vendors to the Government. The Government’s acceptance of those bids was the acceptance of willing offers made to it. On such acceptance, the contract between the bidders and the Government became concluded and a binding agreement came into existence between them. The successful bidders were then granted licences evidencing the terms of contract between them and the Government, Under which they became entitled to sell liquor. The licensees exploited the respective licences for a portion of the period of their currency, presumably in expectation of a profit. Commercial considerations may have revealed an error of judgment in the initial assessment of profitability of the adventure but that is a normal incident of all trading transactions. Those who contract with open eyes must accept the burdens of the contract along with its benefits. The powers of the Financial Commissioner to grant liquor licences by auction and to collect licence fees through the medium of auctions cannot by writ petitions be questioned by those who, had their venture succeeded, would have relied upon those very powers to found a legal claim. Reciprocal rights and obligations arising out of contract do not depend for their enforceability upon whether a contracting party finds it prudent to abide by the terms of the contract. By such a test no contract could ever have a binding force.”
30. It thus can be seen that the Apex Court in the case of Tata Cellular in unequivocal terms has held that the term of invitation to tender is not open to judicial scrutiny. The Apex Court has further held that Government must have freedom to contract. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness but must be free from arbitrariness, not affected by bias or actuated by mala-fides. The facts of the present case are almost identical to the facts that were for consideration before the Constitution Bench of the Apex Court in the case of Har Shankar. In the said case also the terms and conditions of auctions were announced before the auctions were held and the bidders participated in the auction without a demour and with full knowledge of the commitments which the bids involved. On such acceptance, the contract between the bidders and the Government became final and a binding agreement came into existence between them. After issuance of licence the licencees exploited the respective licences for a considerable period of the validity of the agreement. Only after realizing that they had committed an error of judgment in giving their bids, they questioned the power of the Financial Commissioner to grant licence by auction. The Apex Court did not find favour with such conduct on the part of the bidders and rejected their contention. We find that the present case is squarely covered by the law laid down by the Apex Court in the case of Har Shankar (cited supra) in the present case it can clearly be seen from the notice inviting tenders, that though the approximate quantity of material has been specified in the tender notice itself, it has been specifically stated that the yield figures given in the said tender were only estimated and approximate and just for information. In the notice itself it is further stated that intending purchasers are advised to assess and satisfy themselves regarding the yields, area and quantity before filling the tenders and offer rate per notional tonne. Then in the tender notice itself it was again reiterated that the details mentioned in the Schedule A were based on the estimates of quantity and areas but were purely subject to availability. It was again advised that the intending tenderers should inspect on the spot, the bamboos units and satisfy themselves regarding the estimated yield and the bamboo unit areas. It was specifically made clear that no claim shall lie against the State Government for compensation or any other relief, if the details of the quantities or areas are subsequently found to be incorrect or the shortfalls, if any, in the quantities given in the schedule A appended to the said notice. It was also made clear that the said shortfall shall not be made good from another area. Then in the tender it was again specified in the note to the tender document that in case the actual yield was more than the estimated yield the royalty at the sanctioned rates and the taxes, such as sales tax and forest development tax, income tax, on the prevailing rate shall be paid by the tenderer as and when such additional quantity is cut in the forest. It was further made clear that in case the actual yield was less the purchaser will not be entitled to any refund due to loss. It was further clarified in paragraph 38(iv) that at the end of the contract period final accounting would be done on the basis of the actual notional tonne. It was clarified that if the actual yield of the Bamboo from the Bamboo Unit was more than estimated yield given in Schedule A, the contractor shall be liable for additional payment at the tendered rate along with taxes for such excess quantity. Then condition No. 39 apart from reiterating the earlier condition, also clarifies that in no case the deficit in the quantity shall be made good from any other areas. Then clause 42 of the tender document provides that the conditions given in the tender documents would form part of the agreement. It also notifies that a draft agreement was ready for inspection and that the prospective tenderer were advised to go through the conditions in the agreement. Clause 49 provides that it shall be presumed that the tenderer has offered his tender after completely accepting without any reservations, the conditions hereinbefore contained and any additional conditions appearing in the agreement.
31. It is needless to state that the petitioner so also 12 other bidders had submitted their bids after going through all the conditions. We are not inclined to go into the dispute and question as to whether the area was inaccessible for inspection or not. The petitioners have averred in the petition that the said area was not accessible and as such they could not inspect the actual position. However, the respondents have categorically denied the same and have specifically averred that there was good network of forest roads and that the petitioner had also employed experts in the filed of forestry who were assigned the job of inspecting the forest. It is needless to state that the tender document specifically required the intending bidder to inspect the areas in question before submitting their bids. We are unable to accept the contentions raised by learned counsel for the petitioner regarding the interpretation of the word ‘approximate’ in the tender document. Though there cannot be any dispute regarding dictionary meaning, however, a singular word in the tender document cannot be read in isolation. It has to be read harmoniously with all other tender conditions. Petitioners were amply put to notice that the notional tonnage given in the tender documents was only approximate and only for information. The intending purchasers were advised to satisfy themselves regarding the area and quantity before filling the tenders. Not only this, it was also specifically stated in the tender document that no claim shall lay against the State Government for compensation or any other relief if the details of the quantities or any areas were subsequently found to be incorrect or the shortfall if any in the quantities shown in Schedule A. It is thus clear that an abundant precaution has been taken by the respondents not only regarding quantity but also the area for which the tenders were invited. It can also be seen that the said condition was not inserted for the petitioner alone, but was equally applicable to all the bidders who intended to participate and accordingly 13 bidders have submitted their bids including the petitioner. Had the bid of the petitioner not been accepted the bid of some other person would have been accepted, and he would have also received the same fate as that of the petitioner. The action of the respondents therefore, in stipulating the said condition cannot be termed to be arbitrary or unjust. On the contrary we find that as observed in paragraph 70 of the Judgment in the case of Tata Cellular (cited supra) the State Government as a guardian of finances of the State has taken sufficient measures to protect the financial interest of the State.
32. Not only this but after submitting the bid the petitioner who was the highest bidder has entered into an agreement with the respondents. The condition which is sought to be assailed also forms part of an agreement which was entered into by the petitioner with the respondent No. 2. In the agreement it has been specifically provided that if the quantity of the offered bamboo exceeds notional tonnes then purchasers shall have to make additional payment at the tendered rate along with the taxes for such excess quantity, on the said price. It further provides that if the quantity of the flowered bamboo falls short of the estimated quantity of 5612 notional tonnes, then purchaser will not be entitled to ask and call upon the government to supply to the purchasers and the Government shall not be liable to supply to the purchaser the quantity of the flowered bamboo which falls short of the estimated quantity and the purchasers shall not be entitled to any compensation therefor.
33. The petitioner was therefore very well aware of the terms and conditions of the said contract and the contractual obligations between the parties. We find that the contract in question is a purely commercial transaction. We do not find that any public element is involved in the contract in question. Since the contract was purely a commercial contract and since condition which is sought to be assailed was equally applicable to all the intending parties, the petitioner cannot be heard to say that the said condition was unconscionable or against public policy, after being duly made aware of the said conditions and having submitted his bid and entered into an agreement. If the petitioner was really aggrieved with the said conditions he could have immediately challenged the same as observed by the Supreme Court in the case of Har Shankar. The present case at the best can be said to be of an error of judgment of the petitioner, regarding profitability of the venture. Let us consider the matter from another angle. Had the petitioner after completing the contract would have found that there was no short fall but the bamboo yield was in excess than the notional tonnage quoted in the tender notice, he would not have come to the Court to challenge the said condition to be unconscionable or unjust. Only after completion of contract and after realizing that it had committed an error in judgment regarding the profitability of the venture he has knocked the doors of this Court challenging the said condition to be unconscionable or unjust or against the public policy. We find that the conduct of the petitioner does not permit him to do so. Firstly as held in the case of Tata Cellular, the terms and conditions in notice inviting tender are not amenable to judicial review. Secondly the petitioner having been very well made aware of the terms and conditions and also having put on guard and after having submitted a bid and entered into contract, cannot be heard to say that such a condition was illegal.
34. Insofar as the contention of the petitioner that in view of the comparative bargaining power, the petitioner had no other option, but to accept the said condition is concerned, we do not find that said contention is also having any substance. The respondents in their affidavit in reply have categorically stated that the respondents did not have monopoly in forest production. Not only that, but it has been further averred in the affidavit in reply, that the petitioner is getting bamboo supply from other sources also. It is also specifically averred in the reply that there was a subsisting agreement between the petitioner and the Andhra Pradesh Government of continuous supply of bamboos. It is thus clear that the contention of the petitioner that due to monopoly of the State in Bamboo production, the petitioner had no other option but to accept the said condition is without substance. It is further pertinent to note that the averments made in the affidavit in reply have gone unchallenged.
35. There is one another aspect which needs to be considered. The Apex Court in the case of Kerala State Electricity Board v. Kurien E. Kalathi and Ors., has held that:
“10. The interpretation and implementation of a clause in a contract cannot be the subject matter of a writ petition. Whether the contract envisages actual payment or not is a question of construction of contract. If a terms of a contract is violated, ordinarily the remedy is not the writ petition Under Article 226. We are also unable to agree with the observations of the High Court that the contractor was seeking enforcement of a statutory contract. A contract would not become statutory simply because it is for construction of a public utility and it has been awarded by a statutory body. We are also unable to agree with the observations of the High Court that since the obligations imposed by the Contract on the contracting parties come within the purview of the Contract Act, that would not make the contract statutory. Clearly, the High Court fell into an error in coming to the conclusion that the contract in question was statutory in nature.”
It can be seen that the contract in question in the present case was purely a commercial contract. Only because one of the parties was State Government, it cannot be said to be a statutory contract. The Apex Court in paragraph 11 has further observed thus :
“11. A statute may expressly or impliedly confer power on a statutory body to enter into contracts in order to enable it to discharge its functions. Dispute arising out of the terms of such contracts or alleged breaches have to be settled by the ordinary principles of law of contract. The fact that one of the parties to the agreement is a statutory or public body will not by itself affect the principles to be applied. The disputes about the meaning of a covenant in a contract or its enforceability have to be determined according to usual principles of the Contract Act. Every act of a statutory body need not necessarily involve an exercise of statutory power. Statutory bodies, like private parties, have power to contract or deal with property. Such activities may not raise any issue of public law. In the present case, it has not been shown how the contract is statutory.”
Thus, in view of the aforesaid observations of the Apex Court it is clear that the present contract cannot be termed to be a statutory contract, as we do not find any element of public law involved in the contract in question. At the cost of repetition, we state that it is purely commercial transaction between the State on one hand and the petitioner on the other. The Division Bench of this Court has also taken a view in the case of Pratap B. Nalage (cited supra) that this Court would not interfere in its writ jurisdiction, when a contract is of non-statutory nature. Therefore, the question regarding the tenability of the petition itself, in view of the aforesaid judgment of Kerala State Electricity Board is Under shadow of doubt as the contract in question cannot be termed to be a statutory contract. However, as already discussed in the earlier part of the judgment, we find that the petition having been admitted way back in 1991 and the petitioner having waited for 15 long years it would not be appropriate to non-suit the petitioner on the ground of tenability of the petition under Article 226 of the Constitution of India. We have therefore, discussed the merits of the matter and after considering the rival submissions on merits we find that the petition as filed by the petitioner is without substance Petition is therefore, dismissed with no Orders as to costs.