Bhanu Construnctions Company … vs A.P. State Electricity Board, … on 1 March, 1994

ORDER

S. Dasaratharama Reddy, J.

1. The Superintending Engineer, Thermal-IH, Andhra Pradesh State Electricity Board (briefly referred to as ‘the Board’) issued tender notice PCT V3/91 dated 8-12-1991 inviting quotations in two parts, namely, Prequalification and Technical Bids. (Part-I) and Price Bids (Part-II) for the supply, erection and commissioning of 220 K.V. Switchyard extension for Vijayawada Thermal Power Station (briefly referred to as ‘V.T.P.S.’)Stage-IIIat Ibrahimpatnam, Krishna District. As per Clause 1 (a) of Annexure-1 to the Tender Specifications, one of the prequalification requirements is that “the bidder musthave, with total responsibility, successfully designed,engineered, supplied, erected, tested and commissioned two EHV Sub-stations of 220KV or higher voltage comprising of atleast six bays during the past six years which must be in satisfactory operation for a period of two years. “Clause l(c) requires “that the bidder must have financial standing to execute works of this nature and cost and produce evidence in support.” Clause-3 however says “Notwithstandingany thing stated above, the Board reserves the right to assess the bidder’s capability and capacity to execute the contract, should the circumstances warrant such assessment in the overall interest of the Board”. The appellant, the 4th respondent and three others, who are not parties to this appeal, submitted their tenders in two parts. The Board opened the Part-I bids of all tenders on 11th March, 1992 and sent them to Desein Private Ltd., New Delhi, the 3rd respondent, which was appointed by the Board as consultant for this Project under agreement dated 21-12-1990, for their evaluation report. The Chief Engineer of the Board recommended opening of Part-II bids of the appellant and two others who are not parties to this appeal. Though this was initially approved by all the members of the Board except the Chairman, later, on recirculation, all the members agreed with the views of the Chairman to open Part-II bids of all the tenderers. Accordingly, Part-II bids of all the tenderers were opened on 30-4-1992 and evaluated by the Board as follows:-

  Sl.     Name of the tenderer         Price quoted     Price evaluated
No.                                                   by the Board
                                     Rs.     Rs.
1.      Controls & SchematicsLtd.    2,18,43,650/-    2,76,54,014/-
        (4th respondent).               
2.      Crompton Greaves Ltd.        2,84,29,100/-    2,87,23,822/-
3.      Alluminium Industries Ltd.   2,14,86,145/-    3,13,23,986/-
4.      Larsen & Tubro Ltd.          3,10,97,737/-    3,32,55,905/-
5.      Bhanu Construction Company   3,12,96,835/-    3,34,03,387/-
        Ltd. (Appellant).
 

2. As per the above evaluation, the price quoted by the appellant as well as the price evaluated by the Board on that quotation is the highest, while the price quoted by the 4th respondent is the second lowest and the evaluated price thereon is the lowest of all. The Board held negotiations with the 4th respondent and awarded the contract to it for Rs. 2,37,43,650/- by letter of intent dated 18-9-1992. The appellant has filed the writ petition for declaring the impugned proceedings as illegal and for a direction to the Board to award contract to it, contending that–

(1) (a). The tender of the 4th respondent is invalid as it was filed by a consortium of three companies;

(b) Even assuming that the experience of three consortium partners can be taken into consideration, they do not possess the prequalification requirements prescribed by the Tender Notice and hence the tender of the 4th respondent ought to have been rejected.

2. The designs and drawings of the 4th respondent are not in accordance with tine tender prequalifications and as such its tender should have been rejected.

3. The decision of the Board to open Part-II bids without waiting for the report of the consultant on the prequalification requirements or all the tenderers is contrary to the Tender Notice.

4. The Board is bound to,accept the recommendations made by its consultant.

5. In any event, the exercise of the power by the Board differing from the opinion of the Consultant was mala fide with an intention to help the 4th respondent.

6. The method of evaluation of the tenders adopted by the Board is not correct and the evaluated price with reference to the price quoted by the appellant will be the lowest, if correct evaluation is made.

7. The Board should have taken the previous experience of the appellant into consideration and awarded the contract to it, even if the rate quoted by it is higher, and lastly,

8. The Board has acted mala fide in not only agreeing to pay the 4th respondent higher price than what has been quoted by it but also to confer some extra benefits on it.

3. The Board has filed counter-affidavit and additional counter-affidavit. The stand of the Board is that the recommendation of its consultant is not binding on it; that the evaluation of prequalification bid is not covered by the agreement with the consultant which is only concerned with designing, engineering, construction and commissioning of the project; that the Board has not given the contract to the appellant because of the higher price quoted by it and not because of its unsound financial incapacity that after the report of the Consulant was received on 11-5-1992, the matter was referred to the Financial Adviser of the Board on 7-7-1992 for arthimatical verification and after receipt of report from him on 16-7-1992, referred the matter to the Stores Purchase Committee which met on 18-8-1992 and wanted the 4th respondent to be called for negotiations with Negotiating Committee consisting of Member (Project). Member (Accounts) and Member (Secretary) and accepting its recommendations, the Board accepted the tender of 4th respondent on 18-9-1992; that the appelIant has not raised any objection against the opening of the price bids till 1-9-1992; and that in case of Rayalaseema Thermal Project also persons not qualified in the prequalification bids including the appellant were considered and awarded contracts and that there is nothing unusual in the case of VTPS. The Board has also stated that there is nothing irregular or arbitrary in the evaluation of the price bids which were not always referred to the consultant. The Board has also denied the allegation of mala fides and stated that Sri V.V. Reddy, the then Chairman died on 3-5-1992. It is also the case of the Board that even if the offer of tine 4th respondent is rejected, the appellant would not have got the contract as the evaluated bid offered by the Crompton Greaves Ltd., will be the lowest. The learned counsel has also produced before us the file relating to this contract. From the file it is seen that the Board has accepted Hie offer Of the 4th respondent on 28-4-1993 and awarded the work to it for Rs. 2,37,43,650. The learned counsel for the Board has stated that the work has commenced at the end of April, 1993 and that the 4th respondent is satisfactorily executing the work.

4. The 4th respondent has filed counter-affidavit almost similar to that of the Board. It has also averred that if previous experience is made the only eligibility, it results in monopoly; that there is no prohibition of submitting the tender through consortium; that the Consultant did not disqualify the 4th respondent on this aspect; that the opinion of the Consultant on the prequalification is not complete and that the appellant who has never raised any objection before the Board till the time of consideration of price bids, cannot now raise any objection after having lost the contract.

5. The learned single Judge rejected all the contentions of the appellant and dismissed the writ petition.

6. Sri B.S.A. Swamy, the learned counsel for the appellant has raised the following contentions:-

I. Prequalification bid:-

(a) The evaluation of the prequalification bids was not done by the Board properly and that the tender of the 4th respondent ought to have been rejected since it is in effect by consortium of companies which is not permitted by the tender notice.

(b) Even assuming that the consortium is eligible to quote, it does not fulfil the prequalification requirement as per the opinion of the consultant which is binding on the Board.

(c) The Board ought not to have opened the price bids without receipt of the report of the consultant on prequalification bids and the price bids were opened in order to help the 4th respondent.

(d) Non-obstante clause cannot nullify the main operative provision and hence cannot be invoked at all.

(e) Even otherwise, the clause can be invoked only after opening of price bids and not before.

(f) Even if the Board can invoke non-obstante Clause before opening price bids, it has not recorded any valid reasons to differ from the report of the Consultant.

II: Price bids:-

(g) The price bids ought to have been referred to the Consultant as per the agreement.

(h) The method of evaluation of the price bids adopted by the Board is incorrect and arbitrary and if the bids are properly evaluated, the price quoted by the appellant will be the lowest,

(i) The appellant was being awarded contracts by the Board eversince 1984 and the Board cannot deny the present contract on the ground that it has no financial capability to execute the work.

(j) The action of the Board is vitiated by mala fides as the Board accepted the offer of the 4th respondent though the designs and drawings submitted by it are not in accordance with the Tender specifications and the Board has not only agreed to pay the 4th respondent higher price than what has been quoted by it, but also agreed to confer some extra benefit on it.

Preliminary objection:

7. Before considering the various contentions urged regarding prequalification bids, a preliminary objection raised by the respondent may be takenup. The respondents say that the appellant, having not raised any objection at the time of evalution of price bids before the Board considering the tender of the 4th respondent cannot raise the same in this Court having lost the award of the contract. They rely on Manual Thomas v. State, in which the following observations of the Kerala High Court are apposite:

“It is however, necessary to advert to one or two contentions pressed for our aceptance by the appellants. It was contended that the 4th respondent did not satisfy the qualifications prescribed for pretender registration and it was therefore wrong to have allowed the 4th respondent to submit tenders. This contention is based on the fact that the prequalification tender notification stated that the contractors/firms who have carried out building construction worth more than Rs. 150/- lakhs per single multistoreyedR.C.C. building alone need apply and that the 4th respondent did not construct any single build ing worth more than Rs. 150/- lakhs, though they have constructed buildings worth more than that amount and even though they would have undertaken to construct buildings of greater value. This contention is not acceptable for more than one reason. When the 4 th respondent participated as a tenderer and the tenders were opened in the presence of the parties, the appeIlants knew that the 4th respondent was all owed to be a tenderer on that ground. The appellants, then thought, that as the4th respondent’s tender amount was higher, the appellants had a better chance than the 4th respondent and therefore it did not matter whether the 4th respondent was allowed to submit its tender or not. When once their tenders were rejected, they raised this objection then. The appellants were therefore sitting on the fence and cannot be allowed to raise this contention now”.

8. This is opposed by the learned counsel for the appellant who contends that there can be no estoppel against the statute or against waiver of fundamental rights and relies on Air India v. Nergesh Meerza , A.C. Jose v. Sivan Pillai, and Olga Tellis v. Bombay Municipal Corporation, .

9. In all these cases, it was held that there can be no estoppel against the statute and that no one can be estopped from contending that the act complained of is a violation of any fundamental right. There is no d ispute about this proposition. Here, no statutory provision or regulation is challenged as unconstitutional and the complaint of the appellant is that the Board has not followed the terms of the tender specification. We fail to see how these cases help the appellant. The learned counsel has also feebly attempted to distinguish the decision of Kerala High Court1, on the ground that there both were qualified tenderers. We have no hesitation in holding that the decision of Kerala High Court is apposite and in Kerala case one of he tenderers was unqualified. Accordingly, we uphold the plea of the respondents that the appellant is not entitled to raise this contention at this stage.

10. Now let u.s examine the various contentions raised by the learned counsel for the appellant.

Contention 1 (a)

11. According to Sri B.S.A. Swamy, the learned counsel for the appellant, the prequalification requirement as per Tender Notice dt. 8-12-1991 is that the bidder should have commissioned at least two E.H.V. Sub-stations of 220 K.V. by himself and that the expression “by himself” means one person either natural person or legal entity and that it does not include consortium. It is significant to note that the words “by himself” are not found in Clause 1 of Annexure-1 to Bid Qualification Requirements. The learned counsel relies on Clause 4 of General Conditions of Contracts which reads as follows:

“The contractor shall not, without the consent in writing of the Engineer or purchaser which shall not be unreasonably withheld, assign or sub-let his contract.”

12. According to the learned counsel, this implies that a consortium cannot tender and as the offer of the 4th respondent is on behalf of the consortium consisting of itself, M/s. Information Managementlndia Pvt. Ltd., Hyderabad and M/s. Sapphire Construction Company, Vijayawada, the 4th respondent is not qualified to participate in the tenders. On the other hand, the Board and the 4th respondent contend that the 4th respondent is a manufacturer of L.T. Switch gear penels, while M/s. Information Management India Pvt. Ltd., is Engineering and Design Consultant and M/s. Sapphire Construction Company deals in installation, testing and commissioning work and all the three of them are independently doing other contracts for the Board and even assuming that the contractor cannot sub-let the contract, it does not follow that consortium cannot participate in the bid in the absence of specific prohibition to that effect. It is also their contention that Clause 4 relied on by the appellant does not prohibit sub-letting of the contract and on the other hand implies that the contract can be sub-let, but with the permission of the Board. It is also their contention that the consultant did not disqualify the 4th respondent on this aspect. The respondents also contend that if the Clause is interpreted to mean that consortium cannot bid it amounts to encoruraging monopoly of existing contractors and such an interpretation has to be avoided. They also rely on Clause 11.08.00 (vi) of sub-section (A) of Section VIII of Technical Specifications which says mat the tenderer while submitting tender must indicate the name of the Sub-contractor to whom he intend s to sub-contract part of the work and the nature and extent of such work. They relay on the decision of the Supreme Court in Rasbihari v. State of Orissa, . In that case, the Governmetn of Orissa, instead of inviting tenders for sale of Kendu leaves, invited offers from individuals who carried out contracts in the previous year without default to the satisfaction of the Government and excluded new entrants. The Supreme Court held that the Scheme was violative of Articles 14 and 19(1)(g) of the Constitution. The Supreme Court held as follows:

“The classification based on the circumstance that certain exising con tractors had carried out their obligations in the previous year regularly and to the satisfaction of the Government is not based in any real and substantial distinction bearing a just and reasonable relation to the object sought to be achieved i.e., effective execution of the monopoly in the public interest. Exclusion of all persons interested in the trade, who were not in the previous year licensees is ex facie arbitrary: it had no direct relation to the object of preventing exploitation of plockers and growers of kendu leaves, nor had it any just or reasonable relation to th securing of the full benefit from the trade, to the State.

Validity of the law by which the State assumed the monopoly to trade in a given commodity has to be judged by the test whether the entire benefit arising therefrom is to ensure to the State, and the monopoly is not used as a cloak for conferring privte benefit upon a limited class of persons. The scheme adopted by the Government first of offering to enter into contracts with certain named licensees, and later inviting tenders from licensees who had in the previous year carried out their contracts satisfactorily is liable to be adjudged void on the ground that it unreasonably excludes traders in Kendu leaves from earring on their business. The scheme of selling Kendu leaves to selected puchasers or of accepting tenders only from a specified class of purchasers was not “integrally and essentially” connected with the creation of the monopoly and was not on the view taken by this Court in Akadasi Pudhan’s case, protected by Article 19 (6) (ii); it had therefore to satisfy the requirement of reasonableness under the first part of Article 19 (6). No attempt was made to support the scheme on the ground that it imposed reasonable restrictions on the fundamental rights of the traders to carry on business in kendu leaves. The High Court also did not consider whether the restrictions imposed upon persons excluded from the benefit of trading satisfied the test of reasonableness under the first part of Article 19(6). The High Court examined the problem from the angle whether the action of the State Government was vitiated on account of any oblique motive, and whether it was such as a prudent person carrying on business may adopt.

No explanation has been attempted on behalf of the Stateas to why an offer made by a well known manufacturer of bid is interested in the trade to purchase the entire crop of kendu leaves for the year 1968 for rupees three crores was turned down. If the interests of the State alone were to be taken into consideration the State stood to gain more than rupees one crore by accepting that offer. We are not suggesting’that merely becuase that offer was made, the Government was bound to accept it. The Government had to consider, as prudent businessman whether, having regard to the circumstances, it should accept the offer, especially in the light of the financial position of the offerer, the security which he ws willing to give and the effect which the acceptance of the offer may have on the other traders and the general public interest.

The learned Judges of the High Court have observed that in their view the exercise of the discretion was not shown to be arbitrary, nor was the action shown to be lacking in bona fides. But that conclusion is open to criticism that the Government is not shown to have considered the prevailing prices of kendu leaves about the time when offers were made, the estimated crop of kendu leaves, the conditions in the market and the likelihood of offerers at higher prices carrying out their obligations, and whether it was in the interests of the State of invite tenders in the open market from all persons whether they had or or had not taken contracts in the previous year. If the Government was anxious to ensure due performance by those who submitted tenders for purchase of kendu leaves, it was open to the Government to devise adequate safeguards in that behalf. In our judgment, the plea that the action of the Government was bona fide cannot be an effective answer to a claim made by a citizen that his fundamental rights were infrigned by the action of the Government, nor can the claim of the petitioners be defeated on the plea that the Governmet in adopting the impugned scheme committed an error of judgment. That plea would have assisted the Government if the action was in law valid and the objection was that the Government erred in the exercise of its discretion. It is unnecessary in the circumstances to consider whether the Government acted in the interest of their party men and to increase party funds in devising the schemes for sale of Kendu leaves in 196 .”

13. The learned counsel for the 4th respondent contends that in view of the above judgment the terms of the contractors have to be interpreted as not to exclude bid by consortium and not ristricting it to the contractors who have experience in the type of work. We agree with the respondents and reject the contention of the appellant.

Contention No. 1 (b):-

14. The next contention is that even assuming that consortium is eligible to quote, the 4th respondent does not fulfi the prequalification requirement of adequate experience. The learned counsel for the appellant Sri B.S. A. Swamy. relies on the report of tine consultant though it is marked confidential. We are surprised how the appellant could procure copy of this confidential parer and more so file it in this Court. According to the consultant, the 4th respondent does not meet the specified qualifying criteria regarding experience in the execution of two 220 K.V. or higher voltage switchyards traction sub-stations with at least 6 Bays; their proposal are also deficient in respect of several technical details; and the structural desings enclosed by the 4th respondent are found to be totally inadequate and unacceptable. According to him as per the agreement dated 21-12-1990 entered into between the Board and the consultant, the opinion of the consultant is binding on the Board. On the other hand, Sri C.V. Nagarjuna Reddy, the learned counsel for the Board and Sri K. Subrahmanya Reddy, the learned senior counsel for the 4th respondent say that the consultant was asked to give opinion only on technical a spects and not on prequalification requirement and that its opinion on prequalification bid is not binding on the Board.

15. Dehors the report of the consultant, the Chief Engineer of the Board was of the opinion that the consortium and another tenderer Alluminium Industries Ltd., had no adequate required experience for this project and hence, are not eligible to tender. But the Board took a decision to open the price bids of all the tenderers including the appellant, who was also disqualified from the financial aspect, evidently invoking non-obstante clause about which we shall deal in succeeding paragraphs. Further, the report of the consultant was received by the Board on 11-5-1992 while price bids were opened on 30-4-1992. Thus, the question whether the report of the consultant is binding on the Board and whether the Board ought to have rejected the tender of the 4th respondent following the report of the consultant are both academic. However, as these are relevant for deciding the next contention or the appellant, we have to consider them. The relevant clauses of the agreement may now be noticed.

“Cl.1.1(d): DESEIN should study the Existing State I & II units; and design to specify schemes for the proposed State III units making provision for interconnections wherever possible such as Auxiliary Steam system, DM Water Makeup system, Compressed Service Air system, Instrumentation Air system, Oil Handling system, Electrical systems, Communication systems, Trippers and Coal Bunkers Feeding systems etc.

Cl. 2.1:DESEIN shall assume full responsibility for engineering adequacy, quality, co-ordination and timely completion of design construction, start up commissioning and all other activities, the execution of the Project as developing on them under the provisions of this contract. Desein shall be fully responsible for the complete designing and engineering of all the Civil, Electrical, Mechanical and Instrumention works of the Project.”

Cl. 2.3 (h): Tender drawings and specifications shall be prepared with the utmost expedition and promptly furnished to the Board.

Cl. 2.4: Study and evaluate the offers received technically and economically and make purchase recommendations to the Board within a month from the date of receipt with complete technical and financial analysis. Where a composite tender for Civil, Electrical and Mechanical works is invited, DESEIN shall furnish their analysis for the complete tender including Civil Works, the analysis for all the tenders shall be submitted in 25 copies. In case where confirmations/clarifications on technical details are necessary from the bidders, these shall be obtained directly only once by DESEIN with copies to the Board. While furnishing the analysis DESEIN shall indicate loading for all the technical and commercial deficiencies apart from giving the final list or confirmations/ clarifications still to be obtained from the bidders before placing the orders. Were the lowest offer is not recommended for acceptance, DESEIN shall furnish a list of deviations from the specifications giving the reasons why these are not acceptable.

Cl. 13: Variation in Scope of Work:

The Board reserves the right to delete any item or items of work from the scope of the consultants and execute the same by itself or through any other agency separately appointed by the Board. This provision shall apply at any time during currency of the contract. The total contract price in such case shall stand suitably adjusted by proportionately reducing the cost of the deleted item from the contract price.

16. Thus, from the above it can be seen that the Consultant is responsible for engineering adequacy, quality coordination and timely completion of designing construction and commissioning and other activities in the execution of the project. In particular, the consultant has to study and review the details of the engineering specific features and scope of plant and equipment to be supplied by the Board or other suppliers. It shall also carry out the basic duties and various systems of the station and prepare basic engineering and consortium designing for the same. It shall also prepare technical specifications and draft enquiry document for the supply and erection of all power station branches and equipment such as boilers without auxiliaries, lifts etc. It shall also draft as many specifications as are necessary for the completion of the project. Thus, the agreement does not provide for giving any opinion by the consultant on the prequalification requirement of the tenderers and even assuming mat the consultant could give its opinion. There is no clause in the agreement to the effect that such an opinion is binding on the Board.

Contention No. 1 (c):-

17. The next contention is that in order to help the 4th respondent, the Board opened the Part-II price bids without waiting for the consultant’s report regarding Part-I prequalification technical bids of all the tenderers and that it is contrary to the tender notice.

18. The learned counsel for the appellant contended that the Board anticitipating that the consultant is likely to disqualify the 4th respondent, opened the price bids of all the tenderers in order to help the 4th resondent in whom Sri V.V. Reddy, the then chairmam of the Board was interested. The contention or the Board is that the consultant is not required to give report on the prequalification requirement of the tenderers and hence there is no obligation to wait for the report of the consultant and that it is competent to open the price bids in over all interest of the Board invoking the non-obstante clause 3 of Annexure-I to bid Qualification requirements, which reads as follows:

“Notwithstanding anything stated above the Board reserves the right to assess the tenderer’s capability to execute the contract should the circumstances warrant such assessment in the overall interest of the Board”.

19. The further case of the Board is that it is usual practice of the Board and that in the case of Rayalaseema Thermal Power Project, Muddnuru, Cuddapah District also similar decision was taken by the Board and contract was awarded to the appellant. It is also the further contention of the Board that the Board does not consist of the Chairman alone, but of other members also who were responsible officers of high rank and there is nothing suggest that they were pressurised by the then Chairman. It is further contended that though the apellant, 4th respondent and the Alluminum Industries Ltd., were not qualified for the prequalification requirement, the 5 members of the Board evidently invoking the non-obstante clause, were of the opinion that price bids of the appellant may be opened, and when the Chariman suggested opening of all the bids, the members concurred with his suggestion. In the counter, the allegation of mala fides is denied. It is also stated by the learned counsel for the Board that Sri V. V. Reddy, who was the then Chairman and who was to lay down his office on 4-5-92, died on 3-5-1992 long before filing of the Writ Petition.

20. The submission of the appellant proceeds on the assumption that it is qualified to submit the tender. Sri Swamy, the learnd counsel for the appellant contends that financial capacity is not one of the prequalification requirements and that the appellant cannot be disqualified on that count. Clause 1 (c) of Annexure-1, which prescribes Bid qualification requirements, reads as follows:

“The bidder must have financial standing to execute works of this nature and cost and produces evidence in support”.

21. Thus, Sri Swamy is not right in contending that financial capacity is not one of the prequalification requirements and that the appellant is not disqualified on that count.

22. We have already held while dealing with the preceding contention that the consultant is not required to give its opinion on the prequalification eligibility of the tenderers, that its duty is only to advise the Board on technical aspects and that such a report is not binding on the Board. Hence, it follows that the Board need not wait for the receipt of the report of the consultant before opening the price bids. In fact the Chief Engineer of the Board recommended opening of the price bids excluding the bid of the 4th respondent and the bid of Alluminium Industries Ltd., even before receipt of the report of the consultant. Thus, the grievance of the appellant seems to be more against opening of the bid of the 4th respondent and not so much against the timing of the opening of the bids as such.

23. Another contention is that when the Board came to the conclusion that the appellant is not eligible a s per prequalification requirement, it ought to have returned the appellant’s bid istead of opening the bid along with other bids. We fail to appreciate how the appellant is prejudiced by this. If its bid were to be lowest, the appellant would have been granted the contract and thus having taken the chance, the appellant without then raising this plea, cannot now complain having lost the constract.

24. We have perused the file produced by the learned counsel for the Board. The Chief Engineer in his note to the Board has not expressed his view about the financial status of the bidders, except by merely saying that the financial statements of the bidders are enclosed. He recommended that the appellant may be considered as qualified on the ground of having experience and that the 4th respondent does not have the required experience and hence it is disqualified. He accordingly recommended opening of price bids of all the tenderers except 4th respondent and Alluminiurn Industries Ltd. This note was approved by the five members of the Board who however did not record any reasons. But the Chairman Sri V.V. Reddy endorsed on 21-4-1992 as follows:

“When we can consider the tender of M/s. Bhanu, I do not see why we cannot open other tenders. Better all tenders are opened.”

Then the file was recirculated to the members who agreed with the views of the Chairman. The allegation that the price bids of all the tenderers were opened in order to help the 4th respondent is without substance since the offers of all the tenderers were in sealed covers and not known to anybody until they were opened. Though no reasons are recorded by the Board, as to why price bids of all the tenderers were opened, the reason suggested in the counter was that the Board invoked the non-obstante Clause 3. Sri Swamy contends that giving reasons in the counter is not enough in the absence of those reasons finding place in the file and relies on the decision of the Supreme Court in Mohinder Singh v. Chief Election Commr., This is without substance since there is no reason recorded by other members as to why the price bids of the appellant whose financial capacity was not discussed, should be opened, that too, even before receipt of the report of the consultant. We must not forget that these are administrative matters and one cannot expect the authorities to record detailed reasons in support of the decisions which are generally preceded by deliberations. Of course, it would have been better had the Board indicated some reasons in the note file. But merely because they have not noted, we cannot hold that the Board is not competent to indicate the reason in the counter-affidavit. So the decision of the Supreme Court is distinguishable. Further, the learned counsel for the appellant has proceeded on the premises that the Board in its counter has justified its action on the ground that it will result in saving of Rs. 75 lakhs to the Board. There is no such reason disclosed either in the counter-affidavit or additional counter-affidavit. Thus, we hold that the Board has not acted illegally in invoking the non-obstante clause and in considering bids of all the tenderers, and even before receipt of the report of the consultant by invoking non-obstante clause.

Contention No. 1 (d):-

25. It is next contended by Sri Swamy, the learned counsel for the appellant that the non-obstante clause cannot be interpreted to have effect of scuttling the clear mandatory term in the tender notice and relies on the decision of the Supreme Court in Dominion of India v. Sreen Bhai in which it is held that,
“. …it is however necessary to observe that althogh ordinarily there should be a close approximation between the non-obstante clause and the operative part of the section the non-obstante clause need not necessarily and always be co-extensive with the operative part, so as to have the effect of cutting down the clear terms of an enactment. If the words of the enactment are clear and are capable of only one interpretation on a plain and grammatical construction of the words thereof a non-obstante clause cannot cut down the construction and restrict the scope of its operation. In such cases the non-obstante clause has to be read as clarifying the whole position and must be understood to have been incorporated in the enactment by the Legislature by way of abundant caution and not by way of limiting the ambit and scope of the operative part of the enactment….”

26. In that case, Clause 3 of Requisitioned Land (Continuance of Powers) Ordinance (19 of 1946) fell for consideration. The Clause reads as follows:.

Cl. 3: ‘Continuance of requisitions’:-

Notwithstanding the expiration of the Defence of India Act, 1939 (35 of 1939), and the rules made thereunder, all requisitioned lands shall continue to be subject to requisition until the expiry of this Ordinance and the apporpriate Government may use or deal with any requisitioned land in such manner as may appear to it to be expedient.”

27. We fail to seen how this decision is of any assistance to the appellant. The other decisions relied on by the learned counsel for the apellant in Chief Inspector of Mines v. K.C. Thapars , L.I.C. of India v. S.V. Oak , Flnnmnar Nath v. Tek Chand, and Chief Justice of A.P. v. L.V.A. Dikshitulu do not throw any light on the point in discussion.

Contention No. 1(b):-

28. The next contention of the learned counsel for the appellant is that the non-obstante clause can be invoked only after the price bids are opened and not carrier. We are afrid we cannot agree. The non-obstante clause does not make any such distinction or restriction.

29. The learned counsel for the appellant relies on the decision of the Supreme Court in Ramana v. International Airport Authority of India, . In that case, the tender notice by the International Airport Authority, which is a statutory body stated that:

“the sealed tenders in the prescribed form are hereby invited from Registered II Class Hoteliers having at least 5 year’s experience for putting up and running a II Class Restaurant and two Snack Bars at this Airport for a period of 3 years”.

30. But the Airport authority has accepted the tender of the person who does not satisfy the requirement of the tender notice. It was held by the Supreme Court that the requirement mentioned in the tender notice is a condition of eligibility which is an objective test and not a subjective one and accordingly it was observed that it is a well settled rule of administrative law that an executive authority must be rigorously held to the standards by which it profasses its actions to be judged and it must scrupulously observe those standards on pain of invalidation of an act in violation of them. It has further held that,
“It must, therefore, be taken to be the law that where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largess, the Government cannot act arbitrarily at its sweat will and like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norm which is not arbitrary, irrational or irrelevant. The power of discretion of the Government in the matter of grant of largess including award of jobs, contracts quotas, licences etc.,must be confined and structured by rational, relevant and nondiscriminatory standard or norm and if the Government departs from such standard or norm in any particular case or cases, the action of the Government would be liable to be struck down, unless it can be shown by the Government that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory.”

Later again the Court observed:

“The Corporation acting as an instrumentality or agency of Government, obviously be subject to the same limitation in the filed of constitutional and administrative law as Government itself though in the eye of law there is distinct and legal entities.”

31. It can be seen that the minimum requirement prescribed in that tender notice was absolute and there was no power of relaxation available to the authorities unlike in the present case. Thus, this case is distinguishable.

32. The learned counsel for the appellant relied on two other decisions of the Supreme Court in M. Lachia Setty & Sons Ltd. v. Coffee Board Bangalore, and Harminder Singh v. Union of India, for the propositation that offer of a person not eligible to participate in the tender, cannot be considered by the Government. In M. Lachia Setty & Sons Ltd., case, as per condition No. 6 of conditions of sale, the Coffee Board does not bind itself to accept the highest or any bid and the Board need not assign any reasons for doing so and its decision shall be final and conclusive. The highest bid was not accepted by the Coffee Board for some reason and the Coffee Board thereupon acepted the lawest bid of and her tenderer. The Supreme Court on construction of that condition held that the Coffee Board is empowered to accept the lower bid in preference to any higher bid. We fail to see how this helps the appellant.

33. The next case relied on by the learned counsel for the appellant is Haraminder Singh’s case, . In that case, tenders were invited for supply of mik. Though the tender of Harminder Singh, the appellant therein was the lowest, the Government accepted the higher tender of Government Milk Scheme. The award of contract of milk scheme was set aside by the Supreme Court on the ground that the tenders were to be adjudged on their own intrinsic merits in accoidure with the terms and conditions of that tender notice and that as the tender notice do not indicate any preference to any Government Undertaking, the authority concerned acted arbitrarily in allowing 10% price to Government Milk Scheme. This decision is not relevant since as in International Air Port’ Authority’s case (12 supra), in this case also there is no power of relaxation available to the authorities unlike the present case.

34. On the other hand, the learned Counsel for the respondents relied on M/s. G.J. Fernandes v. State of Karnatakai, which deals with the permissibility of relaxation of prequalification requirements. It is held in the said decision,
“Thirdly, the conditions and stipulations in a tender notice like this have two types of consequences. The first is that the party issuing the tender has the right to punctiliously and rigidly enforce them. Thus, if party does not strictly comply with the requirements of paras III, V or VI of the Notification Inviting Tenders (NIT), it is open to the Karnataka Power Corporation Ltd., (KPC) to decline to consider the party for the contract and if a party conies to Court saying that the KPC should be stopped from doing so, the Court will decline relief. The second consequence, indicated by this Court in earlier decisions, is not that the KPC cannot deviate from these guidelines at all in any situation but that any deviation, if made, should not result in arbitrariness or discrimination. It comes in for application where the non-conformity with, or relaxation from, the prescribed standards results in some substantial prejudice or injustice to any of the parties involved or to public interest in general. For example, in this very case, the KPC made some changes in the time frame originally prescribed. These changes affected all intending applicants alike and were not objectionable. In the same way, changes or relaxations in other directions would be unobjectionable unless the benefit of those changes or relaxations were extended to some but denied to others. The fact that a document was belatedly entertained from one of the applicants will cause substantial prejudice to another party who wanted, like wise, an extension of time for filing a similar certificate or document but was declined the benefit. It may perhaps be said to cause prejudice also to a party which can show that if had refrained from applying for the tender documents only because it thought it would not be able to produce the document by the time stipulated but would have applied had it known that the rule was likely to be relaxed. But neither of these situations is present here. Sri Vaidhyanathan says that in this case one of the applicants was excluded at the preliminary stage. But it is not known on what grounds that application was rejected nor has that party come to Court with any such grievance. The question, then, is whether the course adopted by the KPC has caused any real prejudice to the appellant and other parties who had already supplied all the documents in time and sought no extension at all? It is true that the relaxation of time schedule in the case of one party does affect even such a person in the sense that he would otherwise have had one competitor less. But, we are inclined to agree with the respondent’s contention that while the rule in Ramana’s case (supra) will be readily applied by Courts to a case where a person complains that a departure from the qualifications has kept him out of the race, injustice is less apparent where the attempt of the applicant before Court is only to gain immunity from competition. Assuming for purposes of argument that there has been a slight deviation from the terms of the NIT, it has not deprived the appellant of its right to be considered for the contract; on the other hand, its tender has received due and full consideration. If, save for the delay in filing one of the relevant documents, MCC is also found to be qualified to tender for the contract, no injustice can be said to have been done to the appellant by the consideration of its tender side by side with that of the MCC and in the KPC going in for a choice of the better on the merits”.

35. Thus, we hold that non-obstante clause can be invoked even before opening of price bids and that as both the appellant and the 4th respondent did not satisfy the prequalification requirements, the Board invoked the non- obstante Clause and opened the price bids of all the tenderers and there is nothing illegal about it.

Contention No. 1 (f):-

36. The next contention of the learned Counsel for the appellant is that even if the Board can invoke non-obstante clause before opening price bids, it has not recorded any valid reasons to differ from the report of the consultant. This is ex facie without substance since the price bids were opened on 30-4-1992 while the consultant’s report was received on 11-5-1992. Thus, we reject this contention

II. Price Bids:-

37. Contention No. II (g):- The learned counsel for the appellant next contended that the price bids ought to have been referred to the Consultant for evaluation. This is opposed by the Counsel for the Board who contends that evaluation of price bids is not covered by the agreement with the Consultant. To appreciate this contention, it is necessary to refer to Clauses 2.1,2.4 and 5.1 of the agreement. Though clauses 2.1 and 2.4 are extracted elsewhere in this judgment, they are extracted again here for the sake of convenience:

2.1: DESE1N shall assume full responsibility for Engineering adequacy, quality, co-ordination and timely completion of design construction strartup commissioning and all other activities, the execution of the Project as devolving on them under the provisions of this contract. DESEIN shall be fully responsible for the complete designing and engineering of all the Civil, Electrical, Mechanical and Instrumentation works of the Project.

Cl.2.4: Study and evahtate the offers received technically and economically and make purchase recommandations to the Board within a month from the date of receipt with complete technical and financial analysis. Where a composite tender for Civil, Electrical and Mechanical works is invited, DESEIN shall furnish their analysis for the complete tender including Civil works, the analysis for all the tenders shall be submitted in 25 copies. In case where confirmations/clarifications on technical details are necessary from the bidders, these shall be obtained directly only once by DESEIN with copies to the Board. While furnishing the analysis, DESEIN shall indicate loading for all the technical and commercial deficiencies part from giving the final list of confirmations/ clarifications still to be obtained from the bidders before placing the orders. Where the lowest offer is not recommended for acceptance, DESEIN shall furnish a list of deviations from the specifications giving the reasons why these are not acceptable.

Cl. 5.1: For all services indicated in Article No. 2 herein above including for the services of Resident erection and commissioning supervisory Engineers as detailed in Clauses 2.31 and 2.32, Board shall pay DESEIN a lumpsum firm fee of Rs. 105.25 lakhs (Rupees One Hundred and Five lakhs twenty five thousand only), as per the following breakup details:

38. No doubt, these clauses indicate that the Consultant can also evaluate the bids. But according to the Board it is not always obligatory on its part to refer price bids for evaluation to the Consultant whose main function is to advise on the technical side. The learned counsel for the Board has filed list of 34 contracts relating to Rayalaseema Thermal Power Project and V.T.P.S. State-Ill in respect of which price bids were not earlier sent to the Consultant to show that there is nothing unusual about the procedure adopted in the instant case. We agree with this plea of the respondents.

Contention No. II(h):-

39. The next contention is that the method of evaluation of the price bids adopted by the Board is incorrect and arbitrary and if the bids are properly evaluated, the price quoted by the appellant would be the lowest.

40. As already seen, the prices quoted by the appellant and the 4th respondent and the avaluated prices by the Board are as follows:

                                   Quoted price.    Evaluated price.
                                 Rs.              Rs.
1. M/s. Bhanu Construction
Co. Ltd. (Appellant).            3,12,96,835      3,36,03,387
2. M/s. Controls & Schematics
Pvt. Ltd. (4th respondent)       2,18,43,650      2,76,54,014
 

41. Sri B.S.A. Swamy, the learned Counsel has taken us through various technical details like loading, off-loading etc. and vehemently argued that the evaluation of the price bids is illegal. For example, he says that the quantities offered by the 4th respondent in civil works are mostly inadequate and hence the bid of the 4th respondent in civil works has to be ‘loaded’. Similarly, in Structural Steel, Bus Bar System and Equipment, the contention of the appellant is that as a result of wrong evaluation done by the Board, the evaluated price of the bid offered by the 4th respondent became the lowest and the price of the appellant became the highest.

42. On the other hand, the learned Counsel for the Board and the 4th respondent contended that the bids were properly evaluated and all tenderers were treated equally arid the bid of the 4th respondent being the lowest, the 4th respondent was awarded the work after negotiations when certain conditions were imposed in accordance with the opinion of the Consultant. It is also their contention that small deviations are magnified by the appellant due to the business rivalry with the 4th respondent.

43. From the perusal of the file produced, it is seen that the valuation process was completed on 7-7-1992 and the file was sent to the Financial Adviser for arithmetical check-up and the Financial Adviser returned it to the Board on 16-7-1992. The Store Purchase Committee consisting of entire Board and two Officers of the Government met on 18-8-1992 and after considering the Tender Analysis documents came to the conclusion that the evaluated bid of the 4th respondent is the lowest but wanted the 4th respondent to be called for negotiations with the negotiating Committee consisting of Member (Projects), Member (Accounts) and Member (Secretary). The offers were kept valid till 27-8-1992 and hence the tenderers were not asked to revalidate the tenders and finally after negotiations, tender of the 4th respondent was accepted with the addition of Rs. 19 lakhs towards the cost of extra Structural Steel required to make up for 215 tons and 47.52 tons of Reinforced Steel required to be used in accordance with the opinion of the consultant.

44. The appellant is not consistent about the evaluatd price of his bid as well as bid of the 4th respondent as can be seen from the following statement:

                     Page-8 of          Page-37of           Page-8 of addl.
                   Sec. II (at        Sec. IX material    papers
                   the time of        (during argu-       (filed during
                   filing W.P.)       ments of W.P.)      hearing of W.A.)
                     Rs.              Rs.     Rs.
Appellant (M/s.                 
Bhanu Construc-                 
tion Co.)          3,03,44,000*       3,15,48,900**       3,10,43,259"*
4th Respondent     3,47,94,700****    3,42,90/048         3,42,90,048
(*).  Rs. 3,03,85,000.    (**). Rs. 3,15,50,935
(***) Rs. 3,09,45,935.    (****) Rs. 3,46,94,700....Due to Arithmetical
                          mistakes.
 

The appellant has taken its quoted price at Rs. 3,12,76,935/- while the correct figure is Rs. 3,12,96,835/-. If this difference of Rs. 19,900/- is taken into consideration, the evaluated prices of the Appellant will be nearly Rs. 19,900/- more than those indicated above in the table.
 

45. The figures of loadings and off-loadings relating to the appellant are different in the three statements as can be seen from tine following table.
                          Page-8 of     Page-37 of    Page-8B of
                        Sec.II.       Sec. IX       addl. material
                        (in lakhs)    (in lakhs)    papers.
                        (1)           (2)           (3)
1. Civil Works          nil           -0.32         nil.
2. Structural Steel.    + 12.10       + 10.29       + 8.97
3. Bus Bar System       - 23.77       - 15.70       -15.70
4. Equipment            + 2.50        + 2.38        + 2.38
5. D.C. Boards          + 0.25        + 0.22        + 0.23
6. Financial Loading    Not made      + 5.87        + 5.87
7. Rebate for excess    Not made      Not made      - 5.06
Provision.                      
                        - 8.92*        + 2.74**     - 3.31***
(*). Not-9.32 lakhs; (**) not + 2.72 lakhs. (***)not-2.34 lakhs.
 

46. The appellant has also filed a statement (found at page-20 of Sec. IX) computing its evaluated bid at Rs. 2,97,06,343 with reference to “short falls of the offer of the 4th respondent”, compared to its offer. As per this statement, the 4th respondent’s evaluated bid is Rs. 3,18,91,970/-. But the appellant has not chosen to give the comparable evaluated bids of other tenderers to prove that its bid is the lowest.

47. These disputed bid valuation figures with all their technical features like loading, off-loading, cannot evidently be gone into the writ proceedings. What all this Court has to see is whether the decision is arrived at by the authorities applying the correct test and considering tenders dispassionately and without bias. The Court can interfere if the decision making process of the authorities is vitiated on any ground, but cannot interfere with the decision arrived at. This has been so held by the Supreme Court in Sterling Computers Ltd. v. M/s. M.N. Publications Ltd, 1993 (1) SCC 116 and F.C.I, v. M/s. Kamadhenu Cattle Feed Industries, .

48. In Sterling Computers Ltd. case, ‘” the Supreme Court held:

“While exercising the power of judicial review, in respect of contracts entered in to on behalf of the State, the Court is concerned primarily as to whether there has been any infirmity in the “decision making process”. In this connection reference may be made to the case of Chief Constable of North Wales Police v. Evans where it was said that: (p. 144-a).

“The purpose of judicial review is to ensure that the individual receives fair treatment, and not to ensure that the authority, after according fair treatment, reaches on a matter which it is authorised or enjoined by law to decide for itself a conclusion which is correct in the eyes of the Court”.

By way of judicial review the Court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State Courts have inherent limitations on the scope of any such enquiry. But at the same time as was said by the House of Lords in the aforesaid case, Chief Constable of the North Wales Police v. Evans the Courts can certainly examine whether “decision making process” was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution.

If the con tract has been entered into without ignoring the procedure which can be said to be basic in nature and after an objective consideration of different options available taking into account the interest of the State and the public, the Court cannot act as an appellate authority by substituting its opinion i n respect of selection made for entering into such contract. But, once the procedure adopted by an authority for purpose of entering into a contract is held to be against the mandate of Article 14 of the Constitution, the Courts cannot ignore such action saying that the authorities concerned must have some latitude or liberty in contractural matters and any interference by Court amounts to encroachment on the exclusive right of the executive to take such decision”.

49. In F.C.I. ‘s case, the Supreme Court observed as follows:

“7. In contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to Article-14 of the Constitution of. which non-arbitrariness is a significant facet. There is no unfettered discretion in public law. A public authority possesses powers only to use them for public good: This imposes the duty to act fairly and to adopt a procedure which is ‘fairplay in action’. The observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his inter action with the State and its instrumentalities, with this element forming a necessary component of the decision making process in all State actions. To satisfy this requirement of non-arbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely to be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona fides of the decision in a given case. The decision so made would be exposed to challenge on the ground of arbitrariness. Rule of law does not completely elimiate discretion in the exercise of power as it is unrealistic, but provides for control of its exercise by judicial review”.

50. A feeble argument was advanced by the learned Counsel for the appellant that there are two different statements of valuation of price bids both dt. 7-9-92 – one typed and one in manuscript. We have seen the file. Tine allegation is absolutely without substance. As per the office practice, the manuscript is the draft and typed one is the fair and there is absolutely no difference between the two. The stand of the Board is that the object of loading and off-loading is not to award contract on the evaluated price, but to know whether the bidder is having any idea about scope of the work and whether any reasonable person in this line can quote those prices.

51. Another contention urged by Sri Swamy is that negotiating with only one tenderer is bad. He relies on the following observations in M/s. C.J. Fernacleiz’s case (15 supra), at page-967.

“Assuming for purpose of argument that there has been a siight deviation from the terms of the NIT, it has not deprived the appellant of its right to be considered for the contract; on the other hand, its tender has received due and full consideration. If, save for the delay in filing one of the relevant documents, MCC is also found to be qualified to tender for the contract, no injustice can be said to have been done to the appellant by the consideration of its tender side by side with that of the MCC and in the KPC going in for a choice of the better on the merits. The appellant had no doubt also urged that the MCC had no experience in this line of work and that the appellant was much better qualified for the contract. The cooperative merits of the appellant vis-a-vis MCC are, however, a matter for the KPC (counselled by the TCE) to decide and not for the Courts. We were, therefore, rightly not called upon to go into this question”.

52. We fail to see how these observations are of any assistance to the appellant. Here, the bids of all the tenderers including the appellant and the 4th respondent were considered and the bid of the 4th respondent was found to be the lowest and hence it was given the contract. In fact this is the decision relied on by the learned Counsel for the 4th respondent.

53. We agree with the learned Counsel for the Board who has also raised a plea that in any event, the appellant cannot get the contract as it is only Alluminium Industries Ltd., whose evaluated bid of Rs. 3,13,23,986 is the lowest, that could have got the contract. We accordingly hold that the complaint of the appellant that price bids were arbitrarily evaluated by the Board is not justified.

Contention No. II (i):-

54. The next contention of the learned Counsel for the appellant is that even if it is found that the rates quoted by the appellant are higher, the Board ought to have awarded the contract to it in view of its previous experience. To appreciate this contention, Clause 2.8.1 of Section 2 of Tender Specifications is relevant and it reads as follows:

Cl. 2.8.1. – Experience:

“While being equal of comparable on other aspects preffrence will be given to those who had supplied similar plant/equipment/materials to that specified du ring the last 5 years or supplying now under a running contract. A list of such supplies should be given in a schedule”.

55. From tlis, it i s clear that preference wil1 be given to the persons who have experience provided the other things are equal. It is a matter of policy decision and especially when awarding contract to a party, who has quoted more for doing the work, there should be compelling and strong reasons to award to it in preference to the one who quoted less. Merely because it was earlier given work of Rayalaseema Thermal Power Project when its financial position was 25 the same, it does not follow that the appellant should be preferred for this work also even though it has quoted higher rates. It is also to be remembered that the appellant was not given the contract in question not because of its financial capability, but because the evaluated price of its bid was found to be more than that of the 4th respondent. Hence, the contention that the Board ought to have relaxed from the requirement of financial capability has no force. The learned Counsel has relied on voluminous documents filed by him in support his contention that the appellant has got many claims pending settlement against the Board to the extent of Rs. 2.75 crores, that it is now executing many contracts with the Board to its satisfaction and that mere accumulation of losses of about Rs. 5.96croresason31-3-1991 does not disabletheappellantfromtakingup and executing the work. But all these are not material since the appellant was denied the contract not because of its financial incapacity, but because its bid was not the lowest.

56. The learned Counsel for the appellant relies on the principle of legitimate expectation laid down in U.O.I. and Ors. v. Hindustan Development Corporation and Ors., where the Supreme Court observed as follows:

“A case of legitimate expectation would arise when a body by representation or by past practice aroused expectation which it would be within its powers to fulfil. The protection is limited to that extent and a judicial review can be within those limits. But as discussed above a person who bases his claim on the doctrine of legitimate expectation, in the first instance, must satisfy that there is a foundation and thus has locus standi to make such a claim. In considering the same several factors which give rise to such legitimate expectation must be present. The decision taken by the authority must be found to be arbitrary, unreasonable and not taken in public interest. If it is a question of policy, even by way of change of old policy, the Courts cannot interfere with a decision. In a given case whether there are such facts and circumstances giving rise to a legitimate expectation, it would primarily be a question of fact. If these tests are satisfied and if the Court is satisfied that a case of legitimate expectation is made out then the next question would be whether failure to give an opportunity of hearing before the decision affecting such legitimate expectation is taken, has resulted in failure of justice and whether on that ground the decision should be quashed. If that be so then what should be the relied is again a matter which depends on several factors”.

57. Explaining the theory in its application, the Supreme Court went on,
“….By and large they (legitimate expectations) arise in cases of promotions which are in normal course expected, though not guaranteed by way of a statutory right, in cases of contracts, distribution of largess by the Government and in somewhat similar situations. For instance in cases of discretionary grant of licences, permits or the like, carries with it a reasonable expectation, though not a legal right to renewal or nonrevocation, but to summarily disappoint that expectation may be seen as unfair without the expectant person being heard. But there again the Court has to see whether it was done as a policy or in the public interest either by way of G.O. rule or by way of a legislation……..”

58. The grounds on which the administrative action can be assailed and the relief that can be given to a party are laid down by the Supreme Court in the same case as under:

“….If that be so, a decision denying a legitimate expectation based on such grounds does not qualify for interference unless in a given case, the decision or action taken amounts to an abuse of power…….”

xxx xxx xxx

“……For instance if an authority who has full discretion to grant a licence and if he prefers an existing licence holder to a new applicant, the decision cannot be interefered with on the ground of legitimate expectation entertained by the new applicant applying the principles of natural justice. It can therefore be seen that legitimate expectation can at the most be one of the grounds which may give rise to judicial review but the granting of relief is very much limited……”

xxx xxx xxx

“If a denial of legitimate expectation in a given case amounts to denial of right guaranteed or is arbitrary, discriminatary, unfair or biased, gross abuse of power or violation of principles of natural justice, the same can be questioned on the well known grounds attracting Article-14 but a claim based on mere legitimate expectation without anything more can not ipso facto give a right to invoke these principles….”

xxx xxx xxx

“As cautioned in Attorney General for New South Wales’ case the Courts should restrain themselves and restrict such claims duly to the legal limitations. It is a well-meant caution. Otherwise a resourceful litigant having vested interests in contracts, licences etc. can successfully indulge in getting welfare activities mandated by directive principles thwarted to further his own interests. The caution, particularly in the changing scenario, becomes all the more important.”

59. We are afraid that this decision is not of any help to the appellant. First of all there is no pleading to this effect either in the Writ Petition or in the Writ Appeal. Even otherwise, there is no change of policy here. If the appellant was denied the contract on the ground of its financial position, it could have some justification to contend that hitherto it was given contracts by the Board inspite of its financial position and that there are no reasons to depart from the practice in deciding this contract, without notice to the appellant. Whether in such circumstances the appellant is entitled to the benefit of theory of legitimate expectation is also doubtful and we need not express any opinion in this case since it is academic. Thus, we reject this contention.

60. Sri Swamy, the learned Counsel for the appellant also contended that the price quoted by the 4th respondent is predatory and that the three members of the consortium formed cartel and relied on the observations of the Supreme Court in Hindustan Development Corporation case (18 supra), in para 15.

“The cartel therefore is an association of producer who by agreement among themselves attempt to control production, sale and prices of the product to obtain a monopoly in any particular industry or commodity. Analysing the object of formation of a cartel in other words, it amounts to an unfair trade practice which is not in the public interest. The intention to acquire monopoly power can be spelt out from formation of such a cartel by some of the producers. However, the determination whether such agreement unreasonably restrains the trade depends on the nature of the agreement and on the surrounding circumstances that give rise to an inference that the parties intended to restrain the trade and monopolise the same”.

61. Later, the Supreme Court said in Matsushita Electric Industrial Co. Ltd., et al v. Zenith Radio Coloration et al 89 L.Ed. 2d 538, that predatory pricing conspiracies are by nature speculative and that the agreement to price below the competition level requires the conspirators to forego profits that free competition would offer them”.

62. On the other hand, Sri Subrahmanya Reddy, the learned Counsel for tine respondents relied on the very same judgment at paras 17 and 19.

“…..Therefore mere offering of a lower price by itself, though appears to be predatory, cannot be a factor for inferring formation of a cartel unless an agreement amounting to conspiracy is also proved”.

“1.9. A mere offer of a lower price by itself does not mainfest the requisite intent to gain monopoly and in the absence of a specific agreement by way of a concerted action suggesting conspiracy, the formation of a cartel among the producers who offered such lower price cannot readily be inferred”.

63. Here, neither the question of cartel nor the question of predatory price arises. Further, this plea has not been taken by the appellant either in the Writ Petition or in the Writ Appeal.

Contention No. II (J):-

64. The last contention of the learned Counsel for the appellant is that the award of contract to the 4th respondent is vitiated by mala fides, since it was selected though the designs and drawings submitted by it are not in accordance with tender specifications and the Board not only agreed to pay higher price than what has been quoted by i t, but aIso conferred some extra benefits on it. The learned Counsel for the Board drew our attention to Clauses 6.3.0 and 6.4.0 of sub-section-D of Technical Specifications which are extracted hereunder:

Cl. 6.3.0: Contracts shall submit design calculations in support of the design and fabrication drawings submitted by him for the approval of ConsuItant /Purchaser.

Cl.6.4.0: Contractor shall check erection clearance and ensure that detailing of connection is carefully planned for easy erection.

65. Relying on these clauses, he contended that as the consultant has pointed out number of defects and deficiencies in the contract submitted by the 4th respondent, the Board took an undertaking from it that it will execute the work as per the specifications given by the consultant and as such there is no reason to reject the tender on that ground.

66. Coming to the higher price being paid, it is true that the 4th respondent has quoted Rs. 2,18,43,650/-. In the negotiations the 4th respondent was given extra amount of Rs. 19 lakhs to cover the cost of additional tonnage to make up 215 M.Tons of structural steel and 47.52 tons of R.C.C. steel as per the requirement pointed out by the consultant. The learned Counsel for the appellant criticises the stipulation of payment of extra amount to the 4th respondent in case any extra structural steel is required to be used over and above the estimated 215 M.Tons. The learned Counsel for the Board says that the possibility of using extra steel over 215 M.Tons is a remote one in view of the fact that the appellant itself has estimated use of 229.1 tons and even otherwise that the amount may be meagre. He has also drawn out attention to the Clause in the Final Acceptance of the offer dated 28-4-1993 to the effect that extra reinforced steel if any required to be used has to be borne by the 4th respondent. He has also stated that in fact the amount at which the contract was awarded was far less than the evaluated price and the Board has gained by about Rs. 39 lakhs (Rs. 2,76,54,014 the evaluated price Bid less Rs. 2,37,43,650 the price at which awarded) and that the price quoted by the appellant (Rs. 3,12,96,835) is nearly Rs. 75 lakhs higher than the price at which the contract was awarded to the 4th respondent. We agree with the contention of the learned counsel for the Board.

67. The learned counsel for the appellant has relied on clause 2.03 of subsection (B) of Standard Specification and Clauses 2.2.3. and 2.26.4 of Tender Specifications, which read as follows:

Cl.2.03.00: Should major deviations be desired by the Bidder, then a Base Offer shall be made in compliance with the specification and a separate Alternate offer may be made. Evaluation comparisons will, however, be made on the basis of Base offer only and the Alternate offer will be considered only when the Base offer of the Bidder is competitive otherwise and technically acceptable.

Alternate offer exhibits improved technology and economy over its Base Officer. Bids without Base Offer will be rejected as ‘Irresponsive’.

Cl.2.2.3.: Clarifications, amplications and/or any other correspondence from the tenderer subsequent to the opening of the tender, will not be entertained. The tenderers are, therefore, advised to ensure that their tenders sent in COMPLETE SHAPE at the first instance itself. Post tender rebates, revisions or deviations in quoted prices and /or conditions or any such offers which will give a benefit to the tender over others wil1 not only be rejected but the ORIGINAL TENDER ITSELF WILL GET DISQUALIFIED ON THIS ACCOUNT AND THE TENDERER’S EARNEST MONEY DEPOSIT FORFEITED.

Cl.2.26.4: Under no circumstances shall tenderer alter his price during the validity period after tenders are opened, any tenderer who does so resulting in recalling of tenders by the Board or additional expenditure to the Board shall not only lose his Earnest Money Deposit but also run the risk of being black listed by the Board which reserves the right under the Law to recover damages resulting therefrom.

68. The learned counsel for the appellant contended that in view of any major deviation proposed by the 4th respondent the base offer ought to have been rejected and the quoted price cannot be enhanced in any circumstances. These clauses do not indicate such a prohibition. These clauses also indicate that the tenderers while submitting their Base Offers can also submit alternate offer with major deviations if any. But evaluation of the bids will be madeonly on the basis of Base Offer. The Clauses also advises the tenderers that they should firm offers at the first instance itself and post tender modification or alteration of the price giving benefit to the tenderers over others will result in disqualification of the original tender itself. As can be seen, these apply to unilateral alteration of price due to any reason including as a result of major deviations. But here the amount of Rs. 19 lakhs is the amount agreed to by the Board through negotiations and not the amount demanded by the 4th respondent unilaterally. Further, by this enhancement of Rs. 19 lakhs, the 4th respondent does not derive any benefit over the other tenderers since even after the addition of Rs. 19 lakhs, the evaluated price bids of all the tenders are not disturbed and the bid of the 4th respondent continued to be the lowest of all the tenderers.

69. The plea of mala fides raised by the appellant is without any merit. It is well settled that the burden of establishing mala fide is on the person who alleges the same. (See: E.P. Royappa v. State of Tamil Nadu, and M. Sankaranarayana, IAS v. State of Karnataka, . In E.P. Royappa’s case, the Supreme Court, observed as follows:

“92. Secondly, we must not also overlook that the burden of establishing mala fides is very heavy on the person who alleges it. The allegations of. mala fides are often more easily made than proved, and the very seriousness of such allegations demands proof of a high order of credibility. Here the petitioner, who was himself once the Chief Secretary, has flung a series of charges of oblique conduct against the Chief Minister. That is in itself a rather extraordinary and unusual occurrence and if these charges are true, they are bound to shake the confidence of the people in the political custodians of power in the State and therefore, the anxiety of the Court should be all the greater to insist on a high degree of proof. In this context it may be noted that top administrators are often required to do acts which affect others adversely but which are necessary in the execution of their duties. These acts may lend themselves to misconstruction and suspcion as to the bona fides of their author when the full facts and surrounding circumstances are not known. The Court would, therefore, be slow to draw dubious inferences from incomplete facts placed before it by a party, particularly when the imputations are grave and they are made against the holder of an office which has a high responsibility in the administration. Such is the judicial perspective devaluating charges of unworthy conduct against ministers and other high authorities, not because of any special status which they are supposed to enjoy, nor because they are highly placed in social life or administrative set up – these considerations are wholly irrelevant in judicial approach – but because otherwise, functioning effectively would become difficult in a democracy. It is from this stand-point that we must assess the merits of the allegations of mala fides made by the petitioner against the second respondent”.

70. In Sankaranarayana’s case , the Supreme Court observed that it may be permissible in an appropriate case to draw reasonable inference of mala fides from the facts pleaded and established. But such inference must be based on factual matrix, which cannot remain in the realm of insinuation, surmise or conjecture.

71. The learned Counsel for the appellant heavily relied on the decision of a Full Bench of this Court in Kranth Sangram Parishath v. Sri N. Janardhan Reddy, 1992 (3) ALT 99 (F.B.). It was held in that case,
“It is of paramount importance that decisions affecting the lives and liberties of citizens are rendered by people who are impartial, act fairly and bring to bear a dispassionate and objective consideration to the issues involved”.

72. There is absolutely no dispute about this proposition and whether there is bias or not has to be decided on the facts and circumstances of each case. In the instant case, there is no material to show bias on the part of any member of the Board or Chairman or late Chairman in favour of the 4th respondent or against the appellant.

73. Apart from this, there is another hurdle in the way of the appellant. The appellant did not raise this plea of bias before the Board at various levels when the matter was considered and took a chance of getting a favourable order from the Board awarding the contract. Having failed, it is not now open to it to allege bias. The observations of the Supreme Court in G. Sarana v. Lucknoxv University, are apposite:

“We do not, however, consider it necessary in the present case to go into the question of the reasonableness of bias or real likelihood of bias as despite the fact that the appellant knew all the relevant facts, he did not before appearing for the interview or at the time of the interivew raise even his little finger against the constitution of the Selection Committee. He seems to have voluntarily appeared before the Committee and taken a chance of having a favourable recommendation from it. Having done so, it isnot now open to him to turn round and question the constitution of the Committee. This view gains strength from a decision of this Court in Manak Lal’s case (supra) wherein more or less similar circumstances, it was held that the failure of the appellant to take the identical plea at the earlier stage of the proceedings created an effective bar of waiver against him. The following observations made therein are worth quoting:-

“It seems clear that the appellant wanted to take a chance to secure a favourable report from the tribunal which was constituted and when he found that he was confronted with an unfavourable report, he adopted the devise of raising the present technical point”.

74. In reply to the contention raised by the respondents that in any event it is only Alluminium Industries Ltd., which is the lowest tenderer that could complain, and which has not come to the Court and it is not for the appellant to champion its cause, the learned Counsel for the appellant relied on the decision in Bangalore Medical Trust v. B.S. Muddappa, wherein the Supreme Court observed as follows:

“….It is too late in the day, therefore, to claim that petition filed by inhabitants of a locality whose park was converted into a nursing home had no cause to invoke equity jurisdiction of the High Court. In fact public spirited citizens having faith in rule of law are rendering great social and legal service by espousing couse of public nature. They cannot be ignored or overlooked on technical or conservative yardstick of the rule of locus standi or absence of personal loss or injury. Present day development of this branch of jurisprudence is towards free movement both in nature of litigation and approach of the Courts. Residents of locality seeking protection and maintenance of environment of their locality cannot be said to be busy bodies or interlopers . Even otherwise physical or personal or economic injury may give rise to civil or criminal action but violation of rule of law either by ignoring or affronting individual or action of the executive in disregard of the provisions of law raises substantial issue of accountability of those entrusted with responsibility of the administration. It furnishes enough cause of action either for individual or community in general to approach by way of writ petition and the authorities cannot be permitted to seek shelter under cover of technical) ties of locus standi nor they can be heard to plead for restraint in exercise of discretion as grave issues of public concern outweight such considerations”.

75. The learned Counsel for the appellant contends that applying the above principle, this can be treated as a public interest litigation. On the other hand, in Janata Dal v. H.S. Choudary, , Justice Ramaval Pandian speaking for the Bench, a fter reviewing all the cases of public in terest litigation held that persons acting bona fide and having sufficient interest in instituting an action for redressal of public wrong or public injury, to advance the cause of community or disadvantaged groups and individuals can maintain public interest litigation. The Supreme Court also held that mere busy body or a meddlesome interloper or way farer or officious intervener has no locus standi to file public interest litigation for personal gain or private motivation or any other oblique consideration or for glare of publicity.

76. In the instant case, no interest of any disadvantaged group of individuals is vindicated. The appellant does not come within the parameters laid down by the Supreme Court in the Janata Dai’s case (24 supra). As already seen, the Writ Petition and the Writ Appeal have been filed due to the business rivalry of the appellant with the 4th respondent and because he was not successful in getting the contract.

77. For the above, reasons, the Writ Appeal is dismissed with costs. Advocates fee Rs. 1,000/-.

78. After pronouncing the judgment Sri B.S.A. Swamy, the learned Counsel for the Appellant, has sought oral leave for appeal to Supreme Court. We do not think that this case involves any substantial question of law of general importance which needs to be decided by the Supreme Court. Accordingly leave is refused.