ORDER
1. The petitioner in the instant writ petition challenges the decision of respondents 1 and 2 awarding the contract of Power/mechanised washing of linen work at Secunderabad as notified in Tender notice No.C/C/409/Tender notice/SC Division 2000 dated 5-7-2000 in favour of the third respondent. The petitioner seeks a writ of mandamus declaring the action of the respondents 1 and 2 in awarding the said contract to the third respondent as illegal and violative of Article 14 of the Constitution of India.
2. The scope of judicial review in the case of a tender awarded by a public authority is well settled. The Supreme Court time and again reiterated the principles of judicial review in the matter of exercise of contractual powers by the Government and its instrumentalities. The principles of judicial review “can apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness of favouritism.” The Supreme Court acknowledged the inherent limitations in the exercise of the power of judicial review and held that “right to choose” cannot be considered as an arbitrary power. Of course, if this power is exercised for any collateral purpose, the exercise of that power will be struck down.”
3. The Supreme Court after examining number of authorities on the subject concluded that:
1. The modern trend points to judicial restraint in administrative action.
2. The Court does not sit as a Court of appeal but merely reviews the manner in which the decision was made.
3. The Court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without
the necessary expertise, which itself may be fallible.
4. The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract.
5. The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative or quasi-administrative sphere. However, the decision can be tested by the application of the “Wednesbury principle” of reasonableness and the decision should be free from arbitrariness, not affected by bias or actuated by mala fides.
6. Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure (See Tata Cellular v. Union of India, (1994) 6 SCC 651).
In Raunaq International Limited v. I.V.R.Construction Limited, , the Supreme Court held that “the Court must be satisfied that there is some element of public interest involved” in entertaining petitions challenging the award of a contract by a public authority or the State. If the dispute is purely between two tenderers, the Court must be very careful to see if there is any element of public interest involved in the litigation. A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. It is observed by the Supreme Court that unless the Court is satisfied that there is a substantial amount of public interest, or the transaction is entered into mala fide, the Court should not intervene under Article 226 of the
Constitution of India in disputes between two rival tenderers.
4. In Monarch Infrastructure (Private) Limited v. Commissioner, Ulhasnagar Municipal Corporation, , the legal” position in the matter of tender process and award of contract and the parameters of judicial review are summed up:
1. The Government is free to enter into any contract with citizens but the Court may interfere where it acts arbitrarily or contrary to public interest.
2. The Government cannot arbitrarily choose any person it likes for entering into such a relationship or to discriminate between persons similarly situate.
3. It is open to the Government to reject even the highest bid at a tender where such rejection is not arbitrary or unreasonable or such rejection is in public interest for valid and good reasons.
It is held by the Supreme Court that the Courts would not interfere “:with the matter of administrative action or changes made therein, unless the Government’s action is arbitrary or discriminatory or the policy adopted has no nexus with the object it seeks to achieve or is mala fide”
5. We shall bear these principles in mind and proceed to evaluate the decision making process by the respondents in awarding the contract to the third respondent herein.
6. The decision is mainly attacked on the touchstone of Article 14 of the Constitution of India. Sri K. Ramakrishna Reddy, learned senior Counsel contends that the decision of the respondents in awarding
the contract to the third respondent is not only arbitrary but also it is against the public interest. He contended that the respondents have committed an illegality in rejecting file lowest offer of the petitioner resulting in loss to the exchequer. According to the learned senior Counsel, it is eminently a fit case requiring the Court’s interference in public interest.
7. Learned Standing Counsel contends that the decision making process is absolutely transparent. The respondents have not committed any illegality in accepting the offer of the third respondent. Mere fact that the offer of the petitioner herein is lowest compared to that of the third respondent itself is not a ground for awarding the contract. Public interest parameters have been duly taken into consideration by the respondents in awarding the contract. Learned Counsel for the third respondent submitted that the petitioner is not entitled for the award of the contract, as he does not possess the requisite infrastructure in terms of the tender notification.
8. The respondent-Railways invited open tenders for award of the work of washing of Bed Rolls (linen) vide tender notice dated 5-7-2000. The period of contract was specified to be two years from the date of opening of the contract. Six persons including the petitioner have participated and offered their respective quotations. The petitioner is the lowest tenderer at a value of Rs. 37,10,354-40 paise and the third respondent is the second lowest tenderer of Rs. 40,13,422-56 paise. Admittedly, the petitioner is the lowest tenderer. The tenders were opened on 24-8-2000. The details of financial status of the tenderers, their capability of washing linen by power/mechanised system, the equipment available with them etc., for the purpose was ascertained by a Committee of three commercial supervisors, and their
observations were made available and placed before the Tender Committee.
9. The Tender Committee minutely examined the offers made by the parties, particularly the financial status of the tenderers, their capability of washing linen by power/mechanised system and infrastructure available with them. The Tender Committee observed that the minimum compliment of equipment required for washing of 3000 bed sheets, 1500 pillow covers and 1500 towels as stipulated in condition No. 18.0 of terms and conditions of the contract would be:
Sl. No.
Description
Capacity
Number
1.
Steam cleaning washing machine
200 Kg.
1 No.
2.
Hydro Extractor
50 Kg.
1 No.
3.
Calendar machine
–
2
Nos.
4.
Drying machine
50 Kg.
1 No.
5.
Generator
10 KVA
1 No.
6.
Water treatment plant
–
1 No.
10. That apart, the minimum drying space open to sunlight of 300 sq. yards should be available. The requirement is that the tenderer should have his own water resources in the form of bore well in his premises and own transport facility.
11. The Tender Committee observed that the petitioner has taken on lease a washing unit besides Supreme Laundry owned by one K. Srisailam at Ramanthapur. It is noticed by the Committee that the lease agreement between the said Srisailam and the petitioner does not clearly specify the area and equipment that is leased to the petitioner. In the circumstances, two commercial supervisors were deputed to ascertain the actual position of the extent of area and the actual equipment available in the leased area to take up washing of bedrolls etc. The Supervisors submitted
their report. The Supervisors after examining the premises noticed that washing machine and hydro extractor are available in the area earmarked for lease in favour of the petitioner. But such other equipments, such as, calendar machine, drier, boiler and water treatment plant were not available. The Supervisors have also noticed that no separate water resource as such is available in the leased area.
12. The Tender Committee having examined the matter has opined that the equipments and facilities available in the area obtained on lease by the petitioner from the said Srisailam does not satisfy the basic requirements of equipment need to undertake the job of washing of bedrolls.
13. The Tender Committee also noticed that the petitioner is a partner of M/s. Unique Laundry. One Abdulla Veerani, another partner of M/s. Unique Laundry is being considered for award of bedroll washing contract for Hyderabad-II Station against the machinery available with M/s. Unique Laundry. It appears that the petitioner also furnished the details of equipment of the same firm for award of the work. The Tender Committee opined that the availability of infrastructure with M/s. Unique Laundry cannot be taken into consideration as the same is already taken into consideration as against the offer made by one of the partners of M/s. Unique Laundry for award of the work for Hyderabad-II Station. Obviously, the petitioner is also conscious that she is not entilled to show the equipment available with M/s. Unique Laundry for consideration of her claim for award of the contract, since the same is shown as equipment by another partner of the same firm. Precisely, for that reason, the petitioner obtained a lease deed from one Srisailam about which we have already referred to hereinabove.
14. The Tender Committee after taking all the factors into consideration, decided,
“to pass over the offer of Mrs. Farida A. Lakhani.” The Committee accordingly proceeded to evaluate the offer of the third respondent whose offer is next best to that of the petitioner. After making a detailed analysis of the infrastructure and equipment, the Tender Committee observed that none of the tenderers possess “all the stipulated compliment of equipment completely,” However, the Tender Committee came to the conclusion that the third respondent is having two washing machines, a Hydro extractor, a calendar machine, a drier and other equipment and thus satisfied the minimum/essential and bare equipment for power/mechanised washing.
15. The Tender Committee made a detailed analysis of the offer made by the petitioner and the third respondent respectively and accordingly observed:
1″As can be seen from the above, the cost of washing of one set of bed roll as quoted by Sri M. Muralidhar is Rs.3.33 against the existing rate of Rs.4.34. This rate is comparable to the rate of the lowest tender of Mr. Abdulla Veerani of Hyderabad-11 tenderer, which are under consideration for acceptance, though the rates for individual items of bed sheets, pillow covers and face towels are varying.”
16. For all the aforesaid reasons, the Tender Committee opined that the offer made by the third respondent is reasonable and hence considered acceptable keeping in view the financial advantage to the Railways. The competent authority accordingly accepted the recommendations of the Tender Committee.
17. One more aspect required to be noticed is that the Railways to avoid monopoly to any of the contractors and to avoid inconvenience and hardship to the travelling passengers, thought it fit to award the contracts to different contractors
and accordingly adopted and followed the system of awarding contracts to different persons. Earlier, the whole of the contract of Secunderabad was being awarded to only one contractor. The Railways thought it fit to divide the existing work into three units, viz., Hyderabad-I, Hyderabad-II and Secunderabad. M/s. Unique Laundry of which the petitioner is one of the partners was being awarded the contract work, since 1995. The petitioner claims to have executed the contract without any complaint whatsoever.
18. The partners of M/s. Unique Laundry appear to have deviced a system for themselves to obtain more than one contract for themselves. The partnership firm as such could not have obtained more than one of three works, since there is a prohibition imposed in the terms and conditions of the notification specifying that the contract for power/mechanized washing will not be awarded to an individual/firm for more than one of the three works. It is under those circumstances, the partners appear to have deviced a scheme of submitting the offers for Hyderabad-I as well as Secunderabad in their individual capacity by showing the same infrastructure and equipment of M/s. Unique Laundry. In the instant case, we are concerned with the awarding of the work for Secunderabad. It is nothing but an attempt to circumvent one of the terms and conditions of the tender notification.
19. The question that falls for consideration is as to whether the respondents-Railways have committed any illegality and acted in any arbitrary manner. We have already noticed the legal position that no lowest tenderer has any right in law as such for an automatic award of the contract. It is true; there must be discemable reasons for not accepting the lowest offer. The reasons could be many. We have already noticed that the Tender Committee minutely
and microscopically examined each of the offers made by the tenderers and their respective capacity to undertake the work with reference to availability of the machinery, infrastructure, equipment etc. The observations of the Tender Committee that the petitioner and her other partner Abdulla Veerani who is competing for awarding of the work of Hyderabad-I cannot be allowed to take advantage of the same infrastructure available with M/s. Unique Laundry of which the petitioner and the said Abdulla Veerani are the partners. It appears that if the same is taken out of the consideration, the leased portion of the premises obtained by the petitioner from one Srisailam does not satisfy the requirements according to the terms and conditions of the tender notification. That apart, it is also required to notice that the petitioner obtained lease dated 15-9-2000 from the said Srisailam, who has also submitted tender for washing of bed rolls for Hyderabad-I by showing the same premises and machinery, which is leased to the petitioner. It is interesting to notice that the said Srisailam executed the lease deed in favour of the petitioner after opening of the tenders by leasing out a portion of the premises. The facts would undoubtedly reveal that the petitioner made an attempt to contrive a situation and present as if she possesses the necessary infrastructure, equipment and machinery for undertaking the work. The infrastructure possessed by the petitioner as well as the other partner who is competing for award of the work of Hyderabad-I is one and the same owned by M/s. Unique Laundry, of which the petitioner and one Abdulla Veerani are the partners. According to the revised policy of the Railways, M/s. Unique Laundry if at all could have competed for awarding of only one contract out of three, viz., Hyderabad-I, Hyderabad-II and Secunderabad. To overcome the said terms and conditions, the petitioner and her partner deviced the present method and accordingly applied
individually for the award of the work of both Hyderabad-I and Secunderabad by showing the same equipment of M/s. Unique Laundry. The Tender Committee during the evaluation of the tenders, noticed all these facts and after making pragmatic assessment of the offer made by the petitioner as well as the third respondent, opined that it would be in the interest of the Railways to accept the offer made by the third respondent.
20. It is also required to notice that the Tender Committee made an assessment of reasonableness of rates and observed:
6.5. Reasonableness of rates:
6.5.1. The offer of Shri M. Muralidhar at Rs. 40,13,422.56 is lower than the tender estimated value of Rs. 53,84,037/- by 25.47%.
6.5.2. There are three major items in this tender for washing of bedrolls, and they are washing of bed sheets, pillow covers and face towels.
6.5.3. For washing of bed sheets Shri M. Muralidhar has quoted Rs.1.35 ps. per bed sheet against the existing rate of Rs.1.39 ps. This rate is slightly lower than the existing rate and hence it is considered reasonable.
6.5.4. For washing of pillow covers and face towels Shri M. Muralidhar has quoted the rates of Rs.0.36 ps. and 0.27 ps. against the existing rates of Rs.0.74 ps. and 0.82 ps. respectively. These rates are about 51% and 67% lower than the existing rates.
6.5.5. It is noted by Tender Committee that the following are the rates quoted by Shri M. Muralidhar in the present tender, by the lowest acceptable tenderer Shri Abdulla Veerani in the tender for Hyderabad-11 which is also under consideration by the Tender
Committee and the rates in the existing contract.
A Grade
Officers
B Grade
Asst. Managers (Junior Mgmt.)
C Grade
Dy. Managers
D Grade
Managers
E Grade
Senior Manager (Middle Mgmt.)
F Grade
Chief Managers
G Grade
Dy. General Managers
H Grade
General Manager (Senior Mgmt.)
I Grade
Executive Directors
J Grade
Directors.
# One set of bed roll normally given for washing
consist of two bed sheets, one pillow cover
and one face towel.
6.5.6. As can be seen from the above, the cost of washing of one set of bed roll as quoted by Sri M. Muralidhar is Rs.3.33 against the existing rate of Rs.4.34. This rate is comparable to the rate of the lowest tenderer of Mr. Abdulla Veerani of Hyderabad-II tenderer, which are under consideration for acceptance, though the rates for individual items of bed sheets, pillow covers and face towels are varying.
6.5.7. As, normally, while giving bed rolls for washing, the bed sheets, pillow covers and face towels are given in the fixed ratio of 2:1:1 higher rate for bed sheets and lower rates for pillow cover, and face towels quoted by Mr. M. Muralidhar than Shri Abdulla Veerani in Hyderabad-II tender is not likely to lead to undue advantage to Shri M. Muralidhar.
6.5.8. Therefore, the Tender Committee has felt that the rates offered by Shri M,
Muralidhar are reasonable and hence considered acceptable keeping in view the financial advantage to the Railways.
21. On what basis, this Court should take a different view other than the one taken by the Tender Committee and accepted by the competent authority to award the contract to the third respondent? There is no dispute whatsoever that this Court does not exercise any appellate jurisdiction over the decision of the Tender Committee and the competent authority. The decision making process in the instant case is absolutely transparent. The respondents, obviously, felt that it would not be safe to award the contract to the petitioner due to non-availability of requisite infrastructure, machinery, equipment, water resources etc. It is true; in stricto senso the third respondent also does not fulfil and satisfy all the terms and conditions of the tender notification. But, on a pragmatic assessment of the relative merits, the Tender Committee as well as the competent authority arrived at the conclusion that the third respondent satisfies the minimum requirement–for awarding the contract. It is true as contended by the learned senior Counsel that it was open to the Railways to call for the fresh tenders. The Railways could have done that. But, they have chosen to award the contract to the third respondent after making thorough assessment of the competing claim of the petitioner and the third respondent. The decision making process, in my considered opinion, is not vitiated for any reason whatsoever. The financial aspects and the advantages of accepting the offer of the third respondent have also been taken into consideration by the Tender Committee. May be, there is a possibility of taking a different view other than the one taken by the respondents and not to award the contract either to the petitioner or third respondent, but call for fresh tenders/quotations. But, that itself would not be a ground to set aside
and interfere with the decision of the Railways. Mere possibility of taking an alternative decision itself is no ground to quash the award of the contract by the competent authority. In my considered opinion, in no manner, the public interest is adversely affected by the decision of the Railways. Awarding of the work to a person without requisite infrastructure, machinery, equipment etc., would not sub-serve any public interest.
22. For the aforesaid reasons, I do not
find any merit in this writ petition. The
same shall accordingly stand dismissed. No
order as to costs.