{"id":199781,"date":"1986-05-09T00:00:00","date_gmt":"1986-05-08T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/harminder-singh-arora-vs-union-of-india-ors-on-9-may-1986"},"modified":"2018-01-12T10:43:21","modified_gmt":"2018-01-12T05:13:21","slug":"harminder-singh-arora-vs-union-of-india-ors-on-9-may-1986","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/harminder-singh-arora-vs-union-of-india-ors-on-9-may-1986","title":{"rendered":"Harminder Singh Arora vs Union Of India & Ors on 9 May, 1986"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Harminder Singh Arora vs Union Of India & Ors on 9 May, 1986<\/div>\n
Equivalent citations: 1990 SCALE (1)145<\/div>\n
Author: M Rangnath<\/div>\n
Bench: Misra Rangnath<\/div>\n
           PETITIONER:\nHARMINDER SINGH ARORA\n\n\tVs.\n\nRESPONDENT:\nUNION OF INDIA & ORS.\n\nDATE OF JUDGMENT09\/05\/1986\n\nBENCH:\nMISRA RANGNATH\nBENCH:\nMISRA RANGNATH\nPUNCHHI, M.M.\n\nCITATION:\n 1990 SCALE  (1)145\n\n\nACT:\n     Constitution of  India,  Arts.  32\t and  226-Government\nContracts by calling tenders-Whether can be assailed in writ\nproceedings as infringing fundamental rights.\n     Government Contracts  by tenders-Variation\t of terms of\ntender-Whether notice to parties obligatory.\n\n\n\nHEADNOTE:\n     The appellant  is carrying\t on  the  business  of\tbulk\nsupply of  milk and milk products for the last twenty years.\nHe has\ta plant for pasteurization at Pune. On July 16, 1985\nthe officer-in-charge  of the  Military Farms-respondent No.\n2, issued tender notice for the supply of pure fresh buffalo\nand cow\t milk. The  appellant being  eligible and already on\nthe approved  list of  the respondent authority, submitted a\ntender offering\t fresh buffalo\tmilk of\t the  specified\t fat\ncontent and  gravity giving  a rate  of R.S..  421  per\t 100\nlitres. The  General Manager,  Government Milk Scheme, Pune-\nrespondent No.\t4, also submitted a tender for the supply of\npasteurized milk,  an item  not contemplated  by the  tender\nnotice, at  Rs.400 per\t100 litres.  Tenders were  opened on\nAugust 23,  1985 and  the appellant  was  found\t the  lowest\nbidder.\n     The Military  officer concerned  submitted a  report to\nthe higher authority stating that the appellant was not only\nthe lowest  'bidder but\t also that the purchase of milk from\nhim would  be profitable,  while the  purchase of  milk from\nrespondent No.\t4 would result in serious loss to the extent\nof rupees  ten lakhs or so. But all the same, the respondent\nauthority accepted  the higher\tbid of\trespondent No. 4, in\npreference to the lower bid of the appellant contrary to the\nterms of  the notice  inviting tender.\tFeeling aggrieved by\nthe rejection  of his  tender, the  appellant challenged the\norder by  filing a writ petition in the High Court which was\ndismissed in limine.\n     In this  appeal by\t special  leave\t on  behalf  of\t the\nappellant it was\n64\ncontended  that\t  even\tin  the\t matter\t of  contracts,\t the\nGovernment has\tto act\tfairly and justly and the failure of\nthe Government\tto do  so gives\t a right  to the  citizen to\napproach the court for justice, that the authority concerned\nin rejecting his tender had acted contrary to the principles\nof law,\t unfairly, arbitrarily\tand discriminately, that the\ntender submitted  by respondent\t No. 4 was not in consonance\nwith the  tender notice and it should have been ignored, and\nthat if\t the authority wished to alter the conditions of the\ntender notice it was obligatory and mandatory for it to call\nhim for\t negotiation. It  was further  contended that the 10\nper cent price preference given to respondent No. 4 contrary\nto  the\t  terms\t of   the  tender  notice  was\tillegal\t and\ndiscriminatory.\n     On behalf\tof the\trespondents it\twas  contended\tthat\nrespondent No.\t4 being\t the Government\t agency was  rightly\nawarded the  contract as per the policy of the Government of\nIndia laid down in notification dated August 13, 1385.\n     Allowing the appeal, the Court,\n^\n     HELD: 1.  The Government may enter into a contract with\nany  person   but   in\t so   doing   the   State   or\t its\ninstrumentalities cannot  act arbitrarily. It is open to the\nState to  adopt a policy different from the one in question,\nbut once  the authority\t or the\t State Government chooses to\ninvite tenders\tthen it\t must abide  by the  result  of\t the\ntender. [75 C-D; 77 D-E]\n     2. The  High Court\t was not justified in dismissing the\nwrit petition  in limine by saying that the question relates\nto the contractual obligation and the policy decision cannot\nbe termed as unfair or arbitrary. [77 E]\n     There was\tno question  of any  policy decision  in the\ninstant case.  The notification dated August 13, 1985 laying\ndown the  policy came in after July 16, 1985 when respondent\nNo. 2  issued tender  notice. The  instrumentalities of\t the\nState having invited tenders for the supply of fresh buffalo\nand cow\t milk, these  were to be adjudged on their intrinsic\nmerits in  accordance with  the terms  and conditions of the\ntender notice. The contract for the supply of milk was to be\ngiven to  the lowest  bidder under  the terms  of the tender\nnotice and  the appellant being the lowest bidder, it should\nhave been  granted to  him. The authority acted capriciously\nin accepting  a\t bid  which  was  much\thigher\tand  to\t the\ndetriment of the State. [75 B-D; 77 D-F]\n     3. Where  the tender form submitted by any party is not\nin con-\n65\nformity with  the conditions  of the  tender notice the same\nshould not  be A accepted. So also, where the original terms\nof the tender notice are changed the parties should be given\nan opportunity\tto submit  their tenders  in conformity with\nthe changed terms. [72 C-E]\n     4. The  authority acted  arbitrarily in allowing 10 per\ncent price  preference to  respondent No.  4. The  terms and\nconditions of the tender had been incorporated in the tender\nnotice itself  and that\t did not  indicate  any\t such  price\npreference to  government undertakings.\t The only concession\navailable to  Central\/State  Government\t or  to\t the  purely\ngovernment concerns  was under\tpara 13\t of the notice, that\nis, that  they need  not pay  tender form  fee\tand  earnest\nmoney. No other concession or benefit was contemplated under\nthe terms of the tender notice. [73 A-C ]\n     Ramana Dayaram  Shetty  v.\t The  International  Airport\nAuthority of  India &  Ors.,<\/a> [1979]  3 SCR  1014; V.  Punnan\nThomas v. State of Kerala, AIR 1969 Kerala 81; C.K. Achuthan\nv. State  of Kerala<\/a>  [1359] Suppl.  1 SCR  787; Viklad\tCoal\nMerchants, Patiala  etc. etc.  v. Union\t of India & Ors. AIR\n1984 SC\t 95; and Madhya Pradesh Ration Vikreta Sangh Society\nJUDGMENT:\n<\/pre>\n
SCR 750, referred to.\n<\/p>\n
&
\n     CIVIL APPELLATE  JURISDICTION: Civil  Appeal No. 824 of
\n1986<\/span>
\n     From the  Judgement and  order dated  10. 1.1986 of the
\nBombay High Court in W.P. No. 5327 of 1985.\n<\/p>\n
     S.N. Kacker.  Rani Chhabra\t and Swatanter Kumar for the
\nAppellant.\n<\/p>\n
     V.S. Desai,  C.V.\tSubba  Rao,  A.S.  Bhasme  and\tA.M.
\nKhanwilkar for the Respondents.\n<\/p>\n
     The Judgment of the Court-was delivered by
\n     R.B. MISRA,  J. The  present appeal by special leave is
\ndirected against  the judgment\tand order  dated January 10,
\n1986 of\t the High  Court of  Judicature at Bombay dismissing
\nthe petition  under Article 226 of the Constitution filed by
\nthe appellant.\n<\/p>\n
     The appellant  is carrying\t on  the  business  of\tbulk
\nsupply of milk,
\n66<\/span>
\nproducts and  milk cream etc. The appellant is well-known in
\nthe said field and has a plant of pasteurization in Pune and
\nhas been  carrying on the said business for more than twenty
\nyears. The appellant installed a plant for pasteurization at
\na heavy\t cost  to  the\ttune  of  rupees  three\t lakhs.\t The
\nappellant has  been supplying  large quantities\t of milk and
\nmilk products pasteurized or otherwise to various companies,
\nGovernment Departments\tincluding respondents  Nos. 2 and 3.
\nThe appellant  as a registered contractor has been supplying
\nfresh buffaloes\t and cows milk to respondent Nos. 2 and 3 as
\nper  the   requirements\t for  the  last\t twenty\t years.\t The
\nappellant is  on their approved list for the same period and
\nhis supplies  and work\twere always appreciated and accepted
\nby the respondents for all these periods.\n<\/p>\n
     The appellant is also capable of supplying any quantity
\nof pasteurized\tmilk and,  indeed, he  had been supplying to
\nvarious organisations  the milk\t and milk  products and also
\npasteurized milk.  Later on  Respondent No.  2, the officer-
\nincharge of  the Military  Farms, Pimpri,  directed that the
\nlocal purchase of milk be stopped and regular supply under a
\ncontract by  inviting tenders  be effected. Accordingly, the
\nappellant’s contract  for supply  of fresh  buffalo and\t cow
\nmilk ended in 1984
\n     The Military  Farm had its own plant for pasteurization
\nand for\t all these  years respondents  Nos. 2 and 3 had been
\nmaking purchases  of only  fresh buffalo  milk and  used  to
\npasteurize the\tmilk for  their own  purposes in  their\t own
\nplant. The  plant of  respondents 2  and 3  is very  much in
\noperation till\tto-day and  also on  the  date\tof  inviting
\ntenders in question .\n<\/p>\n
     Respondent No.  2 issued  on or  about  July  16,\t1985
\ntender notices\tfor the supply of fresh buffalo or cow milk.
\nThe said  tender notice\t was published in the Indian Express
\non July\t 29, 1985.  The tender\tnotice was  also sent to the
\nappellant  by\tRespondent  No.\t  2   by   registered\tpost
\nacknowledgement due  which was\treceived by the appellant in
\nJuly 1985.  By the  said tender\t notice, the  respondent had
\ninvited tenders\t for supply  of fresh buffalo or cow milk at
\nMilitary Farms of Pimpri, Pune. The appellant being eligible
\nand  already   on  the\tapproved  list\tof  the\t respondents
\nsubmitted a  tender for\t supply of  fresh  buffalo  milk  to
\nrespondents 2  and 3  as per  the requirements stated in the
\ntender notice.\tThe appellant  had offered  the milk  at the
\nrate of Rs.4.21 per litre having 6 per cent fat and specific
\ngravity of  1.030 as  required in  the tender  notice, thus,
\ngiving a rate of Rs.421 for each 100 litres.\n<\/p>\n
67<\/span><\/p>\n
Respondent No. 4, General Manager, Government Milk Scheme, A
\nPune, also  submitted a\t tender but the tender of respondent
\nNo. 4 related not to the item asked for in the tender notice
\nviz. fresh  buffalo or cow milk but related to the supply of
\npasteurized milk. While the cow milk asked for in the tender
\nprovided for  4 per  cent fat  with a  specific\t gravity  of
\n1.029, respondent  No. 4  agreed to  supply pasteurized milk
\nfor Rs.4 per litre, that is Rs.400 per 100 litres.\n<\/p>\n
     It appears that after the submission of the tender, the
\nappellant received  a notice  dated October  30,  1985\tfrom
\nrespondent Nos.\t 2 and\t3 requesting the appellant to extend
\nthe validity period of tender up to November 30, 1985 on the
\nsame  terms  and  conditions  as  mentioned  in\t the  tender
\nsubmitted by  the appellant.  The appellant  acceded to\t the
\nrequest and  extended the  validity period till November 30,
\n1985 in\t view of  the long  standing business  and his\tgood
\nrelations with respondents 2 and 3.\n<\/p>\n
     During  this   period  respondents\t 2  and\t 3  kept  on
\nreceiving  sup-\t  plies\t of   fresh  buffalo   milk  to\t the
\nsatisfaction till the appellant was asked to stop the supply
\nfrom November  20, 1985\t vide letter dated October 30, 1985,
\nalthough  the\tappellant  had\tbeen  requested\t earlier  to
\ncontinue the  supply at\t least up  to December\t1, 1985 vide
\nletter dated  October 30,  1985. The  appellant thus  had to
\nsuffer a  huge loss on account of the abrupt stoppage of the
\nsupply.\n<\/p>\n
     Tenders were  opened on  August 23, 1985. The appellant
\nwas the\t lowest bidder.\t The rates given by the appellant in
\nthe tender  for supply\tof fresh  buffalo milk was lower and
\ntender of  respondent No. 4 could be of no consequence as it
\nwas for\t a different  item not\tcontemplated by\t the  tender
\nnotice. The  tender given  by Respondent  No. 4\t was however
\naccepted on  November 19-20,  1985 and\tthe  tender  of\t the
\nappellant was  rejected although  it was  lower than that of
\nrespondent No. 4. The concerned officer had made a report to
\nthe higher  authorities about  the two tenders, one from the
\nappellant and  the other  from respondent No. 4, vide letter
\ndated August  23, 1985. It will be appreciated at this stage
\nto refer  to the advice given by the officer concerned which
\nis as follow:\n<\/p>\n
\t  “CONCLUSION OF  CONTRACT FOR\tSUPPLY OF MILK AT PR
\n\t  MF KIRKEE \/ PIMPRI.\n<\/p><\/blockquote>\n
\t  1. Reference discussion DDME and ADMP of date.\n<\/p><\/blockquote>\n
68<\/span><\/p>\n
\t  2. The information required is given below:\n<\/p><\/blockquote>\n
\t  (a) The  cost of  blended milk  and standard\tmilk
\n\t  taking the buff milk rate of Rs.421 for 100 litres
\n\t  works out to:<\/p><\/blockquote>\n
\n\t  i)  Blended Milk (Taking\t     -Rs.3.59per lit\n\t      of BMP Rs.28 per kg.)\n\t      10% price preference\t     -Rs.0.36\n\t\t\t\t\t      --------\n<\/pre>\n
\t  ii) Standard Milk (Taking cost of  -Rs.3.48 per
\n\t      litre separated milk Rs.2.30
\n\t      per litre)
\n\t      10% price preference\t     -Rs.0.35\n<\/p><\/blockquote>\n
\t\t\t\t\t      ——–\n<\/p><\/blockquote>\n
\t\t\t\t\t      Rs.3.83\n<\/p><\/blockquote>\n
\t\t\t\t\t      ——–\n<\/p><\/blockquote>\n
\t  (b) If  contract  for\t purchase  of  cow  milk  is
\n\t  concluded, farm  will lose  41 paise\tper litre on
\n\t  blended milk\tand 52\tpaise on  standard milk\t per
\n\t  litre. Taking\t a daily  purchase of 3000 litres of
\n\t  cows milk  for which tender has been called for it
\n\t  will amount to a loss of Rs.4.48 lakhs in terms of
\n\t  blended  milk\t  and  Rs.5.69\tlakhs  in  terms  of
\n\t  standard milk during the period of contract of one
\n\t  year.\n<\/p><\/blockquote>\n
\t  3. In\t so far as pasteurization is concerned, milk
\n\t  has to  be repasteurized  as delivery\t timings  of
\n\t  units in the station are different. Moreover, even
\n\t  if Milk  Scheme delivers  the milk just before one
\n\t  hour of  sending out\tthe delivery rounds, it will
\n\t  only save  on electricity  charges which  will  be
\n\t  negligible. The  7,500 litres\t of cows  milk being
\n\t  produced daily at Pimpri has to be pasteurized for
\n\t  which the  daily section  will continue to work as
\n\t  it is at present.\n<\/p><\/blockquote>\n
\t  4. The  collection charges  under farm arrangement
\n\t  works out  to Rs.0.10\t per litres. The details are
\n\t  enclosed  at\t Appendix-‘A’.\t Though\t  collection
\n\t  charges will be less by 10 paise but it will cause
\n\t  lot of  inconvenience to  the dairy  staff because
\n\t  milk is  already being collected three times a day
\n\t  from Pimpri  and lot\tof  difficulties  are  being
\n\t  experienced in  route. If Milk Scheme delivers the
\n\t  Milk at  MP Dairy  that arrangement  will  be\t the
\n\t  best. “<\/p><\/blockquote>\n
     From  the\t above\treport\t it  is\t  obvious  that\t the
\nrespondents will  be put  to substantial loss to the tune of
\nabout Rupees ten lakhs by accept-\n<\/p>\n
69<\/span><\/p>\n
ing the\t tender of  respondent No.  4 but  all the  same the
\ntender of respondent No. 4 was accepted in preference to the
\ntender made by the appellant. Respondents 2 and 3 would have
\ngained by  accepting the  tender of  the appellant  which is
\nstrictly  in   terms  of   the\ttender\tnotice\tbecause\t the
\nrespondent could  further increase  the quantity  of milk by
\ndiluting the same to bring to fat and gravity standard. From
\nthe terms and conditions inviting the tender, the Government
\nsuppliers were\tgiven exemption\t from depositing the earnest
\nmoney and  tender form\tfee but\t no other  concession to the
\nGovernment supplies  was indicated  in the tender notice yet
\n10 per\tcent price  preference was given to respondent No. 4
\nwithout any  basis and\tin violation  of the terms of notice
\ninviting the tender. All the same the price of the appellant
\nquoted in the tender was lower than that of respondent No. 4
\nand there was absolutely no justification whatsoever for not
\naccepting the tender of the appellant.\n<\/p>\n
     To start with the appellant had made an offer of Rupees
\nfour hundred  fifty per\t hundred litres\t but para  16 of the
\ntender notice provided for negotiations by respondents 2 and
\n3 with the contractors on rates or otherwise. As a result of
\nsubsequent  negotiations   between  the\t appellant  and\t the
\nrespondents, the  offer of  Rs.450 was reduced to Rs.421 per
\nhundred litres.\t If the\t tender notice had indicated for the
\nsupply of  pasteurized milk  there was no difficulty for the
\nappellant to  have done\t so. But  in the absence of any such
\nindication in  the tender  notice and  in the absence of any
\nsubsequent  negotiations   between  the\t appellant  and\t the
\nrespondents  under   para  16  of  the\ttender\tnotice,\t the
\nappellant offered  to supply  the buffaloes  or\t cows  fresh
\nmilk.\n<\/p>\n
     Feeling aggrieved\tby the\trejection of his tender, the
\nappellant challenged the order of the authority concerned by
\na Writ\tPetition in  the High  Court. The Writ Petition was,
\nhowever, dismissed in limine by a cryptic order as under:\n<\/p>\n
\t  “Heard both  sides.  The  Writ  Petition  involves
\n\t  Questions  relating  to  contractual\tobligations.
\n\t  Even otherwise,  we do  not  find  that  there  is
\n\t  anything wrong  or unfair  in accepting  the\tmilk
\n\t  from\tthe   Government  Milk\tScheme.\t The  policy
\n\t  decision cannot  be termed as unfair or arbitrary.
\n\t  Hence W.P. rejected.”<\/p><\/blockquote>\n
     The appellant  has now  come to  challenge the judgment
\nand order  of the  High Court  dated  10.1.1986\t by  special
\nleave. Shri  S.N. Kacker,  learned counsel appearing for the
\nappellant has  reiterated the  same contentions\t as had been
\nraised before the High Court.\n<\/p>\n
70<\/span><\/p>\n
     The main  contention is  that the authorities concerned
\nhad acted  contrary to\tthe  principles\t of  law,  unfairly,
\narbitrarily and\t discriminately.  The  appellant  being\t the
\nlowest bidder  his tender ought to have been accepted by the
\nPanel  officers\t and  there  was  absolutely  no  reason  or
\njustification for the respondents to reject the same. It was
\nfurther contended  that the  tender submitted  by respondent
\nNo. 4  was not\tin consonance  with the\t requirements of the
\ntender form  and, therefore,  that should have been ignored.
\nThe tender notice demanded supply of fresh buffaloes or cows
\nmilk hut  respondent No.  4 had\t submitted  for\t pasteurized
\nmilk. In  any case,  if the  respondents wished to alter the
\ninvitation of the tender it was obligatory and mandatory for
\nthe respondents\t to  call  the\tappellant  for\tnegotiations
\nbefore rejecting  his tender  and accepting  the  tender  of
\nrespondent  No.\t  4.  There   was  a   clear  provision\t for
\nnegotiation  in\t the  tender  notice  and  it  was  open  to
\nrespondent No. 4 to have negotiated with appellant and asked
\nhim to\ttender for  the supplying  pasteurized milk.  In any
\ncase, on  the own  admission of\t the respondents,  that\t the
\npasteurized milk  supplied by respondent No. 4 would have to
\nbe re-pasteurized  and secondly the cost of 5() paise had to
\nbe added  even to  the price of respondent No. 4 as the same
\nwas being  added to  the price\tgiven by  the appellant. The
\naction\tof   the  respondent  is  completely  arbitrary\t and
\ndiscriminatory inasmuch as respondent No. 4 merely being the
\nGovernment organisation\t had been  given preference over the
\nappellant while\t respondent No.\t 4 had\tno better quality or
\nstandard for  effecting the  supplies asked  for  under\t the
\ncontract and  even tor\tthe pasteurized\t milk. Even  in\t the
\nmatter of  contract, the  Government has  to act  fairly and
\njustly and  the failure\t of the\t Government to do so given a
\nright to  the citizen to approach the court for justice. The
\nrespondents have  made a wrongful exercise of their power in
\nrejecting the tender of the appellant.\n<\/p>\n
     It was  contended for  the appellant  that he being the
\nlowest bid  der, the authorities concerned acted arbitrarily
\nin accepting  the bid  of respondent  No. 4 which was higher
\nthan that  of the  appellant. We  find considerable force in
\nthis contention. In Ramana Dayaram Shetty v. The
\nInternational Airport  Authority of India and Ors.,<\/a> [1979] 3
\nSCR 1014,  this Court  laid down  the law in this respect in
\nthe following words:\n<\/p>\n
\t  “Where the  Government is dealing with the public,
\n\t  whether by  way of  giving jobs  or entering\tinto
\n\t  contracts  or\t  issuing  quotas   or\tlicences  or
\n\t  granting other  forms of  largess, the  Government
\n\t  cannot act arbitrarily at its sweet
\n71<\/span>
\n\t  will and, like a private individual, deal with any
\n\t  person it  pleases, but  its\taction\tmust  be  in
\n\t  conformity with  standard or\tnorms which  is\t not
\n\t  arbitrary, irrational\t or irrelevant. The power or
\n\t  discretion of\t the Government\t in  the  matter  of
\n\t  grant of  largess must  be confined and structured
\n\t  by  rational,\t  relevant  and\t  non-discriminatory
\n\t  standard or  norm and\t if the\t Government  departs
\n\t  from such  standard or norm in any particular case
\n\t  or cases,  the action\t of the\t Government would be
\n\t  liable to be struck down unless it can be shown by
\n\t  the  Government   that  the\tdeparture  was\t not
\n\t  arbitrary but\t was based  on some  valid principle
\n\t  which in  itself was\tnot irrational, unreasonable
\n\t  or discriminatory.”<\/p><\/blockquote>\n
     On\t August\t 23,  1985,  the  officer  of  the  Military
\nDepartment  submitted  a  report  to  the  Higher  Authority
\nstating therein\t that the  appellant was not only the lowest
\nbidder but  also the  purchase of  milk from  the  appellant
\ncould  be   profitable\twhile  the  purchase  of  milk\tfrom
\nrespondent No.\t4 would\t result in  serious  losses  to\t the
\nextent of  Rupees  ten\tlakhs  or  so.\tThe  report  further
\nindicates that\trespondents would  have to re-pasteurize the
\nmilk for  its supply to its various units without any profit
\nbecause the  minimum fat  standard of  4 per  cent with\t the
\ngravity of  1.029 has  to be  maintained. As such the entire
\nlabour would  be deployed  without any\tfruitful  result  or
\nbenefit to  the respondent  while on  the other hand, if the
\nrespondent wished,  by pasteurizing the fresh milk supply of
\nthe appellant  they could  otherwise earn profits extracting
\nfat while  maintaining the  fat and the gravity standard. In
\nspite of  the report of the Military Officer, the higher bid
\nof respondent  No. 4  in preference  to the lower bid of the
\nappellant was accepted. It clearly indicates that the action
\nof the respondent authority was arbitrary and fanciful.\n<\/p>\n
     The terms\tcontained in  the tender  notice  have\tbeen
\ndetailed in  the notice\t itself and  it is  not necessary to
\nrefer to all the terms but we would refer to paras 2, 16 and\n<\/p>\n
19. Para  2 of\tthe tender notice provides that tenders will
\nbe invited  for the  supply of\tpure  fresh  buffaloes\tmilk
\ntesting not  less than\t6.0% butter  fat and  1.030 specific
\ngravity or  pure fresh\tcows milk  testing not\tless than 4%
\nbutter fat  and 1.029  specific gravity\t daily\tat  Military
\nfarms\/depots as mentioned in Appendix `A’.\n<\/p>\n
     Para  16\tprovides  that\t as  per   orders  of\tArmy
\nHeadquarters, Military\tFarms contracts\t are to be concluded
\nthrough a panel of officers which may hold negotiations with
\nthe contractor\twhere necessary and recommend the reasonable
\nrates to the higher authorities.\n<\/p>\n
72<\/span><\/p>\n
     Para 19  provides\tthat  the  Central  Government\/State
\nGovernments are\t purely governments  concerns need  not\t pay
\ntender form  fees and  earnest\tmoney.\tThey  are,  however,
\nrequested to  inimate the  period of  supply for  which they
\ndesire to  tender their\t rates to  enable the undersigned to
\nsend them the required tender form.\n<\/p>\n
     It is  contended for  the\tappellant  that\t the  tender
\nsubmitted  by\trespondent  No.\t  4  did   not\tsatisfy\t the
\nrequirement of\tpara 2 of the tender notice. The tenders had
\nbeen invited  for the supply of pure fresh buffaloes milk or
\nfresh cows  milk but the respondent had submitted tender for
\nsupplying  pasteurized\t milk,\tand  therefore,\t the  tender
\nsubmitted by  respondent No.  4 being not in conformity with
\nthe tender  notice should  not have  been  accepted  by\t the
\nauthorities. In\t any case, if the tender of respondent No. 4
\nregarding supply  of pasteurized  milk was  accepted and the
\noriginal terms\tof  the\t tender\t notice\t were  changed,\t the
\nappellant should  have been  given an  opportunity to submit
\nhis tender in conformity with the changed terms but this was
\nnot  done   which  has\t caused\t serious  prejudice  to\t the
\nappellant. If the tender forms submitted by any party is not
\nin conformity  with the\t conditions of the tender notice the
\nsame should  not have  been  accepted  but  the\t authorities
\nconcerned arbitrarily  and in a fanciful manner accepted the
\ntender of respondent No. 4. The State of its instrumentality
\nhas to\tact in\taccordance with\t the conditions laid down in
\nthe tender  notice. In\tany case if the authorities chose to
\naccept\tthe   tender  of  respondent  No.  4  for  supplying
\npasteurized milk,  the appellant should also have been given
\nan opportunity\tto change  its tender. The authorities have,
\nhowever, given\tpreference to the tender of respondent No. 4
\nfor offering  to supply\t pasteurized milk  contrary  to\t the
\nterms contained\t in para  2 of\tthe tender  notice. We\tfind
\nconsiderable force in this contention of the appellant.\n<\/p>\n
     It was  next contended that the conditions contained in
\nthe tender  notice did not contemplate of giving 10 per cent
\nprice preference  to Government undertakings yet 10 per cent
\nprice preference  was given  to the Government illegally and
\nthe policy  of the  Government to  give 10  per\t cent  price
\npreference to  Government undertaking was discriminatory and
\nviolative of  Articles 14  and 16  of the  constitution. The
\nState policy  places respondent\t No. 4\tabove the  appellant
\nwithout any  basis  or\treasonable  classification.  In\t the
\nabsence of  any such  stipulation in the contract such price
\npreference was unjustified.\n<\/p>\n
     If the  terms and\tconditions of  the tender  have been
\nincorporated
\n73<\/span>
\nin the\ttender notice  itself and  that did not indicate any
\npreference to  the Government  undertakings of giving 10 per
\ncent  price   preference  to   Government  undertaking,\t the
\nauthority concerned  acted arbitrarily in allowing 10% price
\npreference to  respondent No.  4. The only facility provided
\nto the\tGovernment undertakings was provided in paragraph 19
\nwhich contemplates  that the  Central  or  State  Government
\nDepartments are\t purely Government  concerns  need  not\t pay
\ntender forms  fees and\tearnest money.\tThis  was  the\tonly
\nconcession available  to the  Central\/State Government or to
\nthe purely  Government concerns,  and no other concession or
\nbenefit was  contemplated under\t the  terms  of\t the  tender
\nnotice. If  the appellant  had known  that 10 per cent price
\npreferene to  Government undertaking  was  to  be  given  to
\nrespondent No.\t4  the\tappellant  would  have\ttaken  every
\nprecaution while  submitting the  tender. In  support of his
\ncontentions, Shri  S.N. Kacker,\t appearing for the appellant
\nstrongly  relied   upon\t Ramana\t  Dayaram  Shetty   v.\t The
\nInternational Airport  Authority of  India and Ors.<\/a> (supra).
\nIn that\t case, the  first  respondent  by  a  public  notice
\ninvited tenders\t for putting  up and  running a Second Class
\nRestaurant and\tTwo Snack  Bars at the International Airport
\nat Bombay.  The notice,\t inter alia,  stated in\t paragraph 1
\nthat sealed tenders in the prescribed form were invited from
\nRegistered Second Class Hoteliers having at least five years
\nexperience  for\t putting  up  and  running  a  Second  Class
\nRestaurant and\ttwo Snack  Bars at  the Bombay Airport for a
\nperiod\tof   three  years.   Paragraph\t8  stated  that\t the
\nacceptance  of\tthe  tender  would  rest  with\tthe  Airport
\nDirector who  does not bind himself to accept any tender and
\nreserve to  himself the right to accept or reject any tender
\nreceived without  assigning any\t reason therefor. Out of the
\nsix tenders  received only  the tender of the 4th Respondent
\nwas complete  and offered the highest amount as licence fee.
\nAll the\t other\ttenders\t were  rejected\t because  they\twere
\nincomplete. As\tthe  4th  respondent  did  not\tsatisfy\t the
\ndescription of\ta Registered Second Class Hotelier having at
\nleast five  years experience  prescirbed in paragraph (1) of
\nthe tender  notice, the first respondent called upon the 4th
\nrespondent to produce documentary evidence whether they were
\nregistered second class hoteliers having at least five years
\nexperience. The\t Fourth Respondent  stated once\t again\tthat
\nthey had  considerable experience  of catering\tfor  various
\nreputed commercial  houses, clubs, messes and banks and that
\nthey held  on Eating  House Catering Establishment (Centeen)
\nLicence. On  being satisfied by the information given by the
\n4th respondent,\t the first respondent accepted the tender on
\nthe terms and conditions set out in its letter.\n<\/p>\n
74<\/span><\/p>\n
     The appellant  challenged the  decision  of  the  first
\nrespondent in  accepting the  tender of\t the 4th respondent.
\nThis Court  held that  the action of the first Respondent in
\naccepting the  tender of  the 4th  respondent  who  did\t not
\nsatisfy the  standard or  norms was  clearly  discriminatory
\nsince it  exlcuded other  persons  similarly  situated\tfrom
\ntendering for  the contract and it was arbitrary and without
\nreason. The  acceptance\t of  tender  was  invalid  as  being
\nviolative of the equality clause of the Constitution as also
\nthe administrative law for its arbitrary actions. This Court
\nalso did  not justify  the action of the first respondent on
\nthe ground  that it  could have\t achieved the same result by
\nrejecting  all\t the  tenders\tand  entering\tinto  direct
\nnegotiations with the 4th respondent. This Court observed:\n<\/p>\n
\t  “It  is  true\t that  there  was  no  statutory  or
\n\t  administrative rule  requiring the  1st respondent
\n\t  to give  a contract  only by\tinviting tenders and
\n\t  hence the  1st respondent  was entitled  to reject
\n\t  all the tenders and, subject to the constitutional
\n\t  norm laid  down in  Article 14, negotiate directly
\n\t  for entering into a contract. Paragraph (8) of the
\n\t  notice also  made it clear that the 1st respondent
\n\t  was not  bound to  accept  any  tender  and  could
\n\t  reject all  the tenders  received by\tit. But here
\n\t  the 1st  respondent did  not\treject\tthe  tenders
\n\t  outright and\tenter into  direct negotiations with
\n\t  the 4th respondents for awarding the contract. The
\n\t  process of awarding a contract by inviting tenders
\n\t  was  not   terminated\t or  abandoned\tby  the\t 1st
\n\t  respondent by\t rejecting all\tthe tenders  but  in
\n\t  furtherance of  the process, the tender of the 4th
\n\t  respondents was  accepted by\tthe 1st\t respondent.
\n\t  The contract\twas not given to the 4th respondents
\n\t  as a\tresult of  direct negotiations. Tenders were
\n\t  invited and  out of  the tenders received, the one
\n\t  submitted by\tthe 4th respondents was accepted and
\n\t  the contract was given to them.”<\/p><\/blockquote>\n
     This  Court   quoted  with\t  approval   the   following
\nobservations of\t Mathew J.,  in V. Punnan Thomas v. State of
\nKerala, AIR 1969 Kerala 81:\n<\/p>\n
\t  “The Government  is not  and should not be as free
\n\t  as an\t individual in\tselecting the recipients for
\n\t  its largess. Whatever its activity, the Government
\n\t  is still  the Government  and will  be subject  to
\n\t  restraints,  inherent\t  in  its   position  in   a
\n\t  democratic society. A democratic Government cannot
\n\t  lay
\n75<\/span>
\n\t  down arbitrary  and capricious  standards for\t the
\n\t  choice of persons with whom alone it will deal.”<\/p><\/blockquote>\n
     Shri Anil Dev Singh, appearing for the respondents, has
\ncontended that\trespondent No.\t4 being the State Government
\nagency was rightly awarded the contract as per the policy of
\nthe  Government\t  of  India  as\t laid  down  in\t Letter\t No.
\n12(1)\/1\/85\/D\/(QS) dated\t August 13, 1985. The policy adopted
\nby said\t letter dated August 13, 1985 came in after the 16th
\nJuly, 1985  when respondent  No. 2  issued tender notice for
\nthe supply  of fresh  buffalo  or  cow\tmilk.  As  such\t the
\nnotification dated  August 13,\t1985 is\t of no\tavail to the
\nrespondent in  so far  as the  acceptance of  the tender  of
\nrespondent No.\t4 is  concerned. Acceptance  or rejection of
\ntender made  by the  appellant or  the respondent No. 4 will
\ndepend upon the compliance of the terms of tender notice. It
\nis true\t that the  Government may enter into a contract with
\nany  person   but   in\t so   doing   the   State   or\t its
\ninstrumentalities cannot  act arbitrarily.  In\tthe  instant
\ncase, tenders  were invited and the appellant and respondent
\nNo. 4  submitted their\ttenders.  The  tenders\twere  to  be
\nadjudged on  their own\tintrinsic merits  in accordnace with
\nthe terms  and conditions  of the tender notice. The learned
\ncounsel, however,  placed reliance on C.K. Achuthan v. State
\nof Kerala,<\/a>  [1959] Suppl. 1 SCR 787 where Hidayathullah, J.,
\nas he  then was,  held that  a contract\t which is  held from
\nGovernment stands  on no different footing from the contract
\nheld by a private party and when one person is chosen rather
\nthan another, the aggrieved party cannot claim protection of
\nArticle 14.\n<\/p>\n
     The wide  observation made\t by  Hidayatullah,  J.,\t was
\nexplained in  Ramana Dayaram  Shetty (Supra). Bhagwati J. as
\nhe then was, speaking for the Court observed:\n<\/p>\n
\t  “Though the  language in which this observation is
\n\t  couched is  rather wide,  we do  not think that in
\n\t  making this observation, the Court intended to lay
\n\t  down any absolute proposition permitting the State
\n\t  to act  arbitrarily in the matter of entering into
\n\t  contract with third parties. We have no doubt that
\n\t  the Court could not have intended to lay down such
\n\t  a  proposition   because   Hidayatullah   J.\t who
\n\t  delivered the\t judgment of  the Court in this case
\n\t  was also  a party  to the  judgment in  Rashbihari
\n\t  Panda v  State of  Orissa (Supra) which was also a
\n\t  decision of  the Constitution\t Bench, where it was
\n\t  held in  so many  terms that\tthe State cannot act
\n\t  arbitrarily in  selecting  persons  with  whom  to
\n\t  enter into
\n76<\/span>
\n\t  contracts. Obviously\twhat the  Court meant to say
\n\t  was that  merely because  one person\tis chosen in
\n\t  preference to\t another, it  does not\tfollow\tthat
\n\t  there is  a violation\t of Article  14, because the
\n\t  Government must  necessarily be entitled to make a
\n\t  choice. But  that does not mean that the choice be
\n\t  arbitrary or fanciful. The choice must be dictated
\n\t  by public  interest and  must not be unreasoned or
\n\t  unprincipled.”<\/p><\/blockquote>\n
     Next reliance  was placed\ton  Viklad  Coal  Merchants,
\nPatiala, etc.  etc. v.\tUnion of India & others, AIR 1984 SC\n<\/p>\n
95. In\tthat case this Court had to construe section 27A and
\n28 of the Railways Act and the Court observed:\n<\/p>\n
\t  “Section 28 forbids discrimination by giving undue
\n\t  or unreasonable preference or advantage in respect
\n\t  of any particular traffic to any particular person
\n\t  or any  railway administration  but  this  general
\n\t  prohibition against  discrmination is\t subject  to
\n\t  the  overriding   power   conferred\ton   Central
\n\t  Government under  section  27A.  If  while  giving
\n\t  effect to  the orders\t of the\t Central  Government
\n\t  issued under\tSection 27A, priority is accorded in
\n\t  the matter  of transport  of\tgoods  consigned  to
\n\t  Central or  State Government\tor  class  of  goods
\n\t  specified in\tthe general  or special order issued
\n\t  in  this   behalf,  the   action  of\tthe  railway
\n\t  administration in  complying with  such special or
\n\t  general order\t could not  be said as tentamounting
\n\t  to giving  undue  or\tunreasonable  preference  or
\n\t  advantage to or in favour of any particular person
\n\t  or railway administration. What section 28 forbids
\n\t  is discrimination  in the  matter of\ttransport of
\n\t  goods against\t a class  but this is subject to the
\n\t  permissible\tclassification\t  that\t would\t  be
\n\t  introduced by a special or general order issued by
\n\t  the Central  Government in  exercise of  the power
\n\t  conferred by\tSection 27A. It may be recalled that
\n\t  the Preferential  Traffic  Schedule  according  to
\n\t  Priority  `C’\t  to  transport\t of  coal  by  those
\n\t  mentioned therein  has been  issued in exercise of
\n\t  the power conferred by Section 27A. Therefore, the
\n\t  submission  that  petitioners\t in  the  matter  of
\n\t  transport of\tcoal are similarly situated with the
\n\t  Central or  State Government or transporters given
\n\t  priority by  general or special order issued under
\n\t  Section 27A cannot be entertained.”<\/p><\/blockquote>\n
77<\/span><\/p>\n
     This case\tis not of much help in the present case. The
\nfacts were  materially different in that case. In that case,
\nthe railway  authority had  to comply  with  the  directions
\ngiven by  the Central  Government which\t was in\t the  public
\ninterest.\n<\/p>\n
     Lastly, the  counsel relied  upon Madhya Pradesh Ration
\nVikareta Sangh\tSociety &  Ors. etc  etc. v. State of Madhya
\nPradesh &  Anr. [1982]\t1 SCR 750. In that case the question
\nfor consideration  was whether\tthe Fair  Price Shops in the
\nState under  the Government Scheme should be directly run by
\nthe  Government\t  through  the\t instrumentalities  of\t the
\nConsumers Co-operative\tSocieties as its agents or by retail
\ndealers to  be appointed  by the  Collector. This Court took
\nthe view  that essentially  this was  a matter\tof policy to
\nwhich the  Court is  not concerned. This case also is not of
\nmuch help in the present case.\n<\/p>\n
     In the instant case, the instrumentalities of the State
\ninvited tenders\t for the  supply of fresh buffaloes and cows
\nmilk and,  therefore, this  case has  to be  decided on\t the
\nbasis of  bid by the tenderers. There was no question of any
\npolicy in  this case.  It is  open to  the State  to adpot a
\npolicy different  from the  one\t in  question.\tBut  if\t the
\nauthority or  the State Government chooses to invite tenders
\nthen it\t must abide  by the  result of the tender and cannot
\narbitrarily and\t capriciously accept  the bid  of respondent
\nNo. 4  although it  was much  higher and to the detriment of
\nthe State. The High Court, in our opinion, was not justified
\nin dismissing the writ petition in limine by saying that the
\nquestion relates  to  the  contractual\tobligation  and\t the
\npolicy decision\t cannot be  termed as  unfair or  arbitrary.
\nThere was  no question of any policy decision in the instant
\ncase. The  contract of supply of milk was to be given to the
\nlowest bidder  under the  terms of the tender notice and the
\nappellant being\t the  lowest  bidder  he  should  have\tbeen
\ngranted the contract to supply, especially, when he has been
\ndoing so for the last so many years.\n<\/p>\n
     In\t the   result,\tthe   appeal  must  succeed.  It  is
\naccordingly allowed  and the  judgment and order of the High
\nCourt dated  January 10,  1986 is  set aside  and  the\tWrit
\nPetition  is  allowed  and  the\t order\tof  the\t authorities
\nrejecting the  tender of  the appellant\t and  accepting\t the
\ntender of  respondent No.  4  is  quashed.  The\t respondents
\nauthorities  are  directed  to\taccept\tthe  tender  of\t the
\nappellant. There is, however, no order as to costs.\n<\/p>\n
P.S.S.\t\t\t\t\t     Appeal allowed.\n78<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Harminder Singh Arora vs Union Of India & Ors on 9 May, 1986 Equivalent citations: 1990 SCALE (1)145 Author: M Rangnath Bench: Misra Rangnath PETITIONER: HARMINDER SINGH ARORA Vs. RESPONDENT: UNION OF INDIA & ORS. DATE OF JUDGMENT09\/05\/1986 BENCH: MISRA RANGNATH BENCH: MISRA RANGNATH PUNCHHI, M.M. CITATION: 1990 SCALE (1)145 ACT: […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-199781","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nHarminder Singh Arora vs Union Of India & Ors on 9 May, 1986 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/harminder-singh-arora-vs-union-of-india-ors-on-9-may-1986\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Harminder Singh Arora vs Union Of India & Ors on 9 May, 1986 - 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