{"id":228636,"date":"2002-08-14T00:00:00","date_gmt":"2002-08-13T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/bhaskar-industrial-developments-vs-union-of-india-uoi-and-ors-on-14-august-2002"},"modified":"2016-10-16T04:11:01","modified_gmt":"2016-10-15T22:41:01","slug":"bhaskar-industrial-developments-vs-union-of-india-uoi-and-ors-on-14-august-2002","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/bhaskar-industrial-developments-vs-union-of-india-uoi-and-ors-on-14-august-2002","title":{"rendered":"Bhaskar Industrial Developments … vs Union Of India (Uoi) And Ors. on 14 August, 2002"},"content":{"rendered":"
Delhi High Court<\/div>\n
Bhaskar Industrial Developments … vs Union Of India (Uoi) And Ors. on 14 August, 2002<\/div>\n
Author: S Sinha<\/div>\n
Bench: S Sinha, A Sikri<\/div>\n<\/p>\n
<\/pre>\n
JUDGMENT<\/p>\n
 S.B. Sinha, C.J.<\/p>\n
1. The petitioners who are two in number along with third
\nrespondent herein which is said to be a public sector undertaking, along with many
\nothers, participated in a tender for supply of various types of sleepers pursuant to a
\ntender floated by the second respondent herein being Tender No. Track-1 of 2001.
\nBy reason of the said tender, a notice inviting tender was called in respect of
\n6,30,000 sleepers. Having regard to the terms and conditions of the said notice
\ninviting tender, the participants submitted their offer to a limited quantity.\n<\/p>\n
2. The positions of the parties upon submission of their respective offer
\nwould appear from the following chart:\n<\/p>\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0“Railway board Tender 1 of 2001 for Manufacture and Supply of 6,30 M.G. Steel Trough sleepers opened on 19.04.2001<\/p>\n
S.\n<\/p>\n
No.\n<\/p>\n
Name\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n
Qty<\/p>\n
EMD<\/p>\n
Rate
\nin Rs.\n<\/p>\n
ED%<\/p>\n
ST%<\/p>\n
Total<\/p>\n
DEV<\/p>\n
1.<\/p>\n
M\/s
\nChinttpurni Engg Works<\/p>\n
630000<\/p>\n
ENCD<\/p>\n
898<\/span><\/p>\n
143.68<\/p>\n
41.66672<\/p>\n
1083.347<\/p>\n
(3)<\/span><\/p>\n
NIL<\/p>\n
2.<\/p>\n
Veeratechocrat<\/p>\n
New
\nDelhi<\/p>\n
\u00a0630000<\/p>\n
ENCD<\/p>\n
895<\/span><\/p>\n
143.2<\/p>\n
41.528<\/p>\n
1079.728<\/p>\n
(2)<\/span><\/p>\n
NIL<\/p>\n
3.<\/p>\n
Ramswaroop
\nProduct New<\/p>\n
Delhi<\/p>\n
630000<\/p>\n
ENCD<\/p>\n
900<\/span><\/p>\n
144<\/span><\/p>\n
41.76<\/p>\n
1085.76
\n(4)<\/span><\/p>\n
NIL<\/p>\n
4.<\/p>\n
Bhaskar
\nIndus.\n<\/p>\n
Calcutta<\/p>\n
112000<\/p>\n
ENCD<\/p>\n
954<\/span><\/p>\n
152.64<\/p>\n
44.2656<\/p>\n
1150.906
\n(6)<\/span><\/p>\n
NIL<\/p>\n
5.<\/p>\n
J.\n<\/p>\n
Sonsengg. Works Meerut<\/p>\n
130000<\/p>\n
ENCD<\/p>\n
960<\/span><\/p>\n
153.6<\/p>\n
44.544<\/p>\n
1158.144
\n(7)<\/span><\/p>\n
NIL<\/p>\n
6.<\/p>\n
Bina<\/p>\n
Metalway,
\nJamshedpur<\/p>\n
130000<\/p>\n
ENCD<\/p>\n
960<\/span><\/p>\n
153.6<\/p>\n
44.544<\/p>\n
1158.144
\n(7)<\/span><\/p>\n
NIL<\/p>\n
7.<\/p>\n
Vishwa
\nInd. Calcutta<\/p>\n
110000<\/p>\n
ENCD<\/p>\n
954<\/span><\/p>\n
152.64<\/p>\n
44.2656<\/p>\n
1150.906<\/p>\n
(6)<\/span><\/p>\n
NIL<\/p>\n
8.<\/p>\n
Rahee
\nIndustries Ltd Cal.\n<\/p>\n
135000<\/p>\n
ENCD<\/p>\n
960<\/span><\/p>\n
153.6<\/p>\n
44.544<\/p>\n
1158.144<\/p>\n
(7)<\/span><\/p>\n
NIL<\/p>\n
9.<\/p>\n
Richardson
\nCrudass<\/p>\n
Bombay<\/p>\n
81000<\/p>\n
ENCD<\/p>\n
936<\/span><\/p>\n
149.76<\/p>\n
43.4304<\/p>\n
1129.19
\n(5)<\/span><\/p>\n
NIL<\/p>\n
10.<\/p>\n
Shalimar
\nFastening Calcutta<\/p>\n
630000<\/p>\n
ENCD<\/p>\n
699<\/span><\/p>\n
111.84<\/p>\n
32.4336<\/p>\n
843.2736
\n(1)<\/span><\/p>\n
NIL<\/p>\n
3. The relevant terms and conditions of the said tender are as under:\n<\/p>\n
“3.6. The purchaser reserves the right to
\nplace order(s) for any quantity within the tendered
\nquantity or even discharge the tender at it sole
\ndiscretion without prejudice.\n<\/p>\n
8.1 The Tenderers should quote firm price
\nonly which will not be subject to any variation.\n<\/p>\n
8.6 Tenderers have to quote only one
\nuniform rate for the quantity they tender for. The
\noffers of the firm which link the rates with the quantity
\nfor which order is placed shall be treated as
\nunresponsive and may be similarly rejected.\n<\/p>\n
9.1.1 One-month preparation time shall be
\ngranted to the contractor after placement of the order
\n50% of the quantity ordered shall to be supplied
\nwithin four months thereafter and the balance 50%
\nquantity shall be supplied within the next four months.\n<\/p>\n
13.1 Bulk orders for supply of ST sleepers
\nagainst this tender shall be placed only on the RDSO
\napproved manufacturers of steel trough sleepers\/steel
\nturnout sleepers\/rolled steel sleepers and the tenderers
\nmust submit a copy of their current and valid
\nregistration along with their offer. No tenderers
\nregistered or validated by RDSO after the opening of
\nthe tender shall be considered for placement of bulk
\norder.\n<\/p>\n
Other tenderers may be considered for
\nplacement of developmental orders of the sleepers,
\nprovided their credentials are found to be satisfactory.\n<\/p>\n
19.2 In case the overall value of the tender
\nby a public sector undertaking of the State or Central
\nGovernment is within 110% of the overall value of the
\nlowest tender of a private sector tenderer, the Railway
\nreserves the right to give purchase preference to the
\ntender of such public sector undertaking at the lowest
\nacceptable rate, ignoring the lower tenderer.”\n<\/p>\n
4. Despite the fact that the third respondent, as noticed hereinbefore,
\noffered to supply only 81,000 sleepers, a purported negotiation took place between
\nthe authorities of the first respondent and the said third respondent.\n<\/p>\n
5. It is not in dispute that orders are placed only on RDSO approved
\nsuppliers. The grievance of the petitioner is that despite the fact that the third
\nrespondent made an offer only of 81,000 sleepers although it was not an RDSO
\napproved supplier at the relevant point of time for the entire quantity, the
\nrespondents have placed offer in respect of the entire quantity in its favor upon
\nentering into a negotiation therefore which is not contemplated in law. The offer
\nmae in favor of the third respondent, having regard to the terms and conditions of
\nthe notice inviting tender, was therefore illegal.\n<\/p>\n
6. In support of the said contention, reliance has been placed on
\n Monarch Infrastructure (P) Ltd. v. Commissioner, Ulhasnagar Municipal
\nCorporation and Ors.,  and  Harminder Singh Arora<\/a> v. Union of India
\nand Ors., .\n<\/p>\n
7. It was pointed out on behalf of the learned counsel for the petitioner
\nthat in the instant case the respondent No. 3 fighting a shadow battle inasmuch as
\nM\/s. Bina Metal Way Ltd. which was also one of the bidders, sought for extension
\nfrom time to time and later on underhand arrangement was arrived at between it and
\nthe third respondent to favor it by placing an order in the name of respondent No. 3.
\nIt was pointed out:\n<\/p>\n
“(a) Letter of Intent was issued by the
\nRespondent No. 2 to the Respondent No. 3 on 3rd
\nJanuary, 2002 and the final contract was placed on 21st
\nJanuary, 2002 despite being fully aware that the unit at
\nRaipur is not RDSO approved which is a mandatory
\npre-condition for awarding of the contract to any party.
\nImmediately thereafter on 1st February, 2002, Bina
\nMetal Way Limited writes to RDSO stating that they
\nhave wet-leased their Raipur Works to M\/s. R & C
\n(Respondent No. 3). A copy of the letter dated 1.2.02
\nwritten by Bina Metal is annexed and marked
\nAnnexure ‘A”.\n<\/p>\n
(b) The respondent No. 3 thereafter vide their letter
\ndated 19-02-02 to the Railways stating therein that
\ntheir works at Raipur which has been wet-leased is
\nfully ready for the RDSO inspection. The malafide
\nand the fraudulent intentions would be evident from
\nthe fact that in the said letter there is no reference to
\nBina Metals who was one of the bidders till the last
\ndate. A copy of the letter dated 19.02.02 written by the
\nrespondent No. 3 is annexed and marked as Annexure
\n“B”.\n<\/p>\n
(c) Accordingly RDSO removed their registration
\nfor Turnout Sleepers of their Raipur unit from this list
\nvide letter dated 14th\/18th March, 2002, copy enclosed
\nmarked Annexure “C”.\n<\/p>\n
(d) Railway Administration has advised RDSO to
\nexpedite approval to Richardson & Cruddas vide their
\nletter dated 20th February, 2002, copy enclosed marked
\n“D”, which is a very unusual practice.\n<\/p>\n
(e) RDSO has issued guidelines in December,
\n2001 regarding the procedure for approval\/renewal of
\nthe units and the copy of the same is enclosed marked
\nAnnexure “E”.\n<\/p>\n
As per the said guidelines issued by RDSO, the
\nRaipur unit of Richardson & Cruddas can at best be
\ngiven a status of new unit and registration as Part-II
\nsupplier but guidelines have been violated while
\naccording purported registration to them.\n<\/p>\n
(f) In view of the above facts, the Railway
\nAdministration have blatantly violated the tender
\nCondition 3.6 which clearly prohibits placement of
\nbulk orders on non-RDSO approved units. As a matter
\nof fact, they even went on to record to say that
\ntenderers revalidated or registered after the tender
\nopening will not be considered for placement of bulk
\norder and in the circumstances the Raipur Unit of R &
\nC cannot be considered for placement of an order as
\nthere was no bid for this unit when the tender was
\nopened and the said unit was non-existent at that time,
\nand it came into being on 1st February, 2002 as a result
\nof unholy nexus amongst the respondents and Bina
\nMetal Way Limited.\n<\/p>\n
(g) In the instant case, the Railway Administration
\nhave not only violated their own Tender conditions as
\nwell as guidelines as stated above but have also
\nallowed Richardson & Cruddas to take on leas the
\nworks of a private firm who themselves were the
\ntenderers and was a RDSO approved unit, which
\nproves the malafides intention and wrong doings as well
\nas same is in breach and violation of the CVC
\nguidelines.”\n<\/p>\n
8. The learned counsel appearing on behalf of the respondents, on the
\nother hand, would contend that this court should not exercise its discretionary
\njurisdiction under Article 226 of the Constitution unless there exists an over-riding
\npublic interest. According to the respondents, the third respondent being the lowest
\ntenderer not only in terms of the terms and conditions contained in notice inviting
\ntender, but also in terms of the guidelines issued by the Central Vigilance
\nCommissioner from time to time, the respondents were under an obligation to give
\npreference to the public sector undertakings and enter into negotiation therefore. It
\nwas contended that having regard to the provisions contained in Clause 6.2 of the said
\nnotice inviting tender, it was open to the respondents to enter into negotiation in
\nrelation to the tendered quantity which would mean entire 6,30,000 sleepers and not
\nin relation to 81,000 sleepers only.\n<\/p>\n
9. As regards the RDSO approved supplier, it was contended that upon
\ncancellation of the license of the factory of the said Bina Metal Way Ltd., Raipur, a
\npurported wet-lease has been granted and the same would be deemed to be a fresh
\napproval in favor of the petitioner. It was contended that this court should not take
\ninto consideration the fact that Bina Metal was also a tenderer inasmuch as such an
\nagreement of wet-lease could have been entered into by and between the petitioner
\nand the Bina Metal so as to enable it to manufacture an additional capacity.\n<\/p>\n
10. The learned counsel would contend that taking of the said Raipur
\nWorks wet-lease is not prohibited. In this connection, our attention has been drawn
\nto para 8 of its counter-affidavit.\n<\/p>\n
11. Having regard to the fact that by grant of such an offer in favor of
\nthe third respondent, the official respondents would be saving a huge amount, it
\nwould not be in public interest to grant any relied to the petitioners herein.\n<\/p>\n
 RE: CONTENTION NO.1.\n<\/p>\n
12. In the instant case, basic fact is not disputed. It is not known under
\nwhat circumstances oral negotiations started between the respondents herein. It
\nappears that certain discussions took place between the petitioner and the Railway
\nBoard.\n<\/p>\n
13. Despite the fact that the terms and conditions of contract particularly
\nin relation to the time frame therefore were mandatory in nature, the third respondent
\nin its letter dated 22nd August 2001 stated:\n<\/p>\n
“With reference to the above tender submitted
\nto you and also further discussions held in Delhi with
\nthe Railway Board, we would like to inform you that
\nsince we have liquidated the present commitment of
\norders and the workshop has been made free for
\nmanufacturing more number of Railway Products. Our
\ncommitment of 81,000 Nos. of Steel Trough Sleepers
\ncan be increased substantially.\n<\/p>\n
Quoted for–81,000 Nos.\n<\/p>\n
Capacity to increase–6,00,000 Nos.\n<\/p>\n
In such case, we would like to clarify that we
\nare in a position to supply the entire tendered quantity
\nwith a little more extended period of delivery.\n<\/p>\n
Hope you will consider us favorably as a
\nPublic Sector Undertaking and help us in getting the
\nnecessary Orders.\n<\/p>\n
Awaiting your early communications”\n<\/p>\n
14. Further, their letter dated 12th November 2001 is quoted as
\nunder:\n<\/p>\n
“With reference to the above tender, we furnish
\nherewith as an Annexure details of production\/
\nmanufacture of steel trough sleepers and cost break up
\nand other details for you kind perusal\/approval.\n<\/p>\n
We have reduced the cost than the quoted price
\nto minimize the losses of our company, utilization of
\nmen and machinery at present due to non-receipt of
\nRailway Board orders for few years are adding to the
\nlosses of our Company. In order to utilize the
\nworkshop, which present lying idle, we have reduced
\nthe price. The operating cost has also been reduced to
\nproduction up to the rated capacity.\n<\/p>\n
Richardson & Cruddas has got a capacity for
\nmanufacture 3 lacs sleepers per annum with the
\ninstalled machineries at our Byculla Unit at Mumbai.
\nWe have made necessary arrangement with a unit at
\nRaipur by shifting some of our existing machineries
\nfrom Byculla and also add new machineries which will
\nenhance our annual installed production capacity. In
\nsuch case be able to compete the order of 6,30,000
\nsleepers within 18 months from the date of order lesser
\ncost as quoted.\n<\/p>\n
This will also enhance the capacity utilization
\nof R & C having a larger set up with the machineries
\nwhere 2 operations like straightening and pressing can
\nbe carried out simultaneously with minimum tooling
\ncost.\n<\/p>\n
You may kindly note that the cost of the
\nsleepers with additional operations like heating, and
\ngiving cant of 1 in 20 also, is quite comparable than
\nthe steel turnout sleepers of Rly. Board. We are also
\nexecuting the contracts for various Railway Track
\nitems for Neelachal Ispat, Shriram Fertilizers etc.<\/p>\n
We hope by the above
\nclarification\/information, you will consider our offer
\nfavorably.”\n<\/p>\n
Thanking you,<\/p>\n
Yours faithfully, <\/p>\n
For Richardson & Cruddas (1972) Ltd.,<\/p>\n
(G.B. MISHRA) <\/p>\n
General Manager<\/p>\n
* This offer is valid for three months from the date of
\nissue of this letter with the other terms and
\nconditions as per in our offer.\n<\/p>\n
* As regards with the fright, the freight to the
\nSouthern side will be less in cost than Northern
\nand Northeaster or North Frontier we may
\naccommodate freight difference absorbing the
\nextra cost invoiced in compensation with the
\nsouthern side freight cost which will be less,
\nthis can be equalized and we may bear the
\ndifference.\n<\/p>\n
* We also stand with we swill be able to accept
\nthe average price both for supplying from
\nRaipur or from Bombay by equalizing the price
\nof both as given from Raipur.\n<\/p>\n
G.B. MISHRA <\/p>\n
GENERAL MANAGER <\/p>\n
Richardson & Cruddas (1972) <\/p>\n
Ltd.”\n<\/p>\n
15. Even in the counter-affidavit, it has been accepted that a unilateral
\ndecision has been taken as would appear from para 10 which reads as under:\n<\/p>\n
 “10. In reply to para 10, it is stated that after
\nthe opening of the tender on 19.4.2001, the answering
\nRespondent addressed a letter bearing No.
\nR&C\/GM\/RLY.BOARD\/999\/01 dated 22.8.2001,
\nstating that it had the capacity to increase production to
\n6 lakh sleepers, and could supply the entire tendered
\nquantity. During initial tender opening, the answering
\nRespondent had a number of orders in hand at Byculla,
\nand was participating in other railway tenders, and had
\nquoted to supply on 81,000 MGST Sleepers although it
\nhad a capacity to manufacture much more. However,
\nwhen it was asked to reduce its rate, in consideration of
\nbeing given the entire order the answering Respondent
\noffered to further increase its production and also set
\nup facilities at Raipur so as not to miss the order.”\n<\/p>\n
16. Relevant portion of CVC Manual whereupon the respondents have
\nstrong relied is as under:\n<\/p>\n
“Dated 18th November 1998 <\/p>\n
 Sub: Improving vigilance administration<\/p>\n
The Central Vigilance Commission Ordinance
\n1998 under Section 8(1)(h) directs that the power and
\nfunction of the CVC will be the following:-\n<\/p>\n
“Exercise superintendence over the vigilance
\nadministration of the various ministries of the Central
\nGovernment or corporation established by or under
\nany Central Act, Government companies, Societies and
\nlocal authorities owned or controlled by that
\nGovernment.”\n<\/p>\n
2. Improving vigilance administration is possible
\nonly if system improvements are made to prevent the
\npossibilities of corruption and also encourage a culture
\nof honesty. In exercise of the powers conferred on the
\nCVC by Section 8(1)(h), the following instructions are
\nissued for compliance:\n<\/p>\n
2.1 Creating a culture of honesty.\n<\/p>\n
Many organisation have a reputation for
\ncorruption. The junior employees and officers who
\njoin the organisations hopefully may not be so
\ncorruption minded as those who have already been part
\nof the corrupt system.. In order to ensure that a culture
\nof honesty is encouraged and the junior officers do not
\nhave the excuse that because their seniors are corrupt,
\nthat they have to also adopt the corrupt practices, it is
\ndecided with immediate effect that junior employees
\nwho initiate any proposal relating to vigilance matters
\nwhich is likely to result in a reference to the CVC can
\nsend a copy directly to the CVC by name. This copy
\nwill be kept in the office of the CVC and data fed into
\nthe computer. If within a reasonable time of say three
\nto six months, the reference does not come to the CVC,
\nthe CVC then can verify with the concerned authorities
\nin the department as to what happened to the vigilance
\ncase initiated by the junior employee. If there is an
\nattempt to protect the corrupt or dilute the charges, this
\nwill also become visible. Above all the junior officers
\nwill not have the excuse that they have to fall in line
\nwith the corrupt seniors. Incidentally, the seniors also
\ncannot treat the references made directly to the CVC as
\nan act of indiscipline because the junior officers will be
\ncomplying with the instructions issued under Section
\n8(1)(h) of the CVC Ordinance 1998. However, if a
\njunior officer makes a false or frivolous complain it
\nwill be viewed adversely.”\n<\/p>\n
 xxx           xxx            xxx\n\n \n\n2.4 Tenders.\n\n \n\n<\/pre>\n
Tenders are generally a major source of
\ncorruption. In order to avoid corruption, a more
\ntransparent and effective system must be introduced.
\nAs post tender negotiations are the main source of
\ncorruption, post tender negotiations are banned with
\nimmediate effect except in the case of negotiations
\nwith LI (i.e. Lowest tenderer)<\/p>\n
 xxx            xxx              xxx<\/p>\n
(iii) Another issue that has been raised is
\nthat many a time the quantity to be ordered is much
\nmor than L1 alone can supply. In such cases the
\nquantity order may be distributed in such a manner that
\nthe purchase is done in a fair transparent and equitable
\nmanner.\n<\/p>\n
 xxx            xxx             xxx<\/p>\n
“Subject: Improving Vigilance Administration-
\nTenders.\n<\/p>\n
Sir,<\/p>\n
Please refer to the instructions issued by
\nCommission vide its communication No. 8(1)(h)\/98(1)
\ndated 18.11.98, banning post tender negations except
\nwith L-1.\n<\/p>\n
2. The Commission has been getting a number of
\nqueries on how to handle the matter if the quantity to
\nbe ordered is more than L-1 can supply or about
\nplacement of orders on Public Sector Undertakings. It
\nis requested that such matters may be dealt with in
\naccordance with the clarifications issued by the
\nCommission vide its letter of even number dated
\n15.3.99 (copy enclosed).\n<\/p>\n
3. Some of the organisations have sought
\nclarification as to whether they can consider the L-2
\noffer or negotiate with that firm if L-1 withdraws his
\noffer before the work order is placed, or before the
\nsupply or execution of work order takes place. In this
\nregard, it is clarified that such a situation may be
\navoided if a two-bid system is followed (techno-commercial)
\nso that proper assessment of the offers is
\nmade before the award of work order. Therefore, if L-1
\nparty backs out, there should be retendering in a
\ntransparent and fair manner. The authority may in
\nsuch a situation call for limited or short notice tender if
\nso justified in the interest of work and take decision on
\nthe basis of lowest tender.\n<\/p>\n
4. The Commission has also been getting
\nreferences for its advice on the procedures being
\nfollowed in individual cases of tenders. The
\nCommission would not involve itself in the decision
\nmaking process of individual organisations. It,
\nhowever, would expects the organisation to implement
\nits instructions dated 18.11.98, in its spirit and to
\nensure that the decisions of administrative authorities
\nare transparent.”\n<\/p>\n
17. What would be the meaning of the expression ‘tendered quantity’ as
\ncontained in Clause 3.6 of the terms and conditions of the notice inviting tender? The
\nmeaning of the said term is required to be found out.\n<\/p>\n
18. The tender was for manufacture and supply of Steel Trough Sleepers.\n<\/p>\n
19. Clause 3.6 is an enabling provision in terms whereof the purchaser
\nhad reserved the right to place orders for any quantity within the tendered quantity.
\nThe words ‘tendered quantity’ are significant.\n<\/p>\n
20. As indicated hereinbefore, the participants have submitted their
\ntenders having regard to the time schedule for different quantities. Such quantities
\nhaving regard to the past practice, as are known to all concerned, would depend upon
\nthe capacity of the tenderers to produce certain quantities of sleepers having regard
\nto their earlier commitments to the Railways as also others.\n<\/p>\n
21. The words ‘within tendered quantity’ would, therefore, must be given
\npurposive interpretation so as to mean that the right of the purchaser to place order
\nshall be in relation to the quantity offered to be sold by the tenderers and not vice-versa.\n<\/p>\n
22. The very fact that the parties submit their tender, it will bear repetition
\nto state, having regard to their capacity to produce such number of sleepers, which
\ncan be supplied is itself a pointer tot he fact that the requirements of Clause 9 must be
\nfulfilled.\n<\/p>\n
23. By reason of Clause 9.1.1., 50% of the quantity ordered shall have to
\nbe supplied within four months and thereafter the balance 50% quantity shall be
\nsupplied within the next four months.\n<\/p>\n
24. Thus, the entire supply for which offer has been made is required to
\nbe made within a period of 9 months.\n<\/p>\n
25. Clause 9.2 makes the position absolutely clear.\n<\/p>\n
26. Clause 3.6, therefore, in our opinion, does not confer any jurisdiction
\nupon the purchaser to enter into negotiation for a quantity higher than what has been
\ntendered for by the tenderer.\n<\/p>\n
27. In the instant case, the official respondents have given a complete go
\nby to the norms set forth by them. Such offer of the tenderer is required to be judged
\nhaving regard to his capacity to produce at the time of making the said offer.\n<\/p>\n
28. We may notice that the respondent No. 3 in his counter affidavit stated:-\n<\/p>\n
 “…In other words, railways could place order for lesser
\nquantity than tendered by railways. This clause does not
\nprohibit Respondents 1 and 2 to place orders for higher
\nquantities so as to achieve further reduction in prices, so long as
\nL1 has the capacity.”\n<\/p>\n
29. Such a stand on the part of the respondents, therefore, is contrary to
\nand consistent with each other.\n<\/p>\n
30. A power of relaxation must also be conferred expressly. It may have
\na power to relaxation and even if a power of relaxation has to be conferred, such
\npower of relaxation may be limited or restricted. Such a power of relaxation cannot
\nbe exercised in relation to the essential conditions of contract.\n<\/p>\n
31. Even as regards its capacity to supply the entire quantity of
\n6,30,000 sleepers, the respondents have taken contradictory and\/or inconsistent
\nstands.\n<\/p>\n
32. Firstly, it was not the business of the railway authorities to ascertain
\nfrom the respondent as to what is his capacity to manufacture and what were it prior
\ncommitments. It was for the tenderer to say so and once the tenderer said so, the
\nrespondent were bound to consider such offer within the framework of the terms
\nand conditions contained in the tender documents.\n<\/p>\n
33. In any event, the advertisement made by the respondent No. 1 is not
\nan offer. It is merely a notice inviting tender. Although the terms ‘tender’ and
\n‘offer’ are not decisive, but we may notice that the Supreme Court in  Tata Cellular v.
\nUnion of India<\/a>    discussed at some length as to what is
\n‘a tender’. It laid down broad requisites of a valid tender. The person, who invites
\ntender for the purchaser and sale of goods does not make an offer. It is the person,
\nwho submits the tender, that makes an offer, which it is the person, who invites
\ntender to accept or not. Even acceptance of tender may not result in a contract in a
\ngiven case as, e.g., right to cancel a contract at any point of time is given.\n<\/p>\n
34. Tender has been defined in the Law of Contracts by Trited of p. 12 in
\nthe following terms:-\n<\/p>\n
  “A statement that goods are to be sold by
\ntender is not normally on offer, so that the person
\nmaking the statement is not bound to sell to the person
\nmaking the highest tender, unless he has indicated in
\nthe original statement that he will do so. A statement
\ninviting tenders for the supply of goods or for the
\nexecution of works is similarly not an offer  unless it
\nindicates that the lowest tender will be accepted. The
\noffer in all such cases comes from the person who
\nsubmits the tender and there is no contract until the
\nperson asking for tenders accept one of them. The
\npreparation of a tender may involve very considerable
\nexpense; but the tenderer incurs this at his own risk.”\n<\/p>\n
35. In Anson’s Law of Contract, 26th Edn. at . 25 it is stated:-\n<\/p>\n
  “Offers and Invitations to Treat: It is sometimes
\ndifficult to distinguish statements of intention which
\ncannot, and are not intended to, result in any binding
\nobligation from offers which admit of acceptance, and
\nso become binding promises. A person advertises
\ngoods for sale in a newspaper, or announces that he
\nwill sell them by tender or by auction; a shopkeeper
\ndisplays goods in a shop window at a certain price; or a
\nbus company advertises that it will carry passengers
\nfrom A to Z and will reach Z and other intermediate
\nstops at certain times. In such cases it many be asked
\nwhether the statement made is an offer capable of
\nacceptance or merely an invitation to make offers, and
\nintended to be binding, is known as an ‘invitation to
\ntreat.”\n<\/p>\n
36. In Chitty on Contract, the law is stated thus:-\n<\/p>\n
  “4. Their … A statement that goods are to be
\nsold by tender is not normally an offer to sell to the
\nperson making the highest tender, it merely indicated a
\nreadiness to receive offers. Similarly, an invitation for
\ntenders for the supply of goods or for the execution of
\nworks, generally, not an offer, even though the
\npreparation of .. tender may involve very considerable
\nexpenses. The offer …from the person who … the
\ntender and there is no contract until the person asking
\nfor the tenders to acceptance of them. These rules,
\nmay, however, be excluded by evidence of contrary
\nintention e.g. where the person who invites the tenders
\nstates in the invitation that he binds himself to accept
\nthe highest offer to buy (or as the case may be, the
\nlowest offer to sell or to provide the specified
\nservices). In such cases, the invitation for tenders may
\nbe regarded either as itself an offer or as an invitation
\nto submit offers coupled with an undertaking to accept
\nthe highest (or, as the case may be, the lowest) offer;
\nand the contract is concluded as soon as the highest
\noffer to buy (or lowest offer to sell, etc.) is
\ncommunicated.\n<\/p>\n
37. In Tritel’s Law of Contract, it has been stated thus:-\n<\/p>\n
  “When parties negotiate with a view to making
\na contract, many preliminary communication may
\npass between them before a definite offer is made.
\nOne party may simply respond to a request for
\ninformation (e.g. by stating the price at which he might
\nbe prepared to sell a house), or he may invite the other
\nto make an offer; he is then said to make an “invitation
\nto treat”. The question whether a statement is an offer
\nor an invitation to treat depends primarily on the
\nintention with which it was made.”\n<\/p>\n
38. In Halsbury’s Laws of England, 4th Edn. Vol. 9 paragraphs 228 and 230 is
\nstated thus:-\n<\/p>\n
“228.  Invitation to treat. An invitation to treat
\nis a mere declaration of willingness to enter …
\nnegotiations; it is not an offer, and cannot be…as
\nto form a binding contract.\n<\/p>\n
In practice, the formation of a contract is
\nfrequently preceded by preliminary negotiation. Some
\nof the exchange in these negotiations contain no
\ndeclaration at all, as where one party simply asks for
\ninformation. Others may amount to invitations to the
\nrecipient to make an offer, these being invitations to
\ntreat.\n<\/p>\n
Thus, a distinction must be drawn between the
\ndeclarations which amount to offers, and those which
\nonly amount to invitations to treat. Sometimes, a
\nparticular type of declaration is, at least prima facie,
\nput into one or the other category by statute or by
\ncommon law; but in all other cases it in a question of
\nintention. An express statement that a declaration is
\nnot an offer is effective to prevent it being an offer, but
\nthe mere use of the terminology “invitation to treat” or
\n“offer” in the declaration may not be conclusive one
\nway or the other. Otherwise, the vital question is the
\nintention of the declarant, though his actual intention
\nmust give way to a contradictory apparent intention at
\nthe time of the declaration.\n<\/p>\n
230.  Tenders. An advertisement that
\ngoods or services are to be bought or sold by tender is
\nnot, prima facie, an offer to sell to the person making
\nthe highest tender. Normally, the actual tender will
\namount to an offer; for example a tender for work and
\nlabour (even though in the form of an estimate), or a
\ntender for the sale or purchase of goods. It follows that
\nin the usual case, acceptance of such a tender
\nconcludes a binding contract.”\n<\/p>\n
39. From the letter dated 12.11.2001 as contained in Annexure ‘E’ to the
\ncounter affidavit and as noticed supra, the respondent No. 3 stated that it had a
\ncapacity for manufacture of 3 lacs sleepers per annum with its plant and machinery
\nat Byculla at Mumbai. They purported to have made necessary arrangement at
\nRaipur by shifting some existing machineries from Byculla and also add new
\nmachineries, which would enhance their production capacity. They, therefore,
\nwanted 18 months’ time to complete the order of 6,30,000 sleepers. They also
\nwanted to change the capacity utilization.\n<\/p>\n
40. Despite the fact that they had an existing capacity to manufacture
\n3,00,000 sleepers per annum, they had categorically stated that at the relevant point
\nof time they had been executing the contracts for various Railway Track items for
\nNeelachal Ispat, Shriram Fertilizers, etc.<\/p>\n
41. The cost estimate at Byculla and Raipur for Steel Trough Sleepers
\nwas stated to be:-\n<\/p>\n
 “COST ESTIMATE AT BYCULLA AND
\nRAIPUR FOR STEEL TROUGH SLEEPER<\/p>\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0
\n(Figures
\nin …)<\/p>\n
Sr.\n<\/p>\n
No.\n<\/p>\n
Description<\/p>\n
BIW
\nPrice<\/p>\n
Raipur
\nPrice<\/p>\n
1.<\/p>\n
Bloom
\ncost<\/p>\n
502<\/span><\/p>\n
502<\/span><\/p>\n
2.<\/p>\n
Transportation
\nfrom BSP to Raipur, Raipur rolling mill to Mumbai<\/p>\n
84<\/span><\/p>\n
20<\/span><\/p>\n
3.<\/p>\n
Octori
\n@ 4%<\/p>\n
16<\/span><\/p>\n
16<\/span><\/p>\n
4.<\/p>\n
Cost
\nof tooling<\/p>\n
27<\/span><\/p>\n
35<\/span><\/p>\n
5.<\/p>\n
Conversion
\ncost<\/p>\n
183<\/span><\/p>\n
183<\/span><\/p>\n
6.<\/p>\n
Profit
\nand overheads<\/p>\n
34<\/span><\/p>\n
43<\/span><\/p>\n
\u00a0<\/p>\n
(Admn.\n<\/p>\n
and financial Expenses, working capital)<\/p>\n
\u00a0<\/p>\n
\u00a0<\/p>\n
7A.\n<\/p>\n
Machinery
\nshifting to Raipur and Infrastructural facility and installation the same
\nat Raipur<\/p>\n
\u00a0<\/p>\n
29<\/span><\/p>\n
Total<\/p>\n
\u00a0<\/p>\n
 846<\/span><\/p>\n
 828<\/span><\/p>\n
42. From the respondent No. 1’s letter dated 03.01.2001, it is evident that
\nthe negotiated offer had been considered and found to be not acceptable.\n<\/p>\n
43. The counter offer was made for supply of 6,00,000 MG Steel Trough
\nSleepers through various consignees of Indian Railways at the basic price of Rs. 803\/-
\non the considerations made therein. Such exercise would not amount to a counter
\noffer, but a fresh offer. By reason of such offer, the time schedule has been changed.
\nThe essential terms and conditions of the supply had been given a go by. The
\nmandatory provisions of time schedule had also been given a go by. The same was,
\nin our opinion, beyond the jurisdiction of the authorities.\n<\/p>\n
44. The respondent No. 3 in its letter dated 22.08.2001 sought for the
\nextended period of delivery. Such extended period of delivery is not contemplated
\nunder the terms of the tender documents. It is also evident from the respondent No.
\n3’s letter dated 12.11.2001 that as ti made its offer of supply of 3,00,000 sleepers
\nwithin 18 months from the date of order, the same would amount to a fresh offer,
\nwhich is violative of the term of tender. By reason of such counter offer and
\nacceptance rule of the game has been changed which per se is violative of Article 14
\nof the Constitution of India.\n<\/p>\n
45. We have noticed hereinbefore that in terms of Clause 8.6, the
\ntenderers were required to quote only one unit rate of the quantity they tendered for.
\nThey could not have quoted different rates for quantities manufactured in different
\nfactories. Once the offers of the firm, which links the rates with the quantity or
\nwhich order is placed, the same shall be treated as unreasonable and could be
\nsummarily rejected.\n<\/p>\n
46. At this juncture, we may also consider the Vigilance Manual
\nwhereupon strong reliance has been placed by the respondents. Apart from the fact
\nthat the said Vigilance Manuals are only guidelines issued by the Central
\nGovernment and are not binding on the authorities, we fail to understand as to how
\nsuch guidelines can be issued by the Vigilance Department at all. Even if, as would
\nbe demonstrated hereinafter, that the provisions of the Vigilance Manual had also not
\nbeen complied with.\n<\/p>\n
47. From a perusal of Clause 2.4 of the letter of the Central Vigilance
\nCommission (in short, ‘CVC’) dated 18.11.1998, it is evident that the post tender
\nnegotiations are banned with immediate effect except with negotiation L1. But such
\nnegotiations have to be made for the benefit of the purchase as regards the rate and
\nit cannot be for increasing the quantity of supply, which was beyond the scope of
\nnegotiation.\n<\/p>\n
48. The CVC in its letter dated 15.03.1999 dealt with the question of
\nquantity. It was stated therein that:-\n<\/p>\n
  “(iii) Another issue that has been raised is that many a
\ntime the quantity to be ordered is much more than L1
\nalone can supply. In such cases, the quantity order may be
\ndistributed in such a manner that the purchase is done in a
\nfair transparent and equitable manner.”\n<\/p>\n
49. It is, therefore, clear that no negotiation was to be held while
\naccordingly to the respondent No. 3 itself at the time of making its offer, it was only in
\na position to supply only 81,000 sleepers.\n<\/p>\n
50. A point has also been raised by the respondents that the Railways
\ncould favor a public sector understanding. Such a provision is said to be contained
\nin Clause 19.2 in terms whereof the power to place order with a public sector
\nundertaking is within 110% of the overall value of such tender of a private sector
\ntenderer, but not beyond that. Having regard to the said provision also, a public
\nsector undertaking cannot be shown an undue favor. If that be so, not only
\ntransparency what has been emphasized by the CVC would be given a go bye, the
\nreasons for issuing notice inviting tender would be totally lost. Furthermore, as
\nwould appear from the discussions made hereinafter that in the instant case, an
\nallegation has been made which may not be wholly without substance that behind
\nthis apparent public sector undertaking, a private sector is also working.\n<\/p>\n
51. Bina Metal Way Ltd., Jamshedpur had offered to supply 1,30,000
\nENCD sleepers. It quoted a very high rate, i.e., Rs. 960\/- which was more or less the
\nsame as that of the petitioners herein. We have extracted the manner in which Bina
\nMetal Way Ltd. and the respondent No. 3 struck a deal at a later stage. The
\nrespondent No. 3 in its affidavit while categorically stated that they had one factory
\nonly at Byculla and three other places. How it acquired a factory at Raipur is telltale.
\nThe said factory belongs to the aforementioned Bina Metal Way Ltd.\n<\/p>\n
52. While notice inviting tender was issued in February\/March, 2001 and
\nthe parties submitted their tenders in April, 2001, the letter of intent was issued by
\nthe respondent No. 2 to the respondent No. 3 on 03.01.2002 and the award of
\ncontract has been made on 21.01.2002.\n<\/p>\n
53. So far as the necessity of placing the order on a RDSO approved
\nfactory is concerned, it is not in dispute only on 01.02.2002 Bina Metal Way Ltd.
\nwrote to RDSO that they had got leased their works to the respondent No. 3 stating:-\n<\/p>\n
 “This is to inform you that we have wet leased our
\nRaipur works to M\/s. Richardson & Cruddas (1972)
\nLimited, Mumbai. Presently no work of our company is
\nbeing done at the works.\n<\/p>\n
54. The respondent No. 3 in turn in its letter dated 19.02.2002 stated:-\n<\/p>\n
“Sub: Your Contract No. Track\/21\/2002\/0600\/7\/
\n51138 dated 21.1.2002<\/p>\n
In terms of Clause 9 of the contract our works at
\nRaipur are subjected to RDSO’s inspection to certify
\ninfrastructure, capability of manufacture besides actual
\ndevelopment of proto-type and of initial and later
\nproduction.\n<\/p>\n
We wish to inform that our works at Raipur,
\nwhich has been wet-leased by us for the execution of
\nthe subject contract, is fully ready of the RDSO
\ninspection. We request that you may kindly instruct
\nRDSO Lucknow to carry out its inspection at the
\nfollowing address at the earliest so that the
\nmanufacturing of the sleepers could be taken up at the
\nearliest.\n<\/p>\n
620, Urla Industrial Area, <\/p>\n
Near Classic Wire, <\/p>\n
Raipur-493221 <\/p>\n
Chhatisgarh<\/p>\n
We shall be thankful for your urgent action
\nunder advise to us.\n<\/p>\n
Thanking you,  <\/p>\n
Yours faithfully, <\/p>\n
For Richardson & Cruddas (1972) Ltd.\n<\/p>\n
G.B. MISHRA <\/p>\n
(GENERAL MANAGER)”\n<\/p>\n
55. Thereafter on 14.03.2002, the RDSO approval of the said Bina Metal
\nWay Ltd. was cancelled.\n<\/p>\n
56. It is, therefore, evident that Bina Metal Way Ltd., which was also not
\na successful tenderer and who stood on the same footing as that of the petitioner’s
\nherein obtained benefit out of the negotiations held between the respondent Nos. 1
\nand 2 on the one hand and the respondent No. 3 on the other. We, therefore, are of
\nthe opinion that the respondent No. 1 could not have granted the contract in favor of
\nthe respondent No. 3.\n<\/p>\n
 RE: CONTENTION NO.2:-\n<\/p>\n
57. The respondent No. 1 in its counter affidavit categorically stated:-\n<\/p>\n
 “The list of approved suppliers for BG steel
\nsleepers of various types was the approved list. There
\nare six firms listed therein and both the petitioners and
\nrespondent No. 3 are on the approved list. As per
\npresent convention, ordering bulk quantity means
\nallotting 80% of tendered quantity to Part No. 1 and
\n15% to Part II List of approved suppliers and 5% to
\nnew firms. In this case the approved list is only one
\nlist and not a separate list for part I and part II. Thus,
\napproved firms are entitled for 95% of the quantity in
\nthe tender and new firms can get a maximum of 5%.
\nThe ethics of tendering besides other aspects is
\nunderstood to demand that the lowest and lower parties
\nare given quantity preference and the competitive
\nenvironment is maintained.\n<\/p>\n
58. In view of the aforementioned statement, offer could be placed on the
\nthird respondent so far as the Raipur Factory is concerned only to the extent of 5%,
\nwhich was an unapproved one. There cannot be any doubt whatsoever that Clause
\n13.1 and 13.2 are mandatory in nature. The words ‘only RDSO approved
\nmanufacture’ contained in Clause 13.1 are significant. In terms of the said Clause,
\nno tenderer registered or valid by RDSO after the notice inviting tender is published,
\ncould be treated to be registered and\/or valid.\n<\/p>\n
59. Acquisition of its Raipur factory of Bina Metal Way Ltd. by the
\nrespondent No. 3 in February, 2002, therefore, could not have been considered at all
\nhaving regard to its manufacturing capacity.\n<\/p>\n
60. From a letter dated 21.03.2002 issued by RDSO to the respondent No.
\n3, it was stated:-\n<\/p>\n
“Sub: Capability assessment of M\/s. Richardson &
\n      Cruddas Ltd., 620, Urla Industrial Area, Near
\n      Classic Wire, Raipur-493221 Chhatisgarh.\n<\/p>\n
Ref: (i) Your letter No. R & C \/ Railway Board \/
\n      2002 \/ 384.\n<\/p>\n
 (ii) Railway Board’s letter No. Track \/ 21 \/
\n      2002 \/ 0600 \/ 7 \/ 51138 dtd. 20.02.02.\n<\/p>\n
In connection with the above, RDSO officials
\nhad carried out capability assessment of our work site
\nat 620, Urla Industrial Area, Near Classic Wire, Raipur\n<\/p>\n
– 493221 Chhatisgarh as directed by Railway Board.
\nAs per the inspection report, it is noted that adequate
\ninfrastructural facilities are available at the work site to
\nmanufacture steel trough sleepers.\n<\/p>\n
In view of the above, competent authority has
\npermitted manufacturing of prototype of the steel
\ntrough sleepers, as ordered by Railway Board. You are
\nalso advised to carry out the rectification of the gauges
\nas suggested by RDSO officials during the inspection
\non 15.03.2002.\n<\/p>\n
You are requested to comply with all the
\nsuggested rectifications in the gauges and get them
\napproved by RDSO before manufacturing the
\nprototype.”\n<\/p>\n
61. It is only from the said date, Raipur factory could be said to have
\nbecome as the RDSO approved lis so far as the respondent No. 3 is concerned.\n<\/p>\n
62. We may further notice that the respondents have also issued general
\nguidelines for vendors’ approval.\n<\/p>\n
63. Such guidelines have also been given a complete go by.\n<\/p>\n
64. The effect of de-listing is in the following terms:-\n<\/p>\n
“a. Once the firm is de-listed, the firm shall be
\nconsidered only when applies afresh and the case shall be
\nconsidered as for fresh approval.\n<\/p>\n
b. Such vendors after approval shall be placed in Part-II.
\nFor upgradation to Part-I, the vendors shall require to
\ncomply the requirements as detailed in Para 4.”\n<\/p>\n
65. Thus it became new RDSO approved supplier only from the date and
\nnot prior thereto.\n<\/p>\n
66. From the statements made in paragraph 9 of its counter affidavit of the
\nrespondent No. 3 as quoted supra, it is evident that it tried to make a camouflage by
\nstating that it would set up facilities at Raipur so that it may not miss the order. The
\nsaid facility, thus, was not available to it till March, 2002.\n<\/p>\n
67. The submission of Mr. Rajiv Nayyar to the effect that we should not
\nconsider the fact that the Raipur Works was de-listed, which previously belonged to
\nBina Metal Way Ltd. cannot be accepted.\n<\/p>\n
68. Having regard tot he terms and conditions of the contract, it was
\nabsolutely necessary for the Railways to stick to their norms. It is trite that “he who
\nmakes the procedural sword shall parish with the sword” as laid down by Mr. Justice
\nFrankfurter in  Vitarelli v. Seaton reported in  (1959) 359 US 535 : 3 L. Ed. 2nd 1012.
\nThe said decision has been quoted with approval of  Ramana Dayaram Shetty v. The
\nInternational Airport Authority of India and Ors.<\/a> .\n<\/p>\n
69. In  Air India Ltd. v. Cochin International Airport Ltd. and Ors.<\/a>  , the law is stated in the following terms:-\n<\/p>\n
“7. The law relating to award of a contract by the
\nState, its corporation and bodies actings as
\ninstrumentalities and agencies of the Government has
\nbeen settled by the decision of this Court in  Ramana
\nDayaram Shetty v.  International Airport Authority of
\nIndia<\/a> ,  Fertilizer Corporation, Kamgar
\nUnion (Regd.) v.  Union of India<\/a> ,
\n CCE v. v  Dunlop India Ltd. ,  Tata Cellular v.  Union of India<\/a> ,  Ramniklal N. Bhutta v.  State of
\nMaharashtra  and  Raunaq
\nInternational Ltd.<\/a> v.  I.V.R. Construction Ltd. . The award of a contract, whether it is by a
\nprivate party or by a public body or the State, is
\nessentially a commercial transaction. In arriving at a
\ncommercial decision consideration which are
\nparamount are commercial considerations. The State
\ncan choose its own method to arrive at a decision. It
\ncan fix its own terms of invitation to tender and that is
\nnot open to judicial scrutiny. It can enter into
\nnegotiations before finally deciding to accept one of
\nthe offers made to it. Price need not always be the sole
\ncriterion for awarding a contract. It is free to grant any
\nrelaxation, for bona fide reasons, if the tender
\nconditions permit such a relaxation. It may not accept
\nthe offer even though it happens to be the highest or
\nthe lowest.  But the State, its corporations,
\ninstrumentalities and agencies are bound to adhere to
\nthe norms, standards and procedures laid down by
\nthem and cannot depart from them arbitrarily. Though
\nthat decision is not amendable to judicial review, the
\ncourt can examine the decision-making process and
\ninterfere if it is found vitiated by mala fides,
\nunreasonableness and arbitrariness. The State, its
\ncorporations, instrumentalities and agencies have the
\npublic duty to be fair to all concerned. Even when
\nsome defect is found in the decision-making process
\nthe court must exercise its discretionary power under
\nArticle 226 with great caution and should exercise it
\nonly in furtherance of public interest and not merely on
\nthe making out of a legal point. The court should
\nalways keep the larger public interest in mind in order
\nto decide whether its intervention is called for or not.
\nOnly when it comes to a conclusion that overwhelming
\npublic interest requires interference, the court should
\nintervene.”\n<\/p>\n
(Emphasis supplied)<\/p>\n
70. It is true that in a given case public sector undertaking may be given a
\npreference, but such preference may be given only when there is a bona fide belief
\nthat a national carrier are not proved to be more beneficial. In any event, when the
\nextent of such preference is governed by the term, the same cannot be deviated from.\n<\/p>\n
71. We may notice that in  Harminder Singh Arora v. Union of India and
\nOrs., the<\/a> law is stated in the following terms:-\n<\/p>\n
  “19… … … If the tender forms submitted by any
\nparty is not in conformity with the conditions of the
\ntender notice the same should not have been accepted
\nbut the authorities concerned arbitrarily and in a
\nfanciful manner accepted the tender of respondent 4.
\nThe State or its instrumentality has to act in accordance
\nwith the conditions laid down in the tender notice. In
\nany case if the authorities chose to accept the tender of
\nrespondent 4 for supplying pasteurized milk, the
\nappellant should also have been given an opportunity
\nto change his tender… …”\n<\/p>\n
72. It was also held:-\n<\/p>\n
 “21. If the terms and conditions of the tender have
\nbeen incorporated in the tender notice itself and that
\ndid not indicate any preference to the government
\nundertakings of giving 10 per cent price preference to
\ngovernment undertaking, the authority concerned acted
\narbitrarily in allowing 10 per cent price preference to
\nrespondent 4. The only facility provided to the
\ngovernment undertakings was provided in para 19
\nwhich contemplates that the Central or State
\nGovernment departments which are purely government
\nconcerns need not pay tender forms fees and earnest
\nmoney. This was the only concession available to the
\nCentral\/State Government or to the purely government
\nconcerns, and no other concession or benefit was
\ncontemplated under the terms of the tender notice. If
\nthe appellant had known that 10 per cent price
\npreference to government undertaking was to be given
\nto respondent 4 the appellant would have taken every
\nprecaution while submitting the tender… … …”\n<\/p>\n
73. Yet again in  Monarch Infrastructure (P) Ltd. v. Commissioner,
\nUlhasnagar Municipal Corporation and Ors.<\/a> , it has
\nclearly been stated that where the policies adopted by the Government has no nexus
\nwith the object it seeks to achieve or is mala fide or when the process is arbitrary or
\ndiscriminatory, the power of judicial review can be exercised.\n<\/p>\n
74. In that case, it was held:-\n<\/p>\n
“10… … Ultimately what prevails with the courts in
\nthese matters is that while public interest is paramount
\nthere should be no arbitrariness in the matter of award
\nof contract and all participants in the tender process
\nshould be treated alike. We may sum up the legal
\nposition thus:\n<\/p>\n
(i) The Government is free to enter into any
\ncontract with citizens but the court may interfere where
\nit acts arbitrarily or contrary to public interest.\n<\/p>\n
(ii) The Government cannot arbitrarily choose
\nany person it likes for entering into such a relationship
\nor to discriminate between persons similarly situate.\n<\/p>\n
(iii) It is open to the Government to reject even
\nthe highest bid at a tender where such rejection is not
\narbitrary or unreasonable or such rejection is in public
\ninterest for valid and good reasons.”\n<\/p>\n
75. As in the aforementioned case the appellant therein did not fulfilll the
\nconditions of the tender notice, the High Court’s decision setting aside the contract in
\nits favor was upheld.\n<\/p>\n
76. For the reasons aforementioned, we are of the opinion that all norms
\nlaid down by the respondents themselves in their notice inviting tender had been
\nthrown to the wind, the impugned award of contract cannot be sustained.\n<\/p>\n
77. However, this would not mean that we are setting aside even that part
\nof the contract in relation whereto an offer was made by the respondent No. 3 to the
\nrespondent No. 2, namely, supply of 81,000 sleepers upon complying with the norms
\nlaid down in the tender documents. It will now be open to the respondent No. 2 to
\ntake an objective decision as to whether it intends to place orders upon the other
\ntenderers upon entering into negotiations with them or to issue fresh notice inviting
\ntender.\n<\/p>\n
78. This writ petition is allowed with the aforementioned observations
\nwith costs, which is quantified at Rs. 10,000\/-.<\/p>\n","protected":false},"excerpt":{"rendered":"
Delhi High Court Bhaskar Industrial Developments … vs Union Of India (Uoi) And Ors. on 14 August, 2002 Author: S Sinha Bench: S Sinha, A Sikri JUDGMENT S.B. Sinha, C.J. 1. The petitioners who are two in number along with third respondent herein which is said to be a public sector undertaking, along with many […]<\/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":[14,8],"tags":[],"class_list":["post-228636","post","type-post","status-publish","format-standard","hentry","category-delhi-high-court","category-high-court"],"yoast_head":"\nBhaskar Industrial Developments ... vs Union Of India (Uoi) And Ors. on 14 August, 2002 - 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\/bhaskar-industrial-developments-vs-union-of-india-uoi-and-ors-on-14-august-2002\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Bhaskar Industrial Developments ... vs Union Of India (Uoi) And Ors. on 14 August, 2002 - 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