IMPORTANT POINT
Courts are slow to interfere in matters relating to administrative functions unless decision is tainted by any vulnerability such as lack of fairness in procedure, illegality and irrationality.

Headnote:Constitution of India-Article 226-Administrative action-Scope for judicial review-Courts are slow to interfere unless decision is tainted by vulnerability such as, lack of fairness in procedure, illegality and irrationality-Tender of respondent No. 1 Company though lowest not considered as its Director was found to have assaulted official of appellant-Other tenderers were called for negotiation to lower the rates offered and considering the lower rates offered, contract was awarded to respondent No.2-Burden to establish mala fide is very heavy on person who alleges it-Strained relation between a contractor and contractee can have its implication in working out the contract-Appellant authority could not be said to have acted in a mala fide-Impugned order holding act of appellant in not awarding contract to respondent No.1 was not in accordance with law was unsustainable.
       Held : One can conveniently classify under three heads the grounds on which administrative action is subject to control by judicial review. The first ground is illegality the second irrationality , and the third procedural impropriety . These principles were highlighted by Lord Diplock in Council of Civil Unions v. Minister for the Civil Service (1984 (3) All ER 935), (commonly known as CCSU Case). (Para 11)
       Doubtless, he who seeks to invalidate or nullify any act or order must establish the charge of bad faith, an abuse or a misuse by the authority of its powers. While the indirect motive or purpose, or bad faith or personal ill-will is not to be held established except on clear proof thereof, it is obviously difficult to establish the state of a man s mind, for that is what the employee has to establish in this case, though this may sometimes be done. The difficulty is not lessened when one has to establish that a person apparently acting on the legitimate exercise of power has, in fact, been acting mala fide in the sense of pursuing an illegitimate aim. It is not the law that mala fide in the sense of improper motive should be established only by direct evidence. But it must be discernible from the order impugned or must be shown from the established surrounding factors which preceded the order. If bad faith would vitiate the order, the same can, in our opinion, be deduced as a reasonable and inescapable inference from proved facts. (See S. Pratap Singh v. The State of Punjab (1964 (4) SCR 733). It cannot be overlooked that burden of establishing mala fides is very heavy on the person who alleges it. The allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations demands proof of a high order of credibility. As noted by this Court in R.P. Rovappa v. State of Tamil Nadu and another (AIR 1974 SC 555). Though in a legalistic sense an incorporated body like a company and its Directors are separate entities for certain purposes, in many companies they act as alter ego. For the acts of the Director, the concept of vicarious and constructive liabilities operates so far as the company is concerned. The acts of the company are done primarily through the Directors or the employees. In a case like the one at hand, the stand of respondent No. 1 - Company that even if one of its Directors has assaulted an employee of the appellant-Authority, yet it is of no consequence when deciding the tender application. The strained relationship between a contractor and the contractee can have its implications in working out the contract. This is not a case where the appellant-Authority can be said to have acted in a mala fide manner or with oblique motives. If the Authority felt that in view of the background facts, it would be undesirable to accept the tender, the same is not open to judicial review in the absence of any proved mala fide or irrationality. The impugned judgment of the High Court is indefensible and is set aside. (Para 16 to 18)

JUDGMENT

Arijit Pasayat, J.-Leave granted in SLP (C) No. 23987/2002.

2. The Delhi Development Authority (herein after referred to as the DDA ) calls in question the legality of the judgment rendered by a Division Bench of the Delhi High Court whereby it has held that the act of the appellant in not awarding contract to the respondent No. 1 M/s UEE Electricals Engg. P. Ltd. was not in accordance with law. Though the contract awarded to the second respondent was not nullified, it was held by the High Court that the first respondent who was deprived of its right was entitled to costs to be paid by the appellant. Liberty was also granted to the respondent No.1 to file a suit for damages if it so thought appropriate.

3. Background facts as projected by the appellant DDA which need to be noticed are as follows:

In March 2001, tenders were invited by the appellant for the supply and installation of Clear Water Boosting Pumping Station at Command Tank No. 1 at Sector-7. Clause 10 of the Tender Notice indicated that the final decision, with respect to acceptance of the tender, rests with the Chief Engineer (Electrical) and there was no compulsion to accept the lowest tender. On 21.5.2001 Ashok Sehgal - a Director of the respondent No.1 - company went to the Division Office of the Authority, where one Mr. V.K. Kapoor was acting as the Assistant Engineer (Electrical), for clearance of his earlier dues. Aforesaid Mr. Ashok Sehgal insisted that the files should be handed over to him which was not done by Mr. V.N. Kapoor. Since the files were not handed over, Mr. Ashok Sehgal physically assaulted Mr. V.K. Kapoor with a sharp weapon which caused an injury near the right eye. At about 3.45 P.M., an FIR was lodged by Mr. V.K. Kapoor for alleged commission of offences punishable under Sections 186, 353, and 332 of the Indian Penal Code, 1860 (in short the IPC ) before the Dabri Police Station, Delhi. The matter was also referred for enquiry to the Executive Engineer (Headquarter) of DDA. Mr. Ashok Sehgal submitted a letter to the Commissioner of Police at about 8 P.M. on the same date making allegations against officials of DDA. On 19.6.2001 Enquiry Officer submitted a report inter alia observing that Mr. V.K. Kapoor s version was correct and that the allegations made by Mr. Ashok Sehgal appear to be in retaliation. It was found that Mr. Ashok Sehgal had tried to support his case by producing a medical certificate issued by a Private Poly Clinic which was not valid for a Medico-legal case. The further allegation that Mr. V.K. Kapoor demanded bribe from Mr. Ashok Sehgal was found to be incorrect. The allegation that Mr. Ashok Sehgal was physically beaten up by Mr. V.K. Kapoor was also found to be not correct in view of the statements given by some eyewitnesses. It was, therefore, recommended that necessary action should be taken by the competent authority.

4. On 23.7.2001 the price bid, so far as the tender in question, was opened and the respondent No. 1 was declared to be a successful bidder. However, on 28.8.2001 the Project Manager (Electrical) wrote to the Secretary, Contractor Registration Board requesting for appropriate action against the respondent No.1 - company in the light of the Enquiry Report referred to above. It appears that subsequently action was taken by the Contractor Registration Board in terms of the Rule 22.3(k) of the Enlistment Rules of DDA.

5. On 25.10.2001 the Works Advisory Board decided that the tender of respondent No.1 should not be considered since show cause notice was being issued to it. Therefore, other tenderers were called for negotiations to lower the rates offered. It was also decided that in case the rates were not lowered, fresh tender was to be issued.

6. On 8.11.2001, after consideration of the lowered rates offered the work was awarded to respondent No.2 (respondent No.3 in the writ petition before the High Court).

7. Show cause notice was issued to respondent No.1 on 5.12.2001 requiring it to show cause why

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2004 Supreme(SC) 351

IMPORTANT POINTCourts are slow to interfere in matters relating to administrative functions unless decision is tainted by any vulnerability such as lack of fairness in procedure, illegality and irrationality.

Cases Referred (4)

IMPORTANT POINT
Courts are slow to interfere in matters relating to administrative functions unless decision is tainted by any vulnerability such as lack of fairness in procedure, illegality and irrationality.